<PAGE>
As filed with the Securities and Exchange Commission on April 6, 2000
Registration Nos. 2-80751
811-3618
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]
[X]
Post-Effective Amendment No. 26
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[_]
[X]
Amendment No. 28
(Check appropriate box or boxes)
----------------
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
----------------
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.
[X]on May 1, 2000 pursuant to paragraph (b) of Rule 485.
[_]80 days after filing pursuant to paragraph (a)(1) of Rule 485.
[_]on (date) pursuant to paragraph (a)(1) of Rule 485.
[_]75 days after filing pursuant to paragraph (a)(2) of Rule 485.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[METLIFE LOGO]
[STATE STREET RESEARCH LOGO]
[HARRIS ASSOCIATES LOGO]
[JANUS LOGO]
[L.P.LOOMIS SAYLES & COMPANY, L.P. LOGO]
[NEUBERGER BERMAN LOGO]
[PUTNAM INVESTMENTS LOGO]
[SCUDDER LOGO]
[T. ROWE PRICE LOGO]
PROSPECTUS
FOR
METROPOLITAN SERIES FUND, INC.
May 1, 2000
The investment options currently offered by the Metropolitan Series Fund (the
"Fund") are:
<TABLE>
<S> <C>
State Street Loomis Sayles High
Research Yield Bond Portfolio
Aggressive Growth
Portfolio Neuberger Berman
Partners Mid Cap Value
State Street Portfolio
Research
Diversified Scudder Global Equity
Portfolio Portfolio
State Street T. Rowe Price Large Cap
Research Growth Portfolio
Growth Portfolio
T. Rowe Price Small Cap
State Street Growth Portfolio
Research
Income Portfolio Lehman Brothers(R)
Aggregate Bond Index
State Street Portfolio
Research
Money Market MetLife Stock Index
Portfolio Portfolio
State Street MetLife Mid Cap Stock
Research Index Portfolio
Aurora Small Cap
Value Morgan Stanley EAFE(R)
Portfolio Index Portfolio
Putnam International Russell 2000(R) Index
Stock Portfolio Portfolio
(formerly
Santander
International
Stock Portfolio)
Putnam Large Cap
Growth Portfolio
Harris Oakmark
Large Cap Value
Portfolio
Janus Mid Cap
Portfolio
</TABLE>
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 accurate or
complete. Any representation otherwise is a criminal offense.
<PAGE>
TABLE OF CONTENTS FOR THIS PROSPECTUS
<TABLE>
<CAPTION>
Page
in this
Subject Prospectus
------- ----------
<S> <C>
Risk/Return Summary............................................... 2
Performance and Volatility........................................ 12
About the Investment Managers..................................... 20
Portfolio Turnover Rates.......................................... 26
Dividends, Distributions and Taxes................................ 26
General Information About the Fund and its Purpose................ 27
Sale and Redemption of Shares..................................... 28
Financial Highlights.............................................. 29
Appendix A--Portfolio Manager Prior Performance................... 36
Appendix B--Certain Investment Practices.......................... 39
Appendix C--Description of Some Investments,
Techniques, and Risks............................................ 43
</TABLE>
[Carefully review the objectives and investment practices of the Portfolios and
consider your ability to assume the risks involved before allocating payments to
particular Portfolios.]
Risk/Return Summary
About all the Portfolios
Each Portfolio of the Fund has its own investment objective. Since investment
in any Portfolio 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 investment practices of the
Portfolios and consider your ability to assume the risks involved before
allocating payments to particular Portfolios. The loss of money is a risk of
investing in the Fund.
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 in Appendix B and C to this Prospectus.
However, those 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 Statement of Additional Information
("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.
[State Street Research Aggressive Growth Portfolio]
About the State Street Research Aggressive Growth Portfolio:
Investment objective: maximum capital appreciation.
Principal investment strategies: The Portfolio generally invests most of its
assets in the common stocks of, and other securities convertible into or
carrying the right to acquire common stocks of companies whose earnings appear
to be growing at a faster rate than the earnings of an average company. The
Portfolio's investments can range across the full spectrum from small to large
capitalization issuers. At different times, the Portfolio may emphasize a
particular size or type of company. Currently, the Portfolio focuses on medium
size companies.
2
<PAGE>
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
less mature companies, smaller companies and companies with "special
situations';" and "Growth investing." Volatility may be indicative of risk.
Please refer to the discussion under "Performance and Volatility."
[State Street Research Growth Portfolio]
About the State Street Research Growth Portfolio:
Investment objective: long-term growth of capital and income and moderate
current income.
Principal investment strategies: The Portfolio generally invests the greatest
portion of its assets in equity securities of larger, established companies and
equity securities that are selling below what the portfolio manager believes to
be their intrinsic values. Other principal strategies include investing in
cyclical securities and smaller emerging growth companies with potential for
above average earnings growth.
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
larger companies;" "Investing in less mature companies, smaller companies and
companies with "special situations';" "Growth investing;" and "Value
investing." Volatility may be indicative of risk. Please refer to the
discussion under "Performance and Volatility."
[State Street Research Money Market Portfolio]
About the State Street Research Money Market Portfolio:
Investment objective: the highest possible current income consistent with
preservation of capital and maintenance of liquidity.
Principal investment strategies: The Portfolio primarily invests 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, and the dollar weighted average maturity of the Portfolio's securities
will not be more than 90 days.
Principal risks: Although the portfolio manager will manage the Portfolio so
that significant variations in net asset value are rather unlikely, it is
possible to lose money by investing in the Portfolio. The major risk involved
with investing in the Portfolio is that the overall yield of the Portfolio
could decrease and lower the return on your investment. Situations that can
lower the yield include those that cause short-term interest rates to decline.
An investment in the Portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Volatility may be
indicative of risk. Please refer to the discussion under "Performance and
Volatility."
[State Street Research Income Portfolio]
About the State Street Research Income Portfolio:
Investment objective: a combination of: (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.
Principal investment strategies: The Portfolio invests at least 65% of its net
assets in non-convertible debt securities in the three highest rating
3
<PAGE>
categories as determined by a nationally recognized statistical rating
organization ("NRSRO"), or of comparable quality ("top three ratings"). The
Portfolio may invest in debt securities with varying maturities. The Portfolio
may also invest in (a) debt securities that are not within the top three
rating categories, (b) convertible securities and preferred stocks of
companies that have senior securities rated within the top three credit rating
categories, and (c) up to 10% of total assets in common stocks acquired by
conversion of convertible securities or exercise of warrants attached to debt
securities.
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Investing in fixed income
securities;" "Prepayment risk;" and "Zero coupon risks." Volatility may be
indicative of risk. Please refer to the discussion under "Performance and
Volatility."
[State Street Research Aurora Small Cap Value Portfolio]
About the State Street Research Aurora Small Cap Value Portfolio:
Investment objective: high total return, consisting principally of capital
appreciation.
Principal investment strategies: Under normal market conditions, the portfolio
invests at least 65% of its total assets in small company value stocks. The
Portfolio generally expects that most of these stocks, when it first buys
them, will not be larger than the stocks of the largest companies in the
Russell 2000 Value Index. As of December 31, 1999, this included companies
with capitalizations of approximately $660 million. The Portfolio may continue
to hold or buy stock in a company that has outgrown this range if the company
appears to remain an attractive investment. In choosing among small company
stocks, the Portfolio takes a value approach, searching for those companies
that appear to be trading below their true worth. The Portfolio uses research
to identify potential investments, examining such features as a firm's
financial condition, business prospects, competitive position and business
strategy. The Portfolio looks for companies that appear likely to come back
into favor with investors, for reasons that may range from good prospective
earnings or strong management teams to new products or services.
The Portfolio may adjust the composition of its holdings as market conditions
and economic outlooks change and reserves the right to invest up to 35% of
total assets in other securities. They would generally consist of other types
of equity securities, such as larger company stocks or growth stocks.
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
less mature companies, smaller companies and companies with "special
situations';" and "Value investing." Volatility may be indicative of risk.
4
<PAGE>
[State Street Research Diversified Portfolio]
About the State Street Research Diversified Portfolio:
Investment objective: high total return while attempting to limit investment
risk and preserve capital.
Principal investment strategies: 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 and short-term money market
instruments of the type that can be purchased by the State Street Research
Money Market Portfolio. The portion of the 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 of 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.
Principal risks: The major risk for the Portfolio is that the portfolio
managers will not correctly anticipate the relative performance of different
asset categories for specific periods resulting in the Portfolio
underperforming other types of asset allocation investments or other types of
investments in general. In addition, the Portfolio is subject to the same risks
as the State Street Research Growth, State Street Research Income and State
Street Research Money Market Portfolios to the extent its assets are invested
similarly to each of those portfolios. These risks may be moderated, however,
by the greater variety of asset types in which the Diversified Portfolio is
generally expected to be invested, as compared with those other Portfolios.
Volatility may be indicative of risk. Please refer to the discussion under
"Performance and Volatility."
[Putnam International Stock Portfolio]
About the Putnam International Stock Portfolio:
(formerly, the Santander International Stock Portfolio).
Investment objective: long-term growth of capital.
Principal investment strategies: The Portfolio normally invests mostly in the
common stocks of companies outside the United States. The portfolio manager
selects countries and industries it believes are attractive. The portfolio
manager then seeks stocks offering opportunity for gain. These may include both
growth and value stocks. The Portfolio invests mainly in mid-sized and large
companies, although the Portfolio can invest in companies of any size. The
Portfolio will usually be invested in issuers located in at least three
countries, not including the U.S. Under normal conditions, the Portfolio will
not invest more than 15% of its net assets in the equity securities of
companies domiciled in "emerging countries," as defined by Morgan Stanley
Capital International.
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" Equity investing;" "Investing in
larger companies;" "Investing in securities of foreign issuers;" "Value
investing;" and "Growth investing." Volatility may be indicative of risk.
Please refer to the discussion under "Performance and Volatility."
[Putnam Large Cap Growth Portfolio]
About the Putnam Large Cap Growth Portfolio:
Investment objective: capital appreciation.
Principal investment strategies: The Portfolio normally invests in the common
stocks of U.S. companies, with a focus on growth stocks. The portfolio managers
look for stocks issued by companies that are likely to
5
<PAGE>
grow faster than the economy as a whole. The Portfolio invests in a relatively
small number of companies that the managers believe will benefit from long-term
trends in the economy, business conditions, consumer behavior or public
perceptions of the economic environment. The Portfolio invests mainly in large
companies.
Principal risks: Since the Portfolio invests in fewer issuers than a fund that
invests more broadly, there is vulnerability to factors affecting a single
investment that can result in greater Portfolio losses and volatility. The
Portfolio's other principal risks are described after the following captions
under "Principal Risks of Investing in the Fund:" "Equity investing;"
"Investing in larger companies;" "Investing in securities of foreign issuers;"
and "Growth investing." Volatility may be indicative of risk.
[Harris Oakmark Large Cap Value Portfolio]
About the Harris Oakmark Large Cap Value Portfolio:
Investment objective: long-term capital appreciation.
Principal investment strategies: The Portfolio normally invests at least 65% of
its total assets in equity securities of large capitalization U.S. companies.
The portfolio managers define large-cap ("large-cap") companies as those whose
market capitalization falls within the range of companies included in the S&P
500 Index at the time of the purchase. As of December 31, 1999, this included
companies with capitalizations of approximately $750 million and above. The
portfolio managers' chief consideration in selecting equity securities for the
Portfolio is their judgment as to the size of the discount at which the
security trades, relative to its economic value. The portfolio managers'
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 portfolio managers use several methods to analyze value, but
considers the primary determinant to be the enterprise's long-run ability to
generate cash for its owners. The portfolio managers also believe the risks of
equity investing are often reduced if management's interests are strongly
aligned with the interests of its stockholders.
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
larger companies;" "Investing in less mature companies, smaller companies and
companies with "special situations';" and "Value investing." Volatility may be
indicative of risk. Please refer to the discussion under "Performance and
Volatility."
[Janus Mid Cap Portfolio]
About the Janus Mid Cap Portfolio:
Investment objective: long-term growth of capital.
Principal investment strategies: The Portfolio normally invests at least 65% of
its total assets in common stocks of medium capitalization companies selected
for their growth potential. The portfolio manager defines medium capitalization
("mid-cap") companies as those whose market capitalization falls within the
range of companies included in the S&P MidCap 400 Index at the time of the
purchase. As of December 31, 1999, this included companies with capitalizations
between approximately $170 million and $37 billion. 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.
6
<PAGE>
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.
Principal risks: The Portfolio is nondiversified which means it may hold larger
positions in a smaller number of securities than would a diversified portfolio.
Thus, a single security's increase or decrease in value may have a greater
impact on the value of the Portfolio and its total return. The Portfolio's
other principal risks are described after the following captions, under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
less mature companies, smaller companies and companies with "special
situations';" "Investing in larger companies;" "Investing in securities of
foreign issuers;" "Investing in medium sized companies;" and "Growth
investing." Volatility may be indicative of risk. Please refer to the
discussion under "Performance and Volatility."
[Loomis Sayles High Yield Bond Portfolio]
About the Loomis Sayles High Yield Bond Portfolio:
Investment objective: high total investment return through a combination of
current income and capital appreciation.
Principal investment strategies: 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 expects to invest a substantial amount of
its assets in securities of foreign (non-U.S. domiciled) companies.
Principal risks: The risks are described after the following captions under
"Principal Risks of Investing in the Fund:" "Investing in fixed income
securities;" "Prepayment risk;" "Investing in securities of foreign issuers;"
and "Zero coupon risks." Also, the 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. Volatility may
be indicative of risk. Please refer to the discussion under "Performance and
Volatility."
[Neuberger Berman Partners Mid Cap Value Portfolio]
About the Neuberger Berman Partners Mid Cap Value Portfolio:
Investment objective: capital growth.
Principal investment strategies: The Portfolio normally invests at least 65% of
its total assets in common stocks of mid capitalization companies. The
portfolio managers define mid-cap companies as those whose market
capitalization falls within the range of companies included in the S&P MidCap
400 Index at the time of purchase. As of December 31, 1999, this included
companies with capitalizations between approximately $165 million and $37.094
billion. 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 particular field.
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
medium sized companies;" and "Value investing." Volatility may be indicative of
risk. Please refer to the discussion under "Performance and Volatility."
7
<PAGE>
[Scudder Global Equity Portfolio]
About the Scudder Global Equity Portfolio:
Investment objective: long-term growth of capital.
Principal investment strategies: 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 be invested in non-U.S.
issues.
Principal Risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Value
investing; "Growth investing;" "Investing in larger companies;" and "Investing
in securities of foreign issuers." Volatility may be indicative of risk. Please
refer to the discussion under "Performance and Volatility."
[T. Rowe Price Large Cap Growth Portfolio]
About the T. Rowe Price Large Cap Growth Portfolio:
Investment objective: long-term growth of capital and, secondarily, dividend
income.
Principal investment strategies: The Portfolio normally invests at least 65% of
its total assets in a diversified group of large capitalization growth
companies. The portfolio managers define large capitalization ("large-cap")
companies as those whose market capitalization falls within the range of the
largest 300 companies included in the Russell 3000 Index at the time of the
purchase. As of December 31, 1999, this included companies with capitalizations
of approximately $7.7 billion and above. 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 expects to invest in common
stocks of companies that normally (but not always) pay dividends that are
generally expected to rise in future years as earnings rise.
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
larger companies;" "Investing in securities of foreign issuers;" and "Growth
investing." The risks of equity investing may be moderated by the fact that the
Portfolio emphasizes dividend paying securities. On the other hand, that may
expose the Portfolio more directly to interest rate risk. Volatility may be
indicative of risk. Please refer to the discussion under "Performance and
Volatility."
[T. Rowe Price Small Cap Growth Portfolio]
About the T. Rowe Price Small Cap Growth Portfolio:
Investment objective: long-term capital growth.
Principal investment strategies: The Portfolio normally invests at least 65% of
its total assets in a diversified group of small capitalization companies. The
8
<PAGE>
portfolio manager defines small capitalization ("small cap") companies as those
whose market capitalization falls within the range of companies included in the
bottom 20% of the S&P 500 Index at the time of the purchase. As of December 31,
1999, this included companies with capitalizations of approximately $3.3
billion and below. 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.
Principal risks: The risks described after the following captions "Principal
Risks of Investing in the Fund:" "Equity investing;" "Investing in less mature
companies, smaller companies and companies with "special situations';" and
"Growth investing." Volatility may be indicative of risk. Please refer to the
discussion under "Performance and Volatility."
[The Index Portfolios]
About all the Index Portfolios
Principal investment strategies applicable to all the Index Portfolios: Each
Index Portfolio has as an investment objective to equal the performance of a
particular index. Certain strategies common to all of the Index Portfolios are
discussed in the next paragraph below. Thereafter, the unique aspects of the
objective and principal strategies of each Index Portfolio are discussed.
In addition to securities of the type contained in its index, each Portfolio
also expects to invest, as a principal investment strategy, in securities index
futures contracts and/or related options to simulate full investment in the
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, the portfolio manager 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. MetLife
monitors the tracking performance of the Portfolio through examination of the
"correlation coefficient." A perfect correlation would produce a coefficient of
1.00. The Portfolio will attempt to maintain a target correlation coefficient
of at least .95.
[Lehman Brothers Aggregate Bond Index Portfolio]
Lehman Brothers Aggregate Bond Index Portfolio:
Investment objective: to equal the performance of the Lehman Brothers Aggregate
Bond Index.
Principal investment strategies: In addition to the strategies outlined above
under "Principal investment strategies applicable to all the Index Portfolios,"
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, the Lehman Brothers Asset-Backed
Securities Index and, effective July 1, 1999, the Lehman Brothers Commercial
Mortgage-Backed Securities Index. The Portfolio may continue to hold debt
securities 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. The types of fixed income securities included in the
Index are 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
9
<PAGE>
governments, municipalities, governmental agencies or international agencies,
and 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.
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Investing in fixed income
securities;" "Prepayment risk;" "Zero coupon risks;" and "Index investing."
Volatility may be indicative of risk. Please refer to the discussion under
"Performance and Volatility."
[MetLife Stock Index Portfolio]
MetLife Stock Index Portfolio:
Investment objective: to equal the performance of the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index").
Principal investment strategies: In addition to the strategies outlined above
under "Principal investment strategies applicable to all the Index Portfolios,"
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 Portfolio will be managed
by purchasing the common stock of all the companies in the S&P 500 Index. 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.
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
larger companies;" and "Index investing." Volatility may be indicative of risk.
Please refer to the discussion under "Performance and Volatility."
[Morgan Stanley EAFE Index Portfolio]
Morgan Stanley EAFE Index Portfolio:
Investment objective: to equal the performance of the MSCI EAFE Index.
Principal investment strategies: In addition to the strategies outlined above
under "Principal investment strategies applicable to all the Index Portfolios,"
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 December 31, 1999
countries included in the MSCI EAFE Index were Australia, Austria, Belgium,
Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, The
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland and the United Kingdom. The Portfolio will invest in a
statistically selected sample of the 1,100 stocks included in the MSCI EAFE
Index. The stocks purchased for the 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.
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
10
<PAGE>
securities of foreign issuers;" and "Index investing." Volatility may be
indicative of risk. Please refer to the discussion under "Performance and
Volatility."
[Russell 2000 Index Portfolio]
Russell 2000 Index Portfolio:
Investment objective: to equal the return of the Russell 2000 Index.
Principal investment strategies: In addition to the strategies outlined above
under "Principal Investment Strategies for the Index Portfolios," 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 approximately 2,000
small capitalization companies. As of December 31, 1999, the average stock
market capitalization of companies in the Russell 2000 Index was $460 million,
and the weighted average stock market capitalization was $1,360 million. 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.
Principal risks: The risks described after the following the captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
less mature companies, smaller companies and companies with "special
situations';" and "Index investing." Volatility may be indicative of risk.
Please refer to the discussion under "Performance and Volatility."
[MetLife Mid Cap Stock Index Portfolio]
About the MetLife Mid Cap Stock Index Portfolio:
Investment objective: to equal the performance of the Standard & Poor's MidCap
400 Composite Stock Index ("S&P MidCap 400 Index").
Principal investment strategies: In addition to the strategies outlined above
under "Principal investment strategies applicable to all the Index Portfolios,"
the Portfolio will normally invest most of its assets in common stocks included
in the S&P 400 MidCap Index. The S&P MidCap 400 Index consists of the common
stock of approximately 400 mid capitalization companies. As of December 31,
1999, the average stock market capitalization of companies in the S&P MidCap
400 Index was $2.304 billion, and the weighted average stock market
capitalization was $5.531 billion. The Portfolio will be managed by purchasing
the common stock of all the companies in the S&P MidCap 400 Index.
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund;" "Equity Investing;" "Index
Investing;" "Investing in less mature companies, smaller companies, and
companies with "special situations';" "Investing in larger companies;" and
"Investing in medium sized companies." Volatility may be indicative of risk.
11
<PAGE>
Performance and Volatility
The following tables and charts are provided to illustrate the variability of
the investment returns that each Portfolio shown below has earned in the past.
. Average annual total return measures a Portfolio's performance over time, and
compares those returns to a representative index. Periods of 1, 5, and 10
years (or since inception as applicable) are presented.
. The graphs of year-by-year returns examine volatility by illustrating a
Portfolio's historic highs and lows, as well as the consistency of returns.
. In general, as reflected in this section, Portfolios with higher average
annual total returns tend to be more volatile.
. Return calculations do not reflect insurance product fees or other charges,
and if included these charges would reduce each Portfolio's past performance.
Also, past performance does not necessarily indicate how a particular
Portfolio will perform in the future.
State Street Research Aggresive Growth
Investments Results
Average Annual Total Returns
As of December 31, 1999
-----------------------
1 year 5 Years 10 Years
------ ------- --------
State Street Research
Aggressive Growth 33.24% 17.65% 16.14%
- -------------------------------------------------
S&P 500 21.04% 28.54% 18.19%
[BAR CHART]
90 -10.34%
91 66.41%
92 10.39%
93 22.63%
94 -1.88%
95 29.50%
96 7.72%
97 6.67%
98 13.69%
99 33.24%
During the 10-year period shown in the bar chart, the highest return for a
quarter was 33.8% (quarter ended December 31, 1999) and the lowest return for a
quarter was -22.3% (quarter ended September 30, 1990).
State Street Research Money Market
Investment Results
Average Annual Total Returns
As of December 31, 1999
--------------------------
1 Year 5 Years 10 Years
------ ------- --------
State Street Research
Money Market 4.89% 5.18% 5.06%
- ------------------------------------------------------
IBC's All Taxable 30 Day 4.64% 5.04% 4.86%
The seven day yield for this portfolio is 5.71% (simple yield) and
5.87% (effective yield) for the seven days ended December 31, 1999.
[BAR CHART]
90 8.23%
91 6.10%
92 3.73%
93 2.9%
94 3.85%
95 5.59%
96 5.01%
97 5.21%
98 5.19%
99 4.89%
During the 10-year period shown in the bar chart, the highest return for the
quarter was 2.4% (quarter ended June 30, 1989) and the lowest return for a
quarter was 0.70% (quarter ended September 30, 1993).
12
<PAGE>
State Street Research Diversified
Investment Results
Average Annual Total Returns
As of December 31, 1999
---------------------------------
1 Year 5 Years 10 Years
------ ------- --------
State Street Research
Diversified 8.71% 17.94% 13.05%
- ------------------------------------------------------------------
S&P 500 21.04% 28.54% 18.19%
- ------------------------------------------------------------------
Lehman Brothers Aggregate -0.82% 7.73% 7.70%
[BAR CHART]
90 0.00
91 24.84
92 9.48
93 12.75
94 -3.06
95 27.03
96 14.52
97 20.58
98 19.64
99 8.71
During the 10-year period shown in the bar chart, the highest return for a
quarter was 11.7% (quarter ended June 30, 1998) and the lowest return for a
quarter was -8.8% (quarter ended September 30, 1990).
State Street Research Income
Investment Results
Average Annual Total Returns
As of December 31, 1999
---------------------------------
1 Year 5 Years 10 Years
------ ------- --------
State Street Research
Income -2.28% 7.78% 9.69%
- ------------------------------------------------------------------
Lehman Brothers Aggregate -0.82% 7.73% 7.70%
[BAR CHART]
90 10.03
91 17.31
92 6.91
93 11.36
94 -3.15
95 19.55
96 3.60
97 9.83
98 9.40
99 -2.28
During the 10-year period shown in the bar chart, the highest return for a
quarter was 6.9% (quarter ended September 30, 1991) and the lowest return for a
quarter was -2.5% (quarter ended March 31, 1994).
State Street Research Growth
Investment Results
Average Annual Total Returns
As of December 31, 1999
---------------------------------
1 Year 5 Years 10 Years
------ ------- --------
State Street Research Growth 18.47% 25.96% 16.90%
- ------------------------------------------------------------------
Lehman Brothers Aggregate 21.04% 28.54% 18.19%
[BAR CHART]
90 -8.50
91 33.09
92 11.56
93 14.40
94 -3.25
95 33.14
96 22.18
97 28.36
98 28.18
99 18.47
During the 10-year period shown in the bar chart, the highest return for a
quarter was 38.6% (quarter ended December 31, 1998) and the lowest return for a
quarter was -22.6% (quarter ended September 30, 1998).
13
<PAGE>
State Street Research Aurora Small Cap Value
Since the Portfolio will commence operations effective on or about July
5, 2000,
no volatility or performance information is available.
Putnam International Stock(1)
Investment Results
Average Annual Total Returns
As of December 31, 1999
---------------------------------
1 Year 5 Years 10 Years
------ ------- --------
Santander
International Stock 16.44% 6.66% 7.80%
- ------------------------------------------------------------------
MSCI EAFE 26.96% 12.83% 10.07%
[BAR CHART]
92 -10.21
93 47.76
94 5.08
95 0.84
96 -1.77
97 -2.34
98 22.56
99 16.44
During the 10-year period shown in the bar chart, the highest return for a
quarter was 19.4% (quarter ended March 31, 1993) and the lowest return for a
quarter was -12.8% (quarter ended September 30, 1998).
- --------
1. Putnam became the sub-investment manager of the Putnam International Stock
Portfolio on January 24, 2000. Performance for all prior periods reflects
results under other sub-investment managers.
Putnam Large Cap Growth
Since the Portfolio will commence operations effective on or about May 1, 2000,
no volatility or performance information is available.
Harris Oakmark Large Cap Value
Investment Results
Average Annual Total Returns
As of December 31, 1999
----------------------
1 Year Inception
------ ---------
Harris Oakmark
Large Cap Value -6.89% -8.27%
- -------------------------------------------------------
S&P 500 21.04% 27.54%
[BAR CHART]
98* -2.70
99 -6.89
* For the period November 9, 1998 to December 31, 1998.
During the period shown in the bar chart the highest return for a quarter was
12.9% (quarter ended June 30, 1999), and the lowest return for a quarter was
- -13.4% (quarter ended September 30, 1999).
Janus Mid Cap
Investment Results
Average Annual Total Returns
As of December 31, 1999
----------------------
1 Year Inception
------ ---------
Janus Mid Cap 122.92% 61.99%
- -------------------------------------------------------
S&P 400 MidCap 14.72% 21.99%
[BAR CHART]
97* 28.22
98 37.19
99 122.92
* For the period March 3, 1997 to December 31, 1997.
During the period shown in the bar chart the highest return for a quarter was
59.4% (quarter ended December 31, 1999), and the lowest return for a quarter was
- -14.5% (quarter ended September 30, 1998).
14
<PAGE>
Loomis Sayles High Yield Bond
Investment Results
Average Annual Total Returns
As of December 31, 1999
---------------------------------
1 Year Inception
------ ---------
Loomis Sayles
High Yield Bond 17.82% 5.29%
- --------------------------------------------------------
Merrill Lynch High Yield 1.57% 5.40%
[BAR CHART]
97* 6.18
98 -7.51
99 17.82
* For the period March 3, 1997 to December 31, 1997.
During the period shown in the bar chart, the highest return for a quarter was
7.5% (quarter ended September 30, 1997) and the lowest return for a quarter was
- -15.8% (quarter ended September 30, 1998).
Neuberger Berman Partners Mid Cap Value Fund
Investment Results
Average Annual Total Returns
As of December 31, 1999
---------------------------------
1 Year Inception
------ ---------
Neuberger Berman Partners
Mid Cap Value Fund 17.63% 22.69%
- --------------------------------------------------------
S&P 400 MidCap Value 2.32% 4.96%
[BAR CHART]
98* 7.44
99 17.63
* For the period November 9, 1998 to December 31, 1998.
During the period shown in the bar chart, the highest return for a quarter was
16.3% (quarter ended June 30, 1999) and the lowest return for a quarter was
- -12.6% (quarter ended September 30, 1999).
Scudder Global Equity
Investment Results
Average Annual Total Returns
As of December 31, 1999
---------------------------------
1 Year Inception
------ ---------
Scudder Global Equity 25.17% 17.82%
- --------------------------------------------------------
MSCI World 27.31% 21.18%
[BAR CHART]
97* 9.62
98 15.96
99 25.17
* For the period March 3, 1997 to December 31, 1997.
During the period shown in the bar chart, the highest return for a quarter was
16.0% (quarter ended December 31, 1999) and the lowest return for a quarter was
- -11.2% (quarter ended September 30, 1998).
15
<PAGE>
T. Rowe Price Large Cap Growth
Investment Results
Average Annual Total Returns
As of December 31, 1999
---------------------------------
1 Year Inception
T. Rowe Price Large Cap Growth 22.23% 29.79%
- -------------------------------------------------------------------
80% of S&P 500+
20% of MSCI EAFE 22.22% 28.58%
[BAR CHART]
98* 10.28
99 22.23
*For the period November 9, 1998 to December 31, 1998.
During the 10-year period shown in the bar chart, the highest return for a
quarter was 19.3% (quarter ended December 31, 1999) and the lowest return for a
quarter was -5.8% (quarter ended September 30, 1999).
T. Rowe Price Small Cap Growth
Investment Results
Average Annual Total Returns
As of December 31, 1999
---------------------------------
1 Year Inception
T. Rowe Price Small Cap Growth 27.99% 17.34%
- -------------------------------------------------------------------
Russell 2000 Growth 43.09% 20.59%
[BAR CHART]
97* 18.81
98 3.45
99 27.99
*For the period March 3, 1997 to December 31, 1997.
During the 10-year period shown in the bar chart, the highest return for a
quarter was 26.5% (quarter ended December 31, 1999) and the lowest return for a
quarter was -21.8% (quarter ended September 30, 1998).
Lehman Brothers(R) Aggregate Bond Index
Investment Results
Average Annual Total Returns
As of December 31, 1999
---------------------------------
1 Year Inception
Lehman Brothers(R)
Aggregate Bond Index -1.37% -0.01%
- -------------------------------------------------------------------
Lehman Brothers Aggregate -0.82% -2.23%
[BAR CHART]
98* 1.38
99 -1.37
*For the period November 9, 1998 to December 31, 1998.
During the 10-year period shown in the bar chart, the highest return for a
quarter was 0.7% (quarter ended September 30, 1999) and the lowest return for a
quarter was -1.2% (quarter ended June 30, 1999).
16
<PAGE>
MetLife Stock Index
Investment Results
Average Annual Total Returns
As of December 31, 1999
---------------------------------
1 Year 5 Years Inception
------ ------- ---------
MetLife
Stock Index 20.79% 28.01% 19.07%
- ------------------------------------------------------------------
S&P 500 21.04% 28.54% 19.57%
[BAR CHART]
91 29.76
92 7.44
93 9.54
94 1.18
95 36.87
96 22.66
97 32.19
98 28.23
99 20.79
During the period shown in the bar chart, the highest return for a quarter was
21.3% (quarter ended December 31, 1998) and the lowest return for a quarter was
- -13.6% (quarter ended September 30, 1990).
MetLife Mid Cap Stock Index
Since the Portfolio will commence operations effective on or about July 5,
2000,
no volatility or performance information is available.
Morgan Stanley EAFE(R) Index
Investment Results
Average Annual Total Returns
As of December 31, 1999
---------------------------------
1 Year Inception
------ ---------
Morgan Stanley EAFE/r/
Index 24.90% 29.99%
- ------------------------------------------------------
MSCI EAFE 26.96% 32.74%
[BAR CHART]
98* 8.11
99 24.90
* For the period November 9, 1998 to December 31, 1998.
During the period shown in the bar chart, the highest return for a quarter was
15.2% (quarter ended December 31, 1999) and the lowest return for a quarter was
1.3% (quarter ended March 31, 1999).
Russell 2000(R) Index
Investment Results
Average Annual Total Returns
As of December 31, 1999
---------------------------------
1 Year Inception
------ ---------
Russell 2000/r/ 22.73% 25.29%
- ------------------------------------------------------
Russell 21.26% 24.72%
[BAR CHART]
98* 5.48
99 22.73
* For the period November 9, 1998 to December 31, 1998.
During the period shown in the bar chart, the highest return for a quarter was
18.7% (quarter ended December 31, 1999) and the lowest return for a quarter was
- -6.2% (quarter ended September 30, 1999).
17
<PAGE>
[Carefully review the principal risks associated with investing in the
Portfolios.]
Principal Risks of Investing in the Fund
The following briefly describes the principal risks that are associated with
one or more of the Fund's Portfolios.
Equity investing: Portfolios that invest in equities could lose money due to
sudden unpredictable drops in value and the potential for periods of lackluster
performance. Such adverse developments could result from general market or
economic conditions and/or developments at a particular company that the
portfolio managers do not foresee or circumstances that they do not evaluate
correctly. Historically, investments in equities have been more volatile than
many other investments.
This is a principal risk for the following Portfolios:
State Street Research Aggressive Growth, T. Rowe Price Small Cap Growth, Harris
Oakmark Large Cap Value, State Street Research Growth, State Street Research
Diversified, State Street Research Aurora Small Cap Value, Putnam International
Stock, Putnam Large Cap Growth, Janus Mid Cap, Neuberger Berman Partners Mid
Cap Value, Scudder Global Equity, T. Rowe Price Large Cap Growth, MetLife Stock
Index, Morgan Stanley EAFE Index, MetLife Mid Cap Stock Index and Russell 2000
Index.
Investing in less mature companies, smaller companies and companies with
"special situations": These investments can be particularly sensitive to market
movements, because they may be thinly traded and their market prices tend to
reflect future expectations. Also, these companies often have limited product
lines, markets or financial resources and their management personnel may lack
depth and experience. (For an explanation of "special situations" see
"investment styles" in Appendix C.)
This is a principal risk for the following Portfolios:
State Street Research Aggressive Growth, State Street Research Aurora Small Cap
Value, T. Rowe Price Small Cap Growth, Harris Oakmark Large Cap Value, State
Street Research Growth, State Street Research Diversified, Janus Mid Cap,
MetLife Mid Cap Stock Index and Russell 2000 Index.
Investing in larger companies: Larger more established companies may be unable
to respond quickly to new competitive challenges such as changes in technology
and consumer tastes. Many larger companies also may not be able to attain the
high growth rates of successful smaller companies, especially during extended
periods of economic expansion.
This is a principal risk for the following Portfolios:
State Street Research Diversified, Harris Oakmark Large Cap Value, State Street
Research Growth, Putnam International Stock, Putnam Large Cap Growth, Scudder
Global Equity, T. Rowe Price Large Cap Growth, Janus Mid Cap, MetLife Mid Cap
Stock Index and MetLife Stock Index.
Investing in fixed income securities: These types of investments are subject to
loss in value if the market interest rates subsequently rise after purchase of
the obligation. This risk is greater for investments with longer remaining
durations. Another risk is that the issuer's perceived creditworthiness can
drop and cause the fixed income investment to lose value or the issuer could
default on interest or principal payments causing a loss in value. Lower rated
instruments, especially so called "junk bonds," involve greater risks due to
18
<PAGE>
the financial health of the issuer and the economy generally and their market
prices can be more volatile.
This is a principal risk for the following Portfolios:
State Street Research Income, State Street Research Diversified, Lehman
Brothers Aggregate Bond Index and Loomis Sayles High Yield Bond.
Prepayment risk: Prepayment risk is the risk that an issuer of a debt security
owned by a Portfolio repays the debt before it is due. This is most likely to
occur when interest rates have declined and the issuer can therefore refinance
the debt at a lower interest rate. A Portfolio that owns debt obligations that
are prepaid would generally have to reinvest the amount prepaid in lower
yielding instruments. Also, debt obligations that can be prepaid tend to
increase less in value when interest rates decline, and decrease more when
interest rates rise, than otherwise similar obligations that are not
prepayable.
This is a principal risk for the following Portfolios:
State Street Research Income, State Street Research Diversified, Lehman
Brothers Aggregate Bond Index and Loomis Sayles High Yield Bond.
Zero coupon risks: "Zero coupon" securities are debt obligations that provide
for payment of interest at the maturity date, rather than over the life of the
instrument. The values of zero coupon securities tend to respond more to
changes in interest rates than do otherwise comparable debt obligations that
provide for periodic payment of interest.
This is a principal risk for the following Portfolios:
State Street Research Income, State Street Research Diversified, Lehman
Brothers Aggregate Bond Index and Loomis Sayles High Yield Bond.
Investing in securities of foreign issuers: Investments in securities that are
traded outside the U.S. have additional risks beyond those of investing in U.S.
securities. Foreign securities are frequently more volatile and less liquid
than their U.S. counterparts for reasons that may include unstable political
and economic climates, lack of standardized accounting practices, limited
information available to investors and smaller markets that are more sensitive
to trading activity. Also, changes in currency exchange rates have the
potential of reducing gains or creating losses. There also can be risks of
expropriation, currency controls, foreign taxation or withholding, and less
secure procedures for transacting business in securities. The risks of
investing in foreign securities are usually higher in emerging markets such as
most countries in Southeast Asia, Eastern Europe, Latin America and Africa.
This is a principal risk for the following Portfolios:
Putnam International Stock, Scudder Global Equity, Morgan Stanley EAFE Index,
Janus Mid Cap, Loomis Sayles High Yield Bond, and T. Rowe Price Large Cap
Growth.
Value investing: This investment approach has additional risk associated with
it because the portfolio manager's judgement that a particular security is
undervalued in relation to the company's fundamental economic values may prove
incorrect.
This is a principal risk for the following Portfolios:
Harris Oakmark Large Cap Value, State Street Research Growth, State
19
<PAGE>
Street Research Aurora Small Cap Value, State Street Research Diversified,
Neuberger Berman Partners Mid Cap Value, Putnam International Stock and Scudder
Global Equity.
Growth investing: This investment approach has additional risk associated with
it due to the volatility of growth stocks. Growth companies usually invest a
high portion of earnings in their businesses, and may lack the dividends of
value stocks that can cushion prices in a falling market. Also, earnings
disappointments often lead to sharply falling prices because investors buy
growth stocks in anticipation of superior earnings growth.
This is a principal risk for the following Portfolios:
State Street Research Growth, State Street Research Aggressive Growth, State
Street Research Diversified, T. Rowe Price Small Cap Growth, Putnam
International Stock, Putnam Large Cap Growth, Janus Mid Cap, Scudder Global
Equity and T. Rowe Price Large Cap Growth.
Index investing: Unlike actively managed portfolios, portfolios that attempt to
match the return of an index generally will not use any defensive strategies.
You, therefore, will bear the risk of adverse market conditions with respect to
the market segment that the index seeks to match. In addition, transaction
costs, other Portfolio or Fund expenses, brief delays that occur until a
Portfolio can invest cash it receives and other tracking errors may result in a
Portfolio's return being lower than the return of the applicable index.
This is a principal risk for the following Portfolios:
MetLife Stock Index, Morgan Stanley EAFE Index, Russell 2000 Index, MetLife Mid
Cap Stock Index and Lehman Brothers Aggregate Bond Index.
Investing in medium sized companies: These companies present additional risks
because their earnings are less predictable, their share prices more volatile,
and their securities less liquid than larger, more established companies.
This is a principal risk for the following Portfolios:
Janus Mid Cap, MetLife Mid Cap Stock Index and Neuberger Berman Partners Mid
Cap Value.
Defensive Strategies
Except with respect to the index Portfolios, portfolio managers generally may
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 may 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. Adopting a defensive position, however, can mean that
a Portfolio would be unable to meet its investment objective.
[About MetLife]
About The Investment Managers
Metropolitan Life Insurance Company ("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.) In addition, MetLife is
the Fund's principal underwriter and distributor. MetLife also
20
<PAGE>
manages its own investment assets and those of certain affiliated companies and
other entities. MetLife is a life insurance company which sells insurance
policies and annuity contracts. As of December 31, 1999 MetLife had $420
billion in assets under management. MetLife is the parent of Metropolitan Tower
Life Insurance Company ("Metropolitan Tower").
[Portfolio management of 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 and traces its history back to 1924. It 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, 1999, State Street Research had investment arrangements in effect
for about $54 billion in assets.
The following gives you information on the portfolio managers for certain of
the State Street Research Portfolios:
State Street Research Aggressive Growth Portfolio:
Catherine Dudley has been responsible for the Portfolio's day-to-day management
since October 1999. A senior vice president, she joined State Street Research
in 1998. During the past five years she has also served as a senior portfolio
manager at Chancellor Capital Management and as a portfolio manager at Phoenix
Investment Counsel.
State Street Research Diversified Portfolio:
The portfolio manager for the income portion is the same as the portfolio
manager of the State Street Research Income Portfolio and the portfolio manager
for the growth portion is the same as the portfolio manager of the State Street
Research Growth Portfolio. Assets are allocated among the portions of the
Portfolio based on the input of State Street Research's Asset Allocation
Committee.
State Street Research Growth Portfolio:
John T. Wilson has had primary responsibility for the Portfolio's day-to-day
management since 1996. A senior vice president, he joined State Street Research
in 1996. During the past five years he has also served as a vice president of
Phoenix Investment Counsel.
State Street Research Income Portfolio:
John H. Kallis has been responsible for the Portfolio's day-to-day management
since January 2000. A senior vice president, he joined State Street Research in
1987 and has worked as an investment professional since 1963.
State Street Research Aurora Small Cap Value Portfolio:
Rudolph K. Kluiber has been responsible for the Portfolio's day-to-day
management since its inception. A senior vice president, he joined State Street
Research in 1989 and has worked as an investment professional since 1988.
[Portfolio management of the Putnam Portfolios]
Putnam Investment Management, Inc. ("Putnam") is the sub-investment manager of
the Putnam Portfolios. Putnam, a Massachusetts corporation, has managed mutual
funds since 1937. As of December 31, 1999, Putnam and its affiliates managed in
excess of $391 billion of retail and institutional investors
21
<PAGE>
worldwide. All of the outstanding voting and nonvoting securities of Putnam
are held of record by Putnam Investments, Inc., which is, in turn, except for a
minority interest owned by employees, owned by Marsh & McLennan Companies,
Inc., an NYSE listed public company whose business is insurance brokerage,
investment management and consulting.
The following gives you information on the portfolio managers for the Putnam
Portfolios:.
Putnam International Stock Portfolio:
The Portfolio is managed by Putnam's Core International team, with Omid
Kamshad, Managing Director, as the lead manager. Mr. Kamshad has been employed
by Putnam since 1996. Prior to 1996, Mr. Kamshad was employed at Lombard Odier
International Portfolio Management Limited. Prior to April, 1995 he was
employed at Baring Asset Management Company. He also has portfolio management
responsibilities on the Putnam teams that manage European Core, Global Core,
and Core International Small Cap institutional portfolios.
Until January 24, 2000, Santander Global Advisors, Inc. ("Santander") was the
sub-investment manager for the Portfolio (then known as the Santander
International Stock Portfolio). On January 11, 2000, the Board of Directors of
the Fund voted to terminate the sub-investment management agreement with
Santander relating to the Portfolio effective January 24, 2000. The Board also
voted to retain Putnam as the new sub-investment manager effective the same
date. The shareholders of the Portfolio approved Putnam as the new sub-
investment manager at a special meeting of shareholders on March 31, 2000.
Putnam Large Cap Growth Portfolio:
The Portfolio is managed by Putnam's Large Cap Growth team, with Jeffrey R.
Lindsey, Senior Vice President, as the lead manager. Mr. Lindsey has been
employed by Putnam since 1994. He is responsible for Core Growth Equity and
Concentrated Growth Equity institutional portfolios, is lead manager of Putnam
Growth Opportunities Fund and co-manager of Voyager II and New Opportunities
Fund.
[Portfolio management of 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 1991. It is a
wholly-owned subsidiary of Nvest Companies, L.P. whose general partner, Nvest
Corporation, is an indirect wholly-owed 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, 1999, Harris had investment arrangements in
effect for about $12.5 billion in assets.
Bill Nygren and Kevin Grant are co-portfolio managers for the Portfolio and
have been responsible for its day to day management since March 21, 2000. Mr.
Grant is the portfolio manager for another mutual fund managed by Harris. Mr.
Grant joined Harris in 1988, and has been a partner, portfolio manager and
investment analyst. Mr. Nygren is the portfolio manager for other mutual funds
managed by Harris. He joined Harris in 1983, and has been a partner and
portfolio manager. From 1990 to 1998 Mr. Nygren was the Director of Research of
Harris.
22
<PAGE>
[Portfolio management of 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, 1999, Janus managed
approximately $248 billion in assets.
James P. Goff, Vice President since December 1993 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 been Portfolio Manager at Janus.
[Portfolio management of 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, 1999,
Loomis Sayles had investment arrangements in effect for about $67.9 billion in
assets.
Daniel J. Fuss, Executive Vice President, Director and Managing Partner, and
Kathleen C. Gaffney, Vice-President, have held their current positions over the
past five years and 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.
[Portfolio management of the Neuberger Berman Partners Mid Cap Value Portfolio]
Neuberger Berman Management Inc. ("Neuberger Berman"), is the sub-investment
manager for the Neuberger Berman Partners Mid Cap Value Portfolio. Neuberger
Berman and its predecessor firms and affiliates have been managing money since
1939 and have specialized in the management of mutual funds since 1950. In
addition to the Portfolio, Neuberger Berman and its affiliates provide
investment management services to mutual funds and securities accounts with
assets as of December 31, 1999 of about $51 billion.
Robert I. Gendelman and S. Basu Mullick have been co-managers of the Portfolio
since its inception. Mr. Gendelman has been a Vice President of Neuberger
Berman since October 1994. Mr. Mullick has been a Vice President of Neuberger
Berman since October 1998. Over the past five years, Mr. Mullick was also a
portfolio manager at Ark Asset Management. Mr. Gendelman and Mr. Mullick are
also co-managers of the Neuberger Berman Partners Fund and Neuberger Berman AMT
Partners Portfolio.
[Portfolio management of the Scudder Global Equity Portfolio]
Scudder Kemper Investments, Inc. ("Scudder") is the sub-investment manager for
the Scudder Global Equity Portfolio. Zurich Financial Services Group owns a 70%
interest in Scudder. Zurich Financial Services Group is indirectly owned by
Zurich Allied AG, a publicly held Swiss financial service holding company, and
Allied Zurich p.l.c., a publicly held U.K. financial service holding company.
In addition to the Portfolio, it provides investment management services to
several mutual funds and several individual and
institutional clients. As of December 31, 1999, Scudder had investment
management arrangements in excess of $295 billion in asset globally.
23
<PAGE>
William E. Holtzer, Managing Director, Diego Espinosa, Senior Vice President
and Nicholas Bratt, Director of the Global Equity Group have been with Scudder
since 1980, 1996 and 1976, respectively. Messrs. Holzer, Espinosa and Bratt are
co-portfolio managers for the Portfolio. Messrs. Holzer and Espinosa have been
primarily responsible for its day-to-day management. 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.
Over the past five years, Mr. Espinosa was 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.
Mr. Bratt is responsible for Scudder's Equity Activities and is president of
Scudder's open and closed end equity funds that invest overseas.
[Portfolio management of 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 December 31, 1999, T. Rowe Price and
its affiliates had investment management arrangements in effect for about
$179.7 billion in assets. The following gives you information on the portfolio
managers for the T. Rowe Price Portfolios:
T. Rowe Price Large Cap Growth Portfolio:
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 Growth Stock Fund.
T. Rowe Price Small Cap Growth Portfolio:
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. Mr. Whitney and the Investment Advisory Committee manage other mutual
funds including T. Rowe Price Diversified Small Cap Growth Fund.
[Investment Management Fees]
The Fund pays MetLife monthly for its investment management services. MetLife
pays each sub-investment manager for their investment management services.
There is no separate charge to the Fund for the sub-investment management
services.
24
<PAGE>
For the Portfolios indicated below, the following table shows the investment
management and sub-investment management fees for the year ending December 31,
1999 as an annual percentage of the average daily net assets of each Portfolio.
<TABLE>
<CAPTION>
% of Average
Daily Net Assets
% of Average Paid by
Daily Net Assets Investment
Paid to Manager to
Investment Sub-Investment
Portfolio Manager Manager
- -----------------------------------------------------------------------------------
<S> <C> <C>
State Street Research Money
Market .25% .25%
- -----------------------------------------------------------------------------------
MetLife Stock Index .25% N/A
- -----------------------------------------------------------------------------------
State Street Research Growth .47% .32%
- -----------------------------------------------------------------------------------
State Street Research Income .32% .24%
- -----------------------------------------------------------------------------------
State Street Research
Diversified .43% .28%
- -----------------------------------------------------------------------------------
State Street Research
Aggressive Growth .70% .51%
- -----------------------------------------------------------------------------------
Loomis Sayles High Yield Bond .70% .50%
- -----------------------------------------------------------------------------------
Putnam International Stock/1/ .75% .55%
- -----------------------------------------------------------------------------------
T. Rowe Price Small Cap Growth .52% .33%
- -----------------------------------------------------------------------------------
Janus Mid Cap .67% .49%
- -----------------------------------------------------------------------------------
Scudder Global Equity .67% .47%
- -----------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond
Index .25% N/A
- -----------------------------------------------------------------------------------
Russell 2000 Index .25% N/A
- -----------------------------------------------------------------------------------
Morgan Stanley EAFE Index .30% N/A
- -----------------------------------------------------------------------------------
T. Rowe Price Large Cap Growth .69% .50%
- -----------------------------------------------------------------------------------
Harris Oakmark Large Cap Value .75% .65%
- -----------------------------------------------------------------------------------
Neuberger Berman Partners Mid
Cap Value .70% .50%
</TABLE>
The Portfolios indicated in the following table will not commence operation
until on or after May 1, 2000. The following shows the investment management
and sub-investment management fee schedules as an annual percentage of the
average daily net assets of each Portfolio.
<TABLE>
<CAPTION>
% per
% per annum
annum Paid to
Average paid to Average Sub-
Daily Net Investment Daily Net Investment
Portfolio Assets Manager Assets Manager
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Metlife Mid Cap Stock
Index All assets .25% N/A N/A
- ---------------------------------------------------------------------------------
Putnam Large Cap 1st $500 million .80% first $150 million .50%
Growth next $500 million .75% next $150 million .45%
over $1 billion .70% over $300 million .35%
- ---------------------------------------------------------------------------------
State Street Research 1st $500 million .85% first $50 million .55%
Aurora next $500 million .80% next $75 million .50%
Small Cap Value over $1 billion .75% next $100 million .45%
over $225 million .40%
</TABLE>
/1/For the year ending December 31, 1999, Santander Global Advisors, Inc.
("Santander") was sub-investment manager. Beginning January 24, 2000, Putnam
replaced Santander as sub-investment manager. MetLife paid all sub-investment
management fees to Santander.
25
<PAGE>
[Fund Expenses]
The Fund is responsible for paying its own expenses. However, MetLife
voluntarily pays expenses of certain Portfolios in excess of a certain
percentage of net assets until the earlier of either total net assets of the
Portfolio reaching $100 million or a certain date as follows:
<TABLE>
<CAPTION>
SUBSIDIZED
EXPENSES* IN
PORTFOLIO EXCESS OF DATE
<S> <C> <C>
Harris Oakmark Large Cap Value 0.20% 11/9/00
T. Rowe Price Large Cap Growth 0.20% 11/9/00
Neuberger Berman Partners Mid Cap Value 0.20% 11/9/00
Morgan Stanley EAFE Index 0.25% 11/9/00
Putnam Large Cap Growth 0.20% 7/1/02
State Street Research Aurora Small Cap Value 0.20% 7/1/02
Metlife Mid Cap Stock Index 0.20% 7/1/02
</TABLE>
- --------
*Expenses for this purpose 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).
MetLife also paid such excess expenses for the Janus Mid Cap Portfolio until
December 31, 1997, for the T. Rowe Price Small Cap Growth Portfolio until
January 22, 1998, for the Scudder Global Equity Portfolio until July 2, 1998,
for the Loomis Sayles High Yield Bond Portfolio until March 2, 1999, for the
Russell 2000 Index Portfolio until December 3, 1999 and for the Lehman Brothers
Aggregate Bond Index Portfolio until July 13, 1999. Beginning on February 22,
2000, MetLife will pay all expenses in excess of 0.30% of the average net
assets for the Russell 2000 Index Portfolio until the Portfolio's assets reach
$200 million, or until April 30, 2001, whichever comes first. After the Morgan
Stanley EAFE Index Portfolio's assets reach $100 million, or November 8, 2000,
whichever comes first, MetLife will continue to pay all expenses in excess of
0.40% of the Portfolio's average net assets until the Portfolio's assets reach
$200 million, or until April 30, 2001, whichever comes first. These subsidies
and other prior expense reimbursement arrangements can increase the performance
of the Portfolios. MetLife also has the right to stop these payments at any
time upon notice to the Board of Directors and to Fund shareholders.
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 are set forth in the Prospectus under the Financial
Highlights.
[Dividends are reinvested.]
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
26
<PAGE>
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 reinvested in
additional full and partial shares of the Portfolio as of the dividend payment
date.
The Fund and its Portfolios intend to comply with special diversification and
other tax law requirements 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
premiums to Fund shares are discussed in the prospectus for the Contracts that
is attached at the front of this Prospectus.
General Information about the Fund and its Purpose
The Fund 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 offers its shares to MetLife and its affiliated insurance companies
("Insurance Companies"), including 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.
[Contract owners may allocate the amounts under the Contracts for ultimate
investment in the Portfolios.]
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 publicly available 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.
27
<PAGE>
[Fund shares are available only through variable life and variable annuity
contracts.]
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: (a) the amount of net Contract
premiums or purchase payments transferred to the separate accounts; (b)
transfers to or from separate account investment divisions; (c) policy loans;
(d) loan repayments; and (e) 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.
The Portfolios are not designed for market timers, or large or frequent
transfers. The Fund may restrict or refuse purchases or exchanges by market
timers. You will be considered a market timer if you have (a) requested an
exchange out of the Portfolios within two weeks of an earlier exchange request,
or (b) exchanged shares out of the Portfolios more than twice in a calendar
quarter, or (c) exchanged shares equal to at least $5 million, or more than 1%
of the Portfolios net assets, or (d) otherwise seem to follow a timing pattern.
Accounts under common ownership or control are combined for these limits.
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, or when
the Board of Directors determines that customary pricing procedures would
result in an unreliable valuation, they are valued at fair value as determined
by the Board of Directors. Such a fair value procedure could be followed, for
example, if (a) an event occurs after the time of the most recent available
market quotations that is likely to have affected the value of those securities
or (b) such market quotations for other reasons do not reflect information
material to the value of those securities. The possibility of fair value
pricing means that changes in a Portfolio's net asset value may not always
correspond to changes in quoted prices of a Portfolio's investments.
[A Portfolio's net asset value per share is determined once daily.]
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.
28
<PAGE>
Financial Highlights
The financial highlights table is intended to help you understand each
Portfolio's financial performance for the past 5 years, or since inception of
the Portfolio if shorter. Certain information reflects financial results for a
single share of the Portfolio. The total returns in the table represent the
rate that a shareholder would have earned or lost on an investment in a
Portfolio (assuming reinvestment of all dividends and distributions). This
information has been audited by Deloitte & Touche LLP, whose report, along with
the Fund's financial statements, are included in the annual report, which is
available upon request.
29
<PAGE>
FINANCIAL HIGHLIGHTS
The table below has been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report appearing with the full financial statements and notes
thereto. For further information about the performance of the Portfolios, see
the Fund's December 31, 1999 Management Discussion and Analysis which appears in
the Fund's annual report, which is incorporated by reference into the Statement
of Additional Information.
<TABLE>
<CAPTION>
Selected Data For a Share of Capital STATE STREET RESEARCH GROWTH PORTFOLIO
---------------------------------------------------------------------------
Stock Outstanding Throughout Period: YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of period...... $37.10 $31.92 $30.51 $27.56 $21.81
--------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income.................... 0.23 0.36 0.44 0.36 0.35
Net realized and unrealized gain/(loss).. 6.38 8.52 7.72 5.78 6.83
--------- --------- --------- --------- ---------
Total From Investment Operations......... 6.61 8.88 8.16 6.14 7.18
--------- --------- --------- --------- ---------
Less Distributions:
Dividends from net investment income.... (0.24) (0.36) (0.44) (0.36) (0.35)
Distributions from net realized capital
gains................................... (4.33) (3.34) (6.31) (2.83) (1.08)
--------- --------- --------- --------- ---------
Total Distributions..................... (4.57) (3.70) (6.75) (3.19) (1.43)
----------- ----------- ----------- ----------- ---------
NET ASSET VALUE: End of period $39.14 $37.10 $31.92 $30.51 $27.56
--------------------------------------------------------------------------------------------------------------------------
Total return............................. 18.47% 28.18% 28.36% 22.18% 33.14%
Net assets at end of period (000's)...... $3,623,316 $3,112,081 $2,349,062 $1,597,728 $1,094,751
Supplemental Data/Significant Ratios:
Operating expenses to average net
assets.................................. 0.49% 0.53% 0.43% 0.29% 0.31%
Net investment income to average net
assets.................................. 0.59% 1.04% 1.37% 1.29% 1.46%
Portfolio turnover(1).................... 83.16% 74.29% 82.81% 93.05% 45.52%
</TABLE>
<TABLE>
<CAPTION>
Selected Data For a Share of Capital STATE STREET RESEARCH INCOME PORTFOLIO
----------------------------------------------------------------------
Stock Outstanding Throughout Period: YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of period........... $12.78 $12.66 $12.36 $12.73 $11.32
----------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income......................... 0.81 0.75 0.83 0.82 0.83
Net realized and unrealized gain/(loss)....... (1.10) 0.42 0.38 (0.36) 1.38
------- -------- -------- -------- --------
Total From Investment Operations.............. (0.29) 1.17 1.21 0.46 2.21
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net investment income.......... (0.79) (0.80) (0.87) (0.81) (0.80)
Distributions from net realized capital
gains........................................ (0.02) (0.25) (0.04) (0.02) --
-------- -------- -------- -------- --------
Total Distributions......................... (0.81) (1.05) (0.91) (0.83) (0.80)
-------- -------- -------- -------- --------
NET ASSET VALUE: End of period................. $11.68 $12.78 $12.66 $12.36 $12.73
-----------------------------------------------------------------------------------------------------------------------
Total return.................................. (2.28)% 9.40% 9.83% 3.60% 19.55%
Net assets at end of period (000's)........... $477,880 $526,854 $412,191 $383,395 $349,913
Supplemental Data/Significant Ratios:
Operating expenses to average net assets...... 0.38% 0.39% 0.38% 0.32% 0.34%
Net investment income to average net assets... 6.15% 6.13% 6.57% 6.64% 7.01%
Portfolio turnover (1)........................ 183.16% 123.60% 121.92% 92.90% 102.88%
</TABLE>
- ---------------------
Footnotes Appear on Page 35.
30
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Selected Data For a Share of Capital STATE STREET RESEARCH MONEY MARKET PORTFOLIO
---------------------------------------------------------------------
Stock Outstanding Throughout Period: YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: Beginning of period $10.35 $10.38 $10.44 $10.45 $10.48
------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income.......................... 0.51 0.54 0.54 0.53 0.59
------- ------ ------ ------ ------
Total From Investment Operations............. 0.51 0.54 0.54 0.53 0.59
------- ------ ------ ------ ------
Less Distributions:
Dividends from net investment income........... (0.52) (0.57) (0.60) (0.54) (0.62)
------- ------ ------ ------ ------
Total Distributions.......................... (0.52) (0.57) (0.60) (0.54) (0.62)
------- ------- ------ ------ ------
------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period.................. $10.34 $10.35 $10.38 $10.44 $10.45
------------------------------------------------------------------------------------------------------------------------------
Total return................................... 4.89% 5.19% 5.21% 5.01% 5.59%
Net assets at end of period (000's)............ $51,545 $41,185 $39,480 $41,637 $40,456
Supplemental Data/Significant Ratios:
Operating expenses to average net assets....... 0.42% 0.48% 0.49% 0.43% 0.49%
Net investment income to average net assets.... 4.81% 5.11% 5.08% 4.92% 5.39%
</TABLE>
<TABLE>
<CAPTION>
Selected Data For a Share of Capital STATE STREET RESEARCH DIVERSIFIED PORTFOLIO
---------------------------------------------------------------------
Stock Outstanding Throughout Period: YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: Beginning of period $18.39 $16.98 $16.67 $15.95 $13.40
------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income.......................... 0.59 0.60 0.60 0.55 0.59
Net realized and unrealized gain/(loss)........ 0.96 2.70 2.71 1.77 3.02
------ ------ ------ ------ ------
Total From Investment Operations............. 1.55 3.30 3.31 2.32 3.61
------ ------ ------- ------ ------
Less Distributions:
Dividends from net investment income........... (0.60) (0.57) (0.60) (0.53) (0.58)
Distributions from net realized capital
gains......................................... (1.07) (1.32) (2.40) (1.07) (0.48)
------ ------ ------ ------ ------
Total Distributions.......................... (1.67) (1.89) (3.00) (1.60) (1.06)
------ ------ ------ ------ ------
------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period.................. $18.27 $18.39 $16.98 $16.67 $15.95
------------------------------------------------------------------------------------------------------------------------------
Total return................................... 8.71% 19.64% 20.58% 14.52% 27.03%
Net assets at end of period (000's)............ $2,874,412 $2,656,987 $1,982,232 $1,448,841 $1,114,834
Supplemental Data/Significant Ratios:
Operating expenses to average net assets....... 0.45% 0.48% 0.40% 0.29% 0.31%
Net investment income to average net assets.... 3.08% 3.39% 3.50% 3.38% 3.92%
Portfolio turnover (1)......................... 123.77% 105.89% 114.79% 91.07% 79.29%
</TABLE>
- ---------------------
Footnotes Appear on Page 35.
31
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Selected Data For a Share of Capital STATE STREET RESEARCH AGGRESSIVE GROWTH PORTFOLIO
--------------------------------------------------------------------------
Stock Outstanding Throughout Period: YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of period $29.53 $27.61 $27.11 $25.87 $22.05
--------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income/(loss)................ (0.12) (0.06) (0.03) (0.02) (0.01)
Net realized and unrealized gain/(loss)..... 9.86 3.75 1.67 2.01 6.50
----------- ----------- ----------- ----------- ----------
Total From Investment Operations............ 9.74 3.69 1.64 1.99 6.49
----------- ----------- ----------- ----------- ----------
Less Distributions:
Dividends from net investment income........ -- -- -- -- --
Distributions from net realized capital
gains...................................... (0.82) (1.77) (1.14) (0.75) (2.67)
----------- ----------- ----------- ----------- ----------
Total Distributions......................... (0.82) (1.77) (1.14) (0.75) (2.67)
----------- ----------- ----------- ----------- ----------
NET ASSET VALUE: End of period $38.45 $29.53 $27.61 $27.11 $25.87
--------------------------------------------------------------------------------------------------------------------------
Total return................................ 33.24% 13.69% 6.67% 7.72% 29.50%
Net assets at end of period (000's)......... $1,600,841 $1,431,337 $1,391,956 $1,321,849 $958,915
Supplemental Data/Significant Ratios:
Operating expenses to average net assets.... 0.72% 0.75% 0.81% 0.79% 0.81%
Net investment income to average net assets.. (0.31)% (0.20)% (0.10)% (0.11)% (0.06)%
Portfolio turnover (1)....................... 86.17% 97.39% 219.08% 221.23% 255.83%
</TABLE>
<TABLE>
<CAPTION>
Selected Data For a Share of Capital METLIFE STOCK INDEX PORTFOLIO
--------------------------------------------------------------------------
Stock Outstanding Throughout Period: YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of period $35.38 $28.78 $22.23 $18.56 $13.87
--------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income........................ 0.37 0.37 0.34 0.33 0.32
Net realized and unrealized gain/(loss)...... 6.89 7.75 6.79 3.88 4.79
----------- ----------- ----------- ----------- ----------
Total From Investment Operations............. 7.26 8.12 7.13 4.21 5.11
----------- ----------- ----------- ----------- ----------
Less Distributions:
Divid ends from net investment income (0.36) (0.36) (0.34) (0.33) (0.32)
Distributions from net realized capital
gains....................................... (1.69) (1.16) (0.24) (0.21) (0.10)
----------- ----------- ----------- ----------- ---------
Total Distributions......................... (2.05) (1.52) (0.58) (0.54) (0.42)
----------- ----------- ----------- ----------- ---------
NET ASSET VALUE: End of period............... $40.59 $35.38 $28.78 $22.23 $18.56
--------------------------------------------------------------------------------------------------------------------------
Total return................................ 20.79% 28.23% 32.19% 22.66% 36.87%
Net assets at end of period (000's)......... $4,205,202 $3,111,919 $2,020,480 $1,122,297 $635,823
Supplemental Data/Significant Ratios:
Operating expenses to average net assets..... 0.29% 0.30% 0.33% 0.30% 0.32%
Net investment income to average net assets.. 1.01% 1.21% 1.47% 1.91% 2.22%
Portfolio turnover (1)....................... 8.77% 15.07% 10.69% 11.48% 6.35%
</TABLE>
- ---------------------
Footnotes Appear on Page 35.
32
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Selected Data For a Share of Capital SANTANDER INTERNATIONAL STOCK PORTFOLIO+
----------------------------------------------------------------------
Stock Outstanding Throughout Period: YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: Beginning of period.......... $14.14 $11.67 $11.95 $12.29 $12.30
----------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income........................ 0.13 0.13 0.10 0.07 0.03
Net realized and unrealized gain/(loss)...... 2.05 2.50 (0.38) (0.28) 0.07
---------- ---------- ---------- ---------- ----------
Total From Investment Operations............. 2.18 2.63 (0.28) (0.21) 0.10
---------- ---------- ---------- ---------- ----------
Less Distributions:
Divid ends from net investment income........ (0.13) (0.16) -- -- (0.04)
Distributions from net realized capital
gains....................................... (2.32) -- -- (0.13) (0.07)
---------- ---------- ---------- ---------- ----------
Total Distributions.......................... (2.45) (0.16) -- (0.13) (0.11)
---------- ---------- ---------- ---------- ----------
----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period................ $13.87 $14.14 $11.67 $11.95 $12.29
----------------------------------------------------------------------------------------------------------------------
Total return................................. 16.44% 22.56% (2.34)% (1.77)% 0.84%
Net assets at end of period (000's).......... $317,831 $297,381 $267,089 $303,826 $297,461
Supplemental Data/Significant Ratios:
Operating expenses to average net assets..... 0.97% 1.02% 1.03% 0.97% 1.01%
Net investment income to average net assets.. 0.95% 0.87% 0.77% 0.56% 0.21%
Portfolio turnover (1)....................... 86.77% 156.32% 182.11% 116.67% 86.24%
</TABLE>
+ Now, Putnam International Stock Portfolio
- ---------------------
<TABLE>
<CAPTION>
LOOMIS SAYLES HIGH YIELD BOND JANUS MID CAP
PORTFOLIO PORTFOLIO
------------------------------------- ----------------------------------------
Selected Data For a Share of Capital YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------------- ----------------------------------------
Stock Outstanding Throughout Period: 1999 1998 1997/A/ 1999 1998 1997/A/
--------- --------- --------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: Beginning of
period................................ $8.39 $10.14 $10.00 $17.44 $12.77 $10.00
--------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income/(loss)......... 0.80 0.88 0.35 (0.05) (0.02) 0.01
Net realized and unrealized
gain/(loss)......................... 0.69 (1.65) 0.26 21.14 4.77 2.81
--------- --------- --------- ----------- ---------- ----------
Total From Investment Operations..... (1.49) (0.77) 0.61 21.09 4.75 2.82
--------- --------- --------- ----------- ---------- ----------
Less Distributions:
Dividends from net investment
income................................ (0.79) (0.89) (0.35) -- -- (0.01)
Distributions from net realized...... --
capital gains......................... /B/ (0.09) (0.12) (1.99) (0.08) (0.04)
--------- --------- --------- ----------- ---------- ----------
Total Distributions.................. (0.79) (0.98) (0.47) (1.99) (0.08) (0.05)
--------- --------- --------- ----------- ---------- ----------
--------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period........ $9.09 $8.39 $10.14 $36.54 $17.44 $12.77
--------------------------------------------------------------------------------------------------------------------------
Total return.......................... 17.82% (7.51)% 6.18% 122.92% 37.19% 28.22%
Net assets at end of period
(000's)............................. $61,701 $42,403 $27,804 $1,931,797 $371,504 $103,852
Supplemental Data/Significant Ratios:
-------------------------------------
Net expenses to average net
assets.............................. 0.93% 0.87% 0.83%* 0.71% 0.81% 0.85%*
Operating expenses to average
net assets before voluntary
expense reimbursements.............. 0.94% 1.05% 1.35%* N/A N/A 0.99%*
Net investment income to
average net assets.................. 9.49% 10.41% 7.04%* (0.41)% (0.22)% 0.10%*
Net investment income to
average net assets
before voluntary expense
reimbursements...................... 9.48% 10.23% 6.52%* N/A N/A (0.40)%*
Portfolio turnover (1)............... 27.75% 46.02% 39.26% 103.28% 106.66% 74.70%
</TABLE>
- ---------------------
/A/ For the period March 3, 1997 (commencement of operations) to December 31,
1997.
/B/ Less than $.005.
Footnotes Appear on Page 35.
33
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
T. ROWE PRICE SMALL CAP GROWTH SCUDDER GLOBAL EQUITY
PORTFOLIO PORTFOLIO
--------------------------------------- ---------------------------------------
Selected Data For a Share of YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
Capital --------------------------------------- ---------------------------------------
Stock Outstanding Throughout 1999 1998 1997/A/ 1999 1998 1997/A/
Period: ---------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of
period......................... $12.29 $11.88 $10.00 $12.38 $10.85 $10.00
--------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income/(loss).. (0.03) -- -- 0.14 0.16 0.10
Net realized and unrealized
gain/(loss).................... 3.47 0.41 1.88 2.93 1.57 0.86
---------- ---------- --------- ---------- ---------- ---------
Total From Investment
Operations..................... 3.44 0.41 1.88 3.07 1.73 0.96
---------- ---------- --------- ---------- ---------- ---------
Less Distributions:
Dividends from net investment
income......................... -- -- -- /B/ (0.07) (0.16) (0.10)
Distributions from net realized
capital gains.................. -- -- -- (0.47) (0.04) (0.01)
---------- ---------- --------- ---------- ---------- ---------
Total Distributions........... -- -- -- (0.54) (0.20) (0.11)
---------- ---------- --------- ---------- ---------- ---------
NET ASSET VALUE: End of period. $15.73 $12.29 $11.88 $14.91 $12.38 $10.85
--------------------------------------------------------------------------------------------------------------------------
Total return.................. 27.99% 3.45% 18.81% 25.17% 15.96% 9.62%
Net assets at end of period
(000's)........................ $269,518 $189,132 $94,020 $171,714 $113,715 $60,712
Supplemental Data/Significant Ratios:
------------------------------------
Net expenses to average net
assets......................... 0.61% 0.67% 0.67%* 0.87% 0.96% 0.78%*
Operating expenses to average
net assets before voluntary expense
reimbursements................. N/A N/A 0.86%* N/A 1.01% 1.14%*
Net investment income to
average net assets............. (0.27)% (0.02)% 0.01%* 1.23% 1.61% 1.66%*
Net investment income to
average net assets before
voluntary expense reimbursements.... N/A N/A (0.19)%* N/A 1.56% 1.30%*
Portfolio turnover (1) 67.99% 37.93% 13.45% 54.49% 50.98% 36.04%
</TABLE>
- ---------------------
/A/ For the period March 3, 1997 (commencement of operations) to December 31,
1997.
/B/ Less than $.005.
<TABLE>
<CAPTION>
NEUBERGER BERMAN T. ROWE PRICE LARGE
HARRIS OAKMARK LARGE CAP PARTNERS MID CAP CAP GROWTH PORTFOLIO
VALUE PORTFOLIO VALUE PORTFOLIO
-------------------------- ----------------------- -----------------------
Selected Data For a Share of YEAR ENDED DECEMBER 31,
Capital
----------------------------------------------------------------------------------
Stock Outstanding Throughout 1999 1998/C/ 1999 1998/C/ 1999 1998/C/
Period: ---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of
period......................... $9.70 $10.00 $10.73 $10.00 $11.02 $10.00
--------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income/(loss) 0.10 0.03 0.06 0.03 0.02 0.01
Net realized and unrealized
gain/(loss)................... (0.78) (0.30) 1.80 0.71 2.43 1.02
---------- ---------- --------- --------- --------- ---------
Total From Investment Operations (0.68) (0.27) 1.86 0.74 2.45 1.03
---------- ---------- --------- --------- --------- ---------
Less Distributions:
Dividends from net investment
income................ (0.08) (0.03) (0.07) (0.01) (0.03) (0.01)
Distributions from net realized
capital gains......... (0.01) -- (0.55) -- (0.03) --
---------- ---------- --------- --------- --------- ---------
Total Distributions... (0.09) (0.03) (0.62) (0.01) (0.06) (0.01)
---------- ---------- --------- --------- --------- ---------
NET ASSET VALUE: End of period $8.93 $9.70 $11.97 $10.73 $13.41 $11.02
--------------------------------------------------------------------------------------------------------------------------
Total return.................. (6.89)% (2.70)% 17.63% 7.44% 22.23% 10.28%
Net assets at end of period
(000's)........................ $38,378 $8,658 $38,722 $8,647 $51,402 $6,740
Supplemental Data/Significant Ratios:
-------------------------------------
Net expenses to average net
assets......................... 0.91% 0.70%* 0.72% 0.68%* 0.87% 0.50%*
Operating expenses to average
net assets before voluntary expense
reimbursements................. 1.15% 1.79%* 1.18% 1.86%* 1.31% 2.62%*
Net investment income to average
net assets..................... 1.63% 2.47%* 0.86% 2.61%* 0.23% 0.93%*
Net investment income to average
net assets before voluntary expense
reimbursements................. 1.39% 1.38%* 0.40% 1.42%* (0.21)% (1.19)%*
Portfolio turnover (1)........ 16.59% 0.00% 134.37% 20.81% 46.48% 5.69%
</TABLE>
- ---------------------
/C/ For the period November 9, 1998 (commencement of operations) to December 31,
1998.
Footnotes Appear on Page 35.
34
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LEHMAN BROTHERS AGGREGATE MORGAN STANLEY EAFE RUSSELL 2000 INDEX
BOND INDEX PORTFOLIO INDEX PORTFOLIO
--------------------------- ----------------------- ------------------------
Selected Data For a Share of
Capital YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------
Stock Outstanding Throughout 1999 1998/C/ 1999 1998/C/ 1999 1998/C/
Period: ----------- ---------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of
period......................... $10.06 $10.00 $10.80 $10.00 $10.53 $10.00
--------------------------------------------------------------------------------------------------------------------------
Investment Operations:
Net investment income/(loss) 0.48 0.07 0.10 0.01 0.08 0.02
Net realized and unrealized
gain/(loss).................... (0.62) 0.07 2.58 0.80 2.29 0.53
----------- ---------- --------- --------- ---------- ---------
Total From Investment
Operations..................... (0.14) 0.14 2.68 0.81 2.37 0.55
----------- ---------- --------- --------- ---------- ---------
Less Distributions:
Dividends from net investment
income......................... (0.47) (0.08) (0.06) (0.01) (0.08) (0.02)
Distributions from net
realized capital gains......... -- /B/ -- (0.08) -- (0.30) --
----------- ---------- --------- --------- ---------- ---------
Total Distributions........... (0.47) (0.08) (0.14) (0.01) (0.38) (0.02)
----------- ---------- --------- --------- ---------- ---------
NET ASSET VALUE: End of period $9.45 $10.06 $13.34 $10.80 $12.52 $10.53
--------------------------------------------------------------------------------------------------------------------------
Total return.................. (1.37)% 1.38% 24.90% 8.11% 22.73% 5.48%
Net assets at end of period
(000's)........................ $129,339 $58,810 $82,355 $25,453 $111,729 $38,147
Supplemental Data/Significant
-----------------------------
Ratios:
-------
Net expenses to average net
assets......................... 0.40% 0.42%* 0.50% 0.49%* 0.45% 0.40%*
Operating expenses to average
net assets before voluntary
expense reimbursements........ N/A 0.59%* 1.77% 1.41%* 0.89% 1.04%*
Net investment income to
average net assets............. 6.06% 5.28%* 1.25% 0.71%* 1.04% 1.46%*
Net investment income to
average net assets
before voluntary expense
reimbursements................. N/A 5.11%* (0.02)% (0.21)%* 0.59% 0.82%*
Portfolio turnover (1)........ 96.19% 11.08% 43.67% 12.68% 67.01% 2.80%
</TABLE>
- ---------------------
/B/ Less than $.005.
/C/ For the period November 9, 1998 (commencement of operations) to December 31,
1998.
Notes:
------
* Ratios have been determined based on annualized operating results for the
period. Twelve month results may be different.
(1) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of securities (excluding short-term
securities) for the year ended December 31, 1999 are as follows:
Portfolio Purchases Sales of Securities
--------- --------- -------------------
State Street Research
Growth............... $2,700,443,738 $2,676,686,614
State Street Research
Income............... 886,515,836 899,620,990
State Street Research
Diversified.......... 3,417,074,990 3,289,086,228
State Street Research
Aggressive Growth.... 1,131,998,384 1,485,574,884
MetLife Stock Index.. 776,401,767 317,391,821
Santander
International Stock.. 255,774,543 281,516,698
Loomis Sayles High
Yield Bond........... 26,645,433 13,830,252
Janus Mid Cap........ 1,548,568,019 878,660,374
T. Rowe Price Small
Cap Growth........... 142,965,196 131,996,934
Scudder Global Equity 92,395,485 68,284,251
Harris Oakmark Large
Cap Value............ 37,718,312 3,866,011
Neuberger Berman
Partners Mid Cap Value 56,456,718 30,593,570
T. Rowe Price Large
Cap Growth........... 48,659,861 11,618,731
Lehman Brothers
Aggregate Bond Index. 160,310,362 90,216,457
Morgan Stanley EAFE
Index................ 65,340,616 21,570,722
Russell 2000 Index... 102,489,864 46,437,402
See Notes to Financial Statements.
35
<PAGE>
Appendix A To Prospectus
Portfolio Manager Prior Performance
Because they commenced operations only on November 9, 1998, limited performance
history is available for the 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 December 31, 1999 (or since
inception if more recent) for certain similar accounts that are managed by the
same sub-investment managers as are these three Portfolios. Year-to-date
information is also given for the two months ended February 29, 2000. Results
are shown on a "total return" basis and include reinvestment of all dividends
and capital gain distributions.
Because Putnam Large Cap Growth will not commence operations until on or about
May 1, 2000, and State Street Research Aurora Small Cap Value will not commence
operations until on or about July 5, 2000, no performance history is available
for these Portfolios. The following, however, sets forth total return
information for the one-year, three-year, five-year and ten-year periods ended
December 31, 1999 (or since inception if more recent) for certain similar
accounts that are managed by the same sub-investment managers as are these two
Portfolios. Year-to-date information is also given for the two months ended
February 29, 2000. Results are shown on a "total return" basis and include
reinvestment of all dividends and capital gain distributions.
The tables also show the total return information for appropriate indices for
the same periods. The index performance information set forth below does not
reflect any fees and expenses that the applicable Fund Portfolio will bear.
Finally each table also shows the related Fund Portfolio over the period of its
existence.
Each sub-investment manager has represented to the Fund that, except as
otherwise noted, the similar 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, (b) are of sufficient size that their performance would be
considered relevant to the owner of a policy or contract investing in that
Portfolio and (c) are otherwise deemed sufficiently comparable to warrant
including their performance. No such similar account performance information is
available with respect to the MetLife Mid Cap Stock Index Portfolio, which also
will commence operations on or about July 5, 2000.
The similar 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 any of the charges and
deductions 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.
36
<PAGE>
THE FOLLOWING PERFORMANCE INFORMATION DOES NOT REPRESENT THE PERFORMANCE OF ANY
FUND PORTFOLIO EXCEPT IN THE RIGHT HAND COLUMN OF EACH TABLE.
Harris
<TABLE>
<CAPTION>
Harris Oakmark
Large Cap Value
Total Return for Oakmark Fund Portfolio
Period (unaudited) (8/5/91)/1/ S&P 500 Index/2/ (11/9/98)
------------------ ------------ ---------------- ---------------
<S> <C> <C> <C>
Year to Date (ended 2/29/2000) -10.47% 21.04% -6.89%
Since inception of Harris
Oakmark Large Cap Value
Portfolio (11/9/98 to 12/31/99,
annualized) -12.24% not available -9.40%
One Year (12/98 to 12/99) -10.47% 21.04% -6.89%
Three Year (12/96 to 12/99,
annualized) 7.19% 27.56% --
Five Year (12/99 to 12/99,
annualized) 13.99% 28.54% --
8/5/91 to 12/99, annualized
(since inception of the Oakmark
Fund) 21.17% 19.89% --
</TABLE>
- --------
/1/ As of December 31, 1999 the Oakmark Fund, a mutual fund, had assets of
$2.36 billion. The actual fees and expenses of the fund whose performance is
shown has been used. Had the Portfolio's estimated fees and expenses been used
(whether before or after estimated expense reimbursement), the performance
figures would have been lower. Performance figures are based on historical
performance and do not guarantee future results.
/2/ The S&P 500 Index is an unmanaged index of common stocks that are primarily
issued by companies with large aggregate market values. Performance for the
index has been obtained from public sources and has not been audited.
T. Rowe Price
<TABLE>
<CAPTION>
Lipper
T. Rowe Price Variable Funds Morgan T. Rowe Price
Total Return for Growth Stock Underlying Growth Stanley Large Cap
Period (unaudited) Fund/1/ Funds Average/2/ S&P 500/2/ EAFE Index/2/ Growth Portfolio
------------------ ------------- ----------------- ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Year to Date (ended
2/29/2000) 0.42% 2.03% -6.82% 25.77% 0.07%
Since inception of T.
Rowe Large Cap Growth
Portfolio (11/9/98 to
12/31/99, annualized) -- -- -- -- 29.79%
One Year (12/31/98 to
12/31/99) 22.15% 31.48% 21.04% 27.03% 22.23%
Three Year (12/31/96 to
12/31/99, annualized) 25.35% 26.38% 27.56% 16.06% --
Five Year (12/31/94 to
12/31/99, annualized) 25.71% 26.45% 28.56% 13.15% --
Ten Year (12/31/89 to
12/31/99, annualized) 17.39% 17.79% 18.21% 7.33% --
</TABLE>
- --------
/1/ As of December 31, 1999 the T. Rowe Price Growth Stock Fund, a mutual fund,
had assets of $5.67 billion. 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 been used (whether before or after estimated
expense reimbursement), the performance figures would have been lower.
Performance figures are based on historical performance and do not guarantee
future results.
/2/ The Lipper Variable Funds Underlying Growth Funds Average represents the
average total return based on net asset values of all underlying growth funds.
The S&P 500 Index is an unmanaged index of common stocks that are primarily
issued by companies with large aggregate market values. Performance for the
indices has been obtained from public sources and has not been audited.
37
<PAGE>
MetLife
<TABLE>
<CAPTION>
Lehman Brothers Lehman Brothers
Total Return for MetLife Fixed Aggregate Aggregate Bond
Period (unaudited) Income Account/1/ Bond Index/2/ Index Portfolio
------------------ ----------------- --------------- ---------------
<S> <C> <C> <C>
Year to Date (ended
2/29/2000) 0.88% 0.88% 0.85%
Since inception of Lehman
Brothers Aggregate Bond
Index Portfolio (11/9/98
to 12/31/99, annualized) -- 0.79% -0.01%
One Year (12/31/98 to
12/31/99) -0.67% -0.82% -1.37%
Three Year (12/31/96 to
12/31/99), annualized 5.88% 5.74% --
8/1/96 to 12/31/99,
annualized/3/ 6.62% 6.19% --
</TABLE>
- --------
/1/ As of December 31, 1999 the MetLife Fixed Income Account, a non-mutual fund
separate account, had assets of $400 million. The MetLife Fixed Income Account
is not an SEC registered investment company and does not comply with
requirements of Subchapter M of the Internal Revenue Code. The management of
the Account would not have been affected had the Account been a registered
investment company that complied with all legal requirements applicable to such
companies and Subchapter M of the Code. The total returns were calculated using
the estimated fees and expenses of the Lehman Brothers Aggregate Bond Index
Portfolio. Performance figures are based on historical performance and do not
guarantee future results.
/2/ Lehman Brothers Aggregate Bond Index is an unmanaged index comprised of the
Lehman Brothers Government/Corporate Index, the Lehman Brothers Mortgaged-
Backed Securities Index, and the Lehman Brothers Asset-Backed Securities Index
and effective July 1, 1999, the Lehman Brothers Commercial Mortgage-Backed
Securities Index. Performance for the index has been obtained from public
sources and has not been audited.
/3/ MetLife was not the investment manager of the separate account until August
1, 1996. Prior thereto an affiliate of MetLife was the investment manager for
the separate account.
Putnam
<TABLE>
<CAPTION>
Putnam Lipper
Growth Variable Funds
Total Return for Opportunities Underlying Growth Putnam Large Cap
Period (unaudited) Fund/1/ Funds Average/2/ S&P 500/2/ Growth Portfolio
------------------ ------------- ----------------- ---------- ----------------
<S> <C> <C> <C> <C>
Year to Date (ended
2/29/2000) 1.78% 1.73% -6.82% --
One Year (12/31/98 to
12/31/99) 51.37% 29.97% 21.04% --
Three Year (12/31/96 to
12/31/99, annualized) 46.62% 26.79% 27.58% --
10/2/95 to 12/99,
annualized (since
inception of the
Putnam Growth
Opportunities Fund) 38.20% 23.13% 26.55% --
</TABLE>
- --------
/1/ As of December 31, 1999 the Putnam Growth Opportunities Fund, a mutual
fund, had assets of $5.3 billion. 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 been used (whether before or after
estimated expense reimbursement), the performance figures would have been
lower. Performance figures are based on historical performance and do not
guarantee future results.
/2/ The Lipper Variable Funds Underlying Growth Funds Average represents the
average total return based on net asset values of all underlying growth funds.
The S&P 500 Index is an unmanaged index of common stocks that are primarily
issued by companies with large aggregate market values. Performance for the
indices has been obtained from public sources and has not been audited.
State Street Research
<TABLE>
<CAPTION>
State Street
State Street Russell 2000 Research Aurora
Total Return for Research Value Small Cap Value
Period (unaudited) Aurora Fund/1/ Index/2/ S&P 500/2/ Portfolio
------------------ -------------- ------------ ---------- ---------------
<S> <C> <C> <C> <C>
Year to Date (ended
2/29/2000) 10.59% 3.34% -6.82% --
One Year (12/31/98 to
12/31/99) 33.91% -1.49% 21.03% --
Three Year (12/31/96 to
12/31/99), annualized 18.74% 6.69% 27.56% --
2/13/95 to 12/99,
annualized (since in-
ception of the State
Street Research Aurora
Fund) 26.68% 11.79% 21.68% --
</TABLE>
- --------
/1/ As of December 31, 1999, the State Street Research Aurora Fund, a mutual
fund, had assets of $525.9 million. The total returns were calculated using the
actual fees and expenses of the fund for class S shares whose performance is
shown. Had the Portfolio's estimated fees and expenses been used (whether
before or after estimated expense reimbursement) the performance figures would
have been lower. Performance figures are based on historical performance and do
not guarantee future results.
/2/ The Russell 2000 Value Index is an unmanaged index of common stocks that
are primarily issued by the 2000 smallest companies with the Russell 3000
Index. The S&P 500 Index is an unmanaged index of common stocks that are
primarily issued by companies with large aggregate market values. Performance
for the indices has been obtained from public sources and has not been audited.
38
<PAGE>
Appendix B To Prospectus
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 if noted under "Risk/Return Summary"
in the Prospectus. The following Portfolio numbers are used in the table:
<TABLE>
<CAPTION>
Portfolio
Number Portfolio Name
--------- --------------
<C> <S>
State Street Research Aggressive
1. Growth
2. State Street Research Diversified
3. State Street Research Growth
4. State Street Research Income
5. State Street Research Money Market
6. Putnam International Stock
7. Harris Oakmark Large Cap Value
8. Janus Mid Cap
9. Loomis Sayles High Yield Bond
10. Neuberger Berman Partners Mid Cap
Value
</TABLE>
<TABLE>
<CAPTION>
Portfolio
Number Portfolio Name
--------- --------------
<C> <S>
11. Scudder Global Equity
12. T. Rowe Price Large Cap Growth
13. T. Rowe Price Small Cap Growth
14. Lehman Brothers Aggregate Bond Index
15. MetLife Stock Index
16. Morgan Stanley EAFE Index
17. Russell 2000 Index
18. MetLife Mid Cap Stock Index
19. Putnam Large Cap Growth
20. State Street Research Aurora Small
Cap Value
</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 6,8,9,11,12,13, None
stock indices to earn additional income, as a 19,20
hedge against or to minimize anticipated loss
in value.
- --------------------------------------------------------------------------------------------------------
3 Sell covered put and covered call options on 6,8,9,11,12,13,20 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 10 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 on securities and All, except 10 None
indices that correlate with that Portfolio's
securities.
- --------------------------------------------------------------------------------------------------------
6 Purchase put options on currencies for 1,2,3,4,6,8,9, None
defensive purposes in order to protect 11,
against anticipated declines in values on 12,13,20
currencies in which a Portfolio's securities
are or may be denominated.
- --------------------------------------------------------------------------------------------------------
7 Purchase call options on currencies that 1,2,3,4,6,8,9, None
correlate with the currencies in which the 11,12,13,20
Portfolio's securities may be denominated.
- --------------------------------------------------------------------------------------------------------
8 Purchase and sell otherwise permitted stock, 1,2,3,4,6,7,8, None
currency, and index put and call options 10,11,20
"over-the-counter" (rather than only on
established exchanges).
- --------------------------------------------------------------------------------------------------------
9 Purchase and sell futures contracts (on All, except Combined limit on the sum of
recognized futures exchanges) on debt 10,15,16,17,18 the initial margin for
securities and indices of debt securities as futures and options sold on
a hedge against or to minimize adverse futures, plus premiums paid
principal fluctuations resulting from for unexpired options on
anticipated interest rate changes or to futures, is 5% of total
adjust exposure to the bond market. assets (excluding "in the
money" and, for Portfolios
7, 8, 9, 11, 12 and 13,
"bona fide hedging" as
defined by the Commodity
Futures Trading Commission)
- --------------------------------------------------------------------------------------------------------
10 Purchase and sell future contracts (on All, except Same as Item 9
recognized futures exchanges) on equity 4,5,7,10,14
securities or stock indices as a hedge or to
enhance return.
- --------------------------------------------------------------------------------------------------------
11 Purchase and sell currency futures contracts 6,8,9,11,12,13,20 Same as Item 9
(on recognized futures exchanges) as a hedge
or to adjust exposure to the currency market.
</TABLE>
39
<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 10 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 6,8,9, Same as Item 9
(on recognized futures exchanges) of the type 11,12,13,19,20
and for the same reasons the Portfolio is
permitted to enter into futures contracts.
- ----------------------------------------------------------------------------------------------------------
14 Enter into forward foreign currency exchange All, except None
contracts to hedge currency risk relating to 15,17,18
securities denominated, exposed to, or traded
in a foreign currency in which the Portfolio
may invest.
- ----------------------------------------------------------------------------------------------------------
15 Enter into forward foreign currency exchange 1,2,3,4,6,8,9, 5% of total assets
contracts for non hedging purposes. 11,12, 13,20
- ----------------------------------------------------------------------------------------------------------
16 Enter into transactions to offset or close All None
out any of the above.
- ----------------------------------------------------------------------------------------------------------
17 Mortgage-related securities (except for IOs All None
and POs).
- ----------------------------------------------------------------------------------------------------------
18 All, except None
Mortgage related interest only (IOs) and 5,10,15,
principal only (POs) securities. 16,17,18
- ----------------------------------------------------------------------------------------------------------
19 Use swaps, caps, floors and collars on 1,2,3,4,6,8,9,11, None
interest rates, currencies and indices as a 12,13,14,19,20
risk management tool or to enhance return.
- ----------------------------------------------------------------------------------------------------------
20 Invest in foreign securities (including A. 1,2,3,4,5,15,17, A. 10% of total assets in
investments through European Depository 18,19 securities of foreign
Receipts ("EDRs") and International issuers except 25% of
Depository Receipts ("IDRs")). 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 of securities listed
on the New York Stock
Exchange.*
B. 6,11,14,16,20 B. None
C. 9 C. 50% of total assets in
foreign securities (except
100% in securities of
Canadian issuers)*
D. 12 D. 30% of total assets
(excluding reserves)*
E. 13 E. 20% of total assets
(excluding reserves)*
F. 7 F. 25% of total assets*
G. 10 G. 10% of total assets*
H. 8 H. 30% of total assets in
foreign securities
denominated in a foreign
currency and not publicly
traded in the U.S.*
- ----------------------------------------------------------------------------------------------------------
21 Lend Portfolio securities. A. 1,2,3,4,5,6,9,15 A. 20% of total assets*
B. 7,10,11,12,13, B. 33 1/3% of total assets*
14,16,17,18,19,
20
C. 8 C. 25% of total assets*
- ----------------------------------------------------------------------------------------------------------
22 Invest in securities that are illiquid. A. All, except 5,11 A. 15% of total assets
B. 5,11 B. 10% of total assets
</TABLE>
40
<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 A. All, except 10 A. 10% of total assets
may involve payment of duplicate fees. except as in B below
(except 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).
B. 8,12,13 B. Up to 25% of total assets
may be invested in
affiliated money market
funds for defensive
purposes or as a means of
receiving a return on idle
cash.
- ---------------------------------------------------------------------------------------------------------
24 Invest in money market instruments issued by 1,2,3,4,6,8,9, None
a commercial bank or savings and loan 11,12,13,19,20
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 assets in securities issued by All 25% of total assets.
companies primarily engaged in any one Excluded from the 25%
industry. Provided that: (a) utilities will limitation are portfolios 2
be considered separate industries according and 5's: (a) money market,
to type of service; (b) oil and oil related securities, securities
companies will be considered separate issued or guaranteed by the
industries according to type; and (c) U.S. government, its
savings, loan associations, and finance agencies or
companies will be considered separate instrumentalities; and (b)
industries. bank issued debt
securities.* (The Fund will
disclose when more than 25%
of a Portfolio's total
assets are invested in four
oil related industries. For
Portfolios 1, 2, 3, 4, 5, 14
and 20, companies engaged in
the business of financing
may be classified according
to the industries of their
parent or sponsor companies,
or industries that otherwise
most affect the financing
companies).
- ---------------------------------------------------------------------------------------------------------
26 Borrow in the form of short-term credits All Together with item 27, up to
necessary to clear Portfolio transactions; 1/3 of the amount by which
enter into reverse repurchase arrangements total assets exceed total
with banks. liabilities (excluding the
liabilities represented by
such obligations).*
- ---------------------------------------------------------------------------------------------------------
27 Borrow money for extraordinary or emergency A. All, except 11 A. 5% of total assets*
purposes (e.g.
to honor redemption requests which might B. All, except 11 B. Together with item 26, up
otherwise require the sale of securities at to 1/3 of the amount by
an inopportune time). which total assets exceed
total liabilities
(excluding the liabilities
represented by such
obligations).*
C. 11 C. 33 1/3% of total assets,
provided that if these
obligations with reverse
repurchase agreements do
not exceed 5% of total
assets, no additional
securities will be
purchased for the
Portfolio.*
- ---------------------------------------------------------------------------------------------------------
28 Purchase securities on a "when-issued" basis. All, except 5 None
- ---------------------------------------------------------------------------------------------------------
29 Invest in real estate interests, including All 10% of total assets.* This
real estate mortgage loans. limit shall not restrict
investments in exchange-
traded real estate
investment trusts and shares
of other real estate
companies.
- ---------------------------------------------------------------------------------------------------------
30 Purchase American Depository Receipts A. 1,2,3,4,5,19 A. Together with the assets
("ADRs"). referred to in Item 20 A
above, 35% of total assets
B. 6,8,10,11,16,20 B. None
C. 12,15,17,18 C. Together with assets
referred to in Item 20 D
above, 30% of total assets
D. 7 D. Together with assets
referred to in Item 20 F
above, 25% of total assets
E. 9 E. Together with assets
referred to in Item 20C
above, 50% of total assets
(except 100% in
securities).
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
Percentage limit per Portfolio
Item Investment practice Portfolios on assets/1/
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
F. 13 F. Together with assets
referred to in Item 20E
above, 20% of total assets
- -------------------------------------------------------------------------------------------------------
31 Invest in debt securities. A. All, except A. None
6,7,10,13,14,
19, 20
B. 6,7,10,11,12, B. None on investment grade
13,14,19,20 securities but 25% of
total assets for 7, 15%
for 10 and 5% for 6, 11,
12, 13, 14, 19 and 20 in
below investment grade
securities.
- -------------------------------------------------------------------------------------------------------
32 Invest in preferred stocks. A. All, except 9 A. None
B. 9 B. Up to 20% of total assets
- -------------------------------------------------------------------------------------------------------
33 Invest in common stocks. A. All, except 9 A. None
B. 9 B. 10% of total assets
- -------------------------------------------------------------------------------------------------------
34 Invest in hybrid instruments. A. All, except A. None
12,13
B. 12,13 B. 10% of its total assets
- -------------------------------------------------------------------------------------------------------
35 Enter into forward contracts on debt All None
securities.
</TABLE>
- -----------
/1/ At time of investment, unless otherwise noted.
* Policy may be changed only by shareholder vote.
42
<PAGE>
Appendix C To Prospectus
Description Of Some Investments, Techniques, And Risks
Investment Styles
[To varying extents, the portfolio managers may use the following techniques and
investments in managing the Portfolios.]
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.
Morgan Stanley sponsors the MSCI EAFE Index, Lehman Brothers sponsors the
Lehman Brothers Aggregate Bond Index, the McGraw Hill Companies, Inc. sponsor
the Standard & Poor's 500 Composite Stock Price Index and the Standard & Poor's
MidCap 400 Composite Stock Index, and Frank Russell Company sponsors the
Russell 2000 Index (together referred to as "index sponsors"). The index
sponsors have no responsibility for and do not participate in the management of
the Portfolio assets or sale of the Portfolio shares. Each index and its
associated trademarks and service marks are the exclusive property of the
respective index sponsors. The Metropolitan Series Fund, Inc. Statement of
Additional Information contains a more detailed description of the limited
relationship the index sponsors have with MetLife and the Fund.
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's 500", "S&P
MidCap 400", "Standard & Poor's MidCap 400", and "500" are trademarks of The
McGraw-Hill Companies, Inc. and references thereto have been made with
permission. The Portfolio is not sponsored, endorsed, sold or promoted by
Standard & Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the Portfolio. For more detailed information, see
the discussion under "GENERAL INFORMATION--Index Sponsors" in the Statement of
Additional Information.
[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.
43
<PAGE>
[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.
[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 nationally recognized
statistical rating organization 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
44
<PAGE>
. 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
receivables such as automobile, credit cards, equipment leases, or student
loans. 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.
[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
45
<PAGE>
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 risks listed below. In addition, these risks may be heightened for
investments in developing countries:
. 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
. change in net asset value of the Portfolio's shares on days when shareholders
will not be able to purchase or redeem Fund shares.
[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
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).
[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:
46
<PAGE>
. 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 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
47
<PAGE>
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
[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.
[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 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.
48
<PAGE>
Metropolitan Series Fund, Inc.
---------------------
Principal Office of the Fund
1 Madison Avenue
New York, New York 10010
---------------------
Investment Manager and Principal Underwriter
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
(Principal Executive Offices)
Neuberger Berman Management Inc.
605 Third Avenue
New York, NY 10158-0180
(Principal Executive Offices)
Putnam Investment Management, Inc.
One Post Office Square
Boston, Massachusetts 02109
(Principal Executive Office)
Custodian, Transfer Agent and
Dividend Paying 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, Met-
ropolitan Tower, Loomis Sayles, T. Rowe Price, Janus, Scudder, Harris, Neu-
berger Berman or Putnam. This Prospectus does not constitute an offering in any
state in which such offering may not lawfully be made.
<PAGE>
How to learn more:
We have incorporated the Statement of Additional Information ("SAI") into this
Prospectus. That means the SAI is considered part of this Prospectus as though
it were included in it. The SAI contains more information about the Fund. Also,
the Fund's annual and semi-annual reports to shareholders (the "reports")
contain more information including information on each Portfolio's investments
and a discussion of the market conditions and investment strategies that
affected each Portfolio's performance for the period covered by the report.
How to get copies:
To request a free copy of the SAI or the reports or to make any other
inquiries, write or call:
Metropolitan Life Insurance Company
One Madison Avenue
New York, NY 10010
Phone: (800) 553-4459
You can also get information about the Fund (including the SAI) from the
Securities and Exchange Commission (a copying fee may apply) by visiting or
writing to its Public Reference Room or using its Internet site at:
Securities and Exchange Commission
Public Reference Room
Washington, D.C. 20549
Call 1-800-SEC-0330 (for information about
using the Public Reference Room)
Internet site: http://www.sec.gov
IC# 811-3618
E00048LJI (exp0501)MLIC-LD
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
FOR
METROPOLITAN SERIES FUND, INC.
May 1, 2000
The investment options ("Portfolios") currently offered by the Metropolitan
Series Fund, Inc. (the "Fund") are:
State Street Research Aggressive
Growth Portfolio Neuberger Berman Partners Mid Cap
Value Portfolio
State Street Research Diversified
Portfolio Scudder Global Equity Portfolio
State Street Research Growth T. Rowe Price Large Cap Growth
Portfolio Portfolio
State Street Research Income T. Rowe Price Small Cap Growth
Portfolio Portfolio
State Street Research Money Market Lehman Brothers(R) Aggregate Bond
Portfolio Index Portfolio
State Street Research Aurora Small MetLife Stock Index Portfolio
Cap Value Portfolio
MetLife MidCap Stock Index Portfolio
Putnam International Stock Portfolio
(formerly Santander International Morgan Stanley(R) EAFE Index Portfolio
Stock Portfolio)
Russell 2000(R) Index Portfolio
Putnam Large Cap Growth Portfolio
Harris Oakmark Large Cap Value
Portfolio
Janus Mid Cap 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 May 1, 2000. The annual report
for the Fund for the year ending December 31, 1999 accompanies this SAI and is
incorporated by reference. A copy of the May 1, 2000 Prospectus and the annual
report may be obtained, without charge, from Metropolitan Life Insurance
Company, One Madison Avenue, New York, New York 10010, Area 2H or by calling
(800) 553-4459.
E00048LJJ (exp0501)MLIC-LD
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Headings Page
- -------- ----
<S> <C>
The Fund's Organization.................................................... B-2
Description of Some Investment Practices, Policies and Risk................ B-3
Certain Investment Limitations............................................. B-7
Investment Management Arrangements......................................... B-8
Directors and Officers of the Fund......................................... B-11
Placing Portfolio Transactions............................................. B-13
Shareholder Meetings....................................................... B-17
Voting..................................................................... B-17
Sale and Redemption of Shares.............................................. B-17
Pricing of Portfolio Securities............................................ B-17
Taxes...................................................................... B-19
General Information........................................................ B-20
Financial Statements....................................................... B-22
Appendix................................................................... B-23
</TABLE>
THE FUND'S ORGANIZATION
The Fund, an open-end management investment company, is a corporation that 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, other than the Janus Mid Cap Portfolio, is
"diversified" for purposes of the Investment Company Act of 1940.
Each Portfolio's issued and outstanding shares participate equally in dividends
and distributions declared by such Portfolio and 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.
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 purchased 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.
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, except to the
extent that such activity would require a shareholder vote, as discussed below
under "Fundamental Policies."
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
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
(two highest for the T. Rowe Price Large Cap Growth and T. Rowe Price Small
Cap Growth Portfolios) 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
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
B-3
<PAGE>
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
instruments 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.
. 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
B-4
<PAGE>
(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 (a) the issuers of
these securities tend to be more highly leveraged and may not have available
to them more traditional methods of financing and (b) 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 (a) with a sufficient number
of securities to minimize the likelihood of a trading halt and (b) for which
there is a developed secondary market.
A Portfolio will cover any option it has sold on a stock index by (a) if the
option is a call option, segregating with the Fund's custodian bank either (i)
cash or other liquid assets having a
B-5
<PAGE>
value that, when added to any related margin deposits, at all times at least
equals the value of the securities comprising the index, or (ii) securities
that substantially replicate changes in value of the securities in the index;
(b) 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 (c)
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 (a) segregating with the Fund's custodian bank (i) 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 (ii) securities or
currencies that substantially replicate changes in value of the securities or
currencies on which the futures contract (or related index) is based or (b)
holding an offsetting call option on that futures contract at the same or
better
B-6
<PAGE>
settlement price. A Portfolio will cover any futures contract it has
purchased, or any put option it has sold on a futures contract, by (a)
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 (b)
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. If such a vote is
required, approval requires a favorable vote of at least the lesser of: (a)
67% of the shares represented (in person or by proxy) at a meeting and
entitled to vote thereon; or (b) if at least 50% of such shares are
represented at the meeting, a majority of those represented.
A policy is fundamental only if the Prospectus or this SAI states that it is
fundamental or that it may be changed only by shareholder vote. If the
Prospectus or SAI specifically states that one or more Portfolios may engage
in practices that would otherwise violate a fundamental policy, such exception
is also part of the Fund's fundamental policies. (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 only at the time of
purchase.
No Portfolio may:
. borrow money to purchase securities 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.
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 of investments for the
Portfolio, or to adjust the effective duration or maturity of fixed income
instruments owned by the Portfolio.
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
described elsewhere in the Prospectus or SAI.
. 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: (a) securities of
issuers in which the Portfolio has not invested more than 5% of its total
assets, (b) voting securities of issuers as to which the Fund owns no more
than 10% of such securities, and (c) securities issued or guaranteed by the
U.S.
B-7
<PAGE>
government, its agencies or instrumentalities. These restrictions do not
apply to the Janus Mid Cap 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
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 five
index Portfolios and overall responsibility for all Portfolios. In addition,
MetLife has entered into sub-investment management agreements for all other
Portfolios. For simplicity, each of MetLife and the sub-investment managers 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).
Payment of Fund Expenses
As detailed in the Prospectus, MetLife currently pays certain expenses for the
Harris Oakmark Large Cap Value, T. Rowe Price Large Cap Growth, Neuberger
Berman Partners Mid Cap Value, Putnam Large Cap Growth, State Street Research
Aurora Small Cap Value, Lehman Brothers Aggregate Bond Index, Russell 2000
Index, MetLife Mid Cap Stock 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: (a) fees of the Fund's directors; (b)
custodian and transfer agent fees; (c) audit and legal fees; (d) printing and
mailing costs for the Fund's prospectuses, proxy material and periodic reports
to shareholders; (e) MetLife's investment management fee; (f) brokerage
commissions on portfolio transactions (including costs for acquisition,
disposition, lending or borrowing of investments); (g) Fund taxes; (h) interest
and other costs related to any Fund borrowing; and (i) 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-8
<PAGE>
Management Fees
The Fund pays MetLife for its investment management services.
MetLife pays the sub-investment managers for their investment management
services.
The following table shows the fee schedules for the investment management fees
and sub-investment management fees as a percentage per annum of the average net
assets and the investment management fees paid to MetLife for each Portfolio:
<TABLE>
<CAPTION>
Sub-
Investment Investment
Management Management
Fee Fee Investment Management Fees
Average Schedule-- Average Schedule-- For the Year Ended December 31,
Daily Net % Per Daily Net % Per ----------------------------------
Portfolio Assets Annum Assets Annum 1997 1998 1999
- --------- ----------------- ---------- ----------------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
State Street Research .25% .25%
Money Market All assets $ 105,515 $ 105,727 $ 127,180
State Street Research
Growth 1st $500 million .55% .40% $7,305,001 $13,095,405 $15,804,021
next $500 million .50% .35%
over $1 billion .45% .30%
State Street Research
Income 1st $250 million .35% .27%
next $250 million .30% .22% $1,102,819 $ 1,514,111 $ 1,635,946
over $500 million .25% .17%
State Street Research
Diversified 1st $500 million .50% .35%
next $500 million .45% .30% $5,811,475 $10,067,374 $11,893,804
over $1 billion .40% .25%
State Street Research 1st $500 million .75% .55%
Aggressive Growth next $500 million .70% .50% $9,931,653 $ 9,539,534 $ 9,495,639
over $1 billion .65% .45%
Putnam Large Cap Growth 1st $500 million .80% 1st $150 million .50%
next $500 million .75% next $150 million .45% -- -- --
over $1 billion .70% over $300 million .35%
State Street Research 1st $50 million .55%
Aurora 1st $500 million .85%
Small Cap Value next $500 million .80% next $75 million .50%
over $1 billion .75% next $100 million .45% -- -- --
over $225 million .40%
Putnam International 1st $150 million .65%
Stock /1/ 1st $500 million .90%
next $500 million .85% next $150 million .55% $2,258,438 $ 2,161,315 $ 2,250,241
over $1 billion .80% over $300 million .45%
Loomis Sayles High Yield .50%
Bond All assets .70% $ 84,589 $ 266,117 $ 359,652
T. Rowe Price Small Cap .35%
Growth 1st $100 million .55%
next $300 million .50% .30% $ 187,380 $764,242 $ 1,040,413
over $400 million .45% .25%
T. Rowe Price Large Cap .50%
Growth 1st $50 million .70%
over $50 million .60% .40% -- $ 3,585 $ 181,312
Janus Mid Cap 1st $100 million .75% .55%
next $400 million .70% .50% $ 263,954 $ 1,584,660 $ 5,844,052
over $500 million .65% .45%
Scudder Global Equity 1st $50 million .90% .70%
next $50 million .55% .35% $ 201,758 $ 674,520 $ 884,558
next $400 million .50% .30%
over $500 million .475% .275%
Harris Oakmark Large Cap
Value 1st $250 million .75% 1st $100 million .45%
over $250 million .70% next $400 million .40% -- $ 6,470 $ 192,890
over $500 million .35%
Neuberger Berman .50%
Partners 1st $100 million .70%
Mid Cap Value next $250 million .675% .475% -- $ 6,314 $ 169,231
next $500 million .65% .45%
next $750 million .625% .425%
over $1.6 billion .60% .40%
</TABLE>
B-9
<PAGE>
<TABLE>
<CAPTION>
Sub-
Investment Investment
Management Management
Fee Fee Investment Management Fees
Average Schedule-- Average Schedule-- For the Year Ended December 31,
Daily Net % Per Daily Net % Per --------------------------------
Portfolio Assets Annum Assets Annum 1997 1998 1999
- --------- ---------- ---------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
MetLife Stock Index All Assets .25% N/A $3,961,131 $6,387,967 $9,091,545
Lehman Brothers All Assets .25% N/A -- $ 18,962 $ 239,612
Aggregate Bond Index
Russell 2000 Index All Assets .25% N/A -- $ 11.355 $ 172,630
Morgan Stanley EAFE(R) All Assets .30% N/A -- $ 9,366 $ 148,862
Index
MetLife Mid Cap Stock All Assets .25% N/A -- -- --
Index
</TABLE>
- --------
/1/For the years ended December 31, 1997, 1998 and 1999, a lower investment
management fee schedule was in effect for the Putnam International Stock
Portfolio. Thus, the investment management fees set forth herein were based
on the lower schedule. Such fees would have been higher if the revised fee
schedule had been in effect.
B-10
<PAGE>
DIRECTORS AND OFFICERS OF THE FUND
The Fund's Directors review actions of the Fund's investment manager and sub-
investment managers, 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 below. 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 (62)+ Director Retired, formerly Senior Vice-President
The Pennsylvania State Finance and Operations and Treasurer, The
University Pennsylvania State University
208 Old Main
University Park, PA
16802
- ------------------------------------------------------------------------------------------------
David A. Levene (60)* Chairman of the Board, Executive Vice-President, MetLife since
Chief Executive Officer 1996; prior thereto, Senior Vice-President
and Director and Chief Actuary
- ------------------------------------------------------------------------------------------------
Linda B. Strumpf (52) Director Vice-President and Chief Investment Officer,
Ford Foundation Ford Foundation
320 E. 43rd St.
New York, NY 10017
- ------------------------------------------------------------------------------------------------
Dean O. Morton (68)+ 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
(62)* Treasurer, MetLife
43 Chestnut Drive
Garden City, NY 11530
- ------------------------------------------------------------------------------------------------
Dianne Johnson (48)* Controller Director -- Financial Management, MetLife
since 1999; Senior Technical Consultant --
Financial Management, MetLife 1997-1999;
prior thereto Technical Consultant --
Retirement and Savings Center
- ------------------------------------------------------------------------------------------------
Christopher P. Nicholas President and Chief Associate General Counsel, MetLife
(51)+* Operating Officer
- ------------------------------------------------------------------------------------------------
Janet Morgan (37)* Treasurer Assistant Vice-President, MetLife since
1997; prior thereto, Director
- ------------------------------------------------------------------------------------------------
Barbara Hume (46)* Vice-President Vice-President, MetLife since 1997; prior
thereto, Vice-President, Prudential
Investments
- ------------------------------------------------------------------------------------------------
Lawrence A. Vranka (60)* Vice-President Vice-President, MetLife
- ------------------------------------------------------------------------------------------------
Danne L. Bullock (31)* Secretary Associate Counsel, MetLife since February
2000; prior thereto, Branch Chief, U.S.
Securities & Exchange Commission
- ------------------------------------------------------------------------------------------------
Patricia S. Worthington Assistant Secretary Assistant Vice-President and Associate
(43)* Compliance Director of MetLife since 1997;
prior thereto Associate Counsel
- ------------------------------------------------------------------------------------------------
Nancy A. Turchio (31)* Assistant Secretary Legal Assistant, MetLife
- ------------------------------------------------------------------------------------------------
John Malatchi (30)* Assistant Controller Senior Technical Consultant -- Financial
Management, MetLife since 1996; prior
thereto, Technical Analyst -- Retirement and
Savings Center
- ------------------------------------------------------------------------------------------------
Jeanne Manning (49)* Assistant Controller Technical Consultant -- Financial
Management, MetLife since 1997; Accounting
Supervisor -- Retirement and Savings Center,
1995-1997; prior thereto, Associate
Accounting Analyst -- 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-11
<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>
Linda B. Strumpf(d) 0 0 0 0
- -----------------------------------------------------------------------------
Steve A. Garban $30,750 0 0 $110,900
- -----------------------------------------------------------------------------
Malcolm T. Hopkins(f) $30,750 0 0 $103,450
- -----------------------------------------------------------------------------
Robert A. Lawrence(e) $ 8,000 0 0 $ 25,600
- -----------------------------------------------------------------------------
Dean O. Morton $27,750 0 0 $108,900
- -----------------------------------------------------------------------------
Michael S. Scott Morton $27,750 0 0 $113,000
- -----------------------------------------------------------------------------
David A. Levene 0 0 0 0
- -----------------------------------------------------------------------------
Arthur G. Typermass $26,750 0 0 $ 26,750
</TABLE>
- ------------
(a) For the fiscal year ended December 31, 1999.
(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, 1999.
(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 currently active employees of
MetLife receive a fee of $15,000 per year, plus $3,500 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 chairmen of the audit and contracts
committees each receive a fee of $1,500 for each full calendar year during
which he/she serves as chairman.
(d) Linda B. Strumpf was appointed to the Board effective May 1, 2000.
(e) Robert A. Lawrence resigned as a director effective April 1, 1999.
(f) Malcolm Hopkins, resigned as a director effective May 1, 2000.
- ------------
None of the above officers and directors of the Fund owns any stock of the
Fund.
B-12
<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. In the discussion that follows, the term broker-dealer
includes both brokers (brokerage firms who act as agents in purchases or sales
of portfolio investments by the Fund) and dealers (investment firms who act for
their own account in selling or purchasing securities to or from the Fund).
Codes of Personal Conduct
The Fund has adopted a code of conduct for its officers, directors and other
personnel. Among other things this code regulates (although it does not
absolutely prohibit) transactions by such persons in securities of a type in
which the Portfolios of the Fund may and do invest. The investment managers and
the sub-investment managers have adopted codes of conduct that are similar to
the Fund's.
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. To this end, when
selecting 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 with respect to specific
markets or securities (see, for example, "Fixed Income Securities" and "Over-
the-Counter Securities Market" below)
. 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 (see
"Research and Statistical Services" below)
. the broker-dealer's capital clearance and settlement capabilities
. 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.
B-13
<PAGE>
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 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
After considering a combination of all the factors, managers may not
necessarily select the broker with the lowest commission rate or the dealer
with the lowest net price. 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.
Compensating Broker-Dealers for Non-Execution Services
Managers do not intentionally pay 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.
Brokerage Allocation Agreements and Understandings Managers may pay cash for
certain services provided by external sources or
B-14
<PAGE>
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.
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.
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
B-15
<PAGE>
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
. 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.
Brokerage commissions paid to Harris Associates Securities, L.P. during 1999
totaled $50,582. This represented 70.37% of the total commissions paid by the
Harris Oakmark Large Cap Value Portfolio during 1999 and 72% of the aggregate
dollar amount of transactions involving payment of commissions for that
Portfolio during 1999.
Brokerage commission paid to Neuberger Berman, LLC during 1999 totaled $16,175.
This represented 11% of the total commissions paid by the Neuberger Berman
Partners Mid Cap Value Portfolio during 1999 and 12% of the aggregate dollar
amount of transactions involving payment of commissions for that Portfolio
during 1999.
The following table shows the brokerage commissions paid by the Fund for each
of the Portfolios for the years ended December 31, 1997, 1998 and 1999:
<TABLE>
<CAPTION>
Portfolio 1997 1998 1999
<S> <C> <C> <C>
State Street Research
Money Market N/A N/A N/A
State Street Research N/A N/A N/A
Income
State Street Research $1,771,904 $2,204,538 $2,669,281
Diversified
State Street Research $3,228,651 $4,486,471 $5,614,065
Growth
State Street Research $5,031,886 $3,260,411 $2,687,582
Aggressive Growth
Putnam $3,009,725 $2,313,364 $1,584,912
International Stock
Loomis Sayles High $ 4,236 $ 6,463 $ 1,966
Yield Bond
T. Rowe Price Small $ 84,657 $ 174,688 $ 180,042
Cap Growth
T. Rowe Price Large N/A $ 5,222 $ 55,158
Cap Growth
Janus Mid Cap $ 139,969 $ 482,758 $1,007,044
Scudder Global Equity $ 143,783 $ 165,847 $ 183,800
Harris Oakmark Large N/A $ 12,228 $ 71,883
Cap Value
Neuberger Berman N/A $ 11,875 $ 126,856
Partners Mid Cap Value
MetLife Stock Index $ 341,117 $ 469,162 $ 369,088
Lehman Brothers N/A N/A N/A
Aggregate Bond Index
Russell 2000 Index N/A $ 41,989 $ 150,280
</TABLE>
B-16
<PAGE>
<TABLE>
<S> <C> <C> <C>
Morgan Stanley EAFE N/A $79,325 $198,582
Putnam Large Cap Growth N/A N/A N/A
State Street Research Aurora N/A N/A N/A
Small Cap Value
MetLife MidCap Stock Index N/A N/A N/A
</TABLE>
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: (a) approve certain agreements required by securities laws; (b) change
fundamental investment objectives and restrictions of the Portfolios; and (c)
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 the Fund
Prospectus describes how Contract owners can give voting instructions for Fund
shares. Shares held by MetLife's general account or 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.
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 (a) trading on the New York Stock Exchange is restricted or the
Exchange is closed (other than customary weekend and holiday closings); (b) an
emergency exists which makes disposing of portfolio securities or establishing
a Portfolio's net asset value impractical; or (c) 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-17
<PAGE>
PRICING OF SECURITIES CHART
<TABLE>
<CAPTION>
Value
Average Established by
Last Between Recognized
Last Spot Last Bid Exchange or
Sale Last Bid Price and 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/, NB/1/ L/1/ S/2/ NB and MM MM
- ----------------------------------------------------------------------------------------------------------------
Non-U.S. Securities All
Traded in the Over All Portfolios/2
the Counter Market Portfolios/1/ / except NB NB/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
NB.Neuberger Berman Partners Mid Cap Value Portfolio Only
S. Scudder Global Equity Portfolio Only
MM.State Street Research Money Market Portfolio Only
* 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-18
<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-19
<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, 555 17th Street, Suite 3600,
Denver, CO, 80202, is the Fund's independent auditor. The Fund's financial
statements for the 12 months ended December 31, 1999 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.
Custodian Arrangement
State Street Bank and Trust Company of Boston, Massachusetts, is the custodian
of the assets of all Portfolios. The custodian's duties include safeguarding
and controlling the Fund's cash and investments, handling the receipt and
delivery of securities, and collecting interest and dividends on the Fund's
investments. Portfolio securities purchased in the United States are maintained
in the custody of State Street Bank, although such securities may be deposited
in the Book-entry system of the Federal Reserve System or with Depository Trust
Company. Except as otherwise permitted under applicable Securities and Exchange
Commission "no-action" letters or exemptive orders, the Fund holds foreign
assets in qualified foreign banks and depositories meeting the requirements of
Rule 17f-5 under the Investment Company Act of 1940.
Index Sponsors
The Prospectus describes certain aspects of the limited relationship the index
sponsors have with the Fund.
With respect to Standard & Poor's, neither the MetLife Stock Index Portfolio or
the MetLife Mid Cap Stock Index Portfolio is sponsored, endorsed, sold or
promoted by Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
("S&P"). S&P makes no representation or warranty, express or implied, to the
owners of either Portfolio or any member of the public regarding the
advisability of investing in securities generally or in either Portfolio
particularly or the ability of the S&P 500 Index or the S&P 400 MidCap Index to
track general stock market performance. S&P's only relationship to the Licensee
is S&P's grant of permission to the Licensee to use the S&P 500 Index or the
S&P 400 MidCap Index which are determined, composed and calculated by S&P
without regard to the Licensee or either Portfolio. S&P has no obligation to
take the needs of the Licensee or the owners of this Portfolio into
consideration in determining, composing or calculating the S&P 500 Index or the
S&P 400 MidCap Index.
S&P is not responsible for and has not participated in the determination of the
prices and amount of this Portfolio or the timing of the issuance or sale of
this Portfolio or in the determination or calculation of the equation by which
this Portfolio is to be converted into cash. S&P has no obligation or liability
in connection with the administration, marketing or trading of this Portfolio.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR THE S&P 400 MIDCAP INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL
HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P
MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE
LICENSEE, OWNERS OF THIS PORTFOLIO, OR ANY OTHER PERSON OR ENTITY FROM THE USE
OF THE S&P 500 INDEX OR THE S&P 400 MIDCAP INDEX OR ANY DATA INCLUDED THERE.
S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500 INDEX OR THE S&P 400 MIDCAP INDEX OR ANY DATA INCLUDED
THEREIN. WITHOUT
B-20
<PAGE>
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS),
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
In addition, with respect to Morgan Stanley, the Morgan Stanley EAFE (R) Index
Portfolio is not sponsored, endorsed, sold or promoted by Morgan Stanley.
Morgan Stanley makes no representation or warranty, express or implied, to the
owners of this Portfolio or any member of the public regarding the advisability
of investing in funds generally or in this Portfolio particularly or the
ability of the MSCI EAFE (R) index to track general stock market performance.
Morgan Stanley is the licensor of certain trademarks, service marks and trade
names of Morgan Stanley and of the MSCI EAFE (R) index which is determined,
composed and calculated by Morgan Stanley without regard to the issuer of this
Portfolio or this Portfolio. Morgan Stanley has no obligation to take the needs
of the issuer of this Portfolio or the owners of this Portfolio into
consideration in determining, composing or calculating the MSCI EAFE (R) index.
Morgan Stanley is not responsible for and has not participated in the
determination of the timing of, prices at, or quantities of this Portfolio to
be issued or in the determination or calculation of the equation by which this
Portfolio is redeemable for cash. Morgan Stanley has no obligation or liability
to owners of this Portfolio in connection with the administration, marketing or
trading of this Portfolio.
ALTHOUGH MORGAN STANLEY SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE IN
THE CALCULATION OF THE INDEXES FROM SOURCES WHICH MORGAN STANLEY CONSIDERS
RELIABLE, NEITHER MORGAN STANLEY NOR ANY OTHER PARTY GUARANTEES THE ACCURACY
AND/OR THE COMPLETENESS OF THE INDEXES OR ANY DATA INCLUDED THEREIN. NEITHER
MORGAN STANLEY NOR ANY OTHER PARTY MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS
TO RESULTS TO BE OBTAINED BY LICENSEE, LICENSEE'S CUSTOMERS AND COUNTERPARTIES,
OWNERS OF THE PORTFOLIO, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE
INDEXES OR ANY DATA INCLUDED THEREIN IN CONNECTION WITH THE RIGHTS LICENSED
HEREUNDER OR FOR ANY OTHER USE. NEITHER MORGAN STANLEY NOR ANY OTHER PARTY
MAKES ANY EXPRESS OR IMPLIED WARRANTIES, AND MORGAN STANLEY HEREBY EXPRESSLY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
WITH RESPECT TO THE INDEXES OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY
OF THE FOREGOING, IN NO EVENT SHALL MORGAN STANLEY OR ANY OTHER PARTY HAVE ANY
LIABILITY FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY
OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF
SUCH DAMAGES. The MSCI EAFE (R) Index is the exclusive property of Morgan
Stanley. Morgan Stanley Capital International is a service mark of Morgan
Stanley and has been licensed for use by MetLife.
With respect to Frank Russell Company, the Russell 2000 Index Portfolio is not
promoted, sponsored or endorsed by, nor in any way affiliated with Frank
Russell Company. Frank Russell Company is not responsible for and has not
reviewed the Portfolio nor any associated literature or publications and Frank
Russell Company makes no representation or warranty, express or implied, as to
their accuracy, or completeness, or otherwise. Frank Russell Company reserves
the right at any time and without notice, to alter, amend, terminate or in any
way change its index. The Russell 2000(R) Index is a service mark of the Frank
Russell Company. Russell(TM) is a trademark of the Frank Russell Company. Frank
Russell Company has no obligation to take the needs of any particular fund or
its participants or any other product or person into consideration in
determining, composing or calculating the index. Frank Russell Company's
publication of the index in no way suggests or implies an opinion by Frank
Russell Company as to the attractiveness or appropriateness of investment in
any or all securities upon which the index is based. FRANK RUSSELL COMPANY
B-21
<PAGE>
MAKES NO REPRESENTATION, WARRANTY, OR GUARANTEE AS TO THE ACCURACY,
COMPLETENESS, RELIABILITY, OR OTHERWISE OF THE INDEX OR ANY DATA INCLUDED IN
THE INDEX. FRANK RUSSELL COMPANY MAKES NO REPRESENTATION OR WARRANTY REGARDING
THE USE, OR THE RESULTS OF USE, OF THE INDEX OR ANY DATA INCLUDED THEREIN, OR
ANY SECURITY (OR COMBINATION THEREOF) COMPRISING THE INDEX. FRANK RUSSELL
COMPANY MAKES NO OTHER EXPRESS OR IMPLIED WARRANTY, AND EXPRESSLY DISCLAIMS ANY
WARRANTY, OF ANY KIND, INCLUDING, WITHOUT MEANS OF LIMITATION, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE INDEX
OR ANY DATA OR ANY SECURITY (OR COMBINATION THEREOF) INCLUDED THEREIN.
FINANCIAL STATEMENTS
The Fund's financial statements for periods ending December 31, 1999, and the
related schedules of investments for each Portfolio and report of independent
auditors thereon, are included in the Fund's annual report to shareholders for
1999 that accompanies this Statement of Additional Information and are
incorporated by reference into this SAI.
B-22
<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-23
<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-24
<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-25
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
(a)(a). --Articles of Incorporation of Registrant, as amended May 23, 1983*
(a)(b). --Articles Supplementary of Registrant*
(a)(c). --Articles Supplementary of Registrant*
(a)(d). --Articles Supplementary of Registrant*
(a)(e). --Articles Supplementary of Registrant*
(a)(f). --Articles Supplementary of Registrant*
(a)(g). --Articles Supplementary of Registrant*
(a)(h). --Articles Supplementary of Registrant+++
(a)(i). --Articles Supplementary of Registrant*****
(a)(j). --Articles Supplementary of Registrant+
(a)(k). --Articles of Amendment****
(a)(l). --Articles of Amendment+++++
(b)(a). --By-Laws of Registrant, as amended January 27, 1988*
(b)(b). --Amendment to By-Laws Dated April 24, 1997***
(c). --None, other than Exhibits (a) and (b) above
(d)(a). --Investment Management Agreement(s), as amended, relating to the
MetLife Stock Index and State Street Research Money Market Portfo-
lios*
(d)(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
Putnam International Stock Portfolios***
(d)(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**
(d)(d). --Investment Management Agreements relating to Neuberger Berman Part-
ners 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 Portfolios*****
(d)(e). --Forms of Investment Management Agreements relating to the Putnam
Large Cap Growth, the State Street Research Aurora Small Cap Value,
and the Met Life Mid Cap Stock Index Portfolios.+++++
(d)(f). --Sub-Investment Management Agreements relating to State Street Re-
search Growth, State Street Research Income, State Street Research
Diversified, State Street Research Aggressive Growth and State
Street Research Money Market Portfolios***
(d)(g). --Sub-Investment Management Agreements relating to Scudder Global
Equity Portfolio, Neuberger Berman Partners Mid Cap Value, T. Rowe
Price Large Cap Growth and Harris Oakmark Large Cap Value
Portfolios*****
(d)(h). --Sub-Investment Management Agreements relating to Loomis Sayles High
Yield Bond, Janus Mid Cap and T. Rowe Price Small Cap Growth Portfo-
lios**
(d)(i). --Sub-Investment Management Agreement relating to the Putnam Interna-
tional Stock Portfolio+++++
(d)(j). --Forms of Sub-Investment Management Agreements relating to the Putnam
Large Cap Growth and State Street Research Aurora Small Cap Value
Portfolios+++++
(d)(k). --Forms of Amended Investment and Sub-Investment Management Agreements
relating to Putnam International Stock Portfolio+
(d)(l). --Forms of Amended Sub-Investment Management Agreement relating to
the Harris Oakmark Large Cap Value Portfolio+
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
(e)(a). --Distribution Agreement*
(e)(b). --Addendum to Distribution Agreement*
(e)(c). --Second Addendum to Distribution Agreement*
(f). --None
(g)(a). --Custodian Agreement with State Street Bank & Trust Company*
(g)(b). --Revised schedule of remuneration*
(g)(c). --Amendment to Custodian Agreement*
(g)(d). --Amendments to Custodian Agreement*
(h)(a). --Transfer Agency Agreement*
(h)(b). --Agreement relating to the use of the "Metropolitan" name and service
marks*
(h)(c). --Licensing Agreements relating to Morgan Stanley EAFE Index, Russell
2000 Index and Lehman Brothers Aggregate Bond Index Portfolio++++
(h)(d). --Licensing Agreement relating to MetLife Stock Index and MetLife Mid
Cap Stock Index Portfolios (fee schedule omitted)+
(h)(e). --Form of Participation Agreement+
(i)(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*
(i)(b). --Opinion and Consent of Counsel with respect to the shares of the
State Street Research Diversified and GNMA Portfolios*
(i)(c). --Opinion and Consent of Counsel with respect to the shares of the
State Street Research Aggressive Growth and Equity Income Portfo-
lios*
(i)(d). --Opinion and Consent of Counsel with respect to the shares of the
MetLife Stock Index Portfolio*
(i)(e). --Opinion and Consent of Counsel with respect to the shares of the
Santander International Stock Portfolio*
(i)(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**
(i)(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****
(i)(h). --Opinion and Consent of Counsel with respect to the shares of the
Putnam Large Cap Growth, State Street Research Aurora Small Cap
Value and MetLife Mid Cap Index Portfolios.+
(j)(a). --Consent of Independent Public Accountants+
(j)(b). --Consent of Freedman, Levy, Kroll & Simonds*
(k). --None
(l)(a). --Stock Purchase Agreement*
(l)(b). --Supplementary Stock Purchase Agreement*
(l)(c). --Second Supplementary Stock Purchase Agreement*
(l)(d). --Third Supplementary Stock Purchase Agreement*
(l)(e). --Fourth Supplementary Stock Purchase Agreement*
(l)(f). --Fifth Supplementary Stock Purchase Agreement*
(l)(g). --Sixth Supplementary Stock Purchase Agreement**
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
(l)(h). --Seventh Supplementary Stock Purchase Agreement*****
(l)(i). --Form of Eighth Supplementary Stock Purchase Agreement+++++
(m). --None
(n). --None
(o). --None
(p)(a). --Metropolitan Series Fund, Inc. Code of Ethics+
(p)(b). --Metropolitan Life Insurance Company Statement of Policy with Respect
to Material Nonpublic Information+
(q). --Specimen Price Make-Up Sheet+
(r). --Powers of Attorney++
</TABLE>
- --------
+ Filed herewith.
* 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 No.
20 to the Registration Statement on April 2, 1998.
**** Incorporated by reference to the filing of Post Effective Amendment No.
22 to the Registration Statement on October 6, 1998.
***** Incorporated by reference to the filing of Post Effective Amendment No.
23 to the Registration Statement on January 11, 1999.
++ Powers of Attorney for all signatories except for Messrs. Levene, and
Typermass and Ms. Johnson 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 Ms. Johnson is incorporated
by reference to the filing of Post-Effective Amendment No. 25 on
January 19, 2000. The Powers of Attorney for Messrs. Levene and
Typermass are incorporated by reference to the filing of Post-Effective
Amendment No. 21 on July 30, 1998.
+++ Incorporated by reference to the filing of Post Effective Amendment No.
18 on December 18, 1996.
++++ Incorporated by reference to the filing of Post Effective Amendment No.
24 on April 1, 1999.
+++++ Incorporated by reference to the filing of Post Effective Amendment No.
25 on January 19, 2000.
Item 24. Persons Controlled by or Under Common Control with the Fund
C-3
<PAGE>
ORGANIZATIONAL STRUCTURE OF METROPOLITAN AND SUBSIDIARIES
AS OF APRIL 3, 2000
The following is a list of subsidiaries of Metropolitan Life Insurance Company
("Metropolitan"). It is expected that Metropolitan will become a wholly-owned
subsidiary of MetLife, Inc. on or about April 7, 2000. MetLife, Inc. will become
a publicly-traded company at that time. 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)
h. Economy Fire & Casualty Company
i. Economy Preferred Insurance Company
j. Economy Premier Assurance Company
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)
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)
<PAGE>
4. Metropolitan Asset Management Corporation (Delaware)
(a.) MetLife Capital, Limited Partnership (Delaware).
Partnership interests in MetLife Capital, Limited
Partnership are held by Metropolitan (90%) and
Metropolitan Asset Management Corporation (10%).
(i.) MetLife Capital Credit L.P. (Delaware).
Partnership interests in MetLife Capital Credit
L.P. are held by Metropolitan (90%) and
Metropolitan Asset Management Corporation (10%).
(1) MetLife Capital CFLI Holdings, LLC (DE)
(a.) MetLife Capital CFLI Leasing, LLC
(DE)
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.
e. MetLife Investment, S.A. 23rd Street Investment, Inc. holds one
share of MetLife Investments Limited and MetLife Investments,
S.A.
5. SSRM Holdings, Inc. (Delaware)
a. 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)
<PAGE>
b. 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.
(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)
6. MetLife Holdings, Inc. (Delaware)
a. MetLife Funding, Inc. (Delaware)
b. MetLife Credit Corp. (Delaware)
7. Metropolitan Tower Realty Company, Inc. (Delaware)
8. Security First Group, Inc. (DE)
a. Security First Life Insurance Company (DE)
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 Financial Agency, Inc. (TX)
9. Natiloportem Holdings, Inc. (Delaware)
a. Services Administrativos Gen, S.A. de CV One Share of Servicos
Administrativos Gen. S.A. de C.V. is held by a nominee of
Natiloportem Holdings, Inc.
B. Metropolitan Tower Life Insurance Company (Delaware)
C. MetLife Security Insurance Company of Louisiana (Louisiana)
<PAGE>
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. 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).
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 (80%) and by an entity (20%) 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. Metropolitan Life Seguros de Vida S.A. (Uruguay). One share of Metropolitan
Life Seguros de Vida S.A. is held by Alejandro Miller Artola, a nominee of
Metropolitan Life Insurance Company.
T. Metropolitan Life Seguros E Previdencia Privada S.A. (Brazil)
<PAGE>
U. MetLife (India) Ltd.
V. Hyatt Legal Plans, Inc. (Delaware)
1. Hyatt Legal Plans of Florida, Inc. (Fl)
W. 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%.
X. Metropolitan Realty Management, Inc. (Delaware)
1. Edison Supply and Distribution, Inc. (Delaware)
2. Cross & Brown Company (New York)
a. CBNJ, Inc. (New Jersey)
Y. MetPark Funding, Inc. (Delaware)
Z. Transmountain Land & Livestock Company (Montana)
AA. Farmers National Company (Nebraska)
1. Farmers National Commodities, Inc. (Nebraska)
A.B. MetLife Trust Company, National Association. (United States)
A.C. Benefit Services Corporation (Georgia)
A.D. G.A. Holding Corporation (MA)
A.E. MetLife, Inc.
A.F. CRH., Co, Inc. (MA)
A.G. 334 Madison Euro Investments, Inc.
A.H. Park Twenty Three Investments Company 1% Voting Control of Park Twenty
Three Investment Company is held by St. James Fleet Investments Two
Limited
a. Convent Stution Euro Investments Four Company 1% voting control of
Convert Stution Euro Investments Four Company is held by 334 Madison
Euro Investments, Inc. as nominee for Park Twenty Three Investments
Company.
A.I. L/C Development Corporation (CA)
A.J. One Madison Investments (Cayco) Limited 1% Voting Control of One Madison
Investment (Cayco) Limited is held by Convent Station Euro Investments
Four Company.
A.K. 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. New England Life Mortgage Funding Corporation (MA)
A.N. 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.O. 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.P. St. James Fleet Investments two Limited.
<PAGE>
A.Q. MetLife New England Holdings, Inc. (DE)
1. Fulcrum Financial Advisors, Inc. (MA)
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)
(6) Hereford Insurance Agency of Wyoming, Inc.
(7) Hereford Insurance Agency of Oklahoma, Inc.
ii. TNE Information Services, Inc. (MA)
(1) First Connect Insurance Network, Inc. (DE)
(2) Interative Financial Solutions, Inc. (MA)
iii. 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)
iv. New England Securities Corporation
v. New England Investment Management Inc.
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)
A.R. General American Life
1. General American Life Insurance Company
a. GenAm Benefits Life Insurance Company
b. Paragon Life Insurance Company
c. Security Equity Life Insurance Company
d. Cova Corporation
i. Cova Financial Services Life Insurance Company
(1) Cova Financial Life Insurance Company
(2) First Cova Life Insurance Company
ii. Cova Investment Advisory Corporation
(1) Cova Investment Advisory Corporation
(2) Cova Investment Allocution Corporation
(3) Cova Life Sales Company
(4) Cova Life Administration Services Company
e. General Life Insurance Company
i. General Life Insurance Company of America
f. Equity Intermediary Company
i. Reinsurance Group of America, Incorporated
1. Reinsurance Company of Missouri Incorporated
a. RGA Reinsurance Company
b. Fairfield Management Group, Inc.
i. Reinsurance Partners, Inc.
ii. Great Rivers Reinsurance Management, Inc.
iii. RGA (U.K.) Underwriting Agency Limited
2. Triad Re, Ltd
3. RGA Americas Reinsurance Company, Ltd.
4. RGA Reinsurance Company (Barbados) Ltd.
(a) RGA/Swiss Financial Group, L.L.C.
5. RGA International Ltd.
(a) RGA Financial Products Limited
(b) RGA Canada Management Company, Ltd.
(i) RGA Life Reinsurance Company of Canada
6. Benefit Resource Life Insurance Company (Bermuda) Ltd.
7. RGA Holdings Limited
(a) RGA Managing Agency Limited
(b) RGA Capital Limited
8. RGA South African Holdings (Pty) Ltd.
(a) RGA Reinsurance Company of South Africa Limited
9. RGA Australian Holdings Pty Limited
(a) RGA Reinsurance Company of Australia Limited
10. General American Argentina Seguros
11. RGA Argentina, S.A.
12. RGA Sudamerica, S.A.
(a) RGA Reinsurance
(b) BHIF American Seguros de Vida, S.A.
g. GenAm Holding Company
i. NaviSys Incorporated
ii. NaviSys Illustration Solutions, Inc.
iii. NaviSys Asia Pacifica Limited
iv. NaviSys de Mexico S.A. de C.V.
99% of the shares of NaviSys de Mexico S.A. de C.V. are held
by NaviSys Incorporated and 1% is held by General American
Life Insurance Company.
v. NaviSys Enterprise Solutions, Inc.
vi. Red Oak Realty Company
vii. White Oak Royalty Company
viii. GenMark Incorporated
(a) Stan Mintz Associates, Inc.
(b) GenMark Insurance Agency of Alabama, Inc.
(c) GenMark Insurance Agency of Massachusetts, Inc.
(d) GenMark Insurance Agency of Ohio, Inc.
(e) GenMark Insurance Agency of Texas, Inc.
ix. Conning Corporation
(a) Conning, Inc.
(i) Conning & Company
(1) Conning Asset Management Company
2. Collaborative Strategies, Inc.
3. Virtual Finances.Com, Inc.
4. Missouri Reinsurance (Barbados) Inc.
5. GenAmerican Capital I
6. GenAmerican Management
7. Walnut Street Securities, Inc.
a. WSS Insurance Agency of Alabama, Inc.
b. WSS Insurance Agency of Massachusetts, Inc.
c. WSS Insurance Agency of Ohio, Inc.
d. WSS Insurance Agency of Texas, Inc.
e. Walnut Street Advisers, Inc.
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) Reich & Tang Asset Management
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)
<PAGE>
(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
<PAGE>
(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 ( )
<PAGE>
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 II Corporation ( )
(2) AEW Partners III, Inc. ( )
(3) AEW TSF, Inc. ( )
(4) AEW Exchange Management, LLC
(5) AEWPN, LLC ( )
(6) 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.
ii. 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.
ii. 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.
iii. CREA Investors Santa Fe Springs, Inc. (MA)
(7) 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.
<PAGE>
(8) 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.
(9) 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.
(10) 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.
A.R. General American Life
1. General American Life Insurance Company
a. GenAm Benefits Life Insurance Company
b. Paragon Life Insurance Company
c. Security Equity Life Insurance Company
d. Cova Corporation
i. Cova Financial Services Life Insurance Company
(1) Cova Financial Life Insurance Company
(2) First Cova Life Insurance Company
ii. Cova Investment Advisory Corporation
(1) Cova Investment Advisory Corporation
(2) Cova Investment Allocution Corporation
(3) Cova Life Sales Company
(4) Cova Life Administration Services Company
e. General Life Insurance Company
i. General Life Insurance Company of America
f. Equity Intermediary Company
i. Reinsurance Group of America, Incorporated
1. Reinsurance Company of Missouri Incorporated
a. RGA Reinsurance Company
b. Fairfield Management Group, Inc.
i. Reinsurance Partners, Inc.
ii. Great Rivers Reinsurance Management, Inc.
iii. RGA (U.K.) Underwriting Agency Limited
2. Triad Re, Ltd
3. RGA Americas Reinsurance Company, Ltd.
4. RGA Reinsurance Company (Barbados) Ltd.
(a) RGA/Swiss Financial Group, L.L.C.
5. RGA International Ltd.
(a) RGA Financial Products Limited
(b) RGA Canada Management Company, Ltd.
(i) RGA Life Reinsurance Company of Canada
6. Benefit Resource Life Insurance Company (Bermuda) Ltd.
7. RGA Holdings Limited
(a) RGA Managing Agency Limited
(b) RGA Capital Limited
8. RGA South African Holdings (Pty) Ltd.
(a) RGA Reinsurance Company of South Africa Limited
9. RGA Australian Holdings Pty Limited
(a) RGA Reinsurance Company of Australia Limited
10. General American Argentina Seguros
11. RGA Argentina, S.A.
12. RGA Sudamerica, S.A.
(a) RGA Reinsurance
(b) BHIF American Seguros de Vida, S.A.
g. GenAm Holding Company
i. NaviSys Incorporated
ii. NaviSys Illustration Solutions, Inc.
iii. NaviSys Asia Pacifica Limited
iv. NaviSys de Mexico S.A. de C.V.
99% of the shares of NaviSys de Mexico S.A. de C.V. are held
by NaviSys Incorporated and 1% is held by General American
Life Insurance Company.
v. NaviSys Enterprise Solutions, Inc.
vi. Red Oak Realty Company
vii. White Oak Royalty Company
viii. GenMark Incorporated
(a) Stan Mintz Associates, Inc.
(b) GenMark Insurance Agency of Alabama, Inc.
(c) GenMark Insurance Agency of Massachusetts, Inc.
(d) GenMark Insurance Agency of Ohio, Inc.
(e) GenMark Insurance Agency of Texas, Inc.
ix. Conning Corporation
(a) Conning, Inc.
(i) Conning & Company
(1) Conning Asset Management Company
2. Collaborative Strategies, Inc.
3. Virtual Finances.Com, Inc.
4. Missouri Reinsurance (Barbados) Inc.
5. GenAmerican Capital I
6. GenAmerican Management
7. Walnut Street Securities, Inc.
a. WSS Insurance Agency of Alabama, Inc.
b. WSS Insurance Agency of Massachusetts, Inc.
c. WSS Insurance Agency of Ohio, Inc.
d. WSS Insurance Agency of Texas, Inc.
e. Walnut Street Advisers, Inc.
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) 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.
6) 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.
7) 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.
8) Metropolitan directly owns 100% of the non-voting preferred stock of Nathan
and Lewis Associates Ohio, Incorporated, an insurance agency. 100% of the voting
common stock of this company is held by an individual who has agreed to vote
such shares at the direction of N.L. Holding Corp. (DEL), an indirect wholly
owned subsidiary of Metropolitan.
<PAGE>
9) 100% of the capital stock of Hereford Insurance Agency of Oklahoma, Inc.
(OK) is owned by an officer. New England Life Insurance Company controls the
issuance of additional stock and has certain rights to purchase such officer's
shares.
10) 100% of the capital stock of Fairfield Insurance Agency of Texas, Inc. (TX)
is owned by an officer. New England Life Insurance Company controls the
issuance of additional stock and has certain rights to purchase such officer's
shares.
11) 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,
100% 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.
<PAGE>
Item 25. 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, 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.
C-14
<PAGE>
(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 26. Business and other Connections of Investment Manager.
Metropolitan Life is a 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). As of December 31, 1999 Metropolitan
Life had $420 billion in total assets under management. 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
Director and former American Iron and Steel
Chairman Institute,
Washington, DC
Director and former West Virginia University
Chairman Foundation,
Morgantown, WV
Trustee Lehigh University
Bethlehem, PA
Director Owens Corning
Board of Advisors West Virginia University
Robert H. Benmosche . . Chairman of the Board, Metropolitan Life Insurance
President and Chief Company
Executive Officer New York, NY
Director New York Philharmonic
Director New England Financial
Trustee Alfred University
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., Overland
President and Chief Park, KS
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
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 Villanova University
Director/Officer Certain wholly-owned subsidiaries
of Metropolitan Life Insurance
Company
James R. Houghton.... Chairman of the Board Corning Incorporated, Corning, NY
Emeritus 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
Chairman National Skill Standards Board
Member Business Council
Member Council on Foreign Relations
Member Harvard Corporation
Harry Paul Kamen..... Chairman and Chief Metropolitan Life Insurance
Executive Officer Company,
(Retired) and Director New York, NY
since 7/1/98, prior
thereto, Chairman,
Chief Executive Officer
and Director
Director Bethlehem Steel Corporation,
Bethlehem, PA
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 (Vice-President)
Director/Trustee Smith College
Director NVEST L.P.
Director National Association of Securities
Dealers
Director/Trustee and Conference Board
Vice-Chairman
Director/Trustee American Museum of Natural History
Director Pfizer Inc.
</TABLE>
C-16
<PAGE>
<TABLE>
<CAPTION>
Organization and Principal
Name Position Business Address of Organization
---- -------- --------------------------------
<C> <C> <S>
Helene L. Kaplan..... Of Counsel Skadden, Arps, Slate, Meagher &
Flom,
New York, NY
Director May Department Stores Co., New
York, NY
Chair Emeritus Barnard College, New York, NY
Director Exxon Mobil Corp., New York, NY
Director Bell Atlantic Corporation, New
York, NY
Director The Chase Manhattan Corporation
Trustee and Vice-Chair American Museum of Natural History
Trustee Carnegie Corporation of New York
Trustee Commonwealth Fund
Trustee J. Paul Getty Trust
Chairman Mt. Sinai School of Medicine
Trustee Institute for Advanced Study
Trustee Mt. Sinai-NYU Health System
Charles M. Leighton.. Retired Chairman and CML Group, Inc., Bolton, MA
Chief Executive Officer
Director CML Group, Inc.
Director NVEST Companies, L.P.
Former Chairman Listed Company Advisory Committee,
New York Stock Exchange
Trustee Lahey Clinic
Chairman New York Yacht Club America's Cup
Challenge
Director Fitsense Technology 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 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
Trustee Barnard College
Chairman of the Board Polytechnic University of New York
(Chairman, Finance Committee)
</TABLE>
C-17
<PAGE>
<TABLE>
<CAPTION>
Organization and Principal
Name Position Business Address of Organization
---- -------- --------------------------------
<C> <C> <S>
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
Former President International Federation of
Stock Exchanges
Director or Trustee Aspen Institute and Cold Spring
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/Trustee Committee for Economic
Development, Washington, DC
Director Consolidated Edison Company of
New York, Inc., New York, NY
Director/Trustee The Horatio Alger Association of
Distinguished Americans, Inc.
Ruth Simmons............ President Smith College, Northampton, MA
Director Pfizer Inc.
Trustee Carnegie Corporation
Trustee Clarke School for the Deaf
Director Texas Instruments
Director Goldman Sachs
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 Mt. Sinai-New York University
Health System
Director Business Council
Director Business Roundtable
Director New York Botanical Garden
Board of Memorial Sloan-Kettering Cancer
Overseers/Executive Center
Committee
</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
--------------- --------
<C> <S>
Robert H. Benmosche. Chairman, President, Chief Executive Officer and
Director
Gerald Clark........ Vice-Chairman, Chief Investment Officer and Director
Stewart G. Nagler... Vice-Chairman, Chief Financial Officer and Director
Gary A. Beller...... Senior Executive Vice-President and General Counsel
James H. Benson..... President, Individual Business; Chairman, Chief
Executive
Officer and President, New England Life Insurance
Company
C. Robert Henrikson. President, Institutional Business
Jeffrey J Hodgman... Executive Vice-President
Richard A. Liddy.... Senior Executive Vice-President
Catherine A. Rein... Senior Executive Vice-President; President and Chief
Executive
Officer of Metropolitan Property and Casualty
Insurance Company
William J. Toppeta.. President, Client Services and Chief Administrative
Officer
John H. Tweedie..... Senior Executive Vice-President
Lisa Weber.......... Executive Vice-President
Judy E. Weiss....... Executive Vice-President & Chief Actuary
</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.
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. 34 to the
Registration Statement of State Street Research Financial Trust on February
29, 2000.
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. 16 to the Registration Statement of Scudder Mutual Funds, Inc. (File No.
811-5565) on March 1, 2000. 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. 20 to the Registration Statement
for Janus Aspen Series (File No. 33-63212) on October 26, 1999.
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
C-19
<PAGE>
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 seventeen series of Loomis Sayles
Funds, seven series of Loomis Sayles Investment Trust, five series of New
England Funds Trust I, one series of New England Funds Trust II, one series of
New England Funds Trust III, two series of New England Zenith Fund, all of
which are registered investment companies, several other registered investment
companies and 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. 23 to Registration
Statement to the Harris Associates Investment Trust (File No. 33-38953) on
November 30, 1999.
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.
801-8259).
The list of each director and certain officers of Putnam 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 Putnam Investment Management, Inc. pursuant
to the Investment Advisers Act of 1940 (SEC File No. 801-7974).
Item 27. Principal Underwriters.
Not applicable
Item 28. 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, Putnam Investment Management, Inc. of Boston, Massachusetts,
Loomis, Sayles & Company, L.P. of Boston, Massachusetts, Janus Capital
Corporation of Denver, Colorado, T. Rowe Price Associates, Inc. of Baltimore,
Maryland, Scudder Kemper Investments, Inc. of New York, New York, Neuberger
Berman Management Incorporated, of New York, New York, Harris Associates L.P.
of Boston, Massachusetts and 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 29. Management Services.
None.
Item 30. Undertakings.
Not applicable.
C-20
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities
Act Rule 485(b) for effectiveness of this Registration Statement and has
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 5th day of April, 2000.
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
*
.....................................
Dean O. Morton
Director
*
.....................................
Michael S. Scott Morton
Director
*
.....................................
Arthur G. Typermass
Director
*
.....................................
Dianne Johnson
Controller (Principal Financial and
Accounting Officer)
/s/ Christopher P. Nicholas
*By: ................................ April 5, 2000
Christopher P. Nicholas, Esq.
Attorney-in-Fact
C-21
<PAGE>
Exhibit (a)(j)
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 February 1, 2000, adopted resolutions classifying or
reclassifying three hundred million (300,000,000) unissued shares of capital
stock of the Corporation of the par value of $0.01 per share by (i) establishing
three (3) new classes of capital stock of the Corporation of the par value of
$0.01 per share designated respectively as State Street Research Aurora Small
Cap Value Portfolio Capital Stock, Putnam Large Cap Growth Portfolio Capital
Stock, and MetLife Mid Cap Stock Index Portfolio Capital Stock, and (ii) by
allocating or reallocating such three 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:
<TABLE>
<CAPTION>
Original Increased and Reclassified
Shares of Shares of
Class Authorized Authorized
- ----- Stock Stock
------------- ----------------------------
<S> <C> <C>
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 200,000,000 200,000,000
State Street Research Diversified Portfolio 200,000,000 200,000,000
GNMA Portfolio 100,000,000 100,000,000
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Putnam 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 200,000,000 200,000,000
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 100,000,000 100,000,000
Harris Oakmark Large Cap Value Portfolio 100,000,000 100,000,000
Neuberger Berman Partners Mid Cap Value Portfolio 100,000,000 100,000,000
Lehman Brothers Aggregate Bond Index Portfolio 100,000,000 100,000,000
Russell 2000 Index Portfolio 100,000,000 100,000,000
Morgan Stanley EAFE Index Portfolio 100,000,000 100,000,000
State Street Research Aurora Small Cap Value Portfolio -- 100,000,000
Putnam Large Cap Growth Portfolio -- 100,000,000
MetLife Mid Cap Stock Index Portfolio -- 100,000,000
Unclassified 800,000,000 500,000,000
------------- -------------
Total 3,000,000,000 3,000,000,000
</TABLE>
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 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
2
<PAGE>
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 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 open-end investment company" under the Internal
Revenue Code of 1986, as amended, or any successor or statute
3
<PAGE>
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
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
<PAGE>
(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 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
5
<PAGE>
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 Assistant Secretary, on February 7, 2000.
METROPOLITAN SERIES FUND, INC.
By /s/ Christopher P. Nicholas
-------------------------------------
Christopher P. Nicholas
President and Chief Operating Officer
Attest:
/s/ Patricia S. Worthington
- ---------------------------
Patricia S. Worthington
Assistant 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.
/s/ Christopher P. Nicholas
------------------------------
Christopher P. Nicholas
7
<PAGE>
Exhibit (d)(k)
PUTNAM INTERNATIONAL STOCK PORTFOLIO
AMENDED SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 24th day of January, 2000, and amended May 1,
2000, among Metropolitan Series Fund, Inc., a Maryland corporation (the "Fund"),
Metropolitan Life Insurance Company (the "Investment Manager"), a New York
corporation, and Putnam Investment Management, Inc., a Massachusetts 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 Putnam International Stock Portfolio (formerly
known as the
1
<PAGE>
Santander International Stock Portfolio) as set forth in the Investment
Management Agreement dated April 29, 1991 and amended effective August 1, 1997
relating to the Putnam International Stock Portfolio between the Fund and the
Investment Manager (the "Putnam International Stock 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 Putnam
International Stock 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 Putnam International
Stock 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
2
<PAGE>
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 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 at a
price which is approximately averaged.
In connection with these services the Sub-Investment Manager will
provide investment
3
<PAGE>
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 Prospectus, as from time to time amended, and communicated in
writing to the Sub-Investment Manager, and consistent with applicable law,
including, but not limited to, the Investment Company Act and, so far as it is
in its power and authority, 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
Investment Manager acknowledges and agrees that the Sub-Investment Manager's
compliance with such obligations with respect to the Code will be based, in
part, on information supplied by the Investment Manager or its agents as to the
Portfolio, such as Portfolio security lot gain/loss allocation. The
Sub-Investment Manager shall have no responsibility for any losses due to
inaccurate or untimely information supplied by the Investment Manager.
The Sub-Investment Manager shall not be responsible for the
administrative affairs of the Fund including, but not limited to, accounting and
pricing the Portfolio except as specifically agreed to herein. 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 due to a lack of market or broker quotations, with
respect to the investments
4
<PAGE>
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 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.
Notwithstanding any other provision of this Agreement, the Fund, the
Investment
5
<PAGE>
Manager and the Sub-Investment Manager may agree to the employment of a
Sub-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-Sub-Investment Manager shall be the sole
responsibility of the Sub-Investment Manager and the duties and responsibilities
of the Sub-Sub-Investment Manager shall be as set forth in a sub-sub-investment
management agreement among the Investment Manager, the Sub-Investment Manager,
the Sub-Sub-Investment Manager and the Fund on behalf of the Portfolio.
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 Putnam International Stock Portfolio Investment
Management Agreement. Nothing in this Putnam International Stock 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
6
<PAGE>
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.
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
7
<PAGE>
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, to the extent required by the
Investment Company Act, 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.
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 Prospectus, 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
8
<PAGE>
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.
The Investment Manager may use (and shall cause all of its
affiliates, including the Fund, to use, the names "Putnam Investment Management,
Inc.", "Putnam Investment Management", "Putnam Investments" or "Putnam" or any
derivation thereof only for so long as this Agreement or any extension, renewal
or amendment remains in effect. At such times as this Agreement shall no longer
be in effect, the Investment Manager shall cease to use (and shall cause its
affiliates to cease using) any name using any of the foregoing terms or any
other name indicating that the Portfolio is advised by or otherwise connected
with the Sub-Investment Manager. The Investment Manager acknowledges that the
Fund has included the name "Putnam" in the Portfolio through permission of the
Sub-Investment Manager and the Sub-Investment Manager retains all rights to such
name.
The Investment Manager will not, and will cause its affiliates to
not, refer to or describe the Sub-Investment Manager in any prospectus, proxy
statement, sales literature or other material except with the written permission
of the Sub-Investment Manager, which permission shall not unreasonably be
withheld.
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, 2001 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
9
<PAGE>
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, or 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 Putnam International Stock 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
10
<PAGE>
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.
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 6E
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: Putnam Investment Management, Inc.
One Post Office Square
Boston, Massachusetts 02109
11
<PAGE>
Attention: Eric S. Levy
Changes in the foregoing notice provisions may be made by notice in
writing to the other parties at the addresses set forth above. Notice shall be
effective upon delivery.
12
<PAGE>
METROPOLITAN SERIES FUND, INC.
By ___________________________
Attest:
- -----------------
METROPOLITAN LIFE INSURANCE
COMPANY
By ____________________________
Attest:
- ----------------------
PUTNAM INVESTMENT MANAGEMENT,
INC.
By ____________________________
Attest:
- --------------------
13
<PAGE>
Appendix
PUTNAM INVESTMENT MANAGEMENT, INC.
Metropolitan Series Fund Fee Schedule
-------------------------------------
Putnam International Stock Portfolio
------------------------------------
1st $150M .65%
next $150M .55%
above $300M .45% of the average daily value of the
net assets of the Portfolio
14
<PAGE>
PUTNAM INTERNATIONAL STOCK PORTFOLIO AMENDED INVESTMENT
MANAGEMENT AGREEMENT
AGREEMENT made this 29th day of April, 1991, and amended effective the
1st day of May 2000, 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
<PAGE>
WHEREAS, the Fund desires to enter into a separate investment
management agreement with respect to the Putnam International Stock Portfolio of
the Fund with the Investment Manager;
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 Putnam International Stock
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
<PAGE>
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 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
<PAGE>
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 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
<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 coverage and errors and omissions insurance; and
extraordinary or non-recurring expenses (such
<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, bad faith, gross negligence in the performance of
its duties on behalf of the Fund, reckless
<PAGE>
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, 1998 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
<PAGE>
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.
<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.
METROPOLITAN SERIES FUND, INC.
By____________________________
President
Attest:
____________________________
Assistant Secretary
METROPOLITAN LIFE INSURANCE COMPANY
By_______________________________
Senior Executive Vice-President
Attest:
____________________________
Assistant Secretary
<PAGE>
Appendix
--------
Metropolitan Series Fund Fee Schedule
-------------------------------------
Putnam International Stock Portfolio
------------------------------------
1st $500M .90%
next $500M .85%
above $1,000M .80% of the average daily
value of the net assets of the Portfolio.
<PAGE>
Exhibit (d)(l)
HARRIS OAKMARK LARGE CAP VALUE PORTFOLIO
AMENDED SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 9th day of November, 1998, and amended May 1,
2000, 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:
- -----------------------
Patricia S. Worthington
METROPOLITAN LIFE INSURANCE COMPANY
By: _______________________________
Gary A. Beller
Attest:
- -----------------------
Cheryl D. Martino
HARRIS ASSOCIATES L.P.
By: _______________________________
Attest:
- -----------------------
11
<PAGE>
APPENDIX
--------
HARRIS ASSOCIATES L.P.
----------------------
Metropolitan Series Fund Fee Schedule
-------------------------------------
Harris Oakmark Large Cap Value Portfolio
----------------------------------------
0.450% on the first $100MM
0.400% on the next $400MM
0.350% thereafter
of the average daily value of the net assets of the Portfolio
12
<PAGE>
Exhibit (h)(d)
AGREEMENT
---------
AGREEMENT, dated as January 1, 2000 (the "Commencement Date"), by and
between The McGraw-Hill Companies, Inc., a New York corporation, having an
office at 1221 Avenue of the Americas, New York, New York, 10016, on behalf of
its division known as STANDARD & POOR'S ("S&P") having an office at 55 Water
Street, New York, NY, 10041 and METROPOLITAN LIFE INSURANCE COMPANY, and its
affiliates and subsidiaries (collectively referred to as "Licensee"), a New York
corporation, having an office at One Madison Avenue, New York, NY 10010-3690.
WHEREAS, S&P compiles, calculates, maintains, and claims to own certain
rights in and to the S&P 500 Composite Stock Price Index and to the proprietary
data therein contained that it claims to be proprietary (such rights being
hereinafter individually and collectively referred to as the "S&P 500 Index");
and
WHEREAS, S&P uses in commerce and has trade name and trademark rights to
the designations "Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard &
Poor's 500", and "500", in connection with the S&P 500 Index (such rights being
hereinafter individually and collectively referred to as the "S&P Marks"); and
WHEREAS, Licensee wishes to use the S&P 500 Index as the basis of the
product or products described in Exhibit A attached hereto and made a part
hereof (individually and collectively referred to as the "Product"); and
WHEREAS, Licensee wishes to use the S&P Marks in connection with references
to the S&P 500 Index in order to identify the nature and components of the
Product and in connection with making disclosure about the Product under
applicable law, rules and regulations in order to indicate that S&P is the
source of the S&P 500 Index; and
WHEREAS, Licensee disputes and does not agree that it is legally obligated
to obtain S&P's authorization to use the S&P 500 Index in connection with the
Product but nevertheless, to avoid
1
<PAGE>
litigation, is willing to enter into an agreement pursuant to the terms and
conditions hereinafter set forth; and,
WHEREAS, notwithstanding anything to the contrary herein, each party hereto
expressly reserves its legal rights with respect to the above-noted
disagreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of License.
----------------
(a) Subject to the terms and conditions of this Agreement, S&P hereby
grants to Licensee a non-transferable, non-exclusive license (i) to use the S&P
500 Index as the basis of the Product to be created, marketed and/or promoted by
Licensee and (ii) to use and refer to the S&P Marks in connection with the
creation, distribution, marketing and promotion of the Product for the limited
purpose of identifying the nature of the Product and the source of the S&P Index
500 and in connection with making such disclosure about the Product as Licensee
deems necessary or desirable under any applicable law, rules, regulations or
provisions of this Agreement. It is expressly agreed and understood by Licensee
that no rights to use the S&P 500 Index and the S&P Marks are granted hereunder
other than those specifically described and expressly granted herein.
(b) S&P agrees that no person or entity (other than the Licensee) shall
need to obtain a license from S&P with respect to the Product.
2. Term.
----
(a) The term of this Agreement shall commence on the Commencement Date
and, unless terminated earlier pursuant to Section 4 hereof, shall continue in
effect thereafter for a five-year term (the "Term") until December 31, 2004.
(b) At least six (6) months but not more than twelve (12) months prior
to the end of the Term, S&P shall give Licensee written notice of its proposed
annual fee for renewing the Agreement for an additional period. Licensee may by
written notice at least sixty (60) days prior to the expiration date of the Term
elect to renew the term of this Agreement under such annual fee proposed by S&P;
2
<PAGE>
or, alternatively, may refuse to accept a renewal of the Agreement under the fee
proposed, with no prejudice to its legal position. In the event of such refusal
by Licensee, or termination of this Agreement by either party pursuant to
Section 4 hereof, the parties agree that the fact that they had previously
entered into this Agreement shall not be construed to constitute or imply any
admission contrary to their respective positions on the issue of whether
Licensee is legally required to enter into a license agreement with S&P for the
purposes stated in this Agreement.
3. License Fees.
------------
Licensee shall pay to S&P the license fee ("License Fee") specified in
Exhibit B attached hereto and made a part hereof. The fee shall be made payable
to "Standard & Poor's, a division of The McGraw-Hill Companies, Inc," and shall
be payable in full on the Commencement Date and each one-year anniversary
thereof.
4. Termination.
-----------
(a) In the case of breach of any of the material terms or conditions of
this Agreement by either party, the other party may terminate this Agreement by
giving ninety (90) days prior written notice of its intent to terminate, and
such notice shall be effective on the date specified therein for such
termination unless the breaching party shall correct such breach within the
notice period. In such event, Licensee shall be entitled to a pro-rata refund of
any prepaid License Fees as provided in Subsection 4(e).
(b) S&P shall have the right, in its sole discretion, to cease
compilation and publication of the S&P 500 Index and, in such event, to
terminate this Agreement if S&P does not offer a replacement or substitute
index. In the event that S&P intends to discontinue the S&P 500 Index, S&P shall
give Licensee at least one (1) year's written notice prior to such
discontinuance, which notice shall specify whether a replacement or substitute
index will be made available.
Licensee shall have the option hereunder within ninety (90) days after
receiving such written notice from S&P to notify S&P in writing of its intent to
use the replacement or substitute index, if any, under the terms of this
Agreement, or to terminate the Agreement. In the event that Licensee does not
exercise such option to use the replacement or substitute index, or no
substitute or
3
<PAGE>
replacement index is made available, this Agreement shall be terminated as of
the date specified in the S&P notice and the Licensee shall be entitled to a
pro-rata refund of any prepaid License Fees as provided in Subsection 4(e).
(c) Licensee may terminate this Agreement upon not more than ninety (90)
days prior written notice to S&P if (i) Licensee is informed of the final
adoption of any legislation or regulation or the issuance of any interpretation
that in Licensee's reasonable judgment materially impairs Licensee's ability to
market and/or promote the Product; (ii) any material litigation or regulatory
proceeding regarding the Product is threatened or commenced; or (iii) Licensee
elects to terminate the public offering or other distribution of the Product, as
may be applicable. In such event the Licensee shall be entitled to a pro-rata
refund of any prepaid License Fees as provided in Subsection 4(e).
(d) S&P may terminate this Agreement upon ninety (90) days (or upon such
lesser period of time if required pursuant to a court order) prior written
notice to Licensee if (i) S&P is informed of the final adoption of any
legislation or regulation or the issuance of any interpretation that in S&P's
reasonable judgment materially impairs S&P's ability to license and provide the
S&P 500 Index and S&P Marks under this Agreement in connection with such
Product; or (ii) any litigation or proceeding is threatened or commenced and S&P
reasonably believes that such litigation or proceeding would have a material and
adverse effect upon the S&P Marks and/or the S&P 500 Index or upon the ability
of S&P to perform under this Agreement. In such event the Licensee shall be
entitled to a pro-rata refund of any prepaid License Fees as provided in
Subsection 4(e).
(e) Since Licensee is paying S&P its License Fees on a prospective
basis, in the event of termination of this Agreement as provided in Subsections
4(a), (b), (c), or (d), Licensee shall be entitled to a refund of any prepaid
License Fees, which shall be computed by prorating the amount of the applicable
License Fees shown in Exhibit B on the basis of the number of elapsed days in
the current year of the Agreement, beginning from the Commencement Date or the
anniversary thereof and up to the date of termination of the Agreement.
4
<PAGE>
(f) Upon termination of this Agreement, Licensee shall no longer possess
any rights under this Agreement to use the S&P 500 Index and the S&P Marks in
connection with the Product; provided that Licensee may continue to utilize any
previously printed materials which contain the S&P Marks for a period of ninety
(90) days following such termination.
5. S&P's Obligations.
-----------------
(a) It is the policy of S&P to prohibit its employees who are directly
responsible for changes in the components of the S&P 500 Index from purchasing
or beneficially owning any interest in the Product and S&P believes that its
employees comply with such policy. Licensee shall have no responsibility for
ensuring that such S&P employees comply with such S&P policy and shall have no
duty to inquire whether any investors or sellers of the Product are such S&P
employees. S&P shall have no liability to the Licensee with respect to its
employees' adherence or failure to adhere to such policy.
(b) S&P shall not and is in no way obliged to engage in any marketing or
promotional activities in connection with the Product or in making any
representation or statement to investors or prospective investors in connection
with the promotion by Licensee of the Product.
(c) S&P agrees to provide reasonable support for Licensee's development
and educational efforts with respect to the Product as follows: (i) S&P shall
provide Licensee, upon request but subject to any agreements of confidentiality
with respect thereto, copies of the results of any marketing research conducted
by or on behalf of S&P with respect to the S&P 500 Index; and (ii) S&P shall
respond in a timely fashion to any reasonable requests for information by
Licensee regarding the S&P 500 Index.
(d) S&P or its agent shall calculate and disseminate the S&P 500 Index
at least once each fifteen (15) seconds in accordance with its current
procedures, which procedures may be modified by S&P.
(e) S&P shall promptly correct or instruct its agent to correct any
mathematical errors made in S&P's computations of the S&P 500 Index which are
brought to S&P's attention by
5
<PAGE>
Licensee, provided that nothing in this Section 5 shall give Licensee the right
to exercise any judgment or require any changes with respect to S&P's method of
composing, calculating or determining the S&P 500 Index; and, provided further,
that nothing herein shall be deemed to modify the provisions of Section 9 of
this Agreement.
6. Informational Materials Review.
------------------------------
Licensee shall submit to S&P for its review and approval all newly
developed or materially revised informational materials prepared by or on behalf
of Licensee after the Commencement Date of this Agreement, pertaining to and to
be used in connection with the Product, including, where applicable, all
prospectuses, plans, registration statements, application forms, videos,
internet sites, advertisements, brochures and promotional and any other similar
informational materials (including documents required to be filed with
governmental or regulatory agencies) that in any way use or refer to S&P, the
S&P 500 Index, or the S&P Marks (the "Informational Materials"). S&P's approval
shall be required with respect to the use of and description of S&P, the S&P
Marks and the S&P 500 Index and shall not be unreasonably withheld or delayed by
S&P. Specifically, S&P shall notify Licensee of its approval or disapproval of
any Informational Materials within forty-eight (48) hours (excluding Saturday,
Sunday and New York Stock Exchange Holidays) following receipt thereof from
Licensee. Any disapproval shall indicate S&P's reasons therefor. Any failure by
S&P to respond within such forty-eight (48) hour period shall be deemed to
constitute a waiver of S&P's right to review such Informational Materials.
Informational Materials shall be addressed to S&P, c/o Sandra Weinberger,
Specialist - Index Licensing/Marketing, Equity Index Services, at the address
specified in Subsection 13(f). Informational Materials may be submitted via
facsimile (to 212-438-3523 or 212-438-3543) if they are less than 20 pages and
legible after transmission. Once Informational Materials have been approved by
S&P, subsequent Informational Materials which do not alter the use or
description of S&P, the S&P Marks or the S&P 500 Index need not be submitted for
review and approval by S&P.
7. Protection of Value of License.
------------------------------
(a) During the term of this Agreement, S&P shall use its best efforts
to maintain in full force and effect federal registrations for "Standard &
Poor's(R)", "S&P(R)", and "S&P 500(R)". S&P
6
<PAGE>
shall at S&P's own expense and sole discretion exercise S&P's common law and
statutory rights against infringement of the S&P Marks, copyrights and other
proprietary rights.
(b) Licensee shall cooperate with S&P in the maintenance of such rights
and registrations and shall take such actions and execute such instruments as
S&P may from time to time reasonably request, and shall use the following notice
when referring to the S&P 500 Index or the S&P Marks in any newly developed or
materially revised Informational Materials prepared by or on behalf of Licensee
after the Commencement Date of this Agreement:
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's
500", and "500" are trademarks of The McGraw-Hill Companies, Inc. and
references thereto have been made with permission. The Product is not
sponsored, endorsed, sold or promoted by Standard & Poor's and
Standard & Poor's makes no representation regarding the advisability
of investing in the Product.
or such similar language as may be approved in advance by S&P, it being
understood that such notice need only refer to the specific S&P Marks referred
to in the Informational Materials.
8. Proprietary Rights.
------------------
(a) Without limiting Licensee's position and rights under Subsection
2(b), Licensee acknowledges S&P's claim that (i) S&P has represented to Licensee
that the S&P 500 Index is selected, coordinated, arranged and prepared by S&P
through the application of methods and standards of judgment used and developed
through the expenditure of considerable work, time and money by S&P and (ii) the
S&P 500 Index and the S&P Marks are the exclusive property of S&P, that S&P has
and retains all proprietary rights therein (including but not limited to
trademarks and copyrights) and that the S&P 500 Index and its compilation and
composition and changes therein are in the control and discretion of S&P. S&P
acknowledges that Licensee does not necessarily agree with the foregoing
representations and that Licensee expressly reserves its rights in that regard.
7
<PAGE>
(b) S&P reserves all rights with respect to the S&P 500 Index and the
S&P Marks except those expressly licensed to Licensee hereunder. Licensee
reserves its rights with respect to the S&P 500 Index and its references thereto
in connection with the Product.
(c) Each party shall treat as confidential and shall not disclose or
transmit to any third party any documentation or other written materials that
are marked as "Confidential and Proprietary" by the providing party
("Confidential Information"). Confidential Information shall not include (i) any
information that is available to the public or to the receiving party hereunder
from sources other than the providing party (provided that such source is not
subject to a confidentiality agreement with regard to such information) or (ii)
any information that is independently developed by the receiving party without
use of or reference to information from the providing party. Notwithstanding the
foregoing, either party may reveal Confidential Information to any regulatory
agency or court of competent jurisdiction if such information to be disclosed is
(a) approved in writing by the other party for disclosure or (b) required by
law, regulatory agency or court order to be disclosed by a party, provided, if
permitted by law, that ten (10) business days' prior written notice of such
required disclosure is given to the other party and provided further that the
providing party shall cooperate with the other party to limit the extent of such
disclosure. The provisions of this Subsection 8(c) shall survive any termination
of this Agreement for a period of five (5) years from disclosure by either party
to the other of the last item of such Confidential Information.
9. Representations; Warranties; Disclaimers.
----------------------------------------
(a) S&P represents and warrants that S&P has the right to grant the
rights granted to Licensee herein and that the license and rights granted herein
shall not infringe any trademark, service mark, trade secret, patent, copyright
or other proprietary right of any third party.
(b) Licensee agrees expressly to be bound itself by and furthermore to
include all of the following disclaimers and limitations in each prospectus or
each Statement of Additional Information ("SAI") relating to the Product, newly
developed or materially revised by or on behalf of Licensee after the
Commencement Date of this Agreement, provided the SAI is incorporated by
reference into the prospectus and the prospectus contains disclosure regarding
the S&P 500 Index that
8
<PAGE>
conforms to the notice in Subsection 7(b), including a cross reference to the
SAI disclosure. Licensee shall furnish a copy of the prospectus and, if
applicable, the SAI, to S&P:
The Product is not sponsored, endorsed, sold or promoted by Standard &
Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"). S&P makes no
representation or warranty, express or implied, to the owners of the Product or
any member of the public regarding the advisability of investing in securities
generally or in the Product particularly or the ability of the S&P 500 Index to
track general stock market performance. S&P's only relationship to the Licensee
is S&P's grant of permission to Licensee to use the S&P 500 Index which is
determined, composed and calculated by S&P without regard to the Licensee or the
Product. S&P has no obligation to take the needs of the Licensee or the owners
of the Product into consideration in determining, composing or calculating the
S&P 500 Index. S&P is not responsible for and has not participated in the
determination of the prices and amount of the Product or the timing of the
issuance or sale of the Product or in the determination or calculation of the
equation by which the Product is to be converted into cash. S&P has no
obligation or liability in connection with the administration, marketing or
trading of the Product.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P
500 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE PRODUCT, OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED
THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY
OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
9
<PAGE>
Any changes in the foregoing disclaimers and limitations must be
approved in advance in writing by an authorized officer of S&P.
Notwithstanding the foregoing, S&P acknowledges and agrees that the
Informational Materials already in use or printed by Licensee as of the
Commencement Date of this Agreement may continue to be used by Licensee in their
present form, until materially revised by Licensee.
(c) Each party represents and warrants to the other that it has the
authority to enter into this Agreement according to its terms and that its
performance does not violate any laws, regulations or agreements applicable to
it.
(d) Licensee represents and warrants to S&P that the Product shall at
all times comply with the description in Exhibit A.
(e) Licensee represents and warrants to S&P that, to the best of its
knowledge, information and belief, the Product shall not violate any applicable
law, including but not limited to banking, commodities and securities laws.
(f) Neither party shall have any liability for lost profits or
indirect, punitive, special, or consequential damages arising out of this
Agreement, even if notified of the possibility of such damages. Without
diminishing the disclaimers and limitations set forth in Subsection 9(b), in no
event shall the cumulative liability of S&P to Licensee exceed the average
annual License Fees actually paid to S&P hereunder. Notwithstanding the
foregoing, the limitations on liability and remedies contained in this Section
9(f) shall not apply to liability arising under Sections 11(a) and 11(b)
(indemnification) of this Agreement.
(g) Use of any non-S&P related marks by Licensee in connection with its
Product (including in the name of such Product) is at Licensee's sole risk.
10
<PAGE>
(h) S&P represents and warrants to Licensee that the annual license fee
payable by Licensee hereunder is no greater than the fee payable by any other
similarly situated licensee of the S&P 500 Index and the S&P Marks that has
entered into a license agreement governing the S&P 500 Index and the S&P Marks
at any time during the past eight (8) years. S&P also represents and warrants to
Licensee that all of the terms, conditions, warranties, and benefits
(collectively referred to as "Terms and Conditions") of S&P's license agreements
with all other similarly situated licensees that entered into license agreements
with S&P during the past eight (8) years are no more favorable, considered in
the aggregate, than all of the Terms and Conditions set forth in this agreement
with Licensee. A "similarly situated licensee" shall mean an index fund manager
that is a licensee of S&P and is using the S&P Index as the basis of an index
funds product containing approximately the same amount of assets as Licensee
and/or is licensed to use the S&P Marks in the name of the licensee's product.
(i) The provisions of this Section 9 shall survive any termination of
this Agreement.
10. Release and Discharge
---------------------
Without waiving or altering any portion of Section 11 described below,
S&P hereby expressly agrees that it shall release and discharge Licensee, its
directors, officers, employees and agents, from any and all claims or causes of
action -- known or unknown -- that were or could have been asserted with respect
to any event or omission which is alleged to occur prior to the execution of
this Agreement in connection with Licensee's prior use of the S&P 500 Index and
S&P Marks. S&P releases, acquits, and forever discharges Licensee from and shall
not now or hereafter institute, participate in, maintain, or assert against
Licensee, either directly or indirectly, on its own behalf or on behalf any
other person or entity, any cause of action or claim that relates in any way to
any act or omission which is alleged to occur prior to the execution of this
Agreement in connection with Licensee's prior use of the S&P 500 Index and S&P
Marks. This provision shall survive the expiration or termination of this
Agreement.
11
<PAGE>
11. Indemnification.
---------------
(a) Licensee shall indemnify and hold harmless S&P, its
affiliates and their officers, directors, employees and agents against any and
all judgments, damages, costs or losses of any kind (including reasonable
attorneys' and experts' fees) as a result of any claim, action, or proceeding
that arises out of or relates to (a) this Agreement, except insofar as it
relates to a breach by S&P of its representations or warranties hereunder, or
(b) the Product; provided, however, that S&P notifies Licensee promptly of any
such claim, action or proceeding and, at Licensee's option, S&P shall grant
Licensee control of its defense and/or settlement. Licensee shall periodically
reimburse S&P for its reasonable expenses incurred under this Subsection 11(a).
S&P shall have the right, at its own expense, to participate in the defense of
any claim, action or proceeding against which it is indemnified hereunder;
provided, however, it shall have no right to control the defense, consent to
judgment, or agree to settle any such claim, action or proceeding without the
written consent of Licensee without waiving the indemnity hereunder. Licensee,
in the defense of any such claim, action or proceeding except with the written
consent of S&P, shall not consent to entry of any judgment or enter into any
settlement which either (a) does not include, as an unconditional term, the
grant by the claimant to S&P of a release of all liabilities in respect of such
claims or (b) otherwise adversely affects the rights of S&P. This provision
shall survive the termination or expiration of this Agreement.
(b) S&P shall indemnify and hold harmless Licensee, their
officers, directors, employees and agents against any and all judgments,
damages, costs or losses of any kind (including reasonable attorneys' and
experts' fees) as a result of any claim, action, or proceeding that arises out
of or relates to any breach by S&P of its representations or warranties under
this Agreement; provided, however, that (a) Licensee notifies S&P promptly of
any such claim, action or proceeding and, at S&P's option, Licensee shall grant
S&P control of its defense and/or settlement; and (b) Licensee cooperates with
S&P in the defense thereof. S&P shall periodically reimburse Licensee for its
reasonable expenses incurred under this Subsection 11(b). Licensee shall have
the right, at its own expense, to participate in the defense of any claim,
action or proceeding against which it is indemnified hereunder; provided,
however, it shall have no right to control the defense, consent to judgment, or
agree to settle any such claim, action or proceeding without the written consent
of S&P without waiving the indemnity hereunder. S&P, in the defense of any such
claim, action or proceeding, except
12
<PAGE>
with the written consent of Licensee, shall not consent to entry of any judgment
or enter into any settlement which either (a) does not include, as an
unconditional term, the grant by the claimant to Licensee of a release of all
liabilities in respect of such claims or (b) otherwise adversely affects the
rights of Licensee. This provision shall survive the termination or expiration
of this Agreement.
12. Suspension of Performance.
-------------------------
Neither S&P nor Licensee shall bear responsibility or
liability for any losses arising out of any delay in or interruptions of their
respective performance of their obligations under this Agreement due to any act
of God, act of governmental authority, act of the public enemy or due to war,
the outbreak or escalation of hostilities, riot, fire, flood, civil commotion,
insurrection, labor difficulty (including, without limitation, any strike, or
other work stoppage or slow down), severe or adverse weather conditions,
communications line failure, or other similar cause beyond the reasonable
control of the party so affected.
13. Other Matters.
-------------
(a) This Agreement is solely and exclusively between the
parties hereto and shall not be assigned or transferred by either party, without
prior written consent of the other party, and any attempt to so assign or
transfer this Agreement without such written consent shall be null and void.
(b) The paragraph headings used herein are solely for
convenience and shall have no bearing on the meaning or legal interpretation of
any of the provisions and terms of this Agreement.
(c) The recitals and Exhibits are incorporated into and a part of the
Agreement.
(d) This Agreement constitutes the entire agreement of the
parties hereto with respect to its subject matter and may be amended or modified
only by a writing signed by duly authorized officers of both parties. This
Agreement supersedes all previous agreements between the parties with respect to
the subject matter of this Agreement; and there are no oral or written
collateral representations, agreements, or understandings except as provided
herein.
13
<PAGE>
(e) No breach, default, or threatened breach of this Agreement
by either party shall relieve the other party of its obligations or liabilities
under this Agreement with respect to the protection of the property or
proprietary nature of any property which is the subject of this Agreement.
(f) Except as set forth in Section 6 hereof with respect to
Informational Materials, all notices and other communications under this
Agreement shall be (i) in writing, (ii) delivered by hand, by registered or
certified mail, return receipt requested, or by facsimile transmission to the
address or facsimile number set forth below or such address or facsimile number
as either party shall specify by a written notice to the other and (iii) deemed
given upon receipt.
Notice to S&P: Standard & Poor's
55 Water Street
New York, NY 10041-0003
Attn.: Robert Shakotko
Senior Vice President
Index Services
Fax #: (212) 438-3523
Notice to Licensee: Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
Attn: Anthony D'Amore
Associate General Counsel, Law Department
Fax #: (212) 251-1656
(g) This Agreement shall be interpreted, construed and enforced in
accordance with the laws of the State of New York.
(h) Each party agrees that in connection with any legal action
or proceeding arising with respect to this Agreement, they will bring such
action or proceeding only in the United States District Court for the Southern
District of New York or in the Supreme Court of the State of New York in and for
the First Judicial Department and each party agrees to submit to the
jurisdiction of such court and venue in such court and to waive any claim that
such court is an inconvenient forum.
14
<PAGE>
IN WITNESS WHEREOF, the undersigned authorized parties have caused this
Agreement to be executed as of the date first set forth above.
METROPOLITAN LIFE INSURANCE The McGraw-Hill Companies, Inc., on behalf
COMPANY of its Division, STANDARD & POOR'S
BY: /s/Anthony D'Amore BY: /s/ Robert A. Shakotko
------------------------- ------------------------------------
Anthony D'Amore Robert A. Sahkotko
------------------------- ------------------------------------
(Print Name) (Print Name)
Associate General Counsel Senior Vice President, Index Service
------------------------- ------------------------------------
(Print Title) (Print Title)
15
<PAGE>
EXHIBIT A
PRODUCT DESCRIPTION
Product: Licensee's retail and institutional index funds, which seek to
replicate and are based on the S&P 500 Index, and whose investment objectives
are to track the price and yield performance of publicly-traded common stocks of
companies as represented by the S&P 500 Index.
16
<PAGE>
Exhibit (h)(e)
PARTICIPATION AGREEMENT
Among
METROPOLITAN SERIES FUND, INC.
METROPOLITAN LIFE INSURANCE COMPANY
and
________________________ LIFE INSURANCE COMPANY
AGREEMENT, made and entered into this __ day of _____________, 2000 by
and among _____________________ LIFE INSURANCE COMPANY (the "Company") on its
own behalf and on behalf of [_______________ Variable Life Account],
[_______________ Variable Annuity Account], and [Group Pension Account] (each an
"Account"), each a separate account of the Company, METROPOLITAN SERIES FUND,
INC, a corporation organized under the laws of the State of Maryland (the
"Fund") and METROPOLITAN LIFE INSURANCE COMPANY ("MetLife").
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and its shares are registered under the Securities Act of 1933, as amended
(hereinafter the "1933 Act"); and
WHEREAS, the Fund serves as an investment vehicle underlying variable
life insurance policies and variable annuity contracts (collectively, "Variable
Insurance Products") offered by MetLife and its affiliates ("Participating
Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, including but not limited to those listed on Schedule A hereto
(the "Series"), each representing the interest in a particular managed portfolio
of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission ("SEC") granting Participating Insurance Companies and
variable annuity and variable life insurance separate accounts exemptions from
certain provisions of the 1940 Act and certain thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by both variable
annuity and variable life insurance separate accounts of affiliated life
insurance companies (hereinafter the "Exemptive Order"); and
WHEREAS, MetLife acts as the investment adviser to all of the Series
and is registered as an investment adviser under the Investment Advisers Act of
1940, as amended; and
WHEREAS, the Company has registered or will register certain variable
life and/or variable annuity contracts (the "Contracts") under the 1933 Act; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
1
<PAGE>
WHEREAS, MetLife is registered as a broker dealer with the SEC under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a
member in good standing of the National Association of Securities Dealers, Inc.
(the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of certain Series on behalf
of each Account to fund certain of the Contracts and MetLife is authorized to
sell such shares to unit investment trusts such as each Account at net asset
value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and MetLife agree as follows:
1. Sale of Fund Shares.
-------------------
1.1 Subject to the terms of the Distribution Agreement in effect from time
to time between the Fund and MetLife, MetLife agrees to sell to the
Company those shares of each Series which each Account orders,
executing such orders on a daily basis at the net asset value next
computed after receipt by the Fund or its designee of the order for the
shares of the Fund. "Business Day" shall mean any day on which the New
York Stock Exchange is open for trading and on which the Fund
calculates the net asset value of shares of the Series.
1.2 The Fund agrees to make its shares available for purchase at the
applicable net asset value per share by the Company and its Accounts on
those days on which the Fund calculates its net asset value. The Fund
agrees to use reasonable efforts to calculate such net asset value on
each day which the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the Board of Directors of the Fund
(hereinafter the "Board" or the "Directors") may refuse to sell shares
of any Series to any person, or suspend or terminate the offering of
shares of any Series, if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole
discretion of the Directors acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, in the
best interests of the shareholders of such Series.
1.3 The Fund and MetLife agree that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts, or to
other purchasers of the kind specified in Treas. Reg. Section 1.817-5
(f)(3) (or any successor regulation) as from time to time in effect.
1.4 The Fund agrees to redeem, on the Company's request, any full or
fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of the request for redemption.
1.5 The Company agrees that all purchases and redemptions by it of the
shares of each Series will be in accordance with the provisions of then
current prospectus and statement of additional information of the Fund
and in accordance with any procedures that the Fund,
2
<PAGE>
MetLife or the Fund's transfer agent may have established governing
purchases and redemptions of shares of the Series generally.
1.6 The Company shall pay for Fund shares on the next Business Day after an
order to purchase Fund shares is made in accordance with the provisions
of Section 1.1. hereof. Payment shall be in federal funds transmitted
by wire to the Fund's custodian.
1.7 Issuance and transfer of the Fund's shares will be by book entry only.
Share certificates will not be issued. Shares ordered from the Fund
will be recorded on the transfer records of the Fund in an appropriate
title for each Account or the appropriate subaccount of each Account.
1.8 The Fund shall furnish same day notice (by e-mail, fax or telephone,
followed by written confirmation) to the Company of any income,
dividends or capital gain distributions payable on the shares of any
Series. The Company hereby elects to receive all such income dividends
and capital gain distributions as are payable on the Series shares in
additional shares of that Series. The Company reserves the right to
revoke this election and to receive all such income dividends and
capital gain distributions in cash. The Fund shall notify the Company
of the number of shares so issued as payment of such dividends and
distributions.
1.9 The Fund shall make the net asset value per share for each Series
available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall
use its best efforts to make such net asset value per share available
by 7:00 p.m. New York time.
2. Representations and Warranties.
------------------------------
2.1 The Company represents and warrants that each Contract is or, prior to
the purchase of shares of any Series in connection with the funding of
such Contract, will be registered under the 1933 Act; that the
Contracts will be issued and sold in compliance in all material
respects with all applicable federal and state laws, including all
applicable customer suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized
and in good standing under applicable law and that it has legally and
validly established each Account as a separate account pursuant to
relevant state insurance law prior to any issuance or sale of any
Contract by such Account and that each Account is either (i) registered
or, prior to any issuance or sale of the Contracts, will register each
Account as a unit investment trust in accordance with the provisions of
the 1940 Act; or (ii) the Account is exempt from such registration.
2.2 The Fund represents and warrants that Fund shares sold pursuant to this
Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the Commonwealth of
Massachusetts and all applicable federal and state securities laws and
that the Fund is and shall remain registered under the 1940 Act. The
Fund agrees that it will amend the registration statement for its
shares under the 1933 Act
3
<PAGE>
and the 1940 Act from time to time as required in order to permit the
continuous public offering of its shares in accordance with the 1933
Act. The Fund shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the
extent deemed advisable by the Fund or MetLife.
2.3 The Fund represents that each Series is currently qualified as a
"regulated investment company" under subchapter M of the Internal
Revenue Code of 1986, as amended, (the "Code") and agrees that it will
make every effort to maintain such qualification (under Subchapter M or
any successor or similar provision) and that it will notify the Company
promptly upon having a reasonable basis for believing that it has
ceased to so qualify or that it might not so qualify in the future.
2.4 The Company represents that the Contracts are currently treated as
modified endowment, annuity or life insurance contracts under
applicable provisions of the Code and agrees that it will make every
effort to maintain such treatment and that it will notify the Fund and
MetLife immediately upon having a reasonable basis for believing that
the Contracts have ceased to be so treated or that they might not be so
treated in the future.
2.5 The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and
investment policies) complies with the insurance laws or regulations of
the various states.
2.6 MetLife represents and warrants that it is a member in good standing of
the NASD and is registered as a broker-dealer with the SEC.
2.7 MetLife further represents that it will sell and distribute the Fund
shares in accordance with all applicable state and federal securities
laws, including without limitation the 1933 Act, the 1934 Act and the
1940 Act.
2.8 The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Maryland and that it does and will
comply in all material respects with the 1940 Act.
2.9 Each of the Fund and MetLife represent and warrant that all of their
directors, officers and employees dealing with the money and/or
securities of the Fund are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit
of the Fund in an amount not less than the minimal coverage as required
by Rule 17g-(1) under the 1940 Act or any successor regulations as may
be promulgated from time to time. The aforesaid Bond shall include
coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.10 The Company represents and warrants that all of its directors,
officers, employees and other individuals/entities dealing with the
money and/or securities representing amounts intended for the purchase
of shares of the Fund or proceeds of the redemption of shares of the
Fund are and shall continue to be at all times covered by a blanket
fidelity bond or
4
<PAGE>
similar coverage for the benefit of the Fund, in an amount not less
than the amount required of the Fund and MetLife under Section 2.9.
hereof. The aforesaid Bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.11 The Company represents and warrants that it will not, without the prior
written consent of the Fund and MetLife, purchase Fund shares with
Account assets derived from the sale of Contracts to individuals or
entities which would cause the investment policies of any Series to be
subject to any limitations not in the Fund's then current prospectus or
statement of additional information with respect to any Series.
3. Prospectuses and Proxy Statements; Voting.
-----------------------------------------
3.1 MetLife shall provide the Company with as many copies of the Fund's
current prospectus as the Company may reasonably request (at the
Company's expense with respect to other than existing Contract owners).
If requested by the Company in lieu thereof, the Fund shall provide
such documentation (including a final copy of the new prospectus as set
in type at the Fund's expense) and other assistance as is reasonably
necessary in order for the Company once each year (or more frequently
if the prospectus for the Fund is amended) to have the prospectus for
the Contracts and the Fund's prospectus printed together in one
document (such printing to be at the Company's expense with respect to
other than existing Contract owners).
3.2 MetLife (or the Fund), at its expense, shall print and provide the
Fund's then current statement of additional information free of charge
to the Company and to any owner of a Contract or prospective owner who
requests such statement.
3.3 The Fund, at its expense, shall provide the Company with copies of its
proxy material, reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably require
for distribution (at the Fund's expense) to Contract owners.
3.4 So long as and to the extent that the SEC or its staff continues to
interpret the 1940 Act to require pass-through voting privileges for
variable contract owners, or if and to the extent required by law, the
Company shall: (i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received from
Contract owners; and (iii) vote Fund shares for which no instructions
have been received in the same proportion as Fund shares of such Series
for which instructions have been received. The Company reserves the
right to vote Fund shares held in any Account in its own right, to the
extent permitted by law. The Company shall be responsible for assuring
that each Account participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on
Schedule B hereto, which standards will also be provided to the other
Participating Insurance Companies.
5
<PAGE>
4. Sales Material and Information.
------------------------------
4.1 The Company shall be solely responsible for ensuring that sales
literature in which the Fund, a Series, any subadviser to any Series or
MetLife (in its capacity as distributor or adviser of the Fund) is
named, eligible for use under Rule 134 or Rule 482 under the 1933 Act
or other sales literature the substance of which is contained in the
then current prospectus or statement of additional information of the
Fund. The Company may, if it so chooses, deliver other draft sales
literature to the Fund or its designee, at least thirty Business Days
prior to its use. The Fund or such designee shall use commercially
reasonable efforts to review sales literature so delivered within
fifteen days. Any sales literature so delivered shall not be used by
the Company if the Fund or its designee objects to such use within
fifteen Business Days after receipt of such material.
4.2 The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement, prospectus or
statement of additional information for the Fund shares, as such
registration statement and prospectus or statement of additional
information may be amended or supplemented from time to time, or in
reports or proxy statements for the Fund, or in sales literature or
other promotional material approved by the Fund or its designee or by
MetLife, except with the approval of the Fund or MetLife or the
designee of either.
4.3 The obligations set forth in Section 4.1 herein shall apply mutatis
-------
mutandis to the Fund and MetLife with respect to each piece of sales
--------
literature or other promotional material in which the Company and/or
any Account is named.
4.4 The Fund and MetLife shall not give any information or make any
representations on behalf of the Company or concerning the Company, any
Account or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts,
as such registration statement and prospectus may be amended or
supplemented from time to time, or in published reports for each
Account which are in the public domain or approved by the Company for
distribution to Contract owners, or in sales literature or other
promotional material approved by the Company or its designee, except
with the permission of the Company.
4.5 The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional
information, shareholder annual, semi-annual or other reports, proxy
statements, applications for exemptions, requests for no-action letters
and any amendments to any of the above, that relate to any Series,
promptly after the filing of each such document with the SEC or any
other regulatory authority.
4.6 The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, statements of additional
information, shareholder annual, semi-annual or other reports,
solicitations for voting instructions, applications for exemptions,
6
<PAGE>
requests for no-action letters and any amendments to any of the above,
that relate to the Contracts or any Account, promptly after the filing
of such document with the SEC or any other regulatory authority. Each
party hereto will provide to each other party, to the extent it is
relevant to the Contracts or the Fund, a copy of any comment letter
received from the staff of the SEC or the NASD, and the Company's
response thereto, following any examination or inspection by the staff
of the SEC or the NASD.
4.7 As used herein, the phrase "sales literature or other promotional
material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures or other public
media), sales literature (i.e., any written communication distributed
or made generally available to customers or the public, including
brochures, circulars, research reports, market letters, form letters,
seminar texts, reprints or excerpts of any other advertisement, sales
literature or published article), educational or training materials or
other communications distributed or made generally available to some or
all agents or employees.
5. Fees and Expenses.
-----------------
5.1 The Fund and MetLife shall pay no fee or other compensation to the
Company under this Agreement, except that if the Fund or any Series
adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then MetLife may make payments to the Company or
to the underwriter. Each party acknowledges that MetLife may pay
service or administrative fees to the Company and other Participating
Insurance Companies pursuant to separate agreements.
6. Diversification.
---------------
6.1 The Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply
with Section 817(h) of the Code and any Treasury Regulations thereunder
relating to the diversification requirements for variable annuity,
endowment or life insurance contracts, as from time to time in effect.
7. Potential Conflicts.
-------------------
7.1 To the extent required by the Exemptive Order or by applicable law, the
Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material
conflict may arise for a variety of reasons, including: (a) an action
by any state insurance regulatory authority; (b) a change in applicable
federal or state insurance, tax, or securities laws or regulations, or
a public ruling, private letter ruling, no-action or interpretative
letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in
any relevant
7
<PAGE>
proceeding; (d) the manner in which the investments of any Series are
being managed; (e) a difference in voting instructions given by
variable annuity contract and variable life insurance contract owners;
or (f) a decision by an insurer to disregard the voting instructions
of contract owners. The Fund shall promptly inform the Company if it
determines that an irreconcilable material conflict exists and the
implications thereof.
7.2 The Company will report to the Board any potential or existing
conflicts between the interests of contract owners of different
separate accounts of which the Company is or becomes aware. The Company
will assist the Board in carrying out its responsibilities under the
Exemptive Order and under applicable law, by providing the Board with
all information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an obligation of
the Company to inform the Board whenever contract owner voting
instructions are disregarded.
7.3 If it is determined by a majority of the Board, or a majority of its
disinterested directors, that a material irreconcilable conflict
exists, the Company and other Participating Insurance Companies shall,
at their expense take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, which steps could
include: (1) withdrawing the assets allocable to some or all of the
separate accounts from the Fund or any Series and reinvesting such
assets in a different investment medium, including (but not limited to)
another series of the Fund, or submitting the question of whether such
segregation should be implemented to a vote of all affected Contract
owners and, as appropriate, segregating the assets of any appropriate
group (i.e., annuity contract owners, life insurance contract owners,
or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the
affected contract owners the option of making such a change; and (2)
establishing a new registered management investment company or managed
separate account.
7.4 If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority
vote, the Company may be required, at the Fund's election, to withdraw
the relevant Account's investment in the Fund and terminate this
Agreement; provided, however, that such withdrawal and termination
shall be limited to the extent required by such material irreconcilable
conflict as determined by a majority of the disinterested members of
the Board. Any such withdrawal and termination will take place within
six (6) months after the Fund gives written notice that this provision
is being implemented.
7.5 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw
the affected Account's investment in the Fund and terminate this
Agreement within six months after the Board informs the Company in
writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the
8
<PAGE>
extent required by such material irreconcilable conflict as determined
by a majority of the disinterested members of the Board.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a majority
of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Fund be required to establish a new
funding medium for the Contracts. The Company shall not be required by
Section 7.3 to establish a new funding medium for the Contracts if an
offer to do so has been declined by vote of a majority of Contract
owners materially adversely affected by the irreconcilable material
conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict,
then the Company will withdraw the Account's investment in the Fund and
terminate this Agreement within six (6) months after the Board informs
the Company in writing of the foregoing determination, provided,
however, that such withdrawal and termination shall be limited to the
extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested members of the Board.
7.7 If and to the extent that Rule 6e-2 and Rule 6e-3(T) under the 1940 Act
are amended, or Rule 6e-3 is adopted, to provide exemptive relief from
any provision of the Act or the rules promulgated thereunder with
respect to mixed or shared funding (as defined in the Exemptive Order)
on terms and conditions materially different from those contained in
the Exemptive Order, then (a) the Fund and/or Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to
comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as
adopted, to the extent such rules are applicable; and (b) Sections 3.4,
7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect
only to the extent that terms and conditions substantially identical to
such Sections are contained in such Rule(s) as so amended or adopted.
8. Indemnification.
---------------
8.1 Indemnification by the Company
(a). The Company agrees to indemnify and hold harmless the Fund and
each of its Directors and officers and each person, if any, who
controls the Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section
8.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Company) or litigation (including legal and other expenses), to which
the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares
or the Contracts and: (i) arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact contained
in the registration statement or prospectus or statement of additional
information (if applicable) for the Contracts or contained in the
Contracts or sales literature or other promotional material for the
Contracts (or any amendment or supplement to any of the foregoing), or
9
<PAGE>
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that
this agreement to indemnify shall not apply as to any Indemnified Party
if such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to
the Company by or on behalf of the Fund for use in the registration
statement or prospectus or statement of additional information (if
applicable) for the Contracts or in the Contracts or sales literature
or other promotional material (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Fund
shares; or (ii) arise out of or as a result of statements or
representations (other than statements or representations contained in
the registration statement, prospectus or statement of additional
information (if applicable) or sales literature or other promotional
material of the Fund not supplied by the Company, or persons under its
control) or wrongful conduct of the Company or persons under its
control, with respect to the sale or distribution of the Contracts or
Fund Shares; or (iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in any registration
statement, prospectus or statement of additional information (if
applicable) or sales literature or other promotional material of the
Fund or any amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if
such a statement or omission was made in reliance upon information
furnished to the Fund by or on behalf of the Company; or (iv) arise as
a result of any failure by the Company to provide the services and
furnish the materials under the terms of this Agreement; or (v) arise
out of or result from any material breach of any representation and/or
warranty made by the Company in this Agreement or arise out of or
result from any other material breach of this Agreement by the Company,
as limited by and in accordance with the provisions of Section 8.1(b)
and 8.1(c) hereof.
(b). The Company shall not be liable under this Section 8.1 with
respect to any losses, claims, damages, liabilities or litigation to
which an Indemnified Party would otherwise be subject if such loss,
claim, damage, liability or litigation is caused by or arises out of
such Indemnified Party's willful misfeasance, bad faith or gross
negligence or by reason of such Indemnified Party's reckless disregard
of obligations or duties under this Agreement or to the Fund, whichever
is applicable.
(c). Each Indemnified Party shall notify the Company of any claim made
against an Indemnified Party in writing within a reasonable time after
the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party
(or after such Indemnified Party shall have received notice of such
service on any designated agent), but failure to notify the Company of
any such claim shall not relieve the Company from any liability which
it may have to the Indemnified
10
<PAGE>
Party against whom such action is brought under this indemnification
provision unless the Company's ability to defend against the claim
shall have been materially prejudiced by the Indemnified Party's
failure to give such notice and shall not in any way relieve the
Company from any liability which it may have to the Indemnified Party
against whom the action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against
one or more Indemnified Parties, the Company shall be entitled to
participate, at its own expense, in the defense of such action. The
Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to each Indemnified Party named in the action.
After notice from the Company to such party of the Company's election
to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than
reasonable costs of investigation. An Indemnified Party shall not
settle any claim involving a remedy including other than monetary
damages without the prior written consent of the Company.
(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the
Contracts or the operation of the Fund.
8.2 Indemnification by MetLife
(a). MetLife agrees to indemnify and hold harmless the Company and each
of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 8.2) against any
and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of MetLife) or litigation
(including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and: (i) arise out of
or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the registration statement, prospectus
or statement of additional information, or sales literature or other
promotional material of the Fund (or any amendment or supplement to any
of the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to MetLife or Fund by or on
behalf of the Company for use in the registration statement, prospectus
or statement of additional information for the Fund or in sales
literature or other promotional material (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or (ii) arise out of or as a result of
statements or representations (other than statements or representations
contained in the registration statement, prospectus or statement of
additional information or sales literature or other promotional
material for the Contracts not supplied by MetLife or the Fund or
persons under their control) or wrongful conduct of MetLife or the Fund
or persons under their control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
11
<PAGE>
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in any registration statement, prospectus or
statement of additional information or sales literature or other
promotional material covering the Contracts, or any amendment thereof
or supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the
Company by or on behalf of MetLife or the Fund; or (iv) arise as a
result of any failure by MetLife or the Fund to provide the services
and furnish the materials under the terms of this Agreement (including
a failure, whether unintentional or in good faith or otherwise, to
comply with the diversification requirements specified in Article VI
of this Agreement; or (v) arise out of or result from any material
breach of any representation and/or warranty made by MetLife or the
Fund in this Agreement or arise out of or result from any other
material breach of this Agreement by MetLife or the Fund; as limited
by and in accordance with the provisions of Sections 8.2(b) and 8.2(c)
hereof.
(b). MetLife shall not be liable under this Section 8.2 with respect to
any losses, claims, damages, liabilities or litigation to which an
Indemnified Party would otherwise be subject if such loss, claim,
damage, liability or litigation is caused by or arises out of such
Indemnified Party's willful misfeasance, bad faith or gross negligence
or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to the Company or each
Account, whichever is applicable.
(c). Each Indemnified Party shall notify each of MetLife and the Fund
of any claim made against the Indemnified Party within a reasonable
time after the summons or other first legal process giving information
of the nature of the claim shall have been served upon such Indemnified
Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify each of
MetLife and the Fund of any such claim shall not relieve MetLife from
any liability which it may have to the Indemnified Party against whom
such action is brought under this indemnification provision unless
MetLife's ability to defend against the claim shall have been
materially prejudiced by the Indemnified Party's failure to give such
notice and shall not in any way relieve the Company from any liability
which it may have to the Indemnified Party against whom the action is
brought otherwise than on account of this indemnification provision. In
case any such action is brought against one or more Indemnified
Parties, MetLife will be entitled to participate, at their own expense,
in the defense thereof. MetLife shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action.
After notice from MetLife to such party of the election of MetLife to
assume the defense thereof, the Indemnified Party shall bear the fees
and expenses of any additional counsel retained by it, and MetLife will
not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation. An Indemnified Party shall not settle any claim
involving any remedy other than monetary damages without the prior
written consent of MetLife.
12
<PAGE>
(d). The Company agrees promptly to notify MetLife and the Fund of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of each Account.
9. Applicable Law.
--------------
9.1 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as
the SEC may grant (including, but not limited to, the Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance
therewith.
10. Termination.
-----------
10.1 This Agreement shall terminate:
(a) at the option of any party upon 180 days' advance written notice to
the other parties; provided, however, that such notice shall not be
given earlier than one year following the date of this Agreement; or
(b) at the option of the Company to the extent that shares of a Series
are not reasonably available to meet the requirements of the Contracts
as determined by the Company, provided however, that such termination
shall apply only to those Series the shares of which are not reasonably
available. Prompt notice of the election to terminate for such cause
shall be furnished by the Company; or
(c) at the option of the Fund in the event that formal administrative
proceedings are instituted against the Company by the NASD, the SEC,
any state insurance department or commissioner or similar insurance
regulator or any other regulatory body regarding the Company's duties
under this Agreement or related to the sale of the Contracts, with
respect to the operation of any Account or the purchase by any Account
of Fund shares, provided, however, that the Fund determines in its sole
judgment, exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of the
Company to perform its obligations under this Agreement; or
(d) at the option of the Company in the event that formal
administrative proceedings are instituted against the Fund or MetLife
by the NASD, the SEC or any state securities or insurance department or
commissioner or any other regulatory body, provided, however, that the
Company determines in its sole judgment exercised in good faith, that
any such administrative proceedings will have a material adverse effect
upon the ability of the Fund or MetLife to perform its obligations
under this Agreement; or
13
<PAGE>
(e) with respect to any Account, upon requisite authority (by vote of
the Contract owners having an interest in such Account or any
subaccount thereof, or otherwise) to substitute the shares of another
investment company (or separate series thereof) for the shares of any
Series in accordance with the terms of the Contracts for which shares
of that Series had been selected to serve as the underlying investment
medium. The Company will give 90 days' prior written notice to the Fund
of the date of any proposed vote to replace the Fund's shares or of the
filing by the Company with the SEC of any application relating to any
such substitution; or
(f) at the option of the Company, in the event any shares of any Series
are not registered, issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of such shares as the
underlying investment medium of the Contracts issued or to be issued by
the Company; or
(g) at the option of the Company, if any Series ceases to qualify as a
Regulated Investment Company under Subchapter M of the Code or under
any successor or similar provision, or if the Company reasonably
believes that any Series may fail to so qualify; or
(h) at the option of the Company, if the Fund fails to meet the
diversification requirements specified in Article 6 hereof; or
(i) at the option of the Fund or MetLife, if (1) the Fund or MetLife,
as the case may be, shall determine, in its sole judgment reasonably
exercised in good faith, that the Company has suffered a material
adverse change in its business or financial condition or is the subject
of material adverse publicity and such material adverse change or
material adverse publicity will have a material adverse impact on the
business and operations of the Fund or MetLife, as the case may be, (2)
the Fund or MetLife shall notify the Company in writing of such
determination and its intent to terminate this Agreement, and (3) after
considering the actions taken by the Company and any other changes in
circumstances since the giving of such notice, such determination of
the Fund or MetLife shall continue to apply on the sixtieth (60th) day
following the giving of such notice, which sixtieth day shall be the
effective date of termination; or
(j) at the option of the Company, if (1) the Company shall determine,
in its sole judgment reasonably exercised in good faith, that the Fund
or MetLife has suffered a material adverse change in its business or
financial condition or is the subject of material adverse publicity and
such material adverse change or material adverse publicity will have a
material adverse impact upon the business and operations of the
Company, (2) the Company shall notify the Fund and MetLife in writing
of such determination and its intent to terminate the Agreement, and
(3) after considering the actions taken by the Fund and/or MetLife and
any other changes in circumstances since the giving of such notice,
such determination shall continue to apply on the sixtieth (60th) day
following the giving of such notice, which sixtieth day shall be the
effective date of termination; or
14
<PAGE>
(k) in the case of an Account not registered under the 1933 Act or 1940
Act, the Company shall give the Fund 90 days' prior written notice if
the Company chooses to cease using any Series as an investment vehicle
for such Account.
It is understood and agreed that the right of any party hereto to terminate this
Agreement pursuant to Section 10.1(a) may be exercised for any reason or for no
reason.
10.2 Notice Requirement. No termination of this Agreement shall be effective
unless and until the party terminating this Agreement gives prior
written notice to all other parties to this Agreement of its intent to
terminate which notice shall set forth the basis for such termination.
Furthermore, in the event that any termination is based upon the
provisions of Article 7, or the provision of Section 10.1(a), 10.1(i)
or 10.1(j) of this Agreement, such prior written notice shall be given
in advance of the effective date of termination as required by such
provisions; and
10.3 In the event that any termination is based upon the provisions of
Section 10.1(c) or 10.1(d) of this Agreement, such prior written notice
shall be given at least ninety (90) days before the effective date of
termination.
10.4 Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and MetLife shall, at the option of the Company,
continue to make available additional shares of each Series pursuant to
the terms and conditions of this Agreement, for all Contracts in effect
on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, without limitation,
the owners of the Existing Contracts shall be permitted to reallocate
investments in the Fund, redeem investments in the Fund and/or invest
in the Fund upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 10.4 shall not
apply to any terminations under Section 10.1(b) or Article VII, and in
the case of terminations under Article 7 terminations, the effect of
such terminations shall be governed by Article 7 of this Agreement.
11. Notices.
-------
Any notice shall be sufficiently given when sent by registered or certified mail
to the other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
party.
If to the Fund or to MetLife:
One Madison Avenue
New York, New York 10010
Attention: Secretary
15
<PAGE>
If to the Company:
_________________ Life Insurance Company
[address]
Attention: ________________
12. Miscellaneous.
-------------
12.1 A copy of the Articles of Incorporation establishing the Fund is on
file with the Secretary of the State of Maryland, and notice is hereby
given that this Agreement is executed on behalf of the Fund by officers
of the Fund as officers and not individually and that the obligations
of or arising out of this Agreement are not binding upon any of the
directors, officers or shareholders of the Fund individually but are
binding only upon the assets and property belonging to the Series.
12.2 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and,
except as permitted by this Agreement, shall not disclose, disseminate
or utilize such names and addresses and other confidential information
until such time as it may come into the public domain without the
express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the
same instrument.
12.5 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
SEC, the NASD and state insurance regulators) and shall permit such
authorities reasonable access to its books and records in connection
with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled
to under state and federal laws.
16
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
________________________ LIFE INSURANCE COMPANY
By: __________________________
Name:
Title:
Date: _________________________
METROPOLITAN SERIES FUND, INC.
By: ___________________________
Name:
Title:
Date: __________________________
METROPOLITAN LIFE INSURANCE COMPANY
By: ___________________________
Name:
Title:
Date: _______________________
17
<PAGE>
Schedule A
[List Series]
18
<PAGE>
Schedule B
With respect to each Account, all shares of each Series attributable to such
policies and contracts for which no owner instructions have been received by the
Company and all shares of the Series attributable to charges assessed by the
Company against such policies and contracts will be voted for, voted against, or
withheld from voting on any proposal in the same proportions as are the shares
for which owner instructions have been received by the Company with respect to
policies or contracts issued by such Account. To the extent the Company has so
agreed with respect to an Account not registered with the SEC under the 1940
Act, all shares of each Series held by the Account will be voted for, voted
against or withheld from voting on any proposal in the same proportions as are
the shares of such Series for which contract owners' voting instructions have
been received. If the Company has not so agreed, the shares of each Series
attributable to such unregistered Account will be voted for, voted against, or
withheld from voting on any proposal in the same proportions as are all other
shares for which the Company has received voting instructions.
19
<PAGE>
Exhibit (i)(h)
FREEDMAN, LEVY, KROLL & SIMONDS
Washington Square
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5366
April 3, 2000
OPINION AND CONSENT OF COUNSEL
Metropolitan Series Fund, Inc.
One Madison Avenue
New York, New York 10010
Executives:
This opinion is given in connection with the filing with the Securities
and Exchange Commission ("SEC") by Metropolitan Series Fund, Inc., a Maryland
corporation (the "Fund"), of Post-Effective Amendment No. 26 under the
Securities Act of 1933 ("1933 Act") and Amendment No. 28 under the Investment
Company Act of 1940 ("1940 Act") to the Fund's Registration Statement on Form
N-1A (File Nos. 2-80751 and 811-3618, the "Registration Statement"), relating to
an indefinite number of the Fund's three billion authorized shares of capital
stock, par value $.01 per share, which includes, among others, 100 million
authorized shares of each of the State Street Research Aurora Small Cap Value
Portfolio, Putnam Large Cap Growth Portfolio, and MetLife Mid Cap Stock Index
Portfolio (collectively, the "Portfolios"), each Portfolio being a separate
series of the Fund's capital stock. The Fund's authorized shares of capital
stock relating to these Portfolios are hereinafter referred to collectively as
the "Shares."
We have examined the following: the Fund's Articles of Incorporation,
dated November 23, 1982, and its various Articles of Amendment, Articles of
Correction, and Articles Supplementary, dated May 19, 1983, December 1, 1983,
October 22, 1984, May 16, 1986, October 6, 1987, January 27, 1988, January 25,
1990, August 3, 1990, December 17, 1996, July 30, 1997, September 9, 1998,
October 6, 1998, February 2, 1999, January 24, 2000, and February 7, 2000; the
Fund's By-Laws, as amended January 27, 1988 and April 24, 1997; the
certification of the Fund's Secretary of Board of Directors' resolutions adopted
by the Board of Directors on February 1, 2000, authorizing the creation of each
Portfolio and the issuance of the Shares; the Notification of Registration on
Form N-8A filed with the SEC under the 1940 Act on December
<PAGE>
Metropolitan Series Fund, Inc.
April 3, 2000
Page 2
6, 1982; the Registration Statement as originally filed with the SEC under the
1933 Act and the 1940 Act on the same date, and the amendments thereto filed
with the SEC, including Post-Effective Amendment No. 26 to the Registration
Statement substantially in the form in which it is to be filed with the SEC; a
current Certificate of Good Standing for the Fund issued by the State of
Maryland; pertinent provisions of the laws of Maryland; and such other records,
certificates, documents and statutes that we have deemed relevant in order to
render the opinion expressed herein.
Based on the foregoing examination, we are of the opinion that:
1. The Fund is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Maryland; and
2. The Shares to be offered for sale by the Fund, when issued in the
manner contemplated by the Registration Statement, will be
legally issued, fully-paid, and non-assessable.
This letter expresses our opinion as to the Maryland General
Corporation Law, addressing matters such as due formation and, in effect, the
authorization and issuance of shares of capital stock, but does not extend to
the securities or "Blue Sky" laws of Maryland or to federal securities or other
laws.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Freedman, Levy, Kroll & Simonds
<PAGE>
Exhibit (j)(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment
No. 26 to Registration Statement No. 2-80751 on Form N-1A of our report dated
February 18, 2000, to the reference to us under the heading "Experts", appearing
in the Statement of Additional Information, which is a part of such Registration
Statement, and to the reference to us under the heading "Financial Highlights"
appearing in the Prospectus, which are also a part of such Registration
Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
April 4, 2000
<PAGE>
Metropolitan Series Fund, Inc.
Code of Ethics
1. Definitions
(a) "Access Person" is defined to include:
(i) Any director or officer of the Fund; or
(ii) Investment Personnel.
(b) For purposes of reporting personal Covered Securities transactions,
Access Persons will be deemed to have "Beneficial Ownership "or
"Beneficially Held" Covered Securities when such securities are held:
(i) In such Access Person's name;
(ii) In the name of a spouse, a minor child or any relative or
relative of a spouse who shares such Access Person's home,
absent special circumstances indicating that the Access
Person does not obtain benefits substantially equivalent to
those of ownership;
(iii) In the name of another person, if by reason of any
contract, understanding, relationship, agreement or other
arrangement such Access Person obtains therefrom benefits
substantially equivalent to those of ownership (i.e. the
ability to exercise a controlling influence over the
purchase, sale or voting of such Covered Securities);
(iv) By any partnership, closely held corporation, trust or
estate, to the extent of his/her interest therein; or
(v) By such Access Person as trustee where either such person
or members of his/her immediate family have a vested
interest in the income or corpus of the trust, or as
settlor of a revocable trust.
(c) "Board of Directors" is referring to the board of directors for the
Fund.
(d) "Code of Ethics" means the Code of Ethics for the Fund.
<PAGE>
(e) "Compliance" means the SEC/NASD Corporate Ethics and Compliance
Department of MetLife.
(f) "Covered Security" means a security as defined in Section 2(a)(36)
of the Investment Company Act of 1940 except as excluded in Section 3
below.
(g) "Fund" means the Metropolitan Series Fund, Inc.
(h) "Investment Advisers" means collectively, the Metropolitan Life
Insurance Company and the Fund's sub-investment advisers.
(i) "Investment Personnel" is defined as (i) any employee including any
director or officer of the Fund or its Investment Advisers (or any
company in a control relationship with either) who, in connection with
his or her regular functions or duties, makes or participates in making
any recommendations regarding the purchase or sale of securities by the
Fund and (ii) any natural person in a control relationship to the Fund
or its Investment Advisers who obtains information concerning
recommendations made to the Fund regarding the purchase or sale of
securities by the Fund.
(j) "MetLife" means Metropolitan Life Insurance Company.
(k) "Sub-investment advisers" or "sub-advisers" includes all sub-
investment managers performing investment advisory services for MetLife
as investment adviser to the Fund.
2. General Prohibitions
WHEREAS the Board of Directors of the Fund has determined that no Affiliated
Person (as defined in Section 2(a)(3) of the Investment Company Act of 1940) of
the Fund, or of the Fund's Investment Advisers, in connection with the purchase
or sale, directly or indirectly, by such person of a security held or to be
acquired by the Fund shall: (i) employ any device, scheme or article to defraud
the Fund; (ii) make to the Fund any untrue statement of material fact or omit to
state to the Fund a material fact necessary in order to make the statements
made, in light of the circumstance under which they are made, not misleading;
(iii) engage in any act, practice or course of business which operates or would
operate as fraud or deceit upon the Fund; or (iv) engage in any manipulative
practice with respect to the Fund.
2
<PAGE>
NOW THEREFORE, the Board of Directors have determined that no Affiliated Person
deemed an Access Person hereunder shall purchase or sell directly or indirectly,
any Covered Security which such person knows is currently being purchased or
sold for the Fund or which such person knows is currently being actively
considered for the purchase or sale for the Fund. This prohibition shall apply
to the purchase or sale by such person of any convertible issue, option or
warrant relating to such security. Access Persons hereunder who are employees of
Investment Advisers of the Fund shall be deemed to meet the requirements
hereunder by complying with the Investment Adviser's rule 17j-1 procedures.
3. Exempt Purchases and Sales
The prohibitions in Section 2 of this Code shall not apply to:
(i) Purchases or sales effected in any account over which an
Access Person has no direct influence or control;
(ii) Purchases or sales of securities that are direct
obligations of the United Stated Government, bankers'
acceptances, bank certificates of deposit, commercial paper
and high quality short-term debt instruments including
repurchase or reverse repurchase agreement transactions,
and shares of registered open-end investment companies;
(iii) Purchases of securities pursuant to an automatic dividend
reinvestment plan;
(iv) Purchases or sales which are non-volitional on the part of
an Access Person; and
(v) Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its
securities, to the extent such rights were acquired from
such issuer, and sales of such rights so acquired.
4. Reporting
(a) Initial Holdings Reports
All persons upon becoming an Access Person of the Fund shall file with
Compliance, no later than ten (10) days after becoming an Access Person
of the Fund, a report that contains a listing of every Covered Security
beneficially held by such person.
3
<PAGE>
(b) Quarterly Transactions Reports
Access Persons of the Fund shall file with Compliance, no later than
ten (10) days after each calendar quarter, a report relating to any
transactions during the calendar quarter, in which such person has or
by reason of such transaction acquires any direct or indirect
beneficial ownership in a Covered Security, except for purchases or
sales specified in Section 3.
(c) Annual Holdings Report
Access Persons of the Fund shall file with Compliance, no later than
ten (10) days after the end of the calendar year, a report that
contains a cumulative listing of every Covered Security beneficially
held by such person as of the end of the reporting calendar year. The
information submitted for an Access Person's annual holdings reports
must be current as of a date no more than thirty (30) days before such
report is submitted.
(d) Content Required in Holdings and Transaction Reports
1. Initial and Annual Holdings Reports
With respect to initial and annual holdings reports, all Access Persons required
to file such reports must submit the following information with the appropriate
Compliance person of the Fund.
(i) Title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect
beneficial ownership;
(ii) Name of any broker, dealer or bank with whom the Access Person
maintains an account in which any securities were held for the
direct or indirect benefit of the Access Person as of the date
the person became an Access Person; and
(iii) Date the report is submitted by the Access Person.
2. Quarterly Transaction Reports
In addition to the information specified above, Access Persons required to file
quarterly transaction reports should include the nature of the transaction
(i.e., purchase, sale or any other type of acquisition or disposition), the
price at which the
4
<PAGE>
transaction was effected and the broker or dealer through whom the transaction
was executed in complying with their respective quarterly reporting
requirements.
(e) Exceptions from Reporting Requirements
Directors of the Fund who are not "interested persons" of the Fund within the
meaning of Section 2(a)(19) of the Investment Company Act of 1940, and who would
be required to make a report solely by reason of being a Fund director, are
exempt from making:
(i) an initial holdings report and an annual holdings report; and
(ii) a quarterly holdings report , unless the director knew or in the
ordinary course of fulfilling his or her official duties as a Fund
director, should have known that during the 15-day period immediately
before or after the director's transaction in a Covered Security, the
Fund purchased or sold the Covered Security or the Fund or any of its
Investment Advisers considered purchasing or selling the Covered
Security.
(f) Certification of Access Persons With Code of Ethics Access Persons are
required to certify annually in writing that they have:
(i) Read and understand the Code of Ethics and recognize that they are
subject thereto;
(ii) Complied with the requirements of the Code of Ethics; and
(iii) Disclosed or reported all personal securities transactions required.
5. Compliance Reporting and Procedures
(a) Reports of Potential Deviations or Violations
Compliance will investigate all apparent violations of the Code of Ethics and
will maintain a record of the findings. A periodic report will be prepared for
the Board of Directors of the Fund describing the results of the review and
setting forth appropriate recommendations. This report will be submitted to the
Board of Directors of the Fund together with a copy of any underlying records of
fact. Based on its review of the report and any required clarification, the
Board of Directors will initiate any actions it considers appropriate under the
circumstances.
5
<PAGE>
(b) Annual Issues/Certification Report
Compliance will furnish, no less frequently than annually, a written report to
the Fund's Board of Directors that shall set forth:
(i) Copies of Codes of Ethics for the Fund and its Investment Adviser's
rule 17j-1 procedures, as revised, including a summary of any changes
made during the past year;
(ii) A summary that describes any violations requiring significant
remedial action during the past year and sanctions imposed in
response to those material violations;
(iii) Recommendations, if any, regarding changes in existing restrictions
or procedures based upon evolving industry practices and new
developments in applicable laws or regulations; and
(iv) Certifications from the Fund's Investment Advisers certifying that
each adviser has adopted rule 17j-1 procedures that are reasonably
necessary to prevent its Access Persons from violating the
determinations of the Fund's Board of Directors hereunder as well as
any applicable procedures of the Investment Adviser.
(c) Required Reports and Certifications of Investment and Sub-Investment
Advisers
In order to assist Compliance with the prevention and detection of any
violations of this Code, Investment Advisers and Sub-Investment Advisers of the
Fund are required to annually submit for inclusion in the Annual
Issues/Certification Report: (i) copies of their respective rule 17j-1
procedures hereunder, as revised, including a summary of any changes made during
the past year; (ii) a written summary of all violations and the remedial action
and sanctions imposed in response to those violations; and (iii) certifications
that state that each Investment Adviser's and Sub-Investment Adviser's
respective rule 17j-1 procedures contain provisions reasonably necessary to
prevent violations. Such records should be submitted to Patricia Worthington the
Assistant Secretary of the Fund for review no later than 10 days after the end
of the reporting calendar year.
6
<PAGE>
6. Records
Compliance should maintain the following records in an easily accessible place:
(i) Copies of each Code of Ethics for the Fund that are in effect or that
have been in effect within the past five years;
(ii) A copy of all reports and other forms submitted by Fund Access
Persons pursuant to Section 4. and any other pertinent information
for a period of not less than five years after the end of the fiscal
year in which the report is made or the information is provided;
(iii) A record of all persons currently or within the past five years who
are or were required to make reports or who are or were responsible
for reviewing and maintaining such files required pursuant to Section
4;
(iv) Records of any violation of the Code of Ethics, and any action taken
as a result of such violation for a period of not less than five
years after the end of the fiscal year in which the violation
occurred; and
(v) A copy of each annual issues/certification report submitted to the
Board during the last five years.
7. Sanctions
Upon discovering a violation of this Code of Ethics, the Board of Directors of
the Fund may impose such sanctions as it deems appropriate.
8. Interpretations
Any questions regarding the interpretation of any provisions of this Code of
Ethics should be directed to the Secretary of the Fund.
7
<PAGE>
December 4, 1996
Exhibit p(b)
METROPOLITAN LIFE INSURANCE COMPANY
-----------------------------------
STATEMENT OF POLICY WITH RESPECT TO
MATERIAL NONPUBLIC INFORMATION
------------------------------
1. Introduction
This Statement of Policy represents the policy of Metropolitan Life
Insurance Company ("MetLife") with respect to its directors, officers and
employees with regard to material nonpublic information. For ease of reference,
directors, officers and employees of MetLife are referred to herein as
"Employees". This Statement of Policy is applicable to transactions by MetLife
(1) for its general account and separate accounts for which MetLife has
day-to-day investment management responsibility, and (2) with respect to other
assets for which MetLife has day-to-day investment management responsibility.
This Statement of Policy also applies to personal securities transactions of
MetLife Employees who obtain material nonpublic information either by virtue of
their affiliation with MetLife or by other means. As used in this Statement of
Policy, "MetLife" includes Metropolitan Life Insurance Company and MetLife
Securities, Inc.
<PAGE>
II. Prohibited Conduct
Court decisions and Securities and Exchange Commission ("SEC") rulings
interpreting the federal securities laws make it unlawful for any person to
purchase or sell securities on the basis of material nonpublic information,
commonly known as "insider trading". The Insider Trading and Securities Fraud
Enforcement Act of 1988 ("ITSFEA") requires all investment advisers and
broker-dealers (such as MetLife, MetLife Securities, Inc. ("MSI"), State Street
Research & Management Company ("State Street"), GFM International Investors
Limited ("GFM"), State Street Research Investment Services, Inc., and State
Street Research Energy, Inc., to establish, maintain and enforce written
policies and procedures reasonably designed to detect and prevent insider
trading. ITSFEA also provides additional penalties for individuals who engage in
insider trading as well as their employers, if such employers have failed to
establish and enforce adequate procedures. In addition, MetLife prohibits
certain practices even though they may not be unlawful because MetLife considers
them to be poor business practices or to reflect adversely on MetLife's
reputation.
-2-
<PAGE>
MetLife's policy is:
A. An Employee may not trade for his or her own account (a
"Personal Account")/1/, directly or indirectly, in
securities/2/ on the basis of material information which is
gained in the course of employment or which is gained by any
other means and which has not been made known to the general
public. (See Section V, "MetLife Procedures").
- ---------------------------
/1/ A Personal Account is any brokerage account maintained by or for the benefit
of an individual or such person's "family member," including any account in
which the individual or family member holds a direct or indirect beneficial
interest, retains discretionary investment authority or exercises a power of
attorney. The term "family member" means an individual's spouse, child, or other
relative, whether related by blood, marriage or otherwise, who either (i)
resides with, or (ii) is financially dependent upon, or (iii) whose investments
are controlled by the individual. The term also includes any unrelated person
whose investments are controlled and whose financial support is materially
contributed to by the individual, such as a "significant other."
/2/ For purposes of this Statement of Policy, the term "security" shall have the
meaning set forth in Section 2(1) of the Securities Act of 1933 as amended,
except that it shall not include shares of registered open-end investment
companies issued or sponsored by organizations not affiliated with MetLife,
securities issued by the Government of the United States of America, short term
debt securities that are "government securities" within the meaning of Section
2(a)(16) of the Investment Company Act of 1940, as amended, bankers'
acceptances, bank certificates of deposit, commercial paper and such other money
market instruments as designated by the Compliance Director. Any prohibition or
reporting obligation relating to a security shall apply equally to any option,
warrant or right to purchase or sell such security and to any security
convertible into or exchangeable for such security. Any question about whether a
particular instrument is or is not a "security" should be referred to the
Compliance Director.
-3-
<PAGE>
B. An Employee may not trade in securities for or on behalf of an account
owned, managed or controlled by MetLife (a "Company Account") on the
basis of material information which is gained in the course of
employment or which is gained by any other means and which has not
been made known to the general public.
C. An Employee may not recommend to any person either in connection with
the Employee's employment or otherwise any transactions in any
securities on the basis of material information, whether or not gained
in the course of such Employee's employment with MetLife and which has
not been made known to the general public.
D. An Employee may not communicate material nonpublic information to any
person except in furtherance of such Employee's lawful duties as an
employee of MetLife.
E. In addition, Employees who know or have reason to believe that MetLife
or any affiliate is purchasing, selling or actively negotiating with
respect to a particular security or other investment in an issuer (or
guarantor) (e.g., the provider of a letter of credit for an issuer) of
securities (the "issuer") may not trade for his or her Personal
Account the securities of that entity until fifteen (15) days after
-4-
<PAGE>
any such purchase or sale by MetLife or the affiliate without the
approval of the SEC/NASD Compliance Director of MetLife or his or her
designee (the "Compliance Director") .
The exact scope of what constitutes "material nonpublic information"
is a continuously evolving area of law. For purposes of this Statement of
Policy, "material nonpublic information" should be deemed to be any information
about an issuer which is nonpublic because it has not been disseminated in a
manner which would cause it to be available to investors generally and if there
is a substantial likelihood that the information would affect the market price
for the securities or any information that a reasonable investor would consider
important in deciding whether to buy, sell or hold securities of the issuer.
Material nonpublic information about a company or its securities is
likely to originate from someone who is an "insider." The concept of "insider"
is very broad. The term includes officers, directors and employees of a company.
A person can become a "temporary insider" if he or she enters into a special
confidential relationship in the conduct of a company's affairs and as a result
is given access to information solely for the company's purposes. A temporary
insider can include, among others, a company's outside counsel, outside
accountants,
-5-
<PAGE>
consultants, bank lending officers, and the employees of such organizations, as
well as, in certain cases, secretaries, administrative or legal assistants,
messengers and printers. In addition, MetLife itself may become a temporary
insider of a company with which it has a business relationship or for which it
performs other services. In these situations, the company expects MetLife and
its Employees to keep nonpublic information confidential. In addition, a person
who receives material nonpublic information from an insider (a "tippee"), may
assume the status of an insider with respect to the material nonpublic
information received if the tippee knows or should know that this information
has been provided in violation of the insider's duty to keep it confidential.
Any benefit derived from the misuse of material nonpublic information
does not have to be monetary, but can be a reputational or goodwill benefit. For
example, an insider who provides material nonpublic information to others in
order to make it appear that he or she holds an important position, may violate
the law. In addition, for example, a parent who provides material nonpublic
information to a son or daughter who then purchases or sells securities may
violate the prohibition on tipping .
In addition to the general prohibitions against purchasing or selling
securities while in possession of material nonpublic
-6-
<PAGE>
information, and against disclosing such information to others who purchase or
sell securities discussed above, there is a specific SEC rule concerning trading
in connection with tender offers. This rule makes it unlawful to buy or sell
securities while in possession of material information relating to a tender
offer, if the person buying or selling the securities knows or has reason to
know that the information is nonpublic and has been acquired directly or
indirectly from the person making or planning to make the tender offer, from the
target company, or from any officer, director, partner or employee or other
person acting on behalf of either the bidder or the target company. The term
"tender offer" generally refers to the purchase of a significant amount of
securities of a company at a price above the prevailing market price.
Information should be presumed "material" if it relates to such
matters as dividend increases or decreases, earnings and earnings estimates,
changes in previously released earnings estimates, significant increases or
decreases in orders for a company's products, dispositions of subsidiaries or
divisions, merger or acquisition proposals or agreements, changes in debt
ratings, significant new products or discoveries, extraordinary borrowing,
significant major litigation, liquidity problems, extraordinary management
developments, purchases or sales of substantial assets, actions by a company
that may have an impact on the company's financial condition such as significant
write-
-7-
<PAGE>
downs of assets, additions to reserves for bad debts or contingent liabilities,
recapitalizations, restructurings spin off s, leveraged buy-outs, contract
awards, new products, voluntary calls of debt or preferred stock, public
offerings of debt or equity securities, major price and marketing changes;
significant litigation, impending bankruptcy, and investigations by government
entities. Material information also includes similar major events that would be
viewed as having materially altered the total mix of information available
regarding a company or the market for its securities.
As a rule, information which is no longer timely or cannot otherwise
be reasonably anticipated to have any immediate market impact will lack
"materiality." Among the factors to be considered in determining whether
information is actually "material" are the degree of its specificity, the extent
to which it differs from information previously disseminated publicly, and its
reliability in view of its nature and the source and the circumstances under
which it was received.
Nonpublic information is information that has not been publicly
disclosed. Information received about an issuer under circumstances which
indicate that it is not yet in general circulation in the market place may be
deemed to be nonpublic information. As a rule, before determining that
information is public, one should be able to point out some readily demonstrable
-8-
<PAGE>
fact to show that the information has been disseminated to the public through,
for example, an SEC filing, a press conference or press release or after
delivery of the information to a stock exchange, the Associated Press, The New
-------
York Times, The Wall Street Journal or appropriate trade publications. In
- ---------- -----------------------
certain situations, the insider may be required to know that the information has
been publicly disseminated.
III. Penalties for Insider Trading
Civil and criminal penalties for trading on or communicating material
nonpublic information are severe, both for individuals involved in such
unlawful conduct and their employers and other controlling persons. A person can
be subject to some or all of the penalties below even if he or she does not
personally benefit from the violation. Penalties include:
. civil injunctions
. treble damages
. disgorgement of profits
. jail sentences (up to 10 years) for each violation
. fines for the person who committed the violation of up to
three times the profit gained or loss avoided, whether the
person actually benefitted or the benefit accrued to a
tippee of that person, and
-9-
<PAGE>
. fines for the employer or other controlling person (i.e.,
----
supervisors) of up to the greater of $1,000,000 or three
times the amount of the profit gained or loss avoided.
Events have shown how severe the penalties for insider trading can be
and how becoming involved in insider trading can result not only in such things
as fines and/or the loss of a person's liberty, but can also destroy careers and
families and cause public humiliation and disgrace. The late 1980s cases
involving Ivan Boesky, Dennis Levine and Wall Street Journal reporter R. Foster
-------------------
Winans are good examples.
In addition, any violation of this Statement of Policy can be expected
to result in sanctions by MetLife, including, but not limited to, such
disciplinary action as a warning, a reprimand, probation, suspension, demotion
or dismissal of the persons involved, even if such violation does not also
violate the law.
IV. Making a Determination
Any question as to what constitutes material nonpublic information
should be resolved in the most conservative fashion (i.e., that the
----
determination be made that the information in question is material nonpublic
information) or the question should be referred to the Compliance Director for a
ruling.
-10-
<PAGE>
Before trading for MetLife, yourself or others, in the
securities of a company about which you may have potential
inside information, ask yourself the following questions:
Is the information material? Is this information that an investor
would consider important in making his or her investment decisions? Is this
information that would substantially affect the market price of the securities
if generally disclosed?
and
Is the information nonpublic? To whom has this information been
provided? Has the information been effectively communicated to the marketplace
by being published in The Wall Street Journal, The New York Times or other
----------------------- ------------------
publications of general circulation?
In certain instances, such as the creation of a so-called
"Chinese Wall" with respect to a particular security, you may
be notified that you are an insider with respect to such
security and that trading in that security is prohibited.
If, after consideration of the foregoing, you have any questions as to
whether the information is material and nonpublic, you should consult the
Compliance Director.
-11-
<PAGE>
V. MetLife Procedures
A. Proper Course of Conduct for Those Who Possess Material
Nonpublic Information
1. If you have determined that information in your
possession may be material and nonpublic (a) you should not
purchase or sell the affected securities on behalf of
yourself or others, including purchases or sales for any
Company or Personal Accounts, (b) you should notify the
Compliance Director immediately and consult with the
Compliance Director regarding the appropriate course of
action, and (c) you should refrain from discussing such
information with any other personnel at MetLife or any of
its affiliates (e.g., State Street, GFM etc.) except in
----
connection with your lawful duties as an employee of
MetLife.
2. In addition, if the material nonpublic information was
obtained in the course of your employment with MetLife or
otherwise, you should:
(i) Identify the issuer or issuers of the securities
about which such material nonpublic information
relates and notify the Vice President and
Investment Counsel of the
-12-
<PAGE>
Securities Investments Section of the Law
Department or his or her designee (the "Vice
President and Investment Counsel") that such issuer
or issuers may need to be placed on the MetLife
Restricted List (the "Restricted List") (see
below). Since no one else maintains a complete and
current restricted list it is extrememly important
that the Vice President and Investment Counsel
alone be contacted in this regard.
In order to comply with the federal securities laws
and to detect and prevent both the misuse of
material nonpublic information as well as the
appearance of impropriety in connection with
securities transactions, MetLife maintains a
confidential Restricted List containing the names
of. companies about which MetLife or its employees
possess material nonpublic information. The
Restricted List identifies securities that are
subject to trading restrictions by MetLife and its
employees.
A security may be placed on the Restricted List on
any occasion where, under the
-13-
<PAGE>
particular facts and circumstances, it
is deemed necessary and appropriate to
restrict trading in order to prevent the
misuse or appearance of misuse of
material nonpublic information.
During the period during which a
security is listed on the Restricted
List, neither MetLife nor its Employees
who have been apprised of such listing
may buy or sell, solicit trades in, or
recommend the security.
The Vice President and Investment
Counsel maintains a record of each
addition to or deletion from the
Restricted List. This record reflects
the date and the time the security was
added to or deleted from the Restricted
List and the name(s) of the person(s)
responsible for the addition to or
deletion from the Restricted List (and
names of all those who, in addition to
the person responsible for placing a
security on the Restricted List, also
possess the information) and a brief
summary of the reasons for the
inclusion.
-14-
<PAGE>
The Restricted List is distributed to
appropriate personnel, including traders
within MetLife. The Restricted List is
highly confidential and the contents of
the List must not be communicated to any
person other than persons deemed
appropriate recipients of the Restricted
List by the Vice President and
Investment Counsel.
The Vice President and Investment
Counsel also maintains a Watch List for
those issuers and their securities
where, even though neither MetLife nor
its Employees possesses material
nonpublic information about such
issuers, MetLife or its Employees may,
as a result of special relationships or
otherwise, appear to be in the position
of having such sensitive information.
The Vice President and Investment
Counsel also maintains a Watch List
which lists the securities of issuers
about whom MetLife or its Employees have
in their possession material nonpublic
information as well as the names of
those persons within MetLife (e.g., the
----
Board of Directors, CMO members or
senior
-15-
<PAGE>
management) who have been given such
material nonpublic information and the
date and time such persons' names were
placed on such list.
(ii) Do not communicate the material
nonpublic information inside or outside
MetLife except to other employees or
agents of MetLife or its affiliates who
need to know about such information in
connection with work being performed on
behalf of MetLife or its affiliates.
When communicating material nonpublic
information to others at MetLife or its
agents is deemed necessary, you should
inform such other employees or agents of
the confidential nature of such
information. You should also notify the
Vice President and Investment Counsel of
the identity of those persons so that
their names may be added to the
Restricted List.
Access to material nonpublic information must be restricted. For
example, files containing such information should be securely maintained in
one's own office or placed in limited access files within the files of one's
unit or department and access to computer files containing such information
must be restricted or
-16-
<PAGE>
specially coded to prevent and detect any improper use of such material.
As long as the information you possess remains material and nonpublic,
you must comply with the provisions outlined in this Statement of Policy.
Thereafter, (i) to the extent the securities of the applicable issuer were
placed on a Restricted List or the Watch List, you should notify the Vice
President and Investment Counsel or his or her designee that removal of such
securities may be appropriate and, (ii) you may be free to trade on and
communicate the relevant information (subject to any other applicable
restrictions contained elsewhere in this Statement of Policy) after being
advised by the Vice President and Investment Counsel that such issuer has been
removed from the Restricted List. Those persons with access to the Restricted
List and/or Watch List will be notified of the removal of any securities from
such lists.
B. Personal Securities Transactions
MetLife has several levels of reporting and monitoring with respect to
personal securities transactions based on the nature of the Employee's duties
and responsibilities at MetLife and the assessed likelihood of the Employee
having access to material nonpublic information in the course of his or her
employment.
-17-
<PAGE>
1. Certification
All Employees notified by their Department Heads that they are
required to submit Quarterly Securities Transaction Reports (see below) may be
required to certify on an annual basis that they have not violated any of the
restrictions set forth in this Statement of Policy regarding the use of material
nonpublic information obtained through their employment with MetLife or
otherwise and that they understand and agree fully to abide by the terms and
conditions of this Statement of Policy.
2. Company Accounts
Each month, the Compliance Director will receive a listing of all
investments organized by account (e.g., MetLife's General Account, Separate
----
Accounts or MetLife investment advisory clients) and will then review the
securities transactions in all such accounts to determine whether a security
reflected on the Restricted List was purchased or sold in a Company Account.
When a security is initially placed on the Restricted list, the Compliance
Director will review trading in Company Accounts for the preceding fifteen (15)
days. The Compliance Director will then certify that no prohibited trades have
occurred and retain such certifications for his or her records. If any
prohibited trading has occurred, the Compliance Director will prepare an
exception report for all trades in Company Accounts in securities
-18-
<PAGE>
listed in the Restricted List and, in consultation with the MetLife Law
Department, investigate why such trade occurred and determine what actions, if
any, need to be taken to remedy the situation and prevent such trades from
occurring again.
3. Personal Accounts and Personal Securities Transaction
Reports
MetLife requires Employees of certain units and departments whose
activities involve investment advisory activities, and Employees of certain
units and departments in which it is probable that material nonpublic
information may be obtained in the course of carrying out their duties as
MetLife Employees, to report all personal securities transactions on a quarterly
basis. Initially, each Department Head will be requested to supply the
Compliance Director with a list of such Employees. Thereafter, Department Heads
will be responsible for notifying the Compliance Director in a timely fashion of
any additions or deletions to such list. Annually, the Compliance Director will
request each Department Head to review the list currently on file with the
Compliance Director for accuracy and completeness. Depending upon the likelihood
that an Employee could obtain access to material nonpublic information,
Employees within particular departments or units may be exempted from reporting.
Personal Securities Transaction Report Forms for this purpose will be provided
to those Employees required to file such reports. These
-19-
<PAGE>
reports will be subject to review by the Compliance Director (See "Supervisory
Procedures" below). Certain Employees not regularly required to submit Personal
Securities Transaction Reports may, however, be required to submit Personal
Securities Transaction Reports on a temporary basis as circumstances may
warrant. Such Employees will be so notified by their Department Head or by the
Compliance Director.
VI. Personal Trading
Reporting of Securities Transactions
- ------------------------------------
Any member of the Board of Directors of MetLife and any officer of MetLife at
the level of Senior Vice President or above and any person notified by his or
her Department Head or Compliance Director is required to submit within ten days
of the end of each calendar quarter a Personal Securities Transaction Report
reflecting securities transactions in any Personal Account during the preceding
quarter. In determining whether to subject other employees or classes of
employees to this reporting requirement the Compliance Director, shall, in
consultation with such Employee's Department Head, consider the Employee's
position and responsibilities.
-20-
<PAGE>
Personnel occupying any of the positions referred to above shall
become subject to the reporting requirements upon receipt of these policies and
procedures.
The quarterly Personal Securities Transaction Report shall reflect the following
information: the title and amount of the security; the date; the nature of the
transaction (i.e., purchase, sale or other acquisition or disposition); the
price at which the transaction was effected; and the name of the broker, dealer
or bank with or through whom the transaction was effected. All information
concerning Personal Accounts and transactions effected therein shall be
maintained by MetLife for six years. Such information will be maintained on a
confidential basis and will be reasonably secured to prevent access to such
records by any unauthorized personnel.
Following the placement of a security on the MetLife Restricted List, the
Compliance Director or his designee shall monitor all trading by individuals
required to report pursuant to this Policy in such security reported to him or
her.
All Personal Securities Transactions Reports will be compared by the Compliance
Director against the Restricted List in effect at the time of the particular
purchase or sale transaction. The Compliance Director shall complete an
exception report for all personal trades in securities reflected on the
Restricted List.
-21-
<PAGE>
VII. Supervisory Procedures
A. Preventative Measures
The Compliance Director will review the Personal Securities
Transactions Reports in conjunction with information concerning MetLife's
securities activities and other relevant information about MetLife's activities
to determine if any questionable trading activity has occurred or if there has
been any other trading which in the judgment of the Compliance Director may be
questionable. If any such trading does appear to have occurred, the Compliance
Director will seek to determine the extent, if any, to which MetLife's policies
regarding the use of material nonpublic information have been violated.
In determining whether to initiate an inquiry, the Compliance Director shall
consider the following:
. the size of the account;
. prior trading activity in the account;
. size of the trade in question;
. type of transaction, e.g., short sale or option transaction;
-22-
<PAGE>
. the timing of the trade in relation to receipt by MetLife of
material non-public information;
. relationships between the trader and persons or departments that
received material nonpublic information; and
. any pattern of trading.
The Compliance Director will maintain a record of each investigation of possible
misuse of material nonpublic information. The record shall include such
information as the Compliance Director may deem appropriate, including the
following information:
. the name of the security;
. the date on which the investigation was commenced;
. an identification of the accounts involved; and
. a summary of the disposition of the investigation.
If a violation appears to exist, the Compliance Director will take
such action as he or she shall deem appropriate, including referral to MetLife's
senior management, sanctions
-23-
<PAGE>
against the Employee(s) involved and/or referral of the matter to appropriate
regulatory authorities.
The Compliance Director and/or members of the Law Department will hold
periodic meetings with selected MetLife personnel to review this Statement of
Policy, including any developments in the law and to answer any questions of
interpretation or application of this Statement of Policy. The meetings may
consist of in person, telephonic, CD ROM, personal computer or videoconferencing
meetings. This Statement of Policy applies with equal force to all MetLife
Employees and any Employees with questions concerning this Statement of Policy
should direct their questions to the Compliance Director.
B. Education
All MetLife employees will be provided with a version of this Statement of
Policy. Personnel who are subject to the quarterly securities transaction
reporting requirements set forth above shall also receive a copy of these
policies and procedures and shall execute an acknowledgment form indicating that
they have received and read these policies and procedures. The executed forms
will be retained by the Compliance Director.
-24-
<PAGE>
Persons subject to the quarterly reporting requirement will be
required to certify compliance with the Statement of Policy and the Insider
Trading Procedures on an annual basis.
Informational material describing the basic elements of MetLife's
Statement of Policy with respect to material nonpublic information will be
distributed to all employees on at least an annual basis. In addition, a variety
of educational materials designed to inform MetLife's employees about the nature
of material nonpublic information and the dangers of trading on such information
for themselves as well as MetLife will be produced and distributed. Such
educational materials may include brochures, videotapes, CD-ROMs, articles in
MetLife internal publications, training materials, segments on the "MetLife
News," etc.
C. Review of Procedures
This Statement of Policy will be reviewed no less frequently than
annually and appropriate revisions in it will be made from time to time promptly
as dictated or suggested by guidelines promulgated by the SEC, developments in
the law, questions or interpretation and application and practical experience
with the procedures contemplated by this Statement of Policy.
-25-
<PAGE>
D. Overall Supervision
Overall responsibility for supervision and implementation of the
programs and procedures described in this Statement of Policy rests with the
Compliance Director. The Compliance Director has the authority to expand the
certification and personal securities transaction reporting requirements to any
Employee or group of Employees of MetLife as the Compliance Director shall deem
appropriate, on a temporary or permanent basis. In addition, failure by any
Employee to comply with any of the various reporting requirements specifically
imposed by this Statement of Policy upon him or her, including the filing of
false information, may subject the Employee to sanctions by MetLife including
possible dismissal.
E. Consultation
Compliance with applicable laws and with MetLife's policies described
in this Statement of Policy and MetLife's Policy Guide for Business Conduct or
any other policy or procedure with respect to insider trading, is the
responsibility of each person. However, interpretative questions may arise, such
as whether certain information is material or nonpublic, or whether the
restrictions on trading in securities set forth in this Statement of Policy are
applicable in a given situation. The Compliance
-26-
<PAGE>
Director should be contacted if you have any questions whatsoever concerning
this Statement of Policy.
-27-
<PAGE>
ACKNOWLEDGMENT
I hereby acknowledge and certify receipt of the Statement of Policy with Respect
to Material Nonpublic Information of Metropolitan Life Insurance Company and
that:
1. I have read and understand the Statement of Policy and its
applicability to me; and
2. I have complied with the requirements of the Statement of Policy;
and
3. I have disclosed or reported all personal securities transactions
required to be disclosed or reported pursuant to the requirements of
the Statement of Policy.
Signed:
------------------------------------- -----------------------------
(Signature) (Position)
------------------------------------- -----------------------------
(Printed Name) (Position)
Date:
------------------------------------- -----------------------------
(Company)
-28-
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
QUARTERLY PERSONAL SECURITIES
TRANSACTION REPORT
NAME: ________________________ For the Quarter Ended_____________________
TITLE: _______________________
<TABLE>
<CAPTION>
======================================================================================================
Name of Broker-
Company Dealer, Bank
Issuing Title of Nature of Unit Effecting Date of
Security Security Quantity Buy/Sell Transaction Price Transaction Transaction
- -------- -------- -------- -------- ----------- ----- ----------- -----------
*
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
*Indicate whether Direct or Indirect
</TABLE>
I hereby confirm that the foregoing constitutes the entirety of my security
transactions for the applicable period.
___________________________ ___________
(Signature) (Date)
29
<PAGE>
Exhibit Q
<TABLE>
<CAPTION>
December 31, 1999
Value of Total
Registrant's Offering
Portfolio Securities Outstanding Price
and Other Assets Securities Per Unit
<S> <C> <C> <C>
State Street Research Growth Portfolio $3,623,315,646 92,575,151 39.14
State Street Research Income Portfolio $ 477,879,699 40,899,707 11.68
State Street Research Money Market Portfolio $ 51,544,991 4,983,562 10.34
State Street Research Diversified Portfolio $2,874,411,645 157,291,656 18.27
State Street Research Aggressive Growth Portfolio $1,600,840,700 41,639,729 38.45
MetLife Stock Index Portfolio $4,205,201,687 103,608,352 40.59
Putnam International Stock Portfolio $ 317,830,871 22,911,816 13.87
Loomis Sayles High Yield Bond Portfolio $ 61,701,369 6,787,498 9.09
Janus Mid Cap Portfolio $1,931,797,054 52,874,145 36.54
T. Rowe Price Small Cap Growth Portfolio $ 269,517,642 17,130,944 15.73
Scudder Global Equity Portfolio $ 171,714,421 11,518,807 14.91
Harris Oakmark Large Cap Value Portfolio $ 38,377,529 4,297,077 8.93
Neuberger Berman Partners Mid Cap Value Portfolio $ 38,721,989 3,234,601 11.97
T. Rowe Price Large Cap Growth Portfolio $ 51,401,516 3,833,421 13.41
Lehman Brothers Aggregate Bond Index Portfolio $ 129,338,660 13,680,253 9.45
Morgan Stanley EAFE Index Portfolio $ 82,354,915 6,175,602 13.34
Russell 2000 Index Portfolio $ 111,728,632 8,921,351 12.52
</TABLE>
