<PAGE>
MML SERIES INVESTMENT FUND
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
To Our Shareholders........................................................................ 2-8
Statement of Assets and Liabilities as of December 31, 1998................................ 9
MML Equity Fund
MML Money Market Fund
MML Managed Bond Fund
MML Blend Fund
Statement of Operations For the Year Ended December 31, 1998............................... 10
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, 1998 and 1997.......... 11
MML Equity Fund
MML Money Market Fund
MML Managed Bond Fund
MML Blend Fund
Financial Highlights
MML Equity Fund............................................................................ 12
MML Money Market Fund...................................................................... 13
MML Managed Bond Fund...................................................................... 14
MML Blend Fund............................................................................. 15
Schedule of Investments as of December 31, 1998
MML Equity Fund............................................................................ 16-18
MML Money Market Fund...................................................................... 19-20
MML Managed Bond Fund...................................................................... 21-25
MML Blend Fund............................................................................. 26-34
Notes to Financial Statements.............................................................. 35-38
Report of Independent Accountants.......................................................... 39
</TABLE>
1
<PAGE>
MML SERIES INVESTMENT FUND
TO OUR SHAREHOLDERS
ANOTHER YEAR OF EXPANSION IN THE U.S.
1998 marked the eighth consecutive year of economic expansion in the United
States, once again confounding those who were looking for the economy to falter.
Real growth of gross domestic product for the year is likely to be somewhere
around 3.75%, a shade under 1997's 3.9%. While economic growth continued,
inflation remained virtually dormant, with the Consumer Price Index rising about
1.7%. Producer prices, which often lead changes in consumer prices, actually
declined in 1998. Interest rates fell for most of the year, ending December at
near-record low levels. Contributing to the easing of interest rates was the
fact that the U.S. government had a $70 billion surplus in fiscal year 1998
after several decades of deficits. Another surplus is forecast for the current
fiscal year.
Consumption and fixed investment both contributed strongly to the expansion in
1998. Thanks to solid income growth and another banner year for large
capitalization stocks, consumers were able to maintain spending at high levels
all year. Fixed investment benefited from steady increases in residential
construction and producers' durable equipment mainly computers and other
business equipment. Investment in technology contributed not only to growth but
also to gains in productivity.
The only broad-based drag on economic growth was the trade deficit, which grew
by close to $100 billion in 1998. The deficit was exacerbated by strong domestic
growth, which spurred imports, and by serious financial problems abroad, which
dampened foreign demand for U.S. goods and services and therefore limited U.S.
exports.
OVERSEAS: SOME PROGRESS, SOME NEW CHALLENGES
In Asia, where severe financial problems first came to a head in 1997, there was
some progress. The stock markets of Thailand and South Korea rebounded
noticeably in 1998, indicating that investors are beginning to overcome their
generalized fear of Southeast Asian markets and instead are making investment
decisions on a nation-specific basis. This is a key prerequisite for meaningful
recovery in the region.
In Japan, political leaders finally adopted an aggressive plan to stimulate the
economy and reform the country's ailing banking system. Policy is now moving in
the proper direction, but it will be a long road back to economic health for
Japan.
One key concern continues to be the extent to which the problems in Asia will
spread to other emerging markets, and eventually to the U.S. This concern gained
renewed force in August, when Russia announced a substantial devaluation of its
currency, the ruble, and defaulted on much of its foreign debt. South America,
particularly Brazil, also gave investors cause for concern in 1998.
EQUITIES TAKE A HIT BUT FINISH STRONG
U.S. equities were uniformly strong during the first three months of the year,
as concerns about Asia receded into the background and investors focused on
strong economic growth. In April, a two-tiered market emerged, with large-
capitalization technology and other growth issues leading the S&P 500 Index and
the Dow Jones Industrial Average higher through mid-July. The Russell 2000
Index, however, trended lower throughout the second quarter, indicating that
many small-capitalization stocks were not participating in the rally. Indeed,
even the S&P 500's gains, at its high water mark in July, were largely due to
its twenty largest components. The rally, therefore, was quite narrow.
In the third quarter, amid Russia's financial difficulties and renewed concerns
about Asia, stocks turned south, giving up all they had gained earlier in the
year and then some in many cases. A flight to quality ensued in which investors
shunned stocks in general. Especially hard hit were small-capitalization issues,
technology stocks, and other sectors perceived to have more than average risk.
With the financial markets reeling, the Federal Reserve Board stepped in,
lowering interest rates three times in three months. Stocks responded with a
vigorous fourth-quarter rally, again concentrated primarily in growth stocks.
The Dow Jones Industrial Average, S&P 500 Index, NASDAQ Composite Index and
Russell 2000 Index ended 1998 with returns of 18.17%, 28.58%, 39.63% and 2.55%,
respectively. The disparity in performance between the different market segments
is especially evident in the latter two indices.
BONDS RIDE THE ROLLER COASTER, TOO
Bonds were by no means immune to the third quarter's volatility. Up to that
point, interest rates, which began the year at low levels, had trended
irregularly lower, as the yield curve gradually flattened. Although first-half
credit spreads widened in January and June, new issuance remained at relatively
healthy levels due to the low absolute level of interest rates.
2
<PAGE>
In August, trouble began brewing in the credit markets when Russia's devaluation
and default caused a number of hedge funds to liquidate some large credit
positions. Panic ensued, and spreads widened dramatically, especially between
corporate issues and Treasuries, as investors sold corporate securities and fled
to the safety of Treasury securities.
As happened with equities, the credit markets recovered somewhat when the
Federal Reserve Board lowered interest rates. Spreads narrowed considerably by
year-end, although not nearly to their levels before the crisis.
LOOKING AHEAD TO 1999
The central economic event of 1999 is likely to be a mild slowdown in the U.S.
economy. The lower rate of expansion in non-farm payrolls in the second half of
1998, together with the associated easing of personal income growth, makes it
unlikely that consumers will be able to keep spending at 1998's brisk rate.
Softness in corporate earnings, a symptom of reduced consumer spending, may be
evident. Federal Reserve Board policy, which was extremely accommodating in
response to the 1998 crisis in the financial markets, has returned to a neutral
stance and will likely remain so until circumstances clearly mandate a change.
Inflation may rise a little but should remain unthreatening. In this
environment, MassMutual should continue to serve shareholders well with its
focus on thorough research and identifying value in the financial markets.
/s/ Stuart H. Reese
Stuart H. Reese
President
MML Series Investment Fund
January 29, 1999
3
<PAGE>
MML EQUITY FUND
HOW DID THE FUND PERFORM OVER THE PAST YEAR?
The Fund performed reasonably well, given the backdrop of 1998's volatile
markets. For the 12 months ended December 31, 1998, the Fund had a net return of
16.20%*. The Fund's return trailed the 28.58% return of the S&P 500 Index, a
market capitalization-weighted, unmanaged index of 500 common stocks, while
surpassing the 14% gain of the average diversified equity fund monitored by
Lipper Analytical Services. The S&P 500's gains in 1998 were driven primarily by
the 20 largest companies in that Index, many of which the fund cannot invest in
either because their stock prices exceed our value parameters or they pay no
dividends.
WHAT WAS THE INVESTMENT ENVIRONMENT IN 1998?
It was a tumultuous year, to be sure. After superlative gains in the previous
three years, it looked as though the stock market would be hard-pressed to
perform well again in 1998. Against those odds, however, popular averages such
as the Dow Jones Industrial Average and the S&P 500 Index surged ahead through
mid-July, gaining in excess of 20%. At that point, however, many multinational
companies began to report lower earnings or to scale back their earnings
forecasts due to the Asian financial crisis. The most negative news during the
period, though, came from Russia, which substantially devalued its currency and
defaulted on much of its foreign debt. Worldwide equity markets responded by
plunging in August, as the S&P 500 relinquished all of the ground it gained
earlier in the year.
In September, October and November, the Federal Reserve Board (Fed) moved
aggressively to cut short-term interest rates, which helped to get the markets
back on track. The October easing had a particularly beneficial effect because
it was a surprise move that occurred between meetings of the Fed's Open Market
Committee, the group that decides the fate of short-term interest rates. As a
result, stocks came roaring back in the fourth quarter, with the S&P 500 gaining
21.3% in that quarter alone. However, the lion's share of the gains was once
again concentrated in the Index's larger growth stocks. More than 200 stocks in
the S&P 500 - about 40% posted price declines during 1998, and operating
earnings for the Index as a whole are likely to be flat or slightly down for the
year.
HOW WAS THE FUND'S STRATEGY EMPLOYED DURING THE YEAR?
Shortly after mid-year, we reduced some of the industrial exposure in the
portfolio, selling positions in specialty chemical companies, Lubrizol and Nalco
Chemical. With the economy appearing to be slowing down, we felt that the
earnings of these companies would suffer significantly in the short term. After
stocks retreated in the third quarter, most stocks were far more attractive on a
value basis. Our buying was selective and included Burlington Resources, Conoco
(which was spun off from Dupont), Newell Corp, and American Home Products.
WHICH STOCKS DID WELL FOR THE FUND, AND WHICH WERE DISAPPOINTING?
Schering Plough, part of a strong health care sector, was our top performer for
the year, with a gain of 78%. Although we took profits on some of this position
when the stock reached what we considered to be relatively high valuation
levels, it is still one of the Fund's top-ten holdings. Bristol Myers-Squibb and
Becton Dickinson were two other health care holdings that turned in strong
performances for the year. IBM was part of a strong technology group, gaining
77%. General Electric, another top-ten holding, also helped the Fund's
performance. Although one of the largest companies in the world, GE is also one
of the best managed and has actually accelerated its earnings growth rate in the
past five years, a rarity for a company of GE's size. McGraw-Hill and Pitney
Bowes were two other top-ten holdings that finished the year with good gains.
Many of our laggards this year were energy stocks that were hurt by weak oil and
gas prices. Kerr-McGee, Unocal, and USX-Marathon Group all exemplified this
trend. Minnesota Mining & Manufacturing, a diversified manufacturing company,
was hurt by its Asian exposure.
WHAT IS YOUR OUTLOOK?
Looking ahead to 1999, we have some concerns. The market is unlikely to deliver
yet another year of above-20% gains. With the U.S. economy apparently slowing,
corporations may not be able to deliver the kind of earnings growth that Wall
Street wants to see. Furthermore, as mentioned previously, the S&P 500's
exceptional performance has been concentrated in relatively few large-
capitalization growth stocks. In order for the market's advance to have staying
power, it must expand to include more than a select few issues. Such an
expansion should likely benefit the Fund, which sticks to moderately valued
securities that could be attractive to investors who become disenchanted with
those highly valued issues that have been market leaders for the past several
years.
On the positive side, inflation remains low and interest rates are favorable.
The Federal Reserve Board has shown its determination to keep the economy from
falling into recession, and 1998's three interest rate cuts may be followed by
more if economic growth shows signs of faltering. In a slower-growth environment
such as we seem to be entering, the Fund's emphasis on value should enable it to
continue to deliver competitive returns for shareholders.
4
<PAGE>
* The return reflects changes in the net asset value per share without the
deduction of any insurance product charges. The inclusion of these charges would
have reduced the performance shown here. Past performance is no indication of
future results.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
STANDARD & POORS
FUND 500 INDEX
<S> <C>
1/1/89 10000 10000
1989 12304 13166
1990 12241 12757
1991 15370 16645
1992 16980 17913
1993 18597 19717
1994 19359 19875
1995 25386 27482
1996 30527 33795
1997 39255 45072
1998 45614 57954
</TABLE>
MML BLEND FUND
HOW DID THE FUND PERFORM OVER THE PAST YEAR?
For the twelve months ended December 31, 1998, the Fund had a net return of
13.56%*, trailing the 15.1% gain recorded by the Lipper Balanced Fund Index, an
unmanaged index of stocks and bonds. Large-capitalization growth stocks once
again garnered the lion's share of the gains compared to the value-oriented
stocks in which the Fund's equity portfolio invests. This hurt performance
relative to the Index. Volatility increased substantially during the third
quarter, and the Fund's fixed-income holdings helped cushion the declines in
equities that occurred during that period.
CAN YOU EXPLAIN THE FUND'S ALLOCATIONS AMONG THE THREE ASSET CLASSES DURING THE
YEAR?
The target allocation for stocks decreased from 61% to 59% at the end of the
year. The allocation for bonds was increased from 19% at the beginning of 1998
to 23% at the end of the year, while the percentage of money market securities
was decreased from 20% to 18% over the same period. In response to widening
spreads between U.S. Treasury securities and other credit instruments in the
third quarter, we felt that the Fund might be able to take advantage of some
compelling values in the bond market.
WHAT WAS THE INVESTMENT ENVIRONMENT IN 1998?
It was a tumultuous year. Popular averages such as the Dow Jones Industrial
Average and the S&P 500 Index surged ahead through mid-July, gaining in excess
of 20%. At that point, however, concerns over the earnings of multinational
companies began to surface due to the Asian financial crisis. The most negative
news during the period, though, came from Russia, which substantially devalued
its currency and defaulted on some of its debt. The S&P 500 Index relinquishing
all of the ground it gained earlier in the year. In the fixed-income markets,
there was a flight to quality, with U.S. Treasuries rallying sharply and spreads
widening dramatically.
In September, October and November, the Federal Reserve Board (Fed) cut short-
term interest rates. This helped fuel a resurgency in stocks which came roaring
back in the fourth quarter, with the S&P 500 gaining 21.3%. The Fed's actions
also helped the fixed-income markets recover to some degree. Spreads between
Treasuries and corporate securities narrowed in November and December, although
not nearly to their pre-August levels.
CAN YOU COMMENT ON SPECIFIC STOCK HOLDINGS AND EXPLAIN CHANGES MADE DURING THE
YEAR.
The Fund had extensive health care holdings, and these generally performed well.
Pharmaceutical giant Schering-Plough, was a star performer, as were two other
health care holdings Bristol Myers-Squibb and Becton Dickinson. Other stocks
that helped performance included IBM, GE, McGraw-Hill and Pitney Bowes.
One of our weaker sectors in 1998 was energy, where stocks were hurt by weak oil
and gas prices. Examples of this trend were Kerr-McGee, and Unocal. Minnesota
Mining & Manufacturing, a diversified manufacturer of industrial, commercial and
health care products, was hurt by its Asian exposure.
In the second half of the year, we sold positions in specialty chemical
companies such as Lubrizol and Nalco Chemical. We felt that the earnings of
these companies would suffer significantly in the short term if economic growth
continued to slow. After stocks retreated in the third quarter, we bought
selectively, initiating or increasing positions in Burlington Resources, Conoco
(which was spun off from Dupont), Newell Corp, Pharmacia & Upjohn and American
Home Products.
5
<PAGE>
HOW WAS THE BOND PORTFOLIO POSITIONED, AND WHAT IMPACT DID THIS HAVE ON THE
FUND?
The largest sector allocation for the bond portfolio was corporate securities.
The Fund's assets grew dramatically during 1998, and much of this new money went
into BBB-rated corporate securities, especially in the second half, when spreads
reached their widest levels. Widening spreads hurt the issues already in the
Fund's portfolio but enabled us to add new purchases at very favorable spread
levels.
The other large sector allocation for the bond portfolio, and the best
performing sector for the year, was Treasuries. We increased Treasury holdings
as interest rates gradually worked lower in the first half. During the huge
rally in Treasuries in the second half of the year, we took some profits,
reducing Treasury holdings by the end of December. The bulk of the proceeds was
reinvested in corporate securities with attractive spreads.
WHAT IS YOUR OUTLOOK?
In 1999, a slowing economy and sluggish growth in corporate profits may limit
gains in stocks for much of the year. One factor that could counteract these
trends is further easing of interest rates by the Federal Reserve Board.
Moreover, the kind of stocks that meet the Fund's value criteria are less
vulnerable to serious damage from unfavorable earnings surprises than the
market-leading growth stocks, whose rich valuations leave little room for
disappointing news. On the fixed income side, we continue to carry an
approximately 60% weighting in spread product versus about 44% for our benchmark
bond index, a reflection of our expectation that spreads will narrow during
1999. Overall, the Fund is well positioned for a slowing but still-growing
economy such as we are likely to find in 1999.
* The return reflects changes in the net asset value per share without the
deduction of any insurance product charges. The inclusion of these charges would
have reduced the performance shown here. Past performance is no indication of
future results.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
LIPPER STANDARD LEHMAN
BALANCED & POORS BROTHERS GOV'T/
FUND FUND INDEX 500 INDEX CORP. INDEX
<S> <C> <C> <C>
1/1/89 10000 10000 10000 10000
1989 11996 11970 13168 11423
1990 12280 12049 12757 12368
1991 15228 15161 16645 14368
1992 16654 16280 17913 15452
1993 18269 18162 19717 17157
1994 18721 17710 19975 16654
1995 23079 22065 27482 19740
1996 26299 24936 33795 20312
1997 31793 29695 45072 22293
1998 36104 34133 57954 24404
</TABLE>
MML MANAGED BOND FUND
HOW DID THE FUND PERFORM OVER THE PAST YEAR?
For the 12 months ended December 31, 1998, the Fund had a net return of 8.14%*.
The Fund's return lagged the 9.47% gain recorded by the Lehman Brothers
Government/Corporate Bond Index. Relative to the Index, a larger percentage of
the Fund's assets were invested in securities that offered a risk premium to
U.S. Treasuries. This heavier allocation to corporate securities and mortgage
backed instruments hurt the Fund's performance versus the Index.
WHAT WAS THE MARKET ENVIRONMENT DURING THE PERIOD?
Overall, interest rates declined in 1998, with the steepest declines coming in
the Treasury markets. This phenomenon was particularly evident in the second
half of the year, when both stock and bond markets were extremely volatile and a
flight to quality caused investors to favor U.S. Treasuries over other
securities. Several factors were at work to create this environment. For one
thing, the Asian financial crisis began to manifest itself in the form of lower
earnings and earnings forecasts for many U.S. corporations. There were also
concerns that the round of currency devaluations in Asia would spread to Brazil
and other South American countries. A particularly negative development occurred
in August, when Russia announced a substantial devaluation of its currency, the
ruble, and defaulted some of its debt. Finally, a prominent U.S. hedge fund
nearly failed and was forced to liquidate some massive positions, causing
dislocations in the credit markets.
In response to these events, world stock markets plunged, Treasuries of all
maturities rallied sharply, and spreads between Treasuries and other credit
instruments, particularly corporate securities, widened, as investors shunned
risk and sought safety. The 30-year Treasury bond, for example, briefly edged
below 5%, a level not seen in over 30 years.
6
<PAGE>
However, the Federal Reserve Board responded quickly to the crisis, reducing
short-term interest rates in September, October, and November. These
interventions helped the markets recover to some degree toward the end of the
year. Spreads between Treasuries and corporate securities narrowed some in
November and December.
HOW WAS THE FUND POSITIONED DURING THE PERIOD?
The Fund's assets grew during 1998, from $205 million at the end of 1997 to $254
million twelve months later. Most of this growth occurred during the second half
of the year and most of this new money was invested in corporate securities and
mortgage backed instruments. Corporate purchases during the last six months of
the year were focused along the yield curve when spreads reached their widest
levels. Companies were added to the portfolio based upon our bottom-up analysis
of the credit and were weighed against the available alternatives. Transactions
during the second half included purchases of issues rated either A or BBB. The
issues purchased included: IMC Global, Anheuser Busch, Conagra, Heller
Financial, Occidental Petroleum, CSX Corp., and J. Seagram & Sons.
We reduced our allocation to the mortgage backed sector from 20.0% to 12.2%
during the first nine months of the year. Adjustable rate mortgage securities
were sold during the summer months as interest rates were drifting lower. These
securities had performed well and our analysis indicated that they were becoming
overvalued. Following the blow-up in spreads in the third quarter, we gradually
increased our allocation to the mortgage backed sector. We invested $9.0 million
in AAA rated commercial mortgage backed securities. This sector had widened
significantly and the underlying collateral suggested that this paper was
undervalued at the time. We also added to our holdings current coupon thirty-
year mortgage pass-through instruments. Pass-through spreads had widened to the
cheaper end of their historical ranges creating an attractive buying opportunity
for the fund.
WHAT IS YOUR OUTLOOK FOR 1999?
In 1998, we saw spreads on corporate securities that haven't occurred since the
1990 recession. At this point, the U.S. economy has slowed to some degree, but
there appears to be no recession on the horizon yet. Furthermore, we have a
Federal Reserve Board that has shown its determination to lower interest rates
in an attempt to fight off a recession in the United States. This scenario
implies heavier supply of new issues as corporate treasurers attempt to seek
lower financing costs, but credit deterioration might also be expected. If no
recession materializes, the spreads on the Fund's corporate securities should do
well in the coming year. Indeed, the mix of a moderately growing economy,
minimal inflation, and stable interest rates at near-record low levels should be
supportive of fixed income investments generally.
* The return reflects changes in the net asset value per share without the
deduction of any insurance product charges. The inclusion of these charges would
have reduced the performance shown here. Past performance is no indication of
future results.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
LEHMAN BROTHERS
FUND GOVERNMENT/CORPORATE INDEX
<S> <C>
1/1/89 10000 10000
1989 11283 11423
1990 12227 12368
1991 14284 14363
1992 15307 15452
1993 17114 17157
1994 16471 16554
1995 19624 19740
1996 20261 20312
1997 22269 22293
1998 24082 24404
</TABLE>
MML MONEY MARKET FUND
HOW DID THE FUND PERFORM DURING 1998?
The Fund returned 5.16%* for the 12 months ended December 31, 1998, slightly
ahead of the 4.86% return recorded by the money market funds average monitored
by Lipper Analytical Services. Although interest rates in the United States
declined during the period, the Fund's continued strong emphasis on credit
selection of Tier 1 securities - that is, rated in the highest rating category
of at least two nationally recognized statistical rating organization - enabled
it to outperform the Lipper average.
WHAT WAS THE MARKET ENVIRONMENT DURING THE PERIOD?
The first half of 1998 was relatively placid, as the U.S. economy continued to
grow moderately in spite of the slowing effects expected by many investors as a
result of the Asian financial crisis. Inflation remained in check, and interest
rates were stable and near record lows. At the short end of the fixed-income
market, Treasury Bill rates fell slightly, while Tier 1 issues rose a bit, with
spreads between Treasuries and 30-day Tier 1 commercial paper widening from 50
to 74 basis points at the end of June.
7
<PAGE>
In the third quarter, world financial markets became extremely volatile. For one
thing, corporate earnings began to show more evidence of susceptibility to the
slowdown in Asia. There was also increased concern about the Brazilian banking
system. However, the "straw that broke the camel's back" was Russia, which
unexpectedly devalued its currency and defaulted on some of its debt. Finally,
the near-failure of a prominent hedge fund added to investors' crisis mentality.
This confluence of events precipitated a worldwide flight to quality that drove
30-day Treasury Bills down to an average yield of 3.56% in October from 4.75% in
August, while the spread between Treasuries and 30-day Tier 1 commercial paper
ballooned to 158 basis points, reflecting the increased premium investors were
demanding to accept the added risk of Tier 1 investments.
The markets settled down to some degree in the fourth quarter, primarily in
response to three cuts in short-term interest rates by the Federal Reserve Board
(Fed) in September, October, and November. The October easing had a particularly
beneficial effect because it was a surprise move that occurred between meetings
of the Fed's Open Market Committee, the group that decides the fate of short-
term interest rates.
HOW DID YOU POSITION THE FUND'S PORTFOLIO THROUGHOUT THIS TURMOIL?
The portfolio was invested in Tier I investments throughout 1998. This sector,
despite its inherent high quality, nonetheless widened versus comparable
Treasury Bills. This widening was a direct result of credit concern precipitated
by worldwide financial and economic problems experienced during 1998. Despite
this volatility the U.S. economy remains in overall sound condition. As in
previous years, the average duration of its holdings was in line with the
IBC/Donohue Universe, an index that we use as a benchmark for that purpose.
WHAT IS YOUR OUTLOOK FOR 1999?
1999 should be an interesting year. The U.S. economy has continued to surprise
investors with its resilience gross domestic product grew at the rate of 3.7%
estimated for 1998 compared to 3.8% for 1997 and the Federal Reserve Board
proved that it will move aggressively to lower interest rates if economic growth
appears threatened. As of the end of 1998, the Fed was in a holding pattern as
it sought to evaluate the effects of its three interventions in the second half
of 1998. Meanwhile, Japanese interest rates are rising, and we will have to see
if that prompts some repatriation of investment assets to Japan, which would
tend to boost U.S. interest rates. Another wild card is the Euro - the common
currency of the European Monetary Union - which debuted on January 1, 1999. Some
experts have speculated that the Euro might rival the U.S. dollar as a reserve
currency, and that a significant amount of funds might flow from U.S. dollar-
denominated assets into Euro-denominated assets. There is also the Y2K (Year
2000) problem, which could limit the supply of commercial paper towards the end
of the year. We remain confident, however, that regardless of the challenges
that arise during 1999, our credit expertise will enable the Fund to offer
shareholders competitive returns.
* The return reflects changes in the net asset value per share without the
deduction of any insurance product charges. The inclusion of these charges would
have reduced the performance shown here. Past performance is no indication of
future results.
MONEY MARKET FUND
Average Annual Total Return for the periods ended December 31, 1998
--------------------------------------------------------------------
---------------------------
-------------------- AVERAGE ANNUAL TOTAL RETURN -------------------
---------------------------
Money Market 1 Year 5 Year 10 Year
---------------------------
-------------------- 5.16% 4.95% 5.41% -------------------
---------------------------
---------------------------
-------------------- AVERAGE ANNUAL TOTAL RETURN -------------------
---------------------------
Lipper Taxable Money
Market Fund Average 1 Year 5 Year 10 Year
---------------------------
-------------------- 4.86% 4.78% 5.22% -------------------
---------------------------
Past performance is not predictive of future performance
--------------------------------------------------------------------
The Lipper Money Market Average is an Index comprised of all the Funds
within the money market investment objective.
8
<PAGE>
MML SERIES INVESTMENT FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MML MML
MML MONEY MANAGED MML
EQUITY MARKET BOND BLEND
FUND FUND FUND FUND
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Investments at value (See Schedule of Investments)
(Notes 2A, 2B and 5)
Equities (Identified cost: $1,762,028,515;
$946,470,658; respectively) $ 2,956,278,484 $ - $ - $ 1,771,923,501
Bonds (Identified cost: $227,587,529;
$652,206,715 respectively) - - 236,700,368 676,854,320
Short Term Investments (Identified cost: $129,170,943;
$ 179,325,017; $ 20,544,715; $ 541,867,659 respectively) 129,096,673 179,325,017 20,545,620 541,828,333
---------------- ---------------- ---------------- ---------------
TOTAL INVESTMENTS 3,085,375,157 179,325,017 257,245,988 2,990,606,154
---------------- ---------------- ---------------- ---------------
Cash 116 9,662 1,857 1,552
Receivable for investment securities sold 16,799,768 3,395,000 3,470,860 12,061,517
Interest and dividends receivable 4,282,404 - 2,731,084 11,493,688
Subscriptions receivable 323,427 710,599 3,300 1,182,234
Prepaid trustees' fees 395 725 725 1,054
---------------- ---------------- ---------------- ---------------
TOTAL ASSETS 3,106,781,267 183,441,003 263,453,814 3,015,346,199
---------------- ---------------- ---------------- ---------------
LIABILITIES
Payable for investment securities purchased 16,898,542 4,077,493 4,164,455 21,472,744
Redemptions payable 289,050 31,807 307,781 274,118
Dividends payable (Note 2C) 148,797,870 707,472 4,602,166 176,323,440
Investment management fee payable (Note 4) 2,570,570 181,237 267,852 2,583,055
Accrued liabilities 117,771 9,237 2,880 3,932
---------------- ---------------- ---------------- ---------------
TOTAL LIABILITIES 168,673,803 5,007,246 9,345,134 200,657,289
---------------- ---------------- ---------------- ---------------
NET ASSETS $ 2,938,107,464 $ 178,433,757 $ 254,108,680 $ 2,814,688,910
================ ================ ================ ===============
NET ASSETS CONSIST OF:
Series shares, (par value $.01 per share) (Note 6) $ 749,560 $ 1,784,338 $ 201,732 $ 1,122,143
Additional paid-in capital 1,742,862,631 176,647,329 244,673,174 1,963,229,471
Undistributed net investment income (Note 2C) 7,107 14,087 120,030 82,185
Undistributed net realized gain(loss) on
investments and forward commitments (Notes 2D and 3) 312,467 (11,997) - 193,989
Net unrealized appreciation on investments
(Note 2A) 1,194,175,699 - 9,113,744 850,061,122
--------------- ---------------- ---------------- ---------------
NET ASSETS $ 2,938,107,464 $ 178,433,757 $ 254,108,680 $ 2,814,688,910
=============== ================ ================ ===============
Outstanding series shares 74,956,036 178,433,757 20,173,153 112,214,264
=============== ================ ================ ===============
Net asset value per share $ 39.20 $ 1.00 $ 12.60 $ 25.08
=============== ================ ================ ===============
</TABLE>
See Notes to Financial Statements
9
<PAGE>
MML SERIES INVESTMENT FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<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 $ 57,978,788 $ - $ - $ 35,442,402
Interest 6,576,537 8,412,554 14,982,005 70,820,208
---------------- --------------- --------------- ----------------
TOTAL INCOME 64,555,325 8,412,554 14,982,005 106,262,610
---------------- --------------- --------------- ----------------
EXPENSES
Investment management fee (Note 4) 10,216,960 693,453 1,034,821 10,258,337
Trustees' fees 29,832 27,236 27,398 26,935
Audit fees 32,605 22,316 28,707 37,193
Other expenses 648 - 1,824 2,616
---------------- --------------- --------------- ----------------
TOTAL EXPENSES 10,280,045 743,005 1,092,750 10,325,081
---------------- --------------- --------------- ----------------
Net investment income (Note 2C) 54,275,280 7,669,549 13,889,255 95,937,529
---------------- --------------- --------------- ----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FORWARD COMMITMENTS
Net realized gain (loss) on:
Investments (Notes 2A, 2B , 2C and 5) 94,862,149 (96) 1,139,377 152,811,311
Forward commitments (Notes 2D and 5) - - 17,790 -
---------------- --------------- --------------- ----------------
NET REALIZED GAIN (LOSS) 94,862,149 (96) 1,157,167 152,811,311
---------------- --------------- --------------- ----------------
Change in net unrealized appreciation on:
Investments (Note 2A) 271,601,536 - 2,666,019 109,417,834
---------------- --------------- --------------- ----------------
TOTAL CHANGE IN NET UNREALIZED APPRECIATION 271,601,536 - 2,666,019 109,417,834
---------------- --------------- --------------- ----------------
Net gain (loss) 366,463,685 (96) 3,823,186 262,229,145
---------------- --------------- --------------- ----------------
Net increase in net assets resulting
from operations $ 420,738,965 $ 7,669,453 $17,712,441 $ 358,166,674
================ =============== =============== ================
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
MML SERIES INVESTMENT FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998
----------------------------------------------------------------------------
MML MML
MML Money Managed MML
Equity Market Bond Blend
Fund Fund Fund Fund
--------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C>
From Operations:
Net investment income $ 54,275,280 $ 7,669,549 $ 13,889,255 $ 95,937,529
Net realized gain (loss)
on investments and
forward commitments 94,862,149 (96) 1,157,167 152,811,311
Net change in unrealized
appreciation on
investments 271,601,536 - 2,666,019 109,417,834
--------------- ------------- -------------- ---------------
NET INCREASE IN NET ASSETS
resulting from operations 420,738,965 7,669,453 17,712,441 358,166,674
Distributions to shareholders
FROM: (NOTE 2C)
Net investment income (54,285,000) (7,669,453) (13,769,225) (95,855,344)
Net realized gains (94,537,870) - (1,157,166) (152,423,440)
--------------- ------------- -------------- ---------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO
SHAREHOLDERS (148,822,870) (7,669,453) (14,926,391) (248,278,784)
NET INCREASE (DECREASE) IN
CAPITAL SHARE
TRANSACTIONS (NOTE 6) 302,750,092 37,268,372 46,006,732 232,973,529
--------------- ------------- -------------- ---------------
TOTAL INCREASE (DECREASE) 574,666,187 37,268,372 48,792,782 342,861,419
NET ASSETS, AT BEGINNING
OF YEAR 2,363,441,277 141,165,385 205,315,898 2,471,827,491
=============== ============= ============== ===============
NET ASSETS, at end
OF YEAR $ 2,938,107,464 $ 178,433,757 $ 254,108,680 $ 2,814,688,910
=============== ============= ============== ===============
Undistributed net investment
income (loss) included in
net assets at end of year $ 7,107 $ 14,087 $ 120,030 $ 82,185
=============== ============= ============== ===============
<CAPTION>
1997
--------------------------------------------------------------------
MML MML
MML Money Managed MML
Equity Market Bond Blend
Fund Fund Fund Fund
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
From 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
Net change in unrealized
appreciation on
investments 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
Distributions 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)
--------------- --------------- ------------- -------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO
SHAREHOLDERS (190,592,682) (7,350,036) (12,621,479) (248,001,935)
NET INCREASE (DECREASE) IN
CAPITAL SHARE
TRANSACTIONS (NOTE 6) 313,775,004 (4,065,657) 18,003,397 168,614,233
--------------- --------------- ------------- -------------
TOTAL INCREASE (DECREASE) 661,442,908 (4,065,657) 23,743,613 377,837,251
NET ASSETS, AT BEGINNING
OF YEAR 1,701,998,369 145,231,042 181,572,285 2,093,990,240
=============== =============== ============= =============
NET ASSETS, at end
OF 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 year $ 16,996 $ 13,560 $ (96,215) $ (53,700)
=============== =============== ============= =============
</TABLE>
See Notes to Financial Statements.
11
<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>
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year $ 35.443 $ 29.786 $ 25.924 $ 20.520 $ 20.510 $ 19.862 $ 18.735 $ 15.659 $ 16.764 $ 14.929
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.724 0.709 0.703 0.634 0.594 0.524 0.543 0.563 0.636 0.694
Net realized and unrealized
gain (loss) on investments 5.016 7.806 4.547 5.754 0.248 1.365 1.420 3.440 (0.722) 2.746
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------
Total from investment operations 5.740 8.515 5.250 6.388 0.842 1.889 1.963 4.003 (0.086) 3.440
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.724) (0.709) (0.703) (0.634) (0.594) (0.524) (0.543) (0.562) (0.665) (0.711)
Distribution from net realized gains (1.261) (2.149) (0.685) (0.350) (0.238) (0.717) (0.288) (0.365) (0.354) (0.894)
Distribution in excess of net
realized gains - - - - - - (0.005) - - -
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------
Total distributions (1.985) (2.858) (1.388) (0.984) (0.832) (1.241) (0.836) (0.927) (1.019) (1.605)
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------
Net asset value:
End of year $ 39.198 $ 35.443 $ 29.786 $ 25.924 $ 20.520 $ 20.510 $ 19.862 $ 18.735 $ 15.659 $ 16.764
======= ======== ======== ======== ======== ======== ======== ======== ======== =======
Total return 16.20% 28.59% 20.25% 31.13% 4.10% 9.52% 10.48% 25.56% (0.51%) 23.04%
Net assets (in millions):
End of year $2,938.11 $2,363.44 $1,701.99 $1,248.90 $ 820.78 $ 663.09 $ 490.62 $ 355.04 $ 235.45 $ 226.41
Ratio of expenses to average
net assets 0.37% 0.35% 0.38% 0.41% 0.43% 0.44% 0.46% 0.48% 0.49% 0.50%
Ratio of net investment income
to average net assets 1.95% 2.03% 2.65% 2.89% 3.04% 3.23% 3.09% 3.43% 4.09% 4.30%
Portfolio turnover rate 14.03% 15.30% 11.42% 11.72% 9.99% 11.28% 9.07% 9.37% 13.50% 15.71%
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
MML SERIES INVESTMENT FUND
FINANCIAL HIGHLIGHTS (Continued)
MML MONEY MARKET FUND
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <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 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.500 0.051 0.049 0.054 0.038 0.027 0.034 0.059 0.078 0.088
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment operations 0.500 0.051 0.049 0.054 0.038 0.027 0.034 0.059 0.078 0.088
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.500) (0.051) (0.049) (0.054) (0.038) (0.027) (0.034) (0.059) (0.078) (0.088)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions (0.500) (0.051) (0.049) (0.054) (0.038) (0.027) (0.034) (0.059) (0.078) (0.088)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value:
End of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total return 5.16% 5.18% 5.01% 5.58% 3.84% 2.75% 3.48% 6.01% 8.12% 9.16%
Net assets (in millions):
End of year $178.43 $141.17 $145.23 $108.92 $ 91.79 $ 73.66 $ 84.56 $ 94.41 $114.59 $ 70.16
Ratio of expenses to average
net assets 0.49% 0.52% 0.52% 0.54% 0.55% 0.54% 0.53% 0.52% 0.54% 0.54%
Ratio of net investment income
to average net assets 5.05% 5.07% 4.92% 5.43% 3.81% 2.71% 3.42% 5.91% 7.80% 8.79%
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
MML SERIES INVESTMENT FUND
FINANCIAL HIGHLIGHTS (Continued)
MML MANAGED BOND FUND
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year $ 12.410 $ 12.048 $ 12.448 $ 11.141 $ 12.405 $ 12.041 $ 12.219 $ 11.318 $ 11.354 $ 10.919
--------- --------- --------- -------- --------- --------- -------- --------- --------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.756 0.801 0.776 0.782 0.792 0.785 0.870 0.903 0.943 0.918
Net realized and unrealized
gain (loss) on investments
and forward commitments 0.236 0.356 (0.401) 1.307 (1.264) 0.618 0.001 0.916 (0.036) 0.454
--------- --------- --------- -------- --------- --------- -------- --------- --------- --------
Total from investment operations 0.992 1.157 0.375 2.089 (0.472) 1.403 0.871 1.819 0.907 1.372
--------- --------- --------- -------- --------- --------- -------- --------- --------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.749) (0.795) (0.775) (0.782) (0.792) (0.784) (0.869) (0.902) (0.943) (0.918)
Distribution from net realized gains (0.057) -- -- -- -- (0.255) (0.158) (0.016) -- (0.019)
Distribution in excess of net
realized gains -- -- -- -- -- -- (0.022) -- -- --
--------- --------- --------- -------- --------- --------- -------- --------- --------- --------
Total distributions (0.806) (0.795) (0.775) (0.782) (0.792) (1.039) (1.049) (0.918) (0.943) (0.937)
--------- --------- --------- -------- --------- --------- -------- --------- --------- --------
Net asset value:
End of year $ 12.596 $ 12.410 $ 12.048 $ 12.448 $ 11.141 $ 12.405 $ 12.041 $ 12.219 $ 11.318 $ 11.354
========= ========= ========= ======== ========= ========= ======== ========= ========= ========
Total return 8.14% 9.91% 3.25% 19.14% (3.76%) 11.81% 7.31% 16.66% 8.38% 12.83%
Net assets (in millions):
End of year $ 254.11 $ 205.32 $ 181.57 $ 158.70 $ 121.21 $ 129.11 $ 88.15 $ 66.98 $ 43.07 $ 40.03
Ratio of expenses to average
net assets 0.48% 0.47% 0.51% 0.52% 0.52% 0.54% 0.56% 0.57% 0.57% 0.59%
Ratio of net investment income
to average net assets 6.07% 6.06% 6.54% 6.63% 6.69% 6.37% 7.28% 7.96% 8.40% 8.35%
Portfolio turnover rate 41.18% 41.99% 46.12% 70.00% 32.77% 58.81% 39.51% 61.85% 69.93% 64.77%
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
MML SERIES INVESTMENT FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
MML BLEND FUND
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year $ 24.080 $ 21.973 $ 20.519 $ 17.672 $ 18.305 $ 17.846 $ 17.307 $ 14.839 $ 15.428 $ 13.876
-------- --------- --------- -------- --------- --------- -------- --------- --------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.417 0.843 0.824 0.811 0.707 0.655 0.707 0.736 0.792 0.823
Net realized and unrealized
gain (loss) on investments
and forward commitments 2.360 3.692 1.990 3.246 (0.271) 1.057 0.880 2.771 (0.445) 1.921
-------- --------- --------- -------- --------- --------- -------- --------- --------- --------
Total from investment operations 2.777 4.535 2.814 4.057 0.436 1.712 1.587 3.507 0.347 2.744
-------- --------- --------- -------- --------- --------- -------- --------- --------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.416) (0.843) (0.824) (0.811) (0.707) (0.655) (0.707) (0.736) (0.811) (0.835)
Distribution from net realized gains (1.358) (1.585) (0.536) (0.399) (0.359) (0.598) (0.326) (0.303) (0.125) (0.357)
Distribution in excess of net
realized gains -- -- -- -- (0.003) -- (0.015) -- -- --
-------- --------- --------- -------- --------- --------- -------- --------- --------- --------
Total distributions (1.774) (2.428) (1.360) (1.210) (1.069) (1.253) (1.048) (1.039) (0.936) (1.192)
-------- --------- --------- -------- --------- --------- -------- --------- --------- --------
Net asset value:
End of year $ 25.083 $ 24.080 $ 21.973 $ 20.519 $ 17.672 $ 18.305 $ 17.846 $ 17.307 $ 14.839 $ 15.428
======== ========= ========= ======== ========= ========= ======== ========= ========= ========
Total return 13.56% 20.89% 13.95% 23.28% 2.48% 9.70% 9.36% 24.00% 2.37% 19.96%
Net assets (in millions):
End of year $2,814.69 $2,471.83 $2,093.99$1,823.14 $1,444.26 $1,296.54$1,013.28 $797.04 $574.15 $524.29
Ratio of expenses to average
net assets 0.37% 0.38% 0.38% 0.38% 0.39% 0.40% 0.41% 0.42% 0.44% 0.45%
Ratio of net investment income
to average net assets 3.43% 3.56% 3.87% 4.19% 3.93% 3.60% 4.07% 4.54% 5.37% 5.57%
Portfolio turnover rate 28.64% 21.20% 19.10% 30.78% 26.59% 20.20% 25.43% 26.92% 24.55% 22.39%
</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 changes would reduce the total return
figures for all periods shown.
See Notes to Financial Statements,
15
<PAGE>
MML EQUITY FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
NUMBER MARKET
OF VALUE
SHARES (NOTE 2A)
----------- ------------
EQUITIES - 100.62%
AEROSPACE & DEFENSE - 3.27%
Raytheon Co. (Class A) 345,000 $ 17,832,188
Raytheon Co. (Class B) 560,000 29,820,000
TRW, Inc. 861,100 48,383,056
----------- ------------
1,766,100 96,035,244
----------- ------------
AGRIBUSINESS - 0.98%
Archer-Daniels-Midland Co. 1,668,182 28,671,878
----------- ------------
APPAREL, TEXTILES, SHOES - 1.24%
V F Corp. 780,000 36,562,500
----------- ------------
AUTOMOTIVE & PARTS - 3.49%
Ford Motor Co. 500,000 29,343,750
Genuine Parts Co. 1,100,250 36,789,610
Goodyear Tire & Rubber Co. 720,000 36,315,000
----------- ------------
2,320,250 102,448,360
----------- ------------
BANKING, SAVINGS & LOANS - 6.91%
The Bank of New York Co., Inc. 1,320,000 53,130,000
Comerica, Inc. 485,250 33,087,984
First Union Corp. 493,776 30,027,753
Pacific Century Financial Corp. 977,900 23,836,312
Wachovia Corp. 363,200 31,757,300
Wells Fargo Co. 782,000 31,231,125
----------- ------------
4,422,126 203,070,474
----------- ------------
BEVERAGES - 1.19%
Brown-Forman Corp. (Class B) 463,000 35,043,313
----------- ------------
CHEMICALS - 3.63%
Air Products and Chemicals 600,000 24,000,000
Bemis Corp. 625,300 23,722,319
Engelhard Corp. 1,325,000 25,837,500
Rohm & Haas 1,095,000 32,986,875
----------- ------------
3,645,300 106,546,694
----------- ------------
COMMUNICATIONS - 2.09%
GTE Corp. 946,800 61,542,000
----------- ------------
COMPUTERS & OFFICE EQUIPMENT - 10.18%
Electronic Data Systems 800,400 40,220,100
Hewlett-Packard Co. 940,000 64,213,750
International Business Machines Corp. 440,000 81,290,000
Pitney Bowes, Inc. 904,000 59,720,500
Xerox Corp. 455,000 53,690,000
----------- ------------
3,539,400 299,134,350
----------- ------------
CONTAINERS - 1.62%
Crown Cork & Seal 906,800 27,940,775
Temple-Inland, Inc. 330,000 19,573,125
----------- ------------
1,236,800 47,513,900
----------- ------------
COSMETICS & PERSONAL CARE - 1.99%
Kimberly-Clark Corp. 1,075,000 58,587,500
----------- ------------
ELECTRIC UTILITIES - 2.43%
Dominion Resources, Inc. 840,000 39,270,000
SCANA Corp. 382,600 12,338,850
Teco Energy, Inc. 704,700 19,863,731
----------- ------------
1,927,300 71,472,581
----------- ------------
ELECTRICAL EQUIPMENT & ELECTRONICS - 6.02%
AMP, Inc. 872,061 45,401,676
General Electric Co. 762,000 77,771,625
Honeywell, Inc. 332,600 25,048,938
Hubbell, Inc. (Class B) 757,144 28,771,472
----------- ------------
2,723,805 176,993,711
----------- ------------
ENERGY - 8.06%
BP Amoco plc * 701,370 62,860,304
Burlington Resources, Inc 522,500 18,712,031
Conoco, Inc * 618,900 12,919,537
Eni, SPA - ADR 464,300 31,456,325
Kerr-McGee Corp. 326,000 12,469,500
Mobil Corp. 550,000 47,918,750
Unocal Corp. 931,000 27,173,563
Usec, Inc. 1,670,000 23,171,250
----------- ------------
5,784,070 236,681,260
----------- ------------
16
<PAGE>
MML EQUITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
NUMBER MARKET
OF VALUE
SHARES (NOTE 2A)
------------ -------------
EQUITIES (Continued)
FINANCIAL SERVICES - 2.44% 324,800 $ 33,210,800
American Express Co. 492,900 38,446,200
American General Corp. ------------ -------------
817,700 71,657,000
------------ -------------
FOODS - 3.86%
Bestfoods 493,000 26,252,250
ConAgra, Inc. 1,781,000 56,101,500
General Mills, Inc. 400,000 31,100,000
------------ -------------
2,674,000 113,453,750
------------ -------------
FOREST PRODUCTS & PAPER - 1.55% 773,055 20,727,537
Westvaco Corp. 490,600 24,928,612
Weyerhaeuser Co. ------------ -------------
1,263,655 45,656,149
------------ -------------
HEALTHCARE - 9.57%
Becton, Dickinson and Co. 1,388,600 59,275,863
Bristol-Myers Squibb Co. 760,000 101,697,500
Pharmacia & Upjohn, Inc. 870,000 49,263,750
Schering-Plough Corp. 1,286,000 71,051,500
------------ -------------
4,304,600 281,288,613
------------ -------------
INDUSTRIAL DISTRIBUTION - 0.87%
W.W. Grainger, Inc. 612,000 25,474,500
------------ -------------
INDUSTRIAL TRANSPORTATION - 2.40%
Burlington Northern Sante Fe 1,038,600 35,052,750
Norfolk Southern Corp. 1,120,100 35,493,169
------------ -------------
2,158,700 70,545,919
------------ -------------
INSURANCE - 5.46%
Cigna Corp. 203,400 15,725,362
Jefferson-Pilot Corp. 355,500 26,662,500
Marsh & McLennan Co's., Inc. 841,500 49,175,156
MBIA, Inc. 536,000 35,141,500
SAFECO Corp. 782,500 33,598,594
------------ -------------
2,718,900 160,303,112
------------ -------------
MACHINERY & COMPONENTS - 1.50%
Dover Corp. 650,000 23,806,250
Parker-Hannifin Corp. 618,075 20,241,956
------------ -------------
1,268,075 44,048,206
------------ -------------
METALS & MINING - 0.57%
USX-Marathon Group 555,200 16,725,400
------------ -------------
MISCELLANEOUS - 1.80%
Armstrong World Industries 440,000 26,537,500
Minnesota Mining &
Manufacturing Co. 369,500 26,280,688
------------ --------------
809,500 52,818,188
------------ --------------
PHARMACUTICALS - 1.44%
American Home Products Corp. 750,000 42,234,375
------------ --------------
PUBLISHING & PRINTING - 2.63%
Donnelley R R & Sons 600,000 26,287,500
McGraw-Hill Companies, Inc. 500,000 50,937,500
------------ --------------
1,100,000 77,225,000
------------ --------------
RETAIL - 2.86%
The May Department Stores Co. 543,000 32,783,625
Newell Co. 499,400 20,600,250
Sears Roebuck and Co. 719,300 30,570,250
------------ --------------
1,761,700 83,954,125
------------ --------------
RETAIL - GROCERY - 4.51%
Albertson's, Inc. 1,273,500 81,106,031
American Stores Co. 1,388,200 51,276,638
------------ --------------
2,661,700 132,382,669
------------ --------------
TELEPHONE UTILITIES - 3.90%
Ameritech Corp. 914,000 57,924,750
Frontier Corp. 1,096,200 37,270,800
Pinnacle West Capital 459,800 19,484,025
------------ --------------
2,470,000 114,679,575
------------ --------------
TOBACCO - 2.16%
Fortune Brands, Inc 795,200 25,148,200
UST, Inc. 1,100,500 38,379,938
------------ --------------
1,895,700 63,528,138
------------ --------------
TOTAL EQUITIES 2,956,278,484
(COST $1,762,028,515) --------------
17
<PAGE>
MML EQUITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
NUMBER MARKET
OF VALUE
SHARES (NOTE 2A)
------------ -------------
SHORT-TERM INVESTMENTS - 4.39%
COMMERCIAL PAPER - 3.86%
Caterpillar Financial Services Corp.
5.12% 1/28/99 $ 3,108,000 $ 3,096,065
Caterpillar Financial Services Corp.
5.13% 2/26/99 5,000,000 4,955,345
Caterpillar Financial Services Corp.
5.20% 2/3/99 3,350,000 3,331,420
Walt Disney Co.
4.89% 4/14/99 4,000,000 3,939,911
Walt Disney Co.
4.88% 5/26/99 5,000,000 4,894,555
E I DuPont De Nemours & Co.
4.87% 5/26/99 7,900,000 7,733,398
E I DuPont De Nemours & Co.
4.87% 5/5/99 3,900,000 3,829,583
Emerson Electric
5.08% 2/12/99 6,000,000 5,959,810
Fortune Brands
5.66% 1/12/99 10,000,000 9,982,709
General Electric Capital Corp.
4.95% 5/14/99 4,200,000 4,118,707
Heinz HJ Co.
5.24% 1/19/99 10,000,000 9,973,790
Kellogg Co.
5.26% 1/8/99 11,000,000 10,988,745
Lucent Technologies, Inc.
5.27% 1/29/99 11,000,000 10,954,978
Pepsico, Inc.
5.12% 1/0/00 3,001,000 2,993,321
Proctor & Gamble Co.
5.07% 2/11/99 11,000,000 10,923,291
Shell Oil Co.
4.85% 1/4/99 15,624,000 15,617,490
------------ -------------
TOTAL COMMERCIAL PAPER
(COST $113,356,940) 114,083,000 113,293,118
------------ -------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 0.53%
Federal National Mortgage Association
5.01% 3/26/99 16,000,000 15,803,555
------------ -------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (COST $15,814,003) 16,000,000 15,803,555
------------ --------------
TOTAL SHORT-TERM INVESTMENTS
(COST $129,170,943) (A) 130,083,000 129,096,673
============ ==============
TOTAL INVESTMENTS -
(COST $1,891,199,458) (A) 105.01% 3,085,375,157
====== ==============
(a) Federal Income Tax Information: At
December 31, 1998 the net unrealized
appreciation on investments based on
cost of $1,891,199,458 for federal
income tax is as follows:
Aggregate gross unrealized appreciation
for all investments in which there is
an excess of market value over tax cost 1,237,420,296
Aggregate gross unrealized depreciation
for all investments in which there is
an excess of tax cost over market value (43,244,597)
--------------
NET UNREALIZED APPRECIATION 1,194,175,699
==============
* Non-income producing security.
See Notes to Financial Statements.
18
<PAGE>
MML MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE 2A)
--------- ---------
SHORT-TERM INVESTMENTS - 100.50%
Commercial Paper - 87.42%
Aristar, Inc.
5.63% 2/4/99 $ 3,280,000 $ 3,262,652
Avco Financial Services, Inc.
5.09% 3/23/99 6,840,000 6,762,092
BellSouth Telecommunications, Inc.
5.00% 2/11/99 6,660,000 6,622,378
Campbell Soup Co.
5.51% 1/8/99 1,200,000 1,198,733
Campbell Soup Co.
5.00% 3/3/99 4,500,000 4,462,256
Cargill, Inc.
5.27% 2/12/99 6,420,000 6,380,977
Carolina Power & Light Co.
4.76% 4/19/99 4,765,000 4,697,814
Caterpillar Financial Services Corp.
5.33% 1/4/99 2,675,000 2,673,823
Caterpillar Financial Services Corp.
5.55% 2/1/99 1,135,000 1,129,654
Caterpillar Financial Services Corp.
4.78% 4/20/99 2,370,000 2,336,130
Central Illinois Light Co.
5.57% 1/28/99 450,000 448,127
Central Illinois Light Co.
5.30% 2/25/99 2,300,000 2,281,482
Clorox Co.
5.11% 2/19/99 1,650,000 1,638,591
Coca Cola Co.
5.04% 1/15/99 1,420,000 1,417,239
Coca Cola Co.
4.93% 1/22/99 1,680,000 1,675,198
Consolidated Natural Gas Co.
5.14% 2/2/99 440,000 437,998
Countrywide Home Loans, Inc.
5.23% 1/19/99 2,365,000 2,358,851
Countrywide Home Loans, Inc.
5.36% 2/5/99 4,640,000 4,616,001
Dayton Power & Light Co.
5.23% 1/19/99 2,130,000 2,124,462
Dayton Power & Light Co.
5.06% 3/8/99 4,600,000 4,557,580
Walt Disney Co.
5.02% 2/18/99 2,100,000 2,086,084
Walt Disney Co.
5.11% 2/22/99 3,200,000 3,176,565
Finova Capital Corp.
5.35% 3/26/99 5,550,000 5,481,365
Finova Capital Corp.
5.33% 3/31/99 1,180,000 1,164,685
Florida Power Corp.
5.27% 1/12/99 4,300,000 4,293,102
Ford Motor Credit Co.
5.15% 2/19/99 1,340,000 1,330,662
Ford Motor Credit Co.
4.88% 6/18/99 3,575,000 3,494,586
Fortune Brands, Inc.
5.12% 1/21/99 2,735,000 2,727,251
GTE Funding, Inc.
5.19% 2/1/99 3,795,000 3,778,105
General Electric Capital Corp.
5.54% 2/18/99 350,000 347,457
General Electric Capital Corp.
4.96% 5/20/99 365,000 358,094
General Electric Co.
4.80% 3/24/99 1,365,000 1,350,231
General Electric Co.
5.04% 3/31/99 240,000 237,033
General Electric Co.
4.94% 6/25/99 1,100,000 1,073,906
General Mills, Inc.
5.27% 1/5/99 1,680,000 1,679,020
General Motors Acceptance Corp.
5.42% 1/15/99 1,560,000 1,556,742
General Motors Acceptance Corp.
5.20% 1/27/99 3,500,000 3,486,957
Georgia Power Co.
5.18% 2/22/99 2,095,000 2,079,416
Goldman Sachs & Co.
5.23% 2/23/99 2,865,000 2,843,151
Goldman Sachs & Co.
5.20% 2/24/99 3,035,000 3,011,555
Goldman Sachs & Co.
5.16% 3/19/99 1,300,000 1,285,819
19
<PAGE>
MML BLEND FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE 2A)
-------------- ----------------
SHORT-TERM INVESTMENTS (Continued)
Commercial Paper (Continued)
Heinz HJ Co.
5.22% 1/14/99 $ 3,970,000 $ 3,962,545
Lucent Technologies, Inc.
4.93% 1/11/99 4,525,000 4,518,841
Minnesota Mining & Manufacturing Co.
5.09% 1/21/99 2,600,000 2,592,706
Monsanto Co.
5.29% 3/5/99 1,500,000 1,486,219
Motorola, Inc.
4.99% 4/1/99 3,850,000 3,802,356
Pepsico, Inc.
5.05% 1/13/99 5,575,000 5,565,653
Portland General Electric Co.
5.15% 1/15/99 2,400,000 2,395,212
Potomac Electric Power Co.
5.46% 1/25/99 6,075,000 6,052,928
Shell Oil Co.
4.85% 2/10/99 4,100,000 4,078,042
SmithKline Beecham Corp.
5.27% 1/14/99 3,370,000 3,363,611
South Carolina Electric Co.
5.44% 1/29/99 6,700,000 6,671,756
Wisconsin Gas Co.
5.08% 3/18/99 2,300,000 2,275,478
Xerox Corp.
5.08% 1/12/99 1,300,000 1,297,994
-------------- ----------------
TOTAL COMMERCIAL PAPER
(COST $155,987,165) 157,015,000 155,987,165
-------------- ----------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 13.08%
Federal Farm Credit Banks
4.76% 8/5/99 $ 3,400,000 $ 3,304,339
Federal Farm Credit Banks
4.78% 12/20/99 795,000 758,585
Federal Home Loan Bank
4.72% 6/23/99 4,000,000 3,910,209
Federal Home Loan Mortgage Corp.
4.94% 4/9/99 6,255,000 6,171,246
Federal National Mortgage Assoc.
5.26% 1/27/99 5,500,000 5,478,973
Federal National Mortgage Assoc.
4.56% 6/30/99 3,800,000 3,714,500
-------------- ----------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (COST $23,337,852) 23,750,000 23,337,852
-------------- ----------------
TOTAL SHORT-TERM INVESTMENTS
(COST $179,325,017) (a) $ 180,765,000 179,325,017
============== ----------------
TOTAL INVESTMENTS
(COST $179,325,017) (a) 100.50% $ 179,325,017
========= ================
(a) Federal Income Tax Information: The aggregate cost for investments for the
MML Money Market Fund as of December 31, 1998 is the same for financial
reporting and federal income tax purposes.
December 31, 1998 seven-day average yield for the portfolio: 4.79%
See Notes to Financial Statements.
20
<PAGE>
MML MANAGED BOND FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE 2A)
------------ -------------
BONDS AND NOTES - 93.14%
ASSET BACKED SECURITIES - 6.55%
AUTO RECEIVABLES
California Infrastructure PG&E-1,
1997-1, Class A6
6.320% 9/25/05 $ 250,000 $ 257,083
California Infrastructure SDG&E-1,
1997-1, Class A5
6.190% 9/25/05 250,000 259,720
California Infrastructure SCE-1,
1997-1, Class A5
6.280% 9/25/05 300,000 312,726
Capita Equipment Receivables Trust,
1996-1, Class A4
6.280% 6/15/00 2,000,000 2,010,280
Case Equipment Loan Trust, 1998,
Class A4
5.830% 2/15/05 1,500,000 1,517,130
Chase Manhattan Auto Owner Trust,
1998-A, Class A4
5.800% 12/16/02 1,500,000 1,515,885
Chase Manhattan RV Owner Trust,
1997-A, Class A7
6.140% 10/16/06 2,000,000 2,008,580
Jet Equipment Trust, 1995-A
8.235% 11/1/12 1,847,795 2,041,998
Metlife Capital Equipment Loan Trust,
1997-A, Class A
6.850% 5/20/08 1,000,000 1,044,675
Premier Auto Trust, 1998-4, Class A3
5.690% 6/8/02 1,500,000 1,512,840
Premier Auto Trust, 1998-5, Class A3
5.070% 7/8/02 1,000,000 996,080
Railcar Trust No. 1992-1
7.750% 6/1/04 1,287,860 1,370,257
Toyota Auto Lease Trust, 1998-B,
Class A1
5.350% 7/25/02 1,500,000 1,500,000
World Omni 1996-A Automobile Lease
Securitization Trust, Class A1
6.300% 6/25/02 286,728 287,086
------------ -------------
TOTAL ASSET BACKED SECURITIES
(COST $16,422,779) 16,222,383 16,634,340
------------ -------------
CORPORATE DEBT - 48.80%
AirTouch Communications, Inc.
7.500% 7/15/06 1,500,000 1,652,865
Alcan Aluminum Ltd.
6.250% 11/1/08 800,000 808,696
American General Finance Corp.
5.750% 11/1/03 1,000,000 1,002,700
America West Airlines 1996-1, Class A
6.850% 7/2/09 1,699,231 1,761,032
American Airlines, Inc.
9.780% 11/26/11 1,854,025 2,184,320
AMR Corp.
9.000% 8/1/12 1,000,000 1,178,190
Analog Devices, Inc.
6.625% 3/1/00 1,000,000 1,011,590
Anheuser-Busch Companies, Inc.
5.375% 9/15/08 1,500,000 1,497,915
Archer - Daniels Midland
6.750% 12/15/27 750,000 801,135
Associates Corp. of North America
7.875% 9/30/01 2,000,000 2,122,200
Associates Corp. of North America
5.750% 11/1/03 750,000 755,356
Atlantic Richfield Co.
7.770% 2/13/02 3,000,000 3,188,700
Barrick Gold Corp.
7.500% 5/01/07 2,000,000 2,146,660
Bell Atlantic Financial Services, Inc.
6.610% 2/4/00 2,000,000 2,027,560
BHP Finance (USA) Limited
6.420% 3/1/26 2,000,000 1,988,100
Boston Scientific Corp.
6.625% 3/15/05 1,500,000 1,455,375
Carlisle Companies, Inc.
7.250% 1/15/07 1,500,000 1,545,885
Celulosa Arauco Constitution
6.950% 9/15/05 1,000,000 888,000
Champion International Corp.
6.400% 2/15/26 1,500,000 1,540,605
CIT Group Holdings
5.625% 10/15/03 1,000,000 999,590
CITGO Petroleum Corp.
7.875% 5/15/06 750,000 735,533
21
<PAGE>
MML MANAGED BOND FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE 2A)
------------ -------------
BONDS AND NOTES (Continued)
CORPORATE DEBT (Continued)
CSX Corp.
7.050% 5/1/02 $ 1,000,000 $ 1,037,690
CSX Corp.
7.250% 5/1/27 2,000,000 2,132,640
Columbia Gas System, Inc.
6.610% 11/28/02 2,000,000 2,064,800
Comcast Cablevision-PH
8.375% 5/1/07 1,250,000 1,450,263
Commercial Credit Co.
7.750% 3/1/05 3,000,000 3,318,600
ConAgra, Inc.
7.000% 10/1/28 1,250,000 1,283,425
Continental Airlines, Inc. Series 1996-B
7.820% 10/15/13 1,431,175 1,545,784
Continental Airlines, Inc. Series 1996-2B
8.560% 7/2/14 948,919 1,109,049
Corning Glass Works, Inc.
8.875% 3/15/16 500,000 588,825
Dana Corp.
6.500% 3/15/08 750,000 770,805
Dover Corp.
6.250% 6/01/08 750,000 785,235
Dover Corp.
6.650% 6/01/28 750,000 775,448
Dow Capital
7.125% 1/15/03 4,000,000 4,166,240
Emerson Electric Co.
5.500% 9/15/08 700,000 707,987
Equifax, Inc.
6.500% 6/15/03 1,250,000 1,287,062
ERAC USA Finance Co. 144A
6.750% 5/15/07 2,000,000 2,018,860
FBG Finance Ltd. 144A
7.875% 6/01/16 1,250,000 1,445,712
First Brands Corp.
7.250% 3/01/07 500,000 533,160
Fletcher Challenge Ltd.
6.750% 3/24/05 500,000 479,730
Fletcher Challenge Ltd.
7.750% 6/20/06 1,500,000 1,512,825
Foster Wheeler Corp.
6.750% 11/15/05 2,000,000 1,872,040
General American Transportation Corp.
6.750% 3/1/06 2,000,000 2,047,880
General Electric Capital Corp.
8.750% 5/21/07 1,000,000 1,220,740
General Electric Capital Corp.
6.500% 11/01/06 250,000 266,520
General Mills
8.900% 6/15/06 1,000,000 1,198,740
Heller Financial, Inc.
6.250% 3/1/01 1,000,000 1,010,720
Hershey Foods Co.
7.200% 8/15/27 1,500,000 1,716,930
Hilton Hotels Corp.
7.000% 7/15/04 450,000 451,075
Household Finance Corp.
6.500% 11/15/08 1,000,000 1,040,520
I C I Wilmington
7.050% 9/15/07 750,000 768,330
IMC Global, Inc.
6.625% 10/15/01 1,000,000 991,660
IMCERA Group, Inc.
6.000% 10/15/03 2,000,000 1,936,760
Interpool, Inc
7.350% 8/01/07 500,000 476,105
Lasmo USA, Inc.
6.750% 12/15/07 2,000,000 1,923,256
Leucadia National Corp.
7.750% 8/15/13 2,000,000 1,975,360
Lockheed Martin Corp.
7.700% 6/15/08 1,500,000 1,695,765
Mapco, Inc.
7.250% 3/01/09 1,500,000 1,580,250
Millipore Corp.
7.500% 4/01/07 1,000,000 1,023,800
Mobil Corp.
8.625% 8/15/21 2,000,000 2,632,180
Newmont Mining Corp.
8.625% 4/1/02 2,000,000 2,103,700
News America Holdings, Inc.
9.250% 2/1/13 2,000,000 2,477,460
Norfolk Southern Corp.
7.050% 5/01/37 2,500,000 2,704,575
Occidental Petroleum Corp.
7.375% 11/15/08 2,500,000 2,549,725
Penske Truck Leasing Comp., L.P.
7.750% 5/15/99 1,250,000 1,261,338
22
<PAGE>
MML MANAGED BOND FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE 2A)
----------- -----------
BONDS AND NOTES (Continued)
CORPORATE DEBT (Continued)
Polaroid Corp.
8.000% 3/15/99 $ 1,000,000 $ 1,004,170
Ralston Purina Co.
7.750% 10/1/15 3,000,000 3,300,180
Raytheon Co.
6.750% 8/15/07 500,000 529,355
Raytheon Co.
6.150% 11/1/08 1,000,000 1,019,603
Rolls-Royce Capital, Inc.
7.125% 7/29/03 1,500,000 1,564,200
Ryder System, Inc.
6.600% 11/15/05 750,000 752,918
Safeway Stores, Inc.
6.050% 11/15/03 250,000 251,715
Scholastic Corp.
7.000% 12/15/03 1,500,000 1,561,035
Schwab (Charles) Corp.
6.250% 1/23/03 2,000,000 1,983,680
The Seagram Co. Ltd.
7.500% 12/15/18 1,800,000 1,801,836
Sears Roebuck Acceptance Corp.
6.750% 9/15/05 1,500,000 1,574,865
Sprint Capital Corp.
6.125% 11/15/08 750,000 766,373
Sprint Capital Corp.
6.875% 11/15/28 750,000 779,475
Textron, Inc.
9.550% 3/19/01 1,000,000 1,088,740
Thomas & Betts Corp.
8.250% 1/15/04 1,500,000 1,628,775
Time Warner, Inc.
6.100% 12/30/01 500,000 508,055
Travelers Funding Ltd.
6.300% 2/18/14 1,400,000 1,346,380
United Air Lines, Inc.
10.110% 2/19/06 394,180 445,057
U S Airways, Inc.
7.500% 10/15/09 928,904 926,294
Valero Energy Corp.
6.750% 12/15/02 1,000,000 1,009,400
W P P Finance
6.625% 7/15/05 900,000 913,037
Worldcom, Inc.
7.750% 4/01/07 1,000,000 1,129,650
Worldcom, Inc.
9.375% 1/15/04 871,000 902,417
----------- -----------
TOTAL CORPORATE DEBT
(COST $119,346,215) 117,927,434 124,018,786
----------- -----------
NON-U S GOVERNMENT AGENCY
OBLIGATIONS - 3.61%
PASS-THRU SECURITIES - 3.61%
Asset Securitization Corp Commercial
Mortgage, 1995-MD-IV
7.100% 8/13/07 2,378,545 2,531,556
Chase Commercial Mortgage Sec, Inc.,
1998-2, Class A2
6.025% 08/18/07 1,243,328 1,258,086
C S First Boston Mortgage Corp,
1998-C2, Class A2
5.960% 12/15/07 995,205 1,006,341
Merrill Lynch Mortgage Inv. ctf, 1998,
Class A1
6.310% 11/15/26 1,659,308 1,695,713
Morgan Stanley Capital I, Inc., 1998-HF2,
Class A1
6.010% 11/15/30 397,748 413,641
Nationlink Funding Corp., 1998-2
Class A1
6.001% 11/20/07 746,085 753,933
Textron Financial Corp., 1998-A,
Class A2
5.890% 01/15/05 1,500,000 1,515,937
----------- -----------
TOTAL NON-U S GOVERNMENT AGENCY
OBLIGATIONS (COST $9,062,747) 8,920,219 9,175,207
----------- -----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 13.24%
FEDERAL HOME LOAN MORTGAGE
CORPORATION (FHLMC) - 2.43%
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.51%
FHLMC Series 1322 Class G
7.500% 2/15/07 1,786,943 1,813,175
FHLMC Series 1460 Class H
7.000% 5/15/07 2,000,000 2,027,500
----------- -----------
3,786,943 3,840,675
23
<PAGE>
MML MANAGED BOND FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE 2A)
----------- -----------
BONDS AND NOTES (Continued)
PASS-THROUGH SECURITIES - 0.92%
FHLMC
6.420% 12/1/05 $ 2,127,334 $ 2,227,723
FHLMC
9.000% 3/1/17 105,980 112,797
----------- -----------
2,233,314 2,340,520
----------- -----------
6,020,257 6,181,195
----------- -----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (FNMA) - 5.22%
COLLATERALIZED MORTGAGE OBLIGATIONS - 4.25%
FNMA Series 1993-221 Class D
6.000% 12/25/08 1,000,000 1,008,430
FNMA Series 1993-134 Class GA
6.500% 2/25/07 2,000,000 2,030,000
FNMA Series 1996-54 Class C
6.000% 9/25/08 4,000,000 4,042,480
FNMA Series 1993-186 Class G
6.250% 3/25/08 3,700,000 3,724,272
----------- -----------
10,700,000 10,805,182
PASS-THROUGH SECURITIES - 0.97%
FNMA
6.000% 11/1/28 2,001,202 1,974,926
FNMA
9.000% 5/1/09 452,893 478,459
----------- -----------
2,454,095 2,453,385
----------- -----------
13,154,095 13,258,567
----------- -----------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA) - 5.59%
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.23%
JHM Acceptance Corp.,
Series E, Class 5
8.960% 4/1/19 590,734 604,391
----------- -----------
PASS-THROUGH SECURITIES - 5.36%
GNMA
8.000% 12/15/03 - 1/15/09 5,639,559 5,901,234
GNMA
7.500% 3/15/17 - 7/15/17 3,581,171 3,726,746
GNMA
7.000% 9/15/23 - 11/15/23 1,656,825 1,695,645
GNMA - ARMS
6.000% 11/20/27 - 12/20/27 820,214 825,595
GNMA - ARMS
6.625% 8/20/25 - 8/20/27 758,161 764,325
GNMA - ARMS
7.000% 11/20/25 690,208 694,736
----------- -----------
13,146,138 13,608,281
----------- -----------
13,736,872 14,212,672
----------- -----------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (COST $32,858,940) 32,911,224 33,652,434
----------- -----------
U.S. TREASURY OBLIGATIONS - 20.94%
U.S.TREASURY BONDS AND NOTES - 12.06%
U.S. Treasury Bond
7.500% 11/15/16 8,200,000 10,185,957
U.S. Treasury Bond
7.125% 2/15/23 4,400,000 5,422,298
U.S. Treasury Note
7.500% 5/15/02 9,500,000 10,314,910
U.S. Treasury Note
5.750% 9/30/99 3,000,000 3,023,910
U.S. Treasury Note
5.625% 11/30/99 1,700,000 1,714,875
U.S.TREASURY STRIPS - 8.88%
U.S. Treasury Strip*
0.000% 5/15/16 58,750,000 22,557,651
----------- -----------
TOTAL U.S. TREASURY OBLIGATIONS
(COST $49,896,848) 85,550,000 53,219,601
----------- -----------
TOTAL BONDS AND NOTES
(COST $227,587,529) 252,611,041 236,700,368
----------- -----------
SHORT-TERM INVESTMENTS - 8.09%
COMMERCIAL PAPER
Appalachian Power Co.
6.661% 1/6/99 3,990,000 3,986,312
Conagra, Inc.
6.137% 2/9/99 3,960,000 3,934,926
Crown Cork & Seal Co., Inc.
5.305% 1/7/99 3,160,000 3,157,209
Crown Cork & Seal Co., Inc.
6.039% 1/12/99 990,000 988,176
Ford Motor Credit Co.
5.508% 1/8/99 1,840,000 1,838,031
Indiana Michigan Power Co.
6.265% 1/5/99 3,515,000 3,512,597
24
<PAGE>
MML MANAGED BOND FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE 2A)
------------ -------------
SHORT-TERM INVESTMENTS (Continued)
COMMERCIAL PAPER (Continued)
McKesson Corp.
6.258% 1/4/99 $ 3,130,000 $ 3,128,369
------------ -------------
TOTAL SHORT-TERM INVESTMENTS
(COST $20,544,715) $ 20,585,000 20,545,620
============ =============
TOTAL INVESTMENTS
(COST $248,132,244) (A) 101.23% $ 257,245,988
====== =============
(a) Federal Income Tax Information: At
December 31, 1998 the net unrealized
appreciation on investments based on
cost of $248,132,243 for federal
income tax purposes 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 $ 10,061,922
Aggregate gross unrealized depreciation for
all investments and forward commitments in
which there is an excess of tax cost over
market value (948,178)
-------------
NET UNREALIZED APPRECIATION $ 9,113,744
-------------
* Non-income producing security.
See Notes to Financial Statements.
25
<PAGE>
MML BLEND FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
NUMBER MARKET VALUE
OF AMOUNT
SHARES (NOTE 2A)
-------------- ----------------
EQUITIES - 62.95%
AEROSPACE & DEFENSE - 2.04%
Raytheon Co. (Class A) 137,700 $ 7,117,369
Raytheon Co. (Class B) 420,000 22,365,000
TRW, Inc. 496,600 27,902,711
-------------- ----------------
1,054,300 57,385,080
-------------- ----------------
AGRIBUSINESS - 0.52%
Archer-Daniels-Midland Co. 838,510 14,411,891
-------------- ----------------
APPAREL, TEXTILES, SHOES - 0.68%
V F Corp. 405,000 19,007,813
-------------- ----------------
AUTOMOTIVE & PARTS - 2.27%
Ford Motor Co. 282,300 16,567,481
Genuine Parts Co. 664,900 22,232,594
Goodyear Tire & Rubber Co. 499,100 25,173,356
-------------- ----------------
1,446,300 63,973,431
-------------- ----------------
BANKING, SAVINGS & LOAN - 4.34%
The Bank of New York Co., Inc. 920,200 37,038,050
Comerica, Inc. 370,500 25,263,469
Pacific Century Financial Corp. 690,600 16,833,375
Wachovia Corp. 260,000 22,733,750
Wells Fargo Co. 508,300 20,300,231
-------------- ----------------
2,749,600 122,168,875
-------------- ----------------
BEVERAGES - 1.03%
Brown-Forman Corp. (Class B) 382,500 28,950,469
-------------- ----------------
CHEMICALS - 2.64%
Air Products and Chemicals 429,700 17,188,000
Bemis Corp. 407,600 15,463,325
Engelhard Corp. 897,200 17,495,400
Rohm & Haas 799,300 24,078,913
-------------- ----------------
2,533,800 74,225,638
-------------- ----------------
COMMUNICATIONS - 1.14%
GTE Corp. 494,400 32,136,000
COMPUTERS & OFFICE EQUIPMENT - 6.20%
Electronic Data Systems 341,400 $ 17,155,350
Hewlett-Packard Co. 529,600 36,178,300
International Business
Machines Corp. 271,100 50,085,725
Pitney Bowes, Inc. 585,900 38,706,019
Xerox Corp. 275,000 32,450,000
-------------- ----------------
2,003,000 174,575,394
-------------- ----------------
CONTAINERS - 0.69%
Crown Cork & Seal 354,500 10,923,031
Temple-Inland, Inc. 140,600 8,339,338
-------------- ----------------
495,100 19,262,369
-------------- ----------------
COSMETICS & PERSONAL CARE - 1.19%
Kimberly-Clark Corp. 615,900 33,566,550
-------------- ----------------
ELECTRIC UTILITIES - 1.49%
Dominion Resources, Inc. 388,000 18,139,000
SCANA Corp. 268,300 8,652,675
Teco Energy, Inc. 541,300 15,257,894
-------------- ----------------
1,197,600 42,049,569
-------------- ----------------
ELECTRICAL EQUIPMENT & ELECTRONICS - 4.06%
AMP, Inc. 492,875 25,660,305
General Electric Co. 531,600 54,256,425
Honeywell, Inc. 236,100 17,781,281
Hubbell, Inc. (Class B) 434,480 16,510,241
-------------- ----------------
1,695,055 114,208,252
-------------- ----------------
ENERGY - 5.25%
BP Amoco plc * 426,182 38,196,530
Burlington Resources, Inc. 375,500 13,447,594
Conoco, Inc. * 359,400 7,502,475
ENI, SPA - ADR 280,100 18,976,775
Kerr-Mcgee Corp. 184,300 7,049,475
Mobil Corp. 366,700 31,948,737
Unocal Corp. 584,900 17,071,768
Usec, Inc. 970,000 13,458,750
-------------- ----------------
3,547,082 147,652,104
-------------- ----------------
26
<PAGE>
SCHEDULE OF INVESTMENTS(Continued)
DECEMBER 31, 1998
NUMBER MARKET VALUE
OF AMOUNT
SHARES (NOTE 2A)
----------- --------------
EQUITIES (Continued)
FINANCIAL SERVICES - 1.53%
American Express Co. 182,400 $ 18,650,400
American General Corp. 314,300 24,515,400
----------- --------------
496,700 43,165,800
----------- --------------
FOODS - 2.34%
Bestfoods 318,200 16,944,150
ConAgra, Inc. 976,400 30,756,600
General Mills, Inc 234,700 18,247,925
----------- --------------
1,529,300 65,948,675
----------- --------------
FOREST PRODUCTS & PAPER - 0.98%
Westvaco Corp. 276,412 7,411,297
Weyerhaeuser Co. 399,200 20,284,350
----------- --------------
675,612 27,695,647
HEALTH CARE - 6.16%
Becton, Dickinson and Co. 907,700 38,755,981
Bristol-Myers Squibb Co. 529,600 70,867,100
Pharmacia & Upjohn, Inc. 415,200 23,510,700
Schering Plough Corp. 729,400 40,299,350
----------- --------------
2,581,900 173,433,131
----------- --------------
INDUSTRIAL DISTRIBUTION - 0.62%
W.W. Grainger, Inc. 421,000 17,524,125
----------- --------------
INDUSTRIAL TRANSPORTATION - 1.62%
Burlington Northern Santa Fe 667,000 22,511,250
Norfolk Southern Corp. 730,200 23,138,213
----------- --------------
1,397,200 45,649,463
----------- --------------
INSURANCE - 3.79%
Cigna Corp. 127,700 9,872,806
Jefferson-Pilot Corp. 264,300 19,822,500
Marsh & McLennan Co's., Inc 458,300 26,781,906
MBIA Inc. 356,000 23,340,250
SAFECO Corp. 628,600 26,990,513
----------- --------------
1,834,900 106,807,975
----------- --------------
MACHINERY & COMPONENTS - 0.75%
Dover Corp. 579,100 21,209,538
----------- --------------
METALS & MINING - 0.42%
USX- Marathon Group 387,300 11,667,412
----------- --------------
MISCELLANEOUS - 1.17%
Armstrong World Industries 266,700 $ 16,085,344
Minnesota Mining &
Manufacturing Co. 238,100 16,934,862
----------- --------------
504,800 33,020,206
----------- --------------
PHARMACEUTICALS - 0.91%
American Home Products Corp. 453,100 25,515,194
----------- --------------
PUBLISHING & PRINTING - 1.45%
McGraw-Hill Companies, Inc. 400,600 40,811,125
----------- --------------
RETAIL - 1.72%
The May Department Stores Co. 312,300 18,855,112
Newell Co. 285,600 11,781,000
Sears Roebuck & Co. 417,400 17,739,500
----------- --------------
1,015,300 48,375,612
----------- --------------
RETAIL-GROCERY - 2.15%
Albertson's, Inc. 484,200 30,837,487
American Stores Co. 805,400 29,749,463
----------- --------------
1,289,600 60,586,950
----------- --------------
TELEPHONE UTILITIES - 2.54%
Ameritech Corp. 524,800 33,259,200
Frontier Corp. 684,800 23,283,200
Pinnacle West Capital 349,800 14,822,775
----------- --------------
1,559,400 71,365,175
----------- --------------
TOBACCO - 1.26%
Fortune Brands, Inc. 474,900 15,018,713
UST, Inc 589,400 20,555,325
----------- --------------
1,064,300 35,574,038
----------- --------------
TOTAL EQUITIES
(COST $946,470,658) 1,771,923,501
--------------
27
<PAGE>
MML BLEND FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE 2A)
----------- ------------
BONDS AND NOTES - 24.05%
ASSET BACKED SECURITIES - 1.45%
AUTO RECEIVABLES
California Infrastructure PG&E-1,
1997-1, Class A6
6.320% 09/25/05 $ 600,000 $ 616,998
California Infrastructure SDG&E-1,
1997-1, Class A5
6.190% 09/25/05 500,000 519,440
California Infrastructure SCE-1,
1997-1, Class A5
6.280% 09/25/05 650,000 677,573
Capital Equipment Receivables Trust,
1996-1, Class A4
6.280% 06/15/00 4,000,000 4,020,560
Case Equipment Loan Trust, 1998,
Class A4
5.830% 02/15/05 3,500,000 3,539,970
Caterpillar Financial Asset Trust,
1997-B, Class A3
6.160% 09/25/03 3,100,000 3,121,049
Chase Manhattan Auto Grantor Trust,
1996-B, Class A
6.140% 10/16/06 4,500,000 4,519,305
Chase Manhattan Auto Owner Trust,
1998-A, Class A4
5.800% 12/16/02 3,750,000 3,789,713
Ford Credit Auto Owner Trust, 1996-B
1996-B, Class A4
6.300% 01/15/01 6,000,000 6,041,220
Metlife Capital Equipment Loan Trust
Series 1997-A, Class A
6.850% 05/20/08 2,500,000 2,611,688
Premier Auto Trust Series, 1998-4,
Class A3
5.690% 06/08/02 4,000,000 4,034,240
Premier Auto Trust Series, 1998-5,
Class A3
5.070% 07/08/02 2,000,000 1,992,160
Railcar Trust No., 1992-1
7.750% 06/01/04 1,165,513 1,240,083
Toyota Auto Lease Trust Series,
1998-B, Class A1
5.350% 07/25/02 3,500,000 3,500,000
World Omni 1996-A Automobile Lease
Securitization Trust, Class A1
6.300% 06/25/02 633,819 634,611
----------- ------------
TOTAL ASSET BACKED SECURITIES
(COST $39,873,360) 40,399,332 40,858,610
----------- ------------
CORPORATE DEBT - 9.89%
Airtouch Communications, Inc.
7.500% 07/15/06 4,000,000 4,407,640
Alcan Aluminum Ltd.
6.250% 11/01/08 2,500,000 2,527,175
American Airlines, Inc.
9.780% 11/26/11 4,635,063 5,460,799
American General Finance Corp.
5.750% 11/01/03 2,000,000 2,005,400
American West Airlines, 1996-1, Class A
6.850% 07/02/09 4,126,713 4,276,802
AMR Corp.
9.000% 08/01/12 2,000,000 2,356,380
Analog Devices, Inc.
6.625% 03/01/00 1,500,000 1,517,385
Anheuser-Busch Companies, Inc.
5.375% 09/15/08 4,000,000 3,994,440
Archer-Daniels Midland
6.750% 12/15/27 1,650,000 1,762,497
Associates Corp. of North America
6.750% 08/01/01 4,000,000 4,125,080
Associates Corp. of North America
6.500% 08/15/02 2,000,000 2,064,360
Associates Corp. of North America
5.750% 11/01/03 2,000,000 2,014,286
Barrick Gold Corp.
7.500% 05/01/07 4,250,000 4,561,653
Bell Atlantic Financial Services, Inc
6.610% 02/04/00 1,000,000 1,013,780
BHP Finance (USA) Limited
6.420% 03/01/26 4,500,000 4,473,225
Boston Scientific Corp.
6.625% 03/15/05 3,800,000 3,686,950
C I T Group Holdings
6.375% 10/01/02 4,000,000 4,114,960
C I T Group Holdings
5.625% 10/15/03 2,500,000 2,498,975
28
<PAGE>
MML BLEND FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE 2A)
----------- ------------
BONDS AND NOTES (Continued)
CORPORATE DEBT (Continued)
CSX Corp.
7.050% 05/01/02 $ 2,000,000 $ 2,075,380
CSX Corp.
7.250% 05/01/27 4,500,000 4,798,400
Cable & Wireless Communications
6.750% 12/01/08 5,750,000 5,822,979
Carlisle Companies, Inc
7.250% 01/15/07 2,760,000 2,844,428
Celulosa Arauco Constitucion
6.950% 09/15/05 2,500,000 2,220,000
Champion International Corp.
6.400% 02/15/26 3,500,000 3,594,745
CITGO Petroleum Corp.
7.875% 05/15/06 1,000,000 980,710
Columbia Gas System, Inc
6.610% 11/28/02 3,000,000 3,097,200
Comcast Cablevision-PH
8.375% 05/01/07 2,500,000 2,900,525
Commercial Credit Co.
7.750% 03/01/05 2,500,000 2,765,500
ConAgra, Inc.
7.000% 10/01/28 3,000,000 3,080,220
Continental Airlines, Inc. Series 1996-B
7.820% 10/15/13 1,908,224 2,061,045
Continental Airlines, Inc. Series 1996-2B
8.560% 07/02/14 1,660,608 1,940,835
Corning Glass Works, Inc.
8.875% 03/15/16 500,000 588,525
Dana Corp.
6.500% 03/15/08 1,750,000 1,798,545
Delta Air Lines, Inc.
8.540% 01/02/07 4,027,752 4,409,341
Dover Corp.
6.250% 06/01/08 2,000,000 2,093,960
Dover Corp.
6.650% 06/01/28 2,000,000 2,067,860
Emerson Electric Co.
5.500% 09/15/08 2,000,000 2,022,822
ERAC USA Finance Co. 144A
6.750% 05/15/07 6,000,000 6,056,580
FBG Finance Ltd, 144A
7.875% 06/01/16 4,000,000 4,626,280
Fletcher Challenge Ltd.
6.750% 03/24/05 2,000,000 1,918,920
Fletcher Challenge Ltd.
7.750% 06/20/06 2,000,000 2,017,100
Ford Motor Corp.
8.450% 07/15/06 1,500,000 1,516,560
Foster Wheeler Corp.
6.750% 11/15/05 2,000,000 1,872,040
GTE Corp.
9.100% 06/01/03 575,000 657,012
General American Transportation Corp.
6.750% 03/01/06 3,000,000 3,071,820
General Electric Capital Corp.
8.750% 05/21/07 1,500,000 1,831,110
General Electric Capital Corp.
6.500% 11/01/06 1,250,000 1,332,600
General Mills
8.900% 06/15/06 2,250,000 2,697,165
General Motors Corp.
9.125% 07/15/01 1,500,000 1,630,740
Goldman Sachs Group, L.P. 144A
6.200% 02/15/01 4,000,000 4,060,720
Halliburton Co.
5.625% 12/01/08 1,500,000 1,516,464
Heller Financial, Inc.
6.250% 03/01/01 2,500,000 2,526,800
Hershey Foods Co.
7.200% 08/15/97 5,300,000 6,066,846
Hilton Hotels Corp.
7.000% 07/15/04 800,000 801,912
Household Finance Corp.
6.500% 11/15/08 2,500,000 2,601,300
I C I Wilmington
7.050% 09/15/07 2,500,000 2,561,100
IMC Global, Inc.
6.625% 10/15/01 2,500,000 2,479,150
Interpool, Inc
7.350% 08/01/07 2,000,000 1,904,418
Leucadia National Corp.
7.750% 08/15/13 3,000,000 2,963,040
Lasmo USA, Inc.
6.750% 12/15/07 6,000,000 5,769,768
Lockheed Martin Corp.
7.700% 06/15/08 4,000,000 4,522,040
29
<PAGE>
MML BLEND FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE 2A)
------------ -------------
BONDS AND NOTES (Continued)
CORPORATE DEBT (Continued)
Mapco, Inc.
7.250% 03/01/09 $ 3,750,000 $ 3,950,625
Midway Airlines
8.140% 01/02/13 2,500,000 2,532,275
Millipore Corp.
7.500% 04/01/07 4,250,000 4,351,150
Mobil Corp.
8.625% 08/18/21 4,500,000 5,922,405
Newmont Mining Corp.
8.625% 04/01/02 5,000,000 5,259,250
News America Holdings, Inc.
9.250% 02/01/13 4,000,000 4,954,920
Norfolk Southern Corp.
7.050% 05/01/37 6,000,000 6,490,980
North Finance (Bermuda) Ltd. 144A
7.000% 09/15/05 4,000,000 4,195,640
Occidental Petroleum Corp.
7.375% 11/15/08 6,000,000 6,119,340
Ralston Purina Co.
7.750% 10/01/15 2,000,000 2,200,120
Raytheon Co.
6.750% 08/15/07 2,700,000 2,858,517
Raytheon Co.
6.150% 11/01/08 3,000,000 3,058,809
Rolls-Royce Capital Inc.
7.1250% 07/29/03 2,000,000 2,085,600
Ryder System, Inc.
6.6000% 11/15/05 3,500,000 3,513,615
Safeway Stores, Inc.
6.0500% 11/15/03 1,000,000 1,006,860
Scholastic Corp.
7.000% 12/15/03 3,000,000 3,122,070
Schwab (Charles) Corp.
6.250% 01/23/03 2,500,000 2,479,600
Scripps (EW) Co.
6.625% 10/15/07 5,000,000 5,193,050
The Seagram Co. Ltd.
7.500% 12/15/18 4,500,000 4,504,590
Sprint Capital Corp.
6.125% 11/15/08 2,000,000 2,043,660
Sprint Capital Corp.
6.875% 11/15/28 2,000,000 2,078,600
TCI Communications, Inc.
7.550% 09/02/03 3,000,000 3,232,290
Thomas & Betts Corp.
8.250% 01/15/04 1,000,000 1,085,850
Time Warner, Inc.
7.750% 06/15/05 3,000,000 3,318,120
Time Warner, Inc.
6.100% 12/30/01 4,750,000 4,826,523
Travelers Funding Ltd.
6.300% 02/15/14 3,400,000 3,269,780
U S Airways, Inc.
7.500% 10/15/09 928,904 926,294
Valero Energy Corp.
6.750% 12/12/02 2,000,000 2,018,800
Worldcom, Inc.
7.750% 04/01/07 2,500,000 2,824,125
Worldcom, Inc.
9.375% 01/15/04 1,525,000 1,580,007
W P P Finance
6.625% 07/15/05 2,250,000 2,282,594
------------ -------------
TOTAL CORPORATE DEBT
(COST $267,329,685) 265,047,264 278,312,351
------------ -------------
NON-U S GOVERNMENT AGENCY
OBLIGATIONS - 0.80%
PASS-THRU SECURITIES
Asset Securitization Corp.
Commercial Mortgage 1995-MD-IV
7.100% 8/13/07 6,184,216 6,582,047
Chase Commercial Mortgage Sec, Inc.,
1998-2, Class A2
6.025% 08/18/07 2,486,656 2,516,173
C S First Boston Mortgage Corp.,
1998-C2, Class A2
5.960% 12/15/07 2,985,615 3,019,024
Merrill Lynch Mortgage Inv. Ctf
1998, Class A1
6.310% 11/15/26 4,266,792 4,360,405
Morgan Stanley Capital I, Inc.,
1998-HF2, Class A1
6.010% 11/15/30 894,933 930,692
30
<PAGE>
MML BLEND FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE 2A)
------------ -------------
BONDS AND NOTES (Continued)
NON-U S GOVERNMENT AGENCY
OBLIGATIONS (Continued)
PASS-THRU SECURITIES (Continued)
Nationlink Funding Corp.,
1998-2, Class A1
6.001% 11/20/07 $ 1,492,170 $ 1,507,868
Textron Financial Corp.,
1998-A, Class A2
5.890% 01/15/05 3,500,000 3,537,188
------------ -------------
TOTAL NON-U S GOVERNMENT AGENCY
OBLIGATIONS (COST $22,176,023) 21,810,382 22,453,397
------------ -------------
U S GOVERNMENT AGENCY OBLIGATIONS - 3.28%
FEDERAL HOME LOAN MORTGAGE
CORPORATION (FHLMC) - 0.63%
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.41%
FHLMC Series 1322 Class G
7.500% 02/15/07 5,000,000 4,532,938
FHLMC Series 1460 Class H
7.000% 05/15/07 1,789,000 1,813,578
FHLMC Series 1490 Class PG
6.300% 05/15/07 5,000,000 5,040,600
------------ -------------
11,789,000 11,387,116
PASS-THROUGH SECURITIES - 0.22%
FHLMC
6.420% 12/01/05 5,492,390 5,751,576
FHLMC
9.000% 03/01/17 317,940 338,390
------------ -------------
5,810,330 6,089,966
------------ -------------
17,599,330 17,477,082
------------ -------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (FNMA) - 1.48%
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.86%
FNMA Series 1993-107 Class E
6.500% 06/25/08 5,000,000 5,109,350
FNMA Series 1993-71 Class PG
6.250% 07/25/07 8,000,000 8,050,000
FNMA Series 1993-175 Class PU
6.350% 09/25/08 7,015,000 7,131,168
FNMA Series 1996-54 Class C
6.000% 09/25/08 4,000,000 4,042,480
------------ -------------
24,015,000 24,332,998
PASS-THROUGH SECURITIES - 0.62%
FNMA
8.000% 05/01/13 1,141,441 1,158,425
FNMA
6.500% 02/25/07 5,000,000 5,075,000
FNMA
6.250% 03/25/08 5,000,000 5,032,800
FNMA
6.000% 11/01/28 6,048,043 5,968,632
------------ -------------
17,189,484 17,234,857
------------ -------------
41,204,484 41,567,855
------------ -------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA) - 0.97%
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.04%
J H M Acceptance Corp.,
Series E, Class 5
8.960% 04/01/19 1,181,467 1,208,783
------------ -------------
PASS-THROUGH SECURITIES - 0.93%
GNMA
6.500% 10/15/28 5,533,045 5,588,375
GNMA
7.000% 4/5/23-11/15/23 4,204,913 4,303,434
GNMA
7.500% 9/15/16-10/15/17 2,937,849 3,057,272
GNMA
8.000% 1/15/07 -5/15/08 8,354,578 8,705,291
GNMA
9.000% 8/15/08 -9/15/09 1,381,872 1,484,821
GNMA-ARMS
5.500% 10/20/27-12/20/27 1,542,616 1,552,736
GNMA-ARMS
6.000% 8/20/25-8/20/27 1,610,971 1,624,068
------------ -------------
25,565,844 26,315,997
------------ -------------
26,747,311 27,524,780
------------ -------------
U.S. GOVERNMENT GUARANTEED NOTES - 0.20%
1991-A Caguas
8.740% 08/01/01 280,000 303,537
1991-A Cncl. Bluffs, IA
8.740% 08/01/01 155,000 168,029
1991-A Fairfax Cnty, VA
8.740% 8/1/01 85,000 92,145
31
<PAGE>
MML BLEND FUND
SCHEDULE OF INVESTMENTS(Continued)
DECEMBER 31, 1998
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE 2A)
------------- -------------
BONDS AND NOTES (Continued)
U.S. GOVERNMENT GUARANTEED NOTES (Continued)
1991-A Fajardo, PR
8.740% 08/01/01 $ 210,000 $ 227,653
1991-A Gasden, AL
8.740% 08/01/01 100,000 108,406
1991-A Lorain, OH
8.740% 08/01/01 30,000 32,522
1991-A Mayaguez, PR
8.740% 08/01/01 150,000 162,609
1991-A Rochester, NY
8.650% 08/01/00 4,295,000 4,517,825
--------------- -------------
5,305,000 5,612,726
--------------- -------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (COST $90,093,244) 90,856,125 92,182,443
--------------- -------------
U.S. TREASURY OBLIGATIONS - 8.64%
U.S. TREASURY BONDS & NOTES - 8.36%
U.S. Treasury Bonds
7.500% 11/15/16 38,250,000 47,513,768
U.S. Treasury Bonds
8.750% 05/15/17 41,100,000 57,173,799
U.S. Treasury Notes
6.375% 05/15/00 5,000,000 5,110,950
U.S. Treasury Notes
7.500% 05/15/02 1,000,000 1,085,780
U.S. Treasury Notes
7.750% 01/31/00 9,900,000 10,214,028
U.S. Treasury Notes
7.500% 02/15/05 5,700,000 6,526,500
U.S. Treasury Notes
7.125% 02/29/00 11,500,000 11,809,005
U.S. Treasury Notes
6.500% 08/15/05 58,300,000 64,075,198
U.S. Treasury Notes
6.375% 05/15/99 5,000,000 5,031,250
U.S. Treasury Notes
6.875% 05/15/06 20,550,000 23,234,241
U.S. Treasury Notes
6.500% 05/31/01 1,150,000 1,197,978
U.S. Treasury Notes
6.500% 10/15/06 2,000,000 2,218,440
--------------- -------------
199,450,000 235,190,937
--------------- -------------
BONDS AND NOTES (Continued)
U.S. TREASURY STRIPS - 0.28%
U.S. Treasury Strips *
0.000% 02/15/99 $ 2,150,000 $ 2,138,497
U.S. Treasury Strips *
0.000% 02/15/10 2,500,000 1,420,700
U.S. Treasury Strips *
0.000% 08/15/15 2,000,000 804,140
U.S. Treasury Strips *
0.000% 02/15/17 9,500,000 3,493,245
--------------- -------------
16,150,000 7,856,582
--------------- -------------
TOTAL U.S. TREASURY OBLIGATIONS
(COST $232,734,403) 215,600,000 243,047,519
--------------- -------------
TOTAL BONDS AND NOTES
(COST $652,206,715) 633,713,103 676,854,320
=============== =============
SHORT-TERM INVESTMENTS - 19.25%
COMMERCIAL PAPER
Aristar, Inc.
5.710% 02/10/99 9,475,000 9,411,964
Aristar, Inc.
5.710% 02/01/99 5,525,000 5,497,869
Aristar, Inc.
5.730% 02/02/99 10,000,000 9,947,770
Case Credit Corp.
6.050% 02/22/99 2,140,000 2,122,253
Case Credit Corp.
6.050% 02/25/99 12,525,000 12,409,334
Case Credit Corp.
5.960% 03/19/99 10,000,000 9,887,333
Case Credit Corp.
5.960% 03/23/99 15,463,000 15,279,850
Comdisco, Inc.
6.980% 01/11/99 6,515,000 6,504,157
Comdisco, Inc.
6.040% 01/20/99 11,685,000 11,646,072
Comdisco, Inc.
5.640% 03/12/99 8,690,000 8,600,879
Comdisco, Inc.
5.750% 03/22/99 10,000,000 9,883,000
Conagra, Inc.
6.040% 01/06/99 10,000,000 9,991,595
32
<PAGE>
MML BLEND FUND
SCHEDULE OF INVESTMENTS (Continued)
DECEMBER 31, 1998
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE 2A)
--------- ---------
SHORT-TERM INVESTMENTS (Continued)
COMMERCIAL PAPER (Continued)
Crown Cork & Seal Co., Inc.
5.700% 01/27/99 $ 11,285,000 $ 11,234,684
Crown Cork & Seal Co., Inc.
5.700% 02/24/99 12,190,000 12,081,252
Crown Cork & Seal Co., Inc.
5.820% 02/01/99 2,675,000 2,661,605
Crown Cork & Seal Co., Inc.
6.120% 03/31/99 11,555,000 11,404,785
Duke Power Co.
5.310% 01/08/99 6,025,000 6,018,778
Duke Power Co.
5.220% 02/08/99 12,000,000 11,934,038
Enron Corp.
5.530% 02/12/99 10,280,000 10,211,142
Finova Capital Corp.
5.580% 01/13/99 10,000,000 9,981,222
Finova Capital Corp.
5.170% 02/04/99 10,115,000 10,055,632
Finova Capital Corp.
5.320% 02/09/99 9,230,000 9,171,557
Finova Capital Corp.
5.350% 03/26/99 10,000,000 9,877,222
GTE Funding, Inc.
5.210% 02/17/99 10,900,000 10,826,037
Georgia Power Co., DTC
5.180% 02/22/99 11,695,000 11,598,012
Goldman Sachs & Co.
5.100% 03/17/99 10,790,000 10,671,550
Goldman Sachs & Co.
4.940% 04/23/99 21,495,000 21,167,321
Indiana Michigan Power Co.
6.210% 01/05/99 1,810,000 1,808,763
Orix Credit Alliance, Inc.
5.890% 01/26/99 8,395,000 8,360,323
Orix Credit Alliance, Inc.
6.160% 01/04/99 15,790,000 15,781,876
Orix Credit Alliance, Inc.
6.150% 02/26/99 12,510,000 12,398,273
Orix Credit Alliance, Inc.
5.390% 04/15/99 9,655,000 9,508,566
Pennsylvania Power & Lights
5.940% 02/19/99 6,045,000 5,997,335
Praxair, Inc.
5.790% 01/21/99 13,255,000 13,206,452
Praxair, Inc.
5.480% 02/23/99 10,000,000 9,913,928
Public Service Co. of Colorado
6.020% 01/05/99 8,615,000 8,609,230
Public Service Co. of Colorado
5.770% 02/05/99 3,260,000 3,241,749
Public Service Electric & Gas Co.
5.660% 01/19/99 10,000,000 9,970,000
Public Service Electric & Gas Co.
5.730% 02/11/99 10,445,000 10,372,161
Public Service Electric & Gas Co.
5.650% 02/01/99 4,260,000 4,239,269
Public Service Electric & Gas Co.
5.860% 02/03/99 12,750,000 12,679,285
Raytheon Co.
5.700% 02/05/99 4,045,000 4,021,892
Rite Aid Corp.
6.080% 01/14/99 16,420,000 16,376,521
Rite Aid Corp.
5.720% 01/29/99 12,000,000 11,946,150
Ryder System, Inc.
5.690% 01/19/99 5,500,000 5,483,500
Sonat, Inc.
5.440% 01/12/99 10,000,000 9,980,560
Sonat, Inc.
5.390% 01/28/99 9,360,000 9,315,200
Sonat, Inc.
6.070% 01/07/99 9,955,000 9,944,908
Sonat, Inc.
6.040% 01/08/99 8,625,000 8,614,850
Sonat, Inc.
5.530% 02/18/99 7,860,000 7,796,829
Textron, Inc.
5.640% 01/22/99 16,025,000 15,969,396
Textron Financial Corp.
6.140% 01/15/99 11,790,000 11,760,830
Tyson Foods, Inc.
5.590% 01/25/99 10,835,000 10,789,880
Union Camp Corp.
5.410% 01/14/99 3,825,000 3,814,871
33
<PAGE>
MML BLEND FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE 2A)
----------- ---------------
SHORT-TERM INVESTMENTS (Continued)
COMMERCIAL PAPER (Continued)
Union Camp Corp.
5.270% 02/16/99 $ 13,576,000 $ 13,475,506
Wisconsin Gas Co.
5.080% 03/18/99 6,445,000 6,373,317
------------ ---------------
AMOUNT RT-TERM INVESTMENTS
(COST $541,867,659) 545,304,000 541,828,333
============ ===============
TOTAL INVESTMENTS
(COST 2,140,545,032) 106.25% $ 2,990,606,154
====== ===============
(a) Federal Income Tax Information: At
December 31, 1998 the net unrealized
appreciation on investments based on
cost of $2,140,545,032 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 $ 871,728,578
Aggregate gross unrealized depreciation
for all investments and forward
commitments in which there is an excess
of tax cost over market value (21,667,456)
---------------
NET UNREALIZED APPRECIATION $ 850,061,122
===============
* Non-income producing security.
See Notes to Financial Statements.
34
<PAGE>
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, diversified
management investment company. MML Equity Fund, MML Money Market Fund, MML
Managed Bond Fund and MML Blend Fund (the "Funds") are the four series of
shares of the MML Trust. The MML Trust is organized 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 $93,227,079, $430,440 and
$141,110,488; respectively, as capital gain dividends for the year ended
December 31, 1998.
35
<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. 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 can not 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, 1998, the fund had no open forward commitments.
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 $11,997 which is available for
federal income tax purposes to offset future capital gains. Of the total
carryforward, $1,204 expires December 31, 2000, $201 expires December 31,
2001, $5,364 expires December 31, 2002, $841 expires December 31, 2003,
$4,291 expires December 31, 2005 and $96 expires December 31, 2006.
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 an investment sub-advisory agreement with David
L. Babson and Company, Inc. ("Babson"), a wholly-owned subsidiary of DLB
Acquisition Corporation which is a controlled subsidiary of MassMutual. The
agreement provides that Babson manage the assets of MML Equity Fund and the
assets of the Equity Sector of 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, 2000, 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, 1998, MassMutual was not required to reimburse the Funds for any
expenses.
36
<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, 1998 COST AND MATURITIES
- ------------------ ----------------- -----------------
<S> <C> <C>
Investments
- -----------
MML EQUITY FUND
Equities $ 532,329,014 $ 375,620,947
Short-term investments 3,415,135,119 3,419,754,586
MML MONEY MARKET FUND
Short-term investments 784,174,293 755,231,689
MML MANAGED BOND FUND
Bonds and notes 45,558,302 33,056,996
U.S. Government investments - long-term 81,901,811 55,917,843
Short-term investments 816,526,581 808,544,864
MML BLEND FUND
Equities 258,939,173 364,338,576
Bonds and notes 151,825,174 49,564,280
U.S. Government investments - long-term 293,335,268 230,088,323
Short-term investments 2,736,323,588 2,763,614,285
<CAPTION>
COST
Forward Commitments OF CONTRACTS
- -------------------- -----------------
<S> <C>
MML MANAGED BOND FUND
U.S. Treasury and GNMA Forward Commitment Contracts:
Contracts opened $ 4,783,171
Contracts closed 4,783,171
Outstanding at December 31, 1998 -
</TABLE>
37
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, 1998 Fund Fund Fund Fund
- ------------------ ---------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Shares
Reinvestment of dividends 5,377,343 7,577,176 1,080,294 10,548,232
Sales of shares 7,903,059 188,771,360 4,363,667 6,180,424
Redemptions of shares (5,006,969) (159,080,164) (1,816,564) (7,166,826)
---------------- ----------------- ----------------- -----------------
Net Increase 8,273,433 37,268,372 3,627,397 9,561,830
---------------- ----------------- ----------------- -----------------
Amount
Reinvestment of dividends $ 190,592,681 $ 7,577,176 $ 13,625,461 $ 257,252,297
Sales of shares 300,269,513 188,771,360 55,354,210 155,904,892
Redemptions of shares (188,112,102) (159,080,164) (22,972,939) (180,183,660)
---------------- ----------------- ----------------- -----------------
Net Increase $ 302,750,092 $ 37,268,372 $ 46,006,732 $ 232,973,529
---------------- ----------------- ----------------- -----------------
<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
---------------- ----------------- ----------------- -----------------
</TABLE>
38
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
MML SERIES INVESTMENT FUND
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial positions 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
(hereafter referred to collectively as the "MML Trust") at December 31, 1998,
the results of each of their operations for the year then ended, the changes in
each of their net assets for each of the two years in the period then ended and
each of their financial highlights for each of the ten years in the period then
ended, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the MML Trust's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1998 by correspondence with the custodian and the application of
alternative auditing procedures where securities purchased had not been settled,
provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Springfield, Massachusetts
February 25, 1999
39
<PAGE>
MML Equity Index Fund
To Our Shareholders
Another Year of Expansion in the U.S.
1998 marked the eighth consecutive year of economic expansion in the United
States, once again confounding those who were looking for the economy to falter.
Real growth of gross domestic product for the year is likely to be somewhere
around 3.75%, a shade under 1997's 3.8%. While economic growth continued apace,
inflation remained virtually dormant, with the Consumer Price Index rising about
1.7%. Producer prices, which often lead changes in consumer prices, actually
declined in 1998. Interest rates fell for most of the year, ending December at
near-record low levels. Contributing to the easing of interest rates was the
fact that the U.S. government had a $70 billion surplus in fiscal year 1998
after several decades of deficits. Another surplus is forecast for the current
fiscal year.
Consumption and fixed investment both contributed strongly to the expansion in
1998. Thanks to solid income growth and another banner year for large cap growth
stocks, consumers were able to maintain spending at high levels all year. Fixed
investment benefited from steady increases in residential construction and
producers' durable equipment o mainly computers and other business equipment.
Investment in technology contributed not only to growth but also to gains in
productivity.
The only broad-based drag on economic growth was the trade deficit, which grew
by close to $100 million in 1998. The deficit was exacerbated by strong domestic
growth, which spurred imports, and by serious financial problems abroad, which
dampened foreign demand for U.S. goods and services and therefore limited U.S.
exports.
Overseas: Some Progress, Some New Challenges
In Asia, where severe financial problems first came to a head in 1997, there was
some progress. The stock markets of Thailand and South Korea rebounded
noticeably in 1998, indicating that investors are beginning to overcome their
generalized fear of Southeast Asian markets and instead are making investment
decisions on a nation-specific basis. This is a key prerequisite for meaningful
recovery in the region.
In Japan, political leaders finally adopted an aggressive plan to stimulate the
economy and reform the country's ailing banking system. Policy is now moving in
the proper direction, but it will be a long road back to economic health for
Japan.
One key concern continues to be the extent to which the problems in Asia will
spread to other emerging markets, and eventually to the U.S. This concern gained
renewed force in August, when Russia announced a substantial devaluation of its
currency, the ruble, and defaulted on much of its foreign debt. South America,
particularly Brazil, also gave investors cause for concern in 1998.
Equities Take a Hit But Finish Strong
U.S. equities were uniformly strong during the first three months of the year,
as concerns about Asia receded into the background and investors focused on
strong economic growth. In April, a two-tiered market emerged, with
large-capitalization technology and other growth issues leading the S&P 500
Index and the Dow Jones Industrial Average higher through mid-July. The Russell
2000 Index, however, trended lower throughout the second quarter, indicating
that many small-capitalization stocks were not participating in the rally.
Indeed, even the S&P 500's gains, at its high water mark in July, were largely
due to its twenty largest components. The rally, therefore, was quite narrow.
In the third quarter, amid Russia's financial difficulties and renewed concerns
about Asia, stocks turned south, giving up all they had gained earlier in the
year and then some in many cases. A flight to quality ensued in which investors
shunned stocks in general. Especially hard hit were small-capitalization issues,
technology stocks, and other sectors perceived to have more than average risk.
With the financial markets reeling, the Federal Reserve Board stepped in,
lowering interest rates three times in three months. Stocks responded with a
vigorous fourth-quarter rally, again concentrated primarily in growth stocks.
The Dow Jones Industrial Average, S&P 500 Index, NASDAQ Composite Index and
Russell 2000 Index ended 1998 with returns of 18.17%, 28.58%, 39.63% and -2.55%,
respectively. The disparity in performance between the different market segments
is especially evident in the latter two indices.
Bonds Ride the Roller Coaster, Too
Bonds were by no means immune to the third quarter's volatility. Up to that
point, interest rates, which began the year at low levels, had trended
irregularly lower, as the yield curve gradually flattened. Although first-half
credit spreads widened in January and June, new issuance remained at relatively
healthy levels due to the low absolute level of interest rates.
1
<PAGE>
In August, trouble began brewing in the credit markets when Russia's devaluation
and default caused a number of hedge funds to liquidate some large credit
positions. Panic ensued, and spreads widened dramatically, especially between
corporate issues and Treasuries, as investors sold corporate securities and fled
to the safety of Treasury securities.
As happened with equities, the credit markets recovered somewhat when the
Federal Reserve Board lowered interest rates. Spreads narrowed considerably by
year-end, although not nearly to their levels before the crisis.
Looking Ahead to 1999
The central economic event of 1999 is likely to be a mild slowdown in the U.S.
economy. The lower rate of expansion in non-farm payrolls in the second half of
1998, together with the associated easing of personal income growth, makes it
unlikely that consumers will be able to keep spending at 1998's brisk rate.
Softness in corporate earnings, a symptom of reduced consumer spending, may be
evident. Federal Reserve Board policy, which was extremely accommodating in
response to the 1998 crisis in the financial markets, has returned to a neutral
stance and will likely remain so until circumstances clearly mandate a change.
Inflation may rise a little but should remain unthreatening. In this
environment, MassMutual should continue to serve shareholders well with its
focus on thorough research and identifying value in the financial markets.
/s/ Stuart H. Reese
Stuart H. Reese
President
MML Series Investment Fund
January 29, 1999
2
<PAGE>
MML EQUITY INDEX FUND
FUND RUSSELL
10,000 10,000 - 5/1/97
11,080 11,084 - 6/30/97
12,192 12,256 - 12/31/97
14,343 14,426 - 6/30/98
15,634 15,758 - 12/31/98
MML Equity Index Fund Portfolio Review
For the year ending December 31, 1998, the portfolio realized a total return of
28.22%/*/, while the Standard & Poor's 500 Stock Index had a total return of
28.58%. The portfolio is designed to replicate the large capitalization United
States equity market as it is represented by the S&P 500 Index for the same
period. Large capitalization equities posted very strong results for the year,
outperforming both small and mid capitalization stocks. Among the best
performing groups in the S&P 500 Index for the year were communications
companies, apparel retailers, and general retailers.
As a portfolio that mirrors the holdings of an existing stock index, we will
continue to make the appropriate changes in accordance with the portfolio's
investment objective.
/*/ The return reflects changes in the net asset value per share without the
deduction of any insurance product charges. The inclusion of these charges would
have reduced the performance shown here. Past performance is no indication of
future results.
3
<PAGE>
MML Equity Index Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments at value (See Schedule of Investments)
(Notes 2A, 2B, and 4)
Equities (Indentified cost: $24,433,380) $ 35,412,357
Short-term investments (Identified cost: $615,085) 615,094
-------------
Total Investments 36,027,451
-------------
Cash 171
Interest and dividends receivable 40,154
Receivables for investment securities sold 208,905
Variation margin on futures contracts 1,700
Subscriptions receivable 273,724
Reimbursement receivable 29,698
-------------
Total Assets 36,579,803
-------------
LIABILITIES
Payable for investment securities purchased 463,926
Investment management fee payable (Note3) 32,098
Accrued trustees' fees 6,811
Accrued audit fees 7,691
-------------
Total Liabilities 510,526
-------------
NET ASSETS $ 36,069,277
=============
Net assets consist of:
Series shares (par value $.01 per share: an unlimited number authorized) (Note 5) $ 23,838
Additional paid-in capital 25,019,067
Undistributed net investment income (Note 2C and 2D) 682
Undistributed net realized gain on investments 22,670
Net unrealized appreciation on Investments (Note 2A) 11,003,220
-------------
NET ASSETS $ 36,069,277
=============
Outstanding series shares 2,363,757
=============
Net asset value per share $ 15.26
=============
</TABLE>
See Notes to Financial Statements
4
<PAGE>
MML Equity Index Fund
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
<S> <C>
Investment Income (Note 2B)
Dividends (net of foreign withholding tax of $100) $ 433,812
Interest 9,179
----------
Total Income 442,991
----------
Expenses
Investment management fee (Note 3) 117,349
Audit fees 29,795
Trustees' fees 28,350
----------
Total expenses 175,494
Expenses reimbursed (Note 3) (29,698)
----------
Net expenses 145,796
----------
Net Investment Income (Note 2C and 2D) 297,195
----------
Net realized and unrealized gain on investments (Notes 2A, 2B, 2C and 2D)
Net realized gain on Investments (Notes 2B, 2C and 2D) 255,853
Net change in unrealized appreciation on investments (Note 2A) 6,831,658
----------
Net gain on investments 7,087,511
----------
Net increase in net assets resulting from operations $7,384,706
==========
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
MML Equity Index Fund
STATEMENT OF CHANGES IN NET ASSETS
For the Year Ended December 31, 1998 and *For the Period May 1, 1997
(Commencement of Operations) through December 31, 1997
Increase in net assets
<TABLE>
<CAPTION>
Operations: 1998 1997*
---- -----
<S> <C> <C>
Net Investment Income $ 297,195 $ 184,598
Net realized gain on investments 255,853 41,673
Net change in unrealized appreciation on investments 6,831,658 4,171,562
------------ -----------
Net increase in net assets resulting from operations 7,384,706 4,397,833
Distributions to shareholders from:
Net investment Income (296,748) (184,363)
Net realized gains on investments (239,134) (41,726)
------------ -----------
Decrease in net assets from distributions to shareholders (536,882) (226,089)
Net increase in capital share transactions 5,018,690 20,030,019
------------ -----------
Total increase 11,867,514 24,201,763
NET ASSETS, at beginning of year/period 24,201,763 -
------------ -----------
NET ASSETS, at end of year $ 36,069,277 $ 24,201,763
============ ============
Undistributed net investment income included in net assets at end of the year $ 682 $ 235
============ ============
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
MML Equity Index Fund
FINANCIAL HIGHLIGHTS
Selected per share data for the series share outstanding throughout for the
periods ended:
<TABLE>
<CAPTION>
For the Period
May 1 ,1997
(Commencement of
For the year Ended Operations) through
December 31, 1998 December 31, 1997*
------------------ -------------------
<S> <C> <C>
Net asset value:
Beginning of period $12.080 $10.000
------- -------
Income from Investment operations:
Net Investment Income 0.128 0.092
Net realized and unrealized gain on investments 3.284 2.101
------- -------
Total from investment operations 3.412 2.193
------- -------
Less distributions:
Dividends from net investment income (0.128) (0.092)
Distributions from net realized gains (0.104) (0.021)
------- -------
Total distributions (0.232) (0.113)
------- -------
Net asset value:
End of year $15.260 $12.080
======= =======
Total return** 28.22% 21.39% **
Net assets ( In millions): $ 36.07 $ 24.20
Ratio of operating expenses to average net assets:
Before expense waiver 0.60% 0.43% **
After expense waiver 0.50% -
Ratio of net investment income to average net assets:
Before expense waiver 0.91% 0.80% **
After expense waiver 1.01% -
Portfolio turnover rate 5.19% 2.00%
</TABLE>
* The Fund commenced operations on May 1, 1997.
** Percentages represent results for the period and are not annualized.
*** Total return Information shown in the Financial Highlights tables does not
reflect expenses that apply at the separate account level or to related
insurance products, inclusion of these charges would reduce the total return
figures for the period shown.
See Notes to Financial Statements.
7
<PAGE>
MML Equity Index Fund
SCHEDULE OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note 2A)
-------- ------------
<S> <C> <C>
EQUITIES-98.18%
Advertising-0.20%
Interpublic Group of Co's., Inc. 450 $ 35,887
Omnicom Group, Inc. 600 34,800
-------- ------------
1,050 70,687
-------- ------------
Aerospace-1.21%
Allied Signal, Inc. 2,100 93,056
Boeing Co. 3,510 114,514
General Dynamics Corp. 400 23,450
Lockheed Martin Corp. 700 59,325
Northrop Corp. 200 14,625
Textron Inc. 600 45,563
United Technologies Corp. 800 87,000
-------- ------------
8,310 437,533
-------- ------------
Airlines-0.33%
AMR Corp* 700 41,562
Delta Air Lines, Inc. 800 31,200
Southwest Airlines Co. 1,125 25,242
US Airways Group, Inc.* 400 20,800
-------- ------------
2,825 118,804
-------- ------------
Apparel, Textiles, Shoes-0.19%
Fruit of the Loom, Inc* 300 4,144
Liz Claiborne, Inc. 200 6,313
NIKE, Inc. Class B 900 36,506
Reebok International, Inc.* 100 1,488
VF Corp. 400 18,750
-------- ------------
1,900 67,201
-------- ------------
Automobile-1.20%
Ford Motor Co. 4,300 252,356
General Motors Corp. 2,400 171,900
Navistar International Corp.* 300 8,550
-------- ------------
7,000 432,806
-------- ------------
Automobile Parts & Equipment-0.28
AutoZone, Inc.* 400 13,175
Cummins Engine, Inc. 100 3,550
Dana Corp. 485 19,824
Genuine Parts Co. 600 20,062
Jonhson Controls Inc. 300 17,700
Pep Boys-Manny, Moe & Jack 200 3,138
TRW, Inc. 400 22,475
-------- ------------
2,485 99,924
-------- ------------
Banks-8.61%
Bank One Corp. 4,110 209,867
Bank of New York, Inc 2,600 104,650
BankAmerica Corp. 6,127 368,386
BankBoston Corp. 1,000 38,937
Bankers Trust, New York Corp. 500 $ 42,719
BB&T Corp. 1,000 40,312
Chase Manhattan Corp. 3,200 217,800
Citigroup, Inc. 8,078 399,861
Comerica, Inc. 550 37,503
Firstar Corp. 900 83,925
Fifth Third Bancorporation 975 69,590
First Union Corp. 3,496 212,600
Fleet Financial Group, Inc. 2,000 89,375
Huntington Bancshares 660 19,841
KeyCorp( New) 1,600 51,200
MBNA Corp. 2,675 66,708
Mellon Bank Corp. 900 81,875
Mercantile Bancorporation, Inc, 500 23,062
Morgan Stanley, Dean Witter, Discover & Co. 2,125 150,875
Morgan(J.P.)& Co., Inc. 600 63,037
National City Corp. 1,200 86,400
Northern Trust Corp. 400 34,925
PNC Bank Corp. 1,100 59,538
Regions Financial Corp. 700 28,219
Republic New York Corp. 400 18,225
State Street Corp. 600 41,738
Summit Bancorp 500 21,844
SunTrust Banks, Inc. 800 61,200
Union Planters Corp. 400 18,125
U.S. Bancorp 93,401
Wachovia Corp. 700 61,206
Wells Fargo & Co. 5,700 227,644
-------- ------------
58,727 3,104,528
-------- ------------
Broadcasting-0.16%
Clear Channel Communications* 900 49,050
Meredith Corp. 200 7,575
-------- ------------
1,100 56,625
-------- ------------
Building Materials-1.12%
Centex Corp. 200 9,012
Crane Co. 300 9,058
Fleetwood Enterprises 100 3,476
Home Depot, Inc. 5,500 336,531
Kaufman & Broad Home Corp. 100 2,875
Masco Corp. 1,200 34,500
Pall Corp. 400 10,125
-------- ------------
7,800 405,574
-------- ------------
</TABLE>
8
<PAGE>
MML Equity Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note 2A)
-------- ------------
<S> <C> <C>
EQUITIES (Continued)
Business Equipment and Supplies-2.46%
Avery Dennison Corp. 400 $ 18,025
Ikon Office Solutions 400 3,425
International Business Machines Corp. 3,300 609,675
Pitney Bowes, Inc. 1,000 66,063
Staples Inc.* 1,100 48,056
Xerox Corp 1,200 141,600
-------- ------------
7,400 886,844
-------- ------------
Business Services-0.32%
Cendant Corp.* 2,961 56,444
Deluxe Corp. 200 7,312
FDX Corp.* 560 49,840
Moore Corp. Ltd. 300 3,300
-------- ------------
4,021 116,896
-------- ------------
Chemicals And Plastic-2.06%
Air Products & Chemicals Inc. 800 32,000
Dow Chemical Co. 800 72,750
DuPont(E.I.) de Nemours & Co. 4,000 225,250
Eastman Chemical Co. 300 13,426
Ecolab, Inc. 400 14,475
Engelhard Corp. 500 9,750
FMC Corp.* 100 5,600
Grace (W.R.) & Co. 200 3,137
Great Lakes Chemical Corp. 200 8,000
Hercules, Inc. 300 8,213
Kerr-McGee Corp. 200 7,650
Mallinckrodt Group, Inc. 300 9,244
Minnesota Mining & Manufacturing Co. 1,400 102,200
Mons?nto Co. 2,100 99,750
Morton International, Inc 400 9,800
Nalco Chemical Co. 200 6,200
Praxair, Inc 500 17,625
Raychem Corp. 200 6,463
Rockwell International Corp. 700 33,994
Rohm & Haas Co. 600 18,075
Sigma-Aldrich Corp. 300 8,613
Union Camp Corp. 200 13,500
Union Carbide Corp. 400 17,000
-------- ------------
15,100 742,914
-------- ------------
Coal-0.13%
CSX Corp. 700 29,050
Eastern Enterprises 100 4,375
Fluor Corp. 300 12,769
-------- ------------
1,100 48,194
-------- ------------
Communication Equipment-1.27%
Cabletron Systems, Inc* 500 $ 4,187
GTE Corp. 3,400 221,000
Harris Corp. 200 7,325
Motorola, Inc. 2,100 128,23l
National Semiconductor Corp.* 700 9,450
Scientific-Atlanta, Inc. 200 4,563
Sprint PCS Group. 1,450 33,531
Tellabs, Inc.* 700 47,994
-------- ------------
9,250 456,251
-------- ------------
Computer Hardware, Software or Services-11.00%
Adobe Systems, Inc. 200 9,350
Advance Micro Devices, Inc.* 400 11,575
AMP, INC. 700 36,444
Apple Computer, Inc.* 400 16,375
Autodesk, Inc. 200 8,537
Automatic Data Processing, Inc. 1,100 88,206
BMC Software, Inc.* 700 31,194
Ceridian Corp.* 300 20,944
CISCO Systems Inc. 5,625 522,070
Compaq Computer Corp. 5,892 247,096
Computer Associates International, Inc. 2,150 91,644
Computer Sciences Corp.* 600 38,662
Compuware Corp.* 700 54,887
Data General Corp.* 100 1,644
Dell Computer Corp. 4,500 329,344
Electronic Data Systems Corp. 1,700 85,425
Gateway 2000 Inc.* 600 30,712
Honeywell, Inc. 400 30,125
IntelCorp, 5,900 699,519
Microsoft Corp.* 8,800 1,220,450
Novell Inc.* 1,100 19,938
Oracle Systems Corp. 3,300 142,313
Parametric Technology Corp.* 1,000 16,375
Peoplesoft, Inc.* 800 15,150
Seagate Technologies, Inc.* 800 24,200
Solectron Corp.* 400 37,175
Sun Microsystems, Inc.* 1,300 111,313
Unisys Corp.* 800 27,550
-------- ------------
50,457 3,968,017
-------- ------------
Computer Semiconductors-0.57%
Applied Materials, Inc.* 1,200 51,225
EMC Corp. 1,800 153,000
-------- ------------
3,000 204,225
-------- ------------
</TABLE>
9
<PAGE>
MML EQUITY INDEX FUND
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note 2A)
-------- ------------
<S> <C> <C>
EQUITIES (Continued)
Consumer Non-Durable-3.65%
Corning, Inc 700 $ 31,500
General Electric Corp. 11,600 1,183,825
Grainger (W.W.), Inc. 400 16,650
Lowe's Co's., Inc. 1,200 61,425
Newell Co. 600 24,750
-------- ------------
14,500 1,318,250
-------- ------------
Consumer Services-0.22%
Block (H&R), Inc. 400 18,000
Paychex, Inc. 600 30,863
Service Corp. International 800 30,450
-------- ------------
1,800 79,313
-------- ------------
Consumer Staples-0.07%
Pioneer Hi-Bred International, Inc. 1,000 27,000
-------- ------------
Containers-0.13%
Ball Corp. 100 4,575
Crown Cork & Seal Co., Inc. 400 12,325
Owens-Illnois, Inc.* 600 15,313
Sealed Air Corp,* 307 15,676
-------- ------------
1,307 47,889
-------- ------------
Cosmetics-Tolletry-0.14%
Alberto-Culver Co., Class B 200 5,337
Avon Products, Inc. 1,000 44,250
-------- ------------
1,200 49,587
-------- ------------
Diversified-1.58%
Aeroquip-Vickers, Inc. 100 2,994
CBS Corp. 2,500 61,675
Fortune Brands, Inc. 500 15,812
Loews Corp. 400 39,300
Raylheon Co., Class B 1,200 63,900
Tyco International Ltd. 2,328 175,619
Unilever N.V. 2,300 190,756
-------- ------------
9,328 570,256
-------- ------------
Electrical Equipment-1.20%
Cooper Industries, Inc. 400 19,075
FirstEnergy Corp.* 800 26,050
Foster Wheeler Corp. 100 1,319
Hewlett-Packard Co. 3,700 252,756
Tektronix, Inc, 150 4,509
Texas Instruments, Inc. 1,400 119,788
Thomas & Betts Corp. 200 8,663
-------- ------------
6,750 432,160
-------- ------------
Electronics-0.47%
Eaton Corp. 300 21,206
EG&G, Inc. 200 5,562
Emerson Electric Co. 1,600 96,800
General Instrument, Corp.* 600 20,287
KLA-Tencor Corp.* 200 8,675
Tandy Corp. 400 16,475
-------- ------------
3,300 169,005
-------- ------------
Energy and Resources-0.05%
Burlington Resources, Inc. 552 19,768
-------- ------------
Entertainment-1.52%
Brunswick Corp. 300 7,425
Disney (Walt) Co. 7,200 216,000
Harcourt General Corp. 300 15,975
Hasbro,Inc. 400 14,450
King World Productions, Inc. 200 5,887
Mattel, Inc. 900 20,531
Time Warner, Inc. 4,300 266,869
-------- ------------
13,600 547,137
-------- ------------
Financial Services-3.50%
American Express Co. 1,600 163,600
American General Corp. 910 70,980
Associates First Capital Corp. 2,496 105,768
Bear Steams Co's., Inc. 400 14,950
Capital One Financial Corp. 200 23,000
Countrywide Credit Industries 400 20,076
Dow Jones & Co., Inc. 300 14,437
Equifax, Inc. 400 13,675
Federal Home Loan Mortgage Corp. 2,400 154,650
Federal National Mortage Association 3,700 273,800
First Data Corp. 1,500 47,531
Franklin Resources, Inc. 800 25,600
Household International, Inc. 1,813 71,840
Lehman Brothers Holdings, Inc. 400 17,625
Merill Lynch & Co., Inc. 1,300 86,775
Pulte Corp. 200 5,583
Schwab (Charles) Corp. 1,575 88,495
SLM Holding Corp. 600 28,800
Synovus Financial Corp. 900 21,938
Temple-Inland, Inc. 200 11,863
-------- ------------
22,094 1,260,965
-------- ------------
</TABLE>
10
<PAGE>
MML Equity Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note 2A)
------------- -------------
<S> <C> <C>
EQUITIES (Continued)
FOOD AND BEVERAGES-5.88%
Albertson's Inc. 900 $ 57,319
Anheuser-Busch Co's., Inc. 1,700 111,562
Bestfoods 1,000 53,250
Campbell Soup Co. 1,600 88,000
Coco-Cola Co. 8,700 581,812
Coco-Cola Enterprises, Inc. 1,400 50,050
ConAgra, Inc. 1,600 50,400
Coors (Adolph) Co., Class B 100 5,644
RJR Nabisco Holdings Corp. 1,100 32,656
Heinz (H.J.) Co. 1,300 73,613
Hershey Foods Corp. 500 31,094
Kellogg Co. 1,400 47,775
PepsiCo, Inc. 5,200 212,875
Philip Morris Co's., Inc. 8,500 454,750
Quaker Oats Co. 500 29,750
Ralston-Purina Group 1,200 38,850
Sara Lee Corp. 3,200 90,200
Seagram Co. Ltd. 1,400 53,200
UST, Inc. 600 20,925
Wrigley (Wm) Jr. Co. 400 35,825
------------- -------------
42,300 2,119,550
------------- -------------
FOOD DISTRIBUTION-1.01%
Archer-Daniels-Midland Co. 1,984 34,100
Costco Co's., Inc.* 800 57,750
General Mills, Inc. 600 46,650
Great Atlantic & Pacific Tea Co. Inc. 100 2,962
Kroger Co. 900 54,450
Safeway, Inc.* 1,700 103,594
Supervalu, Inc. 400 11,200
Sysco Corp. 1,200 32,925
Winn Dixie Stores, Inc. 500 22,438
------------- -------------
8,184 366,069
------------- -------------
GLASS PRODUCTS-0.12%
Owens Corning Fiberglass Corp. 200 7,088
PPG Industries, Inc. 600 34,950
------------- -------------
800 42,038
------------- -------------
HEALTH CARE FACILITIES-0.28%
Columbia/HCA Healthcare Corp. 2,300 56,925
HCR Manor Care, Inc.* 300 8,812
Humana, Inc.* 500 8,906
Tenet Healthcare Corp.* 1,000 26,250
------------- -------------
4,100 100,893
------------- -------------
HEALTHCARE PRODUCTS-4.94%
Abbott Laboratories 5,400 $ 264,600
Allergan, Inc. 200 12,950
American Home Products Corp. 4,600 269,037
Bausch & Lomb Inc. 200 12,000
Becton, Dickinson & Co. 800 34,150
Merck & Co., Inc. 4,200 620,287
Pfizer, Inc. 4,600 577,013
------------- -------------
20,000 1,780,037
------------- -------------
HOLDING COMPANIES-0.20%
Providian Financial Corp. 550 41,250
Public Service Enterprise 800 32,000
------------- -------------
1,350 73,250
------------- -------------
HOME APPLIANCES-0.33%
Black & Decker Corp. 300 16,819
Illinois Tool Works, Inc. 900 52,200
Maytag Corp. 300 18,675
Snap-On, Inc. 200 6,963
Stanley Works 300 8,325
Whirlpool Corp. 300 16,613
------------- -------------
2,300 119,595
------------- -------------
HOME FURNISHINGS AND HOUSEWARES-0.09%
Armstrong World 100 6,031
Rubbermaid, Inc. 500 15,719
Springs Industries, Inc. 200 8,288
Tupperware Corp. 200 3,288
------------- -------------
1,000 33,326
------------- -------------
HOTELS AND RESTAURANTS-0.77%
Darden Restaurants, Inc. 500 9,000
Harrah's Entertainment Corp.* 300 4,706
Hilton Hotels Corp. 800 15,300
Marriott International, Inc., Class A 800 23,200
McDonald's Corp. 2,400 183,900
Mirage Resorts, Inc.* 600 8,963
Tricon Global Restaurants, Inc.* 490 24,561
Wendy's International, Inc. 400 8,725
------------- -------------
6,290 278,355
------------- -------------
INTERNET SOFTWARE-0.80%
America Online* 1,800 288,000
------------- -------------
</TABLE>
<PAGE>
MML Equity Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note 2A)
-------- ------------
<S> <C> <C>
EQUITIES (Continued)
Insurance-3.30%
Aetna Life & Casualty Co. 500 $ 39,312
Allstate Corp. 3,000 116,875
American International Group, Inc. 3,675 355,097
AON Corp. 600 33,225
Chubb Corp. 600 38,825
CIGNA Corp. 900 69,581
Cincinnati Financial Corp. 600 21,875
Conseco, Inc. 1,158 35,391
Hartford Financial Services Group, Inc. 800 43,900
Jefferson-Pilot Corp. 400 30,000
Lincoln National Corp. 400 32,725
Marsh & McLennan Co'.s, Inc. 900 62,694
MBIA, Inc. 400 26,225
MGIC Investment Corp. 400 15,925
Progressive Corp. 300 50,813
Provident Co'.s, Inc. 500 20,750
SAFECO Corp. 400 17,175
St. Paul Co'.s, Inc. 823 28,605
SunAmerica, Inc. 800 64,900
Torchmark Corp. 400 14,125
Transamerica Corp. 200 29,100
United Healthcare Corp. 700 30,144
UNUM Corp. 500 29,188
-------- -----------
18,956 1,189,550
-------- -----------
Machinery And Heavy Equipment-0.43%
Caterpillar, Inc. 1,300 58,800
Millacron Inc. 100 1,925
Deere & Co. 800 26,500
Dover Corp. 800 29,300
Ingersoll-Rand Co. 600 28,162
Parker-Hannifin Corp. 300 9,825
-------- -----------
3,900 155,512
-------- -----------
Manufacturing-0.91%
Alcan Aluminum Ltd. 700 18,944
Aluminum Co. of America 700 52,194
Boston Scientific Corp.* 1,400 37,537
Briggs & Stratton Corp. 100 4,988
Brown-Forman Corp., Class B 200 15,137
Case Corp. 300 6,544
Danaher Corp. 500 27,000
LSI Logic Corp.* 500 8,082
Micron Technology, Inc.* 800 40,450
PACCAR Inc. 300 12,338
Reynolds Metals Co. 300 15,806
Sherwin-Williams Co. 600 17,625
Silicon Graphics, Inc.* 600 7,725
Themo Electron Corp.* 600 10,163
3COM Corp.* 1,200 53,775
-------- -----------
8,800 328,288
-------- -----------
Medical Instruments Services And Supplies-1.28%
Bard (C.R.), Inc. 200 9,900
Baxter International, Inc. 1,000 64,312
Blomet, Inc. 300 12,075
Cardinal Health, Inc. 750 66,906
Guidant Corp. 600 66,150
HBO & Co. 1,600 45,900
HEALTHSOUTH Corp. 1,400 21,612
IMS Health, Inc. 600 45,262
Medtronic, Inc. 1,700 126,225
Shared Medical Systems Corp. 100 4,988
St. Jude Medical, Inc.* 300 8,306
-------- -----------
8,550 461,638
-------- -----------
Metals And Mining-0.28%
Allegheny Teledyne, Inc. 700 14,306
ASARCO, Inc. 100 1,506
Barrick Gold Corp. 1,300 25,350
Battle Mountain Gold Co. 700 2,887
Cyprus Amex Minerals Co. 300 3,000
Freeport-McMoRan Copper & Gold, Inc., Glass 600 6,263
Homestake Mining Co. 800 7,350
Inco Ltd. 600 6,337
Newmont Mining Corp. 472 8,525
Phelps Dodge Corp. 300 15,263
Placer Dome, Inc. 1,000 11,500
-------- -----------
6,872 102,287
-------- -----------
Natural Gas-0.33%
Columbia Energy Group 300 17,325
Consolidated Natural Gas Co. 300 16,200
Enron Corp. 1,200 68,475
NICOR, Inc. 100 4,225
ONEOK, Inc. 100 3,613
Sonat, Inc. 300 8,119
-------- -----------
2,300 117,957
-------- -----------
</TABLE>
12
<PAGE>
MML Equity Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note 2A)
----------- ----------
EQUITIES (Continued)
<S> <C> <C>
News and Publishing-0.40%
Gannett Co, Inc. 1,000 $ 64,500
Knight-Ridder, Inc. 300 15,337
New York Times Co., Class A 600 20,812
Times Mirror Co., (New), Class A 300 16,800
Tribune Co. 400 26,400
----------- -----------
2,600 143,849
----------- -----------
Oil-5.34%
Amerada Hess Corp. 300 14,925
Anadarko Petroleum Co. 400 12,350
Apache Corp. 300 7,594
Ashland, Inc. 300 14,512
Atlantic Richfield Co. 1,100 71,776
Baker Hughes, Inc. 1,040 18,395
Chevron Corp. 2,300 190,756
Coastal Corp. 800 27,950
Exxon Corp. 8,600 628,875
Halliburton Corp. 1,600 47,400
McDermott International, Inc. 200 4,937
Mobil Corp. 2,800 243,950
Occidental Petroleum Corp. 1,300 21,938
Oryx Energy Co.* 400 5,375
Phillips Petroleum Co. 900 38,363
Royal Dutch Petroleum Co. 7,500 359,063
Tenneco, Inc. 500 17,031
Texaco, Inc. 1,900 100,463
Union Pacific Corp. 900 40,?56
Union Pacific Resources Group 800 7,250
Unocal Corp. 800 23,350
USX-Marathon Group Common (New) 1,000 30,125
----------- -----------
35,740 1,926,933
----------- -----------
Oil Equipment and Services-0.26%
Helmerich & Payne, Inc. 400 7,750
Schlumberger Ltd. 1,900 87,638
----------- -----------
2,300 95,388
----------- -----------
Paper and Forest Products-0.83%
Bernis Co., Inc. 200 7,587
Bolse Cascade Corp. 200 6,200
Champion International Corp. 300 12,150
Fort James Corp. 800 32,000
Georgia-Pacific Corp. 300 17,569
Harrischfeger Industries, Inc. 100 1,019
International Paper Co. 1,000 44,812
Kimberly-Clark Corp. 1,900 103,550
Louisiana Pacific Corp. 300 $ 5,494
Mead Corp. 500 14,656
Pollatch Corp. 100 3,688
Weyerhaeuser Co. 700 35,569
Willamette Industries, Inc. 400 13,400
----------- -----------
6,800 297,694
----------- -----------
Personal Items-2.63%
Colgate-Palmolive Co. 1,000 92,875
Gillette Co. 3,900 188,419
International Flavors & Fragrances, Inc. 300 13,2?6
Jostens, Inc. 200 5,238
Proctor & Gamble Co. 4,700 429,169
Warner-Lambert Co. 2,900 218,044
----------- -----------
13,000 947,001
----------- -----------
Petroleum Refining-0.1?%
Rowan Co's.* 300 3,000
Sunoco Co. 300 10,819
Williams Co's., Inc. 1,500 4?,781
----------- -----------
2,100 60,600
----------- -----------
Pharmaceuticals-4.50%
ALZA Corp. 300 15,675
Bristol-Myers Squibb Co. 3,500 468,344
Johnson & Johnson 4,800 402,600
Lily (Eli) & Co. 3,900 346,612
Pharmacia & Upjohn, Inc. 1,800 101,925
Schering-Plough Corp. 5,200 287,300
----------- -----------
19,500 1,622,456
----------- -----------
Photographic Equipment and Supplies-0.23%
Eastman Kodak Co. 1,100 79,200
Polaroid Corp. 200 3,738
----------- -----------
1,300 82,938
----------- -----------
Printing and Publishing-0.26%
American Greetings Corp., Class A 200 8,212
Donnelly(RR) & Sons Co. 500 21,906
Dun & Bradstreet Corp. 800 25,250
McGraw-Hill, Inc. 300 30,562
Westvaco Corp. 300 8,044
----------- -----------
2,100 93,974
----------- -----------
Railroads-0.11%
Norfolk Southern Corp. 1,200 38,025
----------- -----------
</TABLE>
13
<PAGE>
MML EQUITY INDEX FUND
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note 2A)
-------- -----------
<S> <C> <C>
EQUITIES (Continued)
Research and Development - 0.26%
Arrgen, Inc. 900 $ 94,106
-------- -----------
Retail - Store - 4.32%
American Stores Co. 1,100 40,631
Consolidated Stores Corp.* 300 6,056
Circuit City Stores, Inc. - Circuit City Group 400 19,975
CVS Corp. 1,400 77,000
Dayton Hudson Corp. 1,600 86,800
Dillard's Inc., Class A 400 11,350
Dollar General 750 17,719
Federated Department Store* 900 39,206
Fred Meyer, Inc.* 600 30,125
Gap, Inc. 2,025 113,906
Kohls Corp.* 600 36,863
Kmart Corp.* 1,700 26,031
Limited, Inc. 800 23,300
Longs Drug Stores Co. 100 3,750
May Department Stores Co. 800 48,300
Nordstrom, Inc. 400 13,875
Penney (J.C.) Co, Inc. 900 42,188
Rite Aid Corp. 1,100 54,519
Russell Corp. 100 2,031
Sears, Roebuck & Co. 1,400 59,600
TJX Co's., Inc. 1,100 31,900
Toys R Us, Inc.* 1,000 16,875
Walgreen Co. 1,800 105,413
Wal-Mart Stores, Inc. 8,000 651,500
-------- -----------
29,175 1,558,813
-------- -----------
Savings and Loan Associations - 0.26%
Golden West Financial Corp. 200 18,337
Washington Mutual Savings 2,012 76,833
-------- -----------
2,212 95,170
-------- -----------
Soaps and Detergents - 0.16%
Clorox Co. 400 46,725
NACCO Industries, Inc., Class A 100 9,200
-------- -----------
500 55,925
-------- -----------
Steel - 0.08%
Bethlehem Steel Corp.* 400 3,350
Nucor Corp. 300 12,975
Timken Co. 200 3,775
USX-U.S. Steel Group, Inc. 200 4,600
Worthington Industries, Inc. 300 3,750
-------- -----------
1,400 28,450
-------- -----------
Technology - 0.79%
Ameritech Corp. 3,900 247,162
ITT Industries 300 11,925
Millpore Corp. 200 5,687
Perkin-Elmer Corp. 200 19,513
-------- -----------
4,600 284,287
-------- -----------
Telecommunications - 9.77%
AirTouch Communications, Inc.* 2,100 161,462
ALLTEL Corp. 1,000 59,812
Andrew Corp. 300 4,950
Ascend Communications, Inc.* 800 52,800
AT&T Corp. 6,400 481,600
Bell Atlantic Corp. 5,450 309,628
BellSouth Corp. 7,000 349,125
Comcast Corp., Special Class A (non-voting) 1,300 76,294
Frontier Corp. 600 20,400
Lucant Technologies, Inc. 4,700 517,000
MCI Worldcom Inc.* 6,485 465,299
Medlaone Group, Inc.* 2,000 94,000
Nextel Communications, Inc.* 900 21,263
Northern Telecommunications Ltd. 2,280 114,285
SBC Communications 6,900 370,013
Sprint Corp. 1,600 126,188
Tele-Communications Inc., Class A 1,800 99,563
US West, Inc. 1,754 113,352
Viacom Inc., Class B* 1,300 98,200
-------- -----------
54,569 3,532,934
-------- -----------
Tire and Rubber - 0.13%
Cooper Tire & Rubber Co. 300 6,131
Goodrich (B.F.) Co. 300 10,762
Goodyear Tire & Rubber Co. 600 30,262
-------- -----------
1,200 47,155
-------- -----------
Transportation - 0.46%
Burlington Northern Santa Fe 1,700 57,375
Carnival Corp. 2,100 100,800
Ryder System, Inc. 300 7,800
-------- -----------
4,100 165,975
-------- -----------
Utilities - 2.30%
AES Corp. 600 28,425
Ameren corp. 400 17,075
American Electric Power Co., Inc. 700 32,944
Baltimore Gas & Electric Co. 400 12,300
Carolina Power & Light Co. 500 23,531
Central & Southwest Corp. 800 21,950
Cinergy Corp. 500 17,187
</TABLE>
14
<PAGE>
MML Equity Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
Number Market
of Value
Shares (Note 2A)
------ ---------
EQUITIES (Continued)
<S> <C> <C>
Utilities (Continued)
Consolidated Edison Co. 800 $ 42,300
Dominion Resources, Inc. 700 32,725
DTE Energy Co. 500 21,437
Duke Energy Co. 1,322 84,691
Edison International 1,400 39,025
Energy Corp. 1,000 31,125
FPL Group, Inc. 800 49,300
GPU, Inc. 400 17,675
Houston Industries, Inc. 899 28,880
National Service Industries, Inc. 100 3,800
New Century Energies, Inc. 400 19,500
Niagara Mohawk Power Corp.* 600 9,675
Northern States Power Co. 400 11,100
PacifiCorp 1,100 23,169
PECO Energy Co. 700 29,138
Peoples Energy Corp. 100 3,988
PG&E Corp. 1,500 47,250
PP&L Resources, Inc. 400 11,150
Sempra Energy* 851 21,594
Southern Co. 2,400 69,750
Texas Utilities Co. 1,145 53,457
Unicorn Corp. 700 26,994
------ ----------
22,117 831,135
------ ----------
Waste Management-0.35%
Browning-Ferris Industries, Inc. 700 19,906
Laidlaw, Inc., Class B(non-voting) 1,200 12,075
Waste Management, Inc. 2,032 94,742
------ ----------
3,932 126,723
------ ----------
TOTAL EQUITIES
(Cost $24,433,380) 35,412,357
----------
</TABLE>
<TABLE>
<CAPTION>
Market
Principal Value
Amount (Note 2A)
--------- ----------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS-1.70%
(Cost $615,085)
Dreyfus Cash Management Fund,
Class A 585,383 $ 585,383
US Treasury Bill 4,443%(b)
Due 3/25/1999 30,000 29,711
------- --------------
615,383 615,094
------- --------------
Total Investments
(Cost $25,048,465)(a) 99.88% $ 36,027,451
====== ==============
FUTURES CONTRACTS LONG POSITION
Number Unrealized
of Appreciation
Contracts (Depreciation)
--------- --------------
S&P 500 Index, March 1999 ? 2 $ 24,234
==============
(a) Federal Income Tax Information: At
December 31, 1998 the net unrealized
appreciation on investments based on
of cost of $25,048,465 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 $ 11,711,283
Aggregate gross unrealized depreciation
for all investments in which there is an
excess of tax cost over market value (732,297)
--------------
Net unrealized appreciation $ 10,978,986
==============
(b) Annualized yield at date of purchase
* Non-Income producing security
</TABLE>
15
<PAGE>
Notes To Financial Statements
1. HISTORY
MML Equity Index Fund ( "the Fund") is a non-diversified fund series of MML
Series Investment Fund ("MML Trust"), a no load, open-end, management
investment company registered as such under the Investment Company Act of
1940. MML Trust, which has six separate series of shares, was organized as a
business trust under the laws of the Commonwealth of Massachusetts pursuant
to an Agreement and Declaration of the Trust.
MML Trust was established by Massachusetts Mutual Life Insurance Company
("Mass Mutual") for the purposes of providing vehicles for the investment of
assets of various separate investment accounts established by MassMutual and
by a life insurance company which is a subsidiary of MassMutual. Shares of
MML Trust are not offered to the general public.
Information presented in these financial statements pertains only to the
Fund Information for the other series of MML Trust are presented under a
separate cover.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in preparation of its financial statements in
conformity with generally accepted accounting principles.
A. Investment Valuation
The Fund values its Portfolio securities at market value or, in the absence
of market value with respect to any portfolio security, at fair value as
determined by, or under the direction of, the Board of Trustees ("the Board")
of MML Trust. Portfolio securities are valued on the basis of valuations
furnished by a pricing service, authorized by the Board, which provides the
last reported sale price for securities listed on a national securities
exchange, or on the NASDAQ national market system. If securities are unlisted
or there is no reported sales price, the bid price of the prior trade date
will be used. Short-term debt obligations with less than one year, but more
than sixty days to maturity from the date of purchase are valued on the basis
of their market value. Debt obligations with sixty days or less to maturity
from the date of purchase are generally valued at amortized cost when the
Board believes amortized cost approximates market value. Futures contracts
are valued based on market prices unless such prices do not reflect fair
value of the contract, in which case they will be valued by or under the
direction of the Board.
B. Accounting For Investments
Investment transactions are accounted for on trade date. Dividend income is
recorded on ex-dividend date. Interest income is recorded on the accrual
basis.
Realized gains and losses on investment transactions and unrealized
appreciation and depreciation of investments are reported for financial
statement and federal income tax purposes on the identified cost method.
C. Dividends and Distributions
Dividends of net investment income and distributions of capital gains are
declared and paid annually or as approved by the Board to avoid the
application of a 4% non-deductible excise tax on certain undistributed
amounts of ordinary income and capital gains. Income distributions and
capital gains distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income, gains
and losses and differing characterizations of distributions made by the Fund.
As a result, net investment income (loss) and net realized gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically make
reclassifications among certain of their capital accounts without impacting
the net asset value of the Fund.
D. Federal Income Tax
The MML Trust has established a policy for the Fund to comply with the
provisions of the Internal Revenue Code of 1986, as amended, applicable to
regulated investment companies. As a result, the Fund will not be subject to
federal income tax on any net investment income and any capital gains to the
extent they are distributed or are deemed to have been distributed to
shareholders.
Pursuant to section 852 of the Internal Revenue Code, the Fund designated
$148,295 as capital gain dividends for the year ended December 31, 1998.
16
<PAGE>
Notes To Financial Statements (Continued)
E. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. INVESTMENT MANAGEMENT FEE
MassMutual serves as investment adviser to the Fund pursuant to an
investment management agreement ("the Investment Management Agreement").
MassMutual receives a quarterly fee at the annual rate of .40% of the first
$100,000,000 of the average daily net asset value of the Fund, .38% of the
next $150,000,000 and .36% of any excess over $250,000,000. MassMutual has
agreed to bear expenses of the Fund (other than the management fee,
interest, taxes any required trademark licensing fees, custodial fees,
brokerage commissions and extraordinary expenses) in excess of .11% of
average daily net asset value of the Fund through April 30, 1999. Mass
Mutual also serves as transfer agent and dividend paying agent.
4. PURCHASE AND SALES OF INVESTMENTS
Proceeds
For the year Ended Acquisition from Sales
December 31, 1998 Cost and Maturities
----------------- ----------- --------------
Equities $ 5,446,646 $ 1,523,241
Short-term investments 4,120,099 3,533,298
5. NET INCREASE FROM CAPITAL SHARE TRANSACTIONS
The MML Trust is authorized to issue an unlimited number of shares of
beneficial interest to the Fund at $0.01 par value. Changes in shares of
beneficial interest are as follows:
1998 1997*
----------------- -------------
Shares
Sales of shares...................... 333,870 2,002,676
Reinvestment of shares............... 35,188 0
Redemption of shares................. (7,976) (1)
----------------- -------------
Net Increase......................... 361,082 2,002,675
================= =============
Amount
Sales of shares...................... $4,596,400 $20,030,027
Reinvestment of shares............... 535,882 0
Redemption of shares................. (113,592) (8)
----------------- -------------
Net Increase......................... $6,018,690 $20,030,019
================= =============
* For the period May 1, 1997 (Commencement of Operations) through December
31, 1997.
6. INVESTMENT RISK AND CONSIDERATION
Since the fund is non-diversified and a relatively high percentage of the
Fund's assets may be invested in the securities of a limited number of
issuers, some of which may be in the same economic sector, the Fund's
portfolio may be more sensitive to changes in market value of a single
issuer or industry.
17
<PAGE>
Report Of Independent Accountants
To the Board of Trustees and Shareholders of
MML Equity Index Investment Fund
In our opinion, the accompanying statements of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the MML Equity Index Fund
(hereafter referred to as the "Fund"), which is a component of the MML Series
Investment Fund, at December 31, 1998, the results its operations for the year
then ended and the changes in its net assets and the financial highlights the
year then ended and for the period from May 1, 1997 (commencement of operations)
through December 31, 1997, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as the "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities owned at December 31, 1998 by correspondence with the
custodian and application of alternative auditing procedures where securities
purchased had not been settled, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLC
Springfield, Massachusetts
February 25, 1999
18
<PAGE>
MML SMALL CAP VALUE EQUITY FUND
TO OUR SHAREHOLDERS
ANOTHER YEAR OF EXPANSION IN THE U.S.
1998 marked the eighth consecutive year of economic expansion in the United
States, once again confounding those who were looking for the economy to falter.
Real growth of gross domestic product for the year is likely to be somewhere
around 3.75%, a shade under 1997's 3.8%. While economic growth continued apace,
inflation remained virtually dormant, with the Consumer Price Index rising about
1.7%. Producer prices, which often lead changes in consumer prices, actually
declined in 1998. Interest rates fell for most of the year, ending December at
near-record low levels. Contributing to the easing of interest rates was the
fact that the U.S. government had a $70 billion surplus in fiscal year 1998
after several decades of deficits. Another surplus is forecast for the current
fiscal year.
Consumption and fixed investment both contributed strongly to the expansion in
1998. Thanks to solid income growth and another banner year for large cap growth
stocks, consumers were able to maintain spending at high levels all year. Fixed
investment benefited from steady increases in residential construction and
producers' durable equipment - mainly computers and other business equipment.
Investment in technology contributed not only to growth but also to gains in
productivity.
The only broad-based drag on economic growth was the trade deficit, which grew
by close to $100 million in 1998. The deficit was exacerbated by strong domestic
growth, which spurred imports, and by serious financial problems abroad, which
dampened foreign demand for U.S. goods and services and therefore limited U.S.
exports.
OVERSEAS: SOME PROGRESS, SOME NEW CHALLENGES
In Asia, where severe financial problems first came to a head in 1997, there was
some progress. The stock markets of Thailand and South Korea rebounded
noticeably in 1998, indicating that investors are beginning to overcome their
generalized fear of Southeast Asian markets and instead are making investment
decisions on a nation-specific basis. This is a key prerequisite for meaningful
recovery in the region.
In Japan, political leaders finally adopted an aggressive plan to stimulate the
economy and reform the country's ailing banking system. Policy is now moving in
the proper direction, but it will be a long road back to economic health for
Japan.
One key concern continues to be the extent to which the problems in Asia will
spread to other emerging markets, and eventually to the U.S. This concern gained
renewed force in August, when Russia announced a substantial devaluation of its
currency, the ruble, and defaulted on much of its foreign debt. South America,
particularly Brazil, also gave investors cause for concern in 1998.
EQUITIES TAKE A HIT BUT FINISH STRONG
U.S. equities were uniformly strong during the first three months of the year,
as concerns about Asia receded into the background and investors focused on
strong economic growth. In April, a two-tiered market emerged, with
large-capitalization technology and other growth issues leading the S&P 500
Index and the Dow Jones Industrial Average higher through mid-July. The Russell
2000 Index, however, trended lower throughout the second quarter, indicating
that many small-capitalization stocks were not participating in the rally.
Indeed, even the S&P 500's gains, at its high water mark in July, were largely
due to its twenty largest components. The rally, therefore, was quite narrow.
In the third quarter, amid Russia's financial difficulties and renewed concerns
about Asia, stocks turned south, giving up all they had gained earlier in the
year and then some in many cases. A flight to quality ensued in which investors
shunned stocks in general. Especially hard hit were small-capitalization issues,
technology stocks, and other sectors perceived to have more than average risk.
With the financial markets reeling, the Federal Reserve Board stepped in,
lowering interest rates three times in three months. Stocks responded with a
vigorous fourth-quarter rally, again concentrated primarily in growth stocks.
The Dow Jones Industrial Average, S&P 500 Index, NASDAQ Composite Index and
Russell 2000 Index ended 1998 with returns of 18.17%, 28.58%, 39.63% and -2.55%,
respectively. The disparity in performance between the different market segments
is especially evident in the latter two indices.
BONDS RIDE THE ROLLER COASTER, TOO
Bonds were by no means immune to the third quarter's volatility. Up to that
point, interest rates, which began the year at low levels, had trended
irregularly lower, as the yield curve gradually flattened. Although first-half
credit spreads widened in January and June, new issuance remained at relatively
healthy levels due to the low absolute level of interest rates.
1
<PAGE>
In August, trouble began brewing in the credit markets when Russia's devaluation
and default caused a number of hedge funds to liquidate some large credit
positions. Panic ensued, and spreads widened dramatically, especially between
corporate issues and Treasuries, as investors sold corporate securities and fled
to the safety of Treasury securities.
As happened with equities, the credit markets recovered somewhat when the
Federal Reserve Board lowered interest rates. Spreads narrowed considerably by
year-end, although not nearly to their levels before the crisis.
LOOKING AHEAD TO 1999
The central economic event of 1999 is likely to be a mild slowdown in the U.S.
economy. The lower rate of expansion in non-farm payrolls in the second half of
1998, together with the associated easing of personal income growth, makes it
unlikely that consumers will be able to keep spending at 1998's brisk rate.
Softness in corporate earnings, a symptom of reduced consumer spending, may be
evident. Federal Reserve Board policy, which was extremely accommodating in
response to the 1998 crisis in the financial markets, has returned to a neutral
stance and will likely remain so until circumstances clearly mandate a change.
Inflation may rise a little but should remain unthreatening. In this
environment, MassMutual should continue to serve shareholders well with its
focus on thorough research and identifying value in the financial markets.
/S/ Stuart H. Reese
Stuart H. Reese
President
MML Small Cap Value Equity Fund
January 29, 1999
2
<PAGE>
MML SMALL CAP VALUE EQUITY FUND
HOW DID THE FUND PERFORM OVER THE PAST YEAR?
The Fund's performance was disappointing but understandable, given the difficult
market environment of 1998. The Fund commenced on June 1, 1998. For the 7 months
ended December 31, 1998, the Fund had a net return of -14.77%(*). For the same
period ended December 31, 1998, the Russell 2000 Index, a broadly based,
unmanaged index of 2000 medium- and small- capitalization common stocks had a
return of -5.74%.
WHAT WAS THE INVESTMENT BACKDROP DURING 1998?
Volatility continued to increase in 1998, and overall the small-cap market
underperformed large-cap issues. In the first four months of the year, both the
Fund and the Russell 2000 Index enjoyed solid gains. From April through
mid-July, small-cap stocks trended lower even as the S&P 500 and the Dow Jones
Industrial Index, both representative of large-capitalization stocks, advanced.
From mid-July through mid-October the entire U.S. stock market suffered a
substantial decline, as the Asian financial crisis began to make its presence
known in the form of lower earnings or scaled-back earnings forecasts for many
international companies. Another factor undermining the markets at that time was
Russia, which surprised the international investment community by substantially
devaluing its currency and defaulting on much of its foreign debt. A flight to
quality followed in which investors fled stocks in general, especially small-cap
issues.
In the fourth quarter, the Federal Reserve Board reassured investors by cutting
short-term interest rates in September, October and November. U.S. equity
markets obliged by staging a massive rally that saw the Russell 2000 Index vault
approximately 16% higher in the fourth quarter alone. (Russell 2000 Value up
9.07%, our fund up 9.98% for same period)
HOW WAS THE FUND'S STRATEGY EMPLOYED DURING THE YEAR?
Small-cap banks, for example, do not have the international exposure that the
large commercial banks do, and therefore are less risky to hold in the current
environment. SIS Bancorp was one purchase we made near the end of the year.
On the other hand, many companies in the industrial sector have, in response to
weak demand from Asia, cut back on capital spending - apparently in anticipation
of lower earnings growth for the next few quarters. Accordingly, with overall
U.S. economic growth somewhat questionable for the short term, we eliminated or
reduced positions in, Columbus McKinnon and DT Industries - all industrial
machinery and equipment manufacturers.
We also increased our energy holdings. We especially like companies in the gas
business because we think the industry has good long-term growth potential.
Newfield Exploration is one gas holding added during the year.
WHICH STOCKS DID WELL FOR THE FUND, AND WHICH WERE DISAPPOINTING?
Hart Hanks turned in a strong performance during 1998. The largest direct mail
advertising company in the country, Hart Hanks was undergoing a restructuring
process that involved selling off some non-core businesses and refocusing on its
strengths. Another holding making a positive contribution was Nationwide
Financial Services. The company, which is the annuity arm of a major insurance
company, saw healthy earnings and sales growth from a solid book of business in
annuities for teachers and other government employees.
On the negative side, Analysts International, a computer support services firm,
detracted from performance. The company lost a contract with a major client
during the year, and we sold the stock. Another underperforming stock was
Herbalite, which suffered from substantially reduced short-term growth prospects
because of the weakness in Asian currencies. Finally DT Industries, mentioned
earlier, experienced a reduction in orders from the major electronics and
consumer companies that are its customers, and we reduced the Fund's holdings of
this stock.
WHAT IS YOUR OUTLOOK?
We think there is real value in the small-cap market. When you compare the
price-to-earnings ratios of the Russell 2000 Index and the S&P 500 Index, small
stocks are cheap on both a current and historical basis. As the most favored
large-cap and technology stocks have their valuations pushed higher, there will
come a point at which investors will be forced to recognize the values inherent
in the kind of stocks held by the Fund.
3
<PAGE>
1999 looks to be a year of slower economic growth. However, we are not expecting
an outright recession, especially in light of the Federal Reserve Board's
commitment to keeping the economy growing - evidenced by its aggressive lowering
of interest rates in the second half of 1998. To sum up, then, we are cautiously
optimistic for 1999.
* The return reflects changes in the net asset value per share without the
deduction of any insurance product charges. The inclusion of these charges would
have reduced the performance shown here. Past performance is no indication of
future results.
FUND RUSSELL
10,000 10,000 - 6/1/98
9,843 10,021 - 6/30/98
7,781 8,001 - 9/30/98
8,522 9,306 - 12/31/98
4
<PAGE>
MML Small Cap Value Equity Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<S> <C>
ASSETS
Investments at value (See Schedule of Investments) (Notes 2A, 2B and 5)
Equities (Identified cost: $10,332,136) $ 9,212,701
---------------
Total investments 9,212,701
---------------
Cash 2,243,588
Receivable for investment securities sold 34,475
Interest and dividends receivable 6,278
Subscriptions receivable 2,097
Prepaid trustees' fees 488
Reimbursement receivable 36,434
---------------
Total assets 11,536,071
---------------
LIABILITIES
Payable for investment securities purchased 1,023,600
Dividends payable (Note 2C) 37,437
Investment management fee payable (Note 4) 13,228
Accrued liabilities 19,622
---------------
Total liabilities 1,093,887
---------------
NET ASSETS $ 10,442,184
===============
Net assets consist of:
Series shares, (par value $.01 per share) (Note 6) $ 12,295
Additional paid-in capital 11,826,582
Distributions in excess of net investment income (Note 2C) (914)
Undistributed net realized loss on investments (Note 3) (276,344)
Net unrealized depreciation on investments (Note 2A) (1,119,435)
---------------
NET ASSETS $ 10,442,184
===============
Outstanding series shares 1,229,502
===============
Net asset value per share $ 8.49
===============
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
MML Small Cap Value Equity Fund
STATEMENT OF OPERATIONS
For the Period June 1, 1998 (Commencement of Operations) through
December 31, 1998
<TABLE>
<S> <C>
Investment income (Note 2B)
Dividends $ 46,135
Interest 30,115
-----------
Total Income 76,250
-----------
Expenses
Investment management fee (Note 4) 35,260
Trustees' fees 14,004
Other expenses 1,777
Audit fees 25,120
-----------
Total expenses 76,161
Expenses reimbursed (Note 4) (36,434)
-----------
Net expenses 39,727
-----------
Net investment income (Notes 2C) 36,523
-----------
Net realized and unrealized loss on investments
Net realized loss on investments (Notes 2A, 2B, 2C and 5) (276,344)
Net change in unrealized depreciation on investments
(Note 2A and 5) (1,119,435)
-----------
Net loss on investments (1,395,779)
-----------
Net decrease in net assets resulting from operations $(1,359,256)
===========
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
MML Small Cap Value Equity Fund
STATEMENT OF CHANGES IN NET ASSETS
For the Period June 1, 1998 (Commencement of Operations) through
December 31, 1998
<TABLE>
<S> <C>
From Operations:
Net investment income $ 36,523
Net realized loss on investments (276,344)
Net change in unrealized depreciation on investments (1,119,435)
------------
Decrease in net assets resulting from operations (1,359,256)
Distributions to shareholders and capital share transactions
Dividends to shareholders from net investment income (Note 2C) (37,437)
Net increase in capital share transactions (Note 6) 11,838,877
------------
Increase in net assets from distributions to shareholders and shareholder transactions 11,801,440
------------
Total increase 10,442,184
NET ASSETS, at beginning of period -
------------
NET ASSETS, at end of year $ 10,442,184
============
Distributions in excess of net investment income included in net assets at end of year $ (914)
============
</TABLE>
See Notes to Financial Statements
7
<PAGE>
Mml Small Cap Value Equity Fund
FINANCIAL HIGHLIGHTS
Selected per share data for the fund share outstanding for the period June 1,
1998 (Commencement of Operations) through December 31, 1998.
<TABLE>
<S> <C>
Net asset value:
Beginning of period $ 10,000
----------
Income from investment operations:
Net investment income 0.029
Net realized and unrealized loss on investments (1.506)
----------
Total from investment operations (1.477)
----------
Less distributions:
Dividends from net investment income (0.030)
----------
Total distributions (0.030)
----------
Net asset value:
End of year $ 8.493
==========
Total return** (14.77%)
Net assets (in millions): $ 10.44
Ratio of expenses to average net assets:
Before expense waiver 0.85%*
After expense waiver 0.44%*
Ratio of net investment income to average net assets
Before expense waiver 0.81%*
After expense waiver 0.42%*
Portfolio turnover rate 23.40%*
</TABLE>
* Percentages represent results for the period and are not annualized.
** Total return shown in the Financial Highlights table does not reflect
expenses that apply at the separate account level or to related insurance
products.
Inclusion of these charges would reduce the total return figures for the
period shown.
See Notes to Financial Statements.
8
<PAGE>
MML Small Cap Value Equity Fund
SCHEDULE OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
Number Market
of Value
EQUITIES - 88.23% Shares (Note 2A)
---------- -------------
<S> <C> <C>
Aerospace & Defense - 0.54%
Tristar Aerospace Co.* 8,000 $ 56,000
---------- -------------
Airlines - 1.31%
ASA Holding, Inc. 4,500 137,250
---------- -------------
Automotive & Parts - 4.17%
Dura Automotive Systems, Inc.* 5,800 197,925
Keystone Automotive Industries, Inc.* 8,100 169,594
Titan International, Inc. 7,200 68,400
---------- -------------
21,100 435,919
---------- -------------
Banking, Savings & Loans - 3.66%
Banknorth Group, Inc. 5,000 188,125
SIS Bankcorp, Inc. 4,300 194,575
---------- -------------
9,300 382,700
---------- -------------
Beverages - 0.47%
Robert Mondavi Corp.* 1,200 49,050
---------- -------------
Chemicals - 2.77%
Cambrex Corp. 4,000 96,000
OM Group, Inc. 5,300 193,450
---------- -------------
9,300 289,450
---------- -------------
Communications - 1.52%
True North Communications, Inc. 5,800 158,562
---------- -------------
Computers & Office Equipment - 2.69%
Compx International, Inc.* 8,500 224,187
Pomeroy Computers Resources, Inc.* 2,500 56,250
---------- -------------
11,000 280,437
---------- -------------
Electrical Equipment & Electronics - 2.78%
AFC Cable Systems, Inc.* 7,100 238,738
Cognex Corp.* 2,600 52,000
---------- -------------
9,700 290,738
---------- -------------
Energy - 1.61%
Wicor, Inc. 7,700 167,956
---------- -------------
Financial Services - 7.93%
Conning Corp. 8,700 $ 180,525
Eaton Vance Corp.* 4,400 91,850
First Republic Bancorp* 4,400 110,275
Nationwide Financial Services, Inc. 4,000 206,750
Stirling Cooke Brown Holdings Ltd. 5,500 85,563
Webster Financial Corp. 5,200 142,675
---------- -------------
32,200 827,638
---------- -------------
Fluids - Handling - 3.13%
Graco, Inc. 5,200 153,400
Roper Industries, Inc. 8,500 173,188
---------- -------------
13,700 326,588
---------- -------------
Foods - 2.34%
International Home Foods, Inc.* 8,000 135,000
Richfood Holdings, Inc. 5,200 107,900
---------- -------------
13,200 242,900
---------- -------------
Glass & Plastic - 1.77%
Spartech Corp. 8,400 184,800
---------- -------------
Healthcare - 4.99%
Healthcare Realty Trust, Inc. 4,700 104,869
Herbalife International, Inc. Class B 10,800 123,525
Invacare Corp. 3,700 88,800
Landauer, Inc. 6,300 203,962
---------- -------------
25,500 521,156
---------- -------------
Heating & Air Conditioning - 2.99%
Service Experts, Inc.* 5,600 163,800
Waisco, Inc. 8,850 148,238
---------- -------------
14,450 312,038
---------- -------------
Industrial Transportation - 2.60%
Greenbrier Companies, Inc. 9,900 139,838
OmniQuip International, Inc. 10,200 153,000
---------- -------------
20,100 292,838
---------- -------------
Insurance - 3.97%
Executive Risk, Inc. 2,700 148,331
HCC Insurance Holdings, Inc. 8,600 151,575
Highlands Insurance Group, Inc.* 8,800 114,950
---------- -------------
20,100 414,856
---------- -------------
</TABLE>
9
<PAGE>
MML Small Cap Value Equity Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
Number Market
of Value
EQUITIES (Continued) Shares (Note 2A)
---------- -----------
<S> <C> <C>
Machinery & Components-6.61%
Columbus McKinnon Corp. 6,700 $ 120,600
DT Industries, Inc. 4,900 77,175
Gleason Corp. 100 1,813
Hardinge, Inc. 6,850 126,297
Hughes Supply, Inc. 5,100 149,175
Pentacon, Inc.* 14,700 63,394
Regal-Beloit Corp. 6,600 151,800
--------- -----------
44,950 690,254
--------- -----------
Marketing-3.06%
Harie Hanks, Inc. 6,000 171,000
Hub Group, Inc.* 7,800 151,125
--------- -----------
13,800 322,125
--------- -----------
Metals-4.55%
Autocam Corp. 10,740 177,210
Hawk Corp--Class A* 5,300 44,388
Reliance Steel and Aluminum Co. 6,300 146,413
SPS Technologies, Inc.* 1,900 107,588
--------- -----------
23,240 475,599
--------- -----------
Miscellaneous-7.44%
ABC Rail Products Corp.* 7,900 96,281
Analysts International Corp. 6,300 121,275
Crossmann Communities, Inc.* 6,200 171,275
McClatchy Co. 3,100 109,662
Ritchie Brothers Auctioneers, Inc.* 6,900 185,869
US Can Corp. 5,200 92,950
--------- -----------
35,600 777,312
--------- -----------
Oil & Gas-4.10%
Houston Exploration Co.* 8,800 174,900
Newfield Exploration Co.* 5,400 112,725
Stone Energy Corp.* 4,900 140,875
--------- -----------
19,100 428,600
--------- -----------
Paper-1.47%
Wausau-Mosinee Paper Corp. 8,700 153,881
--------- -----------
Printing-2.27%
Banta Corp.* 4,100 $ 112,238
Day Runner, Inc.* 8,600 124,700
--------- -----------
12,700 236,938
--------- -----------
Real Estate-1.54%
Mid-Atlantic Realty Trust 13,000 160,061
--------- -----------
Services-1.85%
Rollins Truck Leasing Corp. 13,100 193,225
--------- -----------
Transportation-3.87%
C.H. Robinson Worldwide, Inc. 7,700 199,719
MS Carriers, Inc.* 6,200 204,211
--------- -----------
13,900 403,930
--------- -----------
Total Equities
Cost($10,332,196) 9,212,701
-----------
Total Investments
Cost($10,332,136)(a) 88.23% $ 9,212,701
====== ===========
</TABLE>
(a) Federal Income Tax information: At December 31, 1998 the net
unrealized appreciation on investments based on cost of
$10,332,136 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 $ 275,176
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over market value (1,394,611)
-----------
Net unrealized depreciation $(1,119,435)
===========
* Non-income producing security.
See Notes to Financial Statements.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. HISTORY
MML Small Cap Value Equity Fund (the "Fund") is a non-diversified fund
series of MML Series Investment Fund ("MML Trust"), a no-load, open-end,
management investment company registered under the Investment Company Act of
1940. MML Trust, which has six separate series of shares, was organized as a
business trust under the laws of the Commonwealth of Massachusetts pursuant
to an Agreement and Declaration of Trust.
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 a life insurance company which is a subsidiary 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 the 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.
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.
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 to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies. As a
result, the Fund will not be subject to federal income tax on any 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. As a result, net
investment income (loss) and net realized gain (loss) on investment
transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically
make reclassifications among certain of its capital accounts without
impacting the net asset value of the Fund.
D. 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.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. CAPITAL LOSS CARRYFORWARD
The accumulated net realized loss on investments for the Fund results in a
capital loss carryforward of $276,344 which is available for federal income
tax purposes to offset future capital gains. All of the carryforward expires
December 31, 2006.
4. INVESTMENT MANAGEMENT FEE
MassMutual provides all investment advisory, management and administrative
services needed by the Fund. For acting as such, MassMutual receives a
quarterly fee from the Fund at the annual rate of .65% of the first
$100,000,000 of the average daily net asset value of each Fund, .60% of the
next $200,000,000, .55% of the next $200,000,000 and .50% of any excess over
$500,000,000.
MassMutual has entered into an investment sub-advisory agreement with David
L. Babson and Company, Inc. ("Babson"), a wholly-owned subsidiary of DLB
Acquisition Corporation which is a controlled subsidiary of MassMutual. The
agreement provides that Babson manage the assets of the Fund. MassMutual
pays Babson a quarterly fee equal to an annual rate of .25% of the average
daily net asset value of the Fund
MassMutual has agreed, at least through April 30, 2000, to absorb the
expenses of the Fund to the extent that the aggregate expenses (excluding
the Fund's management fee, interest, taxes, brokerage commissions and
extraordinary expenses) incurred during Fund's fiscal year exceed .11% of
the average daily net asset value of the Fund for such year. For the period
June 1, 1998 (Commencement of Operations) through December 31, 1998, $36,434
of the Funds expenses were borne by Mass Mutual.
5. PURCHASES AND SALES OF INVESTMENTS
<TABLE>
<CAPTION>
Proceeds
For the Period June 1, 1998 (Commencement Acquisition from Sales
of Operations) through December 31,1998 Cost and Maturities
------------------------------------------ ------------ ---------------
<S> <C> <C>
Equities $ 12,394,866 $1,785,472
</TABLE>
6. NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
For the Period June 1, 1998 (Commencement
of Operations) through December 31, 1998
----------------------------------------
<S> <C>
Shares
Sales of shares 1,237,251
Redemptions of shares (7,749)
-------------
Net Increae 1,229,502
-------------
Amount
Sales of shares $ 11,902,437
Redemptions of shares (63,560)
-------------
Net Increase $ 11,838,877
-------------
</TABLE>
12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
MML SMALL CAP VALUE EQUITY FUND
In our opinion, the accompanying statements of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the MML Small Cap Value Equity Fund
("the Fund") which is a component of the MML Series Investment Fund (the "MML
Trust") at December 31, 1998, the results of its operations, the changes in its
net assets and the financial highlights for the period June 1, 1998
(Commencement Of Operations) through December 31, 1998, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1998 by
correspondence with the custodian and the application of alternative auditing
procedures where securities purchased had not been settled, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Springfield, Massachusetts
February 25, 1999
13
