-----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, KgQleI72fsVXo7Fo57vcAg5q838nB4Q0QRqcMeV7JS1czEljPGEgCh2beS81ctER HTL0l98GxOz98FvB+Ko9RA== 0001047469-04-007065.txt : 20040309 0001047469-04-007065.hdr.sgml : 20040309 20040309120811 ACCESSION NUMBER: 0001047469-04-007065 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040309 EFFECTIVENESS DATE: 20040309 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MML SERIES INVESTMENT FUND CENTRAL INDEX KEY: 0000067160 IRS NUMBER: 042476032 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-02224 FILM NUMBER: 04656567 BUSINESS ADDRESS: STREET 1: 1295 STATE ST CITY: SPRINGFIELD STATE: MA ZIP: 01111 BUSINESS PHONE: 4137888411 MAIL ADDRESS: STREET 1: 1295 STATE STREET CITY: SPRINGFIELD STATE: MA ZIP: 01111 FORMER COMPANY: FORMER CONFORMED NAME: MML EQUITY INVESTMENT CO INC DATE OF NAME CHANGE: 19850227 FORMER COMPANY: FORMER CONFORMED NAME: MML INVESTMENT CO INC DATE OF NAME CHANGE: 19811109 N-CSR 1 a2129646zn-csr.txt N-CSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-02224 --------- MML Series Investment Fund -------------------------- (Exact name of registrant as specified in charter) 1295 State Street, Springfield, MA 01111 ---------------------------------- ----- (Address of principal executive offices) (Zip code) Frederick C. Castellani 1295 State Street, Springfield, MA 01111 ---------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 413-788-8411 ------------ Date of fiscal year end: 12/31/2003 ---------- Date of reporting period: 12/31/2003 ---------- ITEM 1 REPORTS TO STOCKHOLDERS. (Annual Report for the period 1/1/03 through 12/31/03 is filed herewith) MML SERIES INVESTMENT FUND ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2003 [GRAPHIC] MML INFLATION-PROTECTED BOND FUND MML LARGE CAP VALUE FUND MML EQUITY INDEX FUND MML ENHANCED INDEX CORE EQUITY FUND MML GROWTH EQUITY FUND MML OTC 100 FUND MML SMALL CAP EQUITY FUND MML SMALL COMPANY OPPORTUNITIES FUND MML SMALL CAP GROWTH EQUITY FUND MML EMERGING GROWTH FUND INVEST INSURE RETIRE [MASSMUTUAL FINANCIAL GROUP(SM) LOGO] YOU CAN'T PREDICT. YOU CAN PREPARE.(R) TABLE OF CONTENTS TO OUR SHAREHOLDERS i MML INFLATION-PROTECTED BOND FUND Portfolio Manager Report 1 Portfolio of Investments 3 Financial Statements 4 MML LARGE CAP VALUE FUND Portfolio Manager Report 8 Portfolio of Investments 10 Financial Statements 12 MML EQUITY INDEX FUND Portfolio Manager Report 16 Portfolio of Investments 18 Financial Statements 24 MML ENHANCED INDEX CORE EQUITY FUND Portfolio Manager Report 29 Portfolio of Investments 31 Financial Statements 36 MML GROWTH EQUITY FUND Portfolio Manager Report 40 Portfolio of Investments 42 Financial Statements 46 MML OTC 100 FUND Portfolio Manager Report 50 Portfolio of Investments 52 Financial Statements 54 MML SMALL CAP EQUITY FUND Portfolio Manager Report 58 Portfolio of Investments 60 Financial Statements 62 MML SMALL COMPANY OPPORTUNITIES FUND Portfolio Manager Report 66 Portfolio of Investments 68 Financial Statements 70 MML SMALL CAP GROWTH EQUITY FUND Portfolio Manager Report 74 Portfolio of Investments 76 Financial Statements 79 MML EMERGING GROWTH FUND Portfolio Manager Report 83 Portfolio of Investments 85 Financial Statements 88 NOTES TO FINANCIAL STATEMENTS 92 INDEPENDENT AUDITORS' REPORT 102 DIRECTORS AND OFFICERS (UNAUDITED) 103 FEDERAL TAX INFORMATION (UNAUDITED) 106
MML SERIES INVESTMENT FUND - LETTER TO SHAREHOLDERS December 31, 2003 TO OUR SHAREHOLDERS [PHOTO OF FREDRICK C. CASTELLANI] FREDRICK C. CASTELLANI "THE RENEWED STRENGTH IN ECONOMIC GROWTH AND THE RALLY IN THE EQUITY MARKETS DURING 2003 HIGHLIGHT WHY WE BELIEVE IT IS IMPORTANT FOR PARTICIPANTS TO STAY THE COURSE - AS WELL AS MAINTAIN A PROPERLY DIVERSIFIED PORTFOLIO. WE BELIEVE THIS IS THE BEST STRATEGY WHEN TRYING TO ACHIEVE LONG-TERM RETIREMENT GOALS." 2003: A YEAR OF MANY HAPPY RETURNS Good times returned in 2003 for many equity investors. The stock market indexes and most equity funds generated returns in excess of 25%, with more aggressive strategies doubling that advance. The bond market lagged with single-digit returns in the plain vanilla, high quality corporate and government agency categories, but compelling gains of over 25% also were found in the high yield and foreign bond markets. Only a year ago, investors were faced with three straight years of stock market losses - with grave concerns about a possible fourth "down" year. Their pessimism was not without merit: the economy was sluggish, unemployment was rising and war was on the horizon. Fortunately, the fundamentals improved as the year progressed, leading to increased optimism and strong performance. Stronger-than-expected economic growth and improving corporate profitability fueled the equity markets. U.S. Gross Domestic Product, a broad measure of economic activity, grew by an 8.2% annualized rate in the third quarter, the strongest advance in nearly 20 years. Providing the foundation were strong corporate earnings reports, evidence of recovery in business investment, continued strength in consumer spending, the Federal Reserve (Fed) policy of maintaining low interest rates, tax reductions, increased government spending and positive strides in the war on terror. AGGRESSIVE STOCKS PREVAILED As in a typical market rally, during the third and fourth quarters, the more aggressive categories led the way, with small-cap outperforming large-cap, international leading domestic, growth leading value, and high yield leading Treasuries. The technology-heavy NASDAQ led the major stock indexes, with the Russell 2000 small-cap index close behind, followed by the MSCI EAFE international equity benchmark. Bringing up the rear were the Dow Jones Industrial Average and the S&P 500(R) Index - but both still turned in impressive double-digit returns for the six-month period. BOND RETURNS LAGGED Over the six months ending December 31, 2003, bonds trailed stocks by a wide margin. In the third quarter, the bond market's woes were punctuated by a brutal July, when the Lehman Brothers Aggregate Bond Index had its worst monthly decline in over 20 years. This left many investors who had flocked to the "safety" of the bond market - leaving stocks behind - rudely surprised. (This turn of events also underscores why we continuously caution investors not to use the recent past performance of any asset category as the primary reason for investing.) The fourth quarter was not much better for bond investors, as the Lehman Brothers Aggregate Bond Index advanced a paltry 0.32%. THE 2004 OUTLOOK - TEMPERED OPTIMISM The broad-based stock market rally in 2003 was supported by several factors that continue to provide favorable indicators for 2004, including: - - A U.S. economy that seems to be in the early stages of expansion - - Interest rates which are at a 45-year low - - Low inflation, which should allow the Fed to maintain current interest rate policy - - Reduced taxes - - Improving corporate profitability and earnings growth i Conversely, it is unlikely that the market will be as strong or as broad based in 2004 as it was last year, due to several factors: - - High unemployment - - Interest rates that are more likely to rise than decline - - High debt ratios for consumers and government - - Easier comparisons for corporate profit growth (the low or negative profit numbers companies posted in 2001/2002) are now behind us. In closing, as the euphoria of 2003's investment performance abates, pressure will be on the economy and stock prices to sustain the rally. Emphasis will likely be on inflation and interest rates, earnings growth and employment. While last year's gains in the market are encouraging and give stock investors a reason to smile, we continue to urge all investors to maintain focus on long-term investment objectives. This should include maintaining a diversified portfolio in an effort to better weather the stock market's inevitable ups and downs. /s/ Frederick C. Castellani Frederick C. Castellani PRESIDENT ii MML INFLATION-PROTECTED BOND FUND - PORTFOLIO MANAGER REPORT WHAT IS THE INVESTMENT The objective of the Fund is to achieve as high a total OBJECTIVE OF THE MML rate of return on an annual basis as is considered INFLATION-PROTECTED consistent with prudent investment risk and the BOND FUND? preservation of capital. The Fund normally invests: - at least 80% of its assets in Treasury Inflation-Protected Securities ("TIPS") of varying maturities guaranteed as to timely payment of principal and interest by the full faith and credit of the U.S. government; and - up to 20% of its assets in non-inflation-indexed U.S. securities or non-U.S. securities. HOW DID THE FUND For the 12 months ending December 31, 2003, the Fund's PERFORM DURING 2003? shares returned 7.01%, versus an 8.40% return for the Lehman U.S. Treasury Inflation Note Index. HOW DO TIPS PROTECT Like many other fixed-income securities, TIPS pay AGAINST INFLATION? income twice a year, based on a fixed coupon rate. However, both the principal and the interest payment are adjusted for the level of inflation. The inflation rate--as measured by the Consumer Price Index--results in an adjustment to the principal amount of an inflation-protected security. The coupon rate is then applied to the adjusted principal amount to determine the interest payment. For example, assuming an inflation rate of 3% and a security with a par value of $1,000 and a coupon rate of 1.75%, the adjusted principal amount after one year would be $1,030 ($1,000 increased by 3%). The interest payment would be calculated by multiplying $1,030 by 1.75% instead of using the original $1,000 par value to calculate the amount of interest. WHAT WAS THE The third quarter was characterized by positive INVESTMENT BACKGROUND economic surprises, with many companies announcing DURING THE PERIOD? better-than-expected results. Gross Domestic Product (GDP) was revised upward for the second quarter to an annual rate of 3.3%. This positive economic and business momentum continued during the fourth quarter, as investors became increasingly confident. Another positive development was the increase in hiring within the temporary sector of the job market-often viewed as a precursor to an improvement in the permanent job sector. Conversely, non-farm payrolls, which posted seven straight months of declines through August, showed only a modest increase in September, making this a "jobless recovery." The positive economic and business momentum seen in the third quarter continued during the closing quarter of 2003. Investors' increased confidence was unabated through year-end. The monetary stimulus that the Federal Reserve (Fed) started back in 2002 remained in place, with interest rates left unchanged. It is widely believed that the Fed has room to keep rates at current levels well into 2004. This is despite the stunning GDP figure of 8.2% for the third quarter. For the year, the GDP remained at a more reasonable figure, in the 4% to 5% range. While this does increase the inflationary pressures, we believe that these pressures are manageable. HOW DID THIS TIPS had a strong 2003, returning over 8% for the year. INVESTMENT ENVIRONMENT While this return was not as strong as 2002's, the AFFECT TIPS? performance is still being driven by demand. Supply continues to be low, with Treasury issuance only twice a year. (The next rounds are scheduled for January and July 2004.) We have seen some issuance outside the of the government sector, with some agency offerings as well as a few corporate issuances; however, the Fund remains highly concentrated. WHAT IS YOUR OUTLOOK? Looking forward, we expect a continuation of the improving outlook. We expect the Federal Reserve to remain on the sidelines as far as interest rates are concerned, at least through the first half of 2004. If we experience an environment where both interest rates are rising and inflation is increasing, the Fund should benefit. 1 [CHART] DURATION DIVERSIFICATION (12/31/03) MML INFLATION-PROTECTED BOND FUND AVERAGE DURATION = 4.48 YEARS LESS THAN 1 YEAR 11.9% 1-3 YEARS 26.3% 3-5 YEARS 26.3% 5-10 YEARS 35.5%
[CHART] QUALITY STRUCTURE (12/31/03) MML TREASURY-INFLATION PROTECTED BOND FUND U.S. Governments Cash Equivalents Aaa/AAA 88.8% Aa/AA 2.8% A 8.4%
GROWTH OF A $10,000 INVESTMENT Hypothetical Investments in MML Inflation-Protected Bond Fund and the U.S. Treasury Inflation Note Index MML SERIES INVESTMENT FUND
SINCE INCEPTION ONE YEAR AVERAGE ANNUAL TOTAL RETURN 1/1/03 - 12/31/03 8/30/02 - 12/31/03 MML Inflation- Protected Bond Fund 7.01% 7.67% - -------------------------------------------------------------- Lehman U.S. Treasury Inflation Note Index 8.40% 8.67%
GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION
ML INFLATION-PROTECTED BOND FUND LEHMAN U.S. TREASURY INFLATION NOTE INDEX 8/30/2002 $ 10,000 $ 10,000 Dec-2002 $ 10,317 $ 10,306 Dec-2003 $ 11,040 $ 11,176
THE INVESTMENT RETURN AND PRINCIPAL VALUE OF SHARES OF THE FUND WILL FLUCTUATE WITH MARKET CONDITIONS SO THAT SHARES OF THE FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INVESTORS SHOULD NOTE THAT THE FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND, WHILE THE LEHMAN U.S. TREASURY INFLATION NOTE INDEX IS UNMANAGED AND DOES NOT INCUR EXPENSES, AND CANNOT BE PURCHASED DIRECTLY BY INVESTORS. THE FUND'S RETURN REFLECTS CHANGES IN THE NET ASSET VALUE PER SHARE WITHOUT THE DEDUCTION OF ANY PRODUCT CHARGES. THE INCLUSION OF THESE CHARGES WOULD HAVE REDUCED THE PERFORMANCE SHOWN HERE. PAST PERFORMANCE IS NO INDICATION OF FUTURE RESULTS. 2 MML INFLATION-PROTECTED BOND FUND - PORTFOLIO OF INVESTMENTS DECEMBER 31, 2003
PRINCIPAL MARKET AMOUNT VALUE ------------- ------------- BONDS & NOTES -- 97.9% CORPORATE DEBT -- 15.4% Household Finance Corp. 4.350% 12/10/2013 $ 1,500,000 $ 1,477,125 International Bank for Reconstruction & Development 3.000% 12/10/2013 1,500,000 1,500,000 Morgan Stanley Series C 4.390% 11/01/2013 1,000,000 988,040 SLM Corp. 4.500% 11/21/2013 1,500,000 1,473,750 ------------- TOTAL CORPORATE DEBT (COST $5,491,947) 5,438,915 ------------- U.S. GOVERNMENT AGENCY OBLIGATIONS -- 22.7% FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) -- 9.1% PASS-THROUGH SECURITIES FHLMC 3.625% 09/15/2008 1,250,000 1,256,489 FHLMC 4.500% 07/15/2013 2,000,000 1,973,399 ------------- TOTAL PASS-THROUGH SECURITIES 3,229,888 ------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) -- 8.3% Other FNMA (Benchmark Note) 2.500% 06/15/2008 1,000,000 965,367 FNMA (Benchmark Note) 4.375% 03/15/2013 2,000,000 1,965,801 ------------- TOTAL OTHER 2,931,168 ------------- OTHER AGENCIES -- 5.3% Tennessee Valley Authority 3.375% 01/15/2007 1,751,565 1,878,466 ------------- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $8,022,793) 8,039,522 ------------- U.S. TREASURY OBLIGATIONS -- 59.8% U.S. TREASURY BONDS -- 34.6% U.S. Treasury Inflation Index 3.000% 07/15/2012 $ 2,685,586 $ 2,923,931 U.S. Treasury Inflation Index 3.375% 04/15/2032 661,854 817,080 U.S. Treasury Inflation Index 3.625% 04/15/2028 2,247,665 2,781,837 U.S. Treasury Inflation Index 3.875% 01/15/2009 2,070,045 2,338,504 U.S. Treasury Inflation Index 3.875% 04/15/2029 2,622,159 3,393,237 ------------- TOTAL U.S. TREASURY BONDS 12,254,589 ------------- U.S. TREASURY NOTES -- 25.2% U.S. Treasury Inflation Index 1.875% 07/15/2013 1,450,526 1,439,194 U.S. Treasury Inflation Index 3.375% 01/15/2007 373,667 404,728 U.S. Treasury Inflation Index 3.375% 01/15/2012 797,061 890,716 U.S. Treasury Inflation Index 3.500% 01/15/2011 1,514,747 1,697,700 U.S. Treasury Inflation Index 3.625% 01/15/2008 2,422,013 2,679,352 U.S. Treasury Inflation Index 4.250% 01/15/2010 1,588,951 1,840,452 ------------- TOTAL U.S. TREASURY NOTES 8,952,142 ------------- TOTAL U.S. TREASURY OBLIGATIONS (COST $20,284,041) 21,206,731 ------------- TOTAL BONDS & NOTES (COST $33,798,781) 34,685,168 ------------- SHORT-TERM INVESTMENTS -- 0.7% REPURCHASE AGREEMENT Investors Bank & Trust Company Repurchase Agreement, dated 12/31/2003, 0.72%, due 01/02/2004(a) $ 258,110 $ 258,110 ------------- TOTAL SHORT-TERM INVESTMENTS (AT AMORTIZED COST) 258,110 ------------- TOTAL INVESTMENTS -- 98.6% (COST $34,056,891)* 34,943,278 OTHER ASSETS/ (LIABILITIES) -- 1.4% 492,505 ------------- NET ASSETS -- 100.0% $ 35,435,783 =============
NOTES TO PORTFOLIO OF INVESTMENTS * Aggregate cost for Federal tax purposes. (NOTE 7). (a) Maturity value of $258,120. Collateralized by U.S. Government Agency obligation with a rate of 4.625%, maturity date of 04/25/2016, and an aggregate market value, including accrued interest, of $271,015. The accompanying notes are an integral part of the financial statements. 3 MML INFLATION-PROTECTED BOND FUND - FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003 ----------------- ASSETS: Investments, at value (cost $33,798,781) (NOTE 2) $ 34,685,168 Short-term investments, at amortized cost (NOTE 2) 258,110 ----------------- Total Investments 34,943,278 Receivables from: Fund shares sold 166,715 Interest 367,510 ----------------- Total assets 35,477,503 ----------------- LIABILITIES: Payables for: Fund shares repurchased 307 Directors' fees and expenses (NOTE 3) 1,000 Affiliates (NOTE 3): Investment management fees 18,628 Investment advisor 400 Accrued expense and other liabilities 21,385 ----------------- Total liabilities 41,720 ----------------- NET ASSETS $ 35,435,783 ================= NET ASSETS CONSIST OF: Paid-in capital $ 34,407,506 Undistributed net investment income 850 Accumulated net realized gain on investments 141,040 Net unrealized appreciation on investments 886,387 ----------------- $ 35,435,783 ================= SHARES OUTSTANDING: 3,306,430 ================= NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE: $ 10.72 =================
The accompanying notes are an integral part of the financial statements. 4 STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2003 ----------------- INVESTMENT INCOME (NOTE 2): Interest $ 607,816 ----------------- EXPENSES: Investment management fees (NOTE 3) 112,458 Audit and legal fees 18,322 Trustee reporting 12,546 Directors' fees (NOTE 3) 1,246 Custody fees 708 Shareholder reporting fees 216 ----------------- Total expenses 145,496 Expenses waived (NOTE 3) (12,422) ----------------- Net expenses 133,074 ----------------- NET INVESTMENT INCOME 474,742 ----------------- REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain on investment transactions 163,191 Net change in unrealized appreciation (depreciation) on investments 647,327 ----------------- NET REALIZED AND UNREALIZED GAIN 810,518 ----------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,285,260 =================
The accompanying notes are an integral part of the financial statements. 5 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED PERIOD ENDED DECEMBER 31, 2003 DECEMBER 31, 2002* ----------------- ------------------ INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income $ 474,742 $ 86,882 Net realized gain on investment transactions 163,191 - Net change in unrealized appreciation (depreciation) on investments 647,327 239,060 ----------------- ------------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,285,260 325,942 ----------------- ------------------ DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2): From net investment income (474,521) (87,058) From net realized gains (21,371) - NET FUND SHARE TRANSACTIONS (NOTE 5) 23,856,740 10,550,791 ----------------- ------------------ TOTAL INCREASE IN NET ASSETS 24,646,108 10,789,675 NET ASSETS: Beginning of period 10,789,675 - ----------------- ------------------ End of period (including undistributed net investment income of $850 and distributions in excess of net investment income of $151, respectively) $ 35,435,783 $ 10,789,675 ================= ==================
* FOR THE PERIOD FROM AUGUST 30, 2002 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 2002. The accompanying notes are an integral part of the financial statements. 6 MML INFLATION-PROTECTED BOND FUND - FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED PERIOD ENDED 12/31/03 12/31/02+ ---------- ------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 10.23 $ 10.00 INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income 0.23 0.09 Net realized and unrealized gain on investments 0.50 0.23 ---------- ------------ Total income from investment operations 0.73 0.32 ---------- ------------ LESS DISTRIBUTIONS TO SHAREHOLDERS: From net investment income (0.23) (0.09) From net realized gains (0.01) - ---------- ------------ Total distributions (0.24) (0.09) ---------- ------------ NET ASSET VALUE, END OF PERIOD $ 10.72 $ 10.23 ========== ============ TOTAL RETURN(a) 7.01% 3.17%** RATIOS / SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 35,436 $ 10,790 Ratio of expenses to average daily net assets: Before expense waiver 0.78% 1.57%* After expense waiver# 0.71% 0.71%* Net investment income to average daily net assets 2.53% 2.54%* Portfolio turnover rate 25% 0%**
* ANNUALIZED. ** PERCENTAGE REPRESENTS RESULTS FOR THE PERIOD AND ARE NOT ANNUALIZED. + FOR THE PERIOD FROM AUGUST 30, 2002 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 2002. # COMPUTED AFTER GIVING EFFECT TO AN AGREEMENT BY MASSMUTUAL TO WAIVE CERTAIN FEES AND EXPENSES OF THE FUND FOR THE PERIOD AUGUST 30, 2002 THROUGH DECEMBER 31, 2002 AND FOR THE YEAR ENDED DECEMBER 31, 2003. (a) TOTAL RETURN INFORMATION SHOWN IN THE FINANCIAL HIGHLIGHTS TABLE DOES NOT REFLECT EXPENSES THAT APPLY AT THE SEPARATE ACCOUNT LEVEL OR TO RELATED INSURANCE PRODUCTS. INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURN FIGURES FOR ALL PERIODS SHOWN. The accompanying notes are an integral part of the financial statements. 7 MML LARGE CAP VALUE FUND - PORTFOLIO MANAGER REPORT WHAT IS THE INVESTMENT The objective of the Fund is to achieve long-term OBJECTIVE OF THE MML growth of capital and income by investing primarily in LARGE CAP VALUE FUND? a diversified portfolio of equity securities of larger, well-established companies (generally those with market capitalizations over $5.0 billion), using a value-oriented investment strategy. HOW DID THE FUND For the 12 months ending December 31, 2003, the Fund's PERFORM DURING 2003? shares returned 29.60%, outperforming the 28.67% return of the S&P 500 Index, a market capitalization-weighted, unmanaged index of 500 common stocks. WHAT WAS THE In the three months ended September 30, 2003, U.S. INVESTMENT BACKGROUND equities rose slightly, preserving gains from the first DURING THE PERIOD? half of the year through the summer. The stock market, as represented by the S&P 500 Index, returned 2.7% in the third quarter. In the fourth quarter, the stock market advanced more heartily, returning 12.2%. Over the same period, the S&P Barra Value and Russell 1000 Value Indexes gained 14.5% and 14.2%, respectively. WHAT FACTORS During the third quarter, positions in the financial CONTRIBUTED TO THE and industrial sectors contributed to the Fund's FUND'S PERFORMANCE - performance, while those in health care, energy and AND HOW DID YOU consumer staples detracted. These results were RESPOND? primarily the effect of stock selection, rather than the result of a specific sector strategy. During the three-month period ending December 31, top-performing positions included Altria Group, Tyco International, American International Group, HSBC Holdings and Progressive Corp. Takefuji and Safeway were among the positions that detracted from performance during the period. During the fourth quarter, notable changes to the portfolio included the purchase of HCA and Fifth Third Bancorp and the sale of Dover and Safeway. While we continued to have confidence in Dover's management team, we sold our position in the company because we felt that its businesses no longer justified the company's valuation. We sold the portfolio's position in Safeway on the belief that competitive threats (in particular from Wal-Mart) could lead to the deterioration of Safeway's long-term earnings power. WHAT IS YOUR OUTLOOK? We anticipate the current "trading range" environment to persist into the foreseeable future. We believe that market averages may be challenged for some time, but that stock-picking leaves open the possibility of achieving above-average returns. 8 MML LARGE CAP VALUE FUND LARGEST STOCK HOLDINGS (12/31/03) American Express Co. Altria Group, Inc. American International Group, Inc. Berkshire Hathaway, Inc. Cl. A Citigroup, Inc. Tyco International Limited Wells Fargo & Co. HSBC Holdings PLC Sealed Air Corp. Bank One Corp. GROWTH OF A $10,000 INVESTMENT Hypothetical Investments in MML Large Cap Value Fund and the S&P 500 Index MML SERIES INVESTMENT FUND TOTAL RETURN
SINCE INCEPTION ONE YEAR AVERAGE ANNUAL 1/1/03 - 12/31/03 5/1/00 - 12/31/03 MML Large Cap Value Fund 29.60% -1.26% - ------------------------------------------------------------ S&P 500 Index 28.67% -5.60%
[CHART] GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION
MML LARGE CAP VALUE FUND S&P 500 INDEX ------------------------ ------------- 5/1/2000 $ 10,000 $ 10,000 12/2000 $ 9,895 $ 9,162 12/2001 $ 8,791 $ 8,074 12/2002 $ 7,364 $ 6,290 12/2003 $ 9,544 $ 8,094
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF SHARES OF THE FUND WILL FLUCTUATE WITH MARKET CONDITIONS SO THAT SHARES OF THE FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INVESTORS SHOULD NOTE THAT THE FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND, WHILE THE S&P 500 INDEX IS UNMANAGED AND DOES NOT INCUR EXPENSES, AND CANNOT BE PURCHASED DIRECTLY BY INVESTORS. THE FUND'S RETURN REFLECTS CHANGES IN THE NET ASSET VALUE PER SHARE WITHOUT THE DEDUCTION OF ANY PRODUCT CHARGES. TOTAL RETURN FIGURES WOULD BE LOWER FOR THE PERIODS PRESENTED IF THEY REFLECTED THESE CHARGES. 9 MML LARGE CAP VALUE FUND - PORTFOLIO OF INVESTMENTS DECEMBER 31, 2003
NUMBER OF MARKET SHARES VALUE ------------- ------------- EQUITIES -- 90.8% ADVERTISING -- 0.4% WPP Group PLC Sponsored ADR (United Kingdom) 4,200 $ 206,430 ------------- BANKING, SAVINGS & LOANS -- 20.1% Bank One Corp. 42,300 1,928,457 Citigroup, Inc. 44,900 2,179,446 Fifth Third Bancorp 12,100 715,110 Golden West Financial Corp. 17,300 1,785,187 HSBC Holdings PLC 128,651 2,022,018 Lloyds TSB Group PLC Sponsored ADR (United Kingdom) 15,800 514,290 Providian Financial Corp.* 8,000 93,120 State Street Corp. 3,100 161,448 Wells Fargo & Co. 35,600 2,096,484 ------------- 11,495,560 ------------- BEVERAGES -- 2.1% Diageo PLC Sponsored ADR (United Kingdom)18,500 977,910 Heineken Holding NV Cl. A7,400 253,161 ------------- 1,231,071 ------------- BROADCASTING, PUBLISHING & PRINTING -- 2.0% Gannett Co., Inc. 4,800 427,968 Lagardere S.C.A. SA 12,100 698,363 ------------- 1,126,331 ------------- BUILDING MATERIALS & CONSTRUCTION -- 1.5% Martin Marietta Materials, Inc. 9,100 427,427 Vulcan Materials Co. 9,000 428,130 ------------- 855,557 ------------- COMMERCIAL SERVICES -- 3.3% Block (H&R), Inc. 11,500 636,755 Dun & Bradstreet Corp.*11,450 580,630 Moody's Corp. 10,800 653,940 ------------- 1,871,325 ------------- COMPUTERS & INFORMATION -- 1.8% Lexmark International, Inc.* 12,900 1,014,456 ------------- CONTAINERS -- 3.4% Sealed Air Corp.* 36,400 1,970,696 ------------- DIVERSIFIED FINANCIAL -- 0.5% Takefuji Corp. 6,400 299,188 ------------- ELECTRICAL EQUIPMENT & ELECTRONICS -- 0.5% Agere Systems, Inc. Cl. A* 88,000 268,400 ------------- ENERGY -- 6.2% ConocoPhillips 20,930 $ 1,372,380 Devon Energy Corp. 17,900 1,024,954 EOG Resources, Inc. 12,900 595,593 Occidental Petroleum Corp. 12,700 536,448 ------------- 3,529,375 ------------- FINANCIAL SERVICES -- 14.5% American Express Co. 86,000 4,147,780 Berkshire Hathaway, Inc. Cl. A* 28 2,359,000 Centerpoint Properties Corp. 14,100 1,056,090 Janus Capital Group, Inc. 8,400 137,844 Morgan Stanley 10,600 613,422 ------------- 8,314,136 ------------- FOODS -- 1.4% Hershey Foods Corp. 6,400 492,736 Kraft Foods, Inc. Cl. A 10,000 322,200 ------------- 814,936 ------------- HEALTHCARE -- 1.0% HCA, Inc. 13,000 558,480 ------------- INDUSTRIAL - DIVERSIFIED -- 3.7% Tyco International Limited 79,243 2,099,940 ------------- INSURANCE -- 13.5% American International Group, Inc. 47,150 3,125,102 Aon Corp. 20,300 485,982 Chubb Corp. 3,000 204,300 Loews Corp. 18,700 924,715 Markel Corp.* 200 50,702 Principal Financial Group, Inc. 6,700 221,569 Progressive Corp. 20,700 1,730,313 Sun Life Financial, Inc.4,100 102,582 Transatlantic Holdings, Inc. 11,200 904,960 ------------- 7,750,225 ------------- LODGING -- 0.8% Marriott International, Inc. Cl. A 9,900 457,380 ------------- PHARMACEUTICALS -- 3.2% Eli Lilly & Co. 11,800 829,894 Merck & Co., Inc. 4,300 198,660 Novartis AG 6,300 286,201 Pfizer, Inc. 15,040 531,363 ------------- 1,846,118 ------------- PREPACKAGED SOFTWARE -- 0.9% Microsoft Corp. 18,200 $ 501,228 ------------- RETAIL -- 3.4% AutoZone, Inc.* 3,100 264,151 Costco Wholesale Corp.*46,200 1,717,716 ------------- 1,981,867 ------------- TOBACCO -- 5.7% Altria Group, Inc. 60,100 3,270,642 ------------- TRANSPORTATION -- 0.9% United Parcel Service, Inc. Cl. B 7,200 536,760 ------------- TOTAL EQUITIES (COST $44,668,066) 52,000,101 ============= PRINCIPAL AMOUNT ------------- SHORT-TERM INVESTMENTS -- 13.3% CASH EQUIVALENTS -- 4.9%** Bank of Montreal Eurodollar Time Deposit 1.060% 01/15/2004 $ 7,676 7,676 Bank of Montreal Eurodollar Time Deposit 1.060% 02/17/2004 40,561 40,561 Bank of Nova Scotia Eurodollar Time Deposit 1.080% 03/03/2004 121,682 121,682 Bank of Scotland Eurodollar Time Deposit 1.060% 04/02/2004 30,420 30,420 Bank of the West Eurodollar Time Deposit 1.075% 01/14/2004 30,420 30,420 Barclays Eurodollar Time Deposit 1.090% 03/05/2004 101,401 101,401 BNP Paribas Eurodollar Time Deposit 0.970% 01/07/2004 40,561 40,561 Canadian Imperial Bank of Commerce Bank Note 0.990% 05/18/2004 202,803 202,803 Citigroup Eurodollar Time Deposit 1.080% 01/05/2004 20,280 20,280
The accompanying notes are an integral part of the financial statements. 10
PRINCIPAL MARKET AMOUNT VALUE ------------- ------------- Citigroup Eurodollar Time Deposit 1.090% 03/04/2004 $ 81,121 $ 81,121 Citigroup Eurodollar Time Deposit 1.100% 01/22/2004 20,280 20,280 Credit Agricole Indosuez Eurodollar Time Deposit 1.080% 01/06/2004 208,887 208,887 Dreyfus Cash Management Plus, Inc. Money Market Fund 111,541 111,541 Fannie Mae Discount Note 1.062% 01/02/2004 60,841 60,841 Fleet National Bank Bank Note 1.000% 01/21/2004 101,401 101,401 Freddie Mac Discount Note 1.062% 01/27/2004 80,954 80,954 General Electric Capital Corp. 1.092% 01/05/2004 101,217 101,217 Goldman Sachs Financial Square Prime Obligations Money Market Fund 40,561 40,561 Harris Trust & Savings Bank Eurodollar Time Deposit 1.050% 01/29/2004 22,308 22,308 Merrill Lynch Premier Institutional Money Market Fund 139,530 139,530 Merrimac Money Market Fund 336,652 336,652 Morgan Stanley Dean Witter & Co. 1.080% 01/29/2004 105,457 105,457 National Bank of Commerce Bank Note 1.120% 05/19/2004 50,701 50,701 Royal Bank of Canada Eurodollar Time Deposit 1.050% 02/27/2004 50,701 50,701 Royal Bank of Scotland Eurodollar Time Deposit 1.080% 01/09/2004 40,561 40,561 Royal Bank of Scotland Eurodollar Time Deposit 1.080% 01/15/2004 101,401 101,401 Royal Bank of Scotland Eurodollar Time Deposit 1.090% 03/03/2004 50,701 50,701 Southtrust Bank Eurodollar Time Deposit 1.090% 02/17/2004 60,841 60,841 Svenska Handlesbanken Eurodollar Time Deposit 1.080% 02/04/2004 50,701 50,701 Svenska Handlesbanken Eurodollar Time Deposit 1.085% 01/15/2004 50,701 50,701 Svenska Handlesbanken Eurodollar Time Deposit 1.090% 02/24/2004 101,401 101,401 Toronto Dominion Bank Eurodollar Time Deposit 1.100% 01/08/2004 20,280 20,280 Wells Fargo Eurodollar Time Deposit 1.070% 01/20/2004 243,362 243,362 ------------- 2,827,905 ------------- REPURCHASE AGREEMENT -- 8.4% Investors Bank & Trust Company Repurchase Agreement, dated 12/31/2003, 0.72%, due 01/02/2004(a) 4,799,548 4,799,548 ------------- TOTAL SHORT-TERM INVESTMENTS (AT AMORTIZED COST) 7,627,453 ------------- TOTAL INVESTMENTS -- 104.1% (COST $52,295,519)*** 59,627,554 OTHER ASSETS/ (LIABILITIES) -- (4.1%) (2,352,833) ------------- NET ASSETS -- 100.0% $ 57,274,721 =============
NOTES TO PORTFOLIO OF INVESTMENTS ADR - American Depository Receipt. * Non-income producing security. ** Represents investments of security lending collateral. (NOTE 2). *** Aggregate cost for Federal tax purposes. (NOTE 7). (a) Maturity value of $4,799,740. Collateralized by U.S. Government Agency obligation with a rate of 3.875%, maturity date of 05/25/2007, and an aggregate market value, including accrued interest, of $5,039,526. The accompanying notes are an integral part of the financial statements. 11 MML LARGE CAP VALUE FUND - FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003 ----------------- ASSETS: Investments, at value (cost $44,668,066) (NOTE 2) $ 52,000,101 Short-term investments, at amortized cost (NOTE 2) 7,627,453 ----------------- Total Investments (including securities on loan with market values of $2,731,502) 59,627,554 Cash 506,906 Receivables from: Investment adviser (NOTE 3) 1,950 Fund shares sold 25,441 Interest and dividends 98,819 Foreign taxes withheld 54 ----------------- Total assets 60,260,724 ----------------- LIABILITIES: Payables for: Investments purchased 89,882 Fund shares repurchased 1,776 Securities on loan (NOTE 2) 2,827,905 Directors' fees and expenses (NOTE 3) 4,017 Affiliates (NOTE 3): Investment management fees 39,554 Accrued expense and other liabilities 22,869 ----------------- Total liabilities 2,986,003 ----------------- NET ASSETS $ 57,274,721 ================= NET ASSETS CONSIST OF: Paid-in capital $ 55,271,053 Undistributed net investment income 18,208 Accumulated net realized loss on investments and foreign currency translations (5,346,575) Net unrealized appreciation on investments 7,332,035 ----------------- $ 57,274,721 ================= SHARES OUTSTANDING: 6,125,903 ================= NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE: $ 9.35 =================
The accompanying notes are an integral part of the financial statements. 12 STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2003 ----------------- INVESTMENT INCOME (NOTE 2): Dividends (net of withholding tax of $8,975) $ 714,288 Interest (including securities lending income of $3,399) 10,471 ----------------- Total investment income 724,759 ----------------- EXPENSES: Investment management fees (NOTE 3) 341,417 Audit and legal fees 19,930 Trustee reporting 13,445 Custody fees 12,103 Directors' fees (NOTE 3) 2,759 Shareholder reporting fees 1,950 ----------------- Total expenses 391,604 Expenses waived (NOTE 3) (3,243) Fees paid indirectly (NOTE 3) (2,499) ----------------- Net expenses 385,862 ----------------- NET INVESTMENT INCOME 338,897 ----------------- REALIZED AND UNREALIZED GAIN (LOSS): Net realized loss on: Investment transactions (788,416) Foreign currency transactions (7,588) ----------------- Net realized loss (796,004) ----------------- Net change in unrealized appreciation (depreciation) on investments 12,346,148 ----------------- NET REALIZED AND UNREALIZED GAIN 11,550,144 ----------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 11,889,041 =================
The accompanying notes are an integral part of the financial statements. 13 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED DECEMBER 31, 2003 DECEMBER 31, 2002 ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income $ 338,897 $ 240,633 Net realized loss on investment transactions and foreign currency transactions (796,004) (3,126,455) Net change in unrealized appreciation (depreciation) on investments 12,346,148 (4,230,305) ----------------- ----------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 11,889,041 (7,116,127) ----------------- ----------------- DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2): From net investment income (359,133) (241,225) Tax return of capital - (2,964) NET FUND SHARE TRANSACTIONS (NOTE 5) 11,826,285 5,107,623 ----------------- ----------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 23,356,193 (2,252,693) NET ASSETS: Beginning of year 33,918,528 36,171,221 ----------------- ----------------- End of year (including undistributed net investment income of $18,208 and distributions in excess of net investment income of $2,277, respectively) $ 57,274,721 $ 33,918,528 ================= =================
The accompanying notes are an integral part of the financial statements. 14 FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 12/31/03 12/31/02 12/31/01 12/31/00+ ---------- ---------- ---------- ---------- NET ASSET VALUE, BEGINNING OF PERIOD $ 7.26 $ 8.73 $ 9.86 $ 10.00 ---------- ---------- ---------- ---------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income 0.06 0.05 0.03 0.05*** Net realized and unrealized gain (loss) on investments 2.09 (1.47) (1.13) (0.15) ---------- ---------- ---------- ---------- Total income (loss) from investment operations 2.15 (1.42) (1.10) (0.10) ---------- ---------- ---------- ---------- LESS DISTRIBUTIONS TO SHAREHOLDERS: From net investment income (0.06) (0.05) (0.03) (0.04) Tax return of capital - (0.00)~ - - ---------- ---------- ---------- ---------- Total distributions (0.06) (0.05) (0.03) (0.04) ---------- ---------- ---------- ---------- NET ASSET VALUE, END OF PERIOD $ 9.35 $ 7.26 $ 8.73 $ 9.86 ========== ========== ========== ========== TOTAL RETURN(a) 29.60% (16.23)% (11.16)% (1.05)%** RATIOS / SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 57,275 $ 33,919 $ 36,171 $ 18,052 Ratio of expenses to average daily net assets: Before expense waiver 0.92% 0.92% 0.87% 1.07%* After expense waiver# 0.90%(b) 0.90%(b) 0.87% 0.91%* Net investment income to average daily net assets 0.79% 0.61% 0.48% 0.78%* Portfolio turnover rate 7% 32% 19% 14%**
* ANNUALIZED. ** PERCENTAGE REPRESENTS RESULTS FOR THE PERIOD AND ARE NOT ANNUALIZED. *** PER SHARE AMOUNT CALCULATED ON THE AVERAGE SHARES METHOD. ~ TAX RETURN OF CAPITAL IS LESS THAN $0.01 PER SHARE. + FOR THE PERIOD FROM MAY 1, 2000 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 2000. # COMPUTED AFTER GIVING EFFECT TO AN AGREEMENT BY MASSMUTUAL TO WAIVE CERTAIN FEES AND EXPENSES OF THE FUND FOR THE PERIOD MAY 1, 2000 THROUGH DECEMBER 31, 2000 AND FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2003. (a) TOTAL RETURN INFORMATION SHOWN IN THE FINANCIAL HIGHLIGHTS TABLE DOES NOT REFLECT EXPENSES THAT APPLY AT THE SEPARATE ACCOUNT LEVEL OR TO RELATED INSURANCE PRODUCTS. INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURN FIGURES FOR ALL PERIODS SHOWN. (b) THE FUND HAS ENTERED INTO AGREEMENTS WITH CERTAIN BROKERS TO REBATE A PORTION OF BROKERAGE COMMISSIONS. THE REBATED COMMISSIONS ARE USED TO REDUCE OPERATING EXPENSES OF THE FUND. The accompanying notes are an integral part of the financial statements. 15 MML EQUITY INDEX FUND - PORTFOLIO MANAGER REPORT WHAT IS THE INVESTMENT The objective of the Fund is to achieve long-term OBJECTIVE OF THE MML EQUITY growth of capital through performance that closely INDEX FUND? tracks that of the S&P 500 Index by investing in a portfolio of equity securities that mirrors the sector and stock weightings of the Index. HOW DID THE FUND PERFORM For the 12 months ending December 31, 2003, the DURING THE 2003? Fund's Class I shares returned 28.08%, nearly in line with the 28.67% return of the S&P 500 Index, a market capitalization-weighted, unmanaged index of 500 common stocks. WHAT WAS THE INVESTMENT The S&P 500 Index had a strong fourth quarter BACKDROP DURING THE PERIOD? finish, advancing 12.2%. Value stocks outpaced growth stocks both during the fourth quarter and for the year. For the 12 months ending December 31, value outperformed growth by nearly 600 basis points. As had been the case throughout the year, returns increased as capitalization decreased. Throughout 2003, the economic landscape showed signs of improvement, as evidenced in the continual upward revisions to the all-important Gross Domestic Product (GDP) figures. Most recently, GDP growth has been estimated at an annualized rate of 8.2%. During the second half of the year, investment by corporate America began picking up in earnest. While business spending was well in the single-digit category during the first half of the year, the third and fourth quarters' spending levels increased sharply to mid-teen levels, with significant increases experienced in technology spending. The year concluded with robust corporate earnings, as evidenced by the near-record estimate of the S&P 500's 2004 operating earnings at $62 per share. The equity markets continued to enjoy the Federal Reserve's stimulative stance on monetary policy throughout the year. WHAT FACTORS CONTRIBUTED TO With the exception of health care, THE FUND'S PERFORMANCE? telecommunication services and utilities, in the third quarter all sectors generated positive performance; technology and materials led the pack. Health care was the weakest-performing of the sectors. Turning to the fourth quarter, all sectors generated results of at least 8%, with the materials sector enjoying the largest increase. The two sectors contributing the most to the market's fourth quarter return were financials and information technology, with each advancing nearly 13%. Together, these two sectors account for just under 40% of the Index's weighting. Financials and technology also drove performance for the year, with financials advancing by 31% and technology, 47%. The only sector to generate single-digit returns for the year was telecommunication services, with its 7.1% return. WHAT IS YOUR OUTLOOK? Improvement in business performance this cycle, especially corporate profitability, should support further, if more modest, gains in 2004. A stronger cyclical recovery and a potential higher secular growth rate are not fully discounted in equity markets. The state of the business cycle, the end of the bear market, and the economy's remarkable resilience and productivity argue that 2004 will be a favorable year for equity investors. Unquestionably, risk exists - particularly, exogenous threats like terrorism - but markets adjust to these risks and take them into account. In such instances, they do not ordinarily cause volatility; only when unforeseen events happen does the market respond, in either a positive or negative direction. 16 MML EQUITY INDEX FUND LARGEST STOCK HOLDINGS (12/31/03) General Electric Co. Microsoft Corp. Exxon Mobil Corp. Pfizer, Inc. Citigroup, Inc. Wal-Mart Stores, Inc. Intel Corp. American International Group, Inc. Cisco Systems, Inc. International Business Machines Corp. GROWTH OF A $10,000 INVESTMENT Hypothetical Investments in MML Equity Index Fund Class I and the S&P 500 Index. MML SERIES INVESTMENT FUND TOTAL RETURN
FIVE YEAR SINCE INCEPTION ONE YEAR AVERAGE ANNUAL AVERAGE ANNUAL 1/1/03 - 12/31/03 1/1/99 - 12/31/03 5/1/97 - 12/31/03 MML Equity Index Fund Class I 28.08% -1.07% 6.07% - ----------------------------------------------------------------------------- S&P 500 Index 28.67% -0.57% 6.60%
[CHART] GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION MML Equity Index Fund 5/1/97 $ 10,000 $ 10,000 12/97 $ 12,193 $ 12,255 12/98 $ 15,634 $ 15,757 12/99 $ 18,811 $ 19,073 12/00 $ 17,016 $ 17,338 12/01 $ 14,921 $ 15,279 12/02 $ 11,569 $ 11,903 12/03 $ 14,818 $ 15,316
Hypothetical Investments in MML Equity Index Fund Class II, Class III and the S&P 500 Index MML SERIES INVESTMENT FUND TOTAL RETURN
SINCE INCEPTION ONE YEAR AVERAGE ANNUAL 1/1/03 - 12/31/03 5/1/00 - 12/31/03 MML Equity Index Fund Class II 28.31% -5.89% MML Equity Index Fund Class III 28.38% -5.84% - ----------------------------------------------------------------------------- S&P 500 Index 28.67% -5.60%
[CHART] 5/1/2000 $ 10,000 $ 10,000 $ 10,000 12/00 $ 9,137 $ 9,150 $ 9,162 12/01 $ 8,024 $ 8,024 $ 8,074 12/02 $ 6,236 $ 6,244 $ 6,290 12/03 $ 8,001 $ 8,016 $ 8,094
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF SHARES OF THE FUND WILL FLUCTUATE WITH MARKET CONDITIONS SO THAT SHARES OF THE FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INVESTORS SHOULD NOTE THAT THE FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND, WHILE THE S&P 500 INDEX IS UNMANAGED AND DOES NOT INCUR EXPENSES, AND CANNOT BE PURCHASED DIRECTLY BY INVESTORS. THE FUND'S RETURN REFLECTS CHANGES IN THE NET ASSET VALUE PER SHARE WITHOUT THE DEDUCTION OF ANY PRODUCT CHARGES. TOTAL RETURN FIGURES WOULD BE LOWER FOR THE PERIODS PRESENTED IF THEY REFLECTED THESE CHARGES. 17 MML EQUITY INDEX FUND - PORTFOLIO OF INVESTMENTS DECEMBER 31, 2003
NUMBER OF MARKET SHARES VALUE ------------- ------------- EQUITIES -- 98.9% ADVERTISING -- 0.2% Interpublic Group of Companies, Inc.* 14,807 $ 230,989 Monster Worldwide, Inc.* 4,676 102,685 Omnicom Group, Inc. 7,306 638,033 ------------- 971,707 ------------- AEROSPACE & DEFENSE -- 1.8% Boeing Co. 32,769 1,380,886 General Dynamics Corp. 7,607 687,597 Goodrich Corp. 4,539 134,763 Honeywell International, Inc. 33,090 1,106,199 Lockheed Martin Corp. 17,640 906,696 Northrop Grumman Corp. 7,084 677,230 Raytheon Co. 15,788 474,272 Rockwell Collins, Inc. 6,568 197,237 United Technologies Corp. 18,111 1,716,379 ------------- 7,281,259 ------------- AIR TRANSPORTATION -- 0.1% Delta Air Lines, Inc. 4,599 54,314 Southwest Airlines Co. 31,040 500,986 ------------- 555,300 ------------- APPAREL, TEXTILES & SHOES -- 0.6% The Gap, Inc. 34,945 811,073 Jones Apparel Group, Inc. 4,896 172,486 Limited Brands 19,330 348,520 Liz Claiborne, Inc. 4,074 144,464 Nike, Inc. Cl. B 10,224 699,935 Nordstrom, Inc. 5,035 172,700 Reebok International Limited 2,356 92,638 VF Corp. 4,051 175,165 ------------- 2,616,981 ------------- AUTOMOTIVE & PARTS -- 1.1% AutoNation, Inc.* 10,800 198,396 Cooper Tire & Rubber Co. 2,346 50,157 Dana Corp. 5,703 104,650 Delphi Corp. 20,283 207,089 Ford Motor Co. 71,667 1,146,672 General Motors Corp. 21,630 1,155,042 Genuine Parts Co. 6,329 210,123 The Goodyear Tire & Rubber Co.* 6,265 49,243 Harley-Davidson, Inc. 11,720 557,052 Navistar International Corp.* 2,674 128,058 Paccar, Inc. 4,589 390,616 Visteon Corp. 4,812 50,093 ------------- 4,247,191 ------------- BANKING, SAVINGS & LOANS -- 11.8% AmSouth Bancorp. 12,959 $ 317,495 Bank of America Corp. 57,856 4,653,358 Bank of New York Co., Inc. 29,445 975,218 Bank One Corp. 44,532 2,030,214 BB&T Corp. 21,083 814,647 Capital One Financial Corp. 8,700 533,223 Charter One Financial, Inc. 8,176 282,481 Citigroup, Inc. 200,344 9,724,698 Comerica, Inc. 6,769 379,470 Fannie Mae 38,276 2,872,997 Fifth Third Bancorp 22,463 1,327,563 First Tennessee National Corp. 5,400 238,140 FleetBoston Financial Corp. 41,402 1,807,197 Freddie Mac 27,386 1,597,152 Golden West Financial Corp. 5,955 614,496 J.P. Morgan Chase & Co. 78,473 2,882,313 KeyCorp 16,310 478,209 Marshall and Ilsley Corp. 8,800 336,600 Mellon Financial Corp. 16,894 542,466 National City Corp. 24,398 828,068 North Fork Bancorporation, Inc. 5,900 238,773 Northern Trust Corp. 8,488 394,013 Providian Financial Corp.* 11,202 130,391 Regions Financial Corp. 8,552 318,134 SLM Corp. 17,742 668,519 SouthTrust Corp. 14,110 461,820 State Street Corp. 13,022 678,186 SunTrust Banks, Inc. 11,090 792,935 Synovus Financial Corp. 11,763 340,186 U.S. Bancorp 76,132 2,267,211 Union Planters Corp. 7,212 227,106 Wachovia Corp. 52,374 2,440,105 Washington Mutual, Inc. 35,076 1,407,249 Wells Fargo & Co. 65,929 3,882,559 Zions Bancorp 3,893 238,758 ------------- 47,721,950 ------------- BEVERAGES -- 2.6% Anheuser-Busch Companies, Inc. 32,348 1,704,093 Brown-Forman Corp. Cl. B 2,290 214,000 The Coca-Cola Co. 95,876 4,865,707 Coca-Cola Enterprises, Inc. 18,074 395,278 Coors (Adolph) Co. Cl. B 1,389 $ 77,923 The Pepsi Bottling Group, Inc. 10,338 249,973 PepsiCo, Inc. 67,908 3,165,871 ------------- 10,672,845 ------------- BROADCASTING, PUBLISHING & PRINTING -- 3.4% American Greetings Corp. Cl. A* 2,423 52,991 Clear Channel Communications, Inc. 23,749 1,112,166 Comcast Corp. Cl. A* 88,318 2,903,013 Dow Jones & Co., Inc. 3,026 150,846 Gannett Co., Inc. 10,735 957,133 Knight Ridder, Inc. 3,055 236,365 The McGraw-Hill Companies, Inc. 7,630 533,490 Meredith Corp. 1,844 90,006 New York Times Co. Cl. A 5,565 265,951 Time Warner, Inc.* 176,908 3,182,575 Tribune Co. 11,909 614,504 Univision Communications, Inc. Cl. A* 12,500 496,125 Viacom, Inc. Cl. B 67,768 3,007,544 ------------- 13,602,709 ------------- BUILDING MATERIALS & CONSTRUCTION -- 0.2% Louisiana-Pacific Corp.* 4,256 76,097 Masco Corp. 19,167 525,367 Vulcan Materials Co. 3,710 176,485 ------------- 777,949 ------------- CHEMICALS -- 1.5% Air Products & Chemicals, Inc. 8,758 462,685 Ashland, Inc. 2,603 114,688 Dow Chemical Co. 35,868 1,491,033 Du Pont (E.I.) de Nemours & Co. 38,904 1,785,305 Eastman Chemical Co. 3,500 138,355 Engelhard Corp. 4,893 146,545 Great Lakes Chemical Corp. 1,955 53,156 Hercules, Inc.* 4,406 53,753 International Flavors & Fragrances, Inc. 3,446 120,334 Monsanto Co. 10,685 307,514 PPG Industries, Inc. 6,689 428,230 Praxair, Inc. 12,564 479,945 Rohm & Haas Co. 8,140 347,659 ------------- 5,929,202 -------------
The accompanying notes are an integral part of the financial statements. 18
NUMBER OF MARKET SHARES VALUE ------------- ------------- COMMERCIAL SERVICES -- 1.8% Allied Waste Industries, Inc.* 12,460 $ 172,945 Apollo Group, Inc. Cl. A* 6,800 462,400 Block (H&R), Inc. 7,074 391,687 Cendant Corp.* 39,442 878,373 Cintas Corp. 6,890 345,396 Concord EFS, Inc.* 19,384 287,659 Convergys Corp.* 6,816 119,007 Donnelley (R.R.) & Sons Co. 4,122 124,278 eBay, Inc.* 25,300 1,634,127 Ecolab, Inc. 9,516 260,453 Equifax, Inc. 5,559 136,195 Fluor Corp. 2,927 116,026 Moody's Corp. 5,646 341,865 Paychex, Inc. 15,097 561,608 PerkinElmer, Inc. 5,008 85,487 Quest Diagnostics, Inc.* 4,064 297,119 Robert Half International, Inc.* 6,680 155,911 Ryder System, Inc. 2,482 84,760 Waste Management, Inc. 22,853 676,449 ------------- 7,131,745 ------------- COMMUNICATIONS -- 1.9% ADC Telecommunications, Inc.* 27,448 81,521 Andrew Corp.* 5,761 66,309 Avaya, Inc.* 15,976 206,729 Ciena Corp.* 19,241 127,760 Citizens Communications Co.* 10,801 134,148 Lucent Technologies, Inc.* 159,879 454,056 Network Appliance, Inc.* 13,420 275,513 Nextel Communications, Inc. Cl. A* 42,530 1,193,392 Qualcomm, Inc. 30,530 1,646,483 SBC Communications, Inc. 130,646 3,405,941 Scientific-Atlanta, Inc. 5,810 158,613 Tellabs, Inc.* 15,712 132,452 ------------- 7,882,917 ------------- COMMUNICATIONS EQUIPMENT -- 0.3% Motorola, Inc. 91,310 1,284,732 ------------- COMPUTER INTEGRATED SYSTEMS DESIGN -- 0.4% Autodesk, Inc. 4,890 120,196 Computer Sciences Corp.* 7,187 317,881 Parametric Technology Corp.* 9,034 35,594 Sun Microsystems, Inc.* 124,108 557,245 Teradyne, Inc.* 7,560 192,402 Unisys Corp.* 12,315 182,878 ------------- 1,406,196 ------------- COMPUTER PROGRAMMING SERVICES -- 0.0% Mercury Interactive Corp.* 3,470 $ 168,781 ------------- COMPUTERS & INFORMATION -- 3.2% Apple Computer, Inc.* 14,426 308,284 Cisco Systems, Inc.* 268,973 6,533,354 Comverse Technology, Inc.* 7,222 127,035 Dell, Inc.* 99,247 3,370,428 EMC Corp.* 93,632 1,209,725 Gateway, Inc.* 12,490 57,454 International Game Technology 13,216 471,811 Jabil Circuit, Inc.* 7,678 217,287 Lexmark International, Inc.* 4,964 390,369 Solectron Corp.* 32,081 189,599 Symbol Technologies, Inc. 8,835 149,223 ------------- 13,024,569 ------------- COMPUTERS & OFFICE EQUIPMENT -- 2.5% Electronic Data Systems Corp. 18,471 453,278 Hewlett-Packard Co. 119,815 2,752,151 International Business Machines Corp. 67,314 6,238,662 Pitney Bowes, Inc. 9,002 365,661 Xerox Corp.* 31,114 429,373 ------------- 10,239,125 ------------- CONTAINERS -- 0.2% Ball Corp. 2,210 131,650 Bemis Co., Inc. 2,083 104,150 Pactiv Corp.* 5,959 142,420 Sealed Air Corp.* 3,191 172,761 Temple-Inland, Inc. 2,038 127,721 ------------- 678,702 ------------- COSMETICS & PERSONAL CARE -- 2.4% Alberto-Culver Co. Cl. B 2,138 134,865 Avon Products, Inc. 9,178 619,423 Colgate-Palmolive Co. 21,477 1,074,924 The Gillette Co. 39,983 1,468,576 Kimberly-Clark Corp. 20,103 1,187,886 The Procter & Gamble Co. 50,754 5,069,310 ------------- 9,554,984 ------------- DATA PROCESSING & PREPARATION -- 0.7% Automatic Data Processing, Inc. 23,104 915,149 Deluxe Corp. 2,314 95,638 First Data Corp. 28,860 1,185,857 Fiserv, Inc.* 7,821 309,008 IMS Health, Inc. 9,324 231,795 NCR Corp.* 3,750 145,500 ------------- 2,882,947 ------------- ELECTRIC UTILITIES -- 2.4% AES Corp.* 21,449 $ 202,479 Allegheny Energy, Inc.* 5,120 65,331 Ameren Corp. 5,781 265,926 American Electric Power Co. 15,057 459,389 Calpine Corp.* 14,571 70,087 CenterPoint Energy, Inc. 11,663 113,014 Cinergy Corp. 6,763 262,472 CMS Energy Corp.* 5,538 47,184 Consolidated Edison, Inc. 9,150 393,542 Constellation Energy Group, Inc. 5,925 232,023 Dominion Resources, Inc. 12,178 777,322 DTE Energy Co. 6,037 237,858 Duke Energy Corp. 36,535 747,141 Edison International* 12,430 272,590 Entergy Corp. 8,860 506,172 Exelon Corp. 12,968 860,556 FirstEnergy Corp. 13,357 470,166 FPL Group, Inc. 7,086 463,566 NiSource, Inc. 11,046 242,349 PG&E Corp.* 16,321 453,234 Pinnacle West Capital Corp. 3,200 128,064 PPL Corp. 6,889 301,394 Progress Energy, Inc. 9,672 437,755 Public Service Enterprise Group, Inc. 8,698 380,972 Southern Co. 29,487 891,982 Teco Energy, Inc. 7,361 106,072 TXU Corp. 12,877 305,442 ------------- 9,694,082 ------------- ELECTRICAL EQUIPMENT & ELECTRONICS -- 7.5% Advanced Micro Devices, Inc.* 14,060 209,494 Altera Corp.* 15,320 347,764 American Power Conversion Corp. 7,630 186,554 Analog Devices, Inc. 14,070 642,296 Applied Micro Circuits Corp.* 10,300 61,594 Broadcom Corp. Cl. A* 11,753 400,660 Emerson Electric Co. 16,657 1,078,541 General Electric Co. 391,193 12,119,159 Intel Corp. 254,502 8,194,964 JDS Uniphase Corp.* 55,188 201,436 Johnson Controls, Inc. 3,625 420,935 Kla-Tencor Corp.* 7,406 434,510 Linear Technology Corp. 12,130 510,309 LSI Logic Corp.* 15,328 135,959 Maxim Integrated Products, Inc. 12,860 640,428
The accompanying notes are an integral part of the financial statements. 19
NUMBER OF MARKET SHARES VALUE ------------- ------------- Micron Technology, Inc.* 23,717 $ 319,468 Molex, Inc. 7,390 257,837 National Semiconductor Corp.* 7,448 293,526 Novellus Systems, Inc.* 5,950 250,198 Nvidia Corp.* 5,800 134,850 PMC-Sierra, Inc.* 6,189 124,708 Power-One, Inc.* 3,520 38,122 Qlogic Corp.* 3,800 196,080 Rockwell Automation, Inc. 7,168 255,181 Sanmina-SCI Corp.* 20,652 260,422 Texas Instruments, Inc. 66,626 1,957,472 Thomas & Betts Corp. 2,551 58,392 Xilinx, Inc.* 13,111 507,920 ------------- 30,238,779 ------------- ENERGY -- 6.0% Amerada Hess Corp. 3,253 172,962 Anadarko Petroleum Corp. 9,822 501,020 Apache Corp. 6,150 498,765 BJ Services Co.* 6,100 218,990 Burlington Resources, Inc. 7,900 437,502 ChevronTexaco Corp. 41,672 3,600,044 ConocoPhillips 26,264 1,722,131 Devon Energy Corp. 8,885 508,755 Dynegy, Inc. Cl. A* 15,327 65,600 El Paso Corp. 24,446 200,213 EOG Resources, Inc. 4,700 216,999 Exxon Mobil Corp. 257,534 10,558,894 Halliburton Co. 16,765 435,890 Kerr-McGee Corp. 4,146 192,748 KeySpan Corp. 6,080 223,744 Kinder Morgan, Inc. 4,690 277,179 Marathon Oil Corp. 12,005 397,245 Nabors Industries Limited* 5,615 233,023 Nicor, Inc. 1,689 57,494 Noble Corp.* 5,140 183,909 Occidental Petroleum Corp. 15,404 650,665 Peoples Energy Corp. 1,357 57,048 Rowan Companies, Inc.* 4,221 97,801 Schlumberger Limited 22,939 1,255,222 Sempra Energy 8,817 265,039 Sunoco, Inc. 3,093 158,207 Transocean, Inc.* 12,427 298,372 Unocal Corp. 9,957 366,716 The Williams Companies, Inc. 19,518 191,667 Xcel Energy, Inc. 16,072 272,903 ------------- 24,316,747 ------------- ENTERTAINMENT & LEISURE -- 0.5% Brunswick Corp. 3,239 $ 103,097 Harrah's Entertainment, Inc. 4,623 230,087 The Walt Disney Co. 80,622 1,880,911 ------------- 2,214,095 ------------- FINANCIAL SERVICES -- 3.7% American Express Co. 50,372 2,429,442 Apartment Investment & Management Co. Cl. A 4,100 141,450 Bear Stearns Companies, Inc. 4,018 321,239 Countrywide Financial Corp. 6,985 529,812 Federated Investors, Inc. Cl. B 4,200 123,312 Franklin Resources, Inc. 9,828 511,646 The Goldman Sachs Group, Inc. 18,300 1,806,759 Huntington Bancshares, Inc. 8,434 189,765 Janus Capital Group, Inc. 9,250 151,793 Lehman Brothers Holdings, Inc. 10,672 824,092 MBNA Corp. 49,821 1,238,052 Merrill Lynch & Co., Inc. 35,968 2,109,523 Morgan Stanley 42,791 2,476,315 PNC Financial Services Group, Inc. 10,949 599,239 Price (T. Rowe) Group, Inc. 4,800 227,568 ProLogis Trust 6,800 218,212 The Schwab (Charles) Corp. 52,161 617,586 Simon Property Group, Inc. 7,300 338,282 ------------- 14,854,087 ------------- FOODS -- 1.8% Archer- Daniels-Midland Co. 24,861 378,384 Campbell Soup Co. 15,802 423,494 ConAgra Foods, Inc. 20,972 553,451 General Mills, Inc. 14,408 652,682 Heinz (H. J.) Co. 13,522 492,606 Hershey Foods Corp. 4,972 382,794 Kellogg Co. 15,664 596,485 The Kroger Co.* 29,318 542,676 McCormick & Co., Inc. 5,200 156,520 Safeway, Inc.* 17,160 375,976 Sara Lee Corp. 30,365 659,224 Starbucks Corp.* 15,230 $ 503,504 SuperValu, Inc. 4,921 140,691 Sysco Corp. 25,730 957,928 Wrigley (Wm.) Jr. Co. 8,734 490,938 ------------- 7,307,353 ------------- FOREST PRODUCTS & PAPER -- 0.5% Boise Cascade Corp. 2,242 73,672 Georgia-Pacific Corp. 9,670 296,579 International Paper Co. 18,789 809,994 MeadWestvaco Corp. 7,701 229,105 Plum Creek Timber Co., Inc. 7,100 216,195 Weyerhaeuser Co. 8,490 543,360 ------------- 2,168,905 ------------- HEALTHCARE -- 0.9% Express Scripts, Inc.* 3,000 199,290 HCA, Inc. 20,076 862,465 Health Management Associates, Inc. Cl. A 9,800 235,200 Humana, Inc.* 6,203 141,739 Manor Care, Inc. 3,532 122,101 Tenet Healthcare Corp.* 18,059 289,847 UnitedHealth Group, Inc. 22,840 1,328,831 Wellpoint Health Networks, Inc.* 5,640 547,024 ------------- 3,726,497 ------------- HOME CONSTRUCTION, FURNISHINGS & APPLIANCES -- 0.3% Centex Corp. 2,573 276,983 KB Home 1,771 128,433 Leggett & Platt, Inc. 7,450 161,144 Maytag Corp. 3,186 88,730 Pulte Homes, Inc. 2,261 211,675 Whirlpool Corp. 2,669 193,903 ------------- 1,060,868 ------------- HOUSEHOLD PRODUCTS -- 0.5% Black & Decker Corp. 2,950 145,494 The Clorox Co. 8,070 391,879 Corning, Inc.* 52,791 550,610 Fortune Brands, Inc. 5,780 413,212 Newell Rubbermaid, Inc. 10,735 244,436 Sherwin-Williams Co. 5,629 195,551 Snap-On, Inc. 2,253 72,637 The Stanley Works 3,305 125,160 Tupperware Corp. 2,250 39,015 ------------- 2,177,994 ------------- INDUSTRIAL - DISTRIBUTION -- 0.0% Grainger (W.W.), Inc. 3,532 167,381 -------------
The accompanying notes are an integral part of the financial statements. 20
NUMBER OF MARKET SHARES VALUE ------------- ------------- INDUSTRIAL - DIVERSIFIED -- 1.8% 3M Co. 30,272 $ 2,574,028 Cooper Industries Limited Cl. A 3,614 209,359 Danaher Corp. 6,055 555,546 Eaton Corp. 2,897 312,818 Illinois Tool Works, Inc. 11,943 1,002,137 ITT Industries, Inc. 3,537 262,481 Textron, Inc. 5,032 287,126 Tyco International Limited 77,074 2,042,461 ------------- 7,245,956 ------------- INFORMATION RETRIEVAL SERVICES -- 0.3% Yahoo!, Inc.* 25,158 1,136,387 ------------- INSURANCE -- 5.0% ACE Limited 10,000 414,200 Aetna, Inc. 6,049 408,791 AFLAC, Inc. 20,020 724,324 Allstate Corp. 27,704 1,191,826 Ambac Financial Group, Inc. 4,275 296,642 American International Group, Inc. 101,470 6,725,432 Anthem, Inc.* 5,363 402,225 Aon Corp. 12,046 288,381 Chubb Corp. 7,273 495,291 Cigna Corp. 5,440 312,800 Cincinnati Financial Corp. 5,889 246,631 The Hartford Financial Services Group, Inc. 11,358 670,463 Jefferson-Pilot Corp. 5,520 279,588 John Hancock Financial Services, Inc. 11,202 420,075 Lincoln National Corp. 6,841 276,171 Loews Corp. 6,658 329,238 Marsh & McLennan Companies, Inc. 21,042 1,007,701 MBIA, Inc. 5,675 336,130 Metlife, Inc. 30,232 1,017,911 MGIC Investment Corp. 4,089 232,828 Principal Financial Group, Inc. 12,600 416,682 Progressive Corp. 8,283 692,376 Prudential Financial, Inc. 21,700 906,409 Safeco Corp. 5,759 224,198 The St. Paul Companies, Inc. 9,409 373,067 Torchmark Corp. 4,326 197,006 Travelers Property Casualty Corp. Cl. B 38,888 659,929 UnumProvident Corp. 11,570 182,459 XL Capital Limited Cl. A 5,527 428,619 ------------- 20,157,393 ------------- LODGING -- 0.2% Hilton Hotels Corp. 14,591 $ 249,944 Marriott International, Inc. Cl. A 8,964 414,137 Starwood Hotels & Resorts Worldwide, Inc. 7,740 278,408 ------------- 942,489 ------------- MACHINERY & COMPONENTS -- 0.8% Baker Hughes, Inc. 13,198 424,448 Caterpillar, Inc. 13,252 1,100,181 Cummins, Inc. 1,739 85,107 Deere & Co. 9,243 601,257 Dover Corp. 8,235 327,341 Ingersoll-Rand Co. Cl. A 6,783 460,430 Pall Corp. 4,792 128,569 Parker-Hannifin Corp. 4,814 286,433 ------------- 3,413,766 ------------- MANUFACTURING -- 0.5% American Standard Companies, Inc.* 2,800 281,960 Applied Materials, Inc.* 64,006 1,436,935 Avery Dennison Corp. 4,028 225,649 Millipore Corp.* 1,815 78,136 ------------- 2,022,680 ------------- MEDICAL SUPPLIES -- 2.3% Agilent Technologies, Inc.* 18,183 531,671 Allergan, Inc. 5,007 384,588 Applied Biosystems Group-Applera Corp. 7,738 160,254 Bard (C.R.), Inc. 2,060 167,375 Bausch & Lomb, Inc. 2,392 124,145 Baxter International, Inc. 23,092 704,768 Becton, Dickinson & Co. 9,848 405,147 Biomet, Inc. 10,455 380,667 Boston Scientific Corp.* 32,322 1,188,157 Guidant Corp. 11,988 721,678 Medtronic, Inc. 47,081 2,288,607 St. Jude Medical, Inc.* 6,722 412,395 Stryker Corp. 7,750 658,828 Tektronix, Inc. 3,420 108,072 Thermo Electron Corp.* 6,654 167,681 Waters Corp.* 5,300 175,748 Zimmer Holdings, Inc.* 9,422 663,309 ------------- 9,243,090 ------------- METALS & MINING -- 0.8% Alcoa, Inc. 32,788 1,245,944 Allegheny Technologies, Inc. 3,144 41,564 Crane Co. 2,278 70,026 Freeport-McMoRan Copper & Gold, Inc. Cl. B 6,333 266,809 Newmont Mining Corp. 16,509 $ 802,502 Nucor Corp. 3,006 168,336 Phelps Dodge Corp.* 3,485 265,174 United States Steel Corp. 3,954 138,469 Worthington Industries, Inc. 3,207 57,822 ------------- 3,056,646 ------------- PHARMACEUTICALS -- 9.8% Abbott Laboratories 61,398 2,861,147 AmerisourceBergen Corp. 4,276 240,097 Amgen, Inc.* 50,606 3,127,451 Biogen Idec, Inc.* 12,937 475,823 Bristol-Myers Squibb Co. 76,342 2,183,381 Cardinal Health, Inc. 16,869 1,031,708 Chiron Corp.* 7,360 419,446 Eli Lilly & Co. 44,080 3,100,146 Forest Laboratories, Inc.* 13,980 863,964 Genzyme Corp.* 8,400 414,456 Johnson & Johnson 115,312 5,957,018 King Pharmaceuticals, Inc.* 8,867 135,310 McKesson Corp. 11,387 366,206 Medco Health Solutions, Inc.* 10,420 354,176 Medimmune, Inc.* 9,764 248,006 Merck & Co., Inc. 86,643 4,002,907 Pfizer, Inc. 297,327 10,504,563 Schering-Plough Corp. 58,288 1,013,628 Sigma-Aldrich Corp. 3,084 176,343 Watson Pharmaceutical, Inc.* 4,170 191,820 Wyeth 52,356 2,222,512 ------------- 39,890,108 ------------- PHOTOGRAPHY EQUIPMENT/SUPPLIES -- 0.1% Eastman Kodak Co. 11,660 299,312 ------------- PREPACKAGED SOFTWARE -- 4.6% Adobe Systems, Inc. 8,906 350,006 BMC Software, Inc.* 8,765 163,467 Citrix Systems, Inc.* 6,492 137,695 Computer Associates International, Inc. 22,323 610,311 Compuware Corp.* 13,878 83,823 Electronic Arts, Inc.* 11,200 535,136 Intuit, Inc.* 8,010 423,809 Microsoft Corp. 422,128 11,625,405 Novell, Inc.* 14,376 151,236 Oracle Corp.* 205,261 2,709,445 Peoplesoft, Inc.* 14,714 335,479 Siebel Systems, Inc.* 19,718 273,489 SunGard Data Systems, Inc.* 11,000 304,810 Symantec Corp.* 11,600 401,940 Veritas Software Corp.* 16,946 629,713 ------------- 18,735,764 -------------
The accompanying notes are an integral part of the financial statements. 21
NUMBER OF MARKET SHARES VALUE ------------- ------------- REAL ESTATE -- 0.2% Equity Office Properties Trust 16,060 $ 460,119 Equity Residential 10,000 295,100 ------------- 755,219 ------------- RESTAURANTS -- 0.5% Darden Restaurants, Inc. 6,492 136,592 McDonald's Corp. 49,177 1,221,065 Wendy's International, Inc. 4,375 171,675 Yum! Brands, Inc.* 11,298 388,651 ------------- 1,917,983 ------------- RETAIL -- 5.9% AutoZone, Inc.* 3,554 302,836 Bed Bath & Beyond, Inc.* 11,850 513,698 Best Buy Co., Inc. 12,430 649,343 Big Lots, Inc.* 4,274 60,734 Circuit City Stores, Inc. 7,800 79,014 Costco Wholesale Corp.* 18,342 681,956 CVS Corp. 15,303 552,744 Dillards, Inc. Cl. A 3,101 51,042 Dollar General Corp. 12,914 271,065 Family Dollar Stores, Inc. 6,651 238,638 Federated Department Stores, Inc. 7,163 337,592 The Home Depot, Inc. 89,537 3,177,668 J.C. Penney Company, Inc. 10,809 284,061 Kohl's Corp.* 13,123 589,748 Lowe's Companies, Inc. 30,082 1,666,242 The May Department Stores Co. 11,832 343,956 Office Depot, Inc.* 12,665 211,632 RadioShack Corp. 6,905 211,845 Sears, Roebuck and Co. 9,829 447,121 Staples, Inc.* 19,673 537,073 Target Corp. 36,068 1,385,011 Tiffany & Co. 5,592 252,758 TJX Companies, Inc. 20,376 449,291 Toys R Us, Inc.* 7,862 99,376 Walgreen Co. 40,004 1,455,346 Wal-Mart Stores, Inc. 168,612 8,944,867 ------------- 23,794,657 ------------- RETAIL - GROCERY -- 0.1% Albertson's, Inc. 14,147 320,430 Winn-Dixie Stores, Inc. 5,423 53,959 ------------- 374,389 ------------- TELEPHONE UTILITIES -- 2.2% Alltel Corp. 12,367 576,055 AT&T Corp. 30,484 618,825 AT&T Wireless Services, Inc.* 107,431 858,374 BellSouth Corp. 71,820 2,032,506 CenturyTel, Inc. 5,531 $ 180,421 Qwest Communications International, Inc.* 62,058 268,091 Sprint Corp. (FON Group) 34,605 568,214 Sprint Corp. (PCS Group)* 40,661 228,515 Verizon Communications, Inc. 106,829 3,747,561 ------------- 9,078,562 ------------- TOBACCO -- 1.2% Altria Group, Inc. 78,929 4,295,316 Reynolds (R.J.) Tobacco Holdings, Inc. 3,300 191,895 UST, Inc. 6,422 229,201 ------------- 4,716,412 ------------- TOYS, GAMES -- 0.1% Hasbro, Inc. 6,691 142,384 Mattel, Inc. 17,189 331,232 ------------- 473,616 ------------- TRANSPORTATION -- 1.7% Burlington Northern Santa Fe Corp. 15,186 491,267 Carnival Corp. 24,385 968,816 CSX Corp. 7,965 286,262 FedEx Corp. 11,503 776,453 Norfolk Southern Corp. 14,389 340,300 Union Pacific Corp. 9,817 682,085 United Parcel Service, Inc. Cl. B 44,100 3,287,655 ------------- 6,832,838 ------------- TRAVEL -- 0.0% Sabre Holdings Corp. 5,431 117,255 ------------- TOTAL EQUITIES (COST $409,021,965) 400,763,101 ------------- PRINCIPAL AMOUNT ------------- SHORT-TERM INVESTMENTS -- 7.1% CASH EQUIVALENTS -- 6.1%** Bank of Montreal Eurodollar Time Deposit 1.060% 01/15/2004 $ 67,251 67,251 Bank of Montreal Eurodollar Time Deposit 1.060% 02/17/2004 355,336 355,336 Bank of Nova Scotia Eurodollar Time Deposit 1.080% 03/03/2004 1,066,010 1,066,010 PRINCIPAL MARKET AMOUNT VALUE ------------- ------------- Bank of Scotland Eurodollar Time Deposit 1.060% 04/02/2004 $ 266,502 $ 266,502 Bank of the West Eurodollar Time Deposit 1.075% 01/14/2004 266,502 266,502 Barclays Eurodollar Time Deposit 1.090% 03/05/2004 888,341 888,341 BNP Paribas Eurodollar Time Deposit 0.970% 01/07/2004 355,336 355,336 Canadian Imperial Bank of Commerce Bank Note 0.990% 05/18/2004 1,776,683 1,776,683 Citigroup Eurodollar Time Deposit 1.080% 01/05/2004 177,668 177,668 Citigroup Eurodollar Time Deposit 1.090% 03/04/2004 710,673 710,673 Citigroup Eurodollar Time Deposit 1.100% 01/22/2004 177,668 177,668 Credit Agricole Indosuez Eurodollar Time Deposit 1.080% 01/06/2004 1,829,983 1,829,983 Dreyfus Cash Management Plus, Inc. Money Market Fund 977,176 977,176 Fannie Mae Discount Note 1.062% 01/02/2004 533,005 533,005 Fleet National Bank Bank Note 1.000% 01/21/2004 888,341 888,341 Freddie Mac Discount Note 1.062% 01/27/2004 709,209 709,209 General Electric Capital Corp. 1.092% 01/05/2004 886,728 886,728 Goldman Sachs Financial Square Prime Obligations Money Market Fund 355,337 355,337 Harris Trust & Savings Bank Eurodollar Time Deposit 1.050% 01/29/2004 195,435 195,435 Merrill Lynch Premier Institutional Money Market Fund 1,222,378 1,222,378
The accompanying notes are an integral part of the financial statements. 22
PRINCIPAL MARKET AMOUNT VALUE ------------- ------------- Merrimac Money Market Fund $ 2,949,294 $ 2,949,294 Morgan Stanley Dean Witter & Co. 1.080% 01/29/2004 923,876 923,876 National Bank of Commerce Bank Note 1.120% 05/19/2004 444,171 444,171 Royal Bank of Canada Eurodollar Time Deposit 1.050% 02/27/2004 444,171 444,171 Royal Bank of Scotland Eurodollar Time Deposit 1.080% 01/09/2004 355,337 355,337 Royal Bank of Scotland Eurodollar Time Deposit 1.080% 01/15/2004 888,341 888,341 Royal Bank of Scotland Eurodollar Time Deposit 1.090% 03/03/2004 444,171 444,171 Southtrust Bank Eurodollar Time Deposit 1.090% 02/17/2004 533,005 533,005 Svenska Handlesbanken Eurodollar Time Deposit 1.080% 02/04/2004 444,171 444,171 Svenska Handlesbanken Eurodollar Time Deposit 1.085% 01/15/2004 444,171 444,171 Svenska Handlesbanken Eurodollar Time Deposit 1.090% 02/24/2004 888,341 888,341 Toronto Dominion Bank Eurodollar Time Deposit 1.100% 01/08/2004 177,668 177,668 Wells Fargo Eurodollar Time Deposit 1.070% 01/20/2004 2,132,019 2,132,019 ------------- 24,774,298 ------------- REPURCHASE AGREEMENT -- 0.8% Investors Bank & Trust Company Repurchase Agreement, dated 12/31/2003, 0.72%, due 01/02/2004(a) 3,316,949 3,316,949 ------------- U.S. TREASURY BILLS -- 0.2% U.S. Treasury Bill*** 0.892% 01/22/2004 $ 590,000 $ 589,694 ------------- TOTAL SHORT-TERM INVESTMENTS (AT AMORTIZED COST) 28,680,941 ------------- TOTAL INVESTMENTS -- 106.0% (COST $437,702,906)**** 429,444,042 OTHER ASSETS/ (LIABILITIES) -- (6.0%) (24,332,363) ------------- NET ASSETS -- 100.0% $ 405,111,679 =============
NOTES TO PORTFOLIO OF INVESTMENTS * Non-income producing security. ** Represents investments of security lending collateral. (NOTE 2). *** This security is held as collateral for open futures contracts. (NOTE 2). **** Aggregate cost for Federal tax purposes. (NOTE 7). (a) Maturity value of $3,317,082. Collateralized by U.S. Government Agency obligation with a rate of 3.375%, maturity date of 10/25/2024, and aggregate market value, including accrued interest, of $3,482,797. The accompanying notes are an integral part of the financial statements. 23 MML EQUITY INDEX FUND - FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003 ----------------- ASSETS: Investments, at value (cost $409,021,965) (NOTE 2) $ 400,763,101 Short-term investments, at amortized cost (NOTE 2) 28,680,941 ----------------- Total Investments (including securities on loan with market values of $23,859,580) 429,444,042 Cash 1,521 Receivables from: Fund shares sold 86,877 Interest and dividends 578,137 Variation margin on open futures contracts (NOTE 2) 10,144 ----------------- Total assets 430,120,721 ----------------- LIABILITIES: Payables for: Fund shares repurchased 106,845 Securities on loan (NOTE 2) 24,774,298 Directors' fees and expenses (NOTE 3) 22,218 Affiliates (NOTE 3): Investment management fees 35,497 Administration fees 38,500 Accrued expense and other liabilities 31,684 ----------------- Total liabilities 25,009,042 ----------------- NET ASSETS $ 405,111,679 ================= NET ASSETS CONSIST OF: Paid-in capital $ 423,296,147 Distributions in excess of net investment income (12,524) Accumulated net realized loss on investments and futures contracts (10,002,471) Net unrealized depreciation on investments and futures contracts (8,169,473) ----------------- $ 405,111,679 ================= NET ASSETS: Class I $ 78,596,846 ================= Class II $ 188,869,092 ================= Class III $ 137,645,741 ================= SHARES OUTSTANDING: Class I 5,731,716 ================= Class II 13,786,088 ================= Class III 10,066,417 ================= NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE: Class I $ 13.71 ================= Class II $ 13.70 ================= Class III $ 13.67 =================
The accompanying notes are an integral part of the financial statements. 24 STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2003 ----------------- INVESTMENT INCOME (NOTE 2): Dividends $ 6,066,422 Interest (including securities lending income of $18,585) 82,838 ----------------- Total investment income 6,149,260 ----------------- EXPENSES (NOTE 2): Investment management fees (NOTE 3) 340,276 Custody fees 44,862 Audit and legal fees 28,399 Directors' fees (NOTE 3) 22,327 Shareholder reporting fees 17,455 Trustee reporting 13,447 ----------------- 466,766 Administration fees (NOTE 3): Class I 194,500 Class II 286,796 Class III 62,249 ----------------- Total expenses 1,010,311 Class II Administration fees waived (NOTE 3) (120,756) Class III Administration fees waived (NOTE 3) (62,249) ----------------- Net expenses 827,306 ----------------- NET INVESTMENT INCOME 5,321,954 ----------------- REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on: Investment transactions (3,222,941) Closed futures contracts 703,959 ----------------- Net realized loss (2,518,982) ----------------- Net change in unrealized appreciation (depreciation) on: Investments 83,837,371 Open futures contracts 168,388 ----------------- Net unrealized gain 84,005,759 ----------------- NET REALIZED AND UNREALIZED GAIN 81,486,777 ----------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 86,808,731 =================
The accompanying notes are an integral part of the financial statements. 25 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED DECEMBER 31, 2003 DECEMBER 31, 2002 ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income $ 5,321,954 $ 4,425,345 Net realized loss on investment transactions and futures contracts (2,518,982) (6,976,365) Net change in unrealized appreciation (depreciation) on investments and futures contracts 84,005,759 (81,724,466) ----------------- ----------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 86,808,731 (84,275,486) ----------------- ----------------- DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2): From net investment income: Class I (913,733) (721,177) Class II (2,486,104) (1,859,859) Class III (1,931,671) (1,828,852) ----------------- ----------------- TOTAL DISTRIBUTIONS FROM NET INVESTMENT INCOME (5,331,508) (4,409,888) ----------------- ----------------- NET FUND SHARE TRANSACTIONS (NOTE 5): Class I 4,695,413 (3,810,392) Class II 26,828,374 84,771,905 Class III (7,355,331) (3,569,862) ----------------- ----------------- INCREASE IN NET ASSETS FROM NET FUND SHARE TRANSACTIONS 24,168,456 77,391,651 ----------------- ----------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 105,645,679 (11,293,723) NET ASSETS: Beginning of year 299,466,000 310,759,723 ----------------- ----------------- End of year (including distributions in excess of net investment income of $12,524 and undistributed net investment income of $12,132, respectively) $ 405,111,679 $ 299,466,000 ================= =================
The accompanying notes are an integral part of the financial statements. 26 FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
CLASS I ------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, BEGINNING OF PERIOD $ 10.83 $ 14.14 $ 16.27 $ 18.13 $ 15.26 INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income 0.16*** 0.14*** 0.14*** 0.16*** 0.09 Net realized and unrealized gain (loss) on investments 2.88 (3.31) (2.14) (1.88) 3.01 ---------- ---------- ---------- ---------- ---------- Total income (loss) from investment operations 3.04 (3.17) (2.00) (1.72) 3.10 ---------- ---------- ---------- ---------- ---------- LESS DISTRIBUTIONS TO SHAREHOLDERS: From net investment income (0.16) (0.14) (0.07) (0.14) (0.09) From net realized gains - - (0.06) - (0.14) ---------- ---------- ---------- ---------- ---------- Total distributions (0.16) (0.14) (0.13) (0.14) (0.23) ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, END OF PERIOD $ 13.71 $ 10.83 $ 14.14 $ 16.27 $ 18.13 ========== ========== ========== ========== ========== TOTAL RETURN(a) 28.08% (22.46)% (12.32)% (9.53)% 20.32% RATIOS / SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 78,597 $ 58,454 $ 81,535 $ 82,798 $ 95,049 Ratio of expenses to average daily net assets: Before expense waiver 0.44% 0.44% 0.45% 0.45% 0.50% After expense waiver# N/A N/A N/A 0.45% N/A Net investment income to average daily net assets 1.37% 1.16% 0.92% 0.89% 0.92% Portfolio turnover rate 5% 6% 5% 3% 3%
CLASS II -------- YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED 12/31/03 12/31/02 12/31/01 12/31/00+ ---------- ---------- ---------- ------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 10.82 $ 14.13 $ 16.26 $ 17.96 ---------- ---------- ---------- ------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income 0.19*** 0.17*** 0.16*** 0.13*** Net realized and unrealized gain (loss) on investments 2.87 (3.32) (2.14) (1.68) ---------- ---------- ---------- ------------ Total income (loss) from investment operations 3.06 (3.15) (1.98) (1.55) ---------- ---------- ---------- ------------ LESS DISTRIBUTIONS TO SHAREHOLDERS: From net investment income (0.18) (0.16) (0.09) (0.15) From net realized gains - - (0.06) - ---------- ---------- ---------- ------------ Total distributions (0.18) (0.16) (0.15) (0.15) ---------- ---------- ---------- ------------ NET ASSET VALUE, END OF PERIOD $ 13.70 $ 10.82 $ 14.13 $ 16.26 ========== ========== ========== ============ TOTAL RETURN(a) 28.31% (22.29)% (12.18)% (8.63)%** RATIOS / SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 188,869 $ 125,942 $ 74,636 $ 56,998 Ratio of expenses to average daily net assets: Before expense waiver 0.33% 0.33% 0.34% 0.34%* After expense waiver## 0.25% 0.26% 0.29% 0.29%* Net investment income to average daily net assets 1.56% 1.37% 1.08% 1.10%* Portfolio turnover rate 5% 6% 5% 3%**
* ANNUALIZED. ** PERCENTAGE REPRESENTS RESULTS FOR THE PERIOD AND ARE NOT ANNUALIZED. *** PER SHARE AMOUNT CALCULATED ON THE AVERAGE SHARES METHOD. + FOR THE PERIOD FROM MAY 1, 2000 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 2000. # COMPUTED AFTER GIVING EFFECT TO AN AGREEMENT BY MASSMUTUAL TO WAIVE CERTAIN FEES AND EXPENSES OF THE FUND FOR THE YEAR ENDED DECEMBER 31, 2000. ## COMPUTED AFTER GIVING EFFECT TO AN AGREEMENT BY MASSMUTUAL TO WAIVE CERTAIN FEES AND EXPENSES OF THE FUND FOR THE PERIOD MAY 1, 2000 THROUGH DECEMBER 31, 2000 AND THE YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003. (a) TOTAL RETURN INFORMATION SHOWN IN THE FINANCIAL HIGHLIGHTS TABLE DOES NOT REFLECT EXPENSES THAT APPLY AT THE SEPARATE ACCOUNT LEVEL OR TO RELATED INSURANCE PRODUCTS. INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURN FIGURES FOR ALL PERIODS SHOWN. The accompanying notes are an integral part of the financial statements. 27
CLASS III --------- YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED 12/31/03 12/31/02 12/31/01 12/31/00+ ---------- ---------- ---------- ------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 10.80 $ 14.10 $ 16.27 $ 17.96 ---------- ---------- ---------- ------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income 0.20*** 0.18*** 0.19*** 0.15*** Net realized and unrealized gain (loss) on investments 2.86 (3.31) (2.19) (1.67) ---------- ---------- ---------- ------------ Total income (loss) from investment operations 3.06 (3.13) (2.00) (1.52) LESS DISTRIBUTIONS TO SHAREHOLDERS: From net investment income (0.19) (0.17) (0.11) (0.17) From net realized gains - - (0.06) - ---------- ---------- ---------- ------------ Total distributions (0.19) (0.17) (0.17) (0.17) ---------- ---------- ---------- ------------ NET ASSET VALUE, END OF PERIOD $ 13.67 $ 10.80 $ 14.10 $ 16.27 ========== ========== ========== ============ TOTAL RETURN(a) 28.38% (22.18)% (12.30)% (8.50)%** RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 137,646 $ 115,070 $ 154,588 $ 34,111 Ratio of expenses to average daily net assets: Before expense waiver 0.19% 0.19% 0.20% 0.20%* After expense waiver## 0.14% 0.14% 0.15% 0.15%* Net investment income to average daily net assets 1.67% 1.46% 1.32% 1.25%* Portfolio turnover rate 5% 6% 5% 3%**
* ANNUALIZED. ** PERCENTAGE REPRESENTS RESULTS FOR THE PERIOD AND ARE NOT ANNUALIZED. *** PER SHARE AMOUNT CALCULATED ON THE AVERAGE SHARES METHOD. + FOR THE PERIOD FROM MAY 1, 2000 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 2000. ## COMPUTED AFTER GIVING EFFECT TO AN AGREEMENT BY MASSMUTUAL TO WAIVE CERTAIN FEES AND EXPENSES OF THE FUND FOR THE PERIOD MAY 1, 2000 THROUGH DECEMBER 31, 2000 AND THE YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003. (a) TOTAL RETURN INFORMATION SHOWN IN THE FINANCIAL HIGHLIGHTS TABLE DOES NOT REFLECT EXPENSES THAT APPLY AT THE SEPARATE ACCOUNT LEVEL OR TO RELATED INSURANCE PRODUCTS. INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURN FIGURES FOR ALL PERIODS SHOWN. The accompanying notes are an integral part of the financial statements. 28 MML ENHANCED INDEX CORE EQUITY FUND -- PORTFOLIO MANAGER REPORT WHAT IS THE INVESTMENT The objective of the Fund is to achieve total returns OBJECTIVE OF THE MML that slightly exceed those of the S&P 500 Index over ENHANCED INDEX CORE the long term, while maintaining a risk profile similar EQUITY FUND? to that of the Index. The Fund invests primarily in a diversified portfolio consisting of approximately 90% of the securities in the S&P 500 Index. HOW DID THE FUND For the 12 months ending December 31, 2003, the Fund's PERFORM DURING 2003? shares returned 27.19%, underperforming the 28.67% return for the S&P 500 Index, a market capitalization-weighted, unmanaged index of 500 common stocks. WHAT WAS THE The equity market rally that began in March 2003 INVESTMENT BACKGROUND continued in the third quarter, fueled by positive DURING THE PERIOD? corporate earnings reports and largely favorable economic indicators. As has been the case for much of 2003, the third quarter saw investors continuing to embrace market risk, small-cap stocks and growth investing. This resulted in an environment in which small caps continued to outperform large caps by a wide margin and economically sensitive sectors outpaced sectors associated with low risk in almost all equity market indexes. This trend continued into the fourth quarter. For the full year, small-cap stocks led the U.S. equity market, outperforming large caps by approximately 20%. During 2003, investments in higher-risk stocks with exposure to the economic cycle generated the highest returns in all investment styles, most notably in the small-cap space. WHAT FACTORS Those stocks that suffered the most during the bear CONTRIBUTED TO THE market, such as technology issues, rebounded strongly FUND'S PERFORMANCE? in 2003. Additionally, economically sensitive sectors including producer durables and materials & processing, which were once denounced as "old economy," also had a very strong run during the year. Conversely, sectors generally categorized as defensive, such as utilities, consumer staples and health care, lagged. The key to outperformance throughout 2003 was to tilt portfolios toward risk factors such as increased exposure to economic growth factors, high risk and low price. As the Fund's investment process does not incorporate macroeconomic bets such as these, it failed to generate value during the period. During the third quarter, the market trend of high-risk stocks (characterized by generally volatile earnings, poor balance sheets, low stock prices and high debt levels) outperforming quality companies prevailed. This hampered the Fund's performance during the period. It is, however, worth noting that the month of September offered encouraging news, as high-risk stocks underperformed their low-risk counterparts by approximately 200 basis points. Detracting from results during the fourth quarter and for the year in all of our investment models was the difficulty, given market conditions, of identifying those stocks most likely to underperform. WHAT IS YOUR OUTLOOK? The equity market currently has tremendous momentum and until it is impacted by another force, such as rising bond yields, it will likely remain on its current path. However, it should be noted that this is currently the consensus forecast, and therefore it is likely already priced into the market. In 2004, interest rates could be the big story. If they do not go up much, 2004 could be a big up year for equities. If they rise sharply, the opposite could be true. 29 MML ENHANCED INDEX CORE EQUITY FUND LARGEST STOCK HOLDINGS (12/31/03) Standard and Poor's Depository Receipts General Electric Co. Microsoft Corp. Citigroup, Inc. Intel Corp. Pfizer, Inc. Exxon Mobil Corp. Wal-Mart Stores, Inc. Cisco Systems, Inc. Bank of America Corp. GROWTH OF A $10,000 INVESTMENT Hypothetical Investments in MML Enhanced Index Core Equity Fund and the S&P 500 Index MML SERIES INVESTMENT FUND TOTAL RETURN
SINCE INCEPTION* ONE YEAR AVERAGE ANNUAL 1/1/03 - 12/31/03 5/2/01 - 12/31/03 MML Enhanced Index Core Equity Fund 27.19% -2.91% S&P 500 Index 28.67% -3.21%
[CHART] GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION*
MML ENHANCED INDEX CORE EQUITY FUND S&P 500 INDEX 5/2/2001 $ 10,000 $ 10,000 12/01 $ 9,292 $ 9,144 12/02 $ 7,267 $ 7,124 12/03 $ 9,242 $ 9,166
* PLEASE NOTE, WHILE THE FUND COMMENCED OPERATIONS ON MAY 1, 2001, IT DID NOT COMMENCE INVESTMENT OPERATIONS UNTIL MAY 2, 2001. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF SHARES OF THE FUND WILL FLUCTUATE WITH MARKET CONDITIONS SO THAT SHARES OF THE FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INVESTORS SHOULD NOTE THAT THE FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND, WHILE THE S&P 500 INDEX IS UNMANAGED AND DOES NOT INCUR EXPENSES, AND CANNOT BE PURCHASED DIRECTLY BY INVESTORS. THE FUND'S RETURN REFLECTS CHANGES IN THE NET ASSET VALUE PER SHARE WITHOUT THE DEDUCTION OF ANY PRODUCT CHARGES. TOTAL RETURN FIGURES WOULD BE LOWER FOR THE PERIODS PRESENTED IF THEY REFLECTED THESE CHARGES. 30 MML ENHANCED INDEX CORE EQUITY FUND -- PORTFOLIO OF INVESTMENTS DECEMBER 31, 2003
NUMBER OF MARKET SHARES VALUE ------------- ------------- EQUITIES -- 98.6% ADVERTISING -- 0.2% Monster Worldwide, Inc.* 100 $ 2,196 Omnicom Group, Inc. 300 26,199 ------------- 28,395 ------------- AEROSPACE & DEFENSE -- 1.8% Boeing Co. 1,700 71,638 General Dynamics Corp. 300 27,117 Goodrich Corp. 1,700 50,473 Honeywell International, Inc. 1,100 36,773 Lockheed Martin Corp. 200 10,280 Northrop Grumman Corp. 200 19,120 Raytheon Co. 100 3,004 Rockwell Collins, Inc. 300 9,009 United Technologies Corp. 600 56,862 ------------- 284,276 ------------- AIR TRANSPORTATION -- 0.1% Delta Air Lines, Inc. 100 1,181 Southwest Airlines Co. 1,200 19,368 ------------- 20,549 ------------- APPAREL, TEXTILES & SHOES -- 0.6% The Gap, Inc. 1,300 30,173 Jones Apparel Group, Inc. 200 7,046 Limited Brands 900 16,227 Liz Claiborne, Inc. 200 7,092 Nike, Inc. Cl. B 400 27,384 Nordstrom, Inc. 100 3,430 Reebok International Limited 100 3,932 VF Corp. 200 8,648 ------------- 103,932 ------------- AUTOMOTIVE & PARTS -- 1.2% AutoNation, Inc.* 2,100 38,577 Cooper Tire & Rubber Co. 100 2,138 Delphi Corp. 1,900 19,399 Ford Motor Co. 3,800 60,800 General Motors Corp. 900 48,060 Paccar, Inc. 250 21,280 ------------- 190,254 ------------- BANKING, SAVINGS & LOANS -- 11.8% AmSouth Bancorp 500 12,250 Bank of America Corp. 2,900 233,247 Bank One Corp. 1,500 68,385 BB&T Corp. 200 7,728 Capital One Financial Corp. 500 $ 30,645 Charter One Financial, Inc. 325 11,229 Citigroup, Inc. 8,800 427,152 Comerica, Inc. 200 11,212 Fannie Mae 2,200 165,132 Fifth Third Bancorp 100 5,910 First Tennessee National Corp. 200 8,820 FleetBoston Financial Corp. 1,400 61,110 Freddie Mac 1,700 99,144 Golden West Financial Corp. 300 30,957 J.P. Morgan Chase & Co. 4,400 161,612 KeyCorp 100 2,932 Marshall and Ilsley Corp. 400 15,300 Mellon Financial Corp. 500 16,055 National City Corp. 900 30,546 Northern Trust Corp. 300 13,926 Providian Financial Corp.* 500 5,820 Regions Financial Corp. 300 11,160 SLM Corp. 600 22,608 SouthTrust Corp. 500 16,365 State Street Corp. 400 20,832 SunTrust Banks, Inc. 100 7,150 Synovus Financial Corp. 100 2,892 U.S. Bancorp 2,600 77,428 Union Planters Corp. 100 3,149 Wachovia Corp. 3,100 144,429 Washington Mutual, Inc. 1,400 56,168 Wells Fargo & Co. 1,700 100,113 Zions Bancorp 200 12,266 ------------- 1,893,672 ------------- BEVERAGES -- 2.2% Anheuser-Busch Companies, Inc. 1,000 52,680 The Coca-Cola Co. 3,600 182,700 Coca-Cola Enterprises, Inc. 600 13,122 Coors (Adolph) Co. Cl. B 100 5,610 The Pepsi Bottling Group, Inc. 300 7,254 PepsiCo, Inc. 2,030 94,639 ------------- 356,005 ------------- BROADCASTING, PUBLISHING & PRINTING -- 2.3% American Greetings Corp. Cl. A* 200 4,374 Comcast Corp. Cl. A* 1,455 47,826 Dow Jones & Co., Inc. 1,000 $ 49,850 Gannett Co., Inc. 200 17,832 Knight Ridder, Inc. 100 7,737 The McGraw-Hill Companies, Inc. 300 20,976 Meredith Corp. 100 4,881 New York Times Co. Cl. A 200 9,558 Time Warner, Inc.* 7,500 134,925 Tribune Co. 100 5,160 Univision Communications, Inc. Cl. A* 500 19,845 Viacom, Inc. Cl. B 1,200 53,256 ------------- 376,220 ------------- BUILDING MATERIALS & CONSTRUCTION -- 0.5% Louisiana-Pacific Corp.* 1,300 23,244 Masco Corp. 600 16,446 Vulcan Materials Co. 700 33,299 ------------- 72,989 ------------- CHEMICALS -- 1.1% Air Products & Chemicals, Inc. 100 5,283 Dow Chemical Co. 1,400 58,198 Du Pont (E.I.) de Nemours & Co. 700 32,123 Engelhard Corp. 100 2,995 Hercules, Inc.* 200 2,440 International Flavors & Fragrances, Inc. 100 3,492 Monsanto Co. 1,500 43,170 PPG Industries, Inc. 200 12,804 Praxair, Inc. 200 7,640 Rohm & Haas Co. 300 12,813 ------------- 180,958 ------------- COMMERCIAL SERVICES -- 2.1% Allied Waste Industries, Inc.* 400 5,552 Apollo Group, Inc. Cl. A* 300 20,400 Block (H&R), Inc. 800 44,296 Cendant Corp.* 2,900 64,583 Concord EFS, Inc.* 1,500 22,260 Convergys Corp.* 2,200 38,412 Donnelley (R.R.) & Sons Co. 200 6,030 Ecolab, Inc. 200 5,474 Equifax, Inc. 300 7,350 Fluor Corp. 700 27,748 Moody's Corp. 500 30,275 Paychex, Inc. 700 26,040 PerkinElmer, Inc. 1,400 23,898
The accompanying notes are an integral part of the financial statements. 31
NUMBER OF MARKET SHARES VALUE --------- ------- Quest Diagnostics, Inc.* 100 $ 7,311 Ryder System, Inc. 100 3,415 ------------- 333,044 ------------- COMMUNICATIONS -- 2.0% ADC Telecommunications, Inc.* 3,900 11,583 Andrew Corp.* 1,000 11,510 Avaya, Inc.* 900 11,646 Ciena Corp.* 600 3,984 Citizens Communications Co.* 400 4,968 Lucent Technologies, Inc.* 5,500 15,620 Network Appliance, Inc.* 900 18,477 Nextel Communications, Inc. Cl. A* 1,500 42,090 Qualcomm, Inc. 1,100 59,323 SBC Communications, Inc. 4,800 125,136 Scientific-Atlanta, Inc. 700 19,110 Tellabs, Inc.* 500 4,215 ------------- 327,662 ------------- COMMUNICATIONS EQUIPMENT -- 0.3% Motorola, Inc. 4,000 56,280 ------------- COMPUTER INTEGRATED SYSTEMS DESIGN -- 0.2% Autodesk, Inc. 200 4,916 Computer Sciences Corp.* 200 8,846 Teradyne, Inc.* 200 5,090 Unisys Corp.* 400 5,940 ------------- 24,792 ------------- COMPUTER PROGRAMMING SERVICES -- 0.0% Mercury Interactive Corp.* 100 4,864 ------------- COMPUTERS & INFORMATION -- 3.6% Apple Computer, Inc.* 500 10,685 Cisco Systems, Inc.* 10,383 252,203 Comverse Technology, Inc.* 300 5,277 Dell, Inc.* 4,600 156,216 EMC Corp.* 3,800 49,096 Gateway, Inc.* 2,500 11,500 International Game Technology 800 28,560 Jabil Circuit, Inc.* 300 8,490 Lexmark International, Inc.* 400 31,456 Solectron Corp.* 2,300 13,593 Symbol Technologies, Inc. 300 5,067 ------------- 572,143 ------------- COMPUTERS & OFFICE EQUIPMENT -- 2.3% Electronic Data Systems Corp. 700 17,178 Hewlett-Packard Co. 4,454 102,308 International Business Machines Corp. 2,500 $ 231,700 Pitney Bowes, Inc. 300 12,186 ------------- 363,372 ------------- CONTAINERS -- 0.3% Ball Corp. 100 5,957 Pactiv Corp.* 200 4,780 Sealed Air Corp.* 400 21,656 Temple-Inland, Inc. 300 18,801 ------------- 51,194 ------------- COSMETICS & PERSONAL CARE -- 2.2% Alberto-Culver Co. Cl. B 100 6,308 Avon Products, Inc. 400 26,996 Colgate-Palmolive Co. 400 20,020 The Gillette Co. 1,600 58,768 Kimberly-Clark Corp. 700 41,363 The Procter & Gamble Co. 2,000 199,760 ------------- 353,215 ------------- DATA PROCESSING & PREPARATION -- 0.7% Automatic Data Processing, Inc. 800 31,688 Deluxe Corp. 500 20,665 First Data Corp. 700 28,763 Fiserv, Inc.* 250 9,877 IMS Health, Inc. 300 7,458 NCR Corp.* 400 15,520 ------------- 113,971 ------------- ELECTRIC UTILITIES -- 2.2% Ameren Corp. 200 9,200 American Electric Power Co. 500 15,255 CenterPoint Energy, Inc. 800 7,752 Cinergy Corp. 200 7,762 Consolidated Edison, Inc. 200 8,602 Constellation Energy Group, Inc. 200 7,832 Dominion Resources, Inc. 300 19,149 DTE Energy Co. 200 7,880 Duke Energy Corp. 700 14,315 Edison International* 2,400 52,632 Entergy Corp. 400 22,852 Exelon Corp. 700 46,452 FirstEnergy Corp. 200 7,040 FPL Group, Inc. 200 13,084 NiSource, Inc. 300 6,582 PG&E Corp.* 500 13,885 PPL Corp. 300 13,125 Progress Energy, Inc. 100 4,526 Public Service Enterprise Group, Inc. 300 13,140 Southern Co. 1,500 45,375 Teco Energy, Inc. 200 $ 2,882 TXU Corp. 500 11,860 ------------- 351,182 ------------- ELECTRICAL EQUIPMENT & ELECTRONICS -- 7.5% Advanced Micro Devices, Inc.* 800 11,920 Altera Corp.* 800 18,160 American Power Conversion Corp. 300 7,335 Analog Devices, Inc. 500 22,825 Applied Micro Circuits Corp.* 500 2,990 Broadcom Corp. Cl. A* 400 13,636 Emerson Electric Co. 800 51,800 General Electric Co. 14,900 461,602 Intel Corp. 11,300 363,860 JDS Uniphase Corp.* 1,300 4,745 Johnson Controls, Inc. 200 23,224 Kla-Tencor Corp.* 200 11,734 Linear Technology Corp. 400 16,828 LSI Logic Corp.* 600 5,322 Maxim Integrated Products, Inc. 400 19,920 Micron Technology, Inc.* 800 10,776 Molex, Inc. 200 6,978 National Semiconductor Corp.* 400 15,764 PMC-Sierra, Inc.* 200 4,030 Qlogic Corp.* 300 15,480 Rockwell Automation, Inc. 300 10,680 Sanmina-SCI Corp.* 900 11,349 Texas Instruments, Inc. 2,500 73,450 Xilinx, Inc.* 500 19,370 ------------- 1,203,778 ------------- ENERGY -- 6.2% Amerada Hess Corp. 200 10,634 Anadarko Petroleum Corp. 400 20,404 Apache Corp. 147 11,922 Burlington Resources, Inc. 300 16,614 ChevronTexaco Corp. 2,162 186,775 ConocoPhillips 1,847 121,108 Devon Energy Corp. 700 40,082 EOG Resources, Inc. 100 4,617 Exxon Mobil Corp. 8,600 352,600 Halliburton Co. 700 18,200 Kerr-McGee Corp. 200 9,298 KeySpan Corp. 200 7,360 Kinder Morgan, Inc. 200 11,820 Marathon Oil Corp. 500 16,545 Nabors Industries Limited* 200 8,300 Nicor, Inc. 100 3,404 Noble Corp.* 100 3,578
The accompanying notes are an integral part of the financial statements. 32
NUMBER OF MARKET SHARES VALUE --------- ------- Occidental Petroleum Corp. 400 $ 16,896 Peoples Energy Corp. 100 4,204 Schlumberger Limited 1,200 65,664 Sempra Energy 400 12,024 Sunoco, Inc. 400 20,460 Unocal Corp. 300 11,049 The Williams Companies, Inc. 1,700 16,694 Xcel Energy, Inc. 500 8,490 ------------- 998,742 ------------- ENTERTAINMENT & LEISURE -- 0.5% Brunswick Corp. 200 6,366 Harrah's Entertainment, Inc. 100 4,977 The Walt Disney Co. 3,200 74,656 ------------- 85,999 ------------- FINANCIAL SERVICES -- 7.6% American Express Co. 1,000 48,230 Apartment Investment & Management Co. Cl. A 100 3,450 Bear Stearns Companies, Inc. 400 31,980 Countrywide Financial Corp. 533 40,428 Franklin Resources, Inc. 300 15,618 The Goldman Sachs Group, Inc. 700 69,111 Huntington Bancshares, Inc. 300 6,750 Lehman Brothers Holdings, Inc. 500 38,610 MBNA Corp. 2,550 63,368 Merrill Lynch & Co., Inc. 1,400 82,110 Morgan Stanley 1,800 104,166 PNC Financial Services Group, Inc. 400 21,892 Price (T. Rowe) Group, Inc. 100 4,741 ProLogis Trust 200 6,418 The Schwab (Charles) Corp. 1,800 21,312 Simon Property Group, Inc. 300 13,902 Standard and Poor's Depository Receipts 5,900 656,611 ------------- 1,228,697 ------------- FOODS -- 1.5% Archer-Daniels-Midland Co. 1,330 20,243 Campbell Soup Co. 400 10,720 ConAgra Foods, Inc. 300 7,917 General Mills, Inc. 400 18,120 Heinz (H. J.) Co. 500 18,215 Hershey Foods Corp. 200 15,398 Kellogg Co. 700 $ 26,656 The Kroger Co.* 1,100 20,361 McCormick & Co., Inc. 100 3,010 Sara Lee Corp. 900 19,539 Starbucks Corp.* 100 3,306 SuperValu, Inc. 200 5,718 Sysco Corp. 1,600 59,568 Wrigley (Wm.) Jr. Co. 300 16,863 ------------- 245,634 ------------- FOREST PRODUCTS & PAPER -- 0.5% Boise Cascade Corp. 100 3,286 Georgia-Pacific Corp. 700 21,469 International Paper Co. 400 17,244 MeadWestvaco Corp. 300 8,925 Plum Creek Timber Co., Inc. 100 3,045 Weyerhaeuser Co. 300 19,200 ------------- 73,169 ------------- HEALTHCARE -- 0.6% Express Scripts, Inc.* 100 6,643 Humana, Inc.* 300 6,855 Manor Care, Inc. 100 3,457 UnitedHealth Group, Inc. 800 46,544 Wellpoint Health Networks, Inc.* 300 29,097 ------------- 92,596 ------------- HOME CONSTRUCTION, FURNISHINGS & APPLIANCES -- 0.4% Centex Corp. 100 10,765 KB Home 100 7,252 Maytag Corp. 100 2,785 Pulte Homes, Inc. 400 37,448 Whirlpool Corp. 100 7,265 ------------- 65,515 ------------- HOUSEHOLD PRODUCTS -- 0.7% Black & Decker Corp. 600 29,592 The Clorox Co. 300 14,568 Corning, Inc.* 2,700 28,161 Fortune Brands, Inc. 200 14,298 Newell Rubbermaid, Inc. 100 2,277 Sherwin-Williams Co. 500 17,370 Snap-On, Inc. 100 3,224 The Stanley Works 100 3,787 ------------- 113,277 ------------- INDUSTRIAL - DIVERSIFIED -- 1.9% 3M Co. 1,100 93,533 Cooper Industries Limited Cl. A 200 11,586 Danaher Corp. 200 18,350 Eaton Corp. 200 $ 21,596 Illinois Tool Works, Inc. 400 33,564 ITT Industries, Inc. 100 7,421 Textron, Inc. 800 45,648 Tyco International Limited 2,728 72,292 ------------- 303,990 ------------- INFORMATION RETRIEVAL SERVICES -- 0.3% Yahoo!, Inc.* 900 40,653 ------------- INSURANCE -- 4.5% ACE Limited 400 16,568 Aetna, Inc. 400 27,032 AFLAC, Inc. 700 25,326 Allstate Corp. 1,100 47,322 Ambac Financial Group, Inc. 200 13,878 American International Group, Inc. 2,789 184,855 Anthem, Inc.* 200 15,000 Aon Corp. 400 9,576 Chubb Corp. 300 20,430 Cigna Corp. 500 28,750 Cincinnati Financial Corp. 200 8,376 The Hartford Financial Services Group, Inc. 200 11,806 Jefferson-Pilot Corp. 200 10,130 John Hancock Financial Services, Inc. 500 18,750 Lincoln National Corp. 1,000 40,370 Loews Corp. 100 4,945 Marsh & McLennan Companies, Inc. 200 9,578 MBIA, Inc. 300 17,769 Metlife, Inc. 1,500 50,505 Principal Financial Group, Inc. 700 23,149 Progressive Corp. 300 25,077 Prudential Financial, Inc. 1,100 45,947 Safeco Corp. 200 7,786 The St. Paul Companies, Inc. 300 11,895 Torchmark Corp. 200 9,108 Travelers Property Casualty Corp. Cl. B 1,500 25,455 UnumProvident Corp. 500 7,885 XL Capital Limited Cl. A 100 7,755 ------------- 725,023 ------------- LODGING -- 0.3% Hilton Hotels Corp. 600 10,278 Marriott International, Inc. Cl. A 300 13,860
The accompanying notes are an integral part of the financial statements. 33
NUMBER OF MARKET SHARES VALUE --------- ------- Starwood Hotels & Resorts Worldwide, Inc. 600 $ 21,582 ------------- 45,720 ------------- MACHINERY & COMPONENTS -- 0.5% Baker Hughes, Inc. 100 3,216 Caterpillar, Inc. 100 8,302 Cummins, Inc. 100 4,894 Deere & Co. 300 19,515 Dover Corp. 300 11,925 Ingersoll-Rand Co. Cl. A 300 20,364 Pall Corp. 200 5,366 Parker-Hannifin Corp. 100 5,950 ------------- 79,532 ------------- MANUFACTURING -- 0.3% Applied Materials, Inc.* 2,200 49,390 ------------- MEDICAL SUPPLIES -- 2.0% Agilent Technologies, Inc.* 700 20,468 Allergan, Inc. 100 7,681 Applied Biosystems Group-Applera Corp. 200 4,142 Bard (C.R.), Inc. 200 16,250 Bausch & Lomb, Inc. 500 25,950 Baxter International, Inc. 800 24,416 Becton, Dickinson & Co. 500 20,570 Biomet, Inc. 100 3,641 Boston Scientific Corp.* 800 29,408 Guidant Corp. 900 54,180 Medtronic, Inc. 1,300 63,193 St. Jude Medical, Inc.* 200 12,270 Stryker Corp. 300 25,503 Tektronix, Inc. 200 6,320 Thermo Electron Corp.* 200 5,040 Waters Corp.* 100 3,316 Zimmer Holdings, Inc.* 100 7,040 ------------- 329,388 ------------- METALS & MINING -- 0.4% Alcoa, Inc. 900 34,200 Crane Co. 100 3,074 Freeport-McMoRan Copper & Gold, Inc. Cl. B 200 8,426 Newmont Mining Corp. 500 24,305 ------------- 70,005 ------------- PHARMACEUTICALS -- 8.4% Abbott Laboratories 2,300 107,180 AmerisourceBergen Corp. 100 5,615 Amgen, Inc.* 1,820 112,476 Bristol-Myers Squibb Co. 2,900 82,940 Cardinal Health, Inc. 100 6,116 Eli Lilly & Co. 1,200 84,396 Genzyme Corp.* 300 $ 14,802 Johnson & Johnson 4,496 232,263 King Pharmaceuticals, Inc.* 2,466 37,631 McKesson Corp. 1,000 32,160 Medco Health Solutions, Inc.* 373 12,678 Medimmune, Inc.* 300 7,620 Merck & Co., Inc. 3,300 152,460 Pfizer, Inc. 10,000 353,300 Schering-Plough Corp. 200 3,478 Sigma-Aldrich Corp. 100 5,718 Watson Pharmaceutical, Inc.* 200 9,200 Wyeth 2,100 89,145 ------------- 1,349,178 ------------- PHOTOGRAPHY EQUIPMENT/SUPPLIES -- 0.1% Eastman Kodak Co. 400 10,268 ------------- PREPACKAGED SOFTWARE -- 4.6% Adobe Systems, Inc. 600 23,580 BMC Software, Inc.* 500 9,325 Citrix Systems, Inc.* 800 16,968 Computer Associates International, Inc. 900 24,606 Compuware Corp.* 500 3,020 Electronic Arts, Inc.* 200 9,556 Intuit, Inc.* 200 10,582 Microsoft Corp. 16,100 443,394 Novell, Inc.* 500 5,260 Oracle Corp.* 7,300 96,360 Peoplesoft, Inc.* 600 13,680 Siebel Systems, Inc.* 600 8,322 SunGard Data Systems, Inc.* 400 11,084 Symantec Corp.* 800 27,720 Veritas Software Corp.* 900 33,444 ------------- 736,901 ------------- REAL ESTATE -- 0.2% Equity Office Properties Trust 600 17,190 Equity Residential 300 8,853 ------------- 26,043 ------------- RESTAURANTS -- 0.6% Darden Restaurants, Inc. 250 5,260 McDonald's Corp. 2,800 69,524 Wendy's International, Inc. 100 3,924 Yum! Brands, Inc.* 400 13,760 ------------- 92,468 ------------- RETAIL -- 6.0% AutoZone, Inc.* 400 34,084 Bed Bath & Beyond, Inc.* 400 $ 17,340 Best Buy Co., Inc. 700 36,568 Big Lots, Inc.* 200 2,842 Costco Wholesale Corp.* 900 33,462 CVS Corp. 800 28,896 Dollar General Corp. 700 14,693 Family Dollar Stores, Inc. 200 7,176 Federated Department Stores, Inc. 700 32,991 The Home Depot, Inc. 4,400 156,156 J.C. Penney Company, Inc. 100 2,628 Lowe's Companies, Inc. 1,600 88,624 The May Department Stores Co. 400 11,628 RadioShack Corp. 1,500 46,020 Sears, Roebuck and Co. 400 18,196 Staples, Inc.* 800 21,840 Tiffany & Co. 200 9,040 TJX Companies, Inc. 700 15,435 Toys R Us, Inc.* 300 3,792 Walgreen Co. 1,400 50,932 Wal-Mart Stores, Inc. 6,200 328,910 ------------- 961,253 ------------- RETAIL - GROCERY -- 0.1% Albertson's, Inc. 500 11,325 Winn-Dixie Stores, Inc. 200 1,990 ------------- 13,315 ------------- TELEPHONE UTILITIES -- 2.2% Alltel Corp. 400 18,632 AT&T Corp. 1,800 36,540 BellSouth Corp. 4,000 113,200 CenturyTel, Inc. 200 6,524 Sprint Corp. (FON Group) 2,100 34,482 Sprint Corp. (PCS Group)* 1,400 7,868 Verizon Communications, Inc. 4,100 143,828 ------------- 361,074 ------------- TOBACCO -- 1.1% Altria Group, Inc. 3,100 168,702 Reynolds (R.J.) Tobacco Holdings, Inc. 100 5,815 UST, Inc. 200 7,138 ------------- 181,655 ------------- TOYS, GAMES -- 0.2% Hasbro, Inc. 1,600 34,048 ------------- TRANSPORTATION -- 1.7% Burlington Northern Santa Fe Corp. 500 16,175 Carnival Corp. 1,100 43,703 CSX Corp. 100 3,594
The accompanying notes are an integral part of the financial statements. 34
NUMBER OF MARKET SHARES VALUE --------- ------- FedEx Corp. 500 $ 33,750 Norfolk Southern Corp. 100 2,365 Union Pacific Corp. 300 20,844 United Parcel Service, Inc. Cl. B 2,100 156,555 ------------- 276,986 ------------- TOTAL EQUITIES (COST $14,180,569) 15,853,266 -------------
PRINCIPAL AMOUNT --------- SHORT-TERM INVESTMENTS -- 1.4% REPURCHASE AGREEMENT Investors Bank & Trust Company Repurchase Agreement, dated 12/31/03, 0.72%, due 01/02/2004(a) $226,636 226,636 ------------- TOTAL SHORT-TERM INVESTMENTS (AT AMORTIZED COST) 226,636 ------------- TOTAL INVESTMENTS -- 100.0% (COST $14,407,205)** 16,079,902 OTHER ASSETS/ (LIABILITIES) -- 0.0% 2,615 ------------- NET ASSETS -- 100.0% $ 16,082,517 =============
NOTES TO PORTFOLIO OF INVESTMENTS * Non-income producing security. ** Aggregate cost for Federal tax purposes. (NOTE 7). (a) Maturity value of $226,645. Collateralized by U.S. Government Agency obligation with a rate of 3.875%, maturity date of 07/25/2026 and an aggregate market value, including accrued interest, of $237,967. The accompanying notes are an integral part of the financial statements. 35 The remainder of this page is intentionally left blank. MML ENHANCED INDEX CORE EQUITY FUND -- FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003 ----------------- ASSETS: Investments, at value (cost $14,180,569) (NOTE 2) $ 15,853,266 Short-term investments, at amortized cost (NOTE 2) 226,636 ----------------- Total Investments 16,079,902 Receivables from: Investment adviser (NOTE 3) 2,418 Fund shares sold 98 Interest and dividends 24,880 ----------------- Total assets 16,107,298 ----------------- LIABILITIES: Payables for: Fund shares repurchased 102 Directors' fees and expenses (NOTE 3) 707 Affiliates (NOTE 3): Investment management fees 7,651 Accrued expense and other liabilities 16,321 ----------------- Total liabilities 24,781 ----------------- NET ASSETS $ 16,082,517 ================= NET ASSETS CONSIST OF: Paid-in capital $ 16,570,059 Distributions in excess of net investment income (475) Accumulated net realized loss on investments and futures contracts (2,159,764) Net unrealized appreciation on investments 1,672,697 ----------------- $ 16,082,517 ================= SHARES OUTSTANDING: 1,789,474 ================= NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE: $ 8.99 =================
The accompanying notes are an integral part of the financial statements. 36 STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2003 ----------------- INVESTMENT INCOME (NOTE 2): Dividends $ 217,961 Interest 512 ----------------- Total investment income 218,473 ----------------- EXPENSES: Investment management fees (NOTE 3) 66,674 Audit and legal fees 19,106 Custody fees 6,616 Trustee reporting 2,851 Directors' fees (NOTE 3) 780 Shareholder reporting fees 548 ----------------- Total expenses 96,575 Expenses waived (NOTE 3) (16,567) ----------------- Net expenses 80,008 ----------------- NET INVESTMENT INCOME 138,465 ----------------- REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on: Investment transactions (266,503) Closed futures contracts 1,720 ----------------- Net realized loss (264,783) ----------------- Net change in unrealized appreciation (depreciation) on investments 3,213,416 ----------------- NET REALIZED AND UNREALIZED GAIN 2,948,633 ----------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,087,098 =================
The accompanying notes are an integral part of the financial statements. 37 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED DECEMBER 31, 2003 DECEMBER 31, 2002 ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income $ 138,465 $ 97,180 Net realized loss on investment transactions and futures contracts (264,783) (1,350,834) Net change in unrealized appreciation (depreciation) on investments 3,213,416 (1,263,929) ----------------- ----------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 3,087,098 (2,517,583) ----------------- ----------------- DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2): From net investment income (138,749) (96,830) NET FUND SHARE TRANSACTIONS (NOTE 5) 3,467,743 1,720,629 ----------------- ----------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 6,416,092 (893,784) NET ASSETS: Beginning of year 9,666,425 10,560,209 ----------------- ----------------- End of year (including distributions in excess of net investment income of $475 and undistributed net investment income of $269, respectively) $ 16,082,517 $ 9,666,425 ================= =================
The accompanying notes are an integral part of the financial statements. 38 FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED YEAR ENDED PERIOD ENDED 12/31/03 12/31/02 12/31/01+ ---------- ---------- ------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 7.13 $ 9.21 $ 10.00 ---------- ---------- ------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income 0.08 0.07 0.06*** Net realized and unrealized gain (loss) on investments 1.86 (2.08) (0.80) ---------- ---------- ------------ Total income (loss) from investment operations 1.94 (2.01) (0.74) ---------- ---------- ------------ LESS DISTRIBUTIONS TO SHAREHOLDERS: From net investment income (0.08) (0.07) (0.05) ---------- ---------- ------------ NET ASSET VALUE, END OF PERIOD $ 8.99 $ 7.13 $ 9.21 ========== ========== ============ TOTAL RETURN(a) 27.19% (21.80)% (7.08)%** RATIOS / SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 16,083 $ 9,666 $ 10,560 Ratio of expenses to average daily net assets: Before expense waiver 0.80% 0.95% 0.76%* After expense waiver# 0.66% 0.66% 0.66%* Net investment income to average daily net assets 1.14% 0.96% 0.93%* Portfolio turnover rate 78% 82% 59%**
* ANNUALIZED. ** PERCENTAGE REPRESENTS RESULTS FOR THE PERIOD AND ARE NOT ANNUALIZED. *** PER SHARE AMOUNT CALCULATED ON THE AVERAGE SHARES METHOD. + FOR THE PERIOD FROM MAY 1, 2001 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 2001. # COMPUTED AFTER GIVING EFFECT TO AN AGREEMENT BY MASSMUTUAL TO WAIVE CERTAIN FEES AND EXPENSES OF THE FUND FOR THE PERIOD MAY 1, 2001 THROUGH DECEMBER 31, 2001 AND THE YEARS ENDED DECEMBER 31, 2002 AND 2003. (a) TOTAL RETURN INFORMATION SHOWN IN THE FINANCIAL HIGHLIGHTS TABLE DOES NOT REFLECT EXPENSES THAT APPLY AT THE SEPARATE ACCOUNT LEVEL OR TO RELATED INSURANCE PRODUCTS. INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURN FIGURES FOR ALL PERIODS SHOWN. The accompanying notes are an integral part of the financial statements. 39 MML GROWTH EQUITY FUND - PORTFOLIO MANAGER REPORT WHAT IS THE INVESTMENT The objective of the Fund is to achieve long-term OBJECTIVE OF THE MML growth of capital and future income by investing GROWTH EQUITY FUND? primarily in a diversified portfolio of equity securities, which may consist of up to 35% foreign securities (including those of companies in emerging markets), using a growth-oriented investment strategy. HOW DID THE FUND For the 12 months ending December 31, 2003, the Fund's PERFORM DURING 2003? shares returned 23.02%, underperforming the 28.67% return of the S&P 500 Index, a market capitalization-weighted, unmanaged index of 500 common stocks. WHAT WAS THE For the third quarter, small-cap stocks outperformed INVESTMENT BACKGROUND both mid caps and large caps. During the same period, DURING THE PERIOD? growth issues outperformed their value counterparts across all market capitalizations. The landscape was somewhat similar in the fourth quarter, as small caps once again led the markets. This time, however, value stocks outperformed growth issues across all market capitalizations. WHAT FACTORS Good relative positioning in the health care and CONTRIBUTED TO THE consumer staples sectors provided the largest FUND'S PERFORMANCE? contributions to performance during the third quarter. In health care, we were rewarded for maintaining our cautious stance on stocks of major pharmaceutical companies that underperformed. A significant underweighting in the consumer staples sector also helped performance, as the market favored stocks in less defensive areas. Conversely, leisure holdings lost traction during the three months ending September 30, as soft near-term demand for radio advertising buffeted our major holdings. Constraining relative performance was our underweighted position in the technology sector. Worries that weak corporate technology spending and excess capacity would dampen profits abated during the period, as inventories contracted and certain product markets, such as laptop PCs, showed surprising strength. In the fourth quarter, the largest relative contributor to performance was strong stock selection in the industrial goods sector, although strength in the leisure sector also was a positive factor. Although advertising spending was lackluster throughout the majority of 2003, bookings began to improve during the month of December, sending many of our holdings among advertising-sensitive media franchises higher. The largest detractor during the fourth quarter came from several underperforming stocks in the technology sector. Other detractors included several underperforming holdings in transportation, utilities and communications, and retailing. WHAT IS YOUR OUTLOOK? Our bottom-up stock selection process resulted in continued emphasis on opportunities in technology, leisure, and financial services during the quarter. In technology, we are primarily positioned in industry leaders that we believe can generate strong but sustainable earnings growth and that should benefit from a continued improvement in corporate spending on technology items into 2004. In leisure, we continue to own many of the media franchises that we believe should benefit from increased advertising spending and an improving economy, particularly next year with a U.S. presidential election and the 2004 Olympics in Greece. And finally, in financials, we are invested in the brokers and asset managers that we believe stand to benefit from a continued recovery in investment banking revenues as merger and acquisition and IPO activity improves. 40 MML GROWTH EQUITY FUND LARGEST STOCK HOLDINGS (12/31/03) Microsoft Corp. Cisco Systems, Inc. Pfizer, Inc. General Electric Co. Johnson & Johnson Tyco International Limited American International Group, Inc. Dell, Inc. Intel Corp. Citigroup, Inc. GROWTH OF A $10,000 INVESTMENT Hypothetical Investments in MML Growth Equity Fund and the S&P 500 Index MML SERIES INVESTMENT FUND TOTAL RETURN
SINCE INCEPTION ONE YEAR AVERAGE ANNUAL 1/1/03 - 12/31/03 5/3/99 - 12/31/03 MML Growth Equity Fund 23.02% -4.47% S&P 500 Index 28.67% -2.43%
[CHART] GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION
MML GROWTH EQUITY FUND S&P 500 INDEX 5/3/99 $ 10,000 $ 10,000 12/99 $ 13,010 $ 11,100 12/00 $ 12,159 $ 10,090 12/01 $ 9,096 $ 8,892 12/02 $ 6,567 $ 6,928 12/03 $ 8,078 $ 8,913
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF SHARES OF THE FUND WILL FLUCTUATE WITH MARKET CONDITIONS SO THAT SHARES OF THE FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INVESTORS SHOULD NOTE THAT THE FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND, WHILE THE S&P 500 INDEX IS UNMANAGED AND DOES NOT INCUR EXPENSES, AND CANNOT BE PURCHASED DIRECTLY BY INVESTORS. THE FUND'S RETURN REFLECTS CHANGES IN THE NET ASSET VALUE PER SHARE WITHOUT THE DEDUCTION OF ANY PRODUCT CHARGES. TOTAL RETURN FIGURES WOULD BE LOWER FOR THE PERIODS PRESENTED IF THEY REFLECTED THESE CHARGES. 41 MML GROWTH EQUITY FUND - PORTFOLIO OF INVESTMENTS DECEMBER 31, 2003
NUMBER OF MARKET SHARES VALUE ------------- ------------- EQUITIES -- 97.2% ADVERTISING -- 0.7% Getty Images, Inc.* 700 $ 35,091 Lamar Advertising Co.* 2,000 74,640 Monster Worldwide, Inc.* 1,400 30,744 ------------- 140,475 ------------- AEROSPACE & DEFENSE -- 0.1% Honeywell International, Inc. 100 3,343 Lockheed Martin Corp. 400 20,560 ------------- 23,903 ------------- AIR TRANSPORTATION -- 0.9% JetBlue Airways Corp.* 940 24,929 Southwest Airlines Co. 10,850 175,119 ------------- 200,048 ------------- APPAREL, TEXTILES & SHOES -- 1.5% Coach, Inc.* 1,970 74,367 Hot Topic, Inc.* 800 23,568 Nike, Inc. Cl. B 2,140 146,504 Reebok International Limited 1,800 70,776 ------------- 315,215 ------------- AUTOMOTIVE & PARTS -- 0.5% Bayerische Motoren Werke AG 800 37,084 Harley-Davidson, Inc. 1,600 76,048 ------------- 113,132 ------------- BANKING, SAVINGS & LOANS -- 4.5% Bank of New York Co., Inc. 5,000 165,600 Citigroup, Inc. 7,800 378,612 Fannie Mae 2,700 202,662 Mellon Financial Corp. 1,100 35,321 Northern Trust Corp. 1,430 66,381 SLM Corp. 2,940 110,779 ------------- 959,355 ------------- BEVERAGES -- 1.2% Anheuser-Busch Companies, Inc. 740 38,983 PepsiCo, Inc. 4,660 217,249 ------------- 256,232 ------------- BROADCASTING, PUBLISHING & PRINTING -- 8.3% Citadel Broadcasting Corp.* 200 4,474 Clear Channel Communications, Inc. 5,950 278,638 Comcast Corp. Cl. A* 7,738 254,348 Cox Communications, Inc. Cl. A* 800 $ 27,560 Entercom Communications Corp.* 500 26,480 InterActive Corp.* 7,240 245,653 Liberty Media Corp. Cl. A* 6,200 73,718 New York Times Co. Cl. A 1,200 57,348 News Corp. Limited Sponsored ADR (Australia) 2,170 78,337 Time Warner, Inc.* 15,350 276,147 Univision Communications, Inc. Cl. A* 1,500 59,535 Viacom, Inc. Cl. B 7,444 330,365 Westwood One, Inc.* 2,200 75,262 ------------- 1,787,865 ------------- CHEMICALS -- 0.3% Air Products & Chemicals, Inc. 1,000 52,830 Georgia Gulf Corp. 100 2,888 ------------- 55,718 ------------- COMMERCIAL SERVICES -- 2.1% Accenture Limited Cl. A* 2,640 69,485 Akamai Technologies, Inc.* 3,400 36,550 Apollo Group, Inc. Cl. A* 1,070 72,760 Career Education Corp.* 1,640 65,715 Cendant Corp.* 500 11,135 eBay, Inc.* 2,890 186,665 Manpower, Inc. 100 4,708 Waste Management, Inc. 100 2,960 ------------- 449,978 ------------- COMMUNICATIONS -- 2.8% Andrew Corp.* 800 9,208 EchoStar Communications Corp. Cl. A* 6,400 217,600 Juniper Networks, Inc.* 1,100 20,548 L-3 Communications Holdings, Inc.* 100 5,136 Nextel Communications, Inc. Cl. A* 3,140 88,108 Nokia Oyj Sponsored ADR (Finland) 3,890 66,130 Nortel Networks Corp.* 15,800 66,834 NTL, Inc.* 800 55,800 Qualcomm, Inc. 1,300 70,109 ------------- 599,473 ------------- COMPUTER INTEGRATED SYSTEMS DESIGN -- 0.6% Avid Technology, Inc.* 500 24,000 Cadence Design Systems, Inc.* 3,520 63,290 NetScreen Technologies, Inc.* 400 9,900 Synopsys, Inc.* 900 $ 30,384 ------------- 127,574 ------------- COMPUTER PROGRAMMING SERVICES -- 0.6% Mercury Interactive Corp.* 2,800 136,192 ------------- COMPUTER RELATED SERVICES -- 0.1% Manhattan Associates, Inc.* 500 13,820 ------------- COMPUTERS & INFORMATION -- 5.9% Apple Computer, Inc.* 1,540 32,910 Cisco Systems, Inc.* 30,020 729,186 Dell, Inc.* 11,410 387,484 EMC Corp.* 2,300 29,716 Foundry Networks, Inc.* 1,300 35,568 International Game Technology 1,300 46,410 Zebra Technologies Corp. Cl. A* 60 3,982 ------------- 1,265,256 ------------- COMPUTERS & OFFICE EQUIPMENT -- 1.4% Hewlett-Packard Co. 500 11,485 International Business Machines Corp. 3,220 298,430 ------------- 309,915 ------------- CONTAINERS -- 0.0% Smurfit-Stone Container Corp. 400 7,428 ------------- COSMETICS & PERSONAL CARE -- 2.0% Avon Products, Inc. 2,570 173,449 Colgate-Palmolive Co. 2,580 129,129 The Procter & Gamble Co. 1,280 127,846 ------------- 430,424 ------------- DATA PROCESSING & PREPARATION -- 1.0% Affiliated Computer Services, Inc. Cl. A* 1,400 76,244 The BISYS Group, Inc.* 800 11,904 First Data Corp. 800 32,872 Fiserv, Inc.* 2,340 92,453 ------------- 213,473 ------------- ELECTRICAL EQUIPMENT & ELECTRONICS -- 10.7% Agere Systems, Inc. Cl. B* 2,300 6,670 Amphenol Corp. Cl. A* 400 25,572 Analog Devices, Inc. 5,800 264,770 Emerson Electric Co. 590 38,203 Flextronics International Limited* 3,100 46,004 General Electric Co. 15,390 476,782
The accompanying notes are an integral part of the financial statements. 42
NUMBER OF MARKET SHARES VALUE ------------- ------------- Intel Corp. 11,870 $ 382,214 Linear Technology Corp. 1,500 63,105 Marvell Technology Group Limited* 2,900 109,997 Maxim Integrated Products, Inc. 1,470 73,206 Microchip Technology, Inc. 3,720 124,099 Molex, Inc. 1,400 48,846 Novellus Systems, Inc.* 2,500 105,125 PMC-Sierra, Inc.* 1,900 38,285 Rockwell Automation, Inc. 900 32,040 STMicroelectronics NV NY Shares 200 5,402 Taiwan Semiconductor Manufacturing Co. Limited Sponsored ADR (Taiwan)* 7,314 74,895 Texas Instruments, Inc. 7,800 229,164 Xilinx, Inc.* 4,200 162,708 ------------- 2,307,087 ------------- ENERGY -- 0.3% BJ Services Co.* 1,300 46,670 GlobalSantaFe Corp. 500 12,415 Noble Corp.* 400 14,312 ------------- 73,397 ------------- ENTERTAINMENT & LEISURE -- 0.1% The Walt Disney Co. 540 12,598 ------------- FINANCIAL SERVICES -- 4.4% American Express Co. 6,670 321,694 The Goldman Sachs Group, Inc. 1,000 98,730 MBNA Corp. 8,000 198,800 Merrill Lynch & Co., Inc. 2,580 151,317 Morgan Stanley 2,450 141,782 The Schwab (Charles) Corp. 3,100 36,704 ------------- 949,027 ------------- FOODS -- 0.1% Sysco Corp. 470 17,498 ------------- HEALTHCARE -- 0.7% Caremark Rx, Inc.* 3,950 100,054 HCA, Inc. 1,100 47,256 Tenet Healthcare Corp.* 400 6,420 ------------- 153,730 ------------- HOUSEHOLD PRODUCTS -- 0.6% The Clorox Co. 1,000 48,560 Corning, Inc.* 8,100 84,483 ------------- 133,043 ------------- INDUSTRIAL - DISTRIBUTION -- 0.1% Grainger (W.W.), Inc. 600 $ 28,434 ------------- INDUSTRIAL - DIVERSIFIED -- 4.6% 3M Co. 2,210 187,916 Cooper Industries Limited Cl. A 500 28,965 Danaher Corp. 1,380 126,615 Eaton Corp. 600 64,788 Illinois Tool Works, Inc. 1,340 112,439 Tyco International Limited 17,380 460,570 ------------- 981,293 ------------- INFORMATION RETRIEVAL SERVICES -- 0.1% Yahoo!, Inc.* 700 31,619 ------------- INSURANCE -- 2.9% ACE Limited 1,200 49,704 American International Group, Inc. 6,500 430,820 The Hartford Financial Services Group, Inc. 1,300 76,739 Marsh & McLennan Companies, Inc. 500 23,945 UnumProvident Corp. 1,700 26,809 XL Capital Limited Cl. A 300 23,265 ------------- 631,282 ------------- INTERNET CONTENT -- 0.2% BEA Systems, Inc.* 2,820 34,686 ------------- LODGING -- 0.3% Hilton Hotels Corp. 2,340 40,084 Starwood Hotels & Resorts Worldwide, Inc. 600 21,582 ------------- 61,666 ------------- MACHINERY & COMPONENTS -- 0.3% Parker-Hannifin Corp. 400 23,800 Smith International, Inc.* 1,240 51,485 ------------- 75,285 ------------- MANUFACTURING -- 0.0% Applied Materials, Inc.* 300 6,735 ------------- MEDICAL SUPPLIES -- 4.0% Allergan, Inc. 600 46,086 Applied Biosystems Group-Applera Corp. 1,600 33,136 Bard (C.R.), Inc. 1,000 81,250 Baxter International, Inc. 3,100 94,612 Biomet, Inc. 2,430 88,476 CTI Molecular Imaging, Inc.* 400 6,764 Edwards Lifesciences Corp.* 100 3,008 Guidant Corp. 2,480 $ 149,296 Medtronic, Inc. 3,920 190,551 Thermo Electron Corp.* 2,600 65,520 Zimmer Holdings, Inc.* 1,280 90,112 ------------- 848,811 ------------- METALS & MINING -- 0.2% BHP Billiton Limited Sponsored ADR (Australia) 2,170 39,624 ------------- PHARMACEUTICALS -- 12.6% Abbott Laboratories 4,600 214,360 Alcon, Inc. 970 58,724 AmerisourceBergen Corp. 470 26,391 Amgen, Inc.* 3,260 201,468 AstraZeneca PLC 70 3,358 Cardinal Health, Inc. 2,380 145,561 Eli Lilly & Co. 870 61,187 Forest Laboratories, Inc.* 1,100 67,980 Genentech, Inc.* 190 17,778 Genzyme Corp.* 3,900 192,426 Gilead Sciences, Inc.* 4,600 267,444 Invitrogen Corp.* 440 30,800 Johnson & Johnson 9,020 465,973 Novartis AG 200 9,080 Pfizer, Inc. 16,062 567,470 Roche Holding AG 500 50,435 Schering-Plough Corp. 5,310 92,341 Watson Pharmaceutical, Inc.* 600 27,600 Wyeth 4,700 199,515 ------------- 2,699,891 ------------- PREPACKAGED SOFTWARE -- 7.6% DST Systems, Inc.* 1,200 50,112 Intuit, Inc.* 1,250 66,138 Microsoft Corp. 32,280 888,991 Network Associates, Inc.* 2,700 40,608 Oracle Corp.* 14,600 192,720 SunGard Data Systems, Inc.* 400 11,084 Symantec Corp.* 4,960 171,864 Veritas Software Corp.* 5,506 204,603 ------------- 1,626,120 ------------- RESTAURANTS -- 0.8% McDonald's Corp. 2,870 71,262 Outback Steakhouse, Inc. 2,300 101,683 ------------- 172,945 ------------- RETAIL --7.9% Best Buy Co., Inc. 1,470 76,793 Carmax, Inc.* 1,170 36,188 CVS Corp. 2,120 76,574 The Home Depot, Inc. 3,200 113,568
The accompanying notes are an integral part of the financial statements. 43
NUMBER OF MARKET SHARES VALUE ------------- ------------- Kohl's Corp.* 5,800 $ 260,652 Lowe's Companies, Inc. 720 39,881 Pier 1 Imports, Inc. 800 17,488 Rite Aid Corp.* 4,700 28,388 Staples, Inc.* 4,500 122,850 Target Corp. 9,680 371,712 TJX Companies, Inc. 5,100 112,455 Walgreen Co. 3,600 130,968 Wal-Mart Stores, Inc. 4,890 259,415 Williams-Sonoma, Inc.* 1,100 38,247 ------------- 1,685,179 ------------- TELEPHONE UTILITIES -- 2.1% Adtran, Inc. 7,360 228,160 Amdocs Limited* 3,600 80,928 AT&T Wireless Services, Inc.* 9,600 76,704 Sprint Corp. (PCS Group)* 5,900 33,158 Vodafone Group PLC Sponsored ADR (United Kingdom) 966 24,189 ------------- 443,139 ------------- TOBACCO -- 0.3% Altria Group, Inc. 1,100 59,862 ------------- TRANSPORTATION -- 1.8% Carnival Corp. 4,100 162,893 FedEx Corp. 2,400 162,000 Orbitz, Inc. Cl. A* 100 2,403 United Parcel Service, Inc. Cl. B 850 63,368 ------------- 390,664 ------------- TOTAL EQUITIES (COST $19,727,053) 20,869,091 ------------- RIGHTS -- 0.0% COMPUTERS & INFORMATION Seagate Technology* ~ 11,100 - ------------- TOTAL RIGHTS (COST $0) - ------------- TOTAL LONG TERM INVESTMENTS (COST $19,727,053) 20,869,091 ------------- PRINCIPAL AMOUNT ------------- SHORT-TERM INVESTMENTS -- 8.4% CASH EQUIVALENTS -- 6.4%** Bank of Montreal Eurodollar Time Deposit 1.060% 01/15/2004 $ 3,700 3,700 PRINCIPAL MARKET AMOUNT VALUE ------------- ------------- Bank of Montreal Eurodollar Time Deposit 1.060% 02/17/2004 $ 19,550 $ 19,550 Bank of Nova Scotia Eurodollar Time Deposit 1.080% 03/03/2004 58,648 58,648 Bank of Scotland Eurodollar Time Deposit 1.060% 04/02/2004 14,662 14,662 Bank of the West Eurodollar Time Deposit 1.075% 01/14/2004 14,662 14,662 Barclays Eurodollar Time Deposit 1.090% 03/05/2004 48,872 48,872 BNP Paribas Eurodollar Time Deposit 0.970% 01/07/2004 19,549 19,549 Canadian Imperial Bank of Commerce Bank Note 0.990% 05/18/2004 97,744 97,744 Citigroup Eurodollar Time Deposit 1.080% 01/05/2004 9,774 9,774 Citigroup Eurodollar Time Deposit 1.090% 03/04/2004 39,098 39,098 Citigroup Eurodollar Time Deposit 1.100% 01/22/2004 9,774 9,774 Credit Agricole Indosuez Eurodollar Time Deposit 1.080% 01/06/2004 100,677 100,677 Dreyfus Cash Management Plus, Inc. Money Market Fund 53,759 53,759 Fannie Mae Discount Note 1.062% 01/02/2004 29,323 29,323 Fleet National Bank Bank Note 1.000% 01/21/2004 48,872 48,872 Freddie Mac Discount Note 1.062% 01/27/2004 39,017 39,017 General Electric Capital Corp. 1.092% 01/05/2004 48,783 48,783 Goldman Sachs Financial Square Prime Obligations Money Market Fund 19,549 19,549 Harris Trust & Savings Bank Eurodollar Time Deposit 1.050% 01/29/2004 $ 10,752 $ 10,752 Merrill Lynch Premier Institutional Money Market Fund 67,249 67,249 Merrimac Money Market Fund 162,256 162,256 Morgan Stanley Dean Witter & Co. 1.080% 01/29/2004 50,827 50,827 National Bank of Commerce Bank Note 1.120% 05/19/2004 24,436 24,436 Royal Bank of Canada Eurodollar Time Deposit 1.050% 02/27/2004 24,436 24,436 Royal Bank of Scotland Eurodollar Time Deposit 1.080% 01/09/2004 19,549 19,549 Royal Bank of Scotland Eurodollar Time Deposit 1.080% 01/15/2004 48,872 48,872 Royal Bank of Scotland Eurodollar Time Deposit 1.090% 03/03/2004 24,436 24,436 Southtrust Bank Eurodollar Time Deposit 1.090% 02/17/2004 29,323 29,323 Svenska Handlesbanken Eurodollar Time Deposit 1.080% 02/04/2004 24,436 24,436 Svenska Handlesbanken Eurodollar Time Deposit 1.085% 01/15/2004 24,436 24,436 Svenska Handlesbanken Eurodollar Time Deposit 1.090% 02/24/2004 48,872 48,872 Toronto Dominion Bank Eurodollar Time Deposit 1.100% 01/08/2004 9,774 9,774 Wells Fargo Eurodollar Time Deposit 1.070% 01/20/2004 117,293 117,293 ------------- 1,362,960 -------------
The accompanying notes are an integral part of the financial statements. 44 DECEMBER 31, 2003
PRINCIPAL MARKET AMOUNT VALUE ------------- ------------- REPURCHASE AGREEMENT -- 2.0% Investors Bank & Trust Company Repurchase Agreement, dated 12/31/2003, 0.72%, due 01/02/2004(a) $ 430,182 $ 430,182 TOTAL SHORT-TERM INVESTMENTS (AT AMORTIZED COST) 1,793,142 ------------- TOTAL INVESTMENTS -- 105.6% (COST $21,520,195)*** 22,662,233 OTHER ASSETS/ (LIABILITIES) (5.6%) (1,202,016) ------------- NET ASSETS 100.0% $ 21,460,217 =============
NOTES TO PORTFOLIO OF INVESTMENTS ADR - American Depository Receipt. * Non-income producing security. ** Represents investments of security lending collateral. (NOTE 2). *** Aggregate cost for Federal tax purposes. (NOTE 7). ~ This security is valued in good faith under procedures established by the board of directors. (a) Maturity value of $430,199. Collateralized by U.S. Government Agency obligation with a rate of 1.763%, maturity date of 11/15/2032, and an aggregate market value, including accrued interest, of $452,434. The remainder of this page is intentionally left blank. The accompanying notes are an integral part of the financial statements. 45 MML GROWTH EQUITY FUND - FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003 ----------------- ASSETS: Investments, at value (cost $19,727,053) (NOTE 2) $ 20,869,091 Short-term investments, at amortized cost (NOTE 2) 1,793,142 ------------- Total Investments (including securities on loan with market values of $1,304,924) 22,662,233 Cash 3,745 Receivables from: Investments sold 552,975 Investment adviser (NOTE 3) 5,857 Fund shares sold 4,197 Interest and dividends 13,163 Foreign taxes withheld 338 ------------- Total assets 23,242,508 ------------- LIABILITIES: Payables for: Investments purchased 375,031 Fund shares repurchased 1,507 Securities on loan (NOTE 2) 1,362,960 Directors' fees and expenses (NOTE 3) 3,634 Affiliates (NOTE 3): Investment management fees 15,099 Accrued expense and other liabilities 24,060 ------------- Total liabilities 1,782,291 ------------- NET ASSETS $ 21,460,217 ============= NET ASSETS CONSIST OF: Paid-in capital $ 45,850,291 Distributions in excess of net investment income (3,633) Accumulated net realized loss on investments and foreign currency translations (25,528,503) Net unrealized appreciation on investments, foreign currency and other assets and liabilities 1,142,062 ------------- $ 21,460,217 ============= SHARES OUTSTANDING: 3,185,044 ============= NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE: $ 6.74 =============
The accompanying notes are an integral part of the financial statements. 46 STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2003 ----------------- INVESTMENT INCOME (NOTE 2): Dividends (net of withholding tax of $810) $ 157,469 Interest (including securities lending income of $1,274) 4,849 ----------- Total investment income 162,318 ----------- EXPENSES: Investment management fees (NOTE 3) 147,440 Custody fees 53,924 Audit and legal fees 19,373 Trustee reporting 13,446 Directors' fees (NOTE 3) 1,201 Shareholder reporting fees 923 ----------- Total expenses 236,307 Expenses waived (NOTE 3) (68,595) Fees paid indirectly (NOTE 3) (8,366) ----------- Net expenses 159,346 ----------- NET INVESTMENT INCOME 2,972 ----------- REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain on: Investment transactions 2,295,738 Foreign currency transactions 245 ----------- Net realized gain 2,295,983 ----------- Net change in unrealized appreciation (depreciation) on: Investments 1,464,944 Translation of assets and liabilities in foreign currencies (373) ----------- Net unrealized gain 1,464,571 ----------- NET REALIZED AND UNREALIZED GAIN 3,760,554 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,763,526 ===========
The accompanying notes are an integral part of the financial statements. 47 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED DECEMBER 31, 2003 DECEMBER 31, 2002 ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income (loss) $ 2,972 $ (28,905) Net realized gain (loss) on investment transactions and foreign currency transactions 2,295,983 (6,917,966) Net change in unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies 1,464,571 (2,868,418) ------------ ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 3,763,526 (9,815,289) ------------ ------------- DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2): From net investment income (4,061) - NET FUND SHARE TRANSACTIONS (NOTE 5) 1,132,622 (18,361,105) ------------ ------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 4,892,087 (28,176,394) NET ASSETS: Beginning of year 16,568,130 44,744,524 ------------ ------------- End of year (including distributions in excess of net investment income of $3,633 and accumulated net investment loss of $3,189, respectively) $ 21,460,217 $ 16,568,130 ============ =============
The accompanying notes are an integral part of the financial statements. 48 FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99+ ---------- ---------- ---------- ---------- ------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 5.48 $ 7.59 $ 10.15 $ 13.01 $ 10.00 -------- -------- -------- -------- -------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.00~ (0.01) (0.00)~ (0.01) (0.00)~ Net realized and unrealized gain (loss) on investments 1.26 (2.10) (2.56) (0.77) 3.01 -------- -------- -------- -------- -------- Total income (loss) from investment operations 1.26 (2.11) (2.56) (0.78) 3.01 -------- -------- -------- -------- -------- LESS DISTRIBUTIONS TO SHAREHOLDERS: From net investment income (0.00)~~ - (0.00)~~ (0.00)~~ - Tax return of capital - - - (0.00)~~ - From net realized gains - - - (2.08) - -------- -------- -------- -------- -------- Total distributions (0.00) - (0.00) (2.08) - -------- -------- -------- -------- -------- NET ASSET VALUE, END OF PERIOD $ 6.74 $ 5.48 $ 7.59 $ 10.15 $ 13.01 ======== ======== ======== ======== ======== TOTAL RETURN(a) 23.02% (27.80)% (25.20)% (6.54)% 30.10%** RATIOS / SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 21,460 $ 16,568 $ 44,745 $ 53,081 $ 39,487 Ratio of expenses to average daily net assets: Before expense waiver 1.28% 1.08% 0.99% 1.08% 0.77%** After expense waiver# 0.86%(b) 0.89%(b) 0.91% 0.91% 0.61%** Net investment income (loss) to average daily net assets 0.02% (0.10)% (0.06)% (0.10)% (0.04)%** Portfolio turnover rate 271% 219% 292% 271% 106%**
** PERCENTAGE REPRESENTS RESULTS FOR THE PERIOD AND ARE NOT ANNUALIZED. ~ NET INVESTMENT INCOME (LOSS) IS LESS THAN $0.01 PER SHARE. ~~ DISTRIBUTIONS FROM NET INVESTMENT INCOME AND TAX RETURN OF CAPITAL ARE LESS THAN $0.01 PER SHARE. + FOR THE PERIOD FROM MAY 3, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1999 # COMPUTED AFTER GIVING EFFECT TO AN AGREEMENT BY MASSMUTUAL TO WAIVE CERTAIN FEES AND EXPENSES OF THE FUND FOR THE PERIOD MAY 3, 1999 THROUGH DECEMBER 31, 1999 AND THE YEARS ENDING DECEMBER 31, 2000, 2001, 2002 AND 2003. (a) TOTAL RETURN INFORMATION SHOWN IN THE FINANCIAL HIGHLIGHTS TABLE DOES NOT REFLECT EXPENSES THAT APPLY AT THE SEPARATE ACCOUNT LEVEL OR TO RELATED INSURANCE PRODUCTS. INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURN FIGURES FOR ALL PERIODS SHOWN. (b) THE FUND HAS ENTERED INTO AN AGREEMENT WITH CERTAIN BROKERS TO REBATE A PORTION OF BROKERAGE COMMISSIONS. THE RELATED COMMISSIONS ARE USED TO REDUCE OPERATING EXPENSES OF THE FUND. The accompanying notes are an integral part of the financial statements. 49 MML OTC 100 FUND - PORTFOLIO MANAGER REPORT WHAT IS THE INVESTMENT The objective of the Fund is to achieve long-term OBJECTIVE OF THE MML growth of capital through performance that closely OTC 100 FUND? tracks that of the NASDAQ 100 Index by investing at least 80% of its assets in a portfolio of equity securities mirroring the sector and stock weightings of the Index. HOW DID THE FUND For the 12 months ending December 31, 2003, the Fund's PERFORM IN 2003? shares returned 48.62%, nearly in line with the 49.12% return of the NASDAQ 100 Index. The NASDAQ 100 Index represents 100 of the largest non-financial U.S. and non-U.S. companies listed on the National Tier of the NASDAQ stock market. It is a modified capitalization-weighted index that is designed to limit domination by a few large stocks while generally retaining the ranking of companies by capitalization. WHAT WAS THE Improving fundamentals throughout the year provided an INVESTMENT BACKDROP attractive backdrop for equity market advances. The DURING THE PERIOD? NASDAQ Index was up 8.6% for the third quarter, led by the continued strength in the technology sector. For the same reason, during the fourth quarter, the NASDAQ Index advanced 13.4%. At year-end, technology represented just over 60% of the Index. Throughout 2003, the economic landscape showed signs of improvement, as evidenced in the continual upward revisions to the all-important Gross Domestic Product (GDP) figures. Most recently, GDP growth has been estimated at an annualized rate of 8.2%. During the second half of the year, investment by corporate America began picking up in earnest. While business spending was well in the single-digit category during the first half of the year, the third and fourth quarters' spending levels increased sharply to mid-teen levels, with significant increases experienced in technology spending. The year concluded with robust corporate earnings, as evidenced by the near-record estimate of the S&P 500's 2004 operating earnings at $62 per share. The equity markets continued to enjoy the Federal Reserve's stimulative stance on monetary policy throughout the year. WHAT FACTORS During the third quarter, sector performance was led by CONTRIBUTED TO THE information technology and consumer discretionary. The FUND'S PERFORMANCE? worst-performing sector during the period was energy. In the fourth quarter, sector performance was led by information technology and telecommunications services. The greatest detractor during the period was health care. Telecommunication services was the sector leader for the year, advancing 143%; information technology was second, with an impressive 52.2% return. WHAT IS YOUR OUTLOOK? Improvement in business performance this cycle, especially corporate profitability, should support further, if more modest, gains in 2004. A stronger cyclical recovery and a potential higher secular growth rate are not fully discounted in equity markets. The state of the business cycle, the end of the bear market, and the economy's remarkable resilience and productivity argue that 2004 will be a favorable year for equity investors. Unquestionably, risk exists - particularly, exogenous threats like terrorism - but markets adjust to these risks and take them into account. In such instances, they do not ordinarily cause volatility; only when unforeseen events happen does the market respond, in either a positive or negative direction. 50 MML OTC 100 FUND LARGEST STOCK HOLDINGS (12/31/03) Microsoft Corp. Intel Corp. Cisco Systems, Inc. Qualcomm, Inc. Nextel Communications, Inc. Cl. A Amgen, Inc. Dell, Inc. Comcast Corp. Cl. A eBay, Inc. Oracle Corp. GROWTH OF A $10,000 INVESTMENT Hypothetical Investments in MML OTC 100 Fund and the NASDAQ 100 Index MML SERIES INVESTMENT FUND TOTAL RETURN
SINCE INCEPTION ONE YEAR AVERAGE ANNUAL 1/1/03 - 12/31/03 5/1/00 - 12/31/03 MML OTC 100 Fund 48.62% -23.25% - ------------------------------------------------------------ NASDAQ 100 Index 49.12% -22.70%
[CHART] GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION
MML OTC 100 FUND NASDAQ 100 INDEX 5/1/00 $ 10,000 $ 10,000 12/00 $ 6,110 $ 6,207 12/01 $ 4,087 $ 4,180 12/02 $ 2,547 $ 2,609 12/03 $ 3,785 $ 3,890
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF SHARES OF THE FUND WILL FLUCTUATE WITH MARKET CONDITIONS SO THAT SHARES OF THE FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INVESTORS SHOULD NOTE THAT THE FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND, WHILE THE NASDAQ 100 INDEX IS UNMANAGED AND DOES NOT INCUR EXPENSES, AND CANNOT BE PURCHASED DIRECTLY BY INVESTORS. THE FUND'S RETURN REFLECTS CHANGES IN THE NET ASSET VALUE PER SHARE WITHOUT THE DEDUCTION OF ANY PRODUCT CHARGES. TOTAL RETURN FIGURES WOULD BE LOWER FOR THE PERIODS PRESENTED IF THEY REFLECTED THESE CHARGES. 51 MML OTC 100 FUND - PORTFOLIO OF INVESTMENTS DECEMBER 31, 2003
NUMBER OF MARKET SHARES VALUE ------------- ------------- EQUITIES -- 98.1% ADVERTISING -- 0.2% Lamar Advertising Co.* 830 $ 30,976 ------------- AIR TRANSPORTATION -- 0.2% Ryanair Holdings PLC Sponsored ADR (Ireland)* 605 30,637 ------------- APPAREL, TEXTILES & SHOES -- 0.3% Ross Stores, Inc. 1,485 39,249 ------------- AUTOMOTIVE & PARTS -- 0.9% Paccar, Inc. 1,302 110,826 ------------- BROADCASTING, PUBLISHING & PRINTING -- 4.6% Comcast Corp. Cl. A* 9,461 310,983 InterActive Corp.* 7,356 249,589 ------------- 560,572 ------------- COMMERCIAL SERVICES -- 6.0% Apollo Group, Inc. Cl. A* 1,776 120,768 Career Education Corp.* 1,014 40,631 Cintas Corp. 2,040 102,265 eBay, Inc.* 4,798 309,903 Fastenal Co. 722 36,057 Paychex, Inc. 3,562 132,506 ------------- 742,130 ------------- COMMUNICATIONS -- 10.0% EchoStar Communications Corp. Cl. A* 2,530 86,020 Juniper Networks, Inc.* 2,548 47,597 Network Appliance, Inc.* 3,593 73,764 Nextel Communications, Inc. Cl. A* 13,644 382,851 PanAmSat Corp.* 2,015 43,443 Qualcomm, Inc. 9,609 518,213 Research In Motion Limited* 786 52,528 Tellabs, Inc.* 2,368 19,962 ------------- 1,224,378 ------------- COMPUTER INTEGRATED SYSTEMS DESIGN -- 0.9% Sun Microsystems, Inc.* 14,152 63,543 Synopsys, Inc.* 1,431 48,311 ------------- 111,854 ------------- COMPUTER PROGRAMMING SERVICES -- 0.7% Mercury Interactive Corp.* 955 46,451 VeriSign, Inc.* 2,268 36,968 ------------- 83,419 ------------- COMPUTERS & INFORMATION -- 9.4% Apple Computer, Inc.* 5,094 108,859 CDW Corp. 862 $ 49,789 Cisco Systems, Inc.* 24,561 596,587 Comverse Technology, Inc.* 1,989 34,987 Dell, Inc.* 9,392 318,952 Sandisk Corp.* 727 44,449 ------------- 1,153,623 ------------- CONTAINERS -- 0.4% Smurfit-Stone Container Corp. 2,416 44,865 ------------- DATA PROCESSING & PREPARATION -- 0.8% Fiserv, Inc.* 2,414 95,377 ------------- ELECTRICAL EQUIPMENT & ELECTRONICS -- 19.2% Altera Corp.* 5,305 120,424 American Power Conversion Corp. 1,987 48,582 ATI Technologies, Inc.* 2,390 36,137 Broadcom Corp. Cl. A* 2,137 72,850 Flextronics International Limited* 5,699 84,573 Garmin Limited 998 54,371 Gentex Corp. 795 35,107 Intel Corp. 22,778 733,452 Intersil Corp. Cl. A 1,397 34,716 JDS Uniphase Corp.* 16,177 59,046 Kla-Tencor Corp.* 2,350 137,875 Linear Technology Corp. 4,158 174,927 Marvell Technology Group Limited* 1,205 45,706 Maxim Integrated Products, Inc. 4,585 228,333 Microchip Technology, Inc. 1,717 57,279 Molex, Inc. 982 34,262 Novellus Systems, Inc.* 1,546 65,009 Nvidia Corp.* 1,746 40,595 Qlogic Corp.* 959 49,484 Sanmina-SCI Corp.* 5,499 69,342 Xilinx, Inc.* 4,523 175,221 ------------- 2,357,291 ------------- ENERGY -- 0.2% Patterson-UTI Energy, Inc.* 832 27,390 ------------- FOODS -- 1.5% Starbucks Corp.* 5,451 180,210 ------------- HEALTHCARE -- 1.1% Express Scripts, Inc.* 698 46,368 First Health Group Corp.* 976 18,993 Lincare Holdings, Inc.* 945 28,378 Patterson Dental Co.* 652 $ 41,832 ------------- 135,571 ------------- INFORMATION RETRIEVAL SERVICES -- 1.2% Yahoo!, Inc.* 3,150 142,286 ------------- INTERNET CONTENT -- 0.4% BEA Systems, Inc.* 3,725 45,818 ------------- MANUFACTURING -- 1.9% Applied Materials, Inc.* 8,565 192,284 Lam Research Corp.* 1,342 43,347 ------------- 235,631 ------------- MEDICAL SUPPLIES -- 1.3% Biomet, Inc. 3,428 124,814 Dentsply International, Inc. 757 34,194 ------------- 159,008 ------------- MISCELLANEOUS -- 2.2% Nasdaq-100 Index Tracking Stock 7,537 274,498 ------------- PHARMACEUTICALS -- 10.4% Amgen, Inc.* 5,987 369,997 Biogen Idec, Inc.* 3,771 138,697 Cephalon, Inc.* 507 24,544 Chiron Corp.* 2,614 148,972 Genzyme Corp.* 2,798 138,053 Gilead Sciences, Inc.* 1,986 115,466 Henry Schein, Inc.* 404 27,302 Invitrogen Corp.* 478 33,460 Medimmune, Inc.* 2,638 67,005 Millennium Pharmaceuticals, Inc.* 3,290 61,424 Sigma-Aldrich Corp. 663 37,910 Teva Pharmaceutical Sponsored ADR (Israel) 1,916 108,656 ------------- 1,271,486 ------------- PREPACKAGED SOFTWARE -- 18.6% Adobe Systems, Inc. 2,284 89,761 Check Point Software Technologies Limited* 2,419 40,688 Citrix Systems, Inc.* 1,942 41,190 Compuware Corp.* 2,359 14,248 Electronic Arts, Inc.* 2,991 142,910 Intuit, Inc.* 2,490 131,746 Microsoft Corp. 37,058 1,020,577 Oracle Corp.* 21,703 286,480 Peoplesoft, Inc.* 5,276 120,293 Pixar, Inc.* 554 38,387 Siebel Systems, Inc.* 5,784 80,224
The accompanying notes are an integral part of the financial statements. 52
NUMBER OF MARKET SHARES VALUE ------------- ------------- Symantec Corp.* 3,208 $ 111,157 Veritas Software Corp.* 4,352 161,720 ------------- 2,279,381 ------------- RETAIL -- 3.4% Bed Bath & Beyond, Inc.* 3,966 171,926 Costco Wholesale Corp.* 2,401 89,269 Dollar Tree Stores, Inc.* 1,102 33,126 Petsmart, Inc. 1,409 33,534 Staples, Inc.* 3,312 90,418 ------------- 418,273 ------------- RETAIL - GROCERY -- 0.3% Whole Foods Market, Inc.* 587 39,405 ------------- RETAIL - INTERNET -- 1.1% Amazon.com, Inc.* 2,652 139,601 ------------- TELEPHONE UTILITIES -- 0.3% Level 3 Communications, Inc.* 6,659 37,956 ------------- TRANSPORTATION -- 0.6% Expeditors International of Washington, Inc. 1,026 38,639 Robinson (C.H.) Worldwide, Inc. 831 31,503 ------------- 70,142 ------------- TOTAL EQUITIES (COST $9,892,457) 12,041,853 ------------- PRINCIPAL MARKET AMOUNT VALUE ------------- ------------- SHORT-TERM INVESTMENTS -- 2.4% REPURCHASE AGREEMENT -- 1.9% Investors Bank & Trust Company Repurchase Agreement, dated 12/31/2003, 0.72%, due 01/02/2004(a) $ 232,427 $ 232,427 ------------- U.S. TREASURY BILLS -- 0.5% U.S. Treasury Bill** 0.875% 01/22/2004 10,000 9,995 U.S. Treasury Bill** 0.892% 01/22/2004 30,000 29,984 U.S. Treasury Bill** 0.905% 01/22/2004 20,000 19,989 ------------- 59,968 ------------- TOTAL SHORT-TERM INVESTMENTS (AT AMORTIZED COST) 292,395 ------------- TOTAL INVESTMENTS -- 100.5% (COST $10,184,852)*** 12,334,248 OTHER ASSETS/(LIABILITIES) -- (0.5%) (59,996) ------------- NET ASSETS -- 100.0% $ 12,274,252 =============
NOTES TO PORTFOLIO OF INVESTMENTS ADR - American Depository Receipt. * Non-income producing security. ** This security is held as collateral for open futures contracts. (NOTE 2). *** Aggregate cost for Federal tax purposes. (NOTE 7). (a) Maturity value of $232,436. Collateralized by U.S. Government Agency obligation with a rate of 3.875%, maturity date of 07/25/2025 and an aggregate market value, including accrued interest, of $244,048. The accompanying notes are an integral part of the financial statements. 53 MML OTC 100 FUND - FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003 ----------------- ASSETS: Investments, at value (cost $9,892,457) (NOTE 2) $ 12,041,853 Short-term investments, at amortized cost (NOTE 2) 292,395 ------------- Total Investments 12,334,248 Receivables from: Investment adviser (NOTE 3) 3,806 Fund shares sold 3,419 Interest and dividends 1,877 ------------- Total assets 12,343,350 ------------- LIABILITIES: Payables for: Investments purchased 27,112 Fund shares repurchased 12,178 Variation margin on open futures contracts (NOTE 2) 453 Directors' fees and expenses (NOTE 3) 1,978 Affiliates (NOTE 3): Investment management fees 4,761 Accrued expense and other liabilities 22,616 ------------- Total liabilities 69,098 ------------- NET ASSETS $ 12,274,252 ============= NET ASSETS CONSIST OF: Paid-in capital $ 21,130,549 Accumulated net investment loss (1,847) Accumulated net realized loss on investments and futures contracts (11,010,292) Net unrealized appreciation on investments and futures contracts 2,155,842 ------------- $ 12,274,252 ============= SHARES OUTSTANDING: 3,260,682 ============= NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE: $ 3.76 =============
The accompanying notes are an integral part of the financial statements. 54 STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2003 ----------------- INVESTMENT INCOME (NOTE 2): Dividends (net of withholding tax of $94) $ 17,701 Interest 890 ------------ Total investment income 18,591 ------------ EXPENSES: Investment management fees (NOTE 3) 33,539 Custody fees 23,426 Audit and legal fees 19,970 Trustee reporting 13,446 Directors' fees (NOTE 3) 466 Shareholder reporting fees 334 ------------ Total expenses 91,181 Expenses waived (NOTE 3) (49,444) ------------ Net expenses 41,737 ------------ NET INVESTMENT LOSS (23,146) ------------ REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on: Investment transactions (471,292) Closed futures contracts 78,465 ------------ Net realized loss (392,827) ------------ Net change in unrealized appreciation (depreciation) on: Investments 3,320,339 Open futures contracts 12,133 ------------ Net unrealized gain 3,332,472 ------------ NET REALIZED AND UNREALIZED GAIN 2,939,645 ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,916,499 ============
The accompanying notes are an integral part of the financial statements. 55 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED DECEMBER 31, 2003 DECEMBER 31, 2002 ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment loss $ (23,146) $ (33,055) Net realized loss on investment transactions and futures contracts (392,827) (5,972,150) Net change in unrealized appreciation (depreciation) on investments and futures contracts 3,332,472 2,431,861 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,916,499 (3,573,344) ------------ ------------ NET FUND SHARE TRANSACTIONS (NOTE 5) 5,261,985 (3,079,761) ------------ ------------ TOTAL INCREASE (DECREASE) IN NET ASSETS 8,178,484 (6,653,105) NET ASSETS: Beginning of year 4,095,768 10,748,873 ------------ ------------ End of year (including accumulated net investment loss of $1,847 and $1,680, respectively) $ 12,274,252 $ 4,095,768 ============ ============
The accompanying notes are an integral part of the financial statements. 56 FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED 12/31/03 12/31/02 12/31/01 12/31/00+ ---------- ---------- ---------- ------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 2.53 $ 4.06 $ 6.07 $ 10.00 -------- -------- -------- --------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment loss (0.01) (0.02) (0.02)*** (0.02)*** Net realized and unrealized gain (loss) on investments 1.24 (1.51) (1.99) (3.87) -------- -------- -------- --------- Total income (loss) from investment operations 1.23 (1.53) (2.01) (3.89) -------- -------- -------- --------- LESS DISTRIBUTIONS TO SHAREHOLDERS: From net realized gains - - (0.00)~ (0.04) -------- -------- -------- --------- NET ASSET VALUE, END OF PERIOD $ 3.76 $ 2.53 $ 4.06 $ 6.07 ======== ======== ======== ========= TOTAL RETURN(a) 48.62% (37.68)% (33.11)% (38.90)%** RATIOS / SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 12,274 $ 4,096 $ 10,749 $ 8,032 Ratio of expenses to average daily net assets: Before expense waiver 1.22% 1.08% 0.71% 0.88%* After expense waiver# 0.56% 0.56% 0.56% 0.56%* Net investment loss to average daily net assets (0.31)% (0.45)% (0.40)% (0.36)%* Portfolio turnover rate 48% 64% 67% 51%
* ANNUALIZED. ** PERCENTAGE REPRESENTS RESULTS FOR THE PERIOD AND ARE NOT ANNUALIZED. *** PER SHARE AMOUNT CALCULATED ON THE AVERAGE SHARES METHOD. ~ DISTRIBUTIONS FROM NET REALIZED GAINS IS LESS THAN $0.01 PER SHARE. + FOR THE PERIOD FROM MAY 1, 2000 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 2000. # COMPUTED AFTER GIVING EFFECT TO AN AGREEMENT BY MASSMUTUAL TO WAIVE CERTAIN FEES AND EXPENSES OF THE FUND FOR THE PERIOD MAY 1, 2000 THROUGH DECEMBER 31, 2000 AND THE YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003. (a) TOTAL RETURN INFORMATION SHOWN IN THE FINANCIAL HIGHLIGHTS TABLE DOES NOT REFLECT EXPENSES THAT APPLY AT THE SEPARATE ACCOUNT LEVEL OR TO RELATED INSURANCE PRODUCTS. INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURN FIGURES FOR ALL PERIODS SHOWN. The accompanying notes are an integral part of the financial statements. 57 MML SMALL CAP EQUITY FUND - PORTFOLIO MANAGER REPORT WHAT IS THE INVESTMENT The objective of the Fund is to achieve long-term OBJECTIVE OF THE MML growth of capital and income by investing primarily in SMALL CAP EQUITY FUND? a diversified portfolio of equity securities of smaller companies (those with market capitalizations consistent with companies in the Russell 2000 Index), using a value-oriented investment strategy. HOW DID THE FUND For the 12 months ending December 31, 2003, the Fund's PERFORM DURING 2003? shares returned 31.29%, trailing the 47.26% return of the Russell 2000 Index, a broadly based, unmanaged index of 2000 small capitalization common stocks. WHAT WAS THE The U.S. stock market rallied during the third quarter INVESTMENT BACKGROUND on increased optimism about the outlook for the economy DURING THE PERIOD? and corporate earnings. Following a trend established earlier in the year, investors continued to embrace market risk, small stocks and growth investing. Both the market surge and the aforementioned investor sentiment continued into the fourth quarter. For the full year, small-cap stocks outperformed their large-cap counterparts by approximately 20%. Although exposure to equities during the year added value irrespective of asset class or style segmentation, investments in high-risk stocks with exposure to the economic cycle generated the highest returns in all investment styles, most notably the small-cap space. WHAT FACTORS The fourth quarter of 2003 and the full year were CONTRIBUTED TO THE challenging for the portfolio. Our investment approach FUND'S PERFORMANCE? emphasizes stock selection to identify which companies possess the appropriate combination of compelling fundamentals and sustainable competitive advantages to position them for above-average growth. These process characteristics were not rewarded in the 2003 equity market rebound, which favored areas of the market that exhibited the weakest fundamentals and highest risk profiles. Despite these market realities, the portfolio was able to capture a portion of the strong sentiment for small-cap stocks and close the year with extremely strong absolute results. Stock selection in the consumer discretionary and technology sectors detracted from results during much of 2003, but performance for both sectors picked up in the fourth quarter, as the portfolio realized gains from semiconductor companies in technology and media companies in consumer discretionary. The consumer discretionary sector is an area in which the portfolio typically holds an underweight position due to the inability to identify sustainable competitive advantages among the traditional retail companies that comprise a large part of this sector. This underweight position and the relative underperformance of the portfolio's consumer holdings hampered the Fund's 2003 results. On a positive note, the portfolio realized strong gains in both the third and fourth quarters from health care holdings. Additionally, financial services companies experienced a modest correction during the fourth quarter, but generally were strong performers in 2003. WHAT IS YOUR OUTLOOK? The equity market currently has tremendous momentum and until it is impacted by another force, such as rising bond yields, it will likely remain on its current path. However, it should be noted that this is currently the consensus forecast, and therefore it is likely already priced into the market. In 2004, interest rates could be the big story. If they do not go up much, 2004 could be a big up year for equities. If they rise sharply, the opposite could be true. 58 MML SMALL CAP EQUITY FUND LARGEST STOCK HOLDINGS (12/31/03) Carlisle Companies, Inc. Arbitron, Inc. Cognex Corp. IPC Holdings Limited Teleflex, Inc. Roper Industries, Inc. Jefferies Group, Inc. Webster Financial Corp. Technitrol, Inc. Eaton Vance Corp. GROWTH OF A $10,000 INVESTMENT Hypothetical Investments in MML Small Cap Equity Fund and the Russell 2000 Index MML SERIES INVESTMENT FUND TOTAL RETURN
FIVE YEAR SINCE INCEPTION ONE YEAR AVERAGE ANNUAL AVERAGE ANNUAL 1/1/03 - 12/31/03 1/1/99 - 12/31/03 6/1/98 - 12/31/03 MML Small Cap Equity Fund 31.29% 6.11% 2.48% - --------------------------------------------------------------------------------------- Russell 2000 Index 47.26% 7.13% 5.00%
[CHART] GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION
MML SMALL CAP EQUITY FUND RUSSELL 2000 INDEX 6/1/98 $ 10,000 $ 10,000 12/1/98 $ 8,522 $ 9,307 12/1/99 $ 8,433 $ 11,286 12/1/00 $ 9,583 $ 10,945 12/1/01 $ 9,904 $ 11,217 12/2/02 $ 8,732 $ 8,919 12/3/03 $ 11,464 $ 13,134
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF SHARES OF THE FUND WILL FLUCTUATE WITH MARKET CONDITIONS SO THAT SHARES OF THE FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INVESTORS SHOULD NOTE THAT THE FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND, WHILE THE RUSSELL 2000 INDEX IS UNMANAGED AND DOES NOT INCUR EXPENSES, AND CANNOT BE PURCHASED DIRECTLY BY INVESTORS. THE FUND'S RETURN REFLECTS CHANGES IN THE NET ASSET VALUE PER SHARE WITHOUT THE DEDUCTION OF ANY PRODUCT CHARGES. TOTAL RETURN FIGURES WOULD BE LOWER FOR THE PERIODS PRESENTED IF THEY REFLECTED THESE CHARGES. 59 MML SMALL CAP EQUITY FUND - PORTFOLIO OF INVESTMENTS DECEMBER 31, 2003
NUMBER OF MARKET SHARES VALUE ------------- --------------- EQUITIES -- 90.9% AIR TRANSPORTATION -- 1.1% SkyWest, Inc. 53,100 $ 962,172 --------------- BANKING, SAVINGS & LOANS -- 7.2% First Niagara Financial Group, Inc. 56,300 839,433 First Republic Bank 35,600 1,274,480 First State Bancorp 11,300 392,675 Pacific Capital Bancorp 47,266 1,740,334 Webster Financial Corp. 41,980 1,925,203 --------------- 6,172,125 --------------- BROADCASTING, PUBLISHING & PRINTING -- 2.9% Gray Television, Inc. 87,300 1,319,976 Lin TV Corp. Cl. A* 46,200 1,192,422 --------------- 2,512,398 --------------- BUILDING MATERIALS & CONSTRUCTION -- 1.5% ElkCorp 49,100 1,310,970 --------------- COMMERCIAL SERVICES -- 6.4% ADVO, Inc. 57,900 1,838,904 Arbitron, Inc.* 56,800 2,369,696 National Processing, Inc.* 53,200 1,252,860 --------------- 5,461,460 --------------- COMMUNICATIONS -- 1.4% CT Communications, Inc. 41,900 565,650 Inet Technologies, Inc.* 48,600 583,200 --------------- 1,148,850 --------------- COMPUTER RELATED SERVICES -- 1.6% eSpeed, Inc. Cl. A* 59,800 1,399,918 --------------- ELECTRICAL EQUIPMENT & ELECTRONICS -- 14.2% Baldor Electric Co. 37,300 852,305 Cognex Corp. 82,300 2,324,152 Methode Electronics, Inc. Cl. A 27,700 338,771 Micrel, Inc.* 115,900 1,805,722 Mykrolis Corp.* 94,800 1,524,384 Newport Corp.* 43,100 712,443 Rogers Corp.* 14,200 626,504 Technitrol, Inc.* 92,200 1,912,228 Teleflex, Inc. 42,900 2,073,357 --------------- 12,169,866 --------------- ENERGY -- 5.4% Rowan Companies, Inc.* 64,500 1,494,465 Tidewater, Inc. 23,900 714,132 Unit Corp.* 62,500 1,471,875 W-H Energy Services, Inc.* 60,500 980,100 --------------- 4,660,572 --------------- FINANCIAL SERVICES -- 8.9% Chittenden Corp. 51,100 $ 1,719,004 Eaton Vance Corp. 51,900 1,901,616 Fidelity Bankshares, Inc. 39,600 1,243,440 Jefferies Group, Inc. 60,000 1,981,200 Stewart (W.P.) & Co. Limited 38,600 831,058 --------------- 7,676,318 --------------- FOODS -- 0.7% Performance Food Group Co.* 16,300 589,571 --------------- HOME CONSTRUCTION, FURNISHINGS & APPLIANCES -- 1.5% Fossil, Inc.* 17,600 492,976 Miller (Herman), Inc. 33,100 803,337 --------------- 1,296,313 --------------- INDUSTRIAL - DIVERSIFIED -- 3.7% Carlisle Companies, Inc. 51,700 3,146,462 --------------- INSURANCE -- 8.6% Aspen Insurance Holdings Limited* 2,500 62,025 The Commerce Group, Inc. 42,600 1,682,700 HCC Insurance Holdings, Inc. 38,500 1,224,300 Infinity Property & Casualty Corp. 43,000 1,421,150 IPC Holdings Limited 55,100 2,145,594 Philadelphia Consolidated Holding Corp.* 17,600 859,408 --------------- 7,395,177 --------------- MACHINERY & COMPONENTS -- 10.7% Actuant Corp. Cl. A* 24,200 876,040 Hardinge, Inc. 60,450 700,011 Helix Technology Corp. 91,000 1,872,780 IDEX Corp. 30,200 1,256,018 Kaydon Corp. 61,200 1,581,408 Regal-Beloit Corp. 39,500 869,000 Roper Industries, Inc. 41,400 2,039,364 --------------- 9,194,621 --------------- MEDICAL SUPPLIES -- 4.1% Coherent, Inc.* 77,700 1,849,260 Dionex Corp.* 36,200 1,665,924 --------------- 3,515,184 --------------- PHARMACEUTICALS -- 4.2% Pharmaceutical Resources, Inc.* 11,300 736,195 Taro Pharmaceutical Industries Limited* 22,700 1,464,150 Valeant Pharmaceuticals International 56,800 1,428,520 --------------- 3,628,865 --------------- RESTAURANTS -- 1.1% RARE Hospitality International, Inc.* 39,500 $ 965,380 --------------- RETAIL -- 1.3% Michaels Stores, Inc. 25,400 1,122,680 --------------- TRANSPORTATION -- 4.4% Heartland Express, Inc. 67,810 1,640,324 Landstar System, Inc.* 27,600 1,049,904 Quality Distribution, Inc.* 9,700 189,635 Robinson (C.H.) Worldwide, Inc. 22,800 864,348 --------------- 3,744,211 --------------- TOTAL EQUITIES (COST $62,544,860) 78,073,113 --------------- PRINCIPAL AMOUNT ------------- SHORT-TERM INVESTMENTS -- 11.8% CASH EQUIVALENTS -- 3.3%** Bank of Montreal Eurodollar Time Deposit 1.060% 01/15/2004 $ 7,734 7,734 Bank of Montreal Eurodollar Time Deposit 1.060% 02/17/2004 40,866 40,866 Bank of Nova Scotia Eurodollar Time Deposit 1.080% 03/03/2004 122,598 122,598 Bank of Scotland Eurodollar Time Deposit 1.060% 04/02/2004 30,649 30,649 Bank of the West Eurodollar Time Deposit 1.075% 01/14/2004 30,649 30,649 Barclays Eurodollar Time Deposit 1.090% 03/05/2004 102,165 102,165 BNP Paribas Eurodollar Time Deposit 0.970% 01/07/2004 40,866 40,866 Canadian Imperial Bank of Commerce Bank Note 0.990% 05/18/2004 204,330 204,330 Citigroup Eurodollar Time Deposit 1.080% 01/05/2004 20,433 20,433
The accompanying notes are an integral part of the financial statements. 60
PRINCIPAL MARKET AMOUNT VALUE ------------- --------------- Citigroup Eurodollar Time Deposit 1.090% 03/04/2004 $ 81,732 $ 81,732 Citigroup Eurodollar Time Deposit 1.100% 01/22/2004 20,433 20,433 Credit Agricole Indosuez Eurodollar Time Deposit 1.080% 01/06/2004 210,460 210,460 Dreyfus Cash Management Plus, Inc. Money Market Fund 112,381 112,381 Fannie Mae Discount Note 1.062% 01/02/2004 61,299 61,299 Fleet National Bank Bank Note 1.000% 01/21/2004 102,165 102,165 Freddie Mac Discount Note 1.062% 01/27/2004 81,563 81,563 General Electric Capital Corp. 1.092% 01/05/2004 101,979 101,979 Goldman Sachs Financial Square Prime Obligations Money Market Fund 40,866 40,866 Harris Trust & Savings Bank Eurodollar Time Deposit 1.050% 01/29/2004 22,476 22,476 Merrill Lynch Premier Institutional Money Market Fund 140,581 140,581 Merrimac Money Market Fund 339,188 339,188 Morgan Stanley Dean Witter & Co. 1.080% 01/29/2004 106,251 106,251 National Bank of Commerce Bank Note 1.120% 05/19/2004 51,082 51,082 Royal Bank of Canada Eurodollar Time Deposit 1.050% 02/27/2004 51,082 51,082 Royal Bank of Scotland Eurodollar Time Deposit 1.080% 01/09/2004 40,866 40,866 Royal Bank of Scotland Eurodollar Time Deposit 1.080% 01/15/2004 102,165 102,165 Royal Bank of Scotland Eurodollar Time Deposit 1.090% 03/03/2004 51,082 51,082 Southtrust Bank Eurodollar Time Deposit 1.090% 02/17/2004 $ 61,299 $ 61,299 Svenska Handlesbanken Eurodollar Time Deposit 1.080% 02/04/2004 51,082 51,082 Svenska Handlesbanken Eurodollar Time Deposit 1.085% 01/15/2004 51,082 51,082 Svenska Handlesbanken Eurodollar Time Deposit 1.090% 02/24/2004 102,165 102,165 Toronto Dominion Bank Eurodollar Time Deposit 1.100% 01/08/2004 20,433 20,433 Wells Fargo Eurodollar Time Deposit 1.070% 01/20/2004 245,198 245,198 --------------- 2,849,200 --------------- REPURCHASE AGREEMENT -- 8.5% Investors Bank & Trust Company Repurchase Agreement, dated 12/31/03, 0.72%, due 01/02/2004(a) 7,289,605 7,289,605 --------------- TOTAL SHORT-TERM INVESTMENTS (AT AMORTIZED COST) 10,138,805 --------------- TOTAL INVESTMENTS -- 102.7% (COST $72,683,665)*** 88,211,918 OTHER ASSETS/ (LIABILITIES) -- (2.7%) (2,307,847) --------------- NET ASSETS -- 100.0% $ 85,904,071 ===============
NOTES TO PORTFOLIO OF INVESTMENTS * Non-income producing security. ** Represents investments of security lending collateral. (NOTE 2). *** Aggregate cost for Federal tax purposes. (NOTE 7). (a) Maturity value of $7,289,897. Collateralized by U.S. Government Agency obligation with a rate of 2.924%, maturity date of 10/01/2033, and an aggregate market value, including accrued interest, of $7,654,477. The accompanying notes are an integral part of the financial statements. 61 MML SMALL CAP EQUITY FUND - FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003 ----------------- ASSETS: Investments, at value (cost $62,544,860) (NOTE 2) $ 78,073,113 Short-term investments, at amortized cost (NOTE 2) 10,138,805 --------------- Total Investments (including securities on loan with market values of $2,729,085) 88,211,918 Cash 743,976 Receivables from: Investments sold 1,578,954 Fund shares sold 36,405 Interest and dividends 36,988 --------------- Total assets 90,608,241 --------------- LIABILITIES: Payables for: Investments purchased 1,745,841 Fund shares repurchased 28,860 Securities on loan (NOTE 2) 2,849,200 Directors' fees and expenses (NOTE 3) 6,223 Affiliates (NOTE 3): Investment management fees 50,076 Accrued expense and other liabilities 23,970 --------------- Total liabilities 4,704,170 --------------- NET ASSETS $ 85,904,071 =============== NET ASSETS CONSIST OF: Paid-in capital $ 71,184,111 Distributions in excess of net investment income (5,072) Accumulated net realized loss on investments (803,221) --------------- Net unrealized appreciation on investments 15,528,253 --------------- $ 85,904,071 =============== SHARES OUTSTANDINGS: 7,710,033 =============== NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE: $ 11.14 ===============
The accompanying notes are an integral part of the financial statements. 62 STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2003 ----------------- INVESTMENT INCOME (NOTE 2): Dividends $ 633,339 Interest (including securities lending income of $6,285) 23,089 --------------- Total investment income 656,428 --------------- EXPENSES: Investment management fees (NOTE 3) 457,956 Audit and legal fees 21,343 Custody fees 14,500 Trustee reporting 13,446 Directors' fees (NOTE 3) 4,600 Shareholder reporting fees 3,555 --------------- Total expenses 515,400 Fees paid indirectly (NOTE 3) (294) --------------- Net expenses 515,106 --------------- NET INVESTMENT INCOME 141,322 --------------- REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain on investment transactions 2,035,667 Net change in unrealized appreciation (depreciation) on investments 17,469,139 --------------- NET REALIZED AND UNREALIZED GAIN 19,504,806 --------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 19,646,128 ===============
The accompanying notes are an integral part of the financial statements. 63 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED DECEMBER 31, 2003 DECEMBER 31, 2002 ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income $ 141,322 $ 158,664 Net realized gain (loss) on investment transactions 2,035,667 (396,627) Net change in unrealized appreciation (depreciation) on investments 17,469,139 (8,728,340) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 19,646,128 (8,966,303) ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2): From net investment income (142,999) (157,182) NET FUND SHARE TRANSACTIONS (NOTE 5) 4,892,753 13,536,029 ------------- ------------- TOTAL INCREASE IN NET ASSETS 24,395,882 4,412,544 NET ASSETS: Beginning of year 61,508,189 57,095,645 ------------- ------------- End of year (including distributions in excess of net investment income of $5,072 and undistributed net investment income of $7,241, respectively) $ 85,904,071 $ 61,508,189 ============= =============
The accompanying notes are an integral part of the financial statements. 64 FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, BEGINNING OF PERIOD $ 8.50 $ 9.67 $ 9.40 $ 8.34 $ 8.49 ---------- ---------- ---------- ---------- ---------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income 0.02 0.02 0.05 0.08 0.07 Net realized and unrealized gain (loss) on investments 2.64 (1.17) 0.27 1.06 (0.15) ---------- ---------- ---------- ---------- ---------- Total income (loss) from investment operations 2.66 (1.15) 0.32 1.14 (0.08) ---------- ---------- ---------- ---------- ---------- LESS DISTRIBUTIONS TO SHAREHOLDERS: From net investment income (0.02) (0.02) (0.05) (0.08) (0.07) ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, END OF PERIOD $ 11.14 $ 8.50 $ 9.67 $ 9.40 $ 8.34 ========== ========== ========== ========== ========== TOTAL RETURN(a) 31.29% (11.84)% 3.36% 13.63% (1.04)% RATIOS / SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 85,904 $ 61,508 $ 57,096 $ 42,661 $ 20,137 Ratio of expenses to average daily net assets: Before expense waiver 0.73% 0.77% 0.69% 0.80% 1.07% After expense waiver# 0.73%(b) 0.76%(b) N/A 0.76% 0.75% Net investment income to average daily net assets 0.20% 0.25% 0.59% 1.12% 1.13% Portfolio turnover rate 43% 44% 97% 65% 41%
# COMPUTED AFTER GIVING EFFECT TO AN AGREEMENT BY MASSMUTUAL TO WAIVE CERTAIN FEES AND EXPENSES OF THE FUND, FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2002. (a) TOTAL RETURN INFORMATION SHOWN IN THE FINANCIAL HIGHLIGHTS TABLE DOES NOT REFLECT EXPENSES THAT APPLY AT THE SEPARATE ACCOUNT LEVEL OR TO RELATED INSURANCE PRODUCTS. INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURN FIGURES FOR ALL PERIODS SHOWN. (b) THE FUND HAS ENTERED INTO AN AGREEMENT WITH CERTAIN BROKERS TO REBATE A PORTION OF BROKERAGE COMMISSIONS. THE REBATED COMMISSIONS ARE USED TO REDUCE OPERATING EXPENSES OF THE FUND. The accompanying notes are an integral part of the financial statements. 65 MML SMALL COMPANY OPPORTUNITIES FUND - PORTFOLIO MANAGER REPORT WHAT IS THE INVESTMENT The objective of the Fund is to achieve long-term OBJECTIVE OF THE MML growth of capital and income by investing primarily in SMALL COMPANY a diversified portfolio of equity securities of OPPORTUNITIES FUND? micro-capitalization companies (those with market capitalizations at the time of purchase of no more than 50% of the weighted average market capitalization of the Russell 2000 Index), using a value-oriented investment strategy. HOW DID THE FUND For the 12 months ending December 31, 2003, the Fund PERFORM DURING 2003? returned 42.25%, lagging the 47.26% return of the Russell 2000 Index, a broadly based, unmanaged index of 2000 small capitalization common stocks. WHAT WAS THE The equity market rally that began in March 2003 INVESTMENT BACKGROUND continued in the third quarter, fueled by positive DURING THE PERIOD? corporate earnings reports and largely favorable economic indicators. As has been the case for much of 2003, the third quarter saw investors continuing to embrace market risk, small-cap stocks and growth investing. This resulted in an environment in which small caps continued to outperform large caps by a wide margin and economically sensitive sectors outpaced sectors associated with low risk in almost all equity market indexes. This trend continued into the fourth quarter. For the full year, small-cap stocks led the U.S. equity market, outperforming large caps by approximately 20%. Not since 1979 has the market seen such a wide gap between small- and large-cap equity performance. Small caps now have outperformed large caps for five consecutive years, including each of the final three quarters of 2003. WHAT FACTORS Those stocks that suffered the most during the bear CONTRIBUTED TO THE market, such as technology issues, rebounded strongly FUND'S PERFORMANCE? in 2003. Additionally, economically sensitive sectors including producer durables and materials & processing, which were once denounced as "old economy," also had a very strong run during the year. Conversely, sectors generally categorized as defensive, such as utilities, consumer staples and health care, lagged. The key to outperformance throughout 2003 was to tilt portfolios toward risk factors such as increased exposure to economic growth factors, high risk and low price. As the Fund's investment process does not incorporate macroeconomic bets such as these, it failed to generate value during the period. The fourth quarter of 2003 and the full year were challenging for the portfolio. Our investment approach emphasizes stock selection to identify which companies possess the appropriate combination of compelling fundamentals and sustainable competitive advantages to position them for above-average growth. These process characteristics were not rewarded in the 2003 equity market rebound, which favored areas of the market that exhibited the weakest fundamentals and highest risk profiles. Despite these market realities, the portfolio was able to capture a portion of the strong sentiment for small-cap stocks and close the year with extremely strong absolute results. Stock selection in the consumer discretionary and technology sectors detracted from results during much of 2003, but performance for both sectors picked up in the fourth quarter, as the portfolio realized gains from semiconductor companies in technology and media companies in consumer discretionary. The consumer discretionary sector is an area in which the portfolio typically holds an underweight position due to the inability to identify sustainable competitive advantages among the traditional retail companies that comprise a large part of this sector. This underweight position and the relative underperformance of the portfolio's consumer holdings hampered the Fund's 2003 results. On a positive note, the portfolio realized strong gains in the both the third and fourth quarters from health care holdings. Additionally, financial services companies experienced a modest correction during the fourth quarter, but generally were strong performers in 2003. WHAT IS YOUR OUTLOOK? We remain cautiously optimistic for continued strength in equities in 2004. However, we question the long-term sustainability of the brisk pace of 2003 advances, particularly among small-cap stocks. Nevertheless, a continued environment of healthy economics, fiscal stimulus and geopolitical stability should support continued stock price appreciation. 66 MML SMALL COMPANY OPPORTUNITIES FUND LARGEST STOCK HOLDINGS (12/31/03) Actuant Corp. Cl. A Big 5 Sporting Goods Corp. Excel Technology, Inc. Ambassadors Group, Inc. Sterling Bancorp-NY Bel Fuse, Inc. Cl. B Met-Pro Corp. LSI Industries, Inc. Moldflow Corp. Spectrum Control, Inc. GROWTH OF A $10,000 INVESTMENT Hypothetical Investments in MML Small Company Opportunities Fund and the Russell 2000 Index MML SERIES INVESTMENT FUND TOTAL RETURN
SINCE INCEPTION ONE YEAR AVERAGE ANNUAL 1/1/03 - 12/31/03 5/1/01 - 12/31/03 MML Small Company Opportunities Fund 42.25% 15.26% - ------------------------------------------------------------------------- Russell 2000 Index 47.26% 6.75%
[CHART] GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION
MML SMALL COMPANY OPPORTUNITIES FUND RUSSELL 2000 INDEX 5/1/2001 $ 10,000 $ 10,000 12/1/2001 $ 10,969 $ 10,166 12/2/2002 $ 10,273 $ 8,084 12/3/2003 $ 14,614 $ 11,904
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF SHARES OF THE FUND WILL FLUCTUATE WITH MARKET CONDITIONS SO THAT SHARES OF THE FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INVESTORS SHOULD NOTE THAT THE FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND, WHILE THE RUSSELL 2000 INDEX IS UNMANAGED AND DOES NOT INCUR EXPENSES, AND CANNOT BE PURCHASED DIRECTLY BY INVESTORS. THE FUND'S RETURN REFLECTS CHANGES IN THE NET ASSET VALUE PER SHARE WITHOUT THE DEDUCTION OF ANY PRODUCT CHARGES. TOTAL RETURN FIGURES WOULD BE LOWER FOR THE PERIODS PRESENTED IF THEY REFLECTED THESE CHARGES. 67 MML SMALL COMPANY OPPORTUNITIES FUND - PORTFOLIO OF INVESTMENTS DECEMBER 31, 2003
NUMBER OF MARKET SHARES VALUE ------------- --------------- EQUITIES -- 91.9% APPAREL, TEXTILES & SHOES -- 1.2% Penn Engineering & Manufacturing Corp. 27,700 $ 527,131 --------------- AUTOMOTIVE & PARTS -- 1.0% Aftermarket Technology Corp.* 32,800 450,016 --------------- BANKING, SAVINGS & LOANS -- 8.2% CFS Bancorp, Inc. 17,600 261,184 Financial Institutions, Inc. 19,900 561,777 First Essex Bancorp, Inc. 6,200 360,468 First Republic Bank* 18,100 647,980 First State Bancorp 20,200 701,950 Franklin Bank Corp. 2,800 53,200 Sterling Bancorp-NY 33,235 947,197 --------------- 3,533,756 --------------- BROADCASTING, PUBLISHING & PRINTING -- 1.4% Saga Communications, Inc. Cl. A* 32,875 609,174 --------------- BUILDING MATERIALS & CONSTRUCTION -- 1.6% ElkCorp 25,600 683,520 --------------- CHEMICALS -- 0.9% Aceto Corp. 9,500 242,630 Hawkins, Inc. 7,200 100,512 Penford Corp. 3,496 48,000 --------------- 391,142 --------------- COMMERCIAL SERVICES -- 9.3% Ambassadors Group, Inc.* 44,500 1,045,305 Charles River Associates, Inc.* 20,300 649,397 iPayment, Inc.* 20,700 703,800 Rewards Network, Inc. 47,500 506,350 Steiner Leisure Limited* 39,600 566,280 Team, Inc.* 52,800 541,728 --------------- 4,012,860 --------------- COMPUTER INTEGRATED SYSTEMS DESIGN -- 1.8% Ansoft Corp.* 59,400 762,102 --------------- COMPUTERS & INFORMATION -- 1.6% Rimage Corp.* 43,200 683,899 --------------- COSMETICS & PERSONAL CARE -- 1.2% Inter Parfums, Inc. 23,100 521,829 --------------- ELECTRIC UTILITIES -- 1.4% Central Vermont Public Service Corp. 25,800 606,300 --------------- ELECTRICAL EQUIPMENT & ELECTRONICS -- 17.5% Actel Corp.* 31,200 $ 751,920 AZZ, Inc.* 30,200 403,170 Bel Fuse, Inc. Cl. B 28,600 933,218 The Eastern Co. 11,500 179,860 EDO Corp. 25,800 635,970 LSI Industries, Inc. 63,137 852,350 Methode Electronics, Inc. Cl. A 13,200 161,436 Micro Linear Corp.* 61,700 344,903 Mykrolis Corp.* 50,800 816,864 Nu Horizons Electronics Corp. 69,600 682,080 Spectrum Control, Inc.* 104,200 829,536 Ultralife Batteries, Inc. 44,100 545,958 Woodhead Industries, Inc. 24,500 414,050 --------------- 7,551,315 --------------- ENERGY -- 2.7% NUI Corp. 30,200 486,824 RPC, Inc. 62,900 691,271 --------------- 1,178,095 --------------- FINANCIAL SERVICES -- 1.3% Boston Private Financial Holdings, Inc. 21,900 543,996 --------------- FOODS -- 0.7% Performance Food Group Co.* 8,100 292,977 --------------- HEALTHCARE -- 1.6% CorVel Corp.* 18,000 676,800 --------------- HEAVY MACHINERY -- 1.0% TVI Corp. 145,100 420,790 --------------- HOME CONSTRUCTION, FURNISHINGS & APPLIANCES -- 1.6% MITY Enterprises, Inc. 16,400 287,000 Palm Harbor Homes, Inc.* 23,700 423,519 --------------- 710,519 --------------- INFORMATION RETRIEVAL SERVICES -- 1.1% Onesource Information Services, Inc.* 51,600 486,072 --------------- INSURANCE -- 5.2% Donegal Group, Inc. Cl. A 32,500 715,650 Philadelphia Consolidated Holding Corp.* 8,400 410,172 Safety Insurance Group, Inc. 37,800 646,758 United National Group Limited Cl. A 26,600 $ 470,022 --------------- 2,242,602 --------------- MACHINERY & COMPONENTS -- 6.9% Aaon, Inc.* 22,525 437,210 Actuant Corp. Cl. A* 31,500 1,140,300 Hardinge, Inc. 14,200 164,436 Met-Pro Corp. 53,766 868,321 Robbins & Myers, Inc. 20,000 379,800 --------------- 2,990,067 --------------- MANUFACTURING -- 0.4% Quixote Corp. 6,400 156,224 --------------- MEDICAL SUPPLIES -- 7.1% ADE Corp. 33,200 614,864 Excel Technology, Inc.* 32,700 1,074,522 II-VI, Inc.* 28,700 740,460 Neogen Corp. 25,700 636,589 --------------- 3,066,435 --------------- METALS & MINING -- 1.5% Gibraltar Steel Corp. 26,600 668,990 --------------- PREPACKAGED SOFTWARE -- 2.0% Moldflow Corp.* 74,500 845,575 --------------- REAL ESTATE -- 1.4% United Capital Corp. 29,600 613,312 --------------- RESTAURANTS -- 0.3% Benihana, Inc.* 8,300 109,560 --------------- RETAIL -- 3.5% Big 5 Sporting Goods Corp.* 51,300 1,074,735 Sportsman's Guide, Inc.* 26,600 456,163 --------------- 1,530,898 --------------- TRANSPORTATION -- 6.5% Central Freight Lines, Inc. 9,100 161,525 Knight Transportation, Inc.* 19,950 511,718 Marine Products Corp. 43,600 819,680 Marten Transport Limited 36,550 562,139 Old Dominion Freight Line, Inc.* 22,200 756,576 --------------- 2,811,638 --------------- TOTAL EQUITIES (COST $31,907,671) 39,677,594 ===============
The accompanying notes are an integral part of the financial statements. 68
PRINCIPAL MARKET AMOUNT VALUE ------------- --------------- SHORT-TERM INVESTMENTS -- 8.3% REPURCHASE AGREEMENT Investors Bank & Trust Company Repurchase Agreement, dated 12/31/03, 0.72%, due 01/02/2004(a) $ 3,571,650 $ 3,571,650 --------------- TOTAL SHORT-TERM INVESTMENTS (AT AMORTIZED COST) 3,571,650 --------------- TOTAL INVESTMENTS -- 100.2% (COST $35,479,321)** 43,249,244 OTHER ASSETS/ (LIABILITIES) -- (0.2%) (77,358) --------------- NET ASSETS -- 100.0% $ 43,171,886 ===============
NOTES TO PORTFOLIO OF INVESTMENTS * Non-income producing security. ** Aggregate cost for Federal tax purposes. (NOTE 7) (a) Maturity value of $3,571,793. Collateralized by U.S. Government Agency obligation with a rate of 5.146%, maturity date of 03/01/2030, and an aggregate market value, including accrued interest, of $3,750,423. The remainder of this page is intentionally left blank. The accompanying notes are an integral part of the financial statements. 69 MML SMALL COMPANY OPPORTUNITIES FUND - FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003 ----------------- ASSETS: Investments, at value (cost $31,907,671) (NOTE 2) $ 39,677,594 Short-term investments, at amortized cost (NOTE 2) 3,571,650 --------------- Total Investments 43,249,244 Cash 584,802 Receivables from: Investments sold 235,140 Investment adviser (NOTE 3) 1,250 Fund shares sold 51,870 Interest and dividends 17,050 --------------- Total assets 44,139,356 --------------- LIABILITIES: Payables for: Investments purchased 907,793 Fund shares repurchased 1,044 Directors' fees and expenses (NOTE 3) 1,601 Affiliates (NOTE 3): Investment management fees 39,409 Accrued expense and other liabilities 17,623 --------------- Total liabilities 967,470 --------------- NET ASSETS $ 43,171,886 =============== NET ASSETS CONSIST OF: Paid-in capital $ 34,606,550 Accumulated net investment loss (1,079) Accumulated net realized gain on investments 796,492 Net unrealized appreciation on investments 7,769,923 --------------- $ 43,171,886 =============== SHARES OUTSTANDING: 3,130,275 =============== NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE: $ 13.79 ===============
The accompanying notes are an integral part of the financial statements. 70 STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2003 ----------------- INVESTMENT INCOME (NOTE 2): Dividends $ 228,492 Interest 8,720 --------------- Total investment income 237,212 --------------- EXPENSES: Investment management fees (NOTE 3) 318,350 Audit and legal fees 19,584 Custody fees 12,511 Trustee reporting 2,851 Directors' fees (NOTE 3) 1,965 Shareholder reporting fees 1,321 --------------- Total expenses 356,582 Expenses waived (NOTE 3) (4,881) --------------- Net expenses 351,701 --------------- NET INVESTMENT LOSS (114,489) --------------- REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain on investment transactions 3,385,671 Net change in unrealized appreciation (depreciation) on investments 8,075,407 --------------- NET REALIZED AND UNREALIZED GAIN 11,461,078 --------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 11,346,589 ===============
The accompanying notes are an integral part of the financial statements. 71 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED DECEMBER 31, 2003 DECEMBER 31, 2002 ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment loss $ (114,489) $ (79,386) Net realized gain (loss) on investment transactions 3,385,671 (369,764) Net change in unrealized appreciation (depreciation) on investments 8,075,407 (1,390,521) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 11,346,589 (1,839,671) ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2): From net realized gains (1,853,674) (51,201) NET FUND SHARE TRANSACTIONS (NOTE 5) 10,475,678 11,264,223 ------------- ------------- TOTAL INCREASE IN NET ASSETS 19,968,593 9,373,351 NET ASSETS: Beginning of year 23,203,293 13,829,942 ------------- ------------- End of year (including accumulated net investment loss of $1,079 and undistributed net investment income of $324, respectively) $ 43,171,886 $ 23,203,293 ============= =============
The accompanying notes are an integral part of the financial statements. 72 MML SMALL COMPANY OPPORTUNITIES FUND - FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED YEAR ENDED YEAR ENDED 12/31/03 12/31/02 12/31/01+ ---------- ---------- ---------- NET ASSET VALUE, BEGINNING OF PERIOD $ 10.13 $ 10.84 $ 10.00 ---------- ---------- ---------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.04) (0.03) 0.00~ Net realized and unrealized gain (loss) on investments 4.32 (0.66) 0.97 ---------- ---------- ---------- Total income (loss) from investment operations 4.28 (0.69) 0.97 ---------- ---------- ---------- LESS DISTRIBUTIONS TO SHAREHOLDERS: From net investment income -- -- (0.00)++ From net realized gains (0.62) (0.02) (0.13) ---------- ---------- ---------- Total distributions (0.62) (0.02) (0.13) ---------- ---------- ---------- NET ASSET VALUE, END OF PERIOD $ 13.79 $ 10.13 $ 10.84 ========== ========== ========== TOTAL RETURN(a) 42.25% (6.34)% 9.69%** RATIOS / SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 43,172 $ 23,203 $ 13,830 Ratio of expenses to average daily net assets: Before expense waiver 1.18% 1.29% 1.34%* After expense waiver# 1.16% 1.16% 1.16%* Net investment income (loss) to average daily net assets (0.38)% (0.41)% 0.04%* Portfolio turnover rate 57% 43% 50%**
* ANNUALIZED. ** PERCENTAGE REPRESENTS RESULTS FOR THE PERIOD AND ARE NOT ANNUALIZED. ~ NET INVESTMENT INCOME IS LESS THAN $0.01 PER SHARE. ++ DISTRIBUTIONS FROM NET INVESTMENT INCOME IS LESS THAN $0.01 PER SHARE. + FOR THE PERIOD FROM MAY 1, 2001 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 2001. # COMPUTED AFTER GIVING EFFECT TO AN AGREEMENT BY MASSMUTUAL TO WAIVE CERTAIN FEES AND EXPENSES OF THE FUND FOR THE PERIOD MAY 1, 2001 THROUGH DECEMBER 31, 2001 AND THE YEARS ENDED DECEMBER 31, 2002 AND 2003. (a) TOTAL RETURN INFORMATION SHOWN IN THE FINANCIAL HIGHLIGHTS TABLE DOES NOT REFLECT EXPENSES THAT APPLY AT THE SEPARATE ACCOUNT LEVEL OR TO RELATED INSURANCE PRODUCTS. INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURN FIGURES FOR ALL PERIODS SHOWN. The accompanying notes are an integral part of the financial statements. 73 MML SMALL CAP GROWTH EQUITY FUND - PORTFOLIO MANAGER REPORT WHAT IS THE INVESTMENT The objective of the Fund is to achieve long-term OBJECTIVE OF THE MML growth of capital by investing primarily in a SMALL CAP GROWTH diversified portfolio of equity securities of smaller EQUITY FUND? companies consistent with market capitalizations of companies in the Russell 2000 Index, using a growth-oriented investment strategy HOW DID THE FUND For the 12 months ending December 31, 2003, the Fund's PERFORM DURING 2003? shares returned 48.54%, outpacing the 47.26% return of the Russell 2000 Index, an unmanaged index of 2000 small capitalization common stocks and the 38.79% return of the S&P SmallCap 600 Index, a market capitalization-weighted index that measures the performance of 600 domestic small-cap stocks chosen for market size, liquidity and industry group representation. The Fund also performed in line with the 48.55% return of the Russell 2000 Growth Index, which tracks the performance of stocks in the Russell 2000 Index sharing characteristics common to the growth universe. WHAT WAS THE It was an exciting year for small-cap stocks, as the INVESTMENT BACKGROUND Russell 2000 posted a nearly 50% gain. As the war with DURING THE PERIOD? Iraq started to wind down, equity markets started their ascent. Spurred by investor confidence, low interest rates, tax cuts and cash-out refinancing, the consumer propped up the economy. Productivity gains further fueled the rally. As is true for an early part of an economic cycle and an atmosphere of declining risk aversion, small-cap stocks outperformed. WHAT FACTORS During the third quarter, the Fund outperformed its CONTRIBUTED TO THE benchmark on strength in the financials, consumer FUND'S PERFORMANCE - discretionary, information technology and health care AND HOW DID YOU sectors. These results were partially offset, however, RESPOND? by stock selection within consumer staples, where company-specific earnings projections and disappointing earnings results hampered returns. In the fourth quarter, the Fund benefited from strong stock selection in the technology and consumer discretionary sectors. Conversely, these results were partially offset by unfavorable stock picks in the industrials and financials sectors and the Fund's cash balance. During the fourth quarter, we added stocks in the media and retailing industries. In technology, we initiated positions in a number of new names and traded out of some strong performers as they approached our price targets. WHAT IS YOUR OUTLOOK? We enter 2004 with optimism and a degree of caution. While we are confident that there is still considerable upside for most of our holdings, particularly in an accelerating economic environment, we note that the sustainability of the market's 2003 gains remains a concern. Company cost-cutting in both operating and capital budgets has enabled a trickle of revenue growth to become a torrent of earnings and cash flow growth. Furthermore, CFOs' continuing reluctance to spend, despite enormous government stimuli, has resulted in a jobless economic recovery. Lurking in the background are huge budget and trade deficits and a weakening dollar. The compatibility of all of these factors with a rising stock market remains questionable. 74 MML SMALL CAP GROWTH EQUITY FUND - PORTFOLIO MANAGER REPORT MML SMALL CAP GROWTH EQUITY FUND LARGEST STOCK HOLDINGS (12/31/03) American Healthways, Inc. Checkfree Corp. Omnicare, Inc. Dendrite International, Inc. Gentex Corp. MSC Industrial Direct Co. Cl. A AmSurg Corp. O'Reilly Automotive, Inc. Financial Federal Corp. Odyssey Healthcare, Inc. GROWTH OF A $10,000 INVESTMENT Hypothetical Investments in MML Small Cap Growth Equity Fund and the Russell 2000 Index. MML SERIES INVESTMENT FUND TOTAL RETURN
SINCE INCEPTION ONE YEAR AVERAGE ANNUAL 1/1/03 - 12/31/03 5/3/99 - 12/31/03 MML Small Cap Growth Equity Fund 48.54% 6.98% - -------------------------------------------------------------------------------- Russell 2000 Index 47.26% 6.97%
[CHART] GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION
MML SMALL CAP GROWTH EQUITY FUND RUSSELL 2000 INDEX 5/3/99 $ 10,000 $ 10,000 12/99 $ 16,568 $ 11,767 12/00 $ 14,270 $ 11,411 12/2001 $ 12,456 $ 11,695 12/2002 $ 9,225 $ 9,299 12/2003 $ 13,702 $ 13,694
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF SHARES OF THE FUND WILL FLUCTUATE WITH MARKET CONDITIONS SO THAT SHARES OF THE FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INVESTORS SHOULD NOTE THAT THE FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND, WHILE THE RUSSELL 2000 INDEX IS UNMANAGED AND DOES NOT INCUR EXPENSES, AND CANNOT BE PURCHASED DIRECTLY BY INVESTORS. THE FUND'S RETURN REFLECTS CHANGES IN THE NET ASSET VALUE PER SHARE WITHOUT THE DEDUCTION OF ANY PRODUCT CHARGES. TOTAL RETURN FIGURES WOULD BE LOWER FOR THE PERIODS PRESENTED IF THEY REFLECTED THESE CHARGES. 75 MML SMALL CAP GROWTH EQUITY FUND - PORTFOLIO OF INVESTMENTS DECEMBER 31, 2003
NUMBER OF MARKET SHARES VALUE ------------- --------------- EQUITIES -- 88.7% ADVERTISING -- 1.3% Getty Images, Inc.* 12,325 $ 617,852 --------------- AEROSPACE & DEFENSE -- 0.5% Triumph Group, Inc.* 6,300 229,320 --------------- AIR TRANSPORTATION -- 0.3% Northwest Airlines Corp.* 10,900 137,558 --------------- AUTOMOTIVE & PARTS -- 1.4% BorgWarner, Inc. 1,300 110,591 Dana Corp. 13,200 242,220 LKQ Corp.* 11,621 208,597 Visteon Corp. 12,100 125,961 --------------- 687,369 --------------- BANKING, SAVINGS & LOANS -- 3.8% Amcore Financial, Inc. 6,900 186,438 Bank of Hawaii Corp. 4,400 185,680 Financial Federal Corp.* 22,425 685,084 Hancock Holding Co. 3,950 215,551 Providian Financial Corp.* 22,800 265,392 Westcorp 6,900 252,195 --------------- 1,790,340 --------------- BEVERAGES -- 0.9% The Robert Mondavi Corp.* 10,700 415,588 --------------- BROADCASTING, PUBLISHING & PRINTING -- 2.6% Emmis Communications Corp.* 6,500 175,825 Journal Communications, Inc. Cl. A 16,100 298,333 Lin TV Corp. Cl. A* 7,700 198,737 Playboy Enterprises, Inc. Cl. B* 17,600 284,416 UnitedGlobalCom, Inc. Cl. A* 33,100 280,688 --------------- 1,237,999 --------------- CHEMICALS -- 2.4% Cabot Microelectronics Corp.* 7,350 360,150 Cytec Industries, Inc.* 5,625 215,944 IMC Global, Inc. 15,100 149,943 Minerals Technologies, Inc. 3,700 219,225 SurModics, Inc.* 8,200 195,980 --------------- 1,141,242 --------------- COMMERCIAL SERVICES -- 8.1% ADVO, Inc. 8,200 260,432 The Corporate Executive Board Co.* 12,100 564,707 Exelixis, Inc.* 20,400 $ 144,432 Fluor Corp. 5,900 233,876 FTI Consulting, Inc.* 19,050 445,199 Incyte Corp.* 27,000 184,680 ITT Educational Services, Inc.* 12,350 580,079 Maximus, Inc.* 15,325 599,667 MemberWorks, Inc.* 11,600 315,172 Netease.com, Inc. Sponsored ADR (China)* 8,100 298,890 Washington Group International, Inc.* 7,300 247,981 --------------- 3,875,115 --------------- COMMUNICATIONS -- 1.5% McData Corp. Cl. A* 21,300 202,989 Sirius Satellite Radio, Inc.* 35,000 110,600 Tekelec* 26,100 405,855 --------------- 719,444 --------------- COMPUTER INTEGRATED SYSTEMS DESIGN -- 0.9% 3Com Corp.* 26,900 219,773 IDX Systems Corp.* 8,500 227,970 --------------- 447,743 --------------- COMPUTER RELATED SERVICES -- 4.3% Acxiom Corp.* 16,600 308,262 Checkfree Corp.* 35,492 981,354 Ingram Micro, Inc. Cl. A* 18,000 286,200 Sohu.com, Inc.* 16,300 489,163 --------------- 2,064,979 --------------- COMPUTERS & INFORMATION -- 0.5% Maxtor Corp.* 21,700 240,870 --------------- DATA PROCESSING & PREPARATION -- 1.0% Factset Research Systems, Inc. 11,825 451,833 --------------- ELECTRICAL EQUIPMENT & ELECTRONICS -- 8.3% Agere Systems, Inc. Cl. A* 89,900 274,195 ASE Test Limited* 15,700 235,029 ATMI, Inc.* 600 13,884 Cree, Inc.* 24,950 441,365 Gentex Corp. 17,350 766,176 Moog, Inc. Cl. A* 5,300 261,820 ON Semiconductor Corp.* 53,500 345,075 Power Integrations, Inc.* 7,000 234,220 Quantum Fuel Systems Technologies Worldwide Corp.* 9,800 78,792 Sigmatel, Inc.* 6,160 152,029 Visx, Inc.* 25,200 583,380 Wilson Greatbatch Technologies, Inc.* 13,610 $ 575,295 --------------- 3,961,260 --------------- ENERGY -- 3.9% CAL Dive International, Inc.* 9,000 216,990 Grey Wolf, Inc.* 65,600 245,344 Newfield Exploration Co.* 13,750 612,425 Peabody Energy Corp. 6,400 266,944 Premcor, Inc.* 5,600 145,600 TETRA Technologies, Inc.* 7,200 174,528 UGI Corp. 6,500 220,350 --------------- 1,882,181 --------------- ENTERTAINMENT & LEISURE -- 1.5% AMC Entertainment, Inc.* 18,000 273,780 Callaway Golf Co. 15,800 266,230 Churchill Downs, Inc. 4,900 177,385 --------------- 717,395 --------------- FINANCIAL SERVICES -- 1.9% Affiliated Managers Group, Inc.* 3,000 208,770 The Chicago Mercantile Exchange 5,800 419,688 Investment Technology Group, Inc.* 16,850 272,127 --------------- 900,585 --------------- FOODS -- 2.4% American Italian Pasta Co. Cl. A* 15,550 651,545 Sensient Technologies Corp. 9,500 187,815 Smithfield Foods, Inc.* 4,900 101,430 Wild Oats Markets, Inc.* 15,600 201,708 --------------- 1,142,498 --------------- HEALTHCARE -- 9.5% Allscripts Healthcare Solutions, Inc.* 47,100 250,572 American Healthways, Inc.* 42,200 1,007,314 AmSurg Corp.* 19,000 719,910 Beverly Enterprises, Inc.* 27,000 231,930 Coventry Health Care, Inc.* 3,700 238,613 Genesis HealthCare Corp.* 4,100 93,398 Human Genome Sciences, Inc.* 12,400 164,300 Humana, Inc.* 14,200 324,470 Manor Care, Inc. 9,100 314,587 Matria Healthcare, Inc.* 7,600 160,588 Odyssey Healthcare, Inc.* 22,550 659,813 Triad Hospitals, Inc.* 10,800 359,316 --------------- 4,524,811 ---------------
The accompanying notes are an integral part of the financial statements. 76
NUMBER OF MARKET SHARES VALUE ------------- --------------- HOME CONSTRUCTION, FURNISHINGS & APPLIANCES -- 0.5% Furniture Brands International, Inc. 8,025 $ 235,373 --------------- HOUSEHOLD PRODUCTS -- 0.7% Ferro Corp. 9,900 269,379 Trex Company, Inc.* 1,200 45,576 --------------- 314,955 --------------- INFORMATION RETRIEVAL SERVICES -- 1.2% Agile Software Corp.* 20,000 198,000 CoStar Group, Inc.* 2,400 100,032 Sina Corp.* 8,000 270,000 --------------- 568,032 --------------- INSURANCE -- 0.5% Reinsurance Group of America, Inc. 5,600 216,440 --------------- LODGING -- 1.9% Aztar Corp.* 12,300 276,750 Vail Resorts, Inc.* 35,750 607,750 --------------- 884,500 --------------- MACHINERY & COMPONENTS -- 2.3% Agco Corp.* 13,700 275,918 Helix Technology Corp. 7,400 152,292 Kennametal, Inc. 6,600 262,350 Techtronic Industries Co. Sponsored ADR (Hong Kong) 18,400 255,372 Ultratech, Inc.* 5,200 152,724 --------------- 1,098,656 --------------- MEDICAL SUPPLIES -- 2.9% Arrow International, Inc. 8,700 217,326 Cholestech Corp.* 1,597 12,185 CONMED Corp.* 7,900 188,020 CTI Molecular Imaging, Inc.* 14,000 236,740 Kensey Nash Corp.* 5,300 123,225 PSS World Medical, Inc.* 15,200 183,464 Resmed, Inc.* 6,700 278,318 Sequenom, Inc.* 38,000 120,840 --------------- 1,360,118 --------------- METALS & MINING -- 0.5% Precision Castparts Corp. 5,500 249,755 --------------- PHARMACEUTICALS -- 3.3% Abgenix, Inc.* 10,200 127,092 Angiotech Pharmaceuticals, Inc.* 5,300 243,800 The Medicines Co.* 5,800 170,868 Omnicare, Inc. 20,550 $ 830,014 Pharmaceutical Resources, Inc.* 3,400 221,510 --------------- 1,593,284 --------------- PREPACKAGED SOFTWARE -- 7.1% Cerner Corp.* 15,475 585,729 Dendrite International, Inc.* 52,950 829,727 EPIQ Systems, Inc.* 20,900 358,017 Hyperion Solutions Corp.* 6,200 186,868 Informatica Corp.* 17,000 175,100 Red Hat, Inc.* 27,600 518,052 Sanchez Computer Associates, Inc.* 24,500 101,675 SonicWALL, Inc.* 25,100 195,780 Take-Two Interactive Software, Inc.* 15,550 447,996 --------------- 3,398,944 --------------- REAL ESTATE -- 0.5% Host Marriott Corp.* 19,500 240,240 --------------- RESTAURANTS -- 0.3% Krispy Kreme Doughnuts, Inc.* 4,500 164,700 --------------- RETAIL -- 5.3% The Bombay Co., Inc.* 25,300 205,942 Borders Group, Inc.* 10,500 230,160 Foot Locker, Inc. 18,000 422,100 Linens 'N Things, Inc.* 5,900 177,472 MSC Industrial Direct Co. Cl. A 27,775 763,813 O'Reilly Automotive, Inc.* 18,675 716,373 --------------- 2,515,860 --------------- TELEPHONE UTILITIES -- 1.2% General Communication, Inc. Cl. A* 20,800 180,960 Nextel Partners, Inc. Cl. A* 30,100 404,845 --------------- 585,805 --------------- TRANSPORTATION -- 3.5% CNF, Inc. 6,800 230,520 EGL, Inc.* 10,800 189,648 GATX Corp. 11,600 324,568 J.B. Hunt Transport Services, Inc.* 19,600 529,396 Kansas City Southern* 28,175 403,466 --------------- 1,677,598 --------------- TOTAL EQUITIES (COST $32,611,624) 42,290,242 --------------- PRINCIPAL MARKET AMOUNT VALUE ------------- --------------- SHORT-TERM INVESTMENTS -- 31.3% CASH EQUIVALENTS -- 21.6%** Bank of Montreal Eurodollar Time Deposit 1.060% 01/15/2004 $ 27,958 $ 27,958 Bank of Montreal Eurodollar Time Deposit 1.060% 02/17/2004 147,725 147,725 Bank of Nova Scotia Eurodollar Time Deposit 1.080% 03/03/2004 443,176 443,176 Bank of Scotland Eurodollar Time Deposit 1.060% 04/02/2004 110,793 110,793 Bank of the West Eurodollar Time Deposit 1.075% 01/14/2004 110,793 110,793 Barclays Eurodollar Time Deposit 1.090% 03/05/2004 369,313 369,313 BNP Paribas Eurodollar Time Deposit 0.970% 01/07/2004 147,725 147,725 Canadian Imperial Bank of Commerce Bank Note 0.990% 05/18/2004 738,625 738,625 Citigroup Eurodollar Time Deposit 1.080% 01/05/2004 73,863 73,863 Citigroup Eurodollar Time Deposit 1.090% 03/04/2004 295,451 295,451 Citigroup Eurodollar Time Deposit 1.100% 01/22/2004 73,863 73,863 Credit Agricole Indosuez Eurodollar Time Deposit 1.080% 01/06/2004 760,784 760,784 Dreyfus Cash Management Plus, Inc. Money Market Fund 406,245 406,245 Fannie Mae Discount Note 1.062% 01/02/2004 221,588 221,588 Fleet National Bank Bank Note 1.000% 01/21/2004 369,313 369,313 Freddie Mac Discount Note 1.062% 01/27/2004 294,841 294,841 General Electric Capital Corp. 1.092% 01/05/2004 368,643 368,643
The accompanying notes are an integral part of the financial statements. 77
PRINCIPAL MARKET AMOUNT VALUE ------------- --------------- Goldman Sachs Financial Square Prime Obligations Money Market Fund $ 147,725 $ 147,725 Harris Trust & Savings Bank Eurodollar Time Deposit 1.050% 01/29/2004 81,249 81,249 Merrill Lynch Premier Institutional Money Market Fund 508,183 508,183 Merrimac Money Market Fund 1,226,119 1,226,119 Morgan Stanley Dean Witter & Co. 1.080% 01/29/2004 384,085 384,085 National Bank of Commerce Bank Note 1.120% 05/19/2004 184,656 184,656 Royal Bank of Canada Eurodollar Time Deposit 1.050% 02/27/2004 184,656 184,656 Royal Bank of Scotland Eurodollar Time Deposit 1.080% 01/09/2004 147,725 147,725 Royal Bank of Scotland Eurodollar Time Deposit 1.080% 01/15/2004 369,313 369,313 Royal Bank of Scotland Eurodollar Time Deposit 1.090% 03/03/2004 184,656 184,656 Southtrust Bank Eurodollar Time Deposit 1.090% 02/17/2004 221,588 221,588 Svenska Handlesbanken Eurodollar Time Deposit 1.080% 02/04/2004 184,656 184,656 Svenska Handlesbanken Eurodollar Time Deposit 1.085% 01/15/2004 184,656 184,656 Svenska Handlesbanken Eurodollar Time Deposit 1.090% 02/24/2004 369,313 369,313 Toronto Dominion Bank Eurodollar Time Deposit 1.100% 01/08/2004 73,863 73,863 Wells Fargo Eurodollar Time Deposit 1.070% 01/20/2004 $ 886,352 $ 886,352 --------------- 10,299,494 --------------- REPURCHASE AGREEMENT -- 9.7% Investors Bank & Trust Company Repurchase Agreement, dated 12/31/2003, 0.72%, due 01/02/2004(a) 4,629,791 4,629,791 --------------- TOTAL SHORT-TERM INVESTMENTS (AT AMORTIZED COST) 14,929,285 --------------- TOTAL INVESTMENTS -- 120.0% (Cost $47,540,909)*** 57,219,527 OTHER ASSETS/ (LIABILITIES) -- (20.0%) (9,532,626) --------------- NET ASSETS -- 100.0% $ 47,686,901 ===============
NOTES TO PORTFOLIO OF INVESTMENTS ADR - American Depository Receipt. * Non-income producing security. ** Represents investments of security lending collateral. (NOTE 2). *** Aggregate cost for Federal tax purposes. (NOTE7) (a) Maturity value of $4,629,976. Collateralized by U.S. Government Agency obligation with a rate of 1.613%, maturity date of 01/15/2028, and an aggregate market value, including accrued interest, of $4,861,532. The accompanying notes are an integral part of the financial statements. 78 MML SMALL CAP GROWTH EQUITY FUND - FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003 ----------------- ASSETS: Investments, at value (cost $32,611,624) (NOTE 2) $ 42,290,242 Short-term investments, at amortized cost (NOTE 2) 14,929,285 --------------- Total Investments (including securities on loan with market values of $9,868,688) 57,219,527 Cash 772,481 Receivables from: Investments sold 391,126 Investment adviser (NOTE 3) 3,028 Fund shares sold 104,129 Interest and dividends 10,478 --------------- Total assets 58,500,769 --------------- LIABILITIES: Payables for: Investments purchased 440,601 Fund shares repurchased 113 Securities on loan (NOTE 2) 10,299,494 Directors' fees and expenses (NOTE 3) 4,514 Affiliates (NOTE 3): Investment management fees 45,226 Accrued expense and other liabilities 23,920 --------------- Total liabilities 10,813,868 --------------- NET ASSETS $ 47,686,901 =============== NET ASSETS CONSIST OF: Paid-in capital $ 57,565,366 Accumulated net investment loss (3,923) Accumulated net realized loss on investments (19,553,160) Net unrealized appreciation on investments 9,678,618 --------------- $ 47,686,901 =============== SHARES OUTSTANDING: 4,089,226 =============== NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE: $ 11.66 ===============
The accompanying notes are an integral part of the financial statements. 79 STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2003 ----------------- INVESTMENT INCOME (NOTE 2): Dividends (net of withholding tax of $53) $ 99,759 Interest (including securities lending income of $16,424) 25,793 --------------- Total investment income 125,552 --------------- EXPENSES: Investment management fees (NOTE 3) 370,386 Custody fees 23,525 Audit and legal fees 20,161 Trustee reporting 13,446 Directors' fees (NOTE 3) 2,227 Shareholder reporting fees 1,613 --------------- Total expenses 431,358 Expenses waived (NOTE 3) (23,072) Fees paid indirectly (NOTE 3) (9,875) --------------- Net expenses 398,411 --------------- NET INVESTMENT LOSS (272,859) --------------- REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain on investment transactions 1,394,593 Net change in unrealized appreciation (depreciation) on investments 12,478,220 --------------- NET REALIZED AND UNREALIZED GAIN 13,872,813 --------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 13,599,954 ===============
The accompanying notes are an integral part of the financial statements. 80 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED DECEMBER 31, 2003 DECEMBER 31, 2002 ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment loss $ (272,859) $ (304,389) Net realized gain (loss) on investment transactions 1,394,593 (6,838,311) Net change in unrealized appreciation (depreciation) on investments 12,478,220 (4,293,549) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 13,599,954 (11,436,249) ------------- ------------- NET FUND SHARE TRANSACTIONS (NOTE 5) 7,302,485 (10,762,040) ------------- ------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 20,902,439 (22,198,289) NET ASSETS: Beginning of year 26,784,462 48,982,751 ------------- ------------- End of year (including accumulated net investment loss of $3,923 and $3,126, respectively) $ 47,686,901 $ 26,784,462 ============= =============
The accompanying notes are an integral part of the financial statements. 81 FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99+ ---------- ---------- ---------- ---------- ------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 7.85 $ 10.60 $ 12.20 $ 16.15 $ 10.00 ---------- ---------- ---------- ---------- ---------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment loss (0.07) (0.09) (0.06) (0.01)*** (0.01) Net realized and unrealized gain (loss) on investments 3.88 (2.66) (1.49) (2.09) 6.58 ---------- ---------- ---------- ---------- ---------- Total income (loss) from investment operations 3.81 (2.75) (1.55) (2.10) 6.57 ---------- ---------- ---------- ---------- ---------- LESS DISTRIBUTIONS TO SHAREHOLDERS: From net realized gains -- -- (0.05) (1.85) (0.42) ---------- ---------- ---------- ---------- ---------- NET ASSET VALUE, END OF PERIOD $ 11.66 $ 7.85 $ 10.60 $ 12.20 $ 16.15 ========== ========== ========== ========== ========== TOTAL RETURN(a) 48.54% (25.94)% (12.71)% (13.87)% 65.68%** RATIOS / SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 47,687 $ 26,784 $ 48,983 $ 70,380 $ 47,877 Ratio of expenses to average daily net assets: Before expense waiver 1.25% 1.24% 1.15% 1.25% 0.96%** After expense waiver# 1.16%(b) 1.16%(b) N/A 1.18% 0.79%** Net investment loss to average daily net assets (0.79)% (0.84)% (0.46)% (0.04)% (0.07)%** Portfolio turnover rate 59% 53% 104% 95% 75%**
** PERCENTAGE REPRESENTS RESULTS FOR THE PERIOD AND ARE NOT ANNUALIZED. *** PER SHARE AMOUNT CALCULATED ON THE AVERAGE SHARES METHOD. + FOR THE PERIOD FROM MAY 3, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1999. # COMPUTED AFTER GIVING EFFECT TO AN AGREEMENT BY MASSMUTUAL TO WAIVE CERTAIN FEES AND EXPENSES OF THE FUND FOR THE PERIOD MAY 3, 1999 THROUGH DECEMBER 31, 1999 AND THE YEARS ENDED DECEMBER 31, 2000, 2002 AND 2003. (a) TOTAL RETURN INFORMATION SHOWN IN THE FINANCIAL HIGHLIGHTS TABLE DOES NOT REFLECT EXPENSES THAT APPLY AT THE SEPARATE ACCOUNT LEVEL OR TO RELATED INSURANCE PRODUCTS. INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURN FIGURES FOR ALL PERIODS SHOWN. (b) THE FUND HAS ENTERED INTO AN AGREEMENT WITH CERTAIN BROKERS TO REBATE A PORTION OF BROKERAGE COMMISSIONS. THE REBATED COMMISSIONS ARE USED TO REDUCE OPERATING EXPENSES OF THE FUND. The accompanying notes are an integral part of the financial statements. 82 MML EMERGING GROWTH FUND - PORTFOLIO MANAGER REPORT WHAT IS THE INVESTMENT The objective of the Fund is to achieve capital OBJECTIVE OF THE MML appreciation by investing primarily in a diversified EMERGING GROWTH FUND? portfolio of equity securities of smaller, emerging growth companies, using a growth-oriented investment strategy. HOW DID THE FUND For the 12 months ending December 31, 2003, the Fund's PERFORM DURING 2003? shares returned 45.76%, which trailed the 47.26% return of the Russell 2000 Index, an unmanaged index of 2000 small capitalization common stocks. WHAT WAS THE During the third quarter, companies posted better INVESTMENT BACKGROUND performance than they did in comparative periods in the DURING THE PERIOD? past. Positive earnings revisions during the timeframe ran 2:1 over downward revisions. For the full year, small-cap investors favored the smallest of small-cap stocks, and they favored lower quality. In many cases, companies with the poorest fundamentals performed the best. WHAT FACTORS During the third quarter, strong performers included CONTRIBUTED TO THE the technology sector (where specialty semiconductor FUND'S PERFORMANCE - manufacturers produced some of the best gains) and the AND HOW DID YOU biotechnology segment of the health care sector. In the RESPOND? fourth quarter, we maintained an overweight position in the technology sector, with an approximate 30% weighting versus the benchmark's 23%. Also in the third quarter, we maintained an approximate 26% weighting to the broad consumer sector, relative to about a 20% weighting in the benchmark. This weighting expanded in large part through appreciation of certain retailers and Internet-related positions. Many of these positions have the highest revenue and earnings growth rates in the portfolio. Slower-growing consumer services companies provided mixed investment results in the quarter. Technology hardware, which had been a source of returns all year, continued the positive trend in the fourth quarter. Conversely, a detractor from performance in the closing quarter was our underweight relative to the benchmark in the materials/processing sector, which produced the greatest total return in the benchmark, contributing 104 basis points to the index. Growth investors had moved into these stocks to take advantage of favorable supply/demand patterns in base metals and natural resources, but since these companies typically do not produce the sort of secular revenue and earnings growth we look for in our definition of growth, we do not tend to hold a strong position in that sector. WHAT IS YOUR OUTLOOK? We believe our universe of companies offers further upside potential, particularly relative to the benchmark. We have experienced solid price/earnings multiple expansion, and if earnings results come in as we expect, we believe there is room for further multiple expansion as investors return to higher quality companies with more sustainable growth characteristics. We have seen indicators of this trend in the early weeks of 2004. 83 MML EMERGING GROWTH FUND LARGEST STOCK HOLDINGS (12/31/03) O2Micro International Limited Navigant Consulting, Inc. Anteon International Corp. M-Systems Flash Disk Pioneers Limited Salix Pharmaceuticals Limited United Surgical Partners International, Inc. Infospace, Inc. Urban Outfitters, Inc. Altiris, Inc. Ask Jeeves, Inc. GROWTH OF A $10,000 INVESTMENT MML SERIES INVESTMENT FUND TOTAL RETURN
SINCE INCEPTION ONE YEAR AVERAGE ANNUAL 1/1/03 - 12/31/03 5/1/00 - 12/31/03 MML Emerging Growth Fund 45.76% -16.49% Russell 2000 Index 47.26% 4.04%
[CHART] GROWTH OF A $10,000 INVESTMENT SINCE INCEPTION
MML EMERGING GROWTH FUND RUSSELL 2000 INDEX 5/1/2000 $ 10,000 $ 10,000 12/00 $ 7,350 $ 9,636 12/1/2001 $ 6,150 $ 9,876 12/2/2002 $ 3,540 $ 7,853 12/3/2003 $ 5,160 $ 11,564
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF SHARES OF THE FUND WILL FLUCTUATE WITH MARKET CONDITIONS SO THAT SHARES OF THE FUND, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INVESTORS SHOULD NOTE THAT THE FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND, WHILE THE RUSSELL 2000 INDEX IS UNMANAGED AND DOES NOT INCUR EXPENSES, AND CANNOT BE PURCHASED DIRECTLY BY INVESTORS. THE FUND'S RETURN REFLECTS CHANGES IN THE NET ASSET VALUE PER SHARE WITHOUT THE DEDUCTION OF ANY PRODUCT CHARGES. TOTAL RETURN FIGURES WOULD BE LOWER FOR THE PERIODS PRESENTED IF THEY REFLECTED THESE CHARGES. 84 MML EMERGING GROWTH FUND - PORTFOLIO OF INVESTMENTS DECEMBER 31, 2003
NUMBER OF MARKET SHARES VALUE ------------- ------------- EQUITIES -- 95.3% ADVERTISING 0.9% Valueclick, Inc.* 9,650 $ 87,622 ------------- AEROSPACE & DEFENSE -- 0.7% Engineered Support Systems, Inc. 800 44,048 MTC Technologies, Inc.* 800 25,776 ------------- 69,824 ------------- AIR TRANSPORTATION -- 1.0% Forward Air Corp.* 1,700 46,750 Pinnacle Airlines Corp.* 3,700 51,393 ------------- 98,143 ------------- APPAREL, TEXTILES & SHOES -- 4.1% Aeropostale, Inc.* 1,300 35,646 bebe stores, inc.* 1,250 32,487 Christopher & Banks Corp. 2,600 50,778 Deckers Outdoor Corp.* 900 18,450 Guess ?, Inc.* 2,800 33,796 K-Swiss, Inc. Cl. A 1,650 39,699 Oxford Industries, Inc. 1,550 52,514 Pacific Sunwear of California, Inc.* 900 19,008 Urban Outfitters, Inc.* 3,600 133,380 ------------- 415,758 ------------- AUTOMOTIVE & PARTS -- 0.9% United Auto Group, Inc. 2,750 86,075 ------------- BANKING, SAVINGS & LOANS -- 2.3% Franklin Bank Corp.* 1,250 23,750 NetBank, Inc. 5,100 68,085 PrivateBancorp, Inc. 1,450 66,004 Silicon Valley Bancshares* 1,500 54,105 World Acceptance Corp.* 950 18,914 ------------- 230,858 ------------- BEVERAGES -- 0.3% Peet's Coffee & Tea, Inc.* 1,850 32,208 ------------- BUILDING MATERIALS & CONSTRUCTION 0.4% Merge Technologies, Inc.* 2,450 43,218 ------------- CHEMICALS -- 0.8% Applied Films Corp.* 2,450 80,899 ------------- COMMERCIAL SERVICES -- 5.5% BioReliance Corp.* 400 19,128 Bright Horizons Family Solutions, Inc.* 1,300 54,600 eResearch Technology, Inc.* 4,175 106,128 Exact Sciences Corp.* 3,400 34,408 Ipass, Inc.* 2,900 $ 46,487 Navigant Consulting, Inc.* 8,600 162,196 Omnicell, Inc.* 5,250 85,050 Pharmaceutical Product Development, Inc.* 1,650 44,500 ------------- 552,497 ------------- COMMUNICATIONS -- 2.8% Alvarion Limited* 3,100 35,805 AudioCodes Limited* 4,850 50,634 Ditech Communications Corp.* 2,250 42,975 Mindspeed Technologies, Inc.* 9,500 65,075 Sonus Networks, Inc.* 6,000 45,360 Verisity Limited* 3,400 43,350 ------------- 283,199 ------------- COMPUTER & DATA PROCESSING SERVICES -- 1.5% Anteon International Corp.* 4,250 153,212 ------------- COMPUTER INTEGRATED SYSTEMS DESIGN -- 0.8% NetScreen Technologies, Inc.* 3,150 77,962 ------------- COMPUTER PROGRAMMING SERVICES -- 2.3% Business Objects SA Sponsored ADR (France)* 3,250 112,677 Callidus Software, Inc.* 450 7,960 Cognizant Technology Solutions Corp.* 1,150 52,486 Macromedia, Inc.* 3,200 57,088 ------------- 230,211 ------------- COMPUTER RELATED SERVICES -- 2.9% Carreker Corp.* 1,250 17,512 Checkfree Corp.* 2,000 55,300 CNET Networks, Inc.* 11,300 77,066 Digitas, Inc.* 4,650 43,338 eSpeed, Inc. Cl. A* 1,750 40,967 NetFlix, Inc.* 1,100 60,159 ------------- 294,342 ------------- COMPUTERS & INFORMATION -- 3.1% Emulex Corp.* 2,200 58,696 M-Systems Flash Disk Pioneers Limited* 8,650 149,472 Scientific Games Corp. Cl. A* 2,350 39,973 SRA International, Inc. Cl. A* 1,500 64,650 ------------- 312,791 ------------- DATA PROCESSING & PREPARATION -- 0.1% HomeStore, Inc.* 2,050 $ 9,696 ------------- ELECTRICAL EQUIPMENT & ELECTRONICS -- 12.2% August Technology Corp.* 4,250 78,837 Ceradyne, Inc.* 1,400 47,684 Credence Systems Corp.* 7,250 95,410 ESS Technology, Inc.* 2,750 46,777 Exar Corp.* 2,750 46,970 FormFactor, Inc.* 2,600 51,480 Ixia* 4,100 47,970 Mobility Electronics, Inc.* 3,900 34,870 O2Micro International Limited* 10,400 232,960 OmniVision Technologies, Inc.* 1,100 60,775 Photon Dynamics, Inc.* 2,200 88,528 Pixelworks, Inc.* 100 1,104 PLX Technology, Inc.* 5,500 48,675 Power Integrations, Inc.* 2,800 93,688 Sigmatel, Inc.* 2,550 62,934 Silicon Laboratories, Inc.* 750 32,415 Silicon Storage Technology, Inc.* 3,050 33,550 Superconductor Technologies, Inc.* 3,100 17,298 Tessera Technologies, Inc.* 500 9,405 Trident Microsystems, Inc.* 3,150 54,873 Virage Logic Corp.* 4,200 42,714 ------------- 1,228,917 ------------- ENTERTAINMENT & LEISURE -- 2.1% Alliance Gaming Corp.* 5,150 126,947 Multimedia Games, Inc.* 1,300 53,430 Penn National Gaming, Inc.* 1,250 28,850 ------------- 209,227 ------------- FINANCIAL SERVICES -- 3.2% Accredited Home Lenders Holding Co.* 1,800 55,080 Affiliated Managers Group, Inc.* 650 45,233 AmeriCredit Corp.* 1,850 29,470 Boston Private Financial Holdings, Inc. 4,300 106,812 CapitalSource, Inc.* 1,900 41,192 Saxon Capital, Inc.* 1,950 40,852 ------------- 318,639 ------------- HEALTHCARE -- 4.6% Accredo Health, Inc.* 2,750 86,927 American Healthways, Inc.* 2,150 51,320 Covance, Inc.* 1,500 40,200
The accompanying notes are an integral part of the financial statements. 85
NUMBER OF MARKET SHARES VALUE ------------- ------------- Odyssey Healthcare, Inc.* 1,050 $ 30,723 Sunrise Senior Living, Inc.* 2,350 91,039 United Surgical Partners International, Inc.* 4,150 138,942 VistaCare, Inc. Cl. A* 800 28,120 ------------- 467,271 ------------- HOME CONSTRUCTION, FURNISHINGS & APPLIANCES -- 0.7% Select Comfort Corp.* 2,650 65,614 ------------- INFORMATION RETRIEVAL SERVICES -- 4.2% Agile Software Corp.* 2,850 28,215 Ask Jeeves, Inc.* 7,200 130,464 Autobytel, Inc.* 3,250 29,510 CoStar Group, Inc.* 2,500 104,200 Infospace, Inc.* 5,800 133,690 NIC, Inc.* 200 1,606 ------------- 427,685 ------------- INSURANCE -- 0.9% AMERIGROUP Corp.* 700 29,855 Infinity Property & Casualty Corp. 950 31,397 ProAssurance Corp.* 950 30,542 ------------- 91,794 ------------- INTERNET SOFTWARE -- 1.4% Chordiant Software, Inc.* 2,850 15,533 WebEx Communications, Inc.* 6,400 128,640 ------------- 144,173 ------------- LODGING -- 0.4% Station Casinos, Inc. 1,350 41,351 ------------- MACHINERY & COMPONENTS -- 1.0% Ultratech, Inc.* 3,450 101,327 ------------- MEDICAL SUPPLIES -- 5.6% Advanced Neuromodulation Systems, Inc.* 825 37,934 Align Technology, Inc.* 2,950 48,734 Closure Medical Corp.* 3,000 101,790 I-Flow Corp.* 2,050 28,516 Intuitive Surgical, Inc.* 2,950 50,416 Inveresk Research Group, Inc.* 2,200 54,406 Kyphon, Inc.* 2,650 65,800 LTX Corp.* 2,450 36,824 Orthologic Corp.* 4,850 $ 29,731 Ventana Medical Systems, Inc.* 2,000 78,800 Wright Medical Group, Inc.* 1,100 33,484 ------------- 566,435 ------------- METALS & MINING -- 0.8% Steel Dynamics, Inc.* 3,250 76,343 ------------- PHARMACEUTICALS -- 13.6% Adolor Corp.* 3,510 70,270 Alexion Pharmaceuticals, Inc.* 3,800 64,676 Angiotech Pharmaceuticals, Inc.* 1,300 59,800 Atherogenics, Inc.* 6,950 103,903 Atrix Labs, Inc.* 2,350 56,494 Discovery Laboratories, Inc.* 4,300 45,107 EPIX Medical, Inc.* 3,600 58,608 Ilex Oncology, Inc.* 1,650 35,063 Impax Laboratories, Inc.* 1,750 25,183 Inspire Pharmaceuticals, Inc.* 2,750 38,940 K-V Pharmaceutical Co. Cl. A* 3,525 89,888 Martek Biosciences Corp.* 1,050 68,219 The Medicines Co.* 3,700 109,002 Nabi Biopharmaceuticals* 5,550 70,541 Onyx Pharmaceuticals, Inc.* 2,750 77,633 Penwest Pharmaceuticals Co.* 4,600 79,488 Regeneration Technologies, Inc.* 4,650 50,964 Salix Pharmaceuticals Limited* 6,250 141,688 Serologicals Corp.* 800 14,880 Telik, Inc.* 3,450 79,385 Vicuron Pharmaceuticals, Inc.* 1,350 25,178 ------------- 1,364,910 ------------- PREPACKAGED SOFTWARE -- 8.3% Altiris, Inc.* 3,650 133,152 Dendrite International, Inc.* 4,350 68,165 Informatica Corp.* 2,600 26,780 Magma Design Automation, Inc.* 5,100 $ 119,034 Micromuse, Inc.* 4,900 33,810 MicroStrategy, Inc. Cl. A* 2,050 107,584 Packeteer, Inc.* 2,450 41,601 Quest Software, Inc.* 4,200 59,640 Red Hat, Inc.* 4,800 90,096 Retek, Inc.* 6,800 63,104 United Online, Inc.* 5,625 94,444 ------------- 837,410 ------------- RESTAURANTS -- 1.3% Chicago Pizza & Brewery, Inc.* 4,600 68,632 RARE Hospitality International, Inc.* 2,450 59,878 ------------- 128,510 ------------- RETAIL -- 4.1% 1-800-Flowers.com, Inc.* 4,850 53,641 Cost Plus, Inc.* 3,050 125,050 CSK Auto Corp.* 1,650 30,971 Kenneth Cole Productions, Inc. Cl. A 1,500 44,100 Kirkland's, Inc.* 2,750 48,565 Restoration Hardware, Inc.* 3,350 15,913 The Sports Authority, Inc.* 2,350 90,240 ------------- 408,480 ------------- RETAIL - INTERNET -- 0.5% Priceline.com, Inc.* 2,833 50,711 ------------- TOTAL EQUITIES (COST $8,640,655) 9,587,312 ------------- WARRANTS -- 0.1% INFORMATION RETRIEVAL SERVICES InterActive Corp.* 332 14,176 ------------- TOTAL WARRANTS (COST $2,576) 14,176 ------------- TOTAL LONG TERM INVESTMENTS (COST $8,643,231) 9,601,488 -------------
The accompanying notes are an integral part of the financial statements. 86
PRINCIPAL MARKET AMOUNT VALUE ------------- ------------- SHORT-TERM INVESTMENTS -- 7.8% REPURCHASE AGREEMENT Investors Bank & Trust Company Repurchase Agreement, dated 12/31/2003, 0.72%, due 01/02/2004(a) $ 780,113 $ 780,113 ------------- TOTAL SHORT-TERM INVESTMENTS (AT AMORTIZED COST) 780,113 ------------- TOTAL INVESTMENTS -- 103.2% (COST $9,423,344)** 10,381,601 OTHER ASSETS/ (LIABILITIES) -- (3.2%) (317,558) ------------- NET ASSETS -- 100.0% $ 10,064,043 =============
NOTES TO PORTFOLIO OF INVESTMENTS ADR - American Depository Receipt. * Non-income producing security. ** Aggregate cost for Federal tax purposes. (NOTE 7). (a) Maturity value of $780,144. Collateralized by U.S. Government Agency obligation with a rate of 3.61%, maturity date of 03/25/2022, and an aggregate market value, including accrued interest, of $819,118. The remainder of this page is intentionally left blank. The accompanying notes are an integral part of the financial statements. 87 MML EMERGING GROWTH FUND - FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003 ----------------- ASSETS: Investments, at value (cost $8,643,231) (NOTE 2) $ 9,601,488 Short-term investments, at amortized cost (NOTE 2) 780,113 ----------------- Total Investments 10,381,601 Receivables from: Investments sold 396,328 Investment adviser (NOTE 3) 6,618 Fund shares sold 47,957 Interest and dividends 268 ----------------- Total assets 10,832,772 ----------------- LIABILITIES: Payables for: Investments purchased 698,169 Fund shares repurchased 34,744 Directors' fees and expenses (NOTE 3) 2,007 Affiliates (NOTE 3): Investment management fees 9,358 Accrued expense and other liabilities 24,451 ----------------- Total liabilities 768,729 ----------------- NET ASSETS $ 10,064,043 ================= NET ASSETS CONSIST OF: Paid-in capital $ 18,280,232 Accumulated net investment loss (1,883) Accumulated net realized loss on investments (9,172,563) Net unrealized appreciation on investments 958,257 ----------------- $ 10,064,043 ================= SHARES OUTSTANDING: 1,951,043 ================= NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE: $ 5.16 =================
The accompanying notes are an integral part of the financial statements. 88 STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2003 ----------------- INVESTMENT INCOME (NOTE 2): Dividends $ 2,549 Interest 2,173 ----------------- Total investment income 4,722 ----------------- EXPENSES: Investment management fees (NOTE 3) 68,165 Custody fees 46,484 Audit and legal fees 19,077 Trustee reporting 13,446 Directors' fees (NOTE 3) 420 Shareholder reporting fees 319 ----------------- Total expenses 147,911 Expenses waived (NOTE 3) (72,606) ----------------- Net expenses 75,305 ----------------- NET INVESTMENT LOSS (70,583) ----------------- REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain on investment transactions 1,222,283 Net change in unrealized appreciation (depreciation) on investments 1,137,693 ----------------- NET REALIZED AND UNREALIZED GAIN 2,359,976 ----------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,289,393 =================
The accompanying notes are an integral part of the financial statements. 89 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED DECEMBER 31, 2003 DECEMBER 31, 2002 ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment loss $ (70,583) $ (100,440) Net realized gain (loss) on investment transactions 1,222,283 (3,995,193) Net change in unrealized appreciation (depreciation) on investments 1,137,693 (1,269,505) ----------------- ----------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,289,393 (5,365,138) ----------------- ----------------- NET FUND SHARE TRANSACTIONS (NOTE 5) 3,441,673 (2,486,260) ----------------- ----------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 5,731,066 (7,851,398) NET ASSETS: Beginning of year 4,332,977 12,184,375 ----------------- ----------------- End of year (including accumulated net investment loss of $1,883 and $1,732, respectively) $ 10,064,043 $ 4,332,977 ================= =================
The accompanying notes are an integral part of the financial statements. 90 FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED 12/31/03 12/31/02 12/31/01 12/31/00+ ---------- ---------- ---------- ------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 3.54 $ 6.15 $ 7.34 $ 10.00 ---------- ---------- ---------- ---------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment loss (0.04) (0.05)*** (0.04) (0.04)*** Net realized and unrealized gain (loss) on investments 1.66 (2.56) (1.15) (2.62) ---------- ---------- ---------- ---------- Total income (loss) from investment operations 1.62 (2.61) (1.19) (2.66) ---------- ---------- ---------- ---------- NET ASSET VALUE, END OF PERIOD $ 5.16 $ 3.54 $ 6.15 $ 7.34 ========== ========== ========== ========== TOTAL RETURN(a) 45.76% (42.44)% (16.33)% (26.50)%** RATIOS / SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 10,064 $ 4,333 $ 12,184 $ 11,095 Ratio of expenses to average daily net assets: Before expense waiver 2.28% 1.76% 1.37% 1.56%* After expense waiver# 1.16% 1.16% 1.16% 1.16%* Net investment loss to average daily net assets (1.09)% (1.09)% (0.81)% (0.63)%* Portfolio turnover rate 195% 190% 139% 119%**
* ANNUALIZED. ** PERCENTAGE REPRESENTS RESULTS FROM THE PERIOD AND ARE NOT ANNUALIZED. *** PER SHARE AMOUNT CALCULATED ON THE AVERAGE SHARES METHOD. + FOR THE PERIOD FROM MAY 1, 2000 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 2000. # COMPUTED AFTER GIVING EFFECT TO AN AGREEMENT BY MASSMUTUAL TO WAIVE CERTAIN FEES AND EXPENSES OF THE FUND FOR THE PERIOD MAY 1, 2000 THROUGH DECEMBER 31, 2000 AND THE YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003. (a) TOTAL RETURN INFORMATION SHOWN IN THE FINANCIAL HIGHLIGHTS TABLE DOES NOT REFLECT EXPENSES THAT APPLY AT THE SEPARATE ACCOUNT LEVEL OR TO RELATED INSURANCE PRODUCTS. INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURN FIGURES FOR ALL PERIODS SHOWN. The accompanying notes are an integral part of the financial statements. 91 NOTES TO FINANCIAL STATEMENTS 1. THE FUND MML Series Investment Fund ("MML Trust") is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a no-load, open-end, management investment company. The Trust is organized under the laws of the Commonwealth of Massachusetts as a Massachusetts business trust pursuant to an Agreement and Declaration of Trust dated May 14, 1993, as amended. The following are ten series of the Trust (each individually referred to as a "Fund" or collectively as the "Funds"): MML Inflation-Protected Bond Fund ("Inflation-Protected Bond Fund"), MML Large Cap Value Fund ("Large Cap Value Fund"), MML Equity Index Fund ("Equity Index Fund"), MML Enhanced Index Core Equity Fund ("Enhanced Index Core Equity Fund"), MML Growth Equity Fund ("Growth Equity Fund"), MML OTC 100 Fund ("OTC 100 Fund"), MML Small Cap Equity Fund ("Small Cap Equity Fund"), MML Small Company Opportunities Fund ("Small Company Opportunities Fund"), MML Small Cap Growth Equity Fund ("Small Cap Growth Equity Fund") and MML Emerging Growth Fund ("Emerging Growth Fund"). The MML Trust was established by Massachusetts Mutual Life Insurance Company ("MassMutual") for the purpose of providing vehicles for the investment of assets of various separate investment accounts established by MassMutual and by life insurance companies which are subsidiaries of MassMutual. Shares of MML Trust are not offered to the general public. The Equity Index Fund offers three classes of shares: Class I, Class II and Class III. Each share class invests in the same portfolio of assets. The principal difference among the classes is the level of service and administration fees borne by the classes. Because each class will have different fees and expenses, performance and share prices among the classes will vary. The classes of shares are offered to different types of investors, as outlined in the Fund's Prospectus. 2. SIGNIFICANT The following is a summary of significant accounting ACCOUNTING policies followed consistently by each Fund in the POLICIES preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America ("generally accepted accounting principles"). The preparation of the financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. INVESTMENT Equity securities are valued on the basis of valuations VALUATION furnished by a pricing service, authorized by the Trustees, which provides the last reported sale price for securities listed on a national securities exchange or the official closing price on the NASDAQ National Market System, or in the case of over-the-counter securities not so listed, the last reported bid price. Debt securities (other than short-term obligations with a remaining maturity of sixty days or less) are valued on the basis of valuations furnished by a pricing service, authorized by the Trustees, which determines valuations taking into account appropriate factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data. Short-term securities with a remaining maturity of sixty days or less are valued at either amortized cost or at original cost plus accrued interest, whichever approximates current market value. All other securities and other assets, including debt securities for which the prices supplied by a pricing agent are deemed by MassMutual not to be representative of market values, including restricted securities and securities for which no market quotation is available, are valued at fair value in accordance with procedures approved by and determined in good faith by the Trustees, although the actual calculation may be done by others. Portfolio securities traded on more than one national securities exchange are valued at the last price on the business day as of which such value is being determined at the close of the exchange representing the principal market for such securities. All assets and liabilities expressed in foreign currencies are converted into U.S. dollars at the mean between the buying and selling rates of such currencies against U.S. dollars last quoted by any major bank. If such quotations are not available, the rate of exchange is determined in accordance with policies established by the Trustees. 92 SECURITIES LENDING Each Fund may lend its securities to qualified brokers; however, securities lending cannot exceed 33% of the total assets of the Funds taken at current value. The loans are collateralized at all times with cash or securities with a market value at least equal to 100% of the market value of the securities on loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional collateral is delivered to the Fund the next business day. As with other extensions of credit, the Funds may bear the risk of delay in recovery or even loss of rights in the collateral should the borrower of the securities fail financially. The Funds receive compensation for lending their securities. At December 31, 2003, the Funds loaned securities having the following market values, collateralized by cash, which was invested in short-term instruments in the following amounts:
SECURITIES ON LOAN COLLATERAL ------------------ ------------ Large Cap Value Fund $ 2,731,502 $ 2,827,905 Equity Index Fund 23,859,580 24,774,298 Growth Equity Fund 1,304,924 1,362,960 Small Cap Equity Fund 2,729,085 2,849,200 Small Cap Growth Equity Fund 9,868,688 10,299,494
REPURCHASE Each Fund may enter into repurchase agreements with AGREEMENTS certain banks and broker/dealers whereby a Fund acquires a security for cash and obtains a simultaneous commitment from the seller to repurchase the security at an agreed upon price and date. The Funds, through their custodian, take possession of the securities collateralizing the repurchase agreement. The collateral is marked to market daily to ensure that the market value of the underlying assets remains sufficient to protect the Funds in the event of default by the seller. Collateral for repurchase agreements is held at the counterparty's custodian in a segregated account for the benefit of the Funds and the counterparty. In connection with transactions in repurchase agreements, if the seller defaults and the value of the collateral declines or if the seller enters insolvency proceedings, realization of collateral by the Funds may be delayed or limited. ACCOUNTING FOR Investment transactions are accounted for on the trade INVESTMENTS date. Realized gains and losses on sales of investments and unrealized appreciation and depreciation of investments are computed on the specific identification cost method. Interest income, adjusted for amortization of discounts and premiums on debt securities, is earned from the settlement date and is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. FEDERAL INCOME TAX It is each Fund's intent to continue to comply with the provisions of subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), applicable to a regulated investment company. Under such provisions, the Funds will not be subject to federal income taxes on their ordinary income and net realized capital gains to the extent they are distributed or deemed to have been distributed to their shareholders. Therefore, no Federal income tax provision is required. DIVIDENDS AND Dividends from net investment income are declared and DISTRIBUTIONS TO paid quarterly for the Inflation-Protected Bond Fund. SHAREHOLDERS Dividends from net investment income are declared and paid annually for the Large Cap Value Fund, Equity Index Fund, Enhanced Index Core Equity Fund, Growth Equity Fund, OTC 100 Fund, Small Cap Equity Fund, Small Company Opportunities Fund, Small Cap Growth Equity Fund and Emerging Growth Fund. Distributions of any net realized capital gains of each Fund are declared and paid annually and at other times as may be required to satisfy tax or regulatory requirements. Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. These differences are primarily due to investments in forward contracts, passive foreign investment companies, the deferral of wash sale losses, and paydowns on certain mortgage-backed securities. As a result, net investment income and net realized gain on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Funds may periodically make reclassifications among certain of their capital accounts without impacting the net asset value of the Funds. 93 During the year ended December 31, 2003, the following amounts were reclassified due to differences between book and tax accounting:
ACCUMULATED NET REALIZED UNDISTRIBUTED PAID-IN GAIN (LOSS) ON NET INVESTMENT CAPITAL INVESTMENTS INCOME (LOSS) ---------- -------------- -------------- Inflation-Protected Bond Fund $ - $ (780) $ 780 Large Cap Value Fund (51,507) 10,786 40,721 Equity Index Fund (1,987) 17,089 (15,102) Enhanced Index Core Equity Fund (249) 709 (460) Growth Equity Fund (401) (244) 645 OTC 100 Fund (22,969) (10) 22,979 Small Cap Equity Fund (6,164) 16,800 (10,636) Small Company Opportunities Fund (1,631) (111,455) 113,086 Small Cap Growth Equity Fund (272,062) - 272,062 Emerging Growth Fund (70,430) (2) 70,432
FOREIGN CURRENCY The books and records of the Funds are maintained in TRANSLATION U.S. dollars. The market values of foreign currencies, foreign securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the mean of the buying and selling rates of such currencies against the U.S. dollar at the end of each business day. Purchases and sales of foreign securities and income and expense items are translated at the rates of exchange prevailing on the respective dates of such transactions. The Funds do not isolate that portion of the results of operations arising from changes in the exchange rates from that portion arising from changes in the market prices of securities. Net realized foreign currency gains and losses resulting from changes in exchange rates include foreign currency gains and losses between trade date and settlement date on investment securities transactions, foreign currency transactions and the difference between the amounts of dividends recorded on the books of the Funds and the amount actually received. FORWARD FOREIGN Each Fund may enter into forward foreign currency CURRENCY contracts in order to hedge the effect of currency CONTRACTS movements of foreign denominated securities or obligations. A forward foreign currency contract is an agreement between two parties to buy and sell a currency at a set price on a future date. The market value of a forward foreign currency contract fluctuates with changes in foreign currency exchange and interest rates. Forward foreign currency contracts are marked to market daily and the change in their value is recorded by the Funds as an unrealized gain or loss. When a forward foreign currency contract is extinguished, through delivery or offset by entering into another forward foreign currency contract, the Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value of the contract at the time it was extinguished or offset. Forward foreign currency contracts involve a risk of loss from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in foreign currency values and interest rates. The notional or contractual amounts of these instruments represent the investments the Funds have in particular classes of financial instruments and do not necessarily represent the amounts potentially subject to risk. The measurement of the risk associated with these instruments is meaningful only when all related and offsetting transactions are considered. At December 31, 2003, the Funds had no open forward foreign currency contracts. 94 FORWARD Each Fund may purchase or sell securities on a "when COMMITMENTS issued" or delayed delivery or on a forward commitment basis. The Funds use forward commitments to manage interest rate exposure or as a temporary substitute for purchasing or selling particular debt securities. Delivery and payment for securities purchased on a forward commitment basis can take place a month or more after the date of the transaction. The Funds instruct the custodian to segregate assets in a separate account with a current market value at least equal to the amount of its forward purchase commitments. The price of the underlying security and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. Forward commitments are valued on the basis of valuations furnished by a pricing service, authorized by the Trustees, which determines valuations taking into account appropriate factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data. Securities for which no market quotation is available, are valued at fair value in accordance with procedures approved by and determined in good faith by the Trustees, although the actual calculation may be done by others. The Funds record on a daily basis the unrealized appreciation (depreciation) based upon changes in the value of the forward commitment. When a forward commitment contract is closed, the Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value of the contract at the time it was extinguished. Forward commitments involve a risk of loss if the value of the security to be purchased declines prior to the settlement date. The Funds could also be exposed to loss if they cannot close out their forward commitments because of an illiquid secondary market, or the inability of counterparties to perform. The Funds monitor exposure to ensure counterparties are creditworthy and concentration of exposure is minimized. At December 31, 2003, the Funds had no open forward commitments. FINANCIAL FUTURES The Funds may purchase or sell financial futures CONTRACTS contracts and options on such futures contracts for the purpose of hedging the market risk on existing securities or as a substitute for the purchase of securities. Futures contracts are contracts for delayed delivery of securities at a specific future date and at a specific price or yield. Upon entering into a contract, the Funds deposit and maintain as collateral such initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Funds as unrealized gains or losses. When the contract is closed, each Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. A summary of open futures contracts for the Equity Index Fund and the OTC 100 Fund at December 31, 2003, is as follows:
NOTIONAL NUMBER OF CONTRACT NET UNREALIZED CONTRACTS TYPE EXPIRATION DATE VALUE APPRECIATION --------------------- ---------------- --------------- ------------ -------------- MML EQUITY INDEX FUND BUYS 14 S&P 500 Index 03/18/04 $ 3,887,100 $ 89,391 MML OTC 100 FUND BUYS 9 NASDAQ 100 Index 03/19/04 $ 264,780 $ 6,446
ALLOCATION OF In maintaining the records for the Equity Index Fund, OPERATING ACTIVITY the income and expense accounts are allocated to each class of shares. Investment income, unrealized and realized gains or losses are prorated among the classes of shares based on the relative net assets of each. Expenses are allocated to each class of shares depending on the nature of the expenditures. Administration fees, which are directly attributable 95 to a class of shares, are charged to that class' operations. Expenses of the Fund not directly attributable to the operations of any class of shares are prorated among the classes to which the expense relates based on the relative net assets of each. 3. MANAGEMENT FEES AND OTHER TRANSACTIONS INVESTMENT Under agreements between the Trust and MassMutual on MANAGEMENT FEE behalf of each Fund, MassMutual is responsible for providing investment management services for each Fund. In return for this service, MassMutual receives advisory fees monthly based on the following annual rates. For the Inflation-Protected Bond Fund, MassMutual receives a fee from the Fund at an annual rate of 0.60% of the first $100,000,000, 0.55% of the next $200,000,000, 0.50% of the next $200,000,000 and 0.45% on assets over $500,000,000, of the average daily net asset value of the Fund. For the Large Cap Value Fund, MassMutual receives a fee from the Fund at an annual rate of 0.80% of the first $100,000,000, 0.75% on the next $400,000,000 and 0.70% on assets over $500,000,000, of the average daily net asset value of the Fund. For the Equity Index Fund, MassMutual receives a fee from the Fund at an annual rate of 0.10% of the average daily net asset value of the Fund. For the Enhanced Index Core Equity Fund, MassMutual receives a fee from the Fund at an annual rate of 0.55% of the average daily net asset value of the Fund. For the Growth Equity Fund, MassMutual receives a fee from the Fund at an annual rate of 0.80% of the first $300,000,000, 0.77% of the next $300,000,000, 0.75% of the next $300,000,0000, 0.72% of the next $600,000,000 and 0.65% of assets over $1,500,000,000, of the average daily net asset value of the Fund. For the OTC 100 Fund, MassMutual receives a fee from the Fund at an annual rate of 0.45% of the first $200,000,000, 0.44% on the next $200,000,000 and 0.42% on assets over $400,000,000, of the average daily net asset value of the Fund. For the Small Cap Equity Fund, MassMutual receives a fee from the Fund at the annual rate of 0.65% of the first $100,000,000, 0.60% of the next $100,000,000, 0.55% of the next $300,000,000 and 0.50% of any excess over $500,000,000 of the average daily net asset value of the Fund. For the Small Company Opportunities Fund, MassMutual receives a fee from the Fund at an annual rate of 1.05% of the average daily net asset value of the Fund. For the Small Cap Growth Equity Fund, MassMutual receives a fee from the Fund at the annual rate of 1.075% of the first $200,000,000, 1.05% of the next $200,000,000, 1.025% of the next $600,000,000 and 1.00% of assets over $1,000,000,000, of the average daily net asset value of the Fund. For the Emerging Growth Fund, MassMutual receives a fee from the Fund at the annual rate of 1.05% of the first $200,000,000, 1.00% on the next $200,000,000 and 0.95% on assets over $400,000,000, of the average daily net asset value of the Fund. MassMutual has entered into investment sub-advisory agreements with David L. Babson & Company, Inc. ("DLB"), pursuant to which DLB serves as certain Funds' sub-adviser providing day-to-day management of the Funds' investments. DLB is a wholly owned subsidiary of DLB Acquisition 96 Corporation, which is a controlled subsidiary of MassMutual. The sub-advisory agreements with DLB provide that DLB manage the investment and reinvestment of the assets of the Inflation-Protected Bond Fund, Enhanced Index Core Equity Fund, Small Cap Equity Fund and Small Company Opportunities Fund. DLB receives a fee from MassMutual equal to an annual rate of 0.08% of the average daily net assets under management of the Inflation-Protected Bond Fund, 0.25% of the average daily net assets under management of the Enhanced Index Core Equity Fund and Small Cap Equity Fund, and 0.75% of the average daily net assets under management of the Small Company Opportunities Fund. MassMutual has also entered into investment sub-advisory agreements with the following unaffiliated investment sub-advisers; Davis Selected Advisers, L.P. for the Large Cap Value Fund, Northern Trust Investments, Inc. for the Equity Index Fund and the OTC 100 Fund, Massachusetts Financial Services Company for the Growth Equity Fund, Waddell & Reed Investment Management Company for a portion of the Small Cap Growth Equity Fund, RS Investment Management L.P. for the Emerging Growth Fund and Wellington Management Company, LLP for a portion of the Small Cap Growth Equity Fund. Prior to January 31, 2003, Deutsche Asset Management, Inc. managed the investment and reinvestment of the assets of the Equity Index Fund and the OTC 100 Fund. MassMutual pays a sub-advisory fee to each of these sub-advisers based upon the aggregate net assets under management which include (1) the average daily net assets of the specified Fund which it manages, and (2) the average daily net assets of all other funds or accounts of MassMutual or its affiliates for which the sub-adviser provides sub-advisory services and which have substantially the same investment objectives, policies and investment strategies. ADMINISTRATION & For the Equity Index Fund, under a separate SHAREHOLDER SERVICE administrative and shareholder services agreement FEES between the Fund and MassMutual, MassMutual provides certain administrative and shareholder services and bears some class specific administrative expenses. In return for these services, MassMutual receives an administrative services fee monthly based upon the average daily net assets of the applicable class of shares of the Fund at the following annual rates: 0.30% on the first $100,000,000, 0.28% on the next $150,000,000 and 0.26% on assets in excess of $250,000,000 of Class I shares of the Fund, 0.19% of the average daily net assets of Class II shares of the Fund, and for Class III shares, an amount not to exceed 0.05% of the average daily net assets of the Fund. EXPENSE WAIVERS For all Funds, except the Equity Index Fund, MassMutual has agreed, at least through April 30, 2004, to bear the expenses of the Fund to the extent that the aggregate expenses (excluding the Fund's management fee, interest, taxes, brokerage commissions and extraordinary expenses) incurred during the Fund's fiscal year exceed 0.11% of the average daily net assets of the Fund for such year. For Class II of the Equity Index Fund, MassMutual has agreed, through April 30, 2004, to bear the expenses (other than interest, taxes, brokerage commissions and extraordinary expenses) to the extent that total operating expenses, as a percentage of average daily net assets, exceed 0.26%. For Class III, MassMutual has agreed, at least through April 30, 2004, to bear the expenses of the Fund, to the extent that the aggregate expenses (excluding the Fund's management and administrative fees, interest, taxes, brokerage commissions and extraordinary expenses) incurred during the Fund's fiscal year exceed 0.05% of the average daily net assets of the Fund for such year. MassMutual has also agreed to waive certain administrative and shareholder service fees payable by the Fund on account of Class III shares. EXPENSE REDUCTIONS The Large Cap Value Fund, Growth Equity Fund, Small Cap Equity Fund and the Small Cap Growth Equity Fund have entered into agreements with certain brokers whereby the brokers will rebate a portion of brokerage commissions. Amounts earned by the Funds under such agreements are presented as a reduction of expenses in the statement of operations. For the year ended December 31, 2003, expenses were reduced under these agreements as follows:
REDUCTIONS ---------- Large Cap Value Fund $ 2,499 Growth Equity Fund 8,366 Small Cap Equity Fund 294 Small Cap Growth Equity Fund 9,875
97 OTHER Certain officers and trustees of the Funds are also officers of MassMutual. The compensation of each trustee who is not an officer or employee of MassMutual is borne by the Funds. DEFERRED Trustees of the Funds that are not employees of COMPENSATION MassMutual or its subsidiaries may elect to defer receipt of their annual fees in accordance with terms of the Non-Qualified Deferred Compensation Plan. Any amounts deferred shall accrue interest at a rate equal to eight percent (8%) per annum. For the year ended December 31, 2003, no significant amounts have been deferred. 4. PURCHASES AND Cost of purchases and proceeds from sales of investment SALES OF securities (excluding short-term investments) for the INVESTMENTS year ended December 31, 2003, were as follows:
LONG-TERM U.S. OTHER LONG-TERM GOVERNMENT SECURITIES SECURITIES --------------------- --------------- PURCHASES Inflation-Protected Bond Fund $ 22,684,013 $ 5,491,875 Large Cap Value Fund - 11,061,378 Equity Index Fund - 40,283,941 Enhanced Index Core Equity Fund - 12,691,302 Growth Equity Fund - 49,352,355 OTC 100 Fund - 8,451,822 Small Cap Equity Fund - 28,414,618 Small Company Opportunities Fund - 22,375,790 Small Cap Growth Equity Fund - 20,839,204 Emerging Growth Fund - 15,067,854 SALES Inflation-Protected Bond Fund $ 4,597,546 $ - Large Cap Value Fund - 2,879,105 Equity Index Fund - 15,506,654 Enhanced Index Core Equity Fund - 9,300,197 Growth Equity Fund - 48,089,855 OTC 100 Fund - 3,528,073 Small Cap Equity Fund - 27,968,231 Small Company Opportunities Fund - 15,628,610 Small Cap Growth Equity Fund - 18,586,112 Emerging Growth Fund - 11,912,293
98 5. CAPITAL SHARE The Funds are authorized to issue an unlimited number TRANSACTIONS of shares, with no par value in each class of shares. Changes in shares outstanding for each Fund are as follows:
YEAR ENDED DECEMBER 31, 2003 YEAR ENDED DECEMBER 31, 2002 SHARES AMOUNT SHARES AMOUNT -------------- -------------- -------------- -------------- INFLATION-PROTECTED BOND FUND~ Sold 2,692,560 $ 28,521,490 1,081,125 $ 10,823,509 Issued as reinvestment of dividends 46,497 495,892 8,594 87,058 Redeemed (487,070) (5,160,642) (35,276) (359,776) -------------- -------------- -------------- -------------- Net increase (decrease) 2,251,987 $ 23,856,740 1,054,443 $ 10,550,791 ============== ============== ============== ============== LARGE CAP VALUE FUND Sold 2,108,779 $ 16,987,215 2,862,676 $ 22,924,269 Issued as reinvestment of dividends 38,468 359,133 33,438 244,189 Redeemed (692,939) (5,520,063) (2,366,284) (18,060,835) -------------- -------------- -------------- -------------- Net increase (decrease) 1,454,308 $ 11,826,285 529,830 $ 5,107,623 ============== ============== ============== ============== EQUITY INDEX FUND CLASS I Sold 1,373,601 $ 16,523,967 961,983 $ 12,023,695 Issued as reinvestment of dividends 66,793 913,733 65,861 721,177 Redeemed (1,104,652) (12,742,287) (1,398,421) (16,555,264) -------------- -------------- -------------- -------------- Net increase (decrease) 335,742 $ 4,695,413 (370,577) $ (3,810,392) ============== ============== ============== ============== EQUITY INDEX FUND CLASS II Sold 3,785,872 $ 45,312,735 7,799,054 $ 102,342,173 Issued as reinvestment of dividends 181,866 2,486,104 170,161 1,859,859 Redeemed (1,822,195) (20,970,465) (1,610,711) (19,430,127) -------------- -------------- -------------- -------------- Net increase (decrease) 2,145,543 $ 26,828,374 6,358,504 $ 84,771,905 ============== ============== ============== ============== EQUITY INDEX FUND CLASS III Sold 766,101 $ 8,254,570 294,010 $ 3,519,102 Issued as reinvestment of dividends 141,618 1,931,671 167,631 1,828,852 Redeemed (1,499,750) (17,541,572) (767,033) (8,917,816) -------------- -------------- -------------- -------------- Net increase (decrease) (592,031) $ (7,355,331) (305,392) $ (3,569,862) ============== ============== ============== ============== ENHANCED INDEX CORE EQUITY FUND Sold 537,899 $ 4,237,161 309,634 $ 2,551,875 Issued as reinvestment of dividends 15,472 138,749 13,448 96,830 Redeemed (119,693) (908,167) (114,477) (928,076) -------------- -------------- -------------- -------------- Net increase (decrease) 433,678 $ 3,467,743 208,605 $ 1,720,629 ============== ============== ============== ============== GROWTH EQUITY FUND Sold 764,121 $ 4,707,919 772,223 $ 5,090,329 Issued as reinvestment of dividends 605 4,061 - - Redeemed (601,626) (3,579,358) (3,647,482) (23,451,434) -------------- -------------- -------------- -------------- Net increase (decrease) 163,100 $ 1,132,622 (2,875,259) $ (18,361,105) ============== ============== ============== ============== OTC 100 FUND Sold 3,381,484 $ 10,712,617 1,687,103 $ 5,010,758 Issued as reinvestment of dividends - - - - Redeemed (1,738,007) (5,450,632) (2,717,441) (8,090,519) -------------- -------------- -------------- -------------- Net increase (decrease) 1,643,477 $ 5,261,985 (1,030,338) $ (3,079,761) ============== ============== ============== ============== SMALL CAP EQUITY FUND Sold 1,543,870 $ 14,782,305 4,033,669 $ 38,752,010 Issued as reinvestment of dividends 12,718 142,999 18,417 157,182 Redeemed (1,081,987) (10,032,551) (2,722,806) (25,373,163) -------------- -------------- -------------- -------------- Net increase (decrease) 474,601 $ 4,892,753 1,329,280 $ 13,536,029 ============== ============== ============== ============== SMALL COMPANY OPPORTUNITIES FUNDS Sold 968,295 $ 11,536,096 1,373,472 $ 14,888,244 Issued as reinvestment of dividends 134,135 1,853,674 5,048 51,201 Redeemed (263,399) (2,914,092) (362,594) (3,675,222) -------------- -------------- -------------- -------------- Net increase (decrease) 839,031 $ 10,475,678 1,015,926 $ 11,264,223 ============== ============== ============== ============== SMALL CAP GROWTH EQUITY FUND Sold 1,211,042 $ 12,118,367 1,021,734 $ 9,440,406 Issued as reinvestment of dividends - - - - Redeemed (533,737) (4,815,882) (2,232,444) (20,202,446) -------------- -------------- -------------- -------------- Net increase (decrease) 677,305 $ 7,302,485 (1,210,710) $ (10,762,040) ============== ============== ============== ==============
99
YEAR ENDED DECEMBER 31, 2003 YEAR ENDED DECEMBER 31, 2002 SHARES AMOUNT SHARES AMOUNT -------------- -------------- -------------- -------------- EMERGING GROWTH FUND Sold 1,672,583 $ 7,604,348 1,205,422 $ 5,376,027 Issued as reinvestment of dividends - - - - Redeemed (947,231) (4,162,675) (1,962,462) (7,862,287) -------------- -------------- -------------- -------------- Net increase (decrease) 725,352 $ 3,441,673 (757,040) $ (2,486,260) ============== ============== ============== ==============
~ FOR THE PERIOD FROM AUGUST 30, 2002 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 2002. 6. FOREIGN The Funds may also invest in foreign securities, SECURITIES subject to certain percentage restrictions. Investing in securities of foreign companies and foreign governments involves special risks and considerations not typically associated with investing in securities issued by U.S. companies and the U.S. Government. These risks include revaluation of currencies and future adverse political and economic developments. Moreover, securities of many foreign companies and foreign governments and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. companies and the U.S. Government. 7. FEDERAL INCOME At December 31, 2003, the cost of securities and the TAX INFORMATION unrealized appreciation (depreciation) in the value of investments owned by the Funds, as computed on a Federal income tax basis, were as follows:
FEDERAL TAX BASIS TAX BASIS NET UNREALIZED INCOME TAX UNREALIZED UNREALIZED APPRECIATION/ COST APPRECIATION DEPRECIATION (DEPRECIATION) ------------- --------------- --------------- ----------------- Inflation-Protected Bond Fund $ 34,058,479 $ 942,032 $ (57,233) $ 884,799 Large Cap Value Fund 52,536,251 8,242,396 (1,151,093) 7,091,303 Equity Index Fund 440,965,571 38,996,301 (50,517,830) (11,521,529) Enhanced Index Core Equity Fund 14,801,421 1,524,343 (245,862) 1,278,481 Growth Equity Fund 21,759,967 1,125,808 (223,542) 902,266 OTC 100 Fund 12,797,943 - (463,695) (463,695) Small Cap Equity Fund 73,363,864 16,402,455 (1,554,401) 14,848,054 Small Company Opportunities Fund 35,541,18 68,031,250 (323,192) 7,708,058 Small Cap Growth Equity Fund 47,903,510 10,293,358 (977,341) 9,316,017 Emerging Growth Fund 9,574,843 1,032,619 (225,861) 806,758
At December 31, 2003, the following Funds had available, for Federal income tax purposes, unused capital losses:
EXPIRING EXPIRING EXPIRING EXPIRING 2008 2009 2010 2011 ----------- ----------- ----------- ----------- Large Cap Value Fund $ 8,346 $ 1,160,333 $ 2,527,171 $ 1,015,832 Equity Index Fund - - 6,501,477 144,729 Enhanced Index Core Equity Fund - 285,538 1,053,561 375,501 Growth Equity Fund - 17,334,932 7,953,799 - OTC 100 Fund - 943,131 4,762,508 2,362,711 Small Cap Equity Fund - - 123,022 - Small Cap Growth Equity Fund - 10,101,072 8,158,841 930,646 Emerging Growth Fund 748,125 4,870,511 3,402,428 -
100 Net capital loss carryforwards may be applied against any net realized taxable gains in each succeeding year, or until their respective expiration dates, whichever occurs first. Certain differences exist from the amounts reflected in the Statement of Changes in Net Assets primarily due to the character of short-term capital gains treated as ordinary income for tax purposes. The tax character of distributions paid during the year ended December 31, 2003 was as follows:
ORDINARY LONG TERM RETURN OF INCOME CAPITAL GAIN CAPITAL ------------ ------------ ---------- Inflation-Protected Bond Fund $ 495,892 $ - $ - Large Cap Value Fund 359,133 - - Equity Index Fund 5,331,508 - - Enhanced Index Core Equity Fund 138,749 - - Growth Equity Fund 4,061 - - Small Cap Equity Fund 142,999 - - Small Company Opportunities Fund 599,939 1,253,735 -
At December 31, 2003, the components of distributable earnings on a tax basis were as follows:
UNDISTRIBUTED UNDISTRIBUTED LONG TERM UNREALIZED ORDINARY CAPITAL GAIN/ APPRECIATION INCOME (CAPITAL LOSS CARRYOVER) (DEPRECIATION) ------------- ------------------------ -------------- Inflation-Protected Bond Fund $ 216 $ 143,827 $ 886,387 Large Cap Value Fund - (5,346,575) 7,332,035 Equity Index Fund - (10,002,471) (8,169,473) Enhanced Index Core Equity Fund - (2,159,764) 1,672,697 Growth Equity Fund - (25,528,503) 1,142,062 OTC 100 Fund - (11,010,292) 2,155,842 Small Cap Equity Fund - (803,221) 15,528,253 Small Company Opportunities Fund 462,933 395,424 7,769,923 Small Cap Growth Equity Fund - (19,553,160) 9,678,618 Emerging Growth Fund - (9,172,563) 958,257
The following Funds elected to defer to January 1, 2004 post-October losses:
AMOUNT ----------- Large Cap Value Fund $ 367,883 Enhanced Index Core Equity Fund 50,912 OTC 100 Fund 322,405
The following Funds elected to defer January 1, 2004 post-October currency losses:
AMOUNT ----------- Large Cap Value Fund $ 4,760 Growth Equity Fund 292
Pursuant to Section 852 of the Internal Revenue Code, the Small Company Opportunities Fund designates capital gain dividends of $1,253,735 for the year ended December 31, 2003. 101 INDEPENDENT AUDITORS' REPORT THE BOARD OF TRUSTEES AND SHAREHOLDERS OF MML SERIES INVESTMENT FUND We have audited the accompanying statement of assets and liabilities, including the portfolios of investments, of the MML Inflation-Protected Bond Fund, the MML Large Cap Value Fund, the MML Equity Index Fund, the MML Enhanced Index Core Equity Fund, the MML Growth Equity Fund, the MML OTC 100 Fund, the MML Small Cap Equity Fund, the MML Small Company Opportunities Fund, the MML Small Cap Growth Equity Fund and the MML Emerging Growth Fund (collectively the "Funds") which are components of the MML Series Investment Fund ("The MML Trust"), as of December 31, 2003, and the related statements of operations for the year then ended, the statements of changes in net assets for the years ended December 31, 2003 and 2002, and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the MML Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2003 by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Funds as of December 31, 2003, and the results of their operations, the changes in their net assets and their financial highlights for the respective stated periods in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP Deloitte & Touche LLP Boston, Massachusetts February 11, 2004 102 TRUSTEES AND OFFICERS (UNAUDITED) The following table lists the Trust's trustees and officers; their address and age; their position with the Trust; the length of time holding that position with the Trust; their principal occupation(s) during the past five years; the number of portfolios in the fund complex they oversee; and other directorships they hold in companies subject to registration or reporting requirements of the Securities Exchange Act of 1934 (generally called "public companies") or in registered investment companies. The Trust's Statement of Additional Information includes additional information about the Trust's trustees and is available, without charge, upon request by calling 1-888-309-3539 or by writing MML Series Investment Fund, c/o Massachusetts Mutual Life Insurance Company, 1295 State Street, Springfield, Massachusetts 01111-0111, Attention: Retirement Services Marketing. DISINTERESTED TRUSTEES
TERM NUMBER OF OF OFFICE** PORTFOLIOS IN AND FUND POSITION(S) LENGTH PRINCIPAL COMPLEX OTHER NAME,ADDRESS*, HELD WITH OF TIME OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS AND AGE TRUST SERVED PAST 5 YEARS TRUSTEE HELD BY TRUSTEE - ------------------------ ------------- ----------- ---------------------------- ------------- ------------------------ Ronald J. Abdow Trustee of Since President, Abdow 46 Trustee, Abdow G&R Age: 71 the Trust 1993 Corporation (operator Trust and Abdow of restaurants). G&R Co. (owners and operators or restaurant properties); Chairman, Western Mass Development Corp.; Chairman, American International College; Trustee (since 2002), Oppenheimer Tremont Market Neutral Fund LLC, Oppenheimer Tremont Opportunity Fund LLC and Oppenheimer Real Estate Fund. Richard H. Ayers Trustee of Since Retired. 46 Director, Applera Age: 60 the Trust 1999 Corporation; Director (since 2002), Instron Corporation. Mary E. Boland Trustee of Since Attorney at Law, Egan, 46 Director (since 1999), Age: 63 the Trust 1973 Flanagan and Cohen, P.C. BankNorth (law firm), Springfield, MA. Massachusetts; Director (since 1999), Massachusetts Educational Financing Authority. Richard W. Greene Trustee of Since Retired; Vice President for 46 Age: 67 the Trust 1999 Investments and Treasurer (1998-2000), University of Rochester (private university).
103
TERM NUMBER OF OF OFFICE** PORTFOLIOS IN AND FUND POSITION(S) LENGTH PRINCIPAL COMPLEX OTHER NAME,ADDRESS*, HELD WITH OF TIME OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS AND AGE TRUST SERVED PAST 5 YEARS TRUSTEE HELD BY TRUSTEE - ------------------------ ------------- ----------- ---------------------------- ------------- ------------------------ Beverly L. Hamilton Trustee of Since President ARCO 46 Director (since 1991), Age: 56 the Trust 1999 Investment Management Co. American Funds (1991-2000). Emerging Markets Growth Fund (open-interval mutual fund); Trustee (since 2000), Monterey Institute for International Studies; Trustee (since 2001), The California Endowment; Trustee (since 2002), Community Hospital of the Monterey Peninsula; Trustee (since 2002), Board II Oppenheimer Funds; Investment Advisory Committees of Rockefeller Foundation, Unilever (Holland) pension fund, CFSB Sprout, University of Michigan endowment and Hartford Hospital. F. William Marshall, Jr. Trustee of Since Consultant (since 1999); 46 Trustee (since 2000), Age: 61 the Trust 1996 Chairman (1999), Family Board II Oppenheimer Bank, F.S.B. (formerly SIS Funds. Bank); Executive Vice President (1999), Peoples Heritage Financial Group; President, Chief Executive Officer and Director (1993-1999), SIS Bancorp, Inc. and SIS Bank (formerly, Springfield Institution for Savings). Allan W. Blair Trustee of Since President and Chief 46 Director (since 2001), Age: 55 the Trust 2003 Executive Officer (since Future Works, Inc. 1996), Economic Development Council of Western Massachusetts; President and Chief Operating Officer (since 1993), Westmass Area Development Corporation; President and Chief Operating Officer (since 1984), Westover Metropolitan Development Corporation. R. Alan Hunter, Jr. Trustee of Since Retired. 46 Age: 56 the Trust 2003
104 INTERESTED TRUSTEES
TERM NUMBER OF OF OFFICE** PORTFOLIOS IN AND FUND POSITION(S) LENGTH PRINCIPAL COMPLEX OTHER NAME,ADDRESS*, HELD WITH OF TIME OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS AND AGE TRUST SERVED PAST 5 YEARS TRUSTEE HELD BY TRUSTEE - ------------------------ ------------- ----------- ---------------------------- ------------- ------------------------ Stuart H. Reese Chairman Since Executive Vice President 46 Director (since 1994), Age: 48 and Trustee 1999 and Chief Investment Merrill Lynch Derivative of the Trust Officer (since 1999), Chief Products; Chairman Executive Director (since 1999), Director (1997-1999), MassMutual; (since 1996), Antares Chairman and Chief Capital Corporation Executive Officer (since (finance company); 2001), President and Chief Director (since 1996), Executive Officer HYP Management, Inc. (1999-2001), David L. (managing member of Babson & Company Inc. MassMutual High Yield (investment adviser); Partners LLC), and MMHC Chairman (since 1999), Investment, Inc. President (1995-1999), (investor in funds MassMutual Corporate sponsored by Investors and MassMutual MassMutual); Director Participation Investors (since 1994), MassMutual (closed-end investment Corporate Value Partners companies). Limited (investor in debt and equity securities) and MassMutual Corporate Value Limited (parent of MassMutual Corporate Value Partners Limited); President (since 1997), MassMutual/ Darby CBO IM Inc. (manager of MassMutual/ Darby CBO LLC, a high yield bond fund); Advisory Board Member (since 1995), Kirtland Capital Partners. Frederick C. Castellani Trustee and Since Executive Vice President 46 Age: 56 President 2001 (since 2001), of the Trust SeniorVice President (1996-2001), MassMutual. Robert E. Joyal Trustee of Since Retired; President 46 Director (since 1996), Age: 58 the Trust 2003 (2001-2003), Director Antares Leverage Capital (2000-2003) and Managing Corp.; Director (since Director (2000-2001), David 1996), MassMutual High L. Babson & Company Inc.; Yield Partners II, LLC; Executive Director Director (since 1999), (1997-1999), Massachusetts MassMutual Corporate Mutual Life Insurance Value Partners Limited; Company. President (since 1999), MassMutual Corporate Investors (closed-end investment company); President (since 1999), MassMutual Participation Investors (closed-end investment company).
105 PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES
NUMBER OF PORTFOLIOS IN FUND POSITION(S) LENGTH PRINCIPAL COMPLEX NAME,ADDRESS*, HELD WITH OF TIME OCCUPATION(S) DURING OVERSEEN BY AND AGE TRUST SERVED PAST 5 YEARS OFFICER ----------------- ------------- ------- ------------------------------------------------ ------------- James S. Collins Chief Since Vice President (since 1999), Second Vice 46 Age: 45 Financial 2000 President (1990-1999), MassMutual. Officer and Treasurer of Trust Thomas M. Kinzler Vice Since Vice President and Associate General Counsel 46 Age: 47 President 1999 (since 1999), Second Vice President and and Associate General Counsel (1996-1999), Secretary MassMutual. of the Trust Vernon J. Meyer Vice Since Vice President (since 1998), MassMutual. 46 Age: 38 President 1999 of the Trust David W. O'Leary Vice Since Senior Vice President (since 2001), MassMutual; 14 Age: 42 President 2001 Senior Vice President (1999-2001), Vice of the Trust President(1996-1999), Aetna Financial Services. Toby Slodden Vice Since Executive Vice President (since 2003), Senior 46 Age: 46 President 2003 Vice President (1999-2003), Vice President of the Trust (1997-1999), MassMutual.
* The address of each Trustee and Principal Officer is the same as that for the Trust; 1295 State Street, Springfield, Massachusetts 01111. ** Each Trustee of the Trust serves until the next meeting of shareholders called for the purpose of electing Trustees and until the election and qualification of his successor or until he dies, resigns or is removed. Notwithstanding the foregoing, a Trustee shall retire and cease to serve as a Trustee as of the first board meeting following the date on which the Trustee attains the age of seventy-two years. Except, any Trustee who attained the age of seventy-two years during 2001 shall retire and cease to serve as a Trustee on or before June 1, 2003. FEDERAL TAX INFORMATION (UNAUDITED) For corporate shareholders, a portion of the ordinary dividends paid during the Fund's year ended December 31, 2003 qualified for the dividends received deduction, as follows: Large Cap Value Fund 100.00% Equity Index Fund 100.00% Enhanced Index Core Equity Fund 100.00% Growth Equity Fund 100.00% Small Cap Equity Fund 100.00% Small Company Opportunities Fund 20.33%
106 [This page is intentionally left blank.] [MASSMUTUAL FINANCIAL GROUP (SM) LOGO] Massachusetts Mutual Life Insurance Company and its affiliates, Springfield, MA 01111-0001 www.massmutual.com MassMutual Financial Group is a marketing designation (or fleet name) for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliates. L4540A 204 ITEM 2 CODE OF ETHICS. As of December 31, 2003, the Registrant adopted a Code of Ethics that applies to the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act of 2002. For the year ended December 31, 2003, there were no amendments to a provision of the Code of Ethics. A copy of its Code of Ethics is filed with this Form N-CSR under item 10 (a). ITEM 3 AUDIT COMMITTEE FINANCIAL EXPERT. The Registrant's Board of Trustees has determined that Richard H. Ayers and Richard W. Greene, both members of the Audit Committee, are audit committee financial experts as defined by the Securities and Exchange Commission (the "SEC"). Mr. Ayers and Mr. Greene are "independent" as defined by the SEC for purposes of audit committee financial expert determinations. ITEM 4 PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) AUDIT FEES: The aggregate fees paid and accrued by the Registrant for professional services rendered by its independent auditors, Deloitte & Touche LLP, for the audit of the Registrant's annual financial statements for 2003 and 2002 were $191,840 and $166,580, respectively. (b) AUDIT RELATED FEES: No such fees were billed to the Registrant by Deloitte & Touche LLP for 2003 or 2002. (c) TAX FEES: The aggregate fees paid or accrued by the Registrant for professional services rendered by Deloitte & Touche LLP for the review of Form 1120-RIC, Form 8613, excise distribution projections, distribution calculation and reasonable out of pocket expenses for 2003 and 2002 were $63,950 and $31,143, respectively. (d) ALL OTHER FEES: No such fees were billed to the Registrant by Deloitte & Touche LLP for 2003 or 2002. (e) (1) AUDIT COMMITTEE PRE-APPROVAL POLICY: All services to be performed for the Registrant by Deloitte & Touche LLP must be pre-approved by the audit committee. All services performed during 2003 and 2002 were pre-approved by the committee. (2) Not applicable. (f) Not applicable. (g) Not applicable. (h) Not applicable. ITEM 5 AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to this filing. ITEM 6 [RESERVED] ITEM 7 DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to this filing. ITEM 8 [RESERVED] ITEM 9 CONTROLS AND PROCEDURES. (a) The Registrant's Principal Executive Officer and Principal Financial Officer concluded that the Registrant's disclosure controls and procedures are effective based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"). (b) There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the Registrant's last fiscal half-year (the Registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. ITEM 10 (EXHIBITS): (a)(1) Code of Ethics Described in Item 2 is attached. (a)(2) Certifications of the Principal Executive Officer and Principal Financial Officer of the Registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a) are attached hereto as Exhibit 99CERT.302 (b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as Exhibit 99CERT.906. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) MML Series Investment Fund By (Signature and Title): /s/ Frederick C. Castellani ---------------------------------------- Frederick C. Castellani, President and Principal Executive Officer Date February 11, 2004 --------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities, and on the dates indicated. By (Signature and Title): /s/ Frederick C. Castellani ---------------------------------------- Frederick C. Castellani, President and Principal Executive Officer Date February 11, 2004 --------------------- By (Signature and Title): /s/ James S. Collins ---------------------------------------- James S. Collins, Treasurer and Principal Financial Officer Date February 11, 2004 --------------------- EX-99.CODEOFETH 3 a2129646zex-99_codeofeth.txt EX-99.CODE OF ETHICS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS OF MASSMUTUAL INSTITUIONAL FUNDS MML SERIES INVESTMENT FUND This Code of Ethics (the "Code") for Principal Executive and Senior Financial Officers has been adopted by those investment companies identified above for which Massachusetts Mutual Life Insurance Company ("MassMutual") acts as investment adviser (individually, a "Fund" and collectively, the "Funds"), to effectuate compliance with Section 406 under the Sarbanes-Oxley Act of 2002 and the rules adopted to implement Section 406. The Code applies to each Fund's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions ("Covered Officers"). A listing of positions currently within the ambit of Covered Officers for each Fund is attached as Exhibit A.(1) 1. PURPOSES OF THE CODE This Code sets forth standards and procedures that are reasonably designed to deter wrongdoing and to promote: - honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; - full, fair, accurate, timely, and understandable disclosure in reports and documents that the Funds file with, or submit to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Funds; - compliance with applicable governmental laws, rules and regulations; - the prompt internal reporting of violations of this Code to an appropriate person identified in the Code; and - accountability for adherence to this Code. It is acknowledged that, as a result of the contractual relationship between each Fund and MassMutual, of which the Covered Officers are also officers or employees, and subject to MassMutual's fiduciary duties to each Fund, the Covered Officers will, in the normal course of their duties, be involved in establishing policies and implementing decisions that may have different effects on MassMutual and the Funds. It is further acknowledged that the participation of the Covered Officers in such activities is inherent in the contractual relationship between each Fund and MassMutual and is consistent with the expectations of each Fund's Board of Trustees with respect to the performance by the Covered Officers of their duties as officers of the Funds. In general, the principles that govern honest and ethical conduct, including the avoidance of conflicts of interest between personal and professional relationships, reflect, at the minimum, the - ---------- (1) The obligations imposed by this Code on Covered Officers are separate from and in addition to any obligations that may be imposed on such persons as Covered Persons under the Code of Ethics adopted by the Funds dated August 4, 2003, under Rule 17j-1 of the Investment Company Act of 1940, as amended and any other code of conduct applicable to Covered Officers in whatever capacity they serve. This Code does not incorporate by reference any provisions of the Rule 17j-1 Code of Ethics and accordingly, any violations or waivers granted under the Rule 17j-1 Code of Ethics will not be considered a violation or waiver under this Code. 1 following: (1) the duty at all times in performing any responsibilities as a financial officer, controller, accountant or principal executive officer of a Fund, to place the interests of the Fund ahead of personal interests; (2) the fundamental standard that Covered Officers should not take inappropriate advantage of their positions; (3) the duty to assure that each Fund's financial statements and reports to shareholders are prepared honestly and accurately in accordance with applicable rules, regulations and accounting standards; and (4) the duty to conduct the Fund's business and affairs in an honest and ethical manner. Each Covered Officer should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. 2. PROHIBITIONS The specific provisions and reporting requirements of this Code are concerned primarily with promoting honest and ethical conduct and avoiding conflicts of interest between personal and professional relationships. No Covered Officer may use information concerning the business and affairs of a Fund (including the investment intentions of a Fund), or use his or her ability to influence such investment intentions, for personal gain to himself or herself, his or her family or friends or any other person or in a manner detrimental to the interests of a Fund or its shareholders. No Covered Officer may use his or her personal influence or personal relationships to influence the preparation and issuance of financial reports of a Fund whereby the Covered Officer would benefit personally to the detriment of the Fund and its shareholders. No Covered Officer shall, in connection with carrying out his or her official duties and responsibilities on behalf of a Fund: (i) employ any device, scheme or artifice to defraud a Fund or its shareholders; (ii) intentionally cause a Fund to make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading in its official documents, regulatory filings, financial statements or communications to the public; (iii) engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any Fund or its shareholders; (iv) engage in any manipulative practice with respect to any Fund; (v) intentionally cause a Fund to fail to comply with applicable laws, rules and regulations, including failure to comply with the requirement of full, fair, accurate, understandable and timely disclosure in reports and documents that a Fund files with, or submits to, the SEC and in other public communications made by the Fund; (vi) intentionally mislead or omit to provide material information to the Fund's independent auditors or to the Board of Trustees or the officers of the Fund or its investment adviser in connection with Fund related matters; (vii) fail to notify the Code Administrator (as defined in Section 7 below) promptly if he or she becomes aware of any existing or potential violations of this Code or applicable laws; or (viii) retaliate against others for, or otherwise discourage, the reporting of actual or apparent violations of this Code. 2 3. REPORTS OF CONFLICTS OF INTERESTS If a Covered Officer becomes aware of an actual or apparent conflict of interest under this Code, he or she must immediately report the matter to the Code's Administrator. Upon receipt of such report, the Code Administrator will take prompt steps to determine whether an actual conflict of interest exists or appears to exist, and if so, will take steps (if possible) to resolve the conflict or remedy the appearance thereof. If the Code Administrator determines that no actual or apparent conflict exists, the Code Administrator shall meet with the Covered Officer to advise him or her of such finding and of his or her reason for taking no action. In lieu of determining whether a conflict or appearance of conflict exists, the Code Administrator may in his or her discretion refer the matter to the affected Fund's Board of Trustees or any committee appointed by the Board to deal with such information. If the Code Administrator is involved or believed to be involved in the conflict of interest or appearance of conflict of interest, the Covered Officer shall report the matter directly to MassMutual's General Counsel, or his or her designee, who shall take the same action as described above with respect to resolving the matter. 4. WAIVERS Any Covered Officer requesting a waiver of any provision of this Code must submit a written request for such waiver to the Code Administrator, setting forth the basis of such request and all necessary facts upon which such request can be evaluated. The Code Administrator shall review such request and make a written determination thereon. In determining whether to waive any of the provisions of this Code, the Code Administrator shall consider whether the proposed action: (i) is prohibited by this Code; (ii) is consistent with honest and ethical conduct; and (iii) will result in a conflict of interest between the Covered Officer's personal and professional obligations to a Fund. In lieu of determining whether to waive any provision of this Code, the Code Administrator may in his or her discretion refer the matter to the affected Fund's Board of Trustees or any committee appointed by the Board to deal with such information. 5. REPORTING REQUIREMENTS (a) Each Covered Officer shall, upon becoming subject to this Code, be presented with a copy of this Code by the Code Administrator, and shall affirm in writing to the Code Administrator that he or she has received, read, understands and shall adhere to this Code (See Exhibit B). (b) At least annually, all Covered Officers shall be provided with a copy of the current Code by the Code Administrator, and shall certify that they have read and understand the Code and recognize that they are subject thereto (See Exhibit B). (c) At least annually, all Covered Officers shall certify that they have complied with the requirements of this Code and that they have disclosed or reported any violations of this Code to the Code Administrator (See Exhibit C). (d) The Code Administrator shall submit a quarterly report to the Board of Trustees or any committee appointed by the Board to deal with such information, containing (i) a description of any report of a conflict of interest or apparent conflict and the disposition thereof; (ii) a description of any request for a waiver from this Code and the disposition thereof; (iii) any violation of the Code that has been reported or found and the sanction imposed; and (iv) any other significant information 3 arising in connection with the Code, including any proposed amendments. (e) Each Covered Officer shall notify the Code Administrator promptly if he or she knows of or has a reasonable belief that any violation of this Code has occurred or is likely to occur. Failure to do so is itself a violation of this Code. (f) Any changes to or waivers of this Code, including "implicit" waivers as defined in applicable SEC rules, will, to the extent required, be disclosed by the Funds as provided by applicable SEC rules.(2) 6. SANCTIONS Any violations of this Code shall be subject to the imposition of such sanctions by MassMutual as may be deemed appropriate under the circumstances to achieve the purpose of this Code and may include, without limitation, a letter of censure, suspension from employment or termination of employment, in the sole discretion of MassMutual, and/or removal as an officer of the Fund, in the sole discretion of the Fund's Board of Trustees or any committee appointed by the Board to deal with such information. 7. ADMINISTRATION AND CONSTRUCTION (a) The administration of this Code of Ethics shall be the responsibility of the Code Administrator of this Code, acting under the terms of this Code and the oversight of the Board of Trustees of the Fund or any committee appointed by the Board to deal with such information. (b) The Code Administrator shall be the Compliance Officer of the Funds or his or her designee. (c) The duties of such Code Administrator will include: (i) maintaining a current list of the names of all Covered Officers; (ii) furnishing all Covered Officers a copy of this Code and initially and periodically informing them of their duties and obligations thereunder; (iii) maintaining or supervising the maintenance of all records required by this Code, including records of waivers granted hereunder; (iv) issuing interpretations of this Code which appear to the Code Administrator to be consistent with the objectives of this Code and any applicable laws or regulations; (v) conducting such inspections or investigations as shall reasonably be required to detect and report any violations of this Code, with his or her recommendations to MassMutual's General Counsel, or his or her designee, and to the Board of Trustees of the affected Fund(s) or any committee appointed by them to deal with such information; and (vi) periodically conducting educational training programs as needed to explain and reinforce the terms of this Code. - ---------- (2) An "implicit waiver" is the failure to take action within a reasonable period of time regarding a material departure from a provision of this Code that has been made known to the Code Administrator, MassMutual's General Counsel, or his or her designee, or an officer of the Trust. 4 (d) In carrying out the duties and responsibilities described under this Code, the Code Administrator may consult with such other persons as the Code Administrator shall deem necessary or desirable, including legal counsel to the Trust, legal counsel to the Trustees who are not "interested persons," as that term is defined in the Investment Company Act of 1940, as amended (the "Disinterested Trustees"), and legal counsel to the Trust's investment adviser. 8. REQUIRED RECORDS The Code Administrator shall maintain and cause to be maintained in an easily accessible place the following records for the period required by applicable SEC rules (currently six years following the end of the fiscal year of the Fund in which the applicable event or report occurred): (a) a copy of any Code which has been in effect during the period; (b) a copy of each certification pursuant to the Code made by a Covered Officer during the period; (c) a copy of each report made by the Code Administrator pursuant to this Code during the period; (d) a list of all Covered Officers who are or have been required to make reports pursuant to this Code during the period, plus those person(s) who are or were responsible for reviewing these reports; (e) a record of any request to waive any requirement of this Code, the decision thereon and the reasons supporting the decision; (f) a record of any report of any conflict of interest or appearance of a conflict of interest received by the Code Administrator or discovered by the Code Administrator during the period, the decision thereon and the reasons supporting the decision; and (g) a record of any violation of any such Code and of any action taken as a result of such violation, during the period. 9. AMENDMENTS AND MODIFICATIONS This Code (other than Exhibit A and the names of the Funds identified on the first page that have adopted the Code) may not be amended or modified except by a writing that is approved or ratified by a majority vote of the Board of Trustees and the Disinterested Trustees. 10. CONFIDENTIALITY. This Code is for the internal use of the Funds. Reports and records prepared or maintained under this Code are considered confidential and shall be maintained and protected accordingly to the extent permitted by applicable laws, rules and regulations. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Trustees and their counsel, Fund counsel, Fund officers, the independent auditors of the Funds, and MassMutual or its counsel, except as such disclosure may be required pursuant to applicable judicial or regulatory process. 5 EXHIBIT A POSITIONS COVERED BY THIS CODE OF ETHICS MASSMUTUAL INSTITUTIONAL FUNDS AND MML SERIES INVESTMENT FUND Principal Executive Officer Chief Financial Officer Treasurer Assistant Treasurer PERSONNEL OF MASSMUTUAL WHO BY VIRTUE OF THEIR JOBS PERFORM CRITICAL FINANCIAL AND ACCOUNTING FUNCTIONS FOR MASSMUTUAL ON BEHALF OF A FUND, INCLUDING: Second Vice President/Fund Operations 6 EXHIBIT B INITIAL/ANNUAL CERTIFICATION By signing below I certify that I have received, read, and understand this Code of Ethics for Principal Executive and Senior Financial Officers of the Funds (the "Code"), and further certify that I shall adhere to this Code. - ----------------------------------------------------------------------- Signature - ----------------------------------------------------------------------- (Type or Print) Name and Title - --------------------------- Date Please return the executed certification to the Code Administrator. 7 EXHIBIT C ANNUAL COMPLIANCE/REPORTING CERTIFICATION By signing below, I certify that I have complied with the requirements of this Code of Ethics for Principal Executive and Senior Financial Officers of the Funds (the "Code"), and have disclosed or reported any violations of this Code to the Code Administrator for the year ended 2003. - ----------------------------------------------------------------------- Signature - ----------------------------------------------------------------------- (Type or Print) Name and Title - --------------------------- Date Please return the executed certification to the Code Administrator. 8 EX-99.CERT 4 a2129646zex-99_cert.txt EX-99.CERT EXHIBIT-99.CERT CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002: I, Frederick C. Castellani, certify that: 1. I have reviewed this report on Form N-CSR of MML Series Investment Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report; 4. The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the Registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and c) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal half-year (the Registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and 5. The Registrant's other certifying officer(s) and I have disclosed to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: February 11, 2004 /s/ Frederick C. Castellani ----------------------------------------- Frederick C. Castellani President and Principal Executive Officer CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002: I, James S. Collins, certify that: 1. I have reviewed this report on Form N-CSR of MML Series Investment Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report; 4. The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the Registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and c) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal half-year (the Registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and 5. The Registrant's other certifying officer(s) and I have disclosed to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: February 11, 2004 /s/ James S. Collins ----------------------------------------- James S. Collins Treasurer and Principal Financial Officer EX-99.906.CERT 5 a2129646zex-99_906cert.txt EX-99.906.CERT EXHIBIT-99.906.CERT CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Frederick C. Castellani, President and Principal Executive Officer of MML Series Investment Fund (the "Registrant"), certifies to the best of his knowledge that: 1. The Registrant's periodic report on Form N-CSR for the period ended December 31, 2003 (the "Form N-CSR") fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. /s/ Frederick C. Castellani ------------------------------------------------ Frederick C. Castellani President and Principal Executive Officer Date February 11, 2004 A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission (the "Commission") or its staff upon request. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Form N-CSR with the Commission. CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 James S. Collins, Treasurer and Principal Financial Officer of MML Series Investment Fund (the "Registrant"), certifies to the best of his knowledge that: 1. The Registrant's periodic report on Form N-CSR for the period ended December 31, 2003 (the "Form N-CSR") fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. /s/ James S. Collins ------------------------------------------------ James S. Collins Treasurer and Principal Financial Officer Date FEBRUARY 11, 2004 A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission (the "Commission") or its staff upon request. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Form N-CSR with the Commission. -----END PRIVACY-ENHANCED MESSAGE-----