<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 29, 1996
REGISTRATION NOS. 33-42129/811-6375
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO.
POST-EFFECTIVE AMENDMENT NO. 6 [X]
AND/OR
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 8
(CHECK APPROPRIATE BOX OR BOXES)
----------------
STATE STREET RESEARCH PORTFOLIOS, INC.
(Exact name of registrant as specified in charter)
One Madison Avenue 10010
New York, New York (Zip code)
(Address of principal executive office)
Registrant's Telephone Number, Including Area Code:
212-578-5997
----------------
RICHARD M. BLACKWELL, ESQ.
One Madison Avenue
New York, New York 10010
(Name and address of agent for service)
----------------
Copy to:
JOHN A. DUDLEY, ESQ.
SULLIVAN & WORCESTER LLP
1025 Connecticut Avenue, N.W.
Washington, D.C. 20036
----------------
It is proposed that the filing will become effective:
[_] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on March 1, 1996 pursuant to paragraph (b) of Rule 485
[_] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[_] on (date) pursuant to paragraph (a)(1) of Rule 485
[_] 75 days after filing pursuant to paragraph (a)(2) of Rule 485
[_] on (date) pursuant to paragraph (a)(2) of Rule 485
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant has registered an indefinite amount of Class A, Class B, Class C and
Class D shares. The Registrant's Rule 24f-2 Notice for the fiscal year ended
October 31, 1995 was filed with the Commission on or about December 31, 1995.
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<PAGE>
STATE STREET RESEARCH PORTFOLIOS, INC.
CROSS REFERENCE SHEET
PURSUANT TO RULE 481(a)
<TABLE>
<CAPTION>
N-1A ITEM NO. PROSPECTUS HEADING
------------- ------------------
<S> <C>
1. Cover.......................... Cover Page
2. Synopsis....................... Table of Expenses
3. Condensed Financial Informa-
tion........................... Financial Highlights; Calculation of Per-
formance Data
4. General Description of Regis-
trant.......................... The Funds' Investments; Limiting Investment
Risk; The Funds and Their Shares
5. Management of the Fund......... The Funds and Their Shares; Management of
the Funds; Purchase of Shares; Redemption
of Shares
5A. Management's Discussion of Fund
Performance.................... [To be included in Annual Report to Share-
holders]
6. Capital Stock and other Securi-
ties........................... The Funds and Their Shares; Dividends and
Distributions; Taxes; Shareholder Services
7. Purchase of Securities Being
Offered........................ Purchase of Shares
8. Redemption or Repurchase....... Redemption of Shares
9. Pending Legal Proceedings...... Not Applicable
STATEMENT OF ADDITIONAL
INFORMATION HEADING
<CAPTION>
N-1A ITEM NO.
-------------
<S> <C>
10. Cover Page..................... Cover Page
11. Table of Contents.............. Table of Contents
12. General Information and Histo-
ry............................. Not Applicable
13. Investment Objectives and Poli-
cies........................... Investment Practices and Policies; Portfo-
lio Transactions
14. Management of the Registrant... Directors and Officers
15. Control Persons and Principal
Holders of
Securities..................... Control Persons
16. Investment Advisory and Other
Services....................... Investment Management Arrangements;
Custodian; Independent Accountants
17. Brokerage Allocation........... Investment Management Agreements and Sub-
Investment Management Agreements;
Allocation of Portfolio Brokerage
18. Capital Stock and Other Securi-
ties........................... Distribution of Shares of the Funds
19. Purchase, Redemption and Pric-
ing of Securities Being Of-
fered.......................... Purchase of Shares; Redemption In-Kind; Net
Asset Value
20. Tax Status..................... Certain Tax Matters
21. Underwriters................... Distribution of Shares of the Funds
22. Calculations of Performance Da-
ta............................. Calculation of Performance Data
23. Financial Statements........... Financial Statements
</TABLE>
<PAGE>
STATE STREET RESEARCH
INTERNATIONAL EQUITY FUND
STATE STREET RESEARCH
INTERNATIONAL FIXED INCOME
FUND
Prospectus
March 1, 1996
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND, formerly known as MetLife In-
ternational Equity Fund (the "International Equity Fund" or "Fund"), seeks to
achieve long-term growth of capital by investing primarily in common stock and
equity-related securities of non-U.S. companies. Current income is not a
specific prerequisite in the selection of portfolio securities.
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND, formerly known as
MetLife International Fixed Income Fund (the "International Fixed Income Fund"
or "Fund"), seeks to achieve the highest possible total return, consisting of
income and realized and unrealized capital gains, consistent with prudent in-
vestment risk and preservation of capital, by investing primarily in high qual-
ity debt securities of non-U.S. issuers.
Management will measure growth in connection with both Funds in U.S. dollars.
See pp. 5, 6.
Each Fund is a diversified series of State Street Research Portfolios, Inc.,
formerly known as MetLife Portfolios, Inc. ("Portfolios"), an open-end manage-
ment investment company.
State Street Research Investment Services, Inc. (the "Investment Manager" or
the "Distributor") serves as the investment adviser and distributor for the
Funds. GFM International Investors Limited ("GFM" or "Sub-Investment Manager")
is the sub-investment adviser of the Funds. The Investment Manager is an indi-
rect wholly-owned subsidiary and the Sub-Investment Manager is substantially a
wholly-owned indirect subsidiary of Metropolitan Life Insurance Company, the
nation's second largest insurer.
Shareholders may redeem their shares directly from the Funds at net asset
value less the applicable contingent deferred sales charge, if any; redemptions
processed through securities dealers may be subject to processing charges.
There are risks in any investment program, including the risk of changing eco-
nomic and market conditions, and there is no assurance that a Fund will achieve
its investment objective. The net asset value of a share of a Fund will fluctu-
ate as market conditions change.
This Prospectus sets forth concisely the information a prospective investor
ought to know about the Funds before investing. It should be retained for fu-
ture reference. A Statement of Additional Information about the Funds dated
March 1, 1996 has been filed with the Securities and Exchange Commission and is
incorporated by reference in this Prospectus. It is available, at no charge,
upon request to Portfolios at the address indicated on the back cover or by
calling 1-800-562-0032.
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
- --------------------------------------------------------------------------------
<S> <C>
Table of Expenses.......................................................... 2
Financial Highlights....................................................... 4
The Funds' Investments..................................................... 5
Risk Factors............................................................... 12
Limiting Investment Risk................................................... 13
Purchase of Shares......................................................... 14
Redemption of Shares....................................................... 22
Shareholder Services....................................................... 24
The Funds and Their Shares................................................. 28
Management of the Funds.................................................... 29
Dividends and Distributions; Taxes......................................... 30
Calculation of Performance Data............................................ 31
- --------------------------------------------------------------------------------
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE ACCU-
RACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
The Fund offers four classes of shares which may be purchased at the next de-
termined net asset value per share plus, in the case of all classes except
Class C shares, a sales charge which, at the election of the investor, may be
imposed (i) at the time of purchase (the Class A shares) or (ii) on a deferred
basis (the Class B and Class D shares).
Class A shares are subject to (i) an initial sales charge of up to 4.5% and
(ii) an annual service fee of 0.25% of the average daily net asset value of the
Class A shares.
Class B shares are subject (i) to a contingent deferred sales charge (declin-
ing from 5% to 2%), which will be imposed on most redemptions made within five
years of purchase and (ii) annual distribution and service fees of 1% of the
average daily net asset value of these shares. Class B shares automatically
convert into Class A shares (which pay lower ongoing expenses) at the end of
eight years after purchase. No contingent deferred sales charge applies after
the fifth year following the purchase of Class B shares.
Class C shares are offered only to certain employee benefit plans and large
institutions. No sales charge is imposed at the time of purchase or redemption
of Class C shares. Class C shares do not pay any distribution or service fees.
Class D shares are subject to (i) a contingent deferred sales charge of 1% if
redeemed within one year following purchase and (ii) annual distribution and
service fees of 1% of the average daily net asset value of these shares.
TABLE OF EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
------- ------- ------- -------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses(1)
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)........ 4.5% None None None
Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering
price)..................................... None None None None
Maximum Deferred Sales Charge (as a percent-
age of original purchase price or redemp-
tion proceeds, as applicable).............. None(2) 5% None 1%
Redemption Fees (as a percentage of amount
redeemed, if applicable)................... None None None None
Exchange Fees............................... None None None None
</TABLE>
- -------
(1) Reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase; the charge declines
thereafter, and no contingent deferred sales charge is imposed after the
fifth year. Class D shares are subject to a 1% contingent deferred sales
charge on any portion of the purchase redeemed within one year of the sale.
Long-term investors in a class of shares with a distribution fee may, over
a period of years, pay more than the economic equivalent of the maximum
sales charge permissible under applicable rules of the National Association
of Securities Dealers, Inc. See "Purchase of Shares."
(2) Purchases of Class A shares of $1 million or more are not subject to a
sales charge. If such shares are redeemed within 12 months of purchase, a
contingent deferred sales charge of 1% will be applied to the redemption.
See "Purchase of Shares."
- --------------------------------------------------------------------------------
2
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND CLASS A CLASS B CLASS C CLASS D
------------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Annual Fund Operating Expenses (as a percent-
age of average net assets)
Management Fees............................. 0.95% 0.95% 0.95% 0.95%
12b-1 Fees.................................. 0.25% 1.00% None 1.00%
Other Expenses.............................. 1.32% 1.32% 1.32% 1.32%
Less Voluntary Reduction.................. (0.62%) (0.62%) (0.62%) (0.62%)
------ ------ ------ ------
Total Fund Operating Expenses........... 1.90% 2.65% 1.65% 2.65%
<CAPTION>
INTERNATIONAL FIXED INCOME FUND CLASS A CLASS B CLASS C CLASS D
------------------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Annual Fund Operating Expenses (as a percent-
age of average net assets)
Management Fees............................. 0.75% 0.75% 0.75% 0.75%
12b-1 Fees.................................. 0.25% 1.00% None 1.00%
Other Expenses.............................. 1.29% 1.29% 1.29% 1.29%
Less Voluntary Reduction.................. (0.54%) (0.54%) (0.54%) (0.54%)
------ ------ ------ ------
Total Fund Operating Expenses........... 1.75% 2.50% 1.50% 2.50%
</TABLE>
EXAMPLE:
You would pay the following expenses on a $1,000 investment assuming a 5%
annual return and (1) redemption of the entire investment at the end of each
time period or (2) no redemption at the end of each time period.
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------- ------- ------- ------- ---------
(1) (2) (1) (2) (1) (2) (1) (2)
--- --- --- --- --- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A shares............................... 63 63 102 102 143 143 257 257
Class B shares (1)........................... 77 27 112 82 161 141 280 280
Class C shares............................... 17 17 52 52 90 90 195 195
Class D shares............................... 37 27 82 82 141 141 298 298
<CAPTION>
INTERNATIONAL FIXED INCOME FUND
-------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A shares............................... 62 62 98 98 136 136 242 242
Class B shares (1)........................... 75 25 108 78 153 133 265 265
Class C shares............................... 15 15 47 47 82 82 179 179
Class D shares............................... 35 25 78 78 133 133 284 284
</TABLE>
- -------
(1) Ten-year figure assumes conversion of Class B shares to Class A shares at
the end of eight years.
THE EXAMPLE SHOULD NOT BE CONSIDERED AS A REPRESENTATION OF PAST OR FUTURE
RETURN OR EXPENSES. ACTUAL RETURN OR EXPENSES MAY BE GREATER OR LESS THAN
SHOWN.
The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor will bear directly or indirectly.
The percentage expense levels shown in the table above are based on experience
with expenses for the fiscal year ended October 31, 1995; actual expense levels
for the current fiscal year and future years may vary from the amounts shown.
The table does not reflect charges for optional services elected by certain
shareholders, such as the $7.50 fee for remittance of redemption proceeds by
wire. For further information on sales charges, see "Purchase of Shares--Alter-
native Purchase Program"; for further information on management fees, see "Man-
agement of the Funds"; and for further information on 12b-1 fees, see "Purchase
of Shares--Distribution Plan."
The Funds have been advised that the Investment Manager/Distributor or its af-
filiates may from time to time and in varying amounts voluntarily assume some
portion of fees or expenses relating to the Funds. For the fiscal year ended
October 31, 1995, Total Fund Operating Expenses as a percentage of average net
assets of Class A, Class B, Class C and Class D shares, respectively, would
have been 2.51%, 3.24%, 2.27% and 3.24% of the International Equity Fund; and
2.23%, 2.97%, 2.03% and 2.97% of the International Fixed Income Fund, in the
absence of the voluntary assumption of fees or expenses by the Investment Man-
ager/ Distributor. Such assumption of fees or expenses, as a percentage of av-
erage net assets, amounted to 0.61%, 0.59%, 0.62% and 0.59% of the Class A,
Class B, Class C and Class D, respectively, of the International Equity Fund;
and 0.49%, 0.48%, 0.54% and 0.48% of Class A, Class B, Class C and Class D, re-
spectively, of the International Fixed Income Fund. The amount of fees or ex-
penses assumed during the fiscal year ended October 31, 1995 differed among
classes because of fluctuations during the year in relative levels of assets in
each class and in expenses before reimbursement. The Funds expect the voluntary
assumption of fees or
3
<PAGE>
expenses to continue in the current year, although they cannot give complete
assurance that such assistance will be received.
FINANCIAL HIGHLIGHTS
The data set forth below has been audited by Deloitte & Touche LLP, independent
accountants, whose report thereon is included in the Statement of Additional
Information. For further information about the performance of the Funds, see
"Financial Statements" in the Statement of Additional Information.
INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
-------------------------- -------------------------- --------------------------------------------------
JANUARY 22, 1992
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31 (COMMENCEMENT
---------------------- ---------------------- ----------------------------- OF OPERATIONS) TO
1995*** 1994** 1995*** 1994** 1995 1994 1993 OCTOBER 31, 1992
------- ------ ------- ------ ------- ------- ------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period.......... $ 10.98 $ 10.54 $ 10.93 $ 10.54 $ 11.01 $ 9.56 $ 6.50 $ 7.40
Net investment
income*......... (.08) (.04) (.15) (.06) (.05) (.07) (.02) .04
Net realized and
unrealized gain
(loss) on
investments..... (1.04) .48 (1.04) .45 (1.05) 2.09 3.17 (.94)
Dividends from
net investment
income.......... -- -- -- -- -- (.05) (.04) --
Distributions
from net
realized gains.. (.52) -- (.52) -- (.52) (.52) (.05) --
----------- ----------- ----------- ----------- ------- ------- ------- -------
Net asset value,
end of period... $ 9.34 $ 10.98 $ 9.22 $ 10.93 $ 9.39 $ 11.01 $ 9.56 $ 6.50
=========== =========== =========== =========== ======= ======= ======= =======
Total return.... (10.38)%+ 4.17 %++ (11.09)%+ 3.70 %++ (10.16)%+ 22.73 %+ 48.95 %+ (12.16)%++
Net assets at
end of period
(000s).......... $ 22,497 $ 22,579 $ 27,614 $ 18,904 $33,883 $54,631 $27,767 $10,418
Ratio of
operating
expenses to
average net
assets*......... 1.90 % 1.90 %++ 2.65 % 2.65 %++ 1.65 % 1.65 % 1.65 % 1.65 %++
Ratio of net
investment
income (loss) to
average net
assets*......... (0.82)% (0.87)%++ (1.54)% (1.61)%++ (0.51)% (0.75)% (0.37)% 0.79 %++
Portfolio
turnover rate... 100.68 % 80.60 % 100.68 % 80.60 % 100.68 % 80.60 % 116.12 % 77.83 %
*Reflects
voluntary
<CAPTION>assumption of
fees or expenses CLASS D
per share in -------------------------------
each period..... $ .06 $ .03 $ .06 $ .03 $ .06 $ .05 $ .08 $ .10
YEAR ENDED OCTOBER 31,
----------------------
1995*** 1994**
--------------- ---------------
<S> <C> <C>
Net asset value,
beginning of
period.......... $ 10.93 $ 10.54
Net investment
income*......... (.15) (.07)
Net realized and
unrealized gain
(loss) on
investments..... (1.04) .46
Dividends from
net investment
income.......... -- --
Distributions
from net
realized gains.. (.52) --
--------------- ---------------
Net asset value,
end of period... $ 9.22 $ 10.93
=============== ===============
Total return.... (11.09)%+ 3.70 %++
Net assets at
end of period
(000s).......... $ 5,674 $ 2,134
Ratio of
operating
expenses to
average net
assets*......... 2.65 % 2.65 %++
Ratio of net
investment
income (loss) to
average net
assets*......... (1.55)% (1.62)%++
Portfolio
turnover rate... 100.68 % 80.60 %
*Reflects
voluntary
assumption of
fees or expenses
per share in
each period..... $ .06 $ .03
INTERNATIONAL FIXED INCOME FUND
<CAPTION>
CLASS A CLASS B CLASS C
-------------------------- -------------------------- --------------------------------------------------
JANUARY 22, 1992
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31 (COMMENCEMENT
---------------------- ---------------------- ----------------------------- OF OPERATIONS) TO
1995*** 1994** 1995*** 1994** 1995 1994 1993 OCTOBER 31, 1992
------- ------ ------- ------ ---- ---- ------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period.......... $ 8.31 $ 7.99 $ 8.28 $ 7.99 $ 8.32 $ 8.24 $ 7.85 $ 7.40
Net investment
income*......... .40 .30 .34 .27 .44 .14 .41 .32
Net realized and
unrealized gain
(loss) on
investments..... .72 .27 .72 .26 .70 .46 .34 .13
Dividends from
net investment
income.......... (.59) (.25) (.53) (.24) (.61) (.49) (.36) --
Distributions
from net
realized gains.. (.04) -- (.04) -- (.04) (.03) -- --
----------- ----------- ----------- ----------- ------- ------- ------- -------
Net asset value,
end of period... $ 8.80 $ 8.31 $ 8.77 $ 8.28 $ 8.81 $ 8.32 $ 8.24 $ 7.85
=========== =========== =========== =========== ======= ======= ======= =======
Total return.... 14.26 %+ 7.33 %++ 13.53 %+ 6.73 %++ 14.51 %+ 7.72 %+ 9.98 %+ 6.08 %++
Net assets at
end of period
(000s).......... $ 2,106 $ 1,079 $ 2,851 $ 1,439 $24,516 $23,319 $24,965 $22,299
Ratio of
operating
expenses to
average net
assets*......... 1.74 % 1.69 %++ 2.49 % 2.43 %++ 1.49 % 1.47 % 1.50 % 1.50 %++
Ratio of net
investment
income to
average net
assets*......... 4.71 % 5.79 %++ 3.94 % 5.06 %++ 5.14 % 5.62 % 5.48 % 5.63 %++
Portfolio
turnover rate... 23.31 % 38.84 % 23.31 % 38.84 % 23.31 % 38.84 % 20.44 % 56.31 %
* Reflects
voluntary
assumption of
fees or
expenses per
share in each
period........ $ .06 $ .01 $ .06 $ .02 $ .06 $ .03 $ .03 $ .04
<CAPTION>
CLASS D
-------------------------------
YEAR ENDED OCTOBER 31,
----------------------
1995*** 1994**
--------------- ---------------
<S> <C> <C>
Net asset value,
beginning of
period.......... $ 8.29 $ 7.99
Net investment
income*......... .34 .27
Net realized and
unrealized gain
(loss) on
investments..... .72 .26
Dividends from
net investment
income.......... (.53) (.23)
Distributions
from net
realized gains.. (.04) --
--------------- ---------------
Net asset value,
end of period... $ 8.78 $ 8.29
=============== ===============
Total return.... 13.49 % 6.81 %++
Net assets at
end of period
(000s).......... $ 1,173 $ 536
Ratio of
operating
expenses to
average net
assets*......... 2.49 % 2.45 %++
Ratio of net
investment
income to
average net
assets*......... 3.94 % 4.98 %++
Portfolio
turnover rate... 23.31 % 38.84 %
* Reflects
voluntary
assumption of
fees or
expenses per
share in each
period........ $ .06 $ .01
</TABLE>
** March 1, 1994 (commencement of share class designations) to October 31,
1994.
***Per-share figures have been calculated using the average share method.
++ Annualized.
+ Total return figures do not reflect any front-end or contingent deferred
sales charges.
++ Represents aggregate return for the period without annualization and does
not reflect any front-end or contingent deferred sales charges.
4
<PAGE>
THE FUNDS' INVESTMENTS
Each of the International Equity Fund and the International Fixed Income Fund
has its own investment objective and policies, as described below. These in-
vestment objectives and policies are not fundamental and may be changed by the
Board of Directors without shareholder approval. If the Directors should deter-
mine that a change in the investment objective of either Fund is in the best
interests of the Fund and its shareholders, the Fund will provide shareholders
with advance written notice of the change so that each shareholder will have an
opportunity to consider whether the Fund continues to be an appropriate invest-
ment in light of his or her then current needs and financial position.
INTERNATIONAL EQUITY FUND
The investment objective of the International Equity Fund is to achieve long-
term growth of capi-tal by investing primarily in common stocks and equity-re-
lated securities of non-U.S. companies. Non-U.S. companies for these purposes
are companies domiciled outside the United States. Equity-related securities in
which the International Equity Fund may invest are: preferred stocks, securi-
ties convertible into or exchangeable for common stocks and warrants. Current
income is not a specific prerequisite in the selection of International Equity
Fund securities. The performance of the International Equity Fund is measured
in U.S. dollars.
To achieve its objective, the International Equity Fund, under normal circum-
stances, invests at least 65% of its net assets in common stocks and equity-re-
lated securities of non-U.S. companies which GFM believes to be either trading
at a discount to fair value or having attractive long-term prospects for growth
of capital. Under normal circumstances, the Fund has at least three different
countries represented in its portfolio. The International Equity Fund may also
invest its net assets in common stocks and equity-related securities of emerg-
ing growth companies that GFM expects will achieve above-average long-term
earnings growth. Generally, investments in smaller capitalization companies
will be limited to no more than 5% of the Fund's net assets. See "Foreign Secu-
rities" below for information concerning emerging growth companies.
The common stocks and equity-related securities purchased by the International
Equity Fund generally are traded on a non-U.S. stock exchange or on an estab-
lished over-the-counter market outside the United States. The Fund may invest
in common stocks and equity-related securities of non-U.S. companies through
the purchase of American Depositary Receipts ("ADRs"), European Depositary Re-
ceipts ("EDRs"), and International Depositary Receipts ("IDRs"). See "Foreign
Securities" below for information concerning ADRs, EDRs and IDRs.
Although the International Equity Fund is primarily invested in common stocks
and equity-related securities of non-U.S. companies, it may invest up to 35% of
its net assets in (i) high and medium quality debt securities of domestic and
non-U.S. issuers rated at least Baa or its equivalent by a nationally recog-
nized securities rating organization ("NRSRO") or, if unrated, of comparable
investment quality as determined by GFM and (ii) high-quality domestic and non-
U.S. money market instruments, including repurchase agreements with non-U.S.
banks and broker-dealers and "synthetic" money market positions. Generally,
debt securities rated Baa have speculative elements as well as investment grade
characteristics. These speculative features include a lack of protective ele-
ments or a characteristically unreliability of such elements over any great
length of time which would threaten the ability to make interest and principal
payments. See "Other Investment Practices" for information concerning repur-
chase agreements and synthetic money market positions. See the Statement of Ad-
ditional Information for a description of the debt ratings of Moody's Investor
Services, Inc. and Standard & Poor's Ratings Group.
Under normal market and economic conditions, the International Equity Fund in-
vests primarily in non-U.S. securities. Nevertheless, if in GFM's view, current
or anticipated political, market, or economic conditions warrant, the Interna-
tional Equity Fund may for temporary defensive purposes invest in domestic
money market instruments, debt securities, and equity securities without limi-
tation. During those time periods when the Fund has assumed a temporary defen-
sive position, the Fund will not be pursuing its investment objective.
5
<PAGE>
The International Equity Fund intends to invest in a number of companies and
countries. The Fund also has no set limits related to the geography of its in-
vestments and expects to invest in companies located in Europe, the Pacific Ba-
sin, and Latin America. Direct European investments are primarily in Western
European countries, direct Latin American investments are primarily in Mexico
and direct Pacific Basin investments are primarily in Australia, China, Hong
Kong, Japan, Indonesia, Malaysia, New Zealand, Philippines, Singapore, Taiwan
and Thailand. Additionally, the Fund may make investments in companies, such as
those located in Canada, which have operations in developing or emerging econo-
mies. The Fund may also invest indirectly in non-U.S. securities in other geo-
graphical areas through the purchase of ADRs. See "Foreign Securities" below
for more information concerning ADRs. When allocating investments among geo-
graphic regions and individual countries, GFM considers various factors, such
as: prospects for relative economic growth among countries, regions or geo-
graphic areas; expected levels of inflation; government policies influencing
business conditions; and the outlook for currency relationships.
INTERNATIONAL FIXED INCOME FUND
The investment objective of the International Fixed Income Fund is to achieve
the highest possible total return, consisting of income and realized and
unrealized capital gains, consistent with prudent investment risk and preserva-
tion of capital, by investing primarily in high quality debt securities of non-
U.S. issuers. Non-U.S. issuers for these purposes are those domiciled outside
the United States. The performance of the International Fixed Income Fund is
measured in U.S. dollars. The type of securities (fixed income) in which the
Fund primarily invests may preclude it from achieving its objective of highest
total return under certain market conditions. The International Fixed Income
Fund has no policy which limits the range of maturities of the debt obligations
it will purchase. Because the Fund seeks the highest total return, the Fund
maintains the flexibility to invest in debt securities at all maturity levels.
To achieve its objective, the International Fixed Income Fund, under normal
circumstances, invests at least 65% of its assets in high quality debt securi-
ties. Under normal circumstances, the Fund has at least three different coun-
tries represented in its portfolio. High quality debt securities of non-U.S.
issuers are those rated at least AA- or its equivalent by an NRSRO, or, if
unrated, of comparable investment quality as determined by GFM. See the State-
ment of Additional Information for a description of the debt ratings of Moody's
Investor Services, Inc. and Standard & Poor's Ratings Group. GFM will not pur-
chase securities consisting of new long-term debt issues for the International
Fixed Income Fund where those offerings are less than $100 million or its
equivalent. Should any of the Fund's securities become rerated below AA--or its
equivalent by an NRSRO, GFM has the freedom to sell the securities or to retain
the securities in the Fund's portfolio if, in GFM's view, such investment is
considered appropriate under the circumstances.
Because of the high credit standards established for the International Fixed
Income Fund, it is currently expected that investments in debt obligations is-
sued or guaranteed by foreign national governments, their agencies, instrumen-
talities or political subdivisions ("foreign government debt") will constitute
over 25% of the value of the Fund's assets. However, if these securities are
impacted by adverse economic conditions, the Fund may temporarily have less
than 25% of the value of its assets invested in foreign government or govern-
ment agency debt. The Fund may also invest in debt obligations issued or guar-
anteed by international organizations ("supranational debt"), or issued by non-
U.S. corporations or financial institutions. Securities of corporations and fi-
nancial institutions in which the Fund may invest include corporate and commer-
cial obligations, such as medium-term notes. For more information concerning
foreign government debt or supranational debt, see "Foreign Securities."
Under normal circumstances, when in GFM's view prevailing market or economic
conditions warrant, the International Fixed Income Fund may be invested in
short-term instruments, including repurchase agreements with non-U.S. banks and
broker-
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dealers and "synthetic money market positions", such as described in "Other In-
vestment Practices" below. Shorter-term investments in the Fund's portfolio may
also include short-term foreign government debt, certificates of deposit, bank-
ers' acceptances and deposit notes and certain other short-term obligations
such as commercial paper with nine months or less remaining until maturity. For
more information concerning bank money market instruments, see "Foreign Securi-
ties."
Although the International Fixed Income Fund does not intend to invest in eq-
uity or equity-related securities, such as preferred stocks or securities con-
vertible into or exchangeable for common stocks, the Fund retains the freedom
to invest up to 35% of its assets in equity or equity-related securities under
normal circumstances, when such securities provide significant opportunities,
especially when the yields in the debt market are deemed to be unattractive.
The International Fixed Income Fund intends to achieve its objective by in-
vesting in a number of foreign issuers to take advantage of opportunities that
may exist world-wide for its investors, including those opportunities that will
enhance the value and increase the protection of their investment against in-
flation. By investing in a number of different countries, it is believed that
the Fund will not be affected by events in any one country. Nevertheless, if in
GFM's view, current or anticipated political, market, or economic conditions
warrant, the International Fixed Income Fund may for temporary defensive pur-
poses invest in domestic money market instruments, debt securities and equity
securities without limitation. During those time periods when the Fund has as-
sumed a temporary defensive position, the Fund will not be pursuing its invest-
ment objective.
Where appropriate, to enhance return, the International Fixed Income Fund pur-
chases foreign securities where the general economic climate and interest rate
environment provide an opportunity for capital appreciation. Fixed income secu-
rities appreciate in value where interest rates decline. If the currency in
which the investment is held appreciates relative to the U.S. dollar, the In-
ternational Fixed Income Fund's total investment will also appreciate. However,
if interest rates rise or the currency in which the investment is held depreci-
ates relative to the dollar, the Fund's total investment would be negatively
affected. When allocating investments among particular countries, GFM considers
primarily the interest rate environment and the strength of the currency rela-
tive to the dollar. The strength of currency is weighed by considering the
prospects for relative economic growth, relative levels of inflation and
trends, government economic policies and balance of payments. For more informa-
tion concerning currency transactions, see "Other Investment Practices--Cur-
rency Exchange Transactions."
FOREIGN SECURITIES
Emerging Growth Companies
Investment in the securities of emerging growth companies involves greater risk
than investment in more established companies. Such risks include the fact that
securities of emerging growth companies may be subject to more abrupt or er-
ratic market movements than more established companies or the market generally.
Also, these companies may have limited product lines, markets or financial re-
sources, or they may be dependent on a limited management group.
ADRs, EDRs and IDRs
ADRs are U.S. dollar-denominated certificates issued by U.S. banks or trust
companies and represent the right to receive securities of a foreign issuer de-
posited in a domestic bank or foreign branch of a U.S. bank. EDRs and IDRs are
receipts issued in Europe, generally by non-U.S. banks or trust companies, that
evidence ownership of non-U.S. securities. ADRs are traded on domestic ex-
changes or in the U.S. over-the-counter market and, generally, are in regis-
tered form. EDRs and IDRs are traded on non-U.S. exchanges or in non-U.S. over-
the-counter markets and, generally, are in bearer form. Investment in ADRs has
certain advantages over direct investment in the underlying non-U.S. securities
because (i) ADRs are U.S. dollar-denominated investments which are registered
domestically, easily transferable, and for which market quotations are readily
available, and (ii) issuers whose securities are represented by
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ADRs are generally subject to the same auditing, accounting, and financial re-
porting standards as domestic issuers. There may be less information concerning
foreign issuers whose securities are represented by ADRs that are sponsored by
U.S. banks or trust companies rather than by the issuers themselves
("unsponsored ADRs").
Privately Placed Securities
The Funds may acquire privately placed equity securities including securities
that are not registered under the Securities Act of 1933, but that can be of-
fered and sold to qualified institutional buyers under Rule 144A under that Act
("144A securities"). However, a Fund will not invest more than 10% of its total
assets in illiquid investments, which includes securities for which there is no
readily available market. The Board of Directors may adopt guidelines and dele-
gate to GFM the daily function of determining and monitoring the liquidity of
144A securities. Since the institutional market for 144A securities is not
fully developed, the Board of Directors will carefully monitor the Funds' in-
vestments in these securities, focusing on such factors, among others, as valu-
ation, liquidity and availability of information.
Foreign Government Debt
The obligations of foreign governmental entities have various kinds of govern-
ment support and include obligations issued or guaranteed by foreign governmen-
tal entities with taxing powers. These obligations may or may not be supported
by the full faith and credit of a foreign government. The Funds will invest in
foreign government securities of issuers considered stable by GFM, based on its
analysis of factors such as general political or economic conditions relating
to the government and the likelihood of expropriation, nationalization, freezes
or confiscation of private property. GFM does not believe that the credit risk
inherent in the obligations of stable foreign governments is significantly
greater than that of U.S. Government securities.
Supranational Debt
Supranational debt may be denominated in U.S. dollars, a foreign currency or a
multi-national currency unit. Examples of supranational entities include World
Bank, the European Investment Bank, the Asian Development Bank and the Inter-
American Development Bank. The governmental members, or "stockholders", usually
make initial capital contributions to the supranational entity and in many
cases are committed to make additional capital contributions if the suprana-
tional entity is unable to repay its borrowings.
Foreign Currency Units
The Funds may invest in securities denominated in a multi-national currency
unit. An illustration of a multi-national currency unit is the European Cur-
rency Unit (the "ECU"), which is a "basket" consisting of specified amounts of
the currencies of the member states of the European Community, a Western Euro-
pean economic cooperative organization that includes France, Germany, The Neth-
erlands and the United Kingdom. The specific amounts of currencies comprising
the ECU may be adjusted by the Council of Ministers of the European Community
to reflect changes in relative values of the underlying currencies. GFM does
not believe that such adjustments will adversely affect holders of ECU-denomi-
nated obligations or the marketability of such securities. European suprana-
tional entities, in particular, issue ECU-denominated obligations. The Funds
may invest in securities denominated in the currency of one nation although is-
sued by a governmental entity, corporation or financial institution of another
nation. For example, the Funds may invest in a British pound sterling-denomi-
nated obligation issued by a United States corporation. Such investments in-
volve credit risks associated with the issuer and currency risks associated
with the currency in which the obligation is denominated.
Bank Money Market Instruments
Bank money market instruments may be Eurodollar obligations issued by foreign
banks or by foreign branches or subsidiaries of U.S. banks or Yankeedollar ob-
ligations issued by U.S. branches or subsidiaries of foreign banks. Eurodollar
and Yankeedollar obligations may be general obliga-
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tions of the parent bank or may be limited to the issuing branch or subsidiary
by the terms of the specific obligations or by government regulation.
OTHER INVESTMENT PRACTICES
Currency Exchange Transactions
Both Funds intend to invest in securities denominated in currencies other than
the U.S. dollar, may temporarily hold funds in bank deposits or money market
investments denominated in non-U.S. currencies, and may receive interest, divi-
dends, and sale proceeds in non-U.S. currencies. As a result, the Funds will
engage in currency exchange transactions to convert currencies to or from U.S.
dollars. These currency transactions may be on a spot (e. g., cash) basis at
the spot rate prevailing in the non-U.S. exchange market. To reduce risks asso-
ciated with currency fluctuations, each Fund may also enter into forward for-
eign currency exchange contracts to purchase or sell selected currencies, may
write covered put and call options on selected currencies, may purchase put or
call options on selected currencies, may sell or purchase currency futures con-
tracts, and may sell or purchase put or call options on currency futures con-
tracts. Such transactions will be used for hedging purposes, but in no event
for speculation.
Writing Covered Put and Call Options and Purchasing Put and Call Options
In order to earn additional income or as a hedge against or to minimize antici-
pated declines in the value of its securities, each Fund may write (sell) cov-
ered call options on securities and stock indices and may purchase call options
to close out covered call options previously entered into. In addition, to earn
additional income, the Funds may write covered put options on securities and
stock indices and may purchase put options to close out such covered put op-
tions previously written. The Funds also may write covered call and covered put
options on currencies and may purchase call and put options to close out cov-
ered put and covered call options previously written. The Funds may write cov-
ered call and covered put options on currencies to hedge against anticipated
declines in the exchange rate of the currencies in which the Funds' securities
held or to be purchased are denominated or to earn additional income for the
Funds. The International Fixed Income Fund may also write covered call and put
options on the yield "spread" or the difference in yield between two securi-
ties, rather than prices of individual securities or indices. These transac-
tions may be done for hedging purposes and also to earn additional income.
These transactions involve greater risk than other hedging transactions.
As a general matter, a call option gives the holder (purchaser) the right to
buy and obligates the writer (seller) to sell, in return for a premium paid,
the underlying security or currency at the exercise price during the option pe-
riod. As a general matter, a put option gives the holder (purchaser) the right
to sell and obligates the writer (seller) to purchase, in return for a premium
paid, the underlying security or currency at the exercise price during the op-
tion period. In economic effect, a stock index call or put option is similar to
an option on a particular security, except that the value of the option depends
on the weighted value of the group of securities comprising the index, rather
than a particular security, and settlements are made in cash rather than by de-
livery of a particular security. Each Fund will write covered call options only
with respect to equity securities, bonds, and stock and bond indices which cor-
relate with that Fund's particular portfolio securities and the Fund may write
covered put and covered call options only on currencies that correlate with
that Fund's investments. The Funds will write only covered options that are
listed on recognized securities exchanges.
Each Fund may also purchase put and call options with respect to securities
and indices that correlate with each Fund's particular securities, and the
Funds may also purchase put and call options on currencies that correlate with
each Fund's investment. A Fund may purchase put options for defensive purposes
in order to protect against an anticipated decline in the value of its portfo-
lio securities, or the currencies in which its securities are denominated. As
the holder of a put option with respect to individual securities or currencies,
a Fund has the right to sell the securities or currencies underlying the op-
tions and to receive a cash
9
<PAGE>
payment at the exercise price at any time during the option period. As the
holder of a put option on an index, a Fund has the right to receive, upon exer-
cise of the option, a cash payment equal to a multiple of any excess of the
strike price specified by the option over the value of the index. A Fund may
purchase call options in order to acquire the securities or currencies under-
lying the option or, with respect to options on indices, to receive income
equal to the value of such index over the strike price. As the holder of a call
option with respect to individual securities or currencies, a Fund obtains the
right to purchase the underlying security or currency at the exercise price at
any time during the option period. With respect to options on an index, the
holder of a call option obtains the right to receive, upon exercise of the op-
tion, a cash payment equal to the multiple of any excess of the value of the
index on the exercise date over the strike price specified in the option.
Although these investment practices will be used to generate additional income
and to attempt to reduce the effect of any adverse price movement in the secu-
rity or currency subject to the option, they do involve certain risks that are
different in some respects from investment risks associated with similar funds
which do not engage in such activities. These risks include the following:
writing covered call options--the inability to effect closing transactions at
favorable prices and the inability to participate in the appreciation of the
underlying securities or currencies above the exercise price; writing covered
put options--the inability to effect closing transactions at favorable prices
and the obligation to purchase the specified securities or currencies or to
make a cash settlement on the stock index at prices which may not reflect cur-
rent market values or exchange rates; and purchasing put and call options--pos-
sible loss of the entire premium paid. In addition, the effectiveness of hedg-
ing through the purchase or sale of index options will depend upon the extent
to which price movements in the portion of the securities portfolios being
hedged correlate with price movements in the selected index. Perfect correla-
tion may not be possible because the securities held or to be acquired by a
Fund may not exactly match the composition of the index on which options are
written. If the forecasts of GFM regarding movements in securities prices, in-
terest rates or exchange rates are incorrect, a Fund's investment results may
have been better without the hedge. A more thorough description of these in-
vestment practices, their associated risks and the covering of certain of these
obligations by depositing cash and other liquid assets in a segregated account
is contained in the Statement of Additional Information.
Futures Contracts and Options on Futures Contracts
Each Fund may purchase and sell futures contracts on debt securities and indi-
ces of debt securities (i.e. interest rate futures contracts) as a hedge
against or to minimize adverse principal fluctuations resulting from antici-
pated interest rate changes or as an efficient means to adjust its exposure to
the bond market. The Fund may, where appropriate, enter into stock index
futures contracts to provide a hedge for a portion of that particular Fund's
equity holdings. Stock index futures contracts may be used as a way to imple-
ment either an increase or decrease in portfolio exposure to the equity markets
in response to changing market conditions. The Funds may also purchase and sell
currency futures contracts as a hedge to protect against anticipated changes in
currency rates or as an efficient means to adjust its exposure to the currency
market. Each Fund may also write (sell) covered call options on futures con-
tracts, purchase put and call options on futures contracts of the type which
that Fund is permitted to purchase or sell, and may enter into closing transac-
tions with respect to such options on futures contracts purchased or sold. The
Fund may also write covered put options on futures contracts and may enter into
closing transactions with respect to such options on futures contracts. When a
Fund purchases a futures contract, or writes a put option or purchases a call
option thereon, an amount of cash and liquid assets will be deposited in a seg-
regated account with Portfolios' custodian so that the segregated amount, plus
the amount of initial margin deposits held in the account of its broker, equals
the market value of the futures contract, thereby ensuring that the use of the
futures is unleveraged. The Funds will not enter into futures contracts for
speculation and will only enter into futures con-
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<PAGE>
tracts that are traded on a recognized futures exchange. No Fund will enter
into futures contracts or options thereon if immediately thereafter the sum of
the amounts of initial margin deposits on the Fund's open futures contracts and
premiums paid for unexpired options on futures contracts would exceed 5% of the
value of that Fund's total assets; provided, however, that in the case of an
option that is "in-the-money" at the time of purchase, the "in-the-money"
amount may be excluded in calculating the 5% limitation.
The use of futures contracts by the Funds entails certain risks, including but
not limited to the following: no assurance that futures contracts transactions
can be offset at favorable prices; possible reduction of a Fund's income due to
the use of hedging; possible reduction in value of both the security or cur-
rency hedged and the hedging instrument; possible lack of liquidity due to
daily limits on price fluctuations; imperfect correlation between the contract
and the security or currency being hedged; and potential losses in excess of
the amount initially invested in futures contracts themselves. If the expecta-
tions of GFM regarding movements in securities prices, interest rates or ex-
change rates are incorrect, a Fund may have experienced better investment re-
sults without hedging. The use of futures contracts and options on futures con-
tracts requires special skills in addition to those needed to select portfolio
securities. A further discussion of futures contracts and their associated
risks is contained in the Statement of Additional Information.
Securities Purchased on "When-Issued" or "Forward Commitment" Basis
These transactions, which are made directly with another party, involve a com-
mitment by a Fund to purchase or sell particular securities with payment and
delivery taking place at a future date (ordinarily within ten days, although in
some countries settlement may be as much as a month or two later). These trans-
actions allow the Fund to lock in an attractive price or yield on a security
the Fund owns or intends to purchase, regardless of future changes in interest
rates. The Fund bears the risk, however, that the particular securities may de-
cline in value between the trade and settlement dates. After a Fund enters into
an agreement to purchase a security, however, no income will accrue to the Fund
until delivery of the security. These transactions could be viewed as a form of
borrowing by a Fund and are, therefore, subject to the Funds' restrictions with
respect to borrowing generally. To ensure against the risk that the Funds will
have insufficient assets to effect transactions subject to such commitments,
cash and other liquid assets equal in value to the specified transaction price
will be maintained in a segregated account on behalf of the Funds.
Repurchase Agreements
Each Fund may invest in securities pursuant to repurchase agreements.
Repurchase agreements may be entered into only with a member bank of the
Federal Reserve System or primary dealer in U.S. Government securities. Under
such agreements, the bank or primary dealer agrees, upon entering into the
contract, to repurchase the security at a mutually agreed upon time and price
in a specified currency, thereby determining the yield during the term of the
agreement. This results in a fixed rate of return insulated from market
fluctuations during such period although it may be affected by currency
fluctuations. In effect, a repurchase agreement may be seen as a loan made by
the Fund to the bank or dealer with the security that is the subject of the
repurchase agreement acting as "collateral". If the bank or dealer were to
become bankrupt, the Fund may be delayed in recovering its "collateral" or may
lose its rights to its "collateral". Repurchase agreements maturing in more
than seven days are considered illiquid and subject to each Fund's limiting its
investments in illiquid securities to no more than 10% of the Fund's total
assets. In all instances, the Funds take possession of the underlying
securities when investing in repurchase agreements. A further discussion of
repurchase agreements and their associated risks is contained in the Statement
of Additional Information.
Forward Foreign Currency Exchange Contracts
When a Fund invests in securities denominated in currencies other than U.S.
dollars, such securities may be affected favorably or unfavorably by changes in
currency rates. Each Fund may use forward foreign currency exchange contracts
("forward currency contracts") to hedge the currency risk relating to the non-
U.S. dollar-denominated securities purchased, sold, or held by that Fund. A
forward currency contract involves an obligation to purchase or sell a specific
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<PAGE>
currency at a future date, which may be any fixed number of days from the date
of the forward currency contract agreed upon by the parties, at a price set at
the time of the contract. These forward currency contracts are principally
traded in the inter-bank market conducted directly between currency traders
(usually large commercial banks) and their customers. The Funds may enter into
forward currency contracts only under two circumstances. First, when a Fund has
entered into a contract to purchase or sell a security denominated in a foreign
currency or anticipates receiving a dividend on a security in the Fund's
portfolio, that Fund may be able to protect itself against a possible loss,
between the trade date and the settlement date or date on which the dividend is
paid for such security, resulting from an adverse change in the relationship
between the U.S. dollar and the foreign currency in which such security is
denominated, by entering into a forward currency contract in U.S. dollars for
the purchase or sale of the amount of the foreign currency involved in the
underlying security transaction (transaction hedge). However, this practice may
limit potential gains which might result from a positive change in such
currency relationships. Second, when GFM believes that the currency of a
particular country may suffer or enjoy a substantial movement against the U.S.
dollar (or another currency), a Fund may enter into a forward currency contract
to sell or buy an amount of foreign currency approximating the value of some or
all of that Fund's securities denominated in such foreign currency (position
hedge). In addition the Funds may cross-hedge currencies by entering into a
transaction to purchase or sell one or more currencies that are expected to
decline in value relative to other currencies to which a Fund has or expects to
have portfolio exposure. Each Fund may also engage in proxy hedging which is
defined as entering into positions in one currency to hedge investments
denominated in another currency, where the two currencies are economically
linked. A Fund's entry into forward contracts for position hedging, as well as
any use of cross or proxy hedging techniques, will generally require the
portfolio to hold high-grade, liquid securities or cash equal to the
portfolio's obligations in a segregated account throughout the duration of the
contract. The forecasting of short-term currency market movements is extremely
difficult and whether such a short-term hedging strategy will be successful is
highly uncertain.
Synthetic Non-U.S. Money Market Positions
Money market securities denominated in foreign currencies are permissible
investments of the Funds. In addition to, or in lieu of direct investment in
such securities, the Funds may construct a synthetic non-U.S. money market
position by (i) purchasing a money market instrument denominated in U.S.
dollars and (ii) concurrently entering into a forward currency contract to
deliver a corresponding amount of U.S. dollars in exchange for a foreign
currency on a future date and a specified rate of exchange. Because of the
availability of a variety of highly liquid short-term U.S. dollar-denominated
money market instruments, a synthetic money market position utilizing such U.S.
dollar-denominated instruments may offer greater liquidity than direct
investment in a money market instrument denominated in a foreign currency.
Lending of Portfolio Securities
From time to time, the Funds may lend some of their portfolio securities to
third parties such as brokers, dealers and other financial institutions. In re-
turn the Funds receive collateral in the form of cash or United States Treasury
securities that is maintained by the borrower at all times while the loan is
outstanding in an amount equal to 100% of the current market value of the
loaned securities. The Funds continue to have full ownership rights in the
loaned securities and still bear market risks while the securities are in the
hands of these third parties. The collateral may also be invested and such
gains or losses would also inure to the Funds. The Funds bear the risk that
borrowers may default on their obligation and that income from the loaned secu-
rities may not be "qualified" under the tax laws. The Funds do not intend to
loan their securities in any transaction which would jeopardize their tax sta-
tus or in which the borrowers are not judged to be creditworthy. A further dis-
cussion of loans of portfolio securities is contained in the Statement of Addi-
tional Information.
RISK FACTORS
Investments in securities of foreign issuers, particularly non-governmental
issuers, involve risks
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<PAGE>
which are not ordinarily associated with investments in domestic issuers. The
securities of non-U.S. issuers held by the Funds generally will not be regis-
tered under, nor will the issuers thereof be subject to, the reporting require-
ments of the U.S. Securities and Exchange Commission. Accordingly, there may be
less publicly available information about the securities and about the foreign
company or government issuing them than is available about a domestic company
or government entity. Companies outside the United States are not subject to
the same accounting, auditing, and financial reporting standards, practices,
and requirements applicable to domestic companies. Stock markets outside the
United States may not be as developed or as efficient as those in the United
States, and government supervision and regulation of those stock markets and
brokers is not identical to that in the United States. The securities of some
non-U.S. companies may be less liquid and more volatile than securities of com-
parable U.S. companies, and settlement of transactions with respect to such se-
curities may sometimes be delayed beyond periods customary in the United
States, which might present liquidity concerns. Further, fixed brokerage com-
missions on certain non-U.S. stock exchanges are generally higher than negoti-
ated commissions on United States exchange-listed securities, and custodial
costs with respect to these securities generally exceed domestic costs. Enforc-
ing obligations in other countries may be difficult. In addition, the tax au-
thorities of some countries impose restrictions on the payment of dividends and
require the Funds to file claims for payment of certain withheld dividends.
With respect to some countries, there is the possibility of unfavorable changes
in investment or exchange control regulations, expropriation, or confiscatory
taxation, limitations on the removal of funds or other assets of the Funds, po-
litical or social instability, or diplomatic developments that could adversely
affect investments in those countries. In addition, some markets trade at con-
siderably higher valuation levels than in the United States. This condition re-
sults in markets with greater potential for volatility and which are more sus-
ceptible to the influence of events which may generally affect the markets and
to the trades of large blocks of securities by large investors. Some countries
are also heavily dependent on international trade and can be affected by retal-
iatory or protectionist trade measures instituted by their trading partners and
by the economic conditions of these partners. Further, the value of each Fund's
securities denominated in foreign currencies will be affected favorably or un-
favorably by changes in currency exchange rates and exchange control regula-
tions, and the Funds may incur costs in connection with conversions between
various currencies. Some of these risks are heightened for investments in Latin
America. For example, governments of many Latin American countries exercise
substantial influence over the private sector through their own investments in
various companies, and the actions of these governments could have a signifi-
cant effect on economic conditions in any particular country in the region.
LIMITING INVESTMENT RISK
Portfolios has adopted the following fundamental investment restrictions relat-
ing to the investment of assets of each Fund and its activities. Additional
fundamental investment restrictions are described in the Statement of Addi-
tional Information, at "Investment Practices and Policies." The fundamental in-
vestment restrictions discussed below and in the Statement of Additional Infor-
mation, unlike a Fund's investment objective, may not be changed without ap-
proval by the requisite vote of the outstanding voting shares of each Fund af-
fected.
No Fund may:
(1) write call options which are not covered options;
(2) write put options, except covered put options or put options to close out
option positions previously entered into;
(3) invest in commodities or commodity contracts, except that: both Funds may
purchase stock index, interest rate, and currency futures contracts, may
write covered stock index, interest rate and currency futures contracts,
may write covered put and call options on such futures contracts, may pur-
chase put and call options on such futures contracts, and may enter into
closing transactions with respect to options on such futures contracts; or
(4) make loans, provided, however, that this restriction shall not prohibit a
Fund from (a) entering into repurchase agreements (see "In-
13
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vestment Practices and Policies," in the Statement of Additional Informa-
tion), (b) purchasing bonds, notes, debentures or other obligations of a
character customarily purchased by institutional or individual investors
(whether or not publicly distributed) and (c) making loans of its portfolio
securities which do not thereupon cause in excess of 20% of the value of the
Fund's total assets to consist of loaned securities (see "Lending of Portfo-
lio Securities," in this Prospectus and in the Statement of Additional In-
formation for a discussion of risks associated with such practice).
Nothing in the foregoing investment restrictions shall be deemed to prohibit
either Fund from purchasing the securities of any issuer pursuant to the
exercise of subscription rights distributed to the Fund by the issuer, except
that no such purchase may be made if as a result the Fund will no longer be a
diversified investment company as defined in the Investment Company Act of 1940
or fail to meet the diversification requirements of the
Internal Revenue Code of 1986, as amended.
Information on the PURCHASE OF SHARES, REDEMPTION OF SHARES and SHAREHOLDER
SERVICES is set forth on pages 14 to 27 below.
- --------------------------------------------------------------------------------
A Fund is available for in-vestment by many kinds of investors including
partic-ipants investing through 401(k) or other retirement plan sponsors,
employees investing through savings plans sponsored by employ-ers, Individual
Retirement Accounts ("IRAs"), trusts, corporations, individuals, etc. THE
APPLICABILITY OF THE GENERAL INFORMATION AND ADMINISTRATIVE PROCEDURES SET
FORTH BELOW ACCORDINGLY WILL VARY DEPENDING ON THE INVESTOR AND THE RECORD-
KEEPING SYSTEM ESTABLISHED FOR A SHAREHOLDER'S INVEST-MENT IN A FUND. PARTICI-
PANTS IN 401(K) AND OTHER PLANS SHOULD FIRST CONSULT WITH THE APPROPRIATE
PERSON AT THEIR EMPLOYER OR REFER TO THE PLAN MATERIALS BE-FORE FOLLOWING ANY
OF THE PROCEDURES BELOW. FOR MORE INFORMATION OR ASSISTANCE, ANYONE MAY CALL 1-
800-562-0032.
PURCHASE OF SHARES
METHODS OF PURCHASE
Through Dealers
Shares of the Funds are continuously offered through securities dealers who
have entered into sales agreements with the Distributor. Purchases through
dealers are confirmed at the offering price, which is the net asset value plus
the applicable sales charge, next determined after the order is duly received
as defined herein by State Street Research Shareholder Services ("Shareholder
Services"), a division of the Distributor, from the dealer. ("Duly received"
for purposes herein means in accordance with the conditions of the applicable
method of purchase as described below.) The dealer is responsible for transmit-
ting the order promptly to Shareholder Services in order to permit the investor
to obtain the current price. See "Purchase of Shares--Net Asset Value" herein.
By Mail
Initial investments in a Fund may be made by mailing or delivering to the in-
vestor's securities dealer a completed Application (accompanying this Prospec-
tus), together with a check for the total purchase price payable to the appli-
cable Fund. The dealer must forward the Application and check in accordance
with the instructions on the Application.
Additional shares may be purchased by mailing to Shareholder Services a check
payable to the Fund in the amount of the total purchase price together with any
one of the following: (i) an Application; (ii) the stub from a shareholder's
account statement; or (iii) a letter setting forth the name of the Fund, the
class of shares and the shareholder's account name and number. Shareholder
Services will deliver the purchase order to the transfer agent and dividend
paying agent, State Street Bank and Trust Company (the "Transfer Agent").
If a check is not honored for its full amount, the purchaser could be subject
to additional charges to cover collection costs and any investment loss, and
the purchase may be cancelled.
By Wire
An investor may purchase shares by wiring Federal funds of not less than $5,000
to State Street
14
<PAGE>
Bank and Trust Company, which also serves as Portfolios' custodian (the "Custo-
dian"), as set forth below. Prior to making an investment by wire, an investor
must notify Shareholder Services at 1-800-521-6548 and obtain a control number
and instructions. Following such notification, Federal funds should be wired
through the Federal Reserve System to:
ABA #011000028
State Street Bank and Trust Company
Boston, MA
BNF=Name of Fund and class of shares (A, B, C or D)
AC=99029761
OBI=Shareholder Name
Shareholder Account Number
Control #K (assigned by State Street Research Shareholder Services)
In order for a wire investment to be processed on the same day (i) the in-
vestor must notify Shareholder Services of his or her intention to make such
investment by 12 noon Boston time on the day of his or her investment; and (ii)
the wire must be received by 4 P.M. Boston time that same day.
An investor making an initial investment by wire must promptly complete the
Application accompanying this Prospectus and deliver it to his or her securi-
ties dealer, who should forward it as required. No redemptions will be effected
until the Application has been duly processed.
Portfolios may in its discretion discontinue, suspend or change the practice
of accepting orders by any of the methods described above. Orders for the pur-
chase of shares are subject to acceptance by Portfolios. Portfolios reserves
the right to reject any purchase order, including orders in connection with ex-
changes, for any reason which Portfolios in its sole discretion deems appropri-
ate. Portfolios reserves the right to suspend the sale of shares of either
Fund.
MINIMUM INVESTMENT
<TABLE>
<CAPTION>
CLASS OF SHARES
---------------------------
A B C D
---------------------------
<S> <C> <C> <C> <C>
Minimum Initial Investment
By Wire............................................... $5,000 $5,000 (a) $5,000
IRAs.................................................. $2,000 $2,000 (a) $2,000
By Investamatic....................................... $1,000 $1,000 (a) $1,000
All other............................................. $2,500 $2,500 (a) $2,500
Minimum Subsequent Investment
By Wire............................................... $5,000 $5,000 (a) $5,000
IRAs.................................................. $ 50 $ 50 (a) $ 50
By Investamatic....................................... $ 50 $ 50 (a) $ 50
All other............................................. $ 50 $ 50 (a) $ 50
</TABLE>
- -------
(a) Special conditions apply; contact Distributor.
Each Fund reserves the right to vary the minimums for initial or subsequent
investments from time to time as in the case of, for example, exchanges and in-
vestments under various retirement and employee benefit plans, sponsored ar-
rangements involving group solicitations of the members of an organization, or
other investment plans such as for reinvestment of dividends and distributions
or for periodic investments (e.g., Investamatic Check Program).
ALTERNATIVE PURCHASE PROGRAM
General
Alternative classes of shares permit investors to select a purchase program
which they believe will be the most advantageous for them, given the amount of
their purchase, the length of time they anticipate holding Fund shares, or the
flexibility they desire in this regard, and other relevant circumstances. In-
vestors will be able to determine whether in their particular circumstances it
is more advantageous to incur an initial sales charge and not be subject to
certain ongoing charges or to have their entire initial purchase price invested
in a Fund with the investment being subject thereafter to ongoing service fees
and distribution fees.
As described in greater detail below, securities dealers are paid differing
amounts of commissions and other compensation depending on which class of
shares they sell.
15
<PAGE>
The major differences among the various classes of shares are as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
------- ------- ------- -------
<S> <C> <C> <C> <C>
SALES CHARGES Initial sales Contingent None Contingent
charge at time deferred sales deferred sales
of investment charge of 5% charge of 1%
of up to 4.5% to 2% applies applies to any
depending on to any shares shares
amount of redeemed redeemed
investment within first within one
five years year following
following their purchase
their
purchase; no
contingent
deferred sales
charge after
five years
On investments
of $1 million
or more, no
initial sales
charge; but
contingent
deferred sales
charge of 1%
applies to any
shares
redeemed
within one
year following
their purchase
DISTRIBUTION FEE None 0.75% for None 0.75% each
first eight year
years; Class B
shares convert
automatically
to Class A
shares after
eight years
SERVICE FEE 0.25% each 0.25% each None 0.25% each
year year year
INITIAL COMMISSION RE- Above 4% None 1%
CEIVED BY SELLING SECU- described
RITIES DEALER initial sales
charge less
0.25% to 0.50%
retained by
Distributor
On investments
of $1 million
or more, 0.25%
to 1% paid to
dealer by
Distributor
</TABLE>
16
<PAGE>
In deciding which class of shares to purchase, the investor should consider
the amount of the investment, the length of time the investment is expected to
be held, and the ongoing service fee and distribution fee, among other factors.
Class A shares are sold at net asset value plus an initial sales charge of up
to 4.5% of the public offering price. Because of the sales charge, not all of
an investor's purchase amount is invested unless the purchase equals $1,000,000
or more. Class B shareholders pay no initial sales charge, but a contingent de-
ferred sales charge of up to 5% generally applies to shares redeemed within
five years of purchase. Class D shareholders also pay no initial sales charge,
but a contingent deferred sales charge of 1% generally applies to redemptions
made within one year of purchase. For Class B and Class D shareholders, there-
fore, the entire purchase amount is immediately invested in a Fund.
An investor who qualifies for a significantly reduced initial sales charge, or
a complete waiver of the sales charge on investments of $1,000,000 or more, on
the purchase of Class A shares, might elect that option to take advantage of
the lower ongoing service and distribution fees that characterize Class A
shares compared with Class B or Class D shares.
Class A, Class B and Class D shares are assessed an annual service fee of
0.25% of average daily net assets. Class B shares are assessed an annual dis-
tribution fee of 0.75% of daily net assets for an eight-year period following
the date of purchase and are then automatically converted to Class A shares.
Class D shares are assessed an annual distribution fee of 0.75% of daily net
assets for as long as the shares are held. The prospective investor should con-
sider these fees plus the initial or contingent deferred sales charges in esti-
mating the costs of investing in the various classes of a Fund's shares.
Only certain employee benefit plans and large institutions may make invest-
ments in Class C shares.
Some of the service and distribution fees are allocated to dealers (see "Dis-
tribution Plan" below). In addition, the Distributor may, at its expense, pro-
vide additional cash and noncash incentives to securities dealers that sell
shares. Such incentives may be extended only to those dealers who have sold or
may sell significant amounts of shares and/or meet other conditions established
by the Distributor; for example, the Distributor may sponsor special promotions
to develop particular distribution channels or to reach certain investor
groups. The incentives may include merchandise and trips to and attendance at
sales seminars at resorts.
CLASS A SHARES--INITIAL SALES CHARGES
Sales Charges
The purchase price of a Class A share of a Fund is the Fund's per share net as-
set value next determined after the purchase order is duly received, as defined
herein, plus a sales charge which varies depending on the dollar amount of the
shares purchased as set forth in the table below. A major portion of this sales
charge is reallowed by the Distributor to the securities dealer responsible for
the sale.
<TABLE>
<CAPTION>
SALES SALES
CHARGE CHARGE
PAID BY PAID BY DEALER
DOLLAR INVESTOR INVESTOR CONCESSION
AMOUNT OF AS % OF AS % OF AS % OF
PURCHASE PURCHASE NET ASSET PURCHASE
TRANSACTION PRICE VALUE PRICE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than
$100,000 4.50% 4.71% 4.00%
- ---------------------------------------------------------------------------------------------
$100,000 or above
but less than
$250,000 3.50% 3.63% 3.00%
- ---------------------------------------------------------------------------------------------
$250,000 or above
but less than
$500,000 2.50% 2.56% 2.00%
- ---------------------------------------------------------------------------------------------
$500,000 or above
but less than
$1 million 2.00% 2.04% 1.75%
- ---------------------------------------------------------------------------------------------
See
$1 million and following
above 0% 0% discussion
</TABLE>
17
<PAGE>
On any sale of International Equity Fund Class A shares to a single investor
in the amount of $1,000,000 or more, the Distributor will pay the authorized
securities dealer a commission based on the aggregate of such sales as follows:
<TABLE>
<CAPTION>
AMOUNT OF SALE COMMISSION
- -------------- ----------
<S> <C>
(a)$1 million to $3 million.......................................... 1.00%
(b)Next $2 million................................................... 0.50%
(c)Amount over $5 million............................................ 0.25%
</TABLE>
On any sale of International Fixed Income Fund Class A shares to a single in-
vestor in the amount of $1,000,000 or more, the Distributor will pay the autho-
rized securities dealer a commission as follows:
<TABLE>
<CAPTION>
AMOUNT OF SALE COMMISSION
- -------------- ----------
<S> <C>
(a)$1 million to $3 million.......................................... 0.70%
(b)Next $2 million................................................... 0.50%
(c)Amount over $5 million............................................ 0.25%
</TABLE>
On such sales of $1,000,000 or more, the investor is subject to a 1% contin-
gent deferred sales charge on any portion of the purchase redeemed within one
year of the sale. However, such redeemed shares will not be subject to the con-
tingent deferred sales charge to the extent that their value represents (1)
capital appreciation or (2) reinvestment of dividends or capital gains distri-
butions. In addition, the contingent deferred sales charge will be waived for
certain other redemptions as described under "Contingent Deferred Sales Charge
Waivers" below (as otherwise applicable to Class B shares.)
Class A shares of a Fund that are purchased without a sales charge may be ex-
changed for Class A shares of certain other Eligible Funds, as defined below,
without the imposition of a contingent deferred sales charge, although contin-
gent deferred sales charges may apply upon a subsequent redemption within one
year of the Class A shares which are acquired through such exchange. For fed-
eral income tax purposes, the amount of the contingent deferred sales charge
will reduce the gain or increase the loss, as the case may be, on the amount
realized on redemption. The amount of any contingent deferred sales charge will
be paid to the Distributor.
Reduced Sales Charges
The reduced sales charges set forth in the table above are applicable to pur-
chases made at any one time by any "person," as defined in the Statement of Ad-
ditional Information, of $100,000 or more of Class A shares of a Fund or a com-
bination of "Eligible Funds." "Eligible Funds" include the Funds and other
funds so designated by the Distributor from time to time. Class B, Class C and
Class D shares may also be included in the combination under certain circum-
stances. Securities dealers should call Shareholder Services for details con-
cerning the other Eligible Funds and any persons who may qualify for reduced
sales charges and related information. See the Statement of Additional Informa-
tion.
Letter of Intent
Any investor who provides a Letter of Intent may qualify for a reduced sales
charge on purchases of no less than an aggregate of $100,000 of Class A shares
of the Funds and any other Eligible Funds within a 13-month period. Class B,
Class C and Class D shares may also be included in the combination under cer-
tain circumstances. Additional information on a Letter of Intent is available
from dealers, or from the Distributor, and also appears in the Statement of Ad-
ditional Information.
Right of Accumulation
Investors may purchase Class A shares of a Fund or a combination of shares of
the Funds and other Eligible Funds at reduced sales charges pursuant to a Right
of Accumulation. Under the Right of Accumulation, the sales charge is deter-
mined by combining the current purchase with the value of the Class A shares of
other Eligible Funds held at the time of purchase. Class B, Class C and Class D
shares may also be included in the combination under certain circumstances. See
the Statement of Additional Information and call Shareholder Services for de-
tails concerning the Right of Accumulation.
Other Programs
Class A shares of the Funds may be sold or issued in an exchange at a reduced
sales charge or without a sales charge pursuant to certain sponsored arrange-
ments, which include programs under
18
<PAGE>
which a company, employee benefit plan or other organization makes recommenda-
tions to, or permits group solicitation of, its employees, members or partici-
pants, except any organization created primarily for the purpose of obtaining
shares of the Funds at a reduced sales charge or without a sales charge. Sales
without a sales charge, or with a reduced sales charge, may also be made
through brokers, financial planners, institutions, and others, under managed
fee-based programs (e.g., "wrap fee" or similar programs) which meet certain
requirements established from time to time by the Distributor, in the event the
Distributor determines to implement such arrangements. Information on such ar-
rangements and further conditions and limitations is available from the Dis-
tributor.
In addition, no sales charge is imposed in connection with the sale of Class A
shares of a Fund to the following entities and persons: (A) the Investment Man-
ager, Distributor, or any affiliated entities, including any direct or indirect
parent companies and other subsidiaries of such parents (collectively "Affili-
ated Companies"); (B) employees, officers, sales representatives or current or
retired directors or trustees of the Affiliated Companies or any investment
company managed by any of the Affiliated Companies, any relatives of any such
individuals whose relationship is directly verified by such individuals to the
Distributor, or any beneficial account for such relatives or individuals; and
(C) employees, officers, sales representatives or directors of dealers and
other entities with a selling agreement with the Distributor to sell shares of
any aforementioned investment company, any spouse or child of such person, or
any beneficial account for any of them. The purchase must be made for invest-
ment and the shares purchased may not be resold except through redemption. This
purchase program is subject to such administrative policies, regarding the
qualification of purchasers and any other matters, as may be adopted by the
Distributor from time to time.
CLASS B SHARES--CONTINGENT DEFERRED SALES CHARGES
Contingent Deferred Sales Charges
The public offering price of Class B shares is the net asset value per share
next determined after the purchase order is duly received, as defined herein.
No sales charge is imposed at the time of purchase; thus the full amount of the
investor's purchase payment will be invested in the Funds. However, a contin-
gent deferred sales charge may be imposed upon certain redemptions of Class B
shares as described below.
The Distributor will pay securities dealers at the time of sale a 4% commis-
sion for selling Class B shares. The proceeds of the contingent deferred sales
charge and the distribution fee are used to offset distribution expenses and
thereby permit the sale of Class B shares without an initial sales charge.
Class B shares that are redeemed within a five-year period after their pur-
chase will not be subject to a contingent deferred sales charge to the extent
that the value of such shares represents (1) capital appreciation of Fund as-
sets or (2) reinvestment of dividends or capital gains distributions. The
amount of any applicable contingent deferred sales charge will be calculated by
multiplying the net asset value of such shares at the time of redemption or at
the time of purchase, whichever is lower, by the applicable percentage shown in
the table below:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
AS A PERCENTAGE OF
NET ASSET VALUE
REDEMPTION DURING AT REDEMPTION
- ----------------- -------------------
<S> <C>
1st Year Since Purchase..................................... 5%
2nd Year Since Purchase..................................... 4
3rd Year Since Purchase..................................... 3
4th Year Since Purchase..................................... 3
5th Year Since Purchase..................................... 2
6th Year Since Purchase and Thereafter...................... None
</TABLE>
In determining the applicability and rate of any contingent deferred sales
charge, it will be assumed that a redemption of Class B shares is made first of
those shares having the greatest capital appreciation, next of shares repre-
senting reinvestment of dividends and capital gains distributions and finally
of remaining shares held by the shareholder for the longest period of time. The
holding period for purposes of applying a contingent deferred sales charge on
Class B shares of a Fund acquired through an exchange from another Eligible
Fund will be measured from the date that such
19
<PAGE>
shares were initially acquired in the other Eligible Funds, and Class B shares
being redeemed will be considered to represent, as applicable, capital appreci-
ation or dividend and capital gains distribution reinvestments in such other
Eligible Fund. These determinations will result in any contingent deferred
sales charge being imposed at the lowest possible rate. For federal income tax
purposes, the amount of the contingent deferred sales charge will reduce the
gain or increase the loss, as the case may be, on the amount realized on re-
demption. The amount of any contingent deferred sales charge will be paid to
the Distributor.
Contingent Deferred Sales Charge Waivers
The contingent deferred sales charge does not apply to exchanges, or to redemp-
tions under a systematic withdrawal plan which meets certain conditions. In ad-
dition, the contingent deferred sales charge will be waived for: (i) redemp-
tions made within one year of the death or total disability, as defined by the
Social Security Administration, of all shareholders of an account; (ii) redemp-
tions made after attainment of a specific age in an amount which represents the
minimum distribution required at such age under Section 401(a)(9) of the Inter-
nal Revenue Code for retirement accounts or plans (e.g., age 70 1/2 for IRAs
and Section 403(b) plans), calculated solely on the basis of assets invested in
the Funds or other Eligible Funds; and (iii) a redemption resulting from a tax-
free return of an excess contribution to an IRA. (The foregoing waivers do not
apply to a tax-free rollover or transfer of assets out of a Fund.) The Funds
may modify or terminate the waivers described above at any time; for example,
the Funds may limit the application of multiple waivers.
Conversion of Class B Shares to Class A Shares
A shareholder's Class B shares, including all shares received as dividends or
distributions with respect to such shares, will automatically convert to Class
A shares of a Fund at the end of eight years following the issuance of such
Class B shares; consequently, they will no longer be subject to the higher ex-
penses borne by Class B shares. The conversion rate will be determined on the
basis of the relative per share net asset values of the two classes and may re-
sult in a shareholder receiving either a greater or fewer number of Class A
shares than the Class B shares so converted. As noted above, holding periods
for Class B shares received in exchange for Class B shares of other Eligible
Funds will be counted toward the eight-year period.
CLASS C SHARES--INSTITUTIONAL; NO SALES CHARGE
The purchase price of a Class C share of a Fund is the Fund's per share net as-
set value next determined after the purchase order is duly received, as defined
herein. No sales charge is imposed at the time of purchase or redemption. The
Funds will receive the full amount of the investor's purchase payment.
Class C shares are only available for new investments by certain employee
benefit plans and large institutions. See the Statement of Additional Informa-
tion. Information on the availability of Class C shares and further conditions
and limitations with respect thereto is available from the Distributor.
Class C shares may also be issued in connection with mergers and acquisitions
involving a Fund, and under certain other circumstances as described in this
Prospectus (e.g., see "Shareholder Services--Exchange Privilege").
Class C shares may have also been issued directly or through exchanges to
those shareholders of the Funds and other Eligible Funds who previously held
shares not subject to any future sales charge or service fees or distribution
fees.
CLASS D SHARES--SPREAD SALES CHARGES
The purchase price of a Class D share of a Fund is the Fund's per share net as-
set value next determined after the purchase order is duly received, as defined
herein. No sales charge is imposed at the time of purchase; thus the full
amount of the investor's purchase payment will be invested in the Funds. Class
D shares are subject to a 1% contingent deferred sales charge on any portion of
the purchase redeemed within one year of the sale. The contingent deferred
sales charge will be 1% of the lesser of the net asset value of the shares at
the time of purchase or at the time of redemption. The Distributor pays securi-
ties dealers a 1% commission for selling Class D shares at the time of pur-
chase. The proceeds of the contingent deferred
20
<PAGE>
sales charge and the distribution fee are used to offset distribution expenses
and thereby permit the sale of Class D shares without an initial sales charge.
Class D shares that are redeemed within one year after purchase will not be
subject to the contingent deferred sales charge to the extent that the value of
the such shares represents (1) capital appreciation of Fund assets or (2) rein-
vestment of dividends or capital gains distributions. For federal income tax
purposes, the amount of the contingent deferred sales charge will reduce the
gain or increase the loss, as the case may be, on the amount realized on re-
demption. The amount of any contingent deferred sales charge will be paid to
the Distributor.
NET ASSET VALUE
Each Fund's per share net asset values are determined Monday through Friday as
of the close of the New York Stock Exchange ("NYSE") exclusive of days on which
the NYSE is closed. The NYSE ordinarily closes at 4 P.M., New York City time.
Assets held by a Fund are valued on the basis of the last reported sale price
or quotations as of the close of business on the valuation date, except that
securities and assets for which market quotations are not readily available are
valued as determined in good faith by or under the authority of the Directors
of Portfolios. In determining the value of certain assets for which market quo-
tations are not readily available, Portfolios may use one or more pricing serv-
ices. The pricing services utilize information with respect to market transac-
tions, quotations from dealers and various relationships among securities in
determining value and may provide prices determined as of times prior to the
close of the NYSE. The Directors have authorized the use of the amortized cost
method to value short-term debt instruments issued with a maturity of one year
or less and having a remaining maturity of 60 days or less when the value ob-
tained is fair value. Further information with respect to the valuation of each
Fund's assets is included in the Statement of Additional Information.
DISTRIBUTION PLAN
Portfolios has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the "Dis-
tribution Plan") in accordance with the regulations under the Investment Com-
pany Act of 1940, as amended (the "1940 Act"). Under the provisions of the Dis-
tribution Plan, each Fund makes payments to the Distributor based on an annual
percentage of the average daily value of the net assets of each class of shares
as follows:
<TABLE>
<CAPTION>
DISTRIBUTION
CLASS SERVICE FEE FEE
- ----- ----------- ------------
<S> <C> <C>
A 0.25% None
B 0.25% 0.75%
C None None
D 0.25% 0.75%
</TABLE>
Some or all of the service fees are used to reimburse securities dealers (in-
cluding securities dealers that are affiliates of the Distributor) for personal
services and/or the maintenance of shareholder accounts. A portion of any ini-
tial commission paid to dealers for the sale of shares of a Fund represents
payment for personal services and/or the maintenance of shareholder accounts by
such dealers. Dealers who have sold Class A shares are eligible for further re-
imbursement commencing as of the time of such sale. Dealers who have sold Class
B and Class D shares are eligible for further reimbursement after the first
year during which such shares have been held of record by such dealer as nomi-
nee for its clients (or by such clients directly). Any service fees received by
the Distributor and not allocated to dealers may be applied by the Distributor
in reduction of expenses incurred by it directly for personal services and the
maintenance of shareholder accounts.
The distribution fees are used primarily to offset initial and ongoing commis-
sions paid to securities dealers for selling such shares. Any distribution fees
received by the Distributor and not allocated to dealers may be applied by the
Distributor in connection with sales or marketing efforts, including special
promotional fees and cash and noncash incentives based upon sales by securities
dealers.
The Distributor provides distribution services on behalf of other funds having
distribution plans and receives similar payments from, and incurs similar ex-
penses on behalf of, such other funds. When expenses of the Distributor cannot
be identified as relating to a specific fund, the Distributor allocates ex-
penses among the funds in a manner deemed fair and equitable to each fund. Such
allocations are subject to review by Portfolios' Directors.
21
<PAGE>
Commissions and other cash and noncash incentives and payments to dealers, to
the extent payable out of the general profits, revenues or other sources of the
Distributor (including the advisory fees paid by the Funds), have also been au-
thorized pursuant to the Distribution Plan.
A rule of the National Association of Securities Dealers, Inc. ("NASD") limits
the annual expenditures which a Fund may incur under the Distribution Plan to
1%, of which 0.75% may be used to pay distribution expenses and 0.25% may be
used to pay shareholder service fees. The NASD rule also limits the aggregate
amount which a Fund may pay for such distribution costs to 6.25% of gross share
sales of a class since the inception of any asset-based sales charge plus in-
terest at the prime rate plus 1% on unpaid amounts thereof (less any contingent
deferred sales charges). Such limitation does not apply to shareholder service
fees. Payments to the Distributor or to dealers funded under the Distribution
Plan may be discontinued at any time by the Directors of Portfolios.
REDEMPTION OF SHARES
Shareholders may redeem all or any portion of their accounts on any day the
NYSE is open for business. Redemptions will be effective at the net asset value
per share next determined (see "Purchase of Shares--Net Asset Value" herein)
after the receipt of the redemption request in accordance with the requirements
described below, by Shareholder Services and delivery of the request by Share-
holder Services to the Transfer Agent. To allow time for the clearance of
checks used for the purchase of any shares which are tendered for redemption
shortly after purchase, the remittance of the redemption proceeds for such
shares could be delayed for 15 days or more after the purchase. Shareholders
who anticipate a potential need for immediate access to their investments
should, therefore, purchase shares by wire. Except as noted, redemption pro-
ceeds from a Fund are normally remitted within seven days after receipt of the
redemption request by the Fund and any necessary documents in good order.
METHODS OF REDEMPTION
Request By Mail
A shareholder may request redemption of shares, with proceeds to be mailed to
the shareholder or wired to a predesignated bank account (see "Proceeds By
Wire" below), by sending to State Street Research Shareholder Services, P.O.
Box 8408, Boston, Massachusetts 02266-8408: (1) a written request for redemp-
tion signed by the registered owner(s) of the shares, exactly as the account is
registered; (2) an endorsed stock power in good order with respect to the
shares or, if issued, the share certificates for the shares endorsed for trans-
fer or accompanied by an endorsed stock power; (3) any required signature guar-
antees (see "Redemption of Shares--Signature Guarantees" below); and (4) any
additional documents which may be required for redemption in the case of corpo-
rations, trustees, etc., such as certified copies of corporate resolutions,
governing instruments, powers of attorney and the like. The Transfer Agent will
not process requests for redemption until it has received all necessary docu-
ments in good order. A shareholder will be notified promptly if a redemption
request cannot be accepted. Shareholders having any questions about the re-
quirements for redemption should call Shareholder Services toll-free at 1-800-
562-0032.
Request By Telephone
Shareholders may request redemption by telephone with proceeds to be transmit-
ted by check or by wire (see "Proceeds By Wire" below). A shareholder can re-
quest a redemption for $50,000 or less to be transmitted by check. Such check
for the proceeds will be made payable to the shareholder of record and will be
mailed to the address of record. There is no fee for this service. It is not
available for shares held in certificate form or if the address of record has
been changed within 30 days of the redemption request. Portfolios may revoke or
suspend the telephone redemption privilege at any time and without notice. See
"Shareholder Services--Telephone Services" for a discussion of the conditions
and possible risks associated with Telephone Privileges.
Proceeds By Wire
Upon a shareholder's written request or by telephone if the shareholder has
Telephone Privileges (see "Shareholder Services--Telephone Services" herein),
Portfolios' custodian will wire redemption proceeds to the shareholder's
predesignated bank account. To make the request, the shareholder should call 1-
800-521-6548 prior to 4 P.M. Boston
22
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time. A $7.50 charge against the shareholder's account will be imposed for each
wire redemption. This charge is subject to change without notice. The share-
holder's bank may also impose a charge for receiving wires of redemption pro-
ceeds. The minimum redemption by wire is $5,000.
Request to Dealer to Repurchase
For the convenience of shareholders, Portfolios has authorized the Distributor
as its agent to accept orders from dealers by wire or telephone for the repur-
chase of shares by the Distributor from the dealer. Portfolios may revoke or
suspend this authorization at any time. The repurchase price is the net asset
value for the applicable shares next determined following the time at which the
shares are offered for repurchase by the dealer to the Distributor. The dealer
is responsible for promptly transmitting a shareholder's order to the Distribu-
tor. Payment of the repurchase proceeds is made to the dealer who placed the
order promptly upon delivery of certificates for shares in proper form for
transfer or, for Open Accounts, upon the receipt of a stock power with signa-
tures guaranteed as described below, and, if required, any supporting docu-
ments. Neither Portfolios nor the Distributor imposes any charge upon such a
repurchase. However, a dealer may impose a charge as agent for a shareholder in
the repurchase of his or her shares.
Portfolios has reserved the right to change, modify or terminate the services
described above at any time.
ADDITIONAL INFORMATION
BECAUSE OF THE RELATIVELY HIGH COST OF MAINTAINING SMALL SHAREHOLDER ACCOUNTS,
EACH FUND RESERVES THE RIGHT TO INVOLUNTARILY REDEEM AT ITS OPTION ANY
SHAREHOLDER ACCOUNT WHICH REMAINS BELOW $1,500 FOR A PERIOD OF 60 DAYS AFTER
NOTICE IS MAILED TO THE APPLICABLE SHAREHOLDER, OR TO IMPOSE A MAINTENANCE FEE
ON SUCH ACCOUNT AFTER 60 DAYS' NOTICE. Such involuntary redemptions will be
subject to applicable sale charges, if any. Each Fund may increase such minimum
account value above such amount in the future after notice to affected
shareholders. Involuntarily redeemed shares will be priced at the net asset
value on the date fixed for redemption by a Fund, and the proceeds of the
redemption will be mailed to the affected shareholder at the address of record.
CURRENTLY, THE MAINTENANCE FEE IS $18 ANNUALLY, which is paid to the Transfer
Agent. The fee does not apply to certain retirement accounts or if the
shareholder has more than an aggregate $50,000 invested in a Fund and other
Eligible Funds combined. Imposition of a maintenance fee on a small account
could, over time, exhaust the assets of such account.
To cover the cost of additional compliance administration, a $20 fee will be
charged against any shareholder account that has been determined to be subject
to escheat under applicable state laws.
Portfolios may not suspend the right of redemption or postpone the date of
payment of redemption proceeds for a Fund for more than seven days, except that
(a) it may elect to suspend the redemption of shares or postpone the date of
payment of redemption proceeds: (1) during any period that the NYSE is closed
(other than customary weekend and holiday closings) or regular trading on the
NYSE is restricted; (2) during any period in which an emergency exists as a re-
sult of which disposal of portfolio securities is not reasonably practicable or
it is not reasonably practicable to fairly determine a Fund's net asset value;
or (3) during such other periods as the Securities and Exchange Commission may
by order permit for the protection of investors; and (b) payment of redemption
proceeds may be postponed as otherwise provided under "Redemption of Shares"
herein. Portfolios retains the right to redeem the shares of a Fund for other
than cash. Any redemptions other than in cash will be made subject to the pro-
visions of Securities and Exchange Commission rules. (See discussion of redemp-
tions in kind in the Statement of Additional Information.)
SIGNATURE GUARANTEES
To protect shareholder accounts, the Transfer Agent, Portfolios, the Investment
Manager and the Distributor from possible fraud, signature guarantees are re-
quired for certain redemptions. Signature guarantees help the Transfer Agent to
determine that the person who has authorized a redemption from the account is,
in fact, the shareholder. Signature guarantees are required for, among other
things: (1) written requests for redemptions for
23
<PAGE>
more than $50,000; (2) written requests for redemptions for any amount if the
proceeds are transmitted to other than the current address of record (unchanged
in the past 30 days); (3) written requests for redemptions for any amount sub-
mitted by corporations and certain fiduciaries and other intermediaries; and
(4) requests to transfer the registration of shares to another owner. Signa-
tures must be guaranteed by a bank, a member firm of a national stock exchange,
or other eligible guarantor institution. The Transfer Agent will not accept
guarantees (or notarizations) from notaries public. The above requirements may
be waived by Portfolios in certain instances.
SHAREHOLDER SERVICES
THE OPEN ACCOUNT SYSTEM
Under the Open Account System full and fractional shares of each Fund owned by
shareholders are credited to their accounts by the Transfer Agent, State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110. Cer-
tificates representing Class B or Class D shares will not be issued, while cer-
tificates representing Class A or Class C shares will only be issued if specif-
ically requested by shareholders in writing and, in any case, will only be is-
sued for full shares, with any fractional shares to be carried on the share-
holder's account. Shareholders will receive periodic statements of transactions
on their accounts.
Portfolios' Open Account System provides the following options:
1. Additional purchases of shares of any Fund may be made through dealers, by
wire or by mailing a check, payable to the applicable Fund, to Shareholder
Services under the terms set forth above under "Purchase of Shares."
2. The following methods of receiving dividends from investment income and
distributions from capital gains are available:
(a) All income dividends and capital gains distributions reinvested in ad-
ditional shares of the applicable Fund.
(b) All income dividends in cash; all capital gains distributions rein-
vested in additional shares of the applicable Fund.
(c) All income dividends and capital gains distributions in cash.
(d) All income dividends and capital gains distributions invested in any
one available Eligible Fund designated by the shareholder as described
below. See "Dividend Allocation Plan" herein.
Dividend and distribution selections should be made on the Application accom-
panying the initial investment. If no selection is indicated on the Applica-
tion, that account will be automatically coded for reinvestment of all divi-
dends and distributions in additional shares of the same class of the applica-
ble Fund. Selections may be changed at any time by telephone or written notice
to Shareholder Services. Dividends and distributions are reinvested at net as-
set value without a sales charge.
EXCHANGE PRIVILEGE
Shareholders of a Fund may exchange their shares for available shares with cor-
responding characteristics of any of the other Eligible Funds at any time on
the basis of the relative net asset values of the respective shares to be ex-
changed, subject to compliance with applicable securities laws. Shareholders of
any other Eligible Fund may similarly exchange their shares for Fund shares
with corresponding characteristics. Prior to making an exchange, shareholders
should obtain the prospectus of the Eligible Fund into which they are exchang-
ing. Under the Direct Program, subject to certain conditions, shareholders may
make arrangements for regular exchanges from a Fund into other Eligible Funds.
To effect an exchange, Class A, Class B and Class D shares may be redeemed
without the payment of any contingent deferred sales charge that might other-
wise be due upon an ordinary redemption of such shares. The State Street Re-
search Money Market Fund issues Class E shares which are sold without any sales
charge. Exchanges of State Street Research Money Market Fund Class E shares
into Class A shares of the Funds or any other Eligible Fund are subject to the
initial sales charge or contingent deferred sales charge applicable to an ini-
tial investment in such Class A shares, unless a prior Class A sales charge has
been paid directly or indirectly with respect to the shares redeemed. For pur-
poses of computing the contingent deferred sales charge that may be
24
<PAGE>
payable upon disposition of the acquired Class A, Class B and Class D shares,
the holding period of the redeemed shares is "tacked" to the holding period of
the acquired shares. The period any Class E shares are held is not tacked to
the holding period of any acquired shares. No exchange transaction fee is cur-
rently imposed on any exchange.
For the convenience of the shareholders who have Telephone Privileges, Portfo-
lios permits exchanges by telephone request from either the shareholder or his
or her dealer. Shares may be exchanged by telephone provided that the registra-
tion of the two accounts is the same. The toll-free number for exchanges is 1-
800-521-6548. See "Telephone Services" herein for a discussion of conditions
and risks associated with Telephone Privileges.
The exchange privilege may be exercised only in those states where shares of
the relevant other Eligible Fund may legally be sold. For tax purposes, each
exchange actually represents the sale of shares of one fund and the purchase of
shares of another. Accordingly, exchanges may produce a capital gain or loss
for tax purposes. The exchange privilege may be terminated or suspended or its
terms changed at any time, subject, if required under applicable regulations,
to 60 days' prior notice. New accounts established for investments upon ex-
change from an existing account in another fund will have the same Telephone
Privileges as the existing account, unless Shareholder Services is instructed
otherwise. Related administrative policies and procedures may also be adopted
with regard to a series of exchanges, street name accounts, sponsored arrange-
ments and other matters.
The exchange privilege is not designed for use in connection with short-term
trading or market timing strategies. To protect the interests of shareholders,
each Fund reserves the right to temporarily or permanently terminate the ex-
change privilege for any person who makes more than six exchanges out of or
into the Fund per calendar year. Accounts under common ownership or control,
in-cluding accounts with the same taxpayer identification number, may be aggre-
gated for purposes of the six exchange limit. Notwithstanding the six exchange
limit, the Fund reserves the right to refuse exchanges by any person or group
if, in the Investment Manager's judgment, the Fund would be unable to invest
effectively in accordance with its investment objective and policies, or would
otherwise potentially be adversely affected. Exchanges may be restricted or re-
fused if the Fund receives or anticipates simultaneous orders affecting signif-
icant portions of the Fund's assets. In particular, a pattern of exchanges that
coincides with a "market timing" strategy may be disruptive to the Fund. The
Fund may impose these restrictions at any time. The exchange limit may be modi-
fied for ac-
counts in certain institutional retirement plans be-cause of plan exchange lim-
its, Department of Labor regulations or administrative and other considera-
tions. Subject to the foregoing, if an exchange request in good order is re-
ceived by Shareholder Services and delivered by Shareholder Services to the
Transfer Agent by 12 noon Boston time on any business day, the exchange usually
will occur that day. For further information regarding the exchange privilege,
shareholders should contact Shareholder Services.
REINVESTMENT PRIVILEGE
A shareholder of a Fund who has redeemed shares or had shares repurchased at
his or her request may reinvest all or any portion of the proceeds (plus that
amount necessary to acquire a fractional share to round off his or her rein-
vestment to full shares) in shares, of the same class as the shares redeemed,
of a Fund or any other Eligible Fund at net asset value and without subjecting
the reinvestment to an initial sales charge, provided such reinvestment is made
within 120 calendar days after a redemption or repurchase. Upon such reinvest-
ment, the shareholder will be credited with any contingent deferred sales
charge previously charged with respect to the amount reinvested. The redemption
of shares is, for federal income tax purposes, a sale on which the shareholder
may realize a gain or loss. If a redemption at a loss is followed by a rein-
vestment within 30 days, the transaction may be a "wash sale" resulting in a
denial of the loss for federal income tax purposes.
Any reinvestment pursuant to the reinvestment privilege will be subject to any
applicable minimum account standards imposed by the fund into
25
<PAGE>
which the reinvestment is made. Shares are sold to a reinvesting shareholder at
the net asset value thereof next determined following timely receipt by Share-
holder Services of such shareholder's written purchase request and delivery of
the request by Shareholder Services to the Transfer Agent. A shareholder may
exercise this reinvestment privilege only once per 12-month period with respect
to his or her shares of a Fund. No charge is imposed by Portfolios for such re-
investment; however, dealers may charge fees in connection with the reinvest-
ment privilege. The reinvestment privilege may be exercised with respect to an
Eligible Fund only in those states where shares of the relevant other Eligible
Fund may be legally sold.
INVESTMENT PLANS
The Investamatic Check Program is available to Class A, Class B and Class D
shareholders. Under this Program, shareholders may make regular investments by
authorizing withdrawals from their bank accounts each month or quarter on the
Application form available from Shareholder Services.
The Distributor also offers IRAs and tax-sheltered retirement plans, including
prototype and other employee benefit plans for employees, sole proprietors,
partnerships and corporations. Details of these investment plans and their
availability may be obtained from securities dealers or from Shareholder Serv-
ices.
SYSTEMATIC WITHDRAWAL PLAN
A shareholder who owns noncertificated Class A or Class C shares with a value
of $5,000 or more, or Class B or Class D shares with a value of $10,000 or
more, may elect, by participating in the Funds' Systematic Withdrawal Plan, to
have periodic checks issued for specified amounts. These amounts may not be
less than certain minimums, depending on the class of shares held. The Plan
provides that all income dividends and capital gains distributions of the des-
ignated Fund shall be credited to participating shareholders in additional
shares of that Fund. Thus, the withdrawal amounts paid can only be realized by
redeeming shares of the Fund under the Plan. To the extent such amounts paid
exceed dividends and distributions from the relevant Fund or Funds, a share-
holder's investment will decrease and may eventually be exhausted.
In the case of shares otherwise subject to contingent deferred sales charges,
no such charges will be imposed on withdrawals of up to 8% annually of either
(a) the value, at the time the Plan is initiated, of the shares then in the ac-
count or (b) the value, at the time of a withdrawal, of the same number of
shares as in the account when the Plan was initiated, whichever is higher.
Expenses of the Plan are borne by the Funds. A participating shareholder may
withdraw from the Plan and Portfolios may terminate the Plan at any time on
written notice. Purchase of additional shares while a shareholder is receiving
payments under the Plan is ordinarily disadvantageous because of duplicative
sales charges. For this reason, a shareholder may not participate in the
Investamatic Check Program and the Systematic Withdrawal Plan at the same time.
DIVIDEND ALLOCATION PLAN
The Dividend Allocation Plan allows shareholders to elect to have all of their
dividends and any other distributions from a Fund or any Eligible Fund automat-
ically invested at net asset value in one other such Eligible Fund designated
by the shareholder, provided the account into which the investment is made is
initially funded with the requisite minimum amount. The number of shares pur-
chased will be determined as of the dividend payment date. The Dividend Alloca-
tion Plan is subject to state securities law requirements, to suspension at any
time, and to such policies, limitations and restrictions, as for instance, may
be applicable to street name or master accounts, that may be adopted from time
to time.
AUTOMATIC BANK CONNECTION
A shareholder may elect, by participating in Portfolios' Automatic Bank Connec-
tion ("ABC"), to have dividends and other distributions, including Systematic
Withdrawal Plan payments, automati- cally deposited in the shareholder's bank
account by electronic funds transfer. Some contingent deferred sales charges
may apply. See "Systematic Withdrawal Plan" herein.
26
<PAGE>
REPORTS
Reports for each Fund will be sent to shareholders of record at least
semiannually. These reports will include a list of the securities owned by the
applicable Fund as well as the Fund's financial statements.
SHAREHOLDER SERVICES--TELEPHONE SERVICES
The following telephone privileges ("Telephone Privileges") can be used:
(1) the privilege allowing the shareholder to make telephone redemptions for
amounts up to $50,000 to be mailed to the shareholder's address of record
is available automatically;
(2) the privilege allowing the shareholder or his or her dealer to make tele-
phone exchanges is available automatically;
(3) the privilege allowing the shareholder to make telephone redemptions for
amounts over $5,000, to be remitted by wire to the shareholder's
predesignated bank account, is available by election on the Application
accompanying this Prospectus. A current shareholder who did not previ-
ously request such telephone wire privilege on his or her original Appli-
cation may request the privilege by completing a Telephone Redemption-by-
Wire Form which may be obtained by calling 1-800-562-0032. The Telephone
Redemption-by-Wire Form requires a signature guarantee; and
(4) the privilege allowing the shareholder to make telephone purchases or re-
demptions transmitted via the Automated Clearing House system into or
from the shareholder's predesignated bank account, is available upon com-
pletion of the requisite initial documentation. For details and forms,
call 1-800- 562-0032.
A SHAREHOLDER MAY DECLINE THE AUTOMATIC TELEPHONE PRIVILEGES SET FORTH IN (1)
AND (2) ABOVE BY SO INDICATING ON THE APPLICATION ACCOMPANYING THIS PROSPECTUS.
A shareholder may discontinue any Telephone Privilege at any time by advising
Shareholder Services that the shareholder wishes to discontinue the use of such
privileges in the future.
Unless such Telephone Privileges are declined, a shareholder is deemed to au-
thorize Shareholder Services and the Transfer Agent to: (1) act upon the tele-
phone instructions of any person purporting to be the shareholder to redeem, or
purporting to be the shareholder or the shareholder's dealer to exchange,
shares from any account; and (2) honor any written instructions for a change of
address regardless of whether such request is accompanied by a signature guar-
antee. All telephone calls will be recorded. None of the Fund(s), the other El-
igible Funds, the Transfer Agent, the Investment Manager or the Distributor
will be liable for any loss, expense or cost arising out of any request, in-
cluding any fraudulent or unauthorized requests. Shareholders assume the risk
to the full extent of their accounts that telephone requests may be unautho-
rized. Reasonable procedures will be followed to confirm that instructions com-
municated by telephone are genuine. The shareholder will not be liable for any
losses arising from unauthorized or fraudulent instructions if such procedures
are not followed.
Shareholders may redeem or exchange shares by calling toll-free 1-800-521-
6548. Although it is unlikely, during periods of extraordinary market condi-
tions, a shareholder may have difficulty in reaching Shareholder Services at
such telephone number. In that event, the shareholder should contact Share-
holder Services at 1-800-562-0032, 1-617-357-7805 or otherwise at its main of-
fice at One Financial Center, Boston, Massachusetts 02111-2690.
SHAREHOLDER ACCOUNT INQUIRIES:
PLEASE CALL 1-800-562-0032
Call this number for assistance in answering general questions on your account,
including account balance, available shareholder services, statement informa-
tion and performance of the Funds. Account inquiries may also be made in writ-
ing to State Street Research Shareholder Services, P.O. Box 8408, Boston, Mas-
sachusetts 02266-8408. A fee of up to $10 will be charged against an account
for providing additional account transcripts or photocopies of paid redemption
checks or for researching records in response to special requests.
27
<PAGE>
SHAREHOLDER TELEPHONE TRANSACTIONS
PLEASE CALL 1-800-521-6548
Call this number for assistance in purchasing shares by wire, and for telephone
redemptions or telephone exchange transactions. Shareholder Services will re-
quire some form of personal identification prior to acting upon instructions
received by telephone. Written confirmation of the transactions will be provid-
ed.
THE FUNDS AND THEIR SHARES
Portfolios was organized as a Maryland corporation on April 29, 1991 under the
name MetLife Portfolios, Inc. and is registered with the Securities and Ex-
change Commission as an open-end diversified management investment company. On
February 17, 1995, Portfolios filed an amendment to its charter changing its
name to State Street Research Portfolios, Inc. The fiscal year end of Portfo-
lios is October 31. The authorized capital stock of Portfolios consists of 2
billion shares common stock, par value $0.01 per share. The shares of common
stock are presently divided into two series: International Equity Fund common
stock and International Fixed Income Fund common stock. Each series currently
consists of 100,000,000 shares. The Directors have authorized shares of the
Funds to be issued in four classes: Class A, Class B, Class C and Class D
shares. Portfolios reserves the right later to issue additional classes of
shares without the consent of shareholders, and may allocate its remaining un-
classified shares or reallocate any unissued classified shares.
Except for those differences between the classes of shares described below and
elsewhere in the Prospectus, each share of a Fund has equal dividend, redemp-
tion and liquidation rights with other shares of the Fund and when issued is
fully paid and nonassessable. In the future, certain classes may be
redesignated, for administrative purposes only, to conform to standard class
designations and common usage of terms which may develop in the mutual fund in-
dustry. For example, Class C shares may be redesignated as Class Y shares and
Class D shares may be redesignated as Class C shares. Any redesignation would
not affect any substantive rights respecting the shares.
The shares of each class of a Fund represent the same interest in the Fund and
have identical voting, dividend, liquidation and other rights with any other
shares of that Fund, except that the shares of each class may be issued and
sold subject to different sales loads or charges, that expenses related solely
to a particular class (including service and distribution fees) are borne only
by that class and are reflected in the dividends and net asset value of the
shares of that class, that the Class B shares have conversion rights, and that
the shareholders of a particular class are not entitled to vote with respect to
any matter which does not affect the interest of that class, unless required
otherwise by applicable law. The different classes of shares of the Funds also
have different exchange privileges.
As a Maryland corporation, Portfolios is not required to hold regular annual
meetings of shareholders. Thus, there will ordinarily be no shareholder meet-
ings unless required by the 1940 Act or Maryland law or requested by sharehold-
ers holding 10% or more of the outstanding shares of Portfolios. In the event
that less than a majority of the Directors serving as such have been elected by
shareholders of Portfolios, a meeting of shareholders will be called to elect
Directors. A Director may be removed at a special meeting of shareholders by a
vote of a majority of the votes entitled to be cast for the election of Direc-
tors. In connection with such meetings called by shareholders, the relevant
Fund or Funds will assist shareholders in shareholder communications to the ex-
tent required by applicable law. On any matter submitted to the shareholders,
the holder of each Fund share is entitled to one vote per share (with propor-
tionate voting for fractional shares) regardless of the relative net asset
value thereof.
As of January 31, 1996, Metropolitan Life Insurance Company ("Metropolitan"),
was the record and/or beneficial owner, directly or indirectly through its sub-
sidiaries or affiliates, of approximately 88.8% and 39.6% of the outstanding
Class A, Class B, Class C and Class D shares,
28
<PAGE>
respectively of the International Fixed Income Fund, and may be deemed to be in
control of such classes of the Fund. Ownership of 25% or more of a voting secu-
rity is deemed "control" as defined in the 1940 Act. So long as 25% of a class
of shares is so owned, such owners will be presumed to be in control of such
class of shares for purposes of voting on certain matters, such as any Distri-
bution Plan for a given class.
MANAGEMENT OF THE FUNDS
Under the provisions of Portfolios' Articles of Incorporation and the laws of
Maryland, responsibility for the management and supervision of Portfolios and
its Funds rests with the Directors.
The Funds' Investment Manager and principal underwriter is State Street Re-
search Investment Services, Inc., One Financial Center, Boston, Massachusetts
02111-2690. The Investment Manager is an indirect wholly-owned subsidiary of
Metropolitan.
The Investment Manager has entered into Sub-Investment Management Agreements
with Portfolios and GFM with respect to each Fund, pursuant to which GFM has
assumed the overall responsibility for managing the investments of the Funds,
subject to the supervision of the Investment Manager and the authority of the
Board of Directors. GFM receives a fee from the Investment Manager. Formed in
1990, GFM is an English corporation and an indirect subsidiary of Metropolitan.
Its address is 5 Upper St. Martins Lane, London WC2H 9EA England. The firm was
formed to provide pension funds, 401(k) plans, foundations, endowments, corpo-
rations and financial institutions with a range of investment management serv-
ices related to the international marketplace. On December 31, 1995, GFM had
investment management arrangements in effect for over $1.529 billion in assets.
Under the Investment Management Agreements with Portfolios on behalf of each
Fund, the Investment Manager receives a monthly management fee equal to 0.95%
(on an annual basis) of the average daily value of the net assets of the Inter-
national Equity Fund and 0.75% (on an annual basis) of the average daily value
of the net assets of the In ternational Fixed Income Fund. Each Fund bears all
costs of its operation other than those incurred by the Investment Manager un-
der the Investment Management Agreements. Management fees for the International
Equity and International Fixed Income Funds are higher than those of most mu-
tual funds, but are not necessarily higher than other funds with comparable in-
vestment objectives and policies. In particular, the Funds pay, among other ex-
penses, investment advisory fees, certain distribution expenses under the
Funds' Distribution Plan and the compensation and expenses of the Directors who
are not otherwise currently affiliated with the Investment Manager or any of
its affiliates. The Investment Manager will reduce the management fee payable
by each Fund up to the amount of any expenses (excluding permissible items,
such as brokerage commissions, Rule 12b-1 payments, interest, taxes and litiga-
tion expenses) paid or incurred in any year in excess of the most restrictive
expense limitation imposed by any state in which the Fund sells shares, if any.
Under the Investment Management Agreements, the Investment Manager provides
Portfolios with office space, facilities and personnel.
Under its Sub-Investment Management Agreements, the Sub-Investment Manager re-
ceives from the Investment Manager a monthly fee equal to 0.75% (on an annual
basis) of the average daily value of the net assets of the International Equity
Fund and 0.55% (on an annual basis) of the average daily value of the net as-
sets of the International Fixed Income Fund. Portfolios has no responsibility
for payment of fees to GFM.
Subject to the policy of seeking best overall price and execution, sales of
shares of a Fund may be considered by the Sub-Investment Manager in the selec-
tion of broker or dealer firms for the Funds' portfolio transactions.
The International Equity Fund is managed by Stephen J. Bamford, Rosamunde M.
Price, Steven J. Brunnock and Ian R. Vose. Mrs. Price's, Mr. Brunnock's and Mr.
Vose's principal occupation is as a portfolio manager with GFM. They have man-
aged the Fund since its inception in January 1992 and have been with GFM since
its formation in 1990. Mr. Bamford's principal occupation is Chief
29
<PAGE>
Executive and Chief Investment Officer of GFM. For the five years prior to
joining GFM, he served as Investment Director of Aetna International (UK) Ltd.
from 1986 before which he was Investment Director of County Bank Unit Trusts
from 1976. For the five years prior to joining GFM, Mrs. Price served as Chief
Investment Manager (Equities) at Deutsche Bank Capital Management (UK) Ltd. Se-
nior Fund Manager at Nippon Credit International Ltd. and Investment Director
of the Civil Aviation Authority Pension Fund. For the five years prior to join-
ing GFM, Mr. Brunnock served as United Kingdom Portfolio Manager of MGM Assur-
ance plc. before which he was a Portfolio Manager for Philips Electronics Pen-
sion Fund. For the five years prior to joining GFM, Mr. Vose served as Director
of MG International Fund Management and Chief Investment Officer of MG-Tokai
Bank Fund Management.
The International Fixed Income Fund is managed by Nicholas Sanjana. Mr.
Sanjana's principal occupation is as a portfolio manager with GFM. He has man-
aged the Fund since its inception in January 1992. For the five years prior to
joining GFM, he served as Associate Director at Chase Investment Management
Group from 1989, before which he was Senior Portfolio Manager of Deutsche Bank
Capital Management (UK) Ltd.
DIVIDENDS AND DISTRIBUTIONS; TAXES
Each Fund is treated as a separate entity for federal tax purposes. Each Fund
qualified and elected to be treated as a regulated investment company under
Subchapter M of the Internal Revenue Code for its most recent fiscal year and
intends to qualify as such in future fiscal years, although it cannot give com-
plete assurance that it will do so. As long as a Fund so qualifies and satis-
fies certain distribution requirements, it will not be subject to federal in-
come tax on its taxable income (including capital gains, if any) distributed to
its shareholders. Consequently, each Fund intends to distribute annually to its
shareholders substantially all of its net investment income and any capital
gains net income (capital gains net of capital loss). Certain gains and losses
from fluctuations in currency exchange rates are treated as ordinary income or
loss and are included in the net income of a Fund.
Dividends from net investment income, if any, normally will be paid or dis-
tributed annually for the International Equity Fund and quarterly for the In-
ternational Fixed Income Fund. Distributions of capital gain net income, if
any, will generally be made after the end of the fiscal year or as otherwise
required for compliance with applicable tax regulations. Both dividends from
net investment income and distributions of capital gain net income for each
Fund will be declared and paid to shareholders in additional shares of the rel-
evant Fund at net asset value (except in the case of shareholders who elect a
different available distribution method). In certain foreign countries, inter-
est and dividends are subject to a tax which is withheld by the issuer. U.S.
income tax treaties with certain countries reduce the rates of these withhold-
ing taxes. The Funds intend to provide the documentation necessary to achieve
the lower treaty rate of withholding whenever applicable or to seek refund of
amounts withheld in excess of the treaty rate. Moreover, the Funds intend to
qualify under the Internal Revenue Code so that their U.S. shareholders may re-
duce their U.S. tax liability by claiming a foreign tax credit for their share
of foreign income taxes withheld, to the extent allowed by the Code, if the
amount withheld is material.
Each Fund will provide its shareholders of record with annual information on a
timely basis concerning the federal tax status of dividends and distributions
during the preceding calendar year.
Dividends paid by a Fund from net taxable investment income and distributions
of net short-term capital gains, whether paid in cash or reinvested in addi-
tional shares, will be taxable for federal income tax purposes to shareholders
as ordinary income. Distributions of net capital gains (the excess of net long-
term capital gains over net short-term capital losses) which are designated as
capital gains distributions, whether paid in cash or reinvested in additional
shares, will be taxable for federal income tax purposes to shareholders as
long-term capital gains, regardless of how long shareholders have held their
shares. If shares of a Fund which are sold at a loss have been held six months
or less, the loss will be considered as a long-term capital loss to the extent
of any capital gains distributions received.
30
<PAGE>
Dividends and other distributions and the proceeds of redemption of Fund
shares paid to individuals and other nonexempt payees will be subject to a 31%
federal backup withholding tax if the Transfer Agent is not provided with the
shareholder's correct taxpayer identification number or certifi-cation that the
shareholder is not subject to such backup withholding.
The foregoing discussion relates only to generally applicable federal income
tax provisions in effect as of the date of this Prospectus. Therefore, prospec-
tive investors are urged to consult their own tax advisers regarding tax mat-
ters, including state and local tax consequences.
CALCULATION OF PERFORMANCE DATA
From time to time, in advertisements or in communications to shareholders or
prospective investors, a Fund may compare the performance of its Class A, Class
B, Class C or Class D shares to that of other mutual funds with similar invest-
ment objectives, to certificates of deposit and/or to other financial alterna-
tives. A Fund may also compare its performance to appropriate indices, such as
Standard & Poor's 500 Composite Stock Price Index, Consumer Price Index, Dow
Jones Industrial Average, The Morgan Stanley Capital International, Europe,
Australia, Far East (EAFE) Index, J. P. Morgan Global Traded Bond Index and
Salomon Brothers Non-U.S. Dollar World Government Bond Index and/or to appro-
priate rankings and averages such as those compiled by Lipper Analytical Serv-
ices, Inc., Morningstar, Inc., Money Magazine, Business Week, Forbes Magazine,
The Wall Street Journal and Investor's Daily. For example, the performance of
the International Equity Fund might be compared to the Lipper International
Funds Group and the performance of the International Fixed Income Fund might be
compared to the Lipper General World Income Funds Group.
Total return is computed separately for each class of shares of the Funds. The
average annual total return ("standard total return") for shares of a Fund is
computed by determining the average annual compounded rate of return for a des-
ignated period that, if applied to a hypothetical $1,000 ini tial investment
(less the maximum initial or contingent deferred sales charge, if applicable),
would produce the redeemable value of that investment at the end of the period,
assuming reinvestment of all dividends and distributions and with recognition
of all recurring charges. Standard total return may be accompanied with non-
standard total return information computed in the same manner, for differing
periods and with or without annualizing the total return or taking sales
charges into account.
A Fund's yield is computed separately for each class of shares by dividing the
net investment income, after recognition of all recurring charges, per share
earned during the most recent month or other specified 30-day period by the ap-
plicable maximum offering price per share on the last day of such period and
annualizing the result.
The standard total return and yield results take sales charges into account,
if applicable, but do not take into account recurring and nonrecurring charges
for optional services which only certain shareholders elect and which involve
nominal fees, such as the $7.50 fee for remittance of redemption proceeds by
wire. Where sales charges are not applicable and therefore not taken into ac-
count in the calculation of standard total return and yield, the results will
be increased. Any voluntary waiver of fees or assumption of expenses by the
Funds' affiliates will also increase performance results.
A Fund's distribution rate is calculated separately for each class of shares
by annualizing the latest distribution and dividing the result by the maximum
offering price per share as of the end of the period to which the distribution
relates. The distribution rate is not computed in the same manner as the above
described yield, and therefore, can be significantly different from it. In its
supplemental sales literature, a Fund may quote its distribution rate together
with the above described standard total return and yield information. The use
of such distribution rates would be subject to an appropriate explanation of
how the components of the distribution rate differ from the above described
yield.
Performance information may be useful in evaluating a Fund and for providing a
basis for comparison with other financial alternatives. Since the per-
31
<PAGE>
formance of a Fund changes in response to fluctua- tions in economic and market
conditions, interest rates and Fund expenses, among other things, no perfor-
mance quotation should be considered a representation as to a Fund's perfor-
mance for any future period. In addition, the net asset value of shares of a
Fund will fluctuate with the result that shares of a Fund when redeemed, may be
worth more or less than their original cost. Neither an investment in a Fund
nor its performance is insured or guaranteed; such lack of insurance or guaran-
tees should accordingly be given appropriate consideration when comparing a
Fund to financial alternatives which have such features.
Shares of the Funds had no class designations until March 1, 1994, when desig-
nations were assigned based on the pricing and Rule 12b-1 fees applicable to
shares sold thereafter. Performance data for a specified class includes periods
prior to the adoption of class designations. Performance data for periods prior
to March 1, 1994 will not reflect additional Rule 12b-1 Distribution Plan fees,
if any, of up to 1% per year depending on the class of shares, which will ad-
versely affect performance results for periods after such date. Performance
data or rankings for a given class of shares should be interpreted carefully by
investors who hold or may invest in a different class of shares.
32
<PAGE>
[LOGO] State Street Research
State Street Research
Portfolios, Inc.
International Equity Fund
International Fixed Income Fund
STATE STREET RESEARCH
PORTFOLIOS, INC.
ONE MADISON AVENUE
NEW YORK, NY 10010
INVESTMENT MANAGER
DISTRIBUTOR
STATE STREET RESEARCH
INVESTMENT SERVICES, INC.
ONE FINANCIAL CENTER
BOSTON, MA 02111
SUB-INVESTMENT MANAGER
GFM INTERNATIONAL
INVESTORS LIMITED
5 UPPER ST. MARTINS LANE
LONDON, WC2H 9EA
ENGLAND
SHAREHOLDER SERVICES
STATE STREET RESEARCH
SHAREHOLDER SERVICES
P.O. BOX 8408
BOSTON, MA 02266
1-800-562-0032
CUSTODIAN
STATE STREET BANK AND
TRUST COMPANY
225 FRANKLIN STREET
BOSTON, MA 02110
LEGAL COUNSEL
SULLIVAN & WORCESTER LLP
1025 CONNECTICUT AVENUE, N.W.
WASHINGTON, DC 20036
INDEPENDENT ACCOUNTANTS
DELOITTE & TOUCHE LLP
125 SUMMER STREET
BOSTON, MA 02110
MARCH 1, 1995
PROSPECTUS
IE/F-446D-395IBS
CONTROL NUMBER: 2181-950227(0396)SSR-LD
<PAGE>
STATEMENT OF ADDITIONAL
INFORMATION FOR
STATE STREET RESEARCH
PORTFOLIOS, INC.
March 1, 1996
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Prospectus of State Street Research International
Equity Fund and State Street Research International Fixed Income Fund dated
March 1, 1996. A copy of the Prospectus may be obtained without charge from the
offices of State Street Research Portfolios, Inc. ("Portfolios") or State
Street Research Investment Services, Inc. (the "Investment Manager" or the
"Distributor"), One Financial Center, Boston, Massachusetts 02111.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
<S> <C>
Investment Practices and Policies......................................... B-1
Money Market Instruments................................................ B-1
Description of Certain Corporate Bond and Debenture Ratings of Moody's
Investors Service, Inc................................................. B-4
Description of Certain Corporate Bond and Debenture Ratings of Standard
and Poor's Ratings Group............................................... B-4
Description of Commercial Paper
Ratings................................................................ B-4
Certain Investment Limitations............................................ B-5
Certain Investment Practices.............................................. B-7
Lending of Portfolio Securities......................................... B-7
Options and Futures..................................................... B-7
Limitations on the Use of Futures Contracts and Options Thereon and Op-
tions on Indices....................................................... B-14
Forward Foreign Currency Exchange Contracts............................. B-14
Directors and Officers.................................................... B-16
Control Persons........................................................... B-17
Investment Management Arrangements........................................ B-18
Investment Management Agreements and Sub-Investment Management Agree-
ments.................................................................. B-18
</TABLE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS (CONT'D)
- ---------------------------------------------------------------------------------
<S> <C>
Allocation of Portfolio Brokerage......................................... B-20
Purchase of Shares.......................................................... B-21
Redemption In Kind.......................................................... B-22
Net Asset Value............................................................. B-22
Portfolio Transactions...................................................... B-23
Portfolio Turnover........................................................ B-23
Certain Tax Matters......................................................... B-24
Taxation of the Funds--in General......................................... B-24
Taxation of the Funds' Investments........................................ B-25
Taxation of the Funds' Shareholders....................................... B-26
Distribution of Shares of the Funds......................................... B-27
Calculation of Performance Data............................................. B-30
Total Return.............................................................. B-30
Yield..................................................................... B-31
Accrued Expenses.......................................................... B-31
Nonstandardized Total Return.............................................. B-32
Distribution Rates........................................................ B-32
Custodian................................................................... B-32
Independent Accountants..................................................... B-33
Financial Statements........................................................ B-33
</TABLE>
INVESTMENT PRACTICES AND POLICIES
MONEY MARKET INSTRUMENTS:
Certain money market instruments are described below. The International Equity
and International Fixed Income Funds may invest in such instruments to the ex-
tent otherwise consistent with their investment objectives.
United States Treasury Securities: These consist of various types of market-
able securities issued by the United States Treasury: i.e. bills, notes and
bonds. Such securities are direct obligations of the United States Government
and differ mainly in the length of their maturity. Treasury bills, the most
frequently issued marketable government security, have a maturity of up to one
year and are issued on a discount basis.
B-1
<PAGE>
Government Agency Securities:
These consist of debt securities issued by agencies and instrumentalities of
the United States Government, including the various types of instruments cur-
rently outstanding or which may be offered in the future. Agencies include,
among others, the Federal Housing Administration, Government National Mortgage
Association, Farmers Home Administration, Export-Import Bank of the United
States, Maritime Administration, General Services Administration and Tennessee
Valley Authority. Instrumentalities include, for example, the National Bank of
Cooperatives, each of the Federal Home Loan Banks, Federal Home Loan Mortgage
Corporation, Farm Credit Banks, Federal National Mortgage Association and the
United States Postal Service. Such securities are backed by the full faith and
credit of the United States (e.g., U.S. Treasury Bills), guaranteed by the
United States Treasury (e.g. Government National Mortgage Association mortgage-
backed securities), supported by the issuing agency's or instrumentality's
right to borrow from the United States Treasury (e.g. Federal National Mortgage
Association Discount Notes) or supported by the issuing agency's or
instrumentality's credit.
Bank Money Market Instruments:
These include certificates of deposit and bankers' acceptances. Certificates
of deposit are generally short-term, interest-bearing negotiable certificates
issued by commercial banks or savings and loan associations against funds de-
posited in the issuing institution. A banker's acceptance is a time draft drawn
on a commercial bank by a borrower, usually in connection with an international
commercial transaction (to finance the import, export, transfer or storage of
goods). The borrower is liable for payment as well as the bank, which uncondi-
tionally guarantees to pay the draft at its face amount on the maturity date.
Most acceptances have maturities of six months or less and are traded in sec-
ondary markets prior to maturity. A Fund will not invest in any security issued
by a commercial bank or a savings and loan association unless the bank or asso-
ciation is organized and located in the United States, has total assets of at
least $1 billion and is a member of the Federal Deposit Insurance Corporation;
provided that this limitation shall not prohibit investments in foreign
branches of banks or agencies which meet the foregoing requirements. No Fund
will invest in non-negotiable time deposits maturing in more than seven days.
These time deposits are considered illiquid and subject to each Fund's 10% lim-
itation on illiquid investments. No Fund invests in negotiable time deposits
maturing in more than 30 days.
Short-Term Corporate Debt Instruments:
These include commercial paper (including variable amount master demand
notes): i.e., short-term, unsecured promissory notes issued by corporations to
finance short-term credit needs. Commercial paper is usually sold on a discount
basis and has a maturity at the time of issuance not exceeding nine months.
Variable amount master demand notes are obligations of companies that permit
the Funds to invest fluctuating amounts at varying rates of interest pursuant
to arrangements between the Funds as lenders, and the companies, as borrowers.
The Funds will have the right, at any time, to increase the amount lent up to
the full amount provided by a note or to decrease the amount. The borrower will
have the right, at any time, to prepay up to the full amount of the amount bor-
rowed without penalty. Because the notes are direct lending obligations between
the Funds and borrowers, they are generally not traded and there is no second-
ary market. However, the Funds will have the right to redeem a note at any time
and receive face value plus accrued interest. Consequently, the Funds' ability
to receive repayment will depend upon the borrower's ability to pay principal
and interest on the Funds' demand. The Funds will invest only in either notes
that have the ratings described below for commercial paper, or (because notes
are not typically rated by credit rating agencies) unrated notes that are is-
sued by companies that have the ratings described below for issuers of commer-
cial paper. GFM International Investors Limited ("GFM" or "Sub-Investment Man-
ager") does not expect that the notes will be backed by bank letters of credit.
The Funds' Investment Manager and Sub-Investment Manager will value the notes
held by the Funds taking into account such factors as the issuer's earning pow-
er, cash flows and other liquidity ratios.
B-2
<PAGE>
Also included are non-convertible corporate debt securities (e.g. bonds and
debentures) with no more than two years remaining to maturity at the date of
settlement. Corporate debt securities with a remaining maturity of less than
one year are liquid (and tend to become more liquid as their maturities lessen)
and are traded as money market securities. Issues with between one and two
years remaining to maturity tend to have greater liquidity and considerably
less market value fluctuation than longer term issues.
Repurchase Agreements:
Under these arrangements, a Fund invests in securities subject to repurchase
agreements with a bank or dealer. A repurchase agreement is an instrument under
which the purchaser (i.e., the Fund) acquires ownership of an obligation (debt
security) and the seller agrees, at the time of the sale, to repurchase the ob-
ligation at a mutually agreed upon time and price, thereby determining the
yield during the purchaser's holding period. This results in a fixed rate of
return insulated from market fluctuations during such period, unless the seller
defaults on its repurchase obligations.
The underlying securities will consist only of U.S. Government or government
agency securities, certificates of deposit, commercial paper or banker's ac-
ceptances. Repurchase agreements will be collateralized by the purchased secu-
rities, and, during the term of a repurchase agreement, the seller will be re-
quired to provide such additional collateral as is necessary to maintain the
value of all of the collateral at a level at least equal to the repurchase
price. Repurchase agreements usually are for short periods, such as under one
week. Repurchase agreements will be entered into with primary dealers for peri-
ods not to exceed 30 days and only with respect to underlying money market se-
curities in which a Fund may otherwise invest as described above. Repurchase
agreements will not be entered into for a duration of more than seven days if,
as a result, more than 10% of the value of a Fund's total assets would be in-
vested in such agreements or other illiquid securities.
Repurchase agreements could be viewed as a form of loan made by a Fund to the
seller of the agreement, with the security subject to repurchase, in effect,
serving as "collateral" for the loan. A Fund will in all cases seek to assure
that the amount of collateral with respect to any repurchase agreement is ade-
quate. As with a true extension of credit, however, there is risk of delay in
recovery or inadequacy of the "collateral", should the seller of the repurchase
agreement fail financially. Also, a Fund could incur disposition costs in con-
nection with disposition of the collateral if the seller defaults. The Funds
will enter into repurchase agreements only with sellers deemed to be credit-
worthy and only when the economic benefit to the Funds is believed to justify
the attendant risks. Portfolios has adopted standards for the sellers with whom
it will enter into repurchase agreements which it believes are reasonably de-
signed to assure that such a party presents no serious risk of becoming in-
volved in bankruptcy proceedings within the time frame contemplated by the re-
purchase agreement.
Zero Coupon Bonds
Zero coupon bonds do not require the periodic payment of interest and are is-
sued at a significant discount from face value. The discount approximates the
total amount of interest the bonds will accrue and compound over the period un-
til maturity at a rate of interest reflecting the market rate of the security
at the time of issuance. Such investments benefit the issuer by mitigating its
need for cash to meet debt service, but also require a higher rate of return to
attract investors who are willing to defer receipt of such cash. Such invest-
ments may experience greater volatility in market value than debt obligations
which make regular payments of interest. The Funds will accrue income on such
investments for tax and accounting purposes, which is distributable to share-
holders. When distributed to shareholders, any such income resulting from zero
coupon bonds will be paid from a Fund's cash assets, or, if necessary to pay
the distribution, from the proceeds of sales of portfolio securities held by a
Fund. Furthermore, a Fund will be unable to purchase additional portfolio secu-
rities with any cash used to make such distributions and its current income may
be reduced.
B-3
<PAGE>
Debt Instrument Ratings
The ratings of certain debt instruments in which the Funds may invest are de-
scribed below.
DESCRIPTION OF CERTAIN CORPORATE BOND AND DEBENTURE RATINGS OF MOODY'S
INVESTORS SERVICE, INC.:
Aaa-Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all stan-
dards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protec-
tive elements may be of greater amplitude or there may be other elements pres-
ent which make the long term risks appear somewhat greater than in Aaa securi-
ties.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position charac-
terizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable in-
vestment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
DESCRIPTION OF CERTAIN CORPORATE BOND AND DEBENTURE RATINGS OF STANDARD &
POOR'S RATINGS GROUP:
AAA--This is the highest rating assigned by Standard & Poor's to a debt obliga-
tion and indicates an extremely strong capacity to pay principal and interest.
AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest, al-
though they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection parame-
ters, adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal for debt in
this category than in higher rated categories.
BB or B--Bonds rated BB or B are regarded, on balance, as predominantly specu-
lative with respect to capacity to pay interest and repay principal in accor-
dance with the terms of the obligation. BB indicates the lowest degree of spec-
ulation and B a relatively higher degree of speculation. While such bonds will
likely have some quality and protective characteristics, these are outweighted
by large uncertainties or major risk exposures to adverse conditions.
DESCRIPTION OF COMMERCIAL PAPER RATINGS:
Commercial paper rated A (highest quality) by Standard & Poor's has the follow-
ing characteristics: Liquidity ratios are adequate to meet cash requirements.
Long-term senior debt is rated A or better, although in some cases BBB credits
may
B-4
<PAGE>
be allowed. The issuer has access to at least two additional channels of bor-
rowing. Basic earnings and cash flow have an upward trend with allowance made
for unusual circumstances. Typically, the issuer's industry is well established
and the issuer has a strong position within the industry. The reliability and
quality of management are unquestioned. The relative strength or weakness of
the above factors determine whether the issuer's commercial paper is rated A-1,
A-2 or A-3. (Those A-1 issues determined to possess overwhelming safety charac-
teristics are denoted with a plus (+) sign: A-1+.)
The rating Prime is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigning ratings are the following:
evaluation of the management of the issuer; economic evaluation of the issuer's
industry or industries and an appraisal of speculative-type risks which may be
inherent in certain areas; evaluation of the issuer's products in relation to
competition and customer acceptance; liquidity; amount and quality of long-term
debt; trend of earnings over a period of 10 years; financial strength of any
parent company and the relationships which exist with the issuer; and recogni-
tion by the management of obligations which may be present or may arise as a
result of public interest questions and preparations to meet such obligations.
These factors are all considered in determining whether the commercial paper is
rated Prime-1, Prime-2 or Prime-3.
CERTAIN INVESTMENT LIMITATIONS
The investment limitations not described in the Prospectus and generally common
to the Funds are described below. The following four fundamental policies may
not be changed without approval of holders of a majority of the outstanding
voting shares of each Fund affected (which for this purpose and under the In-
vestment Company Act of 1940, as amended (the "1940 Act") means the lesser of
(i) 67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented or (ii) more than 50% of the outstanding
shares).
No Fund may:
1. borrow money or purchase securities on margin, provided, however, that
this restriction shall not prohibit a Fund from (a) obtaining such short-
term credits as are necessary for the clearance of portfolio transactions,
(b) temporarily borrowing up to 5% of the value of a Fund's total assets
for extraordinary or emergency purposes, such as for permitting redemption
requests to be honored which might otherwise require the sale of securi-
ties at a time when it is not in the Fund's best interests or (c) purchas-
ing securities on a "when-issued" or "forward commitment" basis. Collat-
eral arrangements entered into by the Fund to make margin deposits in con-
nection with futures contracts, including options on futures contracts,
are not for these purposes deemed to be the purchase of a security on mar-
gin. The aggregate amount of obligations identified in (a), (b) and (c)
above, when incurred, will not exceed one-third of the amount by which the
Fund's total assets exceed its total liabilities (excluding the liabili-
ties represented by such obligations). If at any time a Fund's obligations
of such type exceed the foregoing limitation, such obligations will be
promptly reduced to the extent necessary to comply with the limitation.
The Funds will not issue senior securities, other than those which repre-
sent obligations under (a), (b) and (c). For purposes hereof, writing cov-
ered call and put options and entering into futures contracts and options
thereon to the extent permitted by the investment policies described in
the Prospectus shall not be deemed to involve the issuance of senior secu-
rities or borrowings;
2. engage in the underwriting of securities of other issuers, except to the
extent that in selling portfolio securities, it may be deemed to be a
"statutory" underwriter for purposes of the Securities Act of 1933; or
3. purchase or sell real estate or real estate interests (except that the
Fund may invest up to 10% of its total assets in: (i) readily marketable
securities of issuers which deal in real estate or mortgages; and (ii)
readily marketable securities which are secured by real estate or inter-
ests therein, and the Fund reserves freedom of action to hold and to sell
real estate
B-5
<PAGE>
acquired as a result of the Fund's ownership of such securities.
4. acquire securities for the purpose of exercising control over the manage-
ment of any company or if such acquisition would thereupon cause more than
25% of the value of the Fund's total assets to consist of (1) securities
(other than securities issued or guaranteed by the United States govern-
ment, its agencies and instrumentalities) which, together with other secu-
rities of the same issuer, constitute more than 5% of the value of the
Fund's total assets and (2) voting securities of issuers more than 10% of
whose outstanding voting securities are owned by Portfolios.
The International Equity Fund may not:
1. make any investment which would thereupon cause more than 25% of the value
of the total assets of the Fund to be invested in securities issued by
companies principally engaged in any one industry, provided, however, that
(a) utilities will be divided according to their services so that, for
example, gas, gas transmission, electric and telephone will each be deemed
a separate industry, (b) oil and oil related companies will be divided by
type so that, for example, domestic crude oil and gas producers, domestic
integrated oil companies, international oil companies and oil service
companies will each be deemed a separate industry, and (c) savings and
loan associations and finance companies will each be deemed a separate
industry. To the extent that 25% of the total assets of the Fund may
become invested in the four oil related industries listed above in the
aggregate, such fact will be disclosed. For purposes of this limitation,
all debt securities issued by foreign governments, their agencies or
instrumentalities will be treated as foreign government debt and all debt
securities issued by supranational organizations will be treated as
supranational debt.
The following investment restrictions may be changed without approval of
shareholders.
1. No Fund will purchase securities of other investment companies if such
purchase would thereupon cause more than 10% of the value of the total as-
sets in the Fund to be invested in the securities of investment companies
or more than 5% of such value to be invested in the securities of any one
investment company, or would cause Portfolios to own more than 3% of the
total outstanding voting stock of any such company (or together with other
investment companies having the same investment adviser to own more than
10% of the total outstanding voting stock of any closed-end investment
company). Securities of investment companies may also be acquired as part
of a merger, consolidation, acquisition of assets or reorganization.
2. No Fund will make any investment in repur-chase agreements having a matu-
rity of more than seven days or any other illiquid assets if, as a result,
more than 10% of the Fund's total assets would be invested in illiquid as-
sets or more than 5% of the Fund's total assets would be invested in re-
stricted securities. For purposes of this limitation, privately placed se-
curities that are not registered under the Securities Act of 1933, but
that can be offered and sold to qualified institutional buyers under Rule
144A under that Act are not considered restricted securities.
3. Portfolios will not make any short sale or participate on a joint or joint
and several basis in any trading account in securities. The latter policy,
however, does not prohibit combining orders for portfolio securities as
described in "Investment Management Agreements and Sub-Investment Manage-
ment Agreements," on page B-18.
4. No Fund will invest in oil, gas or other mineral exploration or develop-
ment programs (although it may invest in issuers which own or invest in
such interests).
5. No Fund will purchase securities of any issuer with a record of less than
three years continuous operations, including predecessors, except obliga-
tions issued or guaranteed by the U.S. Government or by any foreign gov-
ernment or
B-6
<PAGE>
their agencies or instrumentalities, if such purchase would cause the in-
vestments of the Fund in all such issuers to exceed 5% of the total assets
of the Fund taken at market value.
6. No Fund will purchase or retain securities of an issuer any of whose offi-
cers, directors, trustees or security holders is an officer, director or
trustee of the Fund or a member, officer, director or trustee of the in-
vestment adviser of the Fund if one or more of such individuals owns bene-
ficially more than one-half of one percent ( 1/2%) of the outstanding
shares or securities or both (taken at market value) of such issuer and
such individuals owning more than one-half of one percent ( 1/2%) of such
shares or securities together own beneficially more than 5% of such shares
or securities or both.
The investment restrictions set forth in the Pro- spectus contain an exception
that permits the Funds to purchase securities pursuant to the exercise of sub-
scription rights, subject to the condition that such purchase will not result
in a Fund ceasing to be a diversified investment company. Japanese and European
corporations frequently issue additional capital stock by means of subscription
rights offerings to existing shareholders at a price substantially below the
market price of the shares.
The failure to exercise such rights would result in a Fund's interest in the
issuing company being diluted. The market for such rights is not well developed
and, accordingly, a Fund may not always realize full value of the sale of
rights. Therefore, the exception applies in cases where the limits set forth in
the investment restrictions in the Prospectus would otherwise be exceeded by
exercising rights or have already been exceeded as a result of fluctuations in
the market value of a Fund's portfolio securities with the result that a Fund
would otherwise be forced either to sell securities at a time when it might not
otherwise have done so, or to forego exercising the rights.
CERTAIN INVESTMENT PRACTICES
LENDING OF PORTFOLIO SECURITIES:
Subject to Portfolios' fundamental investment restrictions, each Fund from time
to time may lend some of its securities to brokers, dealers and financial in-
stitutions and receive as collateral cash or United States Treasury securities
which at all times while the loan is outstanding will be maintained by the bor-
rower in amounts equal to at least 100% of the current market value of the
loaned securities. Any cash collateral will be invested in short-term high-
grade securities, which can increase the current income of the Fund lending its
securities, since the Fund continues to receive interest and dividends on the
loaned securities during the period of the loan. Any gain or loss in the market
value of loaned securities or securities in which cash collateral is invested
during the term of the loan would also inure to the Fund.
Loans of portfolio securities will not have terms longer than 30 days and will
be terminable at any time. The Funds will have the right to retain record own-
ership of loaned securities to exercise beneficial rights such as voting
rights, subscription rights and rights to dividends, interest or other distri-
butions. Portfolios on behalf of the Funds may pay reasonable finders, adminis-
trative and custodial fees to persons unaffiliated with the Funds for services
in connection with such loans.
The dividends, interest, and other distributions received by a Fund on loaned
securities may, for tax purposes, be treated as income other than qualified in-
come for the 90% test discussed under "Certain Tax Matters," on page B-24. The
Funds intend to lend portfolio securities only to the extent that such activity
does not jeopardize the Funds' qualification as regulated investment companies
under the Internal Revenue Code of 1986, as amended (the "Code").
If the borrower fails to maintain the requisite amount of collateral, the loan
automatically terminates, and the Fund could use the collateral to replace the
securities, while holding the borrower liable for any excess of the replacement
cost over the amount of collateral. As with any extension of credit, there are
risks of delay in recovery, and in some cases even loss of rights in the col-
lateral, should the borrower of the securities fail financially. However, loans
of portfolio securities will be made only to firms deemed to be creditworthy
and only when the economic benefit to the Funds is believed to justify the at-
tendant risks. On termination of a loan, the borrower is required to return the
loaned securities to the Fund.
B-7
<PAGE>
OPTIONS AND FUTURES:
Options on Portfolio Securities and Currencies: Subject to the fundamental in-
vestment restrictions, all the Funds may write (sell) covered call options and
may purchase put options with respect to securities in their portfolio. The
Funds may also purchase call options and may write covered put options on secu-
rities or currencies.
A call option gives the purchaser of such option, in exchange for the option
premium, the right to buy (and obligates the writer to sell) the underlying se-
curity or currency at the price specified in the option (the "exercise price")
at any time until the option expires, generally within three to nine months.
The exercise price, plus the option premium paid, will always be greater than
the market price of the underlying security or currency at the time the option
is written. A put option gives the purchaser of such option, in exchange for
the option premium, the right to sell (and obligates the writer to purchase)
the underlying security or currency at the exercise price at any time before
the option expires.
If a covered call or put option written by a Fund expires unexercised, the
Fund will realize as income, in the form of a short-term capital gain, the pre-
mium it received for the sale of the option, less the brokerage commission it
paid i.e., the "net premium." If a call option written by a Fund is exercised,
a decision over which the Fund has no control, the Fund must sell the under-
lying security or currency to the option holder at the exercise price. By writ-
ing a covered call option, the Fund foregoes, in exchange for the net premium,
the opportunity to profit from any increase in the value of the underlying se-
curity or currency above the exercise price plus the premium paid. Therefore,
call options may be written when GFM believes that the security or currency
should be held, but no increase in price or only a moderate increase within the
option period is expected.
By writing a covered put option, a Fund receives premium income but obligates
itself to purchase from the option holder, at the price specified in the op-
tion, the particular security or currency underlying the option at any time
prior to the expiration of the option period, regardless of the market value of
the security or currency during the option period. Therefore, put options will
be written when GFM believes that the security's or currency's price will rise
during the exercise period and, consequently, the option will not be exercised.
If an option purchased by a Fund expires unexercised, the Fund will experience
a loss in the amount of the premium paid for the option. The Fund will gener-
ally decide to exercise a put option if the market price of the underlying se-
curity or currency falls below the exercise price plus the premium paid; it
will generally decide to exercise a call option if the market price of the un-
derlying security or currency exceeds the exercise price plus the premium paid.
Therefore, options may be purchased when GFM believes that, in the case of a
put, the security or currency should be held but its market price may fall, or,
in the case of a call, the security or currency should be purchased in the fu-
ture and its market price may rise.
In order to reduce the risk of loss, the Funds will not purchase options un-
less GFM believes the market is sufficiently developed. The Funds will not sell
the securities or currencies against which options have been written until af-
ter the option period has expired, a closing purchase transaction, if avail-
able, has been executed, a corresponding put or call option has been purchased
or the written option is otherwise covered.
Options are traded or on certain recognized securities exchanges including the
following United States and foreign exchanges: the Chicago Board Options Ex-
change, American Stock Exchange, New York Stock Exchange, Pacific Stock Ex-
change and Philadelphia Stock Exchange, the Toronto Stock Exchange, Montreal
Stock Exchange, European Options Exchange (in the Netherlands) and London Stock
Exchange.
A Fund may terminate its obligation as the writer of an option by purchasing
an option with the same exercise price and expiration date as the option previ-
ously written (a "closing purchase transaction"). If a Fund cannot enter into a
closing purchase transaction (for example, because no such options are avail-
able for purchase), the Fund will continue to bear the risk of loss of the ap-
preciation, if any, in the price of the underlying security or currency during
the remaining term of the option, if it has written a call option, or the Fund
will continue to be obligated to purchase the specified securities or curren-
cies at the exercise price, regardless of the market value or exchange rate, if
it has written a put option.
B-8
<PAGE>
Both sales and purchases of options require the Funds to pay brokerage commis-
sions. To the extent that an option sold by the Funds is exercised, the Funds
may incur brokerage commissions or other transaction costs in reinvesting the
proceeds received upon such exercise. Also, writing covered call options can
increase a Fund's turnover rate.
When a Fund sells a covered call or put option, an amount equal to the net
premium (the premium less the commission) received by the Fund is included in
the liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of the deferred credit subsequently will be marked-
to-market to reflect the current value of the option written. If an option ex-
pires on its stipulated expiration date or if the Fund enters into a closing
purchase transaction, the Fund will realize a gain (or loss, if the cost of a
closing purchase transaction exceeds the net premium received when the option
was sold), and the deferred credit related to such option will be eliminated.
If a call option sold by the Fund is exercised, the Fund will realize a long-
term or short-term gain or loss from the sale of the underlying security or
currency, and the proceeds of the sale will be increased by the premium previ-
ously received on the option. The writing of such call options will not affect
the holding period of the underlying security. If a put option sold by the Fund
is exercised, the Fund's cost for the security or currency purchased will be
reduced by the premium previously received on the option written.
Options on Indices:
The Funds intend to utilize options on stock indices. Options on stock indi-
ces are similar to options on stock, except that all settlements are made in
cash rather than by delivery of the stock, and gains or losses depend on price
movements in the stock market generally (or in a particular industry or segment
of the market represented by the index) rather than price movements in individ-
ual stocks.
Upon payment of a specified premium at the time an option on a stock index is
entered into, the purchaser of a call option on a stock index obtains the right
to receive, upon exercise of the option, a sum of money equal to a multiple of
any excess of the value of the specified stock index, on the exercise date,
over the exercise or "strike" price specified by the option. The purchaser of a
put option on a stock index obtains the right to receive, upon exercise of the
option, a sum of money equal to a multiple of any excess of the strike price
over the value of the stock index.
The writer of a stock index option has obligations which correspond to the
purchaser's rights. Thus, for example, the writer of a call option on a stock
index, in consideration of the option premium received, has the obligation to
pay, upon exercise, a dollar amount equal to a multiple of any excess of the
value of the specified stock index on the date of exercise over the strike
price specified in the option. The writer of a put option on a stock index, in
consideration of the option pre-mium received, has the obligation to pay, upon
exercise, a dollar amount equal to a multiple of any excess of the value of the
strike price specified in the option over the value of the specified stock in-
dex on the date of exercise.
The Funds will cover call options on a stock index written by, for example,
holding in a segregated account, with the custodian for Portfolios, portfolio
securities that substantially replicate the movement of the particular index
upon which the call option was written or sufficient cash or liquid assets to
cover the outstanding position. In addition, the Funds may also choose to cover
call options written by holding a separate call option permitting the purchase
of the same stock index at the same strike price. The Funds will cover put op-
tions on a stock index written by, for example, holding in a segregated ac-
count, with the custodian for Portfolios, cash or liquid assets equal to the
strike price of the put option or by holding a separate put option permitting
the purchase of the same stock index at the same strike price.
The Funds intend to write covered call and put options on a stock index for
the same purposes as they might write covered call and put options on their
portfolio securities.
A securities index fluctuates with changes in the market values of the securi-
ties included in the index. For example, some options on securities indices are
based on a broad market index such as the Nikkei Index of 225 Japanese stocks
traded on the Singapore International Monetary Exchange
B-9
<PAGE>
("Nikkei Index") or the Standard & Poor's 500 Index, or a narrower market index
such as the Standard & Poor's 100 or the Osaka Index of 50 Japanese Stocks
traded on the Osaka Exchange. Indices may also be based on an industry or mar-
ket segment such as the AMEX Oil and Gas Index or the Computer and Business
Equipment Index. Options on stock indices are currently traded on the following
exchanges, among others: the London Traded Options Market, The Chicago Board
Options Exchange; New York Stock Exchange; and American Stock Exchange. Options
on other types of securities indices, which do not currently exist, may be in-
troduced and traded on exchanges in the future.
Options on indices relating to certain debt securities, referred to as inter-
est rate indices, may be introduced in the future. In the event that a liquid
market develops for options on an interest rate index, and the Board of Direc-
tors of Portfolios authorizes a particular Fund to use such an option, the Fund
may do so. Where permitted, each Fund intends to utilize options on interest
rate indices in a manner similar to that described above with respect to op-
tions on stock indices.
The Funds' purchase and sale of options on indices will be subject to the same
risks as those applicable to options on individual securities. In addition, the
distinctive characteristics of options on indices create certain risks that are
not present with options on individual securities. For example, index prices
may be distorted if trading of certain securities included in the index is in-
terrupted. Trading in the index options also may be interrupted in certain cir-
cumstances, such as, for example, if trading were halted in a substantial num-
ber of securities included in the index. If this occurred, the Fund would not
be able to close out options which it had purchased or written and, if restric-
tions on exercise were imposed, would be unable to exercise an option it holds,
which could result in substantial losses to the Fund. The Funds intend to pur-
chase or write options only on indices which include a sufficient number of se-
curities to minimize the likelihood of a trading halt in such options. In addi-
tion, the ability to establish and close out positions on options on indices
will be subject to the development and maintenance of a liquid secondary market
for such options. The Funds will not purchase or sell any option on an index
unless and until, in the opinion of GFM, the market for such options has devel-
oped sufficiently that the risk in connection with such transactions is accept-
able.
The effectiveness of hedging through the purchase of options on indices will
depend upon the extent to which price movements in the portion of the securi-
ties portfolio being hedged correlate with price movements in the selected in-
dex. Perfect cor-relation is not possible because the securities held or to be
acquired by a Fund will not exactly match the composition of the indices on
which options are written. In the purchase of options on indices, the principal
risk is that the premium and transaction costs paid by a Fund in purchasing an
option will be lost as a result of unanticipated movements in the price of the
securities comprising the index for which the option has been purchased. In
writing call options on indices, the principal risks are the inability to ef-
fect closing transactions at fav-orable prices and the inability to participate
in the appreciation of the underlying securities. In writing put options on in-
dices, the principal risks are the inability to effect closing transactions at
favorable prices and the obligation to make a cash settlement relating to the
stock index at prices which may not reflect current market values.
Futures Transactions:
A futures contract is an agreement to buy or sell a security or currency (or
deliver a final cash settlement price, in the case of a contract relating to an
index or otherwise not calling for physical delivery at the end of trading in
the contract) for a set price in the future. Trading in futures is regulated
under the Commodity Exchange Act by the Commodity Futures Trading Commission
("CFTC"). Futures contracts trade on certain regulated contract markets through
an open outcry auction on the exchange floor. The Funds, as described more
fully below, may purchase or sell futures contracts to effect hedging transac-
tions. A hedge, as defined by the CFTC, is a transaction in which the Funds
utilize futures contracts in order to protect the value of underlying portfolio
securities or the currencies in which they are denominated from adverse fluctu-
ations in the financial markets.
B-10
<PAGE>
Positions taken in the futures markets are not normally held until delivery or
cash settlement is required, but instead are liquidated through offsetting
transactions that may result in a gain or a loss. While futures positions taken
by a Fund will usually be liquidated in this manner, the Fund may instead make
or take delivery of underlying securities or currencies whenever it appears ec-
onomically advantageous for the Fund to do so. A clearing organization associ-
ated with the exchange on which futures are traded assumes responsibility for
closing out transactions and guarantees that, as between the clearing members
of an exchange, the sale and purchase obligations will be performed with regard
to all positions that remain open at the termination of the contract.
Upon entering into a futures contract, a Fund is required to deposit with a
futures commission merchant or in a segregated custodial account a certain per-
centage (presently less than ten percent) of the futures contract's market
value as "initial margin." Initial margin is in the nature of a performance
bond or good faith deposit on the contract which is returned upon termination
of the futures contract if all contractual obligations have been satisfied. The
initial margin in most cases consists of cash or U.S. Government securities.
Subsequent cash payments, called "variation margin," may be required as a re-
sult of marking the contracts to market on a daily basis as the contract value
fluctuates.
The use of futures contracts entails certain risks in addition to those stated
below, including but not limited to; possible reduction in the Fund's income
due to the use of hedging; possible reduction in value of both securities or
currencies hedged and the futures contract; and potential losses in excess of
the amount initially invested in the futures contracts themselves. The use of
futures contracts requires special skills in addition to those needed to select
portfolio securities or currencies.
Stock Index Futures Contracts:
The Funds, consistent with their investment objectives and policies, may at-
tempt to reduce the risk of investments in equity securities by hedging por-
tions of its underlying portfolio through the use of standardized stock index
futures contracts. These contracts currently are actively traded on the Chicago
Board of Trade, the Chicago Mercantile Exchange, the New York Futures Exchange
and the Kansas City Board of Trade. Foreign stock index futures traded outside
the United States include the Nikkei Index traded on the Singapore Interna-
tional Monetary Exchange, Osaka Index traded on the Osaka Exchange, Financial
Times Stock Exchange Index of the 100 largest stocks on the London Stock Ex-
change traded on the London International Financial Futures Exchange, the All
Ordinaries Share Price Index of 307 stocks on the Sydney, Melbourne Exchanges,
Hang Seng Index of 33 stocks on the Hong Kong Stock Exchange, Barclays Share
Price Index of 40 stocks on the New Zealand Stock Exchange and Toronto Index of
35 stocks on the Toronto Stock Exchange. Futures and futures options on the
Nikkei Index are traded on the Chicago Mercantile Exchange. U.S. commodity ex-
changes may develop futures and futures options on other indices of foreign se-
curities; futures and options on a U.S. devised in-dex of foreign stocks are
also being developed. A stock index futures contract is an agreement in which
the seller of the contract agrees to deliver to the buyer an amount of cash
equal to a specific dollar amount times the difference between the value of a
specific stock index at the close of the last trading day of the contract and
the price at which the agreement is made. No physical delivery of the under-
lying stocks in the index is made.
The Funds intend to engage in stock index futures transactions as a hedge
against market risk resulting from market conditions and over-all economic
prospects with respect to the value of portfolio securities held by the Funds
or which the Funds intend to purchase, as distinguished from stock-specific
risk resulting from the market's evaluation of the merits of a particular secu-
rity. For example, a Fund might sell stock index futures contracts to hedge
against a decline in the value of securities held in that Fund. Alternatively,
a Fund might buy stock index futures contracts to hedge against a rise in the
value of securities the Fund intends to acquire.
A Fund's successful use of stock index futures contracts depends upon the
ability of GFM to ac-
B-11
<PAGE>
curately assess the direction of the stock market and is subject to various ad-
ditional risks. The correlation between movement in the price of the stock in-
dex futures contract and the price of the securities being hedged is imperfect
and the risk from imperfect correlation increases as the composition of the
Fund portfolio diverges from the composition of the relevant index. In addi-
tion, the ability of a Fund to close out a futures position
depends on a liquid secondary market. There is no assurance that liquid second-
ary markets will exist for any particular futures contract at any particular
time. See also the risks noted above under "Futures Transactions."
Interest Rate Futures Contracts:
Each of the Funds, consistent with its investment objective and policies, may
buy and sell futures contracts on interest-bearing securities (such as U.S.
Treasury Bonds, U.S. Treasury Notes, three-month U.S. Treasury Bills, Eurodol-
lar Certificates of Deposit and GNMA Certificates) for hedging purposes.
Futures contracts on interest-bearing securities are actively traded on the
Chicago Board of Trade, London International Financial Futures Exchange, Tokyo
Stock Exchange, Paris Stock Exchange and International Monetary Market at the
Chicago Merchantile Exchange. Further, in the event that a liquid market devel-
ops for futures contracts based on an interest rate index, and the Board of Di-
rectors of Portfolios authorizes a particular Fund to use such futures con-
tracts, the Fund may do so. Futures contracts on interest-bearing securities
and interest rate indices are referred to collectively as "interest rate
futures contracts." The Funds will engage in transactions in only those inter-
est rate futures contracts that are traded on a commodities exchange or a board
of trade and are standardized as to maturity date and the underlying financial
instrument.
For example, a Fund might sell an interest rate futures contract to hedge
against a decline in the market value of debt securities the Fund owns. A Fund
might also purchase an interest rate futures contract to hedge against an an-
ticipated increase in the value of debt securities the Fund intends to acquire.
The risks of interest rate futures contracts are briefly described above in
connection with the proposed use of stock index futures contracts and in the
general description of "Futures Transactions." In addition, a Fund's successful
use of interest rate futures contracts depends upon the ability of GFM to accu-
rately assess interest rate moves. Further, because there are a limited number
of types of interest rate futures contracts, it is likely that the financial
futures contracts available to a Fund will not exactly match the debt securi-
ties the Fund intends to hedge or acquire. To compensate for differences in
historical volatility between securities a Fund intends to hedge or acquire and
the interest rate futures contracts available to it, the Fund could purchase or
sell futures contracts with a greater or lesser value than the debt securities
it wished to hedge or intended to purchase. This imperfect correlation between
the interest rate futures contract and the debt securities being hedged is an-
other risk.
Currency Futures Contracts:
The Funds may buy and sell futures contracts on currencies. The Funds will en-
gage in transactions in only those currency futures contracts that are traded
on a national or foreign commodities exchange or a board of trade and are stan-
dardized as to maturity date and the underlying financial instrument.
Currency futures contracts may be used on currencies as a hedge against
changes in prevailing currency exchange rates in order to establish more defin-
itively the return on foreign securities held or intended to be acquired by the
Funds. In this regard, the Funds could sell currency futures contracts to off-
set the effect of expected decreases in currency exchange rates and purchase
such contracts to offset the effect of expected increases in currency exchange
rates. Although techniques other than the sale and purchase of currency futures
contracts could be used for these purposes, currency futures contracts may be
an effective and relatively low cost means of implementing these strategies.
Options on Futures:
The Funds may purchase put and call options on stock index futures contracts,
write (i.e., sell) covered call options on stock index futures con-
B-12
<PAGE>
tracts and enter into closing transactions with respect to such options. The
Funds may also write covered put options on stock index futures options or cur-
rency futures contracts and may enter into closing transactions with respect to
such options. In addition, the Funds are permitted to purchase or write covered
put and call options on interest rate futures with respect to such options.
Such transactions will only be for bona fide hedging purposes, as defined by
the CFTC. A call option on a futures contract gives the purchaser the right, in
return for the premium paid, to purchase a futures contract (assume a "long"
position) at a specified exercise price at any time before the option expires.
A put option gives the purchaser the right, in return for the premium paid, to
sell a futures contract (assume a "short" position), for a specified exercise
price, at any time before the option expires. Upon the exercise of a call, the
writer of the option is obligated to sell the futures contract (to deliver a
"long" position to the option holder) at the option exercise price, which will
presumably be lower than the current market price of the contract in the
futures market. Upon exercise of a put, the writer of the option is obligated
to purchase the futures contract (to deliver a "short" position to the option
holder) at the option exercise price, which will presumably be higher than the
current market price of the contract in the futures market.
When a Fund as a purchaser of an option on a futures contract exercises such
option and assumes a long futures position in the case of a call, or a short
futures position in the case of a put, its gain will be credited to its futures
margin account. Any loss suffered by the writer of the option on a futures con-
tract will be debited to its futures variation margin account. However, as with
the trading of futures, most participants in the options markets do not seek to
realize their gains or losses by exercise of their option rights. Instead, the
holder of an option will usually realize a gain or loss by buying or selling an
offsetting option (i.e., entering into a closing transaction) at a market price
that will reflect an increase or a decrease from the premium originally paid as
a purchaser or required as a writer.
Options on futures contracts can be used by a Fund to hedge the same risks as
might be addressed by the direct purchase or sale of the underlying futures
contracts themselves. Depending on the pricing of the option, compared to ei-
ther the futures contract upon which it is based or upon the price of the un-
derlying securities or currencies themselves, it may or may not be less risky
than direct ownership of the futures contract or the underlying securities or
currencies.
In contrast to a futures transaction, in which only transaction costs are in-
volved, benefits received by a Fund as a purchaser in an option transaction
will be reduced by the amount of the pre-mium paid as well as by transaction
costs. In the event of an adverse market movement, however, a Fund which pur-
chased an option will not be subject to a risk of loss on the option transac-
tion beyond the price of the premium it paid plus its transaction costs. Pur-
chasers of options who do not exercise their options prior to the expiration
date will suffer a loss of the entire premium.
If a Fund writes covered call or put options on futures contracts, the Fund
will receive a premium but will assume a risk of adverse movement in the price
of the underlying futures contract comparable to that involved in holding a
futures position. If the option is not exercised, the Fund will realize a gain
in the amount of the premium, which may partially offset unfavorable changes in
the value of securities held in the Fund or to be acquired for the Fund. If the
option is exercised, the Fund will incur a loss in the option transaction,
which will be reduced by the amount of the premium it has received, but which
may also partially offset favorable changes in the value of its securities or
currencies. For example, the writing of a call option on a futures contract
constitutes a partial hedge against declining prices of the underlying securi-
ties or currencies. If the futures price at expiration is below the exercise
price, the Fund will retain the full amount of the option premium, which pro-
vides a partial hedge against any decline that may have occurred in the value
of the Fund's holdings of securities or currencies.
While the purchaser or writer of an option on a futures contract may normally
terminate its posi-tion by selling or purchasing an offsetting option of the
same series, a Fund's ability to establish and close out options at fairly es-
tablished prices will be
B-13
<PAGE>
subject to the existence of a liquid market. The Funds will not purchase or
write options on futures contracts unless, in the opinion of GFM, the market
for such options has sufficient liquidity that the risks associated with such
options transactions are not unacceptable.
LIMITATIONS ON THE USE OF FUTURES CONTRACTS AND OPTIONS THEREON AND OPTIONS ON
INDICES:
Regulations of the CFTC currently require certain limits to be placed on the
use of futures contracts and options thereon. To ensure that the transactions
constitute bona fide hedges, in instances involving the purchase or sale of a
futures contract or the writing of covered call options on futures contracts,
each Fund will be required to either (i) segregate sufficient cash or liquid
assets to cover the outstanding position or (ii) cover the futures contract or
option written on such contract by owning the instruments or currency under-
lying the futures contract or option thereon or by holding a separate option
permitting it to purchase or sell the same futures contract or option at the
same strike price or better. In instances involving the writing of covered put
options on futures contracts, the Funds will be required to (i) segregate suf-
ficient cash or liquid assets equal to the strike price of the put options
written or (ii) purchase a put option on the same futures contract at the same
strike price as that written by the Funds. Where such positions are covered by
the segregation of sufficient cash, cash equivalents or underlying securities,
such amounts will be held in a segregated account with Portfolios' custodian to
collateralize the position, thereby insuring that the use of such futures con-
tracts and options thereon is unleveraged. A Fund may not establish a position
in a futures contract or purchase an option thereon if immediately thereafter
the sum of the amount of initial margin deposits on all open futures contracts
and premiums paid for unexpired options on futures contracts would exceed 5% of
the market value of that Fund's total assets; provided however, that in the
case of an option that is "in-the-money" at the time of the purchase, the "in-
the-money" amount may be excluded in calculating the 5% limitation. In addi-
tion, shares of the Funds may not be sold or advertised as a participation in a
commodity pool or other vehicle for trading in the commodity futures or options
markets. Finally, the Funds must agree to submit information to the CFTC, as
requested, to demonstrate compliance with applicable regulations and to assist
the CFTC in collecting data and refining its hedging standards.
With respect to options on indices, in order to insure that call options writ-
ten by the Funds on indices are covered and, therefore, unleveraged, the Funds
would be required to: (i) hold in a segregated account, with Portfolios' custo-
dian, portfolio securities that substantially replicate the movement of the
particular index upon which the call option was written or sufficient cash or
liquid assets to cover the outstanding position, or (ii) hold a separate option
permitting the purchase or sale of the same stock index at the same strike
price or better. With respect to put options written on stock indices, the
Funds will (i) segregate sufficient cash or liquid assets equal to the strike
price of the put option written or (ii) purchase a put option on the same index
at the same strike price as that written by the Funds.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS:
Each Fund may use forward foreign currency exchange contracts ("forward cur-
rency contracts") to hedge the currency risk relating to the non-U.S. dollar-
denominated securities purchased, sold, or held by that Fund.
A forward currency contract involves an obligation to purchase or sell a spe-
cific currency at a future date, which may be any fixed number of days from the
date of the contract as agreed by the parties, at a price set at the time of
the contract. In the case of a cancelable forward currency contract, the holder
has the unilateral right to cancel the contract at maturity by paying a speci-
fied fee. Forward currency contracts are traded in the interbank market con-
ducted directly between currency traders (usually large commercial banks) and
their customers. They generally have no deposit requirement, and no commissions
are charged at any stage for trades. Although foreign exchange traders do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they are buying and selling
various currencies.
B-14
<PAGE>
Thus, a trader may offer to sell a foreign currency to a Fund at one rate,
while offering a lower rate of exchange should the Fund desire to resell that
currency to the trader.
At the maturity of a forward currency contract, a Fund may either accept or
make delivery of the currency specified in the contract, or at or prior to ma-
turity, a Fund may enter into a closing transaction involving the purchase or
sale of an offsetting contract. Closing transactions with respect to forward
currency contracts are usually effected with the currency trader that is a
party to the original forward contract.
As described in the Prospectus, each Fund may enter into a forward currency
contract under two circumstances. First, when a Fund has entered into a con-
tract to purchase or sell a non-U.S. security, it may protect itself against a
possible loss between the trade date and the settlement date resulting from an
adverse change in the relationship be-tween the U.S. dollar and the foreign
currency in which such security is denominated by entering into a forward cur-
rency contract in U.S. dollars for the purchase or sale of the amount of the
foreign currency involved in the underlying security transaction. Second, when
management of a Fund believes a particular foreign currency may suffer or enjoy
a substantial movement against the U.S. dollar, the Fund may enter into a for-
ward currency contract to sell or buy an amount of such currency (or another
currency in a cross hedging transaction) approximating the value of some or all
of the Fund's securities denominated in such foreign currency. However, the
precise matching of the amounts of forward currency contracts and the value of
the portfolio securities being hedged will not generally be possible, because
the future value of such securities in foreign currencies will change as a con-
sequence of movements in the market value of those securities between the dates
the forward currency contracts are entered into and the dates they mature.
Since it is impossible to forecast with precision the market value of portfo-
lio securities at the expiration or maturity of a forward currency contract, it
may be necessary for a Fund to purchase additional foreign currency on the spot
(i.e. cash) market (and bear the expense of such purchase) if the market value
of the securities being hedged is less than the amount of foreign currency the
Fund would be obligated to deliver upon the sale of such securities. Converse-
ly, it may be necessary for the Fund to sell some of the foreign currency re-
ceived upon the sale of portfolio securities on the spot market if the market
value of such securities exceeds the amount of foreign currency the Fund is ob-
ligated to deliver.
Each Fund may enter into forward currency contracts or maintain a net exposure
on such contracts only if (i) the consummation of the contracts would not obli-
gate the Fund to deliver an amount of foreign currency in excess of the value
of the Fund's securities or other assets denominated in that currency or (ii)
the Fund maintains with its custodian cash, U.S. government securities, or liq-
uid cash in a segregated account in an amount not less than the value of the
Fund's total assets committed to the consummation of the contracts.
The use of forward currency contracts involves various risks. A Fund may not
always be able to enter into a forward currency contract when management deems
it advantageous to do so, for instance, if the Fund is unable to find a
counterparty to the transaction at an attractive price. Furthermore, a Fund may
not be able to purchase forward currency contracts with respect to all of the
foreign currencies in which its portfolio securities may be denominated. In
those circumstances, and in a cross hedging forward currency contract, the cor-
relation between the movements in the exchange rates of the subject currency
and the currency in which the portfolio security is denominated may not be pre-
cise. Forward currency contracts are not guaranteed by a third party and, ac-
cordingly, each party to a forward currency contract is dependent upon the
creditworthiness and good faith of the other party. A default on the contract
would deprive a Fund of unrealized profits or force the Fund to cover its com-
mitments for purchase or sale of currency, if any, at the current market price.
Finally, the cost of purchasing forward currency contracts in a particular cur-
rency will reflect, in part, the rate of return available on instruments denom-
inated in that currency. The cost of purchasing forward currencies that gener-
ally yield high rates of return may thus tend to reduce the rate of return to-
ward the rate of return that would be earned on assets denominated in U.S. dol-
lars.
B-15
<PAGE>
DIRECTORS AND OFFICERS
The directors and officers of Portfolios and their principal occupations for
at least the last five years are set forth below. Unless otherwise noted, the
address of each executive officer and director is One Madison Avenue, New
York, New York 10010.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION(S)
NAME, (AGE) AND ADDRESS POSITION(S) DURING PAST 5 YEARS
----------------------- ----------- ------------------------
<C> <S> <C>
Steve A. Garban (58)+....... Director Retired, formerly Senior Vice-
The Pennsylvania State Uni- President Finance and Operations and
versity Treasurer Emeritus, The Pennsylvania
208 Old Main State University
University Park, PA 16802
Jeffrey J. Hodgman (52)(*)+. Chairman of the Board, Senior Vice President, Metropolitan
President, Chief Life Insurance Company
Executive Officer and ("Metropolitan Life")
Director
Malcolm T. Hopkins (67)+.... Director Former Vice-Chairman of the Board
14 Brookside Road and Chief Financial Officer, St.
Biltmore Forest Regis Corp.
Asheville, NC 28803
Robert A. Lawrence (69)+.... Director Partner, Saltonstall & Co. (private
50 Congress Street investment firm)
Boston, MA 02109
Dean O. Morton (63)+........ Director Retired; formerly Executive Vice-
3200 Hillview Avenue President, Chief Operating Officer
Palo Alto, CA 94304 and Director, Hewlett--Packard
Company
Michael S. Scott Morton Director Jay W. Forrester Professor of
(58)+....................... Management at Sloan School of
Massachusetts Institute of Management, MIT
Technology ("MIT")
77 Massachusetts Avenue
Cambridge, MA 02139
John H. Tweedie (50)(*)+.... Director Executive Vice President,
Metropolitan Life since 1993;
President and Chief Executive
Officer of Metropolitan Life's
Canadian Operations 1990-1993; prior
thereto, Senior Vice President and
Chief Actuary
Gary Lineberry (45)......... Vice President Vice-President, Metropolitan since
1994; prior thereto National
Director, 1992-1994; prior thereto
Vice President, Mutual of New York
Ronald Zito (37)+........... Controller Director-Accounting and Financial
Controls-Pensions, Metropolitan Life
since 1995; Director-Retirement
Savings Center, 1993-1994; prior
thereto, Manager
Christopher P. Nicholas Secretary Associate General Counsel,
(46)+....................... Metropolitan Life since 1990; prior
thereto, Assistant General Counsel.
Elliot Reiter (44).......... Treasurer Vice-President, Metropolitan Life
Albert Rosenthal (64)+...... Vice-President and Assistant Vice-President
Chief Operating Officer Metropolitan Life since 1993;
Director-Personal Insurance,
Advanced Markets, 1991-1993; prior
thereto, Manager
</TABLE>
- -------
(*) Interested Person, as defined in the Investment Company Act of 1940 ("1940
Act"), of the Funds.
(+) Serves as a trustee, director and/or officer of one or more of the
following investment companies, each of which has an advisory relationship
with the Investment Manager or its affiliates: State Street Research
Financial Trust, State Street Research Income Trust, State Street Research
Money Market Trust, State Street Research Tax-Exempt Trust, State Street
Research Capital Trust, State Street Research Master Investment Trust, State
Street Research Equity Trust, State Street Research Securities Trust, State
Street Research Growth Trust, State Street Research Exchange Trust and
Metropolitan Series Fund, Inc.
B-16
<PAGE>
During the last fiscal year of the Funds, the Directors were compensated as
follows:
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
(5)
(3) TOTAL
PENSION OR COMPENSATION
RETIREMENT (4) FROM
(2) BENEFITS ESTIMATED PORTFOLIOS
AGGREGATE ACCRUED AS ANNUAL AND FUND
(1) COMPENSATION PART OF BENEFITS COMPLEX PAID
NAME OF FROM PORTFOLIOS UPON TO DIRECTORS
DIRECTOR PORTFOLIOS EXPENSE RETIREMENT (A)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jeffrey J. Hodgman............. 0 0 0 0
Steve A. Garban................ $6,000 0 0 $22,500
Malcolm T. Hopkins............. $6,000 0 0 $22,500
Robert A. Lawrence............. $5,250 0 0 $88,435
Dean O. Morton................. $6,000 0 0 $97,085
Michael S. Scott Morton........ $5,250 0 0 $98,535
John H. Tweedie................ 0 0 0 0
</TABLE>
- -------
(a) Complex is comprised of 10 trusts and two corporations with a total of 30
funds and/or series.
(b) Directors and officers who are affiliated with the Investment Manager or
Sub-Investment Manager or their affiliates ("interested persons" as defined
under the Investment Company Act of 1940) do not receive any compensation for
services rendered to Portfolios in addition to their compensation for
services rendered to Metropolitan Life or such affiliated companies. The
Directors who are not affiliated with the Investment Manager or Sub-
Investment Manager or their affiliates are paid a fee of $4,000 for each full
calendar year during which services are rendered to Portfolios. In addition,
they are paid a fee of $750 for attending each of the directors' meetings and
$250 for attending each audit committee meeting and are reimbursed for out-
of-pocket expenses.
As of January 31, 1996, the directors and officers of Portfolios as a group
owned approximately 2.3% of the outstanding Class A shares of the International
Equity Fund and owned no shares of the International Fixed Income Fund.
CONTROL PERSONS
As of January 31, 1996, the following persons or entities were the record
and/or beneficial owners of the approximate amount of each Class of shares of
each Fund as set forth beside their names:
<TABLE>
<CAPTION>
PERCENTAGE
SHAREHOLDER ADDRESS OWNERSHIP
----------- ------- ----------
INTERNATIONAL
EQUITY FUND
-------------
<C> <S> <C> <C>
Class A....... Merrill Lynch Pierce 4800 Deer Lake Drive 7.1%
Fenner & Smith, Inc.(b) East
Jacksonville, FL 32246-
6484
Class B....... Merrill Lynch Pierce 4800 Deer Lake Drive 18.0%
Fenner & Smith, Inc.(b) East
Jacksonville, FL 32246-
6484
Class C....... Chase Manhattan 770 Broadway 47.0%
Bank, N.A.(c) New York, NY 10003
Class D....... Wachovia Bank of North 301 N. Main Street 5.3%
Carolina(b) Winston Salem, NC 27150
Merrill Lynch Pierce 4800 Deer Lake Drive 43.4%
Fenner & Smith, Inc.(b) East
Jacksonville, FL 32246-
6484
</TABLE>
B-17
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
SHAREHOLDER ADDRESS OWNERSHIP
INTERNATIONAL ----------- ------- ----------
FIXED INCOME
FUND
-------------
<C> <S> <C> <C>
Class A....... State Street Bank and 225 Franklin Street 8.3%
Trust Company(d) Boston, MA 02110
Metropolitan Life(a) One Madison Avenue 23.0%
New York, NY 10010
First Southwest 1700 Pacific Avenue, 8.3%
Company(b) Suite 500
Dallas, TX 75201-4627
Class B....... State Street Bank and 225 Franklin Street 7.3%
Trust Company(d) Boston, MA 02110
Metropolitan Life(a) One Madison Avenue 14.4%
New York, NY 10010
Merrill Lynch Pierce 4800 Deer Lake Drive 32.6%
Fenner & Smith, Inc.(b) East
3rd Floor
Jacksonville, FL 32246-
6484
A. Field & B. Zimmerman, c/o State Street 5.0%
Trustees Research Shareholder
Services
One Financial Center
Boston, MA 02111
Class C....... Metropolitan Life(a) One Madison Avenue 90.17%
New York, NY 10010
Class D....... Metropolitan Life(a) One Madison Avenue 44.30%
New York, NY 10010
Merrill Lynch Pierce 4800 Deer Lake Drive 26.83%
Fenner & Smith, Inc.(b) East
Jacksonville, FL 32246-
6484
H. Flammang c/o State Street 9.3%
Research Shareholder
Services
One Financial Center
Boston, MA 02111
</TABLE>
- -------
(a) Metropolitan Life was the record and/or beneficial owner, directly or
indirectly through its subsidiaries or affiliates, of such shares.
(b) Portfolios believes that the entity does not have beneficial ownership of
such shares.
(c) Chase Manhattan Bank, N.A. holds the shares as trustee for various employee
benefit plans and Portfolios believes that United States Trust does not have
beneficial ownership of such shares.
(d) State Street Bank and Trust Company holds such shares as custodian for
individual retirement accounts and Portfolios believes that State Street Bank
does not have beneficial ownership of such shares.
Ownership of 25% or more of a voting security is deemed "control" as defined
in the 1940 Act. So long as 25% of a class of a Fund's shares is so owned, such
owners will be presumed to be in control of such class of shares for purposes
of voting on certain matters submitted to a vote of shareholders, such as any
Distribution Plan for a given class.
INVESTMENT MANAGEMENT AGREEMENTS INVESTMENT MANAGEMENT AGREEMENTS AND SUB-
INVESTMENT MANAGEMENT AGREEMENTS:
Portfolios has entered into separate Investment Management Agreements with the
Investment Manager (State Street Research Investment Services, Inc., One Finan-
cial Center, Boston, MA 02111) with respect to each Fund and separate Sub-In-
vestment Management Agreements with the Investment Manager and GFM, the Sub-In-
vestment Manager, with respect to each Fund. GFM has overall responsibility for
the investment management, and provides the portfolio managers for the Funds.
The portfolio managers consider analyses from various sources, make the neces-
sary investment decisions and effect transactions accordingly. State Street Re-
search Investment Services, Inc. is an indirect wholly-owned subsidiary of Met-
ropolitan Life. State Street Research & Management Company, another indirect
wholly-owned Metropolitan Life subsidiary, is the investment manager of the
other State Street Research mutual funds.
Securities held by any Fund may also be held by other accounts managed by the
Investment Man-ager, by Metropolitan Life, by State Street Research & Manage-
ment Company and by GFM, including Metropolitan Life's general and separate ac-
counts, the other Funds of Portfolios, Metropolitan Life advisory clients, the
advisory clients of the Investment Manager and the advisory clients of State
Street Research & Management Company and GFM. When selecting securities for
purchase
B-18
<PAGE>
or sale for a Fund, the Investment Manager and GFM may at the same time be pur-
chasing or selling the same securities for one or more of such other accounts.
It is the policy of the Investment Manager and GFM not to favor any one account
over the other, and any purchase or sale orders executed contemporaneously are
allocated at the average price and as nearly as practicable on a pro-rata basis
in proportion to the amounts desired to be purchased or sold by each account.
While it is conceivable that in certain instances this procedure could ad-
versely affect the price or number of shares involved in a Fund's transactions,
it is believed that the procedure generally contributes to better overall exe-
cution of portfolio transactions. The Board of Directors has adopted guidelines
governing the procedure and will monitor the procedure to determine that the
guidelines are being followed and that the procedure continues to be in the
best interests of the Funds and their shareholders.
Portfolios compensates the Investment Manager at the annual rate of 0.95% of
the average daily value of the net assets of the International Equity Fund and
0.75% of the average daily value of the net assets of the International Fixed
Income Fund, respectively. For providing sub-investment management services for
the International Equity and International Fixed Income Funds, GFM receives
from the Investment Manager a monthly fee equal to 0.75% (on an annual basis)
of the average daily value of the net assets of the International Equity Fund
and 0.55% (on an annual basis) of the average daily value of the net assets of
the International Fixed Income Fund. Portfolios has no responsibility for the
payment of fees to GFM. For fiscal years ending October 31, 1993, October 31,
1994 and October 31, 1995 the investment advisory fees for the International
Equity Fund were $152,114, $597,501, and $830,476 respectively. For fiscal
years ending October 31, 1993, October 31, 1994 and October 31, 1995 the in-
vestment advisory fees for the International Fixed Income Fund were $172,435,
$188,723 and $210,657, respectively. For the same periods, the voluntary reduc-
tion of management fees and assumption of expenses by the Investment
Manager/Distributor or its affiliates amounted to $240,442, $386,279 and
$529,341 for the International Equity Fund and $100,743, $85,904 and $149,825
for the International Fixed Income Fund. For fiscal years ending October 31,
1993, October 31, 1994, and October 31, 1995, sub-investment management fees
for the International Equity and International Fixed Income Funds were
$120,090, $471,711, and $655,639 and $126,452, $138,397 and $154,482, respec-
tively.
The Investment Management Agreements relating to the International Equity and
International Fixed Income Funds and the Sub-Investment Management Agreements
relating to the Funds were approved by the shareholders of the Funds at the
first annual meeting of shareholders held on April 28, 1993. Unless earlier
terminated, each Agreement will continue in effect from year to year with re-
spect to each Fund, if approved annually (a) by the Board of Directors of Port-
folios or by a majority of the outstanding shares of that Fund (as determined
pursuant to the 1940 Act), and (b) by a majority of the Board of Directors who
are not "interested persons" (within the meaning of the 1940 Act) of any party
of such Agreement. The Agreements are not assignable and may be terminated
without penalty on 60 days' written notice at the option of either party or,
with respect to any Fund, by the requisite vote of the shareholders of that
Fund.
To the extent required under applicable state regulatory requirements, the In-
vestment Manager will reduce its management fee payable by Portfolios with re-
spect to a Fund up to the amount of any expenses (excluding Rule 12b-1 Distri-
bution Plan payments, brokerage commissions, interest, taxes and litigation ex-
penses) paid or incurred by such Fund in any fiscal year which exceed specified
percentages of the average daily net assets of such Fund for such fiscal year.
The most restrictive of such percentage limitations is currently 2.5% of the
first $30 million of average net assets, 2.0% of the next $70 million of aver-
age net assets and 1.5% of the remaining average net assets. These commitments
may be amended or rescinded in response to changes in the requirements of the
various states by the Directors without shareholder approval.
B-19
<PAGE>
No person other than Portfolios and the Investment Manager pays any of the
fees, expenses or costs of the Funds. Under a Shareholders' Administrative
Services Agreement between Portfolios and the Investment Manager, the Invest-
ment Manager provides shareholders' administrative services, such as responding
to inquiries and instructions from shareholders respecting the purchase and re-
demption of shares of the Funds, and is entitled to reimbursement of its costs
for providing such services subject to the limitations described below. Under a
Sub-Administration Agreement between the Funds' transfer agent and dividend
disbursing agent, State Street Bank and Trust Company and Metropolitan Life In-
surance Company, Metropolitan Life Insurance Company receives a fee for the
maintenance of certain share ownership records for participants in sponsored
arrangements, such as employee benefit plans, through or under which a Fund's
shares may be purchased. The Funds' liability for all of the fees and costs
payable by the Funds for services provided by the Funds' transfer agent and
dividend disbursing agent, the fees for shareholders' administrative services,
paid by the Funds, and any other fees or costs under any sub-administration
agreements entered on behalf of the Funds in the aggregate, is limited to 0.30%
of the average daily net assets of the Funds. Any excess is a liability of the
Investment Manager as provided under the Shareholders' Administrative Ser-
vices Agreement, which may be terminated by Portfolios upon 60 days notice and
by the Investment Manager upon six months notice.
ALLOCATION OF PORTFOLIO BROKERAGE:
Under the Investment Management Agreements, the Investment Manager has ultimate
responsibility for selecting broker-dealers through which investments are to be
purchased and sold for Portfolios. Under the Sub-Investment Management Agree-
ments, GFM has day-to-day responsibility for selecting broker-dealers through
which securities or other investments are to be purchased and sold for the
Funds.
In selecting brokers or dealers to effect portfolio transactions for the
Funds, GFM seeks the best available combination of execution and over-all price
(which includes the cost of the transaction). GFM will utilize brokers which
provide it solely with brokerage services, as well as brokers which provide GFM
with such research services as economic, political and social trend analysis
and reports on the equity and credit markets and analyses of industries and in-
dividual companies. GFM is authorized, pursuant to the Sub-Investment Manage-
ment Agreement with respect to the Funds, to cause Portfolios on behalf of the
Funds to pay to the brokers that furnish brokerage and research services (as
such services are defined under Section 28(e) of the 1934 Act) a brokerage com-
mission in excess of that which another broker might have charged for effecting
the same transaction, in recognition of the value of research services provided
by the broker. However, such higher commissions must be deemed by GFM to be
reasonable in relation to the brokerage and research services provided by the
broker-dealer, viewed in terms of either that particular transaction or the
overall decision-making responsibilities of GFM with respect to the Funds or
other accounts, if any, as to which it exercises investment discretion (as such
term is defined under Section 3(a)(35) of the 1934 Act).
In all transactions, GFM seeks on behalf of the Funds brokerage commissions at
least as reasonable as those generally secured by those advisers that generate
annually comparable amounts of commissions paid to brokers that provide broker-
age and research services to those advisers.
Research services rendered to GFM by brokers selected to execute transactions
for the Funds may be used in providing service to all of GFM's clients. Also
all research services may not be utilized by GFM in connection with the client
accounts which paid commissions to the broker providing such services.
On the basis of the best service provided for the benefit of the Funds in
terms of execution capability, execution cost, and research, GFM will allocate
business proportionally among a number of brokers and will regularly review
such allocations. During the fiscal years ending October 31, 1993, October 31,
1994 and October 31, 1995, the dollar amount of brokerage commissions paid by
the International Equity Fund was $171,198, $391,200 and $400,465, respective-
ly. The International
B-20
<PAGE>
Fixed Income Fund did not incur any brokerage commissions for the same periods.
Substantially all commissions were paid to firms which provided research and
statistical services either to Metropolitan Life, State Street Research & Man-
agement Company or GFM.
Subject to the policy of seeking best overall price and execution, sales of
shares of the Funds may be considered in the selection of broker or dealer
firms for the Funds' portfolio transactions.
PURCHASE OF SHARES
Shares of the Funds are distributed by the Distributor. The Funds offer four
classes of shares which may be purchased at the next determined net asset value
per share plus, in the case of all classes except Class C shares, a sales
charge which, at the election of the investor, may be imposed (i) at the time
of purchase (the Class A shares) or (ii) on a deferred basis (the Class B and
Class D shares). General information on how to buy shares of the Funds, as well
as sales charges involved, are set forth under "Purchase of Shares" in the Pro-
spectus. The following supplements that information.
Public Offering Price--The public offering price for each class of shares of
the Funds is based on their net asset value determined as of the close of the
New York Stock Exchange ("NYSE") on the day the purchase order is received by
State Street Research Shareholder Services provided that the order is received
prior to the close of the NYSE on that day; otherwise the net asset value used
is that determined as of the close of the NYSE on the next day it is open for
unrestricted trading. When a purchase order is placed through a dealer, that
dealer is responsible for transmitting the order promptly to State Street Re-
search Shareholder Services in order to permit the investor to obtain the cur-
rent price. Any loss suffered by an investor which results from a dealer's
failure to transmit an order promptly is a matter for settlement between the
investor and the dealer.
Reduced Sales Charges--For purposes of determining whether a purchase of Class
A shares qualifies for reduced sales charges, the term "person" includes: (i)
an individual, or an individual combining with his or her spouse and their
children and purchasing for his, her or their own account; (ii) a "company" as
defined in Section 2(a)(8) of the 1940 Act; (iii) a trustee or other fiduciary
purchasing for a single trust estate or single fiduciary account (including a
pension, profit sharing or other employee benefit trust created pursuant to a
plan qualified under Section 401 of the Internal Revenue Code); (iv) a tax-ex-
empt organization under Section 501(c)(3) or (13) of the Internal Revenue Code;
and (v) an employee benefit plan of a single employer or of affiliated employ-
ers.
Investors may purchase Class A shares of the Funds at reduced sales charges by
executing a Letter of Intent to purchase no less than an aggregate of $100,000
of a Fund or any combination of Class A shares of Eligible Funds as designated
by the Distributor within a 13-month period. The sales charge applicable to
each purchase made pursuant to a Letter of Intent will be that which would ap-
ply if the total dollar amount set forth in the Letter of Intent were being
bought in a single transaction. Purchases made within a 90-day period prior to
the execution of a Letter of Intent may be included therein; in such case the
date of the earliest of such purchases marks the commencement of the 13-month
period.
An investor may include toward completion of a Letter of Intent the value (at
the current public offering price) of all of his or her Class A shares of the
Funds and of any of the other Class A shares of Eligible Funds held of record
as of the date of his or her Letter of Intent, plus the value (at the current
offering price) as of such date of all of such shares held by any "person" de-
scribed herein as eligible to join with the investor in a single purchase.
Class B, Class C and Class D shares may also be included in the combination un-
der certain circumstances.
A Letter of Intent does not bind the investor to purchase the specified
amount. Shares equivalent to 5% of the specified amount will, however, be taken
from the initial purchase (or, if necessary, subsequent purchases) and held in
escrow in the investor's account as collateral against the higher
B-21
<PAGE>
sales charge which would apply if the total purchase is not completed within
the allotted time. The escrowed shares will be released when the Letter of In-
tent is completed or, if it is not completed, when the balance of the higher
sales charge is, upon notice, remitted by the investor. All dividends and capi-
tal gains distributions with respect to the escrowed shares will be credited to
the investor's account.
Investors may purchase Class A shares of the Funds or a combination of Eligi-
ble Funds at reduced sales charges pursuant to a Right of Accumulation. The ap-
plicable sales charge under the Right is determined on the amount arrived at by
combining the dollar amount of the purchase with the value (at the current pub-
lic offering price) of all Class A shares of the other Eligible Funds owned as
of the purchase date by the investor plus the value (at the current public of-
fering price) of all such shares owned as of such date by any "person" de-
scribed herein as eligible to join with the investor in a single purchase.
Class B, Class C and Class D shares may also be included in the combination un-
der certain circumstances. Investors must submit to the Distributor sufficient
information to show that they qualify for this Right of Accumulation.
Class C Shares--Class C shares are currently available to certain benefit
plans such as qualified retirement plans which meet criteria relating to level
of assets, number of participants, service agreements, or similar factors;
banks and insurance companies purchasing for their own accounts; endowment
funds of nonprofit organizations with substantial minimum assets; and other
similar institutional investors.
Reorganizations--In the event of mergers or reorganizations with other public
or private collective investment entities, including investment companies as
defined in the 1940 Act, as amended, a Fund may issue its shares at net asset
value (or more) to such entities or to their security holders.
REDEMPTION IN KIND
Portfolios reserves the right to pay redemptions in kind with portfolio secu-
rities in lieu of cash. In accordance with its election pursuant to Rule 18f-1
under the 1940 Act, a Fund may limit the amount of redemption proceeds paid in
cash. Although it has no present intention to do so, a Fund may, under unusual
circumstances, limit redemptions in cash with respect to each shareholder dur-
ing any ninety-day period to the lesser of (i) $250,000 or (ii) 1% of the net
asset value of such Fund at the beginning of such period. In connection with
any redemptions paid in kind with portfolio securities, brokerage and other
costs may be incurred by the redeeming shareholder in the sale of the securi-
ties received.
NET ASSET VALUE
The net asset value of the shares of each Fund is determined once daily as of
the close of regular trading on the NYSE, ordinarily 4 P.M. New York City time,
Monday through Friday, on each day during which the NYSE is open for unre-
stricted trading. The NYSE is currently closed on New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
The net asset value per share of a Fund is computed by dividing the sum of the
value of the secu-rities held by the Fund plus any cash or other assets minus
all liabilities by the total number of outstanding shares of the Fund at such
time. Any expenses, except for extraordinary or nonrecurring expenses, borne by
a Fund, including the investment management fee payable to the Investment Man-
ager, are accrued daily.
Securities held by each Fund will be valued as follows. Portfolio securities
which are traded on domestic stock exchanges are valued at the last sale price
as of the close of business on the day the securities are being valued, or,
lacking any sales, at the mean between closing bid and asked prices. Portfolio
securities which are traded on NASDAQ, or other system, are valued at the last
reported sales price. Each portfolio security which is primarily traded on non-
domestic securities exchanges is generally valued at the preceding closing
value of such
B-22
<PAGE>
security on the exchange where it is primarily traded. A security that is
listed or traded on more than one exchange is valued at the quotation on the
exchange determined to be the primary market for such security by the Board of
Directors or its delegates. If no closing price is available, then such secu-
rity is valued first by using the mean between the last current bid and asked
prices or, second, by using the last available closing price. Domestic securi-
ties traded in the over-the-counter market are valued at the mean between the
bid and asked prices or yield equivalent as obtained from two or more dealers
which make markets in the securities. All non-U.S. securities traded in the
over-the-counter securities market are valued at the last sale quote, if market
quotations are available, or the last closing bid price, if there is no active
trading in a particular security for a given day. Where market quotations are
not readily available for such non-domestic over-the-counter securities, then
such securities will be valued in good faith by a method that the Board of Di-
rectors, or its delegates, believe accurately reflects fair value. Portfolio
securities which are traded both in the over-the-counter market and on a secu-
rities exchange are valued according to the broadest and most representative
market, and it is expected that for debt securities this ordinarily will be the
over-the-counter market. Securities and assets for which market quotations are
not readily available, e.g. certain long-term bonds and notes, are valued at
fair value as determined in good faith by or under the direction of the Board
of Directors of Portfolios.
In determining the values of portfolio assets as provided below, the Directors
utilize one or more pricing services in lieu of market quotations for certain
securities which are not readily available on a daily basis. Such services may
provide prices determined as of times prior to the close of the NYSE.
The Directors have determined that unless the particular circumstances other-
wise indicate, the fair value of short-term instruments with a remaining matu-
rity of sixty days or less is their amortized cost value. If for any reason the
fair value of any security is not fairly reflected by such method, such secu-
rity will be valued by the same methods as securities having a maturity of more
than sixty days.
Options, whether on securities, indices, or futures contracts, are valued at
the last sales price available as of the close of business on the day of valua-
tion or, if no sale, at the mean between the bid and asked prices. Options on
currencies are valued at the spot price each day. As a general matter, futures
contracts are marked-to-market daily. The value of futures contracts will be
the sum of the margin deposit plus or minus the difference between the value of
the futures contract on each day the net asset value is calculated and the
value on the date the futures contract originated, value being that established
on a recognized commodity exchange, or by reference to other customary sources,
with gain or loss being recognized when the futures contract closes or expires.
Generally, trading in foreign securities, as well as corporate bonds, United
States Government securities and money market instruments, is substantially
completed each day at various times prior to the close of regular trading on
the NYSE. The values of such securities used in computing the net asset value
of the Funds' shares are determined as of such times. Foreign currency exchange
rates are also generally determined prior to the close of regular trading on
the NYSE. Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which they are determined and the
close of regular trading on the NYSE which will not be reflected in the compu-
tation of the Funds' net asset value. If events materially affecting the value
of such securities occur during such period, then these securities will be val-
ued at their fair value as determined in good faith by the Directors.
PORTFOLIO TRANSACTIONS
PORTFOLIO TURNOVER:
A Fund's turnover rate is determined by dividing the lesser of securities pur-
chases or sales for a year by the monthly average value of securities held by
the Fund (excluding securities whose maturities or expiration date at the time
of their acquisition were one year or less).
B-23
<PAGE>
The International Equity Fund's turnover rates for the fiscal years ending Oc-
tober 31, 1994 and October 31, 1995, were 80.60% and 100.68% respectively. The
International Fixed Income Fund's turnover rates for the same periods were
38.84% and 23.31%. Each Fund reserves full freedom with respect to portfolio
turnover. In periods when there are rapid changes in economic conditions or se-
curity price levels, portfolio turnover may be significantly higher than during
times of economic and market price stability or when investment strategy re-
mains relatively constant. A high rate of portfolio turnover will result in in-
creased transaction costs for the Fund.
CERTAIN TAX MATTERS
TAXATION OF THE FUNDS--IN GENERAL:
Each Fund intends to qualify and elect to be treated each taxable year as a
"regulated invest-ment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"), although they cannot give complete assurance
that they will qualify to do so. Accordingly, a Fund must, among other things,
(a) derive at least 90% of its gross income in each taxable year from divi-
dends, interest, payments with respect to securities loans, gains from the sale
or other disposition of stock, securities or foreign currencies, or other in-
come (including, but not limited to, gains from options, futures or forward
contracts) derived with respect to its business of investing in such stock, se-
curities or currencies (the "90% test"); (b) derive less than 30% of its gross
income in each taxable year from the sale or other disposition of any of the
following held for less than three months (the "30% test"): (i) stock or secu-
rities; (ii) options, futures or forward contracts (other than options, futures
or forward contracts on foreign currencies) or (iii) foreign currencies (or op-
tions, futures or forward contracts on foreign currencies) but only if such
currencies (or options, futures or forward contracts) are not directly related
to the Fund's principal business of investing in stocks or securities (or op-
tions and futures with respect to stocks or securities); and (c) satisfy cer-
tain diversification requirements.
The 30% test will limit the extent to which a Fund may sell securities held
for less than three months; write options which expire in less than three
months; and effect closing transactions with respect to call or put options
that have been written or purchased within the preceding three months. (If a
Fund purchases a put option for the purpose of hedging an underlying portfolio
security, the acquisition of the option is treated as a short sale of the un-
derlying security unless, for purposes only of the 30% test, the option and the
security are acquired on the same date.) Finally, as discussed below, this re-
quirement may also limit investments by a Fund in options on stock indices,
listed options on nonconvertible debt securities, futures contracts, options on
interest rate futures contracts and certain foreign currency contracts.
If a Fund should fail to qualify as a regulated investment company in any
year, it would lose the beneficial tax treatment accorded regulated investment
companies under Subchapter M of the Code and all of its taxable income would be
subject to tax at regular corporate rates without any deduction for distribu-
tions to shareholders, and such distributions will be taxable to shareholders
as ordinary income to the extent of such Fund's current or accumulated earnings
and profits. Also, the shareholders, if they received a distribution in excess
of current or accumulated earnings and profits, would receive a return of capi-
tal that would reduce the basis of their shares of such Fund to the extent
thereof. Any distribution in excess of a shareholder's basis in the sharehold-
er's shares would be taxable as gain realized from the sale of such shares.
A Fund will be liable for a nondeductible 4% excise tax on amounts not dis-
tributed on a timely basis in accordance with a calendar year distribution re-
quirement. To avoid the tax, during each calendar year a Fund must distribute
an amount equal to at least 98% of the sum of its ordinary income (not taking
into account any capital gains or losses) for the calendar year, and its capi-
tal gain net income for the 12-month period ending on October 31, in addition
to any undistributed portion of the respective balances from the prior year.
B-24
<PAGE>
Each Fund intends to make sufficient distributions to avoid this 4% excise tax.
TAXATION OF THE FUNDS' INVESTMENTS:
Original Issue Discount; Market Discount:
For federal income tax purposes, debt securities purchased by a Fund may be
treated as having original issue discount. Original issue discount represents
interest for federal income tax purposes and can generally be defined as the
excess of the stated redemption price at maturity of a debt obligation over the
issue price. Original issue discount is treated for federal income tax purposes
as income earned by a Fund, whether or not any income is actually received, and
therefore is subject to the distribution requirements of the Code. Generally,
the amount of original issue discount is determined on the basis of a constant
yield to maturity which takes into account the compounding of accrued interest.
Under section 1286 of the Code, an investment in a stripped bond or stripped
coupon may result in original issue discount.
Debt securities may be purchased by a Fund at a discount that exceeds the
original issue discount, if any, at the time a Fund purchases the securities.
This additional discount represents market discount for income tax purposes. In
the case of any debt security having a fixed maturity date of more than one
year from the date of issue and having market discount, the gain realized on
disposition will be treated as interest to the extent it does not exceed the
accrued market discount on the security (unless a Fund elects to include such
accrued market discount in income in the tax year to which it is attributable).
For debt securities acquired before May 1, 1993, this rule applies only if the
debt security was issued after July 18, 1984. Generally, market discount is ac-
crued on a daily basis. A Fund may be required to capitalize, rather than de-
duct currently, part or all of any direct interest expense incurred to purchase
or carry any debt security having market discount, unless a Fund makes the
election to include market discount in income currently. Because each Fund must
include original issue discount in income, it will be more difficult for such
Fund to make the distributions required for such Fund to maintain its status as
a regulated investment company under Subchapter M of the Code or to avoid the
4% excise tax described above.
Options and Futures Transactions:
Certain of a Fund's investments may be subject to provisions of the Code that
(i) require inclusion of unrealized gains or losses in a Fund's income for pur-
poses of the 90% test, the 30% test, the excise tax and the distribution re-
quirements applicable to regulated investment companies; (ii) defer recognition
of realized losses; and (iii) characterize both realized and unrealized gain or
loss as short-term or long-term gain or loss. Such provisions generally apply
to, among other investments, options on debt securities, indices on securities
and futures contracts. Each Fund will monitor its transactions and may make
certain tax elections available to it in order to mitigate the impact of these
rules and prevent disqualification of the Fund as a regulated investment compa-
ny. The ability of a Fund to engage in option and futures transactions may be
limited by the 30% test.
Gains or losses attributable to foreign currency contracts or fluctuations in
exchange rates that occur between the time a Fund accrues income or expenses
denominated in a foreign currency and the time the Fund actually collects such
income or pays such expenses are treated as ordinary income or loss. The por-
tion of any gain or loss on the disposition of a debt security denominated in a
foreign currency that is attributable to fluctuations in the value of the for-
eign currency during the holding period of the debt security will likewise be
treated as ordinary income or loss. Such ordinary income or loss will increase
or decrease the amount of the Fund's net investment income.
If a Fund invests in the stock of certain "passive foreign investment compa-
nies" ("PFICs"), income of such companies may become taxable to the Fund prior
to its distribution to the Fund or, alter- natively, ordinary income taxes and
interest
B-25
<PAGE>
charges may be imposed on the Fund on "excess distributions" received by the
Fund or on gain from the disposition of such investments by the Fund. Neither
Fund intends to invest in PFICs. Because of the broad scope of the PFIC rules,
however, there can be no assurance that they can avoid doing so.
TAXATION OF THE FUNDS' SHAREHOLDERS:
A Fund may be subject to foreign taxes, including foreign income taxes. If so,
each Fund intends to meet the requirements of the Code for passing through to
its shareholders the tax benefit of foreign income taxes paid, although there
is no assurance that it will be able to do so. Under this provision, if more
than half of the value of the total assets of a Fund at the close of its tax-
able year consists of stock or securities of foreign corporations, the Fund
will be eligible and intends to elect to pass through to its shareholders the
amount of foreign taxes it paid if such amounts are material. Pursuant to this
election, a United States shareholder will, in general, be required to (i) in-
clude in gross income, in addition to taxable distributions actually received,
his or her pro rata share of the foreign taxes paid by the Fund, (ii) treat
that share of taxes as having been paid directly by him or her, and (iii) ei-
ther deduct such share of taxes or treat such share of taxes as a credit
against United States income tax liability. A tax exempt share holder will or-
dinarily not benefit from this election.
Generally, a credit for foreign taxes paid by the Funds may not exceed a
shareholder's United States income tax attributable to the shareholder's for-
eign source income. This limitation applies separately to different categories
of income, one of which is foreign-source passive income, which is likely to
include all of the foreign-source income of a Fund. As a result of these limi-
tations, some shareholders may not be able to utilize fully any foreign tax
credits generated by an investment in a Fund. Each Fund will provide its share-
holders with information about the source of its income and the for-eign taxes
it has paid for use in preparing the shareholder's United States income tax re-
turn.
Dividends from domestic corporations are not expected to comprise a substan-
tial part of the income of either Fund. If such dividends are earned by a Fund,
then a portion of the dividends paid by that Fund may qualify for the 70% de-
duction for dividends received which is available to corporate shareholders of
the Fund. Shareholders will be informed of any portion of the dividends paid by
a Fund which qualifies for this deduction. The dividends-received deduction is
reduced to the extent the dividends received are treated as debt-financed, un-
der the Code, and is eliminated if the stock is held for less than 46 days.
Any dividend declared in October, November or December and made payable to
shareholders of record in any such month is treated as received by such share-
holder on December 31, provided that such Fund pays the dividend during January
of the following calendar year.
Distributions by a Fund result in a reduction in the fair market value of such
Fund's shares. Should a distribution reduce the fair market value below a
shareholder's cost basis, such distribution nevertheless may be taxable to the
shareholder as ordinary income or long-term capital gain, even though, from an
investment standpoint, it may constitute a partial return of capital. In par-
ticular, investors should be careful to consider the tax implications of buying
shares just prior to a taxable distribution. The price of shares purchased at
that time includes the amount of any forthcoming distribution. Those investors
purchasing shares just prior to a taxable distribution will then receive a re-
turn of investment upon distribution which will nevertheless be taxable to
them.
The foregoing discussion of United States federal income tax law relates
solely to the application of that law to United States persons, that is, United
States citizens and residents and United States corporations, partnerships,
trusts and estates. Each shareholder who is not a United States person should
consider the United States and foreign tax consequences of ownership of shares
of the Funds, including the possibility that such a shareholder may be subject
to United States with-
B-26
<PAGE>
holding at a rate of 30% (or at a lower rate under an applicable treaty) on
amounts constituting ordinary income received by him or her, where such
amounts are treated as income from United States sources under the Code.
Shareholders should consult their tax advisers about the application of the
provisions of tax law described in this Statement of Additional Information in
light of their particular tax situations.
DISTRIBUTION OF SHARES OF THE FUNDS:
Portfolios is currently comprised of the following series: International Eq-
uity Fund and International Fixed Income Fund. The Directors of Portfolios
have authorized shares of the Funds to be issued in four classes: Class A,
Class B, Class C and Class D shares. The Directors of Portfolios have author-
ity to issue an unlimited number of shares of each series, $.01 par value per
share. A "series" is a separate pool of assets of Portfolios which is sepa-
rately managed and has a different investment objective and different invest-
ment policies from those of another series. The Directors have authority,
without the necessity of a shareholder vote, to create any number of new se-
ries or classes or to commence the public offering of shares of any previously
established series or class.
The Funds have entered into a Distribution Agreement with State Street Re-
search Investment Services, Inc., as Distributor, whereby the Distributor acts
as agent to sell and distribute shares of the Funds. Shares of the Funds are
sold through dealers who have entered into sales agreements with the Distribu-
tor. The Distributor distributes shares of the Funds on a continuous basis at
an offering price which is based on the net asset value per share of the ap-
plicable Fund plus (subject to certain exceptions) a sales charge which, at
the election of the investor, may be imposed (i) at the time of purchase (the
Class A shares) or (ii) on a deferred basis (the Class B or Class D shares).
The Distributor may reallow all or portions of such sales charges as conces-
sions to dealers. For the fiscal year ending October 31, 1993 and for the pe-
riod November 1, 1993 through February 28, 1994, total sales charges amounted
to $271,323 and $215,107, respectively, for the International Equity Fund and
$42,560 and $10,346, respectively, for the International Fixed Income Fund.
For the same periods, $31,551 and $24,764 was retained by the Distributor af-
ter reallowance of concessions to dealers for the International Equity Fund
and $4,804 and $1,306 for the International Fixed Income Fund. For the period
March 1, 1994 (commencement of share class designation) through October 31,
1994, and the fiscal year ending October 13, 1995 total sales charges for the
Class A shares amounted to $411,711 and $255,655 for the International Equity
Fund and $9,827 and $25,177 for the International Fixed Income Fund. For the
same periods, $91,079 and $29,729 was retained by the Distributor after real-
lowance of concessions to dealers for the International Equity Fund and $4,121
and $3,148 for the International Fixed Income Fund. No information is pre-
sented for Class A, Class B and Class D shares for the fiscal year ended Octo-
ber 31, 1993, and the period ended November 1, 1993 through February 28, 1994,
because no shares of those classes were outstanding during those periods.
For the periods shown below, the Distributor received contingent deferred
sales charges upon redemption of Class A, Class B and Class D shares of the
Funds and paid initial commissions to securities dealers for sales of such
shares as follows:
INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
PERIOD MARCH 1, 1994
(COMMENCEMENT OF SHARE
FISCAL YEAR CLASS DESIGNATION)
ENDING THROUGH
OCTOBER 31, 1995 OCTOBER 31, 1994
---------------------- ----------------------
CONTINGENT CONTINGENT
DEFERRED COMMISSIONS DEFERRED COMMISSIONS
SALES PAID TO SALES PAID TO
CHARGES DEALERS CHARGES DEALERS
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Class A........................... $ 0 $225,926 $ 0 $320,632
Class B........................... $81,190 $558,930 $ 0 $617,850
Class D........................... $ 2,446 $ 45,585 $ 0 $ 15,663
</TABLE>
B-27
<PAGE>
INTERNATIONAL FIXED FUND
<TABLE>
<CAPTION>
PERIOD MARCH 1, 1994
(COMMENCEMENT OF SHARE
FISCAL YEAR CLASS DESIGNATION)
ENDING THROUGH
OCTOBER 31, 1995 OCTOBER 31, 1994
---------------------- ----------------------
CONTINGENT CONTINGENT
DEFERRED COMMISSIONS DEFERRED COMMISSIONS
SALES PAID TO SALES PAID TO
CHARGES DEALERS CHARGES DEALERS
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Class A........................... $ 0 $22,029 $ 0 $ 5,706
Class B........................... $3,822 $44,683 $ 0 $30,667
Class D........................... $ 430 $ 5,961 $ 0 $ 163
</TABLE>
Differences in the price at which the Funds' Class A shares are offered due to
scheduled variations in sales charges, as described in the Funds' Prospectus,
result from cost savings inherent in economies of scale. Management believes
that the cost of sales efforts of the Distributor and broker-dealers tends to
decrease as the size of purchases increases, or does not involve any incremen-
tal sales expenses as in the case of, for example, exchanges, reinvestments or
dividend investments at net asset value. Similarly, no significant sales effort
will be necessary for sales of shares at net asset value to certain Directors,
officers, employees, their relatives and other persons directly or indirectly
related to the Funds or associated entities. Where shares of the Funds are of-
fered at a reduced sales charge or without a sales charge pursuant to sponsored
arrangements and managed fee-based programs, the amount of the sales charge re-
duction will similarly reflect the anticipated reduction in sales expenses as-
sociated with such arrangements. The reduction in sales expenses, and therefore
the reduction in sales charge, will vary depending on factors such as the size
and other characteristics of the organization or program, and the nature of its
membership or the participants. Portfolios reserves the right to make varia-
tions in, or eliminate, sales charges at any time or to revise the terms of or
to suspend or discontinue sales pursuant to sponsored arrangements at any time.
On any sale of Class A shares of $1,000,000 or more, the Distributor will pay
the authorized securities dealer making such sale commission on the shares
sold. Such commission also is payable to authorized securities dealers upon
sales of Class A shares made pursuant to a Letter of Intent to purchase shares
having a net asset value of $1,000,000 or more. Shares sold with such commis-
sions payable are subject to a one-year contingent deferred sales charge of
1.00% on any portion (excluding capital appreciation and dividends) of such
shares redeemed within one year following their sale. After a particular pur-
chase of Class A shares is made under the Letter of Intent, the commission will
be paid only in respect of that particular purchase of shares. If the Letter of
Intent is not completed, the commission paid will be deducted from any dis-
counts or commissions otherwise payable to such dealer in respect of shares ac-
tually sold. If an in-vestor is eligible to purchase shares at net asset value
on account of the Right of Accumulation, the commission will be paid only in
respect of the incremental purchase at net asset value.
Portfolios has adopted a "Plan of Distribution Pursuant to Rule 12b-1" (the
"Distribution Plan") under which the Funds may engage, directly or indirectly,
in financing any activities primarily intended to result in the sale of Class
A, Class B and Class D shares, including, but not limited to, (1) the payment
of commissions and/or reimbursement of expenses to underwriters, securities
dealers and others engaged in the sale of shares, including payments to the
Distributor to be used to pay commissions and/or reimbursement of expenses to
securities dealers (which securities dealers may be affiliates of the Distribu-
tor) engaged in the distribution and marketing of shares and furnishing ongoing
assistance to investors, (2) reimbursement of direct out-of-pocket expenditures
incurred by the Distributor in connection with the distribution and marketing
of shares and the servicing of investor accounts including expenses relating to
the formulation and implementation of marketing strategies and promotional ac-
tivities such as direct mail promotions and television, radio, newspaper, maga-
zine and other mass media advertising, the preparation, printing and distribu-
tion of Prospectuses of the Funds and reports for recipients other than exist-
ing shareholders of the Funds, and obtaining such information, analyses and re-
ports with respect to marketing and promotional activities and investor ac-
counts as the Funds may, from time to time, deem advisable, and (3) reimburse-
ment of expenses incurred by the Distributor in connection
B-28
<PAGE>
with the servicing of shareholder accounts including payments to securities
dealers and others in consideration of the provision of personal services to
investors and/or the maintenance of shareholder accounts and expenses associ-
ated with the provision of personal services by the Distributor directly to in-
vestors. In addition, the Distribution Plan is deemed to authorize the Distrib-
utor/ Investment Manager to make payments out of general profits, revenues or
other sources to underwriters, securities dealers and others in connection with
sales of shares, to the extent, if any, that such payments may be deemed to be
within the scope of Rule 12b-1 under the 1940 Act.
The expenditures to be made pursuant to the Distribution Plan may not exceed
(i) with respect to Class A shares, an annual rate of 0.25% of the average
daily value of net assets represented by such Class A shares, and (ii) with re-
spect to Class B and Class D shares, an annual rate of 0.75% of the average
daily value of the net assets represented by such Class B or Class D shares (as
the case may be) to finance sales or promotion expenses and an annual rate of
0.25% of the average daily value of the net assets represented by such Class B
or Class D shares (as the case may be) to make payments for personal services
and/or the maintenance of shareholder accounts. Proceeds from the service fee
will be used by the Distributor to compensate securities dealers and others
selling shares of the Funds for rendering service to shareholders on an ongoing
basis. Such amounts are based on the net asset value of shares of the Funds
held by such dealers as nominee for their customers or which are owned directly
by such customers for so long as such shares are outstanding and the Distribu-
tion Plan remains in effect with respect to the Funds. Any amounts received by
the Distributor and not so allocated may be applied by the Distributor as reim-
bursement for expenses incurred in connection with the servicing of investor
accounts. The distribution and servicing expenses of a particular class will be
borne solely by that class.
During the fiscal year ended October 31, 1995, the Funds paid the Distributor
fees under the Distribution Plan and the Distributor used all of such payments
for expenses incurred on behalf of the Fund as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
------- -------- -------
<S> <C> <C> <C>
INTERNATIONAL EQUITY FUND
Advertising........................................... $ 0 $ 0 $ 0
Printing and mailing of prospectuses to other than
current shareholders................................. 0 0 0
Compensation to dealers............................... 54,286 233,787 36,306
Compensation to sales personnel....................... 0 0 0
Interest.............................................. 0 0 0
Carrying or other financing charges................... 0 0 0
Other expenses: marketing; general.................... 0 0 0
------- -------- -------
Total fees............................................ $54,286 $233,787 $36,306
======= ======== =======
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
------- ------- -------
<S> <C> <C> <C>
INTERNATIONAL FIXED INCOME FUND
Advertising............................................ $ 154 $ 0 $ 282
Printing and mailing of prospectuses to other than
current shareholders.................................. 67 0 123
Compensation to dealers................................ 2,276 19,980 5,075
Compensation to sales personnel........................ 610 0 1,121
Interest............................................... 0 0 0
Carrying or other financing charges.................... 0 0 0
Other expenses: marketing; general..................... 395 0 725
------ ------- ------
Total fees............................................. $3,502 $19,980 $7,326
====== ======= ======
</TABLE>
The Distributor may also use additional resources of its own for further ex-
penses on behalf of the Funds.
No interested Director of Portfolios has any direct or indirect financial in-
terest in the operation of the Distribution Plan or any related agreements
thereunder. The Distributor's interest in the Distribution Plan is described
above.
To the extent that the Glass-Steagall Act may be interpreted as prohibiting
banks and other depository institutions from being paid for performing services
under the Distribution Plan, the Funds will make alternative arrangements for
such services for shareholders who acquired shares through such institutions.
B-29
<PAGE>
CALCULATION OF PERFORMANCE DATA
The average annual total return ("standard total return") and yield of the
Class A, Class B, Class C and Class D shares of the Funds will be calculated as
set forth below. Total return and yield are computed separately for each class
of shares of the Funds. Performance data for a specified class includes periods
prior to the adoption of class designations. Shares of the Funds had no class
designations until March 1, 1994, when designations were assigned based on the
pricing and Rule 12b-1 fees applicable to shares sold thereafter.
The performance data reflects Rule 12b-1 fees and sales charges as set forth
below:
<TABLE>
<CAPTION>
RULE 12b-1 FEES
---------------------------------------------------
CLASS AMOUNT PERIOD SALES CHARGES
- ----- ------ -------------- ---------------
<S> <C> <C> <C>
A 0.25% March 1, 1994 Maximum 4.5%
to present; sales charge
fee will reflected
reduce
performance
for periods
after March 1,
1994
B 1.00% March 1, 1994 1- and 5-year
to present; periods reflect
fee will a 5% and a 2%
reduce contingent
performance deferred sales
for periods charge,
after March 1, respectively
1994
C 0.00% Since None
commence-ment
of operations
to present
D 1.00% March 1, 1994 1-year period
to present; reflects a 1%
fee will contingent
reduce deferred sales
performance charge
for periods
after March 1,
1994
</TABLE>
All calculations of performance data in this section reflect the voluntary
measures by the Funds' affiliates to reduce fees or expenses relating to the
Funds; see "Accrued Expenses" later in this section. Without such measures,
performance would be lower. Performance data is based on historical figures;
past performance is not a guarantee of future returns.
TOTAL RETURN:
The average annual total returns ("standard total return") of each class of
each Fund's shares were as follows:
<TABLE>
<CAPTION>
COMMENCEMENT OF
OPERATIONS
(JANUARY 22, 1992) ONE YEAR ENDED
TO OCTOBER 31, 1995 OCTOBER 31, 1995
---------------------- -----------------
WITH WITHOUT WITH WITHOUT
FUND SUBSIDY SUBSIDY SUBSIDY SUBSIDY
---- ---------- --------- -------- --------
<S> <C> <C> <C> <C>
International Equity Fund
Class A.............................. 8.55% 7.52% -14.41% -14.95%
Class B.............................. 8.90% 7.84% -15.31% -15.88%
Class C.............................. 10.03% 8.98% -10.16% -10.72%
Class D.............................. 9.52% 8.48% -11.94% -12.50%
International Fixed Income Fund
Class A.............................. 8.66% 8.06% 9.12% 8.11%
Class B.............................. 9.03% 8.37% 8.53% 7.48%
Class C.............................. 10.11% 9.47% 14.51% 13.45%
Class D.............................. 9.66% 9.05% 12.49% 11.44%
</TABLE>
Standard total return is computed by determining the average annual compounded
rates of return over the designated periods that, if applied to the initial
amount invested would produce the ending redeemable value, according to the
following formula:
P(1+T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV
= ending redeemable value at the end of the designated period as-
suming a hypothetical $1,000 payment made at the beginning of the
designated period
The calculation is based on the further assumptions that the maximum initial
or contingent deferred sales charge applicable to the investment is deducted
and that all dividends and distributions by a Fund are reinvested at net asset
value on the reinvestment dates during the periods. All accrued expenses are
also taken into account as described later herein.
B-30
<PAGE>
YIELD:
The annualized yield for the International Fixed Income Fund's Class A, Class
B, Class C and Class D based on the month of October 1995 was as follows:
<TABLE>
<CAPTION>
WITH WITHOUT
SUBSIDY SUBSIDY
------- -------
<S> <C> <C>
Class A......................................................... 2.99% 2.70%
Class B......................................................... 2.41% 2.11%
Class C......................................................... 3.37% 3.07%
Class D......................................................... 2.41% 2.11%
</TABLE>
Yield for the International Fixed Income Fund's Class A, Class B, Class C and
Class D shares is computed by dividing the net investment income per share
earned during a recent month or other specified 30-day period by the maximum
offering price per share on the last day of the period and annualizing the re-
sult, according to the following formula:
YIELD = 2[(a-b+1)/6/- 1]
---
cd
Where: a= dividends and interest earned during the period
b= expenses accrued for the period (net of voluntary expense reduc-
tions by the Investment Manager)
c= the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d= the maximum offering price per share on the last day of the peri-
od.
To calculate interest earned (for the purpose of "a" above) on debt obliga-
tions, a Fund computes the yield to maturity of each obligation held by such
Fund based on the market value of the obligation (including actual accrued in-
terest) at the close of the last business day of the preceding period, or, with
respect to obligations purchased during the period, the purchase price (plus
actual accrued interest). The yield to maturity is then divided by 360 and the
quotient is multiplied by the market value of the obligation (including actual
accrued interest) to determine the interest income on the obligation for each
day of the period that the obligation is in the portfolio. Dividend income is
recognized daily based on published rates.
Undeclared earned income, computed in accordance with generally accepted ac-
counting principles, may be subtracted from the maximum offering price. Unde-
clared earned income is the net investment income which, at the end of the base
period, has not been declared as a dividend, but is reasonably expected to be
declared as a dividend shortly thereafter. The maximum offering price includes
a maximum sales charge of 4.5% with respect to Class A shares.
All accrued expenses are taken into account as described later herein.
Yield information is useful in reviewing a Fund's performance, but because
yields fluctuate, such information cannot necessarily be used to compare an in-
vestment in a Fund's shares with bank deposits, savings accounts and similar
investment alternatives which often are insured and/or provide an agreed or
guaranteed fixed yield for a stated period of time. Shareholders should remem-
ber that yield is a function of the kind and quality of the instruments in a
Fund's portfolio, portfolio maturity and operating expenses and
marketconditions.
ACCRUED EXPENSES:
Accrued expenses include all recurring expenses that are charged to all share-
holder accounts in proportion to the length of the base period. The standard
total return and yield results take sales charges, if applicable, into account,
although the results do not take into account recurring and nonrecurring
charges for optional services which only certain shareholders elect and which
involve nominal fees, such as the $5 fee for certain reinvestments, the $7.50
fee for wire orders, the $15 annual fee for administration of an IRA account,
the $15 annual fee for a participant in a prototype pension plan, the $10 fee
for special requests or photocopies of paid checks and the $20 fee applied to a
shareholder account that has been determined to be escheatable under applicable
state laws.
B-31
<PAGE>
Accrued expenses reflect the Investment Manager's/Distributor's or its affili-
ates' voluntary reduction of management fees and assumption of a portion of ex-
penses relating to a Fund during the subject period. Such reductions in manage-
ment fees and assumption of expenses by the Investment Manager/Distributor or
its affiliates amounted to $240,442, $386,279 and $529,341 for the Interna-
tional Equity Fund and $100,743, $85,904 and $149,825 for the International
Fixed Income Fund for fiscal years ending October 31, 1993, October 31, 1994
and October 31, 1995 respectively. These reductions were $54,510 for the Inter-
national Equity Fund and $7,543 for the International Fixed Income Fund for the
month of October 1995.
Each Fund will be responsible for payment of expenses directly attributable to
it, while indirect expenses are allocated among all Funds in Portfolios.
NONSTANDARDIZED TOTAL RETURN:
A Fund may provide the above described standard total return results for Class
A, Class B, Class C and Class D shares for periods which end no earlier than
the most recent calendar quarter end and which begin twelve months before and
at the time of commencement of such Fund's operations. In addition, a Fund may
provide nonstandardized total return results for differing periods, such as for
the most recent six months, and/or without taking sales charges into account.
Such nonstandardized total return is computed as otherwise described under "To-
tal Return" except that the result may or may not be annualized, and as noted
any applicable sales charge may not be taken into account and therefore not de-
ducted from the hypothetical initial payment of $1,000. The International Eq-
uity Fund's and International Fixed Income Fund's nonstandardized total return
for Class A, Class B, Class C and Class D shares for the six months ended Octo-
ber 31, 1995 were as follows:
<TABLE>
<CAPTION>
WITH WITHOUT
INTERNATIONAL EQUITY FUND SUBSIDY SUBSIDY
- ------------------------- ------- -------
<S> <C> <C>
Class A........................................................ -1.99% -2.30%
Class B........................................................ -2.54% -2.85%
Class C........................................................ -1.98% -2.29%
Class D........................................................ -2.43% -2.74%
</TABLE>
<TABLE>
<CAPTION>
WITH WITHOUT
INTERNATIONAL FIXED INCOME FUND SUBSIDY SUBSIDY
- ------------------------------- ------- -------
<S> <C> <C>
Class A........................................................ 0.66% 0.32%
Class B........................................................ 0.20% -0.14%
Class C........................................................ 0.77% 0.43%
Class D........................................................ 0.32% -0.02%
</TABLE>
DISTRIBUTION RATES:
A Fund may also quote its distribution rate for each class of shares. The dis-
tribution rate is calculated by annualizing the latest per-share distribution
from ordinary income and dividing the result by the maximum offering price per
share as of the end of the period to which the distribution relates. A distri-
bution can include gross investment income from debt obligations purchased at a
premium and in effect include a portion of the premium paid. A distribution can
also include nonrecurring, gross short-term capital gains without recognition
of any unrealized capital losses. Further, a distribution can include income
from the sale of options by a Fund even though such option income is not con-
sidered investment income under generally accepted accounting principles.
Because a distribution can include such premiums, capital gains and option in-
come, the amount of the distribution may be susceptible to control by the In-
vestment Manager through transactions designed to increase the amount of such
items. Also, because the distribution rate is calculated in part by dividing
the latest distribution by the offering price, which is based on net asset
value plus a sales charge, the distribution rate will increase as the net asset
value declines. A distribution rate can be greater than the yield rate calcu-
lated as described above.
The distribution rates for Class A, Class B, Class C and Class D shares based
on the quarter ended October 31, 1995 for the International Fixed Income Fund
were 6.75%, 6.41%, 7.26% and 6.40%, respectively.
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110, is Portfo- lios' custodian. As custodian, State Street Bank
B-32
<PAGE>
and Trust Company is responsible for, among other things, safeguarding and con-
trolling the Funds' cash and securities, handling the receipt and delivery of
securities and collecting interest and dividends on the Funds' investments.
State Street Bank and Trust Company is not an affiliate of the Investment Man-
ager or its affiliates.
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts 02110, are
Portfolios' independent accountants, providing professional services including
(1) audit of the Funds' annual statements, (2) assistance and consultation in
connection with Securities and Exchange Commission filings and (3) review of
the annual income tax returns filed on behalf of the Funds.
FINANCIAL STATEMENTS
The following financial statements of the International Equity Fund and the In-
ternational Fixed Income Fund are for the fiscal year ending October 31, 1995.
B-33
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
October 31, 1995
- --------------------------------------------------------------------------------
VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------------------------
COMMON STOCKS 71.2%
ARGENTINA 0.7%
Buenos Aires Embotelladora ADR........................ 25,300 $ 578,737
-----------
AUSTRALIA 6.0%
Austpac Gold NL*...................................... 2,000,000 68,556
Coles Myer Ltd........................................ 60,000 207,038
Elders Australia Ltd.................................. 350,000 413,239
Gold Mines of Australia Ltd.*......................... 2,396,447 492,871
Henry Walker Group.................................... 140,000 179,159
ISR Group Ltd.*....................................... 815,000 788,429
MultiStack International.............................. 272,899 185,009
Pima Mining NL*....................................... 500,000 41,895
QBE Insurance Group................................... 105,200 464,778
Rhodes Mining NL*..................................... 2,000,000 228,519
Savage Resources*..................................... 600,000 434,186
Star Mining Corp.*.................................... 3,872,000 619,378
Sydney Aquarium Ltd................................... 145,250 241,198
Vanguard Petroleum Ltd.*.............................. 615,000 154,593
Western Mining Corp................................... 140,000 897,928
-----------
5,416,776
-----------
AUSTRIA 1.6%
Creditanstalt Bank AG................................. 3,040 159,653
Flughafen Wien AG..................................... 2,500 160,582
OMV Handels AG........................................ 7,500 647,629
VA Stahl AG*.......................................... 15,000 459,021
-----------
1,426,885
-----------
BELGIUM 0.8%
D'ieteren Trading..................................... 3,000 238,424
UCB................................................... 200 228,231
Union Miniere SA*..................................... 3,500 227,972
-----------
694,627
-----------
CANADA 10.3%
Advanced Material Resources Ltd.*..................... 750,000 380,654
Akiko Gold Resources Ltd.*............................ 545,500 219,861
Asia Pacific Resources Ltd.*.......................... 100,000 365,726
Avocet Ventures Inc.*................................. 637,500 2,079,322
Black Hawk Mining Inc.*............................... 1,565,000 887,744
Canadian Crew Energy Corp.*........................... 210,000 156,740
Epicore Networks Inc.*................................ 300,000 1,119,570
Eurogas Corp.*........................................ 375,000 237,910
Master Plan Mineral & Petroleum
Development Corp.*.................................. 3,353,740 225,285
Nelson Gold Corp Ltd.*................................ 365,000 653,829
Princess Resource Ltd.*............................... 630,000 145,768
Reclamation Management Ltd.*.......................... 150,000 10,076
SCC Resource Inc.*.................................... 500,000 279,893
Siam Trading Ltd.*.................................... 550,000 418,719
Tan Range Exploration Corp. Cl. A*.................... 922,000 385,371
- --------------------------------------------------------------------------------
VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------------------------
CANADA (CONT'D)
TVI Pacific Inc.*..................................... 450,000 $ 591,133
United Reef Ltd.*..................................... 1,000,000 380,654
Xavier Mines Ltd.*.................................... 856,000 734,736
-----------
9,272,991
-----------
FINLAND 0.1%
Cultor OY............................................. 3,000 124,305
-----------
FRANCE 6.1%
Assur General De France............................... 10,000 285,475
AXA................................................... 4,000 222,163
Banque Nationale Paris................................ 3,000 123,494
Bouygues.............................................. 1,500 159,506
Castorama Dubois...................................... 1,950 316,221
Cetelem............................................... 1,500 239,259
Credit Comm France.................................... 13,800 685,753
Eaux (Cie Generale) SA*............................... 4,750 441,479
Eramet................................................ 3,500 236,191
Imetal................................................ 1,500 176,683
LaFarge Coppee SA..................................... 5,000 331,384
LVMH Moet Hennessy Louis Vuitton...................... 1,500 298,460
Pechiney International NV............................. 20,000 455,614
Peugot SA............................................. 2,500 325,658
SGS Thomson Micro*.................................... 4,665 215,120
Total SA.............................................. 10,000 617,983
Usinor Sacilor*....................................... 25,000 373,203
-----------
5,503,646
-----------
GERMANY 8.5%
Allianz AG Holdings................................... 326 603,318
Altana AG............................................. 550 319,817
Ava Allg Handels AG................................... 1,000 379,369
Bankgesell Berlin..................................... 750 221,121
Bayer AG.............................................. 1,250 332,481
CKAG Colonia Konzern AG............................... 400 312,589
Commerzbank AG........................................ 2,000 462,916
Daimler-Benz AG....................................... 1,100 530,229
Degussa AG............................................ 1,000 321,824
Gildemeister AG*...................................... 2,500 283,284
Man AG................................................ 1,500 434,783
Mannesmann AG......................................... 1,100 362,056
Merck KGAA*........................................... 4,250 177,536
Metallgesellschaft*................................... 7,500 156,117
SGL Carbon AG*........................................ 3,000 196,718
Siemens AG............................................ 1,250 655,371
SKW Trostberg AG*..................................... 10,000 217,747
Springer Verlag AG.................................... 1,000 603,865
Veba AG............................................... 15,000 615,835
Volkswagen AG......................................... 1,250 393,844
-----------
7,580,820
-----------
The accompanying notes are an integral part of the financial statements.
B-34
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------------------------
HONG KONG 1.5%
Cathay Pacific Airways................................ 165,000 $ 243,284
China Merchants China Direct.......................... 375,000 177,031
China North Industries*............................... 265,000 231,875
Hong Kong Aircraft.................................... 76,000 195,610
SemiTech.............................................. 137,500 215,186
Shanghai Lujiazhuie................................... 370,000 262,700
-----------
1,325,686
-----------
IRELAND 1.2%
Dana Petroleum PLC*................................... 5,000,000 691,700
Kish Resources PLC*................................... 5,000,000 316,206
World Fluids PLC*..................................... 3,521,073 97,421
-----------
1,105,327
-----------
ITALY 0.9%
Danieli & Co.......................................... 35,000 190,809
Edison................................................ 40,000 160,602
Fiat SPA.............................................. 47,000 153,030
Italgas*.............................................. 100,000 265,997
-----------
770,438
-----------
JAPAN 10.3%
Anritsu Corp.......................................... 45,000 475,097
Eiwa Corp............................................. 29,000 286,329
Keyence Corp.......................................... 5,000 615,866
Meitec Corp........................................... 50,000 816,267
Misawa Homes Co. Ltd.................................. 60,000 466,885
Mitsukoshi............................................ 80,000 634,244
MOS Food Services..................................... 6,000 150,154
Nice Nichiei Co....................................... 90,000 301,774
Nintendo Co. Ltd...................................... 6,000 441,077
Nippon Shinpan Co. Ltd................................ 110,000 687,130
Prospect Japan Fund................................... 100,000 1,000,000
Sumitomo Osaka Cement................................. 120,000 484,481
Sumitomo Realty & Development Co. Ltd................. 150,000 985,385
Tokio Marine & Fire Insurance Co. Ltd................. 75,000 769,832
Tokyo Nissan Auto Sales Co. Ltd.*..................... 45,000 274,940
Tokyo Tungsten Co. Ltd................................ 87,000 850,481
-----------
9,239,942
-----------
KOREA 0.9%
CITC Frontier Fund*................................... 20,000 356,000
Yellow Sea Investment Co.*............................ 45,000 472,500
-----------
828,500
-----------
MALAYSIA 0.9%
Landmarks BHD......................................... 165,000 185,714
Tenaga Nasional BHD................................... 55,000 207,792
UMW Holdings BHD...................................... 100,000 238,095
Wembley Industries Holdings*.......................... 111,000 162,503
-----------
794,104
-----------
- --------------------------------------------------------------------------------
VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------------------------
MEXICO 0.1%
Fundo Opcion S.A. de C.V.*............................ 115,000 $ 125,249
-----------
NETHERLANDS 1.5%
Hunter Douglas NV..................................... 5,000 240,525
IHC Caland NV......................................... 15,000 423,057
International Nederlanden Group....................... 5,500 327,671
Ver Ned Uitgevers..................................... 2,500 349,379
-----------
1,340,632
-----------
NEW ZEALAND 0.7%
Corporate Investments Ltd............................. 2,275,000 510,595
Fernz Corp............................................ 45,000 133,078
-----------
643,673
-----------
NORWAY 0.2%
Pacific Basin Bulk Ship............................... 16,060 226,847
-----------
SINGAPORE 0.5%
Comfort Group......................................... 250,000 208,776
Jurong Shipyard....................................... 29,000 192,923
-----------
401,699
-----------
SPAIN 1.5%
Asturiana de Zinc*.................................... 60,000 533,366
Banco Bilbao Vizcaya.................................. 4,000 122,240
Banco ESP de Credito*................................. 2,279 15,404
Banco Santander SA.................................... 3,838 167,267
Empresa Nacionale Celulosas*......................... 25,000 457,785
-----------
1,296,082
-----------
SWEDEN 1.1%
Autoliv AB............................................ 6,000 344,246
L.M. Ericsson Telephone Co............................ 11,000 233,563
Lindex AB*............................................ 25,000 363,295
-----------
941,104
-----------
SWITZERLAND 1.2%
BBC Brown Boveri AG................................... 180 208,808
Ciba Geigy AG......................................... 500 432,925
CS Holding............................................ 4,000 408,703
Von Roll AG*.......................................... 2,750 60,557
-----------
1,110,993
-----------
UNITED KINGDOM 14.6%
Alexon Group PLC*..................................... 1,180,000 1,156,680
Anglo Eastern Plantations............................. 150,000 282,213
Arcadian International PLC............................ 316,000 264,791
Ascot Holdings PLC*................................... 200,000 648,221
Aviva Petrol Inc.*.................................... 400,000 281,423
Bakyrchik Gold PLC*................................... 72,000 211,731
The accompanying notes are an integral part of the financial statements.
B-35
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- ----------------------------------------------------------------------
INVESTMENT PORTFOLIO (cont'd)
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
VALUE
SHARES (NOTE 1)
- ----------------------------------------------------------------------
UNITED KINGDOM (CONT'D)
Birse Group PLC*........................... 500,000 $ 122,530
British Biotech*........................... 30,000 423,083
BTR PLC.................................... 75,000 398,419
Cedardata PLC.............................. 215,000 593,162
Celsis International*...................... 232,372 462,907
DCS Group PLC.............................. 215,745 341,099
Euro Sales Finance......................... 283,560 560,395
Exploration Co. of Louisiana, Inc.*........ 50,000 27,273
Geest PLC.................................. 50,000 116,206
Grand Metropolitan PLC..................... 45,000 311,621
Great Western Resources*................... 394,737 115,457
Guangdong Development Fund Ltd............. 250,000 150,000
Hampden Group PLC.......................... 395,000 434,032
Hay (Norman)PLC............................ 275,000 128,261
Hobson PLC................................. 900,000 398,419
Lloyds Bank PLC............................ 30,000 369,249
Medeva PLC................................. 75,000 323,123
National Westminster Bank PLC.............. 50,000 499,209
Panther Securities PLC..................... 250,000 262,846
Premium Underwriting PLC*.................. 60,000 114,783
Prospect Industries PLC.................... 1,750,000 138,340
Sainsbury PLC.............................. 50,000 334,783
Simon Engineering PLC*..................... 311,111 408,256
Sims Food Group PLC........................ 320,000 263,083
Upton & Southern Holdings PLC Cum Cv....... 115,207 169,395
Upton & Southern Holdings PLC*............. 7,500,000 296,443
UTD Breweries PLC*......................... 15,000,000 385,375
Vision Group PLC*.......................... 150,000 409,091
Waverley Mining Finance PLC*............... 1,214,480 1,677,711
-----------
13,079,610
-----------
Total Common Stocks (Cost $63,871,069)..... 63,828,673
-----------
EQUITY-RELATED SECURITIES 5.0%
Asahi Glass Co. Wts.*...................... 340 114,750
Baltic Republics Fund Units*............... 5,000 545,000
Best Denki Co. Wts.*....................... 380 156,750
Casio Computer Co. Wts.*................... 500 200,000
Citizen Watch Co. Wts.*.................... 760 57,000
Daido Steel Co. Wts.*...................... 425 74,375
Dainichiseika Wts.*........................ 1,050 33,295
Emtech Ltd. Units*......................... 1,600,000 1,612,181
Godo Steel Wts.*........................... 610 38,125
Gold Mines of Australia Ltd. Option*....... 302,447 23,038
Guangdong Development Fund Ltd. Wts.*...... 50,000 6,750
Hankyu Corp. Wts.*......................... 425 138,125
Kuraray Co. Wts.*.......................... 550 165,000
Nippon Ceramic Co. Ltd. Wts*............... 2,785 125,108
Nishio Rent All Co. Wts.*.................. 320 152,000
Pacific Metals Co. Wts.*................... 2,340 208,174
Panther Securities PLC Wts.*............... 50,000 5,929
Prospect Japan Fund Wts.*.................. 20,000 62,500
Ryobi Wts.*................................ 250 115,625
Showa Sangyo Co. Wts.*..................... 900 78,750
SNT Corp. Wts.*............................ 764 30,283
Sumitomo Light Metals Co. Wts.*............ 6,750 95,129
Sumitomo Metal & Mining Co. Wts.*.......... 360 180
Takashimaya Co. Wts.*...................... 905 90,500
Tobu Railway Co. Wts.*..................... 950 178,125
Toyo Engineering Wts.*..................... 1,370 85,625
Upton & Southern Holdings PLC Wts.*........ 750,000 5,929
Von Roll AG Wts.*.......................... 2,750 7,267
Yamazen Corp. Wts.*........................ 3,200 67,647
-----------
Total Equity-Related Securities (Cost $6,044,646) 4,473,160
-----------
- ----------------------------------------------------------------------
PRINCIPAL MATURITY
AMOUNT DATE
- ----------------------------------------------------------------------
CONVERTABLE BONDS 6.5%
Lippo Treasury Ltd. Cv. Bond,
1.25%......................... $220,000 12/31/2000 199,100
Mitsubishi Bank Cv. Bond,
3.50%......................... 1,900,000 3/31/2004 1,776,500
Regal Hotels International Cv.
Bond, 5.25%................... 415,000 12/13/2008 331,751
S Megga International Cv. Bond,
2.50%......................... 280,000 4/01/2002 231,000
Sino Land Co. Cv. Bond, 5.00%... 440,000 10/21/2000 452,650
Tanayong Cv. Bond, 3.50%........ 300,000 3/01/2004 228,000
Japanese
Yen
Hankyu Corp. Cv. Bond, 1.25%.... 90,000,000 9/30/1998 879,808
Hong Kong
Dollar
HKR International Ltd. Cv. Bond,
6.00%......................... 2,104,200 6/26/2000 224,866
Austrian
Schilling
Lenzing AG Cv. Bond, 5.25%...... 800,000 12/30/2001 76,837
Swiss
Franc
Hoi Sing Holdings Cv. Bond,
1.50%......................... 350,000 12/31/1998 283,240
NEC Corp. Cv. Bond, 1.00%....... 1,100,000 3/31/1999 1,194,178
-----------
Total Convertible Bonds (Cost $5,534,106).............. 5,877,930
-----------
Total Investments (Costs $75,449,821)-82.7%............ 74,179,763
Cash and Other Assets, Less Liabilities-17.3%.......... 15,488,941
-----------
Net Assets-100.0%...................................... $89,668,704
===========
- --------------------------------------------------------------------------------
* Nonincome-producing securities.
ADR and GDR stand for American Depositary Receipt and Global Depositary
Receipt, respectively, representing ownership of foreign securities.
The accompanying notes are an intregral part of the financial statements.
B-36
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
Federal Income Tax Information:
At October 31, 1995, the net unrealized depreciation of
investments based on cost for Federal income tax
purposes of $75,499,467 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value over
tax cost................................................ $ 8,669,935
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value.............................................. (9,989,639)
-----------
$(1,319,704)
===========
- ------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------
October 31, 1995
ASSETS
Investment, at value (Cost $75,449,821) (Note 1).......... $74,179,763
Foreign currency, at value (Cost $12,607,433)............. 12,064,011
Cash...................................................... 4,793,768
Receivable for securities sold............................ 316,733
Receivable for fund shares sold........................... 241,644
Dividends and interest receivable......................... 121,144
Foreign Tax receivable.................................... 74,836
Receivable from investment manager (Note 3)............... 54,510
Deferred organization costs and other assets (Note 1)..... 20,233
-----------
91,866,642
LIABILITIES
Payable for securities purchased.......................... 1,519,389
Payable for fund shares redeemed.......................... 200,236
Accrued transfer agent and shareholder services
(Note 2)................................................ 173,823
Accrued management fee (Note 2)........................... 76,423
Accrued distribution fee (Note 5)......................... 34,567
Accrued directors' fees (Note 2).......................... 18,926
Other accrued expenses.................................... 174,574
-----------
2,197,938
-----------
$89,668,704
===========
NET ASSETS
Net Assets consist of:
Accumulated net investment loss......................... $ (221,450)
Unrealized depreciation of investments and
foreign currency....................................... (1,818,168)
Accumulated net realized loss on investments and
foreign currency........................................ (637,687)
Shares of beneficial interest............................. 92,346,009
-----------
$89,668,704
===========
Net Asset Value and redemption price per share of
Class A shares ($22,497,304 / 2,409,238 shares of
beneficial interest).................................... $9.34
=====
Maximum Offering Price per share of Class A shares
($9.34 / .955).......................................... $9.78
=====
Net Asset Value and offering price per share of
Class B shares ($27,614,183 / 2,994,636 shares of
beneficial interest)*................................... $9.22
=====
Net Asset Value, offering price and redemption price
per share of Class C shares ($33,882,999 /
3,609,214 shares of beneficial interest)................ $9.39
=====
Net Asset Value and offering price per share of
Class D shares ($5,674,218 / 615,728 shares of
beneficial interest)*................................... $9.22
=====
- ------------------------------------------------------------------------
* Redemption price per share for Class B and Class D is equal to net
asset value less any applicable contingent deferred sales charge.
The accompanying notes are an integral part of the financial statements.
B-37
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- ---------------------------------------------------------------------
STATEMENT OF OPERATIONS
- ---------------------------------------------------------------------
For the year ended October 31, 1995
INVESTMENT INCOME
Interest............................................. $ 80,541
Dividends, net of foreign taxes of $113,990.......... 892,985
------------
973,526
EXPENSES
Management fee (Note 2).............................. 830,476
Transfer agent and shareholder services (Note 2)..... 579,528
Custodian fee........................................ 281,995
Reports to shareholders.............................. 102,629
Audit fee............................................ 59,758
Registration fees.................................... 56,816
Distribution fee--Class A (Note 5)................... 54,286
Distribution fees--Class B (Note 5).................. 233,787
Distribution fees--Class D (Note 5).................. 36,306
Amortization of organization costs (Note 1).......... 17,467
Legal fees........................................... 17,282
Directors' fees (Note 2)............................. 14,824
Miscellaneous........................................ 11,798
------------
2,296,952
Expenses borne by the investment manager (Note 3)... (529,341)
------------
1,767,611
------------
Net investment loss.................................. (794,085)
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized loss on investments (Notes 1 and 4)..... (3,765,395)
Net realized gain on foreign currency (Note 1)....... 3,324,162
------------
Total net realized loss.......................... (441,233)
------------
Net unrealized depreciation of investments........... (8,756,032)
Net unrealized depreciation of foreign currency...... (605,718)
------------
Total net unrealized depreciation................ (9,361,750)
------------
Net loss on investments and foreign currency......... (9,802,983)
------------
Net decrease in net assets resulting from operations. $(10,597,068)
============
- ---------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------
YEAR ENDED OCTOBER 31
---------------------------
1995 1994
- ---------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment loss..................... $ (794,085) $ (544,898)
Net realized gain (loss) on
investments and foreign currency*..... (441,233) 4,742,053
Net unrealized appreciation
(depreciation) of investments
and foreign currency.................. (9,361,750) 4,800,123
------------ -----------
Net increase (decrease)
resulting from operations............. (10,597,068) 9,077,278
------------ -----------
Dividends from net
investment income--Class C............ -- (182,235)
------------ -----------
Distributions from net realized gains:
Class A............................... (1,132,506) --
Class B............................... (1,086,016) --
Class C............................... (2,059,288) (1,787,935)
Class D............................... (138,131) --
------------ -----------
(4,415,941) (1,787,935)
------------ -----------
Net increase from fund share
transactions (Note 6)................. 6,433,624 63,373,570
------------ -----------
Total increase (decrease) in
net assets............................ (8,579,385) 70,480,778
NET ASSETS
Beginning of year....................... 98,248,089 27,767,311
------------ -----------
End of year (including accumulated net
investment loss of $221,450 and
$281,289, respectively................ $ 89,668,704 $98,248,089
============ ===========
*Net realized gain (loss) for
Federal income tax purposes (Note 1)... $ (588,041) $ 4,512,616
============ ===========
The accompanying notes are an integral part of the financial statements.
B-38
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
October 31, 1995
NOTE 1
State Street Research International Equity Fund (the "Fund"), formerly MetLife
International Equity Fund, is a diversified series of State Street Research
Portfolios, Inc. ("Portfolios"), formerly MetLife Portfolios, Inc., which was
organized as a Maryland corporation in April, 1991 and is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund commenced operations in January, 1992. Portfolios consists
presently of two separate funds: State Street Research International Equity Fund
and State Street Research International Fixed Income Fund.
The Fund offers four classes of shares. Class A shares are subject to an initial
sales charge of up to 4.50% and annual service fees of 0.25% of average daily
net assets. Class B shares are subject to a contingent deferred sales charge on
certain redemptions made within five years of purchase and pay annual
distribution and service fees of 1.00%. Class B shares automatically convert
into Class A shares (which pay lower ongoing expenses) at the end of eight years
after the issuance of the Class B shares. Class C shares are only offered to
certain employee benefit plans and large institutions. No sales charge is
imposed at the time of purchase or redemption of Class C shares. Class C shares
do not pay any distribution or service fees. Class D shares are subject to a
contingent deferred sales charge of 1.00% on any shares redeemed within one year
of their purchase. Class D shares also pay annual distribution and service fees
of 1.00%. The Fund's expenses are borne pro-rata by each class, except that each
class bears expenses, and has exclusive voting rights with respect to provisions
of the Plan of Distribution, related specifically to that class. The Directors
declare separate dividends on each class of shares.
The following significant accounting policies are consistently followed by the
Fund in preparing its financial statements, and such policies are in conformity
with generally accepted accounting principles for investment companies.
A. INVESTMENT VALUATION
Securities traded on domestic stock exchanges are valued at the last sale price
as of the close of business on the day the securities are being valued, or,
lacking any sales, at the mean between closing bid and asked prices. Securities
traded on the National Association of Securities Dealers Automated Quotation
("NASDAQ") system are valued at the last reported sales price. Each security
traded primarily on non-domestic securities exchanges is generally valued at the
preceding closing value of such security on the exchange where it is primarily
traded. A security that is listed or traded on more than one exchange is valued
at the quotation on the exchange determined to be the primary market for such
security by the Board of Directors or its delegates. If no closing price is
available, then such security is valued at the mean between the last current bid
and asked prices or by using the last available closing price. Domestic
securities traded in the over-the-counter market are valued at the mean between
the bid and asked prices or yield equivalent as obtained from two or more
dealers that make markets in the securities. All non-U.S. securities traded in
the over-the-counter market are valued at the last sale quote or the last
closing bid price, if there is no active trading in a particular security for a
given day. Portfolio securities traded both in the over-the-counter market and
on a securities exchange are valued according to the broadest and most
representative market. Securities for which market quotations are not readily
available are valued as determined in good faith by or under the authority of
the Directors. Short-term securities maturing within sixty days are valued at
amortized cost. Securities quoted in foreign currencies are translated into U.S.
dollars at the current exchange rate.
B. SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). Realized gains or losses are reported on the basis of
identified cost of securities delivered. Gains and losses that arise from
changes in exchange rates are not segregated from gains and losses that arise
from changes in market prices of investments.
C. NET INVESTMENT INCOME
Interest income is accrued daily as earned. Dividend income is accrued on the
ex-dividend date. The Fund is charged for expenses directly attributable to it,
while indirect expenses are allocated among all funds in the Portfolios.
D. DIVIDENDS
Dividends from net investment income are declared and paid or reinvested
annually. Net realized capital gains, if any, are distributed annually, unless
additional distributions are required for compliance with applicable tax
regulations.
Income dividends and capital gain distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles. The difference is primarily due to differing treatments
for foreign currency transactions.
E. FEDERAL INCOME TAXES
No provision for Federal income taxes is necessary because the Fund has elected
to qualify under Subchapter M of the Internal Revenue Code and its policy is to
distribute all of its taxable income, including net realized capital gains,
within the prescribed time periods. At October 31, 1995, the Fund had a capital
loss carryforward of $588,041 available, to the extent provided in regulations,
to offset future capital gains, if any, which expires on October 31, 2003.
B-39
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
NOTES (cont'd)
- --------------------------------------------------------------------------------
F. DEFERRED ORGANIZATION COSTS
Certain costs incurred in the organization and registration of the Fund were
capitalized and are being amortized under the straight-line method over a period
of five years.
NOTE 2
The Fund and State Street Research Investment Services, Inc., the Fund's
investment manager and principal underwriter (the "Investment Manager" and
"Distributor"), a wholly-owned, indirect subsidiary of Metropolitan Life
Insurance Company ("Metropolitan"), have entered into an agreement under which
the Investment Manager receives monthly fees at an annual rate of 0.95% of the
Fund's average daily net assets. The Investment Manager has entered into a Sub-
Investment Management Agreement with GFM International Investors Limited (the
"Sub-Investment Manager"), a substantially wholly owned, indirect subsidiary of
Metropolitan, pursuant to which the Sub-Investment Manager has assumed the
overall responsibility for managing the investments of the Fund. During the year
ended October 31, 1995, the Fund paid the Investment Manager $830,476 in
management fees. The Fund has no responsibility for the payment of fees to the
Sub-Investment Manager.
State Street Research Shareholder Services, a division of the Distributor,
provides certain shareholder services to the Fund such as responding to
inquiries and instructions from investors with respect to the purchase and
redemption of shares of the Fund. In addition, Metropolitan receives a fee for
maintenance of the accounts of certain shareholders who are participants in
sponsored arrangements, employee benefit plans and similar programs or plans,
through or under which shares of the Fund may be purchased. During the year
ended October 31, 1995, the amount of such expenses was $163,898.
The fees of the Directors not currently affiliated with the Investment Manager
amounted to $14,824 during the year ended October 31, 1995.
NOTE 3
The Investment Manager or affiliates may from time to time and in varying
amounts voluntarily assume some portion of fees or expenses relating to the
Fund. During the year ended October 31, 1995, the amount of such assumed
expenses was $529,341.
NOTE 4
For the year ended October 31, 1995, purchases and sales of securities,
exclusive of short-term obligations, aggregated $74,914,476 and $79,642,940,
respectively.
NOTE 5
The Portfolios have adopted a Plan of Distribution Pursuant to Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940, as amended. Under the Plan,
the Fund pays annual service fees to the Distributor at a rate of 0.25% of
average daily net assets for Class A, Class B and Class D shares. In addition,
the Fund pays annual distribution fees of 0.75% of average daily net assets for
Class B and Class D shares. The Distributor uses such payments for personal
services and/or the maintenance of shareholder accounts, to reimburse securities
dealers for distribution and marketing services, to furnish ongoing assistance
to investors and to defray a portion of its distribution and marketing expenses.
For the year ended October 31, 1995, fees pursuant to such plan amounted to
$54,286, $233,787 and $36,306 for Class A, Class B and Class D, respectively.
The Fund has been informed that the Distributor and MetLife Securities, Inc., a
wholly-owned subsidiary of Metropolitan, earned initial sales charges
aggregating $29,729 and $168,621, respectively, on sales of Class A shares of
the Fund during the year ended October 31, 1995, and that MetLife Securities,
Inc. earned commissions aggregating $278,018 on sales of Class B shares, and
that the Distributor collected contingent deferred sales charges of $81,190 and
$2,446 on redemptions of Class B and Class D shares, respectively, during the
same period.
B-40
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE 6
The authorized capital stock of the Fund currently consists of 100,000,000
shares, $.01 par value per share. The Fund reserves the right to issue
additional classes of shares.
Share transactions were as follows:
<TABLE>
<CAPTION>
MARCH 1, 1994
(COMMENCEMENT OF
YEAR ENDED SHARE CLASS DESIGNATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1995
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------- ---------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Shares sold..................................... 1,597,600 $ 15,459,854 2,513,950 $26,806,424
Issued upon reinvestment of
distribution from net gains..................... 112,688 1,095,324 --- ---
Shares repurchased.............................. (1,357,862) (12,966,664) (457,138) (4,879,066)
---------- ------------ --------- -----------
Net increase.................................... 352,426 $ 3,588,514 2,056,812 $21,927,358
========== ============ ========= ===========
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------- ---------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Shares sold..................................... 1,891,639 $ 18,088,917 1,800,031 $19,220,723
Issued upon reinvestment of
distribution from net realized gains............ 108,264 1,045,778 --- ---
Shares repurchased.............................. (734,821) (6,927,600) (70,477) (754,050)
---------- ------------ --------- -----------
Net increase.................................... 1,265,082 $ 12,207,095 1,729,554 $18,466,673
========== ============ ========= ===========
<CAPTION>
YEAR ENDED
OCTOBER 31, 1995
-----------------------------
CLASS C SHARES AMOUNT SHARES AMOUNT
- ------- ---------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Shares sold..................................... 1,440,157 $ 13,962,911 3,082,343 $31,816,155
Issued upon reinvestment of:
Distribution from net realized gains.......... 207,652 2,026,671 187,082 1,772,926
Dividends from net investment income.......... --- --- 11,528 109,898
Shares repurchased.............................. (3,000,375) (29,391,886) (1,223,806) (12,796,604)
---------- ------------ --------- -----------
Net increase (decrease)......................... (1,352,566) $(13,402,304) 2,057,147 $20,902,375
========== ============ ========= ===========
<CAPTION>
MARCH 1, 1994
(COMMENCEMENT OF
SHARE CLASS DESIGNATIONS) TO
OCTOBER 31, 1995
----------------------------
CLASS D SHARES AMOUNT SHARES AMOUNT
- ------- ---------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Shares sold..................................... 555,007 $ 5,321,534 273,636 $ 2,922,952
Issued upon reinvestment of
distribution from net gains..................... 13,592 131,305 --- ---
Shares repurchased.............................. (148,231) (1,412,520) (78,276) (845,788)
---------- ------------ --------- -----------
Net increase.................................... 420,368 $ 4,040,319 195,360 $ 2,077,164
========== ============ ========= ===========
</TABLE>
B-41
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS OF STATE STREET RESEARCH PORTFOLIOS, INC. AND THE
SHAREHOLDERS OF STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
We have audited the accompanying statement of assets and liabilities, including
the investment portfolio, of State Street Research International Equity Fund,
formerly MetLife International Equity Fund, (a series of State Street Research
Portfolios, Inc., formerly MetLife Portfolios, Inc.) as of October 31, 1995, and
the related statement of operations for the year then ended, the statement of
changes in net assets for the two years then ended and the financial highlights
for each of the years in the four year period ended October 31, 1995. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on the financial
statements and financial highlights 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 and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at October
31, 1995, by correspondence with the custodian and brokers. 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.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of State Street
Research International Equity Fund (a series of State Street Research
Portfolios, Inc.) at October 31, 1995, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Boston, Massachusetts
December 15, 1995
B-42
<PAGE>
STATE STREET RESEARCH INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
European stocks, which represented more than 40% of the portfolio, offered mixed
results. In addition, the Fund was hurt by its position in mid-cap (medium-
sized) stocks; the best performance was delivered by stocks of large,
multinational corporations with exposure to the U.S. market.
Japanese stocks had disappointing performance. The Kobe earthquake in January
derailed any market recovery, and domestic investors remained on the sideline.
Much of the Fund's position in Canada and Australia was invested in stocks of
companies tied to mining and raw materials. These stocks offered excellent value
and were expected to benefit from declining supply and increasing demand, driven
by emerging market economies. At this point, the market has not recognized the
potential for these stocks.
The Morgan Stanley EAFE Index is a commonly used indicator of international
stock market performance. The index is unmanaged and does not take sales charges
into consideration. Direct investment in the index is not possible; results are
for illustrative purposes only. All returns represent past performance, which is
no guarantee of future results. The investment return and principal value of an
investment made in the Fund will fluctuate and shares, when redeemed, may be
worth more or less than their original cost. All returns assume reinvestment of
capital gain distributions and income dividends. Shares of the Fund had no class
designations until March 1, 1994, when designations were assigned based on the
pricing and 12b-1 fees applicable to shares sold thereafter. Performance for a
class includes periods prior to the adoption of class designations. Performance
reflects up to a maximum 4.5% front-end or 5% contingent deferred sales charge.
Performance prior to class designations in 1994 does not reflect annual 12b-1
fees of .25% for Class "A" shares and 1% for Class "B" and "D" shares, which
will reduce subsequent performance. Performance results are increased by the
investment manager's voluntary reduction of fees and expenses related to the
Fund. The first figure reflects expense reduction; the second shows what results
would have been without subsidization.
COMPARISON OF CHANGE IN VALUE OF A $10,000
INVESTMENT IN INTERNATIONAL EQUITY FUND
AND THE MORGAN STANLEY EAFE INDEX
CLASS A SHARES
Average Annual Total Return
--------------------------------
1 Year Life of Fund
--------------- -------------
-14.41%/-14.95% +8.55%/+7.52%
[CHART APPEARS HERE]
CLASS B SHARES
Average Annual Total Return
--------------------------------
1 Year Life of Fund
--------------- -------------
-15.31%/-15.88% +8.90%/+7.84%
[CHART APPEARS HERE]
CLASS C SHARES
Average Annual Total Return
--------------------------------
1 Year Life of Fund
--------------- --------------
-10.16%/-10.72% +10.03%/+8.98%
[CHART APPEARS HERE]
CLASS D SHARES
Average Annual Total Return
--------------------------------
1 Year Life of Fund
--------------- -------------
-11.94%/-12.50% +9.52%/+8.48%
[CHART APPEARS HERE]
B-43
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
October 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MATURITY DATE VALUE (NOTE 1)
---------------- ------------- -------------
<S> <C> <C> <C>
FIXED INCOME SECURITIES 75.1%
AUSTRIA 3.6% Japanese Yen
Republic of Austria 5.00%............... 100,000,000 1/22/2001 $ 1,115,646
-----------
BELGIUM 2.8% Belgian Franc
Kingdom of Belgium, 7.50%............... 25,000,000 7/29/2008 868,607
-----------
DENMARK 1.9% Danish Krone
Kingdom of Denmark, 9.00%............... 3,000,000 11/15/2000 594,839
-----------
FRANCE 21.3%
Government of France, French Franc
8.50%................................. 4,500,000 11/25/2002 996,145
Government of France, 6.75%............. 6,500,000 10/25/2003 1,299,840
Government of France, 6.75%............. 6,000,000 10/25/2004 1,188,933
Government of France, 8.50%............. 3,500,000 10/25/2008 776,497
Deutsche Mark
Credit Foncier de France, 7.25%......... 1,500,000 2/24/2003 1,085,891
Japanese Yen
Credit Local de France, 6.00%........... 100,000,000 10/31/2001 1,169,412
-----------
6,516,718
-----------
GERMANY 15.1% Deutsche Mark
Federal Republic of Germany, 6.50%...... 1,500,000 7/15/2003 1,076,620
KFW International Finance, 6.25%........ 2,000,000 10/15/2003 1,403,481
LKB Baden Wurttemb, 6.625%.............. 1,500,000 8/20/2003 1,080,030
Sudwest Landesbank, 6.75%............... 1,500,000 8/26/2003 1,075,021
-----------
4,635,152
-----------
ITALY 3.8% Italian Lira
Republic of Italy, 12.00%............... 1,800,000,000 9/01/2002 1,160,402
-----------
JAPAN 2.1% Japanese Yen
Japan Development Bank, 6.50%........... 23,000,000 9/20/2001 275,991
Pound Sterling
Tokyo Electric Power Co. Inc., 11.00%... 200,000 6/05/2001 356,719
-----------
632,710
-----------
NETHERLANDS 4.5% Guilder
Government of Netherlands, 7.75%........ 2,000,000 3/01/2005 $1,379,769
-----------
SPAIN 3.8% Spanish Peseta
Government of Spain, 10.50%............. 145,000,000 10/30/2003 1,166,962
-----------
UNITED KINGDOM 1.2% Pound Sterling
British Gas PLC, 10.875%................ 200,000 3/26/2001 351,779
-----------
SUPRANATIONAL 15.0% Japanese Yen
European Investment Bank, 6.625%........ 100,000,000 3/15/2000 1,176,133
Inter-American Development Bank, 6.75... 100,000,000 2/20/2001 1,199,961
International Bank for Reconstruction &
Development, 4.50%...................... 100,000,000 6/20/2000 1,098,539
European Economic Deutsche Mark
Community, 6.50%...................... 1,500,000 3/10/2000 1,105,605
-----------
4,580,238
-----------
Total Fixed Income Securities and Investments
(Cost $19,867,007)--75.1%.............................................. 23,002,822
Cash and Other Assets, Less Liabilities---24.9% 7,643,635
-----------
Net Assets--100.0%....................................................... $30,646,457
===========
Federal Income Tax Information:
At October 31, 1995, the net unrealized
appreciation of investments based on cost for Federal income
tax purposes of $19,867,007 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value over
tax cost............................................................... $ 3,240,724
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value............................................................. (104,909)
-----------
$ 3,135,815
===========
</TABLE>
- --------------------------------------------------------------------------------
The principal amount of each security is stated in the currency in which the
security is denominated.
The accompanying notes are an integral part of the financial statements
B-44
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
- ------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
October 31, 1995
ASSETS
Investments, at value (Cost $19,867,007) (Note 1)................. $23,002,822
Foreign currency, at value (Cost $5,537,197)...................... 5,765,716
Cash.............................................................. 1,320,116
Interest receivable............................................... 609,316
Receivable for fund shares sold................................... 26,375
Receivable from investment manager (Note 3)....................... 7,543
Foreign tax receivable............................................ 5,305
Deferred organization costs and other assets (Note 1)............. 39,715
-----------
30,776,908
LIABILITIES
Accrued directors' fees (Note 2).................................. 21,377
Accrued management fee (Note 2)................................... 19,255
Payable for fund shares redeemed.................................. 5,205
Accrued distribution fee (Note 5)................................. 3,789
Other accrued expenses............................................ 80,825
-----------
130,451
-----------
NET ASSETS $30,646,457
===========
Net Assets consist of:
Undistributed net investment income............................. $ 696,597
Unrealized appreciation of investments
and foreign currency.......................................... 3,348,189
Accumulated net realized gain on investments
and foreign currency.......................................... 197,020
Shares of beneficial interest................................... 26,404,651
-----------
$30,646,457
===========
Net Asset Value and redemption price per share of
Class A shares ($2,106,392 / 239,305 shares of
beneficial interest)............................................ $8.80
=====
Maximum Offering Price per share of Class A shares
($8.80 / .955).................................................. $9.21
=====
Net Asset Value and offering price per share of
Class B Shares ($2,851,041 / 324,973 shares of
beneficial interest)*........................................... $8.77
=====
Net Asset Value, offering price and redemption price
per share of Class C shares ($24,516,118 / 2,781,432
shares of beneficial interest).................................. $8.81
=====
Net Asset Value and offering price per share of Class D
shares ($1,172,906 / 133,659 shares of beneficial
interest)*...................................................... $8.78
=====
- ------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
For the year ended October 31, 1995
INVESTMENT INCOME
Interest, net of foreign taxes of $15,189......................... $1,853,452
EXPENSES
Management fee (Note 2)........................................... 210,657
Custodian fee..................................................... 137,628
Registration fees................................................. 59,512
Audit fee......................................................... 46,319
Transfer agent and shareholder services (Note 2).................. 36,577
Reports to shareholders........................................... 22,572
Directors' fees (Note 2).......................................... 20,698
Amortization of organization costs (Note 1)....................... 17,250
Legal fees........................................................ 6,409
Distribution fee--Class A (Note 5)................................ 3,502
Distribution fees--Class B (Note 5)............................... 19,980
Distribution fees--Class D (Note 5)............................... 7,326
Miscellaneous..................................................... 9,555
----------
597,985
Expenses borne by the investment manager (Note 3)................. (149,825)
----------
448,160
----------
Net investment income............................................. 1,405,292
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENT
AND FOREIGN CURRENCY
Net realized gain on investments (Notes 1 and 4).................. 28,314
Net realized gain on foreign currency (Note 1).................... 656,681
----------
Total net realized gain......................................... 684,995
----------
Net unrealized appreciation of investments........................ 1,441,341
Net unrealized appreciation of foreign currency................... 127,582
----------
Total net unrealized appreciation............................... 1,568,923
----------
Net gain on investments and foreign currency...................... 2,253,918
----------
Net increase in net assets resulting from operations.............. $3,659,210
==========
- ------------------------------------------------------------------------------
* Redemption price per share for Class B and Class D is equal to net asset
value less any applicable contingent deferred sales charge.
The accompanying notes are an integral part of the financial statements.
B-45
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31
--------------------------
1995 1994
----------- -----------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income.............................. $ 1,405,292 $ 1,409,678
Net realized gain on investments
and foreign currency*............................ 684,995 505,691
Net unrealized appreciation (depreciation)
of investments and foreign currency.............. 1,568,923 (43,817)
----------- -----------
Net increase resulting from operations............. 3,659,210 1,871,552
Dividends from net investment income:
Class A.......................................... (88,114) (26,264)
Class B.......................................... (113,623) (31,489)
Class C.......................................... (1,691,435) (1,451,541)
Class D.......................................... (41,936) (14,910)
----------- -----------
(1,935,108) (1,524,204)
----------- -----------
Distributions from net realized gains:
Class A.......................................... (5,975) ---
Class B.......................................... (8,086) ---
Class C.......................................... (123,136) (90,111)
Class D.......................................... (2,986) ---
----------- -----------
(140,183) (90,111)
----------- -----------
Net increase from fund share
transactions (Note 6)............................ 2,690,071 1,150,573
----------- -----------
Total increase in net assets....................... 4,273,990 1,407,810
NET ASSETS
Beginning of year.................................. 26,372,467 24,964,657
----------- -----------
End of year (including undistributed
net investment income of $696,597
and $738,734, respectively)...................... $30,646,457 $26,372,467
=========== ===========
*Net realized gain for Federal
income tax purposes (Note 1)...................... $ 197,316 $ 139,887
=========== ===========
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
October 31, 1995
NOTE 1
State Street Research International Fixed Income Fund (the "Fund"), formerly
MetLife International Fixed Income Fund, is a diversified series of State Street
Research Portfolios, Inc. ("Portfolios"), formerly MetLife Portfolios, Inc.,
which was organized as a Maryland corporation in April, 1991 and is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund commenced operations in January, 1992. Portfolios
consists presently of two separate funds: State Street Research International
Fixed Income Fund and State Street Research International Equity Fund.
The Fund offers four classes of shares. Class A shares are subject to an initial
sales charge of up to 4.50% and annual service fees of 0.25% of average daily
net assets. Class B shares are subject to a contingent deferred sales charge on
certain redemptions made within five years of purchase and pay annual
distribution and service fees of 1.00%. Class B shares automatically convert
into Class A shares (which pay lower ongoing expenses) at the end of eight years
after the issuance of the Class B shares. Class C shares are only offered to
certain employee benefit plans and large institutions. No sales charge is
imposed at the time of purchase or redemption of Class C shares. Class C shares
do not pay any distribution or service fees. Class D shares are subject to a
contingent deferred sales charge of 1.00% on any shares redeemed within one year
of their purchase. Class D shares also pay annual distribution and service fees
of 1.00%. The Fund's expenses are borne pro-rata by each class, except that each
class bears expenses, and has exclusive voting rights with respect to provisions
of the Plan of Distribution, related specifically to that class. The Directors
declare separate dividends on each class of shares.
The following significant accounting policies are consistently followed by the
Fund in preparing its financial statements, and such policies are in conformity
with generally accepted accounting principles for investment companies.
A. INVESTMENT VALUATION
Securities traded on domestic stock exchanges are valued at the last sale price
as of the close of business on the day the securities are being valued, or,
lacking any sales, at the mean between closing bid and asked prices. Securities
traded on the National Association of Securities Dealers Automated Quotation
("NASDAQ") system are valued at the last reported sales price. Each security
traded primarily on non-domestic securities exchanges is generally valued at the
preceding closing value of such security on the exchange where it is primarily
traded. A security that is listed or traded on more than one exchange is valued
at the quotation on the exchange determined to be the primary market for such
security by the Board of Directors or its delegates. If no closing price is
available, then such security is valued at the mean between the last current bid
and asked prices or by using the last available closing price. Domestic
securities traded in the over-the-counter market are valued at the mean between
the bid and asked prices or yield equivalent as obtained from two or more
dealers that make markets in the securities. All non-U.S. securities traded in
the over-the-counter market are valued at the last sale quote or the last
closing bid price, if there is no active trading in a particular security for a
given day. Portfolio securities traded both in the
The accompanying notes are an integral part of the financial statements.
B-46
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
over-the-counter market and on a securities exchange are valued according to the
broadest and most representative market. Securities for which market quotations
are not readily available are valued as determined in good faith by or under the
authority of the Directors. Short-term securities maturing within sixty days are
valued at amortized cost. Securities quoted in foreign currencies are translated
into U.S. dollars at the current exchange rate.
B. SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). Realized gains or losses are reported on the basis of
identified cost of securities delivered. Gains and losses that arise from
changes in exchange rates are not segregated from gains and losses that arise
from changes in market prices of investments.
C. NET INVESTMENT INCOME
Investment income is accrued daily as earned. The Fund is charged for expenses
directly attributable to it, while indirect expenses are allocated among all
funds in the Portfolios.
D. DIVIDENDS
Dividends from net investment income are declared and paid or reinvested
quarterly. Net realized capital gains, if any, are distributed annually, unless
additional distributions are required for compliance with applicable tax regula-
tions.
Income dividends and capital gain distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles. The difference is primarily due to differing treatments
for foreign currency transactions.
E. FEDERAL INCOME TAXES
No provision for Federal income taxes is necessary because the Fund has elected
to qualify under Subchapter M of the Internal Revenue Code and its policy is to
distribute all of its taxable income, including net realized capital gains,
within the prescribed time periods.
F. DEFERRED ORGANIZATION COSTS
Certain costs incurred in the organization and registration of the Fund were
capitalized and are being amortized under the straight-line method over a period
of five years.
NOTE 2
The Fund and State Street Research Investment Services, Inc., the Fund's
investment manager and principal underwriter (the "Investment Manager" and
"Distributor") a wholly owned indirect subsidiary of Metropolitan Life Insurance
Company ("Metropolitan"), have entered into an agreement under which the
Investment Manager receives monthly fees at an annual rate of 0.75% of the
Fund's average daily net assets. The Investment Manager has entered into a Sub-
Investment Management Agreement with GFM International Investors Limited (the
"Sub-Investment Manager"), a substantially wholly owned, indirect subsidiary
of Metropolitan, pursuant to which the Sub-Investment Manager has assumed the
overall responsibility for managing the investments of the Fund. During the year
ended October 31, 1995, the Fund paid the Investment Manager $210,657 in
management fees. The Fund has no responsibility for the payment of fees to the
Sub-Investment Manager.
State Street Research Shareholder Services, a division of the Distributor,
provides certain shareholder services to the Fund such as responding to
inquiries and instructions from investors with respect to the purchase and
redemption of shares of the Fund. In addition, Metropolitan receives a fee for
maintenance of the accounts of certain shareholders who are participants in
sponsored arrangements, employee benefit plans and similar programs or plans,
through or under which shares of the Fund may be purchased. During the year
ended October 31, 1995, the amount of such expenses was $18,284.
The fees of the Directors not currently affiliated with the Investment Manager
amounted to $20,698 during the year ended October 31, 1995.
NOTE 3
The Investment Manager or affiliates may from time to time and in varying
amounts voluntarily assume some portion of fees or expenses relating to the
Fund. During the year ended October 31, 1995, the amount of such assumed
expenses was $149,825.
NOTE 4
For the year ended October 31, 1995, purchases and sales of securities,
exclusive of short-term obligations, aggregated $5,570,579 and $9,379,254,
respectively.
NOTE 5
The Portfolios have adopted a Plan of Distribution Pursuant to Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940, as amended. Under the Plan,
the Fund pays annual service fees to the Distributor at a rate of 0.25% of
average daily net assets for Class A, Class B and Class D shares. In addition,
the Fund pays annual distribution fees of 0.75% of average daily net assets for
Class B and Class D shares. The Distributor uses such payments for personal
services and/or the maintenance of shareholder accounts, to reimburse securities
dealers for distribution and marketing services, to furnish ongoing assistance
to investors and to defray a portion of its distribution and marketing expenses.
For the year ended October 31, 1995, fees pursuant to such plan amounted to
$3,502, $19,980 and $7,326 for Class A, Class B and Class D, respectively.
The Fund has been informed that the Distributor and MetLife Securities, Inc., a
wholly owned subsidiary of Metropolitan, earned initial sales charges
aggregating $3,148 and $15,206, respectively on sales of Class A shares of the
Fund during the year ended October 31, 1995, and that MetLife Securities, Inc.
earned commissions aggregating $15,741 on sales of Class B shares, and that the
Distributor collected contingent deferred sales charges of $3,822 and $430 on
redemptions of Class B and Class D, respectively, during the same period.
B-47
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
NOTES (cont'd)
- --------------------------------------------------------------------------------
NOTE 6
The authorized capital stock of the Fund currently consists of 100,000,000
shares, $.01 par value per share. The Fund reserves the right to issue
additional classes of shares. At October 31, 1995, Metropolitan owned 62,933
Class A shares, 62,933 Class B shares, 2,539,382 Class C shares and 62,933
Class D shares of the Fund.
Share transactions were as follows:
<TABLE>
<CAPTION>
MARCH 1, 1994
(COMMENCEMENT OF
YEAR ENDED SHARE CLASS DESIGNATIONS) TO
OCTOBER 31, 1995 OCTOBER 31, 1994
--------------------------- ----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Shares sold................................ 154,393 $1,349,055 143,778 $1,152,383
Issued upon reinvestment of:
Distribution from net realized gains..... 737 5,712 - -
Dividends from net investment
income................................. 5,748 47,607 1,077 8,636
Shares repurchased......................... (51,420) (442,983) (15,008) (119,770)
-------- ---------- -------- ----------
Net increase............................... 109,458 $ 959,391 129,847 $1,041,249
======== ========== ======== ==========
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Shares sold................................ 189,985 $1,645,022 180,601 $1,449,373
Issued upon reinvestment of:
Distribution from net realized gains..... 931 7,205 - -
Dividends from net investment
income................................. 6,879 57,359 1,683 13,466
Shares repurchased......................... (46,537) (393,423) (8,569) (70,408)
-------- ---------- -------- ----------
Net increase............................... 151,258 $1,316,163 173,715 $1,392,431
======== ========== ======== ==========
<CAPTION>
YEAR ENDED
OCTOBER 31, 1994
----------------------------
CLASS C SHARES AMOUNT SHARES AMOUNT
- ------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Shares sold................................ 34,745 $ 311,510 101,016 $ 817,898
Issued upon reinvestment of:
Distribution from net realized gains..... 15,646 121,415 11,332 90,111
Dividends from net investment
income................................. 16,717 137,775 17,188 139,150
Shares repurchased......................... (88,669) (760,263) (354,407) (2,846,802)
-------- ---------- -------- ----------
Net decrease............................... (21,561) $ (189,563) (224,871) $(1,799,643)
======== ========== ======== ===========
<CAPTION>
MARCH 1, 1994
(COMMENCEMENT OF
SHARE CLASS DESIGNATIONS) TO
OCTOBER 31, 1994
----------------------------
CLASS D SHARES AMOUNT SHARES AMOUNT
- ------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Shares sold................................ 73,243 $ 639,413 64,589 $ 516,298
Issued upon reinvestment of:
Distribution from net realized gains..... 385 2,985 - -
Dividends from net investment
income................................. 894 7,531 30 238
Shares repurchased......................... (5,482) (45,849) - -
-------- ---------- -------- ----------
Net increase............................... 69,040 $ 604,080 64,619 $ 516,536
======== ========== ======== ==========
</TABLE>
B-48
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS OF STATE STREET RESEARCH PORTFOLIOS, INC. AND THE
SHAREHOLDERS OF STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
We have audited the accompanying statement of assets and liabilities, including
the investment portfolio, of State Street Research International Fixed Income
Fund, formerly MetLife International Fixed Income Fund, (a series of State
Street Research Portfolios, Inc., formerly MetLife Portfolios, Inc.), as of
October 31, 1995, and the related statement of operations for the year then
ended, the statement of changes in net assets for the two years then ended and
the financial highlights for each of the years in the four year period ended
October 31, 1995. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on the financial statements and financial highlights 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 and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at October
31,1995, by correspondence with the custodian. 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.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of State Street
Research International Fixed Income Fund (a series of State Street Research
Portfolios, Inc.) at October 31, 1995, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Boston, Massachusetts
December 15, 1995
B-49
<PAGE>
STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
Late in 1994, the portfolio was heavily positioned in European bonds. Lower
European interest rates and a rallying bond market benefited the Fund
significantly. After strong performance in the first three months of 1995, the
Fund added to its cash level as a defensive measure.
In the first six months of 1995, the Japanese bond market benefited from a slow
economy, interest rate cuts and a strengthening yen. This helped the Fund, which
had more than 20% of its portfolio denominated in Japanese currency.
The Fund's performance was also linked to the strength of the U.S. dollar
relative to other world currencies. In the past 12 months, GFM did not "hedge"
the portfolio to protect it from changes in foreign currency. As a result, the
Fund benefited from a weakening U.S. dollar earlier in the year. However, over
the most recent few months, the U.S. dollar strengthened--which cut into the
Fund's returns.
The Salomon Brothers Non-U.S. Dollar World Bond Index is a commonly used measure
of overseas bond market performance. The index is unmanaged and does not take
sales charges into consideration. Direct investment in the index is not
possible; results are for illustrative purposes only. All returns represent past
performance, which is no guarantee of future results. The investment return and
principal value of an investment made in the Fund will fluctuate and shares,
when redeemed, may be worth more or less than their original cost. All returns
assume reinvestment of capital gain distributions and income dividends. Shares
of the Fund had no class designations until March 1,1994, when designations were
assigned based on the pricing and 12b-1 fees applicable to shares sold
thereafter. Performance for a class includes periods prior to the adoption of
class designations. Performance reflects up to a maximum 4.5% front-end or 5%
contingent deferred sales charge. Performance prior to class designations in
1994 does not reflect annual 12b-1 fees of .25% for Class "A" shares and 1% for
Class "B" and "D" shares, which will reduce subsequent performance. Performance
results are increased by the investment manager's voluntary reduction of fees
and expenses related to the Fund. The first figure reflects expense reduction;
the second shows what results would have been without subsidization.
COMPARISON OF CHANGE IN VALUE OF A $10,000
INVESTMENT IN INTERNATIONAL FIXED INCOME FUND
AND THE SALOMON BROTHER NON-U.S. DOLLAR WORLD
BOND INDEX
CLASS A SHARES
Average Annual Total Return
----------------------------
1 Year Life of Fund
------------- ------------
+9.12%/+8.11% +8.66%/8.06%
[CHART APPEARS HERE]
CLASS B SHARES
Average Annual Total Return
----------------------------
1 Year Life of Fund
------------- ------------
+8.53%/+7.48% +9.03%/8.37%
[CHART APPEARS HERE]
CLASS C SHARES
Average Annual Total Return
-------------------------------
1 Year Life of Fund
--------------- -------------
+14.51%/+13.45% +10.11%/9.47%
[CHART APPEARS HERE]
CLASS D SHARES
Average Annual Total Return
------------------------------
1 Year Life of Fund
--------------- ------------
+12.49%/+11.44% +9.66%/9.05%
[CHART APPEARS HERE]
B-50
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS:
(1)Financial Statements in Part A (Prospectus) of this Registration
Statement:
Financial Highlights for International Equity Fund and International
Fixed Income Fund for the period January 22, 1992 (commencement of
operations) through October 31, 1995.
(2) Financial Statements included in Part B (Statement of Additional
Information) of this Registration Statement:
For International Equity Fund and International Fixed Income Fund
for the fiscal year ended October 31, 1995 (except as provided
below):
Investment Portfolio
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets (for the period January 22, 1992
(commencement of operations) to October 31, 1995)
Notes to Financial Statements
Independent Auditors' Report
Management's Discussion of Fund Performance
(b) EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER NUMBER
- ------- ------
<S> <C> <C>
1 --Amended and restated Articles of Incorporation of Registrant.
1(a) --Articles Supplementary.
1(b) --Articles Supplementary.
2 --Amended By-Laws of Registrant.
3 --None
4 --Specimen certificates for shares of common stock of Registrant.
5(a) --Investment Management Agreements relating to the MetLife International Equity
and MetLife International Fixed Income Funds between MetLife-State Street
Investment Services, Inc. and MetLife Portfolios, Inc.
(b) --Sub-Investment Management Agreements relating to the MetLife International
Equity and MetLife International Fixed Income Funds among MetLife-State Street
Investment Services, Inc., GFM International Investors Limited, and MetLife
Portfolios, Inc.
6(a) --Distribution Agreement with MetLife-State Street Investment Services, Inc.
(b) --Form of Selected Dealer Agreement.
(c) --Form of Bank and Bank Affiliated Broker-Dealer Agreement.
7 --Not Applicable.
8(a) --Custodian Contract with State Street Bank and Trust Company.
(b) --Form of Transfer Agent and Service Agreement with State Street Bank and Trust
Company.
(c) --Shareholders' Administrative Services Agreement with MetLife-State Street
Investment Services, Inc.
(d) --Service Agreement among MetLife Portfolios, Inc., Metropolitan Life Insurance
Company, and MetLife-State Street Investment Services, Inc.
(e) --Sub-Administration Agreement with State Street Bank and Trust Company,
Metropolitan Life Insurance Company and State Street Research Investment
Services, Inc.
9 --License Agreement with Metropolitan Life Insurance Company.
10 --Opinion and consent of counsel.
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER NUMBER
- ------- ------
<S> <C> <C>
11 --Consent of Deloitte & Touche.
12 --None
13 --Purchase Agreement and Investment Letter.
14(b) --Prototype Individual Retirement Account Terms and Conditions, Individual
Retirement Account Disclosure Statement, Individual Retirement Account
Application And Agreement, Direct Rollover of Assets Form and IRA Systematic
Withdrawal Plan Application.
14(c) --State Street Research 403(b): Brochure, Account Agreement, Maximum Salary
Reduction Worksheet, Account Application, Salary Reduction Agreement and
Direct Rollover of Assets Form.
15 --Distribution Plan.
16 --Schedule of Performance Data.
17 --Powers of Attorney.
18 --Multiple Class Expense Allocation Plan adopted pursuant to Rule 18f-3.
27 --Financial Data Schedules
</TABLE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
(REST OF PAGE LEFT INTENTIONALLY BLANK)
C-2
<PAGE>
ORGANIZATIONAL STRUCTURE OF METROPOLITAN AND SUBSIDIARIES
AS OF DECEMBER 31, 1995
The following is a list of subsidiaries of Metropolitan Life Insurance Company
("Metropolitan") as of December 31, 1995. Those entities which are listed at
the left margin (labelled with capital letters) are direct subsidiaries of
Metropolitan. Unless otherwise indicated, each entity which is indented under
another entity is a subsidiary of such indented entity and, therefore, an
indirect subsidiary of Metropolitan. Certain inactive subsidiaries have been
omitted from the Metropolitan Organizational listing. The voting securities
(excluding directors' qualifying shares, if any) of the subsidiaries listed are
100% owned by their respective parent corporations, unless otherwise indicated.
The jurisdiction of domicile of each subsidiary listed is set forth in the
parenthetical following such subsidiary.
A. Metropolitan Tower Corp. (Delaware)
1. Metropolitan Property and Casualty Insurance Company (Delaware)
a. Metropolitan Group Property and Casualty Insurance Company
(Delaware)
i. Metropolitan Reinsurance Company (U.K.) Limited (Great
Britain)
b. Metropolitan Casualty Insurance Company (Delaware)
c. Metropolitan General Insurance Company (Delaware)
d. First General Insurance Company (Georgia)
e. Metropolitan P&C Insurance Services, Inc. (California)
f. Metropolitan Lloyds, Inc. (Texas)
2. Metropolitan Insurance and Annuity Company (Delaware)
a. MetLife Europe I, Inc. (Delaware)
b. MetLife Europe II, Inc. (Delaware)
c. MetLife Europe III, Inc. (Delaware)
d. MetLife Europe IV, Inc. (Delaware)
e. MetLife Europe V, Inc. (Delaware)
3. MetLife General Insurance Agency, Inc. (Delaware)
a. MetLife General Insurance Agency of Alabama, Inc. (Alabama)
b. MetLife General Insurance Agency of Kentucky, Inc. (Kentucky)
c. MetLife General Insurance Agency of Mississippi, Inc.
(Mississippi)
d. MetLife General Insurance Agency of Texas, Inc. (Texas)
e. MetLife General Insurance Agency of North Carolina, Inc. (North
Carolina)
C-3
<PAGE>
4. Metropolitan Asset Management Corporation (Delaware)
a. MetLife Capital Holdings, Inc. (Delaware)
i. MetLife Capital Corporation (Delaware)
(1) Searles Cogeneration, Inc. (Delaware)
(2) MLYC Cogen, Inc. (Delaware)
(3) MCC Yerkes Inc. (Washington)
(4) MetLife Capital, Limited Partnership (Delaware).
Partnership interests in MetLife Capital, Limited
Partnership are held by Metropolitan (90%) and MetLife
Capital Corporation (10%).
(5) CLJ Finco, Inc. (Delaware)
(a) MetLife Capital Credit L.P. (Delaware).
Partnership interests in MetLife Capital Credit
L.P. are held by Metropolitan (90%) and CLJ
Finco, Inc. (10%).
(6) MetLife Capital Portfolio Investments, Inc. (Nevada)
(a) MetLife Capital Funding Corp. (Delaware)
ii. MetLife Capital Financial Corporation (Delaware)
C-4
<PAGE>
iii. MetLife Financial Acceptance Corporation (Delaware).
MetLife Capital Holdings, Inc. holds 100% of the voting
preferred stock of MetLife Financial Acceptance Corporation.
Metropolitan Property and Casualty Insurance Company holds
100% of the common stock of MetLife Financial Acceptance
Corporation.
b. MetLife Investment Management Corporation (Delaware)
i. MetLife Investments Limited (United Kingdom). 23rd Street
Investments, Inc. holds one share of MetLife Investments
Limited.
c. MetLife Realty Group, Inc. (Delaware)
d. GFM International Investors Limited (United Kingdom). The common
stock of GFM International Investors Limited ("GFM") is held by
Metropolitan (99.5%) and by an employee of GFM (.5%). GFM is a
sub-investment manager for the International Stock Portfolio of
Metropolitan Series Fund, Inc.
i. GFM Investments Limited (United Kingdom)
5. SSRM Holdings, Inc. (Delaware)
a. State Street Research & Management Company (Delaware). Is a sub-
investment manager for the Growth, Income, Diversified and
Aggressive Growth Portfolios of Metropolitan Series Fund, Inc.
i. State Street Research Energy, Inc. (Massachusetts)
ii. State Street Research Investment Services, Inc.
(Massachusetts)
b. Metric Holdings, Inc. (Delaware)
i. Metric Management Inc. (Delaware)
ii. Metric Realty Corp. (Delaware)
iii. Metric Realty (Illinois). Metric Realty Corp. and Metric
Holdings, Inc. each hold 50% of the common stock of Metric
Realty.
(1) Metric Capital Corporation (California)
(2) Metric Assignor, Inc. (California)
(3) Metric Institutional Realty Advisors, Inc. (California)
(4) Metric Institutional Realty Advisors, L.P.
(California).
Metric Realty holds a 99% limited partnership interest
and Metric Institutional Realty Advisors, Inc. holds a
1%
C-5
<PAGE>
interest as general partner in Metric Institutional
Realty Advisors, L.P.
(5) Metric Realty Services, Inc. (Delaware) Metric Holdings
Inc. and Metric Realty Corp. each hold 50% of the
common stock of Metric Realty Services, Inc.
(6) Metric Institutional Apartment Fund II, L.P.
(California). Metric Realty holds a 1% interest as
general partner and Metropolitan holds an approximately
14.6% limited partnership interest in Metric
Institutional Apartment Fund II, L.P.
6. MetLife Holdings, Inc. (Delaware)
a. MetLife Funding, Inc. (Delaware)
b. MetLife Credit Corp. (Delaware)
7. Metropolitan Tower Realty Company, Inc. (Delaware)
8. MetLife Real Estate Advisors, Inc. (California)
9. MetLife HealthCare Holdings, Inc. (Delaware)
B. Metropolitan Tower Life Insurance Company (Delaware)
C. MetLife Security Insurance Company of Louisiana (Louisiana)
D. MetLife Texas Holdings, Inc. (Delaware)
1. Texas Life Insurance Company (Texas)
a. Texas Life Agency Services, Inc. (Texas)
b. Texas Life Agency Services of Kansas, Inc. (Kansas)
E. MetLife Securities, Inc. (Delaware)
F. 23rd Street Investments, Inc. (Delaware)
G. Metropolitan Life Holdings Limited (Ontario, Canada)
1. Metropolitan Life Financial Services Limited (Ontario, Canada)
2. Metropolitan Life Financial Management Limited (Ontario, Canada)
a. Metropolitan Life Insurance Company of Canada (Canada)
b. Metropolitan Life Operations Limited (Canada)
C-6
<PAGE>
3. Morguard Investments Limited (Ontario, Canada)
Shares of Morguard Investments Limited ("Morguard") are held by
Metropolitan Life Holdings Limited (80%) and by employees of Morguard
(20%).
4. Services La Metropolitaine Quebec, Inc. (Quebec, Canada)
5. 167080 Canada, Inc. (Canada)
a. 446068 B.C. Ltd. (British Columbia, Canada)
H. MetLife (UK) Limited (Great Britain)
1. Albany Life Assurance Company Limited (Great Britain)
a. Albany Pension Managers and Trustees Limited (Great Britain)
2. Albany Home Loans Limited (Great Britain)
3. ACFC Corporate Finance Limited (Great Britain)
4. Metropolitan Unit Trust Managers Limited (Great Britain)
5. Albany International Assurance Limited (Isle of Man)
6. MetLife Group Services Limited (Great Britain)
I. Santander Met, S.A. (Spain). Shares of Santander Met, S.A. are held by
Metropolitan (50%) and by an entity (50%) unaffiliated with Metropolitan.
1. Seguros Genesis, S.A. (Spain)
2. Genesis Seguros Generales, Sociedad Anomina de Seguros y Reaseguros
(Spain)
J. Kolon-Met Life Insurance Company (Korea). Shares of Kolon-MetLife Insurance
Company are held by Metropolitan (51%) and by an entity (49%) unaffiliated
with Metropolitan.
C-7
<PAGE>
K. Metropolitan Life Seguros de Vida S.A. (Argentina)
L. Genesis Seguros de Retiro S.A. (Argentina). Shares of Genesis Seguros de
Retiro S.A. are held by Metropolitan (39%) and by an entity (61%)
unaffiliated with Metropolitan.
M. 2945835 Canada Inc. (Canada)
N. Metropolitan Marine Way Investments Limited (British Columbia, Canada)
O. Met Life Holdings Luxembourg (Luxembourg)
P. Metropolitan Life Holdings, Netherlands BV (Netherlands)
Q. MetLife International Holdings, Inc. (Delaware)
R. Metropolitan Life Insurance Company of Hong Kong Limited (Hong Kong)
C-8
<PAGE>
S. Metropolitan Realty Management, Inc. (Delaware)
1. Edison Supply and Distribution, Inc. (Delaware)
2. Cross & Brown Company (New York)
a. Cross & Brown Residentials, Inc. (New York)
b. Cross & Brown Company of Florida, Inc. (Florida)
c. Cross & Brown Associates of New York, Inc. (New York)
d. Cross & Brown Associates of New Jersey, Inc. (New Jersey)
e. Subrown Corp. (New York)
f. Cross & Brown Construction Corp. (New York)
g. CBNJ, Inc. (New Jersey)
h. Cross & Brown of Connecticut, Inc. (Connecticut)
T. MetPark Funding, Inc. (Delaware)
U. 2154 Trading Corporation (New York)
V. Transmountain Land & Livestock Company (Montana)
W. Met West Agribusiness, Inc. (Delaware)
X. Farmers National Company (Nebraska)
1. Farmers National Commodities, Inc. (Nebraska)
C-9
<PAGE>
Z. Nebraska Farms, Inc. (Nebraska)
AA. Met Farm and Ranch Properties, Inc. (Delaware)
AB. City Trust Services, National Association (United States)
In addition to the entities listed above, Metropolitan (or where indicated an
affiliate) also owns an interest in the following entities, among others:
1) CP&S Communications, Inc., a New York corporation, holds federal radio
communications licenses for equipment used in Metropolitan owned facilities and
airplanes. It is not engaged in any business.
C-10
<PAGE>
2) Quadreal Corp., a New York corporation, is the fee holder of a parcel of
real property subject to a 999 year prepaid lease. It is wholly-owned by
Metropolitan, having been acquired by a wholly-owned subsidiary of Metropolitan
in 1973 in connection with a real estate investment and transferred to
Metropolitan in 1988.
3) Met Life International Real Estate Equity Shares, Inc., a Delaware
corporation, is a real estate investment trust. Metropolitan owns approximately
18.4% of the outstanding common stock of this company and has the right to
designate 2 of the 5 members of its Board of Directors.
4) Metropolitan Structures is a general partnership in which Metropolitan owns
a 50% interest. Metropolitan Structures owns 100% of the common stock of
Cicero/Cermak Corporation, an Illinois corporation, which owns and manages a
shopping center in Illinois. Metropolitan Structures, Inc., an Illinois
corporation, is a property manager. Metropolitan Structures, Inc. is wholly-
owned by Metropolitan Structures. Metropolitan Structures, Inc. is the sole
general partner of MS Management Services, L.P., an Illinois limited partnership
in which Metropolitan has a 49.5% interest as a limited partner.
5) Metropolitan Structures West, Inc. (doing business as MS Management
Services), a California corporation, is a property manager in California.
Metropolitan owns 50% of the capital stock of Metropolitan Structures West, Inc.
6) Seguros Genesis, S.A. (Mexico), is a Mexican insurer in which Metropolitan
and two of its subsidiaries collectively own a 24.5% interest and have the right
to designate 2 of the 9 members of the Board of Directors.
C-11
<PAGE>
7) Interbroker, Correduria de Reaseguros, S.A., is a Spanish insurance brokerage
company in which Santander Met, S.A., a subsidiary of Metropolitan in which
Metropolitan owns a 50% interest, owns a 50% interest and has the right to
designate 2 of the 4 members of the Board of Directors.
8) Metropolitan owns varying interests in certain mutual funds distributed by
its affiliates. These ownership interests are generally expected to decrease as
shares of the funds are purchased by unaffiliated investors.
9) Metropolitan Lloyds Insurance Company of Texas, an affiliated association,
provides homeowner and related insurance for the Texas market. It is an
association of individuals designated as underwriters. Metropolitan Lloyds,
Inc., a subsidiary of Metropolitan Property and Casualty Insurance Company,
serves as the attorney-in-fact and manages the association.
10) Mezzanine Investment Limited Partnerships ("MILPs"), Delaware limited
partnerships, are investment vehicles through which investments in certain
entities are held. A wholly-owned subsidiary of Metropolitan serves as the
general partner of the limited partnerships and Metropolitan directly owns a 99%
limited partnership interest therein. The MILPs have various ownership interests
in certain companies. The various MILPs own, directly or indirectly, more than
50% of the common stock of the following companies: Coating Technologies
International, Inc., Dan River, Inc.; Igloo Holdings, Inc. and its subsidiary,
Igloo Products Corporation; Blodgett Holdings, Inc., and its subsidiaries, GS
Blodgett Corporation, GS Blodgett International Ltd., GS Blodgett Inc., Pitco
Frialator, Inc., Frialator International Limited, Magikitch'n, Inc., and
Cloverleaf Properties, Inc.; and Briggs Holdings, Inc., and its subsidiary,
Briggs Plumbing Products, Inc.
C-12
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
NUMBER OF
RECORD HOLDERS
TITLE OF CLASS AS OF JANUARY 31, 1996
-------------- ----------------------
<S> <C>
International Equity Fund Common Stock, par value
$0.01 per share
Class A........................................... 5,405
Class B........................................... 4,003
Class C........................................... 3,031
Class D........................................... 351
International Fixed Income Fund Common Stock, par
value $0.01 per share
Class A........................................... 279
Class B........................................... 205
Class C........................................... 307
Class D........................................... 48
</TABLE>
ITEM 27. INDEMNIFICATION.
(a) MARYLAND LAW AND BY-LAWS.
The Registrant is required by Article V of its By-Laws to indemnify or
advance expenses to directors and officers (or former directors and officers)
to the extent permitted or required by the Maryland General Corporation Law
("MGCL") and, in the case of officers (or former officers), only to the extent
specifically authorized by resolution of the Board of Directors. Section 2-418
of the MGCL permits indemnification of a director against judgments, penalties,
fines, settlements and reasonable expenses actually incurred in connection with
any proceeding to which he has been made a party by reason of service as a
director, unless it is established that (i) the directors's act or omission was
material to the matter giving rise to the proceeding and was committed in bad
faith or was the result of active or deliberate dishonesty; (ii) the director
actually received an improper personal benefit; or (iii) in the case of a
criminal proceeding, the director had reasonable cause to believe that the act
or omission was unlawful. However, indemnification may not be made in any
proceeding by or in the right of the corporation in which the director has been
adjudged to be liable to the corporation. Section 2-418 of the MGCL also
requires a corporation, unless limited by its charter, to indemnify a director
who has been successful in the defense of a proceeding against reasonable
expenses incurred. In addition, reasonable expenses incurred by a director may
be paid or reimbursed by a corporation in advance the final disposition of a
proceeding upon the receipt of certain written affirmations and undertakings
required by Section 2-418. A Maryland corporation may indemnify and advance
expenses to an officer to the same extent it may indemnify a director, and is
required to indemnify an officer to the extent required for a director.
Notwithstanding the foregoing, Article V of the Registrant's By-Laws provides
that nothing contained therein shall be construed to protect any director or
officer against any liability to the Registrant or its security holders to
which he would otherwise by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
(b) Under the Distribution Agreement between the Registrant and State Street
Research Investment Services, Inc., the Registrant's investment manager and
distributor, the Registrant has agreed to indemnify and hold harmless State
Street Research Investment Services, Inc. and each person who has been, is, or
may hereafter be an officer, director, employee or agent of State Street
Research Investment Services, Inc. against any loss, damage or expense
reasonably incurred by any of them in connection with any claim or in
connection with any action, suit or proceeding to which any of them may be a
party, which arises out of or is alleged to arise out of or is based upon a
violation of any of its covenants herein contained or any untrue or
C-13
<PAGE>
alleged untrue statement of material fact, or the omission or alleged omission
to state a material fact necessary to make the statements made not misleading,
in a Registration Statement or Prospectus of the Registrant, or any amendment
or supplement thereto, unless such statement or omission was made in reliance
upon written information furnished by State Street Research Investment
Services, Inc.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Reference is made to the section captioned "Directors and Officers" in the
Statement of Additional Information for additional information concerning
certain affiliations of Directors and Officers which information is
incorporated herein by reference. Information concerning certain other
affiliations of the other officers and directors of State Street Research
Investment Services, Inc., the Registrant's investment adviser, and GFM
International Investors Limited, the Registrant's sub-investment manager,
during the past two years, is set forth below.
<TABLE>
<CAPTION>
PRINCIPAL BUSINESS
ADDRESS OF
NAME CONNECTION ORGANIZATION ORGANIZATION
---- ---------- ------------ ------------------
<C> <C> <S> <C>
Barghaan, Dennis C. ..... Assistant Vice Metropolitan Life New York, NY
Senior Vice President President (until Insurance Company
12/94)
Bennett, Peter Christian. Vice President State Street Research Boston, MA
Director Vice President Capital Trust
Vice President State Street Research Boston, MA
Exchange Trust
State Street Research Boston, MA
Growth Trust
Vice President State Street Research Boston, MA
Master Investment Trust
Vice President State Street Research Boston, MA
Equity Trust
Director and Executive State Street Research & Boston, MA
Vice President Management Company
Director Boston Private Bank & Boston, MA
Trust Co.
President and Director Christian Camps & Boston, MA
Conferences, Inc.
Chairman and Trustee Gordon College Wenham, MA
Borghi, Peter............ None
Senior Vice President
Daly, Paul V. ........... None
Senior Vice President
DiFazio, Susan M.W....... Vice President State Street Research & Boston, MA
Senior Vice President Management Company
Evans, Gordon............ Vice President State Street Research & Boston, MA
Vice President Management Company
Grasso, Linda............ None
Vice President
Haeusler, Robert ........ Assistant Vice Metropolitan Life New York, NY
President Insurance
Senior Vice President (until 12/94) Company
</TABLE>
C-14
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL BUSINESS
ADDRESS OF
NAME CONNECTION ORGANIZATION ORGANIZATION
---- ---------- ------------ ------------------
<S> <C> <C> <C>
Jamieson, Frederick H... Senior Vice President State Street Research & Boston, MA
(Vice President until Management Company
Vice President and 6/95) Vice President SSRM Holdings, Inc. Boston, MA
Assistant Treasurer and Assistant
Treasurer MetLife Securities, Inc. New York, NY
Vice President and
Controller
Maus, Gerard P.......... Treasurer State Street Research Boston, MA
Director, Executive Equity Trust
Vice President, Trea- Treasurer State Street Research Boston, MA
surer and Chief Finan- Financial Trust
cial Treasurer State Street Research Boston, MA
Officer Income Trust
Treasurer State Street Research Boston, MA
Money Market Trust
Treasurer State Street Research Boston, MA
Tax-Exempt Trust
Treasurer State Street Research Boston, MA
Capital Trust
Treasurer State Street Research Boston, MA
Exchange Trust
Treasurer State Street Research Boston, MA
Growth Trust
Treasurer State Street Research Boston, MA
Master Investment Trust
Treasurer State Street Research Boston, MA
Securities Trust
Director, Executive State Street Research & Boston, MA
Vice President, Management Company
Treasurer, Chief
Financial Officer and
Chief Administrative
Officer
Director Metric Holdings, Inc. San
Francisco, CA
Director Certain wholly-owned
subsidiaries of Metric
Holdings, Inc.
Director (until 12/94) GFM International London,
Investors Limited England
Treasurer and Chief SSRM Holdings, Inc. Boston, MA
Financial Officer
Treasurer MetLife Securities, Inc. New York, NY
McMahan, Gregory R...... None
Senior Vice President
McNamara, III, Francis Senior Vice President, State Street Research & Boston, MA
J. Secretary & General Management Company
Senior Vice President, Counsel
Clerk & General Counsel
Secy & General Counsel State Street Research Boston, MA
Capital Trust
</TABLE>
C-15
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL BUSINESS
ADDRESS OF
NAME CONNECTION ORGANIZATION ORGANIZATION
---- ---------- ------------ ------------------
<S> <C> <C> <C>
Secy & General Counsel State Street Research Boston, MA
Exchange Trust
Secy & General Counsel State Street Research Boston, MA
Growth Trust
Secy & General Counsel State Street Research Master Boston, MA
Investment Trust
Secy & General Counsel State Street Research Boston, MA
Equity Trust
Secy & General Counsel State Street Research Boston, MA
Financial Trust
Secy & General Counsel State Street Research Income Boston, MA
Trust
Secy & General Counsel State Street Research Money Boston, MA
Market Trust
Secy & General Counsel State Street Tax-Exempt Boston, MA
Trust
Secy & General Counsel State Street Research Boston, MA
Securities Trust
Secy & General Counsel SSRM Holdings, Inc. Boston, MA
Senior Vice President, The Boston Company, Inc. Boston, MA
General Counsel and
Assistant Secretary
(until 5/95)
Senior Vice President, Boston Safe Deposit and Boston, MA
General Counsel and Trust Company
Assistant Secretary
(until 5/95)
Senior Vice President, The Boston Company Advisors, Boston, MA
General Counsel and Inc.
Assistant Secretary
(until 5/95)
Miller, Joan D. ........ Vice President State Street Research & Boston, MA
Senior Vice President Management Company
Samartin, Richard P. ... None
Senior Vice President
Shaver, Jr., C. Troy.... President and Chief John Hancock Funds, Inc. Boston, MA
President and Chief Executive Officer
Executive Officer (until 1/96)
Shively, Thomas A. ..... Vice President State Street Research Boston, MA
Director Financial Trust
Vice President State Street Research Boston, MA
Money Market Trust
Vice President State Street Research Boston, MA
Tax-Exempt Trust
Vice President State Street Research Boston, MA
Securities Trust
Executive Vice State Street Research & Boston, MA
President Management Company
and Director
Trotta, George B. ...... Senior Vice President Metropolitan Life New York, NY
Executive Vice Presi- (until 1995) Insurance Company
dent
</TABLE>
C-16
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL BUSINESS
ADDRESS OF
NAME CONNECTION ORGANIZATION ORGANIZATION
---- ---------- ------------ ------------------
<C> <C> <S> <C>
Verni, Ralph F.......... Chairman, President, State Street Research Boston, MA
Chairman of the Board Chief Executive Capital Trust
(President, Chief Officer and Trustee
Executive Officer Chairman, President,
until 2/96) Chief Executive State Street Research Boston, MA
Officer and Trustee Exchange Trust
Chairman, President, State Street Research Boston, MA
Chief Executive Growth Trust
Officer and Trustee
Chairman, President, State Street Research Boston, MA
Chief Executive Master Investment Trust
Officer and Trustee
Chairman, President, State Street Research Boston, MA
Chief Executive Equity Trust
Officer and Trustee
Chairman, President, State Street Research Boston, MA
Chief Executive Financial Trust
Officer and Trustee
Chairman, President, State Street Research Boston, MA
Chief Executive Income Trust
Officer and Trustee
Chairman, President, State Street Research Boston, MA
Chief Executive Money Market Trust
Officer and Trustee
Chairman, President, State Street Research Boston, MA
Chief Executive Tax-Exempt Trust
Officer and Trustee
Chairman, President, State Street Research Boston, MA
Chief Executive Securities Trust
Officer and Trustee
Chairman, President, State Street Research & Boston, MA
Chief Executive Management Company
Officer and Director
Chairman and Director Metric Holdings, Inc. San
Francisco, CA
Director and Officer Certain wholly-owned
subsidiaries of Metric
Holdings, Inc.
Chairman of the Board MetLife Securities, Inc. New York, NY
and Director
Chairman and Director GFM International London,
(until 12/94) Investors Limited England
President, Chief SSRM Holdings, Inc. Boston, MA
Executive
Officer and Director
Director CML Group, Inc. Boston, MA
</TABLE>
C-17
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL BUSINESS
ADDRESS OF
NAME CONNECTION ORGANIZATION ORGANIZATION
---- ---------- ------------ ------------------
<C> <C> <S> <C>
Wing, Darman A.......... Vice President, State Street Research & Boston, MA
Senior Vice President, Assistant Secretary Management Company
Assistant Clerk and Assistant
and Assistant General Counsel
General Counsel
(Vice President
until 6/95)
Assistant Secretary State Street Research Boston, MA
Capital Trust
Assistant Secretary State Street Research Boston, MA
Exchange Trust
Assistant Secretary State Street Research Boston, MA
Growth Trust
Assistant Secretary State Street Research Boston, MA
Master Investment Trust
Assistant Secretary State Street Research Boston, MA
Securities Trust
Assistant Secretary State Street Research Boston, MA
Equity Trust
Assistant Secretary State Street Research Boston, MA
Financial Trust
Assistant Secretary State Street Research Boston, MA
Income Trust
Assistant Secretary State Street Research Boston, MA
Money Market Trust
Assistant Secretary State Street Research Boston, MA
Tax-Exempt Trust
Assistant Secretary SSRM Holdings, Inc. Boston, MA
and Assistant General
Counsel
</TABLE>
The business of GFM International Investors Limited is summarized under
"Management of the Funds", in the prospectus constituting Part A of this
Registration Statement, which summarization is incorporated herein by
reference.
Set forth below is a list of each director and certain officers of GFM
International Investors Limited indicating any other business, profession,
vocation or employment of a substantial nature in which each such person is or
has been, at any time during the past two fiscal years, engaged for his or her
own account or in the capacity of director, officer, employee, partner or
trustee.
<TABLE>
<CAPTION>
ORGANIZATION AND PRINCIPAL
NAME POSITION BUSINESS ADDRESS OF ORGANIZATION
---- -------- --------------------------------
<S> <C> <C>
Stephen J. Bamford.......... Director, President and GFM Investments Limited
Chief Executive Chief Executive Officer London, England
Officer & Director
Gerald Clark ............... Executive Vice Metropolitan Life Insurance
Chairman of the Board, President, Chief Company, New York, NY
Director Investment Officer
Advisory Board AIG Asian Infrastructure Fund,
L.P. New York, NY
</TABLE>
C-18
<PAGE>
<TABLE>
<CAPTION>
ORGANIZATION AND PRINCIPAL
NAME POSITION BUSINESS ADDRESS OF ORGANIZATION
---- -------- --------------------------------
<S> <C> <C>
Director The New York Police and Fire
Widows' and Children's Benefit
Fund
New York, NY
Director Community Preservation
Corporation
New York, NY
Director 23rd Street Investments, Inc.
(until 12/93) New York, NY
Director Century 21 Real Estate
(until 1995) Corporation
Irvine, CA
Chairman GFM Investments Limited
London, England
Director, Chief Metropolitan Asset Management
Executive Officer, Corporation
President New York, NY
Director MetFirst Insurance Agency, Inc.
(until 8/95) Overland Park, KS
Chairman of the Board, MetLife Investment Management
Director Corporation
White Plains, NY
Chairman of the Board, MetLife Capital Holdings, Inc.
Director New York, NY
Director Metropolitan Life Financial
Services Limited
Ottawa, Ontario, Canada
Director Metropolitan Life Holdings
(until 1/95) Limited Ottawa, Ontario, Canada
Director MetLife International Holdings,
Inc.
New York, NY
Chairman of the Board, MetLife Realty Group, Inc.
Director White Plains, NY
Director MetLife Securities Inc.
(until 10/95) New York, NY
Chairman, Director Metmor Financial, Inc.
(until 8/95) Overland Park, KS
Director SSRM Holdings, Inc.
Boston, MA
Director MetLife Investments Limited
(until 5/93) Hertfordshire, England
Director Albany Life Assurance
(until 12/93) Company Limited
Hertfordshire, England
Director MetLife (UK) Limited
(until 12/93) Hertfordshire, England
</TABLE>
C-19
<PAGE>
<TABLE>
<CAPTION>
ORGANIZATION AND PRINCIPAL
NAME POSITION BUSINESS ADDRESS OF ORGANIZATION
---- -------- --------------------------------
<S> <C> <C>
C. Robert Henrikson......... Executive Vice President Metropolitan Life Insurance
Director Company, New York, NY
Director MetLife Investment Management
Corporation
White Plains, NY
Chairman of the Board, MetLife Security Insurance
Director, President, Company of Louisiana
Chief Executive Officer Baton Rouge, LA
Director Metropolitan Property & Casualty
Insurance Company
Warwick, RI
Director GFM Investments Limited
London, England
Director MetLife Realty Group
White Plains, NY
Vice-Chairman Life Insurance Companies Guaranty
Corporation of New York,
New York, NY
John C. Morrison, Jr........ Senior Vice President Metropolitan Life Insurance
Director Company New York, NY
Director MetLife Investment Management
Corporation
White Plains, NY
Director MetLife Realty Group, Inc.
White Plains, NY
Director GFM Investments Limited
London, England
Vice President and MetLife Securities, Inc.
Treasurer (until 4/95) New York, NY
President, Director MetLife Capital Holdings, Inc.
New York, NY
Chairman of the Board, MetLife Capital Corporation
Director Bellevue, WA
Director Metmor Financial, Inc.
(until 1995) Overland Park, KS
Director MetFirst Insurance Agency, Inc.
(until 1995) Overland Park, KS
Chairman of the Board, MetLife Capital Financial
Director Corporation
Bellevue, WA
Director CLJ Finco, Inc.
Bellevue, WA
Director MLYC Cogen, Inc.
Wilmington, DE
</TABLE>
C-20
<PAGE>
<TABLE>
<CAPTION>
ORGANIZATION AND PRINCIPAL
NAME POSITION BUSINESS ADDRESS OF ORGANIZATION
---- -------- --------------------------------
<S> <C> <C>
Director Searles Cogeneration, Inc.
Bellevue, WA
Director MCC Yerkes, Inc.
Bellevue, WA
Director Cross & Brown Company
New York, NY
Director Cross & Brown Associates
of New Jersey, Inc.
New York, NY
Director Cross & Brown Associates
of New York, Inc.
New York, NY
Director Cross & Brown Construction Corp.
New York, NY
Director Cross & Brown of Connecticut,
Inc.
Westport, CT
Director Cross & Brown Company
of Florida, Inc.
Jacksonville, FL
Director Cross & Brown Residentials, Inc.
New York, NY
Director Subrown Corp.
New York, NY
Director CBNJ, Inc.
Springfield, NJ
Vice President Metropolitan Asset Management
Corporation
New York, NY
Chairman of the Board, MetPark Funding, Inc.
Director, President New York, NY
Director Cross & Brown Company
of Georgia, Inc.
Atlanta, GA
Director Cross & Brown Company
of Maryland, Inc.
Rockville, MD
Director Cross & Brown Company
of Missouri, Inc.
New York, NY
</TABLE>
C-21
<PAGE>
<TABLE>
<CAPTION>
ORGANIZATION AND PRINCIPAL
NAME POSITION BUSINESS ADDRESS OF ORGANIZATION
---- -------- --------------------------------
<S> <C> <C>
John H. Tweedie............. Executive Vice President Metropolitan Life Insurance
Director Company New York, NY
Director State Street
Research Portfolios, Inc.
New York, NY
Director Metropolitan Series Fund, Inc.
New York, NY
Director MetLife International Holdings,
Inc.
New York, NY
Chairman of the Board, Texas Life Insurance Company
Director Waco, TX
Director Metropolitan Property and
Casualty
Insurance Company
Warwick, RI
Director Metropolitan Group Property and
Casualty Insurance Company
Warwick, RI
Arthur Typermass............ Senior Vice President, Metropolitan Life Insurance
Director Treasurer Company New York, NY
Director Furr's Supermarkets, Inc.
Albuquerque, NM
Director MetLife Realty Group
White Plains, NY
Director, Treasurer Metropolitan Life Foundation
New York, NY
Treasurer Century 21 Real Estate
(until 1995) Corporation
Irvine, CA
Treasurer Metropolitan Insurance and
Annuity Company
New York, NY
Treasurer, 23rd Street Investments, Inc.
Vice President New York, NY
Treasurer Metropolitan Tower Corp.
New York, NY
Treasurer MetLife Texas Holdings, Inc
New York, NY
Chairman of the Board, MetLife Credit Corp.
President, Chief Houston, TX
Executive Officer,
Treasurer
Chairman of the Board, MetLife Funding, Inc.
President, Chief New York, NY
Executive Officer,
Treasurer
</TABLE>
C-22
<PAGE>
<TABLE>
<CAPTION>
ORGANIZATION AND PRINCIPAL
NAME POSITION BUSINESS ADDRESS OF ORGANIZATION
---- -------- --------------------------------
<S> <C> <C>
Chairman, President, MetLife Holdings, Inc.
Chief Executive Officer, Houston, TX
Treasurer
Treasurer Metropolitan Asset Management
Corporation
New York, NY
Treasurer Metropolitan Tower Life
Insurance Company
New York, NY
Treasurer, Metropolitan Tower Realty
Controller Company, Inc.
New York, NY
Treasurer, 2154 Trading Corporation
Controller New York, NY
Treasurer Centennial Equities Corporation
New York, NY
Treasurer MetLife Capital Holdings, Inc.
Newark, DE
Director MetFirst Insurance
Agency, Inc.
Overland Park, KS
Treasurer MetLife International Real Estate
Equity Shares, Inc.
Newark, DE
Director, Vice Park Avenue Funding Corporation
President, Treasurer New York, NY
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) State Street Research Investment Services, Inc., Registrant's principal
underwriter, also acts as principal underwriter for State Street Research
Financial Trust, State Street Research Income Trust, State Street Research
Money Market Trust, State Street Research Tax-Exempt Trust, State Street
Research Capital Trust, State Street Research Master Investment Trust, State
Street Research Equity Trust, State Street Research Securities Trust and State
Street Growth Trust.
(b) Directors and Officers of State Street Research Investment Services, Inc.
are as follows:
<TABLE>
<CAPTION>
(1)
NAME AND
PRINCIPAL (2) (3)
BUSINESS POSITIONS AND OFFICES POSITIONS AND OFFICES
ADDRESS WITH UNDERWRITER WITH REGISTRANT
--------- -------------------------- ---------------------
<S> <C> <C>
Ralph F. Verni................ Chairman of the Board, None
One Financial Center President, Chief Executive
Boston, MA 02111 Officer and Director
Peter C. Bennett.............. Director None
One Financial Center
Boston, MA 02111
</TABLE>
C-23
<PAGE>
<TABLE>
<CAPTION>
(1)
NAME AND
PRINCIPAL (2) (3)
BUSINESS POSITIONS AND OFFICES POSITIONS AND OFFICES
ADDRESS WITH UNDERWRITER WITH REGISTRANT
--------- -------------------------- ---------------------
<S> <C> <C>
Gerald P. Maus................ Executive Vice President, None
One Financial Center Treasurer, Chief Financial
Boston, MA 02111 Officer and Director
Thomas A. Shively............. Director None
One Financial Center
Boston, MA 02111
C. Troy Shaver, Jr. .......... President and Chief None
Executive
One Financial Center Officer
Boston, MA 02111
George B. Trotta.............. Executive Vice President None
One Madison Avenue
New York, NY 10010
Dennis C. Barghaan............ Senior Vice President None
One Financial Center
Boston, MA 02111
Peter Borghi.................. Senior Vice President None
One Financial Center
Boston, MA 02111
Paul V. Daly.................. Senior Vice President None
One Financial Center
Boston, MA 02111
Susan M.W. DiFazio............ Senior Vice President None
One Financial Center
Boston, MA 02111
Robert Haeusler............... Senior Vice President None
One Financial Center
Boston, MA 02111
Francis J. McNamara, III...... Senior Vice President and None
One Financial Center Clerk
Boston, MA 02111
Gregory R. McMahan............ Senior Vice President None
One Financial Center
Boston, MA 02111
Joan D. Miller................ Senior Vice President None
One Financial Center
Boston, MA 02111
Richard P. Samartin........... Senior Vice President None
One Financial Center
Boston, MA 02111
Darman A. Wing................ Senior Vice President and None
One Financial Center Assistant Clerk
Boston, MA 02111
Gordon Evans.................. Vice President None
One Financial Center
Boston, MA 02111
</TABLE>
C-24
<PAGE>
<TABLE>
<CAPTION>
(1)
NAME AND
PRINCIPAL (2) (3)
BUSINESS POSITIONS AND OFFICES POSITIONS AND OFFICES
ADDRESS WITH UNDERWRITER WITH REGISTRANT
--------- -------------------------- ---------------------
<S> <C> <C>
Linda Grasso.................. Vice President None
One Financial Center
Boston, MA 02111
Frederick H. Jamieson......... Vice President and None
One Financial Center Assistant Treasurer
Boston, MA 02111
</TABLE>
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
State Street Research Portfolios, Inc. c/o Metropolitan Life Insurance
Company One Madison Avenue New York, NY 10010
State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110
State Street Research Investment Services, Inc. One Financial Center
Boston, MA 02111
ITEM 31. MANAGEMENT SERVICES
Inapplicable
ITEM 32. UNDERTAKINGS
(a) Inapplicable
(b) Inapplicable
(c) Inapplicable
(d) The Registrant hereby undertakes to call a meeting of shareholders for
the purpose of voting upon the question of removal of a director if requested
to do so by the holders of at least 10% of Portfolios' outstanding shares.
(e) The Registrant hereby undertakes to furnish a copy of the Registrant's
latest annual report to shareholders without charge upon the request of each
person to whom a prospectus is delivered.
C-25
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, THE REGISTRANT CERTIFIES THAT IT MEETS ALL OF THE
REQUIREMENTS FOR EFFECTIVENESS OF THIS REGISTRATION STATEMENT PURSUANT TO RULE
485(b) UNDER THE SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THERETO DULY
AUTHORIZED, IN THE CITY OF NEW YORK, AND STATE OF NEW YORK, ON THE 29 DAY OF
FEBRUARY 1996.
State Street Research Portfolios,
Inc.
(Registrant)
/s/ Jeffrey J. Hodgman
By: _________________________________
(JEFFREY J. HODGMAN, CHAIRMAN OF
THE BOARD, PRESIDENT)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND
ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ------------------------------------ Chairman of the Board,
JEFFREY J. HODGMAN President (Principal
Executive Officer and
Director)
* Treasurer (Principal
- ------------------------------------ Financial Officer)
ELLIOT REITER
* Director
- ------------------------------------
STEVE A. GARBAN
* Director
- ------------------------------------
MALCOLM T. HOPKINS
* Director
- ------------------------------------
ROBERT A. LAWRENCE
* Director
- ------------------------------------
DEAN O. MORTON
* Director
- ------------------------------------
MICHAEL S. SCOTT MORTON
* Director
- ------------------------------------
JOHN H. TWEEDIE
</TABLE>
/s/ Christopher P. Nicholas
*By__________________________________
Christopher P. Nicholas, Esq. February 29, 1996
Attorney-in-fact
C-26
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF EXHIBITS NUMBER
- ------- ----------------------- ------
<S> <C> <C>
1 --Amended and restated Articles of Incorporation of Registrant.
1(a) --Articles Supplementary.
1(b) --Articles Supplementary.
2 --Amended By-Laws of Registrant.
3 --None
4 --Specimen certificates for shares of common stock of Registrant.
5(a) --Investment Management Agreements relating to the MetLife International Equity
and MetLife International Fixed Income Funds between MetLife-State Street
Investment Services, Inc. and MetLife Portfolios, Inc.
(b) --Sub-Investment Management Agreements relating to the MetLife International
Equity and MetLife International Fixed Income Funds among MetLife-State Street
Investment Services, Inc., GFM International Investors Limited, and MetLife
Portfolios, Inc.
6(a) --Distribution Agreement with MetLife-State Street Investment Services, Inc.
(b) --Form of Selected Dealer Agreement.
(c) --Form of Bank and Bank Affiliated Broker-Dealer Agreement.
7 --Not Applicable.
8(a) --Custodian Contract with State Street Bank and Trust Company.
(b) --Form of Transfer Agent and Service Agreement with State Street Bank and Trust
Company.
(c) --Shareholders' Administrative Services Agreement with MetLife-State Street
Investment Services, Inc.
(d) --Service Agreement among MetLife Portfolios, Inc., Metropolitan Life Insurance
Company, and MetLife-State Street Investment Services, Inc.
(e) --Sub-Administration Agreement with State Street Bank and Trust Company,
Metropolitan Life Insurance Company and State Street Research Investment
Services, Inc.
9 --License Agreement with Metropolitan Life Insurance Company.
10 --Opinion and consent of counsel.
11 --Consent of Deloitte & Touche.
12 --None
13 --Purchase Agreement and Investment Letter.
14(b) --Prototype Individual Retirement Account Terms and Conditions, Individual
Retirement Account Disclosure Statement, Individual Retirement Account
Application And Agreement, Direct Rollover of Assets Form and IRA Systematic
Withdrawal Plan Application.
14(c) --State Street Research 403(b): Brochure, Account Agreement, Maximum Salary
Reduction Worksheet, Account Application, Salary Reduction Agreement and
Direct Rollover of Assets Form.
15 --Distribution Plan.
16 --Schedule of Performance Data.
17 --Powers of Attorney.
18 --Multiple Class Expense Allocation Plan adopted pursuant to Rule 18f-3.
27 --Financial Data Schedules
</TABLE>
<PAGE>
EXHIBIT 1
RESTATED ARTICLES OF INCORPORATION
OF
METLIFE PORTFOLIOS, INC.
ARTICLE I
THE UNDERSIGNED, Patricia S. Worthington, whose post office address is 1
Madison Avenue, New York, New York 10010, being at least 18 years of age, does
hereby act as an incorporator, under and by virtue of the General Corporation
Law of the State of Maryland authorizing the formation of corporations and with
the intention of forming a corporation.
ARTICLE II
NAME
----
The name of the corporation is METLIFE PORTFOLIOS, INC.
ARTICLE III
PURPOSE AND POWERS
------------------
The purpose or purposes for which the Corporation is formed and the
business or objects to be transacted, carried on and promoted by it are as
follows:
(1) To conduct and carry on the business of an investment company of the
management type.
(2) To hold, invest and reinvest its assets in securities or other
investments, and in connection therewith to hold part or all of its assets in
cash.
<PAGE>
(3) To issue and sell shares of its own capital stock in such amounts and
on such terms and conditions, for such purposes and for such amount or kind of
consideration now or hereafter permitted by the Maryland General Corporation Law
and by these Articles of Incorporation, as its Board of Directors may determine.
(4) To redeem, purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote or consent of the stockholders
of the Corporation) shares of its capital stock, in any manner and to the extent
now or hereafter permitted by the Maryland General Corporation Law and by these
Articles of Incorporation.
(5) To engage in any or all other lawful business for which corporations
may be incorporated under the Maryland General Corporation Law.
(6) To do any and all such further acts or things and to exercise any and
all such further powers or rights as may be necessary, incidental, relative,
conducive, appropriate or desirable for the accomplishment, carrying out or
attainment of any of the foregoing purposes or objects.
The Corporation shall be authorized to exercise and enjoy all the powers,
rights and privileges granted to, or conferred upon, corporations by the
Maryland General Corporation Law now or hereafter in force, and the enumeration
of the foregoing shall not be deemed to exclude any powers, rights or privileges
so granted or conferred.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
-----------------------------------
The post-office address of the principal office of the Corporation in the
State of Maryland is Twenty South Charles Street, Suite 1200, Baltimore, MD
21201, in care of United Corporate Services, Inc. The resident agent of the
Corporation in Maryland is United Corporate Services, Inc., Twenty South Charles
Street, Suite 1200, Baltimore, MD 21201 and said resident agent is a corporation
of the State of Maryland.
<PAGE>
ARTICLE V
CAPITAL STOCK
-------------
The total number of shares of capital stock which the Corporation shall
have authority to issue is TWO BILLION (2,000,000,000) shares of the par value
of One Cent ($0.01) per share and of the aggregate par value of TWENTY MILLION
DOLLARS ($20,000,000). Three Hundred Million (300,000,000) of such shares shall
be issued in the following classes (or "series") of common stock comprising One
Hundred Million (100,000,000) shares each, and bearing the following
designations, subject however, to the authority herein granted to the Board of
Directors to increase or decrease any such number of shares: 1) MetLife
International Equity Fund 2) MetLife International Fixed Income Fund and 3)
MetLife Money Market Fund. The balance of One Billion Seven Hundred Million
(1,700,000,000) shares may be issued in any class or classes, each comprising
such number of shares and having such preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption as shall be fixed and determined from time to
time by resolution or resolutions providing for the issuance of such shares
adopted by the Board of Directors, to whom authority so to fix and determine the
same is hereby expressly granted (all without the vote or consent of the
stockholders of the Corporation).
(a) The Board of Directors is hereby authorized (subject to applicable
laws) to change the designation of any class, and to increase or decrease the
number of shares of any class, but the number of shares of any class shall not
be decreased by the Board of Directors below the number or shares thereof then
outstanding. The Board may classify or reclassify any shares into one or more
classes that may be established and designated from time to time.
(b) The holders of each share of stock of the Corporation shall be
entitled to one vote for each full share, and a fractional vote for each
fractional share of stock, irrespective of the class, then standing in his/her
name on the books of the Corporation. On any matter submitted to a vote of the
stockholders, all shares of the Corporation then issued and
<PAGE>
outstanding and entitled to vote shall be voted in the aggregate and not by
class except (1) when otherwise required by law; and (2) if the Board of
Directors, in its sole discretion, determines that any matter concerns only one
or more particular classes, it may direct that only holders of that class or
those classes may vote on the matter.
(c) The Corporation may issue shares of stock in fractional denominations
to the same extent as its whole shares, and shares in fractional denominations
shall be shares of stock having proportionately, to the respective fractions
represented thereby, all the rights of whole shares, including without
limitation, the right to vote, the right to receive dividends and distributions
and the right to participate upon liquidation of the Corporation, but excluding
the right to receive a stock certificate representing fractional shares.
(d) Except as the Board of Directors may provide in classifying or
reclassifying any shares of stock, each class of stock of the Corporation shall
have the following powers, preferences or other special rights, and the
qualifications, restrictions, and limitations thereof shall be as follows:
(1) Except as may be otherwise provided herein, all consideration
received by the Corporation for the issue or sale of shares of stock of a
particular class, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form, shall constitute assets of
that class, as opposed to other classes of the Corporation, subject only to
the rights of creditors, and are herein referred to as assets "belonging
to" that class. Any assets, income, earnings, profits, and proceeds
thereof, funds or payments which are not readily identifiable as belonging
to any particular class, shall be allocated by or under the supervision of
the Board of Directors to and among any one or more of the classes
established and designated from time to time, in such manner and on such
basis as the Board of Directors, in its sole discretion, deems fair and
equitable.
<PAGE>
(2) The Board of Directors may from time to time declare and pay dividends
or distributions, in stock or in cash, on any or all classes of stock, the
amount of such dividends and distributions and the payment of them being
wholly in the discretion of the Board of Directors, giving due consideration
to the interests of each class and to the interests of the Corporation as a
whole. Pursuant to the foregoing:
(i) Dividends or distributions on shares of any class of stock shall
be paid only out of surplus or other lawfully available assets determined
by the Board of Directors as belonging to such class.
(ii) Inasmuch as the Corporation intends to qualify as a "regulated
investment company" under the Internal Revenue Code or any successor
statute comparable thereto, and regulations promulgated thereunder, and
inasmuch as the computation of net income and gains for Federal income tax
purposes may vary from the computation thereof on the books of the
Corporation, the Board of Directors shall have the power in its discretion
to distribute in any fiscal years as dividends, including dividends
designated in whole or in part as capital gains distributions amounts
sufficient in the opinion of the Board of Directors, to enable the
Corporation to qualify as a regulated investment company and to avoid
liability for the Corporation for Federal income tax in respect of that
year.
(3) The allocation of the assets and liabilities belonging to the
Corporation to a given class or classes shall be determined by the Board of
Directors. Any decision of the Board of Directors as to the allocation of assets
and liabilities shall be final and conclusive. Pursuant to the foregoing,
generally the assets belonging to any class of stock shall be charged with the
liabilities in respect of such class and with the allocable portion of the
overall liabilities of the Corporation.
(4) In the event of the liquidation of the corporation, the stockholders
of each class that has been established and designated shall be entitled to
receive, as a class, the excess
<PAGE>
of the assets belonging to that class over the liabilities belonging to that
class. The assets so distributable to the stockholders of any particular class
shall be distributed among such stockholders in proportion to the number of
shares of that class held by them and recorded on the books of the corporation.
Any assets not readily identifiable as belonging to any particular class shall
be allocated by or under the supervision of the Board of Directors to and among
any one or more of the classes established and designated, as provided herein.
Any such allocation by the Board of Directors shall be conclusive and binding
for all purposes.
(5) All shares of stock of the Corporation shall have the redemption
rights provided for in Article VII.
(6) The Corporation's shares of stock are issued and sold, and all persons
who shall acquire stock of the Corporation shall acquire the same, subject to
the condition and understanding that the provisions of the Corporation's
Charter, as from time to time amended, shall be binding upon them.
ARTICLE VI
PROVISIONS FOR DEFINING, LIMITING, AND REGULATING
CERTAIN POWERS OF THE CORPORATION AND OF
THE DIRECTORS AND STOCKHOLDERS
----------------------------------------
(1) The number of directors of the Corporation shall be three (3), which
number may be increased or decreased pursuant to the By-Laws of the Corporation
but shall never be less than the minimum number required by the Maryland General
Corporation Law. The names of the directors who shall act until the first annual
meeting or until their successors are duly elected and qualify are:
Patricia S. Worthington
Christopher P. Nicholas
Jeffrey J. Hodgman
(2) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of capital stock, whether now
or hereafter
6
<PAGE>
authorized, for such consideration the Board of Directors may deem advisable
(all without the vote or consent of the stockholders of the Corporation).
(3) No holder of stock of the Corporation shall, as such holder, have any
right to purchase or subscribe for any shares of the capital stock of the
Corporation or any other security of the Corporation which it may issue or sell
(whether out of the number of shares authorized by these Articles of
Incorporation, or out of any shares of the capital stock of the Corporation
acquired by it after the issue thereof, or otherwise) other than such right, if
any, as the Board of Directors, in its discretion, may determine.
(4) The business and affairs of the Corporation shall be managed under the
direction of the Board of Directors which shall have and may exercise all powers
of the Corporation except those powers which are by law, by these Articles of
Incorporation or by the By-Laws conferred upon or reserved to the stockholders.
In furtherance and not in limitation of the powers conferred by law, the Board
of Directors shall have the power:
(i) to make, alter and repeal By-laws of the Corporation.
(ii) from time to time to set apart out of any assets of the
Corporation otherwise available for dividends a reserve or reserves for
working capital or for any other proper purpose or purposes, and to reduce,
abolish or add to any such reserve or reserves from time to time as said
Board of Directors may deem to be in the best interests of the Corporation;
and to determine in its discretion what part of the assets of the
Corporation available for dividends in excess of such reserve or reserves
shall be declared in dividends and paid to the stockholders of the
Corporation.
(5) Notwithstanding any provision of the Maryland General Corporation Law
requiring a greater proportion than a majority of the votes of all classes or of
any class of the Corporation's stock entitled to be cast in order to take or
authorize any action, any such action may be taken or authorized upon the
concurrence of a majority of the aggregate number of votes entitled to be cast
thereon subject to applicable laws and regulations as
7
<PAGE>
from time to time in effect, or rules or orders of the Securities and Exchange
Commission or any successor thereto.
(6) Any determination made in good faith and, so far as accounting matters
are involved, in accordance with generally accepted accounting principles, by or
pursuant to the direction of the Board of Directors, as to the amount of the
assets, debts, obligations, or liabilities of the Corporation, as to the amount
of any reserves or charges set up and the propriety thereof, as to the time of
or purpose for creating such reserves or charges, as to the use, alteration or
cancellation of any reserves or charges (whether or not any debt, obligation or
liability for which such reserves or charges shall have been created shall have
been paid or discharged or shall be then or thereafter required to be paid or
discharged), as to the establishment or designation of procedures or methods to
be employed for valuing any asset of the Corporation and as to the value of any
asset, as to the allocation of any asset of the Corporation to a particular
class or classes of the Corporation's stock, as to the funds available for the
declaration of dividends, as to the charging of any liability of the Corporation
to a particular class or classes of the Corporation's stock, as to the number of
shares of any class or classes of the Corporation's outstanding stock, as to the
estimated expense to the Corporation in connection with purchases or redemptions
of its shares, as to the ability to liquidate investments in orderly fashion, or
as to any other matters relating to the issue, sale, purchase or redemption or
other acquisition or disposition of investments or shares of the Corporation, or
the determination of the net asset value per share of shares of any class of the
Corporation's stock, shall be final and conclusive.
ARTICLE VII
REDEMPTION OF SHARES
--------------------
(1) Each holder of shares of capital stock of the Corporation shall be
entitled to require the Corporation to redeem all or any part of the shares of
capital stock of the
8
<PAGE>
Corporation standing in the name of such holder on the books of the Corporation,
at the redemption price of such shares as in effect from time to time, subject
to the right of the Board of Directors of the Corporation to suspend the right
of redemption of shares of capital stock of the Corporation or postpone the time
of payment of such redemption price in accordance with provisions of applicable
law. The redemption price of shares of capital stock of the Corporation shall be
the net asset value thereof as determined by, or pursuant to the direction of
the Board of Directors of the Corporation from time to time in accordance with
the provision, of applicable law, less such redemption fee or other charge, if
any, as may be fixed by resolution of the Board of Directors of the Corporation.
Redemption shall be conditional upon the Corporation having funds legally
available therefor. Payment of the redemption price shall be made in a cash or
by check on current funds, or in assets other than cash, by the Corporation at
such time and in such manner as may be determined from time to time by the Board
of Directors of the Corporation.
(2) If the Board of Directors determines that the net asset value per
share of any class or classes of the Corporation's stock should remain constant,
the Corporation may declare, pay and credit as dividends daily the net income
(which may include or give effect to realized and unrealized gains and losses,
as determined in accordance with the Corporation's accounting and portfolio
valuation policies) of the Corporation allocated to that class. If the amount so
determined for any day is negative, the Corporation may, without the payment of
monetary compensation but in consideration of the interest of the Corporation
and its stockholders in maintaining a constant net asset value per share of the
class, redeem pro rata from all the stockholders of record of shares of the
class or classes at the time of such redemption (in proportion to their
respective holdings thereof) such number of outstanding shares of the class, or
fractions thereof, as shall be required to permit the net asset value per share
of the class to remain constant.
(3) If in the sole determination of the Board of Directors, the
continuation of the offering of the shares of any one more classes is no longer
in the best interests of the Corporation, e.g. because market conditions have
changed regulatory problems have developed or participation in such class is
low, the Corporation may cease the offering of
9
<PAGE>
such shares and may, by majority vote of the Board of Directors require the
redemption of all outstanding shares of stock of such classes upon thirty (30)
days prior written notice to the stockholders, all subject to the requirements
of applicable securities laws and regulations and the Maryland General
Corporation Law.
ARTICLE VIII
AMENDMENT
---------
The Corporation reserves the right to alter, amend, or repeal any
provisions contained in these Articles of Incorporation from time to time,
including any amendment which alters the contract rights of any outstanding
stock, at any time in the manner now or hereafter prescribed by the laws of the
State of Maryland, and all rights conferred herein upon the Corporation's
stockholders, directors and officers are granted subject to such reservation.
IN WITNESS WHEREOF, METLIFE PORTFOLIOS, INC. has caused these presents to
be signed in its name and on its behalf by its Vice President and attested by
its Secretary on this 11th day of October, 1991.
MetLife Portfolios, Inc.
By:_____________________
Vice President
ATTEST:
____________________
Secretary
10
<PAGE>
Exhibit 1(a)
METLIFE PORTFOLIOS, INC.
ARTICLES SUPPLEMENTARY
METLIFE PORTFOLIOS, INC., a Maryland Corporation having its principal
office in Baltimore City, Maryland (which is hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Articles V, Paragraph (a) of the Charter of the
Corporation, the Board of Directors has duly reclassified all of the 100,000,000
shares of the Corporation's authorized capital stock previously classified as
Common Stock of the MetLife Money Market Fund as shares of capital stock without
designation of class or series.
SECOND: (a) Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Articles V, Paragraph (a) of the Charter of the
Corporation, the Board of Directors has duly divided and classified the unissued
shares of Common Stock of the MetLife International Equity Fund as Class A
shares Class B shares and Class D shares. The shares of Common Stock of the
MetLife International Equity Fund currently issued and outstanding shall be
referred to as Class C Shares.
(b) Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Articles V, Paragraph (a) of the Charter of the
Corporation, the Board of Directors has duly divided and classified the unissued
shares of Common Stock of the MetLife International Fixed Income Fund as Class A
shares, Class B shares and Class D shares. The shares of Common Stock of the
MetLife International Fixed Income Fund currently issued and outstanding shall
be referred to as Class C shares.
(c) The MetLife International Equity Fund and the Metlife
International Fixed Income Fund are hereinafter referred to individually as a
"Fund". The number of authorized Class A, Class B, Class C and Class D shares of
the MetLife International Equity Fund and the Metlife International Fixed Income
Fund shall consist, in the case of each such class, of the sum of (x) the issued
and outstanding shares of that class and (y) one-fourth of the authorized but
unissued shares of that Fund of all such classes; provided, however, that in the
event application of the above formula would result, at the time, in fractional
shares of one or more classes, the number of authorized shares of each such
class shall be rounded down to the nearest whole number of shares; and provided,
further, that at all times the aggregate number of authorized Class A, Class B,
Class C and Class D shares of the MetLife International Equity Fund and the
MetLife International Fixed Income Fund shall not exceed the authorized number
of shares of that Fund (i.e, until changed by action of the Board of Directors
in accordance with Section 2-208.1 of the Maryland General Corporation Law,
100,000,000 shares of the MetLife International Equity Fund and 100,000,000
shares of the MetLife International Fixed Income Fund, as the case may be).
<PAGE>
THIRD: (a) The terms of the Class C shares of the MetLife International
Equity Fund and the MetLife International Fixed Income Fund are set forth in the
Charter of the Corporation. The preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of the Class A, Class B and Class D shares of
the MetLife International Equity Fund and the MetLife International Fixed Income
fund are as hereinafter set forth.
(b) The Class A, Class B, Class C and Class D shares of the MetLife
International Equity Fund and the MetLife International Fixed Income Fund shall
represent the same interest in that Fund and have identical voting, dividend,
liquidation and other rights, provided, however, that notwithstanding anything
in the Charter of the Corporation to the contrary:
(1) the Class A shares may be issued and sold subject to such front-
end sales load as the Board of Directors shall from time to time establish in
accordance with the Investment Company Act of 1940, as amended (the "1940 Act"),
the terms of any exemptive order granted by the Securities and Exchange
Commission (the "Commission") pursuant to the 1940 Act, any applicable state
securities or blue sky laws or regulations, and applicable rules and regulations
the National Association of Securities Dealers, Inc. (the "NASD");
(2) the Class B and Class D shares may be issued and sold subject to
such different contingent deferred sales charges as the Board of Directors shall
from time to time establish in accordance with the 1940 Act, the terms of any
exemptive order granted by the Commission pursuant to the 1940 Act, and
applicable rules and regulations of the NASD;
(3) expenses related solely to a particular class (including,
without limitation, distribution expenses under a Rule 12b-1 plan and
administrative expenses under an administration or service agreement, plan or
other arrangement, however, designated) shall be borne by that class and shall
be appropriately reflected (in the manner determined by the Board of Directors)
in the net asset value of, or the dividends and distributions on, the shares of
that class;
(4) except as otherwise provided hereinafter, not later than the
tenth day of the month following the month in which the eighth anniversary of
the purchase occurred, such Class B shares (as well as a pro rata portion of
any Class B shares purchased through the reinvestment of dividends and other
distributions paid in respect of all Class B shares held by such holder) shall
automatically convert to Class A shares of the same Fund on the basis of the
respective current net asset value per share of the Class B shares and the Class
A shares of that Fund on the conversion date; provided, however, that any
conversion of Class B shares shall be subject to the continuing availability of
an opinion of counsel to the effect that (i) the assessment of the higher
distribution fees or transfer agency costs with respect in Class B shares does
not result in the Corporation's dividends or distributions constituting
"preferred dividends" under the Internal Revenue Code of 1986, as amended, and
(ii) such conversion does not constitute a taxable event under federal income
tax law, and the
<PAGE>
Board of Directors, in its sole discretion, amy suspend the conversion of Class
B shares if such opinion is no longer available;
(5) the holders of shares of a particular class shall be entitled to
vote as a separate class as to any matter with respect to which a separate vote
of the holders of the class is required by the 1940 Act, the terms of any
exemptive order granted by the Commission pursuant to the 1940 Act, or the
Maryland General Corporation Law (including, without limitation, approval of any
plan, agreement or other arrangement referred to in paragraph (3) above) and,
except as required otherwise by the 1940 Act, the terms of any exemptive order
granted by the Commission pursuant to the 1940 Act, or the Maryland General
Corporation Law, the holders of shares of a particular class shall not be
entitle to vote as to any matter which does not affect the interest of that
class; and
(6) the Class A, Class B, Class C and Class D shares may have such
different exchange privileges as may be provided by the Board of Directors,
FOURTH: The aforesaid shares have been duly classified by the Board of
Directors pursuant to authority and power contained in the Charter of the
Corporation.
IN WITNESS WHEREOF, METLIFE PORTFOLIOS, INC. has caused these presents to
be signed in its name and on its behalf by its President and attested by its
Assistant Secretary on November 18, 1993.
METLIFE PORTFOLIOS, INC
By: /s/ Jeffrey J. Hodgman
----------------------
Jeffrey J. Hodgman
President
Attest:
/s/ Patricia S. Worthington
---------------------------
Patricia S. Worthington
Assistant Secretary
<PAGE>
THE UNDERSIGNED, President of MetLife Portfolios, Inc. who executed on
behalf of said Corporation the foregoing Articles Supplementary of which this
certificate is made a part, hereby acknowledges, in the same and on behalf of
said Corporation, the foregoing Articles Supplementary to be the corporate act
of said Corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therin with respect to
the authorization and approval thereof are true in all material respects, under
the penalties of perjury.
/s/ Jeffrey J. Hodgman
----------------------
Jeffrey J. Hodgman
<PAGE>
Exhibit 1 (b)
METLIFE PORTFOLIOS, INC.
ARTICLES OF AMENDMENT
CHANGING NAME OF METLIFE PORTFOLIOS, INC.
PURSUANT TO MGCL SECTION 2-605 (B)
MetLife Portfolios, Inc., a Maryland Corporation, having its principal
office at Twenty South Charles Street, Suite 1200, Baltimore, Maryland 21201,
(hereinafter called the "Corporation"), hereby certifies to the State Department
of Assessments and Taxation of Maryland that:
FIRST: The Charter of the Corporation is hereby amended to provide as
follows:
Article II is amended to read as follows:
The name of the corporation is STATE STREET RESEARCH PORTFOLIOS, INC.
SECOND: The name of the classes of common stock of the Corporation are
hereby changed to State Street Research International Equity Fund and State
Street Research International Fixed Income Fund.
THIRD: The amendment does not change the outstanding capital stock of
the corporation or the aggregate par value thereof.
FOURTH: The foregoing amendment to the charter of the Corporation has been
approved by the Board of Directors and is limited to a change expressly
permitted by Section 2-605 of the Maryland Corporation Law.
FIFTH: The Corporation is registered as an open-end company under the
Investment Company Act of 1940.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these presents to be signed
in its name and on its behalf by its Vice President and witnessed by its
Secretary on this 15th day of February, 1995.
---- --------
STATE STREET RESEARCH
PORTFOLIOS, INC.
By: /s/ Albert Rosenthal
-----------------------
Name:
Title: Vice President
ATTEST:
/s/ P. S. Worthington
- -----------------------
Name:
Title: Assistant Secretary
THE UNDERSIGNED, the Vice President of METLIFE PORTFOLIOS, INC. who
executed on behalf the Corporation the foregoing Articles of Amendment of which
this certificate is made a part, hereby acknowledges in the name and on behalf
of the Corporation the foregoing Articles of Amendment to be the corporate act
of the Corporation and hereby certifies to the best of his knowledge,
information and belief the matters and facts set forth herein with respect to
the authorization and approval thereof are true in all material respects under
the penalties of perjury.
/s/ Albert Rosenthal
-----------------------
Name:
Title: Vice President
<PAGE>
BY LAWS
OF
METLIFE PORTFOLIOS, INC.
ARTICLE I
Meetings of Stockholders
------------------------
Section 1. Annual Meeting. An annual meeting of the stockholders of the
--------------
Corporation for the election of directors and for the transaction of such other
business as may properly be brought before the meeting may, at the discretion of
the Board of Directors, be held on such day during the period April 15 to May
16, as shall be designated by the Board of Directors in any year. An annual
meeting shall be held at such similar time in any year as required by the terms
of Section 3A of this Article. Any business of the Corporation may be transacted
at an annual meeting without being specifically designated in the notice, except
such business as is specifically required by statute to be stated in the notice.
Section 2. Special Meetings. At any time in the interval between annual
----------------
meetings, special meetings of the stockholders, unless otherwise provided by law
or by the Charter, may be called for any purpose or purposes by a majority of
the Board of Directors, the Chairman of the Board or the President. Such
purposes may include those specified in Section 3A of this Article.
<PAGE>
SECTION 3. Place of Meeting. An annual meeting and any special meeting of
----------------
the stockholders shall be held at such place within the United States as the
Board of Directors may from time to time determine.
SECTION 3A. Required Meetings. An annual or special meeting of the
-----------------
stockholders of the Corporation shall be held in any year in which any one of
the following is required to be acted on by stockholders under the Investment
Company Act of 1940: (i) election of directors; (ii) approval of an investment
management or sub-investment management agreement; (iii) ratification of the
selection of independent public accountants; and (iv) approval of a distribution
agreement.
SECTION 4. Notice of Meetings; Waiver of Notice. Notice of the place,
------------------------------------
date and time of the holding of each annual and special meeting of the
stockholders and the purpose or purposes of each special meeting shall be given
personally or by mail, not less than 10 or more than 90 days before the date of
such meeting, to each stockholder entitled to vote at such meeting and to each
other stockholder entitled to notice of the meeting. The Board of Directors may
fix, in advance, a record date which shall not be less than 10 nor more than 90
days before the date of such meeting. Notice by mail shall be deemed to be duly
given when deposited in the United States mail addressed to the stockholder at
his address as it appears on the records of the Corporation, with postage
thereon prepaid.
<PAGE>
Notice of any meeting of stockholders shall be deemed waived by any
stockholder who shall attend such meeting in person or by proxy, or who shall,
either before or after the meeting, submit a signed waiver of notice which is
filed with the records of the meeting. When a meeting is adjourned to another
time and place, unless the Board of Directors, after the adjournment, shall fix
a new record date for an adjourned meeting, or the adjournment is for more than
120 days after the original record date, notice of such adjourned meeting need
not be given if the time and place to which the meeting shall be adjourned were
announced at the meeting at which the adjournment is taken.
SECTION 5. Quorum. At all meetings of the stockholders, the holders of a
------
majority of the shares of stock or the Corporation entitled to vote at the
meeting, present in person or by proxy, shall constitute a quorum for the
transaction of any business, except as otherwise provided by statute or by the
Charter or these By-Laws. In the absence of a quorum no business may be
transacted, except that the holders of a majority of the shares of stock present
in person or by proxy and entitled to vote may adjourn the meeting from time to
time to a date not more than 120 days after the original record date, without
notice other than announcement thereat except as otherwise required by these
By-Laws, until the holders of the requisite amount of shares of stock shall be
so present. At any such adjourned meeting at which a quorum may be present any
business may be transacted which might have been transacted at the meeting as
<PAGE>
originally called. When a quorum is once present to organize a meeting, it is
not broken by the subsequent withdrawal of any stockholder.
SECTION 6. Organization. At each meeting of the stockholders, the
------------
Chairman of the Board, or in his or her absence or inability to act, the
President, or in the absence or inability to act of the Chairman of the Board
and the President, a Vice-President, shall act as chairman of the meeting. The
Secretary, or in his or her absence or inability to act, any person appointed by
the chairman of the meeting, shall act as secretary of the meeting and keep the
minutes thereof.
SECTION 7. Order of Business. The order of business at all meetings of
-----------------
the stockholders shall be as determined by the chairman of the meeting.
SECTION 8. Voting. Except as otherwise provided by statute or the
------
Charter, each holder of record of shares of stock of the Corporation having
voting power shall be entitled at each meeting of the stockholders to one vote
for every share of such stock standing in his or her name on the record of
stockholders of the Corporation as of the record date determined pursuant to
Section 4 of this Article. Each stockholder entitled to vote at any meeting of
stockholders may authorize another person or persons to act for him or her by a
proxy signed by such stockholder or his or her attorney-in-fact. No proxy shall
be valid after the expiration of eleven months from the date thereof, unless
otherwise provided in the proxy. Every proxy shall be revocable
<PAGE>
at the pleasure of the stockholder executing it, except in those cases where
such proxy states that it is irrevocable and where an irrevocable proxy is
permitted by law. Except as otherwise provided by statute, the Charter or these
By-Laws, any corporate action to be taken by vote of the stockholders shall be
authorized by a majority of the total votes cast at a meeting of stockholders by
the holders of shares present in person or represented by proxy and entitled to
vote on such action. If a vote shall be taken on any question other than the
election of directors, which shall be written ballot, then unless required by
statute or these By-Laws, or determined by the chairman of the meeting to be
advisable, any such vote need not be by ballot. On a vote by ballot, each ballot
shall be signed by the stockholder voting, or by his proxy, if there be such
proxy, and shall state the number of shares voted.
SECTION 9. Inspectors. The Board may, in advance of any meeting of
----------
stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If the inspectors shall not be so appointed or if any of
them shall fail to appear or act, the chairman of the meeting may, and on the
request of any stockholder entitled to vote thereat shall, appoint inspectors.
Each inspector, before entering upon the discharge of his or her duties, shall
take and sign an oath to execute faithfully the duties of inspector at such
meeting with strict impartiality and according to the best of his or her
ability. The inspectors shall determine the number of shares outstanding and the
voting
<PAGE>
power of each, the number of shares represented at the meeting, the existence of
a quorum, the validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote in fairness to all stockholders. On request of the chairman of
the meeting or any stockholder entitled to vote thereat, the inspectors shall
make a report in writing of any challenge, request or matter determined by them
and shall execute a certificate of any fact found by them. No director or
candidate for the office of director shall act as inspector of an election of
directors. Inspectors need not be stockholders.
SECTION 10. Consent of Stockholders in Lieu of Meeting. To the fullest
------------------------------------------
extent permitted by law, whenever any action is required or permitted to be
taken at a meeting of stockholders by law, by the Charter or By-Laws, such
action may be taken without a meeting, without prior notice and without a vote
of stockholders, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of all outstanding stock having voting power. The
Board of Directors may fix, in advance, a record date to express consent to any
corporate action in writing, not more than 90 days prior to any other action. If
no such record date is fixed, the record date shall be the date on which the
first written consent is received.
<PAGE>
ARTICLE II
Board of Directors
------------------
SECTION 1. General Powers. Except as otherwise provided in the Charter,
--------------
the business and affairs of the Corporation shall be managed under the direction
of its Board of Directors. The Board may exercise all the powers of the
Corporation and do all such lawful acts and things as are not by statute or the
Charter directed or required to be exercised or done by the stockholders.
SECTION 2. Number of Directors. The number of Directors shall be fixed
-------------------
from time to time by resoultion of the Board of Directors adopted by a majority
of the Directors then in office; provided, however, that the number of directors
shall in no event be less than the minimum number required by the Maryland
General Corporation Law nor more than nine. Any vacancy created by an increase
in directors may be filled in accordance with Section 6 of this Article II. No
reduction in the number of directors shall have the effect of removing any
director from office prior to the expiration of his or her term unless such
director is specifically removed pursuant to Section 5 of this Article II at the
time of such decrease. Directors need not be stockholders.
SECTION 3. Election and Term of Directors. Except as otherwise provided
------------------------------
in Sections 4 and 5 of this Article, the
<PAGE>
Directors shall be elected at each annual meeting of the stockholders to hold
office until the next annual meeting of stockholders. Each Director shall hold
office until the expiration of the term for which such Director is elected and
until a successor has been elected and has qualified, or until such Director's
earlier death, resignation or removal. At each meeting of the stockholders for
the election of Directors, at which a quorum is present, the Directors shall be
elected by a plurality of the votes cast by the holders of shares entitled to
vote in such election. Members of the initial Board of Directors shall hold
office until the first annual meeting of stockholders or until their successors
have been elected and qualified. The Board of Directors shall select one of its
members to serve as Chairman of the Board. The Chairman shall preside at all
meetings of the Board of Directors and all annual meetings of stockholders.
SECTION 4. Resignation. A Director of the Corporation may resign at any
-----------
time by giving written notice of his or her resignation to the Board or the
Chairman of the Board or the President, a Vice-President or the Secretary. Any
such resignation shall take effect at the time specified therein or, if the time
when it shall become effective shall not be specified therein, immediately upon
its receipt; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
<PAGE>
SECTION 5. Removal of Directors. Any Director of the Corporation may be
--------------------
removed with or without cause by the stockholders by a vote of a majority of the
votes entitled to be cast for the election of Directors at any meeting of
stockholders, duly called and at which a quorum is present.
SECTION 6. Vacancies. Any vacancies in the Board, whether arising from
---------
death, resignation, removal, an increase in the number of Directors or any other
cause, shall be filled by a vote of the majority of the Directors then in office
even though such majority of the Directors then in office even though such
majority is less than a quorum, provided that no vacancies shall be filled by
action of the remaining Directors, if after the filling of said vacancy or
vacancies, less than two-thirds of the Directors then holding office shall have
been elected by the stockholders of the Corporation, provided however, that the
foregoing limitation shall not apply when there are no shares of the
Corporation's stock outstanding. In the event that at any time there is a
vacancy in any office of a Director which vacancy may not be filled by the
remaining Directors, a special meeting of the stockholders shall be held as
promptly as possible and in any event within sixty days, for the purpose of
filling said vacancy or vacancies. Any Directors elected or appointed to fill a
vacancy shall hold office only until the next annual meeting of stockholders of
the Corporation and until a successor shall have been chosen and qualifies or
until his or her earlier resignation or removal.
SECTION 7. Place of Meetings. Meetings of the Board may be
-----------------
<PAGE>
held at such place as the Board may from time to time determine or as shall be
specified in the notice of such meeting.
SECTION 8. Annual and Regular Meetings. An annual organizational meeting
---------------------------
of the Board of Directors shall be held immediately following adjournment of the
annual meeting of stockholders at the place of such annual meeting. Notice of
such meeting of the Board need not be given. The Board from time to time may
provide for the holding of other regular meetings and fix the place (which may
be within or without the State of Maryland) and time of such meetings. Notice of
regular meetings need not be given, except that if the Board shall change the
time or place of any regular meeting, notice of such action shall be promptly
communicated personally or by telephone or sent by first class mail, telegraph,
radio or cable, to each Director who shall have not been present at the meeting
at which such action was taken, addressed to such Director at such Director's
residence, usual place of business or other address designated with the
Secretary for such purpose.
SECTION 9. Regular Meetings. Regular meetings of the Board may be held
----------------
without notice at such time and place as may be determined by the Board of
Directors. No notice of a regular meeting need be given.
SECTION 10. Special Meetings; Notice. Special meetings of the Board of
------------------------
Directors shall be held whenever called by the Chairman of the Board or the
President, or in the absence or disability of both, by any Vice-President, or by
the Secretary at
<PAGE>
the request of any two Directors, at such place (within or without the State of
Maryland) as maybe specified in the respective notices or waivers of notice of
such meeting. Except as otherwise provided by law, a notice of each special,
meeting stating the time and place thereof, shall be mailed to each Director
addressed to such Director's residence, usual place of business, or other
address designated with the Secretary for such purpose, at least two business
days before the special meeting is to be held, or shall be sent to such Director
at such place by telegraph, radio or cable, or delivered personally or by
telephone not later than the day before the day on which such meeting is to be
held. Notice may be waived in accordance with Section 11 of this Article.
SECTION 11. Waiver of Notice of Meetings. Notice of any special meeting
----------------------------
need not be given to any director who shall, either before or after the meeting,
sign a written waiver of notice or who shall attend such meeting. Except as
otherwise specifically required by these By-Laws, a notice or waiver of notice
of any meeting need not state the purposes of such meeting.
SECTION 12. Quorum and Voting. One-third, but not less than two, of the
-----------------
members of the entire Board shall be present in person at any meeting of the
Board in order to constitute a quorum for the transaction of business at such
meeting, and except as otherwise required by statute, the Charter, these By-
Laws, or other applicable laws and regulations, the act of a
<PAGE>
majority of the Directors present at any meeting at which a quorum is present
shall be the act of the Board; provided, however, that the approval of any
contract with an investment adviser or principal underwriter, as such terms are
defined in the Investment Company Act of 1940, as amended, which the Corporation
enters into or any renewal or amendment thereof, the approval of the fidelity
bond required by the Investment Company Act 1940, as amended, and the selection
of the Corporation's independent public accountants shall each require the
affirmative vote of a majority of the directors who are not parties to any such
contract or interested persons of any such party so long as the Corporation is
subject to the provisions of the Investment Company Act of 1940, as amended. In
the absence of a quorum at any meeting of the Board, a majority of the directors
present thereat may adjourn such meeting to another time and place until a
quorum shall be present thereat. Notice of the time and place of any such
adjourned meeting shall be given to the Directors who were not present at the
time of the adjournment and, unless such time and place were announced at the
meeting at which the adjournment was taken, to the other Directors. At any
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally called .
SECTION 13. Organization. The Board shall, by resolution adopted by a
------------
majority of the entire Board, designate a Chairman of the Board, who shall
preside at each meeting of the Board. In
<PAGE>
the absence or inability of the Chairman of the Board to preside at a meeting,
the President, or, in his or her absence or inability to act, another Director
chosen by a majority of the directors present, shall act as chairman of the
meeting and preside thereat. The Secretary (or, in his or her absence or
inability to act, any person appointed by the Chairman) shall act as secretary
of the meeting and keep the minutes thereof.
SECTION 14. Written Consent of Directors in Lieu of a Meeting. Any action
-------------------------------------------------
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members of the Board
or committee, as the case may be, consent thereto in writing, and the consents
are filed with the minutes of the proceedings of the Board or committee.
SECTION 15. Compensation. Directors may receive compensation for services
------------
to the Corporation in their capacities as directors or otherwise in such manner
and in such amounts as may be fixed from time to time by the Board.
SECTION 16. Manner of Acting. To the extent consistent with law, the
----------------
Charter and the By-Laws, the Board of Directors may adopt such rules and
regulations for the conduct of meetings of the Board and for the management of
the property, affairs and business of the Corporation as the Board may deem
appropriate. Members of the Board of Directors or of any Committee thereof may
participate in a meeting of the Board or of such Committee, as the case may be,
by means of conference telephone or similar
<PAGE>
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation shall constitute presence in
person at such meeting.
14
<PAGE>
ARTICLE III
Committees
----------
SECTION 1. Executive Committee. The Board may, by resolution adopted by a
-------------------
majority of the entire Board, designate an Executive Committee consisting of two
or more of the Directors of the Corporation, which committee shall have and may
exercise all the powers and authority of the Board with respect to all matters
other than:
(a) the recommendation to stockholders of any action requiring
authorization of stockholders pursuant to statute or the Charter;
(b) the filling of vacancies on the Board of Directors;
(c) the fixing of compensation of the Directors for serving on the Board
or on any committee of the Board, including the Executive Committee;
(d) the approval or termination of any contract with an investment adviser
or principal underwriter, as such terms are defined in the Investment
Company Act of 1940, as amended, or the taking of any other action
required to be taken by the Board of Directors by the Investment
Company Act 1940, as amended;
(e) the amendment or repeal of these By-Laws or the adoption of new
By-Laws;
15
<PAGE>
(f) the amendment or repeal of any resolution of the Board which by its
terms may be amended or repealed only by the Board;
(g) the declaration of dividends;
(h) the approval of any merger or share exchange which does not require
shareholder approval; and
(i) the issuance of capital stock of the Corporation, except to the extent
permitted by the Maryland General Corporation Law.
The Executive Committee shall keep written minutes of its proceedings and shall
report such minutes to the Board. All such proceedings shall be subject to
revision or alteration by the Board; provided, however, that third parties shall
not be prejudiced by such revision or alteration.
SECTION 2. Other Committees of the Board. The Board of Directors may from
-----------------------------
time to time, by resolution adopted by a majority of the whole Board, designate
one or more other committes of the Board, each such committee to consist of such
number of Directors and to have such powers and duties as the Board of Directors
may, by resolution, prescibe.
SECTION 3. General. One-third, but not less than two, of the members of
-------
any committee shall be present in person at any meeting of such committee in
order to constitute a quorum for the transaction of business at such meeting,
and the act of a majority present shall be the act of such committee. The Board
16
<PAGE>
may designate a chairman of any committee and such chairman or any two members
of any committee may fix the time and place of its meetings unless the Board
shall otherwise provide. In the absence or disqualification of any member of
any committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he, she or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. The Board shall
have the power at any time to change the membership of any committee, to fill
all vacancies, to designate alternate members to replace any absent or
disqualified member, or to dissolve any such committee. Nothing herein shall be
deemed to prevent the Board from appointing one or more committees consisting in
whole or in part of persons who are not directors of the Corporation; provided,
however, that no such committee shall have or may exercise any authority or
power of the Board in the management of the business or affairs of the
Corporation.
17
<PAGE>
ARTICLE IV
Officers, Agent and Employees
-----------------------------
SECTION 1. Term and Titles. The officers of the Corporation shall be
---------------
elected or appointed by the Board of Directors and shall hold office at the
pleasure of the Board or until the election or appointment and the qualification
of a successor. There shall be a President, one or more Vice-Presidents, a
Secretary and a Treasurer. The Board of Directors may also elect or appoint
such other officers and agents, having such titles and with such
responsibilities (including but not limited to Assistants of the titles
previously mentioned) as it deems appropriate. The Board of Directors from time
to time may delegate to the chief executive officer the power to appoint each
such officers or agents and to prescribe their respective rights, terms of
office, authorities and duties. Any two or more offices may be held by the same
person, except the offices of President and Vice-President, but no officer shall
act in more than one capacity to execute, acknowledge or verify any instrument
required by law to be executed, acknowledged or verified in more than one
capacity.
SECTION 2. Chief Executive Officer. The Board of Directors
-----------------------
18
<PAGE>
may from time to time determine who among the officers and in what order, shall
act as chief executive officer. In the absence of such determination the
President shall be the chief executive officer. Subject to the control of the
Board and to the extent not otherwise prescribed by these By-Laws, the chief
executive officer shall supervise the carrying out of the policies adopted or
approved by the Board, shall exercise a general supervision and superintendence
over all the business and affairs of the Corporation and shall possess such
other powers and perform such other duties as may be incident to the office of
chief executive officer.
SECTION 3. Resignations. Any officer may resign at any time by delivering
------------
a signed notice of resignation to the Board of Directors, the Chairman of the
Board, the President, a Vice-President or the Secretary. Such resignation shall
take effect upon the later of delivery or the date specified therein. Any
vacancy occurring in any office of the Corporation by death, resignation,
removal or otherwise, may be filled by the Board at any regular or special
meeting.
SECTION 4. Removal of Officer, Agent or Employee. Any officer, agent or
-------------------------------------
employee of the Corporation may be removed by the Board of Directors with or
without cause at any time, and the Board may delegate such power of removal as
to agents and employees not elected or appointed by the Board of Directors.
Such removal shall be without prejudice to such person's contract rights, if
any, but the appointment of any person as an officer.
19
<PAGE>
agent or employee of the Corporation shall not of itself create contract rights.
SECTION 5. Vacancies. A vacancy any office, whether arising from death,
---------
resignation, removal or any other cause, may be filled for the unexpired portion
of the term of the office which shall be vacant, in the manner prescribed in
these By-Laws for the regular election or appointment to such office.
SECTION 6. Compensation. The compensation of the offices of the
------------
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any officer in respect of other officers under his or her control.
SECTION 7. Bonds or other Security. If required by the Board, any
-----------------------
officer, agent or employee of the Corporation shall give a bond or other
security for the faithful performance of his or her duties, in such amount and
with such surety or sureties as the Board may require.
SECTION 8. The Vice-Presidents. Each Vice-President shall exercise such
-------------------
powers and perform such duties as from time to time may be assigned to such
Vice-President by the Board of Directors, the chief executive officer or the
President. In the absence or during the disability of the President, the Vice-
President designated by the Board of Directors or by the President, or if no
such designation shall have been made, then the senior ranking Vice-President
present shall perform all the duties of the President and, when so acting shall
have all the powers of and be subject to all the restrictions upon the
President.
20
<PAGE>
SECTION 9. The Treasurer. Except as may otherwise be provided by the
-------------
Board of Directors, the Treasurer shall have the following powers and duties:
(a) to have charge and supervision over and be responsible for the moneys,
securities, receipts and disbursements of the Corporation;
(b) to cause the moneys and other valuable effects of the Corporation to
be deposited in the name and to the credit of the Corporation in such
banks or trust companies or with such other depositories as shall be
selected in accordance with Article IX of these By-Laws;
(c) to cause the moneys of the Corporation to be disbursed by checks or
drafts (signed as provided in Article X of these By-Laws) upon the
authorized depositories of the Corporation and cause to be taken and
preserved proper vouchers for all moneys disbursed;
(d) to render to the Board of Directors or the chief executive officer
whenever requested, a statement of the financial condition of the
Corporation and of all the financial transactions of the Corporation;
(e) to be empowered from time to time to require from all officers or
agents of the Corporation reports or
21
<PAGE>
statements giving such information as the Treasurer may desire with
respect to any and all financial transactions of the Corporation; and
(f) to perform all duties incident to the office of Treasurer, and such
other duties as from time to time may be assigned to the Treasurer by
the Board of Directors, the chief executive officer or the President.
Section 10. The Secretary. Except as may otherwise be provided by the Board
-------------
of Directors, the Secretary shall have the following powers and duties:
(a) to keep or cause to be kept a record of all the proceedings of the
meetings of the stockholders and of the Board of Directors;
(b) to cause all notices to the Board of Directors and stockholders to
be duly given in accordance with the provisions of these By-Laws
and as required by law;
(c) to be the custodian of the records and of the seal of the
Corporation. The Secretary may cause such seal (or a facsimile
thereof) to be affixed to all instruments the execution of which
on behalf of the Corporation under its seal shall have been duly
authorized in accordance with these By-Laws, and when so affixed
may attest the same;
(d) to have charge of the stock books and ledgers of the
<PAGE>
Corporation and to cause the stock and transfer books to be kept in
such manner as to show at any time the number of shares of stock of
the Corporation of each class issued and outstanding, the names
(alphabetically arranged) and the addresses of the holders of record
of such shares, the number of shares held by each holder and the date
as of which each became such holder of record;
(e) to perform, in general, all duties incident to the office of Secretary
and such other duties as may be given to the Secretary by these By-
Laws or as may be assigned to the Secretary from time to time by the
Board of Directors, the chief executive officer or the President; and
(f) to the extent consistent with law, the Secretary may from time to time
delegate performance of any one or more of the foregoing powers and
duties, or powers and duties otherwise conferred upon the Secretary by
these By-Laws, to one or more officers, agents or employees of the
Corporation.
Section 11. Delegation of Duties. In case of the absence of any officer of
--------------------
the Corporation, or for any other reason that the Board may deem sufficient, the
Board may confer for the time being the powers or duties, or any them, of such
officer upon any other director .
Section 12. Authority and Duties of Officers. The Officers
--------------------------------
<PAGE>
of the Corporation shall have such authority and shall exercise such powers and
perform such duties as may be specified in these By-Laws, or to the extent not
so provided, by the chief executive officer and other officers acting pursuant
to the chief executive officer's authority, except that in any event each
officer shall exercise such powers and perform such duties as may be required by
law. The chief executive officer may at any time suspend any officer, other than
an officer who is a Director, from any duties and authority for a period not
exceeding 90 days.
24
<PAGE>
ARTICLE V
Indemnification
---------------
(a) The Corporation shall indemnify or advance any expenses to
Directors and Officers to the extent permitted or required by the Maryland
General Corporation Law, provided however, that the Corporation shall only be
required to indemnify or advance expenses to any person other than a Director,
to the extent specifically approved by resolution adopted by the Board of
Directors in accordance with applicable law.
(b) The indemnification provided hereunder shall continue as to a
person who has ceased to be a Director or Officer, and shall inure to the
benefit of the heirs, executors and administrators of such a person.
(c) Nothing contained in this Article shall be construed to protect
any Director or officer of the Corporation against any liability to the
Corporation or its security holders to which he or she would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of duties involved in the conduct of his or her office
("Disabling Conduct"). The means for determining whether indemnification shall
be made shall be:
25
<PAGE>
(i) a final decision on the merits by a court or other body before whom
the proceeding was brought that the person to be indemnified
("Indemnitee") was not liable by reason of Disabling Conduct, or
(ii) in the absence of such a decision, a reasonable determination, based
upon a review of the facts, that the Indemnitee was not liable by
reason of Disabling Conduct, by (a) the vote of a majority of a quorum
of Directors who are neither "interested persons" of the Corporation
nor parties to the proceeding ("Disinterested Non-Party Directors"),
or (b) an independent legal counsel in a written opinion.
(d) Nothing contained in this Article shall be construed to permit
the advancement of legal expenses for the defense of a proceeding brought by the
Corporation or its security holders against a Director or officer of the
Corporation unless an undertaking is furnished by or on behalf of the Indemnitee
to repay the advance unless it is ultimately determined that he or she is
entitled to indemnification, and the Indemnitee complies with at least one of
the following conditions:
(i) the Indemnitee shall provide a security for his or her undertaking,
(ii) the Corporation shall be insured against losses arising
26
<PAGE>
by reason of any lawful advances, or
(iii) a majority of a quorum of the Disinterested Non-Party Directors, or an
independent legal counsel in a written opinion, shall determine, based
on a review of readily available facts (as opposed to a full trial-
type inquiry), that there is reason to believe that the Indemnitee
ultimately will be found entitled to indemnification.
27
<PAGE>
ARTICLE VI
Capital Stock
-------------
SECTION 1. Stock Certificates. Each holder of stock of the Corporation
------------------
shall be entitled upon request to have a certificate or certificates, in such
form as shall be approved by the Board, representing the number of shares of
stock of the Corporation owned by him, provided, however, that certificates for
fractional shares will not be delivered in any case. The certificates
representing shares of stock shall be signed by or in the name of the
Corporation by the President or a Vice-President and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed with
the seal of the Corporation. Any or all of the signatures or the seal on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate shall be issued, it may be issued by the Corporation with the same
effect as if such officer, transfer agent or registrar were still in office at
the date of issue.
SECTION 2. Transfers of Shares. Transfers of shares of stock of the
-------------------
Corporation shall be made on the stock records of the Corporation only by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed
28
<PAGE>
and filed with the Secretary or with a transfer agent or transfer clerk, and on
surrender of the certificate or certificates, if issued, for such shares
properly endorsed or accompanied by a duly executed stock transfer power and the
payment of all taxes thereon. Except as otherwise provided by law, the
Corporation shall be entitled to recognize the exclusive right of a person in
whose name any share or shares stand on the record of stockholders as the owner
of such share or shares for all purposes, including, without limitation, the
rights to receive dividends or other distributions, and to vote as such owner,
and the Corporation shall not be bound to recognize any equitable or legal claim
to or interest in any such share or shares on the part of any other person.
SECTION 3. Regulations. The Board may make such additional rules and
-----------
regulations, not inconsistent with these By-Laws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation. It may appoint, or authorize any officer or officers
to appoint, one or more transfer agents or one or more transfer clerks and one
or more registrars and may require all certificates for shares of stock to bear
the signature or signatures of any of them.
SECTION 4. Lost, Destroyed or Mutilated Certificates. The holder of any
-----------------------------------------
certificates representing shares of stock of the Corporation shall immediately
notify the Corporation of any loss, destruction or mutilation of such
certificate, and the
29
<PAGE>
Corporation may issue a new certificate of stock in the place of any certificate
theretofore issued by it which the owner thereof shall allege to have been lost
or destroyed or which shall have been mutilated, and the Board may, in its
discretion, require such owner or his legal representatives to give to the
Corporation a bond in such sum, limited or unlimited, and in such form and with
such surety or sureties, as the Board in its absolute discretion shall
determine, to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss or destruction of any such
certificate, or issuance of a new certificate. Anything herein to the contrary
notwithstanding, the Board, in its absolute discretion, may refuse to issue any
such new certificate, except pursuant to legal proceedings under the laws of the
State of Maryland. The shares of each Portfolio of the Fund shall be issued
without certificates pursuant to Section 2-210(c) of the Annotated Code of
Maryland, provided that the Corporation send stockholders all of the information
required by Section 2-210(c) of the Annotated Code of Maryland.
SECTION 4. Fixing of a Record Date for Dividends and Distributions. The
-------------------------------------------------------
Board may fix, in advance, a date not more than ninety days preceding the date
fixed for the payment of any dividend or the making of any distribution or the
allotment of rights to subscribe for securities of the Corporation, or for the
delivery of evidences or rights or evidences of interests arising out of any
change, conversion or exchange of common stock or
30
<PAGE>
other securities, as the record date for the determination of the stockholders
entitled to receive any such dividend, distribution, allotment, rights or
interests, and in such case only the stockholders of record at the time so fixed
shall be entitled to receive such dividend, distribution, allotment, rights or
interests.
31
<PAGE>
ARTICLE VII
Seal
----
The seal of the Corporation shall be in the form adopted by the Board of
Directors. The seal may be used by causing it or a facsimile thereof to be
impressed, affixed or reproduced, or to place the word "(seal)" adjacent to the
signature of the authorized officer of the Corporation, or in any other lawful
manner.
32
<PAGE>
ARTICLE VIII
Fiscal Year; Books and Records
-----------===================
Section 1. Fiscal Year. Unless otherwise determined by the Board, the
-----------
fiscal year of the Corporation shall end on the 31st day of December in each
year.
Section 2. Books and Records. Except to the extent otherwise required by
-----------------
law, the books and records of the Corporation shall be kept at such place or
places (within or without the State of Maryland) as may be determined from time
to time by the Board of Directors.
33
<PAGE>
ARTICLE IX
Depositories and Custodians
---------------------------
Section 1. Depositories. The funds of the Corporation shall be deposited
------------
with such banks or other depositories as the Board of Directors of the
Corporation may from time to time determine.
Section 2. Custodians. All securities and other investments shall be
----------
deposited in the safekeeping of such banks or other companies as the Board of
Directors of the Corporation may from time to time determine. Every arrangement
entered into with any bank or other company for the safekeeping of the
securities and investments of the Corporation shall contain provisions complying
with all applicable law, rules and regulations.
34
<PAGE>
ARTICLE X
Execution of Instruments and Borrowing of Money
-----------------------------------------------
Section 1. Execution of Instruments. Except as may otherwise be provided
------------------------
in a resolution adopted by the Board of Directors, the Chairman of the Board,
the President, or any Vice-President may enter into any contract or execute and
deliver any instrument and affix the corporate seal in the name and on behalf of
the Corporation. Any Vice-President designated by a number or a word or words
added before or after the title Vice-President to indicate rank or
responsibilities, but not an Assistant Vice-President, shall be a Vice-President
for the purposes of this Article. The Board may authorize any other officer,
employee or agent to enter into any contract or execute and deliver any
instrument and affix the corporate seal in the name and on behalf of the
Corporation. Any such authorization may be general or limited to specific
contracts or instruments.
Section 2. Checks, Notes, Drafts, etc. Checks, notes, drafts, acceptances,
---------------------------
bills of exchange and other orders or obligations for the payment of money shall
be signed by such officer or officers or person or persons as the Board of
Directors by resolution shall from time to time designate.
Section 3. Sale or Transfer of Securities. Stock certificates, bonds or
------------------------------
other securities at any time owned by the
35
<PAGE>
Corporation may be held on behalf of the Corporation or sold, transferred or
otherwise disposed of subject to any limits imposed by Article VI of these
By-Laws and pursuant to authorization by the Board and, when so authorized to be
held on behalf of the Corporation or sold, transferred or otherwise disposed of,
may be transferred from the name of the Corporation by the signature of the
President or a Vice-President or the Treasurer or the Assistant Treasurer or the
Secretary or the Assistant Secretary.
Section 4. Loans. No loan or advance shall be contracted on behalf of the
-----
Corporation, and no note, bond or other evidence of indebtedness shall be
executed or delivered in its name, except as may be authorized by the Board of
Directors. Any such authorization may be general or limited to specific loans or
advances, or notes, bonds or other evidences of indebtedness. Any officer or
agent of the Corporation so authorized may effect loans and advances on behalf
of the Corporation, and in return for any such loans or advances may execute and
deliver notes, bonds or other evidences of indebtedness of the Corporation.
Section 5. Voting as Securityholder. The Chairman of the Board, the
------------------------
President and such other person or persons as the Board of Directors may from
time to time authorize, shall each have full power and authority on behalf of
the Corporation, to attend any meeting of securityholders of any corporation in
which the Corporation may hold securities, and to act, vote (or execute proxies
to vote) and exercise in person or by proxy all other
36
<PAGE>
rights, powers and privileges incident to the ownership of such securities, and
to execute any instrument expressing consent to or dissent from any action of
any such corporation without a meeting, subject to such restrictions or
limitations as the Board of Directors may from time to time impose.
Section 6. Facsimile Signature. The Board of Directors may authorize the
-------------------
use of a facsimile signature or signatures on any instrument. If any Officer
whose facsimile signature has been placed upon any form of instrument shall have
ceased to be such Officer before such instrument is issued, such instrument may
be issued with the same effect as if such person had been such Officer at the
time of its issue.
37
<PAGE>
ARTICLE XI
Amendments
----------
All By-Laws of the Corporation, whether adopted by the Board of Directors
or the stockholders, shall be subject to amendment or repeal, and new By-Laws
may be made, by the affirmative vote of the holders of a majority of the
outstanding shares of stock of the Corporation entitled to vote. All By-Laws of
the Corporation, other than this Section and any other Section that provides it
may be amended or repealed only be the stockholders, whether adopted by the
Board of Directors or the stockholders, shall be subject to amendment or repeal
and new By-Laws may be made by resolution adopted by a majority of the whole
Board of Directors provided, however, that By-Laws which by their terms are
subject to amendment or repeal only by the stockholders shall prevail over new
By-Laws made by the Board of Directors. Notwithstanding anything herein to the
contrary, no amendment or repeal of Article V of these By-Laws shall affect
adversely any then existing rights of any Director or Officer.
38
<PAGE>
METLIFE INTERNATIONAL EQUITY FUND
A SERIES OF METLIFE PORTFOLIOS, INC.
SHARE CERTIFICATE
METLIFE INTERNATIONAL EQUITY FUND - A
THIS CERTIFIES that is the owner of
*SEE REVERSE FOR CERTAIN DEFINITIONS
------------------------------------
CUSIP
------------------------------------
Shares of Beneficial Interest of METLIFE INTERNATIONAL EQUITY FUND, a
SERIES OF METLIFE PORTFOLIOS, INC. (the "Corporation"), the said shares being
issued, received and held under and subject to the terms and provisions of the
Articles of Incorporation establishing the Fund, and all amendments thereto,
copies of which are on file with the Department of Assessments and Taxation of
the State of Maryland. The said owner by accepting this certificate agrees to
and is bound by all of the said terms and provisions. The shares represented
hereby are transferable in writing by the owner thereof in person or by
attorney upon surrender of this certificate to the Corporation properly endorsed
for transfer. Under provisions of the Articles of Incorporation, shares of
beneficial interest of the Fund under certain circumstances may be called for
redemption by the Corporation at any time and from time to time and redeemed on
the date fixed for redemption at the applicable redemption price determined by
the Corporation's Board of Directors. This certificate is not valid until
countersigned by the Transfer Agent.
WITNESS the facsimile signatures of the Trust's duly authorized officers.
Dated:
/s/ Elliot Reiter /s/ Jeffrey J. Hodgman
----------------- ----------------------
TREASURER PRESIDENT
COUNTERSIGNED: STATE STREET BANK AND TRUST COMPANY
TRANSFER AGENT (BOSTON, MASSACHUSETTS)
P.O. BOX 8408, BOSTON, MA 02266-8408
BY
__________________________________________________
AUTHORIZED OFFICER
<PAGE>
The following abbreviations, when used in the form of ownership on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Abbreviations in addition to those
appearing below may be used.
<TABLE>
<CAPTION>
ABBREVIATION EQUIVALENT ABBREVIATION EQUIVALENT
<S> <C> <C> <C>
JT TEN As joint tenants, with right of TEN IN COM As tenants in common
survivorship and not as tenants TEN BY ENT As tenants by the entireties
in common UNIF GIFT MIN ACT Under Uniform Gifts to
Minors Act
ADM Administrator(s) FDN Foundation
Administratrix PL Public Law
AGMT Agreement TR (As) trustee(s), for, of
CUST Custodian for UA Under agreement
EST Estate, Of estate of UW Under Will of, Of Will of,
EX Executor(s), Executrix Under last Will & Testament
FBO For the benefit of
</TABLE>
Additional abbreviations may also be used though not in the
above list.
For value received, ______________________________________ hereby sell,
assign and transfer unto
(I/we)
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________
[ ]
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF
ASSIGNEE)
_______________________________________________________________________________
_______________________________________________________________________________
__________________________________________________________________________Shares
of Beneficial Interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint_____________________________________________
__________________Attorney to transfer the said shares on the books of the Trust
with full power of substitution in the premises.
Dated Signature(s)________________________
____________________________________
(The signature(s) to this assignment
must correspond with the name(s) as
written upon the face of this
Certificate in every particular
without alteration or enlargement or
any change whatsoever. If more than
one owner all must sign.)
Signature Guaranteed By
___________________________________________
(Signature(s) must be guaranteed by a bank,
a member firm of a national stock exchange
or other eligible guarantor institution.)
IMPORTANT NOTICE:
When you sign your name to the Transfer Form without filing in the name of your
"Assignee", this share certificate becomes fully negotiable, similar to a check
endorsed in blank. Therefore, to safeguard a signed certificate, it is
recommended that you fill in the name of the new owner in the "Assignee" space.
Alternatively instead of using this Transfer Form, you may sign a separate
"stock power" form and then mail the unsigned share certificate and the signed
"stock power" in separate envelopes. For added protection, use registered mail
for a share certificate.
REDEMPTION FORMS
The undersigned hereby tenders to the Trust the within Certificate properly
endorsed with any requisite guarantee of signature and supporting papers and
requests the redemption of
__________________________________________________________________________Shares
(Indicate the number of shares to be redeemed. A new certificate
will be issued for any unredeemed balance.)
of beneficial interest represented by this Certificate in accordance with the
terms of the Amended and Restated Master Trust Agreement dated as noted on the
face of the Certificate and all amendments thereto.
________________________________________________________________________________
Signature Guaranteed By
Signature(s)________________________
____________________________________
(The signature(s) to this assignment
must correspond with the name(s) as
written upon the face of this
Certificate in every particular
without alteration or enlargement or
any change whatsoever. If more than
one owner all must sign.)
___________________________________________
(Signature(s) must be guaranteed by a bank,
a member firm of a national stock exchange,
or other eligible guarantor institution.)
____________________________________
Address
<PAGE>
METLIFE INTERNATIONAL FIXED INCOME FUND
A SERIES OF METLIFE PORTFOLIOS, INC.
SHARE CERTIFICATE
METLIFE INTERNATIONAL FIXED INCOME FUND - A
THIS CERTIFIES that is the owner of
*SEE REVERSE FOR CERTAIN DEFINITIONS
------------------------------------
CUSIP
------------------------------------
Shares of Beneficial Interest of METLIFE INTERNATIONAL FIXED INCOME FUND. A
SERIES OF METLIFE PORTFOLIOS, INC. (the "Corporation"), the said shares being
issued, received and held under and subject to the terms and provisions of the
Articles of Incorporation establishing the Fund, and all amendments thereto,
copies of which are on file with the Department of Assessments and Taxation of
the State of Maryland. The said owner by accepting this certificate agrees to
and is bound by all of the said terms and provisions. The shares represented
hereby are transferable in writing by the owner thereof in person or by
attorney upon surrender of this certificate to the Corporation properly endorsed
for transfer. Under provisions of the Articles of Incorporation, shares of
beneficial Interest of the Fund under certain circumstances may be called for
redemption by the Corporation at any time and from time to time and redeemed on
the date fixed for redemption at the applicable redemption price determined by
the Corporation's Board of Directors. This certificate is not valid until
countersigned by the Transfer Agent.
WITNESS the facsimile signatures of the Trust's duly authorized officers.
Dated:
/s/ Elliot Reiter /s/ Jeffrey J. Hodgman
----------------- ----------------------
TREASURER PRESIDENT
COUNTERSIGNED: STATE STREET BANK AND TRUST COMPANY
TRANSFER AGENT (BOSTON, MASSACHUSETTS)
P.O. BOX 8408, BOSTON, MA 02266-8408
BY
__________________________________________________
AUTHORIZED OFFICER
<PAGE>
The following abbreviations,when used in the form of ownership on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Abbreviations in addition to those
appearing below may be used.
<TABLE>
<CAPTION>
ABBREVIATION EQUIVALENT ABBREVIATION EQUIVALENT
<S> <C> <C> <C>
JT TEN As joints tenants, with right of TEN IN COM As tenants in common
survivorship and not as tenants TEN BY ENT As tenants by the entireties
in common UNIF GIFT MIN ACT Under Uniform Gifts to
Minors Act
ADM Administrator(s) FDN Foundation
Administratix PL Public Law
AGMT Agreement TR (As) trustees(s), for, or
CUST Custodian for UA Under agreement
EST Estate, Of estate of UW Under Will of, Of Will of,
EX Executor(s), Executrix Under last Will & Testament
FBO For the benefit of
</TABLE>
Additional abbreviations may also be used though not in the
above list.
For value received, _____________________________________________ hereby
(I) we)
sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFY NUMBER OF ASSIGNEE
______________________________
[ ]
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________Shares
of Beneficial Interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint_____________________________________________
__________________Attorney to transfer the said shares on the books of the Trust
with full power of substitution in the premises.
Dated Signature(s)________________________
____________________________________
(The signature(s) to this assignment
must correspond with the name(s) as
written upon the face of this
Certificate in every particular,
without alteration or enlargement or
any change whatsoever. If more than
one owner, all must sign.)
Signature Guarantee By
_________________________________________
(Signature(s) must be guarantee by a bank,
a member firm of a national stock exchange,
or eligible guarantor institution.)
IMPORTANT NOTICE:
When you sign your name to this Transfer Form without filling in the name of
your "Assignee," this share certificate becomes fully negotiable, similar to a
check endorsed in blank. Therefore, to safeguard a signed certificate, it is
recommended that you fill in the name of the new owner in the "Assignee" space.
Alternatively, instead of using this Transfer Form, you may sign a separate
"stock power" form and then mail the unsigned share certificate and the signed
"stock power" in separate envelopes. For added protection, use registered mail
for a share certificate.
REDEMPTION FORMS
The undersigned hereby tenders to the Trust the within Certificate properly
endorsed with any requisite guarantee of signature and supporting papers and
requests the redemption of
__________________________________________________________________________Shares
(Indicate the number of shares to be redeemed. A new certificate will be issued
for any unredeemed balances.)
of beneficial interest represented by this Certificate in accordance with the
terms of the Amended and Restated Master Trust Agreement dated as noted on the
face of the Certificate, and all amendments thereto.
________________________________________________________________________________
Signature Guaranteed By
Signature(s)________________________
____________________________________
(The signature(s) to this assignment
must correspond with the name(s) as
written upon the face of this
Certificate in every particular,
without alteration or enlargement or
any change whatsoever. If more than
one owner, all must sign.)
____________________________________________________________
(Signature(s) must be guaranteed by a bank, a member firm of
a national stock exchange, or other eligible guarantor
institution.)
_____________________________________
Address
_____________________________________
<PAGE>
METLIFE INTERNATIONAL EQUITY FUND
A SERIES OF METLIFE PORTFOLIOS, INC.
SHARE CERTIFICATE
METLIFE INTERNATIONAL EQUITY FUND - C
THIS CERTIFIES that is the owner of
*SEE REVERSE FOR CERTAIN DEFINITIONS
------------------------------------
CUSIP
------------------------------------
Shares of Beneficial Interest of METLIFE INTERNATIONAL EQUITY FUND. A SERIES OF
METLIFE PORTFOLIOS, INC. (the "Corporation"), the said shares being issued,
received and held under and subject to the terms and provisions of the Articles
of Incorporation establishing the Fund, and all amendments thereto, copies of
which are on file with the Department of Assessment and Taxation of the State of
Maryland. The said owner by accepting this certificate agrees to and is
bound by all of the said terms and provisions. The shares represented hereby
are transferable in writing by the owners thereof in person or by attorney upon
surrender of this certificate to the Corporation properly endorsed for transfer.
Under provisions of the Articles of Incorporation, shares of beneficial interest
of the Fund under certain circumstances may be called for redemption by the
Corporation at any time and from time to time and redeemed on the date fixed for
redemption at the applicable redemption price determined by the Corporation's
Board of Directors. This certificate is not valid until countersigned by the
Transfer Agent.
WITNESS the facsimile signatures of the Trust's duly authorized officers.
Dated:
/s/ Elliot Reiter /s/ Jeffrey J. Hodgman
----------------- ----------------------
TREASURER PRESIDENT
COUNTERSIGNED: STATE STREET BANK AND TRUST COMPANY
TRANSFER AGENT (BOSTON, MASSACHUSETTS)
P.O. BOX 8408, BOSTON, MA 02266-8408
BY
__________________________________________________
AUTHORIZED OFFICER
<PAGE>
The following abbreviations, when used in the form of ownership on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Abbreviations in addition to those
appearing below may be used.
<TABLE>
<CAPTION>
ABBREVIATION EQUIVALENT ABBREVIATION EQUIVALENT
<S> <C> <C> <C>
JT TEN As joint tenants, with right of TEN IN COM As tenants in common
survivorship and not as tenants TEN BY ENT As tenants by the entireties
in common UNIF GIFT MIN ACT Under Uniforms Gifts to
Minors Act
ADM Administrator(s) FDN Foundation
Administratix PL Public Law
AGMT Agreement TR (As) trustee(s), for,of
CUST Custodian for UA Under agreement
EST Estate, Of estate of UW Under Will of , Of Will of,
EX Executor(s), Executrix Under last Will & Testament
FBO For the benefit of
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, ______________________________ hereby sell, assign and
transfer unto
(I/we)
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFY NUMBER OF ASSIGNEE
__________________________________
[ ]
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF
ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________Shares
of Beneficial Interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint
________________________________________________________________________Attorney
to transfer the said shares on the books of the Trust with full power of
substitution in the premises.
Dated Signature(s)________________________
____________________________________
(The signature(s) to this assignment
must correspond with the name(s) as
written upon thee face of this
Certificate in every particular,
without alteration or enlargement or
any change whatsoever. If more than
one owner, all must sign.)
Signature Guaranteed By
__________________________________________
(Signature(s) must be guaranteed by a bank,
a member firm of a national stock exchange,
or other eligible guarantor institution.)
IMPORTANT NOTICE:
When you sign your name to the Transfer Form without filling the name of your
"Assignee," this share certificate becomes fully negotiable, similar to a check
endorsed in blank. Therefore, to safeguard a signed certificate, it is
recommended that you fill in the name of the new owner in the "Assignee" space.
Alternatively, instead of using this Transfer Form, you may sign a separate
"stock power" form and then mail the unsigned share certificate and the signed
"stock power" in separate envelopes. For added protection, use registered mail
for a share certificate.
REDEMPTION FORMS
The undersigned hereby tenders to the Trust the within Certificate property
endorsed with any requisite guarantee of signature and supporting papers and
requests the redemptions of
__________________________________________________________________________Shares
(Indicate the number of shares to be redeemed. A new certificate will be issued
for any unredeemed balance.)
of beneficial interest represented by this Certificate in accordance with the
terms of the Amended and Restated Master Trust Agreement dated as noted on the
face of the Certificate, and all amendments thereto
________________________________________________________________________________
Signature Guaranteed By
Signature(s)_________________________
_____________________________________
(The signature(s) to this assignment
must correspond with the name(s) as
written upon the face of this
Certificate in every particular,
without alteration or enlargement or
any change whatsoever. If more than
one owner, all must sign.)
__________________________________________
(Signature(s) must be guaranteed by a bank,
a member firm of a national stock exchange,
or other eligible guarantor institution.)
____________________________________
Address
<PAGE>
METLIFE INTERNATIONAL FIXED INCOME FUND
A SERIES OF METLIFE PORTFOLIOS, INC.
SHARE CERTIFICATE
METLIFE INTERNATIONAL FIXED INCOME FUND - C
THIS CERTIFIES that is the owner of
*SEE REVERSE FOR CERTAIN DEFINITIONS
------------------------------------
CUSIP
------------------------------------
Shares of Beneficial Interest of METLIFE INTERNATIONAL FIXED INCOME FUND, A
SERIES OF METLIFE PORTFOLIOS, INC. (the "Corporation"), the said shares being
issued, received and held under and subject to the terms and provisions of the
Articles of Incorporation establishing the Fund, and all amendments thereto,
copies of which are on file with the Department of Assessments and Taxation of
the State of Maryland. The said owner by accepting this certificate agrees to
and is bound by all of the said terms and provisions. The shares represented
hereby are transferable in writing by the owners thereof in person or by
attorney upon surrender of this certificate to the Corporation properly endorsed
for transfer. Under provisions of the Articles of Incorporation, shares of
beneficial interest of the Fund under certain circumstances may be called for
redemption by the Corporation at any time and from time to time and redeemed on
the date fixed for redemption at the applicable redemption price determined by
the Corporation's Board of Directors. This certificate is not valid until
countersigned by the Transfer Agent.
WITNESS the facsimile signatures of the Trust's duly authorized officers.
Dated:
/s/ Elliot Reiter /s/ Jeffrey J. Hodgman
----------------- ----------------------
TREASURER PRESIDENT
COUNTERSIGNED: STATE STREET BANK AND TRUST COMPANY
TRANSFER AGENT (BOSTON, MASSACHUSETTS)
P.O. BOX 8408, BOSTON, MA 02266-8408
BY
__________________________________________________
AUTHORIZED OFFICER
<PAGE>
The following abbreviations, when used in the form of ownership on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Abbreviations in addition to those
appearing below may be used.
<TABLE>
<CAPTION>
ABBREVIATION EQUIVALENT ABBREVIATION EQUIVALENT
<S> <C> <C> <C>
JT TEN As joint tenants, with right of TEN IN COM As tenants in common
survivorship and not as tenants TEN BY ENT As tenants by the entireties
in common UNIF GIFT MIN ACT Under Uniform Gifts to
Minors Act
ADM Administrator(s) FDN Foundation
Administratix PL Public Law
AGMT Agreement TR (As) trustee(s), for,of
CUST Custodian for UA Under agreement
EST Estate, Of estate of UW Under Will of , Of Will of,
EX Executor(s), Executrix Under last Will & Testament
FBO For the benefit of
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, ______________________________ hereby sell, assign and
transfer unto
(I/we)
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
__________________________________
[ ]
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF
ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________Shares
of Beneficial Interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint
________________________________________________________________________Attorney
to transfer the said shares on the books of the Trust with full power of
substitution in the premises.
Dated Signature(s)________________________
____________________________________
(The signature(s) to this assignment
must correspond with the name(s) as
written upon the face of this
Certificate in every particular,
without alteration or enlargement or
any change whatsoever. If more than
one owner, all must sign.)
Signature Guaranteed By
__________________________________________
(Signature(s) must be guaranteed by a bank,
a member firm of a national stock exchange,
or other eligible guarantor institution.)
IMPORTANT NOTICE:
When you sign your name to the Transfer Form without filling the name of your
"Assignee," this share certificate becomes fully negotiable, similar to a check
endorsed in blank. Therefore, to safeguard a signed certificate, it is
recommended that you fill in the name of the new owner in the "Assignee" space.
Alternatively, instead of using this Transfer Form, you may sign a separate
"stock power" form and then mail the unsigned share certificate and the signed
"stock power" in separate envelopes . For added protection, use registered mail
for a share certificate.
REDEMPTION FORMS
The undersigned hereby tenders to the Trust the within Certificate properly
endorsed with any requisite guarantee of signature and supporting papers and
requests the redemption of
__________________________________________________________________________Shares
(Indicate the number of shares to be redeemed. A new certificate will be issued
for any unredeemed balance.)
of beneficial interest represented by this Certificate in accordance with the
terms of the Amended and Restated Master Trust Agreement dated as noted on the
face of the Certificate, and all amendments thereto
________________________________________________________________________________
Signature Guaranteed By
Signature(s)_________________________
_____________________________________
(The signature(s) to this assignment
must correspond with the name(s) as
written upon the face of this
Certificate in every particular,
without alteration or enlargement or
any change whatsoever. If more than
one owner, all must sign.)
__________________________________________
(Signature(s) must be guaranteed by a bank,
a member firm of a national stock exchange,
or other eligible guarantor institution.)
____________________________________
Address
<PAGE>
EXHIBIT 5A
INTERNATIONAL EQUITY FUND
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of this 19th day of January, 1992, by and between METLIFE
STATE STREET INVESTMENT SERVICES, INC., a corporation organized under the laws
of the Commonwealth of Massachusetts having its principal place of business in
Boston, Massachusetts (the "Investment Manager"), and METLIFE PORTFOLIOS, INC.,
a Maryland corporation (the "Corporation") having its principal place of
business in New York, New York.
WHEREAS, the Corporation is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (the "1940 Act"); and
WHEREAS, the Investment Manager is engaged principally in the business of
rendering investment management services and is registered as an investment
adviser under the Investment Adviser Act of 1940, as amended; and
WHEREAS, the Corporation, a series type of investment company, issues separate
classes (or series) of stock, each of which represents a separate diversified
portfolio of securities and other assets; and
WHEREAS, the Corporation is currently comprised of two series, the MetLife
International Equity Fund and the MetLife International Fixed Income Fund, each
of which pursues its investment objectives through separate investment policies,
and the Corporation may add or delete series from time to time;
WHEREAS, the Corporation desires to enter into a separate investment management
agreement with respect to the MetLife International Fixed Income Fund of the
Corporation with the Investment Manager,
NOW, THEREFORE, in consideration of the promises and the covenants hereinafter
contained, the Corporation and the Investment Manager hereby agree as follows:
ARTICLE 1
APPOINTMENT OF MANAGER
The Corporation hereby appoints the Investment Manager to act as investment
manager of and investment adviser to the International Equity Fund (the "Fund")
and to manage the investment and reinvestment of the assets of the Fund and to
administer its affairs, subject to the supervision of the Board of Directors of
the Corporation, for the
<PAGE>
period and on the terms herein set forth. The Investment Manager accepts such
appointment and agrees during such period, at its own expense, to render the
services and to assume the obligations herein set forth, for the compensation
herein provided. The Investment Manager shall for all purposes herein be deemed
to be an independent contractor and shall, unless otherwise provided or
authorized, have no authority to act for or represent the Corporation in any way
or otherwise be deemed an agent of the Corporation other than in furtherance of
its duties and responsibilities as set forth in this Agreement.
ARTICLE 2
DUTIES OF MANAGER
The Investment Manager, at its own expense, shall furnish the following
services and facilities to the Corporation:
I. INVESTMENT MANAGEMENT SERVICES
In acting as Investment Manager of the Fund, the Investment Manager shall
regularly provide the Fund with such investment research, advice and management
as the Corporation may from time to time consider necessary for the proper
management of the Fund and shall furnish continuously an investment program and
shall determine which securities shall be purchased, sold or exchanged and what
portion of the assets of the Fund shall be held in the various securities or
other assets, subject always to any restrictions of the Corporation's Articles
of Incorporation and By-Laws, as amended or supplemented from time to time, the
provisions of applicable law and regulations including the 1940 Act, and the
statements relating to the Fund's investment objectives, policies and
restrictions as the same are set forth in the prospectus and statement of
additional information of the Corporation then currently effective under the
Securities Act of 1933 (the "Prospectus"). Should the Board of Directors of the
Corporation at any time, however, make any definite determination as to
investment policy and notify the Investment Manager thereof, the Investment
Manager shall be bound by such determination for the period, if any, specified
in such notice or until similarly notified that such determination has been
revoked. The Investment Manager shall take, on behalf of the corporation, all
actions which it deems necessary to implement the investment policies of the
Fund, determined as provided above. Subject to the foregoing, the Investment
Manager shall have the authority to engage one or more sub-investment managers
in connection with the management of the Fund, which sub-investment managers may
be affiliates of the Investment Manager.
The Investment Manager shall place all orders for the purchase and sale of
portfolio securities for the account of the Fund with brokers or dealers
selected by the Investment Manager, although the Fund will pay the actual
brokerage commissions on portfolio transactions in accordance with Article 3(d).
In connection with the selection of such brokers or dealers and the placing
of such
<PAGE>
orders, the Investment Manager is directed at all times to follow the policies
of the Corporation as set forth in the Prospectus. Nothing herein shall
preclude the "bunching"of orders for the sale or purchase of portfolio
securities with other Funds or with other accounts managed by the Investment
Manager or with the Investment Manager's own general funds. The Investment
Manager shall not favor any account over any other and any purchase or sale
orders executed contemporaneously shall be allocated in a manner it deems
equitable among the accounts involved and at a price which is approximately
averaged.
The Investment Manager shall furnish to the Corporation necessary assistance in:
(i) the preparation of all reports now or hereafter required by
federal or other laws; and
(ii) the preparation of prospectuses, registration statements and
amendments thereto thant may be required by federal or other
laws or by the rules or regulations of any duly authorized
commission or administrative body.
The Investment Manager shall arrange for providing and maintaining a bond
issued by a reputable insurance company authorized to do business in the place
where the bond is issued against larceny and embezzlement covering each officer
and employee of the Corporation and/or the Investment Manager who may singly or
jointly with others have access to funds or securities of the Corporation, with
direct or indirect authority to draw upon such funds or to direct generally the
disposition of such funds. The bond shall be in such reasonable amount as a
majority of the Board of Directors of the Corporation who are not "interested
persons" of the Corporation, as defined in the 1940 Act, shall determine, with
due consideration given to the aggregate assets of the Corporation to which any
such officer or employee may have access. The premium for the bond shall be
payable by the Corporation in accordance with Article 3(o).
II. ADMINISTRATIVE SERVICES
The Investment Manager shall also manage, supervise and conduct the other
affairs and business of the Fund and matters incidental thereto, subject always
to the control of the Board of Directors of the Corporation and to the
provisions of the Articles of Incorporation and By-laws of the Corporation, as
amended, and the Prospectus of the Corporation as from time to time amended and
in effect, and the 1940 Act. Subject to the foregoing, and subject to the
specific approval of the Corporation, the Investment Manager shall have the
authority to engage one or more entities to perform its obligations for
sub-administrative services in connection with the management of the Fund, which
sub-administrators may be affiliates of the Investment Manager.
The Investment Manager shall furnish the Corporation office space in the
offices of
3
<PAGE>
the Investment Manager, or in such other place or places as may be agreed upon
from time to time, and all necessary office facilities, simple business
equipment supplies, utilities, and telephone service for managing the affairs
and investments of the Fund.
The Investment Manager shall provide all necessary executive and
administrative personnel for managing the affairs of the Fund, including
personnel to perform clerical, bookkeeping, accounting and other office
functions. These services are exclusive of the bookkeeping and accounting
services of any dividend disbursing agent, transfer agent, registrar or
custodian. The Investment Manager shall compensate all personnel, officers and
Directors of the Corporation if such persons are also employees of the
Investment Manager or its affiliates.
ARTICLE 3
ALLOCATION OF EXPENSE
Except for the services and facilities to be provided by the Investment
Manager as set forth in Article 2 above, the Corporation assumes and shall pay
all expenses for all other Fund operations and activities and shall reimburse
the Investment Manager for any such expenses incurred by the Investment Manager
(it being understood that the Corporation shall allocate such expenses between
or among its Funds to the extent contemplated by its Article of Incorporation).
The expenses to be borne by the Fund with respect to the Fund shall include,
without limitation:
(a) all expenses of organizing the Corporation or forming any Fund thereof;
(b) the charges and expenses of any registrar, stock transfer or dividend
disbursing agent, shareholder servicing agent, custodian, or depository
appointed by the Corporation with respect to the Fund for the safekeeping of its
cash, portfolio securities and other property, including the costs of servicing
shareholder investment accounts and bookkeeping, accounting and pricing
services;
(c) the charges and expenses of auditors;
(d) brokerage commissions and other direct costs incurred in connection
with transactions in the portfolio securities of the Fund, including any portion
of such commissions attributable to brokerage and research services as defined
in Section 28(e) of the Exchange Act and including any costs directly related to
the acquisition, disposition, lending or borrowing of portfolio investments;
(e) taxes, including issuance and transfer taxes, and corporate
registration, filing or other
4
<PAGE>
fees payable by the Corporation with respect to the Fund, to federal, state or
other governmental agencies;
(f) expenses, including the cost of printing certificates, relating to the
issuance of shares of the Fund;
(g) expenses involved in registering and maintaining registrations of the
Fund and of its shares with the Securities and Exchange Commission and various
states and other jurisdictions, including reimbursement of actual expenses
incurred by the Investment Manager in performing such functions for the Fund,
which may include compensation of persons who are employees of the Investment
Manager, in proportion to the relative time spent on such matters;
(h) expenses related to the redemption of shares of the Fund, including
expenses attributable to any program of periodic redemption;
(i) expenses of shareholders and Directors meetings, including meetings of
committees, and of preparing, printing and mailing proxy statements, quarterly
reports, semi-annual reports, annual reports and other communications to
existing shareholders;
(j) expenses of preparing and setting in type prospectuses, and expenses of
printing and mailing the same to existing shareholders (but not expenses of
printing and mailing of prospectuses and literature used for promotional
purposes);
(k) compensation and expenses of Directors who are not "interested persons"
within the meaning of the 1940 Act;
(l) expenses of maintaining shareholder accounts and furnishing, or causing
to be furnished, to each shareholder statement of his or her account, including
the expense of mailing;
(m) charges and expenses of legal counsel in connection with matters
relating to the Fund, including, without limitation, legal services rendered in
connection with the Corporation's corporate and financial structure and
relations with its shareholders, issuance of shares of the Fund, and
registration and qualification of securities under federal, state and other
laws;
(n) the cost and expense of maintaining the books and records of the Fund,
including general ledger accounting;
(o) insurance premiums on fidelity, errors and omissions and other
coverages including the expense of obtaining and maintaining a fidelity bond as
required by Section 17(g) of the 1940 Act;
5
<PAGE>
(p) interest and any other costs related to borrowings by the Corporation
for the Fund; and
(q) such other non-recurring expenses of the Corporation with respect to
the Fund as may arise, including expenses of actions, suits, or proceedings to
which the Corporation is a party and expenses resulting from the legal
obligation which the Corporation may have to provide indemnity with respect
thereto.
ARTICLE 4
MANAGEMENT FEE
For the services rendered and the facilities to be provided by the
Investment Manager as set forth in Article 2 hereof, the Corporation agrees that
the Fund shall pay to the Investment Manager a monthly fee as soon as practical
after the last day of each calendar month, which fee shall be paid at a rate
equal to ninety-five one hundredths of one percent (95%) of the average daily
net asset value of such Fund for such calendar month, commencing as of the date
on which this Agreement becomes effective with respect to such Fund and computed
in accordance with the description of the method of determination of net asset
value contained in the Prospectus.
In the case of commencement or termination of this Agreement with respect
to the Fund during any calendar month, the fee with respect to the Fund for that
month shall be reduced proportionately based upon the number of calendar days
during which this Agreement is in effect with respect to the Fund, and the fee
shall be computed based upon the average daily net asset value of the Fund
during such period.
ARTICLE 5
EXPENSE LIMITATION
The Investment Manager agrees that if the total expenses of the Fund
(exclusive of interest, taxes, brokerage expenses and extraordinary items such
as litigation expenses) for any fiscal year of the Fund exceed the lowest
expense limitation imposed in any jurisdiction in which the Fund is then making
sales of its shares or in which its shares are then qualified for sale, if any,
the Investment Manager will pay or reimburse the Fund for that excess up to the
amount of its advisory fees payable with respect to the Fund during that fiscal
year. The amount of the monthly advisory fee payable by the Fund under Article 4
hereof shall be reduced to the extent that the monthly expenses of the Fund, on
an annualized basis,
6
<PAGE>
would exceed the foregoing limitation. At the end of each fiscal year of the
Fund, if the aggregate annual expenses chargeable to the Fund for that year
exceed the foregoing limitation based upon the average of the monthly average
net asset value of the Fund for the year, the Investment Manager will promptly
reimburse the Fund for the amount of such excess to the extent not already
reimbursed by reduction of the monthly advisory fee, but if such expenses are
within the foregoing limitation, any excess amount previously withheld from the
monthly advisory fee during that fiscal year will be promptly paid over to the
Investment Manager.
In the event that this Agreement (i) is terminated as of a date other than
the last day of the fiscal year of the Fund or (ii) commences as of a date other
than the first day of the fiscal year of the Fund, then the expenses of the Fund
shall be annualized and the Investment Manager shall pay to, or receive from,
the Fund a pro rata portion of the amount that the Investment Manager would have
been required to pay or would have been entitled to receive, if any, had this
Agreement been in effect with respect to the Fund for the full fiscal year.
ARTICLE 6
RELATIONS WITH CORPORATION
Subject to and in accordance with the Articles of Incorporation and By-laws
of the Corporation and the Articles of Organization and By-laws of the
Investment Manager, it is understood that Directors, officers, agents and
shareholders of the Corporation are or may be interested in the Investment
Manager (or any successor thereof) as directors, officers or otherwise, that
directors, officers, agents and shareholders of the Investment Manager (or any
successor thereof) are or may be interested in the Corporation as Directors,
officers, agents, shareholders or otherwise, that the Investment Manager (or any
such successor thereof) is or may be interested in the Corporation as a
shareholder or otherwise and that the effect of any such adverse interests shall
be governed by said Articles of Incorporation, Articles of Organization and By-
laws.
ARTICLE 7
LIABILITY OF INVESTMENT MANAGER
(a) In the performance of investment management services as provided in
Article 2, the Investment Manager shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Fund in connection with any
investment policy or the purchase, sale or redemption of any securities on the
recommendation of the Investment Manager. Nothing herein contained shall be
construed to protect the Investment Manager against any liability to the Fund or
its shareholders to which the Investment Manager shall
7
<PAGE>
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence in the performance of its duties on behalf of the Fund, reckless
disregard of the Investment Manager's obligations and duties under this
Agreement or the violation of any applicable law.
(b) In the performance of administrative services as provided in Article
2, and which the Investment Manager is obligated to perform hereunder, the
Investment Manager shall be liable to the Fund or its shareholders for any
willful or negligent act or omission in the performance of such administrative
services.
ARTICLE 8
DURATION AND TERMINATION OF THIS AGREEMENT
(a) Duration. This Agreement shall become effective on the later of (i)
the date on which a Registration Statement with respect to its shares under the
Securities Act of 1933, as amended, is first declared effective by the
Securities and Exchange Commission or (ii) the date on which the Fund commences
offering its shares to the public, and shall continue in effect, but only so
long as such continuance is specifically approved at least annually by (i) the
Board of Directors of the Corporation, or by the vote of a majority of the
outstanding shares of the Fund, and (ii) a majority of those directors who are
not parties to this Agreement or interested persons of any such party cast in
person at a meeting called for the purpose of voting on such approval.
(b) Termination. This Agreement may be terminated at any time, without
payment of any penalty, by vote of the Board of Directors of the Corporation or
by vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the Fund, or by the Investment Manager, in each case on sixty (60)
days prior written notice to the other party.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (as defined in the 1940
Act).
(d) Approval, Amendment or Termination. Any approval, amendment or
termination of this Agreement by the holders of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the Fund shall be effective to
continue, amend or terminate this Agreement notwithstanding that such action has
not been approved by the vote of a majority of the outstanding voting securities
of the Corporation, unless such action shall be required by any applicable law
or otherwise.
8
<PAGE>
ARTICLE 9
SERVICES NOT EXCLUSIVE
The services of the Investment Manager to the Corporation hereunder are not
to be deemed exclusive, and the Investment Manager shall be free to render
similar services to others so long as its services hereunder are not impaired
thereby.
ARTICLE 10
NOTICES
Notices under this Agreement shall be in writing and shall be addressed,
and delivered or mailed postage prepaid, to the other party at such address as
such other party may designate from time to time for the receipt of such
notices. For this purpose, and until further notice, the address of the
Corporation is One Madison Avenue, New York, New York, 10010-3690 and the
address of the Investment Manager is One Financial Center, Boston, Massachusetts
02111.
ARTICLE 11
GOVERNING LAW; COUNTERPARTS
This Agreement shall be construed in accordance with the laws of the State
of New York. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall
together, constitute only one instrument.
9
<PAGE>
ARTICLE 12
DEFINITIONS
The terms "assignment," "interested person," and "majority of the
outstanding shares," when used in this Agreement, shall have the respective
meanings specified under the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
METLIFE - STATE STREET
INVESTMENT SERVICES
By /s/ George Trotta
---------------------------
President
Attest
/s/ Leonard M. Bakal
- --------------------------
Asst. Clerk
METLIFE PORTFOLIOS, INC.
By /s/ Jeffrey Hodgman
---------------------------
Attest
/s/ Christopher Nicholas
- --------------------------
Asst. Secretary
10
<PAGE>
INTERNATIONAL FIXED INCOME FUND
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of this 17th day of January, 1992, by and between METLIFE
STATE STREET INVESTMENT SERVICES, INC., a corporation organized under the laws
of the Commonwealth of Massachusetts having its principal place of business in
Boston, Massachusetts (the "Investment Manager"), and METLIFE PORTFOLIOS, INC.,
a Maryland corporation (the "Corporation") having its principal place of
business in New York, New York.
WHEREAS, the Corporation is engaged in business as an open-end management
investment company and is registered as such under the Investment Company
Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Investment Manager is engaged principally in the business of
rendering investment management services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Corporation, a series type of investment company, issues
separate classes (or series) of stock, each of which represents a separate
diversified portfolio of securities and other assets; and
WHEREAS, the Corporation is currently comprised of two series, the MetLife
International Equity Fund and the MetLife International Fixed Income Fund,
each of which pursues its investment objectives through separate investment
policies, and the Corporation may add or delete series from time to time;
WHEREAS, the Corporation desires to enter into a separate investment
management agreement with respect to the MetLife International Fixed Income
Fund of the Corporation with the Investment Manager,
NOW, THEREFORE, in consideration of the promises and the covenants
hereinafter contained, the Corporation and the Investment Manager hereby
agree as follows:
ARTICLE 1
APPOINTMENT OF MANAGER
The Corporation hereby appoints the Investment Manager to act as investment
manager of and investment adviser to the International Fixed Income Fund (the
"Fund") and to manage the investment and reinvestment of the assets of the Fund
and to administer its affairs, subject to the supervision of the Board of
Directors of the Corporation, for the
<PAGE>
period and on the terms herein set forth. The Investment Manager accepts such
appointment and agrees during such period, at its own expense, to render the
services and to assume the obligations herein set forth, for the compensation
herein provided. The Investment Manager shall for all purposes herein be deemed
to be an independent contractor and shall, unless otherwise provided or
authorized, have no authority to act for or represent the Corporation in any way
or otherwise be deemed an agent of the Corporation other than in furtherance of
its duties and responsibilities as set forth in this Agreement.
ARTICLE 2
DUTIES OF MANAGER
The Investment Manager, at its own expense, shall furnish the following
services and facilities to the Corporation:
I. INVESTMENT MANAGEMENT SERVICES
In acting as Investment Manager of the Fund, the Investment Manager shall
regularly provide the Fund with such investment research, advice and management
as the Corporation may from time to time consider necessary for the proper
management of the Fund and shall furnish continuously an investment program and
shall determine which securities shall be purchased, sold or exchanged and what
portion of the assets of the Fund shall be held in the various securities or
other assets, subject always to any restrictions of the Corporation's Articles
of Incorporation and By-Laws, as amended or supplemented from time to time, the
provisions of applicable law and regulations including the 1940 Act, and the
statements relating to the Fund's investment objectives, policies and
restrictions as the same are set forth in the prospectus and statement of
additional information of the Corporation then currently effectively under the
Securities Act of 1933 (the "Prospectus"). Should the Board of Directors of the
Corporation at any time, however, make any definite determination as to
investment policy and notify the Investment Manager thereof, the Investment
Manager shall be bound by such determination for the period, if any, specified
in such notice or until similarly notified that such determination has been
revoked. The Investment Manager shall take, on behalf of the Corporation, all
actions which it deems necessary to implement the investment policies of the
Fund, determined as provided above. Subject to the foregoing, the Investment
Manager shall have the authority to engage one or more sub-investment managers
in connection with the management of the Fund, which sub-investment managers may
be affiliates of the Investment Manager.
The Investment Manager shall place all orders for the purchase and sale of
portfolio securities for the account of the Fund with brokers or dealers
selected by the Investment Manager, although the Fund will pay the actual
brokerage commission on portfolio transactions in accordance with Article 3(d).
In connection with the selection of such brokers or dealers and the placing
of such
<PAGE>
orders, the Investment Manager is directed at all times to follow the policies
of the Corporation as set forth in the Prospectus. Nothing herein shall preclude
the "bunching" of orders for the sale or purchase of portfolio securities with
other Funds or with other accounts managed by the Investment Manager or with the
Investment Manager's own general funds. The Investment Manager shall not favor
any account over any other and any purchase or sale orders executed
contemporaneously shall be allocated in a manner it deems equitable among the
accounts involved and at a price which is approximately averaged.
The Investment Manager shall furnish to the Corporation necessary assistance in:
(i) the preparation of all reports now or hereafter required by federal or
other laws; and
(ii) the preparation of prospectuses, registration statements and
amendments thereto that may be required by federal or other laws or by
the rules or regulations of any duly authorized commission or
administrative body.
The Investment Manager shall arrange for providing and maintaining a bond
issued by a reputable insurance company authorized to do business in the place
where the bond is issued against larceny and embezzlement covering each officer
and employee of the Corporation and/or the Investment Manager who may singly or
jointly with others have access to funds or securities of the Corporation,
with direct or indirect authority to draw upon such funds or to direct generally
the disposition of such funds. The bond shall be in such reasonable amount as a
majority of the Board of Directors of the Corporation who are not "interested
persons" of the Corporation, as defined in the 1940 Act, shall determine, with
due consideration given to the aggregate assets of the Corporation to which any
such officer or employee may have access. The premium for the bond shall be
payable by the Corporation in accordance with Article 3(o).
II. ADMINISTRATIVE SERVICES
The Investment Manager shall also manage, supervise and conduct the other
affairs and business of the Fund and matter incidental thereto, subject always
to the control of the Board of Directors of the Corporation and to the
provisions of the Articles of Incorporation and By-laws of the Corporation, as
amended, and the Prospectus of the Corporation as from time to time amended and
in effect, and in the 1940 Act. Subject to the foregoing, and subject to the
specific approval of the Corporation, the Investment Manager shall have the
authority to engage one or more entities to perform its obligations for
sub-administrative services in connection with the management of the Fund, which
sub-administrators may be affiliates of the Investment Manager.
The Investment Manager shall furnish the Corporation office space in the
offices of
3
<PAGE>
the Investment Manager, or in such other place or places as may be agreed upon
from time to time, and all necessary office facilities, simple business
equipment, supplies, utilities, and telephone service for managing the affairs
and investments of the Fund.
The Investment Manager shall provide all necessary executive and
administrative personnel for managing the affairs of the Fund, including
personnel to perform clerical, bookkeeping, accounting and other office
functions. These services are exclusive of the bookkeeping and accounting
services of any dividend disbursing agent, transfer agent, registrar or
custodian. The Investment Manager shall compensate all personnel, officers and
Directors of the Corporation if such persons are also employees of the
Investment Manager or its affiliates.
ARTICLE 3
ALLOCATION OF EXPENSE
Except for the services and facilities to be provided by the Investment
Manager as set forth in Article 2 above, the Corporation assumes and shall pay
all expenses for all other Fund operations and activities and shall reimburse
the Investment Manager for any such expenses incurred by the Investment Manager
(it being understood that the Corporation shall allocate such expenses between
or among its Funds to the extent contemplated by its Articles of Incorporation).
The expenses to be borne by the Fund with respect to the Fund shall include,
without limitation:
(a) all expenses of organizing the Corporation or forming any Fund
thereof;
(b) the charges and expenses of any registrar, stock transfer or dividend
disbursing agent, shareholder servicing agent, custodian, or depository
appointed by the Corporation with respect to the Fund for the safekeeping of
its cash, portfolio securities and other property, including the costs of
servicing shareholder investment accounts and bookkeeping, accounting and
pricing services;
(c) the charges and expenses of auditors;
(d) brokerage commissions and other direct costs incurred in connection
with transactions in the portfolio securities of the Fund, including any portion
of such commissions attributable to brokerage and research services as defined
in Section 28(e) of the Exchange Act and including any costs directly related to
the acquisition, disposition, lending or borrowing of portfolio investments;
(e) taxes, including issuance and transfer taxes, and corporate
registration, filing or other
4
<PAGE>
fees payable by the Corporation with respect to the Fund, to federal, state or
other governmental agencies;
(f) expenses, including the cost of printing certificates, relating to
the issuance of shares of the Fund;
(g) expenses involved in registering and maintaining registrations of the
Fund and of its shares with the Securities and Exchange Commission and various
states and other jurisdictions, including reimbursement of actual expenses
incurred by the Investment Manager in performing such functions for the Fund,
which may include compensation of persons who are employees of the Investment
Manager, in proportion to the relative time spent on such matters;
(h) expenses related to the redemption of shares of the Fund, including
expenses attributable to any program of periodic redemption;
(i) expenses of shareholders and Directors meetings, including meetings of
committees, and of preparing, printing and mailing proxy statements, quarterly
reports, semi-annual reports, annual reports and other communications to
existing shareholders;
(j) expenses of preparing and setting in type prospectuses, and expenses
of printing and mailing the same to existing shareholders (but not expenses of
printing and mailing of prospectuses and literature used for promotional
purposes);
(k) compensation and expenses of Directors who are not "interested
persons" within the meaning of the 1940 Act;
(l) expenses of maintaining shareholder accounts and furnishing, or
causing to be furnished, to each shareholder a statement of his or her account,
including the expense of mailing;
(m) charges and expenses of legal counsel in connection with matters
relating to the Fund, including, without limitation, legal services rendered in
connection with the Corporation's corporate and financial structure and
relations with its shareholders, issuance of shares of the Fund, and
registration and qualification of securities under federal, state and other
laws;
(n) the cost and expense of maintaining the books and records of the Fund,
including general ledger accounting;
(o) insurance premiums on fidelity, errors and omissions and other
coverages including the expense of obtaining and maintaining a fidelity bond as
required by Section 17(g) of the 1940 Act;
5
<PAGE>
(p) interest and any other costs related to borrowings by the Corporation
for the Fund; and
(q) such other non-recurring expenses of the Corporation with respect to
the Fund as may arise, including expenses of actions, suits, or proceedings to
which the Corporation is a party and expenses resulting from the legal
obligation which the Corporation may have to provide indemnity with respect
thereto.
ARTICLE 4
MANAGEMENT FEE
For the services rendered and the facilities to be provided by the
Investment Manager as set forth in Article 2 hereof, the Corporation agrees that
the Fund shall pay to the Investment Manager a monthly fee as soon as practical
after the last day of each calendar month, which fee shall be paid at a rate
equal to ninety-five one hundredths of one percent (.95%) of the average daily
net asset value of such Fund for such calendar month, commencing as of the date
on which this Agreement becomes effective with respect to such Fund and computed
in accordance with the description of the method of determination of net asset
value contained in the Prospectus.
In the case of commencement or termination of this Agreement with respect
to the Fund during any calendar month, the fee with respect to the Fund for that
month shall be reduced proportionately based upon the number of calendar days
during which this Agreement is in effect with respect to the Fund, and the fee
shall be computed based upon the average daily net asset value of the Fund
during such period.
ARTICLE 5
EXPENSE LIMITATION
The Investment Manger agrees that if the total expenses of the Fund
(exclusive of interest, taxes, brokerage expenses and extraordinary items such
as litigation expenses) for any fiscal year of the Fund exceed the lowest
expense limitation imposed in any jurisdiction in which the Fund is then making
sales of its shares or in which its shares are then qualified for sale, if any,
the Investment Manager will pay or reimburse the Fund for that excess up to the
amount of its advisory fees payable with respect to the Fund during that fiscal
year. The amount of the monthly advisory fee payable by the Fund under Article 4
hereof shall be reduced to the extent that the monthly expenses of the Fund, on
an annualized basis,
6
<PAGE>
would exceed the foregoing limitation. At the end of each fiscal year of the
Fund, if the aggregate annual expenses chargeable to the Fund for that year
exceed the foregoing limitation based upon the average of the monthly average
net asset value of the Fund for the year, the Investment Manager will promptly
reimburse the Fund for the amount of such excess to the extent not already
reimbursed by reduction of the monthly advisory fee, but if such expenses are
within the foregoing limitation, any excess amount previously withheld from the
monthly advisory fee during that fiscal year will be promptly paid over to the
Investment Manager.
In the event that this Agreement (i) is terminated as of a date other than
the last day of the fiscal year of the Fund or (ii) commences as of a date other
than the first day of the fiscal year of the Fund, then the expenses of the Fund
shall be annualized and the Investment Manager shall pay to, or receive from,
the Fund a pro rata portion of the amount that the Investment Manager would have
been required to pay or would have been entitled to receive, if any, had this
Agreement been in effect with respect to the Fund for the full fiscal year.
ARTICLE 6
RELATIONS WITH CORPORATION
Subject to and in accordance with the Articles of Incorporation and By-Laws
of the Corporation and the Articles of Organization and By-Laws of the
Investment Manager, it is understood that Directors, officers, agents and
shareholders of the Corporation are or may be interested in the Investment
Manager (or any successor thereof) as directors, officers or otherwise, that
directors, officers, agents and shareholders of the Investment Manager (or any
successor thereof) are or may be interested in the Corporation as Directors,
officers, agents, shareholders or otherwise, that the Investment Manager (or any
such successor thereof) is or may interested in the Corporation as a shareholder
or otherwise and that the effect of any such adverse interests shall be
goverened by said Articles of Incorporation, Articles of Organization and By-
Laws.
ARTICLES 7
LIABILITY OF INVESTMENT MANAGER
(a) In the performance of investment management services as provided in
Article 2, the Investment Manager shall not be liable for any errors of
judgment or mistake of law or for any loss suffered by the Fund in connection
with any investment policy or the purchase, sale or redemption of any securities
on the recommendation of the Investment Manager. Nothing herein contained shall
be construed to protect the Investment Manager against any liability to the Fund
or its shareholders to which the Investment Manager shall
7
<PAGE>
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence in the performance of its duties on behalf of the Fund, reckless
disregard of the Investment Manager's obligations and duties under this
Agreement or the violation of any applicable law.
(b) In the performance of administrative services as provided in Article
2, and which the Investment Manager is obligated to perform hereunder, the
Investment Manager shall be liable to the Fund or its shareholders for any
willful or negligent act or omission in the performance of such administrative
services.
ARTICLE 8
DURATION AND TERMINATION OF THIS AGREEMENT
(a) Duration. This Agreement shall become effective on the later of (i)
the date on which a Registration Statement with respect to its shares under the
Securities Act of 1933, as amended, is first declared effective by the
Securities and Exchange Commission or (ii) the date on which the Fund commences
offering its shares to the public, and shall continue in effect, but only so
long as such continuance is specifically approved at least annually by (i) the
Board of Directors of the Corporation, or by the vote of a majority of the
outstanding shares of the Fund, and (ii) a majority of those directors who are
not parties to this Agreement or interested persons of any such party cast in
person at a meeting called for the purpose of voting on such approval.
(b) Termination. This Agreement may be terminated at any time, without
payment of any penalty, by vote of the Board of Directors of the Corporation or
by vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the Fund, or by the Investment Manager, in each case on sixty (60)
days prior written notice to the other party.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (as defined in the 1940
Act).
(d) Approval, Amendment or Termination. Any approval, amendment or
termination of this Agreement by the holders of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the Fund shall be effective to
continue, amend or terminate this Agreement notwithstanding that such action has
not been approved by the vote of a majority of the outstanding voting securities
of the Corporation, unless such action shall be required by any applicable law
or otherwise.
8
<PAGE>
ARTICLE 9
SERVICES NOT EXCLUSIVE
The services of the Investment Manager to the Corporation hereunder are not
to be deemed exclusive, and the Investment Manager shall be free to render
similar services to others so long as its services hereunder are not impaired
thereby.
ARTICLE 10
NOTICES
Notices under this Agreement shall be in writing and shall be addressed,
and delivered or mailed postage prepaid, to the other party at such address as
such other party may designate from time to time for the receipt of such
notices. For this purpose, and until further notice, the address of the
Corporation is One Madison Avenue, New York, New York, 10010-3690 and the
address of the Investment Manager is One Financial Center, Boston, Massachusetts
02111.
ARTICLE 11
GOVERNING LAW; COUNTERPARTS
This Agreement shall be construed in accordance with the laws of the State
of New York. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
9
<PAGE>
ARTICLE 12
DEFINITIONS
The terms "assignment," "interested person," and "majority of the
outstanding shares," when used in this Agreement, shall have the respective
meanings specified under the 1940 Act.
WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
METLIFE - STATE STREET
INVESTMENT SERVICES, INC.
By: /s/ George Trotta
----------------------------
President
Attest:
/s/ Leonard M. Bakal
- -------------------------
Asst. Clerk
METLIFE PORTFOLIOS, INC.
By: /s/ Jeffrey J. Hodgman
----------------------------
President
Attest:
/s/ Christopher Nicholas
- -------------------------
Asst. Secretary
10
<PAGE>
INTERNATIONAL EQUITY FUND SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 17th day of January, 2, 12:00 p.m. Eastern Standard
Time, among MetLife Portfolios, Inc., a Maryland corporation (the
"Corporation"), MetLife-State Street Investment Services, Inc. (the "Investment
Manager"), a Massachusetts corporation, and GFM International Investors Limited,
an England corporation (the "Sub-Investment Manager");
W I T N E S S E T H:
WHEREAS, the Corporation is engaged in business as a diversified open-end
management Investment company and is registered as such under the Investment
Company Act of 1940 (the Investment Company Act");
WHEREAS, the Corporation, a series type of investment company, issues
separate classes (or series) of stock, each of which represents a separate
portfolio of investments;
WHEREAS, the Corporation is currently comprised of two portfolios which are
the MetLife International Equity Fund and the MetLife International Fixed Income
Fund, each of which pursues investment objectives through separate investment
policies, and the Corporation may add or delete portfolios from time to time;
WHEREAS, the Sub-Investment Manager is engaged principally in the business
of rendering advisory services and is registered as an investment adviser under
the Investment Adviser Act of 1940; and
WHEREAS, the Corporation has employed the Investment Manager to act as
investment manager of the MetLife International Equity Fund as set forth in the
MetLife International Equity Fund Investment Management Agreement dated January
17, 1992 between the Corporation and Investment Manager (the "MetLife
International Equity Fund Investment Management
<PAGE>
Agreement"); and the Corporation and the Investment Manager desire to enter into
a separate sub-investment management agreement with respect to the MetLife
International Equity Fund of the Corporation with the Sub-Investment Manager;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Corporation, the Investment Manager and the
Sub-Investment Manager hereby agree as follows:
ARTICLE 1
Duties of the Sub-Investment Manger
-----------------------------------
Subject to the supervision and approval of the Investment Manager and the
Corporation's Board of Directors, the Sub-Investment Manager will manage the
investment and reinvestment of the assets of the Corporation's International
Equity Fund (the "Fund") for the period and on the terms and conditions set
forth in this Agreement. In acting as Sub-Investment Manager to the corporation
with respect to the Fund, the Sub-Investment Manager shall determine which
securities shall be purchased, sold or exchanged and what portion of the assets
of the Fund shall be held in the various securities or other assets in which it
may invest, subject always to any restrictions of the Corporation's Articles of
Incorporation and By-Laws, as amended or supplemented from time to time, the
provisions of applicable laws and regulations including the Investment Company
Act, and the statements relating to the Fund's investment objectives, policies
and restrictions as the same are set forth in the prospectus and statement of
additional information of the Corporation then currently effective under the
Securities Act of 1933 (the "Prospectus"). Should the Board of Directors of the
Corporation or the Investment Manager at any time, however, make any definite
determination as to investment policy and notify the Sub-Investment Manager
thereof, the Sub-Investment Manager shall be bound by such determination for the
period, if any, specified in such notice or until similarly notified that such
determination has been revoked. The Sub-Investment Manager shall take, on behalf
the Corporation, all actions which it deems necessary to implement the
investment policies of the Fund, determined as provided above, and in particular
to place all orders for the purchase or
2
<PAGE>
sale of portfolio securities for the Fund with brokers or dealers selected by
it.
On the basis of information about the Corporation supplied to the Sub-
Investment Manager, the Sub-Investment Manager will treat the Corporation as a
business investor in relation to the services to be provided in accordance with
this Agreement. As a consequence, certain of the rules of the Investment
Management Regulatory Organization Limited ("IMRO") introduced to protect less
sophisticated investors will not apply to this Agreement.
In connection with the selection of such brokers or dealers and the placing
of such orders, the Sub-Investment Manager is directed at all times to follow
the policies of the Corporation set forth in the Prospectus. Nothing herein
shall preclude the "bunching" of orders for the sale or purchase of portfolio
securities with other of the Corporation's series or with other accounts managed
by the Sub-Investment Manager. The Sub-Investment Manager shall not favor any
account over any other and any purchase or sale orders executed
contemporaneously shall be allocated in a manner it deems equitable among the
accounts involved and at a price which is approximately averaged.
Nothing herein contained shall prevent the sale or purchase of investments
of which an issue or offer for sale was underwritten, managed or arranged by
the Sub-Investment Manager or an Associate during the twelve months preceding
such sale or purchase, provided that such sale or purchase is otherwise
permitted under the Investment Company Act and the rules and regulations
thereunder.
If and to the extent that the investment objectives of the Corporation and
the MetLife International Equity Fund permit the holding of units in collective
investment schemes, the Sub-Investment Manager may acquire or dispose of units
in such collective investment schemes operated or advised by the Sub-Investment
Manager or an Associate, provided that such acquisition or disposition is
otherwise permitted by the Investment Company Act and the rules and regulations
thereunder.
The Sub-Investment Manager may not commit the Corporation to underwrite any
issue or
3
<PAGE>
offer for sale of securities, except to the extent that the Corporation may be
deemed to be a statutory underwriter for purposes of the Securities Act
of 1933 in selling its portfolio securities.
In connection with these services the Sub-Investment Manager will provide
investment research as to the Fund's investments and conduct a continuous
program of evaluation of their assets. The Sub-Investment Manager will furnish
the Investment Manager and the Corporation such statistical information with
respect to the investments it makes for the Fund as the Investment Manager and
the Corporation may reasonably request. On its own initiative, the
Sub-Investment Manager will apprise the Investment Manager and the Corporation
of important developments materially affecting the Fund and will furnish the
Investment Manager and the Corporation from time to time such information as
may be believed appropriate for this purpose. The Sub-Investment Manager shall
send to the Corporation a half-yearly periodic statement of MetLife
International Equity Fund in accordance with Rule 21, Chapter IV of the rules
of IMRO. In addition, the Sub-Investment Manager will furnish the Investment
Manager and the Corporation's Board of Directors with such periodic and special
reports as either of them may reasonable request.
The Sub-Investment Manager will not hold money or investments on behalf of
the Corporation. The money and investments will be held by the Custodian of the
Corporation, which is not an Associate of the Sub-Investment Manager.
The Sub-Investment Manager will exercise its best judgment in rendering the
services provided for in this Article 1, and the Corporation and the Investment
Manager agree, as an inducement to the Sub-Investment Manager's undertaking so
to do, that the Sub-Investment Manager will not be liable under this Agreement
for any mistake of judgment or in any other event whatsoever, except as
hereinafter provided. Further details of the risks associated with the
investment practices and policies of the Fund are contained in the Risk
Disclosure Statements set out in Appendix B.
The Sub-Investment Manager shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise provided or authorized, have
no authority to act for or represent the Corporation or the Investment Manager
in any way or otherwise be deemed an agent of the Corporation or the Investment
Manager other than in furtherance of its duties and
4
<PAGE>
responsibilities as set forth in this Agreement.
ARTICLE 2
Sub-Investment Management Fee
-----------------------------
The payment of advisory fees and the allocation of charges and expenses
between the Corporation and the Investment Manager with respect to the Fund are
set forth in the MetLife International Equity Fund Investment Management
Agreement. Nothing in this MetLife International Equity Fund Sub-Investment
Management Agreement shall change or affect that arrangement. The payment of
advisory fees and the apportionment of any expenses related to the services of
the Sub-Investment Manager under this Agreement shall be the sole concern of the
Investment Manager and the Sub-Investment Manager and shall not be the
responsibility of the Corporation.
In consideration of services rendered pursuant to this Agreement, the
Investment Manager will pay the Sub-Investment Manager on the first business day
of each month the fee specified by the schedule of fees in Appendix A to this
Agreement. The fee for any period from the date the Fund commences operations
to the end of the month will be prorated according to the proportion which the
period bears to the full month, and, upon any termination of this Agreement
before the end of any month, the fee for the part of the month during which
the Sub-Investment Manager acted under this Agreement will be prorated according
to the proportion which the period bears to the full month and will be payable
upon the date of termination of this Agreement.
For the purpose of determining the fees payable to the Sub-Investment
Manager, the value of the Fund's net assets will be computed in the manner
specified in the Corporation's Prospectus. The Sub-Investment Manager will bear
all of its own expenses (such as research costs) in connection with the
performance of its duties under this Agreement except for those which the
Investment Manager agrees to pay.
5
<PAGE>
Other Matters
-------------
The Sub-Investment Manager may from time to time employ or associate with
itself any person or persons believed to be particularly fitted to assist in its
performance of services under this agreement. The compensation of any such
persons will be paid by the Sub-Investment Manager, and no obligation will be
incurred by, or on behalf of, the Corporation or the Investment Manager with
respect to them.
The Corporation and the Investment Manager understand that the Sub-
Investment Manager now acts and will continue to act as investment manager to
various investment companies and fiduciary or other managed accounts, and the
Corporation and the Investment Manager have no objection to the Sub-Investment
Manager's so acting. In addition, the Corporation understands that the persons
employed by the Sub-Investment Manager to assist in the performance of the Sub-
Investment Manager's duties hereunder will not devote their full time to such
service, and nothing herein contained shall be deemed to limit or restrict the
Sub-Investment Manager's right or the right of any of the Sub-Investment
Manager's affiliates to engage in and devote time and attention to other
businesses or to render other services of whatever kind or nature.
The Sub-Investment Manager agrees that all books and records which it
maintains for the Corporation are the Corporation's property. The Sub-Investment
Manager also agrees upon request of the Investment Manager or the Corporation,
promptly to surrender the books and records to the requester or make the books
and records available for inspection by representatives of regulatory
authorities. The Sub-Investment Manager further agrees to maintain and preserve
its books and records in accordance with the Investment Company Act and rules
thereunder.
The Sub-Investment Manager will not be liable for any error of judgment or
mistake of law or for any loss suffered by the Corporation in connection with
the matters to which this Agreement relates, except for a loss resulting from
willful misfeasance, bad faith or gross negligence of the Sub-Investment Manager
in the performance of its duties or from reckless disregard of its obligations
and duties under this Agreement.
6
<PAGE>
The Investment Manager has herewith furnished the Sub-Investment Manager
copies of the Corporation's Prospectus, Articles of Incorporation and By-Laws as
currently in effect and agrees during the continuance of this Agreement to
furnish the Sub-Investment Manager copies of any amendments or supplements
thereto before or at the time the Amendments or Supplements become effective.
The Sub-Investment Manager will be entitled to rely on all documents furnished
to it by the Investment Manager or the Corporation.
ARTICLE 3
Duration and Termination of this Agreement
------------------------------------------
This Agreement shall become effective as of the date first above written
and shall remain in force until January 17, 1994 and thereafter shall continue
in effect, but only so long as such continuance is specifically approved at
least annually by (i) the Board of Directors of the Corporation, or by the vote
of a majority of the outstanding shares of the Fund, and (ii) a majority of
those directors who are not parties to this Agreement or interested persons of
any such party cast in person at a meeting called for the purpose of voting on
such approval.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the Board of Directors of the
Corporation, or by vote of a majority of the outstanding shares of the Fund, on
sixty days' written notice to the Investment Manager or by the Investment
Manager on sixty days' written notice to the Corporation. This Agreement shall
automatically terminate in the event of its assignment or in the event of
termination of the MetLife International Fixed Income Fund Investment Management
Agreement.
ARTICLE 4
Definitions
-----------
The terms "assignment," "interested person," and "majority of the
outstanding shares," when used
7
<PAGE>
used in this Agreement, shall have the respective meanings specified under the
Investment Company Act.
The term "Associate" means a holding company or subsidiary of the
Sub-Investment Manager and any other subsidiary of such holding company, and
any other person who alone or with any Associate (as so defined) is entitled to
control the exercise of 15 per cent of the voting power at any general meeting
of the Sub-Investment Manager or such holding company or subsidiary.
The term "Custodian" means State Street Bank and Trust Company of 225
Franklin Street, Boston, Massachusetts 02110.
ARTICLE 5
Complaints Procedure
--------------------
The Sub-Investment Manager has in operation a written procedure in
accordance with the rules of IMRO for the effective consideration and proper
handling of complaints from clients. Any complaint by the Corporation should be
sent in writing to the compliance officer of the Sub-Investment Manager at 2A
Great Titchfield Street, London, WIP 7AA. If the matter cannot be resolved
immediately to the Corporation's satisfaction then the compliance officer will
conduct an investigation into the complaint and will notify the Corporation
within 14 days as to what action the Sub-Investment Manager intends to take with
regard to the matter. The Corporation is also entitled to make any complaint
about the Sub-Investment Manager to IMRO. At the Corporation's request, IMRO
will provide a statement describing the Corporation's rights to compensation in
the event of the Sub-Investment Manager's inability to meet any liabilities to
the Corporation.
ARTICLE 6
Amendments of this Agreement
----------------------------
8
<PAGE>
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the Board of Directors of the Corporation, or by
the vote of a majority of the outstanding shares of the Fund, and (ii) by the
vote of a majority of those directors of the Corporation who are not parties to
this Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval.
ARTICLE 7
Governing Law
-------------
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
9
<PAGE>
METLIFE PORTFOLIOS, INC.
By /s/ Jeffrey J. Hodgman
---------------------------------------
President
Attest: /s/ P.A. Worthington
- ----------------------------
Asst. Secretary
METLIFE-STATE STREET INVESTMENT SERVICES. INC.
By /s/ George Trotta
---------------------------------------
President
Attest: /s/ Leonard M. Bakal
- ----------------------------
Assistant Clerk
GFM INTERNATIONAL INVESTORS LIMITED
By /s/ Stephen Bamford
---------------------------------------
Director and Chief Executive Officer
<PAGE>
APPENDIX A
GFM INTERNATIONAL INVESTORS LIMITED
----------------------------------
MetLife Portfolios Fee Schedule
-------------------------------
MetLife International Equity Fund .75%
---------------------------------
11
<PAGE>
APPENDIX I
GENERAL RISK DISCLOSURE STATEMENT
---------------------------------
PART I
------
This statement is made in compliance with the rules of the Securities and
Investments Board.
The risk of loss in investing in commodity, financial or other futures, options
or contracts for differences can be substantial. The Corporation should
carefully consider whether such investments are suitable for it in light of
its circumstances and financial resources. The Corporation should be aware of
the following points:
1. In a relatively short time it may sustain a total loss of the deposits and of
the margin placed with the Sub-Investment Manager to establish or maintain an
open position if the market moves against it. The Corporation may be called
upon to deposit a substantial additional margin, at short notice, to maintain
its position. If the Corporation does not provide such additional funds
within the time required, its position may be liquidated at a loss and it
will be liable for any resulting deficit.
2. If the Corporation deposits collateral as security for calls made upon it by
the Sub-Investment Manager it will lose its identity as the Corporation's
property once dealings on its behalf are undertaken and may be passed on to
an exchange's clearing house or other brokers. Even if its dealings should
ultimately prove profitable, the Corporation may have to accept payment in
cash and not get back the actual assets which it has deposited. Nor will the
Corporation's deposit be protected to the same extent as would a cash deposit
held on trust in a segregated client bank account.
3. Under certain market conditions it may be difficult or impossible to
liquidate a position. This may occur, for example, at times of rapid price
movement if the price rises or falls in one trading session to such an extent
that, under the rules of the relevant exchange, trading is suspended or
restricted.
4. Placing a stop-loss order will not necessary limit the Corporation's losses
to the intended amounts, for market conditions may make it impossible to
execute such orders at the stipulated price.
5. A spread or straddle position may be as risky as a single long or short
position and can be more complex.
6. Markets in futures, options and contracts for differences can be highly
volatile and investment in them carries a high risk of loss. The high degree
of "gearing" or "leverage" is a particular feature of this type of
transaction. This stems from the margining system applicable to such
contracts which generally involves a comparatively modest deposit of margin
in terms of the
12
<PAGE>
overall contract value, so that a relatively small market movement can have a
disproportionately dramatic effect on the Corporation's investment. If the
market movement is in the Corporation's favor, it may achieve a good profit
return, but an equally small adverse market movement can result not only in the
loss of the Corporation's entire original investment, but may also expose it to
the distinct possibility of an unquantifiable loss exceeding its original
investment.
7. If the Corporation takes (buys) an option, its risk in most cases will be
less than trading in futures since the Corporation should not lose more than
the premium it paid plus any commission or other transaction charges.
However, there are many different types of options with different
peculiarities and subject to different conditions. The Corporation should
accordingly require the Sub-Investment Manager to inform it of all relevant
details before committing itself. In all cases the Corporation can easily
lose its entire investment in the option. If the Corporation grants (sells)
an option, its risk of loss may be at least as great as its exposure in
trading futures. Although the Corporation will receive a premium payment for
granting (selling) the option, a relatively small adverse market movement can
quickly eradicate that premium. The Corporation may be liable to pay
substantial additional margins which could involve it in significant losses.
Moreover, the buyer of an option acquires certain rights which may limit the
Corporation's ability to protect itself. Only experienced traders should
contemplate granting options and then only after securing full details from
the Sub-Investment Manager of the applicable conditions and potential risk
exposure.
8. Where the Sub-Investment Manager deals for the Corporation it should, unless
the Corporation has effectively agreed otherwise in circumstances where this
is permitted under the rules of the Securities and Investments Board, do so
only in contracts of the types dealt with on one of the recognized or
designated exchanges. If the Corporation instructs the Sub-Investment Manager
to deal on foreign markets, it will probably instruct a broker in the country
concerned. Normally that broker will not be subject to the rules or
regulations of the Securities and Investments Board and the exchange on which
that foreign broker effects the transactions may not be subject to as strict
regulations as a recognized investment exchange in the United Kingdom. Hence
the degree of protection afforded to the Corporation may be less than if the
Corporation restricts its transactions to United Kingdom markets. The
Corporation should ensure that the Sub-Investment Manager explains the
protections which will operate and ascertain whether it accepts liability for
any default of the foreign broker that he employs. If the Sub-Investment
Manager does not accept such a liability the Corporation could lose all that
it has invested or stands to gain if the foreign broker defaults.
9. The Corporation should require of the Manager prior to the commencement of
trading written confirmation of all commission and other transactions charges
for which the Corporation will be liable. In the event that any charges are
not expressed in money terms, (but, for example, as a percentage of contract
value) the Corporation should obtain a clear written explanation, including
appropriate examples, to establish what such charges are likely to mean in
specific money terms. The Corporation should realise that when commission is
13
<PAGE>
charged as a percentage it will normally be as a percentage of the total
contract value and not simply a percentage of the Corporation's deposit.
10. The Sub-Investment Manager may also be a dealer trading for its own account
and may accordingly be involved in the same markets as the Corporation.
Under such circumstances the Company should be aware that the
Sub-Investment Manager's own account involvement could be contrary to the
Corporation's interests. The Sub-Investment Manager is required to inform
the Corporation in advance if the Sub-Investment Manager deals on his own
behalf in relevant markets.*
11. The guarantee of performance by the exchanges' clearing houses applies only
to their contracts with members. They do not guarantee performance of the
Sub-Investment Manager's contracts with the Corporation.
12. The Sub-Investment Manager's insolvency or that of any other brokers
involved may lead to the Corporation's positions being closed without the
Corporation's consent.
13. The Corporation has agreed that its money held by the Sub-Investment
Manager need not be segregated in a client bank account and the Corporation
will lack that protection should the Sub-Investment Manager become
insolvent.+
This brief statement cannot disclose all risks of investments in futures,
options and contracts for differences. They are not suitable for many members of
the public and the Corporation should carefully study such investments before he
commits funds to them. They may also have tax consequences and on this the
Corporation should consult its lawyer, accountant or other tax adviser.
14
<PAGE>
GFM INTERNATIONAL INVESTORS LIMITED
I have read and understood Part I of this risk disclosure statement set out
above.
January 17, 1992
- ------------------------------
Date
/s/ Jeffrey J. Hodgman
- ------------------------------
Signature
For and on behalf of:
______________________________
METLIFE PORTFOLIOS,INC.
Notwithstanding that the rules of the Securities and Investments Board
require the Sub-Investment Manager to so state, the Sub-Investment Manager
will not be acting as a dealer trading for his own account.
Notwithstanding that the rules of the Securities and Investments Board
require the Sub-Investment Manager to so state, the Corporation has agreed
that its money will not be held by the Sub-Investment Manager, but rather
will be held by its custodian.
<PAGE>
GENERAL RISK DISCLOSURE STATEMENT
---------------------------------
PART II
Limited Liability Transaction
-----------------------------
1. Before entering into a limited liability transaction, the Corporation should
obtain from the Sub-Investment Manager a formal written statement confirming
that the extent of the Corporation's loss liability on each transaction will
be limited to an amount agreed by the Corporation prior to entering into the
transaction.
2. The amount of such agreed liability must be indicated in the contract or
confirmation note of the transactions.
3. The Corporation is required under the rules of the Securities and Investments
Board to deposit in cash the amount of the agreed maximum liability assumed
by the Corporation in relation to each transaction.
4. The amount the Corporation can lose in limited liability transactions will be
less than in other margined transactions which have no predetermined loss
limit. Nevertheless, even though the extent of loss will be subject to the
agreed limited, the Corporation may sustain the loss in a relatively short
time. The Corporation's loss may be limited, but the risk of it sustaining
the total loss of his deposit is substantial.
5. The commission or other costs the Corporation will incur in entering into
this type of transaction are likely to be substantially higher than for other
margined transactions where there is no guaranteed loss limit. Such costs
must be included in (and not additional to) the Corporation's agreed loss
liability, and the Corporation should be aware that higher charges increase
the likelihood and extent of his loss.
16
<PAGE>
I have read and understood Part II of this risk disclosure statement set out
above.
January 17, 1992
- ------------------------------
Date
/s/ Jeffrey J. Hodgman
- ------------------------------
Signature
For and on behalf of:
______________________________
METLIFE PORTFOLIOS, INC.
<PAGE>
INTERNATIONAL FIXED INCOME FUND SUB-INVESTMENT MANAGEMENT
AGREEMENT
AGREEMENT made this 17th day of January, 1992, 12:00 p.m. Eastern Standard
Time, among MetLife Portfolios, Inc., a Maryland corporation (the
"Corporation"), MetLife-State Street Investment Services Inc. (the "Investment
Manager"), a Massachusetts corporation, and GFM International Investors Limited,
an England corporation (the "Sub-Investment Manager");
W I T N E S S E T H:
WHEREAS, the Corporation is engaged in business as a diversified open-end
management investment company and is registered as such under the Investment
Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Corporation, a series type of investment company, issues
separate classes (or series) of stock, each of which represents a separate
portfolio of investments;
WHEREAS, the Corporation is currently comprised of two portfolios which are
the MetLife International Equity Fund and the MetLife International Fixed Income
Fund, each of which pursues investment objectives through separate investment
policies, and the Corporation may add or delete portfolios from time to time;
WHEREAS, the Sub-Investment Manager is engaged principally in the business
of rendering advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940 and
WHEREAS, the Corporation has employed the Investment Manager to act as
investment manager of MetLife International Fixed Income Fund as set forth in
the MetLife International Fixed Income Fund Investment Management Agreement
dated January 17, 1992 between the
<PAGE>
Corporation and the Investment Manager (the "MetLife International Fixed Income
Fund Investment Management Agreement"); and the Corporation and the Investment
Manager desire to enter into a separate sub-investment management agreement with
respect to the MetLife International Fixed Income Fund of the Corporation with
Sub-Investment Manager;
NOW, THEREFORE, in consideration of the premises and the covenants hereinafter
contained,the Corporation, the Investment Manager and the Sub-Investment Manager
hereby agree as follows:
ARTICLE I
Duties of the Sub-Investment Manager
------------------------------------
Subject to the supervision and approval of the Investment Manager and the
Corporation's Board of Directors, the Sub-Investment Manager will manage the
investment and reinvestment of the assets of the Corporation's International
Fixed Income Fund (the "Fund") for the period and on the terms and conditions
set forth in this Agreement. In acting as Sub-Investment Manager to the
Corporation with respect to the Fund, the Sub-Investment Manager shall determine
which securities shall be purchased, sold or exchanged and what portion of the
assets of the Fund shall be held in the various securities or other assets in
which it may invest, subject always to any restrictions of the Corporation's
Articles of Incorporation and By-Laws, as amended or supplemented from time to
time, the provisions of applicable laws and regulations including the Investment
Company Act, and the statements relating to the Fund's investment objectives,
policies and restrictions as the same are set forth in the prospectus and
statement of additional information of the Corporation then currently effective
under the Securities Act of 1933 (the "Prospectus"). Should the Board of
Directors of the Corporation or the Investment Manager at any time, however,
make any definite determination as to investment policy and notify the Sub-
Investment Manager thereof, the Sub-Investment Manager shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. The Sub-Investment
Manager shall take, on behalf of the Corporation, all actions which it deems
necessary to implement the investment policies of the Fund, determined as
provided above, and in particular to place all orders for the purchase or
<PAGE>
sale of portfolio securities for the Fund with brokers or dealers selected by
it.
On the basis of information about the Corporation supplied to the Sub-
Investment Manager, the Sub-Investment Manager will treat the Corporation as a
business investor in relation to the services to be provided in accordance with
this Agreement. As a consequence, certain of the rules of the Investment
Management Regulatory Organization Limited ("IMRO") introduced to protect less
sophisticated investors will not apply to this Agreement.
In connection with the selection of such brokers or dealers and the placing
of such orders, the Sub-Investment Manager is directed at all times to follow
the policies of the Corporation set forth in the Prospectus. Nothing herein
shall preclude the "bunching" of orders for the sale or purchase of portfolio
securities with other of the Corporation's series or with other accounts managed
by the Sub-Investment Manager. The Sub-Investment Manager shall not favor any
account over any other and any purchase or sale orders executed
contemporaneously shall be allocated in a manner it deems equitable among the
accounts involved and at a price which is approximately averaged.
Nothing herein contained shall prevent the sale or purchase of investments
of which an issue or offer for sale was underwritten, managed or arranged by
the Sub-Investment Manager or an Associate during the twelve months preceding
such sale or purchase, provided that such sale or purchase is otherwise
permitted under the Investment Company Act and the rules and regulations
thereunder.
If and to the extent that the investment objectives of the Corporation and
the MetLife International Fixed Income Fund permit the holding of units in
collective investment schemes, the Sub-Investment Manager may acquire or dispose
of units in such collective investment schemes operated or advised by the Sub-
Investment Manager or an Associate, provided that such acquisition or
disposition is otherwise permitted by the Investment Company Act and the rules
and regulations thereunder.
The Sub-Investment Manager may not commit the Corporation to underwrite any
issue or
3
<PAGE>
offer for sale of securities, except to the extent that the Corporation may be
deemed to be a statutory underwriter for purposes of the Securities Act of 1933
in selling its portfolio securities.
In connection with these services the Sub-Investment Manager will provide
investment research as to the Fund's investments and conduct a continuous
program of evaluation of their assets. The Sub-Investment Manager will furnish
the Investment Manager and the Corporation such statistical information with
respect to the investments it makes for the Fund as the Investment Manager and
the Corporation may reasonably request. On its own initiative, the
Sub-Investment Manager will apprise the Investment Manager and the Corporation
of important developments materially affecting the Fund and will furnish the
Investment Manager and the Corporation from time to time such information as
may be believed appropriate for this purpose. The Sub-Investment Manager shall
send to the Corporation a half-yearly periodic statement of the MetLife
International Fixed Income Fund in accordance with Rule 21, Chapter IV of the
rules of IMRO. In addition, the Sub-Investment Manager will furnish the
Investment Manager and the Corporation's Board of Directors such periodic and
special reports as either of them may reasonable request.
The Sub-Investment Manager will not hold money or investments on behalf of
the Corporation. The money and investments will be held by the Custodian of the
Corporation, which is not an Associate of the Sub-Investment Manager.
The Sub-Investment Manager will exercise its best judgment in rendering
the services provided for in this Article 1, and the Corporation and the
Investment Manager agree, as an inducement to the Sub-Investment Manager's
undertaking so to do, that the Sub-Investment Manager will not be liable under
this Agreement for any mistake of judgment or in any other event whatsoever,
except as hereinafter provided. Further details of the risks associated with the
investment practices and policies of the Fund are contained in the Risk
Disclosure Statements set out in Appendix B.
The Sub-Investment Manager shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise provided or authorized, have
no authority to act for or represent the Corporation or the Investment Manager
in any way or otherwise be deemed an agent of the Corporation or the Investment
Manager other than in furtherance of its duties and
4
<PAGE>
responsibilities as set forth in this Agreement.
ARTICLE 2
Sub-Investment Management Fee
-----------------------------
The payment of advisory fees and the allocation of charges and expenses
between the Corporation and the Investment Manager with respect to the Fund are
set forth in the MetLife International Fixed Income Fund Investment Management
Agreement. Nothing in this MetLife International Fixed Income Fund Sub-
Investment Management Agreement shall change or affect that arrangement. The
payment of advisory fees and the apportionment of any expenses related to the
services of the Sub-Investment Manager under this Agreement shall be the sole
concern of the Investment Manager and the Sub-Investment Manager and shall not
be the responsibility of the Corporation.
In consideration of services rendered pursuant to this Agreement, the
Investment Manager will pay the Sub-Investment Manager on the first business
day of each month the fee specified by the schedule of fees in Appendix A to
this Agreement. The fee for any period from the date the Fund commences
operations to the end of the month will be prorated according to the proportion
which the period bears to the full month, and, upon any termination of this
Agreement before the end of any month, the fee for the part of the month during
which the Sub-Investment Manager acted under this Agreement will be prorated
according to the proportion which the period bears to the full month and will be
payable upon the date of termination of this Agreement.
For the purpose of determining the fees payable to the Sub-Investment
Manager, the value of the Fund's net assets will be computed in the manner
specified in the Corporation's Prospectus. The Sub-Investment Manager will bear
all of its own expenses (such as research costs) in connection with the
performance of its duties under this Agreement except for those which the
Investment Manager agrees to pay.
5
<PAGE>
Other Matters
-------------
The Sub-Investment Manager may from time to time employ or associate with
itself any person or persons believed to be particularly fitted to assist in its
performance of services under this Agreement. The compensation of any such
persons will be paid by the Sub-Investment Manager, and no obligation will be
incurred by, or on behalf of, the Corporation or the Investment Manager with
respect to them.
The Corporation and the Investment Manager understand that the Sub-
Investment Manager now acts and will continue to act as investment manager to
various investment companies and fiduciary or other managed accounts, and the
Corporation and the Investment Manager have no objection to the Sub-Investment
Manager's so acting. In addition, the Corporation understands that the persons
employed by the Sub-Investment Manager to assist in the performance of the Sub-
Investment Manager's duties hereunder will not devote their full time to such
service, and nothing herein contained shall be deemed to limit or restrict the
Sub-Investment Manager's right or the right of any of the Sub-Investment
Manager's affiliates to engage in and devote time and attention to other
businesses or to render other services of whatever kind or nature.
The Sub-Investment Manager agrees that all books and records which it
maintains for the Corporation are the Corporation's property. The Sub-Investment
Manager also agrees upon request of the Investment Manager or the Corporation,
promptly to surrender the books and records to the requester or make the books
and records available for inspection by representatives of regulatory
authorities. The Sub-Investment Manager further agrees to maintain and preserve
its books and records in accordance with the Investment Company Act and rules
thereunder.
The Sub-Investment Manager will not be liable for any error of judgment or
mistake of law or for any loss suffered by the Corporation in connection with
the matters to which this Agreement relates, except for a loss resulting from
willful misfeasance, bad faith or gross negligence of the Sub-Investment Manager
in the performance of its duties or from reckless disregard of its obligations
and duties under this Agreement.
6
<PAGE>
The Investment Manager has herewith furnished the Sub-Investment Manager
copies of the Corpoation's Prospectus, Articles of Incorporation and By-Laws as
currently in effect and agrees during the continuance of this Agreement to
furnish the Sub-Investment Manager copies of any amendments or supplements
thereto before or at the time the Amendments or Supplements become effective.
The Sub-Investment Manager will be entitled to rely on all documents furnished
to it by the Investment Manager of the Corporation.
ARTICLE 3
Duration and Termination of this Agreement
------------------------------------------
This Agreement shall become effective as of the date first above written
and shall remain in force until January 17, 1994 and thereafter shall continue
in effect, but only so long as such continuance is specifically approved at
least annually by (i) the Board of Directors of the Corporation, or by the vote
of majority of the outstanding shares of the Fund, and (ii) a majority of those
directors who are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of voting on such
approval.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the Board of Directors of the
Corporation, or by vote of a majority of the outstanding shares of the Fund, on
sixty days' written notice to the Investment Manager or by the Investment
Manager on sixty days' written notice to the Corporation. This Agreement shall
automatically terminate in the event of its assignment or in the event of
termination of the MetLife International Fixed Income and Investment Management
Agreement.
ARTICLE 4
Definitions
-----------
The terms "assignment," "interested person," and "majority of the
outstanding shares," when used
7
<PAGE>
used in this Agreement, shall have the respective meanings specified under the
Investment Company Act.
The term "Associate" means a holding company or subsidiary of the Sub-
Investment Manager and any other subsidiary of such holding company, and any
other person who alone or with any Associate (as so defined) is entitled to
control the exercise of 15 per cent of the voting power at any general meeting
of the Sub-Investment Manager or such holding company or subsidiary.
The term "Custodian" means State Street Bank and Trust Company of 225
Franklin Street, Boston Massachusetts 02110.
ARTICLE 5
Complaints Procedure
--------------------
The Sub-Investment Manager has in operation a written procedure in
accordance with the rules of IMRO for the effective consideration and proper
handling of complaints from clients. Any complaint by the Corporation should be
sent in writing to the compliance officer of the Sub-Investment Manager at 2A
Great Titchfield Street, London, WIP 7AA. If the matter cannot be resolved
immediately to the Corporation's satisfaction then the compliance officer will
conduct an investigation into the complaint and will notify the Corporation
within 14 days as to what action the Sub-Investment Manager intends to take with
regard to the matter. The Corporation is also entitled to make any complaint
about the Sub-Investment Manager to IMRO. At the Corporation's request, IMRO
will provide a statement describing the Corporation's rights to compensation in
the event of the Sub-Investment Manager's inability to meet any liabilities to
the Corporation.
ARTICLE 6
Amendments of this Agreement
----------------------------
8
<PAGE>
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the Board of Directors of the Corporation, or by
the vote of a majority of the outstanding shares of the Fund, and (ii) by the
vote of a majority of those directors of the corporation who are not parties to
this Agreement or interested persons of any such party cast in person a meeting
called for the purpose of voting on such approval.
ARTICLE 7
Governing Law
-------------
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
9
<PAGE>
METLIFE PORTFOLIOS, INC.
By: /s/ Jeffrey J. Hodgman
-----------------------
President
Attest:
/s/ PA. Worthington
- --------------------
Asst. Secretary
METLIFE-STATE STREET INVESTMENT SERVICES, INC.
By: /s/ George Trotta
--------------------
President
Attest:
/s/ Leonard M. Bakal
- --------------------
Assistant Clerk
GFM INTERNATIONAL INVESTORS LIMITED
By: /s/ Stephen Bamford
------------------------------------------
Directors and Chief Executive Officer
Attest:
- --------------------
<PAGE>
APPENDIX A
GFM INTERNATIONAL INVESTORS LIMITED
-----------------------------------
MetLife Portfolios Fee Schedule
-------------------------------
MetLife International Fixed Income Fund - .55%
---------------------------------------
11
<PAGE>
APPENDIX B
GENERAL RISK DISCLOSURE STATEMENT
---------------------------------
PART I
------
This statement is made in compliance with the rules of the Securities and
Investments Board.
The risk of loss in investing in commodity, financial or other futures,
options or contracts for differences can be substantial. The Corporation should
carefully consider whether such investments are for it in the light of its
circumstances and financial resources. The Corporation should be aware of the
following points:
1. In a relatively short time it may sustain a total loss of the deposits and of
the margin place with the Sub-Investment Manager to establish or maintain an
open position if the market moves against it. The Corporation may be called
upon to deposit a substantial additional margin, at short notice, to maintain
its position. If the Corporation does not provide such additional funds
within the time required, its position may be liquidated at a loss and it
will be liable for any resulting deficit.
2. If the Corporation deposits collateral as security for calls made upon it by
the Sub-Investment Manager it will lose its identity as the Corporation's
property once dealings on its behalf are undertaken and may be passed on to
an exchange's clearing house or other brokers. Even if its dealings should
ultimately prove profitable, the Corporation may have to accept payment in
cash and not get back the actual assets which it has deposited. Nor will the
Corporation's deposit be protected to the same extent as would a cash deposit
held on trust in a segregated client bank account.
3. Under certain market conditions it may be difficult or impossible to
liquidate a position. This may occur, for example, at times of rapid price
movement if the price rises or falls in one trading session to such an extent
that, under the rules of the relevant exchange, trading is suspended or
restricted.
4. Placing a stop-loss order will not necessarily limit the Corporation's losses
to the intended amounts, for market conditions may make it impossible to
execute such orders at the stipulated price.
5. A spread or straddle position may be as risky as a single long or short
position and can be more complex.
6. Markets in futures, options and contracts for differences can be highly
volatile and investment in them carries a high risk of loss. The high degree
of "gearing" or "leverage" is a particular feature of this type of
transaction. This stems from the margining system applicable to such
contracts which generally involves a c omparatively modest deposit of margin
in terms of the
12
<PAGE>
overall contract value, so that a relatively small market movement can have a
disproportionately dramatic effect on the Corporation's investment. If the
market movement is in the Corporation's favour, it may achieve a good profit
return, but an equally small adverse market movement can result not only in
the loss of the Corporation's entire original investment, but may also expose
it to the distinct possibility of an unquantifiable loss exceeding its
original investment.
7. If the Corporation takes (buys) an option, its risk in most cases will be
less than trading in futures since the Corporation should not lose more than
the premium it paid plus any commission or other transaction charges.
However, there are many different types of options with different
peculiarities and subject to different conditions. The Corporation should
accordingly require the Sub-Investment Manager to inform it of all relevant
details before committing itself. In all cases the Corporation can easily
lose its entire investment in the option. If the Corporation grants (sells)
an option, its risk of loss may be at least as great as its exposure in
trading futures. Although the Corporation will receive a premium payment for
granting (selling) the option, a relatively small adverse market movement can
quickly eradicate that premium. The Corporation may be liable to pay
substantial additional margins which could involve it in significant losses.
Moreover, the buyer of an option acquires certain rights which may limit the
Corporation's ability to protect itself. Only experienced traders should
contemplate granting options and then only after securing full details from
the Sub-Investment Manager of the applicable conditions and potential risk
exposure.
8. Where the Sub-Investment Manager deals for the Corporation it should, unless
the Corporation has effectively agreed otherwise in circumstances where this
is permitted under the rules of the Securities and Investments Board, do so
only in contracts of the types dealt with on one of the recognized or
designated exchanges. If the Corporation instructs the Sub-Investment Manager
to deal on foreign markets, it will probably instruct a broker in the country
concerned. Normally that broker will not be subject to the rules or
regulations of the Securities and Investments Board and the exchange on which
that foreign broker effects the transactions may not be subject to as strict
regulations as a recognized investment exchange in the United Kingdom. Hence
the degree of protection afforded to the Corporation may be less than if the
Corporation restricts its transactions to United Kingdom markets. The
Corporation should ensure that the Sub-Investment Manager explains the
protections which will operate and ascertain whether it accepts liability for
any default of the foreign broker that he employs. If the Sub-Investment
Manager does not accept such a liability the Corporation could lose all that
it has invested or stands to gain if the foreign broker defaults.
9. The Corporation should require of the Manager prior to the commencement of
trading written confirmation of all commission and other transactions charges
for which the Corporation will be liable. In the event that any charges are
not expressed in money terms, (but, for example, as a percentage of contract
value) the Corporation should obtain a clear written explanation, including
appropriate examples, to establish what such charges are likely to mean in
specific money terms. The Corporation should realise that when commission is
13
<PAGE>
charged as a percentage it will normally be as a percentage of the total
contract value and not simply a percentage of the Corporation's deposit.
10. The Sub-Investment Manager may also be a dealer trading for its own account
and may accordingly be involved in the same markets as the Corporation.
Under such circumstances the Company should be aware that the Sub-Investment
Manager's own account involvement could be contrary to the Corporation's
interests. The Sub-Investment Manager is required to inform the Corporation
in advance if the Sub-Investment Manager deals on his own behalf in relevant
markets.*
11. The guarantee of performance by the exchanges' clearing houses applies only
to their contracts with members. They do not guarantee performance of the
Sub-Investment Manager's contracts with the Corporation.
12. The Sub-Investment Manager's insolvency or that of any other brokers
involved may lead to the Corporation's positions being closed without the
Corporation's consent.
13. The Corporation has agreed that its money held by the Sub-Investment
Manager need not be segregated in a client bank account and the Corporation
will lack that protection should the Sub-Investment Manager become
insolvent.+
This brief statement cannot disclose all risks of investments in futures,
options and contracts for differences They are not suitable for many members of
the public and the Corporation should carefully study such investments before he
commits funds to them. They may also have tax consequences and on this the
Corporation should consult its lawyer, accountant or other tax adviser.
14
<PAGE>
GFM INTERNATIONAL INVESTORS LIMITED
I have read and understood Part I of this risk disclosure statement set out
above
January 17, 1992
- --------------------
Date
/s/ Jeffrey J. Hodgman
- --------------------
Signature
For and on behalf of:
______________________________
METLIFE PORTFOLIOS, INC.
* Notwithstanding that the rules of the Securities and Investments Board require
the Sub-Investment Manager to so state, the Sub-Investment Manager will not be
acting as a dealer trading for his own account.
+ Notwithstanding that the rules of the Securities and Investments Board require
the Sub-Investment Manager to so state, the Corporation has agreed that its
money will not be held by the Sub-Investment Manager, but rather will be held
by its custodian.
<PAGE>
GENERAL RISK DISCLOSURE STATEMENT
---------------------------------
PART II
Limited Liability Transaction
-----------------------------
1. Before entering into a limited liability transaction, the Corporation should
obtain from the Sub-Investment Manager a formal written statement confirming
that the extent of the Corporation's loss liability on each transaction will
be limited to an amount agreed by the Corporation prior to entering into the
transaction.
2. The amount of such agreed liability must be indicated in the contract or
confirmation note of the transactions.
3. The Corporation is required under the rules of the Securities and Investments
Board to deposit in cash the amount of the agreed maximum liability assumed
by the Corporation in relation to each transaction.
4. The amount the Corporation can lose in limited liability transactions will be
less than in other margined transactions which have no predetermined loss
limit. Nevertheless, even though the extent of loss will be subject to the
agreed limited, the Corporation may sustain the loss in a relatively short
time. The Corporation's loss may be limited, but the risk of it sustaining
the total loss of his deposit is substantial.
5. The commission or other costs the Corporation will incur in entering into
this type of transaction are likely to be substantially higher than for other
margined transactions where there is no guaranteed loss limit. Such costs
must be included in (and not additional to) the Corporation's agreed loss
liability, and the Corporation should be aware that higher charges increase
the likelihood and extent of his loss.
16
<PAGE>
I have read and understood Part II of this risk disclosure statement set out
above.
January 17, 1992
- ------------------------------
Date
/s/ Jeffrey J. Hodgman
- ------------------------------
Signature
For and on behalf of:
______________________________
METLIFE PORTFOLIOS, INC.
<PAGE>
EXHIBIT 6A
DISTRIBUTION AGREEMENT
----------------------
DISTRIBUTION AGREEMENT made as of this 11th day of January, 1992 by and
between METLIFE-STATE STREET INVESTMENT SERVICES, INC., a corporation organized
under the laws of the Commonwealth of Massachusetts having its place of business
in Boston, Massachusetts (the "Distributor"), and METLIFE PORTFOLIOS, Inc., a
Maryland corporation having its principal place of business in New York, New
York (the "Corporation") which Corporation proposes to offer its shares in
different series representing interests in separate portfolios of assets (each
series being referred to herein as a "Fund").
WITNESSETH:
-----------
In consideration of the agreements herein contained and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties, it is agreed:
1. Appointment of Distributor.
---------------------------
(a) Appointment. The Corporation hereby appoints the Distributor as its
------------
exclusive agent to sell and distribute shares of each Fund in existence as of
the date hereof (the "Initial Funds") and the Distributor hereby accepts such
appointment and agrees during the term of this Agreement to provide the services
and to assume the obligations herein set forth. The Distributor represents that
as of the date of this Agreement and for the duration hereof, including any
renewals, that it is a broker-dealer registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, and a member in good
standing of the National Association of Securities Dealers, Inc.
In the event that the Corporation establishes one or more series of shares other
than the Initial Funds with respect to which it desires to retain the
Distributor to serve as distributor and principal underwriter hereunder, it
shall so notify the Distributor in writing, indicating the fee to be payable
with respect to the additional series of shares. If the Distributor is willing
to render such services, it shall so notify the Corporation in writing,
whereupon such series of shares shall become a Fund hereunder. In such event a
writing signed by both the Corporation and the Distributor shall be annexed
hereto as a part hereof indicating that such additional series of shares has
become a Fund hereunder.
(b) Sales of Shares. Shares of each Fund shall be sold as the offering
----------------
price thereof as from time to time determined in the manner herein provided. The
Corporation agrees that it will not, without the Distributor's consent, sell or
agree to sell any shares of a Fund otherwise than through the
Distributor, except that the Corporation
<PAGE>
may (a) sell shares for not less than the net asset value thereof as an
investment to such persons or classes of persons as may be indicated in the
Prospectus and Statement of Additional Information of the Corporation as amended
and in effect from time to time ("Prospectus"); (b) issue or sell shares for not
less than the net asset value thereof directly to holders of shares of any Fund
upon such terms and for such consideration, if any, as it may determine, whether
in connection with the distribution of subscription or purchase rights, the
payment or reinvestment of distributions or dividends, the exercise of any
applicable reinvestment privilege, or otherwise; (c) issue or sell shares for
not less than the net asset value thereof of any Fund to the shareholders of any
other Fund or investment company for which the Fund's investment adviser acts as
investment adviser in connection with the exercise of exchange privileges
offered by the Fund; and (d) issue shares for not less than the net asset value
thereof in connection with a merger, consolidation or acquisition of assets on
such basis as may be authorized or permitted under the Investment Company Act of
1940, as amended (the "1940 Act").
2. Basis of Sale Shares: Selected Dealers. The Distributor does not agree
---------------------------------------
to sell any specific number of shares. Shares will be sold by the Distributor
as agent for the Corporation only against orders therefor. The Distributor will
not purchase shares except as agent for the Corporation. Notwithstanding
anything herein to the contrary, the Corporation may terminate, suspend or
withdraw the offering of shares whenever, in its sole discretion, it deems such
action desirable. In connection with its performance of services hereunder, the
Distributor may engage other members in good standing of the National
Association of Securities Dealers, Inc., to act as selected dealers in
accordance with the terms of a selected dealer agreement in substantially the
form attached hereto.
3. Compensation.
-------------
(a) Offering Price/Sales Charge. The offering price for shares of any Fund
----------------------------
of the Corporation shall be the "net asset value per share" for that Fund
determined in accordance with the Prospectus of the Corporation, plus a sales
charge payable to the Distributor as set forth in the Corporation's Prospectus
as from time to time amended and in effect. The Distributor may reallow such
portions of such sales charges as dealer concessions to dealers through whom
sales are made as the Distributor may determine consistent with the terms of the
Corporation's Prospectus as from time to time amended and in effect; provided,
however, that the sales charge to each purchaser of shares shall not exceed that
set forth for such category of purchaser in the Corporation's Prospectus as from
time to time amended and in effect. The Distributor may also pay from its own
funds a monthly commission, if any, with respect to sales to the extent
consistent with and as contemplated by the Corporation's Prospectus as from time
to time amended and in effect. The net asset value per share for each Fund
shall be determined at such time and on such days as are established by the
Board of Directors of the Corporation from time to time.
4. Manner of Offering. The Distributor will conform to the securities
-------------------
laws of any jurisdiction in which it sells, directly or indirectly, any shares
of the Corporation. The Distributor also agrees to furnish to the Corporation
sufficient copies of any sales
<PAGE>
literature it intends to use in connection with any sales of shares in adequate
time for the Corporation to review such sales literature. The Distributor
agrees that it will be responsible for filing and clearing all such sales
literature with the proper authorities before the same is put in use to the
extent required by applicable law, and not to use the same until so filed and
cleared.
The Distributor and the Corporation each shall have the right to accept or
reject orders for the purchase of shares of the Corporation. Any consideration
which the Distributor may receive in connection with a rejected purchase order
will be returned promptly to the prospective purchaser. The Distributor agrees
to promptly issue confirmations of all accepted purchase orders and to transmit
a copy of such confirmations to the Corporation, or, if so directed, to any duly
appointed transfer or shareholder servicing agent of the Corporation. If the
originating dealer shall fail to make timely settlement of its purchase order in
accordance with the rules of the National Association of Securities Dealers,
Inc., the Distributor shall have the right to cancel such purchase order and to
hold the originating dealer responsible. The Distributor agrees to promptly
reimburse the Corporation for any amount by which the Corporation's losses
attributable to any such cancellations or to accepted purchase orders exceed
gains realized by the Corporation for either of such reasons in respect of other
purchase orders. The Corporation shall register or cause to be registered all
shares sold by the Distributor pursuant to the provisions hereof in such name or
names and amounts as the Distributor may request from time to time.
The Distributor agrees that if any person tenders to the Corporation for
redemption any shares purchased from the Corporation within seven days of the
redemption request, the Distributor will promptly pay to the Corporation the
full sales commission paid with respect to the shares so tendered for redemption
(in the case of sales by selected dealers, such payment shall be made promptly
after the Distributor's receipt of the same from the selected dealer responsible
for the sale).
The Distributor hereby agrees to act as agent for the Corporation in
connection with any share repurchase arrangements from time to time offered by
the Corporation in accordance with the terms of the Corporation's Prospectus as
from time to time amended.
5. Securities Laws. The Corporation has delivered to the Distributor a
---------------
copy of its current Prospectus. The Corporation agrees that it will use its best
efforts to continue the effectiveness of its Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act"), and the 1940 Act. The
Corporation further agrees to prepare and file any amendments to such
Registration Statement and any supplemental data as may be necessary in order to
comply with the Securities Act and the 1940 Act. The Corporation is presently
registered under the 1940 Act as an investment company, and it will use its best
efforts to maintain such registration and to comply with the requirements of
said Act.
3
<PAGE>
At the Distributor's request, the Corporation will take such steps as may
be necessary and feasible to qualify shares of the Fund for sale in states,
territories or dependencies of the United States of America, in the District of
Columbia and in foreign countries, in accordance with the laws thereof, and to
renew or extend any such qualification; provided, however, that the Corporation
shall not be required to qualify shares or to maintain the qualification of
shares in any state, territory, dependency, district or country where it shall
deem such qualification disadvantageous to the Corporation.
The Distributor agrees that it will (i) not use, distribute or disseminate
or authorize the use, distribution or dissemination by others in connection with
the sale of shares of the Fund, any statement, other than those contained in the
Corporation's current Prospectus, except such supplemental literature or
advertising as shall be approved by the Corporation, (ii) conform to the
requirements of all state and federal laws and the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. relating to the sale of shares
of the Corporation (including without limitation, the maintenance of effective
broker-dealer registrations as required), and (iii) observe and be bound by the
fundamental policies adopted by the Corporation pursuant to the 1940 Act, notice
of which shall have been given to the Distributor which at the time in any way
require, limit, restrict or prohibit or otherwise regulate any action on the
part of the Distributor.
The Distributor further agrees that:
(a) the Distributor shall furnish to the Corporation any information with
respect to the Distributor within the purview of any reports or registrations
required to be filed with any governmental authority; and
(b) the Distributor will not make any representations inconsistent with
the Registration Statement of the Corporation filed under the Securities Act, as
from time to time amended and in effect.
6. Allocation of Expenses.
-----------------------
(a) The Funds, either directly or through their investment adviser or
investment advisers, will be responsible for, and shall pay their allocable
portions of the expenses of:
(i) providing all necessary services, including fees and
disbursements of counsel, related to the preparation, setting in type,
printing and filing of any registration statement and/or prospectus
required under the Securities Act or the 1940 Act or under state
securities laws covering their shares, and all amendments and
supplements thereto, the mailing of any such prospectus to existing
shareholders, and preparing,
4
<PAGE>
setting in type, printing and mailing of periodic reports to existing
shareholders;
(ii) the cost of all registration or qualification fees
relating to the Fund's shares, including the fees or expenses of
qualifying the Corporation as a broker or dealer under laws of any
state, if any;
(iii) the cost of preparing temporary and permanent share
certificates for shares, if any; and
(iv) any and all federal and state issue and/or transfer taxes
payable upon the issue by or (in the case of treasury shares) transfer
from a Fund of the shares distributed hereunder.
(b) The Distributor agrees that, after the Corporation's Prospectus and
periodic reports have been set in type, it will bear the expense of printing and
distributing any copies thereof which are to be used in connection with the
offering of shares to prospective investors. The Distributor further agrees
that it will bear the expenses of preparing, printing and distributing any other
literature used by the Distributor or furnished by it for use in connection with
the offering of the shares for sale to the public, and any expenses of
advertising in connection with such offering. The Distributor will also pay fees
and expenses related to its registrations as a broker-dealer and fees for
services rendered by the Corporation's transfer agent on behalf of the
Distributor.
(c) The Funds will be responsible for and shall pay the expenses of
maintaining shareholder accounts and furnishing or causing to be furnished to
each shareholder a statement of his or her account.
7. Distributor Is Independent Contractor. The Distributor shall be an
--------------------------------------
independent contractor. The Distributor is responsible for its own conduct, for
the employment, control and conduct of its agents and employees and for injury
to such agents or employees or to others through its agents or employees. The
Distributor assumes full responsibility for its agents and employees under
applicable laws and agrees to pay all employer taxes relating thereto.
8. Term and Termination: Amendment.
--------------------------------
(a) Term and Termination. This Agreement shall become effective with
---------------------
respect to each Initial Fund as of the later of (i) the date on which a
Registration Statement with respect to its shares becomes effective under the
Securities Act or (ii) the date on which such Initial Fund commences offering
its shares to the public, and, with respect to any additional Fund, on the date
of receipt by the Corporation of notice from the Distributor in accordance with
Section 1(a) hereof that the Distributor is willing to
5
<PAGE>
serve as Distributor with respect to such Fund. Unless terminated as herein
provided, this Agreement shall remain in full force and effect with respect to
each Initial Fund until the date which is two years after the effective date of
this Agreement with respect to such Initial Fund, and, with respect to each
additional Fund, for twelve months from the date on which such Fund becomes a
Fund hereunder. Subsequent to such initial periods of effectiveness, this
Agreement shall continue in full force and effect, subject to the last sentence
of this Section 8(a), for successive one-year periods with respect to each Fund
so long as such continuance with respect to such Fund is approved at least
annually (a) by either the Directors of the Corporation or by vote of a majority
of the outstanding voting securities (as defined in the 1940 Act) of such Fund,
and (b) in either event, by the vote of a majority of the Directors of the
Corporation who are not parties to this Agreement or "interested persons" (as
defined in the 1940 Act) of any such party, or of the Corporation, and who have
no direct or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such approval. This Agreement may
be terminated with respect to the Corporation or any Fund at any time, without
payment of any penalty, by a vote of (a) a majority of the Directors who are not
"interested persons" of the Corporation (as defined in the 1940 Act)and who have
no direct or indirect financial interest in this Agreement or (b) a majority of
the outstanding voting securities of the Corporation or that Fund, or by the
Distributor, as the case may be, in each case on sixty (60) days' prior written
notice to the other party.
(b) Amendment. Any amendment to this Agreement shall become
----------
effective with respect to a Fund upon approval in writing of the Distributor and
the Corporation (subject in the latter case to approval by a majority of the
Directors and a majority of the Directors who are not "interested persons" of
the Corporation (as defined in the 1940 Act).
(c) Approval, Amendment or Termination by Individual Fund. Any
-----------------------------------------------------
approval, amendment or termination of this Agreement with respect to any Fund
shall be effective to continue, amend or terminate this Agreement with respect
to such Fund notwithstanding (i) that such action has not been approved with
respect to any other Fund affected thereby, and (ii) that such action has not
been approved by the shareholders of such Fund, unless such action shall be
required by any applicable law or otherwise.
9. Assignment. This Distribution Agreement may not be assigned by the
----------
Distributor and shall automatically terminate in the event of an attempted
assignment by the Distributor; provided, however, that the Distributor may
employ or enter into agreements with such other person, persons, corporation or
corporations, as it shall determine in order to assist it in carrying out this
Agreement, including, without limitation, selected dealers as contemplated by
Section 2.
10. Indemnification by Distributor. The Distributor agrees to
------------------------------
indemnify and hold harmless the Corporation or any other person who has been,
is, or may hereafter be
6
<PAGE>
an officer, Director, employee or agent of the Corporation against any loss,
damage or expense reasonably incurred by any of them in connection with any
claim or in connection with any action, suit or proceeding to which any of them
may be a party, which arises out of or is alleged to arise out of or is based
upon any violation of any of its representations or covenants herein contained
or any untrue statement or alleged untrue statement of a material fact, or the
omission or alleged omission to state a material fact necessary to make the
statements made not misleading, on the part of the Distributor or any agent or
employee of the Distributor or any other person for whose acts the Distributor
is responsible or is alleged to be responsible (such as any selected dealer or
person through whom sales are made pursuant to an agreement with the
Distributor), whether made orally or in writing, unless such statement or
omission was made in or in reliance upon written information furnished by the
Corporation. The term "expenses" for purposes of this and the next paragraph
includes reasonable attorneys fees and amounts paid in satisfaction of judgments
or in settlements which are made with the Distributor's consent. The foregoing
rights of indemnification shall be in addition to any other rights to which any
of the foregoing indemnified parties may be entitled as a matter of law.
11. Indemnification by Corporation. The Corporation agrees to indemnify
-------------------------------
and hold harmless the Distributor and each person who has been, is, or may
hereafter be an officer, director, employee or agent of the Distributor against
any loss, damage or expense reasonably incurred by any of them in connection
with any claim or in connection with any action, suit or proceeding to which any
of them may be a party, which arises out of or is alleged to arise out of or is
based upon a violation of any of its covenants herein contained or any untrue or
alleged untrue statement of material fact, or the omission or alleged omission
to state a material fact necessary to make the statements made not misleading,in
a Registration Statement or Prospectus of the Corporation, or any amendment or
supplement thereto, unless such statement or omission was made in reliance upon
written information furnished by the Distributor. The foregoing rights of
indemnification shall be in addition to any other rights to which any of the
foregoing indemnified parties may be entitled as a matter of law. Nothing
contained herein shall relieve the Distributor of any liability to the
Corporation or its shareholders to which the Distributor would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or reckless disregard of its obligations and duties
hereunder.
12. Non-Exclusive Agreement. The services of the Distributor to the
------------------------
Corporation hereunder shall not be deemed to be exclusive, and the Distributor
shall be free (a) render similar services to, and act as underwriter or
distributor in connection with the distribution of shares of, other investment
companies, and (b) engage in any other businesses and activities from time to
time.
7
<PAGE>
13. Governing Law; Counterparts. This Agreement shall be construed in
---------------------------
accordance with the laws of the State of New York. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, but such counterparts shall, together, constitute only one instrument.
14. Prior Agreements Superseded; Construction. This Agreement supersedes
-----------------------------------------
any prior agreement relating to the subject matter hereof between the parties
hereto. Where the context of this Agreement so permits, each of the masculine,
feminine and neuter genders shall be deemed to denote the other two genders, the
singular to denote the plural and the plural to denote the singular. Without
limiting the generality of the foregoing, all references to the Corporation's
Prospectus shall include all Prospectuses thereunder.
15. Notices. Notices under this Agreement shall be in writing and shall
-------
be addressed, and delivered or mailed postage prepaid, to the other party at
such address as such other party may designate from time to time for the receipt
of such notices. Until further notice to the Corporation, the address of the
Distributor shall be:
One Financial Center
Boston, Massachusetts 02111.
and the address of the Corporation shall be:
One Madison Avenue
New York, NY 10010
16. Limitation of Liability. The Articles of Incorporation of the
-----------------------
Corporation provide, and it is expressly agreed, that generally the assets
belonging to any class of stock shall be charged with the liabilities in respect
of such class and with the allocable portion of the overall liabilities of the
Corporation.
IN WITNESS WHEREOF, this Agreement has been executed for the
Distributor and the Corporation by their duly authorized officers, as of the
date first set forth above.
METLIFE - STATE STREET INVESTMENT SERVICES, INC.
By: /s/ George Trotta
-------------------------------
8
<PAGE>
Attest:
/s/ Leonard M. Bakal
- ----------------------------
Asst. Clerk
METLIFE PORTFOLIOS, INC.
By /s/ Jeffrey J. Hodgman
------------------------
President
Attest: /s/ Christopher P. Nicholas
---------------------------
Secretary
9
<PAGE>
Exhibit (6)(b)
SELECTED DEALER AGREEMENT
Boston, Massachusetts
Effective Date: __________
Dealer Name:
---------------------------------------
Address:
---------------------------------------
---------------------------------------
Attn:
---------------------------------------
Ladies and Gentlemen:
We have been appointed to serve as an agent and principal underwriter as
defined in the Investment Company Act of 1940 (the "1940 Act") for the purpose
of selling and distributing shares (the "Shares") of each of the portfolio
series as specified from time to time, of certain investment companies,
including, but not limited to, the MetLife - State Street trusts, the State
Street trusts and MetLife Portfolios, Inc. Hereinafter the specified portfolio
series shall be denoted individually as a "Fund" and collectively as the
"Funds", and the investment companies shall be denoted individually as an
"Investment Company" and collectively as the "Investment Companies" for purposes
of this Agreement.
We are hereby inviting you, as a selected dealer and subject to the terms
and conditions set forth below, to make available to your customers Shares of
the Funds. By your acceptance hereof, you agree that you shall exercise your
best efforts to find purchasers for the Shares, shall purchase Shares only from
us or from your customers, and shall act only as agent for your customers or
dealer for your own account, with no authority to act as agent for the Funds,
for us or for any other dealer in any respect.
1. Acceptance of Orders. Orders received from you will be accepted only at
the public offering price (as defined below in Section 2) applicable to each
order. You agree to place orders for Shares immediately upon the receipt of, and
in the same amount as, orders from your customers. We will not accept a
conditional order from you on any basis. All orders are subject to our receipt
of Shares from the Investment Company and to acceptance and confirmation of such
<PAGE>
orders by us and by the Investment Company. The procedures relating to the
handling of orders shall be subject to instructions which we shall provide from
time to time to you. We and the Investment Companies reserve the right in our
sole discretion to reject any order.
2. Public Offering Price and Sales Charge. The public offering price shall
be the net asset value per Share plus any sales charge payable upon the purchase
of Shares of such Fund or class thereof as described in the then current
prospectus applicable to such Shares, as amended and in effect from time to time
(the "Prospectus"). The public offering price may reflect scheduled variations
in, or the elimination of, the sales charge on sales of the Shares either
generally to the public or in connection with special purchase plans, as
described in the Prospectus and related Statement of Additional Information. You
agree that you will apply any scheduled variation in, or elimination of, the
sales charge uniformly to all offerees in the class specified in the Prospectus.
The sales charge applicable to any sale of Shares by you and the dealer
concession or commission applicable to any order from you for the purchase of
Shares accepted by us shall be as set forth in the applicable Prospectus and
related Statement of Additional Information. You agree that you will not combine
customer orders to reach breakpoints in commissions for any purpose unless
authorized by the Prospectus or by us in writing. All commissions and
concessions are subject to change without notice by us.
3. 12b-1 Plans.
(a) As consideration for your providing distribution and marketing
services in the promotion of the sale of Shares of certain Funds or classes
thereof which have adopted Distribution Plans pursuant to Rule 12b-1 under the
1940 Act, and for providing personal services to and/or the maintenance of the
accounts of, your customers who invest in and own such Shares, we shall pay you
such fee, if any, as is described in the applicable Prospectus and otherwise
established by us from time to time on Shares which are owned of record by your
firm as nominee for your customers or which are owned by those customers of your
firm whose records, as maintained by such Fund or its agent, designate your firm
as the customer's dealer of record. Any fee payable hereunder shall be computed
and accrued daily and for each month shall be based on average daily net asset
value of the relevant Shares which remain outstanding during such month. No such
fee will be paid to you with respect to Shares redeemed or repurchased by such
Fund within seven business days after the date of our confirmation of such
purchase. No such fee will be paid to you with respect to any of your customers
2
<PAGE>
if the amount of such fee based upon the value of such customer's Shares will be
less than $1.00.
(b) The provisions of this Paragraph 3 may be terminated with respect to
any Fund or class thereof in accordance with the provisions of Rule 12b-1 under
the 1940 Act or the rules of the National Association of Securities Dealers,
Inc. (the "NASD") and thereafter no such fee will be paid to you.
(c) Consistent with NASD policies as amended or interpreted from time to
time (i) you waive payment of amounts due from us which are funded by fees we
receive under such Distribution Plans until we are in receipt of the fees on the
relevant shares of a Fund, and (ii) our liability for amounts payable to you is
limited solely to the proceeds of the fees receivable to us on the relevant
shares.
4. Payment for Shares. Payment for Shares sold through you shall be made on
or before the settlement date specified in the applicable confirmation, at the
office of our clearing agent, and by your check payable to the order of such
Fund or, if applicable, by Federal Funds wire for credit to such Fund, in any
case in accordance with the procedures and conditions described in the
applicable Prospectus. Each Fund reserves the right to delay issuance or
transfer of Shares until such check has cleared. If such payment is not received
by us, we reserve the right, without notice, forthwith to cancel the sale.
Unless other instructions are received by us on or before the settlement date,
orders accepted by us may be placed in an Open Account in your name. If such
payment or instruments are not timely received by us, we may hold you
responsible for any expense or loss, including loss of profit, suffered by us or
by such Fund resulting from your failure to make payment as aforesaid.
5. Redemption and Repurchase of Shares. If any of the Shares sold through
you hereunder are redeemed by such Fund or repurchased by us as agent for such
Fund within seven business days after confirmation of the original purchase, it
is agreed that you shall forfeit your right to the entire dealer concession and
related commission, if any, received by you on such Shares. We will notify you
of any such repurchase or redemption within ten business days from the date
thereof and you shall forthwith refund to us the entire concession and
commission, if any, received by you on such sale. We agree, in the event of any
such repurchase or redemption, to refund to such Fund our share of the sales
charge retained by us, if any, and upon receipt from you of the refund of the
concession allowed to you, to pay such refund forthwith to such Fund.
3
<PAGE>
If you purchase Shares from any customer in connection with repurchase
arrangements offered by an Investment Company, you agree to pay such customer
not less than the applicable repurchase price as established by the Prospectus.
If you act as agent for your customer in selling Shares to us or a Fund, you
agree not to charge your customer more than a fair commission for handling the
transaction. Any order placed by you for the repurchase of Shares of a Fund is
subject to the timely receipt by the Fund's transfer agent of all required
documents in good order. If such documents are not received within a reasonable
time after the order is placed, the order is subject to cancellation, in which
case you agree to be responsible for any loss resulting to the Fund or to us
from such cancellation.
6. Manner of Offering.
(a) No person is authorized to make any representations concerning
Shares except those contained in the applicable Prospectus, in the related
Statement of Additional Information and in any then current sales literature or
other material issued by us supplemental to such Prospectus, which sales
literature or other material is used in conformity with applicable rules or
conditions. All offerings of Shares by you shall be subject to the conditions
set forth in the applicable Prospectus (including the condition relating to
minimum purchases) and to the terms and conditions herein set forth. We will
furnish additional copies of the Prospectuses and such sales literature and
other material issued by us in reasonable quantities upon request. You will
provide all customers with the applicable Prospectus prior to or at the time
such customer purchases Shares and will forward promptly to us any customer
request for a copy of the applicable Statement of Additional Information. Sales
and exchanges of Shares may only be made in those states and jurisdictions where
the Shares are registered or qualified for sale to the public. We agree to
advise you currently of the identity of those states and jurisdictions in which
the Shares are registered or qualified for sale, and you agree to indemnify us
and/or the Funds for any claim, liability, expense or loss in any way arising
out of a sale of Shares in any state or jurisdiction in which such Shares are
not so registered or qualified.
(b) You agree to conform to any compliance or offering standards that we
may establish from time to time, including without limitation standards as to
when classes of Shares may appropriately be sold to particular investors.
4
<PAGE>
7. NASD Matters. This Agreement is conditioned upon your representation and
warranty that you are a member of the NASD or, in the alternative, that you are
a foreign dealer not eligible for membership in the NASD. You and we agree to
abide by the Rules and Regulations of the NASD, including Rule 26 of its Rules
of Fair Practice, and all applicable federal, state, and foreign laws, rules and
regulations.
8. Rejection of Orders. We shall have the right to accept or reject orders
for the purchase of Shares of any Fund. It is understood that for the purposes
hereof no Share shall be considered to have been sold by you and no compensation
will be payable to you with respect to any subscription for Shares which is
rejected by us or an Investment Company. Any consideration which you may receive
in connection with a rejected purchase order will be returned promptly.
Confirmations of all accepted purchase orders will be transmitted by the
Transfer Agent for the applicable Fund or class thereof to the investor or to
you, if authorized.
9. Status of Soliciting Dealer. Nothing herein shall make you a partner
with us or render our relationship an association. You are responsible for your
own conduct, for the employment, control and conduct of your employees and
agents and for injury to such employees or agents or to others through such
employees or agents. You assume full responsibility for your employees and
agents under applicable laws and agree to pay all employer taxes relating
thereto.
10. No Liability. As distributor of the Shares, we shall have full
authority to take such action as we may deem advisable in respect of all matters
pertaining to the distribution of such Shares. We shall not be under any
liability to you, except for lack of good faith and for obligations expressly
assumed by us in this Agreement; provided, however, that nothing in this
sentence shall be deemed to relieve any of us from any liability imposed by the
Securities Act of 1933, as amended.
11. Term of Contract; Amendment; Termination. This Agreement shall become
effective on the date hereof. We and each Fund reserve the right, in our
discretion upon notice to you, to amend, modify or terminate this Agreement at
any time, to change any sales charges, commissions, concessions and other fees
described in the applicable Prospectus or to suspend sales or withdraw the
offering of Shares of any Fund or class of Shares thereof entirely. You agree
that any order to purchase Shares placed by you after notice of any amendment to
this Agreement has been sent to you shall constitute your agreement to such
amendment.
5
<PAGE>
12. Miscellaneous. This Agreement supersedes any and all prior agreements
between us. All communications to us should be sent to the above address. Any
notice to you shall be duly given if mailed or telefacsimiled to you at the
address specified by you above. This Agreement shall be effective when accepted
by you below and shall be construed under the laws of the Commonwealth of
Massachusetts.
The following provision, as marked, applies to this agreement.
|_| This document constitutes an amendment to and restatement of the Selected
Dealer Agreement currently in effect between you and us.
|_| Please confirm your agreement hereto by signing and returning the enclosed
counterpart of this Agreement at once to: State Street Research Investment
Services, Inc., One Financial Center, Boston, Massachusetts 02111,
Attention: President. Upon receipt thereof, this Agreement and such signed
duplicate copy will evidence the agreement between us as of the date
indicated.
State Street Research
Investment Services, Inc.
(Distributor)
By:
-----------------------
ACCEPTED:
[ ]
(Selected Dealer)
By:
----------------------------
6
<PAGE>
SUPPLEMENT NO. 1 TO
SELECTED DEALER AGREEMENT
Boston, Massachusetts
Effective Date: _________________
Dealer Name: _____________________________________
Address: _____________________________________
_____________________________________
Attn: _____________________________________
Ladies and Gentlemen:
This Agreement amends and supplements the Selected Dealer Agreement
between you and us, as in effect from time to time (the "Selected Dealer
Agreement"). All of the terms and provisions of the Selected Dealer Agreement
remain in full force and effect, and this Agreement and the Selected Dealer
Agreement shall be construed and interpreted as one Agreement, provided that in
the event of any inconsistency between this Agreement and the Selected Dealer
Agreement, the terms and provisions of this Agreement shall control. Capitalized
terms used in this Agreement and not defined herein are used as defined in the
Selected Dealer Agreement.
We understand that you wish to use Shares of the Funds in managed
fee-based programs in which you participate (the "Fee-Based Program"), and that
you wish to afford investors participating in such programs the opportunity to
qualify for the ability to purchase shares of the Funds at net asset value. We
are willing to allow you to purchase Shares of the Funds for sale to investors
participating in the Fee-Based Program on such basis, subject to the terms and
conditions of this Agreement and the Selected Dealer Agreement.
1. Sale of Shares through Fee-Based Program
You may, in connection with the Fee-Based Program, sell shares of any
Funds made available by us, from time to time, at net asset value to investors
participating in a bona fide Fee-Based Program. You will receive no discount,
commission or other concession with respect to any
<PAGE>
such sale, but will be entitled to receive any service fees otherwise payable
with respect thereto to the extent provided from time to time in the applicable
Funds' Prospectuses and in the Dealer Agreement. We will, after consulting with
you, determine, from time to time, which Funds we will make available to you for
use in the Fee-Based Program. You agree that Shares will not be made available
through the Fee-Based Program for the sole purpose of enabling evasion of sales
charges.
2. Fees under Fee-Based Program
For any Fee-Based Program investor eligible to purchase Fund shares at
net asset value, the investor shall be subject to an annual fee of not more than
2.50% of such investor's average net assets included in the Fee-Based Program,
nor less than 0.50% of such assets. You shall send to us upon request from time
to time the then-current standard fee schedule for the applicable Fee-Based
Program and a copy of the applicable Schedule H to the Form ADV containing the
required disclosures relating to the Fee-Based Program, or any successor
required disclosures. Any brochures, written materials or advertising relating
to the Fee-Based Program may refer to the Funds as available at net asset value
if the fees and expenses of the Fee-Based Program are given at least equal
prominence. In connection with explaining the fees and expenses of the Fee-Based
Program, your representatives may describe to customers the option of purchasing
Fund shares through such Program at net asset value.
3. Undertakings
You will (i) provide us with continuous reasonable access to your
offices, representatives and mutual fund and Fee-Based Program sales support
personnel and to meetings, including national and regional sales conferences and
training programs, of your representatives and sales personnel, (ii) include
descriptions of all Funds offered through the Fee-Based Program in internal
sales materials and electronic information displays used in conjunction with the
Fee-Based Program, (iii) include our representatives on your internal sales
lines and conference calls on a regular basis, (iv) use reasonable efforts to
motivate your representatives to recommend suitable Funds for clients of the
Fee-Based Program, (v) provide us with sales information in reasonable
Fund-by-Fund detail, including identification of offices and representatives
that account for the most significant sales of shares of the Funds through the
Fee-Based Program, and (vi) include the Funds on any approved, preferred or
other similar list of mutual fund products offered through the Fee-Based
Program.
4. Customer Accounts
You may maintain with the Funds' shareholder servicing agent either (i)
one or more omnibus accounts solely for the participants in the applicable
Fee-Based Program or (ii) separate accounts for each participant in the
applicable Fee-Based Program. If one or more omnibus accounts are maintained,
you shall, among other things, be responsible for forwarding proxies, annual and
semi-annual reports and other materials to each beneficial owner in a timely
manner.
5. Applicable Law
This Agreement shall be governed by and construed and interpreted in
accordance with the internal laws of The Commonwealth of Massachusetts.
6. Disclaimer and Indemnity
We are not endorsing, recommending and are not otherwise involved in
providing any investment product of yours, including but not limited to any
Fee-Based Program. We are merely affording you the opportunity to use shares of
the Funds as an investment medium for the applicable Fee-Based Program. You
acknowledge and agree that you are solely responsible for any such Fee-Based
Program and you agree to indemnify, defend and hold harmless us, the Funds and
our and their affiliates, directors, trustees, officers, employees and agents
from and against any claims, losses, damages or costs (including attorneys'
fees) arising from or related to such Fee-Based Program, including without
limitation any brochures, written materials or advertising in any form that
refers to the Funds or the Fee-Based Program.
7. Miscellaneous
This Agreement is not exclusive and shall terminate automatically upon
termination of the Selected Dealer Agreement. We reserve the right, in our
discretion upon notice to you, to amend, modify or terminate this Agreement at
any time. You agree that any order to purchase Shares placed by you after notice
of any amendment to this Agreement has been sent to you shall constitute your
agreement to such amendment.
<PAGE>
STATE STREET RESEARCH
INVESTMENT SERVICES, INC.
By: __________________________
Name:
Title:
Accepted:
__________________________________
Name of Dealer
By: __________________________________
Name:
Title:
<PAGE>
EXHIBIT 6C
BANK AND BANK AFFILIATED BROKER-DEALER AGREEMENT
(FULLY DISCLOSED BASIS)
Dated as of:_________________________
To: ____________________________________________
(Exact legal name of bank or bank affiliate)
____________________________________________
(Address)
____________________________________________
____________________________________________
(Attn)
We have been appointed to serve as an agent and a principal underwriter as
defined in the Investment Company Act of 1940 (the "1940 Act") for the purpose
of selling and distributing shares (the "Shares") of each of the portfolio
series, as specified from time to time, of certain investment companies,
including, but not limited to, the MetLife-State Street trusts, the State Street
trusts and MetLife Portfolios, Inc. Hereinafter the specified portfolio series
shall be denoted individually as "Fund" and collectively as "Funds," and the
investment companies shall be denoted individually as "Investment Company" and
collectively as "Investment Companies" solely for purposes of this agreement. We
are hereby inviting you, subject to the terms and conditions set forth below, to
make available to your customers Shares of the Funds.
1. Acceptance of Orders.
--------------------
(a) The customers in question are for all purposes your customers and
not our customers. We shall execute transactions for each of your customers only
upon your
<PAGE>
authorization, it being understood in all cases that (i) you are acting as the
agent for the customer; (ii) the transactions are subject to the federal and
state securities laws without recourse against you by the customer; (iii) as
between you and the customer, the customer will have beneficial ownership of the
securities; (iv) each transaction is initiated solely upon the order of the
customer; (v) each transaction is for the account of the customer and not for
your account; and (vi) you shall not have any authority in any transactions to
act as our agent or agent of the Funds.
(b) Orders received from you will be accepted by us and the
Investment Companies only at the public offering price applicable to each order.
The public offering price shall be the net asset value per Share plus any sales
charge payable upon the purchase of Shares of such Fund or class thereof as
specified in the then current prospectus applicable to such Shares, as amended
and in effect from time to time (the "Prospectus"). The public offering price
may reflect scheduled variations in, or the elimination of the sales charge on
sales of the Shares either generally to the public or in connection with special
purchase plans, as described in the Prospectus and related Statement of
Additional Information. You agree that you will apply any scheduled variation
in, or elimination of, the sales charge uniformly to all offerees in the class
specified in the Prospectus. Upon acceptance of an order we shall confirm the
order directly to the customer on a fully disclosed basis in writing and a copy
of each confirmation shall be sent simultaneously to you. The procedures
relating to the handling of orders shall be subject to instructions which we
shall provide from time to time to you. We and the Investment Companies reserve
the right to reject any purchase request in our sole discretion.
2. Agency Commission. Any compensation received by you with respect to
-----------------
the sale of shares of a Fund shall be deemed to be charged by you to your
customer as an agency commission. The schedule of sales charges, commissions and
dealer concessions described in the applicable Prospectus and related Statement
of Additional Information shall apply and the amount of the agency commission
shall equal the applicable amount payable as compensation to a dealer in
connection with the sale of shares of a Fund. You agree that you will not
combine customer orders to reach breakpoints in commissions for any purpose
unless authorized by the Prospectus or in writing. You agree that you will apply
any scheduled variation, or elimination of, the sales charge uniformly to all
offerees in the class specified in the
2
<PAGE>
Prospectus. All compensation amounts are subject to change without notice by us.
3. Rule 12b-1 Plans.
----------------
(a) As consideration for your providing services in our promotion of
the sale of Shares of certain Funds or classes thereof which have a sales charge
and which have adopted Distribution Plans pursuant to Rule 12b-1 under the 1940
Act, and for providing personal services to, and/or the maintenance of the
accounts of, your customers who invest in and own such Shares of such Funds or
classes thereof, we shall pay you such fee as is described in the applicable
Prospectus and otherwise established by us from time to time, on Shares which
are owned of record by your firm as nominee for your customers or which are
owned by those customers of your firm whose records, as maintained by such Fund
or its agent, designate your firm as the customer's dealer of record. The fees
payable hereunder shall be computed and accrued daily and for each month shall
be based on the average daily net asset value of the relevant Shares which
remain outstanding during such month. No such fee will be paid to you with
respect to Shares redeemed or repurchased by such Fund within seven business
days after the date of our confirmation of such purchase. No such fee will be
paid to you with respect to any of your customers if the amount of such fee
based upon the value of such customer's Shares will be less than $1.00.
(b) The provisions of this Paragraph 3 may be terminated with respect
to any Fund or class thereof in accordance with the provisions of Rule 12b-1
under the 1940 Act or the rules of the National Association of Securities
Dealers, Inc. (the "NASD") and thereafter no such fee will be paid to you.
(c) Consistent with NASD policies as amended or interpreted from time
to time (i) you waive payment of amounts due from us which are funded by fees we
receive under such Distribution Plans until we are in receipt of the fees on the
relevant shares of a Fund, and (ii) our liability for amounts payable to you is
limited solely to the proceeds of the fees receivable to us on the relevant
shares.
4. Redemption and Repurchase of Shares. If any shares with a sales
-----------------------------------
charge are sold through you hereunder and are redeemed by such Fund or
repurchased by us as agent for such Fund within seven business days after
confirmation of the original purchase, it is agreed that you shall forfeit your
right to the entire agency commission and any other related
3
<PAGE>
commission received by you on such Shares. We will notify you of any such
repurchase or redemption within ten business days from the date thereof and you
shall forthwith refund to us the entire agency commission and other commission,
if any, received by you on such sale. We agree, in the event of any such
repurchase or redemption, to refund to such Fund our share of the sales charge
retained by us, if any, and upon receipt from you of the refund of the agency
commission allowed to you, to pay such refund forthwith to such Fund.
If you purchase Shares from any customer in connection with repurchase
arrangements offered by an Investment Company, you agree to pay such customer
not less than the applicable repurchase price as established by the Prospectus.
If you act as agent for your customer in selling Shares to a Fund, you agree not
to charge your customer more than a fair commission for handling the
transaction. Any order placed by you for the repurchase of Shares of a Fund is
subject to the timely receipt by the Fund's transfer agent of all required
documents in good order. If such documents are not received within a reasonable
time after the order is placed, the order is subject to cancellation, in which
case you agree to be responsible for any loss resulting to the Fund or to us
from such cancellation.
5. Payment for Shares.
------------------
(a) Payment for Shares sold through you shall be made on or before
the settlement date specified in the applicable confirmation, at the office of
our clearing agent, and by check payable to the order of such Fund or, if
applicable, by Federal Funds wire for credit to such Fund in accordance with the
procedures and conditions described in the Prospectus. Each Fund reserves the
right to delay issuance or transfer of Shares until such check has cleared. If
such payment is not received by us, we reserve the right, without notice,
forthwith to cancel the sale. Unless other instructions are received by us on or
before the settlement date, orders accepted by us may be placed in an Open
Account in your name. If such payment or instructions are timely received by us,
we may hold you responsible for any expense or loss, including loss of profit,
suffered by us or by such Fund resulting from your failure to make payment as
aforesaid.
(b) You will also act as agent in all purchases by a shareholder for
whom, on the records of the Fund or its Shareholders' Servicing and Transfer
Agent as defined in the Prospectus, you are the designated dealer of record of
Shares where payments are sent directly by such shareholders to the
4
<PAGE>
Agent, and you authorize and appoint the Agent to execute and confirm such
purchases to such shareholder on your behalf.
6. Manner of Offering.
------------------
(a) No person is authorized to make any representations concerning
Shares except those contained in the then current applicable Prospectuses and in
sales literature and other materials issued by us supplemental to such
Prospectuses. Shares of Funds shall only be offered by means of the then current
applicable Prospectus and you shall be obligated to deliver such Prospectus to
your customers in accordance with all applicable federal and state securities
laws. All offerings of Shares by you shall be subject to the conditions set
forth in the applicable Prospectus (including the condition relating to minimum
purchases) and to the terms and conditions herein set forth. We will furnish
additional copies of the Prospectuses and such sales literature and other
material issued by us in reasonable quantities upon request. You will provide
all customers with the applicable Prospectus prior to or at the time such
customer purchases Shares and will forward promptly to us any customer request
for a copy of the applicable Statement of Additional Information. Sales and
exchanges of Shares may only be made in those states and jurisdictions where the
Shares are registered or qualified for sale to the public. We agree to advise
you currently of the identity of those states and jurisdictions in which the
Shares are registered or qualified for sale, and you agree to indemnify us
and/or the Funds for any claim, liability, expense or loss in any way arising
out of a sale of Shares in any state or jurisdiction in which such Shares are
not so registered or qualified.
(b) You agree to conform to any compliance or offering standards that
we may establish from time to time, including without limitation standards as to
when classes of Shares may appropriately be sold to particular investors.
(c) We recognize that you may be subject to the provisions of the
Glass-Steagall Act and other laws governing, among other things, the conduct of
activities by federal or state chartered or supervised banks and affiliated
organizations. BECAUSE ONLY YOU WILL HAVE A DIRECT RELATIONSHIP WITH YOUR
CUSTOMER, YOU COVENANT AND AGREE TO COMPLY WITH ALL LAWS AND REGULATIONS
INCLUDING THOSE OF THE REGULATORY AUTHORITIES DIRECTLY APPLICABLE TO YOU AND ANY
OTHER FEDERAL OR STATE REGULATORY BODY HAVING JURISDICTION OVER YOU OR YOUR
CUSTOMERS TO THE EXTENT APPLICABLE TO SECURITIES PURCHASES HEREUNDER FOR THE
ACCOUNT OF YOUR CUSTOMER.
5
<PAGE>
(d) We and the Investment Companies shall have the right to accept or
reject orders for the purchase of Shares of any Fund or class thereof. It is
understood that for the purposes hereof no Share shall be considered to have
been sold by you and no compensation will be payable to you with respect to any
order for Shares which is rejected by us or an Investment Company. Any
consideration which you may receive in connection with a rejected purchase order
is to be returned promptly by you. Confirmations of all accepted purchase
orders will be transmitted by the applicable Investment Company or us to
investors, or, if so directed, to any duly appointed transfer or shareholder
servicing agent of the Fund or class of Shares thereof.
7. Your Status.
-----------
Nothing herein shall make you a partner with us or render our relationship
an association. You are responsible for your own conduct, for the employment,
control and conduct of your employees and agents and for injury to such
employees or agents or to others through such employees or agents. You assume
full responsibility for your employees and agents under applicable laws and
agree to pay all employer taxes relating thereto.
8. No Liability.
------------
As distributor of the Shares, we shall have full authority to take
such action as we may deem advisable in respect of all matters pertaining to the
distribution of such Shares. We shall not be under any liability to you, except
for lack of good faith and for obligations expressly assumed by us in this
Agreement; provided, however, that nothing in this sentence shall be deemed to
relieve any of us from any liability imposed by the Securities Act of 1933, as
amended.
9. Term of Contract; Amendments; Termination.
-----------------------------------------
This Agreement shall become effective on the date hereof. We and each Fund
reserve the right, in our discretion upon notice to you, to amend, modify or
terminate this Agreement at any time, to change the sales charges, commissions,
concessions and other fees described in the applicable Prospectus or to suspend
sales or withdraw the offering of Shares of a Fund or class of Shares thereof
entirely. You agree that any order to purchase Shares placed by you after notice
of any amendment to this Agreement has
6
<PAGE>
been sent to you shall constitute your agreement to such amendment.
10. Miscellaneous.
-------------
This Agreement supersedes any and all prior agreements between us.
References to a Selected Dealer Agreement, dealer agreement or sales agreement
contained in a Prospectus, new account Application, Statement of Additional
Information or related documents with respect to Shares shall be deemed to
include this Agreement and references to dealer(s) or securities dealer(s) shall
be deemed to include you. All communications to us should be sent to the above
address. Any notice to you shall be duly given if mailed or telefacsmiled to you
at the address specified by you above. This Agreement shall be effective when
accepted by you below and shall be construed under the laws of the Commonwealth
of Massachusetts.
11. Bank or Bank Affiliate.
----------------------
Check applicable box:
[ ] (a) You represent and warrant that you are a member of the NASD or in
the alternative, that you are a foreign dealer not eligible for membership in
the NASD. You and we agree to abide by the Rules and Regulations of the NASD
including Rule 26 of its Rules of Fair Practice, and all applicable federal,
state, and foreign laws, rules and regulations.
[ ] (b) [Note: This box relates to "banks." Before checking this box,
please be aware that certain financial institutions such as savings and loan
associations and credit unions are not deemed to be a "bank" under the Exchange
Act of 1934, as amended (the "Exchange Act") and may need to register as a
boxer/dealer with the Securities and Exchange Commission.] You represent and
warrant to us that (i) you are a "bank" as such term is defined in Section
3(a)(6) of the Exchange Act; (ii) you are a duly organized and validly existing
"bank" in good standing under the laws of the jurisdiction in which you are
organized; (iii) all authorization (if any) required for your lawful execution
of this Agreement and your performance hereunder have been obtained; and (iv)
this Agreement will constitute a valid and binding agreement, enforceable
against you in accordance with its terms. You agree to give written notice to us
promptly in the event that you cease to be a "bank" as such term is defined in
Section 3(a)(6) of the Exchange Act. Upon such
7
<PAGE>
written notice, this Agreement shall automatically terminate. You also agree to
abide by all of the Rules of Fair Practice of the NASD applicable to the sale of
investment company shares to your customers.
The following provision, as marked, applies to this Agreement.
[ ] This document constitutes an amendment to and restatement of the
Agreement currently in effect between you and us.
[ ] Please confirm your agreement hereto by signing and returning the
enclosed counterpart of this Agreement at once to: State Street Research
Investment Services, Inc., One Financial Center, Boston, Massachusetts 02111,
Attention: President. Upon receipt thereof, this Agreement and such signed
duplicate copy will evidence the agreement between us.
State Street Research
Investment Services, Inc.
(Distributor)
By: _________________________
We have checked box 11(a) or 11(b) above and accept this Agreement:
* *
- ---------------------------------------------
(Exact legal name of bank or bank affiliate)
By: __________________________
8
<PAGE>
EXHIBIT 8A
CUSTODIAN CONTRACT
Between
METLIFE PORTFOLIOS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Employment of Custodian and Property to be Held By
It........................................................................1
2. Duties of the Custodian with Respect to Property
of the Corporation Held by the Custodian in the
United States.............................................................3
2.1 Holding Securities.................................................3
2.2 Delivery of Securities.............................................3
2.3 Registration of Securities.........................................9
2.4 Bank Accounts......................................................9
2.5 Availability of Federal Funds.....................................10
2.6 Collection of Income..............................................11
2.7 Payment of Corporation's Monies...................................12
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased...................................15
2.9 Appointment of Agents.............................................15
2.10 Deposit of Corporation's Assets in Securities
System............................................................15
2.10A Corporation Assets Held in the Custodian's
Direct Paper System...............................................19
2.11 Segregated Account................................................20
2.12 Ownership Certificates for Tax Purposes...........................22
2.13 Proxies...........................................................22
2.14 Communications Relating to Fund
Securities........................................................22
3. Duties of the Custodian with Respect to Property of
the Corporation Held Outside of the United
States...................................................................23
3.1 Appointment of Foreign Sub-Custodians.............................23
3.2 Assets to be Held.................................................24
3.3 Foreign Securities Depositories...................................24
3.4 Segregation of Securities.........................................24
3.5 Agreements with Foreign Banking Institutions......................25
3.6 Access of Independent Accountants of the
Corporation.......................................................26
3.7 Reports by Custodian..............................................26
3.8 Transactions in Foreign Custody and Bank
Accounts..........................................................26
3.9 Liability of Foreign Sub-Custodians...............................27
3.10 Liability of Custodian............................................28
3.11 Reimbursement for Advances........................................29
3.12 Monitoring Responsibilities.......................................30
3.13 Branches of U.S. Banks............................................31
3.14 Tax Law...........................................................31
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Corporation.............................................32
5. Proper Instructions......................................................33
6. Actions Permitted Without Express Authority..............................34
7. Evidence of Authority....................................................35
<PAGE>
8. Duties of Custodian With Respect to the Books of Account and Calculation
of Net Asset Value and Net Income........................................35
9. Records..................................................................36
10. Opinion of Corporation's Independent
Accountants..............................................................37
11. Reports to Corporation by Independent Public
Accountants..............................................................38
12. Compensation of Custodian................................................38
13. Responsibility of Custodian..............................................39
14. Effective Period, Termination and Amendment..............................41
15. Successor Custodian......................................................43
16. Interpretive and Additional Provisions...................................44
17. Additional Funds.........................................................45
18. Massachusetts Law to Apply...............................................45
19. Prior Contracts..........................................................45
<PAGE>
CUSTODIAN CONTRACT
------------------
This Contract between MetLife Portfolios, Inc., a corporation organized
and existing under the laws of Maryland, having its principal place of business
at One Madison Avenue, New York, New York 10010 hereinafter called the
"Corporation", and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, the Corporation is authorized to issue shares in separate
series, with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Corporation intends to initially offer shares in two
series, the MetLife International Equity Fund and MetLife International Fixed
Income Fund (such series together with all other series subsequently established
by the Corporation and made subject to this Contract in accordance with
paragraph 17, being herein referred to as the "Fund(s)");
NOW THEREFOR, in consideration of the mutual convenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
-----------------------------------------------------
The Corporation hereby employs the Custodian as the custodian of the
assets of the Funds of the Corporation, including securities which the
Corporation, on behalf of the
<PAGE>
applicable Fund desires to be held in places within the United States ("domestic
securities") and securities it desires to be held outside the United States
("foreign securities") pursuant to the provisions of the Corporation's Articles
of Incorporation. The Corporation on behalf of the Fund(s) agrees to deliver to
the Custodian all securities and cash of the Funds, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Fund(s) from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock of
the Corporation representing interests in the Funds, ("Shares") as may be issued
or sold from time to time and to specify the Fund to which such securities,
cash, payments, distributions and cash considerations are allocable. The
Custodian shall segregate, keep, and maintain the assets of each Fund separate
and apart from the assets of any other Fund or person. The Custodian shall not
be responsible for any property of a Fund held or received by the Fund and not
delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Fund(s) from time to time employ
one or more sub-custodians which are themselves qualified under the Investment
Company Act of 1940, as amended, to act as custodians, as a sub-custodian,
located in the United States but only in accordance with an applicable
resolution by the Board of Directors of the Corporation on behalf of the
applicable Fund(s), and provided that the Custodian shall have no more or less
responsibility or
-2-
<PAGE>
liability to the Corporation on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has to the Custodian. The
Custodian may employ as sub-custodian for the Corporation's foreign securities
on behalf of the applicable Fund(s) the foreign banking institutions and foreign
securities despositories designated in Schedule A hereto but only in accordance
with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Corporation Held
------------------------------------------------------------------------
by the Custodian in the United States
- -------------------------------------
2.1 Holding Securities. The Custodian shall hold and physically segregate
------------------
for the account of each Fund all non-cash property, to be held by it in
the United States including all domestic securities owned by the
Corporation and allocable to such Fund, other than (a) securities which
are maintained pursuant to Section 2.10 in a clearing agency which acts
as a securities depository or in a book-entry system authorized by the
U.S. Department of the Treasury, collectively referred to herein as
"Securities System" and (b) commercial paper of an issuer for which
State Street Bank and Trust Company acts as issuing and paying agent
("Direct Paper") which is deposited and/or maintained in the Direct
Paper System of the Custodian pursuant to Section 2.10A.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
----------------------
securities of a Fund owned by the Corporation held by the Custodian or
in a Securities System account of the Custodian or in the Custodian's
-3-
<PAGE>
Direct Paper book entry system account ("Direct Paper System Account")
only upon receipt of Proper Instructions from the Corporation on behalf
of the applicable Fund, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered into
by the Fund;
3) In the case of a sale effected through a Securities System,
in accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Fund;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Fund or into the name of any nominee or nominees
of the Custodian or into the name or nominee name of
-4-
<PAGE>
any agent appointed pursuant to Section 2.9 or into name or
nominee name of any sub-custodian appointed pursuant to
Article 1; or for exchange for a different number of bonds,
certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in
--------
any such case, the new securities are to be delivered to the
Custodian;
7) Upon the sale of such securities for the account of the
Fund, to the broker selling the securities for such Fund or
its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in
any such case, the Custodian shall have no responsibility or
liability for any loss arising from the delivery of such
securities prior to receiving payment for such securities
except as may arise from the Custodian's own negligence or
willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities,
-5-
<PAGE>
or pursuant to any deposit agreement; provided that, in any
such case, the new securities and cash, if any, are to be
delivered to the Custodian;
9) In the case of the warrants, rights or similar securities,
the surrender thereof in the exercise of such warrants,
rights or similar securities or the surrender of interim
receipts or temporary securities for definitive securities;
provided that, in any such case, the new securities and
cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by such Fund, but only against receipt of adequate
--- ----
collateral as agreed upon from time to time by the Custodian
and the Corporation on behalf of the Fund, which may be in
the form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that
in connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the
delivery of securities owned by the Fund prior to the
receipt of such collateral;
-6-
<PAGE>
11) For delivery as security in connection with any borrowings
by the Corporation on behalf of the Fund requiring a pledge
of assets by the Corporation on behalf of the Fund, but only
--- ----
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Corporation on behalf a Fund, the
Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a
member of The National Association of Securities Dealers,
Inc. ("NASD"), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions by a Fund of the Corporation;
13) For delivery in accordance with the provisions of any
agreement among the Corporation on behalf of a Fund, the
Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission
and/or any Contract Market, or any similar
-7-
<PAGE>
organization or organizations, regarding account deposits in
connection with transactions by a Fund of the Corporation;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Corporation, for delivery to such
Transfer Agent or to the holders of Shares of such Fund in
connection with distributions in kind, as may be described
from time to time in the currently effective prospectus and
statement of additional information of the Corporation,
related to such Fund ("Prospectus"), in satisfaction of
requests by holders of Shares for repurchase or redemption;
and
15) For any other proper corporate purpose, but only upon
--- ----
receipt of, in addition to Proper Instructions from the
Corporation on behalf of the applicable Fund, a certified
copy of a resolution of the Board of Directors or of the
Executive Committee signed by an officer of the Corporation
and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Fund to be delivered,
setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper corporate
-8-
<PAGE>
purpose, and naming the person or persons to whom delivery
of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
--------------------------
(other than bearer securities) shall be registered in the name of the
Corporation or in the name of any nominee of the Corporation on behalf
of a Fund or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Corporation, unless the Corporation has
------
authorized in writing the appointment of a nominee to be used in common
with other registered investment companies having the same investment
adviser as the Corporation, or in the name or nominee name of any agent
appointed pursuant to Section 2.9 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All securities accepted
by the Custodian on behalf of a Fund under the terms of this Contract
shall be in "street name" or other good delivery form. If, however, the
Corporation directs the Custodian to maintain securities in "street
name", the Custodian shall utilize its best efforts only to timely
collect income due the Corporation on such securities and to notify the
Corporation on a best efforts basis only of relevant corporate actions
including, without limitation, pendency of calls, maturities, tender or
exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
-------------
account or accounts in the United States in
-9-
<PAGE>
the name of each Fund of the Corporation, subject only to draft or order
by the Custodian acting pursuant to the terms of this Contract, and
shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of such Fund,
other than cash maintained by such Fund in a bank account established
and used in accordance with Rule 17f-3 under the Investment Company Act
of 1940. Funds held by the Custodian for a Fund may be deposited by it
to its credit as Custodian in the Banking Department of the Custodian
or, if and when authorized by Proper Instructions, the Custodian may
open and operate an additional account(s) in such other banks or trust
companies as may be designated by the Corporation in such Instructions;
provided, however, that any such account(s) shall be in the name of the
--------
Custodian for the account of the applicable Fund and subject only to the
Custodian's draft or order. The Custodian's duty of care in respect of
cash held hereunder shall be the same as Custodian's duty of care for
securities held pursuant to this Contract.
2.5 Availability of Federal Funds. Upon mutual agreement between the
-----------------------------
Corporation on behalf of each applicable Fund and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions from the
Corporation on behalf of a Fund, make federal funds available to such
Fund as of specified times agreed upon from time to time by the
Corporation and the Custodian in the amount of checks
-10-
<PAGE>
received in payment for Shares of such Fund which are deposited into
such Fund's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
--------------------
Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder or held in
a Securities System to which each Fund shall be entitled either by law
or pursuant to custom in the securities business, and shall collect on a
timely basis all income and other payments with respect to bearer
domestic securities if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent thereof and shall
credit such income, as collected, to such Fund's custodian account.
Without limiting the generality of the foregoing, the Custodian shall
detach and present for payment all coupons and other income items
requiring presentation as and when they become due and shall collect
interest when due on securities held hereunder. Income due each Fund on
securities loaned pursuant to the provisions of Section 2.2 (10) shall
be the responsibility of the Corporation. The Custodian will have no
duty or responsibility in connection therewith, other than to provide
the Corporation with such information or data as may be necessary to
assist the Corporation in arranging for the timely delivery to the
Custodian of the income to which the Fund is properly entitled.
-11-
<PAGE>
2.7 Payment of Corporation's Monies. Upon receipt of Proper Instructions
-------------------------------
from the Corporation on behalf of the applicable Fund, which may be
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of a Fund in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
such Fund but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian
(or any bank, banking firm or trust company doing business
in the United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the
Corporation or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set
forth in Section 2.10 hereof; (c) in the case of a purchase
involving the Direct Paper System,
-12-
<PAGE>
in accordance with the conditions set forth in Section
2.10A; (d) in the case of repurchase agreements entered into
between the Corporation on behalf of a Fund and the
Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities
either in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt
evidencing purchase by such Fund of securities owned by the
Custodian along with written evidence of the agreement by
the Custodian to repurchase such securities from such Fund
or (e) for transfer to a time deposit account of the
Corporation in any bank, whether domestic or foreign; such
transfer may be effected prior to receipt of a confirmation
from a broker and/or the applicable bank pursuant to Proper
Instructions from the Corporation as defined in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by such Fund as set forth in Section 2.2
hereof;
-13-
<PAGE>
3) For the redemption or repurchase of Shares issued by the
Corporation as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by such
Fund, including but not limited to the following payments
for the account of such Fund: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses allocable to such Corporation whether or not such
expenses are to be in whole or part capitalized or treated
as deferred expenses;
5) For the payment of any dividends on Shares of such Fund
declared pursuant to the governing documents of the
Corporation;
6) For any other proper purpose, but only upon receipt of, in
--- ----
addition to Proper Instructions from the Corporation on
behalf of a Fund, a certified copy of a resolution of the
Board of Directors or of the Executive Committee of the
Corporation signed by an officer of the Corporation and
certified by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
purpose to be a proper purpose, and naming the person of
persons to whom such payment is to be made.
-14-
<PAGE>
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
-------------------------------------------------------------------
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Fund is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions
from the Corporation on behalf of such Fund to so pay in advance, the
Custodian shall be absolutely liable to the Corporation for such
securities to the same extent as if the securities had been received by
the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
---------------------
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such
of the provisions of this Article 2 as the Custodian may from time to
time direct; provided, however, that the appointment of any agent shall
--------
not relieve the Custodian of its responsibilities or liabilities
hereunder. The Custodian shall use reasonable efforts to provide the
Corporation with timely notice in the event of the appointment of any
such agent.
2.10 Deposit of the Corporation's Assets in Securities Systems. The Custodian
---------------------------------------------------------
may deposit and/or maintain securities belonging to a Fund in a clearing
agency registered with the Securities and Exchange Commission
-15-
<PAGE>
under Section 17A of the Exchange Act, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "Securities Systems" in accordance with applicable
Federal Reserve Board and Securities and Exchange Commission rules and
regulations, if any, and subject to the following provisions:
1) The Custodian may keep securities belonging to a Fund in a
Securities System provided that such securities are
represented in an account ("Account") of the Custodian in
the Securities System which shall not include any assets of
the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of a
Fund which are maintained in a Securities System shall
identify by book-entry those securities belonging to that
Fund;
3) The Custodian shall pay for securities purchased for the
account of a Fund upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the making of an entry on the
records of the Custodian to reflect
-16-
<PAGE>
such payment and transfer for the account of the Fund. The
Custodian shall transfer securities sold for the account of
the Fund upon (i) receipt of advice from the Securities
System that payment for such securities has been transferred
to the Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer and
payment for the account of the Fund. Copies of all advices
from the Securities System of transfers of securities for
the account of a Fund shall identify the Fund, be maintained
for the Fund by the Custodian and be provided to the
Corporation at its request. Upon request, the Custodian
shall furnish the Corporation on behalf of the Fund
confirmation of each transfer to or from the account of the
Fund in the form of a written advice or notice and shall
furnish to the Corporation on behalf of the Fund copies of
daily transaction sheets reflecting each day's transactions
in the Securities System for the account of the Fund.
4) The Custodian shall provide the Corporation with any report
obtained by the Custodian on the Securities System's
accounting system, internal accounting control and
procedures
-17-
<PAGE>
for safeguarding securities deposited in the Securities
System;
5) The Custodian shall have received from the Corporation the
initial or annual certificate, as the case may be, required
by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding,
the Custodian shall be liable to the Corporation for the
benefit of any Fund for any loss or damage to the Fund
resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or
any of its agents or of any of its or their employees or
from failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the
Securities System; at the election of the Corporation, it
shall be entitled to (i) be subrogated to the rights of the
Custodian or (ii) have an assignment of the rights of the
Custodian with respect to any claim against the Securities
System or any other person which the Custodian may have as a
consequence of any such loss or damage if and to the extent
that the Corporation has not been made whole for any such
loss or damage.
-18-
<PAGE>
2.10A Corporation Assets Held in the Custodian's Direct Paper System
--------------------------------------------------------------
The Custodian may deposit and/or maintain securities owned by the
Corporation in the Direct Paper System of the Custodian subject to the
following provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper
Instructions;
2) The Custodian may keep securities of the Corporation in the
Direct Paper System only if such securities are represented
in an account ("Account") of the Custodian in the Direct
Paper System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian
or otherwise for customers;
3) The records of the Custodian with respect to securities of
the Corporation which are maintained in the Direct Paper
System shall identify by book-entry those securities
belonging to the applicable Fund;
4) The Custodian shall pay for securities purchased for the
account of the Corporation upon the making of an entry on
the records of the Custodian to reflect such payment and
transfer of securities to the account of a Fund. The
Custodian shall transfer
-19-
<PAGE>
securities sold for the account of a Fund upon the making of
an entry on the records of the Custodian to reflect such
transfer and receipt of payment for the account of a Fund;
5) The Custodian shall furnish the Corporation confirmation of
each transfer to or from the account of a Fund, in the form
of a written advice or notice, of Direct Paper on the next
business day following such transfer and shall furnish to
the Corporation on behalf of the Fund copies of daily
transaction sheets reflecting each day's transactions in the
Securities System for the account of a Fund;
6) The Custodian shall provide the Corporation with any report
on its system of internal accounting control as the
Corporation may reasonably request from time to time.
2.11 Segregated Account. The Custodian shall upon receipt of Proper
------------------
Instructions from the Corporation on behalf of each applicable Fund
establish and maintain a segregated account or accounts for and on
behalf of the Fund, into which account or accounts may be transferred
cash and/or securities, including securities maintained in an account by
the Custodian pursuant to Section 2.10 hereof, (i) in accordance with
the provisions of any agreement among the Corporation on behalf of its
Funds, the Custodian and a broker-dealer registered under the Exchange
Act and a
-20-
<PAGE>
member of the NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of
The Options Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading Commission or any
registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Corporation, (ii) for purposes of segregating cash
or other liquid assets in connection with options purchased, sold or
written by the Corporation or commodity futures contracts or options
thereon purchased or sold by the Corporation, (iii) for the purposes of
compliance by the Corporation with the procedures required by Investment
Company Act Release No. 10666, or any subsequent release or releases of
the Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and (iv) for
other proper corporate purposes, but, only, in the case of clause (iv),
--- ----
upon receipt of, in addition to Proper Instructions, a certified copy of
a resolution of the Board of Directors or of the Executive Committee
signed by an officer of the Corporation and certified by the Secretary
or an Assistant Secretary, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper corporate
purposes.
-21-
<PAGE>
2.12 Ownership Certificates for Tax Purposes. The Custodian shall execute
---------------------------------------
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of each Fund held by it and
in connection with transfers of securities.
2.13 Proxies. The Custodian shall, with respect to the domestic securities
-------
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in
the name of the Corporation or a nominee of the Corporation, all
proxies, without indication of the manner in which such proxies are to
be voted, and shall promptly deliver to the Corporation such proxies,
all proxy soliciting materials and all notices relating to such
securities.
2.14 Communications Relating to Fund Securities
------------------------------------------
Subject to the provisions of Section 2.3, the Custodian shall transmit
promptly to the Corporation for each Fund all written information
(including, without limitation, pendency of calls and maturities of
domestic securities and expirations of rights in connection therewith
and notices of exercise of call and put options written by the
Corporation on behalf of the Funds and the maturity of futures contracts
purchased or sold by the Funds) received by the Custodian from issuers
of the securities being held for the Corporation. With respect to tender
or exchange offers, the Custodian shall transmit promptly
-22-
<PAGE>
to the Corporation all written information received by the Custodian
from issuers of the securities whose tender or exchange is sought and
from the party (or his or her agents) making the tender or exchange
offer. If the Corporation desires to take action with respect to any
tender offer, exchange offer or any other similar transaction, the
Corporation shall notify the Custodian at lease three business days
prior to the date on which the Custodian is to take such action.
3. Duties of the Custodian with Respect to Property of the Corporation Held
------------------------------------------------------------------------
Outside of the United States
- ----------------------------
3.1 Appointment of Foreign Sub-Custodians
-------------------------------------
The Fund hereby authorizes and instructs the Custodian to employ as sub-
custodians for the Corporation's securities and other assets maintained
outside the United States the foreign banking institutions and foreign
securities depositories designated on Schedule A hereto ("foreign sub-
custodians"). Upon receipt of "Proper Instructions", as defined in
Section 5 of this Contract, together with a certified resolution of the
Corporation's Board of Directors, the Custodian and the Corporation may
agree to amend Schedule A hereto from time to time to designate
additional foreign banking institutions and foreign securities
depositories to act as sub-custodian. Upon receipt of Proper
Instructions, the Corporation may instruct the Custodian to cease the
employment of any one or more such sub-custodians for maintaining
custody of the Fund's assets.
-23-
<PAGE>
3.2 Assets to be Held. The Custodian shall limit the securities and other
-----------------
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or the Corporation may determine to be
reasonably necessary to effect each Fund's foreign securities
transactions.
3.3 Foreign Securities Depositories. Except as may otherwise be agreed upon
-------------------------------
in writing by the Custodian and the Corporation, assets of the
Corporation shall be maintained in foreign securities depositories for
the account of each Fund only through arrangements implemented by the
foreign banking institutions serving as sub-custodians pursuant to the
terms hereof. Where possible, such arrangements shall include entry into
agreements containing the provisions set forth in Section 3.5 hereof.
3.4 Segregation of Securities. The Custodian shall identify on its books as
-------------------------
belonging to each applicable Fund of the Corporation, the foreign
securities and other assets of such Fund held by each foreign sub-
custodian. Each agreement pursuant to which the Custodian employs a
foreign banking institution shall require that such institution
establish a custody account for the Custodian on behalf of each Fund of
the Corporation and physically segregate in that account, securities and
other assets of
-24-
<PAGE>
each Fund, and, in the event that such institution deposits the
securities of one or more of the Funds in a foreign securities
depository, that it shall identify on its books as belonging to the
Custodian, as agent for each applicable Fund, the securities so
deposited.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a
--------------------------------------------
foreign banking institution shall be substantially in the form set forth
in Exhibit 1 hereto and shall provide that: (a) the assets of each Fund
will not be subject to any right, charge, security interest, lien or
claim of any kind in favor of the foreign banking institution or its
creditors or agent, except a claim of payment for their safe custody or
administration; (b) beneficial ownership of a Fund's assets will be
freely transferable without the payment of money or value other than for
custody or administration; (c) adequate records will be maintained
identifying the assets as belonging to each applicable Fund; (d)
officers of or auditors employed by, or other representatives of the
Custodian, including to the extent permitted under applicable law the
independent public accountants for the Corporation, will be given access
to the books and records of the foreign banking institution relating to
its actions under its agreement with the Custodian; and (e) assets of
the Funds held by the foreign sub-custodian will be subject only to the
instructions of the Custodian or its agents.
-25-
<PAGE>
Access of Independent Accountants of the Corporation.
----------------------------------------------------
Upon request of the Corporation, the Custodian will use its best efforts
to arrange for the independent accountants of the Corporation to be
afforded access to the books and records of any foreign banking
institution employed as a foreign sub-custodian insofar as such books
and records relate to the performance of such foreign banking
institution under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Corporation from
--------------------
time to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Corporation held by foreign sub-
custodians, including but not limited to an identification of entities
having possession of each Fund's securities and other assets and advices
or notifications of any transfers of securities to or from each
custodial account maintained by a foreign banking institution for the
Custodian on behalf of each applicable Fund indicating, as to securities
acquired for a Fund, the identity of the entity having physical
possession of such securities.
3.8 Transactions in Foreign Custody and Bank Accounts (a) Except as
-------------------------------------------------
otherwise provided in paragraph (b) of this Section 3.8, the provisions
of Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis
------- --------
to the foreign securities and cash of the Corporation held outside the
United States by foreign sub-custodians.
-26-
<PAGE>
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of each
applicable Fund and delivery of securities maintained for the account of
each applicable Fund may be effected in accordance with the customary
established securities trading or securities processing practices and
procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivering securities to the
purchaser thereof or to a dealer therefor (or an agent for such
purchaser or dealer) against a receipt with the expectation of receiving
later payment for such securities from such purchaser or dealer.
(c) Securities maintained in the custody of a foreign sub-custodian may
be maintained in the name of such entity's nominee to the same extent as
set forth in Section 2.3 of this Contract, and the Corporation agrees to
hold any such nominee harmless from any liability as a holder of record
of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which
-----------------------------------
the Custodian employs a foreign banking institution as a foreign sub-
custodian shall require the institution to exercise reasonable care in
the performance of its duties and to indemnify, and hold harmless, the
Custodian and the Corporation from and against any loss, damage, cost,
expense, liability or claim arising out of or in connection with the
-27-
<PAGE>
institution's performance of such obligations. At the election of the
Corporation, it shall be entitled to be subrogated to or have an
assignment of the rights of the Custodian with respect to any claims
against a foreign banking institution as a consequence of any such loss,
damage, cost, expense, liability or claim if and to the extent that the
Corporation has not been made whole for any such loss, damage, cost,
expense, liability or claim.
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
----------------------
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a
U.S. bank as contemplated by paragraph 3.13 hereof, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions, or
acts of war or terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care. In all such respects, however, the
Corporation shall have rights of subrogation or assignment as more fully
described in Section 3.9 above. Notwithstanding the foregoing provisions
of this paragraph 3.10, in delegating custody duties to State Street
London Ltd., the Custodian shall not be relieved of any responsibility
to the Corporation
-28-
<PAGE>
for any loss due to such delegation, except such loss as may result from
(a) political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization,
insurrection, civil strife or armed hostilities) or (b) other losses
(excluding a bankruptcy or insolvency of State Street London Ltd. not
caused by political risk) due to Acts of God, nuclear incident or other
losses under circumstances where the Custodian and State Street London
Ltd. have exercised reasonable care.
3.11 Reimbursement for Advances. If the Corporation requires the Custodian to
--------------------------
advance cash or securities for any purpose for the benefit of a Fund
including the purchase or sale of foreign exchange or of contracts for
foreign exchange, or in the event that the Custodian or its nominee
shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any
property at any time held for the account of the applicable Fund shall
be security therefor and should the Corporation fail to repay the
Custodian promptly, the Custodian shall be entitled to utilize available
cash and to dispose of that Fund's assets to the extent necessary to
obtain reimbursement. The Custodian hereby grants to the Corporation,
acting on behalf of a Fund, a right to
-29-
<PAGE>
cure prior to exercising Custodian's right to liquidation hereunder. In
this respect, prior to any sale by the Custodian of a Fund's securities
pursuant to this section, the Custodian will notify the Corporation of
the proposed sale. Upon receipt of such notice, the Corporation will
have one business day in which to provide reimbursement to the Custodian
in the amount of the advancement. If by the close of business on such
date the Corporation has failed to remit to the Custodian the amount of
cash necessary for reimbursement, the Custodian shall be authorized to
liquidate such securities as aforesaid.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to the
---------------------------
Corporation, during the month of June, information concerning the
foreign sub-custodians employed by the Custodian. Such information shall
be similar in kind and scope to that furnished to the Board of Directors
of the Corporation in connection with the initial approval of this
Contract. In addition, the Custodian will promptly inform the
Corporation in the event that the Custodian learns of a material adverse
change in the financial condition of a foreign sub-custodian or any
material loss of the assets of the Corporation or in the case of any
foreign sub-custodian not the subject of an exemptive order from the
Securities and Exchange Commission is notified by such foreign sub-
custodian that there appears to be a substantial
-30-
<PAGE>
likelihood that its shareholders' equity will decline below $200 million
(U.S. dollars or the equivalent thereof) or that its shareholders'
equity has declined below $200 million (in each case computed in
accordance with generally accepted U.S. accounting principles).
3.13 Branches of U.S. Banks
----------------------
(a) Except as otherwise set forth in this Contract, the provisions
hereof shall not apply where the custody of a Fund's assets is
maintained in a foreign branch of a banking institution which is a
"bank" as defined by Section 2(a)(5) of the Investment Company Act of
1940 meeting the qualification set forth in Section 26(a) of said Act.
The appointment of any such branch as a sub-custodian shall be governed
by paragraph 1 of this Contract.
(b) Cash held for each Fund in the United Kingdom shall be maintained in
an interest bearing account established for the Corporation with the
Custodian's London branch, which account shall be subject to the
direction of the Custodian, State Street London Ltd. or both.
3.14 Tax Law
-------
The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Corporation or the Custodian
as custodian of the Corporation by the tax law of the United States of
America or any state or political subdivision thereof. It shall be the
responsibility of the Corporation to
-31-
<PAGE>
notify the Custodian of the obligations imposed on the Corporation or
the Custodian as custodian of the Corporation by the tax law of
jurisdictions other than those mentioned in the above sentence,
including responsibility for withholding and other taxes, assessments or
other governmental charges, certifications and governmental reporting.
The sole responsibility of the Custodian with regard to such tax law
shall be to use reasonable efforts to assist the Corporation with
respect to any claim for exemption or refund under the tax law of
jurisdictions for which the Corporation has provided such information.
The Custodian shall use reasonable efforts to file appropriate tax forms
at agreed upon withholding rates. In addition, the Custodian shall make
available to the Corporation such information specifically relating to
tax reclaim and other foreign tax law developments generally relating
thereto as the Custodian shall acquire and which it makes available to
clients generally.
4. Payments for Sales or Repurchases or Redemptions of Shares of the
-----------------------------------------------------------------
Corporation
- -----------
The Custodian shall receive from the distributor for the Shares or from
the Transfer Agent of the Corporation and deposit into the account of the
appropriate Fund such payments as are received for Shares of that Fund issued or
sold from time to time by the Corporation or its Distributor. The Custodian will
provide timely notification to the Corporation and the Transfer Agent of any
receipt by it of payments for Shares of such Fund.
-32-
<PAGE>
From such funds as may be available for the purpose but subject to the
limitations of the Corporation's Articles of Incorporation and any applicable
resolution of the Board of Directors of the Corporation pursuant thereto, the
Custodian shall, upon receipt of instructions from the Transfer Agent, make
funds available for payment to holders of Shares who have delivered to the
Transfer Agent a request for redemption or repurchase of their Shares. In
connection with the redemption or repurchase of Shares of a Fund, the Custodian
is authorized upon receipt of instructions from the Transfer Agent to wire funds
to or through a bank designated by the redeeming shareholder(s). In
connection with the redemption or repurchase of Shares of the Corporation, the
Custodian shall honor checks drawn on the Custodian by a holder of Shares, which
checks have been furnished by the Corporation to the holder of Shares, when
presented to the Custodian in accordance with such procedures and controls as
are mutually agreed upon from time to time between the Corporation and the
Custodian.
5. Proper Instructions
-------------------
Proper Instructions as used throughout this Contract means a writing
signed or initialled by one or more person or persons as the Board of Directors
of the Corporation shall have from time to time authorized. Each such writing
shall set forth the specific transaction or type of transaction involved,
including a specific statement of the purpose for which such action is
requested. Oral instructions will be considered Proper Instructions if the
Custodian reasonably believes them to have
-33-
<PAGE>
been given by a person authorized to give such instructions with respect to the
transaction involved. The Corporation shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Directors of the
Corporation accompanied by a detailed description of procedures approved by the
Board of Directors, Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that the
Board of Directors and the Custodian are satisfied that such procedures afford
adequate safeguards for the Corporation's assets. For purposes of this Section,
Proper Instructions shall include instructions received by the Custodian
pursuant to any three - party agreement which requires a segregated asset
account in accordance with Section 2.11.
6. Actions Permitted without Express Authority
-------------------------------------------
The Custodian may in its discretion, without express authority from the
Corporation on behalf of each applicable Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this Contract,
provided that all such payments shall be accounted for to the Corporation on
- --------
behalf of a Fund;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Corporation, checks,
drafts and other negotiable instruments; and
-34-
<PAGE>
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other dealings
with the securities and property of each Fund except as otherwise directed by
the Board of Directors of the Corporation.
7. Evidence of Authority
---------------------
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed by or on behalf
of the Corporation. The Custodian may receive and accept a certified copy of a
resolution of the board of Directors of the Corporation as conclusive evidence
(a) of the authority of any person to act in accordance with such resolution or
(b) of any determination or of any action by the Board of Directors pursuant to
the Corporation's Articles of Incorporation as described in such resolution, and
such resolution may be considered as in full force and effect until receipt by
the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and Calculation
------------------------------------------------------------------------
of Net Asset Value and Net Income
- ---------------------------------
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Directors of the Corporation to
keep the books of account of the Corporation and/or compute the net asset value
per share of the outstanding shares of each Fund or, if directed in writing to
do so by the Corporation on behalf of a Fund, shall itself keep such
-35-
<PAGE>
books of account and/or compute such net asset value per share. If so directed,
the Custodian shall also calculate daily the net income of any Fund as described
in the Corporation's currently effective Prospectus and shall advise the
Corporation and the Transfer Agent daily of the total amounts of such net income
and, if instructed in writing by an officer of the Corporation to do so, shall
advise the Transfer Agent periodically of the division of such net income among
its various components. The calculations of the net asset value per share and
the daily income of each Fund shall be made at the time or times described from
time to time in the Corporation's currently effective prospectus related to such
Fund. The Custodian shall submit to all judicial, regulatory and administrative
bodies having jurisdiction over the services provided pursuant to this Contract,
present or future, any information, reports, or other material which any such
body by reason of this Contract may request or require pursuant to applicable
laws and regulations. The Custodian shall not disclose or use any records it has
prepared by reason of this Contract in any manner except as expressly authorized
herein or directed by the Corporation and shall keep confidential any
information obtained by reason of this Contract.
9. Records
-------
The Custodian shall with respect to each Fund create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Corporation under the Investment
Company Act of 1940, with
-36-
<PAGE>
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the Corporation and shall at all times
during the regular business hours of the Custodian be open for inspection by
duly authorized officers, employees or agents of the Corporation (including
independent certified public accountants designated by the Corporation, duly
authorized employees and officers of Metropolitan Life Insurance Company
designated by the Corporation) and employees and agents of the Securities and
Exchange Commission. The Custodian shall, at the Corporation's request, supply
the Corporation with a tabulation of securities owned by each Fund and held by
the Custodian and shall, when requested to do so by the Corporation and for such
compensation as shall be agreed upon between the Corporation and the Custodian,
include certificate numbers in such tabulations and, if available, provide other
information needed for completion of reports and records required with respect
to the Corporation under the federal or state securities laws and such other
information as the Corporation may reasonably request.
10. Opinion of Corporation's Independent Accountant
-----------------------------------------------
The Custodian shall take all reasonable action, as the Corporation on
behalf of each applicable Fund may from time to time request, to obtain from
year to year favorable opinions from the Corporation's independent certified
public accountants with respect to its activities hereunder in connection with
the preparation of the Corporation's Form N-1A and any amendments thereto, and
Form N-SAR or other annual reports to the Securities
-37-
<PAGE>
and Exchange Commission and with respect to any other requirements of such
Commission.
11. Reports to Corporation by Independent Public Accountants
--------------------------------------------------------
The Custodian shall provide the Corporation, on behalf of each of the
Funds at such times as the Corporation may reasonably require, with reports by
independent certified public accountants on the accounting system, internal
accounting controls and procedures for safeguarding securities, futures
contracts and options on futures contracts, including securities deposited
and/or maintained in a Securities System, relating to the services provided by
the Custodian under this Contract; such reports shall be of sufficient scope and
in sufficient detail, as may reasonably be required by the Corporation to
provide reasonable assurance that any material inadequacies would be disclosed
by such examination, and, if there are no such inadequacies, the reports shall
so state. Such examinations shall be conducted, if applicable, in accordance
with generally accepted auditing standards. The Custodian will provide the
Corporation with a statement of any change in the amount of the Custodian's
bonding.
12. Compensation of Custodian
-------------------------
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Corporation on behalf of each applicable Fund and the Custodian. The Custodian
will not charge the custodied assets or withhold delivery of any such assets, in
part or in full, for the Custodian's compensation or expenses, except in the
event of the termination of the Contract.
-38-
<PAGE>
13. Responsibility of Custodian
---------------------------
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity
or genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract, but shall be kept indemnified by and shall be
without liability to the Corporation for any action taken or omitted by it in
good faith without negligence. The Custodian shall be entitled to rely on and
may act upon advice of counsel (who may be counsel for the Corporation) on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United States (except as specifically provided in Article 3.10)
and, regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a U.S. bank
as contemplated by paragraph 3.13 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from, or caused
by,
-39-
<PAGE>
the direction of or authorization by the Corporation to maintain custody of any
securities or cash of the Corporation in a foreign country including, but not
limited to, losses resulting from nationalization, expropriation, currency
restrictions, or acts of war or terrorism.
If the Corporation on behalf of a Fund requires the Custodian to take
any action with respect to securities, which action involves the payment of
money or which action may, in the opinion of the Custodian, result in the
Custodian or its nominee assigned to the Corporation or the Fund being liable
for the payment of money or incurring liability of some other form, the
Corporation on behalf of the Fund, as a prerequisite to requiring the Custodian
to take such action, shall provide indemnity to the Custodian in an amount and
form satisfactory to it.
If the Corporation requires the Custodian, its affiliates, subsidiaries
or agents, to advance cash or securities for any purpose (including but not
limited to securities settlements, foreign exchange contracts and assumed
settlement) for the benefit of a Fund including the purchase or sale of foreign
exchange or of contracts for foreign exchange or in the event that the Custodian
or its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominee's own negligent
action, negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Fund shall be security therefor and
should the Corporation fail to
-40-
<PAGE>
repay the Custodian promptly, the Custodian shall be entitled to utilize
available cash and to dispose of such Fund's assets to the extent necessary to
obtain reimbursement. The Custodian hereby grants to the Corporation, acting on
behalf of a Fund, a right to cure prior to exercising Custodian's right to
liquidation hereunder. In this respect, prior to any sale by the Custodian of a
Fund's securities pursuant to this section, the Custodian will notify the
Corporation of the proposed sale. Upon receipt of such notice, the Corporation
will have one business day in which to provide reimbursement to the Custodian in
the amount of the advancement. If by the close of business on such date the
Corporation has failed to remit to the Custodian the amount of cash necessary
for reimbursement, the Custodian shall be authorized to liquidate such
securities as aforesaid.
14. Effective Period, Termination and Amendment
-------------------------------------------
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
--------
however that the Custodian shall not with respect to a Fund act under Section
2.10 hereof in the absence of receipt of an initial certificate of the Secretary
or an Assistant Secretary that the Board of Directors of the Corporation has
approved the initial use of a particular
-41-
<PAGE>
Securities System by such Fund and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of Directors has reviewed the
use by such Fund of such Securities System, as required in each case by Rule
17f-4 under the Investment Company Act of 1940, as amended and that the
Custodian shall not with respect to a Fund act under Section 2.10A hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Directors has approved the initial use of the Direct
Paper System by such Fund and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of Directors has reviewed the
use by such Fund of the Direct Paper System; provided further, however, that the
-------- -------
Corporation shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Corporation's
Articles of Incorporation, and further provided, that the Corporation on behalf
of one or more of the Funds may at any time by action of its Board of Directors
(i) substitute another bank or trust company for the Custodian by giving notice
as described above to the Custodian, or (ii) immediately terminate this Contract
in the event of the appointment of a conservator or receiver for the Custodian
by the Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Corporation on behalf of each
applicable Fund shall pay to the Custodian such
-42-
<PAGE>
compensation as may be due as of the date of such termination and all likewise
reimburse the Custodian for its costs, expenses and disbursements. Upon
termination of this Contract, the custodian shall promptly return to the
Corporation, or the Corporation's designee, all records relating to the
Custodian's activities and obligations under this Contract required to be
prepared and maintained by the Custodian under this Contract.
15. Successor Custodian
-------------------
If a successor custodian of the Corporation, for one or more of the
Funds of the Corporation, shall be appointed by the Board of Directors of the
Corporation, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities and all funds and other properties of each applicable
Fund then held by it hereunder and shall transfer to an account of the successor
custodian all of the securities of each such Fund held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a resolution of the Board of
Directors of the Corporation, deliver at the office of the Custodian and
transfer such securities, funds and other properties in accordance with such
resolution.
In the event that no written order designating a successor custodian or
certified copy of a resolution of the Board of Directors shall have been
delivered to the Custodian on or before the date when such termination shall
become effective,
-43-
<PAGE>
then the Custodian shall have the right to deliver to a bank or trust company,
which is a "bank" as defined in the Investment Company Act of 1940, doing
business in Boston, Massachusetts, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published report,
of not less than $25,000,000, all securities, funds and other properties held by
the Custodian on behalf of each applicable Fund and all instruments held by the
Custodian relative thereto and all other property held by it under this Contract
on behalf of each applicable Fund and to transfer to an account of such
successor custodian all of the securities of each such Fund held in any
Securities System. Thereafter, such bank or trust company shall be the successor
of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Corporation to procure the certified copy of the resolution
referred to or of the Board of Directors to appoint a successor custodian, the
Custodian shall be entitled to fair compensation for its services during such
period as the Custodian retains possession of such securities, funds and other
properties and the provisions of this Contract relating to the duties and
obligations of the Custodian shall remain in full force and effect.
16. Interpretive and Additional Provisions
--------------------------------------
In connection with the operation of this Contract, the Custodian and the
Corporation on behalf of each of the Funds, may from time to time agree on such
provisions interpretive of or in
-44-
<PAGE>
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
--------
shall contravene any applicable federal or state regulations or any provision of
the Corporation's Articles of Incorporation of the Corporation. No interpretive
or additional provisions made as provided in the preceding sentence shall be
deemed to be an amendment of this Contract.
17. Additional Funds
----------------
In the event that the Corporation establishes one or more additional
Funds with respect to which it desires to have the Custodian render services as
custodian under the terms hereof, it shall so notify the Custodian in writing,
and if the Custodian agrees in writing to provide such services, such Fund shall
become a Fund hereunder. The Custodian shall not unreasonably withhold approval
of such new Funds .
18. Massachusetts Law to Apply
--------------------------
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
19. Prior Contracts
---------------
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Corporation on behalf of each of the Funds and the
Custodian relating to the custody of the Corporation's assets.
-45-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed at in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as of the 31st
day of December, 1991.
ATTEST METLIFE PORTFOLIOS, INC.
_____________________________ By /s/ Jeffrey J. Hodgman
---------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
By
_____________________________ _________________________________
Assistant Secretary Vice President
-46-
<PAGE>
Schedule A
----------
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors of MetLife Portfolios,
Inc. for use as sub-custodians for the Corporation's securities and other
assets:
(Insert banks and securities depositories)
Certified:
_____________________________
Corporation's Authorized Officer
Date:
___________________
-47-
<PAGE>
STATE STREET BANK AND TRUST COMPANY
Fee Schedule
METLIFE INTERNATIONAL EQUITY FUND
METLIFE INTERNATIONAL FIXED INCOME FUND
I. Administration
--------------
Custody, Portfolio and Fund Accounting Service - Maintain custody of
----------------------------------------------
fund assets. Settle portfolio purchases and sales. Report buy and sell
fails. Determine and collect portfolio income. Make cash disbursements
and report cash transactions. Monitor corporate actions. Withhold
foreign taxes. File foreign reclaims. Maintain multicurrency investment
ledgers, provide selected portfolio transactions, position and income
reports. Maintain general ledger and capital stock accounts in
compliance with GAAP (FAS52). Prepare daily trial balance. Calculate net
asset value daily. Provide selected general ledger reports.
The administration fee shown below is an annual charge, billed and
payable monthly, based on average monthly net assets.
ANNUAL FEES PER PORTFOLIO
-------------------------
<TABLE>
<CAPTION>
Custody, Portfolio
Fund Net Assets and Fund Accounting
--------------- -------------------
<S> <C>
First $20 Million 1/ 15 of 1%
Next $80 Million 1/ 30 of 1%
Excess 1/100 of 1%
Minimum Monthly
Charges $3,000
</TABLE>
II. Global Custody - Fees are divided into two categories: Trading and
--------------
Holding charges, which are calculated based upon country groups as
classified.
Group I Group II Group III Group IV
------- -------- --------- --------
Austria Australia Denmark Mexico
Canada Belgium Finland Portugal
Euroclear Netherlands France Spain
W. Germany New Zealand Italy Sweden
Hong Kong Norway Malaysia
Japan Singapore Thailand
Switzerland United Kingdom
<PAGE>
[LOGO APPEARS HERE]
Transaction Charges
-------------------
<TABLE>
<CAPTION>
Group I Group II Group III Group IV
------- -------- --------- --------
<S> <C> <C> <C>
$ 30 $ 45 $ 60 $ 75
</TABLE>
Holdings Charges (Basis Points)
<TABLE>
<CAPTION>
Assets Group I Group II Group III Group IV
------ ------- -------- --------- --------
<S> <C> <C> <C> <C>
First $ 50 Million 12 15 18 25
Next $ 50 Million 10 13 16 25
Over $100 Million 8 11 14 25
</TABLE>
<TABLE>
<CAPTION>
III. Portfolio Trades (Domestic) - For each line item processed
----------------------------------------------------------
<S> <C>
State Street Bank Repos $ 7.00
DTC or Fed Book Entry $ 12.00
New York Physical Settlements $ 25.00
Maturity Collections $ 8.00
PTC Purchase, Sale, Deposit or Withdrawal $ 20.00
All other trades $ 16.00
IV. Automated Pricing
-----------------
Base Charge/month $375.00
Quote Charge/month $ 6.00
V. Options
-------
Option charge for each option written or
closing contract, per issue, per broker $ 25.00
Option expiration charge, per issue, per broker $ 15.00
Option exercised charge, per issue, per broker $ 15.00
VI. Interest Rate Futures
---------------------
Transactions -- no security movement $ 8.00
VII. Holdings Charge
---------------
For each issue maintained -- monthly charge $ 5.00
VIII. Principal Reduction Payments
----------------------------
Per paydown $ 10.00
</TABLE>
<PAGE>
[LOGO APPEARS HERE]
IX. Dividend Charges (For items held at the Request of Traders over record
----------------
date in street form) $50.00
X. Special Services
----------------
Fees for activities of a non-recurring nature such as fund
consolidations or reorganizations, extraordinary security shipments and
the preparation of special reports will be subject to negotiation. Fees
for automated pricing, yield calculation and other special items will be
negotiated separately.
XI. Phase-in of Fees
----------------
All of the above fees shall not exceed 30 basis points per portfolio on
an annualized basis for the first 12 months of operation.
XII. Out-of-Pocket Expenses
----------------------
A billing for the recovery of applicable out-of-pocket expenses will be
made as of the end of each month. Out-of-pocket expenses include, but
are not limited to the following:
Telephone
Wire Charges ($5.25 per wire in and $5.00 out)
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies Related to Fund Records
Rush Transfer -- $8.00 Each
Transfer Fees
Telex Charge
Sub-custodian Charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over $2,500 - $4.25
GNMA Transfer - $15 each
PTC Deposit/Withdrawal for same day turnarounds - $50.00
METLIFE INTERNATIONAL EQUITY FUND
METLIFE INTERNATIONAL FIXED
INCOME FUND STATE STREET BANK & TRUST CO.
By: /s/ Jeffrey J. Hodgman By: /s/ Wendy Labonte
----------------------------- -------------------------
Title: President Title: Vice President
------------------------- ----------------------
Date: January 16, 1992 Date: January 16, 1992
------------------------- ----------------------
<PAGE>
EXHIBIT 8B
TRANSFER AGENCY AND SERVICE AGREEMENT
between
METLIFE PORTFOLIOS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Article 1 Terms of Appointment; Duties of the Bank 1
Article 2 Fees and Expenses 9
Article 3 Representations and Warranties of the Bank 10
Article 4 Representations and Warranties of the Fund 10
Article 5 Data Access and Proprietary Information 11
Article 6 Indemnification 15
Article 7 Standard of Care 18
Article 8 Covenants of the Fund and the Bank 18
Article 9 Termination of Agreement 20
Article 10 Assignment 20
Article 11 Amendments 21
Article 12 Massachusetts Law to Apply 21
Article 13 Force Majeure 21
Article 14 Consequential Damages 21
Article 15 Merger of Agreement 22
Article 16 Limitations of Liability of Directors and
Shareholders 22
Article 17 New Series 22
Article 18 Counterparts 23
</TABLE>
Appendix A
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of the day of , 1993, by and between MetLife
Portfolios, Inc., which consists of series as listed on Appendix A (as such
Appendix may be amended from time to time) (the "Fund"), and STATE STREET BANK
AND TRUST COMPANY, a Massachusetts trust company having its principal office and
place of business at 225 Franklin Street, Boston, Massachusetts 02110 (the
"Bank").
WHEREAS, the Fund desires to appoint the Bank as its transfer agent,
dividend disbursing agent, custodian of certain retirement plans and agent in
connection with certain other activities, and the Bank desires to accept such
appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1 Terms of Appointment; Duties of the Bank
----------------------------------------
1.01 Subject to the terms and conditions set forth in this
Agreement, the fund hereby employs and appoints the Bank to act as, and the Bank
agrees to act, as its transfer agent for each class of the fund's authorized and
issued shares of beneficial interest ("Shares"), dividend disbursing agent,
custodian of certain retirement plans and agent in connection with any
accumulation, open-account, or similar plans provided to the shareholders of the
Fund ("Shareholders") and set forth in the currently effective prospectus and
statement of additional information ("prospectus") of one or more series of the
Fund,
1
<PAGE>
including without limitation any periodic investment plan or periodic withdrawal
program.
1.02 The Bank agrees that it will perform the following services
in accordance with procedures established from time to time by agreement between
the Fund and the Bank:
(a) Receive, for acceptance, orders for the purchase of Shares
and promptly deliver payment and appropriate documentation
thereof to the authorized Custodian of the Fund pursuant to
the Articles of Incorporation of the Fund (the "Custodian");
(b) Issue, pursuant to purchase orders, the appropriate number
of Shares and hold such Shares in the appropriate
Shareholder account:
(c) Receive, for acceptance, redemption requests and redemption
directions and deliver the appropriate documentation thereof
to the Custodian;
(d) Execute transactions described in subparagraphs (a), (b),
and (c) above directly with broker-dealers or other agents
authorized by the Fund which broker-dealers or other agents
shall, thereby, be deemed to be acting on behalf of the Fund
or the shareholders of the Fund;
(e) Pay, or cause to be paid, at the appropriate time with
respect to any redemption, monies
2
<PAGE>
received from the Custodian therefor, to, and in accordance
with instructions from, the redeeming shareholder;
(f) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(g) Prepare and transmit payments for dividends and
distributions declared by the Fund;
(h) Issue replacement certificates for those certificates
alleged to have been lost, stolen, or destroyed upon receipt
by the Bank of indemnification satisfactory to the Bank and
protecting the Bank and the Fund, and, at its option, issue
replacement certificates in place of mutilated stock
certificates upon presentation thereof and without such
indemnity;
(i) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(j) Record the issuance of Shares and maintain, pursuant to Rule
17Ad-10(e) adopted under the Securities Exchange Act of 1934
(or comparable regulation), a record of the total number of
Shares which are authorized, based upon data provided to it
by the Fund, and issued and outstanding; and shall also
provide the Fund
3
<PAGE>
on a regular basis with the total number of Shares which are
authorized and issued and outstanding but shall have no
obligation, when recording the issuance of Shares, to
monitor the issuance of such Shares, or to take cognizance
of any laws relating to the issue or sale of such Shares,
which functions shall be the sole responsibility of the
Fund;
(k) perform the customary services of a transfer agent, dividend
disbursing agent, custodian of certain retirement plans and,
as relevant, agent in connection with accumulation,
open-account or similar plans (including without limitation
any periodic investment plan or periodic withdrawal
program), including, but not limited to, maintaining all
Shareholder accounts, preparing Shareholder meeting lists,
mailing and tabulating proxies, mailing Shareholder reports
and prospectuses to current Shareholders, withholding taxes
on U.S. resident and non-resident alien accounts, preparing
and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders,
preparing and mailing confirmation forms and statements of
account
4
<PAGE>
to Shareholders for all purchases and redemptions of Shares
and other confirmable transactions in Shareholder accounts,
preparing and mailing activity statements for Shareholders,
and providing Shareholder account information and
(1) provide a system which will enable the Fund to monitor the
total number of Shares sold in each State and, in connection
therewith, to
(i) identify to the Bank in writing those transactions and
assets to be treated as exempt from Blue Sky reporting
for each State and
(ii) verify the establishment of transactions for each State
on the system prior to activation and thereafter
monitor the daily activity for each State.
The responsibility of the Bank for the Fund's Blue Sky State
registration status is solely limited to the initial
establishment of transactions subject to Blue Sky compliance
by the Fund and the reporting of such transactions to the
Fund as provided above.
(m) Monitor, and take action with respect to "As-Of
Transactions" (defined below) in Shares of the Fund as
follows:
5
<PAGE>
(i) Utilize, with respect to each class of Shares of the
Fund, a system to identify each purchase and redemption
order which is processed at a time other than the time
----- ----
of the computation of the net asset value per share
next computed after the receipt of such order by or on
behalf of the Fund ("As-of Transaction"), as well as
the party responsible therefor, and shall calculate the
net effect on each class of Shares of the Fund,
positive or negative, of such processing of orders on a
daily and cumulative basis. "Effect on a class of
Shares of the Fund" shall mean the amount, positive or
negative, equivalent to the difference between the per
share net asset value of such class of Shares on the
date on which the order is processed and the per share
net asset value of such class of Shares at the close of
business on the date on which the As-Of Transaction is
deemed posted ("As-Of Date") multiplied by the number
of Shares in the transaction, plus or minus, as
appropriated, any
6
<PAGE>
dividends or distributions earned on such class of
Shares during the period, and taking into account As-Of
Transactions "estimated" on the books and records of
the Fund in sufficient time to offset any effect on
such class of Shares of the Fund and As-Of Transactions
as to which reimbursement has been received by the Fund
with respect to such class of Shares from the party
responsible therefor;
(ii) Generate, and submit to the Fund periodically, as
instructed by the Fund, except as otherwise required by
(v) below, reports which show the accumulated net
effect on each class of Shares of the Fund, listed
separately as to each party responsible therefor, of
As-Of Transactions and which segregate those As-Of
Transactions as to which the Bank is responsible where
the net effect on the class of Shares of the Fund is
fifty dollars ($50.00) or more or, if the Effect on a
class of Shares of the Fund is less than $50.00, as to
which the As-Of Date is more than
7
<PAGE>
three (3) business days after the date on which the
purchase or redemption order is received by or on
behalf of the Fund;
(iii) Calculate, within ten (10) business days after the end
of each calendar year, the aggregate net effect of all
As-Of Transactions on each class of Shares of the Fund
for such year attributable to the party responsible
therefor and segregate those As-Of Transactions as to
which the Bank is responsible which are described in
(ii) above; if the aggregate net effect on a class of
Shares of the Fund as a result of such As-Of
Transactions as to which the Bank is responsible is (a)
a negative amount, promptly make a payment of such
amount to the Fund with respect to such class of
Shares, or (b) a positive amount, carry forward such
amount into the next calendar year as an offset against
negative effects on that class of Shares of the Fund
attributable to the Bank in such year;
8
<PAGE>
(iv) Make immediate payment to the Fund the amount of any
negative effect on the Fund of a single As-Of
Transaction with respect to a class of Shares of the
Fund for which the Bank is responsible and which equals
or exceeds the lesser of (a) $10,000 or (b) one half of
one cent per share times the number of Shares of such
class;
(v) Advise the Fund if at any time during a calendar year
the cumulative negative net effect on the Fund of As-Of
Transactions with respect to a class of Shares of the
Fund exceeds the lesser of (a) $10,000 or (b) one half
of one cent per share times the number of Shares of
such class.
(n) provide services on behalf of the Fund additional to those
set forth above (e.g., escheatment services) as may from
time to time be agreed upon in writing between the Fund and
the Bank.
1.03 Procedures as to who shall provide certain of these services
in Article 1 may be established from time to time by agreement between the Fund
and the Bank in accordance with the attached service responsibility schedule;
consequently, the Bank
9
<PAGE>
may at times perform only a portion of these services with the remainder of such
services performed by the Fund, or another agent acting on its behalf.
Article 2 Fees and Expenses
-----------------
2.01 For performance by the Bank pursuant to this Agreement, the Fund
agrees to pay the Bank an annual maintenance fee for each Shareholder account as
set out in the initial fee schedule attached hereto, adjusted in accordance with
the Risk & Reward Schedule attached hereto. Such fees and out-of-pocket expenses
and advances identified under Section 2.02 below may be changed from time time
subject to mutual written agreement between the Fund and the Bank.
2.02 In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse the Bank for out-of-pocket expenses, including but not
limited to confirmation production, postage, forms, microfilm, microfiche,
records storage, or advances incurred by the Bank for the items set forth in the
fee schedule attached hereto. In addition, any other expenses incurred by the
Bank at the written request, or with the written consent, of the Fund will be
reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses within
ten business days following the receipt of the respective billing notice.
Postage for mailing of dividends, proxies, Fund reports and other mailings to
all Shareholder accounts shall be billed to the Fund at the time of the
respective billing notice.
10
<PAGE>
Article 3 Representations and Warranties of the Bank
------------------------------------------
The Bank represents and warrants to the Fund that:
3.01 It is a trust company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the Commonwealth
of Massachusetts.
3.03 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.05 It has, and will continue to have, access to the necessary
facilities, equipment, and personnel to perform its duties and obligations
under this Agreement.
Article 4 Representations and Warranties of the Fund
------------------------------------------
The Fund represents and warrants to the Bank that:
4.01 It is a corporation duly organized and existing and in good
standing under the laws of the State of Maryland.
4.02 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
4.03 All proceedings required by said Articles of Incorporation and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
11
<PAGE>
4.04 Unless otherwise advised by the Fund, it is an open-end
management investment company registered under the Investment Company Act of
1940, as amended.
4.05 Unless otherwise advised by the Fund, a registration statement
under the Securities Act of 1933, as amended, is currently effective and will
remain effective and appropriate state securities law filings have been made
and will continue to be made with respect to all Shares of the Fund being
offered for sale.
Article 5 Date Access and Proprietary Information
---------------------------------------
5.01 The Fund acknowledges that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's ability to
access certain Fund-related data ("Customer Data") maintained by the Bank on
data bases under the control and ownership of the Bank or other third party
("Data Access Services") constitute copyrighted, trade secret, or other
proprietary information (collectively, "Proprietary Information") of substantial
value to the Bank or other third party. In no event shall Proprietary
Information be deemed Customer Data. The Fund agrees to treat all Proprietary
Information as proprietary to the Bank and further agrees that it shall not
divulge any Proprietary Information to any person or organization except as may
be provided hereunder. Without limiting the foregoing, the Fund agrees for
itself and its employees and agents:
12
<PAGE>
(a) to access Customer Data solely from locations as may be
designated in writing by the Bank and solely in
accordance with the Bank's applicable user
documentation;
(b) to refrain from copying or duplicating in any way the
Proprietary Information;
(c) to refrain from obtaining unauthorized access to any
portion of the Proprietary Information, and if such
access is inadvertently obtained, to inform in a timely
manner of such fact and dispose of such information in
accordance with the Bank's instructions;
(d) to refrain from causing or allowing third-party data
acquired hereunder from being retransmitted to any
other computer facility or other location, except with
the prior written consent of the Bank;
(e) that the Fund shall have access only to those
authorized transactions agreed upon by the parties;
(f) to honor all reasonable written requests made by the
Bank to protect at the Bank's expense the rights of the
Bank in Proprietary Information at common law, under
federal copyright law, and under other federal or state
law.
13
<PAGE>
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Article 5. The obligations of this Article shall
survive any earlier termination of this Agreement.
5.02 If the Fund notifies the Bank that any of the Data Access
Services do not operate in material compliance with the most recently issued
user documentation for such services, the Bank shall endeavour in a timely
manner to correct such failure. Organizations from which the Bank may obtain
certain data included in the Data Access Services are solely responsible for the
contents of such data and the Fund agrees to make no claim against the Bank
arising out of the contents of such third-part data, including, but not limited
to, the accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND
SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS,
AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE
EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
5.03 If the transactions available to the Fund include the ability to
originate electronic instructions to the Bank in order to (i) effect the
transfer or movement of cash or Shares or (ii) transmit Shareholder information
or other information, then in such event the Bank shall be entitled to rely on
the validity and authenticity of such instruction without undertaking any
further inquiry as long as such instruction is
14
<PAGE>
undertaken in conformity with security procedures established by the Bank from
time to time.
5.04 The Bank shall be responsible for providing quality control over
all information entered on the Fund's records and shall take sufficient measures
consistent with industry standards so that the magnetic and other data for which
it is responsible are reasonably likely to be safeguarded from destruction or
distortion in the event of electrical power failure, fire or other disruption,
including, but not limited to, provision for alternative power supplies and
daily transportation to a safe location of sufficient supporting and duplicate
data to enable the Bank to reconstruct any data which may be lost or destroyed
at the Bank's regular sites. Also, in the event data is lost or destroyed
through programming errors or systems malfunctions, the Bank will re-enter, at
its expense, such lost or destroyed data from duplicate or back-up records and
data. The Bank shall develop and maintain written plans and procedures, subject
to reasonable acceptance by the Fund, to provide for the recovery of records and
data in the event of a disaster.
Article 6 Indemnification
---------------
6.01 The Bank shall not be responsible for, and the Fund shall
indemnify and hold the Bank harmless from and against, any and all losses,
damages, costs, charge, counsel fees, payments, expenses, and liability arising
out of or attributable to:
15
<PAGE>
(a) All actions of the Bank or its agent or subcontractors
required to be taken pursuant to this Agreement, provided
that such actions are taken in good faith and without
negligence or willful misconduct;
(b) The Fund's lack of good faith, negligence, or willful
misconduct which results in of the breach of any
representation or warranty of the Fund hereunder;
(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents, or
services which
(i) are received by the Bank and its agents or
subcontractors and
(ii) have been prepared, maintained or performed by the
Fund, or any other person or firm on behalf of the
Fund, including but not limited to any previous
transfer agent or registrar;
(d) The reliance on, or the carrying out by the Bank or its
agents or subcontractors of, any instructions or requests of
the Fund; and/or
(e) The offer or sale of Shares in violation of
(i) any requirement under the federal securities laws or
regulations, or
16
<PAGE>
(ii) the securities laws or regulations of any state that
such Shares be registered in such state, or
(iii) in violation of any stop order or other determination
or ruling by any federal agency or any state with
respect to the offer or sale of such Shares in such
state.
6.02 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. The Bank
shall report to the Fund any action taken or omitted in reliance upon the
opinion of counsel. The Bank, its agents and subcontractors shall be protected
and indemnified in acting upon any paper or document furnished by or on behalf
of the Fund, reasonably believed to be genuine and to have been signed by the
proper person or persons, or upon any instruction, information, data, records,
or documents provided the Bank or its agents or subcontractors by machine
readable input, telex, CRT data entry or other similar means authorized by the
Fund, and shall not be held to have notice of any change of authority of any
person, until receipt of written notice thereof from the Fund. The Bank, its
agents and subcontractors shall also be
17
<PAGE>
protected and indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officers of
the Fund, and the proper countersignature of any former transfer agent or former
registrar, or of a co-transfer agent or co-registrar.
6.03 The Bank shall indemnify and hold the Fund harmless from and
against any claims brought by third parties based upon infringement of a United
States patent, copyright, or other proprietary right in connection with the use
by the Fund of the Proprietary Information, as defined in Article 5 hereof, in
accordance with the terms of this Agreement; provided that the Fund promptly
notifies the Bank in writing of such claim and permits the Bank, at the Bank's
expense, to defend any such claim. The Bank agrees to pay, without limitation,
all litigation costs, attorneys' fees, settlement payments and any damages
awarded or resulting from any such claim.
6.04 In order that the indemnification provisions contained in Section
6.01 of this Article 6 shall apply, upon the assertion of a claim for which the
Fund may be required to indemnify the Bank, the Bank shall promptly notify the
Fund of such assertion and shall keep the Fund advised with respect to all
developments concerning such claim. The Fund shall have the option to
participate with the Bank in the defense of such claim or to defend against said
claim in its own name or in the name of the Bank. The Bank shall in no case
confess any claim or make any compromise in any case in which the Fund may be
required to indemnify the Bank except with the Fund's prior written consent.
18
<PAGE>
Article 7 Standard of Care
----------------
7.01 The Bank shall at all times act in good faith and agrees to use
its best efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but assumes no responsibility and shall not be
liable for loss or damage due to errors not caused but its, or its employees',
negligence, bad faith, or willful misconduct. The Bank shall indemnify and hold
the Fund harmless from and against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable
to any action or failure or omission to act by the Bank as a result of the
Bank's lack of good faith, negligence or willful misconduct.
Article 8 Covenants of the Fund and the Bank
----------------------------------
8.01 The fund shall promptly furnish to the Bank the following:
(a) A certified copy of the resolution of the Board of Directors of
the Fund authorizing or ratifying the appointment of the Bank and
the execution and delivery of this Agreement.
(b) A copy of the Articles of Incorporation and By-Laws of the Fund
and all amendments thereto.
8.02 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms, and facsimile signature imprinting devices, if any;
and for the
19
<PAGE>
preparation or use, and for keeping account of, such certificates, forms, and
devices.
8.03 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained, and
made available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.
8.04 The Bank and the Fund agree that all books, records, information
and data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
8.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify the Fund and
to secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
20
<PAGE>
Article 9 Termination of Agreement
------------------------
9.01 This Agreement may be terminated by the Fund upon sixty (60)
days written notice to the Bank and by the Bank upon one hundred twenty (120)
days written notice to the Fund.
9.02 Should the Fund or the Bank exercise its right to terminate,
all out-of-pocket expenses associated with the movement of records and material
will be borne by the party exercising the right. Additionally, the terminated
party reserves the right to charge for any other reasonable expenses associated
with such termination.
Article 10 Assignment
----------
10.01 Except as provided in Section 8.03 below, neither this
Agreement nor any rights or obligation hereunder may be assigned by either party
without the written consent of the other party.
10.02 This Agreement shall inure to the benefit of and may be binding
upon the parties and their respective permitted successors and assigns.
10.03 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with Boston Financial Data Services,
Inc., a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A(c) (1) of the Securities Exchange Act of
1934, as amended; provided, however, that the Bank shall be as fully responsible
to the Fund for the acts and omissions of any subcontractor as it is for its
own acts and omissions.
21
<PAGE>
Article 11 Amendments
----------
11.01 This Agreement may be amended or modified by a written
agreement executed by both parties.
Article 12 Massachusetts Law to Apply
--------------------------
12.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
Article 13 Force Majeure
-------------
13.01 Except as set forth in Section 5.04 of Article 5 herein, in the
event either party is unable to perform its obligations under the terms of this
Agreement because of acts of God, strikes, equipment or transmission failure or
damage reasonably beyond its control, or other causes reasonably beyond its
control, such party shall not be liable for damages to the other for any damages
resulting from such failure to perform or otherwise from such causes.
Article 14 Consequential Damages
---------------------
14.01 Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
Article 15 Merger of Agreement
-------------------
15.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
22
<PAGE>
Article 16 Limitations Liability of Directors and Shareholders
---------------------------------------------------
16.01 It is expressly agreed that the execution and delivery of this
Agreement and the obligations of the Fund hereunder shall not be binding upon
any of the Directors, shareholders, nominees, officers, agents or employees of
the Fund as individuals or personally, but shall bind only the property of the
Fund. This Agreement shall not be deemed to have been made individually or to
impose any personal liability, but shall bind only the property of the Fund. The
Articles of Incorporation of the Fund provide, and it is expressly agreed that
each series of the Fund shall be solely and exclusively responsible for the
payments of its debts, liabilities and obligations, and that no other series
shall be responsible for the same. Each series is responsible for its portion of
corporate expenses.
Article 17 New Series.
----------
17.01 In the event that the Fund establishes one or more new series,
in addition to the series names herein, which the Fund desires to have included
in this Agreement, the Fund shall provide written notice to the parties hereto
and if such parties provide written consent to include such new series, such new
series shall become a party hereunder. Similarly, a new Fund may be included
hereunder by written notice to the parties hereto and the consent of all such
parties.
17.02 Liability for fees, out-of-pocket expenses, as-of-trade
adjustments and other obligations herein which relate
23
<PAGE>
to a particular series shall not be the responsibility of any other series.
Article 18 Counterparts
------------
18.01 This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
IN WITNESS WHEREOF,the parties hereto have caused this Agreement to
be executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
METLIFE INTERNATIONAL EQUITY FUND
BY:_____________________________________
METLIFE INTERNATIONAL FIXED INCOME FUND
BY:_____________________________________
ATTEST:
_____________________________
STATE STREET BANK AND TRUST COMPANY
BY:_____________________________
Executive Vice President
ATTEST:
_____________________________
Assistant Secretary
24
<PAGE>
APPENDIX A
----------
The following Funds are parties to this Agreement, and have so indicated
their intention to be bound by such Agreement by executing the Agreement on the
dates indicated thereon.
MetLife Portfolios, Inc.
MetLife International Equity Fund
MetLife International Fixed Income Fund
<PAGE>
EXHIBIT 8C
SHAREHOLDERS' ADMINISTRATIVE SERVICES AGREEMENT
-----------------------------------------------
Agreement made as of January 17, 1992, by MetLife Portfolios, Inc. (the
"Corporation") on behalf of its series, as listed in Appendix I hereto (as the
same may be amended to add or delete one or more investment companies or series)
and MetLife-State Street Investment Services, Inc. ("MLSSISI");
WHEREAS, the Corporation is a registered investment company and desires
that MLSSISI perform certain services for its series and
WHEREAS, MLSSISI is willing to perform such services for the Corporation
and the series thereof, as well as for other investment companies (each
portfolio series thereof called a "Fund") for which MLSSISI acts as investment
adviser and distributor (the "Adviser" or the "Distributor") upon the terms and
subject to the conditions set forth herein;
In consideration of the mutual promises and covenants set forth, the
parties agree as follows:
1. Shareholders' Administrative Services. MLSSISI shall provide shareholders'
--------------------------------------
administrative services for the Corporation, as distinguished from the transfer
agent and dividend disbursing agent services otherwise provided by Citadel
Services Company, Inc. ("CSC"). Shareholders' administrative services shall
include, but not be limited to, responding to telephone, written or other
inquiries or instructions from shareholders, dealers and prospective investors
concerning account balances, available shareholder services, account statements,
transaction confirmations, procedures for purchasing and redeeming shares and
similar matters and services; accepting and monitoring receipts of
<PAGE>
wire order trades (including trades processed via the National Securities
Clearing Corporation Fund/Serv system); receiving telephone transaction
instructions and inputting such instructions into the transfer agent's computer
system; operating the MetLife-State Street Service Center and providing the
services for which the center is responsible as described in the Corporation's
then current Prospectus; and performing such other functions as the Corporation
and MLSSISI shall determine from time to time ("Shareholders' Administrative
Services").
2. Reimbursement. The Corporation shall reimburse MLSSISI for its costs in
--------------
providing such Shareholders' Administrative Services. Such costs shall include,
but not be limited to, compensation of personnel, leasehold expenses, computer
and related equipment expenses, telephone charges, telephone equipment expenses,
and expenses for furniture and fixtures. Reimbursement shall be limited as
described herein under "Limitation of Expenses".
3. Limitation of Expenses. The aggregate amount to be paid by the Corporation
-----------------------
to MLSSISI as reimbursements under this Agreement, paid by the Corporation to
CSC under paragraphs 2 and 19 of the Transfer Agent and Dividend Disbursing
Agent Agreement dated December 31, 1991 between the Corporation and CSC, and
paid by the Corporation pursuant to any subadministration agreements as
described herein under "Subadministration Agreements", shall be no greater (and
may be less) than the sum of the amounts calculated as percentages of the
average daily net assets values of each Fund of the Corporation determined, on
an annual basis, as follows:
<TABLE>
<CAPTION>
% Fund
--- ----
<S> <C>
.30 International Equity Fund
.30 International Fixed Income Fund
</TABLE>
<PAGE>
The designated maximum amounts shall be applied first to amounts due to
CSC, then to amounts due under any subadministration agreements, and last to
reimbursements to MLSSISI for Shareholders' Administrative Services. MLSSISI
shall however be liable for all such amounts due in excess of such designated
amounts and shall continue to provide Shareholders' Administrative Services
notwithstanding that all or any portion of its costs are not reimbursed by the
Corporation. All amounts due from the Corporation shall be apportioned by
MLSSISI to each Fund in accordance with methodologies approved from time to time
by the Directors of the Corporation,
4. Terms. This Agreement may be terminated at any time on not less than sixty
------
(60) days written notice given by the Corporation to MLSSISI, or six (6) months
written notice by MLSSISI to the Corporation.
5. Duty of Care and Indemnification. MLSSISI will at all times use reasonable
---------------------------------
care and act in good faith in performing Shareholders' Administrative Services
hereunder. MLSSISI shall be responsible for providing quality control over all
information entered on the records of the Corporation's transfer agent. MLSSISI
will not be liable or responsible for delays or errors owing to circumstances
beyond its control, including, without limitation, acts of civil or military
authority, national or state emergencies, labor difficulties, fire, mechanical
breakdown, flood or catastrophe, acts of God, insurrection, war, riots or
failure of transportation, communication or power supply.
MLSSISI may rely on certifications and instructions of an officer of the
Corporation as to proceedings or facts in connection with any action taken by
the shareholders or the Directors of the Corporation. MLSSISI may apply to
counsel for the Corporation, at the Corporation's expense, for advice whenever
it deems expedient. With respect to any action taken on the basis of such
certifications or instructions or in accordance with the
<PAGE>
advice of counsel for the Corporation, the Corporation will indemnify and hold
harmless MLSSISI from any and all losses, claims, damages, liabilities and
expenses (including reasonable counsel fees and expenses).
The Corporation will indemnify MLSSISI against and hold MLSSISI harmless
from any and all losses, claims, damages, liabilities and expenses (including
reasonable counsel fees and expenses) in respect of any claim, demand, action or
suit not resulting from MLSSISI's bad faith or negligence and arising out of, or
in connection with, its performance of Shareholders' Administrative Services on
behalf of a Fund under this Agreement.
MLSSISI shall also be indemnified and held harmless by the Corporation
against any loss, claim, damage, liability and expense (including reasonable
counsel fees and expenses) by reason of any act done by it in good faith and in
reliance upon any instrument believed by it (a) to be genuine and (b) to be
signed, countersigned or executed by any person or persons authorized to sign,
countersign, or execute such instrument.
6. Limitation of Liability. A copy of the Articles of Incorporation of the
------------------------
Corporation is on file with the Department of Assessments and Taxation of the
State of Maryland, wherein it states that generally the assets belonging to any
class of stock shall be charged with the liabilities in respect of each class
and with the allocable portion of the overall liabilities of the Corporation.
7. Subadministration Agreements. Officers of MLSSISI and the Corporation may
-----------------------------
enter into subadministration agreements with outside parties, for the provision
of subadministration services for certain shareholder accounts, provided that
the fee payable by the Corporation for such subadministration services shall
not exceed the cost that would
<PAGE>
otherwise be incurred hereunder and under the said Transfer Agent and Dividend
Disbursing Agent Agreement between the Corporation and CSC if such services were
provided directly by CSC and MLSSISI for such accounts. Such officers may also
enter into subadministration agreements where the requisite subadministration
services are not otherwise available from MLSSISI or CSC.
8. Miscellaneous. In the event that the Corporation establishes one or more
--------------
new Funds, in addition to the Funds named in Appendix I, which the Corporation
desires to have included in this Agreement, the Corporation shall provide
written notice to MLSSISI and if MLSSISI provides written consent to include
such new Fund, such new Fund shall become a party hereunder.
This Agreement may not be assigned by any party without the express written
consent of the other parties.
This Agreement shall be construed in accordance with and governed by the
laws of the State of New York.
IN WITNESS hereto, the parties have executed this Agreement as of the date
first set forth above.
METLIFE PORTFOLIOS, INC.
BY: /s/ Jeffrey J. Hodgman
--------------------------
Title: President
<PAGE>
METLIFE - STATE STREET INVESTMENT SERVICES, INC.
By: /s/ George Trotta
---------------------
Title: President
<PAGE>
APPENDIX I
----------
MetLife International Equity Fund
MetLife International Fixed Income Fund
<PAGE>
EXHIBIT 8D
SERVICE AGREEMENT
Agreement made as of January 17, 1992, by MetLife Portfolios, Inc. (the
"Corporation") on behalf of its series, as listed in Appendix I ("Fund" or
"Funds") (as the same may be amended to add or delete one or more investment
companies or series), Metropolitan Life Insurance Company ("MetLife") and
MetLife-State Street Investment Services, Inc. ("MLSSISI");
WHEREAS, MLSSISI is the Investment Manager for the Funds of the Corporation
and as such is obligated to perform certain services for, and to provide certain
facilities and personnel for, the Corporation and its Funds;
WHEREAS, MetLife is willing to furnish certain of these services,
facilities and personnel to the Corporation and the series thereof on behalf of
MLSSISI, upon the terms and subject to the conditions set forth herein;
In consideration of the mutual promises and covenants set forth, the
parties agree as follows:
1. MetLife will perform such services and will provide such facilities and
personnel as MLSSISI may from time to time request in connection with
MLSSISI's obligations under the Investment Management Agreement between the
Corporation and MLSSISI dated January ,1992; provided however, that MetLife
will not perform any services hereunder that could constitute providing
investment advisory services for the Corporation.
<PAGE>
2. MLSSISI agrees to compensate MetLife for MetLife's actual costs incurred in
furnishing these services, facilities and personnel.
3. Term. This Agreement may be terminated at any time on not less than sixty
-----
(60) days written notice given by any party to the others.
4. Duty of Care and Indemnification. MetLife will at all times use reasonable
---------------------------------
care and act in good faith in performing services hereunder. MetLife will not be
liable or responsible for delays or errors owing to circumstances beyond its
control, including, without limitations, acts of civil or military authority,
national or state emergencies, labor difficulties, fire, mechanical breakdown,
flood or catastrophe, acts of God, insurrection, war, riots or failure of
transportation, communication or power supply.
MLSSISI will indemnify MetLife against and hold MetLife harmless from any
and all losses, claims, damages, liabilities and expenses (including reasonable
counsel fees and expenses) in respect of any claim, demand, action or suit not
resulting from MetLife's bad faith or negligence and arising out of, or in
connection with, its performance of services under this Agreement.
MetLife shall also be indemnified and held harmless by MLSSISI against any
loss, claim, damage, liability and expense (including reasonable counsel fees
and expenses) by reason of any act done by it in good faith and in reliance upon
instrument believed by it (a) to be genuine and (b) to be signed, countersigned
or executed by any person or persons authorized to sign, countersign, or execute
such instrument.
<PAGE>
5. Miscellaneous. In the event that the Corporation establishes one or more
--------------
new Funds, in addition to the Funds named in Appendix I, which the Corporation
desires to have included in this Agreement, the Corporation shall provide
written notice to MLSSISI and MetLife and if MLSSISI provides written consent to
include such new Fund, such new Fund shall become covered hereunder.
This Agreement may not be assigned by any party without the express written
consent of the other parties.
This Agreement shall be construed in accordance with and governed by the
laws of the State of New York.
IN WITNESS hereto, the parties have executed this Agreement as of the date
first set forth above.
METLIFE PORTFOLIOS, INC.
By: /s/ Jeffrey J. Hodgman
----------------------
Title:
<PAGE>
METLIFE - STATE STREET INVESTMENT SERVICES, INC.
By: /s/ George Trotta
-----------------------------
Title:
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ Richard M. Blackwell
-----------------------------
Title:
<PAGE>
APPENDIX I
MetLife International Equity Fund
MetLife International Fixed Income Fund
<PAGE>
SUB-ADMINISTRATION AGREEMENT
----------------------------
AGREEMENT, effective May 1, 1993 by and between State Street Bank and Trust
Company ("the Bank"), a Massachusetts trust Company with its principal office
located at 225 Franklin Street, Boston, Massachusetts 02110; Metropolitan Life
Insurance Company ("Metropolitan"), a New York corporation with its principal
office located at One Madison Avenue, New York, New York 10010; State Street
Research Investment Services, Inc. ("State Street Research"), a Massachusetts
corporation with its principal office located at One Financial Center, Boston,
Mass. 02111; and MetLife Portfolios, Inc., a Maryland corporation with its
principal office located at One Madison Avenue, New York, New York 10010
("Portfolios");
WHEREAS, Portfolios is an investment company, registered under the
Investment Company Act of 1940, as amended, with its own series (the "Funds");
WHEREAS, State Street Research provides shareholders administrative
services for the Funds;
WHEREAS, the Bank is the transfer agent, dividend disbursing agent and
shareholder accounting agent for the Funds; and
WHEREAS, Metropolitan has created a program of services and products, which
include prototype defined contribution pension plans and funding choices for the
plans adopted by employer-sponsors of the plans (the "Program"), which funding
choices include the Funds sold by MetLife Securities, Inc. ("MSI"), a
<PAGE>
broker-dealer subsidiary of Metropolitan, in its capacity as an introducing
broker-dealer; and
WHEREAS, The United States Trust Company ("U.S. Trust") is the trustee of
the employer defined contribution plans under the Program and Banco De Ponce is
the trustee of each employer defined contribution plan under the Program which
has a legal situs in the Commonwealth of Puerto Rico; and
WHEREAS, shares of the Funds attributable to plans under the Program are
held in the name of U.S. Trust and Banco De Ponce as trustees of the Program;
and
WHEREAS, U.S. Trust, by agreement dated January 1, 1991, has agreed to
appoint Metropolitan as its agent in the keeping of records for plans in the
Program; and
WHEREAS, Banco De Ponce, by agreement dated August 9, 1990, has agreed to
appoint Metropolitan as its agent in the keeping of records for plans in the
Program which have their legal situs in the Commonwealth of Puerto Rico; and
WHEREAS, Metropolitan is willing and able to perform the sub-administrative
services for the plans on the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter contained, the parties hereby agree, as follows:
1. Metropolitan agrees to perform, subject to instructions from the Bank
and State Street Research, the sub-administrative services and functions
specified in Exhibit A hereto (the
2
<PAGE>
"Services") for the benefit of plans in the Program for shares of the Funds and
which plans are included in the accounts referred to in paragraph 1 of Exhibit
A. Metropolitan represents that each plan in the Program is aware of and agrees
to the arrangements provided for in this Agreement.
2. Metropolitan will maintain and preserve all records as required by law
to be maintained and preserved in connection with providing the Services, and
will otherwise comply with all laws, rules and regulations applicable to the
Services. Upon the request of the Bank or State Street Research, Metropolitan
shall provide copies of all the historical records relating to transactions
involving the Funds and plan, written communications regarding the Funds to or
from such plans and other materials, in each case as may reasonably be requested
to enable the Bank or State Street Research or their representatives, including
their auditors, to monitor and review the Services, or to comply with any
request of a governmental body or self-regulatory organization or a shareholder.
Metropolitan agrees that it will permit the Bank, State Street Research or such
representatives to have reasonable access to its personnel and records in order
to facilitate the monitoring of the quality of the Services. Among other things
Metropolitan agrees to provide at the request of the Bank or State Street
Research a complete and accurate set of mailing labels with the name and address
of each plan in the Program for whom it is providing services under this
Agreement, and also upon such request both a plan accounting history in
3
<PAGE>
machine readable form of each plan account and a printout thereof.
3. Metropolitan hereby agrees to promptly notify the Bank and State Street
Research if for any reason it is unable to perform fully and promptly any of its
obligations with respect to any plan under this Agreement.
4. In no way shall the provisions of the Agreement limit the authority of
the Bank or State Street Research to take such action as it may deem appropriate
or advisable in connection with all matters relating to the operations of the
Funds and the sale of shares of the Funds.
5. In consideration of the performance of Services by Metropolitan,
Metropolitan shall receive compensation for services rendered, as set forth in
the Appendix to this Agreement. Metropolitan shall also be reimbursed for
postage, handling fees and the reasonable cost of supplies used by Metropolitan
in the performance of the Services specified in Item 4 of Exhibit A. Payment for
services rendered shall be billed monthly by Metropolitan and shall be based
upon the services rendered and the number of participants in the Program who
have chosen any of the Funds as a funding vehicle under their plans and to whom
shares have been sold by MSI during any part of the subject month. Such number
shall be certified each month by an officer of Metropolitan and shall be
certified once each year by Metropolitan's independent public accountants as of
a month selected by State Street Research, such certification to be at
4
<PAGE>
Metropolitan's expense. Reimbursement for Metropolitan's out-of-pocket expenses
described in this paragraph shall be made quarterly upon receipt of
Metropolitan's billing therefor. Subject to the Limitation of Expenses under a
certain Shareholders' Administrative Services Agreement, the Funds shall be
liable for compensation and reimbursements owed to Metropolitan under this
paragraph
6. Metropolitan agrees to indemnify and hold harmless the Bank and State
Street Research against any claim or liability which the Bank or State Street
Research may incur as a result of any negligent acts or omissions to act by
Metropolitan in connection with Services provided by Metropolitan under the
Agreement, including reasonable legal fees and other costs of defending against
such claim or liability, except to the extent such claim or liability arises
from the Bank's or State Street Research's intentional misconduct, criminal acts
or negligent performance of its duties under this Agreement. In order to avail
itself of the provisions for indemnification under this Agreement, the Bank or
State Street Research must notify Metropolitan in writing of the commencement of
an action within ten (10) days of receipt of a summons, and/or summons and
complaint or other pleading commencing such action or other proceeding. Failure
to make a timely notification will not relieve Metropolitan from any obligation
to provide indemnification if the failure has not had a material, adverse effect
on Metropolitan's position.
5
<PAGE>
Once notification of the commencement of any action or proceeding is given,
Metropolitan will be entitled to participate in the action or proceeding to the
extent it may wish, including, assuming the defense of the action and selecting
counsel. In any event, Metropolitan shall not be liable for indemnification
under this Agreement in the case where a settlement of the action or proceeding
is reached unless Metropolitan has consented to such settlement.
7. This Agreement may be terminated at any time by any party upon 120
days' written notice to the other party.
8. This Agreement shall not be assigned by any party without the written
consent of the other parties.
9. It is expressly understood that this Agreement represents the entire
understanding between the parties and may not be modified except by amendment in
writing signed by the parties. No oral agreements or representations shall be
binding.
10. This Agreement shall be governed and interpreted under the laws of the
laws of the Commonwealth of Massachusetts.
11. All notices, requests and demands shall be given or made upon the
respective parties hereto as follows:
Metropolitan: Metropolitan Life Insurance Company
One Madison Avenue
New York, N.Y. 10010
Attn: Gail Praslick, Vice-President
copy to Myra Saul, Esq.
Law Department
Metropolitan Life Insurance Company
One Madison Avenue
New York, N.Y. 10010
6
<PAGE>
Bank: State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Attn:
Portfolios: MetLife Portfolios, Inc.
One Madison Avenue
New York, N.Y. 10010
Attn: Secretary
State Street State Street Research Investment
Research: Services, Inc.
One Financial Center
Boston, MA 0211
Attn: Susan DiFazio
or such other address or to the attention of some other individual which a party
may designate in a written notice to the other parties.
12. All notices, requests and demands given or made in accordance with the
provisions of this Agreement shall be deemed to have been given or made when
received.
13. This Agreement may be amended by letter at any time to add any MetLife-
State Street or State Street Research investment companies or to add any
additional investment companies as parties. Such amendment shall become
effective upon execution by Metropolitan, Bank, State Street Research, any of
the MetLife-State Street and State Street Research investment companies and any
new party, subject to such further terms as may be provided in such amendment.
14. This Agreement shall govern the various obligations, rights and
liabilities of the parties in connection with all accounts, including those
established in the name of any
7
<PAGE>
successors to U.S Trust and Banco de Ponce, established in connection with the
Program.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
Metropolitan Life Insurance Company
By: /s/ Gail F. Praslick
--------------------------------
Title Vice President
State Street Bank and Trust Company
By: /s/ Michael L. Williams
--------------------------------
Title Vice President
State Street Research Investment Services, Inc.
By: /s/ Donald E. Weber
--------------------------------
Title President
MetLife Portfolios, Inc.
By: /s/ Jeffrey J. Hudgman
--------------------------------
Title President
8
<PAGE>
EXHIBIT A
Pursuant to its Sub-Administration Agreement, Metropolitan shall perform
the following services:
1. Maintain separate records for each plan, which includes individual
participant recordkeeping, in the Program which has chosen the Funds as a
funding vehicle, which records shall reflect shares purchased and redeemed and
share balances. The Bank shall maintain two accounts on behalf of all plans. One
account shall be for those plans with U.S. Trust; the other account shall be
for those plans with Banco De Ponce. Each account shall be in the name of the
respective trustee as the record owner of such shares.
2. Disburse or credit to each plan and participant all proceeds of
redemptions of shares of the Fund, except where proceeds are to be redeemed to
pay plan expenses incurred by an employer-sponsor of a plan, and all dividends
and other distributions not reinvested in shares of the Fund.
3. Prepare and transmit to each plan and participant periodic statements
showing the total number of shares owned by the plan and participant as of the
statement closing date, purchases and redemptions of shares of the Funds by the
plan and participant during the period covered by the statement and the
dividends and other distributions paid to the plan and participant during the
statement period (whether paid in cash or reinvested in Fund shares of the
Funds).
4. Transmit to plans and/or participants prospectuses, proxy materials,
reports, and other information as required under the federal and state
securities and tax laws.
5. Transmit to the Bank and State Street Research purchase and redemption
orders on behalf of each plan and participant.
6. Transmit to the Bank and State Street Research such periodic reports
as the Funds shall reasonably conclude are necessary to enable the Funds and
their distributor to comply with state Blue Sky requirements.
7. Perform as necessary all other services and recordkeeping for each
plan and participant that the Bank and State Street Research otherwise directly
provides with respect to the Funds' beneficial shareholders under the Bank's
Shareholder's Servicing and Transfer Agent Agreement, and MetLife-State
Investment Services, Inc.'s (now known as State Street Research Investment
Services, Inc.) Shareholders' Administrative Services Agreement, as both may be
amended from time to time and are incorporated by reference herein, with the
Funds to the extent
9
<PAGE>
that the Bank or State Street Research is obligated but unable to perform such
services because the requisite records are maintained hereunder by Metropolitan.
10
<PAGE>
APPENDIX
Compensation Payable to Metropolitan
1. From May 1, 1993 through September 30, 1993, Metropolitan shall be paid at
the annual rate of $4.50 per participant in each plan in the Program for
which Metropolitan is providing the Services.
2. Effective October 1, 1993, this compensation shall be at an annual rate of
$11.00 per participant. Metropolitan shall not request any increase in
compensation to be effective prior to September 30, 1996.
11
<PAGE>
EXHIBIT 9
LICENSE AGREEMENT
-----------------
AGREEMENT made as of the 17th day of January, 1992 between Metropolitan Life
---- -------
Insurance Company ("MetLife"), a mutual insurance company organized and existing
under the laws of the state of New York, with its principal place of business at
One Madison Avenue, New York, New York 10010, and MetLife Portfolios Inc.
("Licensee"), a stock corporation organized and existing under the laws of
Maryland, with its principal place of business at One Madison Avenue, New York,
New York 10010.
RECITALS
--------
Since 1868, MetLife has conducted its business under its corporate name
METROPOLITAN LIFE INSURANCE COMPANY. At later dates in its history, MetLife has
conducted business under the names of METROPOLITAN, METROPOLITAN LIFE, METLIFE,
MET LIFE and MET, all sometimes referred to below as the "Trade Names." The
Trade Names have come to identify MetLife in the mind of the public.
MetLife has adopted and is presently using the service marks set forth in
Exhibit A as the "Licensed Marks."
In view of the relationship between MetLife and Licensee and MetLife's ultimate
ability to protect its Trade Names and the Licensed Marks and the good will
associated with them, MetLife is willing to grant permission to Licensee to use
the Licensed Marks in accordance with the terms and conditions set forth below.
In consideration of the mutual promises contained in this Agreement, and other
good and valuable consideration, the parties agree as follows:
TERMS AND CONDITIONS
--------------------
1. MetLife hereby grants Licensee on a royalty-free, non-exclusive and
non-transferable basis, and subject to the terms and conditions set forth below,
a license to use the Licensed Marks in connection with the business and affairs
of Licensee. From time to time, MetLife may add or delete Licensed Marks on the
list set forth in Exhibit A.
2. Licensee agrees that, as long as the license granted under this Agreement
is in effect, it shall conduct its affairs in a lawful and ethical manner so as
to avoid any disparagement of MetLife's name, the Trade Names and the Licensed
Marks, or damage to MetLife's reputation and good will.
3(a). Upon the request of MetLife in any instance, proposed uses
<PAGE>
of the Licensed Marks by Licensee shall be submitted to MetLife in advance of
use. In its sole and absolute discretion, MetLife shall have the right to reject
any use which it finds inappropriate for any Licensed Mark or MetLife's
reputation and goodwill.
(b). Licensee agrees that it shall not use, and shall not permit or suffer
others to use, any identification with MetLife, its corporate name, the Trade
Names or the Licensed Marks, in contravention of any general or specific rules,
regulations, standards, guidelines and directions of MetLife governing that use.
Licensee agrees that MetLife may establish rules, regulations, standards,
guidelines and directions and amend them from time to time, all in its sole and
absolute discretion.
4. Licensee agrees to cooperate fully with MetLife to retain MetLife's rights
in and to the Trade Names and the Licensed Marks, and further agrees to do any
and all things reasonably requested by MetLife in connection with that
protection. MetLife agrees to cooperate fully with Licensee to assure that
Licensee will have and fully enjoy the benefit of the Licensed Marks, subject to
the terms of this Agreement.
5. MetLife shall have the sole and absolute right to terminate all or any
portion of the permissions granted by this Agreement or pursuant to it at any
time, with or without cause. MetLife shall give reasonable advance notice (which
under no circumstances need be more than thirty (30) days) of any termination.
Furthermore, MetLife shall not be required to give any advance notice whatsoever
(a) if it believes in good faith that Licensee has breached this Agreement (b)
if, in the opinion of MetLife's General Counsel (or any attorney working under
him), the continued use of the Licensed Marks or any other identification with
MetLife, including, without limitation, identification through the Trade Names,
might subject MetLife to any substantial disadvantage, or (c) if Licensee shall
cease to have a currently effective investment management agreement with MetLife
or an entity in which MetLife has a majority ownership interest.
6. Upon receipt of notice that the license to use the Licensed Marks is being
or has been terminated, Licensee shall take immediate steps to effectuate a
change so that the Licensed Marks shall no longer be used as of the effective
date of the termination.
7. The failure of MetLife at any time to enforce any provisions of this
Agreement or to exercise any right provided under it shall in no way be
construed as a waiver of any provision or right, or in any way affect the
validity of this Agreement or any part of it or MetLife's right thereafter to
enforce each and every provision and to exercise each and every right.
8(a). MetLife represents and warrants that it has the power to enter into
this agreement and, to the best of its knowledge, that it has the necessary
rights to license the Licensed Marks pursuant
<PAGE>
to the terms and conditions of this agreement.
(b). Licensee represents and warrants that it has the power to enter into
this agreement and that it will only use the Licensed Marks in accordance with
its terms.
(c). Licensee shall indemnify MetLife and hold it harmless from and against
any damages which MetLife may sustain as a result of a breach arising out of any
action or inaction by Licensee or by any employee, officer, director, agent,
affiliate, subsidiary, partnership or joint venture in which Licensee may have
an interest.
9. Nothing contained in this Agreement shall be construed as granting
permission to Licensee to claim any Trade Name or the Licensed Marks as a trade
name or service marks in which it shall have a proprietary interest. Under no
circumstance shall Licensee attempt to register any trade name or any element of
any trade name or service mark now owned or later adopted by MetLife.
10. If a dispute should arise between the parties over any matter arising out
of, or relating to, this Agreement, that dispute may, at the option of either
party, be determined in accordance with the New York Simplified Procedure for
Court Determination of Disputes (Section 3031, et seq. of the New York Civil
-- ---
Practice Law and Rules) in the Supreme Court of the State of New York, County of
New York. Each party consents to the jurisdiction of that Court for that
purpose. Nothing contained in this Agreement shall affect MetLife's absolute
rights under this Agreement to terminate the permissions granted under this
agreement.
11. This Agreement shall be interpreted in accordance with the law of the State
of New York. It sets forth the full and complete understanding of the parties
with respect to its subject matter and may not be modified or terminated (other
than by its terms) except in writing. This agreement may be executed in
counterparts, each of which shall constitute an original agreement. It shall be
binding upon the parties and their successors and assigns. In the event any
provision of this Agreement is found to be void or unenforceable, the remaining
provisions shall remain in full force and effect. Where appropriate in context,
the use of the singular shall include the plural, the neuter shall include the
masculine and feminine and vice versa.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective proper officers, duly authorized by each.
METROPOLITAN LIFE INSURANCE COMPANY METLIFE PORTFOLIOS, INC.
By: /s/ Richard M. Blackwell By: /s/ Jeffrey J. Hodgman
------------------------- -------------------------
Title: Senior Vice President Title: President
---------------------- ---------
<PAGE>
Exhibit 10
[LETTERHEAD OF PIPER & MARBURY]
February 23, 1994
MetLife Portfolios, Inc.
One Madison Avenue
New York, New York 10010
Re: Registration Statement on Form N-1A
(File Nos 33-42129: 811-6375)
-----------------------------------
Dears Sirs:
We have acted as special Maryland counsel to MetLife Portfolios,Inc., a
Maryland corporation (the "Corporation"), in connection with the filing with the
Securities and Exchange Commission of a registration statement on Form N-1A
(File Nos. 33-42129; 811-6375), as amended (the "Registration Statement"),
registering an indefinite number of Class A, Class B, Class C and Class D shares
of the MetLife International Equity Fund and MetLife International Fixed Income
Fund series (the "Series") of the Corporation's Common Stock, par value $0.01
per share, under the Securities Act of 1933, as amended. In our capacity as
special counsel to the Corporation, the Corporation, we have examined the
charter and by-laws of the Corporation, Post-Effective Amendment No.3 to the
Registration Statement, the corporate action taken by the Corporation that
provides for the issuance of the Class A, Class B, Class C and Class D shares of
the Series, and such other documents and matters as we have deemed necessary and
appropriate to render the opinions set forth in this letter. In reaching the
opinions set forth below, we have assumed all documents submitted to us as
originals are authentic, all documents submitted to us as certified or
photostatic copies conform to the original documents, all signatures on all
documents submitted to us for examination are genuine, and all public records
reviewed are accurate and complete.
Based upon and subject to the foregoing and limited in all respects to
applicable Maryland law, we are of the opinion that an aggregate of 100,000,000
Class A, Class B, Class C and Class D shares of each Series (the "Shares") have
been duly authorized for issuance and, when issued and paid for as described in
the Registration Statement, such Shares will be, under the general corporate
laws of the State of Maryland, validly issued, fully paid and nonassessable.
<PAGE>
PIPER & MARBURY
MetLife Portfolios, Inc.
February 23, 1994
Page 2
We hereby consent to the filing of this opinion letter as an exhibit
to the Registration Statement and to the reference to our firm and the opinions
set forth herein in the Registration Statement.In giving our consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended,or the rules and
regulations of the Securities and Exchange Commission thereunder.
Messrs. Sullivan & Worcester are authorized to rely on this opinion
letter in rendering their opinions to you in connection with the Registration
Statement.
Very truly yours,
/s/ Piper & Marbury
<PAGE>
EXHIBIT 11
INDEPENDENT AUDITORS' CONSENT
State Street Research Portfolios, Inc.
We consent to the use in Post-Effective Amendment No. 6 to Registration
Statement No. 33-42129 of State Street Research Portfolios, Inc. ("Portfolios")
(formerly MetLife Portfolios, Inc.) of our reports dated December 15, 1995
appearing in the Statement of Additional Information, which is a part of such
Registration Statement, and to the reference to us under the caption
"Independent Accountants" in such Statement of Additional Information and to
the reference to us under the caption "Financial Highlights" appearing in the
Prospectus, which is also a part of such Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Boston, Massachusetts
February 29, 1996
<PAGE>
EXHIBIT 13
STOCK PURCHASE AGREEMENT
------------------------
Agreement between Metropolitan Life Insurance Company (hereinafter
"Metropolitan"), a mutual life insurance company existing under and by virtue of
the laws of the State of New York and MetLife Portfolios, Inc. (hereinafter the
"Corporation"), a corporation organized and existing under and by virtue of the
laws of the state of Maryland.
In consideration of the mutual promises set forth herein, the parties agree
as follows:
1. The Corporation agrees to sell to Metropolitan and Metropolitan agrees
to purchase for the aggregate amount of $30,000,000, 3,000,000 shares of
Common Stock, $.01 Par Value of the Common Stock of the Corporation
(hereinafter the "Stock") as follows:
1,000,000 Shares of Stock of the
International Equity Fund
2,000,000 Shares of Stock of the
International Fixed Income Fund
Of the above amounts, 10,000 shares (5,000 shares of each Fund) will be
purchased prior to the Corporation's Registration Statement being declared
effective by the Securities and Exchange Commission, and the remaining
2,990,000 shares will be purchased after such declaration.
<PAGE>
2. Metropolitan acknowledges that the Stock to be purchased prior to the
effective date of the Corporation's Registration Statement has not been
registered under any state or federal securities laws and that, therefore,
the Corporation is relying on certain exemptions therein from such
registration requirements, including exemptions dependent on the intent of
the undersigned in acquiring such Stock. Metropolitan also understands that
any resale of such Stock, or any part thereof, may be subject to
restrictions under state and federal securities laws, and that Metropolitan
may be required to bear the economic risk of an investment in such Stock
for an indefinite period of time.
3. Metropolitan represents and warrants that it is acquiring the Stock
solely for its own account and solely for investment purposes and not with
a view to the resale or disposition of all or any part thereof, and that it
has no present plan or intention to sell or otherwise dispose of the Stock
or any part thereof; and
4. Metropolitan agrees that it will not sell or dispose of the Stock or any
part thereof unless registration statements with respect to such Stock are
then in effect under the Securities Act of 1933 and under any applicable
state securities laws or unless the undersigned shall have delivered to the
Corporation an opinion of counsel acceptable to the Corporation, in form
and substance acceptable to the Corporation that no such registration is
necessary.
<PAGE>
5. Metropolitan further agrees to withdraw any request to redeem any of the
Stock to the extent the Corporation informs the undersigned that the effect
of such redemption could be to reduce the Corporation's net worth below
$100,000.
IN WITNESS THEREOF, the parties hereto have executed this Agreement by
their duly authorized representatives this 10 day of January, 1992
-- -------
Metropolitan Life Insurance Company MetLife Portfolios, Inc.
By /s/ Richard M Blackwell By /s/ Jeffrey J Hodgman
------------------------ ----------------------
Title Senior Vice-President and Title President
----------------------- -------------------
General Counsel
<PAGE>
EXHIBIT 14B
[LOGO OF STATE STREET RESEARCH]
PLANNING
FOR
TOMORROW
TERMS AND
CONDITIONS
IRA
<PAGE>
TERMS AND CONDITIONS
These Terms and Conditions are in the form promulgated by the Internal Revenue
Service in Form 5305 for use in establishing an individual retirement trust
account.
- --------------------------------------------------------------------------------
ARTICLE I.
The Trustee may accept additional cash contributions on behalf of the Grantor
for a tax year of the Grantor. The total cash contributions are limited to
$2,000 for the tax year unless the contribution is a rollover contribution
described in section 402(c) (but only after December 31, 1992), 403(a)(4),
403(b)(8), 408(d)(3), or an employer contribution to a simplified employee
pension plan as described in section 408(k). Rollover contributions before
January 1, 1993, include rollovers described in section 402(a)(5), 402(a)(6),
402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a
simplified employee pension plan as described in section 408(k).
- --------------------------------------------------------------------------------
ARTICLE II.
The Grantor's interest in the balance in the custodial account is
nonforfeitable.
- --------------------------------------------------------------------------------
ARTICLE III.
1. No part of the custodial funds may be invested in life insurance contracts,
nor may the assets of the custodial account be commingled with other property
except in a common trust fund or common investment fund (within the meaning of
section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within the
meaning of section 408(m)) except as otherwise permitted by section 408(m)(3)
which provides an exception for certain gold and silver coins and coins issued
under the laws of any state.
- --------------------------------------------------------------------------------
ARTICLE IV.
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Grantor's interest in the custodial account shall be made in
accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin to
the Grantor under paragraph 3, or to the surviving spouse under paragraph 4,
other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Grantor and
the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. The Grantor's entire interest in the custodial account must be or begin to
be, distributed by the Grantor's required beginning date (April 1 following the
calendar year end in which the Grantor reaches age 70 1/2). By that date, the
Grantor may elect, in a manner acceptable to the Trustee, to have the balance
in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the Grantor.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives or
the Grantor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Grantor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor expectancy
of the Grantor and his or her designated beneficiary.
4. If the Grantor dies before his or her entire interest is distributed to him
or her, the entire remaining interest will be distributed as follows:
(a) If the Grantor dies on or after distribution of his or her interest has
begun, distribution must continue to be made in accordance with
paragraph 3.
(b) If the Grantor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the
Grantor or, if the Grantor has not so elected, at the election of the
beneficiary or beneficiaries either.
(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the Grantor's death, or
(ii) Be distributed in equal or substantially equal payments over the life
or life expectancy of the designated beneficiary or beneficiaries
starting by December 31 of the year following the year of the Grantor's
death. If, however, the beneficiary is the Grantor's surviving spouse,
then this distribution is not required to begin before December 31 of
the year in which the Grantor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on the
Grantor's required beginning date, even though payments may actually
have been made before that date.
(d) If the Grantor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse,
no additional cash contributions or rollover contributions may be
accepted in the account.
5. In the case of distribution over life expectancy in equal or substantially
equal annual payments, to determine the minimum annual payment for each year,
divide the Grantor's entire interest in the custodial account as of the close of
business on December 31 of the preceding year by the life expectancy of the
Grantor (or the joint life and last survivor expectancy of the Grantor and the
Grantor's designated beneficiary, or the life expectancy of the designated
beneficiary, whichever applies). In the case of distributions under paragraph 3,
determine the initial life expectancy (or joint life and last survivor
expectancy) using the attained ages of the Grantor and designated beneficiary as
of their birthdays in the year the Grantor reaches age 70 1/2. In the case of
distribution in accordance with paragraph 4(b)(ii), determine life expectancy
using the attained age of the designated beneficiary as of the beneficiary's
birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 CB. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
<PAGE>
- --------------------------------------------------------------------------------
ARTICLE V.
1. The Grantor agrees to provide the Trustee with information necessary for the
Trustee to prepare any reports required under section 408(i) and Regulations
sections 1.408-5 and 1.408-6.
2. The Trustee agrees to submit reports to the Internal Revenue Service and the
Grantor prescribed by the Internal Revenue Service.
- --------------------------------------------------------------------------------
ARTICLE VI.
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and related
regulations will be invalid.
- --------------------------------------------------------------------------------
ARTICLE VII.
This agreement will be amended from time to time to comply with the provisions
of the Code and related regulations. Other amendments may be made with the
consent of the persons whose signatures appear below.
- --------------------------------------------------------------------------------
ARTICLE VIII.
1. The amount of each contribution credited to the Grantor's individual
retirement trust account shall (except to the extent applied to pay fees or
other charges under Section 7 below) be applied to purchase full and fractional
shares of beneficial interest of one or more classes in one or more mutual funds
(hereinafter collectively the "Funds" or individually a "Fund"), as designated
from time to time by State Street Research Investment Services, Inc. ("SSRIS")
as available for investment under this agreement (provided always that such
shares may legally be offered for sale in the state of the Grantor's residence),
in accordance with instructions of the Grantor given under Section 3 below. The
Trustee (or any party appointed to act as agent for the Trustee under Section 16
of this Article VIII - the "Agent") may retain the Grantor's initial deposit for
a period of up to ten days after receipt thereof without liability for interest,
earnings or loss of appreciation, and may invest such initial deposit at the end
of such period if the Grantor has not revoked his account. The Grantor may
revoke the account by written notice to the Trustee or its Agent received by the
Trustee or its Agent within seven calendar days after the Grantor establishes
the account. Upon revocation, the amount of the Grantor's initial deposit will
be returned to him.
2. All dividends and capital gain distributions received on the shares of a
particular class of any Fund held in the Grantor's account shall be retained in
the account and (unless received in additional shares of such class) shall be
reinvested in full and fractional shares of such class of such Fund.
3. For each contribution, the Grantor shall designate the portion that will be
invested in each Fund. A contribution may be invested entirely in one Fund, or
may be invested in two or more Funds. However, investment designations will be
subject to any minimum initial or additional investment rules applicable to a
Fund. In addition, the Grantor shall designate which class of shares of each
such Fund the Grantor's contribution shall be invested in.
The Grantor shall make such designation on the State Street Research
Individual Retirement Account Application and Agreement Form or other written
notice acceptable to the Trustee.
4. Subject to the minimum initial or additional investment, minimum balance and
other exchange rules applicable to a Fund, the Grantor may at any time direct
the Trustee to exchange all or a specified portion of the shares of a Fund in
the Grantor's account for shares and fractional shares of one or more other
Funds.
The Grantor shall give such directions by written or telephone notice
acceptable to the Trustee, and the Trustee will process such directions as soon
as practicable after receipt thereof.
If any investment designation or instructions under this Section 4 or Section
3 above are, in the opinion of the Trustee (or SSRIS or the Agent), ambiguous or
incomplete, the Trustee may refrain from carrying out such designation or other
investment instructions until the designation or other investment instructions
have been clarified or completed to the Trustee's satisfaction, and neither the
Trustee, SSRIS, the Agent nor any Fund (nor any of their affiliates) will have
any liability for loss of interest, earnings or investment gains or appreciation
during such period.
5. The Grantor, by written notice to the Trustee, may designate one or more
beneficiaries to receive the balance (if any) remaining in the Grantor's account
after his death and the time and manner of payment of such balance (subject to
the applicable requirements of the preceding Articles of these Terms and
Conditions). A designation may be on a form provided by the Trustee or on a
written instrument acceptable to the Trustee executed by the Grantor and filed
with the Trustee. The Grantor may revoke or change such designation in like
manner, at any time and from time to time. If no such designation is in effect
upon the Grantor's death, the balance in the account shall be paid in a single
sum, as soon as is practicable, to the Grantor's estate.
Subject to the applicable requirements of the preceding Articles of these
Terms and Conditions, the Grantor may designate a form of payment to the
beneficiary by filing a signed instrument with the Trustee. In the absence of
such written instructions from the Grantor, the Trustee will pay the beneficiary
in such form as the beneficiary selects.
6. The Trustee shall forward to the Grantor any notices, prospectuses, reports
to shareholders, financial statements, proxies and proxy soliciting materials,
relating to the Fund shares in the Grantor's account. The Trustee shall vote any
such shares held in the account in accordance with the timely written
instructions of the Grantor, if received. If no timely written instructions are
received from the Grantor, the Trustee may vote such shares in such manner as it
deems appropriate (including "present" or in accordance with the recommendation
of SSRIS).
7. The Trustee's fee for performing its duties hereunder shall be such
reasonable amounts as shall be agreed to from time to time by the Trustee and
SSRIS. Such fee, any taxes of any kind and any liabilities with respect to the
account, and any and all expenses reasonably incurred by the Trustee shall, if
not paid by the Grantor, be paid from the Grantor's account.
8. The Trustee shall make distributions from the account at such times and in
such manner as the Grantor directs in writing, subject (except where otherwise
specifically provided in this Article VIII) to the applicable requirements of
the preceding Articles of these Terms and Conditions.
The recalculation of life expectancy of the Grantor and/or the Grantor's
spouse in connection with distributions from the account before the Grantor's
death will be made only at the written election of the Grantor. The
recalculation of life expectancy of the surviving spouse in connection with
distributions from the account after the Grantor's death will be made only at
the written election of the surviving spouse. By establishing the account, the
Grantor (for himself and his surviving spouse, if any)
<PAGE>
determines not to recalculate life expectancies unless the Grantor for (or
surviving spouse) specifically elects the recalculation of life expectancies
approach in accordance with the following sentence. Any such election may be
made in such form as the Grantor for the surviving spouse) provides for
(including instructions to such effect to the Trustee, or the calculation of
minimum distribution amounts in accordance with a method that provides for
recalculation of life expectancy and instructions to the Trustee to make
distributions in accordance with such method).
9. It shall be the sole responsibility of the Grantor to determine the time and
amount of contributions to the account and the time, amount and manner of
payment of distributions from the account (and to instruct the Trustee or the
Agent accordingly), and the federal and state income tax treatment of any
contributions to or distributions from the account. SSRIS, the Agent, the
Trustee and the Funds shall be fully protected in following the direction of the
Grantor with respect to the time, amount and manner of payment of such
distributions, or in not acting in the absence of such direction. If the Grantor
(or beneficiary) does not direct the Trustee to make distributions from the
account by the time that such distributions are required to commence in
accordance with the preceding Articles of these Terms and Conditions, the
Trustee (and SSRIS and the Agent) will assume that the Grantor (or beneficiary)
is meeting the minimum distribution requirements from another individual
retirement arrangement maintained by the Grantor (or beneficiary) and will be
fully protected in so doing. SSRIS, the Agent, the Trustee and the Funds shall
not be liable for any taxes, penalties, liabilities or other costs to the
Grantor or any other person resulting from contributions to or distributions
from the Grantor's account.
10. SSRIS, the Agent, the Trustee and the Funds shall not be responsible for any
loss or diminution in the value of the Grantor's account arising out of the
Grantor's establishment of a State Street Research Individual Retirement Account
or arising out of any investment instructions of the Grantor, whether relating
to the portion of contributions invested in one or more of the Funds, the
selection of a particular class of shares of a particular Fund, or the exchange
of shares of one Fund for shares of one or more other Funds.
11. Whenever the Grantor (or beneficiary) is responsible for any
direction, notice, representation or instruction under these Terms and
Conditions, SSRIS, the Agent, the Trustee and the Funds shall be entitled to
assume the truth of any statement made by the Grantor (or beneficiary), and
shall be under no duty of further inquiry with respect thereto, and shall have
no liability with respect to any action taken in reliance upon such statement.
12. These Terms and Conditions shall terminate upon the complete distribution of
the account to the Grantor or his beneficiaries or to a successor individual
retirement account, annuity or bond, to a qualified plan, or to an annuity or
custodial account under Section 403(b) of the Internal Revenue Code. The Trustee
shall have the right to terminate this account upon 60 days notice to the
Grantor, or to his beneficiaries if he is then dead. In such event, upon
expiration of such 60 day period, the Trustee shall transfer the amount in the
account into such successor individual retirement accounts, annuities or bonds,
qualified plan, or annuity or custodial account as the Grantor (or his
beneficiaries) shall designate, or, in the absence of such designation, to the
Grantor, or, if he is then dead, to the beneficiaries as their interests shall
appear.
13. The Trustee may resign at any time upon 60 days notice in writing to SSRIS
and may be removed by SSRIS at any time upon 60 days notice in writing to the
Trustee. Upon such resignation or removal, SSRIS shall appoint a successor
trustee which satisfies the requirements of Section 408 of the Internal Revenue
Code.
14. Upon receipt by the Trustee of written notice of appointment of a successor
trustee or custodian and of written acceptance of such appointment by the
successor, the Trustee shall transfer to such successor the assets of the
account and copies of all records pertaining thereto. The Trustee may reserve
such sum of money as it deems advisable for payment of its fees, taxes, costs,
expenses or liabilities with respect to the account, with the balance (if any)
of such reserve remaining after the payment of such items to be paid over to the
successor. The successor shall hold the assets paid over to it under terms that
satisfy the requirements of Section 408 of the Internal Revenue Code.
15. If, within 60 days after the Trustee's resignation or removal, SSRIS has not
appointed a successor trustee which has accepted such appointment, the Trustee
shall appoint such a successor unless it elects to terminate the Agreement under
Section 12 of this Article VIII.
16. The Trustee may employ or designate one or more parties to serve as agents
or contractors to perform any or all of its duties hereunder.
17. Any notice sent to the Grantor, or to his beneficiaries if he is then dead,
shall be effective if sent by first class mail to him or them at his or their
last addresses of record as provided to the Trustee.
18. Any distributions from the account may be mailed, first-class postage
prepaid, to the last known address of the person who is to receive such
distribution, as shown on the Trustee's records, and such distribution shall to
the extent of the amount thereof completely discharge the Trustee's liability
for such payment.
19. Any purchase or redemption of shares of any class of a Fund for or from the
Grantor's account will be effected at the public offering price or net asset
value of such Fund (as described in the then effective prospectus for such Fund)
next established after the Fund's transfer agent receives the contribution or
other directions.
Any purchase, exchange, transfer or redemption of shares of any class of a
Fund for or from the Grantor's account will be subject to any sales charge,
distribution fee or redemption charge, or other fee or charge applicable to
shares of such class, as described in the then effective prospectus for such
Fund. In addition, shares of any class of a Fund will be subject to any service
fee, charge or other annual maintenance or servicing fees or charges applicable
to shares of such class as described in the then effective prospectus for such
Fund.
20. SSRIS may amend these Terms and Conditions from time to time, and shall give
written notice of any material amendment to the Grantor within a reasonable time
after the amendment is adopted or becomes effective, whichever is later. The
Grantor hereby expressly delegates authority to SSRIS to amend these Terms and
Conditions and consents to any such amendments.
21. These Terms and Conditions shall be construed, administered and enforced
according to the laws of Massachusetts.
22. The term "Trustee" refers to the person serving as the Trustee of the
Individual Retirement Account established hereby, and the term "Grantor" refers
to the person for whose benefit such Account was established.
23. Articles I through VIII of these Terms and Conditions are in the form
promulgated by the Internal Revenue Service. It is anticipated that if and when
the Internal Revenue Service promulgates changes to Form 5305, SSRIS will adopt
such charges as an amendment to these Terms and Conditions. Pending the adoption
of any amendment necessary or desirable to conform these Terms and Conditions to
the requirements of any amendment to the Internal Revenue Code or regulations or
rulings thereunder, the Trustee (and SSRIS and the Agent) may operate the
Grantor's account in accordance with such requirements to the extent deemed
necessary preserve the tax benefits of the account.
24. The Grantor acknowledges that he or she has received and read the current
prospectus for each Fund in which his or her account is invested and the State
Street Research Individual Retirement Account Disclosure Statement.
(References are to the Internal Revenue Code)
[LOGO OF STATE STREET RESEARCH]
(C) 1993 State Street Research Investment Services, Inc., Boston, MA 02111
IR1-197D-493 (40M)
<PAGE>
STATE STREET RESEARCH
PLANNING
FOR
TOMORROW
QUESTIONS
AND ANSWERS
STATE STREET RESEARCH
This brochure must be preceded or
accompanied by the relevant Fund
prospectus(es) including investment
policies sales charges and expenses.
Please read the prospectus(es)
carefully before you invest.
(C) 1993 State Street Research Investment Services Inc. Boston MA 02111:
IR1(196D-393 (40M)
<PAGE>
Planning for tomorrow - that's what an IRA is all about. It's a
way of putting some of your money to work today, to build for your future.
If you've chosen to invest your IRA in one or more of the available mutual
funds managed by State Street Research or its affiliates, you're giving yourself
an added benefit - time-tested money management expertise.
Before opening your State Street Research IRA, read this booklet and
accompanying materials carefully. If you have any questions, contact your
investment representative.
<PAGE>
CONTRIBUTIONS TO YOUR IRA
- --------------------------------------------------------------------------------
WHAT IS AN INDIVIDUAL RETIREMENT ACCOUNT?
An individual Retirement Account (IRA) is a savings program that lets you
set aside money specifically for retirement. The investment earnings of your IRA
(interest, dividends and capital gain distributions) are not taxed until you
begin receiving them as distributions. That's an important tax benefit for you.
Also, many taxpayers will be able to deduct some or all of their IRA
contributions; that's a double tax benefit.
- --------------------------------------------------------------------------------
WHO MAY OPEN AN IRA?
Anyone under age 70 1/2 at the end of the calendar year who is currently
receiving compensation or taxable alimony.
- --------------------------------------------------------------------------------
HOW DO I SET UP AN IRA?
Simply complete and sign an IRA application, and submit it through your
investment representative. If you already have an IRA and wish to transfer it to
State Street Research, use a State Street Research Direct Rollover of Assets
form available from your investment representative. The kit accompanying this
booklet contains a State Street Research IRA Application and Direct Rollover of
Assets form.
- --------------------------------------------------------------------------------
CAN AN IRA BE REVOKED?
Yes. You may revoke your IRA within seven calendar days after you establish
it. Your deposit will be returned to you without penalty, administrative charge
or adjustment for market changes. To revoke your State Street Research IRA, mail
or deliver a written notice to State Street Research Shareholder Services, P.O.
Box 8408, Boston, MA. 02266. Your letter will be forwarded to the Transfer Agent
for processing.
- --------------------------------------------------------------------------------
HOW MUCH MAY I CONTRIBUTE EACH YEAR
If you make contributions for yourself only, you may contribute up to the
lesser of $2,000 or 100% of the compensation includable in your income. You
must make your contribution for a particular year before April 15 (tax filing
deadline) of the following year.
- --------------------------------------------------------------------------------
CAN A NON-WORKING SPOUSE HAVE AN IRA?
Yes. A wage earner with an IRA may set up an IRA for a non-working spouse
who is under age 70 1/2, provided a joint tax return is filed. Total
contributions to the two accounts may not exceed $2,250 or 100% of compensation,
and no more than $2,000 may be contributed to either account.
- --------------------------------------------------------------------------------
HOW MUCH OF MY CONTRIBUTION CAN I DEDUCT?
The income tax deduction for IRA contributions is limited for certain
taxpayers.
If you are single and not an active participant in an employer-sponsored
retirement or profit sharing plan, or if you are married and neither you nor
your spouse is an active participant, you may deduct your IRA contribution in
full on your federal income tax return.
If you, or your spouse, is an active participant in an employer-sponsored
plan, you may deduct your IRA contribution in full if your income is below
$40,000 ($25,000 if you are single). Above
<PAGE>
these levels, the IRA deduction phases out. If your income is above $50,000
(married), $35,000 (single), or $10,000 (married filing separately), there is no
deduction.
The active participation rules are complicated, but your W-2 Form should
indicate whether you are an active participant. Check with your employer or your
tax adviser if you have a question.
You can make a full IRA contribution even though all or part of it is not
deductible. Remember to indicate the non-deductible contribution amount on your
income tax return. Earnings on your IRA will still be tax-free until distributed
to you.
- --------------------------------------------------------------------------------
WHAT IF I CONTRIBUTE TOO MUCH?
Excess contributions are subject to a penalty tax of 6% of the excess
contribution. Remember, an excess contribution happens if you contribute more
than the contribution maximum (generally $2,000 or $2,250 with an IRA for a
non-working spouse) as opposed to your deductible maximum. For example, if you
contributed $2,500 to your own IRA in a particular year, you would have a $500
excess contribution, and would have to pay a penalty tax of $30. These limits do
not apply to an IRA rollover.
To avoid the penalty, you must withdraw the excess amount, and any income
it earned, before the deadline for filing your tax return. The net income from
the excess contribution must be declared on your tax return. If you are under
age 59 1/2, you must also pay a premature withdrawal penalty on the net income.
If you do not withdraw the excess in time, you must pay the 6% penalty tax that
year and in every subsequent year the excess remains in your IRA.
- --------------------------------------------------------------------------------
WHAT IS A "ROLLOVER" IRA?
NEW RULES APPLY TO ROLLOVERS
AS OF JANUARY 1, 1993
You may receive a payment from an existing employer retirement plan if you
leave your current employer or, if you become the beneficiary of your deceased
spouse's plan account or IRA. With a few exceptions, most of these benefit
payments are eligible for "direct rollover" to an IRA or to another
employer-sponsored plan that accepts rollovers. These payments may also be paid
directly to you.
UNDER FEDERAL LAW, EFFECTIVE JANUARY 1, 1993, IF YOU CHOOSE A DIRECT
ROLLOVER OF YOUR PLAN PAYMENT TO AN IRA OR ANOTHER EMPLOYER PLAN:
. Your payment will not be taxed in the current year and no income tax
will be withheld.
. Your payment will be taxed later when you take it out of the IRA or
employer plan.
IF YOU CHOOSE TO HAVE THE PLAN BENEFITS PAID DIRECTLY TO YOU, THE PLAN IS
REQUIRED BY THE IRS TO WITHHOLD 20% OF THE PAYMENT IN THE YEAR YOU RECEIVE IT:
. If you roll the entire payment over to an IRA or another employer plan
within 60 days, you will avoid income taxes in the year of the payment.
However you will have to come up with the 20% withholding amount from
your savings or other assets in order to roll the entire payment over.
The amount withheld may be refunded to you at tax time.
. If you do not roll the payment over and you are under age 59 1/2, you
will have to pay a 10% penalty tax for premature distribution (there are
limited exceptions to this penalty) in addition to regular income taxes.
<PAGE>
There are no penalties for rolling over IRA assets from one IRA account
to another--from a bank savings account to a mutual fund, for instance. You may
make one IRA-to-IRA rollover per year.
The requirements for rollovers are complex and strictly applied by the IRS.
Additional taxes may apply. Check with your tax adviser before making a rollover
to be certain you meet all the requirements.
- --------------------------------------------------------------------------------
WILL I EVER HAVE TO PAY TAX ON THE MONEY I PUT INTO AN IRA?
Yes. The payouts--called distributions--from your IRA are generally
taxable as ordinary income in the year you receive them. But--and this is
important to many people--at retirement your income may well be lower than it
is now, putting you in a lower tax bracket. Accordingly, you will then pay less
tax on your IRA contributions and earnings than if you had to include them as
taxable earnings now.
If you make non-deductible IRA contributions, you are not taxed when you
receive them from your IRA. Any distribution will be treated as partly a payment
of your non-deductible contributions (not taxed) and partly a payment of
deductible contributions and investment earnings (taxed). Keep accurate records
so you can calculate income tax on your IRA distributions.
If you owe a penalty tax for your IRA, you must file IRA Form 5329 with
your tax return (for an excess contribution, premature withdrawal or
insufficient withdrawals). Otherwise, no separate tax return is necessary for
your IRA. Additional IRA tax information is available from your local Internal
Revenue Service District Office.
- --------------------------------------------------------------------------------
IS THERE A MINIMUM CONTRIBUTION?
No. Subject to any minimum initial or additional contribution rules of a
mutual fund, you may contribute any amount up to the maximum, or nothing at all
in any particular year.
- --------------------------------------------------------------------------------
CAN MY EMPLOYER CONTRIBUTE TO MY IRA?
Yes, through what is known as a Simplified Employee Pension Plan, or
SEP-IRA.
- --------------------------------------------------------------------------------
HOW DOES A SEP-IRA WORK?
A SEP-IRA must cover any employee aged 21 or over who has worked for the
employer during at least three of the last five calendar years and who has
received at least $300 in compensation. (The exceptions are employees who are
covered by union plans.)
Your employer may contribute up to $30,000 or 15% of your compensation,
whichever is less. This is in addition to your allowed contribution of up to
$2,000 or 100% of compensation, whichever is less. As with all IRAs, you are
immediately vested, which means that the SEP-IRA assets belong to you from the
beginning.
Your employer must use a written allocation formula which specifies
employee eligibility requirements and explains how contribution amounts are
computed. Your employer must inform you of these details in writing.
- --------------------------------------------------------------------------------
HOW ARE SEP-IRAS TREATED FOR TAX PURPOSES?
Your employer's contribution is not treated as taxable income to you until
withdrawn by or distributed to you from you SEP-IRA.
- --------------------------------------------------------------------------------
WHAT FORM MAY CONTRIBUTIONS TAKE?
All contributions must be in cash.
<PAGE>
- ------------------------------------------------------------------------------
HOW LONG CAN I MAKE IRA CONTRIBUTIONS!
From now until the year in which you reach age 70 1/2. You cannot make any
contributions for that year or any year after that.
DISTRIBUTIONS FORM YOUR IRA
- ------------------------------------------------------------------------------
WHEN WILL DISTRIBUTIONS FROM MY IRA BEGIN?
You may start receiving distributions from your IRA in the year in which
you reach the age of 59 1/2. If you make a withdrawal before that time (unless
you become disabled), your withdrawal will be considered a premature
distribution, subject in most cases to a 10% penalty tax in addition to regular
income taxes. However, you MUST begin to receive distributions from your IRA by
April 1 of the year following the year in which you reach age 70 1/2.
- -------------------------------------------------------------------------------
HOW ARE DISTRIBUTIONS PAID FROM AN IRA?
You may choose to receive distributions in a lump sum or in installments.
Because a lump sum IRA payment does not receive the special averaging tax
treatment provided for other retirement plans, you may save on income taxes if
you receive your IRA distributions in installments.
Installment payments after age 70 1/2 must be made each year so that you
receive you entire IRA over your life expectancy or the joint life expectancy of
you and your designated beneficiary. If you do not take your required minimum
distribution each year, you will be assessed a penalty tax equal to 50% of the
difference between the amount you received and the amount you should have
received.
- --------------------------------------------------------------------------------
WHAT HAPPENS TO MY IRA IF I DIE OR BECOME DISABLED?
If you become disabled as defined in Section 72(m) of the Internal Revenue
Code, you may begin to receive distributions from your IRA at that time.
If you die after some of your IRA assets have been distributed to you, your
designated beneficiary may continue to receive payments under the method you
elected prior to your death. Distribution of your IRA assets to your beneficiary
must be made at least as rapidly as they were made to you before your death.
If you die before any distribution has begun the size and timing of
payments depend on who the beneficiary is:
. If your designated beneficiary is your spouse, he or she may defer any
payment until April 1 following the year in which you would have reached age 70
1/2. Or, your spouse may roll your IRA assets over into his or her own IRA: the
assets would then be subject to the same distribution rules as any IRA with
withdrawals allowed after age 59 1/2 without penalty.
. If your designated beneficiary is someone other than your spouse,
payments must begin no later than one year after the date of your death, and
must be large enough so that all of the IRA assets can be distributed during the
beneficiary's life expectancy.
If you have not designated a beneficiary, your IRA must be distributed to
your estate within five years after your death.
- --------------------------------------------------------------------------------
WILL IRA DISTRIBUTIONS AFFECT MY SOCIAL SECURITY BENEFITS?
No. Your IRA Distributions will be in addition
<PAGE>
to Social Security and any retirement or pension benefits you may receive.
- --------------------------------------------------------------------------------
MAY I USE MY IRA AS COLLATERAL FOR A LOAN?
No. If you use your IRA or any portion of it as collateral for a loan, or
if you borrow from your IRA, or engage in other prohibited transactions such as
selling stock or other property to your IRA, the value of your account (or the
portion used as collateral) will be taxed as if it were distributed to you.
In addition, if you are under age 59 1/2, you will have to pay the penalty
tax for premature withdrawals.
INVESTING YOUR IRA
- --------------------------------------------------------------------------------
HOW MAY CONTRIBUTIONS BE INVESTED?
Choices include individual securities, mutual funds, certain types of
annuities, endowment policies and savings accounts. These investments vary in
risk and potential rate of return. Life insurance policies are NOT allowed.
- --------------------------------------------------------------------------------
WHAT IS A MUTUAL FUND?
A mutual fund is a company that pools the money of many shareholders,
investing it in a variety of securities chosen by full-time, professional money
managers, for the purpose of meeting a stated financial objective.
Currently, 25% of all IRA assets are invested in mutual funds. Because an
IRA is generally a long-term investment, many financial advisers recommend
mutual funds because of the flexibility and diversification they offer.
- --------------------------------------------------------------------------------
WHY SHOULD I INVEST IN A STATE STREET RESEARCH IRA?
To gain the benefit of time-tested expertise, investment flexibility and
convenience. The funds' managers have extensive experience in the investment
industry. Their clients include some or the most knowledgeable institutional
investors in the nation. The mutual funds available for investment within the
State Street Research IRA are designed to meet a variety of investment
objectives, providing flexibility. You can invest your contributions in one fund
or a combination of funds. And, with a simple phone call to your investment
representative, you can transfer shares form one available mutual fund managed
by State Street Research or its affiliates to another, with no fee. (Exchanges
may be subject to applicable sales charges in certain cases. Exchange privilege
may be changed or discontinued at any time.)
- --------------------------------------------------------------------------------
WILL I RECEIVE DIVIDENDS FROM MY IRA?
Dividends and other distributions from the mutual funds in you IRA are
automatically reinvested in additional shares. These additional shares do not
affect the amount you may contribute. Because the value of a fund's portfolio
may fluctuate, the amount available for distribution to you cannot be projected
or guaranteed.
- --------------------------------------------------------------------------------
HOW MUCH MONEY DO I NEED TO INVEST?
The minimum investment in most funds is $500, and the minimum additional
investment is $50. Also, you must maintain a minimum investment balance as
described in each fund's prospectus.
- --------------------------------------------------------------------------------
ARE THERE ANY OTHER FEES OR CHARGES?
There is a $10 annual maintenance fee for each individual IRA. (If you also
have a spousal IRA, no
<PAGE>
additional fee is charged.) Investment advisory fees, distribution fees, or
sales, transfer or redemption charges are described in the prospectus for each
fund.
Each fund issues different classes of shares. Each class has different
combinations of sales charges, redemption fees, distribution fees and annual
maintenance or account servicing fees. Depending upon the amount of your IRA
contribution and the number of years you anticipate continuing your IRA
investment in State Street Research funds, one or another class of shares may be
better for you. Review the prospectuses of the fund(s) in which you are
interested for complete information on these fees and charges.
- --------------------------------------------------------------------------------
HOW CAN I DECIDE WHICH FUNDS TO INVEST IN?
First determine your investment objective. For instance, how soon do you
plan to retire? If you'll be needing your IRA assets within a few years, you may
want to choose a very stable, low-risk portfolio, such as that of a money market
or government securities fund, designed to meet short-term goals. On the other
hand, if you are just starting your career, you can probably afford to withstand
more price fluctuation. You may then want to choose a common stock fund for
maximum potential capital appreciation. Such funds offer the possibility of
greater growth in the value of your investment over the long term. And you may
have time to wait out any periods when values may be declining.
Second, discuss your objectives with your investment representative, who
can recommend specific funds.
Third, request and read carefully, the prospectus of each fund in which you
are interested before you invest.
<PAGE>
A P P L I C A T I O N A N D A G R E E M E N T
- --------------------------------------------------------------------------------
STATE STREET RESEARCH
IRA
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HOW TO OPEN 1. TO OPEN A STATE STREET RESEARCH IRA. 3. You may choose VARIOUS INVESTMENT PRIVILEGES:
YOUR IRA please complete this side of the application. just complete the applicable sections on the
2. YOUR INVESTMENT DEALER must complete the first back of this form
section on the back of the application
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
WHAT TYPE OF [_] Individual IRA $__________________ [_] Regular Rollover $_________________ [_] SEP IRA $______________
IRA ARE YOU OPENING
AND WHAT IS THE [_] Spousal IRA $_____________________ [_] Transfer of assets or direct rollover $________________________
AMOUNT OF YOUR
INVESTMENT? [_] CHECK HERE IF YOU HAVE ANOTHER STATE STREET RESEARCH IRA
- ------------------------ -------------------------------------------------
Fill out this column to open an
ACCOUNT INFORMATION Fill out this column to open an individual IRA. IRA for a non-working spouse.
Use just one Name Name
application and fill --------------------------------------------------- ------------------------------------------------
in both columns Street Street
if you and your --------------------------------------------------- ------------------------------------------------
non-working Spouse want City State ZIP City State ZIP
to open IRAs. Only one --------------------------------------------------- ------------------------------------------------
$10 annual fee will be Social Security # Social Security #
charged! --------------------------------------------------- ------------------------------------------------
Date of birth Day phone( ) Date of birth Day phone( )
--------------------------------------------------- ------------------------------------------------
- ------------------------
State Street Share State Street Share
WHICH FUND HAVE YOU Research Fund(s) Class Amount Research Fund(s) Class Amount
SELECTED FOR YOUR IRA? A B D A B D
_______________________ [_] [_] [_] $ ____________ _______________________ [_] [_] [_] $ _________
_______________________ [_] [_] [_] $ ____________ _______________________ [_] [_] [_] $ _________
See the IRA brochure MetLife-State MetLife-State
and relevant prospectus Street Fund(s) Amount Street Fund(s) Amount
for fund details. _______________________ $ ____________ _______________________ $ _________
_______________________ $ ____________ _______________________ $ _________
Trustee Fee $ ____________ $ _________
Total $ ____________ Total $ _________
--------------------------------------------------- ------------------------------------------------
THIS CONTRIBUTION IS FOR TAX YEAR 19_________.
The annual fee is $10 per IRA (no additional fee
charged for spousal IRA.) If the fee is not paid
directly by you in addition to the contribution(s)
for the taxable year, it will be deducted from your
account at year end.
- ------------------------ --------------------------------------------------- ------------------------------------------------
WHO IS THE PRIMARY Name Name
BENEFICIARY OF --------------------------------------------------- ------------------------------------------------
YOUR IRA? Relationship Relationship
Only one required per --------------------------------------------------- ------------------------------------------------
account. If you have Address Address
more than two, attach --------------------------------------------------- ------------------------------------------------
separate signed sheet. City State ZIP City State ZIP
If two or more are --------------------------------------------------- ------------------------------------------------
named, they will receive Social Security # Social Security #
equal amounts unless --------------------------------------------------- ------------------------------------------------
you specify otherwise. Date of birth Date of birth
- ------------------------ --------------------------------------------------- ------------------------------------------------
SECONDARY Name Name
BENEFICIARY (IF THE --------------------------------------------------- ------------------------------------------------
PERSON(S) NAMED AS Relationship Relationship
PRIMARY BENEFICIARY --------------------------------------------------- ------------------------------------------------
FAILS TO SURVIVE YOU) Address Address
--------------------------------------------------- ------------------------------------------------
City State ZIP City State ZIP
--------------------------------------------------- ------------------------------------------------
Social Security # Social Security #
--------------------------------------------------- ------------------------------------------------
Date of birth Date of birth
--------------------------------------------------- ------------------------------------------------
- ------------------------ --------------------------------------------------
PLEASE SIGN HERE TO I hereby establish a State Street Research IRA, appoint State Street Bank and Trust Company as Trustee,
ESTABLISH YOUR IRA. direct that contributions to my IRA be invested as specified by this Application, and designate the
individual(s) named above, or in any signed attachment as my beneficiary(ies). I have received a current
Prospectus of the Fund(s) indicated above and the Terms and Conditions of the State Street Research IRA
(which are incorporated herein by reference) and have read its Disclosure Statement. I certify under
penalties of perjury that my Social Security number specified above is correct.
INDIVIDUAL SPOUSE
___________________________________________________ __________________________________________________
Signature Date Signature Date
- ------------------------------------------------------------------------------------------------------------------------------------
PLEASE BE SURE YOUR INVESTMENT DEALER COMPLETES FIRST SECTION ON OTHER SIDE.
</TABLE>
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
PLEASE HAVE YOUR Dealer firm Branch office address
INVESTMENT DEALER Home office address_____________ City_____________ State____ Zip _______
FILL OUT THIS SECTION City________________ State ________ Zip_____ Telephone (___)_____________
___________________________________________ Branch office address no. _____ Rep no. ____
Authorized dealer signature
Rep's last name
- ------------------------------------------------------------------------------------------------------------------------------------
STATE STREET BANK AND You are hereby authorized and appointed on behalf of the above signed dealer to execute the
TRUST COMPANY, purchase transactions in accordance with the terms and conditions of this Application, and to
TRUSTEE: confirm each purchase. With respect to each purchase the amount of any commissions due will be
remitted to the dealer of record except that no commissions will be paid to the dealer on any
transactions for which the dealer's net sales commission is less than $1.00. The dealer
represents that it may lawfully sell shares of the designated Fund(s) in the state designated as
the Applicant's record address, and that it has a currently effective Selected Dealer Agreement
or sales agreement with State Street Research Investment Services, Inc. ("SSRIS") the
Distributor, with respect to the sale of shares of the designated Fund(s).
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
THE FOLLOWING INVESTMENT PRIVILEGES ARE OPTIONAL. COMPLETE ONLY THOSE THAT APPLY TO YOUR ACCOUNT.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
RIGHT OF ACCUMULATION I qualify for a reduced sales charge under Right of Accumulation (excluding any Fund which does
FOR ClASS A ONLY) not impose sales charge in connection with the purchase of shares). I have accounts in:
LOWER SALES CHARGES IF YOU
OR YOUR SPOUSE HAVE INVEST- Fund name Account number
MENTS IN OTHER ELIGIBLE -------------------------------------------------------------------------------------------------
FUNDS. SEE PROSPECTUS Fund name Account number
FOR FURTHER DETAILS! -------------------------------------------------------------------------------------------------
Fund name Account number
- ------------------------------------------------------------------------------------------------------------------------------------
LETTER OF INTENT I agree to the provisions of the Letter of Intent set forth in the Prospectus of the designated
FOR CLASS A ONLY) fund(s) which I have received. I intend to invest over a 13-month period beginning ___________
LOWER SALES CHARGES IF __________ 19 ____, at least an aggregate of:
YOU OR YOUR SPOUSE PLAN
TO INVEST MORE! IF YOU OR [_]$100,000 [_]$250,000 [_]$500,000 [_]$1,000,000
YOUR SPOUSE ALREADY HAVE
A LETTER OF INTENT- in any combination of the Eligible Funds (excluding any Fund which does not impose a sales charge
CHECK HERE [_]! in connection with the purchase of shares).
- ------------------------------------------------------------------------------------------------------------------------------------
TELEPHONE EXCHANGE [_] I authorize the transfer agent (the "Agent") for the applicable Fund as designated by SSRIS,
(SERVICE AVAILABLE ONLY FOR to effect exchanges for my account according to telephone instructions from me or my dealer and
SHARES HEKD ON DEPOSIT WITH to register the shares of the Fund to be acquired exactly the same as my existing account. I
AGENT.) agree that none of the Fund(s), any other Eligible Funds, the Agent or SSRIS will be liable for
any loss, liability, cost, or expense for acting upon , and will not be responsible for the
authenticity of any telephone instructions. I understand that all telephone calls will be
recorded on tape. Authorizing an exchange constitutes an acknowledgement that the shareholder has
received the current Prospectus of the Fund to be acquired .
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOMATIC INVESTING
[_] Check here to receive the information
An easy way to invest in you need to start the State Street Research
your IRA! Investamate program.
- ------------------------------------------------------------------------------------------------------------------------------------
IF YOU ARE ESTABLISHING A Name of employer
-------------------------------------------------------------------------------------------------
SIMPLIFIED EMPLOYEE Address of employer
-------------------------------------------------------------------------------------------------
PENSION PLAN, PLEASE Telephone no. of employer
COMPLETE THIS SECTION.
- ------------------------------------------------------------------------------------------------------------------------------------
ACCEPTANCE BY THE This plan shall be deemed to have been accepted by the Trustee State Street Bank and Trust
TRUSTEE Company, after all necessary forms, properly completed, are received by State Street Research
Shareholder Services, and delivered by Share-holders Services to the agent for the Trustee.
- ------------------------------------------------------------------------------------------------------------------------------------
SEND COMPETED APPLICATION AND CHECK MADE PAYABLE TO
"STATE STREET BANK AND TRUST COMPANY, TRUSTEE" TO:
STATE STREET RESEARCH
SHAREHOLDER SERVICES
P.O. BOX 8408
BOSTON, MA 02266-8314
</TABLE>
<PAGE>
D I R E C T R O L L O V E R OF A S S E T S F O R M
---------------------------------------------------------
STATE STREET RESEARCH
- -------------------------------------------------------------------------------
HOW TO TRANSFER . Complete this Direct Rollover Form and a State
YOUR RETIREMENT Street Research IRA application. EVEN IF YOU
PLAN ACCOUNT OR ALREADY HAVE ANOTHER STATE STREET RESEARCH IRA,
403(b) TO A it is advisable to set up a separate IRA to
STATE STREET receive a direct rollover from a qualified plan
RESEARCH IRA: or 403(b).
. WHEN COMPLETED, send both copies of this Direct
Rollover Form and the IRA application to: STATE
STREET RESEARCH SHAREHOLDER SERVICES, P.O. BOX
8408, BOSTON, MA 02266-8408.
- -------------------------------------------------------------------------------
YOUR NAME Name Social Security#[_][_][_] [_][_] [_][_][_]
AND ADDRESS Address Telephone(Home)
-----------------------------------------------------------
City Telephone(Business)
-----------------------------------------------------------
State/ZIP Date of birth
- -------------------------------------------------------------------------------
WHAT IS YOUR TYPE OF CURRENT PLAN [_] Regular IRA [_] Spousal IRA
RETIREMENT PLAN [_] Rollover IRA [_] SEP-IRA [_] 403(b) [_] 401(K)
OR 403(b) NOW? [_] Money Purchase [_] Pension Plan [_] Keogh (HR-10)
-----------------------------------------------------------
TYPE OF INVESTMENT [_] Mutual fund (specify below)
[_] Savings account [_] Other (specify below)
-----------------------------------------------------------
Account number Name of investment
-----------------------------------------------------------
Name of current Trustee/Custodian
Address of current Trustee/Custodian
- -------------------------------------------------------------------------------
PLEASE TELL US My investment choices are indicated below and on the IRA
WHICH FUND YOU application.
HAVE SELECTED FOR
YOUR IRA Fund name % Fund name %
INVESTMENT -----------------------------------------------------------
Fund name % Fund name %
- -------------------------------------------------------------------------------
USE THIS SECTION Fund name IRA account# %
TO TRANSFER AN -----------------------------------------------------------
EXISTING IRA TO AN Fund name IRA account# %
EXISTING STATE
STREET RESEARCH IRA Fund name IRA account# %
- -------------------------------------------------------------------------------
PLEASE AUTHORIZE Please redeem [_] ALL or [_] PART ($ _________) of my
YOUR CURRENT present account and transfer the redemption proceeds
TRUSTEE/CUSTODIAN to my State Street Research IRA account [_] immediately
TO TRANSFER YOUR [_] at maturity.
QUALIFIED PLAN OR
403(b) ASSETS TO
STATE STREET Your signature Date
RESEARCH ------------------------------------------------------
Employer's signature (if needed) Date
------------------------------------------------------
SIGNATURE GUARANTEE: Your current Trustee or Custodian
may require your signature to be guaranteed. Call them
for requirements.
Complete this Signature guaranteed by:
section and Name of bank or dealer firm
State Street ------------------------------------------------------
Research will
transfer your Signature of officer and title
qualified plan
assets for you.
- -------------------------------------------------------------------------------
PLEASE DO NOT FILL OUT THE LOWER PORTION OF THIS ROLLOVER FORM.
- -------------------------------------------------------------------------------
FOR CURRENT INSTRUCTIONS FOR DELIVERY TO STATE STREET RESEARCH
TRUSTEE/CUSTODIAN IRA
USE:
Please liquidate and transfer on a fiduciary-to-
fiduciary basis all or part of the designated account
as instructed above and make check payable to: STATE
STREET BANK AND TRUST COMPANY, TRUSTEE
PLEASE INCLUDE MAIL TO: State Street Research Shareholder Services,
ACCOUNT NUMBER AND P.O. Box 8408, Boston, MA 02266-8408
FBO ON THE CHECK. Please remember to include a copy of this Direct
Rollover Form, along with the check, for proper credit to
the accounts. State Street Research Shareholders Services
will deliver the items to the agent for State Street Bank
and Trust Company, who serves as Trustee .
- -------------------------------------------------------------------------------
FOR SUCCESSOR SUCCESSOR TRUSTEE'S ACCEPTANCE OF INDIVIDUAL RETIREMENT
TRUSTEE/CUSTODIAN ACCOUNT ASSETS
USE:
State Street Bank and Trust Company will accept the
transfer described above once this form has been
completed and signed by you.
-------------------------------------------------------
-------------------------------------------------------
Authorized signature of acceptance Date
by Agent for State Street Bank and
Trust Company, Trustee
<PAGE>
- -------------------------------------------------------------------------------
STATE STREET RESEARCH
- -------------------------------------------------------------------------------
IRA SYSTEMATIC WITHDRAWAL PLAN APPLICATION
- -------------------------------------------------------------------------------
___________________________________________________________
PLEASE FILL OUT Name Fund name Account number Class
ALL INFORMATION designation
The transfer agent the ("Agent") is authorized to liquidate
shares in and withdraw cash from my IRA account on or
about the 8th calendar day beginning the month of
___________ to provide Systematic Withdrawal Plan (SWP)
payment checks to the registered shareholder or to the
following designated payee:
-----------------------------------------------------------
Name of bank Bank account number
or payee if applicable
-----------------------------------------------------------
Street address City State ZIP
CHOOSE THE BEST I would like to take my payments in accordance with the
PAYMENT SCHEDULE following schedule:
FOR YOU [_] Monthly [_] Quarterly [_] Semiannually
[_] Annually
-----------------------------
CHOOSE ONLY ONE: My total payments should *Please note
amount to (choose one)* If you are a Class B Share-
[_] 1. 5 ______ to be holder your Systematic With-
paid out as indicated drawl payments will be
above subject to the contingent
[_] 2. ________ % of the deferred sales charge unless
value of my account the maximum amount redeemed
[_] 3. Minimum amount based during a year does not exceed
on my life expectancy certain limits or does meet
[_] 4. Minimum amount based IRS eligibility regulations.
on joint life expect- -----------------------------
------------------------------------------------------------
My birthdate Spouse's birthdate
The Agent [_] should [_] should not withhold taxes on my
SWP payments.
[_] I am of retirement age and eligible to receive
distribution on my IRA account.
[_] I am under 59 1/2 years of age and I am aware of the
implied tax penalties for early withdrawal.
- -------------------------------------------------------------------------------
SUBSTITUTE FORM W-4P-WITHHOLDING ELECTION
- -------------------------------------------------------------------------------
I acknowledge that, unless I elect to have no withholding
made from my IRA distributions, or if I have a foreign
address, the Agent on behalf of the Trustee will withhold a
fixed 10% of the amounts to be paid to me and will
immediately remit the amount withheld to the IRS. I
understand that unless I have a foreign address I may, with
respect to future distributions, revoke my withholding
election by submitting written instructions to the Agent of
the Trustee.
CHOOSE ONLY ONE: [_] 1. I elect NOT to have any amounts withheld from my IRA
distributions.
[_] 2. I elect to have _________ % (minimum of 10%)
withheld from my IRA distributions.
I hereby elect that the assets held by the Trustees in the
above individual Retirement Account(s) be paid according to
the instructions above. This payment is to continue as long
as there is any balance in my IRA(s) to fund such
payment. Although these distributions are made in accordance
with the law, they are revocable and another plan may be
substituted that is also in accordance with the law.
Additional amounts may be distributed from time to time upon
presentation to the Trustee Agent of written instructions in
good order.
I hereby release the Agent and Trustee and indemnify them
from any and all claims arising from the Agent's or
Trustee's actions hereunder.
PLEASE SIGN X
-----------------------------------------------------------
Signature Date
IF THE PAYEE OR THE ADDRESS IS DIFFERENT FROM THE
INFORMATION FOUND ON YOUR STATE STREET RESEARCH CONFIRMATION
STATEMENTS, WE REQUIRE THAT YOUR SIGNATURE BE GUARANTEED BY
A BANK, A MEMBER FIRM OF A NATIONAL STOCK EXCHANGE, OR OTHER
ELIGIBLE GUARANTOR INSTITUTION.
X
SIGNATURE(S) ------------------------------------------------------------
GUARANTEED BY: Name of bank or Authorized signature
investment dealer
------------------------------------------------------------
Street Address City State ZIP
MAIL COMPLETED STATE STREET RESEARCH
APPLICATION TO: SHAREHOLDER SERVICES
P. O. BOX 8408
BOSTON, MA 02266-8408
<PAGE>
Exhibit (14)(c)
[FRONT COVER]
[State Street Research Logo]
403(b)
Retirement--The Key Is Planning Now
As a working person, you have a decision to make--how to protect your current
earnings and provide for a comfortable retirement.
Social Security may not be adequate. Currently, average monthly benefits
are around $675.* And, as the retired population grows in proportion to
the number of workers paying into the fund, Social Security may become
less reliable. In fact, in many places, employees of state or local
governments do not participate in Social Security.
Taxable savings plans may not be adequate either. Both the money you set
aside and the interest it earns are taxed at current rates--just when
you're at peak income levels.
*Source: Social Security Administration.
A Good Way To Plan For Retirement
A State Street Research 403(b) Account is a good way for employees of
private tax-exempt organizations such as hospitals or colleges, and
employees of public schools or colleges, to build financial resources
for retirement. If you are such an employee, you should consider a
403(b) account.
The 403(b) Advantage--Lower Income Taxes
Contributions to your State Street Research 403(b) Account are not
subject to current federal income tax, within the limits allowed by the tax
laws. This reduces your current federal income tax liability and increases your
spendable income, compared to a taxable savings program. Many states
exclude 403(b) contributions from state income taxes as well.
This chart shows the benefits of saving with a 403(b) account. In each
instance, the employee plans to save 10% of income, or $5,000. This
example shows only federal income tax savings. You may also save on
state income taxes.
Saving Outside 403(b) Saving With 403(b)
Salary $50,000 Salary $50,000
Income Taxes 9,353 403(b) Savings 5,000
- ---------------------------- -------------------------------
After-Tax Income 40,647 Taxable income 45,000
Savings 5,000 Income Taxes 7,953
- ---------------------------- -------------------------------
Spendable Income $35,647 Spendable Income $37,047
With 403(b), you have $1,400 more in spendable income!
The 403(b) Advantage--Tax-Free Accumulation
The interest and other investment earnings accumulating in your 403(b)
account compound tax deferred until you begin making withdrawals from your
account. This can mean greater overall returns than with taxable
investments.
<PAGE>
------------------------ LINE CHART ------------------------------
Taxable vs. Tax-free Accumulation
The chart at right
illustrates what
happens when monthly investments of $125
grow at 7% and 5%
tax free for 10 years,
versus the same
taxable investments
growing at 7% and 5%
for 10 years in the 28%
tax bracket. All
distributions are
reinvested. Sales
charges, if any are
not reflected.
($ in Thousands)
$21,501 Tax deferred 7%
$19,413 Taxable 7%
$19,375 Tax deferred 5%
$18,018 Taxable 5%
The chart illustrates general advantages of tax-deferral. Returns are
hypothetical and are for illustrative purposes only; they are not
intended to imply or guarantee a rate of return on any mutual fund or
other investment.
----------------------------------------------------------------
State Street Research Mutual Funds
Your 403(b) contributions will be invested in the State Street Research
fund(s) of your choice. State Street Research offers a variety of mutual
funds, each managed to meet a specific investment objective, such as
growth or income.
Corporate Heritage
State Street Research has a history dating to 1924, with the founding of
the nation's second oldest mutual fund. Today the Company manages over
$27 billion in assets.
How To Get Started
The following questions and answers will give you important information
about your State Street Research 403(b) Account. Simply follow the
instructions on the back cover to set up your account.
Questions And Answers About Your
403(b) Account
Eligibility
Who can have a 403(b) account?
Only employees of an organization described in Section 501(c)(3) of the
Internal Revenue Code may have a 403(b) account. These include non-
profit charitable, educational, scientific or religious organizations,
such as hospitals or colleges. Also, an employee of a state or local
government who is employed by a school (for example, a local school
system or state college or university) can have a 403(b) account. Check
with your employer to determine whether you qualify for a 403(b)
account.
<PAGE>
What happens if I change employers?
If your new employer is a qualified employer, you may continue to
contribute to your 403(b) account after changing jobs. If your new
employer is not a qualified organization, you may no longer make
contributions to your 403(b) account, but your account will continue to
accumulate tax free until you begin making withdrawals. Contact
State Street Research Shareholder Services for additional information:
1-800-562-0032.
Contributions
How do I make contributions to my 403(b) account?
Usually, you would enter into a salary reduction agreement with your
employer that specifies the amount you want to contribute. Your
compensation will be reduced by this amount and the money will be
contributed by your employer to your 403(b) account. In some cases, your
employer may make contributions to your 403(b) account as a retirement
benefit for you.
Your employer may already have a salary reduction agreement for you to
use. If not, a form of salary reduction agreement is included in your
State Street Research 403(b) Package. Read the form for an explanation
of IRS restrictions on changing the amount of your salary reduction.
Maximum Contribution
How much can be contributed each year to my 403(b) account?
Determining your maximum 403(b) contribution is complex because several
different tax law limits apply depending on your individual situation.
For most employees, the maximum salary reduction contribution for a
calendar year will be the smaller of 20% of your compensation or $9,500.
In the future, the $9,500 limit may be indexed for inflation each year.
Employees of certain kinds of qualified employers (for example, public
schools and private tax-exempt schools, colleges, hospitals and home-
health agencies) can elect different limits in some situations. Also,
long-service employees (15 or more years of service) of such employers
may have increased limits.
Your employer's benefits or personnel department, or the business
office, may be available to calculate your maximum contribution. If not,
you may use the worksheet enclosed in your State Street Research 403(b)
Package. You may wish to consult an accountant or tax adviser to confirm
your maximum contribution.
What happens if I exceed the maximum for a year?
If you exceed the $9,500 limit for a year, you should request State
Street Research to return the excess contribution to you with earnings.
You should make your request no later than March 1 of the following
year.
<PAGE>
If your contributions for a year exceed any of the other limits, you
must include the excess in your income for federal income tax purposes.
In addition, you may have to pay a penalty tax equal to 6% of the
"excess contribution." The penalty tax also applies to excess
contribution amounts left over from prior years.
You can avoid paying the penalty tax if you withdraw the amount of the
excess from your account before the end of the year in which the excess
contribution was made.
Even if you have to pay the penalty tax in one year, you can avoid paying it in
later years by contributing less than your maximum for the later year; the
excess is reduced by the difference between the maximum and the actual
contribution.
Investments
What are my investment choices?
Contributions to your 403(b) account may be invested in one or more of
the eligible mutual funds distributed by State Street Research.
Also, you can exchange amounts from one fund to another. (You can even
choose telephone exchange privileges when completing your State Street
Research 403(b) Account Application.) There may be minimum investment
amounts for certain funds, or there may be sales charges. Such minimums
or charges are described in the prospectus(es).
Before investing, be sure to read the current prospectus(es) for the
funds in which you are interested so that you can be familiar with the
investment objectives and policies, and the sales charges or other
charges applicable to a Fund.
May I transfer my existing 403(b) to State Street Research?
Yes. Complete the Transfer of 403(b) Assets Form found in your State
Street Research 403(b) Package. Be sure to note the requirements for a
tax-free transfer described in the Form. Consult your personnel or
benefits department or your tax adviser for additional information.
What about an IRA?
You can have an IRA even though you are contributing to a 403(b)
account. Depending on your income level, contributions to an IRA may or
may not be deductible on your federal income tax return. For more
information about our IRAs, call State Street Research Shareholder
Services: 1-800-562-0032.
<PAGE>
Withdrawals From Your Account
When will I begin to receive retirement benefits from my account?
You choose when to make withdrawals from your 403(b) account. However,
withdrawals may not begin until you have retired or terminated
employment with your employer; reached age 59-1/2 (even though you are
still employed by your employer); or died. Earlier withdrawals are
permitted only if you become disabled or suffer a financial hardship
(as defined by IRS regulations). Consult your tax adviser, as tax
penalties may result. You may be requested to verify disability with a
doctor's certificate or a Social Security disability benefits award.
You may be asked to verify financial hardship by a certificate from an
independent person appointed by your employer, and financial hardship
withdrawals are limited to the amount of your salary reduction
contributions (no earnings or investment gains). You must begin making
withdrawals by April 1 of the year following the year when you reach
age 70-1/2. This is required even if you are still working.
Use the Withdrawal Form to notify State Street Research when you wish to
begin making withdrawals from your account.
How will the benefits be paid to me?
Benefits will be paid to you either in a lump-sum payment or in periodic
(monthly, quarterly, or annual) installments. Installment payments may
not extend beyond your life expectancy or the joint life expectancy of
you and your designated beneficiary.
Also, there are minimums on the amount of installments you must receive
after age 70-1/2. There are substantial penalty taxes (up to 50%) if you
do not make the minimum required withdrawals.
What happens to my account if I die?
Your account balance goes to the beneficiary(ies) you designate on the
403(b) application or on another written document you send to State
Street Research Shareholder Services. You can change your
beneficiary(ies) in writing. Naming a beneficiary(ies) can have estate
and tax-planning implications; consult a qualified professional.
Withdrawals by a beneficiary(ies) are also subject to rules relating to
when withdrawals must begin and minimums for installment withdrawals.
Taxes
How will I be taxed on withdrawals from my 403(b)?
Generally, amounts withdrawn from your account are taxed as ordinary
income in the year when received. In addition, with limited exceptions,
such as disability, amounts withdrawn before age 59-1/2 are subject to
an additional 10% penalty tax.
Special five-year averaging, applicable to lump-sum distributions from
certain retirement plans, does not apply to 403(b).
<PAGE>
Certain very large withdrawals (generally over $150,000 in a year--
counting all 403(b) and IRA withdrawals and distributions to you from
qualified retirement plans) may be subject to a 15% penalty tax.
There may be income tax withholding on the amounts you withdraw. If you
withdraw an amount from your State Street Research 403(b) Account that
is eligible for rollover (see next question), mandatory 20% federal
income tax withholding will apply unless the withdrawn amount is rolled
directly to another 403(b) arrangement or to an IRA. If the amount you
withdraw is not eligible for rollover to another 403(b) arrangement or
IRA, 10% withholding of federal income tax will apply unless you elect
no withholding on your Withdrawal Form.
Can I postpone federal income tax on a withdrawal from my 403(b)
account?
In certain situations, you can defer income taxes on withdrawals from
your 403(b) account if all or part of the withdrawal is rolled over to
another 403(b) account or into an IRA either directly by State Street
Research (direct rollover) or by you (regular rollover) within 60 days.
All withdrawals are eligible for rollover (either a direct rollover or a
regular rollover) except minimum required withdrawals after age 70-1/2
and withdrawals over a period of at least 10 years or over the life
expectancy of you (or you and your designated beneficiary).
Caution: Rollovers must meet technical IRS requirements that cannot be
described in detail here. Consult your employer or tax adviser for
assistance in carrying out a rollover.
If a withdrawal is eligible for rollover and if you do not elect a
direct rollover, the Custodian must withhold 20% of your withdrawal for
federal income taxes. The rollover and withholding rules also apply to
your surviving spouse if he or she receives a distribution from your
account upon your death.
Be certain to carefully read the notice on tax treatment and withholding
on withdrawals that accompanies the Withdrawal Form for more
information.
What about other taxes?
Contributions under a salary reduction agreement will be subject to
Social Security withholding if you are covered by Social Security.
State tax treatment varies from state to state. You should consult your
tax adviser with any questions on how a 403(b) account would affect your
state taxes.
IMPORTANT. The preceding questions and answers are general and are
provided for informative purposes only. Always consult your tax adviser
for advice on how the tax laws apply to you and how a State Street
Research 403(b) account will affect your tax situation. More information
is available in IRS Publication 571, Tax-Sheltered Annuity Plans for
Employees of Public Schools and Certain Tax-Exempt Organizations; this
publication is available from the IRS.
<PAGE>
How To Start Your State Street Research 403(b) Account
1. Carefully read the material describing the State Street Research
403(b) Account and the prospectus(es) for the fund(s) in which you plan
to invest. You may want to review the material with your accountant,
lawyer or other tax adviser because the rules under Section 403(b) are
complex and subject to change.
2. If contributions to your 403(b) Account will be made under a salary
reduction agreement, you should fill out, and you and your employer
should sign, a salary reduction agreement. If your employer does not
have a form of salary reduction agreement for use with employees, you
may use the sample Salary Reduction Agreement found in the State Street
Research 403(b) package.
3. Complete and sign the State Street Research 403(b) Account
Application. Be sure to complete the beneficiary section of the
Application.
4. If you are transferring your current 403(b) assets to State Street
Research, complete and sign the Transfer of Assets Form.
5. Mail the completed and signed Application (and the Transfer of Assets
Form, if used) to:
State Street Research Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
Enclose a check in the amount of $10.00 payable to State Street Bank and
Trust Company, Custodian, to cover the first year's annual maintenance
fee for the account; otherwise the fee will be charged to your account.
There is a $10.00 annual maintenance fee for each calendar year (the fee
is not prorated for less than a full calendar year). We will forward the
necessary materials to the Custodian.
This brochure must be preceded or accompanied by the relevant fund
prospectus(es), which includes investment policies, sales charges and
expenses. Please read the prospectus(es) carefully before investing.
[State Street Research logo]
(C)1995 State Street Research Investment Services, Inc. Boston, MA 02111
Control Number: 2717-951025(1196)SSR-LD RP-923C-1095
<PAGE>
[BACK COVER]
(C)1995 State Street Research Investment Services, Inc., Boston, MA 02111
CONTROL NUMBER: 2713-951025(1196)SSR-LD RP-921C-1095
[FRONT COVER]
[State Street Research logo]
403(b)
Maximum Salary
Reduction Worksheet
Maximum Salary Reduction Worksheet
This worksheet will help you compute the maximum amount by which you can reduce
your salary without exceeding any of the limits. Before doing the calculations,
you may wish to check with your Employer's benefits or personnel department or
business office. Often these departments will calculate an employee's 403(b)
maximum.
If you use the worksheet to do your own calculation, read the
information following the worksheet first. After completing the
worksheet, you should consult your accountant, lawyer or other
professional tax adviser to verify your calculation or answer your
questions. The tax laws change often and individual situations can vary.
Also, certain exceptions and rules that apply only in relatively rare
situations are not covered by the worksheet. This worksheet and the
questions and answers following it are not intended to be tax advice,
and you are responsible for meeting the tax law limits
on contributions to your 403(b) account.
To help you, the example demonstrates a typical salary reduction situation and
the worksheet provides spaces for your own computations. This worksheet and the
questions and answers are designed to help you determine your maximum salary
reduction. If your employer will make contributions on your behalf as an
addition to your salary, or if you will contribute by foregoing an increase in
compensation, there are different formulas to determine your maximum. If this
situation applies to you, your Employer should be able to help you calculate the
limits that apply to you.
In the example, a college teacher will earn $40,000 in 1995. She will
have worked for the college 15 years at the end of 1995. The college has
previously contributed $20,000 on her behalf to its 403(b) retirement
plan ($18,000 of which was contributed in the most recent 10 years). The
college will contribute 10% of her salary ($4,000) to its retirement
plan for 1995. In addition, the employee reduced her salary in prior
years by a total of $10,000 for contribution to her 403(b) account. How
much can this employee reduce her salary for 1995?
Step 1 - Determine the Exclusion Allowance
(example) (your computation)
(a) Enter your expected
salary for the current
year before reduction
for contributions to
your 403(b) account. $40,000 ___________________
(b) Enter your number
of years of service
(including whole
and fractional years)
as of the end of the
current year. 15 ____________________
(c) Multiply (a) by (b)
by .20. $120,000 ____________________
(d) Enter the amount of
your salary reduction
contributions and
employer contributions
for you to a 403(b)
retirement plan or to a
qualified retirement plan
in prior years. $ 30,000 _____________________
<PAGE>
(e) Enter amount of
contributions by
your employer
for you to a 403(b)
retirement plan for
the current year. $ 4,000 ______________________
(f) Subtract (d) and (e)
from (c). $ 86,000 ______________________
(g) Multiply your years
of service in (b) by .20
and add 1. 4 ______________________
(h) Divide (f) by (g) to
determine your
exclusion allowance
for the year. $ 21,500 ______________________
Step 2 - Determine the Section 415 General Limitation
(a) Multiply your expected
salary (before reduction
for contributions to your
403(b) account) for the
current year by .20. $ 8,000 ______________________
(b) Multiply amount of
your employer's
expected contributions
for you for the current
year to a 403(b) retire-
ment plan by .80. $ 3,200 ______________________
(c) Subtract (b) from
(a)to determine your
Section 415 general
limitation (but not
in excess of $30,000). $ 4,800 ______________________
Step 3 - Determine the Section 415 Alternatives
Alternative A
Available if employee
terminates service;
same as exclusion
allowance but based
on last ten years of
service with employer,
up to a maximum
of $30,000. $ 16,000 ______________________
Alternative B
(a) Enter the exclusion
allowance determined
in Step 1. $ 21,500 ______________________
(b) Add $3,200 to the Section
415 general limitation
determined in Step 2. $ 8,000 ______________________
(c) Enter $15,000. $ 15,000 $ 15,000
<PAGE>
(d) Your alternative B
limitation is the
smallest of (a),
(b) or (c). $ 8,000 ______________________
Alternative C
Enter the Section 415
general limitation
determined in Step 2. $ 4,800 ______________________
Step 4 - Apply the $9,500 Limit
(a) Enter $9,500. $ 9,500 $9,500
(b) If eligible (see Question 14
below), use the smallest
of the following:
(i) $ 3,000 $ 3,000 $3,000
(ii) $15,000 reduced
by increases to the
$9,500 limit you
used in prior years. $ 15,000 ______________________
(iii) $5,000 multiplied
times years of service,
reduced by all prior
salary reduction
contributions to a
403(b) account or
annuity or to a
401(k) plan. $ 65,000 $_____________________
(c) Add the amount
determined in (b)
to $9,500; this is
your limit for the
year under this step. $ 12,500 $_____________________
Step 5 - Determine the maximum salary reduction
(a) Enter your exclusion
allowance from step 1. $ 21,500 ______________________
(b) Enter your Section 415
general limitation
from step 2. $ 4,800 ______________________
(c) Enter the lesser
of (a) or (b). $ 4,800 ______________________
(d) Enter Alternative A
if applicable. $ 16,000* ______________________
(e) Enter Alternative B. $ 8,000 ______________________
(f) Enter Alternative C. $ 4,800 ______________________
(g) Enter the largest
of items (c), (d),
(e) or (f). $ 8,000* ______________________
<PAGE>
(h) Enter the $9,500
limit (Step 5(c)). $ 12,500 $_____________________
(i) Enter the smaller
of (g) or (h).
This is your maxi-
mum salary reduc-
tion for this year. $ 8,000 ______________________
*Alternative A is not available to the employee in the example because
she is not terminating employment.
For this employee, the Alternative B limit of $8,000 is the largest for
this year. Keep in mind that the alternative election, which appears
most advantageous in this year may not necessarily be the best for you
over the long run. See Questions 9 and 12.
Step 6 - Salary Reduction Agreement
Enter a salary reduction agreement with your Employer, which reduces
your compensation each pay period so that the correct amount is
contributed to your State Street Research 403(b) Account.
QUESTIONS AND ANSWERS ON
CALCULATING YOUR MAXIMUM
Maximum Contribution
1. What is the maximum annual contribution to my 403(b) account?
The maximum contribution you can exclude from your taxable income
(sometimes called your "maximum exclusion allowance"
or "MEA") is the smaller of your "403(b) exclusion allowance" (Questions
2-5) or your "415 limit" (Questions 6-12). Finally, your salary
reduction contributions for a year cannot exceed $9,500; this is
increased for certain employees (Questions 13 and 14).
Exclusion Allowance
2. How do I compute my "exclusion allowance"?
Use the following steps to compute your 403(b) exclusion allowance:
(a) Take 20 percent of your expected salary for the current
year (before reduction for your 403(b) contributions, but
after reduction for salary reduction contributions under a
cafeteria or flexible benefits plan or 401(k) plan if your
employer maintains such a plan).
(b) Multiply (a) by your number of years of service with your
current employer as of the end of the current year.
(c) Subtract the following total from (b):
(bullet) your total 403(b) salary reduction contributions
in previous years (which you excluded from your
income),
(bullet) your employer's contributions in previous years on
your behalf to a 403(b) retirement plan or to a
qualified retirement plan,
<PAGE>
(bullet) your employer's expected contributions to a 403(b)
retirement plan for you for the current year (see
Questions 15 and 16).
(d) Divide (c) by the sum of one plus 20 percent of your years
of service as of the end of the current year.
The resulting figure is the amount of your exclusion allowance for the
current year.
3. What if I do not know how much my employer has contributed in
previous years on my behalf to a retirement plan?
If you cannot learn this from the benefits or personnel office of your
employer, IRS regulations provide a method for determining the amount of
your employer's prior contributions. Consult your employer or tax
adviser for further information.
Years of Service
4. How do I determine my years of service?
Count one year of service for each full year you were a full-time
employee. Count a fraction of a year of service for years in which you
were a part-time employee or did not work a full year. Add your full and
fractional years of service together to determine your total years of
service. Only service with your current employer can be counted.
Part-time Fraction. For part-time work, the fraction is your work
schedule divided by the normal work schedule for a full-time employee
holding the same position. For example, if for a year you taught one
course for six hours per week, and a full-time teacher normally teaches
18 hours per week, your fraction would be one-third of a year.
Partial Year Fraction. If you were a full-time employee for part of the year,
the fraction is the number of weeks or months you worked divided by the number
of weeks or months in your employer's annual work period. For example, if you
taught full-time for four and one-half months and your employer's annual work
period is an academic year of nine months, your fraction would be one-half of a
year.
Part-time, Partial Year Fraction. If you were a part-time employee for
part of a year, calculate one fraction as though you were a part-time
employee for a full year and one fraction as though you were
a full-time employee for a part of a year. Then multiply the two
fractions together to obtain your fractional year of service. For
example, if you taught a course for six hours per week for one semester
at a school where full-time teachers taught 18 hours per week for two
semesters, your fractional year of service would be one-sixth (part-time
fraction of one-third times full-time for part-of-a-year fraction of
one-half).
5. What if I have less than one year of service?
Under the law, you may compute your exclusion allowance based on one
year of service even if you have worked for your employer for less than
a year or if your fractional years of service total less than a year.
<PAGE>
415 Limits
6. What are the 415 limits?
The 415 limits are from Section 415 of the Internal Revenue Code. The
415 limits apply even though your 403(b) exclusion allowance for the
year is greater. Section 415 has a general limit and certain
alternatives that may permit a larger maximum.
7. How do I compute the 415 general limit?
Your 415 general limit is the smaller of:
(a) 20 percent of your compensation for the year (before
reduction for contributions to your 403(b) account, but
after reduction for salary reduction contributions under
any cafeteria or flexible benefits plan or 401(k) plan your
employer maintains); this amount must be reduced by 80% of
your employer's contribution for the year to the 403(b)
retirement plan; or
(b) $30,000. (This $30,000 figure will eventually be indexed
for cost-of-living changes. However, the indexing will not
begin for some years depending on future inflation.)
415 Alternatives
8. What are the 415 alternatives?
In the past, many employees eligible for 403(b) did not enter into
salary reduction agreements because they expected to make large "catch-
up" contributions later. The 415 general limit might prevent those
employees from saving enough for their retirement years. To remedy this
situation, 415 provides certain alternatives.
These alternatives are available only to employees of an educational
organization, a hospital, a home health service agency, a health and
welfare service agency, or a church or association of churches. If you
do not work for such an employer, you can skip Questions 9 through 12.
9. How many alternatives are there?
Section 415 provides three alternatives:
Alternative A may be used only once, in the year you leave the
service of your employer. Under this alternative, the 415
percentage limitation (see Answer 7(a)) is disregarded and you
may calculate your 403(b) exclusion allowance using your years
of service with your employer up to a maximum of ten years. The
$30,000 limit still applies, however, even if your exclusion
allowance is higher.
In other words, under this alternative, you are limited to your
403(b) exclusion allowance based on a maximum of ten years of
service, or $30,000, whichever is less.
Alternative B is the smallest of:
(a) the amount of your 403(b) exclusion allowance;
(b) 20 percent of your compensation (before reduction for
contributions to your 403(b) account) plus $3,200;
(c) $15,000
<PAGE>
Alternative C is to disregard the 403(b) exclusion allowance
altogether. Under this alternative, contributions are subject
only to the 415 general limit described in Answer 7.
Finally, there is a separate alternative available only to an employee
of a church or association of churches: to replace the 415 general limit
with the limit of $10,000 per year (up to a cumulative total
of $40,000).
10. Are there any special rules for electing one of the alternatives?
Yes. You may elect only one of the three alternatives. If you elect one
of the alternatives, you may not elect either of the other
alternatives in any future year.
Alternative A (for the year of separation) may be elected only once. If
you elect this alternative in any year, you may not elect an
alternative at any time in the future.
If you elect an alternative, your election is irrevocable for that year.
However, you may elect either alternative B or C in one year,
choose not to use it in the following year, and then elect the same
alternative again in the third year.
11. How do l elect an alternative?
You elect an alternative simply by computing your income tax
liability in a manner consistent with the alternative.
12. Which alternative is best for me?
This depends upon your current compensation, expected future
compensation, years of service, expected future years of service,
expected ability to make future salary reduction contributions, and so
forth. An alternative which appears advantageous this year may restrict
contributions to your 403(b) account in later years. Only you can decide
which alternative is most advantageous to you.
The $9,500 Cap
13. Where did the $9,500 limit come from?
In the Tax Reform Act of 1986, Congress decided to limit salary
reduction contributions by employees. For 403(b), Congress chose a
$9,500 cap. This $9,500 cap applies as a maximum salary reduction
contribution even though your 403(b) exclusion allowance or 415 limit is
higher. This cap applies only to your salary reduction contributions,
not to employer contributions to a 403(b) retirement plan for you.
The $9,500 cap is indexed for future cost-of-living increases.
However, the cap will not increase for some years; exactly when depends
on future inflation rates.
14. Who qualifies for an increased $9,500 cap?
Congress realized that the $9,500 cap would affect employees who
expected to make "catch-up" contributions. Therefore, an increased cap
is available to some employees.
There are two requirements for an increased cap. First, your employer
must be one of the types listed in Answer 8. Second, you must have 15 or
more years of service with the employer. If you qualify, your $9,500 cap
is increased by the smallest of the following:
(a) $3,000;
<PAGE>
(b) $15,000 (reduced by all amounts by which your $9,500 cap
was increased in prior years under this special rule); or
(c) $5,000 multiplied by your number of years of service, minus
all previous salary reduction contributions under 403(b)
(or under any 401(k) plan in which you participated).
Additional Rules for an Employee with Another Retirement Program
15. If for the current year my employer or any other employer contributes to
another 403(b) account or annuity for me, must such contributions be added to my
salary reduction contributions when determining my maximum contribution?
Yes. To determine your 403(b) exclusion allowance, your 415 limit or one
of the alternatives (but not the $9,500 cap--only your salary reduction
contributions count against the $9,500 cap), your employer's current
contributions to a 403(b) plan or arrangement for you must be included.
(See the Worksheet for an example of this situation). If your employer
has a retirement plan, you should find out whether it is a 403(b) plan.
16. If for the current year my employer makes contributions for me to a
retirement plan that is "qualified" under section 401(a) of the Code,
must such contributions be counted when determining my maximum
contribution?
If this situation applies to you, you should consult your tax adviser.
The following is only a general summary of the rules governing
aggregation of contributions to your 403(b) account with contributions
to a qualified plan.
Contributions for you to a qualified plan during the current year by an
employer are not counted in determining your 403(b) exclusion allowance
this year.
However, for your 415 limit, the answer depends on whether you have
elected one of the 415 alternatives and on whether you
"control" your employer.
If you have not elected an alternative, or if you have elected
alternative A or B, you need not combine contributions to your 403(b)
account with contributions on your behalf to a qualified plan of the
same or any other employer unless you control the employer by owning a
50% or greater interest.
If you have elected alternative C (to disregard the exclusion allowance
entirely), you must count contributions to your 403(b) account with
contributions for you to a qualified retirement plan maintained by any employer
regardless of whether you "control" the employer.
<PAGE>
State Street Research 403(b)
Account Application
How to open your
State Street
Research 403(b)
Account
1. To open a State Street Research 403(b) Account, please complete
this side of the Application.
2. Your investment dealer must complete the dealer information
section of the Application.
What type of State
Street Research
403(b) are you
opening?
[ ] Regular 403(b) [ ] Transfer of Assets [ ] Regular Rollover
or Direct Rollover
Employee
information
Complete the following
information about
yourself. Your account
will be registered in
your name.
Name ___________________________________ Birth date______________________
Street___________________________________________________________________
City_____________________________________State___________ZIP_____________
Social Security #________________________________________________________
Daytime telephone #______________________________________________________
Employer
information
Complete the following
information about your
Employer.
Name_____________________________________________________________________
Street___________________________________________________________________
City_____________________________________State___________ZIP_____________
Name of contact person___________________Daytime telephone #_____________
Which Fund(s)
have you selected
for your 403(b)?
See the State Street
Research 403(b)
brochure and relevant
prospectus(es) for
Fund details.
Name of Fund Class of Shares Percentage
A B D
[ ] [ ] [ ] _______ %
- ---------------------------------------
[ ] [ ] [ ] _______ %
- ---------------------------------------
[ ] [ ] [ ] _______ %
- ---------------------------------------
[ ] [ ] [ ] _______ %
- ---------------------------------------
[ ] [ ] [ ] _______ %
- ---------------------------------------
Total 100%
<PAGE>
Who is the
beneficiary of
your State Street
Research 403(b) Account?
1. Name__________________________________Birth date______________________
Relationship to you___________________________________________________
Street________________________________________________________________
City__________________________________State___________ZIP_____________
Social Security #_____________________________________________________
Percentage to this beneficiary ____%
2. Name__________________________________Birth date______________________
Relationship to you___________________________________________________
Street________________________________________________________________
City__________________________________State___________ZIP_____________
Social Security #_____________________________________________________
Percentage to this beneficiary ____%
Important
Naming a beneficiary(ies) can have estate and tax-planning implications.
Also, if you are married and live in a community property state (AZ, CA,
ID, LA, NM, NV, TX, or WA), you may need your spouse's consent to
designate someone else as beneficiary for more than half of your
Account. Consult your attorney, or other qualified professional, for
additional advice.
Keep a copy of this account application with your other important papers
(such as your will).
Telephone Exchange
The Telephone Exchange Privilege is available only for shares held on
deposit with the Transfer Agent. None of the Transfer Agent, any of the
Funds, State Street Research Shareholder Services, the Investment
Manager or the Distributor will be liable for any loss, injury, damage
or expense as a result of acting upon, and will not be responsible for
the authenticity of, any telephone instructions. I understand that all
telephone calls are tape recorded. My liability shall be subject to the
use of reasonable procedures to confirm that instructions communicated
by telephone are genuine.
<PAGE>
Telephone Exchange
by Shareholder
or Dealer
The Transfer Agent may effect exchanges for my account according
to telephone instructions from me or my Dealer as set forth in the
prospectus, and may register the shares of the Fund to be acquired
exactly the same as my existing account. Authorizing an exchange
constitutes an acknowledgment that the shareholder has received
the current prospectus of the Fund to be acquired. The account will
automatically have this privilege unless it is expressly declined by
providing your initials in the space below.
I DO NOT WANT THE TELEPHONE EXCHANGE PRIVILEGE.
___(Initial here.)
Sign here to
establish the
403(b) Account
I hereby establish a State Street Research 403(b) Account, the terms of
which are contained in this Application and the State Street Research
403(b) Agreement (which I have received and which is incorporated herein
by reference) and appoint State Street Bank and Trust Company as
Custodian. I direct that contributions to my 403(b) Account be invested
as specified above in this Application (until changed by me
in accordance with the Agreement), designate the individual(s) named
above as my beneficiary(ies) (unless I have filed a separate written
designation with the Custodian or its agent), acknowledge that I have
received a current prospectus(es) of the Fund(s) indicated above, and
acknowledge that there is a $10 annual maintenance fee (in addition
to any fees and charges described in the prospectus(es)).
Under penalties of perjury, I certify that (1) the number shown on this
Application is my correct taxpayer identification number (or I am
waiting for a number to be issued to me), and (2) I am not subject to
backup withholding because (a) I am exempt from backup withholding, or
(b) I have not been notified by the Internal Revenue Service that I am
subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
Certification Instructions--You must cross out item (2) above if you have
been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your
tax return.
Employee signature_____________________________Date___________________
<PAGE>
Dealer information
and signature
guarantee
Please have your
investment dealer
fill out this section.
Dealer firm__________________________________________________________
Home office address_________________City__________State______ZIP_____
Branch office address_______________City__________State______ZIP_____
Telephone #______________Branch #_____________Rep. #_________________
Authorized dealer signature__________________________________________
Investment Dealer's last name________________________________________
If this Application is for an account introduced through the
above-named Dealer, the Dealer further agrees to all applicable
provisions in this Application and in the prospectus(es) of the
Fund(s) selected by the Employee, represents that it has provided a
current prospectus(es) to the Employee and that the Application is
properly executed by a person authorized by the Dealer to guarantee
signatures. The Dealer warrants that this Application is completed in
accordance with the Employee's instructions and agrees to indemnify
the Funds(s), the Distributor, the Investment Manager, State Street
Research Shareholder Services and the Transfer Agent for any loss or
liability from acting or relying upon such instructions and
information. The terms and conditions of the Distributor's currently
effective Selected Dealer Agreement or sales agreement are included by
reference in this section. The Dealer represents that it has a
currently effective Selected Dealer Agreement or sales agreement with
the Distributor authorizing the Dealer to sell shares of the Fund(s),
and that it may lawfully sell shares of the designated Fund(s) in the
state designated as the Employee's address of record.
State Street Bank
and Trust Company,
Custodian
You are hereby authorized and appointed on behalf of the above-signed
dealer to execute purchase transactions in accordance with the terms and
conditions of this Application, and to confirm each purchase.
Acceptance by
the Custodian
This Account will be deemed to have been accepted by the Custodian,
State Street Bank and Trust Company, after all necessary forms, properly
completed, are received by State Street Research Shareholder
Services and delivered by Shareholder Services to the Transfer Agent.
Send completed application to:
State Street Research Shareholder Services
P.O. Box 8408
Boston, MA 02266-8408
Control Number: 2709-951025(1196)SSR-LD RP-918C-1095
<PAGE>
State Street Research 403(b)
Salary Reduction Agreement
Parties
Complete the information
about the Employee and
the Employer.
Employee name______________________________________
Social Security #__________________________________
Employer name______________________________________
Check one box.
[ ] Original Agreement [ ] Modification
Agreements
Fill in the dollar amount
or percentage that you
want to contribute in
section 2.
The Employee and the Employer agree as follows:
1. The Employee has signed the State Street Research 403(b) Account
Application establishing the Account for the benefit of the
Employee. The Employee and the Employer are entering into this
salary reduction agreement ("this Agreement") to provide for
contributions to the Account.
2. The Employee requests, and the Employer agrees, to reduce the
compensation of the Employee by $______ or by ______% per pay
period, starting with the first pay period that begins after the
Employee and the Employer have signed this Agreement.
3. As soon as possible after each pay day, the Employer will transmit
the amount by which the Employee's compensation is reduced for that
pay period to the agent for the Custodian of the Employee's
Account, to be credited to the Employee's Account in accordance
with the State Street Research 403(b) Account Agreement. For
federal income tax purposes, such amounts are considered Employer
contributions to the Employee's Account.
Where to send
contributions.
Checks should be made payable to "State Street Bank and Trust Company,
Custodian, FBO __________________________ [insert name of Employee]
403(b) Account." Mail checks to State Street Research, P.O. Box
8408, Boston, MA 02266-8408.
OVER >
<PAGE>
4. This Agreement will be effective only with respect to compensation
not yet earned by the Employee, and not with respect to
compensation already earned by the Employee on the date this
Agreement is signed.
This Agreement is binding and irrevocable with respect to
compensation earned by the Employee while this Agreement is in
effect. The Employer or the Employee may terminate this Agreement
at any time with respect to compensation not yet earned by the
Employee at the date of termination, by giving written notice to
the other party. After termination, the Employee may reinstate this
Agreement (with the same or a different salary reduction amount);
however, the Employee may not reinstate this Agreement during the
same calendar year that the Employee (or Employer) terminated this
Agreement.
The Employee may modify the amount of salary reduction elected in
Paragraph 2 above at any time by giving the Employer signed
instructions specifying the new salary reduction amount. However,
the Employee may not modify this Agreement during the same calendar
year that the Employee originally signed this Agreement or in any
calendar year when the Employee has already modified this Agreement
once during such year.
5. Unless the Employer agrees to calculate the Employee's maximum
403(b) contribution, the Employer has no responsibility for
determining that the amount by which the Employee's compensation is
reduced, as set forth in Paragraph 2 above, does not exceed the
limitations applicable to the Employee under the Internal Revenue
Code. The Employee agrees to indemnify the Employer, State Street
Research Investment Services, Inc., and its affiliates for any and
all charges, expenses, taxes, interest or penalties imposed on the
Employer as a result of any reduction in compensation in excess of
such limitations.
Signatures
In witness whereof, the parties hereto have signed this Agreement
on______________________________, 19_______.
Employee Employer
(Signature)______________ (Name of employer)___________________________
By:_________________________________________
Signature and title of authorized official)
CONTROL NUMBER: 2711-951025(1196)SSR-LD RP-920C-1095
<PAGE>
State Street Research 403(b)
Transfer of 403(b) Assets Form
How to transfer
your existing
403(b) Account
to State Street
Research
(bullet) If you don't have a State Street Research 403(b) Account
yet, complete this transfer form and a State Street Research
403(b) Account Application.
(bullet) If you already have a State Street Research 403(b) Account,
just complete this transfer form.
(bullet) When completed, send this transfer form (and if necessary,
your 403(b) Account Application) to: State Street Research
Shareholder Services, P.O. Box 8408, Boston, MA 02266-8408.
Information
about you
Name______________________________Social Security #__________________
Telephone (day)___________________Telephone (night)__________________
Account number (If you already have a State Street Research 403(b)
Account)_____________________________________________________________
Where is your
403(b) Account
now?
Name of current Custodian/Insurer____________________________________
Address______________________________________________________________
City_____________________________State__________________ZIP__________
Account number_____________________Name of mutual fund or fund family
(if applicable)______________________________________________________
Please tell us
which Fund(s)
you have selected
for your 403(b)
investment
[ ] This is a new State Street Research 403(b) Account. My
investment choices are on my 403(b) Account Application.
[ ] I already have a State Street Research 403(b) Account. Please
invest the amount transferred as follows:
Fund name___________________________Account number____________ _____%
Fund name___________________________Account number____________ _____%
I acknowledge that I have received a current prospectus(es) of the
Fund(s) selected.
OVER >
<PAGE>
Please authorize
transfer of your
current 403(b)
Account to State
Street Research
To my current Custodian/Insurer: Please redeem
[ ] ALL or [ ] PART ($_________) of my current 403(b) and transfer
the proceeds in cash to my State Street Research 403(b) Account.
(For partial transfers, indicate which investments are to be liquidated.)
Your signature______________________________Date____________
Note: Under current IRS rulings, a transfer from another 403(b) account
to a State Street Research 403(b) Account will be a tax-free transaction
as long as the withdrawal restrictions under your existing 403(b) are
not more severe than those under the State Street Research 403(b)
account (see Section 5.2 of the State Street Research 403(b) Agreement).
By signing this form, you are certifying that this transfer will be a
tax-free transaction under the preceding sentence.
Signature
Guarantee
A signature guarantee may be required. Call your current Custodian/
Insurer for requirements.
Signature guaranteed by (name of bank or dealer firm)__________________
Signature and title of officer_________________________________________
PLEASE DO NOT FILL OUT THE FOLLOWING PORTION OF THIS FORM
Directions
to Current
Custodian/Insurer
Please liquidate and transfer on a fiduciary-to-fiduciary basis all or
part of the designated account as instructed above. Make check payable
to State Street Bank and Trust Company, Custodian.
Include the following account number and FBO on the check.
Account number________________________Name____________________________
Mail to: State Street Research Shareholder Services,
P.O. Box 8408, Boston, MA 02266-8408
Include a copy of this Transfer of 403(b) Assets Form with the check for
proper credit to the customer's account. State Street Research
Shareholder Services will deliver the items to Boston Financial Data
Services, Inc., which serves as Agent for the Custodian.
Successor
Custodian
State Street Bank and Trust Company will accept the transfer described
above once this form has been completed by you and the transfer has been
completed by your current 403(b) Custodian/Insurer.
______________________________________________________________________
Authorized signature of acceptance Date
by State Street Research Shareholder
Services on behalf of State Street Bank and Trust Company, Custodian
CONTROL NUMBER: 2707-951025(1196)SSR-LD RP-919C-1095
<PAGE>
EXHIBIT 15
METLIFE PORTFOLIOS, INC.
PLAN OF
DISTRIBUTION PURSUANT TO RULE 12b-1
WHEREAS, MetLife Portfolios, Inc. (the "Corporation"), a Maryland
corporation, engages in business as an open-end management investment company
and is registered as such under the Investment Company Act of 1940, as amended
(the "Act")
WHEREAS, the Corporation is authorized to issue shares of beneficial
interest (the "Shares") in separate series, with the Shares of each such series
representing the interests in a separate portfolio of securities and other
assets;
WHEREAS, the Corporation has established three portfolio series, including
the MetLife International Equity Fund, the MetLife International Fixed Income
Fund, and the MetLife Stock Index Fund (being referred to herein as the "Initial
Funds" - such series, together with any other series subsequently established by
the Corporation and made subject to this Plan, being referred to herein
individually as a "Fund" and collectively as the "Funds");
WHEREAS, the Corporation may be deemed a distributor of the Shares within
the meaning of Rule 12b-1 under the Act, and desires to adopt a Plan of
Distribution and has adopted a related Distribution Agreement with State Street
Research Investment Services, Inc., the Corporation's principal underwriter (the
"Distributor") pursuant to such Rule (respectively, the "Plan" and the
"Agreement"); and
WHEREAS, the Board of Directors as a whole, and the Directors who are not
interested persons of the Funds of the Corporation (as defined in the Act) and
who have no direct or indirect financial interest in the operation of this Plan
or the Agreement and any agreements relating to it (the "Qualified Directors"),
having determined, in the exercise of their reasonable business judgment and in
light of their fiduciary duties under state law and under Section 36(a) and (b)
of the Act, that there is a reasonable likelihood that this Plan and the
Agreement will benefit the Initial Funds and its shareholders, have accordingly
approved this Plan and the Agreement by votes cast in person at a meeting called
for the purpose of voting on this Plan and the Agreement and any agreements
related thereto.
NOW, THEREFORE, the Corporation hereby adopts this Plan in accordance with
Rule 12b-1 under the Act, on the following terms and conditions:
SECTION 1. DISTRIBUTION ACTIVITIES
- ----------------------------------
Subject to the supervision of the Board of Directors, the Corporation may
engage, directly or indirectly, in financing any activities primarily intended
to result in the sale of Shares, including, but not limited to, the following:
(1) payment of commissions and/or reimbursement to underwriters, securities
dealers and others engaged in the sale of Shares, including payments to the
Distributor to be used to pay commissions and/or reimbursement to securities
dealers and others (including affiliates of the Distributor) engaged in the
distribution and marketing of Shares or furnishing assistance to investors on an
ongoing basis, (2) reimbursement of direct out-of-pocket expenditures incurred
by
<PAGE>
the Distributor in connection with the distribution and marketing of Shares,
including expenses relating to the formulation and implementation of marketing
strategies and promotional activities such as direct mail promotions and
television, radio, newspaper, magazine and other mass media advertising, the
preparation, printing and distribution of sales literature, the preparation,
printing and distribution of Prospectuses of the Funds of the Corporation and
reports for recipients other than existing shareholders of the Corporation, and
obtaining such information, analyses and reports with respect to marketing and
promotional activities and investor accounts as the Corporation may, from time
to time, deem advisable, and (3) reimbursement of expenses incurred by the
Distributor in connection with the servicing of shareholder accounts, including
payments to securities dealers and others in consideration of the provision of
personal service to investors and/or the maintenance of shareholder accounts and
expenses associated with the provision of personal service by the Distributor
directly to investors. In addition, the Plan shall be deemed to authorize the
Distributor and State Street Research Investment Services, Inc. (the "Adviser")
to make payments out of general profits, revenues and other sources to
underwriters, securities dealers and others in connection with sales as
described in the Prospectus of the Corporation as from time to time amended and
in effect (for purposes hereof, references to the Prospectus of the Corporation
shall be deemed to include all Prospectuses of the Corporation), to the extent,
if any, that such payments may be deemed to be within the scope of Rule 12b-1
under the Act.
The Corporation and its Funds are authorized to engage in the activities
listed above, and in other activities primarily intended to result in the sale
of Shares, either directly or through other persons with which the Corporation
has entered into agreements pursuant to the Plan.
SECTION 2. MAXIMUM EXPENDITURES
-------------------------------
The expenditures to be made by the Initial Funds pursuant to this Plan and
the basis upon which payment of such expenditures will be made shall be
determined by the Initial Funds, but in no event may such expenditures exceed
the following: (i) with respect to Class A Shares of each Initial Fund, an
annual rate of .25% of the average daily value of net assets represented by such
Class A shares, (ii) with respect to Class B Shares and Class D Shares of each
Initial Fund, an annual rate of .75% of the average daily value of the net
assets represented by such Class B or Class D shares (as the case may be) to
finance sales or promotion expenses and an annual rate of .25% of the average
daily value of the net assets represented by such Class B or Class D shares (as
the case may be) to make payments for personal service and/or the maintenance of
shareholder accounts, and (iii) with respect to any Fund subsequently
established by the Corporation and made subject to this Agreement, the annual
rate as agreed upon and specified in an addendum hereto; plus such amounts as
the Distributor and Adviser may expend from general revenues, profits and other
sources form time to time in accordance with the last sentence of Section 1 and
the second paragraph of Section 3. The expenditures to be made pursuant to this
Plan shall commence with respect to each class of Shares of a Fund as of the
date on which this Plan becomes effective with respect to each such class.
<PAGE>
SECTION 3. PAYMENTS
-------------------
Pursuant to this Plan, the Corporation shall make periodic payments to the
Distributor at the annual rate provided for in Section 2 with respect to each
Fund, or class of Shares thereof. The Distributor shall in turn remit to and
allocate among selected dealers (including those that are affiliates of the
Distributor) who have entered into selected dealer agreements with the
Distributor, in consideration of and as reimbursement for expenses incurred in
the provision of distribution and marketing services and furnishing assistance
to investors on an ongoing basis, such amounts as are required pursuant to such
selected dealer agreements and as indicated in the Prospectus of the
Corporation. Any amounts received by the Distributor and not so allocated may be
applied by the Distributor as reimbursement for expenses incurred in connection
with the distribution and marketing of Shares of each class and the servicing of
investor accounts as contemplated by Section 1(2) hereof. The distribution and
servicing expenses of a particular class will be borne solely by that class and
no Fund will use fees charged to one class within a Fund to support the
marketing or servicing relating to any other class of Shares within that Fund of
any other Fund. Any amounts received by the Distributor hereunder and not
applied as provided herein shall be returned to the applicable class or Fund of
the Corporation.
The Distributor and the Adviser may also make payments to authorized
securities and dealers as specified in the Prospectus of the Corporation as from
time to time amended and in effect, from its general profits, revenues and other
sources. Amounts received by the Distributor from any Fund in respect of any
class of Shares shall not be used to pay any commission expenses related to the
sale of any other class of Shares of such Fund.
Notwithstanding anything to the contrary herein, the aggregate of all
payments to the Distributor to finance sales or promotion expenses with respect
to the Class B or the Class D shares pursuant to this Section 3 together with
any contingent deferred sales charges received by the Distributor in connection
with the redemption of shares of the respective class shall not exceed the
amount expended by the Distributor to finance sales or promotion expenses of
such class.
SECTION 4. TERM AND TERMINATION
- -------------------------------
(a) Initial Funds. This Plan shall become effective with respect to
-------------
each class of Initial Funds as of the later of (i) the date on which a
Registration Statement with respect to such class of Shares becomes effective
under the Securities Act of 1933, as amended, or (ii) the date on which each of
the Initial Funds commences offering such class of its Shares to the public and
shall continue in effect with respect to each Initial Fund (subject to Section
4(c) hereof) until one year from the date of such effectiveness, unless the
continuation of this Plan shall have been approved with respect to the Initial
Funds in accordance with the provisions of Section 4(c) hereof.
(b) Additional Funds. This Plan shall become effective with respect
----------------
to each additional Fund or class thereof other than the Initial Funds
established by the Corporation after the date hereof and made subject to this
Plan upon commencement of the initial public offering thereof (provided that the
Plan has previously been approved for continuation by votes of a majority of
both (i) the Board of Directors of the Corporation and
<PAGE>
(ii) the Qualified Directors, cast in person at a meeting held before the
initial public offering of such additional Fund or classes thereof and called
for the purpose of voting on such approval), and shall continue in effect with
respect to each such additional Fund or Class (subject to Section 4(c) hereof)
for one year thereafter, unless the continuation of this Plan shall have been
approved with respect to such additional Fund or Class in accordance with the
provisions of Section 4(c) hereof. The Distributor and the Corporation on behalf
of each such additional Fund or Class shall each sign an addendum hereto
agreeing to be bound hereby and setting forth such specific and different terms
as the parties may agree upon, including, without implied limitation, the amount
and purpose of payments to be made hereunder.
(c) Continuation. This Plan and the Agreement shall continue in
------------
effect with respect to each Fund or Class thereof subsequent to the initial term
specified in Section 4(a) and (b) for so long as such continuance is
specifically approved at least annually by votes of a majority of both (i) the
Board of Directors of the Corporation and (ii) the Qualified Directors, cast in
person at a meeting called for the purpose of voting on this Plan, subject to
any shareholder approval requirements existing under applicable law.
(d) Termination.
-----------
(i) This Plan may be terminated at any time with respect to the
Corporation or any Fund or Class thereof, as the case may be, by vote of a
majority of the Qualified Directors, or by vote of a majority of the outstanding
voting securities of the Corporation or that Fund or Class, as the case may be.
The Plan may remain in effect with respect to a Fund or Class thereof even if it
has been terminated in accordance with this Section 4(d) with respect to such
Fund or one or more other Funds of the Corporation.
(ii) The Agreement may be terminated at any time, without
penalty, with respect to the Corporation or any Fund, as the case may be, by
vote of a majority of the Qualified Directors or by vote of a majority of the
outstanding voting securities of the Corporation or that Fund, as the case may
be, on sixty days' written notice to the Distributor. In addition, the
Agreement provides for automatic termination in the event of its assignment.
SECTION 5. AMENDMENTS
- ---------------------
This Plan may not be amended to increase materially the amount of
distribution expenditures provided for in Section 2 hereof unless such
amendment is approved by a vote of a majority of the outstanding voting
securities of each Fund or Class thereof with respect to which a material
increase in the amount of distribution expenditures is proposed, and no
material amendment to the Plan shall be made unless approved in the manner
provided for annual renewal in Section 4(c) hereof. Otherwise, this Plan may be
amended with respect to the Corporation or a Fund or Class thereof by vote of a
majority of the Qualified Directors or the outstanding voting securities of the
Corporation or that Fund, as the case may be.
<PAGE>
SECTION 6. INDEPENDENT DIRECTORS
- --------------------------------
While this Plan is in effect with respect to any Fund, the selection and
nomination of Directors who are not interested persons (as defined in the Act)
of the Corporation shall be committed to the discretion of the Directors not
interested persons.
SECTION 7. QUARTERLY REPORTS
- ----------------------------
The Treasurer of the Corporation and the Treasurer of the Distributor shall
provide to the Directors of the Corporation, and the Directors shall review, at
least quarterly, a written report of the amounts expended for distribution
pursuant to this Plan and the purposes for which such expenditures were made.
SECTION 8. RECORDKEEPING
- ------------------------
The Corporation shall preserve copies of this Plan, the Agreement and any
related agreements and all reports made pursuant to Section 7 hereof, for a
period of not less than six years from the date of this Plan and the Agreement,
the agreements or such reports, as the case may be, the first two years in an
easily accessible place.
IN WITNESS WHEREOF, the Corporation and the Distributor have executed this
Plan of Distribution on the day and year set forth below.
ATTEST: METLIFE PORTFOLIOS, INC.
/s/ Patricia S. Worthington By: /s/ Jeffrey J. Hodgman
- --------------------------- ----------------------
Patricia S. Worthington Jeffrey J. Hodgman
Assistant Secretary President
ATTEST: STATE STREET RESEARCH
INVESTMENT SERVICES, INC.
___________________________ By:_______________________
Date: November 18, 1993
<PAGE>
METLIFE INTERNATIONAL EQUITY FUND
Standard Total Return Computations- Since Inception
Original Amt. Invested $1,000.00
Commission at 4.5% $45.00
Net Amount to Fund $955.00
Purchase price $7.40
Shares acquired 129.054
<TABLE>
<CAPTION>
Beginning Dividend Dividend Reinvest Shares New Month-end Monthly Aggregate
Month Shares Rate Amount Price Purchased Shares NAV ERV Performance Performance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
01/31/92 129.054 0.0000 0.00 $7.43 0.000 129.054 $7.43 $958.87 -4.11 -4.11
02/29/92 129.054 0.0000 0.00 $7.22 0.000 129.054 $7.22 $931.77 -2.83 -6.82
03/31/92 129.054 0.0000 0.00 $6.72 0.000 129.054 $6.72 $867.24 -6.93 -13.28
04/30/92 129.054 0.0000 0.00 $6.71 0.000 129.054 $6.71 $865.95 -0.15 -13.40
05/31/92 129.054 0.0000 0.00 $7.20 0.000 129.054 $7.20 $929.19 7.30 -7.08
06/30/92 129.054 0.0000 0.00 $6.87 0.000 129.054 $6.87 $886.60 -4.58 -11.34
07/31/92 129.054 0.0000 0.00 $6.44 0.000 129.054 $6.44 $831.11 -6.26 -16.89
08/31/92 129.054 0.0000 0.00 $6.84 0.000 129.054 $6.84 $882.73 6.21 -11.73
09/30/92 129.054 0.0000 0.00 $6.78 0.000 129.054 $6.78 $874.99 -0.88 -12.50
10/31/92 129.054 0.0000 0.00 $6.50 0.000 129.054 $6.50 $838.85 -4.13 -16.11
</TABLE>
The average annual total return is computed as follows:
(1) Annualize the actual return of the Fund for the period January 17,
1992 through October 31, 1992:
289/365
955 (1 + T) = 838.90
T = -15.10%
(2) Calculate ERV based on annualized rate of return:
955 (1 - .1510) = 810.80
(3) Calculate average annual return since inception:
1,000 (1 + T) = 810.80
T = -18.92%
<PAGE>
METLIFE INTERNATIONAL EQUITY FUND
Nonstandardized Total Return Computations
Original Amt. Invested $1,000.00
Commission at 0.0% $0.00
Net Amount to Fund $1,000.00
Purchase price $7.40
Shares acquired 135.135
<TABLE>
<CAPTION>
Beginning Dividend Dividend Reinvest Shares New Month-end Monthly ITD
Month Shares Rate Amount Price Purchased Shares NAV ERV Performance Performance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
02/29/92 135.135 0.0000 0.00 $7.22 0.000 135.135 $7.22 $975.68 -2.43 -2.43
03/31/92 135.135 0.0000 0.00 $6.72 0.000 135.135 $6.72 $908.11 -6.93 -9.19
04/30/92 135.135 0.0000 0.00 $6.71 0.000 135.135 $6.71 $906.76 -0.15 -9.32
05/31/92 135.135 0.0000 0.00 $7.20 0.000 135.135 $7.20 $972.97 7.30 -2.70
06/30/92 135.135 0.0000 0.00 $6.87 0.000 135.135 $6.87 $928.38 -4.58 -7.16
07/31/92 135.135 0.0000 0.00 $6.44 0.000 135.135 $6.44 $870.27 -6.26 -12.97
08/31/92 135.135 0.0000 0.00 $6.84 0.000 135.135 $6.84 $924.32 6.21 -7.57
09/30/92 135.135 0.0000 0.00 $6.78 0.000 135.135 $6.78 $916.22 -0.88 -8.38
10/31/92 135.135 0.0000 0.00 $6.50 0.000 135.135 $6.50 $878.38 -4.13 -12.16
</TABLE>
No annualization is made. Computation for the period from inception
(January 17, 1992) through October 31, 1992.
<PAGE>
METLIFE INTERNATIONAL FIXED INCOME FUND
Standard Total Return Computations- Since Inception
Original Amt. Invested $1,000.00
Commission at 4.5% $45.00
Net Amount to Fund $955.00
Purchase price $7.40
Shares acquired 129.054
<TABLE>
<CAPTION>
Beginning Dividend Dividend Reinvest Shares New Month-end Monthly Aggregate
Month Shares Rate Amount Price Purchased Shares NAV ERV Performance Performance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
01/31/92 129.054 0.0000 0.00 $7.39 0.000 129.054 $7.39 $953.71 -4.63 -4.63
02/29/92 129.054 0.0000 0.00 $7.23 0.000 129.054 $7.23 $933.06 -2.17 -6.69
03/31/92 129.054 0.0000 0.00 $7.09 0.000 129.054 $7.09 $914.99 -1.94 -8.50
04/30/92 129.054 0.0000 0.00 $7.13 0.000 129.054 $7.13 $920.16 0.56 -7.98
05/31/92 129.054 0.0000 0.00 $7.47 0.000 129.054 $7.47 $964.03 4.77 -3.60
06/30/92 129.054 0.0000 0.00 $7.75 0.000 129.054 $7.75 $1,000.17 3.75 0.02
07/31/92 129.054 0.0000 0.00 $7.84 0.000 129.054 $7.84 $1,011.78 1.16 1.18
08/31/92 129.054 0.0000 0.00 $8.18 0.000 129.054 $8.18 $1,055.66 4.34 5.57
09/30/92 129.054 0.0000 0.00 $8.22 0.000 129.054 $8.22 $1,060.82 0.49 6.08
10/31/92 129.054 0.0000 0.00 $7.85 0.000 129.054 $7.85 $1,013.07 -4.50 1.31
</TABLE>
The average annual total return is computed as follows:
(1) Annualize the actual return of the Fund for the period January 17,
1992 through October 31, 1992:
289/365
955 (1 + T) = 1013.10
T = 7.74%
(2) Calculate ERV based on annualized rate of return:
955 (1 + .0774) = 1028.92
(3) Calculate average annual return since inception:
1,000 (1 + T) = 1028.92
T = 2.89%
<PAGE>
METLIFE INTERNATIONAL FIXED INCOME FUND
Nonstandardized Total Return Computation
Original Amt. Invested $1,000.00
Commission at 0.0% $0.00
Net Amount to Fund $1,000.00
Purchase price $7.40
Shares acquired 135.135
<TABLE>
<CAPTION>
Beginning Dividend Dividend Reinvest Shares New Month-end Monthly ITD
Month Shares Rate Amount Price Purchased Shares NAV ERV Performance Performance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
02/29/92 135.135 0.0000 0.00 $7.23 0.000 135.135 $7.23 $977.03 -2.30 -2.30
03/31/92 135.135 0.0000 0.00 $7.09 0.000 135.135 $7.09 $958.11 -1.94 -4.19
04/30/92 135.135 0.0000 0.00 $7.13 0.000 135.135 $7.13 $963.51 0.56 -3.65
05/31/92 135.135 0.0000 0.00 $7.47 0.000 135.135 $7.47 $1,009.46 4.77 0.95
06/30/92 135.135 0.0000 0.00 $7.75 0.000 135.135 $7.75 $1,047.30 3.75 4.73
07/31/92 135.135 0.0000 0.00 $7.84 0.000 135.135 $7.84 $1,059.46 1.16 5.95
08/31/92 135.135 0.0000 0.00 $8.18 0.000 135.135 $8.18 $1,105.41 4.34 10.54
09/30/92 135.135 0.0000 0.00 $8.22 0.000 135.135 $8.22 $1,110.81 0.49 11.08
10/31/92 135.135 0.0000 0.00 $7.85 0.000 135.135 $7.85 $1,060.81 -4.50 6.08
</TABLE>
No annualization is made. Computation for the period from inception
(Janaury 17, 1992) through October 31, 1992.
<PAGE>
METLIFE INTERNATIONAL FIXED INCOME FUND
Yield Computation
Period Ended October 31, 1992
a-b
YIELD = 2[(----- +1)/6/ -1]
cd
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of voluntary expense
reductions by the Investment Manager)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
122,245.73-27,978.82
Therefore: YIELD = 2[(-------------------- +1)/6/ -1]
2,841,552.426 (8.22)
YIELD = 4.89%
<PAGE>
EXHIBIT 17A
POWER OF ATTORNEY
MetLife Portfolios, Inc.
------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, a director of MetLife Portfolios,
Inc. (the "Corporation"), do hereby appoint Jeffrey J. Hodgman, Christopher P.
Nicholas and Patricia S. Worthington and each of them severally, my true and
lawful attorney-in-fact, for me and in my name, place and stead to execute and
file any instrument or document to be filed as part of or in connection with or
in any way related to the Registration Statements and any and all amendments
thereto, filed by the Corporation under the Securities Act of 1933, as amended,
and/or the Investment Company Act of 1940, as amended, and to have full power
and authority to do or cause to be done in my name, place and stead each and
every act and thing necessary or appropriate in order to effectuate the same, as
fully to all intents and purposes as I might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact, or any of them, may do
or cause to be done by virtue hereof. Each of said attorneys-in-fact shall have
power to act hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of October,
----
1993.
/s/ Robert A. Lawrence
--------------------------
Robert A. Lawrence
<PAGE>
POWER OF ATTORNEY
MetLife Portfolios, Inc.
------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, a director of MetLife Portfolios,
Inc. (the "Corporation"), do hereby appoint Jeffrey J. Hodgman, Christopher P.
Nicholas and Patricia S. Worthington and each of them severally, my true and
lawful attorney-in-fact, for me and in my name, place and stead to execute and
file any instrument or document to be filed as part of or in connection with or
in any way related to the Registration Statements and any and all amendments
thereto, filed by the Corporation under the Securities Act of 1933, as amended,
and/or the Investment Company Act 1940, as amended, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact, or any of them, may do or cause
to be done by virtue hereof. Each of said attorneys-in-fact shall have power to
act hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 29 day of October,
--
1933.
/s/ Dean O. Morton
------------------------
Dean O. Morton
<PAGE>
POWER OF ATTORNEY
MetLife Portfolios, Inc.
------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, a director of MetLife Portfolios,
Inc. (the "Corporation"), do hereby appoint Jeffrey J. Hodgman, Christopher P.
Nicholas and Patricia S. Worthington and each of them severally, my true and
lawful attorney-in-fact, for me and in my name, place and stead to execute and
file any instrument or document to filed as part of or in connection with or in
any way related to the Registration Statements and any all amendments thereto,
filed by the Corporation under the Securities Act of 1933, as amended, and/or
the Investment Company Act of 1940, as amended, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact, or any of them, may do or cause
to be done by virtue hereof. Each of said attorneys-in-fact shall have power to
act hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 30 day of October,
--
1993.
/s/ Michael S. Scott Morton
-----------------------------
Michael S. Scott Morton
<PAGE>
POWER OF ATTORNEY
-----------------
MetLife Portfolios, Inc.
------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, a director of MetLife Portfolios,
Inc. (the "Corporation"), do hereby appoint Jeffrey J. Hodgman, Christopher P.
Nicholas and Patricia S. Worthington and each of them severally, my true and
lawful attorney-in-fact, for me and in my name, place and stead to execute and
file any instrument or document to be filed as part of or in connection with or
in any way related to the Registration Statements and any and all amendments
thereto, filed by the Corporation under the Securities Act of 1933, as amended,
and/or the Investment Company Act of 1940, as amended, and to have full power
and authority to do or cause to be done in my name, place and stead each and
every act and thing necessary or appropriate in order to effectuate the same, as
fully to all intents and purposes as I might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact, or any of them, may do
or cause to be done by virtue hereof. Each of said attorneys-in-fact shall have
power to act hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 23 day of October,
--
1993.
/s/ Robert G. Schwartz
--------------------------
Robert G. Schwartz
<PAGE>
EXHIBIT 18
MULTIPLE CLASS EXPENSE ALLOCATION PLAN
ADOPTED PURSUANT TO RULE 18f-3
WHEREAS, State Street Research Portfolios, a corporation organized under the
laws of the State of Maryland ("Portfolios"), engages in business as an open-end
management investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, Portfolios is authorized to (i) issue shares of beneficial interest
("Shares") in separate series, with the Shares of each such series representing
an interest in a separate portfolio of securities and other assets, and (ii)
divide the Shares within each such series into two or more classes;
WHEREAS, Portfolios has established one or more portfolio series as of the
date hereof (such portfolios being referred to collectively herein as the
"Initial Series" - such series, together with all other series subsequently
established by Portfolios and made subject to this Plan, being referred to
herein individually as a "Series" and collectively as the "Series"), and four
classes thereof designated as "Class A," "Class B," "Class C," and "Class D"
shares;
WHEREAS, prior to the adoption of Rule 18f-3 by the Securities and Exchange
Commission, Portfolios received an Order from the Securities and Exchange
Commission under Section 6(c) of the act for an exemption from Sections
2(a)(32), 2(a)(35), 18(f), 18(g), 18(i), 22(c) and 22(d) of the Act and Rule
22c-1 thereunder to permit Portfolios to issue multiple classes of shares
representing interests in the same portfolio of securities, assess a contingent
deferred sales charge ("CDSC") on certain redemptions of shares, and waive the
CDSC in certain cases: and
WHEREAS, the Directors have determined to operate under Rule 18f-3 and
pursuant to such Rule, the Board of Directors as a whole, and the Directors who
are not interested persons of Portfolios (as defined in the Act) (the "Qualified
Directors"), having determined in the exercise of their reasonable business
judgment that this Plan is in the best interests of each class of the Initial
Series individually and the Initial Series as a whole, have accordingly approved
this Plan.
NOW, THEREFORE, Portfolios hereby adopts this Plan in accordance with Rule
18f-3 under the Act, on the following terms and conditions;
1. CLASS DIFFERENCES. Each class of Shares of each Initial Series shall
represent interests in the same portfolio of investments of the Initial Series
and shall be identical in all respects, and except as otherwise set forth in the
Plan, shall differ solely with respect to: (i) arrangements for shareholder
services or the distribution of Shares, or both, as provided for in Sections 2
and 3 of this Plan; (ii) the exclusive right of a Class to vote on certain
matters
- 1 -
17512.1 July 25, 1995
<PAGE>
relating to the Plan of Distribution Pursuant to Rule 12b-1 adopted by
Portfolios with respect to such Class; (iii) such differences relating to
purchase minimums, sales charges and eligible investors as may be set forth in
the prospectuses and Statement of Additional Information of the Initial Series,
as the same may be amended or supplemented from time to time (the
"Prospectuses" and SAI"); (iv) the different exchange privileges of the classes
of Shares; (v) the fact that only certain classes will have a conversion
feature; and (iv) the designation of each Class of shares.
2. DIFFERENCES IN DISTRIBUTION AND SHAREHOLDER SERVICES. Each Class of Shares
of the Initial Series shall have a different arrangement for shareholder
services or the distribution of Shares. or both, as follows:
Class A Shares shall be sold subject to a front-end sales charge as set forth
in the Prospectuses and SAI with respect to the applicable Initial Series. Class
B and Class D Shares shall be sold subject to a contingent deferred sales charge
as set forth in the prospectuses and SAI with respect to the applicable Initial
Series. Class A, B and D Shares shall be subject to a service fee of up to 0.25%
of the net assets of the Initial Series allocable to such Class of Shares. Class
B and D Shares shall also be subject to an annual distribution fee of up to
0.75% of the net assets of the Initial Series allocable to such Class of Shares.
Such service and distribution fees may be used to finance activities in
accordance with Rule 12b-1 under the Act and the Plan of Distribution pursuant
to Rule 12b-1 adopted by Portfolios.
3. ALLOCATION OF EXPENSES. Expenses of the Series shall be allocated as follows:
(a) Class Expenses. Expenses relating to different arrangements for
shareholder services or the distribution of Shares, or both, shall be allocated
to and paid by that class. A class may pay a different share of other expenses,
not including advisory or custodial fees or other expenses related to the
management of a Series' assets, if such expenses are actually incurred in a
different amount by that class, or if the class receives services of a different
kind or to a different degree than other classes.
(b) Other Allocations. All expenses of the Series not allocated to a
particular class pursuant to Sections 2 and 3(a) of this Plan shall be allocated
to each class on the basis of the net asset value of that class in relation to
the net asset value of the Series. Notwithstanding the foregoing, the
underwriter, adviser, or other provider of services to a Series may waive or
reimburse the expenses of a specific class or classes to the extent permitted
under Rule 18f-3 under the Act; provided, however, that the Board shall monitor
the use of such waivers or reimbursements intended to differ by class.
4. TERM AND TERMINATION.
(a) Initial Series. This Plan shall become effective with respect to the
- 2 -
17512.1 July 25, 1995
<PAGE>
Initial Series as of , 1995, and shall continue in effect with
-------------
respect to each Class of Shares of the Initial Series (subject to Section 4(c)
hereof) until terminated in accordance with the provisions of Section 4(c)
hereof.
(b) Additional Series or Classes. This Plan shall become effective with
respect to any class of the Initial Series other than Class A, Class B, Class C,
and Class D, and with respect to each additional Series or class thereof
established by Portfolios after the date hereof and made subject to this Plan,
upon commencement of operations thereof or as otherwise determined, and shall
continue in effect with respect to each such additional Series or class (subject
to Section 4(c) hereof) until terminated in accordance with the provisions of
Section 4(c) hereof. An addendum hereto setting for the such specific and
different terms of such additional series of classes shall be attached to this
Plan.
(c) Termination. This Plan may be terminated at any time with respect to
Portfolios or any Series or class thereof, as the case may be, by vote of a
majority of both the Directors of Portfolios and the Qualified Directors. The
plan may remain in effect with respect to a Series or class thereof even if it
has been terminated in accordance with this Section 4(e) with respect to such
Series or class or one or more other Series of Portfolios.
5. AMENDMENTS. Any material amendment to this Plan shall require the
affirmative vote of a majority of both the Directors of the Portfolios and the
Qualified Directors.
Dated: , 1995
------------
- 3 -
17512.1 July 25, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> STATE STREET RESEARCH INTERNATIONAL EQUITY FUND CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 75,449,821
<INVESTMENTS-AT-VALUE> 74,179,763
<RECEIVABLES> 808,867
<ASSETS-OTHER> 16,878,012
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 91,866,642
<PAYABLE-FOR-SECURITIES> 1,519,389
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 678,549
<TOTAL-LIABILITIES> 2,197,938
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 92,346,009
<SHARES-COMMON-STOCK> 2,409,238
<SHARES-COMMON-PRIOR> 2,056,812
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (221,450)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (637,687)
<ACCUM-APPREC-OR-DEPREC> (1,818,168)
<NET-ASSETS> 89,668,704
<DIVIDEND-INCOME> 892,985
<INTEREST-INCOME> 80,541
<OTHER-INCOME> 0
<EXPENSES-NET> 1,767,611
<NET-INVESTMENT-INCOME> (794,085)
<REALIZED-GAINS-CURRENT> (441,233)
<APPREC-INCREASE-CURRENT> (9,361,750)
<NET-CHANGE-FROM-OPS> (10,597,068)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,132,506)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> (1,597,600)
<NUMBER-OF-SHARES-REDEEMED> (1,357,862)
<SHARES-REINVESTED> 112,688
<NET-CHANGE-IN-ASSETS> (8,579,385)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,319,350
<OVERDISTRIB-NII-PRIOR> (281,289)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 830,476
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,296,952
<AVERAGE-NET-ASSETS> 87,418,526
<PER-SHARE-NAV-BEGIN> 10.98
<PER-SHARE-NII> (0.08)
<PER-SHARE-GAIN-APPREC> (1.04)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.52)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.34
<EXPENSE-RATIO> 1.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> STATE STREET RESEARCH INTERNATIONAL EQUITY FUND CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 75,449,821
<INVESTMENTS-AT-VALUE> 74,179,763
<RECEIVABLES> 808,867
<ASSETS-OTHER> 16,878,012
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 91,866,642
<PAYABLE-FOR-SECURITIES> 1,519,389
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 678,549
<TOTAL-LIABILITIES> 2,194,938
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 92,346,009
<SHARES-COMMON-STOCK> 2,994,636
<SHARES-COMMON-PRIOR> 1,729,554
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (221,450)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (637,687)
<ACCUM-APPREC-OR-DEPREC> (1,818,168)
<NET-ASSETS> 89,668,704
<DIVIDEND-INCOME> 892,985
<INTEREST-INCOME> 80,541
<OTHER-INCOME> 0
<EXPENSES-NET> 1,767,611
<NET-INVESTMENT-INCOME> (794,085)
<REALIZED-GAINS-CURRENT> (441,233)
<APPREC-INCREASE-CURRENT> (9,361,750)
<NET-CHANGE-FROM-OPS> (10,597,068)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,086,016)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,891,639
<NUMBER-OF-SHARES-REDEEMED> (734,821)
<SHARES-REINVESTED> 108,264
<NET-CHANGE-IN-ASSETS> (8,579,385)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,319,350
<OVERDISTRIB-NII-PRIOR> (281,289)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 830,476
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,296,952
<AVERAGE-NET-ASSETS> 87,418,526
<PER-SHARE-NAV-BEGIN> 10.93
<PER-SHARE-NII> (0.15)
<PER-SHARE-GAIN-APPREC> (1.04)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.52)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.22
<EXPENSE-RATIO> 2.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> STATE STREET RESEARCH INTERNATIONAL EQUITY FUND CLASS C
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 75,449,821
<INVESTMENTS-AT-VALUE> 74,179,763
<RECEIVABLES> 808,867
<ASSETS-OTHER> 16,878,012
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 91,866,642
<PAYABLE-FOR-SECURITIES> 1,519,389
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 678,549
<TOTAL-LIABILITIES> 2,197,938
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 92,346,009
<SHARES-COMMON-STOCK> 3,609,214
<SHARES-COMMON-PRIOR> 4,961,780
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (221,450)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (637,687)
<ACCUM-APPREC-OR-DEPREC> (1,818,168)
<NET-ASSETS> 89,668,704
<DIVIDEND-INCOME> 892,985
<INTEREST-INCOME> 80,541
<OTHER-INCOME> 0
<EXPENSES-NET> 1,767,611
<NET-INVESTMENT-INCOME> (794,085)
<REALIZED-GAINS-CURRENT> (441,233)
<APPREC-INCREASE-CURRENT> (9,361,750)
<NET-CHANGE-FROM-OPS> (10,597,068)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (2,059,288)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,440,157
<NUMBER-OF-SHARES-REDEEMED> (3,000,375)
<SHARES-REINVESTED> 207,652
<NET-CHANGE-IN-ASSETS> (8,579,385)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,319,350
<OVERDISTRIB-NII-PRIOR> (281,289)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 830,476
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,296,952
<AVERAGE-NET-ASSETS> 87,418,526
<PER-SHARE-NAV-BEGIN> 11.01
<PER-SHARE-NII> (0.05)
<PER-SHARE-GAIN-APPREC> (1.05)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.52)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.39
<EXPENSE-RATIO> 1.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> STATE STREET RESEARCH INTERNATIONAL EQUITY FUND CLASS D
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 75,449,821
<INVESTMENTS-AT-VALUE> 74,179,763
<RECEIVABLES> 808,867
<ASSETS-OTHER> 16,878,012
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 91,866,642
<PAYABLE-FOR-SECURITIES> 1,519,389
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 678,549
<TOTAL-LIABILITIES> 2,197,938
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 92,346,009
<SHARES-COMMON-STOCK> 615,728
<SHARES-COMMON-PRIOR> 195,360
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (221,450)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (637,687)
<ACCUM-APPREC-OR-DEPREC> (1,818,168)
<NET-ASSETS> 89,668,704
<DIVIDEND-INCOME> 892,985
<INTEREST-INCOME> 80,541
<OTHER-INCOME> 0
<EXPENSES-NET> 1,767,611
<NET-INVESTMENT-INCOME> (794,085)
<REALIZED-GAINS-CURRENT> (441,233)
<APPREC-INCREASE-CURRENT> (9,361,750)
<NET-CHANGE-FROM-OPS> (10,597,068)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (138,131)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 555,007
<NUMBER-OF-SHARES-REDEEMED> (148,231)
<SHARES-REINVESTED> 13,592
<NET-CHANGE-IN-ASSETS> (8,579,385)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,319,350
<OVERDISTRIB-NII-PRIOR> (281,289)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 830,476
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,296,952
<AVERAGE-NET-ASSETS> 87,418,526
<PER-SHARE-NAV-BEGIN> 10.93
<PER-SHARE-NII> (0.15)
<PER-SHARE-GAIN-APPREC> (1.04)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.52)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.22
<EXPENSE-RATIO> 2.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND CL. A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 19,867,007
<INVESTMENTS-AT-VALUE> 23,002,822
<RECEIVABLES> 648,539
<ASSETS-OTHER> 7,125,547
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30,776,908
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 130,451
<TOTAL-LIABILITIES> 130,451
<SENIOR-EQUITY> 30,646,457
<PAID-IN-CAPITAL-COMMON> 26,404,651
<SHARES-COMMON-STOCK> 239,305
<SHARES-COMMON-PRIOR> 129,847
<ACCUMULATED-NII-CURRENT> 696,597
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 197,020
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,348,189
<NET-ASSETS> 30,646,457
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,853,452
<OTHER-INCOME> 0
<EXPENSES-NET> 448,160
<NET-INVESTMENT-INCOME> 1,405,292
<REALIZED-GAINS-CURRENT> 684,995
<APPREC-INCREASE-CURRENT> 1,568,923
<NET-CHANGE-FROM-OPS> 3,659,210
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (88,114)
<DISTRIBUTIONS-OF-GAINS> (5,975)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 154,393
<NUMBER-OF-SHARES-REDEEMED> (51,420)
<SHARES-REINVESTED> 6,485
<NET-CHANGE-IN-ASSETS> 4,273,990
<ACCUMULATED-NII-PRIOR> 738,734
<ACCUMULATED-GAINS-PRIOR> 139,887
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 210,657
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 597,985
<AVERAGE-NET-ASSETS> 28,087,600
<PER-SHARE-NAV-BEGIN> 8.31
<PER-SHARE-NII> 0.40
<PER-SHARE-GAIN-APPREC> 0.72
<PER-SHARE-DIVIDEND> (0.59)
<PER-SHARE-DISTRIBUTIONS> (0.04)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.80
<EXPENSE-RATIO> 1.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND CL. B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 19,867,007
<INVESTMENTS-AT-VALUE> 23,002,822
<RECEIVABLES> 648,539
<ASSETS-OTHER> 7,125,547
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30,776,908
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 130,451
<TOTAL-LIABILITIES> 130,451
<SENIOR-EQUITY> 30,646,457
<PAID-IN-CAPITAL-COMMON> 26,404,651
<SHARES-COMMON-STOCK> 324,973
<SHARES-COMMON-PRIOR> 173,715
<ACCUMULATED-NII-CURRENT> 696,597
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 197,020
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,348,189
<NET-ASSETS> 30,646,457
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,853,452
<OTHER-INCOME> 0
<EXPENSES-NET> 448,160
<NET-INVESTMENT-INCOME> 1,405,292
<REALIZED-GAINS-CURRENT> 684,995
<APPREC-INCREASE-CURRENT> 1,568,923
<NET-CHANGE-FROM-OPS> 3,659,210
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (113,623)
<DISTRIBUTIONS-OF-GAINS> (8,086)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 189,985
<NUMBER-OF-SHARES-REDEEMED> (46,537)
<SHARES-REINVESTED> 7,810
<NET-CHANGE-IN-ASSETS> 4,273,990
<ACCUMULATED-NII-PRIOR> 738,734
<ACCUMULATED-GAINS-PRIOR> 139,887
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 210,657
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 597,985
<AVERAGE-NET-ASSETS> 28,087,600
<PER-SHARE-NAV-BEGIN> 8.28
<PER-SHARE-NII> 0.34
<PER-SHARE-GAIN-APPREC> 0.72
<PER-SHARE-DIVIDEND> (0.53)
<PER-SHARE-DISTRIBUTIONS> (0.04)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.77
<EXPENSE-RATIO> 2.49
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND CLASS C
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 19,867,007
<INVESTMENTS-AT-VALUE> 23,002,822
<RECEIVABLES> 648,539
<ASSETS-OTHER> 7,125,547
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30,776,908
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 130,451
<TOTAL-LIABILITIES> 130,451
<SENIOR-EQUITY> 30,646,457
<PAID-IN-CAPITAL-COMMON> 26,404,651
<SHARES-COMMON-STOCK> 2,781,432
<SHARES-COMMON-PRIOR> 2,802,993
<ACCUMULATED-NII-CURRENT> 696,597
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 197,020
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,348,189
<NET-ASSETS> 30,646,457
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,853,452
<OTHER-INCOME> 0
<EXPENSES-NET> 448,160
<NET-INVESTMENT-INCOME> 1,405,292
<REALIZED-GAINS-CURRENT> 684,995
<APPREC-INCREASE-CURRENT> 1,568,923
<NET-CHANGE-FROM-OPS> 3,659,210
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,691,435)
<DISTRIBUTIONS-OF-GAINS> (123,136)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 34,745
<NUMBER-OF-SHARES-REDEEMED> (88,669)
<SHARES-REINVESTED> 32,363
<NET-CHANGE-IN-ASSETS> 4,273,990
<ACCUMULATED-NII-PRIOR> 738,734
<ACCUMULATED-GAINS-PRIOR> 139,887
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 210,657
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 597,985
<AVERAGE-NET-ASSETS> 28,087,600
<PER-SHARE-NAV-BEGIN> 8.32
<PER-SHARE-NII> 0.44
<PER-SHARE-GAIN-APPREC> 0.70
<PER-SHARE-DIVIDEND> (0.61)
<PER-SHARE-DISTRIBUTIONS> (0.04)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.81
<EXPENSE-RATIO> 1.49
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> STATE STREET RESEARCH INTERNATIONAL FIXED INCOME FUND CL. D
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 19,867,007
<INVESTMENTS-AT-VALUE> 23,002,822
<RECEIVABLES> 648,539
<ASSETS-OTHER> 7,125,547
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30,776,908
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 130,451
<TOTAL-LIABILITIES> 130,451
<SENIOR-EQUITY> 30,646,457
<PAID-IN-CAPITAL-COMMON> 26,404,651
<SHARES-COMMON-STOCK> 133,659
<SHARES-COMMON-PRIOR> 64,619
<ACCUMULATED-NII-CURRENT> 696,597
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 197,020
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,348,189
<NET-ASSETS> 30,646,457
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,853,452
<OTHER-INCOME> 0
<EXPENSES-NET> 448,160
<NET-INVESTMENT-INCOME> 1,405,292
<REALIZED-GAINS-CURRENT> 684,995
<APPREC-INCREASE-CURRENT> 1,568,923
<NET-CHANGE-FROM-OPS> 3,659,210
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (41,936)
<DISTRIBUTIONS-OF-GAINS> (2,986)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 73,243
<NUMBER-OF-SHARES-REDEEMED> (5,482)
<SHARES-REINVESTED> 1,279
<NET-CHANGE-IN-ASSETS> 4,273,990
<ACCUMULATED-NII-PRIOR> 738,734
<ACCUMULATED-GAINS-PRIOR> 139,887
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 210,657
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 597,985
<AVERAGE-NET-ASSETS> 28,087,600
<PER-SHARE-NAV-BEGIN> 8.29
<PER-SHARE-NII> 0.34
<PER-SHARE-GAIN-APPREC> 0.72
<PER-SHARE-DIVIDEND> (0.53)
<PER-SHARE-DISTRIBUTIONS> (0.04)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.78
<EXPENSE-RATIO> 2.49
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
