NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
485BPOS, 2001-01-19
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<PAGE>


   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 19, 2001



                                                      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. 11                  [X]



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

                                AMENDMENT NO. 17                          [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:

          Anne M. Goggin                     Stephen E. Roth, Esquire
    Senior 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 January 22, 2001 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 registration statement incorporates by reference the prospectuses,
Statements of Additional Information and Profile prospectus dated May 1, 2000
and the supplement dated May 1, 2000 to the prospectuses dated May 1, 2000 for
the contracts, each as filed in Post-Effective Amendment No. 10 to the
Registration Statement on Form N-4 (File No. 33-85442) filed on April 27, 2000.


<PAGE>

                      NEW ENGLAND LIFE INSURANCE COMPANY

                 Individual Variable Annuity Contract Profile

                            AMERICAN GROWTH SERIES

                             January 22, 2001

  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 twelve series of the New England Zenith Fund or nine Portfolios
of the Metropolitan Series Fund, Inc. (the "Funds"). (Not all of the sub-
accounts may be available as of the date of this Profile. Consult your
registered representative concerning availability.) 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 the plan was established prior to January 1,
  1997.)

  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.

  FOR ANY TAX QUALIFIED ACCOUNT E.G., 401(K) PLAN OR IRA, THE TAX DEFERRED
ACCRUAL FEATURE IS PROVIDED BY THE TAX QUALIFIED RETIREMENT PLAN. THEREFORE,
THERE SHOULD BE REASONS OTHER THAN TAX DEFERRAL FOR ACQUIRING AN ANNUITY
CONTRACT WITHIN A QUALIFIED PLAN.

  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.

<TABLE>
<S>                                    <C>
       NEW ENGLAND ZENITH FUND             METROPOLITAN SERIES FUND, INC.

Back Bay Advisors Money Market Series     Putnam Large Cap Growth Portfolio
 Back Bay Advisors Bond Income Series   Putnam International Stock Portfolio
   Salomon Brothers Strategic Bond     State Street Research Aurora Small Cap
         Opportunities Series                     Value Portfolio*
   Salomon Brothers U.S. Government           Janus Mid Cap Portfolio*
                Series                    Lehman Brothers(R) Aggregate Bond
           Balanced Series                        Index Portfolio*
      Alger Equity Growth Series           MetLife Stock Index Portfolio*
      Davis Venture Value Series       MetLife Mid Cap Stock Index Portfolio*
 Harris Oakmark Mid Cap Value Series        Morgan Stanley EAFE(R) Index
    Loomis Sayles Small Cap Series                   Portfolio*
         MFS Investors Series             Russell 2000(R) Index Portfolio*
     MFS Research Managers Series
  Westpeak Growth and Income Series
</TABLE>


                                       2
<PAGE>


In addition, the Fixed Account is available. AVAILABILITY OF THE STATE STREET
RESEARCH AURORA SMALL CAP VALUE, JANUS MID CAP, LEHMAN BROTHERS(R) AGGREGATE
BOND INDEX, METLIFE STOCK INDEX, METLIFE MID CAP STOCK INDEX, MORGAN STANLEY
EAFE(R) INDEX AND RUSSELL 2000(R) INDEX PORTFOLIOS ARE 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.

  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 1.00% 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 .07%), the .10%
administration asset charge, the 1.30% mortality and expense risk charge, and
the investment charges for each

                                       3
<PAGE>


Fund for the year ended December 31, 1999 (as a percentage of average net
assets after giving effect to any current expense cap or expense deferral).
The Putnam Large Cap Growth, State Street Research Aurora Small Cap Value and
MetLife Mid Cap Stock Index Portfolios reflect anticipated annual operating
expenses for 2000. 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.

<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 12/31/99 Charges   One Year      Ten Years
----                      --------- -------------- ------- ------------  -------------
<S>                       <C>       <C>            <C>     <C>           <C>
Money Market............    1.47%         .40%      1.87%   $      84.13  $      218.29
Bond Income.............    1.47%         .48%      1.95%          84.88         226.67
Strategic Bond Opportu-
 nities.................    1.47%         .81%      2.28%          87.95         260.47
U.S. Government.........    1.47%         .70%      2.17%          86.93         249.34
Balanced................    1.47%         .77%      2.24%          87.58         256.44
Equity Growth...........    1.47%         .80%      2.27%          87.86         259.47
Venture Value...........    1.47%         .81%      2.28%          87.95         260.47
Mid Cap Value...........    1.47%         .88%      2.35%          88.60         267.49
Small Cap...............    1.47%        1.00%      2.47%          89.72         279.39
Investors...............    1.47%         .90%      2.37%          88.79         269.48
Research Managers.......    1.47%         .90%      2.37%          88.79         269.48
Growth and Income.......    1.47%         .74%      2.21%          87.30         253.40
Large Cap Growth........    1.47%        1.00%      2.47%          89.72         279.39
International Stock.....    1.47%        1.12%      2.59%          90.83         291.14
State Street Research
 Aurora Small Cap Value.    1.47%        1.05%      2.52%          90.18         284.30
Janus Mid Cap...........    1.47%         .96%      2.43%          89.34         275.44
Lehman Brothers Aggre-
 gate Bond Index........    1.47%         .65%      2.12%          86.47         244.23
MetLife Stock Index.....    1.47%         .54%      2.01%          85.44         232.90
MetLife Mid Cap Stock
 Index..................    1.47%         .70%      2.17%          86.93         249.34
Morgan Stanley EAFE In-
 dex....................    1.47%         .95%      2.42%          89.25         274.45
Russell 2000 Index......    1.47%         .80%      2.27%          87.86         259.47
</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.

                                       4
<PAGE>

  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                       1999    1998    1997    1996    1995    1994    1993    1992    1991    1990   1989
----                      ------   -----   -----   -----   -----   -----   -----   -----   -----   ----   ----
<S>                       <C>      <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>    <C>
Money Market.............   1.12 %  1.38 %  1.42 %  1.18 %  1.71 %  0.01 % (0.96)% (0.14)%  2.19%  4.03%  4.96%
Bond Income..............  (3.28)%  6.01 %  7.71 %  1.49 % 17.57 % (6.53)%  9.06 %  4.59 % 13.95%  4.11%  8.08%
Strategic Bond Opportu-
 nities..................  (2.22)% (1.60)%  7.16 % 10.14 % 14.73 %   N/A     N/A     N/A     N/A    N/A    N/A
U.S. Government..........  (3.76)%  3.48 %  4.22 % (0.85)% 10.43 %   N/A     N/A     N/A     N/A    N/A    N/A
Balanced.................  (8.25)%  5.62 % 12.35 % 12.78 % 20.06 %   N/A     N/A     N/A     N/A    N/A    N/A
Equity Growth............  31.18 % 44.17 % 21.98 %  9.50 % 43.64 %   N/A     N/A     N/A     N/A    N/A    N/A
Venture Value............  14.62 % 11.41 % 29.81 % 21.85 % 34.35 %   N/A     N/A     N/A     N/A    N/A    N/A
Mid Cap Value............  (3.18)% (8.72)% 13.48 % 13.45 % 25.40 % (4.65)%   N/A     N/A     N/A    N/A    N/A
Small Cap................  28.27 % (4.64)% 21.20 % 26.44 % 24.06 %   N/A     N/A     N/A     N/A    N/A    N/A
Investors................    N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A    N/A    N/A
Research Managers........    N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A    N/A    N/A
Growth and Income........   6.48 % 21.08 % 29.50 % 14.02 % 31.40 % (5.58)%   N/A     N/A     N/A    N/A    N/A
Large Cap Growth.........    N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A    N/A    N/A
International Stock......  19.91 %  2.73 % (5.56)%  2.23 %  1.76 %   N/A     N/A     N/A     N/A    N/A    N/A
State Street Research
 Aurora Small Cap Value..    N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A    N/A    N/A
Janus Mid Cap............ 115.55 % 32.86 % 26.34 %   N/A     N/A     N/A     N/A     N/A     N/A    N/A    N/A
Lehman Brothers Aggre-
 gate Bond Index.........  (5.96)%  1.18 %   N/A     N/A     N/A     N/A     N/A     N/A     N/A    N/A    N/A
MetLife Stock Index......  11.90 % 19.93 % 27.01 % 18.40 % 30.99 % (2.64)%  5.08 %  8.09 % 24.97 % 1.08 %  N/A
MetLife Mid Cap Stock
 Index...................    N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A     N/A    N/A    N/A
Morgan Stanley EAFE In-
 dex.....................  19.81 %  7.90 %   N/A     N/A     N/A     N/A     N/A     N/A     N/A    N/A    N/A
Russell 2000 Index.......  17.52 %  5.27 %   N/A     N/A     N/A     N/A     N/A     N/A     N/A    N/A    N/A
</TABLE>

  The Putnam International Stock Portfolio commenced operations on October 31,
1994 and became available to American Growth Series Contracts on May 1, 2000.
On December 1, 2000, the Putnam International Stock Portfolio was substituted
for the Morgan Stanley International Magnum Equity Series, which is no longer
available for investment under the Contract. The Morgan Stanley International
Magnum Equity Series commenced operations on October 31, 1994. Performance
figures for dates on or before December 1, 2000 reflect performance of the
Morgan Stanley International Magnum Equity Series.

  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. The death benefit may be taxable to the beneficiary.

  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

                                       5
<PAGE>


option that you select under this feature. Additionally, subject to state
availability and to the extent allowed by state law, we may credit an interest
rate different from the current Fixed Account rate to eligible payments which
you allocate to a Guaranteed Account we establish for the purpose of enhanced
dollar cost averaging. Please see the Prospectus for more information.

  Asset Rebalancing. We offer an asset rebalancing program for Contract Value.
This feature automatically reallocates your Contract Value among the sub-
accounts periodically (annually, semi-annually or quarterly) to return the
allocation to the allocation percentages you specify.

  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.

                                       6
<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 the New England Zenith Fund ("Zenith Fund") and the
Metropolitan Series Fund ("Metropolitan Fund").

<TABLE>
<S>                                                    <C>
NEW ENGLAND ZENITH FUND                                METROPOLITAN SERIES FUND, INC.
Back Bay Advisors Money Market Series                  Putnam Large Cap Growth Portfolio
Back Bay Advisors Bond Income Series                   Putnam International Stock Portfolio
Salomon Brothers Strategic Bond Opportunities Series   State Street Research Aurora Small Cap Value Portfolio*
Salomon Brothers U.S. Government Series                Janus Mid Cap Portfolio*
Balanced Series                                        Lehman Brothers(R) Aggregate Bond Index Portfolio*
Alger Equity Growth Series                             MetLife Stock Index Portfolio*
Davis Venture Value Series                             MetLife Mid Cap Stock Index Portfolio*
Harris Oakmark Mid Cap Value Series                    Morgan Stanley EAFE(R) Index Portfolio*
Loomis Sayles Small Cap Series                         Russell 2000(R) Index Portfolio*
MFS Investors Series
MFS Research Managers Series
Westpeak Growth and Income Series
</TABLE>
--------
 * Subject to any necessary state insurance department approvals.

  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 January 22, 2001. 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-59 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 maintains a web site that contains the Statement of Additional
Information, material incorporated by reference, and other information
regarding registrants that file electronically with the Securities and Exchange
Commission. The address of the site is http://www.sec.gov.

  Neither the Securities and Exchange Commission nor any state securities
commission has approved these contracts or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.

                             January 22, 2001

  THE ELIGIBLE FUND PROSPECTUSES ARE ATTACHED. PLEASE READ THEM AND KEEP THEM
FOR REFERENCE.

  WE DO NOT GUARANTEE HOW ANY OF THE SUB-ACCOUNTS OR ELIGIBLE FUNDS WILL
PERFORM. THE CONTRACTS AND THE ELIGIBLE FUNDS 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
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-16
 Substitution of Investments.............................................. A-17
GUARANTEED OPTION......................................................... A-17
THE CONTRACTS............................................................. A-17
 Purchase Payments........................................................ A-17
 Allocation of Purchase Payments.......................................... A-18
 Contract Value and Accumulation Unit Value............................... A-18
 Payment on Death Prior to Annuitization.................................. A-19
 Transfer Privilege....................................................... A-21
 Dollar Cost Averaging.................................................... A-22
 Asset Rebalancing........................................................ A-22
 Surrenders............................................................... A-23
 Systematic Withdrawals................................................... A-24
 Loan Provision for Certain Tax Benefited Retirement Plans................ A-24
 Disability Benefit Rider................................................. A-25
 Suspension of Payments................................................... A-26
 Ownership Rights......................................................... A-26
 Requests and Elections................................................... A-26
ADMINISTRATION CHARGES, CONTINGENT DEFERRED SALES CHARGE AND OTHER DEDUC-
 TIONS.................................................................... A-27
 Administration Contract Charge........................................... A-27
 Administration Asset Charge.............................................. A-28
 Mortality and Expense Risk Charge........................................ A-28
 Contingent Deferred Sales Charge......................................... A-28
 Premium Tax Charge....................................................... A-30
 Other Expenses........................................................... A-31
ANNUITY PAYMENTS.......................................................... A-31
 Election of Annuity...................................................... A-31
 Annuity Options.......................................................... A-32
 Amount of Variable Annuity Payments...................................... A-33
RETIREMENT PLANS OFFERING FEDERAL TAX BENEFITS............................ A-33
FEDERAL INCOME TAX STATUS................................................. A-34
 Introduction............................................................. A-34
 Taxation of the Company.................................................. A-34
 Tax Status of the Contract............................................... A-34
 Taxation of Annuities.................................................... A-35
 Qualified Contracts...................................................... A-38
 Withholding.............................................................. A-42
 Possible Changes in Taxation............................................. A-42
 Other Tax Consequences................................................... A-42
 General.................................................................. A-42
</TABLE>

                                      A-2
<PAGE>

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
VOTING RIGHTS.............................................................. A-43
DISTRIBUTION OF CONTRACTS.................................................. A-43
THE FIXED ACCOUNT.......................................................... A-43
 Contract Value and Fixed Account Transactions............................. A-44
INVESTMENT PERFORMANCE INFORMATION......................................... A-44
FINANCIAL STATEMENTS....................................................... A-45
ACCUMULATION UNIT VALUES................................................... A-46
APPENDIX A: Consumer Tips.................................................. A-48
APPENDIX B: Contingent Deferred Sales Charge............................... A-49
APPENDIX C: Premium Tax.................................................... A-50
APPENDIX D: Exchanged Contracts............................................ A-51
APPENDIX E: Average Annual Total Return.................................... A-53
</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.") We offer other variable annuities
with different fees and charges, that invest in the Eligible Funds. Your
registered representative has additional information.

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, or (2) after a Contract Owner (or the Annuitant, if the Contract is not
owned by an individual) reaches age 88 (83 in New York). For joint contract
owners, you may not make a purchase payment after the older contract owner
reaches age 86 (83 in New York.) (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.

  FOR ANY TAX QUALIFIED ACCOUNT E.G. 401(K) PLAN OR IRA, THE TAX DEFERRED
ACCRUAL FEATURE IS PROVIDED BY THE TAX QUALIFIED RETIREMENT PLAN. THEREFORE,
THERE SHOULD BE REASONS OTHER THAN TAX DEFERRAL FOR ACQUIRING AN ANNUITY
CONTRACT WITHIN A QUALIFIED PLAN.

  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 twenty 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.")

  Death Proceeds are taxable and generally are included in the income of the
recipient as follows:

  . If received under an annuity payment option, they are taxed in the same
    manner as annuity payments.

  . If distributed in a lump sum, they are taxed in the same manner as a full
    surrender.

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 12/31/99

 (AS A PERCENTAGE OF AVERAGE NET ASSETS)


<TABLE>
<CAPTION>
                                         OTHER         TOTAL         OTHER         TOTAL
                                       EXPENSES      EXPENSES      EXPENSES      EXPENSES
                          MANAGEMENT    BEFORE        BEFORE         AFTER         AFTER
                            FEES*    REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT
                          ---------- ------------- ------------- ------------- -------------
<S>                       <C>        <C>           <C>           <C>           <C>
Back Bay Advisors Money
 Market Series..........     .35%         .05%          .40%         .05%           .40%
Back Bay Advisors Bond
 Income Series..........     .40%         .08%          .48%         .08%           .48%
Salomon Brothers
 Strategic Bond
 Opportunities Series...     .65%         .16%          .81%         .16%           .81%
Salomon Brothers U.S.
 Government Series(6)        .55%         .17%          .72%         .15%           .70%
Balanced Series.........     .70%         .07%          .77%         .07%           .77%
Alger Equity Growth
 Series.................     .75%         .05%          .80%         .05%           .80%
Davis Venture Value
 Series.................     .75%         .06%          .81%         .06%           .81%
Harris Oakmark Mid Cap
 Value Series(6)........     .75%         .13%          .88%         .13%           .88%
Loomis Sayles Small Cap
 Series(6)(7)...........     .90%         .20%         1.10%         .10%          1.00%
MFS Investors Series(6).     .75%        1.28%         2.03%         .15%           .90%
MFS Research Managers
 Series(6)..............     .75%        1.28%         2.03%         .15%           .90%
Westpeak Growth and
 Income Series..........     .68%         .06%          .74%         .06%           .74%
</TABLE>

--------

* Our affiliate, New England Investment Management, LLC, is the investment
  adviser for the Series of the Zenith Fund.

                                      A-7
<PAGE>


                      METROPOLITAN SERIES FUND, INC.

OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1999

 (ANTICIPATED EXPENSES FOR 2000 FOR THE PUTNAM LARGE CAP GROWTH, STATE STREET
 RESEARCH AURORA SMALL CAP VALUE AND METLIFE MID CAP STOCK INDEX PORTFOLIOS)

 (AS A PERCENTAGE OF NET ASSETS)


<TABLE>
<CAPTION>
                                                      OTHER         TOTAL         OTHER         TOTAL
                                        12B-1       EXPENSES      EXPENSES      EXPENSES      EXPENSES
                          MANAGEMENT DISTRIBUTION    BEFORE        BEFORE         AFTER         AFTER
                            FEES*        FEE      REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT
                          ---------- ------------ ------------- ------------- ------------- -------------
<S>                       <C>        <C>          <C>           <C>           <C>           <C>
Putnam Large Cap Growth
 Portfolio(8)...........     .80%         N/A          .59%         1.39%         .20%          1.00%
Putnam International
 Stock Portfolio........     .90%         N/A          .22%         1.12%         .22%          1.12%
State Street Research
 Aurora Small Cap Value
 Portfolio(8)...........     .85%         N/A          .23%         1.08%         .20%          1.05%
Janus Mid Cap
 Portfolio(8)(9)........     .67%        .25%          .04%          .96%         .04%           .96%
Lehman Brothers
 Aggregate Bond Index
 Portfolio(8)(9)........     .25%        .25%          .15%          .65%         .15%           .65%
MetLife Stock Index
 Portfolio(9)...........     .25%        .25%          .04%          .54%         .04%           .54%
MetLife Mid Cap Stock
 Index Portfolio(8)(9)..     .25%        .25%          .65%         1.15%         .20%           .70%
Morgan Stanley EAFE
 Index Portfolio(8)(9)..     .30%        .25%         1.47%         2.02%         .40%           .95%
Russell 2000 Index
 Portfolio(8)(9)........     .25%        .25%          .64%         1.14%         .30%           .80%
</TABLE>

--------

* Metropolitan Life Insurance Company ("MetLife") is the investment adviser for
  the Portfolios of the Metropolitan Fund.

                                      A-8
<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.(10)) 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 or Metropolitan Fund Portfolios
   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>
     Back Bay Advisors Money Market............ $84.13 $108.15 $130.95 $218.29
     Back Bay Advisors Bond Income.............  84.88  110.47  135.05  226.67
     Salomon Brothers Strategic Bond
      Opportunities............................  87.95  119.96  151.79  260.47
     Salomon Brothers U.S. Government..........  86.93  116.80  146.24  249.34
     Balanced..................................  87.58  118.81  149.78  256.44
     Alger Equity Growth.......................  87.86  119.67  151.29  259.47
     Davis Venture Value.......................  87.95  119.96  151.79  260.47
     Harris Oakmark Mid Cap Value..............  88.60  121.95  155.30  267.49
     Loomis Sayles Small Cap...................  89.72  125.37  161.30  279.39
     MFS Investors.............................  88.79  122.52  156.30  269.48
     MFS Research Managers.....................  88.79  122.52  156.30  269.48
     Westpeak Growth and Income................  87.30  117.95  148.26  253.40
     Putnam Large Cap Growth...................  89.72  125.37  161.30  279.39
     Putnam International Stock................  90.83  128.78  167.25  291.14
     State Street Research Aurora Small Cap
      Value*...................................  90.18  126.79  163.78  284.30
     Janus Mid Cap*............................  89.34  124.23  159.30  275.44
     Lehman Brothers Aggregate Bond Index*.....  86.47  115.37  143.71  244.23
     MetLife Stock Index*......................  85.44  112.20  138.12  232.90
     MetLife Mid Cap Stock Index*..............  86.93  116.80  146.24  249.34
     Morgan Stanley EAFE Index*................  89.25  123.94  158.80  274.45
     Russell 2000 Index*.......................  87.86  119.67  151.29  259.47
</TABLE>

                                      A-9
<PAGE>


  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 or Metropolitan Fund Portfolios
   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)(11):

<TABLE>
<CAPTION>
                                                1 YEAR 3 YEARS 5 YEARS 10 YEARS
                                                ------ ------- ------- --------
     <S>                                        <C>    <C>     <C>     <C>
     Back Bay Advisors Money Market............ $18.99 $58.74  $100.95 $218.29
     Back Bay Advisors Bond Income.............  19.80  61.18   105.05  226.67
     Salomon Brothers Strategic Bond
      Opportunities............................  23.11  71.17   121.79  260.47
     Salomon Brothers U.S. Government..........  22.01  67.85   116.24  249.34
     Balanced..................................  22.71  69.96   119.78  256.44
     Alger Equity Growth.......................  23.01  70.87   121.29  259.47
     Davis Venture Value.......................  23.11  71.17   121.79  260.47
     Harris Oakmark Mid Cap Value..............  23.81  73.27   125.30  267.49
     Loomis Sayles Small Cap...................  25.01  76.87   131.30  279.39
     MFS Investors.............................  24.01  73.87   126.30  269.48
     MFS Research Managers.....................  24.01  73.87   126.30  269.48
     Westpeak Growth and Income................  22.41  69.06   118.26  253.40
     Putnam Large Cap Growth...................  25.01  76.87   131.30  279.39
     Putnam International Stock................  26.21  80.46   137.25  291.14
     State Street Research Aurora Small Cap
      Value*...................................  25.51  78.37   133.78  284.30
     Janus Mid Cap*............................  24.61  75.67   129.30  275.44
     Lehman Brothers Aggregate Bond Index*.....  21.51  66.34   113.71  244.23
     MetLife Stock Index*......................  20.40  63.00   108.12  232.90
     MetLife Mid Cap Stock Index*..............  22.01  67.85   116.24  249.34
     Morgan Stanley EAFE Index*................  24.51  75.37   128.80  274.45
     Russell 2000 Index*.......................  23.01  70.87   121.29  259.47
</TABLE>
--------

* Availability of these portfolios is subject to any necessary state insurance
  department approval.




--------
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) New England Investment Management voluntarily limits the expenses (other
    than brokerage costs, interest, taxes or extraordinary expenses) of
    certain series with either an expense cap or expense deferral arrangement.
    Under the expense cap, New England Investment Management bears expenses of
    the Loomis Sayles Small Cap Series that exceed 1.00% of average daily net
    assets. Under the expense deferral agreement, New England Investment
    Management bears expenses which exceed a certain limit in the year the
    series incurs them and charges those expenses to the series in a future
    year if actual expenses of the series are below the limit. The limit on
    expenses for these series are: .90% of average daily net assets for the
    Harris Oakmark Mid Cap Value, MFS Investors and MFS Research Managers
    Series; and .70% of average daily net assets for the Salomon Brothers U.S.
    Government Series. New England Investment Management may end these expense
    limits at any time.

                                     A-10
<PAGE>


(7)  In 1999, the management fee for the Loomis Sayles Small Cap Series was
     1.00%

(8)  MetLife voluntarily pays expenses (other than the management fee,
     brokerage commissions, amounts payable pursuant to a plan adopted in
     accordance with Rule 12b-1 under the Investment Company Act of 1940,
     taxes, interest and other loan costs, and any unusual one-time expenses)
     of certain Portfolios in excess of a certain percentage of net assets
     until the earlier of either total net assets of the Portfolio reaching
     $100 million or a certain date as follows:
<TABLE>
<CAPTION>
                                                    SUBSIDIZED EXPENSES
     PORTFOLIO                                         IN EXCESS OF      DATE
     ---------                                      ------------------- -------
     <S>                                            <C>                 <C>
     Putnam Large Cap Growth........................       0.20%         5/1/02
     State Street Research Aurora Small Cap Value...       0.20%         7/1/02
     MetLife Mid Cap Stock Index....................       0.20%         7/1/02
</TABLE>
  --------

      Prior to 11/8/00, MetLife paid all Expenses in excess of .25% of the
      average net assets for the Morgan Stanley EAFE Index Portfolio until the
      Portfolio's total assets reached $100 million or November 8, 2000,
      whichever came first. Beginning on 11/8/00, MetLife will pay all
      expenses in excess of .40% of the average net assets of the Morgan
      Stanley EAFE Index Portfolio until the Portfolio's assets reach $200
      million, or until May 1, 2001, whichever comes first.

      MetLife also paid all Expenses that exceeded .20% of the average net
      assets, for the Russell 2000 Index Portfolio until December 3, 1999 and
      for the Lehman Brothers Aggregate Bond Index Portfolio until July 13,
      1999. Beginning on February 22, 2000, MetLife will pay all expenses in
      excess of 0.30% of the average net assets for the Russell 2000 Index
      Portfolio until the Portfolio's assets reach $200 million, or until
      April 30, 2001, whichever comes first. MetLife also paid all Expenses
      that exceeded .20% of average net assets for the Janus Mid Cap Portfolio
      until the Portfolio's assets reached $100 million or until March 2,
      1999, whichever came first. These subsidies and other prior expense
      reimbursement arrangements can increase the performance of the
      Portfolios. MetLife can terminate this arrangement at any time upon
      notice to the Board of Directors and to Fund Shareholders.

(9)  The Metropolitan Fund has adopted a Distribution Plan under Rule 12b-1 of
     the Investment Company Act of 1940. Under the Distribution Plan the
     Portfolios pay an annual fee to compensate certain other parties for
     promoting, selling and servicing the shares of the Portfolio. These other
     parties may include the Insurance Companies (or their affiliates) and
     other broker-dealers and financial intermediaries involved in the offer
     and sale of the contracts. The Distribution Plan is described in more
     detail in the Fund's prospectus.

(10) In these examples, the average Administration Contract Charge of .07% has
     been used. (See (4), above.)

(11) 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. (See "Contingent Deferred Sales Charge" and "Annuity Options" for
     more information.)
-------------------------------------------------------------------------------

Condensed financial information containing the Accumulation Unit Value history
appears at the end of this prospectus (p. A-46).

                                     A-11
<PAGE>


                             HOW THE CONTRACT WORKS

   PURCHASE PAYMENT             CONTRACT VALUE           DAILY DEDUCTION FROM
                                                           VARIABLE ACCOUNT
 . You can make a             . You allocate              . We deduct a
   one-time                     payments to your            mortality and
   investment or                choice, within              expense risk
   establish an                 limits, of                  charge of 1.30%
   ongoing                      Eligible Funds              on an annualized
   investment                   and/or the Fixed            basis from the
   program, subject             Account.                    Contract Value
   to the Company's           . The Contract                daily.
   minimum and                  Value reflects     ----   . We deduct an
   maximum purchase             purchase                    Administration
   payment                      payments,                   Asset Charge of
   guidelines.                  investment                  0.10% on an
                                experience,                 annualized basis
  ADDITIONAL PAYMENTS           interest credited           from the Contract
                                on Fixed Account            Value daily.
 . Generally may be    ----     allocations,              . Investment
   made at any time,            partial                     advisory fees and
   (subject to                  surrenders, loans           operating
   Company limits),             and Contract                expenses are
   but no purchase              charges.                    deducted from the
   payments allowed:          . The Contract                Eligible Fund
   (1) during the               Value invested in           assets daily.
   seven years                  the Eligible
   immediately                  Funds is not              ANNUAL CONTRACT FEE
   preceding the                guaranteed.
   Maturity Date; or          . Earnings in the           . We deduct a $30
   (2) after a                  contract are free           Administration
   Contract Owner               of any current              Contract Charge
   (or the                      income taxes (see           from the Contract
   Annuitant, if not            page A-35).                 Value in the
   owned in an                . You may change              Variable Account
   individual                   the allocation of           on each
   capacity) reaches            future payments,            anniversary while
   age 88 (83 in New            within limits, at  ----     the Contract is
   York).                       any time.                   in-force, other
 . Minimum $250 with          . Prior to                    than under a
   certain                      annuitization,              Payment Option.
   exceptions (see              you may transfer            (May be waived
   page A-17).                  Contract Value              for certain large
                                among accounts,             Contracts.) We
         LOANS                  currently free of           deduct a pro rata
                                charge. (Special            portion on full
 . Loans are           ----     limits apply to             surrender and at
   available to                 the Fixed Account           annuitization.
   participants of              and to situations
   certain tax                  that involve               SURRENDER CHARGE
   qualified pension            "market timing.")
   plans (see page            . Contract Value            . Consists of
   A-24).                       may not be                  Contingent
                                allocated among             Deferred Sales
      SURRENDERS       ----     more than ten               Charge based on
                                Accounts                    purchase payments
 . Up to the greater            (including the     ----     made (see pages
   of: 10% of the               Fixed Account) at           A-28 to A-30).
   Contract Value at            any time.
   the beginning of                                       PREMIUM TAX CHARGE
   the Contract               RETIREMENT BENEFITS
   Year; and the                                          . Where applicable,
   excess of the              . Lifetime income             we deduct a
   Contract Value               options.                    premium tax
   over purchase              . Fixed and/or                charge from the
   payments that are            variable payout             Contract Value
   subject to the               options.                    when annuity
   Contingent                 . Retirement                  benefits commence
   Deferred Sales               benefits may be             (or, in certain
   Charge on the                taxable.                    states, at the
   date of                    . Premium tax                 earliest of: full
   surrender, can be            charge may apply.           or partial
   withdrawn each                                           surrender;
   year without                                             annuitization; or
   incurring a                                              payment of the
   Contingent                                               Death Proceeds
   Deferred Sales                                           due to the death
   Charge, subject                                          of a Contract
   to any applicable                                        Owner or, if
   tax law                                                  applicable, of
   restrictions.                                            the Annuitant).
 . Surrenders may be
   taxable to the                                         ADDITIONAL BENEFITS
   extent of gain.
 . Prior to age                                           . You pay no taxes
   59 1/2 a 10% penalty                                     on your
   tax may apply. (A                                        investment as
   25% penalty tax                                          long as it
   may apply upon                                           remains in the
   surrender from a                                         Contract.
   SIMPLE IRA within                                      . You may surrender
   the first two                                            the Contract at
   years.)                                                  any time for its
 . Premium tax                                              Contract Value,
   charge may apply.                                        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                                          . We may waive the
   surrenders or                                            Contingent
   outstanding loans                                        Deferred Sales
   (and, where                                              Charge on
   applicable, net                                          evidence of
   of premium tax                                           terminal illness,
   charges).                                                confinement to a
 . Death proceeds                                           nursing home, or
   may be taxable.                                          permanent and
 . Premium tax                                              total disability,
   charge may apply.                                        if this benefit
                                                            is available in
                                                            your state.



                                      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 ("New England Mutual"). On August 30, 1996, New England
Mutual merged into MetLife, an insurance company whose principle office is One
Madison Avenue, New York, NY 10010. MetLife is a wholly-owned subsidiary of
MetLife, Inc., a publicly traded company. MetLife then 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 twenty 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>

  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.

  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 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.

  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.

  BALANCED SERIES (FORMERLY THE LOOMIS SAYLES BALANCED SERIES)

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

  ALGER EQUITY GROWTH SERIES

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

  DAVIS VENTURE VALUE SERIES

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

  HARRIS OAKMARK MID CAP VALUE SERIES (FORMERLY THE GOLDMAN SACHS MIDCAP VALUE
SERIES)

  The Harris Oakmark Mid Cap Value Series investment objective is long-term
capital appreciation.

  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 equivalents.

  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.

                                     A-14
<PAGE>

  WESTPEAK GROWTH AND INCOME SERIES

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

  PUTNAM LARGE CAP GROWTH PORTFOLIO

  The Putnam Large Cap Growth Portfolio's investment objective is capital
 appreciation.

  PUTNAM INTERNATIONAL STOCK PORTFOLIO

  The Putnam International Stock Portfolio's investment objective is long-term
growth of capital.

  STATE STREET RESEARCH AURORA SMALL CAP VALUE PORTFOLIO*

  The State Street Research Aurora Small Cap Value Portfolio's investment
objective is high total return, consisting principally of capital
appreciation.

  JANUS MID CAP PORTFOLIO*

  The Janus Mid Cap Portfolio's investment objective is long-term growth of
capital.

  LEHMAN BROTHERS AGGREGATE BOND INDEX PORTFOLIO*

  The Lehman Brothers Aggregate Bond Index Portfolio's investment objective is
to equal the performance of the Lehman Brothers Aggregate Bond Index.

  METLIFE STOCK INDEX PORTFOLIO*

  The MetLife Stock Index Portfolio's investment objective is to equal the
performance of the Standard & Poor's 500 Composite Stock Price Index ("S&P 500
Index").

  METLIFE MID CAP STOCK INDEX PORTFOLIO*

  The MetLife Mid Cap Stock Index Portfolio's investment objective is to equal
the performance of the Standard & Poor's MidCap 400 Composite Stock Index
("S&P MidCap 400 Index").

  MORGAN STANLEY EAFE INDEX PORTFOLIO*

  The Morgan Stanley EAFE Index Portfolio's investment objective is to equal
the performance of Morgan Stanley Capital International Europe Australasia Far
East Index ("MSCI EAFE Index").

  RUSSELL 2000 INDEX PORTFOLIO*

  The Russell 2000 Index Portfolio's investment objective is to equal the
return of the Russell 2000 Index.

--------
   * Availability of these Portfolios is subject to any necessary state
     insurance department approvals.

                                     A-15
<PAGE>

INVESTMENT ADVICE

  New England Investment Management, LLC, an indirect, wholly-owned subsidiary
of the Company, serves as investment adviser for each Series of the New
England Zenith Fund (the "Zenith Fund"). Each Series also has a subadviser,
shown in the chart below, each of which is registered with the SEC as an
investment adviser under the Investment Advisers Act of 1940.

<TABLE>
<CAPTION>
SERIES                                  SUB-ADVISER
------                                  -----------
<S>                                     <C>
Back Bay Advisors Money Market Series.  Back Bay Advisors, L.P.
Back Bay Advisors Bond Income Series..  Back Bay Advisors, L.P.
Salomon Brothers Strategic Bond
 Opportunities*.......................  Salomon Brothers Asset Management Inc.
Salomon Brothers U.S. Government
 Series...............................  Salomon Brothers Asset Management Inc.
Balanced Series.......................  Wellington Management Company, LLP.
Alger Equity Growth Series............  Fred Alger Management, Inc.
Davis Venture Value Series............  Davis Selected Advisers, L.P.**
Harris Oakmark Mid Cap Value Series...  Harris Associates L.P.
Loomis Sayles Small Cap Series........  Loomis Sayles & Company, L.P.
MFS Investors Series..................  Massachusetts Financial Services Company
MFS Research Managers Series..........  Massachusetts Financial Services Company
Westpeak Growth and Income Series.....  Westpeak Investment Advisors, L.P.
</TABLE>
--------


  * 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.

 ** Davis Selected Advisers may delegate any of its responsibilities to Davis
    Selected Advisers--NY, Inc., a wholly-owned subsidiary of Davis Selected.

  In the case of the Back Bay Advisors Money Market Series, Back Bay Advisors
Bond Income Series, Westpeak Growth and Income Series, Harris Oakmark Mid Cap
Value Series and Loomis Sayles Small Cap Series, New England Investment
Management became the adviser on May 1, 1995. The Harris Oakmark Mid Cap Value
Series' subadviser was Loomis, Sayles until May 1, 1998 when Goldman Sachs
Asset Management, a separate operating division of Goldman Sachs & Co., became
the subadviser. Harris Associates became the subadviser on May 1, 2000.
The Balanced Series' subadviser was Loomis, Sayles until May 1, 2000, when
Wellington Management Company became the subadviser.

  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.

  MetLife is the investment adviser for the Metropolitan Series Fund
Portfolios. Putnam Investment Management, Inc. is the sub-investment manager
of the Putnam Large Cap Growth Portfolio. Putnam Investment Management, Inc.
became the sub-investment manager of the Putnam International Stock Portfolio
on January 24, 2000. Prior to that time Santander Global Advisors, Inc. served
as sub-investment manager. State Street Research & Management Company is the
sub-investment manager for the State Street Research Aurora Small Cap Value
Portfolio. Janus Capital Corporation is the sub-investment manager for the
Janus Mid Cap Portfolio. For more information regarding the investment adviser
and the sub-investment manager of the Metropolitan Series Fund Portfolios, see
the Metropolitan Series Fund prospectus attached at the end of this prospectus
and its Statement of Additional Information.

  You can also get information about the Zenith Fund or Metropolitan Fund
(including a copy of the SAI) by accessing the Securities and Exchange
Commission's website at http://www.sec.gov.

  An investment adviser or affiliates thereof may compensate NELICO and/or
certain affiliates for administrative, distribution, or other services
relating to the Eligible Funds. We (or our affiliates) may also be compensated
with

                                     A-16
<PAGE>


12b-1 fees from Eligible Funds. This compensation is based on assets of the
Eligible Funds attributable to the Contracts and certain other variable
insurance products that we and our affiliates issue. Some advisers, affiliates
and/or Eligible Funds may pay us more than others.

SUBSTITUTION OF INVESTMENTS

  If investment in the Eligible Funds or a particular Series is no longer
possible, in our judgment becomes inappropriate for the purposes of the
Contract, or for any other reason in our sole discretion, we may substitute
another Eligible Fund or Funds without your consent. The substituted fund may
have different fees and expenses. Substitution may be made with respect to
existing investments or the investment of future purchase payments, or both.
However, we will not make such substitution without any necessary approval of
the Securities and Exchange Commission. Furthermore, we may close sub-accounts
to allocation of purchase payments or Contract Value, or both, at any time in
our sole discretion.

                               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

  We will issue the Contract to an individual through the age of 87 (through
age 82 in New York). We will issue the Contract to joint contract owners
through the age of 85 (through age 82 in New York), 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 Nvest 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

                                     A-17
<PAGE>

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.

  NO PURCHASE PAYMENTS MAY BE MADE: (1) WITHIN SEVEN YEARS PRIOR TO THE
CONTRACT'S MATURITY DATE; OR (2) AFTER A CONTRACT OWNER (OR THE ANNUITANT, IF
THE CONTRACT IS NOT OWNED IN AN INDIVIDUAL CAPACITY) REACHES AGE 88 (83 IN NEW
YORK,). FOR JOINT CONTRACT OWNERS, YOU MAY NOT MAKE A PURCHASE PAYMENT AFTER
THE OLDER CONTRACT OWNER REACHES AGE 86 (AGE 83 IN NEW YORK).

  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 twenty 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.")

                                     A-18
<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 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.

  For Contracts issued in New York, the minimum guaranteed death benefit will
be recalculated at the beginning of each contract anniversary.

--------------------------------------------------------------------------------
EXAMPLE: Assume that we issue your contract with a $10,000 purchase payment on
         1/1/01. 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 7/1/01,
         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 12/1/01, 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 12/31/01 the Contract Value has decreased to $10,050.
         The minimum guaranteed death benefit remains at $10,165 and the Death
         Proceeds payable on 12/31/01 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.

                                     A-19
<PAGE>

  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.

  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

                                     A-20
<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.

  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.

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.

  The Metropolitan Fund may restrict or refuse purchases or redemptions of
shares in their Portfolios as a result of certain market timing activities.
You should read the prospectuses of these Eligible Funds for more details.

  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.

                                     A-21
<PAGE>


  We may distribute your Contract Value among no more than twenty 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 twenty 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. You may not participate in a dollar cost averaging
program while you are participating in the asset rebalancing or systematic
withdrawal program. (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. Subject to state availability and to the extent allowed
  -------------------
by state law, we may credit an interest rate different from the current Fixed
Account rate, to eligible payments which you allocate to a Guaranteed Account
we establish for the purpose of enhanced dollar cost averaging. The Guaranteed
Account is part of our general account. Amounts in a Guaranteed Account are
subject to the following limitations.

  . 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.

  Under enhanced dollar cost averaging, you currently may select a duration of
six or twelve months. The first transfer will be made on the date amounts are
allocated to the enhanced dollar cost averaging option. If amounts are
received on the 29th, 30th, or 31st of the month, dollar cost averaging
transactions will be made on the 1st day of the following month. Subsequent
transfers will be made on the same day in subsequent months. If the selected
day is not a business day, the dollar cost averaging transaction will occur on
the next business day.

  The transfer amount will be equal to the amount allocated to the enhanced
dollar cost averaging option divided by the selected duration in months. For
example, a $12,000 allocation to a six-month enhanced dollar cost averaging
option will consist of a $2,000 transfer each month for six months, and may
include a final transfer of any remaining amounts, including the interest
credited, separately as a seventh transfer.

  If a subsequent premium is allocated to an enhanced rate dollar cost
averaging option while dollar cost averaging transfers are currently active,
the subsequent payment will be allocated to the active enhanced dollar cost
averaging option (6 or 12 months). The monthly dollar cost averaging transfer
amount will be increased by the subsequent investment amount divided by the
number of months in the selected duration period for the program. Using our
example above, a subsequent $6,000 allocation to a 6 month dollar cost
averaging program will increase the dollar cost averaging transfer amount from
$2,000 to $3,000 ($12,000/6 + $6,000/6). Dollar cost averaging transfers will
be made on a first-in first-out basis. If a subsequent premium is allocated to
an enhanced rate dollar cost averaging option, the program will end when the
assets are exhausted (which may be later than the selected period).

  Contact your agent for more information.

ASSET REBALANCING

  We offer an asset rebalancing program for Contract Value. Contract Value
allocated to the sub-accounts can be expected to increase or decrease at
different rates due to market fluctuations. An asset rebalancing program

                                     A-22
<PAGE>


automatically reallocates your Contract Value among the sub-accounts
periodically (quarterly, semi-annually or annually) to return the allocation
to the allocation percentages you specify. Asset rebalancing is intended to
transfer Contract Value from those sub-accounts that have increased in value
to those that have declined, or not increased as much, in value. Over time,
this method of investing may help you "buy low and sell high," although there
can be no assurance that this objective will be achieved. Asset rebalancing
does not guarantee profits, nor does it assure that you will not have losses.

  You may select an asset rebalancing program when you apply for the contract
or at a later date by contacting our Home Office. You specify the percentage
allocations to which your contract value will be reallocated among the sub-
accounts (excluding the Fixed Account). You may not participate in the asset
rebalancing program while you are participating in the dollar cost averaging
program. On the last day of each period on which the New York Stock Exchange
is open, we will transfer Contract Value among the sub-accounts to the extent
necessary to return the allocation to your specifications. Asset rebalancing
will continue until you notify us in writing or by telephone at our Home
Office. Asset rebalancing cannot continue beyond the Maturity Date or once
annuity payments have commenced. Currently, we don't count transfers made
under an asset rebalancing program for purposes of the transfer rules
described above.

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.")

  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.

                                     A-23
<PAGE>

  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.

  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.

                                     A-24
<PAGE>

  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.

  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). For more information, please refer to "Tax Treatment of Loans"
in this prospectus.

  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.

  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 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.

                                     A-25
<PAGE>

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.

  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.

  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)

                                     A-26
<PAGE>

   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.

CONFIRMING TRANSACTIONS

  We will send out written statements confirming that a transaction was
recently completed. Certain transactions may be confirmed quarterly. Unless
you inform us of any errors within 60 days of receipt, we will consider these
communications to be accurate and complete.

                      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.

  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

                                     A-27
<PAGE>

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); or (b) in some circumstances, a withdrawal of the
commuted value of amounts that you applied to an annuity payment option.

  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.

                                     A-28
<PAGE>

  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.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
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
                                                                           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.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
 EXAMPLE: Assume that you make a $10,000 purchase payment into the Contract on 6/1/00 and you make
          another $10,000 purchase payment on 2/1/01. The following illustrates the Contingent
          Deferred Sales Charge that would apply on partial surrenders in two hypothetical

                          HYPOTHETICAL CONTRACT VALUE

                                                                            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
   partial surrender
   on 12/1/01............      $22,000         $25,000       $5,000        $2,200        $5,000

   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 6/1/00
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
                                                                           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 1/1/05....     $30,000         $33,000       $13,000       $3,000       $13,000

   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 6/1/00
and $2,000 of the $10,000 purchase payment that you made on 2/1/01. 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.
---------------------------------------------------------------------------------------------------
</TABLE>

  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.


                                     A-29
<PAGE>

  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 (if elected prior to age 85), 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.)

  . 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.

  . 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 an
affiliate.

  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

                                     A-30
<PAGE>

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 1.00%
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.

                               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.

                                     A-31
<PAGE>

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.

    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.

--------
* 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-32
<PAGE>

  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.

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.

  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 the Plan was
  established prior to January 1, 1997;

    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.

                                     A-33
<PAGE>

  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.

                           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

                                     A-34
<PAGE>

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.

  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 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.

  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

                                     A-35
<PAGE>

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.

  Investment in the Contract. 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.

  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.

  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,

                                     A-36
<PAGE>

selection, or exchange should contact a competent tax adviser with respect to
the potential tax effects of such a transaction.

  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, 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.

                                     A-37
<PAGE>

  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.

                                     A-38
<PAGE>

(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 2000 the deductions are phased out and eventually eliminated, on a pro
rata basis, for adjusted gross income between $32,000 and $42,000 for an
individual, between $52,000 and $62,000 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 $170,000 for 2000) 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

  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

                                     A-39
<PAGE>


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 modified 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 for 2000. 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

  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

                                     A-40
<PAGE>

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. A 10% penalty
tax may apply to amounts attributable to a conversion from an IRA if they are
distributed during the five taxable years beginning with the year in which the
conversion was made.

  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 a period not extending
beyond 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-41
<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 meet
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-42
<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 Corporation, the principal distributor of the
Contracts and a wholly-owned subsidiary of NELICO, 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 8% 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.

  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

                                     A-43
<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.

                      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)
historical and hypothetical 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.


                                     A-44
<PAGE>

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.

  We may also illustrate growth and value of a specified purchase payment or
payments in the same manner as described above based on hypothetical returns.

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>

                            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>
Money Market Sub-Account
 04/19/95* to 12/31/95.............   1.824171      1.877438           --
 01/01/96 to 12/31/96..............   1.877438      1.946086           --
 01/01/97 to 12/31/97..............   1.946086      2.021482           --
 01/01/98 to 12/31/98..............   2.021482      2.098320         3,737
 01/01/99 to 12/31/99..............   2.098320      2.171899        21,356

Bond Income Sub-Account
 04/19/95* to 12/31/95.............   2.684861      3.018347           --
 01/01/96 to 12/31/96..............   3.018347      3.113250           --
 01/01/97 to 12/31/97..............   3.113250      3.404265           --
 01/01/98 to 12/31/98..............   3.404265      3.660529         2,055
 01/01/99 to 12/31/99..............   3.660529      3.592823        10,828

Strategic Bond Opportunities Sub-
 Account
 04/19/95* to 12/31/95.............   1.030925      1.158151           --
 01/01/96 to 12/31/96..............   1.158151      1.305874           --
 01/01/97 to 12/31/97..............   1.305874      1.430333           --
 01/01/98 to 12/31/98..............   1.430333      1.439188         2,999
 01/01/99 to 12/31/99..............   1.439188      1.439668        10,480

U.S. Government Sub-Account
 04/19/95* to 12/31/95.............   1.046628      1.138448           --
 01/01/96 to 12/31/96..............   1.138448      1.159699           --
 01/01/97 to 12/31/97..............   1.159699      1.240432           --
 01/01/98 to 12/31/98..............   1.240432      1.316242         3,447
 01/01/99 to 12/31/99..............   1.316242      1.300191        11,140

Balanced Sub-Account
 04/19/95* to 12/31/95.............   1.073395      1.226569           --
 01/01/96 to 12/31/96..............   1.226569      1.413947           --
 01/01/97 to 12/31/97..............   1.413947      1.619885           --
 01/01/98 to 12/31/98..............   1.619885      1.742881         4,075
 01/01/99 to 12/31/99..............   1.742881      1.631646        21,661

Equity Growth Sub-Account
 04/19/95* to 12/31/95.............   1.091176      1.401562           --
 01/01/96 to 12/31/96..............   1.401562      1.563978           --
 01/01/97 to 12/31/97..............   1.563978      1.937505           --
 01/01/98 to 12/31/98..............   1.937505      2.823513         4,586
 01/01/99 to 12/31/99..............   2.823513      3.734589        35,476
</TABLE>
--------
*Date on which the sub-account first became available.

                                      A-46
<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>
Venture Value Sub-Account
 04/19/95* to 12/31/95.............   1.071349      1.322415            --
 01/01/96 to 12/31/96..............   1.322415      1.640833            --
 01/01/97 to 12/31/97..............   1.640833      2.160040            --
 01/01/98 to 12/31/98..............   2.160040      2.437055         4,389
 01/01/99 to 12/31/99..............   2.437055      2.824171        33,707

Mid Cap Value Sub-Account
 04/19/95* to 12/31/95.............   1.200515      1.438865            --
 01/01/96 to 12/31/96..............   1.436949      1.669358            --
 01/01/97 to 12/31/97..............   1.666295      1.932280            --
 01/01/98 to 04/30/98..............   1.927771      2.193289            --
 05/01/98 to 12/31/98..............   2.193289      1.797180         1,480
 01/01/99 to 12/31/99..............   1.797180      1.778414         6,534

Small Cap Sub-Account
 04/19/95* to 12/31/95.............   1.024415      1.218215            --
 01/01/96 to 12/31/96..............   1.218215      1.569712            --
 01/01/97 to 12/31/97..............   1.569712      1.932590            --
 01/01/98 to 12/31/98..............   1.932590      1.873409         2,233
 01/01/99 to 12/31/99..............   1.873409      2.433952        11,469

MFS Investors Sub-Account
 07/01/99* to 12/31/99.............   1.025560      1.018894         3,629

MFS Research Managers Sub-Account
 07/01/99* to 12/31/99.............   1.058483      1.186801         3,133

Growth and Income Sub-Account
 04/19/95* to 12/31/95.............   1.191883      1.483784            --
 01/01/96 to 12/31/96..............   1.483784      1.727747            --
 01/01/97 to 12/31/97..............   1.727747      2.274012            --
 01/01/98 to 12/31/98..............   2.274012      2.790691         4,235
 01/01/99 to 12/31/99..............   2.790691      3.009259        27,575

Putnam International Stock Sub-Ac-
 count**
(previously the Morgan Stanley In-
 ternational Magnum Equity Sub-
 Account)
 04/19/95* to 12/31/95.............   1.034298      1.072382            --
 01/01/96 to 12/31/96..............   1.072382      1.127927            --
 01/01/97 to 12/31/97..............   1.127927      1.097793            --
 01/01/98 to 12/31/98..............   1.097793      1.161274         2,163
 01/01/99 to 12/31/99..............   1.161274      1.426996        14,100
</TABLE>
--------

 *Date on which the sub-account first became available.

**On December 1, 2000, the Putnam International Stock Portfolio was substituted
  for the Morgan Stanley International Magnum Equity Series, which is no longer
  available for investment under the Contract.

                                      A-47
<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-48
<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-49
<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%
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-50
<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, including any CDSC, 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 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-51
<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-52
<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, the New England Zenith Fund (the "Zenith
Fund") and the Metropolitan 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 Harris Oakmark Mid Cap Value Series
(formerly the Goldman Sachs Midcap Value Series) commenced operations on April
30, 1993. The Small Cap Series commenced operations on May 2, 1994. The MFS
Investors and MFS Research Managers Series commenced operations on April 30,
1999 and became available to American Growth Series Contractholders on July 1,
1999. The six other series of the Zenith Fund commenced operations on October
31, 1994. The Putnam International Stock Portfolio commenced operations on
October 31, 1994 and became available to Contractholders on May 1, 2000. (On
December 1, 2000, the Putnam International Stock Portfolio was substituted for
the Morgan Stanley International Magnum Equity Series, which is no longer
available for investment under the Contract. The Morgan Stanley International
Magnum Equity Series commenced operations on October 31, 1994. Performance
figures for dates on or before December 1, 2000 reflect performance of the
Morgan Stanley International Magnum Equity Series.) The Putnam Large Cap
Growth Portfolio commenced operations and became available to Contractholders
on May 1, 2000. The remaining Portfolios of the Metropolitan Fund became
available to contractholders on January 22, 2001 and commenced operations as
follows: State Street Research Aurora Small Cap Value and the MetLife Mid Cap
Stock Index Portfolio, July 5, 2000; Janus Mid Cap Portfolio, March 3, 1997;
Lehman Brothers Aggregate Bond Index, Morgan Stanley EAFE Index, and Russell
2000 Index Portfolios, November 9, 1998; and MetLife Stock Index Portfolio,
May 1, 1990.

  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, 1999 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, 1999 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, 1999. 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. 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.


                                     A-53
<PAGE>

                    SUB-ACCOUNT AVERAGE ANNUAL TOTAL RETURN

  For purchase payment allocated to the Back Bay Advisors Money Market Sub-
Account

<TABLE>
<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year..........................................................  -4.92%
      Since Inception of the Sub-Account..............................   0.25%

  For purchase payment allocated to the Back Bay Advisors Bond Income Sub-
Account

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year..........................................................  -9.99%
      Since Inception of the Sub-Account..............................   3.14%

  For purchase payment allocated to the Salomon Brothers Strategic Bond
Opportunities Sub-Account

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year..........................................................  -8.21%
      Since Inception of the Sub-Account..............................   4.29%

  For purchase payment allocated to the Salomon Brothers U.S. Government Sub-
Account

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year..........................................................  -9.39%
      Since Inception of the Sub-Account..............................   1.31%

  For purchase payment allocated to the Balanced Sub-Account*

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year.......................................................... -14.28%
      Since Inception of the Sub-Account..............................   6.42%

  For purchase payment allocated to the Alger Equity Growth Sub-Account

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year..........................................................  23.27%
      Since Inception of the Sub-Account..............................  27.52%

  For purchase payment allocated to the Davis Venture Value Sub-Account

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year..........................................................   6.88%
      Since Inception of the Sub-Account..............................  20.53%

  For purchase payment allocated to the Harris Oakmark Mid Cap Value Sub-
Account**

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year..........................................................  -9.23%
      Since Inception of the Sub-Account..............................   5.90%
</TABLE>

  For purchase payment allocated to the Loomis Sayles Small Cap Sub-Account

<TABLE>
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1999
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. 20.92%
      Since Inception of the Sub-Account................................. 18.04%
</TABLE>


                                      A-54
<PAGE>


  For purchase payment allocated to the MFS Investors Sub-Account

<TABLE>
<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      Since Inception of the Sub-Account.............................. -16.06%

  For purchase payment allocated to the MFS Research Managers Sub-Account

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      Since Inception of the Sub-Account..............................   7.40%
</TABLE>

  For purchase payment allocated to the Westpeak Growth and Income Sub-Account

<TABLE>
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1999
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. -0.83%
      Since Inception of the Sub-Account................................. 19.38%

  For purchase payment allocated to the Putnam International Stock Sub-
Account***
  (previously the Morgan Stanley International Magnum Equity Sub-Account)

<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1999
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. 13.88%
      Since Inception of the Sub-Account.................................  3.62%
</TABLE>
--------

*   Wellington Management Company, LLP became the subadviser on May 1, 2000.
    Prior to that time, Loomis Sayles & Company, LLP served as subadviser.

**  Harris Associates L.P. became the subadviser on May 1, 2000. Prior to that
    time, other entities served as subadviser.

*** On December 1, 2000, the Putnam International Stock Portfolio was
    substituted for the Morgan Stanley International Magnum Equity Series, which
    is no longer available for investment under the Contract. Putnam Investment
    Management, Inc. became the sub-investment manager of the Putnam
    International Stock Portfolio on January 24, 2000. Prior to that time,
    Santander Global Advisors, Inc. served as sub-investment manager. Values
    represent the performance of the Morgan Stanley International Magnum Equity
    Series.

                                     A-55
<PAGE>

                FUND TOTAL RETURN ADJUSTED FOR CONTRACT CHARGES
                                (NON-STANDARD)

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

<TABLE>
<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year..........................................................  -4.92%
      5 Years.........................................................   0.51%
      10 years........................................................   0.81%
      Since Inception of the Fund.....................................   2.50%

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

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year..........................................................  -9.99%
      5 Years.........................................................   4.42%
      10 years........................................................   4.79%
      Since Inception of the Fund.....................................   6.30%

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

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year..........................................................  -8.21%
      5 Years.........................................................   5.11%
      Since Inception of the Fund.....................................   4.43%

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

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year..........................................................  -9.39%
      5 years.........................................................   2.23%
      Since Inception of the Fund.....................................   2.13%

  For purchase payment allocated to the Balanced Series*

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year.......................................................... -14.28%
      5 Years.........................................................   7.78%
      Since Inception of the Fund.....................................   7.30%

  For purchase payment allocated to the Alger Equity Growth Series

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year..........................................................  23.27%
      5 Years.........................................................  29.26%
      Since Inception of the Fund.....................................  26.84%

  For purchase payment allocated to the Davis Venture Value Series

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year..........................................................   6.88%
      5 Years.........................................................  21.92%
      Since Inception of the Fund.....................................  20.02%
</TABLE>
--------

 * Wellington Management Company, LLP became the subadviser of the Balanced
   Series on May 1, 2000. Prior to that time, Loomis Sayles & Company, L.P.
   served as subadviser.

                                     A-56
<PAGE>

  For purchase payment allocated to the Harris Oakmark Mid Cap Value Series*

<TABLE>
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1999
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. -9.23%
      5 Years............................................................  7.18%
      Since Inception of the Fund........................................  6.65%

  For purchase payment allocated to the Loomis Sayles Small Cap Series

<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1999
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. 20.92%
      5 Years............................................................ 18.18%
      Since Inception of the Fund........................................ 14.46%

  For purchase payment allocated to the MFS Investors Series

<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1999
                           -------------------------------
      <S>                                                                 <C>
      Since Inception of the Fund........................................ -9.63%

  For purchase payment allocated to the MFS Research Managers Series

<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1999
                           -------------------------------
      <S>                                                                 <C>
      Since Inception of the Fund........................................ 14.82%
</TABLE>

  For purchase payment allocated to the Westpeak Growth and Income Series

<TABLE>
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1999
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. -0.83%
      5 Years............................................................ 20.06%
      Since Inception of the Fund........................................ 15.73%

  For purchase payment allocated to the Putnam International Stock
Portfolio***

<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1999
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. 13.88%
      5 Years............................................................  3.55%
      Since Inception of the Fund........................................  3.78%
</TABLE>

  For purchase payment allocated to the Janus Mid Cap Portfolio

<TABLE>
<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year.......................................................... 110.35%
      Since Inception.................................................  56.39%
</TABLE>
--------

*** On December 1, 2000, the Putnam International Stock Portfolio was
    substituted for the Morgan Stanley International Magnum Equity Series, which
    is no longer available for investment under the Contract. Putnam Investment
    Management, Inc. became the sub-investment manager of the Putnam
    International Stock Portfolio on January 24, 2000. Prior to that time,
    Santander Global Advisors, Inc., served as sub-investment manager. Values
    represent the performance of the Morgan Stanley International Magnum Equity
    Series.

                                     A-57
<PAGE>


  For purchase payment allocated to the Lehman Brothers Aggregate Bond Index
Portfolio

<TABLE>
<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year.......................................................... -11.11%
      Since Inception.................................................  -9.02%
</TABLE>

  For purchase payment allocated to the MetLife Stock Index Portfolio

<TABLE>
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1999
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. 10.06%
      5 Years............................................................ 24.09%
      Since Inception.................................................... 15.43%
</TABLE>

  For purchase payment allocated to the Morgan Stanley EAFE Index Portfolio

<TABLE>
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1999
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. 13.89%
      Since Inception.................................................... 19.88%
</TABLE>

  For purchase payment allocated to the Russell 2000 Index Portfolio

<TABLE>
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1999
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. 11.75%
      Since Inception.................................................... 15.13%
</TABLE>
--------
* Harris Associates L.P. became the subadviser on May 1, 2000. Prior to that
  time, other entities served as subadviser.

  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-58
<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-19
ANNUITY PAYMENTS.......................................................... II-19
HYPOTHETICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS...................... II-21
HISTORICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS........................ II-25
THE FIXED ACCOUNT......................................................... II-28
EXPERTS................................................................... II-29
LEGAL MATTERS............................................................. II-29
APPENDIX A................................................................ II-30
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-59
<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)

                             JANUARY 22, 2001

  This Statement of Additional Information is not a prospectus. This Statement
of Additional Information relates to the Prospectus dated January 22, 2001 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-201-01

                                     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-20
Annuity Payments.......................................................... II-20
Hypothetical Illustrations of Annuity Income Payouts...................... II-22
Historical Illustrations of Annuity Income Payouts........................ II-26
The Fixed Account......................................................... II-29
Experts................................................................... II-30
Legal Matters............................................................. II-30
Appendix A................................................................ II-31
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"). MetLife
is a wholly-owned subsidiary of MetLife, Inc., a publicly traded company.

                   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 200 BERKELEY 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, 1998, 1999 AND 2000, THE COMPANY PAID COMMISSIONS IN THE
AMOUNT OF $10,931,428.85, $13,588,577.45, AND $14,406,330.95 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. 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. See Appendix A of this Statement of Additional Information.

  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

  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 Harris Oakmark Mid Cap Value Series
(formerly the Goldman Sachs Midcap Value Series) commenced operations on April
30, 1993. The Small Cap Series commenced operations on May 2, 1994. The MFS
Investors and MFS Research Managers Series commenced operations on April 30,
1999 and became available to American Growth Series Contractholders on July 1,
1999. The five other series of the Zenith Fund commenced operations on October
31, 1994. The Putnam International Stock Portfolio commenced operations on
October 31, 1994 and became available to Contractholders on May 1, 2000. (On
December 1, 2000, the Putnam International Stock Portfolio was substituted for
the Morgan Stanley International Magnum Equity Series, which is no longer
available for investment under the Contract. The Morgan Stanley International
Magnum Equity Series commenced operations on October 31, 1994. Performance
figures for dates on or before December 1, 2000 reflect the performance of the
Morgan Stanley International Magnum Equity Series.) The Putnam Large Cap
Growth Portfolio commenced operations and became available to Contractholders
on May 1, 2000. The remaining Portfolios of the Metropolitan Fund became
available to contractholders on January 22, 2001 and commenced operations as
follows: State Street Research Aurora Small Cap Value and the MetLife Mid Cap
Stock Index Portfolios, July 5, 2000; Janus Mid Cap Portfolio, March 3, 1997;
Lehman Brothers Aggregate Bond Index, Morgan Stanley EAFE Index, and Russell
2000 Index Portfolios, November 9, 1998; and MetLife Stock Index Portfolio,
May 1, 1990.

  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 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, 1999 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, 1999 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, 1999. 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. See Appendix E of the
prospectus for Sub-account average annual total return and Fund total return
adjusted for contract charges.

  The following chart illustrates how the average annual total return was
determined for the five year period ending December 31, 1999 for the sub-
account investing in the Back Bay Advisors Bond Income Series based on the
assumptions used above. 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.

                                     II-4
<PAGE>

<TABLE>
<CAPTION>
                                                                      AVERAGE
                                          UNIT   CONTRACT SURRENDER ANNUAL TOTAL
   DATE                         UNITS    VALUE    VALUE     VALUE      RETURN
   ----                        -------- -------- -------- --------- ------------
   <S>                         <C>      <C>      <C>      <C>       <C>
   December 31, 1994.......... 395.9726 2.525427 1,000.00      --        --
   December 31, 1995.......... 386.0334 3.018347 1,165.18 1,105.18     10.52%
   December 31, 1996.......... 376.3972 3.113250 1,171.82 1,121.82      5.91%
   December 31, 1997.......... 367.5847 3.404265 1,251.36 1,211.36      6.59%
   December 31, 1998.......... 359.3892 3.660529 1,315.55 1,285.55      6.48%
   December 31, 1999.......... 351.0392 3.592823 1,261.22 1,241.22      4.41%
</TABLE>

  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 Harris Oakmark Mid Cap Value Series; May 2, 1994 for the Loomis
Sayles Small Cap Series; May 1, 1999 for the MFS Investors and MFS Research
Managers Series; November 1, 1994 for the other series of the Zenith Fund;
November 1, 1994 for the Putnam International Stock Portfolio (performance
figures for dates on or before December 1, 2000 reflect the performance of the
Morgan Stanley International Magnum Equity Series); March 3, 1997 for the
Janus Mid Cap Portfolio; December 1, 1998 for the Lehman Brothers Aggregate
Bond Index, Morgan Stanley EAFE Index Portfolio and Russell 2000 Index
Portfolios and May 1, 1990 for the MetLife Stock Index Portfolio. 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
                              INVESTMENT RESULTS

                               CONTRACT VALUE(1)

<TABLE>
<CAPTION>
                                           SALOMON
                   BACK BAY   BACK BAY    BROTHERS     SALOMON                                       HARRIS     LOOMIS
                   ADVISORS   ADVISORS    STRATEGIC    BROTHERS                ALGER      DAVIS     OAKMARK     SAYLES
                    MONEY       BOND        BOND         U.S.                  EQUITY    VENTURE    MID CAP     SMALL
                    MARKET     INCOME   OPPORTUNITIES GOVERNMENT BALANCED(2)   GROWTH     VALUE     VALUE(3)     CAP
                  ---------- ---------- ------------- ---------- ----------- ---------- ---------- ---------- ----------
<S>               <C>        <C>        <C>           <C>        <C>         <C>        <C>        <C>        <C>
As of December
 31:
 1983............ $10,256.90 $10,337.67
 1984............  11,167.87  11,445.98
 1985............  11,891.93  13,372.34
 1986............  12,494.00  15,111.94
 1987............  13,093.94  15,209.14
 1988............  13,851.97  16,221.84
 1989............  14,893.43  17,933.29
 1990............  15,858.00  19,081.33
 1991............  16,578.78  22,162.98
 1992............  16,938.41  23,611.58
 1993............  17,169.20  26,189.62                                                            $11,366.57
 1994............  17,573.10  24,928.24  $ 9,838.07   $10,037.26 $ 9,967.47  $ 9,694.22 $ 9,628.18  11,147.74 $ 9,587.79
 1995............  18,286.71  29,762.30   11,551.12    11,354.32  12,234.95   14,185.73  13,193.69  14,294.36  12,146.27
 1996............  18,925.00  30,666.44   12,993.93    11,536.13  14,072.65   15,798.75  16,338.34  16,543.95  15,616.68
 1997............  19,627.81  33,501.82   14,201.85    12,308.95  16,091.52   19,541.57  21,477.28  19,105.05  19,189.74
 1998............  20,343.50  35,992.44   14,259.18    13,031.10  17,281.74   28,441.73  24,198.88  17,786.31  18,575.54
 1999............  21,026.50  32,296.24   14,233.57    12,842.26  16,149.16   37,584.64  28,010.74  17,572.66  24,092.64
</TABLE>

                                     II-5
<PAGE>

<TABLE>
<CAPTION>
                                         WESTPEAK                             LEHMAN
                                MFS       GROWTH      PUTNAM                 BROTHERS   METLIFE     MORGAN    RUSSELL
                     MFS      RESEARCH     AND     INTERNATIONAL JANUS MID  AGGREGATE    STOCK     STANLEY     2000
                  INVESTORS   MANAGERS    INCOME     STOCK(4)       CAP     BOND INDEX   INDEX    EAFE INDEX   INDEX
                  ---------- ---------- ---------- ------------- ---------- ---------- ---------- ---------- ----------
<S>               <C>        <C>        <C>        <C>           <C>        <C>        <C>        <C>        <C>
As of December 31:
 1983............
 1984............
 1985............
 1986............
 1987............
 1988............
 1989............
 1990............                                                                      $10,108.05
 1991............                                                                       12,944.18
 1992............                                                                       13,704.20
 1993............                       $11,317.31                                      14,742.75
 1994............                        10,995.38  $10,237.00                          14,645.02
 1995............                        14,760.65   10,692.43                          19,741.56
 1996............                        17,154.34   11,215.69                          23,828.54
 1997............                        22,540.94   10,886.69   $12,633.54             31,022.58
 1998............                        27,630.60   11,484.84    17,126.95 $10,006.09  39,199.37 $10,545.81 $10,578.25
 1999............ $10,188.94 $11,868.01  29,764.38   14,079.55    37,504.14   9,672.61  46,639.55  12,927.62  12,739.49
</TABLE>

                               SURRENDER VALUE(1)

<TABLE>
<CAPTION>
                                             SALOMON
                     BACK BAY   BACK BAY    BROTHERS     SALOMON                                       HARRIS     LOOMIS
                     ADVISORS   ADVISORS    STRATEGIC    BROTHERS                ALGER      DAVIS     OAKMARK     SAYLES
                      MONEY       BOND        BOND         U.S.                  EQUITY    VENTURE    MID CAP     SMALL
                      MARKET     INCOME   OPPORTUNITIES GOVERNMENT BALANCED(2)   GROWTH     VALUE     VALUE(3)     CAP
                    ---------- ---------- ------------- ---------- ----------- ---------- ---------- ---------- ----------
<S>                 <C>        <C>        <C>           <C>        <C>         <C>        <C>        <C>        <C>
As of December 31:
 1983............   $ 9,598.92 $ 9,674.03
 1984............    10,557.87  10,835.98
 1985............    11,381.93  12,862.34
 1986............    12,084.00  14,701.94
 1987............    12,783.94  14,899.14
 1988............    13,641.97  16,011.84
 1989............    14,783.43  17,823.29
 1990............    15,848.00  19,071.33
 1991............    16,568.78  22,152.98
 1992............    16,928.41  23,601.58
 1993............    17,159.20  26,179.62                                                            $10,646.57
 1994............    17,563.10  24,918.24  $ 9,214.41   $ 9,399.65 $ 9,334.75  $ 9,080.62 $ 9,019.21  10,527.74 $ 8,969.15
 1995............    18,276.71  29,752.30   10,946.12    10,749.32  11,629.95   13,580.73  12,588.59  13,774.36  11,528.77
 1996............    18,915.00  30,656.44   12,488.93    11,031.13  13,567.65   15,293.75  15,833.34  16,123.95  15,099.18
 1997............    19,617.81  33,491.82   13,796.85    11,903.95  15,686.52   19,136.57  21,072.28  18,785.05  18,772.24
 1998............    20,333.50  35,982.44   13,954.18    12,726.10  16,976.74   28,136.73  23,893.88  17,566.31  18,258.04
 1999............    21,016.50  35,286.24   14,028.57    12,637.26  15,944.16   37,379.64  27,805.74  17,452.66  23,875.14
</TABLE>

<TABLE>
<CAPTION>
                                                                              LEHMAN
                                          WESTPEAK                           BROTHERS              MORGAN
                                 MFS       GROWTH      PUTNAM       JANUS    AGGREGATE  METLIFE   STANLEY    RUSSELL
                       MFS     RESEARCH     AND     INTERNATIONAL    MID       BOND      STOCK      EAFE      2000
                    INVESTORS  MANAGERS    INCOME     STOCK(4)       CAP       INDEX     INDEX     INDEX      INDEX
                    --------- ---------- ---------- ------------- ---------- --------- --------- ---------- ----------
<S>                 <C>       <C>        <C>        <C>           <C>        <C>       <C>       <C>        <C>
As of December 31:
 1983............
 1984............
 1985............
 1986............
 1987............
 1988............
 1989............
 1990............                                                                      $9,450.49
 1991............                                                                      12,324.18
 1992............                                                                      13,184.20
 1993............                        $10,597.31                                    14,322.75
 1994............                         10,380.95  $ 9,585.41                        14,325.02
 1995............                         14,240.65   10,106.41                        19,521.56
 1996............                         16,734.34   10,710.69                        23,708.54
 1997............                         22,220.94   10,490.72   $11,908.54           31,002.58
 1998............                         27,410.60   11,179.84    16,501.95 $9,373.16 39,179.37 $ 9,875.11 $ 9,905.27
 1999............   $9,525.71 $11,148.01  29,644.38   13,874.55    36,979.14  9,148.09 46,619.55  12,325.12  12,136.99
</TABLE>


                                      II-6
<PAGE>

                 ANNUAL PERCENTAGE CHANGE IN CONTRACT VALUE(1)

<TABLE>
<CAPTION>
                                               SALOMON
                          BACK BAY BACK BAY   BROTHERS     SALOMON                                 HARRIS  LOOMIS
                          ADVISORS ADVISORS   STRATEGIC    BROTHERS              ALGER    DAVIS   OAKMARK  SAYLES
                           MONEY     BOND       BOND         U.S.                EQUITY  VENTURE  MID CAP  SMALL
                           MARKET   INCOME  OPPORTUNITIES GOVERNMENT BALANCED(2) GROWTH   VALUE   VALUE(3)  CAP
                          -------- -------- ------------- ---------- ----------- ------  -------  -------- ------
<S>                       <C>      <C>      <C>           <C>        <C>         <C>     <C>      <C>      <C>
As of December 31:
 1983...................     2.57%    3.38%
 1984...................     8.88    10.72
 1985...................     6.48    16.83
 1986...................     5.06    13.01
 1987...................     4.80     0.64
 1988...................     5.79     6.66
 1989...................     7.52    10.55
 1990...................     6.48     6.40
 1991...................     4.55    16.15
 1992...................     2.17     6.54
 1993...................     1.36    10.92                                                         13.67%
 1994...................     2.35    -4.82      -1.62%       0.37%      -0.33%    -3.60%  -3.72%   -1.93    -4.12%
 1995...................     4.06    19.39      17.41       13.12       22.75     46.33   37.03    28.23    26.68
 1996...................     3.49     3.04      12.49        1.60       15.02     11.37   23.84    15.74    28.57
 1997...................     3.71     9.25       9.30        6.70       14.35     23.69   31.45    15.48    22.88
 1998...................     3.65     7.43       0.40        5.87        7.40     45.54   12.67    -6.90    -3.20
 1999...................     3.36    -1.93      -0.18       -1.45       -6.55     32.15   15.75    -1.20    29.70
Cumulative Return.......   110.26   252.96      42.34       28.42       61.49    275.85  180.11    75.73   140.93
Annual Effective Rate of
 Return.................     4.66     8.03       7.07        4.96        9.72     29.22   22.07     8.82    16.79
</TABLE>

<TABLE>
<CAPTION>
                                                                     LEHMAN
                                     WESTPEAK                       BROTHERS           MORGAN
                              MFS     GROWTH     PUTNAM     JANUS   AGGREGATE METLIFE  STANLEY RUSSELL DOW JONES  S&P 500
                     MFS    RESEARCH   AND    INTERNATIONAL  MID      BOND     STOCK    EAFE    2000   INDUSTRIAL  STOCK
                  INVESTORS MANAGERS  INCOME    STOCK(4)     CAP      INDEX    INDEX    INDEX   INDEX  AVERAGE(5) INDEX(6)
                  --------- -------- -------- ------------- ------  --------- -------  ------- ------- ---------- --------
<S>               <C>       <C>      <C>      <C>           <C>     <C>       <C>      <C>     <C>     <C>        <C>
As of December
 31:
 1983............                                                                                           5.11%     1.79%
 1984............                                                                                           1.35      6.27
 1985............                                                                                          33.62     31.73
 1986............                                                                                          27.25     18.66
 1987............                                                                                           5.55      5.25
 1988............                                                                                          16.21     16.61
 1989............                                                                                          32.24     31.69
 1990............                                                               1.08%                      -0.54     -3.10
 1991............                                                              28.06                       24.25     30.47
 1992............                                                               5.87                        7.40      7.62
 1993............                      13.17%                                   7.58                       16.97     10.08
 1994............                      -2.84       2.37%                       -0.66                        5.02      1.32
 1995............                      34.24       4.45                        34.80                       36.94     37.58
 1996............                      16.22       4.89                        20.70                       28.91     22.96
 1997............                      31.40      -2.93      26.34%            30.19                       24.91     33.36
 1998............                      22.58       5.49      35.57     0.06%   26.36     5.46%   5.78%     18.14     28.52
 1999............   1.89%    18.68%     7.72      22.59     118.98    -3.33    18.98    22.59   20.43      27.21     21.04
Cumulative Re-
 turn............   1.89     18.68    197.64      40.80     275.04    -3.27   366.40    29.28   27.39   1,791.58  1,653.04
Annual Effective
 Rate of Return..   2.84     29.20     17.77       6.85      59.53    -3.03    17.27    26.78   25.07      18.88     18.35
<CAPTION>
                     LEHMAN
                  INTERMEDIATE
                  GOVERNMENT/
                   CORPORATE   CONSUMER
                      BOND      PRICE
                    INDEX(7)   INDEX(8)
                  ------------ --------
<S>               <C>          <C>
As of December
 31:
 1983............      4.51%     1.07%
 1984............     14.37      3.95
 1985............     18.06      3.77
 1986............     13.13      1.13
 1987............      3.66      4.41
 1988............      6.67      4.42
 1989............     12.77      4.65
 1990............      9.16      6.11
 1991............     14.62      3.06
 1992............      7.17      2.90
 1993............      8.79      2.75
 1994............     -1.93      2.67
 1995............     15.33      2.54
 1996............      4.05      3.32
 1997............      7.87      1.83
 1998............      8.44      1.61
 1999............     -2.15      2.68
Cumulative Re-
 turn............    357.92     72.44
Annual Effective
 Rate of Return..      9.36      3.26
</TABLE>

                                      II-7
<PAGE>

                ANNUAL PERCENTAGE CHANGE IN SURRENDER VALUE(1)

<TABLE>
<CAPTION>
                                            SALOMON
                  BACK BAY   BACK BAY      BROTHERS     SALOMON                                   HARRIS    LOOMIS
                  ADVISORS   ADVISORS      STRATEGIC    BROTHERS               ALGER    DAVIS    OAKMARK    SAYLES
                   MONEY       BOND          BOND         U.S.                EQUITY   VENTURE   MID CAP    SMALL         MFS
                   MARKET     INCOME     OPPORTUNITIES GOVERNMENT BALANCED(2) GROWTH    VALUE    VALUE(3)    CAP       INVESTORS
                  -------- ------------- ------------- ---------- ----------- -------  -------  ---------- --------  -------------
<S>               <C>      <C>           <C>           <C>        <C>         <C>      <C>      <C>        <C>       <C>
As of December
 31:
 1983............   -4.01%     -3.26%
 1984............    9.99      12.01
 1985............    7.81      18.70
 1986............    6.17      14.30
 1987............    5.79       1.34
 1988............    6.71       7.47
 1989............    8.37      11.31
 1990............    7.20       7.00
 1991............    4.55      16.16
 1992............    2.17       6.54
 1993............    1.36      10.92                                                                 6.47%
 1994............    2.35      -4.82         -7.86%      -6.00%      -6.65%    -9.19%   -9.81%      -1.12    -10.31%
 1995............    4.06      19.40         18.79       14.36       24.59     49.56    39.58       30.84     28.54
 1996............    3.49       3.04         14.09        2.62       16.66     12.61    25.78       17.06     30.97
 1997............    3.72       9.25         10.47        7.91       15.62     25.13    33.09       16.50     24.33
 1998............    3.65       7.44          1.14        6.91        8.23     47.03    13.39       -6.49     -2.74
 1999............    3.36      -1.93          0.53       -0.70       -6.08     32.85    16.37       -0.65     30.77      -4.74%
Cumulative Re-
 turn............  110.17     252.86         40.29       26.37       59.44    273.80   178.06       74.53    138.75      -4.74
Annual Effective
 Rate of Return..    4.65       8.03          6.77        4.64        9.45     29.09    21.90        8.71     16.60      -7.01
<CAPTION>
                                                                                                                        LEHMAN
                  WESTPEAK                               LEHMAN               MORGAN                                 INTERMEDIATE
                   GROWTH     PUTNAM         JANUS      BROTHERS              STANLEY  RUSSELL  DOW JONES  S&P 500    GOVERNMENT/
                    AND    INTERNATIONAL      MID      AGGREGATE    METLIFE    EAFE     2000    INDUSTRIAL  STOCK      CORPORATE
                   INCOME    STOCK(4)         CAP      BOND INDEX STOCK INDEX  INDEX    INDEX   AVERAGE(5) INDEX(6)  BOND INDEX(7)
                  -------- ------------- ------------- ---------- ----------- -------  -------  ---------- --------  -------------
<S>               <C>      <C>           <C>           <C>        <C>         <C>      <C>      <C>        <C>       <C>
As of December
 31:
 1983............                                                                                    5.11%     1.79%      4.51%
 1984............                                                                                    1.35      6.27      14.37
 1985............                                                                                   33.62     31.73      18.06
 1986............                                                                                   27.25     18.66      13.13
 1987............                                                                                    5.55      5.25       3.66
 1988............                                                                                   16.21     16.61       6.67
 1989............                                                                                   32.24     31.69      12.77
 1990............                                                    -5.50%                         -0.54     -3.10       9.16
 1991............                                                    30.41                          24.25     30.47      14.62
 1992............                                                     6.98                           7.40      7.62       7.17
 1993............    5.97%                                            8.64                          16.97     10.08       8.79
 1994............   -2.04      -4.15%                                 0.02                           5.02      1.32      -1.93
 1995............   37.18       5.44                                 36.28                          36.94     37.58      15.33
 1996............   17.51       5.98                                 21.45                          28.91     22.96       4.05
 1997............   32.79      -2.05         19.09                   30.77                          24.91     33.36       7.87
 1998............   23.35       6.57         38.57       -6.27       26.37     -1.25    -0.95       18.14     28.52       8.44
 1999............    8.15      24.10        124.09       -2.40       18.99     24.81    22.53       27.21     21.04      -2.15
Cumulative Re-
 turn............  196.44      38.75        269.79       -8.52      366.20     23.25    21.37    1,791.58  1,653.04     357.92
Annual Effective
 Rate of Return..   17.70       6.55         58.74       -7.90       17.26     21.31    19.60       18.88     18.35       9.36
<CAPTION>
                    MFS
                  RESEARCH
                  MANAGERS
                  --------
<S>               <C>
As of December
 31:
 1983............
 1984............
 1985............
 1986............
 1987............
 1988............
 1989............
 1990............
 1991............
 1992............
 1993............
 1994............
 1995............
 1996............
 1997............
 1998............
 1999............  11.48%
Cumulative Re-
 turn............  11.48
Annual Effective
 Rate of Return..  17.65
<CAPTION>
                  CONSUMER
                   PRICE
                  INDEX(8)
                  --------
<S>               <C>
As of December
 31:
 1983............   1.07%
 1984............   3.95
 1985............   3.77
 1986............   1.13
 1987............   4.41
 1988............   4.42
 1989............   4.65
 1990............   6.11
 1991............   3.06
 1992............   2.90
 1993............   2.75
 1994............   2.67
 1995............   2.54
 1996............   3.32
 1997............   1.83
 1998............   1.61
 1999............   2.68
Cumulative Re-
 turn............  72.44
Annual Effective
 Rate of Return..   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 Harris Oakmark Mid Cap 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. 1999 figures for the MFS
    Investors and MFS Research Managers Series are from May 1 to December 31,
    1999. 1994 figures for all other series of the Zenith Fund are from
    November 1 through December 31, 1994. 1994 figures for the Putnam
    International Stock Portfolio are from November 1, 1994 through December
    31, 1994 (see footnote 4 for more information). 1997 figures for the Janus
    Mid Cap Portfolio are from March 3, 1997 through December 31, 1997. 1998
    figures for the Lehman Brothers Aggregate Bond Index, Morgan Stanley EAFE
    Index and Russell 2000 Index Portfolios are from December 1, 1998 through
    December 31, 1998. 1990 figures for the MetLife Stock Index Portfolio are
    from May 1, 1990 to December 31, 1990.

(2) Wellington Management Company, LLP became the subadviser of the Balanced
    Series on May 1, 2000. Prior to that time, Loomis Sayles & Company, L.P.
    served as subadviser.
(3) Harris Associates L.P. became the subadviser on May 1, 2000. Prior to that
    time, other entities served as subadviser.

(4) On December 1, 2000, the Putnam International Stock Portfolio was
    substituted for the Morgan Stanley International Magnum Equity Series,
    which is no longer available for investment under the Contract.
    Performance figures on or before December 1, 2000 reflect the performance
    of the Morgan Stanley International Magnum Equity Series. Putnam
    Investment Management, Inc. became the sub-investment manager of the
    Putnam International Stock Portfolio on January 24, 2000. Prior to that
    time, Santander Global Advisors, Inc. served as sub-investment manager.

(5) 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.

(6) 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.

(7) 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.

(8) 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-8
<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 Harris
Oakmark Mid Cap Value Series, May 2, 1994 for the Loomis Sayles Small Cap
Series, May 1, 1999 for the MFS Investors and MFS Research Managers Series,
November 1, 1994 for the other series of the Zenith Fund, November 1, 1994 for
the Putnam International Stock Portfolio, March 3, 1997 for the Janus Mid Cap
Portfolio, December 1, 1998 for the Lehman Brothers Aggregate Bond Index,
Morgan Stanley EAFE Index and Russell 2000 Index Portfolios and May 1, 1990
for the MetLife Stock Index Portfolio. 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, 1999. 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

<TABLE>
<CAPTION>
                   CUMU-
                  LATIVE
                   PAY-
                   MENTS
                  -------
<S>               <C>
As of Decem-
ber 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
 1995............  37,000
 1996............  40,000
 1997............  43,000
 1998............  46,000
 1999............  49,000
Annual Effective
Rate of Return...
<CAPTION>
                                                                CONTRACT VALUE
                  ------------------------------------------------------------------------------------------------------------------
                                                   SALOMON     SALOMON                                                  HARRIS
                   BACK BAY    BACK BAY    CUMU-   BROTHERS    BROTHERS                                        CUMU-   OAKMARK
                   ADVISORS    ADVISORS   LATIVE     BOND        U.S.                    ALGER       DAVIS     LATIVE    MID
                    MONEY        BOND      PAY-     OPPOR-     GOVERN-                   EQUITY     VENTURE     PAY-     CAP
                    MARKET      INCOME     MENTS   TUNITIES      MENT     BALANCED(1)    GROWTH      VALUE     MENTS   VALUE(2)
                  ----------- ----------- ------- ----------- ----------- ------------ ----------- ----------- ------ -----------
<S>               <C>         <C>         <C>     <C>         <C>         <C>          <C>         <C>         <C>    <C>
As of Decem-
ber 31:
 1983............ $ 1,016.00  $ 1,012.71
 1984............   4,228.77    4,347.60
 1985............   7,589.75    8,359.85
 1986............  11,042.60   12,610.03
 1987............  14,655.09   15,713.15
 1988............  18,608.55   19,831.44
 1989............  23,140.46   25,092.76
 1990............  27,762.78   29,874.35
 1991............  32,117.90   38,038.94
 1992............  35,876.57   43,679.58
 1993............  39,423.75   51,587.72                                                                       $2,000 $ 2,121.84
 1994............  43,437.95   52,090.01  $   500 $   492.19  $   502.40  $   502.20   $   497.68  $   494.91   5,000   5,097.79
 1995............  48,314.12   65,505.31    3,500   3,814.17    3,734.85    3,904.75     4,222.10    4,125.99   8,000   9,873.90
 1996............  53,109.32   70,653.96    6,500   7,478.86    6,849.78    7,778.69     7,864.68    8,536.02  11,000  14,629.01
 1997............  58,199.85   80,401.77    9,500  11,316.03   10,426.55   12,114.50    13,001.28   14,632.30  14,000  20,125.90
 1998............  63,442.93   89,546.77   12,500  14,347.08   14,126.17   16,145.27    22,715.97   19,757.89  17,000  21,575.14
 1999............  68,696.04   90,853.10   15,500  17,350.85   16,919.98   17,954.36    33,621.59   26,134.45  20,000  24,241.52
Annual Effective
Rate of Return...       3.99%       7.13%               4.31%       3.35%       5.63%       30.42%      20.28%              5.69%
</TABLE>
-------

(1) Wellington Management Company, LLP became the subadviser of the Balanced
    Series on May 1, 2000. Prior to that time, Loomis Sayles & Company, L.P.
    served as subadviser.

(2) Harris Associates L.P. became the subadviser on May 1, 2000. Prior to that
    time, other entities served as subadviser.


                                     II-9
<PAGE>

<TABLE>
<CAPTION>
                                                                      CONTRACT VALUE
                  ------------------------------------------------------------------------------------------------------------
                                                                                                                     LEHMAN
                   WESTPEAK    CUMU-    LOOMIS     PUTNAM    CUMU-                        CUMU-              CUMU-  BROTHERS
                    GROWTH    LATIVE    SAYLES     INTER-    LATIVE    MFS        MFS     LATIVE             LATIVE AGGREGATE
                     AND       PAY-     SMALL     NATIONAL    PAY-   INVES-    RESEARCH    PAY-    JANUS      PAY-    BOND
                    INCOME     MENTS     CAP      STOCK(3)   MENTS    TORS     MANAGERS   MENTS   MID CAP    MENTS    INDEX
                  ----------  ------- ----------  ---------  ------ ---------  ---------  ------ ----------  ------ ---------
<S>               <C>         <C>     <C>         <C>        <C>    <C>        <C>        <C>    <C>         <C>    <C>
As of Decem-
ber 31:
 1983............
 1984............
 1985............
 1986............
 1987............
 1988............
 1989............
 1990............
 1991............
 1992............
 1993............ $ 2,120.54
 1994............   5,049.40  $ 2,000 $ 1,956.26  $  511.38
 1995............  10,258.06    5,000   5,895.10   3,637.36
 1996............  15,236.80    8,000  11,021.85   6,859.16
 1997............  23,467.27   11,000  16,902.67   9,550.07                               2,500  $ 2,854.90
 1998............  32,141.38   14,000  19,391.41  13,031.07                               5,500    7,663.90    250  $  250.15
 1999............  37,749.82   17,000  29,103.91  19,500.64  $2,000 $2,086.00  $2,329.33  8,500   22,023.71  3,250   3,181.33
Annual Effective
Rate of Return...      18.78%              18.91%      8.81%            11.81%     49.00%             78.23%            -3.60%
<CAPTION>
                   CONTRACT VALUE
                  -----------------
                  CUMU-             CUMU-   MORGAN
                  LATIVE  METLIFE   LATIVE  STANLEY    RUSSELL
                   PAY-    STOCK     PAY-    EAFE       2000
                  MENTS    INDEX    MENTS    INDEX      INDEX
                  ------ ---------- ------ ---------- ----------
<S>               <C>    <C>        <C>    <C>        <C>
As of Decem-
ber 31:
 1983............
 1984............
 1985............
 1986............
 1987............
 1988............
 1989............
 1990............  2,000 $2,000.45
 1991............  5,000  5,906.94
 1992............  8,000  9,402.83
 1993............ 11,000 13,216.07
 1994............ 14,000 16,132.86
 1995............ 17,000 25,247.92
 1996............ 20,000 33,833.72
 1997............ 23,000 47.466.27
 1998............ 26,000 63,454.52    250  $  263.65  $  264.46
 1999............ 29,000 78,877.25  3,250   3,845.11   3,842.82
Annual Effective
Rate of Return...            19.72%            32.53%     32.42%
</TABLE>

<TABLE>
<CAPTION>
                       CUMU-
                      LATIVE
                       PAY-
                       MENTS
                      -------
 <S>                  <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
 1995............      37,000
 1996............      40,000
 1997............      43,000
 1998............      46,000
 1999............      49,000
 Annual Effective
  Rate of Return.
<CAPTION>
                                                                 SURRENDER VALUE
                 -------------------------------------------------------------------------------------------------------------------
                  BACK BAY    BACK BAY    CUMU-     SALOMON     SALOMON                                          CUMU-    HARRIS
                  ADVISORS    ADVISORS   LATIVE    BROTHERS     BROTHERS                  ALGER       DAVIS     LATIVE   OAKMARK
                   MONEY        BOND      PAY-       BOND         U.S.                    EQUITY     VENTURE     PAY-    MID CAP
                   MARKET      INCOME     MENTS  OPPORTUNITIES GOVERNMENT  BALANCED(1)    GROWTH      VALUE      MENTS   VALUE(2)
                 ----------- ----------- ------- ------------- ----------- ------------ ----------- ----------- ------- -----------
 <S>             <C>         <C>         <C>     <C>           <C>         <C>          <C>         <C>         <C>     <C>
 As of Decem-
ber 31:
 1983............$   936.63  $   933.57
 1984............  3,956.32    4,067.60
 1985............  7,145.30    7,909.85
 1986............ 10,452.60   12,020.03
 1987............ 13,955.09   15,013.15
 1988............ 17,828.55   19,051.44
 1989............ 22,310.46   24,262.76
 1990............ 26,912.78   29,024.35
 1991............ 31,267.90   37,188.94
 1992............ 35,026.57   42,829.58
 1993............ 38,573.75   50,737.72                                                                         $ 2,000 $ 1,961.84
 1994............ 42,587.95   51,240.01  $   500  $   454.48   $   463.99  $   463.80   $   459.59  $   457.01    5,000   4,763.39
 1995............ 47,464.12   64,655.31    3,500    3,571.44     3,497.31    3,659.75     3,977.10    3,880.99    8,000   9,363.90
 1996............ 52,259.32   69,803.96    6,500    7,058.86     6,451.30    7,358.69     7,444.68    8,116.02   11,000  13,989.01
 1997............ 57,349.85   79,551.77    9,500   10,751.03     9,867.25   11,549.50    12,436.28   14,067.30   14,000  19,385.90
 1998............ 62,592.93   88,696.77   12,500   13,667.08    13,446.17   15,465.27    22,035.97   19,077.99   17,000  20,765.14
 1999............ 67,846.04   90,003.10   15,500   16,585.85    16,172.60   17,189.36    32,856.59   25,369.45   20,000  23,391.52
 Annual Effective
  Rate of Return.      3.84%       7.03%                2.58%        1.62%       3.95%       29.48%      19.11%               4.63%
</TABLE>

<TABLE>
<CAPTION>
                                                                                                                       LEHMAN
                                  CUMU-   LOOMIS     PUTNAM    CUMU-                        CUMU-              CUMU-  BROTHERS
                       WESTPEAK   LATIVE  SAYLES     INTER-    LATIVE    MFS        MFS     LATIVE             LATIVE AGGREGATE
                        GROWTH     PAY-    SMALL    NATIONAL    PAY-   INVES-    RESEARCH    PAY-    JANUS      PAY-    BOND
                      AND INCOME  MENTS     CAP     STOCK(3)   MENTS    TORS     MANAGERS   MENTS   MID CAP    MENTS    INDEX
                      ----------  ------ ---------  ---------  ------ ---------  ---------  ------ ----------  ------ ---------
 <S>                  <C>         <C>    <C>        <C>        <C>    <C>        <C>        <C>    <C>         <C>    <C>
 As of December 31:
 1983............
 1984............
 1985............
 1986............
 1987............
 1988............
 1989............
 1990............
 1991............
 1992............
 1993............     $ 1,960.54
 1994............       4,718.60  $2,000 $1,803.57  $  472.33
 1995............       9,748.06   5,000  5,547.60   3,405.07
 1996............      14,596.80   8,000 10,514.35   6,459.43
 1997............      22,727.27  11,000 16,265.17   9,048.11                               2,500  $ 2,654.90
 1998............      31,331.38  14,000 18,653.99  12,399.37                               5,500    7,278.90    250  $  231.89
 1999............      36,899.82  17,000 28,296.41  18,735.64  $2,000 $1,926.00  $2,169.33  8,500   21,483.71  3,250   2,981.02
 Annual Effective
  Rate of Return.          18.11%            17.90%      7.27%            -9.61%     23.92%             75.83%           -13.93%
<CAPTION>
                      CUMU-             CUMU-   MORGAN
                      LATIVE  METLIFE   LATIVE  STANLEY    RUSSELL
                       PAY-    STOCK     PAY-    EAFE       2000
                      MENTS    INDEX    MENTS    INDEX      INDEX
                      ------ ---------- ------ ---------- ----------
 <S>                  <C>    <C>        <C>    <C>        <C>
 As of December 31:
 1983............
 1984............
 1985............
 1986............
 1987............
 1988............
 1989............
 1990............      2,000 $1,842.17
 1991............      5,000  5,556.94
 1992............      8,000  8,892.83
 1993............     11,000 12,576.07
 1994............     14,000 15,392.86
 1995............     17,000 24,437.92
 1996............     20,000 32,983.72
 1997............     23,000 46,606.27
 1998............     26,000 62,594.52    250  $  244.44  $  245.19
 1999............     29,000 78,017.25  3,250   3,617.61   3,615.32
 Annual Effective
  Rate of Return.                19.51%            19.83%     19.72%
</TABLE>
-------

(1) Wellington Management Company, LLP became the subadviser of the Balanced
    Series on May 1, 2000. Prior to that time, Loomis Sayles & Company, L.P.
    served as subadviser.

(2) Harris Associates L.P. became the subadviser on May 1, 2000. Prior to that
    time, other entities served as subadviser.

(3) On December 1, 2000, the Putnam International Stock Portfolio was
    substituted for the Morgan Stanley International Magnum Equity Series,
    which is no longer available for investment under the Contract.
    Performance figures on or before December 1, 2000 reflect the performance
    of the Morgan Stanley International Magnum Equity Series. Putnam
    Investment Management, Inc. became the sub-investment manager of the
    Putnam International Stock Portfolio on January 24, 2000. Prior to that
    time, Santander Global Advisors, Inc. served as sub-investment manager.


                                     II-10
<PAGE>

  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.

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%
      December 31, 1999.....................................   2.171899    3.5%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      16 years, 4 months ended December 31, 1999.............  117.2%     4.9%
      10 years ended December 31, 1999.......................   43.6%     3.7%
      5 years ended December 31, 1999........................   20.6%     3.8%
      1 year ended December 31, 1999.........................    3.5%     3.5%
</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>

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..................................   3.660529      6.8%
      December 31, 1999..................................   3.592823     -1.8%

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

<CAPTION>
                                                            % CHANGE    ANNUAL
                                                            IN UNIT    EFFECTIVE
                                                             VALUE       RATE
                                                          ------------ ---------
      <S>                                                 <C>          <C>
      16 years, 4 months ended December 31, 1999.........     259.3%      8.1%
      10 years ended December 31, 1999...................      99.1%      7.1%
      5 years ended December 31, 1999....................      42.3%      7.3%
      1 year ended December 31, 1999.....................      -1.8%     -1.8%
</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      0.5%
      December 31, 1999..................................   1.439668      0.0%

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

<CAPTION>
                                                            % CHANGE    ANNUAL
                                                            IN UNIT    EFFECTIVE
                                                             VALUE       RATE
                                                          ------------ ---------
      <S>                                                 <C>          <C>
      5 years, 2 months ended December 31, 1999..........      44.0%      7.3%
      5 years ended December 31, 1999....................      46.3%      7.9%
      1 year ended December 31, 1999.....................       0.0%      0.0%
</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     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.....................................   1.316242     5.9%
      December 31, 1999.....................................   1.300191    -1.2%
</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, 2 months ended December 31, 1999..............   30.0%     5.2%
      5 years ended December 31, 1999........................   29.5%     5.3%
      1 year ended December 31, 1999.........................   -1.2%    -1.2%
</TABLE>

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    -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.....................................   1.742881     7.4%
      December 31, 1999.....................................   1.631646    -6.4%
</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, 2 months ended December 31, 1999..............   63.2%     9.9%
      5 years ended December 31, 1999........................   63.7%    10.4%
      1 year ended December 31, 1999.........................   -6.4%    -6.4%
</TABLE>
--------
 * Unit values do not reflect the impact of any Contingent Deferred Sales
   Charge, premium tax charge, or the annual Administration Contract Charge.
** The Balanced Series' subadviser was Loomis Sayles & Company, L.P. until May
   1, 2000 when Wellington Management Company, LLP became the subadviser.

                                     II-13
<PAGE>

ALGER 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%
      December 31, 1999.....................................   3.734589    32.3%
</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, 2 months ended December 31, 1999..............  237.5%    29.0%
      5 years ended December 31, 1999........................  290.7%    31.3%
      1 year ended December 31, 1999.........................   32.3%    32.3%
</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%
      December 31, 1999.....................................   2.824171    15.9%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      5 years, 2 months ended December 31, 1999..............  182.4%    22.3%
      5 years ended December 31, 1999........................  193.3%    24.0%
      1 year ended December 31, 1999.........................   15.9%    15.9%
</TABLE>
--------
*  Unit values do not reflect the impact of any Contingent Deferred Sales
   Charge, premium tax, or the annual Administration Contract Charge.

                                     II-14
<PAGE>

HARRIS OAKMARK MID CAP 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%
      December 31, 1999.....................................   1.778414    -1.0%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      6 years, 8 months ended December 31, 1999..............   77.8%     9.0%
      5 years ended December 31, 1999........................   59.1%     9.7%
      1 year ended December 31, 1999.........................   -1.0%    -1.0%
</TABLE>

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%
      December 31, 1999.....................................   2.433952    29.9%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      5 years, 8 months ended December 31, 1999..............  143.4%    17.0%
      5 years ended December 31, 1999........................  153.9%    20.5%
      1 year ended December 31, 1999.........................   29.9%    29.9%
</TABLE>
--------
 *  Unit values do not reflect the impact of any Contingent Deferred Sales
    Charge, premium tax charge, or the annual Administration Contract Charge.
**  Harris Associates L.P. became the subadviser on May 1, 2000. Prior to that
    time, other entities served as subadviser.

                                     II-15
<PAGE>

MFS INVESTORS SUB-ACCOUNT

                      ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
                                                             ACCUMULATION   %
       DATE                                                   UNIT VALUE  CHANGE
       ----                                                  ------------ ------
      <S>                                                    <C>          <C>
       April 30, 1999.......................................   1.000000     --
       December 31, 1999....................................   1.018894    -1.9%
</TABLE>

        PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
       8 months ended December 31, 1999......................   1.9%      2.8%
</TABLE>

MFS RESEARCH MANAGERS SUB-ACCOUNT

                      ANNUAL PERCENT CHANGE IN UNIT VALUE*
<TABLE>
<CAPTION>
                                                             ACCUMULATION   %
       DATE                                                   UNIT VALUE  CHANGE
       ----                                                  ------------ ------
      <S>                                                    <C>          <C>
       April 30, 1999.......................................   1.000000     --
       December 31, 1999....................................   1.186801    18.7%
</TABLE>

        PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN

<TABLE>
<CAPTION>
                                                                  %
                                                                CHANGE
                                                                  IN    ANNUAL
                                                                 UNIT  EFFECTIVE
                                                                VALUE    RATE
                                                                ------ ---------
      <S>                                                       <C>    <C>
       8 months ended December 31, 1999........................  18.7%   29.2%
</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%
      December 31, 1999.....................................   3.009259     7.8%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      6 years, 8 months ended December 31, 1999..............  200.9%    18.0%
      5 years ended December 31, 1999........................  172.9%    22.2%
      1 year ended December 31, 1999.........................    7.8%     7.8%
</TABLE>
--------
* Unit values do not reflect the impact of any Contingent Deferred Sales
  Charge, premium tax charge, or the annual Administration Contract Charge.

                                     II-16
<PAGE>


PUTNAM INTERNATIONAL STOCK 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%
      December 31, 1999.....................................   1.426996    22.9%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      5 years, 2 months ended December 31, 1999..............   42.7%     7.1%
      5 years ended December 31, 1999........................   39.4%     6.9%
      1 year ended December 31, 1999.........................   22.9%    22.9%
</TABLE>

JANUS MID CAP SUB-ACCOUNT

                   ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
                                                             ACCUMULATION
                                                              VALUE UNIT    %
      DATE                                                      VALUE     CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      March 3, 1997.........................................   1.000000
      December 31, 1997.....................................   1.263354    26.3
      December 31, 1998.....................................   1.716503    35.9
      December 31, 1999.....................................   3.765136   119.3
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      2 years, 10 months ended December 31, 1999.............  276.5%     59.8%
      1 year ended December 31, 1999.........................  119.3%    119.3%
</TABLE>

LEHMAN BROTHERS AGGREGATE BOND INDEX SUB-ACCOUNT

                   ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
                                                             ACCUMULATION
                                                              VALUE UNIT    %
      DATE                                                      VALUE     CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      November 9, 1998......................................   1.000000
      December 31, 1998.....................................   1.011763     1.2%
      December 31, 1999.....................................   0.981061    -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>
      1 year, 2 months ended December 31, 1999...............   -1.9%    -1.7%
      1 year ended December 31, 1999.........................   -3.0%    -3.0%
</TABLE>
--------
*  Unit values do not reflect the impact of any Contingent Deferred Sales
   Charge, premium tax charge, or the annual Administration Contract Charge.

** On December 1, 2000, the Putnam International Stock Portfolio was substituted
   for the Morgan Stanley International Magnum Equity Series, which is no longer
   available for investment under the Contract. Performance figures on or before
   December 1, 2000 reflect the performance of the Morgan Stanley International
   Magnum Equity Series. Putnam Investment Management, Inc. became the sub-
   investment manager of the Putnam International Stock Portfolio on January 24,
   2000. Prior to that time, Santander Global Advisors, Inc. served as sub-
   investment manager.

                                     II-17
<PAGE>


METLIFE STOCK INDEX SUB-ACCOUNT

                   ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
                                                             ACCUMULATION
                                                              VALUE UNIT    %
      DATE                                                      VALUE     CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      May 1, 1990...........................................   1.000000
      December 31, 1990.....................................   1.010805     1.1%
      December 31, 1991.....................................   1.297781    28.4%
      December 31, 1992.....................................   1.377188     6.1%
      December 31, 1993.....................................   1.484766     7.8%
      December 31, 1994.....................................   1.478020    -0.5%
      December 31, 1995.....................................   1.996017    35.0%
      December 31, 1996.....................................   2.412686    20.9%
      December 31, 1997.....................................   3.144772    30.3%
      December 31, 1998.....................................   3.976991    26.5%
      December 31, 1999.....................................   4.735178    19.1%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      9 years, 8 months ended December 31, 1999..............  373.5%    17.4%
      5 years ended December 31, 1999........................  220.4%    26.2%
      1 year ended December 31, 1999.........................   19.1%    19.1%
</TABLE>

MORGAN STANLEY EAFE INDEX SUB-ACCOUNT

                   ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
                                                             ACCUMULATION
                                                              VALUE UNIT    %
      DATE                                                      VALUE     CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      November 9, 1998......................................   1.000000
      December 31, 1998.....................................   1.078983     7.9%
      December 31, 1999.....................................   1.326004    22.9%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      1 year, 2 months ended December 31, 1999...............   32.6%    28.2%
      1 year ended December 31, 1999.........................   22.9%    22.9%
</TABLE>
--------
* Unit values do not reflect the impact of any Contingent Deferred Sales
  Charge, premium tax charge, or the annual Administration Contract Charge.

                                     II-18
<PAGE>


RUSSELL 2000 INDEX SUB-ACCOUNT

                   ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
                                                             ACCUMULATION
                                                              VALUE UNIT    %
      DATE                                                      VALUE     CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      November 9, 1998......................................   1.000000
      December 31, 1998.....................................   1.052705     5.3%
      December 31, 1999.....................................   1.271109    20.7%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      1 year, 2 months ended December 31, 1999...............   27.1%    23.4%
      1 year ended December 31, 1999.........................   20.7%    20.7%
</TABLE>
--------
* Unit values do not reflect the impact of any Contingent Deferred Sales
  Charge, premium tax charge, or the annual Administration Contract Charge.

                                     II-19
<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-20
<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 (2.18%), 3.50%, 3.69%, 5.64% and 7.60%
shown in the tables at pages II-23-25 are (.18%), .29%, .30%, .46% and .61%.

                                     II-21
<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%, 5.81%, 6%, 8% or 10%. The
values would be different from those shown if the returns averaged 0%, 5.81%,
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 0.81% 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 0.81%, 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 0.81% 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 2.21%.

  Three 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 with annuitization occurring within the first two
years. The third 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,
with annuitization occurring after the second year. The 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-22
<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:                 1/1/00

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 WITHIN THE FIRST TWO YEARS: FOR AGE 65: $664.00

FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED AFTER TWO YEARS: FOR AGE 65: $678.61

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%       5.81%      6%        8%        10%
PAYMENT  CALENDAR     ----- --------- --------- --------- --------- ---------
 YEAR      YEAR   AGE NET**  -2.18%     3.50%     3.69%     5.64%     7.60%
-------  -------- --- ----- --------- --------- --------- --------- ---------
<S>      <C>      <C> <C>   <C>       <C>       <C>       <C>       <C>
    1      2000    65       $  581.00 $  581.00 $  581.00 $  581.00 $  581.00
    2      2001    66          549.10    581.00    582.04    593.03    604.01
    3      2002    67          518.94    581.00    583.09    605.30    627.93
    4      2003    68          490.45    581.00    584.14    617.83    652.80
    5      2004    69          463.51    581.00    585.18    630.62    678.65
   10      2009    74          349.48    581.00    590.46    698.64    824.10
   15      2014    79          263.50    581.00    595.78    774.00  1,000.72
   20      2019    84          198.67    581.00    601.15    857.49  1,215.20
</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 Charge from the Gross Rates of Return.

                                     II-23
<PAGE>

    ANNUITY PAY-OUT ILLUSTRATION, ANNUITIZATION OCCURRING WITHIN TWO YEARS
                       (50% VARIABLE--50% FIXED PAYOUT)

<TABLE>
<S>                       <C>        <C>                                 <C>
ANNUITANT:                John Doe   GROSS AMOUNT OF CONTRACT VALUE:     $100,000

SEX:                      Unisex     DATE OF ILLUSTRATION:                 1/1/00

ANNUITY OPTION SELECTED:  Life Income with 10 Years Certain*

FREQUENCY OF INCOME PAY-  Monthly
 MENTS:
</TABLE>

FIXED MONTHLY ANNUITY INCOME PAYMENT FOR AGE 65 BASED ON CURRENT RATES, IF
100% FIXED ANNUITY OPTION SELECTED: $664.00

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:  $332.00. THE MONTHLY GUARANTEED PAYMENT OF $332.00 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%       5.81%      6%        8%        10%
PAYMENT  CALENDAR     ----- --------- --------- --------- --------- ---------
 YEAR      YEAR   AGE NET**  -2.18%     3.50%     3.69%     5.64%     7.60%
-------  -------- --- ----- --------- --------- --------- --------- ---------
<S>      <C>      <C> <C>   <C>       <C>       <C>       <C>       <C>
    1      2000    65       $  622.50 $  622.50 $  622.50 $  622.50 $  622.50
    2      2001    66          606.55    622.50    623.02    628.51    634.00
    3      2002    67          591.47    622.50    623.54    634.65    645.96
    4      2003    68          577.22    622.50    624.07    640.91    658.40
    5      2004    69          563.76    622.50    624.59    647.31    671.32
   10      2009    74          506.74    622.50    627.23    681.32    744.05
   15      2014    79          463.75    622.50    629.89    719.00    832.36
   20      2019    84          431.34    622.50    632.57    760.75    939.60
</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 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
   Charge from the Gross Rate of Return.

                                     II-24
<PAGE>

AMERICAN GROWTH II

     ANNUITY PAY-OUT ILLUSTRATION, ANNUITIZATION OCCURRING AFTER TWO YEARS
                       (50% VARIABLE--50% FIXED PAYOUT)

<TABLE>
<S>                       <C>        <C>                                 <C>
ANNUITANT:                John Doe   GROSS AMOUNT OF CONTRACT VALUE:     $100,000

SEX:                      Unisex     DATE OF ILLUSTRATION:                 1/1/00

ANNUITY OPTION SELECTED:  Life Income with 10 Years Certain*

FREQUENCY OF INCOME PAY-  Monthly
 MENTS:
</TABLE>

FIXED MONTHLY ANNUITY INCOME PAYMENT FOR AGE 65 BASED ON CURRENT RATES, IF
100% FIXED ANNUITY OPTION SELECTED: $678.61

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:  $339.31. THE MONTHLY GUARANTEED PAYMENT OF $339.31 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%       5.81%      6%        8%        10%
PAYMENT  CALENDAR     ----- --------- --------- --------- --------- ---------
 YEAR      YEAR   AGE NET**  -2.18%     3.50%     3.69%     5.64%     7.60%
-------  -------- --- ----- --------- --------- --------- --------- ---------
<S>      <C>      <C> <C>   <C>       <C>       <C>       <C>       <C>
    1      2000    65       $  629.81 $  629.81 $  629.81 $  629.81 $  629.81
    2      2001    66          613.85    629.81    630.33    635.82    641.31
    3      2002    67          598.78    629.81    630.85    641.96    653.27
    4      2003    68          584.53    629.81    631.37    648.22    665.70
    5      2004    69          571.06    629.81    631.90    654.61    678.63
   10      2009    74          514.04    629.81    634.53    688.63    751.35
   15      2014    79          471.06    629.81    637.19    726.31    839.67
   20      2019    84          438.64    629.81    639.88    768.05    946.91
</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 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-25
<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-26
<PAGE>

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

<TABLE>
<S>                       <C>        <C>                                 <C>
ANNUITANT:                John Doe   GROSS AMOUNT OF CONTRACT VALUE:     $100,000
SEX:                      Unisex     DATE OF ILLUSTRATION:                 1/1/00
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 WITHIN THE FIRST TWO YEARS: FOR AGE 65: $664.00; FOR
AGE 72: $754.07; FOR AGE 73: $769.08; FOR AGE 75: $800.36; FOR AGE 76:
$816.47; FOR AGE 79: $865.50; FOR AGE 80: $881.67; AND FOR AGE 81: $897.48.

FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED AFTER TWO YEARS: FOR AGE 65: $678.61; FOR AGE 72:
$770.66; FOR AGE 73: $786.00; FOR AGE 75: $817.97; FOR AGE 76: $834.43; FOR
AGE 79: $884.54; FOR AGE 80: $901.07; AND FOR AGE 81: $917.23.

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
                      BACK BAY BACK BAY   STRATEGIC    SALOMON               ALGER     DAVIS
PAYMENT  CALENDAR      MONEY     BOND       BOND         U.S.               EQUITY    VENTURE
 YEAR      YEAR   AGE  MARKET   INCOME  OPPORTUNITIES GOVERNMENT BALANCED   GROWTH     VALUE
-------  -------- --- -------- -------- ------------- ---------- --------- --------- ---------
<S>      <C>      <C> <C>      <C>      <C>           <C>        <C>       <C>       <C>
    1      1983    65 $581.00  $ 581.00
    2      1984    66  589.11    593.75
    3      1985    67  621.40    636.91
    4      1986    68  640.96    720.66
    5      1987    69  652.22    788.46
    6      1988    70  661.97    768.23
    7      1989    71  678.04    793.10
    8      1990    72  705.82    848.57
    9      1991    73  727.52    873.81
   10      1992    74  736.22    982.04
   11      1993    75  727.98  1,012.04
   12      1994    76  714.19  1,085.82    $765.00     $765.00   $  765.00 $  765.00 $  765.00
   13      1995    77  707.50    999.76     748.30      763.45      758.14    737.36    732.33
   14      1996    78  712.51  1,154.49     851.15      836.67      901.43  1,044.66    971.87
   15      1997    79  713.52  1,150.41     927.17      823.39    1,003.91  1,126.19  1,165.00
   16      1998    80  716.10  1,215.41     981.20      850.93    1,111.23  1,347.99  1,481.77
   17      1999    81  718.18  1,262.70     953.89      872.40    1,155.17  1,897.98  1,615.27
   18      2000    82  718.23  1,197.44     921.94      832.62    1,044.88  2,425.52  1,808.55
</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, 1999, after giving effect to current
expense caps or deferrals: 1.00% Loomis Sayles Small Cap, .80% Alger Equity
Growth, .88% Harris Oakmark Mid Cap Value, .81% Davis Venture Value, .74%
Westpeak Growth and Income, .77% Balanced, .81% Salomon Strategic Bond
Opportunities, .48% Back Bay Bond Income, .70% Salomon US Government, .40%
Back Bay Money Market, .90% MFS Investors and MFS Research Managers, 1.12%
Putnam International Stock, .96% Janus Mid Cap, .65% Lehman Brothers Aggregate
Bond Index, .54% MetLife Stock Index, .95% Morgan Stanley EAFE Index, and .80%
Russell 2000 Index.)
-------
 * 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.

                                     II-27
<PAGE>

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

<TABLE>
<S>                       <C>        <C>                                 <C>
ANNUITANT:                John Doe   GROSS AMOUNT OF CONTRACT VALUE:     $100,000
SEX:                      Unisex     DATE OF ILLUSTRATION:                 1/1/00
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 WITHIN THE FIRST TWO YEARS: FOR AGE 65: $664.00; FOR
AGE 72: $754.07; FOR AGE 73: $769.08; FOR AGE 75: $800.36; FOR AGE 76:
$816.47; FOR AGE 79: $865.50; FOR AGE 80: $881.67; AND FOR AGE 81: 897.48.

FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED AFTER TWO YEARS: FOR AGE 65: $678.61; FOR AGE 72:
$770.66; FOR AGE 73: $786.00; FOR AGE 75: $817.97; FOR AGE 76: $834.43; FOR
AGE 79: $884.54; FOR AGE 80: $901.07; AND FOR AGE 81: $917.23.

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>
                    HARRIS                                                             LEHMAN
                    OAKMARK   LOOMIS                      WESTPEAK   PUTNAM           BROTHERS            MORGAN
PAY-                  MID     SAYLES               MFS     GROWTH   INTERNA-          AGGREGATE METLIFE  STANLEY  RUSSELL
MENT  CALENDAR        CAP      SMALL      MFS    RESEARCH    AND     TIONAL   JANUS     BOND     STOCK     EAFE     2000
YEAR    YEAR   AGE   VALUE      CAP    INVESTORS MANAGERS  INCOME   STOCK**  MID CAP    INDEX    INDEX    INDEX    INDEX
----  -------- --- --------- --------- --------- -------- --------- -------- -------- --------- -------- -------- --------
<S>   <C>      <C> <C>       <C>       <C>       <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                                                                              $ 693.00
  9     1991    73                                                                                684.50
 10     1992    74                                                                                848.46
 11     1993    75 $  747.00                              $  747.00                               907.68
 12     1994    76    829.70 $  765.00                       826.11 $765.00                       941.99
 13     1995    77    788.39    733.51                       777.60  778.64                       905.57
 14     1996    78    979.16    900.48                     1,011.07  788.12                     1,168.59
 15     1997    79  1,096.94  1,120.95                     1,137.39  800.83  $ 819.00           1,357.48
 16     1998    80  1,226.15  1,333.42                     1,446.38  753.08  1,005.46  $836.00  1,687.76 $ 836.00 $ 836.00
 17     1999    81  1,104.44  1,248.88  $852.00  $852.00   1,714.99  769.69  1,319.91   841.62  2,059.30   897.54   875.68
 18     2000    82  1,055.95  1,567.68   848.28   988.07   1,786.77  913.82  2,797.31   788.48  2,363.63 1,065.72 1,021.60
</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, 1999, after giving effect to expense caps
or deferrals: 1.00% Loomis Sayles Small Cap, .80% Alger Equity Growth, .88%
Harris Oakmark Mid Cap Value, .81% Davis Venture Value, .74% Westpeak Growth
and Income, .77% Balanced, .81% Salomon Strategic Bond Opportunities, .48%
Back Bay Bond Income, .70% Salomon US Government, .40% Back Bay Money Market,
 .90% MFS Investors and MFS Research Managers, 1.12% Putnam International
Stock, .96% Janus Mid Cap, .65% Lehman Brothers Aggregate Bond Index, .54%
MetLife Stock Index, .95% Morgan Stanley EAFE Index, and .80% Russell 2000
Index.)
-------
 * 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.

** On December 1, 2000, the Putnam International Stock Portfolio was
   substituted for the Morgan Stanley International Magnum Equity Series,
   which is no longer available for investment under the Contract. Performance
   figures on or before December 1, 2000 reflect the performance of the Morgan
   Stanley International Magnum Equity Series.

                                     II-28
<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 twenty 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-29
<PAGE>

                                    EXPERTS

  The financial statements of New England Variable Annuity Separate Account of
New England Life Insurance Company ("NELICO") as of December 31, 1999 and for
each of the two years in the period ended December 31, 1999 and the
consolidated financial statements of NELICO and subsidiaries as of December
31, 1999 and 1998 and for each of the three years in the period ended December
31, 1999 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 Anne Goggin, 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 (or Directors) 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 (or Directors) 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-30
<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 its affiliates, such
as State Street Research & Management Company. Prior to October 30, 2000,
Nvest Companies (which includes affiliates such as Back Bay Advisors, Loomis
Sayles, Westpeak and Harris Associates, L.P.) was affiliated with NEIM.
However, on October 30, 2000, MetLife sold its majority limited partnership
interest in Nvest Companies to CDC Asset Management.

  NEF's advertising and promotional literature may include references to other
NEF affiliates. References may also be made to NEF's parent company, MetLife
and the services it provides to the Metropolitan Series Fund, Inc.

  References to subadvisers unaffiliated with NEIM or NEF that perform
subadvisory functions on behalf of New England Zenith Fund ("Zenith Fund") or
the Metropolitan Series Fund, Inc. ("Metropolitan 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,
MSAM and Putnam Investment Management Inc.

  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-31
<PAGE>

  . The general and specific strategies applied by the advisers in the
    management of the Zenith Fund's and Metropolitan 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/Portfolios of the Zenith
    Fund and Metropolitan Fund, and those families of funds, other than the
    Zenith Fund or Metropolitan Fund. Any such references will indicate that
    the Zenith Fund and Metropolitan 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.

  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-32
<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-33
<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 the following Sub-Accounts: Bond Income, Money Market,
Midcap Value (formerly Avanti Growth), Growth and Income (formerly Value
Growth), Small Cap, U.S. Government, Balanced, Equity Growth, International
Magnum Equity (formerly International Equity), Venture Value, Bond
Opportunities, Investors and Research Managers) of New England Life Insurance
Company as of and for the year ended December 31, 1999, 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 auditing standards generally
accepted in the United States of America. 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, 1999, and the changes in their net assets for each
of the two years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP
Boston, Massachusetts
April 26, 2000

                                      F-1
<PAGE>

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

                      STATEMENT OF ASSETS AND LIABILITIES

                               DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                                                             GROWTH AND      SMALL
                                                   BOND INCOME  MONEY MARKET  MIDCAP VALUE     INCOME         CAP
                                                   SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT
                                                   -----------  ------------  ------------  ------------  ------------
<S>                       <C>        <C>           <C>          <C>           <C>           <C>           <C>
ASSETS
 Investments in New England Zenith Fund, at value
  (Note 2)........................................ $90,230,754  $79,002,470   $40,806,258   $204,689,531  $102,804,966

<CAPTION>
                            SHARES       COST
                          ---------- -------------
<S>                       <C>        <C>           <C>          <C>           <C>           <C>           <C>
 Back Bay Advisors Bond
  Income Series.........     889,850    97,906,181
 Back Bay Advisors Money
  Market Series.........     790,025    79,002,470
 Goldman Sachs Midcap
  Value Series..........     335,247    50,929,546
 Westpeak Growth and
  Income Series.........   1,031,285   204,615,937
 Loomis Sayles Small Cap
  Series................     509,617    78,511,042
 Salomon Brothers U.S.
  Government Series.....   3,089,392    35,130,811
 Loomis Sayles Balanced
  Series................   7,808,129   112,842,243
 Alger Equity Growth
  Series................  11,722,258   270,444,523
 Morgan Stanley
  International Magnum
  Equity Series.........   4,181,903    49,040,652
 Davis Venture Value
  Series................   9,818,642   206,506,417
 Solomon Brothers Bond
  Opportunities Series..   5,608,202    66,413,056
 MFS Investors Series...     586,545     5,849,817
 MFS Research Managers
  Series................     488,198     4,959,354
                                     -------------
    Total.................           1,262,152,049
                                     =============
 Amount due and accrued from contract-related
  transactions, net...............................     157,647      271,020        18,682        525,156       175,734
 Dividends receivable.............................     --            --            --            --            --
                                                   -----------  -----------   -----------   ------------  ------------
   Total Assets...................................  90,388,401   79,273,490    40,824,940    205,214,687   102,980,700
LIABILITIES
 Due to (from) New England Life Insurance Company.    (100,296)     (75,794)      (46,729)      (201,320)     (120,078)
                                                   -----------  -----------   -----------   ------------  ------------
NET ASSETS........................................ $90,288,105  $79,197,697   $40,778,211   $205,013,367  $102,860,622
                                                   ===========  ===========   ===========   ============  ============
NET ASSETS CONSIST OF:
 Net Assets attributable to Variable Annuity
  Contracts....................................... $87,968,368  $78,640,243   $40,006,487   $199,183,907  $101,172,571
 Annuity Reserves (Note 7)........................   2,319,737      557,454       771,724      5,829,460     1,688,051
                                                   -----------  -----------   -----------   ------------  ------------
    TOTAL NET ASSETS.............................. $90,288,105  $79,197,697   $40,778,211   $205,013,367  $102,860,622
                                                   ===========  ===========   ===========   ============  ============
</TABLE>


                       See Notes to Financial Statements

                                      F-2
<PAGE>


<TABLE>
<CAPTION>
    U.S.                       EQUITY     INTERNATIONAL   VENTURE         BOND                    RESEARCH
 GOVERNMENT     BALANCED       GROWTH     MAGNUM EQUITY    VALUE      OPPORTUNITIES  INVESTORS    MANAGERS
 SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT    SUB-ACCOUNT  SUB-ACCOUNT    SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT      TOTAL
 -----------  ------------  ------------  ------------- ------------  ------------- -----------  -----------  --------------
<S>           <C>           <C>           <C>           <C>           <C>           <C>          <C>          <C>
 $33,396,326  $108,142,585  $343,931,064   $59,173,929  $261,863,196   $59,839,516  $6,017,947   $5,848,614   $1,395,747,156










      67,817       116,587       976,484       170,465       592,742        61,884      33,542       81,586        3,249,346
     --            --            --            --            --            --           --           --             --
 -----------  ------------  ------------   -----------  ------------   -----------  ----------   ----------   --------------
  33,464,143   108,259,172   344,907,548    59,344,394   262,455,938    59,901,400   6,051,489    5,930,200   $1,398,996,502

     (37,027)     (124,699)     (400,679)      (68,371)     (296,113)      (68,704)     (6,689)     (19,911)      (1,566,410)
 -----------  ------------  ------------   -----------  ------------   -----------  ----------   ----------   --------------
 $33,427,116  $108,134,473  $344,506,869   $59,276,023  $262,159,825   $59,832,696  $6,044,800   $5,910,289    1,397,430,092
 ===========  ============  ============   ===========  ============   ===========  ==========   ==========   ==============

 $32,672,392  $106,082,861  $339,611,477   $58,469,314  $257,563,878   $57,959,437  $5,891,078   $5,910,289   $1,371,132,301
     754,724     2,051,612     4,895,392       806,709     4,595,947     1,873,259     153,722       --           26,297,791
 -----------  ------------  ------------   -----------  ------------   -----------  ----------   ----------   --------------
 $33,427,116  $108,134,473  $344,506,869   $59,276,023  $262,159,825   $59,832,696  $6,044,800   $5,910,289   $1,397,430,092
 ===========  ============  ============   ===========  ============   ===========  ==========   ==========   ==============
</TABLE>



                       See Notes to Financial Statements

                                      F-3
<PAGE>


               NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

                    STATEMENT OF ASSETS AND LIABILITIES

                      SEPTEMBER 30, 2000 (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         GROWTH AND      SMALL         U.S.
                                               BOND INCOME  MONEY MARKET  MIDCAP VALUE     INCOME         CAP       GOVERNMENT
                                               SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT
                                               -----------  ------------  ------------  ------------  ------------  -----------
<S>                   <C>        <C>           <C>          <C>           <C>           <C>           <C>           <C>
ASSETS
 Investments in New England Zenith Fund, at
  value (Note 2).............................. $97,510,897  $68,521,578   $48,868,917   $207,167,669  $167,358,997  $36,439,864

<CAPTION>
                        SHARES       COST
                      ---------- -------------
<S>                   <C>        <C>           <C>          <C>           <C>           <C>           <C>           <C>
 Back Bay Advisors
  Bond Income
  Series............     915,853   100,715,598
 Back Bay Advisors
  Money Market
  Series............     685,216    68,521,578
 Harris Oakmark
  Midcap Value
  Series............     356,864    54,024,235
 Westpeak Growth and
  Income Series.....   1,081,646   214,061,160
 Loomis Sayles Small
  Cap Series........     744,579   130,169,864
 Salomon Brothers
  U.S. Government
  Series............   3,168,684    36,069,682
 Balanced Series....   7,232,214   105,114,813
 Alger Equity Growth
  Series............  14,549,456   355,240,671
 Morgan Stanley
  International
  Magnum Equity
  Series............   5,290,758    63,985,610
 Davis Venture Value
  Series............  11,857,166   263,687,581
 Solomon Brothers
  Bond Opportunities
  Series............   5,507,000    65,347,095
 Putnam Large Cap
  Growth Portfolio..     897,757     8,890,083
 Putnam
  International
  Stock Portfolio...   1,230,312    16,559,457
 MFS Investors
  Series............   1,255,523    12,609,678
 MFS Research
  Managers Series...   2,711,723    33,056,657
                                 -------------
  Total.............             1,528,053,764
                                 =============
 Amount due and accrued from contract-related
  transactions, net...........................      88,742       55,786       121,701        117,188       220,897       38,888
 Dividends receivable.........................     --            --            --            --            --           --
                                               -----------  -----------   -----------   ------------  ------------  -----------
  Total Assets................................  97,599,639   68,577,365    48,990,618    207,284,857   167,579,894   36,478,752
LIABILITIES
 Due to (from) New England Life Insurance
  Company.....................................    (124,643)    (104,743)      (41,938)      (226,523)     (181,273)    (58,233)
                                               -----------  -----------   -----------   ------------  ------------  -----------
NET ASSETS.................................... $97,474,996  $68,472,622   $48,948,680   $207,058,333  $167,398,621  $36,420,520
                                               ===========  ===========   ===========   ============  ============  ===========
NET ASSETS CONSIST
 OF:
 Net Assets attributable to Variable Annuity
  Contracts................................... $94,692,040  $67,800,984   $48,066,566   $201,329,046  $165,058,971  $35,346,422
 Annuity Reserves (Note 7)....................   2,782,956      671,638       882,114      5,729,287     2,339,650    1,074,098
                                               -----------  -----------   -----------   ------------  ------------  -----------
  TOTAL NET ASSETS............................ $97,474,996  $68,472,622   $48,948,680   $207,058,333  $167,398,621  $36,420,520
                                               ===========  ===========   ===========   ============  ============  ===========
</TABLE>

                     See Notes to Financial Statements

                                      F-4
<PAGE>


<TABLE>
<CAPTION>
                EQUITY     INTERNATIONAL   VENTURE         BOND       LARGE CAP   INTERNATIONAL               RESEARCH
 BALANCED       GROWTH     MAGNUM EQUITY    VALUE      OPPORTUNITIES   GROWTH         STOCK      INVESTORS    MANAGERS
SUB-ACCOUNT  SUB-ACCOUNT    SUB-ACCOUNT  SUB-ACCOUNT    SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT
-----------  ------------  ------------- ------------  ------------- -----------  ------------- -----------  -----------
<S>          <C>           <C>           <C>           <C>           <C>          <C>           <C>          <C>
$99,659,910  $426,278,909   $66,504,830  $343,146,375   $61,147,869  $8,654,375    $15,612,664  $13,195,545  $35,577,806








    (16,321)      383,865       (12,354)      224,676        50,551     101,496        103,105       43,775      183,504
    --            --            --            --            --           --            --           --           --
-----------  ------------   -----------  ------------   -----------  ----------    -----------  -----------  -----------
 99,643,589   426,662,773    66,492,476   343,371,051    61,198,421   8,755,871     15,715,769   13,239,321   35,761,310

   (106,277)     (416,716)      (77,917)     (396,541)     (104,949)     (8,385)       (13,880)     (13,809)     (34,805)
-----------  ------------   -----------  ------------   -----------  ----------    -----------  -----------  -----------
$99,537,312  $426,246,057   $66,414,559  $342,974,510   $61,093,471  $8,747,486    $15,701,889  $13,225,512  $35,726,505
===========  ============   ===========  ============   ===========  ==========    ===========  ===========  ===========

$97,303,174  $420,315,622   $65,617,166  $337,419,130   $59,077,490  $8,686,036    $15,581,803  $13,067,725  $35,564,371
  2,234,138     5,930,435       797,393     5,555,380     2,015,981      61,450        120,086      157,787      162,134
-----------  ------------   -----------  ------------   -----------  ----------    -----------  -----------  -----------
$99,537,312  $426,246,057   $66,414,559  $342,974,510   $61,093,471  $8,747,486    $15,701,889  $13,225,512  $35,726,505
===========  ============   ===========  ============   ===========  ==========    ===========  ===========  ===========

<CAPTION>

    TOTAL
---------------
<C>
$1,695,646,205









     1,705,501
      --
---------------

 1,697,351,706
    (1,910,634)
---------------
 1,695,441,072
===============

$1,664,926,545
    30,514,527
---------------
$1,695,441,072
===============
</TABLE>

                     See Notes to Financial Statements

                                      F-5
<PAGE>

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

                            STATEMENT OF OPERATIONS

                      FOR THE YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
                             BOND         MONEY       MIDCAP      GROWTH AND      SMALL
                            INCOME       MARKET       VALUE         INCOME         CAP
                          SUB-ACCOUNT  SUB-ACCOUNT SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT
                          -----------  ----------- ------------  ------------  -----------
<S>                       <C>          <C>         <C>           <C>           <C>
INCOME
Dividends...............  $ 6,559,178  $2,699,253  $    508,794  $ 26,043,945  $   266,873
EXPENSES
Mortality, expense risk
 and administrative
 charges (Note 3).......      663,993     494,266       331,777     1,402,075      642,382
                          -----------  ----------  ------------  ------------  -----------
Net investment income
 (loss).................    5,895,185   2,204,987       177,017    24,641,870     (375,509)
NET REALIZED AND
 UNREALIZED GAIN (LOSS)
 ON INVESTMENTS
Net unrealized
 appreciation
 (depreciation) on
 investments:
  Beginning of period...     (867,486)     --        (9,390,649)   12,516,114      791,164
  End of period.........   (7,675,427)     --       (10,123,288)       73,594   24,293,924
                          -----------  ----------  ------------  ------------  -----------
Net change in unrealized
 appreciation
 (depreciation).........   (6,807,941)     --          (732,639)  (12,442,520)  23,502,760
Net realized gain (loss)
 on investments.........           41      --            28,021        (1,085)         674
                          -----------  ----------  ------------  ------------  -----------
Net realized and
 unrealized gain (loss)
 on investments.........   (6,807,900)     --          (704,618)  (12,443,605)  23,503,434
                          -----------  ----------  ------------  ------------  -----------
NET INCREASE (DECREASE)
 IN NET ASSETS RESULTING
 FROM OPERATIONS........  $  (912,715) $2,204,987  $   (527,601) $ 12,198,265  $23,127,925
                          ===========  ==========  ============  ============  ===========
</TABLE>
--------
*  For the period April 30, 1999 (Commencement of Operations) through December
   31, 1999.


                       See Notes to Financial Statements

                                      F-6
<PAGE>



<TABLE>
<CAPTION>
   U.S.                       EQUITY     INTERNATIONAL   VENTURE        BOND                   RESEARCH
GOVERNMENT      BALANCED      GROWTH     MAGNUM EQUITY    VALUE     OPPORTUNITIES INVESTORS*   MANAGERS*
SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT  SUB-ACCOUNT SUB-ACCOUNT    TOTAL
-----------   ------------  -----------  ------------- -----------  ------------- ----------- ----------- ------------
<S>           <C>           <C>          <C>           <C>          <C>           <C>         <C>         <C>
$ 1,970,055   $  6,438,184  $41,132,126   $   184,122  $ 4,886,753   $ 4,767,637   $ 14,406    $       0    95,471,326


    255,774        889,355    2,090,536       383,398    1,761,657       445,703      5,388       20,063     9,386,366
-----------   ------------  -----------   -----------  -----------   -----------   --------    ---------  ------------
  1,714,281      5,548,829   39,041,590      (199,276)   3,125,096     4,321,934      9,018      (20,063)   86,084,960




    148,686      7,370,426   40,449,754      (271,074)  27,953,818    (2,613,697)         0            0    76,087,056
 (1,734,485)    (4,699,658)  73,486,541    10,133,277   55,356,779    (6,573,540)   168,130      889,260   133,595,107
-----------   ------------  -----------   -----------  -----------   -----------   --------    ---------  ------------
 (1,883,171)   (12,070,084)  33,036,787    10,404,351   27,402,961    (3,959,843)   168,130      889,260    57,508,051
        707          3,722         (609)        1,414      (12,769)        4,820    103,828     (170,136)      (41,372)
-----------   ------------  -----------   -----------  -----------   -----------   --------    ---------  ------------

 (1,882,464)   (12,066,362)  33,036,178    10,405,765   27,390,192    (3,955,023)   271,958      719,124    57,466,679
-----------   ------------  -----------   -----------  -----------   -----------   --------    ---------  ------------

$  (168,183)  $ (6,517,533) $72,077,768   $10,206,489  $30,515,288   $   366,911   $280,976    $ 699,061  $143,551,639
===========   ============  ===========   ===========  ===========   ===========   ========    =========  ============
</TABLE>


                       See Notes to Financial Statements

                                      F-7
<PAGE>


               NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

                          STATEMENT OF OPERATIONS

         FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)

<TABLE>
<CAPTION>
                             BOND         MONEY       MIDCAP     GROWTH AND      SMALL         U.S.
                            INCOME       MARKET       VALUE        INCOME         CAP       GOVERNMENT    BALANCED
                          SUB-ACCOUNT  SUB-ACCOUNT SUB-ACCOUNT   SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT
                          -----------  ----------- ------------  -----------  -----------  ------------  -----------
<S>                       <C>          <C>         <C>           <C>          <C>          <C>           <C>
INCOME
Dividends...............  $         0  $3,015,727  $          0  $ 5,278,838  $ 1,316,580  $          0  $    36,012
EXPENSES
Mortality, expense risk
 and administrative
 charges (Note 3).......  $   789,552  $  593,366  $    360,337  $ 1,768,391  $ 1,162,810  $    291,451  $   875,389
                          -----------  ----------  ------------  -----------  -----------  ------------  -----------
Net investment income
 (loss).................     (789,552)  2,422,360      (360,337)   3,510,447      153,771      (291,451)    (839,377)
NET REALIZED AND
 UNREALIZED GAIN (LOSS)
 ON INVESTMENTS
Net unrealized
 appreciation
 (depreciation) on
 investments:
  Beginning of period...  $(7,678,490)     --      $(10,123,288) $    73,594  $24,293,924  $ (1,734,485) $(4,699,658)
  End of period.........  $(3,204,701)     --      $ (5,155,319) $(6,893,491) $37,189,132  $    370,183  $(5,454,903)
                          -----------  ----------  ------------  -----------  -----------  ------------  -----------
Net change in unrealized
 appreciation
 (depreciation).........    4,473,789      --         4,967,969   (6,967,085)  12,895,208     2,104,667     (755,245)
Net realized gain (loss)
 on investments.........  $    27,455      --      $     76,288  $     8,447  $   (12,803) $      5,160  $    21,693
                          -----------  ----------  ------------  -----------  -----------  ------------  -----------
Net realized and
 unrealized gain (loss)
 on investments.........    4,501,244      --         5,044,257   (6,958,638)  12,882,405     2,109,827     (733,553)
                          -----------  ----------  ------------  -----------  -----------  ------------  -----------
NET INCREASE (DECREASE)
 IN NET ASSETS RESULTING
 FROM OPERATIONS........  $ 3,711,692  $2,422,360  $  4,683,921  $(3,448,192) $13,036,175  $  1,818,375  $(1,572,930)
                          ===========  ==========  ============  ===========  ===========  ============  ===========
</TABLE>
--------

*  For the period May 1, 2000 (Commencement of Operations) through September
   30, 2000.

                     See Notes to Financial Statements

                                      F-8
<PAGE>



<TABLE>
<CAPTION>
  EQUITY      INTERNATIONAL   VENTURE        BOND      LARGE CAP*  INTERNATIONAL*              RESEARCH
  GROWTH      MAGNUM EQUITY    VALUE     OPPORTUNITIES   GROWTH        STOCK       INVESTORS   MANAGERS
SUB-ACCOUNT    SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT SUB-ACCOUNT     TOTAL
-----------   ------------- -----------  ------------- ----------- -------------- ----------- -----------  -----------
<S>           <C>           <C>          <C>           <C>         <C>            <C>         <C>          <C>

$ 4,408,824    $ 1,230,877  $         0   $         0   $       0    $  87,979     $  5,794   $   10,765    15,391,395



$ 3,415,349    $   556,884  $ 2,604,030   $   509,852   $  86,866    $  33,531     $ 80,795   $  177,949    13,306,551
-----------    -----------  -----------   -----------   ---------    ---------     --------   ----------   -----------

    993,475        673,992   (2,604,030)     (509,852)    (86,866)      54,448      (75,001)    (167,184)    2,084,844






$73,486,541    $10,133,277  $55,356,779   $(6,573,540)  $       0    $       0     $168,130   $  889,260   133,592,046
$71,038,238    $ 2,519,219  $79,458,794   $(4,199,226)  $(235,708)   $(946,794)    $585,868   $2,521,149   167,592,441
-----------    -----------  -----------   -----------   ---------    ---------     --------   ----------   -----------

 (2,448,302)    (7,614,057)  24,102,014     2,374,313    (235,709)    (946,795)     417,737    1,631,890    34,000,396

$  (207,616)   $      (971) $  (437,464)  $    28,722   $    (277)   $    (447)    $   (677)  $     (739)     (493,230)
-----------    -----------  -----------   -----------   ---------    ---------     --------   ----------   -----------

 (2,655,918)    (7,615,028)  23,664,550     2,403,035    (235,986)    (947,241)     417,061    1,631,150    33,507,165
-----------    -----------  -----------   -----------   ---------    ---------     --------   ----------   -----------


$(1,662,443)   $(6,941,036) $21,060,520   $ 1,893,184   $(322,851)   $(892,793)    $342,060   $1,463,966    35,592,011
===========    ===========  ===========   ===========   =========    =========     ========   ==========   ===========
</TABLE>

                     See Notes to Financial Statements

                                      F-9
<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, 1999

<TABLE>
<CAPTION>
                            BOND         MONEY       MIDCAP      GROWTH AND      SMALL
                           INCOME       MARKET        VALUE        INCOME         CAP
                         SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT
                         -----------  -----------  -----------  ------------  ------------
<S>                      <C>          <C>          <C>          <C>           <C>
FROM OPERATING
 ACTIVITIES
  Net investment income
   (loss)..............  $ 5,895,185  $ 2,204,987  $   177,017  $ 24,641,870  $   (375,509)
  Net realized and
   unrealized gain
   (loss) on
   investments.........   (6,807,900)     --          (704,618)  (12,443,605)   23,503,434
                         -----------  -----------  -----------  ------------  ------------
   Net increase
    (decrease) in net
    assets resulting
    from operations....     (912,715)   2,204,987     (527,601)   12,198,265    23,127,925
FROM CONTRACT-RELATED
 TRANSACTIONS
  Purchase payments
   transferred from New
   England Life
   Insurance Company...   39,592,895   87,153,491   11,422,989    73,643,643    19,263,023
  Net transfers (to)
   from other sub-
   accounts............   (3,435,277) (40,727,745)  (4,763,885)   17,973,384    (5,127,343)
  Net transfers to New
   England Life
   Insurance Company...   (6,081,823)  (8,373,126)  (2,637,565)   (9,888,722)   (4,635,188)
                         -----------  -----------  -----------  ------------  ------------
   Net Increase
    (decrease) in net
    assets resulting
    from contract-
    related
    transactions.......   30,075,795   38,052,621    4,021,539    81,728,305     9,500,492
                         -----------  -----------  -----------  ------------  ------------
  Net increase in net
   assets..............   29,163,080   40,257,608    3,493,938    93,926,570    32,628,417
NET ASSETS, AT
 BEGINNING OF THE
 PERIOD................   61,125,025   38,940,089   37,284,273   111,086,797    70,232,205
                         -----------  -----------  -----------  ------------  ------------
NET ASSETS, AT END OF
 THE PERIOD............  $90,288,105  $79,197,697  $40,778,211  $205,013,367  $102,860,622
                         ===========  ===========  ===========  ============  ============
</TABLE>
--------
*  For the period April 30, 1999 (Commencement of Operations) through December
   31, 1999.


                       See Notes to Financial Statements

                                      F-10
<PAGE>



<TABLE>
<CAPTION>
   U.S.                       EQUITY     INTERNATIONAL   VENTURE         BOND                    RESEARCH
GOVERNMENT     BALANCED       GROWTH     MAGNUM EQUITY    VALUE      OPPORTUNITIES INVESTORS*    MANAGERS*
SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT    SUB-ACCOUNT  SUB-ACCOUNT    SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT      TOTAL
-----------  ------------  ------------  ------------- ------------  ------------- -----------  -----------  --------------
<S>          <C>           <C>           <C>           <C>           <C>           <C>          <C>          <C>
$ 1,714,281  $  5,548,829  $ 39,041,590   $  (199,276) $  3,125,096   $ 4,321,934  $    9,018   $  (20,063)  $   86,084,960

 (1,882,464)  (12,066,362)   33,036,178    10,405,765    27,390,192    (3,955,023)    271,958      719,124       57,466,679
-----------  ------------  ------------   -----------  ------------   -----------  ----------   ----------   --------------

   (168,183)   (6,517,533)   72,077,768    10,206,489    30,515,288       366,911     280,976      699,061      143,551,639


 11,676,892    36,915,088   105,766,344    14,380,644    82,196,529    14,472,208   3,188,388    2,588,796      502,260,930
   (375,655)   (8,372,542)   28,991,618     1,583,012    13,440,194    (4,639,463)  2,724,877    2,728,825         --

 (3,080,296)   (7,725,407)  (16,083,618)   (3,417,967)  (15,932,494)   (4,936,143)   (149,441)    (106,393)     (83,048,184)
-----------  ------------  ------------   -----------  ------------   -----------  ----------   ----------   --------------

  8,220,941    20,817,139   118,674,344    12,545,689    79,704,229     4,896,602   5,763,824    5,211,228      419,212,747
-----------  ------------  ------------   -----------  ------------   -----------  ----------   ----------   --------------
  8,052,757    14,299,606   190,752,112    22,752,178   110,219,517     5,263,513   6,044,800    5,910,289      562,764,385
 25,374,358    93,834,867   153,754,757    36,523,845   151,940,308    54,569,183           0            0      834,665,707
-----------  ------------  ------------   -----------  ------------   -----------  ----------   ----------   --------------
$33,427,116  $108,134,473  $344,506,869   $59,276,023  $262,159,825   $59,832,696  $6,044,800   $5,910,289   $1,397,430,092
===========  ============  ============   ===========  ============   ===========  ==========   ==========   ==============
</TABLE>


                       See Notes to Financial Statements

                                      F-11
<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-12
<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-13
<PAGE>


               NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

                    STATEMENT OF CHANGES IN NET ASSETS

         FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)

<TABLE>
<CAPTION>
                           BOND         MONEY        MIDCAP      GROWTH AND      SMALL          U.S.
                          INCOME        MARKET        VALUE        INCOME         CAP        GOVERNMENT     BALANCED
                        SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT
                        -----------  ------------  -----------  ------------  ------------  ------------  ------------
<S>                     <C>          <C>           <C>          <C>           <C>           <C>           <C>
FROM OPERATING
 ACTIVITIES
  Net investment
   income (loss)......  $  (789,552) $  2,422,360  $  (360,337) $  3,510,447  $    153,771  $   (291,451) $   (839,377)
  Net realized and
   unrealized gain
   (loss) on
   investments........    4,501,244       --         5,044,257    (6,958,638)   12,882,405     2,109,827      (733,553)
                        -----------  ------------  -----------  ------------  ------------  ------------  ------------
   Net increase
    (decrease) in net
    assets resulting
    from operations...    3,711,692     2,422,360    4,683,921    (3,448,192)   13,036,175     1,818,375    (1,572,930)
FROM CONTRACT-RELATED
 TRANSACTIONS
  Purchase payments
   transferred from
   New England Life
   Insurance Company..  $15,467,488  $ 45,707,153  $ 6,986,036  $ 30,658,365  $ 38,003,316    $5,277,972  $ 15,915,304
  Net transfers (to)
   from other sub-
   accounts...........  $(5,976,338) $(50,236,785) $(1,183,076) $(12,522,251) $ 21,611,500   $(1,533,657) $(15,737,029)
  Net transfers to
   New England Life
   Insurance Company..  $(6,015,952) $ (8,614,741) $(2,316,414) $(12,642,956) $ (8,112,992)  $(2,569,288) $ (7,202,507)
                        -----------  ------------  -----------  ------------  ------------  ------------  ------------
   Net Increase
    (decrease) in net
    assets resulting
    from contract-
    related
    transactions......    3,475,198   (13,144,371)   3,486,547     5,493,158    51,501,824     1,175,027    (7,024,232)
                        -----------  ------------  -----------  ------------  ------------  ------------  ------------
  Net increase in net
   assets.............    7,186,890   (10,722,011)   8,170,468     2,044,966    64,537,999     2,993,403    (8,597,162)
NET ASSETS, AT
 BEGINNING OF THE
 PERIOD...............  $90,288,105  $ 79,194,634  $40,778,211  $205,013,368  $102,860,622   $33,427,116  $108,134,474
                        -----------  ------------  -----------  ------------  ------------  ------------  ------------
NET ASSETS, AT END OF
 THE PERIOD...........  $97,474,996  $ 68,472,622  $48,948,680  $207,058,333  $167,398,621   $36,420,520  $ 99,537,312
                        ===========  ============  ===========  ============  ============  ============  ============
</TABLE>
-------

*  For the period May 1, 2000 (Commencement of Operations) through September
   30, 2000.

                     See Notes to Financial Statements

                                      F-14
<PAGE>



<TABLE>
<CAPTION>
    EQUITY      INTERNATIONAL   VENTURE         BOND      LARGE CAP*   INTERNATIONAL*               RESEARCH
    GROWTH      MAGNUM EQUITY    VALUE      OPPORTUNITIES   GROWTH         STOCK       INVESTORS    MANAGERS
 SUB-ACCOUNT     SUB-ACCOUNT  SUB-ACCOUNT    SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT  SUB-ACCOUNT      TOTAL
 ------------   ------------- ------------  ------------- -----------  -------------- -----------  -----------  --------------
 <S>            <C>           <C>           <C>           <C>          <C>            <C>          <C>          <C>

 $    993,475    $   673,992  $ (2,604,030)  $  (509,852) $  (86,866)   $    54,448   $   (75,001) $  (167,184) $    2,084,844
   (2,655,918)    (7,615,028)   23,664,550     2,403,035    (235,986)      (947,241)      417,061    1,631,150      33,507,165
 ------------    -----------  ------------   -----------  ----------    -----------   -----------  -----------  --------------


   (1,662,443)    (6,941,036)   21,060,520     1,893,184    (322,851)      (892,793)      342,060    1,463,966      35,592,011




 $ 86,722,984    $14,524,562  $ 63,726,349   $ 7,780,537  $5,918,487    $ 9,236,281   $ 5,030,899  $14,881,048     365,836,781

 $ 23,615,448    $ 3,256,235  $ 15,505,046   $(3,936,030) $3,134,610    $ 7,483,661   $ 2,153,275  $14,365,390        --


 $(26,936,800)   $(3,701,223) $(19,477,231)  $(4,476,915) $   17,240    $  (125,262)  $  (345,523) $  (894,188)   (103,414,752)
 ------------    -----------  ------------   -----------  ----------    -----------   -----------  -----------  --------------




   83,401,632     14,079,573    59,754,164      (632,409)  9,070,336     16,594,680     6,838,652   28,352,250     262,422,031
 ------------    -----------  ------------   -----------  ----------    -----------   -----------  -----------  --------------

   81,739,190      7,138,538    80,814,684     1,260,775   8,747,485     15,701,888     7,180,712   29,816,217     298,014,041

 $344,506,869    $59,276,022  $262,159,826   $59,832,696      --             --       $ 6,044,801  $ 5,910,290   1,397,427,032
 ------------    -----------  ------------   -----------  ----------    -----------   -----------  -----------  --------------

 $426,246,057    $66,414,559  $342,974,510   $61,093,471  $8,747,486    $15,701,889   $13,225,512  $35,726,505  $1,695,441,072
 ============    ===========  ============   ===========  ==========    ===========   ===========  ===========  ==============
</TABLE>


                       See Notes to Financial Statements

                                      F-15
<PAGE>


              NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

(INFORMATION WITH RESPECT TO THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 IS
                                UNAUDITED)

                      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. NELICO is
an indirect wholly-owned subsidiary of Metropolitan Life Insurance Company.

  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 fifteen investment sub-accounts as of September 30, 2000
each of which invests in the shares of one series of the New England Zenith
Fund ("Zenith Fund") and the Metropolitan Series Fund ("Metropolitan Fund").
The series of the Zenith Fund and the Metropolitan Series Fund in which the
sub-accounts invest are referred to herein as the "Eligible Funds". The Zenith
Fund and the Metropolitan Series Fund are diversified, open-end management
investment companies. The Account purchases or redeems shares of the fifteen
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 (the
"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.

  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%

                                     F-16
<PAGE>


              NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

(INFORMATION WITH RESPECT TO THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 IS
                                UNAUDITED)

                 NOTES TO FINANCIAL STATEMENTS--CONTINUED

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. New England Investment Management, Inc. (previously 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 Income          New England Investment Management, Inc.*     Back Bay Advisors, L.P. *
Back Bay Advisors Money Market         New England Investment Management, Inc.*     Back Bay Advisors, L.P. *
Harris Oakmark Midcap Value            New England Investment Management, Inc.*     Harris Associates L.P. *
Westpeak Growth and Income             New England Investment Management, Inc.*     Westpeak Investment Advisors, L.P. *
Loomis Sayles Small Cap                New England Investment Management, Inc.*     Loomis, Sayles & Company, L.P. *
Salomon Brothers U.S. Government       New England Investment Management, Inc.*     Salomon Brothers Asset Management Inc
Balanced                               New England Investment Management, Inc.*     Wellington Management Company, LLP
Alger Equity Growth                    New England Investment Management, Inc.*     Fred Alger Management, Inc.
Morgan Stanley International           New England Investment Management, Inc.*     Morgan Stanley Dean Witter Investment
Magnum Equity                                                                       Management Inc.
Davis Venture Value                    New England Investment Management, Inc.*     Davis Selected Advisers, L.P. (a)
Salomon Brothers Strategic Bond        New England Investment Management, Inc.*     Salomon Brothers Asset
Opportunities                                                                       Management Inc. (b)
MFS Investors                          New England Investment Management, Inc.*     Massachusetts Financial Services Company
MFS Research Managers                  New England Investment Management, Inc.*     Massachusetts Financial Services Company
</TABLE>
--------

 *  An affiliate of NELICO

(a) Davis Selected Adivisors, 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 Solomon
    Brothers Asset Management Inc.

(c) Effective March 26, 1999, TNE Advisers, Inc. changed its name to New
    England Investment Management, Inc.

    The Harris Oakmark Mid Cap Value Series' sub-adviser was Loomis Sayles until
May 1, 1998, when Goldman Sachs Asset Management, a separate operating
division of Goldman Sachs & Co. became the sub-adviser. Harrris Associates
became the sub-adviser on May 1, 2000. The Balanced Series' sub-adviser was
Loomis Sayles until May 1, 2000, when Wellington Management Company became
sub-adviser.

    Metropolitan Life Insurance Company is investment adviser for the
Metropolitan Series Fund Portfolios. Putnam Investment Management, Inc. is the
sub-investment manager of the Putnam Large Cap Growth Portfolio and the Putnam
International Stock Portfolio.

                                     F-17
<PAGE>


               NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

 (INFORMATION WITH RESPECT TO THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 IS
                                UNAUDITED)

                 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, 1999:

<TABLE>
<CAPTION>
                                                        PURCHASES      SALES
                                                       ------------ ------------
   <S>                                                 <C>          <C>
   Back Bay Advisors Bond Income Series..............  $ 56,789,463 $ 27,325,489
   Back Bay Advisors Money Market Series.............   130,805,428   93,243,312
   Goldman Sachs Midcap Value Series.................    19,580,358   15,882,402
   Westpeak Growth and Income Series.................   113,176,629   32,797,935
   Loomis Sayles Small Cap Series....................    31,025,923   22,123,169
   Salomon Brothers U.S. Government Series...........    18,500,389   10,520,846
   Loomis Sayles Balanced Series.....................    51,003,101   31,046,084
   Alger Equity Growth Series........................   164,961,156   48,170,939
   Morgan Stanley International Magnum Equity Series.    23,249,623   11,049,891
   Davis Venture Value Series........................   118,567,208   40,511,024
   Salomon Brothers Strategic Bond Opportunities
    Series...........................................    21,640,875   17,233,423
   MFS Investors Series *............................     6,757,970      992,864
   MFS Research Managers *...........................     5,969,721      758,645
</TABLE>
  --------

  *  For the period April 30, 1999 (Commencement of Operations) to December
     31, 1999.

  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 nine months ended September 30, 2000:

<TABLE>
<CAPTION>
                                                        PURCHASES      SALES
                                                       ------------ ------------
   <S>                                                 <C>          <C>
   Back Bay Advisors Bond Income Series..............  $ 25,055,869 $ 22,338,825
   Back Bay Advisors Money Market Series.............    86,388,874  100,097,519
   Harris Oakmark Midcap Value Series................    14,423,264   11,309,977
   Westpeak Growth and Income Series.................    50,687,425   46,898,064
   Loomis Sayles Small Cap Series....................    71,558,549   21,158,185
   Salomon Brothers U.S. Government Series...........     9,637,324    8,730,995
   Balanced Series...................................    23,123,397   31,042,833
   Alger Equity Growth Series........................   140,307,366   60,304,469
   Morgan Stanley International Magnum Equity Series.    34,524,005   20,991,483
   Davis Venture Value Series........................    98,690,367   41,467,420
   Salomon Brothers Strategic Bond Opportunities
    Series...........................................    12,159,665   13,234,940
   MFS Investors Series..............................     9,801,409    3,036,411
   MFS Research Managers.............................    33,605,038    5,415,842
   Putnam Large Cap Growth Portfolio.................    10,010,156    1,018,299
   Putnam International Stock Portfolio..............    18,485,001    1,909,970
</TABLE>
  --------

  *  For the period May 1, 2000 (Commencement of Operations) to September 30,
     2000.

                                      F-18
<PAGE>


              NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

(INFORMATION WITH RESPECT TO THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 IS
                                UNAUDITED)

                 NOTES TO FINANCIAL STATEMENTS--CONTINUED

7. ANNUITY RESERVES.

  For contracts payable on or after January 1, 1998, annuity reserves are
computed according to the Annuity 2000 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.

8. INCREASES (DECREASES) IN ACCUMULATION UNITS.

  A summary of units outstanding for variable annuity contracts for the year
ended December 31, 1999 and the nine months ended September 30, 2000:

<TABLE>
<CAPTION>
                       BOND            MONEY          MIDCAP        GROWTH AND         SMALL
                      INCOME          MARKET           VALUE          INCOME            CAP       U.S. GOVERNMENT    BALANCED
AGS                 SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT
---               --------------- --------------- --------------- --------------- --------------- --------------- ---------------
<S>               <C>             <C>             <C>             <C>             <C>             <C>             <C>
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 49,660,332.7705
Units Purchased.   3,115,418.8916 19,977,413.0165  2,988,562.7904  9,209,262.8584  3,800,701.7241  2,748,826.4094  5,382,985.1021
Units Redeemed..   3,461,857.8005 19,706,351.9200  5,859,057.4202  4,261,954.6267  8,269,380.3948  4,014,490.5355 10,546,113.7898
                  --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Units
 Outstanding
 12/31/99.......  14,185,135.5317 14,978,748.5421 16,341,180.8477 40,417,726.2362 30,704,661.1452 14,531,962.1889 44,497,204.0828
                  =============== =============== =============== =============== =============== =============== ===============
Unit Value
 12/31/99.......           3.6223          2.1897          1.7844          3.0193          2.4409          1.3036          1.6359
                  =============== =============== =============== =============== =============== =============== ===============
</TABLE>

<TABLE>
<CAPTION>
                             EQUITY       INTERNATIONAL      VENTURE          BOND                         RESEARCH
                             GROWTH       MAGNUM EQUITY       VALUE       OPPORTUNITIES    INVESTORS       MANAGERS
                           SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT    SUB-ACCOUNT    SUB-ACCOUNT
                         --------------- --------------- --------------- --------------- -------------- --------------
<S>                      <C>             <C>             <C>             <C>             <C>            <C>
Units Outstanding
 12/31/98............... 49,765,211.0935 29,227,367.9117 57,835,822.2841 34,844,516.2721         0.0000         0.0000
Units Purchased......... 13,349,863.4121  3,527,951.0480  8,512,416.2025  3,370,366.9390 2,585,525.9017 2,143,475.4115
Units Redeemed..........  6,488,692.0432  5,386,124.0611  7,381,239.9297  7,214,892.8848   282,543.1229   296,682.1191
                         --------------- --------------- --------------- --------------- -------------- --------------
Units Outstanding
 12/31/99............... 56,626,382.4624 27,369,194.8986 58,966,998.5569 30,999,990.3263 2,302,982.7788 1,846,793.2924
                         =============== =============== =============== =============== ============== ==============
Unit Value 12/31/99.....          3.7442          1.4307          2.8315          1.4434         1.0192         1.1872
                         =============== =============== =============== =============== ============== ==============
</TABLE>

<TABLE>
<CAPTION>
                       BOND            MONEY          MIDCAP       GROWTH AND         SMALL
                      INCOME          MARKET          VALUE          INCOME            CAP       U.S. GOVERNMENT    BALANCED
AGS 98              SUB-ACCOUNT     SUB-ACCOUNT    SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT
------            --------------- --------------- -------------- --------------- --------------- --------------- ---------------
<S>               <C>             <C>             <C>            <C>             <C>             <C>             <C>
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  4,074,977.5403
Units Purchased.  12,802,287.9622 38,540,545.5281 5,917,016.7148 25,031,244.5586  9,984,580.8601  9,387,259.1794 19,915,645.4082
Units Redeemed..   4,028,616.4100 20,914,268.8566   863,182.7303  1,691,518.5722    749,086.7917  1,694,728.3944  2,329,722.8953
                  --------------- --------------- -------------- --------------- --------------- --------------- ---------------
Units
 Outstanding
 12/31/99.......  10,828,514.0535 21,362,974.0533 6,533,739.7610 27,574,789.3153 11,468,962.5318 11,139,816.8193 21,660,900.0532
                  =============== =============== ============== =============== =============== =============== ===============
Unit Value
 12/31/99.......           3.5928          2.1719         1.7784          3.0093          2.4340          1.3002          1.6316
                  =============== =============== ============== =============== =============== =============== ===============
</TABLE>

<TABLE>
<CAPTION>
                             EQUITY       INTERNATIONAL      VENTURE          BOND                         RESEARCH
                             GROWTH       MAGNUM EQUITY       VALUE       OPPORTUNITIES    INVESTORS       MANAGERS
                           SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT    SUB-ACCOUNT    SUB-ACCOUNT
                         --------------- --------------- --------------- --------------- -------------- --------------
<S>                      <C>             <C>             <C>             <C>             <C>            <C>
Units Outstanding
 12/31/98...............  4,586,101.9363  2,163,155.6514  4,389,416.1760  2,999,423.4478         0.0000         0.0000
Units Purchased......... 34,900,701.5661 13,616,155.4098 30,696,450.5464 11,475,555.7583 3,965,936.0682 3,327,047.8906
Units Redeemed..........  4,012,058.5942  1,680,291.6608  1,378,210.9852  3,995,135.2619   336,984.4395   194,443.6469
                         --------------- --------------- --------------- --------------- -------------- --------------
Units Outstanding
 12/31/99............... 35,474,744.9082 14,099,019.4004 33,707,655.7372 10,479,843.9442 3,628,951.6287 3,132,604.2437
                         =============== =============== =============== =============== ============== ==============
Unit Value 12/31/99.....          3.7346          1.4270          2.8242          1.4397         1.0189         1.1868
                         =============== =============== =============== =============== ============== ==============
</TABLE>

                                     F-19
<PAGE>


               NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

 (INFORMATION WITH RESPECT TO THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 IS
                                UNAUDITED)

                 NOTES TO FINANCIAL STATEMENTS--CONTINUED

<TABLE>
<CAPTION>
                                                                    GROWTH AND
                    BOND INCOME    MONEY MARKET    MIDCAP VALUE     INCOME SUB-      SMALL CAP    U.S. GOVERNMENT    BALANCED
AGS                 SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT       ACCOUNT       SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT
---               --------------- --------------- --------------- --------------- --------------- --------------- ---------------
<S>               <C>             <C>             <C>             <C>             <C>             <C>             <C>
Units
 Outstanding
 12/31/99.......  14,185,135.5317 14,978,748.5421 16,341,180.8477 40,417,726.2362 30,704,661.1452 14,531,962.1889 44,497,204.0828
Units Purchased.     319,273.1052    310,302.0568    233,145.1778    782,552.0926  5,134,606.5757    429,937.7248    934,347.0049
Units Redeemed..   1,808,524.3028  4,351,110.4622  2,174,238.8830  5,857,418.9075  2,453,056.7799  2,299,606.3231  9,518,259.4378
                  --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Units
 Outstanding
 09/30/00.......  12,695,884.3341 10,937,940.1367 14,400,087.1425 35,342,859.4213 33,386,210.9410 12,662,293.5906 35,913,291.6499
                  =============== =============== =============== =============== =============== =============== ===============
Unit Value
 09/30/00.......           3.7652          2.2663          1.9873          2.9607          2.7164          1.3728         1.61183
                  =============== =============== =============== =============== =============== =============== ===============
</TABLE>

<TABLE>
<CAPTION>
                                          INTERNATIONAL                       BOND       MFS INVESTORS   MFS RESEARCH
                          EQUITY GROWTH   MAGNUM EQUITY   VENTURE VALUE   OPPORTUNITIES      SERIES        MANAGER
                           SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT    SUB-ACCOUNT    SUB-ACCOUNT
                         --------------- --------------- --------------- --------------- -------------- --------------
<S>                      <C>             <C>             <C>             <C>             <C>            <C>
Units Outstanding
 12/31/99............... 56,626,382.4624 27,369,194.8986 58,966,998.5569 30,999,990.3263 2,302,982.7788 1,846,793.2924
Units Purchased.........  1,030,888.7822    638,941.8892    933,154.7136    603,149.0936 1,537,345.4731 6,574,807.8686
Units Redeemed..........  1,887,542.0129    230,619.9061  2,213,639.5444  4,819,045.0695   142,707.0584   702,829.5980
                         --------------- --------------- --------------- --------------- -------------- --------------
Units Outstanding
 09/30/00............... 55,769,729.2317 27,777,516.8817 57,686,513.7261 26,784,094.3504 3,697,621.1935 7,718,771.5630
                         =============== =============== =============== =============== ============== ==============
Unit Value 09/30/00.....          3.7408          1.2807          3.0416          1.4865         1.0341         1.2876
                         =============== =============== =============== =============== ============== ==============
</TABLE>

<TABLE>
<CAPTION>
                                                       PUTNAM         PUTNAM
                                                     LARGE CAP    INTERNATIONAL
                                                    SUB-ACCOUNT    SUB-ACCOUNT
                                                   -------------- --------------
<S>                                                <C>            <C>
Units Outstanding 05/05/00........................    12,655.9364     4,246.4887
Units Purchased................................... 1,319,668.0460 2,399,426.1926
Units Redeemed....................................    88,971.8757   320,529.9526
                                                   -------------- --------------
Units Outstanding 09/30/00........................ 1,243,352.1067 2,083,142.7287
                                                   ============== ==============
Unit Value 09/30/00...............................         0.9586         1.5353
                                                   ============== ==============
</TABLE>

                                      F-20
<PAGE>


               NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

 (INFORMATION WITH RESPECT TO THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 IS
                                UNAUDITED)

                 NOTES TO FINANCIAL STATEMENTS--CONTINUED

<TABLE>
<CAPTION>
                                                                    GROWTH AND
                    BOND INCOME    MONEY MARKET    MIDCAP VALUE       INCOME         SMALL CAP    U.S. GOVERNMENT    BALANCED
AGS 98              SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT
------            --------------- --------------- --------------- --------------- --------------- --------------- ---------------
<S>               <C>             <C>             <C>             <C>             <C>             <C>             <C>
Units
 Outstanding
 12/31/99.......  10,828,514.0535 21,363,853.4941  6,533,739.7610 27,574,789.3153 11,468,962.5318 11,139,816.8193 21,660,900.0532
Units Purchased.   2,930,888.4621    347,696.6757  4,470,266.6554  8,255,710.6497 18,267,879.6497  3,286,465.5467  4,823,619.4619
Units Redeemed..     448,669.4469  2,418,374.0529    740,301.5183  1,105,562.1809  1,403,525.3000    504,523.3178    565,935.0913
                  --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Units
 Outstanding
 09/30/00.......  13,310,733.0687 19,293,176.1169 10,263,704.8981 34,724,937.7841 28,333,316.8815 13,921,759.0482 25,918,584.4238
                  =============== =============== =============== =============== =============== =============== ===============
Unit Value
 09/30/00.......           3.7332          2.2470          1.9800          2.9497          2.7077          1.3688          1.6071
                  =============== =============== =============== =============== =============== =============== ===============
</TABLE>

<TABLE>
<CAPTION>
                                          INTERNATIONAL                       BOND       MFS INVESTORS   MFS RESEARCH
                          EQUITY GROWTH   MAGNUM EQUITY   VENTURE VALUE   OPPORTUNITIES      SERIES         MANAGER
                           SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT    SUB-ACCOUNT     SUB-ACCOUNT
                         --------------- --------------- --------------- --------------- -------------- ---------------
<S>                      <C>             <C>             <C>             <C>             <C>            <C>
Units Outstanding
 12/31/99............... 35,474,744.9082 14,099,019.4004 33,707,655.7372 10,479,843.9442 3,628,951.6287  3,132,604.2437
Units Purchased......... 24,888,324.0418 11,936,619.0312 23,646,458.1543  4,509,150.7045 5,968,047.8402 19,070,315.1546
Units Redeemed..........  2,013,416.0966  1,874,623.9981  2,102,104.3421    618,481.2183   498,745.3173  2,161,477.5893
                         --------------- --------------- --------------- --------------- -------------- ---------------
Units Outstanding
 09/30/00............... 58,349,652.8534 24,161,014.4335 55,252,009.5494 14,370,513.4304 9,098,254.1516 20,041,441.8090
                         =============== =============== =============== =============== ============== ===============
Unit Value 09/30/00.....          3.7298          1.2769          3.0327          1.4821         1.0334          1.2867
                         =============== =============== =============== =============== ============== ===============
</TABLE>

<TABLE>
<CAPTION>
                                                       PUTNAM         PUTNAM
                                                     LARGE CAP    INTERNATIONAL
                                                    SUB-ACCOUNT    SUB-ACCOUNT
                                                   -------------- --------------
<S>                                                <C>            <C>
Units Outstanding 05/01/00........................   121,074.2200    28,582.3500
Units Purchased................................... 7,844,676.1805 8,831,896.5563
Units Redeemed....................................    82,143.2200   678,312.0030
                                                   -------------- --------------
Units Outstanding 09/30/00........................ 7,883,607.1805 8,182,166.9033
                                                   ============== ==============
Unit Value 09/30/00...............................         0.9584         1.5281
                                                   ============== ==============
</TABLE>

                                      F-21
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Independent Auditors' Report

The Board of Directors and Policyholders of New England Life Insurance
Company:

We have audited the accompanying consolidated balance sheets of New England
Life Insurance Company and subsidiaries (the "Company") as of December 31,
1999 and 1998, 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, 1999. These consolidated 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 New England Life Insurance
Company and subsidiaries as of December 31, 1999 and 1998, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1999 in conformity with generally accepted
accounting principles.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
February 4, 2000

                                     F-22
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Balance Sheets

DECEMBER 31, 1999 AND 1998 AND SEPTEMBER 30, 2000 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  SEPTEMBER 30,
                                              1999        1998        2000
                                           ----------  ---------- -------------
                                                                   (UNAUDITED)
<S>                                        <C>         <C>        <C>
ASSETS
Investments:
 Fixed Maturities, Available for Sale, at
  Estimated Fair Value.................... $  735,697  $  769,364  $  763,577
 Equity Securities, at Fair Value.........     22,685      13,240      25,842
 Policy Loans.............................    181,995     135,800     225,898
 Short-Term Investments...................     62,619      52,285       8,418
 Other Invested Assets....................     16,798      16,372      85,110
                                           ----------  ----------  ----------
    Total Investments.....................  1,019,794     987,061   1,108,845
Cash and Cash Equivalents.................     84,371      43,598      51,588
Deferred Policy Acquisition Costs.........    930,703     710,961   1,028,707
Accrued Investment Income.................     29,940      21,802      31,473
Premiums and Other Receivables............    119,750     145,117     239,751
Other Assets..............................    105,982     111,067     106,137
Separate Account Assets...................  4,840,029   3,258,383   5,585,571
                                           ----------  ----------  ----------
    TOTAL ASSETS.......................... $7,130,569  $5,277,989  $8,152,072
                                           ==========  ==========  ==========
LIABILITIES AND EQUITY
LIABILITIES
Future Policy Benefits.................... $  614,927  $  561,746  $  657,410
Policyholder Account Balances.............    325,385     210,242     386,230
Other Policyholder Funds..................    245,339     186,255     371,500
Policyholder Dividends Payable............        977         609       1,463
Short and Long-Term Debt..................     75,053      82,855      87,625
Income Taxes Payable:
 Current..................................        (77)     10,984        (863)
 Deferred.................................     38,669      42,334      10,860
Due to Parent.............................     72,247         789
Other Liabilities.........................     64,717      78,721     205,009
Separate Account Liabilities..............  4,840,029   3,258,383   5,585,571
                                           ----------  ----------  ----------
    TOTAL LIABILITIES.....................  6,277,266   4,432,918   7,304,805
                                           ----------  ----------  ----------
Commitments and Contingencies (Notes 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       2,500
Preferred Stock, $0.00 par value;
 1,000,000 shares authorized, 200,000
 shares issued and outstanding............          0           0           0
Contributed Capital.......................    647,273     647,273     647,272
Retained Earnings.........................    214,528     177,859     219,119
Accumulated Other Comprehensive Income....    (10,998)     17,439     (21,624)
                                           ----------  ----------  ----------
    TOTAL EQUITY..........................    853,303     845,071     847,267
                                           ----------  ----------  ----------
TOTAL LIABILITIES AND EQUITY.............. $7,130,569  $5,277,989  $8,152,072
                                           ==========  ==========  ==========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-23
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Statements of Income and Comprehensive Income

FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997, AND NINE MONTHS ENDED
SEPTEMBER 30, 2000 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  SEPTEMBER 30,
                                        1999      1998     1997       2000
                                      --------  -------- -------- -------------
                                                                   (UNAUDITED)
<S>                                   <C>       <C>      <C>      <C>
REVENUES
Premiums............................. $123,638  $100,689 $ 63,616   $ 97,127
Universal Life and Investment-Type
 Product Policy Fees.................  220,841   173,766  145,157    168,181
Net Investment Income................   68,498    49,077   61,059     50,702
Investment Gains (Losses), Net.......    2,922     5,610      890       (838)
Commissions, Fees and Other Income...  265,891   192,411   28,302    271,845
                                      --------  -------- --------   --------
  TOTAL REVENUES.....................  681,790   521,553  299,024    587,017
                                      --------  -------- --------   --------
BENEFITS AND OTHER DEDUCTIONS
Policyholder Benefits................  193,293   149,687  100,180    120,082
Interest Credited to Policyholder
 Account Balances....................   10,721     7,735    6,220     14,725
Policyholder Dividends...............   20,827    22,989   21,325     17,074
Other Operating Costs and Expenses...  381,881   316,659  144,342    410,747
                                      --------  -------- --------   --------
  TOTAL BENEFITS AND OTHER
   DEDUCTIONS........................  606,722   497,070  272,067    562,628
                                      --------  -------- --------   --------
Income From Operations Before Income
 Taxes...............................   75,068    24,483   26,957     24,389
Income Taxes.........................   29,344    13,046    4,988     11,994
                                      --------  -------- --------   --------
NET INCOME........................... $ 45,724  $ 11,437 $ 21,969   $ 12,395
                                      --------  -------- --------   --------
Other Comprehensive Income (Loss),
 Net of Tax:
 Unrealized Investment Gains (Losses)
  (Net of Related Offsets,
  Reclassification Adjustments and
  Income Taxes, of $45,376, $(299)
  and $(16,588), Respectively).......  (28,437)       92   13,620    (21,624)
                                      --------  -------- --------   --------
COMPREHENSIVE INCOME................. $ 17,287  $ 11,529 $ 35,589   $ (9,229)
                                      ========  ======== ========   ========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-24
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Statements of Equity

FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997, AND NINE MONTHS ENDED
SEPTEMBER 30, 2000 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                    CAPITAL              ACCUMULATED
                                    STOCK &                 OTHER
                                  CONTRIBUTED RETAINED  COMPREHENSIVE
                                    CAPITAL   EARNINGS     INCOME      TOTAL
                                  ----------- --------  ------------- --------
<S>                               <C>         <C>       <C>           <C>
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
Net Income.......................               45,724                  45,724
Preferred Stock Dividends........               (9,055)                 (9,055)
Change in Net Unrealized
 Investment Gains (Losses).......                          (28,437)    (28,437)
                                   --------   --------    --------    --------
BALANCES AT DECEMBER 31, 1999....  $649,773   $214,528    $(10,998)   $853,303
                                   ========   ========    ========    ========
<CAPTION>
                                    CAPITAL              ACCUMULATED
                                    STOCK &                 OTHER
                                  CONTRIBUTED RETAINED  COMPREHENSIVE
                                    CAPITAL   EARNINGS     INCOME      TOTAL
                                  ----------- --------  ------------- --------
<S>                               <C>         <C>       <C>           <C>
                                                  (UNAUDITED)
BALANCES AT DECEMBER 31, 1999....  $649,772   $214,528    $(10,998)   $853,302
Net Income.......................               12,395                  12,395
Preferred Stock Dividends........               (7,804)                 (7,804)
Change in Net Unrealized
 Investment Gains (Losses).......                          (10,626)    (10,626)
                                   --------   --------    --------    --------
BALANCES AT SEPTEMBER 30, 2000...  $649,772   $219,119    $(21,624)   $847,267
                                   ========   ========    ========    ========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-25
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Statements of Cash Flows

FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997, AND NINE MONTHS ENDED
SEPTEMBER 30, 2000 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                  SEPTEMBER 30,
                                   1999       1998       1997         2000
                                 ---------  ---------  ---------  -------------
                                                                   (UNAUDITED)
<S>                              <C>        <C>        <C>        <C>
NET CASH USED IN OPERATING
 ACTIVITIES..................... $(159,314) $(311,296) $(121,838)   $(148,814)
                                 ---------  ---------  ---------    ---------
Cash Flows from Investing
 Activities:
 Sales, Maturities and
  Repayments of:
  Available for Sale Fixed
   Maturities...................   114,478    164,566    145,197      105,515
  Equity Securities.............     2,491     39,333     32,806        1,379
  Other, Net....................        (1)       721        128      146,858
 Purchases of:
  Available for Sale Fixed
   Maturities...................  (157,761)  (184,810)  (326,059)    (135,875)
  Equity Securities.............    (9,590)   (80,066)         0      (15,887)
  Real Estate...................    (3,251)    (3,644)         0          (95)
  Fixed Asset Property and
   Equipment....................         0     (1,459)      (101)           0
  Other Assets..................      (302)       (89)         0     (219,144)
 Net Change in Short-Term
  Investments...................   (10,334)   (24,341)   128,616       55,252
 Net Change in Policy Loans.....   (46,195)   (31,017)   (28,520)     (43,903)
 Other, Net.....................    23,443      1,631        177            0
                                 ---------  ---------  ---------    ---------
NET CASH USED IN INVESTING
 ACTIVITIES.....................   (87,022)  (119,175)   (47,756)    (105,900)
                                 ---------  ---------  ---------    ---------
Cash Flows from Financing
 Activities:
 Capital Contributions..........         0    200,000     46,681            0
 Dividends Paid.................    (9,055)         0          0       (7,804)
 Additions to Debt..............                                       10,000
 Repayment of Debt..............   (13,232)    (8,670)    (3,181)           0
 Policyholder Account Balances:
  Deposits......................   517,551    358,090    244,338      925,744
  Withdrawals...................  (242,388)  (149,499)   (95,066)    (706,009)
 Financial Reinsurance
  Receivables...................    34,233          0      1,823            0
                                 ---------  ---------  ---------    ---------
NET CASH PROVIDED BY FINANCING
 ACTIVITIES.....................   287,109    399,921    194,595      221,931
                                 ---------  ---------  ---------    ---------
Change in Cash and Cash
 Equivalents....................    40,773    (30,550)    25,001      (32,783)
Cash and Cash Equivalents,
 Beginning of Year..............    43,598     74,148     49,147       84,371
                                 ---------  ---------  ---------    ---------
CASH AND CASH EQUIVALENTS, END
 OF YEAR........................ $  84,371  $  43,598  $  74,148    $  51,588
                                 =========  =========  =========    =========
Supplemental Cash Flow
 Information:
 Interest Paid.................. $      87  $   3,830  $   1,495    $     368
                                 =========  =========  =========    =========
 Income Taxes Paid.............. $  30,045  $  14,118  $   5,470    $  20,100
                                 =========  =========  =========    =========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-26
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Statements of Cash Flows--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997, AND NINE MONTHS ENDED
SEPTEMBER 30, 2000 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  SEPTEMBER 30,
                                   1999       1998       1997         2000
                                 ---------  ---------  ---------  -------------
                                                                   (UNAUDITED)
<S>                              <C>        <C>        <C>        <C>
NET INCOME.....................  $  45,724  $  11,437  $  21,969    $  12,395
Adjustments to Reconcile Net
 Income to Net Cash Provided by
 (Used in) Operating
 Activities:
 Change in Deferred Policy
  Acquisition Costs, Net.......   (186,467)  (145,787)  (140,578)    (111,055)
 Change in Accrued Investment
  Income.......................     (8,138)    (3,090)    (4,999)      (1,533)
 Change in Premiums and Other
  Receivables..................     25,367    (82,081)   (57,095)    (120,001)
 Gains from Sales of
  Investments, Net.............     (2,922)    (5,610)      (890)        (838)
 Depreciation and Amortization
  Expenses.....................     11,350     13,137     10,085        8,513
 Interest Credited to
  Policyholder Account
  Balances.....................     10,721      7,735      6,220       14,725
 Universal Life and Investment-
  Type Product Policy Fee
  Income.......................   (220,841)  (173,766)  (145,157)    (168,181)
 Change in Future Policy
  Benefits.....................     53,181     61,317     35,540       42,483
 Change in Other Policyholder
  Funds........................     59,084     73,814      6,309      126,161
 Change in Policyholder
  Dividends Payable............        368        188      5,701          486
 Change in Income Taxes
  Payable......................    (26,871)     2,358      1,674      (23,831)
 Other, Net....................     80,130    (70,948)   139,383       71,863
                                 ---------  ---------  ---------    ---------
NET CASH USED IN OPERATING
 ACTIVITIES....................  $(159,314) $(311,296) $(121,838)   $(148,813)
                                 =========  =========  =========    =========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-27
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)

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 and independent brokers located throughout the
United States. The Company also provides participating and non-participating
traditional life insurance, fixed annuity contracts, pension products, as well
as, group life, medical, and 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 New
England Investment Management, 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 New England
Investment Management, 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 acquisition, 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.

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. Effective September 1, 1999, Newbury began
providing errors and omissions coverage to certain of the life insurance
agents of MetLife through a facultative reinsurance agreement with Fireman's
Fund 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.

New England Investment Management, Inc. (NEIM), which changed its name from
TNE Advisers, Inc. in March 1999, was incorporated on August 26, 1994, and is
registered as an investment adviser with the SEC, under the Investment
Advisers Act of 1940. NEIM was organized to serve as an investment adviser to
certain series of the New England Zenith Fund.

                                     F-28
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


NL Holding Corporation and subsidiaries (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 of NL Holding, is a National
Association of Securities Dealers (NASD) registered broker/dealer. N&L
Associates, a wholly owned subsidiary of NL Holding, is a general insurance
agent which sells insurance policies and other insurance related products
through its licensed brokers and independent agents.

BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles (GAAP). The
Commonwealth of Massachusetts Division of Insurance (the "Division")
recognizes only statutory accounting practices for determining and reporting
the financial condition and results of operations of an insurance company for
determining solvency under the Massachusetts Insurance Law. No consideration
is given by the Division to financial statements prepared in accordance with
GAAP in making such determination.

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, but more than a minimal interest, under the equity method of
accounting.

Certain amounts in the prior years' consolidated financial statements have
been reclassified to conform with the 1999 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 accumulated 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.

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.

                                     F-29
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


CASH AND CASH EQUIVALENTS

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

PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

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 $36,122, and $24,772 at December 31, 1999 and 1998,
respectively. Related depreciation and amortization expense was $11,350,
$13,137 and $10,085 for the years ended December 31, 1999, 1998 and 1997,
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.

Information regarding deferred policy acquisition costs is as follows:

<TABLE>
<CAPTION>
                                                    YEARS ENDED DECEMBER 31,
                                                   ----------------------------
                                                     1999      1998      1997
                                                   --------  --------  --------
   <S>                                             <C>       <C>       <C>
   Balance at January 1........................... $710,961  $565,769  $434,636
   Capitalized during the year....................  216,913   182,943   157,670
                                                   --------  --------  --------
     Total........................................  927,874   748,712   592,306
   Amortization allocated to:
    Net realized investment gains.................     (616)   (5,282)        0
    Unrealized investment gains (losses)..........   33,276      (595)   (9,446)
    Other Expenses................................  (29,831)  (31,874)  (17,091)
                                                   --------  --------  --------
     Total amortization...........................    2,829   (37,751)  (26,537)
   Balance at December 31......................... $930,703  $710,961  $565,769
                                                   ========  ========  ========
</TABLE>


                                     F-30
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)

Amortization of deferred policy acquisition costs is allocated to (1) realized
investment gains and losses to provide consolidated statement of income
information regarding the impact of such gains and losses on the amount of the
amortization, (2) unrealized investment gains and losses to provide
information regarding the amount of deferred policy acquisition costs that
would have been amortized if such gains and losses had been realized and (3)
other expenses to provide amounts related to the gross margins or profits
originating from transactions other than investment gains and losses.

Realized investment gains and losses related to certain products have a direct
impact on the amortization of deferred policy acquisition costs. Presenting
realized investment gains and losses net of related amortization of deferred
policy acquisition costs provides information useful in evaluating the
operating performance of the Company. This presentation may not be comparable
to presentations made by other insurers.

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 ending December 31, 2000. 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>

OTHER INTANGIBLE ASSETS

The excess of cost over the fair value of net assets acquired, which
represents goodwill, and the value of business 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.

        Excess of Purchase Price Over Fair Value of Net Assets Acquired

<TABLE>
<CAPTION>
                                                    YEARS ENDED DECEMBER 31,
                                                    ------------------------
                                                     1999     1998     1997
                                                    -------  -------  ------
   <S>                                              <C>      <C>      <C>
   Net Balance, January 1.......................... $21,931  $     0    $0
    Acquisitions...................................       0   23,498     0
    Amortization...................................  (2,350)  (1,567)    0
                                                    -------  -------    --
   Net Balance, December 31........................ $19,581  $21,931    $0
                                                    =======  =======    ==
   December 31
    Accumulated Amortization....................... $(3,917) $(1,567)   $0
                                                    =======  =======    ==
</TABLE>


                                     F-31
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)

FUTURE POLICY BENEFITS AND POLICYHOLDER ACCOUNT BALANCES

Future policy benefit liabilities for participating traditional life insurance
policies are equal to the aggregate of (a) net level premium reserves for
death and endowment policy benefits (calculated based upon the nonforfeiture
interest rate, ranging from 4% to 4.5%, and mortality rates guaranteed in
calculating the cash surrender values described in such contracts), (b) the
liability for terminal dividends and (c) premium deficiency reserves, which
are established when the liabilities for future policy benefits plus the
present value of expected future gross premiums are insufficient to provide
for expected future policy benefits and expenses after deferred policy
acquisition costs are written off.

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 6%.

Future policy benefit liabilities for non-medical health insurance are
calculated using the net level premium method and assumptions as to future
morbidity, withdrawals and interest, which provide a margin for adverse
deviation. 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. The interest rates used in
establishing such liabilities range from 3% 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 3.8% to 7.25%, less expense and mortality charges and
withdrawals.

The liability for unpaid claims represents the amount estimated for claims
that have been reported but not settled and claims incurred but not reported.
Liabilities for unpaid claims are estimated based upon the Company's
historical experience and other actuarial assumptions that consider the
effects of current developments, anticipated trends and risk management
programs. Revisions of these estimates are included in operations in the year
such refinements are made.

RECOGNITION OF INSURANCE REVENUE AND RELATED BENEFITS

Premiums related to traditional life and annuity policies with life
contingencies are recognized as revenues 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 operations 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
operations include interest credited to policyholders.

DIVIDENDS TO POLICYHOLDERS

Dividends to policyholders are determined annually by the board of directors.
The aggregate amount of policyholders' 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.


                                     F-32
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)

PARTICIPATING BUSINESS

Participating business represented approximately 3.49% and 3.52% of the
Company's life insurance in force, and 8.30% and 7.96% of the number of life
insurance policies in force at December 31, 1999 and 1998, respectively.
Participating policies represented approximately 56.77%, 95.78% and 68.24% of
gross life insurance premiums, for the years ended December 31, 1999, 1998 and
1997, 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 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.

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 ACCOUNTS

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. See Note 14.

APPLICATION OF ACCOUNTING PRONOUNCEMENTS

Effective January 1, 1999, the Company adopted Statement of Position ("SOP")
98-5, Reporting on the Costs of Start-Up Activities ("SOP 98-5"). SOP 98-5
broadly defines start-up activities. SOP 98-5 requires costs of start-up
activities and organization costs to be expensed as incurred. Adoption of SOP
98-5 did not have a material effect on the Company's consolidated financial
statements.

Effective January 1, 1999, the Company adopted SOP 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 adoption of SOP 98-1 resulted in
the capitalization of $6 million of software costs which would have otherwise
been expensed in 1999.

Effective January 1, 1999, the Company adopted SOP 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. Adoption of SOP 97-3 did not have a material effect on
the Company's consolidated financial statements.

                                     F-33
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137, Accounting for Derivative Instruments
and Hedging Activities--Deferral of the Effective Date of FASB Statement No.
133 ("SFAS 137"). SFAS 137 defers the provisions of SFAS 133 until January 1,
2001. The provisions of SFAS 133 require, 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 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 in the process of
quantifying the impact of SFAS 133 on its consolidated financial statements.

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 statements.

2. NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)

The components of net investment income are as follows:

<TABLE>
<CAPTION>
                                                   YEARS ENDED DECEMBER 31,
                                                  ----------------------------
                                                    1999      1998      1997
                                                  --------  --------  --------
   <S>                                            <C>       <C>       <C>
   Fixed maturities.............................. $ 54,490  $ 53,467  $ 50,348
   Equity securities.............................   13,896    (9,118)    4,915
   Real estate...................................      831     4,149       815
   Policy loans..................................    9,157     6,855     5,081
   Cash, cash equivalents and short-term
    investments..................................    3,494       861     4,160
   Other investment income.......................   (7,529)       76       591
                                                  --------  --------  --------
   Gross investment income.......................   74,339    56,290    65,910
   Investment expenses...........................   (5,841)   (7,213)   (4,851)
                                                  --------  --------  --------
   Net Investment income......................... $ 68,498  $ 49,077  $ 61,059
                                                  ========  ========  ========
</TABLE>

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

<TABLE>
<CAPTION>
                                                     YEARS ENDED DECEMBER 31,
                                                     --------------------------
                                                      1999     1998     1997
                                                     ----------------  --------
   <S>                                               <C>     <C>       <C>
   Fixed maturities................................. $   850 $ 10,899  $  (774)
   Equity securities................................       0        0    1,040
   Other invested assets............................   2,688       (7)      (8)
                                                     ------- --------  -------
     Subtotal.......................................   3,538   10,892      258
   Less: Amounts allocable to amortization of
    deferred policy acquisition costs...............     616    5,282     (632)
                                                     ------- --------  -------
   Investment gains (losses), net................... $ 2,922 $  5,610  $   890
                                                     ======= ========  =======
</TABLE>

                                     F-34
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


Realized investment gains have been reduced by (1) deferred policy acquisition
amortization to the extent that such amortization results from realized
investment gains and losses, (2) additions to future policy benefits resulting
from the need to establish additional liabilities due to the recognition of
investment gains, and (3) additions to participating contractholder accounts
when amounts equal to such investment gains and losses are credited to the
contractholders' accounts. This presentation may not be comparable to
presentations made by other insurers.

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

<TABLE>
<CAPTION>
                                                    YEARS ENDED DECEMBER 31,
                                                    --------------------------
                                                      1999     1998     1997
                                                    --------  -------  -------
   <S>                                              <C>       <C>      <C>
   Balance at January 1...........................  $ 17,439  $17,347  $ 3,727
    Change in unrealized investment gains
     (losses).....................................   (73,813)     391   30,207
    Change in unrealized investment gains (losses)
     attributable to:
     Deferred policy acquisition costs............    33,276     (595)  (9,446)
     Deferred income tax (expense) benefit........    12,100      296   (7,141)
                                                    --------  -------  -------
   Balance at December 31.........................  $(10,998) $17,439  $17,347
                                                    ========  =======  =======
</TABLE>

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

<TABLE>
<CAPTION>
                                                  YEARS ENDED DECEMBER 31,
                                                 ----------------------------
                                                   1999      1998      1997
                                                 --------  --------  --------
   <S>                                           <C>       <C>       <C>
   Balance, end of year, comprised of:
    Unrealized investment gains (losses) on:
     Fixed maturities........................... $(35,205) $ 40,928  $ 41,706
     Equity securities..........................    3,511     1,191         0
     Other......................................        0         0        22
                                                 --------  --------  --------
                                                  (31,694)   42,119    41,728
   Amounts of unrealized investment gains
    (losses)
    Attributable to:
     Deferred policy acquisition costs..........   17,478   (15,798)  (15,202)
     Deferred income tax (expense) benefit......    3,218    (8,882)   (9,179)
                                                 --------  --------  --------
   Balance, end of year......................... $(10,998) $ 17,439  $ 17,347
                                                 ========  ========  ========
</TABLE>

                                     F-35
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


3. INVESTMENTS

FIXED MATURITIES AND EQUITY SECURITIES

The amortized cost, gross unrealized gain (loss) and estimated fair value of
fixed maturities 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, 1999
Fixed Maturities:
 U. S. Treasury Securities and
  obligations of U. S. Government
  corporations and agencies.............. $ 33,909  $    20 $    439  $ 33,490
 Foreign governments.....................   20,748      201      581    20,368
 Corporate...............................  670,602    5,074   40,237   635,439
 Mortgage-backed securities..............   44,470      934      203    45,201
 Other...................................    1,199        0        0     1,199
                                          --------  ------- --------  --------
  Total Fixed Maturities................. $770,928  $ 6,229 $ 41,460  $735,697
                                          ========  ======= ========  ========
Equity Securities:
 Common stocks...........................   19,174    4,191      680    22,685
                                          --------  ------- --------  --------
  Total Equity Securities................ $ 19,174  $ 4,191 $    680  $ 22,685
                                          ========  ======= ========  ========
</TABLE>

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-36
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


The amortized cost and estimated fair value of fixed maturities classified as
available for sale, by contractual maturity, at December 31, 1999 are shown
below.

<TABLE>
<CAPTION>
                                                            AMORTIZED ESTIMATED
                                                              COST    FAIR VALUE
                                                            --------- ----------
   <S>                                                      <C>       <C>
   Due in one year or less................................. $ 15,910   $ 15,857
   Due after one year through five years...................   92,303     90,635
   Due after five years through ten years..................  131,438    130,492
   Due after ten years.....................................  486,807    453,512
                                                            --------   --------
     Subtotal..............................................  726,458    690,496
   Mortgage-backed securities..............................   44,470     45,201
                                                            --------   --------
     Total................................................. $770,928   $735,697
                                                            ========   ========
</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.

Sales of fixed maturities and equity securities are as follows:

<TABLE>
<CAPTION>
                                                        1999     1998     1997
                                                       ------- -------- --------
   <S>                                                 <C>     <C>      <C>
   Fixed Maturities
    Proceeds.......................................... $64,925 $120,416 $110,301
    Gross realized gains.............................. $ 1,897 $ 10,901 $  1,036
    Gross realized losses............................. $ 1,047 $      2 $  1,810
   Equity Securities
    Proceeds.......................................... $ 2,491 $ 39,333 $ 32,806
    Gross realized gains.............................. $     0 $      0 $  1,344
    Gross realized losses............................. $     0 $      0 $    304
</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. The bonds and short-term investments at fair market value held by
the trust were $518,436 and $526,723, at December 31, 1999 and 1998,
respectively.

STATUTORY DEPOSITS

The Company had assets on deposit with regulatory agencies of $6,245 and
$6,245 at December 31, 1999 and 1998, respectively.

                                     F-37
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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.

Effective July 1, 1999, the Company reinsured the general account liability
for certain group pension variable contracts assumed from Sun Life Assurance
Company of Canada (U.S.). The initial liability assumed included in
Policyholder Account Balances was $53,675 at July 1, 1999, and was $44,431 at
December 31, 1999.

The effect of reinsurance on premiums earned is as follows:

<TABLE>
<CAPTION>
                                                     1999      1998      1997
                                                   --------  --------  --------
   <S>                                             <C>       <C>       <C>
   Direct premiums................................ $163,159  $110,768  $ 30,975
   Reinsurance assumed............................   57,479    58,329    62,315
   Reinsurance ceded..............................  (97,000)  (68,408)  (29,674)
                                                   --------  --------  --------
   Net premiums earned............................ $123,638  $100,689  $ 63,616
                                                   ========  ========  ========
</TABLE>

Reinsurance recoverables, included in other receivables, were $83,091 and
$103,677 at December 31, 1999 and 1998, respectively.

Reinsurance and ceded commissions payables, included in other liabilities,
were $23,400 and $21,152 at December 31, 1999 and 1998, 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,
                                                     ------------------------
                                                      1999     1998     1997
                                                     ------   ------   ------
   <S>                                               <C>      <C>      <C>
   Balance at January 1............................. $1,953   $  809    $  0
    Less: Reinsurance recoverables..................  1,565      647       0
                                                     ------   ------    ----
   Net balance at January 1.........................    388      162       0
                                                     ------   ------    ----
   Incurred related to:
    Current year....................................    472      303     173
    Prior years.....................................    (33)     (57)    (11)
                                                     ------   ------    ----
                                                        439      246     162
                                                     ------   ------    ----
   Paid related to:
    Current year....................................     23        2       0
    Prior years.....................................     19       18       0
                                                     ------   ------    ----
                                                         42       20       0
                                                     ------   ------    ----
   Balance at December 31...........................    785      388     162
    Add: Reinsurance recoverables...................  3,147    1,565     647
                                                     ------   ------    ----
   Balance at December 31........................... $3,932   $1,953    $809
                                                     ======   ======    ====
</TABLE>

                                     F-38
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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>
   1999
   Federal............................................. $20,910 $ 8,134   $29,044
   State and Local.....................................       0     300       300
                                                        ------- -------   -------
     Total............................................. $20,910 $ 8,434   $29,344
                                                        ======= =======   =======
   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
                                                        ======= =======   =======
</TABLE>

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

<TABLE>
<CAPTION>
                                                      YEARS ENDED DECEMBER 31,
                                                     -------------------------
                                                      1999     1998     1997
                                                     -------  -------  -------
   <S>                                               <C>      <C>      <C>
   Income before taxes.............................. $75,068  $24,483  $26,957
   Income tax rate..................................      35%      35%      35%
                                                     -------  -------  -------
   Expected income tax expense at federal statutory
    income tax rate.................................  26,274    8,569    9,435
   Tax effect of:
    Tax exempt investment income....................       0     (100)       0
    State and local income taxes....................     300      100   (1,013)
    Tax credits.....................................       0     (100)       0
    Prior year taxes................................     684        0        0
    Other, net......................................   2,086    4,577   (3,434)
                                                     -------  -------  -------
   Income Tax Expense............................... $29,344  $13,046  $ 4,988
                                                     =======  =======  =======
</TABLE>

                                      F-39
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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>
                                                            1999       1998
                                                          ---------  ---------
   <S>                                                    <C>        <C>
   Deferred tax assets:
    Policyholder liabilities............................. $ 233,504  $ 177,017
    Unrealized investment losses, net....................     3,218          0
    Other, net...........................................    15,035     15,453
                                                          ---------  ---------
     Total gross assets..................................   251,757    192,470
                                                          ---------  ---------
   Deferred tax liabilities:
    Investments..........................................      (216)    (1,068)
    Deferred policy acquisition costs....................  (267,249)  (208,881)
    Unrealized investment gains, net.....................         0     (8,882)
    Other, net...........................................   (22,961)   (15,973)
                                                          ---------  ---------
     Total gross liabilities.............................  (290,426)  (234,804)
                                                          ---------  ---------
   Net deferred tax liability............................ $ (38,669) $ (42,334)
                                                          =========  =========
</TABLE>

                                     F-40
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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>
                                                    DECEMBER 31,
                                         --------------------------------------
                                         PENSION BENEFITS     OTHER BENEFITS
                                         ------------------  ------------------
                                           1999      1998      1999      1998
                                         --------  --------  --------  --------
<S>                                      <C>       <C>       <C>       <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION
Projected benefit obligation at
 beginning of year.....................  $252,487  $210,590  $ 48,987  $ 46,591
Service cost...........................     8,172     6,927       973       942
Interest cost..........................    18,488    15,878     3,351     3,267
Actuarial gain.........................   (15,914)   14,831    (3,214)    1,256
Divestitures...........................         0         0         0         0
Curtailments...........................         0         0         0         0
Terminations...........................         0         0         0         0
Change in benefits.....................         0    11,935         0       (10)
Benefits paid..........................    (8,444)   (7,674)   (3,475)   (3,059)
                                         --------  --------  --------  --------
Projected benefit obligation at end of
 year..................................  $254,789  $252,487  $ 46,622  $ 48,987
                                         --------  --------  --------  --------
CHANGE IN PLAN ASSETS
Contract value of plan assets at
 beginning of year.....................  $184,803  $150,820  $      0  $      0
Actual return on plan assets...........    25,300    28,309         0         0
Employer contribution..................     7,620    12,997         0         0
Benefits paid..........................    (7,500)   (7,323)        0         0
                                         --------  --------  --------  --------
Contract value of plan assets at end of
 year..................................  $210,223  $184,803  $      0  $      0
                                         --------  --------  --------  --------
Over/(Under) funded....................  $(44,566) $(67,684) $(46,622) $(48,987)
Unrecognized net asset at transition...      (503)   (1,674)        0         0
Unrecognized net actuarial gains.......     7,681    34,350   (20,068)  (17,787)
Unrecognized prior service cost........    15,942    16,854        (8)       (9)
                                         --------  --------  --------  --------
Prepaid (accrued) benefit cost.........  $(21,446) $(18,154) $(66,698) $(66,783)
                                         ========  ========  ========  ========
Qualified plan prepaid (accrued)
 pension cost..........................  $ (2,675) $ (2,164) $      0  $      0
Non-qualified plan prepaid (accrued)
 pension cost..........................   (18,771)  (15,990)        0         0
                                         --------  --------  --------  --------
Prepaid (accrued) benefit cost.........  $(21,446) $(18,154) $      0  $      0
                                         ========  ========  ========  ========
</TABLE>

                                     F-41
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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
                          ------------------  ------------------  ------------------
                            1999      1998      1999      1998      1999      1998
                          --------  --------  --------  --------  --------  --------
<S>                       <C>       <C>       <C>       <C>       <C>       <C>
Aggregate projected
 benefit obligation.....  $224,653  $226,717  $ 30,136  $ 25,770  $254,789  $252,487
Aggregate contract value
 of plan assets
 (principally Company
 contracts).............   210,223   184,803         0         0   210,223   184,803
                          --------  --------  --------  --------  --------  --------
Over/(Under) funded.....  $(14,430) $(41,914) $(30,136) $(25,770) $(44,566) $(67,684)
                          ========  ========  ========  ========  ========  ========
</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>
                                                          PENSION      OTHER
                                                         BENEFITS    BENEFITS
                                                         ----------  ----------
                                                         1999  1998  1999  1998
                                                         ----  ----  ----  ----
   <S>                                                   <C>   <C>   <C>   <C>
   Weighted average assumptions as of December 31,
   Discount rate........................................ 7.00% 7.25% 7.75% 7.00%
   Expected return on plan assets....................... 8.50% 8.50%   --    --
   Rate of compensation increase........................ 5.50% 4.50%   --    --
</TABLE>

The assumed health care cost trend rate used in measuring the accumulated
nonpension postretirement benefit obligation was generally 7.00% in 1999,
gradually decreasing to 5.00% over five years and generally 7.40% in 1998,
gradually decreasing to 5.00% over five 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...    13%     (10%)
   Effect on accumulated postretirement benefit obligation...    11%     (10%)
</TABLE>

The components of periodic benefit costs were as follows:

<TABLE>
<CAPTION>
                                 PENSION BENEFITS            OTHER BENEFITS
                            ----------------------------  ---------------------
                              1999      1998      1997     1999    1998   1997
                            --------  --------  --------  ------  ------ ------
   <S>                      <C>       <C>       <C>       <C>     <C>    <C>
   Service cost............ $  8,172  $  6,927  $  5,310  $  973  $  942 $  885
   Interest cost...........   18,488    15,878    13,958   3,351   3,267  3,707
   Expected return on plan
    assets.................  (15,698)  (12,866)  (22,250)      0       0      0
   Net amortization and
    deferrals..............    1,322       669    11,092    (934)    167   (871)
                            --------  --------  --------  ------  ------ ------
   Net periodic benefit
    cost................... $ 12,284  $ 10,608  $  8,110  $3,390  $4,376 $3,721
                            ========  ========  ========  ======  ====== ======
</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 $2,187, $2,252 and $1,588 for the years ended
December 31, 1999, 1998 and 1997, respectively.

                                     F-42
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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>
                                                                         GROSS
                                                      RENTAL SUB-RENTAL  RENTAL
                                                      INCOME   INCOME   EXPENSE
                                                      ------ ---------- --------
   <S>                                                <C>    <C>        <C>
   2000..............................................  $31    $ 7,845   $ 14,738
   2001..............................................    0      7,854     14,042
   2002..............................................    0      7,864     13,413
   2003..............................................    0      8,026     13,822
   2004..............................................    0      8,206     12,836
   Thereafter........................................    0     26,319    117,722
                                                       ---    -------   --------
     Total...........................................  $31    $66,114   $186,573
                                                       ===    =======   ========
</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 loan was collateralized by sales
loads and surrender charges collected on a defined block of variable life
insurance policies issued by the Company. Repayment was structured in a manner
to result in repayment over a term of five years or less. The Company repaid
the entire outstanding balance of the loan in January 1999. Repayments of
principal and interest of $13,310, $8,612 and $3,155 were made during 1999,
1998 and 1997, respectively. The interest rate applied was 6.4%, 6.4% and 5.8%
at January 31, 1999 and December 31, 1998 and 1997, respectively.

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 the 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 $75,053. No repayments were made during 1999,
1998 and 1997, respectively.

9. COMMITMENTS AND 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 for a portion of the Company's
premium taxes. The Company paid guaranty fund assessments of approximately,
$197, $204, and $43 in 1999, 1998, and 1997, respectively, of which $197,
$203, and $33 were to be credited against premium taxes.

                                     F-43
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


Various litigation, claims and assessments against the Company, in addition to
those otherwise provided for in the Company's consolidated financial
statements, have arisen in the course of the Company's business, including,
but not limited to, in connection with its activities as an insurer, employer,
investor, investment advisor and taxpayer. Further, state insurance regulatory
authorities and other Federal and state authorities regularly make inquiries
and conduct investigations concerning the Company's compliance with applicable
insurance and other laws and regulations.

In some of the matters referred to above, large and/or indeterminate amounts,
including punitive damages and treble damages, are sought. While it is not
feasible to predict or determine the ultimate outcome of all pending
investigations and legal proceedings or provide reasonable ranges of potential
losses, it is the opinion of the Company's management that their outcomes,
after consideration of available insurance and reinsurance and the provisions
made in the Company's consolidated financial statements, are not likely to
have a material adverse effect on the Company's consolidated financial
position. However, given the large and/or indeterminate amounts sought in
certain of these matters and the inherent unpredictability of litigation, it
is possible that an adverse outcome in certain matters could, from time to
time, have a material adverse effect on the Company's operating results or
cash flows in particular annual periods.

10. OTHER EXPENSES

Other operating costs and expenses consisted of the following:

<TABLE>
<CAPTION>
                                                    YEARS ENDED DECEMBER 31,
                                                -------------------------------
                                                  1999       1998       1997
                                                ---------  ---------  ---------
<S>                                             <C>        <C>        <C>
Compensation................................... $  96,887  $  86,822  $  58,754
Commissions....................................   205,463    166,218     77,351
Interest and debt expense......................     5,493      9,374      6,750
Amortization of policy acquisition costs.......    29,831     31,874     17,091
Capitalization of policy acquisition costs.....  (216,913)  (182,943)  (157,670)
Rent expense, net of sub-lease income..........     5,550      4,252      4,473
Insurance taxes, licenses, and fees............    21,253     21,802     15,002
Other..........................................   234,317    179,260    122,591
                                                ---------  ---------  ---------
  Total........................................ $ 381,881  $ 316,659  $ 144,342
                                                =========  =========  =========
</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.

                                     F-44
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


Amounts related to the Company's financial instruments are as follows:

<TABLE>
<CAPTION>
                                                             CARRYING ESTIMATED
                                                              VALUE   FAIR VALUE
                                                             -------- ----------
   <S>                                                       <C>      <C>
   DECEMBER 31, 1999:
   ASSETS
   Fixed maturities......................................... $735,697  $735,697
   Equity securities........................................   22,685    22,685
   Policy loans.............................................  181,995   181,995
   Short-term investments...................................   62,619    62,619
   Cash and cash equivalents................................   84,371    84,371
   LIABILITIES
   Policyholder account balances............................   84,037    82,765
   Other policyholder funds.................................      525       525
   Short and long-term debt.................................   75,053    75,053

<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.................................      646       646
   Short and long-term debt.................................   82,855    82,855
</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.

                                     F-45
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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.

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,
                                               -------------------------------
                                                 1999       1998       1997
                                               ---------  ---------  ---------
   <S>                                         <C>        <C>        <C>
   Statutory surplus.......................... $ 399,864  $ 456,525  $ 307,290
   Adjustments to GAAP for:
     Future policy benefits and policyholders
      account balances........................  (435,980)  (336,821)  (279,510)
     Deferred policy acquisition costs........   930,703    710,961    565,769
     Deferred federal income taxes............   (38,669)   (42,334)   (42,066)
     Valuation of investments.................   (46,890)    53,514     56,873
     Statutory asset valuation reserves.......    13,514     10,636      8,388
     Statutory interest maintenance reserve...       462        816        571
     Surplus notes............................   (75,053)   (69,560)   (64,016)
     Receivables from reinsurance
      transactions............................     5,049     26,004     27,519
     Other, net...............................   100,303     35,330     52,724
                                               ---------  ---------  ---------
   GAAP equity................................ $ 853,303  $ 845,071  $ 633,542
                                               =========  =========  =========
</TABLE>

<TABLE>
<CAPTION>
                                                 YEARS ENDED DECEMBER 31,
                                               -------------------------------
                                                 1999       1998       1997
                                               ---------  ---------  ---------
   <S>                                         <C>        <C>        <C>
   Statutory net income (loss)................ $ (40,928) $ (28,043) $ (37,358)
   Adjustments to GAAP for:
     Future policy benefits and policyholders
      account balances........................  (295,868)  (196,754)  (311,588)
     Deferred policy acquisition costs........   186,497    135,788    139,947
     Deferred federal income taxes............      (580)       688      3,801
     Valuation of investments.................    13,681    (13,490)         0
     Statutory interest maintenance reserve...      (354)       245        342
     Other, net...............................   183,276    113,003    226,825
                                               ---------  ---------  ---------
   GAAP net income............................ $  45,724  $  11,437  $  21,969
                                               =========  =========  =========
</TABLE>

                                     F-46
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


13. RELATED PARTY TRANSACTIONS

MetLife and the Company have 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 $160,792, $193,641 and $186,757 including accruals
for administrative services on NEMLICO administered contracts for 1999, 1998,
and 1997, respectively. In addition, $9,442, $14,123 and $600 for 1999, 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.

During 1999, the Company paid $9,055 of preferred stock dividends to MetLife
Credit Corporation.

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. The Company paid
$2,730 and $6,166 in 1999 and 1998, respectively under these agreements.

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 $4,219, $2,340
and $2,340 in 1999, 1998 and 1997, respectively.

Commissions earned by NES from sales of New England Funds (NEF) and State
Street Research (SSR) shares, subsidiaries of MetLife, for 1999 were $12,736
and $751, respectively. Included in accrued income at December 31, 1999, were
amounts receivable for sales-based commissions from NEF and SSR totaling $312
and $4, respectively. In 1999, NES earned asset-based income of $11,184 and
$183 on average assets of approximately $4,500,000 and $101,000 under
management with NEF and SSR, respectively. Included in accrued income at
December 31, 1999 were amounts receivable for asset-based commissions from NEF
and SSR totaling $307 and $0, respectively.

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
$75,053 and $69,560 at December 31, 1999 and 1998, respectively.

                                     F-47
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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.

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 $4,840,029
and $3,258,383 at December 31, 1999 and 1998, 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 $36,934, $30,714 and $12,642 in 1999, 1998 and 1997,
respectively.

15. YEAR 2000

The Year 2000 issue was 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 costs associated with additional mainframe capacity necessary to
accommodate a four-digit 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 major system
failures 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 implemented a plan to resolve the issue. There can be
no assurances that the Year 2000 plan of the Company or that of its vendors or
third parties have resolved all Year 2000 issues. Further, there can be no
assurance that there will not be any future system failure or that such
failure, if any, will not have a material impact on the operations of the
Company.

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, medical, and 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,
1999, 1998 and 1997. 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-48
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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, 1999
                          -------------------------------------------------------------------
                                                             GROUP     CORPORATE
                          INDIVIDUAL  INDIVIDUAL   GROUP     LIFE,        AND
                             LIFE      ANNUITY    PENSION     A&H     SUBSIDIARIES   TOTAL
                          ----------  ----------  --------  --------  ------------ ----------
<S>                       <C>         <C>         <C>       <C>       <C>          <C>
REVENUES
Premiums................  $   63,358  $        0  $     15  $ 28,652    $ 31,613   $  123,638
Universal Life and
 Investment-Type Product
 Policy Fees............     199,701      16,771     4,369         0           0      220,841
Net Investment Income...     (31,181)       (108)      (13)      167      99,633       68,498
Investment Gains
 (Losses), Net..........         402           1         0        (1)      2,520        2,922
Commissions, Fees and
 Other Revenues.........      25,376       6,708     3,005    34,610     196,192      265,891
                          ----------  ----------  --------  --------    --------   ----------
  Total Revenues........     257,656      23,372     7,376    63,428     329,958      681,790
BENEFITS AND OTHER
 DEDUCTIONS
Policyholder Benefits...     124,727       4,624       113    23,814      40,015      193,293
Interest Credited to
 Policyholder Account
 Balances...............       8,811       1,623     1,220        30        (963)      10,721
Policyholder Dividends..       1,739           0         0       (32)     19,120       20,827
Other Operating Costs
 and Expenses...........     128,466      21,826     6,196    36,326     189,067      381,881
                          ----------  ----------  --------  --------    --------   ----------
  Total Benefits and
   Other Deductions.....     263,743      28,073     7,529    60,138     247,239      606,722
Income from Operations
 Before Income Taxes....      (6,087)     (4,701)     (153)    3,290      82,719       75,068
Income Taxes............       1,357      (1,563)      (26)    1,244      28,332       29,344
                          ----------  ----------  --------  --------    --------   ----------
Net Income..............  $   (7,444) $   (3,138) $   (127) $  2,046    $ 54,387   $   45,724
                          ==========  ==========  ========  ========    ========   ==========
Assets
Deferred Policy
 Acquisition Costs......  $  771,879  $   63,123  $ 10,499  $  8,539    $ 76,663   $  930,703
Separate Account Assets.   2,704,767   1,398,993   517,920   218,349           0    4,840,029
Liabilities
Policyholder
 Liabilities............     535,662      43,674    45,407    43,936     517,949    1,186,628
Separate Account
 Liabilities............   2,704,767   1,398,993   517,920   218,349           0    4,840,029
</TABLE>

                                     F-49
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


<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 Revenues.........       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
Liabilities
Policyholder
 Liabilities............     380,586     38,912       768    19,233     519,353      958,852
Separate Account
 Liabilities............   2,073,552    835,648   235,467   113,716           0    3,258,383
</TABLE>

                                      F-50
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


<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 Revenues.........       9,542     3,253       266    4,383       10,858       28,302
                          ----------  --------  --------  -------     --------   ----------
  Total Revenues........     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
Liabilities
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>

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-51
<PAGE>


                          AMERICAN GROWTH SERIES

                    NEW ENGLAND LIFE INSURANCE COMPANY

              NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                    Supplement dated January 22, 2001

                                      To

                       Prospectus Dated May 1, 2000

  This supplement updates certain information contained in the prospectus
dated May 1, 2000.

1. PAGE A-1 OF YOUR PROSPECTUS IS AMENDED TO INCLUDE THE FOLLOWING ELIGIBLE
FUNDS:

METROPOLITAN SERIES FUND, INC. ("METROPOLITAN FUND")

State Street Research Aurora Small Cap Value Portfolio*
Janus Mid Cap Portfolio*
Lehman Brothers(R) Aggregate Bond Index Portfolio*

MetLife Stock Index Portfolio*
MetLife Mid Cap Stock Index Portfolio*
Morgan Stanley EAFE(R) Index Portfolio*
Russell 2000(R) Index Portfolio*
--------
* Availability is subject to any necessary state insurance department
  approval.


2. On December 1, 2000, the Putnam International Stock Portfolio was
substituted for the Morgan Stanley International Magnum Equity Series, which
is no longer available for investment under the Contract.

3. You may allocate contract value to a maximum of twenty sub-accounts
(including the Fixed Account) at any time.

4. THE "EXPENSE TABLE" IS REPLACED WITH THE FOLLOWING:

                              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.

                                      A-1
<PAGE>

<TABLE>
<CAPTION>
<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 12/31/99
 (AS A PERCENTAGE OF AVERAGE NET ASSETS)


<TABLE>
<CAPTION>
                                         OTHER         TOTAL         OTHER         TOTAL
                                       EXPENSES      EXPENSES      EXPENSES      EXPENSES
                          MANAGEMENT    BEFORE        BEFORE         AFTER         AFTER
                            FEES*    REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT
                          ---------- ------------- ------------- ------------- -------------
<S>                       <C>        <C>           <C>           <C>           <C>
Back Bay Advisors Money
 Market Series...........    .35%         .05%          .40%         .05%           .40%
Back Bay Advisors Bond
 Income Series...........    .40%         .08%          .48%         .08%           .48%
Salomon Brothers
 Strategic Bond
 Opportunities Series....    .65%         .16%          .81%         .16%           .81%
Salomon Brothers U.S.
 Government Series(6)        .55%         .17%          .72%         .15%           .70%
Balanced Series..........    .70%         .07%          .77%         .07%           .77%
Alger Equity Growth
 Series..................    .75%         .05%          .80%         .05%           .80%
Davis Venture Value
 Series..................    .75%         .06%          .81%         .06%           .81%
Harris Oakmark Mid Cap
 Value Series(6).........    .75%         .13%          .88%         .13%           .88%
Loomis Sayles Small Cap
 Series(6)(7)............    .90%         .20%         1.10%         .10%          1.00%
MFS Investors Series(6)..    .75%        1.28%         2.03%         .15%           .90%
MFS Research Managers
 Series(6)...............    .75%        1.28%         2.03%         .15%           .90%
Westpeak Growth and
 Income Series...........    .68%         .06%          .74%         .06%           .74%
</TABLE>

--------

* Our affiliate, New England Investment Management, LLC, is the investment
  adviser for the Series of the Zenith Fund.

                                      A-2
<PAGE>

                         METROPOLITAN SERIES FUND, INC.

OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1999

 (ANTICIPATED EXPENSES FOR 2000 FOR THE PUTNAM LARGE CAP GROWTH, STATE STREET
 RESEARCH AURORA SMALL CAP VALUE AND METLIFE MID CAP STOCK INDEX PORTFOLIOS)

 (AS A PERCENTAGE OF NET ASSETS)


<TABLE>
<CAPTION>
                                                      OTHER         TOTAL         OTHER         TOTAL
                                        12B-1       EXPENSES      EXPENSES      EXPENSES      EXPENSES
                          MANAGEMENT DISTRIBUTION    BEFORE        BEFORE         AFTER         AFTER
                            FEES*        FEE      REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT
                          ---------- ------------ ------------- ------------- ------------- -------------
<S>                       <C>        <C>          <C>           <C>           <C>           <C>
Putnam Large Cap Growth
 Portfolio(8)...........     .80%         N/A          .59%         1.39%         .20%          1.00%
Putnam International
 Stock Portfolio........     .90%         N/A          .22%         1.12%         .22%          1.12%
State Street Research
 Aurora Small Cap Value
 Portfolio(8)...........     .85%         N/A          .23%         1.08%         .20%          1.05%
Janus Mid Cap
 Portfolio(8)(9)........     .67%        .25%          .04%          .96%         .04%           .96%
Lehman Brothers
 Aggregate Bond Index
 Portfolio(8)(9)........     .25%        .25%          .15%          .65%         .15%           .65%
MetLife Stock Index
 Portfolio(9)...........     .25%        .25%          .04%          .54%         .04%           .54%
MetLife Mid Cap Stock
 Index Portfolio(8)(9)..     .25%        .25%          .65%         1.15%         .20%           .70%
Morgan Stanley EAFE
 Index Portfolio(8)(9)..     .30%        .25%         1.47%         2.02%         .40%           .95%
Russell 2000 Index
 Portfolio(8)(9)........     .25%        .25%          .64%         1.14%         .30%           .80%
</TABLE>

--------
* Metropolitan Life Insurance Company ("MetLife") is the investment adviser for
  the Portfolios of the Metropolitan Fund.

                                      A-3
<PAGE>


5. THE "EXAMPLE" CHART IS AMENDED TO INCLUDE THE FOLLOWING:

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.(10)) 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 or Metropolitan Fund Portfolios
   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>
     State Street Research Aurora Small Cap
      Value*.................................. 90.18  126.79  163.78   284.30
     Janus Mid Cap*........................... 89.34  124.23  159.30   275.44
     Lehman Brothers Aggregate Bond Index*.... 86.47  115.37  143.71   244.23
     MetLife Stock Index*..................... 85.44  112.20  138.12   232.90
     MetLife Mid Cap Stock Index*............. 86.93  116.80  146.24   249.34
     Morgan Stanley EAFE Index*............... 89.25  123.94  158.80   274.45
     Russell 2000 Index*...................... 87.86  119.67  151.29   259.47
</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 or Metropolitan Fund Portfolios
   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)(11):

<TABLE>
<CAPTION>
                                               1 YEAR 3 YEARS 5 YEARS 10 YEARS
                                               ------ ------- ------- --------
     <S>                                       <C>    <C>     <C>     <C>
     State Street Research Aurora Small Cap
      Value*.................................. 25.51   78.37  133.78   284.30
     Janus Mid Cap*........................... 24.61   75.67  129.30   275.44
     Lehman Brothers Aggregate Bond Index*.... 21.51   66.34  113.71   244.23
     MetLife Stock Index*..................... 20.40   63.00  108.12   232.90
     MetLife Mid Cap Stock Index*............. 22.01   67.85  116.24   249.34
     Morgan Stanley EAFE Index*............... 24.51   75.37  128.80   274.45
     Russell 2000 Index*...................... 23.01   70.87  121.29   259.47
</TABLE>
--------
* Availability of these portfolios is subject to any necessary state insurance
  department approval.
--------

6. THE "NOTES" TO THE EXPENSE TABLE IS REPLACED WITH THE FOLLOWING:

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.

                                      A-4
<PAGE>

(5)   These charges are not imposed on the Fixed Account.
(6)   New England Investment Management voluntarily limits the expenses (other
      than brokerage costs, interest, taxes or extraordinary expenses) of
      certain series with either an expense cap or expense deferral arrangement.
      Under the expense cap, New England Investment Management bears expenses of
      the Loomis Sayles Small Cap Series that exceed 1.00% of average daily net
      assets. Under the expense deferral agreement, New England Investment
      Management bears expenses which exceed a certain limit in the year the
      series incurs them and charges those expenses to the series in a future
      year if actual expenses of the series are below the limit. The limit on
      expenses for these series are: .90% of average daily net assets for the
      Harris Oakmark Mid Cap Value, MFS Investors and MFS Research Managers
      Series; and .70% of average daily net assets for the Salomon Brothers U.S.
      Government Series. New England Investment Management may end these expense
      limits at any time.
(7)   In 1999, the management fee for the Loomis Sayles Small Cap Series was
      1.00%
(8)   MetLife voluntarily pays expenses (other than the management fee,
      brokerage commissions, amounts payable pursuant to a plan adopted in
      accordance with Rule 12b-1 under the Investment Company Act of 1940,
      taxes, interest and other loan costs, and any unusual one-time expenses)
      of certain Portfolios in excess of a certain percentage of net assets
      until the earlier of either total net assets of the Portfolio reaching
      $100 million or a certain date as follows:
<TABLE>
<CAPTION>
                                                    SUBSIDIZED EXPENSES
      PORTFOLIO                                         IN EXCESS OF      DATE
      ---------                                     ------------------- -------
      <S>                                           <C>                 <C>
      Putnam Large Cap Growth.......................       0.20%         5/1/02
      State Street Research Aurora Small Cap Value..       0.20%         7/1/02
      MetLife Mid Cap Stock Index...................       0.20%         7/1/02
</TABLE>
  --------

      Prior to 11/8/00, MetLife paid all Expenses in excess of .25% of the
      average net assets for the Morgan Stanley EAFE Index Portfolio until the
      Portfolio's total assets reached $100 million or November 8, 2000,
      whichever came first. Beginning on 11/8/00, MetLife will pay all expenses
      in excess of .40% of the average net assets of the Morgan Stanley EAFE
      Index Portfolio until the Portfolio's assets reach $200 million, or until
      May 1, 2001, whichever comes first.

      MetLife also paid all Expenses in excess of .20% of the average net assets
      for the Russell 2000 Index Portfolio until December 3, 1999 and for the
      Lehman Brothers Aggregate Bond Index Portfolio until July 13, 1999.
      Beginning on February 22, 2000, MetLife will pay all expenses in excess of
      0.30% of the average net assets for the Russell 2000 Index Portfolio until
      the Portfolio's assets reach $200 million, or until April 30, 2001,
      whichever comes first. MetLife also paid all Expenses that exceeded .20%
      of average net assets for the Janus Mid Cap Portfolio until the
      Portfolio's assets reached $100 million or until March 2, 1999, whichever
      came first. These subsidies and other prior expense reimbursement
      arrangements can increase the performance of the Portfolios. MetLife can
      terminate this arrangement at anytime upon notice to the Board of
      Directors and to Fund Shareholders.

(9)   The Metropolitan Fund has adopted a Distribution Plan under Rule 12b-1 of
      the Investment Company Act of 1940. Under the Distribution Plan the
      Portfolios pay an annual fee to compensate certain other parties for
      promoting, selling and servicing the shares of the Portfolio. These other
      parties may include the Insurance Companies (or their affiliates) and
      other broker-dealers and financial intermediaries involved in the offer
      and sale of the contracts. The Distribution Plan is described in more
      detail in the Fund's prospectus.
(10)  In these examples, the average Administration Contract Charge of .07% has
      been used. (See (4), above.)
(11)  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.
      (See "Contingent Deferred Sales Charge" and "Annuity Options" for more
      information.)


7.    THE "INVESTMENTS OF THE VARIABLE ACCOUNT" SECTION IS AMENDED TO INCLUDE
THE FOLLOWING:

      STATE STREET RESEARCH AURORA SMALL CAP VALUE PORTFOLIO*

      The State Street Research Aurora Small Cap Value Portfolio's investment
objective is high total return, consisting principally of capital
appreciation.

      JANUS MID CAP PORTFOLIO*

      The Janus Mid Cap Portfolio's investment objective is long-term growth of
capital.

                                      A-5
<PAGE>

  LEHMAN BROTHERS AGGREGATE BOND INDEX PORTFOLIO*

  The Lehman Brothers Aggregate Bond Index Portfolio's investment objective is
to equal the performance of the Lehman Brothers Aggregate Bond Index.

  METLIFE STOCK INDEX PORTFOLIO*

  The MetLife Stock Index Portfolio's investment objective is to equal the
performance of the Standard & Poor's 500 Composite Stock Price Index ("S&P 500
Index").

  METLIFE MID CAP STOCK INDEX PORTFOLIO*

  The MetLife Mid Cap Stock Index Portfolio's investment objective is to equal
the performance of the Standard & Poor's MidCap 400 Composite Stock Index
("S&P MidCap 400 Index").

  MORGAN STANLEY EAFE INDEX PORTFOLIO*

  The Morgan Stanley EAFE Index Portfolio's investment objective is to equal
the performance of Morgan Stanley Capital International Europe Australasia Far
East Index ("MSCI EAFE Index").

  RUSSELL 2000 INDEX PORTFOLIO*

  The Russell 2000 Index Portfolio's investment objective is to equal the
return of the Russell 2000 Index.
--------
   * Availability of these Portfolios is subject to any necessary state
     insurance department approvals.

8. THE "INVESTMENT ADVICE" SECTION IS AMENDED TO INCLUDE THE FOLLOWING:

    State Street Research & Management Company is the sub-investment manager
  for the State Street Research Aurora Small Cap Value Portfolio. Janus
  Capital Corporation is the sub-investment manager for the Janus Mid Cap
  Portfolio.

    An investment adviser or affiliates thereof may compensate NELICO and/or
  certain affiliates for administrative, distribution, or other services
  relating to the Eligible Funds. We (or our affiliates) may also be
  compensated with 12b-1 fees from Eligible Funds. This compensation is based
  on assets of the Eligible Funds attributable to the Contracts and certain
  other variable insurance products that we and our affiliates issue. Some
  advisers, affiliates and/or Eligible Funds may pay us more than others.

9. "THE CONTRACTS" SECTION IS AMENDED TO INCLUDE THE FOLLOWING:

ASSET REBALANCING

  We offer an asset rebalancing program for Contract Value. Contract Value
allocated to the sub-accounts can be expected to increase or decrease at
different rates due to market fluctuations. An asset rebalancing program
automatically reallocates your Contract Value among the sub-accounts
periodically (quarterly, semi-annually, or annually) to return the allocation
to the allocation percentages you specify. Asset rebalancing is intended to
transfer Contract Value from those sub-accounts that have increased in value
to those that have declined, or not increased as much, in value. Over time,
this method of investing may help you "buy low and sell high," although there
can be no assurance that this objective will be achieved. Asset rebalancing
does not guarantee profits, nor does it assure that you will not have losses.

  You may select an asset rebalancing program when you apply for the contract
or at a later date by contacting our Home Office. You specify the percentage
allocations to which your contract value will be reallocated among the sub-
accounts (excluding the Fixed Account). You may not participate in the asset
rebalancing program while you are participating in the dollar cost averaging
program. On the last day of each period on which the New York Stock Exchange
is open, we will transfer Contract Value among the sub-accounts to the extent
necessary to return the allocation to your specifications. Asset rebalancing
will continue until you notify us in writing or by telephone at our Home
Office. Asset Rebalancing cannot continue beyond the Maturity Date or once
annuity payments have commenced. Currently, we don't count transfers made
under an asset rebalancing program for purposes of the transfer rules.

                                      A-6
<PAGE>


DOLLAR COST AVERAGING

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

  . 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.


  Under enhanced dollar cost averaging, you currently may select a duration of
six or twelve months. The first transfer will be made on the date amounts are
allocated to the enhanced dollar cost averaging option. If amounts are
received on the 29th, 30th or 31st of the month, dollar cost averaging
transactions will be made on the 1st day of the following month. Subsequent
transfers will be made on the same day in subsequent months. If the selected
day is not a business day, the dollar cost averaging transaction will occur on
the next business day.

  The transfer amount will be equal to the amount allocated to the enhanced
dollar cost averaging option divided by the selected duration in months. For
example, a $12,000 allocation to a six-month enhanced dollar cost averaging
option will consist of a $2,000 transfer each month for six months, and may
include a final transfer of any remaining amounts, including the interest
credited, separately as a seventh transfer.

  If a subsequent premium is allocated to an enhanced rate dollar cost
averaging option while dollar cost averaging transfers are currently active,
the subsequent payment will be allocated to the active enhanced dollar cost
averaging option (6 or 12 months). The monthly dollar cost averaging transfer
amount will be increased by the subsequent investment amount divided by the
number of months in the selected duration period for the program. Using our
example above, a subsequent $6,000 allocation to a 6 month dollar cost
averaging program will increase the dollar cost averaging transfer amount from
$2,000 to $3,000 ($12.000/6 + $6.000/6). Dollar cost averaging transfers will
be made on a first-in first-out basis. If a subsequent premium is allocated to
an enhanced rate dollar cost averaging option, the program will end when the
assets are exhausted (which may be later than the selected period).

10. THE "REQUESTS AND ELECTIONS" SECTION IS AMENDED TO INCLUDE THE FOLLOWING:

CONFIRMING TRANSACTIONS

  We will send out written statements confirming that a transaction was
recently completed. Certain transactions may be confirmed quarterly. Unless
you inform us of any errors within 60 days of receipt, we will consider these
communications to be accurate and complete.

11. "FUND TOTAL RETURN ADJUSTED FOR CONTRACT CHARGES" CHART IS AMENDED TO
INCLUDE THE FOLLOWING:

  For purchase payment allocated to the Janus Mid Cap Portfolio

<TABLE>
<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year.......................................................... 110.35%
      Since Inception.................................................  56.39%
</TABLE>

  For purchase payment allocated to the Lehman Brothers Aggregate Bond Index
Portfolio

<TABLE>
<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year.......................................................... -11.11%
      Since Inception.................................................  -9.02%
</TABLE>


                                      A-7
<PAGE>

  For purchase payment allocated to the MetLife Stock Index Portfolio

<TABLE>
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1999
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. 10.06%
      5 Years............................................................ 24.09%
      Since Inception.................................................... 15.43%
</TABLE>

  For purchase payment allocated to the Morgan Stanley EAFE Index Portfolio

<TABLE>
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1999
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. 13.89%
      Since Inception.................................................... 19.88%
</TABLE>

  For purchase payment allocated to the Russell 2000 Index Portfolio

<TABLE>
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1999
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. 11.75%
      Since Inception.................................................... 15.13%
</TABLE>

                                      A-8
<PAGE>


                          AMERICAN GROWTH SERIES

                    NEW ENGLAND LIFE INSURANCE COMPANY

              NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                    Supplement dated January 22, 2001

                                      To

                       Prospectus Dated May 1, 2000

  This supplement updates certain information contained in the prospectus
dated May 1, 2000.

1. PAGE A-1 OF YOUR PROSPECTUS IS AMENDED TO INCLUDE THE FOLLOWING ELIGIBLE
FUNDS:

METROPOLITAN SERIES FUND, INC. ("METROPOLITAN FUND")

State Street Research Aurora Small Cap Value Portfolio*
Janus Mid Cap Portfolio*

Lehman Brothers(R) Aggregate Bond Index Portfolio*

MetLife Stock Index Portfolio*

MetLife Mid Cap Stock Index Portfolio*

Morgan Stanley EAFE(R) Index Portfolio*

Russell 2000(R) Index Portfolio*
--------
* Availability is subject to any necessary state insurance department
  approval.

2. On December 1, 2000, the Putnam International Stock Portfolio was
substituted for the Morgan Stanley International Magnum Equity Series, which
is no longer available for investment under the Contract.

3. You may allocate contract value to a maximum of twenty sub-accounts
(including the Fixed Account) at any time.

4. THE "EXPENSE TABLE" IS REPLACED WITH THE FOLLOWING:

                              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>
<CAPTION>
<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>

                                      A-1
<PAGE>


                          NEW ENGLAND ZENITH FUND

OPERATING EXPENSES FOR THE YEAR ENDED 12/31/99

 (AS A PERCENTAGE OF AVERAGE NET ASSETS)


<TABLE>
<CAPTION>
                                         OTHER         TOTAL         OTHER         TOTAL
                                       EXPENSES      EXPENSES      EXPENSES      EXPENSES
                          MANAGEMENT    BEFORE        BEFORE         AFTER         AFTER
                            FEES*    REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT
                          ---------- ------------- ------------- ------------- -------------
<S>                       <C>        <C>           <C>           <C>           <C>
Back Bay Advisors Money
 Market Series..........     .35%         .05%          .40%         .05%           .40%
Back Bay Advisors Bond
 Income Series..........     .40%         .08%          .48%         .08%           .48%
Salomon Brothers
 Strategic Bond
 Opportunities Series...     .65%         .16%          .81%         .16%           .81%
Salomon Brothers U.S.
 Government Series(6)        .55%         .17%          .72%         .15%           .70%
Balanced Series.........     .70%         .07%          .77%         .07%           .77%
Alger Equity Growth
 Series.................     .75%         .05%          .80%         .05%           .80%
Davis Venture Value
 Series.................     .75%         .06%          .81%         .06%           .81%
Harris Oakmark Mid Cap
 Value Series(6)........     .75%         .13%          .88%         .13%           .88%
Loomis Sayles Small Cap
 Series(6)(7)...........     .90%         .20%         1.10%         .10%          1.00%
MFS Investors Series(6).     .75%        1.28%         2.03%         .15%           .90%
MFS Research Managers
 Series(6)..............     .75%        1.28%         2.03%         .15%           .90%
Westpeak Growth and
 Income Series..........     .68%         .06%          .74%         .06%           .74%
</TABLE>

--------

* Our affiliate, New England Investment Management, LLC, is the investment
  adviser for the Series of the Zenith Fund.


                                      A-2
<PAGE>


                      METROPOLITAN SERIES FUND, INC.

OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1999

 (ANTICIPATED EXPENSES FOR 2000 FOR THE PUTNAM LARGE CAP GROWTH, STATE STREET
 RESEARCH AURORA SMALL CAP VALUE AND METLIFE MID CAP STOCK INDEX PORTFOLIOS)

 (AS A PERCENTAGE OF NET ASSETS)


<TABLE>
<CAPTION>
                                                      OTHER         TOTAL         OTHER         TOTAL
                                        12B-1       EXPENSES      EXPENSES      EXPENSES      EXPENSES
                          MANAGEMENT DISTRIBUTION    BEFORE        BEFORE         AFTER         AFTER
                            FEES*        FEE      REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT
                          ---------- ------------ ------------- ------------- ------------- -------------
<S>                       <C>        <C>          <C>           <C>           <C>           <C>
Putnam Large Cap Growth
 Portfolio(8)...........     .80%         N/A          .59%         1.39%         .20%          1.00%
Putnam International
 Stock Portfolio........     .90%         N/A          .22%         1.12%         .22%          1.12%
State Street Research
 Aurora Small Cap Value
 Portfolio(8)...........     .85%         N/A          .23%         1.08%         .20%          1.05%
Janus Mid Cap
 Portfolio(8)(9)........     .67%        .25%          .04%          .96%         .04%           .96%
Lehman Brothers
 Aggregate Bond Index
 Portfolio(8)(9)........     .25%        .25%          .15%          .65%         .15%           .65%
MetLife Stock Index
 Portfolio(9)...........     .25%        .25%          .04%          .54%         .04%           .54%
MetLife Mid Cap Stock
 Index Portfolio(8)(9)..     .25%        .25%          .65%         1.15%         .20%           .70%
Morgan Stanley EAFE
 Index Portfolio(8)(9)..     .30%        .25%         1.47%         2.02%         .40%           .95%
Russell 2000 Index
 Portfolio(8)(9)........     .25%        .25%          .64%         1.14%         .30%           .80%
</TABLE>

--------

* Metropolitan Life Insurance Company ("MetLife") is the investment adviser for
  the Portfolios of the Metropolitan Fund.

                                      A-3
<PAGE>


5. THE "EXAMPLE" CHART IS AMENDED TO INCLUDE THE FOLLOWING:

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.(10)) 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 or Metropolitan Fund Portfolio 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>
     State Street Research Aurora Small Cap
      Value*.................................. $89.56 $124.89 $160.46 $277.74
     Janus Mid Cap*...........................  88.72  122.33  155.96  268.81
     Lehman Brothers Aggregate Bond Index*....  85.84  113.44  140.32  237.37
     MetLife Stock Index*.....................  84.81  110.27  134.70  225.96
     MetLife Mid Cap Stock Index*.............  86.31  114.89  142.86  242.51
     Morgan Stanley EAFE Index*...............  88.63  122.05  155.46  267.81
     Russell 2000 Index*......................  87.24  117.75  147.92  252.72
</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 or Metropolitan Fund Portfolio 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)(11):

<TABLE>
<CAPTION>
                                               1 YEAR 3 YEARS 5 YEARS 10 YEARS
                                               ------ ------- ------- --------
     <S>                                       <C>    <C>     <C>     <C>
     State Street Research Aurora Small Cap
      Value*.................................. $24.84 $76.37  $130.46 $277.74
     Janus Mid Cap*...........................  23.94  73.67   125.96  268.81
     Lehman Brothers Aggregate Bond Index*....  20.83  64.31   110.32  237.37
     MetLife Stock Index* ....................  19.73  60.97   104.70  225.96
     MetLife Mid Cap Stock Index*.............  21.34  65.83   112.86  242.51
     Morgan Stanley EAFE Index*...............  23.84  73.37   125.46  267.81
     Russell 2000 Index*......................  22.34  68.85   117.92  252.72
</TABLE>
--------

* Availability of these portfolios is subject to any necessary state insurance
  department approval.

--------

6. THE "NOTES" TO THE EXPENSE TABLE IS REPLACED WITH THE FOLLOWING:

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.

                                      A-4
<PAGE>


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

(6)  New England Investment Management voluntarily limits the expenses (other
     than brokerage costs, interest, taxes or extraordinary expenses) of certain
     series with either an expense cap or expense deferral arrangement. Under
     the expense cap, New England Investment Management bears expenses of the
     Loomis Sayles Small Cap Series that exceed 1.00% of average daily net
     assets. Under the expense deferral agreement, New England Investment
     Management bears expenses which exceed a certain limit in the year the
     series incurs them and charges those expenses to the series in a future
     year if actual expenses of the series are below the limit. The limit on
     expenses for these series are: .90% of average daily net assets for the
     Harris Oakmark Mid Cap Value, MFS Investors and MFS Research Managers
     Series; and .70% of average daily net assets for the Salomon Brothers U.S.
     Government Series. New England Investment Management may end these expense
     limits at any time.

(7)  In 1999, the management fee for the Loomis Sayles Small Cap Series was
     1.00%.

(8)  MetLife voluntarily pays expenses (other than the management fee, brokerage
     commissions, amounts payable pursuant to a plan adopted in accordance with
     Rule 12b-1 under the Investment Company Act of 1940, taxes, interest and
     other loan costs, and any unusual one-time expenses) of certain Portfolios
     in excess of a certain percentage of net assets until the earlier of either
     total net assets of the Portfolio reaching $100 million or a certain date
     as follows:
<TABLE>
<CAPTION>
                                                     SUBSIDIZED EXPENSES
     PORTFOLIO                                           IN EXCESS OF      DATE
     ---------                                       ------------------- -------
     <S>                                             <C>                 <C>
     Putnam Large Cap Growth.........................       0.20%         5/1/02
     State Street Research Aurora Small Cap Value....       0.20%         7/1/02
     MetLife Mid Cap Stock Index.....................       0.20%         7/1/02

</TABLE>
     --------

     Prior to 11/8/00, MetLife paid all Expenses in excess of .25% of the
     average net assets for the Morgan Stanley EAFE Index Portfolio until the
     Portfolio's total assets reached $100 million or November 8, 2000,
     whichever came first. Beginning on 11/8/00, MetLife will pay all expenses
     in excess of .40% of the average net assets of the Morgan Stanley EAFE
     Index Portfolio until the Portfolio's assets reach $200 million, or until
     May 1, 2001, whichever comes first.

     MetLife also paid all Expenses in excess of .20% of the average net assets
     for the Russell 2000 Index Portfolio until December 3, 1999 and for the
     Lehman Brothers Aggregate Bond Index Portfolio until July 13, 1999.
     Beginning on February 22, 2000, MetLife will pay all expenses in excess of
     0.30% of the average net assets for the Russell 2000 Index Portfolio until
     the Portfolio's assets reach $200 million, or until April 30, 2001,
     whichever comes first. MetLife also paid all Expenses that exceeded .20% of
     average net assets for the Janus Mid Cap Portfolio until the Portfolio's
     assets reached $100 million or until March 2, 1999, whichever came first.
     These subsidies and other prior expense reimbursement arrangements can
     increase the performance of the Portfolios. MetLife can terminate this
     arrangement at anytime upon notice to the Board of Directors and to Fund
     Shareholders.

(9)  The Metropolitan Fund has adopted a Distribution Plan under Rule 12b-1 of
     the Investment Company Act of 1940. Under the Distribution Plan the
     Portfolios pay an annual fee to compensate certain other parties for
     promoting, selling and servicing the shares of the Portfolio. These other
     parties may include the Insurance Companies (or their affiliates) and other
     broker-dealers and financial intermediaries involved in the offer and sale
     of the contracts. The Distribution Plan is described in more detail in the
     Fund's prospectus.

(10) In these examples, the average Administration Contract Charge of .05% has
     been used. (See (4), above.)

(11) 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. (See "Contingent Deferred Sales Charge" and "Annuity Options" for
     more information.)
-------------------------------------------------------------------------------

7.   THE "INVESTMENTS OF THE VARIABLE ACCOUNT" SECTION IS AMENDED TO INCLUDE THE
FOLLOWING:

     STATE STREET RESEARCH AURORA SMALL CAP VALUE PORTFOLIO*

     The State Street Research Aurora Small Cap Value Portfolio's investment
objective is high total return, consisting principally of capital
appreciation.

     JANUS MID CAP PORTFOLIO*

     The Janus Mid Cap Portfolio's investment objective is long-term growth of
capital.

                                      A-5
<PAGE>


  LEHMAN BROTHERS AGGREGATE BOND INDEX PORTFOLIO*

  The Lehman Brothers Aggregate Bond Index Portfolio's investment objective is
to equal the performance of the Lehman Brothers Aggregate Bond Index.

  METLIFE STOCK INDEX PORTFOLIO*

  The MetLife Stock Index Portfolio's investment objective is to equal the
performance of the Standard & Poor's 500 Composite Stock Price Index ("S&P 500
Index").

  METLIFE MID CAP STOCK INDEX PORTFOLIO*

  The MetLife Mid Cap Stock Index Portfolio's investment objective is to equal
the performance of the Standard & Poor's MidCap 400 Composite Stock Index
("S&P MidCap 400 Index").

  MORGAN STANLEY EAFE INDEX PORTFOLIO*

  The Morgan Stanley EAFE Index Portfolio's investment objective is to equal
the performance of Morgan Stanley Capital International Europe Australasia Far
East Index ("MSCI EAFE Index").

  RUSSELL 2000 INDEX PORTFOLIO*

  The Russell 2000 Index Portfolio's investment objective is to equal the
return of the Russell 2000 Index.

--------
   * Availability of these Portfolios is subject to any necessary state
     insurance department approvals.

8. THE "INVESTMENT ADVICE" SECTION IS AMENDED TO INCLUDE THE FOLLOWING:

    State Street Research & Management Company is the sub-investment manager
  for the State Street Research Aurora Small Cap Value Portfolio. Janus
  Capital Corporation is the sub-investment manager for the Janus Mid Cap
  Portfolio.

    An investment adviser or affiliates thereof may compensate NELICO and/or
  certain affiliates for administrative, distribution, or other services
  relating to the Eligible Funds. We (or our affiliates) may also be
  compensated with 12b-1 fees from Eligible Funds. This compensation is based
  on assets of the Eligible Funds attributable to the Contracts and certain
  other variable insurance products that we and our affiliates issue. Some
  advisers, affiliates and/or Eligible Funds may pay us more than others.

9. "THE CONTRACTS" SECTION IS AMENDED TO INCLUDE THE FOLLOWING:

ASSET REBALANCING

  We offer an asset rebalancing program for Contract Value. Contract Value
allocated to the sub-accounts can be expected to increase or decrease at
different rates due to market fluctuations. An asset rebalancing program
automatically reallocates your Contract Value among the sub-accounts
periodically (quarterly, semi-annually or annually) to return the allocation
to the allocation percentages you specify. Asset rebalancing is intended to
transfer Contract Value from those sub-accounts that have increased in value
to those that have declined, or not increased as much, in value. Over time,
this method of investing may help you "buy low and sell high," although there
can be no assurance that this objective will be achieved. Asset rebalancing
does not guarantee profits, nor does it assure that you will not have losses.

  You may select an asset rebalancing program when you apply for the contract
or at a later date by contacting our Home Office. You specify the percentage
allocations to which your contract value will be reallocated among the sub-
accounts (excluding the Fixed Account). You may not participate in the asset
rebalancing program while you are participating in the dollar cost averaging
program. On the last day of each period on which the New York Stock Exchange
is open, we will transfer Contract Value among the sub-accounts to the extent
necessary to return the allocation to your specifications. Asset rebalancing
will continue until you notify us in writing or by telephone

                                      A-6
<PAGE>


at our Home Office. Asset rebalancing cannot continue beyond the Maturity Date
or once annuity payments have commenced. Currently, we don't count transfers
made under an asset rebalancing program for purposes of the transfer rules.

DOLLAR COST AVERAGING

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

  .  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.


  Under enhanced dollar cost averaging, you currently may select a duration of
six or twelve months. The first transfer will be made on the date amounts are
allocated to the enhanced dollar cost averaging option. If amounts are
received on the 29th, 30th, or 31st of the month, dollar cost averaging
transactions will be made on the 1st day of the following month. Subsequent
transfers will be made on the same day in subsequent months. If the selected
day is not a business day, the dollar cost averaging transaction will occur on
the next business day.

  The transfer amount will be equal to the amount allocated to the enhanced
dollar cost averaging option divided by the selected duration in months. For
example, a $12,000 allocation to a six-month enhanced dollar cost averaging
option will consist of a $2,000 transfer each month for six months and may
include a final transfer of any remaining amounts, including the interest
credited, separately as a seventh transfer.

  If a subsequent premium is allocated to an enhanced rate dollar cost
averaging option while dollar cost averaging transfers are currently active,
the subsequent payment will be allocated to the active enhanced dollar cost
averaging option (6 or 12 months). The monthly dollar cost averaging transfer
amount will be increased by the subsequent investment amount divided by the
number of months in the selected duration period for the program. Using our
example above, a subsequent $6,000 allocation to a 6 month dollar cost
averaging program will increase the dollar cost averaging transfer amount from
$2,000 to $3,000 ($12.000/6 + $6,000/6). Dollar cost averaging transfers will
be made on a first-in first-out basis. If a subsequent premium is allocated to
an enhanced rate dollar cost averaging option, the program will end when the
assets are exhausted (which may be later than the selected period).

10. THE "REQUESTS AND ELECTIONS" SECTION IS AMENDED TO INCLUDE THE FOLLOWING:

CONFIRMING TRANSACTIONS

  We will send out written statements confirming that a transaction was
recently completed. Certain transactions may be confirmed quarterly. Unless
you inform us of any errors within 60 days of receipt, we will consider these
communications to be accurate and complete.

                                      A-7
<PAGE>


11. "FUND TOTAL RETURN ADJUSTED FOR CONTRACT CHARGES" CHART IS AMENDED TO
INCLUDE THE FOLLOWING:

  For purchase payment allocated to the Janus Mid Cap Portfolio

<TABLE>
<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year.......................................................... 110.46%
      Since Inception.................................................  56.48%

  For purchase payment allocated to the Lehman Brothers Aggregate Bond Index
Portfolio

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year.......................................................... -11.06%
      Since Inception.................................................  -8.97%

  For purchase payment allocated to the MetLife Stock Index Portfolio

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year..........................................................  10.12%
      5 Years.........................................................  24.16%
      Since Inception.................................................  15.49%

  For purchase payment allocated to the Morgan Stanley EAFE Index Portfolio

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year..........................................................  13.95%
      Since Inception.................................................  19.95%

  For purchase payment allocated to the Russell 2000 Index Portfolio

<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1999
                          -------------------------------
      <S>                                                              <C>
      1 Year..........................................................  11.81%
      Since Inception.................................................  15.19%
</TABLE>

                                      A-8
<PAGE>

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

                             JANUARY 22, 2001

  This Statement of Additional Information is not a prospectus. This Statement
of Additional Information relates to the Prospectus dated May 1, 2000, as
supplemented January 22, 2001 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-203-01

                                     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-18

Annuity Payments.......................................................... II-18

Hypothetical Illustrations of Annuity Income Payouts...................... II-20

Historical Illustrations of Annuity Income Payouts........................ II-24

The Fixed Account......................................................... II-27

Experts................................................................... II-28

Legal Matters............................................................. II-28

Appendix A................................................................ II-29

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"). MetLife
is a wholly-owned subsidiary of MetLife, Inc., a publicly traded company.

                   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 200 BERKELEY STREET, BOSTON,
MASSACHUSETTS 02116, CONDUCTS AN ANNUAL AUDIT OF THE COMPANY'S AND 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, 1998, 1999 AND 2000 THE COMPANY PAID COMMISSIONS IN THE
AMOUNT OF $10,931,428.85, $2,464,897.40 AND $1,186,615.39 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

  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 Harris Oakmark Mid Cap Value Series
(formerly the Goldman Sachs Midcap Value Series) commenced operations on April
30, 1993. The Small Cap Series commenced operations on May 2, 1994. The MFS
Investors and MFS Research Managers Series commenced operations on April 30,
1999 and became available to American Growth Series Contractholders on July 1,
1999. The five other Series of the Zenith Fund commenced operations on October
31, 1994. The Putnam International Stock Portfolio commenced operations on
October 31, 1994 and became available to Contractholders on May 1, 2000. (On
December 1, 2000, the Putnam International Stock Portfolio was substituted for
the Morgan Stanley International Magnum Equity Series, which is no longer
available for investment under the Contract. The Morgan Stanley International
Magnum Equity Series commenced operations on October 31, 1994. Performance
figures for dates on or before December 1, 2000 reflect the performance of the
Morgan Stanley International Magnum Equity Series.) The Putnam Large Cap
Growth Portfolio commenced operations and became available to Contractholders
on May 1, 2000. The remaining Portfolios of the Metropolitan Fund became
available to contractholders on January 22, 2001 and commenced operations as
follows: State Street Research Aurora Small Cap Value and the MetLife Mid Cap
Stock Index Portfolios, July 5, 2000; Janus Mid Cap Portfolio, March 3, 1997;
Lehman Brothers Aggregate Bond Index, Morgan Stanley EAFE Index, and Russell
2000 Index Portfolios, November 9, 1998; and MetLife Stock Index Portfolio,
May 1, 1990.

  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 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, 1999 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, 1999 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, 1999. 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. See Appendix E of the
prospectus for Sub-account average annual total return and Fund total return
adjusted for contract charges.

  The following chart illustrates how the average annual total return was
determined for the five year period ending December 31, 1999 for the sub-
account investing in the Back Bay Advisors Bond Income Series based on the
assumptions used above. 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.

                                     II-4
<PAGE>

<TABLE>
<CAPTION>
                                                                      AVERAGE
                                          UNIT   CONTRACT SURRENDER ANNUAL TOTAL
   DATE                         UNITS    VALUE    VALUE     VALUE      RETURN
   ----                        -------- -------- -------- --------- ------------
   <S>                         <C>      <C>      <C>      <C>       <C>
   December 31, 1994.......... 393.7316 2.539801 1,000.00      --        --
   December 31, 1995.......... 383.8536 3.037039 1,165.78 1,105.78     10.58%
   December 31, 1996.......... 374.2815 3.134109 1,173.04 1,123.04      5.97%
   December 31, 1997..........  365.532 3.428788 1,253.33 1,213.33      6.65%
   December 31, 1998.......... 357.3992 3.688741 1,318.35 1,288.35      6.53%
   December 31, 1999.......... 349.1172 3.622325 1,264.62 1,244.62      4.47%
</TABLE>

  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 Harris Oakmark Mid Cap Value Series; May 2, 1994 for the Loomis
Sayles Small Cap Series; May 1, 1999 for the MFS Investors and MFS Research
Managers Series; November 1, 1994 for the other series of the Zenith Fund;
November 1, 1994 for the Putnam International Stock Portfolio (performance
figures for dates on or before December 1, 2000 reflect the performance of the
Morgan Stanley International Magnum Equity Series); March 3, 1997 for the
Janus Mid Cap Portfolio; December 1, 1998 for the Lehman Brothers Aggregate
Bond Index, Morgan Stanley EAFE Index and Russell 2000 Index Portfolios; and
May 1, 1990 for the MetLife Stock Index Portfolio. 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
                              INVESTMENT RESULTS

                               CONTRACT VALUE(1)

<TABLE>
<CAPTION>
                                           SALOMON
                   BACK BAY   BACK BAY    BROTHERS     SALOMON                                       HARRIS     LOOMIS
                   ADVISORS   ADVISORS    STRATEGIC    BROTHERS                ALGER      DAVIS     OAKMARK     SAYLES
                    MONEY       BOND        BOND         U.S.                  EQUITY    VENTURE    MID CAP     SMALL
                    MARKET     INCOME   OPPORTUNITIES GOVERNMENT BALANCED(2)   GROWTH     VALUE     VALUE(3)     CAP
                  ---------- ---------- ------------- ---------- ----------- ---------- ---------- ---------- ----------
<S>               <C>        <C>        <C>           <C>        <C>         <C>        <C>        <C>        <C>
As of December 31:
 1983............ $10,258.59 $10,339.37
 1984............  11,175.34  11,453.64
 1985............  11,905.86  13,388.01
 1986............  12,514.94  15,137.25
 1987............  13,122.50  15,242.29
 1988............  13,889.20  16,265.40
 1989............  14,941.00  17,990.50
 1990............  15,916.76  19,151.95
 1991............  16,648.66  22,256.25
 1992............  17,018.47  23,722.98
 1993............  17,259.12  26,326.49                                                            $11,370.39
 1994............  17,674.12  25,071.19  $ 9,838.87   $10,038.07 $ 9,968.28  $ 9,695.00 $ 9,628.96  11,157.06 $ 9,590.97
 1995............  18,401.19  29,948.07   11,557.83    11,360.92  12,242.06   14,193.96  12,201.25  14,313.48  12,156.37
 1996............  19,053.28  30,873.63   13,008.06    11,548.68  14,087.95   15,815.91  16,356.09  16,574.48  15,637.59
 1997............  19,770.95  33,745.26   14,224.45    12,328.54  16,117.11   19,572.63  21,511.41  19,149.94  19,225.09
 1998............  20,502.34  36,272.33   14,289.07    13,058.43  17,317.95   28,501.23  24,249.91  17,837.19  18,619.12
 1999............  21,201.50  35,588.76   14,270.63    12,875.72  16,191.16   37,682.20  28,083.48  17,631.72  24,161.33
<CAPTION>
                                         WESTPEAK                             LEHMAN
                                MFS       GROWTH      PUTNAM                 BROTHERS   METLIFE     MORGAN
                     MFS      RESEARCH     AND     INTERNATIONAL JANUS MID  AGGREGATE    STOCK     STANLEY    RUSSELL
                  INVESTORS   MANAGERS    INCOME     STOCK(4)       CAP     BOND INDEX   INDEX    EAFE INDEX 2000 INDEX
                  ---------- ---------- ---------- ------------- ---------- ---------- ---------- ---------- ----------
<S>               <C>        <C>        <C>        <C>           <C>        <C>        <C>        <C>        <C>
As of December 31:
 1983............
 1984............
 1985............
 1986............
 1987............
 1988............
 1989............
 1990............                                                                      $10,110.39
 1991............                                                                       12,951.64
 1992............                                                                       13,717.25
 1993............                       $11,321.11                                      14,764.19
 1994............                        11,004.57  $10,237.83                          14,673.69
 1995............                        14,780.39   10,698.65                          19,790.14
 1996............                        17,185.98   11,227.90                          23,899.30
 1997............                        22,593.88   10,904.04   $12,638.78             31,130.36
 1998............                        27,709.41   11,508.95    17,142.64 $10,006.50  39,355.34 $10,546.25 $10,578.68
 1999............ $10,192.36 $11,871.99  29,864.28   14,116.24    37,557.28   9,677.86  46,848.66  12,934.63  12,746.40
</TABLE>

                                     II-5
<PAGE>

                               SURRENDER VALUE(1)

<TABLE>
<CAPTION>
                                           SALOMON
                   BACK BAY   BACK BAY    BROTHERS     SALOMON                                       HARRIS     LOOMIS
                   ADVISORS   ADVISORS    STRATEGIC    BROTHERS                ALGER      DAVIS     OAKMARK     SAYLES
                    MONEY       BOND        BOND         U.S.                  EQUITY    VENTURE    MID CAP     SMALL       MFS
                    MARKET     INCOME   OPPORTUNITIES GOVERNMENT BALANCED(2)   GROWTH     VALUE     VALUE(3)     CAP     INVESTORS
                  ---------- ---------- ------------- ---------- ----------- ---------- ---------- ---------- ---------- ---------
<S>               <C>        <C>        <C>           <C>        <C>         <C>        <C>        <C>        <C>        <C>
As of December 31:
 1983............ $ 9,600.49 $ 9,675.61
 1984............  10,565.34  10,843.64
 1985............  11,395.86  12,878.01
 1986............  12,104.94  14,727.29
 1987............  12,812.50  14,932.29
 1988............  13,679.20  16,055.40
 1989............  14,831.00  17,880.50
 1990............  15,906.76  19,141.95
 1991............  16,638.66  22,246.25
 1992............  17,008.47  23,712.98
 1993............  17,249.12  26,316.49                                                            $10,650.39
 1994............  17,664.12  25,061.19  $ 9,215.15   $ 9,400.41 $ 9,335.50  $ 9,081.35 $ 9,019.93  10,537.06 $ 8,972.10
 1995............  18,391.19  29,938.07   10,952.83    10,755.92  11,637.06   13,588.96  12,596.25  13,793.48  11,538.87
 1996............  19,043.28  30,863.63   12,503.06    11,043.68  13,582.95   15,310.91  15,851.09  16,154.48  15,120.09
 1997............  19,760.95  33,735.26   14,219.45    11,923.54  15,712.11   19,167.63  21,106.41  18,829.94  18,807.59
 1998............  20,492.34  36,262.33   13,984.07    12,753.43  17,012.95   28,196.23  23,944.51  17,617.09  18,301.62
 1999............  21,191.50  35,578.76   14,065.63    12,670.72  15,986.16   37,477.20  27,878.48  17,511.72  23,943.83 $9,528.89
<CAPTION>
                                                                  LEHMAN
                              WESTPEAK                           BROTHERS
                     MFS       GROWTH      PUTNAM                AGGREGATE  METLIFE    MORGAN
                   RESEARCH     AND     INTERNATIONAL JANUS MID    BOND      STOCK    STANLEY    RUSSELL
                   MANAGERS    INCOME     STOCK(4)       CAP       INDEX     INDEX   EAFE INDEX 2000 INDEX
                  ---------- ---------- ------------- ---------- --------- --------- ---------- ----------
<S>               <C>        <C>        <C>           <C>        <C>       <C>       <C>        <C>
As of December 31:
 1983............
 1984............
 1985............
 1986............
 1987............
 1988............
 1989............
 1990............                                                          $9,452.67
 1991............                                                          12,331.64
 1992............                                                          13,197.25
 1993............            $10,601.11                                    14,344.19
 1994............             10,389.62  $ 9,586.18                        14,353.69
 1995............             14,260.39   10,112.28                        19,570.14
 1996............             16,765.98   10,722.90                        23,779.30
 1997............             22,273.88   10,507.64   $11,913.78           31,110.36
 1998............             27,489.41   11,203.95    16,517.64 $9,373.55 39,335.34 $ 9,875.51 $ 9,905.68
 1999............ $11,151.99  29,744.28   13,911.24    37,032.28  9,153.06 46,828.66  12,332.13  12,143.90
</TABLE>

                 ANNUAL PERCENTAGE CHANGE IN CONTRACT VALUE(1)

<TABLE>
<CAPTION>
                                               SALOMON
                          BACK BAY BACK BAY   BROTHERS     SALOMON                                 HARRIS
                          ADVISORS ADVISORS   STRATEGIC    BROTHERS              ALGER    DAVIS   OAKMARK
                           MONEY     BOND       BOND         U.S.                EQUITY  VENTURE  MID CAP
                           MARKET   INCOME  OPPORTUNITIES GOVERNMENT BALANCED(2) GROWTH   VALUE   VALUE(3)
                          -------- -------- ------------- ---------- ----------- ------  -------  --------
<S>                       <C>      <C>      <C>           <C>        <C>         <C>     <C>      <C>
As of December 31:
 1983...................     2.59%    3.39%
 1984...................     8.94    10.78
 1985...................     6.54    16.89
 1986...................     5.12    13.07
 1987...................     4.85     0.69
 1988...................     5.84     6.71
 1989...................     7.57    10.61
 1990...................     6.53     6.46
 1991...................     4.60    16.21
 1992...................     2.22     6.59
 1993...................     1.41    10.97                                                         13.70%
 1994...................     2.40    -4.77      -1.61%       0.38%      -0.32%    -3.05%  -3.71%   -1.88
 1995...................     4.11    19.45      17.47       13.18       22.81     46.40   37.10    28.29
 1996...................     3.54     3.09      12.55        1.65       15.08     11.43   23.90    15.80
 1997...................     3.77     9.30       9.35        6.75       14.40     23.75   31.52    15.54
 1998...................     3.70     7.49       0.45        5.92        7.45     45.62   12.73    -6.86
 1999...................     3.41    -1.88      -0.13       -1.40       -6.51     32.21   15.81    -1.15
Cumulative Return.......   112.01   255.89      42.71       28.76       61.91    276.82  180.83    76.32
Annual Effective Rate of
 Return.................     4.71     8.08       7.13        5.02        9.78     29.29   22.13     8.88
</TABLE>

<TABLE>
<CAPTION>
                                                                             LEHMAN
                  LOOMIS                     WESTPEAK                       BROTHERS           MORGAN
                  SAYLES              MFS     GROWTH     PUTNAM     JANUS   AGGREGATE METLIFE  STANLEY RUSSELL DOW JONES
                  SMALL      MFS    RESEARCH   AND    INTERNATIONAL  MID      BOND     STOCK    EAFE    2000   INDUSTRIAL
                   CAP    INVESTORS MANAGERS  INCOME    STOCK(4)     CAP      INDEX    INDEX    INDEX   INDEX  AVERAGE(5)
                  ------  --------- -------- -------- ------------- ------  --------- -------  ------- ------- ----------
<S>               <C>     <C>       <C>      <C>      <C>           <C>     <C>       <C>      <C>     <C>     <C>
As of Decem-
 ber 31:
1983............                                                                                                    5.11%
1984............                                                                                                    1.35
1985............                                                                                                   33.62
1986............                                                                                                   27.25
1987............                                                                                                    5.55
1988............                                                                                                   16.21
1989............                                                                                                   32.24
1990............                                                                        1.10%                      -0.54
1991............                                                                       28.10                       24.25
1992............                                                                        5.91                        7.40
1993............                               13.21%                                   7.63                       16.97
1994............   -4.09%                      -2.80       2.38%                       -0.61                        5.02
1995............   26.75                       34.31       4.50                        34.87                       36.94
1996............   28.64                       16.28       4.95                        20.76                       28.91
1997............   22.94                       31.47      -2.88      26.39%            30.26                       24.91
1998............   -3.15                       22.64       5.55      35.64     0.07%   26.42     5.46%   5.79%     18.14
1999............   29.77    1.92%    18.72%     7.78      22.65     119.09    -3.28    19.04    22.65   20.49      27.21
Cumulative Re-
 turn...........  141.61    1.92     18.72    198.64      41.16     275.57    -3.22   368.49    29.35   27.46   1,791.58
Annual Effective
 Rate of Re-
 turn...........   16.85    2.89     29.26     17.83       6.90      59.61    -2.98    17.32    26.84   25.14      18.88
<CAPTION>
                               LEHMAN
                            INTERMEDIATE
                            GOVERNMENT/
                  S&P 500    CORPORATE   CONSUMER
                   STOCK        BOND      PRICE
                  INDEX(6)    INDEX(7)   INDEX(8)
                  --------- ------------ --------
<S>               <C>       <C>          <C>
As of Decem-
 ber 31:
1983............      1.79%      4.51%     1.07%
1984............      6.27      14.37      3.95
1985............     31.73      18.06      3.77
1986............     18.66      13.13      1.13
1987............      5.25       3.66      4.41
1988............     16.61       6.67      4.42
1989............     31.69      12.77      4.65
1990............     -3.10       9.16      6.11
1991............     30.47      14.62      3.06
1992............      7.62       7.17      2.90
1993............     10.08       8.79      2.75
1994............      1.32      -1.93      2.67
1995............     37.58      15.33      2.54
1996............     22.96       4.05      3.32
1997............     33.36       7.87      1.83
1998............     28.52       8.44      1.61
1999............     21.04      -2.15      2.68
Cumulative Re-
 turn...........  1,653.04     357.92     72.44
Annual Effective
 Rate of Re-
 turn...........     18.35       9.36      3.26
</TABLE>

                                      II-6
<PAGE>

                ANNUAL PERCENTAGE CHANGE IN SURRENDER VALUE(1)

<TABLE>
<CAPTION>
                                               SALOMON
                          BACK BAY BACK BAY   BROTHERS     SALOMON                                 HARRIS  LOOMIS
                          ADVISORS ADVISORS   STRATEGIC    BROTHERS              ALGER    DAVIS   OAKMARK  SAYLES
                           MONEY     BOND       BOND         U.S.                EQUITY  VENTURE  MID CAP  SMALL
                           MARKET   INCOME  OPPORTUNITIES GOVERNMENT BALANCED(2) GROWTH   VALUE   VALUE(3)  CAP
                          -------- -------- ------------- ---------- ----------- ------  -------  -------- ------
<S>                       <C>      <C>      <C>           <C>        <C>         <C>     <C>      <C>      <C>
As of December 31:
 1983...................    -4.00%   -3.24%
 1984...................    10.05    12.07
 1985...................     7.86    18.76
 1986...................     6.22    14.36
 1987...................     5.85     1.39
 1988...................     6.76     7.52
 1989...................     8.42    11.37
 1990...................     7.25     7.05
 1991...................     4.60    16.22
 1992...................     2.22     6.59
 1993...................     1.41    10.98                                                          6.50%
 1994...................     2.41    -4.77      -7.85%      -6.00%      -6.64%    -9.19%  -9.80%   -1.06   -10.28%
 1995...................     4.12    19.46      18.86       14.42       24.65     49.64   39.65    30.90    28.61
 1996...................     3.55     3.09      14.15        2.68       16.72     12.67   25.84    17.12    31.04
 1997...................     3.77     9.30      10.53        7.97       15.68     25.19   33.15    16.56    24.39
 1998...................     3.70     7.49       1.19        6.96        8.28     47.10   13.45    -6.44    -2.69
 1999...................     3.41    -1.89       0.58       -0.65       -6.04     32.92   16.43    -0.60    30.83
Cumulative Return.......   111.92   255.79      40.66       26.71       59.86    274.77  178.78    75.12   139.44
Annual Effective Rate of
 Return.................     4.71     8.08       6.83        4.69        9.51     29.15   21.96     8.77    16.66
</TABLE>

<TABLE>
<CAPTION>
                                                                      LEHMAN
                                      WESTPEAK                       BROTHERS           MORGAN
                               MFS     GROWTH     PUTNAM     JANUS   AGGREGATE METLIFE  STANLEY RUSSELL DOW JONES  S&P 500
                      MFS    RESEARCH   AND    INTERNATIONAL  MID      BOND     STOCK    EAFE    2000   INDUSTRIAL  STOCK
                   INVESTORS MANAGERS  INCOME    STOCK(4)     CAP      INDEX    INDEX    INDEX   INDEX  AVERAGE(5) INDEX(6)
                   --------- -------- -------- ------------- ------  --------- -------  ------- ------- ---------- --------
<S>                <C>       <C>      <C>      <C>           <C>     <C>       <C>      <C>     <C>     <C>        <C>
As of Decem-
 ber 31:
 1983............                                                                                            5.11%     1.79%
 1984............                                                                                            1.35      6.27
 1985............                                                                                           33.62     31.73
 1986............                                                                                           27.25     18.66
 1987............                                                                                            5.55      5.25
 1988............                                                                                           16.21     16.61
 1989............                                                                                           32.24     31.69
 1990............                                                               -5.47%                      -0.54     -3.10
 1991............                                                               30.46                       24.25     30.47
 1992............                                                                7.02                        7.40      7.62
 1993............                        6.01%                                   8.69                       16.97     10.08
 1994............                       -1.99      -4.14%                        0.07                        5.02      1.32
 1995............                       37.26       5.49                        36.34                       36.94     37.58
 1996............                       17.57       6.04                        21.51                       28.91     22.96
 1997............                       32.85      -2.01      19.14%            30.83                       24.91     33.36
 1998............                       23.42       6.63      38.64    -6.26%   26.44    -1.24%  -0.94%     18.14     28.52
 1999............    -4.71%   11.52%     8.20      24.16     124.20    -2.35    19.05    24.88   22.60      27.21     21.04
Cumulative Re-
 turn............    -4.71    11.52    197.44      39.11     270.32    -8.47   368.29    23.32   21.44   1,791.58  1,653.04
Annual Effective
 Rate of Return..    -6.96    17.72     17.76       6.60      58.82    -7.85    17.31    21.37   19.66      18.88     18.35
<CAPTION>
                      LEHMAN
                   INTERMEDIATE
                   GOVERNMENT/
                    CORPORATE   CONSUMER
                       BOND      PRICE
                     INDEX(7)   INDEX(8)
                   ------------ --------
<S>                <C>          <C>
As of Decem-
 ber 31:
 1983............       4.51%     1.07%
 1984............      14.37      3.95
 1985............      18.06      3.77
 1986............      13.13      1.13
 1987............       3.66      4.41
 1988............       6.67      4.42
 1989............      12.77      4.65
 1990............       9.16      6.11
 1991............      14.62      3.06
 1992............       7.17      2.90
 1993............       8.79      2.75
 1994............      -1.93      2.67
 1995............      15.33      2.54
 1996............       4.05      3.32
 1997............       7.87      1.83
 1998............       8.44      1.61
 1999............      -2.15      2.68
Cumulative Re-
 turn............     357.92     72.44
Annual Effective
 Rate of Return..       9.36      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 Harris Oakmark Mid Cap 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. 1999 figures for the MFS
    Investors and MFS Research Managers Series are from May 1 to December 31,
    1999. 1994 figures for all other series of the Zenith Fund are from
    November 1 through December 31, 1994. 1994 figures for the Putnam
    International Stock Portfolio are from November 1, 1994 through December
    31, 1994 (see footnote 4 for more information). 1997 figures for the Janus
    Mid Cap Portfolio are from March 3, 1997 through December 31, 1997. 1998
    figures for the Lehman Brothers Aggregate Bond Index, Morgan Stanley EAFE
    Index and Russell 2000 Index Portfolios are from December 1, 1998 through
    December 31, 1998. 1990 figures for the MetLife Stock Index Portfolio are
    from May 1, 1990 through December 31, 1990.

(2) Wellington Management Company, LLP became the subadviser of the Balanced
    Series on May 1, 2000. Prior to that time, Loomis Sayles & Company, L.P.
    served as subadviser.
(3) Harris Associates L.P. became the subadviser on May 1, 2000. Prior to that
    time, other entities served as subadviser.

(4) On December 1, 2000, the Putnam International Stock Portfolio was
    substituted for the Morgan Stanley International Magnum Equity Series,
    which is no longer available for investment under the Contract.
    Performance figures for dates on or before December 1, 2000 reflect the
    performance of the Morgan Stanley International Magnum Equity Series.
    Putnam Investment Management, Inc. became the sub-investment manager of
    the Putnam International Stock Portfolio on January 24, 2000. Prior to
    that time, Santander Global Advisors, Inc. served as sub-investment
    manager.

(5) 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.

(6) 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.

(7) 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.

                                     II-7
<PAGE>


(8) 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.

  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 Harris
Oakmark Mid Cap Value Series, May 2, 1994 for the Loomis Sayles Small Cap
Series May 1, 1999 for the MFS Investors and MFS Research Managers Series,
November 1, 1994 for the other series of the Zenith Fund, November 1, 1994 for
the Putnam International Stock Portfolio, March 3, 1997 for the Janus Mid Cap
Portfolio, December 1, 1998 for the Lehman Brothers Aggregate Bond Index,
Morgan Stanley EAFE Index and Russell 2000 Index Portfolios, and May 1, 1990
for the MetLife Index Portfolio. 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, 1999. 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

<TABLE>
<CAPTION>
                                                                                                             CONTRACT VALUE
                   ------------------------------------------------------------------------------------------------------------
                                                            SALOMON     SALOMON
                    CUMU-   BACK BAY    BACK BAY    CUMU-   BROTHERS    BROTHERS                                         CUMU-
                   LATIVE   ADVISORS    ADVISORS   LATIVE     BOND        U.S.                    ALGER       DAVIS     LATIVE
                    PAY-     MONEY        BOND      PAY-     OPPOR-     GOVERN-                   EQUITY     VENTURE     PAY-
                    MENTS    MARKET      INCOME     MENTS   TUNITIES      MENT     BALANCED(1)    GROWTH      VALUE      MENTS
                   ------- ----------  ----------  ------- ----------  ----------  -----------  ----------  ----------  -------
 <S>               <C>     <C>         <C>         <C>     <C>         <C>         <C>          <C>         <C>         <C>
 As of December 31:
 1983............  $ 1,000 $ 1,016.10  $ 1,012.82
 1984............    4,000   4,230.31    4,349.17
 1985............    7,000   7,594.48    8,365.14
 1986............   10,000  11,052.43   12,621.63
 1987............   13,000  14,672.07   15,732.03
 1988............   16,000  18,635.16   19,860.86
 1989............   19,000  23,179.99   25,137.16
 1990............   22,000  27,818.23   29,936.01
 1991............   25,000  32,191.38   38,128.97
 1992............   28,000  35,969.10   43,796.87
 1993............   31,000  39,536.81   51,743.14                                                                       $ 2,000
 1994............   34,000  43,574.89   52,263.51  $   500 $   492.22  $   502.43  $   502.23   $   497.71  $   494.93    5,000
 1995............   37,000  48,480.34   65,744.71    3,500   3,815.40    3,736.04    3,906.01     4,223.53    4,127.35    8,000
 1996............   40,000  53,307.79   70,935.93    6,500   7,482.81    6,854.02    7,782.17     7,869.16    8,539.41   11,000
 1997............   43,000  58,434.53   80,749.76    9,500  11,325.33   10,435.60   12,123.84    13,012.63   14,643.35   14,000
 1998............   46,000  63,717.69   89,965.21   12,500  14,362.94   14,142.16   16,162.67    22,743.04   19,779.51   17,000
 1999............   49,000  69,014.25   91,308.79   15,500  17,374.72   16,943.57   17,979.00    33,673.43   26,171.87   20,000
 Annual Effective
 Rate of Return..                4.04%       7.18%               4.36%       3.40%       5.68%       30.48%      20.34%
<CAPTION>
                     HARRIS
                    OAKMARK     WESTPEAK    CUMU-
                      MID        GROWTH    LATIVE
                      CAP         AND       PAY-
                    VALUE(2)     INCOME     MENTS
                   ----------- ----------- -------
 <S>               <C>         <C>         <C>     <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
 As of December 31:
 1983............
 1984............
 1985............
 1986............
 1987............
 1988............
 1989............
 1990............
 1991............
 1992............
 1993............  $ 2,122.25  $ 2,120.94
 1994............    5,100.04    5,051.82  $ 2,000
 1995............    9,880.99   10,265.42    5,000
 1996............   14,643.89   15,252.30    8,000
 1997............   20,152.48   23,498.65   11,000
 1998............   21,610.05   32,195.22   14,000
 1999............   24,287.55   37,826.06   17,000
 Annual Effective
 Rate of Return..        5.74%      18.84%
</TABLE>
-------
<TABLE>
<CAPTION>
                                                                MFS                                LEHMAN
                     LOOMIS      PUTNAM    CUMU-                RE-     CUMU-              CUMU-  BROTHERS   CUMU-
                     SAYLES      INTER-    LATIVE    MFS      SEARCH    LATIVE   JANUS     LATIVE AGGREGATE  LATIVE  METLIFE
                     SMALL      NATIONAL    PAY-   INVES-      MANA-     PAY-     MID       PAY-    BOND      PAY-    STOCK
                      CAP       STOCK(3)   MENTS    TORS       GERS     MENTS     CAP      MENTS    INDEX    MENTS    INDEX
                   ----------  ----------  ------ ---------  ---------  ------ ----------  ------ ---------  ------ ---------
 <S>               <C>         <C>         <C>    <C>        <C>        <C>    <C>         <C>    <C>        <C>    <C>
 As of December 31:
 1983............
 1984............
 1985............
 1986............
 1987............
 1988............
 1989............
 1990............                                                                                             2,000 $2,000.70
 1991............                                                                                             5,000  5,908.78
 1992............                                                                                             8,000  9,407.80
 1993............                                                                                            11,000 13,227.34
 1994............  $ 1,956.63  $   511.41                                                                    14,000 16,151.44
 1995............    5,897.75    3,638.51                                                                    17,000 25,284.86
 1996............   11,030.05    6,861.95                                                                    20,000 33,894.69
 1997............   16,920.50    9,556.93                               2,500  $ 2,855.58                    23,000 47,568.76
 1998............   19,417.77   13,044.17                               5,500    7,667.77    250  $  250.16  26,000 63,615.14
 1999............   29,151.74   19,525.71  $2,000 $2,086.38  $2,329.77  8,500   22,042.09  3,250   3,182.26  29,000 79,107.25
 Annual Effective
 Rate of Return..       18.97%       8.86%            11.87%     49.07%             78.31%            -3.57%            19.78%
<CAPTION>
                   CUMU-   MORGAN
                   LATIVE  STANLEY    RUSSELL
                    PAY-    EAFE       2000
                   MENTS    INDEX      INDEX
                   ------ ---------- ----------
 <S>               <C>    <C>        <C>
 As of December 31:
 1983............
 1984............
 1985............
 1986............
 1987............
 1988............
 1989............
 1990............
 1991............
 1992............
 1993............
 1994............
 1995............
 1996............
 1997............
 1998............    250  $  263.66  $  264.47
 1999............  3,250   3,846.26   3,843.96
 Annual Effective
 Rate of Return..             32.59%     32.48%
</TABLE>
-------

(1) Wellington Management Company LLP became the subadviser for the Balanced
    Series on May 1, 2000. Prior to that time, Loomis Sayles & Company, L.P.
    served as subadviser.
(2) Harris Associates L.P. became the subadviser on May 1, 2000. Prior to that
    time, other entities served as subadviser.

(3) On December 1, 2000, the Putnam International Stock portfolio was
    substituted for the Morgan Stanley International Magnum Equity Series,
    which is no longer available for investment under the Contract.
    Performance figures for dates on or before December 1, 2000 reflect the
    performance of the Morgan Stanley International Magnum Equity Series.
    Putnam Investment Management, Inc. became the sub-investment manager of
    the Putnam International Stock Portfolio on January 24, 2000. Prior to
    that time, Santander Global Advisors, Inc. served as sub-investment
    manager.

                                     II-8
<PAGE>

<TABLE>
<CAPTION>
                                                                                      SURRENDER VALUE
                   --------------------------------------------------------------------------------------------------------------
                    CUMU-   BACK BAY    BACK BAY    CUMU-     SALOMON     SALOMON                                          CUMU-
                   LATIVE   ADVISORS    ADVISORS   LATIVE    BROTHERS     BROTHERS                  ALGER       DAVIS     LATIVE
                    PAY-     MONEY        BOND      PAY-       BOND         U.S.                    EQUITY     VENTURE     PAY-
                    MENTS    MARKET      INCOME     MENTS  OPPORTUNITIES GOVERNMENT  BALANCED(1)    GROWTH      VALUE      MENTS
                   ------- ----------  ----------  ------- ------------- ----------  -----------  ----------  ----------  -------
 <S>               <C>     <C>         <C>         <C>     <C>           <C>         <C>          <C>         <C>         <C>
 As of December 31:
 1983............  $ 1,000 $   936.73  $   933.67
 1984............    4,000   3,957.75    4,069.17
 1985............    7,000   7,149.73    7,915.14
 1986............   10,000  10,462.43   12,031.63
 1987............   13,000  13,972.07   15,032.03
 1988............   16,000  17,855.16   19,080.86
 1989............   19,000  22,349.99   24,307.16
 1990............   22,000  26,968.23   29,086.01
 1991............   25,000  31,341.38   37,278.97
 1992............   28,000  35,119.10   42,946.87
 1993............   31,000  38,686.81   50,893.14                                                                         $ 2,000
 1994............   34,000  42,724.89   51,413.51  $   500  $   454.51   $   464.01  $   463.83   $   459.62  $   457.04    5,000
 1995............   37,000  47,630.34   64,894.71    3,500    3,572.58     3,498.43    3,661.01     3,978.53    3,882.35    8,000
 1996............   40,000  52,457.79   70,085.93    6,500    7,062.81     6,455.26    7,362.17     7,449.16    8,119.41   11,000
 1997............   43,000  57,584.53   79,899.76    9,500   10,760.33     9,875.72   11,558.84    12,447.63   14,078.35   14,000
 1998............   46,000  62,867.69   89,115.21   12,500   13,682.94    13,462.16   15,482.69    22,063.04   19,099.51   17,000
 1999............   49,000  68,164.25   90,458.79   15,500   16,609.72    16,194.70   17,214.00    32,908.43   25,406.87   20,000
 Annual Effective
  Rate of Return.                3.90%       7.08%                2.64%        1.67%       4.01%       29.54%      19.16%
<CAPTION>
                     HARRIS                 CUMU-    LOOMIS
                    OAKMARK     WESTPEAK   LATIVE    SAYLES
                    MID CAP      GROWTH     PAY-     SMALL
                    VALUE(2)   AND INCOME   MENTS     CAP
                   ----------- ----------- ------- -----------
 <S>               <C>         <C>         <C>     <C>         <C>
 As of December 31:
 1983............
 1984............
 1985............
 1986............
 1987............
 1988............
 1989............
 1990............
 1991............
 1992............
 1993............  $ 1,962.25  $ 1,960.94
 1994............    4,765.49    4,720.67  $ 2,000 $ 1,803.92
 1995............    9,370.99    9,755.42    5,000   5,550.25
 1996............   14,003.89   14,612.30    8,000  10,522.55
 1997............   19,412.48   22,758.65   11,000  16,283.00
 1998............   20,800.05   31,385.22   14,000  19,400.27
 1999............   23,437.55   36,976.06   17,000  28,344.24
 Annual Effective
  Rate of Return.        4.69%      18.17%              17.96%
</TABLE>
<TABLE>
<CAPTION>
                                                                                 SURRENDER VALUE
                   -------------------------------------------------------------------------------------------------------------
                                                                                                 LEHMAN
                                 CUMU-                                                          BROTHERS
                      PUTNAM     LATIVE               MFS                  JANUS                AGGREGATE              METLIFE
                   INTERNATIONAL  PAY-     MFS     RESEARCH   CUMULATIVE    MID      CUMULATIVE   BOND     CUMULATIVE   STOCK
                     STOCK (3)   MENTS  INVESTORS  MANAGERS    PAYMENTS     CAP       PAYMENTS    INDEX     PAYMENTS    INDEX
                   ------------- ------ ---------  ---------  ---------- ----------  ---------- ---------  ---------- ---------
 <S>               <C>           <C>    <C>        <C>        <C>        <C>         <C>        <C>        <C>        <C>
 As of December 31:
 1983............
 1984............
 1985............
 1986............
 1987............
 1988............
 1989............
 1990............                                                                                             2,000   $1,842.40
 1991............                                                                                             5,000    5,558.78
 1992............                                                                                             8,000    8,897.80
 1993............                                                                                            11,000   12,587.34
 1994............   $   472.36                                                                               14,000   15,411.44
 1995............     3,406.14                                                                               17,000   24,474.86
 1996............     6,462.04                                                                               20,000   33,044.69
 1997............     9,054.53                                  2,500    $ 2,655.58                          23,000   46,708.76
 1998............    12,411.63                                  5,500      7,282.77      250    $ 231.90     26,000   62,755.14
 1999............    18,760.71   $2,000 $1,926.38  $2,169.77    8,500     21,502.09    3,250    2,981.90     29,000   78,247.25
 Annual Effective
  Rate of Return.         7.32%             -9.56%     23.99%                 75.90%              -13.88%                 19.57%
<CAPTION>
                               MORGAN
                               STANLEY    RUSSELL
                   CUMULATIVE   EAFE       2000
                    PAYMENTS    INDEX      INDEX
                   ---------- ---------- ----------
 <S>               <C>        <C>        <C>        <C>
 As of December 31:
 1983............
 1984............
 1985............
 1986............
 1987............
 1988............
 1989............
 1990............
 1991............
 1992............
 1993............
 1994............
 1995............
 1996............
 1997............
 1998............      250    $  244.45  $  245.20
 1999............    3,250     3,618.76   3,616.46
 Annual Effective
  Rate of Return.                 19.92%     19.77%
</TABLE>

(1)  Wellington Management Company LLP became the subadviser of the Balanced
     Series on May 1, 2000. Prior to that time, Loomis Sayles & Company, L.P.
     served as sub-adviser.
(2)  Harris Associates L.P. became the subadviser on May 1, 2000. Prior to
     that time, other entities served as subadviser.

(3)  On December 1, 2000, the Putnam International Stock Portfolio was
     substituted for the Morgan Stanley International Magnum Equity Series,
     which is no longer available for investment under the Contract.
     Performance figures for dates on or before December 1, 2000 reflect the
     performance of the Morgan Stanley International Magnum Equity Series.
     Putnam Investment Management, Inc. became the sub-investment manager of
     the Putnam International Stock Portfolio on January 24, 2000. Prior to
     that time, Santander Global Advisors, Inc. served as sub-investment
     manager.

  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.

                                     II-9
<PAGE>

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.....................................   2.114493    3.9%
      December 31, 1999.....................................   2.189734    3.6%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      16 years, 4 months ended December 31, 1999.............  119.0%     4.9%
      10 years ended December 31, 1999.......................   44.3%     3.7%
      5 years ended December 31, 1999........................   20.9%     3.9%
      1 year ended December 31, 1999.........................    3.6%     3.6%
</TABLE>
--------
*  Unit values do not reflect the impact of any Contingent Deferred Sales
   Charge, premium tax charge, or the annual Administration Contract Charge.

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%
      December 31, 1999.....................................   3.622325    -1.8%
</TABLE>


                                     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>
      16 years, 4 months ended December 31, 1999.............  262.2%     8.2%
      10 years ended December 31, 1999.......................  100.1%     7.2%
      5 years ended December 31, 1999........................   42.6%     7.4%
      1 year ended December 31, 1999.........................   -1.8%    -1.8%
</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     0.7%
      December 31, 1999.....................................   1.443394     0.1%
</TABLE>
--------
*  Unit values do not reflect the impact of any Contingent Deferred Sales
   Charge, premium tax charge, or the annual Administration Contract Charge.

       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, 2 months ended December 31, 1999..............   44.3%     7.4%
      5 years ended December 31, 1999........................   46.7%     8.0%
      1 year ended December 31, 1999.........................    0.1%     0.1%
</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%
      December 31, 1999.....................................   1.303556    -1.2%
</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, 2 months ended December 31, 1999..............   30.4%     5.3%
      5 years ended December 31, 1999........................   29.9%     5.4%
      1 year ended December 31, 1999.........................   -1.2%    -1.2%
</TABLE>


                                     II-11
<PAGE>

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%
      December 31, 1999.....................................   1.635868    -6.3%
</TABLE>
--------
*  Unit values do not reflect the impact of any Contingent Deferred Sales
   Charge, premium tax charge, or the annual Administration Contract Charge.

** Wellington Management Company, LLP became the subadviser of the Balanced
   Series on May 1, 2000. Prior to that time, Loomis Sayles & Company, L.P.
   served as sub-adviser.

       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, 2 months ended December 31, 1999..............   63.6%    10.0%
      5 years ended December 31, 1999........................   64.1%    10.4%
      1 year ended December 31, 1999.........................   -6.3%    -6.3%
</TABLE>

ALGER 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%
      December 31, 1999.....................................   3.744249    32.3%
</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, 2 months ended December 31, 1999..............  274.4%    29.1%
      5 years ended December 31, 1999........................  291.7%    31.4%
      1 year ended December 31, 1999.........................   32.3%    32.3%
</TABLE>

                                     II-12
<PAGE>

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%
      December 31, 1999.....................................   2.831476    15.9%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      5 years, 2 months ended December 31, 1999..............  183.1%    22.3%
      5 years ended December 31, 1999........................  194.1%    24.1%
      1 year ended December 31, 1999.........................   15.9%    15.9%
</TABLE>
--------
 * Unit values do not reflect the impact of any Contingent Deferred Sales
   Charge, premium tax charge, or the annual Administration Contract Charge.

HARRIS OAKMARK MID CAP 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.....................................   1.802285    -6.7%
      December 31, 1999.....................................   1.784358    -0.1%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      6 years, 8 months ended December 31, 1999..............   78.4%     9.1%
      5 years ended December 31, 1999........................   59.5%     9.8%
      1 year ended December 31, 1999.........................   -0.1%    -0.1%
</TABLE>

                                     II-13
<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%
      December 31, 1999.....................................   2.440858    30.0%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      5 years, 8 months ended December 31, 1999..............  144.1%    17.1%
      5 years ended December 31, 1999........................  154.5%    20.5%
      1 year ended December 31, 1999.........................   30.0%    30.0%
</TABLE>
--------
 * Unit values do not reflect the impact of any Contingent Deferred Sales
   Charge, premium tax charge, or the annual Administration Contract Charge.
** Harris Associates L.P. became the subadviser on May 1, 2000. Prior to that
   time, other entities served as subadviser.

MFS INVESTORS SUB-ACCOUNT

                      ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
                                                             ACCUMULATION   %
      DATE                                                    UNIT VALUE  CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      April 30, 1999........................................   1.000000    --
      December 31, 1999.....................................   1.019236    1.9%
</TABLE>

        PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      8 months ended December 31, 1999.......................   1.9%      2.9%
</TABLE>

MFS RESEARCH MANAGERS SUB-ACCOUNT

                      ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
                                                             ACCUMULATION   %
      DATE                                                    UNIT VALUE  CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      April 30, 1999........................................   1.000000     --
      December 31, 1999.....................................   1.187199    18.7%
</TABLE>

        PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      8 months ended December 31, 1999.......................   18.7%    29.3%
</TABLE>

                                     II-14
<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%
      December 31, 1999.....................................   3.019311     7.9%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      6 years, 8 months ended December 31, 1999..............  201.9%    18.0%
      5 years ended December 31, 1999........................  173.6%    22.3%
      1 year ended December 31, 1999.........................    7.9%     7.9%
</TABLE>
--------
 * Unit values do not reflect the impact of any Contingent Deferred Sales
   Charge, premium tax charge, or the annual Administration Contract Charge.

PUTNAM INTERNATIONAL STOCK 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.....................................   1.163698     5.8%
      December 31, 1999.....................................   1.430688    22.9%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      5 years, 2 months ended December 31, 1999..............   43.1%     7.2%
      5 years ended December 31, 1999........................   39.8%     6.9%
      1 year ended December 31, 1999.........................   22.9%    22.9%
</TABLE>


















--------
 * Unit values do not reflect the impact of any Contingent Deferred Sales
   Charge, premium tax charge, or the annual Administration Contract Charge.

** On December 1, 2000, the Putnam International Stock Portfolio was
   substituted for the Morgan Stanley International Magnum Equity Series,
   which is no longer available for investment under the Contract. Performance
   figures for dates on or before December 1, 2000 reflect the performance of
   the Morgan Stanley International Magnum Equity Series. Putnam Investment
   Management, Inc. became the sub-investment manager of the Putnam
   International Stock Portfolio on January 24, 2000. Prior to that time,
   Santander Global Advisors, Inc. served as sub-investment manager.

                                     II-15
<PAGE>


JANUS MID CAP SUB-ACCOUNT

                   ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
                                                            ACCUMULATION
                                                             VALUE UNIT    %
      DATE                                                     VALUE     CHANGE
      ----                                                  ------------ ------
      <S>                                                   <C>          <C>
      March 3, 1997........................................   1.000000
      December 31, 1997....................................   1.263878    26.4%
      December 31, 1998....................................   1.718073    35.9%
      December 31, 1999....................................   3.770460   119.5%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      2 years, 10 months ended December 31, 1999.............  277.0%     59.8%
      1 year ended December 31, 1999.........................  119.5%    119.5%
</TABLE>

LEHMAN BROTHERS AGGREGATE BOND INDEX SUB-ACCOUNT

                   ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
                                                             ACCUMULATION
                                                              VALUE UNIT    %
      DATE                                                      VALUE     CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      November 9, 1998......................................   1.000000
      December 31, 1998.....................................   1.011835     1.2%
      December 31, 1999.....................................   0.981622    -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>
      1 year, 2 months ended December 31, 1999...............   -1.8%    -1.7%
      1 year ended December 31, 1999.........................   -3.0%    -3.0%
</TABLE>

METLIFE STOCK INDEX SUB-ACCOUNT

                   ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
                                                             ACCUMULATION
                                                              VALUE UNIT    %
      DATE                                                      VALUE     CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      May 1, 1990...........................................   1.000000
      December 31, 1990.....................................   1.011039     1.1%
      December 31, 1991.....................................   1.298528    28.4%
      December 31, 1992.....................................   1.378496     6.2%
      December 31, 1993.....................................   1.486919     7.9%
      December 31, 1994.....................................   1.480902    -0.4%
      December 31, 1995.....................................   2.000905    35.1%
      December 31, 1996.....................................   2.419812    20.9%
      December 31, 1997.....................................   3.155636    30.4%
      December 31, 1998.....................................   3.992725    26.5%
      December 31, 1999.....................................   4.756286    19.1%
</TABLE>
--------
 * Unit values do not reflect the impact of any Contingent Deferred Sales
   Charge, premium tax charge, or the annual Administration Contract Charge.

                                     II-16
<PAGE>


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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      9 years, 8 months ended December 31, 1999..............  375.6%    17.5%
      5 years ended December 31, 1999........................  221.2%    26.3%
      1 year ended December 31, 1999.........................   19.1%    19.1%
</TABLE>

MORGAN STANLEY EAFE INDEX SUB-ACCOUNT

                   ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
                                                             ACCUMULATION
                                                              VALUE UNIT    %
      DATE                                                      VALUE     CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      November 9, 1998......................................   1.000000
      December 31, 1998.....................................   1.079060     7.9%
      December 31, 1999.....................................   1.326760    23.0%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      1 year, 2 months ended December 31, 1999...............   32.7%    28.2%
      1 year ended December 31, 1999.........................   23.0%    23.0%
</TABLE>

RUSSELL 2000 INDEX SUB-ACCOUNT

                   ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
                                                             ACCUMULATION
                                                              VALUE UNIT    %
      DATE                                                      VALUE     CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      November 9, 1998......................................   1.000000
      December 31, 1998.....................................   1.052780     5.3%
      December 31, 1999.....................................   1.271835    20.8%
</TABLE>

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

<TABLE>
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      1 year, 2 months ended December 31, 1999...............   27.2%    23.4%
      1 year ended December 31, 1999.........................   20.8%    20.8%
</TABLE>
--------
 * Unit values do not reflect the impact of any Contingent Deferred Sales
   Charge, premium tax charge, or the annual Administration Contract Charge.

                                     II-17
<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 1.35% 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,

                                     II-18
<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.

  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 -2.15%, 3.50%, 3.73%, 5.68% and 7.64% shown
in the tables at pages II-22-24 are (.18%), .29%, .31%, .46% and .62%.

                                     II-19
<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%, 5.77%, 6%, 8% or 10%. The
values would be different from those shown if the returns averaged 0%, 5.77%,
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 0.82% 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 0.82%, 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 0.82% 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 2.17%.

  Three 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 with annuitization occurring within the first two
years. The third 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,
with annuitization occurring after the second year. The 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-20
<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:                 1/1/00
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 WITHIN THE FIRST TWO YEARS: FOR AGE 65: $664.00

FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED AFTER TWO YEARS: FOR AGE 65: $678.61

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%     5.77%      6%       8%       10%
PAYMENT  CALENDAR     ----- ----------------- -------- -------- ----------
 YEAR      YEAR   AGE NET**  -2.15%   3.50%    3.73%    5.68%     7.64%
-------  -------- --- ----- ----------------- -------- -------- ----------
<S>      <C>      <C> <C>   <C>      <C>      <C>      <C>      <C>
    1      2000    65       $ 581.00 $ 581.00 $ 581.00 $ 581.00 $   581.00
    2      2001    66         549.30   581.00   582.27   593.25     604.24
    3      2002    67         519.34   581.00   583.53   605.76     628.41
    4      2003    68         491.01   581.00   584.80   618.54     653.54
    5      2004    69         464.22   581.00   586.08   631.58     679.68
   10      2009    74         350.68   581.00   592.49   701.04     826.93
   15      2014    79         264.91   581.00   598.96   778.14   1,006.07
   20      2019    84         200.12   581.00   605.51   863.72   1,224.03
</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 Charge from the Gross Rates of Return.

                                     II-21
<PAGE>

    ANNUITY PAY-OUT ILLUSTRATION, ANNUITIZATION OCCURRING WITHIN TWO YEARS
                       (50% VARIABLE--50% FIXED PAYOUT)

<TABLE>
<S>                       <C>        <C>                                 <C>
ANNUITANT:                John Doe   GROSS AMOUNT OF CONTRACT VALUE:     $100,000
SEX:                      Unisex     DATE OF ILLUSTRATION:                 1/1/00
ANNUITY OPTION SELECTED:  Life Income with 10 Years Certain*
FREQUENCY OF INCOME PAY-  Monthly
 MENTS:
</TABLE>

FIXED MONTHLY ANNUITY INCOME PAYMENT FOR AGE 65 BASED ON CURRENT RATES, IF
100% FIXED ANNUITY OPTION SELECTED: $664.00

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:  $332.00. THE MONTHLY GUARANTEED PAYMENT OF $332.00 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%       5.77%      6%        8%        10%
PAYMENT  CALENDAR     ----- --------- --------- --------- --------- ---------
 YEAR      YEAR   AGE NET**  -2.15%     3.50%     3.73%     5.68%     7.64%
-------  -------- --- ----- --------- --------- --------- --------- ---------
<S>      <C>      <C> <C>   <C>       <C>       <C>       <C>       <C>
    1      2000    65       $  622.50 $  622.50 $  622.50 $  622.50 $  622.50
    2      2001    66          606.65    622.50    623.13    628.63    634.12
    3      2002    67          591.67    622.50    623.77    634.88    646.20
    4      2003    68          577.50    622.50    624.40    641.27    658.77
    5      2004    69          564.11    622.50    625.04    647.79    671.84
   10      2009    74          507.34    622.50    628.24    682.52    745.46
   15      2014    79          464.45    622.50    631.48    721.07    835.04
   20      2019    84          432.06    622.50    634.76    763.86    944.01
</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 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-22
<PAGE>

     ANNUITY PAY-OUT ILLUSTRATION, ANNUITIZATION OCCURRING AFTER TWO YEARS
                       (50% VARIABLE--50% FIXED PAYOUT)

<TABLE>
<S>                       <C>        <C>                                 <C>
ANNUITANT:                John Doe   GROSS AMOUNT OF CONTRACT VALUE:     $100,000
SEX:                      Unisex     DATE OF ILLUSTRATION:                 1/1/00
ANNUITY OPTION SELECTED:  Life Income with 10 Years Certain*
FREQUENCY OF INCOME PAY-  Monthly
 MENTS:
</TABLE>

FIXED MONTHLY ANNUITY INCOME PAYMENT FOR AGE 65 BASED ON CURRENT RATES, IF
100% FIXED ANNUITY OPTION SELECTED: $678.61

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:  $339.31. THE MONTHLY GUARANTEED PAYMENT OF $339.31 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%       5.77%      6%        8%        10%
PAYMENT  CALENDAR     ----- --------- --------- --------- --------- ---------
 YEAR      YEAR   AGE NET**  -2.15%     3.50%     3.73%     5.68%     7.64%
-------  -------- --- ----- --------- --------- --------- --------- ---------
<S>      <C>      <C> <C>   <C>       <C>       <C>       <C>       <C>
    1      2000    65       $  629.81 $  629.81 $  629.81 $  629.81 $  629.81
    2      2001    66          613.96    629.81    630.44    635.93    641.42
    3      2002    67          598.97    629.81    631.07    642.19    653.51
    4      2003    68          584.81    629.81    631.71    648.57    666.08
    5      2004    69          571.42    629.81    632.34    655.09    679.15
   10      2009    74          514.65    629.81    635.55    689.83    752.77
   15      2014    79          471.76    629.81    638.79    728.38    842.34
   20      2019    84          439.36    629.81    642.06    771.16    951.32
</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 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-23
<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 1.25%
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.

  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-24
<PAGE>

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

<TABLE>
<S>                       <C>        <C>                                 <C>
ANNUITANT:                John Doe   GROSS AMOUNT OF CONTRACT VALUE:     $100,000
SEX:                      Unisex     DATE OF ILLUSTRATION:                 1/1/00
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 WITHIN THE FIRST TWO YEARS: FOR AGE 72: $754.07; FOR
AGE 75: $800.36; FOR AGE 76: $816.47 FOR AGE 79: $865.50; AND FOR AGE 80:
$881.67.

FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED AFTER TWO YEARS: FOR AGE 72: $770.66; FOR AGE 75:
$817.97; FOR AGE 76: $834.43; FOR AGE 79: $884.54; AND FOR AGE 80: $901.07.

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
                      BACK BAY BACK BAY    STRATEGIC    SALOMON
PAYMENT  CALENDAR      MONEY     BOND        BOND         U.S.
 YEAR      YEAR   AGE  MARKET   INCOME   OPPORTUNITIES GOVERNMENT BALANCED
-------  -------- --- -------- --------- ------------- ---------- ---------
<S>      <C>      <C> <C>      <C>       <C>           <C>        <C>
    1      1983    65 $581.00  $  581.00
    2      1984    66  589.21     593.85
    3      1985    67  621.82     637.34
    4      1986    68  641.71     721.50
    5      1987    69  653.31     789.77
    6      1988    70  663.40     769.90
    7      1989    71  679.85     795.21
    8      1990    72  708.06     851.26
    9      1991    73  730.20     877.02
   10      1992    74  739.29     986.14
   11      1993    75  731.38   1,016.77
   12      1994    76  717.90   1,091.45    $765.00     $765.00   $  765.00
   13      1995    77  711.52   1,005.44     748.36      763.51      758.20
   14      1996    78  716.92   1,161.63     851.64      837.15      901.95
   15      1997    79  718.30   1,158.11     928.18      824.28    1,004.99
   16      1998    80  721.25   1,224.15     982.75      852.27    1,112.99
   17      1999    81  723.71   1,272.43     955.87      874.22    1,157.58
   18      2000    82  724.12   1,207.26     924.32      834.77    1,047.58
</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 (1.35%), MANAGEMENT FEES
AND OTHER EXPENSES (These may vary from year to year. The following expenses
are for the year ended December 31, 1999, after giving effect to current
expense caps or deferrals: 1.00% Loomis Sayles Small Cap, .80% Alger Equity
Growth, .88% Harris Oakmark Mid Cap Value, .81% Davis Venture Value, .74%
Westpeak Growth and Income, .77% Balanced, .81% Salomon Strategic Bond
Opportunities, .48% Back Bay Bond Income, .70% Salomon US Government, .40%
Back Bay Money Market, .90% MFS Investors and MFS Research Managers Series,
1.12% Putnam International Stock Portfolio, .65% Lehman Brothers Aggregate
Bond Index, .96% Janus Mid Cap, .54% MetLife Stock Index, .95% Morgan Stanley
EAFE Index, and .80% Russell 2000 Index.)
-------
*  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.

                                     II-25
<PAGE>

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

<TABLE>
<S>                       <C>        <C>                                 <C>
ANNUITANT:                John Doe   GROSS AMOUNT OF CONTRACT VALUE:     $100,000
SEX:                      Unisex     DATE OF ILLUSTRATION:                 1/1/00
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 WITHIN THE FIRST TWO YEARS: FOR AGE 65: $664.00; FOR
AGE 72: $754.07; FOR AGE 75: $769.08; FOR AGE 76: $816.47; FOR AGE 79:
$865.50; AND FOR AGE 80: $881.67.

FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED AFTER THE FIRST TWO YEARS: FOR AGE 65: $678.61; FOR
AGE 72: $770.66; FOR AGE 73: $786.00; FOR AGE 76: $834.43; FOR AGE 79:
$884.54; AND FOR AGE 80: $901.07.

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>
                                           HARRIS    LOOMIS                      WESTPEAK                 LEHMAN
                        ALGER     DAVIS    OAKMARK   SAYLES               MFS     GROWTH      PUTNAM     BROTHERS   METLIFE
PAYMENT  CALENDAR      EQUITY    VENTURE   MID CAP    SMALL      MFS    RESEARCH    AND    INTERNATIONAL AGGREGATE   STOCK
 YEAR      YEAR   AGE  GROWTH     VALUE     VALUE      CAP    INVESTORS MANAGERS  INCOME      STOCK**      BOND      INDEX
-------  -------- --- --------- --------- --------- --------- --------- -------- --------- ------------- --------- ---------
<S>      <C>      <C> <C>       <C>       <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                                                                                              $  693.00
    9      1991    73                                                                                                 684.66
   10      1992    74                                                                                                 848.95
   11      1993    75                     $  747.00                              $  747.00                            908.54
   12      1994    76 $  765.00 $  765.00    829.98 $  765.00                       826.38    $765.00                 943.36
   13      1995    77    737.42    732.39    789.05    733.73                       778.25     778.70                 907.34
   14      1996    78  1,045.27    972.43    980.46    901.19                     1,012.42     788.57               1,171.45
   15      1997    79  1,127.42  1,166.26  1,098.95  1,122.40                     1,139.48     801.70               1,361.49
   16      1998    80  1,350.12  1,484.12  1,229.02  1,335.81                     1,449.76     754.27     $836.00   1,693.59
   17      1999    81  1,901.94  1,618.68  1,107.57  1,251.74  $852.00  $852.00   1,719.86     771.29      841.68   2,067.44
   18      2000    82  2,431.79  1,813.22  1,059.48  1,572.07   848.57   988.40   1,792.74     916.18      788.93   2,374.17
<CAPTION>
                    MORGAN
                    STANLEY   RUSSELL
PAYMENT    JANUS     EAFE      2000
 YEAR     MID CAP    INDEX     INDEX
-------  --------- --------- ---------
<S>      <C>       <C>       <C>
    1
    2
    3
    4
    5
    6
    7
    8
    9
   10
   11
   12
   13
   14
   15    $  819.00
   16     1,005.88 $  836.00 $  836.00
   17     1,321.12   897./60    875.74
   18     2,801.26  1,066.32  1,022.18
</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 (1.35%), MANAGEMENT FEES
AND OTHER EXPENSES (These may vary from year to year. The following expenses
are for the year ended December 31, 1999, after giving effect to expense caps
or deferrals: 1.00% Loomis Sayles Small Cap, .80% Alger Equity Growth, .88%
Harris Oakmark Mid Cap Value, .81% Davis Venture Value, .74% Westpeak Growth
and Income, .77% Balanced, .81% Salomon Strategic Bond Opportunities, .48%
Back Bay Bond Income, .70% Salomon US Government, .40% Back Bay Money Market,
 .90% MFS Investors and MFS Research Managers Series, 1.12% Putnam
International Stock Portfolio, .65% Lehman Brothers Aggregate Bond Index, .96%
Janus Mid Cap, .54% MetLife Stock Index, .95% Morgan Stanley EAFE Index, and
 .80% Russel 2000 Index.)
-------
 * 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.

** On December 1, 2000, the Putnam International Stock Portfolio was
   substituted for the Morgan Stanley International Magnum Equity Series,
   which is no longer available for investment under the Contract. Performance
   figures for dates on or before December 1, 2000 reflect the performance of
   the Morgan Stanley International Magnum Equity Series.

                                     II-26
<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 TWENTY 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-27
<PAGE>

                                    EXPERTS

  The financial statements of New England Variable Annuity Separate Account of
New England Life Insurance Company ("NELICO") as of December 31, 1999 and for
each of the two years in the period ended December 31, 1999 and the
consolidated financial statements of NELICO and subsidiaries as of December
31, 1999 and 1998 and for each of the three years in the period ended December
13, 1999 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 Anne Goggin, 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 (or Directors) 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 (or Directors) 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-28
<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 and its affiliates, such
as State Street Research & Management Company. Prior to October 30, 2000,
Nvest Companies (which includes affiliates, such as Back Bay Advisors, Loomis
Sayles, Westpeak and Harris Associates) was affiliated with NEIM. However, on
October 30, 2000, MetLife sold its majority limited partnership interest in
Nvest Companies to CDC Asset Management.

  NEF's advertising and promotional literature may include references to other
NEF affiliates. References may also be made to NEF's parent company, MetLife
and the services it provides to the Metropolitan Series Fund, Inc.

  References to subadvisers unaffiliated with NEIM or NEF that perform
subadvisory functions on behalf of New England Zenith Fund ("Zenith Fund") or
the Metropolitan Series Fund, Inc. ("Metropolitan 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,
MSAM and Putnam Investment Management Inc.

  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-29
<PAGE>

  . The general and specific strategies applied by the advisers in the
    management of the Zenith Fund's and Metropolitan 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/Portfolios of the Zenith
    Fund and Metropolitan Fund, and those families of funds, other than the
    Zenith Fund and Metropolitan Fund. Any such references will indicate that
    the Zenith Fund and Metropolitan 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.

  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.

                                     II-30
<PAGE>

  . 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.

  . 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-31
<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 the following Sub-Accounts: Bond Income, Money Market,
Midcap Value (formerly Avanti Growth), Growth and Income (formerly Value
Growth), Small Cap, U.S. Government, Balanced, Equity Growth, International
Magnum Equity (formerly International Equity), Venture Value, Bond
Opportunities, Investors and Research Managers) of New England Life Insurance
Company as of and for the year ended December 31, 1999, 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 auditing standards generally
accepted in the United States of America. 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, 1999, and the changes in their net assets for each
of the two years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP
Boston, Massachusetts
April 26, 2000

                                      F-1
<PAGE>

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

                      STATEMENT OF ASSETS AND LIABILITIES

                               DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                                                             GROWTH AND      SMALL
                                                   BOND INCOME  MONEY MARKET  MIDCAP VALUE     INCOME         CAP
                                                   SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT
                                                   -----------  ------------  ------------  ------------  ------------
<S>                       <C>        <C>           <C>          <C>           <C>           <C>           <C>
ASSETS
 Investments in New England Zenith Fund, at value
  (Note 2)........................................ $90,230,754  $79,002,470   $40,806,258   $204,689,531  $102,804,966

<CAPTION>
                            SHARES       COST
                          ---------- -------------
<S>                       <C>        <C>           <C>          <C>           <C>           <C>           <C>
 Back Bay Advisors Bond
  Income Series.........     889,850    97,906,181
 Back Bay Advisors Money
  Market Series.........     790,025    79,002,470
 Goldman Sachs Midcap
  Value Series..........     335,247    50,929,546
 Westpeak Growth and
  Income Series.........   1,031,285   204,615,937
 Loomis Sayles Small Cap
  Series................     509,617    78,511,042
 Salomon Brothers U.S.
  Government Series.....   3,089,392    35,130,811
 Loomis Sayles Balanced
  Series................   7,808,129   112,842,243
 Alger Equity Growth
  Series................  11,722,258   270,444,523
 Morgan Stanley
  International Magnum
  Equity Series.........   4,181,903    49,040,652
 Davis Venture Value
  Series................   9,818,642   206,506,417
 Solomon Brothers Bond
  Opportunities Series..   5,608,202    66,413,056
 MFS Investors Series...     586,545     5,849,817
 MFS Research Managers
  Series................     488,198     4,959,354
                                     -------------
    Total.................           1,262,152,049
                                     =============
 Amount due and accrued from contract-related
  transactions, net...............................     157,647      271,020        18,682        525,156       175,734
 Dividends receivable.............................     --            --            --            --            --
                                                   -----------  -----------   -----------   ------------  ------------
   Total Assets...................................  90,388,401   79,273,490    40,824,940    205,214,687   102,980,700
LIABILITIES
 Due to (from) New England Life Insurance Company.    (100,296)     (75,794)      (46,729)      (201,320)     (120,078)
                                                   -----------  -----------   -----------   ------------  ------------
NET ASSETS........................................ $90,288,105  $79,197,697   $40,778,211   $205,013,367  $102,860,622
                                                   ===========  ===========   ===========   ============  ============
NET ASSETS CONSIST OF:
 Net Assets attributable to Variable Annuity
  Contracts....................................... $87,968,368  $78,640,243   $40,006,487   $199,183,907  $101,172,571
 Annuity Reserves (Note 7)........................   2,319,737      557,454       771,724      5,829,460     1,688,051
                                                   -----------  -----------   -----------   ------------  ------------
    TOTAL NET ASSETS.............................. $90,288,105  $79,197,697   $40,778,211   $205,013,367  $102,860,622
                                                   ===========  ===========   ===========   ============  ============
</TABLE>


                       See Notes to Financial Statements

                                      F-2
<PAGE>


<TABLE>
<CAPTION>
    U.S.                       EQUITY     INTERNATIONAL   VENTURE         BOND                    RESEARCH
 GOVERNMENT     BALANCED       GROWTH     MAGNUM EQUITY    VALUE      OPPORTUNITIES  INVESTORS    MANAGERS
 SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT    SUB-ACCOUNT  SUB-ACCOUNT    SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT      TOTAL
 -----------  ------------  ------------  ------------- ------------  ------------- -----------  -----------  --------------
<S>           <C>           <C>           <C>           <C>           <C>           <C>          <C>          <C>
 $33,396,326  $108,142,585  $343,931,064   $59,173,929  $261,863,196   $59,839,516  $6,017,947   $5,848,614   $1,395,747,156










      67,817       116,587       976,484       170,465       592,742        61,884      33,542       81,586        3,249,346
     --            --            --            --            --            --           --           --             --
 -----------  ------------  ------------   -----------  ------------   -----------  ----------   ----------   --------------
  33,464,143   108,259,172   344,907,548    59,344,394   262,455,938    59,901,400   6,051,489    5,930,200   $1,398,996,502

     (37,027)     (124,699)     (400,679)      (68,371)     (296,113)      (68,704)     (6,689)     (19,911)      (1,566,410)
 -----------  ------------  ------------   -----------  ------------   -----------  ----------   ----------   --------------
 $33,427,116  $108,134,473  $344,506,869   $59,276,023  $262,159,825   $59,832,696  $6,044,800   $5,910,289    1,397,430,092
 ===========  ============  ============   ===========  ============   ===========  ==========   ==========   ==============

 $32,672,392  $106,082,861  $339,611,477   $58,469,314  $257,563,878   $57,959,437  $5,891,078   $5,910,289   $1,371,132,301
     754,724     2,051,612     4,895,392       806,709     4,595,947     1,873,259     153,722       --           26,297,791
 -----------  ------------  ------------   -----------  ------------   -----------  ----------   ----------   --------------
 $33,427,116  $108,134,473  $344,506,869   $59,276,023  $262,159,825   $59,832,696  $6,044,800   $5,910,289   $1,397,430,092
 ===========  ============  ============   ===========  ============   ===========  ==========   ==========   ==============
</TABLE>



                       See Notes to Financial Statements

                                      F-3
<PAGE>


               NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

                    STATEMENT OF ASSETS AND LIABILITIES

                      SEPTEMBER 30, 2000 (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         GROWTH AND      SMALL         U.S.
                                               BOND INCOME  MONEY MARKET  MIDCAP VALUE     INCOME         CAP       GOVERNMENT
                                               SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT
                                               -----------  ------------  ------------  ------------  ------------  -----------
<S>                   <C>        <C>           <C>          <C>           <C>           <C>           <C>           <C>
ASSETS
 Investments in New England Zenith Fund, at
  value (Note 2).............................. $97,510,897  $68,521,578   $48,868,917   $207,167,669  $167,358,997  $36,439,864

<CAPTION>
                        SHARES       COST
                      ---------- -------------
<S>                   <C>        <C>           <C>          <C>           <C>           <C>           <C>           <C>
 Back Bay Advisors
  Bond Income
  Series............     915,853   100,715,598
 Back Bay Advisors
  Money Market
  Series............     685,216    68,521,578
 Harris Oakmark
  Midcap Value
  Series............     356,864    54,024,235
 Westpeak Growth and
  Income Series.....   1,081,646   214,061,160
 Loomis Sayles Small
  Cap Series........     744,579   130,169,864
 Salomon Brothers
  U.S. Government
  Series............   3,168,684    36,069,682
 Balanced Series....   7,232,214   105,114,813
 Alger Equity Growth
  Series............  14,549,456   355,240,671
 Morgan Stanley
  International
  Magnum Equity
  Series............   5,290,758    63,985,610
 Davis Venture Value
  Series............  11,857,166   263,687,581
 Solomon Brothers
  Bond Opportunities
  Series............   5,507,000    65,347,095
 Putnam Large Cap
  Growth Portfolio..     897,757     8,890,083
 Putnam
  International
  Stock Portfolio...   1,230,312    16,559,457
 MFS Investors
  Series............   1,255,523    12,609,678
 MFS Research
  Managers Series...   2,711,723    33,056,657
                                 -------------
  Total.............             1,528,053,764
                                 =============
 Amount due and accrued from contract-related
  transactions, net...........................      88,742       55,786       121,701        117,188       220,897       38,888
 Dividends receivable.........................     --            --            --            --            --           --
                                               -----------  -----------   -----------   ------------  ------------  -----------
  Total Assets................................  97,599,639   68,577,365    48,990,618    207,284,857   167,579,894   36,478,752
LIABILITIES
 Due to (from) New England Life Insurance
  Company.....................................    (124,643)    (104,743)      (41,938)      (226,523)     (181,273)    (58,233)
                                               -----------  -----------   -----------   ------------  ------------  -----------
NET ASSETS.................................... $97,474,996  $68,472,622   $48,948,680   $207,058,333  $167,398,621  $36,420,520
                                               ===========  ===========   ===========   ============  ============  ===========
NET ASSETS CONSIST
 OF:
 Net Assets attributable to Variable Annuity
  Contracts................................... $94,692,040  $67,800,984   $48,066,566   $201,329,046  $165,058,971  $35,346,422
 Annuity Reserves (Note 7)....................   2,782,956      671,638       882,114      5,729,287     2,339,650    1,074,098
                                               -----------  -----------   -----------   ------------  ------------  -----------
  TOTAL NET ASSETS............................ $97,474,996  $68,472,622   $48,948,680   $207,058,333  $167,398,621  $36,420,520
                                               ===========  ===========   ===========   ============  ============  ===========
</TABLE>

                     See Notes to Financial Statements

                                      F-4
<PAGE>


<TABLE>
<CAPTION>
                EQUITY     INTERNATIONAL   VENTURE         BOND       LARGE CAP   INTERNATIONAL               RESEARCH
 BALANCED       GROWTH     MAGNUM EQUITY    VALUE      OPPORTUNITIES   GROWTH         STOCK      INVESTORS    MANAGERS
SUB-ACCOUNT  SUB-ACCOUNT    SUB-ACCOUNT  SUB-ACCOUNT    SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT
-----------  ------------  ------------- ------------  ------------- -----------  ------------- -----------  -----------
<S>          <C>           <C>           <C>           <C>           <C>          <C>           <C>          <C>
$99,659,910  $426,278,909   $66,504,830  $343,146,375   $61,147,869  $8,654,375    $15,612,664  $13,195,545  $35,577,806








    (16,321)      383,865       (12,354)      224,676        50,551     101,496        103,105       43,775      183,504
    --            --            --            --            --           --            --           --           --
-----------  ------------   -----------  ------------   -----------  ----------    -----------  -----------  -----------
 99,643,589   426,662,773    66,492,476   343,371,051    61,198,421   8,755,871     15,715,769   13,239,321   35,761,310

   (106,277)     (416,716)      (77,917)     (396,541)     (104,949)     (8,385)       (13,880)     (13,809)     (34,805)
-----------  ------------   -----------  ------------   -----------  ----------    -----------  -----------  -----------
$99,537,312  $426,246,057   $66,414,559  $342,974,510   $61,093,471  $8,747,486    $15,701,889  $13,225,512  $35,726,505
===========  ============   ===========  ============   ===========  ==========    ===========  ===========  ===========

$97,303,174  $420,315,622   $65,617,166  $337,419,130   $59,077,490  $8,686,036    $15,581,803  $13,067,725  $35,564,371
  2,234,138     5,930,435       797,393     5,555,380     2,015,981      61,450        120,086      157,787      162,134
-----------  ------------   -----------  ------------   -----------  ----------    -----------  -----------  -----------
$99,537,312  $426,246,057   $66,414,559  $342,974,510   $61,093,471  $8,747,486    $15,701,889  $13,225,512  $35,726,505
===========  ============   ===========  ============   ===========  ==========    ===========  ===========  ===========

<CAPTION>

    TOTAL
---------------
<C>
$1,695,646,205









     1,705,501
      --
---------------

 1,697,351,706
    (1,910,634)
---------------
 1,695,441,072
===============

$1,664,926,545
    30,514,527
---------------
$1,695,441,072
===============
</TABLE>

                     See Notes to Financial Statements

                                      F-5
<PAGE>

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

                            STATEMENT OF OPERATIONS

                      FOR THE YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
                             BOND         MONEY       MIDCAP      GROWTH AND      SMALL
                            INCOME       MARKET       VALUE         INCOME         CAP
                          SUB-ACCOUNT  SUB-ACCOUNT SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT
                          -----------  ----------- ------------  ------------  -----------
<S>                       <C>          <C>         <C>           <C>           <C>
INCOME
Dividends...............  $ 6,559,178  $2,699,253  $    508,794  $ 26,043,945  $   266,873
EXPENSES
Mortality, expense risk
 and administrative
 charges (Note 3).......      663,993     494,266       331,777     1,402,075      642,382
                          -----------  ----------  ------------  ------------  -----------
Net investment income
 (loss).................    5,895,185   2,204,987       177,017    24,641,870     (375,509)
NET REALIZED AND
 UNREALIZED GAIN (LOSS)
 ON INVESTMENTS
Net unrealized
 appreciation
 (depreciation) on
 investments:
  Beginning of period...     (867,486)     --        (9,390,649)   12,516,114      791,164
  End of period.........   (7,675,427)     --       (10,123,288)       73,594   24,293,924
                          -----------  ----------  ------------  ------------  -----------
Net change in unrealized
 appreciation
 (depreciation).........   (6,807,941)     --          (732,639)  (12,442,520)  23,502,760
Net realized gain (loss)
 on investments.........           41      --            28,021        (1,085)         674
                          -----------  ----------  ------------  ------------  -----------
Net realized and
 unrealized gain (loss)
 on investments.........   (6,807,900)     --          (704,618)  (12,443,605)  23,503,434
                          -----------  ----------  ------------  ------------  -----------
NET INCREASE (DECREASE)
 IN NET ASSETS RESULTING
 FROM OPERATIONS........  $  (912,715) $2,204,987  $   (527,601) $ 12,198,265  $23,127,925
                          ===========  ==========  ============  ============  ===========
</TABLE>
--------
*  For the period April 30, 1999 (Commencement of Operations) through December
   31, 1999.


                       See Notes to Financial Statements

                                      F-6
<PAGE>



<TABLE>
<CAPTION>
   U.S.                       EQUITY     INTERNATIONAL   VENTURE        BOND                   RESEARCH
GOVERNMENT      BALANCED      GROWTH     MAGNUM EQUITY    VALUE     OPPORTUNITIES INVESTORS*   MANAGERS*
SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT  SUB-ACCOUNT SUB-ACCOUNT    TOTAL
-----------   ------------  -----------  ------------- -----------  ------------- ----------- ----------- ------------
<S>           <C>           <C>          <C>           <C>          <C>           <C>         <C>         <C>
$ 1,970,055   $  6,438,184  $41,132,126   $   184,122  $ 4,886,753   $ 4,767,637   $ 14,406    $       0    95,471,326


    255,774        889,355    2,090,536       383,398    1,761,657       445,703      5,388       20,063     9,386,366
-----------   ------------  -----------   -----------  -----------   -----------   --------    ---------  ------------
  1,714,281      5,548,829   39,041,590      (199,276)   3,125,096     4,321,934      9,018      (20,063)   86,084,960




    148,686      7,370,426   40,449,754      (271,074)  27,953,818    (2,613,697)         0            0    76,087,056
 (1,734,485)    (4,699,658)  73,486,541    10,133,277   55,356,779    (6,573,540)   168,130      889,260   133,595,107
-----------   ------------  -----------   -----------  -----------   -----------   --------    ---------  ------------
 (1,883,171)   (12,070,084)  33,036,787    10,404,351   27,402,961    (3,959,843)   168,130      889,260    57,508,051
        707          3,722         (609)        1,414      (12,769)        4,820    103,828     (170,136)      (41,372)
-----------   ------------  -----------   -----------  -----------   -----------   --------    ---------  ------------

 (1,882,464)   (12,066,362)  33,036,178    10,405,765   27,390,192    (3,955,023)   271,958      719,124    57,466,679
-----------   ------------  -----------   -----------  -----------   -----------   --------    ---------  ------------

$  (168,183)  $ (6,517,533) $72,077,768   $10,206,489  $30,515,288   $   366,911   $280,976    $ 699,061  $143,551,639
===========   ============  ===========   ===========  ===========   ===========   ========    =========  ============
</TABLE>


                       See Notes to Financial Statements

                                      F-7
<PAGE>


               NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

                          STATEMENT OF OPERATIONS

         FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)

<TABLE>
<CAPTION>
                             BOND         MONEY       MIDCAP     GROWTH AND      SMALL         U.S.
                            INCOME       MARKET       VALUE        INCOME         CAP       GOVERNMENT    BALANCED
                          SUB-ACCOUNT  SUB-ACCOUNT SUB-ACCOUNT   SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT
                          -----------  ----------- ------------  -----------  -----------  ------------  -----------
<S>                       <C>          <C>         <C>           <C>          <C>          <C>           <C>
INCOME
Dividends...............  $         0  $3,015,727  $          0  $ 5,278,838  $ 1,316,580  $          0  $    36,012
EXPENSES
Mortality, expense risk
 and administrative
 charges (Note 3).......  $   789,552  $  593,366  $    360,337  $ 1,768,391  $ 1,162,810  $    291,451  $   875,389
                          -----------  ----------  ------------  -----------  -----------  ------------  -----------
Net investment income
 (loss).................     (789,552)  2,422,360      (360,337)   3,510,447      153,771      (291,451)    (839,377)
NET REALIZED AND
 UNREALIZED GAIN (LOSS)
 ON INVESTMENTS
Net unrealized
 appreciation
 (depreciation) on
 investments:
  Beginning of period...  $(7,678,490)     --      $(10,123,288) $    73,594  $24,293,924  $ (1,734,485) $(4,699,658)
  End of period.........  $(3,204,701)     --      $ (5,155,319) $(6,893,491) $37,189,132  $    370,183  $(5,454,903)
                          -----------  ----------  ------------  -----------  -----------  ------------  -----------
Net change in unrealized
 appreciation
 (depreciation).........    4,473,789      --         4,967,969   (6,967,085)  12,895,208     2,104,667     (755,245)
Net realized gain (loss)
 on investments.........  $    27,455      --      $     76,288  $     8,447  $   (12,803) $      5,160  $    21,693
                          -----------  ----------  ------------  -----------  -----------  ------------  -----------
Net realized and
 unrealized gain (loss)
 on investments.........    4,501,244      --         5,044,257   (6,958,638)  12,882,405     2,109,827     (733,553)
                          -----------  ----------  ------------  -----------  -----------  ------------  -----------
NET INCREASE (DECREASE)
 IN NET ASSETS RESULTING
 FROM OPERATIONS........  $ 3,711,692  $2,422,360  $  4,683,921  $(3,448,192) $13,036,175  $  1,818,375  $(1,572,930)
                          ===========  ==========  ============  ===========  ===========  ============  ===========
</TABLE>
--------

*  For the period May 1, 2000 (Commencement of Operations) through September
   30, 2000.

                     See Notes to Financial Statements

                                      F-8
<PAGE>



<TABLE>
<CAPTION>
  EQUITY      INTERNATIONAL   VENTURE        BOND      LARGE CAP*  INTERNATIONAL*              RESEARCH
  GROWTH      MAGNUM EQUITY    VALUE     OPPORTUNITIES   GROWTH        STOCK       INVESTORS   MANAGERS
SUB-ACCOUNT    SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT SUB-ACCOUNT     TOTAL
-----------   ------------- -----------  ------------- ----------- -------------- ----------- -----------  -----------
<S>           <C>           <C>          <C>           <C>         <C>            <C>         <C>          <C>

$ 4,408,824    $ 1,230,877  $         0   $         0   $       0    $  87,979     $  5,794   $   10,765    15,391,395



$ 3,415,349    $   556,884  $ 2,604,030   $   509,852   $  86,866    $  33,531     $ 80,795   $  177,949    13,306,551
-----------    -----------  -----------   -----------   ---------    ---------     --------   ----------   -----------

    993,475        673,992   (2,604,030)     (509,852)    (86,866)      54,448      (75,001)    (167,184)    2,084,844






$73,486,541    $10,133,277  $55,356,779   $(6,573,540)  $       0    $       0     $168,130   $  889,260   133,592,046
$71,038,238    $ 2,519,219  $79,458,794   $(4,199,226)  $(235,708)   $(946,794)    $585,868   $2,521,149   167,592,441
-----------    -----------  -----------   -----------   ---------    ---------     --------   ----------   -----------

 (2,448,302)    (7,614,057)  24,102,014     2,374,313    (235,709)    (946,795)     417,737    1,631,890    34,000,396

$  (207,616)   $      (971) $  (437,464)  $    28,722   $    (277)   $    (447)    $   (677)  $     (739)     (493,230)
-----------    -----------  -----------   -----------   ---------    ---------     --------   ----------   -----------

 (2,655,918)    (7,615,028)  23,664,550     2,403,035    (235,986)    (947,241)     417,061    1,631,150    33,507,165
-----------    -----------  -----------   -----------   ---------    ---------     --------   ----------   -----------


$(1,662,443)   $(6,941,036) $21,060,520   $ 1,893,184   $(322,851)   $(892,793)    $342,060   $1,463,966    35,592,011
===========    ===========  ===========   ===========   =========    =========     ========   ==========   ===========
</TABLE>

                     See Notes to Financial Statements

                                      F-9
<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, 1999

<TABLE>
<CAPTION>
                            BOND         MONEY       MIDCAP      GROWTH AND      SMALL
                           INCOME       MARKET        VALUE        INCOME         CAP
                         SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT
                         -----------  -----------  -----------  ------------  ------------
<S>                      <C>          <C>          <C>          <C>           <C>
FROM OPERATING
 ACTIVITIES
  Net investment income
   (loss)..............  $ 5,895,185  $ 2,204,987  $   177,017  $ 24,641,870  $   (375,509)
  Net realized and
   unrealized gain
   (loss) on
   investments.........   (6,807,900)     --          (704,618)  (12,443,605)   23,503,434
                         -----------  -----------  -----------  ------------  ------------
   Net increase
    (decrease) in net
    assets resulting
    from operations....     (912,715)   2,204,987     (527,601)   12,198,265    23,127,925
FROM CONTRACT-RELATED
 TRANSACTIONS
  Purchase payments
   transferred from New
   England Life
   Insurance Company...   39,592,895   87,153,491   11,422,989    73,643,643    19,263,023
  Net transfers (to)
   from other sub-
   accounts............   (3,435,277) (40,727,745)  (4,763,885)   17,973,384    (5,127,343)
  Net transfers to New
   England Life
   Insurance Company...   (6,081,823)  (8,373,126)  (2,637,565)   (9,888,722)   (4,635,188)
                         -----------  -----------  -----------  ------------  ------------
   Net Increase
    (decrease) in net
    assets resulting
    from contract-
    related
    transactions.......   30,075,795   38,052,621    4,021,539    81,728,305     9,500,492
                         -----------  -----------  -----------  ------------  ------------
  Net increase in net
   assets..............   29,163,080   40,257,608    3,493,938    93,926,570    32,628,417
NET ASSETS, AT
 BEGINNING OF THE
 PERIOD................   61,125,025   38,940,089   37,284,273   111,086,797    70,232,205
                         -----------  -----------  -----------  ------------  ------------
NET ASSETS, AT END OF
 THE PERIOD............  $90,288,105  $79,197,697  $40,778,211  $205,013,367  $102,860,622
                         ===========  ===========  ===========  ============  ============
</TABLE>
--------
*  For the period April 30, 1999 (Commencement of Operations) through December
   31, 1999.


                       See Notes to Financial Statements

                                      F-10
<PAGE>



<TABLE>
<CAPTION>
   U.S.                       EQUITY     INTERNATIONAL   VENTURE         BOND                    RESEARCH
GOVERNMENT     BALANCED       GROWTH     MAGNUM EQUITY    VALUE      OPPORTUNITIES INVESTORS*    MANAGERS*
SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT    SUB-ACCOUNT  SUB-ACCOUNT    SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT      TOTAL
-----------  ------------  ------------  ------------- ------------  ------------- -----------  -----------  --------------
<S>          <C>           <C>           <C>           <C>           <C>           <C>          <C>          <C>
$ 1,714,281  $  5,548,829  $ 39,041,590   $  (199,276) $  3,125,096   $ 4,321,934  $    9,018   $  (20,063)  $   86,084,960

 (1,882,464)  (12,066,362)   33,036,178    10,405,765    27,390,192    (3,955,023)    271,958      719,124       57,466,679
-----------  ------------  ------------   -----------  ------------   -----------  ----------   ----------   --------------

   (168,183)   (6,517,533)   72,077,768    10,206,489    30,515,288       366,911     280,976      699,061      143,551,639


 11,676,892    36,915,088   105,766,344    14,380,644    82,196,529    14,472,208   3,188,388    2,588,796      502,260,930
   (375,655)   (8,372,542)   28,991,618     1,583,012    13,440,194    (4,639,463)  2,724,877    2,728,825         --

 (3,080,296)   (7,725,407)  (16,083,618)   (3,417,967)  (15,932,494)   (4,936,143)   (149,441)    (106,393)     (83,048,184)
-----------  ------------  ------------   -----------  ------------   -----------  ----------   ----------   --------------

  8,220,941    20,817,139   118,674,344    12,545,689    79,704,229     4,896,602   5,763,824    5,211,228      419,212,747
-----------  ------------  ------------   -----------  ------------   -----------  ----------   ----------   --------------
  8,052,757    14,299,606   190,752,112    22,752,178   110,219,517     5,263,513   6,044,800    5,910,289      562,764,385
 25,374,358    93,834,867   153,754,757    36,523,845   151,940,308    54,569,183           0            0      834,665,707
-----------  ------------  ------------   -----------  ------------   -----------  ----------   ----------   --------------
$33,427,116  $108,134,473  $344,506,869   $59,276,023  $262,159,825   $59,832,696  $6,044,800   $5,910,289   $1,397,430,092
===========  ============  ============   ===========  ============   ===========  ==========   ==========   ==============
</TABLE>


                       See Notes to Financial Statements

                                      F-11
<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-12
<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-13
<PAGE>


               NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

                    STATEMENT OF CHANGES IN NET ASSETS

         FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)

<TABLE>
<CAPTION>
                           BOND         MONEY        MIDCAP      GROWTH AND      SMALL          U.S.
                          INCOME        MARKET        VALUE        INCOME         CAP        GOVERNMENT     BALANCED
                        SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT
                        -----------  ------------  -----------  ------------  ------------  ------------  ------------
<S>                     <C>          <C>           <C>          <C>           <C>           <C>           <C>
FROM OPERATING
 ACTIVITIES
  Net investment
   income (loss)......  $  (789,552) $  2,422,360  $  (360,337) $  3,510,447  $    153,771  $   (291,451) $   (839,377)
  Net realized and
   unrealized gain
   (loss) on
   investments........    4,501,244       --         5,044,257    (6,958,638)   12,882,405     2,109,827      (733,553)
                        -----------  ------------  -----------  ------------  ------------  ------------  ------------
   Net increase
    (decrease) in net
    assets resulting
    from operations...    3,711,692     2,422,360    4,683,921    (3,448,192)   13,036,175     1,818,375    (1,572,930)
FROM CONTRACT-RELATED
 TRANSACTIONS
  Purchase payments
   transferred from
   New England Life
   Insurance Company..  $15,467,488  $ 45,707,153  $ 6,986,036  $ 30,658,365  $ 38,003,316    $5,277,972  $ 15,915,304
  Net transfers (to)
   from other sub-
   accounts...........  $(5,976,338) $(50,236,785) $(1,183,076) $(12,522,251) $ 21,611,500   $(1,533,657) $(15,737,029)
  Net transfers to
   New England Life
   Insurance Company..  $(6,015,952) $ (8,614,741) $(2,316,414) $(12,642,956) $ (8,112,992)  $(2,569,288) $ (7,202,507)
                        -----------  ------------  -----------  ------------  ------------  ------------  ------------
   Net Increase
    (decrease) in net
    assets resulting
    from contract-
    related
    transactions......    3,475,198   (13,144,371)   3,486,547     5,493,158    51,501,824     1,175,027    (7,024,232)
                        -----------  ------------  -----------  ------------  ------------  ------------  ------------
  Net increase in net
   assets.............    7,186,890   (10,722,011)   8,170,468     2,044,966    64,537,999     2,993,403    (8,597,162)
NET ASSETS, AT
 BEGINNING OF THE
 PERIOD...............  $90,288,105  $ 79,194,634  $40,778,211  $205,013,368  $102,860,622   $33,427,116  $108,134,474
                        -----------  ------------  -----------  ------------  ------------  ------------  ------------
NET ASSETS, AT END OF
 THE PERIOD...........  $97,474,996  $ 68,472,622  $48,948,680  $207,058,333  $167,398,621   $36,420,520  $ 99,537,312
                        ===========  ============  ===========  ============  ============  ============  ============
</TABLE>
-------

*  For the period May 1, 2000 (Commencement of Operations) through September
   30, 2000.

                     See Notes to Financial Statements

                                      F-14
<PAGE>



<TABLE>
<CAPTION>
    EQUITY      INTERNATIONAL   VENTURE         BOND      LARGE CAP*   INTERNATIONAL*               RESEARCH
    GROWTH      MAGNUM EQUITY    VALUE      OPPORTUNITIES   GROWTH         STOCK       INVESTORS    MANAGERS
 SUB-ACCOUNT     SUB-ACCOUNT  SUB-ACCOUNT    SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT   SUB-ACCOUNT  SUB-ACCOUNT      TOTAL
 ------------   ------------- ------------  ------------- -----------  -------------- -----------  -----------  --------------
 <S>            <C>           <C>           <C>           <C>          <C>            <C>          <C>          <C>

 $    993,475    $   673,992  $ (2,604,030)  $  (509,852) $  (86,866)   $    54,448   $   (75,001) $  (167,184) $    2,084,844
   (2,655,918)    (7,615,028)   23,664,550     2,403,035    (235,986)      (947,241)      417,061    1,631,150      33,507,165
 ------------    -----------  ------------   -----------  ----------    -----------   -----------  -----------  --------------


   (1,662,443)    (6,941,036)   21,060,520     1,893,184    (322,851)      (892,793)      342,060    1,463,966      35,592,011




 $ 86,722,984    $14,524,562  $ 63,726,349   $ 7,780,537  $5,918,487    $ 9,236,281   $ 5,030,899  $14,881,048     365,836,781

 $ 23,615,448    $ 3,256,235  $ 15,505,046   $(3,936,030) $3,134,610    $ 7,483,661   $ 2,153,275  $14,365,390        --


 $(26,936,800)   $(3,701,223) $(19,477,231)  $(4,476,915) $   17,240    $  (125,262)  $  (345,523) $  (894,188)   (103,414,752)
 ------------    -----------  ------------   -----------  ----------    -----------   -----------  -----------  --------------




   83,401,632     14,079,573    59,754,164      (632,409)  9,070,336     16,594,680     6,838,652   28,352,250     262,422,031
 ------------    -----------  ------------   -----------  ----------    -----------   -----------  -----------  --------------

   81,739,190      7,138,538    80,814,684     1,260,775   8,747,485     15,701,888     7,180,712   29,816,217     298,014,041

 $344,506,869    $59,276,022  $262,159,826   $59,832,696      --             --       $ 6,044,801  $ 5,910,290   1,397,427,032
 ------------    -----------  ------------   -----------  ----------    -----------   -----------  -----------  --------------

 $426,246,057    $66,414,559  $342,974,510   $61,093,471  $8,747,486    $15,701,889   $13,225,512  $35,726,505  $1,695,441,072
 ============    ===========  ============   ===========  ==========    ===========   ===========  ===========  ==============
</TABLE>


                       See Notes to Financial Statements

                                      F-15
<PAGE>


              NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

(INFORMATION WITH RESPECT TO THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 IS
                                UNAUDITED)

                      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. NELICO is
an indirect wholly-owned subsidiary of Metropolitan Life Insurance Company.

  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 fifteen investment sub-accounts as of September 30, 2000
each of which invests in the shares of one series of the New England Zenith
Fund ("Zenith Fund") and the Metropolitan Series Fund ("Metropolitan Fund").
The series of the Zenith Fund and the Metropolitan Series Fund in which the
sub-accounts invest are referred to herein as the "Eligible Funds". The Zenith
Fund and the Metropolitan Series Fund are diversified, open-end management
investment companies. The Account purchases or redeems shares of the fifteen
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 (the
"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.

  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%

                                     F-16
<PAGE>


              NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

(INFORMATION WITH RESPECT TO THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 IS
                                UNAUDITED)

                 NOTES TO FINANCIAL STATEMENTS--CONTINUED

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. New England Investment Management, Inc. (previously 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 Income          New England Investment Management, Inc.*     Back Bay Advisors, L.P. *
Back Bay Advisors Money Market         New England Investment Management, Inc.*     Back Bay Advisors, L.P. *
Harris Oakmark Midcap Value            New England Investment Management, Inc.*     Harris Associates L.P. *
Westpeak Growth and Income             New England Investment Management, Inc.*     Westpeak Investment Advisors, L.P. *
Loomis Sayles Small Cap                New England Investment Management, Inc.*     Loomis, Sayles & Company, L.P. *
Salomon Brothers U.S. Government       New England Investment Management, Inc.*     Salomon Brothers Asset Management Inc
Balanced                               New England Investment Management, Inc.*     Wellington Management Company, LLP
Alger Equity Growth                    New England Investment Management, Inc.*     Fred Alger Management, Inc.
Morgan Stanley International           New England Investment Management, Inc.*     Morgan Stanley Dean Witter Investment
Magnum Equity                                                                       Management Inc.
Davis Venture Value                    New England Investment Management, Inc.*     Davis Selected Advisers, L.P. (a)
Salomon Brothers Strategic Bond        New England Investment Management, Inc.*     Salomon Brothers Asset
Opportunities                                                                       Management Inc. (b)
MFS Investors                          New England Investment Management, Inc.*     Massachusetts Financial Services Company
MFS Research Managers                  New England Investment Management, Inc.*     Massachusetts Financial Services Company
</TABLE>
--------

 *  An affiliate of NELICO

(a) Davis Selected Adivisors, 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 Solomon
    Brothers Asset Management Inc.

(c) Effective March 26, 1999, TNE Advisers, Inc. changed its name to New
    England Investment Management, Inc.

    The Harris Oakmark Mid Cap Value Series' sub-adviser was Loomis Sayles until
May 1, 1998, when Goldman Sachs Asset Management, a separate operating
division of Goldman Sachs & Co. became the sub-adviser. Harrris Associates
became the sub-adviser on May 1, 2000. The Balanced Series' sub-adviser was
Loomis Sayles until May 1, 2000, when Wellington Management Company became
sub-adviser.

    Metropolitan Life Insurance Company is investment adviser for the
Metropolitan Series Fund Portfolios. Putnam Investment Management, Inc. is the
sub-investment manager of the Putnam Large Cap Growth Portfolio and the Putnam
International Stock Portfolio.

                                     F-17
<PAGE>


               NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

 (INFORMATION WITH RESPECT TO THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 IS
                                UNAUDITED)

                 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, 1999:

<TABLE>
<CAPTION>
                                                        PURCHASES      SALES
                                                       ------------ ------------
   <S>                                                 <C>          <C>
   Back Bay Advisors Bond Income Series..............  $ 56,789,463 $ 27,325,489
   Back Bay Advisors Money Market Series.............   130,805,428   93,243,312
   Goldman Sachs Midcap Value Series.................    19,580,358   15,882,402
   Westpeak Growth and Income Series.................   113,176,629   32,797,935
   Loomis Sayles Small Cap Series....................    31,025,923   22,123,169
   Salomon Brothers U.S. Government Series...........    18,500,389   10,520,846
   Loomis Sayles Balanced Series.....................    51,003,101   31,046,084
   Alger Equity Growth Series........................   164,961,156   48,170,939
   Morgan Stanley International Magnum Equity Series.    23,249,623   11,049,891
   Davis Venture Value Series........................   118,567,208   40,511,024
   Salomon Brothers Strategic Bond Opportunities
    Series...........................................    21,640,875   17,233,423
   MFS Investors Series *............................     6,757,970      992,864
   MFS Research Managers *...........................     5,969,721      758,645
</TABLE>
  --------

  *  For the period April 30, 1999 (Commencement of Operations) to December
     31, 1999.

  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 nine months ended September 30, 2000:

<TABLE>
<CAPTION>
                                                        PURCHASES      SALES
                                                       ------------ ------------
   <S>                                                 <C>          <C>
   Back Bay Advisors Bond Income Series..............  $ 25,055,869 $ 22,338,825
   Back Bay Advisors Money Market Series.............    86,388,874  100,097,519
   Harris Oakmark Midcap Value Series................    14,423,264   11,309,977
   Westpeak Growth and Income Series.................    50,687,425   46,898,064
   Loomis Sayles Small Cap Series....................    71,558,549   21,158,185
   Salomon Brothers U.S. Government Series...........     9,637,324    8,730,995
   Balanced Series...................................    23,123,397   31,042,833
   Alger Equity Growth Series........................   140,307,366   60,304,469
   Morgan Stanley International Magnum Equity Series.    34,524,005   20,991,483
   Davis Venture Value Series........................    98,690,367   41,467,420
   Salomon Brothers Strategic Bond Opportunities
    Series...........................................    12,159,665   13,234,940
   MFS Investors Series..............................     9,801,409    3,036,411
   MFS Research Managers.............................    33,605,038    5,415,842
   Putnam Large Cap Growth Portfolio.................    10,010,156    1,018,299
   Putnam International Stock Portfolio..............    18,485,001    1,909,970
</TABLE>
  --------

  *  For the period May 1, 2000 (Commencement of Operations) to September 30,
     2000.

                                      F-18
<PAGE>


              NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

(INFORMATION WITH RESPECT TO THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 IS
                                UNAUDITED)

                 NOTES TO FINANCIAL STATEMENTS--CONTINUED

7. ANNUITY RESERVES.

  For contracts payable on or after January 1, 1998, annuity reserves are
computed according to the Annuity 2000 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.

8. INCREASES (DECREASES) IN ACCUMULATION UNITS.

  A summary of units outstanding for variable annuity contracts for the year
ended December 31, 1999 and the nine months ended September 30, 2000:

<TABLE>
<CAPTION>
                       BOND            MONEY          MIDCAP        GROWTH AND         SMALL
                      INCOME          MARKET           VALUE          INCOME            CAP       U.S. GOVERNMENT    BALANCED
AGS                 SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT
---               --------------- --------------- --------------- --------------- --------------- --------------- ---------------
<S>               <C>             <C>             <C>             <C>             <C>             <C>             <C>
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 49,660,332.7705
Units Purchased.   3,115,418.8916 19,977,413.0165  2,988,562.7904  9,209,262.8584  3,800,701.7241  2,748,826.4094  5,382,985.1021
Units Redeemed..   3,461,857.8005 19,706,351.9200  5,859,057.4202  4,261,954.6267  8,269,380.3948  4,014,490.5355 10,546,113.7898
                  --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Units
 Outstanding
 12/31/99.......  14,185,135.5317 14,978,748.5421 16,341,180.8477 40,417,726.2362 30,704,661.1452 14,531,962.1889 44,497,204.0828
                  =============== =============== =============== =============== =============== =============== ===============
Unit Value
 12/31/99.......           3.6223          2.1897          1.7844          3.0193          2.4409          1.3036          1.6359
                  =============== =============== =============== =============== =============== =============== ===============
</TABLE>

<TABLE>
<CAPTION>
                             EQUITY       INTERNATIONAL      VENTURE          BOND                         RESEARCH
                             GROWTH       MAGNUM EQUITY       VALUE       OPPORTUNITIES    INVESTORS       MANAGERS
                           SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT    SUB-ACCOUNT    SUB-ACCOUNT
                         --------------- --------------- --------------- --------------- -------------- --------------
<S>                      <C>             <C>             <C>             <C>             <C>            <C>
Units Outstanding
 12/31/98............... 49,765,211.0935 29,227,367.9117 57,835,822.2841 34,844,516.2721         0.0000         0.0000
Units Purchased......... 13,349,863.4121  3,527,951.0480  8,512,416.2025  3,370,366.9390 2,585,525.9017 2,143,475.4115
Units Redeemed..........  6,488,692.0432  5,386,124.0611  7,381,239.9297  7,214,892.8848   282,543.1229   296,682.1191
                         --------------- --------------- --------------- --------------- -------------- --------------
Units Outstanding
 12/31/99............... 56,626,382.4624 27,369,194.8986 58,966,998.5569 30,999,990.3263 2,302,982.7788 1,846,793.2924
                         =============== =============== =============== =============== ============== ==============
Unit Value 12/31/99.....          3.7442          1.4307          2.8315          1.4434         1.0192         1.1872
                         =============== =============== =============== =============== ============== ==============
</TABLE>

<TABLE>
<CAPTION>
                       BOND            MONEY          MIDCAP       GROWTH AND         SMALL
                      INCOME          MARKET          VALUE          INCOME            CAP       U.S. GOVERNMENT    BALANCED
AGS 98              SUB-ACCOUNT     SUB-ACCOUNT    SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT
------            --------------- --------------- -------------- --------------- --------------- --------------- ---------------
<S>               <C>             <C>             <C>            <C>             <C>             <C>             <C>
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  4,074,977.5403
Units Purchased.  12,802,287.9622 38,540,545.5281 5,917,016.7148 25,031,244.5586  9,984,580.8601  9,387,259.1794 19,915,645.4082
Units Redeemed..   4,028,616.4100 20,914,268.8566   863,182.7303  1,691,518.5722    749,086.7917  1,694,728.3944  2,329,722.8953
                  --------------- --------------- -------------- --------------- --------------- --------------- ---------------
Units
 Outstanding
 12/31/99.......  10,828,514.0535 21,362,974.0533 6,533,739.7610 27,574,789.3153 11,468,962.5318 11,139,816.8193 21,660,900.0532
                  =============== =============== ============== =============== =============== =============== ===============
Unit Value
 12/31/99.......           3.5928          2.1719         1.7784          3.0093          2.4340          1.3002          1.6316
                  =============== =============== ============== =============== =============== =============== ===============
</TABLE>

<TABLE>
<CAPTION>
                             EQUITY       INTERNATIONAL      VENTURE          BOND                         RESEARCH
                             GROWTH       MAGNUM EQUITY       VALUE       OPPORTUNITIES    INVESTORS       MANAGERS
                           SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT    SUB-ACCOUNT    SUB-ACCOUNT
                         --------------- --------------- --------------- --------------- -------------- --------------
<S>                      <C>             <C>             <C>             <C>             <C>            <C>
Units Outstanding
 12/31/98...............  4,586,101.9363  2,163,155.6514  4,389,416.1760  2,999,423.4478         0.0000         0.0000
Units Purchased......... 34,900,701.5661 13,616,155.4098 30,696,450.5464 11,475,555.7583 3,965,936.0682 3,327,047.8906
Units Redeemed..........  4,012,058.5942  1,680,291.6608  1,378,210.9852  3,995,135.2619   336,984.4395   194,443.6469
                         --------------- --------------- --------------- --------------- -------------- --------------
Units Outstanding
 12/31/99............... 35,474,744.9082 14,099,019.4004 33,707,655.7372 10,479,843.9442 3,628,951.6287 3,132,604.2437
                         =============== =============== =============== =============== ============== ==============
Unit Value 12/31/99.....          3.7346          1.4270          2.8242          1.4397         1.0189         1.1868
                         =============== =============== =============== =============== ============== ==============
</TABLE>

                                     F-19
<PAGE>


               NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

 (INFORMATION WITH RESPECT TO THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 IS
                                UNAUDITED)

                 NOTES TO FINANCIAL STATEMENTS--CONTINUED

<TABLE>
<CAPTION>
                                                                    GROWTH AND
                    BOND INCOME    MONEY MARKET    MIDCAP VALUE     INCOME SUB-      SMALL CAP    U.S. GOVERNMENT    BALANCED
AGS                 SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT       ACCOUNT       SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT
---               --------------- --------------- --------------- --------------- --------------- --------------- ---------------
<S>               <C>             <C>             <C>             <C>             <C>             <C>             <C>
Units
 Outstanding
 12/31/99.......  14,185,135.5317 14,978,748.5421 16,341,180.8477 40,417,726.2362 30,704,661.1452 14,531,962.1889 44,497,204.0828
Units Purchased.     319,273.1052    310,302.0568    233,145.1778    782,552.0926  5,134,606.5757    429,937.7248    934,347.0049
Units Redeemed..   1,808,524.3028  4,351,110.4622  2,174,238.8830  5,857,418.9075  2,453,056.7799  2,299,606.3231  9,518,259.4378
                  --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Units
 Outstanding
 09/30/00.......  12,695,884.3341 10,937,940.1367 14,400,087.1425 35,342,859.4213 33,386,210.9410 12,662,293.5906 35,913,291.6499
                  =============== =============== =============== =============== =============== =============== ===============
Unit Value
 09/30/00.......           3.7652          2.2663          1.9873          2.9607          2.7164          1.3728         1.61183
                  =============== =============== =============== =============== =============== =============== ===============
</TABLE>

<TABLE>
<CAPTION>
                                          INTERNATIONAL                       BOND       MFS INVESTORS   MFS RESEARCH
                          EQUITY GROWTH   MAGNUM EQUITY   VENTURE VALUE   OPPORTUNITIES      SERIES        MANAGER
                           SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT    SUB-ACCOUNT    SUB-ACCOUNT
                         --------------- --------------- --------------- --------------- -------------- --------------
<S>                      <C>             <C>             <C>             <C>             <C>            <C>
Units Outstanding
 12/31/99............... 56,626,382.4624 27,369,194.8986 58,966,998.5569 30,999,990.3263 2,302,982.7788 1,846,793.2924
Units Purchased.........  1,030,888.7822    638,941.8892    933,154.7136    603,149.0936 1,537,345.4731 6,574,807.8686
Units Redeemed..........  1,887,542.0129    230,619.9061  2,213,639.5444  4,819,045.0695   142,707.0584   702,829.5980
                         --------------- --------------- --------------- --------------- -------------- --------------
Units Outstanding
 09/30/00............... 55,769,729.2317 27,777,516.8817 57,686,513.7261 26,784,094.3504 3,697,621.1935 7,718,771.5630
                         =============== =============== =============== =============== ============== ==============
Unit Value 09/30/00.....          3.7408          1.2807          3.0416          1.4865         1.0341         1.2876
                         =============== =============== =============== =============== ============== ==============
</TABLE>

<TABLE>
<CAPTION>
                                                       PUTNAM         PUTNAM
                                                     LARGE CAP    INTERNATIONAL
                                                    SUB-ACCOUNT    SUB-ACCOUNT
                                                   -------------- --------------
<S>                                                <C>            <C>
Units Outstanding 05/05/00........................    12,655.9364     4,246.4887
Units Purchased................................... 1,319,668.0460 2,399,426.1926
Units Redeemed....................................    88,971.8757   320,529.9526
                                                   -------------- --------------
Units Outstanding 09/30/00........................ 1,243,352.1067 2,083,142.7287
                                                   ============== ==============
Unit Value 09/30/00...............................         0.9586         1.5353
                                                   ============== ==============
</TABLE>

                                      F-20
<PAGE>


               NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT

                                    OF

                    NEW ENGLAND LIFE INSURANCE COMPANY

 (INFORMATION WITH RESPECT TO THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 IS
                                UNAUDITED)

                 NOTES TO FINANCIAL STATEMENTS--CONTINUED

<TABLE>
<CAPTION>
                                                                    GROWTH AND
                    BOND INCOME    MONEY MARKET    MIDCAP VALUE       INCOME         SMALL CAP    U.S. GOVERNMENT    BALANCED
AGS 98              SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT
------            --------------- --------------- --------------- --------------- --------------- --------------- ---------------
<S>               <C>             <C>             <C>             <C>             <C>             <C>             <C>
Units
 Outstanding
 12/31/99.......  10,828,514.0535 21,363,853.4941  6,533,739.7610 27,574,789.3153 11,468,962.5318 11,139,816.8193 21,660,900.0532
Units Purchased.   2,930,888.4621    347,696.6757  4,470,266.6554  8,255,710.6497 18,267,879.6497  3,286,465.5467  4,823,619.4619
Units Redeemed..     448,669.4469  2,418,374.0529    740,301.5183  1,105,562.1809  1,403,525.3000    504,523.3178    565,935.0913
                  --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Units
 Outstanding
 09/30/00.......  13,310,733.0687 19,293,176.1169 10,263,704.8981 34,724,937.7841 28,333,316.8815 13,921,759.0482 25,918,584.4238
                  =============== =============== =============== =============== =============== =============== ===============
Unit Value
 09/30/00.......           3.7332          2.2470          1.9800          2.9497          2.7077          1.3688          1.6071
                  =============== =============== =============== =============== =============== =============== ===============
</TABLE>

<TABLE>
<CAPTION>
                                          INTERNATIONAL                       BOND       MFS INVESTORS   MFS RESEARCH
                          EQUITY GROWTH   MAGNUM EQUITY   VENTURE VALUE   OPPORTUNITIES      SERIES         MANAGER
                           SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT    SUB-ACCOUNT     SUB-ACCOUNT
                         --------------- --------------- --------------- --------------- -------------- ---------------
<S>                      <C>             <C>             <C>             <C>             <C>            <C>
Units Outstanding
 12/31/99............... 35,474,744.9082 14,099,019.4004 33,707,655.7372 10,479,843.9442 3,628,951.6287  3,132,604.2437
Units Purchased......... 24,888,324.0418 11,936,619.0312 23,646,458.1543  4,509,150.7045 5,968,047.8402 19,070,315.1546
Units Redeemed..........  2,013,416.0966  1,874,623.9981  2,102,104.3421    618,481.2183   498,745.3173  2,161,477.5893
                         --------------- --------------- --------------- --------------- -------------- ---------------
Units Outstanding
 09/30/00............... 58,349,652.8534 24,161,014.4335 55,252,009.5494 14,370,513.4304 9,098,254.1516 20,041,441.8090
                         =============== =============== =============== =============== ============== ===============
Unit Value 09/30/00.....          3.7298          1.2769          3.0327          1.4821         1.0334          1.2867
                         =============== =============== =============== =============== ============== ===============
</TABLE>

<TABLE>
<CAPTION>
                                                       PUTNAM         PUTNAM
                                                     LARGE CAP    INTERNATIONAL
                                                    SUB-ACCOUNT    SUB-ACCOUNT
                                                   -------------- --------------
<S>                                                <C>            <C>
Units Outstanding 05/01/00........................   121,074.2200    28,582.3500
Units Purchased................................... 7,844,676.1805 8,831,896.5563
Units Redeemed....................................    82,143.2200   678,312.0030
                                                   -------------- --------------
Units Outstanding 09/30/00........................ 7,883,607.1805 8,182,166.9033
                                                   ============== ==============
Unit Value 09/30/00...............................         0.9584         1.5281
                                                   ============== ==============
</TABLE>

                                      F-21
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Independent Auditors' Report

The Board of Directors and Policyholders of New England Life Insurance
Company:

We have audited the accompanying consolidated balance sheets of New England
Life Insurance Company and subsidiaries (the "Company") as of December 31,
1999 and 1998, 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, 1999. These consolidated 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 New England Life Insurance
Company and subsidiaries as of December 31, 1999 and 1998, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1999 in conformity with generally accepted
accounting principles.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
February 4, 2000

                                     F-22
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Balance Sheets

DECEMBER 31, 1999 AND 1998 AND SEPTEMBER 30, 2000 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  SEPTEMBER 30,
                                              1999        1998        2000
                                           ----------  ---------- -------------
                                                                   (UNAUDITED)
<S>                                        <C>         <C>        <C>
ASSETS
Investments:
 Fixed Maturities, Available for Sale, at
  Estimated Fair Value.................... $  735,697  $  769,364  $  763,577
 Equity Securities, at Fair Value.........     22,685      13,240      25,842
 Policy Loans.............................    181,995     135,800     225,898
 Short-Term Investments...................     62,619      52,285       8,418
 Other Invested Assets....................     16,798      16,372      85,110
                                           ----------  ----------  ----------
    Total Investments.....................  1,019,794     987,061   1,108,845
Cash and Cash Equivalents.................     84,371      43,598      51,588
Deferred Policy Acquisition Costs.........    930,703     710,961   1,028,707
Accrued Investment Income.................     29,940      21,802      31,473
Premiums and Other Receivables............    119,750     145,117     239,751
Other Assets..............................    105,982     111,067     106,137
Separate Account Assets...................  4,840,029   3,258,383   5,585,571
                                           ----------  ----------  ----------
    TOTAL ASSETS.......................... $7,130,569  $5,277,989  $8,152,072
                                           ==========  ==========  ==========
LIABILITIES AND EQUITY
LIABILITIES
Future Policy Benefits.................... $  614,927  $  561,746  $  657,410
Policyholder Account Balances.............    325,385     210,242     386,230
Other Policyholder Funds..................    245,339     186,255     371,500
Policyholder Dividends Payable............        977         609       1,463
Short and Long-Term Debt..................     75,053      82,855      87,625
Income Taxes Payable:
 Current..................................        (77)     10,984        (863)
 Deferred.................................     38,669      42,334      10,860
Due to Parent.............................     72,247         789
Other Liabilities.........................     64,717      78,721     205,009
Separate Account Liabilities..............  4,840,029   3,258,383   5,585,571
                                           ----------  ----------  ----------
    TOTAL LIABILITIES.....................  6,277,266   4,432,918   7,304,805
                                           ----------  ----------  ----------
Commitments and Contingencies (Notes 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       2,500
Preferred Stock, $0.00 par value;
 1,000,000 shares authorized, 200,000
 shares issued and outstanding............          0           0           0
Contributed Capital.......................    647,273     647,273     647,272
Retained Earnings.........................    214,528     177,859     219,119
Accumulated Other Comprehensive Income....    (10,998)     17,439     (21,624)
                                           ----------  ----------  ----------
    TOTAL EQUITY..........................    853,303     845,071     847,267
                                           ----------  ----------  ----------
TOTAL LIABILITIES AND EQUITY.............. $7,130,569  $5,277,989  $8,152,072
                                           ==========  ==========  ==========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-23
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Statements of Income and Comprehensive Income

FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997, AND NINE MONTHS ENDED
SEPTEMBER 30, 2000 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  SEPTEMBER 30,
                                        1999      1998     1997       2000
                                      --------  -------- -------- -------------
                                                                   (UNAUDITED)
<S>                                   <C>       <C>      <C>      <C>
REVENUES
Premiums............................. $123,638  $100,689 $ 63,616   $ 97,127
Universal Life and Investment-Type
 Product Policy Fees.................  220,841   173,766  145,157    168,181
Net Investment Income................   68,498    49,077   61,059     50,702
Investment Gains (Losses), Net.......    2,922     5,610      890       (838)
Commissions, Fees and Other Income...  265,891   192,411   28,302    271,845
                                      --------  -------- --------   --------
  TOTAL REVENUES.....................  681,790   521,553  299,024    587,017
                                      --------  -------- --------   --------
BENEFITS AND OTHER DEDUCTIONS
Policyholder Benefits................  193,293   149,687  100,180    120,082
Interest Credited to Policyholder
 Account Balances....................   10,721     7,735    6,220     14,725
Policyholder Dividends...............   20,827    22,989   21,325     17,074
Other Operating Costs and Expenses...  381,881   316,659  144,342    410,747
                                      --------  -------- --------   --------
  TOTAL BENEFITS AND OTHER
   DEDUCTIONS........................  606,722   497,070  272,067    562,628
                                      --------  -------- --------   --------
Income From Operations Before Income
 Taxes...............................   75,068    24,483   26,957     24,389
Income Taxes.........................   29,344    13,046    4,988     11,994
                                      --------  -------- --------   --------
NET INCOME........................... $ 45,724  $ 11,437 $ 21,969   $ 12,395
                                      --------  -------- --------   --------
Other Comprehensive Income (Loss),
 Net of Tax:
 Unrealized Investment Gains (Losses)
  (Net of Related Offsets,
  Reclassification Adjustments and
  Income Taxes, of $45,376, $(299)
  and $(16,588), Respectively).......  (28,437)       92   13,620    (21,624)
                                      --------  -------- --------   --------
COMPREHENSIVE INCOME................. $ 17,287  $ 11,529 $ 35,589   $ (9,229)
                                      ========  ======== ========   ========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-24
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Statements of Equity

FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997, AND NINE MONTHS ENDED
SEPTEMBER 30, 2000 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                    CAPITAL              ACCUMULATED
                                    STOCK &                 OTHER
                                  CONTRIBUTED RETAINED  COMPREHENSIVE
                                    CAPITAL   EARNINGS     INCOME      TOTAL
                                  ----------- --------  ------------- --------
<S>                               <C>         <C>       <C>           <C>
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
Net Income.......................               45,724                  45,724
Preferred Stock Dividends........               (9,055)                 (9,055)
Change in Net Unrealized
 Investment Gains (Losses).......                          (28,437)    (28,437)
                                   --------   --------    --------    --------
BALANCES AT DECEMBER 31, 1999....  $649,773   $214,528    $(10,998)   $853,303
                                   ========   ========    ========    ========
<CAPTION>
                                    CAPITAL              ACCUMULATED
                                    STOCK &                 OTHER
                                  CONTRIBUTED RETAINED  COMPREHENSIVE
                                    CAPITAL   EARNINGS     INCOME      TOTAL
                                  ----------- --------  ------------- --------
<S>                               <C>         <C>       <C>           <C>
                                                  (UNAUDITED)
BALANCES AT DECEMBER 31, 1999....  $649,772   $214,528    $(10,998)   $853,302
Net Income.......................               12,395                  12,395
Preferred Stock Dividends........               (7,804)                 (7,804)
Change in Net Unrealized
 Investment Gains (Losses).......                          (10,626)    (10,626)
                                   --------   --------    --------    --------
BALANCES AT SEPTEMBER 30, 2000...  $649,772   $219,119    $(21,624)   $847,267
                                   ========   ========    ========    ========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-25
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Statements of Cash Flows

FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997, AND NINE MONTHS ENDED
SEPTEMBER 30, 2000 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                  SEPTEMBER 30,
                                   1999       1998       1997         2000
                                 ---------  ---------  ---------  -------------
                                                                   (UNAUDITED)
<S>                              <C>        <C>        <C>        <C>
NET CASH USED IN OPERATING
 ACTIVITIES..................... $(159,314) $(311,296) $(121,838)   $(148,814)
                                 ---------  ---------  ---------    ---------
Cash Flows from Investing
 Activities:
 Sales, Maturities and
  Repayments of:
  Available for Sale Fixed
   Maturities...................   114,478    164,566    145,197      105,515
  Equity Securities.............     2,491     39,333     32,806        1,379
  Other, Net....................        (1)       721        128      146,858
 Purchases of:
  Available for Sale Fixed
   Maturities...................  (157,761)  (184,810)  (326,059)    (135,875)
  Equity Securities.............    (9,590)   (80,066)         0      (15,887)
  Real Estate...................    (3,251)    (3,644)         0          (95)
  Fixed Asset Property and
   Equipment....................         0     (1,459)      (101)           0
  Other Assets..................      (302)       (89)         0     (219,144)
 Net Change in Short-Term
  Investments...................   (10,334)   (24,341)   128,616       55,252
 Net Change in Policy Loans.....   (46,195)   (31,017)   (28,520)     (43,903)
 Other, Net.....................    23,443      1,631        177            0
                                 ---------  ---------  ---------    ---------
NET CASH USED IN INVESTING
 ACTIVITIES.....................   (87,022)  (119,175)   (47,756)    (105,900)
                                 ---------  ---------  ---------    ---------
Cash Flows from Financing
 Activities:
 Capital Contributions..........         0    200,000     46,681            0
 Dividends Paid.................    (9,055)         0          0       (7,804)
 Additions to Debt..............                                       10,000
 Repayment of Debt..............   (13,232)    (8,670)    (3,181)           0
 Policyholder Account Balances:
  Deposits......................   517,551    358,090    244,338      925,744
  Withdrawals...................  (242,388)  (149,499)   (95,066)    (706,009)
 Financial Reinsurance
  Receivables...................    34,233          0      1,823            0
                                 ---------  ---------  ---------    ---------
NET CASH PROVIDED BY FINANCING
 ACTIVITIES.....................   287,109    399,921    194,595      221,931
                                 ---------  ---------  ---------    ---------
Change in Cash and Cash
 Equivalents....................    40,773    (30,550)    25,001      (32,783)
Cash and Cash Equivalents,
 Beginning of Year..............    43,598     74,148     49,147       84,371
                                 ---------  ---------  ---------    ---------
CASH AND CASH EQUIVALENTS, END
 OF YEAR........................ $  84,371  $  43,598  $  74,148    $  51,588
                                 =========  =========  =========    =========
Supplemental Cash Flow
 Information:
 Interest Paid.................. $      87  $   3,830  $   1,495    $     368
                                 =========  =========  =========    =========
 Income Taxes Paid.............. $  30,045  $  14,118  $   5,470    $  20,100
                                 =========  =========  =========    =========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-26
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Statements of Cash Flows--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997, AND NINE MONTHS ENDED
SEPTEMBER 30, 2000 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  SEPTEMBER 30,
                                   1999       1998       1997         2000
                                 ---------  ---------  ---------  -------------
                                                                   (UNAUDITED)
<S>                              <C>        <C>        <C>        <C>
NET INCOME.....................  $  45,724  $  11,437  $  21,969    $  12,395
Adjustments to Reconcile Net
 Income to Net Cash Provided by
 (Used in) Operating
 Activities:
 Change in Deferred Policy
  Acquisition Costs, Net.......   (186,467)  (145,787)  (140,578)    (111,055)
 Change in Accrued Investment
  Income.......................     (8,138)    (3,090)    (4,999)      (1,533)
 Change in Premiums and Other
  Receivables..................     25,367    (82,081)   (57,095)    (120,001)
 Gains from Sales of
  Investments, Net.............     (2,922)    (5,610)      (890)        (838)
 Depreciation and Amortization
  Expenses.....................     11,350     13,137     10,085        8,513
 Interest Credited to
  Policyholder Account
  Balances.....................     10,721      7,735      6,220       14,725
 Universal Life and Investment-
  Type Product Policy Fee
  Income.......................   (220,841)  (173,766)  (145,157)    (168,181)
 Change in Future Policy
  Benefits.....................     53,181     61,317     35,540       42,483
 Change in Other Policyholder
  Funds........................     59,084     73,814      6,309      126,161
 Change in Policyholder
  Dividends Payable............        368        188      5,701          486
 Change in Income Taxes
  Payable......................    (26,871)     2,358      1,674      (23,831)
 Other, Net....................     80,130    (70,948)   139,383       71,863
                                 ---------  ---------  ---------    ---------
NET CASH USED IN OPERATING
 ACTIVITIES....................  $(159,314) $(311,296) $(121,838)   $(148,813)
                                 =========  =========  =========    =========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-27
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)

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 and independent brokers located throughout the
United States. The Company also provides participating and non-participating
traditional life insurance, fixed annuity contracts, pension products, as well
as, group life, medical, and 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 New
England Investment Management, 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 New England
Investment Management, 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 acquisition, 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.

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. Effective September 1, 1999, Newbury began
providing errors and omissions coverage to certain of the life insurance
agents of MetLife through a facultative reinsurance agreement with Fireman's
Fund 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.

New England Investment Management, Inc. (NEIM), which changed its name from
TNE Advisers, Inc. in March 1999, was incorporated on August 26, 1994, and is
registered as an investment adviser with the SEC, under the Investment
Advisers Act of 1940. NEIM was organized to serve as an investment adviser to
certain series of the New England Zenith Fund.

                                     F-28
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


NL Holding Corporation and subsidiaries (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 of NL Holding, is a National
Association of Securities Dealers (NASD) registered broker/dealer. N&L
Associates, a wholly owned subsidiary of NL Holding, is a general insurance
agent which sells insurance policies and other insurance related products
through its licensed brokers and independent agents.

BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles (GAAP). The
Commonwealth of Massachusetts Division of Insurance (the "Division")
recognizes only statutory accounting practices for determining and reporting
the financial condition and results of operations of an insurance company for
determining solvency under the Massachusetts Insurance Law. No consideration
is given by the Division to financial statements prepared in accordance with
GAAP in making such determination.

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, but more than a minimal interest, under the equity method of
accounting.

Certain amounts in the prior years' consolidated financial statements have
been reclassified to conform with the 1999 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 accumulated 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.

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.

                                     F-29
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


CASH AND CASH EQUIVALENTS

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

PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

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 $36,122, and $24,772 at December 31, 1999 and 1998,
respectively. Related depreciation and amortization expense was $11,350,
$13,137 and $10,085 for the years ended December 31, 1999, 1998 and 1997,
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.

Information regarding deferred policy acquisition costs is as follows:

<TABLE>
<CAPTION>
                                                    YEARS ENDED DECEMBER 31,
                                                   ----------------------------
                                                     1999      1998      1997
                                                   --------  --------  --------
   <S>                                             <C>       <C>       <C>
   Balance at January 1........................... $710,961  $565,769  $434,636
   Capitalized during the year....................  216,913   182,943   157,670
                                                   --------  --------  --------
     Total........................................  927,874   748,712   592,306
   Amortization allocated to:
    Net realized investment gains.................     (616)   (5,282)        0
    Unrealized investment gains (losses)..........   33,276      (595)   (9,446)
    Other Expenses................................  (29,831)  (31,874)  (17,091)
                                                   --------  --------  --------
     Total amortization...........................    2,829   (37,751)  (26,537)
   Balance at December 31......................... $930,703  $710,961  $565,769
                                                   ========  ========  ========
</TABLE>


                                     F-30
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)

Amortization of deferred policy acquisition costs is allocated to (1) realized
investment gains and losses to provide consolidated statement of income
information regarding the impact of such gains and losses on the amount of the
amortization, (2) unrealized investment gains and losses to provide
information regarding the amount of deferred policy acquisition costs that
would have been amortized if such gains and losses had been realized and (3)
other expenses to provide amounts related to the gross margins or profits
originating from transactions other than investment gains and losses.

Realized investment gains and losses related to certain products have a direct
impact on the amortization of deferred policy acquisition costs. Presenting
realized investment gains and losses net of related amortization of deferred
policy acquisition costs provides information useful in evaluating the
operating performance of the Company. This presentation may not be comparable
to presentations made by other insurers.

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 ending December 31, 2000. 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>

OTHER INTANGIBLE ASSETS

The excess of cost over the fair value of net assets acquired, which
represents goodwill, and the value of business 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.

        Excess of Purchase Price Over Fair Value of Net Assets Acquired

<TABLE>
<CAPTION>
                                                    YEARS ENDED DECEMBER 31,
                                                    ------------------------
                                                     1999     1998     1997
                                                    -------  -------  ------
   <S>                                              <C>      <C>      <C>
   Net Balance, January 1.......................... $21,931  $     0    $0
    Acquisitions...................................       0   23,498     0
    Amortization...................................  (2,350)  (1,567)    0
                                                    -------  -------    --
   Net Balance, December 31........................ $19,581  $21,931    $0
                                                    =======  =======    ==
   December 31
    Accumulated Amortization....................... $(3,917) $(1,567)   $0
                                                    =======  =======    ==
</TABLE>


                                     F-31
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)

FUTURE POLICY BENEFITS AND POLICYHOLDER ACCOUNT BALANCES

Future policy benefit liabilities for participating traditional life insurance
policies are equal to the aggregate of (a) net level premium reserves for
death and endowment policy benefits (calculated based upon the nonforfeiture
interest rate, ranging from 4% to 4.5%, and mortality rates guaranteed in
calculating the cash surrender values described in such contracts), (b) the
liability for terminal dividends and (c) premium deficiency reserves, which
are established when the liabilities for future policy benefits plus the
present value of expected future gross premiums are insufficient to provide
for expected future policy benefits and expenses after deferred policy
acquisition costs are written off.

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 6%.

Future policy benefit liabilities for non-medical health insurance are
calculated using the net level premium method and assumptions as to future
morbidity, withdrawals and interest, which provide a margin for adverse
deviation. 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. The interest rates used in
establishing such liabilities range from 3% 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 3.8% to 7.25%, less expense and mortality charges and
withdrawals.

The liability for unpaid claims represents the amount estimated for claims
that have been reported but not settled and claims incurred but not reported.
Liabilities for unpaid claims are estimated based upon the Company's
historical experience and other actuarial assumptions that consider the
effects of current developments, anticipated trends and risk management
programs. Revisions of these estimates are included in operations in the year
such refinements are made.

RECOGNITION OF INSURANCE REVENUE AND RELATED BENEFITS

Premiums related to traditional life and annuity policies with life
contingencies are recognized as revenues 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 operations 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
operations include interest credited to policyholders.

DIVIDENDS TO POLICYHOLDERS

Dividends to policyholders are determined annually by the board of directors.
The aggregate amount of policyholders' 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.


                                     F-32
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)

PARTICIPATING BUSINESS

Participating business represented approximately 3.49% and 3.52% of the
Company's life insurance in force, and 8.30% and 7.96% of the number of life
insurance policies in force at December 31, 1999 and 1998, respectively.
Participating policies represented approximately 56.77%, 95.78% and 68.24% of
gross life insurance premiums, for the years ended December 31, 1999, 1998 and
1997, 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 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.

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 ACCOUNTS

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. See Note 14.

APPLICATION OF ACCOUNTING PRONOUNCEMENTS

Effective January 1, 1999, the Company adopted Statement of Position ("SOP")
98-5, Reporting on the Costs of Start-Up Activities ("SOP 98-5"). SOP 98-5
broadly defines start-up activities. SOP 98-5 requires costs of start-up
activities and organization costs to be expensed as incurred. Adoption of SOP
98-5 did not have a material effect on the Company's consolidated financial
statements.

Effective January 1, 1999, the Company adopted SOP 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 adoption of SOP 98-1 resulted in
the capitalization of $6 million of software costs which would have otherwise
been expensed in 1999.

Effective January 1, 1999, the Company adopted SOP 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. Adoption of SOP 97-3 did not have a material effect on
the Company's consolidated financial statements.

                                     F-33
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137, Accounting for Derivative Instruments
and Hedging Activities--Deferral of the Effective Date of FASB Statement No.
133 ("SFAS 137"). SFAS 137 defers the provisions of SFAS 133 until January 1,
2001. The provisions of SFAS 133 require, 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 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 in the process of
quantifying the impact of SFAS 133 on its consolidated financial statements.

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 statements.

2. NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)

The components of net investment income are as follows:

<TABLE>
<CAPTION>
                                                   YEARS ENDED DECEMBER 31,
                                                  ----------------------------
                                                    1999      1998      1997
                                                  --------  --------  --------
   <S>                                            <C>       <C>       <C>
   Fixed maturities.............................. $ 54,490  $ 53,467  $ 50,348
   Equity securities.............................   13,896    (9,118)    4,915
   Real estate...................................      831     4,149       815
   Policy loans..................................    9,157     6,855     5,081
   Cash, cash equivalents and short-term
    investments..................................    3,494       861     4,160
   Other investment income.......................   (7,529)       76       591
                                                  --------  --------  --------
   Gross investment income.......................   74,339    56,290    65,910
   Investment expenses...........................   (5,841)   (7,213)   (4,851)
                                                  --------  --------  --------
   Net Investment income......................... $ 68,498  $ 49,077  $ 61,059
                                                  ========  ========  ========
</TABLE>

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

<TABLE>
<CAPTION>
                                                     YEARS ENDED DECEMBER 31,
                                                     --------------------------
                                                      1999     1998     1997
                                                     ----------------  --------
   <S>                                               <C>     <C>       <C>
   Fixed maturities................................. $   850 $ 10,899  $  (774)
   Equity securities................................       0        0    1,040
   Other invested assets............................   2,688       (7)      (8)
                                                     ------- --------  -------
     Subtotal.......................................   3,538   10,892      258
   Less: Amounts allocable to amortization of
    deferred policy acquisition costs...............     616    5,282     (632)
                                                     ------- --------  -------
   Investment gains (losses), net................... $ 2,922 $  5,610  $   890
                                                     ======= ========  =======
</TABLE>

                                     F-34
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


Realized investment gains have been reduced by (1) deferred policy acquisition
amortization to the extent that such amortization results from realized
investment gains and losses, (2) additions to future policy benefits resulting
from the need to establish additional liabilities due to the recognition of
investment gains, and (3) additions to participating contractholder accounts
when amounts equal to such investment gains and losses are credited to the
contractholders' accounts. This presentation may not be comparable to
presentations made by other insurers.

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

<TABLE>
<CAPTION>
                                                    YEARS ENDED DECEMBER 31,
                                                    --------------------------
                                                      1999     1998     1997
                                                    --------  -------  -------
   <S>                                              <C>       <C>      <C>
   Balance at January 1...........................  $ 17,439  $17,347  $ 3,727
    Change in unrealized investment gains
     (losses).....................................   (73,813)     391   30,207
    Change in unrealized investment gains (losses)
     attributable to:
     Deferred policy acquisition costs............    33,276     (595)  (9,446)
     Deferred income tax (expense) benefit........    12,100      296   (7,141)
                                                    --------  -------  -------
   Balance at December 31.........................  $(10,998) $17,439  $17,347
                                                    ========  =======  =======
</TABLE>

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

<TABLE>
<CAPTION>
                                                  YEARS ENDED DECEMBER 31,
                                                 ----------------------------
                                                   1999      1998      1997
                                                 --------  --------  --------
   <S>                                           <C>       <C>       <C>
   Balance, end of year, comprised of:
    Unrealized investment gains (losses) on:
     Fixed maturities........................... $(35,205) $ 40,928  $ 41,706
     Equity securities..........................    3,511     1,191         0
     Other......................................        0         0        22
                                                 --------  --------  --------
                                                  (31,694)   42,119    41,728
   Amounts of unrealized investment gains
    (losses)
    Attributable to:
     Deferred policy acquisition costs..........   17,478   (15,798)  (15,202)
     Deferred income tax (expense) benefit......    3,218    (8,882)   (9,179)
                                                 --------  --------  --------
   Balance, end of year......................... $(10,998) $ 17,439  $ 17,347
                                                 ========  ========  ========
</TABLE>

                                     F-35
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


3. INVESTMENTS

FIXED MATURITIES AND EQUITY SECURITIES

The amortized cost, gross unrealized gain (loss) and estimated fair value of
fixed maturities 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, 1999
Fixed Maturities:
 U. S. Treasury Securities and
  obligations of U. S. Government
  corporations and agencies.............. $ 33,909  $    20 $    439  $ 33,490
 Foreign governments.....................   20,748      201      581    20,368
 Corporate...............................  670,602    5,074   40,237   635,439
 Mortgage-backed securities..............   44,470      934      203    45,201
 Other...................................    1,199        0        0     1,199
                                          --------  ------- --------  --------
  Total Fixed Maturities................. $770,928  $ 6,229 $ 41,460  $735,697
                                          ========  ======= ========  ========
Equity Securities:
 Common stocks...........................   19,174    4,191      680    22,685
                                          --------  ------- --------  --------
  Total Equity Securities................ $ 19,174  $ 4,191 $    680  $ 22,685
                                          ========  ======= ========  ========
</TABLE>

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-36
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


The amortized cost and estimated fair value of fixed maturities classified as
available for sale, by contractual maturity, at December 31, 1999 are shown
below.

<TABLE>
<CAPTION>
                                                            AMORTIZED ESTIMATED
                                                              COST    FAIR VALUE
                                                            --------- ----------
   <S>                                                      <C>       <C>
   Due in one year or less................................. $ 15,910   $ 15,857
   Due after one year through five years...................   92,303     90,635
   Due after five years through ten years..................  131,438    130,492
   Due after ten years.....................................  486,807    453,512
                                                            --------   --------
     Subtotal..............................................  726,458    690,496
   Mortgage-backed securities..............................   44,470     45,201
                                                            --------   --------
     Total................................................. $770,928   $735,697
                                                            ========   ========
</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.

Sales of fixed maturities and equity securities are as follows:

<TABLE>
<CAPTION>
                                                        1999     1998     1997
                                                       ------- -------- --------
   <S>                                                 <C>     <C>      <C>
   Fixed Maturities
    Proceeds.......................................... $64,925 $120,416 $110,301
    Gross realized gains.............................. $ 1,897 $ 10,901 $  1,036
    Gross realized losses............................. $ 1,047 $      2 $  1,810
   Equity Securities
    Proceeds.......................................... $ 2,491 $ 39,333 $ 32,806
    Gross realized gains.............................. $     0 $      0 $  1,344
    Gross realized losses............................. $     0 $      0 $    304
</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. The bonds and short-term investments at fair market value held by
the trust were $518,436 and $526,723, at December 31, 1999 and 1998,
respectively.

STATUTORY DEPOSITS

The Company had assets on deposit with regulatory agencies of $6,245 and
$6,245 at December 31, 1999 and 1998, respectively.

                                     F-37
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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.

Effective July 1, 1999, the Company reinsured the general account liability
for certain group pension variable contracts assumed from Sun Life Assurance
Company of Canada (U.S.). The initial liability assumed included in
Policyholder Account Balances was $53,675 at July 1, 1999, and was $44,431 at
December 31, 1999.

The effect of reinsurance on premiums earned is as follows:

<TABLE>
<CAPTION>
                                                     1999      1998      1997
                                                   --------  --------  --------
   <S>                                             <C>       <C>       <C>
   Direct premiums................................ $163,159  $110,768  $ 30,975
   Reinsurance assumed............................   57,479    58,329    62,315
   Reinsurance ceded..............................  (97,000)  (68,408)  (29,674)
                                                   --------  --------  --------
   Net premiums earned............................ $123,638  $100,689  $ 63,616
                                                   ========  ========  ========
</TABLE>

Reinsurance recoverables, included in other receivables, were $83,091 and
$103,677 at December 31, 1999 and 1998, respectively.

Reinsurance and ceded commissions payables, included in other liabilities,
were $23,400 and $21,152 at December 31, 1999 and 1998, 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,
                                                     ------------------------
                                                      1999     1998     1997
                                                     ------   ------   ------
   <S>                                               <C>      <C>      <C>
   Balance at January 1............................. $1,953   $  809    $  0
    Less: Reinsurance recoverables..................  1,565      647       0
                                                     ------   ------    ----
   Net balance at January 1.........................    388      162       0
                                                     ------   ------    ----
   Incurred related to:
    Current year....................................    472      303     173
    Prior years.....................................    (33)     (57)    (11)
                                                     ------   ------    ----
                                                        439      246     162
                                                     ------   ------    ----
   Paid related to:
    Current year....................................     23        2       0
    Prior years.....................................     19       18       0
                                                     ------   ------    ----
                                                         42       20       0
                                                     ------   ------    ----
   Balance at December 31...........................    785      388     162
    Add: Reinsurance recoverables...................  3,147    1,565     647
                                                     ------   ------    ----
   Balance at December 31........................... $3,932   $1,953    $809
                                                     ======   ======    ====
</TABLE>

                                     F-38
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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>
   1999
   Federal............................................. $20,910 $ 8,134   $29,044
   State and Local.....................................       0     300       300
                                                        ------- -------   -------
     Total............................................. $20,910 $ 8,434   $29,344
                                                        ======= =======   =======
   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
                                                        ======= =======   =======
</TABLE>

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

<TABLE>
<CAPTION>
                                                      YEARS ENDED DECEMBER 31,
                                                     -------------------------
                                                      1999     1998     1997
                                                     -------  -------  -------
   <S>                                               <C>      <C>      <C>
   Income before taxes.............................. $75,068  $24,483  $26,957
   Income tax rate..................................      35%      35%      35%
                                                     -------  -------  -------
   Expected income tax expense at federal statutory
    income tax rate.................................  26,274    8,569    9,435
   Tax effect of:
    Tax exempt investment income....................       0     (100)       0
    State and local income taxes....................     300      100   (1,013)
    Tax credits.....................................       0     (100)       0
    Prior year taxes................................     684        0        0
    Other, net......................................   2,086    4,577   (3,434)
                                                     -------  -------  -------
   Income Tax Expense............................... $29,344  $13,046  $ 4,988
                                                     =======  =======  =======
</TABLE>

                                      F-39
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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>
                                                            1999       1998
                                                          ---------  ---------
   <S>                                                    <C>        <C>
   Deferred tax assets:
    Policyholder liabilities............................. $ 233,504  $ 177,017
    Unrealized investment losses, net....................     3,218          0
    Other, net...........................................    15,035     15,453
                                                          ---------  ---------
     Total gross assets..................................   251,757    192,470
                                                          ---------  ---------
   Deferred tax liabilities:
    Investments..........................................      (216)    (1,068)
    Deferred policy acquisition costs....................  (267,249)  (208,881)
    Unrealized investment gains, net.....................         0     (8,882)
    Other, net...........................................   (22,961)   (15,973)
                                                          ---------  ---------
     Total gross liabilities.............................  (290,426)  (234,804)
                                                          ---------  ---------
   Net deferred tax liability............................ $ (38,669) $ (42,334)
                                                          =========  =========
</TABLE>

                                     F-40
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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>
                                                    DECEMBER 31,
                                         --------------------------------------
                                         PENSION BENEFITS     OTHER BENEFITS
                                         ------------------  ------------------
                                           1999      1998      1999      1998
                                         --------  --------  --------  --------
<S>                                      <C>       <C>       <C>       <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION
Projected benefit obligation at
 beginning of year.....................  $252,487  $210,590  $ 48,987  $ 46,591
Service cost...........................     8,172     6,927       973       942
Interest cost..........................    18,488    15,878     3,351     3,267
Actuarial gain.........................   (15,914)   14,831    (3,214)    1,256
Divestitures...........................         0         0         0         0
Curtailments...........................         0         0         0         0
Terminations...........................         0         0         0         0
Change in benefits.....................         0    11,935         0       (10)
Benefits paid..........................    (8,444)   (7,674)   (3,475)   (3,059)
                                         --------  --------  --------  --------
Projected benefit obligation at end of
 year..................................  $254,789  $252,487  $ 46,622  $ 48,987
                                         --------  --------  --------  --------
CHANGE IN PLAN ASSETS
Contract value of plan assets at
 beginning of year.....................  $184,803  $150,820  $      0  $      0
Actual return on plan assets...........    25,300    28,309         0         0
Employer contribution..................     7,620    12,997         0         0
Benefits paid..........................    (7,500)   (7,323)        0         0
                                         --------  --------  --------  --------
Contract value of plan assets at end of
 year..................................  $210,223  $184,803  $      0  $      0
                                         --------  --------  --------  --------
Over/(Under) funded....................  $(44,566) $(67,684) $(46,622) $(48,987)
Unrecognized net asset at transition...      (503)   (1,674)        0         0
Unrecognized net actuarial gains.......     7,681    34,350   (20,068)  (17,787)
Unrecognized prior service cost........    15,942    16,854        (8)       (9)
                                         --------  --------  --------  --------
Prepaid (accrued) benefit cost.........  $(21,446) $(18,154) $(66,698) $(66,783)
                                         ========  ========  ========  ========
Qualified plan prepaid (accrued)
 pension cost..........................  $ (2,675) $ (2,164) $      0  $      0
Non-qualified plan prepaid (accrued)
 pension cost..........................   (18,771)  (15,990)        0         0
                                         --------  --------  --------  --------
Prepaid (accrued) benefit cost.........  $(21,446) $(18,154) $      0  $      0
                                         ========  ========  ========  ========
</TABLE>

                                     F-41
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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
                          ------------------  ------------------  ------------------
                            1999      1998      1999      1998      1999      1998
                          --------  --------  --------  --------  --------  --------
<S>                       <C>       <C>       <C>       <C>       <C>       <C>
Aggregate projected
 benefit obligation.....  $224,653  $226,717  $ 30,136  $ 25,770  $254,789  $252,487
Aggregate contract value
 of plan assets
 (principally Company
 contracts).............   210,223   184,803         0         0   210,223   184,803
                          --------  --------  --------  --------  --------  --------
Over/(Under) funded.....  $(14,430) $(41,914) $(30,136) $(25,770) $(44,566) $(67,684)
                          ========  ========  ========  ========  ========  ========
</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>
                                                          PENSION      OTHER
                                                         BENEFITS    BENEFITS
                                                         ----------  ----------
                                                         1999  1998  1999  1998
                                                         ----  ----  ----  ----
   <S>                                                   <C>   <C>   <C>   <C>
   Weighted average assumptions as of December 31,
   Discount rate........................................ 7.00% 7.25% 7.75% 7.00%
   Expected return on plan assets....................... 8.50% 8.50%   --    --
   Rate of compensation increase........................ 5.50% 4.50%   --    --
</TABLE>

The assumed health care cost trend rate used in measuring the accumulated
nonpension postretirement benefit obligation was generally 7.00% in 1999,
gradually decreasing to 5.00% over five years and generally 7.40% in 1998,
gradually decreasing to 5.00% over five 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...    13%     (10%)
   Effect on accumulated postretirement benefit obligation...    11%     (10%)
</TABLE>

The components of periodic benefit costs were as follows:

<TABLE>
<CAPTION>
                                 PENSION BENEFITS            OTHER BENEFITS
                            ----------------------------  ---------------------
                              1999      1998      1997     1999    1998   1997
                            --------  --------  --------  ------  ------ ------
   <S>                      <C>       <C>       <C>       <C>     <C>    <C>
   Service cost............ $  8,172  $  6,927  $  5,310  $  973  $  942 $  885
   Interest cost...........   18,488    15,878    13,958   3,351   3,267  3,707
   Expected return on plan
    assets.................  (15,698)  (12,866)  (22,250)      0       0      0
   Net amortization and
    deferrals..............    1,322       669    11,092    (934)    167   (871)
                            --------  --------  --------  ------  ------ ------
   Net periodic benefit
    cost................... $ 12,284  $ 10,608  $  8,110  $3,390  $4,376 $3,721
                            ========  ========  ========  ======  ====== ======
</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 $2,187, $2,252 and $1,588 for the years ended
December 31, 1999, 1998 and 1997, respectively.

                                     F-42
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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>
                                                                         GROSS
                                                      RENTAL SUB-RENTAL  RENTAL
                                                      INCOME   INCOME   EXPENSE
                                                      ------ ---------- --------
   <S>                                                <C>    <C>        <C>
   2000..............................................  $31    $ 7,845   $ 14,738
   2001..............................................    0      7,854     14,042
   2002..............................................    0      7,864     13,413
   2003..............................................    0      8,026     13,822
   2004..............................................    0      8,206     12,836
   Thereafter........................................    0     26,319    117,722
                                                       ---    -------   --------
     Total...........................................  $31    $66,114   $186,573
                                                       ===    =======   ========
</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 loan was collateralized by sales
loads and surrender charges collected on a defined block of variable life
insurance policies issued by the Company. Repayment was structured in a manner
to result in repayment over a term of five years or less. The Company repaid
the entire outstanding balance of the loan in January 1999. Repayments of
principal and interest of $13,310, $8,612 and $3,155 were made during 1999,
1998 and 1997, respectively. The interest rate applied was 6.4%, 6.4% and 5.8%
at January 31, 1999 and December 31, 1998 and 1997, respectively.

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 the 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 $75,053. No repayments were made during 1999,
1998 and 1997, respectively.

9. COMMITMENTS AND 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 for a portion of the Company's
premium taxes. The Company paid guaranty fund assessments of approximately,
$197, $204, and $43 in 1999, 1998, and 1997, respectively, of which $197,
$203, and $33 were to be credited against premium taxes.

                                     F-43
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


Various litigation, claims and assessments against the Company, in addition to
those otherwise provided for in the Company's consolidated financial
statements, have arisen in the course of the Company's business, including,
but not limited to, in connection with its activities as an insurer, employer,
investor, investment advisor and taxpayer. Further, state insurance regulatory
authorities and other Federal and state authorities regularly make inquiries
and conduct investigations concerning the Company's compliance with applicable
insurance and other laws and regulations.

In some of the matters referred to above, large and/or indeterminate amounts,
including punitive damages and treble damages, are sought. While it is not
feasible to predict or determine the ultimate outcome of all pending
investigations and legal proceedings or provide reasonable ranges of potential
losses, it is the opinion of the Company's management that their outcomes,
after consideration of available insurance and reinsurance and the provisions
made in the Company's consolidated financial statements, are not likely to
have a material adverse effect on the Company's consolidated financial
position. However, given the large and/or indeterminate amounts sought in
certain of these matters and the inherent unpredictability of litigation, it
is possible that an adverse outcome in certain matters could, from time to
time, have a material adverse effect on the Company's operating results or
cash flows in particular annual periods.

10. OTHER EXPENSES

Other operating costs and expenses consisted of the following:

<TABLE>
<CAPTION>
                                                    YEARS ENDED DECEMBER 31,
                                                -------------------------------
                                                  1999       1998       1997
                                                ---------  ---------  ---------
<S>                                             <C>        <C>        <C>
Compensation................................... $  96,887  $  86,822  $  58,754
Commissions....................................   205,463    166,218     77,351
Interest and debt expense......................     5,493      9,374      6,750
Amortization of policy acquisition costs.......    29,831     31,874     17,091
Capitalization of policy acquisition costs.....  (216,913)  (182,943)  (157,670)
Rent expense, net of sub-lease income..........     5,550      4,252      4,473
Insurance taxes, licenses, and fees............    21,253     21,802     15,002
Other..........................................   234,317    179,260    122,591
                                                ---------  ---------  ---------
  Total........................................ $ 381,881  $ 316,659  $ 144,342
                                                =========  =========  =========
</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.

                                     F-44
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


Amounts related to the Company's financial instruments are as follows:

<TABLE>
<CAPTION>
                                                             CARRYING ESTIMATED
                                                              VALUE   FAIR VALUE
                                                             -------- ----------
   <S>                                                       <C>      <C>
   DECEMBER 31, 1999:
   ASSETS
   Fixed maturities......................................... $735,697  $735,697
   Equity securities........................................   22,685    22,685
   Policy loans.............................................  181,995   181,995
   Short-term investments...................................   62,619    62,619
   Cash and cash equivalents................................   84,371    84,371
   LIABILITIES
   Policyholder account balances............................   84,037    82,765
   Other policyholder funds.................................      525       525
   Short and long-term debt.................................   75,053    75,053

<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.................................      646       646
   Short and long-term debt.................................   82,855    82,855
</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.

                                     F-45
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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.

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,
                                               -------------------------------
                                                 1999       1998       1997
                                               ---------  ---------  ---------
   <S>                                         <C>        <C>        <C>
   Statutory surplus.......................... $ 399,864  $ 456,525  $ 307,290
   Adjustments to GAAP for:
     Future policy benefits and policyholders
      account balances........................  (435,980)  (336,821)  (279,510)
     Deferred policy acquisition costs........   930,703    710,961    565,769
     Deferred federal income taxes............   (38,669)   (42,334)   (42,066)
     Valuation of investments.................   (46,890)    53,514     56,873
     Statutory asset valuation reserves.......    13,514     10,636      8,388
     Statutory interest maintenance reserve...       462        816        571
     Surplus notes............................   (75,053)   (69,560)   (64,016)
     Receivables from reinsurance
      transactions............................     5,049     26,004     27,519
     Other, net...............................   100,303     35,330     52,724
                                               ---------  ---------  ---------
   GAAP equity................................ $ 853,303  $ 845,071  $ 633,542
                                               =========  =========  =========
</TABLE>

<TABLE>
<CAPTION>
                                                 YEARS ENDED DECEMBER 31,
                                               -------------------------------
                                                 1999       1998       1997
                                               ---------  ---------  ---------
   <S>                                         <C>        <C>        <C>
   Statutory net income (loss)................ $ (40,928) $ (28,043) $ (37,358)
   Adjustments to GAAP for:
     Future policy benefits and policyholders
      account balances........................  (295,868)  (196,754)  (311,588)
     Deferred policy acquisition costs........   186,497    135,788    139,947
     Deferred federal income taxes............      (580)       688      3,801
     Valuation of investments.................    13,681    (13,490)         0
     Statutory interest maintenance reserve...      (354)       245        342
     Other, net...............................   183,276    113,003    226,825
                                               ---------  ---------  ---------
   GAAP net income............................ $  45,724  $  11,437  $  21,969
                                               =========  =========  =========
</TABLE>

                                     F-46
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


13. RELATED PARTY TRANSACTIONS

MetLife and the Company have 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 $160,792, $193,641 and $186,757 including accruals
for administrative services on NEMLICO administered contracts for 1999, 1998,
and 1997, respectively. In addition, $9,442, $14,123 and $600 for 1999, 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.

During 1999, the Company paid $9,055 of preferred stock dividends to MetLife
Credit Corporation.

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. The Company paid
$2,730 and $6,166 in 1999 and 1998, respectively under these agreements.

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 $4,219, $2,340
and $2,340 in 1999, 1998 and 1997, respectively.

Commissions earned by NES from sales of New England Funds (NEF) and State
Street Research (SSR) shares, subsidiaries of MetLife, for 1999 were $12,736
and $751, respectively. Included in accrued income at December 31, 1999, were
amounts receivable for sales-based commissions from NEF and SSR totaling $312
and $4, respectively. In 1999, NES earned asset-based income of $11,184 and
$183 on average assets of approximately $4,500,000 and $101,000 under
management with NEF and SSR, respectively. Included in accrued income at
December 31, 1999 were amounts receivable for asset-based commissions from NEF
and SSR totaling $307 and $0, respectively.

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
$75,053 and $69,560 at December 31, 1999 and 1998, respectively.

                                     F-47
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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.

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 $4,840,029
and $3,258,383 at December 31, 1999 and 1998, 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 $36,934, $30,714 and $12,642 in 1999, 1998 and 1997,
respectively.

15. YEAR 2000

The Year 2000 issue was 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 costs associated with additional mainframe capacity necessary to
accommodate a four-digit 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 major system
failures 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 implemented a plan to resolve the issue. There can be
no assurances that the Year 2000 plan of the Company or that of its vendors or
third parties have resolved all Year 2000 issues. Further, there can be no
assurance that there will not be any future system failure or that such
failure, if any, will not have a material impact on the operations of the
Company.

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, medical, and 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,
1999, 1998 and 1997. 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-48
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


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, 1999
                          -------------------------------------------------------------------
                                                             GROUP     CORPORATE
                          INDIVIDUAL  INDIVIDUAL   GROUP     LIFE,        AND
                             LIFE      ANNUITY    PENSION     A&H     SUBSIDIARIES   TOTAL
                          ----------  ----------  --------  --------  ------------ ----------
<S>                       <C>         <C>         <C>       <C>       <C>          <C>
REVENUES
Premiums................  $   63,358  $        0  $     15  $ 28,652    $ 31,613   $  123,638
Universal Life and
 Investment-Type Product
 Policy Fees............     199,701      16,771     4,369         0           0      220,841
Net Investment Income...     (31,181)       (108)      (13)      167      99,633       68,498
Investment Gains
 (Losses), Net..........         402           1         0        (1)      2,520        2,922
Commissions, Fees and
 Other Revenues.........      25,376       6,708     3,005    34,610     196,192      265,891
                          ----------  ----------  --------  --------    --------   ----------
  Total Revenues........     257,656      23,372     7,376    63,428     329,958      681,790
BENEFITS AND OTHER
 DEDUCTIONS
Policyholder Benefits...     124,727       4,624       113    23,814      40,015      193,293
Interest Credited to
 Policyholder Account
 Balances...............       8,811       1,623     1,220        30        (963)      10,721
Policyholder Dividends..       1,739           0         0       (32)     19,120       20,827
Other Operating Costs
 and Expenses...........     128,466      21,826     6,196    36,326     189,067      381,881
                          ----------  ----------  --------  --------    --------   ----------
  Total Benefits and
   Other Deductions.....     263,743      28,073     7,529    60,138     247,239      606,722
Income from Operations
 Before Income Taxes....      (6,087)     (4,701)     (153)    3,290      82,719       75,068
Income Taxes............       1,357      (1,563)      (26)    1,244      28,332       29,344
                          ----------  ----------  --------  --------    --------   ----------
Net Income..............  $   (7,444) $   (3,138) $   (127) $  2,046    $ 54,387   $   45,724
                          ==========  ==========  ========  ========    ========   ==========
Assets
Deferred Policy
 Acquisition Costs......  $  771,879  $   63,123  $ 10,499  $  8,539    $ 76,663   $  930,703
Separate Account Assets.   2,704,767   1,398,993   517,920   218,349           0    4,840,029
Liabilities
Policyholder
 Liabilities............     535,662      43,674    45,407    43,936     517,949    1,186,628
Separate Account
 Liabilities............   2,704,767   1,398,993   517,920   218,349           0    4,840,029
</TABLE>

                                     F-49
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


<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 Revenues.........       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
Liabilities
Policyholder
 Liabilities............     380,586     38,912       768    19,233     519,353      958,852
Separate Account
 Liabilities............   2,073,552    835,648   235,467   113,716           0    3,258,383
</TABLE>

                                      F-50
<PAGE>


NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)


<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 Revenues.........       9,542     3,253       266    4,383       10,858       28,302
                          ----------  --------  --------  -------     --------   ----------
  Total Revenues........     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
Liabilities
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>

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-51
<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:

     Statements of Assets and Liabilities as of September 30, 2000 and
     December 31, 1999.

     Statements of Operations for the nine month period ending September 30,
     2000 and the year ended December 31, 1999.

     Statements of Changes in Net Assets for the nine month period ending
     September 30, 2000 and the years ended December 31, 1999 and 1998.

     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 September 30, 2000 and December 31, 1999
     and 1998.

     Consolidated Statements of Income and Comprehensive Income for the nine
     month period ending September 30, 2000 and the years ended December 31,
     1999, 1998 and 1997.

     Consolidated Statements of Equity for the nine month period ending
     September 30, 2000 and the years ended December 31, 1999, 1998 and 1997.

     Consolidated Statements of Cash Flows for the nine month period ending
     September 30, 2000 and the years ended December 31, 1999, 1998 and 1997.


     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.

(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.
<PAGE>

   (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.

   (v) Form of Participation Agreement among Metropolitan Series Fund, Inc.,
Metropolitan Life Insurance Company and New England Life Insurance Company is
incorporated by reference to Post-Effective Amendment No. 26 to the Registration
Statement on Form N-1A (File No. 2-80751) filed April 6, 2000.

   (vi) Participation Agreement among Metropolitan Series Fund, Inc.,
Metropolitan Life Insurance Company and New England Life Insurance Company.

   (vii)  Participation Agreement among New England Zenith Fund, New England
Investment Management, Inc., New England Securities Corporation and New England
Life Insurance Company.

(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) Forms of Endorsement (Dollar Cost Averaging and 72(s)) are incorporated
herein by reference to Post-Effective Amendment No. 9 to the Registration
Statement on Form N-4 (No. 33-85442) filed on April 28, 1999.

                                     III-2
<PAGE>

   (vi) Form of Endorsements (TSA and Death Benefit) are incorporated herein by
reference to Post-Effective Amendment No. 10 to the Registration Statement on
Form N-4 (No. 33-85442) filed on April 27, 2000.

   (vii)  Form of Endorsement (Extension of Maturity Age- Pennsylvania).

(5)  (i)  Application is incorporated herein by reference to Registration
Statement on Form
N-4 (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.

   (iii)  Additional Application is incorporated herein by reference to Post-
Effective Amendment No. 10 to the Registration Statement on Form N-4 (No. 33-
85442) filed on April 27, 2000.

(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 are
incorporated herein by reference to Post-Effective Amendment No. 9 to the
Registration Statement on Form N-4 (No. 33-85442) filed on April 28, 1999.

(7)  None

(8)  None

(9)  Opinion and consent of Anne M. Goggin, 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.

                                     III-3
<PAGE>

(14) Powers of Attorney are incorporated herein by reference to the Registration
Statement on Form N-4 ( File No. 333-51676) filed on December 12, 2000.

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

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 Global Television
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
Covington & Burling
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

                                     III-4
<PAGE>

           Name and Principal                      Positions and Offices
            Business Address                          with Depositor


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

Catherine A. Rein                                        Director
Metropolitan Property and Casualty
700 Quaker Lane
Warwick, RI  02887

Rand N. Stowell                                          Director
P. O. Box 60
Weld, ME  04285

Lisa M. Weber                                            Director
Metropolitan Life Insurance
Company
One Madison Avenue
New York, NY 10010

                                          Chairman, President and Chief
James M. Benson*                          Executive Officer


David W. Allen*                           Senior Vice President

Pauline V. Belisle*                       Senior 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)

                                     III-5
<PAGE>

Anne M. Goggin*                           Senior Vice President and
                                          General Counsel

Daniel D. Jordan*                         Second Vice President, Counsel,
                                          Secretary and Clerk

Alan C. Leland, Jr.*                      Senior Vice President

George J. Maloof*                         Senior Vice President

Kenneth D. Martinelli*                    Senior Vice President

Thomas W. McConnell*                      Senior Vice President

Hugh C. McHaffie*                         Senior Vice President

Stephen J. McLaughlin*                    Senior Vice President

Thomas W. Moore*                          Senior Vice President

David Y. Rogers*                          Executive Vice President, Chief
                                          Financial Officer and Chief Accounting
                                          Officer

John G. Small, Jr.*                       President, New England Services
                                          (a business unit of NELICO)

*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 registrant is a separate account of New England Life Insurance Company
under Massachusetts Insurance law. New England Life Insurance Company is a
wholly-owned, indirect subsidiary of Metropolitan Life Insurance Company, which
is organized under the laws of New York. Metropolitan Life Insurance Company is
a wholly-owned subsidiary of MetLife, Inc. a publicly traded company. The
following outline indicates those persons who are controlled by or under common
control with Metropolitan Life Insurance Company:



                                     III-6

<PAGE>

              ORGANIZATIONAL STRUCTURE OF METLIFE AND SUBSIDIARIES
                            AS OF SEPTEMBER 30, 2000

Metropolitan Life Insurance Company ("Metropolitan") is a wholly-owned
subsidiary of MetLife, Inc, a publicly-traded company. The following is a list
of subsidiaries of Metropolitan updated as of September 30, 2000. Metropolitan
sold its interests in Nvest Corporation and all of Nvest Corporation affiliates
on October 30, 2000. Nvest Corporation and its affiliates and the note following
the list that refers to Nvest Corporation and its affiliates are marked with an
asterisk (*). 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 the irrespective
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. (DE)

     1.   Metropolitan Property and Casualty Insurance Company (RI)

          a.   Metropolitan Group Property and Casualty Insurance Company (RI)

               i.   Metropolitan Reinsurance Company (U.K.) Limited (Great
                    Britain)

          b.   Metropolitan Casualty Insurance Company (RI)

          c.   Metropolitan General Insurance Company (RI)

          d.   Metropolitan Direct Property and Casualty Insurance Company (GA)

          e.   MetLife Auto & Home Insurance Agency, Inc. (RI)

          f.   Metropolitan Lloyds, Inc. (TX)

          g.   Met P&C Managing General Agency, Inc. (TX)

          h.   Economy Fire & Casualty Company (RI)

               i.   Economy Preferred Insurance Company (RI)

               ii.  Economy Premier Assurance Company (RI)

     2.   Metropolitan Insurance and Annuity Company (DE)

          a.   MetLife Europe I, Inc. (DE)

          b.   MetLife Europe II, Inc. (DE)

          c.   MetLife Europe III, Inc. (DE)

          d.   MetLife Europe IV, Inc. (DE)

          e.   MetLife Europe V, Inc. (DE)

     3.   MetLife General Insurance Agency, Inc. (DE)

          a.   MetLife General Insurance Agency of Alabama, Inc. (AL)

          b.   MetLife General Insurance Agency of Kentucky, Inc. (KY)

          c.   MetLife General Insurance Agency of Mississippi, Inc. (MS)

          d.   MetLife General Insurance Agency of Texas, Inc. (TX)

          e.   MetLife General Insurance Agency of North Carolina, Inc. (NC)
<PAGE>

          f.   MetLife General Insurance Agency of Massachusetts, Inc. (MA)

     4.   Metropolitan Asset Management Corporation (DE)

          a.   MetLife Capital, Limited Partnership (DE). Partnership interests
               in MetLife Capital, Limited Partnership are Limited Partnership
               held by Metropolitan (90%) and General Partnership by
               Metropolitan Asset Management Corporation (10%).

          b.   MetLife Capital Credit L.P. (Delaware). Partnership interests in
               MetLife Capital Credit L.P. are Limited Partnership held by
               Metropolitan (90%) and General Partnership by Metropolitan Asset
               Management Corporation (10%).

               1.   MetLife Capital CFLI Holdings, LLC (DE)

                    a.   MetLife Capital CFLI Leasing, LLC (DE)

          c.   MetLife Financial Acceptance Corporation (DE). Metropolitan Asset
               Management Co. Inc. holds 100% of the voting preferred stock of
               MetLife Financial Acceptance Corporation. Metropolitan Property
               and Casualty Insurance Company holds 100% of the non voting
               common stock of MetLife Financial Acceptance Corporation.

          d.   MetLife Investments Limited (United Kingdom). 23rd Street
               Investments, Inc. holds one share of MetLife Investments Limited.

          e.   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.

          f.   MetLife Investments, S.A. (Argentina) 23rd Street Investment,
               Inc. holds one share of MetLife Investments, S.A.

     5.   SSRM Holdings, Inc. (DE)

          a.   State Street Research & Management Company (DE) is the
               sub-investment manager for the State Street Research Aggressive
               Growth Portfolio, State Street Research Diversified Portfolio,
               State Street Research Growth Portfolio, State Street Research
               Income Portfolio and State Street Research Aurora Small Cap Value
               Portfolio of Metropolitan Series Fund, Inc.

               i.   State Street Research Investment Services, Inc. (MA)

          b.   SSR Realty Advisors, Inc. (DE)

               i.   Metric Management Inc. (DE)

               ii.  Metric Property Management, Inc. (DE)

                    1.   Metric Realty (DE). SSR Realty Advisors, Inc. and
                         Metric Property Management, Inc. each hold 50% of the
                         common stock of Metric Realty.

                    2.   Metric Colorado, Inc. (CO). Metric Property Management,
                         Inc. holds 80% of the common stock of Metric Colorado,
                         Inc.

               iii. Metric Capital Corporation (CA)

               iv.  Metric Assignor, Inc. (CA)

               v.   SSR AV, Inc. (DE)

     6.   MetLife Holdings, Inc. (DE)

          a.   MetLife Funding, Inc. (DE)

          b.   MetLife Credit Corp. (DE)
<PAGE>

     7.   Metropolitan Tower Realty Company, Inc. (DE)

     8.   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 Financial Agency, Inc. (TX)

     9.   Natiloportem Holdings, Inc. (DE)

          a.   Services Administrativos Gen, S.A. de C.V. One Share of Servicos
               Administrativos Gen. S.A. de C.V. is held by a nominee of
               Natiloportem Holdings, Inc.

     10.  Metlife CC Holding Company (DE)

          a.   Conning Corporation (MO) 60.4% of the voting shares of Conning
               Corporation are held by MetLife CC Holding Company and 39.6% are
               held by Gen Am Holding Company.

               i.   Conning, Inc. (DE)

                    (1.) Conning & Company (CT)

                    (a)  Conning Asset Management Company (MO)

                    (b)  American Horizon Holdings Inc. (DE) 28.6% of the shares
                         of American Horizon Holdings Inc. are held by
                         Metropolitan Property and Casualty Insurance Company.

                         (i)  American Horizon Services, Inc. (DE)

                         (ii) American Horizon Property & Casualty Insurance
                              Company. (IL)

                              (1.) Texas American Horizon Insurance Services
                                   Agency, Inc. (TX)

                         (iii) American Horizon Insurance Company (AZ)

                              (1.) American Horizon General Agency, Inc. (FL)

     B.   Metropolitan Tower Life Insurance Company (DE)

     C.   MetLife Security Insurance Company of Louisiana (LA)

     D.   MetLife Texas Holdings, Inc. (DE)

          1.   Texas Life Insurance Company (TX)

               a.   Texas Life Agency Services, Inc. (TX)

               b.   Texas Life Agency Services of Kansas, Inc. (KS)

     E.   MetLife Securities, Inc. (DE)

     F.   23rd Street Investments, Inc. (DE)

          1.   Mezzanine Investment Limited Partnership-BDR (DE). Metropolitan
               Life Insurance Company holds a 99% limited partnership interest
               in Mezzanine Investment Limited Partnership-BDR.

          2.   Mezzanine Investment Limited Partnership-LG (DE). 23rd Street
               Investments, Inc. is a 1% partner of Mezzanine Investment Limited
               Partnership-LG. Metropolitan Life Insurance
<PAGE>

               Company holds a 99% limited partnership interest in Mezzanine
               Investment Limited Partnership-LG.

               a.   Coating Technologies International, Inc (DE).

          3.   Mezzanine Investment Limited Partnership-8. (DE) 23rd Street
               Investments, Inc. is a 1% partner of Mezzanine Investment Limited
               Partnership-8. Metropolitan Life Insurance Company holds a 99%
               limited partnership interest in Mezzanine Investment Limited
               Partnership-8.

     G.   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)

     H.   MetLife Saengmyoung Insurance Company Ltd. (Korea).

     I.   Metropolitan Life Seguros de Vida S.A. (Argentina)

     J.   Metropolitan Life Seguros de Retiro S.A. (Argentina).

     K.   MetLife Holdings Luxembourg S.A. (Luxembourg)

     L.   Metropolitan Life Holdings, Netherlands BV (Netherlands)

     M.   MetLife International Holdings, Inc. (DE)

          1.   MetLife Insurance Company of the Philippines, Inc. (Philippines).

     N.   Metropolitan Life Insurance Company of Hong Kong Limited (Hong Kong)

     O.   Metropolitan Marine Way Investments Limited (Canada)

     P.   P.T. MetLife Sejahtera (Indonesia) Shares of P.T. MetLife Sejahtera
          are held by Metropolitan (94.3%) and by an entity (5.7%) unaffiliated
          with Metropolitan.

     Q.   Seguros Genesis S.A. (Mexico) Metropolitan holds 85.49%, Metropolitan
          Tower Corp. holds 7.31% and Metropolitan Asset Management Corporation
          holds 7.20%.

     R.   Metropolitan Life Seguros de Vida S.A. (Uruguay).

     S.   Metropolitan Life Seguros E Previdencia Privada S.A. (Brazil)

     T.   MetLife (India) Private Ltd.

     U.   Hyatt Legal Plans, Inc. (DE)

          1.   Hyatt Legal Plans of Florida, Inc. (FL)

     V.   One Madison Merchandising L.L.C. (CT) Ownership of membership
          interests in One Madison Merchandising L.L.C. is as follows:
          Metropolitan Life Insurance Company owns 99% and Metropolitan Tower
          Corp. owns 1%.

     W.   Metropolitan Realty Management, Inc. (DE)

          1.   Edison Supply and Distribution, Inc. (DE)

          2.   Cross & Brown Company (NY)

               a.   CBNJ, Inc. (NJ)

     X.   MetPark Funding, Inc. (DE)

     Y.   Transmountain Land & Livestock Company (MT)

     Z.   MetLife Trust Company, National Association. (United States)
<PAGE>

     A.A. Benefit Services Corporation (GA)

     A.B. G.A. Holding Corporation (MA)

     A.C. CRH., Co, Inc. (MA)

     A.D. 334 Madison Euro Investments, Inc.

          1.   Park Twenty Three Investments Company* 1% Voting Control of Park
               Twenty Three Investment Company is held by St. James Fleet
               Investments Two Limited

               a.   Convent Station Euro Investments Four Company. 1% voting
                    control of Convert Station Euro Investments Four Company
                    (United Kingdom) is held by 334 Madison Euro Investments,
                    Inc. as nominee for Park Twenty Three Investments Company.

     A.E. L/C Development Corporation (CA)

     A.F. One Madison Investments (Cayco) Limited (Cayman Islands). 1% Voting
          Control of One Madison Investment (Cayco) Limited is held by Convent
          Station Euro Investments Four Company.

     A.G. New England Portfolio Advisors, Inc. (MA)

     A.H. 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.I. Grand Cathay Securities Investment Trust Co. Ltd. (Hong Kong)
          Metropolitan Life Insurance Company owns 20% of Grand Cathay
          Securities Investment Trust Co. Ltd. (*Nvest Companies L.P. owns
          14.81% of voting control of Grand Cathay Securities Investment Trust
          Co., Ltd.)

     A.J. 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.K. 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.L. St. James Fleet Investments Two Limited (Cayman Islands). Metropolitan
          Life Insurance Company owns 34% of St. James Fleet Investments Two
          Limited.

     A.M. 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 Idaho, Inc. (ID)

                         (4)  Hereford Insurance Agency of Minnesota, Inc. (MN)

                         (5)  Hereford Insurance Agency of New Mexico, Inc. (NM)

                         (6)  Hereford Insurance Agency of Wyoming, Inc (WY).

                    ii.  TNE Information Services, Inc. (MA)

                         (1)  First Connect Insurance Network, Inc. (DE)

                         (2)  Interactive Financial Solutions, Inc. (MA)
<PAGE>

                    iii. 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)

                    iv.  New England Investment Management Inc.

               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 47.10% 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)  *Reich & Tang Asset Management.
                         R & T Asset Management, Inc. holds a 0.5% general
                         partner interest and NEIC Holdings, Inc. hold a 99.5%
                         limited partner interest in Reich & Tang Asset
                         Management, L.P.

                    (c)  *Reich & Tang Services, Inc. (DE)

               (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.

                         i.   *Loomis Sayles (Australia) Holdings, LLC
                              (1) Loomis Sayles (Australia) Pty Limited

                         ii.  *Loomis Sayles Distributors, L.P.

                         iii. *Loomis Sayles Distributors, Inc.
<PAGE>

                         iv.  *Loomis Sayles (Euro) Limited

                   (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)

                         (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 interest

               (8)  *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.
<PAGE>

                    (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.

                    (c)  *Nvest Services Company, Inc.

               (9)  *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.

                    (b)  *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.

                         (i)  *AEW II Corporation (MA)

                         (ii) *AEW Partners III, Inc. (DE)

                         (iii) *AEW Partners IV, Inc.

                         (iv) *AEW TSF, Inc. (DE)

                         (v)  *AEWPN, LLC (DE)

                         (vi) *AEW Curzon Limited

                         (vii) *AEW Investment Group, Inc. (MA)

                              (1)  *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.

                              (2)  *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.

                              (3)  *AEW Real Estate Advisors, Inc. (MA)

                                   (i)  *AEW Advisors, Inc. (MA)

                                   (ii) *Copley Properties Company, Inc. (MA)

                                   (iii) *Copley Properties Company II, Inc.
                                         (MA)

                                   (iv) *Copley Properties Company III, Inc.
                                        (MA)

                                   (v)  *Fourth Copley Corp. (MA)

                                   (vi) *Fifth Copley Corp. (MA)

                                   (vii) *Sixth Copley Corp. (MA)

                                   (viii) *Seventh Copley Corp. (MA).

                                   (ix) *Eighth Copley Corp. (MA).

                                   (x)  *Second Income Corp. (MA).

                                   (xi) *Third Income Corp. (MA).

                                   (xii) *Fourth Income Corp. (MA).
<PAGE>

                                          (xiii) *Third Singleton Corp. (MA).

                                          (xiv) *Fourth Singleton Corp. (MA)

                                     (xv) *Fifth Singleton Corp. (MA)

                                     (xvi) *Sixth Singleton Corp. (MA).

                                     (xvii) *BCOP Associates L.P. (MA) AEW Real
                                            Estate Advisors, Inc. holds a 1%
                                            general partner interest in BCOP
                                            Associates L.P.

                                (4)  *CREA Western Investors I, Inc. (MA)

                                (5)  *CREA Investors Santa Fe Springs, Inc. (MA)

                         (viii) *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.

                         (ix) *AEW Hotel Investment Corporation (MA)

                              (1.) *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) *Nvest Associates, Inc.

                    (11) *Snyder Capital Management, Inc.

                         (a)  *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.

                    (12) *Jurika & Voyles, Inc.

                         (a)  *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.

                    (13) *Nvest Partnerships, LLC ( )

                    (14) *Kobrick Funds LLC

          A.N. GenAmerica Financial Corporation (MO)

               1.   General American Life Insurance Company (MO)

                    a.   Paragon Life Insurance Company (MO)

                    b.   Security Equity Life Insurance Company (NY)

                    c.   Cova Corporation (MO)

                         i.   Cova Financial Services Life Insurance Company
                              (MO)

                              (1)  Cova Financial Life Insurance Company (CA)

                              (2)  First Cova Life Insurance Company (NY)

                         ii.  Cova Life Management Company (DE)

                              (1)  Cova Investment Advisory Corporation (IL)

                              (2)  Cova Investment Allocation Corporation (IL)
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                              (3)  Cova Life Sales Company (DE)

                              (4)  Cova Life Administration Services Company
                                   (IL)

                    d.   General Life Insurance Company (TX)

                         i.   General Life Insurance Company of America (IL)

                    e.   Equity Intermediary Company (MO)

                         i. Reinsurance Group of America, Incorporated. (MO)
                         9.6% of the voting shares of Reinsurance Group of
                         America, Incorporated is held directly by Metropolitan
                         Life Insurance Company. 48.3% is held by GenAmerica
                         Financial Corporation.

                              (1)  Reinsurance Company of Missouri Incorporated
                                   (MO)

                                   a.   RGA Reinsurance Company (MO)

                                   b.   Fairfield Management Group, Inc. (MO)

                                        i.   Reinsurance Partners, Inc. (MO)

                                        ii.  Great Rivers Reinsurance
                                             Management, Inc. (MO)

                                        iii. RGA (U.K.) Underwriting Agency
                                             Limited (United Kingdom)

                              (2)  Triad Re, Ltd. (Barbados) Reinsurance Group
                                   of America, Incorporated owns 100% of the
                                   preferred stock of Triad RE, Ltd. and 67% of
                                   the common stock.

                              (3)  RGA Americas Reinsurance Company, Ltd.
                                   (Barbados)

                              (4)  RGA Reinsurance Company (Barbados) Ltd.
                                   (Barbados)

                                   (a)  RGA Financial Group, L.L.C. (DE)

                              (5)  RGA International Ltd. (Canada)

                                   (a)  RGA Financial Products Limited (Canada)

                                   (b)  RGA Canada Management Company, Ltd.
                                        (Canada)

                                        (i)  RGA Life Reinsurance Company of
                                             Canada (Canada)

                              (6)  Benefit Resource Life Insurance Company
                                   (Bermuda) Ltd. (Bermuda)

                              (7)  RGA Holdings Limited (United Kingdom)

                                   (a)  RGA Managing Agency Limited (United
                                        Kingdom)

                                   (b)  RGA Capital Limited (United Kingdom)

                                   (c)  RGA Reinsurance (UK) Limited (South
                                        America)

                              (8)  RGA South African Holdings (Pty) Ltd. (South
                                   America)

                                   (a)  RGA Reinsurance Company of South Africa
                                        Limited (Australia)

                              (9)  RGA Australian Holdings Pty Limited
                                   (Australia)

                                   (a)  RGA Reinsurance Company of Australia
                                        Limited (Australia)

                              (10) General American Argentina Seguros de Vida,
                                   S.A. (Argentina)

                              (11) RG