<PAGE>
Registration No. 33-76920
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
Post-Effective Amendment No. 2
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 2 /___/
MML Bay State Variable Annuity Separate Account 1
-------------------------------------------------
(Exact Name of Registrant)
MML Bay State Life Insurance Company
------------------------------------
(Name of Depositor)
1295 State Street, Springfield, Massachusetts 01111
----------------------------------------------------
(Address of Depositor's Principal Executive Offices)
(413) 788-8411
Thomas F. English
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: May 1, 1996.
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b) of Rule 485.
- ----
X on May 1, 1996 pursuant to paragraph (b) of Rule 485.
- ----
60 days after filing pursuant to paragraph (a) of Rule 485.
- ----
on (date) pursuant to paragraph (a) of Rule 485.
- ----
STATEMENT PURSUANT TO RULE 24f-2
The Registrant has registered an indefinite number or amount of its variable
annuity contracts under the Securities Act of 1933 pursuant to Rule 24f-2 under
the Investment Company Act of 1940. The Rule 24f-2 Notice for Registrant's
Fiscal Year ended December 31, 1995 was filed on or about February 22, 1996.
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 2
TO THE REGISTRATION STATEMENT
This Registration Statement is comprised of the following:
The Facing Sheet.
The Cross Reference Sheet.
Part A, the Prospectus consisting of 21 pages.
Part B, the Statement of Additional Information consisting of 21 pages.
Part C, Other Information.
The Signatures.
Exhibit 3 (i)(a) Form of Distribution Agreement
Exhibit 3 (i)(b) Form of Co-Underwriting Agreement
Exhibit 10 Consent of Independent Accountants
Exhibit 13 Schedule of Computation of Performance
Exhibit 15 Powers of Attorney
Exhibit 27 Financial Data Schedule
<PAGE>
CROSS REFERENCE TO ITEMS
REQUIRED BY FORM N-4
N-4 Item Caption in Prospectus
- -------- ---------------------
1......................................Cover Page
2......................................Glossary
3......................................Table of Fees and Expenses
4......................................Not Applicable
5......................................MML Bay State, MassMutual, the Separate
Account, MML Trust and the Oppenheimer
Trust
6......................................Charges and Deductions; Distribution
7......................................Miscellaneous Provisions; An Explanation
of the Contracts; Reservation of Rights;
Contract Owner's Voting Rights
8......................................The Annuity (Pay-Out Period)
9......................................The Death Benefit
10.....................................The Accumulation (Pay-In) Period;
Distribution
11.....................................Right to Return Contract; Redemption
Privileges
12.....................................Federal Tax Status
13.....................................Not Applicable
14.....................................Additional Information
<PAGE>
Caption in Statement of
Additional Information
----------------------
15.....................................Cover Page
16.....................................Table of Contents
17.....................................General Information and History
18.....................................Service Arrangements and Distribution
19.....................................Service Arrangements and Distribution
20.....................................Service Arrangements and Distribution
21.....................................Performance Measures and Distribution
21.....................................Performance Measures
22.....................................Contract Value Calculations
23.....................................Reports of Independent Accountants and
Financial Statements
24.....................................Financial Statement and Exhibits
<PAGE>
MassMutual and Affiliated Companies Service Center
ALLIANCE-ONE Services, L.P.
301 West 11th Street
Kansas City, MO 64105
(800) 258-4511
or
P. O. Box 419607
Kansas City, MO 64141-1007
PROSPECTUS
MML BAY STATE LIFE INSURANCE COMPANY
OPPENHEIMERFUNDS LIFETRUST VARIABLE ANNUITY CONTRACT
MML BAY STATE VARIABLE ANNUITY SEPARATE ACCOUNT 1
This prospectus (the "Prospectus") describes a flexible purchase payment
individual variable annuity contract (the "Contract") issued by MML Bay State
Life Insurance Company ("MML Bay State"). The Contract provides for the
accumulation of contract values prior to maturity and for the distribution of
annuity benefits thereafter.
Purchase payments may be allocated among the thirteen Divisions of MML Bay State
Variable Annuity Separate Account 1 (the "Separate Account"), and, in the
majority of states, a Fixed Account with a Market Value Adjustment feature (the
"Fixed Account"). Please contact the Annuity Service Center indicated above for
more information about the availability of the Fixed Account. For a more
thorough discussion of the Fixed Account, please see - Fixed Account and the
Market Value Adjustment Feature on page 16.
Purchase payments allocated to a Division of the Separate Account will be
invested in a corresponding fund (a "Fund") of either MML Series Investment Fund
(the "MML Trust") or Oppenheimer Variable Account Funds (the "Oppenheimer Trust"
- - collectively MML Trust and Oppenheimer Trust are referred to as the "Trusts").
The Trusts are both open-end, diversified management investment companies
suitable for use with variable annuity contracts.
Annuity benefits can be either fixed or variable amounts or a combination of
both. The Contract value prior to maturity, except for amounts allocated to the
Fixed Account, and the amount of any variable annuity payments thereafter will
vary with the investment performance of the Funds which You have selected. MML
Bay State serves as depositor for the Separate Account.
The Prospectus for MML Trust, which is attached to this Prospectus, describes
the investment objectives and risks of investing in the four available MML
Funds: MML Equity Fund; MML Money Market Fund; MML Managed Bond Fund; and MML
Blend Fund. Similarly, the Prospectus for the Oppenheimer Trust describes the
investment objectives and risks of investing in the nine available Oppenheimer
Funds: Oppenheimer Money Fund; Oppenheimer High Income Fund; Oppenheimer Bond
Fund; Oppenheimer Capital Appreciation Fund; Oppenheimer Growth Fund;
Oppenheimer Multiple Strategies Fund; Oppenheimer Global Securities Fund;
Oppenheimer Strategic Bond Fund; and Oppenheimer Growth & Income Fund.
This Prospectus sets forth the information that a prospective investor ought to
know before investing. Certain additional information about the Contract is
contained in a Statement of Additional Information dated May 1, 1996, which has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference. The Table of Contents for the Statement of Additional
Information appears on page 21 of this Prospectus. The Statement of Additional
Information is available upon written or oral request and without charge from
the Service Center.
THIS PROSPECTUS MUST BE ACCOMPANIED BY OR PRECEDED BY THE PROSPECTUSES OF BOTH
THE OPPENHEIMER VARIABLE ACCOUNT FUNDS AND THE MML SERIES FUND, WHICH ARE
ATTACHED HERETO. ADDITIONALLY, IN STATES WHERE THE FIXED ACCOUNT IS OFFERED,
THIS PROSPECTUS MUST ALSO BE ACCOMPANIED BY A PROSPECTUS FOR THE FIXED ACCOUNT.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
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 UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Prospectus and the Statement of Additional Information are dated May 1,
1996, and may be amended from time to time.
All Contracts are serviced through MML Bay State's Service Center. MML Bay
State's Home Office is located in Jefferson City, Missouri. MML Bay State's
Principal Administrative Office is located at 1295 State Street Springfield,
Massachusetts 01111-0001.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Contents Page
Glossary.................................................................. 3
Summary................................................................... 4
Table of Fees and Expenses................................................ 5
Condensed Financial Information........................................... 7
MML Bay State Life Insurance Company, OppenheimerFunds, Inc., MassMutual,
The Separate Account, and The Trusts..................................... 8
MML Bay State Life Insurance Company..................................... 8
OppenheimerFunds, Inc.................................................... 8
Massachusetts Mutual Life Insurance Company.............................. 8
The Separate Account..................................................... 8
The Trusts............................................................... 8
Investments and Objectives of the Available Funds........................ 9
Possible Conflicts....................................................... 10
An Explanation of the Contract............................................ 10
General-Uses of the Contract............................................. 10
The Accumulation (Pay-In) Period......................................... 11
How Contracts May Be Purchased........................................... 11
Initial Purchase......................................................... 11
Subsequent Purchases..................................................... 11
Wire Transfer............................................................ 11
Electronic Data Transmission of Application Information.................. 11
Allocation of Purchase Payments.......................................... 11
General Transfer Rules................................................... 11
Telephone Transfers...................................................... 12
Automatic Transfers...................................................... 12
Right to Return Contracts................................................ 12
The Death Benefit........................................................ 12
Redemption Privileges.................................................... 13
Automatic Partial Redemptions............................................ 13
Tax Sheltered Annuity Redemption Restrictions............................ 13
The Annuity (Pay-Out) Period............................................. 14
Annuity Benefits......................................................... 14
Payment Options.......................................................... 14
Fixed Income Option...................................................... 14
Variable Monthly Income Option........................................... 14
Fixed-Time Payment Option................................................ 14
Life Income Payments..................................................... 15
Joint-and-Survivor Life Income Payments.................................. 15
Joint-and-Survivor Life Income Payments (Two-Thirds to the Survivor)..... 15
Payments After Death of Annuitant........................................ 15
Special Limitations...................................................... 15
Charges and Deductions.................................................... 15
Asset Charge............................................................. 15
Administrative Charge.................................................... 15
Contingent Deferred Sales Charge......................................... 15
Premium Taxes............................................................ 16
Fund Expenses............................................................ 16
The Fixed Account and the Market Value Adjustment Feature................. 16
Market Value Adjustment.................................................. 17
Distribution.............................................................. 17
Miscellaneous Provisions.................................................. 17
Termination of Liability................................................. 17
Adjustment of Units and Unit Values...................................... 18
Periodic Statements...................................................... 18
Contract Owner's Voting Rights............................................ 18
Reservation of Rights..................................................... 18
Federal Tax Status........................................................ 18
Introduction............................................................. 18
Tax Status of MML Bay State.............................................. 18
Taxation of Contracts in General.......................................... 19
Penalty Taxes............................................................ 19
Annuity Distribution Rules of Section 72(s).............................. 19
Tax Withholding.......................................................... 19
Tax Reporting............................................................ 20
Taxation of Qualified Plans, TSAs and IRAs............................... 20
Performance Measures...................................................... 20
Standardized Average Annual Total Return................................. 20
Additional Performance Measures.......................................... 21
Additional Information.................................................... 21
</TABLE>
10
<PAGE>
Glossary
As used in this Prospectus, the following terms mean:
Accumulated Amount: For each amount credited to a Segment of the Fixed Account
the Accumulated Amount on any date is the amount credited to the Segment
accumulated to that date at the Guaranteed Rate for that amount.
Accumulated Value: The value of a Contract on or prior to the Maturity Date
equal to the Variable Value plus the Fixed Value.
Accumulation Period: The period prior to the Maturity Date, during the lifetime
of the Annuitant and Contract Owner.
Accumulation Unit: A unit of measurement used in determining the value of
amounts credited to a Contract in a Division of the Separate Account on or prior
to the Maturity Date.
Annuitant: The person on whose life the Contract is issued.
Annuity Unit: A unit of measurement used in determining the amount of each
Variable Monthly Income payment.
Application: The document executed by a Contract Owner evidencing his or her
desire to purchase a Contract.
Beneficiary: The person(s) or entity(ies) designated by the Contract Owner to
receive a death benefit under the Contract, if any, upon the death of the
Contract Owner or the Annuitant.
Cash Redemption Value: The value of a Contract which a Contract Owner will
receive if the Contract is redeemed, equal to Accumulated Value less
Administrative Charges, Sales Charges, premium taxes, and a Market Value
Adjustment, if any such charges are applicable.
Contract Date: The Date used to determine the Annuitant's age at the
commencement of the Contract and to determine the start of the first Contract
Year.
Contract Owner(s): The owner (and in some instances the owners) of a Contract.
Contract Owners may include the Annuitant, another individual, an employer, a
trust, or any entity specified in an employee benefit plan. If the Contract is
issued under Section 403(b), Section 408(b) or Section 408(k) of the Internal
Revenue Code, the Contract Owner must be the Annuitant.
Contract Year: A period of 12 months starting on the Contract Date and on each
anniversary of the Contract Date.
Division(s): A sub-account of the Separate Account, the assets of which consist
of shares of a specified Fund of either the MML Trust or the Oppenheimer Trust.
Expiration Date: The Date on which the Guarantee Period for an Accumulated
Amount ends.
Fixed Account: In certain states, the Contract offers a Fixed Account which pays
interest at a Guaranteed Rate on amounts credited to a particular Segment. If
such amounts are withdrawn prior to the end of the Guarantee Period, a Market
Value Adjustment will be made. Assets attributable to the Fixed Account are not
included in assets which are allocated to the Divisions of the Separate Account.
Fixed Income: A benefit providing for periodic payments of a fixed dollar amount
throughout the annuity period. The benefit does not vary with, or reflect the
investment performance of, any Division of the Separate Account.
Fixed Value: On any date, the Fixed Value of the Contract is the sum of the
Accumulated Amounts credited to all Segments of the Fixed Account.
Funds: The thirteen separate series of shares of Oppenheimer Variable Account
Funds and MML Series Investment Fund, both of which are open-end, diversified
management investment companies, registered with the Securities and Exchange
Commission, in which the Divisions of the Separate Account invest.
Guarantee Period: The period for which interest accrues at the Guaranteed Rate
on an amount credited to a Segment. Guarantee Periods range in whole-year
periods from one to ten years.
Guaranteed Rate: The effective annual interest rate MML Bay State uses to accrue
interest on an amount credited to a Segment as of a certain date. Guarantee
Rates are level for the entire Guarantee Period and are fixed at the time an
amount is credited to the Segment.
Market Value Adjustment ("MVA"): An adjustment made to the amount that the
Contract Owner will receive if money is taken from an Accumulated Amount prior
to the Expiration Date of its Guarantee Period.
Maturity Date: The date designated by the Contract Owner as of which Variable
Monthly Income payments (or, if elected, Fixed Income payments or a payment in
one sum) will begin. This date may be no later than the Annuitant's 90th
birthday (unless an earlier date is required by law.)
Maturity Value: The Cash Redemption Value of a Contract at Maturity.
Non-Qualified Contract: A Contract not used in connection with a retirement plan
receiving favorable federal income tax treatment under Sections 401, 403(b), or
408 of the Internal Revenue Code.
Purchase Payment: An amount paid to MML Bay State by, or on behalf of, the
Annuitant.
Qualified Contract: A Contract used in connection with a retirement plan
receiving favorable federal income tax treatment under Sections 401, 403(b), or
408 of the Internal Revenue Code.
Segment: All Guarantee Periods of a given length constitute a Segment. Segments
for all Guarantee Periods may not be available at one time.
Service Center: The office at which the administration of the Contract occurs.
Valuation Date: A valuation date is any date on which the net asset value of the
shares of the Funds is determined. Generally, this will be any date on which the
New York Stock Exchange (or its successor) is open for trading.
11
<PAGE>
Valuation Period: The period of time from the end of one Valuation Date to the
end of the next Valuation Date.
Valuation Time: The time of the close of the New York Stock Exchange (currently
4:00 p.m. New York time) on a Valuation Date. All actions to be performed on a
Valuation Date will be performed as of the Valuation Time.
Variable Monthly Income: A benefit providing for monthly payments that vary
with, and reflect the investment performance of, one or more Divisions of the
Separate Account.
Variable Value: On any date, the Variable Value of a Contract is the sum of the
values of the Accumulation Units credited to each Division of the Separate
Account. The value in each Division is equal to the Accumulation Unit Value
multiplied by the number of units in that Division You own.
You or Your refers to the Contract Owner.
Summary
The Nature of the Contract
The product described in this Prospectus is a flexible premium variable annuity
contract. (See - The Accumulation (Pay-In) Period, page 11). It is designed to
allow a Contract Owner to accumulate values over time for uses such as
retirement planning.
Generally, the Contract is purchased by completing an application and submitting
it for approval together with an initial premium payment to MML Bay State
through Your registered representative. The minimum initial premium is $2,000.
Purchasing the Contract
Contracts may be purchased by both Qualified Plans and by individuals or
entities not qualifying for favorable tax treatment under the Internal Revenue
Code. The Contracts are also available for certain Tax Sheltered Annuities and
Individual Retirement Annuities.
Investments Under the Contract
The Contract offers 13, separate investment Divisions to which a Contract Owner
may allocate money. The Divisions offered represent a wide range of investment
strategies, including money market, bond, blend, global securities, equity, and
high-income (junk bond) funds, among others. Additionally, a Fixed Account with
a Market Value Adjustment feature is available in the majority of states. For
more information concerning available investments please review the Separate
Account discussion beginning on page 8 of this prospectus and the Fixed Account
discussion beginning on page 16.
Inquiries Concerning the Contract
If You have questions about the Contract, please either consult Your registered
representative or contact a customer service representative at the Service
Center.
Transfers
Currently, during the Accumulation Period You may make up to 14 transfers per
Contract Year among the Divisions without incurring a charge. MML Bay State
reserves the right to charge a fee of $20 for transfers in excess of 4 transfers
per Contract Year. In the annuity pay-out period, You may make transfers once
every three months. Additionally, subject to certain limitations, You may make
transfers to and from amounts held in the Fixed Account. (See - General Transfer
Rules, page 11.)
Redemption Rights
You may redeem all or part of the Contract's Accumulated Value at any time prior
to the Maturity Date. All redemptions may be subject to a Sales Charge.
Redemptions from the Fixed Account may be subject to a Market Value Adjustment.
Please note that redemptions may result in the imposition of penalty taxes. (See
- - Contingent Deferred Sales Charge on page 15, and Penalty Taxes on page 19.)
Death Benefit Prior to Maturity
If the Annuitant dies before the death of the Owner and before the Maturity
Date, the Death Benefit will depend on the Annuitant's Age at the time that the
Contract was issued. The beneficiary named in the Contract will receive the
greater of: (a) the total of all purchase payments made to the Contract less all
partial redemptions accumulated at 5% to Annuitant's 75th birthday and 0%
thereafter, but not more than two times the difference between all purchase
payments and all redemptions; or (b) the Accumulated Value of the Contract less
any applicable Administrative Charge (and any Sales Charge, if the Annuitant's
age on the Contract Date exceeds 75).
If the Contract Owner dies prior to the Maturity Date, the named beneficiary
will receive the Cash Redemption Value of the Contract.
Please note that in some states, the Death Benefit described above may not be
available. For more information concerning the available death benefits see The
Death Benefit, on page 12.
Tax Treatment
Under current law, during the accumulation phase of the Contract, the Contract's
Accumulated Value is not taxed. If redemptions are made from the Contract prior
to age 59 1/2, a ten percent (10%) federal income tax penalty will apply to
the income portion of the withdrawal. In certain instances, the tax penalty will
not apply. Please review Taxation of Contracts in General, beginning on page 19,
for a more detailed description of the tax rules applicable to the Contract.
Partial or full redemption of a Contract may require MML Bay State to withhold
20% of the amount redeemed, as more fully described in the Taxation of Qualified
Plans, TSAs and IRAs, section on page 20.
Right to Return Contract
The Contract entitles the purchaser to a 10-day revocation right more fully
described under Right to Return Contracts on page 12.
Charges Under the Contract
MML Bay State assesses certain charges for the administration and the mortality
and expense risks associated with the Contract. MML Bay State also assesses a
contingent deferred
12
<PAGE>
sales charge (the "Sales Charge") if all or some of the value is redeemed prior
to the expiration of a seven-year period following the date of each purchase
payment.
Each Contract Year, MML Bay State permits You to redeem, without a Sales Charge,
up to 10% of the Contract's premiums that would otherwise be assessed a Sales
Charge. For more information concerning this feature, please consult Contingent
Deferred Sales Charge commencing on page 15.
Asset Charge
MML Bay State currently imposes a charge of 1.40% on an annual basis against the
assets held in the Separate Account. (MML Bay State reserves the right to
increase this fee to 1.50% see - Asset Charge, page 15).
Administrative Charge
An administrative charge, currently $30 (maximum $50) will be assessed annually
on each Contract. This charge will be waived for Contracts which have an
Accumulated Value of at least $50,000.
Premium Taxes
Additionally, a deduction is made for premium taxes for purchase payments made
into Contracts in certain jurisdictions where such tax applies. Currently, the
applicable premium tax will be deducted at the time of redemption, death,
maturity, or annuitization. (See - Premium Taxes, page 16.)
Table of Fees and Expenses
Contract Owner Transaction Expenses
Sales Load Imposed on Purchases......None
Deferred sales load as a Percentage of Purchase Payments when withdrawn:
<TABLE>
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Full Years since payment 0 1 2 3 4 5 6 7 or more
- --------------------------------------------------------------------------------------------------
Percentage 7% 6% 5% 4% 3% 2% 1% 0%
- --------------------------------------------------------------------------------------------------
</TABLE>
Transfer Fee....................................None for first 14 transfers
during the Accumulation Period
($20 thereafter)**
Annual Administrative Charge*...................$30**
Separate Account Annual Expenses
(as a percentage of average account values).....1.40%**
Mortality and Expense Risk Fee..........1.15%
Administrative Fee......................0.15%
Death Benefit Fee.......................0.10%
Portfolio Annual Charges and Expenses (as a percentage of Fund average net
assets)***
<TABLE>
<CAPTION>
Management Other Total Portfolio
Fees Expenses Annual Expenses
<S> <C> <C> <C>
MML Equity Fund 0.40% 0.01% 0.41%
MML Money Market Fund 0.50% 0.04% 0.54%
MML Managed Bond Fund 0.49% 0.03% 0.52%
MML Blend Fund 0.37% 0.01% 0.38%
Oppenheimer Money Fund 0.45% 0.06% 0.51%
Oppenheimer High Income Fund 0.75% 0.06% 0.81%
Oppenheimer Bond Fund 0.75% 0.05% 0.80%
Oppenheimer Capital
Appreciation Fund 0.74% 0.04% 0.78%
Oppenheimer Multiple
Strategies Fund 0.74% 0.03% 0.77%
Oppenheimer Growth Fund 0.75% 0.04% 0.79%
Oppenheimer Global Securities
Fund 0.74% 0.15% 0.89%
Oppenheimer Strategic Bond Fund 0.75% 0.10% 0.85%
Oppenheimer Growth & Income
Fund**** 0.75% 1.32% 2.07%
</TABLE>
*The Administrative Charge will be waived if the Accumulated Value is at least
$50,000 when the Administrative Charge would be deducted.
**These fees and charges are shown on a current basis. MML Bay State reserves
the right to raise the Administrative & Separate Account charges up to $50, and
1.50% respectively. For more information please see - Charges and Deductions,
page 15.
***The expenses listed are for the year ended December 31, 1995.
****For the period from July 3, 1995 (commencement of operations) to December
31, 1995, annualized.
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<PAGE>
EXAMPLE:
You would pay the following cumulative expenses on a $1,000 investment assuming
a 5% annual return on assets:
If Your Contract is redeemed at the end of the year:
<TABLE>
<CAPTION>
Year 1 3 5 10
<S> <C> <C> <C> <C>
MML Equity Fund $83 $105 $131 $224
MML Money Market Fund 84 109 137 238
MML Managed Bond Fund 84 109 136 236
MML Blend Fund 82 104 129 221
Oppenheimer Money Fund 84 108 136 235
Oppenheimer High Income Fund 87 117 151 266
Oppenheimer Bond Fund 86 117 151 265
Oppenheimer Capital Appreciation Fund 86 117 150 263
Oppenheimer Multiple Strategies Fund 86 116 149 262
Oppenheimer Growth Fund 86 117 150 264
Oppenheimer Global Securities Fund 87 120 155 274
Oppenheimer Strategic Bond Fund 87 119 153 270
Oppenheimer Growth & Income Fund 99 155 212 384
If Your Contract is not redeemed at the end of the
year:
Year 1 3 5 10
<S> <C> <C> <C> <C>
MML Equity Fund 20 60 104 224
MML Money Market Fund 21 64 110 238
MML Managed Bond Fund 21 64 109 236
MML Blend Fund 19 59 102 221
Oppenheimer Money Fund 21 63 109 235
Oppenheimer High Income Fund 24 72 124 266
Oppenheimer Bond Fund 23 72 124 265
Oppenheimer Capital Appreciation Fund 23 72 123 263
Oppenheimer Multiple Strategies Fund 23 71 122 262
Oppenheimer Growth Fund 23 72 123 264
Oppenheimer Global Securities Fund 24 75 128 274
Oppenheimer Strategic Bond Fund 24 74 126 270
Oppenheimer Growth & Income Fund 36 110 185 384
</TABLE>
The purpose of the table set forth above is to assist You in understanding the
various costs and expenses that Contract Owners bear directly or indirectly. The
table is based on estimated amounts for the most recent fiscal year and reflects
the expenses of the Separate Account and the Trusts, adjusted to reflect changes
in management fee rates and a voluntary expense limitation. The table does not
reflect the deduction of premium taxes.
For the purpose of calculating the expenses in the above examples, we have
converted the $30 annual administrative charge to a 0.11% annual asset charge
based on an average contract size of $27,500.
Converted in this way, this annual charge (on a percentage basis) would be
higher for smaller contracts and lower for larger contracts. No annual
Administrative Charge is assessed on contracts with accumulated values of
$50,000 or more.
The above examples should not be considered representative of past or future
expenses; actual expenses may be more or less than those shown.
14
<PAGE>
Condensed Financial Information
MML Bay State Variable Annuity Separate Account 1
Accumulation Unit Values (Audited)
<TABLE>
<CAPTION>
December 31, 1995 *December 31, 1994
<S> <C> <C>
MML Equity Division $1.29 $1.00
MML Money Market Division $1.05 $1.00
MML Managed Bond Division $1.18 $1.01
MML Blend Division $1.22 $1.00
Oppenheimer Money Division $1.05 $1.00
Oppenheimer High Income Division $1.15 $ .97
Oppenheimer Bond Division $1.15 $ .99
Oppenheimer Capital Appreciation Division $1.31 $1.00
Oppenheimer Growth Division $1.32 $ .98
Oppenheimer Multiple Strategies Division $1.18 $ .99
Oppenheimer Global Securities Division $ .95 $ .94
Oppenheimer Strategic Bond Division $1.12 $ .98
Oppenheimer Growth & Income Division ** $1.24 N/A
*Public offering commenced on November 14, 1994. All accumulation unit values were $1.00 on November 14, 1994.
**Public offering commenced July 3, 1995.
MML Bay State Variable Annuity Separate Account 1
Number of Accumulation Units Outstanding (Audited)
<CAPTION>
December 31, 1995 *December 31, 1994
<S> <C> <C>
MML Equity Division 685,964 5,000
MML Money Market Division 839,793 16,949
MML Managed Bond Division 328,514 5,000
MML Blend Division 778,529 5,000
Oppenheimer Money Division 1,023,398 5,000
Oppenheimer High Income Division 1,518,022 6,184
Oppenheimer Bond Division 883,171 5,000
Oppenheimer Capital Appreciation Division 2,254,545 12,000
Oppenheimer Growth Division 2,762,984 5,000
Oppenheimer Multiple Strategies Division 2,190,174 7,339
Oppenheimer Global Securities Division 2,698,363 12,367
Oppenheimer Strategic Bond Division 3,491,031 7,314
Oppenheimer Growth & Income Division** 1,507,840 N/A
</TABLE>
*Public offering commenced on November 14, 1994.
**Public offering commenced July 3, 1995.
Financial Statements
For financial statements and other information concerning the financial
condition of MML Bay State Variable Annuity Separate Account 1 and of MML Bay
State, see the Statement of Additional Information.
15
<PAGE>
MML Bay State Life Insurance Company, OppenheimerFunds, Inc., Massachusetts
Mutual Life Insurance Company, The Separate Account, and The Trusts
MML Bay State Life Insurance Company
MML Bay State Life Insurance Company ("MML Bay State") is a life insurance
company and a wholly-owned subsidiary of Massachusetts Mutual Life Insurance
Company ("MassMutual"). Organized in 1894 under the laws of the state of
Missouri, MML Bay State (formerly known as Western Life Insurance Company of
America) was purchased in 1981 by MassMutual. Its name was changed in March
1982. MML Bay State currently is licensed to sell variable life insurance in all
states except New York. MML Bay State plans to obtain variable annuity authority
in all states except New York, and, as of February 12, 1996, it had obtained
such authority in 43 states and the District of Columbia. The Contract is
available only in states where this approval process has been completed. MML Bay
State's Home Office is located in Jefferson City, Missouri.
OppenheimerFunds, Inc.
OppenheimerFunds, Inc. ("OFI") is a corporation organized under the laws of the
state of Colorado. (Prior to January 5, 1996, OFI was known as Oppenheimer
Management Corporation.) It has operated as an investment adviser since April
30, 1959. It (including a subsidiary) currently advises U.S. investment
companies with assets aggregating over $42 billion as of December 31, 1995, and
having more than 2.8 million shareholder accounts. OFI is owned by Oppenheimer
Acquisition Corp., a holding company owned in part by senior management of OFI,
and ultimately controlled by MassMutual.
MassMutual
MassMutual is a mutual life insurance company chartered in 1851 under the laws
of Massachusetts. Its Home Office is located in Springfield, Massachusetts.
MassMutual is licensed to transact life, accident, and health insurance business
in all fifty states of the United States and certain provinces of Canada. It
also has approval to write variable annuity business in all states.
On February 29, 1996, the merger of Connecticut Mutual Life Insurance Company
("Connecticut Mutual") with and into MassMutual was completed. The separate
existence of Connecticut Mutual has ceased. MassMutual continues its corporate
existence under its current name. The merger does not affect any provisions of,
or rights or obligations under, policies or contracts previously issued by
MassMutual. As a result of the merger, MassMutual has estimated statutory assets
in excess of $50 billion, and estimated total assets under management in excess
of $103 billion.
The Separate Account
MML Bay State Variable Annuity Separate Account 1 (the "Separate Account") was
established on January 14, 1994. It is a separate account of MML Bay State
registered with the Securities and Exchange Commission as a unit investment
trust. The Separate Account meets the definition of a Separate Account under
Rule 0-1(e) under the Investment Company Act of 1940.
The Separate Account is divided into Divisions. Each Division invests in
corresponding shares of either MML Series Investment Trust ("MML Trust") or
Oppenheimer Variable Account Funds ("Oppenheimer Trust"). The value of both
Accumulation Units and Annuity Units in each Division reflects the investment
results of its underlying Funds. Please note that MML Bay State reserves the
right to add, or substitute Divisions, create new separate accounts, in some
cases restrict Funds, and to invest in shares of other series of the Trusts or
of other registered, open-end investment companies. See - Reservation of Rights,
page 18.
Although MML Bay State owns the assets of the Separate Account, assets of the
Separate Account equal to the reserves and other Contract liabilities which
depend on the investment performance of the Separate Account and are not
chargeable with liabilities arising out of any other business MML Bay State may
conduct. The income and capital gains and losses, realized or unrealized, of
each Division of the Separate Account are credited to or charged against such
Division without regard to the income and capital gains and losses of the other
Divisions or other accounts of MML Bay State. This state law provision has been
supported in several recent decisions in states reviewing this issue. All
obligations arising under a Contract, however, are general corporate obligations
of MML Bay State.
The Trusts
Each of the Trusts described below has separate assets and liabilities and a
separate net asset value per share. An investor's interest in a Separate Account
is limited to the Fund(s) in which shares are held. Since market risks are
inherent in all securities to varying degrees, assurance cannot be given that
the investment objective of any of the Funds will be met.
Financial Statements for the Oppenheimer Trust and for the MML Trust are
contained in their respective Statements of Additional Information.
Additional information concerning the investment objectives and policies of the
Funds can be found in the current prospectuses for the Trusts which are attached
to this prospectus and should be read carefully before making any decision
concerning allocation of premium payments.
Oppenheimer Trust
Oppenheimer Trust is a diversified, open-end management investment company
organized as a Massachusetts business trust in 1984. It consists of nine
separate Funds - Oppenheimer Money Fund, Oppenheimer Bond Fund and Oppenheimer
Growth Fund, all organized in 1984; Oppenheimer High Income Fund, Oppenheimer
Capital Appreciation Fund, and Oppenheimer Multiple Strategies Fund, all
organized in 1986; Oppenheimer Global Securities Fund, organized in 1990;
Oppenheimer Strategic Bond Fund, organized in 1993; and
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Oppenheimer Growth & Income Fund, organized in 1995. OFI serves as the
investment adviser to Oppenheimer Trust. OFI is registered as investment adviser
under the Investment Advisers Act of 1940.
MML Trust
MML Trust is a diversified, open-end management investment company having four
series of shares (the "MML Funds"), each of which has different investment
objectives designed to meet different investment needs. These Funds include: MML
Equity Fund organized in 1971; MML Money Market Fund and MML Managed Bond Fund
organized in 1981; and MML Blend Fund organized in 1983. MassMutual serves as
the investment adviser to MML Trust. MassMutual has entered into investment sub-
advisory agreement with Concert Capital Management, Inc. ("Concert Capital"), a
wholly-owned subsidiary of MassMutual. These agreements provide that Concert
Capital manages the investment and reinvestment of the assets of the MML Equity
Fund and the assets of the Equity Sector of the MML Blend Fund. Both MassMutual
and Concert Capital are registered as investment advisers under the Investment
Advisers Act of 1940.
Investments and Objectives of the Available Funds:
MML Equity Fund
The assets of the MML Equity Fund are invested primarily in common stocks and
other equity-type securities. The primary investment objective of the MML Equity
Fund is to achieve a superior total rate of return over an extended period of
time from both capital appreciation and current income. A secondary investment
objective is the preservation of capital when business and economic conditions
indicate that investing for defensive purposes is appropriate.
MML Money Market Fund
The assets of the MML Money Market Fund are invested in short-term debt
instruments, including but not limited to commercial paper, certificates of
deposit, bankers' acceptances, and obligations issued, sponsored, or guaranteed
by the United States government or its agencies or instrumentalities. The
investment objectives of the MML Money Market Fund are to achieve high current
income, preservation of capital, and liquidity.
MML Managed Bond Fund
The assets of the MML Managed Bond Fund are invested primarily in publicly
issued, readily marketable, fixed income securities of such maturities as
MassMutual, as investment manager, deems appropriate from time to time in light
of market conditions and prospects. The investment objective of the MML Managed
Bond Fund is to achieve as high a total rate of return on an annual basis as is
considered consistent with the preservation of capital values.
MML Blend Fund
The assets of the MML Blend Fund are invested in a portfolio of common stocks
and other equity-type securities, bonds and other debt securities with
maturities generally exceeding one year, and money market instruments and other
debt securities with maturities generally not exceeding one year. The investment
objective of the MML Blend Fund is to achieve as high a level of total rate of
return over an extended period of time as is considered consistent with prudent
investment risk and the preservation-of-capital values.
Oppenheimer Money Fund
Oppenheimer Money Fund seeks the maximum current income from investments in
"money market" securities consistent with low capital risk and maintenance of
liquidity. Its shares are neither insured nor guaranteed by the U.S. Government,
and there is no assurance that this Fund will be able to maintain a stable net
asset value of $1.00 per share.
Oppenheimer High Income Fund
Oppenheimer High Income Fund seeks a high level of current income from
investment in high yield, high-risk, fixed-income securities, including unrated
securities or securities in the lower rating categories. These securities may be
considered to be speculative. Please consult the Oppenheimer Trust prospectus
for a more complete discussion of the risks and investment objectives associated
with this Fund.
Oppenheimer Bond Fund
Oppenheimer Bond Fund primarily seeks a high level of current income from
investment in high yield fixed-income securities rated "Baa" or better by
Moody's or "BBB" or better by Standard & Poor's. Secondarily, the Fund seeks
capital growth when consistent with its primary objective.
Oppenheimer Capital Appreciation Fund
Oppenheimer Capital Appreciation Fund seeks to achieve capital appreciation by
investing in "growth-type" companies.
Oppenheimer Growth Fund
Oppenheimer Growth Fund seeks to achieve capital appreciation by investing in
securities of well-known established companies.
Oppenheimer Multiple Strategies Fund
Oppenheimer Multiple Strategies Fund seeks a total investment return (which
includes current income and capital appreciation in the value of its shares)
from investments in common stocks and other equity securities, bonds and other
debt securities, and "money market" securities.
Oppenheimer Global Securities Fund
Oppenheimer Global Securities Fund seeks long-term capital appreciation by
investing a substantial portion of assets in securities of foreign issuers,
"growth-type" companies, cyclical industries and special situations which are
considered to have appreciation possibilities. Current income is not an
objective. This Fund's investments may be considered to be speculative.
Oppenheimer Strategic Bond Fund
Oppenheimer Strategic Bond Fund seeks a high level of current income principally
derived from interest on debt securities and
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seeks to enhance such income by writing covered call options on debt securities.
The Fund invests principally in: (i) foreign government and corporate debt
securities; (ii) U.S. Government securities; and (iii) lower-rated high yield,
high-risk debt securities. This Fund's investments may be considered to be
speculative. Please consult the Oppenheimer Trust prospectus for a more complete
discussion of the risks and investment objectives associated with this Fund.
All dividends and capital gains distributions paid by the Funds' shares are
automatically reinvested in additional shares at their net asset value
determined on the distribution date.
Oppenheimer Growth & Income Fund
Oppenheimer Growth & Income Fund seeks a high total return (which includes
growth in the value of its shares as well as current income) from equity and
debt securities. From time to time this Fund may focus on small to medium
capitalization common stocks, bonds and convertible securities.
Possible Conflicts
MML Trust
Assets of variable life insurance separate accounts are also invested in the MML
Trust. It is possible that under this arrangement conflicts could arise between
the interests of Contract Owners and owners of variable life insurance policies.
The Trustees of the MML Trust will follow monitoring procedures to determine
whether material conflicts have arisen. If an irreconcilable material conflict
exists, the assets of the variable life insurance separate accounts may be
invested solely in shares of mutual funds which offer their shares exclusively
to variable life insurance separate accounts, unless the owners of the variable
life insurance policies and the variable annuity contracts vote otherwise.
Oppenheimer Trust
The Oppenheimer Trust was established for use as an investment vehicle by
variable contract separate accounts such as the Separate Account. Accordingly,
it is possible that a material irreconcilable conflict may develop between the
interests of Contract Owners and other separate accounts investing in the
Oppenheimer Trust. The Board of Trustees of the Oppenheimer Trust (the "Board")
will monitor the Oppenheimer Funds for the existence of any such conflicts. If
it is determined that a conflict exists, the Board will notify MML Bay State,
and appropriate action will be taken to eliminate such irreconcilable conflict.
Such steps may include: (1) withdrawing the assets allocable to some or all of
the separate accounts from the particular Oppenheimer Fund and reinvesting such
assets in a different investment medium, including (but not limited to) another
Oppenheimer Fund; (2) submitting the question of whether such segregation should
be implemented to a vote of all affected Contract Owners; and (3) establishing a
new registered management investment company or managed separate account.
For a discussion of other separate accounts investing in the MML Trust and the
Oppenheimer Trust and possible conflicts arising from such an arrangement, see
the Statement of Additional Information.
An Explanation of the Contract
The principal provisions of the Contract are described below. If You desire
additional information, You should refer to the Contract and to the Statement of
Additional Information. For a complete understanding of Your rights, You should
also review any applicable employee benefit plan documents.
General-Uses of the Contract
The Contract described herein is an individual variable annuity contract issued
by MML Bay State. Purchase payments are flexible. The Contract may be purchased
by individuals or entities for use in arrangements not receiving favorable tax
treatment under the Internal Revenue Code.
The Contract is also available for use in the following retirement plans which
qualify (with necessary endorsement as appropriate) for special federal tax
treatment under the Internal Revenue Code of 1986, as amended (the "Code"): (1)
pension and profit-sharing plans qualified under Section 401(a) or 403(a) of the
Code ("Qualified Plans"), which may also constitute participant-directed
individual account plans under Section 404(c) of ERISA; (2) annuity purchase
plans adopted by public school systems and certain tax-exempt organizations
pursuant to Section 403(b) of the Code ("Tax Sheltered Annuities" or "TSAs");
and (3) Individual Retirement Annuities established in accordance with Section
408 of the Code ("IRAs"), including those established by employer contributions
under a Simplified Employee Pension Plan arrangement. At MML Bay State's
request, the Internal Revenue Service has issued to MML Bay State favorable
opinion letters approving specific versions of the Contract. IRA Contract Owners
with these Contracts will receive a copy of the favorable opinion letter. The
Internal Revenue Service approval is a determination only as to the form of the
Contract for use as an IRA and does not represent a determination of the merits
of the Contract as an IRA. Under tax-qualified retirement plans except TSAs and
IRAs, participants may not be the Contract Owners and, therefore, may have no
Contract Owners' rights.
Unless restricted by endorsement or the terms of the Contract, the Contract
Owner has all rights in the Contract prior to the Maturity Date, including the
right to make a partial or full redemption of the Contract, to designate and
change the beneficiaries who will receive the proceeds at the death of the
Annuitant or Contract Owner before the Maturity Date, to transfer amounts among
the Divisions of the Separate Account (and to and from the Fixed Account, if
available) and to designate a payment option to begin on the Maturity Date.
Prior to issue, a Contract will be endorsed to preclude the Contract Owner from
assigning the Contract as collateral. Although both Owner and the Joint Owner
must authorize any change made to the Contract, either the Owner or Joint Owner
may exercise certain Contract rights with the consent, satisfactory to us, of
the other.
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The Contract Owner may, subject to certain limitations, be the Annuitant or
another individual or entity.
The Accumulation (Pay-In) Period
How Contracts May Be Purchased
The minimum initial purchase payment is $2,000. After making Your initial
payment, You may make as many or as few subsequent purchase payments of at least
$100 as You desire. The Contract permits MML Bay State to establish a maximum on
total purchase payments that may be made under the Contract. This maximum will
not be less than $500,000.
Initial Purchase
You may place Your initial purchase payment, together with a completed
Application, with Your registered representative.
Subsequent Purchases
You may make subsequent purchase payments by mailing Your check, clearly
indicating Your name and Contract Number, to the Service Center.
Wire Transfer
You may make purchase payments by wire transfer. For instructions concerning how
to make a wire transfer, please contact the Service Center.
ELECTRONIC DATA TRANSMISSION OF APPLICATION INFORMATION
MML Bay State may accept, by agreement with a limited number of broker-dealers,
electronic data transmission of Application information, along with wire
transmittals of initial purchase payments from the broker-dealers to the Service
Center for purchase of the Contract. Please contact the Service Center to
receive more information about electronic data transmission of Application
information.
Allocation of Purchase Payments
You may direct that Your purchase payments (after deducting any applicable
premium taxes) be allocated among the Divisions of the Separate Account.
Additionally, where available, and subject to minimum allocations of $1,000,
purchase payments may be allocated to Segments of the Fixed Account. Initial
purchase payment allocations to either a Division of the Separate Account or to
a Segment will be effective as of the Valuation Date within two business days of
the date an initial purchase payment is received in good order at the Service
Center provided that Your Contract application is complete. Purchase payments
allocated to a Division will be applied to purchase Accumulation Units in that
Division at its Accumulation Unit value on the Valuation Date. These
Accumulation Units will be used in determining the value of amounts held in a
Division of a Separate Account credited to a Contract on or prior to the
Maturity Date. The value of the Accumulation Units in each Division will vary
with and will reflect the investment performance of that Division (which in turn
will reflect the investment performance and expenses of the Fund in which the
assets of that Division are invested), less any applicable taxes and the
applicable Asset Charge. A more detailed description of how the value of an
Accumulation Unit is calculated is contained in the Statement of Additional
Information.
The value of the Accumulation Units purchased is determined as of the Valuation
Date within two days after MML Bay State receives Your payment in good order by
mail at its Service Center, provided that Your Contract application is complete.
If an initial purchase payment is not applied within five business days after
receipt (due to incomplete or ambiguous application information, for example),
the payment amount will be refunded unless specific consent to retain the
payment for a longer period is obtained from the prospective purchaser.
General Transfer Rules
Prior to 30 days before the Maturity Date, the Contract Owner may make transfers
among Divisions of the Separate Account (and if available among Segments of the
Fixed Account) without the imposition of a transfer fee. If more than four
transfers have been made in a Contract Year, MML Bay State reserves the right to
deduct a transfer fee of $20. Currently 14 transfers may be made per Contract
Year without charge. (Transfers made by Dollar Cost Averaging do not count
against the 14 transfer limit.)
If a Variable Monthly Income is in effect, transfers among the Divisions of the
Separate Account are limited to one transfer every three months.
All transfers, whether occurring before or after the Maturity Date are subject
to the following:
(a.) The minimum amount which may be transferred is the lesser of: (1) $500;
or (2) the Accumulated Value in the Division or the Accumulated Amount
in a Segment.
(b.) Transfers will be effected as of the Valuation Date which is on or next
follows the date Your request is received in good order at the Service
Center. Transfer requests may be made by telephone (during the
Accumulation Period), facsimile, or by written direction. Please note
that no transfers may be made within thirty days before Maturity Date.
(c.) Transfer requests must clearly specify the amount to be transferred
from each Division or Segment (if the Fixed Account is available) and
the Division or Segment to which amounts are to be transferred. Unless
otherwise specified, transfers from a Segment of the Fixed Account will
be taken on a first-in, first-out basis. Transfer requests made during
the Annuity pay-out period must specify the percentage to be
transferred among the Divisions of the Separate Account.
(d.) Transfers to a Segment of the Fixed Account may not be less than
$1,000. If the Segment elected is not available, the transfer will not
be processed.
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(e.) Transfers made from the Fixed Account are subject to a Market Value
Adjustment ("MVA") unless the transfer is being taken from an
Accumulated Amount within thirty days prior to its Expiration Date. The
MVA will be applied as of the effective date of the transfer.
(f.) Transfer fees will be deducted from the Division or Segment from which
the transfer has been made, unless the balance remaining in such
Division or Segment is insufficient to cover the applicable transfer
fee. If this is the case, the transfer fee will be deducted from the
amount being transferred.
(g.) We reserve the right to limit the number and frequency of transfers
made during a Contract Year.
(h.) After a payout option has been invoked, transfers may not be made
between a Fixed Income and a Variable Monthly Income option.
Telephone Transfers
Contract Owners, subject to the limitations described below, may make transfers
among either Divisions or the Fixed Account (if available) during the
Accumulation Period by telephoning a transfer request to the Service Center at
its toll free telephone number. This feature will be made automatically
available to Contract Owners unless MML Bay State receives different
instructions. Through use of this toll free number, Contract Owners may also
obtain information concerning the Contract including Accumulated Values. This
service is not available to Contracts owned by Custodians or Trustees of
Qualified Plans, or Contracts held by Guardians. Normal transfer provisions
apply.
MML Bay State will not be liable for complying with any telephone instructions
it reasonably believes to be genuine, nor for any loss, damage, cost or expense
in acting on telephone instructions. MML Bay State will employ reasonable
procedures to ensure the legitimacy of telephone transfer requests. Such
procedures may include, among others, requiring forms of personal identification
prior to acting upon telephone instructions, providing written confirmation of
such transactions to the Contract, and/or tape recording of telephone transfer
request instructions received from a Contract Owner. If we fail to follow such
procedures, we may be liable for losses due to unauthorized or fraudulent
instructions.
Automatic Transfers
MML Bay State offers You two automatic transfer options described below. They
are available any time before the Maturity Date. The automatic transfer options
are not available for use with the Fixed Account. Only one of the automatic
transfer options may be in effect at a time. Both options are subject to the
transfer rules discussed above. Although no charge is currently imposed for this
service, MML Bay State reserves the right to impose a fee in the future.
Dollar Cost Averaging
Dollar Cost Averaging is a feature whereby a Contract amount is periodically
transferred from one Division of the Separate Account to one or more other
designated Divisions of the Separate Account. Once the feature is elected, these
transfers occur automatically at the frequency elected - monthly, quarterly,
semiannually, or annually.
Dollar Cost Averaging provides a mechanism designed to minimize the negative
effects of short-term market fluctuations. Over a period of time, an investor
may, at least theoretically, be able to purchase more units than he or she would
have been able to purchase had all monies been invested on a single Valuation
Date when the value of the units was high.
Dollar Cost Averaging may be available at any time, provided that the Division
from which the automatic transfers will be made has a value of at least $6,000.
The minimum amount any Division may receive is $100. All Divisions are available
for use with this feature.
Asset Reallocation
You may elect the Asset Reallocation option as a means of maintaining a constant
allocation of Accumulated Value among the Divisions in which You have allocated
Your monies. If You elect this option, we will make automatic transfers among
selected Divisions on a quarterly, semiannual, or annual basis as You instruct
us. A minimum Accumulated Value of $50,000 is required in order to elect this
option. Allocations will be made on a basis consistent with the allocation
selected for new purchase payments.
Right to Return Contracts
You may return Your Contract to MML Bay State (at its Service Center) at any
time within 10 days after the Contract has been delivered to you (unless a
longer period is required by applicable state law). If You exercise this right
and Your Contract is not an IRA, then You will receive the Accumulated Value of
the Contract plus any premium tax deductions, except where state law requires us
to return the amount of purchase payment(s) made less the net amount of partial
redemptions. If You exercise this right and Your Contract is an IRA, You will
not receive less than the amount of purchase payment(s) made less the net amount
of partial redemptions. For this purpose, the Accumulated Value of the Contract
will be determined as of the Valuation Time on the date on which the Contract is
received at MML Bay State's Service Center or at the next Valuation Time after
receipt if the Contract is received on other than a Valuation Date.
The Death Benefit
A death benefit is paid upon the death of either the Contract Owner (for jointly
owned Contracts, upon the first death of the two Owners) or Annuitant. If a
Contract Owner and Annuitant are the same, the Death Benefit paid will be the
Annuitant Death Benefit.
Contract Owner Death Benefit
If a Contract Owner, who is not the annuitant, dies prior to the Maturity Date,
the named beneficiary will receive the Cash Redemption Value of the Contract.
Annuitant Death Benefit
Historically, variable annuities have guaranteed a return of premiums less
withdrawals as a minimum standard death
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benefit. This Contract offers one of two enhancements, depending on Your
contract state.
If the Annuitant dies before the Maturity Date, the beneficiary named in the
Contract will receive the greater of: (a) the total of all purchase payments
made to the Contract less all partial redemptions accumulated at 5% to
Annuitant's 75th birthday and 0% thereafter, but not more than two times the
difference between all purchase payments and all redemptions; or (b) the
Accumulated Value of the Contract less any applicable Administrative Charge (and
any Sales Charge, if the Annuitant's age on the Contract Date exceeds 75).
In certain states, the death benefit described above may not be available for
Annuitant's whose issue age is less than 76. In those instances, the death
benefit during the first three years will be equal to the greater of: (a.) the
total of all purchase payments made to the Contract less all partial
redemptions; or (b.) the Accumulated Value of the Contract less any applicable
Administrative Charge. During any subsequent three Contract Year period, the
death benefit will be the greater of: (a.) the death benefit on the last day of
the previous three Contract Year period plus any purchase payments made less all
partial redemptions since then; or (b.) the Accumulated Value of the Contract
less any applicable Administrative Charge.
In any case, the amount of Death Benefit received will be reduced by the amount
of any applicable premium tax.
The Death Benefit is determined as of the Valuation Date which is on or next
follows the date on which due proof of death is received at the Service Center.
The death benefit will be paid within seven days of receipt of due proof of
death and all other requirements. With MML Bay State's consent, the death
benefit may be applied under one or more of the payment options provided for in
the Contract (see - Payment Options, page 14). If a Payment Option is not
selected, the death benefit will be paid in one sum.
A beneficiary who is the surviving spouse of the Contract Owner of a Contract
issued as an IRA may elect to treat the Contract as if he or she were the
Contract Owner.
Redemption Privileges
Subject to the special rules regarding TSAs, discussed below, You may redeem all
or part of the Accumulated Value of a Contract on or prior to its Maturity Date
if the Annuitant is alive. The amount of any partial redemption, however, must
be at least $100, and requests for a partial redemption which would reduce the
Accumulated Value of the Contract to less than $1,000 plus outstanding premium
taxes will be treated as a request for a full redemption. You may incur a Sales
Charge upon redemption. (See - CHARGES AND DEDUCTIONS, page 15.) Any partial
redemption will be paid in one sum. If the entire Contract is redeemed, the cash
redemption value may be paid in one sum or applied under one or more of the
payment options. You must designate the Division(s) (or the Segment of the Fixed
Account, if available) from which any partial redemption is to be made. Unless
otherwise specified, partial redemptions from a Segment of the Fixed Account
will be taken on a first-in, first-out basis. A partial redemption from a
Division will reduce the number of Accumulation Units in that Division by an
amount equal to the sum of the redemption payment plus any Sales Charge, divided
by the Accumulation Unit Value.
The Accumulation Unit value on redemption is determined as of the Valuation Time
on the date on which the written request for redemption is received in good
order at the Service Center or, if that date is not a Valuation Date, on the
next Valuation Date after receipt.
Redemption payments from a Separate Account will be made within seven days (or a
shorter period if required by law) after written request in good order is
received at MML Bay State's Service Center. The right of redemption may be
suspended or payments postponed whenever: (1) the New York Stock Exchange is
closed, except for holidays and weekends; (2) the Securities and Exchange
Commission has determined that trading on the New York Stock Exchange is
restricted; (3) the Securities and Exchange Commission permits suspension or
postponement and so orders; or (4) an emergency exists, as defined by the
Securities and Exchange Commission, so that valuation of the assets of each
Separate Account or disposal of securities held by it is not reasonably
practicable.
In addition, a purchase payment amount is not available to satisfy a redemption
request until the check, or other instrument by which the purchase payment was
made, has been honored.
Redemptions of amounts from the Fixed Account may be delayed for up to six
months from the date the request is received by us at our Service Center. If
payment is delayed 30 days or more, we will add interest at an annual rate of
not less than 3%.
Amounts withdrawn may be includable in the gross income of the Contract Owner in
the year in which the withdrawal occurs. Additionally, a 10% tax penalty may be
applicable (as described more fully in the Penalty Taxes section on page 19).
Redemption payments may be subject to federal income tax and elective and/or
mandatory tax withholding. (See - FEDERAL TAX STATUS, page 18).
Automatic Partial Redemptions
An Automatic Partial Redemption program permitting Contract Owners to elect to
receive automatic partial redemptions on a periodic basis is available on a
limited basis. All applicable limitations concerning redemptions apply to this
program. Additionally, automatic partial redemptions may be subject to penalty
taxes.
This program is available only during the Accumulation Period of the Contract.
Although no charge is imposed for processing automatic partial redemptions
currently, MML Bay State reserves the right to impose a fee for this program in
the future.
Tax Sheltered Annuity Redemption Restrictions
The redemption of Internal Revenue Code Section 403(b) annuities (Tax Sheltered
Annuities, "TSAs") may be restricted. Specifically, salary reduction
contributions after 1988 and post-1988 earnings on all salary reduction
contributions may not be distributed to the Annuitant until age 59 1/2,
death, disability, or separation from service with the TSA employer. Such salary
reduction contributions may be withdrawn, however, for "hardship".
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The Annuity (Pay-Out) Period
Annuity Benefits
You may elect to change the Maturity Date of Your Contract. The Maturity Date
may not be later than the Contract anniversary nearest the Annuitant's 90th
birthday (or at an earlier date if required by applicable state law). In
general, in order to avoid adverse tax consequences, distributions, either by a
partial redemption or by maturing the Contract, from a Contract issued as an IRA
or as a TSA or under a qualified plan should begin for the calendar year in
which the Annuitant reaches age 70 1/2 and should be made each year
thereafter in an amount no less than the Accumulated Value of the Contract at
the end of the previous year divided by the applicable life expectancy (see
Taxation of Qualified Plans, TSAs and IRAs, page 20, for additional
information). You may elect to defer the Maturity Date to any permissible date
after the previously specified Maturity Date, provided that a written notice
within 90 days before the Maturity Date then in effect is received by MML Bay
State at the Service Center. You also may elect to advance the Maturity Date to
a date prior to the specified Maturity Date or prior to any new Maturity Date
You may have selected, provided that written notice is received at MML Bay
State's Service Center at least 30 days before the Maturity Date elected. For
additional rules regarding TSAs. (See - Tax Sheltered Annuity Redemption
Restrictions, page 13.)
When Your Contract approaches its Maturity Date You may choose to receive either
Fixed Income payments, (referred to as the "Fixed Income Option" in Your
Contract), Variable Monthly Income payments (referred to as the "Variable Income
Option" in Your Contract), or a combination of the two. You also may elect to
receive the Maturity Value in one sum. If You have made no election within
thirty days prior to the Maturity Date, the Contract will automatically pay a
Variable Monthly Income under a life income option with payments guaranteed for
10 years.
Payment Options
You may elect either a Fixed or a Variable Monthly Income payment option by
submitting a written request in a form satisfactory to MML Bay State. MML Bay
State must receive this request at the Service Center 30 days prior to the
Maturity Date of the Contract. For a description of payment options from which
You (or in some cases a Beneficiary) may choose, You should refer to the
Contracts. Generally, once selected, You may not change Your payment option.
Income payments may be received under several different payment options. If the
value of a Contract applied to any payment option is less than $2,000 or
produces an initial Income payment of less than $20, MML Bay State may discharge
its obligation by paying the value applied, less any applicable Sales Charge, in
one sum to the person entitled to receive the first annuity payment.
Upon Your request, MML Bay State will endorse a Contract to eliminate or
restrict any payment option in order that the plan pursuant to which the
Contract is issued remains qualified under the Internal Revenue Code, provided
such endorsement is not otherwise contrary to law. MML Bay State may make
available payment options in addition to those set forth in the Contract.
You may transfer amounts among the Divisions if the Variable Monthly Income
option is selected subject to transfer restrictions described in General
Transfer Rules, page 11.
Fixed Income Option
If You select a Fixed Income, each payment will be for a fixed dollar amount and
will not vary with or reflect the investment performance of the Separate
Account. For further information regarding the Fixed Income and the payment
options thereunder, You should refer to Your Contract.
Variable Monthly Income Option
If You select a Variable Monthly Income, amounts held in the Fixed Account that
are to be used to provide Variable Monthly Income payments will be credited to
the MML Money Market Division of the Separate Account unless the Contract Owner
instructs MML Bay State otherwise. Each annuity payment will be based upon the
value of the Annuity Units credited to Your Contract.
You may transfer among the Divisions no more frequently than once every 3 months
under this option. (See - General Transfer Rules, page 11 for transfer
guidelines.)
The number of Annuity Units in each Division to be credited to Your Contract is
based on the value of the Accumulation Units in that Division and the applicable
Purchase Rate. The Purchase Rate will differ according to the payment option You
have elected and takes into account the age, year of birth and sex of the
Annuitant. The value of the Annuity Units will vary with, and reflect the
investment performance of, each Division to which Annuity Units are credited
based on an Assumed Investment Rate of 4% per year. This Rate is a fulcrum rate
around which Variable Monthly Income payments will vary. An actual net rate of
return for a Division for the month greater than the Assumed Investment Rate
will increase Variable Monthly Income payments attributable to that Division. An
actual net rate of return for a Division for the month less than the Assumed
Investment Rate will decrease Variable Monthly Income payments attributable to
that Division.
For a more detailed description of how the value of an Annuity Unit and the
amount of Variable Monthly Income payments are calculated, see the Statement of
Additional Information.
Fixed-Time Payment Option
If You elect this option, Variable Monthly Income payments will be made for any
period selected, up to 30 years. If provided in the payment option election, You
may withdraw the full amount, subject to any applicable Sales Charge of the then
present value of the remaining unpaid Variable Monthly Income payments. (See -
CHARGES AND DEDUCTIONS, page 15.) The present value will be calculated using an
assumed investment rate of 4% per year unless a lower rate is required by state
law. A mortality risk charge continues to be assessed against Contract values
under this option. (See - CHARGES AND DEDUCTIONS, page 15.)
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Life Income Payments
If You elect this option, Variable Monthly Income payments will be made during
the lifetime of the Annuitant, either: (1) without any guaranteed number of
payments; or (2) with a guaranteed number of payments for 5 or 10 years. Of
these two alternatives, alternative (1) offers the maximum level of monthly
payments since there is no guarantee of a higher number of payments and no
provision for payments to the beneficiary upon the death of the Annuitant. Since
there is no such guarantee, however, it would be possible to receive only one
annuity payment if the Annuitant died prior to the due date of the second
annuity payment, two if he or she died before the third annuity payment date,
etc.
Joint-and-Survivor Life Income Payments
If You elect this option, Variable Monthly Income payments will be made during
the joint lifetime of the two Annuitants and thereafter during the lifetime of
the survivor, either: (1) without a guaranteed number of payments; or (2) with a
guaranteed number of payments for 10 years from the date the payments begin.
Joint-and-Survivor Life Income Payments
(Two-Thirds to the Survivor)
If You elect this option, Variable Monthly Income payments will be made during
the joint lifetime of the two annuitants, and thereafter at two-thirds the prior
rate during the lifetime of the survivor, in both cases without a guaranteed
number of payments.
Payments After Death of Annuitant
Generally, if a payment option with a guaranteed number of payments is elected,
and the Annuitant(s) should die before the guaranteed number of payments have
been completed, MML Bay State will continue making the guaranteed payments to
the designated beneficiary.
Special Limitations
Where the Contract is issued pursuant to a TSA, or as an IRA, there are special
limitations on the types of payment options which You may elect.
Charges and Deductions
The Separate Account does not bear any expenses other than the charges stated
below.
1. Asset Charge
MML Bay State receives a daily-computed charge against the assets of the
Separate Account (the "Asset Charge") for: (1) assuming the risks that (a)
its estimates of longevity will turn out to be inadequate, and (b) the
Administrative Charge may be insufficient to cover the administrative
expenses associated with the Contract; (2) other administrative expenses;
and (3) the Death Benefit. The Asset Charge is currently equal to 1.40% on
an annual basis of the net asset value of the Separate Account assets
attributable to the Contracts.
The mortality and expense risk part of this charge will be computed daily
at an annual rate, currently equal to 1.15% of the net asset value of the
Separate Account assets attributable to the Contracts (0.30% is for
assuming mortality risks and 0.85% is for assuming expense risks). MML Bay
State reserves the right to raise this rate up to 1.25%.
The administrative expense part of this Charge will be computed daily at an
annual rate of 0.15%.
The third component of the Asset Charge is 0.10% assessed to reimburse MML
Bay State for the cost of providing the enhanced Death Benefit under the
Contract. For more information concerning the enhanced Death Benefit.
(See - Annuitant Death Benefit, page 12.)
2. Administrative Charge
In addition to that portion of the Asset Charge assigned to administrative
expenses, each year on the Contract anniversary date a charge is imposed
against each Contract to reimburse MML Bay State for administrative
expenses incurred by MML Bay State during the previous year relating to the
issuance and maintenance of the Contract (the "Administrative Charge"). The
Administrative Charge is also imposed on death, maturity, or full
redemption. The Administrative Charge is currently $30 per year. MML Bay
State reserves the right to increase the Administrative Charge up to $50
per year. This charge is not designed to produce a profit and is subject to
statutory limitations.
If a Contract's Accumulated Value is $50,000 or more when the
Administrative Charge would be deducted, the Administrative Charge will be
waived. This charge will be deducted on a pro rata basis from each Division
of the Separate Account and then pro-rata from Segments of the Fixed
Account. Deductions from Segments will be made on a first-in, first-out
basis.
3. Contingent Deferred Sales Charge
Sales charges are not deducted at the time a purchase payment is made.
Instead, to reimburse MML Bay State for sales expenses including
commissions, sales literature and related costs, a Contingent Deferred
Sales Charge (the "Sales Charge") may be imposed upon a full or partial
redemption, upon maturity, and upon certain death benefits.
Sales charges are based on the purchase payments made and the time that has
passed since we received them. The part of the sales charge related to each
purchase payment is a level percentage of that payment during each year
since it was paid. For each successive year, the percentage decreases until
it becomes zero. Sales charge percentages for each purchase payment are
shown in the table below.
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<TABLE>
<CAPTION>
Sales Charge Percentages
<S> <C> <C> <C> <C> <C> <C> <C> <C>
===================================================================================================
Full Years since payment 0 1 2 3 4 5 6 7 or more
===================================================================================================
Percentage 7% 6% 5% 4% 3% 2% 1% 0%
===================================================================================================
</TABLE>
Example: You make a $1,000 purchase payment on May 10, 1991. The sales charge
related to this purchase payment is:
$70 from May 10, 1991, through May 9, 1992;
$60 from May 10, 1992, through May 9, 1993;
:
$10 from May 10, 1997, through May 9, 1998;
and $0 thereafter.
Subject to the limits stated below, the Sales Charge at any time is based
solely on the purchase payments assumed to be redeemed at that time. In
determining the Sales Charge, we assume that purchase payments are redeemed
in the order in which they are paid. Any amounts in excess of purchase
payments are assumed to be redeemed last.
Each Contract Year, You may redeem the following amounts without incurring
a Sales Charge:
(1) all unredeemed purchase payments that are at least seven years old; and
(2) 10% of the purchase payments that are less than seven years old.
No Sales Charge will be imposed upon a death benefit payable upon the
Annuitant's death if the Contract was issued to an Annuitant less than 76
years old. Also a Sales Charge will not be assessed upon a full redemption
or maturity of the Contract if all proceeds of the Contract are:
(1) applied under a variable lifetime payment option or variable fixed-time
payment option (with payment for 10 years or more) in the Contract; or
(2) applied under a fixed or combination fixed-variable lifetime payment
option or fixed-time payment option (with payments for 10 years or
more) in the Contract and the Annuitant is age 59 1/2 or older.
The Sales Charge may also be eliminated when an agent of MML Bay State
sells a Contract to specified members of his or her family.
To the extent sales expenses are not covered by the sales charge, they will
be recovered from MML Bay State's surplus, which may include proceeds
derived from the asset charge described above.
Any available waiver of a Sales Charge will be applied on a non-
discriminatory basis.
(4) Premium Taxes
Several states (and certain municipalities) levy premium taxes on
annuities. Currently, no premium tax will be deducted when purchase
payments are received; any applicable premium tax will be deducted at the
time of redemption, death, maturity or annuitization. MML Bay State
reserves the right to deduct premium taxes at the time when a purchase
payment is made. Premium tax rates on annuities currently range up to 3.5%.
Fund Expenses
The Accumulated Value of the Separate Account reflects the value of shares held
in the Oppenheimer Trust and the MML Trust. Each Trust charges certain
investment advisery fees and other expenses against the value of each Fund. For
a complete description of the expenses and deductions for each Trust, please
review the accompanying prospectuses for each Trust.
The Fixed Account and the Market Value Adjustment Feature
The following summarizes certain features of the Fixed Account which is
available as part of the Contract in the majority of states during the
Accumulation Period. Please review the Prospectus for the Fixed Account before
making any allocations to it. The Fixed Account offers different Segments which
provide the option of earning interest at one or more Guaranteed Rates on all or
a portion of Your Accumulated Value. As of the date of this prospectus, we offer
Segments with Guarantee Periods of 1, 3, 5, and 7 years.
You may allocate purchase payments or transfer all or a portion of Your
Accumulated Value to one or more Segments of the Fixed Account. Amounts credited
to a Segment of the Fixed Account will earn interest at the Guaranteed Rate
applicable on the date the amounts are credited. The applicable Guarantee Rate
does not change during the Guarantee Period. You may have multiple amounts
credited to a single Segment or multiple Segments. We may change the Segments
available for allocations of purchase payments, transfers and renewals at any
time. The Guaranteed Rate for any Segment may never be less than 3%. Please note
that if You allocate sums to the Fixed Account, You will bear the investment
risk that such amounts will increase or decrease in value.
The end of a Guarantee Period for a specific amount credited to a Segment is
called its Expiration Date. At that time, the Guarantee Period normally "renews"
and we begin crediting interest for a new Guarantee Period lasting the same
amount of time as the one just ended. The Accumulated Amount then earns interest
at the new Guaranteed Rate applicable at the time of renewal. You may also
choose different Segments from among those we are then offering, or You may
transfer all
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or a portion of the Accumulated Amount to the Separate Account.
To the extent permitted by law, we reserve the right at any time to offer
Segments with Guarantee Periods that differ from those available when Your
Contract was issued. We also reserve the right, at any time, to stop accepting
new amounts credited, transferred, or renewed for a particular Segment.
Between 75 and 45 days before the end of the Expiration Date for an Accumulation
Amount, we will inform You of the Guaranteed Rates being offered and Segments
available as of the date of such notice. The Guaranteed Rates on the date of a
renewal may be more or less than the rates quoted in such notice.
If Your Accumulated Amount's Segment is no longer available for new amounts
credited, or You choose a different Segment that is no longer available, we will
try to reach You so that You may make another choice.
If a choice is not made at this point, the Segment with the next shortest
Guarantee Period available will be used and if not available, the Segment with
the next longest Period will be used.
Market Value Adjustment
Any withdrawal of Your Accumulated Amount will be subject to a Market Value
Adjustment ("MVA") unless the effective date of the withdrawal is within 30 days
prior to the end of a Guarantee Period. For this purpose, redemptions,
transfers, death benefits based on a Contract Owner's death, and maturity
amounts are treated as withdrawals. The MVA is an adjustment that will be
applied to the amount being withdrawn which is subject to the MVA, after the
deduction of any applicable Administrative Charge and before the deduction of
any applicable Sales Charge. The MVA can be positive or negative. The amount
being withdrawn after application of the MVA can therefore be greater than or
less than the amount withdrawn before application of the MVA.
The MVA will reflect the relationship between the Current Rate (as defined
below) for the Accumulated Amount being withdrawn and the Guaranteed Rate. It
also reflects the time remaining in the applicable Guarantee Period. Generally,
if the Guaranteed Rate is lower than the applicable Current Rate, then the
application of the MVA will result in a lower payment upon withdrawal.
Similarly, if the Guaranteed Rate is higher than the applicable Current Rate,
the application of the MVA will result in a higher payment upon withdrawal.
The Market Value Adjustment which is applied to the amount being withdrawn is
determined by using the following formula:
n
---
365
1 + i
MVA = Amount x [ ( ----- ) - 1 ]
1 = j
where,
Amount is the amount being withdrawn from a given accumulated amount less any
applicable administrative charges.
i, is the Guaranteed Rate being credited to the Accumulated Amount subject to
the MVA.
j, the "Current Rate," is the Guaranteed Rate, available as of the effective
date of the application of the MVA, for current allocations to the Segment with
a Guarantee Period equal to the time remaining to the Expiration Date for the
amount being withdrawn rounded to the next higher number of complete years.
n, is the number of days remaining in the Guarantee Period of the amount subject
to the MVA.
In the determination of "j," if MML Bay State currently does not offer the
applicable Segment, we will determine "j" above using a method as described in
the Statement of Additional Information.
Distribution
Effective May 1, 1996, MML Distributors, LLC ("MML Distributors"), 1414 Main
Street, Springfield, MA 01144-1013, is the principal underwriter of the
Contracts pursuant to an Underwriting and Servicing Agreement to which MML
Distributors, MML Bay State and the Separate Account are parties. Prior to May
1, 1996, MML Investors Services, Inc. ("MMLISI"), also located at 1414 Main
Street, Springfield, MA 01144-1013, served as the principal underwriter of the
Contracts. Effective May 1, 1996, MMLISI serves as the co-underwriter of the
Contracts. Both MML Distributors and MMLISI are registered with the Securities
and Exchange Commission (the "SEC") as broker-dealers under the Securities
Exchange Act of 1934 and are members of the National Association of Securities
Dealers, Inc. (the "NASD"). The maximum commission a broker-dealer will receive
is 6.25%.
MML Distributors may enter into selling agreements with other broker-dealers
which are registered with the SEC and are members of the NASD ("selling
brokers"). Contracts are sold through agents who are licensed by state insurance
officials to sell the Contracts. These agents are also registered
representatives of selling brokers or of MMLISI.
Additionally, Oppenheimer Funds Distributor, Inc. ("OFDI"), a subsidiary of OFI,
and MML Distributors have entered into an agreement pursuant to which OFDI has
agreed to promote sales of the product through wholesale distribution
arrangements with such broker-dealers. Registered representatives of the
particular broker-dealer, who are also properly licensed to sell MassMutual
products, may make such sales.
MML Distributors does business under different variations of its name; including
the name MML Distributors, L.L.C. in the states of Illinois, Michigan, Oklahoma,
South Dakota and Washington; and the name MML Distributors, Limited Liability
Company in the states of Maine, Ohio and West Virginia.
Miscellaneous Provisions
TERMINATION OF LIABILITY
MML Bay State's liability under a Contract terminates on the death of the
Contract Owner or Annuitant(s) and on the completion of any guaranteed payments.
There is no liability
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for any proportionate monthly annuity payment from the date of the last payment
to the date of death.
ADJUSTMENT OF UNITS AND UNIT VALUES
MML Bay State reserves the right in its sole discretion to split or consolidate
the number of Accumulation Units or Annuity Units for any Division of the
Separate Account and correspondingly decrease or increase the Accumulation or
Annuity Unit values for any such Division whenever it deems such action to be
desirable. Any such adjustment will have no adverse effect on rights under the
Contracts.
PERIODIC STATEMENTS
While the Contract is in force prior to the Maturity Date and before the death
of the Annuitant, MML Bay State will furnish to the Contract Owner at least
semiannually a status report showing the number of Accumulation Units credited
to each Division of the Separate Account, the corresponding Accumulation Unit
values, the value of amounts in the Fixed Account (if available) and the
Accumulated Value of the Contract.
CONTRACT OWNER'S VOTING RIGHTS
As long as the Separate Account continues to operate as a unit investment trust
under the Investment Company Act of 1940, the Contract Owner during the lifetime
of the Annuitant, or the beneficiary after the Annuitant's death, will be
entitled to give instructions as to how the shares of the Funds held in the
Separate Account (or other securities held in lieu of such shares) deemed
attributable to the Contract should be voted at meetings of shareholders of the
Funds or the Trusts. Those persons entitled to give voting instructions will be
determined as of the record date for the meeting.
The number of Fund shares held in the Separate Account deemed attributable to a
Contract prior to its Maturity Date and during the lifetime of the Annuitant
will be determined on the basis of the value of Accumulation Units credited to
the Contract in the corresponding Division of the Separate Account as of the
record date. After the Maturity Date or after the death of the Annuitant, the
number of Fund shares deemed attributable to the Contract will be based on the
liability for future Variable Monthly Annuity payments under the Contract as of
the record date and thus the voting rights will decrease as payments are made.
Contract Owners or beneficiaries will receive proxy material and a form with
which voting instructions may be given. Fund shares held by the Separate Account
as to which no effective instructions have been received or which are
attributable to assets transferred from MML Bay State's general account will be
voted for or against any proposition in the same proportion as the shares as to
which instructions have been received.
In situations where the Annuitant is not the Contract Owner, the Annuitant will
have the right to instruct the Contract Owner with respect to the votes
attributable to any vested interest the Contract Owner has in the Contract. MML
Bay State's obligation in this instance will be to make available to the
Contract Owner copies of the proxy material for distribution to the Annuitant.
Votes representing interests as to which the Contract Owner is not instructed
may, in turn, be voted by the Contract Owner in his discretion.
RESERVATION OF RIGHTS
MML Bay State may, at any time, make any change in a Contract to the extent that
such change is required in order to make the Contract conform with any law or
regulation issued by any governmental agency to which MML Bay State is subject.
If shares of any Fund should not be available, or, if in the judgment of MML Bay
State, investment in shares of a Fund is no longer appropriate in view of the
purposes of a Division of the Separate Account, shares of other series of the
Trusts or of other registered, open-end investment companies may be substituted
for such Fund shares. Payments received after a date specified by MML Bay State
may be applied to the purchase of shares of another Trust series or investment
company in lieu of shares of that Fund. Additionally, if in the judgment of MML
Bay State, investment in shares of a Fund is no longer appropriate, MML Bay
State reserves the right to withdraw availability of a Division of the Separate
Account for further amounts being credited. In any event, approval of the SEC
must be obtained. MML Bay State reserves the right to change the name of a
Separate Account or to add Divisions to the Separate Account for the purpose of
investing in additional investment vehicles. Additionally, we reserve the right
to terminate the Contract: (a) if no purchase payment has been received for at
least two consecutive years measured from the date we received the last purchase
payment; and (b) if the Accumulated Value less any deduction we would make for
premium taxes, the Cash Redemption Value and the unredeemed premium payments are
all less than $2,000. Before exercising this right, we will provide You with
written notice of our decision.
Federal Tax Status
INTRODUCTION
The ultimate effect of federal income taxes on the value of the Contract, on
annuity payments, and on the economic benefit to the Contract Owner, Annuitant
or beneficiary depends on a variety of factors including the type of retirement
plan for which the Contract is purchased and the tax and employment status of
the individual concerned. The discussion contained herein is general in nature
and is not intended as tax advice. Each person concerned should consult a
competent tax adviser for complete information and advice. No attempt is made to
consider any applicable state or other local tax laws. Moreover, the discussion
herein is based upon MML Bay State's understanding of current federal income tax
laws as they are currently interpreted. No representation is made regarding the
likelihood of continuation of those current federal income tax laws or of the
current interpretations by the Internal Revenue Service ("IRS").
TAX STATUS OF MML BAY STATE
Under existing federal law, no taxes are payable by MML Bay State on investment
income and realized capital gains of the Separate Account credited to the
Contracts. Accordingly, MML Bay State does not intend to make any charge to the
Separate Accounts to provide for company income taxes.
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MML Bay State may, however, make such a charge in the future if an unanticipated
construction of current law or a change in law results in a company tax
liability attributable to the Separate Account.
MML Bay State may incur state and local taxes (in addition to premium taxes) in
several states. At present, these taxes are not significant. If they increase,
however, charges for such taxes attributable to the Separate Account may be
made.
Taxation of Contracts in General
Under Section 817(h) of the Internal Revenue Code (the "Code") a Contract (other
than one used in a tax-qualified retirement plan) will not be treated as an
annuity contract and will be taxed on the annual increase in earnings if, as of
the end of any quarter, the Funds, or the Fund on which the Contract is based
are not adequately diversified in accordance with regulations prescribed by the
Treasury Department. It is anticipated that the Trusts will comply with the
Code's diversification requirements.
Subject to certain annuity distribution rules (see - Annuity Distribution Rules
of Section 72(s)), annuity payments under the Contracts are taxable under
Section 72 of the Code. For contributions made after February 28, 1986, a
Contract Owner that is not a natural person will be taxed on the annual increase
in the earnings of a Contract unless the Contract Owner holds the Contract as
agent for a natural person. Otherwise, increases in the value of a Contract are
not subject to tax until actually or constructively received.
Amounts received prior to the Maturity Date from Contracts not under tax
qualified arrangements (see - Taxation of Qualified Plans TSAs and IRAs, page
20, for a discussion of Contracts used in the qualified plan market) are subject
to tax to the extent of any earnings or gains in the Contract; amounts received
which are in excess of such earnings or gains are considered a return of
capital. Similarly, amounts borrowed upon the Contract will be treated as
amounts received under the Contract and will be taxable to the same extent. If
an individual Contract Owner transfers ownership, for other than full and
adequate consideration, the Contract Owner will be taxed on the transfer as
though he or she had taken a full redemption of the Contract. For Contracts
entered into after October 21, 1988, all annuity contracts issued by the same
insurer and its affiliates to the same Contract Owner within the same calendar
year must be aggregated in determining the amount of gain realized on a
withdrawal from any one.
If the Contract is obtained in a tax-free exchange of contracts under Section
1035 of the Code, different tax rules may apply. If a distribution prior to the
Maturity Date of a contract obtained in such an exchange is entirely
attributable to investments in the surrendered contract prior to August 14,
1982, the distribution will first be considered a return of capital to the
extent of those investments and only the amounts received in excess of those
investments will be regarded as taxable earnings or gains.
PENALTY TAXES
In addition to the foregoing tax consequences, certain distributions under the
Contract will be subject to a penalty tax under Code Section 72(q) (for non-tax
qualified Contracts) or 72(t) (for Contracts in tax qualified plans see -
Taxation of Qualified Plans, TSAs and IRAs, page 20) of 10% of the amount of the
distribution that is includable in gross income. However, the following
distributions from non-tax qualified Contracts currently are not subject to the
penalty tax: (1) withdrawals made after the Contract Owner is 59 1/2 years
old; (2) payments made to a beneficiary (or to the estate of the Contract Owner)
on or after the death of the Contract Owner; (3) payments attributable to a
Contract Owner becoming disabled; or (4) substantially equal periodic payments
made (at least annually) for the lifetime (or life expectancy) of the Contract
Owner or for the joint lifetimes (or joint life expectancies) of the Contract
Owner and the beneficiary.
When monthly annuity payments commence, they are taxable as ordinary income in
the year of receipt to the extent that they exceed that portion of the
"Investment in the Contract" allocable to that year. The Investment in the
Contract will equal the gross amount of purchase payments made under the
Contract less any amount that was previously received under the Contract but was
not included in gross income. The Investment in the Contract would also be
increased by any amount that was previously included in gross income under the
Contract but was not received. This amount, divided by the anticipated number of
monthly annuity payments, gives the "excludable amount," which is the portion of
each annuity payment considered to be a return of capital and, therefore, not
taxable. Under this exclusion ratio, the total amount excluded from payments
actually received is limited to the Investment in the Contract. The rules for
determining the excludable amount are contained in Section 72 of the Code and
regulations thereunder and require adjustment when the payment option elected
provides a feature such as a guaranteed number of payments.
ANNUITY DISTRIBUTION RULES OF SECTION 72(S)
Annuity distribution requirements are imposed under Section 72(s) of the Code.
MML Bay State understands that these requirements do not apply to Contracts
issued to or under Qualified Plans.
Under Section 72(s), a Contract will not be treated as an annuity subject to
Section 72 of the Code, unless it provides for certain required distributions
from and after the date of death of the Contract Owner. The Contracts will be
endorsed before issue to provide that annuity payments be made only in
accordance with these distribution requirements, as applicable.
TAX WITHHOLDING
Certain tax withholding is imposed on payments that are made under the Contracts
(for Contracts in tax qualified plans, see - Taxation of Qualified Plans, TSAs
and IRAs, page 20). Withheld amounts do not constitute an additional tax, but
are fully creditable on the individual tax return of each payee who is affected
by tax withholding. Furthermore, no payments will be subject to the withholding
if (1) it is reasonable to believe that the payments are not includable in gross
income, or (2) the payee elects not to have withholding apply. The payee may
make such an election either by filing an election form with MML Bay State or,
in the case of redemptions, by following procedures that MML Bay State has
established to afford
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payees an opportunity to elect out of withholding. These forms and procedures
will be provided to payees by MML Bay State upon a request for payment.
Unless the Payee elects not to have withholding apply (for Contracts in tax
qualified plans see - Taxation of Qualified Plans, TSAs and IRAs, page 20), MML
Bay State is required to withhold, for federal income tax purposes, 10% of the
taxable portion of any redemption payment or non-periodic distribution under the
Contracts. Periodic annuity payments under the Contracts are subject to
withholding at the payee's wage base rate. If the payee of these annuity
payments does not file an appropriate withholding certificate (obtainable from
any local IRS office) with MML Bay State, it will be presumed that the payee is
married claiming three exemptions.
TAX REPORTING
MML Bay State is required to report all taxable payments and distributions to
the IRS and to the payees. Payees will receive reports of taxable payments and
distributions by January 31 of the year following the year of payment.
TAXATION OF QUALIFIED PLANS, TSAS AND IRAS
The tax rules applicable to participants in retirement plans that qualify for
special federal income tax treatment ("Qualified Plans") vary according to the
type of plan and its terms and conditions.
Increases in the value of a Contract are not subject to tax until received by
the employee or his beneficiary. Monthly annuity payments under Qualified Plans
are taxed as described above (see - TAXATION OF CONTRACTS IN GENERAL, page 19),
except that the "investment in the Contract" under a Qualified Plan is normally
the gross amount of purchase payment made by the employee under the Contract or
made by the employer on the employee's behalf and included in the employee's
taxable income when made.
If the Annuitant receives a distribution that qualifies as a "lump sum
distribution" under the Code, he or she may be eligible for special "5-year
averaging" treatment of the funds received (or "10-year averaging" treatment if
he or she was age 50 or older on January 1, 1986). TSAs and IRAs are not
eligible for the special treatment under the "lump sum distribution" rules.
Certain TSA contributions may not be distributed to the Annuitant until age
59 1/2, death, disability, separation of service or hardship. (See -
Redemption Privileges, page 13.) Distributions from Qualified Plans, IRAs and
TSAs may be subject to a 10% penalty tax on amounts withdrawn before age
59 1/2. However, the following distributions from Qualified Plans (and TSAs
and IRAs except as otherwise noted) are not subject to the penalty: (1) payments
made to a beneficiary (or the estate of an Annuitant) on or after the death of
the Annuitant; (2) payments attributable to an Annuitant becoming disabled; (3)
substantially equal periodic payments made (at least annually) for the lifetime
(or life expectancy) of the Annuitant or for the joint lifetimes (or joint life
expectancies) of the Annuitant and the beneficiary (for Qualified Plans and
TSAs, payments can only begin after the employee separates from service); (4)
payment for certain medical expenses (not applicable to IRAs); (5) payment after
age 55 and separation from service (not applicable to IRAs); and (6) payments to
an alternate payee pursuant to a qualified domestic relations order under Code
Section 414(p) (not applicable to IRAs). Excess retirement accumulations may be
subject to a 15% penalty tax. Excess distributions may be subject to a 15%
excise tax.
IRAs are subject to limitations on the amount that may be contributed. The
deductibility of contributions by individuals or their spouses who are active
participants in an employer-maintained pension or profit-sharing plan may be
reduced based on the individual's adjusted gross income. In addition, certain
distributions from Qualified Plans and TSAs may be placed into an IRA on a tax-
deferred basis.
In general, tax law requires that minimum distributions be made from Qualified
Plans, TSAs and IRAs beginning at age 70 1/2. To avoid penalty taxes of 50
percent or more, required distributions, including distributions which should
have been distributed in prior years, should not be rolled over to IRAs.
Distributions from Qualified Plans and TSAs are subject to mandatory federal
income tax withholding. MML Bay State is required to withhold 20% when a payment
from a Qualified Plan or TSA is an "eligible rollover distribution" and such
payment is not directly rolled over to another Qualified Plan, TSA or IRA. In
general, an "eligible rollover distribution" is any taxable distribution other
than: (1) payments for the life (or life expectancy) of the Annuitant, or for
joint life (or joint life expectancies) of the Annuitant and the beneficiary;
(2) payments made over a period of ten years or more; and (3) required minimum
distributions (see above). Plan administrators should be able to tell Annuitants
what other payments are not "eligible rollover distributions".
Taxable distributions that are not "eligible rollover distributions" are subject
to the withholding rules for annuities (See - Tax Withholding, page 19.)
Performance Measures
MML Bay State may show the performance under the Contracts in the following
ways:
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
Except for Divisions of the Separate Account which have been in existence for
less than one year, MML Bay State will show the Standardized Average Annual
Total Return for a Division of the Separate Account which, as prescribed by the
rules of the SEC, is the effective annual compounded rate of return that would
have produced the cash redemption value over the stated period had the
performance remained constant throughout. The Standardized Average Annual Total
Return assumes a single $1000 payment made at the beginning of the period and
full redemption at the end of the period. It reflects a deduction for the Sales
Charge, the annual administrative charge and all other Fund, Separate Account,
and Contract level charges except premium taxes, if any. The annual
Administrative Charge will be apportioned among the Divisions of the Separate
Account based upon the percentages of Contracts investing in each of the
Divisions.
For Divisions of the Separate Account which have been in existence for less than
one year, MassMutual will show the aggregate total return as permitted by the
SEC. The aggregate
28
<PAGE>
total return assumes a single one thousand dollar payment made at the beginning
of the period and full redemption at the end of the period. It reflects the
change in unit value and a deduction of the contingent deferred sales charge.
ADDITIONAL PERFORMANCE MEASURES
The performance figures discussed below may be calculated on the basis of the
historical performance of the Funds, and may assume that the Contracts were in
existence prior to the Inception Date (which they were not). Beginning the date
that the product became available to for sale to the public, actual Accumulation
Unit Values will be used for the calculations. Such Accumulation Unit Values
will be accompanied by the Standardized Average Annual Total Return described
above.
The difference between the first set of additional performance measures,
PERCENTAGE CHANGE and ANNUALIZED RETURNS on Accumulation Unit Values, and the
second set, the NON-STANDARDIZED ANNUAL and AVERAGE ANNUAL TOTAL RETURNS, is
that the second set is based on specified premium patterns and includes the
deduction of the annual Administrative Charge, whereas the first set does not.
Additional details are described below.
ACCUMULATION UNIT VALUES: PERCENTAGE CHANGE AND ANNUALIZED RETURNS
MML Bay State will show the PERCENTAGE CHANGE in the value of an Accumulation
Unit for a Division of the Separate Account with respect to one or more periods.
The ANNUALIZED RETURN, or average annual change in Accumulation Unit Values, may
also be shown with respect to one or more periods. For a one year period, the
Percentage Change and the Annualized Return are effective annual rates of return
and are equal. For periods greater than one year, the Annualized Return is the
effective annual compounded rate of return for the periods stated. Since the
value of an Accumulation Unit reflects the Separate Account and Trust expenses
(see Table of Fees and Expenses, page 5), the Percentage Change and Annualized
Returns also reflect these expenses. These percentages, however, do not reflect
the annual Administrative Charge and the Sales Charge or premium taxes (if any),
which if included would reduce the percentages reported. For periods of less
than one year, the percentage change in accumulation unit value may be shown.
The NON-STANDARDIZED ANNUAL TOTAL RETURN and the NON-STANDARDIZED AVERAGE ANNUAL
TOTAL RETURN reflect a deduction for the annual Administrative Charge as well as
reflecting deductions for the Separate Account expenses and the expenses of the
Trusts. They are based on specified premium patterns which produce the resulting
Accumulated Values. They do not include Sales Charges or premium taxes (if any),
which would reduce the percentages reported.
The NON-STANDARDIZED ANNUAL TOTAL RETURN for a Division is the effective annual
rate of return that would have produced the ending Accumulated Value, as of the
stated one-year period.
The NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN for a Division is the effective
annual compounded rate of return that would have produced the ending Accumulated
Value over the stated period had the performance remained constant throughout.
Note: The NON-STANDARDIZED ANNUAL TOTAL RETURN will be less than the NON-
STANDARDIZED ANNUALIZED RETURN on Accumulation Unit values for the same period
due to the effect of the annual Administrative Charge. Additionally, the
magnitude of this difference will depend on the size of the Accumulated Value
from which the Annual Administrative Charge is deducted.
YIELD AND EFFECTIVE YIELD. MML Bay State may also show yield and effective yield
figures for the Money Market and Money Fund Divisions of the Separate Account.
"Yield" refers to the income generated by an investment in the Money Market and
Money Fund Divisions over a seven-day period, which is then "annualized". That
is, the amount of income generated by the investment during that week is assumed
to be generated each week over a 52-week period and is shown as a percentage of
the investment. The "effective yield" is calculated similarly but, when
annualized, the income earned by an investment in these divisions is assumed to
be re-invested. Therefore the effective yield will be slightly higher than the
yield because of the compounding effect of this assumed reinvestment. These
figures will reflect a deduction for Fund, Separate Account, and certain
Contract level charges, and the Annual Administrative Charge assuming such
Contract remains in force. The Administrative Charge is based on a hypothetical
contract where such charge is applicable. These figures do not reflect the Sales
Charge or premium taxes, (if any), which if included would reduce the yields
reported.
The performance measures discussed above reflect results of the Funds and are
not intended to indicate or predict future performance. For more detailed
information, see the Statement of Additional Information.
Performance information for the Separate Account Divisions may be compared to
other variable annuity separate accounts or other investment products surveyed
by Lipper Analytical Services, Inc. a nationally recognized independent
reporting service that ranks mutual funds and other investment companies by
overall performance, investment objectives and assets, or it may be tracked by
other ratings services, companies, publications or persons who rank separate
accounts or other investment products on overall performance or other criteria.
Performance figures will be calculated in accordance with standardized methods
established by each reporting service.
Additional Information
For further information about the Contracts, You may obtain a Statement of
Additional Information prepared by MML Bay State.
The Table of Contents of this Statement is as follows:
1. General Information and History
2. Service Arrangements and Distribution
3. Contract Value Calculations and Annuity Payments
4. Performance Measures
5. Reports of Independent Accountants and Financial Statements.
Section 5 of the Statement of Additional Information contains financial
statements for MML Bay State.
29
<PAGE>
This Prospectus sets forth the information about Separate Account 1 that a
prospective investor ought to know before investing. Certain additional
information about the Separate Accounts is contained in a Statement of
Additional Information dated May 1, 1996 which has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. The
Table of Contents for the Statement of Additional Information appears on page 21
of this Prospectus. To obtain a copy, return this request form to the address
shown below or telephone 1-800-258-4511.
...............................................................................
To: MassMutual and Affiliated Companies Service Center
Continuum Administrative Services Corporation
301 West 11th Street
Kansas City, MO 64105
Please send me a Statement of Additional Information for LifeTrust.
Name
----------------------------------------------------------------------
Address
----------------------------------------------------------------------
----------------------------------------------------------------------
City State Zip
-------------------------- -------------------- ------------------
Telephone
----------------------------------------------------------------------
<PAGE>
OppenheimerFunds LifeTrust Variable Annuity
- --------------------------------------------------------------------------------
MML BAY STATE LIFE INSURANCE COMPANY
(DEPOSITOR)
MML BAY STATE VARIABLE ANNUITY SEPARATE ACCOUNT 1
(REGISTRANT)
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the prospectus of MML Bay State Variable Annuity Separate
Account 1 dated May 1, 1996 (the "Prospectus"). The Prospectus may be obtained
from the MML Bay State Service Center, c/o ALLIANCE-ONE Services, L.P., 301 West
11th Street, Kansas City, MO (800) 258-4511
May 1, 1996
<PAGE>
TABLE OF CONTENTS
General Information and History..................................... 1
Service Arrangements and Distribution............................... 7
Contract Value Calculations For
Amounts Allocated to an Investment
Division of a Separate Account...................................... 9
Performance Measures................................................ 15
Reports of Independent
Accountants and Financial
Statements................................................ Final Pages
<PAGE>
GENERAL INFORMATION AND HISTORY
MML Bay State
-------------
MML Bay State Life Insurance Company ("MML Bay State") is a corporation
established under the laws of Missouri. Formerly known as Western Life
Insurance Company of America, its name was changed to MML Bay State following
the purchase by Massachusetts Mutual Life Insurance Company ("MassMutual") of
all of the Company's issued and outstanding stock. MML Bay State is licensed
to transact a life, accident and health insurance business in all states except
New York. As of February 12, 1996, MML Bay State has obtained approval to write
variable annuity business in 43 states and the District of Columbia, and
currently plans to seek such authority in all states except for New York.
MML Bay State's Home Office is located in Jefferson City, Missouri. The Service
Center for Contracts is located at ALLIANCE-ONE Services, L.P., Kansas City, MO.
OppenheimerFunds, Inc.
----------------------
OppenheimerFunds, Inc. ("OFI") is a corporation organized under the laws of the
state of Colorado. (Prior to January 5, 1996, OFI was known as Oppenheimer
Management Corporation.) It has operated as an investment adviser since April
30, 1959. It (including a subsidiary) currently advises U.S. investment
companies with assets aggregating over $42 billion as of December 31, 1995, and
having over 2.8 million shareholder accounts. OFI is owned by Oppenheimer
Acquisition Corp., a holding company owned in part by senior management of OFI,
and ultimately controlled by MassMutual.
The Separate Account
--------------------
MML Bay State Variable Annuity Separate Account 1 (the "Separate Account") was
established as a separate investment account of MML Bay State on January 14,
1994, in accordance with the provisions of Chapter 309.376 of Missouri Statutes.
The Separate Account is registered as a unit investment trust under the
Investment Company Act of 1940. A unit investment trust is a type of investment
company which invests its assets in the shares of one or more management
investment companies rather than directly in its own portfolio of investment
securities. Registration under the
1
<PAGE>
Investment Company Act of 1940 does not involve supervision of the management or
investment practices or policies of the Separate Account or of MML Bay State.
Under Missouri law, however, both MML Bay State and the Separate Account are
subject to regulation by the Insurance Department of the State of Missouri.
The Separate Account is divided into thirteen Divisions. Four of the Divisions
(MML Equity, MML Managed Bond, MML Blend, and MML Money Market) invest in
corresponding shares of MML Series Investment Fund ("MML Trust"). The remaining
nine Divisions (Oppenheimer Money, Oppenheimer High Income, Oppenheimer Bond,
Oppenheimer Capital Appreciation, Oppenheimer Growth, Oppenheimer Multiple
Strategies, Oppenheimer Global Securities, Oppenheimer Strategic Bond, and
Oppenheimer Growth & Income) invest in corresponding shares of Oppenheimer
Variable Account Funds (the "Oppenheimer Trust" and collectively with MML
Trust, the "Trusts"). MML Bay State reserves the right to add additional
divisions or separate accounts. The value of both Accumulation Units (see "The
---
Accumulation (Pay-In) Period" section in the prospectus) and Annuity Units (see
"The Annuity (Pay Out) Period" section in the prospectus) in each Division
reflects the investment results of its underlying Fund.
Although the assets of the Separate Account are assets of MML Bay State, assets
of the Separate Account equal to the reserves and other annuity contract
liabilities which depend on the investment performance of the Separate Account
are not chargeable with liabilities arising out of any other business MML Bay
State may conduct. The income and capital gains and losses, realized or
unrealized, of each Division of a Separate Account are credited to or charged
against such Division without regard to the income and capital gains and losses
of the other Divisions or other accounts of MML Bay State. All obligations
arising under MML Bay State Variable Annuity Contracts (the "Contracts"),
however, are general corporate obligations of MML Bay State.
The Trusts
----------
1. The MML Trust
-------------
The MML Trust is a no-load, open-end, diversified management investment company
consisting of four separate series of shares--
2
<PAGE>
MML Equity Fund, MML Money Market Fund, MML Managed Bond Fund, and MML Blend
Fund (the "MML Funds") each of which has its own investment objectives and
policies. MassMutual organized the MML Trust for the purpose of providing
vehicles for the investment of assets held in various separate investment
accounts, including the Separate Account, established by MassMutual or its life
insurance company subsidiaries such as MML Bay State. A statement of additional
information concerning the MML Trust is available upon request from the Service
Center.
2. The Oppenheimer Trust
---------------------
The Oppenheimer Trust is also an open-end, diversified management investment
company consisting of the following funds: Oppenheimer Global Securities Fund,
Oppenheimer High Income Fund, Oppenheimer Money Fund, Oppenheimer Strategic Bond
Fund, Oppenheimer Capital Appreciation Fund, Oppenheimer Multiple Strategies
Fund, Oppenheimer Bond Fund, Oppenheimer Growth Fund, and Oppenheimer Growth &
Income Fund. Each of these funds is available to Contract Owners. The
Oppenheimer Trust was organized for the purpose of providing funds to variable
life and annuity contracts, and exemptive relief permitting such sales has been
obtained from the Securities and Exchange Commission ("SEC"). Shares of the
Trusts are not available to the public. A statement of additional information
concerning the Oppenheimer Trust is available upon request from the Service
Center.
3. General Information Concerning the Trusts
-----------------------------------------
A Separate Account purchases and redeems shares of specified funds at their net
asset value without the imposition of any sales or redemption charge.
Distributions made on the shares of each Fund held by a Division of a Separate
Account are immediately reinvested in shares of a corresponding Fund at net
asset value, which shares are added to the assets of the appropriate Division of
the Separate Account. MassMutual serves as investment manager of each of the
MML Funds pursuant to separate investment management agreements executed by
MassMutual and each of the MML Funds. Pursuant to investment sub-advisery
agreements, Concert Capital Management, Inc. ("Concert Capital"), a wholly-owned
subsidiary of MassMutual, manages the investment and reinvestment of the assets
of the MML Equity Fund and the Equity Sector of the MML Blend Fund. Both
MassMutual and Concert Capital are
3
<PAGE>
registered as investment advisers under the Investment Advisers Act of 1940.
OFI serves as investment adviser to the Funds of the Oppenheimer Trust. OFI is
registered as an investment adviser under the Investment Advisers Act of 1940.
The Prospectus and Statement of Additional Information for both the MML Trust
and the Oppenheimer Trust contain a description of their respective Funds, their
investment objectives, policies and restrictions, their expenses, the risks
attendant therein, and aspects of their operation.
Possible Conflicts
------------------
1. MML Trust
---------
Assets of Massachusetts Mutual Variable Life Separate Accounts I and II and
MML Bay State Variable Life Separate Account I are invested in the MML Funds.
Because Massachusetts Mutual Variable Annuity Separate Account 1, 2, and 3 and
MML Bay State Variable Annuity Separate Account 1 are also invested in the MML
Funds, it is possible that material conflicts could arise between owners of the
Contracts and owners of variable life insurance policies funded by the separate
accounts listed above. Possible conflicts could arise if: (i) state insurance
regulators should disapprove of or require changes in investment policies,
investment advisers or principal underwriters, or if MassMutual or MML Bay State
should be permitted to act contrary to actions approved by holders of the
variable life insurance policies under rules of the SEC; (ii) adverse tax
4
<PAGE>
treatment of the Contracts or other variable contracts would result from using
the same Funds; (iii) different investment strategies would be more suitable for
the Contracts than for other variable contracts; or (iv) state insurance laws or
regulations or other applicable laws would prohibit the funding of variable
annuity separate accounts and variable life separate accounts by the same MML
Funds. The Board of Trustees of the MML Trust will follow monitoring procedures
which have been developed to determine whether material conflicts have arisen.
Such Board will have a majority of Trustees who are not interested persons of
the MML Trust, and determinations whether or not a material conflict exists will
be made by a majority of such disinterested Trustees. If a material
irreconcilable conflict exists, MML Bay State and MassMutual will take such
action at their own expense as may be required to cause Massachusetts Mutual
Variable Life Separate Accounts I and II and MML Bay State Variable Life
Separate Account I to be invested solely in shares of mutual funds which offer
their shares exclusively to variable life insurance separate accounts unless, in
certain cases, the holders of both the variable life insurance policies and the
variable annuity contracts vote not to effect such segregation.
2. Oppenheimer Trust
-----------------
The Oppenheimer Trust was established for use as an investment vehicle by
variable contract separate accounts such as the Separate Accounts. Accordingly,
it is possible that a material irreconcilable conflict may develop between the
interests of Contract Owners and other separate accounts investing in the
Oppenheimer Trust. The Board of Trustees of the Oppenheimer Trust (the "Board")
will monitor the Oppenheimer Funds for the existence of any such conflicts. If
it is determined that a conflict exists, the Board will notify MML Bay State and
appropriate action will be taken to eliminate such irreconcilable conflict.
Such steps may include: (1) withdrawing the assets allocable to some or all of
the separate accounts from the particular Oppenheimer Fund and reinvesting such
assets in a different investment medium, including (but not limited to) another
Oppenheimer Fund; (2) submitting the question to whether such segregation should
be implemented to a vote of all affected Contract Owners; and (3) establishing a
new registered management investment company or managed separate account.
5
<PAGE>
Assignment of Contract
----------------------
MML Bay State will not be charged with notice of any assignment of a Contract or
of the interest of any beneficiary or of any other person unless the assignment
is in writing and MML Bay State receives at its Service Center a true copy
thereof. MML Bay State assumes no responsibility for the validity of any
assignment.
While the Contracts are generally assignable, all non-tax qualified Contracts
must carry a non-transferability endorsement which precludes their assignment.
For qualified Contracts, the following exceptions and provisions should be
noted:
(1) No person entitled to receive annuity payments under a Contract or
part or all of the Contract's value will be permitted to commute, anticipate,
encumber, alienate or assign such amounts, except upon the written authority of
the Contract Owner given during the Annuitant's lifetime and received in good
order by MML Bay State at its Service Center. To the extent permitted by law, no
Contract nor any proceeds or interest payable thereunder will be subject to the
Annuitant's or any other person's debts, contracts or engagements, nor to any
levy or attachment for payment thereof;
(2) If an assignment of a Contract is in effect on the maturity date, MML
Bay State reserves the right to pay to the assignee in one sum the amount of the
Contract's maturity value to
6
<PAGE>
which he is entitled, and to pay any balance of such value in one sum to the
Contract Owner, regardless of any payment options which the Contract Owner may
have elected. Moreover, if an assignment of a Contract is in effect at the death
of the Annuitant or Owner prior to the maturity date, MML Bay State will pay to
the assignee in one sum, to the extent that he or she is entitled, the death
benefit available under the Contract. Please consult The Death Benefit section
-----------------
of the prospectus for more information;
(3) Contracts used in connection with annuity purchase plans adopted by
public school systems and certain tax-exempt organizations pursuant to Section
403(b) of the Code ("tax-sheltered annuities" or "TSAs") must be endorsed to
provide that they are non-transferable; and
(4) Contracts issued under a plan for an Individual Retirement Annuity
pursuant to Section 408 of the Code must be endorsed to provide that they are
non-transferable. Such Contracts may not be sold, assigned, discounted, or
pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose by the Annuitant to any person or party
other than MML Bay State, except to a former spouse of the Annuitant in
accordance with the terms of a divorce decree or other written instrument
incident to a divorce.
Assignments may be subject to federal income tax.
RESTRICTIONS ON REDEMPTION
Redemptions of TSAs may be restricted as required by Section 403(b) (11) of the
Internal Revenue Code (see, "Tax-Sheltered Annuity Redemption Restrictions" in
the prospectus for details). In restricting any such redemption, MassMutual
relies on the relief from sections 22(e), 27(c) and 27(d) of the Investment
Company Act of 1940 granted in American Council of Life Insurance [1988 Transfer
Binder] Fed. Sec. L. Rep (CCH) 78,904 (November 22, 1988) (the "No Action
Letter"). In relying on such relief, MassMutual hereby represents that it
complies with the provisions of paragraphs (1) - (4) as set forth in the No
Action Letter.
SERVICE ARRANGEMENTS AND DISTRIBUTION
Custodian of Assets of the Funds
--------------------------------
Citibank N.A., with its home office located at 111 Wall Street, New York, New
York 10005, acts as custodian of the MML Funds. The Bank of New York, with its
home office located at
7
<PAGE>
One Wall Street, New York, New York 10015, acts as custodian for the Oppenheimer
Funds. The Custodians' responsibilities include safeguarding and controlling the
Funds' cash and securities, handling the receipt of delivery of securities, and
collecting interest and dividends on the Funds' investments.
Independent Accountants
-----------------------
The financial statements of the Separate Account and the financial statements of
MML Bay State included in this Statement of Additional Information have been
included herein in reliance on the reports of Coopers & Lybrand L.L.P.,
Springfield, Massachusetts 01101, independent accountants, given on the
authority of that firm as experts in accounting and auditing. Coopers &
Lybrand's report on the financial statements of MML Bay State includes
explanatory paragraphs relating to prior year adjustments and the pending merger
between MassMutual and Connecticut Mutual Life Insurance Company.
Distribution and Administration
-------------------------------
Effective May 1, 1996, MML Distributors, LLC ("MML Distributors"), a wholly-
owned subsidiary of MassMutual, is the principal underwriter for the contract
pursuant to an Underwriting and Servicing Agreement among MML Bay State, MML
Distributors and the Separate Account. Prior to May 1, 1996, MML Investors
Services, Inc. ("MMLISI"), also a wholly-owned subsidiary of MassMutual, served
as principal underwriter for the Separate Account. Effective May 1, 1996,
MMLISI serves as co-underwriter for the Separate Account.
MML Distributors may enter into selling agreements with other broker-dealers
which are registered with the SEC as broker-dealers under the Securities
Exchange Act of 1934 and are members of the
8
<PAGE>
National Association of Securities Dealers, Inc. ("selling brokers"). The
Contract is sold through agents who are licensed by state insurance department
officials to sell the Contract. These agents are also registered representatives
of selling brokers or MMLISI. The Contract will be offered on a continuous basis
in certain states where MML Bay State has the authority to write variable
annuity business and the Contract has been approved.
Pursuant to the Underwriting and Servicing Agreement, both MML Distributors and
MMLISI will receive compensation for their activities as underwriters for each
Separate Account. Compensation paid to MMLISI in 1995 was $18,830. No
compensation was paid to MML Distributors in 1995. Commissions will be paid
through MMLISI and MML Distributors to agents and selling brokers for selling
the Contracts. During 1995 and 1994, such payments amounted to $2,901,619 and
$2,061 respectively.
An Administration Agreement among MassMutual, MML Bay State, ALLIANCE-ONE
Services, L.P. ("ALLIANCE-ONE") and the Separate Account has been entered into
pursuant to which ALLIANCE-ONE has agreed to provide: all services required for
the administration of those Contracts which depend in whole or in part on the
investment performance of the Separate Account. Additionally, pursuant to such
Agreement, ALLIANCE-ONE will keep such other records as may be mandated by
state and federal laws and regulations. ALLIANCE-ONE will operate MML Bay
State's Service Center and will respond to Contract Owner inquiries concerning
the status of their Contracts.
The Agreement may be terminated by the parties without the payment of any
penalty upon 180 days written notice. The agreements immediately terminate in
the event of their assignment (as that term is defined under the Investment
Company Act of 1940). The agreements may be amended at any time by the mutual
consent of the parties. Contract Owners will not receive notice with respect to
changes in the agreements.
The offering of the Contracts is continuous.
Purchase of Securities Being Offered
------------------------------------
Interests in the Separate Account are sold to Contract Owners as accumulation
units. Charges associated with such securities are discussed in the Charges and
-----------
Deductions Section of the prospectus for the Contract. The Contract does not
- ----------
offer any special purchase plan or exchange program not discussed in the
prospectus. (For a discussion of instances when sales charges will be waived,
see Contingent Deferred Sales Charges Section of the prospectus.)
---------------------------------
9
<PAGE>
CONTRACT VALUE CALCULATIONS FOR AMOUNTS ALLOCATED TO AN
INVESTMENT DIVISION OF A SEPARATE ACCOUNT
The Accumulation (Pay-In) Period
--------------------------------
Valuation Date, Valuation Time and Valuation Period
---------------------------------------------------
Each day on which the net asset value of the shares of any of the Funds is
determined is a "Valuation Date." The value of shares of the Funds held in the
Separate Account is determined as of the "Valuation Time," which is the time of
the close of trading on the New York Stock Exchange (currently 4:00 p.m. New
York time) on a Valuation Date. A "Valuation Period" is the period, consisting
of one or more days, from one Valuation Time to the next succeeding Valuation
Time.
Accumulation Unit Value
-----------------------
The value of an Accumulation Unit (the "Accumulation Unit Value") for each
Division of the Separate Account will vary from Valuation Date to Valuation
Date. The initial Accumulation Unit Value for each Division was set at
$1.000000. The Accumulation Unit Value for each Division on any date thereafter
is equal to the product of the "Net Investment Factor" for that Division (as
defined below) for the Valuation Period which includes such date and the
Accumulation Unit Value for that Division on the preceding Valuation Date.
Purchase of Accumulation Units in a Division
--------------------------------------------
of a Separate Account
---------------------
You may allocate purchase payments among the investment Divisions of the
Separate Account and to the Fixed Account, where available. At the end of each
Valuation Period MML Bay State will apply your purchase payment (after deducting
any applicable premium taxes) to each Separate Account Division that you have
allocated in order to purchase Accumulation Units of the designated Division(s).
These Accumulation Units will be used in determining the value of amounts in the
Separate Account credited to the Contract on or prior to the maturity date and
the amount of variable annuity benefits at maturity. The value of the
Accumulation Units in each Division will vary with and will reflect the
investment performance and expenses of that Division (which in turn will reflect
the investment performance of the corresponding Fund in which the assets of the
Division are invested), any applicable taxes and the applicable Asset Charge.
10
<PAGE>
The Accumulation Unit Value is determined as of the Valuation Time. Provided
that the Contract application is complete, Accumulation Units are purchased at
their Accumulation Unit Value within two days of the date a purchase payment is
received in good order at the Service Center. If the date of receipt is not a
Valuation Date, or if the purchase payment is received after the Valuation Time
or other than by mail or wire transfer, the value of the Accumulation Units
purchased will be determined within two days of the next Valuation Time
following the date the payment is received. If an initial purchase payment is
not applied within five business days after receipt (due to incomplete or
ambiguous Application information, for example) the payment amount will be
refunded unless specific consent to retain the payment for a longer period is
obtained from the prospective purchaser. For subsequent purchase payments, the
Valuation Date will be the date which is on or next follows the date of receipt.
Amounts allocated to a Fixed Account will earn interest at a Guaranteed Rate
for the Guarantee Period. If, however, a Contract Owner redeems amounts held in
the Fixed Account, or transfers such sums before the Expiration Date of the
selected Accumulated Amount, such sums will be subject to a Market Value
Adjustment ("MVA"). The application of the MVA may operate to provide a yield
which is less than the return generated pursuant to the Guarantee Rate. If an
applicable Segment is not available, then the formula used to calculate the
Guaranteed Rate available as of the effective date of the application of the MVA
(referred to as "j" in the formula described in the Market Value Adjustment
-----------------------
section of the prospectus) will be determined by interpolation or extrapolation
of the Guaranteed Rates for the Segments then available. (Please consult the
prospectus for the Fixed Account for more information).
Net Investment Factor
---------------------
The Net Investment Factor for each Division for any Valuation Period is equal to
the sum of the Gross Investment Rate for that Division (as defined below) for
the Valuation Period and 1.000000, decreased by the applicable Asset Charge.
The Net Investment Factor may be greater than or less than 1.000000.
Gross Investment Rate
---------------------
The Gross Investment Rate for each Division of the Separate Account is equal to
the net earnings of that Division during the Valuation Period, divided by the
value of the net assets of that Division at
11
<PAGE>
the beginning of the Valuation Period. The net earnings of the Division is equal
to the accrued investment income and capital gains and losses (realized and
unrealized) of that Division and an adjustment for taxes paid or provided for.
The Gross Investment Rate will be determined in accordance with generally
accepted accounting principles and applicable laws, rules and regulations. The
Gross Investment Rate may be positive or negative.
The policy of the Separate Account is to take dividends and capital gain
distributions on shares of the Funds held by the Separate Account in additional
shares and not in cash.
See the General Formulas section below for the general formulas which may be
----------------
used to compute the value of an Accumulation Unit for any Division of the
Separate Account, and for an explanation of how a hypothetical illustration
using such formulas may be developed.
The Annuity (Pay-Out) Period
----------------------------
When your Contract approaches its maturity date, you may choose to have the
Maturity Value of the Contract provide you at maturity with either Fixed Income
payments (referred to as the "Fixed Income Option" in your Contract), Variable
Monthly Income payments [referred to as the "Variable Monthly Income Option" in
your Contract], or a combination of the two. You also may elect to receive the
Maturity Value in one lump sum. Fixed or Variable Monthly Income payments may
be received under several different payment options. If you have made no
election within 30 days prior to the maturity date, the Contract will provide
you with the automatic payment of a Variable Monthly Income under a life income
option with payments guaranteed for 10 years.
Fixed Income
------------
If you select a Fixed Income, then each annuity payment will be for a fixed-
dollar amount and will not vary with or reflect the investment performance of
the Separate Account or its Divisions. For further information regarding the
type of annuity benefit and the payment options available thereunder, you should
refer to your Contract.
Variable Monthly Income
-----------------------
If you select a Variable Monthly Income, then each annuity payment will be based
upon the value of the Annuity Units. This value will vary with and reflect the
investment performance of each Division
12
<PAGE>
to which Annuity Units are credited. The number of Annuity Units will not vary,
but will remain fixed during the annuity period unless a Contract Owner makes
transfers to another Division or a joint and survivor Payment Option with
reduced survivor income (as described in the Prospectus). Variable Monthly
Income payments will be made by withdrawal of assets from the Separate Account.
Annuity Units and Monthly Payments
----------------------------------
The number of Annuity Units in each Division to be credited to a Contract is
determined in the following manner. First, the value of amounts attributable to
a Contract for each Division of the Separate Account is determined by
multiplying the number of Accumulation Units credited to a Division on the
maturity date of the Contract by the Accumulation Unit Value of that Division on
the Payment Calculation Date for the first Variable Monthly Income payment.
Such value is then multiplied by the "purchase rate" (as defined below) to
determine the amount of the first Variable Monthly Income payment attributable
to each Division. Finally, the amount of the first Variable Monthly Income
payment attributable to each Division is divided by the Annuity Unit Value for
that Division on the Payment Calculation Date for such payment to determine the
number of Annuity Units for that Division.
The dollar amount of each Variable Monthly Income payment (other than the first
payment under a Contract) is equal to the sum of the products obtained by
multiplying the number of Annuity Units in each Division credited to the
Contract by their value (the "Annuity Unit Value") on the Payment Calculation
Date.
Purchase Rate
-------------
The purchase rate for each Division is the amount of Variable Monthly Annuity
payment purchased by each $1,000 applied to that Division. The purchase rates
which will be applied will be those specified in the Contract or those in use by
MML Bay State when the first Variable Monthly Income payment is due, whichever
provides the higher income. The purchase rate will differ according to the
payment option elected. Such rate takes into account the age and year of birth
of the Annuitant or Annuitants. The sex of the Annuitant or Annuitants will
also be considered unless the Contract is issued on a unisex basis, including
cases issued in connection with an employer-sponsored plan covered by the United
States Supreme Court case of Arizona Governing Committee v. Norris.
-------------------------------------
13
<PAGE>
Assumed Investment Rates
------------------------
The Assumed Investment Rate for each Separate Account Division will be 4% per
annum unless a lower rate is required by state law. The Assumed Investment Rate
will affect the amount by which Variable Monthly Income payments will vary from
month to month. If the actual net investment performance for a Division for the
period between the date any Variable Monthly Income payment is determined and
the date the next Variable Monthly Income payment is determined is equivalent on
an annual basis to an investment return at the Assumed Investment Rate, then the
amount of the next payment attributable to that Division will be equal to the
amount of the last payment. If such net investment performance for a Division
is equivalent to an investment return greater than the Assumed Investment rate,
the next payment attributable to that Division will be larger than the last; if
such net investment performance for a Division is equivalent to a return smaller
than the Assumed Investment Rate, then the next payment attributable to that
Division will be smaller than the last.
Annuity Unit Value
------------------
The Annuity Unit Value for a Division depends on the Assumed Investment Rate and
on the Net Investment Factor for that Division. In 1994, the initial Annuity
Unit Value for each Division was set at $1.000000. An Annuity Unit Value for a
Division on any date thereafter is equal to the Net Investment Factor for the
Valuation Period which includes such date divided by the sum of 1.000000 plus
the rate of interest for the number of days in such Valuation Period at an
effective annual rate equal to the Assumed Investment Rate, and multiplied by
the Annuity Unit Value for the Division on the preceding Valuation Date.
General Formulas
----------------
General Formulas to Determine Accumulation Unit Value and
---------------------------------------------------------
Annuity Unit Value for any Division of the Separate Account
-----------------------------------------------------------
Gross Investment = Net Earnings during Valuation Period
------------------------------------
Rate Value of Net Assets at beginning of
Valuation Period
Net Investment = Gross Investment Rate + 1.000000 -
Factor Asset Charge
14
<PAGE>
Accumulation = Accumulation Unit Value on Preceding
Unit Value Valuation Date X Net Investment Factor
Annuity Unit Value on Preceding
Valuation Date X Net Investment Factor
--------------------------------------
Annuity Unit = 1.000000 + rate of interest for days in
Value current Valuation Period at Assumed
Investment Rate
Illustration of Computation of Accumulation
-------------------------------------------
and Annuity Unit Value Using Hypothetical Example
-------------------------------------------------
The above computations may be illustrated by the following hypothetical example:
Assume that the net earnings of the Division for the Valuation Period were
$11,760; that the value of net assets at the beginning of the Valuation Period
was $30,000,000; that the Asset Charge was .000038 per day; that the values of
an Accumulation Unit and an Annuity Unit in the Division of the Separate Account
on the preceding Valuation Date were $1.135000 and $1.067000, respectively, that
the corresponding Assumed Investment Rate was 4% and that the Valuation Period
was one day.
The Gross Investment Rate for the Valuation Period would be .000392 ($11,760
divided by $30,000,000). The Net Investment Factor would be 1.000354 (.000392
plus 1.000000 minus .000038). The new Accumulation Unit Value would be $1.1354
($1.135000 x 1.000354). At an effective annual rate of 4%, the rate of interest
for one day is .000107, and the new Annuity Unit Value would be $1.0673
($1.067000 x 1.000354 divided by 1.000107).
General Formulas to Determine Variable Monthly Income
-----------------------------------------------------
Payments and Number of Annuity Units for any Division of the
------------------------------------------------------------
Separate Account
----------------
First Variable = Accumulation Units Applied X
Monthly Income Accumulation Unit Value on Payment
Payment Calculation Date for First
Variable Monthly Annuity Payment
Number of Annuity = First Variable Monthly Annuity Payment
--------------------------------------
Units Annuity Unit Value on Payment
Calculation Date for First Variable
Monthly Income Payment
15
<PAGE>
Amount of Subsequent = Number of Annuity Units X Annuity Unit
Value Variable Value on the Applicable Payment
Income Payments Calculation Date
Illustration of Computation of Variable Monthly Income
------------------------------------------------------
Payments for a Contract Using Hypothetical Example
--------------------------------------------------
The above computations may be illustrated by the following hypothetical example:
Assume that 35,000 Accumulation Units in a Division of the Separate Account were
to be applied; that the purchase rate for the Assumed Investment Rate and
payment option elected was $5.65 per $1,000; that the Accumulation Unit Value of
such Division on the Payment Calculation Date for the first Variable Monthly
Income payment was $1.350000; and that the Annuity Unit Value of such Division
on the Payment Calculation Date for the first Variable Monthly Income was
$1.200000 and for the second Variable Monthly Income payment was $1.20050.
The first Variable Monthly Income payment would be $266.96 (35,000 X 1.350000 X
.005650). The number of Annuity Units of such Division credited would be
222.467 ($266.96 divided by $1.200000). The amount of the second Variable
Monthly Income payment would be $267.07 (222.467 X $1.200500). If the Contract
has Annuity Units credited in more than one Division of a Separate Account, the
above computation would be made for each Division and the Variable Monthly
Income Payment would be equal to the sum thereof.
PERFORMANCE MEASURES
MML Bay State may show the performance for the Divisions of the Separate Account
in the following ways:
Standardized Average Annual Total Return
----------------------------------------
MML Bay State will show the "SEC Average Annual Total Return," formulated as
prescribed by the rules of the SEC, for each Division of the Separate Account
except any Divisions which has been in existence for less than one year. The
Standardized Average Annual Total Return is the effective annual compounded rate
of return that would have produced the cash redemption value over the stated
period had the performance remained constant throughout. The calculation
assumes a single $1,000 payment made at the beginning of the period and full
redemption at the end of the period. It reflects a deduction for the contingent
deferred sales charge, the annual Administrative Charge and all other Fund,
16
<PAGE>
Separate Account and Contract level charges except premium taxes, if any. The
annual administrative charge will be apportioned among the Divisions of the
Separate Account based upon the percentages of in force Contracts investing in
each of the Divisions. For any Division which has been in existence for less
than one year, MML Bay State will show the aggregate total return as permitted
by the SEC. This aggregate total return will reflect the change in unit value
and a deduction for the contingent deferred sales charge. The following table
shows the aggregate total return for the Divisions of the Separate Account for
the period ending December 31, 1995.
<TABLE>
<CAPTION>
Since
1 Year Availability*
<S> <C> <C>
MML Equity 23.83% 20.44%
MML Money Market (1.36) (0.77)
MML Managed Bond 12.06 11.46
MML Blend 16.13 14.10
Oppenheimer High Income 13.10 8.60
Oppenheimer Capital Appreciation 24.87 21.82
Oppenheimer Global Securities (4.99) (9.83)
Oppenheimer Growth 28.92 23.22
Oppenheimer Strategic Bond 8.06 5.33
Oppenheimer Multiple Strategies 13.98 10.77
Oppenheimer Bond 9.92 7.98
Oppenheimer Money (1.25) (0.67)
Oppenheimer Growth and Income N/A 18.12
</TABLE>
* Since availability of the Divisions within the Contract: November 14, 1994 -
all Divisions except Oppenheimer Growth & Income. July 5, 1995 - Oppenheimer
Growth & Income.
17
<PAGE>
Additional Performance Measures
-------------------------------
The performance figures discussed below, may be calculated on the basis of the
historical performance of the Funds, and may assume the Contracts were in
existence prior to their inception date, (which they were not). Beginning the
date the Contracts became available, actual Accumulation Unit values are used
for the calculations. These returns are based on specified premium patterns
which produce the resulting Accumulated Values. They reflect a deduction for
the Separate Account expenses, MML Trust expenses, Oppenheimer Trust expenses,
and the annual Administrative Charge. They do not include contingent deferred
sales charges or premium taxes (if any), which if included would reduce the
percentages reported.
The difference between the first set of additional performance measures,
PERCENTAGE CHANGE and ANNUALIZED RETURNS on Accumulation Unit Values, and the
second set, the NON-STANDARDIZED ANNUAL and AVERAGE ANNUAL TOTAL RETURNS, is
that the second set is based on specified premium patterns and includes the
deduction of the annual Administrative Charge, whereas the first set does not.
ACCUMULATION UNIT VALUES: PERCENTAGE CHANGE AND ANNUALIZED RETURNS. MML Bay
State will show the PERCENTAGE CHANGE in the value of an Accumulation Unit for a
Division with respect to one or more periods. The ANNUALIZED RETURN, or average
annual change in Accumulation Unit values, may also be shown with respect to one
or more periods. For one year, the Percentage Change and the Annualized Return
are effective annual rates of return and are equal. For periods greater than
one year, the Annualized Return will be the effective annual compounded rate of
return for the periods stated. Since the value of an Accumulation Unit reflects
the expenses of the Separate Account and Trust (See Table of Fees and Expenses--
pages 5-6 of the Prospectus), the Percentage Change and Annualized Returns also
reflect these expenses. These percentages, however, do not reflect contingent
deferred sales charge or premium taxes (if any), which if included would reduce
the percentages that MML Bay State reports.
The NON-STANDARDIZED ANNUAL TOTAL RETURN and the NON-STANDARDIZED AVERAGE ANNUAL
TOTAL RETURN reflect a deduction for the Annual Administrative Charge as well as
reflecting deductions for the
18
<PAGE>
Separate Account expenses and the expenses of the Trusts. They are based on
specified premium patterns which produce the resulting Accumulated Values. They
do not include Sales Charges or premium taxes (if any), which would reduce the
percentages reported.
The NON-STANDARDIZED ANNUAL TOTAL RETURN for a Division of the Separate Account
is the effective annual rate of return that would have produced the ending
Accumulated Value of the stated one-year period had the division been in
existence.
The NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN for a Division of the Separate
Account is the effective annual compounded rate of return that would have
produced the ending Accumulated Value over the stated period had the performance
remained constant throughout.
Note: The NON-STANDARDIZED ANNUAL TOTAL RETURN will be less than the NON-
STANDARDIZED ANNUALIZED RETURN on Accumulation Unit values for the same period
due to the effect of the annual Administrative Charge. Additionally, the
magnitude of this difference will depend on the size of the Accumulated Value
from which the annual Administrative Charge is deducted.
The performance figures discussed above reflect historical results of the Funds
and are not intended to indicate or to predict future performance.
YIELD AND EFFECTIVE YIELD
MML Bay State may also show yield figures for the Oppenheimer Bond, Oppenheimer
High Income, Oppenheimer Strategic Bond, Oppenheimer Multiple Strategies,
Oppenheimer Growth & Income, MML Managed Bond and MML Blend Divisions,
calculated based upon a 30-day period ended on December 31, 1995. The yields
are determined by dividing the net investment income per Accumulation Unit
earned during the period by the price per Unit on the last day of the period.
MML Bay State may also show yield and effective yield figures for the Money
Market and Money Fund Divisions of the Separate Account. "Yield" refers to the
income generated by an investment in either money market Division over a seven-
day period, which is then "annualized." That is, the amount of income generated
by the investment during that week is assumed to be generated each week over a
52-week period and is shown as a percentage of the investment. The "effective"
yield is calculated similarly but,
19
<PAGE>
when annualized, the income earned by an investment in a money market division
is assumed to be re-invested. Therefore the effective yield will be slightly
higher than the yield because of the compounding effect of this assumed
reinvestment.
These figures will reflect a deduction for Fund, Separate Account, and certain
Contract level charges and the Annual Administrative Charge assuming such
contract remains in force. The Administrative Charge is based on a hypothetical
contract where such charge is applicable. These figures do not reflect the
Sales charge or premium taxes (if any), which if included would reduce the
yields.
The following tables show the 7-day Yield and Effective Yield for the Money
Market Divisions of the Separate Accounts for the periods ended December 31,
1995:
<TABLE>
<CAPTION>
LifeTrust MML LifeTrust Oppenheimer
Money Market Money Market
Division Division
<S> <C> <C>
Yield 3.85% 3.91%
Effective Yield 3.92 3.98
After administrative fee deduction (0.11%)
Yield 3.74% 3.80%
Effective Yield 3.81 3.87
</TABLE>
Performance information for the Separate Account Divisions may be compared to
other variable annuity separate accounts or other investment products surveyed
by Lipper Analytical Services, Inc. a nationally recognized independent
reporting service which ranks mutual funds and other investment companies by
overall performance, investment objectives and assets, or tracked by other
ratings services, companies, publications or persons who rank separate accounts
or other investment products on overall performance or other criteria.
Performance figures will be calculated in accordance with standardized methods
established by each reporting service.
20
<PAGE>
LIFETRUST HYPOTHETICAL PROJECTIONS
MML Equity Fund
<TABLE>
<CAPTION>
Date of Cumulative Accumulated Value Accumulated Value Annual Average Annual
Payment Premium Payment Before Payment After Payment Total Return Total Return
- ------- --------------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
12/31/85 $10,000 $ 0 $10,000 0.00 0.00
12/31/86 10,000 11,818 11,818 18.18 18.18
12/31/87 10,000 11,732 11,732 -0.72 8.32
12/31/88 10,000 13,469 13,469 14.80 10.44
12/31/89 10,000 16,313 16,313 21.11 13.01
12/31/90 10,000 15,973 15,973 -2.08 9.82
12/31/91 10,000 19,747 19,747 23.63 12.01
12/31/92 10,000 21,483 21,483 8.79 11.54
12/31/93 10,000 23,170 23,170 7.85 11.07
12/31/94 10,000 23,757 23,757 2.53 10.09
12/31/95 10,000 30,706 30,706 29.25 11.87
</TABLE>
MML Managed Bond Fund
<TABLE>
<CAPTION>
Date of Cumulative Accumulated Value Accumulated Value Annual Average Annual
Payment Premium Payment Before Payment After Payment Total Return Total Return
- ------- --------------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
12/31/85 $10,000 $ 0 $10,000 0.00 0.00
12/31/86 10,000 11,283 11,283 12.83 12.83
12/31/87 10,000 11,385 11,385 0.91 6.70
12/31/88 10,000 11,998 11,998 5.38 6.26
12/31/89 10,000 13,319 13,319 11.01 7.43
12/31/90 10,000 14,203 14,203 6.64 7.27
12/31/91 10,000 16,309 16,309 14.83 8.49
12/31/92 10,000 17,228 17,228 5.63 8.08
12/31/93 10,000 18,965 18,965 10.08 8.33
12/31/94 10,000 17,968 17,968 -5.26 6.73
12/31/95 10,000 21,086 21,086 17.36 7.75
</TABLE>
MML Blend Fund
<TABLE>
<CAPTION>
Date of Cumulative Accumulated Value Accumulated Value Annual Average Annual
Payment Premium Payment Before Payment After Payment Total Return Total Return
- ------- --------------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
12/31/85 $10,000 $ 0 $10,000 0.00 0.00
12/31/86 10,000 11,642 11,642 16.42 16.42
12/31/87 10,000 11,806 11,806 1.40 8.65
12/31/88 10,000 13,172 13,172 11.57 9.62
12/31/89 10,000 15,552 15,552 18.07 11.67
12/31/90 10,000 15,670 15,670 0.76 9.40
12/31/91 10,000 19,131 19,131 22.09 11.42
12/31/92 10,000 20,601 20,601 7.68 10.88
12/31/93 10,000 22,255 22,255 8.03 10.52
12/31/94 10,000 22,459 22,459 0.92 9.41
12/31/95 10,000 27,284 27,284 21.48 10.56
</TABLE>
21
<PAGE>
LIFETRUST HYPOTHETICAL PROJECTIONS
Oppenheimer Capital Appreciation Fund
<TABLE>
<CAPTION>
Date of Cumulative Accumulated Value Accumulated Value Annual Average Annual
Payment Premium Payment Before Payment After Payment Total Return Total Return
- ------- --------------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
12/31/86 $10,000 $ 0 $10,000 0.00 0.00
12/31/87 10,000 11,244 11,244 12.44 12.44
12/31/88 10,000 12,545 12,545 11.57 12.01
12/31/89 10,000 15,751 15,751 25.56 16.35
12/31/90 10,000 12,890 12,890 -18.17 6.55
12/31/91 10,000 19,636 19,636 52.34 14.45
12/31/92 10,000 22,319 22,319 13.66 14.32
12/31/93 10,000 27,992 27,992 25.42 15.84
12/31/94 10,000 25,478 25,478 -8.98 12.40
12/31/95 10,000 33,282 33,282 30.63 14.29
</TABLE>
Oppenheimer Multiple Strategies Fund
<TABLE>
<CAPTION>
Date of Cumulative Accumulated Value Accumulated Value Annual Average Annual
Payment Premium Payment Before Payment After Payment Total Return Total Return
- ------- --------------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
12/31/87 $10,000 $ 0 $10,000 0.00 0.00
12/31/88 10,000 12,015 12,015 20.15 20.15
12/31/89 10,000 13,685 13,685 13.90 16.98
12/31/90 10,000 13,208 13,208 -3.49 9.72
12/31/91 10,000 15,270 15,270 15.62 11.16
12/31/92 10,000 16,383 16,383 7.29 10.38
12/31/93 10,000 18,702 18,702 14.15 11.00
12/31/94 10,000 18,053 18,053 -3.47 8.81
12/31/95 10,000 21,582 21,582 19.55 10.09
</TABLE>
Oppenheimer Global Securities Fund
<TABLE>
<CAPTION>
Date of Cumulative Accumulated Value Accumulated Value Annual Average Annual
Payment Premium Payment Before Payment After Payment Total Return Total Return
- ------- --------------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
12/31/90 $10,000 $ 0 $10,000 0.00 0.00
12/31/91 10,000 10,165 10,165 1.65 1.65
12/31/92 10,000 9,281 9,281 -8.69 -3.66
12/31/93 10,000 15,558 15,558 67.64 15.87
12/31/94 10,000 14,434 14,434 -7.23 9.61
12/31/95 10,000 14,524 14,524 0.62 7.75
</TABLE>
Oppenheimer Strategic Bond Fund
<TABLE>
<CAPTION>
Date of Cumulative Accumulated Value Accumulated Value Annual Average Annual
Payment Premium Payment Before Payment After Payment Total Return Total Return
- ------- --------------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
12/31/93 $10,000 $ 0 $10,000 0.00 0.00
12/31/94 10,000 9,458 9,458 -5.42 -5.42
12/31/95 10,000 10,730 10,730 13.44 3.58
</TABLE>
22
<PAGE>
LIFETRUST HYPOTHETICAL PROJECTIONS
Oppenheimer Bond Fund
<TABLE>
<CAPTION>
Date of Cumulative Accumulated Value Accumulated Value Annual Average Annual
Payment Premium Payment Before Payment After Payment Total Return Total Return
- ------- --------------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
12/31/85 $10,000 $ 0 $10,000 0.00 0.00
12/31/86 10,000 10,829 10,829 8.29 8.29
12/31/87 10,000 10,918 10,918 0.82 4.49
12/31/88 10,000 11,702 11,702 7.18 5.38
12/31/89 10,000 13,047 13,047 11.49 6.87
12/31/90 10,000 13,854 13,854 6.19 6.74
12/31/91 10,000 16,040 16,040 15.78 8.19
12/31/92 10,000 16,815 16,815 4.83 7.71
12/31/93 10,000 18,713 18,713 11.29 8.15
12/31/94 10,000 18,065 18,065 -3.46 6.79
12/31/95 10,000 20,819 20,819 15.24 7.61
</TABLE>
Oppenheimer Growth Fund
<TABLE>
<CAPTION>
Date of Cumulative Accumulated Value Accumulated Value Annual Average Annual
Payment Premium Payment Before Payment After Payment Total Return Total Return
- ------- --------------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
12/31/85 $10,000 $ 0 $10,000 0.00 0.00
12/31/86 10,000 11,582 11,582 15.82 15.82
12/31/87 10,000 11,770 11,770 1.62 8.49
12/31/88 10,000 14,140 14,140 20.14 12.24
12/31/89 10,000 17,203 17,203 21.66 14.52
12/31/90 10,000 15,540 15,540 -9.66 9.22
12/31/91 10,000 19,208 19,208 23.60 11.49
12/31/92 10,000 21,663 21,663 12.78 11.68
12/31/93 10,000 22,880 22,880 5.62 10.90
12/31/94 10,000 22,751 22,751 -0.56 9.56
12/31/95 10,000 30,645 30,645 34.70 11.85
</TABLE>
Oppenheimer High Income Fund
<TABLE>
<CAPTION>
Date of Cumulative Accumulated Value Accumulated Value Annual Average Annual
Payment Premium Payment Before Payment After Payment Total Return Total Return
- ------- --------------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
12/31/86 $10,000 $ 0 $10,000 0.00 0.00
12/31/87 10,000 10,627 10,627 6.27 6.27
12/31/88 10,000 12,082 12,082 13.69 9.92
12/31/89 10,000 12,461 12,461 3.14 7.61
12/31/90 10,000 12,829 12,829 2.95 6.43
12/31/91 10,000 16,911 16,911 31.82 11.08
12/31/92 10,000 19,634 19,634 16.10 11.90
12/31/93 10,000 24,430 24,430 24.43 13.61
12/31/94 10,000 23,295 23,295 -4.65 11.15
12/31/95 10,000 27,630 27,630 18.61 11.95
</TABLE>
23
<PAGE>
LIFETRUST
AUV RETURNS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Percentage Change
in Accumulation Annualized Accumulation Unit Value (AUV) Total Returns
Unit Value For Periods Ending 12/31/95
- ------------------------------------------------------------------------------------------------------------------------------------
Since
Year-To-Date 1 Year 3 Year 5 Year 10 Year Inception
Funds 12/31/95 12/31/94 - 95 12/31/92 - 95 12/31/90 - 95 12/31/85 - 95 Date Shown
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Opp Glob Sec 0.83% 0.83% 16.33% 8.01% 7.84% 11/12/90
- ------------------------------------------------------------------------------------------------------------------------------------
Opp Cap 30.75% 30.75% 14.37% 21.04% 13.59% 8/15/86
- ------------------------------------------------------------------------------------------------------------------------------------
Opp Growth 34.83% 34.83% 12.39% 14.70% 12.05%
- ------------------------------------------------------------------------------------------------------------------------------------
Opp Mult Str 19.71% 19.71% 9.79% 10.51% 9.63% 2/2/87
- ------------------------------------------------------------------------------------------------------------------------------------
Opp High Inc 18.74% 18.74% 12.20% 16.74% 11.65% 4/14/86
- ------------------------------------------------------------------------------------------------------------------------------------
Opp Bond 15.41% 15.41% 7.55% 8.67% 7.83%
- ------------------------------------------------------------------------------------------------------------------------------------
Opp Str Bond 13.76% 13.76% 4.17% 5/3/93
- ------------------------------------------------------------------------------------------------------------------------------------
Opp Growth & Inc 24.42% since 7/3/95 55.37% 7/3/95
- ------------------------------------------------------------------------------------------------------------------------------------
MML Blend 21.62% 21.62% 9.96% 11.88% 10.76%
- ------------------------------------------------------------------------------------------------------------------------------------
MML Bond 17.52% 17.52% 7.13% 8.40% 7.97%
- ------------------------------------------------------------------------------------------------------------------------------------
MML Equity 29.38% 29.38% 12.78% 14.11% 12.07%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
These performance numbers using Accumulation Unit Values are calculated on the
basis of the historical performance of the Funds. Prior to November 14, 1994,
the Accumulation Unit Values used are hypothetical unit values based on the
historical performance of the Funds and the current applicable contract
expenses. Beginning November 14, 1994, actual Accumulation Unit Values are used
for the calculations. The Growth & Income Division was added to LifeTrust on
July 3, 1995.
24
<PAGE>
Report Of Independent Accountants
To the Contract Owners of MML Bay State Variable Annuity Separate Account 1
and the Board of Directors of MML Bay State Life Insurance Company
We have audited the accompanying statement of assets and liabilities of MML Bay
State Variable Annuity Separate Account 1 (comprising, respectively, the MML
Equity Division, MML Money Market Division, MML Managed Bond Division, MML Blend
Division, Oppenheimer Money Division, Oppenheimer High Income Division,
Oppenheimer Bond Division, Oppenheimer Capital Appreciation Division,
Oppenheimer Growth Division, Oppenheimer Multiple Strategies Division,
Oppenheimer Global Securities Division, Oppenheimer Strategic Bond Division and
Oppenheimer Growth & Income Division - the "Divisions") as of December 31,
1995, and the related statements of operations and changes in net assets for the
periods indicated thereon. These financial statements are the responsibility of
the Account's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
verification of investments owned as of December 31, 1995, by examination of the
records of MML Series Investment Fund and by confirmation with Oppenheimer
Variable Account Funds. 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, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
Divisions constituting MML Bay State Variable Annuity Separate Account 1 as of
December 31, 1995, the results of their operations and the changes in their net
assets for the periods indicated thereon, in conformity with generally accepted
accounting principles.
Also, in our opinion, based upon these audits and our previous audit, made in
accordance with generally accepted auditing standards, of the financial
statements of MML Bay State Variable Annuity Separate Account 1 for each
respective period indicated thereon, and upon which we expressed an unqualified
opinion, the financial information under the caption "Condensed Financial
Information" for each date appearing in the Prospectus, is fairly stated in all
material respects in relation to the financial statements for which it has been
derived.
Coopers & Lybrand L.L.P.
Springfield, Massachusetts
February 9, 1996
<PAGE>
MML Bay State Variable Annuity Separate Account 1
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer
MML Money Managed MML Oppenheimer High Oppenheimer Capital
Equity Market Bond Blend Money Income Bond Appreciation
Division Division Division Division Division Division Division Division
-------- -------- -------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments
Number of shares (Note 2). 32,868 871,480 30,797 44,795 1,069,005 164,818 85,447 86,254
======== ======== ======== ======== ========== ========== ========== ==========
Identified cost (Note 3B). $818,192 $871,480 $373,848 $904,605 $1,069,005 $1,744,754 $ 991,477 $2,610,006
======== ======== ======== ======== ========== ========== ========== ==========
Value (Note 3A)........... $852,078 $871,480 $383,363 $919,154 $1,069,005 $1,752,012 $1,011,687 $2,950,749
Dividends receivable....... 32,327 3,595 5,934 27,205 2,662 -- -- --
Receivable from MML Bay
State Life Insurance
Company................... -- 3,602 -- -- -- -- -- 94
-------- -------- -------- -------- ---------- ---------- ---------- ----------
Total assets............ 884,405 878,677 389,297 946,359 1,071,667 1,752,012 1,011,687 2,950,843
LIABILITIES
Payable to MML Bay State
Life Insurance Company.... 85 89 39 100 103 173 102 289
-------- -------- -------- -------- ---------- ---------- ---------- ----------
NET ASSETS................. $884,320 $878,588 $389,258 $946,259 $1,071,564 $1,751,839 $1,011,585 $2,950,554
======== ======== ======== ======== ========== ========== ========== ==========
Net Assets consist of:
Accumulation units - value
Number of units........... $884,320 $878,588 $389,258 $946,259 $1,071,564 $1,751,839 $1,011,585 $2,950,554
======== ======== ======== ======== ========== ========== ========== ==========
Contractowners accumulation
units (Note 7)............ 685,964 839,793 328,514 778,529 1,023,398 1,518,022 883,171 2,254,545
======== ======== ======== ======== ========== ========== ========== ==========
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1995......... $1.29 $1.05 $1.18 $1.22 $1.05 $1.15 $1.15 $1.31
December 31, 1994......... 1.00 1.00 1.01 1.00 1.00 .97 .99 1.00
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer Oppenheimer
Oppenheimer Multiple Global Strategic Growth &
Growth Strategies Securities Bond Income
Division Division Division Division Division
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments
Number of shares (Note 2). 155,456 177,612 170,556 794,583 149,981
========== ========== ========== ========== ==========
Identified cost (Note 3B). $3,351,157 $2,497,731 $2,555,043 $3,807,216 $1,675,813
========== ========== ========== ========== ==========
Value (Note 3A)........... $3,660,983 $2,584,258 $2,558,345 $3,901,403 $1,876,267
Dividends receivable....... -- -- -- -- --
Receivable from MML Bay
State Life Insurance
Company................... 107 -- 96 -- --
---------- ---------- ---------- ---------- ----------
Total assets............ 3,661,090 2,584,258 2,558,441 3,901,403 1,876,267
LIABILITIES
Payable to MML Bay State
Life Insurance Company.... 394 262 250 378 190
---------- ---------- ---------- ---------- ----------
NET ASSETS................. $3,660,696 $2,583,996 $2,558,191 $3,901,025 $1,876,077
========== ========== ========== ========== ==========
Net Assets consist of:
Accumulation units - value
Number of units........... $3,660,696 $2,583,996 $2,558,191 $3,901,025 $1,876,077
========== ========== ========== ========== ==========
Contractowners accumulation
units (Note 7)............ 2,762,984 2,190,174 2,698,363 3,491,031 1,507,840
========== ========== ========== ========== ==========
NET ASSET VALUE PER
ACCUMULATION UNIT
December 31, 1995......... $1.32 $1.18 $.95 $1.12 $1.24
December 31, 1994......... .98 .99 .94 .98 --
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
MML Bay State Variable Annuity Separate Account 1
STATEMENT OF OPERATIONS
For The Year Ended December 31, 1995
<TABLE>
<CAPTION>
MML MML Oppenheimer Oppenheimer
MML Money Managed MML Oppenheimer High Oppenheimer Capital
Equity Market Bond Blend Money Income Bond Appreciation
Division Division Division Division Division Division Division Division
-------- -------- -------- -------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income
Dividends (Note 3B)....... $32,330 $25,437 $11,832 $35,053 $50,411 $ 95,136 $29,471 $ 1,382
Expenses
Mortality and expense risk
fee and administrative
expenses (Note 4)......... 4,841 6,651 1,976 4,018 12,796 9,467 5,252 15,450
-------- -------- -------- -------- ----------- ---------- ---------- -----------
Net investment income
(loss) (Note 3C).......... 27,489 18,786 9,856 31,035 37,615 85,669 24,219 (14,068)
-------- -------- -------- -------- ----------- ---------- ---------- -----------
Net realized and
unrealized gain
on investments
Net realized gain (loss) on
investments (Note 3B, 3C
& 6)...................... 17,013 -- 1,100 6,690 -- 11,461 4,702 14,588
Change in net unrealized
appreciation/ depreciation
of investments............ 34,089 -- 9,552 14,697 -- 7,489 20,333 340,611
-------- -------- -------- -------- ----------- ---------- ---------- -----------
Net gain on investments.... 51,102 -- 10,652 21,387 -- 18,950 25,035 355,199
-------- -------- -------- -------- ----------- ---------- ---------- -----------
Net increase (decrease)
in net assets resulting
from operations........... $ 78,591 $ 18,786 $ 20,508 $ 52,422 $ 37,615 $ 104,619 $ 49,254 $ 341,131
======== ======== ======== ======== =========== ========== ========== ===========
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer
Oppenheimer Multiple Global Strategic *Oppenheimer
Growth Strategies Securities Bond Growth & Income
Division Division Division Division Division
----------- --------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Investment income
Dividends (Note 3B)....... $ 4,399 $ 67,112 $ 5,890 $ 159,599 $ 2,155
Expenses
Mortality and expense risk
fee and administrative
expenses (Note 4)......... 20,443 15,614 15,230 24,249 5,059
----------- --------- ----------- ---------- -----------
Net investment income
(loss) (Note 3C).......... (16,044) 51,498 (9,340) 135,350 (2,904)
----------- --------- ----------- ---------- -----------
Net realized and
unrealized gain
on investments
Net realized gain (loss) on
investments
(Note 3B, 3C & 6)......... 34,194 7,403 (1,429) 9,991 9,875
Change in net unrealized
appreciation/ depreciation
of investments............ 309,903 86,644 3,554 94,392 200,453
----------- --------- ----------- ---------- -----------
Net gain on investments.... 344,097 94,047 2,125 104,383 210,328
----------- --------- ----------- ---------- -----------
Net increase (decrease)
in net assets resulting
from operations........... $ 328,053 $ 145,545 $ (7,215) $ 239,733 $ 207,424
=========== ========= =========== ========== ===========
</TABLE>
*For the Period July 3, 1995 (Date of Commencement of Operations) through
December 31, 1995
See Notes to Financial Statements.
4
<PAGE>
MML Bay State Variable Annuity Separate Account 1
STATEMENT OF CHANGES IN NET ASSETS
For The Year Ended December 31, 1995
<TABLE>
<CAPTION>
MML MML Oppenheimer
MML Money Managed MML Oppenheimer High Oppenheimer
Equity Market Bond Blend Money Income Bond
Division Division Division Division Division Division Division
-------- ----------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net
assets
Operations:
Net investment income
(loss) $.27,489 $ 18,786 $ 9,856 $ 31,035 $ 37,615 $ 85,669 $ 24,219
Net realized gain (loss)
on investments................17,013 -- 1,100 6,690 -- 11,461 4,702
Change in net unrealized
appreciation/depreciation
of investments................34,089 -- 9,552 14,697 -- 7,489 20,333
-------- ----------- -------- -------- ---------- ---------- ----------
Net increase (decrease) in
net assets resulting from
operations....................78,591 18,786 20,508 52,422 37,615 104,619 49,254
-------- ----------- -------- -------- ---------- ---------- ----------
Capital transactions: (Note
7)
Net contract payments
(Note 5) 608,861 2,267,770 267,005 837,480 2,040,439 1,453,537 858,539
Transfer from MML Bay State
Life Insurance Company........ -- -- -- -- -- -- --
Withdrawal of funds............(5,289) -- -- (1,994) (46,651) (17,675) (2,796)
Reimbursement of accumulation
unit value fluctuation........ 1,136 176 202 383 379 662 189
Withdrawal due to
administrative
and contingent deferred
sales charges (Note 5)........ -- -- -- -- -- (3) (4)
Divisional transfers 196,039 (1,425,173) 96,502 52,971 (965,242) 204,688 101,441
-------- ----------- -------- -------- ---------- ---------- ----------
Net increase in net assets
resulting from capital
transactions 800,747 842,773 363,709 888,840 1,028,925 1,641,209 957,369
-------- ----------- -------- -------- ---------- ---------- ----------
Total increase 879,338 861,559 384,217 941,262 1,066,540 1,745,828 1,006,623
NET ASSETS, at beginning
of the year/period............. 4,982 17,029 5,041 4,997 5,024 6,011 4,962
-------- ----------- -------- -------- ---------- ---------- ----------
NET ASSETS, at end
of the year $884,320 $ 878,588 $389,258 $946,259 $1,071,564 $1,751,839 $1,011,585
======== =========== ======== ======== ========== ========== ==========
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer Oppenheimer *Oppenheimer
Capital Oppenheimer Multiple Global Strategic Growth &
Appreciation Growth Strategies Securities Bond Income
Division Division Division Division Division Division
---------- ---------- ---------- ---------- ---------- ----------
<S>............................. <C> <C> <C> <C> <C> <C>
Increase (decrease) in net
assets
Operations:
Net investment income
(loss)........................ $ (14,068) $ (16,044) $ 51,498 $ (9,340) $ 135,350 $ (2,904)
Net realized gain (loss)
on investments................ 14,588 34,194 7,403 (1,429) 9,991 9,875
Change in net unrealized
appreciation/depreciation
of investments................ 340,611 309,903 86,644 3,554 94,392 200,453
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
net assets resulting from
operations.................... 341,131 328,053 145,545 (7,215) 239,733 207,424
---------- ---------- ---------- ---------- ---------- ----------
Capital transactions: (Note
7)
Net contract payments
(Note 5)...................... 2,310,277 2,984,873 2,112,398 2,350,570 3,577,773 1,267,067
Transfer from MML Bay State
Life Insurance Company........ -- -- -- -- -- 5,000
Withdrawal of funds............ (4,680) (77,753) (15,460) (9,883) (16,021) (3,270)
Reimbursement of accumulation
unit value fluctuation........ 3,038 3,538 1,752 1,591 2,443 1,015
Withdrawal due to
administrative and contingent
deferred sales charges
(Note 5)...................... (25) (20) (19) (54) (25) --
Divisional transfers........... 288,802 417,092 332,547 211,554 89,938 398,841
---------- ---------- ---------- ---------- ---------- ----------
Net increase in net assets
resulting from capital
transactions.................. 2,597,412 3,327,730 2,431,218 2,553,778 3,654,108 1,668,653
---------- ---------- ---------- ---------- ---------- ----------
Total increase................. 2,938,543 3,655,783 2,576,763 2,546,563 3,893,841 1,876,077
NET ASSETS, at beginning
of the year/period............. 12,011 4,913 7,233 11,628 7,184 --
---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS, at end
of the year.................... $2,950,554 $3,660,696 $2,583,996 $2,558,191 $3,901,025 $1,876,077
========== ========== ========== ========== ========== ==========
</TABLE>
*For the Period July 3, 1995 (Date of Commencement of Operations) through
December 31, 1995
See Notes to Financial Statements.
5
<PAGE>
MML Bay State Variable Annuity Separate Account 1
STATEMENT OF CHANGES IN NET ASSETS
For The Period November 14, 1994 (Date Of Commencement Of Operations) Through
December 31, 1994
<TABLE>
<CAPTION>
MML MML Oppenheimer
MML Money Managed MML Oppenheimer High
Equity Market Bond Blend Money Income
Division Division Division Division Division Division
-------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss)....... $ 185 $ 26 $ 79 $ 145 $ 24 $ 97
Change in net unrealized
appreciation/depreciation
of investments.................... (203) -- (38) (148) -- (231)
------ ------- ------ ------ ------ ------
Net increase (decrease) in net
assets resulting from operations.. (18) 26 41 (3) 24 (134)
------ ------- ------ ------ ------ ------
Capital transactions: (Note 7)
Net contract payments (Note 5)..... -- 12,000 -- -- -- 1,145
Transfer from MML Bay State
Life Insurance Company............ 5,000 5,000 5,000 5,000 5,000 5,000
Reimbursement of accumulation
unit value fluctuation............ -- 3 -- -- -- --
------ ------- ------ ------ ------ ------
Net increase in net assets
resulting from capital
transactions...................... 5,000 17,003 5,000 5,000 5,000 6,145
------ ------- ------ ------ ------ ------
Total increase..................... 4,982 17,029 5,041 4,997 5,024 6,011
NET ASSETS, at beginning of
the period......................... -- -- -- -- -- --
------ ------- ------ ------ ------ ------
NET ASSETS, at end of the year...... $4,982 $17,029 $5,041 $4,997 $5,024 $6,011
====== ======= ====== ====== ====== ======
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer Oppenheimer
Oppenheimer Capital Oppenheimer Multiple Global Strategic
Bond Appreciation Growth Strategies Securities Bond
Division Division Division Division Division Division
-------- ------------ ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss)....... $ 86 $ (9) $ (9) $ 62 $ (10) $ 101
Change in net unrealized
appreciation/depreciation
of investments.................... (124) 132 (78) (117) (252) (205)
------ ------- ------ ------ ------- ------
Net increase (decrease) in net
assets resulting from operations.. (38) 123 (87) (55) (262) (104)
------ ------- ------ ------ ------- ------
Capital transactions: (Note 7)
Net contract payments (Note 5)..... -- 6,860 -- 2,288 6,861 2,288
Transfer from MML Bay State
Life Insurance Company............ 5,000 5,000 5,000 5,000 5,000 5,000
Reimbursement of accumulation
unit value fluctuation............ -- 28 -- -- 29 --
------ ------- ------ ------ ------- ------
Net increase in net assets
resulting from capital
transactions...................... 5,000 11,888 5,000 7,288 11,890 7,288
------ ------- ------ ------ ------- ------
Total increase..................... 4,962 12,011 4,913 7,233 11,628 7,184
NET ASSETS, at beginning of the
period............................ -- -- -- -- -- --
------ ------- ------ ------ ------- ------
NET ASSETS, at end of the year...... $4,962 $12,011 $4,913 $7,233 $11,628 $7,184
====== ======= ====== ====== ======= ======
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
MML Bay State Variable Annuity Separate Account 1
Notes To Financial Statements
1. HISTORY
MML Bay State Variable Annuity Separate Account 1 ("Separate Account 1") is
a separate investment account established on January 14, 1994 by MML Bay
State Life Insurance Company ("MML Bay State"). Separate Account 1 operates
as a registered unit investment trust pursuant to the Investment Company Act
of 1940 and the rules promulgated thereunder.
On November 15, 1994, MML Bay State paid $60,000 to provide the initial
capital for Separate Account 1's twelve divisions: 14,099 shares were
purchased in the two management investment companies described in Note 2.
On July 5, 1995, MML Bay State paid $5,000 to establish Separate Account 1's
thirteenth division: 500 shares were purchased in the Growth & Income
Division of the Oppenheimer Variable Account Fund described in Note 2.
2. INVESTMENT OF THE SEPARATE ACCOUNT 1 ASSETS
Separate Account 1 maintains thirteen divisions. Each division invests in
corresponding shares of either MML Series Investment Trust ("MML Trust") or
Oppenheimer Variable Account Funds ("Oppenheimer Trust").
MML Equity Fund, MML Money Market Fund, MML Managed Bond Fund and MML Blend
Fund are the four series of shares of MML Trust. The MML Trust is a no-load,
registered, open-end, diversified management investment company for which
Massachusetts Mutual Life Insurance ("MassMutual") acts as investment
manager. Concert Capital Management, Inc. ("Concert Capital"), a wholly-
owned subsidiary of DLB Acquisition Corporation, which is a controlled
subsidiary of MassMutual, serves as investment sub-advisor to the MML Equity
Fund and the Equity Sector of the MML Blend Fund.
Oppenheimer Money Fund, Oppenheimer High Income Fund, Oppenheimer Bond Fund,
Oppenheimer Capital Appreciation Fund, Oppenheimer Growth Fund, Oppenheimer
Multiple Strategies Fund, Oppenheimer Global Securities Fund, Oppenheimer
Strategic Bond Fund and Oppenheimer Growth & Income Fund (the "Oppenheimer
Funds") are the nine separate funds of the Oppenheimer Trust. The
Oppenheimer Trust is a registered, open-end, diversified management
investment company for which Oppenheimer Management Corporation ("OMC") acts
as investment advisor (effective January 5, 1996, the name of OMC was
changed to OppenheimerFunds, Inc.).
In addition to the thirteen divisions of Separate Account 1, a
contractowner, in certain states, may also allocate funds to the Fixed
Account. Proceeds from the Fixed Account will be deposited in a non-unitized
segment of MML Bay State's general account organized as a separate account
for accounting purposes. The interests in the Fixed Account are registered
under the Securities Act of 1933.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
consistently by Separate Account 1 in preparation of the financial
statements in conformity with generally accepted accounting principles.
A. Investment Valuation
The investments in the MML Trust and the Oppenheimer Trust are each stated
at market value which is the net asset value of each of the respective
underlying funds.
B. Accounting for Investments
Investment transactions are accounted for on trade date and identified cost
is the basis followed in determining the cost of investments sold for
financial statement purposes. Dividend income is recorded on the ex-dividend
date.
C. Federal Income Taxes
Operations of Separate Account 1 form a part of the total operations of MML
Bay State, and Separate Account 1 is not taxed separately. MML Bay State is
taxed as a life insurance company under the provisions of the 1986 Internal
Revenue Code, as amended. Separate Account 1 will not be taxed as a
"regulated investment company" under Subchapter M of the Internal Revenue
Code. Under existing federal law, no taxes are payable on investment income
and realized capital gains attributable to Contracts which depend on
Separate Account 1's investment performance. Accordingly, no provision for
federal income tax has been made. MML Bay State may, however, make such a
charge in the future if an unanticipated change of current law results in a
company tax liability attributable to Separate Account 1.
7
<PAGE>
Notes To Financial Statements (Continued)
D. Annuity Reserves
Since all contracts are in the accumulation phase, Separate Account 1 has
not recorded any annuity reserves at December 31, 1995.
E. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
4. CHARGES
An asset charge is computed against the net asset value of Separate Account
1's assets ("Net Asset Value"). The asset charge is equivalent on an
annual basis to 1.40% of the Net Asset Value. The mortality and expense risk
part of this charge is made daily at an annual rate which is currently equal
to 1.15%, and will not exceed 1.25% of the Net Asset Value. The
administrative expense part of the charge is made daily at an annual rate of
0.l5%. The third component of the asset charge is a charge of 0.10% of the
Net Asset Value assessed to reimburse MML Bay State for the cost of
providing the enhanced death benefit under the contract. MML Bay State also
charges for administrative costs and may impose a contingent deferred sales
charge and a premium tax charge upon redemption, maturity or annuitization.
5. CHARGES/DEDUCTIONS FOR ADMINISTRATIVE CHARGES, CONTINGENT DEFERRED SALES
CHARGES AND PREMIUM TAXES
<TABLE>
<CAPTION>
Administrative
Charges and
For the Year Ended December 31, 1995 and Net Contingent
*For the Period July 3, 1995 (Date of Commencement Contract Deferred
of Operations) through December 31, 1995 Payments Sales Charges
- -------------------------------------------------- -------- --------------
<S> <C> <C>
MML Equity Division............................... $ 608,861 $ --
MML Money Market Division......................... 2,267,770 --
MML Managed Bond Division......................... 267,005 --
MML Blend Division................................ 837,480 --
Oppenheimer Money Division........................ 2,040,439 --
Oppenheimer High Income Division.................. 1,453,537 3
Oppenheimer Bond Division......................... 858,539 4
Oppenheimer Capital Appreciation Division......... 2,310,277 25
Oppenheimer Growth Division....................... 2,984,873 20
Oppenheimer Multiple Strategies Division.......... 2,112,398 19
Oppenheimer Global Securities Division............ 2,350,570 54
Oppenheimer Strategic Bond Division............... 3,577,773 25
*Oppenheimer Growth & Income Division............. 1,267,067 --
</TABLE>
6. PURCHASES AND SALES OF INVESTMENTS
<TABLE>
<CAPTION>
For the Year Ended December 31, 1995 and
*For the Period July 3, 1995 (Date of Commencement Cost of Proceeds
of Operations) through December 31, 1995 Purchases from Sales
- -------------------------------------------------- --------- ----------
<S> <C> <C>
MML Equity Fund................................... $ 1,022,250 $ 226,071
MML Money Market Fund............................. 2,456,572 1,602,106
MML Managed Bond Fund............................. 389,381 21,633
MML Blend Fund.................................... 995,046 102,131
Oppenheimer Money Fund............................ 2,865,409 1,801,426
Oppenheimer High Income Fund...................... 2,026,036 298,994
Oppenheimer Bond Fund............................. 1,087,550 105,869
Oppenheimer Capital Appreciation Fund............. 2,728,125 144,597
Oppenheimer Growth Fund........................... 3,632,396 320,433
Oppenheimer Multiple Strategies Fund.............. 2,711,607 228,640
Oppenheimer Global Securities Fund................ 2,719,997 175,414
Oppenheimer Strategic Bond Fund................... 4,236,940 447,114
*Oppenheimer Growth & Income Fund................. 1,741,063 75,124
</TABLE>
8
<PAGE>
Notes To Financial Statements (Continued)
7. NET INCREASE IN ACCUMULATION UNITS
<TABLE>
<CAPTION>
For the Year Ended December 31, 1995 MML MML Oppenheimer
and * For the Period July 3, 1995 MML Money Managed MML Oppenheimer High Oppenheimer
(Date of Commencement of Operations) Equity Market Bond Blend Money Income Bond
Through December 31, 1995 Division Division Division Division Division Division Division
- --------------------------- ---------- ---------- ---------- ---------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units transferred from MML Bay
State for initial capital..... -- -- -- -- -- -- --
Units purchased................ 520,950 2,202,247 238,058 727,509 1,998,497 1,342,772 787,070
Units withdrawn................ (4,446) -- -- (1,793) (45,282) (16,193) (2,570)
Units transferred
between divisions............. 164,460 (1,379,403) 85,456 47,813 (934,817) 185,259 93,671
-------- ----------- -------- -------- ---------- ---------- --------
Net increase................... 680,964 822,844 323,514 773,529 1,018,398 1,511,838 878,171
Units, at beginning
of the year................... 5,000 16,949 5,000 5,000 5,000 6,184 5,000
-------- ----------- -------- -------- ---------- ---------- --------
Units, at end
of the year.................... 685,964 839,793 328,514 778,529 1,023,398 1,518,022 883,171
======== =========== ======== ======== ========== ========== ========
<CAPTION>
For the Year Ended December 31, 1995 Oppenheimer Oppenheimer Oppenheimer Oppenheimer
and * For the Period July 3, 1995 Capital Oppenheimer Multiple Global Strategic *Oppenheimer
(Date of Commencement of Operations) Appreciation Growth Strategies Securities Bond Growth & Income
Through December 31, 1995 Division Division Division Division Division Division
- --------------------------- -------------- ------------- ------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Units transferred from MML Bay
State for initial capital..... -- -- -- -- -- 5,000
Units purchased................ 2,005,234 2,476,030 1,897,779 2,476,370 3,424,590 1,126,147
Units withdrawn................ (4,047) (60,937) (13,901) (10,524) (14,833) (2,890)
Units transferred
between divisions............. 241,358 342,891 298,957 220,150 73,960 379,583
---------- ---------- ---------- ---------- ---------- ----------
Net increase................... 2,242,545 2,757,984 2,182,835 2,685,996 3,483,717 1,507,840
Units, at beginning
of the year................... 12,000 5,000 7,339 12,367 7,314 --
---------- ---------- ---------- ---------- ---------- ----------
Units, at end
of the year................... 2,254,545 2,762,984 2,190,174 2,698,363 3,491,031 1,507,840
========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
MML MML Oppenheimer
For the Period Ended November 14, 1994 MML Money Managed MML Oppenheimer High Oppenheimer
(Date of Commencement of Operations) Equity Market Bond Blend Money Income Bond
Through December 31, 1994 Division Division Division Division Division Division Division
- --------------------------- ---------- ---------- ---------- ---------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units transferred from MML
Bay State for initial capital. 5,000 5,000 5,000 5,000 5,000 5,000 5,000
Units purchased................ -- 11,949 -- -- -- 1,184 --
---------- ---------- ---------- ---------- ------------- ------------ -------------
Net increase................... 5,000 16,949 5,000 5,000 5,000 6,184 5,000
Units, at beginning
of the period................. -- -- -- -- -- -- --
---------- ---------- ---------- ---------- ------------- ------------ -------------
Units, at end
of the year................... 5,000 16,949 5,000 5,000 5,000 6,184 5,000
========== ========== ========== ========== ============= ============ =============
<CAPTION>
Oppenheimer Oppenheimer Oppenheimer Oppenheimer
For the Period Ended November 14, 1994 Capital Oppenheimer Multiple Global Strategic
(Date of Commencement of Operations) Appreciation Growth Strategies Securities Bond
Through December 31, 1994 Division Division Division Division Division
- --------------------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Units transferred from MML
Bay State for initial capital. 5,000 5,000 5,000 5,000 5,000
Units purchased................ 7,000 -- 2,339 7,367 2,314
-------------- ------------- ------------- ------------- -------------
Net increase................... 12,000 5,000 7,339 12,367 7,314
Units, at beginning
of the period................. -- -- -- -- --
-------------- ------------- ------------- ------------- -------------
Units, at end
of the year................... 12,000 5,000 7,339 12,367 7,314
============== ============= ============= ============= =============
</TABLE>
8. DISTRIBUTION AGREEMENT
Notes to Financial Statements (continued)
MML Investors Services, Inc. ("MMLISI"), a wholly-owned subsidiary of
MassMutual, acts as the principal underwriter of the Contracts. MMLISI is
registered as a broker-dealer under the Securities Exchange Act of 1934 and
is a member of the National Association of Securities Dealers, Inc. The
Contracts are sold by registered representatives of MMLISI who are also
insurance agents of MassMutual under state insurance law. Additionally,
Contracts are offered by independent broker-dealers through the distribution
network of Oppenheimer Funds Distributor, Inc. ("OFDI"), a subsidiary of
OMC. OFDI and MMLISI have entered into an agreement pursuant to which OFDI
has agreed to promote sales of the product through wholesale distribution
arrangements with such broker-dealers.
Offered through MML Investors Services, Inc., Springfield, Massachusetts, and
Oppenheimer Funds Distributor, Inc., Denver, Colorado.
9
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
---------------
AUDIT OF FINANCIAL STATEMENTS
for the years ended December 31, 1995, 1994 and 1993
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
MML Bay State Life Insurance Company
We have audited the statement of financial position of MML Bay State Life
Insurance Company as of December 31, 1995 and 1994, and the related statements
of operations, changes in shareholder's equity, and cash flows for each of the
years in the three year period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of MML Bay State Life Insurance
Company as of December 31, 1995 and 1994, and the results of its operations and
its cash flows for each of the years in the three year period ended December 31,
1995, in conformity with generally accepted accounting principles.
As discussed in Notes 2 and 3 to the financial statements, during 1995 and
1994 the Company recorded prior year adjustments through the Statement of
Changes in Shareholder's Equity.
As discussed in Note 7 to the financial statements, the parent company of
MML Bay State Life Insurance Company, Massachusetts Mutual Life Insurance
Company, has entered into a definitive agreement to merge with Connecticut
Mutual Life Insurance Company.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedule of selected financial
data on page 14 is not a required part of the basic financial statements but is
supplementary information required by the National Association of Insurance
Commissioners. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
Springfield, Massachusetts
February 23, 1996
1
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
1995 1994
-------- --------
(In Thousands)
<S> <C> <C>
Assets:
Bonds $ 41,260.6 $ 52,336.9
Policy loans 6,444.9 3,918.0
Cash and short-term investments 490.5 950.0
Investment and insurance amounts receivable 1,268.0 1,245.3
Receivable from separate account 29,015.6 21,108.0
Federal income tax receivable 215.5 0.0
Other assets 109.8 80.1
Separate account assets 265,188.5 151,057.9
---------- ----------
$343,993.4 $230,696.2
========== ==========
Liabilities:
Policyholders' reserves and funds $ 19,095.9 $ 11,826.7
Policy claims and other benefits 1,507.6 166.0
Payable to parent 3,165.2 4,368.2
Federal income taxes 0.0 803.2
Asset valuation reserve 153.8 106.8
Other liabilities 6,894.2 8,369.6
Separate account reserves and liabilities 262,833.9 149,092.7
---------- ----------
293,650.6 174,733.2
---------- ----------
Shareholder's equity:
Common stock, $200 par value
25,000 shares authorized
10,001 shares issued and outstanding 2,000.2 2,000.2
Paid-in capital and contributed surplus 46,736.9 46,736.9
Surplus 1,605.7 7,225.9
---------- ----------
50,342.8 55,963.0
---------- ----------
$343,993.4 $230,696.2
========== ==========
</TABLE>
See notes to financial statements.
2
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994 1993
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Income:
Premium income $92,732.8 $54,481.4 $43,469.2
Net investment and other income 4,305.8 3,531.8 2,898.8
Expense allowance on reinsurance ceded 526.5 132.4 3,776.2
--------- --------- ---------
97,565.1 58,145.6 50,144.2
--------- --------- ---------
Benefits and expenses:
Policy benefits and payments 5,691.0 2,939.9 2,178.5
Addition to policyholders' reserves, funds
and separate accounts 66,974.4 30,422.1 27,192.4
Operating expenses 11,222.9 11,960.6 8,956.8
Commissions 15,072.4 10,747.5 8,264.8
State taxes, licenses and fees 2,546.8 1,405.1 1,603.4
--------- --------- ---------
101,507.5 57,475.2 48,195.9
--------- --------- ---------
Net gain (loss) from operations
before federal income taxes (3,942.4) 670.4 1,948.3
Federal income taxes (benefit) 632.8 (934.8) 1,283.1
--------- --------- ---------
Net gain (loss ) from operations (4,575.2) 1,605.2 665.2
Net realized capital loss (42.8) (24.4) (19.3)
--------- --------- ---------
Net income (loss) $(4,618.0) $ 1,580.8 $ 645.9
========= ========= =========
</TABLE>
See notes to financial statements.
3
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994 1993
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Shareholder's equity, beginning of year $55,963.0 $33,396.9 $32,774.5
--------- --------- ---------
Increases (decrease) due to:
Net income (loss) (4,618.0) 1,580.8 645.9
Additions to asset valuation reserve (47.0) (43.3) (29.4)
Change in separate account surplus 344.2 108.6 5.9
Surplus contribution 0.0 25,000.0 0.0
Prior year adjustment (1,299.4) (4,101.5) 0.0
Change in accounting for mortgage backed
securities 0.0 21.5 0.0
--------- --------- ---------
(5,620.2) 22,566.1 622.4
--------- --------- ---------
Shareholder's equity, end of year $50,342.8 $55,963.0 $33,396.9
========= ========= =========
</TABLE>
See notes to financial statements.
4
<PAGE>
MML BAY STATE LIFE INSURANCE COMPANY
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994 1993
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Operating activities:
Net income (loss) $(4,618.0) $ 1,580.8 $ 645.9
Additions to policyholders' reserves,
funds, and net of transfers to
separate accounts 8,610.8 2,064.6 2,001.9
Net realized capital (gain) loss 42.8 24.4 19.3
Change in receivable from separate
accounts (7,907.6) (6,456.2) (6,148.2)
Change in receivable (payable) from
parent (1,203.0) 5,145.0 1,352.4
Change in federal taxes receivable
(payable) (1,018.7) (910.3) (1,335.4)
Other changes (2,543.9) (1,178.9) 1,898.4
--------- --------- ---------
Net cash provided by (used in)
operating activities (8,637.6) 269.4 (1,565.7)
--------- --------- ---------
Investing activities:
Loans and purchases of investments 28,440.1 43,275.8 20,020.2
Sales or maturities of investments and
receipts from repayments of loans 36,618.2 18,455.4 20,711.1
--------- --------- ---------
Net cash provided by (used in)
investing activities 8,178.1 (24,820.4) 690.9
--------- --------- ---------
Financing activity:
Surplus contribution 0.0 25,000.0 0.0
--------- --------- ---------
Net cash provided by financing
activities 0.0 25,000.0 0.0
--------- --------- ---------
Increase (decrease) in cash and
short-term investments (459.5) 449.0 (874.8)
Cash and short-term investments,
beginning of year 950.0 501.0 1,375.8
--------- --------- ---------
Cash and short-term investments, end of
year $ 490.5 $ 950.0 $ 501.0
========= ========= =========
</TABLE>
See notes to financial statements.
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Operations
MML Bay State Life Insurance Company ("the Company") is a wholly-owned
subsidiary of Massachusetts Mutual Life Insurance Company ("MassMutual").
The Company's insurance operation consists primarily of flexible and limited
premium variable whole life insurance and variable annuities distributed
through career agents.
2. Summary of Accounting Practices
The accompanying financial statements, except as to form, have been prepared
in conformity with the practices of the National Association of Insurance
Commissioners and the accounting practices prescribed or permitted by the
Division of Insurance of the State of Missouri which are currently
considered generally accepted accounting principles for stock life insurance
subsidiaries of a mutual life insurance company.
The Financial Accounting Standards Board, which has no role in establishing
regulatory accounting practices, issued Interpretation 40, Applicability of
Generally Accepted Accounting Principles to Mutual Life Insurance and Other
Enterprises, and Statement of Financial Accounting Standards No. 120,
Accounting and Reporting by Mutual Life Insurance Enterprises and by
Insurance Enterprises for Certain Long-Duration Participating Contracts. The
American Institute of Certified Public Accountants, which also has no role
in establishing regulatory accounting practices, issued Statement of
Position 95-1, Accounting for Certain Insurance Activities of Mutual Life
Insurance Enterprises. These pronouncements will require mutual life
insurance companies to modify their financial statements in order to
continue to be in accordance with generally accepted accounting principles,
effective for 1996 financial statements. The manner in which policy
reserves, new business acquisition costs, asset valuations and related tax
effects are recorded will change. Management has not determined the impact
of such changes on the Company's Statement of Operations, but believes
implementation of these pronouncements will cause shareholders' equity to
increase.
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, as well as disclosures of contingent assets and liabilities at
the date of the financial statements. Management must also make estimates
and assumptions that affect the amounts of revenues and expenses during the
reporting period. Future events, including the levels of mortality,
morbidity, interest rates and asset valuations, could cause actual results
to differ from the estimates used in these financial statements.
The following is a description of the Company's current principal accounting
policies and practices.
a. Investments
Bonds are valued in accordance with rules established by the National
Association of Insurance Commissioners. Generally, bonds are valued at
amortized cost.
As promulgated by the National Association of Insurance Commissioners,
the Company adopted the retrospective method of accounting for
amortization of premium and discount on
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
mortgage backed securities as of December 31, 1994. Prepayment
assumptions for mortgage backed securities were obtained from a
prepayment model, which factors in mortgage type, seasoning, coupon,
current interest rate and the economic environment. The effect of this
change, $21.5 thousand, was recorded as of December 31, 1994 as an
increase to shareholders' equity on the Statement of Financial Position
and had no material effect on 1995 net income. Through December 31,
1994, premium and discount on bonds were amortized into investment
income over the stated lives of the securities.
Policy loans are carried at the outstanding loan balance less amounts
unsecured by the cash surrender value of the policy. Short-term
investments are stated at amortized cost, which approximates fair value.
In compliance with regulatory requirements, the Company maintains an
Asset Valuation Reserve and an Interest Maintenance Reserve. The Asset
Valuation Reserve stabilizes the shareholders' equity against declines
in the value of bonds.
The Interest Maintenance Reserve captures after-tax realized capital
gains and losses which result from changes in the overall level of
interest rates for all types of fixed income investments and amortizes
these capital gains and losses into income using the grouped method over
the remaining life of the investment sold or over the remaining life of
the underlying asset. Net realized after tax capital gains of $250.2
thousand in 1995 and net realized after tax capital losses of $7.0
thousand in 1994 and net realized after-tax capital gains of $53.5
thousand in 1993 were charged to the Interest Maintenance Reserve.
Amortization of the Interest Maintenance Reserve into net investment
income amounted to $42.1 thousand in 1995, $86.9 thousand in 1994 and
$99.8 thousand in 1993. The Interest Maintenance Reserve is included in
other liabilities on the Statement of Financial Position.
Realized capital gains and losses, less taxes, not includable in the
Interest Maintenance Reserve, are recognized in net income. Realized
capital gains and losses are determined using the specific
identification method. Unrealized capital gains and losses are included
in shareholders' equity.
b. Separate Accounts
Separate account assets and liabilities represent segregated funds
administered and invested by the Company for the benefit of variable
life insurance policyholders. Assets, consisting of holdings in an open-
end series investment fund affiliated with MassMutual, bonds, common
stocks, and short-term investments, are reported at fair value. Separate
account reserves and liabilities are determined based upon the
performance of the related assets within the separate account. Premiums,
benefits and expenses of the separate accounts are reported on the
Statement of Operations. The Company receives compensation for providing
administrative services to the separate account and for assuming
mortality and expense risks in connection with the policies. The Company
had $2,354.6 thousand and $1,965.3 thousand of its assets invested in
the separate account as of December 31, 1995 and 1994, respectively.
The net transfers to separate accounts of $59,792.6 thousand, $28,141.7
thousand and $25,216.2 thousand in 1995, 1994 and 1993, respectively,
are included in addition to
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
policyholders' reserves, funds and separate accounts.
c. Policyholders' Reserves
Policyholders' reserves for life contracts were developed using accepted
actuarial methods computed principally on the net level premium and the
Commissioners' Reserve Valuation Method bases using the 1958 and 1980
Commissioners' Standard Ordinary mortality tables with assumed interest
rates ranging from 3.5 to 5.5 percent. Reserves for individual annuities
are based on accepted actuarial methods, principally at interest rates
ranging from 5.5 to 6.0 percent.
During 1994, actuarial guidelines became effective, requiring additional
reserves for immediate payment of claims. While the Company's aggregate
reserves were sufficient, the reserves for certain products were not
recorded. The effect of correctly recording these reserves was $1,299.4
thousand at December 31, 1994 and was recorded as an adjustment to
shareholders' equity during 1995.
d. Premium and Related Expense Recognition
Premium revenue is recognized annually on the anniversary date of the
policy. Commissions and other costs related to issuance of new policies,
maintenance and settlement costs are charged to current operations.
e. Cash and Short-Term Investments
For purposes of the Statement of Cash Flows, the Company considers all
highly liquid short-term investments purchased with a maturity of three
months or less to be cash equivalents.
3. Related Party Transactions
Investment and administrative services are provided to the Company pursuant
to a management services agreement with MassMutual. Service fees are accrued
based upon estimated costs and are billed the following period, when actual
costs are available. Fees incurred under the terms of this agreement were
$6,588.1 thousand, $7,762.9 thousand and $5,941.6 thousand in 1995, 1994 and
1993, respectively.
The Company had reinsurance agreements with MassMutual in which MassMutual
assumed specific plans of insurance on a coinsurance basis and on a yearly
renewal term basis. The coinsurance agreement was terminated in 1995. A
termination fee of $6,200.0 thousand was recorded as an expense and paid to
MassMutual for the rights to retain future fees and charges on the
reinsurance business. While the agreement was in effect, the Company ceded
premiums amounting to $29,597.0 thousand, $26,115.1 thousand and $21,862.4
thousand in 1995, 1994 and 1993, respectively. Additionally, the Company
ceded administrative and insurance charges of $4,310.3 thousand in 1995,
$4,208.3 thousand in 1994 and $1,845.0 thousand in 1993 for policies issued
in those years. The Company received $4,836.8 thousand, $8,434.7 thousand
and $5,621.2 thousand in 1995, 1994 and 1993, respectively, as commissions
and an expense allowance. Reserves on all business ceded amounted to
$8,027.9 thousand in 1995, immediately preceding the termination, which
reduced policyholders' reserves and funds. The Company's separate accounts
retained the assets applicable to variable life reserves of the policies
reinsured under the agreement with MassMutual. Premium income and the
expense allowance on
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
reinsurance ceded differ from annual statement presentation.
A provision in the Company's coinsurance agreement with MassMutual required
surrender charge offsets to be included in the ceding provisions of the
reinsurance contract with MassMutual. This surrender charge offset, inherent
in the reserve calculations of the separate account liabilities, is
considered funds which would be due to the general account of MassMutual if
the life policies were surrendered. During 1993, this provision was
incorrectly excluded from amounts recorded for the contract. The effect of
correctly recording this provision was $4,101.5 thousand at December 31,
1993 and was recorded as an adjustment to shareholders' equity during 1994.
The effects of this adjustment in 1994 were included in the expense
allowance on reinsurance ceded and all related tax benefits were recorded in
1995 and 1994 on the Statement of Operations in accordance with the
accounting practices of the National Association of Insurance Commissioners.
During 1994, MassMutual contributed additional paid in capital of $25,000.0
thousand to the Company.
4. Federal Income Taxes
Provision for federal income taxes is based upon the Company's best estimate
of its tax liability. No deferred tax effect is recognized for temporary
differences that may exist between financial reporting and taxable income.
Accordingly, the reporting of equity tax, using most current information,
and other miscellaneous temporary differences, such as reserves and
acquisition costs, resulted in an effective tax rate which is other than the
statutory tax rate.
The Internal Revenue Service has completed examining the Company's income
tax returns through the year 1989, and is currently examining the years 1990
through 1992. The Company believes any adjustments resulting from such
examinations will not materially affect its financial statements.
The Company plans to file its 1995 federal income tax return on a
consolidated basis with MassMutual and MassMutual's other life and non-life
affiliates. The Company and its life and non-life affiliates are subject to
a written tax allocation agreement which allocates tax liability in a manner
permitted under Treasury regulations. Generally, the agreement provides that
loss members shall be compensated for the use of their losses and credits by
other members.
The Company made federal tax payments of $1,892.0 thousand during 1995 and
$2,696.5 thousand during 1993. No federal tax payments were made during
1994. At December 31, 1995 and 1994, the Company established a recoverable
for federal income taxes of $215.5 thousand and a liability of $803.2
thousand, respectively.
5. Investments
The Company maintains as diversified investment portfolio. Investment
policies limit concentration in any asset class, geographic region, industry
group, economic characteristic, investment quality or individual investment.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
a. Bonds
The carrying value and estimated fair value of bonds are as follows:
<TABLE>
<CAPTION>
December 31, 1995
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
--------- ---------- ---------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
U. S. Treasury Securities $ 7,929.3 $107.8 $ 1.0 $ 8,036.1
and Obligations of U. S.
Government Corporations
and Agencies
Mortgage-backed securities 11,979.4 114.9 35.9 12,058.4
Industrial securities 21,351.9 684.2 1.7 22,034.4
--------- ------ ---- ---------
TOTAL $41,260.6 $906.9 $38.6 $42,128.9
<CAPTION>
December 31, 1994
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
--------- ---------- ---------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
U. S. Treasury Securities $36,162.6 $1.7 $ 974.3 $35,190.0
and Obligations of U. S.
Government Corporations
and Agencies
Debt Securities issued by 494.4 0.0 68.6 425.8
Foreign Governments
Industrial securities 15,179.9 0.0 439.9 14,740.0
Utilities 500.0 0.0 4.7 495.3
--------- ---- -------- ---------
TOTAL $52,336.9 $1.7 $1,487.5 $50,851.1
</TABLE>
The carrying value and estimated fair value of bonds at December 31, 1995 by
contractual maturity are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
<TABLE>
<CAPTION>
Estimated
Carrying Fair
Value Value
--------- ---------
(In Thousands)
<S> <C> <C>
Due in one year or less $ 2,065.0 $ 2,076.4
Due after one year through five years 9,637.9 10,010.1
Due after five years through ten years 7,140.6 7,301.7
Due after ten years 7,000.0 7,216.3
--------- ---------
25,843.5 26,604.5
Mortgage-backed securities, including securities
guaranteed by the U.S. Government 15,417.1 15,524.4
--------- ---------
TOTAL $41,260.6 $42,128.9
</TABLE>
Proceeds from sales of investments in bonds were $36,584.5 thousand
during 1995, $17,742.4 thousand during 1994 and $20,374.8 thousand
during 1993. Gross capital gains of $535.0 thousand in 1995, $44.5
thousand in 1994 and $154.5 thousand in 1993 and gross capital losses of
$87.0 thousand in 1995, $52.3 thousand in 1994 and $42.5 thousand in
1993 were realized on those sales, as portion of which were included in
the Interest Maintenance Reserve. The estimated fair value of non-
publicly traded bonds is determined by the Company using as pricing
matrix.
b. Other
It is not practicable to determine the fair value of policy loans which
do not have a stated maturity.
6. Liquidity
The withdrawal characteristics of the policyholders' reserves and funds,
including separate accounts, and the invested assets which support them at
December 31, 1995 are illustrated below:
<TABLE>
(In Thousands)
<S> <C> <C>
Total policyholders' reserves and funds and
separate account liabilities $281,929.8
Policy loans (6,444.9)
----------
Subject to discretionary withdrawal $275,484.9
----------
Total invested assets, including separate
investment accounts $313,384.4
Policy loans and other invested assets (6,444.9)
----------
Readily marketable investments $306,939.5
----------
</TABLE>
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
7. Subsequent Event
The Company's parent, MassMutual, entered into a definitive agreement to
merge with Connecticut Mutual Life Insurance Company. This merger has been
approved by the Boards of Directors and policyholders of MassMutual and
Connecticut Mutual Life Insurance Company, as well as by the insurance
regulatory authorities in Massachusetts and Connecticut. This merger will be
effective March 1, 1996.
8. Affiliated Companies
The relationship of the Company, its parent and affiliated companies as of
December 31, 1995 is illustrated below.
Parent
------
Massachusetts Mutual Life Insurance Company
Subsidiaries
------------
MML Bay State Life Insurance Company
MassMutual Holding Company
MassMutual Holding Company Two, Inc.
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
Subsidiaries of MassMutual Holding Company
------------------------------------------
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation
MML Investors Services, Inc.
MML Real Estate Corporation (liquidated in 1995)
MML Realty Management Corporation
MML Reinsurance (Bermuda) Ltd.
Mass Seguros De Vida S. A. (Chile)
MassLife Seguros De Vida S. A. (Argentina)
MassMutual/Carlson CBO N.V.
MassMutual Corporate Value Limited
MassMutual International (Bermuda) Limited
Oppenheimer Acquisition Corporation
Westheimer 335 Suites, Inc.
Subsidiaries of DLB Acquisition Corporation
-------------------------------------------
Concert Capital Management, Inc.
Subsidiaries of MassMutual Corporate Value Limited
--------------------------------------------------
MassMutual Corporate Value Partners Limited
Subsidiaries of MassMutual Holding Company Two, Inc.
----------------------------------------------------
MassMutual Holding Company Two MSC, Inc.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
Subsidiaries of MassMutual Holding Company Two MSC, Inc.
--------------------------------------------------------
Benefit Panel Services, Inc.
MML Pension Insurance Company
MassMutual of Ireland, Limited
National Capital Health Plan, Inc.
National Capital Preferred Provider Organization
Sloans Lake Management Corporation
Affiliates
- ----------
MassMutual Corporate Investors
MassMutual Participation Investors
13
<PAGE>
MML Bay State Life Insurance Company
Annual Statement for the Year Ended December 31, 1995
Schedule of Selected Financial Data
<TABLE>
<S> <C>
Investment Income Earned:
Government bonds $ 2,025,039
Other bonds (unaffiliated) 1,203,885
Premium notes, policy loans and liens 308,753
Short-term investments 100,168
Aggregate write-ins for investment income 4,337
-----------
$ 3,642,182
===========
Bonds and short-term investments by class and maturity:
Bonds and short-term investments by maturity - statement value:
Due within one year $10,974,222
Over 1 year through 5 years 16,440,536
Over 5 years through 10 years 10,158,347
Over 10 years through 20 years 3,987,412
-----------
Total by maturity $41,560,517
===========
Bonds and short-term investments by class - statement value:
Class 1 $37,908,001
Class 2 3,652,516
-----------
Total by class $41,560,517
===========
Total bonds and short-term investments publicly traded $40,560,517
===========
Total bonds and short-term investments privately placed $ 1,000,000
===========
Short-term investments - book value $ 299,938
===========
Cash on deposit $ 190,522
===========
Life insurance in force (in thousands):
Ordinary $ 6,553,122
===========
Group Life $ 383,725
===========
Life insurance policies with disability provisions in force (in
thousands): Ordinary $ 2,535,574
===========
Supplementary contracts in force:
Ordinary - not involving life contingencies:
Amount on deposit $ 67,712
===========
</TABLE>
14
<PAGE>
PART C
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
Financial Statements Included in Part A
---------------------------------------
Condensed Financial Information
Financial Statements Included in Part B
---------------------------------------
The Registrant
--------------
Report of Independent Accountants
Statement of Assets and Liabilities as of
December 31, 1995
Statement of Operations for the year ended
December 31, 1995
Statement of Changes in Net Assets for the years ended
December 31, 1995 and 1994
Notes to Financial Statements
The Depositor
-------------
Report of Independent Accountants
Supplemental Statement of Financial Position as of
December 31, 1995 and 1994
Supplemental Statement of Income for the years ended
December 31, 1995, 1994 and 1993
Supplemental Statement of Changes in Shareholders Equity
for the years ended December 31, 1995, 1994 and 1993
Supplemental Statement of the Cash flows for the years ended
December 31, 1995, 1994 and 1993
Notes to Supplemental Financial Statements
(b) Exhibits:
Exhibit 1 - Copy of Resolution of the Executive Committee of the
Board of Directors of MML Bay State Life Insurance
Company authorizing the establishment of the
Registrant.*
Exhibit 2 - None
<PAGE>
Exhibit 3 - (i)(a) Form of Distribution Agreement
between the Registrant and MML Distributors, LLC
(i)(b) Form of Co-Underwriting Agreement between the
Registrant and MML Investors Services, Inc.
Exhibit 4 - Copy of the form of Life Trust Variable
Annuity Contract.*
Exhibit 5 - The form of Application to be used with the Life Trust
Variable Annuity Contract described in Exhibit 4 above.*
Exhibit 6 - (i) Copy of the Articles of Incorporation
of MML Bay State Life Insurance Company.*
(ii) By-laws of MML Bay State Life Insurance Company.*
Exhibit 7 - None
Exhibit 8 - None
Exhibit 9 - Opinion of and Consent of Counsel.*
Exhibit 10 - Written consent of Coopers & Lybrand
L.L.P., independent accountants.
Exhibit 11 - None
Exhibit 12 - None
Exhibit 13 - Schedule of Computation of Performance
Exhibit 15 - Powers of Attorney
Exhibit 27 - Financial Data Schedule
* Incorporated by reference pursuant to Rule 411 of the Securities Act,
previously filed as part of Registration Statement No. 33-76920 filed on March
25, 1994.
Item 25. Directors and Executive Officers of MML Bay State
-------------------------------------------------
The directors and executive vice presidents of MML Bay State, their
positions and their other business affiliations and business
experience for the past two years are as follows:
<PAGE>
Directors:
Paul D. Adornato
Director (since 1987), MML Bay State; Senior Vice President (since 1986),
MassMutual; Director (1987-1991), MML Life Insurance Company; Director (1987-
1994), MML Pension Insurance Company; Chief Executive Officer (since 1994) and
Director (since 1993), MML Insurance Agency, Inc.; Chief Executive Officer
(since 1994) and Director (since 1993), MML Insurance Agency of Ohio, Inc.;
Director (since 1989), MML Investors Services, Inc.
Donald D. Cameron
Director (since 1993) and Senior Vice President-Corporate Marketing (since
1991), MML Bay State; Senior Vice President (since 1987), MassMutual; Director
(since 1986), MML Investors Services, Inc.
Daniel J. Fitzgerald
Director (since 1994), President and Chief Executive Officer (1991-1993) and
President (1987-1990), MML Bay State; Executive Vice President (since 1994),
Senior Vice President (1991-1994), Vice President and Controller (1986-1991),
MassMutual; Vice President (since 1994) and Director (since 1993), MassMutual
Holding Company; Director (1987-1991) and President (1987-1990), MML Life
Insurance Company; Director (1992-1993), MML Life Insurance Agency, Inc.;
Director and President (1987-1990), Bay Colony of Arizona; Director and
President (1987-1990), Bay Colony of Vermont, Inc.; Director (since 1994),
Cornerstone Real Estate Advisers, Inc.; Director (since 1994), MML Investors
Services, Inc.; Director (1994-1995), MML Real Estate Corporation; Director
(since 1994), MML Realty Management Corporation; Director (since 1994),
MassMutual of Ireland, Inc.; Director and President (1987-1990), Mass Life
Insurance Company of New York; Director (since 1993), Concert Capital
Management, Inc.; Director (since 1995), DLB Acquisition Corporation; Director
(since 1994, 1987-1993), Chief Executive Officer (1991-1993), President (1987-
1990), MML Pension Insurance Company; Director and Vice President (since 1994),
MassMutual Holding Company Two, Inc.; Director and Vice President (since 1994),
MassMutual Holding Company Two MSC, Inc.
<PAGE>
Arthur D. Foresi
Director (since 1994), MML Bay State; Vice President (since 1991) and Second
Vice President (1987-1991), MassMutual; Director (1993-1994), MML Pension
Insurance Company.
Gary T. Huffman
Director (since 1994), MML Bay State; Senior Vice President (since 1994),
General Agent (1981-1994), MassMutual; Director and Chief Executive Officer
(since 1994), MML Investors Services, Inc.; Director (since 1994), MML Insurance
Agency, Inc.
Douglas J. Jangraw
Director (since 1992), MML Bay State; Second Vice President and Actuary (since
1988), MassMutual.
Isadore Jermyn
Chairman, Chief Executive Officer and President (since 1993) and Chief Executive
Officer and President (1990-1991), MML Bay State; Senior Vice President and
Actuary (since 1995) and Vice President and Actuary (1987-1995), MassMutual;
Director (1990-1991), MML Life Insurance Company; Chairman and President (1993-
1994) and Director (1990-1994), MML Pension Insurance Company;Director (since
1992), MML Investors Service, Inc.; Director (since 1993), MML Insurance Agency,
Inc.; Director (since 1993), MML Insurance Agency of Ohio, Inc.; Director (since
1994), Cornerstone Real Estate Advisers, Inc.
John J. Libera, Jr.
Director (since 1991), MML Bay State; Senior Vice President (since 1987),
MassMutual; Director (1987-1990), MML Life Insurance Company; Director (1987-
1990 and 1991-1994), MML Pension Insurance Company; Director (since 1993), MML
Investors Services, Inc.; Director (since 1992), MML Insurance Agency, Inc.;
Director (since 1994), MML Insurance Agency of Ohio, Inc.
William T. McElmurray
Director (since 1991), MML Bay State; Senior Vice President (since 1991), Vice
President (1979-1991), MassMutual; Director (1991-1994), MML Pension Insurance
Company; Director (since 1993), MML Investors Services, Inc.; Director (since
1993), MML Insurance Agency, Inc; Director (since 1993), MML Insurance Agency of
Ohio, Inc.
<PAGE>
Stuart H. Reese
Director (since 1994), MML Bay State; Senior Vice President (since 1993),
MassMutual; President (since 1993), MML Series Investment Funds; President
(since 1994), MassMutual Institutional Funds; Executive Vice President (since
1993), MassMutual Corporate Investors; Executive Vice President (since 1993),
MassMutual Participation Investors; Director (since 1994), MML Pension Insurance
Company; Director (since 1994), MassMutual/Corporate Value Partners, Ltd.;
Director (since 1994) MassMutual Corporate Value Ltd.; Director (since 1994),
MassMutual/Carlson CBO N.V.
Jeanne L. Stamant
Director (since 1990), MML Bay State; Vice President and Actuary (since 1980),
MassMutual; Director (1990-1991), MML Life Insurance Company; Director (1991-
1994), MML Pension Insurance Company; Director (since 1994), MML Investors
Services, Inc.
Officers (other than Directors):
Yek Soan S. Cheng
Vice President-Actuarial (since 1988), MML Bay State; Vice President (since
1995), Actuary (since 1986), MassMutual; Vice President-Actuarial (1988-1991),
MML Life Insurance Company; Vice President-Actuarial (1988-1994), MML Pension
Insurance Company.
Thomas J. Finnegan, Jr.
Secretary (since 1991), Director (1990-1991), MML Bay State; Vice President,
Secretary and Associate General Counsel (since 1984), MassMutual; Director
(1990-1991), MML Life Insurance Company; Director (1990-1991), MML Pension
Insurance Company; Clerk (since 1994), Assistant Clerk (1992-1994) and Director
(1982-1992), Concert Capital Management, Inc.; Clerk (since 1994), Cornerstone
Real Estate Advisers, Inc.; Clerk (since 1991), MML Realty Management
Corporation; Secretary (since 1995), DLB Acquisition Corporation; Secretary
(1991-1995), MML Real Estate Corporation; Secretary (since 1991), MML
Reinsurance (Bermuda) Ltd.; Secretary (since 1984), MassMutual Holding Company;
Secretary (since 1994), Westheimer 335 Suites, Inc.; Secretary and Clerk (since
1994), MML Insurance Agency, Inc.; Secretary and Clerk (since 1994), MML
Investors Services, Inc.; Secretary and
<PAGE>
Clerk (since 1994), MassMutual Holding Company Two, Inc.; Secretary
and Clerk (since 1994), MassMutual Holding Company Two MSC, Inc.;
Associate Secretary (since 1990), MML Series Investment Fund;
Associate Secretary (since 1990), MassMutual Corporate Investors;
Associate Secretary (since 1994), MassMutual Institutional Funds;
Associate Secretary (since 1990), MassMutual Participation Investors;
Secretary (1992-1993), Bedford Hotel Company, Inc.; Secretary (since
1990), Crestwood Realty Investors, Inc.; Secretary (1990-1991), MML
Syndicate, Inc.
Ann Iseley
Treasurer (since 1996), MML Bay State; Treasurer (since 1996),
MassMutual; Chief Financial Officer and Operations Officer (1994-
1996), Connecticut Mutual Life Insurance Company; Corporate Controller
(1993-1994), The Mack Company; Vice President (1990-1993), Mutual of
New York.
Efrem Marder
Vice President-Investments (since 1990), MML Bay State; Senior
Managing Director (since 1996), Vice President and Managing Director
(1989-1996), Vice President (1987-1989), MassMutual; Vice President-
Investments (1990-1991), MML Life Insurance Company; Vice President-
Investments (1990-1994), MML Pension Insurance Company.
Mary E. Wilson
Vice President-Investments (since 1990), MML Bay State; Senior
Managing Director (since 1996), Vice President and Managing Director
(1991-1996), Vice President (1990-1991), Second Vice President (1989-
1990), MassMutual; Vice President-Investments (1990-1991), MML Life
Insurance Company; Vice President-Investments (1990-1994), MML Pension
Insurance Company; Senior Vice President (since 1993), Vice President
(1991-1993) and Second Vice President (1990-1991), MML Series
Investment Fund; Vice President (since 1992), MassMutual Corporate
Investors; Vice President (since 1991), MassMutual Participation
Investors.
Item 26. Persons Controlled by or Under Common Control with the Depositor or
-------------------------------------------------------------------
Registrant
- ----------
The assets of the Registrant, under state law, are assets of MML Bay
State.
<PAGE>
The Registrant may also be deemed to be under common control with the
following separate accounts which are registered as unit investment
trusts under the Investment Company Act of 1940: Massachusetts Mutual
Variable Annuity Fund 1, Massachusetts Mutual Variable Annuity Fund 2,
Massachusetts Mutual Variable Annuity Separate Account 1,
Massachusetts Mutual Variable Annuity Separate Account 2,
Massachusetts Mutual Variable Annuity Separate Account 3,
Massachusetts Mutual Variable Life Separate Accounts I, Massachusetts
Mutual Variable Life Separate Account II, MML Bay State Variable Life
Separate Account I, Panorama Separate Account, CML Variable Annuity
Account A, CML Variable Annuity Account B, CML Accumulation Annuity
Account E, Connecticut Mutual Variable Life Separate Account I,
Panorama Plus Separate Account, C.M. Multi-Account A, C.M. Life
Variable Life Separate Account A, and CML/OFFITBANK Separate Account.
The Registrant may also be deemed to control MML Series Investment
Fund, a Massachusetts business trust which is registered as an open-
end, diversified, management investment company under the Investment
Company Act of 1940. The Registrant may also be deemed to be under
common control of the following separate accounts which are exempt
from the registration requirements of the Investment Company Act of
1940: MML Bay State Variable Life Separate Account II, MML Bay State
Variable Life Separate Account III, and MML Bay State Variable Life
Separate Account IV.
Item 27. Number of Contract Owners
-------------------------
As of March 19, 1996, 841 Separate Account contracts were in force.
Item 28. Indemnification
---------------
MML Bay State directors and officers are indemnified under its by-
laws. No indemnification is provided with respect to any liability to
any entity which is registered as an investment company under the
Investment Company Act of 1940 or to the security holders thereof,
where the basis for such liability is willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of office.
<PAGE>
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of MML Bay State pursuant to the foregoing
provisions, or otherwise, MML Bay State has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933,
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
MML Bay State of expenses incurred or paid by a director, officer or
controlling person of MML Bay State in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
MML Bay State will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
Item 29. Principal Underwriters
----------------------
(a) MML Distributors, LLC, a wholly-owned subsidiary of MassMutual, acts
as principal underwriter for Massachusetts Mutual Variable Annuity
Separate Accounts 1, 2 and 3, Massachusetts Mutual Variable Life
Separate Accounts I and II, MML Bay State Variable Life Separate
Account I, MML Bay State Variable Annuity Separate Account 1, Panorama
Separate Account, CML Variable Annuity Account A, CML Variable Annuity
Account B, CML Accumulation Annuity Account E, Connecticut Mutual
Variable Life Separate Account I, Panorama Plus Separate Account, C.M.
Multi-Account A, C.M. Life Variable Life Separate Account A, and
CML/OFFITBANK Separate Account.
(b) See response to Item 25.
(c) See the section captioned "Service Arrangements and Distribution" in
the Statement of Additional Information.
-----------------------------------
Item 30. Location of Accounts and Records
--------------------------------
All accounts, books, or other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules
promulgated thereunder are
<PAGE>
maintained by the Registrant through a full service agreement between
itself and ALLIANCE-ONE Services, L.P. ("ALLIANCE-ONE") and such
records will be maintained at ALLIANCE-ONE, 301 West Eleventh Street,
Kansas City, Missouri 64105.
Item 31. Management Related Services
---------------------------
None
Item 32. Undertakings
------------
(a) Registrant undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that
the audited financial statements in the Registration Statement are
never more than 16 months old for so long as payments under the
variable annuity contracts may be accepted.
(b) Registrant undertakes to include either: (1) as part of any
application to purchase a contract offered by the prospectus, a space
that an applicant can check to request a Statement of Additional
Information; or (2) a post card or similar written communication
affixed to or included in the prospectus that the applicant can remove
to send for a Statement of Additional Information;
(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under this Form promptly upon written or oral request.
(d) Registrant asserts that the Separate Account meets the definition of a
separate account under the Investment Company Act of 1940.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant, MML
Bay State Variable Annuity Separate Account 1, certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment No. 2
pursuant to Rule 485(b) under the Securities Act of 1933 and has caused this
Post-Effective Amendment No. 2 to Registration Statement No. 33-76920 to be
signed on its behalf by the undersigned thereunto duly authorized, all in the
city of Springfield and the Commonwealth of Massachusetts, on the 24th day of
April, 1996.
MML BAY STATE VARIABLE ANNUITY SEPARATE ACCOUNT 1
MML BAY STATE LIFE INSURANCE COMPANY (Depositor)
By: /s/ Isadore Jermyn*
-----------------------------------------------------
Isadore Jermyn, President and Chief Executive Officer
MML Bay State Life Insurance Company
/s/ Richard M. Howe On April 24, 1996, as Attorney-in-Fact pursuant to
- ------------------------ powers of attorney filed herewith.
*Richard M. Howe
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 2 to Registration Statement No. 33-76920 has been signed by the following
persons in the capacities and on the duties indicated.
Signature Title Date
--------- ----- ----
/s/ Isadore Jermyn* President, Chief Executive April 24, 1996
- ----------------------------- Officer and Chairman of
Isadore Jermyn the Board
/s/ Ann Iseley* Treasurer (Principal April 24, 1996
- ----------------------------- Financial Officer)
Ann Iseley
/s/ Paul D. Adornato* Director April 24, 1996
- -----------------------------
Paul D. Adornato
/s/ Donald D. Cameron* Director April 24, 1996
- -----------------------------
Donald D. Cameron
<PAGE>
/s/ Daniel F. Fitzgerald* Director April 24, 1996
- -----------------------------
Daniel F. Fitzgerald
/s/ Arthur D. Foresi* Director April 24, 1996
- -----------------------------
Arthur D. Foresi
/s/ Gary T. Huffman* Director April 24, 1996
- -----------------------------
Gary T. Huffman
/s/ Douglas J. Jangraw* Director April 24, 1996
- -----------------------------
Douglas J. Jangraw
/s/ John J. Libera, Jr.* Director April 24, 1996
- -----------------------------
John J. Libera, Jr.
/s/ William T. McElmurray* Director April 24, 1996
- -----------------------------
William T. McElmurray
/s/ Stuart H. Reese* Director April 24, 1996
- -----------------------------
Stuart H. Reese
/s/ Jeanne M. Stamant* Director April 24, 1996
- -----------------------------
Jeanne M. Stamant
/s/ Richard M. Howe On April 24, 1996, as Attorney-in-Fact
- ----------------------------- pursuant to powers of attorney filed herewith.
*Richard M. Howe
<PAGE>
REPRESENTATION BY REGISTRANT'S COUNSEL
--------------------------------------
As attorney to the Registrant, I, James Rodolakis, have reviewed this Post-
Effective Amendment No. 2 to Registration Statement No. 33-76920, and represent,
pursuant to the requirement of paragraph (e) of Rule 485 under the Securities
Act of 1933, that this Amendment does not contain disclosures which would render
it ineligible to become effective pursuant to paragraph (b) of said Rule 485.
/s/James Rodolakis
------------------------------
James Rodolakis
Attorney
Massachusetts Mutual Life
Insurance Company
<PAGE>
EXHIBIT LIST
Exhibit 99.3.1.A Form of Distribution Agreement
Exhibit 99.3.1.B Form of Co-Underwriting Agreement
Exhibit 99.C.1 Written consent of Coopers & Lybrand
L.L.P., independent accountants.
Exhibit 99.5 Powers of Attorney
Exhibit 99.6 Schedule of Computation of Performance
Exhibit 27 Financial Data Schedule
<PAGE>
UNDERWRITING AND
SERVICING AGREEMENT
This UNDERWRITING AND SERVICING AGREEMENT is made this 1st day of May, 1996, by
and between MML Distributors, LLC ("MML DISTRIBUTORS") and MML Bay State Life
Insurance Company ("Bay State"), on its own behalf and on behalf of
___________________ Separate Account (the "Separate Account"), a separate
account of Bay State, as follows:
WHEREAS, the Separate Account was established on _____________ pursuant to
authority of the Board of Directors of Bay State in order to set aside and
invest assets attributable to certain variable life insurance contracts (the
"Contracts") issued by Bay State; and
WHEREAS, Bay State has registered the Separate Account under the Investment
Company Act of 1940, as amended, (the "1940 Act") and has registered the
Contracts under the Securities Act of 1933, as amended, (the "1933 Act"); and
WHEREAS, Bay State will continue the effectiveness of the registrations of the
Separate Account under the 1940 Act and the Contracts under the 1933 Act; and
WHEREAS, Bay State intends for the Contracts to be sold by agents and brokers
who are required to be registered representatives of a broker-dealer that is
registered with the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934 ("1934 Act") and a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, Bay State desires to engage MML DISTRIBUTORS, a broker-dealer
registered with the SEC under the 1934 Act and a member of the NASD, to act as
the principal underwriter ("Underwriter") of the Contracts, and to otherwise
perform certain duties and functions that are necessary and proper for the
distribution of the Contracts as required under applicable federal and state
securities laws and NASD regulations, and MML DISTRIBUTORS desires to act as
Underwriter for the sale of the Contracts and to assume such responsibilities;
NOW, THEREFORE, the parties hereto agree as follows:
1. Underwriter. Bay State hereby appoints MML DISTRIBUTORS as, and MML
DISTRIBUTORS agrees to serve as, Underwriter of the Contracts during the
term of this Agreement for purposes of federal and state securities laws.
Bay State reserves the right, however, to refuse at any time or times to
sell any Contracts hereunder for any reason, and Bay State maintains
ultimate responsibility for the sales of the Contracts.
1
<PAGE>
MML DISTRIBUTORS shall use reasonable efforts to sell the Contracts but does
not agree hereby to sell any specific number of Contracts and shall be free
to act as underwriter of other securities. MML DISTRIBUTORS agrees to offer
the Contracts for sale in accordance with the prospectus then in effect for
the Contracts.
2. Services. MML DISTRIBUTORS agrees, on behalf of Bay State and the Separate
Account, and in its capacity as Underwriter, to undertake at its own expense
except as otherwise provided herein, to provide certain sales,
administrative and supervisory services relative to the Contracts as
described below, and otherwise to perform all duties that are necessary and
proper for the distribution of the Contracts as required under applicable
federal and state securities laws and NASD regulations.
3. Selling Group. MML DISTRIBUTORS may enter into sales agreements for the sale
of the Contracts with independent broker-dealer firms ("Independent
Brokers") whose registered representatives have been or shall be licensed
and appointed as life insurance agents of Bay State. All such agreements
shall be in a form agreed to by Bay State. All such agreements shall provide
that the Independent Brokers must assume full responsibility for continued
compliance by itself and its associated persons with the NASD Rules of Fair
Practice (the "Rules") and all applicable federal and state securities and
insurance laws. All associated persons of such Independent Brokers
soliciting applications for the Contracts shall be duly and appropriately
licensed and appointed for the sale of the Contracts under the Rules and
applicable federal and state securities and insurance laws.
4. Compliance and Supervision. All persons who are engaged directly or
indirectly in the operations of MML DISTRIBUTORS and Bay State in connection
with the offer or sale of the Contracts shall be considered a "person
associated" with MML DISTRIBUTORS as defined in Section 3(a)(18) of the 1934
Act. MML DISTRIBUTORS shall have full responsibility for the securities
activities of each such person as contemplated by Section 15 of the 1934
Act.
MML DISTRIBUTORS shall be fully responsible for carrying out all compliance,
supervisory and other obligations hereunder with respect to the activities
of its registered representatives as required by the Rules and applicable
federal and state securities laws. Without limiting the generality of the
foregoing, MML DISTRIBUTORS agrees that it shall be fully responsible for:
(a) ensuring that no representative of MML DISTRIBUTORS shall offer or sell
the Contracts until such person is appropriately licensed, registered,
or otherwise qualified to offer and sell such Contracts under the
federal securities laws and any applicable securities laws of each
state or other jurisdiction in which such Contracts may be lawfully
sold, in which Bay State is licensed to sell the Contracts, and in
which such person shall offer or sell the Contracts; and
2
<PAGE>
(b) training and supervising Bay State's agents and brokers who are also
registered representatives of MML DISTRIBUTORS for purposes of
complying on a continuous basis with the Rules and with federal and
state securities laws applicable in connection with the offering and
sale of the Contracts. In this connection, MML DISTRIBUTORS shall:
(i) jointly conduct with Bay State such training (including the
preparation and utilization of training materials) as in the
opinion of MML DISTRIBUTORS and Bay State is necessary to
accomplish the purposes of this Agreement;
(ii) establish and implement reasonable written procedures for
supervision of sales practices of registered representatives of
MML DISTRIBUTORS who sell the Contracts;
(iii) provide a sufficient number of registered principals and an
adequately staffed compliance department to carry out the
responsibilities as set forth herein;
(iv) take reasonable steps to ensure that Bay State agents and
brokers who are also registered representatives of MML
DISTRIBUTORS recommend the purchase of the Contracts only upon
reasonable grounds to believe that the purchase of the Contracts
is suitable for such applicant; and
(v) impose disciplinary measures on agents of Bay State who are also
registered representatives of MML DISTRIBUTORS as required.
The parties hereto recognize that any registered representative of MML
DISTRIBUTORS or Independent Broker selling the Contracts as contemplated by
this Agreement shall also be acting as an insurance agent of Bay State or as
an insurance broker, and that the rights of MML DISTRIBUTORS and Independent
Broker to supervise such persons shall be limited to the extent specifically
described herein or required under applicable federal or state securities
laws or NASD regulations.
5. Registration and Qualification of Contracts. Bay State has prepared or
caused to be prepared a registration statement describing the Contracts,
together with exhibits thereto (hereinafter referred to as the "Registration
Statement"). The Registration Statement includes a prospectus (the
"Prospectus") for the Contracts.
Bay State agrees to execute such papers and to do such acts and things as
shall from time-to-time be reasonably requested by MML DISTRIBUTORS for the
purpose of qualifying and maintaining qualification of the Contracts for
sale under applicable state law and for maintaining the registration of the
Separate Account and interests therein under the 1933 Act and the 1940 Act,
to the end that there will be available for sale from time-to-time such
amounts of the Contracts as MML DISTRIBUTORS may reasonably request. Bay
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State shall advise MML DISTRIBUTORS promptly of any action of the SEC or any
authorities of any state or territory, of which it is aware, affecting
registration or qualification of the Separate Account, or rights to offer
the Contracts for sale.
If any event shall occur as a result of which it is necessary to amend or
supplement the Registration Statement in order to make the statements
therein, in light of the circumstances under which they were or are made,
true, complete or not misleading, Bay State will forthwith prepare and
furnish to MML DISTRIBUTORS, without charge, amendments or supplements to
the Registration Statement sufficient to make the statements made in the
Registration Statement as so amended or supplemented true, complete and not
misleading in light of the circumstances under which they were made.
6. Representations of Bay State. Bay State represents and warrants to MML
DISTRIBUTORS and to the Independent Brokers as follows:
(a) Bay State is an insurance company duly organized under the laws of the
State of Missouri and is in good standing and is authorized to conduct
business under the laws of each state in which the Contracts are sold,
that the Separate Account was legally and validly established as a
segregated asset account under the Insurance Code of Missouri, and that
the Separate Account has been properly registered as a unit investment
trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.
(b) All persons that will be engaging in the offer or sale of the Contracts
will be authorized insurance agents of Bay State.
(c) The Registration Statement does not and will not contain any
misstatements of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were or are
made, not materially misleading.
(d) Bay State shall make available to MML DISTRIBUTORS copies of all
financial statements that MML DISTRIBUTORS reasonably requests for use
in connection with the offer and sale of the Contracts.
(e) No federal or state agency or bureau has issued an order preventing or
suspending the offer of the Contracts or the use of the Registration
Statement, or of any part thereof, with respect to the sale of the
Contracts.
(f) The offer and sale of the Contracts is not subject to registration, or
if necessary, is registered, under the Blue Sky laws of the states in
which the Contracts will be offered and sold.
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(g) The Contracts are qualified for offer and sale under the applicable
state insurance laws in those states in which the Contracts shall be
offered for sale. In each state where such qualification is effected,
Bay State shall file and make such statements or reports as are or may
be required by the laws of such state.
(h) This Agreement has been duly authorized, executed and delivered by Bay
State and constitutes the valid and legally binding obligation of Bay
State. Neither the execution and delivery of this Agreement by Bay
State nor the consummation of the transactions contemplated herein will
result in a breach or violation of any provision of the state insurance
laws applicable to Bay State, any judicial or administrative orders in
which it is named or any material agreement or instrument to which it
is a party or by which it is bound.
7. Representations of MML DISTRIBUTORS. MML DISTRIBUTORS represents and
warrants to Bay State as follows:
(a) MML DISTRIBUTORS is duly registered as a broker-dealer under the 1934
Act and is a member in good standing of the NASD and, to the extent
necessary to perform the activities contemplated hereunder, is duly
registered, or otherwise qualified, under the applicable securities
laws of every state or other jurisdiction in which the Contracts are
available for sale.
(b) This Agreement has been duly authorized, executed and delivered by MML
DISTRIBUTORS and constitutes the valid and legally binding obligation
of MML DISTRIBUTORS. Neither the execution and delivery of this
Agreement by MML DISTRIBUTORS nor the consummation of the transactions
contemplated herein will result in a breach or violation of any
provision of the federal or state securities laws or the Rules,
applicable to MML DISTRIBUTORS, or any judicial or administrative
orders in which it is named or any material agreement or instrument to
which it is a party or by which it is bound.
(c) MML DISTRIBUTORS shall comply with the Rules and the securities laws of
any jurisdiction in which it sells, directly or indirectly, any
Contracts.
8. Expenses. MML DISTRIBUTORS shall be responsible for all expenses incurred in
connection with its provision of services and the performance of its
obligations hereunder, except as otherwise provided herein.
Bay State shall be responsible for all expenses of printing and distributing
the Prospectuses, and all other expenses of preparing, printing and
distributing all other sales literature or material for use in connection
with offering the Contracts for sale.
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9. Sales Literature and Advertising. MML DISTRIBUTORS agrees to ensure that it
uses and distributes only the Prospectus, statements of additional
information, or other applicable and authorized sales literature then in
effect in selling the Contracts. MML DISTRIBUTORS is not authorized to give
any information or to make any representations concerning the Contracts
other than those contained in the current Registration Statement filed with
the SEC or in such sales literature as may be authorized by Bay State.
MML DISTRIBUTORS agrees to make timely filings with the SEC, the NASD, and
such other regulatory authorities as may be required of any sales literature
or advertising materials relating to the Contracts and intended for
distribution to prospective investors. Bay State shall review and approve
all advertising and sales literature concerning the Contracts utilized by
MML DISTRIBUTORS. MML DISTRIBUTORS also agrees to furnish to Bay State
copies of all agreements and plans it intends to use in connection with any
sales of the Contracts.
10. Applications. All applications for Contracts shall be made on application
forms supplied by Bay State, and shall be remitted by MML DISTRIBUTORS or
Independent Brokers promptly, together with such forms and any other
required documentation, directly to Bay State at the address indicated on
such application or to such other address as Bay State may, from time to
time, designate in writing. All applications are subject to acceptance or
rejection by Bay State at its sole discretion.
11. Payments. All money payable in connection with any of the Contracts, whether
as premiums, purchase payments or otherwise, and whether paid by, or on
behalf of any applicant or Contract owner, is the property of Bay State and
shall be transmitted immediately in accordance with the administrative
procedures of Bay State without any deduction or offset for any reason,
including by example but not limitation, any deduction or offset for
compensation claimed by MML DISTRIBUTORS. Checks or money orders as payment
on any Contract shall be drawn to the order of "Massachusetts Mutual Life
Insurance Company." No cash payments shall be accepted by MML DISTRIBUTORS
in connection with the Contracts. Unless otherwise agreed to by Bay State in
writing, neither MML DISTRIBUTORS nor any of Bay State's agents nor any
broker shall have an interest in any surrender charges, deductions or other
fees payable to Bay State as set forth herein.
12. Insurance Licenses. Bay State shall apply for and maintain the proper
insurance licenses and appointments for each of the agents and brokers
selling the Contracts in all states or jurisdictions in which the Contracts
are offered for sale by such person. Bay State reserves the right to refuse
to appoint any proposed agent or broker, and to terminate an agent or broker
once appointed. Bay State agrees to be responsible for all licensing or
other fees required under pertinent state insurance laws to properly
authorize agents or brokers for the sale of the Contracts; however, the
foregoing shall not limit Bay State's right to collect such amount from any
person or entity other than MML DISTRIBUTORS.
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13. Agent/Broker Compensation. Commissions or other fees due all brokers and
agents in connection with the sale of Contracts shall be paid by Bay State,
on behalf of MML DISTRIBUTORS, to the persons entitled thereto in accordance
with the applicable agreement between each such broker or agent and Bay
State or a general agent thereof. MML DISTRIBUTORS shall assist Bay State in
the payment of such amounts as Bay State shall reasonably request, provided
that MML DISTRIBUTORS shall not be required to perform any acts that would
subject it to registration under the insurance laws of any state. The
responsibility of MML DISTRIBUTORS shall include the performance of all
activities by MML DISTRIBUTORS necessary in order that the payment of such
amounts fully complies with all applicable federal and state securities
laws. Unless applicable federal or state securities law shall require, Bay
State retains the ultimate right to determine the commission rate paid to
its agents.
14. MML DISTRIBUTORS Compensation. As payment for its services hereunder, MML
DISTRIBUTORS shall receive an annual fee that has the following components:
(1) a fixed fee in the amount of $_____ per year, and (2) a variable fee in
the amount of __ basis points (.000x) per year of new sales of the
Contracts. Payments shall commence and be made no later than December 31 of
the year in which a Contract is issued. The variable component of the fee
shall be paid to MML DISTRIBUTORS's affiliate, MML Insurance Agency, Inc.
("MMLIAI"). The fixed component shall be renegotiated annually commencing in
1997. The last agreed-to amounts for each of these fees shall remain in
effect until the new fees are mutually agreed upon and are set forth in
schedules attached hereto.
15. Books and Records. MML DISTRIBUTORS and Bay State shall each cause to be
maintained and preserved for the period prescribed such accounts, books, and
other documents as are required of it by the 1934 Act and any other
applicable laws and regulations. In particular, without limiting the
foregoing, MML DISTRIBUTORS shall cause all the books and records in
connection with the offer and sale of the Contracts by its registered
representatives to be maintained and preserved in conformity with the
requirements of Rules 17a-3 and 17a-4 under the 1934 Act, to the extent that
such requirements are applicable to the Contracts. The books, accounts, and
records of MML DISTRIBUTORS and Bay State as to all transactions hereunder
shall be maintained so as to disclose clearly and accurately the nature and
details of the transactions. The payment of premiums, purchase payments,
commissions and other fees and payments in connection with the Contracts by
its registered representatives shall be reflected on the books and records
of MML DISTRIBUTORS as required under applicable NASD regulations and
federal and state securities laws requirements.
MML DISTRIBUTORS and Bay State, from time to time during the term of this
Agreement, shall divide the administrative responsibility for maintaining
and preserving the books, records and accounts kept in connection with the
Contracts; provided, however, in the case of books, records and accounts
kept pursuant to a requirement of applicable law
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or regulation, the ultimate and legal responsibility for maintaining and
preserving such books, records and accounts shall be that of the party which
is required to maintain or preserve such books, records and accounts under
the applicable law or regulation, and such books, records and accounts shall
be maintained and preserved under the supervision of that party. MML
DISTRIBUTORS and Bay State shall each cause the other to be furnished with
such reports as it may reasonably request for the purpose of meeting its
reporting and recordkeeping requirements under such regulations and laws,
and under the insurance laws of the Commonwealth of Massachusetts and any
other applicable states or jurisdictions.
MML DISTRIBUTORS and Bay State each agree and understand that all documents,
reports, records, books, files and other materials required under applicable
Rules and federal and state securities laws shall be the property of MML
DISTRIBUTORS, unless such documents, reports, records, books, files and
other materials are required by applicable regulation or law to be also
maintained by Bay State, in which case such material shall be the joint
property of MML DISTRIBUTORS and Bay State. All other documents, reports,
records, books, files and other materials maintained relative to this
Agreement shall be the property of Bay State. Upon termination of this
Agreement, all said material shall be returned to the applicable party.
MML DISTRIBUTORS and Bay State shall establish and maintain facilities and
procedures for the safekeeping of all books, accounts, records, files, and
other materials related to this Agreement. Such books, accounts, records,
files, and other materials shall remain confidential and shall not be
voluntarily disclosed to any other person or entity except as described
below in section 16..
16. Availability of Records. MML DISTRIBUTORS and Bay State shall each submit to
all regulatory and administrative bodies having jurisdiction over the sales
of the Contracts, present or future, any information, reports, or other
material that any such body by reason of this Agreement may request or
require pursuant to applicable laws or regulations. In particular, without
limiting the foregoing, Bay State agrees that any books and records it
maintains pursuant to paragraph 15 of this Agreement which are required to
be maintained under Rule 17a-3 or 17a-4 of the 1934 Act shall be subject to
inspection by the SEC in accordance with Section 17(a) of the 1934 Act and
Sections 30 and 31 of the 1940 Act.
17. Confirmations. Bay State agrees to prepare and mail a confirmation for each
transaction in connection with the Contracts at or before the completion
thereof as required by the 1934 Act and applicable interpretations thereof,
including Rule 10b-10 thereunder. Each such confirmation shall reflect the
facts of the transaction, and the form thereof will show that it is being
sent on behalf of MML DISTRIBUTORS or Independent Broker acting in the
capacity of agent for Bay State.
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18. Indemnification. Bay State shall indemnify MML DISTRIBUTORS, Independent
Brokers, their registered representatives, officers, directors, employees,
agents and controlling persons and hold such persons harmless, from and
against any and all losses, damages, liabilities, claims, demands,
judgments, settlements, costs and expenses of any nature whatsoever
(including reasonable attorneys' fees and disbursements) resulting or
arising out of or based upon an allegation or finding that: (i) the
Registration Statement or any application or other document or written
information provided by or on behalf of Bay State includes any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
are made, not misleading, unless such statement or omission was made in
reliance upon, and in conformity with, written information furnished to Bay
State by MML DISTRIBUTORS, Independent Brokers, or their registered
representatives specifically for use in the preparation thereof, or (ii)
there is a misrepresentation, breach of warranty or failure to fulfill any
covenant or warranty made or undertaken by Bay State hereunder.
MML DISTRIBUTORS will indemnify Bay State, its officers, directors,
employees, agents and controlling persons and hold such persons harmless,
from and against any and all losses, damages, liabilities, claims, demands,
judgments, settlements, costs and expenses of any nature whatsoever
(including reasonable attorneys' fees and disbursements) resulting or
arising out of or based upon an allegation or finding that: (i) MML
DISTRIBUTORS or its registered representatives offered or sold or engaged in
any activity relating to the offer and sale of the Contracts which was in
violation of any provision of the federal securities laws or, (ii) there is
a material misrepresentation, material breach of warranty or material
failure to fulfill any covenant or warranty made or undertaken by MML
DISTRIBUTORS hereunder.
Promptly after receipt by an indemnified party under this paragraph 18 of
notice of the commencement of any action by a third party, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this paragraph 18, notify the indemnifying party of
the commencement thereof; but the omission to notify the indemnifying party
will not relieve the indemnifying party from liability which the
indemnifying party may have to any indemnified party otherwise than under
this paragraph. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein and, to the
extent that it may wish, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election to assume the
defense thereof, the indemnifying party will not be liable to such
indemnified party under this paragraph for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
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19. Independent Contractor. MML DISTRIBUTORS shall be an independent contractor.
MML DISTRIBUTORS is responsible for its own conduct and 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. MML
DISTRIBUTORS assumes full responsibility for its agents and employees under
applicable statutes and agrees to pay all employer taxes thereunder.
20. Termination. Subject to termination as hereinafter provided, this Agreement
shall remain in full force and effect for the initial term of the Agreement,
which shall be for a two year period commencing on the date first above
written, and this Agreement shall continue in full force and effect from
year to year thereafter, until terminated as herein provided.
This Agreement may be terminated by either party hereto upon 30 days written
notice to the other party, or at any time upon the mutual written consent of
the parties hereto. This Agreement shall automatically be terminated in the
event of its assignment. Subject to Bay State's approval, however, MML
DISTRIBUTORS may delegate any duty or function assigned to it in this
agreement provided that such delegation is permissible under applicable law.
Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except the obligations to settle accounts hereunder,
including the settlement of monies due in connection with the Contracts in
effect at the time of termination or issued pursuant to applications
received by Bay State prior to termination.
21. Interpretation. This Agreement shall be subject to the provisions of the
1934 Act and the rules, regulations, and rulings thereunder and of the NASD,
from time to time in effect, and the terms hereof shall be interpreted and
construed in accordance therewith. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule, or otherwise,
the remainder of this Agreement shall not be affected thereby. This
Agreement shall be interpreted in accordance with the laws of the
Commonwealth of Massachusetts.
22. Non-exclusivity. The services of MML DISTRIBUTORS and Bay State to the
Separate Account hereunder are not to be deemed exclusive and MML
DISTRIBUTORS and Bay State shall be free to render similar services to
others so long as their services hereunder are not impaired or interfered
with hereby.
23. Amendment. This Agreement constitutes the entire Agreement between the
parties hereto and may not be modified except in a written instrument
executed by all parties hereto.
24. Interests in and of MML DISTRIBUTORS. It is understood that any of the
policyholders, directors, officers, employees and agents of Bay State may be
a shareholder, director, officer, employee, or agent of, or be otherwise
interested in, MML DISTRIBUTORS, any affiliated person of MML DISTRIBUTORS,
any organization in which MML DISTRIBUTORS may have an interest, or any
organization which may have
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an interest in MML DISTRIBUTORS; that MML DISTRIBUTORS, any such affiliated
person or any such organization may have an interest in Bay State; and that
the existence of any such dual interest shall not affect the validity hereof
or of any transaction hereunder except as otherwise provided in the Charter,
Articles of Incorporation, or By-Laws of Bay State and MML DISTRIBUTORS,
respectively, or by specific provision of applicable law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officials thereunto duly authorized and seals to
be affixed, as of the day and year first above written.
ATTEST: MML BAY STATE LIFE
INSURANCE COMPANY, on its behalf
and on behalf of __________________
SEPARATE ACCOUNT
By: _________________________________
ATTEST: MML INVESTORS SERVICES, INC.
By: _________________________________
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UNDERWRITING AND
SERVICING AGREEMENT
This UNDERWRITING AND SERVICING AGREEMENT is made this 1st day of May, 1996, by
and between MML Investors Services, Inc. ("MMLISI") and MML Bay State Life
Insurance Company ("Bay State"), on its own behalf and on behalf of
________________________ Separate Account (the "Separate Account"), a separate
account of Bay State, as follows:
WHEREAS, the Separate Account was established on ____________________, pursuant
to authority of the Board of Directors of Bay State in order to set aside and
invest assets attributable to certain variable annuity contracts (the
"Contracts") issued by Bay State; and
WHEREAS, Bay State has registered the Separate Account under the Investment
Company Act of 1940, as amended, (the "1940 Act") and has registered the
Contracts under the Securities Act of 1933, as amended, (the "1933 Act"); and
WHEREAS, Bay State will continue the effectiveness of the registrations of the
Separate Account under the 1940 Act and the Contracts under the 1933 Act; and
WHEREAS, Bay State intends for the Contracts to be sold by its agents and
brokers who are required to be registered representatives of a broker-dealer
that is registered with the Securities and Exchange Commission (the "SEC") under
the Securities Exchange Act of 1934 ("1934 Act") and a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, Bay State desires to engage MMLISI, a broker-dealer registered with the
SEC under the 1934 Act and a member of the NASD, to act as a co-underwriter
("Co-underwriter") in connection with the distribution of the Contracts by the
full-time career contracted agents of Bay State ("Agents") and certain other
brokers, and in connection therewith, to provide certain services and
supervision to such Agents and brokers who are also registered representatives
of MMLISI and who sell the Contracts, and to otherwise perform certain duties
and functions that are necessary and proper for the distribution of the
Contracts as required under applicable federal and state securities laws and
NASD regulations, and MMLISI desires to act as Co-underwriter for the sale of
the Contracts and to assume such responsibilities;
NOW, THEREFORE, the parties hereto agree as follows:
1. Underwriter. Bay State hereby appoints MMLISI as, and MMLISI agrees to serve
as, Co-underwriter of the Contracts during the term of this Agreement for
purposes of federal and state securities laws. Bay State reserves the right,
however, to refuse at any time or times to sell any Contracts hereunder for
any reason, and Bay State maintains ultimate responsibility for the sales of
the Contracts.
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2. Services. MMLISI agrees, on behalf of Bay State and in its capacity as Co-
underwriter, to undertake at its own expense except as otherwise provided
herein, to provide certain sales, administrative and supervisory services
relative to the Contracts as described below, and otherwise to perform all
duties that are necessary and proper for the distribution of the Contracts
as required under applicable federal and state securities laws and NASD
regulations.
3. Best Efforts. MMLISI shall use reasonable efforts to sell the Contracts but
does not agree hereby to sell any specific number of Contracts and shall be
free to act as underwriter of other securities. MMLISI agrees to offer the
Contracts for sale in accordance with the prospectus then in effect for the
Contracts.
4. Compliance and Supervision. All persons who are engaged directly or
indirectly in the operations of MMLISI and Bay State in connection with the
offer or sale of the Contracts shall be considered a "person associated"
with MMLISI as defined in Section 3(a)(18) of the 1934 Act. MMLISI shall
have full responsibility for the securities activities of each such person
as contemplated by Section 15 of the 1934 Act.
MMLISI shall be fully responsible for carrying out all compliance,
supervisory and other obligations hereunder with respect to the activities
of its registered representatives as required by the NASD Rules of Fair
Practice (the "Rules") and applicable federal and state securities laws.
Without limiting the generality of the foregoing, MMLISI agrees that it
shall be fully responsible for:
(a) ensuring that no representative of MMLISI shall offer or sell the
Contracts until such person is appropriately licensed, registered, or
otherwise qualified to offer and sell such Contracts under the federal
securities laws and any applicable securities laws of each state or
other jurisdiction in which such Contracts may be lawfully sold, in
which Bay State is licensed to sell the Contracts, and in which such
person shall offer or sell the Contracts; and
(b) training and supervising Bay State's Agents and brokers who are also
registered representatives of MMLISI for purposes of complying on a
continuous basis with the Rules and with federal and state securities
laws applicable in connection with the offering and sale of the
Contracts. In this connection, MMLISI shall:
(i) jointly conduct with Bay State such training (including the
preparation and utilization of training materials) as in the
opinion of MMLISI and Bay State is necessary to accomplish the
purposes of this Agreement;
(ii) establish and implement reasonable written procedures for
supervision of sales practices of registered representatives of
MMLISI who sell the Contracts;
(iii) provide a sufficient number of registered principals and an
adequately staffed compliance department to carry out the
responsibilities as set forth herein;
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(iv) take reasonable steps to ensure that Bay State Agents and
brokers who are also registered representatives of MMLISI
recommend the purchase of the Contracts only upon reasonable
grounds to believe that the purchase of the Contracts is
suitable for such applicant; and
(v) impose disciplinary measures on agents of Bay State who are also
registered representatives of MMLISI as required.
The parties hereto recognize that any registered representative of
MMLISI selling the Contracts as contemplated by this Agreement shall
also be acting as an insurance agent of Bay State or as an insurance
broker, and that the rights of MMLISI to supervise such persons shall
be limited to the extent specifically described herein or required
under applicable federal or state securities laws or NASD regulations.
Such persons shall not be considered employees of MMLISI and shall be
considered agents of MMLISI only as and to the extent required by such
laws and regulations. Further, it is intended by the parties hereto
that such persons are and shall continue to be considered to have a
common law independent contractor relationship with Bay State and not
to be common law employees of Bay State.
5. Registration and Qualification of Contracts. Bay State has prepared or
caused to be prepared a registration statement describing the Contracts,
together with exhibits thereto (hereinafter referred to as the "Registration
Statement"). The Registration Statement includes a prospectus (the
"Prospectus") for the Contracts.
Bay State agrees to execute such papers and to do such acts and things as
shall from time-to-time be reasonably requested by MMLISI for the purpose of
qualifying and maintaining qualification of the Contracts for sale under
applicable state law and for maintaining the registration of the Separate
Account and interests therein under the 1933 Act and the 1940 Act, to the
end that there will be available for sale from time-to-time such amounts of
the Contracts as MMLISI may reasonably be expected to sell. Bay State shall
advise MMLISI promptly of any action of the SEC or any authorities of any
state or territory, of which it is aware, affecting registration or
qualification of the Separate Account, or rights to offer the Contracts for
sale.
If any event shall occur as a result of which it is necessary to amend or
supplement the Registration Statement in order to make the statements
therein, in light of the circumstances under which they were or are made,
true, complete or not misleading, Bay State will forthwith prepare and
furnish to MMLISI, without charge, amendments or supplements to the
Registration Statement sufficient to make the statements made in the
Registration Statement as so amended or supplemented true, complete and not
misleading in light of the circumstances under which they were made.
6. Representations of Bay State. Bay State represents and warrants to MMLISI as
follows:
(a) Bay State is an insurance company duly organized under the laws of the
State of Missouri and is in good standing and is authorized to conduct
business under the laws
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of each state in which the Contracts are sold, that the Separate
Account was legally and validly established as a segregated asset
account under the Insurance Code of Missouri, and that the Separate
Account has been properly registered as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
(b) All persons that will be engaging in the offer or sale of the Contracts
will be authorized insurance agents of Bay State.
(c) The Registration Statement does not and will not contain any
misstatements of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were or are
made, not materially misleading.
(d) Bay State shall make available to MMLISI copies of all financial
statements that MMLISI reasonably requests for use in connection with
the offer and sale of the Contracts.
(e) No federal or state agency or bureau has issued an order preventing or
suspending the offer of the Contracts or the use of the Registration
Statement, or of any part thereof, with respect to the sale of the
Contracts.
(f) The offer and sale of the Contracts is not subject to registration, or
if necessary, is registered, under the Blue Sky laws of the states in
which the Contracts will be offered and sold.
(g) The Contracts are qualified for offer and sale under the applicable
state insurance laws in those states in which the Contracts shall be
offered for sale. In each state where such qualification is effected,
Bay State shall file and make such statements or reports as are or may
be required by the laws of such state.
(h) This Agreement has been duly authorized, executed and delivered by Bay
State and constitutes the valid and legally binding obligation of Bay
State. Neither the execution and delivery of this Agreement by Bay
State nor the consummation of the transactions contemplated herein will
result in a breach or violation of any provision of the state insurance
laws applicable to Bay State, any judicial or administrative orders in
which it is named or any material agreement or instrument to which it
is a party or by which it is bound.
7. Representations of MMLISI. MMLISI represents and warrants to Bay State as
follows:
(a) MMLISI is duly registered as a broker-dealer under the 1934 Act and is
a member in good standing of the NASD and, to the extent necessary to
perform the activities contemplated hereunder, is duly registered, or
otherwise qualified, under the applicable securities laws of every
state or other jurisdiction in which the Contracts are available for
sale.
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(b) This Agreement has been duly authorized, executed and delivered by
MMLISI and constitutes the valid and legally binding obligation of
MMLISI. Neither the execution and delivery of this Agreement by MMLISI
nor the consummation of the transactions contemplated herein will
result in a breach or violation of any provision of the federal or
state securities laws or the Rules, applicable to MMLISI, or any
judicial or administrative orders in which it is named or any material
agreement or instrument to which it is a party or by which it is bound.
(c) MMLISI shall comply with the Rules and the securities laws of any
jurisdiction in which it sells, directly or indirectly, any Contracts.
8. Expenses. MMLISI shall be responsible for all expenses incurred in
connection with its provision of services and the performance of its
obligations hereunder, except as otherwise provided herein.
Bay State shall be responsible for all expenses of printing and distributing
the Prospectuses, and all other expenses of preparing, printing and
distributing all other sales literature or material for use in connection
with offering the Contracts for sale.
9. Sales Literature and Advertising. MMLISI agrees to ensure that its
registered representatives use only the Prospectus, statements of additional
information, or other applicable and authorized sales literature then in
effect in selling the Contracts. MMLISI is not authorized to give any
information or to make any representations concerning the Contracts other
than those contained in the current Registration Statement filed with the
SEC or in such sales literature as may be authorized by Bay State.
MMLISI agrees to make timely filings with the SEC, the NASD, and such other
regulatory authorities as may be required of any sales literature or
advertising materials relating to the Contracts and intended for
distribution to prospective investors. Bay State shall review and approve
all advertising and sales literature concerning the Contracts utilized by
MMLISI. MMLISI also agrees to furnish to Bay State copies of all agreements
and plans it intends to use in connection with any sales of the Contracts.
10. Applications. All applications for Contracts shall be made on application
forms supplied by Bay State, and shall be remitted by MMLISI promptly,
together with such forms and any other required documentation, directly to
Bay State at the address indicated on such application or to such other
address as Bay State may, from time to time, designate in writing. All
applications are subject to acceptance or rejection by Bay State at its sole
discretion.
11. Payments. All money payable in connection with any of the Contracts, whether
as premiums, purchase payments or otherwise, and whether paid by, or on
behalf of any applicant or Contract owner, is the property of Bay State and
shall be transmitted immediately in accordance with the administrative
procedures of Bay State without any deduction or offset for any reason,
including by example but not limitation, any deduction or offset for
compensation claimed by MMLISI. Checks or money orders as payment on
5
<PAGE>
any Contract shall be drawn to the order of "MML Bay State Life Insurance
Company." No cash payments shall be accepted by MMLISI in connection with
the Contracts. Unless otherwise agreed to by Bay State in writing, neither
MMLISI nor any of Bay State's Agents nor any broker shall have an interest
in any surrender charges, deductions or other fees payable to Bay State as
set forth herein.
12. Insurance Licenses. Bay State shall apply for and maintain the proper
insurance licenses and appointments for each of the Agents and brokers
selling the Contracts in all states or jurisdictions in which the Contracts
are offered for sale by such person. Bay State reserves the right to refuse
to appoint any proposed Agent or broker, and to terminate an Agent or broker
once appointed. Bay State agrees to be responsible for all licensing or
other fees required under pertinent state insurance laws to properly
authorize Agents or brokers for the sale of the Contracts; however, the
foregoing shall not limit Bay State's right to collect such amount from any
person or entity other than MMLISI.
13. Agent/Broker Compensation. Commissions or other fees due all brokers and
Agents in connection with the sale of Contracts shall be paid by Bay State,
on behalf of MMLISI, to the persons entitled thereto in accordance with the
applicable agreement between each such broker or Agent and Bay State or a
general agent thereof. MMLISI shall assist Bay State in the payment of such
amounts as Bay State shall reasonably request, provided that MMLISI shall
not be required to perform any acts that would subject it to registration
under the insurance laws of any state. The responsibility of MMLISI shall
include the performance of all activities by MMLISI necessary in order that
the payment of such amounts fully complies with all applicable federal and
state securities laws. Unless applicable federal or state securities law
shall require, Bay State retains the ultimate right to determine the
commission rate paid to its Agents.
14. MMLISI Compensation. As payment for its services hereunder, MMLISI shall
receive an annual fee in the amount of $______ per year. Payments shall
commence and be made no later than December 31 of the year in which a
Contract is issued.
15. Books and Records. MMLISI and Bay State shall each cause to be maintained
and preserved for the period prescribed such accounts, books, and other
documents as are required of it by the 1934 Act and any other applicable
laws and regulations. In particular, without limiting the foregoing, MMLISI
shall cause all the books and records in connection with the offer and sale
of the Contracts by its registered representatives to be maintained and
preserved in conformity with the requirements of Rules 17a-3 and 17a-4 under
the 1934 Act, to the extent that such requirements are applicable to the
Contracts. The books, accounts, and records of MMLISI and Bay State as to
all transactions hereunder shall be maintained so as to disclose clearly and
accurately the nature and details of the transactions. The payment of
premiums, purchase payments, commissions and other fees and payments in
connection with the Contracts by its registered representatives shall be
reflected on the books and records of MMLISI as required under applicable
NASD regulations and federal and state securities laws requirements.
6
<PAGE>
MMLISI and Bay State, from time to time during the term of this Agreement,
shall divide the administrative responsibility for maintaining and
preserving the books, records and accounts kept in connection with the
Contracts; provided, however, in the case of books, records and accounts
kept pursuant to a requirement of applicable law or regulation, the ultimate
and legal responsibility for maintaining and preserving such books, records
and accounts shall be that of the party which is required to maintain or
preserve such books, records and accounts under the applicable law or
regulation, and such books, records and accounts shall be maintained and
preserved under the supervision of that party. MMLISI and Bay State shall
each cause the other to be furnished with such reports as it may reasonably
request for the purpose of meeting its reporting and recordkeeping
requirements under such regulations and laws, and under the insurance laws
of the Commonwealth of Massachusetts and any other applicable states or
jurisdictions.
MMLISI and Bay State each agree and understand that all documents, reports,
records, books, files and other materials required under applicable Rules
and federal and state securities laws shall be the property of MMLISI,
unless such documents, reports, records, books, files and other materials
are required by applicable regulation or law to be also maintained by Bay
State, in which case such material shall be the joint property of MMLISI and
Bay State. All other documents, reports, records, books, files and other
materials maintained relative to this Agreement shall be the property of Bay
State. Upon termination of this Agreement, all said material shall be
returned to the applicable party.
MMLISI and Bay State shall establish and maintain facilities and procedures
for the safekeeping of all books, accounts, records, files, and other
materials related to this Agreement. Such books, accounts, records, files,
and other materials shall remain confidential and shall not be voluntarily
disclosed to any other person or entity except as described below in section
16..
16. Availability of Records. MMLISI and Bay State shall each submit to all
regulatory and administrative bodies having jurisdiction over the sales of
the Contracts, present or future, any information, reports, or other
material that any such body by reason of this Agreement may request or
require pursuant to applicable laws or regulations. In particular, without
limiting the foregoing, Bay State agrees that any books and records it
maintains pursuant to paragraph 15 of this Agreement which are required to
be maintained under Rule 17a-3 or 17a-4 of the 1934 Act shall be subject to
inspection by the SEC in accordance with Section 17(a) of the 1934 Act and
Sections 30 and 31 of the 1940 Act.
17. Confirmations. Bay State agrees to prepare and mail a confirmation for each
transaction in connection with the Contracts at or before the completion
thereof as required by the 1934 Act and applicable interpretations thereof,
including Rule 10b-10 thereunder. Each such confirmation shall reflect the
facts of the transaction, and the form thereof will show that it is being
sent on behalf of MMLISI acting in the capacity of agent for Bay State.
7
<PAGE>
18. Indemnification. Bay State shall indemnify MMLISI, its registered
representatives, officers, directors, employees, agents and controlling
persons and hold such persons harmless, from and against any and all losses,
damages, liabilities, claims, demands, judgments, settlements, costs and
expenses of any nature whatsoever (including reasonable attorneys' fees and
disbursements) resulting or arising out of or based upon an allegation or
finding that: (i) the Registration Statement or any application or other
document or written information provided by or on behalf of Bay State
includes any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, unless such
statement or omission was made in reliance upon, and in conformity with,
written information furnished to Bay State by MMLISI or its registered
representatives specifically for use in the preparation thereof, or (ii)
there is a misrepresentation, breach of warranty or failure to fulfill any
covenant or warranty made or undertaken by Bay State hereunder.
MMLISI will indemnify Bay State, its officers, directors, employees, agents
and controlling persons and hold such persons harmless, from and against any
and all losses, damages, liabilities, claims, demands, judgments,
settlements, costs and expenses of any nature whatsoever (including
reasonable attorneys' fees and disbursements) resulting or arising out of or
based upon an allegation or finding that: (i) MMLISI or its registered
representatives offered or sold or engaged in any activity relating to the
offer and sale of the Contracts which was in violation of any provision of
the federal securities laws or, (ii) there is a material misrepresentation,
material breach of warranty or material failure to fulfill any covenant or
warranty made or undertaken by MMLISI hereunder.
Promptly after receipt by an indemnified party under this paragraph 18 of
notice of the commencement of any action by a third party, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this paragraph 18, notify the indemnifying party of
the commencement thereof; but the omission to notify the indemnifying party
will not relieve the indemnifying party from liability which the
indemnifying party may have to any indemnified party otherwise than under
this paragraph. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein and, to the
extent that it may wish, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election to assume the
defense thereof, the indemnifying party will not be liable to such
indemnified party under this paragraph for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
19. Independent Contractor. MMLISI shall be an independent contractor. MMLISI is
responsible for its own conduct and 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. MMLISI assumes full responsibility
for its agents and employees under applicable statutes and agrees to pay all
employer taxes thereunder.
8
<PAGE>
20. Termination. Subject to termination as hereinafter provided, this Agreement
shall remain in full force and effect for the initial term of the Agreement,
which shall be for a two year period commencing on the date first above
written, and this Agreement shall continue in full force and effect from
year to year thereafter, until terminated as herein provided.
This Agreement may be terminated by either party hereto upon 30 days written
notice to the other party, or at any time upon the mutual written consent of
the parties hereto. This Agreement shall automatically be terminated in the
event of its assignment. Subject to Bay State's approval, however, MMLISI
may delegate any duty or function assigned to it in this agreement provided
that such delegation is permissible under applicable law. Upon termination
of this Agreement, all authorizations, rights and obligations shall cease
except the the obligations to settle accounts hereunder, including the
settlement of monies due in connection with the Contracts in effect at the
time of termination or issued pursuant to applications received by Bay State
prior to termination.
21. Interpretation. This Agreement shall be subject to the provisions of the
1934 Act and the rules, regulations, and rulings thereunder and of the NASD,
from time to time in effect, and the terms hereof shall be interpreted and
construed in accordance therewith. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule, or otherwise,
the remainder of this Agreement shall not be affected thereby. This
Agreement shall be interpreted in accordance with the laws of the
Commonwealth of Massachusetts.
22. Non-exclusivity. The services of MMLISI and Bay State to the Separate
Account hereunder are not to be deemed exclusive and MMLISI and Bay State
shall be free to render similar services to others so long as their services
hereunder are not impaired or interfered with hereby.
23. Amendment. This Agreement constitutes the entire Agreement between the
parties hereto and may not be modified except in a written instrument
executed by all parties hereto.
24. Interests in and of MMLISI. It is understood that any of the policyholders,
directors, officers, employees and agents of Bay State may be a shareholder,
director, officer, employee, or agent of, or be otherwise interested in,
MMLISI, any affiliated person of MMLISI, any organization in which MMLISI
may have an interest, or any organization which may have an interest in
MMLISI; that MMLISI, any such affiliated person or any such organization may
have an interest in Bay State; and that the existence of any such dual
interest shall not affect the validity hereof or of any transaction
hereunder except as otherwise provided in the Charter, Articles of
Incorporation, or By-Laws of Bay State and MMLISI, respectively, or by
specific provision of applicable law.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their respective officials thereunto duly authorized and seals to be affixed,
as of the day and year first above written.
ATTEST: MML BAY STATE LIFE
INSURANCE COMPANY, on its behalf
and on behalf of __________SEPARATE ACCOUNT
By: _________________________________________
ATTEST: MML INVESTORS SERVICES, INC.
By: _________________________________________
10
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
MML Bay State Life Insurance Company
We consent to the inclusion in Post-Effective Amendment No. 2 to the
Registration Statement of MML Bay State Variable Annuity Separate Account 1 on
Form N-4 (Registration No. 33-76920), of our report, dated February 23, 1996 on
our audits of the financial statements of MML Bay State Life Insurance Company,
which include explanatory paragraphs relating to prior year adjustments and the
pending merger between Massachusetts Mutual Life Insurance Company and
Connecticut Mutual Life Insurance Company, and our report dated February 9, 1996
on our audits of MML Bay State Variable Annuity Separate Account 1. We also
consent to the reference to our Firm under the caption "Independent Accountants"
in the Statement of Additional Information.
Springfield, Massachusetts
April 26, 1996
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Isadore Jermyn, President, Chief Executive Officer and Chairman
of the Board of Directors of MML Bay State Life Insurance Company ("MML Bay
State"), does hereby constitute and appoint Lawrence V. Burkett, Thomas F.
English, Richard M. Howe, and Michael Berenson, and each of them individually,
as his true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 14th day of March,
1996.
/s/ Isadore Jermyn
- ---------------------------------- --------------------------------------------
Isadore Jermyn Witness
President, Chief Executive Officer
and Chairman of the Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Ann Iseley, Chief Financial Officer of MML Bay State Life
Insurance Company ("MML Bay State"), does hereby constitute and appoint Lawrence
V. Burkett, Thomas F. English, Richard M. Howe, and Michael Berenson, and each
of them individually, as his true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 15th day of March,
1996.
/s/ Ann Iseley
- -------------------------------- ----------------------------------------
Ann Iseley Witness
Chief Financial Officer
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Paul D. Adornato, a member of the Board of Directors of MML Bay
State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 20th day of March,
1996.
/s/ Paul D. Adornato
- ------------------------------------ -----------------------------------------
Paul D. Adornato Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Donald D. Cameron, Senior Vice President and a member of the
Board of Directors of MML Bay State Life Insurance Company ("MML Bay State"),
does hereby constitute and appoint Lawrence V. Burkett, Thomas F. English,
Richard M. Howe, and Michael Berenson, and each of them individually, as his
true and lawful attorneys and agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 14th day of March,
1996.
/s/ Donald D. Cameron
- ------------------------------------ ----------------------------------------
Donald D. Cameron Witness
Senior Vice President and a
member of the Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Daniel J. Fitzgerald, a member of the Board of Directors of MML
Bay State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 18th day of March,
1996.
/s/ Daniel J. Fitzgerald
- ------------------------------------ ----------------------------------------
Daniel J. Fitzgerald Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Arthur D. Foresi, a member of the Board of Directors of MML Bay
State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 18th day of March,
1996.
/s/ Arthur D. Foresi
- ------------------------------------ ----------------------------------------
Arthur D. Foresi Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Gary T. Huffman, a member of the Board of Directors of MML Bay
State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 25th day of March,
1996.
/s/ Gary T. Huffman
- ------------------------------------ ----------------------------------------
Gary T. Huffman Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Douglas J. Jangraw, a member of the Board of Directors of MML
Bay State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 14th day of March,
1996.
/s/ Douglas J. Jangraw
- ------------------------------------ ----------------------------------------
Douglas J. Jangraw Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, John J. Libera, Jr., a member of the Board of Directors of MML
Bay State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 21st day of March,
1996.
/s/ John J. Libera, Jr.
- ------------------------------------ ----------------------------------------
John J. Libera, Jr. Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, William T. McElmurray, a member of the Board of Directors of
MML Bay State Life Insurance Company ("MML Bay State"), does hereby constitute
and appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 19th day of March,
1996.
/s/ William T. McElmurray
- ------------------------------------ ----------------------------------------
William T. McElmurray Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Stuart H. Reese, a member of the Board of Directors of MML Bay
State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 14th day of March,
1996.
/s/ Stuart H. Reese
- ------------------------------------ ----------------------------------------
Stuart H. Reese Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY
MML BAY STATE SEPARATE INVESTMENT ACCOUNTS
------------------------------------------
The Undersigned, Jeanne M. Stamant, a member of the Board of Directors of MML
Bay State Life Insurance Company ("MML Bay State"), does hereby constitute and
appoint Lawrence V. Burkett, Thomas F. English, Richard M. Howe, and Michael
Berenson, and each of them individually, as his true and lawful attorneys and
agents.
The attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as a member of the Board of Directors of MML Bay State that said attorneys and
agents may deem necessary or advisable to enable MML Bay State to comply with
the Securities Act of 1933, as amended (the "1933 Act"), the Investment Company
Act of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of MML Bay State separate
investment accounts (the "MML Bay State Separate Accounts"). This power of
attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as a member of the Board of Directors of MML Bay State to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents or instruments of any MML Bay State Separate Account, including but
not limited to those listed below.
MML Bay State Variable Annuity Separate Account 1
MML Bay State Variable Life Separate Account I
MML Bay State Variable Life Separate Account II
MML Bay State Variable Life Separate Account III
MML Bay State Variable Life Separate Account IV
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 19th day of March,
1996.
/s/ Jeanne M. Stamant
- ------------------------------------ ----------------------------------------
Jeanne M. Stamant Witness
Member, Board of Directors
<PAGE>
SCHEDULE OF COMPUTATION OF PERFORMANCE
LIFETRUST
The following examples are calculated in accordance with the methods described
in the Prospectus and Statement of Additional Information:
1. Standardized Average Annual Total Return
----------------------------------------
Assuming experience from Oppenheimer Capital Appreciation
$1,000 Purchase Payment on 11/14/94
<TABLE>
<CAPTION>
Dates Unit Values
----- -----------
<S> <C>
12/31/94 1.000949
12/31/95 1.308714
</TABLE>
A $30 Annual Administrative Charge was charged on each contract anniversary.
For this calculation, it is prorated among divisions, with 16% allocated to
Capital Appreciation.
The deferred sales charge on 12/31/95 would have been 6% of the $1,000
contribution. The 10% free corridor was also applicable.
Standardized Average Annual Total Return for the period 12/31/94 - 12/31/95
Accumulated Value 12/31/95
([1000/1.00949] x 1.308714) - (.16)(30) = $1,302.67
Ending Redeemable Value on 12/31/95
1302.67 - (1000 x .9 x .06) = $1,248.67
Standardized Average Annual Total Return, 12/31/94 - 12/31/95
([1248.67/1000] - 1) x 100 = 24.87%
2. Percentage Change in Accumulation Unit Values
---------------------------------------------
Assuming experience from the Blend Division
<TABLE>
<C> <S> <C>
Unit Value 12/31/94 0.999399
Unit Value 12/31/95 1.215444
</TABLE>
Percentage Change in Unit Values for 1995: 21.62%
(1.215444 - 0.999399)/0.999399 x 100
<PAGE>
3. Annualized Accumulation Unit Value(AUV) Return
----------------------------------------------
For a one year period, the annualized AUV return is equal to the percentage
change in accumulation unit values.
For periods greater than one year, the annualized AUV return is an average
annual change in accumulation unit values, based on the percentage change.
Prior to November 14, 1994, the Accumulation Unit Values used are
hypothetical unit values based on the historical performance of the Funds
and the applicable contract expenses.
Assuming experience from the Blend Division
<TABLE>
<C> <S> <C>
Unit Value 12/31/92 0.914271
Unit Value 12/31/95 1.215444
</TABLE>
Percentage Change in Unit Values for the 3 year period ending 12/31/95:
32.94%
(1.215444 - 0.914271)/0.914271 x 100
Annualized AUV Return for the 3 year period ending 12/31/95: 9.96%
([1.3294 /\ (1/3)] - 1) x 100
The symbol /\ is being used to denote exponentiation.
4. Non-Standardized Average Annual Total Return
--------------------------------------------
Assuming experience from the Managed Bond Division
<TABLE>
<S> <C> <C>
Single Purchase Payment 12/31/85 $10,000
Accumulated Value 12/31/95 $21,086
</TABLE>
Average Annual Total Return: 7.75%
([21,086/10,000] /\ (1/10) - 1) x 100
The symbol /\ is being used to denote exponentiation.
<PAGE>
5. One Year Total Return
---------------------
Assuming experience from the Equity Division
<TABLE>
<S> <C> <C>
Single Purchase Payment 12/31/85 $10,000
Accumulated Value 12/31/94 $23,757
Accumulated Value 12/31/95 $30,706
</TABLE>
One Year Total Return: 29.25%
([30,706 - 23,757]/23,757) x 100
6. 7-day Money Market Yield and Effective Yield
--------------------------------------------
Assuming experience from the MML Money Market Division
For the period ending 12/31/95
<TABLE>
<C> <S> <C>
Unit Value 12/22/95 1.045199
Unit Value 12/26/95 1.045648
Unit Value 12/31/95 1.046195
</TABLE>
To get the change in value from 12/22/95 to 12/26/95, take 50%
of the change from 12/22/95 to 12/26/95:
([1.045648/1.045199] - 1)(.5) 0.000215
Change in value from 12/26/95 to 12/31/95:
(1.046195/1.045648) - 1 0.000523
Combine to get change in value from 12/24/95 to 12/31/95:
(0.000221 + 0.000535) 0.000738
Before administrative fee deduction
Yield: .000738 x (365/7) x 100 = 3.85%
Effective Yield: ([1.000738] /\ (365/7) - 1) x 100 = 3.92%
The symbol /\ is being used to denote exponentiation.
Administrative fee deduction is: 0.11%
After administrative fee deduction
Yield: 3.74%
Effective Yield: 3.81%
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 23,270,327
<INVESTMENTS-AT-VALUE> 24,390,784
<RECEIVABLES> 75,622
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 24,466,406
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,454
<TOTAL-LIABILITIES> 2,454
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 24,463,952
<DIVIDEND-INCOME> 520,207
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 141,046
<NET-INVESTMENT-INCOME> 379,161
<REALIZED-GAINS-CURRENT> 115,588
<APPREC-INCREASE-CURRENT> 1,121,717
<NET-CHANGE-FROM-OPS> 1,616,466
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 24,372,937
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 12,277,484
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
