<PAGE>
Registration No. 33-87904
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 7 TO FORM S-6
FOR REGISTRATION UNDER THE SECURITIES
ACT OF 1933 OF SECURITIES OF
UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
A. Exact name of Trust: Massachusetts Mutual
Variable Life Separate
Account I
B. Name of Depositor: Massachusetts Mutual Life
Insurance Company
C. Complete address of 1295 State Street
Depositor's principal Springfield, MA 01111
executive offices:
It is proposed that this filing will become effective (check appropriate box)
_________ immediately upon filing pursuant to
paragraph (b) of Rule 485.
____X____ on May 1, 1999 pursuant to paragraph (b) of
Rule 485.
_________ 60 days after filing pursuant to paragraph
(a) of Rule 485
_________ on May 1, 1999 pursuant to paragraph (a) of
Rule 485.
_________ this post effective amendment designates a new effective
date for a previously filed post effective amendment.
*STATEMENT PURSUANT TO RULE 24F-2
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, the Registrant
registered an indefinite amount of securities being offered. The Rule 24f-2
Notice for the fiscal year ending December 31, 1998 was filed on or about March
22, 1999.
1
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of
Form N-8B-2 Caption
- ----------- -------
1 Cover Page; Glossary; The Separate Account
2 Cover Page; The Separate Account
3 Investments of the Separate Account
4 Sales and Other Agreements
5 The Separate Account
6 The Separate Account
7 Not Applicable
8 Not Applicable
9 Legal Proceedings
10 Cover Page; Premiums; Death Benefit Under the Policy; Free Look
Provision;
11 Account Value; Policy Loan Privilege; The Separate Account;
Charges Under the Policy; Sales and Other Agreements; When We Pay
Proceeds; Payment Options; Our Rights; Your Voting Rights
11 The Separate Account
12 The Separate Account; Sales and Other Agreements
13 The Separate Account; Charges Under the Policy
14 Premiums; The Separate Account; Sales and Other Agreements
15 Premiums; General Provisions 0f the Policy
2
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of
Form N-8B-2 Caption
- ----------- -------
16 The Separate Account; Account Value
17 The Separate Account; Account Value; Payment Options
18 The Separate Account
19 Records and Reports
20 Not Applicable
21 Policy Loan Privilege
22 Not Applicable
23 Bonding Arrangement
24 Limits on Our Right to Challenge the Policy; Suicide;
Misstatement of Age or Sex; Assignment; Beneficiary; Our Rights;
The Separate Account
25 Cover Page
26 Not Applicable
27 Cover Page
28 Directors and Executive Officers of MassMutual
29 Cover Page
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
3
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of
Form N-8B-2 Caption
- ----------- -------
34 Not Applicable
35 Cover Page
36 Not Applicable
37 Not Applicable
38 Sales and Other Agreements
39 Sales and Other Agreements
40 Sales and Other Agreements
41 Sales and Other Agreements
42 Not Applicable
43 Sales and Other Agreements
44 The Separate Account; Investment Return Charges for Federal
Income Tax; Charges Under The Policy
45 Not Applicable
46 The Separate Account; Investment Return
47 The Separate Account
48 The Separate Account; Investment Return
49 Not Applicable
50 The Separate Account
51 Cover Page; Availability; Underwriting; Free Look Provision;
Beneficiary; Reinstatement; Premiums
52 The Separate Account; Our Rights
53 Federal Income Tax Considerations
4
<PAGE>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
Item No. of
Form N-8B-2 Caption
- ----------- -------
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Financial Statements
5
<PAGE>
Massachusetts Mutual Life Insurance Company
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE
This prospectus describes a flexible premium variable whole life insurance
policy offered by Massachusetts Mutual Life Insurance Company ("MassMutual").
The policy provides lifetime insurance protection for as long as it remains in
force.
You, the policyowner, may allocate the net premium for Your policy among several
investment options. These investment options include a Guaranteed Principal
Account ("GPA") and twenty-eight Separate Account Divisions of a segment of
Massachusetts Mutual Variable Life Separate Account I. Each of the Separate
Account Divisions invests in a corresponding Fund. The Separate Account
Divisions invest in the following Funds:
<TABLE>
<S> <C>
MML Series Investment Fund Oppenheimer Variable Account Funds
MML Money Market Fund Oppenheimer Global Securities Fund/VA
MML Equity Fund Oppenheimer Small Cap Growth Fund/VA
MML Equity Index Fund Oppenheimer Aggressive Growth Fund/VA
MML Blend Fund Oppenheimer Capital Appreciation Fund/VA
MML Managed Bond Fund Oppenheimer Main Street Growth & Income
Fund/VA
Oppenheimer Multiple Strategies Fund/VA
Panorama Series Fund, Inc. Oppenheimer High Income Fund/VA
Panorama International Equity Portfolio Oppenheimer Strategic Bond Fund/VA
Panorama LifeSpan Balanced Portfolio Oppenheimer Bond Fund/VA
Panorama LifeSpan Diversified Income Portfolio Oppenheimer Money Fund/VA
Panorama LifeSpan Capital Appreciation Portfolio
MFS(R) Variable Insurance Trust(SM) Goldman Sachs Variable Insurance Trust
MFS(R) New Discovery Series Goldman Sachs Capital Growth Fund
MFS(R) Emerging Growth Series Goldman Sachs Mid Cap Value Fund
MFS(R) Research Series Goldman Sachs CORE U.S. Equity Fund
Goldman Sachs Growth and Income Fund
T. Rowe Price Equity Series, Inc.
T. Rowe Price New America Growth Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
</TABLE>
Your policy is "flexible" because You may select the timing and amount of
premium payments. You may choose to increase or decrease the death benefit and
change the death benefit option under Your policy. Your policy is "variable"
because the death benefit may, and cash surrender value will, vary.
MassMutual is a mutual life insurance company established in 1851 under the laws
of Massachusetts. We are licensed to transact life, accident and health
insurance business in all fifty states of the United States, the District of
Columbia, Puerto Rico and certain provinces of Canada. As of December 31, 1998,
MassMutual had consolidated statutory assets in excess of $67 billion and
estimated total assets under management of $176.8 billion. The mailing address
for the Home Office is Massachusetts Mutual Life Insurance Company, Springfield,
Massachusetts 01111-0001. The telephone number is (413) 788-8411.
May 1, 1999
The Securities and Exchange Commission has not approved or disapproved these
securities, or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
This prospectus is not an offer to sell nor is it seeking an offer to buy these
securities in any state where the offer or sale is not permitted. This
prospectus is valid only when accompanied by the prospectuses of the Funds.
You should read and retain this prospectus.
Replacing existing insurance with the policy described in this prospectus may
not be to Your advantage.
This prospectus is not an offering in any jurisdiction where the policy is not
available. MassMutual has not authorized any person to make any representations
about the policy other than those contained in this prospectus.
<PAGE>
<TABLE>
<CAPTION>
Table Of Contents
Page
----
<S> <C>
PART I - General Provisions of the Policy ..................................................................................... 5
Availability ............................................................................................................. 5
Underwriting ............................................................................................................. 5
Charges Under the Policy ................................................................................................. 6
Deductions from Premiums ............................................................................................ 7
Sales Load ..................................................................................................... 7
State Premium Tax Charge ....................................................................................... 7
Deferred Acquisition Cost ("DAC") Tax Charge ................................................................... 8
Account Value Charges ............................................................................................... 8
Administrative Charge .......................................................................................... 8
Cost of Insurance Charge ....................................................................................... 8
Underwriting Charge ............................................................................................ 8
Rider Charge ................................................................................................... 8
Separate Account Charges ............................................................................................ 8
Mortality and Expense Risk Charge .............................................................................. 8
Charges for Federal Income Taxes ............................................................................... 8
Fund Charges ........................................................................................................ 8
Other Charges ....................................................................................................... 9
Withdrawal Charges ............................................................................................. 9
Loan Interest Rate Expense Charge .............................................................................. 9
Substitute Insured Charge ...................................................................................... 9
The Separate Account ..................................................................................................... 9
Investments of the Separate Account ................................................................................. 10
MML Series Investment Fund ..................................................................................... 11
Oppenheimer Variable Account Funds ............................................................................. 12
Panorama Series Fund, Inc. ..................................................................................... 13
Goldman Sachs Variable Insurance Trust ......................................................................... 14
MFS(R) Variable Insurance Trust(SM) ............................................................................ 14
T. Rowe Price Equity Series, Inc. .............................................................................. 15
Fund Monitoring ................................................................................................ 15
The Guaranteed Principal Account ......................................................................................... 15
Premiums ................................................................................................................. 16
Initial Case Premium Paid ........................................................................................... 16
Minimum Case Premium ................................................................................................ 16
Minimum Initial Policy Premium ...................................................................................... 16
Planned Annual Premium .............................................................................................. 16
Minimum Planned Annual Premium ...................................................................................... 16
Minimum and Maximum Premium Payments ................................................................................ 16
Net Premium Allocation .............................................................................................. 17
Termination .............................................................................................................. 17
Grace Period ........................................................................................................ 17
Death Benefit Under the Policy ........................................................................................... 17
Minimum Face Amount ................................................................................................. 17
Death Benefit Options ............................................................................................... 17
Changes in Selected Face Amount ..................................................................................... 18
Account Value ............................................................................................................ 18
Investment Return ................................................................................................... 18
Cash Surrender Value ................................................................................................ 19
Transfers ........................................................................................................... 19
Automated Account Value Transfer ............................................................................... 19
Withdrawals ......................................................................................................... 20
Policy Loan Privilege .................................................................................................... 20
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Source of Loan ...................................................................................................... 20
If Loans Exceed the Policy Account Value ............................................................................ 20
Interest ............................................................................................................ 20
Repayment ........................................................................................................... 21
Interest Credited on Loaned Value ................................................................................... 21
Effect of Loan ...................................................................................................... 21
PART II - Additional Provisions of the Policy ................................................................................. 21
Paid-up Policy Date ...................................................................................................... 21
Reinstatement ............................................................................................................ 21
Payment Options .......................................................................................................... 22
Fixed Amount Payment Option ......................................................................................... 22
Fixed Time Payment Option ........................................................................................... 22
Lifetime Payment Option ............................................................................................. 22
Interest Payment Option ............................................................................................. 22
Joint Lifetime Payment Option ....................................................................................... 22
Joint Lifetime Payment Option with Reduced Payments ................................................................. 22
Withdrawal Rights under Payment Options ............................................................................. 22
Beneficiary .............................................................................................................. 22
Changing the Policyowner or Beneficiary .................................................................................. 23
Right to Substitute Insured .............................................................................................. 23
Assignment ............................................................................................................... 23
Dividends ................................................................................................................ 23
Limits on Our Right to Challenge the Policy .............................................................................. 23
Misstatement of Age orSex ................................................................................................ 23
Suicide Exclusion ........................................................................................................ 23
When We PayProceeds ...................................................................................................... 23
Free Look Provision ...................................................................................................... 24
PART III - Other Important Information ........................................................................................ 24
Federal Income TaxConsiderations ......................................................................................... 24
Your Voting Rights ....................................................................................................... 26
Our Rights ............................................................................................................... 26
Records and Reports ...................................................................................................... 27
Sales and Other Agreements ............................................................................................... 27
Commissions .............................................................................................................. 27
Bonding Arrangement ...................................................................................................... 27
Year 2000 ................................................................................................................ 27
Legal Proceedings ........................................................................................................ 28
Experts .................................................................................................................. 28
Financial Statements ..................................................................................................... 28
Appendix A - Glossary ......................................................................................................... A-1
Appendix B - Rates of Return .................................................................................................. B-1
Appendix C - Hypothetical Illustrations ....................................................................................... C-1
Appendix D - Directors of Massachusetts Mutual Life Insurance Company ......................................................... D-1
Appendix E - Financial Statements ............................................................................................. F-1
</TABLE>
3
<PAGE>
Part I - General Provisions Of the Policy
This section of the prospectus describes the general provisions of the policy
and is subject to the terms of the policy. You may review a copy of the policy
upon request.
In the event of a conflict between the terms within this prospectus and the
terms of the policy, the policy terms will control.
Certain provisions of the policy as described in this prospectus may differ in a
particular state because of specific state requirements.
We define the following terms in Appendix A:
Case, Fixed Account Value, Insured, Issue Date, Monthly Calculation
Date, Net Premium, Policy Anniversary, Policy Date, Policy Year,
Policyowner, Valuation Date, Valuation Period, Valuation Time, and
Variable Account Value.
Throughout the prospectus, MassMutual is referred to as We, Us or Our, and the
policyowner is referred to as You or Your.
Availability.
The policy is available on a case basis. We may define a case as one person. All
policies within a case are aggregated for purposes of determining issue dates,
policy dates, underwriting requirements and sales load percentages. If an
individual owns the policy as part of an employer sponsored program, he or she
may exercise all rights and privileges under the policy through their employer
or other sponsoring entity acting as case administrator. After termination of
the employment or other relationship, the individual may exercise such rights
and privileges directly with MassMutual.
The minimum total selected face amount is $25,000 per policy. At the time of
issue, the insured must be age 20 through age 85 as of his/her birthday nearest
the policy date for policies we issue with regular underwriting. At the time of
issue, the insured must be age 20 through age 65 as of his/her birthday nearest
the policy date for policies We issue with guaranteed issue or simplified issue
underwriting.
Underwriting.
We currently offer three different underwriting programs:
1. regular underwriting;
2. simplified issue underwriting; and
3. guaranteed issue underwriting.
The cost of insurance charges vary depending on the type of underwriting We use.
4
<PAGE>
Charges Under The Policy.
We deduct certain charges for providing the insurance benefits under Your
policy, for administering Your policy, for assuming certain risks and for
incurring certain expenses in distributing Your policy. A summary of these
charges is as follows, and a more detailed description follows this chart:
<TABLE>
<CAPTION>
====================================================================================================================================
Charges Current Rate Guaranteed Rate
====================================================================================================================================
<S> <C> <C> <C>
Deductions Sales Load For policies issued under a case installed on the For policies issued under a case installed on the
from Premium Charge administration system on or after January 1, 1997 administration system on or after January 1, 1997
(not applicable in New York): (not applicable in New York):
Initial Case Premium Paid Years 1-5 Years 6+ Initial Case Premium Paid Years 1-5 Years 6+
Less than $3,500,000 Less than $3,500,000
Less than or equal to the Less than or equal to the
Minimum Planned Annual Minimum Planned Annual
Premium 18.00% 6.00% Premium 18.00% 6.00%
Greater than the Minimum Greater than the Minimum
Planned Annual Premium 6.00% 6.00% Planned Annual Premium 6.00% 6.00%
Greater than or equal to Greater than or equal to
$3,500,000 but less than $3,500,000 but less than
$7,000,000 5.50% 5.50% $7,000,000 5.50% 5.50%
Greater than or equal to Greater than or equal to
$7,000,000 but less than $7,000,000 but less than
$10,000,000 3.25% 3.25% $10,000,000 3.25% 3.25%
Greater than or equal to Greater than or equal to
$10,000,000 .75% .75% $10,000,000 .75% .75%
For policies issued under a case installed on the For policies issued under a case installed on the
administration system prior to January 1, 1997 and administration system prior to January 1, 1997 and
for all policies issued under a case in New York: for all policies issued under a case in New York:
Initial Case Premium Paid Years 1-5 Years 6+ Initial Case Premium Paid Years 1-5 Years 6+
Less than $1,000,000 Less than $1,000,000
Less than or equal to the Less than or equal to the
Minimum Planned Annual Minimum Planned Annual
Premium 18.00% 6.00% Premium 18.00% 6.00%
Greater than the Minimum Greater than the Minimum
Planned Annual Premium 6.00% 6.00% Planned Annual Premium 6.00% 6.00%
Greater than or equal to Greater than or equal to
$1,000,000 but less than $1,000,000 but less than
$2,500,000 7.00% 7.00% $2,500,000 7.00% 7.00%
Greater than or equal to Greater than or equal to
$2,500,000 but less than $2,500,000 but less than
$5,000,000 5.50% 5.50% $5,000,000 5.50% 5.50%
Greater than or equal to Greater than or equal to
$5,000,000 but less than $5,000,000 but less than
$10,000,000 4.00% 4.00% $10,000,000 4.00% 4.00%
Greater than or equal to Greater than or equal to
$10,000,000 3.25% 3.25% $10,000,000 3.25% 3.25%
- ------------------------------------------------------------------------------------------------------------------------------------
State 0% to 4% of each premium, depending on This charge will always equal the applicable
Premium Your state's applicable rate state rate
Tax Charge
- ------------------------------------------------------------------------------------------------------------------------------------
Deferred 1% of each premium This charge will always represent the
Acquisition expense to MassMutual of the federal
Cost Tax acquisition deferred cost tax
Charge
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Charges Current Rate Guaranteed Rate
====================================================================================================================================
<S> <C> <C> <C>
Account Administrative $5.25 per month ($63.00 annually) $9.00 per month ($108.00 annually)
Value Charge
Charges
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of A per thousand rate multiplied by the amount at risk The maximum monthly cost of insurance charge for
Insurance each month. This charge varies by the insured's sex, each $1,000 of insurance is shown in the Table of
Charge issue age and smoking classification; the policy Maximum Monthly Mortality Charges in Your policy
year We make the deduction; the rating class of Your
policy and the underwriting classification of the
case
- ------------------------------------------------------------------------------------------------------------------------------------
Underwriting Issue Age 20-24 Issue Age 20-24
Charge Policy years 1-5: $0.00583 per month of Policy years 1-5: $0.00583 per month
(for regular a specified amount of a specified amount
underwritten Policy years 6+: 0 Policy years 6+: 0
policies only) Issue Age 25-34 Issue Age 25-34
Policy years 1-4: $0.00833 per month of Policy years 1-4: $0.00833 per month
a specified amount of a specified amount
Policy years 5+: 0 Policy years 5+: 0
Issue Age 35-39 Issue Age 35-39
Policy years 1-3: $0.01250 per month of Policy years 1-3: $0.01250 per month
a specified amount of a specified amount
Policy years 4+: 0 Policy years 4+: 0
Issue Age 40-44 Issue Age 40-44
Policy years 1-2: $0.02500 per month of Policy years 1-2: $0.02500 per month
a specified amount of a specified amount
Policy years 3+: 0 Policy years 3+: 0
Issue Age 45-49 Issue Age 45-49
Policy year 1: $0.05000 per month of a Policy year 1: $0.05000 per month of a
specified amount specified amount
Policy years 2+: 0 Policy years 2+: 0
Issue Age 50-85 Issue Age 50-85
Policy year 1: $0.05833 per month of a Policy year 1: $0.05833 per month of a
specified amount specified amount
Policy years 2+: 0 Policy years 2+: 0
- ------------------------------------------------------------------------------------------------------------------------------------
Separate Mortality and 0.30% annually of each Separate Account 0.60% annually of each Separate Account
Account Expense Risks Division's assets Division's assets
Charges Charge
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Charges SEE FUND CHARGE TABLE SEE FUND CHARGE TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
Other Withdrawal 2.0% of the withdrawn amount, but not greater 2.0% of the withdrawn amount, but not greater
Charges Charge than $25.00 than $25.00
- ------------------------------------------------------------------------------------------------------------------------------------
Substitute $75.00 $75.00
Insured Charge
- ------------------------------------------------------------------------------------------------------------------------------------
Loan Interest 0.75% 0.75%
Crediting Rate
Charge
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Deductions from Premiums.
Prior to applying Your premium to the GPA or the selected Separate Account
Divisions, We deduct a sales load, state premium tax and a deferred acquisition
cost tax charge from Your premium.
Sales Load.
We deduct a sales load from Your premium for the expenses related to the sales
and distribution of the policies. The sales load is based on the total initial
case premium paid on all policies under a case before we installed the case on
the administration system.
State Premium Tax Charge.
States assess premium taxes at various rates. We currently deduct the applicable
state rate from each premium to cover premium taxes assessed against
MassMutual by the states. The state rate will be either the Massachusetts rate
or the applicable state rate.
6
<PAGE>
We may increase or decrease this charge if there is any change in the tax or
change of residence. You should notify MassMutual of any residence change. Any
change in this charge will be effective immediately.
Deferred Acquisition Cost ("DAC") Tax Charge.
This charge is related to MassMutual's federal income tax burden, under Internal
Revenue Code Section 848.
Account Value Charges.
On each monthly calculation date, We deduct from Your account value the
following charges:
1. An administrative charge;
2. A cost of insurance charge;
3. An underwriting charge (if applicable); and
4. Any rider charge (if applicable).
We deduct these charges from Your account value in proportion to the non-loaned
account value in the Separate Account and the GPA.
1. Administrative Charge.
We deduct a monthly charge for costs We incur for providing certain
administrative services. These services include premium billing and collection,
record keeping, processing claims, and communicating with policyowners.
2. Cost of Insurance Charge.
(We refer to this charge as the "Mortality Charge" in Your policy.)
We deduct a cost of insurance charge on each monthly calculation date. This
charge is based on the:
o Insured's sex;
o Insured's issue age;
o Insured's smoking classification;
o Policy year in which We make the deduction;
o Rating class of the policy; and
o Underwriting classification of the case.
This charge may vary monthly because it is determined by multiplying the
applicable cost of insurance rates by the amount at risk each policy month. We
will apply any change in this charge to all policies in the same class.
3. Underwriting Charge.
We currently deduct a monthly underwriting charge from policies that We issue
under a regular underwriting basis. We use this charge to reimburse Us for the
costs associated with performing regular underwriting on potential policyowners.
We base this charge on the initial selected face amount. This charge is fixed
for a set number of policy years.
4. Rider Charge.
We will deduct applicable monthly rider charges for any additional benefits We
provide to You by rider.
Separate Account Charges
Mortality and Expense Risk Charge.
(We refer to this charge as the "Net Investment Factor Asset Charge" in Your
policy.)
We charge the Separate Account Divisions for the mortality and expense risks We
assume. We deduct it from the value of each Division's assets attributable to
the policies.
The mortality risk We assume is that the group of lives insured under Our
policies may, on average, live for shorter periods of time than We estimated.
The expense risk We assume is that Our costs of issuing and administering
policies may be more than We estimated.
If all the money We collect from this charge is not needed to cover death
benefits and expenses, it will be Our gain. We will use this gain for any
purpose, including payment of sales commissions. If the money We collect is
insufficient, We will still provide for all death benefits and expenses.
Charges for Federal Income Taxes.
We do not currently charge the Separate Account Divisions for federal income
taxes attributable to them. However, We reserve the right to eventually charge
the Separate Account Divisions to provide for future federal income tax
liability of the Separate Account Divisions.
Fund Charges.
The value of the Separate Account Divisions' assets will reflect investment
management fees and other expenses of the Funds. The following table shows the
Funds' total Fund operating expenses expressed as a percentage of average net
assets for the year ended December 31, 1998:
7
<PAGE>
<TABLE>
<CAPTION>
Total
Other Fund
Expenses Expenses
After After
Expense Expense
Management Reimbur- Reimbur-
Fund / Portfolio Name Fees sements sements
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
MML Money Market(1) 0.46% 0.03% 0.49%
MML Equity(1) 0.37% 0.00% 0.37%
MML Equity Index 0.30% 0.20% 0.50%
MML Blend(1) 0.37% 0.00% 0.37%
MML Managed Bond(1) 0.45% 0.03% 0.48%
Oppenheimer Global Securities 0.68% 0.06% 0.74%
Oppenheimer Small Cap Growth 0.75% 0.12% 0.87%
Oppenheimer Aggressive Growth 0.69% 0.02% 0.71%
Oppenheimer Capital Appreciation(2) 0.72% 0.03% 0.75%
Opp. Main Street Growth & Income(3) 0.74% 0.05% 0.79%
Oppenheimer Multiple Strategies 0.72% 0.04% 0.76%
Oppenheimer High Income 0.74% 0.04% 0.78%
Oppenheimer Strategic Bond 0.74% 0.06% 0.80%
Oppenheimer Bond 0.72% 0.02% 0.74%
Oppenheimer Money 0.45% 0.05% 0.50%
Panorama International Equity 1.00% 0.09% 1.09%
Panorama LifeSpan Cap Appreciation 0.85% 0.08% 0.93%
Panorama LifeSpan Div Income 0.75% 0.09% 0.84%
Panorama LifeSpan Balanced 0.85% 0.08% 0.93%
Goldman Sachs Capital Growth(4) 0.75% 0.15% 0.90%
Goldman Sachs Mid Cap Value(4),(7) 0.80% 0.15% 0.95%
Goldman Sachs CORE U.S. Equity(4) 0.70% 0.10% 0.80%
Goldman Sachs Growth and Income(4) 0.75% 0.15% 0.90%
MFS(R)New Discovery(5) 0.90% 0.25% 1.15%
MFS(R)Emerging Growth 0.75% 0.10% 0.85%
MFS(R)Research Series 0.75% 0.11% 0.86%
T. Rowe Price New America Growth(6) 0.85% 0.00% 0.85%
T. Rowe Price Mid-Cap Growth(6) 0.85% 0.00% 0.85%
</TABLE>
(1) MassMutual has agreed to bear the expenses of these Funds (other than the
management fee, interest, taxes, brokerage commissions and extraordinary
expenses) in excess of 0.11% of the average daily net asset value of these Funds
through April 30, 2000. MassMutual does not expect that it will be required to
reimburse any expenses of these funds due to this undertaking in 1999.
(2) Prior to May 1, 1999, this Fund was called Oppenheimer Growth Fund.
(3) Prior to May 1, 1999, this Fund was called Oppenheimer Growth & Income Fund.
(4) The Goldman Sachs Capital Growth and Goldman Sachs Mid Cap Value Funds'
expenses are estimated due to the Funds not being in existence for less than 10
months as of December 31, 1998. The Goldman Sachs CORE U.S. Equity and Goldman
Sachs Growth and Income Funds' expenses are based on actual expenses for fiscal
year ended December 31, 1998. In addition, Goldman Sachs Asset Management, the
investment adviser to the Goldman Sachs Capital Growth, Goldman Sachs Mid Cap
Value, Goldman Sachs CORE U.S. Equity and Goldman Sachs Growth and Income Funds
has voluntarily agreed to reduce or limit certain "Other Expenses" of such Funds
(excluding management fees, taxes, interest and brokerage fees and litigation,
indemnification and other extraordinary expenses) to the extent such expenses
exceed 0.15%, 0.15%, 0.10% and 0.15% per annum of such Funds' average daily net
assets, respectively. The expenses shown include this reimbursement. If not
included, the "Other Expenses" and "Total Expenses" for the Goldman Sachs
Capital Growth, Goldman Sachs Mid Cap Value, Goldman Sachs CORE U.S. Equity and
Goldman Sachs Growth and Income Funds would be 1.03% and 1.78%, 0.57% and 1.37%,
2.13% and 2.83% and 1.94% and 2.69% respectively.
(5) The MFS New Discovery Series has an expense offset arrangement which reduces
the series' custodian fee based upon the amount of cash maintained by the series
with its custodian and dividend disbursing agent. The series may enter into
other such arrangements and directed brokerage arrangements, which would also
have the effect of reducing the series' expenses. Expenses do not take into
account these expense reductions and are therefore higher than the actual
expenses of the series. MFS has agreed to bear expenses for the series, subject
to reimbursement by the series, such that the series' "Other Expenses" shall not
exceed 0.25% of the average daily net assets of the series during the current
fiscal year. The expense shown includes this reimbursement. If not included, the
Other Expenses are estimated to be 5.22% for 1998. The payments made by MFS on
behalf of the series under this arrangement are subject to reimbursement by the
series to MFS, which will be accomplished by the payment of an expense
reimbursement fee by the series to MFS computed and paid monthly at a percentage
of the series' average daily net assets for its then current fiscal year, with a
limitation that immediately after such payment the series' "Other Expenses" will
not exceed the percentage set forth above for that series. The obligation of MFS
to bear a series' "Other Expenses" pursuant to this arrangement, and the series'
obligation to pay the reimbursement fee to MFS, terminates on May 1, 2001.
(6) Management fees include operating expenses.
(7) Prior to May 1, 1999, this Fund was called Goldman Sachs Mid Cap Equity
Fund.
Other Charges.
Withdrawal Charges.
We deduct a charge from each withdrawal. Loan Interest Rate Expense Charge. We
deduct a charge from the loan interest rate. This charge reimburses us for
expenses We incur for administering Your loan. The charge varies by policy year.
Substitute Insured Charge.
We charge an administrative fee if You transfer the policy to the life of a
substitute insured.
The Separate Account.
Our Board of Directors established the Separate Account on July 13, 1988 in
accordance with the provisions of Section 132G of Chapter 175 of the
Massachusetts General Laws. The Separate Account is registered as a unit
investment trust under the Investment Company Act of 1940, as amended. The
8
<PAGE>
Securities and Exchange Commission does not supervise MassMutual's or the
Separate Account's management or investment practices. Under Massachusetts law,
however, the Division of Insurance of the Commonwealth of Massachusetts
regulates both Us and the Separate Account.
We establish designated segments of the Separate Account to receive and invest
premiums for other MassMutual variable life insurance policies. We have
established a segment for the policies.
Although the Separate Account assets are assets of MassMutual, We cannot use
those Separate Account assets equal to the reserves and other liabilities of the
Separate Account attributable to the policies to satisfy any obligations that
may arise out of any other business We conduct. The Separate Account assets may,
however, be subject to liabilities arising from other variable life insurance
policies funded by the Separate Account. We may at Our discretion transfer those
assets which exceed the reserves and other liabilities of the Separate Account
to Our general account. Such transfers will not adversely affect the Separate
Account.
We credit or charge the Separate Account Divisions with the Divisions' income
and realized or unrealized gains or losses without regard to any of MassMutual's
other income, gains, or losses.
MassMutual may accumulate in the Separate Account the mortality and expense
risks charge, account value charges and investment results applicable to those
assets that are in excess of net assets supporting the policies.
MassMutual has the right to establish additional divisions of the Separate
Account. We will invest amounts credited to any additional divisions in shares
of other Funds. We have the right to substitute new Funds for any Separate
Account Divisions. If We do this, We will obtain prior approval from all of the
necessary regulatory authorities. We will also give You notice of Our intent to
do this.
Investments of the Separate Account.
We have established a segment within the Separate Account to receive and invest
premium payments for the policies. We have established twenty-eight Divisions
within the policies' designated segment of the Separate Account. Each Separate
Account Division invests in a Fund as follows:
<TABLE>
<CAPTION>
================================================================================
Division Fund
================================================================================
<S> <C>
MML Money Market MML Money Market Fund
- --------------------------------------------------------------------------------
MML Equity Division MML Equity Fund
- --------------------------------------------------------------------------------
MML Equity Index Division MML Equity Index Fund
- --------------------------------------------------------------------------------
MML Blend Division MML Blend Fund
- --------------------------------------------------------------------------------
MML Managed Bond MML Managed Bond Fund
Division
- --------------------------------------------------------------------------------
Oppenheimer Global Oppenheimer Global
Securities Division Securities Fund/VA
- --------------------------------------------------------------------------------
Oppenheimer Small Cap Oppenheimer Small Cap
Growth Division Growth Fund/VA
- --------------------------------------------------------------------------------
Oppenheimer Aggressive Oppenheimer Aggressive
Growth Division * Growth Fund/VA *
- --------------------------------------------------------------------------------
Oppenheimer Capital Oppenheimer Capital
Appreciation Division ** Appreciation Fund/VA **
- --------------------------------------------------------------------------------
Oppenheimer Main Street Oppenheimer Main Street
Growth & Income Division *** Growth & Income
Fund/VA ***
- --------------------------------------------------------------------------------
Oppenheimer Multiple Oppenheimer Multiple
Strategies Division Strategies Fund/VA
- --------------------------------------------------------------------------------
Oppenheimer High Income Oppenheimer High Income
Division Fund/VA
- --------------------------------------------------------------------------------
Oppenheimer Strategic Oppenheimer Strategic
Bond Division Bond Fund/VA
- --------------------------------------------------------------------------------
Oppenheimer Bond Oppenheimer Bond
Division Fund/VA
- --------------------------------------------------------------------------------
Oppenheimer Money Oppenheimer Money
Division Fund/VA
- --------------------------------------------------------------------------------
Panorama International Panorama International
Equity Division Equity Portfolio
- --------------------------------------------------------------------------------
Panorama LifeSpan Balanced Panorama LifeSpan Balanced
Division Portfolio
- --------------------------------------------------------------------------------
Panorama LifeSpan Panorama LifeSpan
Diversified Income Division Diversified Income Portfolio
- --------------------------------------------------------------------------------
Panorama LifeSpan Capital Panorama LifeSpan Capital
Appreciation Division Appreciation Portfolio
- --------------------------------------------------------------------------------
MFS(R) New Discovery MFS(R) New Discovery Series
Division
- --------------------------------------------------------------------------------
MFS(R) Emerging Growth MFS(R) Emerging Growth
Division Series
- --------------------------------------------------------------------------------
MFS(R) Research Division MFS(R) Research Series
- --------------------------------------------------------------------------------
Goldman Sachs Capital Goldman Sachs Capital
Growth Division Growth Fund
- --------------------------------------------------------------------------------
Goldman Sachs Mid Cap Goldman Sachs Mid Cap
Value Division**** Value Fund****
- --------------------------------------------------------------------------------
Goldman Sachs CORE U.S. Goldman Sachs CORE U.S.
Equity Division Equity Fund
- --------------------------------------------------------------------------------
Goldman Sachs Growth and Goldman Sachs Growth and
Income Division Income Fund
- --------------------------------------------------------------------------------
T. Rowe Price New America T. Rowe Price New America
Growth Division Growth Portfolio
- --------------------------------------------------------------------------------
T. Rowe Price Mid-Cap T. Rowe Price Mid-Cap
Growth Division Growth Portfolio
- --------------------------------------------------------------------------------
</TABLE>
* Prior to May 1, 1999, the Oppenheimer Aggressive Growth Division was called
the Oppenheimer Capital Appreciation Division. Prior to May 1, 1998, the
Oppenheimer Aggressive Growth Fund/VA was called the Oppenheimer Capital
9
<PAGE>
Appreciation Fund.
**Prior to May 1, 1999, the Oppenheimer Capital Appreciation Division was called
the Oppenheimer Growth Division and the Oppenheimer Capital Appreciation Fund/VA
was called the Oppenheimer Growth Fund.
***Prior to May 1, 1999, the Oppenheimer Main Street Growth & Income Division
was called the Oppenheimer Growth & Income Division and the Oppenheimer Main
Street Growth & Income Fund/VA was called the Oppenheimer Growth & Income Fund.
****Prior to May 1, 1999, the Goldman Sachs Mid Cap Value Division was called
the Goldman Sachs Mid Cap Equity Division and the Goldman Sachs Mid Cap Value
Fund was called the Goldman Sachs Mid Cap Equity Fund.
As custodian for the Separate Account, MassMutual holds the shares of the
underlying Funds purchased by the Separate Account Divisions. The Separate
Account purchases and redeems shares of the Funds at their net asset value. The
net asset value is determined at the time of receipt of the purchase order or
redemption request.
Some of the Funds available to You are similar to mutual funds offered in the
retail marketplace. These Funds generally have the same investment objectives,
policies and portfolio managers as the retail mutual funds and usually were
formed after the retail mutual funds. While these Funds generally have identical
investment objectives, policies and portfolio managers, they are separate and
distinct from the retail mutual funds. In fact, performance of these Funds may
be dramatically different from the performance of the retail mutual funds. This
is due to differences in the funds' sizes, dates shares of stocks are purchased
and sold, cash flows and expenses. You should remember that retail mutual fund
performance is not the performance of the Funds that are available to You in
this policy and is not an indication of future performance of such Funds.
There is no assurance that the Funds will achieve stated objectives. The Fund
prospectuses contain more detailed information about the Funds. Current copies
of the Fund prospectuses are attached to this prospectus. You should read the
information contained in the Funds' prospectuses before making allocations to
any Division of the Separate Account.
MML Series Investment Fund
The MML Series Investment Fund (the "MML Trust") is a no-load, open-end
investment company. The MML Money Market Fund, MML Equity Fund, MML Equity Index
Fund, MML Blend Fund and MML Managed Bond Fund (collectively, the "MML Funds")
are separate series of shares of the MML Trust.
MassMutual acts as investment manager to each of the MML Funds. David L. Babson
and Company, Inc. ("Babson") serves as the investment sub-adviser to the MML
Equity Fund and the equity sector of the MML Blend Fund. Babson is a
wholly-owned subsidiary of DLB Acquisition Corporation, a controlled subsidiary
of MassMutual.
MassMutual has also entered into an agreement with Mellon Equity Associates, LLP
("Mellon Equity") to serve as the investment sub-adviser to the MML Equity Index
Fund. MassMutual, Babson and Mellon Equity are registered as investment advisers
under the Investment Advisers Act of 1940.
MassMutual is also the investment adviser to MassMutual Corporate Investors and
MassMutual Participation Investors, closed-end investment companies, certain
wholly-owned subsidiaries of MassMutual, and various employee benefit plans.
MassMutual also serves as the investment adviser to MassMutual Corporate Value
Partners, Limited; MassMutual High Yield Partners, II, LLC; MassMutual/Darby CBO
LLC; Somers CDO, Limited; and MassMutual Institutional Funds.
Citibank N.A. acts as custodian for the MML Trust, other than the MML Equity
Index Fund. Its home office is located at 111 Wall Street, New York, NY, 10005.
Boston Safe Deposit and Trust Company serves as the custodian of the MML Equity
Index Fund. It is an indirect subsidiary of Mellon Bank Corporation and is
located at One Boston Place, Boston, Massachusetts 02108.
MML Money Market Fund
The MML Money Market Fund seeks to maximize current income, to preserve capital,
and to maintain liquidity, by investing in money market instruments.
MML Equity Fund
The MML Equity Fund seeks to achieve a superior rate of return over time from
both capital appreciation and current income, and to preserve capital by
investing in equity securities.
MML Equity Index Fund
The MML Equity Index Fund seeks investment results that correspond to the price
and yield performance of the publicly traded common stocks in the aggregate, as
represented by the Standard & Poor's 500 Composite Stock Price Index. ("Standard
& Poor's 500" and "S&P 500(R)" are trademarks of The McGraw-Hill Companies,
Inc. and
10
<PAGE>
have been licensed for use by the Fund. The Fund is not sponsored, endorsed,
sold or promoted by Standard & Poor's or The McGraw-Hill Companies, Inc.
Standard & Poor's makes no representation regarding the advisability of
investing in the Fund.)
MML Blend Fund
The MML Blend Fund seeks a high total rate of return over time, consistent with
prudent investment risk and capital preservation by investing in equity, fixed
income and money market securities.
MML Managed Bond Fund
The MML Managed Bond Fund seeks a high rate of return, consistent with capital
preservation by investing in investment grade, publicly traded, fixed income
securities.
Oppenheimer Variable Account Funds
The Oppenheimer Variable Account Funds (the "Oppenheimer Funds") is an
investment company consisting of ten separate funds. Oppenheimer Funds acts as
the investment vehicle for separate accounts for variable insurance policies
offered by insurance companies. Oppenheimer Global Securities Fund/VA,
Oppenheimer Small Cap Growth Fund/VA, Oppenheimer Aggressive Growth Fund/VA,
Oppenheimer Capital Appreciation Fund/VA, Oppenheimer Main Street Growth &
Income Fund/VA, Oppenheimer Multiple Strategies Fund/VA, Oppenheimer High Income
Fund/VA, Oppenheimer Strategic Bond Fund/VA, Oppenheimer Bond Fund/VA and
Oppenheimer Money Fund/VA are part of the Oppenheimer Funds.
OppenheimerFunds, Inc. ("OFI") supervises the investment operations of the
Oppenheimer Funds. OFI also determines the composition of each respective
portfolio and advises and recommends investment policies and the purchase and
sale of securities, pursuant to an investment advisory agreement with each
Oppenheimer Fund.
OFI is located at Two World Trade Center, New York, NY 10048-0203 and has
operated as an investment adviser since April 30, 1959. Oppenheimer Acquisition
Corp., a holding company owned in part by senior management of OFI, and
ultimately controlled by MassMutual, owns OFI. OFI is registered as an
investment adviser under the Investment Advisers Act of 1940.
Bank of New York acts as custodian for the Oppenheimer Funds. Its home office is
located at One Wall Street, New York, NY 10015.
Oppenheimer Global Securities Fund/VA
The Oppenheimer Global Securities Fund/VA seeks long-term capital appreciation
by investing a substantial portion of assets in securities of foreign issuers,
"growth-type" companies, cyclical industries and special situations which are
considered to have appreciation possibilities. It invests in equity securities
of U.S. and foreign issuers
Oppenheimer Small Cap Growth Fund/VA
The Oppenheimer Small Cap Growth Fund/VA seeks capital appreciation. Current
income is not an objective. In seeking its objective, the Fund emphasizes
investments in securities of "growth-type" companies with market capitalization
less than $1 billion, including common stocks, preferred stocks, convertible
securities, rights, warrants and options, in proportions which may vary from
time to time.
Oppenheimer Aggressive Growth Fund/VA *
The Oppenheimer Aggressive Growth Fund seeks capital appreciation by investing
in "growth-type" companies. *Prior to May 1, 1998, this Fund was called
Oppenheimer Capital Appreciation Fund.
Oppenheimer Capital Appreciation Fund/VA *
The Oppenheimer Capital Appreciation Fund/VA seeks long-term capital
appreciation by investing in securities of well-known established companies. It
invests mainly in equity securities. *Prior to May 1, 1999, this Fund was called
Oppenheimer Growth Fund.
Oppenheimer Main Street Growth & Income Fund/VA *
The Oppenheimer Main Street Growth & Income Fund/VA seeks total return (which
includes growth in the value of its shares as well as current income) from
equity and debt securities. *Prior to May 1, 1999, this Fund was called
Oppenheimer Growth & Income Fund.
Oppenheimer Multiple Strategies Fund/VA
The Oppenheimer Multiple Strategies Fund/VA seeks a total return (which includes
current income and capital appreciation in the value of its shares) from
investments in common stocks and other equity securities, bonds and other debt
securities, and money market securities.
Oppenheimer High Income Fund/VA
The Oppenheimer High Income Fund/VA seeks a high level of current income. The
Fund invests in unrated securities or high risk securities in the lower rating
categories, commonly known as "junkbonds" which are subject to a greater risk of
loss of principal
11
<PAGE>
and non payment of interest than higher-rated securities.
Oppenheimer Strategic Bond Fund/VA
The Oppenheimer Strategic Bond Fund/VA seeks a high level of current income
principally derived from interest on debt securities and seeks to enhance such
income by writing covered call options on debt securities. The Fund invests in
three market sectors: debt securities of foreign government and companies, U.S.
government securities, and lower-rated high yield securities of U.S. companies.
Oppenheimer Bond Fund/VA
The Oppenheimer Bond Fund/VA seeks a high level of current income. The Fund
seeks capital growth when consistent with its primary objective. The Fund will,
under normal market conditions, invest at least 65% of its total assets in
investment grade debt securities.
Oppenheimer Money Fund/VA
The Oppenheimer Money Fund/VA seeks maximum current income from investments in
money market securities consistent with low capital risk and the maintenance of
liquidity. The Fund invests in short-term high quality money market securities.
Panorama Series Fund, Inc.
The Panorama Series Fund, Inc., ("Panorama Fund") is an open-end investment
company. The Panorama Fund acts as the investment vehicle for separate accounts
for variable insurance policies offered by insurance companies. The Panorama
International Equity Portfolio, Panorama LifeSpan Balanced Portfolio, Panorama
LifeSpan Diversified Income Portfolio, and Panorama LifeSpan Capital
Appreciation Portfolio are separate series of the Panorama Fund.
OFI supervises the investment operations of the Panorama Fund. OFI also
determines the composition of each Panorama Portfolio, and advises and
recommends investment policies and purchase and sale of securities, under an
investment advisory agreement with each Panorama Portfolio.
OFI has engaged three sub-advisers: Babson-Stewart Ivory International
("Babson-Stewart"), Credit Suisse Asset Management ("Credit Suisse") and Pilgrim
Baxter & Associates ("Pilgrim Baxter") to provide day-to-day portfolio
management for certain components of the Panorama LifeSpan Portfolios. Prior to
January 12, 1999, Credit Suisse was known as BEA Associates.
Babson-Stewart, located at One Memorial Drive, Cambridge, MA 02142, also serves
as the sub-adviser to the Panorama International Equity Portfolio.
Babson-Stewart was originally formed in 1987. Credit Suisse is located at One
Citicorp Center, 153 East 53 rd Street, 57 th Floor, New York, NY 10022. Pilgrim
Baxter is located at 825 Duportail Road, Wayne, PA 19087.
Bank of New York acts as custodian for the Panorama Fund. Its home office is
located at One Wall Street, New York, NY 10015.
Panorama International Equity Portfolio
The Panorama International Equity Portfolio seeks long-term growth of capital by
investing primarily in equity securities of companies wherever located, the
primary stock market of which is outside the United States.
Panorama LifeSpan Balanced Portfolio
The Panorama LifeSpan Balanced Portfolio seeks a blend of capital appreciation
and income by investing in a strategically allocated portfolio of stocks and
bonds with a slightly stronger emphasis on stocks.
Panorama LifeSpan Diversified Income Portfolio
The Panorama LifeSpan Diversified Income Portfolio seeks high current income,
with opportunities for capital appreciation by investing in a strategically
allocated portfolio consisting primarily of bonds.
Panorama LifeSpan Capital Appreciation Portfolio
The Panorama LifeSpan Capital Appreciation Portfolio seeks long-term capital
appreciation by investing in a strategically allocated portfolio consisting
primarily of stocks. Current income is not a primary consideration.
Goldman Sachs Variable Insurance Trust
The Goldman Sachs Variable Insurance Trust ("Goldman Sachs VIT Trust") is an
open-end, management investment company, organized in Delaware in September,
1997. The Goldman Sachs Capital Growth Fund, Goldman Sachs Mid Cap Value Fund,
Goldman Sachs CORE U.S. Equity Fund and Goldman Sachs Growth and Income Fund are
each a separate series of shares of the Goldman Sachs VIT Trust.
Goldman Sachs Asset Management ("GSAM") is a separate operating division of
Goldman Sachs & Co.
12
<PAGE>
It serves as investment adviser to the Goldman Sachs Growth and Income, Goldman
Sachs CORE U.S. Equity, Goldman Sachs Capital Growth and Goldman Sachs Mid Cap
Value Funds. GSAM is located at One New York Plaza, New York, NY 10004.
The custodian for each fund of the Goldman Sachs VIT Trust is State Street Bank
and Trust Company. It is located at 1776 Heritage Drive, North Quincy, MA 02110.
Goldman Sachs Capital Growth Fund
The Goldman Sachs Capital Growth Fund seeks long-term growth of capital through
diversified investments in equity securities of companies that are considered to
have long-term capital appreciation potential.
Goldman Sachs Mid Cap Value Fund*
The Goldman Sachs Mid Cap Equity Fund seeks long-term capital appreciation
primarily through investments in equity securities of companies with public
stock market capitalizations within the range of the market capitalization of
companies constituting the Russell Midcap Index at the time of investment
(currently between $400 million and $16 billion).
* Prior to May 1, 1999, this Fund was called Goldman Sachs Mid Cap Equity Fund.
Goldman Sachs CORE U.S. Equity Fund
The Goldman Sachs CORE U.S. Equity Fund seeks long-term growth of capital and
dividend income through a broadly diversified portfolio of large cap and blue
chip equity securities representing all major sectors of the U.S. economy.
Goldman Sachs Growth and Income Fund
The Goldman Sachs Growth and Income Fund seeks long-term growth of capital and
growth of income through investments in equity securities that are considered to
have favorable prospects for capital appreciation and/or dividend paying
ability.
MFS(R) Variable Insurance Trust(SM)
The MFS(R) Variable Insurance Trust(SM) ("MFS Trust") is an open-end management
investment company, organized as a Massachusetts business trust in 1994. The
MFS(R) New Discovery Series, MFS(R) Emerging Growth Series and MFS(R) Research
Series (collectively referred to as "MFS Series") are each a separate series of
shares of the MFS Trust.
Massachusetts Financial Services Company ("MFS Co.") advises the MFS Series. MFS
Co. is a Delaware corporation and is located at 500 Boylston Street, Boston, MA
02116.
State Street Bank and Trust Company is the custodian of the MFS Series. It is
located at 225 Franklin Street, Boston, MA 02110.
MFS(R) New Discovery Series
The MFS(R) New Discovery Series seeks capital appreciation by investing, under
normal market conditions, at least 65% of its total assets in companies that are
believed to offer superior prospects for growth. Such securities may either be
listed on the securities exchanges or traded in the over-the-counter markets and
may be U.S. or foreign companies.
MFS(R) Emerging Growth Series
The MFS(R) Emerging Growth Series seeks long-term growth of capital by investing
primarily in common stocks of companies which are early in their life cycle, but
which have the potential to become major enterprises (emerging growth
companies).
MFS(R) Research Series
The MFS(R) Research Series seeks long-term growth of capital and future income
by investing a substantial portion of its assets in equity securities of
companies believed to possess better than average prospects for long-term
growth. A smaller proportion of the Fund's assets may be invested in bonds,
short-term obligations, preferred stocks or common stocks whose principal
characteristic is income production rather than growth.
T. Rowe Price Equity Series, Inc.
T. Rowe Price Equity Series, Inc. is a diversified, open-end investment company
incorporated in Maryland in 1994. The T. Rowe Price Mid-Cap Growth Portfolio and
T. Rowe Price New America Growth Portfolio are each a separate series of shares
of T. Rowe Price Equity Series, Inc.
T. Rowe Price Associates, Inc. ("T. Rowe Price") was founded in 1937 and is the
investment adviser to each of the Portfolios. Its business address is 100 East
Pratt Street, Baltimore, MD 21202.
State Street Bank and Trust Company and The Chase Manhattan Bank, N.A., London
are the custodians for the T. Rowe Price Mid-Cap Growth Portfolio and T. Rowe
Price New America Growth Portfolio. The custodians' main offices are located at
225 Franklin Street, Boston, MA 02110 and Woolgate House, Coleman Street,
London, EC2P 2HD, England, respectively.
T. Rowe Price Mid-Cap Growth Portfolio
13
<PAGE>
The T. Rowe Price Mid-Cap Growth Portfolio seeks to provide long-term capital
appreciation by investing in mid-cap stocks with potential for above-average
earnings growth. T. Rowe Price defines mid-cap companies as those with market
capitalizations within the range of companies in the S&P 400 Mid-Cap Index.
T. Rowe Price New America Growth Portfolio
The T. Rowe Price New America Growth Portfolio seeks long-term growth of capital
by investing in the common stocks of U.S. growth companies operating in service
industries. Most of Portfolio assets are invested in service companies,
regardless of size, which are expected to show superior earnings growth and are
above-average performers in their fields. The Portfolio may also invest up to
25% of total assets in nonservice-related growth companies.
Fund Monitoring.
The MML Trust, Oppenheimer Funds, Panorama Fund, Goldman Sachs VIT Trust, MFS
Trust, and T. Rowe Price Equity Series, Inc. were established to provide
investment vehicles for variable life insurance contracts and variable annuities
contracts. Shares of the MML Trust and Panorama Fund are not offered to the
general public. They are offered solely to MassMutual separate investment
accounts and other life insurance company separate accounts of MassMutual
subsidiaries. Shares of the Oppenheimer Funds, Goldman Sachs VIT Trust, MFS
Trust, and T. Rowe Price Equity Series, Inc. are also not offered to the general
public. They are offered to insurance company separate accounts affiliated and
unaffiliated with MassMutual which fund variable annuity, variable life
insurance contracts and qualified plans.
Shares of the Funds may be sold to and held by separate accounts which fund
variable annuity and variable life insurance contracts. As a result, certain
conflicts of interests between variable annuity owners, variable life insurance
policyowners and program investors may occur. Each Board of Trustees/Directors
will monitor their respective Fund(s) for any material irreconcilable conflict
of interest. Each will determine the appropriate action, if any, which should be
taken if a material irreconcilable conflict arises between the holders of
variable annuity contracts and variable life policies.
The Guaranteed Principal Account (GPA).
In addition to the Separate Account, You may allocate net premium or transfer
account value to the GPA. Amounts You allocate or transfer to the GPA become
part of MassMutual's general account assets. You do not share in the investment
experience of those assets. Rather, We guarantee a 3% rate of return on Your
allocated amount. For amounts transferred to the GPA due to a policy loan, the
guaranteed rate is the greater of: (a) 3%; and (b) the policy loan rate less a
MassMutual declared charge which cannot exceed 0.75%.
Although We are not obligated to credit interest at a rate higher than this
minimum, We will credit and guarantee a secondary interest rate, which may be
higher but will never be lower than the minimum, for the calendar year 1999. We
may also pay a rate of interest in excess of that secondary guarantee for such
periods. At Your request, We will inform you of the then applicable rate or
rates.
Because of exemptive and exclusionary provisions, MassMutual has not registered
interests in Our general account under the Securities Act of 1933. We also have
not registered the general account as an investment company under the Investment
Company Act of 1940, as amended. Therefore, neither the general account nor any
interests therein are subject to these Acts, and the Securities and Exchange
Commission has not reviewed the general account disclosures. These disclosures
may, however, be subject to certain provisions of the federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.
Premiums.
There are five premium concepts under the policy:
1. Initial Case Premium Paid.
2. Minimum Case Premium.
3. Minimum Initial Policy Premium.
4. Planned Annual Premium.
5. Minimum Planned Annual Premium.
1. Initial Case Premium Paid.
The initial case premium paid is the amount of premium paid for all policies in
a case on deposit with Us before we install the case on our administrative
system. The initial case premium paid determines the sales load percentages for
all policies in that case.
2. Minimum Case Premium.
The minimum case premium is $250,000 of first year annualized premium.
14
<PAGE>
3. Minimum Initial Policy Premium.
You must pay the minimum initial policy premium and submit the application and
all other required forms in good order to Our Home Office before We will issue
Your policy. The minimum initial policy premium is twelve times an amount equal
to the first account value charges.
4. Planned Annual Premium.
You may elect in the application to pay an annual premium for Your policy. We
call this premium Your planned annual premium. Your election of a planned annual
premium forms the basis for the premium bills We send You. You may change the
amount of Your planned annual premium at any time.
The amount of Your planned annual premium will depend on:
o The selected face amount of Your policy;
o The insured's age;
o The insured's sex;
o The insured's smoking classification; and
o The amount of the initial premium paid.
There is no penalty if You do not pay the planned annual premium. Your payment
of this amount does not guarantee coverage for any period of time. Even if You
pay planned annual premiums, the policy terminates if the account value becomes
insufficient to pay certain account value charges and the grace period expires
without sufficient payment.
5. Minimum Planned Annual Premium.
The minimum planned annual premium establishes a threshold for Your policy's
sales loads. The minimum planned annual premium depends on:
o The initial selected face amount of the policy;
o The insured's issue age;
o The insured's sex; and
o The insured's smoking classification
If there is a policy in a case with an initial case premium paid of less than
$3,500,000, the sales load is greater in each of the first ten policy years up
to the minimum planned annual premium.
The following table shows the minimum planned annual premium at certain ages for
a policy with a selected face amount of $100,000 in all years, under death
benefit option 1.
MINIMUM PLANNED ANNUAL PREMIUM
LEVEL $100,000 SELECTED FACE AMOUNT
(DEATH BENEFIT OPTION 1)
<TABLE>
<CAPTION>
Issue Age
----------------------------------
Class Age Age Age
----- --- --- ---
25 40 55
-- -- --
<S> <C> <C> <C>
Male Smoker $792 $1,590 $3,486
Female Smoker $640 $1,259 $2,516
Unisex Smoker $762 $1,521 $3,294
Male Nonsmoker $666 $1,269 $2,705
Female Nonsmoker $578 $1,082 $2,185
Unisex Nonsmoker $648 $1,231 $2,593
Male Unismoker $734 $1,403 $2,945
Female Unismoker $603 $1,128 $2,245
Unisex Unismoker $708 $1,345 $2,789
</TABLE>
Minimum and Maximum Premium Payments.
While Your policy is in force, You may pay premiums at any time before the death
of the insured subject to certain restrictions. The minimum premium You may pay
is $100.00.
There is no set maximum premium payment. However, We have the right to refund a
premium paid in any year if it will increase the net amount at risk under the
policy. Premium payments should be sent to Our Home Office or to the address
indicated for payment on the premium reminder notice.
Net Premium Allocation.
You choose the percentages of Your net premiums to be allocated to the Separate
Account Divisions and/or the GPA. You may choose any whole-number percentages as
long as the total is 100%. You may allocate net premium payments to a maximum of
eight Separate Account Divisions and the GPA at any time. You may also change
Your allocation of future net premiums at any time without charge. To allocate
net premiums or to transfer account value to a ninth Separate Account Division,
You must transfer 100% of the account value from one or more of Your eight
selected Separate Account Divisions.
During Your free look period, We will apply Your initial net premium to the MML
Money Market Division, provided the premium equals or exceeds the minimum
initial policy premium. At the later of the
15
<PAGE>
end of the free look period or the date We receive proper notice that You
received Your policy, We will apply Your account value to the GPA and/or
Separate Account Divisions according to Your instructions and subject to Our
current allocation rules.
Termination.
We will not terminate Your policy for failure to pay premiums. Instead, We will
terminate Your policy if on a monthly calculation date, the account value less
any policy debt is insufficient to cover the total account value charges. Your
policy will then enter a 61-day grace period.
Grace Period.
We allow You 61 days to pay any premium necessary to cover overdue account value
charges. You will receive a notice from Us which states the overdue amount and
premium due. During the 61-day grace period, Your policy remains in force. Your
policy will terminate without value if We do not receive the premium due by the
later of 61 days from the date the deduction is due or 30 days after We have
mailed the written notice.
Death Benefit Under the Policy.
The death benefit is the amount We pay to the designated beneficiary(ies) when
the insured dies. Upon receiving proof of death, We pay the beneficiary the
death benefit amount determined as of the date the insured dies. The beneficiary
may direct Us to pay all or part of the benefit in cash or to apply it under one
or more of Our payment options.
Minimum Face Amount.
To qualify as life insurance under federal tax laws currently in effect, the
policy has a minimum face amount. The minimum face amount equals the account
value times the minimum face amount percentage. The percentages depend upon the
insured's age, sex and smoking classification. The percentages are shown in the
Table Of Minimum Face Amount Percentages in the policy.
Death Benefit Options.
In the application, You choose a selected face amount and death benefit option.
We offer two death benefit options:
1. Death Benefit Option 1:
the death benefit is the greater of the selected face amount in effect
on the date of death or the minimum face amount in effect on the date
of death.
2. Death Benefit Option 2:
the death benefit is the greater of (a) the sum of the selected face
amount in effect on the date of death plus the account value on the
date of death or (b) the minimum face amount in effect on the date of
death.
If the insured dies while the policy is in force, We will pay a death benefit
based on the option in effect on the date of death, with the following
adjustments:
o We add the part of any account value charges that apply for the period
beyond the date of death; and
o We deduct any policy debt outstanding on the date of death; and
o We deduct any account value charges unpaid as of the date of death.
If the insured dies after the first policy year, We will also include a pro-rata
share of any dividend allocated to the policy for the year death occurs.
Under death benefit option 1, the death benefit amount is unaffected by Your
policy's investment experience unless the death benefit is based on the minimum
face amount. Under death benefit option 2, the death benefit amount may increase
or decrease as a result of Your policy's investment experience.
We pay interest on the death benefit from the date of death to the date the
death benefit is paid or a payment option becomes effective. The interest rate
equals the rate determined under the interest payment option but not less than
that required by law.
Example: The following example shows how the death
benefit may vary as a result of investment performance
and death benefit option in effect on the date of death.
<TABLE>
<CAPTION>
Policy A Policy B
-------- --------
<S> <C> <C>
(a) Selected face amount: $100,000 $100,000
(b) Account value on
date of death $40,000 $50,000
(c) Minimum face amount
percentage on date of death: 240% 240%
(d) Minimum face amount
(b x c): $96,000 $120,000
Death benefit if
death benefit option 1
is in effect
[greater of (a) or (d)]: $100,000 $120,000
</TABLE>
16
<PAGE>
Death benefit if
death benefit option 2
is in effect [greater of
(a + b) or (d)]: $140,000 $150,000
The examples assume no additions to or deductions from the selected face amount
or minimum face amount are applicable.
Changes In Selected Face Amount.
You may increase the selected face amount by written request six months after We
issue Your policy or six months after a previous increase. We require adequate
evidence of insurability for an increase. We will not allow an increase in the
selected face amount after the policy anniversary date nearest the insured's
85th birthday. Additionally, any increase in the selected face amount will be
effective on the monthly calculation date which is on, or next follows, the
later of:
o 15 days after We receive and approve Your written request for such
change; or
o the requested effective date of the change.
Any increase must be for at least $5,000.
You may also decrease Your policy's selected face amount. We allow a decrease in
the selected face amount only once per policy year. The selected face amount
after a decrease must be at least $50,000. Any requested decrease in the
selected face amount will be effective on the monthly calculation date which is
on, or next follows the later of :
o 15 days after We receive and approve Your written request for such
change; or
o the requested effective date of the change.
Account Value.
The account value of Your policy is the variable account value plus the fixed
account value. Initially, this value equals the net amount of the initial
premium You paid under the policy. We apply this amount to the MML Money Market
Division until the later of: (1) the expiration of the free look period or (2)
the date We receive proper notice that You have received Your policy. The
account value is then allocated among the Separate Account Divisions and/or the
GPA according to Your instructions, subject to applicable restrictions.
The purchase and sale of accumulation units will affect Your variable account
value. We purchase and sell units at the unit value as of the valuation time on
the valuation date if We receive Your transaction request before the valuation
time. Otherwise, We will purchase and sell units to complete Your request at the
unit value as of the valuation time on the next following valuation date, or a
later date if You request. We determine unit values on each valuation date.
Investment Return.
The investment return of Your policy is based on:
o The account value held in each Separate Account Division for that
policy;
o The investment experience of each Separate Account Division as
measured by its actual net rate of return; and
o The interest rate credited on account value held in the GPA.
The investment experience of a Separate Account Division reflects:
o increases or decreases in the net asset value of the shares of the
underlying Fund;
o any dividend or capital gains distributions declared by the Fund; and
o any charges against the assets of the Separate Account Division.
We determine the investment experience each day on each valuation date. The
actual net rate of return for a Separate Account Division measures the
investment experience from the end of one valuation date to the end
of the next valuation date.
Cash Surrender Value.
You may surrender Your policy for its cash surrender value at any time while the
insured is living. The cash surrender value is:
o Account value; less
o Any outstanding policy debt.
There is no surrender charge.
Your surrender is effective on the date We receive Your policy and a fully
completed written request at Our Home Office, unless You select a later
effective date. If, however, We receive Your surrender request on a date that is
not a valuation date or after a valuation time, then Your surrender will be
effective on the next valuation date.
Transfers.
17
<PAGE>
You may transfer all or part of the account value among the policy's Separate
Account Divisions and the GPA by written request. In Your transfer request, You
must indicate the dollar amount or the whole-number percentage You wish to
transfer. There is no limit on the number of transfers You may make from the
Separate Account Divisions.
You may maintain account value in a maximum of eight Separate Account Divisions
and the GPA at any one time. If You want to transfer net premium or transfer
account value to a ninth Division, You must transfer 100% of the account value
from one or more of the eight active Separate Account Divisions.
You may transfer all account value in the Separate Account to the GPA at any
time without incurring a fee. The transfer will take effect when We receive Your
signed, written request.
We will consider all transfers made on one valuation date to be one transfer.
We currently do not charge a fee for transfers. We, however, reserve the right
to charge a fee for transfers if there are more than six transfers in a policy
year. This fee will not exceed $10 per transfer.
You may only transfer account value from the GPA to the Separate Account once
per policy year. This transfer may not exceed 25% of Your fixed account value at
the time of Your transfer. For purposes of this transfer restriction, Your fixed
account value does not include policy debt. However, You may transfer 100% of
Your fixed account value to the Separate Account if:
o You have transferred 25% of Your fixed account value in each of the
previous three policy years, and
o You have not allocated premium payments or made transfers to the GPA
during any of the previous three policy years, except as a result of a
policy loan.
You cannot transfer GPA account value equal to any policy debt.
Automated Account Value Transfer.
Automated account value transfer allows You to make monthly transfers of account
value in a Separate Account Division to any combination of Separate Account
Divisions and the GPA. You must specify the amount You wish to transfer as a
dollar amount or a whole-number percentage. Automated account value transfers
are not available from more than one Separate Account Division or from the GPA.
We consider this process as one transfer per policy year.
You can elect, change or cancel automated account value transfer on any
valuation date, provided We receive a fully completed written request. We will
only make transfers on the monthly calculation date. The effective date of the
first automated transfer will be the first monthly calculation date after We
receive Your request at Our Home Office. If We receive Your request before the
end of the free look period, Your first automated transfer will occur at the end
of this period.
Transfers will occur automatically. However, You must specify:
o the Separate Account Division We are to transfer from; and
o the Separate Account Division(s) and/or GPA We are to transfer to; and
o the length of time during which transfers will continue.
If Your transfer amount is greater than Your account value in the Separate
Account Division We are transferring from, then We will transfer Your remaining
account value in that Division in the same proportion as Your previously
transferred amounts. We will not process any more automated transfers
thereafter.
Withdrawals.
After Your policy has been in force for six months, You can withdraw value from
Your policy on any monthly calculation date. You must send written request to
Our Home Office.
o Minimum withdrawal amount: $100 (before deducting the withdrawal
charge).
o Maximum withdrawal amount: cash surrender value, less an amount equal
to the following:
o twelve multiplied by the most recent account value charges for
Your policy if You take a withdrawal before the policy
anniversary date nearest the insured's 65th birthday; or
o sixty multiplied by the most recent account value charges if You
take a withdrawal on or after the policy anniversary date nearest
18
<PAGE>
the insured's 65th birthday.
We deduct the withdrawal amount from Your account value as of the valuation time
on the applicable monthly calculation date. You must specify the GPA or the
Separate Account Division(s) from which the withdrawal is to be made. If You do
not specify otherwise, We will withdraw the amount in proportion from Your
values in the Separate Account Divisions and the GPA. The withdrawal amount may
not exceed the non-loaned account value of a Separate Account Division or GPA.
We deduct a charge of 2.0% from the amount You withdraw. This charge will not
exceed $25.00.
We will reduce Your account value by the amount of the withdrawal. We may reduce
Your policy's selected face amount to prevent an increase in the amount at risk,
unless You provide Us with satisfactory evidence of insurability. Withdrawals
may have tax consequences.
Policy Loan Privilege.
You can take a loan on Your policy at any time while the insured is living. The
maximum loan is:
o Your account value at the time of the loan; less
o any outstanding policy debt before the new loan; less
o interest on the loan being made and on any outstanding policy debt to
the next policy anniversary date; less
o an amount equal to the most recent account value charge for Your
policy multiplied by the number of monthly calculation dates
remaining, up to and including, the next policy anniversary date.
You must properly assign Your policy to Us as collateral for the loan.
Source of Loan.
We deduct Your requested loan amount from the Separate Account Divisions and the
GPA in proportion to the non-loaned account value of each on the date of the
loan request. We liquidate shares taken from the Separate Account Divisions and
transfer the resulting dollar amounts to the GPA. These dollar amounts become
part of the loaned portion of the GPA. You may not borrow from the loaned
portion of the GPA.
We may delay any loan from the non-loaned portion of the GPA for up to six
months. We may also delay any loan from the Separate Account if:
o the New York Stock Exchange is closed, except for normal weekend and
holiday closings or trading is restricted, or
o the Securities and Exchange Commission determines that an emergency
exists, or
o the Securities and Exchange Commission permits Us to delay payment.
If Loans Exceed the Policy Account Value.
Policy debt is Your outstanding loan balance, including accrued interest. Policy
debt must not exceed Your account value. If this limit is reached, We may
terminate the policy. If We terminate Your policy for this reason, We will
notify You and any assignee shown on our records in writing. This notice states
the amount necessary to bring the policy debt back within the limit. If We do
not receive a payment within 31 days after the date We mailed the notice, the
policy terminates without value at the end of those 31 days. Termination of a
policy under these circumstances could cause You to recognize gross income.
Interest.
On the application, You may select a loan interest rate of 6% per year or, where
permitted, an adjustable loan rate. All policies within a case must have the
same fixed or adjustable loan rate. We set the adjustable loan rate each year
that will apply for the next policy year. The maximum rate is based on the
monthly average of the composite yield on seasoned corporate bonds as published
by Moody's Investors Service. If Moody's is no longer published, We will use a
substantially similar average. The maximum rate is the greater of:
o the published monthly average for the calendar month ending two months
before the policy year begins; or
o 5%.
We will increase the rate if the maximum limit is at least 1/2% higher than the
rate in effect for the previous year. We will decrease the rate if the maximum
limit is at least 1/2% lower than the rate in effect for the previous year.
Interest accrues daily, becoming part of the policy debt. Interest is due on
each policy anniversary. If You do not pay interest when due, We will add the
interest to the
19
<PAGE>
loan, and it will bear interest at the same rate. We treat any interest
capitalized on a policy anniversary the same as a new loan. We will deduct this
capitalized interest from the Separate Account Divisions and the GPA in
proportion to the non-loaned account value in each.
Repayment.
You may repay all or part of any policy debt at any time while Your policy is in
force. Upon repayment, We will transfer values equal to the repayment from the
loaned portion of the GPA to the non-loaned portion of the GPA and the
applicable Separate Account Division(s). We will transfer the repayment in
proportion to the non-loaned value in each Separate Account Division and/or the
GPA at the time of repayment. If You do not repay the loan, We deduct the loan
amount due from the surrender value or death benefit.
Interest Credited on Loaned Value.
The amount equal to any outstanding policy loans is held in the GPA. This amount
is credited with interest at a rate which is the greater of 3.0% or Your policy
loan rate, less a MassMutual declared charge we guarantee will not exceed 0.75%.
Effect of Loan.
Your policy loan reduces the death benefit and cash surrender value under the
policy by the amount of the loan. Your repayment of the loan increases the death
benefit and cash surrender value by the amount of the repayment.
As long as a loan is outstanding, a portion of Your policy's account value equal
to the loan is held in the GPA. The Separate Account's investment performance
does not affect this amount. Tax consequences may result if You have policy debt
when You surrender
Your policy.
Part II - Additional Provisions of the Policy.
Paid-up Policy Date.
The paid-up policy date is the policy anniversary nearest the insured's 100th
birthday. On this date and at all times thereafter, the selected face amount
equals the account value and the death benefit option will be death benefit
option 1. As of this date, the charge for cost of insurance will be $0 and We
will no longer accept premium payments. We will continue to deduct any other
account value charges. The policy does not lapse after the paid-up policy date.
Your payment of planned annual premiums does not guarantee that the policy will
continue in force to the paid-up policy date.
Reinstatement.
For a period of five (5) years after termination, You can request that We
reinstate the policy during the insured's lifetime. We will not reinstate the
policy if it has been surrendered for its cash surrender value. A termination
and/or reinstatement may cause the policy to become a modified endowment
contract.
Before We reinstate the policy, We must receive the following:
o A premium payment that will produce an account value equal to 3 times
the total account value charges for the policy on the monthly
calculation date on or next following the date of reinstatement;
o Evidence of insurability satisfactory to us; and
o Where necessary, a signed acknowledgement that the policy has become a
modified endowment contract.
If We do reinstate the policy, Your policy's selected face amount for the
reinstated policy will be the same as if the policy had not terminated.
Payment Options.
Upon full surrender or the insured's death, We will pay the entire cash
surrender value or all or part of the death benefit in cash or as a series of
level payments under a payment option. Your payments will no longer be affected
by the investment experience of the Separate Account Divisions or the GPA.
To receive payments under any of the following options, the proceeds must be at
least $2,000. If the payments under any option are less than $20 each, We
reserve the right to make payments at less frequent intervals. Your payment
option choices are:
A. Fixed Amount Payment Option. We make a monthly payment for an agreed
fixed amount. The amount of each payment may not be less than $10 for
each $1,000 applied. We credit interest of at least 3% per year each
month on the unpaid balance and add the interest to this balance.
Payments continue until the amount We hold runs out.
B. Fixed Time Payment Option. We make equal monthly payments for any
period selected,
20
<PAGE>
up to 30 years. The amount of each payment depends on:
o the total amount applied; and
o the period selected; and
o the monthly payment rates we are using when the first
payment is due.
C. Lifetime Payment Option. We make equal monthly payments on the life of
a named person. Three variations are available:
o Payments for life only;
o Payments guaranteed for five, ten or twenty years or the
death of the named person, whichever is later; or
o Payments guaranteed for the amount applied or the death of
the named person, whichever is later.
D. Interest Payment Option. We hold amounts applied under this option. We
will pay interest monthly of at least 3% per year on the unpaid
balance.
E. Joint Lifetime Payment Option. We make equal monthly payments based on
the lives of two named persons. While both named persons are living,
we make one payment per month. When one of the named persons dies, the
same payment continues for the lifetime of the other named person. We
offer two variations:
o Payments guaranteed for 10 years or when both named persons
die, whichever is later; and
o Payments for two lives only. We do not guarantee a specific
number of payments. We stop payments when both named persons
die.
F. Joint Lifetime Payment Option with Reduced Payments. We make monthly
payments based on the lives of two named persons. While both named
persons are living, we make one payment each month. When one dies, we
reduce payments by one-third and continue for the lifetime of the
other named person. We stop payments when both named persons die.
Withdrawal Rights under Payment Options.
If provided in the payment option election, You may withdraw all or part of the
unpaid balance or apply it under any other option.
Beneficiary.
A beneficiary is any person You name on Our records to receive insurance
proceeds after the insured dies. You name the beneficiary in the policy
application. There may be different classes of beneficiaries, such as primary
and secondary. These classes set the order of payment. There may be more than
one beneficiary in a class.
You may name any beneficiary as an irrevocable beneficiary. We need the consent
of an irrevocable beneficiary if You wish to change that beneficiary. We also
need the consent of any irrevocable beneficiary if You wish to exercise any
policy right except the right to:
o Exercise dividend rights.
o Reinstate the policy after termination.
If no beneficiary is living when the insured dies, we will pay the death benefit
to the policyowner unless instructed otherwise. If the policyowner is deceased,
then We will pay the death benefit to the policyowner's estate.
Changing the Policyowner or Beneficiary.
You may change the policyowner or any beneficiary during the insured's lifetime
by writing to Our Home Office. The change takes effect as of the date of the
request, even if the insured dies before we receive it. Different rules apply if
You named an irrevocable beneficiary.
Right to Substitute Insured.
You may transfer the policy to the life of a substitute insured subject to
certain restrictions. You must request this transfer in writing. The
substitution of an insured may affect the policy's selected face amount and
account value. Future charges against the policy will be based on the life of
the substitute insured.
The costs to transfer are:
o an administrative fee of $75, plus
o any premium necessary to effect the transfer,
plus
o any excess policy debt You have not repaid prior to transfer.
Excess policy debt is the amount by which policy debt
21
<PAGE>
exceeds the maximum loan available after transfer. You must pay any such excess
on or before the transfer date.
The incontestability and suicide exclusion periods, as they apply to the
substitute insured, run from the transfer date. Any assignments will continue to
apply.
The Internal Revenue Service has ruled that a substitution of insureds is an
exchange of contracts which does not qualify for the tax deferral available
under Code Section 1035. Therefore, You must include in current gross income all
the previously unrecognized gain in the policy upon a substitution of insureds.
Assignment.
You may assign Your policy as collateral for a loan or other obligation, subject
to any outstanding policy debt. For any assignment to be binding on us, We must
receive a signed assignment in proper form at Our Home Office. We are not
responsible for the validity of any assignment.
Dividends.
Each year We determine the money available to pay dividends. We then determine
if We will pay any dividend under the policy. We will pay any dividend on Your
policy anniversary. If the insured dies after the first policy year, We will
include as part of the death benefit a pro rata share of any dividend allocated
to the policy for the year death occurs. We do not expect to pay any dividends
under the policies.
Limits on Our Right to Challenge the Policy.
We reserve the right to contest the validity of a policy within two years from
its issue date, reinstatement or an increase in the selected face amount. After
that two-year period, We cannot contest its validity, except for failure to pay
premiums.
Misstatement of Age or Sex.
We will make an adjustment if the insured's date of birth or sex in the
application is not correct. If the adjustment is made when the insured dies, We
will adjust the death benefit by the most recent cost of insurance charge
according to the correct age and sex. If We make the adjustment before the
insured dies, We will base future account value charges on the correct age and
sex.
Suicide Exclusion.
If the insured commits suicide whether sane or insane within two years from the
issue date while the policy is in force, We will pay a limited death benefit in
one sum to the beneficiary. The limited death benefit is the amount of premiums
paid for the policy, less any policy debt and amounts withdrawn.
If the insured commits suicide whether sane or insane within two years from an
increase in the selected face amount and while the policy is in force, We will
pay a limited benefit to the beneficiary. The limited death benefit is the cost
of insurance charges associated with the selected face amount increase plus the
death benefit in effect two years prior to the suicide.
When We Pay Proceeds.
If the policy has not terminated, We will normally pay the cash surrender value,
loan proceeds or the death benefit within 7 days after We receive all required
documents in proper form at Our Home Office. We can delay payment of the
surrender value from the Separate Account, any withdrawal from the Separate
Account, Separate Account loan proceeds or the death benefit during any period
that:
o It is not reasonably practicable for Us to determine the amount
because the New York Stock Exchange is closed, except for normal
weekend or holiday closings, or trading is restricted; or
o The Securities and Exchange Commission determines that an emergency
exists; or
o The Securities and Exchange Commission permits Us to delay payment for
the protection of our policyowners.
We may delay payment of any cash surrender value or loan proceeds from the GPA
for up to 6 months from the date the We receive the request at Our Home Office.
We can delay payment of the entire death benefit if payment is contested. We
investigate all death claims arising within the two-year contestable period.
When the investigation is complete, We generally determine within five days
whether the claim should be paid and make payments promptly. If We delay payment
for 10 working days or more from the effective date of surrender or withdrawal,
We will add interest at the same rate as is paid under the interest payment
option at that time.
Free Look Provision.
22
<PAGE>
You may cancel Your policy at the latest of:
o within 10 days after You receive it; or
o within 10 days after You receive a written notice of right to
withdraw; or
o within 45 days after signing the Part 1 of the application.
You must mail or deliver the policy either:
o to Our Home Office; or
o to the agent who sold You the policy; or
o to one of Our agency offices.
If You cancel the policy, We will pay a refund to You. The refund equals:
o any premium You paid for this policy; plus interest credited to this
policy under the GPA; plus or minus
o an amount that reflects investment experience of the Separate Account
Divisions; minus
o any amounts You borrowed or withdrew.
Certain states may require that we refund to You the premium payments that You
paid instead. During the free look period, We will apply premium payments to the
MML Money Market Division.
Part III - Other Important
Information.
Federal Income Tax Considerations.
The following discussion presents a general description of the federal income
tax consequences of the policy, in accordance with Our understanding of current
federal income tax laws. It is not an exhaustive study of all tax issues that
might arise under the policy. This discussion is not intended as tax advice. We
make no representation as to the likelihood of continuation of current federal
income tax laws and Treasury Regulations or of the current interpretations of
the Internal Revenue Service. We reserve the right to make changes in the policy
to ensure it qualifies as life insurance for tax purposes. We do not address
state or other applicable tax laws in this discussion. We make no guarantee
regarding the future tax treatment of any policy.
For complete consideration of federal and state tax consequences, You should
consult a qualified tax adviser prior to purchasing the policy.
Under current state laws, We may incur state and local taxes (in addition to
premium taxes). At present, these taxes are not significant. If there is a
material change in state or local tax laws, We reserve the right to charge the
Separate Account for such taxes if attributable to the Separate Account.
Policy Proceeds, Premiums and Loans.
We believe the policy meets the statutory definition of life insurance under
Internal Revenue Code ("Code") Section 7702 and thus receives the same tax
treatment as that given to fixed benefit life insurance. As a result, the
policy's death benefit is generally excludable from the gross income of the
beneficiary under Section 101(a)(1) of the Code. An exception to this general
rule is where a policy has been transferred for value. In that case, only the
portion of the death benefit equal to premiums paid for the policy may be
excluded from gross income.
Upon Your full surrender of a policy for its cash surrender value, You may
recognize ordinary income for federal tax purposes. Ordinary income is the
amount by which:
o account value, including
o outstanding policy debt (which may include unpaid interest), exceeds
o premiums paid but not previously recovered.
Decreases in selected face amount and withdrawals may be taxable depending on
the circumstances. Code Section 7702(f)(7) states that if a reduction of future
benefits occurs during the first 15 years after a policy is issued and if there
is a cash distribution associated with that reduction, You may be taxed on all
or part of the amount distributed. After 15 years, such cash distributions are
not subject to federal income tax, except to the extent they exceed the total
amount of premiums paid but not previously recovered. Generally, if a taxable
event does not otherwise exist, a withdrawal is taxable only if it exceeds Your
yet unrecovered premium contributions. We suggest that You consult Your tax
adviser prior to decreasing Your selected face amount or taking a withdrawal.
If You change the policyowner or the insured or exchange or assign Your policy,
tax consequences may occur. We also believe that under current law any policy
loan will be treated as policy debt. Therefore, no part of any loan under a
policy will constitute income to You. Under the "personal"
23
<PAGE>
interest limitation provisions of the Code, interest on policy loans used for
personal purposes, which otherwise meet the requirements of Code Section 264,
will no longer be tax deductible. Other rules may apply to allow all or part of
the interest expense as a deduction if the loan proceeds are used for "trade or
business" or "investment" purposes. We suggest You consult Your tax adviser for
further guidance on the deductibility for tax purposes of the interest on policy
loans.
If a business or corporation owns the policy, the Code may impose additional
restrictions. The interest deduction available for loans against a
business-owned policy is limited. For those corporations subject to the
alternative minimum tax, there may be an indirect tax upon the inside build-up
of gain. The corporate alternative minimum tax could also apply to a portion of
the amount by which death benefits received exceed the policy's cash value at
date of death.
Federal, state and local estate, inheritance, and other tax consequences of
ownership or receipt of policy proceeds depend on the circumstances of each
policyowner or beneficiary.
For complete information on the impact of changes to Your policy and federal and
state tax considerations, You should consult a qualified tax adviser.
Modified Endowment Contracts.
If Your policy becomes a modified endowment contract, loans, collateral
assignments, and other amounts distributed are taxable to the extent of any
accumulated income in the policy. In general, the amount subject to tax is the
excess of the account value (both loaned and unloaned) over the previously
unrecovered premiums paid. Any death benefits We pay under a modified endowment
contract, however, are not taxed any differently from death benefits payable
under other life insurance contracts.
A policy is a modified endowment contract if it satisfies the definition of life
insurance in the Code, but fails the additional "7-pay test." A policy fails
this test if the accumulated amount paid under the policy at any time during the
first seven policy years exceeds the total premiums that would have been payable
under a policy providing for guaranteed benefits upon the payment of seven level
annual premiums. Regardless, a policy which would otherwise satisfy the 7-pay
test will still be taxed as a modified endowment contract if it is received in
exchange for a modified endowment contract.
Certain changes will require Us to re-test a policy to determine whether it has
become a modified endowment contract. For example, a reduction in death benefits
during the first seven contract years will cause Us to re-test the policy as if
it had originally been issued with the reduced death benefit. If the premiums
actually paid into a policy exceed the limits under the 7-pay test for a policy
with the reduced death benefit, the policy will become a modified endowment
contract. This change is effective retroactively to the contract year in which
the actual premiums paid exceed the new 7-pay limits.
In addition, a "material change" occurring at any time while the policy is in
force will require Us to re-test the policy to determine whether it continues to
meet the 7- pay test. A material change starts a new 7-pay test period. The term
"material change" includes many increases in death benefits.
Since the policy provides for flexible premium payments, We will carefully
monitor the policy to determine whether increases in death benefits or
additional premium payments cause either the start of a new 7-pay test period or
the taxation of distributions and loans. All additional premium payments will be
considered.
If any amount is taxable as a distribution of income under a modified endowment
contract, it will also be subject to a 10% penalty tax. Limited exceptions from
the additional penalty tax are available for individual policyowners. These
exceptions include:
o distributions made on or after the date the taxpayer attains age 59
1/2 ; or
o distributions attributable to the taxpayer's becoming disabled; or
o distributions that are part of a series of substantially equal
periodic payments (made not less frequently than annually) made for
the life or life expectancy of the taxpayer.
Once a policy fails the 7-pay test, loans, collateral assignments, and
distributions occurring in the year of failure and thereafter become subject to
the rules for modified endowment contracts. In addition, any distribution or
loan made within two years prior to failing the 7-pay test is considered to have
been made in anticipation of the failure and may result in tax consequences.
24
<PAGE>
For purposes of determining the amount of income received from a modified
endowment contract, the law requires the aggregation of all modified endowment
contracts issued to the same policyowner by an insurer and its affiliates within
the same calendar year. Therefore, loans and distributions from any one such
policy are taxable to the extent of the income accumulated in all the contracts
required to be aggregated.
You should consult a qualified tax adviser for complete information on modified
endowment contract status, especially in the case of a corporate-owned policy.
Diversification Standards.
To comply with final regulations under Code Section 817(h) ("Final
Regulations"), each Fund is required to diversify its investments. All
securities of the same issuer are treated as a single investment. Each
government agency or instrumentality, however, is treated as a separate issuer.
We intend to comply with the Final Regulations to ensure the policy continues to
qualify as life insurance for federal income tax purposes. If future regulations
are issued regarding whether a policyowner may direct investments to a
particular division of a separate account, We reserve the right to modify the
policy as necessary to prevent the policyowner from being considered the owner
of the assets of the Separate Account.
Your Voting Rights.
As long as the Separate Account continues to operate as a unit investment trust
under the Investment Company Act of 1940, as amended, You have voting rights.
You are entitled to instruct Us how to vote the Funds' shares held in the
Separate Account that are attributable to Your policy at shareholder meetings.
We determine who has voting rights as of the record date for the meeting.
We determine the number of Fund shares held in the Separate Account attributable
to Your policy by dividing Your account value in each Division, if any, by $100.
We count fractional votes.
In order to exercise Your voting rights, We will send You proxy material and an
instruction form. If We have not received effective voting instructions, We will
vote Fund shares held by the Separate Account in the same proportion as the
shares for which We received instructions, if required by law. Otherwise, We
reserve the right to vote such shares at Our own discretion.
Our Rights.
We reserve the right to take certain actions in connection with Our operations
and the operations of the Separate Account. We will act in accordance with
applicable laws. If required by law or regulation, We will seek Your approval.
Specifically, We reserve the right to:
o Create new segments of the Separate Account for any new variable life
insurance products We create in the future;
o Create new Separate Accounts;
o Combine any two or more Separate Accounts;
o Make available additional Separate Account Divisions investing in
additional investment companies;
o Eliminate one or more Separate Account Divisions;
o Substitute or merge two or more Separate Account Divisions or Separate
Accounts;
o Invest the assets of the Separate Account in securities other than
shares of the Funds as a substitute for such shares already purchased
or as the securities to be purchased in the future;
o Operate the Separate Account as a management investment company under
the Investment Company Act of 1940, as amended, or in any other form
permitted by law;
o De-register the Separate Account under the Investment Company Act of
1940, as amended, if registration is no longer required; and
o Change the name of the Separate Account.
We reserve all rights to the name MassMutual and Massachusetts Mutual Life
Insurance Company or any part of it. We may allow the Separate Account and other
entities to use Our name or part of it, but We may also
withdraw this right.
Records And Reports.
We maintain all Separate Account and GPA records and accounts. Each year within
30 days after Your policy anniversary, We will mail to You a report
25
<PAGE>
showing:
o Your account value at the beginning of the previous policy year;
o all premiums paid during the previous policy year;
o all additions to and deductions from Your account value during the
policy year; and
o the account value, death benefit, cash surrender value and policy debt
as of Your last policy anniversary.
We will include any additional information required by any applicable law or
regulation in this report.
Sales And Other Agreements.
MML Distributors, LLC ("MML Distributors") a wholly-owned subsidiary of
MassMutual, is the principal underwriter of the policy. MML Investors Services,
Inc. ("MMLISI"), a wholly-owned subsidiary of MassMutual, serves as the
co-underwriter of the policies. Both MML Distributors and MMLISI are located at
1414 Main Street, Springfield, MA 01144-1013. Each underwriter is registered
with the Securities and Exchange Commission ("SEC") as a broker-dealer under the
Securities Exchange Act of 1934. Each is also a member of the National
Association of Securities Dealers, Inc. ("NASD").
MML Distributors may enter into selling agreements with other registered SEC
broker-dealers who are also members of the NASD. These are selling brokers.
We also sell the policies through state insurance licensed agents. These agents
are also registered representatives of selling brokers or of MMLISI.
When We receive a completed application, the selling broker or co-underwriter
performs suitability review. In some cases, We perform insurance underwriting.
If We accept the application, we determine the insured's risk classification. If
We do not accept the application, We will refund any premium paid.
Both MML Distributors and MMLISI receive compensation for their activities as
underwriters of the policies. We pay commissions through MMLISI and MML
Distributors to agents and selling brokers.
MML Distributors does business under different variations of its name; including
the name MML Distributors, L.L.C. in the states of Illinois, Michigan, Oklahoma,
South Dakota and Washington; and the name MML Distributors, Limited Liability
Company in the states of Maine, Ohio and West Virginia.
Commissions.
We pay agents or selling brokers commissions as a percentage of premiums paid
under the policies. The commission percentage is based on the minimum planned
annual premium. The maximum commission percentage We will pay under the policies
is 18% of premiums.
Agents may receive commissions at lower rates on policies sold to replace
existing insurance issued by MassMutual or any of its subsidiaries.
Bonding Arrangement.
We maintain an insurance company blanket bond which provides $50,000,000
coverage for MassMutual officers and employees and general agents and agents.
The blanket bond is subject to a $350,000 deductible.
Year 2000.
Like other businesses and governments around the world, We could be adversely
affected if the computer systems used by Us and those with which We do business
do not properly recognize the year 2000. This is commonly known as the "Year
2000 issue."
In 1996, We began an enterprise-wide process of identifying, evaluating and
implementing changes to computer systems and applications software to address
the Year 2000 issue on Our Own behalf and on behalf of certain subsidiaries. We
are addressing the Year 2000 issue internally with modifications to existing
programs and conversions to new programs. We are also seeking assurances from
vendors, customers, service providers, governments and others with which We
conduct business, to determine their year 2000 readiness.
The costs are currently being expensed, and when measured against net gain from
operations before dividends, are not material to Us.
Legal Proceedings.
We are currently not involved in any material legal proceedings that adversely
impact the policy.
Experts.
We have included the financial statements of MassMutual and the Strategic
Variable Life(R) segment of Massachusetts Mutual Variable Life Separate Account
I in this prospectus in reliance on the reports
26
<PAGE>
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of that firm as experts in accounting and auditing.
PricewaterhouseCoopers LLP's report on the statutory financial statements of
MassMutual includes explanatory paragraphs relating to the use of statutory
accounting practices rather than generally accepted accounting principles.
John M. Valencia, Assistant Vice President for MassMutual, has examined the
illustrations in Appendix C of this prospectus. We filed his opinion on the
illustrations as an exhibit to the registration statement filed with the SEC.
Financial Statements.
You should consider the financial statements of MassMutual and the Strategic
Variable Life(R) segment of the Separate Account included in Appendix E of this
prospectus only as bearing upon Our ability to meet Our obligations under the
policy.
27
<PAGE>
Appendix A - Glossary
Case:
A group of policies sold to individuals with a common employment or other
non-insurance motivated relationship.
Fixed Account Value:
The account value in the GPA.
Insured:
Person whose life the policy insures.
Issue Date:
The date the policy is in force. It is also the start date of the suicide
exclusion and contestability periods.
Monthly Calculation Date:
The date account value charges are due. The first monthly calculation date is
the policy date. Subsequent monthly calculation dates are on the same date of
each calendar month thereafter.
Net Premium:
Premium paid less sales load, premium tax charges and federal deferred
acquisition cost tax charges.
Policy Anniversary:
The anniversary of the policy date.
Policy Date:
The date used as the starting point for determining policy anniversary dates,
policy years and monthly calculation dates.
Policy Year:
The twelve month period beginning with the policy date, and each successive
twelve month period thereafter.
Policyowner:
The corporation, partnership, trust, individual, or other entity who owns the
policy, as shown on Our records.
Valuation Date:
A date on which the price of the Funds is determined. Generally, this will be
any date on which the New York Stock Exchange is open for trading.
Valuation Period:
The period from the end of one valuation date to the end of the next valuation
date.
Valuation Time:
The time the New York Stock Exchange closes on a valuation date (currently 4:00
p.m. New York time). All required actions will be performed as of the valuation
time.
Variable Account Value:
The account value in the Separate Account Divisions.
A-1
<PAGE>
Appendix B - Rates of Return
Table 1 shows the Effective Annual Rates of Return of the Funds based on the
actual investment performance of the Funds, after deductions of investment
management fees and other Fund operating expenses. This Table is based on
December 31, 1998 figures. The Effective Annual Rates of Return do not reflect
the deduction of mortality and expense risk charges, premium deductions,
administrative charge, cost of insurance charges or underwriting charges.
Table 2 shows the Effective Annual Rates of Return of the Separate Account
Divisions. These returns are based on the actual underlying Fund performance and
the deduction of the current mortality and expense risk charge. The Effective
Annual Rates of Return do not reflect premium deductions, administrative charge,
cost of insurance charges or underwriting charges. This table is based on
December 31, 1998 figures. It assumes the Separate Account Divisions have been
in operation for the same periods as the underlying Funds in which they invest.
Also, it reflects the total of the income generated by the Funds' net of
investment management fees and other operating expenses, plus realized or
unrealized capital gains and losses.
Table 3 shows the One Year Total Returns of the Funds based on actual investment
performance. It reflects the deduction of investment management fees and other
operating expenses. This table is based on December 31, 1998 annualized figures.
These rates of return do not reflect the deduction of mortality and expense risk
charges, premium deductions, administrative charge, cost of insurance charges or
underwriting charges.
Since Tables 1, 2 and 3 do not reflect deductions from premiums or
administrative, cost of insurance, and underwriting charges, the rates do not
illustrate how actual investment performance will affect the benefits under the
policy. If these charges were included, the returns would be lower.
The rates of return shown do not indicate future performance. You may consider
these rates of returns when assessing Funds' investment advisers and
sub-advisers competence and performance.
B-1
<PAGE>
TABLE 1
EFFECTIVE ANNUAL RATES OF RETURN (1)
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1 3 5 10 15 20 Since
Fund (Inception Date) Year Years Years Years Years Years Inception
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MML Equity Fund (9/15/71)(2) 16.20% 21.57% 19.66% 16.39% 15.76% 16.86% 14.84%
MML Equity Index Fund 28.22% -- -- -- -- -- 31.03%
(5/1/97)
MML Blend Fund (2/3/84) 13.56% 16.09% 14.60% 13.70% -- -- 13.67%
MML Managed Bond Fund 8.14% 7.06% 7.07% 9.19% 10.16% -- 10.24%
(12/16/81)
MML Money Market Fund 5.16% 5.11% 4.95% 5.41% 6.16% -- 6.66%
(12/16/81)(3)
Oppenheimer Global Securities 14.11% 18.06% 9.67% -- -- -- 12.49%
Fund/VA (11/12/90)(4)
Oppenheimer Small Cap -- -- -- -- -- -- -4.00%
Growth Fund/VA (5/1/98)(4)
Oppenheimer Aggressive 12.36% 14.69% 13.06% 16.12% -- -- 15.07%
Growth Fund/VA (8/15/86)(4)
Oppenheimer Capital 24.00% 25.29% 22.10% 16.85% -- -- 16.03%
Appreciation Fund/VA
(4/3/85)(4),(7)
Oppenheimer Main Street 4.70% 22.49% -- -- -- -- 27.00%
Growth & Income Fund/VA
(7/5/95)(4),(8)
Oppenheimer Multiple 6.66% 13.03% 11.43% 11.22% -- -- 11.57%
Strategies Fund/VA (2/9/87)(4)
Oppenheimer High Income 0.31% 9.06% 8.62% 12.71% -- -- 12.26%
Fund/VA (4/30/86)(4)
Oppenheimer Strategic Bond 2.90% 7.82% 6.83% -- -- -- 6.79%
Fund/VA (5/3/93)(4)
Oppenheimer Bond Fund/VA 6.80% 6.93% 7.01% 9.28% -- -- 9.66%
(4/3/85)(4)
Oppenheimer Money Fund/VA 5.25% 5.23% 5.10% 5.61% -- -- 5.88%
(4/3/85)(3),(4),(5)
Panorama International Equity 19.40% 13.49% 10.34% -- -- -- 10.21%
Portfolio (5/13/92)
Panorama LifeSpan Capital 6.49% 12.23% -- -- -- -- 13.11%
Appreciation Portfolio (9/1/95)
Panorama LifeSpan Balanced 6.17% 10.54% -- -- -- -- 11.39%
Portfolio (9/1/95)
Panorama LifeSpan Diversified 4.88% 8.06% -- -- -- -- 9.02%
Income Portfolio (9/1/95)
Goldman Sachs Capital Growth -- -- -- -- -- -- 13.40%
Fund (51/98)(6)
Goldman Sachs Mid Cap Value -- -- -- -- -- -- -13.56%
Fund (5/1/98)(6),(9)
Goldman Sachs CORE U.S. -- -- -- -- -- -- 14.73%
Equity Fund (2/13/98)(6)
Goldman Sachs Growth and -- -- -- -- -- -- 5.47%
Income Fund (1/12/98)(6)
MFS (R) a New Discovery Series -- -- -- -- -- -- 2.20%
(5/1/98)
MFS (R) a Emerging Growth Series 34.16% 24.16% -- -- -- -- 26.55%
(7/24/95)
MFS (R)Research Series (7/26/95) 23.39% 21.99% -- -- -- -- 22.52%
T. Rowe Price Mid-Cap Growth 22.08% -- -- -- -- -- 20.43%
Portfolio (12/31/96)
T. Rowe Price New America 18.51% 19.90% -- -- -- -- 22.56%
Growth Portfolio (3/31/94)
</TABLE>
B-2
<PAGE>
(1). The Effective Annual Rates Of Return is calculated by determining, over a
stated period of time, the average annual compounded rate of return that an
investment in the Fund earned over that period, assuming reinvestment of
all distributions.
(2). Although the MML Equity Fund commenced operations in 1971, the information
necessary to calculate the returns is available only for the year 1974 and
subsequent periods.
(3). An investment in money market funds is neither insured nor guaranteed by
the U.S. Government and such a fund's net asset value is not guaranteed to
remain stable at $1.00 per share.
(4). Each Oppenheimer Fund is a series of Oppenheimer Variable Account Funds.
(5). Although the Oppenheimer Money Fund commenced operations on 4/3/85, the
information necessary to calculate the returns is available only for the
year 1987 and subsequent periods.
(6). Each Goldman Sachs Fund is a series of Goldman Sachs Variable Insurance
Trust.
(7). Prior to May 1, 1999, this Fund was called Oppenheimer Growth Fund.
(8). Prior to May 1, 1999, this Fund was called Oppenheimer Growth & Income
Fund.
(9). Prior to May 1, 1999, this Fund was called Goldman Sachs Mid Cap Equity
Fund.
B-3
<PAGE>
The chart below shows the Effective Annual Rates Of Return Of The Divisions Of
The Separate Account. The performance figures are calculated on the basis of the
actual historical performance of the Funds for the periods shown. These
performance figures reflect all Fund level charges, that is, all investment
management fees and direct operating expenses, as well as the mortality and
expense charge. The current mortality and expense risk charge is 0.30%. These
returns do not reflect expenses or administrative and cost of insurance charges
assessed against the account value of the policy. The inclusion of these charges
would reduce the returns shown.
TABLE 2
EFFECTIVE ANNUAL RATES OF RETURN OF EACH DIVISION OF THE SEPARATE ACCOUNT
AS OF DECEMBER 31, 1998
>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1 5 10 Since
Division (Inception Date) Year Years Years Inception
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MML Equity Division (9/15/71)(1) 15.90% 19.36% 16.09% 14.54%
MML Equity Index Division (5/1/97) 27.92% -- -- 30.73%
MML Blend Division (2/3/84) 13.26% 14.30% 13.40% 13.37%
MML Managed Bond Division (12/16/81) 7.84% 6.77% 8.89% 9.94%
MML Money Market Division (12/16/81) 4.86% 4.65% 5.11% 6.36%
Oppenheimer Global Securities Division (11/12/90)(2) 13.81% 9.37% -- 12.19%
Oppenheimer Small Cap Growth Division (5/1/98)(2) -- -- -- -4.30%
Oppenheimer Aggressive Growth Division 12.06% 12.76% 15.82% 14.77%
(8/15/86)(2),(3)
Oppenheimer Capital Appreciation Division 23.70% 21.80% 16.55% 15.73%
(4/3/85)(2),(6)
Oppenheimer Main Street Growth & Income 4.40% -- -- 26.70%
Division (7/5/95)(2),(7)
Oppenheimer Multiple Strategies Division 6.36% 11.13% 10.92% 11.27%
(2/9/87)(2)
Oppenheimer High Income Division (4/30/86)(2) 0.01% 8.32% 12.41% 11.96%
Oppenheimer Strategic Bond Division (5/3/93)(2) 2.60% 6.53% -- 6.49%
Oppenheimer Bond Division (4/3/85)(2) 6.50% 6.71% 8.98% 9.36%
Oppenheimer Money Division (4/3/85)(2),(4) 4.95% 4.80% 5.31% 5.58%
Panorama International Equity Division (5/13/92) 19.10% 10.04% -- 9.91%
Panorama LifeSpan Capital Appreciation Division 6.19% -- -- 12.81%
(9/1/95)
Panorama LifeSpan Balanced Division (9/1/95) 5.87% -- -- 11.09%
Panorama LifeSpan Diversified Income Division 4.58% -- -- 8.72%
(9/1/95)
Goldman Sachs Capital Growth Division (5/1/98)(5) -- -- -- 13.10%
Goldman Sachs Mid Cap Value Division (5/1/98)(5),(8) -- -- -- -13.86%
Goldman Sachs CORE U.S. Equity Division -- -- -- 14.43%
(2/13/98)(5)
Goldman Sachs Growth and Income Division -- -- -- 5.17%
(1/12/98)(5)
MFS (R) a New Discovery Division (5/1/98) -- -- -- 1.90%
MFS (R) a Emerging Growth Division (7/24/95) 33.86% -- -- 26.25%
MFS (R)Research Division (7/26/95) 23.09% -- -- 22.22%
T. Rowe Price Mid-Cap Growth Division (12/31/96) 21.78% -- -- 20.13%
T. Rowe Price New America Growth Division 18.21% -- -- 22.26%
(3/31/94)
</TABLE>
The returns for any Divisions of the Separate Account reflect only the
performance of a hypothetical investment in the Separate Account Divisions
during the particular time period on which the calculations are based. The
returns should be considered in light of the investment objectives and policies,
characteristics and quality of the Fund in which the Separate Account Divisions
invest and the market conditions during the given time period and should not be
considered as a representation of what may be achieved in the future. Actual
returns may be more or less than those shown and will depend on a number of
factors, including the investment allocations by a policyowner and the different
investment rates of return for the Separate Account Divisions. The inception
date of Strategic Variable Life (R) is 7/5/95. The performance figures above are
based on the performance of the underlying Funds. Many of the Funds were in
existence prior to 7/5/95. The performance from the Funds inception dates is
derived by reducing the actual performance of the underlying Fund by the fees
and charges of Strategic Variable Life (R). You may obtain a personalized
illustration which reflects charges based on your individual characteristics.
Please refer to the prospectus for additional information including sample
hypothetical illustrations.
B-4
<PAGE>
(1). Although the MML Equity Fund commenced operations in 1971, the information
necessary to calculate the returns is available only for the year 1974 and
subsequent periods.
(2). Each Oppenheimer Fund is a series of Oppenheimer Variable Account Funds.
(3). Prior to May 1, 1999, this Division was called the Oppenheimer Capital
Appreciation Division.
(4). Although the Oppenheimer Money Fund commenced operations on 4/3/85, the
information necessary to calculate the returns is available only for the
year 1987 and subsequent periods.
(5). Each Goldman Sachs Fund is a series of Goldman Sachs Variable Insurance
Trust.
(6). Prior to May 1, 1999, this Division was called the Oppenheimer Growth
Division.
(7). Prior to May 1, 1999, this Division was called the Oppenheimer Growth &
Income Division.
(8). Prior to May 1, 1999, this Division was called the Goldman Sachs Mid Cap
Equity Division.
B-5
<PAGE>
TABLE 3
ONE YEAR TOTAL RETURNS(1)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
For the year ended 1998 1997 1996 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MML Equity Fund (9/15/71)(2) 16.20% 28.59% 20.25% 31.13% 4.10% 9.52% 10.48% 25.56%
MML Equity Index Fund (5/1/97) 28.22% 21.93% -- -- -- -- -- --
MML Blend Fund (2/3/84) 13.56% 20.89% 13.95% 23.28% 2.48% 9.70% 9.36% 24.00%
MML Mgd. Bond Fund (12/16/81)(2) 8.14% 9.91% 3.25% 19.14% (3.76)% 11.81% 7.31% 16.66%
MML Money Mrkt. Fund
(12/16/81)(2) 5.16% 5.18% 5.01% 5.58% 3.84% 2.75% 3.48% 6.01%
Opp. Global Securities Fund/VA
(11/12/90)(3) 14.11% 22.42% 17.80% 2.24% (5.72)% 70.32% (7.11)% 3.39%
Opp. Small Cap Growth Fund/VA
(5/1/98)(3),(4) (4.00)% -- -- -- -- -- -- --
Opp. Aggressive Growth Fund/VA
(8/15/86)(3),(5) 12.36% 11.67% 20.23% 32.52% (7.59)% 27.32% 15.42% 54.72%
Opp. Capital Appreciation
Fund/VA (4/3/85)(3),(8) 24.00% 26.69% 25.20% 36.66% 0.97% 7.25% 14.53% 25.54%
Opp. Main Street Growth & Income
Fund/VA (7/5/95)(3),(9) 4.70% 32.48% 32.51% 23.25% -- -- -- --
Opp. Multi. Strategies Fund/VA
(2/9/87)(3) 6.66% 17.22% 15.50% 21.36% (1.95)% 15.95% 8.99% 17.48%
Opp. High Income Fund/VA
(4/30/86)(3) 0.31% 12.22% 15.25% 20.37% (3.18)% 26.34% 17.92% 33.91%
Opp. Strategic Bond Fund/VA
(5/3/93)(3) 2.90% 8.71% 12.07% 15.33% (3.78)% 4.25% -- --
Opp. Bond Fund/VA (4/3/85)(3) 6.80% 9.26% 4.80% 17.00% (1.94)% 13.04% 6.50% 17.63%
Opp. Money Fund/VA (4/3/85)(3) 5.25% 5.32% 5.13% 5.62% (4.21)% 3.16% 4.03% 6.18%
Panorama International Equity
Portfolio (5/13/92) 19.40% 8.11% 13.26% 10.30% 1.44% 21.80% (4.32)% --
LifeSpan Cap. Appr. Portfolio
(9/1/95) 6.49% 12.53% 17.97% 6.65% -- -- -- --
LifeSpan Bal. Portfolio (9/1/95) 6.17% 12.20% 13.38% 6.08% -- -- -- --
LifeSpan Div. Inc. Portfolio (9/1/95) 4.88% 12.51% 6.93% 5.69% -- -- -- --
Goldman Sachs Capital Growth
Fund (5/1/98)(4) 13.40% -- -- -- -- -- -- --
Goldman Sachs Mid Cap Value
Fund (5/1/98)(4),(10),(11) -13.56% -- -- -- -- -- -- --
Goldman Sachs CORE U.S. Equity
Fund (2/13/98)(6),(10),(11) 14.73% -- -- -- -- -- -- --
Goldman Sachs Growth and Income
Fund (1/12/98)(7),(10) 5.47% -- -- -- -- -- -- --
MFS (R) New Discovery Series
(5/1/98)(4),(10) 2.20% -- -- -- -- -- -- --
MFS (R) Emerging Growth Series
(7/24/95) 34.16% 21.90% 17.02% -- -- -- -- --
MFS (R) Research Series (7/26/95) 23.39% 20.26% 22.33% -- -- -- -- --
T. Rowe Price Mid-Cap Growth
Portfolio (12/31/96) 22.08% 18.80% -- -- -- -- -- --
Growth Portfolio (3/31/94) 18.51% 21.12% 20.09% 51.10% 1.00% -- -- --
</TABLE>
TABLE 3 (Continued)
B-6
<PAGE>
ONE YEAR TOTAL RETURNS (1) (Continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
For the year ended 1990 1989 1988 1987 1986 1985 1984 1983
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MML Equity Fund (9/15/71)(2) (0.51)% 23.04% 16.68% 2.10% 20.15% 30.54% 5.40% 22.85%
MML Equity Index Fund (5/1/97) -- -- -- -- -- -- -- --
MML Blend Fund (2/3/84) 2.37% 19.96% 13.40% 3.12% 18.30% 24.88% 8.24% --
MML Mgd. Bond Fund (12/16/81)(2) 8.38% 12.83% 7.13% 2.60% 14.46% 19.94% 11.69% 7.26%
MML Money Mrkt. Fund
(12/16/81)(2) 8.12% 9.16% 7.39% 6.49% 6.60% 8.03% 10.39% 8.97%
Opp. Global Securities Fund/VA
(11/12/90)(3) 0.40% -- -- -- -- -- -- --
Opp. Small Cap Growth Fund/VA
(5/1/98)(3),(4) -- -- -- -- -- -- -- --
Opp. Aggressive Growth Fund/VA
(8/15/86)(3),(5) (16.82)% 27.57% 13.41% 14.34% (1.65)% -- -- --
Opp. Capital Appreciation Fund/VA
(4/3/85)(3),(8) (8.21)% 23.59% 22.09% 3.31% 17.76% 9.50% -- --
Opp. Main Street Growth & Income
Fund/VA (7/5/95)(3),(9) -- -- -- -- -- -- -- --
Opp. Multi. Strategies Fund/VA
(2/9/87)(3) (1.91)% 15.76% 22.15% 3.97% -- -- -- --
Opp. High Income Fund/VA
(4/30/86)(3) 4.65% 4.84% 15.58% 8.07% 4.73% -- -- --
Opp. Strategic Bond Fund/VA
(5/3/93)(3) -- -- -- -- -- -- -- --
Opp. Bond Fund/VA (4/3/85)(3) 7.92% 13.32% 8.97% 2.53% 10.12% 18.82% -- --
Opp. Money Fund/VA (4/3/85)(3) 7.84% 9.56% 6.96% 6.75% 6.00% 5.00% -- --
Panorama International Equity
Portfolio (5/13/92) -- -- -- -- -- -- -- --
LifeSpan Cap. Appr. Portfolio
(9/1/95) -- -- -- -- -- -- -- --
LifeSpan Bal. Portfolio (9/1/95) -- -- -- -- -- -- -- --
LifeSpan Div. Inc. Portfolio (9/1/95) -- -- -- -- -- -- -- --
Goldman Sachs Capital Growth
Fund (5/1/98)(4),(10) -- -- -- -- -- -- -- --
Goldman Sachs Mid Cap Value
Fund (5/1/98)(4),(10),(11) -- -- -- -- -- -- -- --
Goldman Sachs CORE U.S. Equity
Fund (2/13/98)(6),(10) -- -- -- -- -- -- -- --
Goldman Sachs Growth and Income
Fund (1/12/98)(7),(10)
MFS (R) New Discovery Series
(5/1/98)(4),(10) -- -- -- -- -- -- -- --
MFS (R) Emerging Growth Series
(7/24/95) -- -- -- -- -- -- -- --
MFS(R)Research Series (7/26/95) -- -- -- -- -- -- -- --
T. Rowe Price Mid-Cap Growth
Portfolio (12/31/96) -- -- -- -- -- -- -- --
</TABLE>
(1). The figures shown are one year total returns from the inception of the
Funds. These figures do not reflect the mortality and expense risk
charges assessed against the Separate Account, deductions from premiums
or administrative, cost of insurance and underwriting charges assessed
against the account value of the policies. If these charges were
included, the total return figures would be lower.
B-7
<PAGE>
The rates of return shown are not necessarily indicative of future
performance. You may consider them in assessing the competence and
performance of each of the Funds' investment advisers.
(2). The figures for the MML Equity Fund from 1974 through 1981 are as
follows: 1974: (17.61)%; 1975: 32.85%; 1976: 24.77%; 1977: (0.52)%; 1978:
3.71%; 1979: 19.54% 1980: 27.62%; 1981: 6.67%; 1982: 25.67%. The figure
for 1982 for the MML Managed Bond Fund is 22.79%. The figure for 1982 for
the MML Money Market Fund is 11.12%.
(3). Each Oppenheimer Fund is a series of Oppenheimer Variable Account Funds.
(4). This is the return for the period May 1, 1998 to December 31, 1998.
(5). Prior to May 1, 1998, this Fund was known as the Oppenheimer Capital
Appreciation Fund.
(6). This is the return for the period February 13, 1998 to December 31, 1998.
(7). This is the return for the period January 12, 1998 to December 31, 1998.
(8). Prior to May 1, 1999, this Fund was called Oppenheimer Growth Fund.
(9). Prior to May 1, 1999, this Fund was called Oppenheimer Growth & Income
Fund.
(10). Each Goldman Sachs Fund is a series of Goldman Sachs Variable Insurance
Trust.
(11). Prior to May 1, 1999, this Fund was called Goldman Sachs Mid Cap Equity
Fund.
B-8
<PAGE>
Appendix C - Hypothetical Illustrations
Illustrations of Death Benefits (Option 1), Cash Surrender Values and
Accumulated Premiums
The following tables illustrate the way in which a policy operates. They show
how the death benefit option 1 and cash surrender value could vary over an
extended period of time, assuming the Funds experience hypothetical gross rates
of investment return (i.e., investment income and capital gains and losses,
realized or unrealized), equivalent to constant gross annual rates of 0%, 6% and
12%. The tables are based on annual premiums of $1,200 for a male, female and
unisex nonsmoker age 35 and an initial case premium paid of $1,000,000. Separate
tables are shown for the current simplified issue and guaranteed schedule of
charges. These tables will help you compare the death benefits and cash
surrender values for the policy with those under other variable life policies
which may be issued by Us or other companies.
1. The illustration on page C-3 is for a policy issued to a male nonsmoker age
35 for a selected face amount of $100,000. The premium payment is $1,200
using a current simplified issue schedule of charges.
2. The illustration on page C-4 is for a policy issued to a male nonsmoker age
35 for a selected face amount of $100,000. The premium payment is $1,200
using a guaranteed schedule of charges.
3. The illustration on page C-5 is for a policy issued to a female nonsmoker
age 35 for a selected face amount of $100,000. The premium payment is
$1,200 using a current simplified issue schedule of charges.
4. The illustration on page C-6 is for a policy issued to a female nonsmoker
age 35 for a selected face amount of $100,000. The premium payment is
$1,200 using a guaranteed schedule of charges.
5. The illustration on page C-7 is for a policy issued to a unisex nonsmoker
age 35 for a selected face amount of $100,000. The premium payment is
$1,200 using a current simplified issue schedule of charges.
The illustration on page C-8 is for a policy issued to a unisex nonsmoker age 35
for a selected face amount of $100,000. The premium payment is $1,200 using a
guaranteed schedule of charges.
The death benefits and cash surrender values for a policy would be different
from the amount shown if the rates of return averaged 0%, 6% and 12% over a
period of years but varied above and below that average in individual policy
years. They would also differ if any policy loan were made during the period of
time illustrated. They would also be different depending upon the allocation of
investment value to each division, if the rates of return for all the Funds
averaged 0%, 6% or 12% but varied above or below that average for particular
Funds.
The death benefits and cash surrender values shown in illustrations 1, 3 and 5
reflect the following current charges:
1. Administrative charge, equal to a monthly $5.25 per Policy charge for
nonqualified policies.
2. Cost of insurance charge, based on the current simplified issue rates being
charged by Us.
3. Mortality and expense risk charge, which is equal to .30% on an annual
basis, of the net asset value of the Fund shares held by the Separate
Account.
4. Fund level expenses of .77% on an annual basis of the net asset value of
the MML Trust, Oppenheimer Trust, Panorama Fund, Goldman Sachs VIT Trust,
MFS Trust, and T. Rowe Price Equity Series, Inc. shares held by the
Separate Account.
The death benefits and cash surrender values shown in illustrations 2, 4 and 6
reflect these guaranteed maximum charges:
1. Administrative charge, equal to $9.00 per month.
2. Cost of insurance charge, based on the 1980 CSO Mortality Table.
3. Mortality and expense risk charge, which is equal to .60% on an annual
basis, of the net asset value of the Fund shares held by the Separate
Account.
4. Fund level expenses of .77% on an annual basis of the net asset value of
the MML Trust, Oppenheimer Trust, Panorama Fund, Goldman Sachs VIT Trust,
MFS Trust, and T. Rowe Price Equity Series, Inc. shares held by the
Separate Account. (This unweighted average reflects current Fund level
expenses.)
Cash surrender values shown in the tables reflect the deduction of the
applicable sales loads and premium
C-1
<PAGE>
taxes for a case with an initial case premium paid of $1,000,000. Taking into
account the mortality and expense risk charge and the Fund level expenses, the
effect is that for gross annual rates of return of 0%, 6% and 12%, the actual
net annual rate of return on a current basis would be -1.064%, 4.872% and
10.809%, respectively, and on a guaranteed basis would be -1.359%, 4.56 and
10.478%, respectively.
Currently We assess no charge against the Separate Account for federal income
taxes but We reserve the right to charge the Separate Account for federal income
taxes attributable to the Separate Account if such taxes are imposed in the
future.
The tables are based on the assumptions that:
o You requested a level selected face amount,
o You did not request a policy loan,
o You did not make additional premium payments,
o No transaction charges have been incurred, and
o You allocated the entire account value under the policy to the Funds.
The second column of each table shows the amounts which would accumulate if an
amount equal to the annual premium were invested to earn interest after taxes,
of 5% per year, compounded annually.
C-2
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Male, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and $1,000,000 Initial Case Premium Paid
Using Current Simplified Issue Schedule Of Charges
<TABLE>
<CAPTION>
Death Benefit (Option 1) Cash Surrender Value
Premiums ---------------------------------------- --------------------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of At 5% Annual Investment Return of Annual Investment Return of
Policy Interest ---------------------------------------- --------------------------------------
Year Per Year 0% 6% 12% 0% 6% 12%
-------- ----------- ----------- ---------- ---------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $ 100,000 $ 100,000 $ 100,000 $839 $892 $946
2 2,583 100,000 100,000 100,000 1,667 1,827 1,993
3 3,972 100,000 100,000 100,000 2,482 2,803 3,149
4 5,431 100,000 100,000 100,000 3,287 3,824 4,429
5 6,963 100,000 100,000 100,000 4,079 4,891 5,842
6 8,571 100,000 100,000 100,000 4,979 6,134 7,539
7 10,260 100,000 100,000 100,000 5,860 7,428 9,411
8 12,033 100,000 100,000 100,000 6,721 8,775 11,476
9 13,895 100,000 100,000 100,000 7,561 10,177 13,754
10 15,850 100,000 100,000 100,000 8,383 11,637 16,270
15 27,192 100,000 100,000 100,000 12,139 19,867 33,397
20 41,668 100,000 100,000 145,009 15,194 29,862 61,483
25 60,142 100,000 100,000 217,679 17,322 42,024 106,705
30(Age 65) 83,720 100,000 101,867 319,999 18,058 56,909 178,770
35 113,812 100,000 118,236 462,198 16,627 74,833 292,530
40 152,219 100,000 137,003 672,718 11,584 95,806 470,432
45 201,237 0 156,361 971,702 0 119,359 741,757
50 263,797 0 177,428 1,403,713 0 144,251 1,141,230
</TABLE>
It is emphasized that the hypothetical investment rates of return shown above
and elsewhere in this prospectus are illustrative only and should not be deemed
a representation of past or future investment rates of return. Actual rates of
return may be more or less than those shown. The death benefits and cash
surrender values for a policy would be different from the amounts shown if the
rates of return averaged 0%, 6% and 12% over a period of years, but varied above
or below that average in individual policy years. They would also be different,
depending on the allocation of investment value to each division of the separate
account, if the rates of return over all divisions averaged 0%, 6% or 12% but
varied above or below that average for individual divisions. They would also
differ if any policy loan were made during the period. No representations can be
made by MassMutual or the trusts that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
C-3
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Male, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and $1,000,000 Initial Case Premium Paid
Using Guaranteed Schedule Of Charges (fund level charges are reflected on a
current basis)
<TABLE>
<CAPTION>
Death Benefit (Option 1) Cash Surrender Value
Premiums ---------------------------------------- --------------------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of At 5% Annual Investment Return of Annual Investment Return of
Policy Interest ---------------------------------------- --------------------------------------
Year Per Year 0% 6% 12% 0% 6% 12%
-------- ----------- ----------- ---------- ---------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,000 $100,000 $100,000 $684 $733 $782
2 2,583 100,000 100,000 100,000 1,352 1,492 1,639
3 3,972 100,000 100,000 100,000 2,002 2,277 2,575
4 5,431 100,000 100,000 100,000 2,632 3,087 3,600
5 6,963 100,000 100,000 100,000 3,242 3,922 4,721
6 8,571 100,000 100,000 100,000 3,950 4,909 6,081
7 10,260 100,000 100,000 100,000 4,634 5,926 7,569
8 12,033 100,000 100,000 100,000 5,292 6,976 9,200
9 13,895 100,000 100,000 100,000 5,924 8,056 10,986
10 15,850 100,000 100,000 100,000 6,530 9,169 12,946
15 27,192 100,000 100,000 100,000 9,090 15,209 26,024
20 41,668 100,000 100,000 111,146 10,641 21,990 47,096
25 60,142 100,000 100,000 162,878 10,539 29,196 79,842
30(Age65) 83,720 100,000 100,000 231,149 7,701 36,329 129,133
35 113,812 0 100,000 318,265 0 42,281 201,434
40 152,219 0 100,000 435,530 0 44,903 304,567
45 201,237 0 100,000 584,770 0 38,197 446,389
50 263,797 0 100,000 782,748 0 2,775 636,380
</TABLE>
It is emphasized that the hypothetical investment rates of return shown above
and elsewhere in this prospectus are illustrative only and should not be deemed
a representation of past or future investment rates of return. Actual rates of
return may be more or less than those shown. The death benefits and cash
surrender values for a policy would be different from the amounts shown if the
rates of return averaged 0%, 6% and 12% over a period of years, but varied above
or below that average in individual policy years. They would also be different,
depending on the allocation of investment value to each division of the separate
account, if the rates of return over all divisions averaged 0%, 6% or 12% but
varied above or below that average for individual divisions. They would also
differ if any policy loan were made during the period. No representations can be
made by MassMutual or the trusts that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
C-4
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Female, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and $1,000,000 Initial Case Premium Paid
Using Current Simplified Issue Schedule Of Charges
<TABLE>
<CAPTION>
Death Benefit (Option 1) Cash Surrender Value
Premiums ---------------------------------------- --------------------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of At 5% Annual Investment Return of Annual Investment Return of
Policy Interest ---------------------------------------- --------------------------------------
Year Per Year 0% 6% 12% 0% 6% 12%
-------- ----------- ----------- ---------- ---------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $ 100,000 $ 100,000 $ 100,000 $875 $931 $986
2 2,583 100,000 100,000 100,000 1,739 1,904 2,076
3 3,972 100,000 100,000 100,000 2,589 2,921 3,280
4 5,431 100,000 100,000 100,000 3,425 3,982 4,608
5 6,963 100,000 100,000 100,000 4,247 5,090 6,076
6 8,571 100,000 100,000 100,000 5,157 6,354 7,811
7 10,260 100,000 100,000 100,000 6,051 7,674 9,727
8 12,033 100,000 100,000 100,000 6,926 9,049 11,843
9 13,895 100,000 100,000 100,000 7,784 10,485 14,181
10 15,850 100,000 100,000 100,000 8,626 11,983 16,765
15 27,192 100,000 100,000 107,029 12,544 20,493 34,414
20 41,668 100,000 100,000 169,251 15,990 31,070 63,390
25 60,142 100,000 101,726 253,997 18,829 44,229 110,434
30(Age65) 83,720 100,000 120,297 371,137 20,903 60,451 186,501
35 113,812 100,000 139,568 537,881 21,970 80,211 309,127
40 152,219 100,000 159,236 773,577 21,397 104,076 505,606
45 201,237 100,000 181,660 1,120,765 16,512 131,638 812,148
50 263,797 100,000 203,835 1,606,373 460 161,774 1,274,899
</TABLE>
It is emphasized that the hypothetical investment rates of return shown above
and elsewhere in this prospectus are illustrative only and should not be deemed
a representation of past or future investment rates of return. Actual rates of
return may be more or less than those shown. The death benefits and cash
surrender values for a policy would be different from the amounts shown if the
rates of return averaged 0%, 6% and 12% over a period of years, but varied above
or below that average in individual policy years. They would also be different,
depending on the allocation of investment value to each division of the separate
account, if the rates of return over all divisions averaged 0%, 6% or 12% but
varied above or below that average for individual divisions. They would also
differ if any policy loan were made during the period. No representations can be
made by MassMutual or the trusts that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
C-5
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Female, Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and $1,000,000 Initial Case Premium Paid
Using Guaranteed Schedule Of Charges (fund level charges are reflected on a
current basis)
<TABLE>
<CAPTION>
Death Benefit (Option 1) Cash Surrender Value
Premiums ---------------------------------------- --------------------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of At 5% Annual Investment Return of Annual Investment Return of
Policy Interest ---------------------------------------- --------------------------------------
Year Per Year 0% 6% 12% 0% 6% 12%
-------- ----------- ----------- ---------- ---------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,000 $100,000 $100,000 $723 $773 $824
2 2,583 100,000 100,000 100,000 1,428 1,574 1,726
3 3,972 100,000 100,000 100,000 2,114 2,401 2,712
4 5,431 100,000 100,000 100,000 2,780 3,255 3,792
5 6,963 100,000 100,000 100,000 3,425 4,137 4,973
6 8,571 100,000 100,000 100,000 4,151 5,155 6,381
7 10,260 100,000 100,000 100,000 4,852 6,204 7,921
8 12,033 100,000 100,000 100,000 5,528 7,287 9,610
9 13,895 100,000 100,000 100,000 6,180 8,405 11,464
10 15,850 100,000 100,000 100,000 6,808 9,560 13,501
15 27,192 100,000 100,000 100,000 9,567 15,938 27,195
20 41,668 100,000 100,000 131,494 11,552 23,390 49,249
25 60,142 100,000 100,000 192,234 12,530 32,056 83,580
30(Age65) 83,720 100,000 100,000 271,796 12,124 42,175 136,581
35 113,812 100,000 100,000 376,628 8,934 53,618 216,453
40 152,219 100,000 102,220 512,649 783 66,810 335,065
45 201,237 0 111,091 694,224 0 80,501 503,061
50 263,797 0 118,036 925,228 0 93,680 734,308
</TABLE>
It is emphasized that the hypothetical investment rates of return shown above
and elsewhere in this prospectus are illustrative only and should not be deemed
a representation of past or future investment rates of return. Actual rates of
return may be more or less than those shown. The death benefits and cash
surrender values for a policy would be different from the amounts shown if the
rates of return averaged 0%, 6% and 12% over a period of years, but varied above
or below that average in individual policy years. They would also be different,
depending on the allocation of investment value to each division of the separate
account, if the rates of return over all divisions averaged 0%, 6% or 12% but
varied above or below that average for individual divisions. They would also
differ if any policy loan were made during the period. No representations can be
made by MassMutual or the trusts that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
C-6
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Unisex (85% Male), Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and $1,000,000 Initial Case Premium Paid
Using Current Simplified Issue Schedule Of Charges
<TABLE>
<CAPTION>
Death Benefit (Option 1) Cash Surrender Value
Premiums ---------------------------------------- --------------------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of At 5% Annual Investment Return of Annual Investment Return of
Policy Interest ---------------------------------------- --------------------------------------
Year Per Year 0% 6% 12% 0% 6% 12%
-------- ----------- ----------- ---------- ---------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,260 $100,000 $100,000 $100,000 $845 $899 $953
2 2,583 100,000 100,000 100,000 1,679 1,840 2,007
3 3,972 100,000 100,000 100,000 2,501 2,823 3,172
4 5,431 100,000 100,000 100,000 3,312 3,852 4,460
5 6,963 100,000 100,000 100,000 4,109 4,926 5,883
6 8,571 100,000 100,000 100,000 5,010 6,172 7,587
7 10,260 100,000 100,000 100,000 5,893 7,471 9,466
8 12,033 100,000 100,000 100,000 6,756 8,822 11,539
9 13,895 100,000 100,000 100,000 7,599 10,229 13,827
10 15,850 100,000 100,000 100,000 8,424 11,696 16,355
15 27,192 100,000 100,000 100,000 12,204 19,970 33,568
20 41,668 100,000 100,000 149,516 15,318 30,055 61,783
25 60,142 100,000 100,000 224,104 17,554 42,373 107,227
30(Age65) 83,720 100,000 104,637 327,110 18,496 57,493 179,731
35 113,812 100,000 121,744 473,925 17,456 75,617 294,363
40 152,219 100,000 140,437 687,082 13,135 96,853 473,850
45 201,237 100,000 160,498 994,265 1,181 120,676 747,568
50 263,797 0 180,800 1,426,407 0 145,806 1,150,328
</TABLE>
It is emphasized that the hypothetical investment rates of return shown above
and elsewhere in this prospectus are illustrative only and should not be deemed
a representation of past or future investment rates of return. Actual rates of
return may be more or less than those shown. The death benefits and cash
surrender values for a policy would be different from the amounts shown if the
rates of return averaged 0%, 6% and 12% over a period of years, but varied above
or below that average in individual policy years. They would also be different,
depending on the allocation of investment value to each division of the separate
account, if the rates of return over all divisions averaged 0%, 6% or 12% but
varied above or below that average for individual divisions. They would also
differ if any policy loan were made during the period. No representations can be
made by MassMutual or the trusts that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
C-7
<PAGE>
FLEXIBLE PREMIUM VARIABLE WHOLE LIFE INSURANCE POLICY
WITH TABLE OF SELECTED FACE AMOUNTS
Unisex (85% Male), Issue Age 35, Nonsmoker
$100,000 Selected Face Amount All Years
$1,200 Annual Premium and $1,000,000 Initial Case Premium Paid
Using Guaranteed Schedule Of Charges (fund level charges are reflected on a
current basis)
<TABLE>
<CAPTION>
Death Benefit (Option 1) Cash Surrender Value
Premiums ---------------------------------------- --------------------------------------
Accumulated Assuming Hypothetical Gross Assuming Hypothetical Gross
End of At 5% Annual Investment Return of Annual Investment Return of
Policy Interest ---------------------------------------- --------------------------------------
Year Per Year 0% 6% 12% 0% 6% 12%
-------- ----------- ----------- ---------- ---------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $1,260 $100,000 $100,000 $100,000 $693 $742 $791
2 2,583 100,000 100,000 100,000 1,368 1,509 1,657
3 3,972 100,000 100,000 100,000 2,026 2,303 2,605
4 5,431 100,000 100,000 100,000 2,663 3,122 3,640
5 6,963 100,000 100,000 100,000 3,280 3,966 4,773
6 8,571 100,000 100,000 100,000 3,991 4,960 6,142
7 10,260 100,000 100,000 100,000 4,678 5,983 7,641
8 12,033 100,000 100,000 100,000 5,341 7,040 9,285
9 13,895 100,000 100,000 100,000 5,977 8,128 11,085
10 15,850 100,000 100,000 100,000 6,588 9,250 13,061
15 27,192 100,000 100,000 100,000 9,187 15,359 26,265
20 41,668 100,000 100,000 115,083 10,827 22,277 47,555
25 60,142 100,000 100,000 168,461 10,947 29,785 80,603
30(Age 65) 83,720 100,000 100,000 237,633 8,624 37,554 130,568
35 113,812 100,000 100,000 328,743 1,715 44,745 204,188
40 152,219 0 100,000 449,342 0 49,994 309,891
45 201,237 0 100,000 606,454 0 49,543 455,980
50 263,797 0 100,000 809,443 0 32,724 652,776
</TABLE>
It is emphasized that the hypothetical investment rates of return shown above
and elsewhere in this prospectus are illustrative only and should not be deemed
a representation of past or future investment rates of return. Actual rates of
return may be more or less than those shown. The death benefits and cash
surrender values for a policy would be different from the amounts shown if the
rates of return averaged 0%, 6% and 12% over a period of years, but varied above
or below that average in individual policy years. They would also be different,
depending on the allocation of investment value to each division of the separate
account, if the rates of return over all divisions averaged 0%, 6% or 12% but
varied above or below that average for individual divisions. They would also
differ if any policy loan were made during the period. No representations can be
made by MassMutual or the trusts that these hypothetical rates of return can be
achieved for any one year or sustained over any period of time.
C-8
<PAGE>
Appendix D - Directors of Massachusetts Mutual Life Insurance Company
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Name, Position, Business Address Principal Occupation(s) During Past Five Years
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Roger G. Ackerman, Director Corning, Inc.
One Riverfront Plaza, HQE 2 Chairman and Chief Executive Officer (since 1996)
Corning, NY 14831 President and Chief Operating Officer (1990-1996)
- -----------------------------------------------------------------------------------------------------------------------------------
James R. Birle, Director Resolute Partners, LLC
2 Soundview Drive Chairman (since 1997), Founder (1994)
Greenwich, CT 06836 President (1994-1997)
Blackstone Group
General Partner (1988-1994)
- -----------------------------------------------------------------------------------------------------------------------------------
Gene Chao, Director Computer Projections, Inc.
733 SW Vista Avenue Chairman, President and CEO (since 1991)
Portland, OR 97205
- -----------------------------------------------------------------------------------------------------------------------------------
Patricia Diaz Dennis, Director SBC Communications Inc.
175 East Houston, Room 5-A-70 Senior Vice President - Regulatory and Public Affairs (since 1998)
San Antonio, TX 78205 Senior Vice President and Assistant General Counsel (1995-1998)
Sullivan & Cromwell
Special Counsel (1993-1995)
U.S. Department of State
Asst. Secy. of State for Human Rights and Human. Affrs. (1992-1993)
- -----------------------------------------------------------------------------------------------------------------------------------
Anthony Downs, Director The Brookings Institution
1775 Massachusetts Ave., N.W. Senior Fellow (since 1977)
Washington, DC 20036-2188
- -----------------------------------------------------------------------------------------------------------------------------------
James L. Dunlap, Director Ocean Energy, Inc.
1201 Louisiana, Suite 1400 Vice Chairman (since 1998)
Houston, TX 77002-5603 United Meridian Corporation
President and Chief Operating Officer (1996-1998)
Texaco, Inc.
Senior Vice President (1987-1996)
- -----------------------------------------------------------------------------------------------------------------------------------
William B. Ellis, Director Yale University School of Forestry and Environmental Studies
31 Pound Foolish Lane Senior Fellow (since 1995)
Glastonbury, CT 06033 Northeast Utilities
Chairman of the Board (1993-1995) and Chief Executive
Officer (1983-1993)
- -----------------------------------------------------------------------------------------------------------------------------------
Robert M. Furek, Director Resolute Partners LLC
1 State Street, Suite 2310 Partner (since 1997)
Hartford, CT 06103 State Board of Trustees for the Hartford School System
Chairman (since 1997)
Heublein, Inc.
President and Chief Executive Officer (1987-1996)
- -----------------------------------------------------------------------------------------------------------------------------------
Charles K. Gifford, Director BankBoston, N.A.
100 Federal Street Chairman and Chief Executive Officer (since 1996)
Boston, MA 02110 President (1989-1996)
BankBoston Corporation
Chairman (since 1998) and Chief Executive Officer (since 1995)
President (1989-1996)
- -----------------------------------------------------------------------------------------------------------------------------------
William N. Griggs, Director Griggs & Santow, Inc.
75 Wall Street, 20th Floor Managing Director (since 1983)
New York, NY 10005
- -----------------------------------------------------------------------------------------------------------------------------------
George B. Harvey, Director Pitney Bowes
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-1
<PAGE>
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
One Landmark Square, Suite 1905 Chairman, President and CEO (1983-1996)
Stamford, CT 06901
- -----------------------------------------------------------------------------------------------------------------------------------
Barbara B. Hauptfuhrer, Director Director of various corporations (since 1972)
1700 Old Welsh Road
Huntingdon Valley, PA 19006
- -----------------------------------------------------------------------------------------------------------------------------------
Sheldon B. Lubar, Director Lubar & Co. Incorporated
700 North Water Street, Suite 1200 Chairman (since 1977)
Milwaukee, WI 53202
- -----------------------------------------------------------------------------------------------------------------------------------
William B. Marx, Jr., Director Lucent Technologies
5 Peacock Lane Senior Executive Vice President (1996-1996)
Village of Golf, FL 33436-5299 AT&T Multimedia Products Group
Executive Vice President and CEO (1994-1996)
AT&T Network Systems Group
Executive Vice President and CEO (1993-1994)
Group Executive and President (1989-1993)
- -----------------------------------------------------------------------------------------------------------------------------------
John F. Maypole, Director Peach State Real Estate Holding Company
55 Sandy Hook Road - North Managing Partner (since 1984)
Sarasota, FL 34242
- -----------------------------------------------------------------------------------------------------------------------------------
Robert J. O'Connell, MassMutual
Director, President President and Chief Executive Officer (since 1999)
and Chief Executive Officer American International Group, Inc.
1295 State Street Senior Vice President (1991-1998)
Springfield, MA 01111 AIG Life Companies
President and Chief Executive Officer (1991-1998)
- -----------------------------------------------------------------------------------------------------------------------------------
Thomas B. Wheeler, Director and MassMutual
Chairman of the Board Chairman of the Board (since 1996)
1295 State Street President (1988-1996) and Chief Executive Officer (1988-1999)
Springfield, MA 01111
- -----------------------------------------------------------------------------------------------------------------------------------
Alfred M. Zeien, Director The Gillette Company
Prudential Tower Chairman and Chief Executive Officer (since 1991)
Boston, MA 02199
- -----------------------------------------------------------------------------------------------------------------------------------
Executive Vice Presidents:
- -----------------------------------------------------------------------------------------------------------------------------------
Lawrence V. Burkett, Jr. MassMutual
1295 State Street Executive Vice President and General Counsel (since 1993)
Springfield, MA 01111 Senior Vice President and Deputy General Counsel (1992-1993)
- -----------------------------------------------------------------------------------------------------------------------------------
Peter J. Daboul MassMutual
1295 State Street Executive Vice President and Chief Information Officer (since 1997)
Springfield, MA 01111 Senior Vice President (1990-1997)
- -----------------------------------------------------------------------------------------------------------------------------------
John B. Davies MassMutual
1295 State Street Executive Vice President (since 1994)
Springfield, MA 01111 Associate Executive Vice President (1994-1994)
General Agent (1982-1993)
- -----------------------------------------------------------------------------------------------------------------------------------
Daniel J. Fitzgerald MassMutual
1295 State Street Executive Vice President (since 1994)
Springfield, MA 01111 Corporate Financial Operations (1994-1997)
Senior Vice President (1991-1994)
- -----------------------------------------------------------------------------------------------------------------------------------
James E. Miller MassMutual
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-2
<PAGE>
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
1295 State Street Executive Vice President (since 1997 and 1987-1996)
Springfield, MA 01111 UniCare Life & Health
Senior Vice President (1996-1997)
- -----------------------------------------------------------------------------------------------------------------------------------
John V. Murphy MassMutual
1295 State Street Executive Vice President (since 1997)
Springfield, MA 01111 David L. Babson & Co., Inc.
Executive Vice President and Chief Operating Officer (1995-1997)
Concert Capital Management, Inc.
Chief Operating Officer (1993-1995)
Liberty Financial Companies
Senior Vice President and Chief Financial Officer (1977-1993)
- -----------------------------------------------------------------------------------------------------------------------------------
Joseph M. Zubretsky MassMutual
1295 State Street Executive Vice President and Chief Financial Officer (since 1997)
Springfield, MA 01111 HealthSource
Chief Financial Officer (1996-1996)
Coopers & Lybrand
Partner (1990-1996)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-3
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyowners of
Massachusetts Mutual Life Insurance Company
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of each of the divisions of the
Strategic Variable Life segment of Massachusetts Mutual Variable Life Separate
Account I (hereafter referred to as "the Account") at December 31, 1998, the
results of each of their operations for the year then ended and the changes in
each of their net assets for each of the two years in the period then ended, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Account's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of investments owned at
December 31, 1998 by correspondence with the investment companies, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Springfield, Massachusetts
February 25, 1999
F-1
<PAGE>
Massachusetts Mutual Variable Life Separate Account I - Strategic Variable Life
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<CAPTION>
MML MML MML Oppenheimer
MML Equity Money Managed MML Oppenheimer High
Equity Index Market Bond Blend Money Income
Division Division Division Division Division Division Division
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments
Number of shares (Note 2) 188,112 91,986 5,743,483 315,080 115,509 2,916,346 86,409
========== ========== ========== ========== ========== ========== ==========
Identified cost (Note 3B) $6,874,457 $1,291,317 $5,743,483 $4,032,073 $2,878,347 $2,916,346 $ 911,037
========== ========== ========== ========== ========== ========== ==========
Value (Note 3A) $7,373,565 $1,403,709 $5,743,483 $3,968,862 $2,897,320 $2,916,346 $ 952,222
Dividends receivable 373,428 21,074 22,686 71,880 181,500 4,159 --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total assets 7,746,993 1,424,783 5,766,169 4,040,742 3,078,820 2,920,505 952,222
LIABILITIES
Payable to Massachusetts
Mutual Life Insurance Company 5,360 946 5,239 2,124 2,392 1,263 1,421
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS $7,741,633 $1,423,837 $5,760,930 $4,038,618 $3,076,428 $2,919,242 $ 950,801
========== ========== ========== ========== ========== ========== ==========
Net Assets:
For variable life insurance policies $7,731,627 $1,416,026 $5,755,027 $4,032,156 $3,067,966 $2,913,321 $ 943,859
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 10,006 7,811 5,903 6,462 8,462 5,921 6,942
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net assets $7,741,633 $1,423,837 $5,760,930 $4,038,618 $3,076,428 $2,919,242 $ 950,801
========== ========== ========== ========== ========== ========== ==========
Accumulation units (Note 8)
Policyowners 3,863,591 906,298 4,874,869 3,119,840 1,812,738 2,460,085 679,822
Massacusetts Mutual Life
Insurance Company 5,000 5,000 5,000 5,000 5,000 5,000 5,000
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total units 3,868,591 911,298 4,879,869 3,124,840 1,817,738 2,465,085 684,822
========== ========== ========== ========== ========== ========== ==========
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1998 $ 2.00 $ 1.56 $ 1.18 $ 1.29 $ 1.69 $ 1.18 $ 1.39
December 31, 1997 1.73 1.22 1.13 1.20 1.49 1.13 1.39
December 31, 1996 1.35 -- 1.07 1.09 1.24 1.08 1.24
December 31, 1995 1.12 -- 1.03 1.06 1.09 1.03 1.08
<CAPTION>
*Oppenheimer
Oppenheimer Capital Oppenheimer
Bond Appreciation Growth
Division Division Division
---------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Investments
Number of shares (Note 2) 55,324 118,374 208,097
========== ========== ==========
Identified cost (Note 3B) $ 657,320 $4,843,153 $6,753,322
========== ========== ==========
Value (Note 3A) $ 681,594 $5,306,720 $7,630,919
Dividends receivable -- -- --
---------- ---------- ----------
Total assets 681,594 5,306,720 7,630,919
LIABILITIES
Payable to Massachusetts
Mutual Life Insurance Company 429 3,012 5,058
---------- ---------- ----------
NET ASSETS $ 681,165 $5,303,708 $7,625,861
========== ========== ==========
Net Assets:
For variable life insurance policies $ 674,763 $5,294,925 $7,614,849
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 6,402 8,783 11,012
---------- ---------- ----------
Net assets $ 681,165 $5,303,708 $7,625,861
========== ========== ==========
Accumulation units (Note 8)
Policyowners 527,021 3,014,459 3,457,434
Massacusetts Mutual Life
Insurance Company 5,000 5,000 5,000
---------- ---------- ----------
Total units 532,021 3,019,459 3,462,434
========== ========== ==========
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1998 $ 1.28 $ 1.76 $ 2.20
December 31, 1997 1.20 1.55 1.78
December 31, 1996 1.10 1.41 1.41
December 31, 1995 1.06 1.17 1.13
</TABLE>
* This division invests in the Oppenheimer Aggressive Growth Fund. Prior to
May 1, 1998, the Oppenheimer Aggressive Growth Fund was called the
Oppenheimer Capital Appreciation Fund.
See Notes to Financial Statements.
F-2
<PAGE>
Massachusetts Mutual Variable Life Separate Account I - Strategic Variable Life
STATEMENT OF ASSETS AND LIABILITIES (Continued)
December 31, 1998
<TABLE>
<CAPTION>
Panorama Panorama
Oppenheimer Oppenheimer Oppenheimer Oppenheimer LifeSpan Panorama LifeSpan
Multiple Global Strategic Growth & Diversified LifeSpan Capital
Strategies Securities Bond Income Income Balanced Appreciation
Division Division Division Division Division Division Division
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments
Number of shares (Note 2) 42,755 107,607 66,011 99,898 37,836 4,720 4,537
========== ========== ========== ========== ========== ========== ==========
Identified cost (Note 3B) $ 704,740 $2,096,528 $ 336,959 $1,957,159 $ 43,429 $ 5,333 $ 5,317
========== ========== ========== ========== ========== ========== ==========
Value (Note 3A) $ 728,971 $2,374,893 $ 337,978 $2,045,903 $ 44,269 $ 6,041 $ 6,170
Dividends receivable -- -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total assets 728,971 2,374,893 337,978 2,045,903 44,269 6,041 6,170
LIABILITIES
Payable to Massachusetts Mutual
Life Insurance Company 440 1,654 121 673 9 4 4
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS $ 728,531 $2,373,239 $ 337,857 $2,045,230 $ 44,260 $ 6,037 $ 6,166
========== ========== ========== ========== ========== ========== ==========
Net Assets:
For variable life insurance policies $ 720,901 $2,365,051 $ 331,231 $2,033,835 $ 38,505 $ -- $ --
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 7,630 8,188 6,626 11,395 5,755 6,037 6,166
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net assets $ 728,531 $2,373,239 $ 337,857 $2,045,230 $ 44,260 $ 6,037 $ 6,166
========== ========== ========== ========== ========== ========== ==========
Accumulation units (Note 8)
Policyowners 472,390 1,444,242 249,949 892,415 33,456 -- --
Massacusetts Mutual Life
Insurance Company 5,000 5,000 5,000 5,000 5,000 5,000 5,000
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total units 477,390 1,449,242 254,949 897,415 38,456 5,000 5,000
========== ========== ========== ========== ========== ========== ==========
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1998 $ 1.53 $ 1.64 $ 1.33 $ 2.28 $ 1.15 $ 1.21 $ 1.23
December 31, 1997 1.44 1.44 1.29 2.18 1.10 1.14 1.16
December 31, 1996 1.23 1.18 1.19 1.65 -- -- --
December 31, 1995 1.07 1.00 1.07 1.25 -- -- --
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
Massachusetts Mutual Variable Life Separate Account I - Strategic Variable Life
STATEMENT OF OPERATIONS
For The Year Ended December 31, 1998
<TABLE>
<CAPTION>
MML MML MML Oppenheimer
MML Equity Money Managed MML Oppenheimer High
Equity Index Market Bond Blend Money Income
Division Division Division Division Division Division Division
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income
Dividends (Note 3B) $ 373,475 $ 21,240 $ 187,524 $ 168,728 $ 246,487 $ 32,467 $ 105,076
Expenses
Mortality and expense risk fees
(Note 4) 16,554 1,364 11,255 6,638 7,150 1,991 6,066
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net investment income
(Note 3C) 356,921 19,876 176,269 162,090 239,337 30,476 99,010
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net realized and unrealized
gain (loss) on investments
Net realized gain (loss) on
investments (Notes 3B, 3C & 6) 343,308 9,451 -- 102,125 69,105 -- (24,045)
Change in net unrealized
appreciation/depreciation
of investments 181,317 111,441 -- (104,407) (21,406) -- 35,997
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net gain (loss) on investments 524,625 120,892 -- (2,282) 47,699 -- 11,952
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase in net assets
resulting from operations $ 881,546 $ 140,768 $ 176,269 $ 159,808 $ 287,036 $ 30,476 $ 110,962
========== ========== ========== ========== ========== ========== ==========
<CAPTION>
*Oppenheimer
Oppenheimer Capital Oppenheimer
Bond Appreciation Growth
Division Division Division
---------- ---------- ----------
<S> <C> <C> <C>
Investment income
Dividends (Note 3B) $ 4,801 $ 103,227 $ 415,163
Expenses
Mortality and expense risk fees
(Note 4) 1,305 10,650 14,930
---------- ---------- ----------
Net investment income
(Note 3C) 3,496 92,577 400,233
---------- ---------- ----------
Net realized and unrealized
gain (loss) on investments
Net realized gain (loss) on
investments (Notes 3B, 3C & 6) 699 28,670 239,979
Change in net unrealized
appreciation/depreciation
of investments 23,404 388,792 646,246
---------- ---------- ----------
Net gain (loss) on investments 24,103 417,462 886,225
---------- ---------- ----------
Net increase in net assets
resulting from operations $ 27,599 $ 510,039 $1,286,458
========== ========== ==========
</TABLE>
* This division invests in the Oppenheimer Aggressive Growth Fund. Prior to
May 1, 1998, the Oppenheimer Aggressive Growth Fund was called the
Oppenheimer Capital Appreciation Fund.
See Notes to Financial Statements.
F-4
<PAGE>
Massachusetts Mutual Variable Life Separate Account I - Strategic Variable Life
STATEMENT OF OPERATIONS (Continued)
For The Year Ended December 31, 1998
<TABLE>
<CAPTION>
Panorama Panorama
Oppenheimer Oppenheimer Oppenheimer Oppenheimer LifeSpan Panorama LifeSpan
Multiple Global Strategic Growth & Diversified LifeSpan Capital
Strategies Securities Bond Income Income Balanced Appreciation
Division Division Division Division Division Division Division
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income
Dividends (Note 3B) $ 28,409 $ 159,215 $ 2,492 $ 51,129 $ 310 $ 355 $ 339
--------- --------- --------- --------- --------- --------- ---------
Expenses
Mortality and expense risk fees
(Note 4) 1,458 5,293 335 3,632 22 18 18
--------- --------- --------- --------- --------- --------- ---------
Net investment income
(Note 3C) 26,951 153,922 2,157 47,497 288 337 321
--------- --------- --------- --------- --------- --------- ---------
Net realized and unrealized
gain (loss) on investments
Net realized gain (loss) on
investments (Notes 3B, 3C & 6) 1,594 (56,819) 427 32,636 3 2 2
Change in net unrealized
appreciation/depreciation
of investments 7,538 204,584 893 32,475 326 (5) 35
--------- --------- --------- --------- --------- --------- ---------
Net gain (loss) on investments 9,132 147,765 1,320 65,111 329 (3) 37
--------- --------- --------- --------- --------- --------- ---------
Net increase in net assets
resulting from operations $ 36,083 $ 301,687 $ 3,477 $ 112,608 $ 617 $ 334 $ 358
========= ========= ========= ========= ========= ========= =========
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
Massachusetts Mutual Variable Life Separate Account I - Strategic Variable Life
STATEMENT OF CHANGES IN NET ASSETS
For The Year Ended December 31, 1998
<TABLE>
<CAPTION>
MML MML MML
MML Equity Money Managed MML
Equity Index Market Bond Blend
Division Division Division Division Division
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 356,921 $ 19,876 $ 176,269 $ 162,090 $ 239,337
Net realized gain (loss) on investments 343,308 9,451 -- 102,125 69,105
Change in net unrealized appreciation/
depreciation of investments 181,317 111,441 -- (104,407) (21,406)
------------ ------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations 881,546 140,768 176,269 159,808 287,036
------------ ------------ ------------ ------------ ------------
Capital transactions: (Note 8)
Net contract payments 2,127,843 284,427 13,190,213 908,561 1,370,816
Withdrawal of funds (233,361) -- (22,113) (15,597) (12,404)
Transfer of death benefits (4,373) (1,996) (3,075) (579) (16,890)
Transfer of policy loans,
net of repayments -- -- -- -- (906)
Transfer due to reimbursement
(payment) of accumulation unit
value fluctuation 22,791 4,910 17,465 (7,694) 11,001
Withdrawal due to charges for
administrative and insurance costs (202,908) (14,752) (196,275) (58,776) (103,484)
Divisional transfers 1,401,479 986,701 (8,727,846) 1,752,697 241,495
------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting
from capital transactions 3,111,471 1,259,290 4,258,369 2,578,612 1,489,628
------------ ------------ ------------ ------------ ------------
Total increase (decrease) 3,993,017 1,400,058 4,434,638 2,738,420 1,776,664
NET ASSETS, at beginning
of the year 3,748,616 23,779 1,326,292 1,300,198 1,299,764
------------ ------------ ------------ ------------ ------------
NET ASSETS, at end
of the year $ 7,741,633 $ 1,423,837 $ 5,760,930 $ 4,038,618 $ 3,076,428
============ ============ ============ ============ ============
<CAPTION>
Oppenheimer *Oppenheimer
Oppenheimer High Oppenheimer Capital Oppenheimer
Money Income Bond Appreciation Growth
Division Division Division Division Division
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 30,476 $ 99,010 $ 3,496 $ 92,577 $ 400,233
Net realized gain (loss) on investments -- (24,045) 699 28,670 239,979
Change in net unrealized appreciation/
depreciation of investments -- 35,997 23,404 388,792 646,246
------------ ------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations 30,476 110,962 27,599 510,039 1,286,458
------------ ------------ ------------ ------------ ------------
Capital transactions: (Note 8)
Net contract payments 76,368 377,840 489,551 1,313,840 2,013,306
Withdrawal of funds -- (31,718) (47,386) (91,729) (115,185)
Transfer of death benefits -- -- -- (1,775) (4,693)
Transfer of policy loans,
net of repayments -- -- -- -- --
Transfer due to reimbursement
(payment) of accumulation unit
value fluctuation 43 11,877 1,124 77,639 36,352
Withdrawal due to charges for
administrative and insurance costs (19,419) (40,841) (26,129) (73,767) (142,707)
Divisional transfers 2,749,366 (1,499,285) 95,338 1,083,879 811,423
------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting
from capital transactions 2,806,358 (1,182,127) 512,498 2,308,087 2,598,496
------------ ------------ ------------ ------------ ------------
Total increase (decrease) 2,836,834 (1,071,165) 540,097 2,818,126 3,884,954
NET ASSETS, at beginning
of the year 82,408 2,021,966 141,068 2,485,582 3,740,907
------------ ------------ ------------ ------------ ------------
NET ASSETS, at end
of the year $ 2,919,242 $ 950,801 $ 681,165 $ 5,303,708 $ 7,625,861
============ ============ ============ ============ ============
</TABLE>
* This division invests in the Oppenheimer Aggressive Growth Fund. Prior to
May 1, 1998, the Oppenheimer Aggressive Growth Fund was called the
Oppenheimer Capital Appreciation Fund.
See Notes to Financial Statements.
F-6
<PAGE>
Massachusetts Mutual Variable Life Separate Account I - Strategic Variable Life
STATEMENT OF CHANGES IN NET ASSETS (Continued)
For The Year Ended December 31, 1998
<TABLE>
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer Oppenheimer
Multiple Global Strategic Growth &
Strategies Securities Bond Income
Division Division Division Division
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 26,951 $ 153,922 $ 2,157 $ 47,497
Net realized gain (loss) on investments 1,594 (56,819) 427 32,636
Change in net unrealized appreciation/
depreciation of investments 7,538 204,584 893 32,475
----------- ----------- ----------- -----------
Net increase in net assets
resulting from operations 36,083 301,687 3,477 112,608
----------- ----------- ----------- -----------
Capital transactions: (Note 8)
Net contract payments 230,144 720,220 70,382 651,881
Withdrawal of funds (13,962) (50,362) (13,451) (650)
Transfer of death benefits (2,387) (514) -- (7,162)
Transfer of policy loans,
net of repayments -- -- -- --
Transfer due to reimbursement
(payment) of accumulation unit
value fluctuation 647 (5,097) (19) 3,686
Withdrawal due to charges for
administrative and insurance costs (16,639) (58,162) (7,584) (44,243)
Divisional transfers 78,045 222,517 212,032 557,081
----------- ----------- ----------- -----------
Net increase in net assets resulting
from capital transactions 275,848 828,602 261,360 1,160,593
----------- ----------- ----------- -----------
Total increase 311,931 1,130,289 264,837 1,273,201
NET ASSETS, at beginning
of the year 416,600 1,242,950 73,020 772,029
----------- ----------- ----------- -----------
NET ASSETS, at end
of the year $ 728,531 $ 2,373,239 $ 337,857 $ 2,045,230
=========== =========== =========== ===========
<CAPTION>
Panorama Panorama
LifeSpan Panorama LifeSpan
Diversified LifeSpan Capital
Income Balanced Appreciation
Division Division Division
----------- ----------- -----------
<S> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 288 $ 337 $ 321
Net realized gain (loss) on investments 3 2 2
Change in net unrealized appreciation/
depreciation of investments 326 (5) 35
----------- ----------- -----------
Net increase in net assets
resulting from operations 617 334 358
----------- ----------- -----------
Capital transactions: (Note 8)
Net contract payments 3,078 -- --
Withdrawal of funds -- -- --
Transfer of death benefits -- -- --
Transfer of policy loans,
net of repayments -- -- --
Transfer due to reimbursement
(payment) of accumulation unit
value fluctuation 4 -- --
Withdrawal due to charges for
administrative and insurance costs (21) -- --
Divisional transfers 35,078 -- --
----------- ----------- -----------
Net increase in net assets resulting
from capital transactions 38,139 -- --
----------- ----------- -----------
Total increase 38,756 334 358
NET ASSETS, at beginning
of the year 5,504 5,703 5,808
----------- ----------- -----------
NET ASSETS, at end
of the year $ 44,260 $ 6,037 $ 6,166
=========== =========== ===========
</TABLE>
See Notes to Financial Statements.
F-7
<PAGE>
Massachusetts Mutual Variable Life Separate Account I - Strategic Variable Life
STATEMENT OF CHANGES IN NET ASSETS
For The Year Ended December 31, 1997
<TABLE>
<CAPTION>
*MML MML MML
MML Equity Money Managed MML Oppenheimer
Equity Index Market Bond Blend Money
Division Division Division Division Division Division
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss) $ 272,644 $ 206 $ 54,386 $ 75,430 $ 108,875 $ 1,572
Net realized gain on investments 21,883 1 -- 868 2,275 --
Change in net unrealized appreciation/
depreciation of investments 282,387 951 -- 38,817 32,048 --
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets
resulting from operations 576,914 1,158 54,386 115,115 143,198 1,572
----------- ----------- ----------- ----------- ----------- -----------
Capital transactions: (Note 8)
Net contract payments 885,334 -- 7,536,342 528,095 281,565 --
Withdrawal of funds (20,829) -- (504,924) (9,303) -- --
Transfer of death benefits -- -- -- -- -- --
Transfer due to reimbursement
(payment) of accumulation unit
value fluctuation 10,001 (4) 5,648 110 2,377 (1)
Transfer of seed money -- 5,000 -- -- -- --
Withdrawal due to charges for
administrative and insurance costs (93,015) -- (140,059) (34,521) (15,017) (982)
Divisional transfers 1,428,272 17,625 (6,356,690) 173,873 584,458 76,444
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets resulting
from capital transactions 2,209,763 22,621 540,317 658,254 853,383 75,461
----------- ----------- ----------- ----------- ----------- -----------
Total increase 2,786,677 23,779 594,703 773,369 996,581 77,033
NET ASSETS, at beginning
of the year 961,939 -- 731,589 526,829 303,183 5,375
----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS, at end
of the year $ 3,748,616 $ 23,779 $ 1,326,292 $ 1,300,198 $ 1,299,764 $ 82,408
=========== =========== =========== =========== =========== ===========
<CAPTION>
Oppenheimer *Oppenheimer
High Oppenheimer Capital
Income Bond Appreciation
Division Division Division
----------- ----------- -----------
<S> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss) $ 124,058 $ 3,165 $ 60,913
Net realized gain on investments 45,671 49 43,440
Change in net unrealized appreciation/
depreciation of investments 10,877 826 64,677
----------- ----------- -----------
Net increase in net assets
resulting from operations 180,606 4,040 169,030
----------- ----------- -----------
Capital transactions: (Note 8)
Net contract payments 208,375 389 841,616
Withdrawal of funds (10,527) -- --
Transfer of death benefits -- -- (34,315)
Transfer due to reimbursement
(payment) of accumulation unit
value fluctuation 1,001 (1) (20,320)
Transfer of seed money -- -- --
Withdrawal due to charges for
administrative and insurance costs (26,651) (2,194) (41,860)
Divisional transfers 403,017 133,314 605,061
----------- ----------- -----------
Net increase in net assets resulting
from capital transactions 575,215 131,508 1,350,182
----------- ----------- -----------
Total increase 755,821 135,548 1,519,212
NET ASSETS, at beginning
of the year 1,266,145 5,520 966,370
----------- ----------- -----------
NET ASSETS, at end
of the year $ 2,021,966 $ 141,068 $ 2,485,582
=========== =========== ===========
</TABLE>
* For the period May 1, 1997 (Commencement of Operations) through December
31, 1997.
F-8
<PAGE>
Massachusetts Mutual Variable Life Separate Account I - Strategic Variable Life
STATEMENT OF CHANGES IN NET ASSETS (Continued)
For The Year Ended December 31, 1997
<TABLE>
<CAPTION>
*Panorama
Oppenheimer Oppenheimer Oppenheimer Oppenheimer LifeSpan
Oppenheimer Multiple Global Strategic Growth & Diversified
Growth Strategies Securities Bond Income Income
Division Division Division Division Division Division
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss) $ 84,442 $ 16,105 $ 6,156 $ 3,098 $ 9,121 $ (10)
Net realized gain on investments 113,022 1,030 88,098 106 3,753 1
Change in net unrealized appreciation/
depreciation of investments 203,917 16,050 52,377 (231) 53,086 513
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets
resulting from operations 401,381 33,185 146,631 2,973 65,960 504
----------- ----------- ----------- ----------- ----------- -----------
Capital transactions: (Note 8)
Net contract payments 1,154,703 142,740 357,799 13,326 79,290 --
Withdrawal of funds -- -- -- -- -- --
Transfer of death benefits (35,742) -- -- -- -- --
Transfer due to reimbursement
(payment) of accumulation unit
value fluctuation 257 86 10,173 78 (291) --
Transfer of seed money -- -- -- -- -- 5,000
Withdrawal due to charges for
administrative and insurance costs (66,528) (10,284) (19,665) (1,444) (9,046) --
Divisional transfers 1,521,051 244,734 488,859 52,128 627,852 --
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets resulting
from capital transactions 2,573,741 377,276 837,166 64,088 697,805 5,000
----------- ----------- ----------- ----------- ----------- -----------
Total increase 2,975,122 410,461 983,797 67,061 763,765 5,504
NET ASSETS, at beginning
of the year 765,785 6,139 259,153 5,959 8,264 --
----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS, at end
of the year $ 3,740,907 $ 416,600 $ 1,242,950 $ 73,020 $ 772,029 $ 5,504
=========== =========== =========== =========== =========== ===========
<CAPTION>
*Panorama
*Panorama LifeSpan
LifeSpan Capital
Balanced Appreciation
Division Division
----------- -----------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss) $ (11) $ (12)
Net realized gain on investments 1 1
Change in net unrealized appreciation/
depreciation of investments 713 819
----------- -----------
Net increase in net assets
resulting from operations 703 808
----------- -----------
Capital transactions: (Note 8)
Net contract payments -- --
Withdrawal of funds -- --
Transfer of death benefits -- --
Transfer due to reimbursement
(payment) of accumulation unit
value fluctuation -- --
Transfer of seed money 5,000 5,000
Withdrawal due to charges for
administrative and insurance costs -- --
Divisional transfers -- --
----------- -----------
Net increase in net assets resulting
from capital transactions 5,000 5,000
----------- -----------
Total increase 5,703 5,808
NET ASSETS, at beginning
of the year -- --
----------- -----------
NET ASSETS, at end
of the year $ 5,703 $ 5,808
=========== ===========
</TABLE>
* For the period May 1, 1997 (Commencement of Operations) through December
31, 1997.
F-9
<PAGE>
Massachusetts Mutual Variable Life Separate Account I - Strategic Variable Life
Notes To Financial Statements
1. HISTORY
Massachusetts Mutual Variable Life Separate Account I ("Separate Account
I") is a separate investment account established on July 13, 1988 by
Massachusetts Mutual Life Insurance Company ("MassMutual") in accordance
with the provisions of Section 132G of Chapter 175 of the Massachusetts
General Laws.
MassMutual maintains eight segments within Separate Account I. The initial
segment ("Variable Life Plus Segment") is used exclusively for MassMutual's
flexible premium variable whole life insurance policy, known as Variable
Life Plus.
On March 30, 1990, MassMutual established a second segment ("Large Case
Variable Life Plus Segment") within Separate Account I to be used
exclusively for MassMutual's flexible premium variable whole life insurance
policy with table of selected face amounts, known as Large Case Variable
Life Plus.
On July 5, 1995, MassMutual established a third segment ("Strategic
Variable Life Segment") within Separate Account I to be used exclusively
for MassMutual's flexible premium variable whole life insurance policy with
table of selected face amounts, known as Strategic Variable Life.
On July 24, 1995, MassMutual established a fourth segment ("Variable Life
Select Segment") within Separate Account I to be used exclusively for
MassMutual's flexible premium variable whole life insurance policy, known
as Variable Life Select.
On February 11, 1997, MassMutual established a fifth segment ("Strategic
GVUL Segment") within Separate Account I to be used exclusively for
MassMutual's group flexible premium adjustable life insurance policy, known
as Strategic Group Variable Universal Life.
On November 12, 1997, MassMutual established a sixth segment ("SVUL
Segment") within Separate Account I to be used exclusively for MassMutual's
survivorship flexible premium adjustable life insurance policy, known as
Survivorship Variable Universal Life.
On November 12, 1997, MassMutual established a seventh segment ("VUL
Segment") within Separate Account I to be used exclusively for MassMutual's
flexible premium adjustable life insurance policy, known as Variable
Universal Life.
On July 13, 1998, MassMutual established an eighth segment ("Strategic
Variable Life Plus Segment") within Separate Account I to be used
exclusively for MassMutual's flexible premium variable universal life
insurance policy, known as Strategic Variable Life Plus.
MassMutual paid $65,000 to the Strategic Variable Life Segment on July 5,
1995 to provide initial capital: 14,439 shares were purchased in two
management investment companies (MML Series Investment Fund and Oppenheimer
Variable Account Funds) described in Note 2 supporting the thirteen
divisions of Strategic Variable Life Segment.
On May 1, 1997, MassMutual paid $20,000 to provide initial capital for four
new divisions of the Strategic Variable Life Segment: 13,950 shares were
purchased in the MML Equity Index Division, of the MML Series Investment
Fund and three divisions in the Panorama Series Fund, Inc. described in
Note 2.
Separate Account I operates as a registered unit investment trust pursuant
to the Investment Company Act of 1940.
2. INVESTMENT OF STRATEGIC VARIABLE LIFE SEGMENT'S ASSETS
Strategic Variable Life Segment maintains twenty-eight divisions. Each
division invests in corresponding shares of the five series of MML Series
Investment Fund ("MML Trust"), ten funds of the Oppenheimer Variable
Account Funds ("Oppenheimer Trust"), four funds of the Panorama Series
Fund, Inc. ("Panorama Fund"), four funds of the Goldman Sachs Variable
Insurance Trust ("Goldman Sachs VIT Trust"), three funds of the MFS
Variable Insurance Trust ("MFS Trust") and two portfolios of T. Rowe Price
Equity Series, Inc. ("T. Rowe Price Equity Series"). At any one time, only
eight divisions are available to a policyowner.
F-10
<PAGE>
Notes To Financial Statements (Continued)
MML Equity Fund, MML Equity Index Fund, MML Money Market Fund, MML Managed
Bond Fund and MML Blend Fund are five of six separate series of the MML
Trust. The MML Trust is a no-load, open-end, management investment company
registered under the Investment Company Act of 1940. MassMutual serves as
investment manager of the MML Trust. David L. Babson and Company, Inc.
("Babson") a controlled subsidiary of MassMutual, serves as the investment
sub-adviser to MML Equity Fund and the Equity Sector of the MML Blend Fund.
MassMutual has entered into a sub-advisory agreement with Mellon Equity
Associates ("Mellon Equity") whereby Mellon Equity serves as the
sub-adviser to the MML Equity Index Fund.
The Oppenheimer Trust is an open-end, diversified, management investment
company registered under the Investment Company Act of 1940 with ten of its
funds currently available to the Strategic Variable Life policyowners:
Oppenheimer Money Fund, Oppenheimer High Income Fund, Oppenheimer Bond
Fund, Oppenheimer Aggressive Growth Fund, Oppenheimer Growth Fund,
Oppenheimer Multiple Strategies Fund, Oppenheimer Global Securities Fund,
Oppenheimer Strategic Bond Fund, Oppenheimer Growth & Income Fund and
Oppenheimer Small Cap Growth Fund.
The Panorama Fund is an open-end, diversified, management investment
company registered under the Investment Company Act of 1940 with four of
its portfolios currently available to the Strategic Variable Life
policyowners: Panorama LifeSpan Diversified Income Portfolio, Panorama
LifeSpan Balanced Portfolio, Panorama LifeSpan Capital Appreciation
Portfolio and Panorama International Equity Portfolio.
OppenheimerFunds, Inc. ("OFI"), a controlled subsidiary of MassMutual,
serves as the investment adviser to the Oppenheimer Trust and Panorama
Fund. OFI has entered into investment sub-advisory agreements with three
sub-advisers to assist in the selection of portfolio investments for the
Panorama Fund's four portfolios. Babson-Stewart Ivory International
("Babson-Stewart") is the sub-adviser to international stock components of
the LifeSpan Balanced Portfolio, the LifeSpan Capital Appreciation
Portfolio and the Panorama International Equity Portfolio. BEA Associates
("BEA") is the sub-adviser to the high yield bond component of the LifeSpan
Diversified Income Portfolio, LifeSpan Balanced Portfolio, and LifeSpan
Capital Appreciation Portfolio. Pilgrim, Baxter & Associates ("Pilgrim
Baxter") is the sub-adviser to the small cap component of the LifeSpan
Balanced Portfolio and the LifeSpan Capital Appreciation Portfolio.
The Goldman Sachs VIT Trust is an open-end, management investment company
with four of its separate series of shares currently available to the
Strategic Variable Life policyowners: Goldman Sachs Capital Growth Fund,
Goldman Sachs Mid Cap Equity Fund, Goldman Sachs CORE U.S. Equity Fund and
Goldman Sachs Growth and Income Fund. Goldman Sachs Asset Management, a
separate operating division of Goldman Sachs & Co., serves as investment
adviser to the Goldman Sachs funds.
The MFS Trust is an open-end, management investment company registered
under the Investment Company Act of 1940 with three of its separate series
of shares currently available to the Strategic Variable Life policyowners:
MFS New Discovery Series, MFS Emerging Growth Series and MFS Research
Series. MFS Investment Management company serves as investment adviser to
the MFS Trust Series.
T. Rowe Price Equity Series, Inc. is an open-end, diversified investment
company registered under the Investment Company Act of 1940 with two of its
separate series of shares currently available to the Strategic Variable
Life policyowners: T. Rowe Price Mid-Cap Growth Portfolio and T. Rowe Price
New America Growth Portfolio. T. Rowe Price Associates, Inc. serves as
investment adviser to each of the portfolios of T. Rowe Price.
In addition to the twenty-eight divisions of Strategic Variable Life
Segment, a policyowner may also allocate funds to the Guaranteed Principal
Account, which is part of MassMutual's general account. Because of
exemptive and exclusionary provisions, interests in the Guaranteed
Principal Account are not registered under the Securities Act of 1933.
Also, the general account is not registered as an investment company under
the Investment Company Act of 1940.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
consistently by Strategic Variable Life Segment in preparation of the
financial statements in conformity with generally accepted accounting
principles.
A. Investment Valuation
Investments in the MML Trust, the Oppenheimer Trust, the Panorama Fund,
Goldman Sachs VIT Trust, MFS Trust and T. Rowe Price Equity Series are each
stated at market value which is the net asset value per share of each of
the respective underlying funds.
F-11
<PAGE>
Notes To Financial Statements (Continued)
B. Accounting for Investments
Investment transactions are accounted for on trade date and identified cost
is the basis followed in determining the cost of investments sold for
financial statement purposes. Dividend income is recorded on the
ex-dividend date.
C. Federal Income Taxes
MassMutual is taxed under federal law as a life insurance company under the
provisions of the 1986 Internal Revenue Code, as amended. Strategic
Variable Life Segment is part of MassMutual's total operation and is not
taxed separately. Strategic Variable Life Segment will not be taxed as a
"regulated investment company" under Subchapter M of the Internal Revenue
Code. Under existing federal law, no taxes are payable on investment income
and realized capital gains of Strategic Variable Life Segment credited to
the policies. Accordingly, MassMutual does not intend to make any charge to
Strategic Variable Life Segment divisions to provide for company income
taxes. MassMutual may, however, make such a charge in the future if an
unanticipated change of current law results in a company tax liability
attributable to Strategic Variable Life Segment.
D. Policy Loan
When a policy loan is made, Strategic Variable Life Segment transfers the
amount of the loan to MassMutual, thereby decreasing both the investments
and net assets of Strategic Variable Life Segment by an equal amount. The
interest rate charged on any loan is 6% per year or the policyowner may
select an adjustable loan rate at the time of application. All loan
repayments are allocated to the Guaranteed Principal Account. The
policyowner earns interest at a rate which is the greater of 3% or the
policy loan rate less a MassMutual declared charge (maximum .75%) for
expenses and taxes.
E. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
4. CHARGES
MassMutual charges the Strategic Variable Life Segment divisions for the
mortality and expense risks it assumes. The charge is made daily at a
current effective annual rate of 0.30% of the value of each division's net
assets. MassMutual makes certain deductions from the annual premium before
amounts are allocated to Strategic Variable Life Segment and the Guaranteed
Principal Account. The deductions are for sales charges, state premium
taxes and deferred acquisition cost tax charge of 1.0% of each premium. No
additional deductions are taken when money is transferred from the
Guaranteed Principal Account to the Strategic Variable Life Segment.
MassMutual also makes certain charges for the cost of insurance and
administrative costs.
5. SALES AGREEMENTS
MML Distributors, LLC ("MML Distributors"), a wholly-owned subsidiary of
MassMutual, serves as principal underwriter of the policies pursuant to an
underwriting and servicing agreement among MML Distributors, MassMutual and
Separate Account I. MML Distributors is registered with the Securities and
Exchange Commission (the "SEC") as a broker-dealer under the Securities
Exchange Act of 1934 and is a member of the National Association of
Securities Dealers, Inc. (the "NASD"). MML Distributors may enter into
selling agreements with other broker-dealers who are registered with the
SEC and are members of the NASD in order to sell the policies.
F-12
<PAGE>
Notes To Financial Statements (Continued)
MML Investors Services, Inc. ("MMLISI") a wholly-owned subsidiary of
MassMutual, serves as co-underwriter of the policies pursuant to
underwriting and servicing agreements among MMLISI, MassMutual and Separate
Account I. MMLISI is registered with the SEC as a broker-dealer under the
Securities Exchange Act of 1934 and is a member of the NASD. Registered
representatives of MMLISI sell the policies as authorized variable life
insurance agents under applicable state insurance laws.
Pursuant to the underwriting and servicing agreements, commissions or other
fees due to registered representatives for selling and servicing the
policies are paid by MassMutual on behalf of MML Distributors or MMLISI.
MML Distributors and MMLISI also receive compensation for their activities
as underwriters of the policies.
6. PURCHASES AND SALES OF INVESTMENTS
<TABLE>
<CAPTION>
Average
For The Year Ended Cost of Proceeds monthly value
December 31, 1998 Purchases from Sales of securities
- ------------------ ----------- ----------- -----------
<S> <C> <C> <C>
MML Equity Division $ 4,849,507 $ 1,471,663 $ 5,420,588
MML Equity Index Division 1,313,837 54,586 452,320
MML Money Market Division 24,205,655 19,780,386 3,843,440
MML Managed Bond Division 4,892,033 2,201,473 2,185,301
MML Blend Division 2,122,375 482,581 2,313,184
Oppenheimer Money Division 3,727,844 893,821 701,454
Oppenheimer High Income Division 4,085,328 5,167,956 1,998,632
Oppenheimer Bond Division 597,701 81,367 419,750
Oppenheimer Capital Appreciation Division 5,402,360 3,000,525 3,543,067
Oppenheimer Growth Division 4,431,437 1,429,769 4,979,178
Oppenheimer Multiple Strategies Division 336,043 33,010 491,702
Oppenheimer Global Securities Division 2,207,501 1,223,991 1,753,122
Oppenheimer Strategic Bond Division 284,889 21,301 120,654
Oppenheimer Growth & Income Division 1,473,300 264,885 1,210,467
Panorama LifeSpan Diversified Income Division 38,471 39 9,333
Panorama LifeSpan Balanced Division 355 18 5,864
Panorama LifeSpan Capital Appreciation Division 339 18 5,930
</TABLE>
F-13
<PAGE>
Notes To Financial Statements (Continued)
7. NET INVESTMENT RETURN
The following table shows the net investment return for each division in
the Strategic Variable Life Segment:
<TABLE>
<CAPTION>
MML MML MML
MML Equity Money Managed MML Oppenheimer
For The Year Ended Equity Index Market Bond Blend Money
December 31, Division Division Division Division Division Division
- ------------------ ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
1998 16.12% 31.03% 4.58% 7.29% 12.30% 4.34%
1997 and *For the Period May 1, 1997
(Commencement of Operations)
Through December 31, 1997 24.12% *14.48% 5.21% 9.88% 17.93% 4.50%
1996 23.57% 5.38% 9.13% 17.94% 4.72%
For the Period July 5, 1995
(Commencement of Operations)
Through December 31, 1995 11.59% 2.48% 6.10% 8.75% 2.50%
<CAPTION>
Oppenheimer Oppenheimer
High Oppenheimer Capital
For The Year Ended Income Bond Appreciation
December 31, Division Division Division
- ------------------ ----------- ----------- -----------
<S> <C> <C> <C>
1998 5.55% 6.58% 14.37%
1997 and *For the Period May 1, 1997
(Commencement of Operations)
Through December 31, 1997 13.06% 8.89% 9.69%
1996 14.08% 4.45% (0.47)%
For the Period July 5, 1995
(Commencement of Operations)
Through December 31, 1995 7.60% 5.51% 15.67%
</TABLE>
<TABLE>
<CAPTION>
Panorama
Oppenheimer Oppenheimer Oppenheimer Oppenheimer LifeSpan
Oppenheimer Multiple Global Strategic Growth & Diversified
For The Year Ended Growth Strategies Securities Bond Income Income
December 31, (continued) Division Division Division Division Division Division
- ----------------------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
1998 25.85% 7.34% 17.22% 2.88% 9.31% 6.61%
1997 and *For the Period May 1, 1997
(Commencement of Operations)
Through December 31, 1997 19.94% 14.83% 18.14% 8.08% 24.69% *9.51%
1996 13.02% 14.16% 23.29% 11.18% 27.68%
For the Period July 5, 1995
(Commencement of Operations)
Through December 31, 1995 11.88% 6.35% 0.37% 6.45% 22.36%
<CAPTION>
Panorama
Panorama LifeSpan
LifeSpan Capital
For The Year Ended Balanced Appreciation
December 31, (continued) Division Division
- ----------------------- ----------- -----------
<S> <C> <C>
1998 5.71% 6.03%
1997 and *For the Period May 1, 1997
(Commencement of Operations)
Through December 31, 1997 *12.46% *14.29%
1996
For the Period July 5, 1995
(Commencement of Operations)
Through December 31, 1995
</TABLE>
The net investment return for each division of the Strategic Variable Life
Segment is computed using the net increase in net assets resulting from
operations as compared to the average monthly net assets. The net
investment return figures shown above do not reflect expenses related to
insurance products. Inclusion of such expenses would reduce the net
investment return figures for all periods shown.
Note: The amounts shown for the period July 5, 1995 through December 31,
1995, and May 1, 1997 through December 31, 1997 are not annualized.
F-14
<PAGE>
Notes To Financial Statements (Continued)
8. NET INCREASE (DECREASE) IN ACCUMULATION UNITS
<TABLE>
<CAPTION>
MML MML MML
MML Equity Money Managed MML Oppenheimer
For The Year Ended Equity Index Market Bond Blend Money
December 31, 1998 Division Division Division Division Division Division
- ------------------ ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Units purchased 1,343,211 288,745 12,754,893 779,199 1,450,873 66,255
Units withdrawn and transferred
to Guaranteed Principal Account (376,998) (94,361) (1,553,925) (97,801) (652,797) (16,790)
Units transferred between divisions 732,198 697,453 (7,499,137) 1,358,821 150,158 2,342,592
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) 1,698,412 891,836 3,701,831 2,040,219 948,234 2,392,057
Units, at beginning of the year 2,170,179 19,462 1,178,038 1,084,621 869,504 73,028
---------- ---------- ---------- ---------- ---------- ----------
Units, at end of the year 3,868,591 911,298 4,879,869 3,124,840 1,817,738 2,465,085
========== ========== ========== ========== ========== ==========
<CAPTION>
Oppenheimer Oppenheimer
High Oppenheimer Capital
For The Year Ended Income Bond Appreciation
December 31, 1998 Division Division Division
- ------------------ ---------- ---------- ----------
<S> <C> <C> <C>
Units purchased 287,389 403,111 916,013
Units withdrawn and transferred
to Guaranteed Principal Account (47,066) (65,653) (176,485)
Units transferred between divisions (1,011,930) 77,238 694,591
---------- ---------- ----------
Net increase (decrease) (771,607) 414,696 1,434,118
Units, at beginning of the year 1,456,429 117,325 1,585,341
---------- ---------- ----------
Units, at end of the year 684,822 532,021 3,019,459
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Panorama
Oppenheimer Oppenheimer Oppenheimer Oppenheimer LifeSpan
Oppenheimer Multiple Global Strategic Growth & Diversified
For The Year Ended Growth Strategies Securities Bond Income Income
December 31, 1998 (continued) Division Division Division Division Division Division
- ---------------------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Units purchased 1,249,786 223,813 499,817 53,027 478,572 2,754
Units withdrawn and transferred
to Guaranteed Principal Account (315,002) (91,360) (85,516) (15,903) (215,111) (39)
Units transferred between divisions 427,629 54,646 171,408 161,297 280,316 30,741
--------- --------- --------- --------- --------- ---------
Net increase (decrease) 1,362,413 187,098 585,708 198,421 543,777 33,456
Units, at beginning of the year 2,100,021 290,292 863,534 56,528 353,638 5,000
--------- --------- --------- --------- --------- ---------
Units, at end of the year 3,462,434 477,390 1,449,242 254,949 897,415 38,456
========= ========= ========= ========= ========= =========
<CAPTION>
Panorama
Panorama LifeSpan
LifeSpan Capital
For The Year Ended Balanced Appreciation
December 31, 1998 (continued) Division Division
- ---------------------------- --------- ---------
<S> <C> <C>
Units purchased -- --
Units withdrawn and transferred
to Guaranteed Principal Account -- --
Units transferred between divisions -- --
--------- ---------
Net increase (decrease) -- --
Units, at beginning of the year 5,000 5,000
--------- ---------
Units, at end of the year 5,000 5,000
========= =========
</TABLE>
F-15
<PAGE>
Notes To Financial Statements (Continued)
8. NET INCREASE (DECREASE) IN ACCUMULATION UNITS (Continued)
<TABLE>
<CAPTION>
For the Year Ended December 31, 1997 MML MML MML
and * For the Period May 1, 1997 MML Equity Money Managed MML Oppenheimer
(Commencement of Operations) Equity Index Market Bond Blend Money
Through December 31, 1997 Division Division Division Division Division Division
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Units purchased 622,668 5,000 11,393,760 492,286 233,372 440
Units withdrawn and transferred
to Guaranteed Principal Account (88,305) -- (4,664,563) (45,589) (16,312) (1,320)
Units transferred between divisions 921,761 14,462 (6,232,623) 156,298 407,951 68,908
---------- ---------- ---------- ---------- ---------- ----------
Net Increase 1,456,124 19,462 496,574 602,995 625,011 68,028
Units, at beginning of the
period/year 714,055 -- 681,464 481,626 244,493 5,000
---------- ---------- ---------- ---------- ---------- ----------
Units, at end of the year 2,170,179 19,462 1,178,038 1,084,621 869,504 73,028
========== ========== ========== ========== ========== ==========
<CAPTION>
For the Year Ended December 31, 1997 Oppenheimer Oppenheimer
and * For the Period May 1, 1997 High Oppenheimer Capital
(Commencement of Operations) Income Bond Appreciation
Through December 31, 1997 Division Division Division
- ------------------------------------ ---------- ---------- ----------
<S> <C> <C> <C>
Units purchased 165,960 339 567,491
Units withdrawn and transferred
to Guaranteed Principal Account (31,447) (1,883) (64,955)
Units transferred between divisions 301,516 113,869 396,220
---------- ---------- ----------
Net Increase 436,029 112,325 898,756
Units, at beginning of the
period/year 1,020,400 5,000 686,585
---------- ---------- ----------
Units, at end of the year 1,456,429 117,325 1,585,341
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Panorama
For the Year Ended December 31, 1997 Oppenheimer Oppenheimer Oppenheimer Oppenheimer LifeSpan
and * For the Period May 1, 1997 Oppenheimer Multiple Global Strategic Growth & Diversified
(Commencement of Operations) Growth Strategies Securities Bond Income Income
Through December 31, 1997 (continued) Division Division Division Division Division Division
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Units purchased 1,033,968 106,878 295,383 11,217 40,265 --
Units withdrawn and transferred
to Guaranteed Principal Account (442,780) (13,672) (25,115) (1,938) (6,606) --
Units transferred between divisions 965,813 192,086 372,969 42,249 314,979 5,000
---------- ---------- ---------- ---------- ---------- ----------
Net Increase 1,557,001 285,292 643,237 51,528 348,638 5,000
Units, at beginning of the
period/year 543,020 5,000 220,297 5,000 5,000 --
---------- ---------- ---------- ---------- ---------- ----------
Units, at end of the year 2,100,021 290,292 863,534 56,528 353,638 5,000
========== ========== ========== ========== ========== ==========
<CAPTION>
Panorama
For the Year Ended December 31, 1997 Panorama LifeSpan
and * For the Period May 1, 1997 LifeSpan Capital
(Commencement of Operations) Balanced Appreciation
Through December 31, 1997 (continued) Division Division
- ------------------------------------ ---------- ----------
<S> <C> <C>
Units purchased -- --
Units withdrawn and transferred
to Guaranteed Principal Account -- --
Units transferred between divisions 5,000 5,000
---------- ----------
Net Increase 5,000 5,000
Units, at beginning of the
period/year -- --
---------- ----------
Units, at end of the year 5,000 5,000
========== ==========
</TABLE>
F-16
<PAGE>
Notes To Financial Statements (Continued)
9. CONSOLIDATED MASSACHUSETTS MUTUAL VARIABLE LIFE SEPARATE ACCOUNT I
As discussed in Note 1, the financial statements only represent activity of
MassMutual's Strategic Variable Life Segment. The combined net assets as of
December 31, 1998 for Separate Account I, which includes the Variable Life
Plus, the Large Case Variable Life Plus, Strategic Variable Life, Variable
Life Select, GVUL and SVUL Segments are as follows:
<TABLE>
<CAPTION>
MML MML MML Oppenheimer
MML Equity Money Managed MML Oppenheimer High
Equity Index Market Bond Blend Money Income
Division Division Division Division Division Division Division
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets $68,569,760 $ 3,773,362 $13,343,746 $25,285,963 $18,619,343 $ 3,331,631 $ 2,182,008
Total liabilities 103,103 946 25,266 23,205 22,397 1,263 3,659
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets $68,466,657 $ 3,772,416 $13,318,480 $25,262,758 $18,596,946 $ 3,330,368 $ 2,178,349
=========== =========== =========== =========== =========== =========== ===========
Net assets:
For variable life insurance
policies 68,346,866 3,763,311 13,264,755 25,197,666 18,501,132 3,323,389 2,162,993
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 119,791 9,105 53,725 65,092 95,814 6,979 15,356
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets $68,466,657 $ 3,772,416 $13,318,480 $25,262,758 $18,596,946 $ 3,330,368 $ 2,178,349
=========== =========== =========== =========== =========== =========== ===========
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer
Oppenheimer Capital Oppenheimer Multiple Global
Bond Appreciation Growth Strategies Securities
Division Division Division Division Division
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total assets $ 1,980,384 $16,395,636 $13,202,771 $ 941,427 $ 9,080,902
Total liabilities 429 13,959 11,379 854 9,817
----------- ----------- ----------- ----------- -----------
Net assets $ 1,979,955 $16,381,677 $13,191,392 $ 940,573 $ 9,071,085
=========== =========== =========== =========== ===========
Net assets:
For variable life insurance
policies 1,972,470 16,354,171 13,168,469 930,839 9,047,257
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 7,485 27,506 22,923 9,734 23,828
----------- ----------- ----------- ----------- -----------
Net assets $ 1,979,955 $16,381,677 $13,191,392 $ 940,573 $ 9,071,085
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Panorama
Oppenheimer Oppenheimer Panorama Panorama LifeSpan Panorama
Strategic Growth & Total Panorama International Diversified LifeSpan
Bond Income Return Growth Equity Income Balanced
Division Division Division Division Division Division Division
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets $ 1,250,072 $ 3,209,353 $ 1,208,387 $ 1,034,642 $ 148,692 $ 93,514 $ 74,338
Total liabilities 1,912 673 8 0 0 123 135
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets $ 1,248,160 $ 3,208,680 $ 1,208,379 $ 1,034,642 $ 148,692 $ 93,391 $ 74,203
=========== =========== =========== =========== =========== =========== ===========
Net assets:
For variable life insurance
policies 1,233,948 3,196,228 1,207,280 1,033,583 147,559 86,570 67,138
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 14,212 12,452 1,099 1,059 1,133 6,821 7,065
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net assets $ 1,248,160 $ 3,208,680 $ 1,208,379 $ 1,034,642 $ 148,692 $ 93,391 $ 74,203
=========== =========== =========== =========== =========== =========== ===========
<CAPTION>
Panorama American
LifeSpan T. Rowe Price Century Fidelity
Capital Dreyfus Mid Cap VP Income VIP II
Appreciation Index Growth & Growth Contrafund
Division Division Division Division Division
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total assets $ 58,063 $46,510,033 $ 24,898 $ 16,456 $ 24,825
Total liabilities 89 51,088 4 4 5
----------- ----------- ----------- ----------- -----------
Net assets $ 57,974 $46,458,945 $ 24,894 $ 16,452 $ 24,820
=========== =========== =========== =========== ===========
Net assets:
For variable life insurance
policies 50,784 46,449,250 24,894 16,452 24,820
Retained in Variable Life
Separate Account I by
Massachusetts Mutual Life
Insurance Company 7,190 9,695 -- -- --
----------- ----------- ----------- ----------- -----------
Net assets $ 57,974 $46,458,945 $ 24,894 $ 16,452 $ 24,820
=========== =========== =========== =========== ===========
</TABLE>
F-17
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyholders of
Massachusetts Mutual Life Insurance Company
We have audited the accompanying statutory statements of financial position of
Massachusetts Mutual Life Insurance Company as of December 31, 1998 and 1997,
and the related statutory statements of income and changes in policyholders'
contingency reserves, and of cash flows for each of the three years in the
period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note 1, these financial statements were prepared in conformity
with accounting practices prescribed or permitted by the Division of Insurance
of the Commonwealth of Massachusetts, which practices differ from generally
accepted accounting principles. The effects on the financial statements of the
variances between the statutory basis of accounting and generally accepted
accounting principles, although not reasonably determinable, are presumed to be
material.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements audited by us do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of Massachusetts Mutual Life Insurance Company as of December 31, 1998 and 1997,
or the results of its operations or its cash flows for each of the three years
in the period ended December 31, 1998.
In our opinion, the financial statements audited by us present fairly, in all
material respects, the financial position of Massachusetts Mutual Life Insurance
Company as of December 31, 1998 and 1997, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1998, on the basis of accounting described in Note 1.
PricewaterhouseCoopers LLP
Springfield, Massachusetts
February 25, 1999
FF-1
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION
December 31,
1998 1997
-------- --------
(In Millions)
Assets:
Bonds $ 25,215.8 $ 23,508.2
Common stocks 296.3 354.7
Mortgage loans 5,916.5 5,245.8
Real estate 1,739.8 1,697.7
Other investments 2,263.7 1,963.8
Policy loans 5,224.2 4,950.4
Cash and short-term investments 1,123.3 1,941.2
----------- -----------
41,779.6 39,661.8
Other assets 1,306.2 1,169.7
----------- -----------
43,085.8 40,831.5
Separate account assets 19,589.7 16,803.1
----------- -----------
$ 62,675.5 $ 57,634.6
=========== ===========
See notes to statutory financial statements.
FF-2
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION, Continued
December 31,
1998 1997
-------- --------
(In Millions)
Liabilities:
Policyholders' reserves and funds $ 35,277.0 $ 33,783.2
Policyholders' dividends 1,021.6 954.1
Policyholders' claims and other benefits 332.4 353.4
Federal income taxes 634.9 436.5
Asset valuation and other investment reserves 1,053.4 973.4
Other liabilities 1,578.9 1,457.9
----------- -----------
39,898.2 37,958.5
Separate account liabilities 19,588.5 16,802.8
----------- -----------
59,486.7 54,761.3
Policyholders' contingency reserves 3,188.8 2,873.3
----------- -----------
$ 62,675.5 $ 57,634.6
=========== ===========
See notes to statutory financial statements.
FF-3
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
-------- -------- --------
(In Millions)
<S> <C> <C> <C>
Revenue:
Premium income $ 7,482.2 $ 6,764.8 $ 6,328.6
Net investment income 2,956.8 2,870.2 2,834.4
Fees and other income 154.0 126.7 117.2
--------- --------- ---------
10,593.0 9,761.7 9,280.2
--------- --------- ---------
Benefits and expenses:
Policyholders' benefits and payments 5,873.9 6,583.8 6,048.2
Addition to policyholders' reserves and funds 2,299.6 826.8 945.2
Operating expenses 509.5 450.8 428.0
Commissions 299.3 315.3 335.5
State taxes, licenses and fees 88.1 81.5 96.4
Merger restructuring costs - - 66.1
--------- --------- ---------
9,070.4 8,258.2 7,919.4
--------- --------- ---------
Net gain before federal income taxes and dividends 1,522.6 1,503.5 1,360.8
Federal income taxes 199.3 284.4 276.7
--------- --------- ---------
Net gain from operations before dividends 1,323.3 1,219.1 1,084.1
Dividends to policyholders 982.9 919.5 859.9
--------- --------- ---------
Net gain from operations 340.4 299.6 224.2
Net realized capital gain (loss) 25.4 (42.5) 40.3
--------- --------- ---------
Net income $ 365.8 $ 257.1 $ 264.5
========= ========= =========
</TABLE>
See notes to statutory financial statements.
FF-4
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF CHANGES
IN POLICYHOLDERS' CONTINGENCY RESERVES
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
-------- -------- --------
(In Millions)
<S> <C> <C> <C>
Policyholders' contingency reserves,
beginning of year $2,873.3 $2,638.6 $2,600.9
-------- -------- --------
Increases (decreases) due to:
Net income 365.8 257.1 264.5
Net unrealized capital gain (loss) 17.4 119.1 (1.7)
Change in asset valuation and other investment reserves (81.0) (76.0) (142.4)
Change in prior year policyholders' reserves 8.6 (55.4) (72.2)
Other 4.7 (10.1) (10.5)
-------- -------- --------
315.5 234.7 37.7
-------- -------- --------
Policyholders' contingency reserves,
end of year $3,188.8 $2,873.3 $2,638.6
======== ======== ========
</TABLE>
See notes to statutory financial statements.
FF-5
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
-------- -------- --------
(In Millions)
<S> <C> <C> <C>
Operating activities:
Net income $ 365.8 $ 257.1 $ 264.5
Addition to policyholders' reserves and funds,
net of transfers to separate accounts 1,472.8 421.3 426.7
Net realized capital (gain) loss (25.4) 42.5 (40.3)
Other changes 15.4 (108.1) (286.1)
--------- --------- ---------
Net cash provided by operating activities 1,828.6 612.8 364.8
--------- --------- ---------
Investing activities:
Loans and purchases of investments (15,981.2) (12,292.7) (10,171.5)
Sales or maturities of investments and receipts
from repayment of loans 13,334.7 12,545.7 8,539.3
--------- --------- ---------
Net cash provided by (used in) investing activities (2,646.5) 253.0 (1,632.2)
--------- --------- ---------
Increase (decrease) in cash and short-term investments (817.9) 865.8 (1,267.4)
Cash and short-term investments, beginning of year 1,941.2 1,075.4 2,342.8
--------- --------- ---------
Cash and short-term investments, end of year $ 1,123.3 $ 1,941.2 $ 1,075.4
========= ========= =========
</TABLE>
See notes to statutory financial statements.
FF-6
<PAGE>
Notes To Statutory Financial Statements
Massachusetts Mutual Life Insurance Company ("the Company") is a mutual life
insurance company and as such has no shareholders. The Company's primary
business is individual life insurance, annuity and disability income
products distributed primarily through career agents. The Company also
provides either directly or through its subsidiaries, a wide range of
pension products and services, as well as investment services to
individuals, corporations and institutions in all 50 states and the District
of Columbia.
On March 1, 1996, the operations of the former Connecticut Mutual Life
Insurance Company ("Connecticut Mutual") were merged into the Company. This
merger was accounted for under the pooling of interests method of
accounting. For the purposes of this presentation, these financial
statements reflect historical amounts giving retroactive effect as if the
merger had occurred on January 1, 1996 in conformity with the practices of
the National Association of Insurance Commissioners ("NAIC") and the
accounting practices prescribed or permitted by the Division of Insurance of
the Commonwealth of Massachusetts. In 1996, merger-related expenses totaling
$66.1 million were recorded in the Statutory Statement of Income. On the
merger date, policyholders' reserves attributable to disability income
contracts were strengthened by $75.0 million, investment reserves for real
estate were increased by $49.8 million and net prepaid pension assets were
increased by $10.4 million with all adjustments reflected as a charge to
policyholders' contingency reserves.
On March 31, 1996, the Company sold MassMutual Holding Company Two, Inc., a
wholly-owned subsidiary, and its subsidiaries, including Mirus Life
Insurance Company (formerly the MML Pension Insurance Company; currently
doing business as "UniCARE"), which comprised the Company's group life and
health business, to WellPoint Health Networks, Inc. The Company received
total consideration of $402.2 million ($340.0 million in cash and $62.2
million in notes receivable) and recognized a before tax gain of $187.9
million. The Company, pursuant to a 1994 reinsurance agreement, cedes its
group life, accident and health business to UniCARE.
1. SUMMARY OF ACCOUNTING PRACTICES
The accompanying statutory financial statements, have been prepared in
conformity with the statutory accounting practices of the NAIC and the
accounting practices prescribed or permitted by the Division of Insurance of
the Commonwealth of Massachusetts and are different in some respects from
financial statements prepared in accordance with generally accepted
accounting principles ("GAAP"). The more significant differences are as
follows: (a) acquisition costs, such as commissions and other costs directly
related to acquiring new business, are charged to current operations as
incurred, whereas GAAP would require these expenses to be capitalized and
recognized over the life of the policies; (b) policy reserves are based upon
statutory mortality, morbidity and interest requirements without
consideration of withdrawals, whereas GAAP reserves would be based upon
reasonably conservative estimates of mortality, morbidity, interest and
withdrawals; (c) bonds are generally carried at amortized cost whereas GAAP
generally requires they be reported at fair value; (d) deferred income taxes
are not provided for book-tax timing differences as would be required by
GAAP, and (e) payments received for universal and variable life products,
variable annuities and investment related products are reported as premium
income and changes in reserves, whereas under GAAP, these payments would be
recorded as deposits to policyholders' account balances.
In March 1998, the NAIC adopted the Codification of Statutory Accounting
Principles ("Codification"). Codification provides a comprehensive guide of
statutory accounting principles for use by insurers in all states and is
expected to become effective no later than January 1, 2001. The effect of
adopting Codification shall be reported as an adjustment to policyholders'
contingency reserves on the effective date. The Company is currently
reviewing the impact of Codification; however, since the Division of
Insurance of the Commonwealth of Massachusetts has not approved
Codification, the ultimate impact cannot be determined at this time.
FF-7
<PAGE>
Notes To Statutory Financial Statements (Continued)
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, as well as disclosures of contingent assets and liabilities at
the date of the financial statements. Management must also make estimates
and assumptions that affect the amounts of revenues and expenses during the
reporting period. Future events, including changes in the levels of
mortality, morbidity, interest rates and asset valuations, could cause
actual results to differ from the estimates used in these financial
statements.
Certain 1997 and 1996 amounts have been reclassified to conform with the
current year presentation.
The following is a description of the Company's principal accounting
policies and practices.
A. Investments
Bonds and stocks are valued in accordance with rules established by the
NAIC. Generally, bonds are valued at amortized cost, preferred stocks in
good standing at cost, and common stocks, except for unconsolidated
subsidiaries, at fair value.
Mortgage loans are valued at unpaid principal net of unamortized premium or
discount. The Company discontinues the accrual of interest on mortgage loans
which are delinquent more than 90 days or when collection is uncertain. Real
estate is valued at cost less accumulated depreciation, impairment
allowances and mortgage encumbrances. Encumbrances totaled $63.5 million in
1998 and $14.2 million in 1997. Depreciation on investment real estate is
calculated using the straight-line and constant yield methods.
Policy loans are carried at the outstanding loan balance less amounts
unsecured by the cash surrender value of the policy.
Short-term investments are stated at amortized cost, which approximates fair
value.
Investments in unconsolidated subsidiaries and affiliates, joint ventures
and other forms of partnerships are included in other investments on the
Statutory Statement of Financial Position and are accounted for using the
equity method.
In compliance with regulatory requirements, the Company maintains an Asset
Valuation Reserve ("AVR") and an Interest Maintenance Reserve ("IMR"). The
AVR and other investment reserves stabilize the policyholders' contingency
reserves against fluctuations in the value of stocks, as well as declines in
the value of bonds, mortgage loans and real estate investments. The IMR
captures after-tax realized capital gains and losses which result from
changes in the overall level of interest rates for all types of fixed income
investments and interest related hedging activities. These interest rate
related gains and losses are amortized into income using the grouped method
over the remaining life of the investment sold or over the remaining life of
the underlying asset. Net realized after tax capital gains of $189.1 million
in 1998, $95.4 million in 1997 and $73.1 million in 1996 were charged to the
IMR. Amortization of the IMR into net investment income amounted to $40.3
million in 1998, $31.0 million in 1997, and $26.9 million in 1996.
Realized capital gains and losses, less taxes, not includible in the IMR,
are recognized in net income. Realized capital gains and losses are
determined using the specific identification method. Unrealized capital
gains and losses are included in policyholders' contingency reserves.
B. Separate Accounts
Separate account assets and liabilities represent segregated funds
administered and invested by the Company for the benefit of pension,
variable annuity and variable life insurance contractholders. Assets consist
principally of marketable securities reported at fair value. Premiums,
benefits and expenses of the separate
FF-8
<PAGE>
Notes To Statutory Financial Statements (Continued)
accounts are reported in the Statutory Statement of Income. The Company
receives administrative and investment advisory fees from these accounts.
Net transfers to separate accounts of $821.3 million, $355.7 million and
$636.5 million in 1998, 1997 and 1996, respectively, are included in the
addition of policyholders' reserves and funds.
C. Non-admitted Assets
Assets designated as "non-admitted" (principally certain furniture,
equipment and other receivables) are excluded from the Statutory Statement
of Financial Position by an adjustment to policyholders' contingency
reserves.
D. Policyholders' Reserves and Funds
Policyholders' reserves for life insurance contracts are developed using
accepted actuarial methods computed principally on the net level premium and
the Commissioners' Reserve Valuation Method bases using the American
Experience and the 1941, 1958 and 1980 Commissioners' Standard Ordinary
mortality tables with assumed interest rates ranging from 2.5 to 6.75
percent.
Reserves for individual annuities, guaranteed investment contracts and
deposit administration and immediate participation guarantee contracts are
based on accepted actuarial methods principally at interest rates ranging
from 2.25 to 11.25 percent. Reserves for policies and contracts considered
investment contracts have a carrying value of $7,734.6 million and $8,077.9
million at December 31, 1998 and 1997, respectively with a fair value of
$7,940.6 million and $8,250.0 million at December 31, 1998 and 1997,
respectively, as determined by discounted cash flow projections.
Disability income policy reserves are generally calculated using the two-
year preliminary term, net level premium and fixed net premium methods and
various morbidity tables.
The Company made certain changes in the valuation of policyholders' reserves
which increased policyholders' contingency reserves by $8.6 million in 1998
and decreased policyholders' contingency reserves by $55.4 million and $72.2
million in 1997 and 1996, respectively.
E. Premium and Related Expense Recognition
Life insurance premium revenue is recognized annually on the anniversary
date of the policy. Annuity premium is recognized when received. Disability
income premiums are recognized as revenue when due. Commissions and other
costs related to issuance of new policies, maintenance and settlement costs
are charged to current operations when incurred.
F. Policyholders' Dividends
The Board of Directors annually approves dividends to be paid in the
following year. These dividends are allocated to reflect the relative
contribution of each group of policies to policyholders' contingency
reserves and consider investment and mortality experience, expenses and
federal income tax charges. The liability for policyholders' dividends is
equal to the estimated amount of dividends to be paid in the following
calendar year.
FF-9
<PAGE>
Notes To Statutory Financial Statements (Continued)
G. Cash and Short-term Investments
For purposes of the Statutory Statement of Cash Flows, the Company considers
all highly liquid investments purchased with a maturity of twelve months or
less to be short-term investments.
H. Policyholders' Contingency Reserves
Policyholders' contingency reserves represent surplus of the Company as
reported to regulatory authorities and are intended to protect policyholders
against possible adverse experience.
2. SURPLUS NOTES
The Company issued surplus notes of $100.0 million at 7.50 percent and $250.0
million at 7.625 percent in 1994 and 1993, respectively. These notes are
unsecured and subordinate to all present and future indebtedness of the
Company, policy claims and prior claims against the Company as provided by
the Massachusetts General Laws. Issuance was approved by the Commissioner of
Insurance of the Commonwealth of Massachusetts ("the Commissioner").
All payments of interest and principal are subject to the prior approval of
the Commissioner. Sinking fund payments are due as follows: $62.5 million in
2021, $87.5 million in 2022, $150.0 million in 2023 and $50.0 million in
2024.
Interest on the notes issued in 1994 is scheduled to be paid on March 1 and
September 1 of each year, to holders of record on the preceding February 15
or August 15, respectively. Interest on the notes issued in 1993 is scheduled
to be paid on May 15 and November 15 of each year, to holders of record on
the preceding May 1 or November 1, respectively. Interest expense is not
recorded until approval for payment is received from the Commissioner.
Interest of $26.6 million was approved and paid in 1998, 1997 and 1996.
The proceeds of the notes, less a $24.4 million reserve in 1998, and a $28.3
million reserve in 1997 for contingencies associated with the issuance of the
notes, are recorded as a component of the Company's policyholders'
contingency reserves as permitted by the Division of Insurance. These surplus
note reserves are included in asset valuation and other investment reserves
on the Statutory Statement of Financial Position.
3. BENEFIT PLANS
The Company provides multiple benefit plans to employees, agents and retirees
including retirement plans and life and health benefits.
Retirement Plans
The Company has two non-contributory defined benefit plans covering
substantially all of its employees. One plan includes active employees and
retirees previously employed by Connecticut Mutual Life Insurance Company
which merged with MassMutual in 1996; the other plan includes all other
eligible employees and retirees. Benefits are based on the employees' years
of service, compensation during the last five years of employment and
estimated social security retirement benefits. The Company accounts for these
plans following Financial Accounting Standards Board Statement No. 87,
"Employers' Accounting for Pensions". Accordingly, as permitted by the
Massachusetts Division of Insurance, the Company has recognized a pension
asset of $216.0 million and $157.4 million at December 31, 1998 and 1997,
respectively. Company policy is to fund pension costs in accordance with the
requirements of the Employee Retirement Income Security Act of 1974 and,
based on such requirements, no funding was required for the years ended
December 31, 1998, and 1997. The assets of the plans are invested in the
Company's general account and separate accounts.
FF-10
<PAGE>
Notes To Statutory Financial Statements (Continued)
The Company also has defined contribution plans for employees and agents. The
Company funds the plans by matching employee contributions, subject to
statutory limits. Company contributions and any earnings on them are vested
based on years of vesting service using a graduated vesting schedule in 20
percent increments over a five-year period.
Life and Health
Life and health insurance benefits are provided to employees and agents
through group insurance contracts. Substantially all of the Company's
employees and agents may become eligible for continuation of certain of these
benefits if they retire as active employees or agents of the Company. The
Company adopted the National Association of Insurance Commissioners'
accounting standard for post retirement life and health benefit costs,
requiring these benefits to be accounted for using the accrual method for
employees and agents eligible to retire and current retirees. The initial
transition obligation of $137.9 million is being amortized over twenty years
through 2012. During 1998, the Company transferred the administration of the
retiree life and health plan benefit obligations and supporting assets to an
unconsolidated subsidiary.
The status of the defined benefit plans as of December 31 is as follows:
Retirement Life and Health
1998 1997 1998 1997
---- ---- ---- ----
(In Millions)
Accumulated benefit obligation
at December 31 $ 822.8 $ 663.1 $ 185.6 $ 145.9
Fair value of plan assets
at December 31 1,160.2 1,154.2 21.0 21.7
--------- --------- -------- --------
Funded status $ 337.4 $ 491.1 $ (164.6) $ (124.2)
========= ========= ======== ========
The following rates were used in determining the actuarial present value of the
accumulated benefit obligations.
<TABLE>
<CAPTION>
Retirement Life and Health
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Discount rate 6.75% 7.25% 6.75% 7.25%
Increase in future compensation
levels 4.00-5.00% 4.00-5.00% 5.00% 5.00-5.50%
Long-term rate of return on assets 9.00-10.00% 9.00-10.00% 6.75% 6.75%
Assumed increases in medical cost
Rates in the first year - - 7.00% 6.25-9.50%
declining to - - 4.25% 4.75-5.00%
within - - 5 years 5 years
</TABLE>
A one percent increase in the annual assumed inflation rate in medical cost
rates would increase the 1998 accumulated postretirement benefit liability and
benefit expense by $9.2 million and $1.1 million, respectively. A one percent
decrease in the annual assumed inflation rate in medical costs rates would
decrease the 1998 accumulated postretirement benefit liability and benefit
expense by $8.5 million and $1.0 million, respectively.
FF-11
<PAGE>
Notes To Statutory Financial Statements (Continued)
The expense charged to operations for all employee benefit plans is $32.1
million in 1998, $23.9 million in 1997 and $38.1 million in 1996. In 1997,
there was a significant reduction in plan participants in the Connecticut
Mutual Plan which resulted in recognition of a pension plan curtailment gain
of $10.7 million.
4. RELATED PARTY TRANSACTIONS
The company has management and service contracts or cost sharing arrangements
with various subsidiaries and affiliates whereby the Company, for a fee, will
furnish a subsidiary or affiliate, as required, operating facilities, human
resources, computer software development and managerial services. Fees earned
under the terms of the contracts or arrangements were $205.0 million and
$137.3 million for 1998 and 1997, respectively.
The Company has reinsurance agreements with its subsidiaries, C.M. Life
Insurance Company and MML Bay State Life Insurance Company, including stop-
loss and modified coinsurance agreements on life insurance products. Total
premiums assumed on these agreements were $38.4 million in 1998, $40.9
million in 1997 and $44.1 million in 1996.
5. FEDERAL INCOME TAXES
Provision for federal income taxes is based upon the Company's estimate of
its current tax liability. No deferred tax effect is recognized for temporary
differences that may exist between financial reporting and taxable income.
Accordingly, the reporting of miscellaneous temporary differences, such as
reserves, acquisition costs and restructuring costs and of permanent
differences such as the equity tax, resulted in effective tax rates which
differ from the statutory tax rate.
The Company plans to file its 1998 federal income tax return on a
consolidated basis with its eligible life affiliates and non-life affiliates.
C.M. Life Insurance Company, which is not an eligible life affiliate, files a
separate return. The Company and its eligible life insurance and non-life
affiliates are subject to a written tax allocation agreement, which allocates
the group's consolidated tax liability for payment purposes. Generally, the
agreement provides that affiliates with losses shall be compensated for the
use of their losses and credits by other affiliates.
The Internal Revenue Service has completed examining the Company's income tax
returns through the year 1992 for Massachusetts Mutual and 1995 for
Connecticut Mutual, and is currently examining Massachusetts Mutual for the
years 1993 and 1994. The Company believes adjustments which may result from
such examinations will not materially affect its financial position.
Components of the formula authorized by the Internal Revenue Service for
determining deductible policyholder dividends have not been finalized for
1998 or 1997. The Company records the estimated effects of anticipated
revisions in the Statutory Statement of Income.
Federal tax payments were $152.4 million in 1998, $353.4 million in 1997 and
$330.7 million in 1996.
6. INVESTMENTS
The Company maintains a diversified investment portfolio. Investment policies
limit concentration in any asset class, geographic region, industry group,
economic characteristic, investment quality or individual investment. In the
normal course of business, the Company enters into commitments to purchase
privately placed bonds and to issue mortgage loans.
FF-12
<PAGE>
Notes To Statutory Financial Statements (Continued)
A. Bonds
The carrying value and estimated fair value of bonds are as follows:
<TABLE>
<CAPTION>
December 31, 1998
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
---------- ---------- ---------- ----------
(In Millions)
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 4,945.3 $ 473.0 $ 20.4 $ 5,397.9
and obligations of U. S.
government corporations
and agencies
Debt securities issued by 41.2 1.5 1.3 41.4
foreign governments
Mortgage-backed securities 3,734.4 188.0 13.9 3,908.5
State and local governments 360.5 33.2 7.9 385.8
Corporate debt securities 14,133.3 845.3 118.4 14,860.2
Utilities 885.8 102.6 0.3 988.1
Affiliates 1,115.3 0.6 0.9 1,115.0
----------- ---------- -------- -----------
TOTAL $ 25,215.8 $ 1,644.2 $ 163.1 $ 26,696.9
=========== ========== ======== ===========
<CAPTION>
December 31, 1997
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
---------- ---------- ---------- ----------
(In Millions)
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 6,241.0 $ 470.5 $ 10.3 $ 6,701.2
and obligations of U. S.
government corporations
and agencies
Debt securities issued by 83.5 4.4 3.0 84.9
foreign governments
Mortgage-backed securities 3,008.7 187.9 9.0 3,187.6
State and local governments 361.9 23.9 .6 385.2
Corporate debt securities 12,148.9 765.2 46.9 12,867.2
Utilities 871.8 100.1 2.2 969.7
Affiliates 792.4 2.8 1.0 794.2
----------- ---------- -------- -----------
TOTAL $ 23,508.2 $ 1,554.8 $ 73.0 $ 24,990.0
=========== ========== ======== ===========
</TABLE>
FF-13
<PAGE>
Notes To Statutory Financial Statements (Continued)
The carrying value and estimated fair value of bonds at December 31, 1998 by
contractual maturity are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
Estimated
Carrying Fair
Value Value
--------- ---------
(In Millions)
Due in one year or less $ 556.5 $ 560.7
Due after one year through five years 4,150.6 4,270.5
Due after five years through ten years 8,622.8 9,045.0
Due after ten years 5,319.5 5,999.6
--------- ---------
18,649.4 19,875.8
Mortgage-backed securities, including
securities guaranteed by the U.S.
Government 6,566.4 6,821.1
--------- ---------
TOTAL $25,215.8 $26,696.9
========= =========
Proceeds from sales of investments in bonds were $11,663.4 million during
1998, $11,427.8 million during 1997 and $6,390.7 million during 1996. Gross
capital gains of $331.8 million in 1998, $200.7 million in 1997 and $188.8
million in 1996 and gross capital losses of $47.3 million in 1998, $68.8
million in 1997 and $255.5 million in 1996 were realized on those sales,
portions of which were included in the IMR. The estimated fair value of non-
publicly traded bonds is determined by the Company using a pricing matrix and
quoted market prices for publicly traded bonds.
B. Stocks
Common stocks, except for unconsolidated subsidiaries, had a cost of $238.4
million in 1998 and $250.3 million in 1997.
C. Mortgages
The fair value of mortgage loans, as determined from a pricing matrix for
performing loans and the estimated underlying real estate value for non-
performing loans, was $6,178.8 million and $5,039.1 million at December 31,
1998 and 1997, respectively.
The Company had restructured loans with book values of $126.6 million, and
$202.3 million at December 31, 1998 and 1997, respectively. These loans
typically have been modified to defer a portion of the contractual interest
payments to future periods. Interest deferred to future periods totaled $0.1
million in 1998, $5.1 million in 1997 and $2.2 million in 1996. At December
31, 1998, scheduled commercial mortgage loan maturities were as follows:
1999 - $341.0 million; 2000 - $333.0 million; 2001 - $305.2 million; 2002 -
$210.6 million; 2003 - $299.0 million; and $3,106.4 million thereafter.
D. Policy Loans
Policy loans are recorded at cost as it is not practicable to determine the
fair value since they do not have a stated maturity.
E. Other
Preferred stocks in good standing had fair values of $116.0 million in 1998
and $145.5 million in 1997, using a pricing matrix for non-publicly traded
stocks and quoted market prices for publicly traded stocks.
FF-14
<PAGE>
Notes To Statutory Financial Statements (Continued)
The carrying value of investments which were non-income producing for the
preceding twelve months was $13.2 million and $5.7 million at December 31,
1998 and 1997, respectively.
7. PORTFOLIO RISK MANAGEMENT
The Company manages its investment risks, primarily to reduce interest rate
and duration imbalances determined in asset/liability analyses. The fair
values of these financial instruments, described below, which are not
recorded in the financial statements, unless otherwise noted, are based upon
market prices or prices obtained from brokers. The Company does not hold or
issue these financial instruments for trading purposes.
The notional amounts described do not represent amounts exchanged by the
parties and, thus, are not a measure of the exposure of the Company. The
amounts exchanged are calculated on the basis of the notional amounts and the
other terms of the instruments, which relate to interest rates, exchange
rates, security prices or financial or other indexes.
The Company utilizes interest rate swap agreements, options, and purchased
caps and floors to reduce interest rate exposures arising from mismatches
between assets and liabilities and to modify portfolio profiles to manage
other risks identified. Under interest rate swaps, the Company agrees to an
exchange, at specified intervals, between streams of variable rate and fixed
rate interest payments calculated by reference to an agreed-upon notional
principal amount. Gains and losses realized on the termination of contracts
are deferred and amortized through the IMR over the remaining life of the
associated contract. IMR amortization is included in net investment income on
the Statutory Statement of Income. Net amounts receivable and payable are
accrued as adjustments to investment income and included in other assets on
the Statutory Statement of Financial Position. At December 31, 1998 and 1997,
the Company had swaps with notional amounts of $4,382.0 million and $3,220.2
million, respectively. The fair values of these instruments were $84.1
million at December 31, 1998 and $20.9 million at December 31, 1997.
Options grant the purchaser the right to buy or sell a security or enter into
a derivative transaction at a stated price within a stated period. The
Company's option contracts have terms of up to fifteen years. The amounts
paid for options purchased are amortized into investment income over the life
of the contract on a straight-line basis. Unamortized costs are included in
other investments on the Statutory Statement of Financial Position. Gains and
losses on these contracts are recorded at the expiration or termination date
and are deferred and amortized through the IMR over the remaining life of the
option contract. At December 31, 1998 and 1997, the Company had option
contracts with notional amounts of $12,704.4 million and $5,388.2 million,
respectively. The Company's credit risk exposure was limited to the
unamortized costs of $92.5 million and $59.0 million, which had fair values
of $161.9 million and $99.6 million at December 31, 1998 and 1997,
respectively.
Interest rate cap agreements grant the purchaser the right to receive the
excess of a referenced interest rate over a stated rate calculated by
reference to an agreed upon notional amount. Interest rate floor agreements
grant the purchaser the right to receive the excess of a stated rate over a
referenced interest rate calculated by reference to an agreed upon notional
amount. Amounts paid for interest rate caps and floors are amortized into
investment income over the life of the asset on a straight-line basis.
Unamortized costs are included in other investments on the Statutory
Statement of Financial Position. Amounts receivable and payable are accrued
as adjustments to investment income and included in the Statutory Statement
of Financial Position as other assets. Gains and losses on these contracts,
including any unamortized cost, are recognized upon termination and are
deferred and amortized through the IMR over the remaining life of the
associated cap or floor agreement. At December 31, 1998 and 1997, the company
had agreements with notional amounts of $4,337.9 million and $3,348.6
million, respectively. The Company's credit risk exposure on these agreements
is limited to the unamortized costs of $22.7 million and $18.2 million at
December 31, 1998 and 1997, respectively. The fair values of these
instruments were $43.9 million and $23.4 million at December 31, 1998 and
1997, respectively.
FF-15
<PAGE>
Notes To Statutory Financial Statements (Continued)
The Company enters into forward U.S. Treasury, and Government National
Mortgage Association ("GNMA") and Federal National Home Mortgage Association
("FNMA") commitments for the purpose of managing interest rate exposure. The
Company generally does not take delivery on forward commitments. These
commitments are instead settled with offsetting transactions. Gains and
losses on forward commitments are recorded when the commitment is closed and
amortized through the IMR over the remaining life of the asset. At December
31, 1998 and 1997, the Company had U. S. Treasury, GNMA and FNMA purchase
commitments which will settle during the following year with contractual
amounts of $603.4 million and $1,100.7 million, respectively. The fair values
of these commitments were $604.1 million and $1,117.6 million, including net
unrealized gains of $0.7 million and $16.9 million at December 31, 1998 and
1997, respectively.
The Company utilizes other agreements to reduce exposures to various risks.
Notional amounts relating to these agreements totaled $384.2 million and
$385.6 million at December 31, 1998 and 1997, respectively. The fair values
of these instruments resulted in an unrealized gain of $7.2 million at
December 31, 1998 and an unrealized loss of $6.8 million at December 31,
1997.
The Company is exposed to credit-related losses in the event of
nonperformance by counterparties to derivative financial instruments. This
exposure is limited to contracts with a positive fair value. The amounts at
risk in a net gain position were $272.5 million and $146.7 million at
December 31, 1998 and 1997, respectively. The Company monitors exposure to
ensure counterparties are credit worthy and concentration of exposure is
minimized. Additionally, collateral positions have been obtained with
counterparties when considered prudent.
8. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES
MassMutual has two primary insurance subsidiaries, C.M. Life, which primarily
writes variable annuities and universal life insurance, and MML Bay State,
which primarily writes variable life and annuity business. MassMutual's
wholly-owned non-insurance subsidiary MassMutual Holding Company, Inc.
("MMHC") owns subsidiaries which include retail and institutional asset
management, registered broker dealer and international life and annuity
operations.
MassMutual accounts for the value of its investments in subsidiaries at their
underlying net equity. Operating results for such subsidiaries are reflected
as net unrealized capital gains in the Statement of Changes in Policyholders'
Contingency Reserves. Net investment income is recorded by MassMutual to the
extent that dividends are declared by the subsidiaries. The Company holds
debt issued by MMHC and its subsidiaries of $1,111.3 million and $792.4
million at December 31, 1998 and 1997, respectively.
Below is summarized financial information for the unconsolidated subsidiaries
as of December 31 and for the year then ended:
1998 1997
-------- --------
(In Millions)
Domestic Life Insurance Subsidiaries:
Total revenue $ 1,151.4 $ 1,086.9
Net income (loss) $ (3.2) $ 1.1
Assets $ 4,741.4 $ 3,766.8
Other Subsidiaries:
Total revenue $ 1,137.4 $ 967.2
Net income $ 73.6 $ 75.4
Assets $ 2,839.5 $ 2,018.8
FF-16
<PAGE>
Notes To Statutory Financial Statements (Continued)
9. REINSURANCE
The Company has reinsurance agreements with other insurance companies in the
normal course of business. In addition, the Company cedes the remainder of
its group life and health business to UniCARE. Premiums, benefits to
policyholders and provisions for future benefits are stated net of
reinsurance. The Company remains liable to the insured for the payment of
benefits if the reinsurer cannot meet its obligations under the reinsurance
agreements. Total premiums ceded were $183.9 million in 1998, $294.6 million
in 1997 and $793.5 million in 1996.
10. BUSINESS RISKS AND CONTINGENCIES
The Company is subject to insurance guaranty fund laws in the states in
which it does business. These laws assess insurance companies amounts to be
used to pay benefits to policyholders and claimants of insolvent insurance
companies. Many states allow these assessments to be credited against future
premium taxes. The Company believes such assessments in excess of amounts
accrued will not materially affect its financial position, results of
operations or liquidity.
The Company is involved in litigation arising in and out of the normal
course of its business. Management intends to defend these actions
vigorously. While the outcome of litigation cannot be foreseen with
certainty, it is the opinion of management, after consultation with legal
counsel, that the ultimate resolution of these matters will not materially
affect its financial position, results of operations or liquidity.
11. SUBSIDIARIES AND AFFILIATED COMPANIES
A summary of ownership and relationship of the Company and its subsidiaries
and affiliated companies as of December 31, 1998 is illustrated below. The
Company provides management or advisory services to these companies.
Subsidiaries are wholly-owned, except as noted.
Parent
------
Massachusetts Mutual Life Insurance Company
Subsidiaries of Massachusetts Mutual Life Insurance Company
-----------------------------------------------------------
CM Assurance Company
CM Benefit Insurance Company
C.M. Life Insurance Company
MassMutual Holding Company
MassMutual of Ireland, Limited
MML Bay State Life Insurance Company
MML Distributors, LLC
MassMutual Mortgage Finance, LLC
Subsidiaries of MassMutual Holding Company
------------------------------------------
GR Phelps & Co., Inc.
MassMutual Holding Trust I
MassMutual Holding Trust II
MassMutual Holding MSC, Inc.
MassMutual International, Inc.
MML Investor Services, Inc.
FF-17
<PAGE>
Notes To Statutory Financial Statements (Continued)
Subsidiaries of MassMutual Holding Trust I
------------------------------------------
Antares Capital Corporation - 99.4%
Charter Oak Capital Management, Inc. - 80.0%
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation - 85.8%
Oppenheimer Acquisition Corporation - 89.36%
Subsidiaries of MassMutual Holding Trust II
-------------------------------------------
CM Advantage, Inc.
CM International, Inc.
CM Property Management, Inc.
HYP Management, Inc.
MMHC Investments, Inc.
MML Realty Management
Urban Properties, Inc.
MassMutual Benefits Management, Inc.
Subsidiaries of MassMutual International, Inc.
----------------------------------------------
Compensa de Seguros de Vida S.A. - 33.5%
MassLife Seguros de Vida (Argentina) S.A.
MassMutual International (Bermuda) Ltd.
Mass Seguros de Vida (Chile) S.A. - 33.5%
MassMutual International (Luxembourg) S.A.
MassMutual Holding MSC, Inc.
----------------------------
MassMutual Corporate Value Limited - 40.93%
9048 - 5434 Quebec, Inc.
1279342 Ontario Limited
Affiliates of Massachusetts Mutual Life Insurance Company
---------------------------------------------------------
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
FF-18
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission (the "Commission") such supplementary and
periodic information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
Article V of the By-laws of MassMutual provide for indemnification of directors
and officers as follows:
Article V. Subject to limitations of law, the Company shall indemnify:
(a) each director, officer or employee;
(b) any individual who serves at the request of the Company as a
Secretary, a director, board member, committee member, officer or
employee of any organization or any separate investment account,
or;
(c) any individual who serves in any capacity with respect to
employee benefit plans;
from and against all loss, liability and expense imposed upon or incurred by
such person in connection with any action, claim or proceeding of any nature
whatsoever, in which such person may be involved or with which he or she may be
threatened, by reason of any alleged act, omission or otherwise while serving in
any such capacity.
Indemnification shall be provided although the person no longer serves in such
capacity and shall include protection for the person's heirs and legal
representatives. Indemnities hereunder shall include, but not be limited to, all
costs and reasonable counsel fees, fines, penalties, judgments or awards of any
kind, and the amount of reasonable settlements, whether or not payable to the
Company or to any of the other entities described in the preceding paragraph, or
to the policyholders or security holders thereof.
Notwithstanding the foregoing, no indemnification shall be provided with respect
to:
(1) any matter as to which the person shall have been adjudicated in any
proceeding not to have acted in good faith in the reasonable belief that his or
her action was in the best interests of the Company or, to the extent that such
matter relates to service with respect to any employee benefit plan, in the best
interests of the participants or beneficiaries of such employee benefit plan;
(2) any liability to any entity which is registered as an investment company
under the Federal Investment Company Act of 1940 or to the security holders
thereof, where the basis for such liability is willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
office; and
(3) any action, claim or proceeding voluntarily initiated by any person seeking
indemnification, unless such action, claim or proceeding had been authorized by
the Board of Directors or unless such person's indemnification is awarded by
vote of the Board of Directors.
In any matter disposed of by settlement or in the event of an adjudication which
in the opinion of the General Counsel or his delegate does not make a sufficient
determination of conduct which could preclude or permit indemnification in
accordance with the preceding paragraphs (1), (2), and (3), the person shall be
entitled to indemnification unless, as determined by the majority of the
disinterested directors or in the opinion of counsel (who may be an officer of
the Company or outside counsel employed by the Company), such person's conduct
was such as precludes indemnification under any of such paragraphs.
7
<PAGE>
The Company may at its option indemnify for expenses incurred in connection with
any action or proceeding in advance of its final disposition, upon receipt of a
satisfactory undertaking for repayment if it be subsequently determined that the
person thus indemnified is not entitled to indemnification under this Article V.
Insofar as indemnification for liability arising under the Securities Act of
1933 (the "Act") 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 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.
REPRESENTATION UNDER SECTION 26(e)(2)(A)
OF THE INVESTMENT COMPANY ACT OF 1940
Massachusetts Mutual Life Insurance Company hereby represents that fees and
charges deducted under the flexible premium variable whole life insurance
policies described in this Registration Statement, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by Massachusetts Mutual Life Insurance Company.
8
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 7
This Post-Effective Amendment is comprised of the following documents:
The Facing Sheet.
Cross-reference to items required by Form N-8B-2.
The Prospectus consisting of 100 pages.
The Undertaking to File Reports.
The undertaking pursuant to Rule 484 under the Securities Act of 1933.
Representation under Section 26(e)(2)(A) of the Investment Company Act of 1940.
The Signatures.
Written Consents of the Following Persons:
1. Independent accountants, PricewaterhouseCoopers LLP.
2. Counsel opining as to the legality of securities being registered.
3. Opinion opining as to actuarial matters contained in the
Post-Effective Amendment by John M. Valencia, Assistant Vice
President.
The following Exhibits:
1. The following Exhibits correspond to those required by Paragraph A of
the instructions as to Exhibits in Form N-8B-2:
A. (1) Resolution of Board of Directors of MassMutual establishing the
Separate Account. (1)
(2) Not applicable.
(3) Form of Distribution Contracts:
(a)(1) Form of Distribution Servicing Agreement between MML
Distributors, LLC, and MassMutual. (3)
(a)(2) Co-Underwriting Agreement between MML Investors
Services, Inc. and MassMutual. (3)
(a)(3) Broker-Dealer Selling Agreement. (3)
(b) Not applicable.
(c) Not applicable.
(4) Not applicable.
(5) Form of Flexible Premium Variable Whole Life Insurance Policy.(4)
(6) (a) Certificate of Incorporation of MassMutual. (1)
(b) By-Laws of MassMutual. (1)
(7) Not applicable.
9
<PAGE>
(8) (a) Form of Participation Agreement with Oppenheimer Variable
Account Funds. (1)
(b) Form of Participation Agreement with Panorama Series Fund,
Inc. (1)
(c) Participation Agreement with T. Rowe Price Equity Series,
Inc. (7)
(d) Participation Agreement with MFS Variable Insurance
Trust.(7)
(e) Form of Participation Agreement with Goldman Sachs Variable
Insurance Trust. (7)
(9) Not applicable.
(10) Application for a Flexible Premium Variable Whole Life Insurance
Policy. (4)
(11) Memorandum describing MassMutual's issuance, transfer, and
redemption procedures for the Policy. (4)
2. Opinion and Consent of Counsel as to the legality of the securities
being registered. (8)
3. No financial statement will be omitted from the Prospectus pursuant to
Instruction 1(b) or (c) of Part I.
4. Not applicable.
5. Opinion and consent of John M. Valencia opining as to actuarial
matters pertaining to the securities being registered. (8)
6. Consent of Independent Accountants, PricewaterhouseCoopers LLP. (8)
7. (i) Powers of Attorney. (1)
(ii) Power of Attorney for Roger G. Ackerman. (6)
(iii) Power of Attorney for Robert J. O'Connell and Thomas B. Wheeler.
(5)
(1) Incorporated by reference to Registration Statement No. 333-22557, filed
February 28, 1997.
(2) Incorporated by reference to Post-Effective Amendment Number 1 to
Registration Statement No. 33-87904 filed with the Commission on April 30,
1996.
(3) Incorporated by reference to Post-Effective Amendment Number 2 to
Registration Statement No. 33-87904 filed with the Commission on February
28, 1997.
(4) Incorporated by reference to Post-Effective Amendment Number 6 to
Registration Statement No. 33-87904 filed with the Commission on April 24,
1998.
(5) Incorporated by reference to Pre-Effective Amendment Number 1 to
Registration Statement No. 333-65887 filed with the Commission on January
28, 1999.
(6) Incorporated by reference to Registration Statement No. 333-45039, filed
with the Commission on June 4, 1998.
(7) Incorporated by reference to Initial Registration Statement No. 333-65887
filed with the Commission on October 20, 1998.
(8) Filed herewith.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Massachusetts Mutual Variable Life Separate Account I, certifies that it meets
all of the requirements for effectiveness of this Post-Effective Amendment No. 7
pursuant to Rule 485(b) under the Securities Act of 1933 and has caused this
Post-Effective Amendment No.7 to Registration Statement No. 33-87904 to be
signed on its behalf by the undersigned thereunto duly authorized, all in the
city of Springfield and the Commonwealth of Massachusetts, on the 22nd day of
April, 1999.
MASSACHUSETTS MUTUAL VARIABLE LIFE SEPARATE ACCOUNT I
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
(Depositor)
By: /s/ Robert J. O'Connell*
- ------------------------------
Robert J. O'Connell, President and Chief Executive Officer
Massachusetts Mutual Life Insurance Company
/s/ Richard M. Howe On April 22, 1999, as Attorney-in-Fact pursuant to
- ------------------------ powers of attorney.
*Richard M. Howe
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 7 to Registration Statement No. 33-87904 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. O'Connell* President and Chief Executive Officer April 22, 1999
- -----------------------------
Robert J. O'Connell
/s/ Joseph M. Zubretsky* Executive Vice President, April 22, 1999
- ----------------------------- Chief Financial Officer &
Joseph M. Zubretsky Chief Accounting Officer
/s/ Roger G. Ackerman* Director April 22, 1999
- -----------------------------
Roger G. Ackerman
/s/ James R. Birle* Director April 22, 1999
- -----------------------------
James R. Birle
/s/ Gene Chao* Director April 22, 1999
- -----------------------------
Gene Chao, Ph.D.
/s/ Patricia Diaz Dennis* Director April 22, 1999
- -----------------------------
Patricia Diaz Dennis
s/ Anthony Downs* Director April 22, 1999
- -----------------------------
Anthony Downs
/s/ James L. Dunlap* Director April 22, 1999
- -----------------------------
James L. Dunlap
/s/ William B. Ellis* Director April 22, 1999
- -----------------------------
William B. Ellis, Ph.D.
/s/ Robert M. Furek* Director April 22, 1999
- -----------------------------
Robert M. Furek
/s/ Charles K. Gifford* Director April 22, 1999
- -----------------------------
Charles K. Gifford
</TABLE>
11
<PAGE>
<TABLE>
<S> <C> <C>
/s/ William N. Griggs* Director April 22, 1999
- -----------------------------
William N. Griggs
/s/ George B. Harvey* Director April 22, 1999
- -----------------------------
George B. Harvey
/s/ Barbara B. Hauptfuhrer* Director April 22, 1999
- -----------------------------
Barbara B. Hauptfuhrer
/s/ Sheldon B. Lubar* Director April 22, 1999
- -----------------------------
Sheldon B. Lubar
/s/ William B. Marx, Jr.* Director April 22, 1999
- -----------------------------
William B. Marx, Jr.
/s/ John F. Maypole* Director April 22, 1999
- -----------------------------
John F. Maypole
/s/ Thomas B. Wheeler* Director April 22, 1999
- -----------------------------
Thomas B. Wheeler
/s/ Alfred M. Zeien* Director April 22, 1999
- -----------------------------
Alfred M. Zeien
/s/ Richard M. Howe On April 22, 1999, as Attorney-in-Fact pursuant to
- ----------------------------- powers of attorney.
*Richard M. Howe
</TABLE>
12
<PAGE>
REPRESENTATION BY REGISTRANT'S COUNSEL
As counsel to the Registrant, I, James M. Rodolakis, have reviewed this
Post-Effective Amendment No. 7 to Registration Statement No. 33-87904 and I
represent, pursuant to the requirement of paragraph (e) of Rule 485 under the
Securities Act of 1933, that this Amendment does not contain disclosures which
would render it ineligible to become effective pursuant to paragraph (b) of said
Rule 485.
/s/ James M. Rodolakis
-------------------------------------------
James M. Rodolakis
Counsel
Massachusetts Mutual Life Insurance Company
13
<PAGE>
EXHIBIT LIST
99.2 Opinion and Consent of James M. Rodolakis
99.C.1 Consent of Independent Accountants, PricewaterhouseCoopers LLP.
99.C.6 Opinion and Consent of John M. Valencia
14
<PAGE>
EXHIBIT 99.2
Opinion and Consent of James M. Rodolakis
[LETTERHEAD OF MASSMUTUAL]
April, 1999
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
RE: Post-Effective Amendment No. 7 to Registration Statement No. 33-87904 filed
on Form S-6
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 7 to Registration Statement No. 33- 87904 under the Securities Act
of 1933 for Massachusetts Mutual Life Insurance Company's ("MassMutual")
Flexible Premium Variable Whole Life Insurance Policy With Tables of Selected
Face Amounts (the "Policy"). Massachusetts Mutual Variable Life Separate Account
I issues the Policy.
As Counsel for MassMutual, I provide legal advice to MassMutual in connection
with the operation of its variable products. In such role I am familiar with the
Post-Effective Amendment for the Policy. In so acting, I have made such
examination of the law and examined such records and documents as in my judgment
are necessary or appropriate to enable me to render the opinion expressed below.
I am of the following opinion:
1. MassMutual is a valid and subsisting corporation, organized and operated
under the laws of the Commonwealth of Massachusetts and is subject to regulation
by the Massachusetts Commissioner of Insurance.
2. Massachusetts Mutual Variable Life Separate Account I is a separate account
validly established and maintained by MassMutual in accordance with
Massachusetts law.
3. All of the prescribed corporate procedures for the issuance of the Policy
have been followed, and all applicable state laws have been complied with.
I hereby consent to the use of this opinion as an exhibit to this Post-Effective
Amendment.
Very truly yours,
/s/ James M. Rodolakis
- ---------------------------
James M. Rodolakis
Counsel
15
<PAGE>
EXHIBIT 99.C.1
Consent of Independent Accountants, PricewaterhouseCoopers LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Massachusetts Mutual Life Insurance Company
We consent to the inclusion in this Post-Effective Amendment No. 7 to the
Registration Statement of Massachusetts Mutual Variable Life Separate Account I
(Strategic Variable Life segment) on Form S-6 (Registration No. 33-87904), of
our report, dated February 25, 1999, on our audits of Massachusetts Mutual
Variable Life Separate Account I (Strategic Variable Life segment), and of our
report dated February 25, 1999, on our audits of the statutory financial
statements of Massachusetts Mutual Life Insurance Company, which includes
explanatory paragraphs relating to the use of statutory accounting practices,
which differ from generally accepted accounting principles. We also consent to
the reference to our Firm under the caption "Experts."
PricewaterhouseCoopers LLP
Springfield, Massachusetts
April 27, 1999
16
<PAGE>
EXHIBIT 99.C.6
Opinion and Consent of John M. Valencia
[LETTERHEAD OF MASSMUTUAL]
April, 1999
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Ladies and Gentlemen:
This opinion is furnished in connection with Post-Effective Amendment No. 7 to
Registration Statement No. 33-87904 for Massachusetts Mutual Life Insurance
Company's Flexible Premium Variable Whole Life Insurance Policies with Table of
Selected Face Amounts (the "Policies") under the Securities Act of 1933. The
prospectus included in the post-effective amendment describes the Policies. I am
familiar with the forms of the Policies and the prospectus.
In my opinion, the illustrations of benefits under the Policies included in the
section entitled "Illustrations" in Appendix C of the prospectus, based on the
assumptions stated in the illustrations, are consistent with the provisions of
the respective forms of the Policies. The age selected in the illustrations is
representative of the manner in which the Policies operate.
I hereby consent to the use of this opinion as an exhibit to Post-Effective
Amendment No. 7 to Registration Statement No. 33- 87904, and to the reference of
my name under the heading "Experts" in the prospectus.
Sincerely,
/s/ John M. Valencia
- ---------------------------------
John M. Valencia, FSA, MAAA
Assistant Vice President
17
