<PAGE>
PROSPECTUS
for
METROPOLITAN SERIES FUND, INC.
Metropolitan Series Fund, Inc. ("Fund") is an investment company designed to
meet a wide range of investment objectives with its separate Portfolios. Each
Portfolio resembles a separate fund issuing its own shares. Metropolitan Life
Insurance Company ("Metropolitan Life") is the investment manager for the
Fund. State Street Research & Management Company ("State Street Research"), a
wholly-owned subsidiary of Metropolitan Life, is the sub-investment manager
with respect to the State Street Research Growth, State Street Research
Income, State Street Research Diversified and State Street Research Aggressive
Growth Portfolios. GFM International Investors Limited ("GFM"), a subsidiary
of Metropolitan Life, is the sub-investment manager of the GFM International
Stock Portfolio.
The investment objectives of the seven currently available Portfolios are as
follows:
STATE STREET RESEARCH GROWTH PORTFOLIO: to achieve long-term growth of capital
and income, and moderate current income, by investing primarily in common
stocks that are believed to be of good quality or to have good growth
potential or which are considered to be undervalued based on historical
investment standards.
STATE STREET RESEARCH INCOME PORTFOLIO: to achieve the highest possible total
return, by combining current income with capital gains, consistent with
prudent investment risk and preservation of capital, by investing primarily in
fixed-income, high-quality debt securities. (The term "high-quality" is used
to describe certain debt securities rated within the three highest grades by
credit rating services as explained under "State Street Research Income
Portfolio.")
METLIFE MONEY MARKET PORTFOLIO: to achieve the highest possible current income
consistent with preservation of capital and maintenance of liquidity, by
investing primarily in short-term money market instruments. INVESTMENT IN THIS
PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE UNITED STATES GOVERNMENT.
STATE STREET RESEARCH DIVERSIFIED PORTFOLIO: to achieve a high total return
while attempting to limit investment risk and preserve capital by investing in
equity securities, fixed-income debt securities, or short-term money market
instruments, or any combination thereof, at the discretion of State Street
Research.
STATE STREET RESEARCH AGGRESSIVE GROWTH PORTFOLIO: to achieve maximum capital
appreciation by investing primarily in common stocks (and equity and debt
securities convertible into or carrying the right to acquire common stocks) of
emerging growth companies, undervalued securities or special situations.
METLIFE STOCK INDEX PORTFOLIO: to equal the performance of the Standard &
Poor's 500 Composite Stock Price Index (adjusted to assume reinvestment of
dividends) by investing in the common stock of companies which are included in
the index.
GFM INTERNATIONAL STOCK PORTFOLIO: to achieve long-term growth of capital by
investing primarily in common stocks and equity-related securities of non-
United States companies.
There can be no assurance that the objectives of any Portfolio will be
realized.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED, ENDORSED
OR GUARANTEED BY, THE UNITED STATES GOVERNMENT, ANY BANK OR OTHER DEPOSITORY
INSTITUTION, SHARES ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE COMPANY,
THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, ENTITY OR PERSON AND ARE
SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.
This Prospectus sets forth concisely information about the Fund that a
prospective investor ought to know before investing. Additional information
about the Fund has been filed with the Securities and Exchange Commission in a
Statement of Additional Information which is incorporated herein by reference.
The Statement of Additional Information is available upon request and without
charge from Metropolitan Life Insurance Company, One Madison Avenue, New York,
New York 10010, Attention: Retirement and Savings Center, Area 2H; telephone
number (212) 578-4057. Inquiries may be made to the same address or telephone
number. This Prospectus should be read and retained for future reference.
The date of this Prospectus is March 3, 1997. The date of the Statement of
Additional Information is March 3, 1997.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Fund and its Purpose............................................ 2
Financial Highlights................................................ 3
Investments in the Portfolios....................................... 7
Investment Objectives and General Investment Policies.............. 7
State Street Research Growth Portfolio............................ 7
State Street Research Income Portfolio............................ 8
MetLife Money Market Portfolio.................................... 9
State Street Research Diversified Portfolio....................... 9
State Street Research Aggressive Growth Portfolio................. 10
MetLife Stock Index Portfolio..................................... 10
GFM International Stock Portfolio................................. 11
Fundamental Investment Policies.................................... 12
Other Investment Practices......................................... 13
Management of the Fund.............................................. 18
General Information About the Fund and its Shares................... 20
Dividends, Distributions and Taxes.................................. 21
Sale and Redemption of Shares....................................... 22
</TABLE>
THE FUND AND ITS PURPOSE
Metropolitan Series Fund, Inc. is an open-end management investment company.
The Fund is a "series" type of mutual fund which issues separate classes (or
series) of stock, each of which currently represents a separate portfolio of
investments. The Fund's classes of shares are issued and redeemed at net asset
value without a sales load.
The shares of the Fund are offered to Metropolitan Life and its affiliated
insurance companies ("Insurance Companies"), including Metropolitan Tower Life
Insurance Company ("Metropolitan Tower"), in order to fund certain of their
separate accounts used to support various insurance contracts including
variable life insurance policies, whether scheduled premium, flexible premium
or single premium policies, or variable annuity contracts (such policies and
contracts being hereinafter referred to as the "Contracts"). Not all of the
current Portfolios of the Fund are available to each of the separate accounts
which hold shares of the Fund. The rights of an Insurance Company holding Fund
shares for a separate account are different from the rights of the owner of a
Contract. The terms "shareholder" or "shareholders" in this Prospectus shall
refer to the Insurance Companies, and not to any Contract owner.
The structure of the Fund permits Contract owners, within the limitations
described in the appropriate Contract, to allocate the amounts under the
Contracts for ultimate investment in the various Portfolios of the Fund. See
the prospectus or other material which is attached at the front of this
Prospectus for a description of the appropriate Contract, which Portfolios of
the Fund are available to such Contract owners and the relationship between
increases or decreases in the net asset value of Fund shares (and any
dividends and distributions on such shares) and the benefits provided under
such Contract.
It is conceivable that in the future it may be disadvantageous for scheduled,
flexible and single premium variable life insurance separate accounts and
variable annuity separate accounts to invest simultaneously in the Fund.
However, the Fund, Metropolitan Tower and Metropolitan Life do not currently
foresee any such disadvantages to variable annuity contract owners or to
flexible premium, scheduled premium or single premium variable life insurance
policy owners. The Fund's Board of Directors intends to monitor events for the
existence of any material irreconcilable conflict between or among such
owners, and the Insurance Companies will take whatever remedial action may be
necessary.
PROSPECTUS 2
<PAGE>
FINANCIAL HIGHLIGHTS
The table below* has been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report appearing with the full financial
statements and notes thereto in the Statement of Additional Information or as
previously stated in earlier reports. For further information about the
performance of the Portfolios, see the Fund's December 31, 1996 Management's
Discussion and Analysis which appears under the caption "Financial Statements"
in the Statement of Additional Information.
<TABLE>
<CAPTION>
STATE STREET RESEARCH GROWTH PORTFOLIO
----------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 1996 31, 1995 31, 1994 31, 1993 31, 1992 31, 1991 31, 1990 31, 1989 31, 1988 31, 1987
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED DATA FOR A
SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT
THE PERIOD:
NET ASSET VALUE:
Beginning of period... $ 27.56 $ 21.81 $ 23.27 $ 21.72 $ 21.56 $ 17.20 $ 19.34 $ 14.64 $ 13.89 $ 13.72
----------- ---------- --------- -------- -------- -------- -------- -------- -------- --------
Income From Investment
Operations
Net investment income. .36 .35 .30 .28 .34 .41 .51 .54 .71 .37
Net realized and
unrealized
gain (loss).......... 5.78 6.83 (1.06) 3.24 2.13 5.39 (2.15) 4.81 .78 .63
----------- ---------- --------- -------- -------- -------- -------- -------- -------- --------
Total From Investment
Operations............ 6.14 7.18 (.76) 3.52 2.47 5.80 (1.64) 5.35 1.49 1.00
----------- ---------- --------- -------- -------- -------- -------- -------- -------- --------
Less Distributions
Dividends from net
investment income.... (.36) (.35) (.30) (.28) (.29) (.42) (.50) (.52) (.74) (.35)
Dividends from net
realized capital
gains................ (2.83) (1.08) (.40) (1.69) (2.02) (1.02) -- (.13) -- (.48)
----------- ---------- --------- -------- -------- -------- -------- -------- -------- --------
Total Distributions.... (3.19) (1.43) (.70) (1.97) (2.31) (1.44) (.50) (.65) (.74) (.83)
----------- ---------- --------- -------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE: End of
period................ $ 30.51 $ 27.56 $ 21.81 $ 23.27 $ 21.72 $ 21.56 $ 17.20 $ 19.34 $ 14.64 $ 13.89
=========== ========== ========= ======== ======== ======== ======== ======== ======== ========
Total Return.......... 22.18% 33.14% (3.25)% 14.40% 11.56% 33.09% (8.50)% 36.64% 10.69% 7.19%
Net assets at end of
period............... $ 1,597,728 $1,094,751 $ 746,433 $640,413 $351,028 $232,160 $153,255 $140,279 $ 99,982 $ 96,177
(In Thousands)
SIGNIFICANT RATIOS:
Operating expenses to
average net assets... 0.29% 0.31% 0.32% 0.28% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Net investment income
to average net
assets............... 1.29% 1.46% 1.40% 1.19% 1.52% 2.04% 2.83% 2.98% 4.83% 2.30%
Portfolio turnover
(Note 1)............. 93.05% 42.52% 57.27% 66.27% 63.74% 62.29% 39.86% 58.01% 51.21% 45.36%
Average broker
commisson rate (Note
2)................... $ 0.0578 -- -- -- -- -- -- -- -- --
<CAPTION>
STATE STREET RESEARCH INCOME PORTFOLIO
----------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 1996 31, 1995 31, 1994 31, 1993 31, 1992 31, 1991 31, 1990 31, 1989 31, 1988 31, 1987
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED DATA FOR A
SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT
THE PERIOD:
NET ASSET VALUE:
Beginning of period... $12.73 $11.32 $12.59 $12.22 $12.32 $11.16 $11.10 $10.58 $10.47 $13.74
----------- ---------- --------- -------- -------- -------- -------- -------- -------- --------
Income From Investment
Operations
Net investment income. 0.82 .83 .91 .83 .90 .94 1.16 .99 .95 .97
Net realized and
unrealized gain
(loss)............... (0.36) 1.38 (1.31) .86 (.05) 1.14 (.05) .41 .02 (1.27)
----------- ---------- --------- -------- -------- -------- -------- -------- -------- --------
Total From Investment
Operations............ 0.46 2.21 (.40) 1.69 .85 2.08 1.11 1.40 .97 (.30)
----------- ---------- --------- -------- -------- -------- -------- -------- -------- --------
Less Distributions
Dividends from net
investment income.... (0.81) (.80) (.87) (.88) ( .71) (.92) (1.05) (.88) (.86) (1.76)
Dividends from net
realized capital
gains................ (0.02) -- -- (.44) (.24) -- -- -- -- (1.21)
----------- ---------- --------- -------- -------- -------- -------- -------- -------- --------
Total Distributions.... (0.83) (.80) (.87) (1.32) (.95) (.92) (1.05) (.88) (.86) (2.97)
----------- ---------- --------- -------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE: End of
period................ $12.36 $12.73 $11.32 $12.59 $12.22 $12.32 $11.16 $11.10 $10.58 $10.47
=========== ========== ========= ======== ======== ======== ======== ======== ======== ========
Total Return.......... 3.60% 19.55% (3.15)% 11.36% 6.91% 17.31% 10.03% 13.35% 9.28% (1.87%)
Net assets at end of
period............... $ 383,395 $ 349,913 $ 275,659 $299,976 $156,245 $ 87,412 $ 54,531 $ 48,629 $ 35,670 $ 27,800
(In Thousands)
SIGNIFICANT RATIOS:
Operating expenses to
average net assets... 0.32 0.34% 0.35% 0.32% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Net investment income
to average net assets
..................... 6.64% 7.01% 7.02% 6.39% 7.16% 7.61% 9.80% 8.81% 8.26% 8.34%
Portfolio turnover
(Note 1)............. 92.90% 102.88% 141.15% 136.98% 151.74% 78.87% 82.93% 51.03% 74.10% 79.59%
</TABLE>
- ----------------
* Footnotes appear on Page 6.
PROSPECTUS 3
<PAGE>
<TABLE>
<CAPTION>
METLIFE MONEY MARKET PORTFOLIO
--------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 1996 31, 1995 31, 1994 31, 1993 31, 1992 31, 1991 31, 1990 31, 1989 31, 1988 31, 1987
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED DATA FOR A
SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT
THE PERIOD:
NET ASSET VALUE:
Beginning of period.... $10.45 $10.48 $10.49 $10.52 $10.59 $10.67 $10.49 $10.32 $10.18 $10.78
-------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Income From Investment
Operations
Net investment income... .53 .59 .40 .28 .39 .57 .86 .95 .76 .64
-------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Total From Investment
Operations............. .53 .59 .40 .28 .39 .57 .86 .95 .76 .64
-------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Less Distributions
Dividends from net
investment income...... (.54) (.62) (.41) (.31) (.46) (.65) (.68) (.78) (.62) (1.24)
-------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Total Distributions..... (.54) (.62) (.41) (.31) (.46) (.65) (.68) (.78) (.62) (1.24)
-------- ------- -------- -------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE: End of
period................. $10.44 $10.45 $10.48 $10.49 $10.52 $10.59 $10.67 $10.49 $10.32 $10.18
======== ======= ======== ======== ======== ======== ======== ======== ======== ========
Total Return............ 5.01% 5.59% 3.85% 2.90% 3.73% 6.10% 8.23% 9.28% 7.55% 6.22%
Net assets at end of
period................. $41,637 $40,456 $39,961 $44,321 $55,412 $70,946 $78,014 $41,779 $26,907 $17,147
(In Thousands)
SIGNIFICANT RATIOS:
Operating expenses to
average net assets..... 0.43% 0.49% 0.44% 0.38% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Net investment income to
average net assets..... 4.92% 5.39% 3.76% 2.85% 3.68% 5.93% 7.68% 8.82% 7.33% 6.06%
Portfolio turnover ..... N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
STATE STREET RESEARCH DIVERSIFIED PORTFOLIO
--------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 1996 31, 1995 31, 1994 31, 1993 31, 1992 31, 1991 31, 1990 31, 1989 31, 1988 31, 1987
---------- ---------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED DATA FOR A
SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT
THE PERIOD:
NET ASSET VALUE:
Beginning of period.... $15.95 $13.40 $14.41 $13.58 $13.61 $11.47 $12.16 $10.58 $10.34 $10.34
---------- ---------- -------- -------- -------- -------- -------- -------- -------- --------
Income From Investment
Operations
Net investment income.. .55 .59 .51 .46 .53 .62 .68 .75 .73 .56
Net realized and
unrealized gain
(loss)................ 1.77 3.02 (.95) 1.58 .74 2.23 (.68) 1.54 .23 (.18)
---------- ---------- -------- -------- -------- -------- -------- -------- -------- --------
Total From Investment
Operations............. 2.32 3.61 (.44) 2.04 1.27 2.85 .00 2.29 .96 .38
---------- ---------- -------- -------- -------- -------- -------- -------- -------- --------
Less Distributions
Dividends from net
investment income..... (.53) (.58) (.50) (.54) (.55) (.62) (.69) (.71) (.72) (.38)
Dividends from net
realized capital
gains................. (1.07) (.48) (.07) (.67) (.75) (.09) -- -- -- --
---------- ---------- -------- -------- -------- -------- -------- -------- -------- --------
Total Distributions..... (1.60) (1.06) (.57) (1.21) (1.30) (.71) (.69) (.71) (.72) (.38)
---------- ---------- -------- -------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE: End of
period................. $16.67 $15.95 $13.40 $14.41 $13.58 $13.61 $11.47 $12.16 $10.58 $10.34
========== ========== ======== ======== ======== ======== ======== ======== ======== ========
Total Return........... 14.52% 27.03% (3.06)% 12.75% 9.48% 24.84% 0.00% 21.76% 9.25% 3.63%
Net assets at end of
period................ $1,448,841 $1,114,834 $892,826 $743,798 $334,480 $232,276 $184,879 $172,968 $134,303 $112,867
(In Thousands)
SIGNIFICANT RATIOS:
Operating expenses to
average net assets.... 0.29% 0.31% 0.32% 0.29% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Net investment income
to average net
assets................ 3.38%* 3.92% 3.66% 3.16% 3.85% 4.94% 5.74% 6.30% 6.64% 5.27%
Portfolio turnover
(Note 1).............. 91.07% 79.29% 96.49% 95.84% 114.67% 70.56% 62.51% 50.61% 70.14% 61.30%
Average broker
commission rate (Note
2).................... $0.0578 -- -- -- -- -- -- -- -- --
</TABLE>
- -------
* Footnotes appear on Page 6.
PROSPECTUS 4
<PAGE>
<TABLE>
<CAPTION>
STATE STREET RESEARCH AGGRESSIVE GROWTH PORTFOLIO
---------------------------------------------------------------------------------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 1996 31, 1995 31, 1994 31, 1993 31, 1992 31, 1991 31, 1990 31, 1989
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED DATA FOR
A SHARE OF
CAPITAL STOCK
OUTSTANDING
THROUGHOUT THE
PERIOD:
NET ASSET VALUE:
Beginning of
period.......... $25.87 $22.05 $22.54 $19.52 $18.11 $10.95 $12.41 $10.42
---------- -------- -------- -------- -------- -------- -------- --------
Income From
Investment
Operations
Net investment
income......... (0.02) (.01) .05 .04 .08 .06 .15 .20
Net realized and
unrealized gain
(loss)......... 2.01 6.50 (.48) 5.06 1.77 7.25 (1.43) 3.00
---------- -------- -------- -------- -------- -------- -------- --------
Total From
Investment
Operations...... 1.99 6.49 (.43) 5.10 1.85 7.31 (1.28) 3.20
---------- -------- -------- -------- -------- -------- -------- --------
Less
Distributions
Dividends from
net investment
income......... -- -- (.05) (.06) (.10) (.07) (.14) (.14)
Dividends from
net realized
capital gains.. (0.75) (2.67) (.01) (2.02) (.34) (.08) (.04) (1.07)
---------- -------- -------- -------- -------- -------- -------- --------
Total
Distributions... (0.75) (2.67) (.06) (2.08) (.44) (.15) (.18) (1.21)
---------- -------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE:
End of period... $27.11 $25.87 $22.05 $22.54 $19.52 $18.11 $10.95 $12.41
========== ======== ======== ======== ======== ======== ======== ========
Total Return.... 7.72% 29.50% (1.88)% 22.63% 10.39% 66.41% (10.34)% 30.94%
Net assets at
end of period.. $1,321,849 $958,915 $590,047 $387,949 $129,249 $ 45,858 $ 15,409 $ 11,280
(In Thousands)
SIGNIFICANT
RATIOS:
Operating
expenses to
average net
assets......... 0.79% 0.81% 0.82% 0.79% 0.75% 0.75% 0.75% 0.75%
Net investment
income to
average net
assets......... (0.11)% (0.06%) 0.24% 0.18% 0.46% 0.45% 1.41% 1.41%
Portfolio
turnover (Note
1) ............ 221.23% 255.83% 186.52% 120.82% 100.95% 146.12% 271.31% 226.39%
Average broker
commission rate
(Note 2)....... $0.0576 -- -- -- -- -- -- --
<CAPTION>
STATE STREET RESEARCH AGGRESSIVE GROWTH PORTFOLIO
---------------
FOR THE PERIOD
APRIL 29, 1988
TO DECEMBER
31, 1988
--------------
<S> <C>
SELECTED DATA FOR
A SHARE OF
CAPITAL STOCK
OUTSTANDING
THROUGHOUT THE
PERIOD:
NET ASSET VALUE:
Beginning of
period.......... $10.00
------
Income From
Investment
Operations
Net investment
income......... .16
Net realized and
unrealized gain
(loss)......... .36
------
Total From
Investment
Operations...... .52
------
Less
Distributions
Dividends from
net investment
income......... (.10)
Dividends from
net realized
capital gains.. --
------
Total
Distributions... (.10)
------
NET ASSET VALUE:
End of period... $10.42
======
Total Return.... 5.21%
Net assets at
end of period.. $4,738
(In Thousands)
SIGNIFICANT
RATIOS:
Operating
expenses to
average net
assets......... 0.75%*
Net investment
income to
average net
assets......... 2.06%*
Portfolio
turnover (Note
1) ............ 94.35%
Average broker
commission rate
(Note 2)....... --
</TABLE>
<TABLE>
<CAPTION>
METLIFE STOCK INDEX PORTFOLIO
------------------------------------------------------------------------- -------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED MAY 1, 1990
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER TO DECEMBER
31, 1996 31, 1995 31, 1994 31, 1993 31, 1992 31, 1991 31, 1990
---------- -------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED DATA FOR A SHARE
OF CAPITAL STOCK
OUTSTANDING
THROUGHOUT THE PERIOD:
NET ASSET VALUE:
Beginning of period..... $18.56 $13.87 $14.25 $13.27 $12.76 $9.96 $10.00
---------- -------- -------- -------- -------- ------- ------
Income From Investment
Operations
Net investment income... 0.33 .32 .33 .35 .36 .35 .23
Net realized and
unrealized gain (loss). 3.88 4.79 (.17) .98 .60 2.82 (.05)
---------- -------- -------- -------- -------- ------- ------
Total From Investment
Operations.............. 4.21 5.11 .16 1.33 .96 3.17 10.18
---------- -------- -------- -------- -------- ------- ------
Less Distributions
Dividends from net
investment income...... (0.33) (.32) (.32) (.35) (.26) (.37) (.22)
Dividends from net
realized capital gains. (0.21) (.10) (.22) -- (.19) -- --
---------- -------- -------- -------- -------- ------- ------
Total Distributions...... (0.54) (.42) (.54) (.35) (.45) (.37) (.22)
---------- -------- -------- -------- -------- ------- ------
NET ASSET VALUE: End of
period.................. $22.23 $18.56 $13.87 $14.25 $13.27 $12.76 $9.96
========== ======== ======== ======== ======== ======= ======
Total Return............ 22.66% 36.87% 1.18% 9.54% 7.44% 29.76% 1.95%
Net assets at end of
period................. $1,122,297 $635,823 $363,001 $282,700 $144,692 $54,183 $6,956
(In Thousands)
SIGNIFICANT RATIOS:
Operating expenses to
average net assets..... 0.30% 0.32% 0.33% 0.32% 0.25% 0.24% 0.25%*
Net investment income to
average net assets..... 1.91% 2.22% 2.51% 2.51% 2.74% 2.98% 4.12%*
Portfolio turnover (Note
1)..................... 11.48% 6.35% 6.55% 13.99% 17.54% 1.18% 3.50%
Average broker
commission rate (Note
2)..................... $0.0204 -- -- -- -- -- --
</TABLE>
- -------
*Footnotes appear on page 6
PROSPECTUS 5
<PAGE>
<TABLE>
<CAPTION>
GFM INTERNATIONAL STOCK PORTFOLIO
--------------------------------------------------------------- -------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED MAY 1, 1991
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER TO DECEMBER
31, 1996 31, 1995 31, 1994 31, 1993 31, 1992 31, 1991
-------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED DATA FOR A SHARE
OF CAPITAL STOCK
OUTSTANDING
THROUGHOUT THE PERIOD:
NET ASSET VALUE:
Beginning of period..... $12.29 $12.30 $12.33 $8.63 $9.71 $10.00
-------- -------- -------- -------- ------- -------
Income From Investment
Operations
Net investment income... 0.07 .03 .08 .02 .05 .05
Net realized and
unrealized gain (loss). (0.28) .07 .54 4.52 (1.04) (.20)
-------- -------- -------- -------- ------- -------
Total From Investment
Operations.............. (0.21) .10 .62 4.54 (.99) 9.85
-------- -------- -------- -------- ------- -------
Less Distributions
Dividends from net
investment income...... -- (.04) -- (.26) (.09) (.14)
Dividends from net
realized capital gains. (0.13) (.07) (.65) (.58) -- --
-------- -------- -------- -------- ------- -------
Total Distributions...... (0.13) (.11) (.65) (.84) (.09) (.14)
-------- -------- -------- -------- ------- -------
NET ASSET VALUE: End of
period.................. $11.95 $12.29 $12.30 $12.33 $8.63 $9.71
======== ======== ======== ======== ======= =======
Total Return............ (1.77)% 0.84% 5.08% 47.76% (10.21)% (1.55)%
Net assets at end of
period................. $303,826 $297,461 $272,952 $120,781 $18,998 $10,809
(In Thousands)
SIGNIFICANT RATIOS:
Net expenses to average
net assets............. 0.97% 1.01% 1.04% 1.14% 0.97% 0.97%*
Operating expenses to
average net assets
before voluntary
expense reimbursements. N/A N/A N/A 1.15% N/A N/A
Net investment income to
average net assets..... 0.56% 0.21% 0.08% 0.15% 0.80% 1.01%*
Net investment income to
average net assets
before voluntary
expense reimbursements. N/A N/A N/A 0.15% N/A N/A
Portfolio turnover (Note
1) .................... 116.67% 86.24% 65.84% 88.90% 65.00% 29.41%
Average broker
commission rate (Note
2)..................... $ 0.0037 -- -- -- -- --
</TABLE>
- -------
Notes:
Total return information shown in the Financial Highlights tables does not
reflect expenses that apply at the separate account level or to related
insurance products. Inclusion of these charges would reduce the total return
figures for all periods shown.
* Ratios have been determined based on annualized operating results for the
period. Twelve months results may be different.
(1) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio
securities owned during the period. Securities with a maturity or
expiration date at the time of acquisition of one year or less are
excluded from the calculation. Purchases and sales of securities
(excluding short-term securities) for the year ended December 31, 1996
are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES OF SECURITIES
-------------- -------------------
<S> <C> <C>
State Street Research Growth Portfo-
lio................................. $1,348,105,796 $1,208,264,280
State Street Research Income Portfo-
lio................................. 332,786,481 293,974,932
State Street Research Diversified
Portfolio........................... 1,224,380,985 1,081,252,639
State Street Research Aggressive
Growth
Portfolio........................... 2,668,086,800 2,444,822,359
MetLife Stock Index Portfolio........ 424,005,842 98,565,577
GFM International Stock Portfolio.... 418,140,220 342,539,121
</TABLE>
(2) Total brokerage commissions paid on purchases and sales of portfolio
securities for the period divided by the total number of related shares
purchased and sold.
See Notes to Financial Statements.
PROSPECTUS 6
<PAGE>
...............................................................
INVESTMENTS IN THE PORTFOLIOS
................................................................................
INVESTMENT OBJECTIVES AND GENERAL INVESTMENT POLICIES
Each Portfolio of the Fund has different general investment objectives, which
are described below, and different rates of portfolio turnover. The rate of
portfolio turnover, however, will not be a limiting factor when it is deemed
appropriate to purchase or sell securities for a Portfolio. Portfolio turnover
may vary from year to year or within a year depending upon economic, market and
business conditions. To the extent that brokerage commissions and transaction
costs are incurred in buying and selling portfolio securities, the rate of
portfolio turnover could affect each Portfolio's net asset value. The
historical rates of portfolio turnover for the State Street Research Growth,
State Street Research Income, State Street Research Diversified, State Street
Research Aggressive Growth, MetLife Stock Index, and GFM International Stock
Portfolios are set forth in the Financial Highlights.
Also, the Fund intends to comply with the various requirements of the
Internal Revenue Code so as to qualify as a "regulated investment company"
thereunder. (See "Dividends, Distributions and Taxes.") Among such requirements
is a limitation that less than 30% of the amount of gross income which each
Portfolio may derive from gain on the sale or other disposition of instruments
may be with respect to instruments held for less than three months.
Accordingly, the ability of any Portfolio to effect certain short-term
portfolio transactions may be limited. The Fund also intends to comply with the
diversification requirements of the Internal Revenue Code (see "Taxes" in the
Statement of Additional Information).
Each Portfolio which invests in equity securities may invest up to 10% of its
total assets in shares of other investment companies (up to 5% of which may be
invested in any single investment company), including unit investment trusts
that issue shares representing separate rights to capital appreciation and
dividends in respect of the common stock of various issuers. Such investments
may in effect include the payment of duplicative management or other fees.
Other limitations may apply (see "Certain Investment Limitations" in the
Statement of Additional Information).
Since investment involves both opportunities for gain and risks of loss, no
assurance can be given that the Portfolios will achieve their objectives.
Contract owners should carefully review the objectives and policies of the
Portfolios and consider their ability to assume the risks involved before
purchasing a Contract and allocating amounts thereunder to particular
Portfolios.
The prices of the types of securities usually purchased for the State Street
Research Growth, State Street Research Aggressive Growth, MetLife Stock Index
and GFM International Stock Portfolios and, to some extent, for the State
Street Research Diversified Portfolio tend to fluctuate more than the prices of
the securities usually purchased for the State Street Research Income Portfolio
or the MetLife Money Market Portfolio. Therefore, the net asset value of these
first five Portfolios may experience greater short-term and long-term
variations than the last two listed Portfolios.
While certain of the investment techniques, instruments and risks associated
with each Portfolio are included in the discussion that follows, further
information on these subjects appears under the headings "Fundamental
Investment Policies" and "Certain Investment Practices" in this Prospectus.
State Street Research Growth Portfolio
The State Street Research Growth Portfolio seeks long-term growth of capital
and income, and moderate current income. The State Street Research Growth
Portfolio will seek to achieve a superior overall return, while at the same
time attempting to minimize the effects of significant stock market declines.
It is anticipated that there will be a mix of assets in the State Street
Research Growth Portfolio. A portion of the State Street Research Growth
Portfolio may be invested in equity securities of good quality and in well-
established companies where the stock price is considered to represent good
value, based on factors including historical investment standards, such as
price/book value ratios and price/earnings ratios. Another portion of the State
Street Research Growth Portfolio may be invested in smaller emerging growth
companies. These are companies that are in the development stage of their life
cycles and that are expected to achieve above-average earnings growth.
Typically, these companies are benefiting from new developments in advanced
technology or are providing new products and services to consumers. A third
portion of the State Street Research Growth Portfolio may be held in short-term
fixed income investments.
The mix of assets in the State Street Research Growth Portfolio will vary
with prevailing economic and market conditions. Consequently, the three
portions of the State Street Research Growth Portfolio's assets will not be
invested in any specified proportions. Generally, the greater portion of assets
will be invested in equity securities of established companies. Up to 25% of
the assets may be invested in securities convertible into common stocks. The
State Street Research Growth Portfolio may acquire convertible securities and
warrants.
PROSPECTUS 7
<PAGE>
...............................................................
Investments in relatively smaller companies involve greater risk than is
customarily associated with more established companies. These risks are
discussed below under "State Street Research Aggressive Growth Portfolio."
However, the State Street Research Growth Portfolio will endeavor to control
risk by investing in a diversified group of companies and industries. The State
Street Research Growth Portfolio will also seek to shift funds into short-term
instruments of the type described in the first paragraph under "MetLife Money
Market Portfolio" for defensive purposes in periods of adverse market
conditions and in periods when short-term rates appear more attractive than
prospective equity returns.
State Street Research Income Portfolio
The primary investment objective of the State Street Research Income
Portfolio is to achieve the highest possible total return, by combining current
income with capital gains, consistent with prudent investment risk. An
additional objective is preservation of capital. In seeking to achieve these
objectives, the Portfolio will invest at least 75% of the value of its assets
in straight debt securities which have a rating within the three highest grades
as determined by Standard & Poor's Ratings Group (Standard & Poor's) or Moody's
Investor Services Inc. (Moody's). (See "Investment Practices and Policies" in
the Statement of Additional Information for a discussion of these ratings.) In
the event that securities held by the Portfolio fall below those ratings, the
Portfolio will not be obligated to dispose of such securities and may continue
to hold such securities if, in the opinion of Metropolitan Life or State Street
Research, such investment is considered appropriate under the circumstances.
From time to time, up to 25% of the State Street Research Income Portfolio's
total assets may be invested in straight debt securities which are not rated
within the three highest grades of Standard & Poor's or Moody's as described
above, or in convertible debt securities, convertible preferred and preferred
stocks of companies, the senior securities of which have a rating within the
three highest grades of Standard & Poor's or Moody's applicable to such
securities. Debt securities within the top credit categories (i.e., rated AAA,
AA or A by Standard & Poor's or Aaa, Aa or A by Moody's) comprise what are
generally known as high-grade bonds. Medium-grade bonds (i.e., rated BBB by
Standard & Poor's or Baa by Moody's) lack outstanding investment
characteristics and also have speculative characteristics, but are regarded as
having an adequate capacity to pay principal and interest, although adverse
economic conditions or changing circumstances are more likely to lead to a
weakening of such capacity than that for higher grade bonds. Such debt
securities, as well as those in higher grade categories, are generally known as
investment grade securities.
Bonds rated BB or B by Standard & Poor's or Ba or B by Moody's (generally
known as lower-medium and lower grade bonds) are the lowest grades in which the
Income Portfolio will invest and are regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and principal
in accordance with the terms of the obligation. While such bonds will likely
have some quality and protective characteristics, these are outweighed by
uncertainties or risk exposures to adverse conditions. Lower-medium and lower
quality bonds may be more susceptible to real or perceived adverse economic and
individual corporate developments than would investment grade bonds. For
example, a projected economic downturn or the possibility of an increase in
interest rates could cause a decline in high yield bond prices because such an
event might lessen the ability of highly leveraged high yield issuers to meet
their principal and interest payment obligations, meet projected business goals
or obtain additional financing. In addition, the secondary trading market for
lower-medium and lower quality bonds may be less liquid than the market for
investment grade bonds. This potential lack of liquidity may make it more
difficult to accurately value certain portfolio securities. See the Statement
of Additional Information for further information concerning the ratings of
debt securities.
If at any time the State Street Research Income Portfolio purchases unrated
investments, such investments would be purchased only if considered by the
Fund's Board of Directors to be of comparable quality to the portfolio
investments rated by a nationally recognized statistical rating organization
("NRSRO").
The maturity of debt securities is considered long (ten years or more),
intermediate (one to ten years), or short-term (twelve months or less). The
proportion invested by the Portfolio in each category will generally vary
depending upon an analysis of market values and trends by State Street
Research.
The State Street Research Income Portfolio will be subject to market risks
resulting from changes in interest rates. However, the Portfolio's emphasis on
high-grade bonds should, overall, minimize the financial risks of its
investments. Moreover, the State Street Research Income Portfolio may forego
attempting to achieve the highest levels of income in the short term in order
to limit risk of loss.
The State Street Research Income Portfolio will not directly purchase common
stocks or warrants. However, it may retain up to 10% of the value of its total
assets in common stocks acquired either by conversion of fixed income
securities or by the exercise of warrants attached thereto.
PROSPECTUS 8
<PAGE>
...............................................................
When prevailing market or economic conditions warrant, a portion of the
State Street Research Income Portfolio may be invested in short-term
instruments of the type described in the first paragraph under "MetLife Money
Market Portfolio" below, to effectively utilize cash reserves.
MetLife Money Market Portfolio
The investment objective of the MetLife Money Market Portfolio is to achieve
the highest possible current income consistent with preservation of capital
and maintenance of liquidity, by investing primarily in short-term money
market instruments. The MetLife Money Market Portfolio will invest in short-
term United States government securities, government agency securities, bank
certificates of deposit and bankers' acceptances, short-term corporate debt
securities (such as commercial paper), variable amount master demand notes and
repurchase and reverse repurchase agreements. The types of money market
instruments in which the MetLife Money Market Portfolio may invest are
described more fully in "Investment Practices and Policies," in the Statement
of Additional Information.
The MetLife Money Market Portfolio will limit its investments to securities
that are determined to have "minimal credit risks" and that are "Eligible
Securities." Eligible Securities have a remaining maturity at the time of
purchase of not more than thirteen months. They are rated in one of the two
highest rating categories by at least two NRSROs (or by the only NRSRO that
has rated the security), or, if unrated, are of comparable quality. The
MetLife Money Market Portfolio will not invest more than five percent of its
assets in Eligible Securities which are not rated in the highest short-term
rating category by at least two NRSROs (or by the only NRSRO that has rated
the instrument), or comparable unrated securities ("Second Level Securities").
In addition to the requirements set forth in fundamental investment policy
number 1 under "Investment Practices and Policies" in the Statement of
Additional Information, the MetLife Money Market Portfolio generally will not
invest more than five percent of its assets in the securities of any one
issuer, excluding United States government securities, measured at the time of
purchase. Moreover, the Portfolio will invest no more than the greater of (i)
one percent of its assets and (ii) one million dollars, in the Second Level
Securities of any one issuer. Finally, the Portfolio will maintain a dollar
weighted average maturity of not more than ninety days.
The value of the securities in the MetLife Money Market Portfolio can be
expected to vary inversely with the changes in prevailing interest rates.
Thus, if interest rates increase after a security is purchased, that security,
if sold, might be sold at less than cost. Conversely, if interest rates
decline after purchase, the security, if sold, might be sold at a profit. In
either instance, if the security were held to maturity, no gain or loss would
normally be realized as a result of these fluctuations. Substantial
redemptions of shares of the MetLife Money Market Portfolio could require the
sale of portfolio investments at a time when a sale might not be desirable.
State Street Research Diversified Portfolio
The investment objective of the State Street Research Diversified Portfolio
is to achieve a high total return while attempting to limit investment risk
and preserve capital by investing in equity securities, fixed-income debt
securities, or short-term money market instruments, or any combination
thereof, at the discretion of State Street Research. State Street Research
will manage the investments of the Portfolio as if they constituted the
complete investment program of an investor. It is anticipated that State
Street Research will vary the portion of the State Street Research Diversified
Portfolio's assets invested in each type of security after considering
economic conditions, the general level of common stock prices, interest rates,
and other relevant considerations, including the risks of each type of
security. The equity securities portion of the Portfolio will be similar in
composition to and consist of securities that are permissible investments for
the State Street Research Growth Portfolio, the fixed-income debt securities
portion will be similar in composition to and consist of securities that are
permissible investments for the State Street Research Income Portfolio, and
the short-term money market instruments portion will consist of securities of
a type described in the first paragraph under "MetLife Money Market Portfolio"
above.
There are no limitations with respect to the percent of the assets of the
State Street Research Diversified Portfolio that may be invested in each of
the three portions described above. Thus, from time to time it may invest
entirely in equity securities, entirely in fixed-income debt securities,
entirely in short-term money market instruments, or any combination of these
types of securities in accordance with the full, complete and total discretion
of State Street Research, subject to the oversight of Metropolitan Life and
the Board of Directors of the Fund.
The State Street Research Diversified Portfolio seeks to reduce the need of
an investor in the Fund to consider in which of several types of investments
various
PROSPECTUS 9
<PAGE>
...............................................................
amounts of his or her monies should be invested, depending on the current
economic environment. This difficult task depends on the ability to select
appropriate investments at the appropriate time in light of anticipated
changes in market conditions. The State Street Research Diversified Portfolio
also is designed to reduce the risks associated with investments in any one
type of security by utilizing a variety of investments. However, the
performance of the Portfolio will depend upon State Street Research's judgment
and ability to structure the investments in the Portfolio to maximize return
in anticipation of changing market conditions. Obviously, there is no
assurance that such goals will be achieved.
State Street Research Aggressive Growth Portfolio
The primary investment objective of the State Street Research Aggressive
Growth Portfolio is to achieve maximum capital appreciation by investing
primarily in common stocks (and equity and debt securities convertible into or
carrying the right to acquire common stocks) of emerging growth companies,
undervalued securities or special situations. Current income is not a
consideration in the selection of investments for the Portfolio.
State Street Research considers emerging growth companies to be less mature
companies that are growing substantially faster than the overall U.S. economy.
The Portfolio will invest in those emerging growth companies believed to offer
appreciation potential greater than the stock market as a whole. State Street
Research considers securities to be undervalued or to be special situations
when, for example, the stock of larger and more mature companies trade at
prices below what State Street Research believes to be the companies'
intrinsic value, and therefore offer the potential for above-average
investment returns. State Street Research also seeks to identify securities
that are undervalued due to adverse operating results, economic or industry
conditions or unfavorable publicity. Securities are selected for the State
Street Research Aggressive Growth Portfolio based on a continuous study of
trends in industries and companies, earning power, growth features and other
investment criteria.
The State Street Research Aggressive Growth Portfolio may not be suitable
for all investors because of the risks described below. Investing in stocks of
companies that offer high appreciation potential involves greater risk than is
customarily associated with investing in more established companies.
Investment in relatively less mature companies involves certain risks since
such companies often have limited product lines, markets or financial
resources, and their management may lack depth of experience. The common
stocks of less mature companies frequently are traded only on smaller
securities exchanges or in the over-the-counter market. Therefore, the
securities of smaller companies may have limited marketability and may be
subject to more abrupt or erratic market movements than securities of larger
companies or the market averages in general. The State Street Research
Aggressive Growth Portfolio will also seek to shift funds into short-term
instruments of the type described in the first paragraph under "MetLife Money
Market Portfolio" for defensive purposes in periods of adverse market
conditions and in periods when short-term rates appear more attractive than
prospective equity returns.
MetLife Stock Index Portfolio
The investment objective of the MetLife Stock Index Portfolio is to equal
the performance of the Standard & Poor's 500 Composite Stock Price Index ("S&P
Index") (adjusted to assume reinvestment of dividends) by investing in the
common stock of companies which are included in the S&P Index. The S&P Index
consists of 500 common stocks, most of which are listed on the New York Stock
Exchange. In choosing the 500 stocks which are included in the S&P Index,
Standard & Poor's Equity Services considers market values and industry
diversification. Most of the stocks in the S&P Index are issued by companies
among the largest, in terms of the aggregate market value of their outstanding
stock, measured by the market price per share multiplied by the number of
shares outstanding. Stocks that are not among the five hundred largest are
included in the S&P Index for diversification purposes. Standard & Poor's
Equity Services may, from time to time, add or remove stocks from the S&P
Index. Standard & Poor's Equity Services is not a sponsor of, or in any other
way affiliated with, the Fund.
The MetLife Stock Index Portfolio attempts to duplicate the total return of
the S&P Index while maintaining low transaction costs. The Portfolio will
invest in equity securities that, as a group, reflect the composite
performance of the S&P Index based on a computer program that tracks the
performance of the various stocks in the S&P Index. As is the case with the
S&P Index, the Portfolio will invest in both dividend paying and non-dividend
paying common stocks. The Portfolio may not own, at the same time, each
individual stock in the S&P Index. The Portfolio, upon commencement of
operations, held about 350 of the stocks included in the S&P Index. Since the
commencement of operations, the number has increased to include approximately
472 stocks included in the S&P Index as the Portfolio has grown in total
PROSPECTUS 10
<PAGE>
...............................................................
assets. As the total assets in the Portfolio continue to increase it is
possible that the number of stocks held by the Portfolio may also increase to
include all 500 stocks included in the S&P Index.
The MetLife Stock Index Portfolio uses a correlation coefficient to measure
the relationship between the performance of the Portfolio and the S&P Index. A
perfect correlation would produce a coefficient of 1.00 which would be achieved
when the Portfolio's net asset value, including the value of its dividends,
increases or decreases in exact proportion to the change in the S&P Index. The
Portfolio will attempt to maintain a target correlation coefficient of at least
.95. If this target is in danger of not being achieved, the components of total
return of both the Portfolio and the S&P Index would be broken down to
determine the source of the difference so that corrective steps could be taken.
The Portfolio may also diversify differently by industry segment (such as
automotive industry, airline industry, electronics industry) than does the S&P
Index. It is expected that initially approximately 60% of the assets in the
Portfolio will be allocated based on a simple capitalization basis, with the
remaining assets allocated on an industry weighted basis. The Portfolio will be
rebalanced only if it deviates from the appropriate weightings by a certain
percent depending on the particular stock or industry. The Portfolio will not
purchase any common stock that is not included in the S&P Index.
Under normal circumstances, at least 75% of the total assets of the Portfolio
will be common stocks included in the S&P Index. (Circumstances that would not
be considered normal include an unusual cash flow pattern such as an
unexpectedly large inflow of cash which the portfolio manager is unable to
invest quickly and completely in such stocks because of the amount of the cash,
or a major catastrophe like atomic war or a natural disaster which prevents
investment in common stocks.) A portion of the Portfolio may temporarily be
invested in short-term investments of the type described in the first paragraph
under "MetLife Money Market Portfolio", pending withdrawal or investment.
The MetLife Stock Index Portfolio will not utilize a defensive investment
approach in periods of adverse market conditions such as generally declining
stock prices. Therefore, an investor participating in the Portfolio bears the
risk of such adverse market conditions. The Portfolio's return may be lower
than the return of the S&P Index because of brokerage and other transaction
costs, other Portfolio or Fund expenses, and tracking error.
The MetLife Stock Index Portfolio will not trade in securities for short-term
profits. Generally, the Portfolio will only trade securities to reflect changes
in the S&P Index or to carry out appropriate rebalancing for diversification
purposes or to more closely track the return of the S&P Index.
GFM International Stock Portfolio
The investment objective of the GFM International Stock Portfolio is to
achieve long-term growth of capital by investing primarily in common stocks and
equity-related securities of non-United States ("U.S.") companies. Non-U.S.
companies for these purposes are companies domiciled outside the United States.
Current income is not a specific prerequisite in the selection of portfolio
securities. Management will measure long-term growth in U.S. dollars. To
achieve its objective, the GFM International Stock Portfolio will, under normal
circumstances, invest at least 65% of its net assets in common stocks and
equity-related securities of established larger capitalization non-U.S.
companies having attractive long-term prospects for growth of capital. Equity-
related securities in which the Portfolio may invest include: preferred stocks,
securities convertible into or exchangeable for common stocks, and warrants. Up
to 25% of the assets may be invested in securities convertible or exchangeable
into common stocks. See "Other Investment Practices--Convertible Securities and
Warrants" for a discussion of convertible securities. The GFM International
Stock Portfolio may also invest up to 5% of its net assets in common stocks and
equity-related securities of smaller capitalization emerging growth companies
that GFM expects will achieve above-average long-term earnings growth. The GFM
International Stock Portfolio may also acquire privately placed equity
securities, limited to 5% of the Portfolio's net assets. The foregoing
percentage limitations are as of the time of investment.
Although the GFM International Stock Portfolio will be primarily invested in
common stocks and equity-related securities of non-U.S. companies, to the
extent it is not so invested, it may be invested in other types of securities,
including: (i) high and medium quality debt securities of domestic and non-U.S.
issuers rated at least Baa or its equivalent by an NRSRO or, if unrated, of
comparable investment quality as determined by GFM and (ii) high-quality
domestic and non-U.S. money market instruments, including repurchase agreements
with non-U.S. banks and broker-dealers and "synthetic" money market positions.
See "Other Investment Practices" for information concerning repurchase
agreements and synthetic money market positions. Under normal market and
economic conditions, the
PROSPECTUS 11
<PAGE>
...............................................................
Portfolio intends to invest primarily in non-U.S. equity and debt securities.
Nevertheless, if current or anticipated political, market, or economic
conditions warrant, the Portfolio may for temporary or defensive purposes
invest in domestic money market instruments, debt securities, and equity
securities without limitation.
The common stocks and equity-related securities purchased by the GFM
International Stock Portfolio are generally expected to be traded on a non-U.S.
stock exchange or on an established over-the-counter market. The Portfolio will
also invest in common stocks and equity-related securities of non-U.S.
companies through the purchase of American Depository Receipts ("ADRs"),
European Depository Receipts ("EDRs"), and International Depository Receipts
("IDRs"). See "Foreign Securities" for a further discussion of these
investments.
The GFM International Stock Portfolio intends to invest primarily in
securities denominated in currencies other than the U.S. dollar, may
temporarily hold funds in bank deposits or money market investments denominated
in non-U.S. currencies, and may receive interest, dividends, and sale proceeds
in non-U.S. currencies. As a result, the Portfolio will engage in currency
exchange transactions to convert currencies to or from U.S. dollars. These
currency transactions may be on a spot (i.e., cash) basis at the spot rate
prevailing in the non-U.S. exchange market. To reduce risks associated with
currency fluctuations, the Portfolio may also enter into forward foreign
currency exchange contracts to purchase or sell selected currencies, may write
covered put and call options on selected currencies, may purchase put or call
options on selected currencies, may sell or purchase currency futures
contracts, and may sell or purchase put or call options on currency futures
contracts. Such transactions will be used for hedging purposes or to earn
additional income, but in no event for leveraging purposes. See "Other
Investment Practices" for information concerning these investment techniques
and the manner in which they may be used by the Portfolio.
FUNDAMENTAL INVESTMENT POLICIES
The Fund has adopted the following fundamental policies relating to the
investment of assets of the Portfolios and their activities. Additional
fundamental investment policies are described in the Fund's Statement of
Additional Information at "Investment Practices and Policies." The fundamental
policies discussed below and in the Statement of Additional Information, unlike
the general objectives and policies discussed above, may not be changed without
approval by the requisite vote of the outstanding voting shares of each
Portfolio affected. Unless otherwise indicated, all restrictions apply at the
time of purchase.
No Portfolio may:
1. write call options which are not covered options (see "Writing Covered
Put and Call Options and Purchasing Put and Call Options" under "Other
Investment Practices");
2. (except for the GFM International Stock Portfolio, which may write
covered put options) write put options, except to close out option positions
previously entered into;
3. invest in commodities or commodity contracts, except that: (i) any
Portfolio that invests in equity securities may purchase and sell stock
index futures contracts, may write covered call options and purchase put and
call options on such stock index futures contracts and may enter into
closing transactions with respect to such options; (ii) all Portfolios may
purchase and sell interest rate futures contracts, may write covered call
options and purchase put and call options on such interest rate futures
contracts and may enter into closing transactions with respect to such
options; (iii) all Portfolios may write covered call options and purchase
put and call options on indices and may enter into closing transactions with
respect to such options, to the extent that investment in a particular index
is economically appropriate for the management of the Portfolio's underlying
securities and consistent with its investment objective(s) and policies; and
(iv) the GFM International Stock Portfolio may purchase and sell stock
index, interest rate, and currency futures contracts, may write covered put
and call options on such futures contracts, may purchase put and call
options on such futures contracts, and may enter into closing transactions
with respect to options on such futures contracts;
4. make loans, provided, however, that this restriction shall not prohibit
a Portfolio from (a) entering into repurchase agreements (see "Investment
Practices and Policies" in the Statement of Additional Information), (b)
purchasing bonds, notes, debentures or other obligations of a character
customarily purchased by institutional or individual investors (whether or
not publicly distributed) and (c) making loans of its portfolio securities
or other assets which do not thereupon cause in excess of 20% of the value
of the Portfolio's total assets to consist of loaned securities or assets
(see "Lending of Portfolio Securities" in the Statement of Additional
Information for a discussion of additional risks associated with such
practice); or
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5. (except for the GFM International Stock Portfolio, which may invest all
of its assets in securities of foreign issuers) purchase securities of
foreign issuers if more than 10% of the value of the Portfolio's total
assets would thereupon be invested in such securities. However, up to 25% of
the value of the Portfolio's total assets may be invested in securities (i)
issued, assumed or guaranteed by foreign governments, or political
subdivisions or instrumentalities thereof, (ii) assumed or guaranteed by
domestic issuers or (iii) issued, assumed or guaranteed by foreign issuers
having a class of securities listed for trading on the New York Stock
Exchange. (See "Foreign Securities" for a discussion of additional risks
associated with such investments.)
OTHER INVESTMENT PRACTICES
Writing Covered Put and Call Options and Purchasing Put and Call Options. In
order to earn additional income or as a hedge against or to minimize
anticipated declines in the value of its securities, each Portfolio may write
(sell) covered call options on securities and stock indices and may purchase
call options to close out covered call options previously entered into. In
addition, to earn additional income, the GFM International Stock Portfolio may
write covered put options on securities and stock indices and may purchase put
options to close out such covered put options previously written. The GFM
International Stock Portfolio also may write covered call and covered put
options on currencies and may purchase call and put options to close out
covered put and covered call options previously written. The GFM International
Stock Portfolio may write covered call and covered put options on currencies
to hedge against anticipated declines in the exchange rate of the currencies
in which the Portfolio's securities held or to be purchased are denominated or
to earn additional income for the Portfolio.
As a general matter, a call option gives the holder (purchaser) the right to
buy and obligates the writer (seller) to sell, in return for a premium paid,
the underlying security or currency at the exercise price during the option
period. As a general matter, a put option gives the holder (purchaser) the
right to sell and obligates the writer (seller) to purchase, in return for a
premium paid, the underlying security or currency at the exercise price during
the option period. In economic effect, a stock index call or put option is
similar to an option on a particular security, except that the value of the
option depends on the weighted value of the group of securities comprising the
index, rather than a particular security, and settlements are made in cash
rather than by delivery of a particular security. The Portfolio will write
covered call options only with respect to equity securities, bonds, stock and
bond indices and currencies which correlate with that Portfolio's particular
portfolio securities.
Options written by the Portfolios will be "covered" by segregating liquid
assets with the Fund custodian that at all times at least equal the Fund's
obligations under options it has written, by purchasing an appropriate
offsetting option or other derivative instruments, or (in the case of a call
option written by the Fund) owning the securities or other investments subject
to the options.
Each Portfolio may also purchase put and call options with respect to
securities and indices that correlate with that Portfolio's securities and the
GFM International Stock Portfolio may purchase put and call options on
currencies that correlate with that Portfolio's investments. A Portfolio may
purchase put options for defensive purposes in order to protect against an
anticipated decline in the value of its portfolio securities or, with respect
to the GFM International Stock Portfolio, the currencies in which its
securities are denominated. As the holder of a put option with respect to
individual securities or currencies, the Portfolio has the right to sell the
securities or currencies underlying the options and to receive a cash payment
at the exercise price at any time during the option period. As the holder of a
put option on an index, the Portfolio has the right to receive, upon exercise
of the option, a cash payment equal to a multiple of any excess of the strike
price specified by the option over the value of the index. A Portfolio may
purchase call options in order to acquire the securities or currencies
underlying the option or, with respect to options on indices, to receive
income equal to the value of such index over the strike price. As the holder
of a call option with respect to individual securities or currencies, the
Portfolio obtains the right to purchase the underlying security or currency at
the exercise price at any time during the option period. With respect to
options on an index, the holder of a call option obtains the right to receive,
upon exercise of the option, a cash payment equal to the multiple of any
excess of the value of the index on the exercise date over the strike price
specified in the option.
Although these investment practices may be used to generate additional
income and to attempt to reduce the effect of any adverse price movement in
the security or currency subject to the option, they do involve certain risks
that are different in some respects from investment risks associated with
similar funds which do not engage in such activities. These risks include the
following: writing covered call options--the inability to effect closing
transactions at favorable prices and the inability
PROSPECTUS 13
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to participate in the appreciation of the underlying securities or currencies
above the exercise price; writing covered put options--the inability to effect
closing transactions at favorable prices and the obligation to purchase the
specified securities or currencies or to make a cash settlement on the stock
index at prices which may not reflect current market values or exchange rates;
and purchasing put and call options--possible loss of the entire premium paid.
In addition, the effectiveness of hedging through the purchase or sale of
index options will depend upon the extent to which price movements in the
portion of the securities portfolios being hedged correlate with price
movements in the selected index. Perfect correlation may not be possible
because the securities held or to be acquired by a Portfolio may not exactly
match the composition of the index on which options are written. If the
forecasts of the manager or a sub-investment manager, as applicable, regarding
movements in securities prices, interest rates or exchange rates are
incorrect, the Portfolio's investment results may have been better without the
hedge. A more thorough description of these investment practices and their
associated risks is contained in the Fund's Statement of Additional
Information.
The options and futures markets of foreign countries are small compared to
those of the United States and consequently are characterized in most cases by
less liquidity than are the U.S. markets. In addition, foreign markets may be
subject to less detailed reporting requirements and regulatory controls than
U.S. markets. Furthermore, investments in options in foreign markets are
subject to many of the same risks as other foreign investments. See "Foreign
Securities" below.
Futures Contracts and Options on Futures Contracts. All the Portfolios
except the MetLife Stock Index Portfolio may purchase and sell futures
contracts on debt securities and indices of debt securities (i.e. interest
rate futures contracts) as a hedge against or to minimize adverse principal
fluctuations resulting from anticipated interest rate changes or as an
efficient means to adjust their exposure to the bond market. The State Street
Research Growth, State Street Research Diversified, State Street Research
Aggressive Growth, MetLife Stock Index and GFM International Stock Portfolios
may, where appropriate, enter into futures contracts on equity securities or
stock indices to provide a hedge for a portion of that particular Portfolio's
equity holdings or to enhance return. Stock index futures contracts may be
used as a way to implement either an increase or decrease in portfolio
exposure to the equity markets in response to changing market conditions. The
GFM International Stock Portfolio may also purchase and sell currency futures
contracts as a hedge to protect against anticipated changes in currency rates
or as an efficient means to adjust its exposure to the currency market.
Each Portfolio may also write (sell) covered call options on, and purchase
put and call options on, futures contracts of the type which that Portfolio is
permitted to purchase or sell, and may enter into closing transactions with
respect to such options on futures contracts purchased or sold. The GFM
International Stock Portfolio may also write covered put options on such
futures contracts and may enter into closing transactions with respect to such
options. In each case, options on futures contracts will be used only for the
same purposes that the Portfolio may use futures contracts. The Portfolios
will not enter into futures contracts or write options on futures for
leveraging purposes and will only enter into futures contracts or related
options that are traded on a recognized futures exchange. No Portfolio will
enter into futures contracts or options thereon if immediately thereafter the
sum of the amounts of initial margin deposits on the Portfolio's open futures
contracts and options written on futures and premiums paid for unexpired
options on futures contracts would exceed 5% of the value of that Portfolio's
total assets; provided, however, that in the case of an option that is "in-
the-money" at the time of purchase, the "in-the-money" amount may be excluded
in calculating the 5% limitation.
The use of futures contracts by the Portfolios entails certain risks,
including but not limited to the following: no assurance that futures
contracts transactions can be offset at favorable prices; possible reduction
of a Portfolio's income due to the use of hedging; possible reduction in value
of both the securities or currency hedged and the hedging instrument; possible
lack of liquidity due to daily limits on price fluctuations; imperfect
correlation between the contract and the securities or currencies being
hedged; and potential losses in excess of the amount initially invested in
futures contracts themselves. If the expectations of the investment manager or
a sub-investment manager, as applicable, regarding movements in securities
prices, interest rates or exchange rates are incorrect, a Portfolio may have
experienced better investment results without use of these instruments. The
use of futures contracts and options on futures contracts requires special
skills in addition to those needed to select portfolio securities. A further
discussion of futures contracts and options and their associated risks is
contained in the Statement of Additional Information.
Foreign Securities. Subject to the restrictions contained in fundamental
investment policy number 5 and each Portfolio's investment objectives and
policies, each Portfolio may purchase securities of foreign issuers (including
foreign governments) or securities denominated in foreign currencies.
PROSPECTUS 14
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When investing in common stocks and equity-related securities of foreign
issuers, the Portfolios may purchase ADRs, EDRs, IDRs and GDRs. ADRs are U.S.
dollar-denominated certificates issued by a U.S. bank or trust company and
represent the right to receive securities of a foreign issuer deposited in a
domestic bank or foreign branch of a U.S. bank. EDRs and IDRs are receipts
issued in Europe, generally by a non-U.S. bank, or trust company, that
evidence ownership of non-U.S. securities. GDRs are securities convertible
into equity securities of foreign issuers. ADRs are traded on domestic
exchanges or in the U.S. over-the-counter market and, generally, are in
registered form. EDRs, GDRs and IDRs are traded on non-U.S. exchanges or in
non-U.S. over-the-counter markets and, generally, are in bearer form.
Investment in ADRs has certain advantages over direct investment in the
underlying non-U.S. securities because (i) ADRs are U.S. dollar-denominated
investments which are registered domestically, easily transferable, and for
which market quotations are generally readily available, and (ii) issuers
whose securities are represented by ADRs are subject to the same auditing,
accounting, and financial reporting standards as domestic issuers.
Each Portfolio may also, in accordance with its specific investment
objectives, policies and restrictions, purchase high-quality U.S. dollar-
denominated money market securities of foreign issuers. Such money market
securities may be registered domestically and traded on domestic exchanges or
in the U.S. over-the-counter market (e.g. Yankee securities), or may be
registered abroad and traded exclusively in foreign markets (e.g. Eurodollar
securities).
Although investments in foreign securities by each Portfolio may reduce
overall risk by providing further diversification, investments in securities
of foreign issuers, particularly non-governmental issuers, involve certain
specific risks which are not ordinarily associated with investments in
domestic issuers. The securities of non-U.S. issuers held by the Portfolios
generally will not be registered under, nor will the issuers thereof be
subject to, the reporting requirements of the U.S. Securities and Exchange
Commission. Accordingly, there may be less publicly available information
about the securities and about the foreign company or government issuing them
than is available about a domestic company or government entity. Companies
outside the United States are not subject to the same accounting, auditing,
and financial reporting standards, practices, and requirements applicable to
domestic companies. Stock markets outside the United States may not be as
developed or as efficient as those in the United States, and government
supervision and regulation of those stock markets and brokers is not identical
to that in the United States. The securities of some non-U.S. companies may be
less liquid and more volatile than securities of comparable U.S. companies,
and settlement of transactions with respect to such securities may sometimes
be delayed beyond periods customary in the United States, which might present
liquidity concerns. Further, fixed brokerage commissions on certain non-U.S.
stock exchanges are generally higher than negotiated commissions on United
States exchange-listed securities, and custodial costs with respect to these
securities generally exceed domestic costs. In addition, with respect to some
countries, there is the possibility of unfavorable changes in investment or
exchange control regulations, expropriation, or confiscatory taxation,
limitations on the removal of funds or other assets of the Portfolios,
political or social instability, or diplomatic developments that could
adversely affect investments in those countries. Further, the value of each
Portfolio's securities denominated in foreign currencies will be affected
favorably or unfavorably by changes in currency exchange rates and exchange
control regulations, and the Portfolios may incur costs in connection with
conversions between various currencies.
The investment manager or a sub-investment manager, as applicable, will
consider these and other factors before investing in foreign securities, and
no such investments will be made unless, in their view, the potential benefits
to a Portfolio are deemed to outweigh the risks and such investments will meet
the policies, standards and objectives of a particular Portfolio.
Forward Foreign Currency Exchange Contracts. When the Portfolios invest in
securities denominated in currencies other than U.S. dollars, such securities
may be affected favorably or unfavorably by changes in currency rates. Each
Portfolio (except the MetLife Stock Index Portfolio) may use forward foreign
currency exchange contracts ("forward currency contracts") to hedge the
currency risk relating to securities denominated or traded in a foreign
currency that are purchased, sold, or held by that Portfolio. A forward
currency contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the forward currency contract agreed upon by the parties, at a price set at
the time of the contract. These forward currency contracts are principally
traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. Except as discussed in
the following paragraph, the Portfolios may enter into forward currency
contracts under two circumstances. First, when a Portfolio has entered into a
contract to purchase or sell a security denominated in or exposed to a foreign
currency, that Portfolio may be able to protect itself against a possible
loss, between the
PROSPECTUS 15
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trade date and the settlement date for such security, resulting from an
adverse change in the relationship between the U.S. dollar and the foreign
currency in which such security is denominated or exposed, by entering into a
forward currency contract in U.S. dollars for the purchase or sale of foreign
currency. However, this practice may limit potential gains which might result
from a positive change in such currency relationships. Second, when the
management for a Portfolio believes that the currency of a particular country
may suffer or enjoy a substantial movement against the U.S. dollar (or another
currency), that Portfolio may enter into a forward currency contract to sell
or buy an amount of foreign currency approximating the value of some or all of
that Portfolio's securities denominated in or exposed to foreign currency.
Portfolios that invest in foreign securities may "hedge" their exposure to
potentially unfavorable currency changes by purchasing a contract to exchange
one currency for another on some future date at a specified exchange rate. In
certain circumstances, a "proxy currency" may be substituted for the currency
in which the investment is denominated, a strategy known as "proxy hedging."
Although foreign currency transactions will be used primarily to protect a
Portfolio's foreign securities from adverse currency movements relative to the
dollar, they involve the risk that anticipated currency movements will not
occur and the Portfolio's total return could be reduced. The forecasting of
currency market movements is extremely difficult and whether such a hedging
strategy will be successful is highly uncertain.
The GFM International Stock Portfolio may enter into forward currency
contracts for non-hedging purposes, provided that no more than 5%, at the time
of investment, of the Portfolio's assets will be committed to such
transactions.
Synthetic Non-U.S. Money Market Positions. Money market securities
denominated in foreign currencies are permissible investments of the GFM
International Stock Portfolio. In addition to, or in lieu of, direct
investment in such securities, the GFM International Stock Portfolio may
construct a synthetic non-U.S. money market position by (i) purchasing a money
market instrument denominated in U.S. dollars and (ii) concurrently entering
into a forward currency contract to deliver a corresponding amount of U.S.
dollars in exchange for a foreign currency on a future date and at a specified
rate of exchange. Because of the availability of a variety of highly liquid
short-term U.S. dollar-denominated money market instruments, a synthetic money
market position utilizing such U.S. dollar-denominated instruments may offer
greater liquidity than direct investment in a money market instrument
denominated in a foreign currency.
Diversification of Investment in Foreign Countries. The GFM International
Stock Portfolio intends to broadly diversify its holdings by both the number
of companies and the countries in which it will invest. Under normal
circumstances, the GFM International Stock Portfolio expects to have
investments in at least three different countries outside the U.S. No more
than 20% of net assets of a Portfolio will be invested in any one country at
any one time except that an additional 15% of net assets may be invested in
securities of issuers located in Australia, Canada, France, Japan, the United
Kingdom, or Germany. Each Portfolio has no other set limits related to the
geography of its investments and expects to invest in companies located in
Europe, the Pacific Basin, and Latin America. When allocating investments
among geographic regions and individual countries, GFM, as applicable,
considers various factors, such as: prospects for relative economic growth
among countries, regions or geographic areas; expected levels of inflation;
government policies influencing business conditions; and the outlook for
currency relationships.
Mortgage-Related Securities. The Portfolios may invest in Fannie Maes,
Freddie Macs, Collateralized Mortgage Obligations ("CMOs"), and related
securities, including Ginnie Maes and mortgage-backed securities. Such
mortgage-related securities represent a direct or indirect interest in a pool
of mortgages. They may be issued or guaranteed by U.S. Government
instrumentalities or by non-governmental entities. The issuer's obligation to
make interest and principal payments is secured by the underlying portfolio of
mortgages or mortgage-backed securities. In the event of sufficient early
prepayments on the underlying mortgages, the class or series of CMOs first to
mature generally will be retired prior to its maturity. As with other
mortgage-backed securities, the early retirement of a particular class or
series of CMOs held by a Portfolio could involve the loss of any premium the
Portfolio paid when it acquired the investment and could result in the
Portfolio's reinvesting the proceeds at a lower interest rate than the retired
security paid. Because of the early retirement feature, mortgage-related
securities may be more volatile than many other fixed-income investments. Also
CMOs and other mortgage-backed securities are valued based on expected
prepayment rates. Changing expectations about prepayment rates (due to
changing interest rates or other factors) will result in higher or lower
market values for these securities after they are purchased by a Portfolio.
The foregoing characteristics can cause the market value of CMOs and other
mortgage-backed securities to increase less in a decreasing interest rate
environment and to decrease more in an increasing interest rate environment
than would be the case with respect to otherwise comparable debt securities
that are not subject to prepayment features.
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All of the Portfolios except for the MetLife Money Market Portfolio and
MetLife Stock Index Portfolio also may purchase "IOs," which are entitled to
the interest payments from a class or series of mortgage-related securities,
and "POs," which are entitled to the principal payments. As compared with
mortgage-related securities that provide for periodic interest payments, POs
generally will experience greater increases in value in response to falling
interest rates or increases in prepayment rates as originally estimated.
Conversely, they will decrease in value more as a result of increasing interest
rates or reductions from originally estimated prepayment rates. IOs also are
highly volatile, and their value will generally change in the opposite
direction from changes in the related POs' value as a result of changes in
interest rates or prepayment rates as originally estimated. If the underlying
mortgages are prepaid, the IOs have no further value and a Portfolio,
therefore, may not recover all of its investment.
Common and Preferred Stocks. Stocks represent shares of ownership in a
company. Equity securities of companies with relatively small market
capitalization may be more volatile than the securities of larger, more
established companies and than the broad equity market indexes. Generally,
preferred stock has a specified dividend and ranks after bonds and before
common stocks in its claim on income for dividend payments and on assets should
the company be liquidated. After other claims are satisfied, common
stockholders participate in company profits on a pro rata basis; profits may be
paid out in dividends or reinvested in the company to help it grow. Increases
and decreases in earnings are usually reflected in a company's stock price, so
common stocks generally have the greatest appreciation and depreciation
potential of all corporate securities. While most preferred stocks pay a
dividend, a Portfolio may purchase preferred stock where the issuer has
omitted, or is in danger of omitting, payment of its dividend. Such investments
would be made primarily for their capital appreciation potential.
Convertible Securities and Warrants. Securities convertible into common
stocks consist primarily of bonds or preferred stocks which have warrants
attached or which are exchangeable into a specified number of shares of common
stock. Traditionally, convertible securities have paid dividends or interest at
rates higher than common stocks but lower than nonconvertible securities. They
generally participate in the appreciation or depreciation of the underlying
stock into which they are convertible, but to a lesser degree. In recent years,
convertibles have been developed which combine higher or lower current income
with options and other features. Warrants are options to buy a stated number of
shares of common stock at a specified price anytime during the life of the
warrants (generally, two or more years).
Private Placements. These securities are sold directly to a small number of
investors, usually institutions. Unlike public offerings, such securities are
not registered with the SEC. Certain privately offered securities are Rule 144A
securities which can be resold only to certain qualified institutional buyers.
Private Placements may be illiquid and their sale may involve substantial
delays and additional costs. The absence of a trading market may make it
difficult to ascertain a market value for an illiquid or restricted investment.
Rule 144A securities may be considered liquid under procedures adopted by the
Fund's Board of Directors.
Zero Coupon Securities. These securities accrue interest at a specified rate,
but do not pay interest in cash on a current basis. A Portfolio is required to
distribute the income on zero coupon securities to Portfolio shareholders as
the income accrues, even though the Portfolio is not receiving the income in
cash on a current basis. Thus the Portfolio may have to sell other investments
to obtain cash to make income distributions. Zero coupon securities are subject
to greater market fluctuations from changing interest rates than debt
obligations of comparable maturities which make current cash distributions of
interest.
Other Derivative Transactions. In a typical interest rate swap agreement, one
party agrees to make payments equal to a floating interest rate on a specified
amount (the "notional amount") in return for payments equal to a fixed interest
rate on the same amount for a specified period. If a swap agreement provides
for payments in different currencies, the parties might agree to exchange the
notional amount as well. The purchaser of an interest rate cap or floor, upon
payment of a fee, has the right to receive payments (and the seller of the cap
is obligated to make payments) to the extent a specified interest rate exceeds
(in the case of a cap) or is less than (in the case of a floor) a specified
level over a specified period of time or at specified dates. The purchaser of
an interest rate collar, upon payment of a fee, has the right to receive
payments (and the seller of the collar is obligated to make payments) to the
extent that a specified interest rate falls outside an agreed upon range over a
specified period of time or at specified dates.
Index and currency swaps, caps, floors, and collars are similar to those
described in the preceding paragraph, except that, rather than being determined
by variations in specified interest rates, the obligations of the parties are
determined by variations in specified interest rate or currency indices.
The amount of a Portfolio's potential gain or loss on any swap transaction is
not subject to any fixed limit. Nor
PROSPECTUS 17
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is there any fixed limit on the Portfolio's potential loss if it sells a cap,
floor or collar. If a Portfolio buys a cap, floor or collar, however, the
Portfolio's potential loss is limited to the amount of the fee that it has
paid. Swaps, caps, floors and collars tend to be more volatile than many other
types of investments. Nevertheless, a Portfolio will use these techniques only
as a risk management tool and not for purposes of leveraging the Portfolio's
market exposure or its exposure to changing interest rates, security values or
currency values. Rather, a Portfolio will use these transactions only to
preserve a return or spread on a particular investment or portion of its
investments, to protect against currency fluctuations, as a duration
management technique, to protect against any increase in the price of
securities the Portfolio anticipates purchasing at a later date, or to gain
exposure to certain markets in the most economical way possible. Nor will a
Portfolio sell interest rate caps, floors or collars if it does not own
securities providing the interest that the Portfolio may be required to pay.
The use of swaps, caps, floors and collars involves investment techniques
and risks different from those associated with other Portfolio security
transactions. If the sub-investment manager is incorrect in its forecasts of
market values, interest rates, currency rates and other applicable factors,
the investment performance of a Portfolio will be less favorable than if these
techniques had not been used. These instruments are typically not traded on
exchanges. Accordingly, there is a risk that the other party to certain of
these instruments will not perform its obligations to the Fund or that a
Portfolio may be unable to enter into offsetting positions to terminate its
exposure or liquidate its investment under certain of these instruments when
it wishes to do so. Such occurrences could result in losses to the Portfolio.
The sub-investment manager, however, will consider such risks and will enter
into swap, cap, floor, and collar transactions only when it believes that the
risks are not unreasonable.
Purchasing Securities on a "When Issued" Basis. The purchase of securities
on a "when issued" basis means that a Portfolio will enter into a commitment
to buy the security before the security has been issued. The Portfolio's
payment obligation and the interest rate on the security are determined when
the Portfolio enters into the commitment. The security is typically delivered
to the Portfolio 15 to 120 days later. No interest accrues on the security
between the time the Portfolio enters into the commitment and the time the
security is delivered. If the value of the security being purchased falls
between the time a Portfolio commits to buy it and the payment date, the
Portfolio may sustain a loss. The risk of the loss is in addition to the
Portfolio's risk of loss on the securities actually in its portfolio at the
time. In addition, when the Portfolio buys a security on a when-issued basis,
it is subject to the risk that market rates of interest will increase before
the time the security is delivered, with the result that the yield on the
security delivered to the Portfolio may be lower than the yield available on
other, comparable securities at the time of delivery. If the Portfolio has
outstanding obligations to buy when-issued securities, it will maintain liquid
assets in a segregated account at its custodian bank in an amount sufficient
to satisfy these obligations.
MANAGEMENT OF THE FUND
...............................................................................
The directors, in addition to reviewing the actions of the Fund's investment
manager and sub-investment manager, as set forth below, decide upon matters of
general policy. The Fund's officers supervise the daily business operations of
the Fund. A listing of the Board of Directors and the officers of the Fund is
set forth under "Directors and Officers" in the Statement of Additional
Information.
Metropolitan Life is the investment manager and principal underwriter and
distributor for the Fund. Metropolitan Life also manages investment assets
owned by it, by certain companies affiliated with it and by certain other
entities. Metropolitan Life is a mutual life insurance company which sells
insurance policies and annuity contracts. On December 31, 1996, it had total
life insurance in force of approximately $1.6 trillion and total assets under
management of approximately $298 billion. Metropolitan Life is the parent of
Metropolitan Tower.
State Street Research is the sub-investment manager with respect to the
State Street Research Growth, State Street Research Income, State Street
Research Diversified and State Street Research Aggressive Growth Portfolios.
State Street Research is a Delaware corporation, and is a wholly-owned
indirect subsidiary of Metropolitan Life, which currently provides investment
research and management services to a family of mutual funds and a limited
number of other substantial institutional clients, such as trustees for
corporate pension plans, endowments and foundations. State Street Research has
a history that dates to 1924, with the founding of America's second mutual
fund. On December 31, 1996, State Street Research and its subsidiaries had
investment arrangements in effect for about $41.7 billion in assets. State
Street Research's fees for sub-investment management services are paid by
Metropolitan Life.
GFM is the sub-investment manager with respect to the GFM International
Stock Portfolio. Formed in 1990, GFM is an English corporation and a
subsidiary of Metropolitan Life. The firm was formed to provide
PROSPECTUS 18
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pension funds, 401(k) plans, foundations, endowments, corporations and
financial institutions with a range of investment management services related
to the international marketplace. On December 31, 1996, GFM had investment
management arrangements in effect for over $1.518 billion in assets. GFM's
fees for sub-investment management services are paid by Metropolitan Life.
Metropolitan Life, subject to review by the Fund's Board of Directors, is
responsible for the overall management of each Portfolio and has ultimate
responsibility for making decisions to buy, sell or hold any particular
security for each Portfolio and day to day responsibility for making such
decisions for the MetLife Money Market and the MetLife Stock Index Portfolios.
State Street Research, subject to review by the Fund's Board of Directors and
by Metropolitan Life, and any sub-investment manager that has been appointed
for a Portfolio, has the day-to-day responsibility for making decisions to
buy, sell or hold any particular security for that Portfolio. Metropolitan
Life is also obligated to perform general administrative and management
services for the Fund.
For providing investment management services to each of the State Street
Research Growth, State Street Research Income, State Street Research
Diversified, MetLife Stock Index and MetLife Money Market Portfolios,
Metropolitan Life receives monthly compensation from the Portfolios at an
annual rate of .25% of the average daily value of the aggregate net assets of
that Portfolio. For providing investment management services to the State
Street Research Aggressive Growth Portfolio and the GFM International Stock
Portfolio, Metropolitan Life receives monthly compensation at an annual rate
of .75% of the average daily value of the aggregate net assets of that
Portfolio. The advisory fee payable by the State Street Research Aggressive
Growth Portfolio is higher than advisory fees paid by many other investment
companies of the same type, but the Fund's Board of Directors believes it to
be justifiable in consideration of the extremely careful scrutiny and analysis
necessary to select and continuously follow the kinds of investments in which
such Portfolio engages in light of such Portfolio's investment objectives and
policies. Moreover, the advisory fee is comparable to other investment
companies with similar investment objectives.
During 1994, 1995 and 1996, such fees aggregated $11,024,956, $14,648,069
and $20,845,048, respectively, for all of the Portfolios.
For providing sub-investment management services with respect to the State
Street Research Growth Portfolio and the State Street Research Diversified
Portfolio, State Street Research receives from Metropolitan Life an annual
percentage fee, calculated on the month ending value of the aggregate net
assets of the particular Portfolio, of 1/2 of 1% for the first $5 million of
Portfolio assets, 3/8 of 1% for the next $5 million of assets, 1/4 of 1% for
the next $190 million of assets and 1/5 of 1% for assets above $200 million.
For such services to the State Street Research Income Portfolio, State Street
Research receives from Metropolitan Life an annual percentage fee, calculated
on the month ending value of the aggregate net assets of the State Street
Research Income Portfolio, of 1/4 of 1% for the first $25 million of Portfolio
assets, 3/16 of 1% for the second $25 million of assets and 1/8 of 1% for
assets above $50 million. For providing sub-investment management services for
the State Street Research Aggressive Growth Portfolio, State Street Research
receives from Metropolitan Life an annual percentage fee, calculated on the
month ending value of the aggregate net assets of the State Street Research
Aggressive Growth Portfolio, of 3/4 of 1%. During 1994, 1995 and 1996, sub-
investment management fees for the State Street Research Growth, State Street
Research Income, State Street Research Diversified, and State Street Research
Aggressive Growth Portfolios aggregated $7,652,865, $10,412,735 and
$14,979,746, respectively.
For providing sub-investment management services for the GFM International
Stock Portfolio, GFM receives from Metropolitan Life an annual percentage fee,
calculated on the month ending value of the aggregate net assets of the GFM
International Stock Portfolio, of .60%. During 1994, 1995 and 1996, sub-
investment management fees for the GFM International Stock Portfolio
aggregated $1,389,924, $1,634,069 and $1,868,362, respectively. The Fund has
no responsibility for the payment of fees to State Street Research or GFM.
John T. Wilson is the portfolio manager for the State Street Research Growth
Portfolio and for the equity portion of the State Street Research Diversified
Portfolio. Mr. Wilson is a member of the State Street Research Equity Group's
Growth Team and a Vice President of the Firm. Mr. Wilson joined the Firm in
1996 as a portfolio manager. Before joining State Street Research, Mr. Wilson
served as a portfolio manager with Phoenix Investment Counsel, Inc. He
received a B.A. from Trinity College and an M.B.A. from Duke University. Mr.
Wilson has six years of investment experience.
Kim M. Peters manages the State Street Research Income Portfolio and the
fixed income portion of the State Street Research Diversified Portfolio. Mr.
Peters is the lead portfolio manager for the State Street Research Fixed
Income Group's Corporate Team and is a Senior
PROSPECTUS 19
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...............................................................
Vice President of the firm. He joined State Street Research in 1986 as a
security analyst, was named Vice President in 1993 and became Senior Vice
President in 1994. Mr. Peters previously served as Registration and Compliance
Specialist at the State Historical Society of Wisconsin. He earned an A.B. from
Clark University, an M.S. from the University of Wisconsin and an M.B.A. from
the University of Wisconsin Graduate School of Business. He has ten years of
investment experience. Frederick R. Kobrick manages the State Street Research
Aggressive Growth Portfolio. He is the lead portfolio manager for the State
Street Research Equity Group's Aggressive Growth Team and a member of the
Investment Research Committee. He joined State Street Research in 1985 as Vice
President and became Senior Vice President in 1989. Previously, Mr. Kobrick
served as a security analyst and portfolio manager at Thorndike, Doran, Paine &
Lewis. He received a B.A. from Boston University and an M.B.A. from Harvard
Business School. Mr. Kobrick has 25 years of investment experience.
The GFM International Stock Portfolio is managed by Rosamunde M. Price,
Steven J. Brunnock, Ian R. Vose, and Justin Donegan of GFM. Mrs. Price's,
Mr. Brunnock's and Mr. Donegan's principal occupation is portfolio manager with
GFM. Mrs. Price and Mr. Brunnock have managed the Portfolio since its inception
in January 1992 and have been with GFM since its formation in 1990. Mr. Donegan
has been with GFM since October 1996. Mr. Vose's principal occupation is Chief
Executive and Chief Investment Officer of GFM. For the five years prior to
joining GFM, Mrs. Price served as Chief Investment Manager (Equities) at
Deutsche Bank Capital Management (UK) Ltd., Senior Fund Manager at Nippon
Credit International Ltd. and Investment Director of the Civil Aviation
Authority Pension Fund. For the five years prior to joining GFM, Mr. Brunnock
served as United Kingdom Portfolio Manager of MGM Assurance plc. For the five
years prior to joining GFM, Mr. Vose served as Director of MG International
Fund Management and Chief Investment Officer of MG-Tokai Bank Fund Management.
For the five years prior to joining GFM, Mr. Donegan was self- employed as a
financial consultant, a Japanese Portfolio Manager at Pictet Asset Management
and a Far Eastern Portfolio Manager at Johnson Capital Management.
Prior to May 16, 1993, Metropolitan Life was obligated to pay all expenses of
each Portfolio that was in operation at the time. Since that date, the Fund has
been obligated to pay all of its own expenses. However, Metropolitan Life
reserves the right, in its sole discretion, to pay all or a portion of the
expenses of the Fund or any of the Portfolios, and to terminate such voluntary
payment at any time upon notice to the Board of Directors and affected
shareholders of the Fund.
GENERAL INFORMATION ABOUT THE FUND AND ITS SHARES
................................................................................
The Fund was incorporated under the laws of the State of Maryland on November
23, 1982 and filed articles supplementary with the State of Maryland with
respect to the State Street Research Diversified Portfolio on October 25, 1984,
with respect to the State Street Research Aggressive Growth and three other
Portfolios on October 19, 1987 and February 2, 1988, with respect to the
MetLife Stock Index Portfolio on January 30, 1990 and with respect to the GFM
International Stock Portfolio on August 7, 1990. The authorized capital stock
of the Fund consists of 2,000,000,000 shares of common stock, par value $0.01
per share. The shares of common stock are presently divided into thirteen
classes (or series) including: State Street Research Growth Portfolio common
stock, State Street Research Income Portfolio common stock, MetLife Money
Market Portfolio common stock, State Street Research Diversified Portfolio
common stock, State Street Research Aggressive Growth Portfolio common stock,
MetLife Stock Index Portfolio common stock and GFM International Stock
Portfolio common stock. Each class currently consists of 100,000,000 shares.
The Board of Directors of the Fund may classify and reclassify any authorized
and unissued shares of capital stock, and the Fund reserves the right to issue
additional classes of shares without the consent of shareholders.
As a Maryland corporation, the Fund is not required to hold regular annual
shareholder meetings and, in the normal course, does not expect to hold such
meetings. The Fund, is, however, required to hold shareholder meetings for such
purposes as, for example: (i) approving certain agreements as required by the
1940 Act; (ii) changing fundamental investment objectives and restrictions of
the Portfolios; and (iii) filling vacancies on the Board of Directors in the
event that less than a majority of the directors have been elected by
shareholders. The Fund expects that there will be no meetings of shareholders
for the purpose of electing directors unless and until such time as less than a
majority of the directors holding office have been elected by shareholders. At
such time, the directors then in office will call a shareholder meeting for the
election of directors. In addition, holders of record of not less than two-
thirds of the outstanding shares of the Fund may remove a director from office
by a vote cast in person or by proxy at a shareholder meeting called for that
purpose at the request of holders of 10% or more of the outstanding shares of
the Fund. The Fund has the obligation to assist in such shareholder
communications. Except as set forth above, directors will continue in office
and may appoint successor directors.
PROSPECTUS 20
<PAGE>
...............................................................
All shares of common stock, of whatever class, are entitled to one vote, and
the votes of all classes are cast on an aggregate basis, except on matters
where the interests of the Portfolios differ. In such a case, the voting is on
a Portfolio-by-Portfolio basis. Approval or disapproval by the shares in one
Portfolio on such a matter would not generally be a prerequisite to approval
or disapproval by shares in another Portfolio; and shares in a Portfolio not
affected by a matter generally would not be entitled to vote on that matter.
Examples of matters which would require a Portfolio-by-Portfolio vote are
changes in fundamental investment policies of a particular Portfolio and
approval of changes in any investment management agreement relating to a
particular Portfolio.
Each issued and outstanding share in a Portfolio is entitled to participate
equally in dividends and distributions declared by such Portfolio and to
receive its pro rata share of the assets of such Portfolio remaining after
satisfaction of outstanding liabilities upon liquidation or dissolution. For
these purposes, and for purposes of determining the sale and redemption prices
of shares, any assets which are not clearly allocable to a particular
Portfolio or Portfolios are allocated in the manner determined by the Board of
Directors. Accrued liabilities which are not clearly allocable to one or more
Portfolios would generally be allocated among the Portfolios in proportion to
their relative net assets before adjustment for such unallocated liability. In
the unlikely event that any Portfolio incurred liabilities in excess of its
assets, the other Portfolios could be held liable for such excess.
Metropolitan Life provided the initial capital for the Fund by purchasing
for its general account $10,000,000 worth of shares of each of the State
Street Research Growth Portfolio, State Street Research Income Portfolio and
MetLife Money Market Portfolio on May 16, 1983, $7,000,000 worth of shares of
the State Street Research Diversified Portfolio on July 31, 1986, $3,000,000
worth of shares of the State Street Research Aggressive Growth Portfolio on
April 29, 1988, $5,000,000 worth of shares of the MetLife Stock Index
Portfolio on May 1, 1990, $10,000,000 worth of shares of the GFM International
Stock Portfolio on May 1, 1991. Metropolitan Life has withdrawn portions of
such investment from time to time, but has agreed not to make any redemption
request if it would reduce the Fund's net worth below $100,000. Metropolitan
Life paid all of the organizational expenses of the Fund and will not be
reimbursed by the Fund.
Owners of Contracts supported by separate accounts registered as unit
investment trusts under the Investment Company Act of 1940 have certain voting
interests in respect of Fund shares. See the prospectus for the Contracts or
other material which is attached at the front of this Prospectus for a
description of the rights granted such Contract owners to instruct voting of
Fund shares. The Fund has been advised that shares held by Metropolitan Life
in its general account and in a separate account not registered as a unit
investment trust will be voted in the same proportion as the shares held by
the Insurance Companies in their separate accounts registered as unit
investment trusts. As of February 21, 1997, Metropolitan Life owned in its
general account and in the separate account not registered as a unit
investment trust approximately 3.62%, 3.55%, 3.77%, 32.35%, 4.60%, 2.83% and
4.34%, respectively, of the outstanding shares of the State Street Research
Growth Portfolio, State Street Research Income Portfolio, State Street
Research Diversified Portfolio, MetLife Money Market Portfolio, State Street
Research Aggressive Growth Portfolio, MetLife Stock Index Portfolio and GFM
International Stock Portfolio.
The Fund's Transfer and Dividend Paying Agent is State Street Bank and Trust
Company, 225 Franklin Street, Boston, Massachusetts 02110. State Street
Research is not affiliated with State Street Bank and Trust Company.
DIVIDENDS, DISTRIBUTIONS AND TAXES
...............................................................................
The Fund intends to qualify as a "regulated investment company" under
certain provisions of the Internal Revenue Code (the "Code"). Under such
provisions, the Fund will not be subject to federal income tax on such part of
its net ordinary income and net realized capital gains which it distributes to
shareholders.
It is the Fund's intention to distribute substantially all the net
investment income, if any, of each Portfolio. The Fund must distribute by the
end of each calendar year substantially all the ordinary income and capital
gains of each Portfolio to avoid the imposition of an excise tax on certain
undistributed amounts (see "Taxes" in the Statement of Additional
Information). For dividend purposes, net investment income of each Portfolio
will consist of all payments of dividends or interest received by such
Portfolio (plus or minus any amortized purchase discount or premium, less the
estimated expenses of such Portfolio). Dividends from investment income of the
Portfolios are expected to be declared annually and reinvested in additional
full and fractional shares of the Portfolio. However, the Board of Directors
may decide to declare dividends at other intervals.
All net realized long or short-term capital gains of the Fund, if any, are
declared and distributed at least
PROSPECTUS 21
<PAGE>
...............................................................
annually either during or after the close of the Fund's fiscal year to the
shareholders of the Portfolio or Portfolios to which such gains are
attributable and are reinvested in additional full and fractional shares of the
Portfolio.
For a discussion of the impact on Contract owners of income taxes the
Insurance Companies may owe as a result of (a) their ownership of Fund shares,
(b) their receipt of dividends and distributions thereon, and (c) their gains
from the purchase and sale thereof, reference should be made to the prospectus
or other material for the Contracts attached at the front of this Prospectus.
SALE AND REDEMPTION OF SHARES
................................................................................
Metropolitan Life is the principal underwriter and distributor of the Fund's
shares. Metropolitan Life is also the principal underwriter and distributor of
the Contracts.
The Insurance Companies place orders for the purchase or redemption of shares
of each Portfolio, based on, among other things, the amount of net Contract
premiums or purchase payments transferred to the separate accounts, transfers
to or from a separate account investment division, policy loans, loan
repayments, and benefit payments to be effected on a given date pursuant to the
terms of the Contracts. Such orders are effected, without sales charge, at the
net asset value per share for each Portfolio determined as of 4:00 p.m., New
York City time, on that same date.
The net asset value of the shares of each Portfolio of the Fund is determined
once daily immediately after the declaration of dividends, if any, and is
currently determined at 4:00 p.m., New York City time, on each day during which
the New York Stock Exchange is open for trading or, on days other than when the
New York Stock Exchange is open, on which it is determined that there is a
sufficient degree of trading in the Fund's portfolio securities that the
current net asset value of its shares might be materially affected.
Net asset value per share of each Portfolio is calculated by dividing the
value of all of that Portfolio's securities plus the value of its other assets
(including dividends and interest received or accrued), less all liabilities
(including accrued expenses and dividends payable), by the number of
outstanding shares of the Portfolio. For purposes of determining the value of a
Portfolio's assets, cash and receivables will be valued at their face amounts.
Interest will be recorded as accrued and dividends will be recorded on the ex-
dividend date.
Except with respect to short-term debt instruments having a remaining
maturity of 60 days or less, securities, options and futures contracts held by
the State Street Research Growth, State Street Research Income, State Street
Research Diversified, State Street Research Aggressive Growth, MetLife Stock
Index and GFM International Stock Portfolios will be valued at market value.
Securities and assets for which market quotations are not readily available
will be valued at fair value as determined in good faith by or under the
direction of the Board of Directors of the Fund. Short-term debt instruments
with a remaining maturity of 60 days or less will be valued on an amortized
cost basis.
The Fund will value all debt instruments held by the MetLife Money Market
Portfolio utilizing the amortized cost method of valuation. All other
securities and assets of the MetLife Money Market Portfolio will be valued in
accordance with the preceding paragraph.
PROSPECTUS 22
<PAGE>
METROPOLITAN SERIES FUND, INC.
---------------------
Principal Office of the Fund
1 Madison Avenue New York, New York 10010 (212) 578-2674
---------------------
Investment Manager
Metropolitan Life Insurance Company 1 Madison Avenue New York, New York 10010
(Principal Business Address) (212) 578-5364
Sub-Investment Managers
State Street Research & Management Company One Financial Center Boston,
Massachusetts 02111 (Principal Business Address)
GFM International Investors Limited 5 Upper St. Martins Lane London, England
WC2H 9EA (Mailing Address)
Custodian and Transfer Agent
State Street Bank and Trust Company 225 Franklin Street Boston, Massachusetts
02110 (Principal Business Address)
NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PRO-
SPECTUS, IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAV-
ING BEEN AUTHORIZED BY THE FUND, METROPOLITAN LIFE, STATE STREET RESEARCH, GFM
OR METROPOLITAN TOWER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY
STATE IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
