-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JNnjsT5tbwyWay6YeCLER3sAsv7XMWPd91M4TGM7V3o/CUVg0KXgRs2N1P9OruVc KrylvM9XvQXpd11PABUBXA== 0000950130-00-001903.txt : 20000407 0000950130-00-001903.hdr.sgml : 20000407 ACCESSION NUMBER: 0000950130-00-001903 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 20000406 EFFECTIVENESS DATE: 20000406 FILER: COMPANY DATA: COMPANY CONFORMED NAME: METROPOLITAN SERIES FUND INC CENTRAL INDEX KEY: 0000710826 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 833164113 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 002-80751 FILM NUMBER: 594494 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-03618 FILM NUMBER: 594495 BUSINESS ADDRESS: STREET 1: ONE MADISON AVE STREET 2: C/O METROPOLITAN LIFE INSURANCE CO CITY: NEW YORK STATE: NY ZIP: 10010 BUSINESS PHONE: 2125787360 MAIL ADDRESS: STREET 1: METROPOLITAN LIFE INSURANCE CO STREET 2: 1 MADISON AVE LAW DEPT AREA 7-G CITY: NEW YORK STATE: NY ZIP: 10010 485BPOS 1 METROPOLITAN SERIES FUND As filed with the Securities and Exchange Commission on April 6, 2000 Registration Nos. 2-80751 811-3618 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- Form N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_] [X] Post-Effective Amendment No. 26 and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_] [X] Amendment No. 28 (Check appropriate box or boxes) ---------------- Metropolitan Series Fund, Inc. (Exact Name of Registrant as Specified in Charter) One Madison Avenue 10010 New York, New York (Zip Code) (Address of Principal Executive Office) Registrant's Telephone Number, Including Area Code: 212-578-2674 ---------------- GARY A. BELLER, ESQ. One Madison Avenue New York, New York 10010 (Name and Address of Agent for Service) Copy to: GARY O. COHEN, ESQ. Freedman, Levy, Kroll & Simonds 1050 Connecticut Avenue, N.W. Washington, D.C. 20036 It is proposed that the filing will become effective (check appropriate box) [_]immediately upon filing pursuant to paragraph (b) of Rule 485. [X]on May 1, 2000 pursuant to paragraph (b) of Rule 485. [_]80 days after filing pursuant to paragraph (a)(1) of Rule 485. [_]on (date) pursuant to paragraph (a)(1) of Rule 485. [_]75 days after filing pursuant to paragraph (a)(2) of Rule 485. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [METLIFE LOGO] [STATE STREET RESEARCH LOGO] [HARRIS ASSOCIATES LOGO] [JANUS LOGO] [L.P.LOOMIS SAYLES & COMPANY, L.P. LOGO] [NEUBERGER BERMAN LOGO] [PUTNAM INVESTMENTS LOGO] [SCUDDER LOGO] [T. ROWE PRICE LOGO] PROSPECTUS FOR METROPOLITAN SERIES FUND, INC. May 1, 2000 The investment options currently offered by the Metropolitan Series Fund (the "Fund") are: State Street Loomis Sayles High Research Yield Bond Portfolio Aggressive Growth Portfolio Neuberger Berman Partners Mid Cap Value State Street Portfolio Research Diversified Scudder Global Equity Portfolio Portfolio State Street T. Rowe Price Large Cap Research Growth Portfolio Growth Portfolio T. Rowe Price Small Cap State Street Growth Portfolio Research Income Portfolio Lehman Brothers(R) Aggregate Bond Index State Street Portfolio Research Money Market MetLife Stock Index Portfolio Portfolio State Street MetLife Mid Cap Stock Research Index Portfolio Aurora Small Cap Value Morgan Stanley EAFE(R) Portfolio Index Portfolio Putnam International Russell 2000(R) Index Stock Portfolio Portfolio (formerly Santander International Stock Portfolio) Putnam Large Cap Growth Portfolio Harris Oakmark Large Cap Value Portfolio Janus Mid Cap Portfolio
As with all mutual fund shares, neither the Securities and Exchange Commission nor any state securities authority have approved or disapproved these securities, nor have they determined if this Prospectus is accurate or complete. Any representation otherwise is a criminal offense. TABLE OF CONTENTS FOR THIS PROSPECTUS
Page in this Subject Prospectus ------- ---------- Risk/Return Summary............................................... 2 Performance and Volatility........................................ 12 About the Investment Managers..................................... 20 Portfolio Turnover Rates.......................................... 26 Dividends, Distributions and Taxes................................ 26 General Information About the Fund and its Purpose................ 27 Sale and Redemption of Shares..................................... 28 Financial Highlights.............................................. 29 Appendix A--Portfolio Manager Prior Performance................... 36 Appendix B--Certain Investment Practices.......................... 39 Appendix C--Description of Some Investments, Techniques, and Risks............................................ 43
[Carefully review the objectives and investment practices of the Portfolios and consider your ability to assume the risks involved before allocating payments to particular Portfolios.] Risk/Return Summary About all the Portfolios Each Portfolio of the Fund has its own investment objective. Since investment in any Portfolio involves both opportunities for gain and risks of loss, we cannot give you assurance that the Portfolios will achieve their objectives. You should carefully review the objectives and investment practices of the Portfolios and consider your ability to assume the risks involved before allocating payments to particular Portfolios. The loss of money is a risk of investing in the Fund. While certain of the investment techniques, instruments and risks associated with each Portfolio are referred to in the discussion that follows, additional information on these subjects appears in Appendix B and C to this Prospectus. However, those discussions do not list every type of investment, technique, or risk to which a Portfolio may be exposed. Further, the Portfolios may change their investment practices at any time without notice, except for those policies that this Prospectus or the Statement of Additional Information ("SAI") specifically identify as requiring a shareholder vote to change. Unless otherwise indicated, all percentage limitations, as well as characterization of a company's capitalization, are evaluated as of the date of purchase of the security. [State Street Research Aggressive Growth Portfolio] About the State Street Research Aggressive Growth Portfolio: Investment objective: maximum capital appreciation. Principal investment strategies: The Portfolio generally invests most of its assets in the common stocks of, and other securities convertible into or carrying the right to acquire common stocks of companies whose earnings appear to be growing at a faster rate than the earnings of an average company. The Portfolio's investments can range across the full spectrum from small to large capitalization issuers. At different times, the Portfolio may emphasize a particular size or type of company. Currently, the Portfolio focuses on medium size companies. 2 Principal risks: The risks described after the following captions under "Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in less mature companies, smaller companies and companies with "special situations';" and "Growth investing." Volatility may be indicative of risk. Please refer to the discussion under "Performance and Volatility." [State Street Research Growth Portfolio] About the State Street Research Growth Portfolio: Investment objective: long-term growth of capital and income and moderate current income. Principal investment strategies: The Portfolio generally invests the greatest portion of its assets in equity securities of larger, established companies and equity securities that are selling below what the portfolio manager believes to be their intrinsic values. Other principal strategies include investing in cyclical securities and smaller emerging growth companies with potential for above average earnings growth. Principal risks: The risks described after the following captions under "Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in larger companies;" "Investing in less mature companies, smaller companies and companies with "special situations';" "Growth investing;" and "Value investing." Volatility may be indicative of risk. Please refer to the discussion under "Performance and Volatility." [State Street Research Money Market Portfolio] About the State Street Research Money Market Portfolio: Investment objective: the highest possible current income consistent with preservation of capital and maintenance of liquidity. Principal investment strategies: The Portfolio primarily invests in short term money market instruments with minimal credit risks including: corporate debt securities, United States government securities, government agency securities, bank certificates of deposit, bankers' acceptances, variable amount master demand notes and repurchase and reverse repurchase agreements. The Portfolio invests only in securities that have a remaining maturity of less than 13 months, and the dollar weighted average maturity of the Portfolio's securities will not be more than 90 days. Principal risks: Although the portfolio manager will manage the Portfolio so that significant variations in net asset value are rather unlikely, it is possible to lose money by investing in the Portfolio. The major risk involved with investing in the Portfolio is that the overall yield of the Portfolio could decrease and lower the return on your investment. Situations that can lower the yield include those that cause short-term interest rates to decline. An investment in the Portfolio is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Volatility may be indicative of risk. Please refer to the discussion under "Performance and Volatility." [State Street Research Income Portfolio] About the State Street Research Income Portfolio: Investment objective: a combination of: (a) the highest possible total return, by combining current income with capital gains, consistent with prudent investment risk, and (b) secondarily, the preservation of capital. Principal investment strategies: The Portfolio invests at least 65% of its net assets in non-convertible debt securities in the three highest rating 3 categories as determined by a nationally recognized statistical rating organization ("NRSRO"), or of comparable quality ("top three ratings"). The Portfolio may invest in debt securities with varying maturities. The Portfolio may also invest in (a) debt securities that are not within the top three rating categories, (b) convertible securities and preferred stocks of companies that have senior securities rated within the top three credit rating categories, and (c) up to 10% of total assets in common stocks acquired by conversion of convertible securities or exercise of warrants attached to debt securities. Principal risks: The risks described after the following captions under "Principal Risks of Investing in the Fund:" "Investing in fixed income securities;" "Prepayment risk;" and "Zero coupon risks." Volatility may be indicative of risk. Please refer to the discussion under "Performance and Volatility." [State Street Research Aurora Small Cap Value Portfolio] About the State Street Research Aurora Small Cap Value Portfolio: Investment objective: high total return, consisting principally of capital appreciation. Principal investment strategies: Under normal market conditions, the portfolio invests at least 65% of its total assets in small company value stocks. The Portfolio generally expects that most of these stocks, when it first buys them, will not be larger than the stocks of the largest companies in the Russell 2000 Value Index. As of December 31, 1999, this included companies with capitalizations of approximately $660 million. The Portfolio may continue to hold or buy stock in a company that has outgrown this range if the company appears to remain an attractive investment. In choosing among small company stocks, the Portfolio takes a value approach, searching for those companies that appear to be trading below their true worth. The Portfolio uses research to identify potential investments, examining such features as a firm's financial condition, business prospects, competitive position and business strategy. The Portfolio looks for companies that appear likely to come back into favor with investors, for reasons that may range from good prospective earnings or strong management teams to new products or services. The Portfolio may adjust the composition of its holdings as market conditions and economic outlooks change and reserves the right to invest up to 35% of total assets in other securities. They would generally consist of other types of equity securities, such as larger company stocks or growth stocks. Principal risks: The risks described after the following captions under "Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in less mature companies, smaller companies and companies with "special situations';" and "Value investing." Volatility may be indicative of risk. 4 [State Street Research Diversified Portfolio] About the State Street Research Diversified Portfolio: Investment objective: high total return while attempting to limit investment risk and preserve capital. Principal investment strategies: The Portfolio invests portions of its assets in equity securities of the type that can be purchased by the State Street Research Growth Portfolio, debt securities of the type that can be purchased by the State Street Research Income Portfolio and short-term money market instruments of the type that can be purchased by the State Street Research Money Market Portfolio. The portion of the Portfolio's assets invested in each category will usually be similar in composition to that of the Portfolio to which that portion correlates. However, no absolute limits apply to the portion of assets invested in each category of the composition of each category. The amount of assets invested in each type of security will depend upon economic conditions, the general level of common stock prices, interest rates and other relevant considerations, including the risks of each type of security. Principal risks: The major risk for the Portfolio is that the portfolio managers will not correctly anticipate the relative performance of different asset categories for specific periods resulting in the Portfolio underperforming other types of asset allocation investments or other types of investments in general. In addition, the Portfolio is subject to the same risks as the State Street Research Growth, State Street Research Income and State Street Research Money Market Portfolios to the extent its assets are invested similarly to each of those portfolios. These risks may be moderated, however, by the greater variety of asset types in which the Diversified Portfolio is generally expected to be invested, as compared with those other Portfolios. Volatility may be indicative of risk. Please refer to the discussion under "Performance and Volatility." [Putnam International Stock Portfolio] About the Putnam International Stock Portfolio: (formerly, the Santander International Stock Portfolio). Investment objective: long-term growth of capital. Principal investment strategies: The Portfolio normally invests mostly in the common stocks of companies outside the United States. The portfolio manager selects countries and industries it believes are attractive. The portfolio manager then seeks stocks offering opportunity for gain. These may include both growth and value stocks. The Portfolio invests mainly in mid-sized and large companies, although the Portfolio can invest in companies of any size. The Portfolio will usually be invested in issuers located in at least three countries, not including the U.S. Under normal conditions, the Portfolio will not invest more than 15% of its net assets in the equity securities of companies domiciled in "emerging countries," as defined by Morgan Stanley Capital International. Principal risks: The risks described after the following captions under "Principal Risks of Investing in the Fund:" Equity investing;" "Investing in larger companies;" "Investing in securities of foreign issuers;" "Value investing;" and "Growth investing." Volatility may be indicative of risk. Please refer to the discussion under "Performance and Volatility." [Putnam Large Cap Growth Portfolio] About the Putnam Large Cap Growth Portfolio: Investment objective: capital appreciation. Principal investment strategies: The Portfolio normally invests in the common stocks of U.S. companies, with a focus on growth stocks. The portfolio managers look for stocks issued by companies that are likely to 5 grow faster than the economy as a whole. The Portfolio invests in a relatively small number of companies that the managers believe will benefit from long-term trends in the economy, business conditions, consumer behavior or public perceptions of the economic environment. The Portfolio invests mainly in large companies. Principal risks: Since the Portfolio invests in fewer issuers than a fund that invests more broadly, there is vulnerability to factors affecting a single investment that can result in greater Portfolio losses and volatility. The Portfolio's other principal risks are described after the following captions under "Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in larger companies;" "Investing in securities of foreign issuers;" and "Growth investing." Volatility may be indicative of risk. [Harris Oakmark Large Cap Value Portfolio] About the Harris Oakmark Large Cap Value Portfolio: Investment objective: long-term capital appreciation. Principal investment strategies: The Portfolio normally invests at least 65% of its total assets in equity securities of large capitalization U.S. companies. The portfolio managers define large-cap ("large-cap") companies as those whose market capitalization falls within the range of companies included in the S&P 500 Index at the time of the purchase. As of December 31, 1999, this included companies with capitalizations of approximately $750 million and above. The portfolio managers' chief consideration in selecting equity securities for the Portfolio is their judgment as to the size of the discount at which the security trades, relative to its economic value. The portfolio managers' investment philosophy is predicated on the belief that, over time, market price and value converge and that the investment in securities priced significantly below long-term value present the best opportunity to achieve long-term capital appreciation. The portfolio managers use several methods to analyze value, but considers the primary determinant to be the enterprise's long-run ability to generate cash for its owners. The portfolio managers also believe the risks of equity investing are often reduced if management's interests are strongly aligned with the interests of its stockholders. Principal risks: The risks described after the following captions under "Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in larger companies;" "Investing in less mature companies, smaller companies and companies with "special situations';" and "Value investing." Volatility may be indicative of risk. Please refer to the discussion under "Performance and Volatility." [Janus Mid Cap Portfolio] About the Janus Mid Cap Portfolio: Investment objective: long-term growth of capital. Principal investment strategies: The Portfolio normally invests at least 65% of its total assets in common stocks of medium capitalization companies selected for their growth potential. The portfolio manager defines medium capitalization ("mid-cap") companies as those whose market capitalization falls within the range of companies included in the S&P MidCap 400 Index at the time of the purchase. As of December 31, 1999, this included companies with capitalizations between approximately $170 million and $37 billion. The Portfolio is non- diversified, so that it can own larger positions in a smaller number of issuers. This means the appreciation or depreciation of a single investment can have a greater impact on the Portfolio's share price. 6 The portfolio manager generally takes a "bottom up" approach to building the Portfolio by identifying companies with earnings growth potential that may not be recognized by the market at large, without regard to any industry sector or other similar selection procedure. Principal risks: The Portfolio is nondiversified which means it may hold larger positions in a smaller number of securities than would a diversified portfolio. Thus, a single security's increase or decrease in value may have a greater impact on the value of the Portfolio and its total return. The Portfolio's other principal risks are described after the following captions, under "Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in less mature companies, smaller companies and companies with "special situations';" "Investing in larger companies;" "Investing in securities of foreign issuers;" "Investing in medium sized companies;" and "Growth investing." Volatility may be indicative of risk. Please refer to the discussion under "Performance and Volatility." [Loomis Sayles High Yield Bond Portfolio] About the Loomis Sayles High Yield Bond Portfolio: Investment objective: high total investment return through a combination of current income and capital appreciation. Principal investment strategies: The Portfolio normally invests at least 65% of its assets in below investment grade fixed income securities (commonly referred to as "junk bonds"). The Portfolio expects to invest a substantial amount of its assets in securities of foreign (non-U.S. domiciled) companies. Principal risks: The risks are described after the following captions under "Principal Risks of Investing in the Fund:" "Investing in fixed income securities;" "Prepayment risk;" "Investing in securities of foreign issuers;" and "Zero coupon risks." Also, the Portfolio has higher risk than many other debt-type investments, because it normally invests 65% or more of its assets in lower rated bonds (commonly known as "junk bonds"), and the bonds in this Portfolio have higher default rates than do high quality bonds. Volatility may be indicative of risk. Please refer to the discussion under "Performance and Volatility." [Neuberger Berman Partners Mid Cap Value Portfolio] About the Neuberger Berman Partners Mid Cap Value Portfolio: Investment objective: capital growth. Principal investment strategies: The Portfolio normally invests at least 65% of its total assets in common stocks of mid capitalization companies. The portfolio managers define mid-cap companies as those whose market capitalization falls within the range of companies included in the S&P MidCap 400 Index at the time of purchase. As of December 31, 1999, this included companies with capitalizations between approximately $165 million and $37.094 billion. The Portfolio uses a value-oriented investment approach designed to increase capital with reasonable risk by purchasing securities believed to be undervalued based on strong fundamentals, including: a low price-to-earnings ratio; consistent cash flows; the company's track record through all economic cycles; ownership interests by a company's management; and the dominance of a company in particular field. Principal risks: The risks described after the following captions under "Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in medium sized companies;" and "Value investing." Volatility may be indicative of risk. Please refer to the discussion under "Performance and Volatility." 7 [Scudder Global Equity Portfolio] About the Scudder Global Equity Portfolio: Investment objective: long-term growth of capital. Principal investment strategies: The Portfolio generally invests most of its assets in equity securities (primarily common stock) of established companies listed on U.S. or foreign securities exchanges or traded over-the-counter. Normally investments will be spread broadly around the world and will include companies of varying sizes. The Portfolio invests in companies that are expected to benefit from global economic trends, promising technologies or products and specific country opportunities resulting from changing geopolitical, currency or economic relationships. The Portfolio will usually be invested in securities of issuers located in at least three countries, one of which may be the U.S., although all of its assets may be invested in non-U.S. issues. Principal Risks: The risks described after the following captions under "Principal Risks of Investing in the Fund:" "Equity investing;" "Value investing; "Growth investing;" "Investing in larger companies;" and "Investing in securities of foreign issuers." Volatility may be indicative of risk. Please refer to the discussion under "Performance and Volatility." [T. Rowe Price Large Cap Growth Portfolio] About the T. Rowe Price Large Cap Growth Portfolio: Investment objective: long-term growth of capital and, secondarily, dividend income. Principal investment strategies: The Portfolio normally invests at least 65% of its total assets in a diversified group of large capitalization growth companies. The portfolio managers define large capitalization ("large-cap") companies as those whose market capitalization falls within the range of the largest 300 companies included in the Russell 3000 Index at the time of the purchase. As of December 31, 1999, this included companies with capitalizations of approximately $7.7 billion and above. The Portfolio generally looks for companies with above-average growth in earnings and cash flow; the ability to sustain earnings momentum even during economic slowdowns by operating in industries or service sectors where earnings and dividends can outpace inflation and the overall economy; or that have a lucrative niche in the economy where profit margins widen due to economic factors (rather than one- time events such as lower taxes). The Portfolio expects to invest in common stocks of companies that normally (but not always) pay dividends that are generally expected to rise in future years as earnings rise. Principal risks: The risks described after the following captions under "Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in larger companies;" "Investing in securities of foreign issuers;" and "Growth investing." The risks of equity investing may be moderated by the fact that the Portfolio emphasizes dividend paying securities. On the other hand, that may expose the Portfolio more directly to interest rate risk. Volatility may be indicative of risk. Please refer to the discussion under "Performance and Volatility." [T. Rowe Price Small Cap Growth Portfolio] About the T. Rowe Price Small Cap Growth Portfolio: Investment objective: long-term capital growth. Principal investment strategies: The Portfolio normally invests at least 65% of its total assets in a diversified group of small capitalization companies. The 8 portfolio manager defines small capitalization ("small cap") companies as those whose market capitalization falls within the range of companies included in the bottom 20% of the S&P 500 Index at the time of the purchase. As of December 31, 1999, this included companies with capitalizations of approximately $3.3 billion and below. The Portfolio expects to invest primarily in common stocks and convertible securities of companies in the development stage of their corporate life cycle with potential to achieve long-term earnings growth faster than the overall market. Principal risks: The risks described after the following captions "Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in less mature companies, smaller companies and companies with "special situations';" and "Growth investing." Volatility may be indicative of risk. Please refer to the discussion under "Performance and Volatility." [The Index Portfolios] About all the Index Portfolios Principal investment strategies applicable to all the Index Portfolios: Each Index Portfolio has as an investment objective to equal the performance of a particular index. Certain strategies common to all of the Index Portfolios are discussed in the next paragraph below. Thereafter, the unique aspects of the objective and principal strategies of each Index Portfolio are discussed. In addition to securities of the type contained in its index, each Portfolio also expects to invest, as a principal investment strategy, in securities index futures contracts and/or related options to simulate full investment in the index while retaining liquidity, to facilitate trading, to reduce transaction costs or to seek higher return when these derivatives are priced more attractively than the underlying security. Also, since the Portfolios attempt to keep transaction costs low, the portfolio manager generally will rebalance a Portfolio only if it deviates from the applicable index by a certain percent, depending on the company, industry, and country, as applicable. MetLife monitors the tracking performance of the Portfolio through examination of the "correlation coefficient." A perfect correlation would produce a coefficient of 1.00. The Portfolio will attempt to maintain a target correlation coefficient of at least .95. [Lehman Brothers Aggregate Bond Index Portfolio] Lehman Brothers Aggregate Bond Index Portfolio: Investment objective: to equal the performance of the Lehman Brothers Aggregate Bond Index. Principal investment strategies: In addition to the strategies outlined above under "Principal investment strategies applicable to all the Index Portfolios," the Portfolio will normally invest most of its assets in fixed income securities included in the Lehman Brothers Aggregate Bond Index. This index is comprised of the Lehman Brothers Government/Corporate Index, the Lehman Brothers Mortgage-Backed Securities Index, the Lehman Brothers Asset-Backed Securities Index and, effective July 1, 1999, the Lehman Brothers Commercial Mortgage-Backed Securities Index. The Portfolio may continue to hold debt securities that no longer are included in the Index, if, together with any money market instruments or cash, such holdings are no more than 20% of the Portfolio's net assets. The types of fixed income securities included in the Index are debt obligations issued or guaranteed by the United States Government or its agencies or instrumentalities, debt obligations issued or guaranteed by U.S. corporations, debt obligations issued or guaranteed by foreign companies, sovereign 9 governments, municipalities, governmental agencies or international agencies, and mortgage-backed securities. The Portfolio will invest in a sampling of the bonds included in the Lehman Brothers Aggregate Bond Index. The bonds purchased for the Portfolio are chosen to, as a group, reflect the composite performance of the Index. As the Portfolio's total assets grow, a larger percentage of bonds included in the Index will be included in the Portfolio. Principal risks: The risks described after the following captions under "Principal Risks of Investing in the Fund:" "Investing in fixed income securities;" "Prepayment risk;" "Zero coupon risks;" and "Index investing." Volatility may be indicative of risk. Please refer to the discussion under "Performance and Volatility." [MetLife Stock Index Portfolio] MetLife Stock Index Portfolio: Investment objective: to equal the performance of the Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index"). Principal investment strategies: In addition to the strategies outlined above under "Principal investment strategies applicable to all the Index Portfolios," the Portfolio will normally invest most of its assets in common stocks included in the S&P 500 Index. The S&P 500 Index consists of 500 common stocks, most of which are listed on the New York Stock Exchange. The Portfolio will be managed by purchasing the common stock of all the companies in the S&P 500 Index. The stocks included in the S&P 500 Index are issued by companies among those whose outstanding stock have the largest aggregate market value, although stocks that are not among the 500 largest are included in the S&P 500 Index for diversification purposes. Principal risks: The risks described after the following captions under "Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in larger companies;" and "Index investing." Volatility may be indicative of risk. Please refer to the discussion under "Performance and Volatility." [Morgan Stanley EAFE Index Portfolio] Morgan Stanley EAFE Index Portfolio: Investment objective: to equal the performance of the MSCI EAFE Index. Principal investment strategies: In addition to the strategies outlined above under "Principal investment strategies applicable to all the Index Portfolios," the Portfolio will normally invest most of its assets in equity securities included in the MSCI EAFE Index. The MSCI EAFE Index (also known as the Morgan Stanley Capital International Europe Australasia Far East Index) is an index containing approximately 1,100 equity securities of companies of varying capitalizations in countries outside the United States. As of December 31, 1999 countries included in the MSCI EAFE Index were Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, The Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom. The Portfolio will invest in a statistically selected sample of the 1,100 stocks included in the MSCI EAFE Index. The stocks purchased for the Portfolio are chosen to, as a group, reflect the composite performance of the MSCI EAFE Index. As the Portfolio's total assets grow, a larger percentage of stocks included in the MSCI EAFE Index will be included in the Portfolio. Principal risks: The risks described after the following captions under "Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in 10 securities of foreign issuers;" and "Index investing." Volatility may be indicative of risk. Please refer to the discussion under "Performance and Volatility." [Russell 2000 Index Portfolio] Russell 2000 Index Portfolio: Investment objective: to equal the return of the Russell 2000 Index. Principal investment strategies: In addition to the strategies outlined above under "Principal Investment Strategies for the Index Portfolios," the Portfolio will normally invest most of its assets in common stocks included in the Russell 2000 Index. The Russell 2000 Index is composed of approximately 2,000 small capitalization companies. As of December 31, 1999, the average stock market capitalization of companies in the Russell 2000 Index was $460 million, and the weighted average stock market capitalization was $1,360 million. The Portfolio will invest in a statistically selected sample of the 2000 stocks included in the Russell 2000 Index. The stocks purchased for the Portfolio are chosen to, as a group, reflect the composite performance of the Russell 2000 Index. As the Portfolio's total assets grow, a larger percentage of stocks included in the Russell 2000 Index will be included in the Portfolio. Principal risks: The risks described after the following the captions under "Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in less mature companies, smaller companies and companies with "special situations';" and "Index investing." Volatility may be indicative of risk. Please refer to the discussion under "Performance and Volatility." [MetLife Mid Cap Stock Index Portfolio] About the MetLife Mid Cap Stock Index Portfolio: Investment objective: to equal the performance of the Standard & Poor's MidCap 400 Composite Stock Index ("S&P MidCap 400 Index"). Principal investment strategies: In addition to the strategies outlined above under "Principal investment strategies applicable to all the Index Portfolios," the Portfolio will normally invest most of its assets in common stocks included in the S&P 400 MidCap Index. The S&P MidCap 400 Index consists of the common stock of approximately 400 mid capitalization companies. As of December 31, 1999, the average stock market capitalization of companies in the S&P MidCap 400 Index was $2.304 billion, and the weighted average stock market capitalization was $5.531 billion. The Portfolio will be managed by purchasing the common stock of all the companies in the S&P MidCap 400 Index. Principal risks: The risks described after the following captions under "Principal Risks of Investing in the Fund;" "Equity Investing;" "Index Investing;" "Investing in less mature companies, smaller companies, and companies with "special situations';" "Investing in larger companies;" and "Investing in medium sized companies." Volatility may be indicative of risk. 11 Performance and Volatility The following tables and charts are provided to illustrate the variability of the investment returns that each Portfolio shown below has earned in the past. . Average annual total return measures a Portfolio's performance over time, and compares those returns to a representative index. Periods of 1, 5, and 10 years (or since inception as applicable) are presented. . The graphs of year-by-year returns examine volatility by illustrating a Portfolio's historic highs and lows, as well as the consistency of returns. . In general, as reflected in this section, Portfolios with higher average annual total returns tend to be more volatile. . Return calculations do not reflect insurance product fees or other charges, and if included these charges would reduce each Portfolio's past performance. Also, past performance does not necessarily indicate how a particular Portfolio will perform in the future. State Street Research Aggresive Growth Investments Results Average Annual Total Returns As of December 31, 1999 ----------------------- 1 year 5 Years 10 Years ------ ------- -------- State Street Research Aggressive Growth 33.24% 17.65% 16.14% - ------------------------------------------------- S&P 500 21.04% 28.54% 18.19% [BAR CHART] 90 -10.34% 91 66.41% 92 10.39% 93 22.63% 94 -1.88% 95 29.50% 96 7.72% 97 6.67% 98 13.69% 99 33.24% During the 10-year period shown in the bar chart, the highest return for a quarter was 33.8% (quarter ended December 31, 1999) and the lowest return for a quarter was -22.3% (quarter ended September 30, 1990). State Street Research Money Market Investment Results Average Annual Total Returns As of December 31, 1999 -------------------------- 1 Year 5 Years 10 Years ------ ------- -------- State Street Research Money Market 4.89% 5.18% 5.06% - ------------------------------------------------------ IBC's All Taxable 30 Day 4.64% 5.04% 4.86% The seven day yield for this portfolio is 5.71% (simple yield) and 5.87% (effective yield) for the seven days ended December 31, 1999. [BAR CHART] 90 8.23% 91 6.10% 92 3.73% 93 2.9% 94 3.85% 95 5.59% 96 5.01% 97 5.21% 98 5.19% 99 4.89% During the 10-year period shown in the bar chart, the highest return for the quarter was 2.4% (quarter ended June 30, 1989) and the lowest return for a quarter was 0.70% (quarter ended September 30, 1993). 12 State Street Research Diversified Investment Results Average Annual Total Returns As of December 31, 1999 --------------------------------- 1 Year 5 Years 10 Years ------ ------- -------- State Street Research Diversified 8.71% 17.94% 13.05% - ------------------------------------------------------------------ S&P 500 21.04% 28.54% 18.19% - ------------------------------------------------------------------ Lehman Brothers Aggregate -0.82% 7.73% 7.70% [BAR CHART] 90 0.00 91 24.84 92 9.48 93 12.75 94 -3.06 95 27.03 96 14.52 97 20.58 98 19.64 99 8.71 During the 10-year period shown in the bar chart, the highest return for a quarter was 11.7% (quarter ended June 30, 1998) and the lowest return for a quarter was -8.8% (quarter ended September 30, 1990). State Street Research Income Investment Results Average Annual Total Returns As of December 31, 1999 --------------------------------- 1 Year 5 Years 10 Years ------ ------- -------- State Street Research Income -2.28% 7.78% 9.69% - ------------------------------------------------------------------ Lehman Brothers Aggregate -0.82% 7.73% 7.70% [BAR CHART] 90 10.03 91 17.31 92 6.91 93 11.36 94 -3.15 95 19.55 96 3.60 97 9.83 98 9.40 99 -2.28 During the 10-year period shown in the bar chart, the highest return for a quarter was 6.9% (quarter ended September 30, 1991) and the lowest return for a quarter was -2.5% (quarter ended March 31, 1994). State Street Research Growth Investment Results Average Annual Total Returns As of December 31, 1999 --------------------------------- 1 Year 5 Years 10 Years ------ ------- -------- State Street Research Growth 18.47% 25.96% 16.90% - ------------------------------------------------------------------ Lehman Brothers Aggregate 21.04% 28.54% 18.19% [BAR CHART] 90 -8.50 91 33.09 92 11.56 93 14.40 94 -3.25 95 33.14 96 22.18 97 28.36 98 28.18 99 18.47 During the 10-year period shown in the bar chart, the highest return for a quarter was 38.6% (quarter ended December 31, 1998) and the lowest return for a quarter was -22.6% (quarter ended September 30, 1998). 13 State Street Research Aurora Small Cap Value Since the Portfolio will commence operations effective on or about July 5, 2000, no volatility or performance information is available. Putnam International Stock(1) Investment Results Average Annual Total Returns As of December 31, 1999 --------------------------------- 1 Year 5 Years 10 Years ------ ------- -------- Santander International Stock 16.44% 6.66% 7.80% - ------------------------------------------------------------------ MSCI EAFE 26.96% 12.83% 10.07% [BAR CHART] 92 -10.21 93 47.76 94 5.08 95 0.84 96 -1.77 97 -2.34 98 22.56 99 16.44 During the 10-year period shown in the bar chart, the highest return for a quarter was 19.4% (quarter ended March 31, 1993) and the lowest return for a quarter was -12.8% (quarter ended September 30, 1998). - -------- 1. Putnam became the sub-investment manager of the Putnam International Stock Portfolio on January 24, 2000. Performance for all prior periods reflects results under other sub-investment managers. Putnam Large Cap Growth Since the Portfolio will commence operations effective on or about May 1, 2000, no volatility or performance information is available. Harris Oakmark Large Cap Value Investment Results Average Annual Total Returns As of December 31, 1999 ---------------------- 1 Year Inception ------ --------- Harris Oakmark Large Cap Value -6.89% -8.27% - ------------------------------------------------------- S&P 500 21.04% 27.54% [BAR CHART] 98* -2.70 99 -6.89 * For the period November 9, 1998 to December 31, 1998. During the period shown in the bar chart the highest return for a quarter was 12.9% (quarter ended June 30, 1999), and the lowest return for a quarter was - -13.4% (quarter ended September 30, 1999). Janus Mid Cap Investment Results Average Annual Total Returns As of December 31, 1999 ---------------------- 1 Year Inception ------ --------- Janus Mid Cap 122.92% 61.99% - ------------------------------------------------------- S&P 400 MidCap 14.72% 21.99% [BAR CHART] 97* 28.22 98 37.19 99 122.92 * For the period March 3, 1997 to December 31, 1997. During the period shown in the bar chart the highest return for a quarter was 59.4% (quarter ended December 31, 1999), and the lowest return for a quarter was - -14.5% (quarter ended September 30, 1998). 14 Loomis Sayles High Yield Bond Investment Results Average Annual Total Returns As of December 31, 1999 --------------------------------- 1 Year Inception ------ --------- Loomis Sayles High Yield Bond 17.82% 5.29% - -------------------------------------------------------- Merrill Lynch High Yield 1.57% 5.40% [BAR CHART] 97* 6.18 98 -7.51 99 17.82 * For the period March 3, 1997 to December 31, 1997. During the period shown in the bar chart, the highest return for a quarter was 7.5% (quarter ended September 30, 1997) and the lowest return for a quarter was - -15.8% (quarter ended September 30, 1998). Neuberger Berman Partners Mid Cap Value Fund Investment Results Average Annual Total Returns As of December 31, 1999 --------------------------------- 1 Year Inception ------ --------- Neuberger Berman Partners Mid Cap Value Fund 17.63% 22.69% - -------------------------------------------------------- S&P 400 MidCap Value 2.32% 4.96% [BAR CHART] 98* 7.44 99 17.63 * For the period November 9, 1998 to December 31, 1998. During the period shown in the bar chart, the highest return for a quarter was 16.3% (quarter ended June 30, 1999) and the lowest return for a quarter was - -12.6% (quarter ended September 30, 1999). Scudder Global Equity Investment Results Average Annual Total Returns As of December 31, 1999 --------------------------------- 1 Year Inception ------ --------- Scudder Global Equity 25.17% 17.82% - -------------------------------------------------------- MSCI World 27.31% 21.18% [BAR CHART] 97* 9.62 98 15.96 99 25.17 * For the period March 3, 1997 to December 31, 1997. During the period shown in the bar chart, the highest return for a quarter was 16.0% (quarter ended December 31, 1999) and the lowest return for a quarter was - -11.2% (quarter ended September 30, 1998). 15 T. Rowe Price Large Cap Growth Investment Results Average Annual Total Returns As of December 31, 1999 --------------------------------- 1 Year Inception T. Rowe Price Large Cap Growth 22.23% 29.79% - ------------------------------------------------------------------- 80% of S&P 500+ 20% of MSCI EAFE 22.22% 28.58% [BAR CHART] 98* 10.28 99 22.23 *For the period November 9, 1998 to December 31, 1998. During the 10-year period shown in the bar chart, the highest return for a quarter was 19.3% (quarter ended December 31, 1999) and the lowest return for a quarter was -5.8% (quarter ended September 30, 1999). T. Rowe Price Small Cap Growth Investment Results Average Annual Total Returns As of December 31, 1999 --------------------------------- 1 Year Inception T. Rowe Price Small Cap Growth 27.99% 17.34% - ------------------------------------------------------------------- Russell 2000 Growth 43.09% 20.59% [BAR CHART] 97* 18.81 98 3.45 99 27.99 *For the period March 3, 1997 to December 31, 1997. During the 10-year period shown in the bar chart, the highest return for a quarter was 26.5% (quarter ended December 31, 1999) and the lowest return for a quarter was -21.8% (quarter ended September 30, 1998). Lehman Brothers(R) Aggregate Bond Index Investment Results Average Annual Total Returns As of December 31, 1999 --------------------------------- 1 Year Inception Lehman Brothers(R) Aggregate Bond Index -1.37% -0.01% - ------------------------------------------------------------------- Lehman Brothers Aggregate -0.82% -2.23% [BAR CHART] 98* 1.38 99 -1.37 *For the period November 9, 1998 to December 31, 1998. During the 10-year period shown in the bar chart, the highest return for a quarter was 0.7% (quarter ended September 30, 1999) and the lowest return for a quarter was -1.2% (quarter ended June 30, 1999). 16 MetLife Stock Index Investment Results Average Annual Total Returns As of December 31, 1999 --------------------------------- 1 Year 5 Years Inception ------ ------- --------- MetLife Stock Index 20.79% 28.01% 19.07% - ------------------------------------------------------------------ S&P 500 21.04% 28.54% 19.57% [BAR CHART] 91 29.76 92 7.44 93 9.54 94 1.18 95 36.87 96 22.66 97 32.19 98 28.23 99 20.79 During the period shown in the bar chart, the highest return for a quarter was 21.3% (quarter ended December 31, 1998) and the lowest return for a quarter was - -13.6% (quarter ended September 30, 1990). MetLife Mid Cap Stock Index Since the Portfolio will commence operations effective on or about July 5, 2000, no volatility or performance information is available. Morgan Stanley EAFE(R) Index Investment Results Average Annual Total Returns As of December 31, 1999 --------------------------------- 1 Year Inception ------ --------- Morgan Stanley EAFE/r/ Index 24.90% 29.99% - ------------------------------------------------------ MSCI EAFE 26.96% 32.74% [BAR CHART] 98* 8.11 99 24.90 * For the period November 9, 1998 to December 31, 1998. During the period shown in the bar chart, the highest return for a quarter was 15.2% (quarter ended December 31, 1999) and the lowest return for a quarter was 1.3% (quarter ended March 31, 1999). Russell 2000(R) Index Investment Results Average Annual Total Returns As of December 31, 1999 --------------------------------- 1 Year Inception ------ --------- Russell 2000/r/ 22.73% 25.29% - ------------------------------------------------------ Russell 21.26% 24.72% [BAR CHART] 98* 5.48 99 22.73 * For the period November 9, 1998 to December 31, 1998. During the period shown in the bar chart, the highest return for a quarter was 18.7% (quarter ended December 31, 1999) and the lowest return for a quarter was - -6.2% (quarter ended September 30, 1999). 17 [Carefully review the principal risks associated with investing in the Portfolios.] Principal Risks of Investing in the Fund The following briefly describes the principal risks that are associated with one or more of the Fund's Portfolios. Equity investing: Portfolios that invest in equities could lose money due to sudden unpredictable drops in value and the potential for periods of lackluster performance. Such adverse developments could result from general market or economic conditions and/or developments at a particular company that the portfolio managers do not foresee or circumstances that they do not evaluate correctly. Historically, investments in equities have been more volatile than many other investments. This is a principal risk for the following Portfolios: State Street Research Aggressive Growth, T. Rowe Price Small Cap Growth, Harris Oakmark Large Cap Value, State Street Research Growth, State Street Research Diversified, State Street Research Aurora Small Cap Value, Putnam International Stock, Putnam Large Cap Growth, Janus Mid Cap, Neuberger Berman Partners Mid Cap Value, Scudder Global Equity, T. Rowe Price Large Cap Growth, MetLife Stock Index, Morgan Stanley EAFE Index, MetLife Mid Cap Stock Index and Russell 2000 Index. Investing in less mature companies, smaller companies and companies with "special situations": These investments can be particularly sensitive to market movements, because they may be thinly traded and their market prices tend to reflect future expectations. Also, these companies often have limited product lines, markets or financial resources and their management personnel may lack depth and experience. (For an explanation of "special situations" see "investment styles" in Appendix C.) This is a principal risk for the following Portfolios: State Street Research Aggressive Growth, State Street Research Aurora Small Cap Value, T. Rowe Price Small Cap Growth, Harris Oakmark Large Cap Value, State Street Research Growth, State Street Research Diversified, Janus Mid Cap, MetLife Mid Cap Stock Index and Russell 2000 Index. Investing in larger companies: Larger more established companies may be unable to respond quickly to new competitive challenges such as changes in technology and consumer tastes. Many larger companies also may not be able to attain the high growth rates of successful smaller companies, especially during extended periods of economic expansion. This is a principal risk for the following Portfolios: State Street Research Diversified, Harris Oakmark Large Cap Value, State Street Research Growth, Putnam International Stock, Putnam Large Cap Growth, Scudder Global Equity, T. Rowe Price Large Cap Growth, Janus Mid Cap, MetLife Mid Cap Stock Index and MetLife Stock Index. Investing in fixed income securities: These types of investments are subject to loss in value if the market interest rates subsequently rise after purchase of the obligation. This risk is greater for investments with longer remaining durations. Another risk is that the issuer's perceived creditworthiness can drop and cause the fixed income investment to lose value or the issuer could default on interest or principal payments causing a loss in value. Lower rated instruments, especially so called "junk bonds," involve greater risks due to 18 the financial health of the issuer and the economy generally and their market prices can be more volatile. This is a principal risk for the following Portfolios: State Street Research Income, State Street Research Diversified, Lehman Brothers Aggregate Bond Index and Loomis Sayles High Yield Bond. Prepayment risk: Prepayment risk is the risk that an issuer of a debt security owned by a Portfolio repays the debt before it is due. This is most likely to occur when interest rates have declined and the issuer can therefore refinance the debt at a lower interest rate. A Portfolio that owns debt obligations that are prepaid would generally have to reinvest the amount prepaid in lower yielding instruments. Also, debt obligations that can be prepaid tend to increase less in value when interest rates decline, and decrease more when interest rates rise, than otherwise similar obligations that are not prepayable. This is a principal risk for the following Portfolios: State Street Research Income, State Street Research Diversified, Lehman Brothers Aggregate Bond Index and Loomis Sayles High Yield Bond. Zero coupon risks: "Zero coupon" securities are debt obligations that provide for payment of interest at the maturity date, rather than over the life of the instrument. The values of zero coupon securities tend to respond more to changes in interest rates than do otherwise comparable debt obligations that provide for periodic payment of interest. This is a principal risk for the following Portfolios: State Street Research Income, State Street Research Diversified, Lehman Brothers Aggregate Bond Index and Loomis Sayles High Yield Bond. Investing in securities of foreign issuers: Investments in securities that are traded outside the U.S. have additional risks beyond those of investing in U.S. securities. Foreign securities are frequently more volatile and less liquid than their U.S. counterparts for reasons that may include unstable political and economic climates, lack of standardized accounting practices, limited information available to investors and smaller markets that are more sensitive to trading activity. Also, changes in currency exchange rates have the potential of reducing gains or creating losses. There also can be risks of expropriation, currency controls, foreign taxation or withholding, and less secure procedures for transacting business in securities. The risks of investing in foreign securities are usually higher in emerging markets such as most countries in Southeast Asia, Eastern Europe, Latin America and Africa. This is a principal risk for the following Portfolios: Putnam International Stock, Scudder Global Equity, Morgan Stanley EAFE Index, Janus Mid Cap, Loomis Sayles High Yield Bond, and T. Rowe Price Large Cap Growth. Value investing: This investment approach has additional risk associated with it because the portfolio manager's judgement that a particular security is undervalued in relation to the company's fundamental economic values may prove incorrect. This is a principal risk for the following Portfolios: Harris Oakmark Large Cap Value, State Street Research Growth, State 19 Street Research Aurora Small Cap Value, State Street Research Diversified, Neuberger Berman Partners Mid Cap Value, Putnam International Stock and Scudder Global Equity. Growth investing: This investment approach has additional risk associated with it due to the volatility of growth stocks. Growth companies usually invest a high portion of earnings in their businesses, and may lack the dividends of value stocks that can cushion prices in a falling market. Also, earnings disappointments often lead to sharply falling prices because investors buy growth stocks in anticipation of superior earnings growth. This is a principal risk for the following Portfolios: State Street Research Growth, State Street Research Aggressive Growth, State Street Research Diversified, T. Rowe Price Small Cap Growth, Putnam International Stock, Putnam Large Cap Growth, Janus Mid Cap, Scudder Global Equity and T. Rowe Price Large Cap Growth. Index investing: Unlike actively managed portfolios, portfolios that attempt to match the return of an index generally will not use any defensive strategies. You, therefore, will bear the risk of adverse market conditions with respect to the market segment that the index seeks to match. In addition, transaction costs, other Portfolio or Fund expenses, brief delays that occur until a Portfolio can invest cash it receives and other tracking errors may result in a Portfolio's return being lower than the return of the applicable index. This is a principal risk for the following Portfolios: MetLife Stock Index, Morgan Stanley EAFE Index, Russell 2000 Index, MetLife Mid Cap Stock Index and Lehman Brothers Aggregate Bond Index. Investing in medium sized companies: These companies present additional risks because their earnings are less predictable, their share prices more volatile, and their securities less liquid than larger, more established companies. This is a principal risk for the following Portfolios: Janus Mid Cap, MetLife Mid Cap Stock Index and Neuberger Berman Partners Mid Cap Value. Defensive Strategies Except with respect to the index Portfolios, portfolio managers generally may use defensive strategies. These include holding greater cash positions, short- term money market instruments or similar investments that are not within the Portfolio's usual investment strategy, but do not violate any prohibition to which the Portfolio is subject. Portfolio managers may use defensive strategies when they believe that market conditions are not favorable for profitable investing or when the portfolio manager is otherwise unable to locate favorable investment opportunities. Adopting a defensive position, however, can mean that a Portfolio would be unable to meet its investment objective. [About MetLife] About The Investment Managers Metropolitan Life Insurance Company ("MetLife") has overall responsibility for investment management for each Portfolio and day-to-day investment management responsibility for the index Portfolios. (MetLife also performs general administrative and management services for the Fund.) In addition, MetLife is the Fund's principal underwriter and distributor. MetLife also 20 manages its own investment assets and those of certain affiliated companies and other entities. MetLife is a life insurance company which sells insurance policies and annuity contracts. As of December 31, 1999 MetLife had $420 billion in assets under management. MetLife is the parent of Metropolitan Tower Life Insurance Company ("Metropolitan Tower"). [Portfolio management of the State Street Research Portfolios] State Street Research & Management Company ("State Street Research") is the sub-investment manager for the State Street Research Portfolios. It is a Delaware corporation and traces its history back to 1924. It is a wholly-owned indirect subsidiary of MetLife. In addition to the Fund, it provides investment management services to several mutual funds and institutional clients. As of December 31, 1999, State Street Research had investment arrangements in effect for about $54 billion in assets. The following gives you information on the portfolio managers for certain of the State Street Research Portfolios: State Street Research Aggressive Growth Portfolio: Catherine Dudley has been responsible for the Portfolio's day-to-day management since October 1999. A senior vice president, she joined State Street Research in 1998. During the past five years she has also served as a senior portfolio manager at Chancellor Capital Management and as a portfolio manager at Phoenix Investment Counsel. State Street Research Diversified Portfolio: The portfolio manager for the income portion is the same as the portfolio manager of the State Street Research Income Portfolio and the portfolio manager for the growth portion is the same as the portfolio manager of the State Street Research Growth Portfolio. Assets are allocated among the portions of the Portfolio based on the input of State Street Research's Asset Allocation Committee. State Street Research Growth Portfolio: John T. Wilson has had primary responsibility for the Portfolio's day-to-day management since 1996. A senior vice president, he joined State Street Research in 1996. During the past five years he has also served as a vice president of Phoenix Investment Counsel. State Street Research Income Portfolio: John H. Kallis has been responsible for the Portfolio's day-to-day management since January 2000. A senior vice president, he joined State Street Research in 1987 and has worked as an investment professional since 1963. State Street Research Aurora Small Cap Value Portfolio: Rudolph K. Kluiber has been responsible for the Portfolio's day-to-day management since its inception. A senior vice president, he joined State Street Research in 1989 and has worked as an investment professional since 1988. [Portfolio management of the Putnam Portfolios] Putnam Investment Management, Inc. ("Putnam") is the sub-investment manager of the Putnam Portfolios. Putnam, a Massachusetts corporation, has managed mutual funds since 1937. As of December 31, 1999, Putnam and its affiliates managed in excess of $391 billion of retail and institutional investors 21 worldwide. All of the outstanding voting and nonvoting securities of Putnam are held of record by Putnam Investments, Inc., which is, in turn, except for a minority interest owned by employees, owned by Marsh & McLennan Companies, Inc., an NYSE listed public company whose business is insurance brokerage, investment management and consulting. The following gives you information on the portfolio managers for the Putnam Portfolios:. Putnam International Stock Portfolio: The Portfolio is managed by Putnam's Core International team, with Omid Kamshad, Managing Director, as the lead manager. Mr. Kamshad has been employed by Putnam since 1996. Prior to 1996, Mr. Kamshad was employed at Lombard Odier International Portfolio Management Limited. Prior to April, 1995 he was employed at Baring Asset Management Company. He also has portfolio management responsibilities on the Putnam teams that manage European Core, Global Core, and Core International Small Cap institutional portfolios. Until January 24, 2000, Santander Global Advisors, Inc. ("Santander") was the sub-investment manager for the Portfolio (then known as the Santander International Stock Portfolio). On January 11, 2000, the Board of Directors of the Fund voted to terminate the sub-investment management agreement with Santander relating to the Portfolio effective January 24, 2000. The Board also voted to retain Putnam as the new sub-investment manager effective the same date. The shareholders of the Portfolio approved Putnam as the new sub- investment manager at a special meeting of shareholders on March 31, 2000. Putnam Large Cap Growth Portfolio: The Portfolio is managed by Putnam's Large Cap Growth team, with Jeffrey R. Lindsey, Senior Vice President, as the lead manager. Mr. Lindsey has been employed by Putnam since 1994. He is responsible for Core Growth Equity and Concentrated Growth Equity institutional portfolios, is lead manager of Putnam Growth Opportunities Fund and co-manager of Voyager II and New Opportunities Fund. [Portfolio management of the Harris Oakmark Large Cap Value Portfolio] Harris Associates L.P. ("Harris") is the sub-investment manager of the Harris Oakmark Large Cap Value Portfolio. Together with its predecessors it has provided investment management services to mutual funds since 1991. It is a wholly-owned subsidiary of Nvest Companies, L.P. whose general partner, Nvest Corporation, is an indirect wholly-owed subsidiary of MetLife. In addition to the Fund, it provides investment management services to several mutual funds as well as individuals, trusts, endowments, institutional clients and private partnerships. As of December 31, 1999, Harris had investment arrangements in effect for about $12.5 billion in assets. Bill Nygren and Kevin Grant are co-portfolio managers for the Portfolio and have been responsible for its day to day management since March 21, 2000. Mr. Grant is the portfolio manager for another mutual fund managed by Harris. Mr. Grant joined Harris in 1988, and has been a partner, portfolio manager and investment analyst. Mr. Nygren is the portfolio manager for other mutual funds managed by Harris. He joined Harris in 1983, and has been a partner and portfolio manager. From 1990 to 1998 Mr. Nygren was the Director of Research of Harris. 22 [Portfolio management of the Janus Mid Cap Portfolio] Janus Capital Corporation ("Janus") is the sub-investment manager for the Janus Mid Cap Portfolio. It is a Colorado corporation that began providing investment management services at its inception in 1970. In addition to the Fund, it provides investment management services to several mutual funds and several individual and institutional clients. As of December 31, 1999, Janus managed approximately $248 billion in assets. James P. Goff, Vice President since December 1993 and Portfolio Manager, joined Janus in 1988. He is the portfolio manager for the Portfolio and has been primarily responsible for its day-to-day management since its inception in March, 1997. He is also a portfolio manager for other investment portfolios. Over the past five years, he has also been Portfolio Manager at Janus. [Portfolio management of the Loomis Sayles High Yield Bond Portfolio] Loomis, Sayles & Company, L.P. ("Loomis Sayles") is the sub-investment manager for the Loomis Sayles High Yield Bond Portfolio. It is a Delaware limited partnership with a history that dates back to 1926. Its general partner is an indirect wholly-owned subsidiary of Nvest Companies, L.P. whose general partner, Nvest Corporation, is an indirect wholly-owned subsidiary of MetLife. In addition to the Portfolio, it provides investment management services to numerous mutual funds and institutional clients. As of December 31, 1999, Loomis Sayles had investment arrangements in effect for about $67.9 billion in assets. Daniel J. Fuss, Executive Vice President, Director and Managing Partner, and Kathleen C. Gaffney, Vice-President, have held their current positions over the past five years and have been with Loomis Sayles since 1976 and 1984, respectively. Mr. Fuss and Ms. Gaffney, co-portfolio managers for the Portfolio, have been primarily responsible for its day-to-day management since its inception in March, 1997. [Portfolio management of the Neuberger Berman Partners Mid Cap Value Portfolio] Neuberger Berman Management Inc. ("Neuberger Berman"), is the sub-investment manager for the Neuberger Berman Partners Mid Cap Value Portfolio. Neuberger Berman and its predecessor firms and affiliates have been managing money since 1939 and have specialized in the management of mutual funds since 1950. In addition to the Portfolio, Neuberger Berman and its affiliates provide investment management services to mutual funds and securities accounts with assets as of December 31, 1999 of about $51 billion. Robert I. Gendelman and S. Basu Mullick have been co-managers of the Portfolio since its inception. Mr. Gendelman has been a Vice President of Neuberger Berman since October 1994. Mr. Mullick has been a Vice President of Neuberger Berman since October 1998. Over the past five years, Mr. Mullick was also a portfolio manager at Ark Asset Management. Mr. Gendelman and Mr. Mullick are also co-managers of the Neuberger Berman Partners Fund and Neuberger Berman AMT Partners Portfolio. [Portfolio management of the Scudder Global Equity Portfolio] Scudder Kemper Investments, Inc. ("Scudder") is the sub-investment manager for the Scudder Global Equity Portfolio. Zurich Financial Services Group owns a 70% interest in Scudder. Zurich Financial Services Group is indirectly owned by Zurich Allied AG, a publicly held Swiss financial service holding company, and Allied Zurich p.l.c., a publicly held U.K. financial service holding company. In addition to the Portfolio, it provides investment management services to several mutual funds and several individual and institutional clients. As of December 31, 1999, Scudder had investment management arrangements in excess of $295 billion in asset globally. 23 William E. Holtzer, Managing Director, Diego Espinosa, Senior Vice President and Nicholas Bratt, Director of the Global Equity Group have been with Scudder since 1980, 1996 and 1976, respectively. Messrs. Holzer, Espinosa and Bratt are co-portfolio managers for the Portfolio. Messrs. Holzer and Espinosa have been primarily responsible for its day-to-day management. Mr. Holzer is a portfolio manager for other investment portfolios, is a member of Scudder's Currency Committee and has responsibilities for global equity investment strategies. Over the past five years, Mr. Espinosa was responsible for Latin American research and was portfolio manager of The Argentina Fund, Inc. at Scudder and held positions at Morgan Stanley & Co., Boston Consulting Group and CitiBank. Mr. Bratt is responsible for Scudder's Equity Activities and is president of Scudder's open and closed end equity funds that invest overseas. [Portfolio management of the T. Rowe Price Portfolios] T. Rowe Price Associates, Inc. ("T. Rowe Price") is the sub-investment manager of the T. Rowe Price Portfolios. A Maryland corporation, it dates back to 1937. In addition to the Fund, it provides investment management services to many retail and institutional accounts. As of December 31, 1999, T. Rowe Price and its affiliates had investment management arrangements in effect for about $179.7 billion in assets. The following gives you information on the portfolio managers for the T. Rowe Price Portfolios: T. Rowe Price Large Cap Growth Portfolio: The Portfolio is managed by an Investment Advisory Committee. Robert W. Smith, Committee Chairman, has been responsible for the day-to-day management of the Portfolio since its inception in November, 1998 and works with the Committee in developing and executing the Portfolio's investment program. Mr. Smith joined T. Rowe Price and began managing assets there in 1992. Mr. Smith and the Investment Advisory Committee manage other mutual funds, including the T. Rowe Price Growth Stock Fund. T. Rowe Price Small Cap Growth Portfolio: The Portfolio is managed by an Investment Advisory Committee. Richard T. Whitney, Committee Chairman, has been responsible for day-to-day management of the Portfolio since its inception in March, 1997 and works with the Committee in developing and executing the Portfolio's investment program. Mr. Whitney joined T. Rowe Price in 1985 and has been managing investments there since 1986. Mr. Whitney and the Investment Advisory Committee manage other mutual funds including T. Rowe Price Diversified Small Cap Growth Fund. [Investment Management Fees] The Fund pays MetLife monthly for its investment management services. MetLife pays each sub-investment manager for their investment management services. There is no separate charge to the Fund for the sub-investment management services. 24 For the Portfolios indicated below, the following table shows the investment management and sub-investment management fees for the year ending December 31, 1999 as an annual percentage of the average daily net assets of each Portfolio.
% of Average Daily Net Assets % of Average Paid by Daily Net Assets Investment Paid to Manager to Investment Sub-Investment Portfolio Manager Manager - ----------------------------------------------------------------------------------- State Street Research Money Market .25% .25% - ----------------------------------------------------------------------------------- MetLife Stock Index .25% N/A - ----------------------------------------------------------------------------------- State Street Research Growth .47% .32% - ----------------------------------------------------------------------------------- State Street Research Income .32% .24% - ----------------------------------------------------------------------------------- State Street Research Diversified .43% .28% - ----------------------------------------------------------------------------------- State Street Research Aggressive Growth .70% .51% - ----------------------------------------------------------------------------------- Loomis Sayles High Yield Bond .70% .50% - ----------------------------------------------------------------------------------- Putnam International Stock/1/ .75% .55% - ----------------------------------------------------------------------------------- T. Rowe Price Small Cap Growth .52% .33% - ----------------------------------------------------------------------------------- Janus Mid Cap .67% .49% - ----------------------------------------------------------------------------------- Scudder Global Equity .67% .47% - ----------------------------------------------------------------------------------- Lehman Brothers Aggregate Bond Index .25% N/A - ----------------------------------------------------------------------------------- Russell 2000 Index .25% N/A - ----------------------------------------------------------------------------------- Morgan Stanley EAFE Index .30% N/A - ----------------------------------------------------------------------------------- T. Rowe Price Large Cap Growth .69% .50% - ----------------------------------------------------------------------------------- Harris Oakmark Large Cap Value .75% .65% - ----------------------------------------------------------------------------------- Neuberger Berman Partners Mid Cap Value .70% .50%
The Portfolios indicated in the following table will not commence operation until on or after May 1, 2000. The following shows the investment management and sub-investment management fee schedules as an annual percentage of the average daily net assets of each Portfolio.
% per % per annum annum Paid to Average paid to Average Sub- Daily Net Investment Daily Net Investment Portfolio Assets Manager Assets Manager - --------------------------------------------------------------------------------- Metlife Mid Cap Stock Index All assets .25% N/A N/A - --------------------------------------------------------------------------------- Putnam Large Cap 1st $500 million .80% first $150 million .50% Growth next $500 million .75% next $150 million .45% over $1 billion .70% over $300 million .35% - --------------------------------------------------------------------------------- State Street Research 1st $500 million .85% first $50 million .55% Aurora next $500 million .80% next $75 million .50% Small Cap Value over $1 billion .75% next $100 million .45% over $225 million .40%
/1/For the year ending December 31, 1999, Santander Global Advisors, Inc. ("Santander") was sub-investment manager. Beginning January 24, 2000, Putnam replaced Santander as sub-investment manager. MetLife paid all sub-investment management fees to Santander. 25 [Fund Expenses] The Fund is responsible for paying its own expenses. However, MetLife voluntarily pays expenses of certain Portfolios in excess of a certain percentage of net assets until the earlier of either total net assets of the Portfolio reaching $100 million or a certain date as follows:
SUBSIDIZED EXPENSES* IN PORTFOLIO EXCESS OF DATE Harris Oakmark Large Cap Value 0.20% 11/9/00 T. Rowe Price Large Cap Growth 0.20% 11/9/00 Neuberger Berman Partners Mid Cap Value 0.20% 11/9/00 Morgan Stanley EAFE Index 0.25% 11/9/00 Putnam Large Cap Growth 0.20% 7/1/02 State Street Research Aurora Small Cap Value 0.20% 7/1/02 Metlife Mid Cap Stock Index 0.20% 7/1/02
- -------- *Expenses for this purpose exclude the investment management fees payable to MetLife, brokerage commissions on portfolio transactions (including any other direct costs related to portfolio investment transactions), taxes, interest and other loan costs owed by the Fund and any unusual one-time expenses (such as legal related expenses). MetLife also paid such excess expenses for the Janus Mid Cap Portfolio until December 31, 1997, for the T. Rowe Price Small Cap Growth Portfolio until January 22, 1998, for the Scudder Global Equity Portfolio until July 2, 1998, for the Loomis Sayles High Yield Bond Portfolio until March 2, 1999, for the Russell 2000 Index Portfolio until December 3, 1999 and for the Lehman Brothers Aggregate Bond Index Portfolio until July 13, 1999. Beginning on February 22, 2000, MetLife will pay all expenses in excess of 0.30% of the average net assets for the Russell 2000 Index Portfolio until the Portfolio's assets reach $200 million, or until April 30, 2001, whichever comes first. After the Morgan Stanley EAFE Index Portfolio's assets reach $100 million, or November 8, 2000, whichever comes first, MetLife will continue to pay all expenses in excess of 0.40% of the Portfolio's average net assets until the Portfolio's assets reach $200 million, or until April 30, 2001, whichever comes first. These subsidies and other prior expense reimbursement arrangements can increase the performance of the Portfolios. MetLife also has the right to stop these payments at any time upon notice to the Board of Directors and to Fund shareholders. Portfolio Turnover Rates The rate of portfolio turnover is the annual amount, expressed as a percentage, of a Portfolio's securities that it replaces in one year. The portfolio turnover rate will not be a limiting factor when it is deemed appropriate to purchase or sell securities for a Portfolio. Portfolio turnover may vary from year to year or within a year, depending upon economic, market or business conditions and client contributions and withdrawals. To the extent that brokerage commissions and transaction costs are incurred in buying and selling portfolio securities, the rate of portfolio turnover could affect each Portfolio's net asset value. The historical rates of portfolio turnover for all of the Portfolios are set forth in the Prospectus under the Financial Highlights. [Dividends are reinvested.] Dividends, Distributions and Taxes The Fund intends to qualify as a regulated investment company under the tax law and, as such distributes substantially all of each Portfolio's ordinary 26 net income and capital gains each calendar year as a dividend to the separate accounts funding the Contracts to avoid an excise tax on certain undistributed amounts. The Fund expects to pay no income tax. Dividends are reinvested in additional full and partial shares of the Portfolio as of the dividend payment date. The Fund and its Portfolios intend to comply with special diversification and other tax law requirements that apply to investments under variable life insurance and annuity contracts. Under these rules, shares of the Fund will generally only be available through the purchase of a variable life insurance or annuity contract. Income tax consequences to Contract owners who allocate premiums to Fund shares are discussed in the prospectus for the Contracts that is attached at the front of this Prospectus. General Information about the Fund and its Purpose The Fund is an open-end management investment company (or "mutual fund"). The Fund is a "series" type of mutual fund, which issues separate classes (or series) of stock. Each class or series represents an interest in a separate portfolio of Fund investments ("Portfolio"). The Fund offers its shares to MetLife and its affiliated insurance companies ("Insurance Companies"), including Metropolitan Tower. The Insurance Companies hold the Fund's shares in separate accounts that they use to support variable life insurance policies and variable annuity contracts (together, the "Contracts"). Not all of the Portfolios of the Fund are available to each of these separate accounts. An Insurance Company holding Fund shares for a separate account has different rights from those of the owner of a Contract. The terms "shareholder" or "shareholders" in this Prospectus refer to the Insurance Companies, and not to any Contract owner. [Contract owners may allocate the amounts under the Contracts for ultimate investment in the Portfolios.] Within limitations described in the appropriate Contract, owners may allocate the amounts under the Contracts for ultimate investment in the various Portfolios of the Fund. See the prospectus which is attached at the front of this Prospectus for a description of (a) the Contract, (b) the Portfolios of the Fund that are available under that Contract and (c) the relationship between increases or decreases in the net asset value of Fund shares (and any dividends and distributions on such shares) and the benefits provided under that Contract. Some of the Portfolios have names and investment objectives that are very similar to certain publicly available mutual funds that are managed by the same money managers. These Portfolios are not those publicly available mutual funds and will not have the same performance. Different performance will result from such factors as different implementation of investment policies, different cash flows into and out of the Portfolios, different fees, and different sizes. It is conceivable that in the future it may be disadvantageous for different types of variable life insurance and variable annuity separate accounts to invest simultaneously in the Fund. However, the Fund, Metropolitan Tower and MetLife do not currently foresee any such disadvantages. The Fund's Board of Directors intends to monitor for the existence of any material irreconcilable conflict between or among such owners, and the Insurance Companies will take whatever remedial action may be necessary. 27 [Fund shares are available only through variable life and variable annuity contracts.] Sale and Redemption of Shares Shares are sold and redeemed at a price equal to the net asset value without any sales charges. The Insurance Companies purchase or redeem shares of each Portfolio, based on, among other things: (a) the amount of net Contract premiums or purchase payments transferred to the separate accounts; (b) transfers to or from separate account investment divisions; (c) policy loans; (d) loan repayments; and (e) benefit payments to be effected on a given date under the Contracts. Generally, these purchases and redemptions are priced using the Portfolio net asset value computed for the same date and time as are used to price the corresponding Contract transaction. The Portfolios are not designed for market timers, or large or frequent transfers. The Fund may restrict or refuse purchases or exchanges by market timers. You will be considered a market timer if you have (a) requested an exchange out of the Portfolios within two weeks of an earlier exchange request, or (b) exchanged shares out of the Portfolios more than twice in a calendar quarter, or (c) exchanged shares equal to at least $5 million, or more than 1% of the Portfolios net assets, or (d) otherwise seem to follow a timing pattern. Accounts under common ownership or control are combined for these limits. Each Portfolio's net asset value per share is calculated by taking its assets (including dividends and interest received or accrued), deducting its liabilities (including accrued expenses and dividends payable) and dividing the result by the total number of the Portfolio's outstanding shares. To determine the value of a Portfolio's assets, cash and receivables are valued at their face amounts. Interest is recorded as accrued and dividends are recorded on the ex-dividend date. Securities, options and futures contracts held by the Portfolios are valued at market value. Short-term debt instruments with a maturity of 60 days or less held by all Portfolios and all debt instruments held by the State Street Research Money Market Portfolio are valued on an amortized cost basis. When market quotations are not readily available for securities and assets, or when the Board of Directors determines that customary pricing procedures would result in an unreliable valuation, they are valued at fair value as determined by the Board of Directors. Such a fair value procedure could be followed, for example, if (a) an event occurs after the time of the most recent available market quotations that is likely to have affected the value of those securities or (b) such market quotations for other reasons do not reflect information material to the value of those securities. The possibility of fair value pricing means that changes in a Portfolio's net asset value may not always correspond to changes in quoted prices of a Portfolio's investments. [A Portfolio's net asset value per share is determined once daily.] A Portfolio's net asset value per share is determined once daily immediately after any dividends are declared and is currently determined at the close of regular trading on the New York Stock Exchange. When it is open, regular trading on the New York Stock Exchange usually ends at 4:00 p.m., Eastern time. The net asset value may also be determined on days when the New York Stock Exchange is closed when there has been trading in a Portfolio's securities which would result in a material change in the net asset value. 28 Financial Highlights The financial highlights table is intended to help you understand each Portfolio's financial performance for the past 5 years, or since inception of the Portfolio if shorter. Certain information reflects financial results for a single share of the Portfolio. The total returns in the table represent the rate that a shareholder would have earned or lost on an investment in a Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by Deloitte & Touche LLP, whose report, along with the Fund's financial statements, are included in the annual report, which is available upon request. 29 FINANCIAL HIGHLIGHTS The table below has been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing with the full financial statements and notes thereto. For further information about the performance of the Portfolios, see the Fund's December 31, 1999 Management Discussion and Analysis which appears in the Fund's annual report, which is incorporated by reference into the Statement of Additional Information.
Selected Data For a Share of Capital STATE STREET RESEARCH GROWTH PORTFOLIO --------------------------------------------------------------------------- Stock Outstanding Throughout Period: YEAR ENDED DECEMBER 31, --------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ----------- ----------- ----------- ---------- ----------- NET ASSET VALUE: Beginning of period...... $37.10 $31.92 $30.51 $27.56 $21.81 -------------------------------------------------------------------------------------------------------------------------- Investment Operations: Net investment income.................... 0.23 0.36 0.44 0.36 0.35 Net realized and unrealized gain/(loss).. 6.38 8.52 7.72 5.78 6.83 --------- --------- --------- --------- --------- Total From Investment Operations......... 6.61 8.88 8.16 6.14 7.18 --------- --------- --------- --------- --------- Less Distributions: Dividends from net investment income.... (0.24) (0.36) (0.44) (0.36) (0.35) Distributions from net realized capital gains................................... (4.33) (3.34) (6.31) (2.83) (1.08) --------- --------- --------- --------- --------- Total Distributions..................... (4.57) (3.70) (6.75) (3.19) (1.43) ----------- ----------- ----------- ----------- --------- NET ASSET VALUE: End of period $39.14 $37.10 $31.92 $30.51 $27.56 -------------------------------------------------------------------------------------------------------------------------- Total return............................. 18.47% 28.18% 28.36% 22.18% 33.14% Net assets at end of period (000's)...... $3,623,316 $3,112,081 $2,349,062 $1,597,728 $1,094,751 Supplemental Data/Significant Ratios: Operating expenses to average net assets.................................. 0.49% 0.53% 0.43% 0.29% 0.31% Net investment income to average net assets.................................. 0.59% 1.04% 1.37% 1.29% 1.46% Portfolio turnover(1).................... 83.16% 74.29% 82.81% 93.05% 45.52%
Selected Data For a Share of Capital STATE STREET RESEARCH INCOME PORTFOLIO ---------------------------------------------------------------------- Stock Outstanding Throughout Period: YEAR ENDED DECEMBER 31, ---------------------------------------------------------------------- 1999 1998 1997 1996 1995 ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE: Beginning of period........... $12.78 $12.66 $12.36 $12.73 $11.32 ---------------------------------------------------------------------------------------------------------------------- Investment Operations: Net investment income......................... 0.81 0.75 0.83 0.82 0.83 Net realized and unrealized gain/(loss)....... (1.10) 0.42 0.38 (0.36) 1.38 ------- -------- -------- -------- -------- Total From Investment Operations.............. (0.29) 1.17 1.21 0.46 2.21 -------- -------- -------- -------- -------- Less Distributions: Dividends from net investment income.......... (0.79) (0.80) (0.87) (0.81) (0.80) Distributions from net realized capital gains........................................ (0.02) (0.25) (0.04) (0.02) -- -------- -------- -------- -------- -------- Total Distributions......................... (0.81) (1.05) (0.91) (0.83) (0.80) -------- -------- -------- -------- -------- NET ASSET VALUE: End of period................. $11.68 $12.78 $12.66 $12.36 $12.73 ----------------------------------------------------------------------------------------------------------------------- Total return.................................. (2.28)% 9.40% 9.83% 3.60% 19.55% Net assets at end of period (000's)........... $477,880 $526,854 $412,191 $383,395 $349,913 Supplemental Data/Significant Ratios: Operating expenses to average net assets...... 0.38% 0.39% 0.38% 0.32% 0.34% Net investment income to average net assets... 6.15% 6.13% 6.57% 6.64% 7.01% Portfolio turnover (1)........................ 183.16% 123.60% 121.92% 92.90% 102.88%
- --------------------- Footnotes Appear on Page 35. 30 FINANCIAL HIGHLIGHTS
Selected Data For a Share of Capital STATE STREET RESEARCH MONEY MARKET PORTFOLIO --------------------------------------------------------------------- Stock Outstanding Throughout Period: YEAR ENDED DECEMBER 31, --------------------------------------------------------------------- 1999 1998 1997 1996 1995 --------- --------- --------- --------- --------- ------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE: Beginning of period $10.35 $10.38 $10.44 $10.45 $10.48 ------------------------------------------------------------------------------------------------------------------------------ Investment Operations: Net investment income.......................... 0.51 0.54 0.54 0.53 0.59 ------- ------ ------ ------ ------ Total From Investment Operations............. 0.51 0.54 0.54 0.53 0.59 ------- ------ ------ ------ ------ Less Distributions: Dividends from net investment income........... (0.52) (0.57) (0.60) (0.54) (0.62) ------- ------ ------ ------ ------ Total Distributions.......................... (0.52) (0.57) (0.60) (0.54) (0.62) ------- ------- ------ ------ ------ ------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE: End of period.................. $10.34 $10.35 $10.38 $10.44 $10.45 ------------------------------------------------------------------------------------------------------------------------------ Total return................................... 4.89% 5.19% 5.21% 5.01% 5.59% Net assets at end of period (000's)............ $51,545 $41,185 $39,480 $41,637 $40,456 Supplemental Data/Significant Ratios: Operating expenses to average net assets....... 0.42% 0.48% 0.49% 0.43% 0.49% Net investment income to average net assets.... 4.81% 5.11% 5.08% 4.92% 5.39%
Selected Data For a Share of Capital STATE STREET RESEARCH DIVERSIFIED PORTFOLIO --------------------------------------------------------------------- Stock Outstanding Throughout Period: YEAR ENDED DECEMBER 31, --------------------------------------------------------------------- 1999 1998 1997 1996 1995 ----------- ----------- ----------- ----------- --------- ------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE: Beginning of period $18.39 $16.98 $16.67 $15.95 $13.40 ------------------------------------------------------------------------------------------------------------------------------ Investment Operations: Net investment income.......................... 0.59 0.60 0.60 0.55 0.59 Net realized and unrealized gain/(loss)........ 0.96 2.70 2.71 1.77 3.02 ------ ------ ------ ------ ------ Total From Investment Operations............. 1.55 3.30 3.31 2.32 3.61 ------ ------ ------- ------ ------ Less Distributions: Dividends from net investment income........... (0.60) (0.57) (0.60) (0.53) (0.58) Distributions from net realized capital gains......................................... (1.07) (1.32) (2.40) (1.07) (0.48) ------ ------ ------ ------ ------ Total Distributions.......................... (1.67) (1.89) (3.00) (1.60) (1.06) ------ ------ ------ ------ ------ ------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE: End of period.................. $18.27 $18.39 $16.98 $16.67 $15.95 ------------------------------------------------------------------------------------------------------------------------------ Total return................................... 8.71% 19.64% 20.58% 14.52% 27.03% Net assets at end of period (000's)............ $2,874,412 $2,656,987 $1,982,232 $1,448,841 $1,114,834 Supplemental Data/Significant Ratios: Operating expenses to average net assets....... 0.45% 0.48% 0.40% 0.29% 0.31% Net investment income to average net assets.... 3.08% 3.39% 3.50% 3.38% 3.92% Portfolio turnover (1)......................... 123.77% 105.89% 114.79% 91.07% 79.29%
- --------------------- Footnotes Appear on Page 35. 31 FINANCIAL HIGHLIGHTS
Selected Data For a Share of Capital STATE STREET RESEARCH AGGRESSIVE GROWTH PORTFOLIO -------------------------------------------------------------------------- Stock Outstanding Throughout Period: YEAR ENDED DECEMBER 31, -------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ----------- ----------- ----------- ----------- ---------- NET ASSET VALUE: Beginning of period $29.53 $27.61 $27.11 $25.87 $22.05 -------------------------------------------------------------------------------------------------------------------------- Investment Operations: Net investment income/(loss)................ (0.12) (0.06) (0.03) (0.02) (0.01) Net realized and unrealized gain/(loss)..... 9.86 3.75 1.67 2.01 6.50 ----------- ----------- ----------- ----------- ---------- Total From Investment Operations............ 9.74 3.69 1.64 1.99 6.49 ----------- ----------- ----------- ----------- ---------- Less Distributions: Dividends from net investment income........ -- -- -- -- -- Distributions from net realized capital gains...................................... (0.82) (1.77) (1.14) (0.75) (2.67) ----------- ----------- ----------- ----------- ---------- Total Distributions......................... (0.82) (1.77) (1.14) (0.75) (2.67) ----------- ----------- ----------- ----------- ---------- NET ASSET VALUE: End of period $38.45 $29.53 $27.61 $27.11 $25.87 -------------------------------------------------------------------------------------------------------------------------- Total return................................ 33.24% 13.69% 6.67% 7.72% 29.50% Net assets at end of period (000's)......... $1,600,841 $1,431,337 $1,391,956 $1,321,849 $958,915 Supplemental Data/Significant Ratios: Operating expenses to average net assets.... 0.72% 0.75% 0.81% 0.79% 0.81% Net investment income to average net assets.. (0.31)% (0.20)% (0.10)% (0.11)% (0.06)% Portfolio turnover (1)....................... 86.17% 97.39% 219.08% 221.23% 255.83%
Selected Data For a Share of Capital METLIFE STOCK INDEX PORTFOLIO -------------------------------------------------------------------------- Stock Outstanding Throughout Period: YEAR ENDED DECEMBER 31, -------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ----------- ----------- ----------- ----------- ---------- NET ASSET VALUE: Beginning of period $35.38 $28.78 $22.23 $18.56 $13.87 -------------------------------------------------------------------------------------------------------------------------- Investment Operations: Net investment income........................ 0.37 0.37 0.34 0.33 0.32 Net realized and unrealized gain/(loss)...... 6.89 7.75 6.79 3.88 4.79 ----------- ----------- ----------- ----------- ---------- Total From Investment Operations............. 7.26 8.12 7.13 4.21 5.11 ----------- ----------- ----------- ----------- ---------- Less Distributions: Divid ends from net investment income (0.36) (0.36) (0.34) (0.33) (0.32) Distributions from net realized capital gains....................................... (1.69) (1.16) (0.24) (0.21) (0.10) ----------- ----------- ----------- ----------- --------- Total Distributions......................... (2.05) (1.52) (0.58) (0.54) (0.42) ----------- ----------- ----------- ----------- --------- NET ASSET VALUE: End of period............... $40.59 $35.38 $28.78 $22.23 $18.56 -------------------------------------------------------------------------------------------------------------------------- Total return................................ 20.79% 28.23% 32.19% 22.66% 36.87% Net assets at end of period (000's)......... $4,205,202 $3,111,919 $2,020,480 $1,122,297 $635,823 Supplemental Data/Significant Ratios: Operating expenses to average net assets..... 0.29% 0.30% 0.33% 0.30% 0.32% Net investment income to average net assets.. 1.01% 1.21% 1.47% 1.91% 2.22% Portfolio turnover (1)....................... 8.77% 15.07% 10.69% 11.48% 6.35%
- --------------------- Footnotes Appear on Page 35. 32 FINANCIAL HIGHLIGHTS
Selected Data For a Share of Capital SANTANDER INTERNATIONAL STOCK PORTFOLIO+ ---------------------------------------------------------------------- Stock Outstanding Throughout Period: YEAR ENDED DECEMBER 31, ---------------------------------------------------------------------- 1999 1998 1997 1996 1995 ---------- ---------- ---------- ---------- ---------- ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE: Beginning of period.......... $14.14 $11.67 $11.95 $12.29 $12.30 ---------------------------------------------------------------------------------------------------------------------- Investment Operations: Net investment income........................ 0.13 0.13 0.10 0.07 0.03 Net realized and unrealized gain/(loss)...... 2.05 2.50 (0.38) (0.28) 0.07 ---------- ---------- ---------- ---------- ---------- Total From Investment Operations............. 2.18 2.63 (0.28) (0.21) 0.10 ---------- ---------- ---------- ---------- ---------- Less Distributions: Divid ends from net investment income........ (0.13) (0.16) -- -- (0.04) Distributions from net realized capital gains....................................... (2.32) -- -- (0.13) (0.07) ---------- ---------- ---------- ---------- ---------- Total Distributions.......................... (2.45) (0.16) -- (0.13) (0.11) ---------- ---------- ---------- ---------- ---------- ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE: End of period................ $13.87 $14.14 $11.67 $11.95 $12.29 ---------------------------------------------------------------------------------------------------------------------- Total return................................. 16.44% 22.56% (2.34)% (1.77)% 0.84% Net assets at end of period (000's).......... $317,831 $297,381 $267,089 $303,826 $297,461 Supplemental Data/Significant Ratios: Operating expenses to average net assets..... 0.97% 1.02% 1.03% 0.97% 1.01% Net investment income to average net assets.. 0.95% 0.87% 0.77% 0.56% 0.21% Portfolio turnover (1)....................... 86.77% 156.32% 182.11% 116.67% 86.24%
+ Now, Putnam International Stock Portfolio - ---------------------
LOOMIS SAYLES HIGH YIELD BOND JANUS MID CAP PORTFOLIO PORTFOLIO ------------------------------------- ---------------------------------------- Selected Data For a Share of Capital YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, ------------------------------------- ---------------------------------------- Stock Outstanding Throughout Period: 1999 1998 1997/A/ 1999 1998 1997/A/ --------- --------- --------- ----------- ---------- --------- -------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE: Beginning of period................................ $8.39 $10.14 $10.00 $17.44 $12.77 $10.00 -------------------------------------------------------------------------------------------------------------------------- Investment Operations: Net investment income/(loss)......... 0.80 0.88 0.35 (0.05) (0.02) 0.01 Net realized and unrealized gain/(loss)......................... 0.69 (1.65) 0.26 21.14 4.77 2.81 --------- --------- --------- ----------- ---------- ---------- Total From Investment Operations..... (1.49) (0.77) 0.61 21.09 4.75 2.82 --------- --------- --------- ----------- ---------- ---------- Less Distributions: Dividends from net investment income................................ (0.79) (0.89) (0.35) -- -- (0.01) Distributions from net realized...... -- capital gains......................... /B/ (0.09) (0.12) (1.99) (0.08) (0.04) --------- --------- --------- ----------- ---------- ---------- Total Distributions.................. (0.79) (0.98) (0.47) (1.99) (0.08) (0.05) --------- --------- --------- ----------- ---------- ---------- -------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE: End of period........ $9.09 $8.39 $10.14 $36.54 $17.44 $12.77 -------------------------------------------------------------------------------------------------------------------------- Total return.......................... 17.82% (7.51)% 6.18% 122.92% 37.19% 28.22% Net assets at end of period (000's)............................. $61,701 $42,403 $27,804 $1,931,797 $371,504 $103,852 Supplemental Data/Significant Ratios: ------------------------------------- Net expenses to average net assets.............................. 0.93% 0.87% 0.83%* 0.71% 0.81% 0.85%* Operating expenses to average net assets before voluntary expense reimbursements.............. 0.94% 1.05% 1.35%* N/A N/A 0.99%* Net investment income to average net assets.................. 9.49% 10.41% 7.04%* (0.41)% (0.22)% 0.10%* Net investment income to average net assets before voluntary expense reimbursements...................... 9.48% 10.23% 6.52%* N/A N/A (0.40)%* Portfolio turnover (1)............... 27.75% 46.02% 39.26% 103.28% 106.66% 74.70%
- --------------------- /A/ For the period March 3, 1997 (commencement of operations) to December 31, 1997. /B/ Less than $.005. Footnotes Appear on Page 35. 33 FINANCIAL HIGHLIGHTS
T. ROWE PRICE SMALL CAP GROWTH SCUDDER GLOBAL EQUITY PORTFOLIO PORTFOLIO --------------------------------------- --------------------------------------- Selected Data For a Share of YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, Capital --------------------------------------- --------------------------------------- Stock Outstanding Throughout 1999 1998 1997/A/ 1999 1998 1997/A/ Period: ---------- ---------- --------- ---------- ---------- --------- NET ASSET VALUE: Beginning of period......................... $12.29 $11.88 $10.00 $12.38 $10.85 $10.00 -------------------------------------------------------------------------------------------------------------------------- Investment Operations: Net investment income/(loss).. (0.03) -- -- 0.14 0.16 0.10 Net realized and unrealized gain/(loss).................... 3.47 0.41 1.88 2.93 1.57 0.86 ---------- ---------- --------- ---------- ---------- --------- Total From Investment Operations..................... 3.44 0.41 1.88 3.07 1.73 0.96 ---------- ---------- --------- ---------- ---------- --------- Less Distributions: Dividends from net investment income......................... -- -- -- /B/ (0.07) (0.16) (0.10) Distributions from net realized capital gains.................. -- -- -- (0.47) (0.04) (0.01) ---------- ---------- --------- ---------- ---------- --------- Total Distributions........... -- -- -- (0.54) (0.20) (0.11) ---------- ---------- --------- ---------- ---------- --------- NET ASSET VALUE: End of period. $15.73 $12.29 $11.88 $14.91 $12.38 $10.85 -------------------------------------------------------------------------------------------------------------------------- Total return.................. 27.99% 3.45% 18.81% 25.17% 15.96% 9.62% Net assets at end of period (000's)........................ $269,518 $189,132 $94,020 $171,714 $113,715 $60,712 Supplemental Data/Significant Ratios: ------------------------------------ Net expenses to average net assets......................... 0.61% 0.67% 0.67%* 0.87% 0.96% 0.78%* Operating expenses to average net assets before voluntary expense reimbursements................. N/A N/A 0.86%* N/A 1.01% 1.14%* Net investment income to average net assets............. (0.27)% (0.02)% 0.01%* 1.23% 1.61% 1.66%* Net investment income to average net assets before voluntary expense reimbursements.... N/A N/A (0.19)%* N/A 1.56% 1.30%* Portfolio turnover (1) 67.99% 37.93% 13.45% 54.49% 50.98% 36.04%
- --------------------- /A/ For the period March 3, 1997 (commencement of operations) to December 31, 1997. /B/ Less than $.005.
NEUBERGER BERMAN T. ROWE PRICE LARGE HARRIS OAKMARK LARGE CAP PARTNERS MID CAP CAP GROWTH PORTFOLIO VALUE PORTFOLIO VALUE PORTFOLIO -------------------------- ----------------------- ----------------------- Selected Data For a Share of YEAR ENDED DECEMBER 31, Capital ---------------------------------------------------------------------------------- Stock Outstanding Throughout 1999 1998/C/ 1999 1998/C/ 1999 1998/C/ Period: ---------- ---------- --------- --------- --------- --------- NET ASSET VALUE: Beginning of period......................... $9.70 $10.00 $10.73 $10.00 $11.02 $10.00 -------------------------------------------------------------------------------------------------------------------------- Investment Operations: Net investment income/(loss) 0.10 0.03 0.06 0.03 0.02 0.01 Net realized and unrealized gain/(loss)................... (0.78) (0.30) 1.80 0.71 2.43 1.02 ---------- ---------- --------- --------- --------- --------- Total From Investment Operations (0.68) (0.27) 1.86 0.74 2.45 1.03 ---------- ---------- --------- --------- --------- --------- Less Distributions: Dividends from net investment income................ (0.08) (0.03) (0.07) (0.01) (0.03) (0.01) Distributions from net realized capital gains......... (0.01) -- (0.55) -- (0.03) -- ---------- ---------- --------- --------- --------- --------- Total Distributions... (0.09) (0.03) (0.62) (0.01) (0.06) (0.01) ---------- ---------- --------- --------- --------- --------- NET ASSET VALUE: End of period $8.93 $9.70 $11.97 $10.73 $13.41 $11.02 -------------------------------------------------------------------------------------------------------------------------- Total return.................. (6.89)% (2.70)% 17.63% 7.44% 22.23% 10.28% Net assets at end of period (000's)........................ $38,378 $8,658 $38,722 $8,647 $51,402 $6,740 Supplemental Data/Significant Ratios: ------------------------------------- Net expenses to average net assets......................... 0.91% 0.70%* 0.72% 0.68%* 0.87% 0.50%* Operating expenses to average net assets before voluntary expense reimbursements................. 1.15% 1.79%* 1.18% 1.86%* 1.31% 2.62%* Net investment income to average net assets..................... 1.63% 2.47%* 0.86% 2.61%* 0.23% 0.93%* Net investment income to average net assets before voluntary expense reimbursements................. 1.39% 1.38%* 0.40% 1.42%* (0.21)% (1.19)%* Portfolio turnover (1)........ 16.59% 0.00% 134.37% 20.81% 46.48% 5.69%
- --------------------- /C/ For the period November 9, 1998 (commencement of operations) to December 31, 1998. Footnotes Appear on Page 35. 34 FINANCIAL HIGHLIGHTS
LEHMAN BROTHERS AGGREGATE MORGAN STANLEY EAFE RUSSELL 2000 INDEX BOND INDEX PORTFOLIO INDEX PORTFOLIO --------------------------- ----------------------- ------------------------ Selected Data For a Share of Capital YEAR ENDED DECEMBER 31, ------------------------------------------------------------------------------------ Stock Outstanding Throughout 1999 1998/C/ 1999 1998/C/ 1999 1998/C/ Period: ----------- ---------- --------- --------- ---------- --------- NET ASSET VALUE: Beginning of period......................... $10.06 $10.00 $10.80 $10.00 $10.53 $10.00 -------------------------------------------------------------------------------------------------------------------------- Investment Operations: Net investment income/(loss) 0.48 0.07 0.10 0.01 0.08 0.02 Net realized and unrealized gain/(loss).................... (0.62) 0.07 2.58 0.80 2.29 0.53 ----------- ---------- --------- --------- ---------- --------- Total From Investment Operations..................... (0.14) 0.14 2.68 0.81 2.37 0.55 ----------- ---------- --------- --------- ---------- --------- Less Distributions: Dividends from net investment income......................... (0.47) (0.08) (0.06) (0.01) (0.08) (0.02) Distributions from net realized capital gains......... -- /B/ -- (0.08) -- (0.30) -- ----------- ---------- --------- --------- ---------- --------- Total Distributions........... (0.47) (0.08) (0.14) (0.01) (0.38) (0.02) ----------- ---------- --------- --------- ---------- --------- NET ASSET VALUE: End of period $9.45 $10.06 $13.34 $10.80 $12.52 $10.53 -------------------------------------------------------------------------------------------------------------------------- Total return.................. (1.37)% 1.38% 24.90% 8.11% 22.73% 5.48% Net assets at end of period (000's)........................ $129,339 $58,810 $82,355 $25,453 $111,729 $38,147 Supplemental Data/Significant ----------------------------- Ratios: ------- Net expenses to average net assets......................... 0.40% 0.42%* 0.50% 0.49%* 0.45% 0.40%* Operating expenses to average net assets before voluntary expense reimbursements........ N/A 0.59%* 1.77% 1.41%* 0.89% 1.04%* Net investment income to average net assets............. 6.06% 5.28%* 1.25% 0.71%* 1.04% 1.46%* Net investment income to average net assets before voluntary expense reimbursements................. N/A 5.11%* (0.02)% (0.21)%* 0.59% 0.82%* Portfolio turnover (1)........ 96.19% 11.08% 43.67% 12.68% 67.01% 2.80%
- --------------------- /B/ Less than $.005. /C/ For the period November 9, 1998 (commencement of operations) to December 31, 1998. Notes: ------ * Ratios have been determined based on annualized operating results for the period. Twelve month results may be different. (1) The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of securities (excluding short-term securities) for the year ended December 31, 1999 are as follows: Portfolio Purchases Sales of Securities --------- --------- ------------------- State Street Research Growth............... $2,700,443,738 $2,676,686,614 State Street Research Income............... 886,515,836 899,620,990 State Street Research Diversified.......... 3,417,074,990 3,289,086,228 State Street Research Aggressive Growth.... 1,131,998,384 1,485,574,884 MetLife Stock Index.. 776,401,767 317,391,821 Santander International Stock.. 255,774,543 281,516,698 Loomis Sayles High Yield Bond........... 26,645,433 13,830,252 Janus Mid Cap........ 1,548,568,019 878,660,374 T. Rowe Price Small Cap Growth........... 142,965,196 131,996,934 Scudder Global Equity 92,395,485 68,284,251 Harris Oakmark Large Cap Value............ 37,718,312 3,866,011 Neuberger Berman Partners Mid Cap Value 56,456,718 30,593,570 T. Rowe Price Large Cap Growth........... 48,659,861 11,618,731 Lehman Brothers Aggregate Bond Index. 160,310,362 90,216,457 Morgan Stanley EAFE Index................ 65,340,616 21,570,722 Russell 2000 Index... 102,489,864 46,437,402 See Notes to Financial Statements. 35 Appendix A To Prospectus Portfolio Manager Prior Performance Because they commenced operations only on November 9, 1998, limited performance history is available for the Harris Oakmark Large Cap Value, T. Rowe Price Large Cap Growth, and Lehman Brothers Aggregate Bond Index Portfolios. The following, however, sets forth total return information for the one-year, three-year, five-year and ten-year periods ended December 31, 1999 (or since inception if more recent) for certain similar accounts that are managed by the same sub-investment managers as are these three Portfolios. Year-to-date information is also given for the two months ended February 29, 2000. Results are shown on a "total return" basis and include reinvestment of all dividends and capital gain distributions. Because Putnam Large Cap Growth will not commence operations until on or about May 1, 2000, and State Street Research Aurora Small Cap Value will not commence operations until on or about July 5, 2000, no performance history is available for these Portfolios. The following, however, sets forth total return information for the one-year, three-year, five-year and ten-year periods ended December 31, 1999 (or since inception if more recent) for certain similar accounts that are managed by the same sub-investment managers as are these two Portfolios. Year-to-date information is also given for the two months ended February 29, 2000. Results are shown on a "total return" basis and include reinvestment of all dividends and capital gain distributions. The tables also show the total return information for appropriate indices for the same periods. The index performance information set forth below does not reflect any fees and expenses that the applicable Fund Portfolio will bear. Finally each table also shows the related Fund Portfolio over the period of its existence. Each sub-investment manager has represented to the Fund that, except as otherwise noted, the similar accounts for which performance figures are shown include all of the sub-investment manager's investment company and other accounts that (a) have been managed with investment objectives, policies, and strategies substantially similar to those used in managing the corresponding Portfolio, (b) are of sufficient size that their performance would be considered relevant to the owner of a policy or contract investing in that Portfolio and (c) are otherwise deemed sufficiently comparable to warrant including their performance. No such similar account performance information is available with respect to the MetLife Mid Cap Stock Index Portfolio, which also will commence operations on or about July 5, 2000. The similar accounts are shown for illustrative purposes only and do not necessarily predict future performance of the Portfolios. You should be aware that the Portfolios are likely to differ from other accounts managed by the same sub-investment manager in such matters as size, cash flow pattern, expense levels and certain tax matters. Accordingly, the portfolio holdings and performance of the Portfolio will vary from those of such other accounts. The performance figures set forth below do not reflect any of the charges and deductions under the terms of the variable annuity contracts and variable life insurance policies that may invest in the Portfolios. These charges may be substantial and will cause the investment return under such a contract or policy to be less than that of the Portfolio. Such charges are discussed in detail in the appropriate Contract prospectus. 36 THE FOLLOWING PERFORMANCE INFORMATION DOES NOT REPRESENT THE PERFORMANCE OF ANY FUND PORTFOLIO EXCEPT IN THE RIGHT HAND COLUMN OF EACH TABLE. Harris
Harris Oakmark Large Cap Value Total Return for Oakmark Fund Portfolio Period (unaudited) (8/5/91)/1/ S&P 500 Index/2/ (11/9/98) ------------------ ------------ ---------------- --------------- Year to Date (ended 2/29/2000) -10.47% 21.04% -6.89% Since inception of Harris Oakmark Large Cap Value Portfolio (11/9/98 to 12/31/99, annualized) -12.24% not available -9.40% One Year (12/98 to 12/99) -10.47% 21.04% -6.89% Three Year (12/96 to 12/99, annualized) 7.19% 27.56% -- Five Year (12/99 to 12/99, annualized) 13.99% 28.54% -- 8/5/91 to 12/99, annualized (since inception of the Oakmark Fund) 21.17% 19.89% --
- -------- /1/ As of December 31, 1999 the Oakmark Fund, a mutual fund, had assets of $2.36 billion. The actual fees and expenses of the fund whose performance is shown has been used. Had the Portfolio's estimated fees and expenses been used (whether before or after estimated expense reimbursement), the performance figures would have been lower. Performance figures are based on historical performance and do not guarantee future results. /2/ The S&P 500 Index is an unmanaged index of common stocks that are primarily issued by companies with large aggregate market values. Performance for the index has been obtained from public sources and has not been audited. T. Rowe Price
Lipper T. Rowe Price Variable Funds Morgan T. Rowe Price Total Return for Growth Stock Underlying Growth Stanley Large Cap Period (unaudited) Fund/1/ Funds Average/2/ S&P 500/2/ EAFE Index/2/ Growth Portfolio ------------------ ------------- ----------------- ---------- ------------- ---------------- Year to Date (ended 2/29/2000) 0.42% 2.03% -6.82% 25.77% 0.07% Since inception of T. Rowe Large Cap Growth Portfolio (11/9/98 to 12/31/99, annualized) -- -- -- -- 29.79% One Year (12/31/98 to 12/31/99) 22.15% 31.48% 21.04% 27.03% 22.23% Three Year (12/31/96 to 12/31/99, annualized) 25.35% 26.38% 27.56% 16.06% -- Five Year (12/31/94 to 12/31/99, annualized) 25.71% 26.45% 28.56% 13.15% -- Ten Year (12/31/89 to 12/31/99, annualized) 17.39% 17.79% 18.21% 7.33% --
- -------- /1/ As of December 31, 1999 the T. Rowe Price Growth Stock Fund, a mutual fund, had assets of $5.67 billion. The total returns were calculated using the actual fees and expenses of the fund whose performance is shown. Had the Portfolio's estimated fees and expenses been used (whether before or after estimated expense reimbursement), the performance figures would have been lower. Performance figures are based on historical performance and do not guarantee future results. /2/ The Lipper Variable Funds Underlying Growth Funds Average represents the average total return based on net asset values of all underlying growth funds. The S&P 500 Index is an unmanaged index of common stocks that are primarily issued by companies with large aggregate market values. Performance for the indices has been obtained from public sources and has not been audited. 37 MetLife
Lehman Brothers Lehman Brothers Total Return for MetLife Fixed Aggregate Aggregate Bond Period (unaudited) Income Account/1/ Bond Index/2/ Index Portfolio ------------------ ----------------- --------------- --------------- Year to Date (ended 2/29/2000) 0.88% 0.88% 0.85% Since inception of Lehman Brothers Aggregate Bond Index Portfolio (11/9/98 to 12/31/99, annualized) -- 0.79% -0.01% One Year (12/31/98 to 12/31/99) -0.67% -0.82% -1.37% Three Year (12/31/96 to 12/31/99), annualized 5.88% 5.74% -- 8/1/96 to 12/31/99, annualized/3/ 6.62% 6.19% --
- -------- /1/ As of December 31, 1999 the MetLife Fixed Income Account, a non-mutual fund separate account, had assets of $400 million. The MetLife Fixed Income Account is not an SEC registered investment company and does not comply with requirements of Subchapter M of the Internal Revenue Code. The management of the Account would not have been affected had the Account been a registered investment company that complied with all legal requirements applicable to such companies and Subchapter M of the Code. The total returns were calculated using the estimated fees and expenses of the Lehman Brothers Aggregate Bond Index Portfolio. Performance figures are based on historical performance and do not guarantee future results. /2/ Lehman Brothers Aggregate Bond Index is an unmanaged index comprised of the Lehman Brothers Government/Corporate Index, the Lehman Brothers Mortgaged- Backed Securities Index, and the Lehman Brothers Asset-Backed Securities Index and effective July 1, 1999, the Lehman Brothers Commercial Mortgage-Backed Securities Index. Performance for the index has been obtained from public sources and has not been audited. /3/ MetLife was not the investment manager of the separate account until August 1, 1996. Prior thereto an affiliate of MetLife was the investment manager for the separate account. Putnam
Putnam Lipper Growth Variable Funds Total Return for Opportunities Underlying Growth Putnam Large Cap Period (unaudited) Fund/1/ Funds Average/2/ S&P 500/2/ Growth Portfolio ------------------ ------------- ----------------- ---------- ---------------- Year to Date (ended 2/29/2000) 1.78% 1.73% -6.82% -- One Year (12/31/98 to 12/31/99) 51.37% 29.97% 21.04% -- Three Year (12/31/96 to 12/31/99, annualized) 46.62% 26.79% 27.58% -- 10/2/95 to 12/99, annualized (since inception of the Putnam Growth Opportunities Fund) 38.20% 23.13% 26.55% --
- -------- /1/ As of December 31, 1999 the Putnam Growth Opportunities Fund, a mutual fund, had assets of $5.3 billion. The total returns were calculated using the actual fees and expenses of the fund whose performance is shown. Had the Portfolio's estimated fees and expenses been used (whether before or after estimated expense reimbursement), the performance figures would have been lower. Performance figures are based on historical performance and do not guarantee future results. /2/ The Lipper Variable Funds Underlying Growth Funds Average represents the average total return based on net asset values of all underlying growth funds. The S&P 500 Index is an unmanaged index of common stocks that are primarily issued by companies with large aggregate market values. Performance for the indices has been obtained from public sources and has not been audited. State Street Research
State Street State Street Russell 2000 Research Aurora Total Return for Research Value Small Cap Value Period (unaudited) Aurora Fund/1/ Index/2/ S&P 500/2/ Portfolio ------------------ -------------- ------------ ---------- --------------- Year to Date (ended 2/29/2000) 10.59% 3.34% -6.82% -- One Year (12/31/98 to 12/31/99) 33.91% -1.49% 21.03% -- Three Year (12/31/96 to 12/31/99), annualized 18.74% 6.69% 27.56% -- 2/13/95 to 12/99, annualized (since in- ception of the State Street Research Aurora Fund) 26.68% 11.79% 21.68% --
- -------- /1/ As of December 31, 1999, the State Street Research Aurora Fund, a mutual fund, had assets of $525.9 million. The total returns were calculated using the actual fees and expenses of the fund for class S shares whose performance is shown. Had the Portfolio's estimated fees and expenses been used (whether before or after estimated expense reimbursement) the performance figures would have been lower. Performance figures are based on historical performance and do not guarantee future results. /2/ The Russell 2000 Value Index is an unmanaged index of common stocks that are primarily issued by the 2000 smallest companies with the Russell 3000 Index. The S&P 500 Index is an unmanaged index of common stocks that are primarily issued by companies with large aggregate market values. Performance for the indices has been obtained from public sources and has not been audited. 38 Appendix B To Prospectus Certain Investment Practices The Table that follows sets forth certain investment practices in which some or all of the Portfolios may engage. These practices will not be the primary activity of any Portfolio, however, except if noted under "Risk/Return Summary" in the Prospectus. The following Portfolio numbers are used in the table:
Portfolio Number Portfolio Name --------- -------------- State Street Research Aggressive 1. Growth 2. State Street Research Diversified 3. State Street Research Growth 4. State Street Research Income 5. State Street Research Money Market 6. Putnam International Stock 7. Harris Oakmark Large Cap Value 8. Janus Mid Cap 9. Loomis Sayles High Yield Bond 10. Neuberger Berman Partners Mid Cap Value
Portfolio Number Portfolio Name --------- -------------- 11. Scudder Global Equity 12. T. Rowe Price Large Cap Growth 13. T. Rowe Price Small Cap Growth 14. Lehman Brothers Aggregate Bond Index 15. MetLife Stock Index 16. Morgan Stanley EAFE Index 17. Russell 2000 Index 18. MetLife Mid Cap Stock Index 19. Putnam Large Cap Growth 20. State Street Research Aurora Small Cap Value
Percentage limit per Portfolio Item Investment practice Portfolios on assets/1/ - -------------------------------------------------------------------------------------------------------- 1 Sell covered call options on securities and All None stock indices as a hedge against or to minimize anticipated loss in value. - -------------------------------------------------------------------------------------------------------- 2 Sell covered put options on securities and 6,8,9,11,12,13, None stock indices to earn additional income, as a 19,20 hedge against or to minimize anticipated loss in value. - -------------------------------------------------------------------------------------------------------- 3 Sell covered put and covered call options on 6,8,9,11,12,13,20 None currencies as a hedge against anticipated declines in currency exchange rates in which securities are held or to be purchased or to earn additional income. - -------------------------------------------------------------------------------------------------------- 4 Purchase put options on securities and All, except 10 None indices that correlate with a Portfolio's securities for defensive purposes in order to protect against anticipated declines in values. - -------------------------------------------------------------------------------------------------------- 5 Purchase call options on securities and All, except 10 None indices that correlate with that Portfolio's securities. - -------------------------------------------------------------------------------------------------------- 6 Purchase put options on currencies for 1,2,3,4,6,8,9, None defensive purposes in order to protect 11, against anticipated declines in values on 12,13,20 currencies in which a Portfolio's securities are or may be denominated. - -------------------------------------------------------------------------------------------------------- 7 Purchase call options on currencies that 1,2,3,4,6,8,9, None correlate with the currencies in which the 11,12,13,20 Portfolio's securities may be denominated. - -------------------------------------------------------------------------------------------------------- 8 Purchase and sell otherwise permitted stock, 1,2,3,4,6,7,8, None currency, and index put and call options 10,11,20 "over-the-counter" (rather than only on established exchanges). - -------------------------------------------------------------------------------------------------------- 9 Purchase and sell futures contracts (on All, except Combined limit on the sum of recognized futures exchanges) on debt 10,15,16,17,18 the initial margin for securities and indices of debt securities as futures and options sold on a hedge against or to minimize adverse futures, plus premiums paid principal fluctuations resulting from for unexpired options on anticipated interest rate changes or to futures, is 5% of total adjust exposure to the bond market. assets (excluding "in the money" and, for Portfolios 7, 8, 9, 11, 12 and 13, "bona fide hedging" as defined by the Commodity Futures Trading Commission) - -------------------------------------------------------------------------------------------------------- 10 Purchase and sell future contracts (on All, except Same as Item 9 recognized futures exchanges) on equity 4,5,7,10,14 securities or stock indices as a hedge or to enhance return. - -------------------------------------------------------------------------------------------------------- 11 Purchase and sell currency futures contracts 6,8,9,11,12,13,20 Same as Item 9 (on recognized futures exchanges) as a hedge or to adjust exposure to the currency market.
39
Percentage limit per Portfolio Item Investment practice Portfolios on assets/1/ - ---------------------------------------------------------------------------------------------------------- 12 Sell covered call options on and purchase put All, except 10 Same as Item 9 and call options contracts on futures contracts (on recognized futures exchanges) of the type and for the same reasons the Portfolio is permitted to enter futures contracts. - ---------------------------------------------------------------------------------------------------------- 13 Sell covered put options on futures contracts 6,8,9, Same as Item 9 (on recognized futures exchanges) of the type 11,12,13,19,20 and for the same reasons the Portfolio is permitted to enter into futures contracts. - ---------------------------------------------------------------------------------------------------------- 14 Enter into forward foreign currency exchange All, except None contracts to hedge currency risk relating to 15,17,18 securities denominated, exposed to, or traded in a foreign currency in which the Portfolio may invest. - ---------------------------------------------------------------------------------------------------------- 15 Enter into forward foreign currency exchange 1,2,3,4,6,8,9, 5% of total assets contracts for non hedging purposes. 11,12, 13,20 - ---------------------------------------------------------------------------------------------------------- 16 Enter into transactions to offset or close All None out any of the above. - ---------------------------------------------------------------------------------------------------------- 17 Mortgage-related securities (except for IOs All None and POs). - ---------------------------------------------------------------------------------------------------------- 18 All, except None Mortgage related interest only (IOs) and 5,10,15, principal only (POs) securities. 16,17,18 - ---------------------------------------------------------------------------------------------------------- 19 Use swaps, caps, floors and collars on 1,2,3,4,6,8,9,11, None interest rates, currencies and indices as a 12,13,14,19,20 risk management tool or to enhance return. - ---------------------------------------------------------------------------------------------------------- 20 Invest in foreign securities (including A. 1,2,3,4,5,15,17, A. 10% of total assets in investments through European Depository 18,19 securities of foreign Receipts ("EDRs") and International issuers except 25% of Depository Receipts ("IDRs")). total assets may be invested in securities issued, assumed, or guaranteed by foreign governments or their political subdivisions or instrumentalities; assumed or guaranteed by domestic issuers; or issued, assumed, or guaranteed by foreign issuers with a class of securities listed on the New York Stock Exchange.* B. 6,11,14,16,20 B. None C. 9 C. 50% of total assets in foreign securities (except 100% in securities of Canadian issuers)* D. 12 D. 30% of total assets (excluding reserves)* E. 13 E. 20% of total assets (excluding reserves)* F. 7 F. 25% of total assets* G. 10 G. 10% of total assets* H. 8 H. 30% of total assets in foreign securities denominated in a foreign currency and not publicly traded in the U.S.* - ---------------------------------------------------------------------------------------------------------- 21 Lend Portfolio securities. A. 1,2,3,4,5,6,9,15 A. 20% of total assets* B. 7,10,11,12,13, B. 33 1/3% of total assets* 14,16,17,18,19, 20 C. 8 C. 25% of total assets* - ---------------------------------------------------------------------------------------------------------- 22 Invest in securities that are illiquid. A. All, except 5,11 A. 15% of total assets B. 5,11 B. 10% of total assets
40
Percentage limit per Portfolio Item Investment practice Portfolios on assets/1/ - --------------------------------------------------------------------------------------------------------- 23 Invest in other investment companies, which A. All, except 10 A. 10% of total assets may involve payment of duplicate fees. except as in B below (except that only 5% of total assets may be invested in a single investment company and no portfolio can purchase more than 3% of the total outstanding voting securities of any one investment company or, together with other investment companies having the same investment adviser, purchase more than 10% of the voting stock of any "closed-end" investment company). B. 8,12,13 B. Up to 25% of total assets may be invested in affiliated money market funds for defensive purposes or as a means of receiving a return on idle cash. - --------------------------------------------------------------------------------------------------------- 24 Invest in money market instruments issued by 1,2,3,4,6,8,9, None a commercial bank or savings and loan 11,12,13,19,20 associations (or its foreign branch or agency) notwithstanding that the bank or association has less than $1 billion in total assets, is not a member of the Federal Deposit Insurance Corporation, is not organized in the U.S., and/or is not operating in the U.S. - --------------------------------------------------------------------------------------------------------- 25 Invest assets in securities issued by All 25% of total assets. companies primarily engaged in any one Excluded from the 25% industry. Provided that: (a) utilities will limitation are portfolios 2 be considered separate industries according and 5's: (a) money market, to type of service; (b) oil and oil related securities, securities companies will be considered separate issued or guaranteed by the industries according to type; and (c) U.S. government, its savings, loan associations, and finance agencies or companies will be considered separate instrumentalities; and (b) industries. bank issued debt securities.* (The Fund will disclose when more than 25% of a Portfolio's total assets are invested in four oil related industries. For Portfolios 1, 2, 3, 4, 5, 14 and 20, companies engaged in the business of financing may be classified according to the industries of their parent or sponsor companies, or industries that otherwise most affect the financing companies). - --------------------------------------------------------------------------------------------------------- 26 Borrow in the form of short-term credits All Together with item 27, up to necessary to clear Portfolio transactions; 1/3 of the amount by which enter into reverse repurchase arrangements total assets exceed total with banks. liabilities (excluding the liabilities represented by such obligations).* - --------------------------------------------------------------------------------------------------------- 27 Borrow money for extraordinary or emergency A. All, except 11 A. 5% of total assets* purposes (e.g. to honor redemption requests which might B. All, except 11 B. Together with item 26, up otherwise require the sale of securities at to 1/3 of the amount by an inopportune time). which total assets exceed total liabilities (excluding the liabilities represented by such obligations).* C. 11 C. 33 1/3% of total assets, provided that if these obligations with reverse repurchase agreements do not exceed 5% of total assets, no additional securities will be purchased for the Portfolio.* - --------------------------------------------------------------------------------------------------------- 28 Purchase securities on a "when-issued" basis. All, except 5 None - --------------------------------------------------------------------------------------------------------- 29 Invest in real estate interests, including All 10% of total assets.* This real estate mortgage loans. limit shall not restrict investments in exchange- traded real estate investment trusts and shares of other real estate companies. - --------------------------------------------------------------------------------------------------------- 30 Purchase American Depository Receipts A. 1,2,3,4,5,19 A. Together with the assets ("ADRs"). referred to in Item 20 A above, 35% of total assets B. 6,8,10,11,16,20 B. None C. 12,15,17,18 C. Together with assets referred to in Item 20 D above, 30% of total assets D. 7 D. Together with assets referred to in Item 20 F above, 25% of total assets E. 9 E. Together with assets referred to in Item 20C above, 50% of total assets (except 100% in securities).
41
Percentage limit per Portfolio Item Investment practice Portfolios on assets/1/ - ------------------------------------------------------------------------------------------------------- F. 13 F. Together with assets referred to in Item 20E above, 20% of total assets - ------------------------------------------------------------------------------------------------------- 31 Invest in debt securities. A. All, except A. None 6,7,10,13,14, 19, 20 B. 6,7,10,11,12, B. None on investment grade 13,14,19,20 securities but 25% of total assets for 7, 15% for 10 and 5% for 6, 11, 12, 13, 14, 19 and 20 in below investment grade securities. - ------------------------------------------------------------------------------------------------------- 32 Invest in preferred stocks. A. All, except 9 A. None B. 9 B. Up to 20% of total assets - ------------------------------------------------------------------------------------------------------- 33 Invest in common stocks. A. All, except 9 A. None B. 9 B. 10% of total assets - ------------------------------------------------------------------------------------------------------- 34 Invest in hybrid instruments. A. All, except A. None 12,13 B. 12,13 B. 10% of its total assets - ------------------------------------------------------------------------------------------------------- 35 Enter into forward contracts on debt All None securities.
- ----------- /1/ At time of investment, unless otherwise noted. * Policy may be changed only by shareholder vote. 42 Appendix C To Prospectus Description Of Some Investments, Techniques, And Risks Investment Styles [To varying extents, the portfolio managers may use the following techniques and investments in managing the Portfolios.] A value investing approach concentrates on securities that are undervalued in relation to a company's fundamental economic values. Securities may be undervalued for various reasons including special situations (i.e., where the portfolio manager believes that a company's securities will appreciate when the market recognizes a specific development at the company, such as a new product or process, a management change or a technological breakthrough). A growth investing approach emphasizes stocks of companies that are projected to grow at above-average rates based on the company's earnings growth potential. Index Portfolios attempt to equal the return of a particular index, which can provide broad exposure to various market segments. Unlike actively managed portfolios, they do not expect to use any defensive strategies and investors bear the risk of adverse market conditions. Morgan Stanley sponsors the MSCI EAFE Index, Lehman Brothers sponsors the Lehman Brothers Aggregate Bond Index, the McGraw Hill Companies, Inc. sponsor the Standard & Poor's 500 Composite Stock Price Index and the Standard & Poor's MidCap 400 Composite Stock Index, and Frank Russell Company sponsors the Russell 2000 Index (together referred to as "index sponsors"). The index sponsors have no responsibility for and do not participate in the management of the Portfolio assets or sale of the Portfolio shares. Each index and its associated trademarks and service marks are the exclusive property of the respective index sponsors. The Metropolitan Series Fund, Inc. Statement of Additional Information contains a more detailed description of the limited relationship the index sponsors have with MetLife and the Fund. "Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's 500", "S&P MidCap 400", "Standard & Poor's MidCap 400", and "500" are trademarks of The McGraw-Hill Companies, Inc. and references thereto have been made with permission. The Portfolio is not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no representation regarding the advisability of investing in the Portfolio. For more detailed information, see the discussion under "GENERAL INFORMATION--Index Sponsors" in the Statement of Additional Information. [Capitalization] Capitalization measures the size of a company, based on the aggregate market value of the company's outstanding stock. Different Portfolios may use different definitions with respect to whether a company is classified as a small-cap, mid-cap or large-cap company. Investments in companies that are less mature or are small or mid-cap may present greater opportunities for capital appreciation than investments in larger, more mature companies, but also present greater risks including: . greater price volatility because they are less broadly traded . less available public information . greater price volatility due to limited product lines, markets, financial resources, and management experience. 43 [Equity Securities] Equity securities include common stocks, preferred stocks, convertible securities and warrants. Equity securities may offer a higher rate of return than debt securities. However, the risks associated with investments in equity securities may also be higher, because the investment performance of equity securities depends upon factors which are difficult to predict. Equity security values may fluctuate in response to the activities of an individual company or in response to general market, interest rate, and/or economic conditions. Historically, equity securities have provided greater long-term returns and have entailed greater short-term risk than other securities choices. Depending on their terms, however, preferred stock and convertible securities may have investment and risk characteristics more closely resembling those of debt securities than those of other equity securities. Common stocks represent ownership in a company and participate in company profits through dividend payments or capital appreciation after other claims are satisfied. Common stock generally has the greatest potential for appreciation and depreciation of all corporate securities (other than warrants) since the share price reflects the company's earnings. Preferred stocks represent an ownership interest in a company of a specified rank (after bonds and before common stocks) with respect to dividend payments and company assets. Preferred stock generally receives a dividend, but may also omit or be in danger of omitting a dividend payment, in which case it would be purchased for its capital appreciation potential. Convertible securities generally are bonds or preferred stocks which can be exchanged, through warrants or otherwise, into a specified number of shares of the issuer's common stock. Convertible securities generally pay higher interest or dividends than common stock but lower interest or dividends than non- convertible securities. Warrants are rights issued by the issuer of a security (usually common stock) to purchase that security at a specified price for a specified period of time. They do not represent an ownership interest in the issuing company, and their prices do not necessarily parallel the prices of the underlying security. [Debt ("Fixed Income") Securities] Some of the many varieties of debt securities that the Portfolios may purchase are described below. Most debt securities (other than those that have "floating" interest rates) will increase in value if market interest rates subsequently decrease and decrease in value if market interest rates subsequently increase. In most market environments these variations tend to be more pronounced the longer the security's remaining duration. Changes in the issuer's perceived creditworthiness can also significantly affect the value of any debt securities that a Portfolio holds. Investment grade securities are rated by at least one nationally recognized statistical rating organization in one of its top four rating categories, or if unrated, the portfolio manager must determine that the securities are of comparable quality. All other securities are considered below investment grade. Below investment grade securities are also known as "junk bonds." Although they generally provide higher yields, below investment grade fixed income securities, and to a lesser extent, lower rated investment grade fixed income securities, expose a Portfolio to greater risks than higher rated investment grade securities including: . the inability of the issuer to meet principal and interest payments . loss in value due to economic recession or substantial interest rate increases 44 . adverse changes in the public's perception of these securities . legislation limiting the ability of financial institutions to invest in these securities . lack of liquidity in secondary markets . market price volatility Mortgage-related securities represent a direct or indirect interest in a pool of mortgages such as FNMAs, FHLMCs, Collateralized Mortgage Obligations ("CMOs"), and related securities including GNMAs and mortgage-backed securities. They may be issued or guaranteed by U.S. government instrumentalities or other entities whose obligation is securitized by the underlying portfolio of mortgages or mortgage-backed securities. These securities are valued based on expected prepayment rates. The risks associated with prepayment of the obligations makes these securities more volatile in response to changing interest rates than other fixed-income securities. Interest only securities ("IOs") are entitled to interest payments from a class of these securities and principal only securities ("POs") are entitled to principal payments from a class of these securities. POs are more volatile in response to changing interest rates than mortgage-related securities that provide for interest payments. IOs also are extremely volatile and generally experience a loss in value in the event prepayment rates are greater than anticipated, which occurs generally when interest rates fall, and an increase in value when interest rates rise. Asset-backed securities represent a direct or indirect interest in a pool of receivables such as automobile, credit cards, equipment leases, or student loans. The issuers of the asset-backed securities are special purpose entities that do not have significant assets other than the receivables securitizing the securities. The collateral supporting these securities generally is of shorter maturity than mortgage-related securities, but exposes a Portfolio to similar risks associated with prepayment of the receivables prior to maturity. Zero coupon securities credit interest at a specified rate but do not distribute cash payments for interest as it falls due. These securities fluctuate in value due to changes in interest rates more than comparable debt obligations that pay periodic interest. [Foreign Investments] Foreign securities include equity securities and debt securities of non-U.S. domiciled issuers. A few of the many varieties of foreign investments are described below. EDRs and IDRs are receipts issued in Europe, generally by a non-U.S. bank or trust company, that evidence ownership of non-U.S. securities. GDRs are securities convertible into equity securities of foreign issuers. Forward Foreign Currency Exchange Contracts obligate a Portfolio to purchase or sell a specific currency on a specified date for a specified amount. They can be used to hedge the currency risk relating to securities traded in or exposed to a foreign currency. When used as a hedge, substitute or proxy currency can also be used instead of the currency in which the investment is actually denominated. This is known as proxy hedging. These contracts can also be used to generate income or adjust a Portfolio's exposure to various currencies. Synthetic Non-U.S. Money Market positions are created through the simultaneous purchase of a U.S. dollar-denominated money market 45 instrument and a forward foreign currency exchange contract to deliver U.S. dollars for a foreign currency. These are purchased instead of foreign currency denominated money market securities because they can provide greater liquidity. Foreign Securities Risk Considerations. Although Portfolios that invest in foreign securities may reduce their overall risk by providing further diversification, the Portfolios will be exposed to the risks listed below. In addition, these risks may be heightened for investments in developing countries: . adverse effects from changing political, social or economic conditions, diplomatic relations, taxation or investment regulations . limitations on repatriation of assets . expropriation . costs associated with currency conversions . less publicly available information because foreign securities and issuers are generally not subject to the reporting requirements of the SEC . differences in financial evaluation because foreign issuers are not subject to the domestic accounting, auditing and financial reporting standards and practices . lack of development or efficiency with respect to non-domestic securities markets and brokerage practices (including higher, non-negotiable brokerage costs) . less liquidity (including due to delays in transaction settlement) . more price volatility . smaller options and futures markets, causing lack of liquidity for these securities . higher custodial and settlement costs . change in net asset value of the Portfolio's shares on days when shareholders will not be able to purchase or redeem Fund shares. [American Depository Receipts ("ADRs")] ADRs are U.S. dollar-denominated certificates issued by a U.S. bank or trust company which represent the right to receive securities of a foreign issuer deposited in a domestic bank or foreign branch of a U.S. bank. ADRs are traded on domestic exchanges or in the U.S. over-the-counter market and are registered domestically. These factors eliminate certain risks associated with investing in foreign securities. [U.S. Dollar-Denominated Money Market Securities of Foreign Issuers] These securities may be registered domestically and traded on domestic exchanges or in the U.S. over-the-counter market (e.g., Yankee securities). If the securities are registered domestically, certain risk factors of investing in foreign securities are eliminated. These securities may also be registered abroad and traded exclusively in foreign markets (e.g., Eurodollar securities). [Derivative Instruments] Futures contracts are agreements to buy or sell a security, or deliver a final cash settlement price in connection with an index, interest rate, currency, or other contracts not calling for physical delivery, for a set price in the future. A Portfolio must post an amount equal to a portion of the total market value of the futures contract as initial margin, which is returned when a Portfolio's obligations under the contract have been satisfied. From time to time thereafter, the Portfolio may have to post variation margin to maintain this amount as the market value of the contract fluctuates. Special skill is required in order to effectively use futures contracts. No Portfolio will use futures contracts or options thereon for leveraging purposes. Certain risks exist when a Portfolio uses futures contracts including the: 46 . inability to close out or offset futures contract transactions at favorable prices . reduction of the Portfolio's income . reduction in the value of the subject of the futures contract or of the contract itself . imperfect correlation between the value of the futures contract and the value of the subject of the contract . prices moving contrary to the portfolio manager's expectation Call options give the purchaser the right to buy and obligate the seller to sell an underlying security, currency, stock index (which is based on the weighted average of the securities in the index), or futures contract at a specified "exercise" price during the option period. There are certain risks to a Portfolio that sells call options, including the inability to effect closing transactions at favorable prices or to participate in the appreciation of the subject of the call option above the exercise price. Purchasing call options exposes a Portfolio to the risk of losing the entire premium it has paid for the option. Put options give the purchaser the right to sell and obligate the seller to purchase an underlying security, currency, stock index (which is based on the weighted average of the securities in the index) or futures contract at a specified "exercise" price during the option period. There are certain risks to a Portfolio that sells put options, including the inability to effect closing transactions at favorable prices and the obligation to purchase the subject of the put option at prices which may be greater than current market values or exchange rates. Purchasing put options exposes a Portfolio to the risk of losing the entire premium it has paid for the option if the option cannot be exercised profitably. Covered options involve a Portfolio's (a) segregating liquid assets with its custodian that at all times at least equal the Portfolio's obligations under such options, (b) holding an appropriate offsetting option or other derivative instrument, or, (c) in the case of a call option sold by the Fund, owning the securities or other investments subject to the option. Hybrid instruments combine elements of futures contracts or options with elements of debt, preferred equity, depository instruments, or other evidence of indebtedness. A portion of or all interest payments to the Portfolio and/or the principal or stated amount payable to the Portfolio at maturity, redemption, or retirement of the hybrid instrument are determined by reference to prices, changes in prices, or differences between prices of securities, currencies, intangibles, goods, articles, or commodities or by another benchmark such as an index or interest rate. Hybrid instruments can be an efficient means of exposing a Portfolio to a particular market in order to enhance total return. Hybrid instruments are potentially more volatile and carry greater market risks than traditional debt instruments. The risks of investing in these instruments reflect a combination of the risks of investing in securities, options, futures and currencies. Hybrid securities typically do not trade on exchanges. Hybrid instruments are frequently (or may become) less liquid than other types of investments. They also expose the Portfolio to losses if the other party to the transaction fails to meet its obligations. Portfolios use swaps, caps, floors and collars as risk management tools to protect against changes in interest rates or in security or currency values, or 47 to gain exposure to certain markets in an economical way. Swap transactions involve an agreement where one party exchanges payments equal to a floating interest rate, currency exchange rate or variation in interest rates or currency indexes on a specified amount (the "notional amount"), and the other party agrees to make payments equal to a fixed rate on the same amount for a specified period. Caps give the purchaser the right to receive payments from the seller to the extent a specified interest rate, currency exchange rate or index exceeds a specified level during a specified period of time. Floors give the purchaser the right to receive payments from the seller to the extent a specified interest rate, currency exchange rate or index is less than a specified level during a specified period of time. Collars give the purchaser the right to receive payments from the seller to the extent a specified interest rate, currency exchange rate or index is outside an agreed upon range during a specified period of time. A Portfolio will not use swaps, caps, floors or collars to leverage its exposure to changing interest rates, currency rates, or security values. Nor will a Portfolio sell interest rate caps, floors or collars unless it owns securities that will provide the interest that the Portfolio may be required to pay. The use of swaps, caps and floors exposes the Portfolio to investment risks different than those associated with other security transactions including: . total loss of the Portfolio's investment in swaps and the sale of caps, floors and collars (a Portfolio's purchase of caps, floors and collars can result only in the loss of the purchase price) . investment performance of the Portfolio can be worse than if these techniques were not used if the assumptions used in entering into the transactions were incorrect . since these instruments generally do not trade on exchanges, a Portfolio may not be able to enter into offsetting positions, or may suffer other losses, if the other party to the transaction fails to meet its obligations . more market volatility than other types of investments [When-Issued Securities] Purchasing securities "when-issued" is a commitment by a Portfolio to buy a security before the security is actually issued. The amount of the Portfolio's payment obligation and the security's interest rate are determined when the commitment is made, even though no interest accrues until the security is issued, which is generally 15 to 120 days later. The Portfolio will segregate liquid assets with its custodian sufficient at all times to satisfy these commitments. If the value of the security is less when delivered than when the commitment was made, the Portfolio will suffer a loss. [Securities Lending] Securities lending involves lending some of a Portfolio's securities to brokers, dealers and financial institutions. As collateral for the loan, the Portfolio receives an amount that is at all times equal to at least 100% of the current market value of the loaned securities. The Portfolio invests the collateral in short-term high investment grade securities, or in a mutual fund that invests in such securities. Securities lending can increase current income for a Portfolio because the Portfolio continues to receive payments equal to the interest and dividends on loaned securities. Also, the investment experience of the cash collateral will inure to the Portfolio. Loans will not have a term longer than 30 days and will be terminable at any time. As with any extension of credit, securities lending exposes a Portfolio to some risks including delay in recovery and loss of rights in the collateral if the borrower fails financially. 48 Metropolitan Series Fund, Inc. --------------------- Principal Office of the Fund 1 Madison Avenue New York, New York 10010 --------------------- Investment Manager and Principal Underwriter Metropolitan Life Insurance Company 1 Madison Avenue New York, New York 10010 (Principal Business Address) Sub-Investment Managers State Street Research & Management Company One Financial Center Boston, Massachusetts 02111 (Principal Business Address) Loomis, Sayles & Company, L.P. One Financial Center Boston, Massachusetts 02111 (Principal Business Address) Janus Capital Corporation 100 Fillmore Street Denver, Colorado 80206-4923 (Principal Executive Offices) T. Rowe Price Associates, Inc. 100 East Pratt Street Baltimore, Maryland 21202 (Principal Business Address) Scudder Kemper Investments, Inc. 345 Park Avenue New York, New York 10154 (Principal Executive Offices) Harris Associates, LP 2 North LaSalle Street Chicago, IL 60602 (Principal Executive Offices) Neuberger Berman Management Inc. 605 Third Avenue New York, NY 10158-0180 (Principal Executive Offices) Putnam Investment Management, Inc. One Post Office Square Boston, Massachusetts 02109 (Principal Executive Office) Custodian, Transfer Agent and Dividend Paying Agent State Street Bank and Trust Company 225 Franklin Street Boston, Massachusetts 02110 (Principal Business Address) No dealer, salesman, or other person has been authorized to give any informa- tion or to make any representations, other than those contained in this Pro- spectus, in connection with the offer made by this Prospectus, and, if given or made, such other information or representations must not be relied upon as hav- ing been authorized by the Fund, Metropolitan Life, State Street Research, Met- ropolitan Tower, Loomis Sayles, T. Rowe Price, Janus, Scudder, Harris, Neu- berger Berman or Putnam. This Prospectus does not constitute an offering in any state in which such offering may not lawfully be made. How to learn more: We have incorporated the Statement of Additional Information ("SAI") into this Prospectus. That means the SAI is considered part of this Prospectus as though it were included in it. The SAI contains more information about the Fund. Also, the Fund's annual and semi-annual reports to shareholders (the "reports") contain more information including information on each Portfolio's investments and a discussion of the market conditions and investment strategies that affected each Portfolio's performance for the period covered by the report. How to get copies: To request a free copy of the SAI or the reports or to make any other inquiries, write or call: Metropolitan Life Insurance Company One Madison Avenue New York, NY 10010 Phone: (800) 553-4459 You can also get information about the Fund (including the SAI) from the Securities and Exchange Commission (a copying fee may apply) by visiting or writing to its Public Reference Room or using its Internet site at: Securities and Exchange Commission Public Reference Room Washington, D.C. 20549 Call 1-800-SEC-0330 (for information about using the Public Reference Room) Internet site: http://www.sec.gov IC# 811-3618 E00048LJI (exp0501)MLIC-LD STATEMENT OF ADDITIONAL INFORMATION FOR METROPOLITAN SERIES FUND, INC. May 1, 2000 The investment options ("Portfolios") currently offered by the Metropolitan Series Fund, Inc. (the "Fund") are: State Street Research Aggressive Growth Portfolio Neuberger Berman Partners Mid Cap Value Portfolio State Street Research Diversified Portfolio Scudder Global Equity Portfolio State Street Research Growth T. Rowe Price Large Cap Growth Portfolio Portfolio State Street Research Income T. Rowe Price Small Cap Growth Portfolio Portfolio State Street Research Money Market Lehman Brothers(R) Aggregate Bond Portfolio Index Portfolio State Street Research Aurora Small MetLife Stock Index Portfolio Cap Value Portfolio MetLife MidCap Stock Index Portfolio Putnam International Stock Portfolio (formerly Santander International Morgan Stanley(R) EAFE Index Portfolio Stock Portfolio) Russell 2000(R) Index Portfolio Putnam Large Cap Growth Portfolio Harris Oakmark Large Cap Value Portfolio Janus Mid Cap Portfolio Loomis Sayles High Yield Bond Portfolio This Statement of Additional Information ("SAI") is not a prospectus. It should be read in conjunction with the Prospectus dated May 1, 2000. The annual report for the Fund for the year ending December 31, 1999 accompanies this SAI and is incorporated by reference. A copy of the May 1, 2000 Prospectus and the annual report may be obtained, without charge, from Metropolitan Life Insurance Company, One Madison Avenue, New York, New York 10010, Area 2H or by calling (800) 553-4459. E00048LJJ (exp0501)MLIC-LD TABLE OF CONTENTS
Headings Page - -------- ---- The Fund's Organization.................................................... B-2 Description of Some Investment Practices, Policies and Risk................ B-3 Certain Investment Limitations............................................. B-7 Investment Management Arrangements......................................... B-8 Directors and Officers of the Fund......................................... B-11 Placing Portfolio Transactions............................................. B-13 Shareholder Meetings....................................................... B-17 Voting..................................................................... B-17 Sale and Redemption of Shares.............................................. B-17 Pricing of Portfolio Securities............................................ B-17 Taxes...................................................................... B-19 General Information........................................................ B-20 Financial Statements....................................................... B-22 Appendix................................................................... B-23
THE FUND'S ORGANIZATION The Fund, an open-end management investment company, is a corporation that was formed in Maryland on November 23, 1982. The Fund has 3 billion shares of authorized common stock at $0.01 par value per share. The Board of Directors may classify and reclassify any authorized and unissued shares. The Fund can issue additional classes of shares without shareholder consent. The shares are presently divided into classes (or series), including one for each Portfolio consisting of 100 million shares (200 million shares for the State Street Research Diversified, State Street Research Growth, and MetLife Stock Index Portfolios). Each Portfolio, other than the Janus Mid Cap Portfolio, is "diversified" for purposes of the Investment Company Act of 1940. Each Portfolio's issued and outstanding shares participate equally in dividends and distributions declared by such Portfolio and receive a portion (divided equally among all of the Portfolio's outstanding shares) of the Portfolio's assets (less liabilities) if the Portfolio is liquidated or dissolved. Liabilities which are not clearly assignable to a Portfolio are generally allocated among the Portfolios in proportion to their relative net assets. In the unlikely event that any Portfolio has liabilities in excess of its assets, the other Portfolios may be held responsible for the excess liabilities. MetLife purchased shares of each of the Portfolios at their inception for its general account. MetLife has sold some of those shares, but will not sell shares if the sale would reduce the Fund's net worth below $100,000. MetLife paid all of the organizational expenses of the Fund and will not be reimbursed. B-2 DESCRIPTION OF SOME INVESTMENT PRACTICES, POLICIES, AND RISKS The information that follows expands on the similar discussion in the Fund's Prospectus and does not describe every type of investment, technique, or risk to which a Portfolio maybe exposed. Each Portfolio reserves the right, without notice, to make any investment, or use any investment technique, except to the extent that such activity would require a shareholder vote, as discussed below under "Fundamental Policies." Money market instruments generally have a remaining maturity of no more than 13 months when acquired by the Fund. They include the following: . United States Government securities -- direct obligations (in the form of Treasury bills, notes and bonds) of the United States Government, differing mainly by maturity lengths. . Government Agency Securities -- debt securities issued by agencies or instrumentalities of the United States Government. They are backed by the full faith and credit of the United States, guaranteed by the United States Treasury, supported by the issuing agency's or instrumentality's right to borrow from the United States Treasury, or supported by the issuing agency's or instrumentality's credit. Agency securities include several of the types of instruments discussed below under "Mortgage-Backed Securities." . Certificates of Deposit -- generally short-term, interest-bearing negotiable certificates issued by commercial banks or savings and loan associations against funds deposited in the issuing institution. Any non-negotiable time- deposits must mature in seven days or less. . Bankers' Acceptances -- time drafts drawn by borrowers on commercial banks, usually in connection with an international commercial transaction where both the borrower and the bank guarantee the payment of the draft in its face amount on the maturity date (which is usually within six months). These securities are traded in secondary markets prior to maturity. The Portfolios will not invest in non-negotiable bankers' acceptance maturing in more than 7 days. . Commercial Paper -- short-term unsecured promissory notes issued by corporations, usually to finance short-term credit needs. Commercial paper is generally sold on a discount basis, with maturity from issue not exceeding nine months. The Portfolios may purchase commercial paper with the highest (two highest for the T. Rowe Price Large Cap Growth and T. Rowe Price Small Cap Growth Portfolios) rating (and, for the State Street Research Money Market Portfolio, it must also be rated in one of the top two "modifiers" that indicate the best investment attributes of such rating) given by a nationally recognized statistical rating organization ("NRSRO") or, if unrated (a) of comparable quality or (b) issued by companies having outstanding debt issues in with ratings with one of the top three ratings given by an NRSRO (and for State Street Research Money Market Portfolio the debt issues must be in the top two rating categories). . Variable Amount Master Demand Notes -- commercial paper of companies that permit the purchaser to lend varying investment amounts (up to the maximum indicated in the note) at varying rates to the borrower. The borrower can prepay the amount borrowed at any time with no penalty and the lender can redeem the note at any time and receive the face value plus accrued interest. No secondary market exists for these notes. The same rating/credit quality requirements apply as described above for other forms of commercial paper. . Non-convertible Corporate Debt Securities -- such as bonds and debentures that will mature within a short time and that have credit characteristics comparable to those required above for commercial paper. . Repurchase Agreements -- the purchaser acquires ownership of another money market instrument, and the seller agrees at the time of sale to repurchase such other instrument at a specified time and price which determine the purchaser's yield during the holding period. This insulates the purchaser from market fluctuations unless the seller defaults. Repurchase agreements are collateralized by cash or the purchased (or equivalent) underlying instrument at all times at least equal in value to the price the Fund paid for the underlying instrument plus interest accrued to date. The Fund can B-3 enter into repurchase agreements with primary dealers for periods not to exceed 30 days. Repurchase agreements with a duration of more than 7 days are considered illiquid. If the seller defaults on its repurchase obligation, the Fund could experience a delay in recovery or inadequacy of the collateral and a cost associated with the disposition of the collateral. . Reverse Repurchase Agreements -- the sale of money market instrument by the Fund with an agreement by the Fund to repurchase the instrument at a specified time, price and interest payment. These agreements can be used when interest income earned from the reinvestment of the proceeds (in money market instruments with the same or shorter duration to maturity or resale) is greater than the interest expense of the reverse repurchase transaction. These agreements can also be used by the Fund as a form of borrowing and they therefore are subject to the limitations regarding borrowing by the Fund. In order to minimize the risk that it will have insufficient assets to repurchase the instrument subject to the agreement, the Fund will keep in a segregated account with its custodian liquid assets at least equal to the value of the specified repurchase price or the proceeds received on the sale subject to repurchase, plus accrued interest. Mortgage-Related Securities GNMA -- partial ownership interests in a pool of mortgage loans which are individually guaranteed or insured by the Federal Housing Administration, the Farmers Home Administration or the Veterans Administration. The GNMA certificates are issued and guaranteed by the Government National Mortgage Association, a U.S. Government corporation, and backed by the full faith and credit of the United States. FNMA and FHLMC -- partial ownership interests in pools of mortgage loans. FNMA certificates are issued and guaranteed by the Federal National Mortgage Association, a federally chartered, privately owned corporation and are not backed by the U.S. Government (although the U.S. Secretary of the Treasury has discretionary authority to lend it up to $2.25 billion). FHLMC certificates are issued and guaranteed by the Federal Home Loan Corporation, a federally chartered corporation owned by the Federal Home Loan Bank and are not backed by the U.S. government (although the U.S. Secretary of the Treasury has discretionary authority to lend it up to $2.25 billion). Mortgage-backed securities -- may be issued by governmental or non-governmental entities such as banks and other mortgage lenders. Non-governmental securities may offer higher yield to the Fund but may also expose the Fund to greater price fluctuation and risk than governmental securities. Many issuers guarantee payment of interest and principal on the securities regardless of whether payments are made on the underlying securities, which generally increases the quality and security. Risks which affect mortgage-backed securities' market values or yields, include actual or perceived interest rate changes, creditworthiness of the issuer or guarantor, prepayment rates value of the underlying mortgages and changes in governmental regulation or tax policies. In addition, certain mortgage-related securities may be settled only through privately owned clearing corporations whose solvency and creditworthiness are not backed by the U.S. Government and whose operational problems may result in delays in settlement or losses to a Portfolio. Mortgage-related securities include: . Mortgage-backed bonds, which are secured by a first lien on a pool of single- family detached properties and are also general obligations of their issuers. . Mortgage pass-through bonds, which are secured by a pool of mortgages where the cash flow generated from the mortgage collateral pool is dedicated to bond repayment. . Stripped agency mortgage-backed securities, which are interests in a pool of mortgages, where the cash flow has been separated into its interest only ("interest only" or "IOs") and principal only ("principal only" or "POs") components. IOs or POs, other than government-issued IOs or POs backed by fixed rate mortgages, are considered illiquid securities. . Other mortgage-related securities, which are other debt obligations secured by mortgages on commercial real estate or residential properties. Below investment grade securities (or junk bonds) -- debt securities that are not rated in B-4 (or judged to be of comparable quality to) one of the top four categories by an NRSRO. These securities expose the Fund to more risks than higher rated securities, including: . greater doubt as to the issuer's capacity to pay interest and principal . greater fluctuations in market values due to individual corporate developments . greater risk of default for various reasons including that (a) the issuers of these securities tend to be more highly leveraged and may not have available to them more traditional methods of financing and (b) the securities are unsecured and are generally subordinated to debts of other creditors . greater difficulty in obtaining accurate market quotations for valuation purposes . increased expenses to the extent the Fund must seek recovery due to a default in payment . less liquid trading markets Restricted or illiquid securities -- securities for which there is no readily available market. These securities are priced at fair value under procedures approved by the Fund's Board of Directors. A Portfolio can sell restricted securities only in privately negotiated transactions or in a public offering registered with the Securities and Exchange Commission ("SEC"). Subsequent to the purchase of a restricted security, SEC registration of such security may become necessary and a Portfolio that owns the security may need to pay all or part of the registration expenses and may need to wait until such registration becomes effective before it can sell the security. In addition, the absence of ready markets may delay a Portfolio's sale of an illiquid investment. Delays in disposing of an investment expose a Portfolio to fluctuations in value for longer periods than it desired. Rule 144A securities -- securities that are not registered with the SEC but under certain circumstances may be considered as liquid. Pursuant to procedures approved by the Board of Directors, these securities are subject to ongoing evaluation to monitor their liquidity, and the purchase of these securities could have the effect of increasing the percent of a Portfolio's securities invested in illiquid securities. Liquidity is evaluated based on various factors including: . the availability of trading markets for the security . the frequency of trades and quotes . the number of dealers and potential purchasers . dealer undertakings to make a market . the nature of the security and of the marketplace trades (including disposal time, solicitation methods and mechanics of transfer) Lending portfolio securities. The Fund may pay reasonable finders, administrative and custodial fees to persons that are unaffiliated with the Fund for services in connection with loans of its portfolio securities. Payments received by a Portfolio equal to dividends, interest and other distributions on loaned securities may be treated as income other than qualified income for the 90% test discussed under "Taxes" below. The Fund intends to engage in securities lending only to the extent that it does not jeopardize its qualification as a regulated investment company under the Internal Revenue Code (the "Code"). Options on securities, currencies and indices. Options that are traded on recognized securities exchanges often have less of a risk of loss than those sold "over-the-counter." A Portfolio will not sell the security or currencies against which options have been written until after the option period has expired, a closing purchase transaction is executed, a corresponding put or call option has been purchased, or the sold option is otherwise covered. The sale and purchase of options involves paying brokerage commissions and other transaction costs. In addition, selling covered call options can increase the portfolio turnover rate. The purchase and sale of index options have additional risks. For example if trading of certain securities in the index is interrupted, a Portfolio would not be able to close out options which it had purchased or sold if restrictions on exercise were also imposed. To address such liquidity concerns the Fund limits use of index options to options on indices (a) with a sufficient number of securities to minimize the likelihood of a trading halt and (b) for which there is a developed secondary market. A Portfolio will cover any option it has sold on a stock index by (a) if the option is a call option, segregating with the Fund's custodian bank either (i) cash or other liquid assets having a B-5 value that, when added to any related margin deposits, at all times at least equals the value of the securities comprising the index, or (ii) securities that substantially replicate changes in value of the securities in the index; (b) if the option is a put option, segregating with the Fund's custodian bank cash or other liquid assets having a value that, when added to any related margin deposits, at all times at least equals the exercise price; or (c) regardless of whether the option is a call or a put option, holding an offsetting position in the same option at an exercise price that is at least as favorable to the Fund. Forward foreign currency exchange contracts. These contracts are traded in the interbank market through currency traders. The traders do not charge a fee, but they do realize a profit based on the difference between the prices at which they are buying and selling various currencies. The use of these contracts involves various risks including: . inability to enter into a contract at advantageous times or with respect to the desired foreign currencies . poor correlation between a currency's value and any proxy currency that a Portfolio is using . the creditworthiness of the counterparty to the transaction . losses (or lost profits) due to unanticipated or otherwise adverse changes in the relative value of currencies . additional expense due to transaction costs or the need to purchase or sell foreign currency on the spot market to correlate with the currency delivery requirements of the contract The Portfolios will cover outstanding forward currency contracts by maintaining liquid portfolio securities denominated in or exposed to the currency underlying the forward contract or the currency being hedged. To the extent that a Portfolio is not able to cover its forward currency positions with underlying portfolio securities, the Portfolio will have its bank custodian segregate cash or liquid assets having a value equal to the aggregate amount of such Portfolio's commitments under forward contracts. As an alternative to segregating assets, a Portfolio may buy call options permitting such Portfolio to buy the amount of foreign currency being hedged by a forward sale contract or a Portfolio may buy put options permitting it to sell the amount of foreign currency subject to a forward buy contract. Swaps, caps, floors and collars. A Portfolio will not enter into any swap, cap, floor or collar unless the portfolio manager thinks that the other party to the transaction is creditworthy. If the other party defaults, the Portfolio may have contractual remedies pursuant to agreements related to the transaction. Portfolios for which swaps are a permissible investment can enter credit protection swap arrangements which involve the sale by the Portfolio of a put option on a debt security which is exercisable by the buyer upon certain events, such as default by the referenced creditor on the underlying debt or a bankruptcy event of the creditor. The swap market has grown substantially in recent years and the swap market has become relatively liquid due to a large number of banks and investment banks acting as principals and agents and using standardized documentation. Caps, floors and collars are more recent innovations and standardized documentation has not yet been fully developed. For that reason they are less liquid than swaps. Liquidity of swaps, caps, floors and collars will be evaluated based on various factors including: . the frequency of trades and quotations . the number of dealers and prospective purchasers in the marketplace . dealer undertakings to make a market . the nature of the instrument (including demand or tender features) . the nature of the marketplace (including the ability to assign or offset a Portfolio's rights and obligations) Futures contracts and options on futures contracts. A Portfolio will cover any futures contract it has sold, or any call option it has sold on a futures contract, by (a) segregating with the Fund's custodian bank (i) cash or other liquid assets having a value that, when added to any related margin deposits, at all times at least equals the value of the securities or currency on which the futures contract (or related index) is based or (ii) securities or currencies that substantially replicate changes in value of the securities or currencies on which the futures contract (or related index) is based or (b) holding an offsetting call option on that futures contract at the same or better B-6 settlement price. A Portfolio will cover any futures contract it has purchased, or any put option it has sold on a futures contract, by (a) segregating with the Fund's custodian bank cash or other liquid assets having a value that, when added to any related margin deposits, at all times at least equals the amount payable upon settlement of such futures contract or (b) holding an offsetting call option on that futures contract at the same or better settlement price. CERTAIN INVESTMENT LIMITATIONS Fundamental policies are those that may not be changed without approval of the outstanding voting shares of each affected Portfolio. If such a vote is required, approval requires a favorable vote of at least the lesser of: (a) 67% of the shares represented (in person or by proxy) at a meeting and entitled to vote thereon; or (b) if at least 50% of such shares are represented at the meeting, a majority of those represented. A policy is fundamental only if the Prospectus or this SAI states that it is fundamental or that it may be changed only by shareholder vote. If the Prospectus or SAI specifically states that one or more Portfolios may engage in practices that would otherwise violate a fundamental policy, such exception is also part of the Fund's fundamental policies. (On the other hand, any policy set forth in the Prospectus that is more restrictive than any fundamental policy on the same subject may be changed without any shareholder vote.) Unless otherwise indicated, all restrictions apply only at the time of purchase. No Portfolio may: . borrow money to purchase securities or purchase securities on margin . engage in the underwriting of securities of other issuers except to the extent that in selling portfolio securities it may be deemed to be a "statutory" underwriter for purposes of the Securities Act of 1933 . issue senior securities . sell call options which are not covered options . sell put options other than to close out option positions previously entered into . invest in commodities or commodity contracts. In this regard, the following aspects of the Prospectus's table of "Certain Investment Practices" are non- fundamental: all of the prohibitions and limitations in item 9; the recognized exchange requirement in, and the omission of any Portfolio that invests in equity securities from, item 10; the recognized exchange requirement and the limitations on purpose in item 11; and all of item 12, except the requirement that the Portfolio must be authorized to use the underlying futures contract. . make loans but this shall not prohibit a Portfolio from entering into repurchase agreements or purchasing bonds, notes, debentures or other obligations of a character customarily purchased by institutional or individual investors . For purposes of the industry concentration limit in item 25 of the Prospectus table, the following additional fundamental policies will apply: domestic crude oil and gas producers, domestic integrated oil companies, international oil companies, and oil service companies each will be deemed a separate industry; money market instruments issued by a foreign branch of a domestic bank will not be deemed to be an investment in a domestic bank. No more than 5% of the Scudder Global Equity Portfolio's assets will be committed to transactions in options, futures or other "derivative" instruments that are intended for any purpose other than to protect against changes in market values of investments the Portfolio owns or intends to acquire, to facilitate the sale or disposition of investments for the Portfolio, or to adjust the effective duration or maturity of fixed income instruments owned by the Portfolio. Non-Fundamental Policies are those that may be changed without approval of shareholders. Unless otherwise indicated, all restrictions apply at the time of purchase. The following non-fundamental policies are in addition to those described elsewhere in the Prospectus or SAI. . No Portfolio will acquire securities for the purpose of exercising control over the management of any company . At least 75% of a Portfolio's total assets must be: (a) securities of issuers in which the Portfolio has not invested more than 5% of its total assets, (b) voting securities of issuers as to which the Fund owns no more than 10% of such securities, and (c) securities issued or guaranteed by the U.S. B-7 government, its agencies or instrumentalities. These restrictions do not apply to the Janus Mid Cap Portfolio. . No Portfolio may make any short sale . No Portfolio (except for the Janus Mid Cap Portfolio) may participate on a joint or joint and several basis in any trading account in securities Insurance Law Restrictions The ability to sell contracts in New York requires that each portfolio manager use his or her best efforts to assure that each Portfolio of the Fund complies with the investment restrictions and limitations prescribed by Sections 1405 and 4240 of the New York State Insurance Law and regulations thereunder in so far as such restrictions and limitations are applicable to investment of separate account assets in mutual funds. Failure to comply with these restrictions or limitations will result in the Insurance Companies ceasing to make investments in that Portfolio for the separate accounts. The current law and regulations permit the Fund to make any purchase if made on the basis of good faith and with that degree of care that an ordinarily prudent person in a like position would use under similar circumstances. INVESTMENT MANAGEMENT ARRANGEMENTS Investment Management Agreements and Sub-investment Management Agreements MetLife and the Fund have entered into investment management agreements under which MetLife has the primary management responsibility for the Fund's five index Portfolios and overall responsibility for all Portfolios. In addition, MetLife has entered into sub-investment management agreements for all other Portfolios. For simplicity, each of MetLife and the sub-investment managers are referred to as "managers" when discussing issues affecting all of them. Each agreement continues from year to year with annual approval by (a) the Board of Directors or a majority of that Portfolio's outstanding shares, and (b) a majority of the Board of Directors who are not "interested persons" of any party of the agreement. Each agreement may be terminated by any party to the agreement, without penalty, with 60 days' written notice. Shareholders of a Portfolio may vote to terminate an agreement as to services provided for that Portfolio. Managers make investment decisions and effect transactions based on information from a variety of sources including their own securities and economic research facilities. Managers are also obligated to provide office space, facilities, equipment and personnel necessary to perform duties associated with their designated Portfolio(s). Payment of Fund Expenses As detailed in the Prospectus, MetLife currently pays certain expenses for the Harris Oakmark Large Cap Value, T. Rowe Price Large Cap Growth, Neuberger Berman Partners Mid Cap Value, Putnam Large Cap Growth, State Street Research Aurora Small Cap Value, Lehman Brothers Aggregate Bond Index, Russell 2000 Index, MetLife Mid Cap Stock Index and Morgan Stanley EAFE Index Portfolios to the extent they exceed certain amounts. Apart from any such payment by MetLife, each Portfolio bears its share of all Fund expenses, including those for: (a) fees of the Fund's directors; (b) custodian and transfer agent fees; (c) audit and legal fees; (d) printing and mailing costs for the Fund's prospectuses, proxy material and periodic reports to shareholders; (e) MetLife's investment management fee; (f) brokerage commissions on portfolio transactions (including costs for acquisition, disposition, lending or borrowing of investments); (g) Fund taxes; (h) interest and other costs related to any Fund borrowing; and (i) extraordinary or one- time expenses (such as litigation related costs). All of the Fund's expenses, except extraordinary or one-time expenses, are accrued daily. B-8 Management Fees The Fund pays MetLife for its investment management services. MetLife pays the sub-investment managers for their investment management services. The following table shows the fee schedules for the investment management fees and sub-investment management fees as a percentage per annum of the average net assets and the investment management fees paid to MetLife for each Portfolio:
Sub- Investment Investment Management Management Fee Fee Investment Management Fees Average Schedule-- Average Schedule-- For the Year Ended December 31, Daily Net % Per Daily Net % Per ---------------------------------- Portfolio Assets Annum Assets Annum 1997 1998 1999 - --------- ----------------- ---------- ----------------- ---------- ---------- ----------- ----------- State Street Research .25% .25% Money Market All assets $ 105,515 $ 105,727 $ 127,180 State Street Research Growth 1st $500 million .55% .40% $7,305,001 $13,095,405 $15,804,021 next $500 million .50% .35% over $1 billion .45% .30% State Street Research Income 1st $250 million .35% .27% next $250 million .30% .22% $1,102,819 $ 1,514,111 $ 1,635,946 over $500 million .25% .17% State Street Research Diversified 1st $500 million .50% .35% next $500 million .45% .30% $5,811,475 $10,067,374 $11,893,804 over $1 billion .40% .25% State Street Research 1st $500 million .75% .55% Aggressive Growth next $500 million .70% .50% $9,931,653 $ 9,539,534 $ 9,495,639 over $1 billion .65% .45% Putnam Large Cap Growth 1st $500 million .80% 1st $150 million .50% next $500 million .75% next $150 million .45% -- -- -- over $1 billion .70% over $300 million .35% State Street Research 1st $50 million .55% Aurora 1st $500 million .85% Small Cap Value next $500 million .80% next $75 million .50% over $1 billion .75% next $100 million .45% -- -- -- over $225 million .40% Putnam International 1st $150 million .65% Stock /1/ 1st $500 million .90% next $500 million .85% next $150 million .55% $2,258,438 $ 2,161,315 $ 2,250,241 over $1 billion .80% over $300 million .45% Loomis Sayles High Yield .50% Bond All assets .70% $ 84,589 $ 266,117 $ 359,652 T. Rowe Price Small Cap .35% Growth 1st $100 million .55% next $300 million .50% .30% $ 187,380 $764,242 $ 1,040,413 over $400 million .45% .25% T. Rowe Price Large Cap .50% Growth 1st $50 million .70% over $50 million .60% .40% -- $ 3,585 $ 181,312 Janus Mid Cap 1st $100 million .75% .55% next $400 million .70% .50% $ 263,954 $ 1,584,660 $ 5,844,052 over $500 million .65% .45% Scudder Global Equity 1st $50 million .90% .70% next $50 million .55% .35% $ 201,758 $ 674,520 $ 884,558 next $400 million .50% .30% over $500 million .475% .275% Harris Oakmark Large Cap Value 1st $250 million .75% 1st $100 million .45% over $250 million .70% next $400 million .40% -- $ 6,470 $ 192,890 over $500 million .35% Neuberger Berman .50% Partners 1st $100 million .70% Mid Cap Value next $250 million .675% .475% -- $ 6,314 $ 169,231 next $500 million .65% .45% next $750 million .625% .425% over $1.6 billion .60% .40%
B-9
Sub- Investment Investment Management Management Fee Fee Investment Management Fees Average Schedule-- Average Schedule-- For the Year Ended December 31, Daily Net % Per Daily Net % Per -------------------------------- Portfolio Assets Annum Assets Annum 1997 1998 1999 - --------- ---------- ---------- --------- ---------- ---------- ---------- ---------- MetLife Stock Index All Assets .25% N/A $3,961,131 $6,387,967 $9,091,545 Lehman Brothers All Assets .25% N/A -- $ 18,962 $ 239,612 Aggregate Bond Index Russell 2000 Index All Assets .25% N/A -- $ 11.355 $ 172,630 Morgan Stanley EAFE(R) All Assets .30% N/A -- $ 9,366 $ 148,862 Index MetLife Mid Cap Stock All Assets .25% N/A -- -- -- Index
- -------- /1/For the years ended December 31, 1997, 1998 and 1999, a lower investment management fee schedule was in effect for the Putnam International Stock Portfolio. Thus, the investment management fees set forth herein were based on the lower schedule. Such fees would have been higher if the revised fee schedule had been in effect. B-10 DIRECTORS AND OFFICERS OF THE FUND The Fund's Directors review actions of the Fund's investment manager and sub- investment managers, and decide upon matters of general policy. The Fund's officers supervise the daily business operations of the Fund. The Board of Directors and the Fund's officers are listed below. Unless otherwise noted, the address of each executive officer and director listed below is One Madison Avenue, New York, New York 10010.
Principal Occupation(s) Name, (Age) and Address Position(s) with Fund During Past 5 Years - ------------------------------------------------------------------------------------------------ Steve A. Garban (62)+ Director Retired, formerly Senior Vice-President The Pennsylvania State Finance and Operations and Treasurer, The University Pennsylvania State University 208 Old Main University Park, PA 16802 - ------------------------------------------------------------------------------------------------ David A. Levene (60)* Chairman of the Board, Executive Vice-President, MetLife since Chief Executive Officer 1996; prior thereto, Senior Vice-President and Director and Chief Actuary - ------------------------------------------------------------------------------------------------ Linda B. Strumpf (52) Director Vice-President and Chief Investment Officer, Ford Foundation Ford Foundation 320 E. 43rd St. New York, NY 10017 - ------------------------------------------------------------------------------------------------ Dean O. Morton (68)+ Director Retired, formerly Executive Vice-President, 3200 Hillview Avenue Chief Operating Officer and Director, Palo Alto, CA 94304 Hewlett-Packard Company - ------------------------------------------------------------------------------------------------ Michael S. Scott Morton Director Jay W. Forrester Professor of Management at (61)+ Sloan School of Management, MIT Massachusetts Institute of Technology ("MIT") 50 Memorial Drive Cambridge, MA 02139-4307 - ------------------------------------------------------------------------------------------------ Arthur G. Typermass Director Retired, formerly Senior Vice-President and (62)* Treasurer, MetLife 43 Chestnut Drive Garden City, NY 11530 - ------------------------------------------------------------------------------------------------ Dianne Johnson (48)* Controller Director -- Financial Management, MetLife since 1999; Senior Technical Consultant -- Financial Management, MetLife 1997-1999; prior thereto Technical Consultant -- Retirement and Savings Center - ------------------------------------------------------------------------------------------------ Christopher P. Nicholas President and Chief Associate General Counsel, MetLife (51)+* Operating Officer - ------------------------------------------------------------------------------------------------ Janet Morgan (37)* Treasurer Assistant Vice-President, MetLife since 1997; prior thereto, Director - ------------------------------------------------------------------------------------------------ Barbara Hume (46)* Vice-President Vice-President, MetLife since 1997; prior thereto, Vice-President, Prudential Investments - ------------------------------------------------------------------------------------------------ Lawrence A. Vranka (60)* Vice-President Vice-President, MetLife - ------------------------------------------------------------------------------------------------ Danne L. Bullock (31)* Secretary Associate Counsel, MetLife since February 2000; prior thereto, Branch Chief, U.S. Securities & Exchange Commission - ------------------------------------------------------------------------------------------------ Patricia S. Worthington Assistant Secretary Assistant Vice-President and Associate (43)* Compliance Director of MetLife since 1997; prior thereto Associate Counsel - ------------------------------------------------------------------------------------------------ Nancy A. Turchio (31)* Assistant Secretary Legal Assistant, MetLife - ------------------------------------------------------------------------------------------------ John Malatchi (30)* Assistant Controller Senior Technical Consultant -- Financial Management, MetLife since 1996; prior thereto, Technical Analyst -- Retirement and Savings Center - ------------------------------------------------------------------------------------------------ Jeanne Manning (49)* Assistant Controller Technical Consultant -- Financial Management, MetLife since 1997; Accounting Supervisor -- Retirement and Savings Center, 1995-1997; prior thereto, Associate Accounting Analyst -- Retirement and Savings Center
- ----------- (*) Interested Person, as defined in the Investment Company Act of 1940 ("1940 Act"), of the Fund. (+) Serves as a trustee, director and/or officer of one or more of the following investment companies, each of which has a direct or indirect advisory relationship with the Investment Manager or its affiliates: State Street Research Financial Trust, State Street Research Income Trust, State Street Research Money Market Trust, State Street Research Tax-Exempt Trust, State Street Research Capital Trust, State Street Research Master Investment Trust, State Street Research Equity Trust, State Street Research Securities Trust, State Street Research Growth Trust, State Street Research Exchange Trust and State Street Research Portfolios, Inc. B-11 The Directors have been compensated as follows:
(3) Pension or (5) Retirement (4) Total (2) Benefits Estimated Compensation Aggregate Accrued Annual from the Fund (1) Compensation as part of Benefits and Fund Name of from Fund Upon Complex Paid Director(b) Fund(a)(c) Expenses Retirement to Directors(b) - ----------------------------------------------------------------------------- Linda B. Strumpf(d) 0 0 0 0 - ----------------------------------------------------------------------------- Steve A. Garban $30,750 0 0 $110,900 - ----------------------------------------------------------------------------- Malcolm T. Hopkins(f) $30,750 0 0 $103,450 - ----------------------------------------------------------------------------- Robert A. Lawrence(e) $ 8,000 0 0 $ 25,600 - ----------------------------------------------------------------------------- Dean O. Morton $27,750 0 0 $108,900 - ----------------------------------------------------------------------------- Michael S. Scott Morton $27,750 0 0 $113,000 - ----------------------------------------------------------------------------- David A. Levene 0 0 0 0 - ----------------------------------------------------------------------------- Arthur G. Typermass $26,750 0 0 $ 26,750
- ------------ (a) For the fiscal year ended December 31, 1999. (b) Complex is comprised of 10 trusts and two corporations with a total of 31 funds and/or series. "Total Compensation from the Fund and Fund Complex Paid to Directors" is for the 12 months ended December 31, 1999. (c) Directors and officers who are currently active employees of MetLife receive no compensation for services rendered to the Fund other than their regular compensation from MetLife or its affiliate of which they are employees. Other directors who are not currently active employees of MetLife receive a fee of $15,000 per year, plus $3,500 for each directors' meeting they attend, $500 for each audit committee meeting they attend, and reimbursement for out-of-pocket expenses related to such attendance. Messrs. Garban and Hopkins also each receive $1,500 for attending any contract committee meeting. The chairmen of the audit and contracts committees each receive a fee of $1,500 for each full calendar year during which he/she serves as chairman. (d) Linda B. Strumpf was appointed to the Board effective May 1, 2000. (e) Robert A. Lawrence resigned as a director effective April 1, 1999. (f) Malcolm Hopkins, resigned as a director effective May 1, 2000. - ------------ None of the above officers and directors of the Fund owns any stock of the Fund. B-12 PLACING PORTFOLIO TRANSACTIONS Each Portfolio's manager has day-to-day responsibility for selecting broker- dealers who will process investment transactions for the Portfolio. The managers follow similar policies and procedures for each Portfolio. When a manager's policy or practice is significantly different, it is specifically identified below. In the discussion that follows, the term broker-dealer includes both brokers (brokerage firms who act as agents in purchases or sales of portfolio investments by the Fund) and dealers (investment firms who act for their own account in selling or purchasing securities to or from the Fund). Codes of Personal Conduct The Fund has adopted a code of conduct for its officers, directors and other personnel. Among other things this code regulates (although it does not absolutely prohibit) transactions by such persons in securities of a type in which the Portfolios of the Fund may and do invest. The investment managers and the sub-investment managers have adopted codes of conduct that are similar to the Fund's. Primary Policy Each manager's primary policy is to get prompt and reliable execution of orders with the most favorable overall net prices to the Fund. To this end, when selecting the best broker-dealer for a given transaction, each manager will consider one or more of the following: . the price of the security or instrument . the nature of the market for the security or instrument . the size and difficulty of the order . the execution experience of the broker-dealer with respect to specific markets or securities (see, for example, "Fixed Income Securities" and "Over- the-Counter Securities Market" below) . confidentiality . the broker-dealer's financial responsibility . the competitiveness of the commission or spread (see "Competitiveness of Commission Rates and Net Prices" below) . proven integrity and reliability . the quality of execution . the broker-dealer's research and statistical services and capabilities (see "Research and Statistical Services" below) . the broker-dealer's capital clearance and settlement capabilities . desired timing of the trade . any broker rebate of commissions to pay Portfolio expenses under any "directed brokerage" arrangements (see "Directed Brokerage" below) Research and Statistical Services When more than one firm satisfies the Portfolio's other standards, managers may consider the range of services and capabilities that those broker-dealers provide, including: . recommendations and advice about market projections and data, security values, asset allocation and portfolio evaluation, purchasing or selling specific securities, and portfolio strategy . seminars, information, analyses, and reports concerning companies, industries, securities, trading markets and methods, legislative and political developments, changes in accounting practices and tax law, economic and business trends, proxy voting, issuer credit-worthiness, technical charts and portfolio strategy . access to research analysts, corporate management personnel, industry experts, economists, government representatives, technical market measurement services and quotation services, and comparative performance evaluation . products and other services including financial publications, reports and analysis, electronic access to data bases and trading systems, computer equipment, software, information and accessories . statistical and analytical data relating to various investment companies, including historical performance, expenses and fees, and risk measurements In most cases, these services supplement a manager's own research and statistical efforts. Research and statistical information and materials are generally subject to internal analysis before being incorporated into a manager's investment process. Generally, services are received primarily in the form of written reports, computer generated services, telephone contacts and personal meetings. Often managers use internal surveys and other methods to evaluate the quality of research and other services provided by various broker-dealer firms. Results of these studies are available to the managers' trading departments for use when selecting broker-dealers to execute portfolio transactions. B-13 Multiple Uses for Services The same research and statistical products and services may be useful for multiple accounts. Managers may use such products and services when managing any of their investment accounts. Therefore, managers may use research and statistical information received from broker- dealers who have handled transactions for any such account (which may or may not include any Portfolio) in the management of the same or any such other account (which, again, may or may not include that Portfolio). If any research or statistical product or service has a mixed use, so that it also serves functions other than assisting in a manager's investment decision process, then the manager may allocate the costs and value accordingly. Only the portion of the cost or value attributable to a product or service that assists the manager with the investment decision process may be considered by the manager in allocating transactions to broker-dealers. Competitiveness of Commission Rates and Net Prices Brokerage and other services furnished by broker-dealers are routinely reviewed and evaluated. Managers try to keep abreast of commission structures and the prevalent bid/ask spread of the market and/or security in which transactions for the Portfolios occur. Commissions on foreign transactions are often higher and fixed, unlike in the United States where commission rates are negotiable. Against this backdrop, managers evaluate the reasonableness of a commission or net price for each transaction. Other considerations which determine reasonableness of a broker-dealer's commission rates or net prices include: .the difficulty of execution and settlement . the size of the transaction (number of shares, dollar amount, and number of clients involved) . historical commission rates or spreads . rates and prices quoted by other brokers and dealers . familiarity with commissions or net prices paid by other institutional investors . the level and type of business done with the broker-dealer over time . the extent to which broker or dealer has capital at risk in the transaction After considering a combination of all the factors, managers may not necessarily select the broker with the lowest commission rate or the dealer with the lowest net price. Managers may or may not ask for competitive bids based on their judgment as to whether such bids would have a negative effect on the execution process. Compensating Broker-Dealers for Non-Execution Services Managers do not intentionally pay a broker-dealer brokerage commission or net price that is higher than another firm would charge for handling the same transaction in a recognition of services (other than execution services) provided. This is an area where differences of opinion as to fact and circumstances may exist, however. Therefore, to the extent necessary, managers rely on Section 28(e) of the Securities Exchange Act of 1934, which permits managers to pay higher commission rates if the manager determines in good faith that the rate is reasonable in relation to the value of the brokerage, research and statistical services provided. Accordingly, while it is difficult to determine any extent to which commission rates or net prices charged by broker-dealers reflect the value of their services, managers expect commissions to be reasonable in light of total brokerage and research services provided by each particular broker. Although it is also difficult to place an exact dollar value on research and statistical services received from broker-dealers, the managers believe that these services tend to reduce the Portfolio's expenses in the long-run. When purchasing securities for a Portfolio in fixed price underwriting transactions, managers follow instructions received from the Fund as to the allocation of new issue discounts, selling concessions and designations to any brokers or dealers which provide the Fund with research, performance evaluation, master trustee and other services. Absent instructions from the Fund, the manager may make such allocations to broker-dealers which provide it with research, statistical, and brokerage services. Brokerage Allocation Agreements and Understandings Managers may pay cash for certain services provided by external sources or B-14 choose to allocate brokerage business as compensation for the services. Managers do not have fixed agreements with any broker-dealer as to the amount of brokerage business which that firm may expect to receive because of the services they supply. However, managers may have understandings with certain firms which acknowledge that in order for such firms to be able to continuously supply certain services, they need to receive allocation of a specified amount of brokerage business. These understandings are honored to the extent possible in accordance with the policies set forth above. Managers have internal brokerage allocation procedures for that portion of their discretionary client brokerage business where more than one broker-dealer can provide best price and execution. In such cases, managers make judgments as to the level of business which would recognize any research and statistical services provided. In addition, broker-dealers sometimes suggest a level of business they would like to receive in return for the various brokerage, research and statistical services they provide. The actual brokerage received by any firm may be less than the suggested allocations but can, and often do, exceed the suggestions, because the total business is allocated on the basis of all the considerations described above. Broker-dealers are never excluded from receiving business because they do not provide research or statistical services. Directed Brokerage On behalf of the Portfolios, the Fund may request that managers also consider directed brokerage arrangements, which involve rebates of commissions by a broker-dealer to pay Portfolio expenses. The Fund may condition its requests by requiring that managers effect transactions with specified broker-dealers only if the broker-dealers are competitive as to price and execution. While the Fund believes that overall this practice can benefit the Fund, in some cases managers may be unable to negotiate commissions or obtain volume discounts or best execution and commissions charged under directed brokerage arrangements may be higher than those not using such arrangements. Directed brokerage arrangements may also result in a loss of the possible advantage from aggregation of orders for several clients as a single transaction for the purchase or sale of a particular security. Among other reasons why best execution may not be achieved using directed brokerage arrangements is that in, an effort to achieve orderly execution of transactions, execution of orders using directed brokerage arrangements may, at the discretion of the trading desk, be delayed until execution of other orders have been completed. The Board of Directors will monitor directed brokerage transactions to help ensure that they are in the best interest of the Fund and its shareholders. Fixed Income Securities Fixed income securities are generally purchased from the issuer or a primary market-maker acting as principal for the securities on a net basis, with no brokerage commission paid, although the price usually includes undisclosed compensation. Transactions placed through dealers serving as primary market- makers reflect the spread between the bid and asked prices known as a dealer's mark-up. Securities may also be purchased from underwriters at prices which include underwriting fees paid by the issuer. Over-the-Counter Securities Market Orders through the over-the-counter securities market are placed with the principal market-makers for the security, unless a more favorable result is available elsewhere. A principal market-maker is one who actively and effectively trades in the relevant security. Bunching of Orders When securities are purchased or sold for a Portfolio, managers may also be purchasing or selling the same securities for other accounts. Managers may group orders of various accounts for execution to get lower prices and commission rates. To be fair to all accounts over time, managers allocate aggregate orders executed in a series of transactions or orders in which the amount of securities available does not fill the order or price requirements at the average price and, as nearly as practicable, on a pro-rata basis in proportion to the amounts intended to be purchased or sold by each account. Managers also consider the investment objectives, amount of money available to invest, order size, amount an account already has committed to the investment, and relative investment risks. While the Fund believes this practice contributes to better overall execution of portfolio transactions, occasionally this policy may adversely affect the price or number of B-15 shares in a particular Portfolio's transaction caused by either increased demand or supply of the security involved in the transaction. The Board of Directors has adopted procedures governing bunching to ensure that bunching remains in the best interest of the Fund and its shareholders. Because the procedures do not always adequately accommodate all facts and circumstances, exceptions are made to the policy of allocating trades on an adjusted, pro-rata basis. Exceptions to the policy may include not aggregating orders and/or reallocating to: . recognize a manager's negotiation efforts . eliminate de minimus positions . give priority to accounts with specialized investment policies and objectives . give special consideration of an account's characteristics (such as concentrations, duration, or credit risk) . avoid a large number of small transactions which may increase custodial and other transaction costs (which effect smaller accounts disproportionately) Depending on the circumstances, such exceptions may or may not cause an account to receive a more or less favorable execution relative to other accounts. Harris Associates L.P. may use its affiliate, Harris Associates Securities L.P., and Neuberger Berman Management Inc. may use its affiliate, Neuberger Berman, LLC (the "affiliated brokers") as brokers for effecting securities transactions for the respective portfolios for which they are the managers. The Board of Directors, including a majority of the directors who are not "interested" directors, has determined that securities transactions for a Portfolio may be executed through these affiliated brokers, if, in the judgment of the manager, the use of the affiliated broker is likely to result in prices and execution at least as favorable to the Portfolio as those available from other qualified brokers and, if, in such transactions, the affiliated broker charges the Portfolio commission rates at least as favorable as those charged by the affiliated broker to comparable unaffiliated customers in similar transactions. The Board of Directors has adopted procedures designed to provide that commissions, fees or other remuneration paid to affiliated brokers are consistent with this standard. The Portfolios will not effect principal transactions with affiliated brokers. Brokerage commissions paid to Harris Associates Securities, L.P. during 1999 totaled $50,582. This represented 70.37% of the total commissions paid by the Harris Oakmark Large Cap Value Portfolio during 1999 and 72% of the aggregate dollar amount of transactions involving payment of commissions for that Portfolio during 1999. Brokerage commission paid to Neuberger Berman, LLC during 1999 totaled $16,175. This represented 11% of the total commissions paid by the Neuberger Berman Partners Mid Cap Value Portfolio during 1999 and 12% of the aggregate dollar amount of transactions involving payment of commissions for that Portfolio during 1999. The following table shows the brokerage commissions paid by the Fund for each of the Portfolios for the years ended December 31, 1997, 1998 and 1999:
Portfolio 1997 1998 1999 State Street Research Money Market N/A N/A N/A State Street Research N/A N/A N/A Income State Street Research $1,771,904 $2,204,538 $2,669,281 Diversified State Street Research $3,228,651 $4,486,471 $5,614,065 Growth State Street Research $5,031,886 $3,260,411 $2,687,582 Aggressive Growth Putnam $3,009,725 $2,313,364 $1,584,912 International Stock Loomis Sayles High $ 4,236 $ 6,463 $ 1,966 Yield Bond T. Rowe Price Small $ 84,657 $ 174,688 $ 180,042 Cap Growth T. Rowe Price Large N/A $ 5,222 $ 55,158 Cap Growth Janus Mid Cap $ 139,969 $ 482,758 $1,007,044 Scudder Global Equity $ 143,783 $ 165,847 $ 183,800 Harris Oakmark Large N/A $ 12,228 $ 71,883 Cap Value Neuberger Berman N/A $ 11,875 $ 126,856 Partners Mid Cap Value MetLife Stock Index $ 341,117 $ 469,162 $ 369,088 Lehman Brothers N/A N/A N/A Aggregate Bond Index Russell 2000 Index N/A $ 41,989 $ 150,280
B-16 Morgan Stanley EAFE N/A $79,325 $198,582 Putnam Large Cap Growth N/A N/A N/A State Street Research Aurora N/A N/A N/A Small Cap Value MetLife MidCap Stock Index N/A N/A N/A
SHAREHOLDER MEETINGS Regular annual shareholder meetings are not required and the Fund does not expect to have regular meetings. For certain purposes, the Fund is required to have a shareholder meeting. Examples of the reasons a meeting might be held are to: (a) approve certain agreements required by securities laws; (b) change fundamental investment objectives and restrictions of the Portfolios; and (c) fill vacancies on the Board of Directors when less than a majority have been elected by shareholders. Also, if 10% or more of the outstanding shares request a shareholders' meeting, then by a vote of two-thirds of the Fund's outstanding shares (as of a designated record date) a director may be removed from office. The Fund assists with all shareholder communications. Except as mentioned above, directors will continue in office and may appoint directors for vacancies. VOTING Each share has one vote and fractional shares have fractional votes. Votes for all Portfolios are generally aggregated. When there is a difference of interests between the Portfolios, votes are counted on a per Portfolio basis and not totaled. Shares in a Portfolio not affected by a matter are not entitled to vote on that matter. A Portfolio-by-Portfolio vote may occur, for example, when there are proposed changes to a particular Portfolio's fundamental investment policies or investment management agreement. Owners of Contracts supported by separate accounts registered as unit investment trusts under the Investment Company Act of 1940 have certain voting interests in Fund shares. The Contract prospectus attached to the Fund Prospectus describes how Contract owners can give voting instructions for Fund shares. Shares held by MetLife's general account or in a separate account not registered as a unit investment trust vote in the same proportion as shares held by the Insurance Companies in their separate accounts registered as unit investment trusts. SALE AND REDEMPTION OF SHARES Portfolio shares, when issued, are fully paid and non-assessable. In addition, there are no preference, preemptive, conversion, exchange or similar rights, and shares are freely transferable. Shares do not have cumulative voting rights. MetLife need not sell any specific number of Fund shares. MetLife will pay the Fund's distribution expenses and costs (which are those arising from activities primarily intended to sell Fund shares). The Fund may suspend sales and redemptions of a Portfolio's shares during any period when (a) trading on the New York Stock Exchange is restricted or the Exchange is closed (other than customary weekend and holiday closings); (b) an emergency exists which makes disposing of portfolio securities or establishing a Portfolio's net asset value impractical; or (c) the Securities and Exchange Commission orders suspension to protect Portfolio shareholders. If the Board of Directors decides that continuing to offer shares of one or more Portfolios will not serve the Fund's best interest (e.g. changing market conditions, regulatory problems or low Portfolio participation), the Fund may stop offering such shares and, by a vote of the Board of Directors, may require redemption (at net asset value) of outstanding shares in such Portfolio(s) upon 30 day's prior written notice to affected shareholders. In the future, the Fund may offer shares to be purchased by separate accounts of life insurance companies not affiliated with MetLife to support insurance contracts they issue. PRICING OF PORTFOLIO SECURITIES Portfolio securities are priced as described in the table that follows. If the data necessary to employ the indicated pricing methods are not available, the investment will be assigned a fair value in good faith pursuant to procedures approved by the Board of Directors. Such "fair value" pricing may also be used if the customary pricing procedures are judged for any reason to result in an unreliable valuation. B-17 PRICING OF SECURITIES CHART
Value Average Established by Last Between Recognized Last Spot Last Bid Exchange or Sale Last Bid Price and Asked Other (primary (primary (primary (primary Amortized Recognized market) market) market) market) Cost* Sources - ---------------------------------------------------------------------------------------------------------------- Portfolio Securities All Traded on Domestic Stock All Portfolios/2 Exchanges Portfolios/1/ L/2/ / except L - ---------------------------------------------------------------------------------------------------------------- Portfolio Securities Traded Primarily on Non-Domestic All Securities Exchanges Portfolios/1/ - ---------------------------------------------------------------------------------------------------------------- Securities Listed or All All Traded on More than All Portfolios/3 Portfolios/2 One Exchange Portfolios/1/ / S/2/ / except S - ---------------------------------------------------------------------------------------------------------------- Domestic Securities All Traded in the Over Portfolios/1 the Counter Market / except S, L, S/1/, NB/1/ L/1/ S/2/ NB and MM MM - ---------------------------------------------------------------------------------------------------------------- Non-U.S. Securities All Traded in the Over All Portfolios/2 the Counter Market Portfolios/1/ / except NB NB/2/ - ---------------------------------------------------------------------------------------------------------------- Short-term Instruments with Remaining Maturity of Sixty Days or All Less Portfolios/1/ - ---------------------------------------------------------------------------------------------------------------- Options on Securities, Indices, or Futures All All Contracts Portfolios/1/ Portfolios/2/ - ---------------------------------------------------------------------------------------------------------------- All Currencies Portfolios/1/ - ---------------------------------------------------------------------------------------------------------------- All Futures Contracts Portfolios/1/ - ----------------------------------------------------------------------------------------------------------------
- ------------ 1. primary method used 2. if primary method is unavailable 3. if both primary and secondary methods are unavailable L. Loomis Sayles High Yield Bond Portfolio Only NB.Neuberger Berman Partners Mid Cap Value Portfolio Only S. Scudder Global Equity Portfolio Only MM.State Street Research Money Market Portfolio Only * Amortized Cost Method: Securities are valued at the cost on the date of purchase and thereafter, a constant proportionate amortization value is assumed until maturity of any discount or premium (regardless of fluctuating interest rates on the market value of the security). Maturity is deemed to be the next date on which the interest rate is to be adjusted. Note, using this method may result in different yield and net asset values than market valuation methods. B-18 TAXES The following summarizes some of the relevant tax considerations associated with the Fund. It is not a complete explanation and should not substitute for careful tax planning and consulting with individual tax advisers. The Fund's tax attributes are allocated among the Portfolios as if they were separate corporations. For example, if a Portfolio has a net capital loss for a taxable year, including any allocated net capital loss carryforwards, such loss(es) will only offset net capital gains of that Portfolio. Also, each Portfolio stands alone to determine that Portfolio's net ordinary income or loss. The Fund currently qualifies (and intends to continue to qualify) as a "regulated investment company" under the Code. To qualify, among other things, each Portfolio must derive at least 90% of its gross income from dividends, interest, payments for security loans, and gains or other income derived from each Portfolio's business of investing in stocks, securities or foreign currencies. As a regulated investment company, the Fund does not pay federal income tax on net ordinary income and net realized capital gains distributed to shareholders. A nondeductible 4% excise tax applies to any regulated investment company on any excess of required distributions for the calendar year over the amount actually distributed. The Fund must distribute 98% of its ordinary income and capital gain net income. The Fund does not expect to incur excise taxes. Dividends paid by a Portfolio from its ordinary income, and distributions of its net realized short-term capital gains, are taxable to the shareholder as ordinary income. Generally, any of a Portfolio's income which represents dividends on common or preferred stock of a domestic corporation (rather than interest income), distributed to the Insurance Companies may be deducted as dividends received, to the extent the deduction is available to a life insurance company. Distributions from the Fund's net realized long-term gains are taxable to the Insurance Companies as long-term capital gains regardless of the holding period of the Portfolio shares. Long-term capital gain distributions are not eligible for the dividends received deduction. Dividends and capital gains distributions may also be subject to state and local taxes. The Fund complies with section 817(h) of the Code and its related regulations. This means that the Fund generally may issue shares only to life insurance company segregated asset accounts (also referred to as separate accounts) that fund variable life insurance or annuity contracts ("variable insurance contracts") and the general account of MetLife which provided the initial capital for the Portfolios. The prospectus for the Contracts discusses in more depth the taxation of segregated asset accounts and of the Contract owner. Section 817(h) of the Code and related regulations require segregated asset accounts investing in the Portfolios to diversify. These diversification requirements, which are in addition to those imposed on the Fund under the 1940 Act and under Subchapter M of the Code, may affect selection of securities for the Portfolios. Failing to meet Section 817(h) requirements may have adverse tax consequences for the insurance company offering the variable insurance contract and result in immediate taxation of the contract owner if the investment in the contract has appreciated in value. The Treasury Department may possibly adopt regulations or the IRS may issue a revenue ruling which may deem a Contract owner, rather than the insurance company, to be treated as owner of the assets of a segregated asset account based on the extent of investment control by the contract owner. As a result, the Fund may take action to assure that a Contract continues to qualify as a variable insurance contract under federal tax laws. For example, the Fund may alter the investment objectives of a Portfolio or substitute shares of one Portfolio for those of another. To the extent legally necessary, a change of investment objectives or share substitution will only occur with prior notice to affected shareholders, approval by a majority of shareholders and approval by the Securities and Exchange Commission. Several unique tax considerations arise in connection with a Portfolio which may invest in foreign securities. The Portfolio may have to pay foreign taxes, which could reduce its investment performance. Dividends paid by a Portfolio corresponding to dividends paid by B-19 non-United States companies do not qualify for the dividends received deduction. Those Portfolios that invest substantial amounts of their assets in foreign securities may make an election to pass through to the Insurance Companies any taxes withheld by foreign taxing jurisdictions on foreign source income. Such an election will result in additional taxable income and income tax to the Insurance Companies. The amount of additional income tax, however, may be more than offset by credits for the foreign taxes withheld, which are also passed through. These credits may provide a benefit to the Insurance Companies. GENERAL INFORMATION Experts The Board of Directors annually approves an independent auditor which is expert in accounting and auditing. Deloitte & Touche LLP, 555 17th Street, Suite 3600, Denver, CO, 80202, is the Fund's independent auditor. The Fund's financial statements for the 12 months ended December 31, 1999 incorporated by reference into this SAI have been audited by Deloitte & Touche LLP. The Fund relies on this firm's report which appears with the financial statements. Custodian Arrangement State Street Bank and Trust Company of Boston, Massachusetts, is the custodian of the assets of all Portfolios. The custodian's duties include safeguarding and controlling the Fund's cash and investments, handling the receipt and delivery of securities, and collecting interest and dividends on the Fund's investments. Portfolio securities purchased in the United States are maintained in the custody of State Street Bank, although such securities may be deposited in the Book-entry system of the Federal Reserve System or with Depository Trust Company. Except as otherwise permitted under applicable Securities and Exchange Commission "no-action" letters or exemptive orders, the Fund holds foreign assets in qualified foreign banks and depositories meeting the requirements of Rule 17f-5 under the Investment Company Act of 1940. Index Sponsors The Prospectus describes certain aspects of the limited relationship the index sponsors have with the Fund. With respect to Standard & Poor's, neither the MetLife Stock Index Portfolio or the MetLife Mid Cap Stock Index Portfolio is sponsored, endorsed, sold or promoted by Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"). S&P makes no representation or warranty, express or implied, to the owners of either Portfolio or any member of the public regarding the advisability of investing in securities generally or in either Portfolio particularly or the ability of the S&P 500 Index or the S&P 400 MidCap Index to track general stock market performance. S&P's only relationship to the Licensee is S&P's grant of permission to the Licensee to use the S&P 500 Index or the S&P 400 MidCap Index which are determined, composed and calculated by S&P without regard to the Licensee or either Portfolio. S&P has no obligation to take the needs of the Licensee or the owners of this Portfolio into consideration in determining, composing or calculating the S&P 500 Index or the S&P 400 MidCap Index. S&P is not responsible for and has not participated in the determination of the prices and amount of this Portfolio or the timing of the issuance or sale of this Portfolio or in the determination or calculation of the equation by which this Portfolio is to be converted into cash. S&P has no obligation or liability in connection with the administration, marketing or trading of this Portfolio. S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 INDEX OR THE S&P 400 MIDCAP INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE LICENSEE, OWNERS OF THIS PORTFOLIO, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR THE S&P 400 MIDCAP INDEX OR ANY DATA INCLUDED THERE. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX OR THE S&P 400 MIDCAP INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT B-20 LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. In addition, with respect to Morgan Stanley, the Morgan Stanley EAFE (R) Index Portfolio is not sponsored, endorsed, sold or promoted by Morgan Stanley. Morgan Stanley makes no representation or warranty, express or implied, to the owners of this Portfolio or any member of the public regarding the advisability of investing in funds generally or in this Portfolio particularly or the ability of the MSCI EAFE (R) index to track general stock market performance. Morgan Stanley is the licensor of certain trademarks, service marks and trade names of Morgan Stanley and of the MSCI EAFE (R) index which is determined, composed and calculated by Morgan Stanley without regard to the issuer of this Portfolio or this Portfolio. Morgan Stanley has no obligation to take the needs of the issuer of this Portfolio or the owners of this Portfolio into consideration in determining, composing or calculating the MSCI EAFE (R) index. Morgan Stanley is not responsible for and has not participated in the determination of the timing of, prices at, or quantities of this Portfolio to be issued or in the determination or calculation of the equation by which this Portfolio is redeemable for cash. Morgan Stanley has no obligation or liability to owners of this Portfolio in connection with the administration, marketing or trading of this Portfolio. ALTHOUGH MORGAN STANLEY SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE IN THE CALCULATION OF THE INDEXES FROM SOURCES WHICH MORGAN STANLEY CONSIDERS RELIABLE, NEITHER MORGAN STANLEY NOR ANY OTHER PARTY GUARANTEES THE ACCURACY AND/OR THE COMPLETENESS OF THE INDEXES OR ANY DATA INCLUDED THEREIN. NEITHER MORGAN STANLEY NOR ANY OTHER PARTY MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, LICENSEE'S CUSTOMERS AND COUNTERPARTIES, OWNERS OF THE PORTFOLIO, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEXES OR ANY DATA INCLUDED THEREIN IN CONNECTION WITH THE RIGHTS LICENSED HEREUNDER OR FOR ANY OTHER USE. NEITHER MORGAN STANLEY NOR ANY OTHER PARTY MAKES ANY EXPRESS OR IMPLIED WARRANTIES, AND MORGAN STANLEY HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE INDEXES OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL MORGAN STANLEY OR ANY OTHER PARTY HAVE ANY LIABILITY FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. The MSCI EAFE (R) Index is the exclusive property of Morgan Stanley. Morgan Stanley Capital International is a service mark of Morgan Stanley and has been licensed for use by MetLife. With respect to Frank Russell Company, the Russell 2000 Index Portfolio is not promoted, sponsored or endorsed by, nor in any way affiliated with Frank Russell Company. Frank Russell Company is not responsible for and has not reviewed the Portfolio nor any associated literature or publications and Frank Russell Company makes no representation or warranty, express or implied, as to their accuracy, or completeness, or otherwise. Frank Russell Company reserves the right at any time and without notice, to alter, amend, terminate or in any way change its index. The Russell 2000(R) Index is a service mark of the Frank Russell Company. Russell(TM) is a trademark of the Frank Russell Company. Frank Russell Company has no obligation to take the needs of any particular fund or its participants or any other product or person into consideration in determining, composing or calculating the index. Frank Russell Company's publication of the index in no way suggests or implies an opinion by Frank Russell Company as to the attractiveness or appropriateness of investment in any or all securities upon which the index is based. FRANK RUSSELL COMPANY B-21 MAKES NO REPRESENTATION, WARRANTY, OR GUARANTEE AS TO THE ACCURACY, COMPLETENESS, RELIABILITY, OR OTHERWISE OF THE INDEX OR ANY DATA INCLUDED IN THE INDEX. FRANK RUSSELL COMPANY MAKES NO REPRESENTATION OR WARRANTY REGARDING THE USE, OR THE RESULTS OF USE, OF THE INDEX OR ANY DATA INCLUDED THEREIN, OR ANY SECURITY (OR COMBINATION THEREOF) COMPRISING THE INDEX. FRANK RUSSELL COMPANY MAKES NO OTHER EXPRESS OR IMPLIED WARRANTY, AND EXPRESSLY DISCLAIMS ANY WARRANTY, OF ANY KIND, INCLUDING, WITHOUT MEANS OF LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE INDEX OR ANY DATA OR ANY SECURITY (OR COMBINATION THEREOF) INCLUDED THEREIN. FINANCIAL STATEMENTS The Fund's financial statements for periods ending December 31, 1999, and the related schedules of investments for each Portfolio and report of independent auditors thereon, are included in the Fund's annual report to shareholders for 1999 that accompanies this Statement of Additional Information and are incorporated by reference into this SAI. B-22 APPENDIX DESCRIPTION OF CERTAIN CORPORATE BOND AND DEBENTURE RATINGS
Standard & Poor's Rating Group (S&P) Rating Moody's Investor Service, Inc. (Moody's) Description Rating Description - ----------------------------------------------------------------------------------------------------------- Aaa Bonds with this rating are judged AAA An obligation with this rating to be of the best quality, has the highest rating assigned carrying the smallest degree or by S&P. The obligor's capacity to investment risk. They are meet its financial commitment on generally referred to as "gilt the obligation is extremely edged." Interest payments are strong. protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. - ----------------------------------------------------------------------------------------------------------- Aa Bonds with this rating are judged AA An obligation with this rating to be of high quality by all differs from the highest standards. Together with the Aaa obligations only in small degree. group, they comprise what are The obligor's capacity to meet generally known as high-grade its financial commitment on the bonds. They are rated lower than obligation is very strong. the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat greater than in Aaa securities. - ----------------------------------------------------------------------------------------------------------- A Bonds with this rating possess A An obligation with this rating is many favorable investment somewhat more susceptible to the attributes and are to be adverse effects of changes in considered as upper-medium-grade circumstances and economic obligations. Factors giving conditions than obligations in security to principal and higher-rated categories. However, interest are considered adequate, the obligor's capacity to meet but elements may be present which its financial commitment on the suggest a susceptibility to obligation is still strong. impairment sometime in the future. - ----------------------------------------------------------------------------------------------------------- Baa Bonds with this rating are BBB An obligation with this rating considered as medium grade exhibits adequate protection obligations, i.e., they are parameters. However, adverse neither highly protected nor economic conditions or change poorly secured. Interest payments circumstances are more likely to and principal security appear lead to weakened capacity of the adequate for the present but obligor to meet its financial certain protective elements may commitment on the obligation. be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. - ----------------------------------------------------------------------------------------------------------- Ba Bonds with this rating are judged BB An obligation with this rating to have speculative elements; has significant speculative their future cannot be considered characteristics, but is less as well-assured. Often, the vulnerable to nonpayment than protection of interest and bonds in the lower ratings. principal payments may be very However, it faces major ongoing moderate, and thereby not well uncertainties or exposure to safeguarded during both good and adverse business, financial or bad times over the future. economic conditions which could Uncertainty of position lead to the obligor's inadequate characterizes bonds in this capacity to meet its financial class. commitment on the obligation. - ----------------------------------------------------------------------------------------------------------- B Bonds with this rating generally B An obligation with this rating is lack characteristics of the more vulnerable to nonpayment desirable investment. Assurance than obligations rated BB, but of interest and principal the obligor currently has the payments of maintenance of other capacity to meet its financial terms of the contract of any long commitment on the obligation. period of time may be small. Adverse business, financial or economic conditions will likely impair the obligator's capacity or willingness to meet its financial commitment on the obligation.
B-23
Rating Moody's Investor Service, Inc. (Moody's) Description Rating Standard & Poor's Rating Group (S&P)Description - -------------------------------------------------------------------------------------------------------------------------- Caa Bonds with this rating are of CCC An obligation with this rating is poor standing. Such issues may be currently vulnerable to in default or there may be nonpayment, and is dependent upon present elements of danger with favorable business, financial, respect to principal or interest. and economic conditions for the obligor to meet its financial, and economic commitment on the obligation. In the event of adverse business, financial or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation. - -------------------------------------------------------------------------------------------------------------------------- Ca Bonds with this rating represent C An obligation with this rating obligations which are speculative may be used to cover a situation in a high degree. Such issues are where a bankruptcy petition has often in default or have other been filed or similar action has marked shortcomings. been taken, but payments on this obligation are being continued. - -------------------------------------------------------------------------------------------------------------------------- C Bonds with this rating are the D An obligation rated D is in lowest rated class of bonds, and payment default. This rating issues so rated can be regarded category is used when payments on as having extremely poor an obligation are not made on the prospects of ever attaining any date due even if the applicable real investment standing. grace period has not expired, unless S&P believes that such payments will be made during such grace period. This rating also will be used upon the filing of a bankruptcy petition on an obligation are jeopardized. - -------------------------------------------------------------------------------------------------------------------------- 1 This modifier is used with Aa, A, (+)/(-) These modifiers are used with Baa, Ba and B ratings and ratings from AA to CCC to show indicates the bond possesses relative standing within the strongest investment attributes rating category. within the rating class. - -------------------------------------------------------------------------------------------------------------------------- No Rating This might arise if: (1) an r This symbol attached to the application for rating was not ratings of instruments with received or accepted; (2) the significant non credit risks. It issue or issuer belongs to a highlights risks to principal or group of securities that are not volatility of expected returns rated as a matter of policy; which are not addressed in the (3) there is a lack of essential credit rating. Examples include: data pertaining to the issue or obligations linked or indexed to issuer; (4) the issue was equities, currencies or privately placed in which case commodities; obligations exposed the rating is not published in to severe prepayment risk such as the Moody's publication; or interest only principal only (5) the rating was suspended or mortgage securities; and withdrawn because new and obligations with unusually risky material circumstances arose, the interest terms, such as inverse effects of which preclude floaters. satisfactory analysis; there is no longer available reasonable up-to-date data to permit a judgment to be formed; a bond is called for redemption or for other reasons.
B-24 DESCRIPTION OF COMMERCIAL PAPER RATINGS
Rating Moody's Investor Service, Inc. (Moody's) Description Rating Standard & Poor's Rating Group (S&P)Description - ---------------------------------------------------------------------------------------------------------------------------- Prime Commercial paper with this rating A Commercial paper with this rating is the highest rated based on the is the highest based on: (1) following factors: (1) management liquidity ratios are adequate to of the issuer; (2) economics of meet cash requirements; (2) the the issuer's industry or issuer's long-term senior debt is industries and the speculative- rated "A" or better, although in type risks which may be inherent some cases "BBB" or better may be in certain areas; (3) the allowed; (3) the issuer has issuer's products in relation to access to at least two additional competition and customer channels of borrowing; (4) the acceptance; (4) liquidity; (5) issuer's basic earnings and cash amount and quality of long-term flow have an upward trend with debt; (6) trend of earnings over allowance made for unusual a period of 10 years; (7) circumstances; (5) Typically, the financial strength of any parent issuer's industry is well and the relationships which exist established and the issuer has a with the issuer; and (8) strong position within the recognition by the management of industry; and (6) the reliability obligations which may be present and quality of management are or may arise as a result of unquestioned. public interest questions and preparations to meet such obligations. - ---------------------------------------------------------------------------------------------------------------------------- 1, 2 or 3 These modifiers indicates the 1, 2 or 3 These modifiers indicate the relative degree to which the relative degree to which the commercial paper possesses the commercial paper possesses the qualities that are required to qualities that are required to receive a Prime rating. receive an A rating. - ---------------------------------------------------------------------------------------------------------------------------- (+) Commercial paper with an A-1 rating can be further modified with this modifier to show that they possess overwhelming safety characteristics.
B-25 PART C. OTHER INFORMATION Item 23. Exhibits
Exhibit Number Description ------- ----------- (a)(a). --Articles of Incorporation of Registrant, as amended May 23, 1983* (a)(b). --Articles Supplementary of Registrant* (a)(c). --Articles Supplementary of Registrant* (a)(d). --Articles Supplementary of Registrant* (a)(e). --Articles Supplementary of Registrant* (a)(f). --Articles Supplementary of Registrant* (a)(g). --Articles Supplementary of Registrant* (a)(h). --Articles Supplementary of Registrant+++ (a)(i). --Articles Supplementary of Registrant***** (a)(j). --Articles Supplementary of Registrant+ (a)(k). --Articles of Amendment**** (a)(l). --Articles of Amendment+++++ (b)(a). --By-Laws of Registrant, as amended January 27, 1988* (b)(b). --Amendment to By-Laws Dated April 24, 1997*** (c). --None, other than Exhibits (a) and (b) above (d)(a). --Investment Management Agreement(s), as amended, relating to the MetLife Stock Index and State Street Research Money Market Portfo- lios* (d)(b). --Investment Management Agreements, as amended, relating to State Street Research Growth, State Street Research Income, State Street Research Diversified, State Street Research Aggressive Growth and Putnam International Stock Portfolios*** (d)(c). --Investment Management Agreements relating to Loomis Sayles High Yield Bond, Janus Mid Cap, Scudder Global Equity and T. Rowe Price Small Cap Growth Portfolios** (d)(d). --Investment Management Agreements relating to Neuberger Berman Part- ners Mid Cap Value, T. Rowe Price Large Cap Growth, Harris Oakmark Large Cap Value, Lehman Brothers Aggregate Bond Index, Russell 2000 Index and Morgan Stanley EAFE Index Portfolios***** (d)(e). --Forms of Investment Management Agreements relating to the Putnam Large Cap Growth, the State Street Research Aurora Small Cap Value, and the Met Life Mid Cap Stock Index Portfolios.+++++ (d)(f). --Sub-Investment Management Agreements relating to State Street Re- search Growth, State Street Research Income, State Street Research Diversified, State Street Research Aggressive Growth and State Street Research Money Market Portfolios*** (d)(g). --Sub-Investment Management Agreements relating to Scudder Global Equity Portfolio, Neuberger Berman Partners Mid Cap Value, T. Rowe Price Large Cap Growth and Harris Oakmark Large Cap Value Portfolios***** (d)(h). --Sub-Investment Management Agreements relating to Loomis Sayles High Yield Bond, Janus Mid Cap and T. Rowe Price Small Cap Growth Portfo- lios** (d)(i). --Sub-Investment Management Agreement relating to the Putnam Interna- tional Stock Portfolio+++++ (d)(j). --Forms of Sub-Investment Management Agreements relating to the Putnam Large Cap Growth and State Street Research Aurora Small Cap Value Portfolios+++++ (d)(k). --Forms of Amended Investment and Sub-Investment Management Agreements relating to Putnam International Stock Portfolio+ (d)(l). --Forms of Amended Sub-Investment Management Agreement relating to the Harris Oakmark Large Cap Value Portfolio+
C-1
Exhibit Number Description ------- ----------- (e)(a). --Distribution Agreement* (e)(b). --Addendum to Distribution Agreement* (e)(c). --Second Addendum to Distribution Agreement* (f). --None (g)(a). --Custodian Agreement with State Street Bank & Trust Company* (g)(b). --Revised schedule of remuneration* (g)(c). --Amendment to Custodian Agreement* (g)(d). --Amendments to Custodian Agreement* (h)(a). --Transfer Agency Agreement* (h)(b). --Agreement relating to the use of the "Metropolitan" name and service marks* (h)(c). --Licensing Agreements relating to Morgan Stanley EAFE Index, Russell 2000 Index and Lehman Brothers Aggregate Bond Index Portfolio++++ (h)(d). --Licensing Agreement relating to MetLife Stock Index and MetLife Mid Cap Stock Index Portfolios (fee schedule omitted)+ (h)(e). --Form of Participation Agreement+ (i)(a). --Opinion and Consent of Counsel with respect to the shares of the State Street Research Growth, State Street Research Income and State Street Research Money Market Portfolios* (i)(b). --Opinion and Consent of Counsel with respect to the shares of the State Street Research Diversified and GNMA Portfolios* (i)(c). --Opinion and Consent of Counsel with respect to the shares of the State Street Research Aggressive Growth and Equity Income Portfo- lios* (i)(d). --Opinion and Consent of Counsel with respect to the shares of the MetLife Stock Index Portfolio* (i)(e). --Opinion and Consent of Counsel with respect to the shares of the Santander International Stock Portfolio* (i)(f). --Opinion and Consent of Counsel with respect to the shares of the Loomis Sayles High Yield Bond, Janus Mid Cap, T. Rowe Price Small Cap Growth and Scudder Global Equity Portfolios** (i)(g). --Opinion and Consent of Counsel with respect to the shares of the Neuberger Berman Partners Mid Cap Value, T. Rowe Price Large Cap Growth, Harris Oakmark Large Cap Value, Lehman Brothers Aggregate Bond Index, Russell 2000 Index and Morgan Stanley EAFE Index Portfo- lios**** (i)(h). --Opinion and Consent of Counsel with respect to the shares of the Putnam Large Cap Growth, State Street Research Aurora Small Cap Value and MetLife Mid Cap Index Portfolios.+ (j)(a). --Consent of Independent Public Accountants+ (j)(b). --Consent of Freedman, Levy, Kroll & Simonds* (k). --None (l)(a). --Stock Purchase Agreement* (l)(b). --Supplementary Stock Purchase Agreement* (l)(c). --Second Supplementary Stock Purchase Agreement* (l)(d). --Third Supplementary Stock Purchase Agreement* (l)(e). --Fourth Supplementary Stock Purchase Agreement* (l)(f). --Fifth Supplementary Stock Purchase Agreement* (l)(g). --Sixth Supplementary Stock Purchase Agreement**
C-2
Exhibit Number Description ------- ----------- (l)(h). --Seventh Supplementary Stock Purchase Agreement***** (l)(i). --Form of Eighth Supplementary Stock Purchase Agreement+++++ (m). --None (n). --None (o). --None (p)(a). --Metropolitan Series Fund, Inc. Code of Ethics+ (p)(b). --Metropolitan Life Insurance Company Statement of Policy with Respect to Material Nonpublic Information+ (q). --Specimen Price Make-Up Sheet+ (r). --Powers of Attorney++
- -------- + Filed herewith. * Incorporated by reference to the filing of Post-Effective Amendment No. 17 to this Registration Statement on April 30, 1996. ** Incorporated by reference to the filing of Post-Effective Amendment No. 19 to this Registration Statement on February 27, 1997. *** Incorporated by reference to the filing of Post-Effective Amendment No. 20 to the Registration Statement on April 2, 1998. **** Incorporated by reference to the filing of Post Effective Amendment No. 22 to the Registration Statement on October 6, 1998. ***** Incorporated by reference to the filing of Post Effective Amendment No. 23 to the Registration Statement on January 11, 1999. ++ Powers of Attorney for all signatories except for Messrs. Levene, and Typermass and Ms. Johnson are incorporated by reference to the filing of Post-Effective Amendment No. 17 to this Registration Statement on April 30, 1996. The Power of Attorney for Ms. Johnson is incorporated by reference to the filing of Post-Effective Amendment No. 25 on January 19, 2000. The Powers of Attorney for Messrs. Levene and Typermass are incorporated by reference to the filing of Post-Effective Amendment No. 21 on July 30, 1998. +++ Incorporated by reference to the filing of Post Effective Amendment No. 18 on December 18, 1996. ++++ Incorporated by reference to the filing of Post Effective Amendment No. 24 on April 1, 1999. +++++ Incorporated by reference to the filing of Post Effective Amendment No. 25 on January 19, 2000. Item 24. Persons Controlled by or Under Common Control with the Fund C-3 ORGANIZATIONAL STRUCTURE OF METROPOLITAN AND SUBSIDIARIES AS OF APRIL 3, 2000 The following is a list of subsidiaries of Metropolitan Life Insurance Company ("Metropolitan"). It is expected that Metropolitan will become a wholly-owned subsidiary of MetLife, Inc. on or about April 7, 2000. MetLife, Inc. will become a publicly-traded company at that time. Those entities which are listed at the left margin (labelled with capital letters) are direct subsidiaries of Metropolitan. Unless otherwise indicated, each entity which is indented under another entity is a subsidiary of such indented entity and, therefore, an indirect subsidiary of Metropolitan. Certain inactive subsidiaries have been omitted from the Metropolitan Organizational listing. The voting securities (excluding directors' qualifying shares, if any) of the subsidiaries listed are 100% owned by their respective parent corporations, unless otherwise indicated. The jurisdiction of domicile of each subsidiary listed is set forth in the parenthetical following such subsidiary. A. Metropolitan Tower Corp. (Delaware) 1. Metropolitan Property and Casualty Insurance Company (Rhode Island) a. Metropolitan Group Property and Casualty Insurance Company (Rhode Island) i. Metropolitan Reinsurance Company (U.K.) Limited (Great Britain) b. Metropolitan Casualty Insurance Company (Rhode Island) c. Metropolitan General Insurance Company (Rhode Island) d. Metropolitan Direct Property and Casualty Insurance Company (Georgia) e. Metropolitan P&C Insurance Services, Inc. (California) f. Metropolitan Lloyds, Inc. (Texas) g. Met P&C Managing General Agency, Inc. (Texas) h. Economy Fire & Casualty Company i. Economy Preferred Insurance Company j. Economy Premier Assurance Company 2. Metropolitan Insurance and Annuity Company (Delaware) a. MetLife Europe I, Inc. (Delaware) b. MetLife Europe II, Inc. (Delaware) c. MetLife Europe III, Inc. (Delaware) d. MetLife Europe IV, Inc. (Delaware) e. MetLife Europe V, Inc. (Delaware) 3. MetLife General Insurance Agency, Inc. (Delaware) a. MetLife General Insurance Agency of Alabama, Inc. (Alabama) b. MetLife General Insurance Agency of Kentucky, Inc. (Kentucky) c. MetLife General Insurance Agency of Mississippi, Inc. (Mississippi) d. MetLife General Insurance Agency of Texas, Inc. (Texas) e. MetLife General Insurance Agency of North Carolina, Inc. (North Carolina) f. MetLife General Insurance Agency of Massachusetts, Inc. (Massachusetts) 4. Metropolitan Asset Management Corporation (Delaware) (a.) MetLife Capital, Limited Partnership (Delaware). Partnership interests in MetLife Capital, Limited Partnership are held by Metropolitan (90%) and Metropolitan Asset Management Corporation (10%). (i.) MetLife Capital Credit L.P. (Delaware). Partnership interests in MetLife Capital Credit L.P. are held by Metropolitan (90%) and Metropolitan Asset Management Corporation (10%). (1) MetLife Capital CFLI Holdings, LLC (DE) (a.) MetLife Capital CFLI Leasing, LLC (DE) b. MetLife Financial Acceptance Corporation (Delaware). MetLife Capital Holdings, Inc. holds 100% of the voting preferred stock of MetLife Financial Acceptance Corporation. Metropolitan Property and Casualty Insurance Company holds 100% of the common stock of MetLife Financial Acceptance Corporation. c. MetLife Investments Limited (United Kingdom). 23rd Street Investments, Inc. holds one share of MetLife Investments Limited. d. MetLife Investments Asia Limited (Hong Kong). One share of MetLife Investments Asia Limited is held by W&C Services, Inc., a nominee of Metropolitan Asset Management Corporation. e. MetLife Investment, S.A. 23rd Street Investment, Inc. holds one share of MetLife Investments Limited and MetLife Investments, S.A. 5. SSRM Holdings, Inc. (Delaware) a. State Street Research & Management Company (Delaware). Is a sub-investment manager for the Growth, Income, Diversified and Aggressive Growth Portfolios of Metropolitan Series Fund, Inc. i. State Street Research Investment Services, Inc. (Massachusetts) b. SSR Realty Advisors, Inc. (Delaware) i. Metric Management Inc. (Delaware) ii. Metric Property Management, Inc. (Delaware) (1) Metric Realty (Delaware). SSR Realty Advisors, Inc. and Metric Property Management, Inc. each hold 50% of the common stock of Metric Realty. (2) Metric Colorado, Inc. (Colorado). Metric Property Management, Inc. holds 80% of the common stock of Metric Colorado, Inc. iii. Metric Capital Corporation (California) iv. Metric Assignor, Inc. (California) v. SSR AV, Inc. (Delaware) 6. MetLife Holdings, Inc. (Delaware) a. MetLife Funding, Inc. (Delaware) b. MetLife Credit Corp. (Delaware) 7. Metropolitan Tower Realty Company, Inc. (Delaware) 8. Security First Group, Inc. (DE) a. Security First Life Insurance Company (DE) b. Security First Insurance Agency, Inc. (MA) c. Security First Insurance Agency, Inc. (NV) d. Security First Group of Ohio, Inc. (OH) e. Security First Financial, Inc. (DE) f. Security First Investment Management Corporation (DE) g. Security First Financial Agency, Inc. (TX) 9. Natiloportem Holdings, Inc. (Delaware) a. Services Administrativos Gen, S.A. de CV One Share of Servicos Administrativos Gen. S.A. de C.V. is held by a nominee of Natiloportem Holdings, Inc. B. Metropolitan Tower Life Insurance Company (Delaware) C. MetLife Security Insurance Company of Louisiana (Louisiana) D. MetLife Texas Holdings, Inc. (Delaware) 1. Texas Life Insurance Company (Texas) a. Texas Life Agency Services, Inc. (Texas) b. Texas Life Agency Services of Kansas, Inc. (Kansas) E. MetLife Securities, Inc. (Delaware) F. 23rd Street Investments, Inc. (Delaware) G. Santander Met, S.A. (Spain). Shares of Santander Met, S.A. are held by Metropolitan (50%) and by an entity (50%) unaffiliated with Metropolitan. 1. Seguros Genesis, S.A. (Spain) 2. Genesis Seguros Generales, Sociedad Anomina de Seguros y Reaseguros (Spain) I. MetLife Saengmyoung Insurance Company Ltd. (Korea). J. Metropolitan Life Seguros de Vida S.A. (Argentina) K. Metropolitan Life Seguros de Retiro S.A. (Argentina). L. Met Life Holdings Luxembourg (Luxembourg) M. Metropolitan Life Holdings, Netherlands BV (Netherlands) N. MetLife International Holdings, Inc. (Delaware) O. Metropolitan Life Insurance Company of Hong Kong Limited (Hong Kong) P. Metropolitan Marine Way Investments Limited (Canada) Q. P.T. MetLife Sejahtera (Indonesia) Shares of P.T. MetLife Sejahtera are held by Metropolitan (80%) and by an entity (20%) unaffiliated with Metropolitan. R. Seguros Genesis S.A. (Mexico) Metropolitan holds 85.49%, Metropolitan Tower Corp. holds 7.31% and Metropolitan Asset Management Corporation holds 7.20% of the common stock of Seguros Genesis S.A. S. Metropolitan Life Seguros de Vida S.A. (Uruguay). One share of Metropolitan Life Seguros de Vida S.A. is held by Alejandro Miller Artola, a nominee of Metropolitan Life Insurance Company. T. Metropolitan Life Seguros E Previdencia Privada S.A. (Brazil) U. MetLife (India) Ltd. V. Hyatt Legal Plans, Inc. (Delaware) 1. Hyatt Legal Plans of Florida, Inc. (Fl) W. One Madison Merchandising L.L.C. (Connecticut) Ownership of membership interests in One Madison Merchandising L.L.C. is as follows: Metropolitan owns 99% and Metropolitan Tower Corp. owns 1%. X. Metropolitan Realty Management, Inc. (Delaware) 1. Edison Supply and Distribution, Inc. (Delaware) 2. Cross & Brown Company (New York) a. CBNJ, Inc. (New Jersey) Y. MetPark Funding, Inc. (Delaware) Z. Transmountain Land & Livestock Company (Montana) AA. Farmers National Company (Nebraska) 1. Farmers National Commodities, Inc. (Nebraska) A.B. MetLife Trust Company, National Association. (United States) A.C. Benefit Services Corporation (Georgia) A.D. G.A. Holding Corporation (MA) A.E. MetLife, Inc. A.F. CRH., Co, Inc. (MA) A.G. 334 Madison Euro Investments, Inc. A.H. Park Twenty Three Investments Company 1% Voting Control of Park Twenty Three Investment Company is held by St. James Fleet Investments Two Limited a. Convent Stution Euro Investments Four Company 1% voting control of Convert Stution Euro Investments Four Company is held by 334 Madison Euro Investments, Inc. as nominee for Park Twenty Three Investments Company. A.I. L/C Development Corporation (CA) A.J. One Madison Investments (Cayco) Limited 1% Voting Control of One Madison Investment (Cayco) Limited is held by Convent Station Euro Investments Four Company. A.K. New England Portfolio Advisors, Inc. (MA) A.L. CRB Co., Inc. (MA) AEW Real Estate Advisors, Inc. holds 49,000 preferred non-voting shares of CRB Co., Inc. AEW Advisors, Inc. holds 1,000 preferred non-voting shares of CRB Co., Inc. A.M. New England Life Mortgage Funding Corporation (MA) A.N. Mercadian Capital L.P. (DE). Metropolitan holds a 95% limited partner interest and an unaffiliated third party holds 5% of Mercadian Capital L.P. A.O. Mercadian Funding L.P. (DE). Metropolitan holds a 95% limited partner interest and an unaffiliated third party holds 5% of Mercadian Funding L.P. A.P. St. James Fleet Investments two Limited. A.Q. MetLife New England Holdings, Inc. (DE) 1. Fulcrum Financial Advisors, Inc. (MA) 2. New England Life Insurance Company (MA) a. New England Life Holdings, Inc. (DE) i. New England Securities Corporation (MA) (1) Hereford Insurance Agency, Inc. (MA) (2) Hereford Insurance Agency of Alabama, Inc. (AL) (3) Hereford Insurance Agency of Minnesota, Inc. (MN) (4) Hereford Insurance Agency of Ohio, Inc. (OH) (5) Hereford Insurance Agency of New Mexico, Inc. (NM) (6) Hereford Insurance Agency of Wyoming, Inc. (7) Hereford Insurance Agency of Oklahoma, Inc. ii. TNE Information Services, Inc. (MA) (1) First Connect Insurance Network, Inc. (DE) (2) Interative Financial Solutions, Inc. (MA) iii. N.L. Holding Corp. (Del)(NY) (1) Nathan & Lewis Securities, Inc. (NY) (2) Nathan & Lewis Associates, Inc. (NY) (a) Nathan and Lewis Insurance Agency of Massachusetts, Inc. (MA) (b) Nathan and Lewis Associates of Texas, Inc. (TX) (3) Nathan & Lewis Associates--Arizona, Inc. (AZ) (4) Nathan & Lewis of Nevada, Inc. (NV) (5) Nathan and Lewis Associates Ohio, Incorporated (OH) iv. New England Securities Corporation v. New England Investment Management Inc. b. Exeter Reassurance Company, Ltd. (MA) c. Omega Reinsurance Corporation (AZ) d. New England Pension and Annuity Company (DE) e. Newbury Insurance Company, Limited (Bermuda) A.R. General American Life 1. General American Life Insurance Company a. GenAm Benefits Life Insurance Company b. Paragon Life Insurance Company c. Security Equity Life Insurance Company d. Cova Corporation i. Cova Financial Services Life Insurance Company (1) Cova Financial Life Insurance Company (2) First Cova Life Insurance Company ii. Cova Investment Advisory Corporation (1) Cova Investment Advisory Corporation (2) Cova Investment Allocution Corporation (3) Cova Life Sales Company (4) Cova Life Administration Services Company e. General Life Insurance Company i. General Life Insurance Company of America f. Equity Intermediary Company i. Reinsurance Group of America, Incorporated 1. Reinsurance Company of Missouri Incorporated a. RGA Reinsurance Company b. Fairfield Management Group, Inc. i. Reinsurance Partners, Inc. ii. Great Rivers Reinsurance Management, Inc. iii. RGA (U.K.) Underwriting Agency Limited 2. Triad Re, Ltd 3. RGA Americas Reinsurance Company, Ltd. 4. RGA Reinsurance Company (Barbados) Ltd. (a) RGA/Swiss Financial Group, L.L.C. 5. RGA International Ltd. (a) RGA Financial Products Limited (b) RGA Canada Management Company, Ltd. (i) RGA Life Reinsurance Company of Canada 6. Benefit Resource Life Insurance Company (Bermuda) Ltd. 7. RGA Holdings Limited (a) RGA Managing Agency Limited (b) RGA Capital Limited 8. RGA South African Holdings (Pty) Ltd. (a) RGA Reinsurance Company of South Africa Limited 9. RGA Australian Holdings Pty Limited (a) RGA Reinsurance Company of Australia Limited 10. General American Argentina Seguros 11. RGA Argentina, S.A. 12. RGA Sudamerica, S.A. (a) RGA Reinsurance (b) BHIF American Seguros de Vida, S.A. g. GenAm Holding Company i. NaviSys Incorporated ii. NaviSys Illustration Solutions, Inc. iii. NaviSys Asia Pacifica Limited iv. NaviSys de Mexico S.A. de C.V. 99% of the shares of NaviSys de Mexico S.A. de C.V. are held by NaviSys Incorporated and 1% is held by General American Life Insurance Company. v. NaviSys Enterprise Solutions, Inc. vi. Red Oak Realty Company vii. White Oak Royalty Company viii. GenMark Incorporated (a) Stan Mintz Associates, Inc. (b) GenMark Insurance Agency of Alabama, Inc. (c) GenMark Insurance Agency of Massachusetts, Inc. (d) GenMark Insurance Agency of Ohio, Inc. (e) GenMark Insurance Agency of Texas, Inc. ix. Conning Corporation (a) Conning, Inc. (i) Conning & Company (1) Conning Asset Management Company 2. Collaborative Strategies, Inc. 3. Virtual Finances.Com, Inc. 4. Missouri Reinsurance (Barbados) Inc. 5. GenAmerican Capital I 6. GenAmerican Management 7. Walnut Street Securities, Inc. a. WSS Insurance Agency of Alabama, Inc. b. WSS Insurance Agency of Massachusetts, Inc. c. WSS Insurance Agency of Ohio, Inc. d. WSS Insurance Agency of Texas, Inc. e. Walnut Street Advisers, Inc. 3. Nvest Corporation (MA) a. Nvest, L.P. (DE) Nvest Corporation holds a 1.69% general partnership interest and MetLife New England Holdings, Inc. 3.19% general partnership interest in Nvest, L.P. b. Nvest Companies, L.P. (DE) Nvest Corporation holds a 0.0002% general partnerhship interest in Nvest Companies, L.P. Nvest, L.P. holds a 14.64% general partnership interest in Nvest Companies, L.P. Metropolitan holds a 46.23% limited partnership interest in Nvest Companies, L.P. i. Nvest Holdings, Inc. (DE) (1) Back Bay Advisors, Inc. (MA) (a) Back Bay Advisors, L.P. (DE) Back Bay Advisors, Inc. holds a 1% general partner interest and NEIC Holdings, Inc. holds a 99% limited partner interest in Back Bay Advisors, L.P. (2) R & T Asset Management, Inc. (MA) (a) Reich & Tang Distributors, Inc. (DE) (b) Reich & Tang Asset Management R & T Asset Management, Inc. holds a 0.5% general partner interest and NEIC Holdings, Inc. hold a 99.5% limited partner interest in & Asset Management, L.P. (c) Reich & Tang Services, Inc. (DE) (3) Loomis, Sayles & Company, Inc. (MA) (a) Loomis Sayles & Company, L.P. (DE) Loomis Sayles & Company, Inc. holds a 1% general partner interest and R & T Asset Management, Inc. holds a 99% limited partner interest in Loomis Sayles & Company, L.P. (4) Westpeak Investment Advisors, Inc. (MA) (a) Westpeak Investment Advisors, L.P. (DE) Westpeak Investment Advisors, Inc. holds a 1% general partner interest and Reich & Tang holds a 99% limited partner interest in Westpeak Investment Advisors, L.P. (i) Westpeak Investment Advisors Australia Limited Pty. (5) Vaughan, Nelson Scarborough & McCullough (DE) (a) Vaughan, Nelson Scarborough & McCullough, L.P. (DE) VNSM, Inc. holds a 1% general partner interest and Reich & Tang Asset Management, Inc. holds a 99% limited partner interest in Vaughan, Nelson Scarborough & McCullough, L.P. (i) VNSM Trust Company (6) MC Management, Inc. (MA) (a) MC Management, L.P. (DE) MC Management, Inc. holds a 1% general partner interest and R & T Asset Management, Inc. holds a 99% limited partner interest in MC Management, L.P. (7) Harris Associates, Inc. (DE) (a) Harris Associates Securities L.P. (DE) Harris Associates, Inc. holds a 1% general partner interest and Harris Associates L.P. holds a 99% limited partner interest in Harris Associates Securities, L.P. (b) Harris Associates L.P. (DE) Harris Associates, Inc. holds a 0.33% general partner interest and NEIC Operating Partnership, L.P. holds a 99.67% limited partner interest in Harris Associates L.P. (i) Harris Partners, Inc. (DE) (ii) Harris Partners L.L.C. (DE) Harris Partners, Inc. holds a 1% membership interest and Harris Associates L.P. holds a 99% membership interest in Harris Partners L.L.C. (1) Aurora Limited Partnership (DE) Harris Partners L.L.C. holds a 1% general partner interest (2) Perseus Partners L.P. (DE) Harris Partners L.L.C. holds a 1% general partner interest (3) Pleiades Partners L.P. (DE) Harris Partners L.L.C. holds a 1% general partner interest (4) Stellar Partners L.P. (DE) Harris Partners L.L.C. holds a 1% general partner interest (5) SPA Partners L.P. (DE) Harris Partners L.L.C. holds a 1% general partner interest (8) Graystone Partners, Inc. (MA) (a) Graystone Partners, L.P. (DE) Graystone Partners, Inc. holds a 1% general partner interest and New England NEIC Operating Partnership, L.P. holds a 99% limited partner interest in Graystone Partners, L.P. (9) NEF Corporation (MA) (a) New England Funds, L.P. (DE) NEF Corporation holds a 1% general partner interest and NEIC Operating Partnership, L.P. holds a 99% limited partner interest in New England Funds, L.P. (b) New England Funds Management, L.P. (DE) NEF Corporation holds a 1% general partner interest and NEIC Operating Partnership, L.P. holds a 99% limited partner interest in New England Funds Management, L.P. (10) New England Funds Service Corporation (11) AEW Capital Management, Inc. (DE) (a) AEW Securities, L.P. (DE) AEW Capital Management, Inc. holds a 1% general partnership and AEW Capital Management, L.P. holds a 99% limited partnership interest in AEW Securities, L.P. ii. Nvest Associates, Inc. iii. Snyder Capital Management, Inc. (1) Snyder Capital Management, L.P. NEIC Operating Partnership holds a 99.5% limited partnership interest and Snyder Capital Management Inc. holds a 0.5% general partnership interest. iv. Jurika & Voyles, Inc. (1) Jurika & Voyles, L.P NEIC Operating Partnership, L.P. holds a 99% limited partnership interest and Jurika & Voyles, Inc. holds a 1% general partnership interest. v. Capital Growth Management, L.P. (DE) NEIC Operating Partnership, L.P. holds a 50% limited partner interest in Capital Growth Management, L.P. vi. Nvest Partnerships, LLC ( ) vii. AEW Capital Management L.P. (DE) New England Investment Companies, L.P. holds a 99% limited partner interest and AEW Capital Management, Inc. holds a 1% general partner interest in AEW Capital Management, L.P. (1) AEW II Corporation ( ) (2) AEW Partners III, Inc. ( ) (3) AEW TSF, Inc. ( ) (4) AEW Exchange Management, LLC (5) AEWPN, LLC ( ) (6) AEW Investment Group, Inc. (MA) (a) Copley Public Partnership Holding, L.P. (MA) AEW Investment Group, Inc. holds a 25% general partnership interest and AEW Capital Management, L.P. holds a 75% limited partnership interest in Copley Public Partnership Holding, L.P. (b) AEW Management and Advisors L.P. (MA) AEW Investment Group, Inc. holds a 25% general partnership interest and AEW Capital Management, L.P. holds a 75% limited partnership interest in AEW Management and Advisors L.P. ii. AEW Real Estate Advisors, Inc. (MA) 1. AEW Advisors, Inc. (MA) 2. Copley Properties Company, Inc. (MA) 3. Copley Properties Company II, Inc. (MA) 4. Copley Properties Company III, Inc. (MA) 5. Fourth Copley Corp. (MA) 6. Fifth Copley Corp. (MA) 7. Sixth Copley Corp. (MA) 8. Seventh Copley Corp. (MA). 9. Eighth Copley Corp. (MA). 10. First Income Corp. (MA). 11. Second Income Corp. (MA). 12. Third Income Corp. (MA). 13. Fourth Income Corp. (MA). 14. Third Singleton Corp. (MA). 15. Fourth Singleton Corp. (MA) 16. Fifth Singleton Corp. (MA) 17. Sixth Singleton Corp. (MA). 18. BCOP Associates L.P. (MA) AEW Real Estate Advisors, Inc. holds a 1% general partner interest in BCOP Associates L.P. ii. CREA Western Investors I, Inc. (MA) 1. CREA Western Investors I, L.P. (DE) CREA Western Investors I, Inc. holds a 24.28% general partnership interest and Copley Public Partnership Holding, L.P. holds a 57.62% limited partnership interest in CREA Western Investors I, L.P. iii. CREA Investors Santa Fe Springs, Inc. (MA) (7) Copley Public Partnership Holding, L.P. (DE) AEW Capital Management, L.P. holds a 75% limited partner interest and AEW Investment Group, Inc. holds a 25% general partner interest and CREA Western Investors I, L.P holds a 57.62% Limited Partnership interest. (8) AEW Real Estate Advisors, Limited Partnership (MA) AEW Real Estate Advisors, Inc. holds a 25% general partnership interest and AEW Capital Management, L.P. holds a 75% limited partnership interest in AEW Real Estate Advisors, Limited Partnership. (9) AEW Hotel Investment Corporation (MA) (a.) AEW Hotel Investment, Limited Partnership (MA) AEW Hotel Investment Corporation holds a 1% general partnership interest and AEW Capital Management, L.P. holds a 99% limited partnership interest in AEW Hotel Investment, Limited Partnership. (10) Aldrich Eastman Global Investment Strategies, LLC (DE) AEW Capital Management, L.P. holds a 25% membership interest and an unaffiliated third party holds a 75% membership interest in Aldrich Eastman Global Investment Strategies, LLC. A.R. General American Life 1. General American Life Insurance Company a. GenAm Benefits Life Insurance Company b. Paragon Life Insurance Company c. Security Equity Life Insurance Company d. Cova Corporation i. Cova Financial Services Life Insurance Company (1) Cova Financial Life Insurance Company (2) First Cova Life Insurance Company ii. Cova Investment Advisory Corporation (1) Cova Investment Advisory Corporation (2) Cova Investment Allocution Corporation (3) Cova Life Sales Company (4) Cova Life Administration Services Company e. General Life Insurance Company i. General Life Insurance Company of America f. Equity Intermediary Company i. Reinsurance Group of America, Incorporated 1. Reinsurance Company of Missouri Incorporated a. RGA Reinsurance Company b. Fairfield Management Group, Inc. i. Reinsurance Partners, Inc. ii. Great Rivers Reinsurance Management, Inc. iii. RGA (U.K.) Underwriting Agency Limited 2. Triad Re, Ltd 3. RGA Americas Reinsurance Company, Ltd. 4. RGA Reinsurance Company (Barbados) Ltd. (a) RGA/Swiss Financial Group, L.L.C. 5. RGA International Ltd. (a) RGA Financial Products Limited (b) RGA Canada Management Company, Ltd. (i) RGA Life Reinsurance Company of Canada 6. Benefit Resource Life Insurance Company (Bermuda) Ltd. 7. RGA Holdings Limited (a) RGA Managing Agency Limited (b) RGA Capital Limited 8. RGA South African Holdings (Pty) Ltd. (a) RGA Reinsurance Company of South Africa Limited 9. RGA Australian Holdings Pty Limited (a) RGA Reinsurance Company of Australia Limited 10. General American Argentina Seguros 11. RGA Argentina, S.A. 12. RGA Sudamerica, S.A. (a) RGA Reinsurance (b) BHIF American Seguros de Vida, S.A. g. GenAm Holding Company i. NaviSys Incorporated ii. NaviSys Illustration Solutions, Inc. iii. NaviSys Asia Pacifica Limited iv. NaviSys de Mexico S.A. de C.V. 99% of the shares of NaviSys de Mexico S.A. de C.V. are held by NaviSys Incorporated and 1% is held by General American Life Insurance Company. v. NaviSys Enterprise Solutions, Inc. vi. Red Oak Realty Company vii. White Oak Royalty Company viii. GenMark Incorporated (a) Stan Mintz Associates, Inc. (b) GenMark Insurance Agency of Alabama, Inc. (c) GenMark Insurance Agency of Massachusetts, Inc. (d) GenMark Insurance Agency of Ohio, Inc. (e) GenMark Insurance Agency of Texas, Inc. ix. Conning Corporation (a) Conning, Inc. (i) Conning & Company (1) Conning Asset Management Company 2. Collaborative Strategies, Inc. 3. Virtual Finances.Com, Inc. 4. Missouri Reinsurance (Barbados) Inc. 5. GenAmerican Capital I 6. GenAmerican Management 7. Walnut Street Securities, Inc. a. WSS Insurance Agency of Alabama, Inc. b. WSS Insurance Agency of Massachusetts, Inc. c. WSS Insurance Agency of Ohio, Inc. d. WSS Insurance Agency of Texas, Inc. e. Walnut Street Advisers, Inc. In addition to the entities listed above, Metropolitan (or where indicated an affiliate) also owns an interest in the following entities, among others: 1) CP&S Communications, Inc., a New York corporation, holds federal radio communications licenses for equipment used in Metropolitan owned facilities and airplanes. It is not engaged in any business. 2) Quadreal Corp., a New York corporation, is the fee holder of a parcel of real property subject to a 999 year prepaid lease. It is wholly owned by Metropolitan, having been acquired by a wholly owned subsidiary of Metropolitan in 1973 in connection with a real estate investment and transferred to Metropolitan in 1988. 3) Met Life International Real Estate Equity Shares, Inc., a Delaware corporation, is a real estate investment trust. Metropolitan owns approximately 18.4% of the outstanding common stock of this company and has the right to designate 2 of the 5 members of its Board of Directors. 4) Metropolitan Structures is a general partnership in which Metropolitan owns a 50% interest. 5) Metropolitan owns, via its subsidiary, AFORE Genesis Metropolitan S.A. de C.V., approximately 61.7% of SIEFORE Genesis S.A. de C.V., a mutual fund. 6) Metropolitan owns varying interests in certain mutual funds distributed by its affiliates. These ownership interests are generally expected to decrease as shares of the funds are purchased by unaffiliated investors. 7) Metropolitan Lloyds Insurance Company of Texas, an affiliated association, provides homeowner and related insurance for the Texas market. It is an association of individuals designated as underwriters. Metropolitan Lloyds, Inc., a subsidiary of Metropolitan Property and Casualty Insurance Company ("MET P&C"), serves as the attorney-in-fact and manages the association. 8) Metropolitan directly owns 100% of the non-voting preferred stock of Nathan and Lewis Associates Ohio, Incorporated, an insurance agency. 100% of the voting common stock of this company is held by an individual who has agreed to vote such shares at the direction of N.L. Holding Corp. (DEL), an indirect wholly owned subsidiary of Metropolitan. 9) 100% of the capital stock of Hereford Insurance Agency of Oklahoma, Inc. (OK) is owned by an officer. New England Life Insurance Company controls the issuance of additional stock and has certain rights to purchase such officer's shares. 10) 100% of the capital stock of Fairfield Insurance Agency of Texas, Inc. (TX) is owned by an officer. New England Life Insurance Company controls the issuance of additional stock and has certain rights to purchase such officer's shares. 11) Mezzanine Investment Limited Partnerships ("MILPs"), Delaware limited partnerships, are investment vehicles through which investments in certain entities are held. A wholly owned subsidiary of Metropolitan serves as the general partner of the limited partnerships and Metropolitan directly owns a 99% limited partnership interest in each MILP. The MILPs have various's ownership interests in certain companies. The various MILPs own, directly or indirectly, 100% of the voting stock of the following company: Coating Technologies International, Inc. NOTE: THE METROPOLITAN LIFE ORGANIZATIONAL CHART DOES NOT INCLUDE REAL ESTATE JOINT VENTURES AND PARTNERSHIPS OF WHICH METROPOLITAN LIFE AND/OR ITS SUBSIDIARIES IS AN INVESTMENT PARTNER. IN ADDITION, CERTAIN INACTIVE SUBSIDIARIES HAVE ALSO BEEN OMITTED. Item 25. Indemnification. (a) Maryland Law and By-Laws. The Registrant is required by Article V of its By-Laws to indemnify or advance expenses to directors and officers (or former directors and officers) to the extent permitted or required by the Maryland General Corporation Law ("MGCL") and, in the case of officers (or former officers), only to the extent specifically authorized by resolution of the Board of Directors. Section 2-418 of the MGCL permits indemnification of a director against judgments, penalties, fines, settlements and reasonable expenses actually incurred by the director in connection with any proceeding to which he has been made a party by reason of service as a director, unless it is established that (i) the director's act or omission was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty; or (ii) the director actually received an improper personal benefit in money, property or services; or (iii) in the case of a criminal proceeding, the director had reasonable cause to believe that the act or omission was unlawful. However, indemnification may not be made in any proceeding by or in the right of the corporation in which the director has been adjudged to be liable to the corporation. In addition, a director may not be indemnified in respect of any proceeding charging improper personal benefit to the director, whether or not involving action in the director's official capacity, in which the director was adjudged to be liable on the basis that personal benefit was improperly received. Section 2-418 of the MGCL also requires a corporation, unless limited by its charter, to indemnify a director who has been successful in the defense of a proceeding against reasonable expenses incurred. Reasonable expenses incurred by a director may be paid or reimbursed by a corporation in advance the final disposition of a proceeding upon the receipt of certain written affirmations and undertakings required by Section 2-418. Unless limited by its directors, a Maryland corporation may indemnify and advance expenses to an officer to the same extent it may indemnify a director, and is required to indemnify an officer to the extent required for a director. Notwithstanding the foregoing, Article V of the Registrant's By-Laws provides that nothing contained therein shall be construed to protect any director or officer against any liability to the Registrant or its security holders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. (b) Distribution Agreement. Under the distribution agreement between the Registrant and Metropolitan Life, Metropolitan Life agreed to indemnify and hold harmless any officer or director (or any former officer or director) or any controlling person of the Registrant from damages and expenses arising out of actual or alleged misrepresentations or omissions to state material facts on the part of Metropolitan Life or persons for whom it is responsible or the negligence of any such persons in rendering services under the agreement. (c) Undertaking. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. C-14 (d) Insurance. The Registrant's directors are indemnified by Metropolitan Life in the same manner and to the same extent as Metropolitan Life's directors. In addition thereto, Metropolitan Life has purchased an Investment Counselors Errors and Omissions Policy to insure the Registrant's directors and officers. Item 26. Business and other Connections of Investment Manager. Metropolitan Life is a life insurance company which sells insurance policies and annuity contracts. It is authorized to transact business in all states of the United States, the District of Columbia, Puerto Rico and all Provinces of Canada. Its Home Office is located at 1 Madison Avenue, New York, New York 10010 (telephone number 212-578-6130). As of December 31, 1999 Metropolitan Life had $420 billion in total assets under management. Metropolitan Life is the parent of Metropolitan Tower. Metropolitan Life also serves as the investment adviser for certain other advisory clients. Set forth below is a list of each director of Metropolitan Life indicating each business, profession, vocation or employment of a substantial nature in which each such person has been, at any time during the past two fiscal years, engaged for his or her own account or in the capacity of director, officer, partner or trustee.
Organization and Principal Name Position Business Address of Organization ---- -------- -------------------------------- Curtis H. Barnette..... Chairman of the Board Bethlehem Steel Corporation and Chief Executive Bethlehem, PA Officer Director and former International Iron and Steel Chairman Institute, Brussels, Belgium Director and former Pennsylvania Business Chairman Roundtable, Harrisburg, PA Director and former American Iron and Steel Chairman Institute, Washington, DC Director and former West Virginia University Chairman Foundation, Morgantown, WV Trustee Lehigh University Bethlehem, PA Director Owens Corning Board of Advisors West Virginia University Robert H. Benmosche . . Chairman of the Board, Metropolitan Life Insurance President and Chief Company Executive Officer New York, NY Director New York Philharmonic Director New England Financial Trustee Alfred University Joan Ganz Cooney....... Chairman, Executive Com- Children's Television Workshop, mittee New York, NY Director Johnson & Johnson, New Brunswick, NJ Trustee National Child Labor Committee, New York, NY Trustee Children's Television Workshop, New York, NY Trustee Museum of Television and Radio Trustee The New York and Presbyterian Hospitals
C-15
Organization and Principal Name Position Business Address of Organization ---- -------- -------------------------------- Burton A. Dole, Jr. . Retired Chairman, Puritan Bennett, Inc., Overland President and Chief Park, KS Executive Officer Former Chairman of the Nellcor Puritan Bennett, Inc., Board Pleasanton, CA Director Anesthesia Patient Safety Foundation Former Chairman of the Health Industries Manufacturer's Board Association Former Chairman of the Federal Reserve Bank of Kansas Board City Gerald Clark......... 7/1/98 Vice-Chairman of Metropolitan Life Insurance the Board and Chief Company, Investment Officer and New York, NY Director; Senior Executive Vice- President and Chief Investment Officer and Director since 1/97; prior thereto Senior Executive Vice- President and Chief Investment Officer Director/Trustee Credit Suisse Group Director/Trustee Villanova University Director/Officer Certain wholly-owned subsidiaries of Metropolitan Life Insurance Company James R. Houghton.... Chairman of the Board Corning Incorporated, Corning, NY Emeritus and Director Director J.P. Morgan & Co., Inc., New York, NY Director Exxon Corp., Dallas, TX Director/Trustee Corning Incorporated Foundation Director/Trustee Corning Museum of Glass Director/Trustee Metropolitan Museum of Art Director/Trustee Pierpont Morgan Library Chairman National Skill Standards Board Member Business Council Member Council on Foreign Relations Member Harvard Corporation Harry Paul Kamen..... Chairman and Chief Metropolitan Life Insurance Executive Officer Company, (Retired) and Director New York, NY since 7/1/98, prior thereto, Chairman, Chief Executive Officer and Director Director Bethlehem Steel Corporation, Bethlehem, PA Director Banco Santander, Madrid, Spain Director and Treasurer New York City Partnership, New York, NY Director/Trustee Board of Overseers of the School of Arts and Sciences at the University of Pennsylvania Director/Trustee and Carnegie Hall Treasurer Director/Trustee Jewish Museum (Vice-President) Director/Trustee Smith College Director NVEST L.P. Director National Association of Securities Dealers Director/Trustee and Conference Board Vice-Chairman Director/Trustee American Museum of Natural History Director Pfizer Inc.
C-16
Organization and Principal Name Position Business Address of Organization ---- -------- -------------------------------- Helene L. Kaplan..... Of Counsel Skadden, Arps, Slate, Meagher & Flom, New York, NY Director May Department Stores Co., New York, NY Chair Emeritus Barnard College, New York, NY Director Exxon Mobil Corp., New York, NY Director Bell Atlantic Corporation, New York, NY Director The Chase Manhattan Corporation Trustee and Vice-Chair American Museum of Natural History Trustee Carnegie Corporation of New York Trustee Commonwealth Fund Trustee J. Paul Getty Trust Chairman Mt. Sinai School of Medicine Trustee Institute for Advanced Study Trustee Mt. Sinai-NYU Health System Charles M. Leighton.. Retired Chairman and CML Group, Inc., Bolton, MA Chief Executive Officer Director CML Group, Inc. Director NVEST Companies, L.P. Former Chairman Listed Company Advisory Committee, New York Stock Exchange Trustee Lahey Clinic Chairman New York Yacht Club America's Cup Challenge Director Fitsense Technology Corp. Allen E. Murray...... Retired Chairman of the Mobil Corporation, New York, NY Board and Chief Executive Officer Director Morgan Stanley, Dean Witter, Discovery Co., New York, NY Director Minnesota Mining and Manufacturing Co., St. Paul, MN Honorary Director American Petroleum Institute, Washington, DC Director St. Francis Hospital Foundation Trustee New York University Stewart Nagler....... Vice-Chairman of the Metropolitan Life Insurance Company Board and Chief New York, NY Financial Officer and Director Director Life Insurance Council of New York Director Various Metropolitan Subsidiaries Trustee Boys and Girls Clubs of America Trustee Barnard College Chairman of the Board Polytechnic University of New York (Chairman, Finance Committee)
C-17
Organization and Principal Name Position Business Address of Organization ---- -------- -------------------------------- John J. Phelan, Jr...... Retired Chairman and New York Stock Exchange, Inc., Chief Executive Officer New York, NY Director Eastman Kodak Co., Rochester, NY Director Merrill Lynch & Co., Inc., New York, NY Former President International Federation of Stock Exchanges Director or Trustee Aspen Institute and Cold Spring Harbor Laboratories Director or Trustee Catholic Charities Archdiocese of NY Hugh B. Price........... President and Chief National Urban League, Inc., New Executive Officer York, NY Director Bell Atlantic Corp., New York, NY Director The Urban Institute, New York, NY Director Education Testing Service Director Sears Roebuck and Company Robert G. Schwartz...... Retired Chairman of the Metropolitan Life Insurance Board, President and Company, Chief Executive Officer New York, NY and Director Director Lowe's Companies, Inc., North Wilkesboro, NC Director Potlatch Corporation, San Francisco, CA Director COMSAT Corporation, Washington, DC Director/Trustee Committee for Economic Development, Washington, DC Director Consolidated Edison Company of New York, Inc., New York, NY Director/Trustee The Horatio Alger Association of Distinguished Americans, Inc. Ruth Simmons............ President Smith College, Northampton, MA Director Pfizer Inc. Trustee Carnegie Corporation Trustee Clarke School for the Deaf Director Texas Instruments Director Goldman Sachs William C. Steere, Jr. . Chairman of the Board Pfizer Inc. and Chief Executive Officer Director Dow Jones & Company, Inc. Director Minerals Technologies Inc. Director Texaco Inc. Director Mt. Sinai-New York University Health System Director Business Council Director Business Roundtable Director New York Botanical Garden Board of Memorial Sloan-Kettering Cancer Overseers/Executive Center Committee
C-18 Set forth below is a list of certain principal officers of Metropolitan Life and officers of Metropolitan Life who may be considered to be involved in Metropolitan Life's investment advisory activities. The principal business address of each officer of Metropolitan Life is One Madison Avenue, New York, New York 10010.
Name of Officer Position --------------- -------- Robert H. Benmosche. Chairman, President, Chief Executive Officer and Director Gerald Clark........ Vice-Chairman, Chief Investment Officer and Director Stewart G. Nagler... Vice-Chairman, Chief Financial Officer and Director Gary A. Beller...... Senior Executive Vice-President and General Counsel James H. Benson..... President, Individual Business; Chairman, Chief Executive Officer and President, New England Life Insurance Company C. Robert Henrikson. President, Institutional Business Jeffrey J Hodgman... Executive Vice-President Richard A. Liddy.... Senior Executive Vice-President Catherine A. Rein... Senior Executive Vice-President; President and Chief Executive Officer of Metropolitan Property and Casualty Insurance Company William J. Toppeta.. President, Client Services and Chief Administrative Officer John H. Tweedie..... Senior Executive Vice-President Lisa Weber.......... Executive Vice-President Judy E. Weiss....... Executive Vice-President & Chief Actuary
The business of State Street Research since December 31, 1983 is summarized under "Management of the Fund", in the prospectus constituting Part A of this Registration Statement, which summarization is incorporated herein by reference. The list of each director and certain officers of State Street Research indicating any other business, profession, vocation or employment of a substantial nature in which each such person is or has been, at any time during the past two fiscal years, engaged for his or her own account or in the capacity of director, officer, employee, partner or trustee is incorporated herein by reference to the filing of Post-Effective Amendment No. 34 to the Registration Statement of State Street Research Financial Trust on February 29, 2000. The list of each director and certain officers of Scudder Kemper Investments, Inc. indicating any other business, profession, vocation or employment of a substantial nature in which each such person is or has been, at any time during the past two fiscal years, engaged for his or her own account or in the capacity of director, officer, employee, partner or trustee is incorporated herein by reference to the filing of Post-Effective Amendment No. 16 to the Registration Statement of Scudder Mutual Funds, Inc. (File No. 811-5565) on March 1, 2000. Scudder Kemper Investments, Inc. has stockholders and employees who are denominated officers but do not as such have corporation-wide responsibilities, and therefore are not considered officers. The list of each director and certain officers of Janus indicating any other business, profession, vocation or employment of a substantial nature in which each such person is or has been, at any time during the past five fiscal years, engaged for his or her own account or in the capacity of director, officer, employee, partner or trustee is incorporated herein by reference to the filing of Post-Effective Amendment No. 20 to the Registration Statement for Janus Aspen Series (File No. 33-63212) on October 26, 1999. The list of each director and certain officers of T. Rowe Price indicating any other business, profession, vocation or employment of a substantial nature in which each such person is or has been, at any time during the past two fiscal years, engaged for his or her own account or in the capacity of C-19 director, officer, employee, partner or trustee is incorporated herein by reference to Schedules A and D of Form ADV filed by T. Rowe Price pursuant to the Investment Advisers Act of 1940 (SEC File No. 801-856). Loomis Sayles, the sub-adviser of the Loomis Sayles High Yield Bond Portfolio, provides investment advice to the seventeen series of Loomis Sayles Funds, seven series of Loomis Sayles Investment Trust, five series of New England Funds Trust I, one series of New England Funds Trust II, one series of New England Funds Trust III, two series of New England Zenith Fund, all of which are registered investment companies, several other registered investment companies and other organizations and individuals. The sole general partner of Loomis Sayles is Loomis, Sayles & Company, Incorporated, One Financial Center, Boston, Massachusetts 02111. The list of each director and certain officers of Harris Oakmark indicating any other business, profession, vocation or employment of a substantial nature in which each such person is or has been, at any time during the past five fiscal years, engaged for his or her own account or in the capacity of director, officer, employee, partner or trustee is incorporated herein by reference to the filing of Post-Effective Amendment No. 23 to Registration Statement to the Harris Associates Investment Trust (File No. 33-38953) on November 30, 1999. The list of each director and certain officers of Neuberger Berman indicating any other business, profession, vocation or employment of a substantial nature in which each such person is or has been, at any time during the past two fiscal years, engaged for his or her own account or in the capacity of director, officer, employee, partner or trustee is incorporated herein by reference to Schedules A and D of Form ADV for Neuberger Berman Management Inc. pursuant to the Investment Advisers Act of 1940 (SEC File No. 801-8259). The list of each director and certain officers of Putnam indicating any other business, profession, vocation or employment of a substantial nature in which each such person is or has been, at any time during the past two fiscal years, engaged for his or her own account or in the capacity of director, officer, employee, partner or trustee is incorporated herein by reference to Schedules A and D of Form ADV for Putnam Investment Management, Inc. pursuant to the Investment Advisers Act of 1940 (SEC File No. 801-7974). Item 27. Principal Underwriters. Not applicable Item 28. Location of Accounts and Records. Accounts, books and other documents required to be maintained by Section 31(a) of the 1940 Act and the rules thereunder are maintained at the offices of the Registrant, of State Street Research & Management Company of Boston, Massachusetts, Putnam Investment Management, Inc. of Boston, Massachusetts, Loomis, Sayles & Company, L.P. of Boston, Massachusetts, Janus Capital Corporation of Denver, Colorado, T. Rowe Price Associates, Inc. of Baltimore, Maryland, Scudder Kemper Investments, Inc. of New York, New York, Neuberger Berman Management Incorporated, of New York, New York, Harris Associates L.P. of Boston, Massachusetts and State Street Bank and Trust Company of Boston, Massachusetts. The address of each is set forth on the back cover of the prospectus forming Part A of this Registration Statement and is incorporated herein by reference. Certain records are maintained at the Registrant's office at 1125 Seventeenth Street, Denver, Colorado 80202. Item 29. Management Services. None. Item 30. Undertakings. Not applicable. C-20 SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this Registration Statement and has caused this amended Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, and State of New York, on the 5th day of April, 2000. METROPOLITAN SERIES FUND, INC. (Registrant) /s/ Christopher P. Nicholas By: ................................. Christopher P. Nicholas President Pursuant to the requirements of the Securities Act of 1933, this amended Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Signature Date * ..................................... David A. Levene Chairman of the Board and (Principal Executive Officer and Director) * ..................................... Steve A. Garban Director * ..................................... Malcolm T. Hopkins Director * ..................................... Dean O. Morton Director * ..................................... Michael S. Scott Morton Director * ..................................... Arthur G. Typermass Director * ..................................... Dianne Johnson Controller (Principal Financial and Accounting Officer) /s/ Christopher P. Nicholas *By: ................................ April 5, 2000 Christopher P. Nicholas, Esq. Attorney-in-Fact C-21 EX-99.A(J) 2 ARTICLES SUPPLEMENTARY OF REGISTRANT Exhibit (a)(j) METROPOLITAN SERIES FUND, INC. ARTICLES SUPPLEMENTARY TO ARTICLES OF INCORPORATION METROPOLITAN SERIES FUND, INC., a Maryland corporation having its principal office in this State c/o United Corporate Services, Inc., 20 South Charles Street, Suite 1200, Baltimore, Maryland 21201 (hereinafter called the Corporation), hereby certifies to the State Department of Assessments and Taxation of Maryland, that: FIRST: The Board of Directors of the Corporation, at a meeting duly convened and held on February 1, 2000, adopted resolutions classifying or reclassifying three hundred million (300,000,000) unissued shares of capital stock of the Corporation of the par value of $0.01 per share by (i) establishing three (3) new classes of capital stock of the Corporation of the par value of $0.01 per share designated respectively as State Street Research Aurora Small Cap Value Portfolio Capital Stock, Putnam Large Cap Growth Portfolio Capital Stock, and MetLife Mid Cap Stock Index Portfolio Capital Stock, and (ii) by allocating or reallocating such three hundred million shares so that the total number of shares of authorized capital stock of the Corporation shall be divided among the following classes of capital stock, each class comprising the number of shares and having the designations, preferences, rights, voting powers and such qualifications, limitations and restrictions as are hereinafter set forth:
Original Increased and Reclassified Shares of Shares of Class Authorized Authorized - ----- Stock Stock ------------- ---------------------------- State Street Research Money Market Portfolio 100,000,000 100,000,000 State Street Research Income Portfolio 100,000,000 100,000,000 State Street Research Growth Portfolio 200,000,000 200,000,000 State Street Research Diversified Portfolio 200,000,000 200,000,000 GNMA Portfolio 100,000,000 100,000,000
Putnam International Stock Portfolio 100,000,000 100,000,000 State Street Research Aggressive Growth Portfolio 100,000,000 100,000,000 MetLife Stock Index Portfolio 200,000,000 200,000,000 Equity Income Portfolio 100,000,000 100,000,000 Scudder Global Equity Portfolio 100,000,000 100,000,000 T. Rowe Price Small Cap Growth Portfolio 100,000,000 100,000,000 Janus Mid Cap Portfolio 100,000,000 100,000,000 Loomis Sayles High Yield Bond Portfolio 100,000,000 100,000,000 T. Rowe Price Large Cap Growth Portfolio 100,000,000 100,000,000 Harris Oakmark Large Cap Value Portfolio 100,000,000 100,000,000 Neuberger Berman Partners Mid Cap Value Portfolio 100,000,000 100,000,000 Lehman Brothers Aggregate Bond Index Portfolio 100,000,000 100,000,000 Russell 2000 Index Portfolio 100,000,000 100,000,000 Morgan Stanley EAFE Index Portfolio 100,000,000 100,000,000 State Street Research Aurora Small Cap Value Portfolio -- 100,000,000 Putnam Large Cap Growth Portfolio -- 100,000,000 MetLife Mid Cap Stock Index Portfolio -- 100,000,000 Unclassified 800,000,000 500,000,000 ------------- ------------- Total 3,000,000,000 3,000,000,000
The holders of each share of stock of the Corporation shall be entitled to one vote for each full share, and a fractional vote for each fractional share of stock, irrespective of the class, then standing in his name on the books of the Corporation. On any matter submitted to a vote of the stockholders, all shares of the Corporation then issued and outstanding and entitled to vote shall be voted in the aggregate and not by class except (1) when otherwise required by law and (2) if the Board of Directors, in its sole discretion, determines that any matter concerns only one or more particular class or classes, it may direct that only holders of that class or those classes may vote on the matter. Except as the Board of Directors may provide in classifying or reclassifying any unissued shares of stock, each class of stock of the Corporation shall have the following powers, preferences or other special rights, and the qualifications, restrictions, and limitations thereof shall be as follows: (1) Except as may be otherwise provided herein, all consideration received by the 2 Corporation for the issue or sale of shares of stock of a particular class, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form, shall constitute assets of that class, as opposed to other classes of the Corporation, subject only to the rights of creditors, and are herein referred to as assets "belonging to" that class. Any assets, income, earnings, profits, and proceeds thereof, funds or payments which are not readily identifiable as belonging to any particular class, shall be allocated by or under the supervision of the Board of Directors to and among any one or more of the classes established and designated from time to time, in such manner and on such basis as the Board of Directors, in its sole discretion, deems fair and equitable. (2) The Board of Directors may from time to time declare and pay dividends or distributions, in stock or in cash, on any or all classes of stock, the amount of such dividends and distributions and the payment of them being wholly in the discretion of the Board of Directors, giving due consideration to the interests of each class and to the interests of the Corporation as a whole. Pursuant to the foregoing: (i) Dividends or distributions on shares of any class of stock shall be paid only out of surplus or other lawfully available assets determined by the Board of Directors as belonging to such class. (ii) Inasmuch as the Corporation intends to qualify as a "regulated open-end investment company" under the Internal Revenue Code of 1986, as amended, or any successor or statute 3 comparable thereto, and regulations promulgated thereunder, and inasmuch as the computation of net income and gains for Federal income tax purposes may vary from the computation thereof on the books of the Corporation, the Board of Directors shall have the power in its discretion to distribute in any fiscal years as dividends, including dividends designated in whole or in part as capital gains distributions, amounts sufficient in the opinion of the Board of Directors, to enable the Corporation to qualify as a regulated investment company and to avoid liability for the Corporation for Federal income tax in respect to that year. In furtherance, and not in limitation of the foregoing, in the event that a class of shares has a net capital loss for a fiscal year, and to the extent that a net capital loss for a fiscal year offsets net capital gains from one or more of the other classes, the amount to be deemed available for distribution to the class or classes with the net capital gain may be reduced by the amount offset. (3) The assets belonging to any class of stock shall be charged with the liabilities in respect to such class, and shall also be charged with its share of the general liabilities of the Corporation in proportion to the net asset value of the respective classes before allocation of general liabilities. However the decision of the Board of Directors as to the amount of assets and liabilities belonging to the Corporation, and their allocation to a given class or classes shall be final and conclusive. 4 (4) In the event of the liquidation of the Corporation the stockholders of each class that has been established and designated shall be entitled to receive, as a class, the excess of the assets belonging to that class over the liabilities belonging to that class. The assets so distributable to the stockholders of any particular class shall be distributed among such stockholders in proportion to the number of shares of that class held by them and recorded on the books of the Corporation. Any assets not readily identifiable as belonging to any particular class shall be allocated by or under the supervision of the Board of Directors to and among any one or more of the classes established and designated, as provided herein. Any such allocation by the Board of Directors shall be conclusive and binding for all purposes. (5) Each holder of shares of capital stock of the Corporation shall be entitled to require the Corporation to redeem all or any part of the shares of capital stock of the Corporation standing in the name of such holder on the books of the Corporation, at the redemption price of such shares as in effect from time to time, subject to the right of the Board of Directors of the Corporation to suspend the right of redemption of shares of capital stock of the Corporation or postpone the time of payment of such redemption price in accordance with provisions of applicable law. The redemption price of shares of capital stock of the Corporation shall be the net asset value thereof as determined by, or pursuant to the discretion of the Board of Directors of the Corporation from time to time in accordance with the provisions of applicable law, less such redemption fee or other charge, if any, as may be fixed by resolution of the Board of Directors of the Corporation. Redemption shall be conditional upon the Corporation having funds legally available therefor. Payment of the redemption price shall be made in cash or by check or current funds, or in assets other than cash, by the 5 Corporation at such time and in such manner as may be determined from time to time by the Board of Directors of the Corporation. (6) The Corporation's shares of stock are issued and sold, and all persons who shall acquire stock of the Corporation shall acquire the same, subject to the condition and understanding that the provisions of the Articles of Incorporation of the Corporation, as from time to time amended, shall be binding upon them. SECOND: The shares aforesaid have been duly classified or reclassified by the Board of Directors pursuant to the authority and power contained in Article V of the Articles of Incorporation of the Corporation. 6 IN WITNESS WHEREOF, METROPOLITAN SERIES FUND, INC. has caused these presents to be signed in its name and on its behalf by its President and Chief Executive Officer and its corporate seal to be hereunto affixed and attested by its Assistant Secretary, on February 7, 2000. METROPOLITAN SERIES FUND, INC. By /s/ Christopher P. Nicholas ------------------------------------- Christopher P. Nicholas President and Chief Operating Officer Attest: /s/ Patricia S. Worthington - --------------------------- Patricia S. Worthington Assistant Secretary THE UNDERSIGNED, President of METROPOLITAN SERIES FUND, INC., who executed on behalf of said Corporation the foregoing Articles Supplementary to the Articles of Incorporation, of which this certificate is made a part, hereby acknowledges, in the name and on behalf of said Corporation, the foregoing Articles Supplementary to the Articles of Incorporation to be the corporate act of said Corporation and further certifies that, to the best of his knowledge, information and belief, the matters and facts set forth therein with respect to the approval thereof are true in all material respects, under the penalties of perjury. /s/ Christopher P. Nicholas ------------------------------ Christopher P. Nicholas 7 EX-99.D(K) 3 FORMS OF AMENDED INVSTMT & SUB INVSTMT MGMT AGRMTS Exhibit (d)(k) PUTNAM INTERNATIONAL STOCK PORTFOLIO AMENDED SUB-INVESTMENT MANAGEMENT AGREEMENT AGREEMENT made this 24th day of January, 2000, and amended May 1, 2000, among Metropolitan Series Fund, Inc., a Maryland corporation (the "Fund"), Metropolitan Life Insurance Company (the "Investment Manager"), a New York corporation, and Putnam Investment Management, Inc., a Massachusetts corporation (the "Sub-Investment Manager"); W I T N E S S E T H : WHEREAS, the Fund is engaged in business as a diversified open-end management investment company and is registered as such under the Investment Company Act of 1940 (the "Investment Company Act"); WHEREAS, the Fund, a series type of investment company, issues separate classes (or series) of stock, each of which represents a separate portfolio of investments; WHEREAS, the Fund is currently comprised of various portfolios, each of which pursues its investment objectives through separate investment policies, and the Fund may add or delete portfolios from time to time; WHEREAS, the Sub-Investment Manager is engaged principally in the business of rendering advisory services and is registered as an investment adviser under the Investment Advisers Act of 1940; and WHEREAS, the Fund has employed the Investment Manager to act as investment manager of the Putnam International Stock Portfolio (formerly known as the 1 Santander International Stock Portfolio) as set forth in the Investment Management Agreement dated April 29, 1991 and amended effective August 1, 1997 relating to the Putnam International Stock Portfolio between the Fund and the Investment Manager (the "Putnam International Stock Portfolio Investment Management Agreement"); and the Fund and the Investment Manager desire to enter into a separate sub-investment management agreement with respect to the Putnam International Stock Portfolio of the Fund with the Sub-Investment Manager; NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained, the Fund, the Investment Manager and the Sub-Investment Manager hereby agree as follows: ARTICLE 1. Duties of the Sub-Investment Manager. ------------------------------------ Subject to the supervision and approval of the Investment Manager and the Fund's Board of Directors, the Sub-Investment Manager will manage the investment and reinvestment of the assets of the Fund's Putnam International Stock Portfolio (the "Portfolio") for the period and on the terms and conditions set forth in this Agreement. In acting as Sub-Investment Manager to the Fund with respect to the Portfolio, the Sub-Investment Manager shall determine which securities shall be purchased, sold or exchanged and what portion of the assets of the Portfolio shall be held in the various securities or other assets in which it may invest, subject always to any restrictions of the Fund's Articles of Incorporation and By-Laws, as amended or supplemented from time to time, the provisions of applicable laws and 2 regulations including the Investment Company Act, and the statements relating to the Portfolio's investment objectives, policies and restrictions as the same are set forth in the prospectus and statement of additional information of the Fund then currently effective under the Securities Act of 1933 (the "Prospectus"). Should the Board of Directors of the Fund or the Investment Manager at any time, however, make any definite determination as to investment policy and notify in writing the Sub-Investment Manager thereof, the Sub-Investment Manager shall be bound by such determination for the period, if any, specified in such notice or until similarly notified in writing that such determination has been revoked. The Sub-Investment Manager shall take, on behalf of the Fund, all actions which it deems necessary to implement the investment policies of the Portfolio, determined as provided above, and in particular to place all orders for the purchase or sale of portfolio securities for the Portfolio with brokers or dealers selected by it. In connection with the selection of such brokers or dealers and the placing of such orders, the Sub-Investment Manager is directed at all times to follow the policies of the Fund set forth in the Prospectus. Nothing herein shall preclude the "bunching" of orders for the sale or purchase of portfolio securities with other Fund portfolios or with other accounts managed by the Sub-Investment Manager. The Sub-Investment Manager shall not favor any account over any other and any purchase or sale orders executed contemporaneously shall be allocated in a manner it deems equitable among the accounts involved and at a price which is approximately averaged. In connection with these services the Sub-Investment Manager will provide investment 3 research as to the Portfolio's investments and conduct a continuous program of evaluation of its assets. The Sub-Investment Manager will have the responsibility to monitor the investments of the Portfolio to the extent necessary for the Sub-Investment Manager to manage the Portfolio in a manner that is consistent with the investment objective and policies of the Portfolio set forth in the Prospectus, as from time to time amended, and communicated in writing to the Sub-Investment Manager, and consistent with applicable law, including, but not limited to, the Investment Company Act and, so far as it is in its power and authority, the rules and regulations thereunder and the applicable provisions of the Internal Revenue Code and the rules and regulations thereunder (including, without limitation, subchapter M of the Code and the investment diversification aspects of Section 817(h) of the Code). The Investment Manager acknowledges and agrees that the Sub-Investment Manager's compliance with such obligations with respect to the Code will be based, in part, on information supplied by the Investment Manager or its agents as to the Portfolio, such as Portfolio security lot gain/loss allocation. The Sub-Investment Manager shall have no responsibility for any losses due to inaccurate or untimely information supplied by the Investment Manager. The Sub-Investment Manager shall not be responsible for the administrative affairs of the Fund including, but not limited to, accounting and pricing the Portfolio except as specifically agreed to herein. The Sub-Investment Manager will furnish the Investment Manager and the Fund such statistical information, including prices of securities in situations where a fair valuation determination is required or when a security cannot be priced by the Fund's accountants due to a lack of market or broker quotations, with respect to the investments 4 it makes for the Portfolio as the Investment Manager and the Fund may reasonably request. On its own initiative, the Sub-Investment Manager will apprise the Investment Manager and the Fund of important developments materially affecting the Portfolio, including but not limited to any change in the personnel of the Sub-Investment Manager responsible for the day to day investment decisions made by the Sub-Investment Manager for the Portfolio and any material legal proceedings against the Sub-Investment Manager by the Securities and Exchange Commission relating to violations of the federal securities laws by the Sub-Investment Manager, and will furnish the Investment Manager and the Fund from time to time with similar material information that is believed appropriate for this purpose. In addition, the Sub-Investment Manager will furnish the Investment Manager and the Fund's Board of Directors such periodic and special reports as either of them may reasonably request. The Sub-Investment Manager will exercise its best judgment in rendering the services provided for in this Article 1, and the Fund and the Investment Manager agree, as an inducement to the Sub-Investment Manager's undertaking so to do, that the Sub-Investment Manager will not be liable under this Agreement for any mistake of judgment or in any other event whatsoever, except as hereinafter provided. The Sub-Investment Manager shall for all purposes herein be deemed to be an independent contractor and shall, unless otherwise provided or authorized, have no authority to act for or represent the Fund or the Investment Manager in any way or otherwise be deemed an agent of the Fund or the Investment Manager other than in furtherance of its duties and responsibilities as set forth in this Agreement. Notwithstanding any other provision of this Agreement, the Fund, the Investment 5 Manager and the Sub-Investment Manager may agree to the employment of a Sub-Sub-Investment Manager to the Fund for the purpose of providing investment management services with respect to the Portfolio, provided that the compensation to be paid to such Sub-Sub-Investment Manager shall be the sole responsibility of the Sub-Investment Manager and the duties and responsibilities of the Sub-Sub-Investment Manager shall be as set forth in a sub-sub-investment management agreement among the Investment Manager, the Sub-Investment Manager, the Sub-Sub-Investment Manager and the Fund on behalf of the Portfolio. ARTICLE 2. Sub-Investment Management Fee. ----------------------------- The payment of advisory fees and the allocation of charges and expenses between the Fund and the Investment Manager with respect to the Portfolio are set forth in the Putnam International Stock Portfolio Investment Management Agreement. Nothing in this Putnam International Stock Portfolio Sub-Investment Management Agreement shall change or affect that arrangement. The payment of advisory fees and the apportionment of any expenses related to the services of the Sub-Investment Manager under this Agreement shall be the sole concern of the Investment Manager and the Sub-Investment Manager and shall not be the responsibility of the Fund. In consideration of services rendered pursuant to this Agreement, the Investment Manager will pay the Sub-Investment Manager on the first business day of each month the fee at the annual rate specified by the schedule of fees in the Appendix to this Agreement. The fee 6 for any period from the date the Portfolio commences operations to the end of the month will be prorated according to the proportion which the period bears to the full month, and, upon any termination of this Agreement before the end of any month, the fee for the part of the month during which the Sub-Investment Manager acted under this Agreement will be prorated according to the proportion which the period bears to the full month and will be payable upon the date of termination of this Agreement. For the purpose of determining the fees payable to the Sub-Investment Manager, the value of the Portfolio's net assets will be computed in the manner specified in the Fund's Prospectus. The Sub-Investment Manager will bear all of its own expenses (such as research costs) in connection with the performance of its duties under this Agreement except for those which the Investment Manager agrees to pay. Other Matters. ------------- The Sub-Investment Manager may from time to time employ or associate with itself any person or persons believed to be particularly fitted to assist in its performance of services under this Agreement. The compensation of any such persons will be paid by the Sub-Investment Manager, and no obligation will be incurred by, or on behalf of, the Fund or the Investment Manager with respect to them. The Fund and the Investment Manager understand that the Sub-Investment Manager now acts and will continue to act as investment manager to various investment companies and fiduciary or other managed accounts, and the Fund and the Investment Manager have no objection to the Sub-Investment Manager's so acting. In addition, the Fund understands that 7 the persons employed by the Sub-Investment Manager to assist in the performance of the Sub-Investment Manager's duties hereunder will not devote their full time to such service, and nothing herein contained shall be deemed to limit or restrict the Sub-Investment Manager's right or the right of any of the Sub-Investment Manager's affiliates to engage in and devote time and attention to other businesses or to render other services of whatever kind or nature. The Sub-Investment Manager agrees that, to the extent required by the Investment Company Act, all books and records which it maintains for the Fund are the Fund's property. The Sub-Investment Manager also agrees upon request of the Investment Manager or the Fund, promptly to surrender the books and records to the requester or make the books and records available for inspection by representatives of regulatory authorities. The Sub-Investment Manager further agrees to maintain and preserve the Fund's books and records in accordance with the Investment Company Act and rules thereunder. The Sub-Investment Manager will not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which this Agreement relates, except for a loss resulting from willful misfeasance, bad faith or gross negligence of the Sub-Investment Manager in the performance of its duties or from reckless disregard of its obligations and duties under this Agreement. The Investment Manager has herewith furnished the Sub-Investment Manager copies of the Fund's Prospectus, Articles of Incorporation and By-Laws as currently in effect and agrees during the continuance of this Agreement to furnish the Sub-Investment Manager copies of any amendments or 8 supplements thereto before or at the time the amendments or supplements become effective. The Sub-Investment Manager will be entitled to rely on all documents furnished to it by the Investment Manager or the Fund. The Investment Manager may use (and shall cause all of its affiliates, including the Fund, to use, the names "Putnam Investment Management, Inc.", "Putnam Investment Management", "Putnam Investments" or "Putnam" or any derivation thereof only for so long as this Agreement or any extension, renewal or amendment remains in effect. At such times as this Agreement shall no longer be in effect, the Investment Manager shall cease to use (and shall cause its affiliates to cease using) any name using any of the foregoing terms or any other name indicating that the Portfolio is advised by or otherwise connected with the Sub-Investment Manager. The Investment Manager acknowledges that the Fund has included the name "Putnam" in the Portfolio through permission of the Sub-Investment Manager and the Sub-Investment Manager retains all rights to such name. The Investment Manager will not, and will cause its affiliates to not, refer to or describe the Sub-Investment Manager in any prospectus, proxy statement, sales literature or other material except with the written permission of the Sub-Investment Manager, which permission shall not unreasonably be withheld. ARTICLE 3. Duration and Termination of this Agreement. ------------------------------------------ This Agreement shall become effective as of the date first above written and shall remain in force until May 16, 2001 and thereafter shall continue in effect, but only so long as such continuance is specifically approved at least annually by (i) the Board of Directors of the 9 Fund, or by the vote of a majority of the outstanding shares of the Portfolio, and (ii) a majority of those directors who are not parties to this Agreement or interested persons of any such party cast in person at a meeting called for the purpose of voting on such approval. This Agreement may be terminated with respect to the Portfolio at any time, without the payment of any penalty, by the Board of Directors of the Fund, or by vote of a majority of the outstanding shares of the Portfolio, on sixty days' written notice to the Investment Manager and Sub-Investment Manager, or by the Investment Manager on thirty days' written notice to the Sub-Investment Manager and the Fund, or by the Sub-Investment Manager on sixty days' written notice to the Investment Manager and the Fund. This Agreement shall automatically terminate in the event of its assignment or in the event of the termination of the Putnam International Stock Portfolio Investment Management Agreement. ARTICLE 4. Definitions. ----------- The terms "assignment," "interested person," and "majority of the outstanding shares," when used in this Agreement, shall have the respective meanings specified under the Investment Company Act. ARTICLE 5. Amendments of this Agreement. ---------------------------- This Agreement may be amended by the parties only if such amendment is specifically approved by (i) the Board of Directors of the Fund, to the extent permitted by the Investment Company Act, or by the vote of a majority of the outstanding shares of the 10 Portfolio, and (ii) by the vote of a majority of those directors of the Fund who are not parties to this Agreement or interested persons of any such party cast in person at a meeting called for the purpose of voting on such approval. ARTICLE 6. Governing Law. ------------- The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of New York as at the time in effect and the applicable provisions of the Investment Company Act. To the extent that the applicable law of the State of New York, or any of the provisions herein, conflict with the applicable provisions of the Investment Company Act, the latter shall control. ARTICLE 7. Notices. ------- Notices to be given hereunder shall be addressed to: Fund: Christopher P. Nicholas President and Chief Operating Officer Metropolitan Series Fund, Inc. One Madison Avenue, Area 6E New York, New York 10010 Investment Manager: Gary A. Beller, Esq. Senior Executive Vice-President and General Counsel Metropolitan Life Insurance Company One Madison Avenue, Area 11G New York, New York 10010 Sub-Investment Manager: Putnam Investment Management, Inc. One Post Office Square Boston, Massachusetts 02109 11 Attention: Eric S. Levy Changes in the foregoing notice provisions may be made by notice in writing to the other parties at the addresses set forth above. Notice shall be effective upon delivery. 12 METROPOLITAN SERIES FUND, INC. By ___________________________ Attest: - ----------------- METROPOLITAN LIFE INSURANCE COMPANY By ____________________________ Attest: - ---------------------- PUTNAM INVESTMENT MANAGEMENT, INC. By ____________________________ Attest: - -------------------- 13 Appendix PUTNAM INVESTMENT MANAGEMENT, INC. Metropolitan Series Fund Fee Schedule ------------------------------------- Putnam International Stock Portfolio ------------------------------------ 1st $150M .65% next $150M .55% above $300M .45% of the average daily value of the net assets of the Portfolio 14 PUTNAM INTERNATIONAL STOCK PORTFOLIO AMENDED INVESTMENT MANAGEMENT AGREEMENT AGREEMENT made this 29th day of April, 1991, and amended effective the 1st day of May 2000, by and between Metropolitan Series Fund, Inc., a Maryland corporation (the "Fund"), and Metropolitan Life Insurance Company, a New York corporation (the "Investment Manager"); W I T N E S S E T H: WHEREAS, the Fund is engaged in business as a diversified open-end management investment company and is registered as such under the Investment Company Act of 1940 (the "Investment Company Act"); WHEREAS, the Fund, a series type of investment company, issues separate classes (or series) of stock, each of which represents a separate portfolio of investments; WHEREAS, the Fund is currently comprised of various portfolios, each of which pursues its investment objectives through separate investment policies, and the Fund may add or delete portfolios from time to time; WHEREAS, the Investment Manager is engaged principally in the business of insurance and also in rendering advisory services and is registered as an investment adviser under the Investment Advisers Act of 1940; WHEREAS, the Investment Manager currently provides investment management and corporate administrative services to each of the Portfolios pursuant to separate investment management agreements between the Fund and the Investment Manager; and WHEREAS, the Fund desires to enter into a separate investment management agreement with respect to the Putnam International Stock Portfolio of the Fund with the Investment Manager; NOW THEREFORE, in consideration of the premises and the covenants hereinafter contained, the Fund and the Investment Manager hereby agree as follows: ARTICLE 1. Duties of the Investment Manager. -------------------------------- The Fund hereby employs the Investment Manager to act as the investment adviser to and investment manager of Putnam International Stock Portfolio (the "Portfolio") and to manage the investment and reinvestment of the assets of the Portfolio and to administer its affairs, subject to the supervision of the Board of Directors of the Fund, for the period and on the terms and conditions set forth in this Agreement. The Investment Manager hereby accepts such employment and agrees during such period, at its own expense, to render the services and to assume the obligations herein set forth for the compensation provided for herein. The Investment Manager shall for all purposes herein be deemed to be an independent contractor and shall, unless otherwise provided or authorized, have no authority to act for or represent the Fund in any way or otherwise be deemed an agent of the Fund other than in furtherance of its duties and responsibilities as set forth in this Agreement. (a) Investment Management Services. In acting as investment manager ------------------------------ to the Portfolio, the Investment Manager shall regularly provide the Portfolio with such investment research, advice and management as the Fund may from time to time consider necessary for the proper management of the Portfolio and shall furnish continuously an investment program and shall determine which securities shall be purchased, sold or exchanged and what portion of the assets of the Portfolio shall be held in the various securities or other assets, subject always to any restrictions of the Fund's Articles of Incorporation and By-Laws, as amended or supplemented from time to time, the provisions of applicable laws and regulations including the Investment Company Act, and the statements relating to the Portfolio's investment objectives, policies and restrictions as the same are set forth in the prospectus of the Fund then-currently effective under the Securities Act of 1933 (the "Prospectus"). Should the Board of Directors of the Fund at any time, however, make any definite determination as to investment policy and notify the Investment Manager thereof, the Investment Manager shall be bound by such determination for the period, if any, specified in such notice or until similarly notified that such determination has been revoked. The Investment Manager shall take, on behalf of the Fund, all actions which it deems necessary to implement the investment policies of the Portfolio, determined as provided above, and in particular to place all orders for the purchase or sale of portfolio securities for the Portfolio with brokers or dealers selected by the Investment Manager. In connection with the selection of such brokers or dealers and the placing of such orders, the Investment Manager is directed at all times to follow the policies of the Fund as set forth in the Prospectus. Nothing herein shall preclude the "bunching" of orders for the sale or purchase of portfolio securities with the other Portfolios or with other accounts managed by the Investment Manager or the Investment Manager's general account and separate accounts. The Investment Manager shall not favor any account over any other and any purchase or sale orders executed contemporaneously shall be allocated in a manner it deems equitable among the accounts involved and at a price which is approximately averaged. (b) Administrative Services. In addition to the performance of ----------------------- investment advisory services, the Investment Manager shall perform administrative services in connection with the management of the Portfolio. In this connection, the Investment Manager agrees (i) to assist in managing all aspects of the Fund's operations relating to the Portfolio, including the coordination of all matters relating to the functions of the custodian, transfer agent, other shareholder service agents, accountants, attorneys and other parties performing services or operational functions for the Fund, (ii) to provide the Fund, at the Investment Manager's expense, with services of persons competent to perform such professional, administrative and clerical functions as are necessary in order to provide effective administration of the Portfolio, including duties in connection with shareholder relations, reports, redemption requests and account adjustments and the maintenance of the books and records required of the Fund, and (iii) to provide the Fund, at the Investment Manager's expense, with adequate office space and related services necessary for its operations as contemplated in this Agreement. In performing such administrative services, the Investment Manager shall comply with all provisions of the Fund's Articles of Incorporation and By-Laws, with all laws and regulations to which the Fund may be subject and with all directions of the Fund's Board of Directors. The Investment Manager shall supply the Board of Directors and officers of the Fund with all statistical information regarding investments which is reasonably required by them and reasonably available to the Investment Manager. (c) Sub-Investment Manager. Notwithstanding any other provision of ---------------------- this Agreement, the Fund and the Investment Manager may agree to the employment of a Sub-Investment Manager to the Fund for the purpose of providing investment management services with respect to the Portfolio, provided that the compensation to be paid to such Sub-Investment Manager shall be the sole responsibility of the Investment Manager and the duties and responsibilities of the Sub-Investment Manager shall be as set forth in a sub-investment management agreement among the Investment Manager, the Sub-Investment Manager and the Fund on behalf of the Portfolio. ARTICLE 2. Allocation of Charges and Expenses. ---------------------------------- (a) The Investment Manager. In addition to the compensation paid to ---------------------- any Sub-Investment Manager as set forth in Article 1 above, the Investment Manager shall pay the organization costs of the Fund relating to the Portfolio. The Investment Manager also assumes expenses of the Fund relating to maintaining the staff and personnel, and providing the equipment, office space and facilities, necessary to perform its obligations under this Agreement. (b) The Fund. The Fund assumes and shall pay (or cause to be paid) -------- all other Fund expenses, including but not limited to the following expenses: the fee referred to in Article 3 below; interest and any other costs related to borrowings by the Fund attributable to the Portfolio; taxes payable by the Fund and attributable to the Portfolio; brokerage costs and other direct costs of effecting portfolio transactions (including any costs directly related to the acquisition, disposition, lending or borrowing of portfolio investments) on behalf of the Portfolio; the compensation of the directors and officers of the Fund who are not actively employed by the Investment Manager; custodian, registration and transfer agent fees; fees of outside counsel to and of independent auditors of the Fund selected by the Board of Directors; expenses of printing and mailing to existing shareholders of registration statements, prospectuses, reports, notices and proxy solicitation materials of the Fund; all other expenses incidental to holding meetings of the Fund's shareholders; insurance premiums for fidelity coverage and errors and omissions insurance; and extraordinary or non-recurring expenses (such as legal claims and liabilities and litigation costs and any indemnification related thereto) attributable to the Portfolio. The Fund shall allocate the appropriate portion of the foregoing expenses to the Portfolio. All expenses of any activity which is primarily intended to result in the sale of the Fund's shares, and certain other expenses as detailed in the Fund's Distribution Agreement with Metropolitan Life Insurance Company, are assumed by the distributor of the Fund's shares. ARTICLE 3. Compensation of the Investment Manager. -------------------------------------- For the services rendered, the facilities furnished and expenses assumed by the Investment Manager, the Fund shall pay to the Investment Manager at the end of each calendar month a fee which shall accrue daily at the annual rate specified by the schedule of fees in the Appendix to this Agreement. The average daily value of the net assets of the Portfolio shall be determined and computed in accordance with the description of the method of determination of net asset value contained in the Prospectus. ARTICLE 4. Limitation of Liability of the Investment Manager. ------------------------------------------------- (a) In the performance of advisory services as provided in Article 1(a), the Investment Manager shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with any investment policy or the purchase, sale or redemption of any securities on the recommendation of the Investment Manager. Nothing herein contained shall be construed to protect the Investment Manager against any liability to the Fund or its shareholders to which the Investment Manager shall otherwise be subject by reason of willful misfeasance, bad faith, gross negligence in the performance of its duties on behalf of the Fund, reckless disregard of the Investment Manager's obligations and duties under this Agreement or the violation of any applicable law. (b) In the performance of administrative services as provided in Article 1(b) and which the Investment Manager is obligated to perform hereunder, the Investment Manager shall be liable to the Fund or its shareholders for any willful or negligent act or omission in the performance of such administrative services. ARTICLE 5. Activities of the Investment Manager. ------------------------------------ The services of the Investment Manager under this Agreement are not to be deemed exclusive, and the Investment Manager shall be free to render similar services to others so long as its services hereunder are not impaired thereby. It is understood that directors, officers, employees and shareholders of the Fund are or may become interested in the Investment Manager, as directors, officers, employees or policyholders or otherwise and that directors, officers, employees or policyholders of the Investment Manager are or may become similarly interested in the Fund, and that the Investment Manager is or may become interested in the Fund as shareholder or otherwise. ARTICLE 6. Duration and Termination of this Agreement. ------------------------------------------ This Agreement shall become effective as of the date first above written and shall remain in force until May 16, 1998 and thereafter shall continue in effect, but only so long as such continuance is specifically approved at least annually by (i) the Board of Directors of the Fund, or by the vote of a majority of the outstanding shares of the Portfolio, and (ii) a majority of those directors who are not parties to this Agreement or interested persons of any such party cast in person at a meeting called for the purpose of voting on such approval. This Agreement may be terminated with respect to the Portfolio at any time, without the payment of any penalty, by the Board of Directors of the Fund, or by vote of a majority of the outstanding shares of the Portfolio, on sixty days' written notice to the Investment Manager, or by the Investment Manager on sixty days' written notice to the Fund. This Agreement shall automatically terminate in the event of its assignment. ARTICLE 7. Definitions. ----------- The terms "assignment," "interested person," and "majority of the outstanding shares," when used in this Agreement, shall have the respective meanings specified under the Investment Company Act. ARTICLE 8. Amendments of this Agreement. ---------------------------- This Agreement may be amended by the parties only if such amendment is specifically approved by (i) the Board of Directors of the Fund, to the extent permitted by the Investment Company Act, or by the vote of a majority of the outstanding shares of the Portfolio, and (ii) by the vote of a majority of those directors of the Fund who are not parties to this Agreement or interested persons of any such party cast in person at a meeting called for the purpose of voting on such approval. ARTICLE 9. Governing Law. ------------- The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of New York as at the time in effect and the applicable provisions of the Investment Company Act. To the extent that the applicable law of the State of New York, or any of the provisions herein, conflict with the applicable provisions of the Investment Company Act, the latter shall control. METROPOLITAN SERIES FUND, INC. By____________________________ President Attest: ____________________________ Assistant Secretary METROPOLITAN LIFE INSURANCE COMPANY By_______________________________ Senior Executive Vice-President Attest: ____________________________ Assistant Secretary Appendix -------- Metropolitan Series Fund Fee Schedule ------------------------------------- Putnam International Stock Portfolio ------------------------------------ 1st $500M .90% next $500M .85% above $1,000M .80% of the average daily value of the net assets of the Portfolio. EX-99.D(L) 4 AMENDED SUB INVESTMENT MGMT AGREEMENT Exhibit (d)(l) HARRIS OAKMARK LARGE CAP VALUE PORTFOLIO AMENDED SUB-INVESTMENT MANAGEMENT AGREEMENT AGREEMENT made this 9th day of November, 1998, and amended May 1, 2000, among Metropolitan Series Fund, Inc., a Maryland corporation (the "Fund"), Metropolitan Life Insurance Company (the "Investment Manager"), a New York corporation, and Harris Associates L.P., a Delaware limited partnership (the "Sub-Investment Manager"); W I T N E S S E T H : WHEREAS, the Fund is engaged in business as a diversified open-end management investment company and is registered as such under the Investment Company Act of 1940 (the "Investment Company Act"); WHEREAS, the Fund, a series type of investment company, issues separate classes (or series) of stock, each of which represents a separate portfolio of investments; WHEREAS, the Fund is currently comprised of various portfolios, each of which pursues its investment objectives through separate investment policies, and the Fund may add or delete portfolios from time to time; WHEREAS, the Sub-Investment Manager is engaged principally in the business of rendering advisory services and is registered as an investment adviser under the Investment Advisers Act of 1940; and WHEREAS, the Fund has employed the Investment Manager to act as investment manager of the Harris Oakmark Large Cap Value Portfolio as set forth in the Harris Oakmark Large Cap Value Portfolio Investment Management Agreement dated October 30, 1998 between the Fund and the Investment Manager (the "Harris Oakmark Large Cap Value Portfolio Investment Management Agreement"); and the Fund and the Investment Manager desire to enter into a separate sub-investment management agreement with respect to the Harris Oakmark Large Cap Value Portfolio of the Fund with the Sub-Investment Manager; NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained, the Fund, the Investment Manager and the Sub-Investment Manager hereby agree as follows: ARTICLE 1 Duties of the Sub-Investment Manager ------------------------------------ Subject to the supervision and approval of the Investment Manager and the Fund's Board of Directors, the Sub-Investment Manager will manage the investment and reinvestment of the assets of the Fund's Harris Oakmark Large Cap Value Portfolio (the "Portfolio") for the period and on the terms and conditions set forth in this Agreement. In acting as Sub-Investment Manager to the Fund with respect to the Portfolio, the Sub-Investment Manager shall determine which securities shall be purchased, sold or exchanged and what portion of the assets of the Portfolio shall be held in the various securities or other assets in which it may invest, subject always to any restrictions of the Fund's Articles of Incorporation and By-Laws, as amended or supplemented from time to time, the provisions of applicable laws and regulations including the Investment Company Act, and the statements relating to the Portfolio's investment objectives, policies and restrictions as the same are set forth in the prospectus and statement of additional information of the Fund then currently effective under the Securities Act of 1933 (the "Prospectus") and provided to Sub-Investment Manager in writing. Should the Board of Directors of the Fund or the Investment Manager at any time, however, make any definite 2 determination as to investment policy and notify in writing the Sub-Investment Manager thereof, the Sub-Investment Manager shall be bound by such determination for the period, if any, specified in such notice or until similarly notified in writing that such determination has been revoked. The Sub-Investment Manager shall take, on behalf of the Fund, all actions which it deems necessary to implement the investment policies of the Portfolio, determined as provided above, and in particular to place all orders for the purchase or sale of portfolio securities for the Portfolio with brokers or dealers selected by it. In connection with the selection of such brokers or dealers and the placing of such orders, the Sub-Investment Manager is directed at all times to follow the policies of the Fund set forth in the Prospectus. Nothing herein shall preclude the "bunching" of orders for the sale or purchase of portfolio securities with other Fund portfolios or with other accounts managed by the Sub-Investment Manager. The Sub-Investment Manager shall not favor any account over any other and any purchase or sale orders executed contemporaneously shall be allocated in a manner it deems equitable among the accounts involved and, to the extent operationally feasible, at a price which is approximately averaged. In connection with these services the Sub-Investment Manager will provide investment research as to the Portfolio's investments and conduct a continuous program of evaluation of its assets. The Sub-Investment Manager will have the responsibility to monitor the investments of the Portfolio to the extent necessary for the Sub-Investment Manager to manage the Portfolio in a manner that is consistent with the investment objective and policies of the Portfolio set forth in the Registration Statement of the Fund, as from time to time amended, and communicated in 3 writing to the Sub-Investment Manager, and consistent with applicable law, including, but not limited to, the Investment Company Act and the rules and regulations thereunder and the applicable provisions of the Internal Revenue Code and the rules and regulations thereunder (including, without limitation, subchapter M of the Code and the investment diversification aspects of Section 817(h) of the Code). The Sub-Investment Manager will furnish the Investment Manager and the Fund such statistical information, including prices of securities in situations where a fair valuation determination is required or when a security cannot be priced by the Fund's accountants, with respect to the investments it makes for the Portfolio as the Investment Manager and the Fund may reasonably request. On its own initiative, the Sub-Investment Manager will apprise the Investment Manager and the Fund of important developments materially affecting the Portfolio, including but not limited to any change in the personnel of the Sub-Investment Manager responsible for the day to day investment decisions made by the Sub-Investment Manager for the Portfolio and any material legal proceedings against the Sub-Investment Manager by the Securities and Exchange Commission relating to violations of the federal securities laws by the Sub-Investment Manager, and will furnish the Investment Manager and the Fund from time to time with similar material information that is believed appropriate for this purpose. In addition, the Sub-Investment Manager will furnish the Investment Manager and the Fund's Board of Directors such periodic and special reports as either of them may reasonably request. The Sub-Investment Manager will exercise its best judgment in rendering the services provided for in this Article 1, and the Fund and the Investment Manager agree, as an inducement 4 to the Sub-Investment Manager's undertaking so to do, that the Sub-Investment Manager will not be liable under this Agreement for any mistake of judgment or in any other event whatsoever, except as hereinafter provided. The Sub-Investment Manager shall for all purposes herein be deemed to be an independent contractor and shall, unless otherwise provided or authorized, have no authority to act for or represent the Fund or the Investment Manager in any way or otherwise be deemed an agent of the Fund or the Investment Manager other than in furtherance of its duties and responsibilities as set forth in this Agreement. ARTICLE 2 Sub-Investment Management Fee ----------------------------- The payment of advisory fees and the allocation of charges and expenses between the Fund and the Investment Manager with respect to the Portfolio are set forth in the Harris Oakmark Large Cap Value Portfolio Investment Management Agreement. Nothing in this Harris Oakmark Large Cap Value Portfolio Sub-Investment Management Agreement shall change or affect that arrangement. The payment of advisory fees and the apportionment of any expenses related to the services of the Sub-Investment Manager under this Agreement shall be the sole concern of the Investment Manager and the Sub-Investment Manager and shall not be the responsibility of the Fund. In consideration of services rendered pursuant to this Agreement, the Investment Manager will pay the Sub-Investment Manager on the first business day of each month the fee at the annual rate specified by the schedule of fees in the Appendix to this Agreement. The fee for any period from the date the Portfolio commences operations to the end of the month will be 5 prorated according to the proportion which the period bears to the full month, and, upon any termination of this Agreement before the end of any month, the fee for the part of the month during which the Sub-Investment Manager acted under this Agreement will be prorated according to the proportion which the period bears to the full month and will be payable upon the date of termination of this Agreement. For the purpose of determining the fees payable to the Sub-Investment Manager, the value of the Portfolio's net assets will be computed in the manner specified in the Fund's Prospectus. The Sub-Investment Manager will bear all of its own expenses (such as research costs) in connection with the performance of its duties under this Agreement except for those which the Investment Manager agrees to pay. The Sub-Investment Manager agrees to notify promptly, upon written request, the Investment Manager if, for any other registered investment company having a substantially similar investment program, it agrees to (1) provide more services or bear more expenses for a comparable or lower fee; and (2) provide comparable services and bear comparable expenses for a lower fee. Other Matters ------------- The Sub-Investment Manager may from time to time employ or associate with itself any person or persons believed to be particularly fitted to assist in its performance of services under this Agreement. The compensation of any such persons will be paid by the Sub-Investment Manager, and no obligation will be incurred by, or on behalf of, the Fund or the Investment Manager with respect to them. 6 The Fund and the Investment Manager understand that the Sub-Investment Manager now acts and will continue to act as investment manager to various investment companies and fiduciary or other managed accounts, and the Fund and the Investment Manager have no objection to the Sub-Investment Manager's so acting. In addition, the Fund understands that the persons employed by the Sub-Investment Manager to assist in the performance of the Sub-Investment Manager's duties hereunder will not devote their full time to such service, and nothing herein contained shall be deemed to limit or restrict the Sub-Investment Manager's right or the right of any of the Sub-Investment Manager's affiliates to engage in and devote time and attention to other businesses or to render other services of whatever kind or nature. The Sub-Investment Manager agrees that all books and records which it maintains for the Fund are the Fund's property as well as the Sub-Investment Manager's. The Sub-Investment Manager also agrees upon request of the Investment Manager or the Fund, promptly to surrender copies of the books and records to the requester or make the books and records available for inspection by representatives of regulatory authorities. The Sub-Investment Manager further agrees to maintain and preserve the Fund's books and records in accordance with the Investment Company Act and rules thereunder. The Sub-Investment Manager will not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which this Agreement relates, except for a loss resulting from willful misfeasance, bad faith or gross negligence of the Sub-Investment Manager in the performance of its duties or from reckless disregard of its obligations and duties under this Agreement. 7 The Investment Manager has herewith furnished the Sub-Investment Manager copies of the Fund's Registration Statement, Articles of Incorporation and By-Laws as currently in effect and agrees during the continuance of this Agreement to furnish the Sub-Investment Manager copies of any amendments or supplements thereto before or at the time the amendments or supplements become effective. The Sub-Investment Manager will be entitled to rely on all documents furnished to it by the Investment Manager or the Fund. ARTICLE 3 Duration and Termination of this Agreement ------------------------------------------ This Agreement shall become effective as of the date first above written and shall remain in force until May 16, 1999 and thereafter shall continue in effect, but only so long as such continuance is specifically approved at least annually by (i) the Board of Directors of the Fund, or by the vote of a majority of the outstanding shares of the Portfolio, and (ii) a majority of those directors who are not parties to this Agreement or interested persons of any such party cast in person at a meeting called for the purpose of voting on such approval. This Agreement may be terminated with respect to the Portfolio at any time, without the payment of any penalty, by the Board of Directors of the Fund, or by vote of a majority of the outstanding shares of the Portfolio, on sixty days' written notice to the Investment Manager and Sub-Investment Manager, by the Investment Manager on thirty days' written notice to the Sub-Investment Manager and the Fund, or by the Sub-Investment Manager on sixty days' written notice to the Investment Manager and the Fund. This Agreement shall automatically terminate in the event of its assignment or in the event of the termination of the Harris Oakmark Large Cap 8 Value Portfolio Investment Management Agreement. ARTICLE 4 Definitions ----------- The terms "assignment," "interested person," and "majority of the outstanding shares," when used in this Agreement, shall have the respective meanings specified under the Investment Company Act. ARTICLE 5 Amendments of this Agreement ---------------------------- This Agreement may be amended by the parties only if such amendment is specifically approved by (i) the Board of Directors of the Fund, to the extent permitted by the Investment Company Act, or by the vote of a majority of the outstanding shares of the Portfolio, and (ii) by the vote of a majority of those directors of the Fund who are not parties to this Agreement or interested persons of any such party cast in person at a meeting called for the purpose of voting on such approval. ARTICLE 6 Governing Law ------------- The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of New York as at the time in effect and the applicable provisions of the Investment Company Act. To the extent that the applicable law of the State of New York, or any of the provisions herein, conflict with the applicable provisions of the Investment Company Act, the latter shall control. 9 ARTICLE 7 Notices ------- Notices to be given hereunder shall be addressed to: Fund: Christopher P. Nicholas President and Chief Operating Officer Metropolitan Series Fund, Inc. One Madison Avenue, Area 7G New York, New York 10010 Investment Manager: Gary A. Beller, Esq. Senior Executive Vice-President and General Counsel Metropolitan Life Insurance Company One Madison Avenue, Area 11G New York, New York 10010 Sub-Investment Manager: Robert J. Sanborn, CFA Partner and Portfolio Manager Anita Nagler Partner and General Counsel Harris Associates L.P. Two North LaSalle Street Chicago, Illinois 60602-3790 Changes in the foregoing notice provisions may be made by notice in writing to the other parties and the addresses set forth above. Notice shall be effective upon delivery. 10 METROPOLITAN SERIES FUND, INC. By: _______________________________ Christopher P. Nicholas Attest: - ----------------------- Patricia S. Worthington METROPOLITAN LIFE INSURANCE COMPANY By: _______________________________ Gary A. Beller Attest: - ----------------------- Cheryl D. Martino HARRIS ASSOCIATES L.P. By: _______________________________ Attest: - ----------------------- 11 APPENDIX -------- HARRIS ASSOCIATES L.P. ---------------------- Metropolitan Series Fund Fee Schedule ------------------------------------- Harris Oakmark Large Cap Value Portfolio ---------------------------------------- 0.450% on the first $100MM 0.400% on the next $400MM 0.350% thereafter of the average daily value of the net assets of the Portfolio 12 EX-99.H(D) 5 LICENSING AGREEMENT-METLIFE STOCK INDEX & MID CAP Exhibit (h)(d) AGREEMENT --------- AGREEMENT, dated as January 1, 2000 (the "Commencement Date"), by and between The McGraw-Hill Companies, Inc., a New York corporation, having an office at 1221 Avenue of the Americas, New York, New York, 10016, on behalf of its division known as STANDARD & POOR'S ("S&P") having an office at 55 Water Street, New York, NY, 10041 and METROPOLITAN LIFE INSURANCE COMPANY, and its affiliates and subsidiaries (collectively referred to as "Licensee"), a New York corporation, having an office at One Madison Avenue, New York, NY 10010-3690. WHEREAS, S&P compiles, calculates, maintains, and claims to own certain rights in and to the S&P 500 Composite Stock Price Index and to the proprietary data therein contained that it claims to be proprietary (such rights being hereinafter individually and collectively referred to as the "S&P 500 Index"); and WHEREAS, S&P uses in commerce and has trade name and trademark rights to the designations "Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's 500", and "500", in connection with the S&P 500 Index (such rights being hereinafter individually and collectively referred to as the "S&P Marks"); and WHEREAS, Licensee wishes to use the S&P 500 Index as the basis of the product or products described in Exhibit A attached hereto and made a part hereof (individually and collectively referred to as the "Product"); and WHEREAS, Licensee wishes to use the S&P Marks in connection with references to the S&P 500 Index in order to identify the nature and components of the Product and in connection with making disclosure about the Product under applicable law, rules and regulations in order to indicate that S&P is the source of the S&P 500 Index; and WHEREAS, Licensee disputes and does not agree that it is legally obligated to obtain S&P's authorization to use the S&P 500 Index in connection with the Product but nevertheless, to avoid 1 litigation, is willing to enter into an agreement pursuant to the terms and conditions hereinafter set forth; and, WHEREAS, notwithstanding anything to the contrary herein, each party hereto expressly reserves its legal rights with respect to the above-noted disagreement. NOW, THEREFORE, the parties hereto agree as follows: 1. Grant of License. ---------------- (a) Subject to the terms and conditions of this Agreement, S&P hereby grants to Licensee a non-transferable, non-exclusive license (i) to use the S&P 500 Index as the basis of the Product to be created, marketed and/or promoted by Licensee and (ii) to use and refer to the S&P Marks in connection with the creation, distribution, marketing and promotion of the Product for the limited purpose of identifying the nature of the Product and the source of the S&P Index 500 and in connection with making such disclosure about the Product as Licensee deems necessary or desirable under any applicable law, rules, regulations or provisions of this Agreement. It is expressly agreed and understood by Licensee that no rights to use the S&P 500 Index and the S&P Marks are granted hereunder other than those specifically described and expressly granted herein. (b) S&P agrees that no person or entity (other than the Licensee) shall need to obtain a license from S&P with respect to the Product. 2. Term. ---- (a) The term of this Agreement shall commence on the Commencement Date and, unless terminated earlier pursuant to Section 4 hereof, shall continue in effect thereafter for a five-year term (the "Term") until December 31, 2004. (b) At least six (6) months but not more than twelve (12) months prior to the end of the Term, S&P shall give Licensee written notice of its proposed annual fee for renewing the Agreement for an additional period. Licensee may by written notice at least sixty (60) days prior to the expiration date of the Term elect to renew the term of this Agreement under such annual fee proposed by S&P; 2 or, alternatively, may refuse to accept a renewal of the Agreement under the fee proposed, with no prejudice to its legal position. In the event of such refusal by Licensee, or termination of this Agreement by either party pursuant to Section 4 hereof, the parties agree that the fact that they had previously entered into this Agreement shall not be construed to constitute or imply any admission contrary to their respective positions on the issue of whether Licensee is legally required to enter into a license agreement with S&P for the purposes stated in this Agreement. 3. License Fees. ------------ Licensee shall pay to S&P the license fee ("License Fee") specified in Exhibit B attached hereto and made a part hereof. The fee shall be made payable to "Standard & Poor's, a division of The McGraw-Hill Companies, Inc," and shall be payable in full on the Commencement Date and each one-year anniversary thereof. 4. Termination. ----------- (a) In the case of breach of any of the material terms or conditions of this Agreement by either party, the other party may terminate this Agreement by giving ninety (90) days prior written notice of its intent to terminate, and such notice shall be effective on the date specified therein for such termination unless the breaching party shall correct such breach within the notice period. In such event, Licensee shall be entitled to a pro-rata refund of any prepaid License Fees as provided in Subsection 4(e). (b) S&P shall have the right, in its sole discretion, to cease compilation and publication of the S&P 500 Index and, in such event, to terminate this Agreement if S&P does not offer a replacement or substitute index. In the event that S&P intends to discontinue the S&P 500 Index, S&P shall give Licensee at least one (1) year's written notice prior to such discontinuance, which notice shall specify whether a replacement or substitute index will be made available. Licensee shall have the option hereunder within ninety (90) days after receiving such written notice from S&P to notify S&P in writing of its intent to use the replacement or substitute index, if any, under the terms of this Agreement, or to terminate the Agreement. In the event that Licensee does not exercise such option to use the replacement or substitute index, or no substitute or 3 replacement index is made available, this Agreement shall be terminated as of the date specified in the S&P notice and the Licensee shall be entitled to a pro-rata refund of any prepaid License Fees as provided in Subsection 4(e). (c) Licensee may terminate this Agreement upon not more than ninety (90) days prior written notice to S&P if (i) Licensee is informed of the final adoption of any legislation or regulation or the issuance of any interpretation that in Licensee's reasonable judgment materially impairs Licensee's ability to market and/or promote the Product; (ii) any material litigation or regulatory proceeding regarding the Product is threatened or commenced; or (iii) Licensee elects to terminate the public offering or other distribution of the Product, as may be applicable. In such event the Licensee shall be entitled to a pro-rata refund of any prepaid License Fees as provided in Subsection 4(e). (d) S&P may terminate this Agreement upon ninety (90) days (or upon such lesser period of time if required pursuant to a court order) prior written notice to Licensee if (i) S&P is informed of the final adoption of any legislation or regulation or the issuance of any interpretation that in S&P's reasonable judgment materially impairs S&P's ability to license and provide the S&P 500 Index and S&P Marks under this Agreement in connection with such Product; or (ii) any litigation or proceeding is threatened or commenced and S&P reasonably believes that such litigation or proceeding would have a material and adverse effect upon the S&P Marks and/or the S&P 500 Index or upon the ability of S&P to perform under this Agreement. In such event the Licensee shall be entitled to a pro-rata refund of any prepaid License Fees as provided in Subsection 4(e). (e) Since Licensee is paying S&P its License Fees on a prospective basis, in the event of termination of this Agreement as provided in Subsections 4(a), (b), (c), or (d), Licensee shall be entitled to a refund of any prepaid License Fees, which shall be computed by prorating the amount of the applicable License Fees shown in Exhibit B on the basis of the number of elapsed days in the current year of the Agreement, beginning from the Commencement Date or the anniversary thereof and up to the date of termination of the Agreement. 4 (f) Upon termination of this Agreement, Licensee shall no longer possess any rights under this Agreement to use the S&P 500 Index and the S&P Marks in connection with the Product; provided that Licensee may continue to utilize any previously printed materials which contain the S&P Marks for a period of ninety (90) days following such termination. 5. S&P's Obligations. ----------------- (a) It is the policy of S&P to prohibit its employees who are directly responsible for changes in the components of the S&P 500 Index from purchasing or beneficially owning any interest in the Product and S&P believes that its employees comply with such policy. Licensee shall have no responsibility for ensuring that such S&P employees comply with such S&P policy and shall have no duty to inquire whether any investors or sellers of the Product are such S&P employees. S&P shall have no liability to the Licensee with respect to its employees' adherence or failure to adhere to such policy. (b) S&P shall not and is in no way obliged to engage in any marketing or promotional activities in connection with the Product or in making any representation or statement to investors or prospective investors in connection with the promotion by Licensee of the Product. (c) S&P agrees to provide reasonable support for Licensee's development and educational efforts with respect to the Product as follows: (i) S&P shall provide Licensee, upon request but subject to any agreements of confidentiality with respect thereto, copies of the results of any marketing research conducted by or on behalf of S&P with respect to the S&P 500 Index; and (ii) S&P shall respond in a timely fashion to any reasonable requests for information by Licensee regarding the S&P 500 Index. (d) S&P or its agent shall calculate and disseminate the S&P 500 Index at least once each fifteen (15) seconds in accordance with its current procedures, which procedures may be modified by S&P. (e) S&P shall promptly correct or instruct its agent to correct any mathematical errors made in S&P's computations of the S&P 500 Index which are brought to S&P's attention by 5 Licensee, provided that nothing in this Section 5 shall give Licensee the right to exercise any judgment or require any changes with respect to S&P's method of composing, calculating or determining the S&P 500 Index; and, provided further, that nothing herein shall be deemed to modify the provisions of Section 9 of this Agreement. 6. Informational Materials Review. ------------------------------ Licensee shall submit to S&P for its review and approval all newly developed or materially revised informational materials prepared by or on behalf of Licensee after the Commencement Date of this Agreement, pertaining to and to be used in connection with the Product, including, where applicable, all prospectuses, plans, registration statements, application forms, videos, internet sites, advertisements, brochures and promotional and any other similar informational materials (including documents required to be filed with governmental or regulatory agencies) that in any way use or refer to S&P, the S&P 500 Index, or the S&P Marks (the "Informational Materials"). S&P's approval shall be required with respect to the use of and description of S&P, the S&P Marks and the S&P 500 Index and shall not be unreasonably withheld or delayed by S&P. Specifically, S&P shall notify Licensee of its approval or disapproval of any Informational Materials within forty-eight (48) hours (excluding Saturday, Sunday and New York Stock Exchange Holidays) following receipt thereof from Licensee. Any disapproval shall indicate S&P's reasons therefor. Any failure by S&P to respond within such forty-eight (48) hour period shall be deemed to constitute a waiver of S&P's right to review such Informational Materials. Informational Materials shall be addressed to S&P, c/o Sandra Weinberger, Specialist - Index Licensing/Marketing, Equity Index Services, at the address specified in Subsection 13(f). Informational Materials may be submitted via facsimile (to 212-438-3523 or 212-438-3543) if they are less than 20 pages and legible after transmission. Once Informational Materials have been approved by S&P, subsequent Informational Materials which do not alter the use or description of S&P, the S&P Marks or the S&P 500 Index need not be submitted for review and approval by S&P. 7. Protection of Value of License. ------------------------------ (a) During the term of this Agreement, S&P shall use its best efforts to maintain in full force and effect federal registrations for "Standard & Poor's(R)", "S&P(R)", and "S&P 500(R)". S&P 6 shall at S&P's own expense and sole discretion exercise S&P's common law and statutory rights against infringement of the S&P Marks, copyrights and other proprietary rights. (b) Licensee shall cooperate with S&P in the maintenance of such rights and registrations and shall take such actions and execute such instruments as S&P may from time to time reasonably request, and shall use the following notice when referring to the S&P 500 Index or the S&P Marks in any newly developed or materially revised Informational Materials prepared by or on behalf of Licensee after the Commencement Date of this Agreement: "Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's 500", and "500" are trademarks of The McGraw-Hill Companies, Inc. and references thereto have been made with permission. The Product is not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no representation regarding the advisability of investing in the Product. or such similar language as may be approved in advance by S&P, it being understood that such notice need only refer to the specific S&P Marks referred to in the Informational Materials. 8. Proprietary Rights. ------------------ (a) Without limiting Licensee's position and rights under Subsection 2(b), Licensee acknowledges S&P's claim that (i) S&P has represented to Licensee that the S&P 500 Index is selected, coordinated, arranged and prepared by S&P through the application of methods and standards of judgment used and developed through the expenditure of considerable work, time and money by S&P and (ii) the S&P 500 Index and the S&P Marks are the exclusive property of S&P, that S&P has and retains all proprietary rights therein (including but not limited to trademarks and copyrights) and that the S&P 500 Index and its compilation and composition and changes therein are in the control and discretion of S&P. S&P acknowledges that Licensee does not necessarily agree with the foregoing representations and that Licensee expressly reserves its rights in that regard. 7 (b) S&P reserves all rights with respect to the S&P 500 Index and the S&P Marks except those expressly licensed to Licensee hereunder. Licensee reserves its rights with respect to the S&P 500 Index and its references thereto in connection with the Product. (c) Each party shall treat as confidential and shall not disclose or transmit to any third party any documentation or other written materials that are marked as "Confidential and Proprietary" by the providing party ("Confidential Information"). Confidential Information shall not include (i) any information that is available to the public or to the receiving party hereunder from sources other than the providing party (provided that such source is not subject to a confidentiality agreement with regard to such information) or (ii) any information that is independently developed by the receiving party without use of or reference to information from the providing party. Notwithstanding the foregoing, either party may reveal Confidential Information to any regulatory agency or court of competent jurisdiction if such information to be disclosed is (a) approved in writing by the other party for disclosure or (b) required by law, regulatory agency or court order to be disclosed by a party, provided, if permitted by law, that ten (10) business days' prior written notice of such required disclosure is given to the other party and provided further that the providing party shall cooperate with the other party to limit the extent of such disclosure. The provisions of this Subsection 8(c) shall survive any termination of this Agreement for a period of five (5) years from disclosure by either party to the other of the last item of such Confidential Information. 9. Representations; Warranties; Disclaimers. ---------------------------------------- (a) S&P represents and warrants that S&P has the right to grant the rights granted to Licensee herein and that the license and rights granted herein shall not infringe any trademark, service mark, trade secret, patent, copyright or other proprietary right of any third party. (b) Licensee agrees expressly to be bound itself by and furthermore to include all of the following disclaimers and limitations in each prospectus or each Statement of Additional Information ("SAI") relating to the Product, newly developed or materially revised by or on behalf of Licensee after the Commencement Date of this Agreement, provided the SAI is incorporated by reference into the prospectus and the prospectus contains disclosure regarding the S&P 500 Index that 8 conforms to the notice in Subsection 7(b), including a cross reference to the SAI disclosure. Licensee shall furnish a copy of the prospectus and, if applicable, the SAI, to S&P: The Product is not sponsored, endorsed, sold or promoted by Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"). S&P makes no representation or warranty, express or implied, to the owners of the Product or any member of the public regarding the advisability of investing in securities generally or in the Product particularly or the ability of the S&P 500 Index to track general stock market performance. S&P's only relationship to the Licensee is S&P's grant of permission to Licensee to use the S&P 500 Index which is determined, composed and calculated by S&P without regard to the Licensee or the Product. S&P has no obligation to take the needs of the Licensee or the owners of the Product into consideration in determining, composing or calculating the S&P 500 Index. S&P is not responsible for and has not participated in the determination of the prices and amount of the Product or the timing of the issuance or sale of the Product or in the determination or calculation of the equation by which the Product is to be converted into cash. S&P has no obligation or liability in connection with the administration, marketing or trading of the Product. S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE PRODUCT, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. 9 Any changes in the foregoing disclaimers and limitations must be approved in advance in writing by an authorized officer of S&P. Notwithstanding the foregoing, S&P acknowledges and agrees that the Informational Materials already in use or printed by Licensee as of the Commencement Date of this Agreement may continue to be used by Licensee in their present form, until materially revised by Licensee. (c) Each party represents and warrants to the other that it has the authority to enter into this Agreement according to its terms and that its performance does not violate any laws, regulations or agreements applicable to it. (d) Licensee represents and warrants to S&P that the Product shall at all times comply with the description in Exhibit A. (e) Licensee represents and warrants to S&P that, to the best of its knowledge, information and belief, the Product shall not violate any applicable law, including but not limited to banking, commodities and securities laws. (f) Neither party shall have any liability for lost profits or indirect, punitive, special, or consequential damages arising out of this Agreement, even if notified of the possibility of such damages. Without diminishing the disclaimers and limitations set forth in Subsection 9(b), in no event shall the cumulative liability of S&P to Licensee exceed the average annual License Fees actually paid to S&P hereunder. Notwithstanding the foregoing, the limitations on liability and remedies contained in this Section 9(f) shall not apply to liability arising under Sections 11(a) and 11(b) (indemnification) of this Agreement. (g) Use of any non-S&P related marks by Licensee in connection with its Product (including in the name of such Product) is at Licensee's sole risk. 10 (h) S&P represents and warrants to Licensee that the annual license fee payable by Licensee hereunder is no greater than the fee payable by any other similarly situated licensee of the S&P 500 Index and the S&P Marks that has entered into a license agreement governing the S&P 500 Index and the S&P Marks at any time during the past eight (8) years. S&P also represents and warrants to Licensee that all of the terms, conditions, warranties, and benefits (collectively referred to as "Terms and Conditions") of S&P's license agreements with all other similarly situated licensees that entered into license agreements with S&P during the past eight (8) years are no more favorable, considered in the aggregate, than all of the Terms and Conditions set forth in this agreement with Licensee. A "similarly situated licensee" shall mean an index fund manager that is a licensee of S&P and is using the S&P Index as the basis of an index funds product containing approximately the same amount of assets as Licensee and/or is licensed to use the S&P Marks in the name of the licensee's product. (i) The provisions of this Section 9 shall survive any termination of this Agreement. 10. Release and Discharge --------------------- Without waiving or altering any portion of Section 11 described below, S&P hereby expressly agrees that it shall release and discharge Licensee, its directors, officers, employees and agents, from any and all claims or causes of action -- known or unknown -- that were or could have been asserted with respect to any event or omission which is alleged to occur prior to the execution of this Agreement in connection with Licensee's prior use of the S&P 500 Index and S&P Marks. S&P releases, acquits, and forever discharges Licensee from and shall not now or hereafter institute, participate in, maintain, or assert against Licensee, either directly or indirectly, on its own behalf or on behalf any other person or entity, any cause of action or claim that relates in any way to any act or omission which is alleged to occur prior to the execution of this Agreement in connection with Licensee's prior use of the S&P 500 Index and S&P Marks. This provision shall survive the expiration or termination of this Agreement. 11 11. Indemnification. --------------- (a) Licensee shall indemnify and hold harmless S&P, its affiliates and their officers, directors, employees and agents against any and all judgments, damages, costs or losses of any kind (including reasonable attorneys' and experts' fees) as a result of any claim, action, or proceeding that arises out of or relates to (a) this Agreement, except insofar as it relates to a breach by S&P of its representations or warranties hereunder, or (b) the Product; provided, however, that S&P notifies Licensee promptly of any such claim, action or proceeding and, at Licensee's option, S&P shall grant Licensee control of its defense and/or settlement. Licensee shall periodically reimburse S&P for its reasonable expenses incurred under this Subsection 11(a). S&P shall have the right, at its own expense, to participate in the defense of any claim, action or proceeding against which it is indemnified hereunder; provided, however, it shall have no right to control the defense, consent to judgment, or agree to settle any such claim, action or proceeding without the written consent of Licensee without waiving the indemnity hereunder. Licensee, in the defense of any such claim, action or proceeding except with the written consent of S&P, shall not consent to entry of any judgment or enter into any settlement which either (a) does not include, as an unconditional term, the grant by the claimant to S&P of a release of all liabilities in respect of such claims or (b) otherwise adversely affects the rights of S&P. This provision shall survive the termination or expiration of this Agreement. (b) S&P shall indemnify and hold harmless Licensee, their officers, directors, employees and agents against any and all judgments, damages, costs or losses of any kind (including reasonable attorneys' and experts' fees) as a result of any claim, action, or proceeding that arises out of or relates to any breach by S&P of its representations or warranties under this Agreement; provided, however, that (a) Licensee notifies S&P promptly of any such claim, action or proceeding and, at S&P's option, Licensee shall grant S&P control of its defense and/or settlement; and (b) Licensee cooperates with S&P in the defense thereof. S&P shall periodically reimburse Licensee for its reasonable expenses incurred under this Subsection 11(b). Licensee shall have the right, at its own expense, to participate in the defense of any claim, action or proceeding against which it is indemnified hereunder; provided, however, it shall have no right to control the defense, consent to judgment, or agree to settle any such claim, action or proceeding without the written consent of S&P without waiving the indemnity hereunder. S&P, in the defense of any such claim, action or proceeding, except 12 with the written consent of Licensee, shall not consent to entry of any judgment or enter into any settlement which either (a) does not include, as an unconditional term, the grant by the claimant to Licensee of a release of all liabilities in respect of such claims or (b) otherwise adversely affects the rights of Licensee. This provision shall survive the termination or expiration of this Agreement. 12. Suspension of Performance. ------------------------- Neither S&P nor Licensee shall bear responsibility or liability for any losses arising out of any delay in or interruptions of their respective performance of their obligations under this Agreement due to any act of God, act of governmental authority, act of the public enemy or due to war, the outbreak or escalation of hostilities, riot, fire, flood, civil commotion, insurrection, labor difficulty (including, without limitation, any strike, or other work stoppage or slow down), severe or adverse weather conditions, communications line failure, or other similar cause beyond the reasonable control of the party so affected. 13. Other Matters. ------------- (a) This Agreement is solely and exclusively between the parties hereto and shall not be assigned or transferred by either party, without prior written consent of the other party, and any attempt to so assign or transfer this Agreement without such written consent shall be null and void. (b) The paragraph headings used herein are solely for convenience and shall have no bearing on the meaning or legal interpretation of any of the provisions and terms of this Agreement. (c) The recitals and Exhibits are incorporated into and a part of the Agreement. (d) This Agreement constitutes the entire agreement of the parties hereto with respect to its subject matter and may be amended or modified only by a writing signed by duly authorized officers of both parties. This Agreement supersedes all previous agreements between the parties with respect to the subject matter of this Agreement; and there are no oral or written collateral representations, agreements, or understandings except as provided herein. 13 (e) No breach, default, or threatened breach of this Agreement by either party shall relieve the other party of its obligations or liabilities under this Agreement with respect to the protection of the property or proprietary nature of any property which is the subject of this Agreement. (f) Except as set forth in Section 6 hereof with respect to Informational Materials, all notices and other communications under this Agreement shall be (i) in writing, (ii) delivered by hand, by registered or certified mail, return receipt requested, or by facsimile transmission to the address or facsimile number set forth below or such address or facsimile number as either party shall specify by a written notice to the other and (iii) deemed given upon receipt. Notice to S&P: Standard & Poor's 55 Water Street New York, NY 10041-0003 Attn.: Robert Shakotko Senior Vice President Index Services Fax #: (212) 438-3523 Notice to Licensee: Metropolitan Life Insurance Company One Madison Avenue New York, New York 10010 Attn: Anthony D'Amore Associate General Counsel, Law Department Fax #: (212) 251-1656 (g) This Agreement shall be interpreted, construed and enforced in accordance with the laws of the State of New York. (h) Each party agrees that in connection with any legal action or proceeding arising with respect to this Agreement, they will bring such action or proceeding only in the United States District Court for the Southern District of New York or in the Supreme Court of the State of New York in and for the First Judicial Department and each party agrees to submit to the jurisdiction of such court and venue in such court and to waive any claim that such court is an inconvenient forum. 14 IN WITNESS WHEREOF, the undersigned authorized parties have caused this Agreement to be executed as of the date first set forth above. METROPOLITAN LIFE INSURANCE The McGraw-Hill Companies, Inc., on behalf COMPANY of its Division, STANDARD & POOR'S BY: /s/Anthony D'Amore BY: /s/ Robert A. Shakotko ------------------------- ------------------------------------ Anthony D'Amore Robert A. Sahkotko ------------------------- ------------------------------------ (Print Name) (Print Name) Associate General Counsel Senior Vice President, Index Service ------------------------- ------------------------------------ (Print Title) (Print Title) 15 EXHIBIT A PRODUCT DESCRIPTION Product: Licensee's retail and institutional index funds, which seek to replicate and are based on the S&P 500 Index, and whose investment objectives are to track the price and yield performance of publicly-traded common stocks of companies as represented by the S&P 500 Index. 16 EX-99.H(E) 6 FORM OF PARTICIPATION AGREEMENT Exhibit (h)(e) PARTICIPATION AGREEMENT Among METROPOLITAN SERIES FUND, INC. METROPOLITAN LIFE INSURANCE COMPANY and ________________________ LIFE INSURANCE COMPANY AGREEMENT, made and entered into this __ day of _____________, 2000 by and among _____________________ LIFE INSURANCE COMPANY (the "Company") on its own behalf and on behalf of [_______________ Variable Life Account], [_______________ Variable Annuity Account], and [Group Pension Account] (each an "Account"), each a separate account of the Company, METROPOLITAN SERIES FUND, INC, a corporation organized under the laws of the State of Maryland (the "Fund") and METROPOLITAN LIFE INSURANCE COMPANY ("MetLife"). WHEREAS, the Fund is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act") and its shares are registered under the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and WHEREAS, the Fund serves as an investment vehicle underlying variable life insurance policies and variable annuity contracts (collectively, "Variable Insurance Products") offered by MetLife and its affiliates ("Participating Insurance Companies"); and WHEREAS, the beneficial interest in the Fund is divided into several series of shares, including but not limited to those listed on Schedule A hereto (the "Series"), each representing the interest in a particular managed portfolio of securities and other assets; and WHEREAS, the Fund has obtained an order from the Securities and Exchange Commission ("SEC") granting Participating Insurance Companies and variable annuity and variable life insurance separate accounts exemptions from certain provisions of the 1940 Act and certain thereunder, to the extent necessary to permit shares of the Fund to be sold to and held by both variable annuity and variable life insurance separate accounts of affiliated life insurance companies (hereinafter the "Exemptive Order"); and WHEREAS, MetLife acts as the investment adviser to all of the Series and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended; and WHEREAS, the Company has registered or will register certain variable life and/or variable annuity contracts (the "Contracts") under the 1933 Act; and WHEREAS, the Company has registered or will register each Account as a unit investment trust under the 1940 Act; and 1 WHEREAS, MetLife is registered as a broker dealer with the SEC under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member in good standing of the National Association of Securities Dealers, Inc. (the "NASD"); and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares of certain Series on behalf of each Account to fund certain of the Contracts and MetLife is authorized to sell such shares to unit investment trusts such as each Account at net asset value; NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund and MetLife agree as follows: 1. Sale of Fund Shares. ------------------- 1.1 Subject to the terms of the Distribution Agreement in effect from time to time between the Fund and MetLife, MetLife agrees to sell to the Company those shares of each Series which each Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the order for the shares of the Fund. "Business Day" shall mean any day on which the New York Stock Exchange is open for trading and on which the Fund calculates the net asset value of shares of the Series. 1.2 The Fund agrees to make its shares available for purchase at the applicable net asset value per share by the Company and its Accounts on those days on which the Fund calculates its net asset value. The Fund agrees to use reasonable efforts to calculate such net asset value on each day which the New York Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of Directors of the Fund (hereinafter the "Board" or the "Directors") may refuse to sell shares of any Series to any person, or suspend or terminate the offering of shares of any Series, if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Directors acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, in the best interests of the shareholders of such Series. 1.3 The Fund and MetLife agree that shares of the Fund will be sold only to Participating Insurance Companies and their separate accounts, or to other purchasers of the kind specified in Treas. Reg. Section 1.817-5 (f)(3) (or any successor regulation) as from time to time in effect. 1.4 The Fund agrees to redeem, on the Company's request, any full or fractional shares of the Fund held by the Company, executing such requests on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the request for redemption. 1.5 The Company agrees that all purchases and redemptions by it of the shares of each Series will be in accordance with the provisions of then current prospectus and statement of additional information of the Fund and in accordance with any procedures that the Fund, 2 MetLife or the Fund's transfer agent may have established governing purchases and redemptions of shares of the Series generally. 1.6 The Company shall pay for Fund shares on the next Business Day after an order to purchase Fund shares is made in accordance with the provisions of Section 1.1. hereof. Payment shall be in federal funds transmitted by wire to the Fund's custodian. 1.7 Issuance and transfer of the Fund's shares will be by book entry only. Share certificates will not be issued. Shares ordered from the Fund will be recorded on the transfer records of the Fund in an appropriate title for each Account or the appropriate subaccount of each Account. 1.8 The Fund shall furnish same day notice (by e-mail, fax or telephone, followed by written confirmation) to the Company of any income, dividends or capital gain distributions payable on the shares of any Series. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on the Series shares in additional shares of that Series. The Company reserves the right to revoke this election and to receive all such income dividends and capital gain distributions in cash. The Fund shall notify the Company of the number of shares so issued as payment of such dividends and distributions. 1.9 The Fund shall make the net asset value per share for each Series available to the Company on a daily basis as soon as reasonably practical after the net asset value per share is calculated and shall use its best efforts to make such net asset value per share available by 7:00 p.m. New York time. 2. Representations and Warranties. ------------------------------ 2.1 The Company represents and warrants that each Contract is or, prior to the purchase of shares of any Series in connection with the funding of such Contract, will be registered under the 1933 Act; that the Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws, including all applicable customer suitability requirements. The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established each Account as a separate account pursuant to relevant state insurance law prior to any issuance or sale of any Contract by such Account and that each Account is either (i) registered or, prior to any issuance or sale of the Contracts, will register each Account as a unit investment trust in accordance with the provisions of the 1940 Act; or (ii) the Account is exempt from such registration. 2.2 The Fund represents and warrants that Fund shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance and sold in compliance with the laws of the Commonwealth of Massachusetts and all applicable federal and state securities laws and that the Fund is and shall remain registered under the 1940 Act. The Fund agrees that it will amend the registration statement for its shares under the 1933 Act 3 and the 1940 Act from time to time as required in order to permit the continuous public offering of its shares in accordance with the 1933 Act. The Fund shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund or MetLife. 2.3 The Fund represents that each Series is currently qualified as a "regulated investment company" under subchapter M of the Internal Revenue Code of 1986, as amended, (the "Code") and agrees that it will make every effort to maintain such qualification (under Subchapter M or any successor or similar provision) and that it will notify the Company promptly upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 2.4 The Company represents that the Contracts are currently treated as modified endowment, annuity or life insurance contracts under applicable provisions of the Code and agrees that it will make every effort to maintain such treatment and that it will notify the Fund and MetLife immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.5 The Fund makes no representation as to whether any aspect of its operations (including, but not limited to, fees and expenses and investment policies) complies with the insurance laws or regulations of the various states. 2.6 MetLife represents and warrants that it is a member in good standing of the NASD and is registered as a broker-dealer with the SEC. 2.7 MetLife further represents that it will sell and distribute the Fund shares in accordance with all applicable state and federal securities laws, including without limitation the 1933 Act, the 1934 Act and the 1940 Act. 2.8 The Fund represents that it is lawfully organized and validly existing under the laws of the State of Maryland and that it does and will comply in all material respects with the 1940 Act. 2.9 Each of the Fund and MetLife represent and warrant that all of their directors, officers and employees dealing with the money and/or securities of the Fund are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Fund in an amount not less than the minimal coverage as required by Rule 17g-(1) under the 1940 Act or any successor regulations as may be promulgated from time to time. The aforesaid Bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. 2.10 The Company represents and warrants that all of its directors, officers, employees and other individuals/entities dealing with the money and/or securities representing amounts intended for the purchase of shares of the Fund or proceeds of the redemption of shares of the Fund are and shall continue to be at all times covered by a blanket fidelity bond or 4 similar coverage for the benefit of the Fund, in an amount not less than the amount required of the Fund and MetLife under Section 2.9. hereof. The aforesaid Bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. 2.11 The Company represents and warrants that it will not, without the prior written consent of the Fund and MetLife, purchase Fund shares with Account assets derived from the sale of Contracts to individuals or entities which would cause the investment policies of any Series to be subject to any limitations not in the Fund's then current prospectus or statement of additional information with respect to any Series. 3. Prospectuses and Proxy Statements; Voting. ----------------------------------------- 3.1 MetLife shall provide the Company with as many copies of the Fund's current prospectus as the Company may reasonably request (at the Company's expense with respect to other than existing Contract owners). If requested by the Company in lieu thereof, the Fund shall provide such documentation (including a final copy of the new prospectus as set in type at the Fund's expense) and other assistance as is reasonably necessary in order for the Company once each year (or more frequently if the prospectus for the Fund is amended) to have the prospectus for the Contracts and the Fund's prospectus printed together in one document (such printing to be at the Company's expense with respect to other than existing Contract owners). 3.2 MetLife (or the Fund), at its expense, shall print and provide the Fund's then current statement of additional information free of charge to the Company and to any owner of a Contract or prospective owner who requests such statement. 3.3 The Fund, at its expense, shall provide the Company with copies of its proxy material, reports to shareholders and other communications to shareholders in such quantity as the Company shall reasonably require for distribution (at the Fund's expense) to Contract owners. 3.4 So long as and to the extent that the SEC or its staff continues to interpret the 1940 Act to require pass-through voting privileges for variable contract owners, or if and to the extent required by law, the Company shall: (i) solicit voting instructions from Contract owners; (ii) vote the Fund shares in accordance with instructions received from Contract owners; and (iii) vote Fund shares for which no instructions have been received in the same proportion as Fund shares of such Series for which instructions have been received. The Company reserves the right to vote Fund shares held in any Account in its own right, to the extent permitted by law. The Company shall be responsible for assuring that each Account participating in the Fund calculates voting privileges in a manner consistent with the standards set forth on Schedule B hereto, which standards will also be provided to the other Participating Insurance Companies. 5 4. Sales Material and Information. ------------------------------ 4.1 The Company shall be solely responsible for ensuring that sales literature in which the Fund, a Series, any subadviser to any Series or MetLife (in its capacity as distributor or adviser of the Fund) is named, eligible for use under Rule 134 or Rule 482 under the 1933 Act or other sales literature the substance of which is contained in the then current prospectus or statement of additional information of the Fund. The Company may, if it so chooses, deliver other draft sales literature to the Fund or its designee, at least thirty Business Days prior to its use. The Fund or such designee shall use commercially reasonable efforts to review sales literature so delivered within fifteen days. Any sales literature so delivered shall not be used by the Company if the Fund or its designee objects to such use within fifteen Business Days after receipt of such material. 4.2 The Company shall not give any information or make any representations or statements on behalf of the Fund or concerning the Fund in connection with the sale of the Contracts other than the information or representations contained in the registration statement, prospectus or statement of additional information for the Fund shares, as such registration statement and prospectus or statement of additional information may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in sales literature or other promotional material approved by the Fund or its designee or by MetLife, except with the approval of the Fund or MetLife or the designee of either. 4.3 The obligations set forth in Section 4.1 herein shall apply mutatis ------- mutandis to the Fund and MetLife with respect to each piece of sales -------- literature or other promotional material in which the Company and/or any Account is named. 4.4 The Fund and MetLife shall not give any information or make any representations on behalf of the Company or concerning the Company, any Account or the Contracts other than the information or representations contained in a registration statement or prospectus for the Contracts, as such registration statement and prospectus may be amended or supplemented from time to time, or in published reports for each Account which are in the public domain or approved by the Company for distribution to Contract owners, or in sales literature or other promotional material approved by the Company or its designee, except with the permission of the Company. 4.5 The Fund will provide to the Company at least one complete copy of all registration statements, prospectuses, statements of additional information, shareholder annual, semi-annual or other reports, proxy statements, applications for exemptions, requests for no-action letters and any amendments to any of the above, that relate to any Series, promptly after the filing of each such document with the SEC or any other regulatory authority. 4.6 The Company will provide to the Fund at least one complete copy of all registration statements, prospectuses, statements of additional information, shareholder annual, semi-annual or other reports, solicitations for voting instructions, applications for exemptions, 6 requests for no-action letters and any amendments to any of the above, that relate to the Contracts or any Account, promptly after the filing of such document with the SEC or any other regulatory authority. Each party hereto will provide to each other party, to the extent it is relevant to the Contracts or the Fund, a copy of any comment letter received from the staff of the SEC or the NASD, and the Company's response thereto, following any examination or inspection by the staff of the SEC or the NASD. 4.7 As used herein, the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures or other public media), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees. 5. Fees and Expenses. ----------------- 5.1 The Fund and MetLife shall pay no fee or other compensation to the Company under this Agreement, except that if the Fund or any Series adopts and implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then MetLife may make payments to the Company or to the underwriter. Each party acknowledges that MetLife may pay service or administrative fees to the Company and other Participating Insurance Companies pursuant to separate agreements. 6. Diversification. --------------- 6.1 The Fund will at all times invest money from the Contracts in such a manner as to ensure that the Contracts will be treated as variable contracts under the Code and the regulations issued thereunder. Without limiting the scope of the foregoing, the Fund will at all times comply with Section 817(h) of the Code and any Treasury Regulations thereunder relating to the diversification requirements for variable annuity, endowment or life insurance contracts, as from time to time in effect. 7. Potential Conflicts. ------------------- 7.1 To the extent required by the Exemptive Order or by applicable law, the Board will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts investing in the Fund. An irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant 7 proceeding; (d) the manner in which the investments of any Series are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners; or (f) a decision by an insurer to disregard the voting instructions of contract owners. The Fund shall promptly inform the Company if it determines that an irreconcilable material conflict exists and the implications thereof. 7.2 The Company will report to the Board any potential or existing conflicts between the interests of contract owners of different separate accounts of which the Company is or becomes aware. The Company will assist the Board in carrying out its responsibilities under the Exemptive Order and under applicable law, by providing the Board with all information reasonably necessary for the Board to consider any issues raised. This includes, but is not limited to, an obligation of the Company to inform the Board whenever contract owner voting instructions are disregarded. 7.3 If it is determined by a majority of the Board, or a majority of its disinterested directors, that a material irreconcilable conflict exists, the Company and other Participating Insurance Companies shall, at their expense take whatever steps are necessary to remedy or eliminate the irreconcilable material conflict, which steps could include: (1) withdrawing the assets allocable to some or all of the separate accounts from the Fund or any Series and reinvesting such assets in a different investment medium, including (but not limited to) another series of the Fund, or submitting the question of whether such segregation should be implemented to a vote of all affected Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract owners, or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected contract owners the option of making such a change; and (2) establishing a new registered management investment company or managed separate account. 7.4 If a material irreconcilable conflict arises because of a decision by the Company to disregard Contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Fund's election, to withdraw the relevant Account's investment in the Fund and terminate this Agreement; provided, however, that such withdrawal and termination shall be limited to the extent required by such material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Any such withdrawal and termination will take place within six (6) months after the Fund gives written notice that this provision is being implemented. 7.5 If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to the Company conflicts with the majority of other state regulators, then the Company will withdraw the affected Account's investment in the Fund and terminate this Agreement within six months after the Board informs the Company in writing that it has determined that such decision has created an irreconcilable material conflict; provided, however, that such withdrawal and termination shall be limited to the 8 extent required by such material irreconcilable conflict as determined by a majority of the disinterested members of the Board. 7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of the disinterested members of the Board shall determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund be required to establish a new funding medium for the Contracts. The Company shall not be required by Section 7.3 to establish a new funding medium for the Contracts if an offer to do so has been declined by vote of a majority of Contract owners materially adversely affected by the irreconcilable material conflict. In the event that the Board determines that any proposed action does not adequately remedy any irreconcilable material conflict, then the Company will withdraw the Account's investment in the Fund and terminate this Agreement within six (6) months after the Board informs the Company in writing of the foregoing determination, provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested members of the Board. 7.7 If and to the extent that Rule 6e-2 and Rule 6e-3(T) under the 1940 Act are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Exemptive Order) on terms and conditions materially different from those contained in the Exemptive Order, then (a) the Fund and/or Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.4, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. 8. Indemnification. --------------- 8.1 Indemnification by the Company (a). The Company agrees to indemnify and hold harmless the Fund and each of its Directors and officers and each person, if any, who controls the Fund within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement or prospectus or statement of additional information (if applicable) for the Contracts or contained in the Contracts or sales literature or other promotional material for the Contracts (or any amendment or supplement to any of the foregoing), or 9 arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Fund for use in the registration statement or prospectus or statement of additional information (if applicable) for the Contracts or in the Contracts or sales literature or other promotional material (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or statement of additional information (if applicable) or sales literature or other promotional material of the Fund not supplied by the Company, or persons under its control) or wrongful conduct of the Company or persons under its control, with respect to the sale or distribution of the Contracts or Fund Shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in any registration statement, prospectus or statement of additional information (if applicable) or sales literature or other promotional material of the Fund or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon information furnished to the Fund by or on behalf of the Company; or (iv) arise as a result of any failure by the Company to provide the services and furnish the materials under the terms of this Agreement; or (v) arise out of or result from any material breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach of this Agreement by the Company, as limited by and in accordance with the provisions of Section 8.1(b) and 8.1(c) hereof. (b). The Company shall not be liable under this Section 8.1 with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject if such loss, claim, damage, liability or litigation is caused by or arises out of such Indemnified Party's willful misfeasance, bad faith or gross negligence or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to the Fund, whichever is applicable. (c). Each Indemnified Party shall notify the Company of any claim made against an Indemnified Party in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified 10 Party against whom such action is brought under this indemnification provision unless the Company's ability to defend against the claim shall have been materially prejudiced by the Indemnified Party's failure to give such notice and shall not in any way relieve the Company from any liability which it may have to the Indemnified Party against whom the action is brought otherwise than on account of this indemnification provision. In case any such action is brought against one or more Indemnified Parties, the Company shall be entitled to participate, at its own expense, in the defense of such action. The Company also shall be entitled to assume the defense thereof, with counsel satisfactory to each Indemnified Party named in the action. After notice from the Company to such party of the Company's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Company will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. An Indemnified Party shall not settle any claim involving a remedy including other than monetary damages without the prior written consent of the Company. (d). The Indemnified Parties will promptly notify the Company of the commencement of any litigation or proceedings against them in connection with the issuance or sale of the Fund Shares or the Contracts or the operation of the Fund. 8.2 Indemnification by MetLife (a). MetLife agrees to indemnify and hold harmless the Company and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of MetLife) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, prospectus or statement of additional information, or sales literature or other promotional material of the Fund (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to MetLife or Fund by or on behalf of the Company for use in the registration statement, prospectus or statement of additional information for the Fund or in sales literature or other promotional material (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or statement of additional information or sales literature or other promotional material for the Contracts not supplied by MetLife or the Fund or persons under their control) or wrongful conduct of MetLife or the Fund or persons under their control, with respect to the sale or distribution of the Contracts or Fund Shares; or 11 (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in any registration statement, prospectus or statement of additional information or sales literature or other promotional material covering the Contracts, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon information furnished to the Company by or on behalf of MetLife or the Fund; or (iv) arise as a result of any failure by MetLife or the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification requirements specified in Article VI of this Agreement; or (v) arise out of or result from any material breach of any representation and/or warranty made by MetLife or the Fund in this Agreement or arise out of or result from any other material breach of this Agreement by MetLife or the Fund; as limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof. (b). MetLife shall not be liable under this Section 8.2 with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject if such loss, claim, damage, liability or litigation is caused by or arises out of such Indemnified Party's willful misfeasance, bad faith or gross negligence or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to the Company or each Account, whichever is applicable. (c). Each Indemnified Party shall notify each of MetLife and the Fund of any claim made against the Indemnified Party within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify each of MetLife and the Fund of any such claim shall not relieve MetLife from any liability which it may have to the Indemnified Party against whom such action is brought under this indemnification provision unless MetLife's ability to defend against the claim shall have been materially prejudiced by the Indemnified Party's failure to give such notice and shall not in any way relieve the Company from any liability which it may have to the Indemnified Party against whom the action is brought otherwise than on account of this indemnification provision. In case any such action is brought against one or more Indemnified Parties, MetLife will be entitled to participate, at their own expense, in the defense thereof. MetLife shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from MetLife to such party of the election of MetLife to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and MetLife will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. An Indemnified Party shall not settle any claim involving any remedy other than monetary damages without the prior written consent of MetLife. 12 (d). The Company agrees promptly to notify MetLife and the Fund of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of the Contracts or the operation of each Account. 9. Applicable Law. -------------- 9.1 This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of New York. 9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant (including, but not limited to, the Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith. 10. Termination. ----------- 10.1 This Agreement shall terminate: (a) at the option of any party upon 180 days' advance written notice to the other parties; provided, however, that such notice shall not be given earlier than one year following the date of this Agreement; or (b) at the option of the Company to the extent that shares of a Series are not reasonably available to meet the requirements of the Contracts as determined by the Company, provided however, that such termination shall apply only to those Series the shares of which are not reasonably available. Prompt notice of the election to terminate for such cause shall be furnished by the Company; or (c) at the option of the Fund in the event that formal administrative proceedings are instituted against the Company by the NASD, the SEC, any state insurance department or commissioner or similar insurance regulator or any other regulatory body regarding the Company's duties under this Agreement or related to the sale of the Contracts, with respect to the operation of any Account or the purchase by any Account of Fund shares, provided, however, that the Fund determines in its sole judgment, exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Company to perform its obligations under this Agreement; or (d) at the option of the Company in the event that formal administrative proceedings are instituted against the Fund or MetLife by the NASD, the SEC or any state securities or insurance department or commissioner or any other regulatory body, provided, however, that the Company determines in its sole judgment exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Fund or MetLife to perform its obligations under this Agreement; or 13 (e) with respect to any Account, upon requisite authority (by vote of the Contract owners having an interest in such Account or any subaccount thereof, or otherwise) to substitute the shares of another investment company (or separate series thereof) for the shares of any Series in accordance with the terms of the Contracts for which shares of that Series had been selected to serve as the underlying investment medium. The Company will give 90 days' prior written notice to the Fund of the date of any proposed vote to replace the Fund's shares or of the filing by the Company with the SEC of any application relating to any such substitution; or (f) at the option of the Company, in the event any shares of any Series are not registered, issued or sold in accordance with applicable state and/or federal law or such law precludes the use of such shares as the underlying investment medium of the Contracts issued or to be issued by the Company; or (g) at the option of the Company, if any Series ceases to qualify as a Regulated Investment Company under Subchapter M of the Code or under any successor or similar provision, or if the Company reasonably believes that any Series may fail to so qualify; or (h) at the option of the Company, if the Fund fails to meet the diversification requirements specified in Article 6 hereof; or (i) at the option of the Fund or MetLife, if (1) the Fund or MetLife, as the case may be, shall determine, in its sole judgment reasonably exercised in good faith, that the Company has suffered a material adverse change in its business or financial condition or is the subject of material adverse publicity and such material adverse change or material adverse publicity will have a material adverse impact on the business and operations of the Fund or MetLife, as the case may be, (2) the Fund or MetLife shall notify the Company in writing of such determination and its intent to terminate this Agreement, and (3) after considering the actions taken by the Company and any other changes in circumstances since the giving of such notice, such determination of the Fund or MetLife shall continue to apply on the sixtieth (60th) day following the giving of such notice, which sixtieth day shall be the effective date of termination; or (j) at the option of the Company, if (1) the Company shall determine, in its sole judgment reasonably exercised in good faith, that the Fund or MetLife has suffered a material adverse change in its business or financial condition or is the subject of material adverse publicity and such material adverse change or material adverse publicity will have a material adverse impact upon the business and operations of the Company, (2) the Company shall notify the Fund and MetLife in writing of such determination and its intent to terminate the Agreement, and (3) after considering the actions taken by the Fund and/or MetLife and any other changes in circumstances since the giving of such notice, such determination shall continue to apply on the sixtieth (60th) day following the giving of such notice, which sixtieth day shall be the effective date of termination; or 14 (k) in the case of an Account not registered under the 1933 Act or 1940 Act, the Company shall give the Fund 90 days' prior written notice if the Company chooses to cease using any Series as an investment vehicle for such Account. It is understood and agreed that the right of any party hereto to terminate this Agreement pursuant to Section 10.1(a) may be exercised for any reason or for no reason. 10.2 Notice Requirement. No termination of this Agreement shall be effective unless and until the party terminating this Agreement gives prior written notice to all other parties to this Agreement of its intent to terminate which notice shall set forth the basis for such termination. Furthermore, in the event that any termination is based upon the provisions of Article 7, or the provision of Section 10.1(a), 10.1(i) or 10.1(j) of this Agreement, such prior written notice shall be given in advance of the effective date of termination as required by such provisions; and 10.3 In the event that any termination is based upon the provisions of Section 10.1(c) or 10.1(d) of this Agreement, such prior written notice shall be given at least ninety (90) days before the effective date of termination. 10.4 Effect of Termination. Notwithstanding any termination of this Agreement, the Fund and MetLife shall, at the option of the Company, continue to make available additional shares of each Series pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, without limitation, the owners of the Existing Contracts shall be permitted to reallocate investments in the Fund, redeem investments in the Fund and/or invest in the Fund upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 10.4 shall not apply to any terminations under Section 10.1(b) or Article VII, and in the case of terminations under Article 7 terminations, the effect of such terminations shall be governed by Article 7 of this Agreement. 11. Notices. ------- Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party. If to the Fund or to MetLife: One Madison Avenue New York, New York 10010 Attention: Secretary 15 If to the Company: _________________ Life Insurance Company [address] Attention: ________________ 12. Miscellaneous. ------------- 12.1 A copy of the Articles of Incorporation establishing the Fund is on file with the Secretary of the State of Maryland, and notice is hereby given that this Agreement is executed on behalf of the Fund by officers of the Fund as officers and not individually and that the obligations of or arising out of this Agreement are not binding upon any of the directors, officers or shareholders of the Fund individually but are binding only upon the assets and property belonging to the Series. 12.2 Subject to the requirements of legal process and regulatory authority, each party hereto shall treat as confidential the names and addresses of the owners of the Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party. 12.3 The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 12.4 This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 12.5 If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby. 12.6 Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. 12.7 The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws. 16 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and on its behalf by its duly authorized representative and its seal to be hereunder affixed hereto as of the date specified below. ________________________ LIFE INSURANCE COMPANY By: __________________________ Name: Title: Date: _________________________ METROPOLITAN SERIES FUND, INC. By: ___________________________ Name: Title: Date: __________________________ METROPOLITAN LIFE INSURANCE COMPANY By: ___________________________ Name: Title: Date: _______________________ 17 Schedule A [List Series] 18 Schedule B With respect to each Account, all shares of each Series attributable to such policies and contracts for which no owner instructions have been received by the Company and all shares of the Series attributable to charges assessed by the Company against such policies and contracts will be voted for, voted against, or withheld from voting on any proposal in the same proportions as are the shares for which owner instructions have been received by the Company with respect to policies or contracts issued by such Account. To the extent the Company has so agreed with respect to an Account not registered with the SEC under the 1940 Act, all shares of each Series held by the Account will be voted for, voted against or withheld from voting on any proposal in the same proportions as are the shares of such Series for which contract owners' voting instructions have been received. If the Company has not so agreed, the shares of each Series attributable to such unregistered Account will be voted for, voted against, or withheld from voting on any proposal in the same proportions as are all other shares for which the Company has received voting instructions. 19 EX-99.I(H) 7 OPINION AND CONSENT OF COUNSEL Exhibit (i)(h) FREEDMAN, LEVY, KROLL & SIMONDS Washington Square 1050 Connecticut Avenue, N.W. Washington, D.C. 20036-5366 April 3, 2000 OPINION AND CONSENT OF COUNSEL Metropolitan Series Fund, Inc. One Madison Avenue New York, New York 10010 Executives: This opinion is given in connection with the filing with the Securities and Exchange Commission ("SEC") by Metropolitan Series Fund, Inc., a Maryland corporation (the "Fund"), of Post-Effective Amendment No. 26 under the Securities Act of 1933 ("1933 Act") and Amendment No. 28 under the Investment Company Act of 1940 ("1940 Act") to the Fund's Registration Statement on Form N-1A (File Nos. 2-80751 and 811-3618, the "Registration Statement"), relating to an indefinite number of the Fund's three billion authorized shares of capital stock, par value $.01 per share, which includes, among others, 100 million authorized shares of each of the State Street Research Aurora Small Cap Value Portfolio, Putnam Large Cap Growth Portfolio, and MetLife Mid Cap Stock Index Portfolio (collectively, the "Portfolios"), each Portfolio being a separate series of the Fund's capital stock. The Fund's authorized shares of capital stock relating to these Portfolios are hereinafter referred to collectively as the "Shares." We have examined the following: the Fund's Articles of Incorporation, dated November 23, 1982, and its various Articles of Amendment, Articles of Correction, and Articles Supplementary, dated May 19, 1983, December 1, 1983, October 22, 1984, May 16, 1986, October 6, 1987, January 27, 1988, January 25, 1990, August 3, 1990, December 17, 1996, July 30, 1997, September 9, 1998, October 6, 1998, February 2, 1999, January 24, 2000, and February 7, 2000; the Fund's By-Laws, as amended January 27, 1988 and April 24, 1997; the certification of the Fund's Secretary of Board of Directors' resolutions adopted by the Board of Directors on February 1, 2000, authorizing the creation of each Portfolio and the issuance of the Shares; the Notification of Registration on Form N-8A filed with the SEC under the 1940 Act on December Metropolitan Series Fund, Inc. April 3, 2000 Page 2 6, 1982; the Registration Statement as originally filed with the SEC under the 1933 Act and the 1940 Act on the same date, and the amendments thereto filed with the SEC, including Post-Effective Amendment No. 26 to the Registration Statement substantially in the form in which it is to be filed with the SEC; a current Certificate of Good Standing for the Fund issued by the State of Maryland; pertinent provisions of the laws of Maryland; and such other records, certificates, documents and statutes that we have deemed relevant in order to render the opinion expressed herein. Based on the foregoing examination, we are of the opinion that: 1. The Fund is a corporation duly organized, validly existing, and in good standing under the laws of the State of Maryland; and 2. The Shares to be offered for sale by the Fund, when issued in the manner contemplated by the Registration Statement, will be legally issued, fully-paid, and non-assessable. This letter expresses our opinion as to the Maryland General Corporation Law, addressing matters such as due formation and, in effect, the authorization and issuance of shares of capital stock, but does not extend to the securities or "Blue Sky" laws of Maryland or to federal securities or other laws. We consent to the use of this opinion as an exhibit to the Registration Statement. Very truly yours, /s/ Freedman, Levy, Kroll & Simonds EX-99.J(A) 8 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS Exhibit (j)(a) INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Post-Effective Amendment No. 26 to Registration Statement No. 2-80751 on Form N-1A of our report dated February 18, 2000, to the reference to us under the heading "Experts", appearing in the Statement of Additional Information, which is a part of such Registration Statement, and to the reference to us under the heading "Financial Highlights" appearing in the Prospectus, which are also a part of such Registration Statement. /s/ Deloitte & Touche LLP DELOITTE & TOUCHE LLP Denver, Colorado April 4, 2000 EX-99.P(A) 9 CODE OF ETHICS Metropolitan Series Fund, Inc. Code of Ethics 1. Definitions (a) "Access Person" is defined to include: (i) Any director or officer of the Fund; or (ii) Investment Personnel. (b) For purposes of reporting personal Covered Securities transactions, Access Persons will be deemed to have "Beneficial Ownership "or "Beneficially Held" Covered Securities when such securities are held: (i) In such Access Person's name; (ii) In the name of a spouse, a minor child or any relative or relative of a spouse who shares such Access Person's home, absent special circumstances indicating that the Access Person does not obtain benefits substantially equivalent to those of ownership; (iii) In the name of another person, if by reason of any contract, understanding, relationship, agreement or other arrangement such Access Person obtains therefrom benefits substantially equivalent to those of ownership (i.e. the ability to exercise a controlling influence over the purchase, sale or voting of such Covered Securities); (iv) By any partnership, closely held corporation, trust or estate, to the extent of his/her interest therein; or (v) By such Access Person as trustee where either such person or members of his/her immediate family have a vested interest in the income or corpus of the trust, or as settlor of a revocable trust. (c) "Board of Directors" is referring to the board of directors for the Fund. (d) "Code of Ethics" means the Code of Ethics for the Fund. (e) "Compliance" means the SEC/NASD Corporate Ethics and Compliance Department of MetLife. (f) "Covered Security" means a security as defined in Section 2(a)(36) of the Investment Company Act of 1940 except as excluded in Section 3 below. (g) "Fund" means the Metropolitan Series Fund, Inc. (h) "Investment Advisers" means collectively, the Metropolitan Life Insurance Company and the Fund's sub-investment advisers. (i) "Investment Personnel" is defined as (i) any employee including any director or officer of the Fund or its Investment Advisers (or any company in a control relationship with either) who, in connection with his or her regular functions or duties, makes or participates in making any recommendations regarding the purchase or sale of securities by the Fund and (ii) any natural person in a control relationship to the Fund or its Investment Advisers who obtains information concerning recommendations made to the Fund regarding the purchase or sale of securities by the Fund. (j) "MetLife" means Metropolitan Life Insurance Company. (k) "Sub-investment advisers" or "sub-advisers" includes all sub- investment managers performing investment advisory services for MetLife as investment adviser to the Fund. 2. General Prohibitions WHEREAS the Board of Directors of the Fund has determined that no Affiliated Person (as defined in Section 2(a)(3) of the Investment Company Act of 1940) of the Fund, or of the Fund's Investment Advisers, in connection with the purchase or sale, directly or indirectly, by such person of a security held or to be acquired by the Fund shall: (i) employ any device, scheme or article to defraud the Fund; (ii) make to the Fund any untrue statement of material fact or omit to state to the Fund a material fact necessary in order to make the statements made, in light of the circumstance under which they are made, not misleading; (iii) engage in any act, practice or course of business which operates or would operate as fraud or deceit upon the Fund; or (iv) engage in any manipulative practice with respect to the Fund. 2 NOW THEREFORE, the Board of Directors have determined that no Affiliated Person deemed an Access Person hereunder shall purchase or sell directly or indirectly, any Covered Security which such person knows is currently being purchased or sold for the Fund or which such person knows is currently being actively considered for the purchase or sale for the Fund. This prohibition shall apply to the purchase or sale by such person of any convertible issue, option or warrant relating to such security. Access Persons hereunder who are employees of Investment Advisers of the Fund shall be deemed to meet the requirements hereunder by complying with the Investment Adviser's rule 17j-1 procedures. 3. Exempt Purchases and Sales The prohibitions in Section 2 of this Code shall not apply to: (i) Purchases or sales effected in any account over which an Access Person has no direct influence or control; (ii) Purchases or sales of securities that are direct obligations of the United Stated Government, bankers' acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments including repurchase or reverse repurchase agreement transactions, and shares of registered open-end investment companies; (iii) Purchases of securities pursuant to an automatic dividend reinvestment plan; (iv) Purchases or sales which are non-volitional on the part of an Access Person; and (v) Purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired. 4. Reporting (a) Initial Holdings Reports All persons upon becoming an Access Person of the Fund shall file with Compliance, no later than ten (10) days after becoming an Access Person of the Fund, a report that contains a listing of every Covered Security beneficially held by such person. 3 (b) Quarterly Transactions Reports Access Persons of the Fund shall file with Compliance, no later than ten (10) days after each calendar quarter, a report relating to any transactions during the calendar quarter, in which such person has or by reason of such transaction acquires any direct or indirect beneficial ownership in a Covered Security, except for purchases or sales specified in Section 3. (c) Annual Holdings Report Access Persons of the Fund shall file with Compliance, no later than ten (10) days after the end of the calendar year, a report that contains a cumulative listing of every Covered Security beneficially held by such person as of the end of the reporting calendar year. The information submitted for an Access Person's annual holdings reports must be current as of a date no more than thirty (30) days before such report is submitted. (d) Content Required in Holdings and Transaction Reports 1. Initial and Annual Holdings Reports With respect to initial and annual holdings reports, all Access Persons required to file such reports must submit the following information with the appropriate Compliance person of the Fund. (i) Title, number of shares and principal amount of each Covered Security in which the Access Person had any direct or indirect beneficial ownership; (ii) Name of any broker, dealer or bank with whom the Access Person maintains an account in which any securities were held for the direct or indirect benefit of the Access Person as of the date the person became an Access Person; and (iii) Date the report is submitted by the Access Person. 2. Quarterly Transaction Reports In addition to the information specified above, Access Persons required to file quarterly transaction reports should include the nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition), the price at which the 4 transaction was effected and the broker or dealer through whom the transaction was executed in complying with their respective quarterly reporting requirements. (e) Exceptions from Reporting Requirements Directors of the Fund who are not "interested persons" of the Fund within the meaning of Section 2(a)(19) of the Investment Company Act of 1940, and who would be required to make a report solely by reason of being a Fund director, are exempt from making: (i) an initial holdings report and an annual holdings report; and (ii) a quarterly holdings report , unless the director knew or in the ordinary course of fulfilling his or her official duties as a Fund director, should have known that during the 15-day period immediately before or after the director's transaction in a Covered Security, the Fund purchased or sold the Covered Security or the Fund or any of its Investment Advisers considered purchasing or selling the Covered Security. (f) Certification of Access Persons With Code of Ethics Access Persons are required to certify annually in writing that they have: (i) Read and understand the Code of Ethics and recognize that they are subject thereto; (ii) Complied with the requirements of the Code of Ethics; and (iii) Disclosed or reported all personal securities transactions required. 5. Compliance Reporting and Procedures (a) Reports of Potential Deviations or Violations Compliance will investigate all apparent violations of the Code of Ethics and will maintain a record of the findings. A periodic report will be prepared for the Board of Directors of the Fund describing the results of the review and setting forth appropriate recommendations. This report will be submitted to the Board of Directors of the Fund together with a copy of any underlying records of fact. Based on its review of the report and any required clarification, the Board of Directors will initiate any actions it considers appropriate under the circumstances. 5 (b) Annual Issues/Certification Report Compliance will furnish, no less frequently than annually, a written report to the Fund's Board of Directors that shall set forth: (i) Copies of Codes of Ethics for the Fund and its Investment Adviser's rule 17j-1 procedures, as revised, including a summary of any changes made during the past year; (ii) A summary that describes any violations requiring significant remedial action during the past year and sanctions imposed in response to those material violations; (iii) Recommendations, if any, regarding changes in existing restrictions or procedures based upon evolving industry practices and new developments in applicable laws or regulations; and (iv) Certifications from the Fund's Investment Advisers certifying that each adviser has adopted rule 17j-1 procedures that are reasonably necessary to prevent its Access Persons from violating the determinations of the Fund's Board of Directors hereunder as well as any applicable procedures of the Investment Adviser. (c) Required Reports and Certifications of Investment and Sub-Investment Advisers In order to assist Compliance with the prevention and detection of any violations of this Code, Investment Advisers and Sub-Investment Advisers of the Fund are required to annually submit for inclusion in the Annual Issues/Certification Report: (i) copies of their respective rule 17j-1 procedures hereunder, as revised, including a summary of any changes made during the past year; (ii) a written summary of all violations and the remedial action and sanctions imposed in response to those violations; and (iii) certifications that state that each Investment Adviser's and Sub-Investment Adviser's respective rule 17j-1 procedures contain provisions reasonably necessary to prevent violations. Such records should be submitted to Patricia Worthington the Assistant Secretary of the Fund for review no later than 10 days after the end of the reporting calendar year. 6 6. Records Compliance should maintain the following records in an easily accessible place: (i) Copies of each Code of Ethics for the Fund that are in effect or that have been in effect within the past five years; (ii) A copy of all reports and other forms submitted by Fund Access Persons pursuant to Section 4. and any other pertinent information for a period of not less than five years after the end of the fiscal year in which the report is made or the information is provided; (iii) A record of all persons currently or within the past five years who are or were required to make reports or who are or were responsible for reviewing and maintaining such files required pursuant to Section 4; (iv) Records of any violation of the Code of Ethics, and any action taken as a result of such violation for a period of not less than five years after the end of the fiscal year in which the violation occurred; and (v) A copy of each annual issues/certification report submitted to the Board during the last five years. 7. Sanctions Upon discovering a violation of this Code of Ethics, the Board of Directors of the Fund may impose such sanctions as it deems appropriate. 8. Interpretations Any questions regarding the interpretation of any provisions of this Code of Ethics should be directed to the Secretary of the Fund. 7 EX-99.P(B) 10 STATEMENT OF POLICY/NONPUBLIC INFORMATION December 4, 1996 Exhibit p(b) METROPOLITAN LIFE INSURANCE COMPANY ----------------------------------- STATEMENT OF POLICY WITH RESPECT TO MATERIAL NONPUBLIC INFORMATION ------------------------------ 1. Introduction This Statement of Policy represents the policy of Metropolitan Life Insurance Company ("MetLife") with respect to its directors, officers and employees with regard to material nonpublic information. For ease of reference, directors, officers and employees of MetLife are referred to herein as "Employees". This Statement of Policy is applicable to transactions by MetLife (1) for its general account and separate accounts for which MetLife has day-to-day investment management responsibility, and (2) with respect to other assets for which MetLife has day-to-day investment management responsibility. This Statement of Policy also applies to personal securities transactions of MetLife Employees who obtain material nonpublic information either by virtue of their affiliation with MetLife or by other means. As used in this Statement of Policy, "MetLife" includes Metropolitan Life Insurance Company and MetLife Securities, Inc. II. Prohibited Conduct Court decisions and Securities and Exchange Commission ("SEC") rulings interpreting the federal securities laws make it unlawful for any person to purchase or sell securities on the basis of material nonpublic information, commonly known as "insider trading". The Insider Trading and Securities Fraud Enforcement Act of 1988 ("ITSFEA") requires all investment advisers and broker-dealers (such as MetLife, MetLife Securities, Inc. ("MSI"), State Street Research & Management Company ("State Street"), GFM International Investors Limited ("GFM"), State Street Research Investment Services, Inc., and State Street Research Energy, Inc., to establish, maintain and enforce written policies and procedures reasonably designed to detect and prevent insider trading. ITSFEA also provides additional penalties for individuals who engage in insider trading as well as their employers, if such employers have failed to establish and enforce adequate procedures. In addition, MetLife prohibits certain practices even though they may not be unlawful because MetLife considers them to be poor business practices or to reflect adversely on MetLife's reputation. -2- MetLife's policy is: A. An Employee may not trade for his or her own account (a "Personal Account")/1/, directly or indirectly, in securities/2/ on the basis of material information which is gained in the course of employment or which is gained by any other means and which has not been made known to the general public. (See Section V, "MetLife Procedures"). - --------------------------- /1/ A Personal Account is any brokerage account maintained by or for the benefit of an individual or such person's "family member," including any account in which the individual or family member holds a direct or indirect beneficial interest, retains discretionary investment authority or exercises a power of attorney. The term "family member" means an individual's spouse, child, or other relative, whether related by blood, marriage or otherwise, who either (i) resides with, or (ii) is financially dependent upon, or (iii) whose investments are controlled by the individual. The term also includes any unrelated person whose investments are controlled and whose financial support is materially contributed to by the individual, such as a "significant other." /2/ For purposes of this Statement of Policy, the term "security" shall have the meaning set forth in Section 2(1) of the Securities Act of 1933 as amended, except that it shall not include shares of registered open-end investment companies issued or sponsored by organizations not affiliated with MetLife, securities issued by the Government of the United States of America, short term debt securities that are "government securities" within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, bankers' acceptances, bank certificates of deposit, commercial paper and such other money market instruments as designated by the Compliance Director. Any prohibition or reporting obligation relating to a security shall apply equally to any option, warrant or right to purchase or sell such security and to any security convertible into or exchangeable for such security. Any question about whether a particular instrument is or is not a "security" should be referred to the Compliance Director. -3- B. An Employee may not trade in securities for or on behalf of an account owned, managed or controlled by MetLife (a "Company Account") on the basis of material information which is gained in the course of employment or which is gained by any other means and which has not been made known to the general public. C. An Employee may not recommend to any person either in connection with the Employee's employment or otherwise any transactions in any securities on the basis of material information, whether or not gained in the course of such Employee's employment with MetLife and which has not been made known to the general public. D. An Employee may not communicate material nonpublic information to any person except in furtherance of such Employee's lawful duties as an employee of MetLife. E. In addition, Employees who know or have reason to believe that MetLife or any affiliate is purchasing, selling or actively negotiating with respect to a particular security or other investment in an issuer (or guarantor) (e.g., the provider of a letter of credit for an issuer) of securities (the "issuer") may not trade for his or her Personal Account the securities of that entity until fifteen (15) days after -4- any such purchase or sale by MetLife or the affiliate without the approval of the SEC/NASD Compliance Director of MetLife or his or her designee (the "Compliance Director") . The exact scope of what constitutes "material nonpublic information" is a continuously evolving area of law. For purposes of this Statement of Policy, "material nonpublic information" should be deemed to be any information about an issuer which is nonpublic because it has not been disseminated in a manner which would cause it to be available to investors generally and if there is a substantial likelihood that the information would affect the market price for the securities or any information that a reasonable investor would consider important in deciding whether to buy, sell or hold securities of the issuer. Material nonpublic information about a company or its securities is likely to originate from someone who is an "insider." The concept of "insider" is very broad. The term includes officers, directors and employees of a company. A person can become a "temporary insider" if he or she enters into a special confidential relationship in the conduct of a company's affairs and as a result is given access to information solely for the company's purposes. A temporary insider can include, among others, a company's outside counsel, outside accountants, -5- consultants, bank lending officers, and the employees of such organizations, as well as, in certain cases, secretaries, administrative or legal assistants, messengers and printers. In addition, MetLife itself may become a temporary insider of a company with which it has a business relationship or for which it performs other services. In these situations, the company expects MetLife and its Employees to keep nonpublic information confidential. In addition, a person who receives material nonpublic information from an insider (a "tippee"), may assume the status of an insider with respect to the material nonpublic information received if the tippee knows or should know that this information has been provided in violation of the insider's duty to keep it confidential. Any benefit derived from the misuse of material nonpublic information does not have to be monetary, but can be a reputational or goodwill benefit. For example, an insider who provides material nonpublic information to others in order to make it appear that he or she holds an important position, may violate the law. In addition, for example, a parent who provides material nonpublic information to a son or daughter who then purchases or sells securities may violate the prohibition on tipping . In addition to the general prohibitions against purchasing or selling securities while in possession of material nonpublic -6- information, and against disclosing such information to others who purchase or sell securities discussed above, there is a specific SEC rule concerning trading in connection with tender offers. This rule makes it unlawful to buy or sell securities while in possession of material information relating to a tender offer, if the person buying or selling the securities knows or has reason to know that the information is nonpublic and has been acquired directly or indirectly from the person making or planning to make the tender offer, from the target company, or from any officer, director, partner or employee or other person acting on behalf of either the bidder or the target company. The term "tender offer" generally refers to the purchase of a significant amount of securities of a company at a price above the prevailing market price. Information should be presumed "material" if it relates to such matters as dividend increases or decreases, earnings and earnings estimates, changes in previously released earnings estimates, significant increases or decreases in orders for a company's products, dispositions of subsidiaries or divisions, merger or acquisition proposals or agreements, changes in debt ratings, significant new products or discoveries, extraordinary borrowing, significant major litigation, liquidity problems, extraordinary management developments, purchases or sales of substantial assets, actions by a company that may have an impact on the company's financial condition such as significant write- -7- downs of assets, additions to reserves for bad debts or contingent liabilities, recapitalizations, restructurings spin off s, leveraged buy-outs, contract awards, new products, voluntary calls of debt or preferred stock, public offerings of debt or equity securities, major price and marketing changes; significant litigation, impending bankruptcy, and investigations by government entities. Material information also includes similar major events that would be viewed as having materially altered the total mix of information available regarding a company or the market for its securities. As a rule, information which is no longer timely or cannot otherwise be reasonably anticipated to have any immediate market impact will lack "materiality." Among the factors to be considered in determining whether information is actually "material" are the degree of its specificity, the extent to which it differs from information previously disseminated publicly, and its reliability in view of its nature and the source and the circumstances under which it was received. Nonpublic information is information that has not been publicly disclosed. Information received about an issuer under circumstances which indicate that it is not yet in general circulation in the market place may be deemed to be nonpublic information. As a rule, before determining that information is public, one should be able to point out some readily demonstrable -8- fact to show that the information has been disseminated to the public through, for example, an SEC filing, a press conference or press release or after delivery of the information to a stock exchange, the Associated Press, The New ------- York Times, The Wall Street Journal or appropriate trade publications. In - ---------- ----------------------- certain situations, the insider may be required to know that the information has been publicly disseminated. III. Penalties for Insider Trading Civil and criminal penalties for trading on or communicating material nonpublic information are severe, both for individuals involved in such unlawful conduct and their employers and other controlling persons. A person can be subject to some or all of the penalties below even if he or she does not personally benefit from the violation. Penalties include: . civil injunctions . treble damages . disgorgement of profits . jail sentences (up to 10 years) for each violation . fines for the person who committed the violation of up to three times the profit gained or loss avoided, whether the person actually benefitted or the benefit accrued to a tippee of that person, and -9- . fines for the employer or other controlling person (i.e., ---- supervisors) of up to the greater of $1,000,000 or three times the amount of the profit gained or loss avoided. Events have shown how severe the penalties for insider trading can be and how becoming involved in insider trading can result not only in such things as fines and/or the loss of a person's liberty, but can also destroy careers and families and cause public humiliation and disgrace. The late 1980s cases involving Ivan Boesky, Dennis Levine and Wall Street Journal reporter R. Foster ------------------- Winans are good examples. In addition, any violation of this Statement of Policy can be expected to result in sanctions by MetLife, including, but not limited to, such disciplinary action as a warning, a reprimand, probation, suspension, demotion or dismissal of the persons involved, even if such violation does not also violate the law. IV. Making a Determination Any question as to what constitutes material nonpublic information should be resolved in the most conservative fashion (i.e., that the ---- determination be made that the information in question is material nonpublic information) or the question should be referred to the Compliance Director for a ruling. -10- Before trading for MetLife, yourself or others, in the securities of a company about which you may have potential inside information, ask yourself the following questions: Is the information material? Is this information that an investor would consider important in making his or her investment decisions? Is this information that would substantially affect the market price of the securities if generally disclosed? and Is the information nonpublic? To whom has this information been provided? Has the information been effectively communicated to the marketplace by being published in The Wall Street Journal, The New York Times or other ----------------------- ------------------ publications of general circulation? In certain instances, such as the creation of a so-called "Chinese Wall" with respect to a particular security, you may be notified that you are an insider with respect to such security and that trading in that security is prohibited. If, after consideration of the foregoing, you have any questions as to whether the information is material and nonpublic, you should consult the Compliance Director. -11- V. MetLife Procedures A. Proper Course of Conduct for Those Who Possess Material Nonpublic Information 1. If you have determined that information in your possession may be material and nonpublic (a) you should not purchase or sell the affected securities on behalf of yourself or others, including purchases or sales for any Company or Personal Accounts, (b) you should notify the Compliance Director immediately and consult with the Compliance Director regarding the appropriate course of action, and (c) you should refrain from discussing such information with any other personnel at MetLife or any of its affiliates (e.g., State Street, GFM etc.) except in ---- connection with your lawful duties as an employee of MetLife. 2. In addition, if the material nonpublic information was obtained in the course of your employment with MetLife or otherwise, you should: (i) Identify the issuer or issuers of the securities about which such material nonpublic information relates and notify the Vice President and Investment Counsel of the -12- Securities Investments Section of the Law Department or his or her designee (the "Vice President and Investment Counsel") that such issuer or issuers may need to be placed on the MetLife Restricted List (the "Restricted List") (see below). Since no one else maintains a complete and current restricted list it is extrememly important that the Vice President and Investment Counsel alone be contacted in this regard. In order to comply with the federal securities laws and to detect and prevent both the misuse of material nonpublic information as well as the appearance of impropriety in connection with securities transactions, MetLife maintains a confidential Restricted List containing the names of. companies about which MetLife or its employees possess material nonpublic information. The Restricted List identifies securities that are subject to trading restrictions by MetLife and its employees. A security may be placed on the Restricted List on any occasion where, under the -13- particular facts and circumstances, it is deemed necessary and appropriate to restrict trading in order to prevent the misuse or appearance of misuse of material nonpublic information. During the period during which a security is listed on the Restricted List, neither MetLife nor its Employees who have been apprised of such listing may buy or sell, solicit trades in, or recommend the security. The Vice President and Investment Counsel maintains a record of each addition to or deletion from the Restricted List. This record reflects the date and the time the security was added to or deleted from the Restricted List and the name(s) of the person(s) responsible for the addition to or deletion from the Restricted List (and names of all those who, in addition to the person responsible for placing a security on the Restricted List, also possess the information) and a brief summary of the reasons for the inclusion. -14- The Restricted List is distributed to appropriate personnel, including traders within MetLife. The Restricted List is highly confidential and the contents of the List must not be communicated to any person other than persons deemed appropriate recipients of the Restricted List by the Vice President and Investment Counsel. The Vice President and Investment Counsel also maintains a Watch List for those issuers and their securities where, even though neither MetLife nor its Employees possesses material nonpublic information about such issuers, MetLife or its Employees may, as a result of special relationships or otherwise, appear to be in the position of having such sensitive information. The Vice President and Investment Counsel also maintains a Watch List which lists the securities of issuers about whom MetLife or its Employees have in their possession material nonpublic information as well as the names of those persons within MetLife (e.g., the ---- Board of Directors, CMO members or senior -15- management) who have been given such material nonpublic information and the date and time such persons' names were placed on such list. (ii) Do not communicate the material nonpublic information inside or outside MetLife except to other employees or agents of MetLife or its affiliates who need to know about such information in connection with work being performed on behalf of MetLife or its affiliates. When communicating material nonpublic information to others at MetLife or its agents is deemed necessary, you should inform such other employees or agents of the confidential nature of such information. You should also notify the Vice President and Investment Counsel of the identity of those persons so that their names may be added to the Restricted List. Access to material nonpublic information must be restricted. For example, files containing such information should be securely maintained in one's own office or placed in limited access files within the files of one's unit or department and access to computer files containing such information must be restricted or -16- specially coded to prevent and detect any improper use of such material. As long as the information you possess remains material and nonpublic, you must comply with the provisions outlined in this Statement of Policy. Thereafter, (i) to the extent the securities of the applicable issuer were placed on a Restricted List or the Watch List, you should notify the Vice President and Investment Counsel or his or her designee that removal of such securities may be appropriate and, (ii) you may be free to trade on and communicate the relevant information (subject to any other applicable restrictions contained elsewhere in this Statement of Policy) after being advised by the Vice President and Investment Counsel that such issuer has been removed from the Restricted List. Those persons with access to the Restricted List and/or Watch List will be notified of the removal of any securities from such lists. B. Personal Securities Transactions MetLife has several levels of reporting and monitoring with respect to personal securities transactions based on the nature of the Employee's duties and responsibilities at MetLife and the assessed likelihood of the Employee having access to material nonpublic information in the course of his or her employment. -17- 1. Certification All Employees notified by their Department Heads that they are required to submit Quarterly Securities Transaction Reports (see below) may be required to certify on an annual basis that they have not violated any of the restrictions set forth in this Statement of Policy regarding the use of material nonpublic information obtained through their employment with MetLife or otherwise and that they understand and agree fully to abide by the terms and conditions of this Statement of Policy. 2. Company Accounts Each month, the Compliance Director will receive a listing of all investments organized by account (e.g., MetLife's General Account, Separate ---- Accounts or MetLife investment advisory clients) and will then review the securities transactions in all such accounts to determine whether a security reflected on the Restricted List was purchased or sold in a Company Account. When a security is initially placed on the Restricted list, the Compliance Director will review trading in Company Accounts for the preceding fifteen (15) days. The Compliance Director will then certify that no prohibited trades have occurred and retain such certifications for his or her records. If any prohibited trading has occurred, the Compliance Director will prepare an exception report for all trades in Company Accounts in securities -18- listed in the Restricted List and, in consultation with the MetLife Law Department, investigate why such trade occurred and determine what actions, if any, need to be taken to remedy the situation and prevent such trades from occurring again. 3. Personal Accounts and Personal Securities Transaction Reports MetLife requires Employees of certain units and departments whose activities involve investment advisory activities, and Employees of certain units and departments in which it is probable that material nonpublic information may be obtained in the course of carrying out their duties as MetLife Employees, to report all personal securities transactions on a quarterly basis. Initially, each Department Head will be requested to supply the Compliance Director with a list of such Employees. Thereafter, Department Heads will be responsible for notifying the Compliance Director in a timely fashion of any additions or deletions to such list. Annually, the Compliance Director will request each Department Head to review the list currently on file with the Compliance Director for accuracy and completeness. Depending upon the likelihood that an Employee could obtain access to material nonpublic information, Employees within particular departments or units may be exempted from reporting. Personal Securities Transaction Report Forms for this purpose will be provided to those Employees required to file such reports. These -19- reports will be subject to review by the Compliance Director (See "Supervisory Procedures" below). Certain Employees not regularly required to submit Personal Securities Transaction Reports may, however, be required to submit Personal Securities Transaction Reports on a temporary basis as circumstances may warrant. Such Employees will be so notified by their Department Head or by the Compliance Director. VI. Personal Trading Reporting of Securities Transactions - ------------------------------------ Any member of the Board of Directors of MetLife and any officer of MetLife at the level of Senior Vice President or above and any person notified by his or her Department Head or Compliance Director is required to submit within ten days of the end of each calendar quarter a Personal Securities Transaction Report reflecting securities transactions in any Personal Account during the preceding quarter. In determining whether to subject other employees or classes of employees to this reporting requirement the Compliance Director, shall, in consultation with such Employee's Department Head, consider the Employee's position and responsibilities. -20- Personnel occupying any of the positions referred to above shall become subject to the reporting requirements upon receipt of these policies and procedures. The quarterly Personal Securities Transaction Report shall reflect the following information: the title and amount of the security; the date; the nature of the transaction (i.e., purchase, sale or other acquisition or disposition); the price at which the transaction was effected; and the name of the broker, dealer or bank with or through whom the transaction was effected. All information concerning Personal Accounts and transactions effected therein shall be maintained by MetLife for six years. Such information will be maintained on a confidential basis and will be reasonably secured to prevent access to such records by any unauthorized personnel. Following the placement of a security on the MetLife Restricted List, the Compliance Director or his designee shall monitor all trading by individuals required to report pursuant to this Policy in such security reported to him or her. All Personal Securities Transactions Reports will be compared by the Compliance Director against the Restricted List in effect at the time of the particular purchase or sale transaction. The Compliance Director shall complete an exception report for all personal trades in securities reflected on the Restricted List. -21- VII. Supervisory Procedures A. Preventative Measures The Compliance Director will review the Personal Securities Transactions Reports in conjunction with information concerning MetLife's securities activities and other relevant information about MetLife's activities to determine if any questionable trading activity has occurred or if there has been any other trading which in the judgment of the Compliance Director may be questionable. If any such trading does appear to have occurred, the Compliance Director will seek to determine the extent, if any, to which MetLife's policies regarding the use of material nonpublic information have been violated. In determining whether to initiate an inquiry, the Compliance Director shall consider the following: . the size of the account; . prior trading activity in the account; . size of the trade in question; . type of transaction, e.g., short sale or option transaction; -22- . the timing of the trade in relation to receipt by MetLife of material non-public information; . relationships between the trader and persons or departments that received material nonpublic information; and . any pattern of trading. The Compliance Director will maintain a record of each investigation of possible misuse of material nonpublic information. The record shall include such information as the Compliance Director may deem appropriate, including the following information: . the name of the security; . the date on which the investigation was commenced; . an identification of the accounts involved; and . a summary of the disposition of the investigation. If a violation appears to exist, the Compliance Director will take such action as he or she shall deem appropriate, including referral to MetLife's senior management, sanctions -23- against the Employee(s) involved and/or referral of the matter to appropriate regulatory authorities. The Compliance Director and/or members of the Law Department will hold periodic meetings with selected MetLife personnel to review this Statement of Policy, including any developments in the law and to answer any questions of interpretation or application of this Statement of Policy. The meetings may consist of in person, telephonic, CD ROM, personal computer or videoconferencing meetings. This Statement of Policy applies with equal force to all MetLife Employees and any Employees with questions concerning this Statement of Policy should direct their questions to the Compliance Director. B. Education All MetLife employees will be provided with a version of this Statement of Policy. Personnel who are subject to the quarterly securities transaction reporting requirements set forth above shall also receive a copy of these policies and procedures and shall execute an acknowledgment form indicating that they have received and read these policies and procedures. The executed forms will be retained by the Compliance Director. -24- Persons subject to the quarterly reporting requirement will be required to certify compliance with the Statement of Policy and the Insider Trading Procedures on an annual basis. Informational material describing the basic elements of MetLife's Statement of Policy with respect to material nonpublic information will be distributed to all employees on at least an annual basis. In addition, a variety of educational materials designed to inform MetLife's employees about the nature of material nonpublic information and the dangers of trading on such information for themselves as well as MetLife will be produced and distributed. Such educational materials may include brochures, videotapes, CD-ROMs, articles in MetLife internal publications, training materials, segments on the "MetLife News," etc. C. Review of Procedures This Statement of Policy will be reviewed no less frequently than annually and appropriate revisions in it will be made from time to time promptly as dictated or suggested by guidelines promulgated by the SEC, developments in the law, questions or interpretation and application and practical experience with the procedures contemplated by this Statement of Policy. -25- D. Overall Supervision Overall responsibility for supervision and implementation of the programs and procedures described in this Statement of Policy rests with the Compliance Director. The Compliance Director has the authority to expand the certification and personal securities transaction reporting requirements to any Employee or group of Employees of MetLife as the Compliance Director shall deem appropriate, on a temporary or permanent basis. In addition, failure by any Employee to comply with any of the various reporting requirements specifically imposed by this Statement of Policy upon him or her, including the filing of false information, may subject the Employee to sanctions by MetLife including possible dismissal. E. Consultation Compliance with applicable laws and with MetLife's policies described in this Statement of Policy and MetLife's Policy Guide for Business Conduct or any other policy or procedure with respect to insider trading, is the responsibility of each person. However, interpretative questions may arise, such as whether certain information is material or nonpublic, or whether the restrictions on trading in securities set forth in this Statement of Policy are applicable in a given situation. The Compliance -26- Director should be contacted if you have any questions whatsoever concerning this Statement of Policy. -27- ACKNOWLEDGMENT I hereby acknowledge and certify receipt of the Statement of Policy with Respect to Material Nonpublic Information of Metropolitan Life Insurance Company and that: 1. I have read and understand the Statement of Policy and its applicability to me; and 2. I have complied with the requirements of the Statement of Policy; and 3. I have disclosed or reported all personal securities transactions required to be disclosed or reported pursuant to the requirements of the Statement of Policy. Signed: ------------------------------------- ----------------------------- (Signature) (Position) ------------------------------------- ----------------------------- (Printed Name) (Position) Date: ------------------------------------- ----------------------------- (Company) -28- METROPOLITAN LIFE INSURANCE COMPANY QUARTERLY PERSONAL SECURITIES TRANSACTION REPORT NAME: ________________________ For the Quarter Ended_____________________ TITLE: _______________________
====================================================================================================== Name of Broker- Company Dealer, Bank Issuing Title of Nature of Unit Effecting Date of Security Security Quantity Buy/Sell Transaction Price Transaction Transaction - -------- -------- -------- -------- ----------- ----- ----------- ----------- * - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ *Indicate whether Direct or Indirect
I hereby confirm that the foregoing constitutes the entirety of my security transactions for the applicable period. ___________________________ ___________ (Signature) (Date) 29 EX-99.Q 11 SPECIMEN PRICE MAKE-UP SHEET Exhibit Q
December 31, 1999 Value of Total Registrant's Offering Portfolio Securities Outstanding Price and Other Assets Securities Per Unit State Street Research Growth Portfolio $3,623,315,646 92,575,151 39.14 State Street Research Income Portfolio $ 477,879,699 40,899,707 11.68 State Street Research Money Market Portfolio $ 51,544,991 4,983,562 10.34 State Street Research Diversified Portfolio $2,874,411,645 157,291,656 18.27 State Street Research Aggressive Growth Portfolio $1,600,840,700 41,639,729 38.45 MetLife Stock Index Portfolio $4,205,201,687 103,608,352 40.59 Putnam International Stock Portfolio $ 317,830,871 22,911,816 13.87 Loomis Sayles High Yield Bond Portfolio $ 61,701,369 6,787,498 9.09 Janus Mid Cap Portfolio $1,931,797,054 52,874,145 36.54 T. Rowe Price Small Cap Growth Portfolio $ 269,517,642 17,130,944 15.73 Scudder Global Equity Portfolio $ 171,714,421 11,518,807 14.91 Harris Oakmark Large Cap Value Portfolio $ 38,377,529 4,297,077 8.93 Neuberger Berman Partners Mid Cap Value Portfolio $ 38,721,989 3,234,601 11.97 T. Rowe Price Large Cap Growth Portfolio $ 51,401,516 3,833,421 13.41 Lehman Brothers Aggregate Bond Index Portfolio $ 129,338,660 13,680,253 9.45 Morgan Stanley EAFE Index Portfolio $ 82,354,915 6,175,602 13.34 Russell 2000 Index Portfolio $ 111,728,632 8,921,351 12.52
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