<PAGE>
Rule 485(b)
Registration No. 2-39334
File No. 811-2224
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _______ [_]
Post-Effective Amendment No. 39 [X]
-------
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 24 [X]
----
MML SERIES INVESTMENT FUND
--------------------------
(Exact Name of Registrant Specified in Charter)
1295 State Street, Springfield, Massachusetts 01111
---------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code: (413) 788-8411
--------------
Name and Address of Agent for Service:
--------------------------------------
Stephen L. Kuhn, Esq.
Vice President and Secretary
MML Series Investment Fund
1295 State Street
Springfield, MA 01111
Copy to:
J.B. Kittredge, Esq.
Ropes & Gray
One International Place
Boston, MA 02110
Approximate Date of Proposed Public Offering: As soon as practical after the
effective date of this
Registration Statement
It is proposed that this filing will become effective (check appropriate line)
[_] immediately upon filing pursuant to paragraph (b)
[X] on May 1, 1998 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on [date] pursuant to paragraph (a)(1) of rule 485
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on [date] pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
[_] this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
The Index to Exhibits is located at Page 1 of Part C (Item 24(b)).
<PAGE>
TO: THE SECURITIES AND EXCHANGE COMMISSION
Registrant submits this Post-Effective Amendment No. 39 to its Registration
Statement No. 2-39334 under the Securities Act of 1933 and this Amendment No. 24
to its Registration Statement No. 811-2224 under the Investment Company Act of
1940. This Post-Effective Amendment relates solely to MML Equity Fund, MML Money
Market Fund, MML Managed Bond Fund, MML Blend Fund and MML Equity Index Fund. No
information relating to any other series of Registrant is amended or superseded
hereby.
<PAGE>
MML SERIES INVESTMENT FUND
Cross-Reference Sheet (page 1): MML Equity Fund,
MML Managed Bond Fund, MML Money Market Fund,
and MML Blend Fund
------------------------------------------------
<TABLE>
<CAPTION>
Item No. Of Form N-1A Prospectus Caption
- ---------------------- ------------------
Part A
- ------
<S> <C>
1 ............................... Prospectus Cover Page
2 ............................... Not Applicable
3(a) ............................ Financial Highlights
3(b) ............................ Not Applicable
3(c) ............................ Investment Performance
3(d) ............................ Not Applicable
4(a), (b) and (c) ............... General Information; The Funds; Investment
Practices of the Funds and Related Risks,
Investment Restrictions
5(a) ............................ Management of MML Trust
5(b), (e), (f) and (g) .......... Investment Managers; Financial Highlights
5(c) ............................ The Funds
5(d) ............................ Not Applicable
5A .............................. Management Discussion
6(a) and (b) .................... Capital Shares; General Information
6(c) and (d) .................... Not Applicable
6(e) ............................ Capital Shares
6(f) ............................ Dividends and Capital Gains Distributions
6(g) ............................ Tax Status; Dividends and Capital Gains
Distributions
6(h) ............................ Not Applicable
7 ............................... General Information; Sale and Redemption of
Shares
7(a) ............................ Not Applicable
7(b) ............................ Net Asset Value; Sale and Redemption of Shares
7(c)-(e) ........................ Not Applicable
8(a) ............................ Sale and Redemption of Shares
8(b)-(d) ........................ Not Applicable
9 ............................... Not Applicable
</TABLE>
i
<PAGE>
MML Series Investment Fund:
Cross-Reference Sheet (page 2). MML Equity Fund,
MML Managed Bond Fund, MML Money Market Fund and MML Blend Fund
---------------------------------------------------------------
<TABLE>
<CAPTION>
Item No. of Form N-1A Statement of Additional Information
- ----------------------- ------------------------------------
Part B Information Location or Caption
- ------ -------------------------------
<S> <C>
10(a) and (b) .................. Cover Page
11 ............................. Table of Contents
12 ............................. General Information
13(a) .......................... Investment Practices of the Funds and
Related Risks
13(b) .......................... Investment Restrictions
13(c) .......................... Investment Practices of the Funds and
Related Risks
13(d) .......................... Not Applicable
14(a)-(c) ...................... Management of MML Trust
15(a) .......................... Not Applicable
15(b) .......................... Control Persons and Principal Holders of
Securities
15(c) .......................... Management of MML Trust
16(a) and (b) .................. Investment Management and Other Services
16(c)-(g) ...................... Not Applicable
16(h) .......................... Investment Management and Other Services;
Experts; Back Cover Page
16(i) .......................... Not Applicable
17(a)-(c) ...................... Brokerage Allocation
17(d) and (e) .................. Not Applicable
18(a) .......................... Capital Shares
18(b) .......................... Not Applicable
19(a) and (b) .................. Purchase, Redemption and Pricing of
Securities Being Offered; Financial
Statements of MML Trust
19(c) .......................... Not Applicable
20 ............................. Certain Tax and Accounting Information
21 ............................. Not Applicable
22 ............................. Investment Performance
23 ............................. Report of Independent Accountants;
Financial Statements of MML Trust
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Item No. of Form N-1A Statement of Additional Information
- --------------------- -----------------------------------
Part B Information Location or Caption
- ------ -------------------------------
<S> <C>
20 ............................. Certain Tax and Accounting Information
21 ............................. Not Applicable
22 ............................. Investment Performance
23 ............................. Report of Independent Accountants;
Financial Statements of MML Trust
</TABLE>
Part C
- ------
Information to be included in Part C is set forth under the appropriate item so
numbered in Part C of this Registration Statement.
iii
<PAGE>
MML SERIES INVESTMENT FUND
CROSS-REFERENCE SHEET (page 3): MML EQUITY INDEX FUND
-----------------------------------------------------
ITEM NO. OF FORM N1-A PROSPECTUS LOCATION OR CAPTION
- ---------------------- ------------------------------
PART A
- ------
1................................. Prospectus Cover Page
2................................. Not Applicable
3(a).............................. Financial Highlights
3(b).............................. Not Applicable
3(c).............................. Investment Performance
3(d).............................. Not Applicable
4(a), (b) and (c)................. General Information; MML Equity Index Fund;
Investment Considerations and Risks;
Appendix
5(a).............................. Management of MML Trust
5(b), (d), (e), (f) and (g)....... The Advisers; Back Cover Page of Prospectus
5(c).............................. Not Applicable
5A................................ Management Discussion
6(a) and (b)...................... General Information; Capital Shares
6(c) and (d)...................... Not Applicable
6(e).............................. Capital Shares
6(f).............................. Dividends and Capital Gains Distributions
6(g).............................. Tax Status; Dividends and Capital Gains
Distributions
6(h).............................. Not Applicable
7................................. General Information; Sale and Redemption of
Shares
7(a).............................. Not Applicable
7(b).............................. Net Asset Value
7(c)-(g).......................... Not Applicable
8(a).............................. Sale and Redemption of Shares
8(b)-(d).......................... Not Applicable
9................................. Not Applicable
<PAGE>
MML SERIES INVESTMENT FUND
CROSS-REFERENCE SHEET (page 4): MML EQUITY INDEX FUND
-----------------------------------------------------
ITEM NO. OF FORM N-1A STATEMENT OF ADDITIONAL
- ---------------------- -----------------------
INFORMATION LOCATION OR CAPTION
-------------------------------
PART B
- ------
10(a) and (b)..................... Cover Page
11................................ Table of Contents
12................................ General Information
13(a)............................. Investment Objective and Management Policies
13(b)............................. Investment Restrictions
13(c)............................. Investment Objective and Management Policies
13(d)............................. Portfolio Transactions
14(a)-(c)......................... Management of MML Trust
15(a)-(b)......................... Control Persons and Principal Holders of
Securities
15(c)............................. Management of MML Trust
16(a), (b), (c), (e), (h), (i).... Management of MML Trust; Investment
Management and Other Services; Independent
Auditors
16(d), (g)........................ Not Applicable
17(a), (c)........................ Portfolio Transactions
17(b), (d) and (e)................ Not Applicable
18(a)............................. Capital Shares
18(b)............................. Not Applicable
19(a) and (b)..................... Purchase, Redemption and Pricing of
Securities Being Offered
19(c)............................. Not Applicable
20................................ Certain Tax and Accounting Information
21................................ Not Applicable
22................................ Investment Performance
23................................ Report of Independent Accountants; Financial
Statements of MML Equity Index Fund
<PAGE>
MML Series Investment Fund
Cross-Reference Sheet (page 5)
-----------------------------
PART C
- ------
Information to be included in Part C is set forth under the appropriate item so
numbered, in part C of this Registration Statement.
<PAGE>
PROSPECTUS
Dated May 1, 1998
MML SERIES INVESTMENT FUND
1295 State Street
Springfield, Massachusetts
(413) 744-8480
MML Series Investment Fund ("MML Trust") is a no-load, open-end, management
investment company having separate investment portfolios, each of which has
different investment objectives and is designed to meet different investment
needs. This Prospectus provides information regarding the four diversified
portfolios of MML Trust described below (the "Funds").
THE FUNDS
MML Equity Fund - The investment objectives are primarily to achieve a superior
total rate of return over an extended period of time from both capital
appreciation and current income and secondarily, depending upon business and
economic conditions, to preserve capital. The Fund invests primarily in
equity-type securities.
MML Money Market Fund - The investment objectives are to achieve high current
income, the preservation of capital, and liquidity. The Fund invests in
short-term debt instruments, including commercial paper, certificates of
deposit, bankers' acceptances, and obligations of the United States, its
agencies and instrumentalities. An investment in the Fund is neither insured nor
guaranteed by the U.S. Government, and there can be no assurance that the Fund
will be able to maintain a stable net asset value of $1.00 per share.
MML Managed Bond Fund - The investment objective is to achieve as high a total
rate of return on an annual basis as is considered consistent with the
preservation of capital. The Fund invests primarily in investment grade,
publicly-traded, fixed income securities.
MML Blend Fund - The investment objective is to achieve as high a level of total
rate of return over an extended period of time as is considered consistent with
prudent investment risk and the preservation of capital. The Fund invests in a
portfolio of common stocks and other equity-type securities, bonds and other
debt securities with maturities generally exceeding one year, and money market
instruments and other debt securities with maturities not exceeding one year.
For further information about each Fund's investment objectives and policies,
see "THE FUNDS" on page 9. There is no assurance that the investment objectives
of the Funds will be realized.
This Prospectus sets forth concisely the information about MML Trust and the
Funds that a prospective investor ought to know before investing. Certain
additional information about MML Trust and the Funds is contained in a Statement
of Additional Information dated May 1, 1998, as amended from time to time, which
has been filed with the Securities and Exchange Commission and is incorporated
herein by reference. This additional information is available upon request and
without charge. To obtain such information, please contact the Secretary, MML
Series Investment Fund, 1295 State Street, Springfield, Massachusetts 01111.
This Prospectus may only be used to offer or sell shares of the Funds described
in this Prospectus. Please read this Prospectus carefully and retain it for
future reference for information about MML Trust and the Funds.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
<PAGE>
<TABLE>
<CAPTION>
Table Of Contents Page
<S> <C>
Financial Highlights .................................................... 2
Management Discussion ................................................... 4
General Information ..................................................... 9
The Funds ............................................................... 9
Investment Practices of the Funds and Related Risks ..................... 11
Investment Restrictions ................................................. 13
Investment Managers ..................................................... 13
Capital Shares .......................................................... 14
Net Asset Value ......................................................... 15
Sale and Redemption of Shares ........................................... 15
Tax Status .............................................................. 15
Dividends and Capital Gains Distributions ............................... 16
Investment Performance .................................................. 16
Management of MML Trust ................................................. 17
</TABLE>
I. Financial Highlights
The information in the following tables has been derived from financial
statements audited by Coopers & Lybrand L.L.P., independent accountants, whose
report on the 1997 financial statements of the Funds is included in MML Trust's
Annual Report for the year ended December 31, 1997 (the "Annual Report") and in
the Statement of Additional Information. Further information about the
performance of the Funds is contained in the Annual Report which may be obtained
from MML Trust's Secretary without charge.
MML EQUITY FUND
Selected financial and per share data for each series share outstanding
throughout each year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year ................... $ 29.786 $ 25.924 $ 20.520 $ 20.510 $ 19.862
----------- ---------- ---------- -------- --------
Income from investment operations:
Net investment income ................ .709 .703 .634 .594 .524
Net realized and unrealized
gain (loss) on investments .......... 7.806 4.547 5.754 .248 1.365
----------- ---------- ---------- -------- --------
Total from investment operations ..... 8.515 5.250 6.388 .842 1.889
----------- ---------- ---------- -------- --------
Less distributions:
Dividends from net investment
income .............................. (.709) (.703) (.634) (.594) (.524)
Distribution from net realized
gains ............................... (2.149) (.685) (.350) (.238) (.717)
Distribution in excess of net realized
gains ............................... -- -- -- -- --
----------- ---------- ---------- -------- --------
Total distributions .................. (2.858) (1.388) (.984) (.832) (1.241)
----------- ---------- ---------- -------- --------
Net asset value:
End of year ......................... $ 35.443 $ 29.786 $ 25.924 $ 20.520 $ 20.510
=========== ========== ========== ======== ========
Total return ......................... 28.59% 20.25% 31.13% 4.10% 9.52%
Net assets (in millions):
End of period ....................... $ 2,363.44 $ 1,701.99 $ 1,248.90 $ 820.78 $ 663.09
Ratio of expenses to average net
assets .............................. .35% .38% .41% .43% .44%
Ratio of net investment income to
average net assets .................. 2.03% 2.65% 2.89% 3.04% 3.23%
Portfolio turnover rate .............. 15.30% 11.42% 11.72% 9.99% 11.28%
Average commission rate .............. .0586 .0582 -- -- --
<CAPTION>
1992 1991 1990 1989 1988
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year ................... $ 18.735 $ 15.659 $ 16.764 $ 14.929 $ 13.828
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ................ .543 .563 .636 .694 .646
Net realized and unrealized
gain (loss) on investments .......... 1.420 3.440 (.722) 2.746 1.660
--------- --------- --------- --------- ---------
Total from investment operations ..... 1.963 4.003 (.086) 3.440 2.306
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment
income .............................. (.543) (.562) (.665) (.711) (.639)
Distribution from net realized
gains ............................... (.288) (.365) (.354) (.894) (.566)
Distribution in excess of net realized
gains ............................... (.005) -- -- -- --
--------- --------- --------- --------- ---------
Total distributions .................. (.836) (.927) (1.019) (1.605) (1.205)
--------- --------- --------- --------- ---------
Net asset value:
End of year ......................... $ 19.862 $ 18.735 $ 15.659 $ 16.764 $ 14.929
========= ========= ========== ========= =========
Total return ......................... 10.48% 25.56% (.51%) 23.04% 16.68%
Net assets (in millions):
End of period ....................... $ 490.62 $ 355.04 $ 235.45 $ 226.41 $ 172.80
Ratio of expenses to average net
assets .............................. .46% .48% .49% .50% .50%
Ratio of net investment income to
average net assets .................. 3.09% 3.43% 4.09% 4.30% 4.05%
Portfolio turnover rate .............. 9.07% 9.37% 13.50% 15.71% 15.97%
Average commission rate .............. -- -- -- -- --
</TABLE>
2
<PAGE>
MML MONEY MARKET FUND
Selected financial and per share data for each series share outstanding
throughout each year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year .................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- --------- --------- -------- --------
Income from investment operations:
Net investment income .............. .051 .049 .054 .038 .027
--------- --------- --------- -------- --------
Total from investment operations ... .051 .049 .054 .038 .027
--------- --------- --------- -------- --------
Less distributions:
Dividends from net investment income (.051) (.049) (.054) (.038) (.027)
--------- --------- --------- -------- --------
Total distributions ................ (.051) (.049) (.054) (.038) (.027)
--------- --------- --------- -------- --------
Net asset value:
End of year ....................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========= ========= ========= ======== ========
Total return ....................... 5.18% 5.01% 5.58% 3.84% 2.75%
Net assets (in millions):
End of period ...................... $ 141.17 $ 145.23 $ 108.92 $ 91.79 $ 73.66
Ratio of expenses to average net
assets ............................. .52% .52% .54% .55% .54%
Ratio of net investment income to
average net assets ................ 5.07% 4.92% 5.43% 3.81% 2.71%
<CAPTION>
1992 1991 1990 1989 1988
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year .................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- --------- -------- --------
Income from investment operations:
Net investment income .............. .034 .059 .078 .088 .072
-------- -------- --------- -------- --------
Total from investment operations ... .034 .059 .078 .088 .072
-------- -------- --------- -------- --------
Less distributions:
Dividends from net investment income (.034) (.059) (.078) (.088) (.072)
-------- -------- --------- -------- --------
Total distributions ................ (.034) (.059) (.078) (.088) (.072)
-------- -------- --------- -------- --------
Net asset value:
End of year ....................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ========= ======== ========
Total return ....................... 3.48% 6.01% 8.12% 9.16% 7.39%
Net assets (in millions):
End of period ...................... $ 84.56 $ 94.41 $ 114.59 $ 70.16 $ 66.35
Ratio of expenses to average net
assets ............................. .53% .52% .54% .54% .55%
Ratio of net investment income to
average net assets ................ 3.42% 5.91% 7.80% 8.79% 7.20%
</TABLE>
MML MANAGED BOND FUND
Selected financial and per share data for each series share outstanding
throughout each year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year ................... $ 12.048 $ 12.448 $ 11.141 $ 12.405 $ 12.041
--------- --------- --------- --------- --------
Income from investment operations:
Net investment income ................ .801 .776 .782 .792 .785
Net realized and unrealized
gain (loss) on investments
and forward commitments ............. .356 (.401) 1.307 (1.264) .618
--------- --------- --------- --------- --------
Total from investment operations ..... 1.157 .375 2.089 (.472) 1.403
--------- --------- --------- --------- --------
Less distributions:
Dividends from net investment income . (.795) (.775) (.782) (.792) (.784)
Distribution from net realized gains . -- -- -- -- (.255)
Distribution in excess of net realized
gains ............................... -- -- -- -- --
--------- --------- --------- --------- --------
Total distributions .................. (.795) (.775) (.782) (.792) (1.039)
--------- --------- --------- --------- --------
Net asset value:
End of year ......................... $ 12.410 $ 12.048 $ 12.448 $ 11.141 $ 12.405
========= ========= ========= ========= ========
Total return ......................... 9.91% 3.25% 19.14% (3.76%) 11.81%
Net assets (in millions):
End of period ....................... $ 205.32 $ 181.57 $ 158.70 $ 121.21 $ 129.11
Ratio of expenses to average
net assets ........................... .47% .51% .52% .52% .54%
Ratio of net investment income to
average net assets ................... 6.06% 6.54% 6.63% 6.69% 6.37%
Portfolio turnover rate .............. 41.99% 46.12% 70.00% 32.77% 58.81%
<CAPTION>
1992 1991 1990 1989 1988
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year ................... $ 12.219 $ 11.318 $ 11.354 $ 10.919 $ 11.052
-------- -------- -------- -------- ---------
Income from investment operations:
Net investment income ................ .870 .903 .943 .918 .906
Net realized and unrealized
gain (loss) on investments
and forward commitments ............. .001 .916 (.036) .454 (.133)
-------- -------- -------- -------- ---------
Total from investment operations ..... .871 1.819 .907 1.372 .773
-------- -------- -------- -------- ---------
Less distributions:
Dividends from net investment income . (.869) (.902) (.943) (.918) (.906)
Distribution from net realized gains . (.158) (.016) -- (.019) --
Distribution in excess of net realized
gains ............................... (.022) -- -- -- --
-------- -------- -------- -------- ---------
Total distributions .................. (1.049) (.918) (.943) (.937) (.906)
-------- -------- -------- -------- ---------
Net asset value:
End of year ......................... $ 12.041 $ 12.219 $ 11.318 $ 11.354 $ 10.919
======== ======== ======== ======== =========
Total return ......................... 7.31% 16.66% 8.38% 12.83% 7.13%
Net assets (in millions):
End of period ....................... $ 88.15 $ 66.98 $ 43.07 $ 40.03 $ 31.35
Ratio of expenses to average
net assets ........................... .56% .57% .57% .59% .61%
Ratio of net investment income to
average net assets ................... 7.28% 7.96% 8.40% 8.35% 8.25%
Portfolio turnover rate .............. 39.51% 61.85% 69.93% 64.77% 74.92%
</TABLE>
3
<PAGE>
MML BLEND FUND
Selected financial and per share data for each series share outstanding
throughout each year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year .................... $ 21.973 $ 20.519 $ 17.672 $ 18.305 $ 17.846
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income ................ .843 .824 .811 .707 .655
Net realized and unrealized
gain (loss) on investments
and forward commitments ............. 3.692 1.990 3.246 (.271) 1.057
---------- ---------- ---------- ---------- ----------
Total from investment operations ...... 4.535 2.814 4.057 .436 1.712
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income . (.843) (.824) (.811) (.707) (.655)
Distribution from net realized gains . (1.585) (.536) (.399) (.359) (.598)
Distribution in excess of net realized
gains ............................... -- -- -- (.003) --
---------- ---------- ---------- ---------- ----------
Total distributions .................. (2.428) (1.360) (1.210) (1.069) (1.253)
---------- ---------- ---------- ---------- ----------
Net asset value:
End of year ......................... $ 24.080 $ 21.973 $ 20.519 $ 17.672 $ 18.305
========== ========== ========== ========== ==========
Total return ......................... 20.89% 13.95% 23.28% 2.48% 9.70%
Net assets (in millions):
End of period ........................ $2,471.83 $2,093.99 $1,823.14 $1,444.26 $1,296.54
Ratio of expenses to average
net assets .......................... .38% .38% .38% .39% .40%
Ratio of net investment income to
average net assets .................. 3.56% 3.87% 4.19% 3.93% 3.60%
Portfolio turnover rate .............. 21.20% 19.10% 30.78% 26.59% 20.20%
Average commission rate .............. .0584 .0581 -- -- --
<CAPTION>
1992 1991 1990 1989 1988
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year .................... $ 17.307 $ 14.839 $ 15.428 $ 13.876 $ 13.095
---------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ................ .707 .736 .792 .823 .734
Net realized and unrealized
gain (loss) on investments
and forward commitments ............. .880 2.771 (.445) 1.921 1.000
---------- --------- --------- --------- ---------
Total from investment operations ...... 1.587 3.507 .347 2.744 1.734
---------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income . (.707) (.736) (.811) (.835) (.728)
Distribution from net realized gains . (.326) (.303) (.125) (.357) (.225)
Distribution in excess of net realized
gains ............................... (.015) -- -- -- --
---------- --------- --------- --------- ---------
Total distributions .................. (1.048) (1.039) (.936) (1.192) (.953)
---------- --------- --------- --------- ---------
Net asset value:
End of year ......................... $ 17.846 $ 17.307 $ 14.839 $ 15.428 $ 13.876
========== ========= ========= ========= =========
Total return ......................... 9.36% 24.00% 2.37% 19.96% 13.40%
Net assets (in millions):
End of period ........................ $1,013.28 $ 797.04 $ 574.15 $ 524.29 $ 401.22
Ratio of expenses to average
net assets .......................... .41% .42% .44% .45% .46%
Ratio of net investment income to
average net assets .................. 4.07% 4.54% 5.37% 5.57% 5.29%
Portfolio turnover rate .............. 25.43% 26.92% 24.55% 22.39% 25.70%
Average commission rate .............. -- -- -- -- --
</TABLE>
Total return information shown in the Financial Highlights tables does not
reflect expenses that apply at the separate account level or to related
insurance products. Inclusion of these charges would reduce the total return
figures for all periods shown.
II. Management Discussion
A. ECONOMIC AND INVESTMENT ENVIRONMENT
As we begin 1998, the U.S. economy appears to be embarking on its eighth
consecutive year of expansion. By almost any measure, 1997 was a solidly good
year. Consumption was up, consumer confidence reached a 28-year high,
unemployment hit a 24-year low, gains were made in personal income and corporate
profits, housing starts and new and existing housing sales were up, and the
Federal budget deficit was reduced to a point where 1998 may even see a small
surplus.
All of this happened against a backdrop of declining price pressures fueling
debate over the relevance of the Phillips Curve, which is the historical model
suggesting that economic growth will eventually breed inflation. Inflation
measured by the Consumer Price Index remained below two percent, down from 1996
levels, and both the Producer Price Index and commodities prices dropped.
Without inflationary pressures, the Federal Reserve Board, which had raised
interest rates by 25 basis points in March, did not take action again for the
remainder of 1997, and interest rates consequently declined.
Working counter to the forces supporting the domestic economy over the past year
was the financial breakdown in the Pacific Rim. After years of over-investment,
weak infrastructure and poor economic policy, high-flying markets including
South Korea, Thailand and Indonesia suffered tremendous losses during the second
half of 1997.
The problems these economies face are deep and far-reaching, and recognition of
this fact has caused turmoil in markets throughout the world. Japan, which has
fiscal problems of its own, is a close trading partner to much of the rest of
Southeast Asia and will be impacted by weakness there. The U.S. has seen effects
of the Asian crisis on a number of levels. The uncertainty created by the Asian
crisis added volatility to an already nervous stock market, precipitating a one
day drop in the Dow Jones Industrial Average of over 500 points in late October.
A flight to quality in the currency markets bolstered the U.S. dollar, making
American exports expensive in overseas markets and potentially increasing the
trade deficit. Domestic firms that rely on sales to Asian markets may see
profits come under pressure as orders decline, and competitive price pressures
from Asian exporters may impact the ability for companies to raise prices on a
global basis.
4
<PAGE>
Even though the U.S. stock market increased in volatility, it turned in
impressive results for the year. As of December 31, 1997, the Standard & Poor's
500 Composite Stock Price Index (the "S&P 500") was up 33.37%, the Dow Jones
Industrial Average increased 24.93%, the NASDAQ Composite Index was up 21.63%
and the Frank Russell 2000 Index earned 22.36%.
Because of the uncertainty inherent in a market that has enjoyed such a
tremendous three-year advance, plus the concerns that arose from the Asian
markets' problems, it was large cap growth stocks that benefited most during
1997. These companies, which are well-represented in indices like the S&P 500,
were part of a `flight to quality' that the market experienced over the course
of the year. They are companies that are large enough to endure competitive
pressures, and due to their large capitalization, their stocks are very liquid.
The bond market also advanced during 1997. After the Federal Reserve's March
tightening, rates began to decline, and bonds rallied as a result. During the
second half of the year, investors moved into bonds as a safe haven from stock
market volatility. Rates declined and the yield curve flattened.
Toward the end of 1997, bonds paying higher yields than Treasuries seemed to
offer the best opportunities. For the first time in quite a while, there was
some risk premium available in moving lower in quality.
B. MML EQUITY FUND
How did the Fund perform during 1997?
The Fund did quite well over the year with a 28.59% total return. However, the
Fund lagged the performance of the S&P 500, which had a return of 33.37%, an
exceptional gain of over 30% for the second time in the past three years. The
S&P 500 has changed in composition over the past several years, with a much
higher component of technology stocks and large capitalization growth stocks
which strongly influence the performance of the index. The past year saw strong
gains in these groups, causing the S&P 500 to exceed the results of most active
managers. As a value manager, the Fund's sub-adviser considers many of these
favored companies as too expensive, with price-earnings ratios at substantial
premiums to the average stock. Such high valuations represent risk to investors
in the event that the companies fall short of expectations. Its focus on high
quality companies selling at more modest valuations should enable the Fund to
compare well with index returns over the full market cycle.
How did the stock market perform during 1997?
The stock market has been remarkably strong over the past three years - in fact
we have not had three consecutive years this buoyant in decades. This hospitable
market environment benefited from a continued economic expansion without the
obvious excesses of past cycles, stable to declining interest rates, high labor
productivity, healthy corporate profits, and a clear focus on shareholder value
on the part of corporate boards and management.
On closer inspection, the first quarter of 1997 was somewhat weak due to an
increase in interest rates. From there, the market came roaring back in the
second quarter and through September. Problems in Asian markets caused a
difficult October, including a sharp one-day selloff that interrupted trading.
The market recovered after October, showed strength in December and finished the
year close to the all-time high. Still, the perception of increased risk and
volatility is now firmly in place.
How did your strategy work during this environment?
Our healthcare holdings were among our best performers for 1997. Bristol-Myers,
our largest single holding, doubled the performance of the broad market for the
period. Its excellent product pipeline and aggressive marketing program are
increasingly recognized by investors and suggest a favorable outlook for the
coming year, as well.
While a valve-oriented investment approach like ours can lag more aggressive
styles in a powerful bull market, we held up better than most during the
challenges of the fourth quarter. Some of our best performers during that period
were electric utilities and telephone companies, two groups that did not
participate earlier in the year. Their stable, domestically based earnings and
ample dividends were appealing as the Asian situation unfolded. Pinnacle West,
which serves the Phoenix area, was purchased mid-year, and performed well for
the Fund.
The financial stocks in the portfolio achieved outstanding gains throughout the
year. CoreStates Financial, the leading bank in the Philadelphia area, agreed to
be acquired by First Union, and the Fund's holdings benefited accordingly. Other
large gainers included Bank of New York, Comerica, and Norwest, all of which
showed appreciation of 70% or more.
5
<PAGE>
[GRAPH APPEARS HERE]
EQUITY FUND
- --------------------------------------------------------------------------------
Standard & Poor's
Fund 500 Index
---- -----------------
1/1/88 10,000 10,000
1988 11,668 11,660
1989 14,356 15,351
1990 13,283 14,875
1991 17,933 19,408
1992 19,813 20,887
1993 21,699 22,990
1994 22,589 23,291
1995 29,621 32,044
1996 35,619 39,405
1997 45,803 52,554
Past performance is not predicitive of future performance.
- --------------------------------------------------------------------------------
-------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
-------------------------------------------
1 Year 5 Year 10 Year
-------------------------------------------
28.59% 18.25% 16.44%
-------------------------------------------
C. MML MONEY MARKET FUND
How did the Fund perform during 1997?
The Fund has enjoyed another good year with a 5.18% total return, outperforming
the Lipper Money Market Instrument Fund Average of 4.90% and keeping investors'
purchasing power well ahead of inflation. Interest rates were favorable for
investors focused on the shortest part of the fixed income spectrum in 1997 and
the Fund took advantage of the opportunities that were created.
How did your market change during 1997?
During the first half of 1997, there was some concern in the fixed income
markets that the Federal Reserve Board would raise interest rates to prevent
economic growth from causing higher inflation. Rates did increase once, by 25
basis points, after the Federal Reserve's March meeting. In the second half,
anticipation of further tightening dissipated. The Federal Reserve's policy
makers met five times during the second half, but did not change rates at all,
due in part to the fact that the rate of increase in the Consumer Price Index
(inflation) was slowing, and that the Producer Price Index and commodity prices
were actually falling. Another reason the Federal Reserve saw no need for action
was the unraveling of the markets in Southeast Asia, a situation that could
potentially slow the growth of the domestic economy.
Yields on bonds at the long end of maturities fell and prices rose as the year
progressed and investors in search of quality looked to Treasuries. Rates at the
short end where we are focused were already competitive, and remained relatively
stable. We were positioned to do well within this type of environment.
What investment decisions worked best for the Fund during the year?
During 1997, MML Money Market only invested in Tier 1 securities. A combination
of commercial paper and agency discount notes optimized our performance in this
high quality sector of the market. Our diversified portfolio continued to
outperform our competitors in the Lipper Money Market Instrument Fund universe
throughout the year.
Another advantage was the average life of our portfolio, a measure of the
maturities of our holdings. Particularly during the second half of the year,
when uncertainty in the broad markets sent investors searching for alternatives
to stocks, demand at the short end of the fixed income market led to higher
rates on new issuances. Beginning December with an average life slightly below
the IBC/Donohue universe of 55 days, our portfolio took advantage of year-end
rate increases, leaving us longer than our competitors at 61 days by year-end.
MONEY MARKET FUND
Average Annual Total Return for the periods ended December 31, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
---------------------------------
Money Market 1 Year 5 Year 10 Year
---------------------------------
5.18% 4.47% 5.63%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
---------------------------------
Lipper Taxable Money Market Fund Average 1 Year 5 Year 10 Year
---------------------------------
4.91% 4.32% 5.40%
- --------------------------------------------------------------------------------
Past performance is not predicitive of future performance.
- --------------------------------------------------------------------------------
<PAGE>
D. MML MANAGED BOND FUND
How did the Fund perform during 1997?
The Fund performed very well for the year showing a total return of 9.91%,
slightly outpacing its benchmark, the Lehman Brothers Government/Corporate Bond
Index, which had a return of 9.75% for the year. A major factor contributing to
the Fund's performance was the overweighting of "spread product," that is,
investments that offered incremental yield advantages to Treasuries.
Describe the investment climate during 1997.
The past year was another positive one for the U.S. economy. Continued growth
without a serious threat from inflation caused interest rates to trend downward
as the year progressed, making it a generally positive environment for the bond
market as well.
During the first half of 1997, the Federal Reserve Board's only policy move - a
25 basis point increase - occurred, creating price volatility, especially in
Treasuries. Volatility proved temporary, however. During the second half, stock
investors reacting to uncertainty from the Asian markets' difficulties moved to
the relative safety of the Treasury bond market and their demand caused bond
prices to rise. Coupled with a rise in short term rates, as central bankers
liquidated their Treasury bill holdings, the yield curve flattened, that is, the
differential between short- and long-term rates narrowed. When Treasuries
rallied, the yield spread between them and other categories of bonds with
similar maturities widened, creating opportunities for the Fund.
What investment decisions benefited the portfolio most as the year progressed?
At year-end our holdings of spread classes - including asset backed securities,
agency bonds, mortgage backed securities as well as corporate bonds -
represented over 85% of the Fund's assets.
Corporate bonds performed well during most of 1997 as corporate profitability
improved. In the investment grade sector, BBB rated issues performed the best.
Over half of our corporate holdings were invested in credits rated in the BBB
category. Corporate bond spreads widened out late in the third quarter as the
Asian crisis unfolded. We own one security, Korea Development Bank, which was
directly impacted by the Asian crisis. This issue was purchased prior to the
upheaval and its performance suffered for the remainder of the quarter. At
roughly one-quarter of one percent of the portfolio, however, the bond's impact
was minimal, and we expect it will do better as the International Monetary Fund
works to get Asia back on its feet.
Asset backed securities offered us an interesting opportunity late in the year.
The combination of spread-widening and an increase in supply led to some new
investments in this sector. A new type of asset backed security was introduced
in the fourth quarter. Rate reduction bonds issued by California utilities were
priced at attractive levels relative to similarly structured asset backed credit
card transactions.
[GRAPH APPEARS HERE]
MANAGED BOND FUND
- --------------------------------------------------------------------------------
Fund Lehman Brothers Government/Corporate Index
---- ------------------------------------------
1/1/88 10,000 10,000
1988 10,713 10,758
1989 12,087 12,288
1990 13,099 13,306
1991 15,281 15,452
1992 16,398 16,624
1993 18,335 18,457
1994 17,645 17,809
1995 21,023 21,236
1996 21,706 21,852
1997 23,857 23,982
Past performance is not predicitive of future performance.
- --------------------------------------------------------------------------------
-------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
-------------------------------------------
1 Year 5 Year 10 Year
-------------------------------------------
9.91% 7.79% 9.08%
-------------------------------------------
E. MML BLEND FUND
How did the Fund perform during 1997?
The Fund performed quite well for the year. We are pleased to report that our
investment sub-adviser's stock-picking strategy allowed the Fund to actively
participate in another very positive 12-month period for the equity market. For
the year ended December 31, 1997, the Fund's total return of 20.89% surpassed
the Lipper Analytical one-year average for balanced funds of 18.94%. The
benefits of our balanced strategy were demonstrated further as the stock market
became volatile toward the end of the year. During the fourth quarter, which was
negative for stocks, the income and price appreciation we garnered from our
fixed income holdings allowed us to continue to report positive results.
7
<PAGE>
Within your stock holdings, what types of investments were strongest during
1997?
Within stocks, our healthcare holdings were our best performers for the year.
Bristol-Myers, our largest single holding, doubled the performance of the broad
market for the period. Its excellent product development pipeline and aggressive
marketing program caught investors' attention, and that drove the stock to new
highs.
Insurance companies have also been strong. Since they tend to own significant
bond portfolios, they do well in periods of declining interest rates. American
General is a well-capitalized insurer in a steady growth business with a focused
and capable management and it has been a good holding for us for the year.
In basic industries, well-managed chemical companies benefited the Fund. Two
examples were Air Products, a distributor of industrial gases, and Englehard, a
firm providing technological solutions to air quality issues.
Some of our best performers during the turbulent fourth quarter were electric
utilities and telephone companies, up roughly 10 percent as a group during a
down quarter for the broad market. Pinnacle West, a Phoenix-based electric
utility has been a strong performer for us, as has Tampa-based Teco. We feel
both of these companies offer stable earnings and good dividends at reasonable
valuations.
What was your fixed income strategy during 1997, and how did it benefit the
Fund?
Over the year, we held roughly equivalent portions of bonds and cash, and both
have served the portfolio well. In bonds, we were focused primarily on AA rated
corporate issues, followed by mortgage-backed securities and Treasuries. Most
classes of bonds have performed well, especially during the second half, when
yields declined on fears about the depth of the Asian financial troubles. Price
appreciation resulted from declining rates and then combined with coupon income
to make bonds an excellent investment in 1997.
We also strategically increased our holdings of cash and short-term debt
instruments during 1997 because of a relatively flat yield curve. When the yield
curve flattens, the yield advantage investors earn by owning longer maturity,
more interest rate sensitive bonds diminishes. Over the past year, the Fund
found it could earn competitive income from short-maturity investments and
reduce risk at the same time.
[GRAPH APPEARS HERE]
BLEND FUND
- --------------------------------------------------------------------------------
Lehman Brothers
Government/
Lipper Balanced Standard & Poor's Corporate
Date Blend Fund Fund Index 500 Index Index
- -------- ---------- --------------- ----------------- ---------------
01/01/88 $10,000 $10,000 $10,000 $10,000
12/31/88 11,340 11,119 11,660 10,758
12/31/89 13,604 13,308 15,351 12,288
12/31/90 13,926 13,396 14,875 13,306
12/31/91 17,269 16,856 19,408 15,452
12/31/92 18,886 18,078 20,887 16,624
12/31/93 20,717 20,193 22,990 18,457
12/31/94 21,230 19,690 23,291 17,809
12/31/95 26,172 24,532 32,044 21,236
12/31/96 29,823 27,724 39,405 21,852
12/31/97 36,053 32,975 52,554 23,982
Past performance is not predicitive of future performance.
- --------------------------------------------------------------------------------
-------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
-------------------------------------------
1 Year 5 Year 10 Year
-------------------------------------------
20.89% 13.81% 13.68%
-------------------------------------------
8
<PAGE>
III. General Information
MML Series Investment Fund ("MML Trust") is a no-load, open-end, management
investment company, having separate investment portfolios. This Prospectus
provides information regarding the following four diversified investment
portfolios (the "Funds") of MML Trust: MML Equity Fund ("MML Equity"); MML Money
Market Fund ("MML Money Market"); MML Managed Bond Fund ("MML Managed Bond");
and MML Blend Fund ("MML Blend"). Each Fund has its own investment objectives
and policies and is designed to meet different investment needs.
MML Trust was organized as a business trust under the laws of The Commonwealth
of Massachusetts pursuant to an Agreement and Declaration of Trust dated
December 19, 1984, as amended from time to time (the "Declaration of Trust").
MML Trust was established by Massachusetts Mutual Life Insurance Company
("MassMutual") for the purpose of providing a vehicle for the investment of
assets of various separate investment accounts established by MassMutual and its
life insurance company subsidiaries, including MML Bay State Life Insurance
Company. Shares of the Funds are offered solely to separate investment accounts
established by MassMutual and its life insurance company subsidiaries.
MassMutual is responsible for providing all investment advisory, management, and
administrative services needed by the Funds pursuant to investment management
agreements. MassMutual has entered into investment sub-advisory agreements
pursuant to which David L. Babson and Company Incorporated ("Babson") manages
the investment of the assets of MML Equity and the Equity Sector of MML Blend.
Both MassMutual and Babson are registered with the Securities and Exchange
Commission (the "SEC") as investment advisers (MassMutual and Babson are
referred to hereinafter collectively as the "Advisers"). For further
information, see "Investment Managers."
IV. The Funds
The investment objectives of each Fund discussed below are fundamental policies
and may not be changed without the vote of a majority of that Fund's outstanding
voting shares (as used in this Prospectus, a majority of the outstanding voting
shares of any Fund means the lesser of (1) 67% of that Fund's outstanding shares
present at a meeting of the shareholders if more than 50% of the outstanding
shares are present in person or by proxy, or (2) more than 50% of that Fund's
outstanding shares). There is no assurance that the investment objectives of the
Funds will be realized. The success of these objectives depends to a great
extent upon management's ability to assess changes in business and economic
conditions. For further information about investment policies and techniques,
see "Investment Practices of the Funds and Related Risks."
A. MML EQUITY FUND
The primary investment objective of MML Equity is to achieve a superior total
rate of return over an extended period of time from both capital appreciation
and current income.
A secondary investment objective is the preservation of capital when business
and economic conditions indicate that investing for defensive purposes is
appropriate. Occasional investments may be made with the objective of short-term
appreciation when in the judgment of Babson general economic conditions dictate
that they may benefit MML Equity and are consistent with sound investment
procedure.
Normally, the assets of MML Equity will be invested primarily in common stocks
and other equity-type securities such as preferred stocks, securities
convertible into common stocks and warrants. Investments are made in securities
of companies which, in the opinion of Babson, are of high quality, offer
above-average dividend growth potential and are attractively valued in the
marketplace. Investment quality and dividend growth potential are evaluated
using fundamental analysis emphasizing each issuer's historical financial
performance, balance sheet strength, management capability and competitive
position. Various valuation parameters are examined to determine the
attractiveness of individual securities. On average, the Fund's portfolio
securities will have price/earnings ratios and price/book value ratios below
those of the Standard & Poor's 500 Composite Stock Price Index. Consideration is
also given to securities of companies whose current prices do not adequately
reflect, in the opinion of Babson, the ongoing business value of the enterprise.
These investments may be maintained in both rising and declining markets. Babson
intends to engage in the active management of MML Equity's portfolio.
The Fund's portfolio is managed by James W. MacAllen, President, Chief Executive
Officer and Chief Investment Officer of Babson. Mr. MacAllen has been associated
with Babson since 1996. During 1996, Mr. MacAllen was also the Senior Vice
President of Concert Capital Management, Inc. ("Concert"), and, as such, managed
the portfolio of the Fund. (Concert merged with and into Babson effective as of
December 31, 1996.) Formerly, Mr. MacAllen was with Hagler, Mastrovita & Hewitt
and prior to that was the President and Chief Investment Officer of Wilmington
Capital Management.
B. MML MONEY MARKET FUND
The investment objectives of MML Money Market are to achieve high current
income, the preservation of capital, and liquidity. These objectives are of
equal importance.
MML Money Market will invest only in short-term (i.e., 397 days or less
remaining to maturity) debt instruments, including but not limited to commercial
paper; certificates of deposit; bankers' acceptances; short-term corporate
obligations; obligations issued, sponsored, assumed or guaranteed as to
principal and interest by the government of the United States, its
9
<PAGE>
agencies or instrumentalities ("U.S. Government securities"); and certain
repurchase agreements with respect to any of the securities listed above (which
underlying securities must be of the highest quality at the time the repurchase
agreement is entered into but which securities may have maturities of more than
one year). MML Money Market's dollar-weighted average portfolio maturity will be
maintained at 90 days or less.
MML Money Market's non-fundamental investment policy is that, at the time it
acquires a security, it will invest 100% of its net assets in Tier 1 Securities,
but it retains the right to invest no more than 5% of its net assets in Tier 2
Securities. A Tier 1 Security is one that is rated in the highest rating
category by at least one nationally recognized statistical rating organization
("NRSRO") such as Standard & Poor's Ratings Group ("S&P") or Moody's Investors
Service, Inc. ("Moody's"). MML Money Market will invest no more than 5% of its
total assets in Tier 2 Securities. A Tier 2 Security is one that is rated in the
second highest rating category by at least one NRSRO. Securities which are
unrated may also qualify as Tier 1 and Tier 2 Securities if so determined by the
Board of Trustees of MML Trust (the "Board of Trustees"). For a description of
S&P and Moody's ratings, see the Statement of Additional Information.
Certificates of deposit and bankers' acceptances will be limited to obligations
of banks having deposits of at least $1,000,000,000 as of their most recently
published financial statements. The obligations of U.S. banks in which MML Money
Market may invest include Eurodollar obligations of their foreign branches. In
the case of foreign banks, the $1,000,000,000 deposit requirement will be
computed using exchange rates in effect at the time of their most recently
published financial statements.
Obligations of foreign issuers, including foreign branches of U.S. banks, will
not be acquired if MML Money Market's investment in such obligations would
exceed in the aggregate 25% of its net assets. Foreign obligations may be
affected by foreign governmental action, including imposition of currency
controls, interest limitations, withholding taxes, seizure of assets or the
declaration of a moratorium or restriction on payments of principal or interest.
Foreign branches of U.S. banks and foreign banks may provide less public
information than, and may not be subject to the same accounting, auditing and
financial record-keeping standards, as domestic banks.
MML Money Market will make portfolio investments primarily in anticipation of or
in response to changing economic and money market conditions and trends. Trading
activity is expected to be relatively low. However, it is anticipated that from
time to time, MML Money Market will take advantage of temporary disparities in
the yield relationships among the different segments of the money market or
among particular instruments within the same segment of the market to make
purchases and sales when MassMutual deems that such transactions will improve
the yield or the quality of the portfolio.
The high quality debt instruments in which MML Money Market invests may not
offer as high a yield as may be achieved from lower quality instruments having
less safety. While MML Money Market invests exclusively in First and Second Tier
Securities, an investment in MML Money Market is not without risk. If MML Money
Market disposes of an obligation prior to maturity, it may realize a loss or
gain. An increase in interest rates will generally reduce the value of portfolio
investments. In addition, investments are subject to the ability of the issuer
to make payment at maturity. MML Money Market will reassess whether a particular
security presents minimal credit risks in certain circumstances. For example, if
a security ceases to be a Tier 2 Security, MML Money Market would dispose of any
such security as soon as practical.
C. MML MANAGED BOND FUND
The investment objective of MML Managed Bond is to achieve as high a total rate
of return on an annual basis as is considered consistent with the preservation
of capital.
Normally, the assets of MML Managed Bond will be invested primarily in
investment grade, publicly-traded, fixed income securities of such maturities as
MassMutual deems appropriate from time to time in light of market conditions and
prospects. Except when invested for defensive purposes, at least 80% of total
invested assets at market value at the time of a purchase will consist of U.S.
Government securities and investment grade quality debt securities which have
been rated in the top four rating categories by S&P (AAA, AA, A or BBB) or
Moody's (Aaa, Aa, A or Baa) or, if unrated, which are judged by MassMutual to be
of equivalent quality to securities so rated. For purposes of this Prospectus, a
rating of BBB by S&P includes a security that has been rated BBB- by S&P, and a
security rated Baa by Moody's includes a security that has been rated Baa3 by
Moody's. While debt securities rated BBB or Baa are investment grade securities,
they have speculative characteristics and are subject to greater credit risk,
and may be subject to greater market risk, than higher-rated investment grade
securities.
In implementing the policies set forth in the preceding paragraph, MML Managed
Bond may invest in (1) obligations (payable in U.S. dollars) issued or
guaranteed as to principal and interest by the Government of Canada, a Province
of Canada, or any instrumentality or political subdivision thereof, provided
that no such investment will be made if it would result in more than 25% of MML
Managed Bond's net assets being invested in such securities, and (2) securities
of foreign issuers, provided however, MML Managed Bond may invest not more than
10% of its net assets in such securities, except as provided in (1) above.
If MML Managed Bond disposes of an obligation prior to maturity, it may realize
a loss or a gain. An increase in interest rates will generally reduce the value
of portfolio investments, and a decline in interest rates will generally
increase the value of portfolio investments. In addition, investments are
subject to the ability of the issuer to make payment at maturity.
Normally, the Fund's duration will range from four to seven
10
<PAGE>
years. Portfolio changes will be accomplished primarily through the reinvestment
of cash flows and selective trading.
The Fund's portfolio is managed by Mary Wilson Kibbe, Executive Director of
MassMutual. She has been associated with MassMutual since 1982 and oversees all
public fixed income trading for MassMutual and its insurance company
subsidiaries.
D. MML BLEND FUND
The investment objective of MML Blend is to achieve as high a level of total
rate of return over an extended period of time as is considered consistent with
prudent investment risk and the preservation of capital.
A committee of MassMutual and Babson investment professionals will adjust the
mix of investments among the Fund's three market sectors to capitalize on
perceived variations in return potential produced by the interaction of changing
financial market and economic conditions. The Advisers expect that such
adjustments will normally be made in a gradual manner over a period of time. No
investment will be made that would result in more than 90% of MML Blend's net
assets being invested in the Equity Sector or in more than 50% of MML Blend's
net assets being invested in the Bond Sector. Up to 100% of MML Blend's net
assets may be invested in the Money Market Sector. No minimum percentage has
been established for any of the sectors.
In addition to MML Blend's investment objective, each of its market sectors has
a specific investment objective. Within the Equity Sector, MML Blend will
attempt to achieve a superior total rate of return over an extended period of
time from both capital appreciation and current income. Within the Bond Sector,
MML Blend will attempt to achieve as high a total rate of return on an annual
basis as is considered consistent with the preservation of capital. Within the
Money Market Sector, MML Blend will attempt to achieve high current income, the
preservation of capital, and liquidity.
In seeking a high rate of return from dividends, interest income and capital
appreciation as well as in seeking to preserve capital, the Advisers intend to
engage in the active management of MML Blend's portfolio. See "Investment
Practices of the Funds and Related Risks - Portfolio Management."
The portfolio of MML Blend will be invested in the following three market
sectors:
1. Equity Sector
The Equity Sector generally invests in equity-type securities in a substantially
similar manner as described in the discussion of MML Equity on page 9. James W.
MacAllen, President, Chief Executive Officer and Chief Investment Officer of
Babson, manages the investment of the assets of
the Equity Sector.
2. Bond Sector
The Bond Sector generally invests in the types of bonds and other debt
securities described in the discussion of MML Managed Bond on pages 10-11 with
maturities usually exceeding one year. The Bond Sector may also invest in debt
securities not described above, including lower quality securities and non-rated
securities acquired directly from issuers in direct placement transactions,
provided no such transaction shall cause such debt securities to exceed 10% of
MML Blend's total assets. Lower quality debt instruments generally provide
higher yields but are generally subject to greater market fluctuations and risk
of loss of income and principal than higher quality debt securities. During
1997, no debt securities were acquired by MML Blend which were not rated at
least BBB by S&P or Baa by Moody's.
Mary Wilson Kibbe, Executive Director of MassMutual, manages the investments of
the assets of the Bond Sector and the Money Market Sector.
3. Money Market Sector
The Money Market Sector invests in money market instruments and other debt
securities with maturities generally not exceeding one year. For example, it may
invest in:
(a) U.S. Treasury Bills and other U.S. Government securities;
(b) obligations (payable in U.S. dollars) issued or guaranteed as to
principal and interest by the Government of Canada, (such obligations
may not exceed 25% of MML Blend's total assets);
(c) commercial paper, including variable amount master notes, having a
rating at the time of purchase within the two highest grades as
determined by Moody's (P-1 or P-2) or S&P (A-1 or A-2);
(d) publicly-traded bonds, debentures and notes having a rating within the
four highest grades as determined by Moody's (Aaa, Aa, A or Baa) or S&P
(AAA, AA, A or BBB); or
(e) securities of foreign issuers.
V. Investment Practices Of The Funds And Related Risks
In managing their portfolios of investments, the Funds, pursuant to policies
adopted by the Board of Trustees or where considered appropriate by the
Advisers, may engage in various investment-related practices. The Funds'
significant investment practices, which are pursuant to non-fundamental policies
and therefore may be changed by the Board of Trustees without consent of
shareholders, are discussed below. For further information see the Statement of
Additional Information.
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A. DERIVATIVES TRANSACTIONS
Although each Fund is authorized to engage in transactions involving
derivatives, as more fully described in the Statement of Additional Information,
the Funds' use of derivatives, other than forward contracts, is minimal. The
Funds may use derivatives to attempt to: (a) protect against possible declines
in the market value of a Fund's portfolio resulting from downward trends in the
relevant markets (for example, in the debt securities markets generally due to
increasing interest rates); (b) facilitate selling securities for investment
reasons; (c) protect a Fund's unrealized gains or limit unrealized losses in the
value of its securities; (d) establish a position in the relevant securities
markets as a temporary substitute for purchasing or selling particular
securities; (e) manage the effective maturity or duration of fixed-income
securities in a Fund's portfolio; or (f) manage its exposure to changing
security prices (collectively, "Derivatives Transactions"). Most, if not all, of
these Derivatives Transactions will involve the portfolios of MML Managed Bond
and the Bond Sector of MML Blend as MML Trust has no present intent to enter
into Derivatives Transactions with regard to MML Money Market, MML Equity, or
the Equity or Money Market Sectors of MML Blend. The Funds will not use
derivatives for speculative purposes.
Each Fund may purchase or sell securities on a "when issued" or delayed delivery
or on a forward commitment basis ("forward contracts"). When such transactions
are negotiated, the price is fixed at the time of commitment, but delivery and
payment for the securities can take place a month or more after the commitment
date. The securities so purchased or sold are subject to market fluctuations,
and no interest accrues to the purchaser during this period. At the time of
delivery, the securities may be worth more or less than the purchase or sale
price.
There can be no assurance that the use of forward contracts or other derivatives
by any of the Funds will assist it in achieving its investment objectives. Risks
inherent in the use of derivatives include: (1) the risk that interest rates and
securities prices will not move in the direction anticipated; (2) imperfect
correlation between the prices of forward contracts and the prices of the
securities being hedged; (3) the fact that skills needed to use these strategies
are different from those needed to select portfolio securities; and (4) forward
contracts involve a risk of a loss if the value of the security to be purchased
declines prior to the settlement date, which is in addition to the risk of
decline of the Funds' other assets.
A Fund will not enter into a forward contract if as a result more than 25% of
the Fund's total assets would be in one or more segregated accounts covering
forward contracts.
B. PORTFOLIO MANAGEMENT
The Advisers intend to use trading as a means of managing the portfolios of the
Funds in seeking to achieve their investment objectives. The Advisers, on behalf
of the Funds, will engage in trading when they believe that the trade, net of
transaction costs, will improve interest income or capital appreciation
potential, or will lessen capital loss potential.
Whether the goals discussed above will be achieved through trading depends on
the Advisers' ability to evaluate particular securities and anticipate relevant
market factors, including interest rate trends and variations from such trends.
Such trading places a premium on the Advisers' ability to obtain relevant
information, evaluate it properly and take advantage of their evaluations by
completing transactions on a favorable basis. If the Advisers' evaluations and
expectations prove to be incorrect, a Fund's income or capital appreciation may
be reduced and its capital losses may be increased. Portfolio trading involves
transaction costs, but, as explained above, will be engaged in when the Advisers
believe that the result of the trading, net of transaction costs, will benefit
the Funds.
The Funds may pay brokerage commissions to Advest, Inc. ("Advest") and
Jeffries & Co., Inc. ("Jeffries"). Jeffries and Advest are each wholly-owned
subsidiaries of companies for which one Trustee serves as a director.
C. RESTRICTED AND ILLIQUID SECURITIES
None of the Funds currently expect to invest in restricted or illiquid
securities. However, each Fund may invest not more than 15% (10% in the case of
MML Money Market) of its net assets in illiquid securities. These policies do
not limit the purchase of securities eligible for resale to qualified
institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as
amended, provided that such securities are determined to be liquid by the Board
of Trustees, or by the Advisers pursuant to Board-approved guidelines. If there
is a lack of trading interest in particular Rule 144A securities, a Fund's
holdings of those securities may be illiquid, resulting in the possibility of
undesirable delays in selling these securities at prices representing fair
value.
D. SECURITIES LENDING
MML Managed Bond and MML Blend may seek additional income by making loans of
portfolio securities of not more than 10% of their respective total assets taken
at current value. Although lending portfolio securities may involve the risk of
delay in recovery of the securities loaned or possible loss of rights in the
collateral should the borrower fail financially, loans will be made only to
borrowers deemed by MassMutual to be of good standing.
E. CASH POSITIONS
Each Fund, other than MML Money Market, may hold cash or cash equivalents to
provide for liquidity (e.g., expenses and anticipated redemption payments) and
so that an orderly investment program may be carried out in accordance with the
Fund's investment policies. To provide liquidity or for temporary defensive
purposes, each Fund may invest any portion of its
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assets in investment grade debt securities and MML Equity may also invest in
non-convertible preferred stocks.
VI. Investment Restrictions
The following is a description of certain investment restrictions, and
exceptions to such restrictions, that apply to each Fund which may not be
changed without a vote of a majority of the outstanding shares of such Fund.
(For a description of additional investment restrictions, reference should be
made to the Statement of Additional Information.)
Each Fund will not:
(1) Pledge or mortgage assets taken at market to an extent greater than 15% of
the total assets of the Fund taken at cost;
(2) Borrow money, except from banks as a temporary measure for extraordinary or
emergency purposes (but not for the purpose of making investments), and except
to the extent that each Fund engages in financial futures transactions (as
described on page 12) and in reverse repurchase agreements (as described in the
Statement of Additional Information), provided (a) that the aggregate amount of
all such borrowings at the time of borrowing does not exceed 10% of the total
assets of the Fund taken at cost, and (b) that immediately after the borrowing,
and at all times thereafter, there will be an asset coverage of at least 300%
for all of the Fund's borrowings (including all obligations under financial
futures contracts on debt obligations); and
(3) Concentrate its investments in any one industry, as determined by the Board
of Trustees, and in this connection it will not acquire securities of companies
in any one industry if, immediately after giving effect to any such acquisition,
more than 25% of the value of the total assets of the Fund would be invested in
such industry, with the following exceptions:
(a) In the case of MML Money Market there is no limitation in respect of
certificates of deposit and bankers' acceptances (see "The Funds - MML
Money Market Fund").
(b) MML Money Market, MML Managed Bond and the Bond Sector of MML Blend
each may invest up to 40% of the value of their respective total assets in
each of the electric utility and telephone industries. However, it
currently is MassMutual's intent not to invest more than 25% of any one of
these Fund's total assets in either the electric utility or telephone
industries.
VII. Investment Managers
MassMutual serves as investment manager of each Fund pursuant to a separate
investment management agreement executed by MassMutual and each Fund (the
"Management Agreements"). MassMutual also acts as the transfer agent and the
dividend paying agent. MassMutual is a mutual life insurance company organized
in 1851 under the laws of The Commonwealth of Massachusetts. MassMutual
provides, directly or through its subsidiaries, a wide range of life insurance,
annuity and disability products, and pension and pension-related products, as
well as investment services to individuals, corporations, investment companies
and other institutions. As of December 31, 1997, MassMutual, together with its
subsidiaries, had consolidated assets in excess of $61 billion and consolidated
assets under management in excess of $152 billion.
Under the Management Agreements, which are substantially identical, MassMutual
is authorized to engage in portfolio transactions on behalf of the Funds,
subject to such general or specific instructions as may be given by the Board of
Trustees. The Management Agreements provide that MassMutual will perform all
administrative functions relating to the Funds and will bear all expenses of the
Funds except: (1) taxes and corporate fees payable to government agencies; (2)
brokerage commissions (which may be higher than other brokers charge if paid to
a broker which provides brokerage and research services to the Advisers or for
use in providing investment advice and management to the Funds and other
accounts over which the Advisers exercise investment discretion) and other
capital items payable in connection with the purchase or sale of Fund
investments; (3) interest on account of any borrowings by the Funds; (4) fees
and expenses of Trustees of MML Trust who are not interested persons, as defined
in the Investment Company Act of 1940, as amended (the "1940 Act"), of the
Advisers or MML Trust; and (5) fees of the Funds' independent certified public
accountants.
For providing the services and bearing the expenses described above, MassMutual
is paid a quarterly fee at the annual rate of .50% of the first $100 million of
the average daily net asset value of each Fund, .45% of the next $200 million,
.40% of the next $200 million and .35% of any excess over $500 million.
MassMutual has unilaterally agreed to bear expenses of each Fund (other than the
management fee, interest, taxes, brokerage commissions and extraordinary
expenses) in excess of .11% of average daily net asset value through April 30,
1999. In 1997, MML Equity, MML Money Market, MML Managed Bond, and MML Blend
paid fees to MassMutual amounting to .34%, .50%, .44% and .36%, respectively, of
their average daily net assets during the year.
Each Management Agreement automatically terminates: (1) unless its continuance
is specifically approved at least annually by the affirmative vote of a majority
of the Board of Trustees, which affirmative vote shall include a majority of the
members of the Board who are not interested persons (as defined in the 1940 Act)
of MassMutual or of MML Trust; or (2) upon its assignment. Under the terms of
each Management Agreement, each Fund recognizes MassMutual's control of the
initials "MML" and each Fund agrees that its right to use these initials is
non-exclusive and can be terminated by MassMutual at any time. Under each
Management Agreement, MassMutual's liability regarding its investment management
obligations and duties is limited to situations involving its willful
misfeasance, bad faith, gross negligence or reckless disregard of such
obligations and duties.
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MassMutual has entered into sub-advisory agreements (the "Sub-Advisory
Agreements") whereby Babson manages the investment of the assets of MML Equity
and the Equity Sector of MML Blend. Babson is a registered investment adviser
that has been providing investment counseling to institutions and individuals
for over 50 years. As of December 31, 1997, Babson had over $18 billion of
assets under management. Babson is a wholly-owned subsidiary of DLB Acquisition
Corporation, a controlled subsidiary of MassMutual.
Pursuant to the Sub-Advisory Agreements, MassMutual pays Babson (1) a quarterly
fee equal to an annual rate of .13% of the average daily net asset value of MML
Equity as of the close of each business day for the investment advisory services
Babson provides with respect to MML Equity and (2) a quarterly fee equal to an
annual rate of .13% of the average daily net asset value of the Equity Sector of
MML Blend as of the close of each business day for the investment advisory
services Babson provides with respect to the Equity Sector of MML Blend. The
Sub-Advisory Agreements automatically terminate upon the termination of the
respective Management Agreements between MassMutual and MML Equity and MML
Blend.
Securities held by the Funds are also frequently held by the Advisers in their
investment accounts and/or by other investment clients for which the Advisers
act as investment advisers. If the same security is purchased or sold for any
Fund and such investment account or clients at the same time, such purchases or
sales normally will be combined, to the extent practicable, and will be
allocated as nearly as practicable on a pro rata basis in proportion to the
amounts to be purchased or sold for each. In determining the amounts to be
purchased or sold, the main factors to be considered will be the investment
objectives of the respective portfolios, the relative size of portfolio holdings
of the same or comparable security, availability of cash for investment by the
various portfolios and the size of their respective investment commitments. It
is believed that the ability of the Funds to participate in larger volume
transactions will, in most cases, produce better execution for the Funds. In
some cases, however, this procedure could have a detrimental effect on the price
and amount of a security available to a Fund or the price at which a security
may be sold. It is the opinion of MML Trust's management that such execution
advantage and the desirability of retaining the Advisers as investment managers
of the Funds outweigh the disadvantages, if any, which might result from this
procedure.
VIII. Capital Shares
MML Trust is a "series" company. To date, shares of six series (i.e., investment
portfolios) have been authorized, four of which constitute the interests in the
Funds described in this Prospectus. Under MML Trust's Declaration of Trust,
however, the Board of Trustees is authorized to create new series in addition to
the Funds without the necessity of a vote of shareholders of MML Trust. Each
share of a particular series represents an equal proportionate interest in that
series with each other share of the same series, none having priority or
preference over another. Each series shall be preferred over all other series in
respect of the assets allocated to that series. Each share of a particular
series is entitled to a pro rata share of any distributions declared by that
series and, in the event of liquidation, a pro rata share of the net assets of
that series remaining after satisfaction of outstanding liabilities. When
issued, shares are fully paid and nonassessable and have no preemptive,
conversion or subscription rights.
MML Trust is not required to hold annual meetings of shareholders. Special
meetings may be called for purposes such as electing Trustees, voting on
management agreements, and with respect to such additional matters relating to
MML Trust as may be required by MML Trust's Declaration of Trust and the 1940
Act. Shareholders holding 10% of the shares of MML Trust may call a meeting to
be held to consider removal of Trustees. On any matter submitted to
shareholders, shares of each series entitle their holder to one vote per share
(with proportionate voting for fractional shares), irrespective of the relative
net asset values of the series' shares. On any matters submitted to a vote of
shareholders, all shares of MML Trust then entitled to vote shall be voted by
individual series, except that (i) when required by the 1940 Act, shares shall
be voted in the aggregate and not by individual series, and (ii) when Trustees
have determined that any matter affects only the interests of one or more
series, then only shareholders of such series shall be entitled to vote thereon.
Shareholder inquiries should be made by contacting the Secretary, MML Series
Investment Fund, 1295 State Street, Springfield, Massachusetts 01111.
The assets of certain variable annuity and variable life insurance separate
accounts for which MassMutual or an affiliate is the depositor are invested in
shares of the Funds. Because these separate accounts are invested in the same
underlying Funds it is possible that material conflicts could arise between
owners of the variable life insurance contracts and owners of the variable
annuity contracts. Possible conflicts could arise if (i) state insurance
regulators should disapprove or require changes in investment policies,
investment advisers or principal underwriters or if the depositor should be
permitted to act contrary to actions approved by holders of the variable life or
variable annuity contracts under rules of the SEC, (ii) adverse tax treatment of
the variable life or variable annuity contracts would result from utilizing the
same underlying Funds, (iii) different investment strategies would be more
suitable for the variable annuity contracts than the variable life contracts, or
(iv) state insurance laws or regulations or other applicable laws would prohibit
the funding of both variable life and variable annuity separate accounts by the
same Funds.
The Board of Trustees follows monitoring procedures which have been developed to
determine whether material conflicts have arisen and what action, if any, should
be taken in the event of such conflicts. If a material irreconcilable conflict
should arise between owners of the variable life insurance contracts and owners
of the variable annuity contracts, one or the other group of owners may have to
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<PAGE>
terminate its participation in the Funds. More information regarding possible
conflicts between variable annuity and variable life insurance contracts is
contained in the prospectuses for those contracts.
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of MML Trust. However, MML Trust's
Declaration of Trust disclaims liability of the shareholders, Trustees, or
officers of MML Trust for acts or obligations of MML Trust, which are binding
only on the assets and property of MML Trust, and requires that notice of such
disclaimer be given in each agreement, obligation, or instrument entered into or
executed by MML Trust or Trustees of MML Trust. MML Trust's Declaration of Trust
provides for indemnification out of MML Trust property for all loss and expense
of any shareholder held personally liable for the obligations of MML Trust.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is considered remote since it is limited to circumstances
in which the disclaimer is inoperative and MML Trust itself would be unable to
meet its obligations.
IX. Net Asset Value
The net asset value of each Fund's shares is determined once daily as of the
normal close of trading on the New York Stock Exchange (presently 4:00 p.m.) on
each day on which the Exchange is open for trading.
A. MML MONEY MARKET FUND
It is the intention of MML Money Market to maintain a per share net asset value
of $1.00, although this cannot be assured. Since the net income of MML Money
Market is declared as a dividend each time it is determined, the net asset value
per share of MML Money Market remains at $1.00 per share immediately after each
determination and dividend declaration. Any increase in the value of a
shareholder's investment in MML Money Market representing the reinvestment of
dividend income is reflected by an increase in the number of shares of MML Money
Market in the shareholder's account, which increase is recorded promptly after
the end of each calendar month. MML Money Market's portfolio instruments are
valued on the basis of amortized cost.
B. OTHER FUNDS
Generally, the other three Funds value portfolio securities on the basis of
market value. For example, equity securities, including those traded on national
securities exchanges or the NASDAQ National Market System, are valued by one or
more pricing services, as authorized by the Board of Trustees. Normally, the
values are based upon the last reported sale price of the security. Long-term
bonds are valued on the basis of valuations furnished by a pricing service,
authorized by the Board of Trustees, which determines valuations taking into
account appropriate factors such as institutional-size trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data. Debt obligations with less than one year
but more than sixty days to maturity are valued on the basis of their market
value, and debt obligations having a maturity of sixty days or less are
generally valued at amortized cost when the Board of Trustees believes that
amortized cost approximates market value. If acquired, preferred stocks will be
valued on the basis of their market value if market quotations are readily
available. Futures contracts are valued based on market prices unless such
prices do not reflect the fair value of the contract, in which case they will be
valued by or under the direction of the Board of Trustees. In all other cases,
assets (including restricted securities) will be valued at fair value as
determined in good faith by the Board of Trustees, although the actual
calculations may be made by persons acting pursuant to the direction of the
Board of Trustees.
X. Sale And Redemption Of Shares
The shares of each Fund are sold at their net asset value (which in the case of
MML Money Market is expected to remain at $1.00) as next computed after receipt
of the purchase order, without the deduction of any selling commission or "sales
load."
Each Fund redeems its shares at their net asset value (which in the case of MML
Money Market is expected to remain at $1.00) as next computed after receipt of
the request for redemption. The redemption price for shares of MML Equity, MML
Managed Bond and MML Blend may be more or less than the shareholder's cost. The
redemption price may be paid in cash or wholly or partly in kind if MML Trust's
Board of Trustees determine that such payment is advisable in the interest of
the remaining shareholders. In making such payment wholly or partly in kind, a
Fund will, as far as may be practicable, deliver securities or property which
approximate the diversification of its entire assets at the time. No fee is
charged on redemption.
Redemption payments will be made within seven days after receipt of the written
request therefore by MML Trust, except that the right of redemption may be
suspended or payments postponed when permitted by applicable law and
regulations.
XI. Tax Status
It is the policy of each Fund to comply, and in 1997 each Fund did comply, with
the provisions of the Internal Revenue Code applicable to regulated investment
companies. As a result, none of the Funds will be subject to federal income tax
on any net income or any capital gains to the extent they are distributed or are
deemed to have been distributed to shareholders.
Regulations issued under Internal Revenue Code Section 817(h) require each of
the Funds to be adequately diversified in order for a variable annuity and
variable life
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<PAGE>
contract funded by MML Trust to receive favorable tax treatment as an annuity or
life insurance contract. Among other requirements, the regulations limit each
Fund's investment in a single issuer to 55% of its assets; while this
requirement applies to U.S. Government securities, each government agency or
instrumentality is treated for this purpose as a separate issuer. The Funds
intend to comply with these diversification requirements. For further
information, see the Statement of Additional Information.
Tax consequences to investors in the separate investment accounts which are
invested in the Funds are described in the prospectuses for such accounts.
XII. Dividends And Capital Gains Distributions
The Funds intend to declare capital gain and ordinary income dividends and to
distribute such dividends in a manner designed to avoid a 4% excise tax on
undistributed regulated investment company income, imposed by the Tax Reform Act
of 1986. The declaration and distribution policies specific to each Fund are
outlined below.
A. MML EQUITY FUND
Distributions, if any, are declared and paid annually. Distributions may be
taken either in cash or in additional shares of MML Equity at net asset value on
the first business day after the record date for the distribution, at the option
of the shareholder.
B. MML MONEY MARKET FUND
The net income of MML Money Market, as defined below, is determined as of the
normal close of trading on the New York Stock Exchange on each day on which the
Exchange is open, and all the net income so determined is declared as a dividend
to shareholders of record as of that time. Dividends are distributed promptly
after the end of each calendar month in additional shares of MML Money Market at
the then current net asset value, or in cash, at the option of the shareholder.
For this purpose the net income of MML Money Market (from the time of the
immediately preceding determination thereof) consists of all interest income
accrued on its portfolio, plus realized gains or minus realized losses, and less
all expenses and liabilities chargeable against income. Interest income includes
discount earned (including both original issue and market discount) on paper
purchased at a discount, less amortization of premium, accrued ratably to the
date of maturity. Expenses, including the compensation payable to MassMutual,
are accrued each day.
Should MML Money Market incur or anticipate any unusual expense, or loss or
depreciation which would adversely affect its net asset value per share or
income for a particular period, the Board of Trustees would at that time
consider whether to adhere to the present dividend policy described above or to
revise it in the light of the then prevailing circumstances. For example, if MML
Money Market's net asset value per share were reduced, or were anticipated to be
reduced, below $1.00, the Board of Trustees might suspend further dividend
payments until the net asset value returned to $1.00. Thus, such expenses or
losses or depreciation might result in an investor receiving no dividends for
the period during which he held his shares and in his receiving upon redemption
a price per share lower than that which he paid.
C. MML MANAGED BOND AND MML BLEND FUNDS
Dividends out of net investment income are declared and paid quarterly. Capital
gains declarations and distributions of net capital gains, if any, for the year
are made annually. Distributions may be taken either in cash or in additional
shares of the applicable Fund at net asset value on the first business day after
the record date for the distribution, at the option of the shareholder.
XIII. Investment Performance
Each of the Funds may from time to time advertise certain investment performance
figures. These figures are based on historical earnings and are not intended to
indicate future performance.
MML Money Market may quote its yield and its effective yield. The yield of MML
Money Market refers to the income generated by the Fund over a seven-day period
(which period will be stated in the advertisement). This income is then assumed
to be earned each week over a 52-week period. The effective yield is calculated
similarly, but the income earned by an investment in the Fund is assumed to be
reinvested.
MML Managed Bond, MML Blend and MML Equity may also quote yield. The yield for
each of these Funds refers to the net investment income earned by the Fund over
a 30-day period (which period will be stated in the advertisement). This income
is then assumed to be earned for a full year and to be reinvested each month for
six months. The resulting semi-annual yield is doubled.
Each of the Funds may advertise its total return and its holding period return
for various periods of time. Total return is calculated by determining, over a
period of time, which will be stated in the advertisement, the average annual
compounded rate of return that an investment in the Fund earned over that
period, assuming reinvestment of all distributions. Holding period return refers
to the percentage change in the value of an investment in a Fund over a period
of time (which period will be stated in the advertisement), assuming
reinvestment of all distributions. Total return and holding period return differ
from yield in that the return figures include capital changes in an investment
while yield measures the rate of net income generated by a Fund. Total return
differs from holding period return principally in that
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total return is an average annual figure while holding period return is an
aggregate figure for the entire period.
These investment performance figures may be of limited use for comparative
purposes because they do not reflect charges imposed by the separate investment
accounts invested in the Funds which, if included, would decrease the
performance figures. For more information about the investment performance of
the Funds, see the Statement of Additional Information.
XIV. Management Of MML Trust
The affairs of MML Trust are generally supervised by its Board of Trustees and
officers. As stated previously, MassMutual acts as investment manager of each of
the Funds and Babson is the sub-adviser to MML Equity and the Equity Sector of
MML Blend. In those capacities, MassMutual and Babson are part of the management
of MML Trust. For more information concerning the management of MML Trust,
reference should be made to the Statement of Additional Information.
The name MML Series Investment Fund is the designation of the Trustees under an
Agreement and Declaration of Trust dated December 19, 1984, as amended from time
to time. The obligations of MML Series Investment Fund are not personally
binding upon, nor shall resort be had to the property of, any of the Trustees,
shareholders, officers, employees or agents of MML Series Investment Fund, but
only the property of the relevant Fund shall be bound.
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MML SERIES INVESTMENT FUND
1295 State Street
Springfield, Massachusetts 01111
--------------
INVESTMENT MANAGER
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
1295 State Street
Springfield, Massachusetts 01111
INVESTMENT SUB-ADVISER
DAVID L. BABSON AND COMPANY
INCORPORATED
One Memorial Drive
Cambridge, Massachusetts 02142
INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.
2300 Tower Square
1500 Main Street
Springfield, Massachusetts 01101
CUSTODIAN
CITIBANK, N.A.
111 Wall Street
New York, New York 10005
--------------
For Use With:
. Massachusetts Mutual Variable Annuity Funds 1 and 2
. MML Bay State Variable Life Separate Accounts I, II, III, IV and V
. MML Bay State Variable Annuity Separate Account 1
. Massachusetts Mutual Variable Life Separate Accounts I and II
. Massachusetts Mutual Variable Annuity Separate Accounts 1, 2 and 3
. Massachusetts Mutual Separate Account C
This Prospectus does not constitute an offering in any jurisdiction in which
such offering may not lawfully be made. No person is authorized to make any
representations in connection with this offering other than those contained in
this Prospectus.
<PAGE>
PROSPECTUS
Dated May 1, 1998
MML EQUITY INDEX FUND
1295 State Street
Springfield, Massachusetts
(413) 744-8480
MML Series Investment Fund ("MML Trust") is a no-load, open-end, management
investment company having separate investment portfolios, each of which has
different investment objectives and is designed to meet different investment
needs. This Prospectus relates only to one such portfolio, MML Equity Index Fund
(the "Fund").
MML Equity Index Fund - The Fund is a non-diversified series of MML Trust. The
Fund's investment objective is to provide investment results that correspond to
the price and yield performance of publicly traded common stocks in the
aggregate, as represented by the Standard & Poor's 500 Composite Stock Price
Index (the "Index"). As such, the Fund will invest in common stocks that
comprise the Index. While the Fund intends to invest in every stock of the
Index, there may be circumstances when the Fund is not invested in every such
stock. The Fund is also permitted to invest in Standard & Poor's Depositary
Receipts ("SPDRs"). See "Appendix - Investment Techniques." In anticipation of
taking a market position, the Fund is also permitted to purchase and sell stock
index futures. The Fund is neither sponsored by nor affiliated with Standard &
Poor's, a division of The McGraw-Hill Companies, Inc.
For further information about the Fund's investment objective and policies, see
"MML EQUITY INDEX FUND" on page 4. There is no assurance that the investment
objective of the Fund will be realized.
This Prospectus sets forth concisely the information about MML Trust and the
Fund that a prospective investor ought to know before investing. Certain
additional information about MML Trust and the Fund is contained in a Statement
of Additional Information dated May 1, 1998, as amended from time to time, which
has been filed with the Securities and Exchange Commission and is incorporated
by reference. This additional information is available upon request and without
charge. To obtain such information, please contact the Secretary, MML Series
Investment Fund, 1295 State Street, Springfield, Massachusetts 01111.
This Prospectus may only be used to offer or sell shares of the Fund described
in this Prospectus. Please read this Prospectus carefully and retain it for
future reference for information about MML Trust and the Fund.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
Page
<S> <C>
Financial Highlights ..................................................... 2
Management Discussion .................................................... 3
General Information ...................................................... 4
MML Equity Index Fund .................................................... 4
Investment Considerations and Risks ...................................... 6
The Advisers ............................................................. 6
Capital Shares ........................................................... 8
Net Asset Value .......................................................... 8
Sale and Redemption of Shares ............................................ 8
Tax Status ............................................................... 9
Dividends and Capital Gains Distributions ................................ 9
Investment Performance ................................................... 9
Management of MML Trust .................................................. 9
Appendix - Investment Techniques ......................................... A-1
</TABLE>
I. Financial Highlights
The information in the following table has been derived from financial
statements audited by Coopers & Lybrand L.L.P., independent accountants, whose
report on the 1997 financial statements of MML Equity Index Fund (the "Fund") is
included in the Fund's Annual Report for the period ended December 31, 1997 (the
"Annual Report") and in the Fund's Statement of Additional Information. Further
information about the performance the Fund is contained in the Annual Report
which may be obtained from the Secretary of MML Series Investment Fund ("MML
Trust") without charge.
FINANCIAL HIGHLIGHTS
For the Period From May 1, 1997 (Commencement of Operations) through December
31, 1997
Selected financial and per share data for each series share outstanding
throughout the period.
<TABLE>
<S> <C>
Net asset value:
Beginning of period.............................................. $ 10,000
--------
Income from investment operations:
Net investment income............................................. 0.092
Net realized and unrealized gain on investments................... 2.101
-----
Total from investment operations.................................. 2.193
-----
Less Distributions:
Dividends from net investment income.............................. (0.092)
Distributions from net realized gains............................. (0.021)
--------
Total Distributions............................................... (0.113)
--------
Net asset value
End of period.................................................... $ 12,080
--------
Total return...................................................... 21.39%*
Net assets (in millions):
End of year...................................................... $ 24,202
Ratio of operating expenses to average net assets................. 0.43%**
Ratio of net investment income to average net assets.............. 0.80%**
Portfolio trunover rate........................................... 2%
Average commission rate paid...................................... $ 0.0309
</TABLE>
* Total return information shown in the Financial Highlights tables does not
reflect expenses that apply at the separate account level or to related
insurance products. Inclusion of these charges would reduce the total return
figures for the period shown. Percentage represents results for the year and
are not annualized.
**Percentages represent results for the period from May 1, 1997 (commencement of
operations) through December 31, 1997.
2
<PAGE>
II. Management Discussion
A. Economic and Investment Environment
As we begin 1998, the U.S. economy appears to be embarking on its eighth
consecutive year of expansion. By almost any measure, 1997 was a solidly good
year. Consumption was up, consumer confidence reached a 28-year high,
unemployment hit a 24-year low, gains were made in personal income and corporate
profits, housing starts and new and existing housing sales were up, and the
Federal budget deficit was reduced to a point where 1998 may even see a small
surplus.
All of this happened against a backdrop of declining price pressures fueling
debate over the relevance of the Phillips Curve, which is the historical model
suggesting that economic growth will eventually breed inflation. Inflation
measured by the Consumer Price Index remained below two percent, down from 1996
levels, and both the Producer Price Index and commodities prices dropped.
Without inflationary pressures, the Federal Reserve Board, which had raised
interest rates by 25 basis points in March, did not take action again for the
remainder of the year, and rates consequently declined.
Working counter to the forces supporting the domestic economy over the past year
was the financial breakdown in the Pacific Rim. After years of over-investment,
weak infrastructure and poor economic policy, high-flying markets including
South Korea, Thailand and Indonesia suffered tremendous losses during the second
half of 1997.
The problems these economies face are deep and far-reaching, and recognition of
this fact has caused turmoil in markets throughout the world. Japan, which has
fiscal problems of its own, is a close trading partner to much of the rest of
Southeast Asia and will be impacted by weakness there. The U.S. has seen effects
of the Asian crisis on a number of levels. The uncertainty created by the Asian
crisis added volatility to an already nervous stock market, precipitating a one
day drop in the Dow Jones Industrial Average of over 500 points in late October.
A flight to quality in the currency markets bolstered the U.S. dollar, making
American exports expensive in overseas markets and potentially increasing the
trade deficit. Domestic firms that rely on sales to Asian markets may see
profits come under pressure as orders decline, and competitive price pressures
from Asian exporters may impact the ability for companies to raise prices on a
global basis.
Even though the U.S. stock market increased in volatility, it turned in
impressive results for the year. As of December 31, 1997, the Standard & Poor's
500 Composite Stock Price Index (the "Index") was up 33.37%, the Dow Jones
Industrial Average increased 24.93%, the NASDAQ Composite Index was up 21.63%
and the Frank Russell 2000 Index earned 22.36%.
Because of the uncertainty inherent in a market that's enjoyed such a tremendous
three-year advance, plus the concerns that arose from the Asian markets'
problems, it was large cap growth stocks that benefited most during the year.
These companies, which are well-represented in indices like the Index, were part
of a `flight to quality' that the market experienced over the course of the
year. They are companies that are large enough to endure competitive pressures,
and due to their large capitalization, their stocks are very liquid.
The bond market also advanced during 1997. After the Federal Reserve's March
tightening, rates began to decline, and bonds rallied as a result. During the
second half of the year, investors moved into bonds as a safe haven from stock
market volatility. Rates declined and the yield curve flattened. Toward the end
of the year, bonds paying higher yields than Treasuries seemed to offer the best
opportunities. For the first time in quite a while, there was some risk premium
available in moving lower in quality.
B. Portfolio Review
For the eight-month period ended December 31, 1997, since inception of the Fund,
the portfolio realized a total return of 21.39%, while the Index had a total
return of 22.56%. The Fund is designed to replicate the large capitalization
United States equity market as it is represented by the Index for the same
period. Large capitalization equities had a very strong year in 1997,
outperforming both small and mid capitalization stocks. In 1997, some of the
best performing groups in the Index were trucking, savings and loan, brokerage
and investment banking companies.
MML EQUITY INDEX FUND
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
MML Equity Standard & Poor's
Date Index Fund 500 Index
-------- ---------- ------------------
05/01/97 $10,000 $10,000
06/30/97 11,080 11,084
09/30/97 11,870 11,914
12/31/97 12,912 12,256
Past performance is not predicitive of future performance.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------
AVERAGE ANNUAL TOTAL RETURN
--------------------------------
<S> <C>
4th Quarter Since Inception
--------------------------------
2.72% 21.39%
--------------------------------
- --------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
III. General Information
MML Trust is a no-load, open-end investment management company having separate
investment portfolios, each of which has its own investment objectives and
policies and is designed to meet different investor needs. This Prospectus
provides information regarding the Fund, a non-diversified investment portfolio
of MML Trust.
MML Trust was organized as a business trust under the laws of The Commonwealth
of Massachusetts pursuant to an Agreement and Declaration of Trust dated
December 19, 1984, as amended from time to time (the "Declaration of Trust").
MML Trust was established by Massachusetts Mutual Life Insurance Company
("MassMutual") for the purpose of providing a vehicle for the investment of
assets of various separate investment accounts established by MassMutual and its
life insurance company subsidiaries, including MML Bay State Life Insurance
Company. Shares of the Fund are offered solely to separate investment accounts
established by MassMutual and its life insurance company subsidiaries.
MassMutual is responsible for providing all investment advisory, management, and
administrative services needed by the Fund pursuant to an investment management
agreement with MML Trust, on behalf of the Fund. MassMutual has entered into an
investment sub-advisory agreement with Mellon Equity Associates, LLP ("Mellon
Equity"), which provides that Mellon Equity will serve as the Fund's investment
sub-adviser, providing day-to-day management of the Fund's investments. Both
MassMutual and Mellon Equity are registered with the Securities and Exchange
Commission (the "SEC") as investment advisers under the Investment Advisers Act
of 1940, as amended. (MassMutual and Mellon Equity are referred to hereinafter
collectively as the "Advisers.") For further information, see "The Advisers."
IV. MML Equity Index Fund
Investment Objective
The Fund's investment objective is to provide investment results that correspond
to the price and yield performance of publicly traded common stocks in the
aggregate, as represented by the Index(1).
This investment objective of the Fund is a fundamental policy and may not be
changed without the vote of a majority of the Fund's outstanding voting shares
(as used in this Prospectus, a majority of the outstanding voting shares of the
Fund means the lesser of (1) 67% of the Fund's outstanding shares present at a
meeting of the shareholders if more than 50% of the outstanding shares are
present in person or by proxy, or (2) more than 50% of the Fund's outstanding
shares). As explained below, there is no assurance that the investment objective
of the Fund will be realized.
Management Policies
The Fund attempts to duplicate the investment results of the Index, which is
composed of 500 selected common stocks, most of which are listed on the New York
Stock Exchange. Standard & Poor's ("S&P") has an Index Committee which is
responsible for the overall management of the Index. The Index Committee looks
at a company's market value, industry group classification, capitalization,
trading activity, financial and operating condition before making a decision to
include it in the Index. New companies are added to the Index only when there is
a vacancy. Companies are removed from the Index for four major reasons: merger
with (or acquisition by) another company, financial operating failure, lack of
representation of leading American industries, or restructuring.
The Fund attempts to be fully invested at all times in the stocks that comprise
the Index, Standard and Poor's Depositary Receipts ("SPDRs") and stock index
futures as described below and, in any event, in the normal course of
management, at least 80% of the Fund's net assets will be so invested.
Furthermore, while the Fund does intend to invest in every stock included in the
Index, there may be circumstances, such as during the Fund's early stages, when
it may have relatively small assets, when the Fund is not invested in every such
stock. Inclusion of a stock in the Index in no way implies an opinion by S&P as
to its attractiveness as an investment. The Fund uses the Index as the standard
performance comparison because it represents approximately 73% of the total
market value of all United States common stocks and is well known to investors.
An investment in the Fund involves risks similar to those of investing in common
stocks.
- ----------
(1) "Standard & Poor's", "S&P", "Standard & Poor's 500", "S&P 500" and "500" are
trademarks of The McGraw-Hill Companies and have been licensed for use by the
Fund. The Fund is not sponsored, endorsed, sold or promoted by Standard &
Poor's, a division of The McGraw-Hill Companies ("S&P"), or The McGraw Hill
Companies, Inc. S&P makes no representation regarding the advisability of
investing in the Fund.
4
<PAGE>
The weightings of stocks in the Index are based on each stock's relative total
market capitalization; that is, its market price per share times the number of
shares outstanding. Because of this weighting, as of December 31, 1997,
approximately 49.33% of the Index was composed of the 50 largest companies.
Mellon Equity generally selects stocks for the Fund's portfolio in the order of
their weightings in the Index beginning with the heaviest weighted stocks. With
respect to the Fund's assets invested in the stocks in the Index, the percentage
of such assets invested in each stock is approximately the same as the
percentage it represents in the Index.
No attempt is made to manage the portfolio in the traditional sense using
economic, financial and market analysis. The Fund is managed using a computer
program to determine which stocks are to be purchased or sold to replicate the
Index to the extent feasible. From time-to-time, administrative adjustments may
be made in the Fund's portfolio because of changes in the composition of the
Index, but such changes should be infrequent.
The Fund believes that the indexing approach described above is an effective
method of substantially duplicating Index performance. It is a reasonable
expectation that there will be a close correlation between the Fund's
performance and that of the Index in both rising and falling markets. The Fund
will attempt to achieve a correlation between the performance of its portfolio
and that of the Index of at least 0.95, without taking into account expenses. A
correlation of 1.00 would indicate perfect correlation, which would be achieved
when the Fund's net asset value, including the value of its dividends and
capital gains distributions, increases or decreases in exact proportion to
changes in the Index. The Fund's ability to correlate its performance with the
Index, however, may be affected by, among other things, changes in securities
markets, the manner in which the Index is calculated by S&P and the timing of
purchases and redemptions of Fund shares.
The Fund's ability to duplicate the performance of the Index also depends to
some extent on the size of the Fund's portfolio and the size of cash flows into
and out of the Fund. Investment changes to accommodate these cash flows are made
to maintain the similarity of the Fund's portfolio to the Index to the maximum
practicable extent.
From time to time to increase its income, the Fund may lend securities from its
portfolio. See "Appendix - Investment Techniques." When the Fund has cash
reserves, the Fund may invest in money market instruments consisting of U.S.
Government securities, time deposits, certificates of deposit, bankers'
acceptances, high-grade commercial paper, and repurchase agreements. See the
Statement of Additional Information for a description of these instruments.
The Fund may invest in SPDRs, an investment intended to provide investment
results that generally correspond to the price and yield performance of the
Index, when, in the opinion of Mellon Equity, available cash balances would not
otherwise allow the Fund to invest such cash balances in a manner which
adequately corresponds to the Index. SPDRs represent an interest in the
portfolio of S&P 500 stocks held by a unit investment trust, and SPDR holders
are entitled to receive dividends which accrue to stocks held by the unit
investment trust, less trust expenses. The Fund also may purchase stock index
futures in anticipation of taking a market position when, in the opinion of
Mellon Equity, available cash balances do not permit an economically efficient
trade in the cash market. The Fund also may sell stock index futures to
terminate existing positions it may have as a result of its purchases of stock
index futures. Investments in stock index futures typically require greater
available cash balances than do investments in SPDRs. See also "Investment
Considerations and Risks" and "Appendix - Investment Techniques" below, and
"Investment Objective and Management Policies" in the Fund's Statement of
Additional Information.
The Fund is not sponsored, endorsed, sold or promoted by S&P. S&P makes no
representation or warranty, express or implied, to the shareholders of the Fund
or any member of the public regarding the advisability of investing in
securities generally or in the Fund particularly or the ability of the Index to
track general stock market performance. S&P's only relationship to the Fund is
the licensing of certain trademarks and trade names of S&P and of the Index,
which is determined, composed and calculated by S&P without regard to the Fund.
S&P has no obligation to take the needs of the Fund or the shareholders of the
Fund into consideration in determining, composing or calculating the Index. S&P
is not responsible for and has not participated in the determination of the
prices and amount of the Fund or the timing of the issuance or sale of the Fund
or in the determination or calculation of the equation by which the Fund is to
be converted into cash. S&P has no obligation or liability in connection with
the administration, marketing or trading of the Fund.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 INDEX
OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY ERRORS,
OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY THE FUND, SHAREHOLDERS OF THE FUND, OR ANY OTHER
PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN.
S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY
OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
5
<PAGE>
V. Investment Considerations and Risks
General - The Fund's net asset value per share should be expected to fluctuate.
Investors should consider the Fund as a part of an overall investment program
and should invest only if they are willing to undertake the risks involved. See
"Investment Objective and Management Policies" in the Statement of Additional
Information for a further discussion of certain risks.
Equity Securities - Equity securities fluctuate in value, often based on factors
unrelated to the value of the issuer of the securities, and such fluctuations
can be pronounced. Changes in the value of the Fund's investments will result in
changes in the value of its shares and thus the Fund's total return to
investors.
Foreign Securities - Since the stocks of some foreign issuers are included in
the Index, the Fund's portfolio may contain securities of such foreign issuers
which may subject the Fund to additional investment risks with respect to those
securities that are different in some respects from those incurred by a fund
which invests only in securities of domestic issuers. Such risks include the
possibility of one or more of the following: imposition of dividend or interest
withholding or confiscatory taxes; currency blockages or transfer restrictions;
expropriation, nationalization, military coups or other adverse political or
economic developments; less government supervision and regulation of securities
exchanges, brokers and listed companies; and the difficulty of enforcing
obligations in other countries. Certain markets may require payment for
securities before delivery. The Fund's ability and decisions to purchase and
sell portfolio securities may be affected by laws or regulations relating to the
convertibility of currencies and repatriation of assets. Further, it may be more
difficult for the Fund's agents to keep currently informed about corporate
actions which may affect the prices of portfolio securities. Communications
between the United States and foreign countries may be less reliable than within
the United States, thus increasing the risk of delayed settlements of portfolio
transactions or loss of certificates for portfolio securities.
Use of Derivatives - The Fund may invest, to a limited extent, in derivatives
("Derivatives"). These are financial instruments which derive their performance,
at least in part, from the performance of an underlying asset or index. The
Derivatives the Fund may use include stock index futures. While Derivatives can
be used effectively in furtherance of the Fund's investment objective, under
certain market conditions, they can increase the volatility of the Fund's net
asset value, can decrease the liquidity of the Fund's portfolio and make more
difficult the accurate pricing of the Fund's portfolio. See "Appendix -
Investment Techniques Use of Derivatives" and "Investment Objective and
Management Policies - Management Policies - Derivatives" in the Statement of
Additional Information.
Non-Diversified Status - The classification of the Fund as "non-diversified"
means that the proportion of the Fund's assets that may be invested in the
securities of a single issuer is not limited by the Investment Company Act of
1940, as amended (the "1940 Act"). A "diversified" investment company is
required by the 1940 Act generally, with respect to 75% of its total assets, to
invest not more than 5% of such assets in the securities of a single issuer.
Since a relatively high percentage of the Fund's assets may be invested in the
securities of a limited number of issuers, some of which may be within the same
economic sector, the Fund's portfolio may be more sensitive to the changes in
market value of a single issuer or industry. However, to meet Federal tax
requirements, at the close of each quarter the Fund may not have more than 25%
of its total assets invested in any one issuer and, with respect to 50% of total
assets, not more than 5% of its total assets invested in any one issuer. These
limitations do not apply to U.S. Government securities.
Fundamental Investment Restrictions - For a description of fundamental
investment restrictions that apply to the Fund, which may not be changed without
a vote of a majority of the outstanding shares of the Fund, reference should be
made to the Statement of Additional Information.
VI. The Advisers
MassMutual
MassMutual serves as investment manager of the Fund pursuant to an investment
management agreement executed by MassMutual and MML Trust, on behalf of the Fund
(the "Investment Management Agreement"). MassMutual is a mutual life insurance
company organized in 1851 under the laws of The Commonwealth of Massachusetts.
MassMutual provides, directly or through its subsidiaries, a wide range of life
insurance, annuity and disability products, and pension and pension-related
products, as well as investment services to individuals, corporations,
investment companies and other institutions. As of December 31, 1997,
MassMutual, together with its subsidiaries, had consolidated assets in excess of
$61 billion and consolidated assets under management in excess of $152 billion.
Under the Investment Management Agreement, MassMutual is authorized to engage in
portfolio transactions on behalf of the Fund, subject to such general or
specific instructions as may be given by the Board of Trustees of MML Trust. The
Investment Management Agreement provides that MassMutual will perform all
administrative functions relating to the Fund and will bear all expenses of the
Fund except: (1) taxes and corporate fees payable to government agencies; (2)
brokerage commissions and other capital items payable in connection with the
purchase or sale of Fund investments; (3) interest on account of any borrowings
by the Fund; (4) fees and expenses of Trustees of MML Trust who are not
interested persons, as defined in the 1940 Act, of the Advisers or MML Trust;
(5)
6
<PAGE>
fees and expenses of MML Trust's Advisory Board Members; (6) fees of the Fund's
independent certified public accountants; and (7) any required trademark
licensing fees.
For providing the services described above, MassMutual is paid a quarterly fee
at the annual rate of .40% of the first $100 million of the average daily net
asset value of the Fund; .38% of the next $150 million and .36% of any net
assets thereafter. For the eight-month period ended December 31, 1997, the Fund
paid fees to MassMutual amounting to .25% of its average daily net assets during
the period. The imposition of the Fund's management fee, as well as the Fund's
other operating expenses, will have the effect of reducing shareholders' return
and will affect the ability of the Fund to track the Index exactly.
The Investment Management Agreement automatically terminates: (1) unless its
continuance is specifically approved at least annually by the affirmative vote
of a majority of the Board of Trustees of MML Trust, which affirmative vote
shall include a majority of the members of the Board who are not interested
persons (as defined in the 1940 Act) of the Advisers or of MML Trust, or (2)
upon its assignment. Under the terms of the Investment Management Agreement, the
Fund recognizes MassMutual's control of the initials "MML" and the Fund agrees
that its right to use these initials is non-exclusive and can be terminated by
MassMutual at any time. Under the agreement, MassMutual's liability regarding
its investment management obligations and duties is limited to situations
involving its willful misfeasance, bad faith, gross negligence or reckless
disregard of such obligations and duties.
MassMutual also acts as the Fund's transfer agent and the dividend paying agent.
First Data Investors Services Group, Inc., located at 4400 Computer Drive,
Westborough, Massachusetts 01481, provides fund accounting services for the Fund
and is compensated by MassMutual for providing such services to the Fund.
Mellon Equity
Pursuant to an investment sub-advisory agreement (the "Sub-Advisory Agreement")
with MassMutual, Mellon Equity, located at 500 Grant Street, Pittsburgh,
Pennsylvania 15258, serves as the Fund's investment sub-adviser, providing
day-to-day management of the Fund's investments. Mellon Equity is a registered
investment adviser formed in 1987. Effective January 1, 1998, Mellon Equity, a
subsidiary of Mellon Bank Corporation, was reorganized as a Pennsylvania limited
liability partnership. Mellon Bank, N.A. is the 99% limited partner and MMIP,
Inc. is the 1% general partner of Mellon Equity. As of December 31, 1997, Mellon
Equity and its employees managed approximately $17 billion and served as the
investment adviser or sub-adviser of 18 other investment companies.
Mellon Bank Corporation is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under the Federal
Bank Holding Company Act of 1956, as amended. Mellon Bank Corporation provides a
comprehensive range of financial products and services in domestic and selected
international markets. Through its subsidiaries, Mellon Bank Corporation managed
more than $300 billion in assets as of December 31, 1997, including
approximately $93 billion in proprietary mutual fund assets.
The Sub-Advisory Agreement provides that MassMutual will pay Mellon Equity a
monthly fee equal at an annual rate of .09% of the first $100 million of the
average daily net asset value of the Fund; .07% of the next $150 million; and
.05% on any assets thereafter. Pursuant to the Sub-Advisory Agreement, Mellon
Equity has agreed that so long as it is the sole investment sub-adviser to the
Fund, the fees for the custody services for the Fund, which will be provided by
Boston Safe Deposit and Trust Company (which is an indirect subsidiary of Mellon
Bank Corporation) will be deducted from Mellon Equity's fee.
The Sub-Advisory Agreement automatically terminates: (1) unless its continuance
is specifically approved at least annually by the affirmative vote of a majority
of the Board of Trustees of MML Trust, which affirmative vote shall include a
majority of the members of the Board who are not interested persons (as defined
in the 1940 Act) of the Advisers or of MML Trust; (2) upon its assignment; or
(3) upon the termination of the Investment Management Agreement. Under the terms
of the Sub-Advisory Agreement, Mellon Equity's liability regarding its
investment management obligations and duties is limited to situations involving
its willful misfeasance, bad faith, gross negligence or reckless disregard of
such obligations and duties.
The Sub-Advisory Agreement acknowledges that when purchase or sale of securities
of the same issuer is suitable for the Fund and one or more other investment
companies or accounts managed by Mellon Equity which attempt to track an equity
index, such purchases or sales may and normally will be combined, to the extent
practicable, and will be allocated as nearly as practicable on a pro rata basis
in proportion to the amounts to be purchased or sold for each. In determining
the amounts to be purchased or sold, the main factors to be considered will be
the investment objectives of the respective portfolios, the relative size of
portfolio holdings of the same or comparable security, availability of cash for
investment by the various portfolios and the size of their respective investment
commitments. Mellon Equity believes that the ability of the Fund to participate
in larger volume transactions will, in most cases, produce better execution for
the Fund. In some cases, however, this procedure could have a detrimental effect
on the price and amount of a security available to the Fund or the price at
which a security may be sold. It is the opinion of MML Trust's management that
such execution advantage and the desirability of retaining Mellon Equity as
index manager of the Fund outweigh the disadvantages, if any, which might result
from this procedure.
In allocating brokerage transactions for the Fund, Mellon Equity seeks to obtain
the best execution of orders at the most favorable net price. Subject to this
determination, Mellon Equity may consider, among other things, the sale of
shares
7
<PAGE>
of the Fund as a factor in the selection of broker-dealers to execute portfolio
transactions for the Fund. Mellon Equity will not consider the provision of
brokerage or research services (as such term is defined in Section 28(e) of the
Securities Exchange Act of 1934, as amended) in allocating brokerage
transactions for the Fund. See "Portfolio Transactions" in the Statement of
Additional Information.
VII. Capital Shares
MML Trust is a "series" company. To date, shares of six separate series (i.e.,
investment portfolios) have been authorized, one of which constitutes the
interests in the Fund. Under MML Trust's Declaration of Trust, however, the
Board of Trustees is authorized to create new series without the necessity of a
vote of shareholders of MML Trust. Each share of a particular series represents
an equal proportionate interest in that series with each other share of the same
series, none having priority or preference over another. Each series shall be
preferred over all other series in respect of the assets allocated to that
series. Each share of a particular series is entitled to a pro rata share of any
distributions declared by that series and, in the event of liquidation, a pro
rata share of the net assets of that series remaining after satisfaction of
outstanding liabilities. When issued, shares are fully paid and nonassessable
and have no preemptive, conversion or subscription rights.
MML Trust is not required to hold annual meetings of shareholders. Special
meetings may be called for purposes such as electing Trustees, voting on
management agreements, and with respect to such additional matters relating to
MML Trust as may be required by MML Trust's Declaration of Trust and the 1940
Act. Shareholders holding 10% of the shares of MML Trust may call a meeting to
be held to consider removal of Trustees. On any matter submitted to
shareholders, shares of each series entitle their holder to one vote per share
(with proportionate voting for fractional shares), irrespective of the relative
net asset values of the series' shares. On any matters submitted to a vote of
shareholders, all shares of MML Trust then entitled to vote shall be voted by
individual series, except that (i) when required by the 1940 Act, shares shall
be voted in the aggregate and not by individual series, and (ii) when the
Trustees have determined that any matter affects only the interests of one or
more series, then only shareholders of such series shall be entitled to vote
thereon. Shareholder inquiries should be made by contacting the Secretary, MML
Series Investment Fund, 1295 State Street, Springfield, Massachusetts 01111.
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of MML Trust. However, MML Trust's
Declaration of Trust disclaims liability of the shareholders, Trustees of MML
Trust, or officers of MML Trust for acts or obligations of MML Trust, which are
binding only on the assets and property of MML Trust, and requires that notice
of such disclaimer be given in each agreement, obligation, or instrument entered
into or executed by MML Trust or Trustees of MML Trust. MML Trust's Declaration
of Trust provides for indemnification out of MML Trust property for all loss and
expense of any shareholder held personally liable for the obligations of MML
Trust. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is considered remote since it is limited to circumstances
in which the disclaimer is inoperative and MML Trust itself would be unable to
meet its obligations.
VIII. Net Asset Value
The net asset value of the Fund's shares is determined once daily as of the
normal close of trading on the New York Stock Exchange (presently 4:00 p.m.) on
each day on which the Exchange is open for trading.
Generally, the Fund values portfolio securities on the basis of market value.
For example, equity securities, including those traded on national securities
exchanges, the NASDAQ National Market System, or over-the-counter securities not
so listed, are valued by one or more pricing services, as authorized by the
Board of Trustees of MML Trust. Normally, the values are based upon the last
reported sale price of the security. Debt obligations with less than one year
but more than sixty days to maturity are valued on the basis of their market
value. Debt obligations having a maturity of sixty days or less are generally
valued at amortized cost when the Board of Trustees of MML Trust believes that
amortized cost approximates market value. Futures contracts are valued based on
market prices unless such prices do not reflect the fair value of the contract,
in which case they will be valued by or under the direction of the Board of
Trustees of MML Trust. In all other cases, assets will be valued at fair value
as determined in good faith by the Board of Trustees, although the actual
calculations may be made by persons acting pursuant to the direction of the
Board.
IX. Sale and Redemption of Shares
The shares of the Fund are sold at their net asset value as next computed after
receipt of the purchase order, without the addition of any selling commission or
"sales load."
The Fund redeems its shares at their net asset value as next computed after
receipt of the request for redemption. The redemption price for shares of the
Fund may be more or less than the shareholder's cost. The redemption price may
be paid in cash or wholly or partly in kind if MML Trust's Board of Trustees
determine that such payment is advisable in the interest of the remaining
shareholders. In making such payment wholly or partly in kind, the Fund will, as
far as may be practicable, deliver securities or property which approximate the
diversification of its entire assets at the time. No fee is charged on
redemption.
Redemption payments will be made within seven days after receipt of the written
request therefor by MML Trust, except
8
<PAGE>
that the right of redemption may be suspended or payments postponed when
permitted by applicable law and regulations.
X. Tax Status
It is the policy of the Fund to comply, and in 1997 the Fund did comply, with
the provisions of the Internal Revenue Code applicable to regulated investment
companies. As a result, the Fund will not be subject to federal income tax on
any net income or any capital gains to the extent they are distributed or are
deemed to have been distributed to shareholders.
Regulations issued under Internal Revenue Code Section 817(h) require the Fund
to be adequately diversified in order for a variable life insurance contract
funded by the Fund to receive favorable tax treatment as a life insurance
contract. Among other requirements, the regulations limit the Fund's investment
in a single issuer to 55% of its assets; while this requirement applies to U.S.
Government securities, each government agency or instrumentality is treated for
this purpose as a separate issuer. The Fund intends to comply with these
diversification requirements. For further information, see the Statement of
Additional Information.
Tax consequences to investors in the separate investment accounts which are
invested in the Fund are described in the prospectuses for such accounts.
XI. Dividends and Capital Gains Distributions
The Fund intends to declare capital gain and ordinary income dividends and to
distribute such dividends in a manner designed to avoid a 4% excise tax on
undistributed regulated investment company income imposed by the Tax Reform Act
of 1986. Distributions, if any, are declared and paid annually. Distributions
may be taken either in cash or in additional shares of the Fund at net asset
value on the first business day after the record date for the distribution, at
the option of the shareholder.
XII. Investment Performance
The Fund may from time to time advertise certain investment performance figures.
These figures are based on historical returns and are not intended to indicate
future performance.
The Fund may advertise its total return and its holding period return for
various periods of time. Total return is calculated by determining, over a
period of time which will be stated in the advertisement, the average annual
compounded rate of return that an investment in the Fund earned over that
period, assuming reinvestment of all distributions. Holding period return refers
to the percentage change in the value of an investment in the Fund over a period
of time (which period will be stated in the advertisement), assuming
reinvestment of all distributions. Total return differs from holding period
return principally in that total return is an average annual figure while
holding period return is an aggregate figure for the entire period. This
performance information for the Fund may also be compared to the Index.
These investment performance figures may be of limited use for comparative
purposes because they do not reflect charges imposed by the separate investment
accounts invested in the Fund which, if included, would decrease the performance
figures. For more information about calculation of the investment performance of
the Fund, see the Statement of Additional Information.
XIII. Management of MML Trust
The affairs of MML Trust are generally supervised by its Board of Trustees and
officers. As stated previously, MassMutual acts as investment manager of the
Fund and Mellon Equity is the sub-adviser to the Fund. In those capacities
MassMutual and Mellon Equity are part of the management of MML Trust. For more
information concerning the management of MML Trust, reference should be made to
the Statement of Additional Information.
The name MML Series Investment Fund is the designation of Trustees of MML Series
Investment Fund under an Agreement and Declaration of Trust dated December 19,
1984, as amended from time to time. The obligations of such Trust are not
personally binding upon, nor shall resort be had to the property of, any
Trustees of MML Series Investment Fund, shareholders, officers, employees or
agents of MML Series Investment Fund, but only the property of the relevant
series of MML Series Investment Fund shall be bound.
9
<PAGE>
Appendix
Investment Techniques
Borrowing Money - The Fund is permitted to borrow money only for temporary or
emergency purposes, in an amount up to 5% of the value of its total assets
(including the amount borrowed) valued at the lesser of cost or market, less
liabilities (not including the amount borrowed) at the time the borrowing is
made.
Use of Derivatives - The Fund may invest in the types of Derivatives enumerated
under "Investment Considerations and Risks - Use of Derivatives." These
instruments and certain related risks are described more specifically under
"Investment Objective and Management Policies - Management Policies Derivatives"
in the Statement of Additional Information.
Although the Fund will not be a commodity pool, Derivatives subject the Fund to
the rules of the Commodity Futures Trading Commission which limit the extent to
which the Fund can invest in certain derivatives. The Fund may invest in stock
index futures contracts for hedging purposes without limit. However, the Fund
may not invest in such contracts for other purposes if the sum of the amount of
initial margin deposits, other than for bona fide hedging purposes, exceeds 5%
of the liquidation value of the Fund's assets, after taking into account
unrealized gains and unrealized losses on such contracts.
Standard & Poor's Depositary Receipts ("SPDRs") - The Fund may invest in SPDRs
when, in the opinion of Mellon Equity, available cash balances would not
otherwise allow the Fund to invest such cash balances in a manner which
adequately corresponds to the Index. Investments in SPDRs typically require less
available cash balances than do investments in stock index futures.
SPDRs represent an interest in the portfolio of S&P 500 stocks held by a unit
investment trust. SPDRs trade on the American Stock Exchange and may be bought
and sold like common stock at any time during the trading day. An investment in
SPDRs is intended to provide investment results that generally correspond to the
price and yield performance of the Index.
Lending Portfolio Securities - The Fund may seek additional income by lending
securities from its portfolio to brokers, dealers and other financial
institutions desiring to borrow securities to complete certain transactions. The
Fund continues to be entitled to payments in amounts equal to the interest,
dividends or other distributions payable on the loaned securities which affords
the Fund an opportunity to earn interest on the amount of the loan and income on
the loaned securities' collateral. Loans of portfolio securities may not exceed
10% of the value of the Fund's total assets, and the Fund will receive
collateral consisting of cash, U.S. Government securities or irrevocable letters
of credit which will be maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities. Such loans are
terminable by the Fund at any time upon specified notice. The Fund might
experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with the Fund.
A-1
<PAGE>
MML EQUITY INDEX FUND
1295 State Street
Springfield, Massachusetts 01111
--------------------
INVESTMENT MANAGER
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
1295 State Street
Springfield, Massachusetts 01111
INVESTMENT SUB-ADVISER
MELLON EQUITY ASSOCIATES, LLP
500 Grant Street
Suite 3700
Pittsburgh, Pennsylvania 15258
INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.
2300 Tower Square
1500 Main Street
Springfield, Massachusetts 01101
CUSTODIAN
BOSTON SAFE DEPOSIT AND
TRUST COMPANY
One Boston Place
Boston, Massachusetts 02108
--------------------
For Use With:
. MML Bay State Variable Life Separate Account I
. MassMutual Variable Life Separate Account I
This Prospectus does not constitute an offering in any jurisdiction in which
such offering may not lawfully be made. No person is authorized to make any
representations in connection with this offering other than those contained in
this Prospectus.
<PAGE>
MML SERIES INVESTMENT FUND
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. IT SHOULD BE READ
IN CONJUNCTION WITH THE PROSPECTUS OF MML SERIES INVESTMENT FUND DATED MAY 1,
1998, AS AMENDED FROM TIME-TO-TIME (THE "PROSPECTUS"). THE PROSPECTUS MAY BE
OBTAINED FROM THE SECRETARY, MML SERIES INVESTMENT FUND, 1295 STATE STREET,
SPRINGFIELD, MASSACHUSETTS 01111.
THIS STATEMENT OF ADDITIONAL INFORMATION RELATES TO THE FOLLOWING FUNDS:
. MML EQUITY FUND
. MML MONEY MARKET FUND
. MML MANAGED BOND FUND
. MML BLEND FUND
DATED MAY 1, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION ...................................................... 1
INVESTMENT PRACTICES OF THE FUNDS AND RELATED RISKS ...................... 1
INVESTMENT RESTRICTIONS .................................................. 9
MANAGEMENT OF MML TRUST .................................................. 11
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES ...................... 16
INVESTMENT MANAGEMENT AND OTHER SERVICES ................................. 16
BROKERAGE ALLOCATION ..................................................... 18
CAPITAL SHARES ........................................................... 19
PURCHASE, REDEMPTION AND PRICING OF
SECURITIES BEING OFFERED .............................................. 19
TAX STATUS ............................................................... 21
CERTAIN TAX AND ACCOUNTING INFORMATION ................................... 22
INVESTMENT PERFORMANCE ................................................... 22
EXPERTS .................................................................. 23
REPORT OF INDEPENDENT ACCOUNTANTS ........................................ F-1
FINANCIAL STATEMENTS OF THE TRUST
(1) Statement of Assets and Liabilities
As of December 31, 1997 ........................................... F-2
MML Equity Fund; MML Money Market Fund; MML Managed
Bond Fund; and MML Blend Fund
(2) Statement of Operations
For the year ended December 31, 1997 .............................. F-3
MML Equity Fund; MML Money Market Fund; MML Managed
Bond Fund; and MML Blend Fund
(3) Statement of Changes in Net Assets
For the years ended December 31, 1997 and 1996 .................... F-4
MML Equity Fund; MML Money Market Fund; MML Managed
Bond Fund; and MML Blend Fund
(4) Financial Highlights .............................................. F-5
(5) Schedules of Investments as of December 31, 1997 .................. F-8
MML Equity Fund; MML Money Market Fund; MML Managed
Bond Fund; and MML Blend Fund
(6) Notes to Financial Statements ..................................... F-20
APPENDIX - Securities Ratings ............................................ A-1
</TABLE>
<PAGE>
I. GENERAL INFORMATION
MML Series Investment Fund ("MML Trust") is a no-load, open-end, investment
management company, having separate investment portfolios. This Statement of
Additional Information provides information regarding the following four
diversified investment portfolios (the "Funds") of MML Trust: MML Equity Fund
("MML Equity"); MML Money Market Fund ("MML Money Market"); MML Managed Bond
Fund ("MML Managed Bond"); and MML Blend fund ("MML Blend"). Each Fund has its
own investment objectives and policies and is designed to meet different
investment needs.
MML Trust was organized as a business trust under the laws of The Commonwealth
of Massachusetts pursuant to an Agreement and Declaration of Trust dated
December 19, 1984, as amended from time to time (the "Declaration of Trust").
MML Trust was established by Massachusetts Mutual Life Insurance Company
("MassMutual") for the purpose of providing a vehicle for the investment of
assets of various separate investment accounts established by MassMutual and its
life insurance company subsidiaries, including MML Bay State Life Insurance
Company. Shares of the Funds are offered solely to separate investment accounts
established by MassMutual and its life insurance company subsidiaries.
MassMutual is responsible for providing all investment advisory, management, and
administrative services needed by the Funds pursuant to investment management
agreements. MassMutual has entered into investment sub-advisory agreements
pursuant to which David L. Babson and Company Incorporated ("Babson") manages
the investment of the assets of MML Equity and the Equity Sector of MML Blend.
Both MassMutual and Babson are registered with the Securities and Exchange
Commission (the "SEC") as investment advisers (MassMutual and Babson are
referred to hereinafter collectively as the "Advisers").
II. INVESTMENT PRACTICES OF THE FUNDS AND RELATED RISKS
The following information supplements and should be read in conjunction with the
discussion of the Funds' investment objectives, techniques and policies
described in the Prospectus. The fundamental investment objectives and
investment restrictions of each Fund (as described in the Prospectus and below)
may not be changed without a vote of a majority of such Fund's outstanding
shares. A "majority of the outstanding shares" of any Fund means the lesser of
(1) 67% of such Fund's outstanding shares present at a meeting of the
shareholders if more than 50% of the outstanding shares are present in person or
by proxy or (2) more than 50% of such Fund's outstanding shares. All other
investment policies and techniques of each Fund may be changed by the Board of
Trustees of MML Trust without a vote of shareholders. For example, such other
policies and techniques include investment in new types of debt instruments
which may be devised in the future, or which are presently in disuse but may
become more prominent in the future, and minor changes in investment policies
which may be made in response to changes in regulatory requirements which are
reflected in the present policies of such Fund. There is no assurance that the
investment objectives of the Funds will be realized. The success of these
objectives depends to a great extent upon the Advisers' ability to assess
changes in business and economic conditions.
In managing their portfolios of investments, the Funds may purchase various
securities, investment related instruments and make use of various investment
techniques, including those described below.
A. MML Managed Bond
It is a non-fundamental policy of MML Managed Bond to invest all of its assets
in investment grade securities as discussed in the Prospectus. While MML Managed
Bond has no current expectation to invest in non-investment grade securities,
MML Managed Bond may invest up to twenty percent (20%) of its assets in
non-investment grade debt instruments and preferred stocks. Lower quality debt
instruments involve greater volatility of price and yield, and greater risk of
loss of principal and interest, and generally reflect a greater possibility of
an adverse change in financial condition which would affect the ability of the
issuer to make payments of principal and interest. The market price for lower
quality securities generally responds to short-term corporate and market
developments to a greater extent than
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<PAGE>
higher-rated securities because such developments are perceived to have a more
direct relationship to the ability of an issuer of lower quality securities to
meet its ongoing debt obligations.
B. MML Blend - Money Market Sector
The Money Market Sector of MML Blend may invest in commercial paper or notes
issued by companies with an unsecured debt issue outstanding having a rating at
the time of purchase within the three highest grades as determined by Moody's
Investors Services, Inc. (Aaa, Aa or A) or Standard & Poor's Ratings Group (AAA,
AA or A) and U.S. dollar denominated foreign commercial paper. This sector may
also invest in repurchase agreements and securities of foreign issuers, provided
that such securities of foreign issuers not be more than 10% of the Sector's
total assets. See "Investment Practices of the Fund and Related Risks - Other
Investment Practices - Foreign Securities" for a discussion of the risks
associated with investing in foreign securities.
C. Derivatives
Although each Fund is authorized to engage in Derivatives Transactions as
indicated in the Prospectus, the Funds have no current expectation of entering
into such transactions in a material way other than the use of forward
contracts. Nonetheless, the following is a discussion of the Funds' authority to
enter into Derivative Transactions and a description of such transactions and
instruments. Examples of Derivative Transactions include entering into financial
futures transactions, writing covered call options on securities and futures or
covered puts on securities and futures and entering into forward contracts, swap
agreements, and other similar instruments (collectively referred to as
"Derivatives").
The Funds may use Derivatives to try to: (a) protect against possible declines
in the market value of a Fund's portfolio resulting from downward trends in the
relevant securities markets (for example, in the debt securities markets
generally due to increasing interest rates); (b) protect a Fund's unrealized
gains or limit unrealized losses in the value of its securities; (c) facilitate
selling securities for investment reasons; (d) establish a position in the
relevant securities markets as a temporary substitute for purchasing particular
securities; (e) manage its exposure to changing security prices; or (f) manage
the effective maturity or duration of fixed income securities in a Fund's
portfolio (collectively "Derivatives Transactions").
1. Forward Contracts - Each Fund may purchase or sell securities on a
"when issued," delayed delivery or on a forward commitment basis ("forward
contracts"). When such transactions are negotiated, the price is fixed at
the time of commitment, but delivery and payment for the securities can
take place a month or more after the commitment date. The securities so
purchased or sold are subject to market fluctuations, and no interest
accrues to the purchaser during this period. At the time of delivery, the
securities may be worth more or less than the purchase or sale price. The
Funds use forward contracts to manage interest rate exposure, as a
temporary substitute for purchasing or selling particular debt securities,
or to take delivery of the underlying security rather than closing out the
forward contract.
2. Currency Swaps - The Funds may invest in debt securities of foreign
issuers that are not denominated in U.S. dollars. In such cases, the Funds
will enter into currency transaction either to hedge the foreign currency
risks or to effectively convert the debt security to U.S. dollars.
3. Interest Rate Swap Agreements - Swap Agreements - An interest rate swap
agreement involves the exchange by the Fund with another party of their
respective commitments to pay or receive interest, such as an exchange of
floating rate payments for fixed rate payments with respect to a notional
amount of principal. Interest rate and yield curve swaps may be used by
MassMutual on behalf of a Fund as a hedging technique to preserve a return
or spread on a particular investment or portion of its portfolio or to
protect against any increase in the price of securities a Fund anticipates
purchasing in the future. The Funds intend to use these transactions as
hedges and not as speculative investments. A Fund usually will enter into
such agreements on a net basis whereby the two payments of interest are
netted with only one party paying the net amount, if any, to the other.
2
<PAGE>
4. Futures - The Funds may enter into exchange-traded futures contracts for the
purchase or sale of debt obligations in order to hedge against anticipated
changes in interest rates. The purpose of hedging in debt obligations is to
establish the effective rate of return on portfolio securities with more
certainty than would otherwise be possible. A futures contract on debt
obligations is a binding contractual commitment which, if held to maturity, will
result in an obligation to make or accept delivery, during a particular month,
of obligations having a standardized face value and rate of return. By entering
into a futures contract for the purchase of a debt obligation, a Fund will
legally obligate itself to accept delivery of the underlying security and pay
the agreed price; by entering into a futures contract for the sale of a debt
obligation it will legally obligate itself to make delivery of the security
against payment of the agreed price. Positions taken in the futures markets are
not normally held to maturity, but are instead liquidated through offsetting
transactions which may result in a profit or a loss as explained below.
While futures contracts based on debt securities provide for the delivery and
acceptance of securities, such deliveries and acceptances usually are not made.
Generally, the futures contract is terminated by entering into an offsetting
transaction. The closing out of a futures contract sale is effected by a Fund's
entering into a futures contract purchase for the same aggregate amount of the
specific type of financial instrument and the same delivery date. If the price
in the sale exceeds the price in the offsetting purchase, the Fund immediately
is paid the difference and thus realizes gain. If the offsetting purchase price
exceeds the sale price, a Fund pays the difference and realizes the loss.
Similarly, the closing out of a futures contract purchase is effected by a
Fund's entering into a futures contract sale for the same aggregate amount of
the specific type of financial instrument and the same delivery date. If the
offsetting sale price exceeds the purchase price, the Fund realizes a gain, and
if the purchase price exceeds the offsetting sale price, the Fund realizes a
loss. Instead of entering into an offsetting position, however, a Fund might
make or take delivery of the underlying securities whenever it appears
economically advantageous for it to do so.
Unlike the purchase or sale of a security, no price is paid or received by a
Fund upon the purchase or sale of a futures contract. The Fund will incur
brokerage fees in connection with its futures transactions, however, and will be
required to deposit and maintain funds with a registered futures commission
merchant or its custodian bank in a segregated account as margin to guarantee
performance of its future obligations. A Fund initially will be required to
deposit with its custodian bank or a registered futures commission merchant an
amount of "initial margin" consisting of cash or U.S. Treasury bills currently
equal to approximately 1 1/2% of the contract amount. The nature of initial
margin in futures transactions is different from that of margin in security
transactions in that futures contract initial margin does not involve the
borrowing of funds by a Fund to finance the transactions. Rather, the initial
margin is in the nature of a performance bond or good faith deposit on the
contract which is returned to the Fund upon termination of the futures contract,
assuming all contractual obligations have been satisfied. Subsequent payments to
and from the broker will be made on a daily basis as the price of the underlying
debt security fluctuates, making the long and short positions in the futures
contract more or less valuable, a process known as "mark to the market".
To compensate for the imperfect correlation of movements in the price of debt
securities being hedged and movements in the price of futures contracts, a Fund
may buy or sell futures contracts in a greater dollar amount than the dollar
amount of the securities being hedged if the historical volatility of the prices
of such securities has been greater than the historical volatility of the
futures contracts. Conversely, a Fund may buy or sell fewer futures contracts if
the historical volatility of the price of the securities being hedged is less
than the historical volatility of the futures contracts.
5. Call and Put Options
Call Options - give the right to a person to buy a security at a stated price,
or strike price, within a stated period. A call option can be exercised during
the exercise period if the spot price rises above the strike price; if not, the
option expires. A call option backed by the securities underlying the option is
a covered call option. The owner of the security will normally sell covered call
options to collect premium income or to reduce price
3
<PAGE>
fluctuations of the security. A covered call option limits the capital
appreciation of the underlying security. As a writer of a call option, a
Fund receives a premium, that may be an additional source of income for
the Fund, for undertaking the obligation to sell the underlying security
at a fixed price during the option period if the option is exercised. So
long as the Fund remains obligated as a writer of a call, it forgoes the
opportunity to profit from increases in the market price of the underlying
security above the exercise price of the option, except insofar as the
premium represents such profit.
Each Fund may write covered call options which are traded on a national
securities exchange with respect to securities in its portfolio, provided
that at all times it will have in its portfolio the securities which it
may be obligated to deliver if the option is exercised. Each Fund may
write call options on securities in its portfolio in an attempt to realize
a greater current return than would be realized on the securities alone or
to provide greater flexibility in disposing of such securities. The Fund
may also enter into "closing purchase transactions" in order to terminate
its obligation as a writer of a call option prior to the expiration of the
option. The writing of call options could result in increases in the
Funds' portfolio turnover rate, especially during periods when market
prices of the underlying securities appreciate.
Put Options - give the holder the right to sell the underlying securities
to the Fund during the term of the option at a fixed exercise price up to
a stated expiration date or, in the case of certain options, on such date.
Put options are "covered" by a Fund, for example, when it has established
a segregated account with its custodian bank consisting of cash, U.S.
Government issued securities and other liquid high quality debt
securities. Each Fund may also write straddles (combinations of calls and
puts on the same underlying security). The writing of straddles generates
additional premium income but may present greater risk.
6. Interest Rate Caps - The purchase of an interest rate cap entitles the
purchaser, to the extent a specific index exceeds a predetermined interest
rate, to receive payments on a contractually-based notional amount from
the party selling the interest rate cap. The purchase of an interest rate
floor entitles the purchaser, to the extent that a specific index falls
below a predetermined interest rate, to receive payments of interest on a
contractually-based notional principal amount from the party selling the
interest rate floor. In instances determined by the Board of Trustees, a
Fund selling caps and floors would maintain in a segregated account cash
or high-grade liquid assets having an aggregate net asset value at least
equal to the full amount, accrued on a daily basis, of the Fund's
obligations with respect to any caps or floors.
7. Other Derivatives - The Funds may use other derivatives that are or
become appropriate in the context of each Fund's investment objectives and
in a manner and to an extent permitted by law and authorized by the Board
of Trustees pursuant to guidelines proposed by MassMutual.
Derivatives Limitations - The policies limiting the use of Derivatives are
non-fundamental policies established by the Board of Trustees. The policies may
be changed by the Board without obtaining shareholder approval. MML Trust's
current non-fundamental policies are: (1) a Fund would not enter into a futures
contract if, immediately after entering into the futures contract, more than 5%
of the Fund's total assets would be committed to initial margin deposits on such
contracts; (2) a Fund will not purchase a put or call option on securities or
investment related instruments if, as a result, more than 5% of its total assets
would be attributable to premiums paid for such options; (3) a Fund would not
write a covered call or put option if as a result more than 20% of the Fund's
total assets would be in one or more segregated accounts covering call and put
options; and (4) a Fund would not enter into a forward contract if as a result
more than 25% of the Fund's total assets would be in one or more segregated
accounts covering forward contracts. Additionally, a Fund is required at all
times to maintain its assets at a level at least three times the amount of all
of its borrowings (the "300% asset coverage test"). Borrowings for this purpose
include obligations under any futures contract on a debt obligation.
Segregated Accounts - If a Fund enters into forward contracts, it must cover
such contracts by, for example, establishing a segregated account with its
custodian bank consisting of cash, U.S. Government issued securities and
4
<PAGE>
other liquid high quality debt securities. The assets of the account must have a
value equal to or greater than the aggregate amount of that Fund's commitment
under forward contracts (that is, greater than the aggregate of the purchase
price of the underlying security on the delivery date). If the value of the
securities in the segregated account declines, additional cash or high grade
liquid assets will be placed in the account so that the value of the account
will equal the amount of the Fund's commitments. At the time of entering into a
forward contract, the segregated account covering such forwards shall not exceed
25% of the Fund's assets. As an alternative to maintaining all or part of the
segregated account, a Fund could buy call or put options to "cover" the forward
contracts. Forward contracts involve a risk of a loss if the value of the
security to be purchased declines prior to the settlement date, which risk is in
addition to the risk of decline of the Fund's other assets. A Fund may realize
short-term gains or losses upon the sale of forward contracts.
Risks in Using Derivatives - There can be no assurance that the use of
Derivatives by any of the Funds will assist it in achieving its investment
objectives. Risks inherent in the use of futures, options, forward contracts,
and swaps include:
a. the risk that interest rates and securities prices will not move in the
direction anticipated;
b. imperfect correlation between the price of futures, options, forward
contracts and the prices of the securities being hedged;
c. the fact that skills needed to use these strategies are different from those
needed to select portfolio securities;
d. the possible absence of a liquid secondary market for any particular
instrument at any time;
e. futures contracts and options can be highly volatile;
f. the writing of call options could result in increases in the Funds' portfolio
turnover rate, especially during periods when market prices of the underlying
securities appreciate;
g. the possible need to defer closing out certain hedged positions to avoid
adverse tax consequences;
h. the risk that a Fund will not be able to effect closing purchase transactions
as to call options it has written at any particular time or at any acceptable
price; and
i. forward contracts involve a risk of a loss if the value of the security to be
purchased declines prior to the settlement date, which is in addition to the
risk of decline of the Funds' other assets.
D. Other Investment Practices
1. Repurchase Agreements - MML Money Market, MML Managed Bond, and MML
Blend may enter into repurchase agreements. While it is the current
expectation that not more than 5% of each such Fund's total assets would
be invested in repurchase agreements at any one time, each such Fund may
invest not more than 10% of their respective total assets in such
agreements. Under a repurchase agreement, a Fund acquires an obligation
for a relatively short period (usually not more than one week) subject to
the agreement of the seller (a member bank of the Federal Reserve System
or a securities dealer) to repurchase the obligation at an agreed upon
price and date. The repurchase price reflects an agreed-upon interest rate
unrelated to the coupon rate on the purchased obligation. A repurchase
agreement is considered to be loans by a Fund for purposes of its
investment restrictions. Investments in repurchase agreements will be
limited to transactions with financial institutions which are believed by
MassMutual to present minimal credit risks. While the repurchase
agreements will provide that the underlying security at all times shall
have a value at least equal to the resale price stated in the agreement,
if the seller defaults, the Fund could realize a loss on the sale of the
underlying security. In addition, if the seller should be involved in
bankruptcy or insolvency proceedings, the Fund may
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incur delay and costs in selling the underlying security or may suffer a loss of
principal and interest if the Fund is treated as an unsecured creditor and
required to return the underlying securities to the seller's estate.
2. Reverse Repurchase Agreements - MML Blend and MML Managed Bond may engage in
reverse repurchase agreements, which are agreements in which MML Blend or MML
Managed Bond, as the seller of the securities, agrees to repurchase them at an
agreed upon time and price. Each such Fund will maintain a segregated account
which will contain cash or high-grade debt obligations having a current market
value at all times in an amount sufficient to repurchase securities pursuant to
outstanding reverse repurchase agreements. Reverse repurchase agreements are
borrowings subject to the 300% asset coverage test described in the Prospectus.
See "Investment Restrictions" in the Prospectus.
3. Restricted and Illiquid Securities - None of the Funds currently expects to
invest in restricted or illiquid securities, although, as a non-fundamental
policy, each Fund may invest no more than 15% (10% in the case of MML Money
Market) of its net assets in illiquid securities. However, this policy does not
limit the purchases of securities eligible for resale to qualified institutional
buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act"), provided that such securities are determined to be liquid by
the Board of Trustees or the Adviser if such determination is pursuant to
Board-approved guidelines.
Although the Board of Trustees is responsible for determining the liquidity of
restricted securities, it is not required to specifically approve and review
each restricted security recommended by the Advisers for the Funds' portfolios.
With respect to Rule 144A securities, for example, the Board of Trustees is
responsible for establishing guidelines for determining the liquidity and value
of securities and monitoring the Adviser's implementation of the guidelines.
Such guidelines have been adopted and take into account trading activity and the
availability of reliable pricing information, among other factors. If there is a
lack of trading interest in particular Rule 144A securities, the Fund's holdings
of those securities may be illiquid, resulting in undesirable delays in selling
these securities at prices representing their fair value. Securities not
registered for sale to the general public but that can be resold to
institutional investors may not be considered illiquid, provided that a dealer
or institutional trading market exists. The institutional trading market is
relatively new and liquidity of the Funds' investments could be impaired if
trading does not develop or declines.
Restricted securities frequently can be purchased at a discount from the price
of unrestricted securities of the same class, and the valuation of such
securities in the Funds' portfolios (which will be their fair value as
determined in good faith by the Board of Trustees of MML Trust or pursuant to
the direction of the Board of Trustees subject to its review) will generally
reflect such discount in whole or in part until the restriction is eliminated.
With the exceptions of Rule 144A securities and commercial paper, the Funds
generally do not expect to purchase restricted securities unless the issuer has
agreed to pay the expenses of registering such securities under the Securities
Act. However, under some circumstances the Funds may dispose of such securities
privately at a discount or pay the cost of registration. A considerable period
may elapse between the time a Fund decides to sell restricted securities and the
time a suitable purchaser is found or registration is effected. Any such lapse
of time would reduce the Fund's flexibility and also delay its ability to
dispose of such securities, thereby subjecting the Fund to the risk of a market
decline in the interim or, in a thin market, a decline caused by the proposed
sale itself. In disposing of restricted securities, the Funds may be
underwriters as that term is defined in the Securities Act.
4. Warrants - MML Equity and MML Blend may each invest in warrants. A warrant
typically gives the holder the right to purchase an underlying stock at a
specified price for a designated period of time. Warrants may be a relatively
volatile investment for the holder. The holder of a warrant takes the risk that
the market price of the underlying stock may never equal or exceed the exercise
price of the warrant. A warrant will expire without value if it is not exercised
or sold during its exercise period.
5. Foreign Securities - Generally, the Funds may invest not more than 10% of
their respective net assets in the securities of foreign issuers, whether or not
the securities are listed on a domestic or foreign exchange. It is
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the current expectation, however, that MML Equity will make no such investments.
If such investments are made by MML Managed Bond or MML Blend, it is presently
expected that no more than 5% of the Fund's respective net assets will be
invested in such securities. Investments in Canadian securities have their own
limitations as set forth in the Prospectus.
In making foreign investments, each Fund will be subject to a number of factors
and risks not generally associated with investments in domestic securities. For
example, foreign securities usually are denominated in foreign currencies which
means that their value will be affected favorably or unfavorably by changes in
the strength of the U.S. dollar relative to other currencies as well as to other
factors that affect security prices. Moreover, foreign issuers are not subject
to uniform legal, accounting, auditing, and financial standards and requirements
comparable to those applicable to U.S. issuers. Other risks include: unfavorable
political or economic developments, applicability of less stringent regulation
of foreign securities markets, the availability of less information about the
issuer of the security in question, possible seizure, expropriation or
nationalization of foreign assets, the imposition of foreign withholding tax on
dividend or interest payments, greater expenses because of the increased
transaction costs on non-U.S. securities markets and the increased costs of
maintaining the custody of foreign securities. Foreign securities markets also
have different clearance and settlement procedures.
6. Money Market Instruments: Large Denominations - Certain money market
instruments are available only in relatively large denominations, and others may
carry higher yields if purchased in relatively large denominations. For example,
yields on certificates of deposit for $1,000,000 or over could be higher than
yields on certificates of deposit for less than $1,000,000. Also, it is believed
by MassMutual that an institutional purchaser of money market instruments who
has the ability to invest relatively large sums on a regular basis may have
investment opportunities that are not available to those who invest smaller sums
less frequently. Certain of the investment restrictions of the Funds, and in
particular MML Money Market, limit the percentage of its assets which may be
invested in certain industries or in securities of any issuer. Accordingly,
while MML Money Market has relatively small net assets and net cash flow from
sales and redemptions of shares, it may be unable to invest in money market
instruments paying the highest yield available at a particular time.
7. MML Money Market Investments - For as long as MML Money Market values its
portfolio instruments on the basis of amortized cost (see "Purchase, Redemptions
and Pricing of Securities Being Offered"), MML Money Market's investments are
subject to portfolio maturity, portfolio quality and portfolio diversification
requirements imposed by Rule 2a-7 under the Investment Company Act of 1940 (the
"1940 Act"). MML Money Market must maintain a dollar-weighted average portfolio
maturity of 90 days or less, generally must purchase instruments having
remaining maturities of thirteen months (397 days) or less, and invest only in
United States dollar-denominated securities determined to be of high quality
with minimal credit risks.
As stated in the Prospectus, MML Money Market's non-fundamental investment
policy is that, at the time it acquires a security, it will invest 100% of its
net assets in First Tier Securities but it retains the right to invest no more
than 5% of its net assets in Second Tier Securities. A security qualifies as a
First Tier Security if two nationally recognized statistical rating
organizations ("NRSROs") have both given it their highest ratings, even if other
NRSROs have rated it lower, or if one NRSRO has given it the highest rating, but
only if the security has been rated by only the one NRSRO. In addition to
Standard & Poor's Ratings Group ("S&P") and Moody's Investors Services, Inc.
("Moody's"), other NRSROs include: Duff & Phelps, Inc., Fitch Investors, Inc.,
IBCA Limited and IBCA, Inc. A Second Tier Security is one that is rated in the
second highest rating category by one or more NRSROs. In certain circumstances,
unrated securities may qualify as First or Second Tier Securities if it is
determined that such securities are of comparable quality to First or Second
Tier Securities. A rating or determination of comparable quality is no guarantee
that a portfolio instrument will not decline in creditworthiness and/or value.
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<PAGE>
At present, obligations of United States agencies or instrumentalities which
MassMutual intends to purchase for the portfolio of MML Money Market include
principally obligations of the Federal National Mortgage Association, Federal
Farm Credit Banks and the Federal Home Loan Banks (which may be backed only by
the credit of the issuer itself).
8. Mortgage-Backed U.S. Government Securities and CMOs - The Funds may invest
in mortgage-backed U.S. Government Securities and collateralized mortgage
obligations ("CMOs"). These securities represent participation interests in
pools of residential mortgage loans made by lenders such as banks and savings
and loan associations. The pools are assembled for sale to investors (such as
the Funds) by government agencies, and also, in the case of CMOs, by private
issuers, which issue or guarantee the securities relating to the pool. Such
securities differ from conventional debt securities which generally provide
for periodic payment of interest in fixed or determinable amounts (usually
semi-annually) with principal payments at maturity or specified call dates.
Some mortgage-backed U.S. Government Securities in which a Fund may invest may
be backed by the full faith and credit of the U.S. Treasury (e.g., direct
pass-through certificates of Government National Mortgage Association); some
are supported by the right of the issuer to borrow from the U.S. Government
(e.g., obligations of Federal Home Loan Mortgage Corporation); and some are
backed by only the credit of the issuer itself (e.g., Federal National
Mortgage Association). Those guarantees do not extend to the value or yield of
the mortgage-backed securities themselves or to the net asset value of a
Fund's shares. These government agencies may also issue derivative mortgage
backed securities such as CMOs.
The expected yield on mortgage-backed securities is based on the average
expected life of the underlying pool of mortgage loans. The actual life of any
particular pool will be shortened by any unscheduled or early payments of
principal. Principal prepayments generally result from the sale of the
underlying property or the refinancing or foreclosure of underlying mortgages.
The occurrence of prepayments is affected by a wide range of economic,
demographic and social factors and, accordingly, it is not possible to predict
accurately the average life of a particular pool. Yield on such pools is
usually computed by using the historical record of prepayments for that pool,
or, in the case of newly-issued mortgages, the prepayment history of similar
pools. The actual prepayment experience of a pool of mortgage loans may cause
the yield realized by a Fund to differ from the yield calculated on the basis
of the expected average life of the pool.
Prepayments tend to increase during periods of falling interest rates, while
during periods of rising interest rates prepayments will most likely decline.
When prevailing interest rates rise, the value of a pass-through security may
decrease as do the values of other debt securities, but, when prevailing
interest rates decline, the value of a pass-through security is not likely to
rise to the extent that the values of other debt securities rise, because of
the prepayment feature of pass-through securities. A Fund's reinvestment of
scheduled principal payments and unscheduled prepayments it receives may occur
at times when available investments offer higher or lower rates than the
original investment, thus affecting the yield of the Fund. Monthly interest
payments received by the Fund have a compounding effect which may increase the
yield to the Fund more than debt obligations that pay interest semi-annually.
Because of those factors, mortgage-backed securities may be less effective
than Treasury bonds of similar maturity at maintaining yields during periods
of declining interest rates. A Fund may purchase mortgage-backed securities at
a premium or at a discount. Accelerated prepayments adversely affect yields
for pass-through securities purchased at a premium (i.e., at a price in excess
of their principal amount) and may involve additional risk of loss of
principal because the premium may not have been fully amortized at the time
the obligation is repaid. The opposite is true for pass-through securities
purchased at a discount.
9. Asset-Backed Securities - These securities, issued by trusts and special
purpose entities, are backed by pools of assets, such as automobile and
credit-card receivables and home equity loans, which pass through the payments
on the underlying obligations to the security holders (less servicing fees
paid to the originator or fees for any credit enhancement). The value of an
asset-backed security is affected by changes in the market's perception of the
asset backing the security, the creditworthiness of the servicing agent for
the loan pool, the originator of the loans, or the financial institution
providing any credit enhancement, and is also affected if any credit
enhancement has been exhausted. Payments of principal and interest passed
through to holders of asset-backed securities are typically supported by some
form of credit enhancement, such as a letter of credit, surety bond, limited
guarantee by another entity or having a priority to certain of the borrower's
other securities. The degree of credit enhancement varies, and generally
applies to only a fraction of the asset-backed security's par value until
exhausted. If the credit enhancement of an asset-backed security held by a
Fund has been exhausted, and if any required payments of principal and
interest are not made with respect to the underlying loans, the Fund may
experience losses or delays in receiving payment.
The risks of investing in asset-backed securities are ultimately dependent
upon payment of consumer loans by the individual borrowers. As a purchaser of
an asset-backed security, a Fund would generally have no recourse to the
entity that originated the loans in the event of default by a borrower. The
underlying loans are subject to prepayments, which shorten the weighted
average life of asset-backed securities and may lower their return, in the
same manner as described above for prepayments of a pool of mortgage loans
underlying mortgage-backed securities. However, asset-backed securities do not
have the benefit of the same security interest in the underlying collateral as
do mortgage-backed securities.
10. Lower Quality Debt Instruments and Preferred Stock - MML Managed Bond and
MML Blend may invest in debt instruments and preferred stock not rated in the
top four rating categories by S&P or Moody's. MML Managed Bond may invest not
more than 20% of its total invested assets in such investments and MML Blend
may invest not more than 10% of its total assets in such investments. Lower
quality debt instruments involve greater volatility of price and yield, and
greater risk of loss of principal and interest, and generally reflect a
greater possibility of an adverse change in financial condition which would
affect the ability of the issuer to make payments of principal and interest.
The market price for lower quality securities generally responds to short-term
corporate and market developments to a greater extent than higher-rated
securities because such developments are perceived to have a more direct
relationship to the ability of an issuer of lower quality securities to meet
its ongoing debt obligations. Because of the relatively high risks associated
with investments in lower quality securities, an investor should carefully
consider the manner in which MML Managed Bond and MML Blend seeks to achieve
their respective investment objectives and such investor's ability to assume
these risks before investing in MML Managed Bond or MML Blend.
11. Investment Basket - The Board of Trustees, notwithstanding any of the
investment restrictions set forth in this Statement of Additional Information or
those set forth in the Prospectus, except those imposed as a matter of law, may
authorize one or more Funds to invest in any security or investment related
instrument, or to engage in investment related transactions or practices, such
as newly developed debt instruments or hedging programs, provided that the Board
has determined that to do so is consistent with the Fund's investment objectives
and policies, has adopted reasonable guidelines for use by the Fund's Advisers,
and provided further that at the time of making such an investment or entering
into such transaction, such investments or instruments account for no more than
10% of the Fund's total assets. MML Trust has no current plans to use this
authority.
12. Variable Rate Master Demand Notes - While the Money Market Sector of MML
Blend may purchase variable rate master demand notes, it has never done so and
has no current intention of doing so in the foreseeable future.
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13. Trading Activity - It is the policy of MML Equity not to invest for
the purpose of exercising management or control. It is also the policy of
MML Equity not to engage in arbitrage activities. In seeking a high rate
of return from interest income and capital appreciation as well as in
seeking to preserve capital values, MassMutual intends to engage in the
active management of MML Managed Bond's portfolio. MML Money Market will
make portfolio investments primarily in anticipation of or in response to
changing economic and money market conditions and trends. Trading activity
is expected to be relatively low. However, it is anticipated that from
time to time MML Money Market will take advantage of temporary disparities
in the yield relationships among the different segments of the money
markets or among particular instruments within the same segment of the
market to make purchases and sales when management deems that such
transactions will improve the yield or the quality of the portfolio.
The Advisers intend to use trading as a means of managing the portfolio of
MML Blend in seeking to achieve its investment objective. Portfolio
trading involves transaction costs, but will be engaged in when the
Advisers believe that the result of the trading, net of transaction costs,
will benefit the Fund.
III. INVESTMENT RESTRICTIONS
The following is a description of certain restrictions on investments of the
Funds (in addition to those described in the Prospectus) which may not be
changed without a vote of a majority of the outstanding shares of the applicable
Fund.
Each Fund will not:
1. Make an investment in the securities of any issuer if such investment
when made would cause more than 5% of the value of the total assets of the
Fund to be invested in such securities (other than U.S. Government
securities), or, in the case of MML Equity Fund, would cause more than 10%
of the outstanding securities of any class of such issuer to be held by
MML Equity;
2. Purchase securities on margin, except for such short-term credits as
are necessary for the clearance of transactions, and except that each Fund
may deposit and maintain funds with its custodian or brokers as margin in
connection with its use of financial futures contracts (see "Investment
Practices of the Funds and Related Risks - Derivatives");
3. Purchase commodities or commodity contracts, except to the extent that
each Fund may enter into financial futures contracts (see the Prospectus
and "Investment Practices of the Funds and Related Risks - Derivatives");
4. Purchase the securities of companies which (including predecessors) are
less than three years old, if such purchase would cause more than 5% of
the value of the total assets of the Fund to be invested in such
companies;
5. Hold more than 10% of the voting securities of any one company;
6. Purchase or hold the securities of any company, if to the knowledge of
the Board of Trustees of MML Trust, persons who are officers or directors
of MassMutual or officers or Trustees of MML Trust, and who individually
own more than 1/2 of 1% of the securities of that company, together own
more than 5% of such securities;
7. Make short sales of securities;
8. Write, purchase or sell puts, calls or combinations thereof, except:
each Fund may write call options on the securities in its portfolio and
enter into closing purchase transactions with respect thereto (see
"Investment Practices of the Funds and Related Risks - Derivatives - Call
and Put Options");
9. Make loans to any officer, Trustee or employee of the Trust or to any
officer, director or employee of MassMutual, or to MassMutual;
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<PAGE>
10. Purchase or sell real estate or interests in real estate, although it may
purchase and sell marketable securities secured by, or of companies investing or
dealing in, real estate;
11. Invest in securities of other investment companies, except (A) as part of a
merger, consolidation or other corporate acquisition, or (B) by purchases in the
open market at no more than customary brokers' commissions, as a result of which
not more than 5% of the value of the total assets of the Fund would be so
invested and no more than 3% of the total outstanding voting stock of any one
investment company would be held;
12. Participate in the underwriting of securities, except to the extent that
each Fund may be deemed an underwriter under federal securities laws by reason
of acquisitions or distributions of portfolio securities (e.g., investments in
restricted securities and instruments subject to such limits as imposed by the
Board and/or law);
13. Make loans, except (i) through the acquisition of bonds, debentures, notes
or other evidences of indebtedness in which the Fund is authorized to invest,
(ii) in the case of MML Money Market, MML Managed Bond and MML Blend, through
repurchase agreements (repurchase agreements of each such Fund maturing in more
than seven days not to exceed 10% of the value of the total assets of such
Fund), and (iii) in the case of MML Managed Bond and MML Blend, through the
lending of portfolio securities with respect to not more than 10% of the total
assets of each such Fund taken at current value. (The present intention is that
securities loans would be made to broker-dealers only pursuant to agreements
requiring that the loans be continuously secured by collateral in cash or U.S.
Government securities at least equal at all times to the market value of the
securities lent. The borrower pays the Fund an amount equal to any interest or
dividends on the securities lent. The Fund also receives a portion of the
interest on the securities purchased with the cash collateral (high-grade
interest-bearing short-term obligations), or a fee from the borrower. Although
voting rights, or rights to consent, with respect to the securities lent pass to
the borrower, the Fund retains the right to call the loans at any time on
reasonable notice, and it will do so in order to vote the securities on a
material event affecting the investment. Such loans may also be called in order
to sell the securities involved);
14. Issue senior securities, except to evidence borrowings permitted by
investment restriction (2) described in the Prospectus; or
15. Pledge or mortgage assets at market to an extent greater than 15% of the
total assets of the Fund taken at cost.
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IV. MANAGEMENT OF MML TRUST
MML Trust has a Board of Trustees, a majority of which must not be "interested
persons," as defined in the 1940 Act, of MML Trust. The Board of Trustees has
established an Advisory Board that has advisory functions only as to investments
made by MML Trust. Trustees of MML Trust, members of the Advisory Board, and
principal officers of MML Trust are listed below together with information on
their age, address, positions with MML Trust, principal occupations during the
past five years and other principal business affiliations.
Gary E. Wendlandt* Chairman and Trustee of MML Trust
1295 State Street
Springfield, MA 01111
Age: 47
Chief Investment Officer (since 1993) and Executive Vice President, MassMutual;
Chairman (since 1995), President (1983-1995) and Trustee, MassMutual Corporate
Investors (closed-end investment company); Chairman (since 1995), President
(1988-1995) and Trustee, MassMutual Participation Investors (closed-end
investment company); Chairman (since 1996), Antares Leveraged Capital Corp.
(finance company); Chairman, HYP Management, Inc. (managing member of MassMutual
High Yield Partners LLC) and MMHC Investment, Inc. (investor in MassMutual High
Yield Partners LLC); Advisory Board Member (since 1996), MassMutual High Yield
Partners LLC (high yield bond fund); President and Director (since 1995), DLB
Acquisition Corporation (holding company for investment advisers); Director,
Oppenheimer Acquisition Corporation (holding company for investment advisers);
Supervisory Director, MassMutual/Carlson CBO N.V. (collateralized bond fund);
Director (since 1994), MassMutual Corporate Value Partners Limited (investor in
debt and equity securities) and MassMutual Corporate Value Limited (parent of
MassMutual Corporate Value Partners Limited); Chairman (since 1994) and Director
(since 1993), MML Realty Management Corporation; Chairman (since 1994), Chief
Executive Officer (1994-1996), Cornerstone Real Estate Advisers, Inc.
(wholly-owned real estate investment adviser subsidiary of MassMutual Holding
Trust); Director, Merrill Lynch Derivative Products, Inc.; Chairman and Chief
Executive Officer (since 1994), MassMutual Institutional Funds (open-end
investment company).
Ronald J. Abdow Trustee of MML Trust
1111 Elm Street
West Springfield, MA 01089
Age: 66
President, Abdow Corporation (operator of restaurants); General Partner, Grove
Investment Group (apartment building syndicator); Trustee, Abdow G&R Trust and
Abdow G&R Co. (owners and operators of restaurant properties); Partner, Abdow
Partnership, Abdow Auburn Associates, and Abdow Hazard Associates (owners and
operators of restaurant properties); Trustee (since 1994), MassMutual
Institutional Funds (open-end investment company).
Mary E. Boland Trustee of MML Trust
67 Market Street
Springfield, MA 01102
Age: 59
Attorney at Law, Egan, Flanagan and Cohen, P.C. (law firm), Springfield, MA;
Director (since 1995), Trustee (until 1995), SIS Bank (formerly, Springfield
Institution for Savings); Trustee (since 1994), MassMutual Institutional Funds
(open-end investment company).
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* Trustee who is an "interested person" of MML Trust within the definition set
forth in Section 2(a)(19) of the 1940 Act.
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Richard G. Dooley* Vice Chairman and Trustee of MML Trust
1295 State Street
Springfield, MA 01111
Age: 68
Consultant (since 1993), Executive Vice President and Chief Investment Officer
(1978-1993), MassMutual; Director (since 1996), Investment Technology Group,
Inc.; Director, The Advest Group, Inc. (financial services holding company), HSB
Group Inc. (formerly known as Hartford Steam Boiler Inspection and Insurance
Co.), New England Education Loan Marketing Corporation; Director, Kimco Realty
Corp. (shopping center ownership and management); Director (since 1993),
Jefferies Group, Inc. (financial services holding company); Vice Chairman (since
1995), Chairman (1982-1995), MassMutual Corporate Investors, and Vice Chairman
(since 1995), Chairman (1988-1995), MassMutual Participation Investors
(closed-end investment companies); Trustee (since 1996), MassMutual
Institutional Funds (open-end investment company).
F. William Marshall, Jr. Trustee of MML Trust
1441 Main Street
Springfield, MA 01102
Age: 56
President, Chief Executive Officer and Director (since 1993), SIS Bancorp, Inc
and SIS Bank (formerly, Springfield Institution for Savings); Chairman and Chief
Executive Officer (1990-1993), Bank of Ireland First Holdings, Inc. and First
New Hampshire Banks; Trustee (since 1996), MassMutual Institutional Funds
(open-end investment company).
Charles J. McCarthy Trustee of MML Trust
181 Eton Road
Longmeadow, MA 01106
Age: 74
Proprietor, Synectics Financial Company (venture capital activities, business
consulting and investments); Trustee (since 1994), MassMutual Institutional
Funds (open-end investment company).
John H. Southworth Trustee of MML Trust
195 Eton Road
Longmeadow, MA 01106
Age: 70
Chairman (since 1993), Southworth Company (manufacturer of paper and calendars);
Director (since 1995), Trustee (until 1995), SIS Bank (formerly, Springfield
Institution for Savings); Trustee (since 1994), MassMutual Institutional Funds
(open-end investment company).
Richard H. Ayers Advisory Board Member
1000 Stanley Drive
New Britain, CT 06053
Age: 55
Retired; former adviser to Chairman (1997), Chairman and Chief Executive Officer
(1989-1996) and Director (1985-1996), The Stanley Works (manufacturer of tools,
hardware and specialty hardware products); Director, Southern New England
Telecommunications Corp. and Perkin-Elmer Corp.; Trustee (since 1996),
MassMutual Institutional Funds (open-end investment company).
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* Trustee who is an "interested person" of MML Trust within the definition set
forth in Section 2(a)(19) of the 1940 Act.
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David E. A. Carson Advisory Board Member
850 Main Street
Bridgeport, CT 06604
Age: 63
Chairman and Chief Executive Officer (since 1997), President and Chief Executive
Officer (1985-1997), People's Bank; Director, United Illuminating Co. (electric
utility); Trustee, American Skandia Trust (open-end investment company); Trustee
(since 1996), MassMutual Institutional Funds (open-end investment company).
Richard W. Greene Advisory Board Member
University Of Rochester
Rochester, NY 14627
Age: 62
Executive Vice President and Treasurer (since 1986), University of Rochester
(private university); Trustee (since 1996), MassMutual Institutional Funds
(open-end investment company).
Beverly C. L. Hamilton Advisory Board Member
515 South Flower Street
Los Angeles, CA 90071
Age: 51
President, ARCO Investment Management Co.; Director, Connecticut Natural Gas;
Director, Emerging Markets Growth Fund (closed-end investment company); Director
(since 1997), United Asset Management Corp. (investment management); Trustee
(since 1996), MassMutual Institutional Funds (open-end investment company).
Stuart H. Reese President of MML Trust
1295 State Street
Springfield, MA 01111
Age: 43
Chief Executive Director (since 1997), Executive Director (1996-1997), Senior
Vice President (1993-1996), MassMutual; President (since 1995), Executive Vice
President (1993-1995), MassMutual Corporate Investors and MassMutual
Participation Investors (closed-end investment companies); Director (since
1996), Antares Leveraged Capital Corp. (finance company) and Charter Oak Capital
Management, Inc. (investment adviser); President and Director (since 1996), HYP
Management Inc. (managing member of MassMutual High Yield Partners LLC), and
MMHC Investment Inc. (investor in funds sponsored by MassMutual); Director
(since 1994), MassMutual Corporate Value Partners Limited (investor in debt and
equity securities) and MassMutual Corporate Value Limited (parent of MassMutual
Corporate Value Partners Limited); Supervisory Director (since 1994),
MassMutual/Carlson CBO N.V. Inc. (collateralized bond fund); President (since
1997), MassMutual/Darby CBO IM Inc. (manager of MassMutual/Darby CBO LLC, a high
yield bond fund); Director (1994-1996), Pace Industries (aluminum die caster);
Advisory Board Member (since 1995), Kirtland Capital Partners; Chairman and
President (1990-1993), Aetna Financial Services, Inc.; President (since 1995),
MassMutual Institutional Funds (open-end investment company).
Mary Wilson Kibbe Senior Vice President of MML Trust
1295 State Street
Springfield, MA 01111
Age: 44
Executive Director (since 1997), Senior Managing Director (1996-1997), Vice
President and Managing Director (1991-1996), MassMutual; Senior Vice President
(since 1996), HYP Management, Inc. (managing member of MassMutual High Yield
Partners LLC) and MMHC Investment, Inc. (investor in funds sponsored by
MassMutual); Vice President, MassMutual Participation Investors and MassMutual
Corporate Investors (closed-end investment companies); Vice President
(1991-1995), Oppenheimer Investment Grade Bond Fund (open-end investment
company).
13
<PAGE>
Charles C. McCobb, Jr. Vice President of MML Trust
1295 State Street
Springfield, MA 01111
Age: 54
Managing Director (since 1997), MassMutual; Managing Director and Vice President
(1994-1997), Citicorp, Inc. (banking); Managing Director (1985-1994), Aetna Life
& Casualty (insurance company); Vice President (since 1996), MassMutual
Corporate Investors and MassMutual Participation Investors (closed-end
investment companies).
Stephen L. Kuhn Vice President and Secretary of MML Trust
1295 State Street
Springfield, MA 01111
Age: 51
Vice President and Associate General Counsel (since 1992), MassMutual; Vice
President and Secretary, MassMutual Participation Investors and MassMutual
Corporate Investors (closed-end investment companies); President,
MassMutual/Carlson CBO Incorporated; Assistant Secretary (since 1996), Antares
Leveraged Capital Corp. (finance company); Chief Legal Officer and Assistant
Secretary (since 1995), DLB Acquisition Corporation (holding company for
investment advisers); Assistant Secretary, Oppenheimer Acquisition Corporation
(holding company for investment advisers); Vice President and Secretary,
MassMutual Institutional Funds (open-end investment company).
Judith A. Martini Vice President of MML Trust
1295 State Street
Springfield, MA 01111
Age: 49
Second Vice President (since 1996), MassMutual; Marketing Manager (1984-1996),
Connecticut Mutual Life Insurance Company (life insurance company).
Raymond B. Woolson Treasurer of MML Trust
1295 State Street
Springfield, MA 01111
Age: 39
Senior Managing Director (since 1996), Second Vice President (1992-1996),
MassMutual; Treasurer, MassMutual Corporate Investors and MassMutual
Participation Investors (closed-end investment companies) and MassMutual
Institutional Funds (open-end investment company); Vice President and Chief
Financial Officer (since 1996), HYP Management, Inc. (managing member of
MassMutual High Yield Partners LLC) and MMHC Investment Inc. (investor in funds
sponsored by Mass Mutual); Vice President and Treasurer, MassMutual/Darby CBO IM
Inc. (manager of MassMutual/Darby CBO LLC, a high yield bond fund).
Mark B. Ackerman Comptroller of MML Trust
1295 State Street
Springfield, MA 01111
Age: 32
Investment Director (since 1996), Associate Director (1993-1996), MassMutual;
Controller (since 1997), Associate Treasurer (1995-1997), MassMutual
Participation Investors and MassMutual Corporate Investors (closed-end
investment companies); Comptroller (since 1997), Associate Treasurer
(1995-1996), MassMutual Institutional Funds (open-end investment company).
14
<PAGE>
The Trustees and officers of MML Trust named above, as a group, own less than
one percent of the shares of any series of MML Trust.
MML Trust's Declaration of Trust provides that MML Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with MML
Trust, except if it is determined in the manner specified in the Declaration of
Trust that they have not acted in good faith in the reasonable belief that their
actions were in the best interests of MML Trust or that such indemnification
would relieve any Trustee or officer of any liability to MML Trust or its
shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of his or her duties.
The following table discloses actual compensation paid to non-interested
Trustees of MML Trust and members of its Advisory Board during the 1997 fiscal
year. MML Trust paid no compensation to any of its officers. MML Trust has no
pension or retirement plan, but does have a deferred compensation plan.
Currently, no Trustee is entitled to receive any benefits under such deferred
compensation plan. One Trustee elected in 1994 to receive these benefits over a
three-year period, beginning in 1994 when he became 67 years old. Each of the
non-interested Trustees and members of the Advisory Board also serve as a
Trustee of one other registered investment company managed by MassMutual.
<TABLE>
<CAPTION>
================================================================================
Aggregate Compensation from Total Compensation from MML
Name/Position MML Trust Trust and Fund Complex
================================================================================
<S> <C> <C>
Ronald J. Abdow
Trustee $16,000 $32,000
- --------------------------------------------------------------------------------
Mary E. Boland
Trustee $16,000 $32,000
- --------------------------------------------------------------------------------
William F. Marshall
Trustee $16,000 $32,000
- --------------------------------------------------------------------------------
Charles J. McCarthy
Trustee $17,000 $34,000
- --------------------------------------------------------------------------------
John H. Southworth
Trustee $17,000 $34,000
- --------------------------------------------------------------------------------
Richard H. Ayers
Advisory Board Member $16,000 $31,674
- --------------------------------------------------------------------------------
David E. A. Carson
Advisory Board Member $16,000 $31,674
- --------------------------------------------------------------------------------
Richard W. Greene
Advisory Board Member $16,000 $31,674
- --------------------------------------------------------------------------------
Beverly C. L. Hamilton
Advisory Board Member $16,000 $31,674
================================================================================
</TABLE>
15
<PAGE>
V. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
MassMutual and MML Bay State were the record owners of all of the outstanding
shares of MML Trust as of April 1, 1998 and therefore, may be deemed to be in
control (as that term is defined in the 1940 Act) of the Funds. However, certain
owners of variable life insurance policies and variable annuity contracts that
depend upon the investment performance of the Funds have the right to instruct
MassMutual and MML Bay State as to how shares of MML Trust deemed attributable
to their contracts shall be voted. MassMutual and MML Bay State generally are
required to vote shares attributable to such contracts but for which no
instructions were received, in proportion to those votes for which instructions
were received. The address of MassMutual and MML Bay State is 1295 State Street,
Springfield, Massachusetts 01111.
VI. INVESTMENT MANAGEMENT AND OTHER SERVICES
MassMutual serves as investments manager of each Fund pursuant to a separate
investment management agreement between MassMutual and MML Trust on behalf of
each Fund (the "Management Agreements"). Under the Management Agreements, which
are substantially identical, MassMutual is authorized to engage in portfolio
transactions on behalf of the Funds, subject to such general or specific
instructions as may be given by the Board of Trustees of MML Trust.
Pursuant to the Management Agreements, MassMutual is paid a quarterly fee at the
annual rate of .50% of the first $100 million of the average daily net asset
value of each Fund, .45% of the next $200 million, .40% of the next $200 million
and .35% of any excess over $500 million. MassMutual has agreed to bear expenses
of each Fund (other than the management fee, interest, taxes, brokerage
commissions and extraordinary expenses) in excess of .11% of average daily net
asset value through April 30, 1999. For the period ended December 31, 1997,
MassMutual was not required to reimburse the Funds for any expenses.
The net asset values of the Funds at December 31, 1997 and the investment
management fees each paid during the past three years were:
MML Equity Fund
Net Assets (December 31, 1997): $2,363,441,277
Investment Management Fees:
1995 $4,178,204
1996 $5,787,673
1997 $8,082,863
MML Money Market Fund
Net Assets (December 31, 1997): $141,165,385
Investment Management Fees:
1995 $501,924
1996 $612,946
1997 $703,344
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<PAGE>
MML Managed Bond Fund
Net Assets (December 31, 1997): $205,315,898
Investment Management Fees:
1995 $681,807
1996 $820,434
1997 $913,026
MML Blend Fund
Net Assets (December 31, 1997): $2,471,827,491
Investment Management Fees:
1995 $6,344,373
1996 $7,525,674
1997 $8,933,947
The Management Agreement with each Fund may be terminated by the Board of
Trustees of MML Trust, or by vote of a majority of the outstanding shares of
such Fund, or by MassMutual. Such termination requires 60 days' written notice
to be given and may be effected without the payment of any penalty. In addition,
each such Management Agreement automatically terminates: (1) unless its
continuance is specifically approved at least annually by the affirmative vote
of a majority of the Board of Trustees of MML Trust, which affirmative vote
shall include a majority of the members of the Board who are not interested
persons (as defined in the 1940 Act) of MassMutual or of MML Trust, or (2) upon
its assignment. Each Management Agreement also provides that its continuance
will be submitted to the shareholders of the Fund in the event the use of the
initial "MML" is withdrawn from the Fund by MassMutual.
Pursuant to two investment sub-advisory agreements (the "Sub-Advisory
Agreements") between MassMutual and Babson, Babson serves as the investment
sub-adviser to MML Equity and the Equity Sector of MML Blend. MassMutual is
ultimately responsible for providing investment advice to these Funds and will
continue to provide administrative and non-investment advisory services to the
Funds.
MassMutual pays Babson a quarterly fee equal to an annual rate of .13% of the
average daily net asset value of MML Equity as of the close of each business day
for the investment advisory services Babson provides with respect to MML Equity.
MassMutual pays Babson a quarterly fee equal to an annual rate of .13% of the
average daily net asset value of the Equity Sector of MML Blend as of the close
of each business day for the investment advisory services Babson provides with
respect to the Equity Sector of MML Blend. Additionally, Babson agreed to assume
the expenses associated with fund accounting for MML Equity and the Equity
Sector of MML Blend, however, Babson has no responsibility for providing such
fund accounting services. The Sub-Advisory Agreements will terminate
automatically upon their assignment or upon the termination of the respective
Management Agreement or by MassMutual upon sixty days' written notice or by
liquidation of either MML Equity or the Equity Sector of MML Blend.
Other service providers of the Funds are as follows. Citibank, N.A., 111 Wall
Street, New York, New York 10005, acts as custodian of the cash and securities
of each Fund. As such, it holds in custody each Fund's portfolio securities and
receives and delivers them upon purchases and sales. Coopers & Lybrand L.L.P. is
the Fund's independent accountant, providing audit services and assistance and
consultation in connection with tax returns and the reviewing of various SEC
filings.
Like other businesses and governments around the world, MML Trust could be
adversely affected if the computer systems used by MassMutual (and those with
which it does business on behalf of MML Trust) and MML Trust's other
17
<PAGE>
service providers do not properly recognize the Year 2000. This is commonly
known as the "Year 2000 issue." In 1996, MassMutual began an enterprise-wide
process of identifying, evaluating and implementing changes to computer systems
and applications software to address the Year 2000 issue. MassMutual has
informed MML Trust that this is one of MassMutual's highest business operational
priorities. MassMutual is addressing the Year 2000 issue internally with
modifications to existing programs and conversions to new programs. MassMutual
is also seeking assurances from vendors, customers, service providers and others
with which MassMutual and MML Trust conduct business in order to identify and
resolve Year 2000 issues.
VII. BROKERAGE ALLOCATION
Purchases and sales of securities on a securities exchange are effected by
brokers, and each Fund which purchases or sells securities on a securities
exchange pays a brokerage commission for this service. In transactions on stock
exchanges in the United States, these commissions are negotiated, whereas on
many foreign stock exchanges these commissions are fixed. In the
over-the-counter markets, securities are generally traded on a "net" basis with
dealers acting as principal for their own accounts without a stated commission,
although the price of the security usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price which includes
an amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount. On occasion, certain money market
instruments may be purchased directly from an issuer, in which case no
commissions or discounts are paid.
The primary consideration in placing portfolio security transactions with
broker-dealers for execution is to obtain and maintain the availability of best
execution at reasonably competitive commission rates. Each Adviser attempts to
achieve this result by selecting broker-dealers to execute portfolio
transactions on the basis of their professional capability, the value and
quality of their brokerage services and the level of their brokerage
commissions.
Under each Management Agreement and as permitted by Section 28(e) of the
Securities Exchange Act of 1934, MassMutual may cause a Fund to pay a
broker-dealer which provides brokerage and research services to the Adviser an
amount of commission for effecting a securities transaction for a Fund in excess
of the amount other broker-dealers would have charged for the transaction if the
Adviser determines in good faith that the greater commission is reasonable in
relation to the value of the brokerage and research services provided by the
executing broker-dealer viewed in terms of either a particular transaction or
the Adviser's overall responsibilities to MML Trust and to its other clients.
The term "brokerage and research services" includes: advice as to the value of
securities, the advisability of investing in, purchasing, or selling securities,
and the availability of securities or of purchasers or sellers of securities;
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and the performance of accounts;
and effecting securities transactions and performing functions incidental
thereto such as clearance and settlement. By virtue of the Sub-Advisory
Agreements, Babson is subject to the same rights, obligations and procedures
that apply to MassMutual pursuant to its Management Agreements with MML Equity
and MML Blend.
Although commissions paid on every transaction will, in the judgment of the
Adviser, be reasonable in relation to the value of the brokerage services
provided, commissions exceeding those which another broker might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of
MML Trust and the Adviser's other clients in part for providing advice as to the
availability of securities or of purchasers or sellers of securities and
services in effecting securities transactions and performing functions
incidental thereto such as clearance and settlement.
Broker-dealers may be willing to furnish statistical, research and other factual
information or services ("Research") to an Adviser for no consideration other
than brokerage or underwriting commissions. Securities may be bought or sold
through such broker-dealers, but at present, unless otherwise directed by MML
Trust, a commission higher than one charged elsewhere will not be paid to such a
firm solely because it provided Research to the Adviser. Research provided by
brokers is used for the benefit of all of an Adviser's clients and not solely or
necessarily for the benefit of MML Trust. The Adviser attempts to evaluate the
quality of Research provided by brokers. Results of this effort are sometimes
used by the Adviser as a consideration in the selection of brokers to execute
portfolio transactions.
18
<PAGE>
The investment advisory fee that MML Trust pays on behalf of each Fund to
MassMutual will not be reduced as a consequence of an Adviser's receipt of
brokerage and research services. To the extent MML Trust's portfolio
transactions are used to obtain such services, the brokerage commissions paid by
MML Trust will exceed those that might otherwise be paid, by an amount which
cannot now be determined. Such services would be useful and of value to an
Adviser in serving both MML Trust and other clients and, conversely, such
services obtained by the placement of brokerage business of other clients would
be useful to an Adviser in carrying out its obligations to MML Trust.
Brokerage commissions paid by the Funds for the fiscal years ended December 31,
1997, December 31, 1996 and December 31, 1995, respectively were as follows: MML
Equity $1,252,897, $794,996 and $390,475; and MML Blend $777,304, $535,301 and
$365,905. MML Money Market and MML Managed Bond did not incur any brokerage
commissions during these periods. In 1997, $988,120,307 of MML Trust's
securities transactions involving $1,274,320 in brokerage commissions were
placed with brokers who furnished research services. During 1997, no recapture
for the benefit of MML Trust of any brokerage commissions or similar fees paid
by MML Trust on portfolio transactions has been effected. MML Trust paid
aggregate brokerage commissions to Jefferies & Co. ("Jefferies") of $4,536 in
1996 and $9,845 in 1997. In 1997, MML Trust also paid brokerage commissions to
Advest, Inc. ("Advest") of $13,080. A Trustee of MML Trust is a director of the
parent companies of Jefferies and Advest.
VIII. CAPITAL SHARES
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for obligations of MML Trust. However, MML Trust's
Declaration of Trust disclaims liability of the shareholders, Trustees, or
officers of MML Trust for acts or obligations of MML Trust, which are binding
only on the assets and property of MML Trust, and requires that notice of such
disclaimer be given in each agreement, obligation, or instrument entered into or
executed by MML Trust or the Trustees. The Declaration of Trust provides for
indemnification out of MML Trust property for all loss and expense of any
shareholder held personally liable for the obligations of MML Trust. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is considered remote since it is limited to circumstances in which the
disclaimer is inoperative and MML Trust itself would be unable to meet its
obligations.
IX. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED
MML Trust is a no-load mutual fund. Fund shares are sold at their net asset
value as next computed after receipt of the purchase order, without the addition
of any selling commission or "sales load." Each Fund redeems its shares at their
net asset value as next computed after receipt of the request for redemption.
The redemption price may be paid in cash or wholly or partly in kind if MML
Trust's Board of Trustees determine that such payment is advisable in the
interest of the remaining shareholders. In making such payment wholly or partly
in kind, the Fund will, as far as may be practicable, deliver securities or
property which approximate the diversification of its entire assets at the time.
No fee is charged on redemption. The redemption price may be more or less than
the shareholder's cost. Redemption payments will be paid within seven days after
receipt of the written request therefor by the Fund, except that the right of
redemption may be suspended or payments postponed when permitted by applicable
law and regulations.
The net asset value of each Fund's shares is determined once daily as of the
normal close of the New York Stock Exchange (presently 4:00 p.m.) on each day on
which the Exchange is open for trading. The New York Stock Exchange is not open
for trading on New Year's Day, Martin Luther King, Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day and on occasion is closed early or entirely due to weather or
other conditions. The net asset value of each Fund share is the total net asset
value of the applicable Fund divided by the number of its shares outstanding.
The total net asset value of each Fund is determined by computing the value of
the total assets of the Fund and deducting total liabilities, including accrued
liabilities. It is the intention of MML Money Market Fund to maintain a per
share net asset value of $1.00, although this cannot be assured.
Except as to MML Money Market, the manner of determining the value of the total
assets of each Fund is briefly discussed below. Equity securities are valued on
the basis of valuations furnished by a pricing service, authorized by the
19
<PAGE>
Board of Trustees, which provides the last reported sale price for securities
listed on a national securities exchange or on the NASDAQ National Market
System. If securities are unlisted or there is no reported sale price, the bid
price of the prior trade date will be used. Long-term bonds are valued on the
basis of valuations furnished by a pricing service, authorized by the Board of
Trustees, which determines valuations taking into account appropriate factors
such as institutional-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other
market data. Debt obligations with less than one year but more than sixty days
to maturity are valued on the basis of their market value, and debt obligations
having a maturity of sixty days or less are generally valued at amortized cost
when the Board of Trustees of MML Trust believes that amortized cost
approximates market value. If acquired, preferred stocks will be valued on the
basis of their market value if market quotations are readily available. In all
other cases, assets (including restricted securities) are valued at their fair
value as determined in good faith by the Board of Trustees of MML Trust,
although the actual calculations may be made by persons acting pursuant to the
direction of the Board.
MML Money Market's portfolio instruments are valued on the basis of amortized
cost which involves initially valuing an instrument at its cost and thereafter
making a constant amortization to maturity of any discount or premium,
regardless of the impact of changes in market interest rates on the market value
of the instrument. While this method provides certainty of valuation, it may
result in periods in which the value, as determined by amortized cost, is higher
or lower than the price MML Money Market would receive if it sold the
instrument. During periods of declining interest rates, the daily yield on
shares of MML Money Market computed as described below may tend to be higher
than a like computation made by a fund with identical investments utilizing a
method of valuation based upon market prices and estimates of market prices for
its portfolio instruments. Thus, if the use of amortized cost by MML Money
Market resulted in a lower aggregate portfolio value on a particular day, a
prospective investor in MML Money Market would be able to obtain a somewhat
higher yield than would result from investment in a fund utilizing market
values, and existing investors in MML Money Market would receive less investment
income. The converse would apply in a period of rising interest rates.
The valuation of MML Money Market's portfolio instruments based upon their
amortized cost and the concomitant maintenance of MML Money Market Fund's per
share net asset value of $1.00 is permitted in accordance with Rule 2a-7 of the
SEC.
The Board of Trustees has established procedures designed to stabilize, to the
extent reasonably possible, MML Money Market's price per share as computed for
the purpose of sales and redemptions at $1.00. Such procedures include periodic
review of MML Money Market's portfolio holdings to determine the extent of any
deviation in MML Money Market's net asset value from $1.00 per share calculated
by using available market quotations, and whether such deviation may result in
material dilution or is otherwise unfair to investors or existing shareholders.
In the event the Board of Trustees determines that such a deviation exists, it
may take such corrective action as it regards as necessary and appropriate,
including: the sale of portfolio instruments prior to maturity in order to
realize capital gains or losses or to shorten average portfolio maturity;
withholding dividends; redemptions of shares in kind; or establishing a net
asset value per share by using available market quotations, in which case the
net asset value could possibly be greater or less than $1.00 per share.
Since the net income of MML Money Market is declared as a dividend each time it
is determined, the net asset value per share of MML Money Market is intended to
remain at $1.00 per share immediately after each determination and dividend
declaration. Any increase in the value of a shareholder's investment in MML
Money Market representing the reinvestment of dividend income is reflected by an
increase in the number of shares of MML Money Market Fund in the shareholder's
account, which increase is recorded promptly after the end of each calendar
month.
Futures contracts are valued based on the market price for the futures contract,
unless such price does not reflect the fair value of the contract, in which case
it will be valued by or under the direction of the Board of Trustees of MML
20
<PAGE>
Trust. When MML Managed Bond or MML Blend enters into a forward commitment to
purchase a security it will record the security as an asset which will be
marked-to-market daily to reflect the value of the security determined in the
manner set forth above. The obligation to pay the purchase price of the security
will be a liability which remains fixed in amount.
X. TAX STATUS
It is the policy of each of the Funds to comply, and in 1997 each of the Funds
did comply, with the provisions of the Internal Revenue Code applicable to
regulated investment companies. As a result, the Funds will not be subject to
federal income tax on any distributed net income or capital gains. To meet these
requirements and to meet other requirements necessary for it to be relieved of
federal income taxes on income and gain it distributes to the separate
investment accounts that invest in the Funds, each Fund must, among other
things, (a) derive at least 90% of its gross income from dividends, interest,
payments with respect to certain securities loans, gains from the sale or other
disposition of stock, securities or foreign currencies, or other income
(including but not limited to gains from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies; (b) diversify its holdings so that, at the close of each quarter of
its taxable year, (i) at least 50% of the value of its total assets consists of
cash, cash items, U.S. government securities, securities of other regulated
investment companies, and other securities limited generally with respect to any
one issuer to a value not greater than 5% of the total assets of the Fund and to
not more than 10% of the outstanding voting securities of such issuer, and (ii)
not more than 25% of the value of its assets is invested in the securities of
any issuer (other than U.S. government securities or securities of other
regulated investment companies); and (c) distribute in or with respect to each
taxable year at least 90% of the sum of its taxable net investment income, its
net tax-exempt income, and the excess, if any, of net short-term capital gains
over net long-term capital losses for such year.
Each Fund intends to declare capital gain and ordinary income dividends by the
end of each calendar year and to distribute such dividends no later than January
31 of the following year to the extent necessary to avoid the 4% excise tax on
undistributed regulated investment company income enacted by the Tax Reform Act
of 1986. The 4% excise applies to the excess of the required distribution for
the calendar year over the amount treated as distributed for that year. The
required distribution equals 98% of a Fund's ordinary income for the calendar
year plus 98% of its capital gain net income for the one year period ending
October 31 (or December 31, if the Fund so elects) and any shortfall of income
or gains from the prior year not previously so distributed.
The Treasury Department has issued Regulations under Internal Revenue Code
Section 817(h), that pertain to diversification requirements for variable
annuity and life insurance contracts. A variable contract based upon a separate
account will not receive favorable tax treatment as an annuity or life insurance
contract unless the separate account and underlying regulated investment company
investments are adequately diversified. In determining whether a separate
account is adequately diversified, in certain circumstances the separate account
can look through to the assets of the regulated investment company in which it
has invested.
The Regulations require each of the Fund's assets to be diversified so that no
single investment represents more than 55% of the value of the Fund's total
assets, no two investments represent more than 70% of the Fund's total assets,
no three investments represent more than 80% of the Fund's total assets and no
four investments represent more than 90% of the Fund's total assets. A "safe
harbor" is available to a separate account if it meets the diversification tests
applicable to registered investment companies and not more than 55% of its
assets constitute cash, cash items, government securities and securities of
other registered investment companies.
The applicable Regulations treat all securities of the same issuer as a single
investment. In the case of "government securities," each government agency or
instrumentality shall be treated as a separate issuer for the purpose of the
diversification test (although not for the purpose of the "safe harbor" test
described above). MML Trust intends to comply with these diversification
requirements.
XI. CERTAIN TAX AND ACCOUNTING INFORMATION
21
<PAGE>
As previously indicated, it is the policy of each of the Funds to meet the
requirements of the Internal Revenue Code to qualify as a regulated investment
company under the federal tax law.
When a Fund writes a call option, an amount equal to the premium received by it
is included in its balance sheet as an asset and as an equivalent liability. The
amount of the liability is subsequently marked-to-market to reflect the current
market value of the option written. The current market value of a written option
is the last sale price on the principal exchange on which such option is traded
or, in the absence of a sale, the mean between the last bid and offering prices.
If an option which a Fund has written on an equity security expires on its
stipulated expiration date, or if the Fund enters into a closing purchase
transaction, it realizes a gain (or loss if the cost of a closing purchase
transaction exceeds the premium received when the option was sold) without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished.
Special rules (including constructive sale, mark-to-market, straddle and wash
sale rules) exist for determining the timing of recognition of income or loss,
the character of such income or loss, and the holding periods of certain of the
Fund's assets in the case of certain transactions involving futures contracts,
forward contracts and options. MML Trust will endeavor to make any available
elections pertaining to such transactions in a manner believed to be in the best
interest of MML Trust.
Pursuant to the Taxpayer Relief Act of 1997 (the "1997 Act"), new "constructive
sale" provisions apply to activities by the Funds which lock-in gain on an
"appreciated financial position." Generally, a "position" is defined to include
stock, a debt instrument, or partnership interest, or an interest in any of the
foregoing, including through a short sale, a swap contract, or a future or
forward contract. Under the 1997 Act, the entry into a short sale, a swap
contract or a future or forward contract relating to an appreciated direct
position in any stock or debt instrument, or the acquisition of stock or debt
instrument at a time when the Fund occupies an offsetting (short) appreciated
position in the stock or debt instrument, is treated as a "constructive sale"
that gives rise to the immediate recognition of gain (but not loss). The
application of these new provisions may cause a Fund to recognize taxable income
from these offsetting transactions in excess of the cash generated by such
activities.
XII. INVESTMENT PERFORMANCE
MML Money Market may advertise investment performance figures, including its
yield and its effective yield. MML Money Market's yield will be calculated by
computing the net change, exclusive of capital changes, in the value of a
hypothetical pre-existing account having a balance of one share at the beginning
of a stated seven-day period and dividing the difference by the value of the
account at the beginning of the base period to obtain the base period return,
and then multiplying the base period return by (365/7). The Fund's effective
yield will be calculated by computing the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a balance of
one share at the beginning of a stated seven-day period and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then compounding the base period return by
adding 1, raising the sum to a power equal to 365 divided by 7 and subtracting 1
from the result.
MML Equity, MML Managed Bond and MML Blend may advertise investment performance
figures, including yield. Each Fund's yield will be based upon a stated 30-day
period and will be computed by dividing the net investment income per share
earned during the period by the maximum offering price per share on the last day
of the period, according to the following formula:
YIELD = 2[((a-b)/cd + 1)/6/ - 1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements, if any).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price (which is the net asset value) per share
on the last day of the period.
Each of the Funds may advertise its total return and its holding period return.
Total return quotations will be based upon a stated period and will be computed
by finding the average annual compounded rate of return over the stated
22
<PAGE>
period that would equate an initial amount invested to the ending redeemable
value of the investment (assuming reinvestment of all distributions), according
to the following formula:
P(1 + T)(n) = ERV Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value at the end of the
stated period of a hypothetical $1,000 payment
made at the beginning of the stated period.
Holding period return will be based upon a stated period and will be computed by
dividing the ending redeemable value of a hypothetical initial payment by the
value of the initial investment (assuming reinvestment of all distributions).
Each investment performance figure will be carried to the nearest hundredth of
one percent. These investment performance figures do not reflect charges imposed
by the separate investment accounts invested in the Funds which, if included,
would decrease the performance figures.
MML Equity Fund's yield, based on the 30-day period ended December 31, 1997 was
2.18%. The Fund's total returns for the 1, 5, 10, 15 and 20 year periods each
ended December 31, 1997 were 28.59%, 18.25%, 16.44%, 16.90% and 16.20%,
respectively. The Fund's holding period returns for the 1, 5, 10, 15 and 20 year
periods each ended December 31, 1997 were 28.59%, 131.18%, 358.03%, 849.37% and
1913.58%, respectively.
MML Money Market Fund's yield for the seven-day period ended December 31, 1997
was 5.22% and its effective yield for such period was 5.36%. The Fund's total
returns for the 1, 5, 10 and 15 year periods each ended December 31, 1997 were
5.18%, 4.47%, 5.63% and 6.44%, respectively. The Fund's total return for the
period beginning December 16, 1981 and ending December 31, 1997 was 6.73%. The
Fund's holding period returns for the 1, 5, 10 and 15 year periods each ended
December 31, 1997 were 5.18%, 24.42%, 72.98% and 155.17%, respectively. The
Fund's holding period return for the period beginning December 16, 1981 and
ending December 31, 1997 was 184.44%.
MML Managed Bond Fund's yield, based on the 30-day period ended December 31,
1997, was 6.0%. The Fund's total returns for the 1, 5, 10 and 15 year periods
each ended December 31, 1997 were 9.91%, 7.79%, 9.08% and 9.73%, respectively.
The Fund's total return for the period beginning December 16, 1981 and ending
December 31, 1997 was 10.37%. The Fund's holding period returns for the 1, 5, 10
and 15 year periods each ended December 31, 1997 were 9.91%, 45.48%, 138.58% and
302.57%, respectively. The Fund's holding period return for the period beginning
December 16, 1981 and ending December 31, 1997 was 386.88%.
MML Blend Fund's yield, based on the 30-day period ended December 31, 1997 was
3.58%. The Fund's total return for the 1, 5 and 10 year periods ended December
31, 1997 were 20.89%, 13.81% and 13.68%, respectively. The Fund's total return
for the period beginning February 3, 1984 and ending December 31, 1997 was
13.67%. The Fund's holding period return for the 1, 5 and 10 year periods ended
December 31, 1997 were 20.89%, 90.91% and 260.56%, respectively. The Fund's
holding period return for the period beginning February 3, 1984 and ending
December 31, 1997 was 494.55%.
XIII. EXPERTS
The financial statements of each of the Funds included in this Statement of
Additional Information have been included herein in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The name MML Series Investment Fund is the designation of Trustees under a
Declaration of Trust dated December 19, 1984, as amended from time to time. The
obligations of such Trust are not personally binding upon, nor shall resort be
had to the property of, any of the Trustees, shareholders, officers, employees
or agents of such Trust, but only the property of the relevant series of MML
Series Investment Fund shall be bound.
23
<PAGE>
Report Of Independent Accountants
To the Board of Trustees and Shareholders of
MML Series Investment Fund
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of the MML Equity Fund, the MML Money Market Fund,
the MML Managed Bond Fund and the MML Blend Fund which are components of the MML
Series Investment Fund (a Massachusetts business trust), as of December 31,
1997, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the ten years in the period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights 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 and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997 by correspondence with the custodian and brokers. 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 and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Funds as of December 31, 1997, the results of their respective operations
for the year then ended, the changes in their respective net assets for each of
the two years in the period then ended, and the financial highlights for each of
the ten years in the period then ended, in conformity with generally accepted
accounting principles.
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
January 31, 1998
F-1
<PAGE>
MML Series Investment Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<CAPTION>
MML
MML Money
Equity Market
Fund Fund
------ ------
<S> <C> <C>
ASSETS
Investments at value (See Schedule of Investments)
(Notes 2A, 2B and 5)
Equities (Identified cost: $1,510,449,497;
$905,861,303 respectively) ........................................ $ 2,433,085,317 $ --
Bonds and notes (Identified cost: $188,206,960;
$479,490,911 respectively) ........................................ -- --
Short-term investments (Identified cost: $127,227,047; $141,970,432;
$11,589,069; $535,623,717 respectively) ........................... 127,165,390 141,970,432
--------------- ---------------
Total Investments ................................................. 2,560,250,707 141,970,432
Cash ............................................................... 2,544,775 1,431
Receivable for investment securities sold .......................... 2,244,059 --
Interest and dividends receivable .................................. 4,703,172 --
Prepaid trustees' fees ............................................. 1,697 1,119
--------------- ---------------
Total assets ...................................................... 2,569,744,410 141,972,982
--------------- ---------------
LIABILITIES
Payable for investment securities purchased ........................ 13,448,674 --
Dividends payable (Note 2C) ........................................ 190,567,681 622,906
Investment management fee payable (Note 4) ......................... 2,284,411 182,325
Accrued liabilities ................................................ 2,367 2,366
--------------- ---------------
Total liabilities ................................................. 206,303,133 807,597
--------------- ---------------
NET ASSETS ......................................................... $ 2,363,441,277 $ 141,165,385
=============== ===============
Net assets consist of:
Series shares (par value $.01 per share) (Note 6) .................. $ 666,826 $ 1,411,654
Additional paid-in capital ......................................... 1,440,195,104 139,753,731
Undistributed net investment income (Note 2C) ...................... 16,996 13,560
Undistributed net realized gain (loss) on investments and
forward commitments (Notes 2D and 3) .............................. (11,812) (13,560)
Net unrealized appreciation on:
Investments (Note 2A) ............................................. 922,574,163 --
--------------- ---------------
NET ASSETS ......................................................... $ 2,363,441,277 $ 141,165,385
=============== ===============
Outstanding series shares .......................................... 66,682,603 141,165,385
=============== ===============
Net asset value per share .......................................... $ 35.44 $ 1.00
=============== ===============
<CAPTION>
MML
Managed MML
Bond Blend
Fund Fund
------ ------
<S> <C> <C>
ASSETS
Investments at value (See Schedule of Investments)
(Notes 2A, 2B and 5)
Equities (Identified cost: $1,510,449,497;
$905,861,303 respectively) ........................................ $ -- $ 1,627,674,051
Bonds and notes (Identified cost: $188,206,960;
$479,490,911 respectively) ........................................ 194,654,685 498,446,432
Short-term investments (Identified cost: $127,227,047; $141,970,432;
$11,589,069; $535,623,717 respectively) ........................... 11,589,069 535,498,736
--------------- ---------------
Total Investments ................................................. 206,243,754 2,661,619,219
Cash ............................................................... 3,085 1,343,844
Receivable for investment securities sold .......................... 1,712 1,599,511
Interest and dividends receivable .................................. 2,610,948 10,043,309
Prepaid trustees' fees ............................................. 1,119 1,119
--------------- ---------------
Total assets ...................................................... 208,860,618 2,674,607,002
--------------- ---------------
LIABILITIES
Payable for investment securities purchased ........................ -- 15,073,387
Dividends payable (Note 2C) ........................................ 3,301,236 185,296,953
Investment management fee payable (Note 4) ......................... 241,109 2,406,805
Accrued liabilities ................................................ 2,375 2,366
--------------- ---------------
Total liabilities ................................................. 3,544,720 202,779,511
--------------- ---------------
NET ASSETS ......................................................... $ 205,315,898 $ 2,471,827,491
=============== ===============
Net assets consist of:
Series shares (par value $.01 per share) (Note 6) .................. $ 165,458 $ 1,026,524
Additional paid-in capital ......................................... 198,798,225 1,730,351,561
Undistributed net investment income (Note 2C) ...................... (96,215) (53,700)
Undistributed net realized gain (loss) on investments and
forward commitments (Notes 2D and 3) .............................. 705 (140,182)
Net unrealized appreciation on:
Investments (Note 2A) ............................................. 6,447,725 740,643,288
--------------- ---------------
NET ASSETS ......................................................... $ 205,315,898 $ 2,471,827,491
=============== ===============
Outstanding series shares .......................................... 16,545,756 102,652,434
=============== ===============
Net asset value per share .......................................... $ 12.41 $ 24.08
=============== ===============
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE>
MML Series Investment Fund
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
MML MML
MML Money Managed MML
Equity Market Bond Blend
Fund Fund Fund Fund
------ ------ ------ ------
<S> <C> <C> <C> <C>
Investment income (Note 2B)
Dividends ................................................ $ 47,216,639 $ -- $ -- $ 33,425,435
Interest ................................................. 8,237,702 8,109,728 13,560,239 60,842,442
------------ ------------ ------------ ------------
Total Income .......................................... 55,454,341 8,109,728 13,560,239 94,267,877
------------ ------------ ------------ ------------
Expenses
Investment management fee (Note 4) ....................... 8,082,863 703,344 913,026 8,933,947
Audit fees ............................................... 29,401 20,420 26,211 32,262
Trustees' fees ........................................... 39,115 31,103 31,103 31,103
Other expenses ........................................... 658 534 534 626
------------ ------------ ------------ ------------
Total expenses ........................................ 8,152,037 755,401 970,874 8,997,938
------------ ------------ ------------ ------------
Net Investment income (Note 2C) .......................... 47,302,304 7,354,327 12,589,365 85,269,939
------------ ------------ ------------ ------------
Net realized and unrealized gain (loss) on investments and
forward commitments (Notes 2A, 2B and 2D)
Net realized gain (loss) on:
Investments (Notes 2B and 2C) ........................... 143,291,447 (4,291) 1,090,224 162,877,142
Forward commitments (Note 2D) ........................... -- -- -- 7,813
------------ ------------ ------------ ------------
Net realized gain (loss) ............................... 143,291,447 (4,291) 1,090,224 162,884,955
------------ ------------ ------------ ------------
Change in net unrealized appreciation on:
Investments (Note 2A) ................................... 347,666,835 -- 4,682,106 209,063,714
Forward commitments (Note 2D) ........................... -- -- -- 6,345
------------- ------------ ------------ ------------
Total change in net unrealized appreciation ............ 347,666,835 -- 4,682,106 209,070,059
------------- ------------ ------------ ------------
Net gain (loss) .......................................... 490,958,282 (4,291) 5,772,330 371,955,014
------------- ------------ ------------ ------------
Net increase in net assets resulting from operations ..... $ 538,260,586 $ 7,350,036 $ 18,361,695 $457,224,953
============= ============ ============ ============
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
MML Series Investment Fund
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997
-----------------------------------------------------------
MML MML
MML Money Managed MML
Equity Market Bond Blend
Fund Fund Fund Fund
------ ------ ------- -----
<S> <C> <C> <C> <C>
Increase (decrease)
in net assets
Operations:
Net investment income................. $ 47,302,304 $ 7,354,327 $ 12,589,365 $ 85,269,939
Net realized gain (loss)
on investments and
forward commitments.................. 143,291,447 (4,291) 1,090,224 162,884,955
Change in net unrealized
appreciation/depreciation on
investments and forward
commitments.......................... 347,666,835 -- 4,682,106 209,070,059
-------------- ------------- ------------- --------------
Net increase in net assets
resulting from operations............ 538,260,586 7,350,036 18,361,695 457,224,953
Dividends to shareholders
from: (Note 2C)
Net investment income............... (47,301,234) (7,350,036) (12,621,479) (85,322,771)
Net realized gains.................. (143,291,448) -- -- (162,679,164)
Net increase (decrease) in capital
share transactions (Note 6)........ 313,775,004 (4,065,657) 18,003,397 168,614,232
-------------- ------------- ------------- --------------
Total increase (decrease)........... 661,442,908 (4,065,657) 23,743,613 377,837,250
NET ASSETS, at beginning
of the year.......................... 1,701,998,369 145,231,042 181,572,285 2,093,990,240
-------------- ------------- ------------- --------------
NET ASSETS, at end
of the year.......................... $2,363,441,277 $ 141,165,385 $ 205,315,898 $2,471,827,491
============== ============= ============= ==============
Undistributed net investment
income (loss) included in net
assets at end of the year........... $ 16,996 $ 13,560 $ (96,215) $ (53,700)
============== ============= ============= ==============
<CAPTION>
1996
---------------------------------------------------------------
MML MML
MML Money Managed MML
Equity Market Bond Blend
Fund Fund Fund Fund
------ ------ ------- ------
<S> <C> <C> <C> <C>
Increase (decrease)
in net assets
Operations:
Net investment income................. $ 40,173,966 $ 6,159,608 $ 11,199,858 $ 77,932,170
Net realized gain (loss)
on investments and
forward commitments.................. 39,133,328 32 (404,955) 51,283,628
Change in net unrealized
appreciation/depreciation on
investments and forward
commitments.......................... 204,554,604 -- (4,664,274) 137,449,802
-------------- ------------- ------------- --------------
Net increase in net assets
resulting from operations............ 283,861,898 6,159,640 6,130,629 266,665,600
Dividends to shareholders
from: (Note 2C)
Net investment income............... (40,161,778) (6,159,640) (11,099,070) (77,800,925)
Net realized gains.................. (39,133,328) -- -- (51,065,539)
Net increase (decrease) in capital
share transactions (Note 6)........ 248,532,571 36,310,841 27,842,588 133,050,174
-------------- ------------- ------------- --------------
Total increase (decrease)........... 453,099,363 36,310,841 22,874,147 270,849,310
NET ASSETS, at beginning of the year.. 1,248,899,006 108,920,201 158,698,138 1,823,140,930
-------------- ------------- ------------- --------------
NET ASSETS, at end of the year........ $1,701,998,369 $ 145,231,042 $ 181,572,285 $2,093,990,240
============== ============= ============= ==============
Undistributed net investment
income (loss) included in net
assets at end of the year........... $ 15,927 $ 9,702 $ (64,100) $ (870)
============== ============= ============= ==============
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
MML Series Investment Fund
FINANCIAL HIGHLIGHTS
Selected per share data for each series share outstanding throughout each year
ended December 31:
MML EQUITY FUND
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year................... $ 29.786 $ 25.924 $ 20.520 $ 20.510 $ 19.862 $ 18.735 $ 15.659 $ 16.764
--------- --------- --------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income................ .709 .703 .634 .594 .524 .543 .563 .636
Net realized and unrealized
gain (loss) on investments.......... 7.806 4.547 5.754 .248 1.365 1.420 3.440 (.722)
--------- --------- --------- --------- --------- --------- --------- ---------
Total from investment operations..... 8.515 5.250 6.388 .842 1.889 1.963 4.003 (.086)
--------- --------- --------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income. (.709) (.703) (.634) (.594) (.524) (.543) (.562) (.665)
Distribution from net realized gains. (2.149) (.685) (.350) (.238) (.717) (.288) (.365) (.354)
Distribution in excess of net
realized gains...................... -- -- -- -- -- (.005) -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total distributions.................. (2.858) (1.388) (.984) (.832) (1.241) (.836) (.927) (1.019)
--------- --------- --------- --------- --------- --------- --------- ---------
Net asset value:
End of year......................... $ 35.443 $ 29.786 25.924 $ 20.520 $ 20.510 $ 19.862 $ 18.735 $ 15.659
========= ========= ========= ========= ========= ========= ========= =========
Total return......................... 28.59% 20.25% 31.13% 4.10% 9.52% 10.48% 25.56% (.51%)
Net assets (in millions):
End of period....................... $2,363.44 $1,701.99 $1,248.90 $ 820.78 $ 663.09 $ 490.62 $ 355.04 $ 235.45
Ratio of expenses to average net
assets.............................. .35% .38% .41% .43% .44% .46% .48% .49%
Ratio of net investment income to
average net assets.................. 2.03% 2.65% 2.89% 3.04% 3.23% 3.09% 3.43% 4.09%
Portfolio turnover rate.............. 15.30% 11.42% 11.72% 9.99% 11.28% 9.07% 9.37% 13.50%
Average commission rate.............. .0586 .0582 -- -- -- -- -- --
</TABLE>
1989 1988
---- ----
Net asset value:
Beginning of year................... $ 14.929 $ 13.828
--------- ---------
Income from investment operations:
Net investment income................ .694 .646
Net realized and unrealized
gain (loss) on investments.......... 2.746 1.660
--------- ---------
Total from investment operations..... 3.440 2.306
--------- ---------
Less distributions:
Dividends from net investment income. (.711) (.639)
Distribution from net realized gains. (.894) (.566)
Distribution in excess of net
realized gains...................... -- --
--------- ---------
Total distributions.................. (1.605) (1.205)
--------- ---------
Net asset value:
End of year......................... $ 16.764 $ 14.929
========= =========
Total return......................... 23.04% 16.68%
Net assets (in millions):
End of period....................... $ 226.41 $ 172.80
Ratio of expenses to average net
assets.............................. .50% .50%
Ratio of net investment income to
average net assets.................. 4.30% 4.05%
Portfolio turnover rate.............. 15.71% 15.97%
Average commission rate.............. -- --
MML MONEY MARKET FUND
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- --------- --------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income................ .051 .049 .054 .038 .027 .034 .059 .078
--------- --------- --------- --------- --------- --------- --------- ---------
Total from investment operations..... .051 .049 .054 .038 .027 .034 .059 .078
--------- --------- --------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income. (.051) (.049) (.054) (.038) (.027) (.034) (.059) (.078)
--------- --------- --------- --------- --------- --------- --------- ---------
Total distributions.................. (.051) (.049) (.054) (.038) (.027) (.034) (.059) (.078)
--------- --------- --------- --------- --------- --------- --------- ---------
Net asset value:
End of year......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========= ========= ========= ========= ========= ========= ========= =========
Total return......................... 5.18% 5.01% 5.58% 3.84% 2.75% 3.48% 6.01% 8.12%
Net assets (in millions):
End of period....................... $ 141.17 $ 145.23 $ 108.92 $ 91.79 $ 73.66 $ 84.56 $ 94.41 $ 114.59
Ratio of expenses to average net
assets.............................. .52% .52% .54% .55% .54% .53% .52% .54%
Ratio of net investment income to
average net assets.................. 5.07% 4.92% 5.43% 3.81% 2.71% 3.42% 5.91% 7.80%
</TABLE>
1989 1988
--------- ---------
Net asset value:
Beginning of year................... $ 1.000 $ 1.000
--------- ---------
Income from investment operations:
Net investment income................ .088 .072
--------- ---------
Total from investment operations..... .088 .072
--------- ---------
Less distributions:
Dividends from net investment income. (.088) (.072)
--------- ---------
Total distributions.................. (.088) (.072)
--------- ---------
Net asset value:
End of year......................... $ 1.000 $ 1.000
========= =========
Total return......................... 9.16% 7.39%
Net assets (in millions):
End of period....................... $ 70.16 $ 66.35
Ratio of expenses to average net
assets.............................. .54% .55%
Ratio of net investment income to
average net assets.................. 8.79% 7.20%
See Notes to Financial Statements.
F-5
<PAGE>
MML Series Investment Fund
FINANCIAL HIGHLIGHTS (Continued)
MML MANAGED BOND FUND
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year .................. $ 12.048 $ 12.448 $ 11.141 $ 12.405 $ 12.041 $ 12.219 $ 11.318 $ 11.354
--------- --------- --------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ............... .801 .776 .782 .792 .785 .870 .903 .943
Net realized and unrealized
gain (loss) on investments
and forward commitments ............ .356 (.401) 1.307 (1.264) .618 .001 .916 (.036)
--------- --------- --------- --------- --------- --------- --------- ---------
Total from investment operations..... 1.157 .375 2.089 (.472) 1.403 .871 1.819 .907
--------- --------- --------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income (.795) (.775) (.782) (.792) (.784) (.869) (.902) (.943)
Distribution from net realized gains -- -- -- -- (.255) (.158) (.016) --
Distribution in excess of net
realized gains ..................... -- -- -- -- -- (.022) -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total distributions ................. (.795) (.775) (.782) (.792) (1.039) (1.049) (.918) (.943)
--------- --------- --------- --------- --------- --------- --------- ---------
Net asset value:
End of year ........................ $ 12.410 $ 12.048 $ 12.448 $ 11.141 $ 12.405 $ 12.041 $ 12.219 $ 11.318
========= ========= ========= ========= ========= ========= ========= =========
Total return......................... 9.91% 3.25% 19.14% (3.76%) 11.81% 7.31% 16.66% 8.38%
Net assets (in millions):
End of period ...................... $ 205.32 $ 181.57 $ 158.70 $ 121.21 $ 129.11 $ 88.15 $ 66.98 $ 43.07
Ratio of expenses to average
net assets ......................... .47% .51% .52% .52% .54% .56% .57% .57%
Ratio of net investment income to
average net assets ................. 6.06% 6.54% 6.63% 6.69% 6.37% 7.28% 7.96% 8.40%
Portfolio turnover rate ............. 41.99% 46.12% 70.00% 32.77% 58.81% 39.51% 61.85% 69.93%
MML MANAGED BOND FUND
<CAPTION>
1989 1988
---- ----
<S> <C> <C>
Net asset value:
Beginning of year ................. $ 10.919 $ 11.052
--------- ---------
Income from investment operations:
Net investment income............... .918 .906
Net realized and unrealized
gain (loss) on investments
and forward commitments............ .454 (.133)
--------- ---------
Total from investment operations ... 1.372 .773
--------- ---------
Less distributions:
Dividends from net investment income (.918) (.906)
Distribution from net realized gains (.019) --
Distribution in excess of net
realized gains .................... -- --
--------- ---------
Total distributions ................ (.937) (.906)
--------- ---------
Net asset value:
End of year ....................... $ 11.354 $ 10.919
========= =========
Total return ....................... 12.83% 7.13%
Net assets (in millions):
End of period ..................... $ 40.03 $ 31.35
Ratio of expenses to average
net assets ........................ .59% .61%
Ratio of net investment income to
average net assets ................ 8.35% 8.25%
Portfolio turnover rate ............ 64.77% 74.92%
</TABLE>
See Notes to Financial Statements
F-6
<PAGE>
MML Series Investment Fund
FINANCIAL HIGHLIGHTS (Continued)
MML BLEND FUND
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year..................... $ 21.973 $ 20.519 $ 17.672 $ 18.305 $ 17.846 $ 17.307 $ 14.839 $ 15.428
--------- --------- --------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income.................. .843 .824 .811 .707 .655 .707 .736 .792
Net realized and unrealized
gain (loss) on investments
and forward commitments............... 3.692 1.990 3.246 (.271) 1.057 .880 2.771 (.445)
--------- --------- --------- --------- --------- --------- --------- ---------
Total from investment operations....... 4.535 2.814 4.057 .436 1.712 1.587 3.507 .347
--------- --------- --------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income... (.843) (.824) (.811) (.707) (.655) (.707) (.736) (.811)
Distribution from net realized gains... (1.585) (.536) (.399) (.359) (.598) (.326) (.303) (.125)
Distribution in excess of net realized
gains................................. -- -- -- (.003) -- (.015) -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total distributions.................... (2.428) (1.360) (1.210) (1.069) (1.253) (1.048) (1.039) (.936)
--------- --------- --------- --------- --------- --------- --------- ---------
Net asset value:
End of year........................... $ 24.080 $ 21.973 $ 20.519 $ 17.672 $ 18.305 $ 17.846 $ 17.307 $ 14.839
========= ========= ========= ========= ========= ========= ========= =========
Total return........................... 20.89% 13.95% 23.28% 2.48% 9.70% 9.36% 24.00% 2.37%
Net assets (in millions):
End of period......................... $2,471.83 $2,093.99 $1,823.14 $1,444.26 $1,296.54 $1,013.28 $ 797.04 $ 574.15
Ratio of expenses to average
net assets............................ .38% .38% .38% .39% .40% .41% .42% .44%
Ratio of net investment income to
average net assets.................... 3.56% 3.87% 4.19% 3.93% 3.60% 4.07% 4.54% 5.37%
Portfolio turnover rate................ 21.20% 19.10% 30.78% 26.59% 20.20% 25.43% 26.92% 24.55%
Average commission rate................ .0584 .0581 -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
1989 1988
---- ----
<S> <C> <C>
Net asset value:
Beginning of year..................... $ 13.876 $ 13.095
--------- ----------
Income from investment operations:
Net investment income.................. .823 .734
Net realized and unrealized
gain (loss) on investments
and forward commitments............... 1.921 1.000
--------- ----------
Total from investment operations....... 2.744 1.734
--------- ----------
Less distributions:
Dividends from net investment income... (.835) (.728)
Distribution from net realized gains... (.357) (.225)
Distribution in excess of net realized
gains................................. -- --
--------- ----------
Total distributions.................... (1.192) (.953)
--------- ----------
Net asset value:
End of year........................... $ 15.428 $ 13.876
========= ==========
Total return........................... 19.96% 13.40%
Net assets (in millions):
End of period......................... $ 524.29 $ 401.22
Ratio of expenses to average
net assets............................ .45% .46%
Ratio of net investment income to
average net assets.................... 5.57% 5.29%
Portfolio turnover rate................ 22.39% 25.70%
Average commission rate................ -- --
</TABLE>
Total return information shown in the Financial Highlights tables does not
reflect expenses that apply at the separate account level or to related
insurance products. Inclusion of these charges would reduce the total return
figures for all periods shown.
See Notes to Financial Statements.
F-7
<PAGE>
MML Equity Fund
SCHEDULE OF INVESTMENTS
December 31, 1997
Number Market
of Value
Shares (Note 2A)
-------- -----------
EQUITIES - 102.95%
Aerospace & Defense - 3.16%
Raytheon Company (Class A)................ 265,000 $ 13,067,680
Raytheon Company (Class B)................ 560,000 28,280,000
TRW, Inc. ................................ 626,600 33,444,775
----------- -------------
1,451,600 74,792,455
----------- -------------
Agribusiness - 1.61%
Archer-Daniels-Midland.................... 1,088,745 23,611,613
Pioneer Hi-Bred International, Inc. ...... 135,000 14,478,750
----------- -------------
1,223,745 38,090,363
----------- -------------
Apparel, Textiles, Shoes - 1.03%
VF Corporation............................ 530,000 24,346,610
----------- -------------
Automotive & Parts - 5.48%
Ford Motor Company........................ 950,000 46,252,650
Genuine Parts Company..................... 1,100,250 37,339,184
Goodyear Tire & Rubber Company............ 720,000 45,810,000
----------- -------------
2,770,250 129,401,834
----------- -------------
Banking, Savings & Loans - 7.67%
The Bank of New York Company,
Incorporated............................. 870,000 50,296,440
Comerica Incorporated..................... 323,500 29,195,875
CoreStates Financial Corporation.......... 304,800 24,402,898
Norwest Corporation....................... 782,000 30,204,750
Pacific Century Financial Corporation..... 712,700 17,639,325
Wachovia Corporation...................... 363,200 29,464,600
----------- -------------
3,356,200 181,203,888
----------- -------------
Beverages - 1.08%
Brown-Forman Corporation (Class B)........ 463,000 25,580,750
----------- -------------
Chemicals - 5.94%
Air Products and Chemical................. 227,600 18,720,100
E.I. du Pont de Nemours and Company....... 333,000 20,000,646
Engelhard Corporation..................... 905,900 15,740,013
The Lubrizol Corporation.................. 565,000 20,834,375
Nalco Chemical Company.................... 764,100 30,229,324
Rohm & Haas............................... 365,000 34,948,750
----------- -------------
3,160,600 140,473,208
----------- -------------
Communications - 2.09%
GTE Corporation........................... 946,800 49,470,300
----------- -------------
Computers & Office Equipment - 8.72%
Electronic Data System.................... 800,400 35,167,174
Hewlett-Packard Company................... 640,000 40,000,000
International Business Machines
Corporation.............................. 490,000 51,235,380
Pitney Bowes, Inc. ....................... 452,000 40,651,524
Xerox Corporation......................... 530,000 39,120,360
----------- -------------
2,912,400 206,174,438
----------- -------------
Containers - .74%
Temple-Inland, Inc. ...................... 330,000 17,262,960
----------- -------------
Cosmetics & Personal Care - 2.00%
Kimberly-Clark Corporation................ 960,000 47,339,520
----------- -------------
Electric Utilities - 1.83%
SCANA Corporation......................... 785,200 23,506,532
Teco Energy Inc. ......................... 704,700 19,819,688
----------- -------------
1,489,900 43,326,220
----------- -------------
Electrical Equipment & Electronics - 6.62%
AMP, Incorporated......................... 955,000 40,110,000
General Electric Company.................. 762,000 55,911,750
Honeywell Inc. ........................... 477,500 32,708,750
Hubbell, Incorporated (Class B)........... 562,144 27,720,445
----------- -------------
2,756,644 156,450,945
----------- -------------
Energy - 7.44%
Amoco Corporation......................... 530,000 45,116,250
Eni, SPA - ADR............................ 339,300 19,361,137
Kerr-McGee Corporation.................... 326,000 20,639,712
Mobil Corporation......................... 450,000 32,484,150
Occidental Petroleum Corp. ............... 754,600 22,118,835
Unocal Corporation........................ 931,000 36,133,972
----------- -------------
3,330,900 175,854,056
----------- -------------
Financial Services - 2.45%
American General Corporation.............. 492,900 26,647,160
American Express Company.................. 350,000 31,237,500
----------- -------------
842,900 57,884,660
----------- -------------
Foods - 2.76%
ConAgra, Inc. ............................ 1,031,000 33,829,172
CPC International, Inc. .................. 291,500 31,409,125
----------- -------------
1,322,500 65,238,297
----------- -------------
Forest Products & Paper - 2.05%
Westvaco Corporation...................... 773,055 24,302,530
Weyerhaeuser Company...................... 490,600 24,069,817
----------- -------------
1,263,655 46,372,347
----------- -------------
Hardware & Tools - .91%
The Stanley Works......................... 451,000 21,281,337
----------- -------------
Healthcare - 7.55%
Becton, Dickinson and Company............. 694,300 34,715,000
Bristol-Myers Squibb Company.............. 760,000 71,915,000
Pharmacia & Upjohn Inc. .................. 870,000 31,863,750
Schering-Plough Corp...................... 643,000 39,946,375
----------- -------------
2,967,300 178,440,125
----------- -------------
Industrial Distribution - 1.01%
W. W. Grainger, Inc. ..................... 246,000 23,908,002
----------- -------------
Industrial Transportation - 2.62%
Burlington Northern Sante Fe.............. 311,200 28,921,994
Norfolk Southern Corporation.............. 1,068,300 32,916,460
----------- -------------
1,379,500 61,838,454
----------- -------------
F-8
<PAGE>
MML Equity Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1997
Number Market
of Value
Shares (Note 2A)
-------- ----------
EQUITIES (Continued)
Insurance - 5.68%
Jefferson-Pilot Corporation .................... 237,000 $ 18,456,375
Marsh & McLennan Companies, Inc. ............... 561,000 41,829,282
MBIA, Inc. ..................................... 536,000 35,811,232
SAFECO Corporation ............................. 782,500 38,146,875
------------- ---------------
2,116,500 134,243,764
------------- ---------------
MachInery & Components - 2.19%
Dover Corporation .............................. 650,000 23,481,250
Parker-Hannifin Corporation .................... 618,075 28,354,191
------------- ---------------
1,268,075 51,835,441
------------- ---------------
Miscellaneous - 2.98%
Armstrong World Industries ..................... 440,000 32,890,000
Harsco Corporation ............................. 339,000 14,619,375
Minnesota Mining & Manufacturing Company ....... 204,500 16,781,679
Pall Corporation ............................... 302,000 6,247,474
------------- ---------------
1,285,500 70,538,528
------------- ---------------
Photography - 1.36%
Eastman Kodak Company .......................... 529,000 32,169,548
------------- ---------------
Publishing & Printing - 2.51%
McGraw-Hill Companies, Inc. .................... 500,000 37,000,000
R. R. Donnelley & Sons Company ................. 600,000 22,350,000
------------- ---------------
1,100,000 59,350,000
------------- ---------------
Retail - 2.70%
The May Department Stores Company .............. 593,000 31,243,391
Sears Roebuck and Company ...................... 719,300 32,548,325
------------- ---------------
1,312,300 63,791,716
------------- ---------------
Retail - Grocery - 3.76%
Albertson's, Inc. .............................. 1,273,500 60,332,062
American Stores Company ........................ 1,388,200 28,544,169
------------- ---------------
2,661,700 88,876,231
------------- ---------------
Telephone Utilities - 4.04%
Ameritech Corporation .......................... 347,000 27,933,500
Frontier Corporation ........................... 1,096,200 26,376,764
Pinnacle West Capital .......................... 459,800 19,484,025
Southern New England Telephone ................. 430,000 21,634,160
------------- ---------------
2,333,000 95,428,449
------------- ---------------
Tobacco - 2.97%
Fortune Brands, Inc. ........................... 795,200 29,471,702
UST, Inc. ...................................... 1,100,500 40,649,169
------------- ---------------
1,895,700 70,120,871
------------- ---------------
Total Equities
(Cost $1,510,449,497)........................... 2,433,085,317
---------------
SHORT-TERM INVESTMENTS - 5.38%
Commercial Paper
Abbott Laboratories
5.900% 1/13/98 ............................... $ 7,000,000 $ 6,986,233
Abbott Laboratories
6.000% 1/9/98 ................................ 5,000,000 4,993,333
Allied Signal Inc.
5.550% 6/12/98 ............................... 5,000,000 4,865,299
Ameritech Corporation
5.800% 1/26/98 ............................... 5,498,000 5,475,855
Anheuser Busch Cos, Inc.
5.630% 2/24/98 ............................... 10,000,000 9,910,000
Brown Forman Corp.
6.100% 1/12/98 ............................... 8,442,000 8,426,265
Caterpillar Financial Service Corp.
5.520% 4/22/98 ............................... 4,105,000 4,029,012
Caterpillar Financial Service Corp.
5.550% 4/24/98 ............................... 6,215,000 6,097,899
Coca Cola Company
5.660% 2/2/98 ................................ 10,000,000 9,949,689
Ford Motor Credit Company
5.520% 4/20/98 ............................... 5,000,000 4,909,097
General Mills Inc.
6.000% 1/9/98 ................................ 9,565,000 9,552,247
IBM Credit Corporation
5.720% 2/11/98 ............................... 4,000,000 3,972,211
Proctor & Gamble Company
5.600% 4/14/98 ............................... 5,000,000 4,914,056
Proctor & Gamble Company
5.550% 4/27/98 ............................... 5,000,000 4,903,313
Sara Lee Corp.
6.000% 1/7/98 ................................ 12,000,000 11,988,000
Transamerica Finance Corp.
6.000% 1/9/98 ................................ 9,311,000 9,298,585
Walt Disney Company
5.550% 4/13/98 ............................... 5,000,000 4,914,882
Walt Disney Company
5.650% 2/9/98 ................................ 7,026,000 6,980,331
Walt Disney Company
6.600% 1/2/98 ................................ 5,000,000 4,999,083
------------- ---------------
Total Short-Term investments
(Cost $127,227,047) .......................... $ 128,162,000 127,165,390
============= ===============
Total Investments -
(Cost $1,637,676,544) (a) 108.33% $ 2,560,250,707
======= ===============
(a) Federal Income Tax Information: At
December 31, 1997 the net unrealized
appreciation on investments based on cost
of $1,637,688,356 for federal income tax
purposes is as follows:
Aggregate gross unrealized appreciation for
all investments in which there is an excess
of market value over tax cost ............................. $ 924,365,276
Aggregate gross unrealized depreciation for
all investments in which there is an excess
of tax cost over market value ............................. (1,802,925)
---------------
Net unrealized appreciation ............................... $ 922,562,350
===============
See Notes to Financial Statements.
F-9
<PAGE>
MML Money Market Fund
SCHEDULE OF INVESTMENTS
December 31, 1997
Market
Principal Value
Amount (Note 2A)
------------- ------------
SHORT-TERM INVESTMENTS - 100.57%
Commercial Paper - 93.75%
Abbott Laboratories
5.480% 1/16/98................ $ 4,635,000 $ 4,624,417
American Greetings Corp.
5.500% 1/21/98................ 5,650,000 5,632,736
Anheuser-Busch Companies, Inc.
5.630% 3/16/98................ 3,485,000 3,444,669
Aristar Inc.
5.900% 2/2/98................. 4,130,000 4,108,340
Atlantic Richfield Corp.
5.510% 2/4/98................. 4,825,000 4,799,891
Baltimore Gas & Electric Company
5.800% 1/6/98................. 710,000 709,428
Bay State Gas Company
5.700% 1/13/98................ 5,930,000 5,918,733
Bellsouth Telecommunications, Inc.
5.680% 2/11/98................ 5,500,000 5,464,421
Bemis Company Incorporated
5.580% 1/22/98................ 3,645,000 3,633,136
CIT Group Holdings Incorporated
5.480% 2/9/98................. 1,370,000 1,361,866
CIT Group Holdings Incorporated
5.630% 2/9/98................. 2,255,000 2,241,246
CIT Group Holdings Incorporated
5.610% 3/24/98................ 2,100,000 2,073,166
Carolina Power & Ught Company
5.700% 2/27/98................ 3,800,000 3,765,705
Carolina Power & Ught Company
5.700% 2/27/98................ 1,800,000 1,783,755
Caterpillar Financial Services Corp.
5.520% 4/24/98................ 2,585,000 2,540,211
Coca Cola Company
5.480% 2/6/98................. 1,385,000 1,377,410
Coca Cola Company
5.630% 3/20/98................ 1,240,000 1,224,874
Coca Cola Company
5.610% 3/23/98................ 2,255,000 2,226,536
Countrywide Home Loans
5.620% 2/3/98................. 6,000,000 5,969,090
E.I. du Pont de Nemours and Company
5.470% 2/17/98................ 2,900,000 2,879,290
E.l. du Pont de Nemours and Company
5.510% 3/6/98................. 1,000,000 990,205
E.l. du Pont de Nemours and Company
5.480% 5/5/98................. 2,000,000 1,962,249
General Electric Company
5.550% 3/27/98................ 1,270,000 1,253,358
General Electric Company
5.550% 3/27/98................ 755,000 744,892
General Electric Company
5.550% 3/27/98................ 1,715,000 1,692,162
General Electric Capital Corp.
5.600% 5/22/98................ 295,000 288,530
General Mills Inc.
5.650% 1/9/98................. 2,365,000 2,362,031
Georgia Power
5.800% 1/9/98................. 1,695,000 1,692,815
Goldman Sachs & Company
5.650% 2/10/98................ 2,670,000 2,653,238
Goldman Sachs & Company
5.700% 3/12/98................ 3,000,000 2,966,750
Heinz H J Company
5.750% 2/13/98................ 2,580,000 2,562,280
Heinz H J Company
5.550% 6/22/98................ 700,000 681,438
Hershey Goods Corporation
5.530% 1/14/98................ 5,565,000 5,553,887
IBM Credit Company
5.530% 4/13/98................ 5,015,000 4,936,423
Minnesota Mining & Manufacturing Company
5.520% 1/23/98................ 5,400,000 5,381,784
Motorola Inc.
5.500% 1/26/98................ 4,500,000 4,482,813
National Fuel Gas Company
5.730% 2/5/98................. 6,000,000 5,966,575
Northern Illinois Gas
5.520% 1/15/98................ 3,610,000 3,602,250
Pitney Bowes Credit Corporation
5.500% 1/20/98................ 5,225,000 5,209,833
Proctor & Gamble Company
5.570% 6/17/98................ 4,470,000 4,354,501
Walt Disney Company
5.520% 4/1/98................. 1,320,000 1,301,784
Walt Disney Company
5.610% 3/6/98................. 1,185,000 1,173,182
Walt Disney Company
5.530% 6/26/98................ 1,860,000 1,809,714
Wisconsin Electric Power Company
5.770% 2/20/98................ 2,570,000 2,549,404
Wisconsin Electric Power Company
5.770% 2/20/98................ 395,000 391,835
------------- -----------
Total Commercial Paper
(Cost $ 132,342,853)................ 133,360,000 132,342,853
------------- -----------
U.S. Government Agency Obligations - 6.82%
Federal Farm Credit Bank
5.430% 9/25/98................ 6,115,000 5,868,733
Federal National Mortgage Association
5.51 0% 4/24/98................ 3,825,000 3,758,846
------------- -----------
Total U.S. Government Agency Obligations
(Cost $9,627,579) 9,940,000 9,627,579
------------- -----------
Total Short-Term Investments
(Cost $141,970,432) (a) $ 143,300,000 141,970,432
============= -----------
Total Investments --
(Cost $141,970,432) (a) 100.57% $ 141,970,432
======= =============
(a) Federal Income Tax Information: The aggregate cost for investments for the
MML Money Market Fund as of December 31, 1997 is the same for financial
reporting and federal income tax purposes.
December 31, 1997 seven-day average yield for the portfolio: 5.22%
See Notes to Financial Statements.
F-10
<PAGE>
MML Managed Bond Fund
SCHEDULE OF INVESTMENTS
December 31, 1997
Market
Principal Value
Amount (Note 2A)
--------- ---------
BONDS AND NOTES - 94.81%
Asset Backed Securities -- 6.41%
Auto Receivables
California Infrastructure PG&E-1, 1997-1,
Class A6
6.320% 9/25/05........................ $ 250,000 $ 252,178
California Infrastructure PG&E-1, 1997-1,
Class A4
6.160% 6/25/03........................ 550,000 552,101
California Infrastructure SDG&E-1, 1997-1,
Class A5
6.190% 9/25/05........................ 250,000 250,770
California Infrastructure SCE-1, 1997-1,
Class A3
6.170% 3/25/03........................ 350,000 351,306
California Infrastructure SCE-1, 1997-1,
Class A5
6.280% 9/25/05........................ 300,000 301,413
Capita Equipment Receivables Trust 1996-1,
Class A4
6.280% 6/15/00........................ 2,000,000 2,008,240
Chase Manhattan RV Owner Trust 1997-A
Class A7
6.140% 10/16/06....................... 2,000,000 2,002,360
Ford Credit 1994-B Grantor Trust
7.300% 10/15/99....................... 239,089 240,882
Jet Equipment Trust 1995-A
8.235% 5/1/15......................... 1,897,668 2,115,938
Metlife Capital Equipment Loan Trust
Series 1997-A, Class A
6.850% 5/20/08........................ 500,000 516,7S0
Railcar Trust No. 1992-1
7.750% 6/1/04......................... 1,471,060 1,545,216
World Omni 1995-A Automobile Lease
Securitization Trust, Class A
6.05O% 11/25/01....................... 1,597,656 1,597,144
World Omni 1996-A Automobile Lease
Securitization Trust, Class Al
6.300% 6/25/02........................ 1,431,649 1,432,980
---------- ----------
Total Asset Backed Securities
(Cost $13,040,260)......................... 12,837,122 13,167,278
---------- ----------
Corporate Debt -- 57.76%
AirTouch Communications, Inc.
7.500% 7/15/06........................ 1,500,000 1,592,564
American West Airlines 1996-1, Class A
6.850% 7/2/09......................... 1,733,154 1,759,775
American Airlines, Inc.
9.780% 11/26/11....................... 1,959,704 2,347,235
AMR Corporation
9.000% 8/1/12......................... 1,000,000 1,186,510
Analog Devices, Inc.
6.625% 3/1/00......................... 1,000,000 1,005,920
Archer -- Daniels Midland
6.750% 12/15/27....................... 750,000 751,298
Associates Corporation of North America
7.875% 9/30/01........................ 2,000,000 2,108,300
Atlantic Richfield Company
7.770% 2/13/02........................ 3,000,000 3,168,690
Barrick Gold Corporation
7.500% 5/01/07........................ 2,000,000 2,103,140
Bell Atlantic Financial Services, Inc.
6.610% 2/4/00......................... 2,000,000 2,025,180
BHP Finance (USA) Limited
6.420% 3/1/26......................... 2,000,000 2,005,420
Carlisle Companies, Inc.
7.250% 1/15/07........................ 1,500,000 1,554,660
Celulosa Arauco Constitution
6.950% 9/15/05........................ 1,000,000 999,110
Champion International Corporation
6.400% 2/15/26........................ 1,500,000 1,491,134
Charles Schwab Corporation
6.250% 1/23/03........................ 2,000,000 1,994,740
CITGO Petroleum Corporation
7.875% 5/15/06........................ 750,000 786,375
Columbia Gas System, Inc.
6.610% 11/28/02....................... 2,000,000 2,017,040
Commercial Credit Company
7.750% 3/1/05......................... 3,000,000 3,217,890
Comcast Cablevision-PH
8.375% 5/1/07......................... 1,250,000 1,389,088
Continental Airlines, Inc. Series 1996-B
7.820% 10/15/13....................... 1,470,587 1,584,837
Continental Airlines, Inc. Series 1996-2B
8.560% 7/2/14......................... 972,107 1,105,752
Corning Glass Works
8.875% 3/15/16........................ 500,000 602,775
CSX Corporation
7.250% 5/1/27......................... 2,000,000 2,197,680
Dow Capital
7.125% 1/15/03........................ 4,000,000 4,099,040
English China Clays Delaware Inc.
7.375% 10/1/02........................ 1,000,000 1,037,450
Equifax, Inc.
6.500% 6/15/03........................ 1,250,000 1,250,400
ERAC USA Finance Company 144A
6.950% 1/15/06........................ 1,500,000 1,536,300
FBG Finance Ltd. 144A
7.875% 6/1/16......................... 1,250,000 1,376,037
First Brands Corporation
7.250% 3/1/07......................... 500,000 515,300
Fletcher Challenge Ltd.
7.750% 6/20/06........................ 1,500,000 1,586,130
Foodbrands America, Inc.
10.750% 5/15/06........................ 1,500,000 1,746,225
Foster Wheeler Corporation
6.750% 11/15/05....................... 2,000,000 2,012,640
General American Transportation Corporation
6.750% 3/1/06......................... 2,000,000 2,021,760
General Electric Capital Corporation
8.750% 5/21/07........................ 1,000,000 1,175,730
General Electric Capital Corporation
6.500% 11/1/06........................ 250,000 253,935
General Mills
8.900% 6/15/06........................ 1,000,000 1,160,720
Hercules Incorporated
6.625% 6/1/03......................... 1,000,000 1,006,060
Hershey Foods Co.
7.200% 8/15/27........................ 1,500,000 1,594,650
Hilton Hotels Corporation
7.000% 7/15/04........................ 2,000,000 2,029,860
IMCERA Group, Inc.
6.000% 10/15/03....................... 2,000,000 1,929,740
Interpool Inc.
7.350% 8/1/07......................... 500,000 500,130
F-11
<PAGE>
MML Managed Bond Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
Market
Principal Value
Amount (Note 2A)
--------- ---------
<S> <C> <C>
BONDS AND NOTES (Continued)
Corporate Debt (Continued)
Korea Development Bank
7.375% 9/17/04 ....................... $ 500,000 $ 400,106
Leucadia National Corporation
7.750% 8/15/13 ....................... 2,000,000 2,068,420
Lockheed Martin Corporation
7.700% 6/15/08 ....................... 1,500,000 1,622,580
Mapco, Inc.
7.250% 3/1/09 ........................ 1,500,000 1,564,665
Millipore Corporation
7.500% 4/1/07 ........................ 1,000,000 1,054,740
Mobil Corporation
8.625% 8/15/21 ....................... 2,000,000 2,501,780
Morgan Stanley Group
6.875% 3/1/07 ........................ 500,000 510,875
Newmont Mining Corporation
8.625% 4/1/02 ........................ 2,000,000 2,148,260
News America Holdings Incorporated
9.250% 2/1/13 ........................ 2,000,000 2,382,180
Norfolk Southern Corporation
7.050% 5/01/37 ....................... 2,500,000 2,642,350
Orchard Supply Hardware
9.375% 2/15/02 ....................... 1,500,000 1,551,660
Penske Truck Leasing Co., L.P.
7.750% 5/15/99 ....................... 1,250,000 1,278,488
Petro Geo-Services
7.500% 3/31/07 ....................... 500,000 529,125
Polaroid Corporation
8.000% 3/15/99 ....................... 1,000,000 1,018,720
Ralston Purina Company
7.750% 10/1/15 ....................... 3,000,000 3,262,620
Raytheon Co.
6.750% 8/15/07 ....................... 500,000 510,086
Rite Aid Corporation
6.700% 12/15/01 ...................... 1,000,000 1,010,680
Rolls-Royce Capital Inc.
7.125% 7/29/03 ....................... 1,500,000 1,545,750
Scholastic Corporation
7.000% 12/15/03 ...................... 2,000,000 2,052,360
Sears Roebuck Acceptance
6.750% 9/15/05 ....................... 1,500,000 1,529,160
Textron Inc.
9.550% 3/19/01 ....................... 1,000,000 1,097,760
Thomas & Betts Corporation
8.250% 1/15/04 ....................... 1,500,000 1,632,120
Time Warner, Inc.
7.750% 6/15/05 ....................... 3,000,000 3,164,220
Time Warner, Inc.
6.100% 12/30/01 ...................... 500,000 489,910
United Air Lines, Inc.
10.110% 2/19/06 ...................... 462,142 523,168
US Air, Inc.
7.500% 10/15/09 ...................... 950,291 994,242
US West Capital Funding Corporation
8.375% 10/18/99 ...................... 3,000,000 3,121,560
US West Capital Funding Corporation
6.850% 1/15/02 ....................... 2,000,000 2,022,520
Valassis Communications, Inc.
9.550% 12/1/03 ....................... 2,000,000 2,247,200
Valero Energy Corporation
6.750% 12/15/02 ...................... 1,000,000 1,004,910
Worldcom Inc.
7.750% 4/1/07 ........................ 1,000,000 1,073,890
Worldcom Inc.
9.375% 1/15/04 ...................... 871,000 922,189
W.R. Grace & Co.
7.750% 10/1/02 ...................... 2,100,000 2,210,334
W.R. Grace & Co.
8.000% 8/15/04 ...................... 1,000,000 1,082,040
------------- ------------
Total Corporate Debt
(Cost $114,659,544) 112,268,985 118,597,888
------------- ------------
U.S. Government Agency Obligations -- 22.07%
Federal Home Loan Mortgage
Corporation (FHLMC) -- 2.08%
Collateralized Mortgage Obligations -- 2.00%
FHLMC Series 1322 Class G
7.500% 2/15/07 ...................... 2,000,000 2,053,120
FHLMC Series 1460 Class H
7.000% 5/15/07 ...................... 2,000,000 2,051,240
------------- ------------
4,000,000 4,104,360
Pass-Through Securities -- .08%
FHLMC
9.000% 3/1/17 ....................... 148,401 158,927
------------- ------------
4,148,401 4,263,287
------------- ------------
Federal National Mortgage
Association (FNMA) -- 6.09%
Collateralized Mortgage Obligations -- 5.77%
FNMA Series 1993-191 Class PD
5.400% 3/25/04 ...................... 1,240,567 1,234,365
FNMA Series 1993-221 Class D
6.000% 12/25/08 ..................... 1,000,000 985,930
FNMA Series 1993-134 Class GA
6.500% 2/25/07 ...................... 2,000,000 2,015,000
FNMA Series 1996-54 Class C
6.000% 9/25/08 ...................... 4,000,000 3,908,280
FNMA Series 1993-186 Class G
6.250% 3/25/08 ...................... 3,700,000 3,705,771
------------- ------------
11,940,567 11,849,346
Pass-Through Securities -- .32%
FNMA
9.000% 5/1/09 ....................... 606,549 644,459
------------- ------------
12,547,117 12,493,805
------------- ------------
Government National Mortgage
Association (GNMA) -- 11.95%
Collateralized Mortgage Obligations -- .40%
JHM Acceptance Corporation,
Series E, Class 5
8.960% 4/1/19 ....................... 774,041 809,841
------------- ------------
Pass-Through Securities -- 11.55%
GNMA
8.000% 12/15/03 - 4/15/08 ........... 7,339,263 7,706,960
GNMA
7.500% 3/15/17 - 7/15/17 ............ 4,100,233 4,241,158
GNMA
7.000% 8/20/25 - 12/20/27 ........... 1,980,001 2,002,890
GNMA - ARMS
5.500% 10/20/27 - 12/20/27 .......... 2,722,522 2,727,561
GNMA - ARMS
6.000% 7/20/25 - 12/20/25 ........... 6,923,807 7,038,086
------------- ------------
23,065,826 23,716,655
------------- ------------
23,839,867 24,526,496
------------- ------------
</TABLE>
F-12
<PAGE>
MML Managed Bond Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1997
Market
Principal Value
Amount (Note 2A)
--------- -----------
BONDS AND NOTES (Continued)
U.S. Government Guaranteed Notes -- 1.95%
1994-A Atlanta, GA
5.780% 8/1/98........................... $ 130,000 $ 129,856
1994-A Baxter Springs, KS
5.780% 8/1/98........................... 700,000 699,222
1994-A Boston, MA
5.780% 8/1/98........................... 745,000 744,173
1994-A Detroit, MI
5.780% 8/1/98........................... 385,000 384,573
1994-A Egg Harbor, NJ
5.780% 8/1/98........................... 260,000 259,711
1994-A Kansas City, MO
5.780% 8/1/98........................... 550,000 549,390
1994-A Mayaguez, PR
5.780% 8/1/98........................... 295,000 294,673
1994-A Rochester, NY
5.780% 8/1/98........................... 300,000 299,667
1994-A Sacramento, CA
5.780% 8/1/98........................... 55,000 54,939
1994-A Saginaw, MI
5.780% 8/1/98........................... 315,000 314,650
1994-A Youngstown, OH
5.780% 8/1/98........................... 265,000 264,706
------------- -------------
4,000,000 3,995,560
------------- -------------
Total U.S. Government Agency Obligations
(Cost $44,479,603)...................... 44,535,385 45,279,148
------------- -------------
U.S. Treasury Obligations -- 8.57%
U.S. Treasury Bonds -- 1.16%
U.S. Treasury Bond
7.250% 5/15/16.......................... 2,095,000 2,386,330
------------- -------------
U.S. Treasury Strips -- 7.41%
U.S. Treasury Strip -- Principal Only
0.000% 5/15/15.......................... 45,700,000 15,224,041
------------- -------------
Total U.S. Treasury Obligations
(Cost $16,027,553)....................... 47,795,000 17,610,371
------------- -------------
Total Bonds and Notes
(Cost $188,206,960)...................... $ 217,436,492 194,654,685
============= -------------
SHORT-TERM INVESTMENTS -- 5.64%
Commercial Paper
Conagra
6.850% 1/2/98........................... $ 1,560,000 $ 1,559,703
Orix Credit Alliance, Inc.
7.000% 1/13/98.......................... 2,550,000 2,544,050
Orix Credit Alliance, Inc.
7.000% 1/16/98.......................... 650,000 648,104
Pennsyvania Power & Light
6.500% 1/6/98........................... 2,295,000 2,292,928
Indiana Michigan Power Co.
7.000% 1/5/98........................... 1,535,000 1,533,806
Indiana Michigan Power Co.
6.750% 1/9/98........................... 3,015,000 3,010,478
------------- -------------
Total Short-Term Investments
(Cost $11,589,069) $ 11,605,000 11,589,069
============= -------------
Total Investments .
(Cost $199,796,029) (a) 100.45% $ 206,243,754
======== =============
(a) Federal Income Tax Information:
At December 31, 1997 the net unrealized
depreciation on investments based on
cost of $199,796,029 for federal income
tax purposes is as follows:
Aggregate gross unrealized appreciation
for all investments and forward commitments
in which there is an excess of market
value over tax cost.................................. $ 7,387,557
Aggregate gross unrealized depreciation
for all investments and forward
commitments in which there is an
excess of tax cost over market value................. (939,832)
-------------
Net unrealized appreciation....................... $ 6,447,725
=============
See Notes to Financial Statements.
F-13
<PAGE>
MML Blend Fund
SCHEDULE OF INVESTMENTS
December 31, 1997
Number Market
of Value
Shares (Note 2A)
------ ---------
EQUITIES - 65.85%
Aerospace & Defense - 2.07%
Raytheon Company (Class A).................. 142,000 $ 7,002,304
Raytheon Company (Class B).................. 410,000 20,705,000
TRW, Inc.................................... 440,200 23,495,675
--------- ------------
992,200 51,202,979
--------- ------------
Agribusiness - .69%
Archer-Daniels-Midland Company.............. 789,915 17,130,887
--------- ------------
Apparel, Textiles, Shoes - .74%
VF Corporation.............................. 400,000 18,374,800
--------- ------------
Automotive & Parts - 3.16%
Ford Motor Company.......................... 465,600 22,668,667
Genuine Parts Company....................... 685,500 23,263,814
Goodyear Tire & Rubber Company.............. 505,000 32,130,625
--------- ------------
1,656,100 78,063,106
--------- ------------
Banking, Savings & Loans - 5.06%
The Bank of New York Company Incorporated... 590,000 34,109,080
Comerica, Incorporated...................... 237,000 21,389,250
CoreStates Financial Corporation............ 207,800 16,636,884
Norwest Corporation......................... 504,000 19,467,000
Pacific Century Finance..................... 498,100 12,327,975
Wachovia Corporation........................ 260,000 21,092,500
--------- ------------
2,296,900 125,022,689
--------- ------------
Beverages -- .81%
Brown-Forman Corporation (Class B).......... 364,500 20,138,625
--------- ------------
Chemicals - 3.83%
Air Products and Chemicals.................. 159,400 13,110,650
E.I. du Pont de Nemours and Company......... 292,000 17,538,103
Engelhard Corp.............................. 615,300 10,690,838
The Lubrizol Corporation.................... 300,300 11,073,563
Nalco Chemical Company...................... 417,700 16,525,047
Rohm & Haas................................. 268,000 25,661,000
--------- ------------
2,052,700 94,599,201
--------- ------------
Communications -- 1.08%
GTE Corporation............................. 509,700 26,631,825
--------- ------------
Computers & Office Equipment - 5.73%
Electronic Data Systems..................... 492,000 21,617,004
Hewlett-Packard Company..................... 536,000 33,500,000
International Business Machines Corporation. 302,000 31,577,724
Pitney Bowes, Inc........................... 287,000 25,811,919
Xerox Corporation........................... 396,000 29,229,552
--------- ------------
2,013,000 141,736,199
--------- ------------
Containers - .31%
Temple-inland, Inc.......................... 145,000 7,585,240
--------- ------------
Cosmetic & Personal Care - 1.20%
Kimberly-Clark Corporation.................. 600,000 29,587,200
--------- ------------
Electric UtilitIes - 1.30%
SCANA Corporation........................... 579,200 17,339,510
Teco Energy Inc............................. 523,000 14,709,375
--------- ------------
1,102,200 32,048,885
--------- ------------
Electrical Equipment & Electronics - 4.60%
AMP, Inc.................................... 700,000 $ 29,400,000
General Electric Company.................... 548,000 40,209,500
Honeywell, Inc.............................. 335,000 22,947,500
Hubbell, Incorporated (Class B)............. 431,880 21,296,867
--------- ------------
2,014,880 113,853,867
--------- ------------
Energy - 4.65%
Amoco Corporation........................... 332,000 28,261,500
ENI, SPA - ADR.............................. 245,800 14,025,840
Kerr-McGee Corporation...................... 190,000 12,029,280
Mobil Corporation........................... 300,000 21,656,100
Occidental Petroleum Corp................... 568,300 16,658,010
Unocal Corporation.......................... 578,000 22,433,335
--------- ------------
2,214,100 115,064,065
--------- ------------
Financial Services -1.58%
American Express Company.................... 250,000 22,312,500
American General Corp....................... 310,000 16,759,220
--------- ------------
560,000 39,071,720
--------- ------------
Foods - 2.11%
ConAgra, Inc................................ 650,200 21,334,362
CPC International, Inc...................... 285,000 30,708,750
--------- ------------
935,200 52,043,112
--------- ------------
Forest Products & Paper -- 1.34%
Westvaco Corporation........................ 450,012 14,147,027
Weyerhaeuser Company........................ 386,500 18,962,463
--------- ------------
836,512 33,109,490
--------- ------------
Hardware & Tools - .65%
The Stanley Works........................... 342,000 16,137,954
--------- ------------
Healthcare -- 4.97%
Becton, Dickinson and Company............... 468,000 23,400,000
Bristol-Myers Squibb Company................ 546,000 51,665,250
Pharmacia & Upjohn Inc...................... 415,000 15,199,375
Schering-Plough Corp........................ 526,000 32,677,750
--------- ------------
1,955,000 122,942,375
--------- ------------
Industrial Distribution - .82%
W. W. Grainger, Inc......................... 208,000 20,214,896
--------- ------------
Industrial Transportation - 1.77%
Burlington Northern......................... 229,200 21,301,160
Norfolk Southern Corporation................ 725,400 22,351,025
--------- ------------
954,600 43,652,185
--------- ------------
Insurance - 4.29%
Jefferson-Pilot Corporation................. 176,000 13,706,000
Marsh & McLennan Companies, Inc............. 430,000 32,061,660
MBIA, Inc................................... 451,000 30,132,212
SAFECO Corporation.......................... 618,000 30,127,500
--------- ------------
1,675,000 106,027,372
--------- ------------
Machinery & Components - .84%
Dover Corporation........................... 572,000 20,663,500
--------- ------------
F-14
<PAGE>
MML Blend Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note 2A)
------ ---------
<S> <C> <C>
EQUITIES (Continued)
Miscellaneous -- 2.06%
Armstrong World Industries ............... 275,000 $ 20,556,250
Harsco Corporation ....................... 312,100 13,459,313
Minnesota Mining &
Manufacturing Company ................... 150,500 12,350,330
Pall Corp ................................ 220,800 4,567,690
----------- ------------
958,400 50,933,583
----------- ------------
Photography -- .64%
Eastman Kodak Company .................... 260,800 15,859,770
----------- ------------
Publishing & Printing -- 1.69%
McGraw-Hill Companies, Inc. .............. 400,000 29,600,000
R.R. Donnelley & Sons Company ............ 326,500 12,162,125
----------- ------------
726,500 41,762,125
----------- ------------
Retail -- 1.73%
The May Department Stores Company ........ 442,000 23,287,654
Sears Roebuck and Company ................ 430,300 19,471,075
----------- ------------
872,300 42,758,729
----------- ------------
Retail -- Grocery -- 2.11%
Albertson's, Inc. ........................ 749,200 35,493,350
American Stores Company .................. 805,400 16,560,635
----------- ------------
1,554,600 52,053,985
----------- ------------
Telephone Utilities -- 2.42%
Ameritech Corporation .................... 198,000 15,939,000
Frontier Corporation ..................... 706,000 16,987,772
Pinnacle West Capital .................... 337,100 14,284,613
Southern New England
Telecommunications Corporation .......... 252,000 12,678,624
----------- ------------
1,493,100 59,890,009
----------- ------------
Tobacco -- 1.60%
Fortune Brands, Inc. ..................... 460,600 17,070,757
UST, Inc. ................................ 607,600 22,442,921
----------- ------------
1,068,200 39,513,678
----------- ------------
Total Equities
(Cost $905,861,303) 1,627,674,051
-------------
<CAPTION>
Market
Principal Value
Amount (Note 2A)
--------- ---------
<S> <C> <C>
BONDS AND NOTES -- 20.17%
Asset Backed Securities -- 1.22%
Auto Receivables
California Infrastructure SCE-1, 1997-1,
Class A3
6.170% 3/25/03 .......................... $ 950,000 953,544
California Infrastructure SCE-1, 1997-1,
Class A5
6.280% 9/25/05 ........................... 650,000 653,062
California Infrastructure SDG&E-1, 1997-1,
Class A5
6.190% 9/25/05 ........................... 500,000 501,540
California Infrastructure PG&E-1, 1997-1,
Class A4
6.160% 6/25/03 ........................... 1,400,000 1,405,348
California infrastructure PG&E-1, 1997-1,
Class A6
6.320% 9/25/05 ........................... 600,000 605,226
Capita Equipment Receivables Trust 1996-1,
Class A4
6.280% 6/15/00 ........................... 4,000,000 4,016,480
Chase Manhattan RV Owner Trust 1997-A,
Class A7
6.140% 10/16/06 .......................... 4,500,000 4,505,310
Caterpillar Financial Asset Trust, 1997-B,
Class A3
6.160% 9/25/03 ........................... 3,100,000 3,093,800
Ford Credit 1994-B Grantor Trust
7.300% 10/15/99 .......................... 318,786 321,176
Ford Credit Auto Owner Trust 1996-B,
Class A-4
6.300% 1/15/01 ........................... 6,000,000 6,022,500
Metlife Capital Equipment Loan Trust Series
1997-A, Class A
6.850% 5/20/08 ........................... 1,500,000 1,555,250
Railcar Trust No. 1992-1
7.750% 6/1/04 ............................ 1,331,309 1,398,421
World Omni 1995-A Automobile Lease
Securitization Trust, Class A
6.050% 11/25/01 .......................... 1,863,932 1,863,335
World Omni 1996-A Automobile Lease
Securitization Trust, Class Al
6.300% 6/25/02 ........................... 3,164,697 3,167,641
----------- ------------
Total Asset Backed Securities
(Cost $29,878,724) 29,878,724 30,057,633
----------- ------------
Corporate Debt -- 8.53%
AirTouch Communications, Inc.
7.500% 7/15/06 ........................... 4,000,000 4,246,840
America West Airlines 1996-1, Class A
6.850% 7/2/09 ............................ 4,209,089 4,273,741
American Airlines, Inc.
9.780% 11/26/11 .......................... 4,899,260 5,868,088
AMR Corporation
9.000% 8/1/12 ............................ 2,000,000 2,373,020
Analog Devices, Inc.
6.625% 3/1/00 ............................ 1,500,000 1,508,880
Archer-Daniels Midland
6.750% 12/15/27 .......................... 1,650,000 1,652,855
Associates Corporation of North America
6.750% 8/1/01 ............................ 4,000,000 4,065,480
Associates Corporation of North America
6.500% 8/15/02 ........................... 2,000,000 2,019,400
Barrick Gold Corporation
7.500% 5/1/07 ............................ 4,250,000 4,469,173
Bell Atlantic Financial Services, Inc.
6.610% 2/4/00 ............................ 1,000,000 l,012,590
BHP Finance (USA) Limited
6.420% 3/1/26 ............................ 4,500,000 4,512,195
C I T Group Holdings
6.375% 10/1/02 ........................... 4,000,000 4,009,640
CSX Corporation
7.250% 5/1/27 ............................ 4,500,000 4,944,780
Carlisle Companies Inc.
7.250% 1/15/07 ........................... 2,250,000 2,331,990
Celulosa Arauco Constitucion
6.950% 9/15/05 ........................... 2,500,000 2,497,775
Champion International Corporation
6.400% 2/15/26 ........................... 3,500,000 3,479,315
</TABLE>
F-15
<PAGE>
MML Blend Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1997
Market
Principal Value
Amount (Note 2A)
--------- -----------
BONDS AND NOTES (Continued)
Corporate Debt (Continued)
Charles Schwab Corporation
6.250% 11/23/03........................... $ 2,500,000 $ 2,493,425
CITGO Petroleum Corporation
7.875% 5/15/06............................ 1,000,000 1,048,500
Columbia Gas System, Inc.
6.610% 11/28/02........................... 3,000,000 3,025,560
Comcast Cablevision
8.375% 5/01/07............................ 2,500,000 2,778,175
Commercial Credit Company
7.750% 3/1/05............................. 2,500,000 2,681,575
Continental Airlines, Inc. Series 1996-B
7.820% 10/15/13........................... 1,960,784 2,113,118
Continental Airlines, Inc. Series 1996-2B
8.560% 7/2/14............................. 1,701,186 1,935,066
Coming Glass Works, Inc.
8.875% 3/15/16............................ 500,000 602,775
Delta Air Lines, Inc.
8.540% 1/2/07............................. 4,226,617 4,493,528
English China Clays Delaware Inc.
7.375% 10/1/02............................ 1,000,000 1,037,450
ERAC USA Finance Company 144A
6.950% 1/15/06............................ 1,500,000 1,536,300
FBG Finance Ltd. 144A
7.875% 6/1/16............................. 4,000,000 4,403,320
Fletcher Challenge Ltd.
7.750% 6/20/06............................ 2,000,000 2,114,840
Foodbrands America Inc.
10.750% 5/15/06........................... 3,500,000 4,074,525
Ford Motor Corporation
8.450% 7/15/06............................ 1,500,000 1,505,370
Foster Wheeler Corporation
6.750% 11/15/05........................... 2,000,000 2,012,640
GTE Corporation
9.100% 6/1/03............................. 775,000 867,799
General American Transportation Corporation
6.750% 3/1/06............................. 3,000,000 3,032,640
General Electric Capital Corporation
8.750% 5/21/07............................ 1,500,000 1,763,595
General Electric Capital Corporation
6.500% 11/1/06............................ 1,250,000 1,269,675
General Mills
8.900% 6/15/06............................ 2,250,000 2,611,620
General Motors Corporation
9.125% 7/15/01............................ 1,500,000 1,631,925
Goldman Sachs Group, L.P. 144A
6.200% 2/15/01............................ 4,000,000 4,013,320
Hershey Food Company
7.200% 8/15/27............................ 3,750,000 3,986,625
Hilton Hotels Corporation
7.000% 7/15/04............................ 3,500,000 3,552,255
Interpool Inc.
7.350% 8/1/07............................. 2,000,000 2,000,520
Korean Development Bank
7.375% 9/14/04............................ 1,500,000 1,200,315
Leucadia National Corporation
7.750% 8/15/13............................ 3,000,000 3,102,630
Lockheed Martin Corporation
7.700% 6/15/08............................ 4,000,000 4,326,880
Mapco, Inc.
7.250% 3/1/09............................. 3,750,000 3,911,663
Millipore Corporation
7.500% 4/1/07............................. 4,250,000 4,482,645
Mobil Corporation
8.625% 8/18/21............................ 4,500,000 5,629,005
Morgan Stanley Group
6.875% 3/1/07............................. 6,500,000 6,641,375
Newmont Mining Corporation
8.625% 4/1/02............................. 5,000,000 5,370,650
News America Holdings Incorporated
9.250% 2/1/13............................. 4,000,000 4,764,360
Norfolk Southern Corporation
7.050% 5/1/37............................. 6,000,000 6,341,640
North Finance (Bermuda) Limited 144A
7.000% 9/15/05............................ 4,000,000 4,084,240
Petro Geo-Services
7.500% 3/31/07............................ 750,000 793,688
Ralston Purina Company
7.750% 10/1/15............................ 2,000,000 2,175,080
Raytheon Company
6.750% 8/15/07............................ 2,700,000 2,754,458
Rite Aid Corporation
6.700% 12/15/01........................... 2,000,000 2,021,360
Rolls-Royce Capital Inc.
7.125% 7/29/03............................ 2,000,000 2,061,000
Scholastic Corporation
7.000% 12/15/03........................... 4,000,000 4,104,720
TCI Communications, Inc.
7.550% 9/2/03............................. 3,000,000 3,100,140
Thomas & Betts Corporation
8.250% 1/15/04............................ 1,000,000 1,088,080
Time Warner, Inc.
7.750% 6/15/05............................ 3,000,000 3,164,220
Time Warner, Inc.
6.100% 12/30/01........................... 4,750,000 4,654,144
US Air, Inc.
7.500% 10/15/09........................... 950,291 994,242
US West Capital Funding Inc.
6.850% 1/15/02............................ 4,250,000 4,297,854
Valassis Communications, Inc.
9.550% 12/1/03............................ 2,000,000 2,247,200
Valero Energy Corporation
6.750% 12/15/02........................... 2,000,000 2,009,820
Worldcom Inc.
7.750% 4/1/07............................. 2,500,000 2,684,724
Worldcom Inc.
9.375% 1/15/04............................ 1,525,000 1,614,623
W.R. Grace & Co.
8.000% 8/15/04............................ 5,000,000 5,410,200
------------- -------------
Total Corporate Debt
(Cost $202,174,033)....................... 199,597,227 210,882,859
------------- -------------
U.S. Government Agency Obligations - 4.34%
Federal Home Loan Mortgage
Corporation (FHLMC) - .51%
CollateralIzed Mortgage Obligations - .49%
FHLMC Series 1322 Class G
7.500% 2/15/07............................ 5,000,000 5,132,800
FHLMC Series 1460 Class H
7.000% 5/15/07............................ 1,789,000 1,834,834
FHLMC Series 1490 Class PG
6.300% 5/15/07............................ 5,000,000 5,021,850
------------- -------------
11,789,000 11,989,484
Pass-Through Securities -- .02%
FHLMC
9.000% 3/1/17............................. 445,203 476,781
------------- -------------
12,234,203 12,466,265
------------- -------------
F-16
<PAGE>
MML Blend Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1997
Market
Principal Value
Amount (Note 2A)
BONDS AND NOTES (Continued) --------- ---------
Federal National Mortgage
Association (FNMA) - 1.21%
Collateralized Mortgage Obligations -- .73%
FNMA Series 1993-134 Class GA
6.500% 2/25/07 ......................... $ 5,000,000 $ 5,014,050
FNMA Series 1993-71 Class PG
6.250% 7/25/07 ......................... 8,000,000 8,012,480
FNMA Series 1993-191 Class PD
5.400% 3/25/04 ......................... 1,240,567 1,234,365
FNMA Series 1996-54 Class C
6.000% 9/25/08 ......................... 4,000,000 3,908,280
------------- -------------
18,240,567 18,169,175
Pass-Through Securities - .48%
FNMA
8.000% 5/1/13 .......................... 1,752,799 1,788,082
FNMA
6.500% 6/25/08 ......................... 5,000,000 5,037,500
FNMA
6.250% 3/25/08 ......................... 5,000,000 5,007,800
------------- -------------
11,752,799 11,833,382
------------- -------------
29,993,366 30,002,557
------------- -------------
Government National Mortgage
Association (GNMA) - 1.86%
Collateralized Mortgage Obligations - .06%
JHM Acceptance Corporation, Series E,
Class 5
8.960% 4/1/19 .......................... 1,548,083 1,619,681
------------- -------------
Pass-Through Securities - 1.80%
GNMA
7.000% 4/5/23 - 11/15/23 ............... 4,950,886 5,008,118
GNMA
7.500% 9/15/16 - 10/15/17 .............. 3,601,806 3,725,600
GNMA
8.000% 1/15/07 - 5/15/08 ............... 9,817,815 10,309,687
GNMA
9.000% 8/15/08 - 9/15/09 ............... 1,826,841 1,983,767
GNMA - ARMS
5.500% 10/20/27 - 12/20/27 ............. 9,355,504 9,372,538
GNMA - ARMS
6.000% 8/20/25 - 8/20/27 ............... 13,758,553 13,996,763
------------- -------------
43,311,405 44,396,473
------------- -------------
44,859,488 46,016,154
------------- -------------
U.S. Government Guaranteed Notes - .76%
1994-A Abilene, TX
5.780% 8/1/98 .......................... 70,000 69,922
1994-A Bakersfield, CA
5.780% 8/1/98 .......................... 245,000 244,728
1994-A Barberton, OH
5.780% 8/1/98 .......................... 75,000 74,917
1994-A Buffalo, NY
5.780% 8/1/98 .......................... 375,000 374,584
1991-A Caguas, PR
8.740% 8/1/01 .......................... 280,000 301,700
1991-A Council Bluffs, IA
8.740% 8/1/01 .......................... 155,000 167,013
1994-A Cumberland, MD
5.780% 8/1/98 .......................... 55,000 54,939
1994-A Elizabeth, NJ
5.780% 8/1/98 .......................... 75,000 74,917
1994-A Erie, PA
5.780% 8/1/98 .......................... 70,000 69,922
1994-A Euclid, OH
5.780% 8/1/98 .......................... 105,000 104,883
1994-A Fairfax County, VA
5.780% 8/1/98 .......................... 110,000 109,878
1991-A Fairfax County, VA
8.740% 8/1/01 .......................... 85,000 91,588
1991-A Fajardo, PR
8.740% 8/1/01 .......................... 210,000 226,275
1994-A Fort Myers, FL
5.780% 8/1/98 .......................... 135,000 134,850
1991-A Gasden, AL
8.740% 8/1/01 .......................... 100,000 107,750
1994-A Lawrence, MA
5.780% 8/1/98 .......................... 40,000 39,956
1991-A Lorain, OH
8.740% 8/1/01 .......................... 30,000 32,325
1994-A Los Angeles County, CA
5.780% 8/1/98 .......................... 175,000 174,806
1994-A Mayaguez, PR
5.780% 8/1/98 .......................... 65,000 64,928
1991-A Mayaguez, PR
8.740% 8/1/01 .......................... 150,000 161,625
1994-A Mobile, AL
5.780% 8/1/98 .......................... 205,000 204,772
1994-A Montgomery County, PA
5.780% 8/1/98 .......................... 230,000 229,745
1994-A New Orleans, LA
5.780% 8/1/98 .......................... 175,000 174,806
1994-A Ocean Shores, WA
5.780% 8/1/98 .......................... 110,000 109,878
1994-A Pasadena, CA
5.780% 8/1/98 .......................... 140,000 139,845
1994-A Providence, RI
5.780% 8/1/98 .......................... 50,000 49,945
1994-A Reading, PA
5.780% 8/1/98 .......................... 65,000 64,928
1994-A Roanoke, VA
5.780% 8/1/98 .......................... 210,000 209,767
1994-A Rochester, NY
5.780% 8/1/98 .......................... 165,000 164,817
1991-A Rochester, NY
8.650% 8/1/00 .......................... 4,295,000 4,543,293
1994-A Sacramento, CA
5.780% 8/1/98 .......................... 300,000 299,667
1994-A Syracuse, NY
5.780% 8/1/98 .......................... 50,000 49,945
1994-A Tacoma, WA
5.780% 8/1/98 .......................... 155,000 154,828
1994-A Trenton, NJ
5.780% 8/1/98 .......................... 130,000 129,856
1994-A Virginia Beach, VA
5.780% 8/1/98 .......................... 260,000 259,711
1994-A Waterford Township, MI
5.780% 8/1/98 .......................... 55,000 54,939
F-17
<PAGE>
MML Blend Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1997
Market
Principal Value
Amount (Note 2A)
--------- ---------
BONDS AND NOTES (Continued)
1994-A West Palm Beach, FL
5.780% 8/1/98 .......................... $ 105,000 $ 104,883
U.S. Department of Housing and Urban
Development, Series 1995-A
8.240% 8/1/02 .......................... 8,475,000 9,208,849
------------- -------------
17,780,000 18,835,980
------------- -------------
Total U.S. Government Agency Obligations
(Cost $104,466,138) 104,867,057 107,320,956
------------- -------------
U.S. Treasury Obligations - 6.08%
U.S. Treasury Bonds - 3.41%
U.S. Treasury Bond
8.750% 5/15/17 ......................... 34,500,000 45,232,606
U.S. Treasury Bond
7.250% 5/15/16 ......................... 34,250,000 39,012,805
------------- -------------
68,750,000 84,245,411
------------- -------------
U.S. Treasury Notes - 2.10%
U.S. Treasury Note
6.375% 1/15/99 ......................... 11,000,000 11,084,260
U.S. Treasury Note
6.500% 5/31/01 ......................... 9,000,000 9,213,750
U.S. Treasury Note
7.125% 2/29/00 ......................... 3,000,000 3,086,730
U.S. Treasury Note
7.750% 1/31/00 ......................... 1,900,000 1,976,000
U.S. Treasury Note
6.375% 5/15/00 ......................... 5,000,000 5,075,000
U.S. Treasury Note
6.125% 5/15/98 ......................... 8,200,000 8,217,957
U.S. Treasury Note
5.875% 1/31/99 ......................... 2,000,000 2,004,680
U.S. Treasury Note
6.375% 5/15/99 ......................... 6,000,000 6,055,320
U.S. Treasury Note
6.875% 5/15/06 ......................... 250,000 267,500
U.S. Treasury Note
7.250% 5/15/04 ......................... 3,000,000 3,237,660
U.S. Treasury Note
7.250% 8/15/04 ......................... 1,500,000 1,621,170
------------- -------------
50,850,000 51,840,027
------------- -------------
U.S. Treasury Strips - .57%
U.S. Treasury Strip -- Principal only
0.000% 2/15/99 ......................... 9,750,000 9,160,906
U.S. Treasury Strip -- Principal only
0.000% 2/15/10 ......................... 2,500,000 1,224,775
U.S. Treasury Strip -- Principal only
0.000% 8/15/15 ......................... 2,000,000 696,760
U.S. Treasury Strip -- Principal only
0.000% 2/15/17 ......................... 9,500,000 3,017,105
------------- -------------
23,750,000 14,099,546
------------- -------------
Total U.S. Treasury Obligations
(Cost $142,913,637) ....................... 143,350,000 150,184,984
------------- -------------
Total Bonds and Notes
(Cost $479,490,911) ....................... $ 477,693,008 498,446,432
============= -------------
SHORT-TERM INVESTMENTS -21.66%
Commercial Paper
Aristar, Inc.
5.730% 1/26/98 ......................... 10,645,000 10,600,289
Aristar, Inc.
5.950% 2/4/98 .......................... 9,540,000 9,485,039
Aristar, Inc.
5.870% 2/23/98 ......................... 8,220,000 8,146,180
Baxter International Inc.
5.800% 4/15/98 ......................... 10,000,000 9,826,458
Baxter International Inc.
5.900% 4/29/98 ......................... 8,635,000 8,465,166
Baxter International Inc.
5.950% 3/12/98 ......................... 7,170,000 7,085,862
Caterpillar Financial Service Corp.
5.520% 1/12/98 ......................... 6,470,000 6,458,339
Caterpillar Financial Service Corp.
5.520% 2/10/98 ......................... 10,030,000 9,963,133
Caterpillar Financial Service Corp.
5.700% 3/27/98 ......................... 14,930,000 14,717,787
Comdisco, Inc.
5.730% 1/16/98 ......................... 6,185,000 6,169,590
Comdisco, Inc.
5.720% 1/20/98 ......................... 7,000,000 6,978,021
Comdisco, Inc.
5.770% 1/21/98 ......................... 11,515,000 11,476,308
Comdisco, Inc.
5.780% 1/27/98 ......................... 11,075,000 11,027,415
Comdisco, Inc.
5.980% 2/17/98 ......................... 2,340,000 2,321,670
Comdisco, Inc.
6.000% 3/13/98 ......................... 7,000,000 6,916,700
Conagra
5.720% 1/23/98 ......................... 6,010,000 5,988,150
Crown Cork & Seal Company, Inc.
5.720% 1/22/98 ......................... 9,000,000 8,967,726
Crown Cork & Seal Company, Inc.
5.970% 1/5/98 .......................... 6,495,000 6,490,692
Crown Cork & Seal Company, Inc.
6.070% 3/31/98 ......................... 8,025,000 7,905,628
Dana Credit Corp.
6.020% 2/24/98 ......................... 10,125,000 10,033,875
Dana Credit Corp.
6.070% 3/5/98 .......................... 9,000,000 8,904,800
Dana Credit Corp.
5.810% 3/19/98 ......................... 10,250,000 10,120,969
Dominion Resources, Inc.
5.720% 1/13/98 ......................... 10,580,000 10,558,912
Dominion Resources, Inc.
5.780% 1/26/98 ......................... 1,785,000 1,777,503
Dominion Resources, Inc.
5.950% 1/6/98 .......................... 7,760,000 7,753,587
Dominion Resources, Inc.
5.950% 2/26/98 ......................... 11,000,000 10,893,911
Dominion Resources, Inc.
5.970% 2/25/98 ......................... 6,235,000 6,176,893
Eastman Chemical Company
6.420% 1/5/98 .......................... 6,000,000 5,995,720
Echlin Inc.
5.740% 2/11/98 ......................... 10,000,000 9,930,528
Echlin Inc.
5.900% 2/23/98 ......................... 2,070,000 2,051,410
F-18
<PAGE>
MML Blend Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1997
Market
Principal Value
Amount (Note 2A)
--------- ---------
SHORT-TERM INVESTMENTS (Continued)
Commercial Paper (Continued)
Echlin Inc.
5.950% 3/20/98 ......................... $ 7,325,000 $ 7,229,358
Echlin Inc.
5.950% 3/23/98 ......................... 7,000,000 6,905,131
Echlin Inc.
5.950% 2/5/98 .......................... 5,635,000 5,602,403
Enron Corporation
5.730% 2/20/98 ......................... 10,500,000 10,412,500
Finova Capital Corporation
5.590% 1/14/98 ......................... 5,325,000 5,313,310
Goldman Sachs & Company
5.740% 3/26/98 ......................... 5,945,000 5,861,481
Goldman Sachs & Company
5.700% 3/16/98 ......................... 8,185,000 8,083,540
H J Heinz Company
5.550% 6/22/98 ......................... 7,470,000 7,256,410
Illinois Power Company DTC
5.820% 2/3/98 .......................... 10,000,000 9,945,000
Illinois Power Company DTC
5.920% 2/18/98 ......................... 8,625,000 8,554,850
Illinois Power Company DTC
5.950% 2/19/98 ........................ 5,920,000 5,870,042
Illinois Power Company DTC
6.200% 1/29/98 ........................ 2,300,000 2,288,909
ORIX Credit Alliance, Inc.
5.770% 1/28/98 ........................ 8,360,000 8,322,077
ORIX Credit Alliance, Inc.
5.800% 1/20/98 ........................ 1,020,000 1,016,797
ORIX Credit Alliance, Inc.
5.800% 1/23/98 ........................ 4,460,000 4,443,785
ORIX Credit Alliance, Inc.
5.800% 2/2/98 ......................... 7,000,000 6,962,667
ORIX Credit Alliance, Inc.
5.850% 1/9/98 ......................... 11,510,000 11,494,913
ORIX Credit Alliance, Inc.
6.050% 3/6/98 ......................... 6,540,000 6,469,740
ORIX Credit Alliance, Inc.
6.050% 3/24/98 ........................ 6,690,000 6,598,226
Public Service Company of Colorado
5.700% 1/7/98 ......................... 3,860,000 3,856,142
Public Service Company of Colorado
5.780% 1/14/98 ........................ 5,150,000 5,138,694
Public Service Electric & Gas Company
5.800% 2/6/98 ......................... 14,200,000 14,114,800
Public Service Electric & Gas Company
5.800% 2/4/98 ......................... 6,265,000 6,228,907
Public Service Electric & Gas Company
5.800% 2/5/98 ......................... 7,680,000 7,633,707
Public Service Electric & Gas Company
5.800% 2/9/98 ......................... 12,975,000 12,890,663
Rayonier Inc.
6.050% 1/20/98 ........................ 3,880,000 3,867,611
Rite Aid Corporation
5.770% 1/15/98 ........................ 12,070,000 12,040,997
Ryder System Inc.
6.220% 3/3/98 ......................... 3,675,000 3,637,341
Textron Financial Corporation
5.900% 2/13/98 ........................ 8,760,000 8,697,220
Textron Financial Corporation
5.970% 2/27/98 ......................... 7,850,000 7,775,425
Textron Financial Corporation
6.100% 1/2/98 .......................... 9,000,000 8,998,475
Textron Financial Corporation
5.870% 3/2/98 .......................... 14,590,000 14,442,904
Tyson Foods Inc. DTC
5.810% 1/8/98 .......................... 10,400,000 10,388,251
Tyson Foods Inc. DTC
5.950% 2/12/98 ......................... 10,750,000 10,672,242
Union Camp Corp.
5.600% 1/30/98 ......................... 10,000,000 9,951,667
Union Camp Corp.
5.670% 1/29/98 ......................... 8,525,000 8,484,239
Union Camp Corp.
5.600% 2/17/98 ......................... 6,650,000 6,597,908
Walt Disney Company
5.700% 1/7/98 .......................... 8,270,000 8,262,143
------------- -------------
Total Short-Term Investments
(Cost $535,623,717) $ 539,450,000 535,498,736
============= -------------
Total Investments --
(Cost $1,920,975,931) (a) 107.68% $2,661,619,219
======== ==============
(a) Federal Income Tax Information: At December 31, 1997
the net unrealized appreciation on investments and
forward commitment contracts based on cost of
$1,921,001,471 for federal income tax purposes
is as follows:
Aggregate gross unrealized appreciation for all
investments and forward commitments in which
there is an excess of market value over tax cost.......... $ 743,104,782
Aggregate gross unrealized depreciation for
all investments and forward commitments in
which there is an excess of tax cost over
market value.............................................. (2,487,034)
-------------
Net unrealized appreciation............................ $ 740,617,748
=============
See Notes to Financial Statements.
F-19
<PAGE>
MML Series Investment Fund
Notes To Financial Statements
1. HISTORY
MML Series Investment Fund (the "MML Trust") is registered under the Investment
Company Act of 1940 as a no-load, registered open end, management investment
company. MML Equity Fund, MML Money Market Fund, MML Managed Bond Fund and MML
Blend Fund (the "Funds") are four series of shares of the MML Trust. The MML
Trust is organized as a business trust under the laws of the Commonwealth of
Massachusetts pursuant to an Agreement and Declaration of Trust.
The MML Trust was established by Massachusetts Mutual Life Insurance Company
("MassMutual") for the purpose of providing vehicles for the investment of
assets of various separate investment accounts established by MassMutual and by
life insurance companies which are subsidiaries of MassMutual. Shares of the MML
Trust are not offered to the general public.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
consistently by each Fund in the preparation of the financial statements in
conformity with generally accepted accounting principles.
A. Investment Valuation
Equity securities are valued on the basis of valuations furnished by a
pricing service, authorized by the Board of Trustees, which provides the last
reported sale price for securities listed on a national securities exchange,
or on the NASDAQ national market system. If securities are unlisted, or there
is no reported sale price, the bid price of the prior trade date will be
used. Long-term bonds are valued on the basis of valuations furnished by a
pricing service, authorized by the Board of Trustees, which determines
valuations taking into account appropriate factors such as institutional-
size, trading in similar groups of securities, yield, quality, coupon rate,
maturity, type of issue, trading characteristics and other market data.
For MML Equity Fund, MML Managed Bond Fund, and MML Blend Fund, short-term
securities with more than sixty days to maturity from the date of purchase
are valued at market and short-term securities having a maturity from the
date of purchase of sixty days or less are valued at amortized cost. MML
Money Market Fund's portfolio securities are valued at amortized cost in
accordance with a rule of the Securities and Exchange Commission pursuant to
which MML Money Market Fund must adhere to certain conditions. It is the
intention of MML Money Market Fund to maintain a per share net asset value of
$1.00.
B. Accounting For Investments
Investment transactions are accounted for on trade date. Dividend income is
recorded on the ex-dividend date. Interest income is recorded on the accrual
basis. Premiums and discounts on short-term securities are amortized in
determining interest income.
The cost basis of long-term bonds is not adjusted for amortization of premium
or accrual of discount since MML Managed Bond Fund and MML Blend Fund do not
generally intend to hold such investments until maturity; however, the MML
Trust has elected to accrue for financial reporting purposes, certain
discounts which are required to be accrued for federal income tax purposes.
Realized gains and losses on investment transactions and unrealized
appreciation and depreciation of investments are reported for financial
statement and federal income tax purposes on the identified cost method.
C. Federal Income Tax
The MML Trust has established a policy for each of the Funds to comply with
the provisions of the Internal Revenue Code applicable to regulated
investment companies. As a result, the Funds will not be subject to federal
income tax on any net investment income and any net capital gains to the
extent they are distributed or are deemed to have been distributed to
shareholders. Distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to the deferral of wash sale losses, and
paydowns on certain mortgage-backed securities. As a result, net investment
income (loss) and net realized gain (loss) on investment transactions for a
reporting period may differ significantly from distributions during such
period. Accordingly, the Funds may periodically make reclassifications among
certain of their capital accounts without impacting the net asset value of
the Funds.
Pursuant to section 852 of the Internal Revenue Code, the MML Equity Fund,
MML Managed Bond Fund and MML Blend Fund designated $142,233,936; $71,702 and
$161,997,877; respectively, as capital gain dividends for the year ended
December 31, 1997.
F-20
<PAGE>
Notes To Financial Statements (Continued)
D. Forward Commitments
Each Fund may purchase or sell securities on a "when issued" or delayed
delivery or on a forward commitment basis. The Funds use forward commitments
to manage interest rate exposure or as a temporary substitute for purchasing
or selling particular debt securities. The Funds may also use forward
commitments to take delivery of the underlying security rather than closing
out the forward contract. Forward commitments are not used for purposes of
trading. Settlement for securities purchased on a forward commitment basis
can take place a month or more after the date of the transaction. The Fund
generally does not take delivery on these forward commitments, but such
commitments are instead settled with offsetting transactions. When a forward
commitment contract is closed, the Funds record a realized gain or loss.
Forward commitments involve a risk of loss if the value of the security to
be purchased declines prior to the settlement date. The Funds could also be
exposed to loss if they cannot close out their forward commitments because
of an illiquid secondary market, or the inability of counterparties to
perform. The Fund monitors exposure to ensure counterparties are credit
worthy and concentration of exposure is minimized. The Funds instruct the
custodian to segregate liquid high quality assets in a separate account with
a current market value at least equal to the amount of its forward purchase
commitments. The price of the underlying security and the date when the
securities will be delivered and paid for are fixed at the time the
transaction is negotiated. The value of the forward commitment is determined
by management using a commonly accepted pricing model and fluctuates based
upon changes in the value of the underlying security and market repo rates.
Such rates equate the counterparty's cost to purchase and finance the
underlying security to the earnings received on the security and forward
delivery proceeds. The Funds record on a daily basis the unrealized
appreciation/depreciation based upon changes in the value of the forward
commitment. At December 31, 1997, the Fund did not have any open forward
commitments. At December 31, 1996 the Funds had open forward commitments
totaling $4,981,445 and recognized unrealized depreciation of ($6,345).
E. Estimates
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
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. Actual results could differ from those estimates.
3. CAPITAL LOSS CARRYFORWARD
The accumulated net realized loss on investments for the MML Money Market Fund
results in a capital loss carryforward of $13,540 which is available for federal
income tax purposes to offset future capital gains. Of the total carryforward,
$1,639 expires December 31, 1998, $1,204 expires December 31, 2000, $201 expires
December 31, 2001, $5,364 expires December 31, 2002 and $841 expires December
31, 2003 and $4,291 expires December 31, 2005.
4. INVESTMENT MANAGEMENT FEE
MassMutual provides all investment advisory, management and administrative
services needed by the Funds. For acting as such, MassMutual receives a
quarterly fee from each Fund at the annual rate of .50% of the first
$100,000,000 of the average daily net asset value of each Fund, .45% of the next
$200,000,000, .40% of the next $200,000,000, and .35% of any excess over
$500,000,000.
MassMutual has entered into investment sub-advisory agreements with David L.
Babson and Company, Inc. ("Babson"), a wholly-owned subsidiary of DLB
Acquisition Corporation which is a controlled subsidiary of MassMutual. The
agreements provide that Babson manage the assets of MML Equity Fund and the
assets of the Equity Sector of the MML Blend Fund. MassMutual pays Babson a
quarterly fee equal to an annual rate of .13% of the average daily net asset
value of MML Equity Fund and the Equity Sector of MML Blend Fund.
MassMutual has agreed, at least through April 30, 1998, to bear the expenses of
the Funds to the extent that the aggregate expenses (excluding each Fund's
management fee, interest, taxes, brokerage commissions and extraordinary
expenses) incurred during each Fund's fiscal year exceed .11% of the average
daily net asset value of each Fund for such year. For the period ended December
31, 1997, MassMutual was not required to reimburse the Funds for any expenses.
F-21
<PAGE>
Notes to Financial Statements (Continued)
5. PURCHASES AND SALES OF INVESTMENTS AND FORWARD COMMITMENTS
<TABLE>
<CAPTION>
Proceeds
For the Year Ended Acquisition from Sales
December 31, 1997 Cost and Maturities
----------------- ------------- --------------
<S> <C> <C>
Investments
-----------
MML EQUITY FUND
Equities........................................................................ $ 636,342,513 $ 334,208,330
Short-term investments.......................................................... 3,588,092,265 3,606,895,074
MML MONEY MARKET FUND
Short-term investments.......................................................... 978,044,094 990,172,840
MML MANAGED BOND FUND
Bonds and notes................................................................. 39,278,875 33,639,466
U.S. Government investments -- long-term........................................ 52,687,803 51,189,530
Short-term investments.......................................................... 449,022,794 439,041,898
MML BLEND FUND
Equities........................................................................ 325,134,426 310,468,668
Bonds and notes................................................................. 102,543,630 66,027,174
U.S. Government investments -- long-term........................................ 175,305,881 143,686,848
Short-term investments.......................................................... 2,659,764,378 2,624,082,000
<CAPTION>
Cost
Forward Commitments of Contracts
------------------- ------------
<S> <C>
MML BLEND FUND
U.S. Treasury and GNMA Forward Commitment Contracts:
Contracts opened................................................................ $ 4,978,907
Contracts closed................................................................ 9,960,352
Outstanding at December 31, 1997................................................ 0
</TABLE>
6. NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
MML MML
MML Money Managed MML
For the Year Ended Equity Market Bond Blend
December 31, 1997 Fund Fund Fund Fund
----------------- ------ ------ ------- --------
<S> <C> <C> <C> <C>
Shares
Reinvestment of dividends............................... 2,662,123 7,322,166 1,010,861 5,871,667
Sales of shares......................................... 9,271,802 149,151,177 2,489,815 6,389,317
Redemptions of shares................................... (2,391,566) (160,539,000) (2,025,214) (4,905,462)
--------------- -------------- ------------ --------------
Net increase (decrease)................................. 9,542,359 (4,065,657) 1,475,462 7,355,522
=============== ============== ============ ==============
Amount
Reinvestment of dividends............................... $ 79,295,107 $ 7,322,166 $ 12,205,431 $ 134,231,230
Sales of shares......................................... 316,494,460 149,151,177 30,449,264 152,709,148
Redemptions of shares................................... (82,014,563) (160,539,000) (24,651,298) (118,326,146)
--------------- -------------- ------------ --------------
Net increase (decrease)................................. $ 313,775,004 $ (4,065,657) $ 18,003,397 $ 168,614,232
=============== ============== ============ ==============
<CAPTION>
MML MML
MML Money Managed MML
For the Year Ended Equity Market Bond Blend
December 31, 1996 Fund Fund Fund Fund
----------------- ------ ------ ------- ------
<S> <C> <C> <C> <C>
Shares
Reinvestment of dividends............................... 1,828,658 6,040,304 891,160 5,306,755
Sales of shares......................................... 10,091,590 124,468,969 2,922,396 7,200,298
Redemptions of shares................................... (2,955,578) (94,198,432) (1,491,952) (6,061,613)
--------------- ------------- ------------ -------------
Net increase............................................ 8,964,670 36,310,841 2,321,604 6,445,440
=============== ============= ============ =============
Amount
Reinvestment of dividends............................... $ 47,407,259 $ 6,040,304 $ 10,670,172 $ 110,096,240
Sales of shares......................................... 284,667,043 124,468,969 35,191,792 154,685,163
Redemptions of shares................................... (83,541,731) (94,198,432) (18,019,376) (131,731,229)
--------------- ------------- ------------ -------------
Net increase............................................ $ 248,532,571 $ 36,310,841 $ 27,842,588 $ 133,050,174
=============== ============= ============ =============
</TABLE>
F-22
<PAGE>
APPENDIX
SECURITIES RATINGS
This is a description of Standard & Poor's Ratings Group ("S&P") and Moody's
Investors Service, Inc. ("Moody's") commercial paper and bond ratings:
I. Commercial Paper Ratings:
S&P Commercial Paper Ratings - are graded into four categories, ranging from `A'
for the highest quality obligations to `D' for the lowest. `A' Issues assigned
the highest rating are regarded as having the greatest capacity for timely
payment. Issues in this category are delineated with the numbers 1, 2, and 3 to
indicate the relative degree of safety. The A-1 and A-2 categories are described
as follows:
"A-1": This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.
"A-2": Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated `A-1'.
Moody's Commercial Paper Ratings - employs three designations, all judged to be
investment grade, to indicate the relative repayment ability of rated issuers.
The two highest designations are as follows:
Prime-1: Issuers rated Prime-1 (or related supporting institutions) have a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:
. Leading market positions in well-established industries.
. High rates of return on funds employed.
. Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
. Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
. Well established access to a range of financial markets and assured
sources of alternate liquidity.
Prime-2: Issuers rated Prime-2 (or related supporting institutions) have a
strong ability for repayment of senior short-term promissory obligations.
This will normally be evidenced by many of the characteristics cited above,
but to a lesser degree. Earnings trends and coverage ratios, while sound, may
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
II. Bond Ratings
S&P describes its four highest ratings for corporate debt as follows:
A:AAA-Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA-Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small
degree.
A-Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories.
A-1
<PAGE>
B:BBB-Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
The ratings from "AA" to "CCC" may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
Moody's describes its four highest corporate bond ratings as follows:
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred
to as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long term risks appear
somewhat larger than the Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment some
time in the future.
Baa - Bonds which are rated Baa are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
S&P describes its below investment grade ratings for corporate debt as follows:
BB, B, CCC, CC, C - Debt rated "BB", "B", "CCC", "CC" and "C" is regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the
obligation, "BB" indicates the lowest degree of speculation and "C" the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB - Debt rated "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which
could lead to inadequate capacity to meet timely interest and principal
payments. The "BB" rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied "BBB-" rating.
B - Debt rated "B" has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
A-2
<PAGE>
capacity or willingness to pay interest and repay principal. The "B"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BB" or "BB-" rating.
CCC - Debt rated "CCC" has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The "CCC" rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied "B" or
"B-" rating.
CC - The rating "CC" is typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.
C - The rating "C" is typically applied to debt subordinated to senior
debt which is assigned an actual or implied "CCC-" debt rating. The "C"
rating may be used to cover a situation where a bankruptcy petition has
been filed, but debt service payments are continued.
D - Debt rated "D" is in payment default. The "D" rating category is
used when interest payments or principal payments are not made on the
date due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
"D" rating also will be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.
Moody's describes its below investment grade corporate bond ratings as follows:
Ba - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate and thereby not
well safeguarded during other good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca - Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
A-3
<PAGE>
MML EQUITY INDEX FUND
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. IT SHOULD BE READ
IN CONJUNCTION WITH THE PROSPECTUS OF MML EQUITY INDEX FUND DATED MAY 1, 1998,
AS AMENDED FROM TIME TO TIME (THE "PROSPECTUS"). THE PROSPECTUS MAY BE OBTAINED
WITHOUT CHARGE FROM THE SECRETARY, MML SERIES INVESTMENT FUND, 1295 STATE
STREET, SPRINGFIELD, MASSACHUSETTS 01111.
DATED MAY 1, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
PAGE
<S> <C>
GENERAL INFORMATION ....................................................... 3
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES .............................. 3
INVESTMENT RESTRICTIONS ................................................... 5
MANAGEMENT OF MML TRUST ................................................... 6
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES ....................... 11
INVESTMENT MANAGEMENT AND OTHER SERVICES .................................. 12
PORTFOLIO TRANSACTIONS .................................................... 13
CAPITAL SHARES ............................................................ 14
PURCHASE, REDEMPTION AND PRICING OF
SECURITIES BEING OFFERED ................................................ 14
TAX STATUS ................................................................ 15
CERTAIN TAX AND ACCOUNTING INFORMATION .................................... 15
INVESTMENT PERFORMANCE .................................................... 16
EXPERTS ................................................................... 16
REPORT OF INDEPENDENT ACCOUNTANTS ......................................... F-1
FINANCIAL STATEMENTS OF MML EQUITY INDEX FUND
(1) Statement of Assets and Liabilities
As of December 31, 1997 ......................................... F-2
(2) Statement of Operations
For the period from May 1, 1997 (Commencement of Operations)
through December 31, 1997 ....................................... F-3
(3) Statement of Changes in Net Assets
For the period from May 1, 1997 (Commencement of Operations)
through December 31, 1997 ....................................... F-4
(4) Financial Highlights ............................................ F-5
(5) Schedules of Investments
As of December 31, 1997 ......................................... F-6
(6) Notes to Financial Statements ................................... F-12
APPENDIX - Securities Ratings ............................................. A-1
</TABLE>
2
<PAGE>
I. GENERAL INFORMATION
MML Series Investment Fund ("MML Trust") is a no-load, open-end investment
management company having separate investment portfolios, each of which has its
own investment objectives and policies and is designed to meet different
investor needs. This Statement of Additional Information provides information
regarding MML Equity Index Fund (the "Fund"), a non-diversified investment
portfolio of MML Trust.
MML Trust was organized as a business trust under the laws of The Commonwealth
of Massachusetts pursuant to an Agreement and Declaration of Trust dated
December 19, 1984, as amended from time to time (the "Declaration of Trust").
MML Trust was established by Massachusetts Mutual Life Insurance Company
("MassMutual") for the purpose of providing a vehicle for the investment of
assets of various separate investment accounts established by MassMutual and its
life insurance company subsidiaries, including MML Bay State Life Insurance
Company. Shares of the Fund are offered solely to separate investment accounts
established by MassMutual and its life insurance company subsidiaries.
MassMutual is responsible for providing all investment advisory, management, and
administrative services needed by the Fund pursuant to an investment management
agreement with MML Trust, on behalf of the Fund. MassMutual has entered into an
investment sub-advisory agreement with Mellon Equity Associates, LLP ("Mellon
Equity"), which provides that Mellon Equity will serve as the Fund's investment
sub-adviser, providing day-to-day management of the Fund's investments. Both
MassMutual and Mellon Equity are registered with the Securities and Exchange
Commission (the "SEC") as investment advisers under the Investment Advisers Act
of 1940, as amended. (MassMutual and Mellon Equity are referred to hereinafter
collectively as the "Advisers.")
II. INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction with the
discussion of the Fund's investment objective, techniques and policies described
in the Prospectus. The fundamental investment objective and investment
restrictions of the Fund (as described in the Prospectus and below) may not be
changed without a vote of a majority of the Fund's outstanding shares. A
"majority of the outstanding shares" of the Fund means the lesser of (1) 67% of
the Fund's outstanding shares present at a meeting of the shareholders if more
than 50% of the outstanding shares are present in person or by proxy or (2) more
than 50% of the Fund's outstanding shares. All other investment policies and
techniques of the Fund may be changed by the Board of Trustees of MML Trust
without a vote of shareholders. For example, such other policies and techniques
include investment in new types of hedging programs which may be devised in the
future, or which are presently in disuse but may become more prominent in the
future, and minor changes in investment policies which may be made in response
to changes in regulatory requirements which are reflected in the present
policies of the Fund. In managing its portfolios of investments, the Fund may
purchase various securities, investment related instruments and make use of
various investment techniques, including those described below.
Other Portfolio Securities
Money Market Instruments. The Fund may invest, in the circumstances described
- ------------------------
under "MML Equity Index Fund-Management Policies" in the Fund's Prospectus, in
the following types of money market instruments.
U.S. Government Securities - Securities issued or guaranteed by the U.S.
--------------------------
Government or its agencies or instrumentalities include U.S. Treasury
securities that differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government agencies
and instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the Treasury;
others by discretionary authority of the U.S. Government to purchase certain
obligations from the agency or instrumentality; and others only by the credit
of the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. While the U.S. Government provides financial
support for such U.S. Government-sponsored agencies and instrumentalities, no
assurance can be given that it will always do so since it is not so obligated
by law.
3
<PAGE>
Repurchase Agreements - In a repurchase agreement, the Fund buys, and the
---------------------
seller agrees to repurchase, a security at a mutually agreed upon time and
price (usually within seven days). The repurchase agreement thereby
determines the yield during the purchaser's holding period, while the
seller's obligation to repurchase is secured by the value of the underlying
security. The Fund's custodian or sub-custodian will have custody of, and
will hold in a segregated account, securities acquired by the Fund under a
repurchase agreement. Repurchase agreements are considered by the staff of
the SEC to be loans by the Fund. In an attempt to reduce the risk of
incurring a loss on a repurchase agreement, the Fund will enter into
repurchase agreements only with domestic banks with total assets in excess of
one billion dollars or primary government securities dealers reporting to the
Federal Reserve Bank of New York, with respect to securities of the type in
which the Fund may invest, and will require that additional securities be
deposited with it if the value of the securities purchased should decrease
below resale price. However, if the seller defaults, the Fund may realize a
loss on the sale of the underlying security. In addition, if the seller
should be involved in bankruptcy or insolvency proceedings, the Fund may
incur delay and costs in selling the underlying security or may suffer a loss
of principal and interest if the Fund is treated as an unsecured creditor and
required to return the underlying securities to the seller's estate.
Bank Obligations - The Fund may purchase certificates of deposit, time
----------------
deposits, bankers' acceptances and other short-term obligations issued by
domestic banks, foreign subsidiaries or foreign branches of domestic banks,
domestic and foreign branches of foreign banks, domestic savings and loan
associations and other banking institutions. With respect to such securities
issued by foreign subsidiaries or foreign branches of domestic banks and
domestic and foreign branches of foreign banks, the Fund may be subject to
additional investment risks that are different in some respects from those
incurred by a fund which invests only in debt obligations of U.S. domestic
issuers.
Certificates of deposit are negotiable certificates evidencing the obligation
of a bank to repay funds deposited with it for a specified period of time.
Time deposits are non-negotiable deposits maintained in a banking institution
for a specified period of time (in no event longer than seven days) at a
stated interest rate.
Bankers' acceptances are credit instruments evidencing the obligation of a
bank to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and the drawer to pay the face amount of the
instruments upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
Commercial Paper - Commercial paper consists of short-term, unsecured
----------------
promissory notes issued to finance short-term credit needs. The commercial
paper purchased by the Fund will consist only of direct obligations which, at
the time of their purchase, are (a) rated at least Prime-1 by Moody's
Investors Service, Inc. ("Moody's") or A-1 by Standard & Poor's Ratings Group
("S&P"), a division of The McGraw-Hill Companies, Inc., (b) issued by
companies having an outstanding unsecured debt issue currently rated at least
Aa by Moody's or at least AA- by S&P, or (c) if unrated, determined by Mellon
Equity to be of comparable quality to those rated obligations which may be
purchased by the Fund.
Management Policies
Lending Portfolio Securities. The SEC currently requires that the following
- ----------------------------
conditions must be met whenever portfolio securities are loaned: (1) the Fund
must receive at least 100% cash collateral from the borrower; (2) the borrower
must increase such collateral whenever the market value of the securities rises
above the level of such collateral; (3) the Fund must be able to terminate the
loan at any time; (4) the Fund must receive reasonable interest on the loan, as
well as any dividends, interest or other distributions payable on the loaned
securities, and any increase in market value; (5) the Fund may pay only
reasonable custodian fees in connection with the loan; and (6) while voting
rights on the loaned securities may pass to the borrower, the Fund's Board must
terminate the loan and regain the right to vote the securities if a material
event adversely affecting the investment occurs.
In connection with its securities lending transactions, the Fund may return to
the borrower or a third party which is unaffiliated with the Fund, and which is
acting as a "placing broker," a part of the interest earned from the investment
of cash collateral received for securities loaned.
4
<PAGE>
Derivatives. The Fund may invest in Derivatives (as defined in the Prospectus)
- -----------
in anticipation of taking a market position when, in the opinion of Mellon
Equity, available cash balances do not permit an economically efficient trade in
the cash market. Derivatives may provide a cheaper, quicker or more specifically
focused way for the Fund to invest than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of risk,
depending upon the characteristics of the particular Derivative and the
portfolio as a whole. Derivatives permit the Fund to increase or decrease the
level of risk, or change the character of the risk, to which its portfolio is
exposed.
Derivatives may entail investment exposures that are greater than their cost
would suggest, meaning that a small investment in Derivatives could have a large
potential impact on the Fund's performance.
Investments in Derivatives may lower the Fund's return or result in a loss. The
Fund also could experience losses if its Derivatives were poorly correlated with
its other investments, or if the Fund were unable to liquidate its position
because of an illiquid secondary market. The market for many Derivatives is, or
suddenly can become, illiquid. Changes in liquidity may result in significant,
rapid and unpredictable changes in the prices for Derivatives.
Stock Index Futures. A stock index future obligates the Fund to pay or receive
- -------------------
an amount of cash equal to a fixed dollar amount specified in the futures
contract multiplied by the difference between the settlement price of the
contract on the contract's last trading day and the value of the index based on
the stock prices of the securities that comprise it at the opening of trading in
such securities on the next business day. The Fund purchases and sells futures
contracts on the stock index for which it can obtain the best price with
consideration also given to liquidity.
Using futures in anticipation of market transactions involves certain risks.
Although the Fund intends to purchase or sell futures contracts only if there is
an active market for such contracts, no assurance can be given that a liquid
market will exist for any particular contract at any particular time. In
addition, the price of stock index futures may not correlate perfectly with the
movement in the stock index due to certain market distortions. First, all
participants in the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts through offsetting transactions which
would distort the normal relationship between the index and futures markets.
Secondly, from the point of view of speculators, the deposit requirements in the
futures market are less onerous than margin requirements in the securities
market. Therefore, increased participation by speculators in the futures market
also may cause temporary price distortions. Because of the possibility of price
distortions in the futures market and the imperfect correlation between
movements in the stock index and movements in the price of stock index futures,
the use of stock index futures may not result in a successful hedging
transaction.
In connection with its futures transactions, the Fund may be required to
establish and maintain at its custodian bank or a registered futures commission
merchant a segregated account consisting of cash or high quality money market
instruments in an amount equal to the market value of the underlying commodity
less any amount deposited as margin.
Standard & Poor's Depositary Receipts ("SPDRs"). The Fund may invest in SPDRs
- ---------------------------------------------
when, in the opinion of Mellon Equity, available cash balances would not
otherwise allow the Fund to invest such cash balances in a manner which
adequately corresponds to the Index. Investments in SPDRs typically require less
available cash balances than do investments in stock index futures.
SPDRs represent an interest in the portfolio of S&P 500 stocks held by a unit
investment trust. SPDRs trade on the American Stock Exchange and may be bought
and sold like common stock at any time during the trading day. An investment in
SPDRs is intended to provide investment results that generally correspond to the
price and yield performance of the S&P 500 Composite Stock Price Index (the
"Index").
III. INVESTMENT RESTRICTIONS
The following is a description of certain restrictions on investments of the
Fund which may not be changed without a vote of a majority of the outstanding
shares of the Fund.
5
<PAGE>
The Fund will not:
1. Purchase securities on margin, except for such short-term credits as are
necessary for the clearance of transactions, and except that the Fund may
deposit and maintain funds with its custodian or brokers as margin in
connection with its use of financial futures contracts;
2. Purchase commodities or commodity contracts, except to the extent that the
Fund may enter into futures contracts, as described in the Prospectus and
this Statement of Additional Information;
3. Borrow money or pledge, mortgage or hypothecate its assets, except as
described in the Fund's Prospectus and the Statement of Additional
Information and in connection with entering into futures contracts.
Collateral arrangements with respect to initial or variation margin for
futures contracts will not be deemed to be pledges of the Fund's assets;
4. Act as an underwriter of securities of other issuers or purchase
securities subject to restrictions on disposition under the Securities Act
of 1933, as amended (so-called "restricted securities"). The Fund may not
enter into repurchase agreements providing for settlement in more than
seven days or purchase securities which are not readily marketable, if, in
the aggregate more than 10% of the value of the Fund's net assets would be
so invested. The Fund will not enter into time deposits maturing in more
than seven days and time deposits maturing from two business through seven
calendar days will not exceed 10% of the Fund's total assets;
5. Write, purchase or sell puts, calls or combinations thereof;
6. Make loans to any officer, Trustee or employee of MML Trust or to any
officer, director or employee of MassMutual, or to MassMutual;
7. Purchase or sell real estate or interests in real estate, although the
Fund may purchase and sell marketable securities secured by, or of
companies investing or dealing in, real estate;
8. Purchase securities of investment companies except as permitted under the
Investment Company Act of 1940, as amended (the "1940 Act");
9. Invest more than 25% of its assets in investments in any particular
industry or industries (including banking), except to the extent the Index
also is so concentrated;
10.Make loans, except through the acquisition of bonds, debentures, notes,
commercial paper, bankers' acceptances or other evidences of indebtedness
in which the Fund is authorized to invest. However, the Fund may lend
portfolio securities with respect to not more than 10% of the total assets
of the Fund taken at current value; or
11.Issue senior securities, except to evidence borrowings permitted by
investment restriction (3) described above.
In addition to the investment restrictions adopted as fundamental policies
set forth above, the Fund operates with certain non-fundamental policies
which may be changed by vote of a majority of the Board members at any time.
The Fund may not sell securities short, but reserves the right to sell
securities short against the box. If a percentage restriction is adhered to
at the time of investment, a later change in percentage resulting from a
change in values or assets will not constitute a violation of such
restriction.
IV. MANAGEMENT OF MML TRUST
MML Trust has a Board of Trustees, a majority of whom are not "interested
persons," as defined in the 1940 Act, of MML Trust. The Board of Trustees has
established an Advisory Board that has advisory functions only as to investments
made by MML Trust. Trustees of MML Trust, members of the Advisory Board, and
principal officers of MML Trust are listed below together with information on
their age, address, positions with MML Trust, principal occupations during the
past five years and other principal business affiliations.
6
<PAGE>
Gary E. Wendlandt* Chairman and Trustee of MML Trust
1295 State Street
Springfield, MA 01111
Age: 47
Chief Investment Officer (since 1993) and Executive Vice President, MassMutual;
Chairman (since 1995), President (1983-1995) and Trustee, MassMutual Corporate
Investors (closed-end investment company); Chairman (since 1995), President
(1988-1995) and Trustee, MassMutual Participation Investors (closed-end
investment company); Chairman (since 1996), Antares Leveraged Capital Corp.
(finance company); Chairman, HYP Management, Inc. (managing member of MassMutual
High Yield Partners LLC) and MMHC Investment, Inc. (investor in MassMutual High
Yield Partners LLC); Advisory Board Member (since 1996), MassMutual High Yield
Partners LLC (high yield bond fund); President and Director (since 1995), DLB
Acquisition Corporation (holding company for investment advisers); Director,
Oppenheimer Acquisition Corporation (holding company for investment advisers);
Supervisory Director, MassMutual/Carlson CBO N.V. (collateralized bond fund);
Director (since 1994), MassMutual Corporate Value Partners Limited (investor in
debt and equity securities) and MassMutual Corporate Value Limited (parent of
MassMutual Corporate Value Partners Limited); Chairman (since 1994) and Director
(since 1993), MML Realty Management Corporation; Chairman (since 1994), Chief
Executive Officer (1994-1996), Cornerstone Real Estate Advisers, Inc.
(wholly-owned real estate investment adviser subsidiary of MassMutual Holding
Trust); Director, Merrill Lynch Derivative Products, Inc.; Chairman and Chief
Executive Officer (since 1994), MassMutual Institutional Funds (open-end
investment company).
Ronald J. Abdow Trustee of MML Trust
1111 Elm Street
West Springfield, MA 01089
Age: 66
President, Abdow Corporation (operator of restaurants); General Partner, Grove
Investment Group (apartment building syndicator); Trustee, Abdow G&R Trust and
Abdow G&R Co. (owners and operators of restaurant properties); Partner, Abdow
Partnership, Abdow Auburn Associates, and Abdow Hazard Associates (owners and
operators of restaurant properties); Trustee (since 1994), MassMutual
Institutional Funds (open-end investment company).
Mary E. Boland Trustee of MML Trust
67 Market Street
Springfield, MA 01102
Age: 59
Attorney at Law, Egan, Flanagan and Cohen, P.C. (law firm), Springfield, MA;
Director (since 1995), Trustee (until 1995), SIS Bank (formerly, Springfield
Institution for Savings); Trustee (since 1994), MassMutual Institutional Funds
(open-end investment company).
Richard G. Dooley* Vice Chairman and Trustee of MML Trust
1295 State Street
Springfield, MA 01111
Age: 68
Consultant (since 1993), Executive Vice President and Chief Investment Officer
(1978-1993), MassMutual; Director (since 1996), Investment Technology Group,
Inc.; Director, The Advest Group, Inc. (financial services holding company), HSB
Group Inc. (formerly known as Hartford Steam Boiler Inspection and Insurance
Co.), New England Education Loan Marketing Corporation; Director, Kimco Realty
Corp. (shopping center ownership and management);
- ----------
* Trustee who is an "interested person" of MML Trust within the definition set
forth in Section 2(a)(19) of the 1940 Act.
7
<PAGE>
Director (since 1993), Jefferies Group, Inc. (financial services holding
company); Vice Chairman (since 1995), Chairman (1982-1995), MassMutual Corporate
Investors, and Vice Chairman (since 1995), Chairman (1988-1995), MassMutual
Participation Investors (closed-end investment companies); Trustee (since 1996),
MassMutual Institutional Funds (open-end investment company).
F. William Marshall, Jr. Trustee of MML Trust
1441 Main Street
Springfield, MA 01102
Age: 56
President, Chief Executive Officer and Director (since 1993), SIS Bancorp, Inc
and SIS Bank (formerly, Springfield Institution for Savings); Chairman and Chief
Executive Officer (1990-1993), Bank of Ireland First Holdings, Inc. and First
New Hampshire Banks; Trustee (since 1996), MassMutual Institutional Funds
(open-end investment company).
Charles J. McCarthy Trustee of MML Trust
181 Eton Road
Longmeadow, MA 01106
Age: 74
Proprietor, Synectics Financial Company (venture capital activities, business
consulting and investments); Trustee (since 1994), MassMutual Institutional
Funds (open-end investment company).
John H. Southworth Trustee of MML Trust
195 Eton Road
Longmeadow, MA 01106
Age: 70
Chairman (since 1993), Southworth Company (manufacturer of paper and calendars);
Director (since 1995), Trustee (until 1995), SIS Bank (formerly, Springfield
Institution for Savings); Trustee (since 1994), MassMutual Institutional Funds
(open-end investment company).
Richard H. Ayers Advisory Board Member
1000 Stanley Drive
New Britain, CT 06053
Age: 55
Retired; former adviser to Chairman (1997), Chairman and Chief Executive Officer
(1989-1996) and Director (1985-1996), The Stanley Works (manufacturer of tools,
hardware and specialty hardware products); Director, Southern New England
Telecommunications Corp. and Perkin-Elmer Corp.; Trustee (since 1996),
MassMutual Institutional Funds (open-end investment company).
David E. A. Carson Advisory Board Member
850 Main Street
Bridgeport, CT 06604
Age: 63
Chairman and Chief Executive Officer (since 1997), President and Chief Executive
Officer (1985-1997), People's Bank; Director, United Illuminating Co. (electric
utility); Trustee, American Skandia Trust (open-end investment company); Trustee
(since 1996), MassMutual Institutional Funds (open-end investment company).
8
<PAGE>
Richard W. Greene Advisory Board Member
University Of Rochester
Rochester, NY 14627
Age: 62
Executive Vice President and Treasurer (since 1986), University of Rochester
(private university); Trustee (since 1996), MassMutual Institutional Funds
(open-end investment company).
Beverly C. L. Hamilton Advisory Board Member
515 South Flower Street
Los Angeles, CA 90071
Age: 51
President, ARCO Investment Management Co.; Director, Connecticut Natural Gas;
Director, Emerging Markets Growth Fund (closed-end investment company); Director
(since 1997), United Asset Management Corp. (investment management); Trustee
(since 1996), MassMutual Institutional Funds (open-end investment company).
Stuart H. Reese President of MML Trust
1295 State Street
Springfield, MA 01111
Age: 43
Chief Executive Director (since 1997), Executive Director (1996-1997), Senior
Vice President (1993-1996), MassMutual; President (since 1995), Executive Vice
President (1993-1995), MassMutual Corporate Investors and MassMutual
Participation Investors (closed-end investment companies); Director (since
1996), Antares Leveraged Capital Corp. (finance company) and Charter Oak Capital
Management, Inc. (investment adviser); President and Director (since 1996), HYP
Management Inc. (managing member of MassMutual High Yield Partners LLC), and
MMHC Investment Inc. (investor in funds sponsored by MassMutual); Director
(since 1994), MassMutual Corporate Value Partners Limited (investor in debt and
equity securities) and MassMutual Corporate Value Limited (parent of MassMutual
Corporate Value Partners Limited); Supervisory Director (since 1994),
MassMutual/Carlson CBO N.V. Inc. (collateralized bond fund); President (since
1997), MassMutual/Darby CBO IM Inc. (manager of MassMutual/Darby CBO LLC, a high
yield bond fund); Director (1994-1996), Pace Industries (aluminum die caster);
Advisory Board Member (since 1995), Kirtland Capital Partners; Chairman and
President (1990-1993), Aetna Financial Services, Inc.; President (since 1995),
MassMutual Institutional Funds (open-end investment company).
Mary Wilson Kibbe Senior Vice President of MML Trust
1295 State Street
Springfield, MA 01111
Age: 44
Executive Director (since 1997), Senior Managing Director (1996-1997), Vice
President and Managing Director (1991-1996), MassMutual; Senior Vice President
(since 1996), HYP Management, Inc. (managing member of MassMutual High Yield
Partners LLC) and MMHC Investment, Inc. (investor in funds sponsored by
MassMutual); Vice President, MassMutual Participation Investors and MassMutual
Corporate Investors (closed-end investment companies); Vice President
(1991-1995), Oppenheimer Investment Grade Bond Fund (open-end investment
company).
Charles C. McCobb, Jr. Vice President of MML Trust
1295 State Street
Springfield, MA 01111
Age: 54
Managing Director (since 1997), MassMutual; Managing Director and Vice President
(1994-1997), Citicorp, Inc. (banking); Managing Director (1985-1994), Aetna Life
& Casualty (insurance company); Vice President (since 1996), MassMutual
Corporate Investors and MassMutual Participation Investors (closed-end
investment companies).
9
<PAGE>
Stephen L. Kuhn Vice President and Secretary of MML Trust
1295 State Street
Springfield, MA 01111
Age: 51
Vice President and Associate General Counsel (since 1992), MassMutual; Vice
President and Secretary, MassMutual Participation Investors and MassMutual
Corporate Investors (closed-end investment companies); President,
MassMutual/Carlson CBO Incorporated; Assistant Secretary (since 1996), Antares
Leveraged Capital Corp. (finance company); Chief Legal Officer and Assistant
Secretary (since 1995), DLB Acquisition Corporation (holding company for
investment advisers); Assistant Secretary, Oppenheimer Acquisition Corporation
(holding company for investment advisers); Vice President and Secretary,
MassMutual Institutional Funds (open-end investment company).
Judith A. Martini Vice President of MML Trust
1295 State Street
Springfield, MA 01111
Age: 49
Second Vice President (since 1996), MassMutual; Marketing Manager (1984-1996),
Connecticut Mutual Life Insurance Company (life insurance company).
Raymond B. Woolson Treasurer of MML Trust
1295 State Street
Springfield, MA 01111
Age: 39
Senior Managing Director (since 1996), Second Vice President (1992-1996),
MassMutual; Treasurer, MassMutual Corporate Investors and MassMutual
Participation Investors (closed-end investment companies) and MassMutual
Institutional Funds (open-end investment company); Vice President and Chief
Financial Officer (since 1996), HYP Management, Inc. (managing member of
MassMutual High Yield Partners LLC) and MMHC Investment Inc. (investor in funds
sponsored by MassMutual); Vice President and Treasurer, MassMutual/Darby CBO IM
Inc. (manager of MassMutual/Darby CBO LLC, a high yield bond fund).
Mark B. Ackerman Comptroller of MML Trust
1295 State Street
Springfield, MA 01111
Age: 32
Investment Director (since 1996), Associate Director (1993-1996), MassMutual;
Controller (since 1997), Associate Treasurer (1995-1997), MassMutual
Participation Investors and MassMutual Corporate Investors (closed-end
investment companies); Comptroller (since 1997), Associate Treasurer
(1995-1996), MassMutual Institutional Funds (open-end investment company).
The Trustees and officers of MML Trust named above, as a group, own less than
one percent of the shares of any of the series of MML Trust.
MML Trust's Declaration of Trust provides that MML Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with MML
Trust, except if it is determined in the manner specified in the Declaration of
Trust that they have not acted in good faith in the reasonable belief that their
actions were in the best interests of MML Trust or that such indemnification
would relieve any Trustee or officer of any liability to MML Trust or its
shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of his or her duties.
10
<PAGE>
The following table discloses actual compensation paid to non-interested
Trustees of MML Trust and members of its Advisory Board during the 1997 fiscal
year. MML Trust paid no compensation to any of its officers. MML Trust has no
pension or retirement plan, but does have a deferred compensation plan.
Currently, no Trustee is entitled to receive any benefits under such deferred
compensation plan. Each of the non-interested Trustees and the members of the
Advisory Board also serve as a Trustee of one other registered, open-end
investment company managed by MassMutual.
<TABLE>
<CAPTION>
================================================================================
Total Compensation from
Aggregate Compensation from MML Trust and Fund
Name/Position MML Trust Complex
================================================================================
<S> <C> <C>
Ronald J. Abdow
Trustee $16,000 $32,000
- --------------------------------------------------------------------------------
Mary E. Boland
Trustee $16,000 $32,000
- --------------------------------------------------------------------------------
William F. Marshall
Trustee $16,000 $32,000
- --------------------------------------------------------------------------------
Charles J. McCarthy
Trustee $17,000 $34,000
- --------------------------------------------------------------------------------
John H. Southworth
Trustee $17,000 $34,000
- --------------------------------------------------------------------------------
Richard H. Ayers
Advisory Board Member $16,000 $31,674
- --------------------------------------------------------------------------------
David E. A. Carson
Advisory Board Member $16,000 $31,674
- --------------------------------------------------------------------------------
Richard W. Greene
Advisory Board Member $16,000 $31,674
- --------------------------------------------------------------------------------
Beverly C. L. Hamilton
Advisory Board Member $16,000 $31,674
- --------------------------------------------------------------------------------
</TABLE>
V. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
MassMutual, through its separate investment account and direct investment in the
Fund, was the owner of record of all of the outstanding shares of the Fund as of
April 1, 1998. In addition, MassMutual and MML Bay State were the owners of
record of all of the outstanding shares of each of the other series of MML Trust
as of April 1, 1998. MassMutual and MML Bay State could be deemed to control (as
that term is described in the 1940 Act) each series of MML Trust. However,
certain owners of variable life insurance contracts and variable annuity
contracts that depend upon the investment performance of MML Trust will have the
right to instruct MassMutual and MML Bay State as to how shares of the Fund
and/or other series of MML Trust deemed attributable to their contracts shall be
voted. MassMutual and MML Bay State are required to vote shares attributable to
such contracts but for which no instructions were received, in proportion to
those votes for which instructions were received. The address of MassMutual and
MML Bay State is 1295 State Street, Springfield, Massachusetts 01111.
11
<PAGE>
VI INVESTMENT MANAGEMENT AND OTHER SERVICES
MassMutual serves as investment manager of the Fund pursuant to an investment
management agreement between MassMutual and MML Trust on behalf of the Fund (the
"Investment Management Agreement"). Under the Investment Management Agreement,
MassMutual is authorized to engage in portfolio transactions on behalf of the
Fund, subject to such general or specific instructions as may be given by the
Board of Trustees of MML Trust. The Investment Management Agreement also
provides that MassMutual will perform all administrative functions relating to
the Fund and will bear all expenses of the Fund except: (1) taxes and corporate
fees payable to government agencies; (2) brokerage commissions and other capital
items payable in connection with the purchase or sale of the Fund's investments;
(3) interest on account of any borrowings by the Fund; (4) fees and expenses of
Trustees of MML Trust who are not interested persons, as defined in the 1940
Act, of the Advisers or MML Trust; (5) fees and expenses of the MML Trust's
Advisory Board Members; (6) fees of the Fund's independent certified public
accountants; and (7) any required trademark licensing fees.
Under the Investment Management Agreement, the Fund pays MassMutual a quarterly
fee based on the average daily net assets of the Fund at the annual rate of .40%
of the first $100 million of average daily net asset value of the Fund; .38% of
the next $150 million and .36% of any net assets thereafter. The Fund, which had
$24,201,763 in net assets as of December 31, 1997, paid MassMutual $61,760 in
investment management fees for the period from May 1, 1997 through December 31,
1997. In 1997, the Fund's total expenses were $99,423, of which $20,666 were
borne by MassMutual pursuant to a unilateral agreement by MassMutual to
reimburse certain expenses of the Fund. MassMutual's obligation to bear certain
expenses of the Fund terminated May 1, 1998.
The Investment Management Agreement with the Fund may be terminated by the Board
of Trustees of MML Trust, or by vote of a majority of the outstanding shares of
the Fund, or by MassMutual. Such termination requires 60 days' written notice to
be given and may be effected without the payment of any penalty. In addition,
such agreement automatically terminates: (1) unless its continuance is
specifically approved at least annually by the affirmative vote of a majority of
the Board of Trustees of MML Trust, which affirmative vote shall include a
majority of the members of the Board who are not interested persons (as defined
in the 1940 Act) of the Advisers or of MML Trust, or (2) upon its assignment.
The Investment Management Agreement also provides that its continuance will be
submitted to the shareholders of the Fund in the event the use of the initials
"MML" is withdrawn from the Fund by MassMutual.
As permitted by the Investment Management Agreement, MassMutual has entered into
an investment sub-advisory agreement with Mellon Equity (the "Sub-Advisory
Agreement"), pursuant to which Mellon Equity serves as the Fund's investment
sub-adviser, providing day-to-day management of the Fund's investments.
Effective January 1, 1998, Mellon Equity, a subsidiary of Mellon Bank
Corporation, was reorganized as a Pennsylvania limited liability partnership.
Mellon Bank, N.A. is the 99% limited partner and MMIP, Inc. is the 1% general
partner of Mellon Equity. MassMutual is ultimately responsible for providing
investment advice to the Fund and will continue to provide administrative and
non-investment advisory services to the Fund.
MassMutual pays Mellon Equity a monthly fee equal to an annual rate of .09% of
the first $100 million of the average daily net asset value of the Fund; .07% of
the next $150 million and .05% on net any assets thereafter for the investment
advisory services Mellon Equity provides with respect to the Fund. The
Sub-Advisory Agreement will terminate automatically upon its assignment or upon
the termination of the Investment Management Agreement or by Mellon Equity upon
90 days' written notice or by the Fund or MassMutual upon 60 days' written
notice or by liquidation of the Fund.
Other service providers of the Fund are as follows. Boston Safe Deposit and
Trust Company, an indirect subsidiary of Mellon Bank Corporation, acts as
Custodian to the Fund. Boston Safe Deposit and Trust Company is located at One
Boston Place, Boston, Massachusetts 02108. Under its Custody Agreement with the
Fund, Boston Safe Deposit and Trust Company holds the Fund's portfolio
securities and keeps all necessary accounts and records. Pursuant to the
Sub-Advisory Agreement, Mellon Equity has agreed that so long as it is the sole
investment sub-adviser to the Fund, the fees for the custody services provided
by Boston Safe Deposit and Trust Company will be deducted from Mellon Equity's
fee. In order to secure payment by the Custodian of overdrafts, the Fund has
granted the Custodian a
12
<PAGE>
continuing security interest in and a right of set off against assets in the
Fund's account with the Custodian. MassMutual has entered into an accounting
services agreement with First Data Investor Services Group, Inc. ("First Data"),
located at 4400 Computer Drive, Westborough, Massachusetts 01581. Pursuant to
the agreement, First Data provides certain accounting services and financial
administration services and is compensated by MassMutual for providing such
services to the Fund. Coopers & Lybrand L.L.P. is the Fund's independent
accountant, providing audit services and assistance and consultation in
connection with tax returns and the reviewing of various SEC filings.
Like other business and governments a round the world, MML Trust could be
adversely affected if the computer systems used by MassMutual (and those with
which it does business on behalf of MML Trust) and MML Trust's other service
providers do not properly recognize the Year 2000. This is commonly known as the
"Year 2000 issue." In 1996, MassMutual began an enterprise-wide process of
identifying, evaluating and implementing changes to computer systems and
applications software to address the Year 2000 issue. MassMutual has informed
MML Trust that this is one of MassMutual's highest business operational
priorities. MassMutual is also seeking assurances from vendors, customers,
service providers and others with which MassMutual and MML Trust conduct
business in order to identify and resolve Year 2000 issues.
VII. PORTFOLIO TRANSACTIONS
The Fund has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. The Fund's Investment
Management Agreement with MassMutual provides that MassMutual will follow such
practices in placing portfolio transactions for the Fund as may from time to
time be set forth in its Prospectus or specified by the Board of Trustees of MML
Trust. Consistent with this agreement, the present policy of the Fund and the
Advisers is that the Advisers, in placing brokerage transactions for the Fund,
are to seek best execution by responsible brokerage firms at reasonably
competitive commission rates. Mellon Equity will not consider the provision of
brokerage research services (as such term is defined in Section 28(e) of the
Securities Exchange Act of 1934, as amended) in allocating brokerage
transactions for the Fund.
By virtue of the Sub-Advisory Agreement, Mellon Equity is subject to the same
rights, obligations and procedures that apply to MassMutual pursuant to its
Investment Management Agreement with the Fund. Mellon Equity assumes general
supervision over placing orders on behalf of the Fund for the purchase or sale
of portfolio securities. Allocation of brokerage transactions, including their
frequency, is made in the best judgment of Mellon Equity. The primary
consideration is to obtain executions at the most favorable and reasonable
commission rates in relation to the benefits received. Mellon Equity attempts to
achieve these results by choosing brokers to execute transactions based on (1)
their professional capabilities (including use of capital, clearance, and
settlement procedures, and participation in underwritings and corporate finance
issues), (2) the value and quality of their services, and (3) the comparative
brokerage commission rates which they offer.
Portfolio turnover will result from changes in the composition of the Index and
from purchases and redemptions of Fund shares and the reinvestment of Fund
dividends. Portfolio turnover may vary from year to year, as well as within a
year. High turnover rates are likely to result in comparatively greater
brokerage expenses. The overall reasonableness of brokerage commissions paid is
evaluated by Mellon Equity based upon its knowledge of available information as
to the general level of commissions paid by other institutional investors for
comparable services. The allocation of orders among brokers and the commission
rates paid are reviewed periodically by the Board of Trustees of MML Trust.
Brokerage commissions paid by the Fund for the eight-month period ended December
31, 1997 were $11,863.
Purchases and sales of equity securities on a securities exchange are effected
through brokers who charge a negotiated commission for their services. Orders
may be directed to any broker, to the extent and in the manner permitted by
applicable law. In the over-the-counter market, securities are generally traded
on a "net" basis with dealers acting as principal for their own accounts without
a stated commission, although the price of the security usually includes a
profit to the dealer. In underwritten offerings, securities are purchased at a
fixed price that includes an amount of compensation to the underwriter,
generally referred to as the underwriter's concession or discount.
Except in the case of equity securities purchased by the Fund, purchases and
sales of securities usually will be principal transactions. Portfolio securities
normally will be purchased from or sold to dealers serving as market makers for
the securities at a net price. The Fund may purchase securities directly from
the issuer. Generally, money market securities are traded on a net basis and do
not involve brokerage commissions. The cost of the Fund's investment portfolio
securities transactions will consist primarily of dealer spreads and
underwriting commissions.
13
<PAGE>
Purchase and sale orders of the securities held by the Fund may be combined with
those of other investment companies and accounts which attempt to track an
equity index that Mellon Equity manages, and for which it has brokerage
placement authority, in the interest of seeking the best overall terms. When
Mellon Equity determines that a particular security should be bought or sold for
the Fund and other accounts managed by Mellon Equity, Mellon Equity undertakes
to allocate those transactions among the participants equitably.
Under the 1940 Act, persons affiliated with the Fund such as MassMutual, Mellon
Equity and, in some cases, their affiliates are prohibited from dealing with the
Fund as a principal in the purchase and sale of securities unless an exemptive
order allowing such transactions is obtained from the SEC or an exemption is
otherwise available.
IX. CAPITAL SHARES
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of MML Trust. However, MML Trust's
Declaration of Trust disclaims liability of the shareholders, Trustees of MML
Trust, or officers of MML Trust for acts or obligations of MML Trust, which are
binding only on the assets and property of MML Trust, and requires that notice
of such disclaimer be given in each agreement, obligation, or instrument entered
into or executed by MML Trust or Trustees of MML Trust. MML Trust's Declaration
of Trust provides for indemnification out of MML Trust property for all loss and
expense of any shareholder held personally liable for the obligations of MML
Trust. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is considered remote since it is limited to circumstances
in which the disclaimer is inoperative and MML Trust itself would be unable to
meet its obligations.
X. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED
MML Trust is a no-load mutual fund. Fund shares are sold at their net asset
value as next computed after receipt of the purchase order, without the addition
of any selling commission or "sales load." The Fund redeems its shares at their
net asset value as next computed after receipt of the request for redemption.
The redemption price may be paid in cash or wholly or partly in kind if MML
Trust's Board of Trustees determine that such payment is advisable in the
interest of the remaining shareholders. In making such payment wholly or partly
in kind, the Fund will, as far as may be practicable, deliver securities or
property which approximate the diversification of its entire assets at the time.
No fee is charged on redemption. The redemption price may be more or less than
the shareholder's cost. Redemption payments will be paid within seven days after
receipt of the written request therefor by the Fund, except that the right of
redemption may be suspended or payments postponed when permitted by applicable
law and regulations.
The net asset value of the Fund's shares is determined once daily as of the
normal close of the New York Stock Exchange on each day on which the Exchange is
open for trading (presently 4:00 p.m. for normal trading). The New York Stock
Exchange is not open for trading on New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day and on occasion is closed early or entirely
due to weather or other conditions. The net asset value of the Fund's shares is
the total net asset value of the Fund divided by the number of its shares
outstanding. The total net asset value of the Fund is determined by computing
the value of the total assets of the Fund and deducting total liabilities,
including accrued liabilities.
The manner of determining the value of the total assets of the Fund is as
follows. Equity securities are valued on the basis of valuations furnished by a
pricing service, authorized by the Board of Trustees, which provides the last
reported sale price for securities which are listed on a national securities
exchange, on the NASDAQ National Market System, or which are unlisted. If there
is no reported sale price, the bid price of the prior trade date will be used.
Debt obligations with less than one year but more than sixty days to maturity
are valued on the basis of their market value, and debt obligations having a
maturity of sixty days or less are generally valued at amortized cost when the
Board of Trustees of MML Trust believes that amortized cost approximates market
value. In all other cases, assets (including restricted securities) are valued
at their fair value as determined in good faith by the Board of Trustees of MML
Trust, although the actual calculations may be made by persons acting pursuant
to the direction of the Board.
Futures contracts are valued based on the market price for the futures contract,
unless such price does not reflect the fair value of the contract, in which case
it will be valued by or under the direction of the Board of Trustees of MML
Trust.
14
<PAGE>
XI. TAX STATUS
It is the policy of the Fund to comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies. As a result, the Fund
will not be subject to federal income tax on any distributed net income or
capital gains. To meet these requirements and to meet other requirements
necessary for it to be relieved of federal income taxes on income and gain it
distributes to the separate investment accounts that invest in the Fund, the
Fund must, among other things, (a) derive at least 90% of its gross income from
dividends, interest, payments with respect to certain securities loans, gains
from the sale or other disposition of stock, securities or foreign currencies,
or other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies; (b) diversify its holdings so that, at the
close of each quarter of its taxable year, (i) at least 50% of the value of its
total assets consists of cash, cash items, U.S. government securities,
securities of other regulated investment companies, and other securities limited
generally with respect to any one issuer to a value not greater than 5% of the
total assets of the Fund and to not more than 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its assets
is invested in the securities of any issuer (other than U.S. government
securities or securities of other regulated investment companies); and (c)
distribute in or with respect to each taxable year at least 90% of the sum of
its taxable net investment income, its net tax-exempt income, and the excess, if
any, of net short-term capital gains over net long-term capital losses for such
year.
The Fund intends to declare capital gain and ordinary income dividends by the
end of each calendar year and to distribute such dividends no later than January
31 of the following year to the extent necessary to avoid the 4% excise tax on
undistributed regulated investment company income enacted by the Tax Reform Act
of 1986. The 4% excise applies to the excess of the required distribution for
the calendar year over the amount treated as distributed for that year. The
required distribution equals 98% of the Fund's ordinary income for the calendar
year plus 98% of its capital gain net income for the one year period ending
October 31 (or December 31, if the Fund so elects) and any shortfall of income
or gains from the prior year not previously so distributed.
The Treasury Department has issued Regulations under Internal Revenue Code
Section 817(h), that pertain to diversification requirements for variable life
insurance contracts. A variable contract based upon a separate account will not
receive favorable tax treatment as a life insurance contract unless the separate
account and underlying regulated investment company investments are adequately
diversified. In determining whether a separate account is adequately
diversified, in certain circumstances the separate account can look through to
the assets of the regulated investment company in which it has invested.
The Regulations require the Fund's assets to be diversified so that no single
investment represents more than 55% of the value of the Fund's total assets, no
two investments represent more than 70% of the Fund's total assets, no three
investments represent more than 80% of the Fund's total assets and no four
investments represent more than 90% of the Fund's total assets. A "safe harbor"
is available to a separate account if it meets the diversification tests
applicable to registered investment companies and not more than 55% of its
assets constitute cash, cash items, government securities and securities of
other registered investment companies.
The applicable Regulations treat all securities of the same issuer as a single
investment. In the case of "government securities," each government agency or
instrumentality shall be treated as a separate issuer for the purpose of the
diversification test (although not for the purpose of the "safe harbor" test
described above). MML Trust intends to comply with these diversification
requirements.
XII.CERTAIN TAX AND ACCOUNTING INFORMATION
As previously indicated, it is the policy of the Fund to meet the requirements
of the Internal Revenue Code to qualify as a regulated investment company under
the federal tax law.
Special rules (including constructive sale, mark-to-market, straddle and wash
sale rules) exist for determining the timing of recognition of income or loss,
the character of such income or loss, and the holding periods of certain of the
Fund's assets in the case of certain transactions involving futures contracts,
forward contracts and options. MML Trust will endeavor to make any available
elections pertaining to such transactions in a manner believed to be in the best
interest of MML Trust.
15
<PAGE>
Pursuant to the Taxpayer Relief Act of 1997 (the "1997 Act"), new "constructive
sale" provisions apply to activities by the Fund which lock-in gain on an
"appreciated financial position." Generally, a "position" is defined to include
stock, a debt instrument, or partnership interest, or an interest in any of the
foregoing, including through a short sale, a swap contract, or a future or
forward contract. Under the 1997 Act, the entry into a short sale, a swap
contract or a future or forward contract relating to an appreciated direct
position in any stock or debt instrument, or the acquisition of stock or debt
instrument at a time when the Fund occupies an offsetting (short) appreciated
position in the stock or debt instrument, is treated as a "constructive sale"
that gives rise to the immediate recognition of gain (but not loss). The
application of these new provisions may cause the Fund to recognize taxable
income from these offsetting transactions in excess of the cash generated by
such activities.
XIII. INVESTMENT PERFORMANCE
The Fund may advertise its total return and its holding period return. Total
return quotations will be based upon a stated period and will be computed by
finding the average annual compounded rate of return over the stated period that
would equate an initial amount invested to the ending redeemable value of the
investment (assuming reinvestment of all distributions), according to the
following formula:
P(1+T)/n/ = ERV Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value at the end of the
stated period of a hypothetical $1,000 payment made
at the beginning of the stated period.
The Fund's total return for the period beginning May 1, 1997 and ending December
31, 1997 was 21.39%.
Holding period return will be based upon a stated period and will be computed by
dividing the ending redeemable value of a hypothetical initial payment by the
value of the initial investment (assuming reinvestment of all distributions).
Each investment performance figure will be carried to the nearest hundredth of
one percent. These investment performance figures do not reflect charges imposed
by the separate investment accounts invested in the Fund which, if included,
would decrease the performance figures.
XIV. EXPERTS
The financial statements of the Fund included in this Statement of Additional
Information have been included herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
The name MML Series Investment Fund is the designation of Trustees under an
Agreement and Declaration of Trust dated December 19, 1984, as amended from time
to time. The obligations of such Trust are not personally binding upon, nor
shall resort be had to the property of, any of the Trustees, shareholders,
officers, employees or agents of such Trust, but only the property of the
relevant series of MML Series Investment Fund shall be bound.
16
<PAGE>
Report Of Independent Accountants
To the Board of Trustees and Shareholders of
MML Series Investment Fund
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments of the MML Equity Index Fund, which is a component
of the MML Series Investment Fund (a Massachusetts business trust), as of
December 31, 1997, and the related statement of operations and statement of
changes in net assets for the period from May 1, 1997 (commencement of
operations) through December 31, 1997, and the financial highlights for the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit 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 and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1997 by
correspondence with the custodian and brokers. 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fund as of December 31, 1997, the results of operations and changes in net
assets for the period then ended, and the financial highlights for the period
then ended, in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
January 31, 1998
F-1
<PAGE>
MML Equity Index Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<S> <C>
ASSETS
Investments at value (See Schedule of Investments) (Notes 2A, 2B, and 4)
Equities (Identified cost: $20,277,732)......................................... $ 24,449,294
Short-term investments (Identified cost: $28,284)............................... 28,284
------------
Total investments.............................................................. 24,477,578
Interest and dividends receivable................................................ 34,053
Receivable for investment securities sold........................................ 6,831
------------
Total assets................................................................... 24,518,462
------------
LIABILITIES
Accrued dividends payable........................................................ 226,089
Payable for investment securities purchased...................................... 4,327
Investment management fee payable (Note 3)....................................... 61,760
Accrued trustees' fees........................................................... 4,523
Accrued audit fees............................................................... 20,000
------------
Total liabilities.............................................................. 316,699
------------
NET ASSETS....................................................................... $ 24,201,763
============
Net assets consist of:
Series shares (par value $.01 per share; an unlimited number authorized) (Note 5) $ 20,026
Additional paid-in capital....................................................... 20,009,993
Undistributed net investment income (Notes 2C and 2D)............................ 235
Undistributed net realized loss on investments................................... (53)
Net unrealized appreciation on investments (Note 2A)............................. 4,171,562
------------
NET ASSETS....................................................................... $ 24,201,763
============
Outstanding series shares........................................................ 2,002,675
============
Net asset value per share........................................................ $ 12.08
============
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE>
MML Equity Index Fund
STATEMENT OF OPERATIONS
For the Period From May 1, 1997 (Commencement of Operations) through December
31, 1997
<TABLE>
<S> <C>
Investment income (Note 2B)
Dividends (Net of foreign withholding tax of $312)................................ $ 272,010
Interest.......................................................................... 12,011
-------------
Total income..................................................................... 284,021
-------------
Expenses
Investment management fee (Note 3)................................................ 61,760
Audit fees........................................................................ 20,000
Trustees' fees.................................................................... 17,661
Other............................................................................. 2
-------------
Total expenses................................................................... 99,423
-------------
Net investment income (Notes 2C and 2D)........................................... 184,598
-------------
Net realized and unrealized gain on investments (Notes 2A, 2B, 2C and 2D)
Net realized gain on investments (Notes 2B, 2C, and 2D)........................... 41,673
-------------
Net unrealized appreciation on investments (Note 2A).............................. 4,171,562
-------------
Net gain.......................................................................... 4,213,235
-------------
Net increase in net assets resulting from operations.............................. $ 4,397,833
=============
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
MML Equity Index Fund
STATEMENT OF CHANGES IN NET ASSETS
For the Period From May 1, 1997 (Commencement of Operations) through December
31, 1997
<TABLE>
<S> <C>
Increase in net assets
Operations:
Net investment income................................................................ $ 184,598
Net realized gain on investments..................................................... 41,673
Net unrealized appreciation on investments........................................... 4,171,562
-----------
Net increase in net assets resulting from operations................................. 4,397,833
Distributions to shareholders from: (Note 2C)
Net investment income.............................................................. (184,363)
Net realized gains on investments.................................................. (41,726)
Net increase in capital share transactions (Note 5)................................. 20,030,019
-----------
Total increase.................................................................... 24,201,763
NET ASSETS, at beginning of period................................................... 0
-----------
NET ASSETS, at end of year........................................................... $24,201,763
===========
Undistributed net investment income included in net assets at the end of the year.... $ 235
===========
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
MML Equity Index Fund
FINANCIAL HIGHLIGHTS
For the Period From May 1, 1997 (Commencement of Operations) through
December 31, 1997
Selected per share data for a series shares outstanding throughout the period.
<TABLE>
<S> <C>
Net asset value:
Beginning of period...................................... $ 10.000
---------
Income from investment operations:
Net investment income...................................... 0.092
Net realized and unrealized gain on investments............ 2.101
---------
Total from investment operations........................... 2.193
---------
Less Distributions:
Dividends from net investment income....................... (0.092)
Distributions from net realized gains...................... (0.021)
---------
Total Distributions........................................ (0.113)
---------
Net asset value:
End of period............................................ $ 12.080
=========
Total return............................................... 21.39%*
Net assets (in millions):
End of year.............................................. $ 24,202
Ratio of operating expenses to average net assets.......... 0.43%**
Ratio of net investment income to average net assets....... 0.80%**
Portfolio turnover rate.................................... 2%
Average commission rate paid............................... $ 0.0309
</TABLE>
* Total return information shown in the Financial Highlights tables does not
reflect expenses that apply at the separate account level or to related
insurance products. Inclusion of these charges would reduce the total return
figures for the period shown. Percentage represents results for the period
from May 1, 1997 (commencement of operations) through December 31, 1997 and
is not annualized.
** Percentages represent results for the period from May 1, 1997 (commencement
of operations) through December 31, 1997 and are not annualized.
See Notes to Financial Statements.
F-5
<PAGE>
MML Equity Index Fund
SCHEDULE OF INVESTMENTS
December 31, 1997
Number Market
of Value
Shares (Note 2A)
------ ---------
EQUITIES - 101.02%
Advertising - 0.20%
Interpublic Group of Companies, Inc. ............ 450 $ 22,416
Omnicom Group Inc. .............................. 600 25,425
---------- ----------
1,050 47,841
---------- ----------
Aerospace - 1.77%
AlliedSignal Inc. ............................... 1,800 70,088
Boeing Company................................... 3,310 161,983
General Dynamics Corporation..................... 200 17,287
Lockheed Martin Corporation...................... 600 59,100
Northrop Grumman Corporation..................... 200 23,000
Textron, Inc. ................................... 600 37,500
United Technologies Corporation.................. 800 58,250
---------- ----------
7,510 427,208
---------- ----------
Airlines - .41%
AMR Corporation*................................. 300 38,550
Delta Air Lines, Inc. ........................... 200 23,800
Southwest Airlines Company....................... 750 18,469
USAirways Group, Inc.*........................... 300 18,750
---------- ----------
1,550 99,569
---------- ----------
Apparel, Textiles, Shoes - .30%
Fruit of the Loom Inc.*.......................... 300 7,687
Liz Claiborne Inc. ............................... 200 8,362
NIKE, Inc., Class B.............................. 900 35,325
Reebok International, Inc.*...................... 100 2,881
VF Corporation................................... 400 18,400
---------- ----------
1,900 72,655
---------- ----------
Automobiles - 1.72%
Chyster Corporation.............................. 2,200 77,413
Ford Motor Company............................... 3,800 185,013
General Motors Corporation....................... 2,400 145,500
Navistar International Corporation*.............. 300 7,444
---------- ----------
8,700 415,370
---------- ----------
Automobile Parts & Equipment - .41%
AutoZone, Inc.*.................................. 400 11,600
Cummins Engine, Inc. ............................ 100 5,906
Dana Corporation................................. 300 14,250
Echlin Inc. ..................................... 200 7,238
Genuine Parts Company............................ 600 20,362
Johnson Controls Inc. ........................... 300 14,325
Pep Boys-Manny, Moe & Jack....................... 200 4,775
TRW Inc. ........................................ 400 21,350
---------- ----------
2,500 99,806
---------- ----------
Banks - 9.27%
Banc One Corporation............................. 1,900 103,194
Bank of New York Inc. ........................... 1,300 75,156
BankAmerica Corporation.......................... 2,200 160,600
BankBoston Corporation........................... 500 46,969
Bankers Trust, New York Corporation.............. 200 22,488
Barnett Banks Inc. .............................. 600 43,125
BB&T Corporation................................. 400 25,625
Chase Manhattan Corporation...................... 1,400 153,300
Citicorp......................................... 1,500 189,656
Comerica Inc. ................................... 300 27,075
CoreStates Financial Corporation................. 800 64,050
Fifth Third Bancorporation....................... 450 36,788
First Chicago Corporation........................ 1,000 83,500
First Union Corporation.......................... 2,000 102,500
Fleet Financial Group Inc. ...................... 800 59,950
Huntington Bancshares............................ 600 21,600
KeyCorp (New).................................... 700 49,569
MBNA Corporation................................. 1,650 45,066
Mellon Bank Corporation.......................... 1,000 60,625
Morgan Stanley, Dean Witter,
Discover & Company............................. 1,825 107,903
Morgan (J.P.) & Company, Inc. ................... 600 67,725
National City Corporation........................ 700 46,025
NationsBank Corporation.......................... 2,500 152,031
Norwest Corporation.............................. 2,200 84,975
PNC Bank Corporation............................. 1,000 57,062
Republic New York Corporation.................... 200 22,837
State Street Corporation......................... 500 29,094
SunTrust Banks Inc. ............................. 800 57,100
U.S. Bancorp..................................... 877 98,169
Wachovia Corporation............................. 600 48,675
Wells Fargo & Company............................ 300 101,831
---------- ----------
31,402 2,244,263
---------- ----------
Broadcasting - .10%
Clear Channel Communications* ................... 200 15,888
Meredith Corporation ............................ 200 7,137
---------- ----------
400 23,025
---------- ----------
Building Materials - .77%
Centex Corporation............................... 100 6,294
Crane Company.................................... 200 8,675
Fleetwood Enterprises............................ 100 4,244
Home Depot Inc. ................................. 2,250 131,766
Kaufman & Broad Home Corporation................. 100 2,244
Masco Corporation................................ 500 25,437
Pall Corporation................................. 400 8,275
---------- ----------
3,650 186,935
---------- ----------
Business Equipment and Supplies - 1.99%
Avery Dennison Corporation....................... 400 17,900
Ikon Office Solutions............................ 400 11,250
International Business Machines Corporation...... 3,200 334,600
Pitney Bowes Inc. ............................... 500 44,969
Xerox Corporation................................ 1,000 73,812
---------- ----------
5,500 482,531
---------- ----------
Business Services - .48%
Cedant Corporation*.............................. 2,261 77,730
Deluxe Corporation............................... 200 6,913
Federal Express Corporation*..................... 400 24,425
Harland (John H.) Company........................ 100 2,094
Moore Corporation Ltd............................ 300 4,537
---------- ----------
3,261 115,699
---------- ----------
Chemicals and Plastics - 3.17%
Air Products & Chemicals Inc. ................... 400 32,900
Dow Chemical Company............................. 800 81,200
duPont (E.I.) deNemours & Company................ 3,600 216,225
Eastman Chemical Company......................... 200 11,913
Ecolab Inc. ..................................... 200 11,088
Engelhard Corporation............................ 500 8,668
FMC Corporation*................................. 100 6,731
Grace (W.R.) & Company........................... 200 16,087
Great Lakes Chemical Corporation................. 200 8,975
Hercules, Inc. .................................. 300 15,019
F-6
<PAGE>
MML Equity Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1997
Number Market
of Value
Shares (Note 2A)
------ ----------
EQUITIES (Continued)
Chemicals and Plastics (Continued)
Kerr-McGee Corporation ........................... 200 $ 12,662
Mallinckrodt Group Inc. .......................... 300 11,400
Minnesota Mining & Manufacturing Company ......... 1,300 106,681
Monsanto Company ................................. 1,900 79,800
Morton International Inc. ........................ 400 13,750
Nalco Chemical Company ........................... 200 7,912
Praxair Inc ...................................... 500 22,500
Raychem Corporation .............................. 200 8,612
Rockwell International Corporation ............... 700 36,575
Rohm & Haas Company .............................. 200 19,150
Sigma-Aldrich Corporation ........................ 300 11,925
Union Camp Corporation ........................... 200 10,737
Union Carbide Corporation ........................ 400 17,175
---------- ----------
13,300 767,705
---------- ----------
Coal - .22%
CSX Corporation .................................. 700 37,800
Eastern Enterprises .............................. 100 4,500
Fluor Corporation ................................ 300 11,213
---------- ----------
1,100 53,513
---------- ----------
Communication Equipment - 1.35%
Cabletron Systems, Inc.* ......................... 500 7,500
GTE Corporation .................................. 3,000 156,750
Harris Corporation ............................... 200 9,175
Motorola, Inc. ................................... 1,900 108,419
National Semiconductor Corporation* .............. 400 10,375
Scientific-Atlanta Inc. .......................... 200 3,350
Tellabs, Inc.* ................................... 600 31,725
---------- ----------
6,800 327,294
---------- ----------
Computer Hardware, Software or Services - 7.20%
Adobe Systems Inc. ............................... 200 8,250
Advanced Micro Devices Inc.* ..................... 400 7,175
AMP Inc. ......................................... 700 29,400
Apple Computer Inc.* ............................. 400 5,250
Autodesk, Inc. ................................... 200 7,400
Automatic Data Processing Inc. ................... 900 55,238
Bay Networks, Inc.* .............................. 600 15,338
Ceridian Corporation* ............................ 200 9,163
CISCO Systems Inc. ............................... 3,150 175,613
Compaq Computer Corporation ...................... 2,410 136,014
Computer Associates International Inc. ........... 1,650 87,244
Computer Sciences Corporation* ................... 200 16,513
Data General Corporation* ........................ 100 1,744
Dell Computer Corporation ........................ 1,200 100,800
Digital Equipment Corporation* ................... 500 18,500
Honeywell, Inc. .................................. 400 27,400
Intel Corporation ................................ 5,200 365,300
Microsoft Corporation* ........................... 3,900 504,075
Novell Inc.* ..................................... 1,100 8,250
Oracle Systems Corporation ....................... 3,300 73,631
Parametric Technology Corporation* ............... 400 18,950
Seagate Technologies Inc.* ....................... 800 15,400
Sun Microsystems Inc.* ........................... 1,200 47,850
Unisys Corporation* .............................. 500 6,937
---------- ----------
29,610 1,741,435
---------- ----------
Computer - Semiconductors - .33%
Applied Materials* ............................... 1,200 36,150
EMC Corporation .................................. 1,600 43,900
---------- ----------
2,800 80,050
---------- ----------
Consumer Non-Durables - 3.65%
Corning Inc. ...................................... 700 25,988
General Electric Corporation ...................... 10,600 777,775
Grainger (W.W.), Inc. ............................. 200 19,437
Lowe's Companies Inc. ............................. 600 28,612
Newell Company .................................... 500 21,250
Whitman Corporation ............................... 400 10,425
---------- ----------
13,000 883,487
---------- ----------
Consumer Services - .21%
Block (H & R) Inc. ................................ 300 13,444
Manor Care Inc. ................................... 200 7,000
Service Corporation International ................. 800 29,550
---------- ----------
1,300 49,994
---------- ----------
Consumer Staples - .09%
Pioneer Hi-Bred International Inc. ................ 200 21,450
---------- ----------
Containers -- .18%
Ball Corporation .................................. 100 3,531
Crown Cork & Seal Company Inc. .................... 400 20,050
Owens-Illinois Inc., New* ......................... 500 18,969
---------- ----------
1,000 42,550
---------- ----------
Cosmetics-Toiletry - .15%
Alberto-Culver Company, Class B ................... 200 6,413
Avon Products Inc. ................................ 500 30,688
---------- ----------
700 37,101
---------- ----------
Diversified - 1.62%
Aeroquip-Vickers, Inc. ............................ 100 4,906
CBS Corporation ................................... 2,200 64,763
Cognizant Corporation ............................. 500 22,281
Fortune Brands, Inc. .............................. 500 18,531
Loews Corporation ................................. 300 31,837
Raytheon Company, Class A ......................... 153 7,547
Raytheon Company, Class B ......................... 700 35,350
Tyco International Ltd. ........................... 1,800 81,112
Unilever N.V. ..................................... 2,000 124,875
---------- ----------
8,253 391,202
---------- ----------
Electrical Equipment - 1.32%
Cooper Industries Inc. ............................ 300 14,700
FirstEnergy Corporation* .......................... 800 23,200
Foster Wheeler Corporation ........................ 100 2,706
General Signal Corporation ........................ 100 4,219
Hewlett-Packard Company ........................... 3,300 206,250
Tektronix Inc. .................................... 150 5,953
Texas Instruments Inc. ............................ 1,200 54,000
Thomas & Betts Corporation ........................ 200 9,450
---------- ----------
6,150 320,478
---------- ----------
Electronics - .51%
Eaton Corporation ................................. 200 17,850
EG&G Inc. ......................................... 200 4,163
Emerson Electric Company .......................... 1,400 79,013
KLA-Tenecor Corporation* .......................... 200 7,725
Tandy Corporation ................................. 400 15,425
---------- ----------
2,400 124,176
---------- ----------
Energy and Resources - .21%
Burlington Resources, Inc. ........................ 552 24,737
Dresser Industries Inc. ........................... 600 25,163
---------- ----------
1,152 49,900
---------- ----------
F-7
<PAGE>
MML Equity Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1997
Number Market
of Value
Shares (Note 2A)
------ ---------
EQUITIES (Continued)
Entertainment - 1.80%
Brunswick Corporation........................... 300 $ 9,094
Disney (Walt) Company........................... 2,100 208,031
Harcourt General Corporation.................... 300 16,444
Hasbro Inc. .................................... 400 12,600
ITT Corporation (New)*.......................... 400 33,150
King World Productions, Inc. ................... 100 5,775
Mattel, Inc. ................................... 900 33,525
Time Warner Inc. ............................... 1,900 117,800
---------- ----------
6,400 436,419
---------- ----------
Environmental Control - .02%
Safety-Kleen Corporation........................ 200 5,487
---------- ----------
Financial Services - 3.96%
American Express Company........................ 1,500 133,875
American General Corporation.................... 710 38,384
Beneficial Corporation.......................... 200 16,625
Countrywide Credit Industries................... 400 17,150
Dow Jones & Company Inc. ....................... 300 16,106
Equifax, Inc. .................................. 400 14,175
Federal Home Loan Mortgage Corporation.......... 2,300 96,456
Federal National Mortgage Association........... 3,500 199,719
First Data Corporation.......................... 1,500 43,875
Green Tree Financial Corporation................ 500 13,094
Household International, Inc. .................. 300 38,269
Merrill Lynch & Company Inc. ................... 1,000 72,937
Pulte Corporation............................... 100 4,181
Schwab (Charles) Corporation.................... 1,050 44,034
Temple-Inland Inc. ............................. 200 10,482
Travelers Group Inc. ........................... 3,678 198,152
---------- ----------
17,638 957,494
---------- ----------
Food and Beverages - 7.18%
Albertson's, Inc. .............................. 800 37,900
Anheuser-Busch Companies Inc. .................. 1,600 70,400
Campbell Soup Company........................... 1,500 87,188
Coca-Cola Company............................... 7,900 526,338
ConAgra Inc. ................................... 1,400 45,938
Coors (Adolph) Company, Class B................. 100 3,325
CPC International Inc. ......................... 500 53,875
Heinz (H.J.) Company............................ 1,200 60,975
Hershey Foods Corporation....................... 500 30,969
Kellogg Company................................. 1,400 69,475
PepsiCo Inc. ................................... 4,900 178,544
Philip Morris Companies Inc. ................... 7,800 353,437
Quaker Oats Company............................. 400 21,100
Ralston-Purina Group............................ 300 27,881
Sara Lee Corporation............................ 1,500 84,469
Seagram Company Ltd............................. 1,200 38,775
UST Inc. ....................................... 600 22,162
Wrigley (Wm) Jr. Company........................ 300 23,869
---------- ----------
33,900 1,736,620
---------- ----------
Food Distribution - .83%
Archer-Daniels-Midland Company.................. 1,890 40,989
Costco Companies Inc.*.......................... 700 31,238
General Mills Inc. ............................. 500 35,812
Giant Food, Inc., Class A....................... 200 6,737
Great Atlantic & Pacific Tea Company Inc. ...... 100 2,969
Kroger Company.................................. 800 29,550
Supervalu Inc. ................................. 200 8,375
Sysco Corporation............................... 500 22,781
Winn Dixie Stores Inc. ......................... 500 21,844
---------- ----------
5,390 200,295
---------- ----------
Freight and Shipping - .04%
Caliber Systems Inc. ............................. 200 9,738
---------- ----------
Glass Products - .17%
Owens Corning Fiberglass Corporation................ 200 6,825
PPG Industries Inc. ................................ 600 34,275
---------- ----------
800 41,100
---------- ----------
Health Care Facilities - .44%
Columbia/HCA Healthcare Corporation............... 2,100 62,213
Humana Inc.*...................................... 500 10,375
Tenet Healthcare Corporation*..................... 1,000 33,125
---------- ----------
3,600 105,713
---------- ----------
Health Care Products - 3.80%
Abbott Laboratories............................... 2,400 157,350
Allergan, Inc. ................................... 200 6,713
Bausch & Lomb Inc. ............................... 200 7,925
Becton, Dickinson & Company....................... 400 20,000
Merck & Company Inc. ............................. 3,900 414,375
Pfizer, Inc. ..................................... 4,200 313,162
---------- ----------
11,300 919,525
---------- ----------
Holding Companies - .16%
Providian, LLC.................................... 300 13,556
Public Service Enterprise......................... 800 25,350
---------- ----------
1,100 38,906
---------- ----------
Home Appliances - .43%
Black & Decker Corporation........................ 300 11,719
Illinois Tool Works Inc. ......................... 800 48,100
Maytag Corporation................................ 300 11,194
Snap-On, Inc. .................................... 200 8,725
Stanley Works..................................... 300 14,156
Whirlpool Corporation............................. 200 11,000
---------- ----------
2,100 104,894
---------- ----------
Home Furnishings and Housewares - .78%
American Home Products Corporation................ 2,000 153,000
Armstrong World................................... 100 7,475
Rubbermaid, Inc. ................................. 500 12,500
Springs Industries, Inc. ......................... 200 10,400
Tupperware Corporation............................ 200 5,575
---------- ----------
3,000 188,950
---------- ----------
Hotels and Restaurants - .87%
Darden Restaurants Inc. .......................... 500 6,250
Harrah's Entertainment Corporation*............... 300 5,662
Hilton Hotels Corporation......................... 800 23,800
Marriott International Inc. ...................... 400 27,700
McDonald's Corporation............................ 2,300 109,825
Mirage Resorts, Inc.*............................. 600 13,650
Tricon Global Restaurants Inc.*................... 490 14,241
Wendy's International Inc. ....................... 400 9,625
---------- ----------
5,790 210,753
---------- ----------
Insurance - 4.25%
Aetna Life & Casualty Company..................... 500 35,281
Allstate Corporation.............................. 1,500 136,313
American International Group, Inc. ............... 2,250 244,688
AON Corporation................................... 600 35,175
Chubb Corporation................................. 600 45,375
CIGNA Corporation................................. 300 51,919
Cincinnati Financial Corporation.................. 200 28,150
F-8
<PAGE>
MML Equity Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1997
Number Market
of Value
Shares (Note 2A)
------ ---------
EQUITIES (Continued)
Insurance (Continued)
Conseco, Inc. ...................................... 500 $ 22,719
General Re Corporation.............................. 300 63,600
Hartford Financial Services Group, Inc. ............ 400 37,425
Jefferson-Pilot Corporation......................... 200 15,575
Lincoln National Corporation........................ 400 31,250
Marsh & McLennan Companies, Inc. ................... 600 44,737
MBIA Inc. .......................................... 400 26,725
MGIC Investment Corporation......................... 400 26,600
Progressive Corporation............................. 200 23,975
SAFECO Corporation.................................. 400 19,500
St. Paul Companies Inc. ............................ 200 16,412
SunAmerica.......................................... 600 25,650
Torchmark Corporation............................... 400 16,825
Transamerica Corporation............................ 200 21,300
United Healthcare Corporation....................... 600 29,812
UNUM Corporation.................................... 400 21,750
USF & G Corporation................................. 400 8,825
---------- ----------
12,550 1,029,581
---------- ----------
Machinery and Heavy Equipment - .72%
Caterpillar Inc. ................................... 1,200 58,275
Cincinnati Milacron Inc. ........................... 100 2,594
Deere & Company..................................... 800 46,650
Dover Corporation................................... 800 28,900
Ingersoll-Rand Company.............................. 600 24,300
Parker-Hannifin Corporation......................... 300 13,762
---------- ----------
3,800 174,481
---------- ----------
Manufacturing - 1.05%
Alcan Aluminum Ltd.................................. 700 19,338
Aluminum Company of America......................... 600 42,225
Boston Scientific Corporation*...................... 700 32,113
Briggs & Stratton Corporation....................... 100 4,856
Brown-Forman Corporation, Class B................... 200 11,050
Case Corporation.................................... 300 18,131
LSI Logic Corporation*.............................. 500 9,875
Micron Technology Inc.*............................. 700 18,200
PACCAR Inc. ........................................ 200 10,500
Reynolds Metals Company............................. 200 12,000
Sherwin-Williams Company............................ 600 16,650
Silicon Graphics Inc.*.............................. 600 7,462
Thermo Electron Corporation*........................ 400 17,800
3COM Corporation*................................... 1,000 34,937
---------- ----------
6,800 255,137
---------- ----------
Medical Instruments, Services and Supplies - 1.15%
Bard (C.R.), Inc. .................................. 200 6,263
Baxter International Inc. .......................... 900 45,394
Biomet, Inc. ....................................... 300 7,688
Cardinal Health, Inc. .............................. 300 22,538
Guidant Corporation................................. 600 37,350
HBO & Company....................................... 600 28,800
HEALTHSOUTH Corporation............................. 1,200 33,300
Medtronic, Inc. .................................... 1,400 73,237
Shared Medical Systems Corporation.................. 100 6,600
St. Jude Medical, Inc.*............................. 300 9,150
United States Surgical Corporation.................. 300 8,794
---------- ----------
6,200 279,114
---------- ----------
Metals and Mining - .47%
Allegheny Teledyne, Inc. ........................... 600 $ 15,525
ASARCO Inc. ........................................ 100 2,244
Barrick Gold Corporation............................ 1,100 20,488
Battle Mountain Gold Company........................ 700 4,113
Cyprus Amax Minerals Company........................ 300 4,613
Echo Bay Mines Ltd.*................................ 400 975
Freeport McMoRan Copper & Gold, Class B............. 600 9,450
Homestake Mining Company............................ 500 4,437
Inco Ltd............................................ 600 10,200
Newmont Mining Corporation.......................... 472 13,865
Phelps Dodge Corporation............................ 300 18,675
Placer Dome, Inc. .................................. 700 8,881
---------- ----------
6,372 113,466
---------- ----------
Miscellaneous - .48%
S & P Depositary Receipt............................ 1,200 $ 116,475
---------- ----------
Natural Gas - .47%
Columbia Gas System, Inc. .......................... 200 15,713
Consolidated Natural Gas Company.................... 300 18,150
Enron Corporation................................... 1,100 45,719
NICOR Inc. ......................................... 100 4,219
ONEOK Inc. ......................................... 100 4,037
Pacific Enterprises Inc. ............................ 300 11,287
Sonat, Inc. ........................................ 300 13,725
---------- ----------
2,400 112,850
---------- ----------
News and Publishing - .95%
Gannett Company Inc. ............................... 1,000 61,812
Kimberly-Clark Corporation.......................... 1,800 88,762
Knight-Ridder Inc. ................................. 300 15,600
New York Times Company, Class A..................... 300 19,837
Times Mirror Company (New), Class A................. 300 18,450
Tribune Company..................................... 400 24,900
---------- ----------
4,100 229,361
---------- ----------
Oil - 7.77%
Amerada Hess Corporation............................ 300 16,463
Amoco Corporation................................... 1,600 136,200
Anadarko Petroleum Company.......................... 200 12,138
Apache Corporation.................................. 300 10,519
Ashland, Inc. ...................................... 200 10,738
Atlantic Richfield Company.......................... 1,000 80,125
Baker Hughes Inc. .................................. 500 21,813
Chevron Corporation................................. 2,000 154,000
Coastal Corporation................................. 300 18,581
Exxon Corporation................................... 7,900 483,381
Halliburton Company................................. 800 41,550
McDermott International, Inc. ...................... 200 7,325
Mobil Corporation................................... 2,600 187,687
Occidental Petroleum Corporation.................... 1,100 32,244
Oryx Energy Company*................................ 400 10,200
Pennzoil Company.................................... 100 6,681
Phillips Petroleum Company.......................... 900 43,762
Royal Dutch Petroleum Company....................... 6,800 368,475
Tenneco Inc. ....................................... 500 19,750
Texaco Inc. ........................................ 1,600 87,000
Union Pacific Corporation........................... 800 49,950
Union Pacific Resources Group....................... 800 19,400
Unocal Corporation.................................. 800 31,050
USX-Marathon Group Common (New)..................... 900 30,375
---------- ----------
32,600 1,879,407
---------- ----------
F-9
<PAGE>
MML Equity Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1997
Number Market
of Value
Shares (Note 2A)
------ ------------
EQUITIES (Continued)
Oil Equipment and Services - .65%
Helmerich & Payne, Inc............................ 200 $ 13,575
Schlumberger Ltd.................................. 1,600 128,800
Western Atlas, Inc................................ 200 14,800
---------- ----------
2,000 157,175
---------- ----------
Paper and Forest Products - .74%
Bemis Company Inc................................. 200 8,813
Boise Cascade Corporation ........................ 200 6,050
Champion International Corporation ............... 300 13,594
Fort James Corporation ........................... 600 22,950
Georgia-Pacific Corporation ...................... 300 18,225
Harnischfeger Industries Inc...................... 100 3,531
International Paper Company ...................... 1,000 43,125
Louisiana Pacific Corporation .................... 300 5,700
Mead Corporation ................................. 200 5,600
Potlatch Corporation ............................. 100 4,300
Stone Container Corporation* ..................... 400 4,175
Weyerhaeuser Company ............................. 600 29,437
Willamette Industries Inc......................... 400 12,875
---------- ----------
4,700 178,375
---------- ----------
Personal Items - 3.05%
Colgate-Palmolive Company ........................ 1,000 73,500
Gillette Company ................................. 1,800 180,787
International Flavors & Fragrances, Inc. ......... 300 15,450
Jostens Inc....................................... 200 4,612
Proctor & Gamble Company ......................... 4,400 351,175
Warner-Lambert Company ........................... 900 111,600
---------- ----------
8,600 737,124
---------- ----------
Petroleum Refining - .20%
Rowan Companies* ................................. 300 9,150
Sun Company ...................................... 300 12,619
Williams Companies Inc............................ 1,000 28,375
---------- ----------
1,600 50,144
---------- ----------
Pharmaceuticals - 4.31%
ALZA Corporation ................................. 300 9,544
Bristol-Myers Squibb Company ..................... 3,200 302,800
Johnson & Johnson ................................ 4,300 283,262
Lilly (Eli) & Company ............................ 3,400 236,725
Pharmacia & Upjohn Inc............................ 1,700 62,262
Schering-Plough Corporation ...................... 2,400 149,100
---------- ----------
15,300 1,043,693
---------- ----------
Photographic Equipment and Supplies - .32%
Eastman Kodak Company ............................ 1,100 66,894
Polaroid Corporation ............................. 200 9,737
---------- ----------
1,300 76,631
---------- ----------
Printing and Publishing - .30%
American Greetings Corporation, Class A .......... 200 7,825
Donnelley (RR) & Sons Company .................... 500 18,625
Dun & Bradstreet Corporation ..................... 500 15,469
McGraw-Hill Inc................................... 300 22,200
Westvaco Corporation ............................. 300 9,431
---------- ----------
1,800 73,550
---------- ----------
Railroads - .15%
Norfolk Southern Corporation ..................... 1,200 36,975
---------- ----------
Research and Development - .18%
Amgen Inc......................................... 800 $ 43,300
---------- ----------
Retail - Store - 3.50%
American Stores Company .......................... 800 16,450
Charming Shoppes Inc.* ........................... 400 1,875
Circuit City Stores Inc. - Circuit City Group .... 400 14,225
CVS Corporation .................................. 600 38,438
Dayton Hudson Corporation ........................ 700 47,250
Dillard's Inc., Class A .......................... 400 14,100
Federated Department Store* ...................... 600 25,838
Gap Inc........................................... 1,350 47,841
K mart Corporation* .............................. 1,500 17,344
Limited Inc....................................... 900 22,950
Longs Drug Stores Company ........................ 100 3,212
May Department Stores Company .................... 800 42,150
Mercantile Stores Company ........................ 200 12,175
Nordstrom, Inc.................................... 200 12,075
Penney (J.C.) Company Inc......................... 800 48,250
Rite Aid Corporation ............................. 400 23,475
Russell Corporation .............................. 100 2,656
Sears, Roebuck & Company ......................... 1,300 58,825
TJX Companies, Inc................................ 400 13,750
Toys R Us Inc.* .................................. 1,000 31,437
Walgreen Company ................................. 1,600 50,200
Wal-Mart Stores, Inc.............................. 7,400 291,837
Woolworth Corporation* ........................... 500 10,187
---------- ----------
22,450 846,540
---------- ----------
Savings and Loan Associations - .35%
Ahmanson (H.F.) Company .......................... 400 26,775
Golden West Financial Corporation ................ 100 9,781
Washington Mutual Inc............................. 760 48,497
---------- ----------
1,260 85,053
---------- ----------
Soaps and Detergents - .13%
Clorox Company ................................... 400 31,625
---------- ----------
Steel - .17%
Armco Inc.* ...................................... 400 1,975
Bethlehem Steel Corporation* ..................... 400 3,450
Inland Steel Industries Inc....................... 200 3,425
Nucor Corporation ................................ 300 14,494
Timken Company ................................... 200 6,875
USX-U.S. Steel Group Inc.......................... 200 6,250
Worthington Industries, Inc....................... 300 4,950
---------- ----------
2,000 41,419
---------- ----------
Technology - .71%
Ameritech Corporation ............................ 1,800 144,900
ITT Industries ................................... 400 12,550
Millipore Corporation ............................ 200 6,787
Perkin-Elmer Corporation ......................... 100 7,106
---------- ----------
2,500 171,343
---------- ----------
Telecommunications - 7.55%
AirTouch Communications, Inc.* ................... 1,600 66,500
ALLTEL Corporation ............................... 600 24,638
Andrew Corporation ............................... 300 7,200
AT&T Corporation ................................. 5,200 318,500
Bell Atlantic Corporation ........................ 2,475 225,225
BellSouth Corporation ............................ 3,200 180,200
F-10
<PAGE>
MML Equity Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1997
Number Market
of Value
Shares (Note 2A)
------ ----------
EQUITIES (Continued)
Telecommunications (Continued)
Comcast Corporation, Special Class A
(non-voting) .................................. 1,000 $ 31,563
DSC Communications Corporation* ................ 300 7,200
Frontier Corporation ........................... 600 14,437
Lucent Technologies, Inc. ...................... 2,100 167,737
MCI Communications Corporation ................. 2,200 94,187
Nextlevel Systems* ............................. 500 8,937
Northern Telecommunications Ltd. ............... 800 71,200
SBC Communications ............................. 3,000 219,750
Sprint Corporation ............................. 1,400 82,075
Tele-Communications Inc., Class A .............. 1,700 47,494
US West, Inc. .................................. 1,500 67,687
US West Media, lnc.* ........................... 2,000 57,750
Viacom Inc., Class B* .......................... 1,200 49,725
WorldCom, lnc.* ................................ 2,800 84,700
--------- ----------
34,475 1,826,705
--------- ----------
Tire and Rubber - .21%
Cooper Tire & Rubber Company ................... 300 7,313
Goodrich (B.F.) Company ........................ 300 12,431
Goodyear Tire & Rubber Company ................. 500 31,812
--------- ----------
1,100 51,556
--------- ----------
Transportation - .23%
Burlington Northern Santa Fe ................... 500 46,469
Ryder System, Inc. ............................. 300 9,825
--------- ----------
800 56,294
--------- ----------
Utilities - 2.52%
American Electric Power Company, Inc. .......... 600 30,975
Baltimore Gas & Electric Company ............... 400 13,625
Carolina Power & Light Company ................. 500 21,219
Central & Southwest Corporation ................ 600 16,238
Cinergy Corporation ............................ 500 19,188
Consolidated Edison Company .................... 700 28,700
Dominion Resources, Inc. ....................... 600 25,538
DTE Energy Company ............................. 500 17,344
Duke Energy Company ............................ 1,122 62,131
Edison International ........................... 1,400 38,063
Entergy Corporation ............................ 700 20,956
FPL Group, Inc. ................................ 500 29,594
GPU, Inc. ...................................... 400 16,850
Houston Industries, Inc. ....................... 899 23,992
National Service Industries, Inc. .............. 100 4,956
Niagara Mohawk Power Corporation* .............. 500 5,250
Northern States Power Company .................. 200 11,650
PacifiCorp ..................................... 900 24,581
PECO Energy Company ............................ 700 16,975
Peoples Energy Corporation ..................... 100 3,937
PG & E Corporation ............................. 1,300 39,569
PP & L Resources Inc. .......................... 500 11,969
Southern Company ............................... 2,200 56,925
Texas Utilities Company ........................ 745 30,964
Unicom Corporation ............................. 700 21,525
Union Electric Company ......................... 400 17,300
------------ ------------
17,766 610,014
------------ ------------
Waste Management - .33%
Browning-Ferris Industries, Inc. ............... 700 25,900
Laidlaw Inc., Class B (non-voting) ............. 1,000 13,625
Waste Management, Inc. ......................... 1,500 41,250
------------ ------------
3,200 80,775
------------ ------------
Total Equities
(Cost $20,277,732) ............................. 24,449,294
------------
SHORT-TERM INVESTMENTS - .12%
(Cost $28,284)
Dreyfus Cash Management Fund, Class A .......... 28,284 28,284
------------ ------------
Total Investments
(Cost $20,306,016) (a) ......................... 101.14 24,477,578
Other Assets and Liabilities (Net) .............. (1.14) (275,815)
------------ ------------
100.00% $ 24,201,763
============ ============
(a) Federal Income Tax Information: At December 31, 1997
the net unrealized appreciation on investments
based on cost of $20,306,016 for federal
income tax purposes is as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of
market value over tax cost.................................... $ 4,519,913
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax
cost over market value........................................ (348,351)
------------
Net unrealized appreciation................................... $ 4,171,562
============
* Non-income producing security.
See Notes to Financial Statements.
F-1l
<PAGE>
Notes To Financial Statements
1. HISTORY
MML Equity Index Fund ("the Fund") is a non-diversified fund series of MML
Series Investment Fund ("MML Trust"), a no load, open-end, management investment
company registered as such under the Investment Company Act of 1940. MML Trust,
which has five separate series of shares, was organized as a business trust
under the laws of the Commonwealth of Massachusetts pursuant to an Agreement and
Declaration of the Trust.
MML Trust was established by Massachusetts Mutual Life Insurance Company
("MassMutual") for the purposes of providing vehicles for the investment of
assets of various separate investment accounts established by MassMutual and by
the life insurance companies which are subsidiaries of MassMutual. Shares of MML
Trust are not offered to the general public.
Information presented in these financial statements pertains only to the Fund.
Information for the other series of MML Trust are presented under a separate
cover.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in preparation of its financial statements in conformity
with generally accepted accounting principles.
A. Investment Valuation
Generally, the Fund values its Portfolio's securities at market value or, in
the absence of market value with respect to any portfolio security, at fair
value as determined by, or under the direction of, the Board of Trustees of
MML Trust ("the Board"). Portfolio securities are valued on the basis of
valuations furnished by a pricing service, authorized by the Board, which
provides the last reported sale price for securities listed on a national
securities exchange, or on the NASDAQ national market system. If securities
are unlisted or there is no reported sales price, the bid price of the prior
trade date will be used. Short-term debt obligations with less than one
year, but more than sixty days to maturity from the date of purchase are
valued on the basis of their market value. Debt obligations with sixty days
or less to maturity from the date of purchase are generally valued at
amortized cost when the Board believes amortized cost approximates market
value.
B. Accounting For Investments
Investment transactions are accounted for on trade date. Dividend income is
recorded on ex-dividend date. Interest income is recorded on the accrual
basis.
Realized gains and losses on investment transactions and unrealized
appreciation and depreciation of investments are reported for financial
statement and federal income tax purposes on the identified cost method.
C. Dividends and Distributions
Dividends of net investment income and distributions of capital gains are
declared and paid annually or as approved by the Board to avoid the
application of a 4% non-deductible excise tax on certain undistributed
amounts of ordinary income and capital gains. Income distributions and
capital gains distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income, gains
and losses and differing characterizations of distributions made by the
Fund. As a result, net investment income (loss) and net realized gain (loss)
on investment transactions for a reporting period may differ significantly
from distributions during such period. Accordingly, the Fund may
periodically make reclassifications among certain of their capital accounts
without impacting the net asset value of the Fund.
D. Federal Income Tax
The MML Trust has established a policy for the Fund to comply with the
provisions of the Internal Revenue Code of 1986, as amended, applicable to
regulated investment companies. As a result, the Fund will not be subject to
federal income tax on any net investment income and any capital gains to the
extent they are distributed or are deemed to have been distributed to
shareholders.
F-12
<PAGE>
Notes To Financial Statements (Continued)
E. Estimates
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
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. Actual results could differ from those estimates.
3. INVESTMENT MANAGEMENT FEE
MassMutual serves as investment adviser to the Fund pursuant to an investment
management agreement (the "Investment Management Agreement"). For acting as
such, MassMutual receives a quarterly fee at the annual rate of .40% of the
first $100,000,000 of the average daily net asset value of the Fund, .38% of the
next $150,000,000 and .36% of any excess over $250,000,000. MassMutual has
agreed to bear expenses of the Fund (other than the management fee, interest,
taxes, any required trademark licensing fees, custodial fees, brokerage
commissions and extraordinary expenses) in excess of .11% of average daily net
asset value of the Fund through April 30, 1998. MassMutual also acts as transfer
agent and dividend paying agent.
MassMutual has entered into an investment sub-advisory agreement with Mellon
Equity Associates ("Mellon Equity"), which provides that Mellon Equity will
serve as the Fund's investment sub-advisor, providing day-to-day management of
the Fund's investments.
4. PURCHASE AND SALES OF INVESTMENTS
For the Period from May 1, 1997 Proceeds
(Commencement of Operations) Acquisition from Sales
through December 31, 1997 Cost and Maturities
- ------------------------- ------------- --------------
Equities.................................. $ 20,590,785 $ 356,112
Short-term Investments.................... 20,592,434 $ 20,572,987
5. NET INCREASE FROM CAPITAL SHARE TRANSACTIONS
The Trust is authorized to issue an unlimited number of shares of beneficial
interest to the Fund at $0.01 par value. Changes in shares of beneficial
interest are as follows:
For the Period from May 1, 1997
(Commencement of Operations)
through December 31, 1997
- -------------------------
Shares
Sales of shares................................................ 2,002,676
Redemption of shares........................................... (1)
-----------
Net Increase................................................... 2,002,675
===========
Amount
Sales of shares................................................ $20,030,027
Redemption of shares........................................... (8)
-----------
Net Increase................................................... $20,030,019
===========
6. INVESTMENT RISK AND CONSIDERATION
Since the fund is non-diversified and a relatively high percentage of the Fund's
assets may be invested in the securities of a limited number of issuers, some of
which may be in the same economic sector, the Fund's portfolio may be more
sensitive to changes in market value of a single issuer or industry.
F-13
<PAGE>
APPENDIX
SECURITIES RATINGS
This is a description of Standard & Poor's Ratings Group ("S&P") and Moody's
Investors Service, Inc. ("Moody's") commercial paper and bond ratings:
I. Commercial Paper Ratings:
S&P Commercial Paper Ratings - are graded into four categories, ranging from `A'
for the highest quality obligations to `D' for the lowest. `A' Issues assigned
the highest rating are regarded as having the greatest capacity for timely
payment. Issues in this category are delineated with the numbers 1, 2, and 3 to
indicate the relative degree of safety. The A-1 category is described as
follows:
"A-1": This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.
Moody's Commercial Paper Ratings - employs three designations, all judged to be
investment grade, to indicate the relative repayment ability of rated issuers.
The highest designation is as follows:
Prime-1: Issuers rated Prime-1 (or related supporting institutions) have a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:
. Leading market positions in well-established industries.
. High rates of return on funds employed.
. Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
. Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
. Well established access to a range of financial markets and assured sources
of alternate liquidity.
II. Bond Ratings
S&P describes its two highest ratings for corporate debt as follows:
A: AAA - Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
The ratings from AA to CCC may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.
Moody's describes its two highest corporate bond ratings as follows:
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
A-1
<PAGE>
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long term risks appear somewhat
larger than the Aaa securities.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
A-2
<PAGE>
PART C: OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:
(1) Financial Statements included in Part A of this Registration Statement
For MML Equity Fund, MML Managed Bond Fund, MML Money Market Fund and MML Blend
Fund:
Financial Highlights
For MML Equity Index Fund:
Financial highlights for the period May 1, 1997 (commencement of
operations) through December 31, 1997
(2) Financial Statements included in Part B of this Registration Statement
For MML Equity Fund, MML Managed Bond Fund, MML Money Market Fund and MML Blend
Fund:
Report of Independent Accountants
Statements of Assets and Liabilities as of December 31, 1997
Statement of Operations for the year ended December 31, 1997
Statement of Changes in Net Assets for the years ended December 31, 1996
and 1997
Financial Highlights
Schedule of Investments as of December 31, 1997
Notes to Financial Statements
For MML Equity Index Fund:
Report of Independent Accountants
Statements of Assets and Liabilities as of December 31, 1997
Statement of Operations for the period from May 1, 1997 (commencement of
operations) through December 31, 1997
Statement of Changes in Net Assets for the period from May 1, 1997
(commencement of operations) through December 31, 1997
Financial Highlights
Schedule of Investments as of December 31, 1997
Notes to Financial Statements
(B) EXHIBITS:
Exhibit 1: Registrant's Agreement and Declaration of Trust, as restated May
14, 1993, incorporated by reference to Exhibit 1 of
Post-Effective Amendment No. 38 to Registrant's Registration
Statement on Form N-1A (as filed with the SEC via EDGAR)
Exhibit 2: Registrant's By-Laws, as amended and restated August 6, 1993,
incorporated by reference to Exhibit 2 of Post-Effective Amendment
No. 38 to Registrant's Registration Statement on Form N-1A (as
filed with the SEC via EDGAR)
Exhibit 3: Not Applicable.
Exhibit 4: Not Applicable.
Exhibit 5: (a)(1) Investment Management Agreement between Registrant, on
behalf of MML Equity Fund, and Massachusetts Mutual Life Insurance
Company ("MassMutual")/1/.
(a)(2) Investment Management Agreement between Registrant, on
behalf of MML Money Market Fund, and MassMutual/1/.
(a)(3) Investment Management Agreement between Registrant, on
behalf of MML Managed Bond Fund, and MassMutual/1/.
(a)(4) Investment Management Agreement between Registrant, on
behalf of MML Blend Fund, and MassMutual/1/.
(a)(5) Investment Management Agreement between Registrant, on
behalf of MML Equity Index Fund, and MassMutual, incorporated by
reference to Exhibit No. 5(a) of Post-Effective Amendment No. 37 to
Registrant's Registration Statement on Form N-1A (as filed with the
SEC via EDGAR).
(b)(1) Investment Sub-Advisory Agreements regarding the MML Blend
Fund (Equity/Sector)/1/.
(b)(2) Investment Sub-Advisory Agreement regarding the MML Equity
Fund/1/.
(b)(3) Investment Sub-Advisory Agreement for MML Equity Index Fund,
incorporated by reference to Exhibit No. 5(b) of Post-Effective
Amendment No. 37 to Registrant's Registration Statement on Form N-
1A (as filed with the SEC via EDGAR).
Exhibit 6: Not Applicable.
Exhibit 7: Not Applicable.
Exhibit 8: (a) Custodian Agreement between Registrant, on behalf of MML
Equity Fund, and Citibank, N.A. ("Citibank")/1/.
(b) Custodian Agreement between Registrant, on behalf of MML
Money Market Fund and Citibank/1/.
(c) Custodian Agreement between Registrant, on behalf of MML
Managed Bond Fund and Citibank/1/.
(d) Custodian Agreement between Registrant, on behalf of MML
Blend Fund, and Citibank/1/.
(e) Citibank Domestic Custody Services Standards (for MML Equity
Fund, MML Money Market Fund, MML Managed Bond Fund and MML Blend
Fund)/1/.
(f) Form of Custodian Agreement between Registrant, on behalf of
MML Equity Index Fund, and Boston Safe Deposit and Trust Company,
incorporated by reference to Exhibit 8 of Post-Effective Amendment
No. 35 to Registrant's Registration Statement on Form N-1A (as
filed with the SEC via EDGAR).
Exhibit 9: Accounting Services Agreement dated as of April 28, 1997 between
the Trust, on behalf of MML Equity Index Fund, and First Data
Investor Services Group, Inc., incorporated by reference to Exhibit
9 of Post-Effective Amendment No. 37 to Registrant's Registration
Statement on Form N-1A (as filed with the SEC via EDGAR).
Exhibit 10: (a) Opinion of counsel as to the legality of shares being
registered (for MML Equity Fund, MML Money Market Fund, MML Managed
Bond Fund and MML Blend Fund) previously filed with Registrant's
Rule 24F-2 Notice filed electronically on February 27, 1997.
(b) Opinion of counsel as to the legality of shares being
registered (for MML Equity Index Fund) previously filed as Exhibit
10 of Post-Effective Amendment No. 35 to Registrant's Registration
Statement on Form N-1A.
Exhibit 11 (a): Consents of Independent Accounts/2/.
(b): Powers of Attorney for Ronald J. Abdow, Charles J. McCarthy,
John H. Southworth, and Mary Boland, incorporated by
reference to Exhibit 11(b) of Post-Effective Amendment No. 38
to Registrant's Registration Statement on Form N-1A (as filed
with the SEC via EDGAR)
(c): Power of Attorney for Gary E. Wendlandt, incorporated by
reference to Exhibit 11(b) of Post-Effective Amendment No. 36
to Registrant's Registration Statement on Form N-1A (as
filed with the SEC via EDGAR).
Exhibit 12: Not Applicable.
Exhibit 13: Not Applicable.
Exhibit 14: Not Applicable.
Exhibit 15: Not Applicable.
Exhibit 16: Previously filed as Exhibit 16 of Post-Effective Amendment No. 27
to Registrant's Registration Statement on Form N-1A.
Exhibit 18: Not Applicable
Exhibit 27: Financial Data Schedules
/1/ Filed herewith. Exhibit was previously filed in paper format and is being
refiled pursuant to the requirements of Section 102(e) of Regulation S-T.
/2/ Filed herewith.
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ITEM 25: PERSON CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
------------------------------------------------------------
At the date of this Post-Effective Amendment, Registrant did not, directly
or indirectly, control any person.
Registrant was organized by MassMutual primarily for the purpose of
providing a vehicle for the investment of assets of various separate investment
accounts established by MassMutual and life insurance company subsidiaries of
MassMutual. The assets in such separate accounts are, under state law, assets of
the life insurance companies which have established such accounts. Thus, at any
time MassMutual and its life insurance company subsidiaries will own such
outstanding shares of Registrant's series as are purchased with separate account
assets; however, where required to do so, MassMutual and its subsidiaries will
vote such shares only in accordance with instructions received from owners of
the contracts pursuant to which sums are placed in such separate accounts.
The following entities are, or may be deemed to be, controlled by MassMutual
through the direct or indirect ownership of such entities' stock.
1. CM Assurance Company, a Connecticut life, accident, disability and health
insurer, all the stock of which is owned by MassMutual.
2. CM Benefit Insurance Company, a Connecticut life, accident, disability and
health insurer, all the stock of which is owned by MassMutual.
3. C.M. Life Insurance Company, a Connecticut life, accident, disability and
health insurer, all the stock of which is owned by MassMutual.
4. MML Bay State Life Insurance Company, a Connecticut life and health
insurer, all the stock of which is owned by MassMutual.
5. MML Distributors, LLC, formerly known as Connecticut Mutual Financial
Services, LLC, a registered broker-dealer incorporated as a limited
liability company in Connecticut. MassMutual has a 99% ownership interest
and G.R. Phelps & Co. has a 1% ownership interest therein.
6. MassMutual Holding Company, a Delaware holding company, all the stock of
which is owned by MassMutual.
7. MassMutual of Ireland, Limited, incorporated in the Republic of Ireland,
which formerly operated as a group life and health claim office for
MassMutual, all of the stock of which is owned by MassMutual.
8. MML Series Investment Fund, a registered open-end investment company
organized as a Massachusetts business trust, all of the shares of which are
owned by separate accounts of MassMutual and companies controlled by
MassMutual.
9. MassMutual Institutional Funds, a registered open-end investment company
organized as a Massachusetts business trust, all of the shares of which are
owned by MassMutual.
10. G.R. Phelps & Co., Inc., a Connecticut corporation which formerly operated
as a securities broker-dealer, all the stock of which is owned by
MassMutual Holding Company.
11. MML Investors Services, Inc. is a, registered broker-dealer incorporated in
Massachusetts. MassMutual Holding Company owns 86% of the capital stock and
G.R. Phelps & Co., Inc. owns 14% of the capital stock of MML Investors
Services, Inc.
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12. MassMutual Holding MSC, Inc., a Massachusetts corporation, which acts as a
holding company for MassMutual positions in investment entities organized
outside the United States. MassMutual Holding Company owns all the
outstanding shares of MassMutual Holding MSC, Inc.
13. MassMutual Holding Trust I, a Massachusetts business trust, which acts as a
holding company for certain MassMutual investment subsidiaries. MassMutual
Holding Company owns all the outstanding shares of MassMutual Holding
Trust I.
14. MassMutual Holding Trust II, a Massachusetts business trust, which acts as
a holding company for certain MassMutual investment subsidiaries.
MassMutual Holding Company owns all the outstanding shares of MassMutual
Holding Trust II.
15. MassMutual International, Inc., a Delaware corporation that acts as a
holding company of and provides services to international insurance
companies, all of the stock of which is owned by MassMutual Holding
Company.
16. MML Insurance Agency, Inc., a licensed insurance broker incorporated in
Massachusetts, all of the stock of which is owned by MML Investors
Services, Inc.
17. MML Securities Corporation, a "Massachusetts Securities Corporation", all
of the stock of which is owned by MML Investors Services, Inc.
18. DISA Insurance Services Agency of America, Inc. (Alabama), a licensed
insurance broker incorporated in Alabama. MML Insurance Agency, Inc. owns
all the shares of outstanding stock.
19. Diversified Insurance Services Agency of America, Inc. (Hawaii), a licensed
insurance broker incorporated in Hawaii. MML Insurance Agency, Inc. owns
all the shares of outstanding stock.
20. MML Insurance Agency of Mississippi, P.C., a Mississippi professional
corporation that operates as an insurance broker, and is controlled by MML
Insurance Agency, Inc.
21. MML Insurance Agency of Nevada, Inc., a Nevada corporation that operates as
an insurance broker, all of the stock of which is owned by MML Insurance
Agency, Inc.
22. MML Insurance Agency of Ohio, Inc., a subsidiary of MML Insurance Agency,
Inc., is incorporated in the state of Ohio and operates as an insurance
broker. The outstanding capital stock is controlled by MML Insurance
Agency, Inc. through a voting trust agreement.
23. MML Insurance Agency of Texas, Inc., a subsidiary of MML Insurance Agency,
Inc., is incorporated in the state of Texas and operates as an insurance
broker.
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The outstanding capital stock is controlled by MML Insurance Agency, Inc.
through an irrevocable proxy arrangement.
24. MassMutual/Carlson CBO N.V., a Netherlands Antilles corporation which
operates as a collateralized bond obligation fund. MassMutual Holding MSC,
Inc. owns 99% of the outstanding shares.
25. MassMutual Corporate Value Limited, a Cayman Islands corporation that owns
approximately 93% of MassMutual Corporate Value Partners Limited.
MassMutual Holding MSC, Inc. owns 46.19% of the outstanding capital stock
of MassMutual Corporate Value Limited.
26 MassMutual Corporate Value Partners Limited, a Cayman Islands corporation
that operates as a high yield bond fund. MassMutual Corporate Value Limited
holds an approximately 93% ownership interest in this company.
27. 9048-5434 Quebec, Inc., a Quebec corporation, which operates as the owner
of hotel property in Montreal, Quebec, Canada. MassMutual Holding MSC, Inc.
owns all the shares of 9048-5434 Quebec, Inc.
28. 1279342 Ontario Limited, an Ontario corporation, which operates as the
owner of a hotel property in Ontario, Canada. MassMutual Holding MSC, Inc.
owns all the shares of 1279342 Ontario Limited.
29. Antares Leveraged Capital Corp., a Delaware corporation that operates as a
finance company. MassMutual Holding Trust I owns approximately 99% of the
capital stock of Antares.
30. Charter Oak Capital Management, Inc., a Delaware corporation that operates
as an investment manager. MassMutual Holding Trust I owns 80% of the
capital stock of Charter Oak.
31. Cornerstone Real Estate Advisers, Inc., a Massachusetts equity real estate
advisory corporation, all the stock of which is owned by MassMutual Holding
Trust I.
32. DLB Acquisition Corporation ("DLB") is a Delaware corporation, which serves
as a holding company for David L. Babson and Company, Incorporated.
MassMutual Holding Trust I owns 85% of the outstanding capital stock of
DLB.
33. Oppenheimer Acquisition Corporation ("OAC") is a Delaware corporation,
which serves as a holding company for OppenheimerFunds, Inc. MassMutual
Holding Trust I owns 89% of the capital stock of OAC.
34. David L. Babson and Company Incorporated, a registered investment adviser
incorporated in Massachusetts, all of the stock of which is owned by
DLB.
35. Babson Securities Corporation, a registered broker-dealer incorporated in
Massachusetts, all of the stock of which is owned by David L. Babson and
Company, Incorporated.
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36. Babson-Stewart-Ivory International, a Massachusetts general partnership,
which operates as a registered investment adviser. David L. Babson and
Company Incorporated holds a 50% ownership interest in the partnership.
37. Potomac Babson Incorporated, a Massachusetts corporation, is a registered
investment adviser. David L. Babson and Company Incorporated owns 60% of
the outstanding shares of Potomac Babson Incorporated.
38. OppenheimerFunds, Inc., a registered investment adviser incorporated in
Colorado, all of the stock of which is owned by OAC.
39. Centennial Asset Management Corporation, a Delaware corporation that serves
as the investment adviser and general distributor of the Centennial Funds.
OppenheimerFunds, Inc. owns all the stock of Centennial Asset Management
Corporation.
40. HarbourView Asset Management Corporation, a registered investment adviser
incorporated in New York, all the stock of which is owned by
OppenheimerFunds, Inc.
41. MultiSource Service, Inc., a registered broker-dealer incorporated in
Colorado that operates as a clearing broker, 80% of the stock of which is
owned by OppenheimerFunds, Inc.
42. OppenheimerFunds Distributor, Inc., a registered broker-dealer incorporated
in New York, all the stock of which is owned by OppenheimerFunds, Inc.
43. Oppenheimer Partnership Holdings, Inc., a Delaware holding company, all the
stock of which is owned by OppenheimerFunds, Inc.
44. Oppenheimer Real Asset Management, Inc., a commodity trading adviser
incorporated in Delaware, all the stock of which is owned by
OppenheimerFunds, Inc.
45. Shareholder Financial Services, Inc., a transfer agent incorporated in
Colorado, all the stock of which is owned by OppenheimerFunds, Inc.
46. Shareholder Services, Inc., a transfer agent incorporated in Colorado, all
the stock of which is owned by OppenheimerFunds, Inc.
47. Centennial Capital Corporation, a Delaware corporation that formerly
sponsored a unit investment trust. Centennial Asset Management Corporation
owns all the outstanding shares of Centennial Capital Corporation.
48. Cornerstone Office Management, LLC, a Delaware limited liability company
that is 50% owned by Cornerstone Real Estate Advisers, Inc. and 50% owned
by MML Realty Management Corporation.
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49. Cornerstone Suburban Office Investors, LP, a Delaware limited partnership,
which operates as a real estate operating company. Cornerstone Office
Management, LLC holds a 1% general partnership interest in this fund and
MassMutual holds a 99% limited partnership interest.
50. CM Advantage, Inc., a Connecticut corporation that acts as a general
partner in real estate limited partnerships. MassMutual Holding Trust II
owns all of the outstanding stock.
51. CM International, Inc., a Delaware corporation that holds a mortgage pool
and issues collateralized mortgage obligations. MassMutual Holding Trust II
owns all the outstanding stock of CM International, Inc.
52. CM Property Management, Inc., a Connecticut real estate holding company,
all the stock of which is owned by MassMutual Holding Trust II.
53. HYP Management, Inc., a Delaware corporation which is the LLC Manager for
MassMutual High Yield Partners LLC and owns 1.28% of the LLC units of such
entity. MassMutual Holding Trust II owns all the outstanding stock of HYP
Management, Inc.
54. MMHC Investment, Inc., a Delaware corporation which is a passive investor
in MassMutual/Darby CBO LLC, MassMutual High Yield Partners LLC and other
MassMutual investments. MassMutual Holding Trust II owns all the
outstanding stock of MMHC Investment, Inc.
55. MassMutual High Yield Partners LLC, a Delaware limited liability company,
that operates as a high yield bond fund. MassMutual holds 5.28%, MMHC
Investment Inc. holds 35.99%, and HYP Management, Inc. hold 1.28% for a
total of 42.55% of the ownership interest in this company.
56. MML Realty Management Corporation, a former property manager incorporated
in Massachusetts, all the stock of which is owned by MassMutual Holding
Trust II.
57. 505 Waterford Park Limited Partnership, a Delaware limited partnership,
which holds title to an office building in Minneapolis, Minnesota. MML
Realty Management Corporation holds a 1% general partnership interest in
this partnership and MassMutual holds a 99% limited partnership interest.
58. MassMutual/Darby CBO IM Inc., a Delaware corporation which operates as the
LLC Manager of MassMutual/Darby CBO LLC. MMHC Investment, Inc. owns 50% of
the capital stock of this company.
59. MassMutual/Darby CBO LLC, a Delaware limited liability company that
operates as a fund investing in high yield debt securities of U.S. and
emerging market issuers. MassMutual holds 1.79%, MMHC Investment Inc. holds
44.91% and MassMutual High Yield Partners LLC holds 2.39% of the ownership
interest in this company.
60. Urban Properties, Inc., a Delaware real estate holding and development
company, all the stock of which is owned by MassMutual Holding Trust II.
61. Westheimer 335 Suites, Inc., was incorporated in Delaware to serve as a
general partner of the Westheimer 335 Suites Limited Partnership.
MassMutual Holding Trust II owns all the stock of Westheimer 335 Suites,
Inc.
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62. Westheimer 335 Suites Limited Partnership, a Texas limited partnership of
which Westheimer 335 Suites, Inc. is the general partner.
63. MassMutual Internacional (Argentina) S.A., an Argentine corporation, which
operates as a holding company. MassMutual International Inc. owns 99.9% of
the outstanding shares and MassMutual Holding Company owns the remaining
0.1% of the shares.
64. MassMutual Internacional (Chile) S.A., a Chilean corporation, which
operates as a holding company. MassMutual International Inc. owns 99.9% of
the outstanding shares and MassMutual Holding Company owns the remaining
0.1% of the shares.
65. MassMutual International (Bermuda) Ltd., a Bermuda life insurance company,
all of the stock of which is owned by MassMutual International Inc.
66. MassMutual International (Luxembourg) S.A., a Luxembourg corporation, which
operates as an insurance company. MassMutual International Inc. owns 99.9%
of the outstanding shares and MassMutual Holding Company owns the remaining
0.1% of the shares.
67. MassLife Seguros de Vida S.A., a life insurance company incorporated in
Argentina. MassMutual International Inc. owns 99.9% of the outstanding
capital stock of MassLife Seguros de Vida S.A.
68. MassMutual Services, S.A., an Argentine corporation, which operates as a
service company. MassMutual Internacional (Argentina) S.A. owns 99.9% of
the outstanding shares and MassMutual International, Inc. owns 0.1% of the
shares.
69. Mass Seguros de Vida S.A., a life insurance company incorporated in Chile.
MassMutual International (Chile) S.A. owns 33.5% of the outstanding capital
stock of Mass Seguros de Vida S.A.
70. Origen Inversiones S.A., a Chilean corporation which operates as a holding
company. MassMutual Internacional (Chile) S.A. holds a 33.5% ownership
interest in this corporation.
71. Compania Seguros de VidaCorp, S.A. a Chilean insurance company. Origen
Inversiones S.A. owns 99% of the outstanding shares of this company.
72. Oppenheimer Series Fund Inc., a Maryland corporation and a registered
open-end investment company of which MassMutual and its affiliates own a
majority of the outstanding shares issued by the fund.
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73. Panorama Series Fund, Inc., a registered open-end investment company
organized as a Maryland corporation. Shares of the fund are sold only to
MassMutual and its affiliates.
74. The DLB Fund Group, an open-end management investment company advised by
David L. Babson and Company Incorporated. MassMutual owns at least 25% of
several of the series of the DLB Fund Group.
MassMutual acts as the investment adviser to each of the following investment
companies, and as such may be deemed to control them.
1. MML Series Investment Fund, a registered open-end Massachusetts business
trust, all of the shares are owned by separate accounts of MassMutual and
companies controlled by MassMutual.
2. MassMutual Corporate Investors, a registered closed-end Massachusetts
business trust.
3. MassMutual Corporate Value Partners Limited, a Cayman Islands corporation
that operates as a high-yield bond fund. MassMutual Corporate Value Limited
holds an approximately 93% ownership interest in this company.
4. MassMutual High Yield Partners LLC, a Delaware limited liability company,
that operates as a high yield bond fund. MassMutual holds 5.28%, MMHC
Investment Inc. holds 35.99%, and HYP Management, Inc. hold 1.28% for a
total of 42.55% of the ownership interest in this company.
5. MassMutual Institutional Funds, a registered open-end Massachusetts
business trust, all of the shares of which are owned by MassMutual.
6. MassMutual Participation Investors, a registered closed-end Massachusetts
business trust.
7. MassMutual/Carlson CBO N.V., a Netherlands Antilles corporation which
operates as a collateralized bond obligation fund. MassMutual Holding MSC,
Inc. owns 99% of the outstanding shares.
8. MassMutual/Darby CBO, LLC, a Delaware limited liability Company that
operates as a fund investing in high yield debt securities of U.S. and
emerging market issuers. Mass Mutual owns 1.79%, MMHC Investment, Inc. owns
44.91% and Mass Mutual High Yield Partners LLC owns 2.39% of the ownership
interest in this Company.
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ITEM 26: NUMBER OF HOLDERS OF SECURITIES
- -------- -------------------------------
As of the date of this Post-Effective Amendment, the number of holders of record
of each class of securities of the Fund was as follows:
Title of Class Number of Record Holders
-------------- ------------------------
Shares of
Beneficial 2
Interest
ITEM 27: INDEMNIFICATION
- -------- ---------------
Article VIII of Registrant's Agreement and Declaration of Trust provides for the
indemnification of Registrant's Trustees and officers. Registrant undertakes to
apply the indemnification provisions of its Agreement and Declaration of Trust
in a manner consistent with Securities and Exchange Commission Release No. IC-
11330 so long as the interpretation of Section 17(h) and 17(i) of the Investment
Company Act of 1940 set forth in such Release shall remain in effect and be
consistently applied.
Trustees and officers of Registrant are also indemnified by MassMutual pursuant
to its by-laws which apply to subsidiaries, including Registrant. No
indemnification is provided with respect to any liability to any entity which is
registered as an investment company under the Investment Company Act of 1940 or
to the security holders thereof, where the basis for such liability is willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of office.
MassMutual's directors' and officers' liability insurance program, which covers
Registrant's Trustees and officers, consists of two distinct coverages. The
first coverage reimburses MassMutual, subject to specified limitations, for
amounts which MassMutual is legally obligated to pay out under its
indemnification by-law, discussed above. The second coverage directly protects a
Trustee or officer of Registrant against liability shareholder derivative and
similar lawsuits which are indemnifiable under the law. There are, however,
specific acts giving rise to liability which are excluded from this coverage.
For example, no Trustee or officer is insured against personal liability for
libel or slander, acts of deliberate dishonesty, fines or penalties, illegal
personal profit or advantage at the expense of Registrant or its shareholders,
violation of employee benefit plans, regulatory statutes, and similar acts which
would traditionally run contrary to public policy and hence reimbursement by
insurance.
MassMutual's present insurance coverage has an overall limit of $60 million
annually ($15 million of which is underwritten by Continental Casualty Company
$15 million of which is underwritten by
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Executive Risk Indemnity, Inc., $15 million of which is underwritten by Federal
Insurance Co. and $15 million of which is underwritten by Sargasso Mutual
Insurance Company). There is a deductible of $200,000 per claim under the
corporate coverage. There is no deductible for individual trustees or officers.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to trustees, officers and controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Registrant
of expenses incurred or paid by a trustee, officer or controlling person of
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such trustee, officer or controlling person in connection with the
securities being registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
Item 28: Business and Other Connections of the Investment Adviser
- -----------------------------------------------------------------
a. The Investment Adviser
MassMutual is the investment adviser for the Registrant. MassMutual is a mutual
life insurance company organized as a Massachusetts corporation which was
originally chartered in 1851. As a mutual life insurance company, MassMutual has
no shareholders. MassMutual's primary business is ordinary life insurance. It
also provides, directly or through its subsidiaries, a wide range of annuity and
disability products, and pension and pension-related products and services, as
well as investment services to individuals, and corporations and other
institutions, in all 50 states of the United States and the District of
Columbia. MassMutual is also licensed to transact business in Puerto Rico, and
six provinces of Canada, but has no export sales. Effective February 29, 1996,
Connecticut Mutual Life Insurance Company merged into MassMutual.
MassMutual's principal lines of business are (i) the Individual Protection
business and Individual Accumulation business, which provide life insurance
including variable and universal life insurance, annuities and disability income
insurance to individuals and small businesses; (ii) Retirement Services, which
provides group pension investment products and administrative services,
primarily to sponsors of tax qualified retirement plans; and (iii) MassMutual
Investment Management Group, which provides advisory services for MassMutual's
general investment account and separate investment
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accounts, as well as for various closed-end and open-end investment companies
and external institutional clients, through its own staff and those of
Oppenheimer Funds Inc. and David L. Babson and Company, Inc., in which
MassMutual indirectly owns a controlling interest.
The directors and executive vice presidents of MassMutual, their positions and
their other business affiliations and business experience for the past two years
are listed below.
Directors
ROGER G. ACKERMAN, Director, Chairman, Human Resources Committee and Member
Board Affairs Committee
Chairman and Chief Executive Officer (since 1996), President and Chief
Operating Officer (1990-1996), Corning Incorporated (manufacturer of
specialty materials, communication equipment and consumer products), One
Riverfront Plaza, Corning, New York; Director, Dow Corning Corporation
(producer of silicone products), 2200 West Salzburg Road, Midland,
Michigan; The Pittson Company (mining and marketing of coal for electric
utility and steel industries), One Pickwick Plaza, Greenwich,
Connecticut.
JAMES R. BIRLE, Director, and Member, Auditing and Investment Committees
Chairman (since 1997), President (1994-1997) and Founder (since 1994),
Resolute Partners, LLC (private merchant bank), 2 Soundview Drive,
Greenwich, Connecticut; Director (since 1996), IKON Office Solutions
(diversified office products and technology solutions), 825 Duportail Road,
Valley Forge, Pennsylvania; Director: Drexel Industries, Inc., Connecticut
Health and Education Facilities Authority, and Transparency International;
Trustee, Villanova University; Trustee (1995-1997), The Sea Research
Foundation; Director (1991-1996), Connecticut Mutual Life Insurance
Company, 140 Garden Street, Hartford, Connecticut.
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GENE CHAO, Director, Chairman, Auditing Committee and Member, Dividend Policy
Committee
Chairman, President and Chief Executive Officer, Computer Projections, Inc.
(computer graphics), 733 S.W. Vista Avenue, Portland, Oregon; Director
(since 1996), Monowave Corporation, 2171 Boyer Avenue East, Seattle,
Washington; Director (since 1997), National Captioning Institute, 1900
Gallows Road, Vienna, Virginia; Director (1990-1996), Connecticut Mutual
Life Insurance Company, 140 Garden Street, Hartford, Connecticut.
PATRICIA DIAZ DENNIS, Director and Member, Auditing and Human Resources
Committees
Senior Vice President and Assistant General Counsel, SBC Communications
Inc. (telecommunications), 175 East Houston, San Antonio, Texas; Director
(since 1997), Citadel Comunications Corp.; Trustee: Tomas Rivera Policy
Institute, and Radio and Television News Directors Foundation; Director:
National Public Radio, Reading Is Fundamental, and Foundation for Women's
Resources; Trustee (1995-1997), Federal Communications Bar Association
Foundation; Director (1995-1996), Connecticut Mutual Life Insurance
Company, 140 Garden Street, Hartford, Connecticut.
ANTHONY DOWNS, Director and Member, Auditing and Investment Committees
Senior Fellow, The Brookings Institution (non-profit policy research
center), 1775 Massachusetts Avenue, N.W., Washington, D.C.; Director (since
1998), Counselors of Real Estate, 430 N. Michigan Avenue, Chicago,
Illinois; Director: The Pittway Corporation (publications and security
equipment), 200 South Wacker Drive, Suite 700, Chicago, Illinois; National
Housing Partnerships Foundation (non-profit organization to own and manage
rental housing), 1225 Eye Street, N.W., Washington, D.C.; Bedford Property
Investors, Inc. (real estate investment trust), 3658 Mt. Diablo Boulevard,
Lafayette, California; General Growth Properties, Inc. (real estate
investment trust), 215 Keo Way, Des Moines, Iowa; NAACP Legal and
Educational Defense Fund, Inc. (civil rights organization), 99 Hudson
Street, New York, New York; Trustee: Urban Institute (public policy
research organization), 2100 M Street, N.W., Washington, D.C. and Urban
Land Institute (educational and research organization), 625 Indiana Avenue,
N.W., Washington, D.C.
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JAMES L. DUNLAP, Director, Chairman, Dividend Policy Committee and Member, Board
Affairs Committee
Vice Chairman (since 1988), President and Chief Operating Officer (1996-
1998), Ocean Energy Inc. (formerly United Meridian Corporation) (oil
exploration), 1201 Louisiana, Houston, Texas; Senior Vice President (1987-
1996), Texaco, Inc. (producer of petroleum products), 2000 Westchester
Avenue, White Plains, New York.
WILLIAM B. ELLIS, Director and Member, Dividend Policy and Investment Committees
Senior Fellow (since 1995), Yale University School of Forestry and
Environmental Studies, New Haven, Connecticut; Chairman (1983-1995) and
Chief Executive Officer (1983-1993), Northeast Utilities (electric
utility), 107 Selden Street, Berlin, Connecticut; Director, HSB Group, Inc.
(formerly known as The Hartford Steam Boiler Inspection and Insurance
Company) (property and casualty insurer), One State Street, Hartford,
Connecticut; Director (since 1996), Advest Group, Inc. (financial services
holding company), 90 State House Square, Hartford, Connecticut; Director
(since 1995), Catalytica Combustion Systems, Inc.; Director, The National
Museum of National History of the Smithsonian Institution, Washington,
D.C.; Director (1985-1996), Connecticut Mutual Life Insurance Company, 140
Garden Street, Hartford, Connecticut.
ROBERT M. FUREK, Director and Member, Dividend Policy and Auditing Committees
Chairman (since 1997), State Board of Trustees for the Hartford Public
School System, 1 State Street, Suite 2310, Hartford, Connecticut; President
(1994-1996), International Distillers and Vintners, Inc.; President and
Chief Executive Officer (1987-1996), Heublein, Inc. (beverage distributor),
450 Columbus Boulevard, Hartford, Connecticut; Partner (since 1997),
Resolute Partners LLC (private merchant bank), 2 Soundview Drive,
Greenwich, Connecticut; Director, The Dexter Corporation (producer of
specialty chemicals and papers), One Elm Street, Windsor Locks,
Connecticut; Corporator, The Bushnel Memorial, Hartford, Connecticut;
Trustee, Colby College, Mayflower Hill Drive, Waterville, Maine; Director
(1990-1996), Connecticut Mutual Life Insurance Company, 140 Garden Street,
Hartford, Connecticut.
CHARLES K. GIFFORD, Director and Member, Investment and Board Affairs Committees
Chairman and Chief Executive Officer (since 1995), and President (1989-
1996), BankBoston, N.A., Chairman (since 1998 and 1995-1996), Chief
Executive Officer (since 1995), President (1989-1996) and BankBoston
Corporation (bank holding company), 100 Federal Street, Boston,
Massachusetts; Director, Member of Audit and Compensation Committees,
Boston Edison Co. (public utility electric company), 800 Boylston Street,
Boston, Massachusetts.
C-13
<PAGE>
WILLIAM N. GRIGGS, Director and Member, Investment and Human Resources
Committees
Managing Director, Griggs & Santow Inc. (financial consultants), 75 Wall
Street, New York, New York; Director (1990-1997), T/SF Communications, Inc.
(diversified publishing and communications company), Tulsa, Oklahoma.
GEORGE B. HARVEY, Director, and Member, Board Affairs and Dividend Policy
Committees
Retired; Chairman, President and Chief Executive Officer (1983-1996),
Pitney Bowes, Inc. (office machines manufacturer), One Elmcroft Road,
Stamford, Connecticut; Director: Merrill Lynch & Co., Inc. (financial
services holding company), 250 Vesey Street, World Financial Center, North
Tower, New York, New York; The McGraw-Hill Companies, Inc. (multimedia
publishing and information services), 1221 Avenue of the Americas, New
York, New York; Stamford Hospital, Stamford, Connecticut; Pfizer, Inc.
(pharmaceutical and health-care products), 235 East 42nd Street, New York,
New York; Director (1994-1997), The Catalyst; Member, Board of Overseers,
Wharton School of Finance, University of Pennsylvania; Director (1989-
1996), Connecticut Mutual Life Insurance Company, 140 Garden Street,
Hartford, Connecticut
BARBARA B. HAUPTFUHRER, Director and Member, Board Affairs and Investment
Committees
Director and Member, Compensation, Nominating and Audit Committees, The
Vanguard Group of Investment Companies including among others the following
funds: Vanguard/Windsor Fund, Vanguard/Wellington Fund, Vanguard/Morgan
Growth Fund, Vanguard/Wellesley Income Fund, Vanguard/Explorer Fund,
Vanguard Municipal Bond Fund, Vanguard Fixed Income Securities Fund,
Vanguard Index Trust, Vanguard World Fund, Vanguard/Star Fund, Vanguard
Ginnie Mae Fund, Vanguard/Primecap Fund, Vanguard Convertible Securities
Fund, Vanguard Quantitative Fund, Vanguard/Trustees Commingled Equity Fund,
Vanguard/Trustees Commingled Fund-International, Vanguard Money Market
Trust, Vanguard/Windsor II, Vanguard Asset Allocation Fund and Vanguard
Equity Income Fund (principal offices, Drummers Lane, Valley Forge,
Pennsylvania); Director, Chairman of Retirement Benefits Committee and
Pension Fund Investment Review - USA and Canada and Member, Audit, Finance
and Executive Committees, The Great Atlantic & Pacific Tea Company, Inc.
(operator of retail food stores), 2 Paragon Drive, Montvale, New Jersey;
Director, Chairman of Nominating Committee and Member, Compensation
Committee, Knight-Ridder, Inc. (publisher of daily newspapers and operator
of cable television and business information systems), One Herald Plaza,
Miami, Florida; Director and Member, Compensation Committee, Raytheon
Company (electronics manufacturer), 141 Spring Street, Lexington,
Massachusetts; Director and Member, Executive Committee and Chairman, Human
Resources and Independent Directors Committees, IKON Office
C-14
<PAGE>
Solutions (diversified office products and technology solutions), 825
Duportail Road, Valley Forge, Pennsylvania.
SHELDON B. LUBAR, Director and Member, Human Resources and Investment Committees
Chairman, Lubar & Co. Incorporated (investment management and advisory
company), Chairman and Director, The Christiana Companies, Inc. (real
estate development); Director: SLX Energy, Inc. (oil and gas exploration);
Member, Advisory Committee, Venture Capital Fund, L.P. (principal offices,
700 North Water Street, Milwaukee, Wisconsin); Director: Firstar
Corporation (bank holding company), 777 East Wisconsin Avenue, Milwaukee,
Wisconsin; Director (1982-1997), Grey Wolf Drilling Co. (contract oil and
gas drilling), 2000 Post Oak Boulevard, Houston, Texas; Director: Marshall
Erdman and Associates, Inc. (design, engineering, and construction firm),
5117 University Avenue, Madison, Wisconsin; MGIC Investment Corporation
(investment company), MGIC Plaza, 111 E. Kilbourn Avenue, Milwaukee,
Wisconsin; Ameritech, Inc. (regional holding company for telephone
companies), 30 South Wacker Drive, Chicago, Illinois; EVI, Inc., 5 Post Oak
Park, Houston, Texas; Director (since 1997), Jefferies & Co. (financial
services), 11100 Santa Monica Boulevard, Los Angeles, California; Director
(1984-1998), Firstar Bank, 777 East Wisconsin Avenue, Milwaukee Wisconsin.
WILLIAM B. MARX, JR., Director and Member, Dividend Policy and Board Affairs
Committees
Retired; Consultant (1996-1997); Senior Executive Vice President (1996),
Lucent Technologies, Inc. (public telecommunications systems and software),
600 Mountain Road, Murray Hill, New Jersey; Director (since 1996),
California Microwave, Inc., Redwood City, California; Member, National
Board of Directors, Junior Achievement, Colorado Springs, Colorado; Member
(since 1996), Advisory Council, Graduate School of Business, Stanford
University, Stanford, California; Chairman, Executive Committee (since
1996), National Minority Supplier Development Council, Inc., 15 West 39th
Street, New York, New York.
JOHN F. MAYPOLE, Director and Member, Board Affairs and Human Resources
Committees
Managing Partner, Peach State Real Estate Holding Company (real estate
investment company), P.O. Box 1223, Toccoa, Georgia; Consultant to
institutional investors; Co-owner of family businesses (including Maypole
Chevrolet-Geo, Inc. and South Georgia Car Rentals, Inc.); Director (since
1996), Coating Technologies International; Director, Chairman, Audit
Committee and Member, Finance Committee and Executive Committee, Bell
Atlantic Corporation (telecommunications), 1717 Arch Street, Philadelphia,
Pennsylvania; Director (since 1996), TCX International, Inc.; Chairman
(1997) Director (1992-1997).
C-15
<PAGE>
Briggs Industries, Inc. (plumbing fixtures), 4350 W. Cypress Street, Tampa,
Florida; Director (1989-1997), Blodgett Corporation; Director, Chairman,
Compensation Committee and Member, Audit Committee, Dan River, Inc.
(textile manufacturer), 2291 Memorial Drive, Danville, Virginia; Director,
Davies, Turner & Co.; Director, (1987-1996), Igloo Corporation
(portable coolers), 1001 W. Sam Houston Parkway North, Houston, Texas;
Director (1989-1996), Connecticut Mutual Life Insurance Company, 140 Garden
Street, Hartford, Connecticut.
JOHN J. PAJAK, President, Chief Operating Officer, Director and Member, Dividend
Policy and Investment Committees
President, Director and Chief Operating Officer (since 1996), Vice Chairman
and Chief Administrative Officer (1996), Executive Vice President (1987-
1996) of MassMutual; Director, MassMutual Holding Company (wholly-owned
holding company subsidiary of MassMutual); Trustee (since 1996), MassMutual
Holding Trust I (wholly-owned holding company subsidiary of MassMutual
Holding Company); Director (since 1996), MassMutual International Inc.
(wholly-owned subsidiary of MassMutual Holding Company to act as service
provider for international insurance companies); DLB Acquisition
Corporation (holding Company for investment advisers) and Oppenheimer
Acquisition Corporation (parent of OppenheimerFunds Inc., an investment
management company); (principal offices, 1295 State Street, Springfield,
Massachusetts); Trustee, Sisters of Providence Health System (operator of
hospitals), 146 Chestnut Street, Sringfield, Massachusetts.
THOMAS B. WHEELER, Chairman, Chief Executive Officer, Chairman, Investment
Committee and Member, Dividend Policy and Board Affairs Committees
Chairman (since 1996), Chief Executive Officer (since 1988), and President
(1987-1996) of MassMutual; Chairman (since 1996), MassMutual Holding Trust
I (wholly-owned holding company subsidiary of MassMutual Holding Company);
MassMutual International Inc. (wholly-owned subsidiary of MassMutual
Holding Company to act as service provider for international insurance
companies); Chairman and
C-16
<PAGE>
Chief Executive Officer, DLB Acquisition Corporation (holding company for
investment advisers); Chairman and Director, Oppenheimer Acquisition Corp.
(parent of OppenheimerFunds, Inc., an investment management company),
(principal offices, 1295 State Street, Springfield, Massachusetts);
Director, BankBoston N.A. and BankBoston Corporation (bank holding
company), 100 Federal Street, Boston, Massachusetts; Member, Executive
Committee, Massachusetts Capital Resources Company, 545 Boylston Street,
Boston, Massachusetts; Director, Textron, Inc. (diversified manufacturing
company), 40 Westminster Street, Providence, Rhode Island.
ALFRED M. ZEIEN, Director, Chairman, Board Affairs Committee and Member, Human
Resources Committee
Chairman and Chief Executive Officer, The Gillette Company (manufacturer of
personal care products), Prudential Tower Building, Boston, Massachusetts;
Director: Polaroid Corporation (manufacturer of photographic products), 549
Technology Square, Cambridge, Massachusetts; BankBoston Corporation
(bank holding company), 100 Federal Street, Boston, Massachusetts; and
Raytheon Corporation (electronics manufacturer), 141 Spring Street,
Lexington, Massachusetts; Trustee (1984-1997), University Hospital of
Boston, Massachusetts; Trustee, Marine Biology Laboratory and Woods Hole
Oceanographic Institute, Woods Hole, Massachusetts; Director (1981-1996),
Repligen Corporation (biotechnology), One Kendall Square, Cambridge,
Massachusetts.
Executive Vice Presidents
LAWRENCE V. BURKETT, JR., Executive Vice President and General Counsel
Executive Vice President and General Counsel of MassMutual; President,
Chief Executive Officer and Director (since 1996), CM Assurance Company, CM
Benefit Insurance Company, C.M. Life Insurance Company and MML Bay State
Life Insurance Company (wholly-owned insurance company subsidiaries of
MassMutual); Director (since 1996), MassMutual Holding MSC, Inc. and
Trustee (since 1996), MassMutual Holding Trust I and MassMutual Holding
Trust II (wholly-owned holding company subsidiaries of MassMutual Holding
Company); Director (since 1996): MassMutual International Inc. (wholly-
owned subsidiary of MassMutual Holding Company to act as service provider
for international insurance companies); G.R. Phelps, Inc. (wholly-owned
broker-dealer subsidiary of MassMutual Holding Company); CM Advantage
Inc.(wholly-owned subsidiary of MassMutual Holding Trust II to act as
general partner in real estate
C-17
<PAGE>
limited partnerships); Director, MassMutual Holding Company (wholly-owned
holding company subsidiary of MassMutual); (principal offices, 1295 State
Street, Springfield, Massachusetts); Chairman and Director (since 1996),
MML Investors Services, Inc. (wholly-owned broker-dealer subsidiary of
MassMutual Holding Company); Director (since 1997) MML Securities
Corporation (a wholly-owned subsidiary of MML Investors Services, Inc. that
is a "Massachusetts Securities Corporation"); (principal offices, 1414 Main
Street, Springfield, Massachusetts); Director, Cornerstone Real Estate
Advisers, Inc. (wholly-owned real estate investment adviser subsidiary of
MassMutual Holding Company), One Financial Plaza, Suite 1700, Hartford,
Connecticut; Chairman (since 1997), Vice President (since 1996) and
Director, Sargasso Mutual Insurance Co., Ltd., Victoria Hall, Victoria
Street, Hamilton, Bermuda; Director, MassMutual of Ireland, Ltd. (wholly-
owned subsidiary of MassMutual that formerly provided group insurance claim
services), One Earlsfort Centre, Hatch Street, Dublin, Ireland; Director,
MassMutual International (Bermuda) Ltd. (wholly-owned subsidiary of
MassMutual Holding Company that distributes variable insurance products in
overseas markets) (principal offices, 41 Cedar Avenue, Hamilton, Bermuda).
PETER J. DABOUL, Executive Vice President
Executive Vice President (since 1997), Senior Vice President (1990-1997) of
MassMutual, 1295 State Street, Springfield, Massachusetts.
JOHN B. DAVIES, Executive Vice President
Executive Vice President of MassMutual; Director (since 1996), CM Assurance
Company, CM Benefit Insurance Company, C.M. Life Insurance Company and MML
Bay State Life Insurance Company (wholly-owned insurance company
subsidiaries of MassMutual); Director (since 1996), MassMutual Holding MSC,
Inc. and Trustee (since 1996), MassMutual Holding Trust II (wholly-owned
holding company subsidiaries of MassMutual Holding Company) (principal
offices, 1295 State Street, Springfield, Massachusetts); Director:
Cornerstone Real Estate Advisers, Inc. (wholly-owned real estate investment
adviser subsidiary of MassMutual Holding Company), One Financial Plaza,
Suite 1700, Hartford, Connecticut; and Life Underwriter Training Council,
7625 Wisconsin Avenue, Bethesda, Maryland; Director, MML Investors
Services, Inc. (wholly-owned broker-dealer subsidiary of MassMutual Holding
Company); Director and Chairman (1994-1997), MML Insurance Agency, Inc.
(wholly-owned subsidiary of MML Investors Services, Inc.); Director (1994-
1997), MML Insurance Agency of Ohio, Inc. (subsidiary of MML Insurance
Agency, Inc.); Director (1995-1997), MML Insurance Agency of Nevada, Inc.
(subsidiary of MML Insurance Agency, Inc.); Director (1996-1997): MML
Insurance Agency of Mississippi, P.C., DISA Insurance Services of America,
Inc. (Alabama), and Diversified Insurance Services of America, Inc.
(Hawaii) (subsidiaries of MML Insurance Agency, Inc.) (principal offices,
1414 Main Street, Springfield, Massachusetts).
C-18
<PAGE>
DANIEL J. FITZGERALD, Executive Vice President
Executive Vice President (since 1994), Corporate Financial Operations
(1994-1997)of MassMutual; Director (since 1996), President and Chief
Executive Officer (since 1997) MassMutual International Inc. (wholly-owned
subsidiary of MassMutual Holding Company to act as service provider for
international insurance companies) (principal offices, 1295 State Street,
Springfield, Massachusetts); Director, MassMutual of Ireland, Ltd. (wholly-
owned subsidiary of MassMutual that formerly provided group insurance claim
services), One Earlsfort Centre, Hatch Street, Dublin, Ireland.
C-19
<PAGE>
JAMES E. MILLER, Executive Vice President
Executive Vice President (since 1997 and 1987-1996) of MassMutual, 1295
State Street, Springfield, Massachusetts; Senior Vice President (1996-
1997), UniCare Life & Health Insurance Company, Springfield, Massachusetts.
JOHN V. MURPHY, Executive Vice President
Executive Vice President (since 1997) of MassMutual, 1295 State Street,
Springfield, Massachusetts; Executive Vice President, Director and Chief
Operating Officer (1995-1997), David L. Babson and Company Incorporated
(wholly-owned investment advisory subsidiary of DLB Acquisition
Corporation); Chief Operating Officer (1993-1996), Concert Capital
Management, Inc. (wholly-owned investment advisory subsidiary of DLB
Acquisition Corporation), (principal offices, One Memorial Drive,
Cambridge, Massachusetts); Senior Vice President and Director (1995-1997),
Potomac Babson Incorporated (investment advisory subsidiary of David L.
Babson and Company Incorporated), New York, New York; Director
and Senior Vice President (1995-1997), DLB Acquisition Corporation (holding
company for investment advisers); Director (since 1997), Oppenheimer
Acquisition Corporation (parent of OppenheimerFunds Inc., an investment
management company); Trustee (since 1997), MassMutual Institutional Funds
(open-end investment company) (principal offices, 1295 State Street,
Springfield, Massachusetts); Director 1989-1998, Emerald Isle Bancorp and
Hibernia Savings Bank (wholly-owned subsidiary of Emerald Isle Bancorp) 730
Hancock Street, Quincy, Massachusetts.
GARY E. WENDLANDT, Executive Vice President and Chief Investment Officer
Chief Investment Officer and Executive Vice President of MassMutual;
Chairman and Trustee: MassMutual Corporate Investors and MassMutual
Participation Investors (closed-end investment companies); MML Series
Investment Fund (open-end investment company); Chairman, Chief Executive
Officer and Member, Investment Pricing Committee, MassMutual Institutional
Funds (open-end investment company); Advisory Board Member (since 1996),
MassMutual High Yield Partners LLC (high yield bond fund); Chairman (since
1996) and President (since 1997), MassMutual Holding MSC, Inc. and
MassMutual Holding Trust II (wholly-owned holding company subsidiaries of
MassMutual Holding Company); Chairman (since 1996) HYP Management, Inc.
(wholly-owned subsidiary of MassMutual Holding Trust II to act as managing
member of MassMutual High Yield Partners LLC); and MMHC Investment, Inc.
(wholly-owned subsidiary of MassMutual Holding Trust II); President and
Trustee (since 1996), MassMutual Holding Trust I (wholly-owned holding
company subsidiary of MassMutual Holding Company); Vice Chairman and
Director (since 1996), MassMutual International Inc. (wholly-owned
subsidiary of MassMutual Holding Company to act as service provider for
international insurance companies); Director (since 1996), MassMutual
International (Chile) S.A. and CM Advantage Inc. (wholly-owned subsidiary
of MassMutual Holding Trust II to act as general partner in real estate
limited partnerships); President and Director, DLB Acquisition Corporation
(holding company for investment advisers) and Director, Oppenheimer
Acquisition Corporation (parent of OppenheimerFunds Inc., an investment
management company); Chairman, Chief Executive Officer, President and
Director, MassMutual Holding Company (wholly-owned holding company
subsidiary of MassMutual); Chairman and Director, MML Realty Management
Corporation (wholly-owned real estate management subsidiary of MassMutual
Holding Company) (principal offices, 1295 State Street, Springfield,
Massachusetts);
C-20
<PAGE>
Chairman and Member, Executive Auditing and Compensation Committees,
Cornerstone Real Estate Advisers, Inc. (wholly-owned real estate investment
advisory subsidiary of MassMutual Holding Trust I), One Financial Plaza,
Suite 1700, Hartford, Connecticut; Supervisory Director, MassMutual/Carlson
CBO N.V. (collateralized bond fund), 14 John Gorsiraweg, Willemstad,
Curacao, Netherlands Antilles; Director: Merrill Lynch Derivative Products,
Inc., World Financial Center, North Tower, New York, New York; MassMutual
Corporate Value Partners Limited (investor in debt and equity securities)
and MassMutual Corporate Value Limited (parent of MassMutual Corporate
Value Partners Limited) (principal offices, c/o BankAmerica Trust and
Banking Corporation, Box 1092, George Town, Grand Cayman, Cayman Islands,
British West Indies); Mass Seguros de Vida, S.A., Huerfanos No. 770,
Santiago, Chile; President and Director, MassMutual International (Bermuda)
Ltd. (wholly-owned subsidiary of MassMutual Holding Company that
distributes variable insurance products in overseas markets), 41 Cedar
Avenue, Hamilton, Bermuda; Chairman (since 1996), Anatares Leveraged
Capital Corp. (finance company), Chicago, Illinois.
JOSEPH M. ZUBRETSKY, Executive Vice President And Chief Financial Officer
Executive Vice President and Chief Financial Officer (since 1997) of
MassMutual, 1295 State Street, Springfield, Massachusetts; Chief Financial
Officer (1996-1997), Healthsource, Hooksett, New Hampshire; Partner (1990-
1996), Coopers & Lybrand LLP (certified public accountants), Hartford,
Connecticut; Director (since 1997): Antares Leverage Capital Corp. (finance
company), Chicago, Illinois; DLB Acquisition Corporation (holding company
for investment adviser); Oppenheimer Acquisition Corporation (parent of
OppenheimerFunds, Inc., an investment management company); MassMutual
Holding Company (wholly-owned holding company subsidiary of MassMutual);
MassMutual Holding MSC, Inc. (wholly owned holding company subsidiary of
MassMutual Holding Company); MassMutual International, Inc. (wholly-owned
subsidiary of MassMutual Holding Company to act as service provider for
international insurance companies); Trustee (since 1997), MassMutual
Holding Trust I and MassMutual Holding Trust II (wholly-owned holding
company subsidiaries of MassMutual Holding Company) (principal offices,
1295 State Street, Springfield, Massachusetts).
b. The Investment Sub-Advisers
C-21
(i) David L. Babson and Company Incorporated
The directors and executive officers of David L. Babson and Company
Incorporated, their positions and their other business affiliations and business
experience for the past two years are as follows:
<PAGE>
Directors and Executive Officers
HANI K. FINDAKLY, Director
Director (since 1996), David L. Babson and Company Inc., One Memorial Drive,
Cambridge, Massachusetts; President (since 1996), Potomac Babson Inc.
(registered investment adviser), 1290 Avenue of the Americas, New York, New
York; President (1989-1995), Potomac Capital, Inc. (registered investment
adviser), 1290 Avenue of the Americas, New York, New York.
RONALD E. GWOZDZ, Director and Executive Vice President
Director (since 1995), Executive Vice President (since 1996) and Senior Vice
President (1991-1996), David L. Babson and Company Inc., One Memorial Drive,
Cambridge, Massachusetts.
JAMES W. MACALLEN, Director, President and Chief Executive Officer
Director, President and Chief Executive Officer (since 1998) and Executive Vice
President (1996-1998), David L. Babson and Company Inc., One Memorial Drive,
Cambridge, Massachusetts; Senior Vice President (1996), Concert Capital
Management, Inc. (former investment advisory subsidiary of DLB Acquisition
Corporation), One Memorial Drive, Cambridge, Massachusetts; Principal (1994-
1995), Hagler, Mastrovita & Hewitt (investment counsel), 225 Franklin Street,
Boston, Massachusetts.
EDWARD L. MARTIN, Director and Executive Vice President
Director (since 1990), Executive Vice President (since 1995) and Senior Vice
President (1988-1995), David L. Babson and Company Inc., One Memorial Drive,
Cambridge, Massachusetts; Director and Senior Vice President (since 1996),
Potomac Babson Inc. (registered investment adviser), 1290 Avenue of the
Americas, New York, New York.
PETER C. SCHLIEMANN, Director and Executive Vice President
Executive Vice President (since 1992), Senior Vice President (1984-1992) and
Director (since 1982), David L. Babson and Company Inc., One Memorial Drive,
Cambridge, Massachusetts; Director (1996), Concert Capital Management, Inc.
(former investment advisory subsidiary of DLB Acquisition Corporation), One
Memorial Drive, Cambridge, Massachusetts.
FRANK L. TARANTINO, Senior Vice President, Clerk and Chief Operating Officer
Senior Vice President, Clerk and Chief Operating Officer (since 1997), David L.
Babson and Company Inc., One Memorial Drive, Cambridge, Massachusetts;
President (1993-1997), Liberty Securities Corporation (broker-dealer), 600
Atlantic Avenue, Boston, Massachusetts.
PETER C. THOMPSON, Director and Chairman
C-22
<PAGE>
Director (since 1977) and Chairman (since 1998) and President (until 1988),
David L. Babson and Company Inc., One Memorial Drive, Cambridge, Massachusetts.;
Director (1996), Concert Capital Management, Inc. (former investment advisory
subsidiary of DLB Acquisition Corporation), One Memorial Drive, Cambridge,
Massachusetts; Director (since 1996), Potomac Babson Inc. (registered investment
adviser) 1290 Avenue of the Americas, New York, New York.
JONATHAN B. TREAT, Director and Senior Vice President
Director and Senior Vice President (since 1992), David L. Babson and Company
Inc., One Memorial Drive, Cambridge, Massachusetts.
ROLAND W. WHITRIDGE, Director and Senior Vice President
Director (since 1990) and Senior Vice President (since 1992), David L. Babson
and Company Inc., One Memorial Drive, Cambridge, Massachusetts.
(ii) Mellon Equity Associates, LLP ("Mellon Equity")
The trustees and executive officers of Mellon Equity, their positions and their
other business affiliations and business experience for the past two years are
as follows:
WILLIAM KEITH SMITH, TRUSTEE
The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166 (Mutual
Funds) Vice Chairman (January, 1995 - Present). Director (August 1994 -
Present). Access Capital Strategies Corp., Boston, Massachusetts (Investment
Advisers) Director (July 1994 - Present). Shearson Summit Euromanagement, Inc.,
Pittsburgh, Pennsylvania (Mellon Sub Trust) Director, Chairman, CEO, President
(September 1993 -Present). Shearson Summit Europartners, Inc., Pittsburgh,
Pennsylvania (Mellon Sub Trust) Director, Chairman, CEO, President (September
1993 - Present). Shearson Summit Management, Pittsburgh, Pennsylvania (Mellon
Sub Trust) Director, Chairman, CEO, President (September 1993 - Present).
Shearson Summit Partners, Inc., Pittsburgh, Pennsylvania (Mellon Sub Trust)
Director, Chairman, CEO, President (September 1993 - Present). Shearson Venture
Capital, Inc., Pittsburgh, Pennsylvania, (Mellon Sub Trust) Director, Chairman,
CEO, President (September 1993 - Present). The Boston Company, Inc., Boston,
Massachusetts (Financial Services) Director (May 1993 - Present). The Boston
Company Asset Management, Inc., One Boston Place, Boston, Massachusetts 02108
(Investment Adviser) Director (June 1993 - Present). TBC Securities Co., Inc.,
Boston, Massachusetts (Financial Services) Director and President (June 1993 -
Present). Wellington-Medford II Properties, Inc., Boston, Massachusetts (Real
Estate Sub) Director and President (June 1993 - Present). First Boylston
Corporation, Boston, Massachusetts (Real Estate Sub) Director and President
(June 1993 -October 1995). Boston Safe Deposit & Trust Company, One Boston
Place, Boston, Massachusetts 02108 (Banking) Director, Chairman and CEO (May
1993 - Present). Boston Group Holdings, Inc., Boston, Massachusetts (Holding
Company) Director and Chairman (May 1993 - Present). The Boston Company, Inc.,
One Boston Place, Boston, Massachusetts 02108 (Financial Services) Chairman and
CEO (May 1993 - Present). Mellon Europe Limited, London England, (Banking)
Director (December 1992 - Present). Laurel Capital Advisors, LLP, Suite 3435,
One Mellon Bank Center, Pittsburgh, Pennsylvania 15258 (Investment Adviser)
Trustee (December 1991 - Present). Mellon Bond Associates, LLP, Pittsburgh,
Pennsylvania (Investment Adviser) Trustee (December 1991 - Present). Mellon
Global Investing Corp., One Mellon Bank Center, Pittsburgh, Pennsylvania 15258
(Mellon Sub Trust) Director (October 1991 - Present). Mellon Financial Services
Corp. #17, One Executive Drive, Fort Lee, New Jersey 07024 (Mellon Sub Trust)
Director and Chairman (June 1991 - Present). Mellon Accounting Services, Inc.,
Suite 3102, 3 M Mellon Bank Center, Pittsburgh, Pennsylvania 15258 (Mellon Sub
Trust) Director (March 1991 - Present). MGIC-UK Ltd., London England EC2M 4LR
(Investment Adviser) Director (March 1991 - Present). Pareto Partners, London,
England (Investment Adviser) Partner Rep. (November 1990 - Present). Mellon
Capital Management Corp., 595 Market Street, San Francisco, California 94105
(Investment Adviser) Director (December 1987 - Present). Franklin Portfolio
Associates Trust, One Post Office Square, Boston, Massachusetts 02109
(Investment Adviser) Trustee (December 1987 - Present). Mellon Financial
Company, One Mellon Bank Center, Pittsburgh, Pennsylvania 15258 (Mellon Sub
Debt) Director and Chairman (August 1987 - Present). Mellon Bank Corporation,
One Mellon Bank Center, Pittsburgh, Pennsylvania 15258 (Banking) Director and
Vice Chairman (July 1987 -Present). Mellon Bank, N.A., One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258 (Banking) Director and Vice Chairman (July 1987 -
Present).
CHRISTOPHER MARK CONDRON, TRUSTEE AND CHAIRMAN
Certus Asset Advisors Corporation, One Bush Street, San Francisco, California
94104 (Investment Adviser) Director (1995 - Present). Access Capital Strategies
Corporation, Boston, Massachusetts (Investment Adviser) Director (1995 -
Present). Mellon Capital Management Corporation, 545 Market Street, San
Francisco, California 94105 (Investment Adviser) Director (1995 - Present).
Mellon Bank, N.A., One Mellon Bank Center, Pittsburgh, Pennsylvania 15256
(Banking) Vice Chairman (1994 - Present). The Boston Company Asset Mgmt. Inc.,
One Boston Place, Boston, Massachusetts 02108 (Investment Adviser) Chairman
Director (1995 - Present). Franklin Portfolio Associates Trust, Suite 3360, One
Post Office Square, Boston, Massachusetts 02109 (Investment Adviser) Trustee
(1995 - Present). The Boston Company, Inc., One Boston Place, Boston,
Massachusetts 02108 (Financial Services) Director (1993 - Present). Boston Safe
Deposit & Trust Company, One Boston Place, Boston, Massachusetts 02108 (Banking)
President (1989 - Present). Laurel Capital Advisors, LLP, Pittsburgh,
Pennsylvania (Investment Adviser) Trustee (1993 - Present). Pareto Partners,
London, England (Investment Adviser) Partner Rep. (March 1991 - Present). Mellon
Bond Associates, LLP, Suite 4135, One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258 (investment adviser) Trustee (1995 - Present). Mellon Bank
Corporation, One Mellon Bank Center, Pittsburgh, Pennsylvania 15258 (banking)
Vice Chairman (1994 - Present).
RONALD PHILIP O'HANLEY, TRUSTEE AND CHAIRMAN
Certus Asset Advisers Corporation, One Bush Street, San Francisco, California
94104 (investment Adviser) Director (February 1997 - Present). Mellon Capital
Management Corporation, 545 Market Street, San Francisco, California 94195
(investment adviser) Director (February 1997 - Present). The Boston Company
Asset Management Inc., One Boston Place, Boston, Massachusetts 02108 (investment
adviser) Director (February 1997 - Present). Boston Safe Advisors, Inc., Boston,
Massachusetts (investment adviser) Director (February 1997 - Present).
Mellon-France Corporation, Pittsburgh, Pennsylvania (investment Adviser)
Director (March 1997 - Present). Franklin Portfolio Holdings, Inc., Boston,
Massachusetts (holding company) Director (March 1997 - Present). Laurel Capital
Advisors, LLP, Pittsburgh, Pennsylvania (investment adviser) Trustee (March
1997 - Present). McKinsey & Company, Inc., Boston, Massachusetts (consulting)
Partner (1986 - 1997).
JAMES MILTON GOCKLEY, TRUSTEE AND ASSISTANT GENERAL COUNSEL
Dreyfus Financial Services Corp., New York, New York (mutual funds) Vice
President (September 1996 - Present). Franklin Portfolio Associates Trust, Suite
3360, One Post Office Square, Boston, Massachusetts 02109 (investment adviser)
Vice President and Chief Legal Officer (November 1995 - Present). Mellon
Securities Trust Company, New York, New York (trust company) Vice President
(September 1995 - Present). Dreyfus Investment Services Corporation, Pittsburgh,
Pennsylvania (brokerage services) Vice President (August 1995 - Present). Laurel
Capital Advisers, LLP, Pittsburgh, Pennsylvania (investment adviser) Vice
President (August 1995 - Present). Boston Safe Deposit and Trust Company, One
Boston Place, Boston, Massachusetts 02108 (financial sercies) General Counsel
(August 1995 - Present). Mellon Accounting Services, Inc. Suite 3102, 3 Mellon
Bank Center, Pittsburgh, Pennsylvania 15258 (Mellon Trust subsidiary) Vice
President (August 1995 - Present). Mellon Bond Associates, LLP, Pittsburgh,
Pennsylvania (Mellon Trust subsidiary) Trustee and Vice President (1995 -
Present). Mellon Capital Management Corporation, 545 Market Street, San
Francisco, California 94105 (investment adviser) Vice President (August 1995 -
Present). Mellon-France Corporation Pittsburgh, Pennsylvania (investment
adviser) Vice President (August 1995 - Present). Mellon Bank Corporation, One
Mellon Bank Center, Pitsburgh, Pennsylvania 15258 (bank holding company)
Assistant General Counsel (October 1992 - Present). Mellon Bank, N.A., One
Mellon Bank Center, Pittsburgh, Pennsylvania 15258 (banking) Assistant Secretary
(April 1990 - Present).
EXECUTIVE OFFICERS:
WILLIAM PAUL RYDELL, TRUSTEE, PRESIDENT AND CHIEF EXECUTIVE OFFICER
JOAN ANTONIAZZI GREEN, TREASURER
Mellon Bond Associates, LLP, Pittsburgh, Pennsylvania (investment adviser)
Treasurer (October 1996 - Present). Mellon Capital Management Corporation, 545
Market Street, San Francisco, California 94195 (investment adviser) Treasurer
(August 1994 - Present). Mellon Securities Trust Company, New York, New York
(trust company) Assistant Treasurer (March 1996 - Present). Mellon Bank, N.A.,
One Mellon Bank Center, Pittsburgh, Pennsylvania 15258 (banking) Finance (May
1984 - Present). Shearson Summit Management Inc., Pittsburgh, Pennsylvania
(Mellon Sub Trust) Director, VP and Treasurer (September 1993 - Present).
Shearson Summit Partners Inc., Pittsburgh, Pennsylvania (Mellon Sub Trust)
Director, VP and Treasurer, Pittsburgh, Pennsylvania (Mellon Sub Trust) Director
VP and Treasurer (September 1993 -Present). Shearson Venture Capital Inc.,
Pittsburgh, Pennsylvania (Mellon Sub Trust) Director, VP and Treasurer
(September 1993 -Present). Laurel Capital Advisors, LLP, One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258 (Investment Adviser) Treasurer (September 1993 -
Present). Mellon Securities Trust Company, 120 Broadway, New York 10271 (Mellon
Sub Trust) Treasurer (July 1993 - Present).
ROBERT ALEXANDER WILK, SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER
JOHN ROBERT O'TOOLE, SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER
STEVEN ANTHONY FALCI, SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER
RONALD PAUL GALA, SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER
JOHN WRAY KELLER, DIRECTOR OF EQUITY TRADING
C-23
<PAGE>
ITEM 29: PRINCIPAL UNDERWRITERS
- -------- ----------------------
Not Applicable.
ITEM 30: LOCATION OF ACCOUNTS AND RECORDS
- -------- --------------------------------
(Declaration of Trust and Bylaws)
MML Series Investment Fund
1295 State Street
Springfield, Massachusetts 01111
(With respect to its services as Advisor)
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
(With respect to its services as Sub-Advisor)
David L. Babson and Company, Incorporated
One Memorial Drive
Cambridge, Massachusetts 02142
(With respect to its services as Sub-Advisor)
Mellon Equity Associates, LLP
500 Grant Street
Suite 3700
Pittsburgh, Pennsylvania 15258
(With respect to its services as Custodian)
Citibank, N.A.
111 Wall Street
New York, New York 10005
(With respect to its services as
custodian for MML Equity Index Fund)
Boston Safe Deposit and Trust Company
One Boston Place
Boston, Massachusetts 02108
(With respect to its services provided to
MML Equity Index Fund)
First Data Investors Services Group, Inc.
4400 Computer Drive
Westborough, Massachusetts 01481
(With respect to its service as Counsel)
Ropes & Gray
One International Place
Boston, Massachusetts
ITEM 31: MANAGEMENT SERVICES
- -------- -------------------
Not Applicable.
- ---------------
ITEM 32: UNDERTAKINGS
- -------- ------------
Not Applicable
C-24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, Registrant certifies that it has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Springfield
and in the Commonwealth of Massachusetts on the 28th day of April, 1998. The
Registrant certifies that this Post-Effective Amendment meets the requirement
for effectiveness pursuant to Rule 485(b) under the Securities Act of 1933.
MML SERIES INVESTMENT FUND
By: /s/ Stuart H. Reese
---------------------------------------------
Stuart H. Reese
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacities indicated and on this 28th day of March, 1998.
SIGNATURE TITLE
--------- -----
* Chairman & Trustee
--------------------------
Gary E. Wendlandt
/s/ Richard G. Dooley Trustee
--------------------------
Richard G. Dooley
* Trustee
---------------------------
Mary E. Boland
* Trustee
---------------------------
Ronald J. Abdow
Trustee
---------------------------
F. William Marshall, Jr.
* Trustee
---------------------------
Charles J. McCarthy
* Trustee
---------------------------
John H. Southworth
/s/ Stuart H. Reese President
---------------------------
Stuart H. Reese
/s/ Raymond B. Woolson Treasurer
---------------------------- (Principal Financial Officer)
Raymond B. Woolson
/s/ Mark B. Ackerman Comptroller
----------------------------
Mark B. Ackerman
*By:/s/ Stephen L. Kuhn
-------------------
Stephen L. Kuhn
Attorney-in-Fact
NOTICE
THE NAME MML SERIES INVESTMENT FUND IS THE DESIGNATION OF THE TRUSTEES UNDER AN
AGREEMENT AND DECLARATION OF TRUST DATED DECEMBER 19, 1984, AS AMENDED FROM TIME
TO TIME. THE OBLIGATIONS OF MML SERIES INVESTMENT FUND ARE NOT PERSONALLY
BINDING UPON, NOR SHALL RESORT BE HAD TO THE PROPERTY OF, ANY OF THE TRUSTEES,
SHAREHOLDERS, OFFICERS, EMPLOYEES OR AGENTS OF MML SERIES INVESTMENT FUND, BUT
ONLY THE PROPERTY OF THE RELEVANT SERIES OF MML SERIES INVESTMENT FUND SHALL BE
BOUND.
C-25
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
TITLE OF EXHIBITS EXHIBIT NO.
- ----------------- -----------
<S> <C>
Investment Management Agreement for MML Equity Fund 5(a)(1)
Investment Management Agreement for MML Money Market Fund 5(a)(2)
Investment Management Agreement for MML Managed Bond Fund 5(a)(3)
Investment Management Agreement for MML Blend Fund 5(a)(4)
Investment Sub-Advisory Agreement Regarding the MML
Blend Fund (Equity Sector) 5(b)(1)
Investment Sub-Advisory Agreement Regarding the MML
Equity Fund 5(b)(2)
Custodian Agreement between Citibank, N.A. and MML
Equity Fund 8(a)
Custodian Agreement between Citibank, N.A. and MML
Money Market Fund 8(b)
Custodian Agreement between Citibank, N.A. and MML
Managed Bond Fund 8(c)
Custodian Agreement between Citibank, N.A. and MML
Blend Fund 8(d)
Citibank Domestic Custody Service Standards (for MML
Equity Fund, MML Money Market Fund, MML Managed Bond
Fund and MML Blend Fund) 8(e)
Consent of Independent Accountants 11(a)
Financial Data Schedules 27
</TABLE>
C-26
<PAGE>
EXHIBIT 5 (a)
INVESTMENT MANAGEMENT AGREEMENTS
<PAGE>
Exhibit 5(a)(1)
INVESTMENT MANAGEMENT AGREEMENT
This INVESTMENT MANAGEMENT AGREEMENT (the "Agreement"), dated this April
16, 1993 by and between MML Series Investment Fund (the "Trust") on behalf of
MML Equity Fund (the "Fund") and Massachusetts Mutual Life Insurance Company
(the "Adviser").
WHEREAS, the Trust, on behalf of the Fund, and the Adviser entered into an
Investment Management Agreement (the "Management Agreement"), dated April 26,
1985 whereby the Adviser will (1) perform certain investment management services
for the Fund, (2) perform administrative functions relating to the Fund, and (3)
assume certain expenses of the Fund;
WHEREAS, the Trust, on behalf of the Fund, and the Adviser wish to enter
into a new agreement, substantially identical to the Management Agreement in all
respects except that the Agreement will contain a new Section 11 not contained
in the Management Agreement. The new Section 11 would provide that the Adviser
could enter into sub-advisory agreements with such persons and under such terms
as approved by the Trust's Board of Trustees and its shareholders.
NOW, THEREFORE, in consideration of the covenants and mutual promises of
the parties made to each other, it is hereby covenanted and agreed as follows:
1. Investment Management Services to be Rendered to the Fund. The Fund
---------------------------------------------------------
hereby engages the Adviser to act as investment adviser for and to manage the
investment and reinvestment of the assets of the Fund, subject to such general
or specific instructions as may be given by the Board of Trustees of the Trust.
The Adviser hereby agrees, at its own expense, to render the services and to
assume the obligations of investment manager.
2. Administrative Services to be Provided and Expenses to be Assumed by the
------------------------------------------------------------------------
Advisor. Until the termination of the employment of the Adviser as investment
- -------
manager for the Fund, the Adviser will provide, or provide for, in its offices
all services required for the administration of the Trust and the Fund, and will
assume all expenses of the Trust and the Fund other than those expenses referred
to in the following paragraph.
The adviser shall not be obligated to pay and the Fund or the Trust shall pay:
(1) taxes and corporate fees payable to governmental agencies; (2) brokerage
commissions (which may be higher than other brokers would charge if paid to a
broker which provides brokerage and research services to the Adviser for use
in providing investment advice and management to the Fund and other accounts
over which the Adviser exercises investment discretion) and other capital
items payable in connection with the purchase or sale of the Fund's
investment; (3) interest on account of any borrowings by the Fund;
2
<PAGE>
(4) fees and expenses of the Trust's Trustees who are not interested persons
(as defined in the Investment Company Act of 1940) of the Adviser or of the
Trust; and (5) fees payable to the Trust's certified independent public
accountants. The words "brokerage and research services" shall have the
meaning given in the Securities Exchange Act of 1934 and the Rules and
Regulations thereunder.
In placing portfolio transactions for the Fund, the Adviser will follow such
practices as may from time to time be set forth in the Trust's most recent
prospectus or specified by its Board of Trustees.
3. Compensation to be Paid by the Fund to the Adviser. For the services
--------------------------------------------------
rendered hereunder, the Fund shall pay to the Adviser as of the last day of each
calendar quarter a fee at the annual rate of:
0.50% of the first $100 million of average daily net asset value of the
Fund,
0.45% of the next $200 million of average daily net asset value,
0.40% of the next $200 million of average daily net asset value, and
0.35% of the average daily net asset value over $500 million,
determined as of the close of the New York Stock Exchange on each day the
Exchange is open for trading.
4. Services of the Adviser to the Trust and the Fund Not Exclusive. The
---------------------------------------------------------------
services of the Adviser to the Trust and the Fund under this agreement are not
to be deemed exclusive and the Adviser shall be free to render similar services
to others.
5. Use of Name by the Trust and the Fund. The Trust and the Fund recognize
-------------------------------------
the Adviser's control of the initials "MML" and agrees that its right to use
these initials is non-exclusive and can be terminated by the Adviser at any
time. The use of such initials will automatically be terminated if at any time
the Adviser or a wholly-owned subsidiary of the Adviser ceases to be investment
manager for the Fund. If, at any time, the use of the initials "MML" is
terminated, the continuance of this agreement will be submitted to shareholders
of the Fund at a meeting specifically called for that purpose.
6. Interested and Affiliated Persons. It is understood that members of the
---------------------------------
Board of Trustees, officers, employees or agents of the Trust or the Fund may
also be directors, officers, employees or agents of the Adviser, and that the
Adviser, its directors, officers, employees or agents maybe interested in the
Fund as shareholders or otherwise.
3
<PAGE>
7. Records and Confidentiality. All records pertaining to the operation
---------------------------
and administration of the Trust and the Fund (whether prepared by the Adviser or
supplied to the Adviser by the Trust or the Fund) are the property and subject
to the control of the Trust. In the event of the termination of this agreement,
all such records in the possession of the Adviser shall be promptly turned over
to the Trust free from any claim or retention of rights. All such records shall
be deemed to be confidential in nature and the Adviser shall not disclose or use
any records or information obtained pursuant to this agreement in any manner
whatsoever except as expressly authorized by the Trust or as required by federal
or state regulatory authorities. The Adviser shall submit to all regulatory and
administrative bodies having jurisdiction over the operations of the Adviser or
the Trust, present or future, any information, reports or other material
obtained pursuant to this agreement which any such body may request or require
pursuant to applicable laws or regulations.
8. Liability Regarding Investment Management. In the absence of willful
-----------------------------------------
misfeasance, bad faith or gross negligence in the performance of its obligations
and duties under this agreement, or of reckless disregard of such obligations
and duties, neither the Adviser nor any of its officers, directors, employees or
agents shall be subject to liability for any act or omission in the course of,
or connected with, rendering services or performing its obligations hereunder.
9. Termination and Amendment. This agreement is effective as of April 30,
--------------------------
1993 and will continue in effect form year to year after the date hereof as long
as it is specifically approved at least annually by vote of the Board of
Trustees of the Trust including the vote of a majority of such Trustees who are
not interested persons (as defined in the he Investment Company Act of 1940) of
the Adviser or of the Fund; provided, however, that (1) this agreement may at
any time be terminated by the Trust on 60 days' written notice to the Adviser
without the payment of any penalty either by vote of the Board of Trustees of
the Trust or by the vote of a majority of the outstanding shares of the Fund (as
defined in the Investment Company Act of 1940); (2) this agreement shall
immediately terminate in the he event of its assignment (within the meaning of
the Investment Company Act of 1940); and (3) this agreement may be terminated by
the Adviser on 60 days' written notice to the Trust without the payment of any
penalty. Any notice under this agreement shall be given in writing, addressed
and delivered, or mailed postpaid, to the other party at the principal office of
such party.
4
<PAGE>
This agreement may be amended at any time by mutual consent of the parties,
provided that such consent on the part of the Fund shall have been approved at a
meeting by the vote of a majority of the outstanding shares of the Fund any by
the vote of a majority of the Trustees of the Trust who are not interested
persons of the Trust or interested persons of the Adviser.
10. Obligation of the Trust. A copy of the Agreement and Declaration of
-----------------------
Trust of the Trust is on file with the Secretary of the Commonwealth of
Massachusetts, and notice is hereby given that this agreement is executed on
behalf of the Trustees as Trustees of the Trust and not individually, and that
the obligations of this agreement are not binding upon any of the Trustees or
shareholders individually, but are binding only upon the assets and property of
the Trust.
11. Sub-Advisory Agreements. The Adviser may enter into sub-advisory
-----------------------
agreements with persons ("Sub-Advisers") pursuant to which the Adviser delegates
any or all of its functions hereunder to one or more Sub-Advisers provided that
a majority of the Trust's Board of Trustees, that are not interested persons of
the Trust or the Adviser; approve the agreement and provided further, that a
majority of the outstanding voting shares of the Fund must also approve the
agreement. The Adviser shall pay all compensation of any such Sub-Advisers and
will have the right to terminate the services of any Sub-Adviser at any time on
no more than 60 days' notice, subject to the approval of the Board of Trustees,
and thereupon shall at such time assume the responsibilities if such Sub-Adviser
unless and until a successor Sub-Adviser is selected.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed on the day and year first above written.
MML SERIES INVESTMENT FUND
on behalf of MML Equity Fund
By:
---------------------------------
Its:
--------------------------------
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By:
---------------------------------
Its:
--------------------------------
5
<PAGE>
Exhibit 5(a)(2)
INVESTMENT MANAGEMENT AGREEMENT
This INVESTMENT MANAGEMENT AGREEMENT (the "Agreement"), dated this April
16, 1993 by and between MML Series Investment Fund (the "Trust") on behalf of
MML Money Market Fund (the "Fund") and Massachusetts Mutual Life Insurance
Company (the "Adviser").
WHEREAS, the Trust, on behalf of the Fund, and the Adviser entered into an
Investment Management Agreement (the "Management Agreement"), dated April 26,
1985 whereby the Adviser will (1) perform certain investment management services
for the Fund, (2) perform administrative functions relating to the Fund, and (3)
assume certain expenses of the Fund;
WHEREAS, the Trust, on behalf of the Fund, and the Adviser wish to enter
into a new agreement, substantially identical to the Management Agreement in all
respects except that the Agreement will contain a new Section 11 not contained
in the Management Agreement. The new Section 11 would provide that the Adviser
could enter into sub-advisory agreements with such persons and under such terms
as approved by the Trust's Board of Trustees and its shareholders.
NOW, THEREFORE, in consideration of the covenants and mutual promises of
the parties made to each other, it is hereby covenanted and agreed as follows:
1. Investment Management Services to be Rendered to the Fund. The Fund
----------------------------------------------------------
hereby engages the Adviser to act as investment adviser for and to manage the
investment and reinvestment of the assets of the Fund, subject to such general
or specific instructions as may be given by the Board of Trustees of the Trust.
The Adviser hereby agrees, at its own expense, to render the services and to
assume the obligations of investment manager.
2. Administrative Services to be Provided and Expenses to be Assumed by the
------------------------------------------------------------------------
Advisor. Until the termination of the employment of the Adviser as investment
- --------
manager for the Fund, the Adviser will provide, or provide for, in its offices
all services required for the administration of the Trust and the Fund, and will
assume all expenses of the Trust and the Fund other than those expenses referred
to in the following paragraph.
The adviser shall not be obligated to pay and the Fund or the Trust shall pay:
(1) taxes and corporate fees payable to governmental agencies; (2) brokerage
commissions (which may be higher than other brokers would charge if paid to a
broker which provides brokerage and research services to the Adviser for use
in providing investment advice and management to the Fund and other accounts
over which the Adviser exercises investment discretion) and other capital
items payable in connection with the purchase or sale of the Fund's
investment; (3) interest on account of any borrowings by the Fund;
6
<PAGE>
(4) fees and expenses of the Trust's Trustees who are not interested persons
(as defined in the Investment Company Act of 1940) of the Adviser or of the
Trust; and (5) fees payable to the Trust's certified independent public
accountants. The words "brokerage and research services" shall have the
meaning given in the Securities Exchange Act of 1934 and the Rules and
Regulations thereunder.
In placing portfolio transactions for the Fund, the Adviser will follow such
practices as may from time to time be set forth in the Trust's most recent
prospectus or specified by its Board of Trustees.
3. Compensation to be Paid by the Fund to the Adviser. For the services
---------------------------------------------------
rendered hereunder, the Fund shall pay to the Adviser as of the last day of each
calendar quarter a fee at the annual rate of:
0.50% of the first $100 million of average daily net asset value of the
Fund,
0.45% of the next $200 million of average daily net asset value,
0.40% of the next $200 million of average daily net asset value, and
0.35% of the average daily net asset value over $500 million,
determined as of the close of the New York Stock Exchange on each day the
Exchange is open for trading.
4. Services of the Adviser to the Trust and the Fund Not Exclusive. The
----------------------------------------------------------------
services of the Adviser to the Trust and the Fund under this agreement are not
to be deemed exclusive and the Adviser shall be free to render similar services
to others.
5. Use of Name by the Trust and the Fund. The Trust and the Fund recognize
--------------------------------------
the Adviser's control of the initials "MML" and agrees that its right to use
these initials is non-exclusive and can be terminated by the Adviser at any
time. The use of such initials will automatically be terminated if at any time
the Adviser or a wholly-owned subsidiary of the Adviser ceases to be investment
manager for the Fund. If, at any time, the use of the initials "MML" is
terminated, the continuance of this agreement will be submitted to shareholders
of the Fund at a meeting specifically called for that purpose.
6. Interested and Affiliated Persons. It is understood that members of the
----------------------------------
Board of Trustees, officers, employees or agents of the Trust or the Fund may
also be directors, officers, employees or agents of the Adviser, and that the
Adviser, its directors, officers, employees or agents maybe interested in the
Fund as shareholders or otherwise.
7
<PAGE>
7. Records and Confidentiality. All records pertaining to the operation
----------------------------
and administration of the Trust and the Fund (whether prepared by the Adviser or
supplied to the Adviser by the Trust or the Fund) are the property and subject
to the control of the Trust. In the event of the termination of this agreement,
all such records in the possession of the Adviser shall be promptly turned over
to the Trust free from any claim or retention of rights. All such records shall
be deemed to be confidential in nature and the Adviser shall not disclose or use
any records or information obtained pursuant to this agreement in any manner
whatsoever except as expressly authorized by the Trust or as required by federal
or state regulatory authorities. The Adviser shall submit to all regulatory and
administrative bodies having jurisdiction over the operations of the Adviser or
the Trust, present or future, any information, reports or other material
obtained pursuant to this agreement which any such body may request or require
pursuant to applicable laws or regulations.
8. Liability Regarding Investment Management. In the absence of willful
------------------------------------------
misfeasance, bad faith or gross negligence in the performance of its obligations
and duties under this agreement, or of reckless disregard of such obligations
and duties, neither the Adviser nor any of its officers, directors, employees or
agents shall be subject to liability for any act or omission in the course of,
or connected with, rendering services or performing its obligations hereunder.
9. Termination and Amendment. This agreement is effective as of April 30,
--------------------------
1993 and will continue in effect form year to year after the date hereof as long
as it is specifically approved at least annually by vote of the Board of
Trustees of the Trust including the vote of a majority of such Trustees who are
not interested persons (as defined in the Investment Company Act of 1940) of the
Adviser or of the Fund; provided, however, that (1) this agreement may at any
time be terminated by the Trust on 60 days' written notice to the Adviser
without the payment of any penalty either by vote of the Board of Trustees of
the Trust or by the vote of a majority of the outstanding shares of the Fund (as
defined in the Investment Company Act of 1940); (2) this agreement shall
immediately terminate in the he event of its assignment (within the meaning of
the Investment Company Act of 1940); and (3) this agreement may be terminated by
the Adviser on 60 days' written notice to the Trust without the payment of any
penalty. Any notice under this agreement shall be given in writing, addressed
and delivered, or mailed postpaid, to the other party at the principal office of
such party.
This agreement may be amended at any time by mutual consent of the parties,
provided that such consent on the part of the Fund shall have been approved at a
meeting by the vote of a majority of the outstanding shares of the Fund any by
the vote of a majority of the Trustees of the Trust who are not interested
persons of the Trust or interested persons of the Adviser.
8
<PAGE>
10. Obligation of the Trust. A copy of the Agreement and Declaration of
------------------------
Trust of the Trust is on file with the Secretary of the Commonwealth of
Massachusetts, and notice is hereby given that this agreement is executed on
behalf of the Trustees as Trustees of the Trust and not individually, and that
the obligations of this agreement are not binding upon any of the Trustees or
shareholders individually, but are binding only upon the assets and property of
the Trust.
11. Sub-Advisory Agreements. The Adviser may enter into sub-advisory
------------------------
agreements with persons ("Sub-Advisers") pursuant to which the Adviser delegates
any or all of its functions hereunder to one or more Sub-Advisers provided that
a majority of the Trust's Board of Trustees, that are not interested persons of
the Trust or the Adviser; approve the agreement and provided further, that a
majority of the outstanding voting shares of the Fund must also approve the
agreement. The Adviser shall pay all compensation of any such Sub-Advisers and
will have the right to terminate the services of any Sub-Adviser at any time on
no more than 60 days' notice, subject to the approval of the Board of Trustees,
and thereupon shall at such time assume the responsibilities if such Sub-Adviser
unless and until a successor Sub-Adviser is selected.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed on the day and year first above written.
MML SERIES INVESTMENT FUND
on behalf of MML Money Market Fund
By:
-----------------------------------
Its:
----------------------------------
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By:
-----------------------------------
Its:
----------------------------------
9
<PAGE>
Exhibit 5(a)(3)
INVESTMENT MANAGEMENT AGREEMENT
This INVESTMENT MANAGEMENT AGREEMENT (the "Agreement"), dated this April
16, 1993 by and between MML Series Investment Fund (the "Trust") on behalf of
MML Managed Bond Fund (the "Fund") and Massachusetts Mutual Life Insurance
Company (the "Adviser").
WHEREAS, the Trust, on behalf of the Fund, and the Adviser entered into an
Investment Management Agreement (the "Management Agreement"), dated April 26,
1985 whereby the Adviser will (1) perform certain investment management services
for the Fund, (2) perform administrative functions relating to the Fund, and (3)
assume certain expenses of the Fund.
WHEREAS, the Trust, on behalf of the Fund, and the Adviser wish to enter
into a new agreement, substantially identical to the Management Agreement in all
respects except that the Agreement will contain a new Section 11 not contained
in the Management Agreement. The new Section 11 would provide that the Adviser
could enter into sub-advisory agreements with such persons and under such terms
as approved by the Trust's Board of Trustees and its shareholders.
NOW, THEREFORE, in consideration of the covenants and mutual promises of
the parties made to each other, it is hereby covenanted and agreed as follows:
1. Investment Management Services to be Rendered to the Fund. The Fund
---------------------------------------------------------
hereby engages the Adviser to act as investment adviser for and to manage the
investment and reinvestment of the assets of the Fund, subject to such general
or specific instructions as may be given by the Board of Trustees of the Trust.
The Adviser hereby agrees, at its own expense, to render the services and to
assume the obligations of investment manager.
2. Administrative Services to be Provided and Expenses to be Assumed by the
------------------------------------------------------------------------
Advisor. Until the termination of the employment of the Adviser as investment
- -------
manager for the Fund, the Adviser will provide, or provide for, in its offices
all services required for the administration of the Trust and the Fund, and will
assume all expenses of the Trust and the Fund other than those expenses referred
to in the following paragraph.
The adviser shall not be obligated to pay and the Fund or the Trust shall pay:
(1) taxes and corporate fees payable to governmental agencies; (2) brokerage
commissions (which may be higher than other brokers would charge if paid to a
broker which provides brokerage and research services to the Adviser for use
in providing investment advice and management to the Fund and other accounts
over which the Adviser exercises investment discretion) and other capital
items payable in connection with the purchase or sale of the Fund's
investment; (3) interest on account of any borrowings by the Fund;
10
<PAGE>
(4) fees and expenses of the Trust's Trustees who are not interested persons
(as defined in the Investment Company Act of 1940) of the Adviser or of the
Trust; and (5) fees payable to the Trust's certified independent public
accountants. The words "brokerage and research services" shall have the
meaning given in the Securities Exchange Act of 1934 and the Rules and
Regulations thereunder.
In placing portfolio transactions for the Fund, the Adviser will follow such
practices as may from time to time be set forth in the Trust's most recent
prospectus or specified by its Board of Trustees.
3. Compensation to be Paid by the Fund to the Adviser. For the services
--------------------------------------------------
rendered hereunder, the Fund shall pay to the Adviser as of the last day of each
calendar quarter a fee at the annual rate of:
0.50% of the first $100 million of average daily net asset value of the
Fund,
0.45% of the next $200 million of average daily net asset value,
0.40% of the next $200 million of average daily net asset value, and
0.35% of the average daily net asset value over $500 million,
determined as of the close of the New York Stock Exchange on each day the
Exchange is open for trading.
4. Services of the Adviser to the Trust and the Fund Not Exclusive. The
---------------------------------------------------------------
services of the Adviser to the Trust and the Fund under this agreement are not
to be deemed exclusive and the Adviser shall be free to render similar services
to others.
5. Use of Name by the Trust and the Fund. The Trust and the Fund recognize
-------------------------------------
the Adviser's control of the initials "MML" and agrees that its right to use
these initials is non-exclusive and can be terminated by the Adviser at any
time. The use of such initials will automatically be terminated if at any time
the Adviser or a wholly-owned subsidiary of the Adviser ceases to be investment
manager for the Fund. If, at any time, the use of the initials "MML" is
terminated, the continuance of this agreement will be submitted to shareholders
of the Fund at a meeting specifically called for that purpose.
6. Interested and Affiliated Persons. It is understood that members of the
---------------------------------
Board of Trustees, officers, employees or agents of the Trust or the Fund may
also be directors, officers, employees or agents of the Adviser, and that the
Adviser, its directors, officers, employees or agents maybe interested in the
Fund as shareholders or otherwise.
11
<PAGE>
7. Records and Confidentiality. All records pertaining to the operation
---------------------------
and administration of the Trust and the Fund (whether prepared by the Adviser or
supplied to the Adviser by the Trust or the Fund) are the property and subject
to the control of the Trust. In the event of the termination of this agreement,
all such records in the possession of the Adviser shall be promptly turned over
to the Trust free from any claim or retention of rights. All such records shall
be deemed to be confidential in nature and the Adviser shall not disclose or use
any records or information obtained pursuant to this agreement in any manner
whatsoever except as expressly authorized by the Trust or as required by federal
or state regulatory authorities. The Adviser shall submit to all regulatory and
administrative bodies having jurisdiction over the operations of the Adviser or
the Trust, present or future, any information, reports or other material
obtained pursuant to this agreement which any such body may request or require
pursuant to applicable laws or regulations.
8. Liability Regarding Investment Management. In the absence of willful
-----------------------------------------
misfeasance, bad faith or gross negligence in the performance of its obligations
and duties under this agreement, or of reckless disregard of such obligations
and duties, neither the Adviser nor any of its officers, directors, employees or
agents shall be subject to liability for any act or omission in the course of,
or connected with, rendering services or performing its obligations hereunder.
9. Termination and Amendment. This agreement is effective as of April 30,
-------------------------
1993 and will continue in effect form year to year after the date hereof, as
long as it is specifically approved at least annually by vote of the Board of
Trustees of the Trust including the vote of a majority of such Trustees who are
not interested persons (as defined in the Investment Company Act of 1940) of the
Adviser or of the Fund; provided, however, that (1) this agreement may at any
time be terminated by the Trust on 60 days' written notice to the Adviser
without the payment of any penalty either by vote of the Board of Trustees of
the Trust or by the vote of a majority of the outstanding shares of the Fund (as
defined in the Investment Company Act of 1940); (2) this agreement shall
immediately terminate in the event of its assignment (within the meaning of the
Investment Company Act of 1940); and (3) this agreement may be terminated by the
Adviser on 60 days' written notice to the Trust without the payment of any
penalty. Any notice under this agreement shall be given in writing, addressed
and delivered, or mailed postpaid, to the other party at the principal office of
such party.
This agreement may be amended at any time by mutual consent of the parties,
provided that such consent on the part of the Fund shall have been approved at a
meeting by the vote of a majority of the outstanding shares of the Fund any by
the vote of a majority of the Trustees of the Trust who are not interested
persons of the Trust or interested persons of the Adviser.
12
<PAGE>
10. Obligation of the Trust. A copy of the Agreement and Declaration of
-----------------------
Trust of the Trust is on file with the Secretary of the Commonwealth of
Massachusetts, and notice is hereby given that this agreement is executed on
behalf of the Trustees as Trustees of the Trust and not individually, and that
the obligations of this agreement are not binding upon any of the Trustees or
shareholders individually, but are binding only upon the assets and property of
the Trust.
11. Sub-Advisory Agreements. The Adviser may enter into sub-advisory
-----------------------
agreements with persons ("Sub-Advisers") pursuant to which the Adviser delegates
any or all of its functions hereunder to one or more Sub-Advisers provided that
a majority of the Trust's Board of Trustees, that are not interested persons of
the Trust or the Adviser; approve the agreement and provided further, that a
majority of the outstanding voting shares of the Fund must also approve the
agreement. The Adviser shall pay all compensation of any such Sub-Advisers and
will have the right to terminate the services of any Sub-Adviser at any time on
no more than 60 days' notice, subject to the approval of the Board of Trustees,
and thereupon shall at such time assume the responsibilities if such Sub-Adviser
unless and until a successor Sub-Adviser is selected.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed on the day and year first above written.
MML SERIES INVESTMENT FUND
on behalf of MML Managed Bond Fund
By:
-------------------------------
Its:
------------------------------
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By:
-------------------------------
Its:
------------------------------
13
<PAGE>
Exhibit 5(a)(4)
INVESTMENT MANAGEMENT AGREEMENT
This INVESTMENT MANAGEMENT AGREEMENT (the "Agreement"), dated this April
16, 1993 by and between MML Series Investment Fund (the "Trust") on behalf of
MML Blend Fund (the "Fund") and Massachusetts Mutual Life Insurance Company (the
"Adviser").
WHEREAS, the Trust, on behalf of the Fund, and the Adviser entered into an
Investment Management Agreement (the "Management Agreement"), dated April 26,
1985 whereby the Adviser will (1) perform certain investment management services
for the Fund, (2) perform administrative functions relating to the Fund, and (3)
assume certain expenses of the Fund;
WHEREAS, the Trust, on behalf of the Fund, and the Adviser wish to enter
into a new agreement, substantially identical to the Management Agreement in all
respects except that the Agreement will contain a new Section 11 not contained
in the Management Agreement. The new Section 11 would provide that the Adviser
could enter into sub-advisory agreements with such persons and under such terms
as approved by the Trust's Board of Trustees and its shareholders.
NOW, THEREFORE, in consideration of the covenants and mutual promises of
the parties made to each other, it is hereby covenanted and agreed as follows:
1. Investment Management Services to be Rendered to the Fund. The Fund
---------------------------------------------------------
hereby engages the Adviser to act as investment adviser for and to manage the
investment and reinvestment of the assets of the Fund, subject to such general
or specific instructions as may be given by the Board of Trustees of the Trust.
The Adviser hereby agrees, at its own expense, to render the services and to
assume the obligations of investment manager.
2. Administrative Services to be Provided and Expenses to be Assumed by the
------------------------------------------------------------------------
Advisor. Until the termination of the employment of the Adviser as investment
- -------
manager for the Fund, the Adviser will provide, or provide for, in its offices
all services required for the administration of the Trust and the Fund, and will
assume all expenses of the Trust and the Fund other than those expenses referred
to in the following paragraph.
The adviser shall not be obligated to pay and the Fund or the Trust shall pay:
(1) taxes and corporate fees payable to governmental agencies; (2) brokerage
commissions (which may be higher than other brokers would charge if paid to a
broker which provides brokerage and research services to the Adviser for use
in providing investment advice and management to the Fund and other accounts
over which the Adviser exercises investment discretion) and other capital
items payable in connection with the purchase or sale of the Fund's
investment; (3) interest on account of any borrowings by the Fund;
14
<PAGE>
(4) fees and expenses of the Trust's Trustees who are not interested persons
(as defined in the Investment Company Act of 1940) of the Adviser or of the
Trust; and (5) fees payable to the Trust's certified independent public
accountants. The words "brokerage and research services" shall have the
meaning given in the Securities Exchange Act of 1934 and the Rules and
Regulations thereunder.
In placing portfolio transactions for the Fund, the Adviser will follow such
practices as may from time to time be set forth in the Trust's most recent
prospectus or specified by its Board of Trustees.
3. Compensation to be Paid by the Fund to the Adviser. For the services
--------------------------------------------------
rendered hereunder, the Fund shall pay to the Adviser as of the last day of each
calendar quarter a fee at the annual rate of:
0.50% of the first $100 million of average daily net asset value of the
Fund,
0.45% of the next $200 million of average daily net asset value,
0.40% of the next $200 million of average daily net asset value, and
0.35% of the average daily net asset value over $500 million,
determined as of the close of the New York Stock Exchange on each day the
Exchange is open for trading.
4. Services of the Adviser to the Trust and the Fund Not Exclusive. The
---------------------------------------------------------------
services of the Adviser to the Trust and the Fund under this agreement are not
to be deemed exclusive and the Adviser shall be free to render similar services
to others.
5. Use of Name by the Trust and the Fund. The Trust and the Fund recognize
-------------------------------------
the Adviser's control of the initials "MML" and agrees that its right to use
these initials is non-exclusive and can be terminated by the Adviser at any
time. The use of such initials will automatically be terminated if at any time
the Adviser or a wholly-owned subsidiary of the Adviser ceases to be investment
manager for the Fund. If, at any time, the use of the initials "MML" is
terminated, the continuance of this agreement will be submitted to shareholders
of the Fund at a meeting specifically called for that purpose.
6. Interested and Affiliated Persons. It is understood that members of the
---------------------------------
Board of Trustees, officers, employees or agents of the Trust or the Fund may
also be directors, officers, employees or agents of the Adviser, and that the
Adviser, its directors, officers, employees or agents maybe interested in the
Fund as shareholders or otherwise.
15
<PAGE>
7. Records and Confidentiality. All records pertaining to the operation
---------------------------
and administration of the Trust and the Fund (whether prepared by the Adviser or
supplied to the Adviser by the Trust or the Fund) are the property and subject
to the control of the Trust. In the event of the termination of this agreement,
all such records in the possession of the Adviser shall be promptly turned over
to the Trust free from any claim or retention of rights. All such records shall
be deemed to be confidential in nature and the Adviser shall not disclose or use
any records or information obtained pursuant to this agreement in any manner
whatsoever except as expressly authorized by the Trust or as required by federal
or state regulatory authorities. The Adviser shall submit to all regulatory and
administrative bodies having jurisdiction over the operations of the Adviser or
the Trust, present or future, any information, reports or other material
obtained pursuant to this agreement which any such body may request or require
pursuant to applicable laws or regulations.
8. Liability Regarding Investment Management. In the absence of willful
-----------------------------------------
misfeasance, bad faith or gross negligence in the performance of its obligations
and duties under this agreement, or of reckless disregard of such obligations
and duties, neither the Adviser nor any of its officers, directors, employees or
agents shall be subject to liability for any act or omission in the course of,
or connected with, rendering services or performing its obligations hereunder.
9. Termination and Amendment. This agreement is effective as of April 30,
-------------------------
1993 and will continue in effect form year to year after the date hereof as long
as it is specifically approved at least annually by vote of the Board of
Trustees of the Trust including the vote of a majority of such Trustees who are
not interested persons (as defined in the Investment Company Act of 1940) of the
Adviser or of the Fund; provided, however, that (1) this agreement may at any
time be terminated by the Trust on 60 days' written notice to the Adviser
without the payment of any penalty either by vote of the Board of Trustees of
the Trust or by the vote of a majority of the outstanding shares of the Fund (as
defined in the Investment Company Act of 1940); (2) this agreement shall
immediately terminate in the he event of its assignment (within the meaning of
the Investment Company Act of 1940); and (3) this agreement may be terminated by
the Adviser on 60 days' written notice to the Trust without the payment of any
penalty. Any notice under this agreement shall be given in writing, addressed
and delivered, or mailed postpaid, to the other party at the principal office of
such party.
This agreement may be amended at any time by mutual consent of the parties,
provided that such consent on the part of the Fund shall have been approved at a
meeting by the vote of a majority of the outstanding shares of the Fund any by
the vote of a majority of the Trustees of the Trust who are not interested
persons of the Trust or interested persons of the Adviser.
16
<PAGE>
10. Obligation of the Trust. A copy of the Agreement and Declaration of
-----------------------
Trust of the Trust is on file with the Secretary of the Commonwealth of
Massachusetts, and notice is hereby given that this agreement is executed on
behalf of the Trustees as Trustees of the Trust and not individually, and that
the obligations of this agreement are not binding upon any of the Trustees or
shareholders individually, but are binding only upon the assets and property of
the Trust.
11. Sub-Advisory Agreements. The Adviser may enter into sub-advisory
-----------------------
agreements with persons ("Sub-Advisers") pursuant to which the Adviser delegates
any or all of its functions hereunder to one or more Sub-Advisers provided that
a majority of the Trust's Board of Trustees, that are not interested persons of
the Trust or the Adviser; approve the agreement and provided further, that a
majority of the outstanding voting shares of the Fund must also approve the
agreement. The Adviser shall pay all compensation of any such Sub-Advisers and
will have the right to terminate the services of any Sub-Adviser at any time on
no more than 60 days' notice, subject to the approval of the Board of Trustees,
and thereupon shall at such time assume the responsibilities if such Sub-Adviser
unless and until a successor Sub-Adviser is selected.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed on the day and year first above written.
MML SERIES INVESTMENT FUND
on behalf of MML Blend Fund
By:
---------------------------------
Its:
---------------------------------
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By:
---------------------------------
Its:
---------------------------------
17
<PAGE>
Exhibit 5(b)(1)
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
AND CONCERT CAPITAL MANAGEMENT, INC.
Regarding MML Series Investment Fund -- The MML Blend Fund (Equity Sector)
THIS AGREEMENT is by and between Massachusetts Mutual Life Insurance Company, a
mutual life insurance company organized under the laws of the Commonwealth of
Massachusetts (hereinafter "MassMutual"), and Concert Capital Management, Inc.,
a corporation organized under the laws of the Commonwealth of Massachusetts
(hereinafter "CCM") and a registered investment adviser under the Investment
Advisers Act of 1940, as amended (the "Agreement"). This Agreement is effective
as of April 16, 1993.
WHEREAS, MassMutual has entered into an investment management agreement with MML
Series Investment Fund (the "Trust") on behalf of MML Blend Fund (the "Fund"),
dated as of April 16, 1993 (the "Management Agreement"). Pursuant to the
management agreement, MassMutual is responsible for providing equity investment
advice to the Fund;
WHEREAS, MassMutual desires to appoint CCM as its sub-adviser for the Fund and
CCM is willing to act in such capacity; and
WHEREAS, The Shareholders of the Trust approved this Agreement at its Annual
Meeting of Shareholders on April 16, 1993 (the "Annual Meeting").
NOW, THEREFORE, MassMutual and CCM, hereby agree as follows:
Section 1--Investment Advisory Services:
MassMutual hereby employs CCM and CCM hereby undertakes to act as the investment
sub-adviser to the Fund and to provide the investment advisory, accounting and
other services as are specifically hereinafter set forth. CCM shall, subject to
the direction and supervision of the Trust's Board of Trustees, provide a
continuing and suitable investment program for the Fund in accordance with the
respective investment objectives and policies of the Fund. In the performance
of its duties hereunder, CCM will, at its expense:
(a) manage the investment and reinvestment of the assets of the Fund;
(b) supervise and monitor the equity investment program of the Fund,
including portfolio composition and identification of securities to be purchased
or sold;
(c) arrange, subject to the provisions of Section 10 hereof, for the
purchase and sale of equity securities for the Fund;
(d) recommend appropriate levels of cash investments pursuant to the
investment objectives of the Fund and provide MassMutual or its designee with
any information necessary to purchase, sell, exchange, or liquidate such cash
investments;
(e) furnish to MassMutual such statistical information regarding the
Fund's investments which the Fund may hold or contemplate purchasing, as
MassMutual may reasonably request;
19
<PAGE>
(f) at the request of the Trust's Board of Trustees (the "Board of
Trustees") or its designee, prepare and present written reports concerning the
performance of the Fund;
(g) take appropriate steps to keep MassMutual informed of important
developments materially affecting the investment performance of the Fund;
(h) notify MassMutual in writing immediately of any change in CCM's status
as a registered investment adviser under either state or federal law;
(i) make available to MassMutual on an as-needed basis (but no less
frequently than quarterly), information in its possession necessary to prepare
annual, semi-annual and quarterly statements of portfolio holdings;
(j) make available to MassMutual information in its possession necessary
to prepare tax returns, as well as reports to and filings with the Securities
and Exchange Commission, state insurance authorities, state corporation
authorities and/or state "Blue Sky" authorities;
(k) agree to provide or contract for calculations of the unit values of
the Fund and each unit value derived therefrom (if any) as a result of different
asset charges daily or at such lesser frequency as MassMutual may request, and
to have the party responsible for calculating such unit values, if different
than MassMutual, advise MassMutual of such unit values no later than 6:00 p.m.
eastern time on each valuation day;
(l) regularly make reports regarding the Fund's performance at meetings of
the Board of Trustees;
(m) attend periodic meetings of MassMutual's General Agents or other
significant special events upon reasonable request, at which meetings CCM shall
present reports on such aspects of its performance as MassMutual shall request;
(n) make available its SEC Form ADV, Parts I and II, and other licensing
forms to MassMutual upon request; and
(o) as directed by MassMutual, vote all proxies solicited by or with
respect to the equity securities held by the Funds in accordance with CCM's
Statement of Policy and Procedures Regarding the Voting of Securities, which
shall be reviewed at least annually by MassMutual.
Section 2--Standard of Care:
CCM agrees to exercise its best judgment, effort, advice, and recommendations in
rendering its services. MassMutual agrees that CCM shall not be liable
hereunder for any error of judgment or mistake of law or for any loss suffered
by MassMutual with respect to the Funds, provided that nothing herein shall be
deemed to protect or purport to protect CCM against any liability to MassMutual
or its policyowners to which CCM would otherwise be subject by reason of the
willful misfeasance, bad faith or gross negligence of CCM, its directors,
officers, employees or agents in the performance of CCM's duties hereunder, or
by reason of the reckless disregard of CCM's obligations and duties hereunder.
Section 3--Expenses:
20
<PAGE>
(a) CCM shall be responsible only for expenses incurred in connection with
the performance of its services under this Agreement. The expenses to be borne
by CCM include the following: (1) the compensation and benefits of all
directors, officers, employees, and agents of CCM; (2) any license or similar
fees in connection with CCM's use of computer software; (3) the management
services fees arising from the Management Services Agreement between MassMutual
and CCM dated January 1, 1993; (4) premiums on any insurance policies purchased
by CCM, including any fidelity insurance purchased pursuant to Section 5 hereof;
(5) those expenses associated with fund accounting for the Fund; and (6) any
other expenses incurred by CCM in connection with the performance of its duties
hereunder, including the compensation of its field representatives and the
expenses of servicing investments.
(b) MassMutual shall be responsible for all expenses related to the Fund,
other than those expressly assumed by CCM hereunder. Expenses to be borne by
MassMutual include, but are not limited to, the following: (1) premiums on any
insurance policies purchased to cover the Fund by MassMutual, including any
fidelity insurance purchased pursuant to Section 5 hereof; (2) charges of
custodians for the Funds; (3) outside legal expenses of MassMutual or the Trust;
and (4) expenses of MassMutual attributable to contract owner services
(including, without limitation, telephone and personnel expenses).
Section 4--Duties of MassMutual:
MassMutual will be responsible for establishing and maintaining appropriate
custodial account(s), payment of charges of custodians, and arranging to have
the Sub-Adviser informed of all receipts and disbursements of cash, cash on
hand, and securities positions.
Section 5--Compensation:
In consideration of the services rendered pursuant to this Agreement, MassMutual
shall pay CCM, and CCM agrees to accept as full compensation for the performance
of all functions and duties assumed and expenses to be borne pursuant to this
Agreement a quarterly fee equal to an annual rate of .13% of the average daily
net value of the Fund as of the close of each business day;
Section 6--Fidelity Insurance and Errors and Omissions Coverage:
In the event that MassMutual no longer arranges for insurance coverage on behalf
of CCM as provided for in Section 1(a)(iv) of the Management Agreement between
CCM and MassMutual dated as of April 16, 1993, CCM agrees to maintain and
provide evidence of fidelity insurance and errors and omissions coverage
relating to its services hereunder in such amounts and with such carriers as are
common in the investment advisory industry.
Section 7--Books and Records:
CCM agrees that all books and records maintained relating to the Fund are the
property of the Trust. CCM may disclose the Trust's books and records to CCM's
governmental regulators, and upon subpoena or with the written consent of the
Trust. CCM may maintain copies of such books and records for its own regulatory
purposes. CCM agrees to furnish the Massachusetts Commissioner of Insurance
(or, at MassMutual's request, any other state insurance authority) with any
information or reports in connection with its services hereunder which the
Commissioner may request to ascertain whether the life insurance
21
<PAGE>
operations of MassMutual are being conducted in a manner consistent with
applicable law.
Section 8--Non-Exclusive Contract; Other Activities of CCM and Affiliates:
Nothing in this Agreement shall prevent MassMutual, CCM or any officers,
directors or employees thereof from acting as investment adviser or sub-adviser
for any other person, firm, or corporation provided, however, CCM will not enter
into an investment advisory agreement with any competitors of MassMutual or its
affiliates without the prior approval of CCM's Board of Directors. This
Agreement shall not limit or restrict MassMutual or CCM, or any of their
respective directors, officers, stockholders or employees from buying, selling,
or trading any securities for its or their own account or for the account of
others for whom it or they may be acting, provided that such activities will not
be in violation of any securities laws or statements of policy on conflict of
interest and or trading and will not adversely affect or otherwise impair the
performance by any party of its duties and obligations under this Agreement.
Section 9--Allocation of Securities Purchased or Sold for More than One Account:
CCM and MassMutual agree that when the purchase or sale of securities of the
same issuer is suitable for the investment objectives of two or more accounts
managed by CCM, the securities purchased or sold will be allocated in a manner
believed by CCM to be in keeping with its fiduciary duties to each account.
Section 10--Portfolio Transactions and Brokerage:
CCM is authorized, in arranging the purchase and sale of publicly-traded
portfolio securities, to employ or deal with such brokers or dealers ("broker-
dealers"), including affiliated broker-dealers, as may, in its best judgment,
implement the policy of the affected account to obtain the "best execution"
(prompt and reliable execution at the most reasonable security price obtainable)
of the transactions. CCM shall select broker-dealers to effect portfolio
transactions on the basis of its estimate of their ability to obtain best
execution of particular and related portfolio transactions. In placing
portfolio transactions for the Fund, CCM will follow such practices as may from
time to time be set forth in the Trust's most recent prospectus or specified by
its Board of Directors.
Section 11--No Assignment:
This Agreement is not assignable by the parties hereto without the prior written
consent of each party. For purposes of this Section 11, a change in the control
of CCM or MassMutual shall be deemed to be an assignment of this Agreement.
Section 12--No Partnership or Joint Venture:
Neither MassMutual, the Trust, the Fund, nor CCM are partners of or joint
venturers with each other, and nothing herein shall be construed so as to make
them such partners or joint venturers or impose any liability as such on any of
them.
Section 13--Duration and Termination of this Agreement:
22
<PAGE>
This Agreement, having been approved by the Shareholders of the Trust at the
Annual Meeting, shall remain in full force and effect for one year and from year
to year thereafter to the extent approved at least annually by vote of a
majority of Trustees of the Trust that are not interested persons of the Trust
or you, cast in person at a meeting called for that purpose of voting on such
approval, and specifically either the Board of Trustees or by a vote of a
majority of the outstanding voting securities of the Trust. This Agreement shall
terminate: (a) automatically in the event of the Fund's liquidation (b)
automatically upon the termination of a Management Agreement with respect to
effected Fund; (c) by MassMutual without penalty upon 60 days' written notice to
CCM; (d) by CCM without penalty upon 60 days' written notice, and (e) this
agreement may be terminated by MassMutual upon 30 days' written notice to CCM
with payment of a penalty equal to the fees paid in the prior calendar quarter.
Section 14--Amendment of this Agreement:
This Agreement may be changed, waived, discharged or terminated only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
Section 15--Miscellaneous:
The captions in this Agreement are included for convenience of reference only
and in no way define or delimit any of the provisions hereof, or otherwise
affect their construction or effect. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 16--Notice:
Any notice under this Agreement shall be in writing, addressed and delivered or
mailed, postage prepaid, to the other party at the address below or such other
address as such other party may designate for the receipt of such notice.
If to MassMutual: Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111-0001
Attention: Edwin P. McCausland, Jr.
Vice President and Managing Director
If to CCM: Concert Capital Management, Inc.
125 High Street
Boston, Massachusetts 02110
Attention: F. Jerome Grimm
President and Chief Executive Officer
A copy of any notice shall also be sent to:
MML Series Investment Fund
1295 State Street
Springfield, Massachusetts 01111-0001
Attention: Hamline C. Wilson
Vice President and Chief Financial Officer
Section 17--Governing Law:
23
<PAGE>
This Agreement shall be administered, construed and enforced in accordance with
the laws of the Commonwealth of Massachusetts relating to contracts performed in
that Commonwealth except to the extent superseded by federal securities laws or
Employee Retirement Income Security Act of 1974, as amended (hereinafter
"ERISA"), the Investment Advisers Act of 1940, or other Federal or state law.
Section 18--ERISA Compliance:
CCM shall not engage in any transaction that it knows or should have reason to
know is in violation of any provisions of Section 406 of ERISA. Notwithstanding
the foregoing, CCM may, in accordance with any appropriate exemption provided
under ERISA or upon the approval of the Secretary of Labor, enter into any
transaction otherwise prohibited under Section 406. CCM agrees to provide
MassMutual with reasonable prior notice of its intent to enter into such
transactions to allow MassMutual to review for potential prohibited
transactions.
IN WITNESS WHEREOF, MassMutual and CCM have caused this Agreement to be
executed.
Massachusetts Mutual Life Insurance Company
By:
Edwin P. McCausland, Jr.
Its: Vice President and Managing Director
Concert Capital Management, Inc.
By:
F. Jerome Grimm
Its: President and Chief Executive Officer
Accepted and agreed to by MML Series Investment Fund:
On behalf of MML Blend Fund (Equity Sector):
By:
Hamline C. Wilson
Its: Vice President and
Chief Financial Officer
24
<PAGE>
Exhibit 5(b)(2)
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
AND CONCERT CAPITAL MANAGEMENT, INC.
Regarding MML Series Investment Fund -- The MML Equity Fund
THIS AGREEMENT is by and between Massachusetts Mutual Life Insurance Company, a
mutual life insurance company organized under the laws of the Commonwealth of
Massachusetts (hereinafter "MassMutual"), and Concert Capital Management, Inc.,
a corporation organized under the laws of the Commonwealth of Massachusetts
(hereinafter "CCM") and a registered investment adviser under the Investment
Advisers Act of 1940, as amended (the "Agreement"). This Agreement is effective
as of April 16, 1993.
WHEREAS, MassMutual has entered into an investment management agreement with MML
Series Investment Fund (the "Trust") on behalf of MML Equity Fund (the "Fund"),
dated as of April 16, 1993 (the "Management Agreement"). Pursuant to the
management agreement, MassMutual is responsible for providing equity investment
advice to the Fund;
WHEREAS, MassMutual desires to appoint CCM as its sub-adviser for the Fund and
CCM is willing to act in such capacity; and
WHEREAS, The Shareholders of the Trust approved this Agreement at its Annual
Meeting of Shareholders on April 16, 1993 (the "Annual Meeting").
NOW, THEREFORE, MassMutual and CCM, hereby agree as follows:
Section 1--Investment Advisory Services:
MassMutual hereby employs CCM and CCM hereby undertakes to act as the investment
sub-adviser to the Fund and to provide the investment advisory, accounting and
other services as are specifically hereinafter set forth. CCM shall, subject to
the direction and supervision of the Trust's Board of Trustees, provide a
continuing and suitable investment program for the Fund in accordance with the
respective investment objectives and policies of the Fund. In the performance
of its duties hereunder, CCM will, at its expense:
(a) manage the investment and reinvestment of the assets of the Fund;
(b) supervise and monitor the equity investment program of the Fund,
including portfolio composition and identification of securities to be purchased
or sold;
(c) arrange, subject to the provisions of Section 10 hereof, for the
purchase and sale of equity securities for the Fund;
(d) recommend appropriate levels of cash investments pursuant to the
investment objectives of the Fund and provide MassMutual or its designee with
any information necessary to purchase, sell, exchange, or liquidate such cash
investments;
(e) furnish to MassMutual such statistical information regarding the
Fund's investments which the Fund may hold or contemplate purchasing, as
MassMutual may reasonably request;
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(f) at the request of the Trust's Board of Trustees (the "Board of
Trustees") or its designee, prepare and present written reports concerning the
performance of the Fund;
(g) take appropriate steps to keep MassMutual informed of important
developments materially affecting the investment performance of the Fund;
(h) notify MassMutual in writing immediately of any change in CCM's status
as a registered investment adviser under either state or federal law;
(i) make available to MassMutual on an as-needed basis (but no less
frequently than quarterly), information in its possession necessary to prepare
annual, semi-annual and quarterly statements of portfolio holdings;
(j) make available to MassMutual information in its possession necessary
to prepare tax returns, as well as reports to and filings with the Securities
and Exchange Commission, state insurance authorities, state corporation
authorities and/or state "Blue Sky" authorities;
(k) agree to provide or contract for calculations of the unit values of
the Fund and each unit value derived therefrom (if any) as a result of different
asset charges daily or at such lesser frequency as MassMutual may request, and
to have the party responsible for calculating such unit values, if different
than MassMutual, advise MassMutual of such unit values no later than 6:00 p.m.
eastern time on each valuation day;
(l) regularly make reports regarding the Fund's performance at meetings of
the Board of Trustees;
(m) attend periodic meetings of MassMutual's General Agents or other
significant special events upon reasonable request, at which meetings CCM shall
present reports on such aspects of its performance as MassMutual shall request;
(n) make available its SEC Form ADV, Parts I and II, and other licensing
forms to MassMutual upon request; and
(o) as directed by MassMutual, vote all proxies solicited by or with
respect to the equity securities held by the Funds in accordance with CCM's
Statement of Policy and Procedures Regarding the Voting of Securities, which
shall be reviewed at least annually by MassMutual.
Section 2--Standard of Care:
CCM agrees to exercise its best judgment, effort, advice, and recommendations in
rendering its services. MassMutual agrees that CCM shall not be liable
hereunder for any error of judgment or mistake of law or for any loss suffered
by MassMutual with respect to the Funds, provided that nothing herein shall be
deemed to protect or purport to protect CCM against any liability to MassMutual
or its policyowners to which CCM would otherwise be subject by reason of the
willful misfeasance, bad faith or gross negligence of CCM, its directors,
officers, employees or agents in the performance of CCM's duties hereunder, or
by reason of the reckless disregard of CCM's obligations and duties hereunder.
Section 3--Expenses:
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(a) CCM shall be responsible only for expenses incurred in connection with
the performance of its services under this Agreement. The expenses to be borne
by CCM include the following: (1) the compensation and benefits of all
directors, officers, employees, and agents of CCM; (2) any license or similar
fees in connection with CCM's use of computer software; (3) the management
services fees arising from the Management Services Agreement between MassMutual
and CCM dated January 1, 1993; (4) premiums on any insurance policies purchased
by CCM, including any fidelity insurance purchased pursuant to Section 5 hereof;
(5) those expenses associated with fund accounting for the Fund; and (6) any
other expenses incurred by CCM in connection with the performance of its duties
hereunder, including the compensation of its field representatives and the
expenses of servicing investments.
(b) MassMutual shall be responsible for all expenses related to the Fund,
other than those expressly assumed by CCM hereunder. Expenses to be borne by
MassMutual include, but are not limited to, the following: (1) premiums on any
insurance policies purchased to cover the Fund by MassMutual, including any
fidelity insurance purchased pursuant to Section 5 hereof; (2) charges of
custodians for the Funds; (3) outside legal expenses of MassMutual or the Trust;
and (4) expenses of MassMutual attributable to contract owner services
(including, without limitation, telephone and personnel expenses).
Section 4--Duties of MassMutual:
MassMutual will be responsible for establishing and maintaining appropriate
custodial account(s), payment of charges of custodians, and arranging to have
the Sub-Adviser informed of all receipts and disbursements of cash, cash on
hand, and securities positions.
Section 5--Compensation:
In consideration of the services rendered pursuant to this Agreement, MassMutual
shall pay CCM, and CCM agrees to accept as full compensation for the performance
of all functions and duties assumed and expenses to be borne pursuant to this
Agreement a quarterly fee equal to an annual rate of .13% of the average daily
net value of the Fund as of the close of each business day;
Section 6--Fidelity Insurance and Errors and Omissions Coverage:
In the event that MassMutual no longer arranges for insurance coverage on behalf
of CCM as provided for in Section 1(a)(iv) of the Management Agreement between
CCM and MassMutual dated as of April 16, 1993, CCM agrees to maintain and
provide evidence of fidelity insurance and errors and omissions coverage
relating to its services hereunder in such amounts and with such carriers as are
common in the investment advisory industry.
Section 7--Books and Records:
CCM agrees that all books and records maintained relating to the Fund are the
property of the Trust. CCM may disclose the Trust's books and records to CCM's
governmental regulators, and upon subpoena or with the written consent of the
Trust. CCM may maintain copies of such books and records for its own regulatory
purposes. CCM agrees to furnish the Massachusetts Commissioner of Insurance
(or, at MassMutual's request, any other state insurance authority) with any
information or reports in connection with its services hereunder which the
Commissioner may request to ascertain whether the life insurance operations of
MassMutual are being conducted in a manner consistent with applicable law.
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Section 8--Non-Exclusive Contract; Other Activities of CCM and Affiliates:
Nothing in this Agreement shall prevent MassMutual, CCM or any officers,
directors or employees thereof from acting as investment adviser or sub-adviser
for any other person, firm, or corporation provided, however, CCM will not enter
into an investment advisory agreement with any competitors of MassMutual or its
affiliates without the prior approval of CCM's Board of Directors. This
Agreement shall not limit or restrict MassMutual or CCM, or any of their
respective directors, officers, stockholders or employees from buying, selling,
or trading any securities for its or their own account or for the account of
others for whom it or they may be acting, provided that such activities will not
be in violation of any securities laws or statements of policy on conflict of
interest and or trading and will not adversely affect or otherwise impair the
performance by any party of its duties and obligations under this Agreement.
Section 9--Allocation of Securities Purchased or Sold for More than One Account:
CCM and MassMutual agree that when the purchase or sale of securities of the
same issuer is suitable for the investment objectives of two or more accounts
managed by CCM, the securities purchased or sold will be allocated in a manner
believed by CCM to be in keeping with its fiduciary duties to each account.
Section 10--Portfolio Transactions and Brokerage:
CCM is authorized, in arranging the purchase and sale of publicly-traded
portfolio securities, to employ or deal with such brokers or dealers ("broker-
dealers"), including affiliated broker-dealers, as may, in its best judgment,
implement the policy of the affected account to obtain the "best execution"
(prompt and reliable execution at the most reasonable security price obtainable)
of the transactions. CCM shall select broker-dealers to effect portfolio
transactions on the basis of its estimate of their ability to obtain best
execution of particular and related portfolio transactions. In placing
portfolio transactions for the Fund, CCM will follow such practices as may from
time to time be set forth in the Trust's most recent prospectus or specified by
its Board of Directors.
Section 11--No Assignment:
This Agreement is not assignable by the parties hereto without the prior written
consent of each party. For purposes of this Section 11, a change in the control
of CCM or MassMutual shall be deemed to be an assignment of this Agreement.
Section 12--No Partnership or Joint Venture:
Neither MassMutual, the Trust, the Fund, nor CCM are partners of or joint
venturers with each other, and nothing herein shall be construed so as to make
them such partners or joint venturers or impose any liability as such on any of
them.
Section 13--Duration and Termination of this Agreement:
This Agreement, having been approved by the Shareholders of the Trust at the
Annual Meeting, shall remain in full force and effect for one year and from year
to year thereafter to the extent approved at least annually by vote of a
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majority of Trustees of the Trust that are not interested persons of the Trust
or you, cast in person at a meeting called for that purpose of voting on such
approval, and specifically either the Board of Trustees or by a vote of a
majority of the outstanding voting securities of the Trust. This Agreement shall
terminate: (a) automatically in the event of the Fund's liquidation (b)
automatically upon the termination of a Management Agreement with respect to
effected Fund; (c) by MassMutual without penalty upon 60 days' written notice to
CCM; (d) by CCM without penalty upon 60 days' written notice, and (e) this
agreement may be terminated by MassMutual upon 30 days' written notice to CCM
with payment of a penalty equal to the fees paid in the prior calendar quarter.
Section 14--Amendment of this Agreement:
This Agreement may be changed, waived, discharged or terminated only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
Section 15--Miscellaneous:
The captions in this Agreement are included for convenience of reference only
and in no way define or delimit any of the provisions hereof, or otherwise
affect their construction or effect. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 16--Notice:
Any notice under this Agreement shall be in writing, addressed and delivered or
mailed, postage prepaid, to the other party at the address below or such other
address as such other party may designate for the receipt of such notice.
If to MassMutual: Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111-0001
Attention: Edwin P. McCausland, Jr.
Vice President and Managing Director
If to CCM: Concert Capital Management, Inc.
125 High Street
Boston, Massachusetts 02110
Attention: F. Jerome Grimm
President and Chief Executive Officer
A copy of any notice shall also be sent to:
MML Series Investment Fund
1295 State Street
Springfield, Massachusetts 01111-0001
Attention: Hamline C. Wilson
Vice President and Chief Financial Officer
Section 17--Governing Law:
This Agreement shall be administered, construed and enforced in accordance with
the laws of the Commonwealth of Massachusetts relating to contracts performed in
that Commonwealth except to the extent superseded by federal
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securities laws or Employee Retirement Income Security Act of 1974, as amended
(hereinafter "ERISA"), the Investment Advisers Act of 1940, or other Federal or
state law.
Section 18--ERISA Compliance:
CCM shall not engage in any transaction that it knows or should have reason to
know is in violation of any provisions of Section 406 of ERISA. Notwithstanding
the foregoing, CCM may, in accordance with any appropriate exemption provided
under ERISA or upon the approval of the Secretary of Labor, enter into any
transaction otherwise prohibited under Section 406. CCM agrees to provide
MassMutual with reasonable prior notice of its intent to enter into such
transactions to allow MassMutual to review for potential prohibited
transactions.
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IN WITNESS WHEREOF, MassMutual and CCM have caused this Agreement to be
executed.
Massachusetts Mutual Life Insurance Company
By:
Edwin P. McCausland, Jr.
Its: Vice President and Managing Director
Concert Capital Management, Inc.
By:
F. Jerome Grimm
Its: President and Chief Executive Officer
Accepted and agreed to by MML Series Investment Fund:
On behalf of MML Equity Fund:
By:
Hamline C. Wilson
Its: Vice President and
Chief Financial Officer
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EXHIBIT 8
CUSTODIAN AGREEMENTS
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Exhibit 8(a)
U.S. INVESTMENT COMPANY
CUSTODIAL SERVICES AGREEMENT
CUSTODIAL SERVICES AGREEMENT dated as of November 10, 1994 among CITIBANK,
N.A., a national banking association having an office at 111 Wall Street, New
York, New York 10005 and acting through such office in New York (the "Bank"),
CITICORP, a corporation organized under the laws of the State of Delaware,
having an office at Citicorp Center, 153 East 53rd Street, New York, New York
10043 and MML Series Investment Fund, a Business Trust organized under the laws
of Massachusetts, having an office at 1295 State Street, Springfield,
Massachusetts, 01111 (the "Trust").
WITNESSETH:
THAT WHEREAS, the Trust represents that it is a management investment
company registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act");
WHEREAS, the Trust further represents that it is duly incorporated,
organized or associated and in good standing under the laws of its state of
incorporation, organization or association and the consummation of transactions
contemplated hereby or directed by it hereunder will not violate any applicable
laws, regulations or orders;
WHEREAS, the Trust represents that it is authorized to (a) open and
maintain a custody account (the "Custody Account") with the Bank to hold certain
property ("Property"), including but not limited to stocks, bonds or other
securities ("Securities"), cash and other property owned or held by the Fund,
(b) to enter into this Agreement and (c) direct all actions and transactions
contemplated hereunder;
WHEREAS, the MML Equity Fund is a series of the Trust (the "Fund"); and
WHEREAS, on June 12, 1992, the Securities and Exchange Commission issued an
order (the "Exemptive Order") which, among other things, exempts certain
indirect subsidiaries of Citicorp (the "Exempt Subsidiaries") from the
shareholders' equity requirements of Rule 17f-5 promulgated under the Investment
Company Act;
NOW, THEREFORE, in consideration of the premises and of the agreements
hereinafter set forth, the parties hereby agree as follows:
1. APPOINTMENT AND ACCEPTANCE
The Fund hereby appoints the Bank as custodian of the Property and as its
agent hereunder, and the Bank agrees to act as such upon the terms and
conditions hereinafter provided.
2. DELIVERY; SAFEKEEPING
The Fund has heretofore delivered, or will deliver or cause to be
delivered, Property to the Bank, which Property the Bank agrees to keep safely
as custodian for the Fund. The Bank shall not surrender possession of Property
except upon properly authorized Instructions (as hereinafter defined) of the
Fund or as may be required by due process of applicable law.
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3. IDENTIFICATION AND SEGREGATION OF ASSETS
With respect to Property in the Custody Account:
(A) Except as otherwise provided in this Agreement, the Bank will
separately identify on its books as belonging to the Fund and, to the extent
practicable, segregate all Property held pursuant to this Agreement by the Bank
or any other entity authorized to hold Property in accordance with Section 6 or
7 hereof.
(B) The Bank shall supply to the Fund from time to time as mutually agreed
upon a written statement with respect to all of the Property in the Custody
Account. In the event that the Fund does not inform the Bank in writing of any
exceptions or objections within sixty (60) days after receipt of such statement,
the Fund shall be deemed to have approved such statement.
4. STANDARD OF CARE
(A) The Bank shall exercise the same standard of care that it exercises
over its own assets in the safekeeping, handling, servicing, and disposition of
the Property in accordance with this Agreement. The Bank will exercise the due
care expected of a professional custodian for hire with respect to the Property
in its possession or control.
(B) The Bank shall be responsible for the acts or omissions of any Exempt
Subsidiary acting as a foreign subcustodian pursuant to the Exemptive Order or
any subsequent exemptive order issued by the Securities and Exchange Commission
to the same extent as if the act or omission of such Exempt Subsidiary were that
of the Bank.
(C) Except as otherwise provided above, the Bank shall use reasonable care
in selecting, and shall be responsible only for the proper selection of, any
foreign subcustodian or foreign depository.
(D) The Bank's delegation of duties to an Exempt Subsidiary shall not
relieve the Bank of any responsibility to the Fund for any loss due to such
delegation, except such losses or damages which may result from (i) political
risk, including, but not limited to losses resulting from exchange control
restrictions, confiscation, expropriation, nationalization, insurrection, civil
strife or armed hostilities and (ii) other risk of loss for which neither the
Bank nor any foreign subcustodian would be liable under Rule 17f-5 promulgated
under the Investment Company Act.
(E) In the event the Fund enters into triparty repurchase agreements
pursuant to which collateral therefor is to be held by a custodian other than
the Bank and the Fund instructs the Bank to deliver Property to such custodian,
the Bank shall be under no duty to determine whether such custodian satisfies
the requirements of Section 17(f) of the Investment Company Act or the Rules
promulgated thereunder. Citibank shall have no further duties or obligations
under this Agreement with respect to such Property.
(F) The Bank is not under any duty to supervise the investments of the
Fund, or to advise or make any recommendation to the Fund with respect to the
purchase or sale of any of the Securities or the investment of any cash. The
Fund shall have the sole and exclusive responsibility for investment of Property
held hereunder.
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5. PERFORMANCE BY THE BANK
(A) General
The Bank's performance of its duties hereunder and the day-to-day
operations of the Custody Account shall be in accordance with written service
standards furnished to, and accepted by the Fund in writing, by the Bank from
time to time, provided that at all times the Bank shall use at least the due
care expected of a professional custodian for hire in the performance of its
duties. Such service standards, as amended from time to time, are incorporated
herein by reference.
(B) Receipt, Delivery and Disposal of Securities
The Bank shall, or shall instruct any other entity authorized to hold
Property in accordance with Section 6 or 7 hereof to, receive or deliver
Securities and credit or debit the Fund's account, in accordance with properly
authorized Instructions from the Fund. The Bank or such entity shall also
receive in custody all stock dividends, fights and similar securities issued in
connection with Securities held hereunder, shall surrender for payment, in a
timely manner, all items maturing or called for redemption and shall take such
other action as the Fund may direct in properly authorized Instructions.
(C) Registration
Securities held hereunder may be registered in the name of the Bank, any
entity authorized to hold Property in accordance with Section 6 or 7 hereof, or
a nominee of the Bank or any such authorized entity, and the Fund shall be
informed upon request of all such registrations. Securities in registered form
will be transferred upon request of the Fund into such names or registrations as
it may specify in properly authorized Instructions.
(D) Cash Accounts
(i) All cash received or held by the Bank or by any entity
authorized to hold Property in accordance with Section 7 hereof as interest,
dividends, proceeds from transfer, and other payments for or with respect to the
Securities shall be (x) held in a cash account in accordance with properly
authorized Instructions received by the Bank or such entity, or (y) if specified
in the Fund's Instructions, converted to or from U.S. dollars and remitted to
the Fund. The Fund shall bear any foreign exchange risk in connection with any
such conversion. In effecting any currency conversions hereunder, the Bank or
such entity may use any methods or agencies as it may see fit including the
Bank's or such entity's facilities at customary rates.
(ii) The Fund agrees, with respect to all payments for purchases of
Securities to be deposited in the Custody Account, that funds for settlement
will be on deposit by the settlement date at the location of settlement, in good
available funds and in the currency of settlement. The Fund acknowledges that
nothing in this Agreement shall obligate the Bank to extend credit, grant
financial accommodation or otherwise advance moneys to the Fund for the purpose
of making any payments for purchases or part thereof or otherwise carrying out
any Instructions.
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(iii) The Fund authorizes the Bank from time to time to cause the
branch of the Bank located in London, England ("Citibank London") to establish a
multicurrency cash account reflecting cash received by any Eligible Foreign
Custodian (as hereinafter defined) on the Fund's behalf. Citibank London will
maintain such cash account in accordance with the requirements of Section 7
hereof applicable to an entity authorized to hold Property hereunder.
(E) Reports
(i) If the Bank has in place a system for providing
telecommunication access or other means of electronic access by customers to the
Bank's reporting system for Property in the Custody Account, then, at the Fund's
election, the Bank shall provide the Fund with such instructions and passwords
as may be necessary in order for the Fund to have such electronic access through
the terminal device under the control of the Fund. Such electronic access shall
be restricted to information relating to the Custody Account. If electronic
access to such reporting system is requested by the Fund, the Fund agrees to
assume full responsibility for the consequences of such use, including any
misuse or unauthorized use of the terminal device, instructions or passwords
referred to above, and agrees to defend and indemnify the Bank and hold the Bank
harmless from and against any and all liabilities, losses, damages, costs,
counsel fees, and other expenses of every nature suffered or incurred by the
Bank by reason of or in connection with the negligent or wrongful acts of the
Fund, its agents or employees, as to the terminal device, unless such
liabilities, losses, damages, costs, counsel fees and other expenses can be
shown to be the result of negligent or wrongful acts of the Bank, the Bank's
employees or the Bank's agents. Further, in the event the Fund elects to have
electronic access, the Bank shall provide the Fund on each business day a report
of the preceding business day's transactions relating to the Custody Account and
of the closing or net balances of each business day. If the Fund does not choose
to have electronic access, the Bank shall provide the Fund with such reports of
transactions in the Custody Account by such means as may be mutually agreed
upon.
(ii) The Bank agrees to use reasonable efforts to furnish the Fund
with such information regarding Property held hereunder as the Fund may
reasonably request in connection with its complying with requests of any
regulatory authorities having jurisdiction over the Fund.
(iii) The Bank shall also, subject to restrictions under applicable
law, obtain from any entity that it directly or indirectly controls or is
controlled by, and shall seek to obtain from any other entity with which the
Bank maintains the physical possession of any of the Property in the Custody
Account records of such entity relating to the Property in the Custody Account
as may be required by the Fund or its agents in connection with an internal
examination by the Fund of its own affairs. Upon a reasonable request from the
Fund, the Bank shall furnish to the Fund such reports (or portions thereof) of
the external auditors of each entity that it directly or indirectly controls or
is controlled by, and shall use its best efforts to furnish to the Fund reports
(or portions thereof) of the external auditors of each such other entity
relating directly to such entity's system of internal accounting controls
applicable to its duties under its agreement with the Bank.
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(F) Access
During the Bank's regular banking, any officer or employee of the Fund, any
independent accountant(s) selected by the Fund and any person designated by any
regulatory authority having jurisdiction over the Fund shall be entitled to
examine on the Bank's premises, Property held by the Bank on its premises and
the Bank's records regarding Property held hereunder deposited with entities
authorized to hold Property in accordance with Section 6 or 7 hereof, but only
upon the Fund's furnishing the Bank with properly authorized Instructions to
that effect, provided, that such examination shall be consistent with the Bank's
obligations of confidentiality to other parties. The Bank's costs and expenses
in facilitating such examinations shall be borne by the Fund, provided that such
costs and expenses shall not be deemed to include the Bank's costs in providing
to the Fund: (i) the "single audit report" of the independent certified public
accountants engaged by the Bank and (ii) such reports and documents as this
Agreement contemplates that the Bank shall furnish routinely to the Fund.
(G) Voting and other Action
(i) The Bank will transmit to the Fund upon receipt, and will
instruct any entities authorized to hold Property in accordance with Section 6
of 7 hereof to transmit to the Fund upon receipt, all financial reports,
stockholder communications, notices, proxies and proxy soliciting materials
received from issuers of the Securities, and all information relating to
exchange or tender offers received from offers with respect to the Securities.
Such proxies will be executed by the registered holder if the registered holder
is other than the Fund, but the manner in which Securities are to be voted will
not be indicated. Neither the Bank nor any other entity holding Property
hereunder shall vote any of the Securities or authorize the voting of any
Securities or give any consent or take any other action with respect thereto,
except as otherwise provided herein.
(ii) In the event of tender offers, the Fund will hand deliver or
telecopy Instructions to the Bank as to the action to be taken with respect
thereto, designating such Instructions as being related to a tender offer. The
Fund shall hold the Bank harmless from any adverse consequences of the Fund's
use of any other method of transmitting Instructions relating to a tender offer.
(iii) The Fund agrees that if it gives an Instruction after 2:00 PM
eastern time with respect to U.S. domestic custody for the performance of an act
on the last permissible date of a period established by a tender offer or on the
last permissible date for the performance of such act, the Fund shall hold the
Bank harmless from any adverse consequences in connection with acting upon or
failing to act upon such Instructions. With respect to non-U.S. domestic
custody, the Fund agrees that if it gives an Instruction for the performance of
an act on the last permissible date of a period established by a tender offer or
on the last permissible date for the performance of such act, the Fund shall
hold the Bank harmless from any adverse consequences In connection with acting
upon or failing to act upon such Instructions.
(iv) The Bank is authorized to accept and open on the Fund's behalf
all mail or communications relating to the Property received by the Bank or
directed in its care.
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6. AUTHORIZED USE OF U.S. DEPOSITORIES
The Fund authorizes the Bank, for any Securities held hereunder, to use the
services of any United States securities depository permitted to perform such
services for registered investment companies and their custodians under Rule
17f-4 promulgated under the Investment Company Act, including but not limited
to, The Depository Trust Company, the Federal Reserve Book Entry System and
Participants Trust Company ("U.S. Depositories"). The Bank will deposit
Securities held hereunder with a U.S. Depository only in an account which holds
assets of customers of the Bank.
7. USE OF FOREIGN CUSTODIANS
(A) Authorization
(i) The Bank may cause Securities which are foreign securities
within the meaning of Rule 17f-5(c)(1) promulgated under the Investment Company
Act ("Foreign Securities") and amounts of cash and cash equivalents reasonably
required to effect the Fund's Foreign Securities transactions ("Cash") in the
Custody Account to be held in such country or other jurisdiction as the Fund
shall direct in properly authorized Instructions.
(ii) Subject to prior approval by the board of trustees of the Fund,
the Bank may hold such Foreign Securities and Cash in subcustody accounts, which
shall be deemed part of the Custody Account and which have been established by
the Bank with (x) branches of "Qualified U.S. Banks", as defined in Rule 17f-
5(c)(3) promulgated under the Investment Company Act ("Branches"), or (y)
foreign custodians which satisfy the provisions of Rule 17f-5(c)(2)(i) or (ii)
promulgated under the Investment Company Act, or (z) Exempt Subsidiaries or
other foreign custodians which are exempt from such provisions under the
Exemptive Order or any other order or release issued by the Securities and
Exchange Commission (such Branches, foreign custodians and Exempt Subsidiaries,
collectively, the "Eligible Foreign Custodians").
(iii) Subject to prior approval by the board of trustees of the Fund,
the Bank or an Eligible Foreign Custodian is authorized to hold Foreign
Securities of the Fund in an account with any foreign securities depository or
foreign clearing agency which in the Bank's judgment satisfies the provisions of
Rule 17f-5(c)(iii) or (iv) promulgated under the Investment Company Act, or
which is exempt from such provisions under an order, no-action letter or release
issued by the Securities and Exchange Commission ("Eligible Foreign Securities
Depository").
(iv) Any Foreign Securities or Cash held by an Eligible Foreign
Custodian or an Eligible Foreign Securities Depository, shall be subject to
applicable laws, regulations, restrictions, customs, procedures, and market
practices (i) to which such Eligible Foreign Custodian or Eligible Foreign
Securities Depository is subject, (ii) as exist in the country in which such
Foreign Securities and Cash is held, and (iii) of the country of the currency in
which the Property is denominated. In the event that local laws or regulations
to which an Eligible Foreign Custodian or Eligible Foreign Securities Depository
is subject change in a way that would prevent or limit the performance of duties
and obligations by the Eligible Foreign Custodian or Foreign Securities
Depository, such duties and obligations shall be superseded and neither the Bank
nor any other member of the Citicorp organization shall be liable therefor or
for any damages in any way resulting from such prevented or limited performance.
The Fund acknowledges that, as is normally the case with respect to the deposits
outside the United States, deposits with Citibank London and any other entity
authorized to hold Property pursuant to the Agreement are not insured by the
Federal Deposit Insurance Corporation.
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(B) Provision of Information Regarding Foreign Custodians and Securities
Depositories
(i) The Bank shall use its best efforts to assist the Fund in
obtaining the following:
(a) As to each country in which Property is held, information
concerning whether, and to what extent, applicable foreign law would restrict
the access afforded the Fund's independent public accountants to books and
records kept by a foreign custodian or foreign securities depository used in
that country;
(b) As to each country in which Property is held, information
concerning whether, and to what extent, applicable foreign law would restrict
the Fund's ability to recover its assets in the event of the bankruptcy of a
foreign custodian or foreign securities depository used in that country;
(c) As to each country in which Property is held, information
concerning whether, and to what extent, applicable foreign law would restrict
the Fund's ability to recover assets that are lost while under the control of a
foreign custodian or foreign securities depository used in that country;
(d) As to each country in which Property is held, information
concerning whether under applicable foreign currency exchange regulations the
Fund's cash and cash equivalents held in that country are readily convertible to
U.S. dollars;
(e) Information relating to whether each foreign custodian or
foreign securities depository used would provide a level of safeguards for
maintaining the Fund's Securities not materially different from that provided by
the Bank in maintaining the Securities in the United States;
(f) Information concerning whether each foreign custodian or
foreign securities depository used has offices in the United States in order to
facilitate the assertion of jurisdiction over and enforcement of judgments
against such custodian or depository; and
(g) As to each foreign securities depository used, information
concerning the number of participants in, and operating history of, such
depository.
(ii) During the term of this Agreement, the Bank shall use its best
efforts to provide the Fund with prompt notice of any material changes in the
facts or circumstances upon which any of the foregoing information or statements
were based.
(iii) Notwithstanding any of the foregoing provisions of this
subsection (b) of this Section 7, the Bank's undertaking to assist the Fund in
obtaining the information referred to in this subsection (b) of the this Section
7 shall neither increase the Bank's duty of care nor reduce the Fund's
responsibility to determine for itself the prudence of entrusting its assets to
any particular foreign custodian or foreign securities depository.
(C) Segregation and Identification of Assets
The Bank will deposit Property of the Fund with an Eligible Foreign
Custodian only in an account which holds exclusively assets of customers of the
Bank. In the event that an Eligible Foreign Custodian is authorized to hold any
of the Foreign Securities placed in its care in an Eligible Foreign Securities
Depository pursuant to the provisions of subsection (A) of this Section 7, the
Bank will direct such Eligible Foreign Custodian to identify such Foreign
Securities on its books as being held for the account of the Bank as custodian
for its customers.
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(D) Instructions to Eligible Foreign Custodians; Instructions to Eligible
Foreign Securities Depositories
Any Property in the Custody Account held by an Eligible Foreign Custodian
will be subject only to the instructions of the Bank or its agents; and any
Foreign Securities held in an Eligible Foreign Securities Depository for the
account of an Eligible Foreign Custodian will be subject only to the
instructions of such Eligible Foreign Custodian, as subcustodian for the Bank.
(E) Contracts between the Bank and Exempt Subsidiaries
The Bank's contract with each Exempt Subsidiary provides:
(i) an acknowledgement by such Exempt Subsidiary that it is acting
as a foreign custodian for U.S. Investment Companies or their custodians
pursuant to the terms of the Exemptive Order;
(ii) that the Fund is entitled to enforce the terms of the
subcustodian agreement between the Bank and the Exempt Subsidiary and is
entitled to seek relief directly against the Exempt Subsidiary; and
(iii) an acknowledgement by such Exempt Subsidiary that at all times
it shall act with at least the due care expected of a professional custodian in
performing its duties.
8. CITICORP GUARANTEE
Citicorp agrees that it shall be liable, in accordance with the terms of a
guarantee issued in compliance with the conditions of the Exemptive Order, for
losses incurred by the Fund resulting from bankruptcy or insolvency of Exempt
Subsidiaries operating pursuant to the terms of the Exemptive Order. Citicorp's
obligations hereunder shall terminate automatically with respect to an Exempt
Subsidiary at such time as such obligations are no longer required by the
Exemptive Order. Obligations arising prior to the date of such termination shall
survive the termination.
9. USE OF AGENTS
The Bank may, subject to applicable laws, rules and regulations, appoint
agents, whether in its own name or that of the Fund, to perform any of the
duties of the Bank hereunder, and the Bank may delegate to any such agent so
appointed any of its functions under this Agreement.
10. INSTRUCTIONS
(A) The Bank is authorized to rely and act upon instructions
("Instructions") in writing which are signed by persons ("Authorized Persons")
named in a list provided to the Bank from time to time, which list must be
certified by the Fund's Secretary or Assistant Secretary and include
authenticated specimen signatures of all Authorized Persons.
(B) The Fund agrees that the Bank is authorized to rely and act upon such
Instructions in accordance with this Section 10 and the Funds Transfer
Procedures attached hereto and incorporated herein by reference (including each
Schedule A) to this Agreement and to debit or credit the applicable account(s)
of the Fund accordingly and that such Funds Transfer Procedures and method(s) of
transmission are commercially reasonable.
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(C) The Bank shall be entitled to rely upon the continued authority of any
Authorized Person to give Instructions until the Bank receives notice from the
Fund to the contrary; and the Bank shall be entitled to rely upon any
Instructions it believes in good faith to have been given by an Authorized
Person.
(D) The Bank is further authorized to rely upon any Instructions received
by any other means and identified as having been given or authorized by any
Authorized Person, regardless of whether such Instructions shall in fact have
been authorized or given by any of such Authorized Persons, provided that the
Bank and the Fund shall have agreed upon the means of transmission and the
method of identification for such Instructions. Instructions received by any
other means shall include but not be limited to verbal Instructions only in
connection with delivery against payment or receipt against payment transactions
and transfer from one account with the Bank to another with the Bank and
provided that such verbal Instructions are promptly confirmed in writing by the
Fund. Notwithstanding the foregoing, in the event any such verbal Instructions
are not subsequently confirmed in writing, as provided above, the Fund agrees to
hold the Bank harmless and without liability for any claims or losses in
connection with such verbal Instructions.
(E) The Fund agrees to be bound by any Instruction, whether or not
authorized, given to the Bank in its name and accepted by the Bank in accordance
with the provisions hereof (including but not limited to the Funds Transfer
Procedures and Schedule A thereto) and further agrees to indemnify and hold the
Bank harmless from and against any loss, liability, claim or expense (including
legal fees and expenses) associated with the Bank's acting upon such
Instructions as provided herein, except such as may arise from the Bank's own
negligence, bad faith or willful misconduct.
(F) The Fund may appoint one or more investment managers ("Investment
Managers") with respect to the Custody Account. The Bank is authorized to act
upon Instructions received from any Investment Manager to the same extent that
the Bank would act upon the Instructions of an Authorized Person, provided that
the Bank has received written evidence of the Investment Manager's appointment
and written confirmation from the Investment Manager evidencing acceptance of
such appointment. The Investment Manager shall provide to the Bank from time to
time a list of persons authorized to give Instructions on behalf of the
Investment Manager. The list must be certified by the Investment Manager's
Secretary or Assistant Secretary and include authenticated specimen signatures
of such persons.
(G) If the Fund should choose to have telecommunication or other means of
electronic access to the Bank's reporting system for Property in the Custody
Account, pursuant to paragraph (E) of Section 5, the Bank is also authorized to
rely and act upon any Instructions received by it through a terminal device,
provided that such Instructions are accompanied by code words which the Bank has
furnished to the Fund, or an Authorized Person, by any method mutually agreed to
by the Bank and the Fund, provided that the Bank has not been notified by the
Fund, or any such Authorized Person to cease to recognize such code words,
regardless of whether such Instructions shall in fact have been given or
authorized by the Fund or any such Authorized Person.
11. SEGREGATED ACCOUNT
The Bank, upon receipt of Instructions, shall establish and maintain a
Segregated Account or Accounts as described by the Securities and Exchange
Commission ("SEC") in Investment Company Act Release No. 10666, or any
subsequent release or releases of the SEC relating to the maintenance of
Segregated Accounts by registered investment companies (the "Release"). Upon
receipt of Instructions, the Bank shall transfer into such Account or Accounts
cash and/or Portfolio Securities:
(A) In accordance with the provisions of any agreement among the Fund, the
Bank and a broker-dealer registered under the Exchange Act and a member of the
NASD or any Futures Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Options Clearing Corporation
and of any registered national securities exchange or the Commodity Futures
Trading Commission or any registered Contract Market, or of any similar
organizations regarding escrow or other arrangements in connection with
transactions by the Fund;
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(B) For the purpose of segregating cash or securities in connection with
options purchased or written by the Fund or commodity futures purchased or
written by the Fund;
(C) For the deposit of any Portfolio Securities which the Fund has agreed
to sell on a forward commitment basis or other purpose on which the Release
applies;
(D) For other proper corporate purposes, but only, in the case of this
clause (D), upon receipt of, in addition to Instructions, a certified copy of a
resolution of the Board, or of the Executive Committee signed by an officer of
the Fund and certified by the Secretary or an Assistant Secretary, setting forth
the purpose or purposes of such Segregated Account and declaring such purposes
to be proper corporate purposes; and
(E) Assets may be withdrawn from the Segregated Account pursuant to
Instructions only:
(i) In accordance with the provisions of any agreements referred in
(a) or (b) above;
(ii) For sale or delivery to meet the Fund's obligations under
outstanding firm commitment or when-issued agreements for the purchase of
Portfolio Securities and under reverse repurchase agreements;
(iii) For exchange for other liquid assets of equal or greater value
deposited in the Segregated Account;
(iv) To the extent that the Fund's outstanding forward commitment or
when-issued agreements for the purchase of portfolio securities or reverse
repurchase agreements are sold to other parties or the Fund's obligations
thereunder are met from assets of the Fund other than those in the Segregated
Account; or
(v) For delivery upon settlement of a forward commitment agreement
for the sale of Portfolio Securities.
Notwithstanding anything herein to the contrary, the Bank shall have no
duty to, and shall not be obligated to determine or ascertain whether any such
Segregated Account, or any withdrawals or additions to such account is in
compliance with the rules, regulations and releases of the SEC, or that any such
Segregated Account or withdrawals or additions to such Segregated Account is
consistent with any other agreements or contracts the Fund may enter into from
time to time. Unless otherwise agreed to in writing, the Bank's sole
responsibility with respect to any Segregated Account or Accounts contemplated
in this Section shall be to act upon the Fund's Instructions.
12. THE FUND
(A) The Fund agrees that no printed material or other matter in any
language (including without limitation, prospectuses, statements of additional
information, notices to shareholders, annual reports and promotional material)
which mention the Bank's or Citicorp's name or the rights, powers or duties of
the custodian of the Fund shall be issued by the Fund or on the Fund's behalf
unless the Bank shall first have given its specific written consent thereto;
provided, however, that no prior consent shall be required if the only reference
to the Bank's or Citicorp's name is in identifying the Bank as the Fund's
custodian.
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(B) The Fund shall give prior notice to the Bank of any change in its
place of incorporation or organization, mailing address, or sponsors, or any
significant change in management, investment objectives, fees or redemption
rights.
(C) The Fund confirms that it is, and agrees that in the future it will
be, audited at least annually by an independent accounting firm and that it
mails, and in the future will mail, an audited financial report of the Fund to
its shareholders at least annually.
13. FEES AND EXPENSES
Fees and expenses for the services rendered under this Agreement shall be
mutually agreed upon by the parties in writing. The Bank shall be entitled to
debit the Custody Account for such fees and expenses.
14. LIENS
The Bank shall have a lien on the Property in the Custody Account to secure
payment of fees and expenses for the services rendered under this Agreement.
Except as otherwise provided in paragraph 22(D), if the Bank advances cash or
securities to the Fund for any purpose or in the event that the Bank or its
nominee shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of its duties
hereunder, except such as may arise from its or Its nominee's negligent action,
negligent failure to act or willful misconduct, any Property at any time held
for the Custody Account shall be security therefor and the Fund hereby grants a
security interest therein to the Bank. The Fund shall promptly reimburse the
Bank for any such advance of cash or securities or any such taxes, charges,
expenses, assessments, claims or liabilities upon request for payment. Except as
otherwise provided in paragraph 22(D), should the Fund fail to so reimburse the
Bank, the Bank shall be entitled to dispose of such Property to the extent
necessary to obtain reimbursement. The Bank shall be entitled to debit any
account of the Fund with the Bank including, without limitation, the Custody
Account in connection with any such advance and any interest on such advance as
the Bank deems reasonable.
15. TAX STATUS/WITHHOLDING TAXES
(A) The Fund's U.S. Tax Identification Number is MML Equity Fund 04-
2476032.
(B) The Fund may be required from time to time to file such proof of
taxpayer status or residence, to execute such certificates and to make such
representations and warranties, or to provide any other information or
documents, as the Bank and/or the Eligible Foreign Custodian may deem necessary
or proper to fulfill the Bank's and/or Eligible Foreign Custodian's obligations
under applicable law. The Fund shall provide the Bank and/or Eligible Foreign
Custodian in a timely manner, with copies of originals if necessary and
appropriate, or any such proofs of residence, taxpayer status, beneficial
ownership and any other information or documents which the Bank and/or a
Eligible Foreign Custodian may reasonably request.
(C) If any tax or other governmental charge or assessment shall become
payable with respect to any payment due to the Fund ("Taxes"), such Taxes shall
be withheld from such payment in accordance with applicable law. The Bank and/or
the Eligible Foreign Custodian may withhold any interest, any dividends or other
distributions or securities receivable in respect of Securities, proceeds from
the sale or distribution of Securities ("Payments"), or may sell for the account
of the Fund any part thereof or all of the Securities, and may apply such
Payment in satisfaction of such Taxes, the Fund remaining liable for any
deficiency. If any Taxes shall become payable with respect to any payment made
to the Fund by the Bank or a Eligible Foreign Custodian in a prior year, the
Bank and the Eligible Foreign Custodian may withhold Payments in satisfaction of
such prior year's Taxes. The Fund shall indemnify and hold harmless the Bank and
the Eligible Foreign Custodian, its officers, employees, agents and affiliated
companies against any Taxes, penalties, additions to tax, and interest, and
costs and expenses related thereto, arising out of claims against the Bank and
the Eligible Foreign Custodian by any governmental authority for failure to
withhold Taxes or arising out of any reclaim or refund of taxes or other tax
benefit obtained by the Bank or the Eligible Foreign Custodian for the Fund.
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(D) This Section 15 shall survive the termination of this Agreement and
continue in force until the time for assessment of all Taxes expires.
16. AMENDMENT
This Agreement may not be amended except by a written agreement among the
parties hereto.
17. TERMINATION
Either the Bank or the Fund may terminate this Agreement upon sixty (60)
days' written notice to the other parties.
18. CONFIDENTIALITY
Subject to the foregoing provisions of this Agreement and subject to any
applicable law, the Fund and the Bank shall each use best efforts to maintain
the confidentiality of matters concerning Property in the Custody Account.
19. NOTICES
All notices and other communications hereunder, except for Instructions and
reports relating to the Property which are transmitted through the Bank's
electronic reporting system for Property in the Custody Account, shall be in
writing, telex or telecopy or, if verbal, shall be promptly confirmed in
writing, and shall be hand-delivered, telexed, telecopied or mailed by prepaid
first class mail (except that notice of termination, if mailed, shall be by
prepaid registered or certified mail) to each party at its address set forth
above, if to the Fund, marked "Attention Hamline C. Wilson", and if to the Bank,
marked "Citibank as Custodian for "MML Series Investment Fund", and if to
Citicorp, marked "Attention of Office of Corporate Finance, Gregory C. Ehlke,
Vice President", and, if to any of the preceding, a copy shall be promptly
mailed or delivered to Mass Mutual Life Insurance Company, 1295 State Street,
Springfield, Massachusetts 01111, Attention, Allan B. Bixby, Vice President and
Treasurer, or at such other address as either party may give notice of to the
other.
20. ASSIGNMENT
No party may assign, transfer or charge all or any of its rights and
benefits hereunder without the written consent of the other parties. Any
purported assignments made in contravention of this Section shall be null and
void and of no effect whatsoever.
21. GOVERNING LAW
This Agreement shall be governed by and construed according to the laws of
the State of New York and the parties agree that the courts of the State of New
York shall have jurisdiction to hear and determine any suit, action or
proceeding and to settle any disputes which may arise out to or in connection
with this Agreement, and, for such purposes, each irrevocably submits to the
non-exclusive jurisdiction of such courts.
22. MISCELLANEOUS
(A) This Agreement may be executed in several counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.
(B) This Agreement contains the entire agreement among the parties
relating to custody of Property and supersedes all prior agreements on this
subject.
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(C) The captions of the various sections and subsections of this Agreement
have been inserted only for the purposes of convenience and shall not be deemed
in any manner to modify, explain, enlarge or restrict any of the provisions of
this Agreement.
(D) A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of the Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Board of Trustees
of the Trust as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees or shareholders individually
but are binding upon the assets and property of the Trust; provided, however,
that the Agreement and Declaration of Trust of the Trust provides that the
assets of a particular series of the Trust shall under no circumstances be
charged with liabilities attributable to any other series of the Trust and that
all persons extending credit to, or contracting with or having any claim against
a particular series of the Trust shall look only to the assets of that
particular series for payment of such credit, contract or claim.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized.
CITICORP, N.A. CITICORP
BY: /s/Wilma J. Williams BY: /s/Gregory C. Ehlke
NAME: Wilma J. Williams NAME: Gregory C. Ehlke
TITLE: North American Investors Services TITLE: Vice President
111 Wall Street/24th Floor
(212)657-9320
MML SERIES INVESTMENT FUND ON BEHALF OF MML EQUITY FUND
BY: /s/Stephen L. Kuhn
NAME: Stephen L. Kuhn
TITLE: Vice President -Secretary
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Exhibit 8(b)
U.S. INVESTMENT COMPANY
CUSTODIAL SERVICES AGREEMENT
CUSTODIAL SERVICES AGREEMENT dated as of November 10, 1994 among CITIBANK,
N.A., a national banking association having an office at 111 Wall Street, New
York, New York 10005 and acting through such office in New York (the "Bank"),
CITICORP, a corporation organized under the laws of the State of Delaware,
having an office at Citicorp Center, 153 East 53rd Street, New York, New York
10043 and MML Series Investment Fund, a Business Trust organized under the laws
of Massachusetts, having an office at 1295 State Street, Springfield,
Massachusetts, 01111. (the "Trust").
W I T N E S S E T H:
THAT WHEREAS, the Trust represents that it is a management investment
company registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act");
WHEREAS, the Trust further represents that it is duly incorporated,
organized or associated and in good standing under the laws of its state of
incorporation, organization or association and the consummation of transactions
contemplated hereby or directed by it hereunder will not violate any applicable
laws, regulations or orders;
WHEREAS, the Trust represents that it is authorized to (a) open and
maintain a custody account (the "Custody Account") with the Bank to hold certain
property ("Property"), including but not limited to stocks, bonds or other
securities ("Securities"), cash and other property owned or held by the Fund,
(b) to enter into this Agreement and (c) direct all actions and transactions
contemplated hereunder;
WHEREAS, the MML Money Market Fund is a series of the Trust (the "Fund");
and
WHEREAS, on June 12, 1992, the Securities and Exchange Commission issued an
order (the "Exemptive Order") which, among other things, exempts certain
indirect subsidiaries of Citicorp (the "Exempt Subsidiaries") from the
shareholders' equity requirements of Rule 17f-5 promulgated under the Investment
Company Act;
NOW, THEREFORE, in consideration of the premises and of the agreements
hereinafter set forth, the parties hereby agree as follows:
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1. APPOINTMENT AND ACCEPTANCE
The Fund hereby appoints the Bank as custodian of the Property and as its
agent hereunder, and the Bank agrees to act as such upon the terms and
conditions hereinafter provided.
2. DELIVERY; SAFEKEEPING
The Fund has heretofore delivered, or will deliver or cause to be delivered,
Property to the Bank, which Property the Bank agrees to keep safely as
custodian for the Fund. The Bank shall not surrender possession of Property
except upon properly authorized Instructions (as hereinafter defined) of the
Fund or as may be required by due process of applicable law.
3. IDENTIFICATION AND SEGREGATION OF ASSETS
With respect to Property in the Custody Account:
(A) Except as otherwise provided in this Agreement, the Bank will separately
identify on its books as belonging to the Fund and, to the extent
practicable, segregate all Property held pursuant to this Agreement by the
Bank or any other entity authorized to hold Property in accordance with
Section 6 or 7 hereof.
(B) The Bank shall supply to the Fund from time to time as mutually agreed
upon a written statement with respect to all of the Property in the Custody
Account. In the event that the Fund does not inform the Bank in writing of
any exceptions or objections within sixty (60) days after receipt of such
statement, the Fund shall be deemed to have approved such statement.
4. STANDARD OF CARE
(A) The Bank shall exercise the same standard of care that it exercises over
its own assets in the safekeeping, handling, servicing, and disposition of
the Property in accordance with this Agreement. The Bank will exercise the
due care expected of a professional custodian for hire with respect to the
Property in its possession or control.
(B) The Bank shall be responsible for the acts or omissions of any Exempt
Subsidiary acting as a foreign subcustodian pursuant to the Exemptive Order
or any subsequent Exemptive Order issued by the Securities and Exchange
Commission to the same extent as if the act or omission of such Exempt
Subsidiary were that of the Bank.
(C) Except as otherwise provided above, the Bank shall use reasonable care
in selecting, and shall be responsible only for the proper selection of, any
foreign subcustodian or foreign depository.
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(D) The Bank's delegation of duties to an Exempt Subsidiary shall not
relieve the Bank of any responsibility to the Fund for any loss due to such
delegation, except such losses or damages which may result from (i)
political risk, including, but not limited to losses resulting from exchange
control restrictions, confiscation, expropriation, nationalization,
insurrection, civil strife or armed hostilities and (ii) other risk of loss
for which neither the Bank nor any foreign subcustodian would be liable
under Rule 17f-5 promulgated under the Investment Company Act.
(E) In the event the Fund enters into triparty repurchase agreements
pursuant to which collateral therefor is to be held by a custodian other
than the Bank and the Fund instructs the Bank to deliver Property to such
custodian, the Bank shall be under no duty to determine whether such
custodian satisfies the requirements of Section 17(f) of the Investment
Company Act or the Rules promulgated thereunder. Citibank shall have no
further duties or obligations under this Agreement with respect to such
Property.
(F) The Bank is not under any duty to supervise the investments of the Fund,
or to advise or make any recommendation to the Fund with respect to the
purchase or sale of any of the Securities or the investment of any cash. The
Fund shall have the sole and exclusive responsibility for investment of
Property held hereunder.
5. PERFORMANCE BY THE BANK
(A) General
-------
The Bank's performance of its duties hereunder and the day-to-day operations
of the Custody Account shall be in accordance with written service standards
furnished to, and accepted by the Fund in writing, by the Bank from time to
time, provided that at all times the Bank shall use at least the due care
expected of a professional custodian for hire in the performance of its
duties. Such service standards, as amended from time to time, are
incorporated herein by reference.
(B) Receipt, Delivery and Disposal of Securities
--------------------------------------------
The Bank shall, or shall instruct any other entity authorized to hold
Property in accordance with Section 6 or 7 hereof to, receive or deliver
Securities and credit or debit the Fund's account, in accordance with
properly authorized Instructions from the Fund. The Bank or such entity
shall also receive in custody all stock dividends, rights and similar
securities issued in connection with Securities held hereunder, shall
surrender for payment, in a timely manner, all items maturing or called for
redemption and shall take such other action as the Fund may direct in
properly authorized Instructions.
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(C) Registration
------------
Securities held hereunder may be registered in the name of the Bank, any
entity authorized to hold Property in accordance with Section 6 or 7 hereof,
or a nominee of the Bank or any such authorized entity, and the Fund shall
be informed upon request of all such registrations. Securities in registered
form will be transferred upon request of the Fund into such names or
registrations as it may specify in properly authorized Instructions.
(D) Cash Accounts
-------------
(i) All cash received or held by the Bank or by any entity authorized to
hold Property in accordance with Section 7 hereof as interest, dividends,
proceeds from transfer, and other payments for or with respect to the
Securities shall be (x) held in a cash account in accordance with properly
authorized Instructions received by the Bank or such entity, or (y) if
specified in the Fund's Instructions, converted to or from U.S. dollars and
remitted to the Fund. The Fund shall bear any foreign exchange risk in
connection with any such conversion. In effecting any currency conversions
hereunder, the Bank or such entity may use any methods or agencies as it may
see fit including the Bank's or such entity's facilities at customary rates.
(ii) The Fund agrees, with respect to all payments for purchases of
Securities to be deposited in the Custody Account, that funds for settlement
will be on deposit by the settlement date at the location of settlement, in
good available funds and in the currency of settlement. The Fund
acknowledges that nothing in this Agreement shall obligate the Bank to
extend credit, grant financial accommodation or otherwise advance moneys to
the Fund for the purpose of making any payments for purchases or part
thereof or otherwise carrying out any Instructions.
(iii) The Fund authorizes the Bank from time to time to cause the branch
of the Bank located in London, England ("Citibank London") to establish a
multicurrency cash account reflecting cash received by any Eligible Foreign
Custodian (as hereinafter defined) on the Fund's behalf. Citibank London
will maintain such cash account in accordance with the requirements of
Section 7 hereof applicable to an entity authorized to hold Property
hereunder.
(E) Reports
-------
(i) If the Bank has in place a system for providing telecommunication
access or other means of electronic access by customers to the Bank's
reporting system for Property in the Custody Account, then, at the Fund's
election, the Bank shall provide the Fund with such instructions and
passwords as may be necessary in order for the Fund to have such electronic
access through the terminal device under the control of the Fund. Such
electronic access shall be restricted to information relating to the Custody
Account. If electronic access to such reporting system is requested by the
Fund, the Fund agrees to assume full responsibility for the consequences of
such use, including any misuse or unauthorized use of the terminal device,
instructions or passwords referred to above, and agrees to defend and
indemnify the Bank and hold the Bank harmless from and against any and all
liabilities, losses, damages, costs, counsel fees, and other expenses of
every nature suffered or incurred by the Bank by reason of or in connection
with the negligent or wrongful acts of the Fund, its agents
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<PAGE>
or employees, as to the terminal device, unless such liabilities, losses,
damages, costs, counsel fees and other expenses can be shown to be the
result of negligent or wrongful acts of the Bank, the Bank's employees or
the Bank's agents. Further, in the event the Fund elects to have electronic
access, the Bank shall provide the Fund on each business day a report of the
preceding business day's transactions relating to the Custody Account and of
the closing or net balances of each business day. If the Fund does not
choose to have electronic access, the Bank shall provide the Fund with such
reports of transactions in the Custody Account by such means as may be
mutually agreed upon.
(ii) The Bank agrees to use reasonable efforts to furnish the Fund with
such information regarding Property held hereunder as the Fund may
reasonably request in connection with its complying with requests of any
regulatory authorities having jurisdiction over the Fund.
(iii) The Bank shall also, subject to restrictions under applicable law,
obtain from any entity that it directly or indirectly controls or is
controlled by, and shall seek to obtain from any other entity with which
the Bank maintains the physical possession of any of the Property in the
Custody Account records of such entity relating to the Property in the
Custody Account as may be required by the Fund or its agents in connection
with an internal examination by the Fund of its own affairs. Upon a
reasonable request from the Fund, the Bank shall furnish to the Fund such
reports (or portions thereof) of the external auditors of each entity that
it directly or indirectly controls or is controlled by, and shall use its
best efforts to furnish to the Fund reports (or portions thereof) of the
external auditors of each such other entity relating directly to such
entity's system of internal accounting controls applicable to its duties
under its agreement with the Bank.
(F) Access
------
During the Bank's regular banking, any officer or employee of the Fund, any
independent accountant(s) selected by the Fund and any person designated by
any regulatory authority having jurisdiction over the Fund shall be entitled
to examine on the Bank's premises, Property held by the Bank on its premises
and the Bank's records regarding Property held hereunder deposited with
entities authorized to hold Property in accordance with Section 6 or 7
hereof, but only upon the Fund's furnishing the Bank with properly
authorized Instructions to that effect, provided that such examination shall
--------
be consistent with the Bank's obligations of confidentiality to other
parties. The Bank's costs and expenses in facilitating such examinations
shall be borne by the Fund, provided that such costs and expenses shall not
--------
be deemed to include the Bank's costs in providing to the Fund: (i) the
"single audit report" of the independent certified public accountants
engaged by the Bank and (ii) such reports and documents as this Agreement
contemplates that the Bank shall furnish routinely to the Fund.
5
<PAGE>
(G) Voting and other Action
-----------------------
(i) The Bank will transmit to the Fund upon receipt, and will instruct
any entities authorized to hold Property in accordance with Section 6 of 7
hereof to transmit to the Fund upon receipt, all financial reports,
stockholder communications, notices, proxies and proxy soliciting materials
received from issuers of the Securities, and all information relating to
exchange or tender offers received from offers with respect to the
Securities. Such proxies will be executed by the registered holder if the
registered holder is other than the Fund, but the manner in which Securities
are to be voted will not be indicated. Neither the Bank nor any other entity
holding Property hereunder shall vote any of the Securities or authorize the
voting of any Securities or give any consent or take any other action with
respect thereto, except as otherwise provided herein.
(ii) In the event of tender offers, the Fund will hand deliver or
telecopy Instructions to the Bank as to the action to be taken with respect
thereto, designating such Instructions as being related to a tender offer.
The Fund shall hold the Bank harmless from any adverse consequences of the
Fund's use of any other method of transmitting Instructions relating to a
tender offer.
(iii) The Fund agrees that if it gives an Instruction after 2:00 PM
eastern time with respect to U.S. domestic custody for the performance of an
act on the last permissible date of a period established by a tender offer
or on the last permissible date for the performance of such act, the Fund
shall hold the Bank harmless from any adverse consequences in connection
with acting upon or failing to act upon such Instructions. With respect to
non-U.S. domestic custody, the Fund agrees that if it gives an Instruction
for the performance of an act on the last permissible date of a period
established by a tender offer or on the last permissible date for the
performance of such act, the Fund shall hold the Bank harmless from any
adverse consequences in connection with acting upon or failing to act upon
such Instructions.
(iv) The Bank is authorized to accept and open on the Fund's behalf all
mail or communications relating to the Property received by the Bank or
directed in its care.
6. AUTHORIZED USE OF U.S. DEPOSITORIES
The Fund authorizes the Bank, for any Securities held hereunder, to use the
services of any United States securities depository permitted to perform
such services for registered investment companies and their custodians under
Rule 17f-4 promulgated under the Investment Company Act, including but not
limited to, The Depository Trust Company, the Federal Reserve Book Entry
System and Participants Trust Company ("U.S. Depositories"). The Bank will
deposit Securities held hereunder with a U.S. Depository only in an account
which holds assets of customers of the Bank.
6
<PAGE>
7. USE OF FOREIGN CUSTODIANS
(A) Authorization
-------------
(i) The Bank may cause Securities which are foreign securities within
the meaning of Rule 17f-5(c)(1) promulgated under the Investment Company Act
("Foreign Securities") and amounts of cash and cash equivalents reasonably
required to effect the Fund's Foreign Securities transactions ("Cash") in
the Custody Account to be held in such country or other jurisdiction as the
Fund shall direct in properly authorized Instructions.
(ii) Subject to prior approval by the board of trustees of the Fund, the
Bank may hold such Foreign Securities and Cash in subcustody accounts, which
shall be deemed part of the Custody Account and which have been established
by the Bank with (x) branches of "Qualified U.S. Banks", as defined in Rule
17f-5(c)(3) promulgated under the Investment Company Act ("Branches"), or
(y) foreign custodians which satisfy the provisions of Rule l7f-5(c)(2)(i)
or (ii) promulgated under the Investment Company Act, or (z) Exempt
Subsidiaries or other foreign custodians which are exempt from such
provisions under the Exemptive Order or any other order or release issued by
the Securities and Exchange Commission (such Branches, foreign custodians
and Exempt Subsidiaries, collectively, the "Eligible Foreign Custodians").
(iii) Subject to prior approval by the board of trustees of the Fund,
the Bank or an Eligible Foreign Custodian is authorized to hold Foreign
Securities of the Fund in an account with any foreign securities depository
or foreign clearing agency which in the Bank's judgment satisfies the
provisions of Rule 17f-5(c)(iii) or (iv) promulgated under the Investment
Company Act, or which is exempt from such provisions under an order, no-
action letter or release issued by the Securities and Exchange Commission
("Eligible Foreign Securities Depository").
(iv) Any Foreign Securities or Cash held by an Eligible Foreign
Custodian or an Eligible Foreign Securities Depository, shall be subject to
applicable laws, regulations, restrictions, customs, procedures, and market
practices (i) to which such Eligible Foreign Custodian or Eligible Foreign
Securities Depository is subject, (ii) as exist in the country in which such
Foreign Securities and Cash is held, and (iii) of the country of the
currency in which the Property is denominated. In the event that local laws
or regulations to which an Eligible Foreign Custodian or Eligible Foreign
Securities Depository is subject change in a way that would prevent or limit
the performance of duties and obligations by the Eligible Foreign Custodian
or Foreign Securities Depository, such duties and obligations shall be
superseded and neither the Bank nor any other member of the Citicorp
organization shall be liable therefor or for any damages in any way
resulting from such prevented or limited performance. The Fund acknowledges
that, as is normally the case with respect to the deposits outside the
United States, deposits with Citibank London and any other entity authorized
to hold Property pursuant to the Agreement are not insured by the Federal
Deposit Insurance Corporation.
(B) Provision of Information Regarding Foreign Custodians and Securities
--------------------------------------------------------------------
Depositories
------------
(i) The Bank shall use its best efforts to assist the Fund in obtaining
following:
7
<PAGE>
(a) As to each country in which Property is held, information concerning
whether, and to what extent, applicable foreign law would restrict the
access afforded the Fund's independent public accountants to books and
records kept by a foreign custodian or foreign securities depository used in
that country;
(b) As to each country in which Property is held, information concerning
whether, and to what extent, applicable foreign law would restrict the
Fund's ability to recover its assets in the event of the bankruptcy of a
foreign custodian or foreign securities depository used in that country;
(c) As to each country in which Property is held, information concerning
whether, and to what extent, applicable foreign law would restrict the
Fund's ability to recover assets that are lost while under the control of a
foreign custodian or foreign securities depository used in that country;
(d) As to each country in which Property is held, information concerning
whether under applicable foreign currency exchange regulations the Fund's
cash and cash equivalents held in that country are readily convertible to
U.S. dollars;
(e) Information relating to whether each foreign custodian or foreign
securities depository used would provide a level of safeguards for
maintaining the Fund's Securities not materially different from that
provided by the Bank in maintaining the Securities in the United States;
(f) Information concerning whether each foreign custodian or foreign
securities depository used has offices in the United States in order to
facilitate the assertion of jurisdiction over and enforcement of judgments
against such custodian or depository; and
(g) As to each foreign securities depository used, information concerning
the number of participants in, and operating history of, such depository.
(ii) During the term of this Agreement, the Bank shall use its best efforts to
provide the Fund with prompt notice of any material changes in the facts or
circumstances upon which any of the foregoing information or statements were
based.
(iii) Notwithstanding any of the foregoing provisions of this subsection (b)
of this Section 7, the Bank's undertaking to assist the Fund in obtaining the
information referred to in this subsection (b) of the this Section 7 shall
neither increase the Bank's duty of care nor reduce the Fund's responsibility
to determine for itself the prudence of entrusting its assets to any particular
foreign custodian or foreign securities depository.
8
<PAGE>
(C) Segregation and Identification of Assets
----------------------------------------
The Bank will deposit Property of the Fund with an Eligible Foreign
Custodian only in an account which holds exclusively assets of customers of
the Bank. In the event that an Eligible Foreign Custodian is authorized to
hold any of the Foreign Securities placed in its care in an Eligible Foreign
Securities Depository pursuant to the provisions of subsection (A) of this
Section 7, the Bank will direct such Eligible Foreign Custodian to identify
such Foreign Securities on its books as being held for the account of the
Bank as custodian for its customers.
(D) Instructions to Eligible Foreign Custodians; Instructions to Eligible
---------------------------------------------------------------------
Foreign Securities Depositories
-------------------------------
Any Property in the Custody Account held by an Eligible Foreign Custodian
will be subject only to the instructions of the Bank or its agents; and any
Foreign Securities held in an Eligible Foreign Securities Depository for the
account of an Eligible Foreign Custodian will be subject only to the
instructions of such Eligible Foreign Custodian, as subcustodian for the
Bank.
(E) Contracts between the Bank and Exempt Subsidiaries.
---------------------------------------------------
The Bank's contract with each Exempt Subsidiary provides:
(i) an acknowledgement by such Exempt Subsidiary that it is acting as a
foreign custodian for U.S. Investment Companies or their custodians
pursuant to the terms of the Exemptive Order;
(ii) that the Fund is entitled to enforce the terms of the subcustodian
agreement between the Bank and the Exempt Subsidiary and is entitled to
seek relief directly against the Exempt Subsidiary; and
(iii) an acknowledgement by such Exempt Subsidiary that at all times it
shall act with at least the due care expected of a professional
custodian in performing its duties.
8. CITICORP GUARANTEE
Citicorp agrees that it shall be liable, in accordance with the terms of a
guarantee issued in compliance with the conditions of the Exemptive Order,
for losses incurred by the Fund resulting from bankruptcy or insolvency of
Exempt Subsidiaries operating pursuant to the terms of the Exemptive Order.
Citicorp's obligations hereunder shall terminate automatically with respect
to an Exempt Subsidiary at such time as such obligations are no longer
required by the Exemptive Order. Obligations arising prior to the date of
such termination shall survive the termination.
9
<PAGE>
9. USE OF AGENTS
The Bank may, subject to applicable laws, rules and regulations, appoint
agents, whether in its own name or that of the Fund, to perform any of the
duties of the Bank hereunder, and the Bank may delegate to any such agent so
appointed any of its functions under this Agreement.
10. INSTRUCTIONS
(A) The Bank is authorized to rely and act upon instructions
("Instructions") in writing which are signed by persons ("Authorized
Persons") named in a list provided to the Bank from time to time, which fist
must be certified by the Fund's Secretary or Assistant Secretary and include
authenticated specimen signatures of all Authorized Persons.
(B) The Fund agrees that the Bank is authorized to rely and act upon such
Instructions in accordance with this Section 10 and the Funds Transfer
Procedures attached hereto and incorporated herein by reference (including
each Schedule A) to this Agreement and to debit or credit the applicable
account(s) of the Fund accordingly and that such Funds Transfer Procedures
and method(s) of transmission are commercially reasonable.
(C) The Bank shall be entitled to rely upon the continued authority of any
Authorized Person to give Instructions until the Bank receives notice from
the Fund to the contrary; and the Bank shall be entitled to rely upon any
Instructions it believes in good faith to have been given by an Authorized
Person.
(D) The Bank is further authorized to rely upon any Instructions received by
any other means and identified as having been given or authorized by any
Authorized Person, regardless of whether such Instructions shall in fact
have been authorized or given by any of such Authorized Persons, provided
--------
that the Bank and the Fund shall have agreed upon the means of transmission
and the method of identification for such Instructions. Instructions
received by any other means shall include but not be limited to verbal
Instructions only in connection with delivery against payment or receipt
against payment transactions and transfer from one account with the Bank to
another with the Bank and provided that such verbal Instructions are
promptly confirmed in writing by the Fund. Notwithstanding the foregoing, in
the event any such verbal Instructions are not subsequently confirmed in
writing, as provided above, the Fund agrees to hold the Bank harmless and
without liability for any claims or losses in connection with such verbal
Instructions.
(E) The Fund agrees to be bound by any Instruction, whether or not
authorized, given to the Bank in its name and accepted by the Bank in
accordance with the provisions hereof (including but not limited to the
Funds Transfer Procedures and Schedule A thereto) and further agrees to
indemnify and hold the Bank harmless from and against any loss, liability,
claim or expense (including legal fees and expenses) associated with the
Bank's acting upon such Instructions as provided herein, except such as may
arise from the Bank's own negligence, bad faith or willful misconduct.
10
<PAGE>
(F) The Fund may appoint one or more investment managers ("Investment
Managers") with respect to the Custody Account. The Bank is authorized to
act upon Instructions received from any Investment Manager to the same
extent that the Bank would act upon the Instructions of an Authorized
Person, provided that the Bank has received written evidence of the
--------
Investment Manager's appointment and written confirmation from the
Investment Manager evidencing acceptance of such appointment. The
Investment Manager shall provide to the Bank from time to time a list of
persons authorized to give Instructions on behalf of the Investment
Manager. The list must be certified by the Investment Manager's Secretary
or Assistant Secretary and include authenticated specimen signatures of
such persons.
(G) If the Fund should choose to have telecommunication or other means of
electronic access to the Bank's reporting system for Property in the
Custody Account, pursuant to paragraph (E) of Section 5, the Bank is also
authorized to rely and act upon any Instructions received by it through a
terminal device, provided that such Instructions are accompanied by code
---------
words which the Bank has furnished to the Fund, or an Authorized Person, by
any method mutually agreed to by the Bank and the Fund, provided that the
Bank has not been notified by the Fund, or any such Authorized Person to
cease to recognize such code words, regardless of whether such Instructions
shall in fact have been given or authorized by the Fund or any such
Authorized Person.
11. SEGREGATED ACCOUNT
The Bank, upon receipt of Instructions, shall establish and maintain a
Segregated Account or Accounts as described by the Securities and Exchange
Commission ("SEC") in Investment Company Act Release No. 10666, or any
subsequent release or releases of the SEC relating to the maintenance of
Segregated Accounts by registered investment companies (the "Release").
Upon receipt of Instructions, the Bank shall transfer into such Account or
Accounts cash and/or Portfolio Securities:
(A) In accordance with the provisions of any agreement among the Fund, the
Bank and a broker-dealer registered under the Exchange Act and a member of
the NASD or any Futures Commission Merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange or the
Commodity Futures Trading Commission or any registered Contract Market, or
of any similar organizations regarding escrow or other arrangements in
connection with transactions by the Fund;
(B) For the purpose of segregating cash or securities in connection with
options purchased or written by the Fund or commodity futures purchased or
written by the Fund;
(C) For the deposit of any Portfolio Securities which the Fund has agreed
to sell on a forward commitment basis or other purpose on which the Release
applies;
11
<PAGE>
(D) For other proper corporate purposes, but only, in the case of this
clause (D), upon receipt of, in addition to Instructions, a certified copy
of a resolution of the Board, or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such Segregated Account
and declaring such purposes to be proper corporate purposes; and
(E) Assets may be withdrawn from the Segregated Account pursuant to
Instructions only:
(i) In accordance with the provisions of any agreements referred in (a) or
(b) above;
(ii) For sale or delivery to meet the Fund's obligations under outstanding
firm commitment or when-issued agreements for the purchase of Portfolio
Securities and under reverse repurchase agreements;
(iii) For exchange for other liquid assets of equal or greater value
deposited in the Segregated Account;
(iv) To the extent that the Fund's outstanding forward commitment or when-
issued agreements for the purchase of portfolio securities or reverse
repurchase agreements are sold to other parties or the Fund's obligations
thereunder are met from assets of the Fund other than those in the
Segregated Account; or
(v) For delivery upon settlement of a forward commitment agreement for the
sale of Portfolio Securities.
Notwithstanding anything herein to the contrary, the Bank shall have no
duty to, and shall not be obligated to determine or ascertain whether any
such Segregated Account, or any withdrawals or additions to such account is
in compliance with the rules, regulations and releases of the SEC, or that
any such Segregated Account or withdrawals or additions to such Segregated
Account is consistent with any other agreements or contracts the Fund may
enter into from time to time. Unless otherwise agreed to in writing, the
Bank's sole responsibility with respect to any Segregated Account or
Accounts contemplated in this Section shall be to act upon the Fund's
Instructions.
12. THE FUND
(A) The Fund agrees that no printed material or other matter in any
language (including without limitation, prospectuses, statements of
additional information, notices to shareholders, annual reports and
promotional material) which mention the Bank's or Citicorp's name or the
rights, powers or duties of the custodian of the Fund shall be issued by
the Fund or on the Fund's behalf unless the Bank shall first have given its
specific written consent thereto; provided, however, that no prior consent
shall be required if the only reference to the Bank's or Citicorp's name is
in identifying the Bank as the Fund's custodian.
12
<PAGE>
(B) The Fund shall give prior notice to the Bank of any change in its place
of incorporation or organization, mailing address, or sponsors, or any
significant change in management, investment objectives, fees or redemption
rights.
(C) The Fund confirms that it is, and agrees that in the future it will be,
audited at least annually by an independent accounting firm and that it
mails, and in the future will mail, an audited financial report of the Fund
to its shareholders at least annually.
13. FEES AND EXPENSES
Fees and expenses for the services rendered under this Agreement shall be
mutually agreed upon by the parties in writing. The Bank shall be entitled
to debit the Custody Account for such fees and expenses.
14. LIENS
The Bank shall have a lien on the Property in the Custody Account to secure
payment of fees and expenses for the services rendered under this
Agreement. Except as otherwise provided in paragraph 22(D), if the Bank
advances cash or securities to the Fund for any purpose or in the event
that the Bank or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the
performance of its duties hereunder, except such as may arise from its or
its nominee's negligent action, negligent failure to act or willful
misconduct, any Property at any time held for the Custody Account shall be
security therefor and the Fund hereby grants a security interest therein to
the Bank. The Fund shall promptly reimburse the Bank for any such advance
of cash or securities or any such taxes, charges, expenses, assessments,
claims or liabilities upon request for payment. Except as otherwise
provided in paragraph 22(D), should the Fund fail to so reimburse the Bank,
the Bank shall be entitled to dispose of such Property to the extent
necessary to obtain reimbursement. The Bank shall be entitled to debit any
account of the Fund with the Bank including, without limitation, the
Custody Account in connection with any such advance and any interest on
such advance as the Bank deems reasonable.
15. TAX STATUS/WITHHOLDING TAXES.
(A) The Fund's U.S. Tax Identification Number is MML Money Market Fund 04-
2741780.
(B) The Fund may be required from time to time to file such proof of
taxpayer status or residence, to execute such certificates and to make such
representations and warranties, or to provide any other information or
documents, as the Bank and/or the Eligible Foreign Custodian may deem
necessary or proper to fulfill the Bank's and/or Eligible Foreign
Custodian's obligations under applicable law. The Fund shall provide the
Bank and/or Eligible Foreign Custodian in a timely with copies of originals
if necessary and appropriate, or any such proofs of residence, taxpayer
status, beneficial ownership and any other information or documents which
the Bank and/or a Eligible Foreign Custodian may reasonably request.
13
<PAGE>
(C) If any tax or other governmental charge or assessment shall become
payable with respect to any payment due to the Fund ("Taxes"), such Taxes
shall be withheld from such payment in accordance with applicable law. The
Bank and/or the Eligible Foreign Custodian may withhold any interest, any
dividends or other distributions or securities receivable in respect of
Securities, proceeds from the sale or distribution of Securities
("Payments"), or may sell for the account of the Fund any part thereof or
all of the Securities, and may apply such Payment in satisfaction of such
Taxes, the Fund remaining liable for any deficiency. If any Taxes shall
become payable with respect to any payment made to the Fund by the Bank or
a Eligible Foreign Custodian in a prior year, the Bank and the Eligible
Foreign Custodian may withhold Payments in satisfaction of such prior
year's Taxes. The Fund shall indemnify and hold harmless the Bank and the
Eligible Foreign Custodian, its officers, employees, agents and affiliated
companies against any Taxes, penalties, additions to tax, and interest, and
costs and expenses related thereto, arising out of claims against the Bank
and the Eligible Foreign Custodian by any governmental authority for
failure to withhold Taxes or arising out of any reclaim or refund of taxes
or other tax benefit obtained by the Bank or the Eligible Foreign Custodian
for the Fund.
(D) This Section 15 shall survive the termination of this Agreement and
continue in force until the time for assessment of all Taxes expires.
16. AMENDMENT
This Agreement may not be amended except by a written agreement among the
parties hereto.
17. TERMINATION
Either the Bank or the Fund may terminate this Agreement upon sixty (60)
days' written notice to the other parties.
18. CONFIDENTIALITY
Subject to the foregoing provisions of this Agreement and subject to any
applicable law, the Fund and the Bank shall each use best efforts to
maintain the confidentiality of matters concerning Property in the Custody
Account.
19. NOTICES
All notices and other communications hereunder, except for Instructions and
reports relating to the Property which are transmitted through the Bank's
electronic reporting system for Property in the Custody Account, shall be
in writing, telex or telecopy or, if verbal, shall be promptly confirmed in
writing, and shall be hand-delivered, telexed, telecopied or mailed by
prepaid first class mail (except that notice of termination, if mailed,
shall be by prepaid registered or certified mail) to each party at its
address set forth above, if to the Fund, marked "Attention Hamline C.
----------
Wilson" and if to the Bank, marked "Citibank as Custodian for MML Series
------ ----------
Investment Fund", and if to
----------
14
<PAGE>
Citicorp, marked "Attention of Office of Corporate Finance, Gregory C.
Ehlke, Vice President", and, if to any of the preceding, a copy shall be
promptly mailed or delivered to Mass Mutual Life Insurance Company, 1295
State Street, Springfield, Massachusetts 01111, Attention, Allan B. Bixby,
Vice President and Treasurer, or at such other address as either party may
give notice of to the other.
20. ASSIGNMENT
No party may assign, transfer or charge all or any of its rights and
benefits hereunder without the written consent of the other parties. Any
purported assignments made in contravention of this Section shall be null
and void and of no effect whatsoever.
21. GOVERNING LAW
This Agreement shall be governed by and construed according to the laws of
the State of New York and the parties agree that the courts of the State of
New York shall have jurisdiction to hear and determine any suit, action or
proceeding and to settle any disputes which may arise out to or in
connection with this Agreement, and, for such purposes, each irrevocably
submits to the non-exclusive jurisdiction of such courts.
22. MISCELLANEOUS
(A) This Agreement may be executed in several counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.
(B) This Agreement contains the entire agreement among the parties relating
to custody of Property and supersedes all prior agreements on this subject.
(C) The captions of the various sections and subsections of this Agreement
have been inserted only for the purposes of convenience and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.
(D) A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of the Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Board of
Trustees of the Trust as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding upon the assets and property of
the Trust; provided, however, that the Agreement and Declaration of Trust
of the Trust provides that the assets of a particular series of the Trust
shall under no circumstances be charged with liabilities attributable to
any other series of the Trust and that all persons extending credit to, or
contracting with or having any claim against a particular series of the
Trust shall look only to the assets of that particular series for payment
of such credit, contract or claim.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized.
CITIBANK, N.A. CITICORP
BY: /s/ Wilma Williams BY: /s/ Gregory C. Ehlke
NAME: Wilma J. Williams NAME: Gregory C. Ehlke
TITLE: North American TITLE: Vice President
Investors Services
111 Wall Street/24th Floor
(212)657-9320
MML SERIES INVESTMENT FUND ON BEHALF OF MML MONEY MARKET
FUND
BY: /s/ Stephen L. Kuhn
NAME: Stephen L. Kuhn
TITLE: Vice President-Secretary
16
<PAGE>
Exhibit 8(c)
U.S. INVESTMENT COMPANY
CUSTODIAL SERVICES AGREEMENT
CUSTODIAL SERVICES AGREEMENT dated as of November 10, 1994 among CITIBANK,
N.A., a national banking association having an office at 111 Wall Street, New
York, New York 10005 and acting through such office in New York (the "Bank"),
CITICORP, a corporation organized under the laws of the State of Delaware,
having an office at Citicorp Center, 153 East 53rd Street, New York, New York
10043 and MML Series Investment Fund, a Business Trust organized under the laws
of Massachusetts, having an office at 1295 State Street, Springfield,
Massachusetts, 01111. (the "Trust").
WITNESSETH:
THAT WHEREAS, the Trust represents that it is a management investment
company registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act
WHEREAS, the Trust further represents that it is duly incorporated,
organized or associated and in good standing under the laws of its state of
incorporation, organization or association and the consummation of transactions
contemplated hereby or directed by it hereunder will not violate any applicable
laws, regulations or orders;
WHEREAS, the Trust represents that it is authorized to (a) open and
maintain a custody account (the "Custody Account") with the Bank to hold certain
property ("Property"), including but not limited to stocks, bonds or other
securities ("Securities"), cash and other property owned or held by the Fund,
(b) to enter into this Agreement and (c) direct all actions and transactions
contemplated hereunder;
WHEREAS, The MML Managed Bond Fund is a series of the Trust (the "Fund");
and
WHEREAS, on June 12, 1992, the Securities and Exchange Commission issued an
order (the "Exemptive Order") which, among other things, exempts certain
indirect subsidiaries of Citicorp (the "Exempt Subsidiaries") from the
shareholders' equity requirements of Rule 17f-5 promulgated under the Investment
Company Act;
NOW, THEREFORE, in consideration of the premises and of the agreements
hereinafter set forth, the parties hereby agree as follows:
1
<PAGE>
1. APPOINTMENT AND ACCEPTANCE
The Fund hereby appoints the Bank as custodian of the Property and as its
agent hereunder, and the Bank agrees to act as such upon the terms and
conditions hereinafter provided.
2. DELIVERY; SAFEKEEPING
The Fund has heretofore delivered, or will deliver or cause to be delivered,
Property to the Bank, which Property the Bank agrees to keep safely as
custodian for the Fund. The Bank shall not surrender possession of Property
except upon properly authorized Instructions (as hereinafter defined) of the
Fund or as may be required by due process of applicable law.
3. IDENTIFICATION AND SEGREGATION OF ASSETS
With respect to Property in the Custody Account:
(A) Except as otherwise provided in this Agreement, the Bank will separately
identify on its books as belonging to the Fund and, to the extent
practicable, segregate all Property held pursuant to this Agreement by the
Bank or any other entity authorized to hold Property in accordance with
Section 6 or 7 hereof.
(B) The Bank shall supply to the Fund from time to time as mutually agreed
upon a written statement with respect to all of the Property in the Custody
Account. In the event that the Fund does not inform the Bank in writing of
any exceptions or objections within sixty (60) days after receipt of such
statement, the Fund shall be deemed to have approved such statement.
4. STANDARD OF CARE
(A) The Bank shall exercise the same standard of care that it exercises over
its own assets in the safekeeping, handling, servicing, and disposition of
the Property in accordance with this Agreement. The Bank will exercise the
due care expected of a professional custodian for hire with respect to the
Property in its possession or control.
(B) The Bank shall be responsible for the acts or omissions of any Exempt
Subsidiary acting as a foreign subcustodian pursuant to the Exemptive Order
or any subsequent exemptive order issued by the Securities and Exchange
Commission to the same extent as if the act or omission of such Exempt
Subsidiary were that of the Bank.
(C) Except as otherwise provided above, the Bank shall use reasonable care
in selecting, and shall be responsible only for the proper selection of, any
foreign subcustodian or foreign depository.
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<PAGE>
(D) The Bank's delegation of duties to an Exempt Subsidiary shall not relieve
the Bank of any responsibility to the Fund for any loss due to such
delegation, except such losses or damages which may result from (i) political
risk, including, but not limited to losses resulting from exchange control
restrictions, confiscation, expropriation, nationalization, insurrection,
civil strife or armed hostilities and (ii) other risk of loss for which
neither the Bank nor any foreign subcustodian would be liable under Rule 17f-
5 promulgated under the Investment Company Act.
(E) In the event the Fund enters into triparty repurchase agreements pursuant
to which collateral therefor is to be held by a custodian other than the Bank
and the Fund instructs the Bank to deliver Property to such custodian, the
Bank shall be under no duty to determine whether such custodian satisfies the
requirements of Section 17(f) of the Investment Company Act or the Rules
promulgated thereunder. Citibank shall have no further duties or obligations
under this Agreement with respect to such Property.
(F) The Bank is not under any duty to supervise the investments of the Fund,
or to advise or make any recommendation to the Fund with respect to the
purchase or sale of any of the Securities or the investment of any cash. The
Fund shall have the sole and exclusive responsibility for investment of
Property held hereunder.
5. PERFORMANCE BY THE BANK
(A) General
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The Bank's performance of its duties hereunder and the day-to-day operations
of the Custody Account shall be in accordance with written service standards
furnished to, and accepted by the Fund in writing, by the Bank from time to
time, provided that at all times the Bank shall use at least the due care
expected of a professional custodian for hire in the performance of its
duties. Such service standards, as amended from time to time, are
incorporated herein by reference.
(B) Receipt, Delivery and Disposal of Securities
--------------------------------------------
The Bank shall, or shall instruct any other entity authorized to hold
Property in accordance with Section 6 or 7 hereof to, receive or deliver
Securities and credit or debit the Fund's account, in accordance with
properly authorized Instructions from the Fund. The Bank or such entity shall
also receive in custody all stock dividends, rights and similar securities
issued in connection with Securities held hereunder, shall surrender for
payment, in a timely manner, all items maturing or called for redemption and
shall take such other action as the Fund may direct in properly authorized
Instructions.
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(C) Registration
------------
Securities held hereunder may be registered in the name of the Bank, any
entity authorized to hold Property in accordance with Section 6 or 7 hereof,
or a nominee of the Bank or any such authorized entity, and the Fund shall be
informed upon request of all such registrations. Securities in registered
form will be transferred upon request of the Fund into such names or
registrations as it may specify in properly authorized Instructions.
(D) Cash Accounts
-------------
(i) All cash received or held by the Bank or by any entity authorized to hold
Property in accordance with Section 7 hereof as interest, dividends, proceeds
from transfer, and other payments for or with respect to the Securities shall
be (x) held in a cash account in accordance with properly authorized
Instructions received by the Bank or such entity, or (y) if specified in the
Fund's Instructions, converted to or from U.S. dollars and remitted to the
Fund. The Fund shall bear any foreign exchange risk in connection with any
such conversion. In effecting any currency conversions hereunder, the Bank or
such entity may use any methods or agencies as it may see fit including the
Bank's or such entity's facilities at customary rates.
(ii) The Fund agrees, with respect to all payments for purchases of
Securities to be deposited in the Custody Account, that funds for settlement
will be on deposit by the settlement date at the location of settlement, in
good available funds and in the currency of settlement. The Fund acknowledges
that nothing in this Agreement shall obligate the Bank to extend credit,
grant financial accommodation or otherwise advance moneys to the Fund for the
purpose of making any payments for purchases or part thereof or otherwise
carrying out any Instructions.
(iii) The Fund authorizes the Bank from time to time to cause the branch of
the Bank located in London, England ("Citibank London") to establish a
multicurrency cash account reflecting cash received by any Eligible Foreign
Custodian (as hereinafter defined) on the Fund's behalf. Citibank London will
maintain such cash account in accordance with the requirements of Section 7
hereof applicable to an entity authorized to hold Property hereunder.
(E) Reports
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(i) If the Bank has in place a system for providing telecommunication access
or other means of electronic access by customers to the Bank's reporting
system for Property in the Custody Account, then, at the Fund's election, the
Bank shall provide the Fund with such instructions and passwords as may be
necessary in order for the Fund to have such electronic access through the
terminal device under the control of the Fund. Such electronic access shall
be restricted to information relating to the Custody Account. If electronic
access to such reporting system is requested by the Fund, the Fund agrees to
assume full responsibility for the consequences of such use, including any
misuse or unauthorized use of the terminal device, instructions or passwords
referred to above, and agrees to defend and indemnify the Bank and hold the
Bank harmless from and against any and all liabilities, losses, damages,
costs, counsel fees, and other expenses of every nature suffered or incurred
by the Bank by reason of or in connection with the negligent or wrongful acts
of the Fund, its agents
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or employees, as to the terminal device, unless such liabilities, losses,
damages, costs, counsel fees and other expenses can be shown to be the result
of negligent or wrongful acts of the Bank, the Bank's employees or the Bank's
agents. Further, in the event the Fund elects to have electronic access, the
Bank shall provide the Fund on each business day a report of the preceding
business day's transactions relating to the Custody Account and of the
closing or net balances of each business day. If the Fund does not choose to
have electronic access, the Bank shall provide the Fund with such reports of
transactions in the Custody Account by such means as may be mutually agreed
upon.
(ii) The Bank agrees to use reasonable efforts to furnish the Fund with such
information regarding Property held hereunder as the Fund may reasonably
request in connection with its complying with requests of any regulatory
authorities having jurisdiction over the Fund.
(iii) The Bank shall also, subject to restrictions under applicable law,
obtain from any entity that it directly or indirectly controls or is
controlled by, and shall seek to obtain from any other entity with which the
Bank maintains the physical possession of any of the Property in the Custody
Account records of such entity relating, to the Property in the Custody
Account as may be required by the Fund or its agents in connection with an
internal examination by the Fund of its own affairs. Upon a reasonable
request from the Fund, the Bank shall furnish to the Fund such reports (or
portions thereof) of the external auditors of each entity that it directly or
indirectly controls or is controlled by, and shall use its best efforts to
furnish to the Fund reports (or portions thereof) of the external auditors of
each such other entity relating directly to such entity's system of internal
accounting controls applicable to its duties under its agreement with the
Bank.
(F) Access
------
During the Bank's regular banking, any officer or employee of the Fund, any
independent accountant(s) selected by the Fund and any person designated by
any regulatory authority having jurisdiction over the Fund shall be entitled
to examine on the Bank's premises, Property held by the Bank on its premises
and the Bank's records regarding Property held hereunder deposited with
entities authorized to hold Property in accordance with Section 6 or 7
hereof, but only upon the Fund's furnishing the Bank with properly authorized
Instructions to that effect, provided, that such examination shall be
--------
consistent with the Bank's obligations of confidentiality to other parties.
The Bank's costs and expenses in facilitating such examinations shall be
borne by the Fund, provided that such costs and expenses shall not be deemed
--------
to include the Bank's costs in providing to the Fund: (i) the "single audit
report" of the independent certified public accountants engaged by the Bank
and (ii) such reports and documents as this Agreement contemplates that the
Bank shall furnish routinely to the Fund.
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<PAGE>
(G) Voting and other Action
-----------------------
(i) The Bank will transmit to the Fund upon receipt, and will instruct any
entities authorized to hold Property in accordance with Section 6 of 7 hereof
to transmit to the Fund upon receipt, all financial reports, stockholder
communications, notices, proxies and proxy soliciting materials received from
issuers of the Securities, and all information relating to exchange or tender
offers received from offers with respect to the Securities. Such proxies will
be executed by the registered holder if the registered holder is other than
the Fund, but the manner in which Securities are to be voted will not be
indicated. Neither the Bank nor any other entity holding Property hereunder
shall vote any of the Securities or authorize the voting of any Securities or
give any consent or take any other action with respect thereto, except as
otherwise provided herein.
(ii) In the event of tender offers, the Fund will hand deliver or telecopy
Instructions to the Bank as to the action to be taken with respect thereto,
designating such Instructions as being related to a tender offer. The Fund
shall hold the Bank harmless from any adverse consequences of the Fund's use
of any other method of transmitting Instructions relating to a tender offer.
(iii) The Fund agrees that if it gives an Instruction after 2:00 PM eastern
time with respect to U.S. domestic custody for the performance of an act on
the last permissible date of a period established by a tender offer or on the
last permissible date for the performance of such act, the Fund shall hold
the Bank harmless from any adverse consequences in connection with acting
upon or failing, to act upon such Instructions. With respect to non-U.S.
domestic custody, the Fund agrees that if it gives an Instruction for the
performance of an act on the last permissible date of a period established by
a tender offer or on the last permissible date for the performance of such
act, the Fund shall hold the Bank harmless from any adverse consequences in
connection with acting upon or failing to act upon such Instructions.
(iv) The Bank is authorized to accept and open on the Fund's behalf all mail
or communications relating to the Property received by the Bank or directed
in its care.
6. AUTHORIZED USE OF U.S. DEPOSITORIES
The Fund authorizes the Bank, for any Securities held hereunder, to use the
services of any United States securities depository permitted to perform such
services for registered investment companies and their custodians under Rule
17f-4 promulgated under the Investment Company Act, including but not limited
to, The Depository Trust Company, the Federal Reserve Book Entry System and
Participants Trust Company ("U.S. Depositories"). The Bank will deposit
Securities held hereunder with a U.S. Depository only in an account which
holds assets of customers of the Bank.
6
<PAGE>
7. USE OF FOREIGN CUSTODIANS
(A) Authorization
-------------
(i) The Bank may cause Securities which are foreign securities within the
meaning of Rule 17f-5(c)(1) promulgated under the Investment Company Act
("Foreign Securities") and amounts of cash and cash equivalents reasonably
required to effect the Fund's Foreign Securities transactions ("Cash") in the
Custody Account to be held in such country or other jurisdiction as the Fund
shall direct in properly authorized Instructions.
(ii) Subject to prior approval by the board of trustees of the Fund, the Bank
may hold such Foreign Securities and Cash in subcustody accounts, which shall
be deemed part of the Custody Account and which have been established by the
Bank with (x) branches of "Qualified U.S. Banks", as defined in Rule 17f-
5(c)(3) promulgated under the Investment Company Act ("Branches"), or (y)
foreign custodians which satisfy the provisions of Rule 17f-5(c)(2)(i) or
(ii) promulgated under the Investment Company Act, or (z) Exempt Subsidiaries
or other foreign custodians which are exempt from such provisions under the
Exemptive Order or any other order or release issued by the Securities and
Exchange Commission (such Branches, foreign custodians and Exempt
Subsidiaries, collectively, the "Eligible Foreign Custodians").
(iii) Subject to prior approval by the board of trustees of the Fund, the
Bank or an Eligible Foreign Custodian is authorized to hold Foreign
Securities of the Fund in an account with any foreign securities depository
or foreign clearing agency which in the Bank's judgment satisfies the
provisions of Rule 17f-5(c)(iii) or (iv) promulgated under the Investment
Company Act, or which is exempt from such provisions under an order, no-
action letter or release issued by the Securities and Exchange Commission
("Eligible Foreign Securities Depository").
(iv) Any Foreign Securities or Cash held by an Eligible Foreign Custodian or
an Eligible Foreign Securities Depository, shall be subject to applicable
laws, regulations, restrictions, customs, procedures, and market practices
(i) to which such Eligible Foreign Custodian or Eligibile Foreign Securities
Depository is subject, (ii) as exist in the country in which such Foreign
Securities and Cash is held, and (iii) of the country of the currency in
which the Property is denominated. In the event that local laws or
regulations to which an Eligible Foreign Custodian or Eligible Foreign
Securities Depository is subject change in a way that would prevent or limit
the performance of duties and obligations by the Eligible Foreign Custodian
or Foreign Securities Depository, such duties and obligations shall be
superseded and neither the Bank nor any other member of the Citicorp
organization shall be liable therefor or for any damages in any way resulting
from such prevented or limited performance. The Fund acknowledges that, as is
normally the case with respect to the deposits outside the United States,
deposits with Citibank London and any other entity authorized to hold
Property pursuant to the Agreement are not insured by the Federal Deposit
Insurance Corporation.
(B) Provision of Information Regarding Foreign Custodians and Securities
--------------------------------------------------------------------
Depositories
------------
(i) The Bank shall use its best efforts to assist the Fund in obtaining
following:
7
<PAGE>
(a) As to each country in which Property is held, information concerning
whether, and to what extent, applicable foreign law would restrict the access
afforded the Fund's independent public accountants to books and records kept
by a foreign custodian or foreign securities depository used in that country;
(b) As to each country in which Property is held, information concerning
whether, and to what extent, applicable foreign law would restrict the Fund's
ability to recover its assets in the event of the bankruptcy of a foreign
custodian or foreign securities depository used in that country;
(c) As to each country in which Property is held, information concerning
whether, and to what extent, applicable foreign law would restrict the Fund's
ability to recover assets that are lost while under the control of a foreign
custodian or foreign securities depository used in that country;
(d) As to each country in which Property is held, information concerning
whether under applicable foreign currency exchange regulations the Fund's
cash and cash equivalents held in that country are readily convertible to
U.S. dollars;
(e) Information relating to whether each foreign custodian or foreign
securities depository used would provide a level of safeguards for
maintaining the Fund's Securities not materially different from that provided
by the Bank in maintaining the Securities in the United States;
(f) Information concerning whether each foreign custodian or foreign
securities depository used has offices in the United States in order to
facilitate the assertion of jurisdiction over and enforcement of judgments
against such custodian or depository; and
(g) As to each foreign securities depository used, information concerning the
number of participants in, and operating history of, such depository.
(ii) During the term of this Agreement, the Bank shall use its best efforts
to provide the Fund with prompt notice of any material changes in the facts
or circumstances upon which any of the foregoing information or statements
were based.
(iii) Notwithstanding any of the foregoing provisions of this subsection (b)
of this Section 7, the Bank's undertaking to assist the Fund in obtaining the
information referred to in this subsection (b) of the this Section 7 shall
neither increase the Bank's duty of care nor reduce the Fund's responsibility
to determine for itself the prudence of entrusting its assets to any
particular foreign custodian or foreign securities depository.
8
<PAGE>
(C) Segregation and Identification of Assets
----------------------------------------
The Bank will deposit Property of the Fund with an Eligible Foreign Custodian
only in an account which holds exclusively assets of customers of the Bank.
In the event that an Eligible Foreign Custodian is authorized to hold any of
the Foreign Securities placed in its care in an Eligible Foreign Securities
Depository pursuant to the provisions of subsection (A) of this Section 7,
the Bank will direct such Eligible Foreign Custodian to identify such Foreign
Securities on its books as being held for the account of the Bank as
custodian for its customers.
(D) Instructions to Eligible Foreign Custodians; Instructions to Eligible
---------------------------------------------------------------------
Foreign Securities Depositories
-------------------------------
Any Property in the Custody Account held by an Eligible Foreign Custodian
will be subject only to the instructions of the Bank or its agents; and any
Foreign Securities held in an Eligible Foreign Securities Depository for the
account of an Eligible Foreign Custodian will be subject only to the
instructions of such Eligible Foreign Custodian, as subcustodian for the
Bank.
(E) Contracts between the Bank and Exempt Subsidiaries.
---------------------------------------------------
The Bank's contract with each Exempt Subsidiary provides:
(i) an acknowledgement by such Exempt Subsidiary that it is acting as a
foreign custodian for U.S. Investment Companies or their custodians pursuant
to the terms of the Exemptive Order;
(ii) that the Fund is entitled to enforce the terms of the subcustodian
agreement between the Bank and the Exempt Subsidiary and is entitled to seek
relief directly against the Exempt Subsidiary; and
(iii) an acknowledgement by such Exempt Subsidiary that at all times it shall
act with at least the due care expected of a professional custodian in
performing its duties.
8. CITICORP GUARANTEE
Citicorp agrees that it shall be liable, in accordance with the terms of a
guarantee issued in compliance with the conditions of the Exemptive Order,
for losses incurred by the Fund resulting from bankruptcy or insolvency of
Exempt Subsidiaries operating pursuant to the terms of the Exemptive Order.
Citicorp's obligations hereunder shall terminate automatically with respect
to an Exempt Subsidiary at such time as such obligations are no longer
required by the Exemptive Order. Obligations arising prior to the date of
such termination shall survive the termination.
9
<PAGE>
9. USE OF AGENTS
The Bank may, subject to applicable laws, rules and regulations, appoint
agents, whether in its own name or that of the Fund, to perform any of the
duties of the Bank hereunder, and the Bank may delegate to any such agent so
appointed any of its functions under this Agreement.
10. INSTRUCTIONS
(A) The Bank is authorized to rely and act upon instructions ("Instructions")
in writing which are signed by persons ("Authorized Persons") named in a list
provided to the Bank from time to time, which list must be certified by the
Fund's Secretary or Assistant Secretary and include authenticated specimen
signatures of all Authorized Persons.
(B) The Fund agrees that the Bank is authorized to rely and act upon such
Instructions in accordance with this Section 10 and the Funds Transfer
Procedures attached hereto and incorporated herein by reference (including
each Schedule A) to this Agreement and to debit or credit the applicable
account(s) of the Fund accordingly and that such Funds Transfer Procedures
and method(s) of transmission are commercially reasonable.
(C) The Bank shall be entitled to rely upon the continued authority of any
Authorized Person to give Instructions until the Bank receives notice from
the Fund to the contrary; and the Bank shall be entitled to rely upon any
Instructions it believes in good faith to have been given by an Authorized
Person.
(D) The Bank is further authorized to rely upon any Instructions received by
any other means and identified as having been given or authorized by any
Authorized Person, regardless of whether such Instructions shall in fact have
been authorized or given by any of such Authorized Persons, provided that the
---------
Bank and the Fund shall have agreed upon the means of transmission and the
method of identification for such Instructions. Instructions received by any
other means shall include but not be limited to verbal Instructions only in
connection with delivery against payment or receipt against payment
transactions and transfer from one account with the Bank to another with the
Bank and provided that such verbal Instructions are promptly confirmed in
writing by the Fund. Notwithstanding the foregoing, in the event any such
verbal Instructions are not subsequently confirmed in writing, as provided
above, the Fund agrees to hold the Bank harmless and without liability for
any claims or losses in connection with such verbal Instructions.
(E) The Fund agrees to be bound by any Instruction, whether or not
authorized, given to the Bank in its name and accepted by the Bank in
accordance with the provisions hereof (including but not limited to the Funds
Transfer Procedures and Schedule A thereto) and further agrees to indemnify
and hold the Bank harmless from and against any loss, liability, claim or
expense (including legal fees and expenses) associated with the Bank's acting
upon such Instructions as provided herein, except such as may arise from the
Bank's own negligence, bad faith or willful misconduct.
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<PAGE>
(F) The Fund may appoint one or more investment managers ("Investment
Managers") with respect to the Custody Account. The Bank is authorized to act
upon Instructions received from any Investment Manager to the same extent
that the Bank would act upon the Instructions of an Authorized Person,
provided that the Bank has received written evidence of the Investment
--------
Manager's appointment and written confirmation from the Investment Manager
evidencing acceptance of such appointment. The Investment Manager shall
provide to the Bank from time to time a list of persons authorized to give
Instructions on behalf of the Investment Manager. The list must be certified
by the Investment Manager's Secretary or Assistant Secretary and include
authenticated specimen signatures of such persons.
(G) If the Fund should choose to have telecommunication or other means of
electronic access to the Bank's reporting system for Property in the Custody
Account, pursuant to paragraph (E) of Section 5, the Bank is also authorized
to rely and act upon any Instructions received by it through a terminal
device, provided that such Instructions are accompanied by code words which
--------
the Bank has furnished to the Fund, or an Authorized Person, by any method
mutually agreed to by the Bank and the Fund, provided that the Bank has not
been notified by the Fund, or any such Authorized Person to cease to
recognize such code words, regardless of whether such Instructions shall in
fact have been given or authorized by the Fund or any such Authorized Person.
11. SEGREGATED ACCOUNT
The Bank, upon receipt of Instructions, shall establish and maintain a
Segregated Account or Accounts as described by the Securities and Exchange
Commission ("SEC") in Investment Company Act Release No. 10666, or any
subsequent release or releases of the SEC relating to the maintenance of
Segregated Accounts by registered investment companies (the "Release"). Upon
receipt of Instructions, the Bank shall transfer into such Account or
Accounts cash and/or Portfolio Securities:
(A) In accordance with the provisions of any agreement among the Fund, the
Bank and a broker-dealer registered under the Exchange Act and a member of
the NASD or any Futures Commission Merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange or the
Commodity Futures Trading Commission or any registered Contract Market, or of
any similar organizations regarding escrow or other arrangements in
connection with transactions by the Fund;
(B) For the purpose of segregating cash or securities in connection with
options purchased or written by the Fund or commodity futures purchased or
written by the Fund;
(C) For the deposit of any Portfolio Securities which the Fund has agreed to
sell on a forward commitment basis or other purpose on which the Release
applies,
11
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(D) For other proper corporate purposes, but only, in the case of this clause
(D), upon receipt of, in addition to Instructions, a certified copy of a
resolution of the Board, or of the Executive Committee signed by an officer
of the Fund and certified by the Secretary or an Assistant Secretary, setting
forth the purpose or purposes of such Segregated Account and declaring such
purposes to be proper corporate purposes; and
(E) Assets may be withdrawn from the Segregated Account pursuant to
Instructions only:
(i) In accordance with the provisions of any agreements referred in (a) or
(b) above;
(ii) For sale or delivery to meet the Fund's obligations under outstanding
firm commitment or when-issued agreements for the purchase of Portfolio
Securities and under reverse repurchase agreements;
(iii) For exchange for other liquid assets of equal or greater value
deposited in the Segregated Account;
(iv) To the extent that the Fund's outstanding forward commitment or when-
issued agreements for the purchase of portfolio securities or reverse
repurchase agreements are sold to other parties or the Fund's obligations
thereunder are met from assets of the Fund other than those in the Segregated
Account; or
(v) For delivery upon settlement of a forward commitment agreement for the
sale of Portfolio Securities.
Notwithstanding anything herein to the contrary, the Bank shall have no duty
to, and shall not be obligated to determine or ascertain whether any such
Segregated Account, or any withdrawals or additions to such account is in
compliance with the rules, regulations and releases of the SEC, or that any
such Segregated Account or withdrawals or additions to such Segregated
Account is consistent with any other agreements or contracts the Fund may
enter into from time to time. Unless otherwise agreed to in writing, the
Bank's sole responsibility with respect to any Segregated Account or Accounts
contemplated in this Section shall be to act upon the Fund's Instructions.
12. THE FUND
(A) The Fund agrees that no printed material or other matter in any language
(including without limitation, prospectuses, statements of additional
information, notices to shareholders, annual reports and promotional
material) which mention the Bank's or Citicorp's name or the rights, powers
or duties of the custodian of the Fund shall be issued by the Fund or on the
Fund's behalf unless the Bank shall first have given its specific written
consent thereto; provided, however, that no prior consent shall be required
if the only reference to the Bank's or Citicorp's name is in identifying the
Bank as the Fund's custodian.
12
<PAGE>
(B) The Fund shall give prior notice to the Bank of any change in its place
of incorporation or organization, mailing address, or sponsors, or any
significant change in management, investment objectives, fees or redemption
rights.
(C) The Fund confirms that it is, and agrees that in the future it will be,
audited at least annually by an independent accounting firm and that it
mails, and in the future will mail, an audited financial report of the Fund
to its shareholders at least annually.
13. FEES AND EXPENSES
Fees and expenses for the services rendered under this Agreement shall be
mutually agreed upon by the parties in writing. The Bank shall be entitled to
debit the Custody Account for such fees and expenses.
14. LIENS
The Bank shall have a lien on the Property in the Custody Account to secure
payment of fees and expenses for the services rendered under this Agreement.
Except as otherwise provided in paragraph 22(D), if the Bank advances cash or
securities to the Fund for any purpose or in the event that the Bank or its
nominee shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of its duties
hereunder, except such as may arise from its or its nominee's negligent
action, negligent failure to act or willful misconduct, any Property at any
time held for the Custody Account shall be security therefor and the Fund
hereby grants a security interest therein to the Bank. The Fund shall
promptly reimburse the Bank for any such advance of cash or securities or any
such taxes, charges, expenses, assessments, claims or liabilities upon
request for payment. Except as otherwise provided in paragraph 22(D), should
the Fund fail to so reimburse the Bank, the Bank shall be entitled to dispose
of such Property to the extent necessary to obtain reimbursement. The Bank
shall be entitled to debit any account of the Fund with the Bank including,
without limitation, the Custody Account in connection with any such advance
and any interest on such advance as the Bank deems reasonable.
15. TAX STATUS/WITHHOLDING TAXES.
(A) The Fund's U.S. Tax Identification Number is MML Managed Bond Fund 04-
2741778.
(B) The Fund may be required from time to time to file such proof of taxpayer
status or residence, to execute such certificates and to make such
representations and warranties, or to provide any other information or
documents, as the Bank and/or the Eligible Foreign Custodian may deem
necessary or proper to fulfill the Bank's and/or Eligible Foreign Custodian's
obligations under applicable law. The Fund shall provide the Bank and/or
Eligible Foreign Custodian in a timely manner, with copies of originals if
necessary and appropriate, or any such proofs of residence, taxpayer status,
beneficial ownership and any other information or documents which the Bank
and/or a Eligible Foreign Custodian may reasonably request.
13
<PAGE>
(C) If any tax or other governmental charge or assessment shall become
payable with respect to any payment due to the Fund ("Taxes"), such Taxes
shall be withheld from such payment in accordance with applicable law. The
Bank and/or the Eligible Foreign Custodian may withhold any interest, any
dividends or other distributions or securities receivable in respect of
Securities, proceeds from the sale or distribution of Securities
("Payments"), or may sell for the account of the Fund any part thereof or all
of the Securities, and may apply such Payment in satisfaction of such Taxes,
the Fund remaining liable for any deficiency. If any Taxes shall become
payable with respect to any payment made to the Fund by the Bank or a
Eligible Foreign Custodian in a prior year, the Bank and the Eligible Foreign
Custodian may withhold Payments in satisfaction of such prior year's Taxes.
The Fund shall indemnify and hold harmless the Bank and the Eligible Foreign
Custodian, its officers, employees, agents and affiliated companies against
any Taxes, penalties, additions to tax, and interest, and costs and expenses
related thereto, arising out of claims against the Bank and the Eligible
Foreign Custodian by any governmental authority for failure to withhold Taxes
or arising out of any reclaim or refund of taxes or other tax benefit
obtained by the Bank or the Eligible Foreign Custodian for the Fund.
(D) This Section 15 shall survive the termination of this Agreement and
continue in force until the time for assessment of all Taxes expires.
16. AMENDMENT
This Agreement may not be amended except by a written agreement among the
parties hereto.
17. TERMINATION
Either the Bank or the Fund may terminate this Agreement upon sixty (60)
days' written notice to the other parties.
18. CONFIDENTIALITY
Subject to the foregoing provisions of this Agreement and subject to any
applicable law, the Fund and the Bank shall each use best efforts to maintain
the confidentiality of matters concerning Property in the Custody Account.
19. NOTICES
All notices and other communications hereunder, except for Instructions and
reports relating to the Property which are transmitted through the Bank's
electronic reporting system for Property in the Custody Account, shall be in
writing, telex or telecopy or, if verbal, shall be promptly confirmed in
writing, and shall be hand-delivered, telexed, telecopied or mailed by
prepaid first class mail (except that notice of termination, if mailed, shall
be by prepaid registered or certified mail) to each party at its address set
forth above, if to the Fund, marked "Attention Hamline C. Wilson" and if to
---------------------------
the Bank, marked "Citibank as Custodian for "MML Series Investment Fund", and
----------------------
if to
14
<PAGE>
Citicorp, marked "Attention of Office of Corporate Finance, Gregory C. Ehlke,
Vice President", and, if to any of the preceding, a copy shall be promptly
mailed or delivered to Mass Mutual Life Insurance Company, 1295 State Street,
Springfield, Massachusetts 01111, Attention, Allan B. Bixby, Vice President
and Treasurer, or at such other address as either party may give notice of to
the other.
20. ASSIGNMENT
No party may assign, transfer or charge all or any of its rights and benefits
hereunder without the written consent of the other parties. Any purported
assignments made in contravention of this Section shall be null and void and
of no effect whatsoever.
21. GOVERNING LAW
This Agreement shall be governed by and construed according to the laws of
the State of New York and the parties agree that the courts of the State of
New York shall have jurisdiction to hear and determine any suit, action or
proceeding and to settle any disputes which may arise out to or in connection
with this Agreement, and, for such purposes, each irrevocably submits to the
non-exclusive jurisdiction of such courts.
22. MISCELLANEOUS
(A) This Agreement may be executed in several counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.
(B) This Agreement contains the entire agreement among the parties relating
to custody of Property and supersedes all prior agreements on this subject.
(C) The captions of the various sections and subsections of this Agreement
have been inserted only for the purposes of convenience and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.
(D) A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Board of Trustees of
the Trust as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees or shareholders
individually but are binding upon the assets and property of the Trust;
provided, however, that the Agreement and Declaration of Trust of the Trust
provides that the assets of a particular series of the Trust shall under no
circumstances be charged with liabilities attributable to any other series of
the Trust and that all persons extending credit to, or contracting with or
having any claim against a particular series of the Trust shall look only to
the assets of that particular series for payment of such credit, contract or
claim.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized.
CITIBANK, N.A. CITICORP
BY: /s/ Wilma Williams BY:/s/ Gregory C. Ehlke
NAME: Wilma J. Williams NAME: Gregory C. Ehlke
TITLE: Vice President TITLE: Vice President
North American
Investor Services
111 Wall Street/24th Floor
(212)657-9320
MML SERIES INVESTMENT FUND ON BEHALF OF MML MANAGED BOND FUND
BY: /s/ Stephen L. Kuhn
NAME: Stephen L. Kuhn
TITLE: Vice President-Secretary
16
<PAGE>
Exhibit 8(d)
U.S. INVESTMENT COMPANY
CUSTODIAL SERVICES AGREEMENT
CUSTODIAL SERVICES AGREEMENT dated as of November 10, 1994 among CITIBANK,
N.A., a national banking association having an office at 111 Wall Street, New
York, New York 10005 and acting through such office in New York (the "Bank"),
CITICORP, a corporation organized under the laws of the State of Delaware,
having an office at Citicorp Center, 153 East 53rd Street, New York, New York
10043 and MML Series Investment Fund, a Business Trust organized under the laws
of Massachusetts, having an office at 1295 State Street, Springfield,
Massachusetts, 01111. (the "Trust").
WITNESSETH:
THAT WHEREAS, the Trust represents that it is a management investment
company registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"
WHEREAS, the Trust further represents that it is duly incorporated,
organized or associated and in good standing under the laws of its state of
incorporation, organization or association and the consummation of transactions
contemplated hereby or directed by it hereunder will not violate any applicable
laws, regulations or orders;
WHEREAS, the Trust represents that it is authorized to (a) open and
maintain a custody account (the "Custody Account") with the Bank to hold certain
property ("Property"), including but not limited to stocks, bonds or other
securities ("Securities"), cash and other property owned or held by the Fund,
(b) to enter into this Agreement and (c) direct all actions and transactions
contemplated hereunder;
WHEREAS, the MML Blend Fund is a series of the Trust (the "Fund"); and
WHEREAS, on June 12, 1992, the Securities and Exchange Commission issued an
order (the "Exemptive Order") which, among other things, exempts certain
indirect subsidiaries of Citicorp (the "Exempt Subsidiaries") from the
shareholders' equity requirements of Rule 17f-5 promulgated under the Investment
Company Act;
NOW, THEREFORE, in consideration of the premises and of the agreements
hereinafter set forth, the parties hereby agree as follows:
1
<PAGE>
1. APPOINTMENT AND ACCEPTANCE
The Fund hereby appoints the Bank as custodian of the Property and as its
agent hereunder, and the Bank agrees to act as such upon the terms and
conditions hereinafter provided.
2. DELIVERY; SAFEKEEPING
The Fund has heretofore delivered, or will deliver or cause to be delivered,
Property to the Bank, which Property the Bank agrees to keep safely as
custodian for the Fund. The Bank shall not surrender possession of Property
except upon properly authorized Instructions (as hereinafter defined) of the
Fund or as may be required by due process of applicable law.
3. IDENTIFICATION AND SEGREGATION OF ASSETS
With respect to Property in the Custody Account:
(A) Except as otherwise provided in this Agreement, the Bank will separately
identify on its books as belonging to the Fund and, to the extent
practicable, segregate all Property held pursuant to this Agreement by the
Bank or any other entity authorized to hold Property in accordance with
Section 6 or 7 hereof.
(B) The Bank shall supply to the Fund from time to time as mutually agreed
upon a written statement with respect to all of the Property in the Custody
Account. In the event that the Fund does not inform the Bank in writing of
any exceptions or objections within sixty (60) days after receipt of such
statement, the Fund shall be deemed to have approved such statement.
4. STANDARD OF CARE
(A) The Bank shall exercise the same standard of care that it exercises over
its assets in the safekeeping, handling, servicing, and disposition of the
Property in accordance with this Agreement. The Bank will exercise the due
care expected of a professional custodian for hire with respect to the
Property in its possession or control.
(B) The Bank shall be responsible for the acts or omissions of any Exempt
Subsidiary acting as a foreign subcustodian pursuant to the Exemptive Order
or any subsequent exemptive order issued by the Securities and Exchange
Commission to the same extent as if the act or omission of such Exempt
Subsidiary were that of the Bank.
(C) Except as otherwise provided above, the Bank shall use reasonable care
in selecting, and shall be responsible only for the proper selection of, any
foreign subcustodian or foreign depository.
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<PAGE>
(D) The Bank's delegation of duties to an Exempt Subsidiary shall not relieve
the Bank of any responsibility to the Fund for any loss due to such
delegation, except such losses or damages which may result from (i) political
risk, including, but not limited to losses resulting from exchange control
restrictions, confiscation, expropriation, nationalization, insurrection,
civil strife or armed hostilities and (ii) other risk of loss for which
neither the Bank nor any foreign subcustodian would be liable under Rule 17f-
5 promulgated under the Investment Company Act.
(E) In the event the Fund enters into triparty repurchase agreements pursuant
to which collateral therefor is to be held by a custodian other than the Bank
and the Fund instructs the Bank to deliver Property to such custodian, the
Bank shall be under no duty to determine whether such custodian satisfies the
requirements of Section 17(f) of the Investment Company Act or the Rules
promulgated thereunder. Citibank shall have no further duties or obligations
under this Agreement with respect to such Property.
(F) The Bank is not under any duty to supervise the investments of the Fund,
or to advise or make any recommendation to the Fund with respect to the
purchase or sale of any of the Securities or the investment of any cash. The
Fund shall have the sole and exclusive responsibility for investment of
Property held hereunder.
5. PERFORMANCE BY THE BANK
(A) General
-------
The Bank's performance of its duties hereunder and the day-to-day operations
of the Custody Account shall be in accordance with written service standards
furnished to, and accepted by the Fund in writing, by the Bank from time to
time, provided that at all times the Bank shall use at least the due care
expected of a professional custodian for hire in the performance of its
duties. Such service standards, as amended from time to time, are
incorporated herein by reference.
(B) Receipt, Delivery and Disposal of Securities
--------------------------------------------
The Bank shall, or shall instruct any other entity authorized to hold
Property in accordance with Section 6 or 7 hereof to, receive or deliver
Securities and credit or debit the Fund's account, in accordance with
properly authorized Instructions from the Fund. The Bank or such entity shall
also receive in custody all stock dividends, rights and similar securities
issued in connection with Securities held hereunder, shall surrender for
payment, in a timely manner, all items maturing or called for redemption and
shall take such other action as the Fund may direct in properly authorized
Instructions.
3
<PAGE>
(C) Registration
Securities held hereunder may be registered in the name of the Bank, any
entity authorized to hold Property in accordance with Section 6 or 7 hereof,
or a nominee of the Bank or any such authorized entity, and the Fund shall be
informed upon request of all such registrations. Securities in registered
form will be transferred upon request of the Fund into such names or
registrations as it may specify in properly authorized Instructions.
(D) Cash Accounts
-------------
(i) All cash received or held by the Bank or by any entity authorized to hold
Property in accordance with Section 7 hereof as interest, dividends, proceeds
from transfer, and other payments for or with respect to the Securities shall
be (x) held in a cash account in accordance with properly authorized
Instructions received by the Bank or such entity, or (y) if specified in the
Fund's Instructions, converted to or from U.S. dollars and remitted to the
Fund. The Fund shall bear any foreign exchange risk in connection with any
such conversion. In effecting any currency conversions hereunder, the Bank or
such entity may use any methods or agencies as it may see fit including the
Bank's or such entity's facilities at customary rates.
(ii) The Fund agrees, with respect to all payments for purchases of
Securities to be deposited in the Custody Account, that funds for settlement
will be on deposit by the settlement date at the location of settlement, in
good available funds and in the currency of settlement. The Fund acknowledges
that nothing in this Agreement shall obligate the Bank to extend credit,
grant financial accommodation or otherwise advance moneys to the Fund for the
purpose of making any payments for purchases or part thereof or otherwise
carrying out any Instructions.
(iii) The Fund authorizes the Bank from time to time to cause the branch of
the Bank located in London, England ("Citibank London") to establish a
multicurrency cash account reflecting cash received by any Eligible Foreign
Custodian (as hereinafter defined) on the Fund's behalf. Citibank London will
maintain such cash account in accordance with the requirements of Section 7
hereof applicable to an entity authorized to hold Property hereunder.
(E) Reports
-------
(i) If the Bank has in place a system for providing telecommunication access
or other means of electronic access by customers to the Bank's reporting
system for Property in the Custody Account, then, at the Fund's election, the
Bank shall provide the Fund with such instructions and passwords as may be
necessary in order for the Fund to have such electronic access through the
terminal device under the control of the Fund. Such electronic access shall
be restricted to information relating to the Custody Account. If electronic
access to such reporting system is requested by the Fund, the Fund agrees to
assume full responsibility for the consequences of such use, including any
misuse or unauthorized use of the terminal device, instructions or passwords
referred to above, and agrees to defend and indemnify the Bank and hold the
Bank harmless from and against any and all liabilities, losses, damages,
costs, counsel fees, and other expenses of every nature suffered or incurred
by the Bank by reason of or in connection with the negligent or wrongful acts
of the Fund, its agents
4
<PAGE>
or employees, as to the terminal device, unless such liabilities, losses,
damages, costs, counsel fees and other expenses can be shown to be the result
of negligent or wrongful acts of the Bank, the Bank's employees or the Bank's
agents. Further, in the event the Fund elects to have electronic access, the
Bank shall provide the Fund on each business day a report of the preceding
business day's transactions relating to the Custody Account and of the
closing or net balances of each business day. If the Fund does not choose to
have electronic access, the Bank shall provide the Fund with such reports of
transactions in the Custody Account by such means as may be mutually agreed
upon.
(ii) The Bank agrees to use reasonable efforts to furnish the Fund with such
information regarding Property held hereunder as the Fund may reasonably
request in connection with its complying with requests of any regulatory
authorities having jurisdiction over the Fund.
(iii) The Bank shall also, subject to restrictions under applicable law,
obtain from any entity that it directly or indirectly controls or is
controlled by, and shall seek to obtain from any other entity with which the
Bank maintains the physical possession of any of the Property in the Custody
Account records of such entity relating to the Property in the Custody
Account as may be required by the Fund or its agents in connection with an
internal examination by the Fund of its own affairs. Upon a reasonable
request from the Fund, the Bank shall furnish to the Fund such reports (or
portions thereof) of the external auditors of each entity that it directly or
indirectly controls or is controlled by, and shall use its best efforts to
furnish to the Fund reports (or portions thereof) of the external auditors of
each such other entity relating directly to such entity's system of internal
accounting controls applicable to its duties under its agreement with the
Bank.
(F) Access
During the Bank's regular banking, any officer or employee of the Fund, any
independent accountant(s) selected by the Fund and any person designated by
any regulatory authority having jurisdiction over the Fund shall be entitled
to examine on the Bank's premises, Property held by the Bank on its premises
and the Bank's records regarding Property held hereunder deposited with
entities authorized to hold Property in accordance with Section 6 or 7
hereof, but only upon the Fund's furnishing the Bank with properly authorized
Instructions to that effect, provided, that such examination shall be
--------
consistent with the Bank's obligations of confidentiality to other parties.
The Bank's costs and expenses in facilitating such examinations shall be
borne by the Fund, provided that such costs and expenses shall not be deemed
--------
to include the Bank's costs in providing to the Fund: (i) the "single audit
report" of the independent certified public accountants engaged by the Bank
and (ii) such reports and documents as this Agreement contemplates that the
Bank shall furnish routinely to the Fund.
5
<PAGE>
(G) Voting and other Action
-----------------------
(i) The Bank will transmit to the Fund upon receipt, and will instruct any
entities authorized to hold Property in accordance with Section 6 of 7 hereof
to transmit to the Fund upon receipt, all financial reports, stockholder
communications, notices, proxies and proxy soliciting materials received from
issuers of the Securities, and all information relating to exchange or tender
offers received from offers with respect to the Securities. Such proxies will
be executed by the registered holder if the registered holder is other than
the Fund, but the manner in which Securities are to be voted will not be
indicated. Neither the Bank nor any other entity holding Property hereunder
shall vote any of the Securities or authorize the voting of any Securities or
give any consent or take any other action with respect thereto, except as
otherwise provided herein.
(ii) In the event of tender offers, the Fund will hand deliver or telecopy
Instructions to the Bank as to the action to be taken with respect thereto,
designating such Instructions as being related to a tender offer. The Fund
shall hold the Bank harmless from any adverse consequences of the Fund's use
of any other method of transmitting Instructions relating to a tender offer.
(iii) The Fund agrees that if it gives an Instruction after 2:00 PM eastern
time with respect to U.S. domestic custody for the performance of an act on
the last permissible date of a period established by a tender offer or on the
last permissible date for the performance of such act, the Fund shall hold
the Bank harmless from any adverse consequences in connection with acting
upon or failing to act upon such Instructions. With respect to non-U.S.
domestic custody, the Fund agrees that if it gives an Instruction for the
performance of an act on the last permissible date of a period established by
a tender offer or on the last permissible date for the performance of such
act, the Fund shall hold the Bank harmless from any adverse consequences in
connection with acting upon or failing to act upon such Instructions.
(iv) The Bank is authorized to accept and open on the Fund's behalf all mail
or communications relating to the Property received by the Bank or directed
in its care.
6. AUTHORIZED USE OF U.S. DEPOSITORIES
The Fund authorizes the Bank, for any Securities held hereunder, to use the
services of any United States securities depository permitted to perform such
services for registered investment companies and their custodians under Rule
17f-4 promulgated under the Investment Company Act, including but not limited
to, The Depository Trust Company, the Federal Reserve Book Entry System and
Participants Trust Company ("U.S. Depositories"). The Bank will deposit
Securities held hereunder with a U.S. Depository only in an account which
holds assets of customers of the Bank.
6
<PAGE>
7. USE OF FOREIGN CUSTODIANS
(A) Authorization
-------------
(i) The Bank may cause Securities which are foreign securities within the
meaning of Rule 17f-5(c)(1) promulgated under the Investment Company Act
("Foreign Securities") and amounts of cash and cash equivalents reasonably
required to effect the Fund's Foreign Securities transactions ("Cash") in the
Custody Account to be held in such country or other jurisdiction as the Fund
shall direct in properly authorized Instructions.
(ii) Subject to prior approval by the board of trustees of the Fund, the Bank
may hold such Foreign Securities and Cash in subcustody accounts, which shall
be deemed part of the Custody Account and which have been established by the
Bank with (x) branches of "Qualified U.S. Banks", as defined in Rule 17f-
5(c)(3) promulgated under the Investment Company Act ("Branches"), or (y)
foreign custodians which satisfy the provisions of Rule l7f-5(c)(2)(i) or
(ii) promulgated under the Investment Company Act, or (z) Exempt Subsidiaries
or other foreign custodians which are exempt from such provisions under the
Exemptive Order or any other order or release issued by the Securities and
Exchange Commission (such Branches, foreign custodians and Exempt
Subsidiaries, collectively, the "Eligible Foreign Custodians").
(iii) Subject to prior approval by the board of trustees of the Fund, the
Bank or an Eligible Foreign Custodian is authorized to hold Foreign
Securities of the Fund in an account with any foreign securities depository
or foreign clearing agency which in the Bank's judgment satisfies the
provisions of Rule 17f-5(c)(iii) or (iv) promulgated under the Investment
Company Act, or which is exempt from such provisions under an order, no-
action letter or release issued by the Securities and Exchange Commission
("Eligible Foreign Securities Depository").
(iv) Any Foreign Securities or Cash held by an Eligible Foreign Custodian or
an Eligible Foreign Securities Depository, shall be subject to applicable
laws, regulations, restrictions, customs, procedures, and market practices
(i) to which such Eligible Foreign Custodian or Eligibile Foreign Securities
Depository is subject, (ii) as exist in the country in which such Foreign
Securities and Cash is held, and (iii) of the country of the currency in
which the Property is denominated. In the event that local laws or
regulations to which an Eligible Foreign Custodian or Eligible Foreign
Securities Depository is subject change in a way that would prevent or limit
the performance of duties and obligations by the Eligible Foreign Custodian
or Foreign Securities Depository, such duties and obligations shall be
superseded and neither the Bank nor any other member of the Citicorp
organization shall be liable therefor or for any damages in any way resulting
from such prevented or limited performance. The Fund acknowledges that, as is
normally the case with respect to the deposits outside the United States,
deposits with Citibank London and any other entity authorized to hold
Property pursuant to the Agreement are not insured by the Federal Deposit
Insurance Corporation.
(B) Provision of Information Regarding Foreign Custodians and Securities
--------------------------------------------------------------------
Depositories
------------
(i) The Bank shall use its best efforts to assist the Fund in obtaining
following:
7
<PAGE>
(a) As to each country in which Property is held, information concerning
whether, and to what extent, applicable foreign law would restrict the access
afforded the Fund's independent public accountants to books and records kept
by a foreign custodian or foreign securities depository used in that country;
(b) As to each country in which Property is held, information concerning
whether, and to what extent, applicable foreign law would restrict the Fund's
ability to recover its assets in the event of the bankruptcy of a foreign
custodian or foreign securities depository used in that country;
(c) As to each country in which Property is held, information concerning
whether, and to what extent, applicable foreign law would restrict the Fund's
ability to recover assets that are lost while under the control of a foreign
custodian or foreign securities depository used in that country;
(d) As to each country in which Property is held, information concerning
whether under applicable foreign currency exchange regulations the Fund's
cash and cash equivalents held in that country are readily convertible to
U.S. dollars;
(e) Information relating to whether each foreign custodian or foreign
securities depository used would provide a level of safeguards for
maintaining the Fund's Securities not materially different from that provided
by the Bank in maintaining the Securities in the United States;
(f) Information concerning whether each foreign custodian or foreign
securities depository used has offices in the United States in order to
facilitate the assertion of jurisdiction over and enforcement of judgments
against such custodian or depository; and
(g) As to each foreign securities depository used, information concerning the
number of participants in, and operating history of, such depository.
(ii) During the term of this Agreement, the Bank shall use its best efforts
to provide the Fund with prompt notice of any material changes in the facts
or circumstances upon which any of the foregoing information or statements
were based.
(iii) Notwithstanding any of the foregoing provisions of this subsection (b)
of this Section 7, the Bank's undertaking to assist the Fund in obtaining the
information referred to in this subsection (b) of the this Section 7 shall
neither increase the Bank's duty of care nor reduce the Fund's responsibility
to determine for itself the prudence of entrusting its assets to any
particular foreign custodian or foreign securities depository.
8
<PAGE>
(C) Segregation and Identification of Assets
----------------------------------------
The Bank will deposit Property of the Fund with an Eligible Foreign Custodian
only in an account which holds exclusively assets of customers of the Bank.
In the event that an Eligible Foreign Custodian is authorized to hold any of
the Foreign Securities placed in its care in an Eligible Foreign Securities
Depository pursuant to the provisions of subsection (A) of this Section 7,
the Bank will direct such Eligible Foreign Custodian to identify such Foreign
Securities on its books as being held for the account of the Bank as
custodian for its customers.
(D) Instructions to Eligible Foreign Custodians; Instructions to Eligible
---------------------------------------------------------------------
Foreign Securities Depositories
-------------------------------
Any Property in the Custody Account held by an Eligible Foreign Custodian
will be subject only to the instructions of the Bank or its agents; and any
Foreign Securities held in an Eligible Foreign Securities Depository for the
account of an Eligible Foreign Custodian will be subject only to the
instructions of such Eligible Foreign Custodian, as subcustodian for the
Bank.
(E) Contracts between the Bank and Exempt Subsidiaries.
---------------------------------------------------
The Bank's contract with each Exempt Subsidiary provides:
(i) an acknowledgement by such Exempt Subsidiary that it is acting as a
foreign custodian for U.S. Investment Companies or their custodians pursuant
to the terms of the Exemptive Order;
(ii) that the Fund is entitled to enforce the terms of the subcustodian
agreement between the Bank and the Exempt Subsidiary and is entitled to seek
relief directly against the Exempt Subsidiary; and
(iii) an acknowledgement by such Exempt Subsidiary that at all times it shall
act with at least the due care expected of a professional custodian in
performing its duties.
8. CITICORP GUARANTEE
Citicorp agrees that it shall be liable, in accordance with the terms of a
guarantee issued in compliance with the conditions of the Exemptive Order,
for losses incurred by the Fund resulting from bankruptcy or insolvency of
Exempt Subsidiaries operating pursuant to the terms of the Exemptive Order.
Citicorp's obligations hereunder shall terminate automatically with respect
to an Exempt Subsidiary at such time as such obligations are no longer
required by the Exemptive Order. Obligations arising prior to the date of
such termination shall survive the termination.
9
<PAGE>
9. USE OF AGENTS
The Bank may, subject to applicable laws, rules and regulations, appoint
agents, whether in its own name or that of the Fund, to perform any of the
duties of the Bank hereunder, and the Bank may delegate to any such agent so
appointed any of its functions under this Agreement.
10. INSTRUCTIONS
(A) The Bank is authorized to rely and act upon instructions
("Instructions") in writing which are signed by persons ("Authorized
Persons") named in a list provided to the Bank from time to time, which list
must be certified by the Fund's Secretary or Assistant Secretary and include
authenticated specimen signatures of all Authorized Persons.
(B) The Fund agrees that the Bank is authorized to rely and act upon such
Instructions in accordance with this Section 10 and the Funds Transfer
Procedures attached hereto and incorporated herein by reference (including
each Schedule A) to this Agreement and to debit or credit the applicable
account(s) of the Fund accordingly and that such Funds Transfer Procedures
and method(s) of transmission are commercially reasonable.
(C) The Bank shall be entitled to rely upon the continued authority of any
Authorized Person to give Instructions until the Bank receives notice from
the Fund to the contrary; and the Bank shall be entitled to rely upon any
Instructions it believes in good faith to have been given by an Authorized
Person.
(D) The Bank is further authorized to rely upon any Instructions received by
any other means and identified as having been given or authorized by any
Authorized Person, regardless of whether such Instructions shall in fact
have been authorized or given by any of such Authorized Persons, provided
that the Bank and the Fund shall have agreed upon the means of transmission
and the method of identification for such Instructions. Instructions
received by any other means shall include but not be limited to verbal
Instructions only in connection with delivery against payment or receipt
against payment transactions and transfer from one account with the Bank to
another with the Bank and provided that such verbal Instructions are
promptly confirmed in writing by the Fund. Notwithstanding the foregoing, in
the event any such verbal Instructions are not subsequently confirmed in
writing, as provided above, the Fund agrees to hold the Bank harmless and
without liability for any claims or losses in connection with such verbal
Instructions.
(E) The Fund agrees to be bound by any Instruction, whether or not
authorized, given to the Bank in its name and accepted by the Bank in
accordance with the provisions hereof (including but not limited to the
Funds Transfer Procedures and Schedule A thereto) and further agrees to
indemnify and hold the Bank harmless from and against any loss, liability,
claim or expense (including legal fees and expenses) associated with the
Bank's acting upon such Instructions as provided herein, except such as may
arise from the Bank's own negligence, bad faith or willful misconduct.
10
<PAGE>
(F) The Fund may appoint one or more investment managers ("Investment
Managers") with respect to the Custody Account. The Bank is authorized to act
upon Instructions received from any Investment Manager to the same extent
that the Bank would act upon the Instructions of an Authorized Person,
provided that the Bank has received written evidence of the Investment
--------
Manager's appointment and written confirmation from the Investment Manager
evidencing acceptance of such appointment. The Investment Manager shall
provide to the Bank from time to time a list of persons authorized to give
Instructions on behalf of the Investment Manager. The list must be certified
by the Investment Manager's Secretary or Assistant Secretary and include
authenticated specimen signatures of such persons.
(G) If the Fund should choose to have telecommunication or other means of
electronic access to the Bank's reporting system for Property in the Custody
Account, pursuant to paragraph (E) of Section 5, the Bank is also authorized
to rely and act upon any Instructions received by it through a terminal
device, provided that such Instructions are accompanied by code words which
--------
the Bank has furnished to the Fund, or an Authorized Person, by any method
mutually agreed to by the Bank and the Fund, provided that the Bank has not
been notified by the Fund, or any such Authorized Person to cease to
recognize such code words, regardless of whether such Instructions shall in
fact have been given or authorized by the Fund or any such Authorized Person.
11. SEGREGATED ACCOUNT
The Bank, upon receipt of Instructions, shall establish and maintain a
Segregated Account or Accounts as described by the Securities and Exchange
Commission ("SEC") in Investment Company Act Release No. 10666, or any
subsequent release or releases of the SEC relating to the maintenance of
Segregated Accounts by registered investment companies (the "Release"). Upon
receipt of Instructions, the Bank shall transfer into such Account or
Accounts cash and/or Portfolio Securities:
(A) In accordance with the provisions of any agreement among the Fund, the
Bank and a broker-dealer registered under the Exchange Act and a member of
the NASD or any Futures Commission Merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange or the
Commodity Futures Trading Commission or any registered Contract Market, or of
any similar organizations regarding escrow or other arrangements in
connection with transactions by the Fund;
(B) For the purpose of segregating cash or securities in connection with
options purchased or written by the Fund or commodity futures purchased or
written by the Fund;
(C) For the deposit of any Portfolio Securities which the Fund has agreed to
sell on a forward commitment basis or other purpose on which the Release
applies;
11
<PAGE>
(D) For other proper corporate purposes, but only, in the case of this clause
(D), upon receipt of, in addition to Instructions, a certified copy of a
resolution of the Board, or of the Executive Committee signed by an officer
of the Fund and certified by the Secretary or an Assistant Secretary, setting
forth the purpose or purposes of such Segregated Account and declaring such
purposes to be proper corporate purposes; and
(E) Assets may be withdrawn from the Segregated Account pursuant to
Instructions only:
(i) In accordance with the provisions of any agreements referred in (a) or
(b) above;
(ii) For sale or delivery to meet the Fund's obligations under outstanding
firm commitment or when-issued agreements for the purchase of Portfolio
Securities and under reverse repurchase agreements;
(iii) For exchange for other liquid assets of equal or greater value
deposited in the Segregated Account;
(iv) To the extent that the Fund's outstanding forward commitment or when-
issued agreements for the purchase of portfolio securities or reverse
repurchase agreements are sold to other parties or the Fund's obligations
thereunder are met from assets of the Fund other than those in the Segregated
Account; or
(v) For delivery upon settlement of a forward commitment agreement for the
sale of Portfolio Securities.
Notwithstanding anything herein to the contrary, the Bank shall have no duty
to, and shall not be obligated to determine or ascertain whether any such
Segregated Account, or any withdrawals or additions to such account is in
compliance with the rules, regulations and releases of the SEC, or that any
such Segregated Account or withdrawals or additions to such Segregated
Account is consistent with any other agreements or contracts the Fund may
enter into from time to time. Unless otherwise agreed to in writing, the
Bank's sole responsibility with respect to any Segregated Account or Accounts
contemplated in this Section shall be to act upon the Fund's Instructions.
12. THE FUND
(A) The Fund agrees that no printed material or other matter in any language
(including without limitation, prospectuses, statements of additional
information, notices to shareholders, annual reports and promotional
material) which mention the Bank's or Citicorp's name or the rights, powers
or duties of the custodian of the Fund shall be issued by the Fund or on the
Fund's behalf unless the Bank shall first have given its specific written
consent thereto; provided, however, that no prior consent shall be required
if the only reference to the Bank's or Citicorp's name is in identifying the
Bank as the Fund's custodian.
12
<PAGE>
(B) The Fund shall give prior notice to the Bank of any change in its place
of incorporation or organization, mailing address, or sponsors, or any
significant change in management, investment objectives, fees or redemption
rights.
(C) The Fund confirms that it is, and agrees that in the future it will be,
audited at least annually by an independent accounting firm and that it
mails, and in the future will mail, an audited financial report of the Fund
to its shareholders at least annually.
13. FEES AND EXPENSES
Fees and expenses for the services rendered under this Agreement shall be
mutually agreed upon by the parties in writing. The Bank shall be entitled to
debit the Custody Account for such fees and expenses.
14. LIENS
The Bank shall have a lien on the Property in the Custody Account to secure
payment of fees and expenses for the services rendered under this Agreement.
Except as otherwise provided in paragraph 22(D), if the Bank advances cash or
securities to the Fund for any purpose or in the event that the Bank or its
nominee shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of its duties
hereunder, except such as may arise from its or its nominee's negligent
action, negligent failure to act or willful misconduct, any Property at any
time held for the Custody Account shall be security therefor and the Fund
hereby grants a security interest therein to the Bank. The Fund shall
promptly reimburse the Bank for any such advance of cash or securities or any
such taxes, charges, expenses, assessments, claims or liabilities upon
request for payment. Except as otherwise provided in paragraph 22(D), should
the Fund fail to so reimburse the Bank, the Bank shall be entitled to dispose
of such Property to the extent necessary to obtain reimbursement. The Bank
shall be entitled to debit any account of the Fund with the Bank including,
without limitation, the Custody Account in connection with any such advance
and any interest on such advance as the Bank deems reasonable.
15. TAX STATUS/WITHHOLDING TAXES.
(A) The Fund's U.S. Tax Identification Number is MML Blend Fund 04-2808313.
(B) The Fund may be required from time to time to file such proof of taxpayer
status or residence, to execute such certificates and to make such
representations and warranties, or to provide any other information or
documents, as the Bank and/or the Eligible Foreign Custodian may deem
necessary or proper to fulfill the Bank's and/or Eligible Foreign Custodian's
obligations under applicable law. The Fund shall provide the Bank and/or
Eligible Foreign Custodian in a timely manner, with copies of originals if
necessary and appropriate, or any such proofs of residence, taxpayer status,
beneficial ownership and any other information or documents which the Bank
and/or a Eligible Foreign Custodian may reasonably request.
13
<PAGE>
(C) If any tax or other governmental charge or assessment shall become
payable with respect to any payment due to the Fund ("Taxes"), such Taxes
shall be withheld from such payment in accordance with applicable law. The
Bank and/or the Eligible Foreign Custodian may withhold any interest, any
dividends or other distributions or securities receivable in respect of
Securities, proceeds from the sale or distribution of Securities
("Payments"), or may sell for the account of the Fund any part thereof or all
of the Securities, and may apply such Payment in satisfaction of such Taxes,
the Fund remaining liable for any deficiency. If any Taxes shall become
payable with respect to any payment made to the Fund by the Bank or a
Eligible Foreign Custodian in a prior year, the Bank and the Eligible Foreign
Custodian may withhold Payments in satisfaction of such prior year's Taxes.
The Fund shall indemnify and hold harmless the Bank and the Eligible Foreign
Custodian, its officers, employees, agents and affiliated companies against
any Taxes, penalties, additions to tax, and interest, and costs and expenses
related thereto, arising out of claims against the Bank and the Eligible
Foreign Custodian by any governmental authority for failure to withhold Taxes
or arising out of any reclaim or refund of taxes or other tax benefit
obtained by the Bank or the Eligible Foreign Custodian for the Fund.
(D) This Section 15 shall survive the termination of this Agreement and
continue in force until the time for assessment of all Taxes expires.
16. AMENDMENT
This Agreement may not be amended except by a written agreement among the
parties hereto.
17. TERMINATION
Either the Bank or the Fund may terminate this Agreement upon sixty (60)
days' written notice to the other parties.
18. CONFIDENTIALITY
Subject to the foregoing provisions of this Agreement and subject to any
applicable law, the Fund and the Bank shall each use best efforts to maintain
the confidentiality of matters concerning Property in the Custody Account.
19. NOTICES
All notices and other communications hereunder, except for Instructions and
reports relating to the Property which are transmitted through the Bank's
electronic reporting system for Property in the Custody Account, shall be in
writing, telex or telecopy or, if verbal, shall be promptly confirmed in
writing, and shall be hand-delivered, telexed, telecopied or mailed by
prepaid first class mail (except that notice of termination, if mailed, shall
be by prepaid registered or certified mail) to each party at its address set
forth above, if to the Fund, marked "Attention Hamline C. Wilson" and if to
the Bank, marked "Citibank as Custodian for "MML Series Investment Fund", and
if to Citicorp, marked "Attention of Office of Corporate Finance, Gregory C.
Ehlke, Vice
14
<PAGE>
President", and, if to any of the preceding, a copy shall be promptly mailed
or delivered to Mass Mutual Life Insurance Company, 1295 State Street,
Springfield, Massachusetts 01111, Attention, Allan B. Bixby, Vice President
and Treasurer, or at such other address as either party may give notice of to
the other.
20. ASSIGNMENT
No party may assign, transfer or charge all or any of its rights and benefits
hereunder without the written consent of the other parties. Any purported
assignments made in contravention of this Section shall be null and void and
of no effect whatsoever.
21. GOVERNING LAW
This Agreement shall be governed by and construed according to the laws of
the State of New York and the parties agree that the courts of the State of
New York shall have jurisdiction to hear and determine any suit, action or
proceeding and to settle any disputes which may arise out to or in connection
with this Agreement, and, for such purposes, each irrevocably submits to the
non-exclusive jurisdiction of such courts.
22. MISCELLANEOUS
(A) This Agreement may be executed in several counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.
(B) This Agreement contains the entire agreement among the parties relating
to custody of Property and supersedes all prior agreements on this subject.
(C) The captions of the various sections and subsections of this Agreement
have been inserted only for the purposes of convenience and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.
(D) A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Board of
Trustees of the Trust as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding upon the assets and property of the
Trust; provided, however, that the Agreement and Declaration of Trust of the
Trust provides that the assets of a particular series of the Trust shall
under no circumstances be charged with liabilities attributable to any other
series of the Trust and that all persons extending credit to, or contracting
with or having any claim against a particular series of the Trust shall look
only to the assets of that particular series for payment of such credit,
contract or claim.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized.
CITIBANK, N.A. CITICORP
BY: /s/ Wilma J. Williams BY: /s/ Gregory C. Ehlke
NAME: Wilma J. Williams NAME: Gregory C. Ehlke
TITLE: Vice President North American TITLE: Vice President
Investors Services
111 Wall Street/24th Floor
(212) 657-9320
MML SERIES INVESTMENT FUND ON BEHALF OF MML BLEND FUND
BY: /s/ Stephen L. Kuhn
NAME: Stephen L. Kuhn
TITLE: Vice President-Secretary
16
<PAGE>
Exhibit 8(e)
Schedule of Omitted Domestic Custody Customer Service Standards
Due to the substantial similarity of the respective Domestic Custody Customer
Service Standards Agreements between Citibank and each of MML Money Market
Fund, MML Managed Bond Fund and MML Blend Fund, and the Domestic Custody
Customer Services Standards Agreement between MML Equity Fund and Citibank
(filed as Exhibit 8(e), this schedule of omitted documents is filed in
accordance with the requirements of Rule 8b-31 under the Investment Company
Act of 1940.
1. Domestic Custody Customers Services Standards agreement between MML Money
Market Fund and Citibank.
2. Domestic Custody Customer Services Standards agreement between MML Managed
Bond Fund and Citibank.
3. Domestic Custody Customer Services Standards agreement between MML Blend
Fund and Citibank.
<PAGE>
SECURITIES
SERVICES
Domestic Custody
Customer Service Standards
for MML Equity Fund
May, 1994
Citibank
<PAGE>
SECURITIES
SERVICES
Table Of Contents
Page
Securities Processing: Receive Instructions 1
Securities Processing: Delivery Instructions 3
Securities Processing: Delivery - Deadlines 4
Transfer/Split Registration Processing 6
Income Collection and Distribution 7
Reorganization Department 8
Customer Investigations 10
Client Responsibilities to Citibank 11
<PAGE>
SECURITIES
SERVICES
Securities Processing: Citibank Receives
Citibank will receive securities delivered to their accounts, in either physical
or book entry form, at the following locations or routing addresses:
PHYSICAL: Citibank
20 Exchange Place
New York, NY 10043
Physical R&D Unit
Level C
Delivery instructions must include:
Customer Name:
Customer Account # with Citibank:
FED ELIGIBLE:* Citibank/Cust
ABA #021000089
Customer Name:
Customer Account # with Citibank:
DTC ELIGIBLE:* Citibank #908
Customer Name:
Customer Account # with Citibank:
PTC ELIGIBLE:* CBANK
Customer Name:
Customer Account # with Citibank:
NSCC ELIGIBLE: Citibank #908
Delivery instructions must include:
Customer Name:
Customer Account # with Citibank:
It is important that Citibank be notified in advance of any securities receipts.
However, in the event that no corresponding instructions have been received
prior to Citibank's receipt of a security, the standards on the following page
will apply.
*For book entry settlements, the customer's bank/broker must include customer
name and account number in the comments field of the transaction.
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Citibank
<PAGE>
SECURITIES
SERVICES
Citibank will receive items against payment or free. We will apply them to the
customer's account on the same day providing Citibank had previously received
valid instructions.
For Securities Received Against Payment Without Instructions
If the Bank/Broker provides sufficient information for Citibank to identify its
customer, then Citibank will attempt to obtain those instructions.
Your response to these exception items must be communicated back to Citibank at
least fifteen minutes for Book Entry and 30 minutes for Physicals prior to the
strict reclaim deadlines, or the item will be returned. It is recommended that
you don't wait until the deadline to communicate and that you don't accumulate a
list to respond to near the deadline.
There will be times when the securities received do not agree with the
customer's instructions (i.e., coupon rate or net money difference). In these
cases the customer will be contacted. Citibank must receive the customer's
response within the guidelines outlined in the above paragraph.
For Securities Received Free Without Instructions:
If the Bank/Broker provides sufficient information for Citibank to identify its
customer, then Citibank will attempt to obtain those instructions.
In the case of securities sent "free" by mail, if instructions or required
documentation are not received within five business days of receipt, the
securities will be returned to the sender.
In the case of securities received "over the window" or through a depository, if
instructions or required documentation are not received within three business
days of the receipt of the securities, the item will be returned.
Please Note:
It is a "street" requirement for amortized securities to settle based on
original face value (not the current principle value). Therefore, the customers'
instructions to Citibank should reflect the value of units to be received or
delivered as original face.
2
Citibank
<PAGE>
SECURITIES
SERVICES
Securities Processing: Citibank Delivers
Citibank will make delivery of securities to its customer's contra parties on
the settlement date of the trade, within "Street" standard window closing
deadlines, as long as the account holds deliverable securities and provided that
valid instructions have been received as specified within the standards on page
four.
Please note that all of the times listed are New York times and that these
standards (for physical deliveries) apply to deliveries within the New York City
Financial District.
These standards do not apply to book entry securities which are requested to be
withdrawn and delivered in physical form, nor do they apply to depository
eligible securities held or received in physical form which are then requested
to be delivered out in book entry form. See transfer/split deposit processing
standards on page 5.
These standards also assume that trades will be input in a staggered fashion
prior to settlement date. If high volumes of delivery instructions are "sent" to
Citibank, by the customer, at or just prior to the stated cutoff times, these
deliveries will be made on a best effort basis (refer to instruction deadline
matrix on page 4).
Securities Lending Program
A separate agreement is needed to participate in this program. If you
participate in Citibank's Securities Lending Program, and need to deliver a
government security that is on loan, you must notify Citibank by no later than
10:00 A.M. on settlement date so that Citibank may recall the asset and process
the delivery on time. Citibank requires 5 days notice for the delivery of
corporate securities. No security in the Lending Program can be delivered prior
to its being returned to Citibank.
Please Note:
It is a "street" requirement for amortized securities to settle based on
original face value (not the current principle value). Therefore, the customers'
instructions to Citibank should reflect the value of units to be received or
delivered as original face.
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Citibank
<PAGE>
SECURITIES
SERVICES
Instruction Deadlines
DELIVERIES vs. PAYMENT
(all times are New York times)
FUNDS INPUT BY INPUT BY SERVICE STREET
INSTRUMENT TYPE CUSTOMER CITIBANK STANDARD DEADLINE
Fed Book Entry-Non dealer FF 2:15PM 2:00PM Same Day 2:30PM
(Gov't Bills, Bonds, Notes,
Agencies)
DTC Eligible Securities CH 11:15AM 4:00PM On S/D 11:30AM
(Equities, Corporates) On S/D Prior Day
DTC - SDFS Settlements FF 2:45PM 2:30PM Same Day 3:00PM
(Including Money Market
- -Instruments)
PTC Eligible Securities FF 2:45PM 2:30PM Same Day 3:00PM
(GNMA's)
Physical Money Market Instruments &
Physical Governments-Non dealer to Dealer
(BAs, CDs, CP, GNMAs, FF 1:00PM 12:45PM Same Day 2:15PM
FHAs, etc.)
Physical Money Market Instruments &
Physical Governments-Non dealer to Non dealer
(BAs, CDs, CP, GNMAs, FF 1:15PM 1:00PM Same Day 2:30PM
FHAs, etc.)
Physical Equities, Corporates, Muni's
CH 7:45PM 4:00PM On S/D 11:30AM
on Prior Day on Prior Day
New Issues:
Physical FF/CH 2:00PM 1:45PM Same Day 3:15PM
DTC-Next Day Funds CH 1:00PM 12:45PM Same Day 1:15PM
-Same Day Funds FF 2:45PM 2:30PM Same Day 3:00PM
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Citibank
<PAGE>
SECURITIES
SERVICES
Note: Sales of maturing securities within two (2) days or less of their stated
maturity date for New York Paying Agents, or within seven (7) days or less for
out-of-town agents must be communicated to your administrator in order to avoid
conflicting delivery and redemption instructions.
S/D = Settlement Date
The Federal Reserve Bank Standards are not static because the Fed often grants
extensions.
Deliveries returned to Citibank (DK'd) require a customer response. Operations
will contact the customer's client administrator as soon as the item is DK'd The
customer must respond within one business day or the instruction will be
cancelled.
Citibank's demand deposit account (DDA) capability allows for both immediately
available funds (FF) and next day funds (CH) processing. Credits or debits in
next day funds will reflect a one day delay in availability from the transaction
settlement date.
Regarding same day turnaround processing:
- - The receive and delivery instructions must be input within the service
standard above. The bank/broker delivering the asset to Citibank must present
them at least 15 minutes prior to the street deadline for book entry securities
and at least 45 minutes prior to the street deadline for physical securities.
- - Same day turnarounds processed within the Federal Reserve System by Citibank's
Custody Operations cannot be delivered in the dealer time.
5
Citibank
<PAGE>
SECURITIES
SERVICES
Transfer/Split Deposit Processing
Physical:
All physical securities required to be split or re-registered will be forwarded
by Citibank to the appropriate transfer agents within one business day of the
Bank's receipt of these instructions.
Book Entry:
Withdrawal-by-transfer instructions will be processed to the depository within
one business day of the Bank's receipt of these instructions.
Please Note:
The customer will be notified directly if any additional documentation or
registration information is required.
Customers selling securities that are already in transfer will have a high
probability of a delivery fail. However, in those situations Citibank will
contact the agent to expedite the transfer process.
Please Note:
Customers trading physical securities as a "turnaround" should use the clearance
pool transaction. This transaction type bypasses standard processing such as
reregistration and vault processing.
Securities placed out for legal transfer (those transfers requiring
documentation, i.e., letters testamentary, corporate resolutions, etc.)
extending over the settlement date of a pending trade, will not be funded by
Citibank.
All requests for re-registration/splits and associated documentation should be
addressed to:
Citibank, N.A.
WWSS Custody Division
111 Wall Street
New York, NY 10043
Attention:
(The name and location of customer's Account Administrator)
6
Citibank
<PAGE>
SECURITIES
SERVICES
Income Collection and Distribution
Payments of principal, interest and dividends (with the exception of physical
securities item number 3 below) are credited to customers accounts on a
contractual basis. These payments will be made by Citibank within the guidelines
below.
Please Note:
Adjustments to income by the paying agent are provided to Citibank's customers
within 48 hours of that adjustment.
U.S. Government Obligations and Agencies (Fed Eligible Securities) Payment will
be in immediately available funds on payable date.
Corporate and Municipal Securities (DTC)
Payment will be in immediately available funds one business day after the
payable date.
Mortgage Backed Securities (PTC and DTC)
Payment will be in immediately available funds one business day after the
payable date.
* See note below.
Physical Securities
1-Bearer Coupon Bonds
Payment will be in immediately available funds one business day after the
payable date.
2-Registered in Citibank's Nominee with a predetermined payment schedule
Payment will be in immediately available funds one business day after the
payable date.
3-Registered in Citibank's Nominee without a predetermined payment schedule
Income from physical securities (e.g. FHAs, SBAs, Broker Mortgages, etc.) will
be credited to the customer's account in immediate funds one business day after
the receipt of the payment.
4-Registered in Customer's Name and Address
See Customer responsibilities to Citibank on page 10.
Note: For those issues that would normally be paid one business day after the
payable date, income will be credited on the last day of the month if
that is the payment date.
Exception: For PTC and Federal Home Loan Mortgage Corp. securities only, when
payment date falls on weekend or holiday, payment is due on the
next business day. /s/ Bruno Umbro
7
Citibank
<PAGE>
SECURITIES
SERVICES
Reorganization Department
Functional responsibilities include:
Tender Offers, Conversions, Mergers, Exchanges, Maturities, Called Bonds,
Rights, Warrants, Liquidations, Bankruptcies, Class Actions, Stock Splits,
Distributions, Put Bonds, Dividend Reinvestments, Treasury Bill Rollover, etc.
Sources of Information:
HARD COPY: DTC Important Notices
DTC Participant Terminal System (PTS)
Wall Street Journal
New York Times
Financial Times
Notices from Redemption Agents
TRANSMISSIONS: XCITEK, Inc.
Financial Information, Inc.
TAPE FORM: Kenny Information Systems
Interactive Data Services
Customer Notification:
On all voluntary reorganization functions with an expiration date, a critical
notice (detailing all pertinent information) will be sent via fax to the
customer no later than the close of business the day following the receipt by
Citibank's Reorganization Department.
The purpose of this notification is for Citibank to solicit a response from the
customer by no later than 5:00 PM in New York, two (2) business days prior to
the notice's expiration date, in order to be able to successfully execute the
required functions. Responses received after this deadline will be handled on a
best efforts basis.
Advance notices are sent to all customers "holding" called bonds to give them
the opportunity to make reinvestment decisions as quickly as possible.
Advance notices on full-issue call redemptions will be sent via fax to clients
within two (2) days of the receipt of this information by Citibank
8
Citibank
<PAGE>
SECURITIES
SERVICES
In the case of partial calls, advance notices will be sent via fax within two
(2) days of the Reorganization Department establishing that the call includes
holdings at Citibank. The allocation of the call for securities held within a
depository will be performed by Citibank based upon market acceptable lottery
practices.
Maturities and Redemptions:
Maturities and redemptions will be posted to customers accounts on the scheduled
maturity date in either immediately available funds or next day funds depending
on the instrument.
Instructions to rollover maturing U.S. Treasury Bills will be accepted up to the
last day of the week preceding the maturity date of the Bill.
Cash and Asset Payments:
Cash payments will be credited to customers' accounts on the payable date of all
called bonds. If a sale is executed after the publication date of any called
bonds, or after the customer's receipt of written notification regarding tender
offers, the customer will assume full responsibility for any exposure this
action might incur.
Cash payments on all other corporate actions will be credited to client accounts
on the same day that the funds are received by Citibank.
In the case of a stock split/dividend or distribution, the shares will be posted
to client accounts, free, on payable date plus one.
If the customer utilizes a Dividend Reinvestment Plan, then customer standing
instructions will be followed. This is subject to "street" conditions and
governed by the plan sponsor.
9
Citibank
<PAGE>
SECURITIES
SERVICES
Investigations and Inquiries
All investigations/inquiries should be forwarded to your account administrator
directly.
The minimum information required to respond to an inquiry/investigation is:
Customer's name and account number
Citibank's internal security number or industry CUSIP number
Description of security
Explanation of problem
Reference or name to whom Citibank can direct a reply.
Note: Any additional relevant information including reference numbers should be
forwarded.
All inquiries will be acknowledged by Client Services within 24 hours of their
receipt.
Investigations/inquiries will be responded to within 4 business days provided
that the age of the underlying problem is less than six months old. Older items
may require some additional time to resolve.
Items requiring more than thirty (30) days to resolve will be reacknowledged by
Client Services via telephone and confirmed in writing.
10
Citibank
<PAGE>
SECURITIES
SERVICES
Customer Responsibilities to Citibank
Citibank is dedicated to providing the highest levels of service and achieving
the greatest levels of customer satisfaction in its Custody Operations. In order
to assure that we meet these goals, we ask our customers to abide by the
following principles for each area
For Instruction Processing:
Ensure the completeness and accuracy of all information that is
communicated to Citibank.
Deliver instructions to Citibank before their stated cutoff times.
Advise Citibank of any amendments or cancellations immediately.
For Settlement Processing:
Follow up with broker/clearing agent on all failed trades the business
day immediately following the contractual settlement date of the trade.
For Income Collection:
In cases where securities are registered in your name (i.e., they are
registered in your name and your address but held in safekeeping at
Citibank) Citibank will not be receiving the income and principal
payments on these securities, and therefore it is the customer's
responsibility to collect these funds directly from the paying agent.
Specifically advise Client Services of shares sold ex-dividend and prior
to ex-date or purchased cum-dividend after ex-date.
For Corporate Actions:
In cases where securities are registered in your name (i.e., they are
registered in your name and your address but held in safekeeping at
Citibank) Citibank will not be receiving notice of a corporate action and
therefore it is the customer's responsibility to notify Citibank of the
desired course of action or we will assume no responsibility.
Reply to Citibank before the cutoff times specified in the individual
corporate action advices you receive from us.
Advise Citibank of any corporate actions you become aware of where
notification from Citibank has not been received.
11
Citibank
<PAGE>
SECURITIES
SERVICES
For Tax Requirements:
Provide tax certification forms.
1001 every three years
W8 or W9 every three years
8709 annually
4224 annually
Provide needed documentation to satisfy legal requirements.
For Customer Inquiries:
Provide a contact list to ensure replies are directed appropriately.
Use the electronic banking reports service, where appropriate, to gather
historical information.
Accepted
/s/ Bruno Umbro
Nov. 15, 1994
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Citibank
<PAGE>
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
MML Series Investment Fund
We consent to the inclusion in this Post-Effective Amendment No. 39 to the
Registration Statement No. 2-39334 of MML Series Investment Fund on Form N-1A
(File No. 811-2224) of our report dated January 31, 1998 on our audits of the
financial statements and financial highlights of MML Equity Fund, MML Money
Market Fund, MML Managed Bond Fund, and MML Blend Fund, which are components
of MML Series Investment Fund. We also consent to the reference to our Firm
under the caption "Experts" in the Statement of Additional Information.
/s/ Coopers & Lybrand L.L.P.
Springfield, Massachusetts
April 29, 1998
<PAGE>
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
MML Series Investment Fund
We consent to the inclusion in this Post-Effective Amendment No. 39 to the
Registration Statement No. 2-39334 of MML Series Investment Fund on Form N-1A
(File No. 811-2224) of our report dated January 31, 1998 on our audit of the
financial statements and financial highlights of MML Equity Index Fund, which
is a component of MML Series Investment Fund. We also consent to the reference
to our Firm under the caption "Experts" in the Statement of Additional
Information.
/s/ Coopers & Lybrand L.L.P.
Springfield, Massachusetts
April 29, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REPORT TO
SHAREHOLDERS OF MML SERIES INVESTMENT FUND FOR THE YEAR ENDED DECEMBER 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000067160
<NAME> MML SERIES INVESTMENT FUND
<SERIES>
<NUMBER> 1
<NAME> MML EQUITY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 1,637,676,544
<INVESTMENTS-AT-VALUE> 2,560,250,707
<RECEIVABLES> 6,947,231
<ASSETS-OTHER> 2,546,472
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,569,744,410
<PAYABLE-FOR-SECURITIES> 13,448,674
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 192,854,459
<TOTAL-LIABILITIES> 206,303,134
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,440,195,104
<SHARES-COMMON-STOCK> 66,682,603
<SHARES-COMMON-PRIOR> 57,140,244
<ACCUMULATED-NII-CURRENT> 16,996
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (11,812)
<ACCUM-APPREC-OR-DEPREC> 922,574,163
<NET-ASSETS> 2,363,441,277
<DIVIDEND-INCOME> 47,216,639
<INTEREST-INCOME> 8,237,702
<OTHER-INCOME> 0
<EXPENSES-NET> 8,152,038
<NET-INVESTMENT-INCOME> 47,302,303
<REALIZED-GAINS-CURRENT> 143,291,448
<APPREC-INCREASE-CURRENT> 347,666,835
<NET-CHANGE-FROM-OPS> 538,260,585
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 47,301,234
<DISTRIBUTIONS-OF-GAINS> 143,291,448
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,271,802
<NUMBER-OF-SHARES-REDEEMED> 2,391,566
<SHARES-REINVESTED> 2,662,123
<NET-CHANGE-IN-ASSETS> 661,442,908
<ACCUMULATED-NII-PRIOR> 15,927
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (11,812)
<GROSS-ADVISORY-FEES> 8,082,863
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,152,038
<AVERAGE-NET-ASSETS> 2,328,067,108
<PER-SHARE-NAV-BEGIN> 29.786
<PER-SHARE-NII> 0.709
<PER-SHARE-GAIN-APPREC> 7.806
<PER-SHARE-DIVIDEND> 0.709
<PER-SHARE-DISTRIBUTIONS> 2.149
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 35.443
<EXPENSE-RATIO> 0.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REPORT TO
SHAREHOLDERS OF MML SERIES INVESTMENT FUND FOR THE YEAR ENDED DECEMBER 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000067160
<NAME> MML SERIES INVESTMENT FUND
<SERIES>
<NUMBER> 2
<NAME> MML MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 141,970,432
<INVESTMENTS-AT-VALUE> 141,970,432
<RECEIVABLES> 0
<ASSETS-OTHER> 2,550
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 141,972,982
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 807,597
<TOTAL-LIABILITIES> 807,597
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 139,753,731
<SHARES-COMMON-STOCK> 141,165,385
<SHARES-COMMON-PRIOR> 145,231,042
<ACCUMULATED-NII-CURRENT> 13,560
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 13,560
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 141,165,385
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,109,728
<OTHER-INCOME> 0
<EXPENSES-NET> 755,401
<NET-INVESTMENT-INCOME> 7,354,327
<REALIZED-GAINS-CURRENT> (4,291)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 7,350,036
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,350,036
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 149,151,177
<NUMBER-OF-SHARES-REDEEMED> 160,539,000
<SHARES-REINVESTED> 7,322,166
<NET-CHANGE-IN-ASSETS> (4,065,657)
<ACCUMULATED-NII-PRIOR> 9,702
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (9,702)
<GROSS-ADVISORY-FEES> 703,344
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 755,401
<AVERAGE-NET-ASSETS> 145,189,638
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.051
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.051
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.52
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REPORT TO
SHAREHOLDERS OF MML SERIES INVESTMENT FUND FOR THE YEAR ENDED DECEMBER 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000067160
<NAME> MML SERIES INVESTMENT FUND
<SERIES>
<NUMBER> 3
<NAME> MML MANAGED BOND FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 199,796,030
<INVESTMENTS-AT-VALUE> 206,243,754
<RECEIVABLES> 2,612,66
<ASSETS-OTHER> 3,085
<OTHER-ITEMS-ASSETS> 1,119
<TOTAL-ASSETS> 208,860,618
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,544,721
<TOTAL-LIABILITIES> 3,544,721
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 198,798,225
<SHARES-COMMON-STOCK> 16,545,756
<SHARES-COMMON-PRIOR> 15,070,294
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (96,215)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 705
<ACCUM-APPREC-OR-DEPREC> 6,447,725
<NET-ASSETS> 205,315,898
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13,560,239
<OTHER-INCOME> 0
<EXPENSES-NET> 970,874
<NET-INVESTMENT-INCOME> 12,589,365
<REALIZED-GAINS-CURRENT> 1,090,224
<APPREC-INCREASE-CURRENT> 4,682,107
<NET-CHANGE-FROM-OPS> 18,361,695
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12,621,479
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,489,815
<NUMBER-OF-SHARES-REDEEMED> 2,025,213
<SHARES-REINVESTED> 1,010,861
<NET-CHANGE-IN-ASSETS> 23,743,613
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (64,100)
<OVERDIST-NET-GAINS-PRIOR> (1,089,519)
<GROSS-ADVISORY-FEES> 913,026
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 970,874
<AVERAGE-NET-ASSETS> 207,742,519
<PER-SHARE-NAV-BEGIN> 12.048
<PER-SHARE-NII> 0.801
<PER-SHARE-GAIN-APPREC> 0.356
<PER-SHARE-DIVIDEND> 0.795
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.410
<EXPENSE-RATIO> 0.47
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REPORT TO
SHAREHOLDERS OF MML SERIES INVESTMENT FUND FOR THE YEAR ENDED DECEMBER 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000067160
<NAME> MML SERIES INVESTMENT FUND
<SERIES>
<NUMBER> 4
<NAME> MML BLEND FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 1,920,975,931
<INVESTMENTS-AT-VALUE> 2,661,619,219
<RECEIVABLES> 11,642,820
<ASSETS-OTHER> 1,344,963
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,674,607,002
<PAYABLE-FOR-SECURITIES> 15,073,387
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 187,706,124
<TOTAL-LIABILITIES> 202,779,511
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,730,351,561
<SHARES-COMMON-STOCK> 102,652,434
<SHARES-COMMON-PRIOR> 95,296,912
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (53,700)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (140,182)
<ACCUM-APPREC-OR-DEPREC> 740,643,288
<NET-ASSETS> 2,471,827,491
<DIVIDEND-INCOME> 33,425,435
<INTEREST-INCOME> 60,842,442
<OTHER-INCOME> 0
<EXPENSES-NET> 8,997,938
<NET-INVESTMENT-INCOME> 85,269,939
<REALIZED-GAINS-CURRENT> 162,884,955
<APPREC-INCREASE-CURRENT> 209,070,059
<NET-CHANGE-FROM-OPS> 457,224,953
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 85,322,771
<DISTRIBUTIONS-OF-GAINS> 162,679,164
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,389,317
<NUMBER-OF-SHARES-REDEEMED> 4,905,462
<SHARES-REINVESTED> 5,871,667
<NET-CHANGE-IN-ASSETS> 377,837,250
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (870)
<OVERDIST-NET-GAINS-PRIOR> (345,972)
<GROSS-ADVISORY-FEES> 8,933,947
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,997,938
<AVERAGE-NET-ASSETS> 2,397,687,898
<PER-SHARE-NAV-BEGIN> 21.973
<PER-SHARE-NII> 0.843
<PER-SHARE-GAIN-APPREC> 3.692
<PER-SHARE-DIVIDEND> 0.843
<PER-SHARE-DISTRIBUTIONS> 1.585
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 24.080
<EXPENSE-RATIO> 0.38
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REPORT TO
SHAREHOLDERS OF MML SERIES INVESTMENT FUND FOR THE YEAR ENDED DECEMBER 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000067160
<NAME> MML SERIES INVESTMENT FUND
<SERIES>
<NUMBER> 5
<NAME> MML EQUITY INDEX FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 20,306,016
<INVESTMENTS-AT-VALUE> 24,477,578
<RECEIVABLES> 40,884
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 24,518,462
<PAYABLE-FOR-SECURITIES> 4,327
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 312,372
<TOTAL-LIABILITIES> 316,699
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 20,009,993
<SHARES-COMMON-STOCK> 2,062,675
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 235
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (53)
<ACCUM-APPREC-OR-DEPREC> 4,171,562
<NET-ASSETS> 24,201,763
<DIVIDEND-INCOME> 272,010
<INTEREST-INCOME> 12,011
<OTHER-INCOME> 0
<EXPENSES-NET> 99,423
<NET-INVESTMENT-INCOME> 184,598
<REALIZED-GAINS-CURRENT> 41,673
<APPREC-INCREASE-CURRENT> 4,171,562
<NET-CHANGE-FROM-OPS> 4,392,833
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 184,363
<DISTRIBUTIONS-OF-GAINS> 41,726
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,002,676
<NUMBER-OF-SHARES-REDEEMED> 1
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 24,201,763
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 61,760
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 99,423
<AVERAGE-NET-ASSETS> 23,094,034
<PER-SHARE-NAV-BEGIN> 10
<PER-SHARE-NII> 0.092
<PER-SHARE-GAIN-APPREC> 2.101
<PER-SHARE-DIVIDEND> 0.092
<PER-SHARE-DISTRIBUTIONS> 0.021
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.08
<EXPENSE-RATIO> 0.64
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
