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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 30, 1998
REGISTRATION NOS. 2-80751
811-3618
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]
Post-Effective Amendment No. 21 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[_]
Amendment No. 23 [X]
(CHECK APPROPRIATE BOX OR BOXES)
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METROPOLITAN SERIES FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
One Madison Avenue 10010
New York, New York (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
Registrant's Telephone Number, Including Area Code: 212-578-2674
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GARY A. BELLER, ESQ.
One Madison Avenue
New York, New York 10010
(NAME AND ADDRESS OF AGENT FOR SERVICE)
Copy to:
GARY O. COHEN, ESQ.
Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue,
N.W. Washington, D.C. 20036
IT IS PROPOSED THAT THE FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
[_] immediately upon filing pursuant to paragraph (b) of Rule 485.
[_] on (date) pursuant to paragraph (b) of Rule 485.
[_] 60 days after filing pursuant to paragraph (a)(1) of Rule 485.
[_] on (date) pursuant to paragraph (a)(1) of Rule 485.
[X] 75 days after filing pursuant to paragraph (a)(2) of Rule 485.
[_] on (date) pursuant to paragraph (a)(2) of Rule 485.
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METROPOLITAN SERIES FUND, INC.
CROSS REFERENCE SHEET
PURSUANT TO RULE 481(A)
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N-1A
ITEM NO. PROSPECTUS HEADING
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1. Cover.............................. Cover Page
2. Synopsis........................... *
3. Condensed Financial Information.... *
4. General Description of Registrant.. The Fund and its Purpose,
Investment in the Portfolios,
Certain Investment Practices,
Description of Some Investment,
Techniques and Risks, Portfolio
Turnover Rates
5. Management of the Fund............. The Fund's Organization
6. Capital Stock and other Securities. Dividends, Distributions and
Taxes, The Fund's Organization
7. Purchase of Securities Being
Offered........................... Sale and Redemption of Shares
8. Redemption or Repurchase........... Sale and Redemption of Shares
9. Pending Legal Proceedings.......... *
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STATEMENT OF ADDITIONAL
INFORMATION HEADING
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10. Cover Page......................... Cover Page
11. Table of Contents.................. Table of Contents
12. General Information and History.... *
13. Investment Objectives and Policies. Description of Some Investment
Practices, Policies, and Risks,
Certain Investment Limitations,
Appendix-Description of Certain
Corporate Bond and Debenture
Ratings
14. Management of the Registrant....... Directors and Officers of the
Fund
15. Control Persons and Principal
Holders of Securities............. *
16. Investment Advisory and Other Investment Management
Services.......................... Arrangements
17. Brokerage Allocation............... Placing Portfolio Transactions
18. Capital Stock and Other Securities. Sale and Redemption of Shares
19. Purchase, Redemption and Pricing of
Securities Being Offered.......... Sale and Redemption of Shares
20. Tax Status......................... Taxes
21. Underwriters....................... Sale and Redemption of Shares
22. Calculations of Yield Quotations of
Money Market Funds................ *
23. Financial Statements............... Financial Statements
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* Not Applicable
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PROSPECTUS
FOR
METROPOLITAN SERIES FUND, INC.
NOVEMBER 1, 1998
The investment options currently offered by the Metropolitan Series Fund (the
"Fund") are:
State Street Research Growth T. Rowe Price Small Cap Growth
Portfolio Portfolio
State Street Research Income T. Rowe Price Large Cap Growth
Portfolio Portfolio
State Street Research Money Market Neuberger&Berman Partners Mid Cap
Portfolio Value Portfolio
State Street Research Diversified Harris Oakmark Large Cap Value
Portfolio Portfolio
State Street Research Aggressive MetLife Stock Index Portfolio
Growth Portfolio
State Street Research International Morgan Stanley EAFE Index Portfolio
Stock Portfolio
Loomis Sayles High Yield Bond Lehman Brothers Aggregate Bond Index
Portfolio Portfolio
Janus Mid Cap Portfolio Russell 2000 Index Portfolio
Scudder Global Equity Portfolio
As with all mutual fund shares, neither the Securities and Exchange Commission
nor any state securities authority have approved or disapproved these
securities, nor have they determined if this Prospectus is truthful or
complete. Any representation otherwise is a criminal offense.
This Prospectus discusses the risks associated with an investment in any of the
Portfolios. The Loomis Sayles High Yield Bond Portfolio has higher risk than
many other debt-type investments, because it normally invests 65% or more of
its assets in lower rated bonds (commonly known as "junk bonds"), and the bonds
in this Portfolio have higher default rates than do (high) quality bonds.
An investment in Fund shares involves risk. You could lose money you invest.
Please note that shares are NOT: bank deposits or obligations, federally
insured or guaranteed, or endorsed by any bank or other financial institution.
Before investing, read the information in this Prospectus about the Fund. Keep
this Prospectus for future reference. For more information, request a copy of
the Statement of Additional Information ("SAI") dated November 1, 1998. We have
"incorporated" the SAI into this Prospectus. That means the SAI is considered
part of this Prospectus as though it were included in it. To request a free
copy of the SAI or to ask questions write or call:
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
Attention: Retirement & Savings Center, Area 2H
Phone: (800) 553-4459
The Securities and Exchange Commission has a website (http://www.sec.gov) which
you may visit to get this Prospectus, this SAI and other information.
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TABLE OF CONTENTS
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HEADING PAGE
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Financial Highlights....................................................... 3
Investments in the Portfolios.............................................. 3
Certain Investment Practices............................................... 11
Portfolio Turnover Rates................................................... 14
Description of Some Investments, Techniques, and Risks..................... 14
The Fund's Organization.................................................... 18
Dividends, Distributions and Taxes......................................... 20
Sale and Redemption of Shares.............................................. 21
Appendix to Prospectus..................................................... 22
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THE FUND AND ITS PURPOSE
Metropolitan Series Fund, Inc. is an open-end management investment company
(or "mutual fund"). The Fund is a "series" type of mutual fund, which issues
separate classes (or series) of stock. Each class or series represents an
interest in a separate portfolio of Fund investments ("Portfolio"). The Fund
issues and redeems its shares at net asset value without a sales load.
The Fund offers its shares to Metropolitan Life Insurance Company
("MetLife(R)") and its affiliated insurance companies ("Insurance Companies"),
including Metropolitan Tower Life Insurance Company ("Metropolitan Tower"). The
Insurance Companies hold the Fund's shares in separate accounts that they use
to support variable life insurance policies and variable annuity contracts
(together, the "Contracts"). Not all of the Portfolios of the Fund are
available to each of these separate accounts. An Insurance Company holding Fund
shares for a separate account has different rights from those of the owner of a
Contract. The terms "shareholder" or "shareholders" in this Prospectus refer to
the Insurance Companies, and not to any Contract owner.
Within limitations described in the appropriate Contract, owners may allocate
the amounts under the Contracts for ultimate investment in the various
Portfolios of the Fund. See the prospectus which is attached at the front of
this Prospectus for a description of (a) the Contract, (b) the Portfolios of
the Fund that are available under that Contract and (c) 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
that Contract.
Some of the Portfolios have names and investment objectives that are very
similar to certain publicly available mutual funds that are managed by the same
money managers. These Portfolios are not those mutual funds and will not have
the same performance. Different performance will result from such factors as
different implementation of investment policies, different cash flows into and
out of the Portfolios, different fees, and different sizes.
It is conceivable that in the future it may be disadvantageous for different
types of variable life insurance and variable annuity separate accounts to
invest simultaneously in the Fund. However, the Fund, Metropolitan Tower and
MetLife do not currently foresee any such disadvantages. The Fund's Board of
Directors intends to monitor 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.
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FINANCIAL HIGHLIGHTS [TO BE FILED BY AMENDMENT]
INVESTMENTS IN THE PORTFOLIOS
About all the Portfolios:
Each Portfolio of the Fund has different investment objectives. Since
investment involves both opportunities for gain and risks of loss, we cannot
give you assurance that the Portfolios will achieve their objectives. You
should carefully review the objectives and policies of the Portfolios and
consider your ability to assume the risks involved before allocating payments
to particular Portfolios.
While certain of the investment techniques, instruments and risks associated
with each Portfolio are referred to in the discussion that follows, additional
information on these subjects appears further below under "Certain Investment
Practices" and "Description of Some Investments, Techniques and Risks."
However, these discussions do not list every type of investment, technique, or
risk to which a Portfolio may be exposed. Further, the Portfolios may change
their investment practices at any time without notice, except for those
policies that this Prospectus or the SAI specifically identify as requiring a
shareholder vote to change. Unless otherwise indicated, all percentage
limitations as well as characterization of a company's capitalization are
evaluated as of the date of purchase of the security.
MetLife has overall responsibility for investment management for each
Portfolio and day-to-day investment management responsibility for the index
Portfolios. (MetLife also performs general administrative and management
services for the Fund.) More information about MetLife appears under "MetLife"
below.
About the State Street Research Portfolios:
STATE STREET RESEARCH & MANAGEMENT COMPANY ("State Street Research") is the
sub-investment manager for the State Street Research Portfolios. It is a
Delaware corporation that dates back to 1924 and is a wholly-owned indirect
subsidiary of MetLife. In addition to the Fund, it provides investment
management services to several mutual funds and institutional clients. As of
December 31, 1997, State Street Research and its subsidiaries had investment
arrangements in effect for about $47.3 billion in assets.
The STATE STREET RESEARCH GROWTH PORTFOLIO seeks long-term growth of capital
and income, and moderate current income.
Generally, the greatest portion of the Portfolio's assets will be invested in
equity securities of good quality where the stock price represents a good
value based on considerations such as price to book value and price to
earnings ratios.
The Portfolio may also invest in:
. smaller emerging growth companies with potential for above average earnings
growth
. short-term fixed income investments
John T. Wilson, a Senior Vice President at State Street Research since 1998,
has been with the firm since 1996. Mr. Wilson is the portfolio manager for the
Portfolio and has been primarily responsible for its day-to-day management for
2 years. He is a member of the State Street Research's Equity Group's Growth
Team. During the past five years, he was also a portfolio manager with Phoenix
Investment Counsel, Inc.
The STATE STREET RESEARCH INCOME PORTFOLIO seeks (a) the highest possible
total return, by combining current income with capital gains, consistent with
prudent investment risk, and (b) secondarily, the preservation of capital.
The Portfolio invests at least 75% of its total assets in non-convertible debt
securities in the three highest rating categories as determined by a
nationally recognized statistical rating organization ("NRSRO"), or of
comparable quality ("top three ratings"). The duration of the debt securities
the Portfolio invests in varies depending on market values and trends and can
be long-term (10 or more years), intermediate-term (1-10 years) or short-term
(less than 1 year).
The Portfolio may also invest in:
. debt securities that are not within the top three rating categories; and
convertible securities and preferred stocks of companies that have senior
securities rated within the top three credit rating categories.
. common stocks acquired by conversion of convertible securities or exercise
of warrants attached to debt securities (limited to 10% of its total assets)
Kim Peters a Senior Vice President at State Street Research since 1994 has
been with the firm since 1985. Mr. Peters is the portfolio
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manager for the Portfolio and has been primarily responsible for its day-to-day
management for 5 years. He is the lead member of the State Street Research
Fixed Income Group's Corporate Team. During the past five years, Mr. Peters has
also served as a Vice President at State Street Research.
The STATE STREET RESEARCH MONEY MARKET PORTFOLIO seeks the highest possible
current income consistent with preservation of capital and maintenance of
liquidity.
The Portfolio invests primarily in short-term money market instruments with
minimal credit risks, including: corporate debt securities, United States
government securities, government agency securities, bank certificates of
deposit, bankers' acceptances, variable amount master demand notes, and
repurchase and reverse repurchase agreements. The Portfolio invests only in
securities that have a remaining maturity of less than 13 months. The Portfolio
will be managed in such a way that significant variations in net asset value
per share are rather unlikely. In addition, the dollar weighted average
maturity for the Portfolio's securities will not be more than ninety days.
The STATE STREET RESEARCH DIVERSIFIED PORTFOLIO seeks a high total return while
attempting to limit investment risk and preserve capital.
The Portfolio invests portions of its assets in:
. equity securities of the type that can be purchased by the State Street
Research Growth Portfolio
. debt securities of the type that can be purchased by the State Street
Research Income Portfolio
. short-term money market instruments of the type that can be purchased by the
State Street Research Money Market Portfolio
The portion of this Portfolio's assets invested in each category will usually
be similar in composition to that of the Portfolio to which that portion
correlates. However, no absolute limits apply to the portion of assets invested
in each category or the composition of each category. The amount of assets
invested in each type of security will depend upon economic conditions, the
general level of common stock prices, interest rates and other relevant
considerations, including the risks of each type of security.
The portfolio manager for each portion is the same as the portfolio manager of
the Portfolio to which such portion correlates (see portfolio manager
information above). Assets are allocated among the portions of the Portfolio
based on the input of State Street Research's Asset Allocation Committee.
The STATE STREET RESEARCH AGGRESSIVE GROWTH PORTFOLIO seeks maximum capital
appreciation.
The Portfolio generally invests most of its assets in the common stocks, and
other securities convertible into or carrying the right to acquire common
stocks, of:
. less mature companies with the potential for rapid growth
. companies whose unusual circumstances have not been fully recognized
The Portfolio's investments can range across a full spectrum from small to
large capitalization issuers.
Richard J. Jodka, a Senior Vice President since joining State Street Research
in February 1998, is the portfolio manager for the Portfolio and has been
primarily responsible for its day-to-day management since that time. During the
past five years, he also served as a portfolio manager with Frontier Capital
Management and Putnam Investments, Inc.
The STATE STREET RESEARCH INTERNATIONAL STOCK PORTFOLIO seeks long-term growth
of capital.
The Portfolio normally invests at least 65% its net assets in equity securities
of established large capitalization foreign (non-U.S. domiciled) companies with
attractive long-term prospects for growth of capital. The Portfolio invests
primarily on non-U.S. stock exchanges or well established over-the-counter
markets, but may also invest in equity securities through the purchase of
American Depository Receipts ("ADRs"), European Depository Receipts ("EDRs")
and International Depository Receipts ("IDRs"). The Portfolio will usually be
invested in issuers located in at least three countries, not including the U.S.
The Portfolio may also invest in:
. securities of medium and small capitalization foreign companies
. investment grade debt securities of domestic and foreign companies
4
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. high-quality non-U.S. (as well as domestic) money market instruments
including repurchase agreements with non-U.S. banks and broker-dealers and
"synthetic" money market positions
. domestic debt and equity securities for temporary or defensive purposes
GFM International Investors, Inc. ("GFM") is the sub-sub-investment manager for
the State Street Research International Stock Portfolio and is primarily
responsible for investment management services to the Portfolio, subject to the
supervision of State Street Research, its parent. It is a Delaware corporation
formed in 1990 and is an indirect subsidiary of MetLife. In addition to the
Fund, it provides investment management services to institutional clients. As
of December 31, 1997, GFM and its subsidiaries had investment arrangements in
effect for about $638 million in assets. Ian R. Vose, a Senior Vice President
at GFM since 1997, has served as Chief Investment Officer since 1996. He is the
portfolio manager for the Portfolio and has been primarily responsible for its
day-to-day management for 2 years. Over the past five years Mr. Vose held
several other positions at GFM.
About the Loomis Sayles High Yield Bond Portfolio:
LOOMIS, SAYLES & COMPANY, L.P. ("Loomis Sayles") is the sub-investment manager
for the Loomis Sayles High Yield Bond Portfolio. It is a Delaware limited
partnership with a history that dates back to 1926. Its general partner is an
indirect wholly-owned subsidiary of Nvest Companies, L.P. whose general
partner, Nvest Corporation, is an indirect wholly-owned subsidiary of MetLife.
In addition to the Portfolio, it provides investment management services to
numerous mutual funds and institutional clients. As of December 31, 1997,
Loomis Sayles had investment arrangements in effect for about $63.8 billion in
assets.
The LOOMIS SAYLES HIGH YIELD BOND PORTFOLIO seeks high total investment return
through a combination of current income and capital appreciation.
The Portfolio normally invests at least 65% of its assets in below investment
grade fixed income securities (commonly referred to as "junk bonds").
The Portfolio may also invest in:
. investment grade debt securities
. preferred stocks (currently, limited to 20% of its total assets)
. common stocks (currently, limited to 10% of its total assets)
Daniel J. Fuss, Executive Vice President, Director and Managing Partner, and
Kathleen C. Gaffney, Vice-President, have been with Loomis Sayles since 1976
and 1984 respectively. Mr. Fuss and Ms. Gaffney, co-portfolio managers for the
Portfolio, have been primarily responsible for its day-to-day management since
its inception in March, 1997.
About the Janus Mid Cap Portfolio:
JANUS CAPITAL CORPORATION ("Janus") is the sub-investment manager for the Janus
Mid Cap Portfolio. It is a Colorado corporation that began providing investment
management services at its inception in 1970. In addition to the Fund, it
provides investment management services to several mutual funds and several
individual and institutional clients. As of December 31, 1997, Janus managed
approximately $67.3 billion in assets.
The JANUS MID CAP PORTFOLIO seeks to provide long-term growth of capital.
The Portfolio will normally invest at least 65% of its total assets in common
stocks of medium capitalization companies selected for their growth potential.
The Portfolio is non-diversified, so that it can own larger positions in a
smaller number of issuers. This means the appreciation or depreciation of a
single investment can have a greater impact on the Portfolio's share price. The
portfolio manager generally takes a "bottom up" approach to building the
Portfolio by identifying companies with earnings growth potential that may not
be recognized by the market at large, without regard to any industry sector or
other similar selection procedure. Realizing income is not a significant
consideration.
The Portfolio may also invest in other equity and debt securities, including
"special situations."
The portfolio manager defines MID-CAPITALIZATION ("mid-cap") COMPANIES as those
whose market capitalization fall within the range of companies included in the
S&P
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MidCap 400 Index at the time of the purchase. As of , 1998, this included
companies with capitalizations between approximately $ and $ .
James P. Goff, Vice President and portfolio manager joined Janus in 1988. He is
the portfolio manager for the Portfolio and has been primarily responsible for
its day-to-day management since its inception in March, 1997. He is also a
portfolio manager for other investment portfolios. Over the past five years, he
has also held other positions at Janus.
About the Scudder Global Equity Portfolio:
SCUDDER KEMPER INVESTMENTS, INC. ("Scudder") is the sub-investment manager for
the Scudder Global Equity Portfolio. In addition to the Portfolio, it provides
investment management services to several mutual funds and several individual
and institutional clients. As of December 31, 1997, Scudder had investment
management arrangements in effect for about $200 billion in assets globally.
The SCUDDER GLOBAL EQUITY PORTFOLIO seeks to provide long-term growth of
capital.
The Portfolio generally invests most of its assets in equity securities
(primarily common stock) of established companies listed on U.S. or foreign
securities exchanges or traded over-the-counter. Normally, investments will be
spread broadly around the world and will include companies of varying sizes.
The Portfolio invests in companies that are expected to benefit from global
economic trends, promising technologies or products and specific country
opportunities resulting from changing geopolitical, currency or economic
relationships. The Portfolio will usually be invested in securities of issuers
located in at least three countries, one of which may be the U.S, although all
of its assets may also be invested in non-U.S. issues, and for temporary
defensive purposes, all of its assets may be invested in U.S. issues.
The Portfolio may also invest in:
. convertible and non-convertible preferred stock
. investment grade debt securities convertible into common stock
. below investment grade debt securities (currently, limited to 5% of its total
assets)
. high-quality non-U.S. (as well as domestic) money market instruments
including repurchase agreements with non-U.S. banks and broker-dealers and
"synthetic" money market positions
William E. Holzer, Managing Director, Nicholas Bratt, Director of the Global
Equity Group and Diego Espinsosa, Senior Vice-President have been with Scudder
since 1980, 1976 and 1996, respectively. Messrs. Holzer, Bratt and Espinosa are
co-portfolio managers for the Portfolio. Messrs. Holzer and Bratt have been
primarily responsible for its day-to-day management since its inception in
March 1997, and Mr. Espinosa joined the team in June, 1997. Mr. Holzer is a
portfolio manager for other investment portfolios, is a member of Scudder's
Currency Committee and has responsibilities for global equity investment
strategies. Mr. Bratt is responsible for Scudder's Equity Activities and is
president of Scudder's open and closed end equity funds that invest overseas.
Over the past five years, Mr. Espinosa was also responsible for Latin American
research and was portfolio manager of The Argentina Fund, Inc. at Scudder and
held positions at Morgan Stanley & Co., Boston Consulting Group and CitiBank.
About the T. Rowe Price Portfolios:
T. ROWE PRICE ASSOCIATES, INC. ("T. Rowe Price") is the sub-investment manager
of the T. Rowe Price Portfolios. A Maryland corporation, it dates back to 1937.
In addition to the Fund, it provides investment management services to many
retail and institutional accounts. As of March 31, 1998, T. Rowe Price and its
affiliates had investment management arrangements in effect for about $139
billion in assets.
The T. ROWE PRICE SMALL CAP GROWTH PORTFOLIO seeks long-term capital growth.
The Portfolio will normally invest at least 65% of its total assets in a
diversified group of small capitalization companies. The Portfolio expects to
invest primarily in common stocks and convertible securities of companies in
the development stage of their corporate life cycle with potential to achieve
long-term earnings growth faster than the overall market.
The Portfolio may also invest in:
. stocks of larger issuers
. warrants
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. fixed income securities of any investment grade (currently no more than 5% of
its total assets may be below investment grade)
The portfolio managers define SMALL CAPITALIZATION ("small-cap") COMPANIES as
those whose market capitalization fall within the range of companies included
in the Index at the time of the purchase. As of , 1998, this included
companies with capitalizations between approximately $ and $ .
The Portfolio is managed by an Investment Advisory Committee. Richard T.
Whitney, Committee Chairman, has been responsible for day-to-day management of
the Portfolio since its inception in March, 1997 and works with the Committee
in developing and executing the Portfolio's investment program. Mr. Whitney
joined T. Rowe Price in 1985 and has been managing investments there since
1986.
The T. ROWE PRICE LARGE CAP GROWTH PORTFOLIO seeks long-term growth of capital
and, secondarily, dividend income.
The Portfolio normally invests at least 65% of its total assets in a
diversified group of large capitalization growth companies. The Portfolio
expects to invest primarily in common stocks of companies that pay dividends
that are generally expected to rise in future years as earnings rise. The
Portfolio generally looks for companies with above-average growth in earnings
and cash flow; the ability to sustain earnings momentum even during economic
slowdowns by operating in industries or service sectors where earnings and
dividends can outpace inflation and the overall economy; or that have a
lucrative niche in the economy where profit margins widen due to economic
factors (rather than one-time events such as lower taxes).
The Portfolio may also invest in:
. other equity securities
. convertible bonds and warrants
. hybrid instruments (currently limited to 10% of its total assets)
The portfolio managers define LARGE CAPITALIZATION ("large-cap") COMPANIES as
those whose market capitalization fall within the range of companies included
in the Index at the time of the purchase. As of , 1998, this
included companies with capitalizations of approximately $ and above.
The Portfolio is managed by an Investment Advisory Committee. Robert W. Smith,
Committee Chairman, has been responsible for the day-to-day management of the
Portfolio since its inception in November, 1998 and works with the Committee in
developing and executing the Portfolio's investment program. Mr. Smith joined
T. Rowe Price and began managing assets there in 1992. Mr. Smith and the
Investment Advisory Committee manage other mutual funds, including the T. Rowe
Price Large Cap Fund.
About the Harris Oakmark Large Cap Value Portfolio:
HARRIS ASSOCIATES L.P. ("Harris") is the sub-investment manager of the Harris
Oakmark Large Cap Value Portfolio. Together with its predecessors it has
provided investment management services to mutual funds since 1970. It is a
wholly-owned subsidiary of Nvest Companies, L.P. whose general partner, Nvest
Corporation, is an indirect wholly-owned subsidiary of MetLife. In addition to
the Fund, it provides investment management services to several mutual funds as
well as individuals, trusts, endowments, institutional clients and private
partnerships. As of December 31, 1997, Harris had investment arrangements in
effect for about $17 billion in assets.
The HARRIS OAKMARK LARGE CAP VALUE PORTFOLIO seeks long-term capital
appreciation.
The Portfolio normally invests at least 65% of its total assets in equity
securities of large capitalization U.S. companies. The sub-adviser's chief
consideration in selecting equity securities for the Portfolio is its judgment
as to the size of the discount at which the security trades, relative to its
economic value. The sub-adviser's investment philosophy is predicated on the
belief that, over time, market price and value converge and that the investment
in securities priced significantly below long-term value present the best
opportunity to achieve long-term capital appreciation. The sub-adviser uses
several methods to analyze value, but considers the primary determinant to be
the enterprise's long-run ability to generate cash for its owners.
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Harris also believes the risks of equity investing are often reduced if
management's interests are strongly aligned with the interest of its
stockholders.
The Portfolio may also invest in:
. warrants and convertible securities
. high and medium investment grade debt securities
. below investment grade debt securities (currently limited to 25% of its total
assets)
The portfolio managers define LARGE-CAP COMPANIES as those whose market
capitalization fall within the range of companies included in the Index at
the time of the purchase. As of , 1998, this included companies with
capitalizations of approximately $ and above.
Robert J. Sanborn and Edward Loeb are co-portfolio managers for the Portfolio
and have been primarily responsible for its day-to-day management since its
inception in November, 1998. Mr. Sanborn is the portfolio manager for other
mutual funds managed by Harris, including The Oakmark Fund. Mr. Loeb is the
portfolio manager for numerous individual and institutional clients as well as
another mutual fund managed by Harris. Mr. Sanborn and Mr. Loeb have been with
Harris since 1988 and 1989, respectively.
About the Neuberger&Berman Partners Mid Cap Value Portfolio:
NEUBERGER&BERMAN MANAGEMENT INCORPORATED ("Neuberger&Berman"), is the sub-
investment manager for the Neubeger&Berman Partners Mid Cap Value Portfolio.
Neuberger&Berman and its predecessor firms have specialized in the management
of mutual funds since 1950. Neuberger&Berman is owned by the principals of
Neuberger&Berman, LLC. In addition to the Fund, Neuberger&Berman LLC and its
affiliates, including Neuberger&Berman, provide investment management services
to mutual funds and securities accounts with assets as of June 30, 1998 of
about $59 billion.
The NEUBERGER&BERMAN PARTNERS MID CAP VALUE PORTFOLIO seeks capital growth.
The Portfolio will normally invest at least 65% of its total assets in common
stocks of mid capitalization companies. The Portfolio uses a value-oriented
investment approach designed to increase capital with reasonable risk by
purchasing securities believed to be undervalued based on strong fundamentals,
including: a low price-to-earnings ratio; consistent cash flows; the company's
track record through all economic cycles; ownership interests by a company's
management; and the dominance of a company in a particular field.
The Portfolio may also invest in the following:
. other equity securities
. investment grade debt securities
. below investment grade debt securities (currently limited to 15% of its net
assets)
The portfolio managers define MID-CAP COMPANIES as those whose market
capitalization fall within the range of companies included in the Index at
the time of purchase. As of , 1998 this included companies with
capitalizations between approximately $ billion and $ billion.
Michael M. Kassen and Mr. Robert I. Gendelman are Vice Presidents of
Neuberger&Berman and principals of Neuberger&Berman, LLC. Mr. Kassen and
Mr. Gendelman have been co-managers of the Portfolio since its inception in
November, 1998. Mr. Kassen and Mr. Gendelman are also co-managers of the
Neuberger&Berman Partners Fund.
About the Index Portfolios:
METLIFE is the investment manager for the index Portfolios.
Generally, the index Portfolios seek to approximately equal the return of the
applicable index. The sponsors of the actual indices in no way sponsor, nor are
they in any other way affiliated with, the Fund. To the extent the rules for
compiling the index, or the securities in the index, change, the Portfolio
investments may also change.
Each of these Portfolios may diversify differently by industry, country,
currency and/or asset sector, as applicable, than the actual index. In addition
to securities of the type contained in its index, each Portfolio may also
invest in securities index, futures contracts and related options, warrants and
convertible securities to simulate full investment in the
8
<PAGE>
index while retaining liquidity, to facilitate trading, to reduce transaction
costs or to seek higher return when these derivatives are priced more
attractively than the underlying security. Also, since the Portfolios attempt
to keep transaction costs low, MetLife generally will rebalance a Portfolio
only if it deviates from the applicable index by a certain percent, depending
on the company, industry, and country, as applicable.
In addition, transaction costs, other Portfolio or Fund expenses, brief delays
that occur until a Portfolio can invest cash that it receives, and other
tracking error may result in a Portfolio's return being lower than the return
of the applicable index.
MetLife monitors the tracking performance of each Portfolio through examination
of the correlation coefficient. A perfect correlation would produce a
coefficient of 1.00. Each Portfolio will attempt to maintain a target
correlation coefficient of at least .95.
The METLIFE STOCK INDEX PORTFOLIO seeks to equal the performance of the
Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index").
The Portfolio will normally invest most of its assets in common stocks included
in the S&P 500 Index. The S&P 500 Index consists of 500 common stocks, most of
which are listed on the New York Stock Exchange. The stocks included in the S&P
500 Index are issued by companies among those whose outstanding stock have the
largest aggregate market value, although stocks that are not among the 500
largest are included in the S&P 500 Index for diversification purposes.
The RUSSELL 2000 INDEX PORTFOLIO seeks to equal the return of the Russell 2000
Index.
The Portfolio will normally invest most of its assets in common stocks included
in the Russell 2000 Index. The Russell 2000 Index is composed of 2,000 small
capitalization companies. As of March 31, 1998, the average stock market
capitalization of companies in the Russell 2000 Index was $513 million, and the
weighted average stock market capitalization was $960 million.
Initially, the Portfolio will invest in a statistically selected sample of the
2000 stocks included in the Russell 2000 Index. The stocks purchased for the
Portfolio are chosen to, as a group, reflect the composite performance of the
Russell 2000 Index. As the Portfolio's total assets grow, a larger percentage
of stocks included in the Russell 2000 Index will be included in the Portfolio.
The MORGAN STANLEY EAFE INDEX PORTFOLIO seeks to equal the return of the MSCI
EAFE Index.
The Portfolio will normally invest most of its assets in equity securities
included in the MSCI EAFE Index. The MSCI EAFE Index (also known as the Morgan
Stanley Capital International Europe Australasia Far East Index) is an index
containing approximately 1,100 equity securities of companies of varying
capitalizations in countries outside the United States. As of July 1, 1998
countries included in the MSCI EAFE Index were Australia, Austria, Belgium,
Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia,
The Netherlands, New Zealand, Norway, Portugal Singapore, Spain, Sweden,
Switzerland and the United Kingdom.
Initially, the Portfolio will invest in a statistically selected sample of the
1,100 stocks included in the MSCI EAFE Index. The stocks purchased for
Portfolio are chosen to, as a group, reflect the composite performance of the
MSCI EAFE Index. As the Portfolio's total assets grow, a larger percentage of
stocks included in the MSCI EAFE Index will be included in the Portfolio.
The LEHMAN BROTHERS AGGREGATE BOND INDEX PORTFOLIO seeks to equal the
performance of the Lehman Brothers Aggregate Bond Index.
The Portfolio will normally invest most of its assets in fixed income
securities included in the Lehman Brothers Aggregate Bond Index. This Index is
comprised of the Lehman Brothers Government/Corporate Index, the Lehman
Brothers Mortgage-Backed Securities Index, and the Lehman Brothers Asset-Backed
Securities Index. The Portfolio may continue to hold debt that no longer are
included in the index, if, together with any money market instruments or cash,
such holdings are no more than 20% of the Portfolio's net assets. In addition,
up to 5% of the Portfolio's net assets may be invested in below investment
grade securities.
9
<PAGE>
The following types of fixed income securities are included in the index:
. debt obligations issued or guaranteed by the United States Government or its
agencies or instrumentalities
. debt obligations issued or guaranteed by U.S. corporations
. debt obligations issued or guaranteed by foreign companies, sovereign
governments, municipalities, governmental agencies or international agencies
. mortgage-backed securities
The Portfolio will invest in a sampling of the bonds included in the Lehman
Brothers Aggregate Bond Index. The bonds purchased for the Portfolio are chosen
to, as a group, reflect the composite performance of the index. As the
Portfolio's total assets grow, a larger percentage of bonds included in the
index will be included in the Portfolio.
10
<PAGE>
CERTAIN INVESTMENT PRACTICES:
The Table that follows sets forth certain investment practices in which some or
all of the Portfolios may engage. These practices will not be the primary
activity of any Portfolio, however, except as noted in the above textual
information about each Portfolio. The following Portfolio numbers are used in
the table:
<TABLE>
<CAPTION>
PORTFOLIO
NUMBER PORTFOLIO NAME
--------- --------------
<C> <S>
1 State Street Research Growth
2 State Street Research Income
3 State Street Research Money Market
4 State Street Research Diversified
5 State Street Research Aggressive Growth
6 State Street Research International Stock
7 Janus Mid Cap
8 T. Rowe Price Small Cap Growth
9 Scudder Global Equity
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO
NUMBER PORTFOLIO NAME
--------- --------------
<C> <S>
10 T. Rowe Price Large Cap Growth
11 Neuberger&Berman Partners Mid Cap Value
12 Harris Oakmark Large Cap Value
13 MetLife Stock Index
14 Russell 2000 Index
15 Morgan Stanley EAFE Index
16 Lehman Brothers Aggregate Bond Index
17 Loomis Sayles High Yield Bond
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE LIMIT PER PORTFOLIO
ITEM INVESTMENT PRACTICE PORTFOLIOS ON ASSETS/1/
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Sell covered call options on securities and All None
stock indices as a hedge against or to
minimize anticipated loss in value.
- -----------------------------------------------------------------------------------------------------
2 Sell covered put options on securities and 6,7,8,9,17 None
stock indices to earn additional income, as a
hedge against or to minimize anticipated loss
in value.
- -----------------------------------------------------------------------------------------------------
3 Sell covered put and covered call options on 6,7,8,9,17 None
currencies as a hedge against anticipated
declines in currency exchange rates in which
securities are held or to be purchased or to
earn additional income.
- -----------------------------------------------------------------------------------------------------
4 Purchase put options on securities and All except 11 None
indices that correlate with a Portfolio's
securities for defensive purposes in order to
protect against anticipated declines in
values.
- -----------------------------------------------------------------------------------------------------
5 Purchase call options that on securities and All except 11 None
indices correlate with that Portfolio's
securities.
- -----------------------------------------------------------------------------------------------------
6 Purchase put options on currencies for 6,7,8,9,11,17 None
defensive purposes in order to protect
against anticipated declines in values on
currencies in which a Portfolio's securities
are or may be denominated.
- -----------------------------------------------------------------------------------------------------
7 Purchase call options on currencies that 6,7,8,9,11,17 None
correlate with the currencies in which the
Portfolio's securities may be denominated.
- -----------------------------------------------------------------------------------------------------
8 Purchase and sell otherwise permitted stock, 7,9,11 None
currency, and index put and call options
"over-the-counter" (rather than only on
established exchanges).
- -----------------------------------------------------------------------------------------------------
9 Purchase and sell futures contracts (on All, except For each applicable
recognized futures exchanges) on debt 11,13,14,15 Portfolio, combined limit
securities and indices of debt securities as on, the sum of the initial
a hedge against or to minimize adverse margin for futures and
principal fluctuations resulting from options sold on futures,
anticipated interest rate changes or to plus premiums paid for
adjust exposure to the bond market. unexpired options on
futures, is 5% of total
assets (excluding "in the
money" and for Portfolios
7,8,9,14,15,16 and 17, "bona
fide hedging" as defined by
the Commodity Futures
Trading Commission)
- -----------------------------------------------------------------------------------------------------
10 Purchase and sell future contracts (on 1,4,5,6,7,8,9, Same as Item 9
recognized futures exchanges) on equity 13,14,15,17
securities or stock indices as a hedge or to
enhance return.
- -----------------------------------------------------------------------------------------------------
11 Purchase and sell currency futures contracts 6,7,8,9,17 Same as Item 9
(on recognized futures exchanges) as a hedge
or to adjust exposure to the currency market.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE LIMIT PER PORTFOLIO
ITEM INVESTMENT PRACTICE PORTFOLIOS ON ASSETS/1/
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
12 Sell covered call options on and purchase put All except 11 Same as Item 9
and call options contracts on futures contracts
(on recognized futures exchanges) of the type
and for the same reasons the Portfolio is
permitted to enter futures contracts.
- ------------------------------------------------------------------------------------------------------------
13 Sell covered put options on futures contracts 6,7,8,9,17 Same as Item 9
(on recognized futures exchanges) of the type
and for the same reasons the Portfolio is
permitted to enter into futures contracts.
- ------------------------------------------------------------------------------------------------------------
14 Enter into forward foreign currency exchange All, except 13,14 None
contracts to hedge currency risk relating to
securities denominated, exposed to, or traded in
a foreign currency in which the Portfolio may
invest.
- ------------------------------------------------------------------------------------------------------------
15 Enter into forward foreign currency exchange 6,7,8,9,17 5% of total assets
contracts for non hedging purposes.
- ------------------------------------------------------------------------------------------------------------
16 Enter into transactions to offset or close out All None
any of the above.
- ------------------------------------------------------------------------------------------------------------
17 Mortgage-related securities (except for IOs and All None
POs)
- ------------------------------------------------------------------------------------------------------------
18 Mortgage related interest only (IOs) and All, except 3,11,13 None
principal only (POs) securities
- ------------------------------------------------------------------------------------------------------------
19 Use swaps, caps, floors and collars on interest 7,8,9,17 None
rates, currencies and indices as a risk
management tool.
- ------------------------------------------------------------------------------------------------------------
20 Invest in foreign securities. A. 1,2,3,4,5,13,14 A. Not more than 10% of its
total assets in securities
of foreign issuers, except
up to 25% of its total
assets may be invested in
securities: issued,
assumed or guaranteed by
foreign governments or
their political
subdivisions or
instrumentalities; assumed
or guaranteed by domestic
issuers; or issued,
assumed or guaranteed by
foreign issuers with a
class securities listed on
the New York Stock
Exchange.*
B. 6,9,15 B. None
C. 17 C. Foreign Securities
limited to 50% of its
total assets (except 100%
in securities of Canadian
issuers).*
D. 10 D. Foreign Securities
limited to 30% of total
assets*
E. 8 E. Foreign Securities
limited to 20% of total
assets*
F. 12 F. Foreign Securities
limited to 25% of total
assets*
G. 11 G. Foreign Securities
limited to 10% of total
assets*
H. 7 H. Foreign securities
denominated in a foreign
currency and not publicly
traded in U.S. limited to
30% of total assets*
- ------------------------------------------------------------------------------------------------------------
21 Lend portfolio securities. A. 1,2,3,4,5,6,13 A. 20% of total assets*
B. 8,9,10,11,12, B. 33 1/3% of total assets*
14,15,16,17
C. 7 C. 25% of total assets*
- ------------------------------------------------------------------------------------------------------------
22 Invest in securities that are illiquid. A. All except 3,9 A. 15% of total assets
B. 3,9 B. 10% of total assets
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE LIMIT PER PORTFOLIO
ITEM INVESTMENT PRACTICE PORTFOLIOS ON ASSETS/1/
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
23 Invest in other investment companies, which All except 11 10% of total assets (except
may involve payment of duplicate fees. that only 5% of total assets
may be invested in a single
investment company and no
portfolio can purchase more
than 3% of the total
outstanding voting
securities of any one
investment company or,
together with other
investment companies having
the same investment adviser,
purchase more than 10% of
the voting stock of any
"closed-end" investment
company).
- -------------------------------------------------------------------------------------------------------------
24 Invest in money market instruments issued by 6,7,8,9,17 None
a commercial bank or savings and loan
associations (or its foreign branch or
agency) notwithstanding that the bank or
association has less than $1 billion in total
assets, is not a member of the Federal
Deposit Insurance Corporation, is not
organized in the U.S., and/or is not
operating in the U.S.
- -------------------------------------------------------------------------------------------------------------
25 Invest in securities issued by companies All 25% of total assets
primarily engaged in any one industry. (provided that the following
will be considered separate
industries: each type of
utility service; each type
of oil or oil-related
company. Also, savings loans
are a separate industry from
finance companies; and for
the money market securities
of Portfolios 3 and 4
securities issued or
guaranteed by the U.S.
government, its agencies or
instrumentalities and debt
securities issued by
domestic banks are not
subject to the
restriction).* (The Fund
will disclose when more than
25% of a Portfolio's total
assets are invested in four
oil related industries).
- -------------------------------------------------------------------------------------------------------------
26 Borrow in the form of short-term credits All Together with items below,
necessary to clear Portfolio transactions; up to 1/3 of the amount by
enter into reverse repurchase arrangements. which total assets exceed
total liabilities (less
those represented by such
obligations).*
- -------------------------------------------------------------------------------------------------------------
27 Borrow money for extraordinary or emergency A. All except 9 A. 5% of total assets*
purposes (e.g. to honor redemption requests
which might otherwise require the sale of
securities at an inopportune time).
B. 9 B. 1/3 of total assets,
provided that if together
with reverse repurchase
agreements obligations
exceed 5% of total assets,
no additional securities
will be purchased for the
Portfolio.*
- -------------------------------------------------------------------------------------------------------------
28 Purchase securities on a "when-issued" basis. 6,7,8,9,13,14,15,16,17 None
- -------------------------------------------------------------------------------------------------------------
29 Invest in real estate interests, including All 10% of total assets*
real estate mortgage loans, but excluding
investments in exchange-traded real estate
investment trusts and shares of other real
estate companies.
- -------------------------------------------------------------------------------------------------------------
30 Purchase ADRs A. 1,2,3,4,5 A. Together with the assets
referred to in Item 20 A
above, 35% of total assets
B. 7,11,15 B. None
C. 10,13,14 C. Together with assets
referred to in Item 20 D
above, 30% of total assets
D. 12 D. Together with assets
referred to in Item 20 F
above, 25% of total assets
</TABLE>
- -----------
* Policy may be changed only by shareholder vote.
/1/ At time of investment, unless otherwise noted.
13
<PAGE>
PORTFOLIO TURNOVER RATES
The rate of portfolio turnover is the annual amount, expressed as a percentage,
of a Portfolio's securities that it replaces in one year. The portfolio
turnover rate 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 or business
conditions and client contributions and withdrawals. 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 all
of the Portfolios that were active prior to November 1, 1998 are set forth in
the Financial Highlights.
The portfolio turnover rates for the listed Portfolios are not expected to
exceed the following:
<TABLE>
<CAPTION>
PORTFOLIO
PORTFOLIO TURNOVER
- --------- ---------
<S> <C>
T. Rowe Price Large Cap Growth 54%
Harris Oakmark Large Cap Value 35%
Neuberger&Berman Partners Mid Cap 100%
Russell 2000 Index 45%
Morgan Stanley EAFE Index 25%
Lehman Brothers Aggregate Bond Index 40%
</TABLE>
DESCRIPTION OF SOME INVESTMENTS, TECHNIQUES, AND RISKS
To varying extents, the portfolio managers may use the following techniques and
investments in managing the Portfolios.
Investment Styles
A VALUE INVESTING approach concentrates on securities that are undervalued in
relation to a company's fundamental economic values. Securities may be
undervalued for various reasons including SPECIAL SITUATIONS (i.e., where the
portfolio manager believes that a company's securities will appreciate when the
market recognizes a specific development at the company, such as a new product
or process, a management change or a technological breakthrough). A GROWTH
INVESTING approach emphasizes stocks of companies that are projected to grow at
above-average rates based on the company's earnings growth potential.
INDEX PORTFOLIOS attempt to equal the return of a particular index, which can
provide broad exposure to various market segments. Unlike actively managed
portfolios, they do not expect to use any DEFENSIVE STRATEGIES and investors
bear the risk of adverse market conditions.
Except with respect to the index Portfolios, portfolio managers generally
expect to use DEFENSIVE STRATEGIES. These include holding greater cash
positions, short-term money market instruments or similar investments that are
not within the Portfolio's usual investment strategy, but do not violate any
prohibition to which the Portfolio is subject. Portfolio managers use defensive
strategies, when they believe that market conditions are not favorable for
profitable investing or when the portfolio manager is otherwise unable to
locate favorable investment opportunities.
Capitalization
CAPITALIZATION measures the size of a company, based on the aggregate market
value of the company's outstanding stock. Different Portfolios may use
different definitions with respect to whether a company is classified as a
small-cap, mid-cap or large-cap company. Investments in companies that are less
mature or are small or mid-cap, may present greater opportunities for capital
appreciation than investments in larger, more mature companies, but also
present greater risks including:
. greater price volatility because they are less broadly traded
. less available public information
. greater price volatility due to limited product lines, markets, financial
resources, and management experience.
Securities Lending
SECURITIES LENDING involves lending some of a Portfolio's securities to
brokers, dealers and financial institutions. As collateral for the loan, the
Portfolio receives an amount that is at all times equal to at least 100% of the
current market value of the loaned securities. The Portfolio invests the
collateral in short-term high investment grade securities, or in a mutual fund
that invests in such securities. Securities lending can increase current income
for a Portfolio because the Portfolio continues to receive payments equal to
the interest and
14
<PAGE>
dividends on loaned securities. Also, the investment experience of the cash
collateral will inure to the Portfolio. Loans will not have a term longer than
30 days and will be terminable at any time. As with any extension of credit,
securities lending exposes a Portfolio to some risks including delay in
recovery and loss of rights in the collateral if the borrower fails
financially.
Equity Securities
EQUITY SECURITIES include common stocks, preferred stocks, convertible
securities and warrants. Equity securities may offer a higher rate of return
than debt securities. However, the risks associated with investments in equity
securities may also be higher, because the investment performance of equity
securities depends upon factors which are difficult to predict. Equity security
values may fluctuate in response to the activities of an individual company or
in response to general market, interest rate, and/or economic conditions.
Historically, equity securities have provided greater long-term returns and
have entailed greater short-term risk than other securities choices. Depending
on their terms, however, preferred stock and convertible securities may have
investment and risk characteristics more closely resembling those of debt
securities than those of other equity securities.
COMMON STOCKS represent ownership in a company and participate in company
profits through dividend payments or capital appreciation after other claims
are satisfied. Common stock generally has the greatest potential for
appreciation and depreciation of all corporate securities (other than warrants)
since the share price reflects the company's earnings.
PREFERRED STOCKS represent an ownership interest in a company of a specified
rank (after bonds and before common stocks) with respect to dividend payments
and company assets. Preferred stock generally receives a dividend, but may also
omit or be in danger of omitting a dividend payment, in which case it would be
purchased for its capital appreciation potential.
CONVERTIBLE SECURITIES generally are bonds or preferred stocks which can be
exchanged, through warrants or otherwise, into a specified number of shares of
the issuer's common stock. Convertible securities generally pay higher interest
or dividends than common stock but lower interest or dividends than non-
convertible securities.
WARRANTS are rights issued by the issuer of a security (usually common stock)
to purchase that security at a specified price for a specified period of time.
They do not represent an ownership interest in the issuing company, and their
prices do not necessarily parallel the prices of the underlying security.
Derivative Instruments
FUTURES CONTRACTS are agreements to buy or sell a security, or deliver a final
cash settlement price in connection with an index, interest rate, currency, or
other contracts not calling for physical delivery, for a set price in the
future. A Portfolio must post an amount equal to a portion of the total market
value of the futures contract as INITIAL MARGIN, which is returned when a
Portfolio's obligations under the contract have been satisfied. From time to
time thereafter, the Portfolio may have to post VARIATION MARGIN to maintain
this amount as the market value of the contract fluctuates.
Special skill is required in order to effectively use futures contracts. No
Portfolio will use futures contracts or options thereon for leveraging
purposes. Certain risks exist when a Portfolio uses futures contracts including
the:
. inability to close out or offset futures contract transactions at favorable
prices
. reduction of the Portfolio's income
. reduction in the value of the subject of the futures contract or of the
contract itself
. imperfect correlation between the value of the futures contract and the value
of the subject of the contract
. prices moving contrary to the portfolio manager's expectation
CALL OPTIONS give the purchaser the right to buy and obligate the seller to
sell an underlying security, currency, stock index (which is based on the
weighted average of the securities in the index), or futures contract at a
specified "exercise" price during the option period. There are certain risks to
a Portfolio that sells call options, including the inability to effect closing
transactions at favorable prices or to participate in the appreciation of the
subject of the call option above the exercise price. Purchasing call options
exposes a Portfolio to
15
<PAGE>
the risk of losing the entire premium it has paid for the option.
PUT OPTIONS give the purchaser the right to sell and obligate the seller to
purchase an underlying security, currency, stock index (which is based on the
weighted average of the securities in the index) or futures contract at a
specified "exercise" price during the option period. There are certain risks to
a Portfolio that sells put options, including the inability to effect closing
transactions at favorable prices and the obligation to purchase the subject of
the put option at prices which may be greater than current market values or
exchange rates. Purchasing put options exposes a Portfolio to the risk of
losing the entire premium it has paid for the option if the option cannot be
exercised profitably.
COVERED OPTIONS involve a Portfolio's (a) segregating liquid assets with its
custodian that at all times at least equal the Portfolio's obligations under
such options, (b) holding an appropriate offsetting option or other derivative
instrument, or, (c) in the case of a call option sold by the Fund, owning the
securities or other investments subject to the option.
HYBRID INSTRUMENTS combine elements of futures contracts or options with
elements of debt, preferred equity, depository instruments, or other evidence
of indebtedness. A portion of or all interest payments to the Portfolio and/or
the principal or stated amount payable to the Portfolio at maturity,
redemption, or retirement of the hybrid instrument are determined by reference
to prices, changes in prices, or differences between prices of securities,
currencies, intangibles, goods, articles, or commodities or by another
benchmark such as an index or interest rate.
Hybrid instruments can be an efficient means of exposing a Portfolio to a
particular market in order to enhance total return. Hybrid instruments are
potentially more volatile and carry greater market risks than traditional debt
instruments. The risks of investing in these instruments reflect a combination
of the risks of investing in securities, options, futures and currencies.
Hybrid securities typically do not trade on exchanges. Hybrid instruments are
frequently (or may become) less liquid than other types of investments. They
also expose the Portfolio to losses if the other party to the transaction fails
to meet its obligations.
Portfolios use SWAPS, CAPS, FLOORS and COLLARS as risk management tools to
protect against changes in interest rates or in security or currency values, or
to gain exposure to certain markets in an economical way. SWAP TRANSACTIONS
involve an agreement where one party exchanges payments equal to a floating
interest rate, currency exchange rate or variation in interest rates or
currency indexes on a specified amount (the "notional amount"), and the other
party agrees to make payments equal to a fixed rate on the same amount for a
specified period. CAPS give the purchaser the right to receive payments from
the seller to the extent a specified interest rate, currency exchange rate or
index exceeds a specified level during a specified period of time. FLOORS give
the purchaser the right to receive payments from the seller to the extent a
specified interest rate, currency exchange rate or index is less than a
specified level during a specified period of time. COLLARS give the purchaser
the right to receive payments from the seller to the extent a specified
interest rate, currency exchange rate or index is outside an agreed upon range
during a specified period of time.
A Portfolio will not use swaps, caps, floors or collars to leverage its
exposure to changing interest rates, currency rates, or security values. Nor
will a Portfolio sell interest rate caps, floors or collars unless it owns
securities that will provide the interest that the Portfolio may be required to
pay.
The use of swaps, caps and floors exposes the Portfolio to investment risks
different than those associated with other security transactions including:
. total loss of the Portfolio's investment in swaps and the sale of caps,
floors and collars (a Portfolio's purchase of caps, floors and collars can
result only in the loss of the purchase price)
. investment performance of the Portfolio can be worse than if these techniques
were not used if the assumptions used in entering into the transactions were
incorrect
. since these instruments generally do not trade on exchanges, a Portfolio may
not be able to enter into offsetting positions, or may suffer other losses,
if the other party to the transaction fails to meet its obligations
. more market volatility than other types of investments
16
<PAGE>
Debt ("Fixed Income") Securities
Some of the many varieties of debt securities that the Portfolios may purchase
are described below. Most debt securities (other than those that have
"floating" interest rates) will increase in value if market interest rates
subsequently decrease and decrease in value if market interest rates
subsequently increase. In most market environments these variations tend to be
more pronounced the longer the security's remaining duration. Changes in the
issuer's perceived creditworthiness can also significantly affect the value of
any debt securities that a Portfolio holds.
INVESTMENT GRADE SECURITIES are rated by at least one NRSRO in one of its top
four rating categories, or if unrated, the portfolio manager must determine
that the securities are of comparable quality. All other securities are
considered BELOW INVESTMENT GRADE. Below investment grade securities are also
known as "JUNK BONDS." Although they generally provide higher yields, below
investment grade fixed income securities, and to a lesser extent, lower rated
investment grade fixed income securities, expose a Portfolio to greater risks
than higher rated investment grade securities including:
. the inability of the issuer to meet principal and interest payments
. loss in value due to economic recession or substantial interest rate
increases
. adverse changes in the public's perception of these securities
. legislation limiting the ability of financial institutions to invest in these
securities
. lack of liquidity in secondary markets
. market price volatility
MORTGAGE-RELATED SECURITIES represent a direct or indirect interest in a pool
of mortgages such as FNMAs, FHLMCs, Collateralized Mortgage Obligations
("CMOs"), and related securities including GNMAs and mortgage-backed
securities. They may be issued or guaranteed by U.S. government
instrumentalities or other entities whose obligation is securitized by the
underlying portfolio of mortgages or mortgage-backed securities. These
securities are valued based on expected prepayment rates. The risks associated
with prepayment of the obligations makes these securities more volatile in
response to changing interest rates than other fixed-income securities.
INTEREST ONLY SECURITIES ("IOs") are entitled to interest payments from a class
of these securities and PRINCIPAL ONLY SECURITIES ("POs") are entitled to
principal payments from a class of these securities. POs are more volatile in
response to changing interest rates than mortgage-related securities that
provide for interest payments. IOs also are extremely volatile and generally
experience a loss in value in the event prepayment rates are greater than
anticipated, which occurs generally when interest rates fall, and an increase
in value when interest rates rise.
ASSET-BACKED SECURITIES represent a direct or indirect interest in a pool of
automobile or credit card receivables. The issuers of the asset-backed
securities are special purpose entities that do not have significant assets
other than the receivables securitizing the securities. The collateral
supporting these securities generally is of shorter maturity than mortgage-
related securities, but exposes a Portfolio to similar risks associated with
prepayment of the receivables prior to maturity.
ZERO COUPON SECURITIES credit interest at a specified rate but do not
distribute cash payments for interest as it falls due. These securities
fluctuate in value due to changes in interest rates more than comparable debt
obligations that pay periodic interest.
When-Issued Securities
Purchasing securities "WHEN-ISSUED" is a commitment by a Portfolio to buy a
security before the security is actually issued. The amount of the Portfolio's
payment obligation and the security's interest rate are determined when the
commitment is made, even though no interest accrues until the security is
issued, which is generally 15 to 120 days later. The Portfolio will segregate
liquid assets with its custodian sufficient at all times to satisfy these
commitments. If the value of the security is less when delivered than when the
commitment was made, the Portfolio will suffer a loss.
American Depository Receipts ("ADRs")
ADRS are U.S. dollar-denominated certificates issued by a U.S. bank or trust
company which represent the right to receive securities of a foreign issuer
deposited in a domestic bank or foreign branch of a U.S. bank. ADRs are traded
17
<PAGE>
on domestic exchanges or in the U.S. over-the-counter market and are registered
domestically. These factors eliminate certain risks associated with investing
in foreign securities.
U.S. dollar-denominated money market securities of foreign issuers
These securities may be registered domestically and traded on domestic
exchanges or in the U.S. over-the-counter market (e.g., Yankee securities). If
the securities are registered domestically, certain risk factors of investing
in foreign securities are eliminated. These securities may also be registered
abroad and traded exclusively in foreign markets (e.g., Eurodollar securities).
FOREIGN INVESTMENTS
FOREIGN SECURITIES include equity securities and debt securities of non-U.S.
domiciled issuers. A few of the many varieties of foreign investments are
described below.
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.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS obligate a Portfolio to purchase or
sell a specific currency on a specified date for a specified amount. They can
be used to hedge the currency risk relating to securities traded in or exposed
to a foreign currency. When used as a hedge, substitute or proxy currency can
also be used instead of the currency in which the investment is actually
denominated. This is known as PROXY HEDGING. These contracts can also be used
to generate income or adjust a Portfolio's exposure to various currencies.
SYNTHETIC NON-U.S. MONEY MARKET POSITIONS are created through the simultaneous
purchase of a U.S. dollar-denominated money market instrument and a forward
foreign currency exchange contract to deliver U.S. dollars for a foreign
currency. These are purchased instead of foreign currency denominated money
market securities because they can provide greater liquidity.
FOREIGN SECURITIES RISK CONSIDERATIONS
Although Portfolios that invest in foreign securities may reduce their overall
risk by providing further diversification, the Portfolios will be exposed to
the following risks with these investments:
. adverse effects from changing political, social or economic conditions,
diplomatic relations, taxation or investment regulations
. limitations on repatriation of assets
. expropriation
. costs associated with currency conversions
. less publicly available information because foreign securities and issuers
are generally not subject to the reporting requirements of the SEC
. differences in financial evaluation because foreign issuers are not subject
to the domestic accounting, auditing and financial reporting standards and
practices
. lack of development or efficiency with respect to non-domestic securities
markets and brokerage practices (including higher, non-negotiable brokerage
costs)
. less liquidity (including due to delays in transaction settlement)
. more price volatility
. smaller options and futures markets, causing lack of liquidity for these
securities
. higher custodial and settlement costs
THE FUND'S ORGANIZATION
The Fund's Directors review actions of the Fund's investment manager, sub-
investment managers and sub-sub-investment manager and decide upon matters of
general policy. The Fund's officers supervise the daily business operations of
the Fund. The Board of Directors and the Fund's officers are listed under
"Directors and Officers" in the SAI.
The Fund was formed in Maryland on November 23, 1982. The Fund has 3 billion
shares of authorized common stock at $0.01 par value per share. The Board of
Directors may classify and reclassify any authorized and unissued shares. The
Fund can issue additional classes of shares without shareholder consent. The
shares are presently divided into classes (or series), including one for each
Portfolio consisting of 100 million shares (200 million shares for the State
Street Research Diversified, State Street Research Growth, and MetLife Stock
Index Portfolios).
Each Portfolio's issued and outstanding shares participate equally in dividends
and distributions declared by such Portfolio and
18
<PAGE>
receive a portion (divided equally among all of the Portfolio's outstanding
shares) of the Portfolio's assets (less liabilities) if the Portfolio is
liquidated or dissolved. For these purposes and for deciding share prices, the
Board of Directors determines how to allocate assets to the Portfolio(s) when
it is not clear to which Portfolio(s) the assets are attributed. Liabilities
which are not clearly assignable to a Portfolio are generally allocated among
the Portfolios in proportion to their relative net assets. In the unlikely
event that any Portfolio has liabilities in excess of its assets, the other
Portfolios may be held responsible for the excess liabilities.
MetLife purchases shares of each of the Portfolios at their inception for its
general account. MetLife has sold some of those shares, but will not sell
shares if the sale would reduce the Fund's net worth below $100,000. MetLife
paid all of the organizational expenses of the Fund and will not be reimbursed.
METLIFE
MetLife is the Fund's investment manager and principal underwriter and
distributor. MetLife also manages its own investment assets and those of
certain affiliated companies and other entities. MetLife is a mutual life
insurance company which sells insurance policies and annuity contracts. On
December 31, 1997, it had total life insurance in force of approximately $1.7
trillion and total assets under management of approximately $330.3 billion.
MetLife is the parent of Metropolitan Tower.
INVESTMENT MANAGEMENT FEES
The Fund pays MetLife monthly for its investment management services based on
the following annual percentages of the average daily net assets of each
Portfolio:
<TABLE>
<CAPTION>
AVERAGE
DAILY NET % PER
PORTFOLIO ASSETS ANNUM
- --------- ---------- -----
<S> <C> <C>
State Street Research Money Market All assets .25%
MetLife Stock Index All assets .25%
Lehman Brothers Aggregate Bond Index All assets .25%
Russell 2000 Index All assets .25%
</TABLE>
<TABLE>
<CAPTION>
AVERAGE
DAILY NET % PER
PORTFOLIO ASSETS ANNUM
- --------- ----------------- -----
<S> <C> <C>
Morgan Stanley EAFE Index All assets .30%
State Street Research Growth 1st $500 million .55%
next $500 million .50%
over $1 billion .45%
State Street Research Income 1st $250 million .35%
next $250 million .30%
over $500 million .25%
State Street Research Diversified 1st $500 million .50%
next $500 million .45%
over $1 billion .40%
State Street Research 1st $500 million .75%
International Stock next $500 million .70%
over $1 billion .65%
State Street Research 1st $500 million .75%
Aggressive Growth next $500 million .70%
over $1 billion .65%
Loomis Sayles High Yield Bond All assets .70%
T. Rowe Price Small Cap Growth 1st $100 million .55%
next $300 million .50%
over $400 million .45%
T. Rowe Price Large Cap Growth 1st $50 million .70%
over $50 million .60%
Janus Mid Cap 1st $100 million .75%
next $400 million .70%
over $500 million .65%
Scudder Global Equity 1st $50 million .90%
next $50 million .55%
next $400 million .50%
over $500 million .475%
Harris Oakmark Large Cap Value 1st $250 million .75%
over $250 million .70%
Neuberger&Berman Partners 1st $100 million .70%
Mid Cap Value next $250 million .675%
next $500 million .65%
next $750 million .625%
over $1.6 billion .60%
</TABLE>
MetLife pays all the sub-investment managers for their services. State Street
Research pays GFM for its services as sub-sub-investment manager.
FUND EXPENSES
The Fund is responsible for paying its own expenses. However, MetLife has the
right, if it chooses, to pay all or part of the Fund's expenses or those of any
of the Portfolios. MetLife also has the right to stop these payments upon
notice to the Board of Directors and to Fund shareholders.
19
<PAGE>
MetLife subsidizes expenses of certain Portfolios in excess of a certain
percentage of net assets until the earlier of either total net assets reaching
$100 million or a certain date as follows:
<TABLE>
<CAPTION>
SUBSIDIZED
EXPENSE IN
PORTFOLIO EXCESS OF DATE
- --------- ---------- -------
<S> <C> <C>
Loomis Sayles High Yield Bond 0.20% 3/2/99
Harris Oakmark Large Cap Value 0.20% 11/2/00
T. Rowe Price Large Cap Growth 0.20% 11/2/00
Neuberger&Berman Partners Mid Cap Value 0.20% 11/2/00
Lehman Brothers Aggregate Bond Index 0.20% 11/2/00
Russell 2000 Index 0.20% 11/2/00
Morgan Stanley EAFE Index 0.25% 11/2/00
</TABLE>
MetLife paid such excess expenses for the Janus Mid Cap Portfolio until
December 30 1997, for the T. Rowe Price Small Cap Growth Portfolio until
January 22, 1998 and for the Scudder Global Equity Portfolio until July 1,
1998. Expenses exclude the investment management fees payable to MetLife,
brokerage commissions on portfolio transactions (including any other direct
costs related to portfolio investment transactions), taxes, interest and other
loan costs owed by the Fund and any unusual one-time expenses (such as legal
related expenses). These subsidies and other prior expense reimbursement
arrangements can increase the performance of the Portfolios.
SHAREHOLDER MEETINGS
Regular annual shareholder meetings are not required and the Fund does not
expect to have regular meetings. For certain purposes, the Fund is required to
have a shareholder meeting. Examples of the reasons a meeting might be held are
to: (1) approve certain agreements required by securities laws; (2) change
fundamental investment objectives and restrictions of the Portfolios; and (3)
fill vacancies on the Board of Directors when less than a majority have been
elected by shareholders. Also, if 10% or more of the outstanding shares request
a shareholders' meeting, then by a vote of two-thirds of the Fund's outstanding
shares (as of a designated record date) a director may be removed from office.
The Fund assists with all shareholder communications. Except as mentioned
above, directors will continue in office and may appoint directors for
vacancies.
VOTING
Each share has one vote and fractional shares have fractional votes. Votes for
all Portfolios are generally aggregated. When there is a difference of
interests between the Portfolios, votes are counted on a per Portfolio basis
and not totaled. Shares in a Portfolio not affected by a matter are not
entitled to vote on that matter. A Portfolio-by-Portfolio vote may occur, for
example, when there are proposed changes to a particular Portfolio's
fundamental investment policies or investment management agreement.
Owners of Contracts supported by separate accounts registered as unit
investment trusts under the Investment Company Act of 1940 have certain voting
interests in Fund shares. The Contract prospectus attached to this Prospectus
describes how Contract owners can give voting instructions for Fund shares.
Shares held by MetLife's general account and in a separate account (not
registered as a unit investment trust) vote in the same proportion as shares
held by the Insurance Companies in their separate accounts registered as unit
investment trusts.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to qualify as a regulated investment company under the tax law
and, as such distributes substantially all of each Portfolio's ordinary net
income and capital gains each calendar year as a dividend to the separate
accounts funding the Contracts to avoid an excise tax on certain undistributed
amounts. The Fund expects to pay no income tax. Dividends are declared annually
and reinvested in additional full and partial shares of the Portfolio. The
Board of Directors may declare dividends at other times.
The Fund and its Portfolios will comply with diversification and other tax law
and rules that apply to investments under variable life insurance and annuity
contracts. Under these rules, shares of the Fund will generally only be
available through the purchase of a variable life insurance or annuity
contract. Income tax consequences to Contract owners who allocate premium to
Fund shares are discussed in the prospectus for the Contracts that is attached
at the front of this Prospectus.
20
<PAGE>
SALE AND REDEMPTION OF SHARES
Shares are sold and redeemed at a price equal to the net asset value without
any sales charges. The Insurance Companies purchase or redeem shares of each
Portfolio, based on, among other things: (1) the amount of net Contract
premiums or purchase payments transferred to the separate accounts; (2)
transfers to or from separate account investment divisions; (3) policy loans;
(4) loan repayments; and (5) benefit payments to be effected on a given date
under the contracts. Generally, these purchases and redemptions are priced
using the Portfolio net asset value computed for the same date and time as are
used to price the corresponding contract transaction.
Each Portfolio's net asset value per share is calculated by taking its assets
(including dividends and interest received or accrued), deducting its
liabilities (including accrued expenses and dividends payable) and dividing the
result by the total number of the Portfolio's outstanding shares. To determine
the value of a Portfolio's assets, cash and receivables are valued at their
face amounts. Interest is recorded as accrued and dividends are recorded on the
ex-dividend date.
Securities, options and futures contracts held by the Portfolios are valued at
market value. Short-term debt instruments with a maturity of 60 days or less
held by all Portfolios and all debt instruments held by the State Street
Research Money Market Portfolio are valued on an amortized cost basis. When
market quotations are not readily available for securities and assets, they are
valued at fair value as determined by the Board of Directors.
A Portfolio's net asset value per share is determined once daily immediately
after any dividends are declared and is currently determined at the close of
regular trading on the New York Stock Exchange. When it is open, regular
trading on the New York Stock Exchange usually ends at 4:00 p.m., Eastern time.
The net asset value may also be determined on days when the New York Stock
Exchange is closed when there has been trading in a Portfolio's securities
which would result in a material change in the net asset value.
21
<PAGE>
APPENDIX TO PROSPECTUS
SUB-INVESTMENT MANAGER PERFORMANCE. Because they commenced operations only on
November 1, 1998, no performance history is available for the Neuberger&Berman
Partners Mid Cap Value, Harris Oakmark Large Cap Value, T. Rowe Price Large Cap
Growth, and Lehman Brothers Aggregate Bond Index Portfolios. The following,
however, sets forth total return information for the one-year, three-year,
five-year and ten-year periods ended September 30, 1998 (or since inception if
more recent) for certain similar accounts that are managed by the same sub-
investment managers as are these four Portfolios. The tables also show the
total return information for appropriate indices for the same periods. Each
sub-investment manager has represented to the Fund that, except as otherwise
noted, the accounts for which performance figures are shown include all of the
sub-investment manager's investment company and other accounts that (a) have
been managed with investment objectives, policies, and strategies substantially
similar to those used in managing the corresponding Portfolio and (b) are of
sufficient size that their performance would be considered relevant to the
owner of a policy or contract investing in that Portfolio. (No such performance
information is available with respect to the Morgan Stanley EAFE Index or
Russell 2000 Index Portfolios, which also commenced operations on November 1,
1998.)
The accounts are shown for illustrative purposes only and do not necessarily
predict future performance of the Portfolios. You should be aware that the
Portfolios are likely to differ from other accounts managed by the same sub-
investment manager in such matters as size, cash flow pattern, expense levels
and certain tax matters. Accordingly, the portfolio holdings and performance of
the Portfolio will vary from those of such other accounts.
The performance figures set forth below do not reflect the deduction of sales,
administrative expense, mortality risk, expense risk, or other charges or taxes
under the terms of the variable annuity contracts and variable life insurance
policies that may invest in the Portfolios. These charges may be substantial
and will cause the investment return under such a contract or policy to be less
than that of the Portfolio. Such charges are discussed in detail in the
appropriate Contract prospectus.
THE PERFORMANCE INFORMATION DOES NOT REPRESENT THE PERFORMANCE OF THE PORTFOLIO
NEUBERGER&BERMAN
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURN FOR NEUBERGER&BERMAN
PERIOD ENDING 9/30/98 PARTNERS FUND NEUBERGER&BERMAN AMT [NAME OF PORTFOLIO]
(UNAUDITED)/1/ ACCOUNTS (1/20/75) PARTNERS PORTFOLIO (3/22/94) INDEX
- --------------------------- ------------------ ---------------------------- -------------------
<S> <C> <C> <C>
One Year % % %
Three Year % % %
Five Year % % %
Ten Year % % %
</TABLE>
- ------------
/1/ As of the Neuberger&Berman Partners Fund Accounts, a mutual fund had
assets of $ . The Neuberger&Berman Advisory Management Trust Partners
Portfolio a [type of account] had assets of $ . The actual fees and expenses
of the accounts whose performance is shown have been used. Had the Portfolio's
estimated fees and expenses, after expense reimbursement from MetLife, been
used, the performance figures would have been lower. Performance figures are
based on historical performance and do not guarantee future results. The
Index is an unmanaged index of [describe index]. Performance for the index has
been obtained from public sources and has not been audited.
22
<PAGE>
HARRIS
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURN FOR
PERIOD ENDING 9/30/98 [NAME OF PORTFOLIO] [NAME OF PORTFOLIO]
(UNAUDITED)/1/ OAKMARK FUND INDEX INDEX
- --------------------------- ------------ ------------------- -------------------
<S> <C> <C> <C>
One Year % % %
Three Year % % %
Five Year % % %
Ten Year % % %
</TABLE>
- --------
/1/ As of the Oakmark Fund, a mutual fund, had assets of $ . The total
returns were calculated using a . % expense ratio, which corresponds to the
estimated first year expense ratio of the Portfolio, after expense
reimbursement from MetLife. [if not possible, then: "the actual fees and
expenses of the accounts whose performance is shown have been used. Had the
Portfolio's estimated fees and expenses, after expense reimbursement from
MetLife been used, the performance figures would have been lower".] Performance
figures are based on historical performance and do not guarantee future
results. The Index is an unmanaged index of [describe index]. The Index
is an index of actively managed [describe index]. Performance for both indices
has been obtained from public sources and has not been audited.
T. ROWE PRICE
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURN FOR LIPPER VARIABLE FUNDS
PERIOD ENDING 9/30/98 T. ROWE PRICE UNDERLYING GROWTH 80% S&P 500
(UNAUDITED)/1/ GROWTH STOCK FUND FUNDS AVERAGE S&P 500 20% MSCI EAFE
- --------------------------- ----------------- --------------------- ------- -------------
<S> <C> <C> <C> <C>
One Year % % % %
Three Year % % % %
Five Year % % % %
Ten Year % % % %
</TABLE>
- --------
/1/ As of the T. Rowe Price Growth Stock Fund, a mutual fund, had assets
of $ . The total returns were calculated using the actual fees and expenses
of the Fund whose performance is shown. Had the Portfolio's estimated fees and
expenses, after expense reimbursement from MetLife been used, the performance
figures would have been lower. Performance figures are based on historical
performance and do not guarantee future results. The Lipper Variable Funds
Underlying Growth Funds Average Index, the S&P 500 Indices and the 80% S&P 500
and 20% MSCI EAFE Indices Blend are unmanaged indices of [describe indices].
Performance for the indices has been obtained from public sources and has not
been audited.
METLIFE
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURN FOR
PERIOD ENDING 9/30/98 LEHMAN BROTHERS AGGREGATE
(UNAUDITED)/1/ NAME OF FUND BOND INDEX
- --------------------------- ------------ -------------------------
<S> <C> <C>
One Year % %
Three Year % %
Five Year % %
Ten Year % %
</TABLE>
- --------
/1/ As of the [name of account], a non-mutual fund, had assets of $ .
The total returns were calculated using the actual fees and expenses of the
Fund whose performance is shown. Had the Portfolio's estimated fees and
expenses, after expense reimbursement from MetLife been used, the performance
figures would have been lower. Performance figures are based on historical
performance and do not guarantee future results. Lehman Brothers Aggregate Bond
Index in an unmanaged index of [describe index]. Performance for the index has
been obtained from public sources and has not been audited.
23
<PAGE>
METROPOLITAN SERIES FUND, INC.
---------------------
Principal Office of the Fund
1 Madison Avenue
New York, New York 10010
---------------------
Investment Manager
Metropolitan Life Insurance Company
1 Madison Avenue
New York, New York 10010
(Principal Business Address)
Sub-Investment Managers
State Street Research & Management Company
One Financial Center
Boston, Massachusetts 02111
(Principal Business Address)
Loomis, Sayles & Company, L.P.
One Financial Center
Boston, Massachusetts 02111
(Principal Business Address)
Janus Capital Corporation
100 Fillmore Street
Denver, Colorado 80206-4923
(Principal Executive Offices)
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
(Principal Business Address)
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
(Principal Executive Offices)
Harris Associates, LP
2 North LaSalle Street
Chicago, IL 60602
Neuberger&Berman Management Inc.
605 Third Avenue
New York, NY 10158-0180
Sub-Sub Investment Manager
GFM International Investors, Inc.
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,
METROPOLITAN TOWER, LOOMIS SAYLES, T. ROWE PRICE, JANUS, SCUDDER, HARRIS OR
NEUBERGER&BERMAN. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY STATE
IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
(EXP0599)MLIC-LD
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
FOR
METROPOLITAN SERIES FUND, INC.
NOVEMBER 1, 1998
The investment options ("Portfolios") currently offered by the Metropolitan
Series Fund, Inc. (the "Fund") are:
State Street Research Growth T. Rowe Price Small Cap Growth
Portfolio Portfolio
State Street Research Income T. Rowe Price Large Cap Growth
Portfolio Portfolio
State Street Research Money Market Neuberger&Berman Partners Mid Cap
Portfolio Value Portfolio
State Street Research Diversified Harris Oakmark Large Cap Value
Portfolio Portfolio
State Street Research Aggressive Scudder Global Equity Portfolio
Growth Portfolio
MetLife Stock Index Portfolio Lehman Brothers Aggregate Bond Index
Portfolio
State Street Research International Russell 2000 Index Portfolio
Stock Portfolio
Janus Mid Cap Portfolio Morgan Stanley EAFE Index Portfolio
Loomis Sayles High Yield Bond
Portfolio
This Statement of Additional Information ("SAI") is not a Prospectus. It should
be read in conjunction with the Prospectus dated November 1, 1998. A copy of
the Prospectus may be obtained from Metropolitan Life Insurance Company, One
Madison Avenue, New York, New York 10010, Area 2H.
One Madison Avenue, New York, NY 10010 Telephone (800) 553-4459
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
HEADINGS PAGE
- -------- ----
<S> <C>
Description of Some Investment Practices, Policies and Risk................ 3
Certain Investment Limitations............................................. 7
Investment Management Arrangements......................................... 8
Directors and Officers of the Fund......................................... 10
Placing Portfolio Transactions............................................. 12
Sale and Redemption of Shares.............................................. 15
Pricing of Portfolio Securities............................................ 15
Taxes...................................................................... 17
General Information........................................................ 18
Financial Statements....................................................... 18
Appendix................................................................... 19
</TABLE>
B-2
<PAGE>
DESCRIPTION OF SOME INVESTMENT PRACTICES, POLICIES, AND RISKS
The information that follows expands on the similar discussion in the Fund's
Prospectus and does not describe every type of investment, technique, or risk
to which a Portfolio maybe exposed. Each Portfolio reserves the right, without
notice, to make any investment, or use any investment technique, that this SAI
or the Fund's Prospectus does not specifically identify as requiring a
shareholder vote.
MONEY MARKET INSTRUMENTS generally have a remaining maturity of no more than
13 months when acquired by the Fund. They include the following:
. United States Government securities -- direct obligations (in the form of
Treasury bills, notes and bonds) of the United States Government, differing
mainly by maturity lengths.
. Government Agency Securities -- debt securities issued by agencies or
instrumentalities of the United States Government. They are backed by the
full faith and credit of the United States, guaranteed by the United States
Treasury, supported by the issuing agency's or instrumentality's right to
borrow from the United States Treasury, or supported by the issuing agency's
or instrumentality's credit. Agency securities include several of the types
of instruments discussed below under "Mortgage-Backed Securities."
. Certificates of Deposit -- generally short-term, interest-bearing negotiable
certificates issued by commercial banks or savings and loan associations
against funds deposited in the issuing institution. Any non-negotiable time-
deposits must mature in seven days or less.
. Bankers' Acceptances -- time drafts drawn by borrowers on commercial banks,
usually in connection with an international commercial transaction where
both the borrower and the bank guarantee the payment of the draft in its
face amount on the maturity date (which is usually within six months). These
securities are traded in secondary markets prior to maturity. The Portfolios
managed by State Street Research & Management Company ("State Street
Research") and the index Portfolios will not invest in any security issued
by a commercial bank or a savings and loan association (including foreign
branches or agencies of banks) unless the bank or association is organized
and operating in the Untied States, has total assets of at least $1 billion
and is a member of the Federal Deposit Insurance Corporation. The Portfolios
will not invest in non-negotiable bankers' acceptance maturing in more than
7 days.
. Commercial Paper -- short-term unsecured promissory notes issued by
corporations, usually to finance short-term credit needs. Commercial paper
is generally sold on a discount basis, with maturity from issue not
exceeding nine months. The Portfolios may purchase commercial paper with the
highest rating (and, for the State Street Research Money Market Portfolio,
it must also be rated in one of the top two "modifiers" that indicate the
best investment attributes of such rating) given by a nationally recognized
statistical rating organization ("NRSRO") or, if unrated (a) of comparable
quality or (b) issued by companies having outstanding debt issues in with
ratings with one of the top three ratings given by an NRSRO (and for State
Street Research Money Market Portfolio the debt issues must be in the top
two rating categories).
. Variable Amount Master Demand Notes -- commercial paper of companies that
permit the purchaser to lend varying investment amounts (up to the maximum
indicated in the note) at varying rates to the borrower. The borrower can
prepay the amount borrowed at any time with no penalty and the lender can
redeem the note at any time and receive the face value plus accrued
interest. No secondary market exists for these notes. The same rating/credit
quality requirements apply as described above for other forms of commercial
paper.
. Non-convertible Corporate Debt Securities -- such as bonds and debentures
that will mature within a short time and that have credit characteristics
comparable to those required above for commercial paper.
. Repurchase Agreements -- the purchaser acquires ownership of another money
market instrument, and the seller agrees at the time of sale to repurchase
such other instrument at a specified time and price which determine the
purchaser's yield during the holding period. This insulates the purchaser
from market fluctuations unless the seller defaults. Repurchase agreements
B-3
<PAGE>
are collateralized by cash or the purchased (or equivalent) underlying
instrument at all times at least equal in value to the price the Fund paid
for the underlying instrument plus interest accrued to date. The Fund can
enter into repurchase agreements with primary dealers for periods not to
exceed 30 days. Repurchase agreements with a duration of more than 7 days are
considered illiquid. If the seller defaults on its repurchase obligation, the
Fund could experience a delay in recovery or inadequacy of the collateral and
a cost associated with the disposition of the collateral.
. Reverse Repurchase Agreements -- the sale of money market instrument by the
Fund with an agreement by the Fund to repurchase the instrument at a
specified time, price and interest payment. These agreements can be used when
interest income earned from the reinvestment of the proceeds (in money market
instrument with the same or shorter duration to maturity or resale) is
greater than the interest expense of the reverse repurchase transaction.
These agreements can also be used by the Fund as a form of borrowing and they
therefore are subject to the limitations regarding borrowing by the Fund. In
order to minimize the risk that it will have insufficient assets to
repurchase the instrument subject to the agreement, the Fund will keep in a
segregated account with its custodian liquid assets at least equal to the
value of the specified repurchase price or the proceeds received on the sale
subject to repurchase, plus accrued interest.
MORTGAGE-RELATED SECURITIES
GNMA -- partial ownership interests in a pool of mortgage loans which are
individually guaranteed or insured by the Federal Housing Administration, the
Farmers Home Administration or the Veterans Administration. The GNMA
certificates are issued and guaranteed by the Government National Mortgage
Association, a U.S. Government corporation, and backed by the full faith and
credit of the United States.
FNMA and FHLMC -- partial ownership interests in pools of mortgage loans. FNMA
certificates are issued and guaranteed by the Federal National Mortgage
Association, a federally chartered, privately owned corporation and are not
backed by the U.S. Government (although the U.S. Secretary of the Treasury has
discretionary authority to lend it up to $2.25 billion). FHLMC certificates are
issued and guaranteed by the Federal Home Loan Corporation, a federally
chartered corporation owned by the Federal Home Loan Bank and are not backed by
the U.S. government (although the U.S. Secretary of the Treasury has
discretionary authority to lend it up to $2.25 billion).
Mortgage-backed securities -- may be issued by governmental or non-governmental
entities such as banks and other mortgage lenders. Non-governmental securities
may offer higher yield to the Fund but may also expose the Fund to greater
price fluctuation and risk than governmental securities. Many issuers guarantee
payment of interest and principal on the securities regardless of whether
payments are made on the underlying securities, which generally increases the
quality and security. Risks which affect mortgage-backed securities' market
values or yields, include actual or perceived interest rate changes,
creditworthiness of the issuer or guarantor, prepayment rates value of the
underlying mortgages and changes in governmental regulation or tax policies. In
addition, certain mortgage-related securities may be settled only through
privately owned clearing corporations whose solvency and creditworthiness are
not backed by the U.S. Government and whose operational problems may result in
delays in settlement or losses to a Portfolio. Mortgage-related securities
include:
. Mortgage-backed bonds, which are secured by a first lien on a pool of single-
family detached properties and are also general obligations of their issuers.
. Mortgage pass-through bonds, which are secured by a pool of mortgages where
the cash flow generated from the mortgage collateral pool is dedicated to
bond repayment.
. Stripped agency mortgage-backed securities, which are interests in a pool of
mortgages, where the cash flow has been separated into its interest only
("interest only" or "IOs") and principal only ("principal only" or "POs")
components. IOs or POs, other than government-issued IOs or POs backed by
fixed rate mortgages, are considered illiquid securities.
B-4
<PAGE>
. Other mortgage-related securities, which are other debt obligations secured
by mortgages on commercial real estate or residential properties.
BELOW INVESTMENT GRADE SECURITIES (or JUNK BONDS) -- debt securities that are
not rated in (or judged to be of comparable quality to) one of the top four
categories by an NRSRO. These securities expose the Fund to more risks than
higher rated securities, including:
. greater doubt as to the issuer's capacity to pay interest and principal
. greater fluctuations in market values due to individual corporate
developments
. greater risk of default for various reasons including that (1) the issuers of
these securities tend to be more highly leveraged and may not have available
to them more traditional methods of financing and (2) the securities are
unsecured and are generally subordinated to debts of other creditors
. greater difficulty in obtaining accurate market quotations for valuation
purposes
. increased expenses to the extent the Fund must seek recovery due to a default
in payment
. less liquid trading markets
RESTRICTED OR ILLIQUID SECURITIES -- securities for which there is no readily
available market. These securities are priced at fair value under procedures
approved by the Fund's Board of Directors. A Portfolio can sell restricted
securities only in privately negotiated transactions or in a public offering
registered with the Securities and Exchange Commission ("SEC"). Subsequent to
the purchase of a restricted security, SEC registration of such security may
become necessary and a Portfolio that owns the security may need to pay all or
part of the registration expenses and may need to wait until such registration
becomes effective before it can sell the security. In addition, the absence of
ready markets may delay a Portfolio's sale of an illiquid investment. Delays in
disposing of an investment expose a Portfolio to fluctuations in value for
longer periods than it desired.
RULE 144A SECURITIES -- securities that are not registered with the SEC but
under certain circumstances may be considered as liquid. Pursuant to procedures
approved by the Board of Directors, these securities are subject to ongoing
evaluation to monitor their liquidity, and the purchase of these securities
could have the effect of increasing the percent of a Portfolio's securities
invested in illiquid securities. Liquidity is evaluated based on various
factors including:
. the availability of trading markets for the security
. the frequency of trades and quotes
. the number of dealers and potential purchasers
. dealer undertakings to make a market
. the nature of the security and of the marketplace trades (including disposal
time, solicitation methods and mechanics of transfer)
LENDING PORTFOLIO SECURITIES. The Fund may pay reasonable finders,
administrative and custodial fees to persons that are unaffiliated with the
Fund for services in connection with loans of its portfolio securities.
Payments received by a Portfolio equal to dividends, interest and other
distributions on loaned securities may be treated as income other than
qualified income for the 90% test discussed under "Taxes" below. The Fund
intends to engage in securities lending only to the extent that it does not
jeopardize its qualification as a regulated investment company under the
Internal Revenue Code (the "Code").
OPTIONS ON SECURITIES, CURRENCIES AND INDICES. Options that are traded on
recognized securities exchanges often have less of a risk of loss than those
sold "over-the-counter." A Portfolio will not sell the security or currencies
against which options have been written until after the option period has
expired, a closing purchase transaction is executed, a corresponding put or
call option has been purchased, or the sold option is otherwise covered. The
sale and purchase of options involves paying brokerage commissions and other
transaction costs. In addition, selling covered call options can increase the
portfolio turnover rate.
The purchase and sale of index options have additional risks. For example if
trading of certain securities in the index is interrupted, a Portfolio would
not be able to close out options which it had purchased or sold if restrictions
on exercise were also imposed. To address such liquidity concerns the Fund
limits use of index options to options on indices (1) with a sufficient number
of securities to minimize the likelihood of a trading halt and (2) for which
there is a developed secondary market.
B-5
<PAGE>
A Portfolio will cover any option it has sold on a stock index by (1) if the
option is a call option, segregating with the Fund's custodian bank either (a)
cash or other liquid assets having a value that, when added to any related
margin deposits, at all times at least equals the value of the securities
comprising the index (in the case of a call option), or (b) securities that
substantially replicate changes in value of the securities in the index; (2) if
the option is a put option, segregating with the Fund's custodian bank cash or
other liquid assets having a value that, when added to any related margin
deposits, at all times at least equals the exercise price; or (3) regardless of
whether the option is a call or a put option, holding an offsetting position in
the same option at an exercise price that is at least as favorable to the Fund.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. These contracts are traded in the
interbank market through currency traders. The traders do not charge a fee, but
they do realize a profit based on the difference between the prices at which
they are buying and selling various currencies. The use of these contracts
involves various risks including:
. inability to enter into a contract at advantageous times or with respect to
the desired foreign currencies
. poor correlation between a currency's value and any proxy currency that a
Portfolio is using
. the creditworthiness of the counterparty to the transaction
. losses (or lost profits) due to unanticipated or otherwise adverse changes in
the relative value of currencies
. additional expense due to transaction costs or the need to purchase or sell
foreign currency on the spot market to correlate with the currency delivery
requirements of the contract
The Portfolios will cover outstanding forward currency contracts by maintaining
liquid portfolio securities denominated in or exposed to the currency
underlying the forward contract or the currency being hedged. To the extent
that a Portfolio is not able to cover its forward currency positions with
underlying portfolio securities, the Portfolio will have its bank custodian
segregate cash or liquid assets having a value equal to the aggregate amount of
such Portfolio's commitments under forward contracts. As an alternative to
segregating assets, a Portfolio may buy call options permitting such Portfolio
to buy the amount of foreign currency being hedged by a forward sale contract
or a Portfolio may buy put options permitting it to sell the amount of foreign
currency subject to a forward buy contract.
SWAPS, CAPS, FLOORS and COLLARS. A Portfolio will not enter into any swap, cap,
floor or collar unless the portfolio manager thinks that the other party to the
transaction is creditworthy. If the other party defaults, the Portfolio may
have contractual remedies pursuant to agreements related to the transaction.
Portfolios for which swaps are a permissible investment can enter credit
protection swap arrangements which involve the sale by the Portfolio of a put
option on a debt security which is exercisable by the buyer upon certain
events, such as default by the referenced creditor on the underlying debt or a
bankruptcy event of the creditor.
The swap market has grown substantially in recent years and the swap market has
become relatively liquid due to a large number of banks and investment banks
acting as principals and agents and using standardized documentation. Caps,
floors and collars are more recent innovations and standardized documentation
has not yet been fully developed. For that reason they are less liquid than
swaps. Liquidity of swaps, caps, floors and collars will be evaluated based on
various factors including:
. the frequency of trades and quotations
. the number of dealers and prospective purchasers in the marketplace
. dealer undertakings to make a market
. the nature of the instrument (including demand or tender features)
. the nature of the marketplace (including the ability to assign or offset a
Portfolio's rights and obligations)
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. A Portfolio will cover any
futures contract it has sold, or any call option it has sold on a futures
contract, by (1) segregating with the Fund's custodian bank (a) cash or other
liquid assets having a value that, when added to any related margin deposits,
at all times at least equals the value of the securities or currency on which
the futures contract (or related index) is based or (b) securities or
currencies that substantially replicate changes in value of the securities or
currencies on which
B-6
<PAGE>
the futures contract (or related index) is based or (2) holding an offsetting
call option on that futures contract at the same or better settlement price. A
Portfolio will cover any futures contract it has purchased, or any put option
it has sold on a futures contract, by (1) segregating with the Fund's custodian
bank cash or other liquid assets having a value that, when added to any related
margin deposits, at all times at least equals the amount payable upon
settlement of such futures contract or (2) holding an offsetting call option on
that futures contract at the same or better settlement price.
CERTAIN INVESTMENT LIMITATIONS
FUNDAMENTAL POLICIES are those that may not be changed without approval of the
outstanding voting shares of each affected Portfolio. The Prospectus indicates
certain fundamental policies, and the following list contains some more. In
some cases, the Prospectus or SAI specifically states that one or more
Portfolios may engage in practices that would violate these fundamental but for
the fact that they are specifically permitted. Unless otherwise noted below,
such exceptions are also part of the Fund's fundamental policies, even though
the Prospectus or SAI do not designated them individually as such. On the other
hand, any policy set forth in the Prospectus that is more restrictive than any
fundamental policy on the same subject may be changed without any shareholder
vote. Unless otherwise indicated, all restrictions apply at the time of
purchase.
No Portfolio may:
. borrow money or purchase securities on margin
. engage in the underwriting of securities of other issuers except to the
extent that in selling portfolio securities it may be deemed to be a
"statutory" underwriter for purposes of the Securities Act of 1933
. issue senior securities
. sell call options which are not covered options
. sell put options other than to close out option positions previously entered
into
. invest in commodities or commodity contracts. In this regard, the following
aspects of the Prospectus's table of "Certain Investment Practices" are non-
fundamental: all of the prohibitions and limitations in item 9; the
recognized exchange requirement in, and the omission of any Portfolio that
invests in equity securities from, item 10; the recognized exchange
requirement and the limitations on purpose in item 11; and all of item 12,
except the requirement that the Portfolio must be authorized to use the
underlying futures contract.
. make loans but this shall not prohibit a Portfolio from entering into
repurchase agreements or purchasing bonds, notes, debentures or other
obligations of a character customarily purchased by institutional or
individual investors
. For purposes of the industry concentration limit in item 25 of the Prospectus
table, the following additional fundamental policies will apply: domestic
crude oil and gas producers, domestic integrated oil companies, international
oil companies, and oil service companies each will be deemed a separate
industry; money market instruments issued by a foreign branch of a domestic
bank will not be deemed to be an investment in a domestic bank.
NON-FUNDAMENTAL POLICIES are those that may be changed without approval of
shareholders. Unless otherwise indicated, all restrictions apply at the time of
purchase. The following non-fundamental policies are in addition to those
elsewhere.
. No Portfolio will acquire securities for the purpose of exercising control
over the management of any company
. At least 75% of a Portfolio's total assets must be: (1) securities of issuers
in which the Portfolio has not invested more than 5% of its total assets, (2)
voting securities of issuers as to which the Fund owns no more than 10% of
such securities and (3) securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities. These restrictions do not
apply to the Janus MidCap Portfolio.
. No Portfolio may make any short sale
. No Portfolio (except for the Janus Mid Cap Portfolio) may participate on a
joint or joint and several basis in any trading account in securities
. No more than 5% of the Scudder Global Equity Portfolio's assets will be
committed to transactions in options, futures or other "derivative"
instruments that are intended for any purpose other than to protect against
changes in market values of investments the Portfolio owns or intends to
acquire, to facilitate the sale or disposition
B-7
<PAGE>
of investments for the Portfolio, or to adjust the effective duration or
maturity of fixed income instruments owned by the Portfolio
INSURANCE LAW RESTRICTIONS
The ability to sell contracts in New York requires that each portfolio manager
use his or her best efforts to assure that each Portfolio of the Fund complies
with the investment restrictions and limitations prescribed by Sections 1405
and 4240 of the New York State Insurance Law and regulations thereunder in so
far as such restrictions and limitations are applicable to investment of
separate account assets in mutual funds. Failure to comply with these
restrictions or limitations will result in the Insurance Companies ceasing to
make investments in that Portfolio for the separate accounts. The current law
and regulations permit the Fund to make any purchase if made on the basis of
good faith and with that degree of care that an ordinarily prudent person in a
like position would use under similar circumstances.
INVESTMENT MANAGEMENT ARRANGEMENTS
INVESTMENT MANAGEMENT AGREEMENTS AND SUB-INVESTMENT MANAGEMENT AGREEMENTS
MetLife and the Fund have entered into investment management agreements under
which MetLife has the primary management responsibility for the Fund's four
index Portfolios and overall responsibility for all Portfolios. In addition,
MetLife has entered into sub-investment management agreements for all other
Portfolios and a sub-sub-investment management agreement for the State Street
Research International Stock Portfolio. For simplicity, each of MetLife, the
sub-investment managers, and the sub-sub-investment manager are referred to as
"managers" when discussing issues affecting all of them.
Each agreement continues from year to year with annual approval by (a) the
Board of Directors or a majority of that Portfolio's outstanding shares, and
(b) a majority of the Board of Directors who are not "interested persons" of
any party of the agreement. Each agreement may be terminated by any party to
the agreement, without penalty, with 60 days' written notice. Shareholders of a
Portfolio may vote to terminate an agreement as to services provided for that
Portfolio.
Managers make investment decisions and effect transactions based on information
from a variety of sources including their own securities and economic research
facilities. Managers are also obligated to provide office space, facilities,
equipment and personnel necessary to perform duties associated with their
designated Portfolio(s).
MANAGEMENT FEES
The Fund pays MetLife for its investment management services as detailed in the
Prospectus. For 1995, 1996 and 1997, MetLife fees for all Portfolios then
available totaled $14,648,069, $20,845,048 and $31,213,713, respectively.
B-8
<PAGE>
SUB-MANAGEMENT FEES
MetLife pays the sub-investment managers for their investment management
services based on the following annual percentages of the average net assets of
each Portfolio.
<TABLE>
<CAPTION>
AVERAGE
DAILY NET % PER
PORTFOLIO ASSETS ANNUM
- --------- ----------------- -----
<S> <C> <C>
State Street Research Money Market All assets .25%
State Street Research Growth 1st $500 million .40%
next $500 million .35%
over $1 billion .30%
State Street Research Income 1st $250 million .27%
next $250 million .22%
over $500 million .17%
State Street Research Diversified 1st $500 million .35%
next $500 million .30%
over $1 billion .25%
State Street Research 1st $500 million .55%
International Stock next $500 million .50%
over $1 billion .45%
State Street Research 1st $500 million .55%
Aggressive Growth next $500 million .50%
over $1 billion .45%
Loomis Sayles High Yield Bond All assets .50%
T. Rowe Price Small Cap Growth 1st $100 million .35%
next $300 million .30%
over $400 million .25%
T. Rowe Price Large Cap Growth 1st $50 million .50%
over $50 million .40%
Janus Mid Cap 1st $100 million .55%
next $400 million .50%
over $500 million .45%
Scudder Global Equity 1st $50 million .70%
next $50 million .35%
next $400 million .30%
over $500 million .275%
Harris Oakmark Large Cap Value 1st $250 million .65%
over $250 million .60%
Neuberger&Berman Partners 1st $100 million .50%
Mid Cap Value next $250 million .475%
next $500 million .45%
next $750 million .425%
over $1.6 billion .40%
</TABLE>
The following table shows gross sub-investment management fees paid by MetLife
under these agreements. No management fees will be paid with respect to the T.
Rowe Price Large Cap Growth, Harris Oakmark Large Cap Value and
Neuberger&Berman Partners Mid Cap Value until after their inception.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
MANAGER 1995 1996 1997
- ------- ----------- ----------- -----------
<S> <C> <C> <C>
State Street Research/1/ $10,412,735 $14,979,746 $19,942,628
GFM International Investors, Inc. $ 1,634,069 $ 1,868,362 $ 1,690,665
("GFM")/2/
Loomis Sayles & Company, L.P./3/ 0 0 $ 60,889
T. Rowe Price Associates, Inc./3/ 0 0 $ 120,608
Janus Capital Corporation/3/ 0 0 $ 184,926
Scudder Kemper Investments, Inc./3/ 0 0 $ 138,864
</TABLE>
- ------------
/1/ No sub-investment management fees were paid to State Street Research during
1995 and 1996 for services to the State Street Research Money Market or State
Street Research International Stock Portfolio because State Street Research
only became sub-investment manager on August 1, 1997.
/2/ GFM prior to August 1, 1997 received fees as sub-investment manager. As of
August 1, 1997, GFM became sub-sub-investment manager and received fees as such
from State Street Research. $616,573 of the amount indicated for 1997 was paid
to GFM as sub-sub-investment manager.
/3/ Prior to March 3, 1997 (Portfolio inception), no fees were paid.
PAYMENT OF FUND EXPENSES
As detailed in the Prospectus, MetLife currently pays certain expenses for the
Loomis Sayles High Yield Bond, Harris Oakmark Large Cap Value, T. Rowe Price
Large Cap Growth, Neuberger&Berman Partners Mid Cap Value, Lehman Brothers
Aggregate Bond Index, Russell 2000 Index and Morgan Stanley EAFE Index
Portfolios to the extent they exceed certain amounts.
Apart from any such payment by MetLife, each Portfolio bears its share of all
Fund expenses, including those for: (1) fees of the Fund's directors; (2)
custodian and transfer agent fees; (3) audit and legal fees; (4) printing and
mailing costs for the Fund's prospectuses, proxy material and periodic reports
to shareholders; (5) MetLife's investment management fee; (6) brokerage
commissions on portfolio transactions (including costs for acquisition,
disposition, lending or borrowing of investments); (7) Fund taxes; (8) interest
and other costs related to any Fund borrowing; and (9) extraordinary or one-
time expenses (such as litigation related costs).
All of the Fund's expenses, except extraordinary or one-time expenses, are
accrued daily.
B-9
<PAGE>
DIRECTORS AND OFFICERS OF THE FUND
Unless otherwise noted, the address of each executive officer and director
listed below is One Madison Avenue, New York, New York 10010.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION(S)
NAME, (AGE) AND ADDRESS POSITION(S) WITH FUND DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Steve A. Garban (61)+ Director Retired, formerly Senior Vice-President
The Pennsylvania State Finance and Operations and Teasurer, The
University Pennsylvania State University
208 Old Main
University Park, PA
16802
- ------------------------------------------------------------------------------------------------
David A. Levene (59)* Chairman of the Board, Executive Vice-President, MetLife since
Chief Executive Officer 1996; prior thereto, Senior Vice-President
and Director and Chief Actuary
- ------------------------------------------------------------------------------------------------
Malcolm T. Hopkins (70)+ Director Private Investor, formerly Vice-Chairman of
14 Brookside Road the Board and Chief Financial Officer, St.
Biltmore Forest Regis Corp. (forest and paper products)
Asheville, NC 28803
- ------------------------------------------------------------------------------------------------
Robert A. Lawrence (72)+ Director Retired, formerly Partner, Saltonstall & Co.
175 Federal Street (private investment firm)
16th Floor
Boston, MA 02110
- ------------------------------------------------------------------------------------------------
Dean O. Morton (66)+ Director Retired, formerly Executive Vice-President,
3200 Hillview Avenue Chief Operating Officer and Director,
Palo Alto, CA 94304 Hewlett-Packard Company
- ------------------------------------------------------------------------------------------------
Michael S. Scott Morton Director Jay W. Forrester Professor of Management at
(61)+ Sloan School of Management, MIT
Massachusetts Institute
of Technology ("MIT")
50 Memorial Drive
Cambridge, MA 02139-4307
- ------------------------------------------------------------------------------------------------
Arthur G. Typermass Director Retired, formerly Senior Vice-President and
(61)* Treasurer, MetLife
43 Chestnut Drive
Garden City, NY 11530
- ------------------------------------------------------------------------------------------------
Bradford W. White (32)+* Controller Senior Technical Consultant -- Pensions,
MetLife since 1993; Senior Financial
Analyst -- Retirement and Savings Center,
1992-1993; prior thereto, Financial Analyst
- ------------------------------------------------------------------------------------------------
Christopher P. Nicholas President and Chief Associate General Counsel, MetLife
(49)+* Operating Officer
- ------------------------------------------------------------------------------------------------
Janet Morgan (35)* Treasurer Assistant Vice-President, MetLife since
1997; prior thereto, Director
- ------------------------------------------------------------------------------------------------
Elaine Stevenson (39)* Vice-President Vice-President, MetLife
- ------------------------------------------------------------------------------------------------
Lawrence A. Vranka (58)* Vice-President Vice-President, MetLife
- ------------------------------------------------------------------------------------------------
Robin Wagner (37)* Secretary Assistant General Counsel, MetLife since
1997, Counsel, 1995-1997; prior thereto,
Associate Counsel
- ------------------------------------------------------------------------------------------------
Patricia S. Worthington Assistant Secretary Assistant Vice-President and Assistant
(42)* Compliance Director of MetLife since 1997;
prior thereto Associate Counsel
- ------------------------------------------------------------------------------------------------
Nancy A. Turchio (29)* Assistant Secretary Legal Assistant, MetLife since 1994; prior
thereto, legal assistant Cadwalader,
Wickersham & Taft
- ------------------------------------------------------------------------------------------------
Harold Lerner (62)* Assistant Controller Technical Consultant -- Financial
Management, MetLife since 1996; prior
thereto, Pricing/Contracts Analyst --
Retirement and Savings Center
- ------------------------------------------------------------------------------------------------
Dianne Johnson (47)* Assistant Controller Senior Technical Consultant -- Financial
Management, MetLife since 1997; Technical
Consultant -- Retirement and Savings Center,
1994-1997; prior thereto, Accounting
Supervisor -- Retirement and Savings Center
</TABLE>
- -----------
(*) Interested Person, as defined in the Investment Company Act of 1940 ("1940
Act"), of the Fund.
(+) Serves as a trustee, director and/or officer of one or more of the
following investment companies, each of which has a direct or indirect
advisory relationship with the Investment Manager or its affiliates: State
Street Research Financial Trust, State Street Research Income Trust, State
Street Research Money Market Trust, State Street Research Tax-Exempt Trust,
State Street Research Capital Trust, State Street Research Master
Investment Trust, State Street Research Equity Trust, State Street Research
Securities Trust, State Street Research Growth Trust, State Street Research
Exchange Trust and State Street Research Portfolios, Inc.
B-10
<PAGE>
The Directors have been compensated as follows:
<TABLE>
<CAPTION>
(3)
PENSION OR (5)
RETIREMENT (4) TOTAL
(2) BENEFITS ESTIMATED COMPENSATION
AGGREGATE ACCRUED ANNUAL FROM THE FUND
(1) COMPENSATION AS PART OF BENEFITS AND FUND
NAME OF FROM FUND UPON COMPLEX PAID
DIRECTOR(B) FUND(A)(C) EXPENSES RETIREMENT TO DIRECTORS(B)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jeffrey J. Hodgman(d) 0 0 0 0
- -----------------------------------------------------------------------------
Steve A. Garban $24,000 0 0 $ 75,899
- -----------------------------------------------------------------------------
Malcolm T. Hopkins $22,500 0 0 $ 78,499
- -----------------------------------------------------------------------------
Robert A. Lawrence $21,000 0 0 $ 93,125
- -----------------------------------------------------------------------------
Dean O. Morton $21,000 0 0 $ 97,125
- -----------------------------------------------------------------------------
Michael S. Scott Morton $21,000 0 0 $103,625
- -----------------------------------------------------------------------------
John H. Tweedie(d) 0 0 0 0
- -----------------------------------------------------------------------------
David A. Levene 0 0 0 0
</TABLE>
- ------------
(a) For the fiscal year ended December 31, 1997.
(b) Complex is comprised of 10 trusts and two corporations with a total of 31
funds and/or series. "Total Compensation from the Fund and Fund Complex
Paid to Directors" is for the 12 months ended December 31, 1997.
(c) Directors and officers who are currently active employees of MetLife
receive no compensation for services rendered to the Fund other than their
regular compensation from MetLife or its affiliate of which they are
employees. Other directors who are not curently active employees of MetLife
receive a fee of $10,000 per year, plus $2,500 for each directors' meeting
they attend, $500 for each audit committee meeting they attend, and
reimbursement for out-of-pocket expenses related to such attendance.
Messrs. Garban and Hopkins also each receive $1,500 for attending any
contract committee meeting. The chairman of the audit committee receives a
fee of $1,500 for each full calendar year during which he/she serves as
chairman.
(d) Jeffrey J. Hodgman resigned as a director effective May 1, 1998. John H.
Tweedie resigned as director effective April 24, 1997.
- ------------
None of the above officers and directors of the Fund owns any stock of the
Fund.
B-11
<PAGE>
PLACING PORTFOLIO TRANSACTIONS
Each Portfolio's manager has day-to-day responsibility for selecting broker-
dealers who will process investment transactions for the Portfolio. The
managers follow similar policies and procedures for each Portfolio. When a
manager's policy or practice is significantly different, it is specifically
identified below.
PRIMARY POLICY
Each manager's primary policy is to get prompt and reliable execution of
orders with the most favorable overall net prices to the Fund.
SELECTING A BROKER-DEALER
To select the best broker-dealer for a given transaction, each manager will
consider one or more of the following:
. the price of the security or instrument
. the nature of the market for the security or instrument
. the size and difficulty of the order
. the execution experience of the broker-dealer (generally and as to specific
markets or securities)
. confidentiality
. the broker-dealer's financial responsibility
. the competitiveness of the commission or spread (see "Competitiveness of
Commission Rates and Net Prices" below)
. proven integrity and reliability
. the quality of execution
. the broker-dealer's research and statistical services and capabilities
. the broker-dealer's capital clearance and settlement capabilities (see
"Research and Statistical Services" below)
. desired timing of the trade
. any broker rebate of commissions to pay Portfolio expenses under any
"directed brokerage" arrangements (see "Directed Brokerage" below)
RESEARCH AND STATISTICAL SERVICES
When more than one firm satisfies the Portfolio's other standards, managers
may consider the range of services and capabilities that those broker-dealers
provide, including:
. recommendations and advice about market projections and data, security
values, asset allocation and portfolio evaluation, purchasing or selling
specific securities, and portfolio strategy
. seminars, information, analyses, and reports concerning companies,
industries, securities, trading markets and methods, legislative and
political developments, changes in accounting practices and tax law,
economic and business trends, proxy voting, issuer credit-worthiness,
technical charts and portfolio strategy
. access to research analysts, corporate management personnel, industry
experts, economists, government representatives, technical market
measurement services and quotation services, and comparative performance
evaluation
. products and other services including financial publications, reports and
analysis, electronic access to data bases and trading systems, computer
equipment, software, information and accessories
. statistical and analytical data relating to various investment companies,
including historical performance, expenses and fees, and risk measurements
In most cases, these services supplement a manager's own research and
statistical efforts. Research and statistical information and materials are
generally subject to internal analysis before being incorporated into a
manager's investment process.
Generally, services are received primarily in the form of written reports,
computer generated services, telephone contacts and personal meetings. Often
managers use internal surveys and other methods to evaluate the quality of
research and other services provided by various broker-dealer firms. Results
of these studies are available to the managers' trading departments for use
when selecting broker-dealers to execute portfolio transactions.
MULTIPLE USES FOR SERVICES
The same research and statistical products and services may be useful for
multiple accounts. Managers may use such products and services when managing
any of their investment accounts. Therefore, managers may use research and
statistical information received from broker-dealers who have handled
transactions for any such account (which may or may not include any Portfolio)
in the management of the same or any such other account (which, again, may or
may not include that Portfolio). If any research or statistical product or
service has a mixed use, so that it also serves functions other than assisting
in a manager's investment decision process, then the manager may allocate the
costs and value
B-12
<PAGE>
accordingly. Only the portion of the cost or value attributable to a product or
service that assists the manager with the investment decision process may be
considered by the manager in allocating transactions to broker-dealers.
COMPETITIVENESS OF COMMISSION RATES AND NET PRICES
Brokerage and other services furnished by broker-dealers are routinely reviewed
and evaluated. Managers try to keep abreast of commission structures and the
prevalent bid/ask spread of the market and/or security in which transactions
for the Portfolios occur. Commissions on foreign transactions are often higher
and fixed, unlike in the United States where commission rates are negotiable.
Against this backdrop, managers evaluate the reasonableness of a commission or
net price for each transaction.
Other considerations which determine reasonableness of a broker-dealer's
commission rates or net prices include:
.the difficulty of execution and settlement
. the size of the transaction (number of shares, dollar amount, and number of
clients involved)
. historical commission rates or spreads
. rates and prices quoted by other brokers and dealers
. familiarity with commissions or net prices paid by other institutional
investors
. the level and type of business done with the broker-dealer over time
. the extent to which broker or dealer has capital at risk in the transaction
COMPENSATING BROKER-DEALERS FOR SERVICES
After considering a combination of all the factors, managers may not
necessarily select the broker with the lowest commission rate.
Managers may or may not ask for competitive bids based on their judgment as to
whether such bids would have a negative effect on the execution process.
Managers do not intentionally pay a firm a broker-dealer brokerage commission
or net price that is higher than another firm would charge for handling the
same transaction in a recognition of services (other than execution services)
provided.
This is an area where differences of opinion as to fact and circumstances may
exist, however. Therefore, to the extent necessary, managers rely on Section
28(e) of the Securities Exchange Act of 1934, which permits managers to pay
higher commission rates if the manager determines in good faith that the rate
is reasonable in relation to the value of the brokerage, research and
statistical services provided.
Accordingly, while it is difficult to determine any extent to which commission
rates or net prices charged by broker-dealers reflect the value of their
services, managers expect commissions to be reasonable in light of total
brokerage and research services provided by each particular broker. Although it
is also difficult to place an exact dollar value on research and statistical
services received from broker-dealers, the managers believe that these services
tend to reduce the Portfolio's expenses in the long-run.
When purchasing securities for a Portfolio in fixed price underwriting
transactions, managers follow instructions received from the Fund as to the
allocation of new issue discounts, selling concessions and designations to any
brokers or dealers which provide the Fund with research, performance
evaluation, master trustee and other services. Absent instructions from the
Fund, the manager may make such allocations to broker-dealers which provide it
with research, statistical, and brokerage services.
FIXED INCOME SECURITIES
Fixed income securities are generally purchased from the issuer or a primary
market-maker acting as principal for the securities on a net basis, with no
brokerage commission paid, although the price usually includes undisclosed
compensation. Transactions placed through dealers serving as primary market-
makers reflect the spread between the bid and asked prices known as a dealer's
mark-up. Securities may also be purchased from underwriters at prices which
include underwriting fees paid by the issuer.
OVER-THE-COUNTER SECURITIES MARKET
Orders through the over-the-counter securities market are placed with the
principal market-makers for the security, unless a more favorable result is
available elsewhere. A principal market-maker is one who actively and
effectively trades in the relevant security.
B-13
<PAGE>
BROKERAGE ALLOCATION AGREEMENTS AND UNDERSTANDINGS
Managers may pay cash for certain services provided by external sources or
choose to allocate brokerage business as compensation for the services.
Managers do not have fixed agreements with any broker-dealer as to the amount
of brokerage business which that firm may expect to receive because of the
services they supply. However, managers may have understandings with certain
firms which acknowledge that in order for such firms to be able to continuously
supply certain services, they need to receive allocation of a specified amount
of brokerage business. These understandings are honored to the extent possible
in accordance with the policies set forth above.
Managers have internal brokerage allocation procedures for that portion of
their discretionary client brokerage business where more than one broker-dealer
can provide best price and execution. In such cases, managers make judgments as
to the level of business which would recognize any research and statistical
services provided. In addition, broker-dealers sometimes suggest a level of
business they would like to receive in return for the various brokerage,
research and statistical services they provide. The actual brokerage received
by any firm may be less than the suggested allocations but can, and often do,
exceed the suggestions, because the total business is allocated on the basis of
all the considerations described above. Broker-dealers are never excluded from
receiving business because they do not provide research or statistical
services.
DIRECTED BROKERAGE
On behalf of the Portfolios, the Fund may request that managers also consider
directed brokerage arrangements, which involve rebates of commissions by a
broker-dealer to pay Portfolio expenses. The Fund may condition its requests by
requiring that managers effect transactions with specified broker-dealers only
if the broker-dealers are competitive as to price and execution. While the Fund
believes that overall this practice can benefit the Fund, in some cases
managers may be unable to negotiate commissions or obtain volume discounts or
best execution and commissions charged under directed brokerage arrangements
may be higher than those not using such arrangements. Directed brokerage
arrangements may also result in a loss of the possible advantage from
aggregation of orders for several clients as a single transaction for the
purchase or sale of a particular security. Among other reasons why best
execution may not be achieved using directed brokerage arrangements is that in,
an effort to achieve orderly execution of transactions, execution of orders
using directed brokerage arrangements may, at the discretion of the trading
desk, be delayed until execution of other orders have been completed. The Board
of Directors will monitor directed brokerage transactions to help ensure that
they are in the best interest of the Fund and its shareholders.
BUNCHING OF ORDERS
When securities are purchased or sold for a Portfolio, managers may also be
purchasing or selling the same securities for other accounts. Managers may
group orders of various accounts for execution to get lower prices and
commission rates. To be fair to all accounts over time, managers allocate
aggregate orders executed in a series of transactions or orders in which the
amount of securities available does not fill the order or price requirements at
the average price and, as nearly as practicable, on a pro-rata basis in
proportion to the amounts intended to be purchased or sold by each account.
Managers also consider the investment objectives, amount of money available to
invest, order size, amount an account already has committed to the investment,
and relative investment risks. While the Fund believes this practice
contributes to better overall execution of portfolio transactions, occasionally
this policy may adversely affect the price or number of shares in a particular
Portfolio's transaction caused by either increased demand or supply of the
security involved in the transaction.
The Board of Directors has adopted procedures governing bunching to ensure that
bunching remains in the best interest of the Fund and its shareholders. Because
the procedures do not always adequately accommodate all facts and
circumstances, exceptions are made to the policy of allocating trades on an
adjusted, pro-rata basis. Exceptions to the policy may include not aggregating
orders and/or reallocating to:
. recognize a manager's negotiation efforts
. eliminate de minimus positions
. give priority to accounts with specialized investment policies and objectives
B-14
<PAGE>
. give special consideration of an account's characteristics (such as
concentrations, duration, or credit risk)
. avoid a large number of small transactions which may increase custodial and
other transaction costs (which effect smaller accounts disproportionately)
Depending on the circumstances, such exceptions may or may not cause an account
to receive a more or less favorable execution relative to other accounts.
Harris Associates L.P. may use its affiliate, Harris Associates Securities
L.P., and Neuberger&Berman Management Inc. may use its affiliate,
Neuberger&Berman, LLC, (the "affiliated brokers") as brokers for effecting
securities transactions for the respective portfolios for which they are the
managers. The Board of Directors, including a majority of the directors who are
not "interested" directors, has determined that securities transactions for a
Portfolio may be executed through these affiliated brokers, if, in the judgment
of the manager, the use of the affiliated broker is likely to result in prices
and execution at least as favorable to the Portfolio as those available from
other qualified brokers and, if, in such transactions, the affiliated broker
charges the Portfolio commission rates at least as favorable as those charged
by the affiliated broker to comparable unaffiliated customers in similar
transactions. The Board of Directors has adopted procedures designed to provide
that commissions, fees or other remuneration paid to affiliated brokers are
consistent with this standard. The Portfolios will not effect principal
transactions with affiliated brokers.
COMMISSIONS PAID
The Fund paid total brokerage commissions in 1995, 1996, and 1997, of
$6,329,000, $10,728,775, $13,756,000, respectively, on the then available
Portfolios. Commissions were materially higher in 1997 because the State Street
Research International Stock Portfolio experienced a higher portfolio turnover
caused by the Portfolio's restructuring effected in 1997 and because of the
addition of four new Portfolios as of March 3, 1997.
SALE AND REDEMPTION OF SHARES
Portfolio shares, when issued, are fully paid and non-assessable. In addition,
there are no preference, preemptive, conversion, exchange or similar rights,
and shares are freely transferable. Shares do not have cumulative voting
rights.
MetLife need not sell any specific number of Fund shares. MetLife will pay the
Fund's distribution expenses and costs (which are those arising from activities
primarily intended to sell Fund shares).
The Fund may suspend sales and redemptions of a Portfolio's shares during any
period when (1) trading on the New York Stock Exchange is restricted or the
Exchange is closed (other than customary weekend and holiday closings); (2) an
emergency exists which makes disposing of portfolio securities or establishing
a Portfolio's net asset value impractical; or (3) the Securities and Exchange
Commission orders suspension to protect Portfolio shareholders.
If the Board of Directors decides that continuing to offer shares of one or
more Portfolios will not serve the Fund's best interest (e.g. changing market
conditions, regulatory problems or low Portfolio participation), the Fund may
stop offering such shares and, by a vote of the Board of Directors, may require
redemption (at net asset value) of outstanding shares in such Portfolio(s) upon
30 day's prior written notice to affected shareholders.
In the future, the Fund may offer shares to be purchased by separate accounts
of life insurance companies not affiliated with MetLife to support insurance
contracts they issue.
PRICING OF PORTFOLIO SECURITIES
Portfolio securities are priced as described in the table that follows. If the
data necessary to employ the indicated pricing methods are not available, the
investment will be assigned a fair value in good faith pursuant to procedures
approved by the Board of Directors. Such "fair value" pricing may also be used
if the customary pricing procedures are judged for any reason to result in an
unreliable valuation.
B-15
<PAGE>
PRICING OF SECURITIES CHART
<TABLE>
<CAPTION>
VALUE
AVERAGE ESTABLISHED BY
BETWEEN RECOGNIZED
LAST SPOT BID AND EXCHANGE OR
SALE LAST BID PRICE ASKED OTHER
(PRIMARY (PRIMARY (PRIMARY (PRIMARY AMORTIZED RECOGNIZED
MARKET) MARKET) MARKET) MARKET) COST* SOURCES
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Portfolio Securities All
Traded on Domestic Stock All Portfolios/2/
Exchanges Portfolios/1/ L/2/ except L
- ----------------------------------------------------------------------------------------------------------------
Portfolio Securities
Traded Primarily on
Non-Domestic All
Securities Exchanges Portfolios/1/
- ----------------------------------------------------------------------------------------------------------------
Securities Listed or All All
Traded on More than All Portfolios/3/ Portfolios/2/
One Exchange Portfolios/1/ S/2/ except S
- ----------------------------------------------------------------------------------------------------------------
Domestic Securities All
Traded in the Over Portfolios/1/
the Counter Market except S, L
S/1/ L/1/ S/2/ and MM MM
- ----------------------------------------------------------------------------------------------------------------
Non-U.S. Securities
Traded in the Over All All
the Counter Market Portfolios/1/ Portfolios/2/
- ----------------------------------------------------------------------------------------------------------------
Short-term
Instruments with
Remaining Maturity
of Sixty Days or All
Less Portfolios/1/
- ----------------------------------------------------------------------------------------------------------------
Options on Securities,
Indices, or Futures All All
Contracts Portfolios/1/ Portfolios/2/
- ----------------------------------------------------------------------------------------------------------------
All
Currencies Portfolios/1/
- ----------------------------------------------------------------------------------------------------------------
All
Futures Contracts Portfolios/1/
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------
1. primary method used
2. if primary method is unavailable
3. if both primary and secondary methods are unavailable
L. Loomis Sayles High Yield Bond Portfolio Only
S. Scudder Global Equity Portfolio Only
MM. State Street Research Money Market Portfolio
* Amortized Cost Method: Securities are valued at the cost on the date of
purchase and thereafter, a constant proportionate amortization value is
assumed until maturity of any discount or premium (regardless of
fluctuating interest rates on the market value of the security).
Maturity is deemed to be the next date on which the interest rate is to
be adjusted. Note, using this method may result in different yield and
net asset values than market valuation methods.
B-16
<PAGE>
TAXES
The following summarizes some of the relevant tax considerations associated
with the Fund. It is not a complete explanation and should not substitute for
careful tax planning and consulting with individual tax advisers.
The Fund's tax attributes are allocated among the Portfolios as if they were
separate corporations. For example, if a Portfolio has a net capital loss for a
taxable year, including any allocated net capital loss carryforwards, such
loss(es) will only offset net capital gains of that Portfolio. Also, each
Portfolio stands alone to determine that Portfolio's net ordinary income or
loss.
The Fund currently qualifies (and intends to continue to qualify) as a
"regulated investment company" under the Code. To qualify, among other things,
each Portfolio must derive at least 90% of its gross income from dividends,
interest, payments for security loans, and gains or other income derived from
each Portfolio's business of investing in stocks, securities or foreign
currencies. As a regulated investment company, the Fund does not pay federal
income tax on net ordinary income and net realized capital gains distributed to
shareholders. A nondeductible 4% excise tax applies to any regulated investment
company on any excess of required distributions for the calendar year over the
amount actually distributed. The Fund must distribute 98% of its ordinary
income and capital gain net income. The Fund does not expect to incur excise
taxes.
Dividends paid by a Portfolio from its ordinary income, and distributions of
its net realized short-term capital gains, are taxable to the shareholder as
ordinary income. Generally, any of a Portfolio's income which represents
dividends on common or preferred stock of a domestic corporation (rather than
interest income), distributed to the Insurance Companies may be deducted as
dividends received, to the extent the deduction is available to a life
insurance company.
Distributions from the Fund's net realized long-term gains are taxable to the
Insurance Companies as long-term capital gains regardless of the holding period
of the Portfolio shares. Long-term capital gain distributions are not eligible
for the dividends received deduction.
Dividends and capital gains distributions may also be subject to state and
local taxes.
The Fund complies with section 817(h) of the Code and its related regulations.
This means that the Fund generally may issue shares only to life insurance
company segregated asset accounts (also referred to as separate accounts) that
fund variable life insurance or annuity contracts ("variable insurance
contracts") and the general account of MetLife which provided the initial
capital for the Portfolios. The prospectus for the Contracts discusses in more
depth the taxation of segregated asset accounts and of the Contract owner.
Section 817(h) of the Code and related regulations require segregated asset
accounts investing in the Portfolios to diversify. These diversification
requirements, which are in addition to those imposed on the Fund under the 1940
Act and under Subchapter M of the Code, may affect selection of securities for
the Portfolios. Failing to meet Section 817(h) requirements may have adverse
tax consequences for the insurance company offering the variable insurance
contract and result in immediate taxation of the contract owner if the
investment in the contract has appreciated in value.
The Treasury Department may possibly adopt regulations or the IRS may issue a
revenue ruling which may deem a Contract owner, rather than the insurance
company, to be treated as owner of the assets of a segregated asset account
based on the extent of investment control by the contract owner. As a result,
the Fund may take action to assure that a Contract continues to qualify as a
variable insurance contract under federal tax laws. For example, the Fund may
alter the investment objectives of a Portfolio or substitute shares of one
Portfolio for those of another. To the extent legally necessary, a change of
investment objectives or share substitution will only occur with prior notice
to affected shareholders, approval by a majority of shareholders and approval
by the Securities and Exchange Commission.
Several unique tax considerations arise in connection with a Portfolio which
may invest in foreign securities. The Portfolio may have to pay foreign taxes,
which could reduce its investment performance. Dividends paid by a Portfolio
corresponding to dividends paid by
B-17
<PAGE>
non-United States companies do not qualify for the dividends received
deduction.
Those Portfolios that invest substantial amounts of their assets in foreign
securities may make an election to pass through to the Insurance Companies any
taxes withheld by foreign taxing jurisdictions on foreign source income. Such
an election will result in additional taxable income and income tax to the
Insurance Companies. The amount of additional income tax, however, may be more
than offset by credits for the foreign taxes withheld, which are also passed
through. These credits may provide a benefit to the Insurance Companies.
GENERAL INFORMATION
EXPERTS
The Board of Directors annually approves an independent auditor which is expert
in accounting and auditing. Deloitte & Touche LLP is the Fund's independent
auditor. The Fund's financial statements for the 12 months ended December 31,
1997 incorporated by reference into this SAI have been audited by Deloitte &
Touche LLP. The Fund relies on this firm's report which appears with the
financial statements.
COMPUTER SOFTWARE SYSTEMS
The services provided to the Fund by MetLife as investment manager and
distributor, the other managers and the transfer agent, depend on the smooth
functioning of their computer systems. Many computer software systems in use
today cannot distinguish the year 2000 from the year 1900 because of the way
dates are encoded and calculated. That failure could negatively impact handling
of securities trades, pricing and account services. MetLife, the other
managers, and transfer agents are actively working on necessary changes to
their computer systems to deal with this issue and expect that their systems
will be adapted in time for that event, although there cannot be assurance of
success.
FINANCIAL STATEMENTS
Copies of the annual report for the Fund for the 12 months ended December 31,
1997 and the semi-annual report for the Fund for the 6 months ended June 30,
1998 accompany this Statement of Additional Information and are incorporated by
reference excluding the "Management Discussion and Analysis" from the June 30,
1998 semi-annual report.
B-18
<PAGE>
APPENDIX
DESCRIPTION OF CERTAIN CORPORATE BOND AND DEBENTURE RATINGS
<TABLE>
<CAPTION>
STANDARD & POOR'S RATING GROUP (S&P)
RATING MOODY'S INVESTOR SERVICE, INC. (MOODY'S) DESCRIPTION RATING DESCRIPTION
- -----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Aaa Bonds with this rating are judged AAA An obligation with this rating
to be of the best quality, has the highest rating assigned
carrying the smallest degree or by S&P. The obligor's capacity to
investment risk. They are meet its financial commitment on
generally referred to as "gilt the obligation is extremely
edged." Interest payments are strong.
protected by a large or by an
exceptionally stable margin and
principal is secure. While the
various protective elements are
likely to change, such changes as
can be visualized are most
unlikely to impair the
fundamentally strong position of
such issues.
- -----------------------------------------------------------------------------------------------------------
Aa Bonds with this rating are judged AA An obligation with this rating
to be of high quality by all differs from the highest
standards. Together with the Aaa obligations only in small degree.
group, they comprise what are The obligor's capacity to meet
generally known as high-grade its financial commitment on the
bonds. They are rated lower than obligation is very strong.
the best bonds because margins of
protection may not be as large as
in Aaa securities or fluctuation
of protective elements may be of
greater amplitude or there may be
other elements present which make
the long-term risks appear
somewhat greater than in Aaa
securities.
- -----------------------------------------------------------------------------------------------------------
A Bonds with this rating possess A An obligation with this rating is
many favorable investment somewhat more susceptible to the
attributes and are to be adverse effects of changes in
considered as upper-medium-grade circumstances and economic
obligations. Factors giving conditions than obligations in
security to principal and higher-rated categories. However,
interest are considered adequate, the obligor's capacity to meet
but elements may be present which its financial commitment on the
suggest a susceptibility to obligation is still strong.
impairment sometime in the
future.
- -----------------------------------------------------------------------------------------------------------
Baa Bonds with this rating are BBB An obligation with this rating
considered as medium grade exhibits adequate protection
obligations, i.e., they are parameters. However, adverse
neither highly protected nor economic conditions or change
poorly secured. Interest payments circumstances are more likely to
and principal security appear lead to weakened capacity of the
adequate for the present but obligor to meet its financial
certain protective elements may commitment on the obligation.
be lacking or may be
characteristically unreliable
over any great length of time.
Such bonds lack outstanding
investment characteristics and in
fact have speculative
characteristics as well.
- -----------------------------------------------------------------------------------------------------------
Ba Bonds with this rating are judged BB An obligation with this rating
to have speculative elements; has significant speculative
their future cannot be considered characteristics, but is less
as well-assured. Often, the vulnerable to nonpayment than
protection of interest and bonds in the lower ratings.
principal payments may be very However, it faces major ongoing
moderate, and thereby not well uncertainties or exposure to
safeguarded during both good and adverse business, financial or
bad times over the future. economic conditions which could
Uncertainty of position lead to the obligor's inadequate
characterizes bonds in this capacity to meet its financial
class. commitment on the obligation.
- -----------------------------------------------------------------------------------------------------------
B Bonds with this rating generally B An obligation with this rating is
lack characteristics of the more vulnerable to nonpayment
desirable investment. Assurance than obligations rated BB, but
of interest and principal the obligor currently has the
payments of maintenance of other capacity to meet its financial
terms of the contract of any long commitment on the obligation.
period of time may be small. Adverse business, financial or
economic conditions will likely
impair the obligator's capacity
or willingness to meet its
financial commitment on the
obligation.
</TABLE>
B-19
<PAGE>
<TABLE>
<CAPTION>
RATING MOODY'S INVESTOR SERVICE, INC. (MOODY'S) DESCRIPTION RATING STANDARD & POOR'S RATING GROUP (S&P)DESCRIPTION
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Caa Bonds with this rating are of CCC An obligation with this rating is
poor standing. Such issues may be currently vulnerable to
in default or there may be nonpayment, and is dependent upon
present elements of danger with favorable business, financial,
respect to principal or interest. and economic conditions for the
obligor to meet its financial,
and economic commitment on the
obligation. In the event of
adverse business, financial or
economic conditions, the obligor
is not likely to have the
capacity to meet its financial
commitment on the obligation.
- --------------------------------------------------------------------------------------------------------------------------
Ca Bonds with this rating represent C An obligation with this rating
obligations which are speculative may be used to cover a situation
in a high degree. Such issues are where a bankruptcy petition has
often in default or have other been filed or similar action has
marked shortcomings. been taken, but payments on this
obligation are being continued.
- --------------------------------------------------------------------------------------------------------------------------
C Bonds with this rating are the D An obligation rated D is in
lowest rated class of bonds, and payment default. This rating
issues so rated can be regarded category is used when payments on
as having extremely poor an obligation are not made on the
prospects of ever attaining any date due even if the applicable
real investment standing. grace period has not expired,
unless S&P believes that such
payments will be made during such
grace period. This rating also
will be used upon the filing of a
bankruptcy petition on an
obligation are jeopardized.
- --------------------------------------------------------------------------------------------------------------------------
1 This modifier is used with Aa, A, (+)/(-) These modifiers are used with
Baa, Ba and B ratings and ratings from AA to CCC to show
indicates the bond possesses relative standing within the
strongest investment attributes rating category.
within the rating class.
- --------------------------------------------------------------------------------------------------------------------------
No Rating This might arise if: (1) an r This symbol attached to the
application for rating was not ratings of instruments with
received or accepted; (2) the significant non credit risks. It
issue or issuer belongs to a highlights risks to principal or
group of securities that are not volatility of expected returns
rated as a matter of policy; which are not addressed in the
(3) there is a lack of essential credit rating. Examples include:
data pertaining to the issue or obligations linked or indexed to
issuer; (4) the issue was equities, currencies or
privately placed in which case commodities; obligations exposed
the rating is not published in to severe prepayment risk such as
the Moody's publication; or interest only principal only
(5) the rating was suspended or mortgage securities; and
withdrawn because new and obligations with unusually risky
material circumstances arose, the interest terms, such as inverse
effects of which preclude floaters.
satisfactory analysis; there is
no longer available reasonable
up-to-date data to permit a
judgment to be formed; a bond is
called for redemption or for
other reasons.
</TABLE>
B-20
<PAGE>
DESCRIPTION OF COMMERCIAL PAPER RATINGS
<TABLE>
<CAPTION>
RATING MOODY'S INVESTOR SERVICE, INC. (MOODY'S) DESCRIPTION RATING STANDARD & POOR'S RATING GROUP (S&P)DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Prime Commercial paper with this rating A Commercial paper with this rating
is the highest rated based on the is the highest based on: (1)
following factors: (1) management liquidity ratios are adequate to
of the issuer; (2) economics of meet cash requirements; (2) the
the issuer's industry or issuer's long-term senior debt is
industries and the speculative- rated "A" or better, although in
type risks which may be inherent some cases "BBB" or better may be
in certain areas; (3) the allowed; (3) the issuer has
issuer's products in relation to access to at least two additional
competition and customer channels of borrowing; (4) the
acceptance; (4) liquidity; (5) issuer's basic earnings and cash
amount and quality of long-term flow have an upward trend with
debt; (6) trend of earnings over allowance made for unusual
a period of 10 years; (7) circumstances; (5) Typically, the
financial strength of any parent issuer's industry is well
and the relationships which exist established and the issuer has a
with the issuer; and (8) strong position within the
recognition by the management of industry; and (6) the reliability
obligations which may be present and quality of management are
or may arise as a result of unquestioned.
public interest questions and
preparations to meet such
obligations.
- ----------------------------------------------------------------------------------------------------------------------------
1, 2 or 3 These modifiers indicates the 1, 2 or 3 These modifiers indicate the
relative degree to which the relative degree to which the
commercial paper possesses the commercial paper possesses the
qualities that are required to qualities that are required to
receive a Prime rating. receive an A rating.
- ----------------------------------------------------------------------------------------------------------------------------
(+) Commercial paper with an A-1
rating can be further modified
with this modifier to show that
they possess overwhelming safety
characteristics.
</TABLE>
B-21
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:++++
Included in Prospectus:
Financial Highlights for the Period June 24, 1984 to December 31,
1997
Financial Highlights for the Period June 24, 1984 to June 30, 1998
Included in Part B:
By incorporation by reference to those portions of the
Registrant's December 31, 1997 Annual Report and June 30, 1998
Semi-Annual Report
INDEPENDENT AUDITORS' REPORT
Schedule of Investments as of December 31, 1997 (Audited) and as
of June 30, 1998 (Unaudited)--State Street Research Growth
Portfolio
Schedule of Investments as of December 31, 1997 (Audited) and as
of June 30, 1998 (Unaudited)--State Street Research Income
Portfolio
Schedule of Investments as of December 31, 1997 (Audited) and as
of June 30, 1998 (Unaudited)--State Street Research Money
Market Portfolio
Schedule of Investments as of December 31, 1997 (Audited) and as
of June 30, 1998 (Unaudited)--State Street Research Diversified
Portfolio
Schedule of Investments as of December 31, 1997 (Audited) and as
of June 30, 1998 (Unaudited)--State Street Research Aggressive
Growth Portfolio
Schedule of Investments as of December 31, 1997 (Audited) and as
of June 30, 1998 (Unaudited)--MetLife Stock Index Portfolio
Schedule of Investments as of December 31, 1997 (Audited) and as
of June 30, 1998 (Unaudited)--State Street Research
International Stock Portfolio
Schedule of Investments as of December 31, 1997 (Audited) and as
of June 30, 1998 (Unaudited)--Loomis Sayles High Yield Bond
Portfolio
Schedule of Investments as of December 31, 1997 (Audited) and as
of June 30, 1998 (Unaudited)--Janus Mid Cap Portfolio
Schedule of Investments as of December 31, 1997 (Audited) and as
of June 30, 1998 (Unaudited)--T. Rowe Price Small Cap Growth
Portfolio
Schedule of Investments as of December 31, 1997 (Audited) and as
of June 30, 1998 (Unaudited)--Scudder Global Equity Portfolio
Statements of Assets and Liabilities, December 31, 1997 (Audited)
and as of June 30, 1998 (Unaudited)
Statements of Operations for the year ended December 31, 1997
(Audited) and as of June 30, 1998 (Unaudited)
Statements of Changes in Net Assets for the year ended December
31, 1997 and the year ended December 31, 1996 (Audited) and for
the period ending June 30, 1998 and the period ending June 30,
1997
Financial Highlights for the Period January 1, 1989 to December
31, 1997 (Audited) and as of June 30, 1998 (Unaudited)
Notes To Financial Statements as of December 31, 1997 (Audited)
and June 30, 1998 (Unaudited)
Management's Discussion and Analysis as of December 31, 1997
(B) EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1. --Articles of Incorporation of Registrant, as amended May 23, 1983*
1(b). --Articles Supplementary of Registrant*
1(c). --Articles Supplementary of Registrant*
1(d). --Articles Supplementary of Registrant*
1(e). --Articles Supplementary of Registrant*
1(f). --Articles Supplementary of Registrant*
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1(g). --Articles Supplementary of Registrant*
1(h). --Articles Supplementary of Registrant+++
1(i). --Form of Articles Supplementary of Registrant+
2(a). --By-Laws of Registrant, as amended January 27, 1988*
2(b). --Amendment to By-Laws Dated April 24, 1997***
3. --None
4. --Specimen certificates for shares of common stock of Registrant*
5(a). --Investment Management Agreement(s), as amended, relating to the
MetLife Stock Index and State Street Research Money Market Portfo-
lios*
5(b). --Investment Management Agreements, as amended, relating to State
Street Research Growth, State Street Research Income, State Street
Research Diversified, State Street Research Aggressive Growth and
State Street Research International Stock Portfolios***
5(c). --Investment Management Agreements relating to Loomis Sayles High
Yield Bond, Janus Mid Cap, Scudder Global Equity and T. Rowe Price
Small Cap Growth Portfolios**
5(d). --Form of Investment Management Agreements relating to
Neuberger&Berman Partners Mid Cap Value, T. Rowe Price Large Cap
Growth, Harris Oakmark Large Cap Value, Lehman Brothers Aggregate
Bond Index, Russell 2000 Index and Morgan Stanley EAFE Index Portfo-
lios+
5(e). --Sub-Investment Management Agreements relating to State Street Re-
search Growth, State Street Research Income, State Street Research
Diversified, State Street Research Aggressive Growth, State Street
Research International Stock and State Street Research Money Market
Portfolios***
5(f). --Sub-Investment Management Agreement relating to Scudder Global
Equity Portfolio***
5(g). --Sub-Investment Management Agreements relating to Loomis Sayles High
Yield Bond, Janus Mid Cap and T. Rowe Price Small Cap Growth Portfo-
lios**
5(h). --Form of Sub-Investment Management Agreements relating to
Neuberger&Berman Partners Mid Cap Value, T. Rowe Price Large Cap
Growth and Harris Oakmark Large Cap Value Portfolios+
5(i). --Sub-Sub-Investment Management Agreement relating to the State Street
Research International Stock Portfolio***
6(a). --Distribution Agreement*
6(b). --Addendum to Distribution Agreement*
6(c). --Second Addendum to Distribution Agreement*
7. --None
8(a). --Custodian Agreement with State Street Bank & Trust Company*
8(b). --Revised schedule of remuneration*
8(c). --Amendment to Custodian Agreement*
8(d). --Amendments to Custodian Agreement*
9(a). --Transfer Agency Agreement*
9(b). --Agreement relating to the use of the "Metropolitan" name and service
marks*
10(a). --Opinion and Consent of Counsel with respect to the shares of the
State Street Research Growth, State Street Research Income and State
Street Research Money Market Portfolios*
10(b). --Opinion and Consent of Counsel with respect to the shares of the
State Street Research Diversified and GNMA Portfolios*
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10(c). --Opinion and Consent of Counsel with respect to the shares of the
State Street Research Aggressive Growth and Equity Income Portfolios*
10(d). --Opinion and Consent of Counsel with respect to the shares of the
MetLife Stock Index Portfolio*
10(e). --Opinion and Consent of Counsel with respect to the shares of the
State Street Research International Stock Portfolio*
10(f). --Opinion and Consent of Counsel with respect to the shares of the
Loomis Sayles High Yield Bond, Janus Mid Cap, T. Rowe Price Small Cap
Growth and Scudder Global Equity Portfolios**
10(g). --Opinion and Consent of Counsel with respect to the shares of the
Neuberger&Berman Partners Mid Cap Value, T. Rowe Price Large Cap
Growth, Harris Oakmark Large Cap Value, Lehman Brothers Aggregate
Bond Index, Russell 2000 Index and Morgan Stanley EAFE Index Portfo-
lios++++
11(a). --Consent of Independent Public Accountants++++
11(b). --Consent of Freedman, Levy, Kroll & Simonds*
12. --None
13(a). --Stock Purchase Agreement*
13(b). --Supplementary Stock Purchase Agreement*
13(c). --Second Supplementary Stock Purchase Agreement*
13(d). --Third Supplementary Stock Purchase Agreement*
13(e). --Fourth Supplementary Stock Purchase Agreement*
13(f). --Fifth Supplementary Stock Purchase Agreement*
13(g). --Sixth Supplementary Stock Purchase Agreement**
13(h). --Form of Seventh Supplementary Stock Purchase Agreement+
14. --None
15. --None
16(a). --Powers of Attorney++
17. --Specimen Price Make-Up Sheet***
27. --Financial Data Schedule***
</TABLE>
- --------
* Incorporated by reference to the filing of Post-Effective Amendment No.
17 to this Registration Statement on April 30, 1996.
** Incorporated by reference to the filing of Post-Effective Amendment No.
19 to this Registration Statement on February 27, 1997.
*** Incorporated by reference to the filing of Post-Effective Amendment to
the Registration Statement No. 20 on April 2, 1998.
+ Filed herewith.
++ Powers of Attorney for all signatories except for Messrs. Levene, White
and Typermass are incorporated by reference to the filing of Post-
Effective Amendment No. 17 to this Registration Statement on April 30,
1996. The Power of Attorney for Mr. White is incorporated by reference to
the filing of Post-Effective Amendment No. 18 on December 18, 1996. The
Powers of Attorney for Messrs. Levene and Typermass are filed herewith.
+++ Incorporated by reference to the filing of Post Effective Amendment No.
18 on December 18, 1996.
++++ To be filed by Amendment.
C-3
<PAGE>
ORGANIZATIONAL STRUCTURE OF METROPOLITAN AND SUBSIDIARIES
AS OF JUNE 30, 1998
The following is a list of subsidiaries of Metropolitan Life Insurance Company
("Metropolitan") as of June 30, 1998. Those entities which are listed at
the left margin (labelled with capital letters) are direct subsidiaries of
Metropolitan. Unless otherwise indicated, each entity which is indented under
another entity is a subsidiary of such indented entity and, therefore, an
indirect subsidiary of Metropolitan. Certain inactive subsidiaries have been
omitted from the Metropolitan Organizational listing. The voting securities
(excluding directors' qualifying shares, if any) of the subsidiaries listed are
100% owned by their respective parent corporations, unless otherwise indicated.
The jurisdiction of domicile of each subsidiary listed is set forth in the
parenthetical following such subsidiary.
A. Metropolitan Tower Corp. (Delaware)
1. Metropolitan Property and Casualty Insurance Company (Rhode Island)
a. Metropolitan Group Property and Casualty Insurance Company
(Rhode Island)
i. Metropolitan Reinsurance Company (U.K.) Limited (Great
Britain)
b. Metropolitan Casualty Insurance Company (Rhode Island)
c. Metropolitan General Insurance Company (Rhode Island)
d. Metropolitan Direct Property and Casualty Insurance Company
(Georgia)
e. Metropolitan P&C Insurance Services, Inc. (California)
f. Metropolitan Lloyds, Inc. (Texas)
g. Met P&C Managing General Agency, Inc. (Texas)
2. Metropolitan Insurance and Annuity Company (Delaware)
a. MetLife Europe I, Inc. (Delaware)
b. MetLife Europe II, Inc. (Delaware)
c. MetLife Europe III, Inc. (Delaware)
d. MetLife Europe IV, Inc. (Delaware)
e. MetLife Europe V, Inc. (Delaware)
f. MetLife Healthcare Holdings, Inc. (Delaware)
3. MetLife General Insurance Agency, Inc. (Delaware)
a. MetLife General Insurance Agency of Alabama, Inc. (Alabama)
b. MetLife General Insurance Agency of Kentucky, Inc. (Kentucky)
c. MetLife General Insurance Agency of Mississippi, Inc.
(Mississippi)
d. MetLife General Insurance Agency of Texas, Inc. (Texas)
e. MetLife General Insurance Agency of North Carolina, Inc. (North
Carolina)
f. MetLife General Insurance Agency of Massachusetts, Inc.
(Massachusetts)
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<PAGE>
4. Metropolitan Asset Management Corporation (Delaware)
a. MetLife Capital Holdings, Inc. (Delaware)
i. MetLife Capital Corporation (Delaware)
(1) Searles Cogeneration, Inc. (Delaware)
(2) MLYC Cogen, Inc. (Delaware)
(3) MCC Yerkes Inc. (Washington)
(4) MetLife Capital, Limited Partnership (Delaware).
Partnership interests in MetLife Capital, Limited
Partnership are held by Metropolitan (90%) and MetLife
Capital Corporation (10%).
(5) CLJFinco, Inc. (Delaware)
(a) MetLife Capital Credit L.P. (Delaware).
Partnership interests in MetLife Capital Credit
L.P. are held by Metropolitan (90%) and CLJ
Finco, Inc. (10%).
(i) MetLife Capital CFLI Holdings, LLC (DE)
(1) MetLife Capital CFLI Leasing, LLC
(DE)
(6) MetLife Capital Portfolio Investments, Inc. (Nevada)
(a) MetLife Capital Funding Corp. (Delaware)
(7) MetLife Capital Funding Corp. II (Delaware)
(8) MetLife Capital Funding Corp. III (Delaware)
ii. MetLife Capital Financial Corporation (Delaware)
90% of outstanding equity interest in Metlife
Capital Financial Corporation held directly
by Metropolitan Life Insurance Company.
C-5
<PAGE>
iii. MetLife Capital International Ltd. (Delaware).
b. MetLife Financial Acceptance Corporation (Delaware).
MetLife Capital Holdings, Inc. holds 100% of the voting
preferred stock of MetLife Financial Acceptance Corporation.
Metropolitan Property and Casualty Insurance Company holds
100% of the common stock of MetLife Financial Acceptance
Corporation.
c. MetLife Investments Limited (United Kingdom). 23rd Street
Investments, Inc. holds one share of MetLife Investments
Limited.
d. MetLife Investments Asia Limited (Hong Kong). One share of
MetLife Investments Asia Limited is held by W&C Services, Inc.,
a nominee of Metropolitan Asset Management Corporation.
5. SSRM Holdings, Inc. (Delaware)
a. GFM International Investors Ltd. (United Kingdom).
b. GFM International Investors, Inc. (United Kingdom).
i. GFM Investments Limited (United Kingdom)
c. State Street Research & Management Company (Delaware). Is a sub-
investment manager for the Growth, Income, Diversified and
Aggressive Growth Portfolios of Metropolitan Series Fund, Inc.
i. State Street Research Investment Services, Inc.
(Massachusetts)
d. SSR Realty Advisors, Inc. (Delaware)
i. Metric Management Inc. (Delaware)
ii. Metric Property Management, Inc. (Delaware)
(1) Metric Realty (Delaware). SSR Realty Advisors, Inc.
and Metric Property Management, Inc. each hold 50% of
the common stock of Metric Realty.
(a) Metric Institutional Apartment Fund II, L.P.
(California). Metric Realty holds a 1% interest
as general partner and Metropolitan holds an
approximately 14.6% limited partnership interest
in Metric Institutional Apartment Fund II, L.P.
(2) Metric Colorado, Inc. (Colorado). Metric Property
Management, Inc. holds 80% of the common stock of
Metric Colorado, Inc.
iii. Metric Capital Corporation (California)
iv. Metric Assignor, Inc. (California)
v. SSR AV, Inc. (Delaware)
C-6
<PAGE>
6. MetLife Holdings, Inc. (Delaware)
a. MetLife Funding, Inc. (Delaware)
b. MetLife Credit Corp. (Delaware)
7. Metropolitan Tower Realty Company, Inc. (Delaware)
8. Met Life Real Estate Advisors, Inc. (California)
9. Security First Group, Inc. (DE)
a. Security First Life Insurance Company (DE)
(i) Security First Life Insurance Company of Arizona (AZ)
b. Security First Insurance Agency, Inc. (MA)
c. Security First Insurance Agency, Inc. (NV)
d. Security First Group of Ohio, Inc. (OH)
e. Security First Financial, Inc. (DE)
f. Security First Investment Management Corporation (DE)
g. Security First Management Corporation (DE)
h. Security First Real Estate, Inc. (DE)
i. Security First Financial Agency, Inc. (TX)
10. Natiloportem Holdings, Inc. (Delaware)
B. Metropolitan Tower Life Insurance Company (Delaware)
C. MetLife Security Insurance Company of Louisiana (Louisiana)
D. MetLife Texas Holdings, Inc. (Delaware)
1. Texas Life Insurance Company (Texas)
a. Texas Life Agency Services, Inc. (Texas)
b. Texas Life Agency Services of Kansas, Inc. (Kansas)
E. MetLife Securities, Inc. (Delaware)
F. 23rd Street Investments, Inc. (Delaware)
G. Metropolitan Life Holdings Limited (Ontario, Canada)
1. Metropolitan Life Financial Services Limited (Ontario, Canada)
2. Metropolitan Life Financial Management Limited (Ontario, Canada)
a. Metropolitan Life Insurance Company of Canada (Canada)
C-7
<PAGE>
3. Morguard Investments Limited (Ontario, Canada)
Shares of Morguard Investments Limited ("Morguard") are held by
Metropolitan Life Holdings Limited (72%) and by employees of Morguard
(28%).
4. Services La Metropolitaine Quebec, Inc. (Quebec, Canada)
H. Santander Met, S.A. (Spain). Shares of Santander Met, S.A. are held by
Metropolitan (50%) and by an entity (50%) unaffiliated with Metropolitan.
1. Seguros Genesis, S.A. (Spain)
2. Genesis Seguros Generales, Sociedad Anomina de Seguros y Reaseguros
(Spain)
I. MetLife Saengmyoung Insurance Company Ltd. (Korea).
C-8
<PAGE>
J. Metropolitan Life Seguros de Vida S.A. (Argentina)
K. Metropolitan Life Seguros de Retiro S.A. (Argentina).
L. Met Life Holdings Luxembourg (Luxembourg)
M. Metropolitan Life Holdings, Netherlands BV (Netherlands)
N. MetLife International Holdings, Inc. (Delaware)
O. Metropolitan Life Insurance Company of Hong Kong Limited (Hong Kong)
P. Metropolitan Marine Way Investments Limited (Canada)
Q. P.T. MetLife Sejahtera (Indonesia) Shares of P.T. MetLife Sejahtera are
held by Metropolitan (62%) and by an entity (38%) unaffiliated with
Metropolitan.
R. Seguros Genesis S.A. (Mexico) Metropolitan holds 85.49%, Metropolitan Tower
Corp. holds 7.31% and Metropolitan Asset Management Corporation holds 7.20%
of the common stock of Seguros Genesis S.A.
S. AFORE Genesis Metropolitan S.A. de C.V. (Mexico)
T. Metropolitan Life Seguros E Previdencia Privada S.A. (Brazil)
U. Hyatt Legal Plans, Inc. (Delaware)
1. Hyatt Legal Plans of Florida, Inc. (Fl)
V. One Madison Merchandising L.L.C. (Connecticut) Ownership of membership
interests in One Madison Merchandising L.L.C. is as follows: Metropolitan
owns 99% and Metropolitan Tower Corp. owns 1%.
C-9
<PAGE>
W. Metropolitan Realty Management, Inc. (Delaware)
1. Edison Supply and Distribution, Inc. (Delaware)
2. Cross & Brown Company (New York)
a. Cross & Brown Associates of New York, Inc. (New York)
b. Cross & Brown Construction Corp. (New York)
c. CBNJ, Inc. (New Jersey)
d. Subrown Corp. (New York)
X. MetPark Funding, Inc. (Delaware)
Y. 2154 Trading Corporation (New York)
Z. Transmountain Land & Livestock Company (Montana)
AA. Farmers National Company (Nebraska)
1. Farmers National Commodities, Inc. (Nebraska)
C-10
<PAGE>
A.B. MetLife Trust Company, National Association. (United States)
A.C. PESCO Plus, L.C. (Florida). Metropolitan holds a 50% interest in
PESCO Plus, L.C. and an unaffiliated party holds a 50% interest.
1. Public Employees Equities Services Company (Florida)
A.D. Benefit Services Corporation (Georgia)
A.E. G.A. Holding Corporation (MA)
A.F. TNE-Y, Inc. (DE)
A.G. CRH., Inc. (MA)
A.H. NELRECO Troy, Inc. (MA)
A.I. TNE Funding Corporation (DE)
A.J. L/C Development Corporation (CA)
A.K. Boylston Capital Advisors, Inc. (MA)
1. New England Portfolio Advisors, Inc. (MA)
A.L. CRB Co., Inc. (MA) AEW Real Estate Advisors, Inc. holds 49,000 preferred
non-voting shares of CRB Co., Inc. AEW Advisors, Inc. holds 1,000
preferred non-voting shares of CRB Co., Inc.
A.M. DPA Holding Corp. (MA)
A.N. Lyon/Copley Development Corporation (CA)
A.O. NEL Partnership Investments I, Inc. (MA)
A.P. New England Life Mortgage Funding Corporation (MA)
A.Q. Mercadian Capital L.P. (DE). Metropolitan holds a 95% limited partner
interest and an unaffiliated third party holds 5% of Mercadian Capital
L.P.
A.R. Mercadian Funding L.P. (DE). Metropolitan holds a 95% limited partner
interest and an unaffiliated third party holds 5% of Mercadian
Funding L.P.
A.S. Tower Resources Group, Inc. (DE)
A.T. MetLife New England Holdings, Inc. (DE)
1. Fulcrum Financial Advisors, Inc. ( )
2. New England Life Insurance Company (MA)
a. New England Life Holdings, Inc. (DE)
i. New England Securities Corporation (MA)
(1) Hereford Insurance Agency, Inc. (MA)
(2) Hereford Insurance Agency of Alabama, Inc. (AL)
(3) Hereford Insurance Agency of Minnesota, Inc. (MN)
(4) Hereford Insurance Agency of Ohio, Inc. (OH)
(5) Hereford Insurance Agency of New Mexico, Inc. (NM)
ii. TNE Advisers, Inc. (MA)
iii. TNE Information Services, Inc. (MA)
(1) First Connect Insurance Network, Inc. ( )
iv. N.L. Holding Corp. (Del)(NY)
(1) Nathan & Lewis Securities, Inc. (NY)
(2) Nathan & Lewis Associates, Inc. (NY)
(a) Nathan and Lewis Insurance Agency of Massachusetts,
Inc. (MA)
(b) Nathan and Lewis Associates of Texas, Inc. (TX)
(3) Nathan & Lewis Associates--Arizona, Inc. (AZ)
(4) Nathan & Lewis of Nevada, Inc. (NV)
(5) Nathan and Lewis Associates Ohio, Incorporated (OH)
b. Exeter Reassurance Company, Ltd. (MA)
c. Omega Reinsurance Corporation (AZ)
d. New England Pension and Annuity Company (DE)
e. Newbury Insurance Company, Limited (Bermuda)
3. Nvest Corporation (MA)
a. Nvest, L.P. (DE) Nvest Corporation holds a 1.69% general partnership
interest and MetLife New England Holdings, Inc. 3.19% general
partnership interest in Nvest, L.P.
b. Nvest Companies, L.P. (DE) Nvest Corporation holds a 0.0002% general
partnerhship interest in Nvest Companies, L.P. Nvest, L.P. holds a
14.64% general partnership interest in Nvest Companies, L.P.
Metropolitan holds a 46.23% limited partnership interest in Nvest
Companies, L.P.
i. Nvest Holdings, Inc. (DE)
(1) Back Bay Advisors, Inc. (MA)
(a) Back Bay Advisors, L.P. (DE)
Back Bay Advisors, Inc.
holds a 1% general partner
interest and NEIC
Holdings, Inc. holds a 99%
limited partner interest
in Back Bay Advisors, L.P.
(2) R & T Asset Management, Inc. (MA)
(a) Reich & Tang Distributors, Inc. (DE)
(b) R & T Asset Management L.P.
R & T Asset Management, Inc.
holds a 0.5% general partner interest and
NEIC Holdings, Inc. hold a 99.5% limited
partner interest in &
Asset Management, L.P.
(c) Reich & Tang Services, Inc. (DE)
(3) Loomis, Sayles & Company, Inc. (MA)
(a) Loomis Sayles & Company, L.P. (DE)
Loomis Sayles & Company, Inc.
holds a 1% general partner interest and
R & T Asset Management, Inc. holds a 99%
limited partner interest in Loomis Sayles &
Company, L.P.
(4) Westpeak Investment Advisors, Inc. (MA)
(a) Westpeak Investment Advisors, L.P. (DE)
Westpeak Investment Advisors, Inc.
holds a 1% general partner interest and
Reich & Tang holds a 99% limited
partner interest in Westpeak Investment
Advisors, L.P.
(i) Westpeak Investment Advisors Australia
Limited Pty.
(5) Vaughan, Nelson Scarborough & McCullough (DE)
(a) Vaughan, Nelson Scarborough & McCullough, L.P. (DE)
VNSM, Inc. holds a 1% general partner interest and
Reich & Tang Asset Management, Inc. holds a 99%
limited partner interest in Vaughan, Nelson
Scarborough & McCullough, L.P.
(i) VNSM Trust Company
(6) MC Management, Inc. (MA)
(a) MC Management, L.P. (DE)
MC Management, Inc. holds a 1% general partner
interest and R & T Asset Management, Inc.
holds a 99% limited partner interest in MC
Management, L.P.
(7) Harris Associates, Inc. (DE)
(a) Harris Associates Securities L.P. (DE)
Harris Associates, Inc. holds a 1% general partner
interest and Harris Associates L.P. holds a
99% limited partner interest in Harris Associates
Securities, L.P.
(b) Harris Associates L.P. (DE)
Harris Associates, Inc. holds a 0.33% general
partner interest and NEIC Operating Partnership,
L.P. holds a 99.67% limited partner interest in
Harris Associates L.P.
(i) Harris Partners, Inc. (DE)
(ii) Harris Partners L.L.C. (DE)
Harris Partners, Inc. holds a 1%
membership interest and
Harris Associates L.P. holds a 99%
membership interest in Harris Partners L.L.C.
(1) Aurora Limited Partnership (DE)
Harris Partners L.L.C. holds a 1% general
partner interest
(2) Perseus Partners L.P. (DE) Harris Partners
L.L.C. holds a 1% general partner interest
(3) Pleiades Partners L.P. (DE) Harris
Partners L.L.C. holds a 1% general partner
interest
(4) Stellar Partners L.P. (DE)
Harris Partners L.L.C. holds a 1% general
partner interest
(5) SPA Partners L.P. (DE) Harris Partners
L.L.C. holds a 1% general partner interest
(8) Graystone Partners, Inc. (MA)
(a) Graystone Partners, L.P. (DE)
Graystone Partners, Inc. holds a 1%
general partner interest and New England
NEIC Operating Partnership, L.P.
holds a 99% limited partner interest in
Graystone Partners, L.P.
(9) NEF Corporation (MA)
(a) New England Funds, L.P. (DE) NEF Corporation holds a
1% general partner interest and NEIC Operating
Partnership, L.P. holds a 99% limited
partner interest in New England Funds, L.P.
(b) New England Funds Management, L.P. (DE) NEF
Corporation holds a 1% general partner interest and
NEIC Operating Partnership, L.P. holds a 99%
limited partner interest in New England Funds
Management, L.P.
(10) New England Funds Service Corporation
(11) AEW Capital Management, Inc. (DE)
(a) AEW Securities, L.P. (DE) AEW Capital Management, Inc. holds
a 1% general partnership and AEW Capital Management, L.P.
holds a 99% limited partnership interest in AEW Securities,
L.P.
ii. Nvest Associates, Inc.
iii. Snyder Capital Management, Inc.
(1) Snyder Capital Management, L.P. NEIC Operating
Partnership holds a 99.5% limited partnership
interest and Snyder Capital Management Inc. holds a
0.5% general partnership interest.
iv. Jurika & Voyles, Inc.
(1) Jurika & Voyles, L.P NEIC Operating Partnership,
L.P. holds a 99% limited partnership interest and
Jurika & Voyles, Inc. holds a 1% general partnership
interest.
v. Capital Growth Management, L.P. (DE)
NEIC Operating Partnership, L.P. holds a 50% limited partner
interest in Capital Growth Management, L.P.
vi. Nvest Partnerships, LLC ( )
vii. AEW Capital Management L.P. (DE)
New England Investment Companies, L.P. holds a 99% limited partner
interest and AEW Capital Management, Inc. holds a 1% general
partner interest in AEW Capital Management, L.P.
(1) AEW Investment Group, Inc. (MA)
(a) Copley Public Partnership Holding, L.P. (MA)
AEW Investment Group, Inc. holds a 25% general partnership
interest and AEW Capital Management, L.P. holds a 75%
limited partnership interest in Copley Public Partnership
Holding, L.P.
(b) AEW Management and Advisors L.P. (MA)
AEW Investment Group, Inc. holds a 25% general partnership
interest and AEW Capital Management, L.P. holds a 75% limited
partnership interest in AEW Management and Advisors L.P.
(i) BBC Investment Advisors, Inc. (MA)
AEW Investment Group, Inc. holds 60% of the voting securities
and Back Bay Advisors, L.P. holds 40% of the voting securities
of BBC Investment Advisors, Inc.
ii. BBC Investment Advisors, L.P. (MA)
BBC Investment Advisors, Inc. holds a 1% general partnership
interest and AEW Management and Advisors, L.P. holds a 59.4%
limited partnership interest and Back Bay Advisors, L.P. holds a
39.6% limited partnership interest in BBC Investment Advisors,
L.P.
iii. AEW Real Estate Advisors, Inc. (MA)
1. AEW Advisors, Inc. (MA)
2. Copley Properties Company, Inc. (MA)
3. Copley Properties Company II, Inc. (MA)
4. Copley Properties Company III, Inc. (MA)
5. Fourth Copley Corp. (MA)
6. Fifth Copley Corp. (MA)
7. Sixth Copley Corp. (MA)
8. Seventh Copley Corp. (MA).
9. Eighth Copley Corp. (MA).
10. First Income Corp. (MA).
11. Second Income Corp. (MA).
12. Third Income Corp. (MA).
13. Fourth Income Corp. (MA).
14. Third Singleton Corp. (MA).
15. Fourth Singleton Corp. (MA)
16. Fifth Singleton Corp. (MA)
17. Sixth Singleton Corp. (MA).
18. BCOP Associates L.P. (MA)
AEW Real Estate Advisors, Inc. holds a 1% general
partner interest in BCOP Associates L.P.
iv. CREA Western Investors I, Inc. (MA)
1. CREA Western Investors I, L.P. (DE)
CREA Western Investors I, Inc. holds a 24.28% general
partnership interest and Copley Public Partnership Holding,
L.P. holds a 57.62% limited partnership interest in CREA
Western Investors I, L.P.
v. CREA Investors Santa Fe Springs, Inc. (MA)
(2) Copley Public Partnership Holding, L.P. (DE)
AEW Capital Management, L.P. holds a 75% limited partner interest and
AEW Investment Group, Inc. holds a 25% general partner interest and
CREA Western Investors I, L.P holds a 57.62% Limited Partnership
interest.
(3) AEW Real Estate Advisors, Limited Partnership (MA)
AEW Real Estate Advisors, Inc. holds a 25% general partnership interest
and AEW Capital Management, L.P. holds a 75% limited partnership
interest in AEW Real Estate Advisors, Limited Partnership.
(4) AEW Hotel Investment Corporation (MA)
(a.) AEW Hotel Investment, Limited Partnership (MA)
AEW Hotel Investment Corporation holds a 1% general
partnership interest and AEW Capital Management, L.P. holds a
99% limited partnership interest in AEW Hotel Investment,
Limited Partnership.
(5) Aldrich Eastman Global Investment Strategies, LLC (DE)
AEW Capital Management, L.P. holds a 25% membership interest and an
unaffiliated third party holds a 75% membership interest in Aldrich
Eastman Global Investment Strategies, LLC.
C-11
<PAGE>
In addition to the entities listed above, Metropolitan (or where indicated an
affiliate) also owns an interest in the following entities, among others:
1) CP&S Communications, Inc., a New York corporation, holds federal radio
communications licenses for equipment used in Metropolitan owned facilities and
airplanes. It is not engaged in any business.
2) Quadreal Corp., a New York corporation, is the fee holder of a parcel of
real property subject to a 999 year prepaid lease. It is wholly owned by
Metropolitan, having been acquired by a wholly owned subsidiary of Metropolitan
in 1973 in connection with a real estate investment and transferred to
Metropolitan in 1988.
3) Met Life International Real Estate Equity Shares, Inc., a Delaware
corporation, is a real estate investment trust. Metropolitan owns approximately
18.4% of the outstanding common stock of this company and has the right to
designate 2 of the 5 members of its Board of Directors.
4) Metropolitan Structures is a general partnership in which Metropolitan owns
a 50% interest.
5) Interbroker, Correduria de Reaseguros, S.A., is a Spanish insurance
brokerage company in which Santander Met, S. A., a subsidiary of Metropolitan in
which Metropolitan owns a 50% mt ST, owns a 50% interest and has the right to
designate 2 of the 4 members of the Board of Directors.
C-12
<PAGE>
6) Metropolitan owns, via its subsidiary, AFORE Genesis Metropolitan S.A. de
C.V., approximately 61.7% of SIEFORE Genesis S.A. de C.V., a mutual fund.
7) Metropolitan owns varying interests in certain mutual funds distributed by
its affiliates. These ownership interests are generally expected to decrease as
shares of the funds are purchased by unaffiliated investors.
8) Metropolitan Lloyds Insurance Company of Texas, an affiliated association,
provides homeowner and related insurance for the Texas market. It is an
association of individuals designated as underwriters. Metropolitan Lloyds,
Inc., a subsidiary of Metropolitan Property and Casualty Insurance Company ("MET
P&C"), serves as the attorney-in-fact and manages the association.
9) Mezzanine Investment Limited Partnerships ("MILPs"), Delaware limited
partnerships, are investment vehicles through which investments in certain
entities are held. A wholly owned subsidiary of Metropolitan serves as the
general partner of the limited partnerships and Metropolitan directly owns a 99%
limited partnership interest in each MILP. The MILPs have various's ownership
interests in certain companies. The various MILPs own, directly or indirectly,
more than 50% of the voting stock of the following company: Coating
Technologies International, Inc.
NOTE: THE METROPOLITAN LIFE ORGANIZATIONAL CHART DOES NOT INCLUDE REAL ESTATE
- ----
JOINT VENTURES AND PARTNERSHIPS OF WHICH METROPOLITAN LIFE AND/OR ITS
SUBSIDIARIES IS AN INVESTMENT PARTNER. IN ADDITION, CERTAIN INACTIVE
SUBSIDIARIES HAVE ALSO BEEN OMITTED.
C-13
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<CAPTION>
NUMBER OF
RECORD HOLDERS
AT JULY 1,
TITLE OF CLASS 1998
-------------- --------------
<S> <C>
Common stock, par value $0.01 per share................ 6
</TABLE>
ITEM 27. INDEMNIFICATION.
(a) Maryland Law and By-Laws.
The Registrant is required by Article V of its By-Laws to indemnify or
advance expenses to directors and officers (or former directors and officers)
to the extent permitted or required by the Maryland General Corporation Law
("MGCL") and, in the case of officers (or former officers), only to the extent
specifically authorized by resolution of the Board of Directors. Section 2-418
of the MGCL permits indemnification of a director against judgments,
penalties, fines, settlements and reasonable expenses actually incurred by the
director in connection with any proceeding to which he has been made a party
by reason of service as a director, unless it is established that (i) the
director's act or omission was material to the matter giving rise to the
proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty; or (ii) the director actually received an improper
personal benefit in money, property or services; or (iii) in the case of a
criminal proceeding, the director had reasonable cause to believe that the act
or omission was unlawful. However, indemnification may not be made in any
proceeding by or in the right of the corporation in which the director has
been adjudged to be liable to the corporation. In addition, a director may not
be indemnified in respect of any proceeding charging improper personal benefit
to the director, whether or not involving action in the director's official
capacity, in which the director was adjudged to be liable on the basis that
personal benefit was improperly received. Section 2-418 of the MGCL also
requires a corporation, unless limited by its charter, to indemnify a director
who has been successful in the defense of a proceeding against reasonable
expenses incurred. Reasonable expenses incurred by a director may be paid or
reimbursed by a corporation in advance the final disposition of a proceeding
upon the receipt of certain written affirmations and undertakings required by
Section 2-418. Unless limited by its directors, a Maryland corporation may
indemnify and advance expenses to an officer to the same extent it may
indemnify a director, and is required to indemnify an officer to the extent
required for a director.
Notwithstanding the foregoing, Article V of the Registrant's By-Laws
provides that nothing contained therein shall be construed to protect any
director or officer against any liability to the Registrant or its security
holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
(b) Distribution Agreement.
Under the distribution agreement between the Registrant and Metropolitan
Life, Metropolitan Life agreed to indemnify and hold harmless any officer or
director (or any former officer or director) or any controlling person of the
Registrant from damages and expenses arising out of actual or alleged
misrepresentations or omissions to state material facts on the part of
Metropolitan Life or persons for whom it is responsible or the negligence of
any such persons in rendering services under the agreement.
(c) Undertaking.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will,
C-14
<PAGE>
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(d) Insurance.
The Registrant's directors are indemnified by Metropolitan Life in the same
manner and to the same extent as Metropolitan Life's directors. In addition
thereto, Metropolitan Life has purchased an Investment Counselors Errors and
Omissions Policy to insure the Registrant's directors and officers.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT MANAGER.
Metropolitan Life is a mutual life insurance company which sells insurance
policies and annuity contracts. It is authorized to transact business in all
states of the United States, the District of Columbia, Puerto Rico and all
Provinces of Canada. Its Home Office is located at 1 Madison Avenue, New York,
New York 10010 (telephone number 212-578-6130). On December 31, 1997 it had
total life insurance in force of approximately $1.7 trillion and total assets
under management of approximately $330.3 billion. Metropolitan Life is the
parent of Metropolitan Tower. Metropolitan Life also serves as the investment
adviser for certain other advisory clients.
Set forth below is a list of each director of Metropolitan Life indicating
each business, profession, vocation or employment of a substantial nature in
which each such person has been, at any time during the past two fiscal years,
engaged for his or her own account or in the capacity of director, officer,
partner or trustee.
<TABLE>
<CAPTION>
ORGANIZATION AND PRINCIPAL
NAME POSITION BUSINESS ADDRESS OF ORGANIZATION
---- -------- --------------------------------
<C> <C> <S>
Curtis H. Barnette..... Chairman of the Board Bethlehem Steel Corporation
and Chief Executive Bethlehem, PA
Officer
Director and former International Iron and Steel
Chairman Institute,
Brussels, Belgium
Director and former Pennsylvania Business
Chairman Roundtable,
Harrisburg, PA
Chairman and Director American Iron and Steel
Institute,
Washington, DC
Director and former West Virginia University
Chairman Foundation,
Morgantown, WV
Trustee Lehigh University
Bethlehem, PA
Robert H. Benmosche . . Chairman of the Board, Metropolitan Life Insurance
President and Chief Company
Executive Officer New York, N.Y.
Director New York Philharmonic
Director Metropolitan Property and
Casualty Insurance Company
Trustee Alfred University
Trustee Life Underwriters Training
Council
Joan Ganz Cooney....... Chairman, Executive Com- Children's Television Workshop,
mittee New York, NY
Director Johnson & Johnson,
New Brunswick, NJ
Trustee National Child Labor Committee,
New York, NY
Trustee Children's Television Workshop,
New York, NY
Trustee Museum of Television and Radio
Trustee The New York and Presbyterian
Hospitals
</TABLE>
C-15
<PAGE>
<TABLE>
<CAPTION>
ORGANIZATION AND PRINCIPAL
NAME POSITION BUSINESS ADDRESS OF ORGANIZATION
---- -------- --------------------------------
<C> <C> <S>
Burton A. Dole, Jr. . Retired Chairman, Puritan Bennett, Inc., Carlsbad,
President and Chief CA
Executive Officer
Former Chairman of the Nellcor Puritan Bennett, Inc.,
Board Pleasanton, CA
Director Anesthesia Patient Safety
Foundation
Former Chairman of the Health Industries Manufacturer's
Board Association
Former Chairman of the Federal Reserve Bank of Kansas
Board City
Trustee I. Heermann Anesthesia Foundation
Gerald Clark......... 7/1/98 Vice-Chairman of Metropolitan Life Insurance
the Board and Chief Company,
Investment Officer and New York, NY
Director; Senior
Executive Vice-
President and Chief
Investment Officer and
Director since 1/97;
prior thereto Senior
Executive Vice-
President and Chief
Investment Officer
Director/Trustee Credit Suisse Group
Director/Trustee New York Police and Firemen's
Fund
Director/Trustee St. Vincent's Hospital
Director/Trustee Villanova University
Director/Trustee Community Preservation
Corporation
Director/Officer Certain wholly-owned subsidiaries
of Metropolitan Life Insurance
Company
James R. Houghton.... Retired Chairman of the Corning Incorporated, Corning, NY
Board and Director
Director J.P. Morgan & Co., Inc., New
York, NY
Director Exxon Corp., Dallas, TX
Director/Trustee Corning Incorporated Foundation
Director/Trustee Corning Museum of Glass
Director/Trustee Metropolitan Museum of Art
Director/Trustee Pierpont Morgan Library
Harry Paul Kamen..... Retired Chairman and Metropolitan Life Insurance
Chief Executive Officer Company,
and Director since New York, NY
7/1/98, prior thereto,
Chairman, Chief
Executive Officer and
Director
Director Bethlehem Steel Corporation,
Bethlehem, PA
Director/Officer Certain wholly-owned subsidiaries
of Metropolitan Life Insurance
Company, New York, NY
Director Banco Santander, Madrid, Spain
Director and Treasurer New York City Partnership, New
York, NY
Director/Trustee Board of Overseers of the School
of Arts and Sciences at the
University of Pennsylvania
Director/Trustee and Carnegie Hall
Treasurer
Director/Trustee Jewish Museum
Director/Trustee Smith College
</TABLE>
C-16
<PAGE>
<TABLE>
<CAPTION>
ORGANIZATION AND PRINCIPAL
NAME POSITION BUSINESS ADDRESS OF ORGANIZATION
---- -------- --------------------------------
<C> <C> <S>
Director/Trustee Business Council
Director/Trustee Business Roundtable
Director/Trustee New York Investment Fund
Board of Governors National Association of Securities
Dealers
Director/Trustee and Conference Board
Vice-Chairman
Director/Trustee American Museum of Natural History
Director Pfizer Inc.
Director New England Life Insurance Company
Director New England Investment Companies,
Inc.
Helene L. Kaplan..... Of Counsel Skadden, Arps, Slate, Meagher &
Flom, New York, NY
Director May Department Stores Co., New
York, NY
Trustee Barnard College, New York, NY
Director Mobil Corp., New York, NY
Director Bell Atlantic Corporation, New
York, NY
Director The Chase Manhattan Corporation
Trustee American Museum of Natural History
Trustee Carnegie Corporation of New York
Trustee Catskill Center Conservation and
Development
Trustee Mount Sinai Hospital, Medical
School and Medical Center
Trustee Commonwealth Fund
Trustee J. Paul Getty Trust
Trustee Institute for Advanced Study
Trustee New York Academy of Medicine
Charles M. Leighton.. Retired Chairman and CML Group, Inc., Acton, MA
Chief Executive Officer
Director CML Group, Inc.
Director New England Investment Companies,
Inc.
Chairman Listed Company Advisory Committee,
New York Stock Exchange
Overseer Lahey Hitchcock Clinic
Trustee Pact 2000 America's Corp.
Allen E. Murray...... Retired Chairman of the Mobil Corporation, New York, NY
Board and Chief
Executive Officer
Director Morgan Stanley, Dean Witter,
Discovery Co., New York, NY
Director Minnesota Mining and Manufacturing
Co., St. Paul, MN
Honorary Director American Petroleum Institute,
Washington, DC
Director Lockheed Martin Corporation,
Bethesda, MD
Director St. Francis Hospital Foundation
Trustee New York University
Stewart Nagler....... Vice-Chairman of the Metropolitan Life Insurance Company
Board and Chief New York, NY
Financial Officer
and Director
Director Life Insurance Council of New York
Director Various Metropolitan Subsidiaries
Trustee Boys and Girls Clubs of America
</TABLE>
C-17
<PAGE>
<TABLE>
<CAPTION>
ORGANIZATION AND PRINCIPAL
NAME POSITION BUSINESS ADDRESS OF ORGANIZATION
---- -------- --------------------------------
<C> <C> <S>
Trustee Polytechnical University of New
York (and Chairman Finance
Committee)
John J. Phelan, Jr...... Retired Chairman and New York Stock Exchange, Inc.,
Chief Executive Officer New York, NY
Director Eastman Kodak Co., Rochester, NY
Director Merrill Lynch & Co., Inc., New
York, NY
Director SONAT, Inc., Birmingham, AL
Former President International Federation of
Stock Exchanges
Director or Trustee Aspen Institute and Cold Spring
Director or Trustee Harbor Laboratories
Director or Trustee Catholic Charities Archdiocese
of NY
Hugh B. Price........... President and Chief National Urban League, Inc., New
Executive Officer York, NY
Director Bell Atlantic Corp., New York,
NY
Director The Urban Institute, New York,
NY
Director Education Testing Service
Director Sears Roebuck and Company
Robert G. Schwartz...... Retired Chairman of the Metropolitan Life Insurance
Board, President and Company,
Chief Executive Officer New York, NY
and Director
Director Lowe's Companies, Inc., North
Wilkesboro, NC
Director Potlatch Corporation, San
Francisco, CA
Director COMSAT Corporation, Washington,
DC
Director Mobil Corporation, New York, NY
Director/Trustee Committee for Economic
Development, Washington, DC
Director Consolidated Edison Company of
New York, Inc., New York, NY
Director The Reader's Digest Association,
Inc., Pleasantville, NY
Director Lone Star Industries, Inc.,
Stamford, CT
Director/Trustee The Horatio Alger Association of
Distinguished Americans, Inc.
Ruth Simmons............ President Smith College, Northampton, MA
Trustee Institute for Advanced Study
Director Pfizer Inc.
Trustee JSTOR
Trustee Clarke School for the Deaf
William C. Steere, Jr. . Chairman of the Board Pfizer Inc.
and Chief Executive
Officer
Director Dow Jones & Company, Inc.
Director Minerals Technologies Inc.
Director Texaco Inc.
Director Pharmaceutical Research, and
Manufacturers of America
Director New York University Medical
Center
Director Business Council
Director Business Roundtable
Director New York Botanical Garden
Board of Overseers Memorial Sloan-Kettering Cancer
Center
</TABLE>
C-18
<PAGE>
Set forth below is a list of certain principal officers of Metropolitan Life
and officers of Metropolitan Life who may be considered to be involved in
Metropolitan Life's investment advisory activities. The principal business
address of each officer of Metropolitan Life is One Madison Avenue, New York,
New York 10010.
<TABLE>
<CAPTION>
NAME OF OFFICER POSITION
--------------- --------
<S> <C>
Robert H. Benmosche.......... Chairman of the Board, President
and Chief Executive Officer
Gerald Clark................. Vice-Chairman of the Board
and Chief Investment Officer
Stewart G. Nagler............ Vice-Chairman of the Board
and Chief Financial Officer
Gary A. Beller............... Senior Executive Vice-President and General Counsel
C. Robert Henrikson.......... Senior Executive Vice-President
Catherine A. Rein............ Senior Executive Vice-President
William J. Toppeta........... Senior Executive Vice-President
John H. Tweedie.............. Senior Executive Vice-President
Jeffrey J. Hodgman........... Executive Vice-President
Terence I. Lennon............ Executive Vice-President
David A. Levene.............. Executive Vice-President
Judy E. Weiss................ Executive Vice-President & Chief Actuary
Alexander D. Brunini......... Senior Vice President
Richard M. Blackwell......... Senior Vice-President
Jon F. Danski................ Senior Vice President and Controller
James B. Digney.............. Senior Vice-President
William T. Friedewald, M.D. . Senior Vice-President
Ira Friedman................. Senior Vice-President
Anne E. Hayden............... Senior Vice-President
Sibyl C. Jacobson............ Senior Vice-President
Joseph W. Jordan............. Senior Vice-President
Kernan F. King............... Senior Vice-President
Nicholas D. Latrenta......... Senior Vice-President
Leland C. Launer, Jr. ....... Senior Vice-President
Gary E. Lineberry............ Senior Vice-President
James L. Lipscomb............ Senior Vice-President
William D. Livesey........... Senior Vice-President
James M. Logan............... Senior Vice-President
Eugene Marks, Jr. ........... Senior Vice-President
Dominick A. Prezzano......... Senior Vice-President
Joseph A. Reali.............. Senior Vice-President
Vincent P. Reusing........... Senior Vice-President
Felix Schirripa.............. Senior Vice-President
Robert E. Sollmann, Jr. ..... Senior Vice-President
Thomas L. Stapleton.......... Senior Vice-President & Tax Director
James F. Stenson............. Senior Vice-President
Stanley J. Talbi............. Senior Vice-President
Richard R. Tartre............ Senior Vice-President
James A. Valentino........... Senior Vice-President
Lisa M. Weber................ Senior Vice-President
William J. Wheeler........... Senior Vice-President and Treasurer
Anthony J. Williamson........ Senior Vice-President
Louis J. Ragusa.............. Vice-President and Secretary
</TABLE>
The business of State Street Research since December 31, 1983 is summarized
under "Management of the Fund", in the prospectus constituting Part A of this
Registration Statement, which summarization is incorporated herein by
reference.
C-19
<PAGE>
The list of each director and certain officers of State Street Research
indicating any other business, profession, vocation or employment of a
substantial nature in which each such person is or has been, at any time
during the past two fiscal years, engaged for his or her own account or in the
capacity of director, officer, employee, partner or trustee is incorporated
herein by reference to the filing of Post-Effective Amendment No. 18 to the
Registration Statement of State Street Research Financial Trust on February
27, 1998.
The list of each director and certain officers of Scudder Kemper
Investments, Inc. indicating any other business, profession, vocation or
employment of a substantial nature in which each such person is or has been,
at any time during the past two fiscal years, engaged for his or her own
account or in the capacity of director, officer, employee, partner or trustee
is incorporated herein by reference to the filing of Post-Effective Amendment
No. 93 to the Registration Statement of Scudder Investment Trust (File No.
811-00043) on March 18, 1998. Scudder Kemper Investments, Inc. has
stockholders and employees who are denominated officers but do not as such
have corporation-wide responsibilities, and therefore are not considered
officers.
The list of each director and certain officers of Janus indicating any other
business, profession, vocation or employment of a substantial nature in which
each such person is or has been, at any time during the past five fiscal
years, engaged for his or her own account or in the capacity of director,
officer, employee, partner or trustee is incorporated herein by reference to
the filing of Post-Effective Amendment No. 16 to the Registration Statement
for Janus Aspen Series (File No. 33-63212) on April 28, 1998.
The list of each director and certain officers of T. Rowe Price indicating
any other business, profession, vocation or employment of a substantial nature
in which each such person is or has been, at any time during the past two
fiscal years, engaged for his or her own account or in the capacity of
director, officer, employee, partner or trustee is incorporated herein by
reference to Schedules A and D of Form ADV filed by T. Rowe Price pursuant to
the Investment Advisers Act of 1940 (SEC File No. 801-856).
Loomis Sayles, the sub-adviser of the Loomis Sayles High Yield Bond
Portfolio, provides investment advice to the eleven series of Loomis Sayles'
Investment Trust, six series of New England Funds Trust I, one series of New
England Funds Trust III, and three series of New England Zenith Funds, all of
which are registered investment companies, and to other organizations and
individuals.
The sole general partner of Loomis Sayles is Loomis, Sayles & Company,
Incorporated, One Financial Center, Boston, Massachusetts 02111.
The list of each director and certain officers of Harris Oakmark indicating
any other business, profession, vocation or employment of a substantial nature
in which each such person is or has been, at any time during the past five
fiscal years, engaged for his or her own account or in the capacity of
director, officer, employee, partner or trustee is incorporated herein by
reference to the filing of Post-Effective Amendment No. 20 to Registration
Statement to the Harris Associates Investment Trust (File No. 33-38953) on
January 23, 1998.
The list of each director and certain officers of Neuberger&Berman
indicating any other business, profession, vocation or employment of a
substantial nature in which each such person is or has been, at any time
during the past two fiscal years, engaged for his or her own account or in the
capacity of director, officer, employee, partner or trustee is incorporated
herein by reference to Schedules A and D of Form ADV for Neuberger&Berman
Management, Inc. pursuant to the Investment Advisers Act of 1940 (SEC File No.
801-856).
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act and the rules thereunder are maintained at the offices
of the Registrant, of State Street Research & Management Company of Boston,
Massachusetts GFM International Investors, Inc. of London, England, Loomis,
Sayles & Company, L.P. of Boston, Massachusetts, Janus Capital Corporation of
Denver, Colorado, T. Rowe Price Associates, Inc. of Baltimore, Maryland,
Scudder Kemper
C-20
<PAGE>
Investments, Inc. of New York, New York and of State Street Bank and Trust
Company of Boston, Massachusetts. The address of each is set forth on the back
cover of the prospectus forming Part A of this Registration Statement and is
incorporated herein by reference. Certain records are maintained at the
Registrant's office at 1125 Seventeenth Street, Denver, Colorado 80202.
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
C-21
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE
INVESTMENT COMPANY ACT OF 1940, THE REGISTRANT HAS DULY CAUSED THIS AMENDED
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, AND STATE OF NEW YORK, ON
THE 30TH DAY OF JULY, 1998.
METROPOLITAN SERIES FUND, INC.
(REGISTRANT)
/s/ Christopher P. Nicholas
By: .................................
CHRISTOPHER P. NICHOLAS
President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDED
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE DATE
*
.....................................
DAVID A. LEVENE
Chairman of the Board and (Principal
Executive Officer and Director)
*
.....................................
STEVE A. GARBAN
Director
*
.....................................
MALCOLM T. HOPKINS
Director
*
.....................................
ROBERT A. LAWRENCE
Director
*
.....................................
DEAN O. MORTON
Director
*
.....................................
MICHAEL S. SCOTT MORTON
Director
*
.....................................
ARTHUR G. TYPERMASS
Director
*
.....................................
BRADFORD W. WHITE
Controller (Principal Financial and
Accounting Officer)
/s/ Christopher P. Nicholas, Esq. July 30, 1998
*By: ................................
CHRISTOPHER P. NICHOLAS, ESQ.
Attorney-in-Fact
C-22
<PAGE>
EXHIBIT 1(i)
METROPOLITAN SERIES FUND, INC.
------------------------------
ARTICLES SUPPLEMENTARY
----------------------
TO
--
ARTICLES OF INCORPORATION
-------------------------
METROPOLITAN SERIES FUND, INC., a Maryland corporation having its principal
office in this State c/o United Corporate Services, Inc., 20 South Charles
Street, Suite 1200, Baltimore, Maryland 21201 (hereinafter called the
Corporation), hereby certifies to the State Department of Assessments and
Taxation of Maryland, that:
FIRST: The Board of Directors of the Corporation, at a meeting duly convened
and held on August 4, 1998, adopted resolutions increasing the total number of
shares of capital stock of the Corporation from two billion (2,000,000,000)
shares of the par value of one cent ($0.01) per share and of the aggregate par
value of twenty million dollars ($20,000,000) to three billion (3,000,000,000)
shares of the par value of one cent ($0.01) per share and of the aggregate par
value of thirty million dollars ($30,000,000), classifying or reclassifying nine
hundred million (900,000,000) unissued shares of capital stock of the
Corporation of the par value of $0.01 per share by (i) establishing six (6) new
classes of capital stock of the Corporation of the par value of $0.01 per share
designated respectively as Harris Oakmark Large Cap Value Portfolio Capital
Stock, T. Rowe Price Large Cap Growth Portfolio Capital Stock, Neuberger&Berman
Partners Mid Cap Value Portfolio Capital Stock, Lehman Brothers Aggregate Bond
Index Portfolio Capital Stock, Russell 2000 Index Portfolio Capital Stock and
Morgan Stanley EAFE Index Portfolio Capital Stock, (ii) by increasing the
aggregate number of shares of the capital stock of the State Street Research
Diversified, the State Street Research Growth and the MetLife Stock Index
Portfolios from, in each case, one hundred million
<PAGE>
(100,000,000) shares to two hundred million (200,000,000) shares and (iii) by
allocating or reallocating such nine hundred million shares so that the total
number of shares of authorized capital stock of the Corporation shall be divided
among the following classes of capital stock, each class comprising the number
of shares and having the designations, preferences, rights, voting powers and
such qualifications, limitations and restrictions as are hereinafter set forth:
Increased
and
Original Reclassified
Shares of Shares of
Authorized Authorized
Class Stock Stock
- ----- ---------- -----------
State Street Research Money Market Portfolio 100,000,000 100,000,000
State Street Research Income Portfolio 100,000,000 100,000,000
State Street Research Growth Portfolio 100,000,000 200,000,000
State Street Research Diversified Portfolio 100,000,000 200,000,000
GNMA Portfolio 100,000,000 100,000,000
State Street Research International Stock Portfolio 100,000,000 100,000,000
State Street Research Aggressive Growth Portfolio 100,000,000 100,000,000
MetLife Stock Index Portfolio 100,000,000 200,000,000
Equity Income Portfolio 100,000,000 100,000,000
Scudder Global Equity Portfolio 100,000,000 100,000,000
T. Rowe Price Small Cap Growth Portfolio 100,000,000 100,000,000
Janus Mid Cap Portfolio 100,000,000 100,000,000
Loomis Sayles High Yield Bond Portfolio 100,000,000 100,000,000
T. Rowe Price Large Cap Growth Portfolio ----- 100,000,000
Harris Oakmark Large Cap Value Portfolio ----- 100,000,000
Neuberger&Berman Partners Mid Cap Value Portfolio ----- 100,000,000
Lehman Brothers Aggregate Bond Index Portfolio ----- 100,000,000
Russell 2000 Index Portfolio ----- 100,000,000
Morgan Stanley EAFE Index Portfolio ----- 100,000,000
Unclassified 700,000,000 800,000,000
----------- -----------
Total 2,000,000,000 3,000,000,000
The holders of each share of stock of the Corporation shall be entitled to
one vote for each full share, and a fractional vote for each fractional share of
stock, irrespective of the class, then standing in his name on the books of the
Corporation. On any matter submitted to a vote of the stockholders, all shares
of the Corporation then issued and outstanding and
2
<PAGE>
entitled to vote shall be voted in the aggregate and not by class except (1)
when otherwise required by law and (2) if the Board of Directors, in its sole
discretion, determines that any matter concerns only one or more particular
class or classes, it may direct that only holders of that class or those classes
may vote on the matter.
Except as the Board of Directors may provide in classifying or reclassifying
any unissued shares of stock, each class of stock of the Corporation shall have
the following powers, preferences or other special rights, and the
qualifications, restrictions, and limitations thereof shall be as follows:
(1) Except as may be otherwise provided herein, all consideration received
by the Corporation for the issue or sale of shares of stock of a particular
class, together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds in whatever
form, shall constitute assets of that class, as opposed to other classes of the
Corporation, subject only to the rights of creditors, and are herein referred to
as assets "belonging to" that class. Any assets, income, earnings, profits, and
proceeds thereof, funds or payments which are not readily identifiable as
belonging to any particular class, shall be allocated by or under the
supervision of the Board of Directors to and among any one or more of the
classes established and designated from time to time, in such manner and on such
basis as the Board of Directors, in its sole discretion, deems fair and
equitable.
(2) The Board of Directors may from time to time declare and pay dividends
or distributions, in stock or in cash, on any or all classes of stock, the
amount of such dividends
3
<PAGE>
and distributions and the payment of them being wholly in the discretion of the
Board of Directors, giving due consideration to the interests of each class and
to the interests of the Corporation as a whole. Pursuant to the foregoing:
(i) Dividends or distributions on shares of any class of stock shall
be paid only out of surplus or other lawfully available assets
determined by the Board of Directors as belonging to such class.
(ii) Inasmuch as the Corporation intends to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986, as
amended, or any successor or statute comparable thereto, and
regulations promulgated thereunder, and inasmuch as the computation of
net income and gains for Federal income tax purposes may vary from the
computation thereof on the books of the Corporation, the Board of
Directors shall have the power in its discretion to distribute in any
fiscal years as dividends, including dividends designated in whole or
in part as capital gains distributions, amounts sufficient in the
opinion of the Board of Directors, to enable the Corporation to
qualify as a regulated investment company and to avoid liability for
the Corporation for Federal income tax in respect to that year. In
furtherance, and not in limitation of the foregoing, in the event that
a class of shares has a net capital loss for a fiscal year, and to the
extent that a net capital loss for a fiscal year offsets net
4
<PAGE>
capital gains from one or more of the other classes, the amount to be
deemed available for distribution to the class or classes with the net
capital gain may be reduced by the amount offset.
(3) The assets belonging to any class of stock shall be charged with the
liabilities in respect to such class, and shall also be charged with its share
of the general liabilities of the Corporation in proportion to the net asset
value of the respective classes before allocation of general liabilities.
However the decision of the Board of Directors as to the amount of assets and
liabilities belonging to the Corporation, and their allocation to a given class
or classes shall be final and conclusive.
(4) In the event of the liquidation of the Corporation the stockholders of
each class that has been established and designated shall be entitled to
receive, as a class, the excess of the assets belonging to that class over the
liabilities belonging to that class. The assets so distributable to the
stockholders of any particular class shall be distributed among such
stockholders in proportion to the number of shares of that class held by them
and recorded on the books of the Corporation. Any assets not readily
identifiable as belonging to any particular class shall be allocated by or under
the supervision of the Board of Directors to and among any one or more of the
classes established and designated, as provided herein. Any such allocation by
the Board of Directors shall be conclusive and binding for all purposes.
(5) Each holder of shares of capital stock of the Corporation shall be
entitled to require the Corporation to redeem all or any part of the shares of
capital stock of the Corporation standing in the name of such holder on the
books of the Corporation, at the redemption price of such shares as in effect
from time to time, subject to the right of the Board of Directors of
5
<PAGE>
the Corporation to suspend the right of redemption of shares of capital stock of
the Corporation or postpone the time of payment of such redemption price in
accordance with provisions of applicable law. The redemption price of shares of
capital stock of the Corporation shall be the net asset value thereof as
determined by, or pursuant to the discretion of the Board of Directors of the
Corporation from time to time in accordance with the provisions of applicable
law, less such redemption fee or other charge, if any, as may be fixed by
resolution of the Board of Directors of the Corporation. Redemption shall be
conditional upon the Corporation having funds legally available therefor.
Payment of the redemption price shall be made in cash or by check or current
funds, or in assets other than cash, by the Corporation at such time and in such
manner as may be determined from time to time by the Board of Directors of the
Corporation.
(6) The Corporation's shares of stock are issued and sold, and all persons
who shall acquire stock of the Corporation shall acquire the same, subject to
the condition and understanding that the provisions of the Articles of
Incorporation of the Corporation, as from time to time amended, shall be binding
upon them.
SECOND: The shares aforesaid have been duly classified or reclassified by
the Board of Directors pursuant to the authority and power contained in Article
V of the Articles of Incorporation of the Corporation.
6
<PAGE>
IN WITNESS WHEREOF, METROPOLITAN SERIES FUND, INC. has caused these presents
to be signed in its name and on its behalf by its President and Chief Executive
Officer and its corporate seal to be hereunto affixed and attested by its
Secretary, on August , 1998.
METROPOLITAN SERIES FUND, INC.
By
----------------------------
Christopher P. Nicholas
President and Chief Operating Officer
Attest:
- -----------------------
Robin Wagner
Secretary
THE UNDERSIGNED, President of METROPOLITAN SERIES FUND, INC., who executed
on behalf of said Corporation the foregoing Articles Supplementary to the
Articles of Incorporation, of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of said Corporation, the foregoing
Articles Supplementary to the Articles of Incorporation to be the corporate act
of said Corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the approval thereof are true in all material respects, under the penalties of
perjury.
-----------------------
Christopher P. Nicholas
7
<PAGE>
EXHIBIT 5(d)
NEUBERGER&BERMAN PARTNERS MID CAP VALUE PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 30th day of October, 1998, by and between Metropolitan
Series Fund, Inc., a Maryland corporation (the "Fund"), and Metropolitan Life
Insurance Company, a New York corporation (the "Investment Manager");
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as a diversified open-end
management investment company and is registered as such under the Investment
Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Fund, a series type of investment company, issues separate
classes (or series) of stock, each of which represents a separate portfolio of
investments;
WHEREAS, the Fund is currently comprised of various portfolios, each of
which pursues its investment objectives through separate investment policies,
and the Fund may add or delete portfolios from time to time;
WHEREAS, the Investment Manager is engaged principally in the business of
insurance and also in rendering advisory services and is registered as an
investment adviser under the Investment Advisers Act of 1940;
WHEREAS, the Investment Manager currently provides investment management
and corporate administrative services to each of the Portfolios pursuant to
separate investment management agreements between the Fund and the Investment
Manager; and
WHEREAS, the Fund desires to enter into a separate investment management
agreement with respect to the Neuberger&Berman Partners Mid Cap Value Portfolio
of the Fund with the Investment Manager;
<PAGE>
NOW THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Investment Manager hereby agree as
follows:
ARTICLE 1
DUTIES OF THE INVESTMENT MANAGER
--------------------------------
The Fund hereby employs the Investment Manager to act as the investment
adviser to and investment manager of the Neuberger&Berman Partners Mid Cap Value
Portfolio (the "Portfolio") and to manage the investment and reinvestment of the
assets of the Portfolio and to administer its affairs, subject to the
supervision of the Board of Directors of the Fund, for the period and on the
terms and conditions set forth in this Agreement. The Investment Manager hereby
accepts such employment and agrees during such period, at its own expense, to
render the services and to assume the obligations herein set forth for the
compensation provided for herein. The Investment Manager shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
provided or authorized, have no authority to act for or represent the Fund in
any way or otherwise be deemed an agent of the Fund other than in furtherance of
its duties and responsibilities as set forth in this Agreement.
(a) INVESTMENT MANAGEMENT SERVICES. In acting as investment manager to
-------------------------------
the Portfolio, the Investment Manager shall regularly provide the Portfolio with
such investment research, advice and management as the Fund may from time to
time consider necessary for the proper management of the Portfolio and shall
furnish continuously an investment program and shall determine which securities
shall be purchased, sold or exchanged and what portion of the assets of the
Portfolio shall be held in the various securities or other assets, subject
always to any restrictions of the Fund's Articles of Incorporation and By-Laws,
as amended or supplemented
2
<PAGE>
from time to time, the provisions of applicable laws and regulations including
the Investment Company Act, and the statements relating to the Portfolio's
investment objectives, policies and restrictions as the same are set forth in
the prospectus of the Fund then-currently effective under the Securities Act of
1933 (the "Prospectus"). Should the Board of Directors of the Fund at any time,
however, make any definite determination as to investment policy and notify the
Investment Manager thereof, the Investment Manager shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. The Investment
Manager shall take, on behalf of the Fund, all actions which it deems necessary
to implement the investment policies of the Portfolio, determined as provided
above, and in particular to place all orders for the purchase or sale of
portfolio securities for the Portfolio with brokers or dealers selected by the
Investment Manager.
In connection with the selection of such brokers or dealers and the
placing of such orders, the Investment Manager is directed at all times to
follow the policies of the Fund as set forth in the Prospectus. Nothing herein
shall preclude the "bunching" of orders for the sale or purchase of portfolio
securities with the other Portfolios or with other accounts managed by the
Investment Manager or the Investment Manager's general account and separate
accounts. The Investment Manager shall not favor any account over any other and
any purchase or sale orders executed contemporaneously shall be allocated in a
manner it deems equitable among the accounts involved and at a price which is
approximately averaged.
(b) ADMINISTRATIVE SERVICES. In addition to the performance of investment
-----------------------
advisory services, the Investment Manager shall perform administrative services
in connection with the management of the Portfolio. In this connection, the
Investment Manager agrees (i) to
3
<PAGE>
assist in managing all aspects of the Fund's operations relating to the
Portfolio, including the coordination of all matters relating to the functions
of the custodian, transfer agent, other shareholder service agents, accountants,
attorneys and other parties performing services or operational functions for the
Fund, (ii) to provide the Fund, at the Investment Manager's expense, with
services of persons competent to perform such professional, administrative and
clerical functions as are necessary in order to provide effective administration
of the Portfolio, including duties in connection with shareholder relations,
reports, redemption requests and account adjustments and the maintenance of the
books and records required of the Fund, and (iii) to provide the Fund, at the
Investment Manager's expense, with adequate office space and related services
necessary for its operations as contemplated in this Agreement. In performing
such administrative services, the Investment Manager shall comply with all
provisions of the Fund's Articles of Incorporation and By-Laws, with all laws
and regulations to which the Fund may be subject and with all directions of the
Fund's Board of Directors.
The Investment Manager shall supply the Board of Directors and officers of
the Fund with all statistical information regarding investments which is
reasonably required by them and reasonably available to the Investment Manager.
(C) SUB-INVESTMENT MANAGER. Notwithstanding any other provision of this
----------------------
Agreement, the Fund and the Investment Manager may agree to the employment of a
Sub-Investment Manager to the Fund for the purpose of providing investment
management services with respect to the Portfolio, provided that the
compensation to be paid to such Sub-Investment Manager shall be the sole
responsibility of the Investment Manager and the duties and responsibilities of
the Sub-Investment Manager shall be as set forth in a
4
<PAGE>
sub-investment management agreement among the Investment Manager, the Sub-
Investment Manager and the Fund on behalf of the Portfolio.
ARTICLE 2
ALLOCATION OF CHARGES AND EXPENSES
----------------------------------
(a) THE INVESTMENT MANAGER. In addition to the compensation paid to any
-----------------------
Sub-Investment Manager as set forth in Article 1 above, the Investment Manager
shall pay the organization costs of the Fund relating to the Portfolio. The
Investment Manager also assumes expenses of the Fund relating to maintaining the
staff and personnel, and providing the equipment, office space and facilities,
necessary to perform its obligations under this Agreement.
(b) THE FUND. The Fund assumes and shall pay (or cause to be paid) all
--------
other Fund expenses, including but not limited to the following expenses: the
fee referred to in Article 3 below; interest and any other costs related to
borrowings by the Fund attributable to the Portfolio; taxes payable by the Fund
and attributable to the Portfolio; brokerage costs and other direct costs of
effecting portfolio transactions (including any costs directly related to the
acquisition, disposition, lending or borrowing of portfolio investments) on
behalf of the Portfolio; the compensation of the directors and officers of the
Fund who are not actively employed by the Investment Manager; custodian,
registration and transfer agent fees; fees of outside counsel to and of
independent auditors of the Fund selected by the Board of Directors; expenses of
printing and mailing to existing shareholders of registration statements,
prospectuses, reports, notices and proxy solicitation materials of the Fund; all
other expenses incidental to holding meetings of the Fund's shareholders;
insurance premiums for fidelity coverage and errors and omissions
insurance; and extraordinary or non-recurring expenses (such
5
<PAGE>
as legal claims and liabilities and litigation costs and any indemnification
related thereto) attributable to the Portfolio. The Fund shall allocate the
appropriate portion of the foregoing expenses to the Portfolio.
All expenses of any activity which is primarily intended to result in the
sale of the Fund's shares, and certain other expenses as detailed in the Fund's
Distribution Agreement with Metropolitan Life Insurance Company, are assumed by
the distributor of the Fund's shares.
ARTICLE 3
COMPENSATION OF THE INVESTMENT MANAGER
--------------------------------------
For the services rendered, the facilities furnished and expenses assumed
by the Investment Manager, the Fund shall pay to the Investment Manager at the
end of each calendar month a fee which shall accrue daily at the annual rate
specified by the schedule of fees in the Appendix to this Agreement. The
average daily value of the net assets of the Portfolio shall be determined and
computed in accordance with the description of the method of determination of
net asset value contained in the Prospectus.
ARTICLE 4
LIMITATION OF LIABILITY OF THE INVESTMENT MANAGER
-------------------------------------------------
(a) In the performance of advisory services as provided in Article 1(a),
the Investment Manager shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Fund in connection with any investment
policy or the purchase, sale or redemption of any securities on the
recommendation of the Investment Manager. Nothing herein contained shall be
construed to protect the Investment Manager against any liability to the Fund or
its shareholders to which the Investment Manager shall otherwise be subject by
reason of willful misfeasance,
6
<PAGE>
bad faith, gross negligence in the performance of its duties on behalf of the
Fund, reckless disregard of the Investment Manager's obligations and duties
under this Agreement or the violation of any applicable law.
(b) In the performance of administrative services as provided in Article
1(b) and which the Investment Manager is obligated to perform hereunder, the
Investment Manager shall be liable to the Fund or its shareholders for any
willful or negligent act or omission in the performance of such administrative
services.
ARTICLE 5
ACTIVITIES OF THE INVESTMENT MANAGER
------------------------------------
The services of the Investment Manager under this Agreement are not to be
deemed exclusive, and the Investment Manager shall be free to render similar
services to others so long as its services hereunder are not impaired thereby.
It is understood that directors, officers, employees and shareholders of the
Fund are or may become interested in the Investment Manager, as directors,
officers, employees or policyholders or otherwise and that directors, officers,
employees or policyholders of the Investment Manager are or may become similarly
interested in the Fund, and that the Investment Manager is or may become
interested in the Fund as shareholder or otherwise.
ARTICLE 6
DURATION AND TERMINATION OF THIS AGREEMENT
------------------------------------------
This Agreement shall become effective as of the date first above written and
shall remain in force until May 16, 1999 and thereafter shall continue in
effect, but only so long as such continuance is specifically approved at least
annually by (i) the Board of Directors of the Fund,
7
<PAGE>
or by the vote of a majority of the outstanding shares of the Portfolio, and
(ii) a majority of those directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
This Agreement may be terminated with respect to the Portfolio at any
time, without the payment of any penalty, by the Board of Directors of the Fund,
or by vote of a majority of the outstanding shares of the Portfolio, on sixty
days' written notice to the Investment Manager, or by the Investment Manager on
sixty days' written notice to the Fund. This Agreement shall automatically
terminate in the event of its assignment.
ARTICLE 7
DEFINITIONS
-----------
The terms "assignment," "interested person," and "majority of the
outstanding shares," when used in this Agreement, shall have the respective
meanings specified under the Investment Company Act.
ARTICLE 8
AMENDMENTS OF THIS AGREEMENT
----------------------------
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the Board of Directors of the Fund, to the extent
permitted by the Investment Company Act, or by the vote of a majority of the
outstanding shares of the Portfolio, and (ii) by the vote of a majority of those
directors of the Fund who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such approval.
8
<PAGE>
ARTICLE 9
GOVERNING LAW
-------------
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
9
<PAGE>
METROPOLITAN SERIES FUND, INC.
By:_____________________________
President
Attest:
__________
Secretary
METROPOLITAN LIFE INSURANCE COMPANY
By:_________________________________
Executive Vice-President
Attest:
_______________
Assistant Secretary
10
<PAGE>
APPENDIX
--------
METROPOLITAN SERIES FUND FEE SCHEDULE
-------------------------------------
NEUBERGER&BERMAN PARTNERS MID CAP VALUE PORTFOLIO
-------------------------------------------------
0.700% on the first $100MM
0.675% on the next $250MM
0.650% on the next $500 MM
0.625% on the next $750 MM
0.600% thereafter
of the average daily value of the net assets of the Portfolio
11
<PAGE>
T. ROWE PRICE LARGE CAP GROWTH PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 30th day of October, 1998, by and between Metropolitan
Series Fund, Inc., a Maryland corporation (the "Fund"), and Metropolitan Life
Insurance Company, a New York corporation (the "Investment Manager");
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as a diversified open-end
management investment company and is registered as such under the Investment
Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Fund, a series type of investment company, issues separate
classes (or series) of stock, each of which represents a separate portfolio of
investments;
WHEREAS, the Fund is currently comprised of various portfolios, each of
which pursues its investment objectives through separate investment policies,
and the Fund may add or delete portfolios from time to time;
WHEREAS, the Investment Manager is engaged principally in the business of
insurance and also in rendering advisory services and is registered as an
investment adviser under the Investment Advisers Act of 1940;
WHEREAS, the Investment Manager currently provides investment management
and corporate administrative services to each of the Portfolios pursuant to
separate investment management agreements between the Fund and the Investment
Manager; and
WHEREAS, the Fund desires to enter into a separate investment management
agreement with respect to the T. Rowe Price Large Cap Growth Portfolio of the
Fund with the Investment Manager;
<PAGE>
NOW THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Investment Manager hereby agree as
follows:
ARTICLE 1
DUTIES OF THE INVESTMENT MANAGER
--------------------------------
The Fund hereby employs the Investment Manager to act as the investment
adviser to and investment manager of the T. Rowe Price Large Cap Growth
Portfolio (the "Portfolio") and to manage the investment and reinvestment of the
assets of the Portfolio and to administer its affairs, subject to the
supervision of the Board of Directors of the Fund, for the period and on the
terms and conditions set forth in this Agreement. The Investment Manager hereby
accepts such employment and agrees during such period, at its own expense, to
render the services and to assume the obligations herein set forth for the
compensation provided for herein. The Investment Manager shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
provided or authorized, have no authority to act for or represent the Fund in
any way or otherwise be deemed an agent of the Fund other than in furtherance of
its duties and responsibilities as set forth in this Agreement.
(a) INVESTMENT MANAGEMENT SERVICES. In acting as investment manager to
-------------------------------
the Portfolio, the Investment Manager shall regularly provide the Portfolio with
such investment research, advice and management as the Fund may from time to
time consider necessary for the proper management of the Portfolio and shall
furnish continuously an investment program and shall determine which securities
shall be purchased, sold or exchanged and what portion of the assets of the
Portfolio shall be held in the various securities or other assets, subject
always to any restrictions of the Fund's Articles of Incorporation and By-Laws,
as amended or supplemented
2
<PAGE>
from time to time, the provisions of applicable laws and regulations including
the Investment Company Act, and the statements relating to the Portfolio's
investment objectives, policies and restrictions as the same are set forth in
the prospectus of the Fund then-currently effective under the Securities Act of
1933 (the "Prospectus"). Should the Board of Directors of the Fund at any time,
however, make any definite determination as to investment policy and notify the
Investment Manager thereof, the Investment Manager shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. The Investment
Manager shall take, on behalf of the Fund, all actions which it deems necessary
to implement the investment policies of the Portfolio, determined as provided
above, and in particular to place all orders for the purchase or sale of
portfolio securities for the Portfolio with brokers or dealers selected by the
Investment Manager.
In connection with the selection of such brokers or dealers and the
placing of such orders, the Investment Manager is directed at all times to
follow the policies of the Fund as set forth in the Prospectus. Nothing herein
shall preclude the "bunching" of orders for the sale or purchase of portfolio
securities with the other Portfolios or with other accounts managed by the
Investment Manager or the Investment Manager's general account and separate
accounts. The Investment Manager shall not favor any account over any other and
any purchase or sale orders executed contemporaneously shall be allocated in a
manner it deems equitable among the accounts involved and at a price which is
approximately averaged.
(b) ADMINISTRATIVE SERVICES. In addition to the performance of investment
-----------------------
advisory services, the Investment Manager shall perform administrative services
in connection with the management of the Portfolio. In this connection, the
Investment Manager agrees (i) to
3
<PAGE>
assist in managing all aspects of the Fund's operations relating to the
Portfolio, including the coordination of all matters relating to the functions
of the custodian, transfer agent, other shareholder service agents, accountants,
attorneys and other parties performing services or operational functions for the
Fund, (ii) to provide the Fund, at the Investment Manager's expense, with
services of persons competent to perform such professional, administrative and
clerical functions as are necessary in order to provide effective administration
of the Portfolio, including duties in connection with shareholder relations,
reports, redemption requests and account adjustments and the maintenance of the
books and records required of the Fund, and (iii) to provide the Fund, at the
Investment Manager's expense, with adequate office space and related services
necessary for its operations as contemplated in this Agreement. In performing
such administrative services, the Investment Manager shall comply with all
provisions of the Fund's Articles of Incorporation and By-Laws, with all laws
and regulations to which the Fund may be subject and with all directions of the
Fund's Board of Directors.
The Investment Manager shall supply the Board of Directors and officers of
the Fund with all statistical information regarding investments which is
reasonably required by them and reasonably available to the Investment Manager.
(c) SUB-INVESTMENT MANAGER. Notwithstanding any other provision of this
----------------------
Agreement, the Fund and the Investment Manager may agree to the employment of a
Sub-Investment Manager to the Fund for the purpose of providing investment
management services with respect to the Portfolio, provided that the
compensation to be paid to such Sub-Investment Manager shall be the sole
responsibility of the Investment Manager and the duties and responsibilities of
the Sub-Investment Manager shall be as set forth in a
4
<PAGE>
sub-investment management agreement among the Investment Manager, the Sub-
Investment Manager and the Fund on behalf of the Portfolio.
ARTICLE 2
ALLOCATION OF CHARGES AND EXPENSES
----------------------------------
(a) THE INVESTMENT MANAGER. In addition to the compensation paid to any
-----------------------
Sub-Investment Manager as set forth in Article 1 above, the Investment Manager
shall pay the organization costs of the Fund relating to the Portfolio. The
Investment Manager also assumes expenses of the Fund relating to maintaining the
staff and personnel, and providing the equipment, office space and facilities,
necessary to perform its obligations under this Agreement.
(b) THE FUND. The Fund assumes and shall pay (or cause to be paid) all
--------
other Fund expenses, including but not limited to the following expenses: the
fee referred to in Article 3 below; interest and any other costs related to
borrowings by the Fund attributable to the Portfolio; taxes payable by the Fund
and attributable to the Portfolio; brokerage costs and other direct costs of
effecting portfolio transactions (including any costs directly related to the
acquisition, disposition, lending or borrowing of portfolio investments) on
behalf of the Portfolio; the compensation of the directors and officers of the
Fund who are not actively employed by the Investment Manager; custodian,
registration and transfer agent fees; fees of outside counsel to and of
independent auditors of the Fund selected by the Board of Directors; expenses of
printing and mailing to existing shareholders of registration statements,
prospectuses, reports, notices and proxy solicitation materials of the Fund; all
other expenses incidental to holding meetings of the Fund's shareholders;
insurance premiums for fidelity coverage and errors and omissions
insurance; and extraordinary or non-recurring expenses (such
5
<PAGE>
as legal claims and liabilities and litigation costs and any indemnification
related thereto) attributable to the Portfolio. The Fund shall allocate the
appropriate portion of the foregoing expenses to the Portfolio.
All expenses of any activity which is primarily intended to result in the
sale of the Fund's shares, and certain other expenses as detailed in the Fund's
Distribution Agreement with Metropolitan Life Insurance Company, are assumed by
the distributor of the Fund's shares.
ARTICLE 3
COMPENSATION OF THE INVESTMENT MANAGER
--------------------------------------
For the services rendered, the facilities furnished and expenses assumed
by the Investment Manager, the Fund shall pay to the Investment Manager at the
end of each calendar month a fee which shall accrue daily at the annual rate
specified by the schedule of fees in the Appendix to this Agreement. The
average daily value of the net assets of the Portfolio shall be determined and
computed in accordance with the description of the method of determination of
net asset value contained in the Prospectus.
ARTICLE 4
LIMITATION OF LIABILITY OF THE INVESTMENT MANAGER
-------------------------------------------------
(a) In the performance of advisory services as provided in Article 1(a),
the Investment Manager shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Fund in connection with any investment
policy or the purchase, sale or redemption of any securities on the
recommendation of the Investment Manager. Nothing herein contained shall be
construed to protect the Investment Manager against any liability to the Fund or
its shareholders to which the Investment Manager shall otherwise be subject by
reason of willful misfeasance,
6
<PAGE>
bad faith, gross negligence in the performance of its duties on behalf of the
Fund, reckless disregard of the Investment Manager's obligations and duties
under this Agreement or the violation of any applicable law.
(b) In the performance of administrative services as provided in Article
1(b) and which the Investment Manager is obligated to perform hereunder, the
Investment Manager shall be liable to the Fund or its shareholders for any
willful or negligent act or omission in the performance of such administrative
services.
ARTICLE 5
ACTIVITIES OF THE INVESTMENT MANAGER
------------------------------------
The services of the Investment Manager under this Agreement are not to be
deemed exclusive, and the Investment Manager shall be free to render similar
services to others so long as its services hereunder are not impaired thereby.
It is understood that directors, officers, employees and shareholders of the
Fund are or may become interested in the Investment Manager, as directors,
officers, employees or policyholders or otherwise and that directors, officers,
employees or policyholders of the Investment Manager are or may become similarly
interested in the Fund, and that the Investment Manager is or may become
interested in the Fund as shareholder or otherwise.
ARTICLE 6
DURATION AND TERMINATION OF THIS AGREEMENT
------------------------------------------
This Agreement shall become effective as of the date first above written and
shall remain in force until May 16, 1999 and thereafter shall continue in
effect, but only so long as such continuance is specifically approved at least
annually by (i) the Board of Directors of the Fund,
7
<PAGE>
or by the vote of a majority of the outstanding shares of the Portfolio, and
(ii) a majority of those directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
This Agreement may be terminated with respect to the Portfolio at any
time, without the payment of any penalty, by the Board of Directors of the Fund,
or by vote of a majority of the outstanding shares of the Portfolio, on sixty
days' written notice to the Investment Manager, or by the Investment Manager on
sixty days' written notice to the Fund. This Agreement shall automatically
terminate in the event of its assignment.
ARTICLE 7
DEFINITIONS
-----------
The terms "assignment," "interested person," and "majority of the
outstanding shares," when used in this Agreement, shall have the respective
meanings specified under the Investment Company Act.
ARTICLE 8
AMENDMENTS OF THIS AGREEMENT
----------------------------
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the Board of Directors of the Fund, to the extent
permitted by the Investment Company Act, or by the vote of a majority of the
outstanding shares of the Portfolio, and (ii) by the vote of a majority of those
directors of the Fund who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such approval.
8
<PAGE>
ARTICLE 9
GOVERNING LAW
-------------
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
9
<PAGE>
METROPOLITAN SERIES FUND, INC.
By:_____________________________
President
Attest:
__________
Secretary
METROPOLITAN LIFE INSURANCE COMPANY
By:_________________________________
Executive Vice-President
Attest:
_______________
Assistant Secretary
10
<PAGE>
APPENDIX
--------
METROPOLITAN SERIES FUND FEE SCHEDULE
-------------------------------------
T. ROWE PRICE LARGE CAP GROWTH PORTFOLIO
----------------------------------------
0.700% on the first $50MM
0.600% thereafter
of the average daily value of the net assets of the Portfolio
11
<PAGE>
HARRIS OAKMARK LARGE CAP VALUE PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 30th day of October, 1998, by and between Metropolitan
Series Fund, Inc., a Maryland corporation (the "Fund"), and Metropolitan Life
Insurance Company, a New York corporation (the "Investment Manager");
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as a diversified open-end
management investment company and is registered as such under the Investment
Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Fund, a series type of investment company, issues separate
classes (or series) of stock, each of which represents a separate portfolio of
investments;
WHEREAS, the Fund is currently comprised of various portfolios, each of
which pursues its investment objectives through separate investment policies,
and the Fund may add or delete portfolios from time to time;
WHEREAS, the Investment Manager is engaged principally in the business of
insurance and also in rendering advisory services and is registered as an
investment adviser under the Investment Advisers Act of 1940;
WHEREAS, the Investment Manager currently provides investment management
and corporate administrative services to each of the Portfolios pursuant to
separate investment management agreements between the Fund and the Investment
Manager; and
WHEREAS, the Fund desires to enter into a separate investment management
agreement with respect to the Harris Oakmark Large Cap Value Portfolio of the
Fund with the Investment Manager;
<PAGE>
NOW THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Investment Manager hereby agree as
follows:
ARTICLE 1
DUTIES OF THE INVESTMENT MANAGER
--------------------------------
The Fund hereby employs the Investment Manager to act as the investment
adviser to and investment manager of the Harris Oakmark Large Cap Value
Portfolio (the "Portfolio") and to manage the investment and reinvestment of the
assets of the Portfolio and to administer its affairs, subject to the
supervision of the Board of Directors of the Fund, for the period and on the
terms and conditions set forth in this Agreement. The Investment Manager hereby
accepts such employment and agrees during such period, at its own expense, to
render the services and to assume the obligations herein set forth for the
compensation provided for herein. The Investment Manager shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
provided or authorized, have no authority to act for or represent the Fund in
any way or otherwise be deemed an agent of the Fund other than in furtherance of
its duties and responsibilities as set forth in this Agreement.
(a) INVESTMENT MANAGEMENT SERVICES. In acting as investment manager to
-------------------------------
the Portfolio, the Investment Manager shall regularly provide the Portfolio with
such investment research, advice and management as the Fund may from time to
time consider necessary for the proper management of the Portfolio and shall
furnish continuously an investment program and shall determine which securities
shall be purchased, sold or exchanged and what portion of the assets of the
Portfolio shall be held in the various securities or other assets, subject
always to any
2
<PAGE>
restrictions of the Fund's Articles of Incorporation and By-Laws, as amended or
supplemented from time to time, the provisions of applicable laws and
regulations including the Investment Company Act, and the statements relating to
the Portfolio's investment objectives, policies and restrictions as the same are
set forth in the prospectus of the Fund then-currently effective under the
Securities Act of 1933 (the "Prospectus"). Should the Board of Directors of the
Fund at any time, however, make any definite determination as to investment
policy and notify the Investment Manager thereof, the Investment Manager shall
be bound by such determination for the period, if any, specified in such notice
or until similarly notified that such determination has been revoked. The
Investment Manager shall take, on behalf of the Fund, all actions which it deems
necessary to implement the investment policies of the Portfolio, determined as
provided above, and in particular to place all orders for the purchase or sale
of portfolio securities for the Portfolio with brokers or dealers selected by
the Investment Manager.
In connection with the selection of such brokers or dealers and the
placing of such orders, the Investment Manager is directed at all times to
follow the policies of the Fund as set forth in the Prospectus. Nothing herein
shall preclude the "bunching" of orders for the sale or purchase of portfolio
securities with the other Portfolios or with other accounts managed by the
Investment Manager or the Investment Manager's general account and separate
accounts. The Investment Manager shall not favor any account over any other and
any purchase or sale orders executed contemporaneously shall be allocated in a
manner it deems equitable among the accounts involved and at a price which is
approximately averaged.
(b) ADMINISTRATIVE SERVICES. In addition to the performance of investment
-----------------------
advisory services, the Investment Manager shall perform administrative services
in connection
3
<PAGE>
with the management of the Portfolio. In this connection, the Investment Manager
agrees (i) to assist in managing all aspects of the Fund's operations relating
to the Portfolio, including the coordination of all matters relating to the
functions of the custodian, transfer agent, other shareholder service agents,
accountants, attorneys and other parties performing services or operational
functions for the Fund, (ii) to provide the Fund, at the Investment Manager's
expense, with services of persons competent to perform such professional,
administrative and clerical functions as are necessary in order to provide
effective administration of the Portfolio, including duties in connection with
shareholder relations, reports, redemption requests and account adjustments and
the maintenance of the books and records required of the Fund, and (iii) to
provide the Fund, at the Investment Manager's expense, with adequate office
space and related services necessary for its operations as contemplated in this
Agreement. In performing such administrative services, the Investment Manager
shall comply with all provisions of the Fund's Articles of Incorporation and By-
Laws, with all laws and regulations to which the Fund may be subject and with
all directions of the Fund's Board of Directors.
The Investment Manager shall supply the Board of Directors and officers of
the Fund with all statistical information regarding investments which is
reasonably required by them and reasonably available to the Investment Manager.
(c) SUB-INVESTMENT MANAGER. Notwithstanding any other provision of this
----------------------
Agreement, the Fund and the Investment Manager may agree to the employment of a
Sub-Investment Manager to the Fund for the purpose of providing investment
management services with respect to the Portfolio, provided that the
compensation to be paid to such Sub-Investment Manager shall be the sole
responsibility of the Investment Manager and the
4
<PAGE>
duties and responsibilities of the Sub-Investment Manager shall be as set forth
in a sub-investment management agreement among the Investment Manager, the Sub-
Investment Manager and the Fund on behalf of the Portfolio.
ARTICLE 2
ALLOCATION OF CHARGES AND EXPENSES
----------------------------------
(a) THE INVESTMENT MANAGER. In addition to the compensation paid to any
-----------------------
Sub-Investment Manager as set forth in Article 1 above, the Investment Manager
shall pay the organization costs of the Fund relating to the Portfolio. The
Investment Manager also assumes expenses of the Fund relating to maintaining the
staff and personnel, and providing the equipment, office space and facilities,
necessary to perform its obligations under this Agreement.
(b) THE FUND. The Fund assumes and shall pay (or cause to be paid) all
--------
other Fund expenses, including but not limited to the following expenses: the
fee referred to in Article 3 below; interest and any other costs related to
borrowings by the Fund attributable to the Portfolio; taxes payable by the Fund
and attributable to the Portfolio; brokerage costs and other direct costs of
effecting portfolio transactions (including any costs directly related to the
acquisition, disposition, lending or borrowing of portfolio investments) on
behalf of the Portfolio; the compensation of the directors and officers of the
Fund who are not actively employed by the Investment Manager; custodian,
registration and transfer agent fees; fees of outside counsel to and of
independent auditors of the Fund selected by the Board of Directors; expenses of
printing and mailing to existing shareholders of registration statements,
prospectuses, reports, notices and proxy solicitation materials of the Fund; all
other expenses incidental to holding meetings of the Fund's shareholders;
insurance premiums for fidelity
5
<PAGE>
coverage and errors and omissions insurance; and extraordinary or non-recurring
expenses (such as legal claims and liabilities and litigation costs and any
indemnification related thereto) attributable to the Portfolio. The Fund shall
allocate the appropriate portion of the foregoing expenses to the Portfolio.
All expenses of any activity which is primarily intended to result in the
sale of the Fund's shares, and certain other expenses as detailed in the Fund's
Distribution Agreement with Metropolitan Life Insurance Company, are assumed by
the distributor of the Fund's shares.
ARTICLE 3
COMPENSATION OF THE INVESTMENT MANAGER
--------------------------------------
For the services rendered, the facilities furnished and expenses assumed
by the Investment Manager, the Fund shall pay to the Investment Manager at the
end of each calendar month a fee which shall accrue daily at the annual rate
specified by the schedule of fees in the Appendix to this Agreement. The
average daily value of the net assets of the Portfolio shall be determined and
computed in accordance with the description of the method of determination of
net asset value contained in the Prospectus.
ARTICLE 4
LIMITATION OF LIABILITY OF THE INVESTMENT MANAGER
-------------------------------------------------
(a) In the performance of advisory services as provided in Article 1(a),
the Investment Manager shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Fund in connection with any investment
policy or the purchase, sale or redemption of any securities on the
recommendation of the Investment Manager. Nothing herein contained shall be
construed to protect the Investment Manager against any liability to the Fund or
its shareholders
6
<PAGE>
to which the Investment Manager shall otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence in the performance of its duties on
behalf of the Fund, reckless disregard of the Investment Manager's obligations
and duties under this Agreement or the violation of any applicable law.
(b) In the performance of administrative services as provided in Article
1(b) and which the Investment Manager is obligated to perform hereunder, the
Investment Manager shall be liable to the Fund or its shareholders for any
willful or negligent act or omission in the performance of such administrative
services.
ARTICLE 5
ACTIVITIES OF THE INVESTMENT MANAGER
------------------------------------
The services of the Investment Manager under this Agreement are not to be
deemed exclusive, and the Investment Manager shall be free to render similar
services to others so long as its services hereunder are not impaired thereby.
It is understood that directors, officers, employees and shareholders of the
Fund are or may become interested in the Investment Manager, as directors,
officers, employees or policyholders or otherwise and that directors, officers,
employees or policyholders of the Investment Manager are or may become similarly
interested in the Fund, and that the Investment Manager is or may become
interested in the Fund as shareholder or otherwise.
ARTICLE 6
DURATION AND TERMINATION OF THIS AGREEMENT
------------------------------------------
This Agreement shall become effective as of the date first above written and
shall remain in force until May 16, 1999 and thereafter shall continue in
effect, but only so long as such
7
<PAGE>
continuance is specifically approved at least annually by (i) the Board of
Directors of the Fund, or by the vote of a majority of the outstanding shares of
the Portfolio, and (ii) a majority of those directors who are not parties to
this Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval.
This Agreement may be terminated with respect to the Portfolio at any
time, without the payment of any penalty, by the Board of Directors of the Fund,
or by vote of a majority of the outstanding shares of the Portfolio, on sixty
days' written notice to the Investment Manager, or by the Investment Manager on
sixty days' written notice to the Fund. This Agreement shall automatically
terminate in the event of its assignment.
ARTICLE 7
DEFINITIONS
-----------
The terms "assignment," "interested person," and "majority of the
outstanding shares," when used in this Agreement, shall have the respective
meanings specified under the Investment Company Act.
ARTICLE 8
AMENDMENTS OF THIS AGREEMENT
----------------------------
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the Board of Directors of the Fund, to the extent
permitted by the Investment Company Act, or by the vote of a majority of the
outstanding shares of the Portfolio, and (ii) by the vote of a majority of those
directors of the Fund who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such approval.
8
<PAGE>
ARTICLE 9
GOVERNING LAW
-------------
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
9
<PAGE>
METROPOLITAN SERIES FUND, INC.
By:_____________________________
President
Attest:
__________
Secretary
METROPOLITAN LIFE INSURANCE COMPANY
By:_________________________________
Executive Vice-President
Attest:
_______________
Assistant Secretary
10
<PAGE>
APPENDIX
--------
METROPOLITAN SERIES FUND FEE SCHEDULE
-------------------------------------
HARRIS OAKMARK LARGE CAP VALUE PORTFOLIO
----------------------------------------
0.750% on the first $250MM
0.700% thereafter
of the average daily value of the net assets of the Portfolio
11
<PAGE>
LEHMAN BROTHERS AGGREGATE BOND INDEX
PORTFOLIO INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 30th day of October, 1998, by and between Metropolitan
Series Fund, Inc., a Maryland corporation (the "Fund"), and Metropolitan Life
Insurance Company, a New York corporation (the "Investment Manager");
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as a diversified open-end
management investment company and is registered as such under the Investment
Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Fund, a series type of investment company, issues separate
classes (or series) of stock, each of which represents a separate portfolio of
investments;
WHEREAS, the Fund is currently comprised of various portfolios, each of
which pursues its investment objectives through separate investment policies,
and the Fund may add or delete portfolios from time to time;
WHEREAS, the Investment Manager is engaged principally in the business of
insurance and also in rendering advisory services and is registered as an
investment adviser under the Investment Advisers Act of 1940;
WHEREAS, the Investment Manager currently provides investment management
and corporate administrative services to each of the Portfolios pursuant to
separate investment management agreements between the Fund and the Investment
Manager; and
WHEREAS, the Fund desires to enter into a separate investment management
agreement with respect to the Lehman Brothers Aggregate Bond Index Portfolio of
the Fund with the Investment Manager;
<PAGE>
NOW THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Investment Manager hereby agree as
follows:
ARTICLE 1
DUTIES OF THE INVESTMENT MANAGER
--------------------------------
The Fund hereby employs the Investment Manager to act as the investment
adviser to and investment manager of the Lehman Brothers Aggregate Bond Index
Portfolio (the "Portfolio") and to manage the investment and reinvestment of the
assets of the Portfolio and to administer its affairs, subject to the
supervision of the Board of Directors of the Fund, for the period and on the
terms and conditions set forth in this Agreement. The Investment Manager hereby
accepts such employment and agrees during such period, at its own expense, to
render the services and to assume the obligations herein set forth for the
compensation provided for herein. The Investment Manager shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
provided or authorized, have no authority to act for or represent the Fund in
any way or otherwise be deemed an agent of the Fund other than in furtherance of
its duties and responsibilities as set forth in this Agreement.
(a) INVESTMENT MANAGEMENT SERVICES. In acting as investment manager to
-------------------------------
the Portfolio, the Investment Manager shall regularly provide the Portfolio with
such investment research, advice and management as the Fund may from time to
time consider necessary for the proper management of the Portfolio and shall
furnish continuously an investment program and shall determine which securities
shall be purchased, sold or exchanged and what portion of the assets of the
Portfolio shall be held in the various securities or other assets, subject
always to any restrictions of the Fund's Articles of Incorporation and By-Laws,
as amended or supplemented
2
<PAGE>
from time to time, the provisions of applicable laws and regulations including
the Investment Company Act, and the statements relating to the Portfolio's
investment objectives, policies and restrictions as the same are set forth in
the prospectus of the Fund then-currently effective under the Securities Act of
1933 (the "Prospectus"). Should the Board of Directors of the Fund at any time,
however, make any definite determination as to investment policy and notify the
Investment Manager thereof, the Investment Manager shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. The Investment
Manager shall take, on behalf of the Fund, all actions which it deems necessary
to implement the investment policies of the Portfolio, determined as provided
above, and in particular to place all orders for the purchase or sale of
portfolio securities for the Portfolio with brokers or dealers selected by the
Investment Manager.
In connection with the selection of such brokers or dealers and the
placing of such orders, the Investment Manager is directed at all times to
follow the policies of the Fund as set forth in the Prospectus. Nothing herein
shall preclude the "bunching" of orders for the sale or purchase of portfolio
securities with the other Portfolios or with other accounts managed by the
Investment Manager or the Investment Manager's general account and separate
accounts. The Investment Manager shall not favor any account over any other and
any purchase or sale orders executed contemporaneously shall be allocated in a
manner it deems equitable among the accounts involved and at a price which is
approximately averaged.
(b) ADMINISTRATIVE SERVICES. In addition to the performance of investment
-----------------------
advisory services, the Investment Manager shall perform administrative services
in connection
with the management of the Portfolio. In this connection, the Investment Manager
agrees (i) to
3
<PAGE>
assist in managing all aspects of the Fund's operations relating to the
Portfolio, including the coordination of all matters relating to the functions
of the custodian, transfer agent, other shareholder service agents, accountants,
attorneys and other parties performing services or operational functions for the
Fund, (ii) to provide the Fund, at the Investment Manager's expense, with
services of persons competent to perform such professional, administrative and
clerical functions as are necessary in order to provide effective administration
of the Portfolio, including duties in connection with shareholder relations,
reports, redemption requests and account adjustments and the maintenance of the
books and records required of the Fund, and (iii) to provide the Fund, at the
Investment Manager's expense, with adequate office space and related services
necessary for its operations as contemplated in this Agreement. In performing
such administrative services, the Investment Manager shall comply with all
provisions of the Fund's Articles of Incorporation and By-Laws, with all laws
and regulations to which the Fund may be subject and with all directions of the
Fund's Board of Directors.
The Investment Manager shall supply the Board of Directors and officers of
the Fund with all statistical information regarding investments which is
reasonably required by them and reasonably available to the Investment Manager.
(c) SUB-INVESTMENT MANAGER. Notwithstanding any other provision of this
----------------------
Agreement, the Fund and the Investment Manager may agree to the employment of a
Sub-Investment Manager to the Fund for the purpose of providing investment
management services with respect to the Portfolio, provided that the
compensation to be paid to such Sub-Investment Manager shall be the sole
responsibility of the Investment Manager and the duties and responsibilities of
the Sub-Investment Manager shall be as set forth in a
4
<PAGE>
sub-investment management agreement among the Investment Manager, the Sub-
Investment Manager and the Fund on behalf of the Portfolio.
ARTICLE 2
ALLOCATION OF CHARGES AND EXPENSES
----------------------------------
(a) THE INVESTMENT MANAGER. In addition to the compensation paid to any
-----------------------
Sub-Investment Manager as set forth in Article 1 above, the Investment Manager
shall pay the organization costs of the Fund relating to the Portfolio. The
Investment Manager also assumes expenses of the Fund relating to maintaining the
staff and personnel, and providing the equipment, office space and facilities,
necessary to perform its obligations under this Agreement.
(b) THE FUND. The Fund assumes and shall pay (or cause to be paid) all
--------
other Fund expenses, including but not limited to the following expenses: the
fee referred to in Article 3 below; interest and any other costs related to
borrowings by the Fund attributable to the Portfolio; taxes payable by the Fund
and attributable to the Portfolio; brokerage costs and other direct costs of
effecting portfolio transactions (including any costs directly related to the
acquisition, disposition, lending or borrowing of portfolio investments) on
behalf of the Portfolio; the compensation of the directors and officers of the
Fund who are not actively employed by the Investment Manager; custodian,
registration and transfer agent fees; fees of outside counsel to and of
independent auditors of the Fund selected by the Board of Directors; expenses of
printing and mailing to existing shareholders of registration statements,
prospectuses, reports, notices and proxy solicitation materials of the Fund; all
other expenses incidental to holding meetings of the Fund's shareholders;
insurance premiums for fidelity coverage and errors and omissions insurance; and
extraordinary or non-recurring expenses (such
5
<PAGE>
as legal claims and liabilities and litigation costs and any indemnification
related thereto) attributable to the Portfolio. The Fund shall allocate the
appropriate portion of the foregoing expenses to the Portfolio.
All expenses of any activity which is primarily intended to result in the
sale of the Fund's shares, and certain other expenses as detailed in the Fund's
Distribution Agreement with Metropolitan Life Insurance Company, are assumed by
the distributor of the Fund's shares.
ARTICLE 3
COMPENSATION OF THE INVESTMENT MANAGER
--------------------------------------
For the services rendered, the facilities furnished and expenses assumed
by the Investment Manager, the Fund shall pay to the Investment Manager at the
end of each calendar month a fee which shall accrue daily at the annual rate
specified by the schedule of fees in the Appendix to this Agreement. The
average daily value of the net assets of the Portfolio shall be determined and
computed in accordance with the description of the method of determination of
net asset value contained in the Prospectus.
ARTICLE 4
LIMITATION OF LIABILITY OF THE INVESTMENT MANAGER
-------------------------------------------------
(a) In the performance of advisory services as provided in Article 1(a),
the Investment Manager shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Fund in connection with any investment
policy or the purchase, sale or redemption of any securities on the
recommendation of the Investment Manager. Nothing herein contained shall be
construed to protect the Investment Manager against any liability to the Fund or
its shareholders to which the Investment Manager shall otherwise be subject by
reason of willful misfeasance,
6
<PAGE>
bad faith, gross negligence in the performance of its duties on behalf of the
Fund, reckless disregard of the Investment Manager's obligations and duties
under this Agreement or the violation of any applicable law.
(b) In the performance of administrative services as provided in Article
1(b) and which the Investment Manager is obligated to perform hereunder, the
Investment Manager shall be liable to the Fund or its shareholders for any
willful or negligent act or omission in the performance of such administrative
services.
ARTICLE 5
ACTIVITIES OF THE INVESTMENT MANAGER
------------------------------------
The services of the Investment Manager under this Agreement are not to be
deemed exclusive, and the Investment Manager shall be free to render similar
services to others so long as its services hereunder are not impaired thereby.
It is understood that directors, officers, employees and shareholders of the
Fund are or may become interested in the Investment Manager, as directors,
officers, employees or policyholders or otherwise and that directors, officers,
employees or policyholders of the Investment Manager are or may become similarly
interested in the Fund, and that the Investment Manager is or may become
interested in the Fund as shareholder or otherwise.
ARTICLE 6
DURATION AND TERMINATION OF THIS AGREEMENT
------------------------------------------
This Agreement shall become effective as of the date first above written and
shall remain in force until May 16, 1999 and thereafter shall continue in
effect, but only so long as such continuance is specifically approved at least
annually by (i) the Board of Directors of the Fund,
7
<PAGE>
or by the vote of a majority of the outstanding shares of the Portfolio, and
(ii) a majority of those directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
This Agreement may be terminated with respect to the Portfolio at any
time, without the payment of any penalty, by the Board of Directors of the Fund,
or by vote of a majority of the outstanding shares of the Portfolio, on sixty
days' written notice to the Investment Manager, or by the Investment Manager on
sixty days' written notice to the Fund. This Agreement shall automatically
terminate in the event of its assignment.
ARTICLE 7
DEFINITIONS
-----------
The terms "assignment," "interested person," and "majority of the
outstanding shares," when used in this Agreement, shall have the respective
meanings specified under the Investment Company Act.
ARTICLE 8
AMENDMENTS OF THIS AGREEMENT
----------------------------
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the Board of Directors of the Fund, to the extent
permitted by the Investment Company Act, or by the vote of a majority of the
outstanding shares of the Portfolio, and (ii) by the vote of a majority of those
directors of the Fund who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such approval.
8
<PAGE>
ARTICLE 9
GOVERNING LAW
-------------
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
9
<PAGE>
METROPOLITAN SERIES FUND, INC.
By:_____________________________
President
Attest:
__________
Secretary
METROPOLITAN LIFE INSURANCE COMPANY
By:_________________________________
Executive Vice-President
Attest:
_______________
Assistant Secretary
10
<PAGE>
APPENDIX
--------
METROPOLITAN SERIES FUND FEE SCHEDULE
-------------------------------------
LEHMAN BROTHERS AGGREGATE BOND INDEX PORTFOLIO
----------------------------------------------
0.250% on all assets
of the average daily value of the net assets of the Portfolio
11
<PAGE>
RUSSELL 2000 INDEX PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 30th day of October, 1998, by and between Metropolitan
Series Fund, Inc., a Maryland corporation (the "Fund"), and Metropolitan Life
Insurance Company, a New York corporation (the "Investment Manager");
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as a diversified open-end
management investment company and is registered as such under the Investment
Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Fund, a series type of investment company, issues separate
classes (or series) of stock, each of which represents a separate portfolio of
investments;
WHEREAS, the Fund is currently comprised of various portfolios, each of
which pursues its investment objectives through separate investment policies,
and the Fund may add or delete portfolios from time to time;
WHEREAS, the Investment Manager is engaged principally in the business of
insurance and also in rendering advisory services and is registered as an
investment adviser under the Investment Advisers Act of 1940;
WHEREAS, the Investment Manager currently provides investment management
and corporate administrative services to each of the Portfolios pursuant to
separate investment management agreements between the Fund and the Investment
Manager; and
WHEREAS, the Fund desires to enter into a separate investment management
agreement with respect to the Russell 2000 Index Portfolio of the Fund with the
Investment Manager;
<PAGE>
NOW THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Investment Manager hereby agree as
follows:
ARTICLE 1
DUTIES OF THE INVESTMENT MANAGER
--------------------------------
The Fund hereby employs the Investment Manager to act as the investment
adviser to and investment manager of the Russell 2000 Index Portfolio (the
"Portfolio") and to manage the investment and reinvestment of the assets of the
Portfolio and to administer its affairs, subject to the supervision of the Board
of Directors of the Fund, for the period and on the terms and conditions set
forth in this Agreement. The Investment Manager hereby accepts such employment
and agrees during such period, at its own expense, to render the services and to
assume the obligations herein set forth for the compensation provided for
herein. The Investment Manager shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise provided or authorized, have
no authority to act for or represent the Fund in any way or otherwise be deemed
an agent of the Fund other than in furtherance of its duties and
responsibilities as set forth in this Agreement.
(a) INVESTMENT MANAGEMENT SERVICES. In acting as investment manager to
-------------------------------
the Portfolio, the Investment Manager shall regularly provide the Portfolio with
such investment research, advice and management as the Fund may from time to
time consider necessary for the proper management of the Portfolio and shall
furnish continuously an investment program and shall determine which securities
shall be purchased, sold or exchanged and what portion of the assets of the
Portfolio shall be held in the various securities or other assets, subject
always to any
restrictions of the Fund's Articles of Incorporation and By-Laws, as amended or
supplemented
2
<PAGE>
from time to time, the provisions of applicable laws and regulations including
the Investment Company Act, and the statements relating to the Portfolio's
investment objectives, policies and restrictions as the same are set forth in
the prospectus of the Fund then-currently effective under the Securities Act of
1933 (the "Prospectus"). Should the Board of Directors of the Fund at any time,
however, make any definite determination as to investment policy and notify the
Investment Manager thereof, the Investment Manager shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. The Investment
Manager shall take, on behalf of the Fund, all actions which it deems necessary
to implement the investment policies of the Portfolio, determined as provided
above, and in particular to place all orders for the purchase or sale of
portfolio securities for the Portfolio with brokers or dealers selected by the
Investment Manager.
In connection with the selection of such brokers or dealers and the
placing of such orders, the Investment Manager is directed at all times to
follow the policies of the Fund as set forth in the Prospectus. Nothing herein
shall preclude the "bunching" of orders for the sale or purchase of portfolio
securities with the other Portfolios or with other accounts managed by the
Investment Manager or the Investment Manager's general account and separate
accounts. The Investment Manager shall not favor any account over any other and
any purchase or sale orders executed contemporaneously shall be allocated in a
manner it deems equitable among the accounts involved and at a price which is
approximately averaged.
(b) ADMINISTRATIVE SERVICES. In addition to the performance of investment
-----------------------
advisory services, the Investment Manager shall perform administrative services
in connection with the management of the Portfolio. In this connection, the
Investment Manager agrees (i) to
3
<PAGE>
assist in managing all aspects of the Fund's operations relating to the
Portfolio, including the coordination of all matters relating to the functions
of the custodian, transfer agent, other shareholder service agents, accountants,
attorneys and other parties performing services or operational functions for the
Fund, (ii) to provide the Fund, at the Investment Manager's expense, with
services of persons competent to perform such professional, administrative and
clerical functions as are necessary in order to provide effective administration
of the Portfolio, including duties in connection with shareholder relations,
reports, redemption requests and account adjustments and the maintenance of the
books and records required of the Fund, and (iii) to provide the Fund, at the
Investment Manager's expense, with adequate office space and related services
necessary for its operations as contemplated in this Agreement. In performing
such administrative services, the Investment Manager shall comply with all
provisions of the Fund's Articles of Incorporation and By-Laws, with all laws
and regulations to which the Fund may be subject and with all directions of the
Fund's Board of Directors.
The Investment Manager shall supply the Board of Directors and officers of
the Fund with all statistical information regarding investments which is
reasonably required by them and reasonably available to the Investment Manager.
(c) SUB-INVESTMENT MANAGER. Notwithstanding any other provision of this
----------------------
Agreement, the Fund and the Investment Manager may agree to the employment of a
Sub-Investment Manager to the Fund for the purpose of providing investment
management services with respect to the Portfolio, provided that the
compensation to be paid to such Sub-Investment Manager shall be the sole
responsibility of the Investment Manager and the
duties and responsibilities of the
4
<PAGE>
Sub-Investment Manager shall be as set forth in a sub-investment management
agreement among the Investment Manager, the Sub-Investment Manager and the Fund
on behalf of the Portfolio.
ARTICLE 2
ALLOCATION OF CHARGES AND EXPENSES
----------------------------------
(a) THE INVESTMENT MANAGER. In addition to the compensation paid to any
-----------------------
Sub-Investment Manager as set forth in Article 1 above, the Investment Manager
shall pay the organization costs of the Fund relating to the Portfolio. The
Investment Manager also assumes expenses of the Fund relating to maintaining the
staff and personnel, and providing the equipment, office space and facilities,
necessary to perform its obligations under this Agreement.
(b) THE FUND. The Fund assumes and shall pay (or cause to be paid) all
--------
other Fund expenses, including but not limited to the following expenses: the
fee referred to in Article 3 below; interest and any other costs related to
borrowings by the Fund attributable to the Portfolio; taxes payable by the Fund
and attributable to the Portfolio; brokerage costs and other direct costs of
effecting portfolio transactions (including any costs directly related to the
acquisition, disposition, lending or borrowing of portfolio investments) on
behalf of the Portfolio; the compensation of the directors and officers of the
Fund who are not actively employed by the Investment Manager; custodian,
registration and transfer agent fees; fees of outside counsel to and of
independent auditors of the Fund selected by the Board of Directors; expenses of
printing and mailing to existing shareholders of registration statements,
prospectuses, reports, notices and proxy solicitation materials of the Fund; all
other expenses incidental to holding meetings of the Fund's shareholders;
insurance premiums for fidelity coverage and errors and omissions
insurance; and extraordinary or non-recurring expenses (such
5
<PAGE>
as legal claims and liabilities and litigation costs and any indemnification
related thereto) attributable to the Portfolio. The Fund shall allocate the
appropriate portion of the foregoing expenses to the Portfolio.
All expenses of any activity which is primarily intended to result in the
sale of the Fund's shares, and certain other expenses as detailed in the Fund's
Distribution Agreement with Metropolitan Life Insurance Company, are assumed by
the distributor of the Fund's shares.
ARTICLE 3
COMPENSATION OF THE INVESTMENT MANAGER
--------------------------------------
For the services rendered, the facilities furnished and expenses assumed
by the Investment Manager, the Fund shall pay to the Investment Manager at the
end of each calendar month a fee which shall accrue daily at the annual rate
specified by the schedule of fees in the Appendix to this Agreement. The
average daily value of the net assets of the Portfolio shall be determined and
computed in accordance with the description of the method of determination of
net asset value contained in the Prospectus.
ARTICLE 4
LIMITATION OF LIABILITY OF THE INVESTMENT MANAGER
-------------------------------------------------
(a) In the performance of advisory services as provided in Article 1(a),
the Investment Manager shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Fund in connection with any investment
policy or the purchase, sale or redemption of any securities on the
recommendation of the Investment Manager. Nothing herein contained shall be
construed to protect the Investment Manager against any liability to the Fund or
its shareholders to which the Investment Manager shall otherwise be subject by
reason of willful misfeasance,
6
<PAGE>
bad faith, gross negligence in the performance of its duties on behalf of the
Fund, reckless disregard of the Investment Manager's obligations and duties
under this Agreement or the violation of any applicable law.
(b) In the performance of administrative services as provided in Article
1(b) and which the Investment Manager is obligated to perform hereunder, the
Investment Manager shall be liable to the Fund or its shareholders for any
willful or negligent act or omission in the performance of such administrative
services.
ARTICLE 5
ACTIVITIES OF THE INVESTMENT MANAGER
------------------------------------
The services of the Investment Manager under this Agreement are not to be
deemed exclusive, and the Investment Manager shall be free to render similar
services to others so long as its services hereunder are not impaired thereby.
It is understood that directors, officers, employees and shareholders of the
Fund are or may become interested in the Investment Manager, as directors,
officers, employees or policyholders or otherwise and that directors, officers,
employees or policyholders of the Investment Manager are or may become similarly
interested in the Fund, and that the Investment Manager is or may become
interested in the Fund as shareholder or otherwise.
ARTICLE 6
DURATION AND TERMINATION OF THIS AGREEMENT
------------------------------------------
This Agreement shall become effective as of the date first above written and
shall remain in force until May 16, 1999 and thereafter shall continue in
effect, but only so long as such continuance is specifically approved at least
annually by (i) the Board of Directors of the Fund,
7
<PAGE>
or by the vote of a majority of the outstanding shares of the Portfolio, and
(ii) a majority of those directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
This Agreement may be terminated with respect to the Portfolio at any
time, without the payment of any penalty, by the Board of Directors of the Fund,
or by vote of a majority of the outstanding shares of the Portfolio, on sixty
days' written notice to the Investment Manager, or by the Investment Manager on
sixty days' written notice to the Fund. This Agreement shall automatically
terminate in the event of its assignment.
ARTICLE 7
DEFINITIONS
-----------
The terms "assignment," "interested person," and "majority of the
outstanding shares," when used in this Agreement, shall have the respective
meanings specified under the Investment Company Act.
ARTICLE 8
AMENDMENTS OF THIS AGREEMENT
----------------------------
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the Board of Directors of the Fund, to the extent
permitted by the Investment Company Act, or by the vote of a majority of the
outstanding shares of the Portfolio, and (ii) by the vote of a majority of those
directors of the Fund who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such approval.
8
<PAGE>
ARTICLE 9
GOVERNING LAW
-------------
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
9
<PAGE>
METROPOLITAN SERIES FUND, INC.
By:_____________________________
President
Attest:
__________
Secretary
METROPOLITAN LIFE INSURANCE COMPANY
By:_________________________________
Executive Vice-President
Attest:
_______________
Assistant Secretary
10
<PAGE>
APPENDIX
--------
METROPOLITAN SERIES FUND FEE SCHEDULE
-------------------------------------
RUSSELL 2000 INDEX PORTFOLIO
----------------------------
0.250% on all assets
of the average daily value of the net assets of the Portfolio
11
<PAGE>
MORGAN STANLEY EAFE INDEX PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 30th day of October, 1998, by and between Metropolitan
Series Fund, Inc., a Maryland corporation (the "Fund"), and Metropolitan Life
Insurance Company, a New York corporation (the "Investment Manager");
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as a diversified open-end
management investment company and is registered as such under the Investment
Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Fund, a series type of investment company, issues separate
classes (or series) of stock, each of which represents a separate portfolio of
investments;
WHEREAS, the Fund is currently comprised of various portfolios, each of
which pursues its investment objectives through separate investment policies,
and the Fund may add or delete portfolios from time to time;
WHEREAS, the Investment Manager is engaged principally in the business of
insurance and also in rendering advisory services and is registered as an
investment adviser under the Investment Advisers Act of 1940;
WHEREAS, the Investment Manager currently provides investment management
and corporate administrative services to each of the Portfolios pursuant to
separate investment management agreements between the Fund and the Investment
Manager; and
WHEREAS, the Fund desires to enter into a separate investment management
agreement with respect to the Morgan Stanley EAFE Index Portfolio of the Fund
with the Investment Manager;
<PAGE>
NOW THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Investment Manager hereby agree as
follows:
ARTICLE 1
DUTIES OF THE INVESTMENT MANAGER
--------------------------------
The Fund hereby employs the Investment Manager to act as the investment
adviser to and investment manager of the Morgan Stanley EAFE Index Portfolio
(the "Portfolio") and to manage the investment and reinvestment of the assets of
the Portfolio and to administer its affairs, subject to the supervision of the
Board of Directors of the Fund, for the period and on the terms and conditions
set forth in this Agreement. The Investment Manager hereby accepts such
employment and agrees during such period, at its own expense, to render the
services and to assume the obligations herein set forth for the compensation
provided for herein. The Investment Manager shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise provided or
authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund other than in furtherance of its duties
and responsibilities as set forth in this Agreement.
(a) INVESTMENT MANAGEMENT SERVICES. In acting as investment manager to
-------------------------------
the Portfolio, the Investment Manager shall regularly provide the Portfolio with
such investment research, advice and management as the Fund may from time to
time consider necessary for the proper management of the Portfolio and shall
furnish continuously an investment program and shall determine which securities
shall be purchased, sold or exchanged and what portion of the assets of the
Portfolio shall be held in the various securities or other assets, subject
always to any restrictions of the Fund's Articles of Incorporation and By-Laws,
as amended or supplemented
2
<PAGE>
from time to time, the provisions of applicable laws and regulations including
the Investment Company Act, and the statements relating to the Portfolio's
investment objectives, policies and restrictions as the same are set forth in
the prospectus of the Fund then-currently effective under the Securities Act of
1933 (the "Prospectus"). Should the Board of Directors of the Fund at any time,
however, make any definite determination as to investment policy and notify the
Investment Manager thereof, the Investment Manager shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. The Investment
Manager shall take, on behalf of the Fund, all actions which it deems necessary
to implement the investment policies of the Portfolio, determined as provided
above, and in particular to place all orders for the purchase or sale of
portfolio securities for the Portfolio with brokers or dealers selected by the
Investment Manager.
In connection with the selection of such brokers or dealers and the
placing of such orders, the Investment Manager is directed at all times to
follow the policies of the Fund as set forth in the Prospectus. Nothing herein
shall preclude the "bunching" of orders for the sale or purchase of portfolio
securities with the other Portfolios or with other accounts managed by the
Investment Manager or the Investment Manager's general account and separate
accounts. The Investment Manager shall not favor any account over any other and
any purchase or sale orders executed contemporaneously shall be allocated in a
manner it deems equitable among the accounts involved and at a price which is
approximately averaged.
(b) ADMINISTRATIVE SERVICES. In addition to the performance of investment
-----------------------
advisory services, the Investment Manager shall perform administrative services
in connection with the management of the Portfolio. In this connection, the
Investment Manager agrees (i) to
3
<PAGE>
assist in managing all aspects of the Fund's operations relating to the
Portfolio, including the coordination of all matters relating to the functions
of the custodian, transfer agent, other shareholder service agents, accountants,
attorneys and other parties performing services or operational functions for the
Fund, (ii) to provide the Fund, at the Investment Manager's expense, with
services of persons competent to perform such professional, administrative and
clerical functions as are necessary in order to provide effective administration
of the Portfolio, including duties in connection with shareholder relations,
reports, redemption requests and account adjustments and the maintenance of the
books and records required of the Fund, and (iii) to provide the Fund, at the
Investment Manager's expense, with adequate office space and related services
necessary for its operations as contemplated in this Agreement. In performing
such administrative services, the Investment Manager shall comply with all
provisions of the Fund's Articles of Incorporation and By-Laws, with all laws
and regulations to which the Fund may be subject and with all directions of the
Fund's Board of Directors.
The Investment Manager shall supply the Board of Directors and officers of
the Fund with all statistical information regarding investments which is
reasonably required by them and reasonably available to the Investment Manager.
(c) SUB-INVESTMENT MANAGER. Notwithstanding any other provision of this
----------------------
Agreement, the Fund and the Investment Manager may agree to the employment of a
Sub-Investment Manager to the Fund for the purpose of providing investment
management services with respect to the Portfolio, provided that the
compensation to be paid to such Sub-Investment Manager shall be the sole
responsibility of the Investment Manager and the duties and responsibilities of
the Sub-Investment Manager shall be as set forth in a
4
<PAGE>
sub-investment management agreement among the Investment Manager, the Sub-
Investment Manager and the Fund on behalf of the Portfolio.
ARTICLE 2
ALLOCATION OF CHARGES AND EXPENSES
----------------------------------
(a) THE INVESTMENT MANAGER. In addition to the compensation paid to any
-----------------------
Sub-Investment Manager as set forth in Article 1 above, the Investment Manager
shall pay the organization costs of the Fund relating to the Portfolio. The
Investment Manager also assumes expenses of the Fund relating to maintaining the
staff and personnel, and providing the equipment, office space and facilities,
necessary to perform its obligations under this Agreement.
(b) THE FUND. The Fund assumes and shall pay (or cause to be paid) all
--------
other Fund expenses, including but not limited to the following expenses: the
fee referred to in Article 3 below; interest and any other costs related to
borrowings by the Fund attributable to the Portfolio; taxes payable by the Fund
and attributable to the Portfolio; brokerage costs and other direct costs of
effecting portfolio transactions (including any costs directly related to the
acquisition, disposition, lending or borrowing of portfolio investments) on
behalf of the Portfolio; the compensation of the directors and officers of the
Fund who are not actively employed by the Investment Manager; custodian,
registration and transfer agent fees; fees of outside counsel to and of
independent auditors of the Fund selected by the Board of Directors; expenses of
printing and mailing to existing shareholders of registration statements,
prospectuses, reports, notices and proxy solicitation materials of the Fund; all
other expenses incidental to holding meetings of the Fund's shareholders;
insurance premiums for fidelity coverage and errors and omissions
insurance; and extraordinary or non-recurring expenses (such
5
<PAGE>
as legal claims and liabilities and litigation costs and any indemnification
related thereto) attributable to the Portfolio. The Fund shall allocate the
appropriate portion of the foregoing expenses to the Portfolio.
All expenses of any activity which is primarily intended to result in the
sale of the Fund's shares, and certain other expenses as detailed in the Fund's
Distribution Agreement with Metropolitan Life Insurance Company, are assumed by
the distributor of the Fund's shares.
ARTICLE 3
COMPENSATION OF THE INVESTMENT MANAGER
--------------------------------------
For the services rendered, the facilities furnished and expenses assumed
by the Investment Manager, the Fund shall pay to the Investment Manager at the
end of each calendar month a fee which shall accrue daily at the annual rate
specified by the schedule of fees in the Appendix to this Agreement. The
average daily value of the net assets of the Portfolio shall be determined and
computed in accordance with the description of the method of determination of
net asset value contained in the Prospectus.
ARTICLE 4
LIMITATION OF LIABILITY OF THE INVESTMENT MANAGER
--------------------------------------------------
(a) In the performance of advisory services as provided in Article 1(a),
the Investment Manager shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Fund in connection with any investment
policy or the purchase, sale or redemption of any securities on the
recommendation of the Investment Manager. Nothing herein contained shall be
construed to protect the Investment Manager against any liability to the Fund or
its shareholders to which the Investment Manager shall otherwise be subject by
reason of willful misfeasance,
6
<PAGE>
bad faith, gross negligence in the performance of its duties on behalf of the
Fund, reckless disregard of the Investment Manager's obligations and duties
under this Agreement or the violation of any applicable law.
(b) In the performance of administrative services as provided in Article
1(b) and which the Investment Manager is obligated to perform hereunder, the
Investment Manager shall be liable to the Fund or its shareholders for any
willful or negligent act or omission in the performance of such administrative
services.
ARTICLE 5
ACTIVITIES OF THE INVESTMENT MANAGER
------------------------------------
The services of the Investment Manager under this Agreement are not to be
deemed exclusive, and the Investment Manager shall be free to render similar
services to others so long as its services hereunder are not impaired thereby.
It is understood that directors, officers, employees and shareholders of the
Fund are or may become interested in the Investment Manager, as directors,
officers, employees or policyholders or otherwise and that directors, officers,
employees or policyholders of the Investment Manager are or may become similarly
interested in the Fund, and that the Investment Manager is or may become
interested in the Fund as shareholder or otherwise.
ARTICLE 6
DURATION AND TERMINATION OF THIS AGREEMENT
------------------------------------------
This Agreement shall become effective as of the date first above written and
shall remain in force until May 16, 1999 and thereafter shall continue in
effect, but only so long as such continuance is specifically approved at least
annually by (i) the Board of Directors of the Fund,
7
<PAGE>
or by the vote of a majority of the outstanding shares of the Portfolio, and
(ii) a majority of those directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
This Agreement may be terminated with respect to the Portfolio at any
time, without the payment of any penalty, by the Board of Directors of the Fund,
or by vote of a majority of the outstanding shares of the Portfolio, on sixty
days' written notice to the Investment Manager, or by the Investment Manager on
sixty days' written notice to the Fund. This Agreement shall automatically
terminate in the event of its assignment.
ARTICLE 7
DEFINITIONS
-----------
The terms "assignment," "interested person," and "majority of the
outstanding shares," when used in this Agreement, shall have the respective
meanings specified under the Investment Company Act.
ARTICLE 8
AMENDMENTS OF THIS AGREEMENT
----------------------------
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the Board of Directors of the Fund, to the extent
permitted by the Investment Company Act, or by the vote of a majority of the
outstanding shares of the Portfolio, and (ii) by the vote of a majority of those
directors of the Fund who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such approval.
8
<PAGE>
ARTICLE 9
GOVERNING LAW
-------------
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
9
<PAGE>
METROPOLITAN SERIES FUND, INC.
By:_____________________________
President
Attest:
__________
Secretary
METROPOLITAN LIFE INSURANCE COMPANY
By:_________________________________
Executive Vice-President
Attest:
_______________
Assistant Secretary
10
<PAGE>
APPENDIX
--------
METROPOLITAN SERIES FUND FEE SCHEDULE
-------------------------------------
MORGAN STANLEY EAFE INDEX PORTFOLIO
-----------------------------------
0.300% on all assets
of the average daily value of the net assets of the Portfolio
11
<PAGE>
EXHIBIT 5(h)
NEUBERGER&BERMAN PARTNERS MID CAP VALUE PORTFOLIO
SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 30th day of October, 1998, among Metropolitan Series
Fund, Inc., a Maryland corporation (the "Fund"), Metropolitan Life Insurance
Company (the "Investment Manager"), a New York corporation, and Neuberger&Berman
Management Incorporated, a New York corporation (the "Sub-Investment Manager");
W I T N E S S E T H :
WHEREAS, the Fund is engaged in business as a diversified open-end
management investment company and is registered as such under the Investment
Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Fund, a series type of investment company, issues separate
classes (or series) of stock, each of which represents a separate portfolio of
investments;
WHEREAS, the Fund is currently comprised of various portfolios, each of
which pursues its investment objectives through separate investment policies,
and the Fund may add or delete portfolios from time to time;
WHEREAS, the Investment Manager is a life insurance company and is
registered as an investment adviser under the Investment Advisers Act of 1940
(the "Advisers Act");
WHEREAS, the Sub-Investment Manager is engaged principally in the business
of rendering advisory and management services and is registered as an investment
adviser under the Advisers Act; and
WHEREAS, the Fund has employed the Investment Manager to act as investment
manager of the Neuberger&Berman Partners Mid Cap Value Portfolio as set forth in
the Neuberger&Berman Partners Mid Cap Value Portfolio Investment Management
Agreement
<PAGE>
dated October 30, 1998 between the Fund and the Investment Manager (the
"Neuberger&Berman Partners Mid Cap Value Portfolio Investment Management
Agreement"); and the Fund and the Investment Manager desire to enter into a
separate sub-investment management agreement with respect to the
Neuberger&Berman Partners Mid Cap Value Portfolio of the Fund with the Sub-
Investment Manager;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund, the Investment Manager and the Sub-Investment
Manager hereby agree as follows:
ARTICLE 1
DUTIES OF THE SUB-INVESTMENT MANAGER
Subject to the supervision and approval of the Investment Manager and the
Fund's Board of Directors, the Sub-Investment Manager will manage the investment
and reinvestment of the assets of the Fund's Neuberger&Berman Partners Mid Cap
Value Portfolio (the "Portfolio") for the period and on the terms and conditions
set forth in this Agreement. In acting as Sub-Investment Manager to the Fund
with respect to the Portfolio, the Sub-Investment Manager shall determine which
securities shall be purchased, sold or exchanged and what portion of the assets
of the Portfolio shall be held in the various securities or other assets in
which it may invest, subject always to any restrictions of the Fund's Articles
of Incorporation and By-Laws, as amended or supplemented from time to time, the
provisions of applicable laws and regulations including the Investment Company
Act, and the statements relating to the Portfolio's investment objectives,
policies and restrictions as the same are set forth in the prospectus and
statement of
2
<PAGE>
additional information of the Fund then currently effective under the Securities
Act of 1933 (the "Prospectus") and provided to the Sub-Investment Manager in
writing. Should the Board of Directors of the Fund or the Investment Manager at
any time, however, make any definite determination as to investment policy and
notify in writing the Sub-Investment Manager thereof, the Sub-Investment Manager
shall be bound by such determination for the period, if any, specified in such
notice or until similarly notified in writing that such determination has been
revoked. The Sub-Investment Manager shall not be liable to the Fund, the
Portfolio or the Investment Manager, or any shareholder of the Fund, and the
Investment Manager shall indemnify and hold harmless the Sub-Investment Manager
for any losses, claims, damages, liabilities or litigation (including reasonable
attorneys fees and expenses) sustained in connection with adherence to such
determination.
The Sub-Investment Manager shall take, on behalf of the Fund, all actions
which it deems necessary and appropriate to implement the investment policies of
the Portfolio, determined as provided above, and in particular to open accounts
and to place all orders for the purchase or sale of portfolio securities for the
Portfolio with brokers or dealers selected by it.
In connection with the selection of such brokers or dealers and the
placing of such orders, the Sub-Investment Manager is directed at all times to
follow the policies of the Fund set forth in the Prospectus. Nothing herein
shall preclude the "bunching" of orders for the sale or purchase of portfolio
securities with any other accounts managed by the Sub-Investment Manager. The
Sub-Investment Manager shall not favor any account over any other and any
purchase or sale orders executed contemporaneously shall be allocated in a
manner it deems
3
<PAGE>
equitable among the accounts involved and at a price which is approximately
averaged.
With respect to brokerage and subject to the policies set forth above and
in the Prospectus, the Sub-Investment Manager may cause the Portfolio to pay a
broker a commission for executing a portfolio transaction in excess of the
commission another broker would have charged for effecting the same transaction
if the difference is reasonably justified by other aspects of portfolio
execution or research services offered. Subject to such policies as the Board
of Directors of the Fund may determine, the Sub-Investment Manager shall not be
deemed to have acted unlawfully or to have breached a duty solely by reason of
its having caused the Portfolio to pay a broker-dealer that provides research
services to the Sub-Investment Manager an amount of commission for effecting a
portfolio transaction in excess of the amount of commission another broker-
dealer would have charged for effecting that transaction, if the Sub-Investment
Manager determines in good faith that such amount of commission was reasonable
in relation to the value of the research or brokerage services provided by such
broker, viewed in terms of either that particular transaction or the Sub-
Investment Manager's ongoing responsibilities with respect to the Portfolio.
The Investment Manager, Sub-Investment Manager and the Fund further agree that
the Sub-Investment Manager is authorized to employ an affiliated broker-dealer
as the Portfolio's principal broker.
In connection with these services the Sub-Investment Manager will provide
investment research as to the Portfolio's investments and conduct a continuous
program of evaluation of its assets. The Sub-Investment Manager will have the
responsibility to monitor the investments of the Portfolio to the extent
necessary for the Sub-Investment Manager to manage the Portfolio in a
4
<PAGE>
manner that is consistent with the investment objective and policies of the
Portfolio set forth in the Prospectus, as from time to time amended, and
consistent with applicable law, including, but not limited to, the Investment
Company Act and the rules and regulations thereunder and the applicable
provisions of the Internal Revenue Code and the rules and regulations thereunder
(including, without limitation, subchapter M of the Code and the investment
diversification aspects of Section 817(h) of the Code).
The Sub-Investment Manager will furnish the Investment Manager and the Fund
such statistical information, including prices of securities in situations where
a fair valuation determination is required or when a security cannot be priced
by the Fund's accountants, with respect to the investments it makes for the
Portfolio as the Investment Manager and the Fund may reasonably request. On its
own initiative, the Sub-Investment Manager will apprise the Investment Manager
and the Fund of important developments materially affecting the Portfolio,
including but not limited to any change in the personnel of the Sub-Investment
Manager responsible for the day to day investment decisions made by the Sub-
Investment Manager for the Portfolio and any material legal proceedings against
the Sub-Investment Manager by the Securities and Exchange Commission relating to
violations of the federal securities laws by the Sub-Investment Manager, and
will furnish the Investment Manager and the Fund from time to time with similar
material information that is believed appropriate for this purpose. In addition,
the Sub-Investment Manager will furnish the Investment Manager and the Fund's
Board of Directors such periodic and special reports as either of them may
reasonably request.
5
<PAGE>
The Sub-Investment Manager will exercise its best judgment in rendering
the services provided for in this Article 1, and the Fund and the Investment
Manager agree, as an inducement to the Sub-Investment Manager's undertaking so
to do, that the Sub-Investment Manager will not be liable under this Agreement
for any mistake of judgment or in any other event whatsoever, except as
hereinafter provided. The Sub-Investment Manager shall for all purposes herein
be deemed to be an independent contractor and shall, unless otherwise provided
or authorized, have no authority to act for or represent the Fund or the
Investment Manager in any way or otherwise be deemed an agent of the Fund or the
Investment Manager other than in furtherance of its duties and responsibilities
as set forth in this Agreement.
ARTICLE 2
SUB-INVESTMENT MANAGEMENT FEE
The payment of advisory fees and the allocation of charges and expenses
between the Fund and the Investment Manager with respect to the Portfolio are
set forth in the Neuberger&Berman Partners Mid Cap Value Portfolio Investment
Management Agreement and nothing in that agreement shall change or affect the
terms of this Sub-Investment Management Agreement. Nothing in this
Neuberger&Berman Partners Mid Cap Value Portfolio Sub-Investment Management
Agreement shall change or affect that arrangement. The payment of advisory fees
and the apportionment of any expenses related to the services of the Sub-
Investment Manager under this Agreement shall be the sole concern of the
Investment Manager and the Sub-Investment Manager and shall not be the
responsibility of the Fund.
6
<PAGE>
In consideration of services rendered pursuant to this Agreement, the
Investment Manager will pay the Sub-Investment Manager on the first business day
of each month the fee at the annual rate specified by the schedule of fees in
the Appendix to this Agreement. The fee for any period from the date the
Portfolio commences operations to the end of the month will be prorated
according to the proportion which the period bears to the full month, and, upon
any termination of this Agreement before the end of any month, the fee for the
part of the month during which the Sub-Investment Manager acted under this
Agreement will be prorated according to the proportion which the period bears to
the full month and will be payable upon the date of termination of this
Agreement.
For the purpose of determining the fees payable to the Sub-Investment
Manager, the value of the Portfolio's net assets will be computed in the manner
specified in the Fund's Prospectus. The Sub-Investment Manager will bear all of
its own expenses (such as research costs) in connection with the performance of
its duties under this Agreement except for those which the Investment Manager
agrees to pay and will not be responsible for any Fund expenses.
The Sub-Investment Manager agrees to notify promptly, upon written request,
the Investment Manager if, for any other registered investment company having a
substantially similar investment program, it agrees to (1) provide more services
or bear more expenses for a comparable or lower fee; and (2) provide comparable
services and bear comparable expenses for a lower fee.
7
<PAGE>
OTHER MATTERS
The Sub-Investment Manager may from time to time employ or associate with
itself any person or persons believed to be particularly fitted to assist in its
performance of services under this Agreement. The compensation of any such
persons will be paid by the Sub-Investment Manager, and no obligation will be
incurred by, or on behalf of, the Fund or the Investment Manager with respect to
them.
The Fund and the Investment Manager understand that the Sub-Investment
Manager now acts and will continue to act as investment manager to various
investment companies and fiduciary or other managed accounts, and the Fund and
the Investment Manager have no objection to the Sub-Investment Manager's so
acting. In addition, the Fund understands that the persons employed by the Sub-
Investment Manager to assist in the performance of the Sub-Investment Manager's
duties hereunder will not devote their full time to such service, and nothing
herein contained shall be deemed to limit or restrict the Sub-Investment
Manager's right or the right of any of the Sub-Investment Manager's affiliates
to engage in and devote time and attention to other businesses or to render
other services of whatever kind or nature.
The Sub-Investment Manager agrees that all books and records which it
maintains for the Fund are the Fund's property as well as the Sub-Investment
Manager's. The Sub-Investment Manager also agrees upon request of the Investment
Manager or the Fund, promptly to surrender copies of the books and records to
the requester or make the books and records available for inspection by
representatives of regulatory authorities. The Sub-Investment Manager further
agrees to maintain and preserve the Fund's books and records in accordance with
the Investment
8
<PAGE>
Company Act and rules thereunder.
The Sub-Investment Manager will not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund or its shareholders in
connection with the matters to which this Agreement relates, except for a loss
resulting from willful misfeasance, bad faith or gross negligence of the Sub-
Investment Manager in the performance of its duties or from reckless disregard
of its obligations and duties under this Agreement. The Sub-Investment Manager,
the Fund and the Investment Manager further agree that the Sub-Investment
Manager shall bear no responsibilities or obligations for any portfolios of the
Fund other than the Portfolio and any other portfolio of the Fund with respect
to which it serves as sub-advisor.
The Investment Manager has herewith furnished the Sub-Investment Manager
copies of the Fund's Registration Statement, Articles of Incorporation and By-
Laws as currently in effect and agrees during the continuance of this Agreement
to furnish the Sub-Investment Manager copies of any amendments or supplements
thereto before the amendments or supplements become effective. The Sub-
Investment Manager will be entitled to rely on all documents furnished to it by
the Investment Manager or the Fund.
The Investment Manager, the Fund and the Sub-Investment Manager agree that
any information or recommendation supplied by the Sub-Investment Manager in
connection with the performance of its obligations hereunder is to be regarded
as confidential for use only by the Investment Manager, the Fund, or such person
as the Investment Manager may designate in connection with the Portfolio.
9
<PAGE>
The Investment Manager represents and warrants that the appointment of the
Sub-Investment Manager by the Investment Manager and the Fund has been duly
authorized.
ARTICLE 3
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date first above written
and shall remain in force until May 16, 1999 and thereafter shall continue in
effect, but only so long as such continuance is specifically approved at least
annually by (i) the Board of Directors of the Fund, or by the vote of a majority
of the outstanding shares of the Portfolio, and (ii) a majority of those
directors who are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of voting on such
approval.
This Agreement may be terminated with respect to the Portfolio at any
time, without the payment of any penalty, by the Board of Directors of the Fund,
or by vote of a majority of the outstanding shares of the Portfolio, on sixty
days' written notice to the Investment Manager and Sub-Investment Manager, by
the Investment Manager on thirty days' written notice to the Sub-Investment
Manager and the Fund, or by the Sub-Investment Manager on sixty days' written
notice to the Investment Manager and the Fund. This Agreement shall
automatically terminate in the event of its assignment or in the event of the
termination of the Neuberger&Berman Partners Mid Cap Value Portfolio Investment
Management Agreement.
10
<PAGE>
ARTICLE 4
DEFINITIONS
The terms "assignment," "interested person," and "majority of the
outstanding shares," when used in this Agreement, shall have the respective
meanings specified under the Investment Company Act.
ARTICLE 5
AMENDMENTS OF THIS AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the Board of Directors of the Fund, to the extent
permitted by the Investment Company Act, or by the vote of a majority of the
outstanding shares of the Portfolio, and (ii) by the vote of a majority of those
directors of the Fund who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such approval.
ARTICLE 6
GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
11
<PAGE>
ARTICLE 7
NOTICES
-------
Notices to be given hereunder shall be addressed to:
Fund: Christopher P. Nicholas
President and Chief Operating Officer
Metropolitan Series Fund, Inc.
One Madison Avenue, Area 7G
New York, New York 10010
Investment Manager: Gary A. Beller, Esq.
Senior Executive Vice-President and General Counsel
Metropolitan Life Insurance Company
One Madison Avenue, Area 11G
New York, New York 10010
Sub-Investment Ms. Ellen Metzger, Esq.
Manager: Vice-President and General Counsel
Neuberger&Berman Management Incorporated
605 Third Avenue - 2nd Floor
New York, NY 10158-0180
Changes in the foregoing notice provisions may be
made by notice in writing to the other parties and the addresses set forth
above. Notice shall be effective upon receipt.
12
<PAGE>
METROPOLITAN SERIES FUND, INC.
By:
-----------------------
Christopher P. Nicholas
Attest:
- -------------------
Robin Wagner
METROPOLITAN LIFE INSURANCE
COMPANY
By:
-----------------------
Jeffrey J. Hodgman
Attest:
- -------------------
Ruth R. Gluck
NEUBERGER&BERMAN MANAGEMENT
INCORPORATED
By:
-----------------------
Attest:
- -------------------
13
<PAGE>
APPENDIX
--------
NEUBERGER&BERMAN MANAGEMENT INC.
--------------------------------
Metropolitan Series Fund Fee Schedule
-------------------------------------
Neuberger&Berman Partners Mid Cap Value Portfolio
-------------------------------------------------
0.500% on the first $100MM
0.475% on the next $250MM
0.450% on the next $500 MM
0.425% on the next $750 MM
0.400% thereafter
of the average daily value of the net assets of the Portfolio
14
<PAGE>
T. ROWE PRICE LARGE CAP GROWTH PORTFOLIO
SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 30th day of October, 1998, among Metropolitan Series
Fund, Inc., a Maryland corporation (the "Fund"), Metropolitan Life Insurance
Company (the "Investment Manager"), a New York corporation, and T. Rowe Price
Associates, Inc., a Maryland corporation (the "Sub-Investment Manager");
W I T N E S S E T H :
WHEREAS, the Fund is engaged in business as a diversified open-end
management investment company and is registered as such under the Investment
Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Fund, a series type of investment company, issues separate
classes (or series) of stock, each of which represents a separate portfolio of
investments;
WHEREAS, the Fund is currently comprised of various portfolios, each of
which pursues its investment objectives through separate investment policies,
and the Fund may add or delete portfolios from time to time;
WHEREAS, the Sub-Investment Manager is engaged principally in the business
of rendering advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940; and
WHEREAS, the Fund has employed the Investment Manager to act as investment
manager of the T. Rowe Price Large Cap Growth Portfolio as set forth in the T.
Rowe Price Large Cap Growth Portfolio Investment Management Agreement dated
October 30, 1998 between the Fund and the Investment Manager (the "T. Rowe Price
Large Cap Growth Portfolio Investment Management Agreement"); and the Fund and
the Investment Manager desire to enter
<PAGE>
into a separate sub-investment management agreement with respect to the T. Rowe
Price Large Cap Growth Portfolio of the Fund with the Sub-Investment Manager;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund, the Investment Manager and the Sub-Investment
Manager hereby agree as follows:
ARTICLE 1
DUTIES OF THE SUB-INVESTMENT MANAGER
Subject to the supervision and approval of the Investment Manager and the
Fund's Board of Directors, the Sub-Investment Manager will manage the investment
and reinvestment of the assets of the Fund's T. Rowe Price Large Cap Growth
Portfolio (the "Portfolio") for the period and on the terms and conditions set
forth in this Agreement. In acting as Sub-Investment Manager to the Fund with
respect to the Portfolio, the Sub-Investment Manager shall determine which
securities shall be purchased, sold or exchanged and what portion of the assets
of the Portfolio shall be held in the various securities or other assets in
which it may invest, subject always to any restrictions of the Fund's Articles
of Incorporation and By-Laws, as amended or supplemented from time to time, the
provisions of applicable laws and regulations including the Investment Company
Act, and the statements relating to the Portfolio's investment objectives,
policies and restrictions as the same are set forth in the prospectus and
statement of additional information of the Fund then currently effective under
the Securities Act of 1933 (the "Prospectus"). Should the Board of Directors of
the Fund or the Investment Manager at any time, however, make any definite
determination as to investment policy and notify the Sub-Investment Manager
thereof in writing, the Sub-Investment Manager shall be bound by such
determination
2
<PAGE>
for the period, if any, specified in such notice or until similarly notified in
writing that such determination has been revoked. The Sub-Investment Manager
shall take, on behalf of the Fund, all actions which it deems necessary to
implement the investment policies of the Portfolio, determined as provided
above, and in particular to place all orders for the purchase or sale of
portfolio securities for the Portfolio with brokers or dealers selected by it.
The Sub-Investment Manager agrees that, in placing orders with broker-
dealers for the purchase or sale of portfolio securities, it shall attempt to
obtain best execution at favorable security prices; provided that, on behalf of
the Portfolio, the Sub-Investment Manager may, in its discretion, agree to pay a
broker-dealer that furnishes brokerage or research services as such services are
defined under Section 28(e) of the Securities Exchange Act of 1934, as amended
("1934 Act") or in accord with any other applicable laws or regulations, a
higher commission than that which might have been charged by another broker-
dealer for effecting the same transactions, if the Sub-Investment Manager
determines in good faith that such commission is reasonable in relation to the
brokerage and research service provided by the broker-dealer, viewed in terms of
either that particular transaction or the overall responsibilities of the Sub-
Investment Manager with respect to the accounts as to which it exercises
investment discretion.
On occasions when the Sub-Investment Manager deems the purchase of a
security to be in the best interest of the Portfolio as well as other clients of
the Sub-Investment Manager, the Sub-Investment Manager, to the extent permitted
by applicable laws and regulations, may, but shall be under no obligation to,
aggregate the securities to be purchased or sold to attempt to obtain a more
favorable price or lower brokerage commissions and efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the
3
<PAGE>
transaction, will be made by the Sub-Investment Manager in the manner the Sub-
Investment Manager considers to be the most equitable and consistent with its
fiduciary obligations to the Portfolio and to its other clients.
In connection with these services the Sub-Investment Manager will provide
investment research as to the Portfolio's investments and conduct a continuous
program of evaluation of its assets. The Sub-Investment Manager will have the
responsibility to monitor the investments of the Portfolio to the extent
necessary for the Sub-Investment Manager to manage the Portfolio in a manner
that is consistent with the investment objective and policies of the Portfolio
set forth in the Registration Statement of the Fund, as from time to time
amended, and consistent with applicable law, including, but not limited to, the
Investment Company Act and the rules and regulations thereunder and the
applicable provisions of the Internal Revenue Code and the rules and regulations
thereunder (including, without limitation, subchapter M of the Code and the
investment diversification aspects of Section 817(h) of the Code).
The Sub-Investment Manager will furnish the Investment Manager and the Fund
such statistical information, including prices of securities in situations where
a fair valuation determination is required or when a security cannot be priced
by the Fund's accountants, with respect to the investments it makes for the
Portfolio as the Investment Manager and the Fund may reasonably request. On its
own initiative, the Sub-Investment Manager will apprise the Investment Manager
and the Fund of important developments materially affecting the Portfolio,
including but not limited to any change in the personnel of the Sub-Investment
Manager responsible for the day to day investment decisions made by the Sub-
Investment Manager for the Portfolio and any material legal proceedings against
the Sub-Investment Manager by the
4
<PAGE>
Securities and Exchange Commission relating to violations of the federal
securities laws by the Sub-Investment Manager, and will furnish the Investment
Manager and the Fund from time to time with similar information that is believed
appropriate for this purpose. In addition, the Sub-Investment Manager will
furnish the Investment Manager and the Fund's Board of Directors such periodic
and special reports as either of them may reasonably request.
The Sub-Investment Manager will exercise its best judgment in rendering the
services provided for in this Article 1, and the Fund and the Investment Manager
agree, as an inducement to the Sub-Investment Manager's undertaking so to do,
that the Sub-Investment Manager will not be liable under this Agreement for any
mistake of judgment or in any other event whatsoever, except as hereinafter
provided. The Sub-Investment Manager shall for all purposes herein be deemed to
be an independent contractor and shall, unless otherwise provided or authorized,
have no authority to act for or represent the Fund or the Investment Manager in
any way or otherwise be deemed an agent of the Fund or the Investment Manager
other than in furtherance of its duties and responsibilities as set forth in
this Agreement.
ARTICLE 2
SUB-INVESTMENT MANAGEMENT FEE
The payment of advisory fees and the allocation of charges and expenses
between the Fund and the Investment Manager with respect to the Portfolio are
set forth in the T. Rowe Price Large Cap Growth Portfolio Investment Management
Agreement. Nothing in this T. Rowe Price Large Cap Growth Portfolio Sub-
Investment Management Agreement shall change or affect that arrangement. The
payment of advisory fees and the apportionment of any expenses related to the
services of the Sub-Investment Manager under this Agreement shall be the sole
concern of the
5
<PAGE>
Investment Manager and the Sub- Investment Manager and shall not be the
responsibility of the Fund.
In consideration of services rendered pursuant to this Agreement, the
Investment Manager will pay the Sub-Investment Manager on the first business day
of each month the fee at the annual rate specified by the schedule of fees in
the Appendix to this Agreement. The fee for any period from the date the
Portfolio commences operations to the end of the month will be prorated
according to the proportion which the period bears to the full month, and, upon
any termination of this Agreement before the end of any month, the fee for the
part of the month during which the Sub-Investment Manager acted under this
Agreement will be prorated according to the proportion which the period bears to
the full month and will be payable upon the date of termination of this
Agreement.
For the purpose of determining the fees payable to the Sub-Investment
Manager, the value of the Portfolio's net assets will be computed in the manner
specified in the Fund's Prospectus. The Sub-Investment Manager will bear all of
its own expenses (such as research costs) in connection with the performance of
its duties under this Agreement except for those which the Investment Manager
agrees to pay.
The Sub-Investment Manager agrees to notify promptly, upon written request,
the Investment Manager if, for any other registered investment company having a
substantially similar investment program, it agrees to (1) provide more services
or bear more expenses for a comparable or lower fee; and (2) provide comparable
services and bear comparable expenses for a lower fee.
6
<PAGE>
OTHER MATTERS
The Sub-Investment Manager may from time to time employ or associate with
itself any person or persons believed to be particularly fitted to assist in its
performance of services under this Agreement. The compensation of any such
persons will be paid by the Sub-Investment Manager, and no obligation will be
incurred by, or on behalf of, the Fund or the Investment Manager with respect to
them.
The Fund and the Investment Manager understand that the Sub-Investment
Manager now acts and will continue to act as investment manager to various
investment companies and fiduciary or other managed accounts, and the Fund and
the Investment Manager have no objection to the Sub-Investment Manager's so
acting. In addition, the Fund understands that the persons employed by the Sub-
Investment Manager to assist in the performance of the Sub-Investment Manager's
duties hereunder will not devote their full time to such service, and nothing
herein contained shall be deemed to limit or restrict the Sub-Investment
Manager's right or the right of any of the Sub-Investment Manager's affiliates
to engage in and devote time and attention to other businesses or to render
other services of whatever kind or nature.
The Sub-Investment Manager agrees that all books and records which it
maintains for the Fund are the Fund's property. The Sub-Investment Manager also
agrees upon request of the Investment Manager or the Fund, promptly to surrender
the books and records to the requester or make the books and records available
for inspection by representatives of regulatory authorities. The Sub-Investment
Manager further agrees to maintain and preserve the Fund's books and records in
accordance with the Investment Company Act and rules thereunder.
7
<PAGE>
The Sub-Investment Manager will not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, except for a loss resulting from
willful misfeasance, bad faith or gross negligence of the Sub-Investment Manager
in the performance of its duties or from reckless disregard of its obligations
and duties under this Agreement.
The Investment Manager has herewith furnished the Sub-Investment Manager
copies of the Fund's Registration Statement, Articles of Incorporation and By-
Laws as currently in effect and agrees during the continuance of this Agreement
to furnish the Sub-Investment Manager copies of any amendments or supplements
thereto before or at the time the amendments or supplements become effective.
The Sub-Investment Manager will be entitled to rely on all documents furnished
to it by the Investment Manager or the Fund.
ARTICLE 3
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date first above written
and shall remain in force until May 16, 1999 and thereafter shall continue in
effect, but only so long as such continuance is specifically approved at least
annually by (i) the Board of Directors of the Fund, or by the vote of a majority
of the outstanding shares of the Portfolio, and (ii) a majority of those
directors who are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of voting on such
approval.
This Agreement may be terminated with respect to the Portfolio at any time,
without the payment of any penalty, by the Board of Directors of the Fund, or by
vote of a majority of the outstanding shares of the Portfolio, on sixty days'
written notice to the Investment Manager and
8
<PAGE>
Sub-Investment Manager, by the Investment Manager on thirty days' written notice
to the Sub-Investment Manager and the Fund, or by the Sub-Investment Manager on
sixty days' written notice to the Investment Manager and the Fund. This
Agreement shall automatically terminate in the event of its assignment or in the
event of the termination of the T. Rowe Price Large Cap Growth Portfolio
Investment Management Agreement.
ARTICLE 4
DEFINITIONS
The terms "assignment," "interested person," and "majority of the
outstanding shares," when used in this Agreement, shall have the respective
meanings specified under the Investment Company Act.
ARTICLE 5
AMENDMENTS OF THIS AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the Board of Directors of the Fund, to the extent
permitted by the Investment Company Act, or by the vote of a majority of the
outstanding shares of the Portfolio, and (ii) by the vote of a majority of those
directors of the Fund who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such approval.
ARTICLE 6
GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the
9
<PAGE>
Investment Company Act. To the extent that the applicable law of the State of
New York, or any of the provisions herein, conflict with the applicable
provisions of the Investment Company Act, the latter shall control.
ARTICLE 7
NOTICES
Notices to be given hereunder shall be addressed to:
Fund: Christopher P. Nicholas
President and Chief Operating Officer
Metropolitan Series Fund, Inc.
One Madison Avenue, Area 7G
New York, New York 10010
Investment
Manager: Gary A. Beller, Esq.
Senior Executive Vice-President and General Counsel
Metropolitan Life Insurance Company
One Madison Avenue, Area 11G
New York, New York 10010
Sub-Investment
Manager: John Cammack
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore Maryland 21202
Copy to: Henry H. Hopkins, Esq.
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore Maryland 21202
Changes in the foregoing notice provisions may be made by notice in writing
to the other parties and the addresses set forth above. Notice shall be
effective upon delivery.
10
<PAGE>
METROPOLITAN SERIES FUND, INC.
By:
--------------------
Christopher P. Nicholas
Attest:
- --------------------
Robin Wagner
METROPOLITAN LIFE INSURANCE
COMPANY
By:
--------------------
Jeffrey J. Hodgman
Attest:
- --------------------
Ruth Gluck
T. ROWE PRICE ASSOCIATES, INC.
By:
--------------------
Darrell N. Braman
Attest:
- --------------------
Cheryl Emory
11
<PAGE>
APPENDIX
--------
T. ROWE PRICE ASSOCIATES, INC.
------------------------------
METROPOLITAN SERIES FUND FEE SCHEDULE
-------------------------------------
T. ROWE PRICE LARGE CAP GROWTH PORTFOLIO
----------------------------------------
0.500% on the first $50MM
0.400% thereafter
of the average daily value of the net assets of the Portfolio
12
<PAGE>
HARRIS OAKMARK LARGE CAP VALUE PORTFOLIO
SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 30th day of October, 1998, among Metropolitan Series
Fund, Inc., a Maryland corporation (the "Fund"), Metropolitan Life Insurance
Company (the "Investment Manager"), a New York corporation, and Harris
Associates L.P., a Delaware limited partnership (the "Sub-Investment Manager");
W I T N E S S E T H :
WHEREAS, the Fund is engaged in business as a diversified open-end
management investment company and is registered as such under the Investment
Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Fund, a series type of investment company, issues separate
classes (or series) of stock, each of which represents a separate portfolio of
investments;
WHEREAS, the Fund is currently comprised of various portfolios, each of
which pursues its investment objectives through separate investment policies,
and the Fund may add or delete portfolios from time to time;
WHEREAS, the Sub-Investment Manager is engaged principally in the business
of rendering advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940; and
WHEREAS, the Fund has employed the Investment Manager to act as investment
manager of the Harris Oakmark Large Cap Value Portfolio as set forth in the
Harris Oakmark Large Cap Value Portfolio Investment Management Agreement dated
October 30, 1998 between the Fund and the Investment Manager (the "Harris
Oakmark Large Cap Value Portfolio Investment Management Agreement"); and the
Fund and the Investment Manager desire to enter
<PAGE>
into a separate sub-investment management agreement with respect to the Harris
Oakmark Large Cap Value Portfolio of the Fund with the Sub-Investment Manager;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund, the Investment Manager and the Sub-Investment
Manager hereby agree as follows:
ARTICLE 1
DUTIES OF THE SUB-INVESTMENT MANAGER
------------------------------------
Subject to the supervision and approval of the Investment Manager and the
Fund's Board of Directors, the Sub-Investment Manager will manage the investment
and reinvestment of the assets of the Fund's Harris Oakmark Large Cap Value
Portfolio (the "Portfolio") for the period and on the terms and conditions set
forth in this Agreement. In acting as Sub-Investment Manager to the Fund with
respect to the Portfolio, the Sub-Investment Manager shall determine which
securities shall be purchased, sold or exchanged and what portion of the assets
of the Portfolio shall be held in the various securities or other assets in
which it may invest, subject always to any restrictions of the Fund's Articles
of Incorporation and By-Laws, as amended or supplemented from time to time, the
provisions of applicable laws and regulations including the Investment Company
Act, and the statements relating to the Portfolio's investment objectives,
policies and restrictions as the same are set forth in the prospectus and
statement of additional information of the Fund then currently effective under
the Securities Act of 1933 (the "Prospectus") and provided to Sub-Investment
Manager in writing. Should the Board of Directors of the Fund or the Investment
Manager at any time, however, make any definite
2
<PAGE>
determination as to investment policy and notify in writing the Sub-
Investment Manager thereof, the Sub-Investment Manager shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified in writing that such determination has been revoked. The Sub-
Investment Manager shall take, on behalf of the Fund, all actions which it deems
necessary to implement the investment policies of the Portfolio, determined as
provided above, and in particular to place all orders for the purchase or sale
of portfolio securities for the Portfolio with brokers or dealers selected by
it.
In connection with the selection of such brokers or dealers and the
placing of such orders, the Sub-Investment Manager is directed at all times to
follow the policies of the Fund set forth in the Prospectus. Nothing herein
shall preclude the "bunching" of orders for the sale or purchase of portfolio
securities with other Fund portfolios or with other accounts managed by the Sub-
Investment Manager. The Sub-Investment Manager shall not favor any account over
any other and any purchase or sale orders executed contemporaneously shall be
allocated in a manner it deems equitable among the accounts involved and, to the
extent operationally feasible, at a price which is approximately averaged.
In connection with these services the Sub-Investment Manager will provide
investment research as to the Portfolio's investments and conduct a continuous
program of evaluation of its assets. The Sub-Investment Manager will have the
responsibility to monitor the investments of the Portfolio to the extent
necessary for the Sub-Investment Manager to manage the Portfolio in a manner
that is consistent with the investment objective and policies of the Portfolio
set forth in the Registration Statement of the Fund, as from time to time
amended, and communicated in
3
<PAGE>
writing to the Sub-Investment Manager, and consistent with applicable law,
including, but not limited to, the Investment Company Act and the rules and
regulations thereunder and the applicable provisions of the Internal Revenue
Code and the rules and regulations thereunder (including, without limitation,
subchapter M of the Code and the investment diversification aspects of Section
817(h) of the Code).
The Sub-Investment Manager will furnish the Investment Manager and the Fund
such statistical information, including prices of securities in situations where
a fair valuation determination is required or when a security cannot be priced
by the Fund's accountants, with respect to the investments it makes for the
Portfolio as the Investment Manager and the Fund may reasonably request. On its
own initiative, the Sub-Investment Manager will apprise the Investment Manager
and the Fund of important developments materially affecting the Portfolio,
including but not limited to any change in the personnel of the Sub-Investment
Manager responsible for the day to day investment decisions made by the Sub-
Investment Manager for the Portfolio and any material legal proceedings against
the Sub-Investment Manager by the Securities and Exchange Commission relating to
violations of the federal securities laws by the Sub-Investment Manager, and
will furnish the Investment Manager and the Fund from time to time with similar
material information that is believed appropriate for this purpose. In addition,
the Sub-Investment Manager will furnish the Investment Manager and the Fund's
Board of Directors such periodic and special reports as either of them may
reasonably request.
The Sub-Investment Manager will exercise its best judgment in rendering
the services provided for in this Article 1, and the Fund and the Investment
Manager agree, as an inducement
4
<PAGE>
to the Sub-Investment Manager's undertaking so to do, that the Sub-Investment
Manager will not be liable under this Agreement for any mistake of judgment or
in any other event whatsoever, except as hereinafter provided. The Sub-
Investment Manager shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise provided or authorized, have no authority
to act for or represent the Fund or the Investment Manager in any way or
otherwise be deemed an agent of the Fund or the Investment Manager other than in
furtherance of its duties and responsibilities as set forth in this Agreement.
ARTICLE 2
SUB-INVESTMENT MANAGEMENT FEE
-----------------------------
The payment of advisory fees and the allocation of charges and expenses
between the Fund and the Investment Manager with respect to the Portfolio are
set forth in the Harris Oakmark Large Cap Value Portfolio Investment Management
Agreement. Nothing in this Harris Oakmark Large Cap Value Portfolio Sub-
Investment Management Agreement shall change or affect that arrangement. The
payment of advisory fees and the apportionment of any expenses related to the
services of the Sub-Investment Manager under this Agreement shall be the sole
concern of the Investment Manager and the Sub-Investment Manager and shall not
be the responsibility of the Fund.
In consideration of services rendered pursuant to this Agreement, the
Investment Manager will pay the Sub-Investment Manager on the first business day
of each month the fee at the annual rate specified by the schedule of fees in
the Appendix to this Agreement. The fee for any period from the date the
Portfolio commences operations to the end of the month will be
5
<PAGE>
prorated according to the proportion which the period bears to the full month,
and, upon any termination of this Agreement before the end of any month, the fee
for the part of the month during which the Sub-Investment Manager acted under
this Agreement will be prorated according to the proportion which the period
bears to the full month and will be payable upon the date of termination of this
Agreement.
For the purpose of determining the fees payable to the Sub-Investment
Manager, the value of the Portfolio's net assets will be computed in the manner
specified in the Fund's Prospectus. The Sub-Investment Manager will bear all of
its own expenses (such as research costs) in connection with the performance of
its duties under this Agreement except for those which the Investment Manager
agrees to pay.
The Sub-Investment Manager agrees to notify promptly, upon written request,
the Investment Manager if, for any other registered investment company having a
substantially similar investment program, it agrees to (1) provide more services
or bear more expenses for a comparable or lower fee; and (2) provide comparable
services and bear comparable expenses for a lower fee.
OTHER MATTERS
-------------
The Sub-Investment Manager may from time to time employ or associate with
itself any person or persons believed to be particularly fitted to assist in its
performance of services under this Agreement. The compensation of any such
persons will be paid by the Sub-Investment Manager, and no obligation will be
incurred by, or on behalf of, the Fund or the Investment Manager with respect to
them.
6
<PAGE>
The Fund and the Investment Manager understand that the Sub-Investment
Manager now acts and will continue to act as investment manager to various
investment companies and fiduciary or other managed accounts, and the Fund and
the Investment Manager have no objection to the Sub-Investment Manager's so
acting. In addition, the Fund understands that the persons employed by the Sub-
Investment Manager to assist in the performance of the Sub-Investment Manager's
duties hereunder will not devote their full time to such service, and nothing
herein contained shall be deemed to limit or restrict the Sub-Investment
Manager's right or the right of any of the Sub-Investment Manager's affiliates
to engage in and devote time and attention to other businesses or to render
other services of whatever kind or nature.
The Sub-Investment Manager agrees that all books and records which it
maintains for the Fund are the Fund's property as well as the Sub-Investment
Manager's. The Sub-Investment Manager also agrees upon request of the Investment
Manager or the Fund, promptly to surrender copies of the books and records to
the requester or make the books and records available for inspection by
representatives of regulatory authorities. The Sub-Investment Manager further
agrees to maintain and preserve the Fund's books and records in accordance with
the Investment Company Act and rules thereunder.
The Sub-Investment Manager will not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, except for a loss resulting from
willful misfeasance, bad faith or gross negligence of the Sub-Investment Manager
in the performance of its duties or from reckless disregard of its obligations
and duties under this Agreement.
7
<PAGE>
The Investment Manager has herewith furnished the Sub-Investment Manager
copies of the Fund's Registration Statement, Articles of Incorporation and By-
Laws as currently in effect and agrees during the continuance of this Agreement
to furnish the Sub-Investment Manager copies of any amendments or supplements
thereto before or at the time the amendments or supplements become effective.
The Sub-Investment Manager will be entitled to rely on all documents furnished
to it by the Investment Manager or the Fund.
ARTICLE 3
DURATION AND TERMINATION OF THIS AGREEMENT
------------------------------------------
This Agreement shall become effective as of the date first above written
and shall remain in force until May 16, 1999 and thereafter shall continue in
effect, but only so long as such continuance is specifically approved at least
annually by (i) the Board of Directors of the Fund, or by the vote of a majority
of the outstanding shares of the Portfolio, and (ii) a majority of those
directors who are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of voting on such
approval.
This Agreement may be terminated with respect to the Portfolio at any
time, without the payment of any penalty, by the Board of Directors of the Fund,
or by vote of a majority of the outstanding shares of the Portfolio, on sixty
days' written notice to the Investment Manager and Sub-Investment Manager, by
the Investment Manager on thirty days' written notice to the Sub-Investment
Manager and the Fund, or by the Sub-Investment Manager on sixty days' written
notice to the Investment Manager and the Fund. This Agreement shall
automatically terminate in the event of its assignment or in the event of the
termination of the Harris Oakmark Large Cap
8
<PAGE>
Value Portfolio Investment Management Agreement.
ARTICLE 4
DEFINITIONS
-----------
The terms "assignment," "interested person," and "majority of the
outstanding shares," when used in this Agreement, shall have the respective
meanings specified under the Investment Company Act.
ARTICLE 5
AMENDMENTS OF THIS AGREEMENT
----------------------------
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the Board of Directors of the Fund, to the extent
permitted by the Investment Company Act, or by the vote of a majority of the
outstanding shares of the Portfolio, and (ii) by the vote of a majority of those
directors of the Fund who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such approval.
ARTICLE 6
GOVERNING LAW
-------------
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
9
<PAGE>
ARTICLE 7
NOTICES
-------
Notices to be given hereunder shall be addressed to:
Fund: Christopher P. Nicholas
President and Chief Operating Officer
Metropolitan Series Fund, Inc.
One Madison Avenue, Area 7G
New York, New York 10010
Investment Manager: Gary A. Beller, Esq.
Senior Executive Vice-President and General Counsel
Metropolitan Life Insurance Company
One Madison Avenue, Area 11G
New York, New York 10010
Sub-Investment Manager: Robert J. Sanborn, CFA
Partner and Portfolio Manager
Anita Nagler
Partner and General Counsel
Harris Associates L.P.
Two North LaSalle Street
Chicago, Illinois 60602-3790
Changes in the foregoing notice provisions may be made by notice in
writing to the other parties and the addresses set forth above. Notice shall be
effective upon delivery.
10
<PAGE>
METROPOLITAN SERIES FUND, INC.
By:
---------------------
Christopher P. Nicholas
Attest:
- -----------------------
Robin Wagner
METROPOLITAN LIFE INSURANCE
COMPANY
By:
---------------------
Jeffrey J. Hodgman
Attest:
- -----------------------
Ruth R. Gluck
HARRIS ASSOCIATES L.P.
By:
---------------------
Attest:
- -----------------------
11
<PAGE>
APPENDIX
--------
HARRIS ASSOCIATES L.P.
---------------------
METROPOLITAN SERIES FUND FEE SCHEDULE
-------------------------------------
HARRIS OAKMARK LARGE CAP VALUE PORTFOLIO
----------------------------------------
0.650% on the first $250MM
0.600% thereafter
of the average daily value of the net assets of the Portfolio
12
<PAGE>
Exhibit 13(h)
Seventh Supplementary Stock Purchase Agreement
----------------------------------------------
Agreement between Metropolitan Life Insurance Company (hereinafter
"Metropolitan"), a mutual life insurance company existing under and by virtue of
the laws of the State of New York and Metropolitan Series Fund, Inc.
(hereinafter the "Fund"), a corporation organized and existing under and by
virtue of the laws of the State of Maryland. In consideration of the mutual
promises set forth herein, the parties agree as follows: 1. The Fund agrees
to sell to Metropolitan and Metropolitan agrees to purchase for the aggregate
amount of $________, ___________shares of Common Stock, $.01 Par Value, of the
Fund (hereinafter the "Stock") as follows:
________ Shares of Stock of the Neuberger&Berman Partners Mid Cap Value
Portfolio
________ Shares of Stock of the T. Rowe Price Large Cap Growth Portfolio
________ Shares of Stock of the Harris Oakmark Large Cap Value Portfolio
________ Shares of Stock of the Lehman Brothers Aggregate Bond Index
Portfolio
________ Shares of Stock of the Russell 2000 Index Portfolio
________ Shares of Stock of the Morgan Stanley EAFE Index Portfolio
2. Metropolitan acknowledges that the Stock has not been registered under any
state or federal securities laws and that, therefore, the Fund is relying on
certain exemptions therein from such registration requirements, including
exemptions dependent on the intent of the undersigned in acquiring the Stock.
Metropolitan also understands that any resale of the Stock, or any part thereof,
may be subject to restrictions under state and federal securities laws, and that
Metropolitan may be required to bear the economic risk of an investment in the
Stock for an indefinite period of time.
3. Metropolitan represents and warrants that it is acquiring the Stock solely
for its own account and solely for investment purposes and not with a view to
the resale or disposition of all or any part thereof, and that it has no present
plan or intention to sell or
<PAGE>
otherwise dispose of the Stock or any part thereof; and
4. Metropolitan agrees that it will not sell or dispose of the Stock or any
part thereof unless registration statements with respect to such Stock are then
in effect under the Securities Act of 1933 and under any applicable state
securities laws or unless the undersigned shall have delivered to the Fund an
opinion of counsel acceptable to the Fund, in form and substance acceptable to
the Fund, that no such registration is necessary.
IN WITNESS THEREOF, the parties hereto have executed this Agreement by their
duly authorized representatives this ____ day of October, 1998.
Metropolitan Life Insurance Company Metropolitan Series Fund, Inc.
By By
--------------------------------- --------------------------------
Title Title
----------------------------- -----------------------------
<PAGE>
EXHIBIT 16(a)
POWER OF ATTORNEY
Metropolitan Series Fund, Inc.
------------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, a director and officer of
Metropolitan Series Fund, Inc. (the "Corporation"), do hereby appoint
Christopher P. Nicholas and Robin Wagner and each of them severally, my true and
lawful attorney-in-fact, for me and in my name, place and stead to execute and
file any instrument or document to be filed as part of or in connection with or
in any way related to the Registration Statements and any and all amendments
thereto, filed by the Corporation under the Securities Act of 1933, as amended,
and/or the Investment Company Act of 1940, as amended, and to have full power
and authority to do or cause to be done in my name, place and stead each and
every act and thing necessary or appropriate in order to effectuate the same, as
fully to all intents and purposes as I might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact, or any of them, may do
or cause to be done by virtue hereof. Each of said attorneys-in-fact shall have
power to act hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 1st day of April, 1998.
---
/s/ David A. Levene
-----------------------------
David A. Levene
<PAGE>
POWER OF ATTORNEY
Metropolitan Series Fund, Inc.
------------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Series
Fund, Inc. (the "Corporation"), do hereby appoint David A. Levene, Christopher
P. Nicholas and Robin Wagner and each of them severally, my true and lawful
attorney-in-fact, for me and in my name, place and stead to execute and file any
instrument or document to be filed as part of or in connection with or in any
way related to the Registration Statements and any and all amendments thereto,
filed by the Corporation under the Securities Act of 1933, as amended, and/or
the Investment Company Act of 1940, as amended, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact, or any of them, may do or cause
to be done by virtue hereof. Each of said attorneys-in-fact shall have power to
act hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of July, 1998.
/s/ Arthur G. Typermass
-----------------------
Arthur G. Typermass
