<PAGE>
MML Series Investment Fund
Table of Contents
Page
----
To Our Shareholders ..................................................... 2-7
Statement of Assets and Liabilities as of December 31, 1997 ............. 8
MML Equity Fund
MML Money Market Fund
MML Managed Bond Fund
MML Blend Fund
Statement of Operations For the Year Ended December 31, 1997 ............ 9
MML Equity Fund
MML Money Market Fund
MML Managed Bond Fund
MML Blend Fund
Statement of Changes in Net Assets For the Years Ended
December 31, 1997 and 1996 ............................................ 10
MML Equity Fund
MML Money Market Fund
MML Managed Bond Fund
MML Blend Fund
Financial Highlights
MML Equity Fund .................................................. 11
MML Money Market Fund ............................................ 11
MML Managed Bond Fund ............................................ 12
MML Blend Fund ................................................... 13
Schedule of Investments as of December 31, 1997
MML Equity Fund .................................................. 14-15
MML Money Market Fund ............................................ 16
MML Managed Bond Fund ............................................ 17-19
MML Blend Fund ................................................... 20-25
Notes to Financial Statements ........................................... 26-28
Report of Independent Accountants ....................................... 29
1
<PAGE>
MML Series Investment Fund
To Our Shareholders
More Positive News From The U.S.
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, which had raised interest
rates by 25 basis points in March, did not take action again for the remainder
of the year, and interest rates consequently declined.
Against Uncertainty From Overseas
Working counter to the forces supporting the domestic economy over the past year
was the financial breakdown in the Pacific Rim. After years of overinvestment,
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.
Strength Overcame Volatility in Stocks
Even though the U.S. stock market increased in volatility, it turned in
impressive results for the year. As of December 31, 1997, the S&P 500 was up
33.37%, the Dow Jones Industrial Average increased 24.93%, the NASDAQ was up
21.63% and the Russell 2000 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 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.
A Profitable Year For Bonds
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.
2
<PAGE>
Strategic Positioning For The Future
We expect the positive economic factors that determined 1997's market to
outweigh Asian concerns as 1998 continues. While the situation in the Far East
is dominating current market psychology, the International Monetary Fund is
assembling both the personnel and the financing necessary to begin restoring
investor confidence and economic stability to the region. If that takes hold,
domestic factors should begin to take precedence again. All things considered,
we expect another year of economic growth, but at less vigorous levels than what
we've seen recently.
In any event, recent volatility reminds us of the need to be paid for taking
risk. In this environment, we believe that research, selectivity and a value
orientation will separate winners from losers in both the stock and bond
markets. MassMutual's strategic focus on identifying value in the markets has
been tested over time. Our managers are experienced and talented, and supported
by a team of in-house researchers and analysts. All told, we should be well
positioned to act on the opportunities the coming year presents.
/s/ Stuart H. Reese
Stuart H. Reese
President
MML Series Investment Fund
January 30, 1998
3
<PAGE>
MML EQUITY FUND
How did the Fund perform over the past year?
The Fund did quite well over the year with a 28.59% return, which surpasses both
the long-term average for stocks* and the results of many other value
managers. However, the Fund lagged the performance of the S&P 500 index, 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 index to
exceed the results of most active managers. As a value manager, we consider 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. Our
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 over the course of the year?
The market has been remarkably strong over the past three years - in fact we
haven't 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 the year 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 the year.
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 conservative 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.
How are you currently positioning the portfolio?
We think selectivity will be the key to this year's market. In general, we're
looking for companies with stable earnings streams, little or no exposure to
Asia, and little import competition. Market valuation continues to be high, but
low interest rates and declining inflation are encouraging signs. Growth in the
economy and corporate profits are likely to be substantially lower than in
recent years, and we have reduced our expectations accordingly. On the negative
side, this country's competitive position has been weakened by the strong
dollar, and import competition is likely to be fierce. This represents an
unusually challenging period for capital equipment and commodity basic
materials. Our emphasis will be on value added products which can retain their
share of market.
Insurance companies may be particularly well positioned, as declining interest
rates increase the value of their bond holdings. American General, a
well-capitalized insurer with a focused management team, is a recent addition to
the portfolio. Finally, well managed specialty chemical companies such as Air
Products, a producer of industrial gases, and Englehard Corp., whose catalysts
provide solutions to air quality problems, offer opportunity for the Fund.
What is your outlook as we enter 1998?
We expect the coming year's market to be challenging. There is still a fair
amount of risk from the unfolding Asian financial situation, and market
valuation continues to be high. Balancing these negatives is the fact that we
can still find individual stocks offering both high quality and valuations which
suggest sound returns over the long term. As always, we will focus on well
financed companies with competitive advantages that can grow earnings at an
attractive rate in the future. This strategy has generated strong returns with
low volatility in the past and we expect continued success in the future.
* Based on annualized returns of the S&P 500 from 1926-1997.
4
<PAGE>
MML MONEY MARKET FUND
How did the Fund perform over the past year?
The Fund has enjoyed another good year with a 5.18% return, outperforming 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 this year and the Fund
took advantage of the opportunities that were created.
How did your market change over the course of the year?
During the first half of the year, there was some concern in the fixed income
markets that the Federal Reserve 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 as 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?
As a pure money market fund, MML Money market was obligated to invest 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 issuance. 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.
What is your current investment strategy?
Our agency holdings will continue to be assessed and replaced with
higher-yielding Tier 1 commercial paper, as opportunities exist. As liquidity
needs are met, the average life will be adjusted to align with the IBC/Donohue
universe.
What is your outlook for the Fund as we move into 1998?
We think the outlook is strong. While we're not anticipating any major changes
in interest rates, in the near term, we continue to watch economic and market
data closely. In the current environment, money market securities are paying
competitive rates, and that should continue as the year progresses. And until
the depth of the Asian markets' difficulties are fully understood and corrective
actions taken, we may benefit from the shift in demand from volatile market
sectors in favor of safer, more predictable investments.
MML BOND FUND
How did the Fund perform over the past year?
The Fund performed very well for the year showing a return of 9.91%, slightly
outpacing its benchmark, the Lehman Brothers Government/Corporate Bond Index,
the Fund's benchmark, which had a return of 9.75 for the year. A major factor
contributing to its performance was the overweighting of spread product, that
is, product that offered incremental yield advantages to Treasuries.
Describe the investment climate over the past year.
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.
5
<PAGE>
During the first half of the year, the Federal Reserve'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 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
Asia 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.
How are you currently positioning the portfolio?
Assets under management have grown significantly over the course of the year. As
we invest new cash, we continue to focus on those investment opportunities that
offer us attractive yield advantages over Treasuries. Primarily because of
concerns over the impact weakness in Asia may have on domestic corporations,
corporate bonds are selling at significant yield advantages over Treasuries. We
think corporates continue to offer compelling opportunity, but since
Asia-related concerns are real, careful research into individual bonds is
imperative.
The mortgage holdings of the Fund are either "well-seasoned" pass through
issues, low coupon adjustable rates mortgages, or well-structured collateralized
mortgage obligations. All of these types of mortgage backed obligations should
perform well in 1998 if lower rates spur a refinancing wave.
What is your outlook for the Fund heading into 1998?
1998 marks the eighth year of the current economic expansion, and many of the
factors that have kept the economy positive - such as a 28 year high in consumer
confidence, positive corporate earnings, low interest rates and low unemployment
against a background of low to declining inflation - endure. However, new
concerns have arisen as well. Foremost among these is the Asian crisis, which
has the potential to slow growth here in the U.S. So while we continue to look
upon the market favorably, the potential for changes in economic conditions
exists, making research and close monitoring of credits and market activity
important.
With interest rates likely to remain in a close trading range at least until the
Asian markets improve, we think the outlook for both the Fund and the bond
market is positive. While volatility in the stock market may continue to bolster
bond prices, we expect that most of the returns from fixed income investments
will be driven by income in the coming year. We believe our focus on yield and
our analytical strength, as a firm should be a benefit to the Fund in that
environment.
MML BLEND FUND
How did the Fund perform over the past year?
The Fund performed quite well for the year. We're pleased to report that our
stock-picking strategy allowed us to actively participate in another very
positive 12-month period for the equity market. For the year ended December 31,
1997, our return of 20.89% surpassed both the Lipper Analytical one-year average
for balanced funds of 18.94%, and far exceeded the long-term average for the
broad stock market*. 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.
6
<PAGE>
Within your stock holdings, what types of investments were strongest over the
period?
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's 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, 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 this year.
We also strategically increased our holdings of cash and short-term debt
instruments this period 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, we found we
could earn competitive income from short-maturity investments and reduce risk at
the same time.
How are you currently positioning the portfolio and why?
We're very comfortable with the current sector allocation of the portfolio, so
we're not planning on making any significant changes at this time. At year-end,
the Fund was roughly 61 percent invested in stocks, 19 percent in bonds and 20
percent in cash. The overweighting in stocks has been a plus, and we expect that
to continue for the coming year. Additionally our fixed income holdings should
continue to help temper any volatility from the stock portion by providing an
income cushion. Within each of the portfolio's components, we will continue to
use first-hand analysis and intensive research to identify the stock and bond
investments we believe represent the best opportunities for the Fund.
What is your outlook for the Fund as we move into 1998?
We think this will be another good year. The economy continues to show signs of
strength. Consumer confidence is at 28-year high, corporations continue to be
well-managed and profitable, inflation is in decline from an already low level
and interest rates are low and fairly stable. We believe these facts bode well
for the stock market, though volatility may continue due to a combination of
high valuations and financial instability in the Pacific Rim. On the bond side,
we expect returns to come primarily from income after last year's rally, but for
the market to remain positive. If the Federal Reserve begins to fear an economic
slowdown either as fallout from Asia or as a natural part of the economic cycle,
however, rates could decline further. Should that happen, we'd expect even more
strength in the bond sector. Being invested in both markets has been the key to
our strong long-term performance, and we'd expect that strategy will continue to
serve the Fund well, allowing us to capture competitive returns without
excessive exposure to risk.
*Based on annualized returns of the S&P 500 from 1926-1997.
7
<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.
8
<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.
9
<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.
10
<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.
11
<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
12
<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.
13
<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
----------- -------------
14
<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.
15
<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.
16
<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
17
<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>
18
<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.
19
<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
--------- ------------
20
<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>
21
<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
------------- -------------
22
<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
23
<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
24
<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.
25
<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.
26
<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.
27
<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>
28
<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 30, 1998
29
