-----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, SD3tRXTjvXjk9ZD73M2h8aETzLBWccQUx9LyLVTSVGqf/ZnWJwYFSOFanpRiu6y3 eR2XH2pUJr0R3MAUfgGAJg== 0001193125-04-074855.txt : 20040430 0001193125-04-074855.hdr.sgml : 20040430 20040430083041 ACCESSION NUMBER: 0001193125-04-074855 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 20040430 EFFECTIVENESS DATE: 20040430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: METROPOLITAN LIFE SEPARATE ACCOUNT UL CENTRAL INDEX KEY: 0000858997 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-47927 FILM NUMBER: 04767390 BUSINESS ADDRESS: STREET 1: 1 MADISON AVE STREET 2: METROPOLITAN LIFE INSURANCE CO CITY: NEW YORK STATE: NY ZIP: 10010 BUSINESS PHONE: 2125788717 MAIL ADDRESS: STREET 1: 1 MADISON AVENUE STREET 2: LAW DEPARTMENT AREA 7 G CITY: NEW YORK STATE: NY ZIP: 10010 FILER: COMPANY DATA: COMPANY CONFORMED NAME: METROPOLITAN LIFE SEPARATE ACCOUNT UL CENTRAL INDEX KEY: 0000858997 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-06025 FILM NUMBER: 04767391 BUSINESS ADDRESS: STREET 1: 1 MADISON AVE STREET 2: METROPOLITAN LIFE INSURANCE CO CITY: NEW YORK STATE: NY ZIP: 10010 BUSINESS PHONE: 2125788717 MAIL ADDRESS: STREET 1: 1 MADISON AVENUE STREET 2: LAW DEPARTMENT AREA 7 G CITY: NEW YORK STATE: NY ZIP: 10010 485BPOS 1 d485bpos.txt EQUITY ADVANTAGE VUL AND UL II As filed with the Securities and Exchange Commission on April 30, 2004 Registration No. 033-47927 811-06025 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-6 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Post-Effective Amendment No. 18 [X] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 11 [X] Metropolitan Life Separate Account UL (Exact Name of Registrant) Metropolitan Life Insurance Company (Name of Depositor) One Madison Avenue New York, NY 10010 (Address of depositor's principal executive offices) ------------------------- James L. Lipscomb, Esq. Executive Vice President and General Counsel Metropolitan Life Insurance Company One Madison Avenue New York, NY 10010 (Name and address of agent for service) Copies to: Gary O. Cohen, Esq. and Thomas C. Lauerman, Esq. Foley & Lardner LLP 3000 K Street, N.W. Washington, D.C. 20007 It is proposed that this filing will become effective (check appropriate box) [ ] immediately upon filing pursuant to paragraph (b) [X] on May 1, 2004 pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(1) [ ] on (date) pursuant to paragraph (a)(1) of Rule 485 [ ] this post-effective amendment designates a new effective date for a previously filed post-effective amendment Title of Securities Being Registered: Interests in Metropolitan Life Separate Account UL, which funds certain Variable Universal Life Insurance Policies. PROSPECTUS FOR EQUITY ADVANTAGE VUL, A FLEXIBLE PREMIUM MULTIFUNDED LIFE INSURANCE POLICY ("POLICY") ISSUED BY METROPOLITAN LIFE INSURANCE COMPANY ("METLIFE") MAY 1, 2004 This prospectus provides you with important information about MetLife's Equity Advantage VUL Policies. However, this prospectus is not the Policy. The Policy, rather, is a separate written agreement that MetLife issues to you. You allocate net premium payments to and transfer cash value among a fixed interest account ("Fixed Account") and 42 different investment divisions of Metropolitan Life Separate Account UL ("Separate Account"). Each investment division (sometimes referred to in this prospectus as "variable investment options"), in turn, invests solely in one of 42 corresponding "Portfolios": METROPOLITAN SERIES FUND, INC. PORTFOLIOS: Davis Venture Value FI International Stock (formerly, Putnam International Stock) FI Mid Cap Opportunities (formerly, Janus Mid Cap) FI Value Leaders (formerly, FI Structured Equity) Franklin Templeton Small Cap Growth Harris Oakmark Focused Value Harris Oakmark Large Cap Value Lehman Brothers(R) Aggregate Bond Index Loomis Sayles Small Cap Met/Putnam Voyager MetLife Mid Cap Stock Index MetLife Stock Index MFS Investors Trust MFS Total Return Morgan Stanley EAFE(R) Index Neuberger Berman Partners Mid Cap Value Russell 2000(R) Index Salomon Brothers Strategic Bond Opportunities Salomon Brothers U.S. Government Scudder Global Equity State Street Research Aggressive Growth State Street Research Aurora State Street Research Bond Income State Street Research Diversified State Street Research Investment Trust State Street Research Large Cap Growth State Street Research Large Cap Value T. Rowe Price Large Cap Growth T. Rowe Price Small Cap Growth MET INVESTORS SERIES TRUST PORTFOLIOS: Harris Oakmark International Janus Aggressive Growth Lord Abbett Bond Debenture Met/AIM Mid Cap Core Equity Met/AIM Small Cap Growth MFS Research International Neuberger Berman Real Estate PIMCO PEA Innovation (formerly, PIMCO Innovation) PIMCO Total Return T. Rowe Price Mid-Cap Growth AMERICAN FUNDS INSURANCE SERIES PORTFOLIOS*: American Funds Global Small Capitalization American Funds Growth American Funds Growth-Income - -------- * The American Funds Insurance Series calls these "Funds", but this prospectus calls them "Portfolios." Separate prospectuses for the Metropolitan Series Fund Inc. ("Metropolitan Series Fund"), the Met Investors Series Trust and the American Funds Insurance Series (each a "Fund") are attached to this prospectus. They describe in greater detail an investment in the Portfolios listed above. Before purchasing a Policy, read the information in this prospectus and in the prospectus for each Fund. Keep these prospectuses for future reference. Policies issued in your state may provide different features and benefits from, and impose different costs than, those described in this prospectus. Your actual Policy and any endorsements are the controlling documents. You should read the Policy carefully for any variations in your state. Neither the Securities and Exchange Commission ("SEC") nor any state securities authority has approved or disapproved these securities, nor have they determined if this prospectus is accurate or complete. Interests in the Separate Account, the Fixed Account and the Portfolios are not deposits or obligations of, or insured or guaranteed by, the U.S. Government, any bank or other depository institution including the Federal Deposit Insurance Corporation ("FDIC"), the Federal Reserve Board or any other agency or entity or person. We do not authorize any representations about this offering other than as contained in this prospectus or its supplements or in our authorized supplemental sales material. TABLE OF CONTENTS
PAGE IN THIS SUBJECT PROSPECTUS - ------- ---------- Summary of Benefits and Risks..................................................... 3 Benefits of a Policy........................................................... 3 Risks of a Policy.............................................................. 5 Risks of Investment in the Portfolios.......................................... 7 Fee Tables........................................................................ 7 Transaction Fees............................................................... 7 Periodic Charges Other Than Portfolio Operating Expenses....................... 8 Charges for Optional Features.................................................. 9 Annual Portfolio Operating Expenses............................................ 10 MetLife........................................................................... 12 Our Separate Account That Supports the Policies................................... 12 The Portfolios.................................................................... 13 Management of Portfolios....................................................... 13 The Portfolio Share Classes That We Offer...................................... 16 Purchases and Redemptions of Portfolio Shares by Our Separate Account.......... 16 Voting Rights That You Will Have............................................... 16 The Fixed Return You Can Choose (Our Fixed Account)............................... 17 Purchasing a Policy............................................................... 17 Your Payment and Allocation of Premiums........................................... 18 Sending Communications and Payments To Us......................................... 20 Contacting Us.................................................................. 20 When Your Requests, Instructions and Notifications Become Effective............ 21 Third Party Requests........................................................... 21 Insurance Proceeds Payable If The Insured Dies.................................... 21 Death Benefit Options You Can Choose........................................... 22 Alternate Death Benefit That Automatically Applies in Some Cases............... 23 Guaranteed Minimum Death Benefit You Can Choose................................ 23 The Specified Face Amount of Your Policy....................................... 24 Your Policy's Values.............................................................. 25 Cash Value..................................................................... 25 Cash Surrender Value........................................................... 26 The Amount We Pay at Your Policy's Final Date.................................. 26 Surrenders and Partial Withdrawals From Your Policy............................... 26 Transferring Cash Value Among Your Policy's Investment Options.................... 27 Automated Investment Strategies You Can Choose................................. 28 Transfers You Can Make by Telephone............................................ 29 Borrowing From Your Policy........................................................ 30 Policy Termination and Reinstatement.............................................. 31 Optional Benefits You Can Add by Rider............................................ 31 Charges and Deductions You Pay.................................................... 32 Deductions From Premiums....................................................... 33 Transfer Charge................................................................ 33 Underwriting Charge............................................................ 33 Charges Included in the Monthly Deduction...................................... 33 Surrender Charge............................................................... 34 Charges for Optional Benefits.................................................. 37 Charges and Expenses of the Separate Account and the Portfolios................ 37 Variations in Charges.......................................................... 37 Federal Tax Matters............................................................... 37 Rights We Reserve................................................................. 40 Other Policy Provisions........................................................... 40 Sales and Administration of the Policies.......................................... 41 Distributing the Policies...................................................... 42 Commissions and Other Compensation............................................. 42 Other Payments................................................................. 43 Legal Proceedings................................................................. 44 Restrictions on Financial Transactions............................................ 44 Experts........................................................................... 44 Illustrations of Policy Benefits.................................................. 44 Financial Statements.............................................................. 44 Glossary.......................................................................... 45 Appendix A: Illustrations of Death Benefits, Cash Values and Cash Surrender Values 46
2 SUMMARY OF BENEFITS AND RISKS This summary describes important Policy benefits and risks. The sections of this prospectus following this summary discuss the Policy in more detail. The Glossary at the end of this prospectus explains certain words and phrases used in this prospectus. BENEFITS OF A POLICY Death Benefit. The Policies are designed to provide insurance protection. If a Policy is in force and upon receipt of satisfactory proof of the death of the insured, we will pay the insurance proceeds to the beneficiary of the Policy. The insurance proceeds generally equal the death benefit on the date of the insured's death plus any additional insurance provided by rider, less any outstanding Policy loan and accrued loan interest. Guaranteed Minimum Death Benefit. Generally, you may choose, in the Policy application, a period of time during which, regardless of how little cash value your Policy may have, it will continue in force and its death benefit will be guaranteed not to fall below a certain minimum. If you choose a guarantee, you will need to pay minimum premium amounts in order to keep that guarantee in force. You may later terminate (or, in some cases, reduce the length of) the guarantee, by not paying the full minimum premium amounts. Choice of Death Benefit Options. Generally, you have a choice among three options. These range from an amount equal to the Policy's "specified face amount" to an amount equal to the specified face amount plus the Policy cash value at the insured's date of death. The specified face amount is the base amount of insurance coverage under a Policy. Subject to certain limits, you can change your death benefit option after the second Policy year once in any 12 month period. A change in death benefit options may have tax consequences. Premium Flexibility. The Policy allows flexibility in making premium payments. You can make premium payments based on a schedule you choose in your application. You can make a payment that does not correspond to your schedule at any time. We can, however, limit or prohibit payments in some situations. There are certain minimum premium requirements to keep the Policy in force during the first policy year and, if you wish, to keep the guaranteed minimum death benefit in effect thereafter. Right to Examine the Policy. During the later of ten days following your receipt of the Policy (more in some states) or 45 days after you sign the completed application, you have the right to return the Policy to us. Depending on state law, we will refund the premiums you paid, the Policy's cash value or any other amount required by state insurance law. Choice of Investment Options. You can allocate your net premiums and cash value among your choice of 42 different variable investment options. The variable investment options available under the Policy include several common stock funds, including funds that invest primarily in foreign securities, as well as bond funds and balanced funds. You may also allocate premiums and cash value to our Fixed Account, which provides guarantees of interest and principal. You may change your allocation of future premiums at any time. 3 Surrender and Partial Withdrawals. You may surrender your Policy for its cash surrender value at any time. In addition, subject to certain limits, you may withdraw part of your cash surrender value from your Policy. Your Policy's cash surrender value equals your cash value, reduced by any outstanding Policy loans (plus accrued interest) and by any applicable surrender charge. A surrender or partial withdrawal may have tax consequences. Transfers and Automated Investment Strategies. Subject to limitations, you may transfer your Policy's cash value among the variable investment options or between those options and the Fixed Account. You may also elect one of five Automated Investment Strategies that allow you to transfer funds periodically from the Fixed Account to the variable investment options, or among such options in accordance with an asset allocation model that you choose, based on your risk tolerance level. You may make other transfers at any time, subject to certain limitations and restrictions, (See "Transferring Cash Value Among your Policy's Investment Options".) Loans. Subject to certain limits, you may borrow against your Policy's cash value. The maximum loan amount you may take is the Policy's cash value net of the surrender charge less two monthly deductions (in most states) and less all other outstanding Policy loans. We charge you a maximum annual interest rate of 6% (4.6% for Policy years 11 through 15, 4.3% for Policy years 16 through 20 and 4.0% after Policy year 20) on your loan. However, we credit you with an annual return of 4% on amounts that you borrow (rather than the return that such amounts would otherwise earn under our variable investment options or Fixed Account). Loans may have tax consequences. Tax Advantages. If you meet certain requirements, you will pay income taxes on cash value you receive (through withdrawals or surrenders or at the Final Date of your Policy) only to the extent that the cumulative amounts you have received exceed the cumulative premiums you have paid. The death benefit may be subject to Federal and state estate taxes, but your beneficiary will generally not be subject to income tax on the death benefit. Exchange Privilege. Within the first 24 Policy months (or within 24 Policy months after a specified face amount increase you have requested), you may transfer all of your cash value (or the cash value attributable to a specified face amount increase) to the Fixed Account at no charge. The purpose of the exchange privilege is to provide you the option of fixed Policy values and benefits. In some states however, we implement this by permitting you to exchange your Policy (or the portion attributable to a specified face amount increase) to a flexible premium fixed benefit life insurance policy, which we make available. Rider Benefits. We offer several riders that provide supplemental benefits under the Policy, such as the Disability Waiver of Premium Benefit which provides for the payment of certain premium amounts on proof of disability of the primary insured. We generally deduct any monthly charges for these riders as part of the monthly deduction. Your sales representative can help you determine whether any of these riders are suitable for you. These riders may not be available in all states. Personalized Illustrations. You will receive personalized illustrations in connection with the purchase of this Policy that reflect your own particular circumstances. These hypothetical illustrations may help you to understand the long-term effects of different levels of investment performance, the possibility of termination, and the charges and deductions under the Policy. They will also 4 help you to compare this Policy to other life insurance policies. The personalized illustrations are based on hypothetical rates of return and are not a representation or guarantee of investment returns or cash value. We have included an example of such an illustration as Appendix A to this prospectus. RISKS OF A POLICY Investment Risk. MetLife does not guarantee the investment performance of the variable investment options, and you should consider your risk tolerance before selecting any of these options. You will be subject to the risk that investment performance will be unfavorable and that your cash value will decrease. In addition, we deduct Policy fees and charges from your Policy's cash value, which can significantly reduce your Policy's cash value. During times of poor investment performance, these deductions will have an even greater impact on your Policy's cash value. It is possible to lose your full investment, and your Policy could terminate without value, unless you pay additional premiums. If you allocate cash value to the Fixed Account, we credit such cash value with a declared rate of interest. You assume the risk that the rate may decrease, although it will never be lower than the guaranteed minimum annual effective rate of 3%. Surrender and Withdrawal Risks. The Policies are designed to provide lifetime insurance protection. They are not offered primarily as an investment, and are not suitable as a short-term savings vehicle. If you surrender the Policy within the first 15 Policy years (or within the first 15 years following a face amount increase), you will be subject to a surrender charge as well as income tax on any gain that is distributed or deemed to be distributed from the Policy. You will also be subject to a surrender charge if you withdraw more than 10% of your cash surrender value in any of the first 15 Policy years (or the first 15 years following a specified face amount increase). You should purchase the Policy only if you have the financial ability to keep it in force for a substantial period of time. You should not purchase the Policy if you intend to surrender all or part of the Policy's cash value in the near future. Even if you do not ask to surrender your Policy, surrender charges may play a role in determining whether your Policy will terminate without value because surrender charges determine the cash surrender value, which is a measure we use to determine whether your Policy will enter the grace period (and possibly terminate). Risk of Policy Termination. Your Policy may terminate without value if you have paid an insufficient amount of premiums or if the investment experience of the investment divisions is poor. If your cash surrender value is not enough to pay a monthly deduction (the charge we deduct from your Policy's cash value every month) and no minimum guaranteed death benefit is in effect, your Policy will terminate without value, unless you make a premium payment sufficient to cover two monthly deductions within the 61-day grace period. If your Policy does terminate, your insurance coverage also will terminate (although you will be given an opportunity to reinstate your Policy and coverage if you satisfy certain requirements). If your Policy terminates when there is an outstanding loan, there may be adverse tax consequences. Certain Tax Risks. We anticipate that the Policy should generally be deemed a life insurance contract under Federal tax law. There is less guidance, however, with respect to Policies issued on a substandard risk basis, and it is not clear whether such Policies will in all cases satisfy the applicable requirements. Assuming that a Policy qualifies as a life insurance contract for Federal income tax purposes, you should not be deemed to be in receipt of any 5 portion of your Policy's cash value until there is an actual distribution from the Policy. Moreover, insurance proceeds payable under the Policy should be excludable from the gross income of the beneficiary. Although the beneficiary generally should not have to pay Federal income tax on the insurance proceeds, other taxes, such as estate taxes, may apply. If you pay more than a certain amount of premiums, you may cause your Policy to become a "modified endowment contract." If it does, you will pay income taxes on loans and other amounts we pay out to you (except for payment of insurance proceeds), to the extent of any gains in your Policy (which is generally the excess of cash value over the premiums paid). In this case, an additional 10% tax penalty may also apply. If the Policy is not a modified endowment contract, distributions generally will be treated first as a return of basis or investment in the contract and then as taxable income. Moreover, loans will generally not be treated as distributions. Finally, neither distributions nor loans from a Policy that is not a modified endowment contract are subject to the 10% penalty tax. As with any taxation matter, you should consult with and rely on the advice of your own tax advisor. Loan Risks. A policy loan, whether or not repaid, will affect the cash value of your Policy over time because we subtract the amount of the loan from the variable investment options or Fixed Account as collateral, and hold it in your Policy loan account. This loan collateral does not participate in the investment experience of the investment divisions or receive the interest rate credited to the Fixed Account either of which may be higher than the interest rate credited on the amount you borrow. Any unpaid loan (plus accrued interest) also reduces the Policy's insurance proceeds paid to your beneficiary. In addition, your Policy may terminate if your outstanding loan and accrued loan interest reduces the cash surrender value to zero unless the guaranteed minimum death benefit is in effect. If you surrender your Policy or your Policy terminates while there is an outstanding loan, there will generally be Federal income tax payable on the amount by which loans and any prior tax-free withdrawals exceed the premiums paid. Particularly because loans and partial withdrawals reduce your Policy's cash surrender value, any remaining cash surrender value may be insufficient to pay the income tax due. Limitations on Access to Cash Value. We limit loans and partial withdrawals of cash value from the Policy to amounts not less than $500 and not more than the cash surrender value less two monthly deductions. Limitations on Transfers. We may limit transfers to four per Policy year and may limit transfers from the Fixed Account to one each year on the Policy anniversary date. We do not currently charge for transfers, but we reserve the right to charge up to $25 per transfer, except for transfers under the Automated Investment Strategies. We have adopted procedures intended to limit excessive transfer activity that may adversely affect other Policy owners. In addition, each Fund may restrict or refuse certain transfers among, or purchases of shares in their Portfolios as a result of certain market timing activities. You should read each Fund's prospectus for more details. Policy Charge and Expense Increase. We have the right to increase certain Policy charges. Tax Law Changes. Tax laws, regulations, and interpretations have often been changed in the past and such changes continue to be proposed. To the 6 extent that you purchase a Policy based on expected tax benefits, relative to other financial or investment products or strategies, there is no certainty that such advantages will always continue to exist. RISKS OF INVESTMENT IN THE PORTFOLIOS A comprehensive discussion of the risks associated with investment in the Portfolios can be found in the prospectus for each of the Funds attached at the end of this prospectus. There is a possibility that fees and expenses of the Portfolios may increase (or decrease). There is no assurance that any of the Portfolios will achieve its stated investment objective. FEE TABLES The following tables describe the fees and expenses that a Policy Owner will pay when buying, owning, and surrendering the Policy. In certain cases, we have the right to increase our charges for new Policies, as well as for Policies already outstanding. The maximum charges in such cases are shown in the far right-hand column of each of the first three tables below. TRANSACTION FEES This table describes the fees and expenses that a Policy Owner will pay at the time that he or she buys the Policy, surrenders the Policy, or transfers cash value among the variable investment options or the Fixed Account.
- --------------------------------------------------------------------------------------- MAXIMUM WHEN CHARGE IS CURRENT AMOUNT AMOUNT CHARGE DEDUCTED DEDUCTED WE CAN DEDUCT - --------------------------------------------------------------------------------------- Sales Charge On payment of 2.25% of Each Same as Current premium Premium Paid Amount - --------------------------------------------------------------------------------------- State Tax Imposed on On payment of 2.00% of Each Same as Current Premiums premium Premium Paid Amount - --------------------------------------------------------------------------------------- Federal Tax Imposed on On payment of 1.25% of Each Same as Current Premiums premium Premium Paid Amount - --------------------------------------------------------------------------------------- Surrender Charge/1/ On surrender or In years 1 and 2, the Same as Current termination of your surrender charge is the Amount Policy in the first 15 amount of premiums Policy years (or the you have actually paid first 15 years after a to date up to the specified face amount Maximum Surrender increase) Charge Premium (less in other years--see footnote 2) ----------------------------------------------- On partial withdrawal A pro-rata portion of of more than your the surrender charge Policy's 10% annual that would apply if you free withdrawal had made a full amount surrender at the time of the withdrawal ----------------------------------------------- On a specified face 50% of a pro-rata amount reduction that portion of the you request surrender charge that would apply if you had made a full surrender - --------------------------------------------------------------------------------------- Transfer Fee for On transfer of cash Not currently charged $25 per transfer non-automated transfers value among variable investment options and to and from the Fixed Account - ---------------------------------------------------------------------------------------
/1/Because the details of this surrender charge are complex, this table does not show all of those details, such as when there have been previous specified face amount increases, decreases or withdrawals. Please refer to "Charges and Deductions You Pay--Surrender Charge" for more information. /2/In years 3 through 15, the surrender charge is a declining percentage of the surrender charge in year 2, beginning with 90% in year 3 and reaching 0% after year 15. Please refer to "Charges and Deductions You Pay--Surrender Charge" for an explanation of the Maximum Surrender Charge Premium and other details. 7 PERIODIC CHARGES OTHER THAN PORTFOLIO OPERATING EXPENSES This table describes other fees and expenses that a Policy Owner will pay periodically during the time that he or she owns the Policy, not including charges for optional features (riders) or the fees and expenses of the Portfolios.
WHEN CHARGE IS CURRENT AMOUNT MAXIMUM AMOUNT CHARGE DEDUCTED DEDUCTED WE CAN DEDUCT - ---------------------------------------------------------------------------------------------- Cost of Term Monthly, on the Insurance/1/ monthly deduction date Lowest and $.01 to $37.98 each month $.06 to $53.58 each Highest Charge per $1000 of term month per $1,000 of Among All insurance amount/2/ term insurance amount Possible Insureds $.20 each month per $.20 each month per Charge for a male $1000 of term insurance $1,000 of term insured, age 40, in amount insurance amount the preferred nonsmoker underwriting class with a specified face amount of $100,000 in the first policy year - ---------------------------------------------------------------------------------------------- Administration Monthly, on the $35 per month (less Same as Current Rate Charge monthly deduction depending on Age of date insured and Policy year-- see footnote 3) - ---------------------------------------------------------------------------------------------- Mortality and Monthly, on the annual rate of: Same as Current Expense Risk monthly deduction .90% for Policy years 1-10 Amount Charge (annual date .60% for Policy years 11-15 rate imposed on .30% after Policy year 15 cash value in our Separate Account) - ---------------------------------------------------------------------------------------------- Underwriting Monthly, on the $5 per month $5 per month Charge monthly deduction date, for the first 12 months after you increase your specified face amount - ---------------------------------------------------------------------------------------------- Loan Interest Annually (or on loan annual rate of: Same as Current Rate Spread/4/ (on loan termination, if earlier) 2% for Policy years 1-10 amount) .6% for Policy years 11-15 .3% for Policy years 16-20 0% after Policy year 20
- -------- /1/ The cost of term insurance charge varies based on individual characteristics, including the insured's age, risk class and, in most cases, sex. It also varies depending on how long the Policy has been outstanding. The cost of term insurance charges shown are probably not representative of the charges that you would pay. You can obtain more information about the cost of term insurance or other charges that would apply for a particular insured by contacting your sales representative. /2/ The term insurance amount is the difference between the death benefit (generally discounted at the monthly equivalent of 3% per year) and the Policy's cash value. /3/ $35 is the administration charge during the first Policy year for insureds Age 41 and over. The charge is less during the first Policy year, for younger insureds ($30 for Ages 26-40, $20 under Age 25). In the second and later Policy years, the charge reduces to $10 for all insureds and, if you pay the "required administrative premium" shown on page 3 of your Policy, the charge reduces further depending on the specified face amount of your Policy ($7 for less than $100,000, $6 for $100,000-$249,999 and $5 for $250,000 or more). We will deduct any amount of the first Policy year's administration charges that remains unpaid at the time of any full surrender or other termination of a Policy during its first year. /4/ We charge interest on Policy loans but credit you with interest on the amount of the cash value we hold as collateral for the loan. The loan interest spread is the excess of the interest rate we charge over the interest rate we credit. 8 CHARGES FOR OPTIONAL FEATURES (RIDERS) This table describes the charges you will pay periodically for any of the indicated optional benefits ("riders") that you choose to add to your Policy.
WHEN CHARGE IS CURRENT AMOUNT MAXIMUM AMOUNT OPTIONAL FEATURE DEDUCTED DEDUCTED WE CAN DEDUCT - --------------------------------------------------------------------------------------------- Disability Waiver of Monthly, on the Premium Benefit/1/ monthly deduction $.13 to $.60 per $100 $.14 to $.67 per $100 date of covered premium of covered premium Lowest and Highest amount amount Charge Among All Possible Insureds $.34 per $100 of $.37 per $100 of covered premium covered premium Charge for a male insured, amount amount age 40, in the preferred nonsmoker underwriting class with a specified face amount of $200,000 - --------------------------------------------------------------------------------------------- Disability Waiver of Monthly, on the Monthly Deduction monthly deduction $.01 to $.45 per $1000 $.02 to $.45 per $1000 Benefit/1/ date of term insurance of term insurance amount amount Lowest and Highest Charge Among All $.02 per $1000 of $.03 per $1000 of Possible Policies term insurance term insurance amount amount Charge for a male insured, age 40, in the preferred nonsmoker underwriting class with a specified face amount of $200,000 - --------------------------------------------------------------------------------------------- Accidental Death Benefit/1/ Monthly, on the monthly deduction $.05 to $.09 per $1000 $.07 to $.12 per $1000 Lowest and Highest date of accidental death of accidental death Charge Among All coverage amount coverage amount Possible Insureds $.05 per $1000 of $.07 per $1000 of Charge for a male insured, accidental death accidental death age 40, in the preferred coverage amount coverage amount nonsmoker underwriting class with a specified face amount of $200,000 - --------------------------------------------------------------------------------------------- Long Term Care Monthly, on the Guaranteed Purchase monthly deduction $.20 to $1.88 per $100 Same as Current Option/1/ date of daily coverage Amount amount Lowest and Highest Same as Current Charge Among All $.48 per $100 of daily Amount Possible Policies coverage amount Charge for a male insured, age 40, in the preferred nonsmoker underwriting class with a specified face amount of $100,000 - --------------------------------------------------------------------------------------------- Children's Term Insurance Monthly, on the $.39 per $1,000 of $.60 per $1,000 of Benefit (identical charge monthly deduction child's term child's term for all eligible children and date insurance amount insurance amount all years) - --------------------------------------------------------------------------------------------- Spouse term Insurance Monthly, on the Benefit/1/ monthly deduction $.07 to $3.90 per $.16 to $3.90 per date $1000 of spouse's $1000 of spouse's Lowest and Highest term insurance term insurance Charge Among All amount amount Possible Policies $.11 per $1000 of $.31 per $1000 of Charge for a female spouse's term spouse's term insured, age 40, in the insurance amount insurance amount preferred nonsmoker underwriting class with a specified face amount of $100,000 - --------------------------------------------------------------------------------------------- Accelerated Death Benefit Not Applicable No Charge No Charge
/1/ The charges for these optional features vary based on individual characteristics, including the insured's age, risk class and, in most cases, sex. The charges shown are probably not representative of the charges that you would pay. You can obtain more information about the charges that would apply for a particular insured by contacting your sales representative. 9 ANNUAL PORTFOLIO OPERATING EXPENSES This table describes the fees and expenses that the Portfolios will pay and that therefore a Policy owner will indirectly pay periodically during the time that he or she owns a Policy. The table shows the lowest and highest fees and expenses charged by the Portfolios for the fiscal year ended December 31, 2003, before and after any contractual fee waivers and expense reimbursements. More detail concerning each Portfolio's fees and expenses is contained in the table that follows this table and in the attached Fund prospectuses.
LOWEST* HIGHEST* - ------------------------------------------------------------------------------------- Gross Total Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets, including management fees, distribution (Rule 12b-1) fees and other expenses) .31% 1.32% - ------------------------------------------------------------------------------------- Net Total Annual Portfolio Operating Expenses (net of any contractual fee waivers and expense reimbursements) .31% 1.20%**
- -------- *The lowest and highest percentages have been selected after adjustment of the percentage for all Portfolios (on a consistent basis) to reflect any changes in expenses during the 12 months ended December 31, 2003 or expected to occur during the 12 months ended December 31, 2004. **Consists of expenses of the Harris Oakmark International Portfolio after the fee waivers and expense reimbursements reflected for that Portfolio in the table below. This table describes the annual operating expenses for each Portfolio for the year ended December 31, 2003, as a percentage of the Portfolio's average daily net assets for the year (anticipated annual operating expenses for 2004 for the Neuberger Berman Real Estate Portfolio). Net Total Annual Expenses do not reflect any expense reductions that certain Portfolios achieved as a result of directed brokerage arrangements.
GROSS TOTAL FEE WAIVERS NET TOTAL MANAGEMENT OTHER 12B-1 ANNUAL AND EXPENSE ANNUAL FEES EXPENSES FEES EXPENSES REIMBURSEMENTS EXPENSES - ---------------------------------------------------------------------------------------------------------- METROPOLITAN SERIES FUND (CLASS A SHARES) - ---------------------------------------------------------------------------------------------------------- Davis Venture Value .74% .05% .00% .79% .00% .79% - ---------------------------------------------------------------------------------------------------------- FI International Stock .86% .23% .00% 1.09% .00% 1.09% - ---------------------------------------------------------------------------------------------------------- FI Mid Cap Opportunities .69% .08% .00% .77% .00% .77% - ---------------------------------------------------------------------------------------------------------- FI Value Leaders .67% .07% .00% .74% .00% .74% - ---------------------------------------------------------------------------------------------------------- Franklin Templeton Small Cap Growth .90% .42% .00% 1.32% .17% 1.15%/(a)/ - ---------------------------------------------------------------------------------------------------------- Harris Oakmark Focused Value .75% .05% .00% .80% .00% .80% - ---------------------------------------------------------------------------------------------------------- Harris Oakmark Large Cap Value .74% .09% .00% .83% .00% .83% - ---------------------------------------------------------------------------------------------------------- Lehman Brothers Aggregate Bond Index .25% .09% .00% .34% .00% .34% - ---------------------------------------------------------------------------------------------------------- Loomis Sayles Small Cap .90% .09% .00% .99% .00% .99% - ---------------------------------------------------------------------------------------------------------- Met/Putnam Voyager .80% .27% .00% 1.07% .07% 1.00%/(a)/ - ---------------------------------------------------------------------------------------------------------- MetLife Mid Cap Stock Index .25% .15% .00% .40% .00% .40% - ---------------------------------------------------------------------------------------------------------- MetLife Stock Index .25% .06% .00% .31% .00% .31% - ---------------------------------------------------------------------------------------------------------- MFS Investors Trust .75% .36% .00% 1.11% .11% 1.00%/(a)/ - ---------------------------------------------------------------------------------------------------------- MFS Total Return .50% .19% .00% .69% .00% .69% - ---------------------------------------------------------------------------------------------------------- Morgan Stanley EAFE Index .30% .41% .00% .71% .00% .71% - ---------------------------------------------------------------------------------------------------------- Neuberger Berman Partners Mid Cap Value .69% .11% .00% .80% .00% .80% - ----------------------------------------------------------------------------------------------------------
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GROSS TOTAL FEE WAIVERS NET TOTAL MANAGEMENT OTHER 12B-1 ANNUAL AND EXPENSE ANNUAL FEES EXPENSES FEES EXPENSES REIMBURSEMENTS EXPENSES - ------------------------------------------------------------------------------------------------------------ Russell 2000 Index .25% .22% .00% .47% .00% .47% - ------------------------------------------------------------------------------------------------------------ Salomon Brothers Strategic Bond Opportunities .65% .16% .00% .81% .00% .81% - ------------------------------------------------------------------------------------------------------------ Salomon Brothers U.S. Government .55% .10% .00% .65% .00% .65% - ------------------------------------------------------------------------------------------------------------ Scudder Global Equity .64% .20% .00% .84% .00% .84% - ------------------------------------------------------------------------------------------------------------ State Street Aggressive Growth .73% .08% .00% .81% .00% .81% - ------------------------------------------------------------------------------------------------------------ State Street Research Aurora .85% .08% .00% .93% .00% .93% - ------------------------------------------------------------------------------------------------------------ State Street Research Bond Income .40% .07% .00% .47% .00% .47% - ------------------------------------------------------------------------------------------------------------ State Street Research Diversified .44% .07% .00% .51% .00% .51% - ------------------------------------------------------------------------------------------------------------ State Street Research Investment Trust .49% .07% .00% .56% .00% .56% - ------------------------------------------------------------------------------------------------------------ State Street Research Large Cap Growth .73% .07% .00% .80% .00% .80% - ------------------------------------------------------------------------------------------------------------ State Street Research Large Cap Value .70% .35% .00% 1.05% .10% .95%/(a)/ - ------------------------------------------------------------------------------------------------------------ T. Rowe Price Large Cap Growth .63% .16% .00% .79% .00% .79% - ------------------------------------------------------------------------------------------------------------ T. Rowe Price Small Cap Growth .52% .11% .00% .63% .00% .63% - ------------------------------------------------------------------------------------------------------------ MET INVESTORS SERIES TRUST (CLASS A SHARES) - ------------------------------------------------------------------------------------------------------------ Harris Oakmark International .85% .36% .00% 1.21% .01% 1.20%/(b)/ - ------------------------------------------------------------------------------------------------------------ Janus Aggressive Growth .78% .12% .00% .90% .00% .90%/(b)/ - ------------------------------------------------------------------------------------------------------------ Lord Abbett Bond Debenture .60% .10% .00% .70% .00% .70%/(d)/ - ------------------------------------------------------------------------------------------------------------ Met/AIM Mid Cap Core Equity .75% .21% .00% .96% .01% .95%/(b)/ - ------------------------------------------------------------------------------------------------------------ Met/AIM Small Cap Growth .90% .26% .00% 1.16% .11% 1.05%/(b)/ - ------------------------------------------------------------------------------------------------------------ MFS Research International .80% .31% .00% 1.11% .01% 1.10%/(b)/ - ------------------------------------------------------------------------------------------------------------ Neuberger Berman Real Estate .70% .41% .00% 1.11% .21% .90%/(b)(c)/ - ------------------------------------------------------------------------------------------------------------ PIMCO PEA Innovation .95% .31% .00% 1.26% .16% 1.10%/(b)/ - ------------------------------------------------------------------------------------------------------------ PIMCO Total Return .50% .09% .00% .59% .00% .59%/(d)/ - ------------------------------------------------------------------------------------------------------------ T. Rowe Price Mid- Cap Growth .75% .17% .00% .92% .00% .92%/(b)/ - ------------------------------------------------------------------------------------------------------------ AMERICAN FUNDS INSURANCE SERIES (CLASS 2 SHARES)/(E)/ - ------------------------------------------------------------------------------------------------------------ American Funds Global Small Capitalization .80% .03% .25% 1.08% .00% 1.08% - ------------------------------------------------------------------------------------------------------------ American Funds Growth .37% .02% .25% .64% .00% .64% - ------------------------------------------------------------------------------------------------------------ American Funds Growth-Income .33% .01% .25% .59% .00% .59% - ------------------------------------------------------------------------------------------------------------
- -------- /(a)/ The Metropolitan Series Fund and its affiliate MetLife Advisers, LLC ("MetLife Advisers") have entered into an Expense Agreement under which MetLife Advisers LLC will waive investment management fees and/or pay expenses (other than brokerage costs, interest, taxes or extraordinary expenses) ("Expenses") attributable to the Class A shares of these Portfolios of the Metropolitan Series Fund, so that the Net Total Annual Expenses will not exceed, at any time 11 prior to April 30, 2005, the percentages shown above. Under the Expense Agreement, if certain conditions are met, the Franklin Templeton Small Cap Growth Portfolio, the MFS Investors Trust Portfolio and the State Street Research Large Cap Value Portfolio may reimburse MetLife Advisers for fees it waived and Expenses it paid if, in the future, actual Expenses of the Portfolios are less than the expense limits. /(b)/ Met Investors Series Trust and its affiliate Met Investors Advisory LLC have entered into an Expense Limitation Agreement under which Met Investors Advisory LLC has agreed to waive or limit its fees and to assume other expenses so that the Net Total Annual Expenses of each Portfolio (other than interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with generally accepted accounting principles, and other extraordinary expenses not incurred in the ordinary course of each Portfolio's business) will not exceed, at any time prior to April 30, 2005, the percentages shown above in the right hand column (.95% in the case of the T. Rowe Price Mid-Cap Growth Portfolio). Under certain circumstances, any fees waived or expenses reimbursed by Met Investors Advisory LLC may, with the approval of the Trust's Board of Trustees, be repaid by the applicable Portfolio to Met Investors Advisory LLC. Due to expense waivers in addition to those shown above, actual Net Total Expenses for the year ended December 31, 2003, for the following Portfolios, were: 1.16% for the Harris Oakmark International Portfolio, .89% for the Janus Aggressive Growth Portfolio, .93% for the Met/AIM Mid Cap Core Equity Portfolio, 1.04% for the Met/AIM Small Cap Growth Portfolio, 1.09% for the MFS Research International Portfolio, and .91% for the T. Rowe Price Mid-Cap Growth Portfolio. /(c)/ Expenses for the Neuberger Berman Real Estate Portfolio are annualized estimates for the year ending December 31, 2004, based on the Portfolio's May 1, 2004 start date. /(d)/ Other Expenses reflect the repayment by the Portfolio of fees previously waived by Met Investors Advisory LLC under the terms of the Expense Limitation Agreement in the following amounts: .03% for the Lord Abbett Bond Debenture Portfolio and .02% for the PIMCO Total Return Portfolio. /(e)/ The American Funds Insurance Series has adopted a Distribution Plan under Rule 12b-1 of the Investment Company Act of 1940. Under the Distribution Plan the Portfolios pay an annual fee to compensate certain other parties for promoting, selling and servicing the shares of the Portfolio. The Distribution Plan is described in more detail in the American Funds Insurance Series prospectus. The American Funds Insurance Series pays MetLife for its distribution-related services and expenses, an amount equal to an annual rate of 0.25% of the assets attributable to the Policies. An Investment Adviser or subadviser of a Portfolio or its affiliates may make payments to MetLife and/or certain MetLife affiliates that are based on a percentage of assets of the Portfolios attributable to the Policies and certain other variable insurance products that we and our affiliates issue. These percentages differ and some Advisers (or other affiliates) may pay us more than others. These percentages currently range up to 0.50% of assets. METLIFE MetLife is a wholly-owned subsidiary of MetLife, Inc., a publicly traded company. Our main office is located at One Madison Avenue, New York, New York 10010. We are obligated to pay all benefits under the policies. OUR SEPARATE ACCOUNT THAT SUPPORTS THE POLICIES Our Separate Account receives premium payments from owners of the Policies described in this prospectus and other variable life insurance policies that we issue. Income and realized and unrealized capital gains and losses of the Separate Account are credited to the Separate Account without regard to any of our other income or capital gains and losses. We will keep an amount in the Separate Account that at least equals the value of our commitments to policy owners that are based on their investments in the Separate Account. We can also keep charges that we deducted and other excess amounts in the Separate Account or we can take the excess out of the Separate Account. The assets in the Separate Account legally belong to us, but they are held solely for the benefit of investors in the Separate Account and no one else, including our other creditors. This means that, except for excess assets that we would be free to withdraw, the assets of the Separate Account are not available to meet the claims of our general creditors, and must be used for the sole purpose of supporting the cash values of the variable life insurance policies whose premiums the Separate Account receives. [SIDEBAR: Each Separate Account investment division invests in a corresponding Portfolio of a Fund.] 12 The Separate Account has subdivisions, called "investment divisions." Each investment division corresponds to one of our variable investment options and invests its assets exclusively in shares of a corresponding Portfolio of a Fund. We can add new investment divisions to or eliminate investment divisions from the Separate Account and can add and eliminate variable investment options from your Policy. You can designate how you would like your net premiums and cash value to be allocated among the available investment divisions and our Fixed Account. Amounts you allocate to each investment division receive the investment experience of the investment division, and you bear this investment risk. THE PORTFOLIOS [SIDEBAR: You should carefully review the investment objectives, practices, and risks of each Portfolio, which are described in the appropriate Fund prospectuses that are attached to this prospectus.] Metropolitan Series Fund, Met Investors Series Trust and American Funds Insurance Series is each a "series" type of mutual fund, which is registered as an open-end management investment company under the Investment Company Act of 1940 (the "1940 Act"). Each Fund is divided into separate investment Portfolios, each of which issues its own class or "series" of stock in which a corresponding investment division of the Separate Account invests. You should read the Fund prospectuses that are attached to this prospectus. They contain information about each Fund and its Portfolios, including the investment objectives, strategies, risks and sub-advisers that are associated with each Portfolio. They also contain information on the different separate accounts that invest in each Fund (which may or may not be related to MetLife) and certain risks that may arise when diverse separate accounts, funding diverse types of insurance products, all invest in the same Fund. MANAGEMENT OF PORTFOLIOS Each Fund has an investment adviser who is responsible for overall management of the Fund. These investment advisers have contracted with sub-advisers to make the day-to-day investment decisions for some of the Portfolios. The adviser, any sub-adviser and investment objective of each Portfolio are as follows:
PORTFOLIO SUB-ADVISER INVESTMENT OBJECTIVE - ----------------------------------------------------------------------------------- METROPOLITAN SERIES FUND, INC. ADVISER: METLIFE ADVISERS, LLC/1/ CLASS A SHARES - ----------------------------------------------------------------------------------- Davis Venture Value Davis Selected Advisers, Growth of capital L.P./2/ - ----------------------------------------------------------------------------------- FI International Stock Fidelity Management & Long-term growth of Research Company/3/ capital - ----------------------------------------------------------------------------------- FI Mid Cap Opportunities/4/ Fidelity Management & Long-term growth of Research Company/5/ capital - ----------------------------------------------------------------------------------- FI Value Leaders Fidelity Management & Long-term growth of Research Company capital - ----------------------------------------------------------------------------------- Franklin Templeton Small Cap Franklin Advisers, Inc. Long-term capital growth Growth - ----------------------------------------------------------------------------------- Harris Oakmark Focused Value Harris Associates L.P. Long-term capital appreciation - ----------------------------------------------------------------------------------- Harris Oakmark Large Cap Value Harris Associates L.P. Long-term capital appreciation - ----------------------------------------------------------------------------------- Lehman Brothers Aggregate Metropolitan Life To equal the performance Bond Index Insurance Company of the Lehman Brothers Aggregate Bond Index - -----------------------------------------------------------------------------------
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PORTFOLIO SUB-ADVISER INVESTMENT OBJECTIVE - --------------------------------------------------------------------------------------- Loomis Sayles Small Cap Loomis, Sayles & Long-term capital growth Company, L.P. from investments in common stocks or other equity securities - --------------------------------------------------------------------------------------- Met/Putnam Voyager Putnam Investment Capital appreciation Management, LLC - --------------------------------------------------------------------------------------- MetLife Mid Cap Stock Index Metropolitan Life To equal the performance Insurance Company of the Standard & Poor's Mid Cap 400 Composite Stock Price Index - --------------------------------------------------------------------------------------- MetLife Stock Index Metropolitan Life To equal the performance Insurance Company of the Standard & Poor's 500 Composite Stock Price Index - --------------------------------------------------------------------------------------- MFS Investors Trust Massachusetts Financial Long-term growth of Services Company capital with a secondary objective to seek reasonable current income - --------------------------------------------------------------------------------------- MFS Total Return Massachusetts Financial Favorable total return Services Company through investment in a diversified portfolio - --------------------------------------------------------------------------------------- Morgan Stanley EAFE Index Metropolitan Life To equal the performance Insurance Company of the MSCI EAFE Index - --------------------------------------------------------------------------------------- Neuberger Berman Partners Mid Neuberger Berman Capital growth Cap Value Management Inc. - --------------------------------------------------------------------------------------- Russell 2000 Index Metropolitan Life To equal the return of the Insurance Company Russell 2000 Index - --------------------------------------------------------------------------------------- Salomon Brothers Strategic Bond Salomon Brothers Asset To maximize total return Opportunities Management Inc/6/ consistent with preservation of capital - --------------------------------------------------------------------------------------- Salomon Brothers U.S. Salomon Brothers Asset To maximize total return Government Management Inc consistent with preservation of capital and maintenance of liquidity - --------------------------------------------------------------------------------------- Scudder Global Equity Deutsche Investment Long-term growth of Management Americas Inc. capital - --------------------------------------------------------------------------------------- State Street Research Aggressive State Street Research & Maximum capital Growth Management Company appreciation - --------------------------------------------------------------------------------------- State Street Research Aurora State Street Research & High total return, Management Company consisting principally of capital appreciation - --------------------------------------------------------------------------------------- State Street Research Bond State Street Research & Competitive total return Income Management Company primarily from investing in fixed-income securities - --------------------------------------------------------------------------------------- State Street Research Diversified State Street Research & High total return while Management Company attempting to limit investment risk and preserve capital - --------------------------------------------------------------------------------------- State Street Research State Street Research & Long-term growth of Investment Trust Management Company capital and income - --------------------------------------------------------------------------------------- State Street Research Large Cap State Street Research & Long-term growth of Growth Management Company/7/ capital - --------------------------------------------------------------------------------------- State Street Research Large Cap State Street Research & Long-term growth of Value Management Company capital - --------------------------------------------------------------------------------------- T. Rowe Price Large Cap Growth T. Rowe Price Associates, Long-term growth of Inc. capital, and secondarily, dividend income - --------------------------------------------------------------------------------------- T. Rowe Price Small Cap Growth T. Rowe Price Associates, Long-term capital growth Inc. - ---------------------------------------------------------------------------------------
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PORTFOLIO SUB-ADVISER INVESTMENT OBJECTIVE - ---------------------------------------------------------------------------------- MET INVESTORS SERIES TRUST ADVISER: MET INVESTORS ADVISORY LLC CLASS A SHARES - ---------------------------------------------------------------------------------- Harris Oakmark International Harris Associates L.P. Long-term capital appreciation - ---------------------------------------------------------------------------------- Janus Aggressive Growth Janus Capital Management Long-term growth of LLC capital - ---------------------------------------------------------------------------------- Lord Abbett Bond Debenture Lord, Abbett & Co. LLC High current income and the opportunity for capital appreciation to produce a high total return - ---------------------------------------------------------------------------------- Met/AIM Mid Cap Core Equity AIM Capital Management, Long-term growth of Inc. capital - ---------------------------------------------------------------------------------- Met/AIM Small Cap Growth AIM Capital Management, Long-term growth of Inc. capital - ---------------------------------------------------------------------------------- MFS Research International Massachusetts Financial Capital appreciation Services Company - ---------------------------------------------------------------------------------- Neuberger Berman Real Estate Neuberger Berman Total return through Management Inc. investment in real estate securities, emphasizing both capital appreciation and current income - ---------------------------------------------------------------------------------- PIMCO PEA Innovation PEA Capital LLC Capital appreciation; no (formerly PIMCO Equity consideration is given to Advisors) income - ---------------------------------------------------------------------------------- PIMCO Total Return Pacific Investment Maximum total return, Management Company consistent with the LLC preservation of capital and prudent investment management - ---------------------------------------------------------------------------------- T. Rowe Price Mid-Cap Growth T. Rowe Price Associates, Long-term growth of Inc. capital - ---------------------------------------------------------------------------------- AMERICAN FUNDS INSURANCE SERIES ADVISER: CAPITAL RESEARCH AND MANAGEMENT COMPANY CLASS 2 SHARES - ---------------------------------------------------------------------------------- American Funds Global Small N/A Capital appreciation Capitalization through stocks - ---------------------------------------------------------------------------------- American Funds Growth N/A Capital appreciation through stocks - ---------------------------------------------------------------------------------- American Funds Growth-Income N/A Capital appreciation and income - ----------------------------------------------------------------------------------
- -------- /1/ Prior to May 1, 2001, Metropolitan Life Insurance Company was the adviser to the Metropolitan Series Fund. /2/ Davis Selected Advisers, L.P. may also delegate any of its responsibilities to Davis Selected Advisers-NY, Inc., a wholly-owned subsidiary. /3/ Prior to December 16, 2003, Putnam Investment Management, LLC was the sub-adviser to this Portfolio. /4/ On or about April 30, 2004, the FI Mid Cap Opportunities Portfolio that had been offered as an investment option up to that date merged with and into the Janus Mid Cap Portfolio which was then renamed the FI Mid Cap Opportunities Portfolio. /5/ Prior to May 1, 2004, Janus Capital Management LLC was the sub-adviser to this Portfolio. /6/ The Salomon Brothers Strategic Bond Opportunities Portfolio also receives certain investment subadvisory services from Citigroup Asset Management Limited, a London-based affiliate of Salomon Brothers Asset Management Inc. /7/ Prior to May 1, 2004, Fred Alger Management, Inc. was the sub-adviser to this Portfolio. A Portfolio may have a name and/or objective that is very similar to that of a publicly available mutual fund that is managed by the same sub-investment manager or adviser. The Portfolios are not publicly available and will not have the same performance as those publicly available mutual funds. Different performance will result from differences in implementation of investment policies, cash flows, fees and size of the Portfolio. 15 THE PORTFOLIO SHARE CLASSES THAT WE OFFER The Portfolios offer various classes of shares, each of which has a different level of expenses. The Fund prospectuses may provide information for share classes or Portfolios that are not available through the Policy. When you consult the Fund prospectus for a Portfolio, you should be careful to refer only to the information regarding the Portfolio and class of shares that is available through the Policy. The following classes of shares are available under the Policy: .. For the Metropolitan Series Fund and the Met Investors Series Trust Portfolios, we offer Class A shares only. .. For the American Funds Insurance Series Portfolios, we offer Class 2 shares only. PURCHASE AND REDEMPTION OF PORTFOLIO SHARES BY OUR SEPARATE ACCOUNT As of the end of each Valuation Period (See "Sending Communications and Payments To Us--When Your Requests, Instructions and Notifications Become Effective"), we purchase and redeem Portfolio shares for the Separate Account at their net asset value without any sales or redemption charges. These purchases and redemptions reflect the amount of any of the following transactions that take effect at the end of the Valuation Period: .. The allocation of net premiums to the Separate Account. .. Dividends and distributions on Fund shares, which are reinvested as of the dates paid (which reduces the value of each share of the Fund and increases the number of Fund shares outstanding, but has no affect on the cash value in the Separate Account). .. Policy loans and loan repayments allocated to the Separate Account. .. Transfers to and among investment divisions. .. Withdrawals and surrenders taken from the Separate Account. VOTING RIGHTS THAT YOU WILL HAVE [SIDEBAR: You can give us voting instructions on shares of each Portfolio of a Fund that are attributed to your Policy.] The Funds have shareholder meetings from time to time to, for example, elect directors or trustees and approve some changes in investment management arrangements. We will vote the shares of each Portfolio that are attributed to your Policy based on your instructions. Should we determine that the 1940 Act no longer requires us to do this, we may decide to vote Fund shares in our own right, without input from you or any other owners of variable life insurance policies or variable annuity contracts that participate in a Fund. If you are eligible to give us voting instructions, we will send you informational material and a form to send back to us. We are entitled to disregard voting instructions in certain limited circumstances prescribed by the SEC. If we do so, we will give you our reasons in the next semi-annual report to Policy owners. If we do not receive timely voting instructions from you and other insurance and annuity owners that are entitled to give us voting instructions, we will vote those shares in the same proportion as the shares held in the same separate account for which we did receive voting instructions. Also, we will vote Fund shares that are not attributable to insurance or annuity owners (including shares that we hold in our general account) or that are held in separate accounts that are not registered under the 1940 Act in the same proportion as the aggregate of the shares for which we received voting instructions from all insurance and annuity owners. 16 THE FIXED RETURN YOU CAN CHOOSE (OUR FIXED ACCOUNT) The Fixed Account is part of our general assets that are not in any legally-segregated separate accounts. Amounts in the Fixed Account are credited with interest at an effective annual rate of at least 3%. We may also credit excess interest on such amounts. Different excess interest rates may apply to different amounts, based upon when such amounts were allocated to the Fixed Account and whether they were premium payments or transfers from the investment divisions. Any partial amounts we remove from the Fixed Account (such as any portion of your Policy's monthly deduction that is allocable to the Fixed Account) will be taken from the most recently allocated amounts first. Any excess interest rate will be credited for at least 12 months before a new rate is credited. We can delay transfers, withdrawals, surrender and payment of Policy loans from the Fixed Account for up to 6 months. Since the Fixed Account is not registered under the federal securities laws, this prospectus contains only limited information about the Fixed Account. The Policy gives you more information on the operation of the Fixed Account. PURCHASING A POLICY [SIDEBAR: We will issue a Policy to you as owner. You will have all the rights under the Policy, including the ability to name a new owner or contingent owner.] If you want to own a Policy, then you must complete an application, which must be received by the Designated Office. We reserve the right to reject an application for any reason permitted by law, and our acceptance of an application is subject to our underwriting rules. Generally, we will issue a Policy only for insureds that are age 80 or less (although we may decide to permit an insured that is older) that have provided evidence of insurability that we find acceptable. An "insured" is the person upon whose life we issue the Policy. You do not have to be the insured. The beneficiary is named in the application as the person who will receive the insurance proceeds upon the death of the insured. The beneficiary has no rights under the Policy until the death of the insured (unless the beneficiary has been designated an irrevocable beneficiary) and must survive the insured in order to receive the insurance proceeds. For the purpose of computing the insured's age under the Policy, we start with the insured's age on the Date of Policy which is set forth in the Policy. Age under the Policy at any other time is then computed using that issue age and adding the number of full Policy years completed. The Date of Policy is usually the date the Policy application is approved. (Under our current administrative rules, a Policy which would be dated the 28th day or later in a month will receive a Date of Policy of the 28th.) In certain situations when payroll deduction is being used for remittance of premiums, we may adjust the Date of Policy. We use the Date of Policy to calculate the Policy years (and Policy months and monthly anniversaries). We may permit a Date of Policy that is earlier than the date the application is approved if there have been no material misrepresentations in the application (but not earlier than the date that the application is completed) in order to preserve a younger age for the insured. Your Date of Policy can also be the date the application is completed if you ask us and if we receive a payment of at least $2,500 with the application. 17 For applications submitted without an advance payment of the initial premium or if we have refunded an advance payment prior to the issuance of the Policy, the Policy will be redated upon delivery to you. The delivery date will be the new Date of Policy. Temporary insurance will be provided for up to 90 days from the date of the application (or a greater period of time that we may elect), provided that we receive a payment equal to at least one "check-o-matic" payment and any necessary medical examination has been completed. Even if the insured hasn't completed the medical examination, there will be coverage if the insured dies from an accident within 30 days of the date of the application. The temporary insurance does not cover death by suicide. The temporary insurance provided is equal to the specified face amount applied for up to a maximum of $500,000 (as may be increased by us). There will be no charge for the insurance protection under the temporary insurance. Insurance coverage under the Policy will begin, and any temporary insurance that is then in force will end, at the time the Policy is delivered and the Date of Receipt of the first premium payment has occurred. For coverage to be effective, the insured's health must be the same as stated in the application and, in most states, the insured must not have sought medical advice or treatment after the date of the application. As to when charges under this Policy begin, see "Charges and Deductions you Pay--Charges Included in the Monthly Deduction." It may not be in your best interest to surrender, terminate, change, or borrow from existing life insurance policies or annuity contracts in connection with the purchase of the Policy. You should compare your existing insurance and the Policy carefully. You should replace your existing insurance only when you determine that the Policy is better for you. You may have to pay a surrender charge on your existing insurance, and the Policy will impose a new surrender charge period. You should talk to your financial professional or tax adviser to make sure the exchange will be tax-free. If you surrender your existing policy for cash and then buy the Policy, you may have to pay a tax, including possibly a penalty tax, on the surrender. Because we will not issue the Policy until we have received an initial premium from your existing insurance company, the issuance of the Policy may be delayed. YOUR PAYMENT AND ALLOCATION OF PREMIUMS PAYING PREMIUMS Unless your Policy has a guaranteed minimum death benefit in effect, the payment of a given amount of premiums won't guarantee that your Policy will remain in force. Rather, this depends on your Policy's cash surrender value. Your Policy will remain in force as long as the Policy's cash surrender value is large enough to cover one monthly deduction. The monthly deduction is a charge we deduct from your Policy's cash value every month. [SIDEBAR: You can make voluntary planned periodic premium payments and unscheduled premium payments.] You can make premium payments, subject to certain limitations discussed below, through the: .. Voluntary planned periodic premium schedule: You choose the schedule on your application. The schedule sets forth the amount of premiums, fixed payment intervals, and the period of time that you intend to pay premiums. The schedule can be: (A) annual; (B) semi-annual; (C) periodic automatic pre- authorized transfers from your checking account ( "preauthorized checking arrangement"); (D) systematic through payment plans that your employer makes available; or (E) through another method to which we agree. You do not have to pay premiums in accordance with your voluntary planned premium schedule. 18 .. Unscheduled premium payment option: You can make premium payments at any time. We will hold a premium payment received before its due date in a non-interest bearing holding account until the due date, if necessary, to prevent a Policy from becoming a modified endowment contract. (See "Modified Endowment Contracts" under "Federal Tax Matters" below.) We will send you an additional notice of this arrangement by letter immediately after receiving your payment. We will also give you the option to either have the money held until the due date or applied on our Date of Receipt of your instructions to apply the money (unless the due date has already passed). Paying Premiums to Maintain the Guaranteed Minimum Death Benefit You can pay certain levels of premiums that entitle you to a guaranteed minimum death benefit for a specified period of time. To keep the guarantee you will need to pay these premium levels for the entire duration of the guarantee. We will test your Policy on each monthly anniversary or upon the Policy lapse date (depending on state requirements) to verify that you have paid the minimum premium (after taking into account partial withdrawals and outstanding Policy loans) to keep the guarantee in force. If no guarantee is in force, your Policy will terminate under the circumstances described in "Policy Termination and Reinstatement". The level of premium to keep the guaranteed minimum death benefit in effect varies based on several factors including: .. Duration of the guarantee (generally higher levels are required for longer durations). .. Specified face amount (generally higher levels are required for higher amounts). .. Smoking class and underwriting class (generally higher levels are required for classes that we consider to pose a greater mortality risk). .. Death benefit option (generally higher levels are required for death benefit options B and CI). .. Except for Policies issued in New York, Policy riders (generally higher levels are required if you have riders in force). Maximum and Minimum Premium Payments .. During the first Policy year you must pay an amount of premium that we call the minimum initial premium (after taking account of partial withdrawals and outstanding Policy loans) or we will terminate your Policy after the grace period. .. After the first Policy year, your voluntary planned periodic payments must be at least: . $200 annually (or, for some Policies distributed by certain brokers, $2,500 annually) . $100 semi-annually . $15 on a preauthorized checking arrangement or other systematic payment schedule. .. Unscheduled premium payments must be at least $250 each. .. You may not pay premiums that exceed tax law premium limitations for life insurance policies. We will return any amounts that exceed these limits except that we will keep any amounts that are required to keep the Policy from terminating. We will let you make premium payments that would turn your Policy into a modified endowment contract, but we will tell you of this status not later than in your annual statement. If possible, we will tell you how to reverse the status. 19 ALLOCATING NET PREMIUMS [SIDEBAR: Net premiums are your premiums minus the charges deducted from those premiums.] We will allocate your net premiums to the Fixed Account from the Investment Start Date until 20 days after such date. Your Investment Start Date is the later of (A) the Date of Policy and (B) the Date of Receipt of your first premium payment. Your premium allocation instructions and transfer requests for investment in the separate account that you make in your Policy application, or within 20 days after your Investment Start Date, will take effect on the end of the first Valuation Date that is 20 days after your Investment Start Date. You can instruct us to allocate your net premiums among the Fixed Account and the investment divisions. The percentage of your net premium allocation into each of these investment options must be a minimum of 1% and in whole numbers. You can change your allocations (effective after the 20th day referred to above) at any time by giving us written notification at our Designated Office or in any other manner that we permit. SENDING COMMUNICATIONS AND PAYMENTS TO US [SIDEBAR: You can contact us at our Designated Office.] CONTACTING US You can communicate all of your requests, instructions and notifications to us by contacting us in writing at our Designated Office. We may require that certain requests, instructions and notifications be made on forms that we provide. These include: changing your beneficiary; taking a Policy loan; changing your death benefit option; taking a partial withdrawal; surrendering your Policy; making transfer requests (including elections with respect to the automated investment strategies) or changing your premium allocations. Below is a list of our Designated Offices for various functions. We may name additional or alternate Designated Offices. If we do, we will notify you in writing. You may also contact us at 1-800-MET-5000 for any function not listed below or for any other inquiry.
FUNCTION DESIGNATED OFFICE - --------------------------------------------------------------------------------- Premium Payments MetLife, P.O. Box 371487, Pittsburgh, PA 15250-7487 - --------------------------------------------------------------------------------- Payment Inquiries MetLife, P.O. Box 30375, Tampa FL 33630 - --------------------------------------------------------------------------------- Surrenders, Withdrawals, Loans, MetLife, P.O. Box 336, Investment Division Transfers, Warwick, R.I. 02887-0336 Premium Reallocation - --------------------------------------------------------------------------------- Death Claims MetLife, P.O. Box 330, Warwick, R.I. 02887-0330 - --------------------------------------------------------------------------------- Beneficiary & Assignment MetLife, P.O. Box 313, Warwick, R.I. 02887-0313 - --------------------------------------------------------------------------------- Cancellations (Free Look Period) MetLife, 500 Schoolhouse Road, Johnstown, PA 15904 Attn: Free Look - --------------------------------------------------------------------------------- Address Changes MetLife, 500 Schoolhouse Road, Johnstown, PA 15904 Attn: Data Integrity - --------------------------------------------------------------------------------- Reinstatements MetLife, P.O. Box 30375, Tampa FL 33630 - ---------------------------------------------------------------------------------
20 WHEN YOUR REQUESTS, INSTRUCTIONS AND NOTIFICATIONS BECOME EFFECTIVE Generally, requests, premium payments and other instructions and notifications are effective on the Date of Receipt. In those cases, the effective time is at the end of the Valuation Period during which we receive them at our Designated Office. (Some exceptions to this general rule are noted below and elsewhere in this Prospectus.) A Valuation Period is the period between two successive Valuation Dates. It begins at the close of regular trading on the New York Stock Exchange on a Valuation Date and ends at the close of regular trading on the New York Stock Exchange on the next succeeding Valuation Date. The close of regular trading is 4:00 p.m., Eastern Time on most days. A Valuation Date is each day on which the New York Stock Exchange is open for trading. The effective date of your Automated Investment Strategies will be that set forth in the strategy chosen. THIRD PARTY REQUESTS Generally, we accept requests for transactions or information only from you. Therefore, we reserve the right not to process transactions requested on your behalf by your agent with a power of attorney or any other authorization. This includes processing transactions by an agent you designate, through a power of attorney or other authorization, who has the ability to control the amount and timing of transfers for a number of other Policy owners, and who simultaneously makes the same request or series of requests on behalf of other Policy owners. INSURANCE PROCEEDS PAYABLE IF THE INSURED DIES If the Policy is in force, we will pay your beneficiary the insurance proceeds as of the end of the Valuation Period that includes the insured's date of death. We will pay this amount after we receive documents that we request as due proof of the insured's death. The beneficiary can receive the death benefit in a single sum or under various income plans described in the Statement of Additional Information. You may make this choice during the insured's lifetime. If no selection is made we may place the amount in an account to which we will credit interest, and the beneficiary will have immediate access to all or part of that amount. The beneficiary has one year from the date the insurance proceeds are paid to change the selection from a single sum payment to an income plan, as long as we have made no payments from the interest-bearing account. If the terms of the income plan permit the beneficiary to withdraw the entire amount from the plan, the beneficiary can also name contingent beneficiaries. The insurance proceeds equal: .. The death benefit under the death benefit option, alternate death benefit or minimum guaranteed death benefit that is then in effect; plus .. Any additional insurance proceeds provided by rider; minus .. Any unpaid Policy loans and accrued interest thereon, and any due and unpaid charges accruing during a grace period. 21 DEATH BENEFIT OPTIONS YOU CAN CHOOSE [SIDEBAR: The Policy generally offers a choice of three death benefit options.] Generally, you can choose among three options, although the choice may be limited based upon the insured's age. You select which option you want in the Policy application. The three options are: .. Option A: The death benefit is a level amount and equals the specified face amount of the Policy. .. Option B: The death benefit varies and equals the specified face amount of the Policy plus the cash value on the date of death. .. Option C: The death benefit is one of two amounts and is available only if insured is age 60 or less when we issue the Policy: . The death benefit varies and equals the specified face amount plus the cash value on the date of death, until the insured is age 65 ("CI"). . At age 65, the death benefit becomes a level amount equal to the specified face amount under CI plus the cash value at the end of the Valuation Date immediately preceding the date on which the insured became age 65. This new amount then becomes the specified face amount ("CII"). [SIDEBAR: You can generally change your death benefit option.] There are issues that you should consider in choosing your death benefit option. For example, under Options B and CI, the cash value is added to the specified face amount. Therefore, the death benefit will generally be greater under these options than under Options A and CII, for Policies with the same specified face amount and premium payments. By the same token, the cost of insurance will generally be greater under Options B and CI than under Options A and CII. You can change your death benefit option after the second Policy year and, thereafter, once in any 12 month period, provided that: .. Your cash surrender value after the change would be enough to pay at least two monthly deductions. .. The specified face amount continues to be no less than the minimum we allow after a decrease. .. The total premiums you have paid do not exceed the then current maximum premium limitations permitted under Internal Revenue Service rules. .. If the change is to Option C, the insured is age 60 or less. Any change will be effective on the monthly anniversary on or immediately following the Date of Receipt of the request. A change in death benefit will have the following effects on your specified face amount: .. Change from A or CII to B or CI: The specified face amount will decrease to equal the death benefit less the cash value on the effective date of the change. .. Change from B or CI to A: The specified face amount will increase to equal the death benefit plus the cash value of the Policy on the effective date of the change. .. Change from B to CI: The specified face amount will remain the same. Before you change your death benefit option you should consider the following: .. If the term insurance portion of your death benefit changes, as it may with a change from A or CII to B or CI and vice versa, the term insurance charge 22 will also change. This will affect your cash value and, in some cases, the amount of the death benefit. .. The premium requirements for maintaining the guaranteed minimum death benefit may change, which could affect your ability to maintain it. .. If your specified face amount changes because of the change in death benefit option, consider also the issues presented by changing your specified face amount that are described under "Specified Face Amount," below. These issues include the possibility that your Policy would become a modified endowment contract; that you would receive a taxable distribution; that there would be an increase or decrease in the monthly administration charge; and that the maximum premium amounts that you can pay would change. A specified face amount decrease resulting from a death benefit option change, however, will not result in deduction of a surrender charge. ALTERNATE DEATH BENEFIT THAT AUTOMATICALLY APPLIES IN SOME CASES In order to ensure that the Policy qualifies as life insurance under the federal income tax laws, the beneficiary will receive an alternate death benefit if it is greater than the amount that the beneficiary would have received under the death benefit option that you chose, as discussed above. The alternate death benefit is as follows: Age of Insured at Death 40 and less 45 50 55 60 65 70 75 to 90 95 % of Cash Value: * 250 215 185 150 130 120 115 105 100
- -------- *For the ages not listed, the percentage decreases by a ratable portion for each full year. GUARANTEED MINIMUM DEATH BENEFIT YOU CAN CHOOSE [SIDEBAR: The Policy offers a guaranteed minimum death benefit.] You can choose to have a guaranteed minimum death benefit for one of several specified periods of time, if you meet certain requirements. Generally, the amount of guaranteed minimum death benefit equals the specified face amount of insurance, plus any additional death benefits provided by rider. Availability may be restricted in your state or by the insured's rating class, however. There is no additional charge for the guarantee, but in order to keep the guarantee in effect, you will need to pay certain minimum premiums, which vary based on many factors (see "Premiums" below). We test the Policy on each monthly anniversary or upon the Policy's lapse date (depending on state requirements)--the "testing date"--to make sure that you have paid the minimum premiums required to keep the guarantee for the duration you chose. If you haven't made the minimum premium payments, we will tell you and give you 61 days from the testing date to make any additional payment to keep the guarantee at the then current duration. If we do not receive the required payment, we will reduce the duration of the guarantee to one that the premiums you have paid would support and that would have been available to you. If no shorter duration is available to you, we will terminate the guarantee. A duration cannot be reactivated, once we terminate it. If no guarantee is in effect, your Policy will terminate under the circumstances described in "Policy Termination and Reinstatement." Each duration for the guaranteed minimum death benefit has its own premium requirement that supports it. The longer the duration, the greater the premiums required. At issue, we will look at the premium you plan to pay and give you which ever duration that premium supports. You can reduce the duration by reducing the premiums paid to an amount that will only support a shorter duration. A duration cannot be increased by subsequently paying 23 additional premiums nor can a duration be reinstated once it is terminated. The durations for the guaranteed minimum death benefit are*: .. For the first five Policy years. .. To age 65, but only if the insured is age 60 or less when the Policy is issued. .. To age 75, but only if the insured is age 70 or less when the Policy is issued. .. To age 85, but only if the insured is age 80 or less when the Policy is issued. THE SPECIFIED FACE AMOUNT OF YOUR POLICY The specified face amount is the basic amount of insurance specified in your Policy. The Minimum Initial Specified Face amount is the smallest amount of specified face amount for which a Policy may be issued. Currently these amounts are generally: .. $100,000 for insureds in the preferred rate class .. $50,000 for most other insureds .. $25,000 for certain insureds over age 59. .. $250,000 for most Policies distributed through broker-dealers not affiliated with us. [SIDEBAR: You can generally increase or decrease your Policy's specified face amount.] Generally, you may decrease your specified face amount after the first Policy year or increase your specified face amount after the second Policy year, and thereafter, once in any 24 month period, as long as the insured is age 79 or under. Any change will be effective on the monthly anniversary on or next following (a) the Date of Receipt of your request; or (b) if we require evidence of insurability, the date we approve your request. You are permitted to decrease the specified face amount to as low as $25,000 except that no reduction may decrease the specified face amount below the Minimum Initial Specified Face Amount during the first five Policy years or one half that amount thereafter. The lowest available specified face amount requirements also apply to decreases that result from partial withdrawals or changes in death benefit option. If there have been previous specified face amount increases, any decreases in specified face amount will be made in the following order: (i) the specified face amount provided by the most recent increase; (ii) the next most recent increases successively; and (iii) the initial specified face amount. You may increase the specified face amount only if: (a) the guaranteed minimum death benefit is in effect; or (b) the cash surrender value after the change is large enough to cover at least two monthly deductions. Generally, the minimum specified face amount increase is $5,000 ($10,000 for Policies issued in New York). Any increase will require that we receive additional evidence of insurability that is satisfactory to us. We will also impose an underwriting charge. - -------- *For Policies issued in New York, the guaranteed minimum death benefit guarantees payment of the specified face amount of insurance only (and not any rider benefits), and the options for the duration of the guarantee are generally: (i) for the first five Policy years; (ii) to age 55 (available only if the insured was between age 18 and age 50 on the date the Policy was issued) or for the first 20 Policy years (if the insured was less than age 18 on the date the Policy was issued); or (iii) to age 65 (available only if the insured was between age 18 and age 60 on the date the Policy was issued) or to age 60 (if the insured was less than age 18 on the date the Policy was issued). For Policies issued in Massachusetts, New Jersey and Texas, the only available duration of the guaranteed minimum death benefit is the first five Policy years. It is possible that other states may, in the future, require similar variations in the durations that are available. 24 Before you change your specified face amount you should consider the following: .. The term insurance portion of your death benefit will likely change and so will the term insurance charge. This will affect the insurance charges, cash value and, in some cases, death benefit levels. .. Reducing your specified face amount in the first 15 Policy years may result in our returning an amount to you which could then be taxed on an income first basis. .. We will deduct a portion of any applicable surrender charge at the time of any decrease in specified face amount that you request. .. We will establish an additional amount of surrender charge at the time of any increase in the specified face amount, other than an increase resulting automatically from a change of death benefit option. .. The premium requirements for maintaining the guaranteed minimum death benefit will change, which could affect your ability to maintain it. .. The amount of additional premiums that the tax laws permit you to pay into your Policy may increase or decrease. The additional amount you can pay without causing your Policy to be a modified endowment contract for tax purposes may also increase or decrease. .. In some circumstances, the Policy could become a modified endowment contract. .. The monthly administration charge may change. YOUR POLICY'S VALUES CASH VALUE [SIDEBAR: Your Policy is designed to accumulate cash value.] Your Policy's cash value equals: .. The Fixed Account cash value, plus .. The Policy Loan Account cash value, plus .. The Separate Account cash value. The Separate Account cash value allocated to each investment division is calculated as follows: .. 20 days after your Investment Start Date, we will allocate your cash value among the investment divisions as you requested your net premiums to be allocated in your application. .. Thereafter, at the end of each Valuation Period the cash value in an investment division will equal: . The cash value in the investment division at the beginning of the Valuation Period; plus . All net premiums, loan repayments and cash value transfers into the investment division during the Valuation Period; minus . All partial cash withdrawals, loans and cash value transfers out of the investment division during the Valuation Period; minus . The portion of any charges and deductions allocated to the cash value in the investment division during the Valuation Period; plus 25 . The net investment return for the Valuation Period on the amount of cash value in the investment division at the beginning of the Valuation Period. The net investment return currently equals the rate of increase or decrease in the net asset value per share of the underlying Fund portfolio over the Valuation Period, adjusted upward to take appropriate account of any dividends and other distributions paid by the portfolio during the period. The net investment return could in the future be reduced by a charge for taxes that we have the right to impose. CASH SURRENDER VALUE Your Policy's cash surrender value equals your cash value minus: .. Any outstanding Policy loans (plus any accrued and unpaid interest); .. Any surrender charges; and .. The administration charge for any full Policy month remaining in the first Policy year. THE AMOUNT WE PAY AT YOUR POLICY'S FINAL DATE The Final Date is the Policy anniversary on which the insured is Age 95. We will allow you to extend that date, however, where permitted by state law. If the insured is living on the Final Date, we will pay you the cash value of the Policy, reduced by any outstanding loans (plus accrued interest). You can receive the cash value in a single sum, in an account that earns interest, or under an available income plan. SURRENDERS AND PARTIAL WITHDRAWALS FROM YOUR POLICY SURRENDERING (TURNING IN) YOUR POLICY You may surrender your Policy for its cash surrender value at any time while the insured is living. We may ask you to return the Policy before we honor your request to surrender your Policy. We determine the cash surrender value as of the end of the Valuation Period during which we receive the surrender request. (See "Sending Communications and Payments To Us"). You can choose to have the proceeds paid in a single sum, or under an income plan. If the insured dies after you surrender the Policy but before the end of the Policy month in which you surrendered the Policy, we will pay your beneficiary an amount equal to the difference between the Policy's death benefit and its cash value, computed as of the surrender date. PARTIAL WITHDRAWALS YOU CAN TAKE You can make partial withdrawals of your cash surrender value at any time if: .. The partial withdrawal would not result in a reduction in your specified face amount during the first Policy year, as described under "The Specified Face Amount of your Policy" above; .. The partial withdrawal would not result in the cash surrender value being less than sufficient to pay 2 monthly deductions; .. The partial withdrawal is at least $500; .. The partial withdrawal would not result in your specified face amount falling below the minimum allowable amount, as described under "The Specified Face Amount of Your Policy" above; and 26 .. The partial withdrawal would not result in total premiums paid exceeding the then current maximum premium limitation determined by the Internal Revenue Code rules. If you make a request for a partial withdrawal that is not permitted, we will tell you and you may then ask for a smaller partial withdrawal or surrender the Policy. We will deduct your partial withdrawal from the Fixed Account and the investment divisions in the same way we allocate the monthly deduction. Before surrendering your Policy or requesting a partial withdrawal you should consider the following: .. Surrender charges may apply. .. At least some amounts received may be taxable as income and, if your Policy is a modified endowment contract, subject to certain tax penalties. (See "Federal Tax Matters--Modified Endowment Contracts.") .. Your Policy could become a modified endowment contract. .. For partial withdrawals, your death benefit will decrease by the amount of the withdrawal. For Options A and CII, your specified face amount also will decrease, generally by the amount of the withdrawal, but this decrease will not cause any surrender charge to be deducted other than any surrender charge attributable to the amount withdrawn. .. Any partial withdrawal that causes the specified face amount to decrease could cause an increase in the monthly administrative charge. .. In some cases you may be better off taking a Policy loan, rather than a partial withdrawal. TRANSFERRING CASH VALUE AMONG YOUR POLICY'S INVESTMENT OPTIONS [SIDEBAR: You can transfer your cash value among the investment divisions and the Fixed Account at any time beginning 20 days after the Investment Start Date.] The minimum amount you may transfer is $50 or, if less, the total amount in an investment option. You may make transfers at any time, but we do reserve the right to limit transfers to four per Policy year and to limit transfers from the Fixed Account to one each year on the Policy anniversary date. We do not currently charge for transfers, but we do reserve the right to charge up to $25 per transfer, except for transfers under the Automated Investment Strategies. Currently, transfers are not taxable transactions. We have policies and procedures that attempt to detect transfer activity that may adversely affect other Policy owners or Portfolio shareholders in situations where there is potential for pricing inefficiencies or that involve relatively large single or grouped transactions by one or more Policy owners (i.e., market timing). We employ various means to try to detect such transfer activity, such as periodically examining the number of transfers and/or the number of "round trip" transfers into and out of particular investment divisions made by Policy owners within given periods of time and/or investigating transfer activity identified by us or the Funds on a case-by-case basis. We may revise these policies and procedures in our sole discretion at any time without prior notice. The detection and deterrence of harmful transfer activity involves judgments that are inherently subjective. Our ability to detect such transfer activity may be limited by operational and technological systems, as well as our ability to 27 predict strategies employed by Policy owners to avoid such detection. Our ability to restrict such transfer activity may be limited by provisions of the Policy. We apply our policies and procedures without exception, waiver, or special arrangement, although we may vary our policies and procedures among our variable policies and investment divisions and may be more restrictive with regard to certain policies or investment divisions than others. Accordingly, there is no assurance that we will prevent all transfer activity that may adversely affect Policy owners or Portfolio shareholders. In addition, we cannot guarantee that the Portfolios will not be harmed by transfer activity related to other insurance companies and/or retirement plans that may invest in the Portfolios. Our policies and procedures may result in restrictions being applied to Policy owner(s). These restrictions may include: .. requiring you to send us by U.S. mail a signed, written request to make transfers; .. establishing an earlier submission time for telephone, facsimile, and Internet requests than for written requests or removing the availability of these means for making transfers; .. limiting the number of transfers you may make each Policy Year; .. charging a transfer or collecting a fund redemption fee; .. denying a transfer request from an authorized third party acting on behalf of multiple Policy owners; and .. imposing other limitations and modifications where we determine that exercise of the transfer privilege may create a disadvantage to other Policy owners. If restrictions are imposed on a Policy owner, we will reverse upon discovery any transaction inadvertently processed in contravention of such restrictions. In accordance with applicable law, we reserve the right to modify or terminate the transfer privilege at any time. We also reserve the right to defer or restrict the transfer privilege at any time that we are unable to purchase or redeem shares of any of the Portfolios, including any refusal or restriction on purchases or redemptions of their shares as a result of their own policies and procedures on market timing activities. You should read the Fund prospectuses for more details. AUTOMATED INVESTMENT STRATEGIES YOU CAN CHOOSE You can choose one of five currently available strategies. You can also change or cancel your choice at any time. .. Equity Generator: allows you to transfer an amount equal to the interest earned in the Fixed Account in any Policy month equal to at least $20 to the MetLife Stock Index investment division or the State Street Research Aggressive Growth investment division. The transfer will be made at the beginning of the Policy month following the Policy month in which the interest was earned. .. Equalizer: allows you to periodically equalize amounts in your Fixed Account and either the MetLife Stock Index investment division or the State Street Research Aggressive Growth investment division. We currently make equalization each quarter. We will terminate this strategy if you make a transfer out of the investment division or the Fixed Account that isn't part of the strategy. You may then reelect the Equalizer on your next Policy anniversary. 28 .. Rebalancer: allows you to periodically redistribute amounts in the Fixed Account and investment divisions in the same proportion that the net premiums are then being allocated. We currently make the redistribution each quarter. .. Allocator: allows you to systematically transfer money from the Fixed Account to any investment division(s). You must have enough cash value in the Fixed Account to enable the election to be in effect for three months. The election can be to transfer each month: . A specific amount, until the cash value in the Fixed Account is exhausted, . A specific amount for a specific number of months, or . Amounts in equal installments until the total amount you have requested has been transferred. .. Index Selector: Allows you to choose one of five asset allocation models which are designed to correlate to various risk tolerance levels. Based on your selection, 100% of your cash value will be allocated among the Lehman Brothers Aggregate Bond Index, Morgan Stanley EAFE Index, MetLife Stock Index, Russell 2000 Index and MetLife Mid Cap Stock Index investment divisions and the Fixed Account. Each quarter we will redistribute amounts in the Fixed Account and investment divisions in the same proportion as you originally requested. We may, in the future, change the asset allocation models used in the Index Selector strategy. If this happens, we will tell you what the new models are and you can choose to no longer participate in this strategy before the new models become effective. We may, in the future, also allow you to allocate less than 100% of your cash value to this strategy. Before electing this strategy, you should consider the fact that investment returns using this strategy may be more volatile than the other strategies. Youcan terminate your participation in the Index Selector strategy at any time. We reserve the right to modify or terminate the Index Selector strategy or any other automated investment strategy, for any reason, including, without limitation, a change in regulatory requirements applicable to such programs. TRANSFERS YOU CAN MAKE BY TELEPHONE We may, if permitted by state law, allow you to make transfer requests, changes to Automated Investment Strategies and changes to allocations of future net premiums by phone. We may also allow you to authorize your sales representative to make such requests. The following procedures apply: .. We must have received your authorization in writing satisfactory to us, to act on instructions from any person that claims to be you or your sales representative, as applicable, as long as that person follows our procedures. .. We will institute reasonable procedures to confirm that instructions we receive are genuine. Our procedures will include receiving from the caller your personalized data. .. All telephone calls will be recorded. .. You will receive a written confirmation of any transaction. .. Neither the Separate Account nor we will be liable for any loss, expense or cost arising out of a telephone request if we reasonably believed the request to be genuine. .. You should contact our Designated Office with any questions regarding the procedures. 29 We do not currently offer Internet transfer capability, but may do so in the future. We will notify you if we begin to offer Internet transactions. BORROWING FROM YOUR POLICY [SIDEBAR: You can borrow from us and use your Policy as security for the loan.] The amount of each loan must be: .. At least $500. .. No more than the cash surrender value less two monthly deductions (unless your Policy provides for a different amount required by state law) when added to all other outstanding Policy loans. As of your loan request's Date of Receipt, we will: .. Remove an amount equal to the loan first from your cash value in the Fixed Account. If an additional amount is required, we will remove it from the cash value in the investment divisions of the Separate Account in the same proportion as your cash value is then allocated. .. Transfer such cash value to the Policy loan account, where it will be credited with interest at the rate of 4% per year. At least once a year, we will transfer any interest earned in your Policy loan account to the Fixed Account and the investment divisions, according to the way that we allocate monthly deductions. .. Charge you interest, which will accrue daily at a rate of 6% per year (which is the maximum rate we will ever charge). We will reduce this rate to 4.6% for Policy years 11 through 15, to 4.3% for Policy years 16 through 20 and to 4.0% after Policy year 20. Your interest payments are due at the end of each Policy year. If you don't pay the amount within 31 days after it is due, we will treat it as a new Policy loan. Repaying your loans (plus accrued interest) is done by sending in payments at least equal to your voluntary planned periodic premium, or $50, if less. Any payments we receive while a loan (plus accrued interest) is outstanding, will be applied first to repaying the loan, and, if any amounts remain after repayment, they will be considered premium. Even though we will repay the loan with these payments, the resulting reduction in outstanding loans will have the same effect as premium payments for purpose of maintaining your guaranteed minimum death benefit. We will allocate your repayment to the Fixed Account and the investment divisions, in the same proportion that any new net premiums would be allocated. If a Policy loan is outstanding, it may be better to repay the loan than to pay premium, because the premium payment is subject to sales and premium tax charges, and the loan repayment is not subject to charges. (See "Charges and Deductions You Pay".) Before taking a Policy loan you should consider the following: .. Interest payments on loans are generally not deductible for tax purposes. .. Under certain situations, Policy loans could be considered taxable distributions. .. If you surrender your Policy or if we terminate your Policy, or at the Final Date, any outstanding loan amounts (plus accrued interest) will be taxed as a distribution. Generally, there will be federal income tax payable on the amount by which withdrawals and loans exceed the premiums paid to date. (See "Federal Tax Matters--Loans" below.) In addition, the amounts borrowed and withdrawn reduce the Policy's cash value and any remaining 30 cash value of the Policy may be insufficient to pay the income tax on your gains. .. A policy loan increases the chances of our terminating your policy due to insufficient cash value. Unless the guaranteed minimum death benefit is in effect, we will terminate your Policy with no value if: (A) on a monthly anniversary your loans (plus accrued interest) exceed your cash value minus the monthly deduction and minus any surrender charges; and (B) we tell you of the insufficiency and you do not make a sufficient payment within 61 days of the monthly anniversary. .. Your Policy's insurance proceeds will be reduced by any unpaid loan (plus any accrued and unpaid interest). .. The amount taken from your Policy's cash value, as a result of a loan does not participate in the investment experience of the investment divisions. Therefore, loans can permanently affect the death benefit and cash value of the Policy, even if they are repaid. POLICY TERMINATION AND REINSTATEMENT TERMINATION We will terminate your Policy without any cash surrender value if: .. The cash surrender value is less than the monthly deduction; .. No minimum guaranteed death benefit is in effect; and .. We do not receive a sufficient premium payment within the 61-day grace period to cover two monthly deductions. We will mail you notice if any grace period starts. If the insured dies during the grace period, we will pay the insurance proceeds minus any overdue monthly deductions. REINSTATEMENT Upon your request, we will reinstate (put back in force) your Policy (without reinstating the guaranteed minimum death benefit or any amounts in a Policy loan account), subject to certain terms and conditions that the Policy provides. We must receive your request within 3 years (or any longer period provided by state law) after the end of the grace period and before the Final Date. You also must provide us: .. A written application for reinstatement (the date we approve the application will be the effective date of the reinstatement). .. Evidence of insurability that we find satisfactory. .. An additional premium amount that the Policy prescribes for this purpose. OPTIONAL BENEFITS YOU CAN ADD BY RIDER You may be eligible for certain benefits provided by rider, subject to certain underwriting requirements and the payment of additional premiums. We will deduct any charges for the rider(s) as part of the monthly deduction. Some of these riders can be added only at the time you purchase your Policy. Each rider contains important information, including limits and conditions that apply to the benefits. If you decide to purchase any of the riders, you should carefully review their provisions to be sure the benefit is something that you want. You should also consider: .. That the premium requirements to maintain the guaranteed minimum death benefit may increase, which could affect your ability to maintain it. 31 .. That the addition of certain riders can restrict your ability to exercise certain rights under the Policy. .. That the amount of benefits provided under the rider is not based on investment performance of a separate account; but, if the Policy terminates because of poor investment performance or any other reason, the riders generally will also terminate. .. The tax consequences. You should also consult with your tax advisor before purchasing one of the riders. Generally, we currently make the following benefits available by rider: .. Disability Waiver of Premium Benefit. This rider is designed for owners who seek to build cash value or maintain the guaranteed minimum death benefit during a period of disability. In order to qualify for this rider, you must maintain a premium level equal to that required under the rider. Otherwise, the rider will operate like the Disability Waiver of Monthly Deduction benefit rider (described below), which in some cases could increase the cost of the rider. The selected premium level will not necessarily be sufficient to keep the Policy in force to the Final Date. Therefore, the Policy could terminate before the Final Date, although not while a guaranteed minimum death benefit is in effect. If your Policy was issued in New York and your Policy includes this rider, you may not add any other rider. .. Disability Waiver of Monthly Deduction Benefit. This rider provides for the waiver of certain monthly deductions including cost of insurance and monthly policy expense charges, upon proof of disability. An increase in specified face amount may not be covered by this rider. If not, the portion of the monthly deduction associated with the increase will continue to be deducted from the cash value, which if insufficient, could result in the Policy's termination. For this reason, it may be advantageous for the owner, at the time of total disability, to reduce the specified face amount to that covered by this rider. .. Accidental Death Benefit. This rider provides additional death benefit coverage for an amount selected at issue upon proof of death of the insured if such death was caused by an accident. .. Children's Term Insurance Benefit. This rider provides term insurance in an amount selected at issue upon proof of death for any insured child. .. Spouse Term Insurance Benefit. This rider provides term insurance in an amount selected at issue upon proof of death of the insured's spouse. .. Accelerated Death Benefit. This rider provides for early payment of a portion of the face amount of insurance upon proof of terminal illness of the insured resulting in a life expectancy of 12 months or less. .. Long Term Care Guaranteed Purchase Option. This rider gives the Policy owner the option to purchase long-term care insurance for the insured, at future specified Purchase Option Dates, without additional underwriting. The new long term care insurance policy will be offered by MetLife or by an affiliate designated by us on the Purchase Option Date, subject to rider specifications about plan benefits. This rider will be available only in states that have approved such long-term care insurance plans. CHARGES AND DEDUCTIONS YOU PAY The Policy charges compensate us for our expenses and risks. Our revenues from any particular charge may be more or less than any costs or expenses 32 that charge may be intended primarily to cover. We may use our revenues from one charge to pay other costs and expenses in connection with the Policies. We may also profit from our revenues from all the charges combined. The following sets forth additional information about the Policy charges. DEDUCTIONS FROM PREMIUMS Sales charge: We deduct a 2.25% sales charge from each premium primarily to help pay the cost of compensating sales representatives and other expenses of distributing the Policies. [SIDE BAR: Carefully review the Fee Tables that set forth the charges that you pay under your Policy] Charge for average expected state taxes attributable to premiums: We deduct 2.00% from each premium to reimburse us for the state premium taxes that we must pay on premiums we receive. Premium taxes vary from state to state and currently range from 0 to 3.5%. Our charge approximates the average tax rate we expect to pay on premiums we receive from all states. Federal tax charge: We deduct 1.25% from each premium to reimburse us for the Federal income tax liability related to premiums. TRANSFER CHARGE We reserve the right to charge up to $25 per transfer among the investment divisions and to or from the Fixed Account, except for any transfers under the Automated Investment Strategies. UNDERWRITING CHARGE This charge applies only if you request an increase in your specified face amount. In that case, we charge $5 per month for the first twelve months after the month you increase your specified face amount. CHARGES INCLUDED IN THE MONTHLY DEDUCTION At issue, or within 30 days of any Policy anniversary, you can choose to have the monthly deduction taken from either: (a) the Fixed Account and each investment division in which you have cash value in the same proportion as your cash value is allocated among these options at the beginning of the policy month; or (b) if there is sufficient cash value, entirely from your Fixed Account. If no election is made or if amounts in the Fixed Account are insufficient, we will take the monthly deduction in accordance with (a). We deduct the monthly deductions as of each monthly anniversary beginning as of the Date of Policy. Cost of term insurance: This charge varies monthly based on many factors. Each month, we determine the charge by multiplying your cost of insurance rates by the term insurance amount. . The term insurance amount is the death benefit at the beginning of the Policy month divided by a discount factor to account for an assumed return during the month; minus the cash value at the beginning month after deduction of all other applicable charges. Factors that affect the term insurance amount include the specified face amount, the cash value and the death benefit you choose. (Generally, the term insurance amount will be higher for Options B and CI). . The term insurance rate is based on our expectations as to future experience, taking into account the insured's sex (if permitted by law), age and rate class. The rates will never exceed the guaranteed rates, which are based on certain 1980 Commissioners Standard Ordinary 33 Mortality Tables and the insured's sex, age and smoking status. As a general rule, the guaranteed rate increases each year you own your Policy, as the insured's age increases. Our current rates are lower than the maximums in most cases. We review our rates periodically and may adjust them, but we will apply the same rates to everyone who purchased their policy at the same time and who is the same age, sex and rate class. . Rate class relates to the level of mortality risk we assume with respect to an insured. It can be the standard rate class, or one that is higher or lower (and, if the insured is 18 or older, we divide rate class by smoking status). The insured's rate class will affect your cost of term insurance. You can also have more than one rate class in effect, if the insured's rate class has changed and you change your specified face amount. A better rate class will lower the cost of term insurance on your entire Policy and a worse rate class will affect the portion of your cost of term insurance charge attributable to the specified face amount increase. . The current cost of insurance rate varies among otherwise identical insureds, depending on how long an insured's Policy has been in force. In the early Policy years, the rate in some cases will decrease from one year to the next. Nevertheless, if held for a long enough period of time, any Policy's current cost of insurance rate will begin to increase from year to year as the insured's age increases. Administration charge: We make this monthly charge primarily to compensate us for expenses we incur in the administration of the Policy, and also, in the first year, our underwriting and start-up expenses. In the first Policy year, the Administration charge is $20 per month for insureds age 25 and under, $30 per month for insureds age 26-40 and $35 per month for insureds age 41 and over. In the second and later Policy years, the Administration charge is $10 per month unless you pay the required Administrative Premium shown on page 3 of your Policy. If you pay these premiums, the monthly charge will be $5 for a specified face amount of $250,000 or more, $6 for a specified face amount between $100,000 and $249,999 and $7 for a specified face amount of less than $100,000. Mortality and expense risk charge: We make this monthly charge primarily to compensate us for: . mortality risks that insureds may live for a shorter period than we expect; and . expense risks that our issuing and administrative expenses may be higher than we expect. The charge is made monthly, based on the cash value of the Policy in our Separate Account, at an annual rate of .90% for Policy years 1 through 10, .60% for Policy years 11 through 15 and .30% thereafter. SURRENDER CHARGE [SIDEBAR: Your Policy sets forth the maximum surrender charges to which your cash value could be subject.] If, during the first fifteen Policy years, or during the first fifteen years following a specified face amount increase, you surrender your Policy, reduce the face amount, make a partial withdrawal, or your Policy terminates for insufficient cash surrender value, we will deduct a surrender charge from the cash value. The amount of your Policy's surrender charge that we will deduct at the time you reduce the specified face amount will be 50% of the portion of the surrender charge that we attribute to the decrease. For partial withdrawals of up to 10% of the Policy's cash surrender value at the date of the partial withdrawal (aggregated for this purpose with all previous withdrawals during the same 34 Policy year) no surrender charge is deducted. We make the surrender charge primarily to help pay the cost of compensating sales representatives and other expenses of distributing the Policies. The method by which we calculate the surrender charges that apply under certain circumstances is complex, because they are based on several factors that are specific to your Policy. You can request a personalized illustration that will show you how this charge (along with other charges plus your loans and accrued interest) affect your cash surrender value. In order to determine the Surrender Charge, we first determine the: .. "Surrender Charge Measure" for the Policy's initial specified face amount, which is: . For the first Policy year the lesser of: (A) actual cumulative premiums paid; and (B) the Maximum Surrender Charge Premium. . For the second Policy year and later Policy years, the lesser of: (A) actual cumulative premiums paid within the first two Policy years; and (B) the Maximum Surrender Charge Premium. .. "Increase Surrender Charge Measure" (i.e., The Surrender Charge Measure for any increase you have made in your specified face amount), which is: . For the first year following the increase, the lesser of: (A)the amount by which the actual cumulative premiums paid within twelve months following the date of the application for the specified face amount increase exceeds the sum of: (i)the Surrender Charge Measure for the first Policy year, plus (ii)the Increase Surrender Charge Measure for the first year following any prior increases; and (B)the Maximum Surrender Charge Premium at the time of the increase. . For the second year and later following the increase, the lesser of: (A)the amount by which actual cumulative premiums paid within twenty-four months following the date of the application for the specified face amount increase exceeds the sum of: (i)the Surrender Charge Measure for the second Policy year, plus (ii)the Increase Surrender Charge Measure for the second year following any prior increases; and (B)the Maximum Surrender Charge Premium for the second Policy year following the increase. .. Maximum Surrender Charge Premium, which is the amount determined at issue (or, for a specified face amount increase, at the time of the increase) which will not exceed: . For the first Policy year, or the first year after the increase, 75% of the Smoker Federal Guideline Annual Premium for Death Benefit Option A and all riders at issue, or at the time of the increase, respectively; and 35 . For the second Policy year and thereafter, or the second and later years after the increase, 100% of the Smoker Federal Guideline Annual Premium for Death Benefit Option A and all riders at issue or at the time of the increase. [SIDEBAR: There is no surrender charge on partial withdrawals of up to 10% of the Policy's Cash Surrender Value each year.] .. Federal Guideline Annual Premium, which is the level annual amount of premium that you would need to pay through the Final Date of your Policy for the specified face amount of your Policy if we set your premiums both as to timing and amount, based on: . the 1980 Commissioners Standard Ordinary Mortality Tables; . net investment earnings at an annual effective rate of 4%; and . fees and charges as set forth in your Policy and Policy riders. This premium is based on the insured's age, sex, smoking status and rate class and is generally higher for older ages, for males, for smokers and for those in a higher rate class. Using the above determinations, we will compute the full surrender charge by first locating the Policy year in the table below that contains the date as of which we are computing the charge. Then we multiply the indicated percentage by the then-applicable Surrender Charge Measure. This gives us the surrender charge for the initial specified face amount. We compute the surrender charge for each specified face amount increase that is then in effect by a similar method, except that we multiply the percentage for the actual year following the date of the increase by the Increase Surrender Charge Measure for that increase. By totaling the surrender charge we compute for the original specified face amount with any that we compute for each specified face amount increase, we arrive at the full surrender charge.
POLICY YEAR (OR ACTUAL YEAR SINCE SPECIFIED FACE 16 AND AMOUNT INCREASE) 1 2 3 4 5 6* 7 8 9 10 11 12 13 14 15 LATER - -------------------------------------------------------------------------------------------- % of Measure 100 100 90 80 70 60 54 48 42 36 30 24 18 12 6 0
*After the fifth year, the surrender charges will decrease each Policy month. You may withdraw up to 10% of the Policy's Cash Surrender Value each year without paying a surrender charge. A withdrawal will exceed the 10% free withdrawal amount to the extent that it (together with any prior withdrawals in the same Policy year) is more than 10% of your Policy's cash surrender value on the date of the withdrawal. The amount deducted would be the same proportion of the full surrender charge as (a) the amount of the withdrawal that exceeds the 10% free withdrawal amount bears to (b) the Policy's total cash value. If you make a withdrawal of cash value or specified face amount decrease that causes us to deduct an amount of surrender charge, we will reduce the remaining surrender charge on the Policies' specified face amount by the amount deducted. If you previously increased your Policy's specified face amount, we make any such reductions first to any remaining surrender charge attributable to the most recent such increase(s) (in reverse chronological order) and then to those attributable to the original specified face amount. We deduct any surrender charge that results from a partial withdrawal or specified face amount decrease from the same sources as we take the monthly deduction. If the cash value is insufficient, we reduce the amount we pay you. Because of the surrender charge, your Policy will probably not have any cash surrender value for at least the first Policy year unless you pay significantly 36 more than the Minimum Initial Premium. Since the Surrender Charge Measure and Increase Surrender Charge Measure are capped at the end of the first two Policy years after issue, and after increase in specified face amount, respectively, you may be able to limit your surrender charges by limiting your premium payments to levels necessary to keep the Policy and the guaranteed minimum death benefit in effect. CHARGES FOR OPTIONAL BENEFITS We charge for the cost of any additional benefits you can add by rider as described in the rider form. CHARGES AND EXPENSES OF THE SEPARATE ACCOUNT AND THE PORTFOLIOS Charges for Income Taxes: In general, we don't expect to incur federal, state or local taxes upon the earnings or realized capital gains attributable to the assets in the Separate Account relating to the Policies' cash value. If we do incur such taxes, we reserve the right to charge the cash value allocated to the Separate Account for these taxes. Portfolio Expenses: There are daily charges against each Portfolio's assets for investment advisory services and fund operating expenses. These are described under "Fee Tables--Annual Portfolio Operating Expenses" in this prospectus as well as in the Fund prospectuses attached to this prospectus. VARIATIONS IN CHARGES We may vary the amounts of charges described in this prospectus as a result of such factors as (1) differences in legal requirements in the jurisdiction where the Policies are sold, (2) differences in actual or expected risks, expenses, policy persistency, premium payment patterns, or mortality experience among different categories of purchasers or insureds, and (3) changes in Policy pricing that we may implement from time to time. Any such variations will be pursuant to administrative procedures that we establish and will not discriminate unfairly against any Policy owner. Any such variations may apply to existing Policies as well as to Policies issued in the future, except that the charges under any Policy may never exceed the maximums therein. FEDERAL TAX MATTERS The following is a brief summary of some tax rules that may apply to your Policy. It does not purport to be complete or cover every situation. Because individual circumstances vary, you should consult with your own tax advisor to find out how taxes can affect your benefits and rights under your Policy, especially before you make unscheduled premium payments, change your specified face amount, change your death benefit option, change coverage provided by riders, take a loan or withdrawal, or assign or surrender the Policy. [SIDEBAR: You should consult with your own tax advisor to find out how taxes can affect your benefits and rights under your Policy.] INSURANCE PROCEEDS .. Generally excludable from your beneficiary's gross income. .. The proceeds may be subject to federal estate tax: (i) if paid to the insured's estate; or (ii) if paid to a different beneficiary if the insured possessed incidents of ownership at or within three years before death. .. If you die before the insured, the value of your Policy (determined under IRS rules) is included in your estate and may be subject to federal estate tax. .. Whether or not any federal estate tax is due is based on a number of factors, including the estate size. 37 .. The insurance proceeds payable upon death of the insured will never be less than the minimum amount required for the Policy to be treated as life insurance under section 7702 of the Internal Revenue Code, as in effect on the date the Policy was issued. CASH VALUE (IF YOUR POLICY IS NOT A MODIFIED ENDOWMENT CONTRACT) You are generally not taxed on your cash value until you withdraw it, surrender your Policy or receive a distribution such as on the Final Date. In these cases, you are generally permitted to take withdrawals and receive other distributions up to the amount of premiums paid without any tax consequences. However, withdrawals and other distributions will be subject to income tax after you have received amounts equal to the total premiums you paid. Somewhat different rules apply in the first 15 Policy years, when a distribution may be subject to tax if there is a gain in your Policy (which is generally when your cash value exceeds the cumulative premiums you paid). There may be an indirect tax upon the income in the Policy or the proceeds of a Policy under the Federal corporate alternative minimum tax, if you are subject to that tax. SPLIT-DOLLAR INSURANCE PLANS The IRS has recently issued guidance on split dollar insurance plans. A tax advisor should be consulted with respect to this new guidance if you have purchased or are considering the purchase of a Policy for a split dollar insurance plan. The Sarbanes-Oxley Act of 2002 (the "Act"), which was signed into law on July 30, 2002, prohibits, with limited exceptions, publicly-traded companies, including non-U.S. companies that have securities listed on U.S. exchanges, from extending, directly or indirectly or through a subsidiary, many types of personal loans to their directors or executive officers. It is possible that this prohibition may be interpreted to apply to certain split-dollar life insurance arrangements for directors and executive officers of such companies, since at least some such arrangements can arguably be viewed as involving a loan from the employer for at least some purposes. Although the prohibition on loans generally took effect as of July 30, 2002, there is an exception for loans outstanding as of the date of enactment, so long as there is no material modification to the loan terms and the loan is not renewed after July 30, 2002. Any affected business contemplating the payment of a premium on an existing Policy or the purchase of a new Policy in connection with a split-dollar life insurance arrangement should consult legal counsel. LOANS .. Loan amounts you receive will generally not be subject to income tax, unless your Policy is or becomes a modified endowment contract, is exchanged or terminates. .. Interest on loans is generally not deductible. For businesses that own a Policy, at least part of the interest deduction unrelated to the Policy may be disallowed unless the insured is a 20% owner, officer, director or employee of the business. .. If your Policy terminates (upon surrender, cancellation lapse, the Final Date or, in most cases, exchange) while any Policy loan is outstanding, the 38 amount of the loan plus accrued interest thereon will be deemed to be a "distribution" to you. Any such distribution will have the same tax consequences as any other Policy distribution. Since amounts borrowed reduce the cash value that will be distributed to you if the Policy is surrendered, cancelled or lapses, any cash value distributed to you in these circumstances may be insufficient to pay the income tax on any gain. .. The tax consequences of loans outstanding after the 20th Policy year are uncertain. MODIFIED ENDOWMENT CONTRACTS These contracts are life insurance policies where the premiums paid during the first 7 years after the Policy is issued, or after a material change in the Policy exceeds tax law limits referred to as the "7-pay test." Material changes in the Policy, include changes in the level of benefits and certain other changes to your Policy after the issue date. Reductions in benefits during a 7-pay period may cause your Policy to become a modified endowment contract. Generally, a life insurance policy that is received in exchange for a modified endowment contract will also be considered a modified endowment contract. The IRS has promulgated a procedure for the correction of inadvertent modified endowment contracts. If your Policy is considered a modified endowment contract: .. The death benefit will still generally be income tax free to your beneficiary, as discussed above. .. Amounts withdrawn or distributed before the insured's death, including (without limitation) loans, assignments and pledges, are (to the extent of any gains on your policy) treated as income first and subject to income tax. All modified endowment contracts you purchase from us and our affiliates during the same calendar year are treated as a single contract for purposes of determining the amount of any such income. .. You will generally owe an additional 10% tax penalty on the taxable portion of the amounts you received before age 59 1/2, except generally if you are disabled or the distribution is part of a series of substantially equal periodic payments. DIVERSIFICATION In order for your Policy to qualify as life insurance, we must comply with certain diversification standards with respect to the investments underlying the Policy. We believe that we satisfy and will continue to satisfy these diversification standards. Inadvertent failure to meet these standards may be able to be corrected. Failure to meet these standards would result in immediate taxation to Policy owners of gains under their Policies. CHANGES TO TAX RULES AND INTERPRETATIONS Changes in applicable tax laws, rules and interpretations can adversely affect the tax treatment of your Policy. These changes may take effect retroactively. We reserve the right to amend the Policy in any way necessary to avoid any adverse tax treatment. Examples of changes that could create adverse tax consequences include: .. Possible taxation of cash value transfers. .. Possible taxation as if you were the owner of your allocable portion of the Separate Account's assets. 39 .. Possible limits on the number of investment funds available or the frequency of transfers among them. .. Possible changes in the tax treatment of Policy benefits and rights. FOREIGN TAX CREDITS To the extent permitted under the federal tax law, we may claim the benefit of certain foreign tax credits attributable to taxes paid by certain Portfolios to foreign jurisdictions. RIGHTS WE RESERVE We reserve the right to make certain changes if we believe the changes are in the best interest of our Policy owners or would help carry out the purposes of the Policy. We will make these changes in the manner permitted by applicable law and only after getting any necessary owner and regulatory approval. We will notify you of any changes that result in a material change in the underlying investments in the investment divisions, and you will have a chance to transfer out of the affected division (without charge). Some of the changes we may make include: .. Operating the Separate Account in any other form that is permitted by applicable law. .. Changes to obtain or continue exemptions from the 1940 Act. .. Transferring assets among investment divisions or to other separate accounts, or our general account or combining or removing investment divisions from the Separate Account. .. Substituting Fund shares in an investment division for shares of another portfolio of a Fund or another fund or investment permitted by law. .. Changing the way we assess charges without exceeding the aggregate amount of the Policy's guaranteed maximum charges. .. Making any necessary technical changes to the Policy to conform it to the changes we have made. [SIDEBAR: Carefully review your Policy which contains a full discussion of all its provisions.] OTHER POLICY PROVISIONS You should read your Policy for a full discussion of its provisions. The following is a brief discussion of some of the provisions that you should consider: "FREE LOOK" PERIOD TO CANCEL YOUR POLICY You can return the Policy during this period. The period is the later of: .. 10 days after you receive the Policy (unless state law requires your Policy to specify a longer specified period); and .. 45 days after the completed application is signed (in the case of tele-underwritten policies, 45 days after the preliminary application is signed). If you return your Policy, we will send you a complete refund of any premiums paid (or cash value plus any charges deducted if state law requires) within seven days. SUICIDE If the insured commits suicide within the first two Policy years (or any different period provided by state law), your beneficiary will receive all premiums paid (without interest), less any outstanding loans (plus accrued 40 interest) and withdrawals taken. Similarly, we will pay the beneficiary only the cost of any increase in specified face amount if the insured commits suicide within two years of such increase. ASSIGNMENT AND CHANGE IN OWNERSHIP You can assign your Policy as collateral if you notify us in writing. The assignment or release of the assignment is effective when it is recorded at the Designated Office. We are not responsible for determining the validity of the assignment or its release. Also, there could be serious adverse tax consequences to you or your beneficiary, so you should consult with your tax adviser before making any change of ownership or other assignment. PAYMENT AND DEFERMENT [SIDEBAR: Under certain situations, we may defer payments.] Generally, we will pay or transfer amounts from the Separate Account within seven days after the Date of Receipt of all necessary documentation required for such payment or transfer. We can defer this if: .. The New York Stock Exchange has an unscheduled closing. .. There is an emergency so that we could not reasonably determine the investment experience of a Policy. .. The Securities and Exchange Commission by order permits us to do so for the protection of Policy owners (provided that the delay is permitted under New York State insurance law and regulations). .. With respect to the insurance proceeds, if entitlement to a payment is being questioned or is uncertain. .. We are paying amounts attributable to a check. In that case we can wait for a reasonable time (15 days or less) to let the check clear. We currently pay interest on the amount of insurance proceeds at 3% per year (or higher if state law requires) from the date of death until the date we pay the benefit. DIVIDENDS The Policy is "nonparticipating," which means it is not eligible for dividends from us and does not share in any distributions of our surplus. EXCHANGE PRIVILEGE If you decide that you no longer want to take advantage of the investment divisions in the Separate Account, you may transfer all of your money into the Fixed Account. There is currently no charge on transfers. Even if we do have a transfer charge in the future, such charge will never be imposed on a transfer of your entire cash value (or the cash value attributable to a specified face amount increase) to the Fixed Account within the first 24 Policy months (or within 24 Policy months after a specified face amount increase you have requested, as applicable). In some states, however, we implement this by permitting you, without charge, to exchange your Policy (or the portion attributable to a specified face amount increase) to a flexible premium fixed benefit life insurance policy, which we make available. SALES AND ADMINISTRATION OF THE POLICIES [SIDEBAR: We perform the sales and administrative services for the Policies.] We serve as the "principal underwriter," as defined in the 1940 Act, for the Policy. We are registered under the Securities Exchange Act of 1934 as a broker-dealer and are a member of the National Association of Securities Dealers, Inc. 41 DISTRIBUTING THE POLICIES We sell the Policies through licensed life insurance sales representatives: .. Registered through us or through a broker-dealer wholly owned by us; or .. Registered through other broker-dealers COMMISSIONS AND OTHER COMPENSATION We pay commissions and other compensation to sales representatives registered through us or to the broker dealer through which they are registered, for the sale of our products. The commissions and other payments described below do not result in a charge against the Policy in addition to the charges already described elsewhere in this prospectus. We may require all or part of the commissions to be returned to us if you do not continue your Policy for at least one year. Payments to MetLife sales representatives MetLife sales representatives are sales representatives registered through us or through MetLife Securities, Inc., a wholly owned broker-dealer. MetLife sales representatives may be career sales representatives who are employees of MetLife or brokers who are not employees of MetLife. We pay MetLife sales representatives commissions based on the sale of the Policy. The maximum commissions are: .. First Policy Year: (1)50% of the lesser of: (A)Actual premiums received during the first Policy year; (B)The annualized modal premium; (C)The annual premium necessary to keep the longest duration of the guaranteed minimum death benefit effective for a like Policy with Option A and the preferred nonsmoking rating class for standard risks (or the actual rating class for other risks) in place ("MCP"); or (D)$80.00 per $1,000 of specified face amount ("Company Cap Premium") plus (2)3% of premiums received in excess of the smaller of the MCP or the Company Cap Premium .. Policy Years 2-4: 5% of premiums received in the Policy year. .. Policy Years 5-10: A servicing fee of 2% of premiums received in the Policy year. .. Policy years 11 and later: A servicing fee of 1% of premiums received in the Policy year. We make additional payments for the sale of the Policy to the field managers of a MetLife sales representative and to the business unit responsible for the operation of our distribution system. Payments to the field managers vary and depend on many factors including the commissions paid to the MetLife sales representative who sold the Policy, the commissions paid to other MetLife sales representatives the field manager supervises and the amount of proprietary and non-proprietary products sold by the MetLife sales 42 representatives that the field managers supervise. Field managers may be eligible for additional compensation based on the sale production of the MetLife sales representatives the field managers supervise. This additional compensation may include cash compensation such as stock options, insurance benefits and other benefits and non-cash compensation such as conferences. MetLife sales representatives may also be eligible for bonuses, stock options, training allowances, supplemental salary, payments based on a percentage of the Policy's cash value, financing arrangements, insurance benefits, and other benefits. Formulas determine the amount of this additional compensation. These formulas are based on many factors including the type of product and the amount of MetLife proprietary products sold. The sale of MetLife proprietary products increases the amount of additional compensation that a MetLife sales representative will receive. MetLife career sales representatives must meet a minimum level of sales of proprietary products in order to maintain employment with us. MetLife sales representatives are also eligible for various non-cash compensation programs that MetLife offers, such as conferences, trips, prizes and awards. Other payments may be made for other services that do not directly involve the sale of products. These services may include the recruitment and training of personnel, production of promotional literature, and similar services. Payments to broker-dealers. We pay compensation for the sale of the Policies by affiliated and unaffiliated broker-dealers. The compensation that we pay to broker-dealers for the sale of the Policies is generally not expected to exceed, on a present value basis, the aggregate amount of compensation that we pay with respect to sales made by MetLife sales representatives. Broker-dealers pay their sales representatives all or a portion of the commissions received for their sales of the Policies. Some firms may retain a portion of commissions. The amount that the broker-dealer passes on to its sales representatives is determined in accordance with its internal compensation programs. Those programs may also include other types of cash and non-cash compensation and other benefits. Sales representatives of affiliated broker-dealers and their managers may be eligible for various cash benefits and non-cash compensation items (as described above) that we may provide jointly with affiliated broker-dealers. Ask your sales representative for further information about what your sales representative and the broker-dealer for which he or she works may receive in connection with your purchase of a Policy. OTHER PAYMENTS MetLife pays American Funds Distributors, Inc., the principal underwriter for the American Funds Insurance Series, a percentage of all premiums allocated to the American Funds Growth Portfolio, the American Funds Growth-Income Portfolio and the American Funds Global Small Capitalization Portfolio for the services it provides in marketing the Portfolios' shares in connection with the Policies. 43 LEGAL PROCEEDINGS MetLife, like other life insurance companies, is involved in lawsuits, including class action lawsuits. In some class action and other lawsuits involving insurers, substantial damages have been sought and/or material settlement payments have been made. Although the outcome of any litigation cannot be predicted with certainty, MetLife believes that, as of the date of this prospectus, there are no pending or threatened lawsuits that will have a materially adverse impact on it or the Separate Account. RESTRICTIONS ON FINANCIAL TRANSACTIONS Federal laws designed to counter terrorism and prevent money laundering by criminals might, in certain circumstances, require us to reject a premium payment and/or block or "freeze" your account. If these laws apply in a particular situation, we would not be allowed to process any request for withdrawals, surrenders, or death benefits, make transfers, or continue making payments under your death benefit option until instructions are received from the appropriate regulator. We also may be required to provide additional information about your account to government regulators. EXPERTS The financial statements included in this prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing herein and are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. Deloitte & Touche LLP's principal business address is 201 E. Kennedy Boulevard, Tampa, Florida 33602. Marian Zeldin, FSA, MAAA, Vice-President and Actuary of MetLife has examined actuarial matters included in the registration statement, as stated in her opinion filed as an exhibit to the registration statement. ILLUSTRATION OF POLICY BENEFITS Personalized illustrations can help you understand how your Policy values can vary. In order to help you understand how your Policy values would vary over time under different sets of assumptions, we will provide you with certain illustrations upon request. These will be based on the age and insurance risk characteristics of the insured under your Policy and such factors as the specified face amount, death benefit option, premium payment amounts and rates of return (within limits) that you request. You can request such illustrations at any time. We have included an example of such an illustration as Appendix A to this prospectus. FINANCIAL STATEMENTS The financial statements of the Separate Account are attached to this prospectus. You can find the financial statements of MetLife in the Statement of Additional Information referred to on the page following Appendix A. Our financial statements should be considered only as bearing upon our ability to meet our obligations under the Policy. 44 GLOSSARY AGE. The age of an insured refers to the insured's age at his or her nearest birthday. DATE OF RECEIPT. The Date of Receipt is the day your requests, instructions and notifications are received in our Designated Office. LOAN ACCOUNT. The account to which cash value from the Separate Account or the Fixed Account is transferred when you take a Policy loan. PREMIUMS. Premiums include all payments you make under your Policy, whether a planned periodic premium payment or an unscheduled premium payment. RIDER. A rider is an optional, additional benefit or increase in coverage that you can add to your Policy. SPECIFIED FACE AMOUNT. The specified face amount is the base amount of insurance coverage under your Policy. YOU. "You" refers to the Policy Owner. 45 APPENDIX A ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES AND CASH SURRENDER VALUES The tables in this Appendix A illustrate the way the Policies work based on assumptions about investment returns and the insured's characteristics. They show how the death benefit, cash surrender value and cash value could vary over an extended period of time assuming hypothetical gross rates of return (i.e., investment income and capital gains and losses, realized or unrealized) for the Separate Account equal to constant after tax annual rates of 0%, 6% and 10%. The tables are based on a specified face amount of $100,000 for a male aged 40. The insured is assumed to be in the nonsmoker preferred class. The tables assume no rider benefits and assume you made no allocations to the Fixed Account. Values are first given based on current cost of term insurance and other Policy charges and then based on the guaranteed maximums for such charges. The illustrations show the Option A death benefit. Policy values would be different (either higher or lower) from the illustrated amounts in certain circumstances. For example, illustrated amounts would be different where actual gross rates of return averaged 0%, 6% or 10%, but: (i) the rates of return varied above and below these averages during the period, (ii) premiums were paid in other amounts or at other than annual intervals, or (iii) cash values were allocated differently among individual investment divisions with varying rates of return. They would also differ if a Policy loan or partial withdrawal were made during the period of time illustrated, if the insured were female or in another risk classification, or if the Policies were issued in situations where distinctions between male and female insureds are not permitted. For example, as a result of variations in actual returns, additional premium payments beyond those illustrated may be necessary to maintain the Policy in force for the periods shown or to realize the Policy values shown on particular illustrations even if the average rate of return is achieved. The death benefits, cash surrender values and cash values shown in the tables reflect: (i) deductions from premiums for the sales charge and state and federal premium tax charge; and (ii) monthly deductions of charges for administration, for the cost of insurance, and for mortality and expense risks. The cash surrender values reflect a Surrender Charge deducted from the cash value upon surrender, face reduction or lapse during the first 15 Policy years. (See "Charges and Deductions You Pay.") The illustrations reflect an arithmetic average of the gross investment advisory fees and operating expenses of the Portfolios, at an annual rate of .81% of the average daily net assets of the Portfolios. This average does not reflect expense reimbursements and subsidies by the investment advisers of certain Portfolios. (See "Annual Portfolio Operating Expenses.") The gross rates of return used in the illustration do not reflect the deductions of the charges and expenses of the Portfolios. Taking account of the average investment advisory fee and operating expenses of the Portfolios, the gross annual rates of return of 0%, 6% and 10% correspond to net investment return at constant annual rates of -.80%, 5.15% and 9.12%, respectively. If you request, we will furnish a personalized illustration reflecting the proposed insured's age, sex, underwriting classification, and the face amount or premium schedule you request. Because these and other assumptions will differ, the values shown in the personalized illustrations can differ very substantially from those shown in the tables below. Therefore, you should carefully review the information that accompanies any personalized illustration. That information will disclose all the assumptions on which the personalized illustration is based. Where applicable, we will also furnish on request a personalized illustration for a Policy which is not affected by the sex of the insured. You should contact your registered representative to request a personalized illustration. 46 MALE ISSUE AGE 40 $816 ANNUAL PREMIUM FOR NONSMOKER PREFERRED UNDERWRITING RISK $100,000 SPECIFIED FACE AMOUNT OPTION A DEATH BENEFIT THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
DEATH BENEFIT CASH SURRENDER VALUE CASH VALUE ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF -------------------------- ----------------------- ----------------------- END OF POLICY YEAR 0% 6% 10% 0% 6% 10% 0% 6% 10% - ------------------ -------- -------- -------- ------ ------- -------- ------ ------- -------- 1 $100,000 $100,000 $100,000 $ 0 $ 0 $ 0 $ 171 $ 197 $ 215 2 100,000 100,000 100,000 0 0 0 612 685 736 3 100,000 100,000 100,000 0 0 0 1,029 1,177 1,282 4 100,000 100,000 100,000 149 399 584 1,454 1,705 1,889 5 100,000 100,000 100,000 786 1,170 1,462 1,928 2,313 2,605 6 100,000 100,000 100,000 1,392 1,944 2,376 2,372 2,924 3,356 7 100,000 100,000 100,000 1,920 2,673 3,281 2,802 3,555 4,162 8 100,000 100,000 100,000 2,432 3,419 4,242 3,215 4,203 5,025 9 100,000 100,000 100,000 2,923 4,181 5,262 3,609 4,866 5,947 10 100,000 100,000 100,000 3,396 4,958 6,345 3,983 5,545 6,932 15 100,000 100,000 100,000 5,446 9,121 12,990 5,544 9,219 13,088 20 100,000 100,000 100,000 6,584 13,496 22,218 6,584 13,496 22,218 25 100,000 100,000 100,000 6,533 17,939 35,424 6,533 17,939 35,424 30 100,000 100,000 100,000 5,367 22,685 55,443 5,367 22,685 55,443 35 100,000 100,000 100,000 1,057 26,157 86,153 1,057 26,157 86,153 40 * 100,000 141,666 * 27,455 134,920 * 27,455 134,920 45 100,000 218,568 22,155 208,160 22,155 208,160 50 100,000 332,615 191 316,776 191 316,776 55 * 481,569 * 481,569 * 481,569
* Policy terminates unless greater premium payments are made. IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY THE POLICY OWNER, AND THE INVESTMENT EXPERIENCE OF THE INVESTMENT DIVISIONS SELECTED FOR THE POLICY. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 10% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATION CAN BE MADE BY METLIFE OR THE PORTFOLIOS THAT THOSE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. 47 MALE ISSUE AGE 40 $816 ANNUAL PREMIUM FOR NONSMOKER PREFERRED UNDERWRITING RISK $100,000 SPECIFIED FACE AMOUNT OPTION A DEATH BENEFIT THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
DEATH BENEFIT CASH SURRENDER VALUE CASH VALUE ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF -------------------------- --------------------- --------------------- END OF POLICY YEAR 0% 6% 10% 0% 6% 10% 0% 6% 10% - ------------------ -------- -------- -------- ------ ------ ------- ------ ------ ------- 1 $100,000 $100,000 $100,000 $ 0 $ 0 $ 0 $ 166 $ 193 $ 210 2 100,000 100,000 100,000 0 0 0 598 671 721 3 100,000 100,000 100,000 0 0 0 1,006 1,152 1,256 4 100,000 100,000 100,000 81 327 508 1,387 1,633 1,814 5 100,000 100,000 100,000 598 971 1,254 1,741 2,113 2,396 6 100,000 100,000 100,000 1,085 1,609 2,022 2,064 2,589 3,001 7 100,000 100,000 100,000 1,475 2,177 2,748 2,356 3,059 3,630 8 100,000 100,000 100,000 1,832 2,737 3,498 2,616 3,521 4,282 9 100,000 100,000 100,000 2,154 3,286 4,271 2,840 3,971 4,957 10 100,000 100,000 100,000 2,439 3,820 5,067 3,026 4,408 5,654 15 100,000 100,000 100,000 3,172 6,149 9,405 3,270 6,247 9,503 20 100,000 100,000 100,000 1,718 6,716 13,590 1,718 6,716 13,590 25 * 100,000 100,000 * 3,847 16,705 * 3,847 16,705 30 * 100,000 * 15,956 * 15,956 35 100,000 3,792 3,792 40 * * * 45 50 55
* Policy terminates unless greater premium payments are made. IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY THE POLICY OWNER, AND THE INVESTMENT EXPERIENCE OF THE INVESTMENT DIVISIONS SELECTED FOR THE POLICY. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUES FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 10% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATION CAN BE MADE BY METLIFE OR THE PORTFOLIOS THAT THOSE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. 48 Additional information about the Policy and the Separate Account can be found in the Statement of Additional Information. You may obtain a copy of the Statement of Additional Information, without charge, by calling 800 MET 5000 or by logging on to our website at www.MetLife.com. For current information about your Policy values, for transfers and premium reallocations, to change or update Policy information such as your billing address, billing mode, beneficiary or ownership, for information about other Policy transactions, and to ask questions about your Policy, you may call our TeleService Center at 800 MET 5000. You may also obtain, without charge, a personalized illustration of death benefits, cash surrender values and cash values by contacting your sales representative. This prospectus incorporates by reference all of the information contained in the Statement of Additional Information, which is legally part of this prospectus. Information about the Policy and the Separate Account, including the Statement of Additional Information, is available for viewing and copying at the SEC's Public Reference Room in Washington, D.C. Information about the operation of the public reference room may be obtained by calling the SEC at 202-942-8090. The Statement of Additional Information, reports and other information about the Separate Account are available on the SEC Internet site as www.sec.gov. Copies of this information may be obtained upon payment of a duplicating fee, by writing to the SEC's Public Reference Section at 450 Fifth Street, NW, Washington, DC 20549-0102. MetLife was formed under the laws of New York State in 1868. MetLife Inc., through its subsidiaries and affiliates, is a leading provider of insurance and other financial services to individual and group customers. The MetLife companies serve approximately 13 million households in the United States and provide benefits to 37 million employees and family members through their plan sponsors. Outside the U.S., the MetLife companies have insurance operations in 10 countries serving approximately 8 million customers. For more information about MetLife, please visit our website at www.metlife.com FILE NO. 811-6025 INDEPENDENT AUDITORS' REPORT To the Policyholders of Metropolitan Life Separate Account UL and the Board of Directors Metropolitan Life Insurance Company: We have audited the accompanying statement of assets and liabilities of each of the investment divisions (as disclosed in Note 1 to the financial statements) comprising Metropolitan Life Separate Account UL (the "Separate Account") of Metropolitan Life Insurance Company ("Metropolitan Life") as of December 31, 2003, and the related statements of operations and statements of changes in net assets for each of the periods in the three years then ended. These financial statements are the responsibility of the Separate Account's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 custodians and the depositors of the Separate Account. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each of the investment divisions comprising the Separate Account of Metropolitan Life as of December 31, 2003, the results of their operations and the changes in their net assets for each of the periods in the three years then ended, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Tampa, Florida April 16, 2004 F-1 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 2003
State Street State Street State Street Research Research Research Investment Trust Diversified Aggressive Growth Investment Division Investment Division Investment Division ------------------- ------------------- ------------------- ASSETS: Investments at Value: Metropolitan Series Fund, Inc. ("Metropolitan Fund") State Street Research Investment Trust Portfolio (14,863,974 Shares; cost $441,842,964)................ $ 366,694,241 $ -- $ -- State Street Research Diversified Portfolio (19,105,895 Shares; cost $308,822,843)................ -- 289,072,197 -- State Street Research Aggressive Growth Portfolio (10,426,099 Shares; cost $247,124,703)................ -- -- 187,148,479 MetLife Stock Index Portfolio (15,492,994 Shares; cost $471,480,310)................ -- -- -- FI International Stock Portfolio (4,453,384 Shares; cost $49,092,645).................. -- -- -- Janus Mid Cap Portfolio (13,049,904 Shares; cost $245,811,880)................ -- -- -- T. Rowe Price Small Cap Growth Portfolio (5,028,788 Shares; cost $60,709,864).................. -- -- -- Scudder Global Equity Portfolio (2,503,741 Shares; cost $28,862,268).................. -- -- -- Harris Oakmark Large Cap Value Portfolio (3,104,521 Shares; cost $33,265,016).................. -- -- -- Neuberger Berman Partners Mid Cap Value Portfolio (1,781,579 Shares; cost $24,876,339).................. -- -- -- T. Rowe Price Large Cap Growth Portfolio (2,868,134 Shares; cost $31,282,336).................. -- -- -- Lehman Brothers Aggregate Bond Index Portfolio (5,026,722 Shares; cost $53,380,037).................. -- -- -- Morgan Stanley EAFE Index Portfolio (2,459,540 Shares; cost $19,855,278).................. -- -- -- Russell 2000 Index Portfolio (2,317,218 Shares; cost $22,079,290).................. -- -- -- Met/Putnam Voyager Portfolio (1,900,061 Shares; cost $8,302,977)................... -- -- -- State Street Research Aurora Portfolio (3,401,875 Shares; cost $44,584,567).................. -- -- -- MetLife Mid Cap Stock Index Portfolio (2,344,249 Shares; cost $23,095,881).................. -- -- -- Franklin Templeton Small Cap Growth Portfolio (327,356 Shares; cost $2,499,796)..................... -- -- -- State Street Research Large Cap Value Portfolio (104,079 Shares; cost $957,558)....................... -- -- -- Davis Venture Value Portfolio (965,333 Shares; cost $21,277,385).................... -- -- -- Loomis Sayles Small Cap Portfolio (23,295 Shares; cost $3,717,206)...................... -- -- -- Alger Equity Growth Portfolio (263,538 Shares; cost $4,582,005)..................... -- -- -- MFS Investors Trust Portfolio (186,025 Shares; cost $1,391,215)..................... -- -- -- MFS Research Managers Portfolio (79,153 Shares; cost $613,213)........................ -- -- -- State Street Research Bond Income Portfolio (837,355 Shares; cost $89,830,207).................... -- -- -- FI Structured Equity Portfolio (3,215 Shares; cost $454,116)......................... -- -- -- Harris Oakmark Focused Value Portfolio (115,466 Shares; cost $21,015,539).................... -- -- -- Salomon Brothers Strategic Bond Opportunities Portfolio (409,695 Shares; cost $4,866,132)..................... -- -- -- Salomon Brothers U.S. Government Portfolio (592,211 Shares; cost $7,267,172)..................... -- -- -- State Street Research Money Market Portfolio (273,528 Shares; cost $27,352,817).................... -- -- -- FI Mid Cap Opportunities Portfolio (96,616 Shares; cost $916,740)........................ -- -- -- ----------------- ----------------- ----------------- Total Investments...................................... 366,694,241 289,072,197 187,148,479 Cash and Accounts Receivable........................... 393,060 -- 119,894 ----------------- ----------------- ----------------- Total Assets........................................... 367,087,301 289,072,197 187,268,373 LIABILITIES............................................ Due to/From Metropolitan Life Insurance Company........ -- 38,810 -- ----------------- ----------------- ----------------- NET ASSETS............................................. $367,087,301 $289,033,387 $187,268,373 ================= ================= ================= Outstanding Units (In Thousands)....................... 16,151 12,881 11,833 Unit Values............................................ $10.57 to $33.12 $11.79 to $30.64 $11.71 to $16.87
MetLife Stock Index Investment Division ------------------- ASSETS: Investments at Value: Metropolitan Series Fund, Inc. ("Metropolitan Fund") State Street Research Investment Trust Portfolio (14,863,974 Shares; cost $441,842,964)................ $ -- State Street Research Diversified Portfolio (19,105,895 Shares; cost $308,822,843)................ -- State Street Research Aggressive Growth Portfolio (10,426,099 Shares; cost $247,124,703)................ -- MetLife Stock Index Portfolio (15,492,994 Shares; cost $471,480,310)................ 456,268,669 FI International Stock Portfolio (4,453,384 Shares; cost $49,092,645).................. -- Janus Mid Cap Portfolio (13,049,904 Shares; cost $245,811,880)................ -- T. Rowe Price Small Cap Growth Portfolio (5,028,788 Shares; cost $60,709,864).................. -- Scudder Global Equity Portfolio (2,503,741 Shares; cost $28,862,268).................. -- Harris Oakmark Large Cap Value Portfolio (3,104,521 Shares; cost $33,265,016).................. -- Neuberger Berman Partners Mid Cap Value Portfolio (1,781,579 Shares; cost $24,876,339).................. -- T. Rowe Price Large Cap Growth Portfolio (2,868,134 Shares; cost $31,282,336).................. -- Lehman Brothers Aggregate Bond Index Portfolio (5,026,722 Shares; cost $53,380,037).................. -- Morgan Stanley EAFE Index Portfolio (2,459,540 Shares; cost $19,855,278).................. -- Russell 2000 Index Portfolio (2,317,218 Shares; cost $22,079,290).................. -- Met/Putnam Voyager Portfolio (1,900,061 Shares; cost $8,302,977)................... -- State Street Research Aurora Portfolio (3,401,875 Shares; cost $44,584,567).................. -- MetLife Mid Cap Stock Index Portfolio (2,344,249 Shares; cost $23,095,881).................. -- Franklin Templeton Small Cap Growth Portfolio (327,356 Shares; cost $2,499,796)..................... -- State Street Research Large Cap Value Portfolio (104,079 Shares; cost $957,558)....................... -- Davis Venture Value Portfolio (965,333 Shares; cost $21,277,385).................... -- Loomis Sayles Small Cap Portfolio (23,295 Shares; cost $3,717,206)...................... -- Alger Equity Growth Portfolio (263,538 Shares; cost $4,582,005)..................... -- MFS Investors Trust Portfolio (186,025 Shares; cost $1,391,215)..................... -- MFS Research Managers Portfolio (79,153 Shares; cost $613,213)........................ -- State Street Research Bond Income Portfolio (837,355 Shares; cost $89,830,207).................... -- FI Structured Equity Portfolio (3,215 Shares; cost $454,116)......................... -- Harris Oakmark Focused Value Portfolio (115,466 Shares; cost $21,015,539).................... -- Salomon Brothers Strategic Bond Opportunities Portfolio (409,695 Shares; cost $4,866,132)..................... -- Salomon Brothers U.S. Government Portfolio (592,211 Shares; cost $7,267,172)..................... -- State Street Research Money Market Portfolio (273,528 Shares; cost $27,352,817).................... -- FI Mid Cap Opportunities Portfolio (96,616 Shares; cost $916,740)........................ -- ---------------- Total Investments...................................... 456,268,669 Cash and Accounts Receivable........................... 845,678 ---------------- Total Assets........................................... 457,114,347 LIABILITIES............................................ Due to/From Metropolitan Life Insurance Company........ -- ---------------- NET ASSETS............................................. $457,114,347 ================ Outstanding Units (In Thousands)....................... 25,747 Unit Values............................................ $9.58 to $29.26
See Notes to Financial Statements. F-2
FI International Janus T. Rowe Price Scudder Harris Oakmark Neuberger Berman T. Rowe Price Stock Mid Cap Small Cap Growth Global Equity Large Cap Value Partners Mid Cap Large Cap Growth Investment Investment Investment Investment Investment Value Investment Investment Division Division Division Division Division Division Division - ---------------- ---------------- ----------------- ----------------- ----------------- ----------------- ---------------- $ -- $ -- $ -- $ -- $ -- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 43,910,364 -- -- -- -- -- -- -- 182,829,152 -- -- -- -- -- -- -- 61,703,229 -- -- -- -- -- -- -- 28,617,758 -- -- -- -- -- -- -- 37,440,522 -- -- -- -- -- -- -- 30,910,402 -- -- -- -- -- -- -- 33,385,077 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - ---------------- ---------------- ----------------- ----------------- ----------------- ----------------- ---------------- 43,910,364 182,829,152 61,703,229 28,617,758 37,440,522 30,910,402 33,385,077 73,925 1,248,936 139,936 77,960 63,107 35,149 135,257 - ---------------- ---------------- ----------------- ----------------- ----------------- ----------------- ---------------- 43,984,289 184,078,088 61,843,165 28,695,718 37,503,629 30,945,551 33,520,334 -- -- -- -- -- -- -- - ---------------- ---------------- ----------------- ----------------- ----------------- ----------------- ---------------- $ 43,984,289 $ 184,078,088 $ 61,843,165 $ 28,695,718 $ 37,503,629 $ 30,945,551 $ 33,520,334 ================ ================ ================= ================= ================= ================= ================ 3,484 13,348 4,703 2,140 3,060 1,946 3,290 $9.92 to $13.85 $5.69 to $16.17 $12.64 to $14.08 $12.92 to $14.39 $11.53 to $14.56 $13.86 to $19.29 $8.23 to $12.13 Lehman Brothers Aggregate Bond Index Investment Division - ----------------- $ -- -- -- -- -- -- -- -- -- -- -- 54,942,071 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - ----------------- 54,942,071 52,236 - ----------------- 54,994,307 -- - ----------------- $ 54,994,307 ================= 4,064 $12.77 to $13.67
See Notes to Financial Statements. F-3 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 2003
Morgan Stanley Russell 2000 Met/Putnam State Street EAFE Index Index Voyager Research Aurora Investment Investment Investment Investment Division Division Division Division ---------------- ----------------- --------------- ----------------- ASSETS: Investments at Value: Metropolitan Series Fund, Inc. ("Metropolitan Fund") State Street Research Investment Trust Portfolio (14,863,974 Shares; cost $441,842,964)................ $ -- $ -- $ -- $ -- State Street Research Diversified Portfolio (19,105,895 Shares; cost $308,822,843)................ -- -- -- -- State Street Research Aggressive Growth Portfolio (10,426,099 Shares; cost $247,124,703)................ -- -- -- -- MetLife Stock Index Portfolio (15,492,994 Shares; cost $471,480,310)................ -- -- -- -- FI International Stock Portfolio (4,453,384 Shares; cost $49,092,645).................. -- -- -- -- Janus Mid Cap Portfolio (13,049,904 Shares; cost $245,811,880)................ -- -- -- -- T. Rowe Price Small Cap Growth Portfolio (5,028,788 Shares; cost $60,709,864).................. -- -- -- -- Scudder Global Equity Portfolio (2,503,741 Shares; cost $28,862,268).................. -- -- -- -- Harris Oakmark Large Cap Value Portfolio (3,104,521 Shares; cost $33,265,016).................. -- -- -- -- Neuberger Berman Partners Mid Cap Value Portfolio (1,781,579 Shares; cost $24,876,339).................. -- -- -- -- T. Rowe Price Large Cap Growth Portfolio (2,868,134 Shares; cost $31,282,336).................. -- -- -- -- Lehman Brothers Aggregate Bond Index Portfolio (5,026,722 Shares; cost $53,380,037).................. -- -- -- -- Morgan Stanley EAFE Index Portfolio (2,459,540 Shares; cost $19,855,278).................. 24,103,487 -- -- -- Russell 2000 Index Portfolio (2,317,218 Shares; cost $22,079,290).................. -- 27,690,757 -- -- Met/Putnam Voyager Portfolio (1,900,061 Shares; cost $8,302,977)................... -- -- 8,588,274 -- State Street Research Aurora Portfolio (3,401,875 Shares; cost $44,584,567).................. -- -- -- 56,539,160 MetLife Mid Cap Stock Index Portfolio (2,344,249 Shares; cost $23,095,881).................. -- -- -- -- Franklin Templeton Small Cap Growth Portfolio (327,356 Shares; cost $2,499,796)..................... -- -- -- -- State Street Research Large Cap Value Portfolio (104,079 Shares; cost $957,558)....................... -- -- -- -- Davis Venture Value Portfolio (965,333 Shares; cost $21,277,385).................... -- -- -- -- Loomis Sayles Small Cap Portfolio (23,295 Shares; cost $3,717,206)...................... -- -- -- -- Alger Equity Growth Portfolio (263,538 Shares; cost $4,582,005)..................... -- -- -- -- MFS Investors Trust Portfolio (186,025 Shares; cost $1,391,215)..................... -- -- -- -- MFS Research Managers Portfolio (79,153 Shares; cost $613,213)........................ -- -- -- -- State Street Research Bond Income Portfolio (837,355 Shares; cost $89,830,207).................... -- -- -- -- FI Structured Equity Portfolio (3,215 Shares; cost $454,116)......................... -- -- -- -- Harris Oakmark Focused Value Portfolio (115,466 Shares; cost $21,015,539).................... -- -- -- -- Salomon Brothers Strategic Bond Opportunities Portfolio (409,695 Shares; cost $4,866,132)..................... -- -- -- -- Salomon Brothers U.S. Government Portfolio (592,211 Shares; cost $7,267,172)..................... -- -- -- -- State Street Research Money Market Portfolio (273,528 Shares; cost $27,352,817).................... -- -- -- -- FI Mid Cap Opportunities Portfolio (96,616 Shares; cost $916,740)........................ -- -- -- -- ---------------- ----------------- --------------- ----------------- Total Investments...................................... 24,103,487 27,690,757 8,588,274 56,539,160 Cash and Accounts Receivable........................... 186,690 35,522 62,483 502 ---------------- ----------------- --------------- ----------------- Total Assets........................................... 24,290,177 27,726,279 8,650,757 56,539,662 LIABILITIES Due to/From Metropolitan Life Insurance Company........ -- -- -- -- ---------------- ----------------- --------------- ----------------- NET ASSETS $ 24,290,177 $ 27,726,279 $ 8,650,757 $ 56,539,662 ================ ================= =============== ================= Outstanding Units (In Thousands)....................... 2,676 2,085 1,913 3,372 Unit Values............................................ $7.85 to $10.37 $10.75 to $14.59 $4.38 to $4.78 $15.46 to $16.89
See Notes to Financial Statements. F-4
MetLife Franklin State Street MFS Mid Cap Stock Templeton Small Research Large Davis Venture Loomis Sayles Alger Equity Investors Index Cap Growth Cap Value Value Small Cap Growth Trust Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division - ----------------- --------------- ----------------- ---------------- ----------------- ------------ --------------- $ -- $ -- $ -- $ -- $ -- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 27,896,567 -- -- -- -- -- -- -- 3,041,132 -- -- -- -- -- -- -- 1,110,523 -- -- -- -- -- -- -- 24,393,963 -- -- -- -- -- -- -- 4,415,478 -- -- -- -- -- -- -- 4,933,432 -- -- -- -- -- -- -- 1,538,430 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - ----------------- --------------- ----------------- ---------------- ----------------- ---------- --------------- 27,896,567 3,041,132 1,110,523 24,393,963 4,415,478 4,933,432 1,538,430 28,320 -- -- 35,532 7,461 -- 5,616 - ----------------- --------------- ----------------- ---------------- ----------------- ---------- --------------- 27,924,887 3,041,132 1,110,523 24,429,495 4,422,939 4,933,432 1,544,046 -- 2,885 395 -- -- -- -- - ----------------- --------------- ----------------- ---------------- ----------------- ---------- --------------- $ 27,924,887 $ 3,038,247 $ 1,110,128 $ 24,429,495 $ 4,422,939 $4,933,432 $ 1,544,046 ================= =============== ================= ================ ================= ========== =============== 2,338 329 103 1,322 30 721 186 $11.04 to $12.13 $9.07 to $9.29 $10.70 to $10.86 $9.79 to $28.40 $9.27 to $205.39 $6.84 $7.96 to $8.33 MFS Research Mangers Investment Division - --------------- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 666,466 -- -- -- -- -- -- -- - --------------- 666,466 2,075 - --------------- 668,541 -- - --------------- $ 668,541 =============== 81 $6.57 to $8.51
See Notes to Financial Statements. F-5 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 2003
State Street Salomon Brothers Research Bond FI Structured Harris Oakmark Strategic Bond Income Equity Focused Value Opportunities Investment Investment Investment Investment Division Division Division Division ---------------- --------------- ------------------ ---------------- ASSETS: Investments at Value: Metropolitan Series Fund, Inc. ("Metropolitan Fund") State Street Research Investment Trust Portfolio (14,863,974 Shares; cost $441,842,964)................ $ -- $ -- $ -- $ -- State Street Research Diversified Portfolio (19,105,895 Shares; cost $308,822,843)................ -- -- -- -- State Street Research Aggressive Growth Portfolio (10,426,099 Shares; cost $247,124,703)................ -- -- -- -- MetLife Stock Index Portfolio (15,492,994 Shares; cost $471,480,310)................ -- -- -- -- FI International Stock Portfolio (4,453,384 Shares; cost $49,092,645).................. -- -- -- -- Janus Mid Cap Portfolio (13,049,904 Shares; cost $245,811,880)................ -- -- -- -- T. Rowe Price Small Cap Growth Portfolio (5,028,788 Shares; cost $60,709,864).................. -- -- -- -- Scudder Global Equity Portfolio (2,503,741 Shares; cost $28,862,268).................. -- -- -- -- Harris Oakmark Large Cap Value Portfolio (3,104,521 Shares; cost $33,265,016).................. -- -- -- -- Neuberger Berman Partners Mid Cap Value Portfolio (1,781,579 Shares; cost $24,876,339).................. -- -- -- -- T. Rowe Price Large Cap Growth Portfolio (2,868,134 Shares; cost $31,282,336).................. -- -- -- -- Lehman Brothers Aggregate Bond Index Portfolio (5,026,722 Shares; cost $53,380,037).................. -- -- -- -- Morgan Stanley EAFE Index Portfolio (2,459,540 Shares; cost $19,855,278).................. -- -- -- -- Russell 2000 Index Portfolio (2,317,218 Shares; cost $22,079,290).................. -- -- -- -- Met/Putnam Voyager Portfolio (1,900,061 Shares; cost $8,302,977)................... -- -- -- -- State Street Research Aurora Portfolio (3,401,875 Shares; cost $44,584,567).................. -- -- -- -- MetLife Mid Cap Stock Index Portfolio (2,344,249 Shares; cost $23,095,881).................. -- -- -- -- Franklin Templeton Small Cap Growth Portfolio (327,356 Shares; cost $2,499,796)..................... -- -- -- -- State Street Research Large Cap Value Portfolio (104,079 Shares; cost $957,558)....................... -- -- -- -- Davis Venture Value Portfolio (965,333 Shares; cost $21,277,385).................... -- -- -- -- Loomis Sayles Small Cap Portfolio (23,295 Shares; cost $3,717,206)...................... -- -- -- -- Alger Equity Growth Portfolio (263,538 Shares; cost $4,582,005)..................... -- -- -- -- MFS Investors Trust Portfolio (186,025 Shares; cost $1,391,215)..................... -- -- -- -- MFS Research Managers Portfolio (79,153 Shares; cost $613,213)........................ -- -- -- -- State Street Research Bond Income Portfolio (837,355 Shares; cost $89,830,207).................... 96,806,570 -- -- -- FI Structured Equity Portfolio (3,215 Shares; cost $454,116)......................... -- 505,504 -- -- Harris Oakmark Focused Value Portfolio (115,466 Shares; cost $21,015,539).................... -- -- 25,894,491 -- Salomon Brothers Strategic Bond Opportunities Portfolio (409,695 Shares; cost $4,866,132)..................... -- -- -- 5,166,251 Salomon Brothers U.S. Government Portfolio (592,211 Shares; cost $7,267,172)..................... -- -- -- -- State Street Research Money Market Portfolio (273,528 Shares; cost $27,352,817).................... -- -- -- -- FI Mid Cap Opportunities Portfolio (96,616 Shares; cost $916,740)........................ -- -- -- -- ---------------- --------------- ------------------ ---------------- Total Investments...................................... 96,806,570 505,504 25,894,491 5,166,251 Cash and Accounts Receivable........................... -- -- -- -- ---------------- --------------- ------------------ ---------------- Total Assets........................................... 96,806,570 505,504 25,894,491 5,166,251 LIABILITIES Due to/From Metropolitan Life Insurance Company........ 86,980 221 28,853 3,182 ---------------- --------------- ------------------ ---------------- NET ASSETS............................................. $96,719,590 $505,283 $25,865,638 $5,163,069 ================ =============== ================== ================ Outstanding Units (In Thousands)....................... 5,517 49 115 375 Unit Values............................................ $12.89 to $27.12 $8.37 to $10.56 $219.73 to $225.05 $13.52 to $13.85
See Notes to Financial Statements. F-6
State Street Salomon Brothers Research FI Mid Cap U.S. Government Money Market Opportunities Investment Investment Investment Division Division Division ----------------- ----------------- ----------------- $ -- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 7,307,884 -- -- -- 27,352,819 -- -- -- 1,112,044 ----------------- ----------------- ----------------- 7,307,884 27,352,819 1,112,044 -- 15,270 -- ----------------- ----------------- ----------------- 7,307,884 27,368,089 1,112,044 2,982 21,662 273 ----------------- ----------------- ----------------- $ 7,304,902 $ 27,346,427 $ 1,111,771 ================= ================= ================= 559 1,760 96 $12.82 to $13.13 $15.21 to $15.92 $11.50 to $11.67
See Notes to Financial Statements. F-7 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 2003
Invesco VIF Invesco VIF Janus Aspen Invesco VIF Equity Real Estate Growth High Yield Income Opportunity Investment Investment Investment Investment Division Division Division Division ----------- ----------- ----------- ----------- ASSETS: Investments at Value: Janus Aspen Series Fund ("Janus Fund") Janus Aspen Growth Portfolio (182,002 Shares; cost $3,317,989).......................................... $3,499,893 $ -- $ -- $ -- Invesco Variable Investment Funds, Inc ("Invesco Funds") Invesco VIF High Yield Portfolio (101,401 Shares; cost $755,920)............................................ -- 804,108 -- -- Invesco VIF Equity Income Portfolio (10,296 Shares; cost $180,622)............................................. -- -- 184,406 -- Invesco VIF Real Estate Opportunity Portfolio (12,455 Shares; cost $132,719)............................................. -- -- -- 178,608 Franklin Templeton Variable Insurance Product Series Funds ("Franklin Fund") Franklin Templeton International Stock Portfolio (327,691 Shares; cost $3,587,146).......................................... -- -- -- -- Franklin Templeton Valuemark Small Cap Portfolio (77,203 Shares; cost $1,159,415)........................................... -- -- -- -- Alliance Variable Product Series Funds ("Alliance Fund") Alliance Growth & Income Portfolio (95,425 Shares; cost $1,731,867)........................................... -- -- -- -- Alliance Premier Growth Portfolio (3,941 Shares; cost $83,621)............................................... -- -- -- -- Alliance Technology Portfolio (3,177 Shares; cost $43,696)............................................... -- -- -- -- Fidelity Variable Insurance Products Funds ("Fidelity Funds") Fidelity VIP Contrafund Portfolio (38,974 Shares; cost $783,501)............................................. -- -- -- -- Fidelity VIP Asset Manager Growth Portfolio (35,491 Shares; cost $395,048)............................................. -- -- -- -- Fidelity VIP Growth Portfolio (9,647 Shares; cost $277,258).............................................. -- -- -- -- American Series Funds ("American Fund") American Funds Growth Portfolio (555,600 Shares; cost $21,669,606)......................................... -- -- -- -- American Funds Growth-Income Portfolio (602,836 Shares; cost $17,398,081)......................................... -- -- -- -- American Funds Global Small Cap Portfolio (410,836 Shares; cost $4,620,777).......................................... -- -- -- -- Met Investors Series Trust ("Met Investors Fund") T. Rowe Price Mid Cap Growth Portfolio (527,122 Shares; cost $2,959,767).......................................... -- -- -- -- MFS Research International Portfolio (152,598 Shares; cost $1,307,159).......................................... -- -- -- -- PIMCO Total Return Portfolio (1,093,890 Shares; cost $12,468,910)....................................... -- -- -- -- PIMCO Innovation Portfolio (924,904 Shares; cost $3,855,266).......................................... -- -- -- -- Lord Abbett Bond Debenture Portfolio (991,531 Shares; cost $10,678,786)......................................... -- -- -- -- Met/AIM Mid Cap Core Equity Portfolio (80,233 Shares; cost $854,896)............................................. -- -- -- -- Met/AIM Small Cap Growth Portfolio (53,490 Shares; cost $596,561)............................................. -- -- -- -- Harris Oakmark International Portfolio (68,416 Shares; cost $766,989)............................................. -- -- -- -- Janus Aggressive Growth Portfolio (567,168 Shares; cost $3,302,437).......................................... -- -- -- -- Lord Abbett Growth and Income Portfolio (845 Shares; cost $16,883)................................................. -- -- -- -- ---------- -------- -------- -------- Total Investments........................................................... 3,499,893 804,108 184,406 178,608 Cash and Accounts Receivable................................................ -- -- -- -- ---------- -------- -------- -------- Total Assets................................................................ 3,499,893 804,108 184,406 178,608 LIABILITIES Due to/From Metropolitan Life Insurance Company............................. -- -- -- -- ---------- -------- -------- -------- NET ASSETS.................................................................. $3,499,893 $804,108 $184,406 $178,608 ========== ======== ======== ======== Outstanding Units (In Thousands)............................................ 435 87 19 10 Unit Values................................................................. $8.03 $9.21 $9.73 $17.79
See Notes to Financial Statements. F-8
Alliance Alliance Fidelity Franklin Templeton Franklin Templeton Growth & Premier Alliance Fidelity Asset Manager Fidelity International Stock Valuemark Small Income Growth Technology Contrafund Growth Growth Investment Cap Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ------------------- ------------------ ---------- ---------- ---------- ---------- ------------- ---------- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 4,053,532 -- -- -- -- -- -- -- -- 1,345,642 -- -- -- -- -- -- -- -- 2,063,085 -- -- -- -- -- -- -- -- 84,057 -- -- -- -- -- -- -- -- 45,595 -- -- -- -- -- -- -- -- 893,677 -- -- -- -- -- -- -- -- 432,629 -- -- -- -- -- -- -- -- 296,358 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- ----------- ---------- ---------- ------- ------- -------- -------- -------- 4,053,532 1,345,642 2,063,085 84,057 45,595 893,677 432,629 296,358 -- -- -- -- -- -- -- -- ----------- ---------- ---------- ------- ------- -------- -------- -------- 4,053,532 1,345,642 2,063,085 84,057 45,595 893,677 432,629 296,358 -- -- -- -- -- -- -- -- ----------- ---------- ---------- ------- ------- -------- -------- -------- $4,053,532 $1,345,642 $2,063,085 $84,057 $45,595 $893,677 $432,629 $296,358 =========== ========== ========== ======= ======= ======== ======== ======== 403 199 197 14 10 97 54 47 $10.03 $6.76 $10.47 $6.10 $4.54 $9.18 $8.00 $6.27
See Notes to Financial Statements. F-9 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 2003
American Funds American Funds American Funds Global Growth Growth-Income Small Cap Investment Investment Investment Division Division Division ---------------- ---------------- ---------------- ASSETS: Investments at Value: Janus Aspen Series Fund ("Janus Fund") Janus Aspen Growth Portfolio (182,002 Shares; cost $3,317,989).......................................... $ -- $ -- $ -- Invesco Variable Investment Funds, Inc ("Invesco Funds") Invesco VIF High Yield Portfolio (101,401 Shares; cost $755,920)............................................ -- -- -- Invesco VIF Equity Income Portfolio (10,296 Shares; cost $180,622)............................................. -- -- -- Invesco VIF Real Estate Opportunity Portfolio (12,455 Shares; cost $132,719)............................................. -- -- -- Franklin Templeton Variable Insurance Product Series Funds ("Franklin Fund") Franklin Templeton International Stock Portfolio (327,691 Shares; cost $3,587,146).......................................... -- -- -- Franklin Templeton Valuemark Small Cap Portfolio (77,203 Shares; cost $1,159,415)........................................... -- -- -- Alliance Variable Product Series Funds ("Alliance Fund") Alliance Growth & Income Portfolio (95,425 Shares; cost $1,731,867)........................................... -- -- -- Alliance Premier Growth Portfolio (3,941 Shares; cost $83,621)............................................... -- -- -- Alliance Technology Portfolio (3,177 Shares; cost $43,696)............................................... -- -- -- Fidelity Variable Insurance Products Funds ("Fidelity Funds") Fidelity VIP Contrafund Portfolio (38,974 Shares; cost $783,501)............................................. -- -- -- Fidelity VIP Asset Manager Growth Portfolio (35,491 Shares; cost $395,048)............................................. -- -- -- Fidelity VIP Growth Portfolio (9,647 Shares; cost $277,258).............................................. -- -- -- American Series Funds ("American Fund") American Funds Growth Portfolio (555,600 Shares; cost $21,669,606)......................................... 25,279,776 -- -- American Funds Growth-Income Portfolio (602,836 Shares; cost $17,398,081)......................................... -- 20,182,964 -- American Funds Global Small Cap Portfolio (410,836 Shares; cost $4,620,777).......................................... -- -- 5,784,566 Met Investors Series Trust ("Met Investors Fund") T. Rowe Price Mid Cap Growth Portfolio (527,122 Shares; cost $2,959,767).......................................... -- -- -- MFS Research International Portfolio (152,598 Shares; cost $1,307,159).......................................... -- -- -- PIMCO Total Return Portfolio (1,093,890 Shares; cost $12,468,910)....................................... -- -- -- PIMCO Innovation Portfolio (924,904 Shares; cost $3,855,266).......................................... -- -- -- Lord Abbett Bond Debenture Portfolio (991,531 Shares; cost $10,678,786)......................................... -- -- -- Met/AIM Mid Cap Core Equity Portfolio (80,233 Shares; cost $854,896)............................................. -- -- -- Met/AIM Small Cap Growth Portfolio (53,490 Shares; cost $596,561)............................................. -- -- -- Harris Oakmark International Portfolio (68,416 Shares; cost $766,989)............................................. -- -- -- Janus Aggressive Growth Portfolio (567,168 Shares; cost $3,302,437).......................................... -- -- -- Lord Abbett Growth and Income Portfolio (845 Shares; cost $16,883)................................................. -- -- -- ---------------- ---------------- ---------------- Total Investments........................................................... 25,279,776 20,182,964 5,784,566 Cash and Accounts Receivable................................................ 480,164 185,947 16,294 ---------------- ---------------- ---------------- Total Assets................................................................ 25,759,940 20,368,911 5,800,860 LIABILITIES Due to/From Metropolitan Life Insurance Company............................. -- -- -- ---------------- ---------------- ---------------- NET ASSETS.................................................................. $25,759,940 $20,368,911 $5,800,860 ================ ================ ================ Outstanding Units (In Thousands)............................................ 417 525 378 Unit Values................................................................. $60.53 to $62.00 $38.04 to $38.96 $15.06 to $15.42
T. Rowe Price Mid Cap Growth Investment Division -------------- ASSETS: Investments at Value: Janus Aspen Series Fund ("Janus Fund") Janus Aspen Growth Portfolio (182,002 Shares; cost $3,317,989).......................................... $ -- Invesco Variable Investment Funds, Inc ("Invesco Funds") Invesco VIF High Yield Portfolio (101,401 Shares; cost $755,920)............................................ -- Invesco VIF Equity Income Portfolio (10,296 Shares; cost $180,622)............................................. -- Invesco VIF Real Estate Opportunity Portfolio (12,455 Shares; cost $132,719)............................................. -- Franklin Templeton Variable Insurance Product Series Funds ("Franklin Fund") Franklin Templeton International Stock Portfolio (327,691 Shares; cost $3,587,146).......................................... -- Franklin Templeton Valuemark Small Cap Portfolio (77,203 Shares; cost $1,159,415)........................................... -- Alliance Variable Product Series Funds ("Alliance Fund") Alliance Growth & Income Portfolio (95,425 Shares; cost $1,731,867)........................................... -- Alliance Premier Growth Portfolio (3,941 Shares; cost $83,621)............................................... -- Alliance Technology Portfolio (3,177 Shares; cost $43,696)............................................... -- Fidelity Variable Insurance Products Funds ("Fidelity Funds") Fidelity VIP Contrafund Portfolio (38,974 Shares; cost $783,501)............................................. -- Fidelity VIP Asset Manager Growth Portfolio (35,491 Shares; cost $395,048)............................................. -- Fidelity VIP Growth Portfolio (9,647 Shares; cost $277,258).............................................. -- American Series Funds ("American Fund") American Funds Growth Portfolio (555,600 Shares; cost $21,669,606)......................................... -- American Funds Growth-Income Portfolio (602,836 Shares; cost $17,398,081)......................................... -- American Funds Global Small Cap Portfolio (410,836 Shares; cost $4,620,777).......................................... -- Met Investors Series Trust ("Met Investors Fund") T. Rowe Price Mid Cap Growth Portfolio (527,122 Shares; cost $2,959,767).......................................... 3,368,307 MFS Research International Portfolio (152,598 Shares; cost $1,307,159).......................................... -- PIMCO Total Return Portfolio (1,093,890 Shares; cost $12,468,910)....................................... -- PIMCO Innovation Portfolio (924,904 Shares; cost $3,855,266).......................................... -- Lord Abbett Bond Debenture Portfolio (991,531 Shares; cost $10,678,786)......................................... -- Met/AIM Mid Cap Core Equity Portfolio (80,233 Shares; cost $854,896)............................................. -- Met/AIM Small Cap Growth Portfolio (53,490 Shares; cost $596,561)............................................. -- Harris Oakmark International Portfolio (68,416 Shares; cost $766,989)............................................. -- Janus Aggressive Growth Portfolio (567,168 Shares; cost $3,302,437).......................................... -- Lord Abbett Growth and Income Portfolio (845 Shares; cost $16,883)................................................. -- -------------- Total Investments........................................................... 3,368,307 Cash and Accounts Receivable................................................ 6,963 -------------- Total Assets................................................................ 3,375,270 LIABILITIES Due to/From Metropolitan Life Insurance Company............................. -- -------------- NET ASSETS.................................................................. $3,375,270 ============== Outstanding Units (In Thousands)............................................ 527 Unit Values................................................................. $6.28 to $6.43
See Notes to Financial Statements. F-10
MFS Lord Abbett Met/AIM Mid Research PIMCO PIMCO Bond Cap Met/AIM Small Harris Oakmark International Total Return Innovation Debenture Core Equity Cap Growth International Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division - -------------- ---------------- -------------- ---------------- ---------------- ---------------- ----------------- $ -- $ -- $ -- $ -- $ -- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 1,496,988 -- -- -- -- -- -- -- 12,700,057 -- -- -- -- -- -- -- 4,467,285 -- -- -- -- -- -- -- 11,938,027 -- -- -- -- -- -- -- 989,278 -- -- -- -- -- -- -- 643,481 -- -- -- -- -- -- -- 813,470 -- -- -- -- -- -- -- -- -- -- -- -- -- -- - -------------- ---------------- -------------- ---------------- ---------------- ---------------- ----------------- 1,496,988 12,700,057 4,467,285 11,938,027 989,278 643,481 813,470 232 -- 13,528 104,275 -- -- -- - -------------- ---------------- -------------- ---------------- ---------------- ---------------- ----------------- 1,497,220 12,700,057 4,480,813 12,042,302 989,278 643,481 813,470 -- 2,991 -- -- 346 30 454 - -------------- ---------------- -------------- ---------------- ---------------- ---------------- ----------------- $1,497,220 $12,697,066 $4,480,813 $12,042,302 $988,932 $643,451 $ 813,016 ============== ================ ============== ================ ================ ================ ================= 151 1,042 932 876 92 60 72 $9.70 to $9.94 $11.96 to $12.25 $4.72 to $4.83 $12.87 to $14.95 $10.69 to $10.85 $10.46 to $10.62 $11.23 to $11.40
Janus Lord Abbett Aggressive Growth & Growth Income Investment Investment Division Division - --------------- ----------- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 3,987,193 -- -- 20,634 - --------------- ------- 3,987,193 20,634 15,526 -- - --------------- ------- 4,002,719 20,634 -- 105 - --------------- ------- $ 4,002,719 $20,529 =============== ======= 569 3 $6.89 to $7.06 $8.10
See Notes to Financial Statements. F-11 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
State Street Research Investment Trust Investment Division ---------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------- INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 2,669,960 $ 1,708,899 $ 51,437,166 Expenses: Mortality and expense charges................................ 2,738,164 2,678,347 3,136,115 ----------- ------------ ------------- Net investment (loss) income................................... (68,204) (969,448) 48,301,051 ----------- ------------ ------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (6,958,914) (6,132,437) 731,187 Change in unrealized appreciation (depreciation) of investments 88,855,777 (90,883,953) (122,469,738) ----------- ------------ ------------- Net realized and unrealized gains (losses) on investments...... 81,896,863 (97,016,390) (121,738,551) ----------- ------------ ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $81,828,659 $(97,985,838) $ (73,437,500) =========== ============ =============
See Notes to Financial Statements. F-12
State Street Research Diversified State Street Research Aggressive Growth MetLife Stock Index Investment Division Investment Division Investment Division - --------------------------------------- --------------------------------------- ---------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 9,831,564 $ 5,726,999 $ 25,415,648 $ -- $ -- $ 46,776,659 $ 6,468,236 $ 5,409,402 $ 3,858,667 2,320,042 2,168,000 2,231,404 1,367,678 1,263,240 1,493,070 3,080,678 2,704,257 2,645,594 - ----------- ------------ ------------ ----------- ------------ ------------ ------------ ------------ ------------ 7,511,522 3,558,999 23,184,244 (1,367,678) (1,263,240) 45,283,589 3,387,558 2,705,145 1,213,073 - ----------- ------------ ------------ ----------- ------------ ------------ ------------ ------------ ------------ (2,593,687) (1,810,936) (111,095) (8,202,841) (5,953,657) (1,536,972) (10,060,006) (5,045,284) 4,130,927 42,182,763 (41,694,719) (42,080,714) 62,199,697 (44,703,891) (94,895,107) 101,361,307 (82,559,071) (48,985,481) - ----------- ------------ ------------ ----------- ------------ ------------ ------------ ------------ ------------ 39,589,076 (43,505,655) (42,191,809) 53,996,856 (50,657,548) (96,432,079) 91,301,301 (87,604,355) (44,854,554) - ----------- ------------ ------------ ----------- ------------ ------------ ------------ ------------ ------------ $47,100,598 $(39,946,656) $(19,007,565) $52,629,178 $(51,920,788) $(51,148,490) $ 94,688,859 $(84,899,210) $(43,641,481) =========== ============ ============ =========== ============ ============ ============ ============ ============
F-13 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
FI International Stock Investment Division -------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 249,748 $ 317,077 $ 1,500,375 Expenses: Mortality and expense charges................................ 304,442 298,333 327,499 ----------- ----------- ------------ Net investment (loss) income................................... (54,694) 18,744 1,172,876 ----------- ----------- ------------ NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (1,630,864) (2,655,399) (1,661,736) Change in unrealized appreciation (depreciation) of investments 10,924,390 (4,418,288) (9,202,287) ----------- ----------- ------------ Net realized and unrealized gains (losses) on investments...... 9,293,526 (7,073,687) (10,864,023) ----------- ----------- ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 9,238,832 $(7,054,943) $ (9,691,147) =========== =========== ============
See Notes to Financial Statements. F-14
Janus Mid Cap T. Rowe Price Small Cap Growth Scudder Global Equity Investment Division Investment Division Investment Division - --------------------------------------- -------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ -- $ -- $ -- $ -- $ -- $ 3,542,193 $ 501,419 $ 350,009 $ 2,319,964 1,297,757 1,013,088 1,037,631 402,320 332,098 332,644 189,917 168,321 164,713 - ----------- ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- (1,297,757) (1,013,088) (1,037,631) (402,320) (332,098) 3,209,549 311,502 181,688 2,155,251 - ----------- ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- (1,145,184) (5,163,698) (2,451,549) (309,653) (297,872) (796,014) (1,005,776) (466,029) (71,082) 46,019,342 (34,449,605) (53,291,667) 17,635,578 (12,423,975) (6,595,361) 7,242,152 (3,445,540) (5,825,339) - ----------- ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- 44,874,158 (39,613,303) (55,743,216) 17,325,925 (12,721,847) (7,391,375) 6,236,376 (3,911,569) (5,896,421) - ----------- ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- $43,576,401 $(40,626,391) $(56,780,847) $16,923,605 $(13,053,945) $(4,181,826) $ 6,547,878 $(3,729,881) $(3,741,170) =========== ============ ============ =========== ============ =========== =========== =========== ===========
F-15 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Harris Oakmark Large Cap Value Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ -- $ 618,214 $ 12,105 Expenses: Mortality and expense charges................................ 252,368 179,930 68,617 ---------- ----------- -------- Net investment (loss) income................................... (252,368) 438,284 (56,512) ---------- ----------- -------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... 38,696 173,172 94,596 Change in unrealized appreciation (depreciation) of investments 6,986,213 (3,824,797) 810,284 ---------- ----------- -------- Net realized and unrealized gains (losses) on investments...... 7,024,909 (3,651,625) 904,880 ---------- ----------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $6,772,541 $(3,213,341) $848,368 ========== =========== ========
See Notes to Financial Statements. F-16
Neuberger Berman Partners Mid Cap Value T. Rowe Price Large Cap Growth Lehman Brothers Aggregate Bond Index Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- -------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 78,805 $ 49,885 $ 196,293 $ 30,610 $ 57,106 $ 8,447 $ 2,863,939 $1,283,105 $ 366,468 197,793 139,354 89,772 210,672 163,196 103,226 357,739 300,244 154,225 ---------- ----------- --------- ---------- ----------- --------- ----------- ---------- ---------- (118,988) (89,469) 106,521 (180,062) (106,090) (94,779) 2,506,200 982,861 212,243 ---------- ----------- --------- ---------- ----------- --------- ----------- ---------- ---------- 28,084 105,666 (68,863) (489,389) (317,124) (100,488) 1,152,171 515,268 210,509 7,656,793 (1,888,036) (195,526) 7,871,800 (5,333,848) (92,461) (2,185,014) 2,760,523 1,053,501 ---------- ----------- --------- ---------- ----------- --------- ----------- ---------- ---------- 7,684,877 (1,782,370) (264,389) 7,382,411 (5,650,972) (192,949) (1,032,843) 3,275,791 1,264,010 ---------- ----------- --------- ---------- ----------- --------- ----------- ---------- ---------- $7,565,889 $(1,871,839) $(157,868) $7,202,349 $(5,757,062) $(287,728) $ 1,473,357 $4,258,652 $1,476,253 ========== =========== ========= ========== =========== ========= =========== ========== ==========
F-17 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Morgan Stanley EAFE Index Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 280,223 $ 59,278 $ 25,460 Expenses: Mortality and expense charges................................ 158,241 123,406 63,300 ---------- ----------- ----------- Net investment (loss) income................................... 121,982 (64,128) (37,840) ---------- ----------- ----------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (497,564) (800,822) (961,834) Change in unrealized appreciation (depreciation) of investments 6,516,826 (1,274,363) (729,479) ---------- ----------- ----------- Net realized and unrealized gains (losses) on investments...... 6,019,262 (2,075,185) (1,691,313) ---------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $6,141,244 $(2,139,313) $(1,729,153) ========== =========== ===========
See Notes to Financial Statements. F-18
Russell 2000 Index Met/Putnam Voyager State Street Research Aurora Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 134,309 $ 74,869 $ 21,244 $ -- $ -- $ -- $ -- $ 127,494 $ 44,265 163,522 104,600 68,898 58,697 39,278 22,732 336,756 225,368 95,291 ---------- ----------- ----------- ---------- ----------- --------- ----------- ----------- ---------- (29,213) (29,731) (47,654) (58,697) (39,278) (22,732) (336,756) (97,874) (51,026) ---------- ----------- ----------- ---------- ----------- --------- ----------- ----------- ---------- (125,595) (343,069) (1,016,179) (624,452) (304,226) (113,353) 196,537 81,843 155,882 7,938,110 (2,545,881) 1,215,383 2,271,140 (1,227,374) (585,114) 17,391,943 (6,958,922) 1,218,805 ---------- ----------- ----------- ---------- ----------- --------- ----------- ----------- ---------- 7,812,515 (2,888,950) 199,204 1,646,688 (1,531,600) (698,467) 17,588,480 (6,877,079) 1,374,687 ---------- ----------- ----------- ---------- ----------- --------- ----------- ----------- ---------- $7,783,302 $(2,918,681) $ 151,550 $1,587,991 $(1,570,878) $(721,199) $17,251,724 $(6,974,953) $1,323,661 ========== =========== =========== ========== =========== ========= =========== =========== ==========
F-19 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
MetLife Mid Cap Stock Index Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 100,611 $ 42,658 $ 24,102 Expenses: Mortality and expense charges................................ 164,774 98,019 42,826 ---------- ----------- -------- Net investment (loss) income................................... (64,163) (55,361) (18,724) ---------- ----------- -------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... 12,063 (23,095) (19,531) Change in unrealized appreciation (depreciation) of investments 6,538,587 (2,089,536) 294,328 ---------- ----------- -------- Net realized and unrealized gains (losses) on investments...... 6,550,650 (2,112,631) 274,797 ---------- ----------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $6,486,487 $(2,167,992) $256,073 ========== =========== ========
See Notes to Financial Statements. F-20
State Street Research Franklin Templeton Small Cap Growth Large Cap Value Davis Venture Value Investment Division Investment Division Investment Division - --------------------------------------- -------------------------- ------------------------------------- For the Year For the Year For the Period For the Year For the Period For the Year For the Year For the Year Ended Ended May 1, 2001 to Ended May 1, 2002 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2003 2002 2001 - ------------ ------------ -------------- ------------ -------------- ------------ ------------ ------------ $ -- $ -- $ -- $ 8,880 $ 869 $ 69,175 $ 91,596 $ 192,850 16,641 8,397 1,124 4,290 436 144,858 90,846 39,662 -------- --------- ------- -------- ------- ---------- ----------- --------- (16,641) (8,397) (1,124) 4,590 433 (75,683) 750 153,188 -------- --------- ------- -------- ------- ---------- ----------- --------- (19,016) (42,766) (3,651) 41,938 (3,284) (213,900) (188,804) (46,987) 796,643 (271,373) 16,066 156,144 (3,178) 5,610,390 (2,083,879) (437,523) -------- --------- ------- -------- ------- ---------- ----------- --------- 777,627 (314,139) 12,415 198,082 (6,462) 5,396,490 (2,272,683) (484,510) -------- --------- ------- -------- ------- ---------- ----------- --------- $760,986 $(322,536) $11,291 $202,672 $(6,029) $5,320,807 $(2,271,933) $(331,322) ======== ========= ======= ======== ======= ========== =========== =========
F-21 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Loomis Sayles Small Cap Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ -- $ 2,322 $ 86,281 Expenses: Mortality and expense charges................................ 28,298 18,464 11,207 ---------- --------- -------- Net investment (loss) income................................... (28,298) (16,142) 75,074 ---------- --------- -------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (88,636) (106,829) (35,645) Change in unrealized appreciation (depreciation) of investments 1,169,772 (414,868) (62,611) ---------- --------- -------- Net realized and unrealized gains (losses) on investments...... 1,081,136 (521,697) (98,256) ---------- --------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $1,052,838 $(537,839) $(23,182) ========== ========= ========
See Notes to Financial Statements. F-22
Alger Equity Growth MFS Investors Trust MFS Research Managers Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 2,523 $ -- $ -- $ 2,817 $ 3,660 $ -- $ 3,840 $ 705 $ 386 26,251 13,698 121 10,528 6,375 1,179 4,713 3,132 749 ---------- ----------- ------- -------- --------- ------- -------- -------- ------ (23,728) (13,698) (121) (7,711) (2,715) (1,179) (873) (2,427) (363) ---------- ----------- ------- -------- --------- ------- -------- -------- ------ (63,998) (57,097) (175) 13,432 (71,866) (5,896) (4,462) (30,794) 1,304 1,339,908 (983,355) (5,126) 221,187 (78,498) 4,527 112,414 (58,814) (346) ---------- ----------- ------- -------- --------- ------- -------- -------- ------ 1,275,910 (1,040,452) (5,301) 234,619 (150,364) (1,369) 107,952 (89,608) 958 ---------- ----------- ------- -------- --------- ------- -------- -------- ------ $1,252,182 $(1,054,150) $(5,422) $226,908 $(153,079) $(2,548) $107,079 $(92,035) $ 595 ========== =========== ======= ======== ========= ======= ======== ======== ======
F-23 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
State Street Research Bond Income Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $2,907,624 $4,937,322 $5,667,650 Expenses: Mortality and expense charges................................ 724,135 658,727 572,051 ---------- ---------- ---------- Net investment (loss) income................................... 2,183,489 4,278,595 5,095,599 ---------- ---------- ---------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... 880,712 (378,655) 400,025 Change in unrealized appreciation (depreciation) of investments 1,572,001 2,444,438 (137,736) ---------- ---------- ---------- Net realized and unrealized gains (losses) on investments...... 2,452,713 2,065,783 262,289 ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $4,636,202 $6,344,378 $5,357,888 ========== ========== ==========
See Notes to Financial Statements. F-24
FI Structured Equity Harris Oakmark Focused Value Salomon Brothers Strategic Bond Investment Division Investment Division Opportunities Investment Division - ------------------------------------- --------------------------------------- --------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Period For the Year For the Year For the Period Ended Ended Ended Ended Ended May 1, 2001 to Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ -------------- ------------ ------------ -------------- $ 1,560 $ 527 $ -- $ 24,204 $ 15,621 $ -- $ 62,248 $ 83,495 $ -- 2,368 457 69 151,516 79,292 9,775 29,146 10,768 894 ------- -------- ------- ---------- ----------- -------- -------- -------- ------ (808) 70 (69) (127,312) (63,671) (9,775) 33,102 72,727 (894) ------- -------- ------- ---------- ----------- -------- -------- -------- ------ 24,426 (9,596) (77) 31,214 (9,588) (43) 97,650 241 117 58,141 (4,285) (2,467) 5,537,632 (938,481) 279,801 233,146 62,351 4,621 ------- -------- ------- ---------- ----------- -------- -------- -------- ------ 82,567 (13,881) (2,544) 5,568,846 (948,069) 279,758 330,796 62,592 4,738 ------- -------- ------- ---------- ----------- -------- -------- -------- ------ $81,759 $(13,811) $(2,613) $5,441,534 $(1,011,740) $269,983 $363,898 $135,319 $3,844 ======= ======== ======= ========== =========== ======== ======== ======== ======
F-25 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Salomon Brothers U.S. Government Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 91,740 $ 90,377 $ -- Expenses: Mortality and expense charges................................ 49,123 18,808 1,841 -------- -------- ------- Net investment (loss) income................................... 42,617 71,569 (1,841) -------- -------- ------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... 48,098 10,225 5,065 Change in unrealized appreciation (depreciation) of investments (40,677) 83,661 (2,273) -------- -------- ------- Net realized and unrealized gains (losses) on investments...... 7,421 93,886 2,792 -------- -------- ------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 50,038 $165,455 $ 951 ======== ======== =======
See Notes to Financial Statements. F-26
State Street Research Money Market FI Mid Cap Opportunities Janus Aspen Growth Investment Division Investment Division Investment Division - ------------------------------------- -------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Period For the Year For the Year For the Year Ended Ended Ended Ended May 1, 2002 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2003 2002 2001 - ------------ ------------ ------------ ------------ -------------- ------------ ------------ ------------ $226,302 $ 527,338 $1,134,017 $ 14,470 $ -- $ 2,873 $ 708 $ 210,720 179,158 268,010 215,488 4,632 333 13,156 10,078 25,354 -------- --------- ---------- -------- ------- ---------- --------- ----------- 47,144 259,328 918,529 9,838 (333) (10,283) (9,370) 185,366 -------- --------- ---------- -------- ------- ---------- --------- ----------- (1) (628,588) (499,341) 19,777 (1,950) (263,013) (179,152) (1,848,663) 1 611,711 796,577 191,546 3,758 1,041,007 (329,490) 498,521 -------- --------- ---------- -------- ------- ---------- --------- ----------- -- (16,877) 297,236 211,323 1,808 777,994 (508,642) (1,350,142) -------- --------- ---------- -------- ------- ---------- --------- ----------- $ 47,144 $ 242,451 $1,215,765 $221,161 $ 1,475 $ 767,711 $(518,012) $(1,164,776) ======== ========= ========== ======== ======= ========== ========= ===========
F-27 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Invesco VIF High Yield Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 46,066 $ 49,754 $ 29,774 Expenses: Mortality and expense charges................................ 2,831 1,346 602 -------- -------- -------- Net investment (loss) income................................... 43,235 48,408 29,172 -------- -------- -------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (5,183) (31,480) (3,798) Change in unrealized appreciation (depreciation) of investments 90,384 (7,350) (33,395) -------- -------- -------- Net realized and unrealized gains (losses) on investments...... 85,201 (38,830) (37,193) -------- -------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $128,436 $ 9,578 $ (8,021) ======== ======== ========
See Notes to Financial Statements. F-28
Invesco VIF Equity Income Invesco VIF Real Estate Opportunity Franklin Templeton International Stock Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 1,951 $ 2,157 $ 1,779 $ 2,672 $ 1,881 $ 1,183 $ 50,493 $ 44,446 $ 203,320 662 638 304 946 2,129 531 16,047 13,035 5,484 ------- -------- ------- ------- ------- ------- -------- --------- --------- 1,289 1,519 1,475 1,726 (248) 652 34,446 31,411 197,836 ------- -------- ------- ------- ------- ------- -------- --------- --------- (4,599) (7,425) (1,414) 7,645 12,032 1,271 (71,786) (325,690) (18,952) 30,971 (21,641) (4,995) 41,591 3,016 (3,692) 947,139 (187,267) (287,060) ------- -------- ------- ------- ------- ------- -------- --------- --------- 26,372 (29,066) (6,409) 49,236 15,048 (2,421) 875,353 (512,957) (306,012) ------- -------- ------- ------- ------- ------- -------- --------- --------- $27,661 $(27,547) $(4,934) $50,962 $14,800 $(1,769) $909,799 $(481,546) $(108,176) ======= ======== ======= ======= ======= ======= ======== ========= =========
F-29 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Franklin Templeton Valuemark Small Cap Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ -- $ 2,327 $ 56 Expenses: Mortality and expense charges................................ 6,613 3,601 177 -------- --------- ------ Net investment (loss) income................................... (6,613) (1,274) (121) -------- --------- ------ NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (16,606) (49,638) (480) Change in unrealized appreciation (depreciation) of investments 366,174 (184,311) 4,364 -------- --------- ------ Net realized and unrealized gains (losses) on investments...... 349,568 (233,949) 3,884 -------- --------- ------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $342,955 $(235,223) $3,763 ======== ========= ======
See Notes to Financial Statements. F-30
Alliance Growth & Income Alliance Premier Growth Alliance Technology Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 11,419 $ 27,692 $ 3,229 $ -- $ -- $ -- $ -- $ -- $ 782 7,030 4,105 1,034 257 274 104 181 96 121 -------- --------- ------- ------- -------- ------ ------- ------- -------- 4,389 23,587 2,195 (257) (274) (104) (181) (96) 661 -------- --------- ------- ------- -------- ------ ------- ------- -------- (27,592) (18,278) (318) (661) (9,853) (138) (931) (519) (19,763) 441,306 (137,057) 24,267 11,616 (12,480) 1,299 13,613 (9,033) (2,681) -------- --------- ------- ------- -------- ------ ------- ------- -------- 413,714 (155,335) 23,949 10,955 (22,333) 1,161 12,682 (9,552) (22,444) -------- --------- ------- ------- -------- ------ ------- ------- -------- $418,103 $(131,748) $26,144 $10,698 $(22,607) $1,057 $12,501 $(9,648) $(21,783) ======== ========= ======= ======= ======== ====== ======= ======= ========
F-31 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Fidelity Contrafund Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 830 $ 187 $ -- Expenses: Mortality and expense charges................................ 3,285 1,113 57 -------- -------- ----- Net investment (loss) income................................... (2,455) (926) (57) -------- -------- ----- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized gains (losses) from security transactions......... 6,303 (348) (27) Change in unrealized appreciation (depreciation) of investments 139,867 (29,437) (253) -------- -------- ----- Net realized and unrealized gains (losses) on investments...... 146,170 (29,785) (280) -------- -------- ----- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $143,715 $(30,711) $(337) ======== ======== =====
See Notes to Financial Statements. F-32
Fidelity Asset Manager Growth Fidelity Growth American Funds Growth Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- --------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Period Ended Ended Ended Ended Ended Ended Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------- $ 8,346 $ 3,640 $ -- $ 174 $ 132 $ -- $ 22,917 $ 3,067 $ 134,864 1,598 623 233 1,005 649 243 141,220 59,610 6,807 ------- -------- ------- ------- -------- ------- ---------- ----------- --------- 6,748 3,017 (233) (831) (517) (243) (118,303) (56,543) 128,057 ------- -------- ------- ------- -------- ------- ---------- ----------- --------- (4,335) (5,591) 113 (2,588) (8,400) (3,407) (100,817) (49,022) (95,342) 59,143 (19,964) (1,597) 63,146 (40,968) (3,078) 5,264,250 (1,636,890) (17,189) ------- -------- ------- ------- -------- ------- ---------- ----------- --------- 54,808 (25,555) (1,484) 60,558 (49,368) (6,485) 5,163,433 (1,685,912) (112,531) ------- -------- ------- ------- -------- ------- ---------- ----------- --------- $61,556 $(22,538) $(1,717) $59,727 $(49,885) $(6,728) $5,045,130 $(1,742,455) $ 15,526 ======= ======== ======= ======= ======== ======= ========== =========== =========
F-33 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
American Funds Growth-Income Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 170,202 $ 83,225 $ 20,236 Expenses: Mortality and expense charges................................ 112,608 48,157 5,104 ---------- ----------- -------- Net investment (loss) income................................... 57,594 35,068 15,132 ---------- ----------- -------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized gains (losses) from security transactions......... (26,406) (51,319) (13,398) Change in unrealized appreciation (depreciation) of investments 3,852,340 (1,122,854) 55,397 ---------- ----------- -------- Net realized and unrealized gains (losses) on investments...... 3,825,934 (1,174,173) 41,999 ---------- ----------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $3,883,528 $(1,139,105) $ 57,131 ========== =========== ========
See Notes to Financial Statements. F-34
American Funds Global Small Cap JPM Enhanced Index T. Rowe Price Mid Cap Growth Investment Division Investment Division Investment Division - --------------------------------------- ------------------------------------- --------------------------------------- For the Year For the Year For the Period For the Year For the Year For the Year For the Year For the Year For the Period Ended Ended May 1, 2001 to Ended Ended Ended Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ -------------- ------------ ------------ ------------ ------------ ------------ -------------- $ 19,214 $ 10,794 $ 7,147 $ 163 $ 117 $ -- $ -- $ 7,906 $ -- 27,847 12,245 1,216 16 39 13 17,818 6,944 940 ---------- --------- -------- ------- ------- ----- -------- --------- ------- (8,633) (1,451) 5,931 147 78 (13) (17,818) 962 (940) ---------- --------- -------- ------- ------- ----- -------- --------- ------- (33,362) 35,746 (18,714) (1,554) (1,186) (25) (46,026) (55,314) (1,372) 1,513,502 (396,292) 46,579 1,806 (1,483) (320) 776,010 (378,709) 11,239 ---------- --------- -------- ------- ------- ----- -------- --------- ------- 1,480,140 (360,546) 27,865 252 (2,669) (345) 729,984 (434,023) 9,867 ---------- --------- -------- ------- ------- ----- -------- --------- ------- $1,471,507 $(361,997) $ 33,796 $ 399 $(2,591) $(358) $712,166 $(433,061) $ 8,927 ========== ========= ======== ======= ======= ===== ======== ========= =======
F-35 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
MFS Research International Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 10,739 $ 1,203 $ 174 Expenses: Mortality and expense charges................................ 7,953 3,324 525 -------- -------- ------- Net investment (loss) income................................... 2,786 (2,121) (351) -------- -------- ------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized gains (losses) from security transactions......... 148,987 (66,559) (4,107) Change in unrealized appreciation (depreciation) of investments 191,049 (2,664) 1,444 -------- -------- ------- Net realized and unrealized gains (losses) on investments...... 340,036 (69,223) (2,663) -------- -------- ------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $342,822 $(71,344) $(3,014) ======== ======== =======
See Notes to Financial Statements. F-36
PIMCO Total Return PIMCO Innovation Lord Abbett Bond Debenture Investment Division Investment Division Investment Division - --------------------------------------- --------------------------------------- ------------------------------------- For the Year For the Year For the Period For the Year For the Year For the Period For the Year For the Year For the Year Ended Ended May 1, 2001 to Ended Ended May 1, 2001 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ -------------- ------------ ------------ -------------- ------------ ------------ ------------ $255,223 $ -- $ 26,164 $ -- $ -- $ -- $ 190,964 $ 996,547 $ 923,897 79,517 28,120 2,322 21,608 9,521 1,528 81,381 71,674 64,809 -------- -------- -------- ---------- --------- ------- ---------- ----------- ----------- 175,706 (28,120) 23,842 (21,608) (9,521) (1,528) 109,583 924,873 859,088 -------- -------- -------- ---------- --------- ------- ---------- ----------- ----------- 175,963 60,373 1,564 (195,867) (111,879) (9,873) 198,834 (1,886,218) (134,223) (25,434) 270,736 (14,155) 1,260,206 (652,366) 4,179 1,391,673 949,375 (902,997) -------- -------- -------- ---------- --------- ------- ---------- ----------- ----------- 150,529 331,109 (12,591) 1,064,339 (764,245) (5,694) 1,590,507 (936,843) (1,037,220) -------- -------- -------- ---------- --------- ------- ---------- ----------- ----------- $326,235 $302,989 $ 11,251 $1,042,731 $(773,766) $(7,222) $1,700,090 $ (11,970) $ (178,132) ======== ======== ======== ========== ========= ======= ========== =========== ===========
F-37 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Met/AIM Mid Cap Core Equity Met/AIM Small Cap Growth Investment Division Investment Division -------------------------- -------------------------- For the Year For the Period For the Year For the Period Ended May 1, 2002 to Ended May 1, 2002 to December 31, December 31, December 31, December 31, 2003 2002 2003 2002 ------------ -------------- ------------ -------------- INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 8,411 $ 291 $ -- $ -- Expenses: Mortality and expense charges................................ 4,773 638 2,947 281 -------- ------- -------- ------- Net investment (loss) income................................... 3,638 (347) (2,947) (281) -------- ------- -------- ------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized gains (losses) from security transactions......... 6,414 (1,242) 66,977 (593) Change in unrealized appreciation (depreciation) of investments 140,733 (6,351) 51,242 (4,322) -------- ------- -------- ------- Net realized and unrealized gains (losses) on investments...... 147,147 (7,593) 118,219 (4,915) -------- ------- -------- ------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.................................................... $150,785 $(7,940) $115,272 $(5,196) ======== ======= ======== =======
See Notes to Financial Statements. F-38
Harris Oakmark International Janus Aggressive Growth Lord Abbett Growth & Income Investment Division Investment Division Investment Division - -------------------------- --------------------------------------- -------------------------------- For the Year For the Period For the Year For the Year For the Period For the Year For the Period Ended May 1, 2002 to Ended Ended May 1, 2001 to Ended October 31, 2002 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2003 2002 2001 2003 2002 - ------------ -------------- ------------ ------------ -------------- ------------ ------------------- $ 8,848 $ 210 $ -- $ -- $ -- $ -- $-- 2,473 298 25,657 13,374 2,780 47 -- -------- ------- ---------- --------- -------- ------ --- 6,375 (88) (25,657) (13,374) (2,780) (47) -- -------- ------- ---------- --------- -------- ------ --- 72,432 (843) (313,967) (78,401) (43,356) 20 -- 49,401 (2,920) 1,123,504 (426,893) (11,854) 3,750 -- -------- ------- ---------- --------- -------- ------ --- 121,833 (3,763) 809,537 (505,294) (55,210) 3,770 -- -------- ------- ---------- --------- -------- ------ --- $128,208 $(3,851) $ 783,880 $(518,668) $(57,990) $3,723 $-- ======== ======= ========== ========= ======== ====== ===
F-39 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
State Street Research Investment Trust Investment Division ----------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------- (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (68,204) $ (969,448) $ 48,301,051 Net realized (losses) gains from security transactions..................... (6,958,914) (6,132,437) 731,187 Change in unrealized appreciation (depreciation) of investments............ 88,855,777 (90,883,953) (122,469,738) ------------ ------------ ------------- Net increase (decrease) in net assets resulting from operations............ 81,828,659 (97,985,838) (73,437,500) ------------ ------------ ------------- From capital transactions: Net premiums............................................................... 67,707,999 78,160,135 80,046,712 Redemptions................................................................ (15,137,546) (10,399,853) (15,513,042) Net Investment Division transfers.......................................... (7,863,696) (11,186,400) 2,751,095 Other net transfers........................................................ (36,428,084) (38,309,389) (40,534,492) ------------ ------------ ------------- Net increase (decrease) in net assets resulting from capital transactions.. 8,278,673 18,264,493 26,750,273 ------------ ------------ ------------- NET CHANGE IN NET ASSETS...................................................... 90,107,332 (79,721,345) (46,687,227) NET ASSETS--BEGINNING OF PERIOD............................................... 276,979,969 356,701,314 403,388,541 ------------ ------------ ------------- NET ASSETS--END OF PERIOD..................................................... $367,087,301 $276,979,969 $ 356,701,314 ============ ============ =============
See Notes to Financial Statements. F-40
State Street Research Diversified State Street Research Aggressive Growth MetLife Stock Index Investment Division Investment Division Investment Division - ---------------------------------------- ---------------------------------------- ---------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 7,511,522 $ 3,558,999 $ 23,184,244 $ (1,367,678) $ (1,263,240) $ 45,283,589 $ 3,387,558 $ 2,705,145 $ 1,213,073 (2,593,687) (1,810,936) (111,095) (8,202,841) (5,953,657) (1,536,972) (10,060,006) (5,045,284) 4,130,927 42,182,763 (41,694,719) (42,080,714) 62,199,697 (44,703,891) (94,895,107) 101,361,307 (82,559,071) (48,985,481) - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 47,100,598 (39,946,656) (19,007,565) 52,629,178 (51,920,788) (51,148,490) 94,688,859 (84,899,210) (43,641,481) - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 52,190,961 54,194,120 55,767,097 34,182,901 40,003,786 42,942,155 108,236,751 114,022,950 113,949,042 (14,264,879) (9,523,000) (8,333,720) (7,318,523) (4,831,140) (6,486,474) (14,265,812) (13,779,170) (11,030,629) (2,178,352) (383,162) 8,413,016 (5,104,646) (6,485,783) 1,097,789 (11,228,029) 11,797,286 19,393,554 (31,835,294) (32,044,615) (31,250,185) (17,936,155) (17,642,321) (19,697,556) (46,545,385) (47,844,806) (45,631,351) - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 3,912,436 12,243,343 24,596,208 3,823,577 11,044,542 17,855,914 36,197,525 64,196,260 76,680,616 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 51,013,034 (27,703,313) 5,588,643 56,452,755 (40,876,246) (33,292,576) 130,886,384 (20,702,950) 33,039,135 238,020,353 265,723,666 260,135,023 130,815,618 171,691,864 204,984,440 326,227,963 346,930,913 313,891,778 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $289,033,387 $238,020,353 $265,723,666 $187,268,373 $130,815,618 $171,691,864 $457,114,347 $326,227,963 $346,930,913 ============ ============ ============ ============ ============ ============ ============ ============ ============
F-41 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
FI International Stock Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (54,694) $ 18,744 $ 1,172,876 Net realized (losses) gains from security transactions..................... (1,630,864) (2,655,399) (1,661,736) Change in unrealized appreciation (depreciation) of investments............ 10,924,390 (4,418,288) (9,202,287) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations............ 9,238,832 (7,054,943) (9,691,147) ----------- ----------- ----------- From capital transactions: Net premiums............................................................... 7,903,805 9,783,594 9,615,907 Redemptions................................................................ (1,780,012) (1,287,021) (1,289,983) Net Investment Division transfers.......................................... (552,252) (2,781,604) 323,092 Other net transfers........................................................ (3,792,182) (3,974,969) (4,148,436) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from capital transactions.. 1,779,359 1,740,000 4,500,580 ----------- ----------- ----------- NET CHANGE IN NET ASSETS...................................................... 11,018,191 (5,314,943) (5,190,567) NET ASSETS--BEGINNING OF PERIOD............................................... 32,966,098 38,281,041 43,471,608 ----------- ----------- ----------- NET ASSETS--END OF PERIOD..................................................... $43,984,289 $32,966,098 $38,281,041 =========== =========== ===========
See Notes to Financial Statements. F-42
Janus Mid Cap T. Rowe Price Small Cap Growth Scudder Global Equity Investment Division Investment Division Investment Division - ---------------------------------------- -------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ (1,297,757) $ (1,013,088) $ (1,037,631) $ (402,320) $ (332,098) $ 3,209,549 $ 311,502 $ 181,688 $ 2,155,251 (1,145,184) (5,163,698) (2,451,549) (309,653) (297,872) (796,014) (1,005,776) (466,029) (71,082) 46,019,342 (34,449,605) (53,291,667) 17,635,578 (12,423,975) (6,595,361) 7,242,152 (3,445,540) (5,825,339) - ------------ ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- 43,576,401 (40,626,391) (56,780,847) 16,923,605 (13,053,945) (4,181,826) 6,547,878 (3,729,881) (3,741,170) - ------------ ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- 53,673,455 64,528,237 74,363,749 12,384,395 14,332,234 15,023,523 6,014,790 7,029,500 7,562,752 (5,340,392) (2,804,544) (3,144,623) (1,578,439) (1,348,311) (2,577,320) (1,735,572) (936,418) (630,613) (5,185,372) (5,298,371) 3,860,189 (197,295) 753,895 (372,409) (125,590) (322,915) 603,395 (21,665,579) (21,964,497) (23,970,747) (5,569,189) (5,463,573) (5,350,422) (2,481,721) (2,670,700) (2,572,779) - ------------ ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- 21,482,112 34,460,825 51,108,568 5,039,472 8,274,245 6,723,372 1,671,907 3,099,467 4,962,755 - ------------ ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- 65,058,513 (6,165,566) (5,672,279) 21,963,077 (4,779,700) 2,541,546 8,219,785 (630,414) 1,221,585 119,019,575 125,185,141 130,857,420 39,880,088 44,659,788 42,118,242 20,475,933 21,106,347 19,884,762 - ------------ ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- $184,078,088 $119,019,575 $125,185,141 $61,843,165 $ 39,880,088 $44,659,788 $28,695,718 $20,475,933 $21,106,347 ============ ============ ============ =========== ============ =========== =========== =========== ===========
F-43 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Harris Oakmark Large Cap Value Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (252,368) $ 438,284 $ (56,512) Net realized (losses) gains from security transactions..................... 38,696 173,172 94,596 Change in unrealized appreciation (depreciation) of investments............ 6,986,213 (3,824,797) 810,284 ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations............ 6,772,541 (3,213,341) 848,368 ----------- ----------- ----------- From capital transactions: Net premiums............................................................... 11,430,624 10,115,432 4,073,390 Redemptions................................................................ (991,704) (287,586) (268,807) Net Investment Division transfers.......................................... 1,835,698 6,291,525 9,043,603 Other net transfers........................................................ (4,616,084) (4,169,815) (1,466,228) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from capital transactions.. 7,658,534 11,949,556 11,381,958 ----------- ----------- ----------- NET CHANGE IN NET ASSETS...................................................... 14,431,075 8,736,215 12,230,326 NET ASSETS--BEGINNING OF PERIOD............................................... 23,072,554 14,336,339 2,106,013 ----------- ----------- ----------- NET ASSETS--END OF PERIOD..................................................... $37,503,629 $23,072,554 $14,336,339 =========== =========== ===========
See Notes to Financial Statements. F-44
Neuberger Berman Partners Mid Cap Value T. Rowe Price Large Cap Growth Lehman Brothers Aggregate Bond Index Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ (118,988) $ (89,469) $ 106,521 $ (180,062) $ (106,090) $ (94,779) $ 2,506,200 $ 982,861 $ 212,243 28,084 105,666 (68,863) (489,389) (317,124) (100,488) 1,152,171 515,268 210,509 7,656,793 (1,888,036) (195,526) 7,871,800 (5,333,848) (92,461) (2,185,014) 2,760,523 1,053,501 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 7,565,889 (1,871,839) (157,868) 7,202,349 (5,757,062) (287,728) 1,473,357 4,258,652 1,476,253 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 8,682,614 8,172,686 5,746,048 8,620,553 9,447,412 8,996,035 13,565,785 10,479,062 8,533,067 (629,059) (1,215,338) (57,006) (982,056) (125,856) (60,227) (1,812,183) (1,839,866) (1,024,276) 650,401 2,321,678 4,766,372 (78,277) 873,833 8,736,398 (6,698,353) 8,318,943 11,244,179 (3,610,116) (3,236,171) (2,321,908) (3,337,120) (3,453,967) (3,536,498) (5,580,587) (4,492,832) (2,262,688) - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 5,093,840 6,042,855 8,133,506 4,223,100 6,741,422 14,135,708 (525,338) 12,465,307 16,490,282 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 12,659,729 4,171,016 7,975,638 11,425,449 984,360 13,847,980 948,019 16,723,959 17,966,535 18,285,822 14,114,806 6,139,168 22,094,885 21,110,525 7,262,545 54,046,288 37,322,329 19,355,794 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $30,945,551 $18,285,822 $14,114,806 $33,520,334 $22,094,885 $21,110,525 $54,994,307 $54,046,288 $37,322,329 =========== =========== =========== =========== =========== =========== =========== =========== ===========
F-45 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Morgan Stanley EAFE Index Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 121,982 $ (64,128) $ (37,840) Net realized (losses) gains from security transactions..................... (497,564) (800,822) (961,834) Change in unrealized appreciation (depreciation) of investments............ 6,516,826 (1,274,363) (729,479) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations............ 6,141,244 (2,139,313) (1,729,153) ----------- ----------- ----------- From capital transactions: Net premiums............................................................... 7,425,875 6,625,665 4,890,376 Redemptions................................................................ (362,211) (1,101,621) (722,285) Net Investment Division transfers.......................................... 438,708 1,672,217 4,395,203 Other net transfers........................................................ (2,849,511) (2,360,586) (1,819,787) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from capital transactions.. 4,652,861 4,835,675 6,743,507 ----------- ----------- ----------- NET CHANGE IN NET ASSETS...................................................... 10,794,105 2,696,362 5,014,354 NET ASSETS--BEGINNING OF PERIOD............................................... 13,496,072 10,799,710 5,785,356 ----------- ----------- ----------- NET ASSETS--END OF PERIOD..................................................... $24,290,177 $13,496,072 $10,799,710 =========== =========== ===========
See Notes to Financial Statements. F-46
Russell 2000 Index Met/Putnam Voyager State Street Research Aurora Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ (29,213) $ (29,731) $ (47,654) $ (58,697) $ (39,278) $ (22,732) $ (336,756) $ (97,874) $ (51,026) (125,595) (343,069) (1,016,179) (624,452) (304,226) (113,353) 196,537 81,843 155,882 7,938,110 (2,545,881) 1,215,383 2,271,140 (1,227,374) (585,114) 17,391,943 (6,958,922) 1,218,805 - ----------- ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- 7,783,302 (2,918,681) 151,550 1,587,991 (1,570,878) (721,199) 17,251,724 (6,974,953) 1,323,661 - ----------- ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- 7,659,016 7,082,371 5,343,692 3,213,111 3,461,165 2,425,615 16,618,731 15,376,489 7,040,736 (486,878) (266,570) (375,673) (93,468) (27,865) (23,841) (920,139) (302,359) (81,569) 991,151 2,834,125 1,811,235 (151,453) 548,678 2,239,800 1,566,557 6,843,668 11,247,758 (3,048,846) (2,527,437) (2,007,235) (1,158,137) (1,159,060) (878,209) (7,037,769) (5,887,521) (2,656,308) - ----------- ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- 5,114,443 7,122,489 4,772,019 1,810,053 2,822,918 3,763,365 10,227,380 16,030,277 15,550,617 - ----------- ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- 12,897,745 4,203,808 4,923,569 3,398,044 1,252,040 3,042,166 27,479,104 9,055,324 16,874,278 14,828,534 10,624,726 5,701,157 5,252,713 4,000,673 958,507 29,060,558 20,005,234 3,130,956 - ----------- ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- $27,726,279 $14,828,534 $10,624,726 $ 8,650,757 $ 5,252,713 $4,000,673 $56,539,662 $29,060,558 $20,005,234 =========== =========== =========== =========== =========== ========== =========== =========== ===========
F-47 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
MetLife Mid Cap Stock Index Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (64,163) $ (55,361) $ (18,724) Net realized (losses) gains from security transactions..................... 12,063 (23,095) (19,531) Change in unrealized appreciation (depreciation) of investments............ 6,538,587 (2,089,536) 294,328 ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations............ 6,486,487 (2,167,992) 256,073 ----------- ----------- ----------- From capital transactions: Net premiums............................................................... 8,658,518 7,438,484 4,147,919 Redemptions................................................................ (315,294) (109,971) (16,900) Net Investment Division transfers.......................................... 960,729 4,006,261 4,052,437 Other net transfers........................................................ (3,433,510) (2,617,681) (1,566,864) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from capital transactions.. 5,870,443 8,717,093 6,616,592 ----------- ----------- ----------- NET CHANGE IN NET ASSETS...................................................... 12,356,930 6,549,101 6,872,665 NET ASSETS--BEGINNING OF PERIOD............................................... 15,567,957 9,018,856 2,146,191 ----------- ----------- ----------- NET ASSETS--END OF PERIOD..................................................... $27,924,887 $15,567,957 $ 9,018,856 =========== =========== ===========
See Notes to Financial Statements. F-48
State Street Research Franklin Templeton Small Cap Growth Large Cap Value Davis Venture Value Investment Division Investment Division Investment Division - --------------------------------------- -------------------------- ------------------------------------- For the Year For the Year For the Period For the Year For the Period For the Year For the Year For the Year Ended Ended May 1, 2001 to Ended May 1, 2002 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2003 2002 2001 - ------------ ------------ -------------- ------------ -------------- ------------ ------------ ------------ $ (16,641) $ (8,397) $ (1,124) $ 4,590 $ 433 $ (75,683) $ 750 $ 153,188 (19,016) (42,766) (3,651) 41,938 (3,284) (213,900) (188,804) (46,987) 796,643 (271,373) 16,066 156,144 (3,178) 5,610,390 (2,083,879) (437,523) ---------- ---------- -------- ---------- -------- ----------- ----------- ----------- 760,986 (322,536) 11,291 202,672 (6,029) 5,320,807 (2,271,933) (331,322) ---------- ---------- -------- ---------- -------- ----------- ----------- ----------- 844,482 626,488 107,629 405,361 64,977 6,492,659 5,157,409 3,338,434 (27,310) (5,592) (802) (5,862) (313) (286,620) (86,825) (44,938) 610,392 745,849 369,945 469,287 153,138 2,147,532 5,300,022 4,710,785 (416,036) (235,608) (30,931) (149,915) (23,188) (2,675,075) (2,166,021) (1,312,198) ---------- ---------- -------- ---------- -------- ----------- ----------- ----------- 1,011,528 1,131,137 445,841 718,871 194,614 5,678,496 8,204,585 6,692,083 ---------- ---------- -------- ---------- -------- ----------- ----------- ----------- 1,772,514 808,601 457,132 921,543 188,585 10,999,303 5,932,652 6,360,761 1,265,733 457,132 -- 188,585 -- 13,430,192 7,497,540 1,136,779 ---------- ---------- -------- ---------- -------- ----------- ----------- ----------- $3,038,247 $1,265,733 $457,132 $1,110,128 $188,585 $24,429,495 $13,430,192 $ 7,497,540 ========== ========== ======== ========== ======== =========== =========== ===========
F-49 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Loomis Sayles Small Cap Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (28,298) $ (16,142) $ 75,074 Net realized (losses) gains from security transactions..................... (88,636) (106,829) (35,645) Change in unrealized appreciation (depreciation) of investments............ 1,169,772 (414,868) (62,611) ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations............ 1,052,838 (537,839) (23,182) ---------- ---------- ---------- From capital transactions: Net premiums............................................................... 1,387,309 1,200,038 909,510 Redemptions................................................................ (49,105) (11,815) (7,864) Net Investment Division transfers.......................................... 159,941 268,407 960,425 Other net transfers........................................................ (536,437) (436,811) (356,458) ---------- ---------- ---------- Net increase (decrease) in net assets resulting from capital transactions.. 961,708 1,019,819 1,505,613 ---------- ---------- ---------- NET CHANGE IN NET ASSETS...................................................... 2,014,546 481,980 1,482,431 NET ASSETS--BEGINNING OF PERIOD............................................... 2,408,393 1,926,413 443,982 ---------- ---------- ---------- NET ASSETS--END OF PERIOD..................................................... $4,422,939 $2,408,393 $1,926,413 ========== ========== ==========
See Notes to Financial Statements. F-50
Alger Equity Growth MFS Investors Trust MFS Research Managers Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ (23,728) $ (13,698) $ (121) $ (7,711) $ (2,715) $ (1,179) $ (873) $ (2,427) $ (363) (63,998) (57,097) (175) 13,432 (71,866) (5,896) (4,462) (30,794) 1,304 1,339,908 (983,355) (5,126) 221,187 (78,498) 4,527 112,414 (58,814) (346) ---------- ----------- ------- ---------- --------- --------- -------- --------- --------- 1,252,182 (1,054,150) (5,422) 226,908 (153,079) (2,548) 107,079 (92,035) 595 ---------- ----------- ------- ---------- --------- --------- -------- --------- --------- 1,035,783 40,283 -- 701,861 657,381 122,835 278,607 256,687 72,571 -- -- -- (14,052) (4,428) (1,444) (4,854) (250) (3,984) 359 4,290,312 52,468 164,766 480,329 486,210 57,895 151,712 231,621 (337,622) (338,952) (1,809) (229,330) (608,417) (282,946) (84,526) (153,237) (149,340) ---------- ----------- ------- ---------- --------- --------- -------- --------- --------- 698,520 3,991,643 50,659 623,245 524,865 324,655 247,122 254,912 150,868 ---------- ----------- ------- ---------- --------- --------- -------- --------- --------- 1,950,702 2,937,493 45,237 850,153 371,786 322,107 354,201 162,877 151,463 2,982,730 45,237 -- 693,893 322,107 -- 314,340 151,463 -- ---------- ----------- ------- ---------- --------- --------- -------- --------- --------- $4,933,432 $ 2,982,730 $45,237 $1,544,046 $ 693,893 $ 322,107 $668,541 $ 314,340 $ 151,463 ========== =========== ======= ========== ========= ========= ======== ========= =========
F-51 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
State Street Research Bond Income Investment Division -------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 2,183,489 $ 4,278,595 $ 5,095,599 Net realized (losses) gains from security transactions..................... 880,712 (378,655) 400,025 Change in unrealized appreciation (depreciation) of investments............ 1,572,001 2,444,438 (137,736) ----------- ----------- ------------ Net increase (decrease) in net assets resulting from operations............ 4,636,202 6,344,378 5,357,888 ----------- ----------- ------------ From capital transactions: Net premiums............................................................... 16,159,717 18,007,464 14,237,318 Redemptions................................................................ (4,549,369) (3,078,401) (3,623,665) Net Investment Division transfers.......................................... (3,340,166) 1,121,089 3,289,281 Other net transfers........................................................ (9,344,726) (8,719,726) (15,760,945) ----------- ----------- ------------ Net increase (decrease) in net assets resulting from capital transactions.. (1,074,544) 7,330,426 (1,858,011) ----------- ----------- ------------ NET CHANGE IN NET ASSETS...................................................... 3,561,658 13,674,804 3,499,877 NET ASSETS--BEGINNING OF PERIOD............................................... 93,157,932 79,483,128 75,983,251 ----------- ----------- ------------ NET ASSETS--END OF PERIOD..................................................... $96,719,590 $93,157,932 $ 79,483,128 =========== =========== ============
See Notes to Financial Statements. F-52
Salomon Brothers FI Structured Equity Harris Oakmark Focused Value Strategic Bond Opportunities Investment Division Investment Division Investment Division - ------------------------------------- --------------------------------------- --------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Period For the Year For the Year For the Period Ended Ended Ended Ended Ended May 1, 2001 to Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ -------------- ------------ ------------ -------------- $ (808) $ 70 $ (69) $ (127,312) $ (63,671) $ (9,775) $ 33,102 $ 72,727 $ (894) 24,426 (9,596) (77) 31,214 (9,588) (43) 97,650 241 117 58,141 (4,285) (2,467) 5,537,632 (938,481) 279,801 233,146 62,351 4,621 -------- -------- ------- ----------- ----------- ---------- ---------- ---------- -------- 81,759 (13,811) (2,613) 5,441,534 (1,011,740) 269,983 363,898 135,319 3,844 -------- -------- ------- ----------- ----------- ---------- ---------- ---------- -------- 167,405 51,077 -- 8,198,287 6,333,512 999,657 1,996,763 890,271 97,914 (10,046) -- -- (450,269) (161,171) (7,188) (108,331) (17,732) (566) 229,644 41,277 28,886 3,144,705 5,880,885 3,223,723 1,486,748 1,049,918 396,753 (56,377) (10,863) (1,055) (3,347,152) (2,377,498) (271,630) (749,672) (348,947) (33,111) -------- -------- ------- ----------- ----------- ---------- ---------- ---------- -------- 330,626 81,491 27,831 7,545,571 9,675,728 3,944,562 2,625,508 1,573,510 460,990 -------- -------- ------- ----------- ----------- ---------- ---------- ---------- -------- 412,385 67,680 25,218 12,987,105 8,663,988 4,214,545 2,989,406 1,708,829 464,834 92,898 25,218 -- 12,878,533 4,214,545 -- 2,173,663 464,834 -- -------- -------- ------- ----------- ----------- ---------- ---------- ---------- -------- $505,283 $ 92,898 $25,218 $25,865,638 $12,878,533 $4,214,545 $5,163,069 $2,173,663 $464,834 ======== ======== ======= =========== =========== ========== ========== ========== ========
F-53 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Salomon Brothers U.S. Government Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 42,617 $ 71,569 $ (1,841) Net realized (losses) gains from security transactions..................... 48,098 10,225 5,065 Change in unrealized appreciation (depreciation) of investments............ (40,677) 83,661 (2,273) ----------- ---------- -------- Net increase (decrease) in net assets resulting from operations............ 50,038 165,455 951 ----------- ---------- -------- From capital transactions: Net premiums............................................................... 3,454,837 1,641,232 162,934 Redemptions................................................................ (137,457) (35,283) (10,909) Net Investment Division transfers.......................................... 916,767 2,382,469 755,686 Other net transfers........................................................ (1,344,693) (637,762) (59,363) ----------- ---------- -------- Net increase (decrease) in net assets resulting from capital transactions.. 2,889,454 3,350,656 848,348 ----------- ---------- -------- NET CHANGE IN NET ASSETS...................................................... 2,939,492 3,516,111 849,299 NET ASSETS--BEGINNING OF PERIOD............................................... 4,365,410 849,299 -- ----------- ---------- -------- NET ASSETS--END OF PERIOD..................................................... $ 7,304,902 $4,365,410 $849,299 =========== ========== ========
See Notes to Financial Statements. F-54
State Street Research Money Market FI Mid Cap Opportunities Janus Aspen Growth Investment Division Investment Division Investment Division - -------------------------------------- -------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Period For the Year For the Year For the Year Ended Ended Ended Ended May 1, 2002 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2003 2002 2001 - ------------ ------------ ------------ ------------ -------------- ------------ ------------ ------------ $ 47,144 $ 259,328 $ 918,529 $ 9,838 $ (333) $ (10,283) $ (9,370) $ 185,366 (1) (628,588) (499,341) 19,777 (1,950) (263,013) (179,152) (1,848,663) 1 611,711 796,577 191,546 3,758 1,041,007 (329,490) 498,521 - ----------- ------------ ----------- ---------- -------- ---------- ---------- ----------- 47,144 242,451 1,215,765 221,161 1,475 767,711 (518,012) (1,164,776) - ----------- ------------ ----------- ---------- -------- ---------- ---------- ----------- 4,560,820 25,769,284 17,936,134 324,317 49,033 839,829 913,602 779,753 (1,186,158) (4,958,930) (1,689,474) (43,946) (19) (88,894) (13,590) (2,741,484) (4,975,125) (33,048,287) (4,603,225) 537,734 149,230 (5,665) 34,319 254,486 (1,910,867) 10,079,748 (1,666,768) (95,364) (31,850) (176,510) (211,649) (189,372) - ----------- ------------ ----------- ---------- -------- ---------- ---------- ----------- (3,511,330) (2,158,185) 9,976,667 722,741 166,394 568,760 722,682 (1,896,617) - ----------- ------------ ----------- ---------- -------- ---------- ---------- ----------- (3,464,186) (1,915,734) 11,192,432 943,902 167,869 1,336,471 204,670 (3,061,393) 30,810,613 32,726,347 21,533,915 167,869 -- 2,163,422 1,958,752 5,020,145 - ----------- ------------ ----------- ---------- -------- ---------- ---------- ----------- $27,346,427 $ 30,810,613 $32,726,347 $1,111,771 $167,869 $3,499,893 $2,163,422 $ 1,958,752 =========== ============ =========== ========== ======== ========== ========== ===========
F-55 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Invesco VIF High Yield Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 43,235 $ 48,408 $ 29,172 Net realized (losses) gains from security transactions..................... (5,183) (31,480) (3,798) Change in unrealized appreciation (depreciation) of investments............ 90,384 (7,350) (33,395) -------- -------- -------- Net increase (decrease) in net assets resulting from operations............ 128,436 9,578 (8,021) -------- -------- -------- From capital transactions: Net premiums............................................................... 232,669 216,788 213,527 Redemptions................................................................ (6,154) -- -- Net Investment Division transfers.......................................... 11,139 2,473 71,476 Other net transfers........................................................ (37,616) (27,503) (13,506) -------- -------- -------- Net increase (decrease) in net assets resulting from capital transactions.. 200,038 191,758 271,497 -------- -------- -------- NET CHANGE IN NET ASSETS...................................................... 328,474 201,336 263,476 NET ASSETS--BEGINNING OF PERIOD............................................... 475,634 274,298 10,822 -------- -------- -------- NET ASSETS--END OF PERIOD..................................................... $804,108 $475,634 $274,298 ======== ======== ========
See Notes to Financial Statements. F-56
Invesco VIF Equity Income Invesco VIF Real Estate Opportunity Franklin Templeton International Stock Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 1,289 $ 1,519 $ 1,475 $ 1,726 $ (248) $ 652 $ 34,446 $ 31,411 $ 197,836 (4,599) (7,425) (1,414) 7,645 12,032 1,271 (71,786) (325,690) (18,952) 30,971 (21,641) (4,995) 41,591 3,016 (3,692) 947,139 (187,267) (287,060) -------- -------- -------- -------- -------- -------- ---------- ---------- ---------- 27,661 (27,547) (4,934) 50,962 14,800 (1,769) 909,799 (481,546) (108,176) -------- -------- -------- -------- -------- -------- ---------- ---------- ---------- 44,937 30,604 5,886 20,763 9,629 3,478 571,285 937,164 461,547 (13,395) -- (780) (74,780) -- -- (219,304) (90,063) (236,261) 6,492 7,548 112,018 8,373 64,182 (24,700) 342,850 643,475 589,847 (6,352) (8,020) (3,589) (5,943) 1,520 (2,641) (163,132) (163,651) (39,531) -------- -------- -------- -------- -------- -------- ---------- ---------- ---------- 31,682 30,132 113,535 (51,587) 75,331 (23,863) 531,699 1,326,925 775,602 -------- -------- -------- -------- -------- -------- ---------- ---------- ---------- 59,343 2,585 108,601 (625) 90,131 (25,632) 1,441,498 845,379 667,426 125,063 122,478 13,877 179,233 89,102 114,734 2,612,034 1,766,655 1,099,229 -------- -------- -------- -------- -------- -------- ---------- ---------- ---------- $184,406 $125,063 $122,478 $178,608 $179,233 $ 89,102 $4,053,532 $2,612,034 $1,766,655 ======== ======== ======== ======== ======== ======== ========== ========== ==========
F-57 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Franklin Templeton Valuemark Small Cap Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (6,613) $ (1,274) $ (121) Net realized (losses) gains from security transactions..................... (16,606) (49,638) (480) Change in unrealized appreciation (depreciation) of investments............ 366,174 (184,311) 4,364 ---------- --------- -------- Net increase (decrease) in net assets resulting from operations............ 342,955 (235,223) 3,763 ---------- --------- -------- From capital transactions: Net premiums............................................................... 258,012 40,174 32,699 Redemptions................................................................ -- -- -- Net Investment Division transfers.......................................... 30,689 995,374 69,587 Other net transfers........................................................ (86,982) (102,364) (3,042) ---------- --------- -------- Net increase (decrease) in net assets resulting from capital transactions.. 201,719 933,184 99,244 ---------- --------- -------- NET CHANGE IN NET ASSETS...................................................... 544,674 697,961 103,007 NET ASSETS--BEGINNING OF PERIOD............................................... 800,968 103,007 -- ---------- --------- -------- NET ASSETS--END OF PERIOD..................................................... $1,345,642 $ 800,968 $103,007 ========== ========= ========
See Notes to Financial Statements. F-58
Alliance Growth & Income Alliance Premier Growth Alliance Technology Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 4,389 $ 23,587 $ 2,195 $ (257) $ (274) $ (104) $ (181) $ (96) $ 661 (27,592) (18,278) (318) (661) (9,853) (138) (931) (519) (19,763) 441,306 (137,057) 24,267 11,616 (12,480) 1,299 13,613 (9,033) (2,681) ---------- ---------- -------- ------- -------- ------- ------- ------- -------- 418,103 (131,748) 26,144 10,698 (22,607) 1,057 12,501 (9,648) (21,783) ---------- ---------- -------- ------- -------- ------- ------- ------- -------- 581,532 560,351 422,139 29,785 29,958 -- 15,245 17,162 463 (87,076) (14,526) -- -- -- -- (316) -- -- 41,687 192,482 160,474 3,688 (60,622) 97,128 727 -- 36,082 (82,296) (71,035) (11,019) (2,341) (2,820) 133 (792) (1,833) (2,213) ---------- ---------- -------- ------- -------- ------- ------- ------- -------- 453,847 667,272 571,594 31,132 (33,484) 97,261 14,864 15,329 34,332 ---------- ---------- -------- ------- -------- ------- ------- ------- -------- 871,950 535,524 597,738 41,830 (56,091) 98,318 27,365 5,681 12,549 1,191,135 655,611 57,873 42,227 98,318 -- 18,230 12,549 -- ---------- ---------- -------- ------- -------- ------- ------- ------- -------- $2,063,085 $1,191,135 $655,611 $84,057 $ 42,227 $98,318 $45,595 $18,230 $ 12,549 ========== ========== ======== ======= ======== ======= ======= ======= ========
F-59 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Fidelity Contrafund Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (2,455) $ (926) $ (57) Net realized (losses) gains from security transactions..................... 6,303 (348) (27) Change in unrealized appreciation (depreciation) of investments............ 139,867 (29,437) (253) --------- -------- ------- Net increase (decrease) in net assets resulting from operations............ 143,715 (30,711) (337) --------- -------- ------- From capital transactions: Net premiums............................................................... 53,210 22,932 3,356 Redemptions................................................................ (213,750) -- -- Net Investment Division transfers.......................................... 657,697 237,002 21,462 Other net transfers........................................................ 3,584 (3,862) (621) --------- -------- ------- Net increase (decrease) in net assets resulting from capital transactions.. 500,741 256,072 24,197 --------- -------- ------- NET CHANGE IN NET ASSETS...................................................... 644,456 225,361 23,860 NET ASSETS--BEGINNING OF PERIOD............................................... 249,221 23,860 -- --------- -------- ------- NET ASSETS--END OF PERIOD..................................................... $ 893,677 $249,221 $23,860 ========= ======== =======
See Notes to Financial Statements. F-60
Fidelity Asset Manager Growth Fidelity Growth American Funds Growth Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- --------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Period Ended Ended Ended Ended Ended Ended Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------- $ 6,748 $ 3,017 $ (233) $ (831) $ (517) $ (243) $ (118,303) $ (56,543) $ 128,057 (4,335) (5,591) 113 (2,588) (8,400) (3,407) (100,817) (49,022) (95,342) 59,143 (19,964) (1,597) 63,146 (40,968) (3,078) 5,264,250 (1,636,890) (17,189) -------- -------- ------- -------- -------- ------- ----------- ----------- ---------- 61,556 (22,538) (1,717) 59,727 (49,885) (6,728) 5,045,130 (1,742,455) 15,526 -------- -------- ------- -------- -------- ------- ----------- ----------- ---------- 194,197 105,094 16,990 101,957 102,972 22,338 8,746,040 5,515,691 700,197 (1,698) (2,162) -- (738) -- -- (274,455) (51,220) (1,570) 74,992 (31,085) 84,590 6,224 (1,143) 74,755 5,353,241 5,147,713 2,173,706 (27,293) (12,942) (5,355) (4,423) (5,581) (3,117) (3,102,038) (2,053,980) 288,414 -------- -------- ------- -------- -------- ------- ----------- ----------- ---------- 240,198 58,905 96,225 103,020 96,248 93,976 10,722,788 8,558,204 3,160,747 -------- -------- ------- -------- -------- ------- ----------- ----------- ---------- 301,754 36,367 94,508 162,747 46,363 87,248 15,767,918 6,815,749 3,176,273 130,875 94,508 -- 133,611 87,248 -- 9,992,022 3,176,273 -- -------- -------- ------- -------- -------- ------- ----------- ----------- ---------- $432,629 $130,875 $94,508 $296,358 $133,611 $87,248 $25,759,940 $ 9,992,022 $3,176,273 ======== ======== ======= ======== ======== ======= =========== =========== ==========
F-61 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
American Funds Growth-Income Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 57,594 $ 35,068 $ 15,132 Net realized (losses) gains from security transactions..................... (26,406) (51,319) (13,398) Change in unrealized appreciation (depreciation) of investments............ 3,852,340 (1,122,854) 55,397 ----------- ----------- ---------- Net increase (decrease) in net assets resulting from operations............ 3,883,528 (1,139,105) 57,131 ----------- ----------- ---------- From capital transactions: Net premiums............................................................... 7,049,440 4,324,156 553,810 Redemptions................................................................ (184,181) (62,519) (6,270) Net investment division transfers.......................................... 3,708,586 4,404,613 1,876,550 Other net transfers........................................................ (2,495,963) (1,573,001) (27,864) ----------- ----------- ---------- Net increase (decrease) in net assets resulting from capital transactions.. 8,077,882 7,093,249 2,396,226 ----------- ----------- ---------- NET CHANGE IN NET ASSETS...................................................... 11,961,410 5,954,144 2,453,357 NET ASSETS--BEGINNING OF PERIOD............................................... 8,407,501 2,453,357 -- ----------- ----------- ---------- NET ASSETS--END OF PERIOD..................................................... $20,368,911 $ 8,407,501 $2,453,357 =========== =========== ==========
See Notes to Financial Statements. F-62
American Funds Global Small Cap JPM Enhanced Index T. Rowe Price Mid Cap Growth Investment Division Investment Division Investment Division - --------------------------------------- ------------------------------------- --------------------------------------- For the Year For the Year For the Period For the Year For the Year For the Year For the Year For the Year For the Period Ended Ended May 1, 2001 to Ended Ended Ended Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ -------------- ------------ ------------ ------------ ------------ ------------ -------------- $ (8,633) $ (1,451) $ 5,931 $ 147 $ 78 $ (13) $ (17,818) $ 962 $ (940) (33,362) 35,746 (18,714) (1,554) (1,186) (25) (46,026) (55,314) (1,372) 1,513,502 (396,292) 46,579 1,806 (1,483) (320) 776,010 (378,709) 11,239 ---------- ---------- -------- -------- ------- ------ ---------- ---------- -------- 1,471,507 (361,997) 33,796 399 (2,591) (358) 712,166 (433,061) 8,927 ---------- ---------- -------- -------- ------- ------ ---------- ---------- -------- 1,663,445 1,071,636 138,839 3,043 6,165 -- 1,283,521 820,210 82,192 (60,720) (8,869) -- -- -- -- (26,453) (1,344) (543) 1,303,948 1,067,611 476,691 (11,034) 1,869 5,908 481,182 375,032 264,649 (610,233) (354,525) (30,269) (173) (3,041) (187) (448,143) 47,743 209,192 ---------- ---------- -------- -------- ------- ------ ---------- ---------- -------- 2,296,440 1,775,853 585,261 (8,164) 4,993 5,721 1,290,107 1,241,641 555,490 ---------- ---------- -------- -------- ------- ------ ---------- ---------- -------- 3,767,947 1,413,856 619,057 (7,765) 2,402 5,363 2,002,273 808,580 564,417 2,032,913 619,057 -- 7,765 5,363 -- 1,372,997 564,417 -- ---------- ---------- -------- -------- ------- ------ ---------- ---------- -------- $5,800,860 $2,032,913 $619,057 $ -- $ 7,765 $5,363 $3,375,270 $1,372,997 $564,417 ========== ========== ======== ======== ======= ====== ========== ========== ========
F-63 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
MFS Research International Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 2,786 $ (2,121) $ (351) Net realized (losses) gains from security transactions..................... 148,987 (66,559) (4,107) Change in unrealized appreciation (depreciation) of investments............ 191,049 (2,664) 1,444 ---------- -------- -------- Net increase (decrease) in net assets resulting from operations............ 342,822 (71,344) (3,014) ---------- -------- -------- From capital transactions: Net premiums............................................................... 514,658 323,700 38,580 Redemptions................................................................ (15,626) (1,956) -- Net investment division transfers.......................................... 140,125 254,704 77,076 Other net transfers........................................................ (198,441) (28,935) 124,871 ---------- -------- -------- Net increase (decrease) in net assets resulting from capital transactions.. 440,716 547,513 240,527 ---------- -------- -------- NET CHANGE IN NET ASSETS...................................................... 783,538 476,169 237,513 NET ASSETS--BEGINNING OF PERIOD............................................... 713,682 237,513 -- ---------- -------- -------- NET ASSETS--END OF PERIOD..................................................... $1,497,220 $713,682 $237,513 ========== ======== ========
See Notes to Financial Statements. F-64
PIMCO Total Return PIMCO Innovation Lord Abbett Bond Debenture Investment Division Investment Division Investment Division - --------------------------------------- --------------------------------------- -------------------------------------- For the Year For the Year For the Period For the Year For the Year For the Period For the Year For the Year For the Year Ended Ended May 1, 2001 to Ended Ended May 1, 2001 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ -------------- ------------ ------------ -------------- ------------ ------------ ------------ $ 175,706 $ (28,120) $ 23,842 $ (21,608) $ (9,521) $ (1,528) $ 109,583 $ 924,873 $ 859,088 175,963 60,373 1,564 (195,867) (111,879) (9,873) 198,834 (1,886,218) (134,223) (25,434) 270,736 (14,155) 1,260,206 (652,366) 4,179 1,391,673 949,375 (902,997) - ----------- ---------- ---------- ---------- ---------- -------- ----------- ------------ ---------- 326,235 302,989 11,251 1,042,731 (773,766) (7,222) 1,700,090 (11,970) (178,132) - ----------- ---------- ---------- ---------- ---------- -------- ----------- ------------ ---------- 5,176,301 1,998,260 266,987 1,268,741 931,879 138,136 2,358,538 2,500,797 2,653,126 (300,049) (31,798) (9,397) (47,295) (7,020) -- (558,076) (441,582) (478,731) 3,254,351 3,693,012 902,199 1,385,317 627,449 661,537 1,087,733 11,019,013 807,014 (1,973,454) (851,347) (68,474) (437,762) (258,151) (43,761) (1,142,589) (13,314,199) (872,472) - ----------- ---------- ---------- ---------- ---------- -------- ----------- ------------ ---------- 6,157,149 4,808,127 1,091,315 2,169,001 1,294,157 755,912 1,745,606 (235,971) 2,108,937 - ----------- ---------- ---------- ---------- ---------- -------- ----------- ------------ ---------- 6,483,384 5,111,116 1,102,566 3,211,732 520,391 748,690 3,445,696 (247,941) 1,930,805 6,213,682 1,102,566 -- 1,269,081 748,690 -- 8,596,606 8,844,547 6,913,742 - ----------- ---------- ---------- ---------- ---------- -------- ----------- ------------ ---------- $12,697,066 $6,213,682 $1,102,566 $4,480,813 $1,269,081 $748,690 $12,042,302 $ 8,596,606 $8,844,547 =========== ========== ========== ========== ========== ======== =========== ============ ==========
F-65 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Met/AIM Met/AIM Mid Cap Core Equity Small Cap Growth Investment Division Investment Division -------------------------- -------------------------- For the Year For the Period For the Year For the Period Ended May 1, 2002 to Ended May 1, 2002 to December 31, December 31, December 31, December 31, 2003 2002 2003 2002 ------------ -------------- ------------ -------------- (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income..................................... $ 3,638 $ (347) $ (2,947) $ (281) Net realized (losses) gains from security transactions........... 6,414 (1,242) 66,977 (593) Change in unrealized appreciation (depreciation) of investments.. 140,733 (6,351) 51,242 (4,322) --------- -------- -------- -------- Net increase (decrease) in net assets resulting from operations.. 150,785 (7,940) 115,272 (5,196) --------- -------- -------- -------- From capital transactions: Net premiums..................................................... 376,221 70,763 201,753 30,362 Redemptions...................................................... (9,516) (929) (5,605) (129) Net investment division transfers................................ 345,361 212,616 286,464 84,320 Other net transfers.............................................. (126,899) (21,530) (70,229) 6,439 --------- -------- -------- -------- Net increase (decrease) in net assets resulting from capital transactions............................................ 585,167 260,920 412,383 120,992 --------- -------- -------- -------- NET CHANGE IN NET ASSETS............................................ 735,952 252,980 527,655 115,796 NET ASSETS--BEGINNING OF PERIOD..................................... 252,980 -- 115,796 -- --------- -------- -------- -------- NET ASSETS--END OF PERIOD........................................... $ 988,932 $252,980 $643,451 $115,796 ========= ======== ======== ========
See Notes to Financial Statements. F-66
Harris Oakmark International Janus Aggressive Growth Lord Abbett Growth & Income Investment Division Investment Division Investment Division - -------------------------- --------------------------------------- -------------------------------- For the Year For the Period For the Year For the Year For the Period For the Year For the Period Ended May 1, 2002 to Ended Ended May 1, 2001 to Ended October 31, 2002 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2003 2002 2001 2003 2002 - ------------ -------------- ------------ ------------ -------------- ------------ ------------------- $ 6,375 $ (88) $ (25,657) $ (13,374) $ (2,780) $ (47) $-- 72,432 (843) (313,967) (78,401) (43,356) 20 -- 49,401 (2,920) 1,123,504 (426,893) (11,854) 3,750 -- -------- -------- ---------- ---------- ---------- ------- --- 128,208 (3,851) 783,880 (518,668) (57,990) 3,723 -- -------- -------- ---------- ---------- ---------- ------- --- 111,653 59,332 1,705,553 1,567,918 311,526 4,885 -- (357) (178) (28,560) (23,600) -- -- -- 446,278 122,434 109,161 607,036 817,361 12,124 -- (22,736) (27,767) (612,599) (540,084) (118,215) (203) -- -------- -------- ---------- ---------- ---------- ------- --- 534,838 153,821 1,173,555 1,611,270 1,010,672 16,806 -- -------- -------- ---------- ---------- ---------- ------- --- 663,046 149,970 1,957,435 1,092,602 952,682 20,529 -- 149,970 -- 2,045,284 952,682 -- -- -- -------- -------- ---------- ---------- ---------- ------- --- $813,016 $149,970 $4,002,719 $2,045,284 $ 952,682 $20,529 $-- ======== ======== ========== ========== ========== ======= ===
F-67 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company NOTES TO FINANCIAL STATEMENTS December 31, 2003 1. BUSINESS Metropolitan Life Separate Account UL (the "Separate Account"), a separate account of Metropolitan Life Insurance Company ("Metropolitan Life"), was established on December 13, 1988 to support Metropolitan Life's operations with respect to certain variable universal life policies ("Policies"). Metropolitan Life is a wholly owned subsidiary of MetLife Inc. ("MetLife"). The Separate Account was registered as a unit investment trust on January 5, 1990 under the Investment Company Act of 1940, as amended, and exists in accordance with the regulations of the New York Insurance Department. The Separate Account presently consists of fifty-seven investment divisions that support six variable universal life insurance policies: Flexible Premium Multifunded Life ("UL II"), MetLife Flexible Premium Variable Life ("MetFlex"), Group Variable Universal Life ("GVUL"), Flexible Premium Multifunded Life ("UL 2001"), Variable Additional Insurance ("VAI") and Variable Additional Benefits Rider ("VABR"). The Separate Account is divided into investment divisions. Each investment division invests its assets exclusively in shares of corresponding portfolios, series or funds (with the same name) within the Metropolitan Fund, Janus Fund, Invesco Funds, Franklin Fund, Alliance Fund, Fidelity Funds, American Fund or Met Investors Fund, collectively, (the "Funds"). For convenience, the portfolios, series, and funds are referred to as "portfolios." The assets of the Separate Account are registered in the name of Metropolitan Life. Under applicable insurance law, the assets and liabilities of the Separate Account are clearly identified and distinguished from Metropolitan Life's other assets and liabilities. The portion of the Separate Account's assets applicable to the variable life policies is not chargeable with liabilities arising out of any other business Metropolitan Life may conduct. The table below represents the investment divisions within the Separate Account: State Street Research Investment Trust Investment Division State Street Research Diversified Investment Division State Street Research Aggressive Growth Investment Division MetLife Stock Index Investment Division FI International Stock Investment Division Janus Mid Cap Investment Division T. Rowe Price Small Cap Growth Investment Division Scudder Global Equity Investment Division Harris Oakmark Large Cap Value Investment Division Neuberger Berman Partners Mid Cap Value Investment Division T. Rowe Price Large Cap Growth Investment Division Lehman Brothers Aggregate Bond Index Investment Division Morgan Stanley EAFE Index Investment Division Russell 2000 Index Investment Division Met/Putnam Voyager Investment Division State Street Research Aurora Investment Division MetLife Mid Cap Stock Index Investment Division Franklin Templeton Small Cap Growth Investment Division (b) State Street Research Large Cap Value Investment Division (c) Davis Venture Value Investment Division Loomis Sayles Small Cap Investment Division Alger Equity Growth Investment Division (a) MFS Investors Trust Investment Division (a) MFS Research Managers Investment Division (a) State Street Research Bond Income Investment Division (a) FI Structured Equity Investment Division (a) Harris Oakmark Focused Value Investment Division (b) Salomon Brothers Stategic Bond Opportunities Investment Division (b) Salomon Brothers U.S. Government Investment Division (b) State Street Research Money Market Investment Division FI Mid Cap Opportunities Investment Division (c) Janus Aspen Growth Investment Division Invesco VIF High Yield Investment Division Invesco VIF Equity Income Investment Division Invesco VIF Real Estate Opportunity Investment Division Franklin Templeton International Stock Investment Division Franklin Templeton Valuemark Small Cap Investment Division (a) Alliance Growth & Income Investment Division Alliance Premier Growth Investment Division (a) Alliance Technology Investment Division (a) Fidelity Contrafund Investment Division (a) Fidelity Asset Manager Growth Investment Division (a) Fidelity Growth Investment Division (a) American Funds Growth Investment Division (b) American Funds Growth-Income Investment Division (b) American Funds Global Small Cap Investment Division (b) JPM Enhanced Index Investment Division (a) T. Rowe Price Mid Cap Growth Investment Division (b) MFS Research International Investment Division (b) PIMCO Total Return Investment Division (b) PIMCO Innovation Investment Division (b) Lord Abbett Bond Debenture Investment Division Met/AIM Mid Cap Core Equity Investment Division (c) Met/AIM Small Cap Growth Investment Division (c) Harris Oakmark International Investment Division (c) Janus Aggressive Growth Investment Division Lord Abbett Growth & Income Investment Division (d) F-68 NOTES TO FINANCIAL STATEMENTS -- (Continued) 1. BUSINESS -- (Continued) (a) On January 1, 2001, operations commenced for eleven new investment divisions added to the Separate Account on that date: Franklin Templeton Valuemark Small Cap Investment Division, Alger Equity Growth Investment Division, MFS Investors Trust Investment Division, MFS Research Managers Investment Division, FI Structured Equity Investment Division, Alliance Premier Growth Investment Division, Alliance Technology Investment Division, Fidelity Contrafund Investment Division, Fidelity Asset Manager Growth Investment Division, Fidelity Growth Investment Division, and JPM Enhanced Index Investment Division. (b) On May 1, 2001, operations commenced for twelve new investment divisions added to the Separate Account on that date: Janus Aggressive Growth Investment Division, Franklin Templeton Small Cap Growth Investment Division, Harris Oakmark Focused Value Investment Division, Salomon Brothers Strategic Bond Opportunities Investment Division, Salomon Brothers U.S. Government Investment Division, American Funds Growth Investment Division, American Funds Growth-Income Investment Division, American Funds Global Small Cap Investment Division, T. Rowe Price Mid Cap Growth Investment Division, MFS Research International Investment Division, PIMCO Total Return Investment Division, and PIMCO Innovation Investment Division. (c) On May 1, 2002, operations commenced for five new investment divisions added to the Separate Account on that date: State Street Research Large Cap Value Investment Division, FI Mid Cap Opportunities Investment Division, Met/AIM Mid Cap Core Equity Investment Division, Met/AIM Small Cap Growth Investment Division, and Harris Oakmark International Investment Division. (d) On October 31, 2002 operations commenced for one new investment division added to the Separate Account on that date: Lord Abbett Growth & Income Investment Division. 2. SIGNIFICANT ACCOUNTING POLICIES The financial statements included herein have been provided in accordance with accounting principles generally accepted in the United States of America for variable universal life separate accounts registered as unit investment trusts. A. Valuation of Investments Investments are made in the portfolios of the Funds and are valued at the reported net asset values of these portfolios. The investments of the Funds are valued at fair value. Money market fund investments are valued utilizing the amortized cost method of valuation. B. Security Transactions Purchases and sales are recorded on the trade date basis. Realized gains and losses on the sales of investments are computed on the basis of the identified cost of the investment sold. Income from dividends, and gains from realized gain distributions, are recorded on the ex-distribution date. C. Federal Income Taxes The operations of the Separate Account are included in the Federal income tax return of Metropolitan Life, which is taxed as a life insurance company under the provisions of the Internal Revenue Code ("IRC"). Under the current provisions of the IRC, Metropolitan Life does not expect to incur Federal income taxes on the earnings of the Separate Account to the extent the earnings are credited under the policies. Accordingly, no charge is being made currently to the Separate Account for Federal income taxes. Metropolitan Life will review periodically the status of this policy in the event of changes in the tax law. A charge may be made in future years for any Federal income taxes that would be attributed to the policies. D. Net Premiums Metropolitan Life deducts a sales load and a state premium tax charge from premiums before amounts are allocated to the Separate Account. In the case of certain policies, Metropolitan Life also deducts a Federal income tax charge before amounts are allocated to the Separate Account. The Federal income tax charge is imposed in connection with certain policies to recover a portion of the Federal income tax adjustment attributable to policy acquisition expenses. F-69 NOTES TO FINANCIAL STATEMENTS -- (Continued) 2. SIGNIFICANT ACCOUNTING POLICIES -- (Continued) E. Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported herein. Actual results could differ from these estimates. F. Purchase Payments Purchase payments received by Metropolitan Life are credited as Accumulation Units as of the end of the valuation period in which received, as provided in the prospectus. 3. EXPENSES With respect to assets in the Separate Account that support certain policies, Metropolitan Life deducts a charge from the assets of the Separate Account for the assumption of general administrative expenses and mortality and expense risks. This charge is equivalent to an effective annual rate of 0.45% of the average daily values of the assets in the Separate Account for GVUL policies, 0.90% for UL II & UL 2001 policies, 0.75% for VAI and VABR policies less than $250,000, and 0.50% for VAI and VABR policies $250,000 and greater. For Met Flex policies, a charge of 0.48% is assessed against the cash value of the assets in the separate account. F-70 NOTES TO FINANCIAL STATEMENTS -- (Continued) 4. PURCHASES AND SALES OF INVESTMENTS The cost of purchases and proceeds from sales of investments for the year ended December 31, 2003 were as follows:
Purchases Sales --------- -------- (In Thousands) State Street Research Investment Trust Investment Division....... $ 23,613 $ 15,572 State Street Research Diversified Investment Division............ 25,688 14,354 State Street Research Aggressive Growth Investment Division...... 11,163 8,764 MetLife Stock Index Investment Division.......................... 63,324 24,023 FI International Stock Investment Division....................... 5,514 3,811 Janus Mid Cap Investment Division................................ 22,923 3,117 T. Rowe Price Small Cap Growth Investment Division............... 6,430 1,862 Scudder Global Equity Investment Division........................ 4,833 2,872 Harris Oakmark Large Cap Value Investment Division............... 9,213 1,835 Neuberger Berman Partners Mid Cap Value Investment Division...... 5,510 557 T. Rowe Price Large Cap Growth Investment Division............... 6,544 2,531 Lehman Brothers Aggregate Bond Index Investment Division......... 20,915 19,015 Morgan Stanley EAFE Index Investment Division.................... 9,570 4,867 Russell 2000 Index Investment Division........................... 6,960 1,888 Met/Putnam Voyager Investment Division........................... 2,701 964 State Street Research Aurora Investment Division................. 11,291 1,416 MetLife Mid Cap Stock Index Investment Division.................. 7,181 1,384 Franklin Templeton Small Cap Growth Investment Division.......... 1,497 116 State Street Research Large Cap Value Investment Division........ 1,062 338 Davis Venture Value Investment Division.......................... 6,627 1,045 Loomis Sayles Small Cap Investment Division...................... 1,611 682 Alger Equity Growth Investment Division.......................... 1,071 396 MFS Investors Trust Investment Division.......................... 1,675 1,062 MFS Research Managers Investment Division........................ 279 34 State Street Research Bond Income Investment Division............ 13,891 12,765 FI Structured Equity Investment Division......................... 587 257 Harris Oakmark Focused Value Investment Division................. 7,908 488 Salomon Brothers Stategic Bond Opportunities Investment Division. 4,033 1,375 Salomon Brothers U.S. Government Investment Division............. 5,404 2,472 State Street Research Money Market Investment Division........... 6,223 9,648 FI Mid Cap Opportunities Investment Division..................... 823 90 Janus Aspen Growth Investment Division........................... 833 274 Invesco VIF High Yield Investment Division....................... 298 55 Invesco VIF Equity Income Investment Division.................... 57 24 Invesco VIF Real Estate Opportunity Investment Division.......... 32 82 Franklin Templeton International Stock Investment Division....... 1,048 482 Franklin Templeton Valuemark Small Cap Investment Division....... 311 502 Alliance Growth & Income Investment Division..................... 635 176 Alliance Premier Growth Investment Division...................... 33 3 Alliance Technology Investment Division.......................... 16 1 Fidelity Contrafund Investment Division.......................... 728 230 Fidelity Asset Manager Growth Investment Division................ 279 32 Fidelity Growth Investment Division.............................. 109 6 American Funds Growth Investment Division........................ 10,843 369 American Funds Growth-Income Investment Division................. 8,552 463 American Funds Global Small Cap Investment Division.............. 3,456 1,175 JPM Enhanced Index Investment Division........................... 3 11 T. Rowe Price Mid Cap Growth Investment Division................. 1,455 183 MFS Research International Investment Division................... 2,812 2,368 PIMCO Total Return Investment Division........................... 8,452 2,120 PIMCO Innovation Investment Division............................. 2,694 553 Lord Abbett Bond Debenture Investment Division................... 4,152 2,314 Met/AIM Mid Cap Core Equity Investment Division.................. 704 115 Met/AIM Small Cap Growth Investment Division..................... 786 377 Harris Oakmark International Investment Division................. 1,577 1,035 Janus Aggressive Growth Investment Division...................... 4,304 3,158 Lord Abbett Growth & Income Investment Division.................. 17 0 -------- -------- Total............................................................ $350,250 $155,708 ======== ========
F-71 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. CHANGES IN OUTSTANDING UNITS The changes in units outstanding for the years ended December 31, 2003, 2002 and 2001 were as follows:
State Street State Street State Street Research MetLife Research Research Aggressive Stock Investment Trust Diversified Growth Index Investment Investment Investment Investment Division Division Division Division ---------------- ------------ ------------ ---------- (In Thousands) Outstanding at December 31, 2002 15,060 12,268 11,447 22,140 Activity during 2003: Issued........................ 5,136 3,873 3,343 10,343 Redeemed...................... (4,045) (3,260) (2,957) (6,736) ------ ------ ------ ------ Outstanding at December 31, 2003 16,151 12,881 11,833 25,747 ====== ====== ====== ====== Outstanding at December 31, 2001 13,264 11,138 10,503 17,015 Activity during 2002: Issued........................ 5,072 3,678 3,343 9,909 Redeemed...................... (3,276) (2,548) (2,399) (4,784) ------ ------ ------ ------ Outstanding at December 31, 2002 15,060 12,268 11,447 22,140 ====== ====== ====== ====== Outstanding at December 31, 2000 11,054 9,234 9,254 11,689 Activity during 2001: Issued........................ 2,828 2,200 1,392 6,525 Redeemed...................... (618) (296) (143) (1,199) ------ ------ ------ ------ Outstanding at December 31, 2001 13,264 11,138 10,503 17,015 ====== ====== ====== ======
F-72 NOTES TO FINANCIAL STATEMENTS -- (Continued)
FI T. Rowe Price Harris Neuberger T. Rowe Price Lehman Brothers International Janus Small Cap Scudder Oakmark Berman Partners Large Cap Aggregate Stock Mid Cap Growth Global Equity Large Cap Value Mid Cap Value Growth Bond Index Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ------------- ---------- ------------- ------------- --------------- --------------- ------------- --------------- 3,296 11,521 4,261 1,978 2,346 1,567 2,853 4,147 1,224 5,469 1,463 768 1,639 892 1,408 2,097 (1,036) (3,642) (1,021) (606) (925) (513) (971) (2,180) ------ ------ ------ ----- ----- ----- ----- ------ 3,484 13,348 4,703 2,140 3,060 1,946 3,290 4,064 ====== ====== ====== ===== ===== ===== ===== ====== 3,106 8,481 3,509 2,000 1,242 1,076 2,124 3,153 1,176 5,867 1,561 687 1,697 906 1,289 1,774 (986) (2,827) (809) (709) (593) (415) (560) (780) ------ ------ ------ ----- ----- ----- ----- ------ 3,296 11,521 4,261 1,978 2,346 1,567 2,853 4,147 ====== ====== ====== ===== ===== ===== ===== ====== 2,709 5,367 2,995 1,848 220 456 632 1,730 1,578 3,701 864 209 1,076 790 2,004 2,267 (1,181) (587) (350) (57) (54) (170) (512) (844) ------ ------ ------ ----- ----- ----- ----- ------ 3,106 8,481 3,509 2,000 1,242 1,076 2,124 3,153 ====== ====== ====== ===== ===== ===== ===== ======
F-73 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. CHANGES IN OUTSTANDING UNITS -- (Continued)
Morgan Stanley State Street EAFE Russell Met/Putnam Research Index 2000 Index Voyager Aurora Investment Investment Investment Investment Division Division Division Division -------------- ---------- ---------- ------------ (In Thousands) Outstanding at December 31, 2002 2,044 1,614 1,463 2,599 Activity during 2003: Issued........................ 2,174 1,138 1,235 1,832 Redeemed...................... (1,542) (667) (785) (1,059) ------ ----- ----- ------ Outstanding at December 31, 2003 2,676 2,085 1,913 3,372 ====== ===== ===== ====== Outstanding at December 31, 2001 1,352 920 792 1,317 Activity during 2002: Issued........................ 1,485 1,015 1,075 1,944 Redeemed...................... (793) (321) (404) (662) ------ ----- ----- ------ Outstanding at December 31, 2002 2,044 1,614 1,463 2,599 ====== ===== ===== ====== Outstanding at December 31, 2000 544 512 131 164 Activity during 2001: Issued........................ 1,865 1,181 704 1,201 Redeemed...................... (1,057) (773) (43) (48) ------ ----- ----- ------ Outstanding at December 31, 2001 1,352 920 792 1,317 ====== ===== ===== ======
F-74 NOTES TO FINANCIAL STATEMENTS -- (Continued)
MetLife Mid Franklin State Street MFS Cap Stock Templeton Research Davis Loomis Sayles Alger MFS Research Index Small Cap Growth Large Cap Value Venture Value Small Cap Equity Growth Investors Trust Managers Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ----------- ---------------- --------------- ------------- ------------- ------------- --------------- ---------- 1,762 198 23 901 18 589 104 47 1,301 266 147 650 21 200 272 54 (725) (135) (67) (229) (9) (68) (190) (20) ----- ---- --- ----- -- --- ---- --- 2,338 329 103 1,322 30 721 186 81 ===== ==== === ===== == === ==== === 867 52 -- 297 11 6 43 13 1,231 215 27 754 12 624 110 73 (336) (69) (4) (150) (5) (41) (49) (39) ----- ---- --- ----- -- --- ---- --- 1,762 198 23 901 18 589 104 47 ===== ==== === ===== == === ==== === 210 -- -- 39 2 -- -- -- 693 54 -- 267 10 6 47 83 (36) (2) -- (9) (1) -- (4) (70) ----- ---- --- ----- -- --- ---- --- 867 52 -- 297 11 6 43 13 ===== ==== === ===== == === ==== ===
F-75 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. CHANGES IN OUTSTANDING UNITS -- (Continued)
State Street Saloman Brothers Research FI Harris Oakmark Strategic Bond Bond Income Structured Equity Focused Value Opportunities Investment Investment Investment Investment Division Division Division Division ------------ ----------------- -------------- ---------------- (In Thousands) Outstanding at December 31, 2002 5,564 12 76 177 Activity during 2003: Issued........................ 1,494 75 72 430 Redeemed...................... (1,541) (38) (33) (232) ------ --- --- ---- Outstanding at December 31, 2003 5,517 49 115 375 ====== === === ==== Outstanding at December 31, 2001 4,202 3 23 41 Activity during 2002: Issued........................ 2,094 15 72 195 Redeemed...................... (732) (6) (19) (59) ------ --- --- ---- Outstanding at December 31, 2002 5,564 12 76 177 ====== === === ==== Outstanding at December 31, 2000 3,980 -- -- -- Activity during 2001: Issued........................ 1,197 3 24 42 Redeemed...................... (975) -- (1) (1) ------ --- --- ---- Outstanding at December 31, 2001 4,202 3 23 41 ====== === === ====
F-76 NOTES TO FINANCIAL STATEMENTS -- (Continued)
State Street FI Janus Invesco VIF Invesco Franklin Templeton Saloman Brothers Research Mid Cap Aspen Invesco VIF Equity VIF Real Estate International U.S. Government Money Market Opportunities Growth High Yield Income Opportunity Stock Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ---------------- ------------ ------------- ---------- ----------- ----------- --------------- ------------------ 340 1,981 21 354 65 15 14 344 626 526 107 123 29 6 2 118 (407) (747) (32) (42) (7) (2) (6) (59) ---- ------ --- ---- --- -- --- --- 559 1,760 96 435 87 19 10 403 ==== ====== === ==== === == === === 71 2,156 -- 236 37 12 7 189 393 1,770 22 149 38 5 61 183 (124) (1,945) (1) (31) (10) (2) (54) (28) ---- ------ --- ---- --- -- --- --- 340 1,981 21 354 65 15 14 344 ==== ====== === ==== === == === === -- 1,479 -- 473 1 2 10 99 99 2,983 -- 84 45 12 1 118 (28) (2,306) -- (321) (9) (2) (4) (28) ---- ------ --- ---- --- -- --- --- 71 2,156 -- 236 37 12 7 189 ==== ====== === ==== === == === ===
F-77 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. CHANGES IN OUTSTANDING UNITS -- (Continued)
Franklin Templeton Alliance Valuemark Growth & Alliance Alliance Small Cap Income Premier Growth Technology Investment Investment Investment Investment Division Division Division Division ------------------ ---------- -------------- ---------- (In Thousands) Outstanding at December 31, 2002 163 150 9 6 Activity during 2003: Issued........................ 57 67 6 5 Redeemed...................... (21) (20) (1) (1) --- --- --- --- Outstanding at December 31, 2003 199 197 14 10 === === === === Outstanding at December 31, 2001 16 65 14 2 Activity during 2002: Issued........................ 183 95 5 4 Redeemed...................... (36) (10) (10) -- --- --- --- --- Outstanding at December 31, 2002 163 150 9 6 === === === === Outstanding at December 31, 2000 -- 6 -- -- Activity during 2001: Issued........................ 17 60 14 26 Redeemed...................... (1) (1) -- (24) --- --- --- --- Outstanding at December 31, 2001 16 65 14 2 === === === ===
F-78 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Fidelity American JPM T. Rowe Price Fidelity Asset Manager Fidelity American American Funds Funds Global Enhanced Mid Cap Contrafund Growth Growth Funds Growth Growth-Income Small Cap Index Growth Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ---------- ------------- ---------- ------------ -------------- ------------ ---------- ------------- 35 20 28 221 287 203 1 294 90 39 20 313 387 375 1 387 (28) (5) (1) (117) (149) (200) (2) (154) --- -- -- ---- ---- ---- -- ---- 97 54 47 417 525 378 -- 527 === == == ==== ==== ==== == ==== 3 13 13 53 68 49 1 68 33 15 18 217 287 226 1 328 (1) (8) (3) (49) (68) (72) (1) (102) --- -- -- ---- ---- ---- -- ---- 35 20 28 221 287 203 1 294 === == == ==== ==== ==== == ==== -- -- -- -- -- -- -- -- 3 14 17 67 76 55 1 71 -- (1) (4) (14) (8) (6) -- (3) --- -- -- ---- ---- ---- -- ---- 3 13 13 53 68 49 1 68 === == == ==== ==== ==== == ====
F-79 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. CHANGES IN OUTSTANDING UNITS -- (Continued)
MFS Lord Abbett Research PIMCO PIMCO Bond International Total Return Innovation Debenture Investment Investment Investment Investment Division Division Division Division ------------- ------------ ---------- ----------- (In Thousands) Outstanding at December 31, 2002 95 534 416 748 Activity during 2003: Issued........................ 397 1,055 896 449 Redeemed...................... (341) (547) (380) (321) ---- ----- ---- ---- Outstanding at December 31, 2003 151 1,042 932 876 ==== ===== ==== ==== Outstanding at December 31, 2001 28 103 121 774 Activity during 2002: Issued........................ 239 623 437 178 Redeemed...................... (172) (192) (142) (204) ---- ----- ---- ---- Outstanding at December 31, 2002 95 534 416 748 ==== ===== ==== ==== Outstanding at December 31, 2000 -- -- -- 601 Activity during 2001: Issued........................ 113 123 128 246 Redeemed...................... (85) (20) (7) (73) ---- ----- ---- ---- Outstanding at December 31, 2001 28 103 121 774 ==== ===== ==== ====
F-80 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Met/Aim Met/Aim Harris Janus Lord Abbett Mid Cap Small Cap Oakmark Aggressive Growth & Core Equity Growth International Growth Income Investment Investment Investment Investment Investment Division Division Division Division Division ----------- ---------- ------------- ---------- ----------- 30 15 18 381 -- 96 99 180 1,088 3 (34) (54) (126) (900) -- --- --- ---- ----- -- 92 60 72 569 3 === === ==== ===== == -- -- -- 122 -- 33 17 22 409 -- (3) (2) (4) (150) -- --- --- ---- ----- -- 30 15 18 381 -- === === ==== ===== == -- -- -- -- -- -- -- -- 148 -- -- -- -- (26) -- --- --- ---- ----- -- -- -- -- 122 -- === === ==== ===== ==
F-81 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. UNIT VALUES A summary of unit values and units outstanding for the Contracts and the expense as a percentage of average net assets, excluding expenses for the underlying funds, for each of the periods ended December 31, 2003, 2002 and 2001, respectively, or lesser time period if applicable.
State Street State Street State Street Research Research Research Aggressive MetLife Investment Trust Diversified Growth Stock Index Investment Investment Investment Investment Division Division Division Division ---------------- ---------------- ---------------- ---------------- 2003 Units (In Thousands).................................. 16,151 12,881 11,833 25,747 Unit Fair Value, Lowest to Highest (1)................ $10.57 to $33.12 $11.79 to $30.64 $11.71 to $16.87 $9.58 to $29.26 Net Assets (In Thousands)............................. $367,087 $289,033 $187,268 $457,114 Investment Income Ratio to Net Assets (2)............. 0.83% 3.73% 0.00% 1.65% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% Total Return, Lowest to Highest (1)(4)................ 29.08% to 30.24% 19.48% to 20.56% 39.53% to 40.79% 27.06% to 28.20% 2002 Units (In Thousands).................................. 15,060 12,268 11,447 22,140 Unit Fair Value, Lowest to Highest (1)................ $8.11 to $25.66 $9.78 to $25.64 $8.32 to $12.09 $7.48 to $23.03 Net Assets (In Thousands)............................. $276,980 $238,020 $130,816 $326,228 Investment Income Ratio to Net Assets (2)............. 0.54% 2.27% 0.00% 1.61% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% Total Return, Lowest to Highest (1)(4)................ -27% to -26% -15% to -14% -29% -23% to -22% 2001 Units (In Thousands).................................. 13,264 11,138 10,503 17,015 Unit Fair Value, Lowest to Highest (1)................ $10.98 to $35.04 $11.35 to $30.04 $11.67 to $17.12 $9.62 to $29.91 Net Assets (In Thousands)............................. $356,701 $265,724 $171,692 $346,931 Investment Income Ratio to Net Assets (2)............. 13.53% 9.67% 24.84% 1.17% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% Total Return, Lowest to Highest (1)(4)................ -18% to -17% -7% to -6% -24% -13% to -12%
- -------- (1) Metropolitan Life sells a number of variable life products which have unique combinations of features and fees that are charged against the contract owners' account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. (2) These amounts represent the dividends, excluding distributions of capital gains, received by the investment division from the underlying portfolio, net of management fees assessed by the fund manager, divided by the average net assets. These ratios excluded those expenses, such as mortality and expense charges, that are assessed against contract owners' accounts either through reductions in unit values or the redemption of units. The recognition of investment income by the investment division is affected by the timing of the declaration of dividends by the underlying portfolio in which the investment divisions invest. (3) These amounts represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense risk charges for each period indicated. The ratios include only those expenses that result in a direct reduction to unit value. Charges made directly to contract owner accounts through the redemption of units, and expenses of the underlying portfolio, are excluded. (4) These amounts represent the total return for the period indicated including changes in the value of the underlying portfolio, and expenses assessed through the reduction of units values. The total return does not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the Separate Account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. F-82 NOTES TO FINANCIAL STATEMENTS -- (Continued)
FI T. Rowe Price Harris Neuberger T. Rowe Price International Janus Small Cap Scudder Oakmark Large Berman Partners Large Cap Stock Mid Cap Growth Global Equity Cap Value Mid Cap Value Growth Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,484 13,348 4,703 2,140 3,060 1,946 3,290 $9.92 to $13.85 $5.69 to $16.17 $12.64 to $14.08 $12.92 to $14.39 $11.53 to $14.56 $13.86 to $19.29 $8.23 to $12.13 $43,984 $184,078 $61,843 $28,696 $37,504 $30,946 $33,520 0.65% 0.00% 0.00% 2.04% 0.00% 0.32% 0.11% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.60% to 0.90% 0.60% to 0.90% 26.90% to 28.04% 33.38% to 35.10% 39.62% to 40.87% 29.29% to 30.45% 24.38% to 25.49% 35.30% to 36.52% 29.64% to 30.81% 3,296 11,521 4,261 1,978 2,346 1,567 2,853 $7.78 to $10.91 $4.22 to $12.07 $9.05 to $10.04 $9.90 to $11.03 $9.23 to $11.71 $10.24 to $14.13 $6.35 to $9.27 $32,966 $119,020 $39,880 $20,476 $23,073 $18,286 $22,095 0.89% 0.00% 0.00% 1.68% 3.31% 0.31% 0.26% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% -18% to -17% -30% to -29% -27% -17% to -16% -15% to -14% -10% -24% to 23% 3,106 8,481 3,509 2,000 1,242 1,076 2,124 $9.47 to $13.35 $5.95 to $17.08 $12.46 to $13.76 $11.79 to $12.88 $10.80 to $13.76 $11.44 to $15.63 $8.35 to $12.08 $38,281 $125,185 $44,660 $21,106 $14,336 $14,115 $21,111 3.67% 0.00% 8.16% 11.32% 0.15% 1.94% 0.06% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.60% to 0.90% 0.60% to 0.90% -21% to -20% -37% to -33% -10% to 2% -16% to -15% 17% to 20% -3% to 0% -11% to -6%
F-83 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. UNIT VALUES -- (Continued)
Lehman Brothers Aggregate Bond Morgan Stanley Russell 2000 Met/Putnam Index EAFE Index Index Voyager Investment Investment Investment Investment Division Division Division Division ---------------- ---------------- ---------------- ---------------- 2003 Units (In Thousands).................................. 4,064 2,676 2,085 1,913 Unit Fair Value, Lowest to Highest (1)................ $12.77 to $13.67 $7.85 to $10.37 $10.75 to $14.59 $4.38 to $4.78 Net Assets (In Thousands)............................. $54,994 $24,290 $27,726 $8,651 Investment Income Ratio to Net Assets (2)............. 5.25% 1.48% 0.63% 0.00% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.60% to 0.90% Total Return, Lowest to Highest (1)(4)................ 2.71% to 3.63% 36.41% to 37.70% 44.77% to 46.07% 24.78% to 25.91% 2002 Units (In Thousands).................................. 4,147 2,044 1,614 1,463 Unit Fair Value, Lowest to Highest (1)................ $12.43 to $13.19 $5.76 to $7.53 $7.43 to $9.99 $3.51 to $3.79 Net Assets (In Thousands)............................. $54,046 $13,496 $14,829 $5,253 Investment Income Ratio to Net Assets (2)............. 2.81% 0.49% 0.59% 0.00% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.50% to 0.90% Total Return, Lowest to Highest (1)(4)................ 9% to 10% -17% -21% to -20% -30% to -29% 2001 Units (In Thousands).................................. 3,153 1,352 920 792 Unit Fair Value, Lowest to Highest (1)................ $11.38 to $11.97 $6.97 to $9.04 $9.42 to $12.56 $4.98 to $5.04 Net Assets (In Thousands)............................. $37,322 $10,800 $10,625 $4,001 Investment Income Ratio to Net Assets (2)............. 1.29% 0.31% 0.26% 0.00% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.60% to 0.90% Total Return, Lowest to Highest (1)(4)................ 7% -22% to -21% 0% to 6% -46% to -31%
- -------- (1) Metropolitan Life sells a number of variable life products which have unique combinations of features and fees that are charged against the contract owners' account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. (2) These amounts represent the dividends, excluding distributions of capital gains, received by the investment division from the underlying portfolio, net of management fees assessed by the fund manager, divided by the average net assets. These ratios excluded those expenses, such as mortality and expense charges, that are assessed against contract owners' accounts either through reductions in unit values or the redemption of units. The recognition of investment income by the investment division is affected by the timing of the declaration of dividends by the underlying portfolio in which the investment divisions invest. (3) These amounts represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense risk charges for each period indicated. The ratios include only those expenses that result in a direct reduction to unit value. Charges made directly to contract owner accounts through the redemption of units, and expenses of the underlying portfolio, are excluded. (4) These amounts represent the total return for the period indicated including changes in the value of the underlying portfolio, and expenses assessed through the reduction of unit values. The total return does not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the Separate Account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. F-84 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Franklin State Street MetLife Mid Templeton State Street Loomis Research Cap Stock Small Cap Research Davis Sayles Alger Aurora Index Growth Large Cap Value Venture Value Small Cap Equity Growth Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ------------- 3,372 2,338 329 103 1,322 30 721 $15.46 to $16.89 $11.04 to $12.13 $9.07 to $9.29 $10.70 to $10.86 $9.79 to $28.40 $9.27 to $205.39 $6.84 $56,540 $27,925 $3,038 $1,110 $24,429 $4,423 $4,933 0.00% 0.46% 0.00% 1.37% 0.37% 0.00% 0.06% 0.60% to 0.90% 0.60% to 0.90% 0.90% 0.90% 0.60% to 0.90% 0.60% to 0.90% 0.60% 48.80% to 50.14% 33.76% to 34.96% 43.64% to 44.93% 34.47% to 35.68% 29.70% to 30.87% 35.25% to 36.47% 35.15% 2,599 1,762 198 23 901 18 589 $10.30 to $11.25 $8.18 to $8.98 $6.31 to $6.41 $7.96 to $8.00 $7.48 to $21.70 $6.80 to $150.51 $5.06 $29,061 $15,568 $1,266 $189 $13,430 $2,408 $2,983 0.52% 0.35% 0.00% 0.92% 0.88% 0.11% 0.00% 0.50% to 0.90% 0.50% to 0.90% 0.90% 0.90% 0.50% to 0.90% 0.50% to 0.90% 0.60% -22% to -21% -16% to -15% -28% -20% -17% to -16% -22% -33% 1,317 867 52 -- 297 11 6 $13.09 to $14.29 $9.62 to $10.56 $8.83 to $8.88 $-- $8.94 to $25.95 $8.66 to $191.87 $7.57 $20,005 $9,019 $457 $-- $7,498 $1,926 $45 0.38% 0.43% 0.00% -- 4.47% 7.28% 0.00% 0.60% to 0.90% 0.60% to 0.90% 0.60% -- 0.60% to 0.90% 0.60% to 0.90% 0.60% 16% to 19% -1% to 3% -12% to -11% -- -11% to -9% -9% to -4% -16%
F-85 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. UNIT VALUES -- (Continued)
MFS State Street MFS Research Research Investors Trust Managers Bond Income Investment Investment Investment Division Division Division ---------------- ---------------- ---------------- 2003 Units (In Thousands)................................................. 186 81 5,517 Unit Fair Value, Lowest to Highest (1)............................... $7.96 to $8.33 $6.57 to $8.51 $12.89 to $27.12 Net Assets (In Thousands)............................................ $1,544 $669 $96,720 Investment Income Ratio to Net Assets (2)............................ 0.25% 0.78% 3.06% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% to 0.90% 0.60% to 0.90% 0.60% to 0.90% Total Return, Lowest to Highest (1)(4)............................... 20.76% to 21.85% 23.00% to 24.10% 4.91% to 5.85% 2002 Units (In Thousands)................................................. 104 47 5,564 Unit Fair Value, Lowest to Highest (1)............................... $6.54 to $6.84 $5.29 to $6.86 $12.18 to $25.85 Net Assets (In Thousands)............................................ $694 $314 $93,158 Investment Income Ratio to Net Assets (2)............................ 0.72% 0.30% 5.72% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% to 0.90% 0.60% to 0.90% 0.60% to 0.90% Total Return, Lowest to Highest (1)(4)............................... -21% to -20% -25% to -24% 7% to 8% 2001 Units (In Thousands)................................................. 43 13 4,202 Unit Fair Value, Lowest to Highest (1)............................... $8.19 to $8.57 $6.97 to $9.04 $11.23 to $24.08 Net Assets (In Thousands)............................................ $322 $151 $79,483 Investment Income Ratio to Net Assets (2)............................ 0.00% 0.25% 5.64% to 7.28% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% to 0.90% 0.60% to 0.90% .45% to 0.90% Total Return, Lowest to Highest (1)(4)............................... -14% to -3% -17% to -14% 7% to 8%
FI Structured Equity Investment Division ---------------- 2003 Units (In Thousands)................................................. 49 Unit Fair Value, Lowest to Highest (1)............................... $8.37 to $10.56 Net Assets (In Thousands)............................................ $505 Investment Income Ratio to Net Assets (2)............................ 0.52% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% to .90% Total Return, Lowest to Highest (1)(4)............................... 25.79% to 26.92% 2002 Units (In Thousands)................................................. 12 Unit Fair Value, Lowest to Highest (1)............................... $6.59 to $8.32 Net Assets (In Thousands)............................................ $93 Investment Income Ratio to Net Assets (2)............................ 0.89% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% to .90% Total Return, Lowest to Highest (1)(4)............................... -19% to -17% 2001 Units (In Thousands)................................................. 3 Unit Fair Value, Lowest to Highest (1)............................... $8.19 Net Assets (In Thousands)............................................ $25 Investment Income Ratio to Net Assets (2)............................ 0.00% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% Total Return, Lowest to Highest (1)(4)............................... -11%
- -------- (1) Metropolitan Life sells a number of variable life products which have unique combinations of features and fees that are charged against the contract owners' account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. (2) These amounts represent the dividends, excluding distributions of capital gains, received by the investment division from the underlying portfolio, net of management fees assessed by the fund manager, divided by the average net assets. These ratios excluded those expenses, such as mortality and expense charges, that are assessed against contract owners' accounts either through reductions in unit values or the redemption of units. The recognition of investment income by the investment division is affected by the timing of the declaration of dividends by the underlying portfolio in which the investment divisions invest. (3) These amounts represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense risk charges for each period indicated. The ratios include only those expenses that result in a direct reduction to unit value. Charges made directly to contract owner accounts through the redemption of units, and expenses of the underlying portfolio, are excluded. (4) These amounts represent the total return for the period indicated including changes in the value of the underlying portfolio, and expenses assessed through the reduction of unit values. The total return does not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the Separate Account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. F-86 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Saloman Brothers Saloman State Street FI Janus Invesco Invesco Harris Oakmark Strategic Bond Brothers Research Mid Cap Aspen VIF High VIF Equity Focused Value Opporunities U.S. Government Money Market Opportunities Growth Yield Income Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ------------------ ---------------- ---------------- ---------------- ---------------- ---------- ---------- ---------- 115 375 559 1,760 96 435 87 19 $219.73 to $225.05 $13.52 to $13.85 $12.82 to $13.13 $15.21 to $15.92 $11.50 to $11.67 $8.03 $9.21 $9.73 $25,866 $5,163 $7,305 $27,346 $1,112 $3,500 $804 $184 0.12% 1.70% 1.57% 0.78% 2.26% 0.10% 7.20% 1.26% 0.90% 0.90% 0.90% 0.60% to 0.90% 0.90% 0.60% 0.60% 0.60% 31.47% to 32.66% 11.62% to 12.62% 0.77% to 1.68% -0.09% to 0.81% 41.26% to 42.53% 31.73% 25.04% 22.60% 76 177 340 1,981 21 354 65 15 $167.13 to $169.65 $12.12 to $12.30 $12.72 to $12.91 $13.09 to $15.93 $8.14 to $8.19 $6.10 $7.37 $7.94 $12,879 $2,174 $4,365 $30,811 $168 $2,163 $476 $125 0.18% 6.33% 3.47% 1.57% 0.00% 0.03% 13.27% 1.74% 0.90% 0.90% 0.90% 0.45% to 0.90% 0.90% 0.60% 0.60% 0.60% -10% to -9% 9% to 10% 7% to 8% 0% to 1% -19% to -18% -27% -1% -19% 23 41 71 2,156 -- 236 37 12 $184.98 to $186.09 $11.15 to $11.22 $11.89 to $11.96 $14.88 to $15.85 $-- $8.30 $7.46 $9.81 $4,215 $465 $849 $32,726 $-- $1,959 $274 $122 0.00% 0.00% 0.00% 4.18% -- 6.04% 20.89% 2.61% 0.90% 0.90% 0.90% 0.60% to 0.90% -- 0.60% 0.60% 0.60% 12% to 13% 3% to 4% 4% 3% to 4% -- -19% -15% -7%
F-87 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. UNIT VALUES -- (Continued)
Franklin Franklin Invesco VIF Templeton Templeton Alliance Real Estate International Valuemark Growth & Opportunity Stock Small Cap Income Investment Investment Investment Investment Division Division Division Division ----------- ------------- ---------- ---------- 2003 Units (In Thousands)................................................. 10 403 199 197 Unit Fair Value, Lowest to Highest (1)............................... $17.79 $10.03 $6.76 $10.47 Net Assets (In Thousands)............................................ $179 $4,054 $1,346 $2,063 Investment Income Ratio to Net Assets (2)............................ 1.49% 1.52% 0.00% 0.70% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% 0.60% 0.60% 0.60% Total Return, Lowest to Highest (1)(4)............................... 38.82% 32.55% 37.24% 32.18% 2002 Units (In Thousands)................................................. 14 344 163 150 Unit Fair Value, Lowest to Highest (1)............................... $12.82 $7.57 $4.93 $7.92 Net Assets (In Thousands)............................................ $179 $2,612 $801 $1,191 Investment Income Ratio to Net Assets (2)............................ 1.40% 2.03% 0.51% 3.31% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% 0.60% 0.60% 0.60% Total Return, Lowest to Highest (1)(4)............................... -6% -18% -29% -22% 2001 Units (In Thousands)................................................. 7 189 16 65 Unit Fair Value, Lowest to Highest (1)............................... $12.05 $9.27 $6.91 $10.19 Net Assets (In Thousands)............................................ $89 $1,767 $103 $656 Investment Income Ratio to Net Assets (2)............................ 1.16% 14.19% 0.05% 0.91% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% 0.60% 0.60% 0.60% Total Return, Lowest to Highest (1)(4)............................... 1% -16% -9% 2%
- -------- (1) Metropolitan Life sells a number of variable life products which have unique combinations of features and fees that are charged against the contract owners' account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. (2) These amounts represent the dividends, excluding distributions of capital gains, received by the investment division from the underlying portfolio, net of management fees assessed by the fund manager, divided by the average net assets. These ratios excluded those expenses, such as mortality and expense charges, that are assessed against contract owners' accounts either through reductions in unit values or the redemption of units. The recognition of investment income by the investment division is affected by the timing of the declaration of dividends by the underlying portfolio in which the investment divisions invest. (3) These amounts represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense risk charges for each period indicated. The ratios include only those expenses that result in a direct reduction to unit value. Charges made directly to contract owner accounts through the redemption of units, and expenses of the underlying portfolio, are excluded. (4) These amounts represent the total return for the period indicated including changes in the value of the underlying portfolio, and expenses assessed through the reduction of unit values. The total return does not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the Separate Account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. F-88 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Fidelity American Asset American American Funds Alliance Alliance Fidelity Manager Fidelity Funds Funds Global Premier Growth Technology Contrafund Growth Growth Growth Growth-Income Small Cap Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - -------------- ---------- ---------- ---------- ---------- ---------------- ---------------- ---------------- 14 10 97 54 47 417 525 378 $6.10 $4.54 $9.18 $8.00 $6.27 $60.53 to $62.00 $38.04 to $38.96 $15.06 to $15.42 $84 $46 $894 $433 $296 $25,760 $20,369 $5,801 0.00% 0.00% 0.15% 2.96% 0.08% 0.13% 1.18% 0.49% 0.60% 0.60% 0.60% 0.60% 0.60% 0.90% 0.90% 0.90% 23.37% 43.79% 28.35% 23.15% 32.78% 35.59% to 36.81% 31.25% to 32.43% 52.16% to 53.53% 9 6 35 20 28 221 287 203 $4.94 $3.16 $7.16 $6.50 $4.72 $44.64 to $45.32 $28.98 to $29.42 $9.90 to $10.05 $42 $18 $249 $131 $134 $9,992 $8,408 $2,033 0.00% 5.08% 0.14% 3.23% 0.12% 0.05% 1.74% 0.81% 0.60% 0.60% 0.60% 0.60% 0.60% 0.90% 0.90% 0.90% -31% -42% -10% -18% -30% -25% to -24% -19% to -18% -20% to -19% 14 2 3 13 13 53 68 49 $7.15 $5.43 $7.96 $7.89 $6.77 $59.63 to $59.99 $35.81 to $36.03 $12.34 to $12.41 $98 $13 $24 $95 $87 $3,176 $2,453 $619 0.00% 6.23% 0.00% 0.00% 0.00% 4.25% 0.82% 1.15% 0.60% 0.60% 0.60% 0.60% 0.60% 0.90% 0.90% 0.90% -14% -35% -12% -10% -20% -15% to -14% -3% -9% to -8%
F-89 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. UNIT VALUES -- (Continued)
JPM MFS Enhanced T. Rowe Price Research Index Mid Cap Growth International Investment Investment Investment Division Division Division ---------- ---------------- ---------------- 2003 Units (In Thousands)................................................. -- 527 151 Unit Fair Value, Lowest to Highest (1)............................... $-- $6.28 to $6.43 $9.70 to $9.94 Net Assets (In Thousands)............................................ $-- $3,375 $1,497 Investment Income Ratio to Net Assets (2)............................ -- 0.00% 0.97% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) -- 0.90% 0.90% Total Return, Lowest to Highest (1)(4)............................... -- 35.90% to 37.12% 31.01% to 32.19% 2002 Units (In Thousands)................................................. 1 294 95 Unit Fair Value, Lowest to Highest (1)............................... $6.09 $4.62 to $4.69 $7.41 to $7.52 Net Assets (In Thousands)............................................ $8 $1,373 $714 Investment Income Ratio to Net Assets (2)............................ 1.78% 0.82% 0.25% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% 0.90% 0.90% Total Return, Lowest to Highest (1)(4)............................... -25% -44% -12% 2001 Units (In Thousands)................................................. 1 68 28 Unit Fair Value, Lowest to Highest (1)............................... $8.12 $8.32 to $8.37 $8.44 to $8.50 Net Assets (In Thousands)............................................ $5 $564 $238 Investment Income Ratio to Net Assets (2)............................ 0.00% 0.00% 0.07% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% 0.90% 0.90% Total Return, Lowest to Highest (1)(4)............................... -9% -16% to -15% -13% to -12%
PIMCO Total Return Investment Division ---------------- 2003 Units (In Thousands)................................................. 1,042 Unit Fair Value, Lowest to Highest (1)............................... $11.96 to $12.25 Net Assets (In Thousands)............................................ $12,697 Investment Income Ratio to Net Assets (2)............................ 2.70% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.90% Total Return, Lowest to Highest (1)(4)............................... 3.59% to 4.52% 2002 Units (In Thousands)................................................. 534 Unit Fair Value, Lowest to Highest (1)............................... $11.55 to $11.72 Net Assets (In Thousands)............................................ $6,214 Investment Income Ratio to Net Assets (2)............................ 0.00% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.90% Total Return, Lowest to Highest (1)(4)............................... 9% to 10% 2001 Units (In Thousands)................................................. 103 Unit Fair Value, Lowest to Highest (1)............................... $10.64 to $10.70 Net Assets (In Thousands)............................................ $1,103 Investment Income Ratio to Net Assets (2)............................ 2.37% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.90% Total Return, Lowest to Highest (1)(4)............................... 6%
- -------- (1) Metropolitan Life sells a number of variable life products which have unique combinations of features and fees that are charged against the contract owners' account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. (2) These amounts represent the dividends, excluding distributions of capital gains, received by the investment division from the underlying portfolio, net of management fees assessed by the fund manager, divided by the average net assets. These ratios excluded those expenses, such as mortality and expense charges, that are assessed against contract owners' accounts either through reductions in unit values or the redemption of units. The recognition of investment income by the investment division is affected by the timing of the declaration of dividends by the underlying portfolio in which the investment divisions invest. (3) These amounts represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense risk charges for each period indicated. The ratios include only those expenses that result in a direct reduction to unit value. Charges made directly to contract owner accounts through the redemption of units, and expenses of the underlying portfolio, are excluded. (4) These amounts represent the total return for the period indicated including changes in the value of the underlying portfolio, and expenses assessed through the reduction of unit values. The total return does not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the Separate Account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. F-90 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Lord Abbett Met/Aim Met/Aim Janus Lord Abbett PIMCO Bond Mid Cap Small Cap Harris Oakmark Aggressive Growth & Innovation Debenture Core Equity Growth International Growth Income Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------- 932 876 92 60 72 569 3 $4.72 to $4.83 $12.87 to $14.95 $10.69 to $10.85 $10.46 to $10.62 $11.23 to $11.40 $6.89 to $7.06 $8.10 $4,481 $12,042 $989 $643 $814 $4,003 $20,529 0.00% 1.85% 1.35% 0.00% 1.84% 0.00% 0.00% 0.90% 0.45% to 0.90% 0.90% 0.90% 0.90% 0.90% 0.60% 56.44% to 57.84% 17.17% to 19.52% 25.29% to 26.42% 37.84% to 39.08% 34.16% to 35.37% 28.77% to 29.93% 29.15% 416 748 30 15 18 381 -- $3.01 to $3.06 $10.87 to $12.51 $8.53 to $8.58 $7.59 to $7.63 $8.37 to $8.42 $5.35 to $5.43 $-- $1,269 $8,597 $253 $116 $150 $2,045 $-- 0.00% 11.43% 0.00% 0.00% 0.00% 0.00% -- 0.90% 0.45% to 0.90% 0.90% 0.90% 0.90% 0.90% -- -51% 0% to 1% -15% to -14% -24% -16% -31% -- 121 774 -- -- -- 122 -- $6.15 to $6.19 $10.83 to $12.35 $-- $-- $-- $7.73 to $7.82 $-- $749 $8,845 $-- $-- $-- $953 $-- 0.00% 11.73% -- -- -- 0.00% -- 0.90% 0.45% to 0.90% -- -- -- 0.90% -- -25% -2% to -1% -- -- -- -23% to -22% --
F-91 NOTES TO FINANCIAL STATEMENTS -- (Concluded) 7. CHANGE OF PORTFOLIO NAME AND PORTFOLIO MERGERS Effective January 1, 2003, MFS Mid Cap Growth Portfolio changed sub-advisers from Massachusetts Financial Services to T. Rowe Price Associates Inc. and changed its name to T. Rowe Price Mid Cap Growth Portfolio; and State Street Research Concentrated International Portfolio changed sub-advisers from State Street Research & Management Company to Harris Associates L.P. and changed its name to Harris Oakmark International Portfolio. Effective April 28, 2003, Janus Growth Portfolio of the Metropolitan Fund merged into the Janus Aggressive Growth Portfolio of the Met Investors Fund. Effective May 1, 2003, Putnam Large Cap Growth Portfolio changed its name to Met/Putnam Voyager Portfolio. Effective May, 1, 2003, all series of the New England Zenith Fund became newly organized portfolios of the Metropolitan Fund. The reorganization had no effect on the investment objectives, policies or advisory fees of any series, nor was there any change in investment adviser or sub-adviser. Effective December 16, 2003, Putnam International Stock Portfolio of the Metropolitan Fund changed its name to FI International Stock Portfolio. Effective April 29, 2002, Loomis Sayles High Yield Bond Portfolio of the Metropolitan Fund was merged into the Lord Abbett Bond Debenture Portfolio of the Met Investors Fund. Effective April 29, 2002, State Street Research Income Portfolio and State Street Research Money Market Portfolio of the Metropolitan Fund were merged respectively into the State Street Research Bond Income Portfolio and the State Street Research Money Market Portfolio of the Zenith Fund. Effective May 1, 2002, State Street Research Aurora Small Cap Value Portfolio and the Harris Oakmark Mid Cap Value Portfolio changed their names to State Street Research Aurora Portfolio and Harris Oakmark Focused Value Portfolio, respectively. Effective July 1, 2001, State Street Research became the sub-investment manager of the State Street Research Bond Income Portfolio (formerly Back Bay Advisers Bond Income Portfolio) of the New England Zenith Series Fund. Effective May 1, 2001, State Street Research Growth Portfolio changed its name to State Street Research Investment Trust Portfolio. F-92 METROPOLITAN LIFE INSURANCE COMPANY Equity Advantage VUL -- Flexible Premium Multifunded Life Insurance Policies Supplement Dated May 1, 2004 to Prospectus Dated May 1, 2003 This supplement updates certain information contained in the last prospectus you received. The last prospectus you received was dated May 1, 2003 and was supplemented on October 2, 2003. You should read and retain this supplement with your Policy. We will send you an additional copy of your most recent prospectus (and any previous supplements thereto), without charge, on written request sent to MetLife, P.O. Box 336, Warwick, RI 02887-0336. Equity Advantage VUL was formerly known as UL 2001. The name change occurred as of May 1, 2004. Prospectuses for the Metropolitan Series Fund, Inc., the Met Investors Series Trust and the American Funds Insurance Series are attached. Please read them and keep them for reference. 1 Sending Communications and Payments to Us You can communicate all of your requests, instructions and notifications to us by contacting us in writing at our Designated Office. We may require that certain requests, instructions and notifications be made on forms that we provide. These include: changing your beneficiary; taking a Policy loan; changing your death benefit option; taking a partial withdrawal; surrendering your Policy; making transfer requests (including elections with respect to the automated investment strategies) or changing your premium allocations. Below is a list of our Designated Offices for various functions. We may name additional or alternate Designated Offices. If we do, we will notify you in writing. You may also contact us at 1-800-MET-5000 for information on where to direct communication regarding any function not listed below.
Function Designated Office Address - --------------------------------------------------------------------------------- Premium Payments MetLife, P.O. Box 371487, Pittsburgh, PA 15250-7487 - --------------------------------------------------------------------------------- Payment Inquiries MetLife, P.O. Box 30375, Tampa, FL 33630 - --------------------------------------------------------------------------------- Surrenders, Withdrawals, Loans, MetLife, P.O. Box 336, Warwick, R.I. Investment Division Transfers, 02887-0336 Premium Reallocation - --------------------------------------------------------------------------------- Death Claims MetLife, P.O. Box 330, Warwick, R.I. 02887-0330 - --------------------------------------------------------------------------------- Beneficiary & Assignment MetLife, P.O. Box 313, Warwick, R.I. 02887-0313 - --------------------------------------------------------------------------------- Address Changes MetLife, 500 Schoolhouse Road, Johnstown, PA 15904 Attn: Data Integrity - --------------------------------------------------------------------------------- Reinstatements MetLife, P.O. Box 30375, Tampa, FL 33630 - ---------------------------------------------------------------------------------
Fee Tables Transaction Fees The transaction fees have not changed except that the amount of your Policy's surrender charge that we will deduct at the time you reduce the specified face amount will now be 50% (rather than 100%) of the pro-rata portion of the surrender charge that we attribute to the decrease in the manner described in the prospectus. Periodic Charges Other Than Portfolio Operating Expenses This table describes other fees and expenses that a Policy Owner will pay periodically during the time that he or she owns the Policy, not including charges for optional features (riders) or the fees and expenses of the Portfolios.
When Charge is Current Amount Maximum Amount Charge Deducted Deducted We Can Deduct - ------------------------------------------------------------------------------------------------------------------ Cost of Term Insurance/1/ Monthly, on the monthly deduction Lowest and Highest Charge Among All Possible date $.01 to $37.98 each month $.06 to $53.58 each Insureds per $1000 of term month per $1,000 of insurance amount/2/ term insurance amount Charge for a male insured, age 40, in the preferred nonsmoker underwriting class with a $.20 each month per $.20 each month per specified face amount of $100,000 in the first $1000 of term insurance $1,000 of term policy year amount insurance amount - ------------------------------------------------------------------------------------------------------------------ Administration Charge Monthly, on the $35 per month (less Same as Current Rate monthly deduction depending on Age of date insured and Policy year-- see footnote 3) - ------------------------------------------------------------------------------------------------------------------ Mortality and Expense Risk Charge (annual rate Monthly, on the annual rate of: Same as Current imposed on cash value in our Separate Account) monthly deduction .90% for Policy years 1-10 Amount date .60% for Policy years 11-15 .30% after Policy year 15 - ------------------------------------------------------------------------------------------------------------------
2
When Charge is Current Amount Maximum Amount Charge Deducted Deducted We Can Deduct - ----------------------------------------------------------------------------------------------------------------- Underwriting Charge Monthly, on the $5 per month $5 per month monthly deduction date, for the first 12 months after you increase your specified face amount - ----------------------------------------------------------------------------------------------------------------- Loan Interest Spread/4/ (on loan amount) Annually (or on loan annual rate of: Same as Current Rate termination, if earlier) 2% for Policy years 1-10 .6% for Policy years 11-15 .3% for Policy years 16-20 0% after Policy year 20
- -------- /1/ The cost of term insurance charge varies based on individual characteristics, including the insured's age, risk class and, in most cases, sex. It also varies based on when the Policy was issued. The cost of term insurance charges shown are probably not representative of the charges that you would pay. You can obtain more information about the cost of term insurance or other charges that would apply for a particular insured by contacting your sales representative. /2/ The term insurance amount is the difference between the death benefit (generally discounted at the monthly equivalent of 3% per year) and the Policy's cash value. /3/ $35 is the administration charge during the first Policy year for insureds Age 41 and over. The charge is less during the first Policy year, for younger insureds ($30 for Ages 26-40, $20 under Age 25). In the second and later Policy years, the charge reduces to $10 for all insureds and, if you pay the "required administrative premium" shown on page 3 of your Policy, the charge reduces further depending on the specified face amount of your Policy ($7 for less than $100,000, $6 for $100,000-$249,999 and $5 for $250,000 or more). We will deduct any amount of the first Policy year's administration charges that remains unpaid at the time of any full surrender or other termination of a Policy during its first year. /4/ We charge interest on Policy loans but credit you with interest on the amount of the cash value we hold as collateral for the loan. The loan interest spread is the excess of the interest rate we charge over the interest rate we credit. Charges for Optional Features (Riders) This table describes the charges you will pay periodically for any of the indicated optional benefits ("riders") that you choose to add to your Policy.
When Charge is Current Amount Maximum Amount Optional Feature Deducted Deducted We Can Deduct - --------------------------------------------------------------------------------------------------------------------- Disability Waiver of Premium Benefit/1/ Monthly, on the monthly deduction Lowest and Highest Charge Among All Possible date $.13 to $.60 per $100 $.14 to $.67 per $100 Insureds of covered premium of covered premium amount amount Charge for a male insured, age 40, in the preferred nonsmoker underwriting class with a specified face $.34 per $100 of $.37 per $100 of amount of $200,000 covered premium covered premium amount amount - --------------------------------------------------------------------------------------------------------------------- Disability Waiver of Monthly Deduction Benefit/1/ Monthly, on the monthly deduction Lowest and Highest Charge Among All Possible Policies date $.01 to $.45 per $1000 $.02 to $.45 per $1000 of term insurance of term insurance Charge for a male insured, age 40, in the preferred amount amount nonsmoker underwriting class with a specified face amount of $200,000 $.02 per $1000 of $.03 per $1000 of term insurance term insurance amount amount - --------------------------------------------------------------------------------------------------------------------- Accidental Death Benefit/1/ Monthly, on the monthly deduction Lowest and Highest Charge Among All Possible date $.05 to $.09 per $1000 $.07 to $.12 per $1000 Insureds of accidental death of accidental death coverage amount coverage amount Charge for a male insured, age 40, in the preferred nonsmoker underwriting class with a specified face $.05 per $1000 of $.07 per $1000 of amount of $200,000 accidental death accidental death coverage amount coverage amount - --------------------------------------------------------------------------------------------------------------------- Long Term Care Guaranteed Purchase Option/1/ Monthly, on the monthly deduction Lowest and Highest Charge Among All Possible Policies date $.20 to $1.88 per $100 Same as Current of daily coverage Amount Charge for a male insured, age 40, in the preferred amount nonsmoker underwriting class with a specified face Same as Current amount of $100,000 $.48 per $100 of daily Amount coverage amount - ---------------------------------------------------------------------------------------------------------------------
3
When Charge is Current Amount Maximum Amount Optional Feature Deducted Deducted We Can Deduct - --------------------------------------------------------------------------------------------------------------- Children's Term Insurance Benefit (identical charge for Monthly, on the $.39 per $1,000 of $.60 per $1,000 of all eligible children and all years) monthly deduction child's term child's term date insurance amount insurance amount - --------------------------------------------------------------------------------------------------------------- Spouse term Insurance Benefit/1/ Monthly, on the monthly deduction Lowest and Highest Charge Among All Possible Policies date $.07 to $3.90 per $.16 to $3.90 per $1000 of spouse's $1000 of spouse's term insurance term insurance Charge for a female insured, age 40, in the preferred amount amount nonsmoker underwriting class with a specified face amount of $100,000 $.11 per $1000 of $.31 per $1000 of spouse's term spouse's term insurance amount insurance amount - --------------------------------------------------------------------------------------------------------------- Accelerated Death Benefit Not Applicable No Charge No Charge
- -------- /1/ The charges for these optional features vary based on individual characteristics, including the insured's age, risk class and, in most cases, sex. The charges shown are probably not representative of the charges that you would pay. You can obtain more information about the charges that would apply for a particular insured by contacting your sales representative. Variable Investment Options The variable investment options for allocating premium payments and transferring cash value now consist of our fixed interest account and 42 different investment divisions of the Metropolitan Life Separate Account UL. Each investment division, in turn, invests solely in one of the corresponding fund "Portfolios". Metropolitan Series Fund, Inc. Portfolios: Davis Venture Value MFS Total Return FI International Morgan Stanley EAFE(R) Stock (formerly, Putnam Index International Stock) Neuberger Berman Partners FI Mid Cap Mid Cap Value Opportunities (formerly, Russell 2000(R) Index Janus Mid Cap) Salomon Brothers FI Value Strategic Bond Leaders (formerly, FI Opportunities Structured Equity) Salomon Brothers U.S. Franklin Templeton Small Government Cap Growth Scudder Global Equity Harris Oakmark Focused State Street Research Value Aggressive Growth Harris Oakmark Large Cap State Street Research Value Aurora Lehman Brothers(R) State Street Research Aggregate Bond Index Bond Income Loomis Sayles Small Cap State Street Research Met/Putnam Voyager Diversified MetLife Mid Cap Stock State Street Research Index Investment Trust MetLife Stock Index State Street Research MFS Investors Trust Large Cap Growth State Street Research Large Cap Value T. Rowe Price Large Cap Growth T. Rowe Price Small Cap Growth Met Investors Series Trust Portfolios: Harris Oakmark Neuberger Berman Real International Estate Janus Aggressive Growth PIMCO PEA Lord Abbett Bond Debenture Innovation (formerly, Met/AIM Mid Cap Core PIMCO Innovation) Equity PIMCO Total Return Met/AIM Small Cap Growth T. Rowe Price Mid-Cap MFS Research International Growth American Funds Insurance Series Portfolios*: American Funds Global American Funds Small Capitalization Growth-Income American Funds Growth - -------- * The American Funds Insurance Series calls these "Funds", but this supplement calls them "Portfolios." 4 The Portfolios The adviser, any sub-adviser and investment objective of each Portfolio are as follows:
Portfolio Sub-Adviser Investment Objective - -------------------------------------------------------------------------------------------------------------- Metropolitan Series Fund, Inc. Adviser: MetLife Advisers, LLC/1/ Class A Shares - -------------------------------------------------------------------------------------------------------------- Davis Venture Value Davis Selected Advisers, L.P./2/ Growth of capital - -------------------------------------------------------------------------------------------------------------- FI International Stock Fidelity Management & Research Long-term growth of capital Company/3/ - -------------------------------------------------------------------------------------------------------------- FI Mid Cap Opportunities/4/ Fidelity Management & Research Long-term growth of capital Company/5/ - -------------------------------------------------------------------------------------------------------------- FI Value Leaders Fidelity Management & Research Long-term growth of capital Company - -------------------------------------------------------------------------------------------------------------- Franklin Templeton Small Cap Growth Franklin Advisers, Inc. Long-term capital growth - -------------------------------------------------------------------------------------------------------------- Harris Oakmark Focused Value Harris Associates L.P. Long-term capital appreciation - -------------------------------------------------------------------------------------------------------------- Harris Oakmark Large Cap Value Harris Associates L.P. Long-term capital appreciation - -------------------------------------------------------------------------------------------------------------- Lehman Brothers Aggregate Bond Index Metropolitan Life Insurance To equal the performance of the Company Lehman Brothers Aggregate Bond Index - -------------------------------------------------------------------------------------------------------------- Loomis Sayles Small Cap Loomis, Sayles & Company, L.P. Long-term capital growth from investments in common stocks or other equity securities - -------------------------------------------------------------------------------------------------------------- Met/Putnam Voyager Putnam Investment Management, Capital appreciation LLC - -------------------------------------------------------------------------------------------------------------- MetLife Mid Cap Stock Index Metropolitan Life Insurance To equal the performance of the Company Standard & Poor's Mid Cap 400 Composite Stock Price Index - -------------------------------------------------------------------------------------------------------------- MetLife Stock Index Metropolitan Life Insurance To equal the performance of the Company Standard & Poor's 500 Composite Stock Price Index - -------------------------------------------------------------------------------------------------------------- MFS Investors Trust Massachusetts Financial Services Long-term growth of capital with a Company secondary objective to seek reasonable current income - -------------------------------------------------------------------------------------------------------------- MFS Total Return Massachusetts Financial Services Favorable total return through Company investment in a diversified portfolio - -------------------------------------------------------------------------------------------------------------- Morgan Stanley EAFE Index Metropolitan Life Insurance To equal the performance of the Company MSCI EAFE Index - -------------------------------------------------------------------------------------------------------------- Neuberger Berman Partners Mid Cap Value Neuberger Berman Management Inc. Capital growth - -------------------------------------------------------------------------------------------------------------- Russell 2000 Index Metropolitan Life Insurance To equal the return of the Russell Company 2000 Index - -------------------------------------------------------------------------------------------------------------- Salomon Brothers Strategic Bond Salomon Brothers Asset To maximize total return consistent Opportunities Management Inc/6/ with preservation of capital - -------------------------------------------------------------------------------------------------------------- Salomon Brothers U.S. Government Salomon Brothers Asset To maximize total return consistent Management Inc with preservation of capital and maintenance of liquidity - -------------------------------------------------------------------------------------------------------------- Scudder Global Equity Deutsche Investment Management Long-term growth of capital Americas Inc. - -------------------------------------------------------------------------------------------------------------- State Street Research Aggressive Growth State Street Research & Maximum capital appreciation Management Company - -------------------------------------------------------------------------------------------------------------- State Street Research Aurora State Street Research & High total return, consisting Management Company principally of capital appreciation - -------------------------------------------------------------------------------------------------------------- State Street Research Bond Income State Street Research & Competitive total return primarily Management Company from investing in fixed-income securities - --------------------------------------------------------------------------------------------------------------
5
Portfolio Sub-Adviser Investment Objective - ------------------------------------------------------------------------------------------------------------------ State Street Research Diversified State Street Research & High total return while attempting to Management Company limit investment risk and preserve capital - ------------------------------------------------------------------------------------------------------------------ State Street Research Investment Trust State Street Research & Long-term growth of capital and Management Company income - ------------------------------------------------------------------------------------------------------------------ State Street Research Large Cap Growth State Street Research & Long-term growth of capital Management Company/7/ - ------------------------------------------------------------------------------------------------------------------ State Street Research Large Cap Value State Street Research & Long-term growth of capital Management Company - ------------------------------------------------------------------------------------------------------------------ T. Rowe Price Large Cap Growth T. Rowe Price Associates, Inc. Long-term growth of capital, and secondarily, dividend income - ------------------------------------------------------------------------------------------------------------------ T. Rowe Price Small Cap Growth T. Rowe Price Associates, Inc. Long-term capital growth - ------------------------------------------------------------------------------------------------------------------ Met Investors Series Trust Adviser: Met Investors Advisory LLC Class A Shares - ------------------------------------------------------------------------------------------------------------------ Harris Oakmark International Harris Associates L.P. Long-term capital appreciation - ------------------------------------------------------------------------------------------------------------------ Janus Aggressive Growth Janus Capital Management LLC Long-term growth of capital - ------------------------------------------------------------------------------------------------------------------ Lord Abbett Bond Debenture Lord, Abbett & Co. LLC High current income and the opportunity for capital appreciation to produce a high total return - ------------------------------------------------------------------------------------------------------------------ Met/AIM Mid Cap Core Equity AIM Capital Management, Inc. Long-term growth of capital - ------------------------------------------------------------------------------------------------------------------ Met/AIM Small Cap Growth AIM Capital Management, Inc. Long-term growth of capital - ------------------------------------------------------------------------------------------------------------------ MFS Research International Massachusetts Financial Services Capital appreciation Company - ------------------------------------------------------------------------------------------------------------------ Neuberger Berman Real Estate Neuberger Berman Management Inc. Total return through investment in real estate securities, emphasizing both capital appreciation and current income - ------------------------------------------------------------------------------------------------------------------ PIMCO PEA Innovation PEA Capital LLC Capital appreciation; no consideration (formerly PIMCO Equity Advisors) is given to income - ------------------------------------------------------------------------------------------------------------------ PIMCO Total Return Pacific Investment Management Maximum total return, consistent Company LLC with the preservation of capital and prudent investment management - ------------------------------------------------------------------------------------------------------------------ T. Rowe Price Mid-Cap Growth T. Rowe Price Associates, Inc. Long-term growth of capital - ------------------------------------------------------------------------------------------------------------------ American Funds Insurance Series Adviser: Capital Research and Management Company Class 2 Shares - ------------------------------------------------------------------------------------------------------------------ American Funds Global Small Capitalization N/A Capital appreciation through stocks - ------------------------------------------------------------------------------------------------------------------ American Funds Growth N/A Capital appreciation through stocks - ------------------------------------------------------------------------------------------------------------------ American Funds Growth-Income N/A Capital appreciation and income - ------------------------------------------------------------------------------------------------------------------
- -------- /1/ Prior to May 1, 2001, Metropolitan Life Insurance Company was the adviser to the Metropolitan Series Fund. /2/ Davis Selected Advisers, L.P. may also delegate any of its responsibilities to Davis Selected Advisers-NY, Inc., a wholly-owned subsidiary. /3/ Prior to December 16, 2003, Putnam Investment Management, LLC was the sub-adviser to this Portfolio. /4/ On or about April 30, 2004, the FI Mid Cap Opportunities Portfolio that had been offered as an investment option up to that date merged with and into the Janus Mid Cap Portfolio which was then renamed the FI Mid Cap Opportunities Portfolio. /5/ Prior to May 1, 2004, Janus Capital Management LLC was the sub-adviser to this Portfolio. /6/ The Salomon Brothers Strategic Bond Opportunities Portfolio also receives certain investment subadvisory services from Citigroup Asset Management Limited, a London-based affiliate of Salomon Brothers Asset Management Inc. /7/ Prior to May 1, 2004, Fred Alger Management, Inc. was the sub-adviser to this Portfolio. 6 Annual Portfolio Operating Expenses This table describes the fees and expenses that the Portfolios will pay and that therefore a Policy owner will indirectly pay periodically during the time that he or she owns a Policy. The table shows the lowest and highest fees and expenses charged by the Portfolios for the fiscal year ended December 31, 2003, before and after any contractual fee waivers and expense reimbursements. More detail concerning each Portfolio's fees and expenses is contained in the table that follows this table and in the attached Fund prospectuses.
Lowest* Highest* - ------------------------------------------------------------------------------------------------------------ Gross Total Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets, including management fees, distribution (Rule 12b-1) fees and other expenses) .31% 1.32% - ------------------------------------------------------------------------------------------------------------ Net Total Annual Portfolio Operating Expenses (net of any contractual fee waivers and expense reimbursements) .31% 1.20%**
- -------- *The lowest and highest percentages have been selected after adjustment of the percentage for all Portfolios (on a consistent basis) to reflect any changes in expenses during the 12 months ended December 31, 2003 or expected to occur during the 12 months ended December 31, 2004. **Consists of expenses of the Harris Oakmark International Portfolio after the fee waivers and expense reimbursements reflected for that Portfolio in the table below. This table describes the annual operating expenses for each Portfolio for the year ended December 31, 2003, as a percentage of the Portfolio's average daily net assets for the year (anticipated annual operating expenses for 2004 for the Neuberger Berman Real Estate Portfolio). Net Total Annual Expenses do not reflect any expense reductions that certain Portfolios achieved as a result of directed brokerage arrangements.
Fee Waivers Gross and Manage- Total Expense Net Total ment Other 12b-1 Annual Reimburse- Annual Fees Expenses Fees Expenses ments Expenses - -------------------------------------------------------------------------------------------------- Metropolitan Series Fund (Class A Shares) - -------------------------------------------------------------------------------------------------- Davis Venture Value .74% .05% .00% .79% .00% .79% - -------------------------------------------------------------------------------------------------- FI International Stock .86% .23% .00% 1.09% .00% 1.09% - -------------------------------------------------------------------------------------------------- FI Mid Cap Opportunities .69% .08% .00% .77% .00% .77% - -------------------------------------------------------------------------------------------------- FI Value Leaders .67% .07% .00% .74% .00% .74% - -------------------------------------------------------------------------------------------------- Franklin Templeton Small Cap Growth .90% .42% .00% 1.32% .17% 1.15%(a) - -------------------------------------------------------------------------------------------------- Harris Oakmark Focused Value .75% .05% .00% .80% .00% .80% - -------------------------------------------------------------------------------------------------- Harris Oakmark Large Cap Value .74% .09% .00% .83% .00% .83% - -------------------------------------------------------------------------------------------------- Lehman Brothers Aggregate Bond Index .25% .09% .00% .34% .00% .34% - -------------------------------------------------------------------------------------------------- Loomis Sayles Small Cap .90% .09% .00% .99% .00% .99% - -------------------------------------------------------------------------------------------------- Met/Putnam Voyager .80% .27% .00% 1.07% .07% 1.00%(a) - -------------------------------------------------------------------------------------------------- MetLife Mid Cap Stock Index .25% .15% .00% .40% .00% .40% - -------------------------------------------------------------------------------------------------- MetLife Stock Index .25% .06% .00% .31% .00% .31% - -------------------------------------------------------------------------------------------------- MFS Investors Trust .75% .36% .00% 1.11% .11% 1.00%(a) - -------------------------------------------------------------------------------------------------- MFS Total Return .50% .19% .00% .69% .00% .69% - -------------------------------------------------------------------------------------------------- Morgan Stanley EAFE Index .30% .41% .00% .71% .00% .71% - -------------------------------------------------------------------------------------------------- Neuberger Berman Partners Mid Cap Value .69% .11% .00% .80% .00% .80% - -------------------------------------------------------------------------------------------------- Russell 2000 Index .25% .22% .00% .47% .00% .47% - -------------------------------------------------------------------------------------------------- Salomon Brothers Strategic Bond Opportunities .65% .16% .00% .81% .00% .81% - -------------------------------------------------------------------------------------------------- Salomon Brothers U.S. Government .55% .10% .00% .65% .00% .65% - -------------------------------------------------------------------------------------------------- Scudder Global Equity .64% .20% .00% .84% .00% .84% - -------------------------------------------------------------------------------------------------- State Street Aggressive Growth .73% .08% .00% .81% .00% .81% - -------------------------------------------------------------------------------------------------- State Street Research Aurora .85% .08% .00% .93% .00% .93% - -------------------------------------------------------------------------------------------------- State Street Research Bond Income .40% .07% .00% .47% .00% .47% - -------------------------------------------------------------------------------------------------- State Street Research Diversified .44% .07% .00% .51% .00% .51% - -------------------------------------------------------------------------------------------------- State Street Research Investment Trust .49% .07% .00% .56% .00% .56% - -------------------------------------------------------------------------------------------------- State Street Research Large Cap Growth .73% .07% .00% .80% .00% .80% - --------------------------------------------------------------------------------------------------
7
Fee Waivers Gross and Manage- Total Expense Net Total ment Other 12b-1 Annual Reimburse- Annual Fees Expenses Fees Expenses ments Expenses - --------------------------------------------------------------------------------------------------- State Street Research Large Cap Value .70% .35% .00% 1.05% .10% .95%(a) - --------------------------------------------------------------------------------------------------- T. Rowe Price Large Cap Growth .63% .16% .00% .79% .00% .79% - --------------------------------------------------------------------------------------------------- T. Rowe Price Small Cap Growth .52% .11% .00% .63% .00% .63% - --------------------------------------------------------------------------------------------------- Met Investors Series Trust (Class A Shares) - --------------------------------------------------------------------------------------------------- Harris Oakmark International .85% .36% .00% 1.21% .01% 1.20%(b) - --------------------------------------------------------------------------------------------------- Janus Aggressive Growth .78% .12% .00% .90% .00% .90%(b) - --------------------------------------------------------------------------------------------------- Lord Abbett Bond Debenture .60% .10% .00% .70% .00% .70%(d) - --------------------------------------------------------------------------------------------------- Met/AIM Mid Cap Core Equity .75% .21% .00% .96% .01% .95%(b) - --------------------------------------------------------------------------------------------------- Met/AIM Small Cap Growth .90% .26% .00% 1.16% .11% 1.05%(b) - --------------------------------------------------------------------------------------------------- MFS Research International .80% .31% .00% 1.11% .01% 1.10%(b) - --------------------------------------------------------------------------------------------------- Neuberger Berman Real Estate .70% .41% .00% 1.11% .21% .90%(b)(c) - --------------------------------------------------------------------------------------------------- PIMCO PEA Innovation .95% .31% .00% 1.26% .16% 1.10%(b) - --------------------------------------------------------------------------------------------------- PIMCO Total Return .50% .09% .00% .59% .00% .59%(d) - --------------------------------------------------------------------------------------------------- T. Rowe Price Mid-Cap Growth .75% .17% .00% .92% .00% .92%(b) - --------------------------------------------------------------------------------------------------- American Funds Insurance Series (Class 2 Shares)(e) - --------------------------------------------------------------------------------------------------- American Funds Global Small Capitalization .80% .03% .25% 1.08% .00% 1.08% - --------------------------------------------------------------------------------------------------- American Funds Growth .37% .02% .25% .64% .00% .64% - --------------------------------------------------------------------------------------------------- American Funds Growth-Income .33% .01% .25% .59% .00% .59% - ---------------------------------------------------------------------------------------------------
- -------- (a) The Metropolitan Series Fund and its affiliate MetLife Advisers, LLC ("MetLife Advisers") have entered into an Expense Agreement under which MetLife Advisers LLC will waive investment management fees and/or pay expenses (other than brokerage costs, interest, taxes or extraordinary expenses) ("Expenses") attributable to the Class A shares of these Portfolios of the Metropolitan Series Fund, so that the Net Total Annual Expenses will not exceed, at any time prior to April 30, 2005, the percentages shown above. Under the Expense Agreement, if certain conditions are met, the Franklin Templeton Small Cap Growth Portfolio, the MFS Investors Trust Portfolio and the State Street Research Large Cap Value Portfolio may reimburse MetLife Advisers for fees it waived and Expenses it paid if, in the future, actual Expenses of the Portfolios are less than the expense limits. (b) Met Investors Series Trust and its affiliate Met Investors Advisory LLC have entered into an Expense Limitation Agreement under which Met Investors Advisory LLC has agreed to waive or limit its fees and to assume other expenses so that the Net Total Annual Expenses of each Portfolio (other than interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with generally accepted accounting principles, and other extraordinary expenses not incurred in the ordinary course of each Portfolio's business) will not exceed, at any time prior to April 30, 2005, the percentages shown above in the right hand column (.95% in the case of the T. Rowe Price Mid-Cap Growth Portfolio). Under certain circumstances, any fees waived or expenses reimbursed by Met Investors Advisory LLC may, with the approval of the Trust's Board of Trustees, be repaid by the applicable Portfolio to Met Investors Advisory LLC. Due to expense waivers in addition to those shown above, actual Net Total Expenses for the year ended December 31, 2003, for the following Portfolios, were: 1.16% for the Harris Oakmark International Portfolio, .89% for the Janus Aggressive Growth Portfolio, .93% for the Met/AIM Mid Cap Core Equity Portfolio, 1.04% for the Met/AIM Small Cap Growth Portfolio, 1.09% for the MFS Research International Portfolio, and .91% for the T. Rowe Price Mid-Cap Growth Portfolio. (c) Expenses for the Neuberger Berman Real Estate Portfolio are annualized estimates for the year ending December 31, 2004, based on the Portfolio's May 1, 2004 start date. (d) Other Expenses reflect the repayment by the Portfolio of fees previously waived by Met Investors Advisory LLC under the terms of the Expense Limitation Agreement in the following amounts: .03% for the Lord Abbett Bond Debenture Portfolio and .02% for the PIMCO Total Return Portfolio. (e) The American Funds Insurance Series has adopted a Distribution Plan under Rule 12b-1 of the Investment Company Act of 1940. Under the Distribution Plan the Portfolios pay an annual fee to compensate certain other parties for promoting, selling and servicing the shares of the Portfolio. The Distribution Plan is described in more detail in the American Funds Insurance Series prospectus. The American Funds Insurance Series pays MetLife for its distribution-related services and expenses, an amount equal to an annual rate of 0.25% of the assets attributable to the Policies. An Investment Adviser or subadviser of a Portfolio or its affiliates may make payments to MetLife and/or certain affiliates based on a percentage of assets of the Portfolios attributable to the Policies and certain other variable insurance products that we and our affiliates issue. These percentages differ and some Advisers (or other affiliates) may pay us more than others. These percentages currently range up to 0.50% of assets. MetLife pays American Funds Distributors, Inc., the principal underwriter for the American Funds Insurance Series, a percentage of all premiums allocated to the American Funds Growth Portfolio, the American Funds Growth-Income Portfolio and the American Funds Global Small Capitalization Portfolio for the services it provides in marketing the Portfolios' shares in connection with the Policies. 8 The Specified Face Amount of Your Policy You may reduce the specified face amount of your Policy after the end of the first (rather than the second) Policy year, subject to the existing age, minimum amount and cash surrender value requirements detailed in the prospectus. Transferring Cash Value Among Your Policy's Investment Options Market Timing We have policies and procedures that attempt to detect transfer activity that may adversely affect other Policy owners or Portfolio shareholders in situations where there is potential for pricing inefficiencies or that involve relatively large single or grouped transactions by one or more Policy owners (i.e., market timing). We employ various means to try to detect such transfer activity, such as periodically examining the number of transfers and/or the number of "round trip" transfers into and out of particular investment divisions made by Policy owners within given periods of time and/or investigating transfer activity identified by us or the Funds on a case-by-case basis. We may revise these policies and procedures in our sole discretion at any time without prior notice. The detection and deterrence of harmful transfer activity involves judgments that are inherently subjective. Our ability to detect such transfer activity may be limited by operational and technological systems, as well as our ability to predict strategies employed by Policy owners to avoid such detection. Our ability to restrict such transfer activity may be limited by provisions of the Policy. We apply our policies and procedures without exception, waiver, or special arrangement, although we may vary our policies and procedures among our variable policies and investment divisions and may be more restrictive with regard to certain policies or investment divisions than others. Accordingly, there is no assurance that we will prevent all transfer activity that may adversely affect Policy owners or Portfolio shareholders. In addition, we cannot guarantee that the Portfolios will not be harmed by transfer activity related to other insurance companies and/or retirement plans that may invest in the Portfolios. Our policies and procedures may result in restrictions being applied to Policy owner(s). These restrictions may include: .. requiring you to send us by U.S. mail a signed, written request to make transfers; .. establishing an earlier submission time for telephone, facsimile, and Internet requests than for written requests or removing the availability of these means of making transfers; .. limiting the number of transfers you may make each Policy Year; .. charging a transfer or collecting a fund redemption fee; .. denying a transfer request from an authorized third party acting on behalf of multiple Policy owners; and .. imposing other limitations and modifications where we determine that exercise of the transfer privilege may create a disadvantage to other Policy owners. If restrictions are imposed on a Policy owner, we will reverse upon discovery any transaction inadvertently processed in contravention of such restrictions. In accordance with applicable law, we reserve the right to modify or terminate the transfer privilege at any time. We also reserve the right to defer or restrict the transfer privilege at any time that we are unable to purchase or redeem shares of any of the Portfolios, including any refusal or restriction on purchases or redemptions of their shares as a result of their own policies and procedures on market timing activities. You should read the Fund prospectuses for more details. 9 Automated Investment Strategies You Can Choose We reserve the right to modify or terminate the Index Selector strategy or any of the other automated investment strategies, for any reason, including, without limitation, a change in regulatory requirements applicable to such programs. Federal Tax Matters The following is a brief summary of some tax rules that may apply to your Policy. It does not purport to be complete or cover every situation. Because individual circumstances vary, you should consult with your own tax advisor to find out how taxes can affect your benefits and rights under your Policy, especially before you make unscheduled premium payments, change your specified face amount, change your death benefit option, change coverage provided by riders, take a loan or withdrawal, or assign or surrender the Policy. [SIDEBAR: You should consult with your own tax advisor to find out how taxes can affect your benefits and rights under your Policy.] Insurance proceeds .. Generally excludable from your beneficiary's gross income. .. The proceeds may be subject to federal estate tax: (i) if paid to the insured's estate; or (ii) if paid to a different beneficiary if the insured possessed incidents of ownership at or within three years before death. .. If you die before the insured, the value of your Policy (determined under IRS rules) is included in your estate and may be subject to federal estate tax. .. Whether or not any federal estate tax is due is based on a number of factors, including the estate size. .. The insurance proceeds payable upon death of the insured will never be less than the minimum amount required for the Policy to be treated as life insurance under section 7702 of the Internal Revenue Code, as in effect on the date the Policy was issued. Cash value (if your Policy is not a modified endowment contract) You are generally not taxed on your cash value until you withdraw it, surrender your Policy or receive a distribution such as on the Final Date. In these cases, you are generally permitted to take withdrawals and receive other distributions up to the amount of premiums paid without any tax consequences. However, withdrawals and other distributions will be subject to income tax after you have received amounts equal to the total premiums you paid. Somewhat different rules apply in the first 15 Policy years, when a distribution may be subject to tax if there is a gain in your Policy (which is generally when your cash value exceeds the cumulative premiums you paid). There may be an indirect tax upon the income in the Policy or the proceeds of a Policy under the Federal corporate alternative minimum tax, if you are subject to that tax. Split-Dollar Insurance Plans The IRS has recently issued guidance on split dollar insurance plans. A tax advisor should be consulted with respect to this new guidance if you have purchased or are considering the purchase of a Policy for a split dollar insurance plan. The Sarbanes-Oxley Act of 2002 (the "Act"), which was signed into law on July 30, 2002, prohibits, with limited exceptions, publicly-traded companies, including non-U.S. companies that have securities listed on U.S. exchanges, from extending, directly or indirectly or through a subsidiary, many types of personal loans to their directors or executive officers. It is possible that this prohibition may be interpreted to apply to certain split-dollar life insurance arrangements for directors and executive officers of such companies, since at least some such arrangements can arguably be viewed as involving a loan from the employer for at least some purposes. 10 Although the prohibition on loans generally took effect as of July 30, 2002, there is an exception for loans outstanding as of the date of enactment, so long as there is no material modification to the loan terms and the loan is not renewed after July 30, 2002. Any affected business contemplating the payment of a premium on an existing Policy or the purchase of a new Policy in connection with a split-dollar life insurance arrangement should consult legal counsel. Loans .. Loan amounts you receive will generally not be subject to income tax, unless your Policy is or becomes a modified endowment contract, is exchanged or terminates. .. Interest on loans is generally not deductible. For businesses that own a Policy, at least part of the interest deduction unrelated to the Policy may be disallowed unless the insured is a 20% owner, officer, director or employee of the business. .. If your Policy terminates (upon surrender, cancellation lapse, the Final Date or, in most cases, exchange) while any Policy loan is outstanding, the amount of the loan plus accrued interest thereon will be deemed to be a "distribution" to you. Any such distribution will have the same tax consequences as any other Policy distribution. Since amounts borrowed reduce the cash value that will be distributed to you if the Policy is surrendered, cancelled or lapses, any cash value distributed to you in these circumstances may be insufficient to pay the income tax on any gain. .. The tax consequences of loans outstanding after the 20th Policy year are uncertain. Modified Endowment Contracts These contracts are life insurance policies where the premiums paid during the first 7 years after the Policy is issued, or after a material change in the Policy exceeds tax law limits referred to as the "7-pay test." Material changes in the Policy, include changes in the level of benefits and certain other changes to your Policy after the issue date. Reductions in benefits during a 7-pay period may cause your Policy to become a modified endowment contract. Generally, a life insurance policy that is received in exchange for a modified endowment contract will also be considered a modified endowment contract. The IRS has promulgated a procedure for the correction of inadvertent modified endowment contracts. If your Policy is considered a modified endowment contract: .. The death benefit will still generally be income tax free to your beneficiary, as discussed above. .. Amounts withdrawn or distributed before the insured's death, including (without limitation) loans, assignments and pledges, are (to the extent of any gains on your policy) treated as income first and subject to income tax. All modified endowment contracts you purchase from us and our affiliates during the same calendar year are treated as a single contract for purposes of determining the amount of any such income. .. You will generally owe an additional 10% tax penalty on the taxable portion of the amounts you received before age 59 1/2, except generally if you are disabled or the distribution is part of a series of substantially equal periodic payments. Diversification In order for your Policy to qualify as life insurance, we must comply with certain diversification standards with respect to the investments underlying the Policy. We believe that we satisfy and will continue to satisfy these diversification standards. Inadvertent failure to meet these standards may be able to be corrected. Failure to meet these standards would result in immediate taxation to Policy owners of gains under their Policies. Changes to tax rules and interpretations Changes in applicable tax laws, rules and interpretations can adversely affect the tax treatment of your Policy. These changes may take effect retroactively. We reserve the right to amend the Policy in 11 any way necessary to avoid any adverse tax treatment. Examples of changes that could create adverse tax consequences include: . Possible taxation of cash value transfers. . Possible taxation as if you were the owner of your allocable portion of the Separate Account's assets. . Possible limits on the number of investment funds available or the frequency of transfers among them. . Possible changes in the tax treatment of Policy benefits and rights. Foreign tax credits To the extent permitted under the federal tax law, we may claim the benefit of certain foreign tax credits attributable to taxes paid by certain Portfolios to foreign jurisdictions. Experts The financial statements included in this Supplement to the prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing herein and are included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. Deloitte & Touche LLP's principal business address is 201 E. Kennedy Boulevard, Tampa, Florida 33602. Financial Statements The financial statements of the Separate Account are attached to this Supplement. You can find the financial statements of MetLife in the Statement of Additional Information referred to on the next page. Our financial statements should be considered only as bearing upon our ability to meet our obligations under the Policy. 12 INDEPENDENT AUDITORS' REPORT To the Policyholders of Metropolitan Life Separate Account UL and the Board of Directors Metropolitan Life Insurance Company: We have audited the accompanying statement of assets and liabilities of each of the investment divisions (as disclosed in Note 1 to the financial statements) comprising Metropolitan Life Separate Account UL (the "Separate Account") of Metropolitan Life Insurance Company ("Metropolitan Life") as of December 31, 2003, and the related statements of operations and statements of changes in net assets for each of the periods in the three years then ended. These financial statements are the responsibility of the Separate Account's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 custodians and the depositors of the Separate Account. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each of the investment divisions comprising the Separate Account of Metropolitan Life as of December 31, 2003, the results of their operations and the changes in their net assets for each of the periods in the three years then ended, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Tampa, Florida April 16, 2004 F-1 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 2003
State Street State Street State Street Research Research Research Investment Trust Diversified Aggressive Growth Investment Division Investment Division Investment Division ------------------- ------------------- ------------------- ASSETS: Investments at Value: Metropolitan Series Fund, Inc. ("Metropolitan Fund") State Street Research Investment Trust Portfolio (14,863,974 Shares; cost $441,842,964)................ $ 366,694,241 $ -- $ -- State Street Research Diversified Portfolio (19,105,895 Shares; cost $308,822,843)................ -- 289,072,197 -- State Street Research Aggressive Growth Portfolio (10,426,099 Shares; cost $247,124,703)................ -- -- 187,148,479 MetLife Stock Index Portfolio (15,492,994 Shares; cost $471,480,310)................ -- -- -- FI International Stock Portfolio (4,453,384 Shares; cost $49,092,645).................. -- -- -- Janus Mid Cap Portfolio (13,049,904 Shares; cost $245,811,880)................ -- -- -- T. Rowe Price Small Cap Growth Portfolio (5,028,788 Shares; cost $60,709,864).................. -- -- -- Scudder Global Equity Portfolio (2,503,741 Shares; cost $28,862,268).................. -- -- -- Harris Oakmark Large Cap Value Portfolio (3,104,521 Shares; cost $33,265,016).................. -- -- -- Neuberger Berman Partners Mid Cap Value Portfolio (1,781,579 Shares; cost $24,876,339).................. -- -- -- T. Rowe Price Large Cap Growth Portfolio (2,868,134 Shares; cost $31,282,336).................. -- -- -- Lehman Brothers Aggregate Bond Index Portfolio (5,026,722 Shares; cost $53,380,037).................. -- -- -- Morgan Stanley EAFE Index Portfolio (2,459,540 Shares; cost $19,855,278).................. -- -- -- Russell 2000 Index Portfolio (2,317,218 Shares; cost $22,079,290).................. -- -- -- Met/Putnam Voyager Portfolio (1,900,061 Shares; cost $8,302,977)................... -- -- -- State Street Research Aurora Portfolio (3,401,875 Shares; cost $44,584,567).................. -- -- -- MetLife Mid Cap Stock Index Portfolio (2,344,249 Shares; cost $23,095,881).................. -- -- -- Franklin Templeton Small Cap Growth Portfolio (327,356 Shares; cost $2,499,796)..................... -- -- -- State Street Research Large Cap Value Portfolio (104,079 Shares; cost $957,558)....................... -- -- -- Davis Venture Value Portfolio (965,333 Shares; cost $21,277,385).................... -- -- -- Loomis Sayles Small Cap Portfolio (23,295 Shares; cost $3,717,206)...................... -- -- -- Alger Equity Growth Portfolio (263,538 Shares; cost $4,582,005)..................... -- -- -- MFS Investors Trust Portfolio (186,025 Shares; cost $1,391,215)..................... -- -- -- MFS Research Managers Portfolio (79,153 Shares; cost $613,213)........................ -- -- -- State Street Research Bond Income Portfolio (837,355 Shares; cost $89,830,207).................... -- -- -- FI Structured Equity Portfolio (3,215 Shares; cost $454,116)......................... -- -- -- Harris Oakmark Focused Value Portfolio (115,466 Shares; cost $21,015,539).................... -- -- -- Salomon Brothers Strategic Bond Opportunities Portfolio (409,695 Shares; cost $4,866,132)..................... -- -- -- Salomon Brothers U.S. Government Portfolio (592,211 Shares; cost $7,267,172)..................... -- -- -- State Street Research Money Market Portfolio (273,528 Shares; cost $27,352,817).................... -- -- -- FI Mid Cap Opportunities Portfolio (96,616 Shares; cost $916,740)........................ -- -- -- ----------------- ----------------- ----------------- Total Investments...................................... 366,694,241 289,072,197 187,148,479 Cash and Accounts Receivable........................... 393,060 -- 119,894 ----------------- ----------------- ----------------- Total Assets........................................... 367,087,301 289,072,197 187,268,373 LIABILITIES............................................ Due to/From Metropolitan Life Insurance Company........ -- 38,810 -- ----------------- ----------------- ----------------- NET ASSETS............................................. $367,087,301 $289,033,387 $187,268,373 ================= ================= ================= Outstanding Units (In Thousands)....................... 16,151 12,881 11,833 Unit Values............................................ $10.57 to $33.12 $11.79 to $30.64 $11.71 to $16.87
MetLife Stock Index Investment Division ------------------- ASSETS: Investments at Value: Metropolitan Series Fund, Inc. ("Metropolitan Fund") State Street Research Investment Trust Portfolio (14,863,974 Shares; cost $441,842,964)................ $ -- State Street Research Diversified Portfolio (19,105,895 Shares; cost $308,822,843)................ -- State Street Research Aggressive Growth Portfolio (10,426,099 Shares; cost $247,124,703)................ -- MetLife Stock Index Portfolio (15,492,994 Shares; cost $471,480,310)................ 456,268,669 FI International Stock Portfolio (4,453,384 Shares; cost $49,092,645).................. -- Janus Mid Cap Portfolio (13,049,904 Shares; cost $245,811,880)................ -- T. Rowe Price Small Cap Growth Portfolio (5,028,788 Shares; cost $60,709,864).................. -- Scudder Global Equity Portfolio (2,503,741 Shares; cost $28,862,268).................. -- Harris Oakmark Large Cap Value Portfolio (3,104,521 Shares; cost $33,265,016).................. -- Neuberger Berman Partners Mid Cap Value Portfolio (1,781,579 Shares; cost $24,876,339).................. -- T. Rowe Price Large Cap Growth Portfolio (2,868,134 Shares; cost $31,282,336).................. -- Lehman Brothers Aggregate Bond Index Portfolio (5,026,722 Shares; cost $53,380,037).................. -- Morgan Stanley EAFE Index Portfolio (2,459,540 Shares; cost $19,855,278).................. -- Russell 2000 Index Portfolio (2,317,218 Shares; cost $22,079,290).................. -- Met/Putnam Voyager Portfolio (1,900,061 Shares; cost $8,302,977)................... -- State Street Research Aurora Portfolio (3,401,875 Shares; cost $44,584,567).................. -- MetLife Mid Cap Stock Index Portfolio (2,344,249 Shares; cost $23,095,881).................. -- Franklin Templeton Small Cap Growth Portfolio (327,356 Shares; cost $2,499,796)..................... -- State Street Research Large Cap Value Portfolio (104,079 Shares; cost $957,558)....................... -- Davis Venture Value Portfolio (965,333 Shares; cost $21,277,385).................... -- Loomis Sayles Small Cap Portfolio (23,295 Shares; cost $3,717,206)...................... -- Alger Equity Growth Portfolio (263,538 Shares; cost $4,582,005)..................... -- MFS Investors Trust Portfolio (186,025 Shares; cost $1,391,215)..................... -- MFS Research Managers Portfolio (79,153 Shares; cost $613,213)........................ -- State Street Research Bond Income Portfolio (837,355 Shares; cost $89,830,207).................... -- FI Structured Equity Portfolio (3,215 Shares; cost $454,116)......................... -- Harris Oakmark Focused Value Portfolio (115,466 Shares; cost $21,015,539).................... -- Salomon Brothers Strategic Bond Opportunities Portfolio (409,695 Shares; cost $4,866,132)..................... -- Salomon Brothers U.S. Government Portfolio (592,211 Shares; cost $7,267,172)..................... -- State Street Research Money Market Portfolio (273,528 Shares; cost $27,352,817).................... -- FI Mid Cap Opportunities Portfolio (96,616 Shares; cost $916,740)........................ -- ---------------- Total Investments...................................... 456,268,669 Cash and Accounts Receivable........................... 845,678 ---------------- Total Assets........................................... 457,114,347 LIABILITIES............................................ Due to/From Metropolitan Life Insurance Company........ -- ---------------- NET ASSETS............................................. $457,114,347 ================ Outstanding Units (In Thousands)....................... 25,747 Unit Values............................................ $9.58 to $29.26
See Notes to Financial Statements. F-2
FI International Janus T. Rowe Price Scudder Harris Oakmark Neuberger Berman T. Rowe Price Stock Mid Cap Small Cap Growth Global Equity Large Cap Value Partners Mid Cap Large Cap Growth Investment Investment Investment Investment Investment Value Investment Investment Division Division Division Division Division Division Division - ---------------- ---------------- ----------------- ----------------- ----------------- ----------------- ---------------- $ -- $ -- $ -- $ -- $ -- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 43,910,364 -- -- -- -- -- -- -- 182,829,152 -- -- -- -- -- -- -- 61,703,229 -- -- -- -- -- -- -- 28,617,758 -- -- -- -- -- -- -- 37,440,522 -- -- -- -- -- -- -- 30,910,402 -- -- -- -- -- -- -- 33,385,077 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - ---------------- ---------------- ----------------- ----------------- ----------------- ----------------- ---------------- 43,910,364 182,829,152 61,703,229 28,617,758 37,440,522 30,910,402 33,385,077 73,925 1,248,936 139,936 77,960 63,107 35,149 135,257 - ---------------- ---------------- ----------------- ----------------- ----------------- ----------------- ---------------- 43,984,289 184,078,088 61,843,165 28,695,718 37,503,629 30,945,551 33,520,334 -- -- -- -- -- -- -- - ---------------- ---------------- ----------------- ----------------- ----------------- ----------------- ---------------- $ 43,984,289 $ 184,078,088 $ 61,843,165 $ 28,695,718 $ 37,503,629 $ 30,945,551 $ 33,520,334 ================ ================ ================= ================= ================= ================= ================ 3,484 13,348 4,703 2,140 3,060 1,946 3,290 $9.92 to $13.85 $5.69 to $16.17 $12.64 to $14.08 $12.92 to $14.39 $11.53 to $14.56 $13.86 to $19.29 $8.23 to $12.13 Lehman Brothers Aggregate Bond Index Investment Division - ----------------- $ -- -- -- -- -- -- -- -- -- -- -- 54,942,071 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - ----------------- 54,942,071 52,236 - ----------------- 54,994,307 -- - ----------------- $ 54,994,307 ================= 4,064 $12.77 to $13.67
See Notes to Financial Statements. F-3 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 2003
Morgan Stanley Russell 2000 Met/Putnam State Street EAFE Index Index Voyager Research Aurora Investment Investment Investment Investment Division Division Division Division ---------------- ----------------- --------------- ----------------- ASSETS: Investments at Value: Metropolitan Series Fund, Inc. ("Metropolitan Fund") State Street Research Investment Trust Portfolio (14,863,974 Shares; cost $441,842,964)................ $ -- $ -- $ -- $ -- State Street Research Diversified Portfolio (19,105,895 Shares; cost $308,822,843)................ -- -- -- -- State Street Research Aggressive Growth Portfolio (10,426,099 Shares; cost $247,124,703)................ -- -- -- -- MetLife Stock Index Portfolio (15,492,994 Shares; cost $471,480,310)................ -- -- -- -- FI International Stock Portfolio (4,453,384 Shares; cost $49,092,645).................. -- -- -- -- Janus Mid Cap Portfolio (13,049,904 Shares; cost $245,811,880)................ -- -- -- -- T. Rowe Price Small Cap Growth Portfolio (5,028,788 Shares; cost $60,709,864).................. -- -- -- -- Scudder Global Equity Portfolio (2,503,741 Shares; cost $28,862,268).................. -- -- -- -- Harris Oakmark Large Cap Value Portfolio (3,104,521 Shares; cost $33,265,016).................. -- -- -- -- Neuberger Berman Partners Mid Cap Value Portfolio (1,781,579 Shares; cost $24,876,339).................. -- -- -- -- T. Rowe Price Large Cap Growth Portfolio (2,868,134 Shares; cost $31,282,336).................. -- -- -- -- Lehman Brothers Aggregate Bond Index Portfolio (5,026,722 Shares; cost $53,380,037).................. -- -- -- -- Morgan Stanley EAFE Index Portfolio (2,459,540 Shares; cost $19,855,278).................. 24,103,487 -- -- -- Russell 2000 Index Portfolio (2,317,218 Shares; cost $22,079,290).................. -- 27,690,757 -- -- Met/Putnam Voyager Portfolio (1,900,061 Shares; cost $8,302,977)................... -- -- 8,588,274 -- State Street Research Aurora Portfolio (3,401,875 Shares; cost $44,584,567).................. -- -- -- 56,539,160 MetLife Mid Cap Stock Index Portfolio (2,344,249 Shares; cost $23,095,881).................. -- -- -- -- Franklin Templeton Small Cap Growth Portfolio (327,356 Shares; cost $2,499,796)..................... -- -- -- -- State Street Research Large Cap Value Portfolio (104,079 Shares; cost $957,558)....................... -- -- -- -- Davis Venture Value Portfolio (965,333 Shares; cost $21,277,385).................... -- -- -- -- Loomis Sayles Small Cap Portfolio (23,295 Shares; cost $3,717,206)...................... -- -- -- -- Alger Equity Growth Portfolio (263,538 Shares; cost $4,582,005)..................... -- -- -- -- MFS Investors Trust Portfolio (186,025 Shares; cost $1,391,215)..................... -- -- -- -- MFS Research Managers Portfolio (79,153 Shares; cost $613,213)........................ -- -- -- -- State Street Research Bond Income Portfolio (837,355 Shares; cost $89,830,207).................... -- -- -- -- FI Structured Equity Portfolio (3,215 Shares; cost $454,116)......................... -- -- -- -- Harris Oakmark Focused Value Portfolio (115,466 Shares; cost $21,015,539).................... -- -- -- -- Salomon Brothers Strategic Bond Opportunities Portfolio (409,695 Shares; cost $4,866,132)..................... -- -- -- -- Salomon Brothers U.S. Government Portfolio (592,211 Shares; cost $7,267,172)..................... -- -- -- -- State Street Research Money Market Portfolio (273,528 Shares; cost $27,352,817).................... -- -- -- -- FI Mid Cap Opportunities Portfolio (96,616 Shares; cost $916,740)........................ -- -- -- -- ---------------- ----------------- --------------- ----------------- Total Investments...................................... 24,103,487 27,690,757 8,588,274 56,539,160 Cash and Accounts Receivable........................... 186,690 35,522 62,483 502 ---------------- ----------------- --------------- ----------------- Total Assets........................................... 24,290,177 27,726,279 8,650,757 56,539,662 LIABILITIES Due to/From Metropolitan Life Insurance Company........ -- -- -- -- ---------------- ----------------- --------------- ----------------- NET ASSETS $ 24,290,177 $ 27,726,279 $ 8,650,757 $ 56,539,662 ================ ================= =============== ================= Outstanding Units (In Thousands)....................... 2,676 2,085 1,913 3,372 Unit Values............................................ $7.85 to $10.37 $10.75 to $14.59 $4.38 to $4.78 $15.46 to $16.89
See Notes to Financial Statements. F-4
MetLife Franklin State Street MFS Mid Cap Stock Templeton Small Research Large Davis Venture Loomis Sayles Alger Equity Investors Index Cap Growth Cap Value Value Small Cap Growth Trust Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division - ----------------- --------------- ----------------- ---------------- ----------------- ------------ --------------- $ -- $ -- $ -- $ -- $ -- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 27,896,567 -- -- -- -- -- -- -- 3,041,132 -- -- -- -- -- -- -- 1,110,523 -- -- -- -- -- -- -- 24,393,963 -- -- -- -- -- -- -- 4,415,478 -- -- -- -- -- -- -- 4,933,432 -- -- -- -- -- -- -- 1,538,430 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - ----------------- --------------- ----------------- ---------------- ----------------- ---------- --------------- 27,896,567 3,041,132 1,110,523 24,393,963 4,415,478 4,933,432 1,538,430 28,320 -- -- 35,532 7,461 -- 5,616 - ----------------- --------------- ----------------- ---------------- ----------------- ---------- --------------- 27,924,887 3,041,132 1,110,523 24,429,495 4,422,939 4,933,432 1,544,046 -- 2,885 395 -- -- -- -- - ----------------- --------------- ----------------- ---------------- ----------------- ---------- --------------- $ 27,924,887 $ 3,038,247 $ 1,110,128 $ 24,429,495 $ 4,422,939 $4,933,432 $ 1,544,046 ================= =============== ================= ================ ================= ========== =============== 2,338 329 103 1,322 30 721 186 $11.04 to $12.13 $9.07 to $9.29 $10.70 to $10.86 $9.79 to $28.40 $9.27 to $205.39 $6.84 $7.96 to $8.33 MFS Research Mangers Investment Division - --------------- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 666,466 -- -- -- -- -- -- -- - --------------- 666,466 2,075 - --------------- 668,541 -- - --------------- $ 668,541 =============== 81 $6.57 to $8.51
See Notes to Financial Statements. F-5 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 2003
State Street Salomon Brothers Research Bond FI Structured Harris Oakmark Strategic Bond Income Equity Focused Value Opportunities Investment Investment Investment Investment Division Division Division Division ---------------- --------------- ------------------ ---------------- ASSETS: Investments at Value: Metropolitan Series Fund, Inc. ("Metropolitan Fund") State Street Research Investment Trust Portfolio (14,863,974 Shares; cost $441,842,964)................ $ -- $ -- $ -- $ -- State Street Research Diversified Portfolio (19,105,895 Shares; cost $308,822,843)................ -- -- -- -- State Street Research Aggressive Growth Portfolio (10,426,099 Shares; cost $247,124,703)................ -- -- -- -- MetLife Stock Index Portfolio (15,492,994 Shares; cost $471,480,310)................ -- -- -- -- FI International Stock Portfolio (4,453,384 Shares; cost $49,092,645).................. -- -- -- -- Janus Mid Cap Portfolio (13,049,904 Shares; cost $245,811,880)................ -- -- -- -- T. Rowe Price Small Cap Growth Portfolio (5,028,788 Shares; cost $60,709,864).................. -- -- -- -- Scudder Global Equity Portfolio (2,503,741 Shares; cost $28,862,268).................. -- -- -- -- Harris Oakmark Large Cap Value Portfolio (3,104,521 Shares; cost $33,265,016).................. -- -- -- -- Neuberger Berman Partners Mid Cap Value Portfolio (1,781,579 Shares; cost $24,876,339).................. -- -- -- -- T. Rowe Price Large Cap Growth Portfolio (2,868,134 Shares; cost $31,282,336).................. -- -- -- -- Lehman Brothers Aggregate Bond Index Portfolio (5,026,722 Shares; cost $53,380,037).................. -- -- -- -- Morgan Stanley EAFE Index Portfolio (2,459,540 Shares; cost $19,855,278).................. -- -- -- -- Russell 2000 Index Portfolio (2,317,218 Shares; cost $22,079,290).................. -- -- -- -- Met/Putnam Voyager Portfolio (1,900,061 Shares; cost $8,302,977)................... -- -- -- -- State Street Research Aurora Portfolio (3,401,875 Shares; cost $44,584,567).................. -- -- -- -- MetLife Mid Cap Stock Index Portfolio (2,344,249 Shares; cost $23,095,881).................. -- -- -- -- Franklin Templeton Small Cap Growth Portfolio (327,356 Shares; cost $2,499,796)..................... -- -- -- -- State Street Research Large Cap Value Portfolio (104,079 Shares; cost $957,558)....................... -- -- -- -- Davis Venture Value Portfolio (965,333 Shares; cost $21,277,385).................... -- -- -- -- Loomis Sayles Small Cap Portfolio (23,295 Shares; cost $3,717,206)...................... -- -- -- -- Alger Equity Growth Portfolio (263,538 Shares; cost $4,582,005)..................... -- -- -- -- MFS Investors Trust Portfolio (186,025 Shares; cost $1,391,215)..................... -- -- -- -- MFS Research Managers Portfolio (79,153 Shares; cost $613,213)........................ -- -- -- -- State Street Research Bond Income Portfolio (837,355 Shares; cost $89,830,207).................... 96,806,570 -- -- -- FI Structured Equity Portfolio (3,215 Shares; cost $454,116)......................... -- 505,504 -- -- Harris Oakmark Focused Value Portfolio (115,466 Shares; cost $21,015,539).................... -- -- 25,894,491 -- Salomon Brothers Strategic Bond Opportunities Portfolio (409,695 Shares; cost $4,866,132)..................... -- -- -- 5,166,251 Salomon Brothers U.S. Government Portfolio (592,211 Shares; cost $7,267,172)..................... -- -- -- -- State Street Research Money Market Portfolio (273,528 Shares; cost $27,352,817).................... -- -- -- -- FI Mid Cap Opportunities Portfolio (96,616 Shares; cost $916,740)........................ -- -- -- -- ---------------- --------------- ------------------ ---------------- Total Investments...................................... 96,806,570 505,504 25,894,491 5,166,251 Cash and Accounts Receivable........................... -- -- -- -- ---------------- --------------- ------------------ ---------------- Total Assets........................................... 96,806,570 505,504 25,894,491 5,166,251 LIABILITIES Due to/From Metropolitan Life Insurance Company........ 86,980 221 28,853 3,182 ---------------- --------------- ------------------ ---------------- NET ASSETS............................................. $96,719,590 $505,283 $25,865,638 $5,163,069 ================ =============== ================== ================ Outstanding Units (In Thousands)....................... 5,517 49 115 375 Unit Values............................................ $12.89 to $27.12 $8.37 to $10.56 $219.73 to $225.05 $13.52 to $13.85
See Notes to Financial Statements. F-6
State Street Salomon Brothers Research FI Mid Cap U.S. Government Money Market Opportunities Investment Investment Investment Division Division Division ----------------- ----------------- ----------------- $ -- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 7,307,884 -- -- -- 27,352,819 -- -- -- 1,112,044 ----------------- ----------------- ----------------- 7,307,884 27,352,819 1,112,044 -- 15,270 -- ----------------- ----------------- ----------------- 7,307,884 27,368,089 1,112,044 2,982 21,662 273 ----------------- ----------------- ----------------- $ 7,304,902 $ 27,346,427 $ 1,111,771 ================= ================= ================= 559 1,760 96 $12.82 to $13.13 $15.21 to $15.92 $11.50 to $11.67
See Notes to Financial Statements. F-7 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 2003
Invesco VIF Invesco VIF Janus Aspen Invesco VIF Equity Real Estate Growth High Yield Income Opportunity Investment Investment Investment Investment Division Division Division Division ----------- ----------- ----------- ----------- ASSETS: Investments at Value: Janus Aspen Series Fund ("Janus Fund") Janus Aspen Growth Portfolio (182,002 Shares; cost $3,317,989).......................................... $3,499,893 $ -- $ -- $ -- Invesco Variable Investment Funds, Inc ("Invesco Funds") Invesco VIF High Yield Portfolio (101,401 Shares; cost $755,920)............................................ -- 804,108 -- -- Invesco VIF Equity Income Portfolio (10,296 Shares; cost $180,622)............................................. -- -- 184,406 -- Invesco VIF Real Estate Opportunity Portfolio (12,455 Shares; cost $132,719)............................................. -- -- -- 178,608 Franklin Templeton Variable Insurance Product Series Funds ("Franklin Fund") Franklin Templeton International Stock Portfolio (327,691 Shares; cost $3,587,146).......................................... -- -- -- -- Franklin Templeton Valuemark Small Cap Portfolio (77,203 Shares; cost $1,159,415)........................................... -- -- -- -- Alliance Variable Product Series Funds ("Alliance Fund") Alliance Growth & Income Portfolio (95,425 Shares; cost $1,731,867)........................................... -- -- -- -- Alliance Premier Growth Portfolio (3,941 Shares; cost $83,621)............................................... -- -- -- -- Alliance Technology Portfolio (3,177 Shares; cost $43,696)............................................... -- -- -- -- Fidelity Variable Insurance Products Funds ("Fidelity Funds") Fidelity VIP Contrafund Portfolio (38,974 Shares; cost $783,501)............................................. -- -- -- -- Fidelity VIP Asset Manager Growth Portfolio (35,491 Shares; cost $395,048)............................................. -- -- -- -- Fidelity VIP Growth Portfolio (9,647 Shares; cost $277,258).............................................. -- -- -- -- American Series Funds ("American Fund") American Funds Growth Portfolio (555,600 Shares; cost $21,669,606)......................................... -- -- -- -- American Funds Growth-Income Portfolio (602,836 Shares; cost $17,398,081)......................................... -- -- -- -- American Funds Global Small Cap Portfolio (410,836 Shares; cost $4,620,777).......................................... -- -- -- -- Met Investors Series Trust ("Met Investors Fund") T. Rowe Price Mid Cap Growth Portfolio (527,122 Shares; cost $2,959,767).......................................... -- -- -- -- MFS Research International Portfolio (152,598 Shares; cost $1,307,159).......................................... -- -- -- -- PIMCO Total Return Portfolio (1,093,890 Shares; cost $12,468,910)....................................... -- -- -- -- PIMCO Innovation Portfolio (924,904 Shares; cost $3,855,266).......................................... -- -- -- -- Lord Abbett Bond Debenture Portfolio (991,531 Shares; cost $10,678,786)......................................... -- -- -- -- Met/AIM Mid Cap Core Equity Portfolio (80,233 Shares; cost $854,896)............................................. -- -- -- -- Met/AIM Small Cap Growth Portfolio (53,490 Shares; cost $596,561)............................................. -- -- -- -- Harris Oakmark International Portfolio (68,416 Shares; cost $766,989)............................................. -- -- -- -- Janus Aggressive Growth Portfolio (567,168 Shares; cost $3,302,437).......................................... -- -- -- -- Lord Abbett Growth and Income Portfolio (845 Shares; cost $16,883)................................................. -- -- -- -- ---------- -------- -------- -------- Total Investments........................................................... 3,499,893 804,108 184,406 178,608 Cash and Accounts Receivable................................................ -- -- -- -- ---------- -------- -------- -------- Total Assets................................................................ 3,499,893 804,108 184,406 178,608 LIABILITIES Due to/From Metropolitan Life Insurance Company............................. -- -- -- -- ---------- -------- -------- -------- NET ASSETS.................................................................. $3,499,893 $804,108 $184,406 $178,608 ========== ======== ======== ======== Outstanding Units (In Thousands)............................................ 435 87 19 10 Unit Values................................................................. $8.03 $9.21 $9.73 $17.79
See Notes to Financial Statements. F-8
Alliance Alliance Fidelity Franklin Templeton Franklin Templeton Growth & Premier Alliance Fidelity Asset Manager Fidelity International Stock Valuemark Small Income Growth Technology Contrafund Growth Growth Investment Cap Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ------------------- ------------------ ---------- ---------- ---------- ---------- ------------- ---------- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 4,053,532 -- -- -- -- -- -- -- -- 1,345,642 -- -- -- -- -- -- -- -- 2,063,085 -- -- -- -- -- -- -- -- 84,057 -- -- -- -- -- -- -- -- 45,595 -- -- -- -- -- -- -- -- 893,677 -- -- -- -- -- -- -- -- 432,629 -- -- -- -- -- -- -- -- 296,358 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- ----------- ---------- ---------- ------- ------- -------- -------- -------- 4,053,532 1,345,642 2,063,085 84,057 45,595 893,677 432,629 296,358 -- -- -- -- -- -- -- -- ----------- ---------- ---------- ------- ------- -------- -------- -------- 4,053,532 1,345,642 2,063,085 84,057 45,595 893,677 432,629 296,358 -- -- -- -- -- -- -- -- ----------- ---------- ---------- ------- ------- -------- -------- -------- $4,053,532 $1,345,642 $2,063,085 $84,057 $45,595 $893,677 $432,629 $296,358 =========== ========== ========== ======= ======= ======== ======== ======== 403 199 197 14 10 97 54 47 $10.03 $6.76 $10.47 $6.10 $4.54 $9.18 $8.00 $6.27
See Notes to Financial Statements. F-9 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 2003
American Funds American Funds American Funds Global Growth Growth-Income Small Cap Investment Investment Investment Division Division Division ---------------- ---------------- ---------------- ASSETS: Investments at Value: Janus Aspen Series Fund ("Janus Fund") Janus Aspen Growth Portfolio (182,002 Shares; cost $3,317,989).......................................... $ -- $ -- $ -- Invesco Variable Investment Funds, Inc ("Invesco Funds") Invesco VIF High Yield Portfolio (101,401 Shares; cost $755,920)............................................ -- -- -- Invesco VIF Equity Income Portfolio (10,296 Shares; cost $180,622)............................................. -- -- -- Invesco VIF Real Estate Opportunity Portfolio (12,455 Shares; cost $132,719)............................................. -- -- -- Franklin Templeton Variable Insurance Product Series Funds ("Franklin Fund") Franklin Templeton International Stock Portfolio (327,691 Shares; cost $3,587,146).......................................... -- -- -- Franklin Templeton Valuemark Small Cap Portfolio (77,203 Shares; cost $1,159,415)........................................... -- -- -- Alliance Variable Product Series Funds ("Alliance Fund") Alliance Growth & Income Portfolio (95,425 Shares; cost $1,731,867)........................................... -- -- -- Alliance Premier Growth Portfolio (3,941 Shares; cost $83,621)............................................... -- -- -- Alliance Technology Portfolio (3,177 Shares; cost $43,696)............................................... -- -- -- Fidelity Variable Insurance Products Funds ("Fidelity Funds") Fidelity VIP Contrafund Portfolio (38,974 Shares; cost $783,501)............................................. -- -- -- Fidelity VIP Asset Manager Growth Portfolio (35,491 Shares; cost $395,048)............................................. -- -- -- Fidelity VIP Growth Portfolio (9,647 Shares; cost $277,258).............................................. -- -- -- American Series Funds ("American Fund") American Funds Growth Portfolio (555,600 Shares; cost $21,669,606)......................................... 25,279,776 -- -- American Funds Growth-Income Portfolio (602,836 Shares; cost $17,398,081)......................................... -- 20,182,964 -- American Funds Global Small Cap Portfolio (410,836 Shares; cost $4,620,777).......................................... -- -- 5,784,566 Met Investors Series Trust ("Met Investors Fund") T. Rowe Price Mid Cap Growth Portfolio (527,122 Shares; cost $2,959,767).......................................... -- -- -- MFS Research International Portfolio (152,598 Shares; cost $1,307,159).......................................... -- -- -- PIMCO Total Return Portfolio (1,093,890 Shares; cost $12,468,910)....................................... -- -- -- PIMCO Innovation Portfolio (924,904 Shares; cost $3,855,266).......................................... -- -- -- Lord Abbett Bond Debenture Portfolio (991,531 Shares; cost $10,678,786)......................................... -- -- -- Met/AIM Mid Cap Core Equity Portfolio (80,233 Shares; cost $854,896)............................................. -- -- -- Met/AIM Small Cap Growth Portfolio (53,490 Shares; cost $596,561)............................................. -- -- -- Harris Oakmark International Portfolio (68,416 Shares; cost $766,989)............................................. -- -- -- Janus Aggressive Growth Portfolio (567,168 Shares; cost $3,302,437).......................................... -- -- -- Lord Abbett Growth and Income Portfolio (845 Shares; cost $16,883)................................................. -- -- -- ---------------- ---------------- ---------------- Total Investments........................................................... 25,279,776 20,182,964 5,784,566 Cash and Accounts Receivable................................................ 480,164 185,947 16,294 ---------------- ---------------- ---------------- Total Assets................................................................ 25,759,940 20,368,911 5,800,860 LIABILITIES Due to/From Metropolitan Life Insurance Company............................. -- -- -- ---------------- ---------------- ---------------- NET ASSETS.................................................................. $25,759,940 $20,368,911 $5,800,860 ================ ================ ================ Outstanding Units (In Thousands)............................................ 417 525 378 Unit Values................................................................. $60.53 to $62.00 $38.04 to $38.96 $15.06 to $15.42
T. Rowe Price Mid Cap Growth Investment Division -------------- ASSETS: Investments at Value: Janus Aspen Series Fund ("Janus Fund") Janus Aspen Growth Portfolio (182,002 Shares; cost $3,317,989).......................................... $ -- Invesco Variable Investment Funds, Inc ("Invesco Funds") Invesco VIF High Yield Portfolio (101,401 Shares; cost $755,920)............................................ -- Invesco VIF Equity Income Portfolio (10,296 Shares; cost $180,622)............................................. -- Invesco VIF Real Estate Opportunity Portfolio (12,455 Shares; cost $132,719)............................................. -- Franklin Templeton Variable Insurance Product Series Funds ("Franklin Fund") Franklin Templeton International Stock Portfolio (327,691 Shares; cost $3,587,146).......................................... -- Franklin Templeton Valuemark Small Cap Portfolio (77,203 Shares; cost $1,159,415)........................................... -- Alliance Variable Product Series Funds ("Alliance Fund") Alliance Growth & Income Portfolio (95,425 Shares; cost $1,731,867)........................................... -- Alliance Premier Growth Portfolio (3,941 Shares; cost $83,621)............................................... -- Alliance Technology Portfolio (3,177 Shares; cost $43,696)............................................... -- Fidelity Variable Insurance Products Funds ("Fidelity Funds") Fidelity VIP Contrafund Portfolio (38,974 Shares; cost $783,501)............................................. -- Fidelity VIP Asset Manager Growth Portfolio (35,491 Shares; cost $395,048)............................................. -- Fidelity VIP Growth Portfolio (9,647 Shares; cost $277,258).............................................. -- American Series Funds ("American Fund") American Funds Growth Portfolio (555,600 Shares; cost $21,669,606)......................................... -- American Funds Growth-Income Portfolio (602,836 Shares; cost $17,398,081)......................................... -- American Funds Global Small Cap Portfolio (410,836 Shares; cost $4,620,777).......................................... -- Met Investors Series Trust ("Met Investors Fund") T. Rowe Price Mid Cap Growth Portfolio (527,122 Shares; cost $2,959,767).......................................... 3,368,307 MFS Research International Portfolio (152,598 Shares; cost $1,307,159).......................................... -- PIMCO Total Return Portfolio (1,093,890 Shares; cost $12,468,910)....................................... -- PIMCO Innovation Portfolio (924,904 Shares; cost $3,855,266).......................................... -- Lord Abbett Bond Debenture Portfolio (991,531 Shares; cost $10,678,786)......................................... -- Met/AIM Mid Cap Core Equity Portfolio (80,233 Shares; cost $854,896)............................................. -- Met/AIM Small Cap Growth Portfolio (53,490 Shares; cost $596,561)............................................. -- Harris Oakmark International Portfolio (68,416 Shares; cost $766,989)............................................. -- Janus Aggressive Growth Portfolio (567,168 Shares; cost $3,302,437).......................................... -- Lord Abbett Growth and Income Portfolio (845 Shares; cost $16,883)................................................. -- -------------- Total Investments........................................................... 3,368,307 Cash and Accounts Receivable................................................ 6,963 -------------- Total Assets................................................................ 3,375,270 LIABILITIES Due to/From Metropolitan Life Insurance Company............................. -- -------------- NET ASSETS.................................................................. $3,375,270 ============== Outstanding Units (In Thousands)............................................ 527 Unit Values................................................................. $6.28 to $6.43
See Notes to Financial Statements. F-10
MFS Lord Abbett Met/AIM Mid Research PIMCO PIMCO Bond Cap Met/AIM Small Harris Oakmark International Total Return Innovation Debenture Core Equity Cap Growth International Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division - -------------- ---------------- -------------- ---------------- ---------------- ---------------- ----------------- $ -- $ -- $ -- $ -- $ -- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 1,496,988 -- -- -- -- -- -- -- 12,700,057 -- -- -- -- -- -- -- 4,467,285 -- -- -- -- -- -- -- 11,938,027 -- -- -- -- -- -- -- 989,278 -- -- -- -- -- -- -- 643,481 -- -- -- -- -- -- -- 813,470 -- -- -- -- -- -- -- -- -- -- -- -- -- -- - -------------- ---------------- -------------- ---------------- ---------------- ---------------- ----------------- 1,496,988 12,700,057 4,467,285 11,938,027 989,278 643,481 813,470 232 -- 13,528 104,275 -- -- -- - -------------- ---------------- -------------- ---------------- ---------------- ---------------- ----------------- 1,497,220 12,700,057 4,480,813 12,042,302 989,278 643,481 813,470 -- 2,991 -- -- 346 30 454 - -------------- ---------------- -------------- ---------------- ---------------- ---------------- ----------------- $1,497,220 $12,697,066 $4,480,813 $12,042,302 $988,932 $643,451 $ 813,016 ============== ================ ============== ================ ================ ================ ================= 151 1,042 932 876 92 60 72 $9.70 to $9.94 $11.96 to $12.25 $4.72 to $4.83 $12.87 to $14.95 $10.69 to $10.85 $10.46 to $10.62 $11.23 to $11.40
Janus Lord Abbett Aggressive Growth & Growth Income Investment Investment Division Division - --------------- ----------- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 3,987,193 -- -- 20,634 - --------------- ------- 3,987,193 20,634 15,526 -- - --------------- ------- 4,002,719 20,634 -- 105 - --------------- ------- $ 4,002,719 $20,529 =============== ======= 569 3 $6.89 to $7.06 $8.10
See Notes to Financial Statements. F-11 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
State Street Research Investment Trust Investment Division ---------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------- INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 2,669,960 $ 1,708,899 $ 51,437,166 Expenses: Mortality and expense charges................................ 2,738,164 2,678,347 3,136,115 ----------- ------------ ------------- Net investment (loss) income................................... (68,204) (969,448) 48,301,051 ----------- ------------ ------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (6,958,914) (6,132,437) 731,187 Change in unrealized appreciation (depreciation) of investments 88,855,777 (90,883,953) (122,469,738) ----------- ------------ ------------- Net realized and unrealized gains (losses) on investments...... 81,896,863 (97,016,390) (121,738,551) ----------- ------------ ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $81,828,659 $(97,985,838) $ (73,437,500) =========== ============ =============
See Notes to Financial Statements. F-12
State Street Research Diversified State Street Research Aggressive Growth MetLife Stock Index Investment Division Investment Division Investment Division - --------------------------------------- --------------------------------------- ---------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 9,831,564 $ 5,726,999 $ 25,415,648 $ -- $ -- $ 46,776,659 $ 6,468,236 $ 5,409,402 $ 3,858,667 2,320,042 2,168,000 2,231,404 1,367,678 1,263,240 1,493,070 3,080,678 2,704,257 2,645,594 - ----------- ------------ ------------ ----------- ------------ ------------ ------------ ------------ ------------ 7,511,522 3,558,999 23,184,244 (1,367,678) (1,263,240) 45,283,589 3,387,558 2,705,145 1,213,073 - ----------- ------------ ------------ ----------- ------------ ------------ ------------ ------------ ------------ (2,593,687) (1,810,936) (111,095) (8,202,841) (5,953,657) (1,536,972) (10,060,006) (5,045,284) 4,130,927 42,182,763 (41,694,719) (42,080,714) 62,199,697 (44,703,891) (94,895,107) 101,361,307 (82,559,071) (48,985,481) - ----------- ------------ ------------ ----------- ------------ ------------ ------------ ------------ ------------ 39,589,076 (43,505,655) (42,191,809) 53,996,856 (50,657,548) (96,432,079) 91,301,301 (87,604,355) (44,854,554) - ----------- ------------ ------------ ----------- ------------ ------------ ------------ ------------ ------------ $47,100,598 $(39,946,656) $(19,007,565) $52,629,178 $(51,920,788) $(51,148,490) $ 94,688,859 $(84,899,210) $(43,641,481) =========== ============ ============ =========== ============ ============ ============ ============ ============
F-13 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
FI International Stock Investment Division -------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 249,748 $ 317,077 $ 1,500,375 Expenses: Mortality and expense charges................................ 304,442 298,333 327,499 ----------- ----------- ------------ Net investment (loss) income................................... (54,694) 18,744 1,172,876 ----------- ----------- ------------ NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (1,630,864) (2,655,399) (1,661,736) Change in unrealized appreciation (depreciation) of investments 10,924,390 (4,418,288) (9,202,287) ----------- ----------- ------------ Net realized and unrealized gains (losses) on investments...... 9,293,526 (7,073,687) (10,864,023) ----------- ----------- ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 9,238,832 $(7,054,943) $ (9,691,147) =========== =========== ============
See Notes to Financial Statements. F-14
Janus Mid Cap T. Rowe Price Small Cap Growth Scudder Global Equity Investment Division Investment Division Investment Division - --------------------------------------- -------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ -- $ -- $ -- $ -- $ -- $ 3,542,193 $ 501,419 $ 350,009 $ 2,319,964 1,297,757 1,013,088 1,037,631 402,320 332,098 332,644 189,917 168,321 164,713 - ----------- ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- (1,297,757) (1,013,088) (1,037,631) (402,320) (332,098) 3,209,549 311,502 181,688 2,155,251 - ----------- ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- (1,145,184) (5,163,698) (2,451,549) (309,653) (297,872) (796,014) (1,005,776) (466,029) (71,082) 46,019,342 (34,449,605) (53,291,667) 17,635,578 (12,423,975) (6,595,361) 7,242,152 (3,445,540) (5,825,339) - ----------- ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- 44,874,158 (39,613,303) (55,743,216) 17,325,925 (12,721,847) (7,391,375) 6,236,376 (3,911,569) (5,896,421) - ----------- ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- $43,576,401 $(40,626,391) $(56,780,847) $16,923,605 $(13,053,945) $(4,181,826) $ 6,547,878 $(3,729,881) $(3,741,170) =========== ============ ============ =========== ============ =========== =========== =========== ===========
F-15 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Harris Oakmark Large Cap Value Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ -- $ 618,214 $ 12,105 Expenses: Mortality and expense charges................................ 252,368 179,930 68,617 ---------- ----------- -------- Net investment (loss) income................................... (252,368) 438,284 (56,512) ---------- ----------- -------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... 38,696 173,172 94,596 Change in unrealized appreciation (depreciation) of investments 6,986,213 (3,824,797) 810,284 ---------- ----------- -------- Net realized and unrealized gains (losses) on investments...... 7,024,909 (3,651,625) 904,880 ---------- ----------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $6,772,541 $(3,213,341) $848,368 ========== =========== ========
See Notes to Financial Statements. F-16
Neuberger Berman Partners Mid Cap Value T. Rowe Price Large Cap Growth Lehman Brothers Aggregate Bond Index Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- -------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 78,805 $ 49,885 $ 196,293 $ 30,610 $ 57,106 $ 8,447 $ 2,863,939 $1,283,105 $ 366,468 197,793 139,354 89,772 210,672 163,196 103,226 357,739 300,244 154,225 ---------- ----------- --------- ---------- ----------- --------- ----------- ---------- ---------- (118,988) (89,469) 106,521 (180,062) (106,090) (94,779) 2,506,200 982,861 212,243 ---------- ----------- --------- ---------- ----------- --------- ----------- ---------- ---------- 28,084 105,666 (68,863) (489,389) (317,124) (100,488) 1,152,171 515,268 210,509 7,656,793 (1,888,036) (195,526) 7,871,800 (5,333,848) (92,461) (2,185,014) 2,760,523 1,053,501 ---------- ----------- --------- ---------- ----------- --------- ----------- ---------- ---------- 7,684,877 (1,782,370) (264,389) 7,382,411 (5,650,972) (192,949) (1,032,843) 3,275,791 1,264,010 ---------- ----------- --------- ---------- ----------- --------- ----------- ---------- ---------- $7,565,889 $(1,871,839) $(157,868) $7,202,349 $(5,757,062) $(287,728) $ 1,473,357 $4,258,652 $1,476,253 ========== =========== ========= ========== =========== ========= =========== ========== ==========
F-17 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Morgan Stanley EAFE Index Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 280,223 $ 59,278 $ 25,460 Expenses: Mortality and expense charges................................ 158,241 123,406 63,300 ---------- ----------- ----------- Net investment (loss) income................................... 121,982 (64,128) (37,840) ---------- ----------- ----------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (497,564) (800,822) (961,834) Change in unrealized appreciation (depreciation) of investments 6,516,826 (1,274,363) (729,479) ---------- ----------- ----------- Net realized and unrealized gains (losses) on investments...... 6,019,262 (2,075,185) (1,691,313) ---------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $6,141,244 $(2,139,313) $(1,729,153) ========== =========== ===========
See Notes to Financial Statements. F-18
Russell 2000 Index Met/Putnam Voyager State Street Research Aurora Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 134,309 $ 74,869 $ 21,244 $ -- $ -- $ -- $ -- $ 127,494 $ 44,265 163,522 104,600 68,898 58,697 39,278 22,732 336,756 225,368 95,291 ---------- ----------- ----------- ---------- ----------- --------- ----------- ----------- ---------- (29,213) (29,731) (47,654) (58,697) (39,278) (22,732) (336,756) (97,874) (51,026) ---------- ----------- ----------- ---------- ----------- --------- ----------- ----------- ---------- (125,595) (343,069) (1,016,179) (624,452) (304,226) (113,353) 196,537 81,843 155,882 7,938,110 (2,545,881) 1,215,383 2,271,140 (1,227,374) (585,114) 17,391,943 (6,958,922) 1,218,805 ---------- ----------- ----------- ---------- ----------- --------- ----------- ----------- ---------- 7,812,515 (2,888,950) 199,204 1,646,688 (1,531,600) (698,467) 17,588,480 (6,877,079) 1,374,687 ---------- ----------- ----------- ---------- ----------- --------- ----------- ----------- ---------- $7,783,302 $(2,918,681) $ 151,550 $1,587,991 $(1,570,878) $(721,199) $17,251,724 $(6,974,953) $1,323,661 ========== =========== =========== ========== =========== ========= =========== =========== ==========
F-19 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
MetLife Mid Cap Stock Index Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 100,611 $ 42,658 $ 24,102 Expenses: Mortality and expense charges................................ 164,774 98,019 42,826 ---------- ----------- -------- Net investment (loss) income................................... (64,163) (55,361) (18,724) ---------- ----------- -------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... 12,063 (23,095) (19,531) Change in unrealized appreciation (depreciation) of investments 6,538,587 (2,089,536) 294,328 ---------- ----------- -------- Net realized and unrealized gains (losses) on investments...... 6,550,650 (2,112,631) 274,797 ---------- ----------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $6,486,487 $(2,167,992) $256,073 ========== =========== ========
See Notes to Financial Statements. F-20
State Street Research Franklin Templeton Small Cap Growth Large Cap Value Davis Venture Value Investment Division Investment Division Investment Division - --------------------------------------- -------------------------- ------------------------------------- For the Year For the Year For the Period For the Year For the Period For the Year For the Year For the Year Ended Ended May 1, 2001 to Ended May 1, 2002 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2003 2002 2001 - ------------ ------------ -------------- ------------ -------------- ------------ ------------ ------------ $ -- $ -- $ -- $ 8,880 $ 869 $ 69,175 $ 91,596 $ 192,850 16,641 8,397 1,124 4,290 436 144,858 90,846 39,662 -------- --------- ------- -------- ------- ---------- ----------- --------- (16,641) (8,397) (1,124) 4,590 433 (75,683) 750 153,188 -------- --------- ------- -------- ------- ---------- ----------- --------- (19,016) (42,766) (3,651) 41,938 (3,284) (213,900) (188,804) (46,987) 796,643 (271,373) 16,066 156,144 (3,178) 5,610,390 (2,083,879) (437,523) -------- --------- ------- -------- ------- ---------- ----------- --------- 777,627 (314,139) 12,415 198,082 (6,462) 5,396,490 (2,272,683) (484,510) -------- --------- ------- -------- ------- ---------- ----------- --------- $760,986 $(322,536) $11,291 $202,672 $(6,029) $5,320,807 $(2,271,933) $(331,322) ======== ========= ======= ======== ======= ========== =========== =========
F-21 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Loomis Sayles Small Cap Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ -- $ 2,322 $ 86,281 Expenses: Mortality and expense charges................................ 28,298 18,464 11,207 ---------- --------- -------- Net investment (loss) income................................... (28,298) (16,142) 75,074 ---------- --------- -------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (88,636) (106,829) (35,645) Change in unrealized appreciation (depreciation) of investments 1,169,772 (414,868) (62,611) ---------- --------- -------- Net realized and unrealized gains (losses) on investments...... 1,081,136 (521,697) (98,256) ---------- --------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $1,052,838 $(537,839) $(23,182) ========== ========= ========
See Notes to Financial Statements. F-22
Alger Equity Growth MFS Investors Trust MFS Research Managers Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 2,523 $ -- $ -- $ 2,817 $ 3,660 $ -- $ 3,840 $ 705 $ 386 26,251 13,698 121 10,528 6,375 1,179 4,713 3,132 749 ---------- ----------- ------- -------- --------- ------- -------- -------- ------ (23,728) (13,698) (121) (7,711) (2,715) (1,179) (873) (2,427) (363) ---------- ----------- ------- -------- --------- ------- -------- -------- ------ (63,998) (57,097) (175) 13,432 (71,866) (5,896) (4,462) (30,794) 1,304 1,339,908 (983,355) (5,126) 221,187 (78,498) 4,527 112,414 (58,814) (346) ---------- ----------- ------- -------- --------- ------- -------- -------- ------ 1,275,910 (1,040,452) (5,301) 234,619 (150,364) (1,369) 107,952 (89,608) 958 ---------- ----------- ------- -------- --------- ------- -------- -------- ------ $1,252,182 $(1,054,150) $(5,422) $226,908 $(153,079) $(2,548) $107,079 $(92,035) $ 595 ========== =========== ======= ======== ========= ======= ======== ======== ======
F-23 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
State Street Research Bond Income Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $2,907,624 $4,937,322 $5,667,650 Expenses: Mortality and expense charges................................ 724,135 658,727 572,051 ---------- ---------- ---------- Net investment (loss) income................................... 2,183,489 4,278,595 5,095,599 ---------- ---------- ---------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... 880,712 (378,655) 400,025 Change in unrealized appreciation (depreciation) of investments 1,572,001 2,444,438 (137,736) ---------- ---------- ---------- Net realized and unrealized gains (losses) on investments...... 2,452,713 2,065,783 262,289 ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $4,636,202 $6,344,378 $5,357,888 ========== ========== ==========
See Notes to Financial Statements. F-24
FI Structured Equity Harris Oakmark Focused Value Salomon Brothers Strategic Bond Investment Division Investment Division Opportunities Investment Division - ------------------------------------- --------------------------------------- --------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Period For the Year For the Year For the Period Ended Ended Ended Ended Ended May 1, 2001 to Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ -------------- ------------ ------------ -------------- $ 1,560 $ 527 $ -- $ 24,204 $ 15,621 $ -- $ 62,248 $ 83,495 $ -- 2,368 457 69 151,516 79,292 9,775 29,146 10,768 894 ------- -------- ------- ---------- ----------- -------- -------- -------- ------ (808) 70 (69) (127,312) (63,671) (9,775) 33,102 72,727 (894) ------- -------- ------- ---------- ----------- -------- -------- -------- ------ 24,426 (9,596) (77) 31,214 (9,588) (43) 97,650 241 117 58,141 (4,285) (2,467) 5,537,632 (938,481) 279,801 233,146 62,351 4,621 ------- -------- ------- ---------- ----------- -------- -------- -------- ------ 82,567 (13,881) (2,544) 5,568,846 (948,069) 279,758 330,796 62,592 4,738 ------- -------- ------- ---------- ----------- -------- -------- -------- ------ $81,759 $(13,811) $(2,613) $5,441,534 $(1,011,740) $269,983 $363,898 $135,319 $3,844 ======= ======== ======= ========== =========== ======== ======== ======== ======
F-25 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Salomon Brothers U.S. Government Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 91,740 $ 90,377 $ -- Expenses: Mortality and expense charges................................ 49,123 18,808 1,841 -------- -------- ------- Net investment (loss) income................................... 42,617 71,569 (1,841) -------- -------- ------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... 48,098 10,225 5,065 Change in unrealized appreciation (depreciation) of investments (40,677) 83,661 (2,273) -------- -------- ------- Net realized and unrealized gains (losses) on investments...... 7,421 93,886 2,792 -------- -------- ------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 50,038 $165,455 $ 951 ======== ======== =======
See Notes to Financial Statements. F-26
State Street Research Money Market FI Mid Cap Opportunities Janus Aspen Growth Investment Division Investment Division Investment Division - ------------------------------------- -------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Period For the Year For the Year For the Year Ended Ended Ended Ended May 1, 2002 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2003 2002 2001 - ------------ ------------ ------------ ------------ -------------- ------------ ------------ ------------ $226,302 $ 527,338 $1,134,017 $ 14,470 $ -- $ 2,873 $ 708 $ 210,720 179,158 268,010 215,488 4,632 333 13,156 10,078 25,354 -------- --------- ---------- -------- ------- ---------- --------- ----------- 47,144 259,328 918,529 9,838 (333) (10,283) (9,370) 185,366 -------- --------- ---------- -------- ------- ---------- --------- ----------- (1) (628,588) (499,341) 19,777 (1,950) (263,013) (179,152) (1,848,663) 1 611,711 796,577 191,546 3,758 1,041,007 (329,490) 498,521 -------- --------- ---------- -------- ------- ---------- --------- ----------- -- (16,877) 297,236 211,323 1,808 777,994 (508,642) (1,350,142) -------- --------- ---------- -------- ------- ---------- --------- ----------- $ 47,144 $ 242,451 $1,215,765 $221,161 $ 1,475 $ 767,711 $(518,012) $(1,164,776) ======== ========= ========== ======== ======= ========== ========= ===========
F-27 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Invesco VIF High Yield Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 46,066 $ 49,754 $ 29,774 Expenses: Mortality and expense charges................................ 2,831 1,346 602 -------- -------- -------- Net investment (loss) income................................... 43,235 48,408 29,172 -------- -------- -------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (5,183) (31,480) (3,798) Change in unrealized appreciation (depreciation) of investments 90,384 (7,350) (33,395) -------- -------- -------- Net realized and unrealized gains (losses) on investments...... 85,201 (38,830) (37,193) -------- -------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $128,436 $ 9,578 $ (8,021) ======== ======== ========
See Notes to Financial Statements. F-28
Invesco VIF Equity Income Invesco VIF Real Estate Opportunity Franklin Templeton International Stock Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 1,951 $ 2,157 $ 1,779 $ 2,672 $ 1,881 $ 1,183 $ 50,493 $ 44,446 $ 203,320 662 638 304 946 2,129 531 16,047 13,035 5,484 ------- -------- ------- ------- ------- ------- -------- --------- --------- 1,289 1,519 1,475 1,726 (248) 652 34,446 31,411 197,836 ------- -------- ------- ------- ------- ------- -------- --------- --------- (4,599) (7,425) (1,414) 7,645 12,032 1,271 (71,786) (325,690) (18,952) 30,971 (21,641) (4,995) 41,591 3,016 (3,692) 947,139 (187,267) (287,060) ------- -------- ------- ------- ------- ------- -------- --------- --------- 26,372 (29,066) (6,409) 49,236 15,048 (2,421) 875,353 (512,957) (306,012) ------- -------- ------- ------- ------- ------- -------- --------- --------- $27,661 $(27,547) $(4,934) $50,962 $14,800 $(1,769) $909,799 $(481,546) $(108,176) ======= ======== ======= ======= ======= ======= ======== ========= =========
F-29 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Franklin Templeton Valuemark Small Cap Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ -- $ 2,327 $ 56 Expenses: Mortality and expense charges................................ 6,613 3,601 177 -------- --------- ------ Net investment (loss) income................................... (6,613) (1,274) (121) -------- --------- ------ NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (16,606) (49,638) (480) Change in unrealized appreciation (depreciation) of investments 366,174 (184,311) 4,364 -------- --------- ------ Net realized and unrealized gains (losses) on investments...... 349,568 (233,949) 3,884 -------- --------- ------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $342,955 $(235,223) $3,763 ======== ========= ======
See Notes to Financial Statements. F-30
Alliance Growth & Income Alliance Premier Growth Alliance Technology Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 11,419 $ 27,692 $ 3,229 $ -- $ -- $ -- $ -- $ -- $ 782 7,030 4,105 1,034 257 274 104 181 96 121 -------- --------- ------- ------- -------- ------ ------- ------- -------- 4,389 23,587 2,195 (257) (274) (104) (181) (96) 661 -------- --------- ------- ------- -------- ------ ------- ------- -------- (27,592) (18,278) (318) (661) (9,853) (138) (931) (519) (19,763) 441,306 (137,057) 24,267 11,616 (12,480) 1,299 13,613 (9,033) (2,681) -------- --------- ------- ------- -------- ------ ------- ------- -------- 413,714 (155,335) 23,949 10,955 (22,333) 1,161 12,682 (9,552) (22,444) -------- --------- ------- ------- -------- ------ ------- ------- -------- $418,103 $(131,748) $26,144 $10,698 $(22,607) $1,057 $12,501 $(9,648) $(21,783) ======== ========= ======= ======= ======== ====== ======= ======= ========
F-31 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Fidelity Contrafund Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 830 $ 187 $ -- Expenses: Mortality and expense charges................................ 3,285 1,113 57 -------- -------- ----- Net investment (loss) income................................... (2,455) (926) (57) -------- -------- ----- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized gains (losses) from security transactions......... 6,303 (348) (27) Change in unrealized appreciation (depreciation) of investments 139,867 (29,437) (253) -------- -------- ----- Net realized and unrealized gains (losses) on investments...... 146,170 (29,785) (280) -------- -------- ----- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $143,715 $(30,711) $(337) ======== ======== =====
See Notes to Financial Statements. F-32
Fidelity Asset Manager Growth Fidelity Growth American Funds Growth Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- --------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Period Ended Ended Ended Ended Ended Ended Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------- $ 8,346 $ 3,640 $ -- $ 174 $ 132 $ -- $ 22,917 $ 3,067 $ 134,864 1,598 623 233 1,005 649 243 141,220 59,610 6,807 ------- -------- ------- ------- -------- ------- ---------- ----------- --------- 6,748 3,017 (233) (831) (517) (243) (118,303) (56,543) 128,057 ------- -------- ------- ------- -------- ------- ---------- ----------- --------- (4,335) (5,591) 113 (2,588) (8,400) (3,407) (100,817) (49,022) (95,342) 59,143 (19,964) (1,597) 63,146 (40,968) (3,078) 5,264,250 (1,636,890) (17,189) ------- -------- ------- ------- -------- ------- ---------- ----------- --------- 54,808 (25,555) (1,484) 60,558 (49,368) (6,485) 5,163,433 (1,685,912) (112,531) ------- -------- ------- ------- -------- ------- ---------- ----------- --------- $61,556 $(22,538) $(1,717) $59,727 $(49,885) $(6,728) $5,045,130 $(1,742,455) $ 15,526 ======= ======== ======= ======= ======== ======= ========== =========== =========
F-33 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
American Funds Growth-Income Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 170,202 $ 83,225 $ 20,236 Expenses: Mortality and expense charges................................ 112,608 48,157 5,104 ---------- ----------- -------- Net investment (loss) income................................... 57,594 35,068 15,132 ---------- ----------- -------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized gains (losses) from security transactions......... (26,406) (51,319) (13,398) Change in unrealized appreciation (depreciation) of investments 3,852,340 (1,122,854) 55,397 ---------- ----------- -------- Net realized and unrealized gains (losses) on investments...... 3,825,934 (1,174,173) 41,999 ---------- ----------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $3,883,528 $(1,139,105) $ 57,131 ========== =========== ========
See Notes to Financial Statements. F-34
American Funds Global Small Cap JPM Enhanced Index T. Rowe Price Mid Cap Growth Investment Division Investment Division Investment Division - --------------------------------------- ------------------------------------- --------------------------------------- For the Year For the Year For the Period For the Year For the Year For the Year For the Year For the Year For the Period Ended Ended May 1, 2001 to Ended Ended Ended Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ -------------- ------------ ------------ ------------ ------------ ------------ -------------- $ 19,214 $ 10,794 $ 7,147 $ 163 $ 117 $ -- $ -- $ 7,906 $ -- 27,847 12,245 1,216 16 39 13 17,818 6,944 940 ---------- --------- -------- ------- ------- ----- -------- --------- ------- (8,633) (1,451) 5,931 147 78 (13) (17,818) 962 (940) ---------- --------- -------- ------- ------- ----- -------- --------- ------- (33,362) 35,746 (18,714) (1,554) (1,186) (25) (46,026) (55,314) (1,372) 1,513,502 (396,292) 46,579 1,806 (1,483) (320) 776,010 (378,709) 11,239 ---------- --------- -------- ------- ------- ----- -------- --------- ------- 1,480,140 (360,546) 27,865 252 (2,669) (345) 729,984 (434,023) 9,867 ---------- --------- -------- ------- ------- ----- -------- --------- ------- $1,471,507 $(361,997) $ 33,796 $ 399 $(2,591) $(358) $712,166 $(433,061) $ 8,927 ========== ========= ======== ======= ======= ===== ======== ========= =======
F-35 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
MFS Research International Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 10,739 $ 1,203 $ 174 Expenses: Mortality and expense charges................................ 7,953 3,324 525 -------- -------- ------- Net investment (loss) income................................... 2,786 (2,121) (351) -------- -------- ------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized gains (losses) from security transactions......... 148,987 (66,559) (4,107) Change in unrealized appreciation (depreciation) of investments 191,049 (2,664) 1,444 -------- -------- ------- Net realized and unrealized gains (losses) on investments...... 340,036 (69,223) (2,663) -------- -------- ------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $342,822 $(71,344) $(3,014) ======== ======== =======
See Notes to Financial Statements. F-36
PIMCO Total Return PIMCO Innovation Lord Abbett Bond Debenture Investment Division Investment Division Investment Division - --------------------------------------- --------------------------------------- ------------------------------------- For the Year For the Year For the Period For the Year For the Year For the Period For the Year For the Year For the Year Ended Ended May 1, 2001 to Ended Ended May 1, 2001 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ -------------- ------------ ------------ -------------- ------------ ------------ ------------ $255,223 $ -- $ 26,164 $ -- $ -- $ -- $ 190,964 $ 996,547 $ 923,897 79,517 28,120 2,322 21,608 9,521 1,528 81,381 71,674 64,809 -------- -------- -------- ---------- --------- ------- ---------- ----------- ----------- 175,706 (28,120) 23,842 (21,608) (9,521) (1,528) 109,583 924,873 859,088 -------- -------- -------- ---------- --------- ------- ---------- ----------- ----------- 175,963 60,373 1,564 (195,867) (111,879) (9,873) 198,834 (1,886,218) (134,223) (25,434) 270,736 (14,155) 1,260,206 (652,366) 4,179 1,391,673 949,375 (902,997) -------- -------- -------- ---------- --------- ------- ---------- ----------- ----------- 150,529 331,109 (12,591) 1,064,339 (764,245) (5,694) 1,590,507 (936,843) (1,037,220) -------- -------- -------- ---------- --------- ------- ---------- ----------- ----------- $326,235 $302,989 $ 11,251 $1,042,731 $(773,766) $(7,222) $1,700,090 $ (11,970) $ (178,132) ======== ======== ======== ========== ========= ======= ========== =========== ===========
F-37 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Met/AIM Mid Cap Core Equity Met/AIM Small Cap Growth Investment Division Investment Division -------------------------- -------------------------- For the Year For the Period For the Year For the Period Ended May 1, 2002 to Ended May 1, 2002 to December 31, December 31, December 31, December 31, 2003 2002 2003 2002 ------------ -------------- ------------ -------------- INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 8,411 $ 291 $ -- $ -- Expenses: Mortality and expense charges................................ 4,773 638 2,947 281 -------- ------- -------- ------- Net investment (loss) income................................... 3,638 (347) (2,947) (281) -------- ------- -------- ------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized gains (losses) from security transactions......... 6,414 (1,242) 66,977 (593) Change in unrealized appreciation (depreciation) of investments 140,733 (6,351) 51,242 (4,322) -------- ------- -------- ------- Net realized and unrealized gains (losses) on investments...... 147,147 (7,593) 118,219 (4,915) -------- ------- -------- ------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.................................................... $150,785 $(7,940) $115,272 $(5,196) ======== ======= ======== =======
See Notes to Financial Statements. F-38
Harris Oakmark International Janus Aggressive Growth Lord Abbett Growth & Income Investment Division Investment Division Investment Division - -------------------------- --------------------------------------- -------------------------------- For the Year For the Period For the Year For the Year For the Period For the Year For the Period Ended May 1, 2002 to Ended Ended May 1, 2001 to Ended October 31, 2002 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2003 2002 2001 2003 2002 - ------------ -------------- ------------ ------------ -------------- ------------ ------------------- $ 8,848 $ 210 $ -- $ -- $ -- $ -- $-- 2,473 298 25,657 13,374 2,780 47 -- -------- ------- ---------- --------- -------- ------ --- 6,375 (88) (25,657) (13,374) (2,780) (47) -- -------- ------- ---------- --------- -------- ------ --- 72,432 (843) (313,967) (78,401) (43,356) 20 -- 49,401 (2,920) 1,123,504 (426,893) (11,854) 3,750 -- -------- ------- ---------- --------- -------- ------ --- 121,833 (3,763) 809,537 (505,294) (55,210) 3,770 -- -------- ------- ---------- --------- -------- ------ --- $128,208 $(3,851) $ 783,880 $(518,668) $(57,990) $3,723 $-- ======== ======= ========== ========= ======== ====== ===
F-39 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
State Street Research Investment Trust Investment Division ----------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------- (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (68,204) $ (969,448) $ 48,301,051 Net realized (losses) gains from security transactions..................... (6,958,914) (6,132,437) 731,187 Change in unrealized appreciation (depreciation) of investments............ 88,855,777 (90,883,953) (122,469,738) ------------ ------------ ------------- Net increase (decrease) in net assets resulting from operations............ 81,828,659 (97,985,838) (73,437,500) ------------ ------------ ------------- From capital transactions: Net premiums............................................................... 67,707,999 78,160,135 80,046,712 Redemptions................................................................ (15,137,546) (10,399,853) (15,513,042) Net Investment Division transfers.......................................... (7,863,696) (11,186,400) 2,751,095 Other net transfers........................................................ (36,428,084) (38,309,389) (40,534,492) ------------ ------------ ------------- Net increase (decrease) in net assets resulting from capital transactions.. 8,278,673 18,264,493 26,750,273 ------------ ------------ ------------- NET CHANGE IN NET ASSETS...................................................... 90,107,332 (79,721,345) (46,687,227) NET ASSETS--BEGINNING OF PERIOD............................................... 276,979,969 356,701,314 403,388,541 ------------ ------------ ------------- NET ASSETS--END OF PERIOD..................................................... $367,087,301 $276,979,969 $ 356,701,314 ============ ============ =============
See Notes to Financial Statements. F-40
State Street Research Diversified State Street Research Aggressive Growth MetLife Stock Index Investment Division Investment Division Investment Division - ---------------------------------------- ---------------------------------------- ---------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 7,511,522 $ 3,558,999 $ 23,184,244 $ (1,367,678) $ (1,263,240) $ 45,283,589 $ 3,387,558 $ 2,705,145 $ 1,213,073 (2,593,687) (1,810,936) (111,095) (8,202,841) (5,953,657) (1,536,972) (10,060,006) (5,045,284) 4,130,927 42,182,763 (41,694,719) (42,080,714) 62,199,697 (44,703,891) (94,895,107) 101,361,307 (82,559,071) (48,985,481) - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 47,100,598 (39,946,656) (19,007,565) 52,629,178 (51,920,788) (51,148,490) 94,688,859 (84,899,210) (43,641,481) - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 52,190,961 54,194,120 55,767,097 34,182,901 40,003,786 42,942,155 108,236,751 114,022,950 113,949,042 (14,264,879) (9,523,000) (8,333,720) (7,318,523) (4,831,140) (6,486,474) (14,265,812) (13,779,170) (11,030,629) (2,178,352) (383,162) 8,413,016 (5,104,646) (6,485,783) 1,097,789 (11,228,029) 11,797,286 19,393,554 (31,835,294) (32,044,615) (31,250,185) (17,936,155) (17,642,321) (19,697,556) (46,545,385) (47,844,806) (45,631,351) - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 3,912,436 12,243,343 24,596,208 3,823,577 11,044,542 17,855,914 36,197,525 64,196,260 76,680,616 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 51,013,034 (27,703,313) 5,588,643 56,452,755 (40,876,246) (33,292,576) 130,886,384 (20,702,950) 33,039,135 238,020,353 265,723,666 260,135,023 130,815,618 171,691,864 204,984,440 326,227,963 346,930,913 313,891,778 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $289,033,387 $238,020,353 $265,723,666 $187,268,373 $130,815,618 $171,691,864 $457,114,347 $326,227,963 $346,930,913 ============ ============ ============ ============ ============ ============ ============ ============ ============
F-41 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
FI International Stock Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (54,694) $ 18,744 $ 1,172,876 Net realized (losses) gains from security transactions..................... (1,630,864) (2,655,399) (1,661,736) Change in unrealized appreciation (depreciation) of investments............ 10,924,390 (4,418,288) (9,202,287) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations............ 9,238,832 (7,054,943) (9,691,147) ----------- ----------- ----------- From capital transactions: Net premiums............................................................... 7,903,805 9,783,594 9,615,907 Redemptions................................................................ (1,780,012) (1,287,021) (1,289,983) Net Investment Division transfers.......................................... (552,252) (2,781,604) 323,092 Other net transfers........................................................ (3,792,182) (3,974,969) (4,148,436) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from capital transactions.. 1,779,359 1,740,000 4,500,580 ----------- ----------- ----------- NET CHANGE IN NET ASSETS...................................................... 11,018,191 (5,314,943) (5,190,567) NET ASSETS--BEGINNING OF PERIOD............................................... 32,966,098 38,281,041 43,471,608 ----------- ----------- ----------- NET ASSETS--END OF PERIOD..................................................... $43,984,289 $32,966,098 $38,281,041 =========== =========== ===========
See Notes to Financial Statements. F-42
Janus Mid Cap T. Rowe Price Small Cap Growth Scudder Global Equity Investment Division Investment Division Investment Division - ---------------------------------------- -------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ (1,297,757) $ (1,013,088) $ (1,037,631) $ (402,320) $ (332,098) $ 3,209,549 $ 311,502 $ 181,688 $ 2,155,251 (1,145,184) (5,163,698) (2,451,549) (309,653) (297,872) (796,014) (1,005,776) (466,029) (71,082) 46,019,342 (34,449,605) (53,291,667) 17,635,578 (12,423,975) (6,595,361) 7,242,152 (3,445,540) (5,825,339) - ------------ ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- 43,576,401 (40,626,391) (56,780,847) 16,923,605 (13,053,945) (4,181,826) 6,547,878 (3,729,881) (3,741,170) - ------------ ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- 53,673,455 64,528,237 74,363,749 12,384,395 14,332,234 15,023,523 6,014,790 7,029,500 7,562,752 (5,340,392) (2,804,544) (3,144,623) (1,578,439) (1,348,311) (2,577,320) (1,735,572) (936,418) (630,613) (5,185,372) (5,298,371) 3,860,189 (197,295) 753,895 (372,409) (125,590) (322,915) 603,395 (21,665,579) (21,964,497) (23,970,747) (5,569,189) (5,463,573) (5,350,422) (2,481,721) (2,670,700) (2,572,779) - ------------ ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- 21,482,112 34,460,825 51,108,568 5,039,472 8,274,245 6,723,372 1,671,907 3,099,467 4,962,755 - ------------ ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- 65,058,513 (6,165,566) (5,672,279) 21,963,077 (4,779,700) 2,541,546 8,219,785 (630,414) 1,221,585 119,019,575 125,185,141 130,857,420 39,880,088 44,659,788 42,118,242 20,475,933 21,106,347 19,884,762 - ------------ ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- $184,078,088 $119,019,575 $125,185,141 $61,843,165 $ 39,880,088 $44,659,788 $28,695,718 $20,475,933 $21,106,347 ============ ============ ============ =========== ============ =========== =========== =========== ===========
F-43 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Harris Oakmark Large Cap Value Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (252,368) $ 438,284 $ (56,512) Net realized (losses) gains from security transactions..................... 38,696 173,172 94,596 Change in unrealized appreciation (depreciation) of investments............ 6,986,213 (3,824,797) 810,284 ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations............ 6,772,541 (3,213,341) 848,368 ----------- ----------- ----------- From capital transactions: Net premiums............................................................... 11,430,624 10,115,432 4,073,390 Redemptions................................................................ (991,704) (287,586) (268,807) Net Investment Division transfers.......................................... 1,835,698 6,291,525 9,043,603 Other net transfers........................................................ (4,616,084) (4,169,815) (1,466,228) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from capital transactions.. 7,658,534 11,949,556 11,381,958 ----------- ----------- ----------- NET CHANGE IN NET ASSETS...................................................... 14,431,075 8,736,215 12,230,326 NET ASSETS--BEGINNING OF PERIOD............................................... 23,072,554 14,336,339 2,106,013 ----------- ----------- ----------- NET ASSETS--END OF PERIOD..................................................... $37,503,629 $23,072,554 $14,336,339 =========== =========== ===========
See Notes to Financial Statements. F-44
Neuberger Berman Partners Mid Cap Value T. Rowe Price Large Cap Growth Lehman Brothers Aggregate Bond Index Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ (118,988) $ (89,469) $ 106,521 $ (180,062) $ (106,090) $ (94,779) $ 2,506,200 $ 982,861 $ 212,243 28,084 105,666 (68,863) (489,389) (317,124) (100,488) 1,152,171 515,268 210,509 7,656,793 (1,888,036) (195,526) 7,871,800 (5,333,848) (92,461) (2,185,014) 2,760,523 1,053,501 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 7,565,889 (1,871,839) (157,868) 7,202,349 (5,757,062) (287,728) 1,473,357 4,258,652 1,476,253 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 8,682,614 8,172,686 5,746,048 8,620,553 9,447,412 8,996,035 13,565,785 10,479,062 8,533,067 (629,059) (1,215,338) (57,006) (982,056) (125,856) (60,227) (1,812,183) (1,839,866) (1,024,276) 650,401 2,321,678 4,766,372 (78,277) 873,833 8,736,398 (6,698,353) 8,318,943 11,244,179 (3,610,116) (3,236,171) (2,321,908) (3,337,120) (3,453,967) (3,536,498) (5,580,587) (4,492,832) (2,262,688) - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 5,093,840 6,042,855 8,133,506 4,223,100 6,741,422 14,135,708 (525,338) 12,465,307 16,490,282 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 12,659,729 4,171,016 7,975,638 11,425,449 984,360 13,847,980 948,019 16,723,959 17,966,535 18,285,822 14,114,806 6,139,168 22,094,885 21,110,525 7,262,545 54,046,288 37,322,329 19,355,794 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $30,945,551 $18,285,822 $14,114,806 $33,520,334 $22,094,885 $21,110,525 $54,994,307 $54,046,288 $37,322,329 =========== =========== =========== =========== =========== =========== =========== =========== ===========
F-45 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Morgan Stanley EAFE Index Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 121,982 $ (64,128) $ (37,840) Net realized (losses) gains from security transactions..................... (497,564) (800,822) (961,834) Change in unrealized appreciation (depreciation) of investments............ 6,516,826 (1,274,363) (729,479) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations............ 6,141,244 (2,139,313) (1,729,153) ----------- ----------- ----------- From capital transactions: Net premiums............................................................... 7,425,875 6,625,665 4,890,376 Redemptions................................................................ (362,211) (1,101,621) (722,285) Net Investment Division transfers.......................................... 438,708 1,672,217 4,395,203 Other net transfers........................................................ (2,849,511) (2,360,586) (1,819,787) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from capital transactions.. 4,652,861 4,835,675 6,743,507 ----------- ----------- ----------- NET CHANGE IN NET ASSETS...................................................... 10,794,105 2,696,362 5,014,354 NET ASSETS--BEGINNING OF PERIOD............................................... 13,496,072 10,799,710 5,785,356 ----------- ----------- ----------- NET ASSETS--END OF PERIOD..................................................... $24,290,177 $13,496,072 $10,799,710 =========== =========== ===========
See Notes to Financial Statements. F-46
Russell 2000 Index Met/Putnam Voyager State Street Research Aurora Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ (29,213) $ (29,731) $ (47,654) $ (58,697) $ (39,278) $ (22,732) $ (336,756) $ (97,874) $ (51,026) (125,595) (343,069) (1,016,179) (624,452) (304,226) (113,353) 196,537 81,843 155,882 7,938,110 (2,545,881) 1,215,383 2,271,140 (1,227,374) (585,114) 17,391,943 (6,958,922) 1,218,805 - ----------- ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- 7,783,302 (2,918,681) 151,550 1,587,991 (1,570,878) (721,199) 17,251,724 (6,974,953) 1,323,661 - ----------- ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- 7,659,016 7,082,371 5,343,692 3,213,111 3,461,165 2,425,615 16,618,731 15,376,489 7,040,736 (486,878) (266,570) (375,673) (93,468) (27,865) (23,841) (920,139) (302,359) (81,569) 991,151 2,834,125 1,811,235 (151,453) 548,678 2,239,800 1,566,557 6,843,668 11,247,758 (3,048,846) (2,527,437) (2,007,235) (1,158,137) (1,159,060) (878,209) (7,037,769) (5,887,521) (2,656,308) - ----------- ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- 5,114,443 7,122,489 4,772,019 1,810,053 2,822,918 3,763,365 10,227,380 16,030,277 15,550,617 - ----------- ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- 12,897,745 4,203,808 4,923,569 3,398,044 1,252,040 3,042,166 27,479,104 9,055,324 16,874,278 14,828,534 10,624,726 5,701,157 5,252,713 4,000,673 958,507 29,060,558 20,005,234 3,130,956 - ----------- ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- $27,726,279 $14,828,534 $10,624,726 $ 8,650,757 $ 5,252,713 $4,000,673 $56,539,662 $29,060,558 $20,005,234 =========== =========== =========== =========== =========== ========== =========== =========== ===========
F-47 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
MetLife Mid Cap Stock Index Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (64,163) $ (55,361) $ (18,724) Net realized (losses) gains from security transactions..................... 12,063 (23,095) (19,531) Change in unrealized appreciation (depreciation) of investments............ 6,538,587 (2,089,536) 294,328 ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations............ 6,486,487 (2,167,992) 256,073 ----------- ----------- ----------- From capital transactions: Net premiums............................................................... 8,658,518 7,438,484 4,147,919 Redemptions................................................................ (315,294) (109,971) (16,900) Net Investment Division transfers.......................................... 960,729 4,006,261 4,052,437 Other net transfers........................................................ (3,433,510) (2,617,681) (1,566,864) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from capital transactions.. 5,870,443 8,717,093 6,616,592 ----------- ----------- ----------- NET CHANGE IN NET ASSETS...................................................... 12,356,930 6,549,101 6,872,665 NET ASSETS--BEGINNING OF PERIOD............................................... 15,567,957 9,018,856 2,146,191 ----------- ----------- ----------- NET ASSETS--END OF PERIOD..................................................... $27,924,887 $15,567,957 $ 9,018,856 =========== =========== ===========
See Notes to Financial Statements. F-48
State Street Research Franklin Templeton Small Cap Growth Large Cap Value Davis Venture Value Investment Division Investment Division Investment Division - --------------------------------------- -------------------------- ------------------------------------- For the Year For the Year For the Period For the Year For the Period For the Year For the Year For the Year Ended Ended May 1, 2001 to Ended May 1, 2002 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2003 2002 2001 - ------------ ------------ -------------- ------------ -------------- ------------ ------------ ------------ $ (16,641) $ (8,397) $ (1,124) $ 4,590 $ 433 $ (75,683) $ 750 $ 153,188 (19,016) (42,766) (3,651) 41,938 (3,284) (213,900) (188,804) (46,987) 796,643 (271,373) 16,066 156,144 (3,178) 5,610,390 (2,083,879) (437,523) ---------- ---------- -------- ---------- -------- ----------- ----------- ----------- 760,986 (322,536) 11,291 202,672 (6,029) 5,320,807 (2,271,933) (331,322) ---------- ---------- -------- ---------- -------- ----------- ----------- ----------- 844,482 626,488 107,629 405,361 64,977 6,492,659 5,157,409 3,338,434 (27,310) (5,592) (802) (5,862) (313) (286,620) (86,825) (44,938) 610,392 745,849 369,945 469,287 153,138 2,147,532 5,300,022 4,710,785 (416,036) (235,608) (30,931) (149,915) (23,188) (2,675,075) (2,166,021) (1,312,198) ---------- ---------- -------- ---------- -------- ----------- ----------- ----------- 1,011,528 1,131,137 445,841 718,871 194,614 5,678,496 8,204,585 6,692,083 ---------- ---------- -------- ---------- -------- ----------- ----------- ----------- 1,772,514 808,601 457,132 921,543 188,585 10,999,303 5,932,652 6,360,761 1,265,733 457,132 -- 188,585 -- 13,430,192 7,497,540 1,136,779 ---------- ---------- -------- ---------- -------- ----------- ----------- ----------- $3,038,247 $1,265,733 $457,132 $1,110,128 $188,585 $24,429,495 $13,430,192 $ 7,497,540 ========== ========== ======== ========== ======== =========== =========== ===========
F-49 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Loomis Sayles Small Cap Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (28,298) $ (16,142) $ 75,074 Net realized (losses) gains from security transactions..................... (88,636) (106,829) (35,645) Change in unrealized appreciation (depreciation) of investments............ 1,169,772 (414,868) (62,611) ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations............ 1,052,838 (537,839) (23,182) ---------- ---------- ---------- From capital transactions: Net premiums............................................................... 1,387,309 1,200,038 909,510 Redemptions................................................................ (49,105) (11,815) (7,864) Net Investment Division transfers.......................................... 159,941 268,407 960,425 Other net transfers........................................................ (536,437) (436,811) (356,458) ---------- ---------- ---------- Net increase (decrease) in net assets resulting from capital transactions.. 961,708 1,019,819 1,505,613 ---------- ---------- ---------- NET CHANGE IN NET ASSETS...................................................... 2,014,546 481,980 1,482,431 NET ASSETS--BEGINNING OF PERIOD............................................... 2,408,393 1,926,413 443,982 ---------- ---------- ---------- NET ASSETS--END OF PERIOD..................................................... $4,422,939 $2,408,393 $1,926,413 ========== ========== ==========
See Notes to Financial Statements. F-50
Alger Equity Growth MFS Investors Trust MFS Research Managers Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ (23,728) $ (13,698) $ (121) $ (7,711) $ (2,715) $ (1,179) $ (873) $ (2,427) $ (363) (63,998) (57,097) (175) 13,432 (71,866) (5,896) (4,462) (30,794) 1,304 1,339,908 (983,355) (5,126) 221,187 (78,498) 4,527 112,414 (58,814) (346) ---------- ----------- ------- ---------- --------- --------- -------- --------- --------- 1,252,182 (1,054,150) (5,422) 226,908 (153,079) (2,548) 107,079 (92,035) 595 ---------- ----------- ------- ---------- --------- --------- -------- --------- --------- 1,035,783 40,283 -- 701,861 657,381 122,835 278,607 256,687 72,571 -- -- -- (14,052) (4,428) (1,444) (4,854) (250) (3,984) 359 4,290,312 52,468 164,766 480,329 486,210 57,895 151,712 231,621 (337,622) (338,952) (1,809) (229,330) (608,417) (282,946) (84,526) (153,237) (149,340) ---------- ----------- ------- ---------- --------- --------- -------- --------- --------- 698,520 3,991,643 50,659 623,245 524,865 324,655 247,122 254,912 150,868 ---------- ----------- ------- ---------- --------- --------- -------- --------- --------- 1,950,702 2,937,493 45,237 850,153 371,786 322,107 354,201 162,877 151,463 2,982,730 45,237 -- 693,893 322,107 -- 314,340 151,463 -- ---------- ----------- ------- ---------- --------- --------- -------- --------- --------- $4,933,432 $ 2,982,730 $45,237 $1,544,046 $ 693,893 $ 322,107 $668,541 $ 314,340 $ 151,463 ========== =========== ======= ========== ========= ========= ======== ========= =========
F-51 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
State Street Research Bond Income Investment Division -------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 2,183,489 $ 4,278,595 $ 5,095,599 Net realized (losses) gains from security transactions..................... 880,712 (378,655) 400,025 Change in unrealized appreciation (depreciation) of investments............ 1,572,001 2,444,438 (137,736) ----------- ----------- ------------ Net increase (decrease) in net assets resulting from operations............ 4,636,202 6,344,378 5,357,888 ----------- ----------- ------------ From capital transactions: Net premiums............................................................... 16,159,717 18,007,464 14,237,318 Redemptions................................................................ (4,549,369) (3,078,401) (3,623,665) Net Investment Division transfers.......................................... (3,340,166) 1,121,089 3,289,281 Other net transfers........................................................ (9,344,726) (8,719,726) (15,760,945) ----------- ----------- ------------ Net increase (decrease) in net assets resulting from capital transactions.. (1,074,544) 7,330,426 (1,858,011) ----------- ----------- ------------ NET CHANGE IN NET ASSETS...................................................... 3,561,658 13,674,804 3,499,877 NET ASSETS--BEGINNING OF PERIOD............................................... 93,157,932 79,483,128 75,983,251 ----------- ----------- ------------ NET ASSETS--END OF PERIOD..................................................... $96,719,590 $93,157,932 $ 79,483,128 =========== =========== ============
See Notes to Financial Statements. F-52
Salomon Brothers FI Structured Equity Harris Oakmark Focused Value Strategic Bond Opportunities Investment Division Investment Division Investment Division - ------------------------------------- --------------------------------------- --------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Period For the Year For the Year For the Period Ended Ended Ended Ended Ended May 1, 2001 to Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ -------------- ------------ ------------ -------------- $ (808) $ 70 $ (69) $ (127,312) $ (63,671) $ (9,775) $ 33,102 $ 72,727 $ (894) 24,426 (9,596) (77) 31,214 (9,588) (43) 97,650 241 117 58,141 (4,285) (2,467) 5,537,632 (938,481) 279,801 233,146 62,351 4,621 -------- -------- ------- ----------- ----------- ---------- ---------- ---------- -------- 81,759 (13,811) (2,613) 5,441,534 (1,011,740) 269,983 363,898 135,319 3,844 -------- -------- ------- ----------- ----------- ---------- ---------- ---------- -------- 167,405 51,077 -- 8,198,287 6,333,512 999,657 1,996,763 890,271 97,914 (10,046) -- -- (450,269) (161,171) (7,188) (108,331) (17,732) (566) 229,644 41,277 28,886 3,144,705 5,880,885 3,223,723 1,486,748 1,049,918 396,753 (56,377) (10,863) (1,055) (3,347,152) (2,377,498) (271,630) (749,672) (348,947) (33,111) -------- -------- ------- ----------- ----------- ---------- ---------- ---------- -------- 330,626 81,491 27,831 7,545,571 9,675,728 3,944,562 2,625,508 1,573,510 460,990 -------- -------- ------- ----------- ----------- ---------- ---------- ---------- -------- 412,385 67,680 25,218 12,987,105 8,663,988 4,214,545 2,989,406 1,708,829 464,834 92,898 25,218 -- 12,878,533 4,214,545 -- 2,173,663 464,834 -- -------- -------- ------- ----------- ----------- ---------- ---------- ---------- -------- $505,283 $ 92,898 $25,218 $25,865,638 $12,878,533 $4,214,545 $5,163,069 $2,173,663 $464,834 ======== ======== ======= =========== =========== ========== ========== ========== ========
F-53 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Salomon Brothers U.S. Government Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 42,617 $ 71,569 $ (1,841) Net realized (losses) gains from security transactions..................... 48,098 10,225 5,065 Change in unrealized appreciation (depreciation) of investments............ (40,677) 83,661 (2,273) ----------- ---------- -------- Net increase (decrease) in net assets resulting from operations............ 50,038 165,455 951 ----------- ---------- -------- From capital transactions: Net premiums............................................................... 3,454,837 1,641,232 162,934 Redemptions................................................................ (137,457) (35,283) (10,909) Net Investment Division transfers.......................................... 916,767 2,382,469 755,686 Other net transfers........................................................ (1,344,693) (637,762) (59,363) ----------- ---------- -------- Net increase (decrease) in net assets resulting from capital transactions.. 2,889,454 3,350,656 848,348 ----------- ---------- -------- NET CHANGE IN NET ASSETS...................................................... 2,939,492 3,516,111 849,299 NET ASSETS--BEGINNING OF PERIOD............................................... 4,365,410 849,299 -- ----------- ---------- -------- NET ASSETS--END OF PERIOD..................................................... $ 7,304,902 $4,365,410 $849,299 =========== ========== ========
See Notes to Financial Statements. F-54
State Street Research Money Market FI Mid Cap Opportunities Janus Aspen Growth Investment Division Investment Division Investment Division - -------------------------------------- -------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Period For the Year For the Year For the Year Ended Ended Ended Ended May 1, 2002 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2003 2002 2001 - ------------ ------------ ------------ ------------ -------------- ------------ ------------ ------------ $ 47,144 $ 259,328 $ 918,529 $ 9,838 $ (333) $ (10,283) $ (9,370) $ 185,366 (1) (628,588) (499,341) 19,777 (1,950) (263,013) (179,152) (1,848,663) 1 611,711 796,577 191,546 3,758 1,041,007 (329,490) 498,521 - ----------- ------------ ----------- ---------- -------- ---------- ---------- ----------- 47,144 242,451 1,215,765 221,161 1,475 767,711 (518,012) (1,164,776) - ----------- ------------ ----------- ---------- -------- ---------- ---------- ----------- 4,560,820 25,769,284 17,936,134 324,317 49,033 839,829 913,602 779,753 (1,186,158) (4,958,930) (1,689,474) (43,946) (19) (88,894) (13,590) (2,741,484) (4,975,125) (33,048,287) (4,603,225) 537,734 149,230 (5,665) 34,319 254,486 (1,910,867) 10,079,748 (1,666,768) (95,364) (31,850) (176,510) (211,649) (189,372) - ----------- ------------ ----------- ---------- -------- ---------- ---------- ----------- (3,511,330) (2,158,185) 9,976,667 722,741 166,394 568,760 722,682 (1,896,617) - ----------- ------------ ----------- ---------- -------- ---------- ---------- ----------- (3,464,186) (1,915,734) 11,192,432 943,902 167,869 1,336,471 204,670 (3,061,393) 30,810,613 32,726,347 21,533,915 167,869 -- 2,163,422 1,958,752 5,020,145 - ----------- ------------ ----------- ---------- -------- ---------- ---------- ----------- $27,346,427 $ 30,810,613 $32,726,347 $1,111,771 $167,869 $3,499,893 $2,163,422 $ 1,958,752 =========== ============ =========== ========== ======== ========== ========== ===========
F-55 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Invesco VIF High Yield Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 43,235 $ 48,408 $ 29,172 Net realized (losses) gains from security transactions..................... (5,183) (31,480) (3,798) Change in unrealized appreciation (depreciation) of investments............ 90,384 (7,350) (33,395) -------- -------- -------- Net increase (decrease) in net assets resulting from operations............ 128,436 9,578 (8,021) -------- -------- -------- From capital transactions: Net premiums............................................................... 232,669 216,788 213,527 Redemptions................................................................ (6,154) -- -- Net Investment Division transfers.......................................... 11,139 2,473 71,476 Other net transfers........................................................ (37,616) (27,503) (13,506) -------- -------- -------- Net increase (decrease) in net assets resulting from capital transactions.. 200,038 191,758 271,497 -------- -------- -------- NET CHANGE IN NET ASSETS...................................................... 328,474 201,336 263,476 NET ASSETS--BEGINNING OF PERIOD............................................... 475,634 274,298 10,822 -------- -------- -------- NET ASSETS--END OF PERIOD..................................................... $804,108 $475,634 $274,298 ======== ======== ========
See Notes to Financial Statements. F-56
Invesco VIF Equity Income Invesco VIF Real Estate Opportunity Franklin Templeton International Stock Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 1,289 $ 1,519 $ 1,475 $ 1,726 $ (248) $ 652 $ 34,446 $ 31,411 $ 197,836 (4,599) (7,425) (1,414) 7,645 12,032 1,271 (71,786) (325,690) (18,952) 30,971 (21,641) (4,995) 41,591 3,016 (3,692) 947,139 (187,267) (287,060) -------- -------- -------- -------- -------- -------- ---------- ---------- ---------- 27,661 (27,547) (4,934) 50,962 14,800 (1,769) 909,799 (481,546) (108,176) -------- -------- -------- -------- -------- -------- ---------- ---------- ---------- 44,937 30,604 5,886 20,763 9,629 3,478 571,285 937,164 461,547 (13,395) -- (780) (74,780) -- -- (219,304) (90,063) (236,261) 6,492 7,548 112,018 8,373 64,182 (24,700) 342,850 643,475 589,847 (6,352) (8,020) (3,589) (5,943) 1,520 (2,641) (163,132) (163,651) (39,531) -------- -------- -------- -------- -------- -------- ---------- ---------- ---------- 31,682 30,132 113,535 (51,587) 75,331 (23,863) 531,699 1,326,925 775,602 -------- -------- -------- -------- -------- -------- ---------- ---------- ---------- 59,343 2,585 108,601 (625) 90,131 (25,632) 1,441,498 845,379 667,426 125,063 122,478 13,877 179,233 89,102 114,734 2,612,034 1,766,655 1,099,229 -------- -------- -------- -------- -------- -------- ---------- ---------- ---------- $184,406 $125,063 $122,478 $178,608 $179,233 $ 89,102 $4,053,532 $2,612,034 $1,766,655 ======== ======== ======== ======== ======== ======== ========== ========== ==========
F-57 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Franklin Templeton Valuemark Small Cap Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (6,613) $ (1,274) $ (121) Net realized (losses) gains from security transactions..................... (16,606) (49,638) (480) Change in unrealized appreciation (depreciation) of investments............ 366,174 (184,311) 4,364 ---------- --------- -------- Net increase (decrease) in net assets resulting from operations............ 342,955 (235,223) 3,763 ---------- --------- -------- From capital transactions: Net premiums............................................................... 258,012 40,174 32,699 Redemptions................................................................ -- -- -- Net Investment Division transfers.......................................... 30,689 995,374 69,587 Other net transfers........................................................ (86,982) (102,364) (3,042) ---------- --------- -------- Net increase (decrease) in net assets resulting from capital transactions.. 201,719 933,184 99,244 ---------- --------- -------- NET CHANGE IN NET ASSETS...................................................... 544,674 697,961 103,007 NET ASSETS--BEGINNING OF PERIOD............................................... 800,968 103,007 -- ---------- --------- -------- NET ASSETS--END OF PERIOD..................................................... $1,345,642 $ 800,968 $103,007 ========== ========= ========
See Notes to Financial Statements. F-58
Alliance Growth & Income Alliance Premier Growth Alliance Technology Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 4,389 $ 23,587 $ 2,195 $ (257) $ (274) $ (104) $ (181) $ (96) $ 661 (27,592) (18,278) (318) (661) (9,853) (138) (931) (519) (19,763) 441,306 (137,057) 24,267 11,616 (12,480) 1,299 13,613 (9,033) (2,681) ---------- ---------- -------- ------- -------- ------- ------- ------- -------- 418,103 (131,748) 26,144 10,698 (22,607) 1,057 12,501 (9,648) (21,783) ---------- ---------- -------- ------- -------- ------- ------- ------- -------- 581,532 560,351 422,139 29,785 29,958 -- 15,245 17,162 463 (87,076) (14,526) -- -- -- -- (316) -- -- 41,687 192,482 160,474 3,688 (60,622) 97,128 727 -- 36,082 (82,296) (71,035) (11,019) (2,341) (2,820) 133 (792) (1,833) (2,213) ---------- ---------- -------- ------- -------- ------- ------- ------- -------- 453,847 667,272 571,594 31,132 (33,484) 97,261 14,864 15,329 34,332 ---------- ---------- -------- ------- -------- ------- ------- ------- -------- 871,950 535,524 597,738 41,830 (56,091) 98,318 27,365 5,681 12,549 1,191,135 655,611 57,873 42,227 98,318 -- 18,230 12,549 -- ---------- ---------- -------- ------- -------- ------- ------- ------- -------- $2,063,085 $1,191,135 $655,611 $84,057 $ 42,227 $98,318 $45,595 $18,230 $ 12,549 ========== ========== ======== ======= ======== ======= ======= ======= ========
F-59 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Fidelity Contrafund Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (2,455) $ (926) $ (57) Net realized (losses) gains from security transactions..................... 6,303 (348) (27) Change in unrealized appreciation (depreciation) of investments............ 139,867 (29,437) (253) --------- -------- ------- Net increase (decrease) in net assets resulting from operations............ 143,715 (30,711) (337) --------- -------- ------- From capital transactions: Net premiums............................................................... 53,210 22,932 3,356 Redemptions................................................................ (213,750) -- -- Net Investment Division transfers.......................................... 657,697 237,002 21,462 Other net transfers........................................................ 3,584 (3,862) (621) --------- -------- ------- Net increase (decrease) in net assets resulting from capital transactions.. 500,741 256,072 24,197 --------- -------- ------- NET CHANGE IN NET ASSETS...................................................... 644,456 225,361 23,860 NET ASSETS--BEGINNING OF PERIOD............................................... 249,221 23,860 -- --------- -------- ------- NET ASSETS--END OF PERIOD..................................................... $ 893,677 $249,221 $23,860 ========= ======== =======
See Notes to Financial Statements. F-60
Fidelity Asset Manager Growth Fidelity Growth American Funds Growth Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- --------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Period Ended Ended Ended Ended Ended Ended Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------- $ 6,748 $ 3,017 $ (233) $ (831) $ (517) $ (243) $ (118,303) $ (56,543) $ 128,057 (4,335) (5,591) 113 (2,588) (8,400) (3,407) (100,817) (49,022) (95,342) 59,143 (19,964) (1,597) 63,146 (40,968) (3,078) 5,264,250 (1,636,890) (17,189) -------- -------- ------- -------- -------- ------- ----------- ----------- ---------- 61,556 (22,538) (1,717) 59,727 (49,885) (6,728) 5,045,130 (1,742,455) 15,526 -------- -------- ------- -------- -------- ------- ----------- ----------- ---------- 194,197 105,094 16,990 101,957 102,972 22,338 8,746,040 5,515,691 700,197 (1,698) (2,162) -- (738) -- -- (274,455) (51,220) (1,570) 74,992 (31,085) 84,590 6,224 (1,143) 74,755 5,353,241 5,147,713 2,173,706 (27,293) (12,942) (5,355) (4,423) (5,581) (3,117) (3,102,038) (2,053,980) 288,414 -------- -------- ------- -------- -------- ------- ----------- ----------- ---------- 240,198 58,905 96,225 103,020 96,248 93,976 10,722,788 8,558,204 3,160,747 -------- -------- ------- -------- -------- ------- ----------- ----------- ---------- 301,754 36,367 94,508 162,747 46,363 87,248 15,767,918 6,815,749 3,176,273 130,875 94,508 -- 133,611 87,248 -- 9,992,022 3,176,273 -- -------- -------- ------- -------- -------- ------- ----------- ----------- ---------- $432,629 $130,875 $94,508 $296,358 $133,611 $87,248 $25,759,940 $ 9,992,022 $3,176,273 ======== ======== ======= ======== ======== ======= =========== =========== ==========
F-61 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
American Funds Growth-Income Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 57,594 $ 35,068 $ 15,132 Net realized (losses) gains from security transactions..................... (26,406) (51,319) (13,398) Change in unrealized appreciation (depreciation) of investments............ 3,852,340 (1,122,854) 55,397 ----------- ----------- ---------- Net increase (decrease) in net assets resulting from operations............ 3,883,528 (1,139,105) 57,131 ----------- ----------- ---------- From capital transactions: Net premiums............................................................... 7,049,440 4,324,156 553,810 Redemptions................................................................ (184,181) (62,519) (6,270) Net investment division transfers.......................................... 3,708,586 4,404,613 1,876,550 Other net transfers........................................................ (2,495,963) (1,573,001) (27,864) ----------- ----------- ---------- Net increase (decrease) in net assets resulting from capital transactions.. 8,077,882 7,093,249 2,396,226 ----------- ----------- ---------- NET CHANGE IN NET ASSETS...................................................... 11,961,410 5,954,144 2,453,357 NET ASSETS--BEGINNING OF PERIOD............................................... 8,407,501 2,453,357 -- ----------- ----------- ---------- NET ASSETS--END OF PERIOD..................................................... $20,368,911 $ 8,407,501 $2,453,357 =========== =========== ==========
See Notes to Financial Statements. F-62
American Funds Global Small Cap JPM Enhanced Index T. Rowe Price Mid Cap Growth Investment Division Investment Division Investment Division - --------------------------------------- ------------------------------------- --------------------------------------- For the Year For the Year For the Period For the Year For the Year For the Year For the Year For the Year For the Period Ended Ended May 1, 2001 to Ended Ended Ended Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ -------------- ------------ ------------ ------------ ------------ ------------ -------------- $ (8,633) $ (1,451) $ 5,931 $ 147 $ 78 $ (13) $ (17,818) $ 962 $ (940) (33,362) 35,746 (18,714) (1,554) (1,186) (25) (46,026) (55,314) (1,372) 1,513,502 (396,292) 46,579 1,806 (1,483) (320) 776,010 (378,709) 11,239 ---------- ---------- -------- -------- ------- ------ ---------- ---------- -------- 1,471,507 (361,997) 33,796 399 (2,591) (358) 712,166 (433,061) 8,927 ---------- ---------- -------- -------- ------- ------ ---------- ---------- -------- 1,663,445 1,071,636 138,839 3,043 6,165 -- 1,283,521 820,210 82,192 (60,720) (8,869) -- -- -- -- (26,453) (1,344) (543) 1,303,948 1,067,611 476,691 (11,034) 1,869 5,908 481,182 375,032 264,649 (610,233) (354,525) (30,269) (173) (3,041) (187) (448,143) 47,743 209,192 ---------- ---------- -------- -------- ------- ------ ---------- ---------- -------- 2,296,440 1,775,853 585,261 (8,164) 4,993 5,721 1,290,107 1,241,641 555,490 ---------- ---------- -------- -------- ------- ------ ---------- ---------- -------- 3,767,947 1,413,856 619,057 (7,765) 2,402 5,363 2,002,273 808,580 564,417 2,032,913 619,057 -- 7,765 5,363 -- 1,372,997 564,417 -- ---------- ---------- -------- -------- ------- ------ ---------- ---------- -------- $5,800,860 $2,032,913 $619,057 $ -- $ 7,765 $5,363 $3,375,270 $1,372,997 $564,417 ========== ========== ======== ======== ======= ====== ========== ========== ========
F-63 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
MFS Research International Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 2,786 $ (2,121) $ (351) Net realized (losses) gains from security transactions..................... 148,987 (66,559) (4,107) Change in unrealized appreciation (depreciation) of investments............ 191,049 (2,664) 1,444 ---------- -------- -------- Net increase (decrease) in net assets resulting from operations............ 342,822 (71,344) (3,014) ---------- -------- -------- From capital transactions: Net premiums............................................................... 514,658 323,700 38,580 Redemptions................................................................ (15,626) (1,956) -- Net investment division transfers.......................................... 140,125 254,704 77,076 Other net transfers........................................................ (198,441) (28,935) 124,871 ---------- -------- -------- Net increase (decrease) in net assets resulting from capital transactions.. 440,716 547,513 240,527 ---------- -------- -------- NET CHANGE IN NET ASSETS...................................................... 783,538 476,169 237,513 NET ASSETS--BEGINNING OF PERIOD............................................... 713,682 237,513 -- ---------- -------- -------- NET ASSETS--END OF PERIOD..................................................... $1,497,220 $713,682 $237,513 ========== ======== ========
See Notes to Financial Statements. F-64
PIMCO Total Return PIMCO Innovation Lord Abbett Bond Debenture Investment Division Investment Division Investment Division - --------------------------------------- --------------------------------------- -------------------------------------- For the Year For the Year For the Period For the Year For the Year For the Period For the Year For the Year For the Year Ended Ended May 1, 2001 to Ended Ended May 1, 2001 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ -------------- ------------ ------------ -------------- ------------ ------------ ------------ $ 175,706 $ (28,120) $ 23,842 $ (21,608) $ (9,521) $ (1,528) $ 109,583 $ 924,873 $ 859,088 175,963 60,373 1,564 (195,867) (111,879) (9,873) 198,834 (1,886,218) (134,223) (25,434) 270,736 (14,155) 1,260,206 (652,366) 4,179 1,391,673 949,375 (902,997) - ----------- ---------- ---------- ---------- ---------- -------- ----------- ------------ ---------- 326,235 302,989 11,251 1,042,731 (773,766) (7,222) 1,700,090 (11,970) (178,132) - ----------- ---------- ---------- ---------- ---------- -------- ----------- ------------ ---------- 5,176,301 1,998,260 266,987 1,268,741 931,879 138,136 2,358,538 2,500,797 2,653,126 (300,049) (31,798) (9,397) (47,295) (7,020) -- (558,076) (441,582) (478,731) 3,254,351 3,693,012 902,199 1,385,317 627,449 661,537 1,087,733 11,019,013 807,014 (1,973,454) (851,347) (68,474) (437,762) (258,151) (43,761) (1,142,589) (13,314,199) (872,472) - ----------- ---------- ---------- ---------- ---------- -------- ----------- ------------ ---------- 6,157,149 4,808,127 1,091,315 2,169,001 1,294,157 755,912 1,745,606 (235,971) 2,108,937 - ----------- ---------- ---------- ---------- ---------- -------- ----------- ------------ ---------- 6,483,384 5,111,116 1,102,566 3,211,732 520,391 748,690 3,445,696 (247,941) 1,930,805 6,213,682 1,102,566 -- 1,269,081 748,690 -- 8,596,606 8,844,547 6,913,742 - ----------- ---------- ---------- ---------- ---------- -------- ----------- ------------ ---------- $12,697,066 $6,213,682 $1,102,566 $4,480,813 $1,269,081 $748,690 $12,042,302 $ 8,596,606 $8,844,547 =========== ========== ========== ========== ========== ======== =========== ============ ==========
F-65 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Met/AIM Met/AIM Mid Cap Core Equity Small Cap Growth Investment Division Investment Division -------------------------- -------------------------- For the Year For the Period For the Year For the Period Ended May 1, 2002 to Ended May 1, 2002 to December 31, December 31, December 31, December 31, 2003 2002 2003 2002 ------------ -------------- ------------ -------------- (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income..................................... $ 3,638 $ (347) $ (2,947) $ (281) Net realized (losses) gains from security transactions........... 6,414 (1,242) 66,977 (593) Change in unrealized appreciation (depreciation) of investments.. 140,733 (6,351) 51,242 (4,322) --------- -------- -------- -------- Net increase (decrease) in net assets resulting from operations.. 150,785 (7,940) 115,272 (5,196) --------- -------- -------- -------- From capital transactions: Net premiums..................................................... 376,221 70,763 201,753 30,362 Redemptions...................................................... (9,516) (929) (5,605) (129) Net investment division transfers................................ 345,361 212,616 286,464 84,320 Other net transfers.............................................. (126,899) (21,530) (70,229) 6,439 --------- -------- -------- -------- Net increase (decrease) in net assets resulting from capital transactions............................................ 585,167 260,920 412,383 120,992 --------- -------- -------- -------- NET CHANGE IN NET ASSETS............................................ 735,952 252,980 527,655 115,796 NET ASSETS--BEGINNING OF PERIOD..................................... 252,980 -- 115,796 -- --------- -------- -------- -------- NET ASSETS--END OF PERIOD........................................... $ 988,932 $252,980 $643,451 $115,796 ========= ======== ======== ========
See Notes to Financial Statements. F-66
Harris Oakmark International Janus Aggressive Growth Lord Abbett Growth & Income Investment Division Investment Division Investment Division - -------------------------- --------------------------------------- -------------------------------- For the Year For the Period For the Year For the Year For the Period For the Year For the Period Ended May 1, 2002 to Ended Ended May 1, 2001 to Ended October 31, 2002 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2003 2002 2001 2003 2002 - ------------ -------------- ------------ ------------ -------------- ------------ ------------------- $ 6,375 $ (88) $ (25,657) $ (13,374) $ (2,780) $ (47) $-- 72,432 (843) (313,967) (78,401) (43,356) 20 -- 49,401 (2,920) 1,123,504 (426,893) (11,854) 3,750 -- -------- -------- ---------- ---------- ---------- ------- --- 128,208 (3,851) 783,880 (518,668) (57,990) 3,723 -- -------- -------- ---------- ---------- ---------- ------- --- 111,653 59,332 1,705,553 1,567,918 311,526 4,885 -- (357) (178) (28,560) (23,600) -- -- -- 446,278 122,434 109,161 607,036 817,361 12,124 -- (22,736) (27,767) (612,599) (540,084) (118,215) (203) -- -------- -------- ---------- ---------- ---------- ------- --- 534,838 153,821 1,173,555 1,611,270 1,010,672 16,806 -- -------- -------- ---------- ---------- ---------- ------- --- 663,046 149,970 1,957,435 1,092,602 952,682 20,529 -- 149,970 -- 2,045,284 952,682 -- -- -- -------- -------- ---------- ---------- ---------- ------- --- $813,016 $149,970 $4,002,719 $2,045,284 $ 952,682 $20,529 $-- ======== ======== ========== ========== ========== ======= ===
F-67 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company NOTES TO FINANCIAL STATEMENTS December 31, 2003 1. BUSINESS Metropolitan Life Separate Account UL (the "Separate Account"), a separate account of Metropolitan Life Insurance Company ("Metropolitan Life"), was established on December 13, 1988 to support Metropolitan Life's operations with respect to certain variable universal life policies ("Policies"). Metropolitan Life is a wholly owned subsidiary of MetLife Inc. ("MetLife"). The Separate Account was registered as a unit investment trust on January 5, 1990 under the Investment Company Act of 1940, as amended, and exists in accordance with the regulations of the New York Insurance Department. The Separate Account presently consists of fifty-seven investment divisions that support six variable universal life insurance policies: Flexible Premium Multifunded Life ("UL II"), MetLife Flexible Premium Variable Life ("MetFlex"), Group Variable Universal Life ("GVUL"), Flexible Premium Multifunded Life ("UL 2001"), Variable Additional Insurance ("VAI") and Variable Additional Benefits Rider ("VABR"). The Separate Account is divided into investment divisions. Each investment division invests its assets exclusively in shares of corresponding portfolios, series or funds (with the same name) within the Metropolitan Fund, Janus Fund, Invesco Funds, Franklin Fund, Alliance Fund, Fidelity Funds, American Fund or Met Investors Fund, collectively, (the "Funds"). For convenience, the portfolios, series, and funds are referred to as "portfolios." The assets of the Separate Account are registered in the name of Metropolitan Life. Under applicable insurance law, the assets and liabilities of the Separate Account are clearly identified and distinguished from Metropolitan Life's other assets and liabilities. The portion of the Separate Account's assets applicable to the variable life policies is not chargeable with liabilities arising out of any other business Metropolitan Life may conduct. The table below represents the investment divisions within the Separate Account: State Street Research Investment Trust Investment Division State Street Research Diversified Investment Division State Street Research Aggressive Growth Investment Division MetLife Stock Index Investment Division FI International Stock Investment Division Janus Mid Cap Investment Division T. Rowe Price Small Cap Growth Investment Division Scudder Global Equity Investment Division Harris Oakmark Large Cap Value Investment Division Neuberger Berman Partners Mid Cap Value Investment Division T. Rowe Price Large Cap Growth Investment Division Lehman Brothers Aggregate Bond Index Investment Division Morgan Stanley EAFE Index Investment Division Russell 2000 Index Investment Division Met/Putnam Voyager Investment Division State Street Research Aurora Investment Division MetLife Mid Cap Stock Index Investment Division Franklin Templeton Small Cap Growth Investment Division (b) State Street Research Large Cap Value Investment Division (c) Davis Venture Value Investment Division Loomis Sayles Small Cap Investment Division Alger Equity Growth Investment Division (a) MFS Investors Trust Investment Division (a) MFS Research Managers Investment Division (a) State Street Research Bond Income Investment Division (a) FI Structured Equity Investment Division (a) Harris Oakmark Focused Value Investment Division (b) Salomon Brothers Stategic Bond Opportunities Investment Division (b) Salomon Brothers U.S. Government Investment Division (b) State Street Research Money Market Investment Division FI Mid Cap Opportunities Investment Division (c) Janus Aspen Growth Investment Division Invesco VIF High Yield Investment Division Invesco VIF Equity Income Investment Division Invesco VIF Real Estate Opportunity Investment Division Franklin Templeton International Stock Investment Division Franklin Templeton Valuemark Small Cap Investment Division (a) Alliance Growth & Income Investment Division Alliance Premier Growth Investment Division (a) Alliance Technology Investment Division (a) Fidelity Contrafund Investment Division (a) Fidelity Asset Manager Growth Investment Division (a) Fidelity Growth Investment Division (a) American Funds Growth Investment Division (b) American Funds Growth-Income Investment Division (b) American Funds Global Small Cap Investment Division (b) JPM Enhanced Index Investment Division (a) T. Rowe Price Mid Cap Growth Investment Division (b) MFS Research International Investment Division (b) PIMCO Total Return Investment Division (b) PIMCO Innovation Investment Division (b) Lord Abbett Bond Debenture Investment Division Met/AIM Mid Cap Core Equity Investment Division (c) Met/AIM Small Cap Growth Investment Division (c) Harris Oakmark International Investment Division (c) Janus Aggressive Growth Investment Division Lord Abbett Growth & Income Investment Division (d) F-68 NOTES TO FINANCIAL STATEMENTS -- (Continued) 1. BUSINESS -- (Continued) (a) On January 1, 2001, operations commenced for eleven new investment divisions added to the Separate Account on that date: Franklin Templeton Valuemark Small Cap Investment Division, Alger Equity Growth Investment Division, MFS Investors Trust Investment Division, MFS Research Managers Investment Division, FI Structured Equity Investment Division, Alliance Premier Growth Investment Division, Alliance Technology Investment Division, Fidelity Contrafund Investment Division, Fidelity Asset Manager Growth Investment Division, Fidelity Growth Investment Division, and JPM Enhanced Index Investment Division. (b) On May 1, 2001, operations commenced for twelve new investment divisions added to the Separate Account on that date: Janus Aggressive Growth Investment Division, Franklin Templeton Small Cap Growth Investment Division, Harris Oakmark Focused Value Investment Division, Salomon Brothers Strategic Bond Opportunities Investment Division, Salomon Brothers U.S. Government Investment Division, American Funds Growth Investment Division, American Funds Growth-Income Investment Division, American Funds Global Small Cap Investment Division, T. Rowe Price Mid Cap Growth Investment Division, MFS Research International Investment Division, PIMCO Total Return Investment Division, and PIMCO Innovation Investment Division. (c) On May 1, 2002, operations commenced for five new investment divisions added to the Separate Account on that date: State Street Research Large Cap Value Investment Division, FI Mid Cap Opportunities Investment Division, Met/AIM Mid Cap Core Equity Investment Division, Met/AIM Small Cap Growth Investment Division, and Harris Oakmark International Investment Division. (d) On October 31, 2002 operations commenced for one new investment division added to the Separate Account on that date: Lord Abbett Growth & Income Investment Division. 2. SIGNIFICANT ACCOUNTING POLICIES The financial statements included herein have been provided in accordance with accounting principles generally accepted in the United States of America for variable universal life separate accounts registered as unit investment trusts. A. Valuation of Investments Investments are made in the portfolios of the Funds and are valued at the reported net asset values of these portfolios. The investments of the Funds are valued at fair value. Money market fund investments are valued utilizing the amortized cost method of valuation. B. Security Transactions Purchases and sales are recorded on the trade date basis. Realized gains and losses on the sales of investments are computed on the basis of the identified cost of the investment sold. Income from dividends, and gains from realized gain distributions, are recorded on the ex-distribution date. C. Federal Income Taxes The operations of the Separate Account are included in the Federal income tax return of Metropolitan Life, which is taxed as a life insurance company under the provisions of the Internal Revenue Code ("IRC"). Under the current provisions of the IRC, Metropolitan Life does not expect to incur Federal income taxes on the earnings of the Separate Account to the extent the earnings are credited under the policies. Accordingly, no charge is being made currently to the Separate Account for Federal income taxes. Metropolitan Life will review periodically the status of this policy in the event of changes in the tax law. A charge may be made in future years for any Federal income taxes that would be attributed to the policies. D. Net Premiums Metropolitan Life deducts a sales load and a state premium tax charge from premiums before amounts are allocated to the Separate Account. In the case of certain policies, Metropolitan Life also deducts a Federal income tax charge before amounts are allocated to the Separate Account. The Federal income tax charge is imposed in connection with certain policies to recover a portion of the Federal income tax adjustment attributable to policy acquisition expenses. F-69 NOTES TO FINANCIAL STATEMENTS -- (Continued) 2. SIGNIFICANT ACCOUNTING POLICIES -- (Continued) E. Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported herein. Actual results could differ from these estimates. F. Purchase Payments Purchase payments received by Metropolitan Life are credited as Accumulation Units as of the end of the valuation period in which received, as provided in the prospectus. 3. EXPENSES With respect to assets in the Separate Account that support certain policies, Metropolitan Life deducts a charge from the assets of the Separate Account for the assumption of general administrative expenses and mortality and expense risks. This charge is equivalent to an effective annual rate of 0.45% of the average daily values of the assets in the Separate Account for GVUL policies, 0.90% for UL II & UL 2001 policies, 0.75% for VAI and VABR policies less than $250,000, and 0.50% for VAI and VABR policies $250,000 and greater. For Met Flex policies, a charge of 0.48% is assessed against the cash value of the assets in the separate account. F-70 NOTES TO FINANCIAL STATEMENTS -- (Continued) 4. PURCHASES AND SALES OF INVESTMENTS The cost of purchases and proceeds from sales of investments for the year ended December 31, 2003 were as follows:
Purchases Sales --------- -------- (In Thousands) State Street Research Investment Trust Investment Division....... $ 23,613 $ 15,572 State Street Research Diversified Investment Division............ 25,688 14,354 State Street Research Aggressive Growth Investment Division...... 11,163 8,764 MetLife Stock Index Investment Division.......................... 63,324 24,023 FI International Stock Investment Division....................... 5,514 3,811 Janus Mid Cap Investment Division................................ 22,923 3,117 T. Rowe Price Small Cap Growth Investment Division............... 6,430 1,862 Scudder Global Equity Investment Division........................ 4,833 2,872 Harris Oakmark Large Cap Value Investment Division............... 9,213 1,835 Neuberger Berman Partners Mid Cap Value Investment Division...... 5,510 557 T. Rowe Price Large Cap Growth Investment Division............... 6,544 2,531 Lehman Brothers Aggregate Bond Index Investment Division......... 20,915 19,015 Morgan Stanley EAFE Index Investment Division.................... 9,570 4,867 Russell 2000 Index Investment Division........................... 6,960 1,888 Met/Putnam Voyager Investment Division........................... 2,701 964 State Street Research Aurora Investment Division................. 11,291 1,416 MetLife Mid Cap Stock Index Investment Division.................. 7,181 1,384 Franklin Templeton Small Cap Growth Investment Division.......... 1,497 116 State Street Research Large Cap Value Investment Division........ 1,062 338 Davis Venture Value Investment Division.......................... 6,627 1,045 Loomis Sayles Small Cap Investment Division...................... 1,611 682 Alger Equity Growth Investment Division.......................... 1,071 396 MFS Investors Trust Investment Division.......................... 1,675 1,062 MFS Research Managers Investment Division........................ 279 34 State Street Research Bond Income Investment Division............ 13,891 12,765 FI Structured Equity Investment Division......................... 587 257 Harris Oakmark Focused Value Investment Division................. 7,908 488 Salomon Brothers Stategic Bond Opportunities Investment Division. 4,033 1,375 Salomon Brothers U.S. Government Investment Division............. 5,404 2,472 State Street Research Money Market Investment Division........... 6,223 9,648 FI Mid Cap Opportunities Investment Division..................... 823 90 Janus Aspen Growth Investment Division........................... 833 274 Invesco VIF High Yield Investment Division....................... 298 55 Invesco VIF Equity Income Investment Division.................... 57 24 Invesco VIF Real Estate Opportunity Investment Division.......... 32 82 Franklin Templeton International Stock Investment Division....... 1,048 482 Franklin Templeton Valuemark Small Cap Investment Division....... 311 502 Alliance Growth & Income Investment Division..................... 635 176 Alliance Premier Growth Investment Division...................... 33 3 Alliance Technology Investment Division.......................... 16 1 Fidelity Contrafund Investment Division.......................... 728 230 Fidelity Asset Manager Growth Investment Division................ 279 32 Fidelity Growth Investment Division.............................. 109 6 American Funds Growth Investment Division........................ 10,843 369 American Funds Growth-Income Investment Division................. 8,552 463 American Funds Global Small Cap Investment Division.............. 3,456 1,175 JPM Enhanced Index Investment Division........................... 3 11 T. Rowe Price Mid Cap Growth Investment Division................. 1,455 183 MFS Research International Investment Division................... 2,812 2,368 PIMCO Total Return Investment Division........................... 8,452 2,120 PIMCO Innovation Investment Division............................. 2,694 553 Lord Abbett Bond Debenture Investment Division................... 4,152 2,314 Met/AIM Mid Cap Core Equity Investment Division.................. 704 115 Met/AIM Small Cap Growth Investment Division..................... 786 377 Harris Oakmark International Investment Division................. 1,577 1,035 Janus Aggressive Growth Investment Division...................... 4,304 3,158 Lord Abbett Growth & Income Investment Division.................. 17 0 -------- -------- Total............................................................ $350,250 $155,708 ======== ========
F-71 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. CHANGES IN OUTSTANDING UNITS The changes in units outstanding for the years ended December 31, 2003, 2002 and 2001 were as follows:
State Street State Street State Street Research MetLife Research Research Aggressive Stock Investment Trust Diversified Growth Index Investment Investment Investment Investment Division Division Division Division ---------------- ------------ ------------ ---------- (In Thousands) Outstanding at December 31, 2002 15,060 12,268 11,447 22,140 Activity during 2003: Issued........................ 5,136 3,873 3,343 10,343 Redeemed...................... (4,045) (3,260) (2,957) (6,736) ------ ------ ------ ------ Outstanding at December 31, 2003 16,151 12,881 11,833 25,747 ====== ====== ====== ====== Outstanding at December 31, 2001 13,264 11,138 10,503 17,015 Activity during 2002: Issued........................ 5,072 3,678 3,343 9,909 Redeemed...................... (3,276) (2,548) (2,399) (4,784) ------ ------ ------ ------ Outstanding at December 31, 2002 15,060 12,268 11,447 22,140 ====== ====== ====== ====== Outstanding at December 31, 2000 11,054 9,234 9,254 11,689 Activity during 2001: Issued........................ 2,828 2,200 1,392 6,525 Redeemed...................... (618) (296) (143) (1,199) ------ ------ ------ ------ Outstanding at December 31, 2001 13,264 11,138 10,503 17,015 ====== ====== ====== ======
F-72 NOTES TO FINANCIAL STATEMENTS -- (Continued)
FI T. Rowe Price Harris Neuberger T. Rowe Price Lehman Brothers International Janus Small Cap Scudder Oakmark Berman Partners Large Cap Aggregate Stock Mid Cap Growth Global Equity Large Cap Value Mid Cap Value Growth Bond Index Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ------------- ---------- ------------- ------------- --------------- --------------- ------------- --------------- 3,296 11,521 4,261 1,978 2,346 1,567 2,853 4,147 1,224 5,469 1,463 768 1,639 892 1,408 2,097 (1,036) (3,642) (1,021) (606) (925) (513) (971) (2,180) ------ ------ ------ ----- ----- ----- ----- ------ 3,484 13,348 4,703 2,140 3,060 1,946 3,290 4,064 ====== ====== ====== ===== ===== ===== ===== ====== 3,106 8,481 3,509 2,000 1,242 1,076 2,124 3,153 1,176 5,867 1,561 687 1,697 906 1,289 1,774 (986) (2,827) (809) (709) (593) (415) (560) (780) ------ ------ ------ ----- ----- ----- ----- ------ 3,296 11,521 4,261 1,978 2,346 1,567 2,853 4,147 ====== ====== ====== ===== ===== ===== ===== ====== 2,709 5,367 2,995 1,848 220 456 632 1,730 1,578 3,701 864 209 1,076 790 2,004 2,267 (1,181) (587) (350) (57) (54) (170) (512) (844) ------ ------ ------ ----- ----- ----- ----- ------ 3,106 8,481 3,509 2,000 1,242 1,076 2,124 3,153 ====== ====== ====== ===== ===== ===== ===== ======
F-73 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. CHANGES IN OUTSTANDING UNITS -- (Continued)
Morgan Stanley State Street EAFE Russell Met/Putnam Research Index 2000 Index Voyager Aurora Investment Investment Investment Investment Division Division Division Division -------------- ---------- ---------- ------------ (In Thousands) Outstanding at December 31, 2002 2,044 1,614 1,463 2,599 Activity during 2003: Issued........................ 2,174 1,138 1,235 1,832 Redeemed...................... (1,542) (667) (785) (1,059) ------ ----- ----- ------ Outstanding at December 31, 2003 2,676 2,085 1,913 3,372 ====== ===== ===== ====== Outstanding at December 31, 2001 1,352 920 792 1,317 Activity during 2002: Issued........................ 1,485 1,015 1,075 1,944 Redeemed...................... (793) (321) (404) (662) ------ ----- ----- ------ Outstanding at December 31, 2002 2,044 1,614 1,463 2,599 ====== ===== ===== ====== Outstanding at December 31, 2000 544 512 131 164 Activity during 2001: Issued........................ 1,865 1,181 704 1,201 Redeemed...................... (1,057) (773) (43) (48) ------ ----- ----- ------ Outstanding at December 31, 2001 1,352 920 792 1,317 ====== ===== ===== ======
F-74 NOTES TO FINANCIAL STATEMENTS -- (Continued)
MetLife Mid Franklin State Street MFS Cap Stock Templeton Research Davis Loomis Sayles Alger MFS Research Index Small Cap Growth Large Cap Value Venture Value Small Cap Equity Growth Investors Trust Managers Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ----------- ---------------- --------------- ------------- ------------- ------------- --------------- ---------- 1,762 198 23 901 18 589 104 47 1,301 266 147 650 21 200 272 54 (725) (135) (67) (229) (9) (68) (190) (20) ----- ---- --- ----- -- --- ---- --- 2,338 329 103 1,322 30 721 186 81 ===== ==== === ===== == === ==== === 867 52 -- 297 11 6 43 13 1,231 215 27 754 12 624 110 73 (336) (69) (4) (150) (5) (41) (49) (39) ----- ---- --- ----- -- --- ---- --- 1,762 198 23 901 18 589 104 47 ===== ==== === ===== == === ==== === 210 -- -- 39 2 -- -- -- 693 54 -- 267 10 6 47 83 (36) (2) -- (9) (1) -- (4) (70) ----- ---- --- ----- -- --- ---- --- 867 52 -- 297 11 6 43 13 ===== ==== === ===== == === ==== ===
F-75 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. CHANGES IN OUTSTANDING UNITS -- (Continued)
State Street Saloman Brothers Research FI Harris Oakmark Strategic Bond Bond Income Structured Equity Focused Value Opportunities Investment Investment Investment Investment Division Division Division Division ------------ ----------------- -------------- ---------------- (In Thousands) Outstanding at December 31, 2002 5,564 12 76 177 Activity during 2003: Issued........................ 1,494 75 72 430 Redeemed...................... (1,541) (38) (33) (232) ------ --- --- ---- Outstanding at December 31, 2003 5,517 49 115 375 ====== === === ==== Outstanding at December 31, 2001 4,202 3 23 41 Activity during 2002: Issued........................ 2,094 15 72 195 Redeemed...................... (732) (6) (19) (59) ------ --- --- ---- Outstanding at December 31, 2002 5,564 12 76 177 ====== === === ==== Outstanding at December 31, 2000 3,980 -- -- -- Activity during 2001: Issued........................ 1,197 3 24 42 Redeemed...................... (975) -- (1) (1) ------ --- --- ---- Outstanding at December 31, 2001 4,202 3 23 41 ====== === === ====
F-76 NOTES TO FINANCIAL STATEMENTS -- (Continued)
State Street FI Janus Invesco VIF Invesco Franklin Templeton Saloman Brothers Research Mid Cap Aspen Invesco VIF Equity VIF Real Estate International U.S. Government Money Market Opportunities Growth High Yield Income Opportunity Stock Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ---------------- ------------ ------------- ---------- ----------- ----------- --------------- ------------------ 340 1,981 21 354 65 15 14 344 626 526 107 123 29 6 2 118 (407) (747) (32) (42) (7) (2) (6) (59) ---- ------ --- ---- --- -- --- --- 559 1,760 96 435 87 19 10 403 ==== ====== === ==== === == === === 71 2,156 -- 236 37 12 7 189 393 1,770 22 149 38 5 61 183 (124) (1,945) (1) (31) (10) (2) (54) (28) ---- ------ --- ---- --- -- --- --- 340 1,981 21 354 65 15 14 344 ==== ====== === ==== === == === === -- 1,479 -- 473 1 2 10 99 99 2,983 -- 84 45 12 1 118 (28) (2,306) -- (321) (9) (2) (4) (28) ---- ------ --- ---- --- -- --- --- 71 2,156 -- 236 37 12 7 189 ==== ====== === ==== === == === ===
F-77 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. CHANGES IN OUTSTANDING UNITS -- (Continued)
Franklin Templeton Alliance Valuemark Growth & Alliance Alliance Small Cap Income Premier Growth Technology Investment Investment Investment Investment Division Division Division Division ------------------ ---------- -------------- ---------- (In Thousands) Outstanding at December 31, 2002 163 150 9 6 Activity during 2003: Issued........................ 57 67 6 5 Redeemed...................... (21) (20) (1) (1) --- --- --- --- Outstanding at December 31, 2003 199 197 14 10 === === === === Outstanding at December 31, 2001 16 65 14 2 Activity during 2002: Issued........................ 183 95 5 4 Redeemed...................... (36) (10) (10) -- --- --- --- --- Outstanding at December 31, 2002 163 150 9 6 === === === === Outstanding at December 31, 2000 -- 6 -- -- Activity during 2001: Issued........................ 17 60 14 26 Redeemed...................... (1) (1) -- (24) --- --- --- --- Outstanding at December 31, 2001 16 65 14 2 === === === ===
F-78 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Fidelity American JPM T. Rowe Price Fidelity Asset Manager Fidelity American American Funds Funds Global Enhanced Mid Cap Contrafund Growth Growth Funds Growth Growth-Income Small Cap Index Growth Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ---------- ------------- ---------- ------------ -------------- ------------ ---------- ------------- 35 20 28 221 287 203 1 294 90 39 20 313 387 375 1 387 (28) (5) (1) (117) (149) (200) (2) (154) --- -- -- ---- ---- ---- -- ---- 97 54 47 417 525 378 -- 527 === == == ==== ==== ==== == ==== 3 13 13 53 68 49 1 68 33 15 18 217 287 226 1 328 (1) (8) (3) (49) (68) (72) (1) (102) --- -- -- ---- ---- ---- -- ---- 35 20 28 221 287 203 1 294 === == == ==== ==== ==== == ==== -- -- -- -- -- -- -- -- 3 14 17 67 76 55 1 71 -- (1) (4) (14) (8) (6) -- (3) --- -- -- ---- ---- ---- -- ---- 3 13 13 53 68 49 1 68 === == == ==== ==== ==== == ====
F-79 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. CHANGES IN OUTSTANDING UNITS -- (Continued)
MFS Lord Abbett Research PIMCO PIMCO Bond International Total Return Innovation Debenture Investment Investment Investment Investment Division Division Division Division ------------- ------------ ---------- ----------- (In Thousands) Outstanding at December 31, 2002 95 534 416 748 Activity during 2003: Issued........................ 397 1,055 896 449 Redeemed...................... (341) (547) (380) (321) ---- ----- ---- ---- Outstanding at December 31, 2003 151 1,042 932 876 ==== ===== ==== ==== Outstanding at December 31, 2001 28 103 121 774 Activity during 2002: Issued........................ 239 623 437 178 Redeemed...................... (172) (192) (142) (204) ---- ----- ---- ---- Outstanding at December 31, 2002 95 534 416 748 ==== ===== ==== ==== Outstanding at December 31, 2000 -- -- -- 601 Activity during 2001: Issued........................ 113 123 128 246 Redeemed...................... (85) (20) (7) (73) ---- ----- ---- ---- Outstanding at December 31, 2001 28 103 121 774 ==== ===== ==== ====
F-80 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Met/Aim Met/Aim Harris Janus Lord Abbett Mid Cap Small Cap Oakmark Aggressive Growth & Core Equity Growth International Growth Income Investment Investment Investment Investment Investment Division Division Division Division Division ----------- ---------- ------------- ---------- ----------- 30 15 18 381 -- 96 99 180 1,088 3 (34) (54) (126) (900) -- --- --- ---- ----- -- 92 60 72 569 3 === === ==== ===== == -- -- -- 122 -- 33 17 22 409 -- (3) (2) (4) (150) -- --- --- ---- ----- -- 30 15 18 381 -- === === ==== ===== == -- -- -- -- -- -- -- -- 148 -- -- -- -- (26) -- --- --- ---- ----- -- -- -- -- 122 -- === === ==== ===== ==
F-81 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. UNIT VALUES A summary of unit values and units outstanding for the Contracts and the expense as a percentage of average net assets, excluding expenses for the underlying funds, for each of the periods ended December 31, 2003, 2002 and 2001, respectively, or lesser time period if applicable.
State Street State Street State Street Research Research Research Aggressive MetLife Investment Trust Diversified Growth Stock Index Investment Investment Investment Investment Division Division Division Division ---------------- ---------------- ---------------- ---------------- 2003 Units (In Thousands).................................. 16,151 12,881 11,833 25,747 Unit Fair Value, Lowest to Highest (1)................ $10.57 to $33.12 $11.79 to $30.64 $11.71 to $16.87 $9.58 to $29.26 Net Assets (In Thousands)............................. $367,087 $289,033 $187,268 $457,114 Investment Income Ratio to Net Assets (2)............. 0.83% 3.73% 0.00% 1.65% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% Total Return, Lowest to Highest (1)(4)................ 29.08% to 30.24% 19.48% to 20.56% 39.53% to 40.79% 27.06% to 28.20% 2002 Units (In Thousands).................................. 15,060 12,268 11,447 22,140 Unit Fair Value, Lowest to Highest (1)................ $8.11 to $25.66 $9.78 to $25.64 $8.32 to $12.09 $7.48 to $23.03 Net Assets (In Thousands)............................. $276,980 $238,020 $130,816 $326,228 Investment Income Ratio to Net Assets (2)............. 0.54% 2.27% 0.00% 1.61% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% Total Return, Lowest to Highest (1)(4)................ -27% to -26% -15% to -14% -29% -23% to -22% 2001 Units (In Thousands).................................. 13,264 11,138 10,503 17,015 Unit Fair Value, Lowest to Highest (1)................ $10.98 to $35.04 $11.35 to $30.04 $11.67 to $17.12 $9.62 to $29.91 Net Assets (In Thousands)............................. $356,701 $265,724 $171,692 $346,931 Investment Income Ratio to Net Assets (2)............. 13.53% 9.67% 24.84% 1.17% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% Total Return, Lowest to Highest (1)(4)................ -18% to -17% -7% to -6% -24% -13% to -12%
- -------- (1) Metropolitan Life sells a number of variable life products which have unique combinations of features and fees that are charged against the contract owners' account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. (2) These amounts represent the dividends, excluding distributions of capital gains, received by the investment division from the underlying portfolio, net of management fees assessed by the fund manager, divided by the average net assets. These ratios excluded those expenses, such as mortality and expense charges, that are assessed against contract owners' accounts either through reductions in unit values or the redemption of units. The recognition of investment income by the investment division is affected by the timing of the declaration of dividends by the underlying portfolio in which the investment divisions invest. (3) These amounts represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense risk charges for each period indicated. The ratios include only those expenses that result in a direct reduction to unit value. Charges made directly to contract owner accounts through the redemption of units, and expenses of the underlying portfolio, are excluded. (4) These amounts represent the total return for the period indicated including changes in the value of the underlying portfolio, and expenses assessed through the reduction of units values. The total return does not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the Separate Account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. F-82 NOTES TO FINANCIAL STATEMENTS -- (Continued)
FI T. Rowe Price Harris Neuberger T. Rowe Price International Janus Small Cap Scudder Oakmark Large Berman Partners Large Cap Stock Mid Cap Growth Global Equity Cap Value Mid Cap Value Growth Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,484 13,348 4,703 2,140 3,060 1,946 3,290 $9.92 to $13.85 $5.69 to $16.17 $12.64 to $14.08 $12.92 to $14.39 $11.53 to $14.56 $13.86 to $19.29 $8.23 to $12.13 $43,984 $184,078 $61,843 $28,696 $37,504 $30,946 $33,520 0.65% 0.00% 0.00% 2.04% 0.00% 0.32% 0.11% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.60% to 0.90% 0.60% to 0.90% 26.90% to 28.04% 33.38% to 35.10% 39.62% to 40.87% 29.29% to 30.45% 24.38% to 25.49% 35.30% to 36.52% 29.64% to 30.81% 3,296 11,521 4,261 1,978 2,346 1,567 2,853 $7.78 to $10.91 $4.22 to $12.07 $9.05 to $10.04 $9.90 to $11.03 $9.23 to $11.71 $10.24 to $14.13 $6.35 to $9.27 $32,966 $119,020 $39,880 $20,476 $23,073 $18,286 $22,095 0.89% 0.00% 0.00% 1.68% 3.31% 0.31% 0.26% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% -18% to -17% -30% to -29% -27% -17% to -16% -15% to -14% -10% -24% to 23% 3,106 8,481 3,509 2,000 1,242 1,076 2,124 $9.47 to $13.35 $5.95 to $17.08 $12.46 to $13.76 $11.79 to $12.88 $10.80 to $13.76 $11.44 to $15.63 $8.35 to $12.08 $38,281 $125,185 $44,660 $21,106 $14,336 $14,115 $21,111 3.67% 0.00% 8.16% 11.32% 0.15% 1.94% 0.06% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.60% to 0.90% 0.60% to 0.90% -21% to -20% -37% to -33% -10% to 2% -16% to -15% 17% to 20% -3% to 0% -11% to -6%
F-83 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. UNIT VALUES -- (Continued)
Lehman Brothers Aggregate Bond Morgan Stanley Russell 2000 Met/Putnam Index EAFE Index Index Voyager Investment Investment Investment Investment Division Division Division Division ---------------- ---------------- ---------------- ---------------- 2003 Units (In Thousands).................................. 4,064 2,676 2,085 1,913 Unit Fair Value, Lowest to Highest (1)................ $12.77 to $13.67 $7.85 to $10.37 $10.75 to $14.59 $4.38 to $4.78 Net Assets (In Thousands)............................. $54,994 $24,290 $27,726 $8,651 Investment Income Ratio to Net Assets (2)............. 5.25% 1.48% 0.63% 0.00% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.60% to 0.90% Total Return, Lowest to Highest (1)(4)................ 2.71% to 3.63% 36.41% to 37.70% 44.77% to 46.07% 24.78% to 25.91% 2002 Units (In Thousands).................................. 4,147 2,044 1,614 1,463 Unit Fair Value, Lowest to Highest (1)................ $12.43 to $13.19 $5.76 to $7.53 $7.43 to $9.99 $3.51 to $3.79 Net Assets (In Thousands)............................. $54,046 $13,496 $14,829 $5,253 Investment Income Ratio to Net Assets (2)............. 2.81% 0.49% 0.59% 0.00% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.50% to 0.90% Total Return, Lowest to Highest (1)(4)................ 9% to 10% -17% -21% to -20% -30% to -29% 2001 Units (In Thousands).................................. 3,153 1,352 920 792 Unit Fair Value, Lowest to Highest (1)................ $11.38 to $11.97 $6.97 to $9.04 $9.42 to $12.56 $4.98 to $5.04 Net Assets (In Thousands)............................. $37,322 $10,800 $10,625 $4,001 Investment Income Ratio to Net Assets (2)............. 1.29% 0.31% 0.26% 0.00% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.60% to 0.90% Total Return, Lowest to Highest (1)(4)................ 7% -22% to -21% 0% to 6% -46% to -31%
- -------- (1) Metropolitan Life sells a number of variable life products which have unique combinations of features and fees that are charged against the contract owners' account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. (2) These amounts represent the dividends, excluding distributions of capital gains, received by the investment division from the underlying portfolio, net of management fees assessed by the fund manager, divided by the average net assets. These ratios excluded those expenses, such as mortality and expense charges, that are assessed against contract owners' accounts either through reductions in unit values or the redemption of units. The recognition of investment income by the investment division is affected by the timing of the declaration of dividends by the underlying portfolio in which the investment divisions invest. (3) These amounts represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense risk charges for each period indicated. The ratios include only those expenses that result in a direct reduction to unit value. Charges made directly to contract owner accounts through the redemption of units, and expenses of the underlying portfolio, are excluded. (4) These amounts represent the total return for the period indicated including changes in the value of the underlying portfolio, and expenses assessed through the reduction of unit values. The total return does not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the Separate Account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. F-84 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Franklin State Street MetLife Mid Templeton State Street Loomis Research Cap Stock Small Cap Research Davis Sayles Alger Aurora Index Growth Large Cap Value Venture Value Small Cap Equity Growth Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ------------- 3,372 2,338 329 103 1,322 30 721 $15.46 to $16.89 $11.04 to $12.13 $9.07 to $9.29 $10.70 to $10.86 $9.79 to $28.40 $9.27 to $205.39 $6.84 $56,540 $27,925 $3,038 $1,110 $24,429 $4,423 $4,933 0.00% 0.46% 0.00% 1.37% 0.37% 0.00% 0.06% 0.60% to 0.90% 0.60% to 0.90% 0.90% 0.90% 0.60% to 0.90% 0.60% to 0.90% 0.60% 48.80% to 50.14% 33.76% to 34.96% 43.64% to 44.93% 34.47% to 35.68% 29.70% to 30.87% 35.25% to 36.47% 35.15% 2,599 1,762 198 23 901 18 589 $10.30 to $11.25 $8.18 to $8.98 $6.31 to $6.41 $7.96 to $8.00 $7.48 to $21.70 $6.80 to $150.51 $5.06 $29,061 $15,568 $1,266 $189 $13,430 $2,408 $2,983 0.52% 0.35% 0.00% 0.92% 0.88% 0.11% 0.00% 0.50% to 0.90% 0.50% to 0.90% 0.90% 0.90% 0.50% to 0.90% 0.50% to 0.90% 0.60% -22% to -21% -16% to -15% -28% -20% -17% to -16% -22% -33% 1,317 867 52 -- 297 11 6 $13.09 to $14.29 $9.62 to $10.56 $8.83 to $8.88 $-- $8.94 to $25.95 $8.66 to $191.87 $7.57 $20,005 $9,019 $457 $-- $7,498 $1,926 $45 0.38% 0.43% 0.00% -- 4.47% 7.28% 0.00% 0.60% to 0.90% 0.60% to 0.90% 0.60% -- 0.60% to 0.90% 0.60% to 0.90% 0.60% 16% to 19% -1% to 3% -12% to -11% -- -11% to -9% -9% to -4% -16%
F-85 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. UNIT VALUES -- (Continued)
MFS State Street MFS Research Research Investors Trust Managers Bond Income Investment Investment Investment Division Division Division ---------------- ---------------- ---------------- 2003 Units (In Thousands)................................................. 186 81 5,517 Unit Fair Value, Lowest to Highest (1)............................... $7.96 to $8.33 $6.57 to $8.51 $12.89 to $27.12 Net Assets (In Thousands)............................................ $1,544 $669 $96,720 Investment Income Ratio to Net Assets (2)............................ 0.25% 0.78% 3.06% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% to 0.90% 0.60% to 0.90% 0.60% to 0.90% Total Return, Lowest to Highest (1)(4)............................... 20.76% to 21.85% 23.00% to 24.10% 4.91% to 5.85% 2002 Units (In Thousands)................................................. 104 47 5,564 Unit Fair Value, Lowest to Highest (1)............................... $6.54 to $6.84 $5.29 to $6.86 $12.18 to $25.85 Net Assets (In Thousands)............................................ $694 $314 $93,158 Investment Income Ratio to Net Assets (2)............................ 0.72% 0.30% 5.72% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% to 0.90% 0.60% to 0.90% 0.60% to 0.90% Total Return, Lowest to Highest (1)(4)............................... -21% to -20% -25% to -24% 7% to 8% 2001 Units (In Thousands)................................................. 43 13 4,202 Unit Fair Value, Lowest to Highest (1)............................... $8.19 to $8.57 $6.97 to $9.04 $11.23 to $24.08 Net Assets (In Thousands)............................................ $322 $151 $79,483 Investment Income Ratio to Net Assets (2)............................ 0.00% 0.25% 5.64% to 7.28% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% to 0.90% 0.60% to 0.90% .45% to 0.90% Total Return, Lowest to Highest (1)(4)............................... -14% to -3% -17% to -14% 7% to 8%
FI Structured Equity Investment Division ---------------- 2003 Units (In Thousands)................................................. 49 Unit Fair Value, Lowest to Highest (1)............................... $8.37 to $10.56 Net Assets (In Thousands)............................................ $505 Investment Income Ratio to Net Assets (2)............................ 0.52% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% to .90% Total Return, Lowest to Highest (1)(4)............................... 25.79% to 26.92% 2002 Units (In Thousands)................................................. 12 Unit Fair Value, Lowest to Highest (1)............................... $6.59 to $8.32 Net Assets (In Thousands)............................................ $93 Investment Income Ratio to Net Assets (2)............................ 0.89% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% to .90% Total Return, Lowest to Highest (1)(4)............................... -19% to -17% 2001 Units (In Thousands)................................................. 3 Unit Fair Value, Lowest to Highest (1)............................... $8.19 Net Assets (In Thousands)............................................ $25 Investment Income Ratio to Net Assets (2)............................ 0.00% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% Total Return, Lowest to Highest (1)(4)............................... -11%
- -------- (1) Metropolitan Life sells a number of variable life products which have unique combinations of features and fees that are charged against the contract owners' account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. (2) These amounts represent the dividends, excluding distributions of capital gains, received by the investment division from the underlying portfolio, net of management fees assessed by the fund manager, divided by the average net assets. These ratios excluded those expenses, such as mortality and expense charges, that are assessed against contract owners' accounts either through reductions in unit values or the redemption of units. The recognition of investment income by the investment division is affected by the timing of the declaration of dividends by the underlying portfolio in which the investment divisions invest. (3) These amounts represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense risk charges for each period indicated. The ratios include only those expenses that result in a direct reduction to unit value. Charges made directly to contract owner accounts through the redemption of units, and expenses of the underlying portfolio, are excluded. (4) These amounts represent the total return for the period indicated including changes in the value of the underlying portfolio, and expenses assessed through the reduction of unit values. The total return does not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the Separate Account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. F-86 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Saloman Brothers Saloman State Street FI Janus Invesco Invesco Harris Oakmark Strategic Bond Brothers Research Mid Cap Aspen VIF High VIF Equity Focused Value Opporunities U.S. Government Money Market Opportunities Growth Yield Income Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ------------------ ---------------- ---------------- ---------------- ---------------- ---------- ---------- ---------- 115 375 559 1,760 96 435 87 19 $219.73 to $225.05 $13.52 to $13.85 $12.82 to $13.13 $15.21 to $15.92 $11.50 to $11.67 $8.03 $9.21 $9.73 $25,866 $5,163 $7,305 $27,346 $1,112 $3,500 $804 $184 0.12% 1.70% 1.57% 0.78% 2.26% 0.10% 7.20% 1.26% 0.90% 0.90% 0.90% 0.60% to 0.90% 0.90% 0.60% 0.60% 0.60% 31.47% to 32.66% 11.62% to 12.62% 0.77% to 1.68% -0.09% to 0.81% 41.26% to 42.53% 31.73% 25.04% 22.60% 76 177 340 1,981 21 354 65 15 $167.13 to $169.65 $12.12 to $12.30 $12.72 to $12.91 $13.09 to $15.93 $8.14 to $8.19 $6.10 $7.37 $7.94 $12,879 $2,174 $4,365 $30,811 $168 $2,163 $476 $125 0.18% 6.33% 3.47% 1.57% 0.00% 0.03% 13.27% 1.74% 0.90% 0.90% 0.90% 0.45% to 0.90% 0.90% 0.60% 0.60% 0.60% -10% to -9% 9% to 10% 7% to 8% 0% to 1% -19% to -18% -27% -1% -19% 23 41 71 2,156 -- 236 37 12 $184.98 to $186.09 $11.15 to $11.22 $11.89 to $11.96 $14.88 to $15.85 $-- $8.30 $7.46 $9.81 $4,215 $465 $849 $32,726 $-- $1,959 $274 $122 0.00% 0.00% 0.00% 4.18% -- 6.04% 20.89% 2.61% 0.90% 0.90% 0.90% 0.60% to 0.90% -- 0.60% 0.60% 0.60% 12% to 13% 3% to 4% 4% 3% to 4% -- -19% -15% -7%
F-87 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. UNIT VALUES -- (Continued)
Franklin Franklin Invesco VIF Templeton Templeton Alliance Real Estate International Valuemark Growth & Opportunity Stock Small Cap Income Investment Investment Investment Investment Division Division Division Division ----------- ------------- ---------- ---------- 2003 Units (In Thousands)................................................. 10 403 199 197 Unit Fair Value, Lowest to Highest (1)............................... $17.79 $10.03 $6.76 $10.47 Net Assets (In Thousands)............................................ $179 $4,054 $1,346 $2,063 Investment Income Ratio to Net Assets (2)............................ 1.49% 1.52% 0.00% 0.70% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% 0.60% 0.60% 0.60% Total Return, Lowest to Highest (1)(4)............................... 38.82% 32.55% 37.24% 32.18% 2002 Units (In Thousands)................................................. 14 344 163 150 Unit Fair Value, Lowest to Highest (1)............................... $12.82 $7.57 $4.93 $7.92 Net Assets (In Thousands)............................................ $179 $2,612 $801 $1,191 Investment Income Ratio to Net Assets (2)............................ 1.40% 2.03% 0.51% 3.31% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% 0.60% 0.60% 0.60% Total Return, Lowest to Highest (1)(4)............................... -6% -18% -29% -22% 2001 Units (In Thousands)................................................. 7 189 16 65 Unit Fair Value, Lowest to Highest (1)............................... $12.05 $9.27 $6.91 $10.19 Net Assets (In Thousands)............................................ $89 $1,767 $103 $656 Investment Income Ratio to Net Assets (2)............................ 1.16% 14.19% 0.05% 0.91% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% 0.60% 0.60% 0.60% Total Return, Lowest to Highest (1)(4)............................... 1% -16% -9% 2%
- -------- (1) Metropolitan Life sells a number of variable life products which have unique combinations of features and fees that are charged against the contract owners' account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. (2) These amounts represent the dividends, excluding distributions of capital gains, received by the investment division from the underlying portfolio, net of management fees assessed by the fund manager, divided by the average net assets. These ratios excluded those expenses, such as mortality and expense charges, that are assessed against contract owners' accounts either through reductions in unit values or the redemption of units. The recognition of investment income by the investment division is affected by the timing of the declaration of dividends by the underlying portfolio in which the investment divisions invest. (3) These amounts represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense risk charges for each period indicated. The ratios include only those expenses that result in a direct reduction to unit value. Charges made directly to contract owner accounts through the redemption of units, and expenses of the underlying portfolio, are excluded. (4) These amounts represent the total return for the period indicated including changes in the value of the underlying portfolio, and expenses assessed through the reduction of unit values. The total return does not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the Separate Account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. F-88 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Fidelity American Asset American American Funds Alliance Alliance Fidelity Manager Fidelity Funds Funds Global Premier Growth Technology Contrafund Growth Growth Growth Growth-Income Small Cap Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - -------------- ---------- ---------- ---------- ---------- ---------------- ---------------- ---------------- 14 10 97 54 47 417 525 378 $6.10 $4.54 $9.18 $8.00 $6.27 $60.53 to $62.00 $38.04 to $38.96 $15.06 to $15.42 $84 $46 $894 $433 $296 $25,760 $20,369 $5,801 0.00% 0.00% 0.15% 2.96% 0.08% 0.13% 1.18% 0.49% 0.60% 0.60% 0.60% 0.60% 0.60% 0.90% 0.90% 0.90% 23.37% 43.79% 28.35% 23.15% 32.78% 35.59% to 36.81% 31.25% to 32.43% 52.16% to 53.53% 9 6 35 20 28 221 287 203 $4.94 $3.16 $7.16 $6.50 $4.72 $44.64 to $45.32 $28.98 to $29.42 $9.90 to $10.05 $42 $18 $249 $131 $134 $9,992 $8,408 $2,033 0.00% 5.08% 0.14% 3.23% 0.12% 0.05% 1.74% 0.81% 0.60% 0.60% 0.60% 0.60% 0.60% 0.90% 0.90% 0.90% -31% -42% -10% -18% -30% -25% to -24% -19% to -18% -20% to -19% 14 2 3 13 13 53 68 49 $7.15 $5.43 $7.96 $7.89 $6.77 $59.63 to $59.99 $35.81 to $36.03 $12.34 to $12.41 $98 $13 $24 $95 $87 $3,176 $2,453 $619 0.00% 6.23% 0.00% 0.00% 0.00% 4.25% 0.82% 1.15% 0.60% 0.60% 0.60% 0.60% 0.60% 0.90% 0.90% 0.90% -14% -35% -12% -10% -20% -15% to -14% -3% -9% to -8%
F-89 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. UNIT VALUES -- (Continued)
JPM MFS Enhanced T. Rowe Price Research Index Mid Cap Growth International Investment Investment Investment Division Division Division ---------- ---------------- ---------------- 2003 Units (In Thousands)................................................. -- 527 151 Unit Fair Value, Lowest to Highest (1)............................... $-- $6.28 to $6.43 $9.70 to $9.94 Net Assets (In Thousands)............................................ $-- $3,375 $1,497 Investment Income Ratio to Net Assets (2)............................ -- 0.00% 0.97% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) -- 0.90% 0.90% Total Return, Lowest to Highest (1)(4)............................... -- 35.90% to 37.12% 31.01% to 32.19% 2002 Units (In Thousands)................................................. 1 294 95 Unit Fair Value, Lowest to Highest (1)............................... $6.09 $4.62 to $4.69 $7.41 to $7.52 Net Assets (In Thousands)............................................ $8 $1,373 $714 Investment Income Ratio to Net Assets (2)............................ 1.78% 0.82% 0.25% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% 0.90% 0.90% Total Return, Lowest to Highest (1)(4)............................... -25% -44% -12% 2001 Units (In Thousands)................................................. 1 68 28 Unit Fair Value, Lowest to Highest (1)............................... $8.12 $8.32 to $8.37 $8.44 to $8.50 Net Assets (In Thousands)............................................ $5 $564 $238 Investment Income Ratio to Net Assets (2)............................ 0.00% 0.00% 0.07% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% 0.90% 0.90% Total Return, Lowest to Highest (1)(4)............................... -9% -16% to -15% -13% to -12%
PIMCO Total Return Investment Division ---------------- 2003 Units (In Thousands)................................................. 1,042 Unit Fair Value, Lowest to Highest (1)............................... $11.96 to $12.25 Net Assets (In Thousands)............................................ $12,697 Investment Income Ratio to Net Assets (2)............................ 2.70% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.90% Total Return, Lowest to Highest (1)(4)............................... 3.59% to 4.52% 2002 Units (In Thousands)................................................. 534 Unit Fair Value, Lowest to Highest (1)............................... $11.55 to $11.72 Net Assets (In Thousands)............................................ $6,214 Investment Income Ratio to Net Assets (2)............................ 0.00% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.90% Total Return, Lowest to Highest (1)(4)............................... 9% to 10% 2001 Units (In Thousands)................................................. 103 Unit Fair Value, Lowest to Highest (1)............................... $10.64 to $10.70 Net Assets (In Thousands)............................................ $1,103 Investment Income Ratio to Net Assets (2)............................ 2.37% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.90% Total Return, Lowest to Highest (1)(4)............................... 6%
- -------- (1) Metropolitan Life sells a number of variable life products which have unique combinations of features and fees that are charged against the contract owners' account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. (2) These amounts represent the dividends, excluding distributions of capital gains, received by the investment division from the underlying portfolio, net of management fees assessed by the fund manager, divided by the average net assets. These ratios excluded those expenses, such as mortality and expense charges, that are assessed against contract owners' accounts either through reductions in unit values or the redemption of units. The recognition of investment income by the investment division is affected by the timing of the declaration of dividends by the underlying portfolio in which the investment divisions invest. (3) These amounts represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense risk charges for each period indicated. The ratios include only those expenses that result in a direct reduction to unit value. Charges made directly to contract owner accounts through the redemption of units, and expenses of the underlying portfolio, are excluded. (4) These amounts represent the total return for the period indicated including changes in the value of the underlying portfolio, and expenses assessed through the reduction of unit values. The total return does not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the Separate Account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. F-90 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Lord Abbett Met/Aim Met/Aim Janus Lord Abbett PIMCO Bond Mid Cap Small Cap Harris Oakmark Aggressive Growth & Innovation Debenture Core Equity Growth International Growth Income Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------- 932 876 92 60 72 569 3 $4.72 to $4.83 $12.87 to $14.95 $10.69 to $10.85 $10.46 to $10.62 $11.23 to $11.40 $6.89 to $7.06 $8.10 $4,481 $12,042 $989 $643 $814 $4,003 $20,529 0.00% 1.85% 1.35% 0.00% 1.84% 0.00% 0.00% 0.90% 0.45% to 0.90% 0.90% 0.90% 0.90% 0.90% 0.60% 56.44% to 57.84% 17.17% to 19.52% 25.29% to 26.42% 37.84% to 39.08% 34.16% to 35.37% 28.77% to 29.93% 29.15% 416 748 30 15 18 381 -- $3.01 to $3.06 $10.87 to $12.51 $8.53 to $8.58 $7.59 to $7.63 $8.37 to $8.42 $5.35 to $5.43 $-- $1,269 $8,597 $253 $116 $150 $2,045 $-- 0.00% 11.43% 0.00% 0.00% 0.00% 0.00% -- 0.90% 0.45% to 0.90% 0.90% 0.90% 0.90% 0.90% -- -51% 0% to 1% -15% to -14% -24% -16% -31% -- 121 774 -- -- -- 122 -- $6.15 to $6.19 $10.83 to $12.35 $-- $-- $-- $7.73 to $7.82 $-- $749 $8,845 $-- $-- $-- $953 $-- 0.00% 11.73% -- -- -- 0.00% -- 0.90% 0.45% to 0.90% -- -- -- 0.90% -- -25% -2% to -1% -- -- -- -23% to -22% --
F-91 NOTES TO FINANCIAL STATEMENTS -- (Concluded) 7. CHANGE OF PORTFOLIO NAME AND PORTFOLIO MERGERS Effective January 1, 2003, MFS Mid Cap Growth Portfolio changed sub-advisers from Massachusetts Financial Services to T. Rowe Price Associates Inc. and changed its name to T. Rowe Price Mid Cap Growth Portfolio; and State Street Research Concentrated International Portfolio changed sub-advisers from State Street Research & Management Company to Harris Associates L.P. and changed its name to Harris Oakmark International Portfolio. Effective April 28, 2003, Janus Growth Portfolio of the Metropolitan Fund merged into the Janus Aggressive Growth Portfolio of the Met Investors Fund. Effective May 1, 2003, Putnam Large Cap Growth Portfolio changed its name to Met/Putnam Voyager Portfolio. Effective May, 1, 2003, all series of the New England Zenith Fund became newly organized portfolios of the Metropolitan Fund. The reorganization had no effect on the investment objectives, policies or advisory fees of any series, nor was there any change in investment adviser or sub-adviser. Effective December 16, 2003, Putnam International Stock Portfolio of the Metropolitan Fund changed its name to FI International Stock Portfolio. Effective April 29, 2002, Loomis Sayles High Yield Bond Portfolio of the Metropolitan Fund was merged into the Lord Abbett Bond Debenture Portfolio of the Met Investors Fund. Effective April 29, 2002, State Street Research Income Portfolio and State Street Research Money Market Portfolio of the Metropolitan Fund were merged respectively into the State Street Research Bond Income Portfolio and the State Street Research Money Market Portfolio of the Zenith Fund. Effective May 1, 2002, State Street Research Aurora Small Cap Value Portfolio and the Harris Oakmark Mid Cap Value Portfolio changed their names to State Street Research Aurora Portfolio and Harris Oakmark Focused Value Portfolio, respectively. Effective July 1, 2001, State Street Research became the sub-investment manager of the State Street Research Bond Income Portfolio (formerly Back Bay Advisers Bond Income Portfolio) of the New England Zenith Series Fund. Effective May 1, 2001, State Street Research Growth Portfolio changed its name to State Street Research Investment Trust Portfolio. F-92 METROPOLITAN LIFE INSURANCE COMPANY UL II -- Flexible Premium Multifunded Life Insurance Policies Supplement Dated May 1, 2004 to Prospectus Dated May 1, 2003 This supplement updates certain information contained in the last prospectus you received. The last prospectus you received was dated May 1, 2003. You should read and retain this supplement with your Policy. We will send you an additional copy of your most recent prospectus (and any previous supplements thereto), without charge, on written request sent to MetLife, P.O. Box 336, Warwick, RI 02887-0336. New UL II Policies are no longer available for sale. Prospectuses for the Metropolitan Series Fund, Inc., the Met Investors Series Trust and the American Funds Insurance Series are attached. Please read them and keep them for reference. 1 Sending Communications and Payments to Us You can communicate all of your requests, instructions and notifications to us by contacting us in writing at our Designated Office. We may require that certain requests, instructions and notifications be made on forms that we provide. These include: changing your beneficiary; taking a Policy loan; changing your death benefit option; taking a partial withdrawal; surrendering your Policy; making transfer requests (including elections with respect to the automated investment strategies) or changing your premium allocations. Below is a list of our Designated Offices for various functions. We may name additional or alternate Designated Offices. If we do, we will notify you in writing. You may also contact us at 1-800-MET-5000 for information on where to direct communication regarding any function not listed below.
Function Designated Office Address - --------------------------------------------------------------------------------- Premium Payments MetLife P.O. Box 371487, Pittsburgh, PA 15250-7487 - --------------------------------------------------------------------------------- Payment Inquiries MetLife, P.O. Box 30375, Tampa, FL 33630 - --------------------------------------------------------------------------------- Surrenders, Withdrawals, Loans, MetLife, P.O. Box 336, Warwick, R.I. Investment Division Transfers, 02887-0336 Premium Reallocation - --------------------------------------------------------------------------------- Death Claims MetLife, P.O. Box 330, Warwick, R.I. 02887-0330 - --------------------------------------------------------------------------------- Beneficiary & Assignment MetLife, P.O. Box 313, Warwick, R.I. 02887-0313 - --------------------------------------------------------------------------------- Address Changes MetLife, 500 Schoolhouse Road, Johnstown, PA 15904 Attn: Data Integrity - --------------------------------------------------------------------------------- Reinstatements MetLife, P.O. Box 30375, Tampa, FL 33630 - ---------------------------------------------------------------------------------
Surrender Charge Under the terms of the UL II Policies, you may reduce the specified face amount of your Policy without paying any surrender charge. Due to an error on our part, a section in the May 1, 2003 prospectus that listed the circumstances under which a surrender charge would be deducted included a reduction in face amount. In fact, a surrender charge is not deducted when the face amount is reduced. Variable Investment Options The variable investment options for allocating premium payments and transferring cash value now consist of our fixed interest account and 43 different investment divisions of the Metropolitan Life Separate Account UL. Each investment division, in turn, invests solely in one of the corresponding fund "Portfolios". Metropolitan Series Fund, Inc. Portfolios: Davis Venture Value MFS Total Return FI International Morgan Stanley EAFE(R) Stock (formerly, Putnam Index International Stock) Neuberger Berman Partners FI Mid Cap Mid Cap Value Opportunities (formerly, Russell 2000(R) Index Janus Mid Cap) Salomon Brothers FI Value Strategic Bond Leaders (formerly, FI Opportunities Structured Equity) Salomon Brothers U.S. Franklin Templeton Small Government Cap Growth Scudder Global Equity Harris Oakmark Focused State Street Research Value Aggressive Growth Harris Oakmark Large Cap State Street Research Value Aurora Lehman Brothers(R) State Street Research Aggregate Bond Index Bond Income Loomis Sayles Small Cap State Street Research Met/Putnam Voyager Diversified MetLife Mid Cap Stock State Street Research Index Investment Trust MetLife Stock Index State Street Research MFS Investors Trust Large Cap Growth State Street Research Large Cap Value State Street Research Money Market T. Rowe Price Large Cap Growth T. Rowe Price Small Cap Growth 2 Met Investors Series Trust Portfolios: Harris Oakmark Neuberger Berman Real International Estate Janus Aggressive Growth PIMCO PEA Lord Abbett Bond Debenture Innovation (formerly, Met/AIM Mid Cap Core PIMCO Innovation) Equity PIMCO Total Return Met/AIM Small Cap Growth T. Rowe Price Mid-Cap MFS Research International Growth American Funds Insurance Series Portfolios*: American Funds Global American Funds Small Capitalization Growth-Income American Funds Growth - -------- * The American Funds Insurance Series calls these "Funds", but this prospectus calls them "Portfolios." The Portfolios The adviser, any sub-adviser and investment objective of each Portfolio are as follows:
Portfolio Sub-Adviser Investment Objective - -------------------------------------------------------------------------------------------------------------- Metropolitan Series Fund, Inc. Adviser: MetLife Advisers, LLC/1/ Class A shares - -------------------------------------------------------------------------------------------------------------- Davis Venture Value Davis Selected Advisers, L.P./2/ Growth of capital - -------------------------------------------------------------------------------------------------------------- FI International Stock Fidelity Management & Research Long-term growth of capital Company/3/ - -------------------------------------------------------------------------------------------------------------- FI Mid Cap Opportunities/4/ Fidelity Management & Research Long-term growth of capital Company/5/ - -------------------------------------------------------------------------------------------------------------- FI Value Leaders Fidelity Management & Research Long-term growth of capital Company - -------------------------------------------------------------------------------------------------------------- Franklin Templeton Small Cap Growth Franklin Advisers, Inc. Long-term capital growth - -------------------------------------------------------------------------------------------------------------- Harris Oakmark Focused Value Harris Associates L.P. Long-term capital appreciation - -------------------------------------------------------------------------------------------------------------- Harris Oakmark Large Cap Value Harris Associates L.P. Long-term capital appreciation - -------------------------------------------------------------------------------------------------------------- Lehman Brothers Aggregate Bond Index Metropolitan Life Insurance To equal the performance of the Company Lehman Brothers Aggregate Bond Index - -------------------------------------------------------------------------------------------------------------- Loomis Sayles Small Cap Loomis, Sayles & Company, L.P. Long-term capital growth from investments in common stocks or other equity securities - -------------------------------------------------------------------------------------------------------------- Met/Putnam Voyager Putnam Investment Management, Capital appreciation LLC - -------------------------------------------------------------------------------------------------------------- MetLife Mid Cap Stock Index Metropolitan Life Insurance To equal the performance of the Company Standard & Poor's Mid Cap 400 Composite Stock Price Index - -------------------------------------------------------------------------------------------------------------- MetLife Stock Index Metropolitan Life Insurance To equal the performance of the Company Standard & Poor's 500 Composite Stock Price Index - -------------------------------------------------------------------------------------------------------------- MFS Investors Trust Massachusetts Financial Services Long-term growth of capital with a Company secondary objective to seek reasonable current income - -------------------------------------------------------------------------------------------------------------- MFS Total Return Massachusetts Financial Services Favorable total return through Company investment in a diversified portfolio - -------------------------------------------------------------------------------------------------------------- Morgan Stanley EAFE Index Metropolitan Life Insurance To equal the performance of the Company MSCI EAFE Index - -------------------------------------------------------------------------------------------------------------- Neuberger Berman Partners Mid Cap Value Neuberger Berman Management Inc. Capital growth - -------------------------------------------------------------------------------------------------------------- Russell 2000 Index Metropolitan Life Insurance To equal the return of the Russell Company 2000 Index - -------------------------------------------------------------------------------------------------------------- Salomon Brothers Strategic Bond Salomon Brothers Asset To maximize total return consistent Opportunities Management Inc/6/ with preservation of capital - -------------------------------------------------------------------------------------------------------------- Salomon Brothers U.S. Government Salomon Brothers Asset To maximize total return consistent Management Inc with preservation of capital and maintenance of liquidity - --------------------------------------------------------------------------------------------------------------
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Portfolio Sub-Adviser Investment Objective - ------------------------------------------------------------------------------------------------------------------ Scudder Global Equity Deutsche Investment Management Long-term growth of capital Americas Inc. - ------------------------------------------------------------------------------------------------------------------ State Street Research Aggressive Growth State Street Research & Maximum capital appreciation Management Company - ------------------------------------------------------------------------------------------------------------------ State Street Research Aurora State Street Research & High total return, consisting Management Company principally of capital appreciation - ------------------------------------------------------------------------------------------------------------------ State Street Research Bond Income State Street Research & Competitive total return primarily Management Company from investing in fixed-income securities - ------------------------------------------------------------------------------------------------------------------ State Street Research Diversified State Street Research & High total return while attempting to Management Company limit investment risk and preserve capital - ------------------------------------------------------------------------------------------------------------------ State Street Research Investment Trust State Street Research & Long-term growth of capital and Management Company income - ------------------------------------------------------------------------------------------------------------------ State Street Research Large Cap Growth State Street Research & Long-term growth of capital Management Company/7/ - ------------------------------------------------------------------------------------------------------------------ State Street Research Large Cap Value State Street Research & Long-term growth of capital Management Company - ------------------------------------------------------------------------------------------------------------------ State Street Research Money Market/8/ State Street Research & A high level of current income Management Company consistent with preservation of capital - ------------------------------------------------------------------------------------------------------------------ T. Rowe Price Large Cap Growth T. Rowe Price Associates, Inc. Long-term growth of capital, and secondarily, dividend income - ------------------------------------------------------------------------------------------------------------------ T. Rowe Price Small Cap Growth T. Rowe Price Associates, Inc. Long-term capital growth - ------------------------------------------------------------------------------------------------------------------ Met Investors Series Trust Adviser: Met Investors Advisory LLC Class A shares - ------------------------------------------------------------------------------------------------------------------ Harris Oakmark International Harris Associates L.P. Long-term capital appreciation - ------------------------------------------------------------------------------------------------------------------ Janus Aggressive Growth Janus Capital Management LLC Long-term growth of capital - ------------------------------------------------------------------------------------------------------------------ Lord Abbett Bond Debenture Lord, Abbett & Co. LLC High current income and the opportunity for capital appreciation to produce a high total return - ------------------------------------------------------------------------------------------------------------------ Met/AIM Mid Cap Core Equity AIM Capital Management, Inc. Long-term growth of capital - ------------------------------------------------------------------------------------------------------------------ Met/AIM Small Cap Growth AIM Capital Management, Inc. Long-term growth of capital - ------------------------------------------------------------------------------------------------------------------ MFS Research International Massachusetts Financial Services Capital appreciation Company - ------------------------------------------------------------------------------------------------------------------ Neuberger Berman Real Estate Neuberger Berman Management Inc. Total return through investment in real estate securities, emphasizing both capital appreciation and current income - ------------------------------------------------------------------------------------------------------------------ PIMCO PEA Innovation PEA Capital LLC Capital appreciation; no consideration (formerly PIMCO Equity Advisors) is given to income - ------------------------------------------------------------------------------------------------------------------ PIMCO Total Return Pacific Investment Management Maximum total return, consistent Company LLC with the preservation of capital and prudent investment management - ------------------------------------------------------------------------------------------------------------------ T. Rowe Price Mid-Cap Growth T. Rowe Price Associates, Inc. Long-term growth of capital - ------------------------------------------------------------------------------------------------------------------ American Funds Insurance Series Adviser: Capital Research and Management Company Class 2 shares - ------------------------------------------------------------------------------------------------------------------ American Funds Global Small Capitalization N/A Capital appreciation through stocks - ------------------------------------------------------------------------------------------------------------------ American Funds Growth N/A Capital appreciation through stocks - ------------------------------------------------------------------------------------------------------------------ American Funds Growth-Income N/A Capital appreciation and income - ------------------------------------------------------------------------------------------------------------------
- -------- /1/ Prior to May 1, 2001, Metropolitan Life Insurance Company was the adviser to the Metropolitan Series Fund. /2/ Davis Selected Advisers, L.P. may also delegate any of its responsibilities to Davis Selected Advisers-NY, Inc., a wholly-owned subsidiary. /3/ Prior to December 16, 2003, Putnam Investment Management, LLC was the sub-adviser to this Portfolio. 4 /4/ On or about April 30, 2004, the FI Mid Cap Opportunities Portfolio that had been offered as an investment option up to that date merged with and into the Janus Mid Cap Portfolio which was then renamed the FI Mid Cap Opportunities Portfolio. /5/ Prior to May 1, 2004, Janus Capital Management LLC was the sub-adviser to this Portfolio. /6/ The Salomon Brothers Strategic Bond Opportunities Portfolio also receives certain investment subadvisory services from Citigroup Asset Management Limited, a London-based affiliate of Salomon Brothers Asset Management, Inc. /7/ Prior to May 1, 2004, Fred Alger Management, Inc. was the sub-adviser to this Portfolio. /8/ An investment in the State Street Research Money Market Portfolio is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Portfolio seeks to maintain a net asset value of $100 per share, it is possible to lose money by investing in the Portfolio. During extended periods of low interest rates, the yields of the investment division investing in the State Street Research Money Market Portfolio may become extremely low and possibly negative. Annual Portfolio Operating Expenses This table describes the fees and expenses that the Portfolios will pay and that therefore a Policy owner will indirectly pay periodically during the time that he or she owns a Policy. The table shows the lowest and highest fees and expenses charged by the Portfolios for the fiscal year ended December 31, 2003, before and after any contractual fee waivers and expense reimbursements. More detail concerning each Portfolio's fees and expenses is contained in the table that follows this table and in the attached Fund prospectuses.
Lowest* Highest* - ------------------------------------------------------------------------------------------------------------ Gross Total Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets, including management fees, distribution (Rule 12b-1) fees and other expenses) .31% 1.32% - ------------------------------------------------------------------------------------------------------------ Net Total Annual Portfolio Operating Expenses (net of any contractual fee waivers and expense reimbursements) .31% 1.20%**
- -------- *The lowest and highest percentages have been selected after adjustment of the percentage for all Portfolios (on a consistent basis) to reflect any changes in expenses during the 12 months ended December 31, 2003 or expected to occur during the 12 months ended December 31, 2004. **Consists of expenses of the Harris Oakmark International Portfolio after the fee waivers and expense reimbursements reflected for that Portfolio in the table below. This table describes the annual operating expenses for each Portfolio for the year ended December 31, 2003, as a percentage of the Portfolio's average daily net assets for the year (anticipated annual operating expenses for 2004 for the Neuberger Berman Real Estate Portfolio). Net Total Annual Expenses do not reflect any expense reductions that certain Portfolios achieved as a result of directed brokerage arrangements.
Fee Waivers Gross and Manage- Total Expense Net Total ment Other 12b-1 Annual Reimburse- Annual Fees Expenses Fees Expenses ments Expenses - -------------------------------------------------------------------------------------------------- Metropolitan Series Fund (Class A Shares) - -------------------------------------------------------------------------------------------------- Davis Venture Value .74% .05% .00% .79% .00% .79% - -------------------------------------------------------------------------------------------------- FI International Stock .86% .23% .00% 1.09% .00% 1.09% - -------------------------------------------------------------------------------------------------- FI Mid Cap Opportunities .69% .08% .00% .77% .00% .77% - -------------------------------------------------------------------------------------------------- FI Value Leaders .67% .07% .00% .74% .00% .74% - -------------------------------------------------------------------------------------------------- Franklin Templeton Small Cap Growth .90% .42% .00% 1.32% .17% 1.15%(a) - -------------------------------------------------------------------------------------------------- Harris Oakmark Focused Value .75% .05% .00% .80% .00% .80% - -------------------------------------------------------------------------------------------------- Harris Oakmark Large Cap Value .74% .09% .00% .83% .00% .83% - -------------------------------------------------------------------------------------------------- Lehman Brothers Aggregate Bond Index .25% .09% .00% .34% .00% .34% - -------------------------------------------------------------------------------------------------- Loomis Sayles Small Cap .90% .09% .00% .99% .00% .99% - -------------------------------------------------------------------------------------------------- Met/Putnam Voyager .80% .27% .00% 1.07% .07% 1.00%(a) - -------------------------------------------------------------------------------------------------- MetLife Mid Cap Stock Index .25% .15% .00% .40% .00% .40% - -------------------------------------------------------------------------------------------------- MetLife Stock Index .25% .06% .00% .31% .00% .31% - -------------------------------------------------------------------------------------------------- MFS Investors Trust .75% .36% .00% 1.11% .11% 1.00%(a) - --------------------------------------------------------------------------------------------------
5
Fee Waivers Gross and Manage- Total Expense Net Total ment Other 12b-1 Annual Reimburse- Annual Fees Expenses Fees Expenses ments Expenses - --------------------------------------------------------------------------------------------------- MFS Total Return .50% .19% .00% .69% .00% .69% - --------------------------------------------------------------------------------------------------- Morgan Stanley EAFE Index .30% .41% .00% .71% .00% .71% - --------------------------------------------------------------------------------------------------- Neuberger Berman Partners Mid Cap Value .69% .11% .00% .80% .00% .80% - --------------------------------------------------------------------------------------------------- Russell 2000 Index .25% .22% .00% .47% .00% .47% - --------------------------------------------------------------------------------------------------- Salomon Brothers Strategic Bond Opportunities .65% .16% .00% .81% .00% .81% - --------------------------------------------------------------------------------------------------- Salomon Brothers U.S. Government .55% .10% .00% .65% .00% .65% - --------------------------------------------------------------------------------------------------- Scudder Global Equity .64% .20% .00% .84% .00% .84% - --------------------------------------------------------------------------------------------------- State Street Aggressive Growth .73% .08% .00% .81% .00% .81% - --------------------------------------------------------------------------------------------------- State Street Research Aurora .85% .08% .00% .93% .00% .93% - --------------------------------------------------------------------------------------------------- State Street Research Bond Income .40% .07% .00% .47% .00% .47% - --------------------------------------------------------------------------------------------------- State Street Research Diversified .44% .07% .00% .51% .00% .51% - --------------------------------------------------------------------------------------------------- State Street Research Investment Trust .49% .07% .00% .56% .00% .56% - --------------------------------------------------------------------------------------------------- State Street Research Large Cap Growth .73% .07% .00% .80% .00% .80% - --------------------------------------------------------------------------------------------------- State Street Research Large Cap Value .70% .35% .00% 1.05% .10% .95%(a) - --------------------------------------------------------------------------------------------------- State Street Research Money Market .35% .05% .00% .40% .00% .40% - --------------------------------------------------------------------------------------------------- T. Rowe Price Large Cap Growth .63% .16% .00% .79% .00% .79% - --------------------------------------------------------------------------------------------------- T. Rowe Price Small Cap Growth .52% .11% .00% .63% .00% .63% - --------------------------------------------------------------------------------------------------- Met Investors Series Trust (Class A Shares) - --------------------------------------------------------------------------------------------------- Harris Oakmark International .85% .36% .00% 1.21% .01% 1.20%(b) - --------------------------------------------------------------------------------------------------- Janus Aggressive Growth .78% .12% .00% .90% .00% .90%(b) - --------------------------------------------------------------------------------------------------- Lord Abbett Bond Debenture .60% .10% .00% .70% .00% .70%(d) - --------------------------------------------------------------------------------------------------- Met/AIM Mid Cap Core Equity .75% .21% .00% .96% .01% .95%(b) - --------------------------------------------------------------------------------------------------- Met/AIM Small Cap Growth .90% .26% .00% 1.16% .11% 1.05%(b) - --------------------------------------------------------------------------------------------------- MFS Research International .80% .31% .00% 1.11% .01% 1.10%(b) - --------------------------------------------------------------------------------------------------- Neuberger Berman Real Estate .70% .41% .00% 1.11% .21% .90%(b)(c) - --------------------------------------------------------------------------------------------------- PIMCO PEA Innovation .95% .31% .00% 1.26% .16% 1.10%(b) - --------------------------------------------------------------------------------------------------- PIMCO Total Return .50% .09% .00% .59% .00% .59%(d) - --------------------------------------------------------------------------------------------------- T. Rowe Price Mid-Cap Growth .75% .17% .00% .92% .00% .92%(b) - --------------------------------------------------------------------------------------------------- American Funds Insurance Series (Class 2 Shares)(e) - --------------------------------------------------------------------------------------------------- American Funds Global Small Capitalization .80% .03% .25% 1.08% .00% 1.08% - --------------------------------------------------------------------------------------------------- American Funds Growth .37% .02% .25% .64% .00% .64% - --------------------------------------------------------------------------------------------------- American Funds Growth-Income .33% .01% .25% .59% .00% .59% - ---------------------------------------------------------------------------------------------------
- -------- (a) The Metropolitan Series Fund and its affiliate MetLife Advisers, LLC ("MetLife Advisers") have entered into an Expense Agreement under which MetLife Advisers LLC will waive investment management fees and/or pay expenses (other than brokerage costs, interest, taxes or extraordinary expenses) ("Expenses") attributable to the Class A shares of these Portfolios of the Metropolitan Series Fund, so that the Net Total Annual Expenses will not exceed, at any time prior to April 30, 2005, the percentages shown above. Under the Expense Agreement, if certain conditions are met, the Franklin Templeton Small Cap Growth Portfolio, the MFS Investors Trust Portfolio and the State Street Research Large Cap Value Portfolio may reimburse MetLife Advisers for fees it waived and Expenses it paid if, in the future, actual Expenses of the Portfolios are less than the expense limits. (b) Met Investors Series Trust and its affiliate Met Investors Advisory LLC have entered into an Expense Limitation Agreement under which Met Investors Advisory LLC has agreed to waive or limit its fees and to assume other expenses so that the Net Total Annual Expenses of each Portfolio (other than interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with generally accepted accounting principles, and other extraordinary expenses not incurred in the ordinary course of each Portfolio's business) will not exceed, at any time prior to April 30, 2005, the percentages shown above in the right hand column (.95% in the case of the T. Rowe Price Mid-Cap Growth Portfolio). Under certain circumstances, any fees waived or expenses reimbursed by Met Investors Advisory LLC may, with the approval of the Trust's Board of Trustees, be repaid by the applicable Portfolio to Met Investors Advisory LLC. Due to expense waivers in addition to those shown above, actual Net Total Expenses for the year ended December 31, 2003, for the following Portfolios, were: 1.16% for the Harris Oakmark International Portfolio, .89% for the Janus Aggressive Growth Portfolio, .93% for the Met/AIM Mid Cap Core Equity Portfolio, 1.04% for the Met/AIM Small Cap Growth Portfolio, 1.09% for the MFS Research International Portfolio, and .91% for the T. Rowe Price Mid-Cap Growth Portfolio. (c) Expenses for the Neuberger Berman Real Estate Portfolio are annualized estimates for the year ending December 31, 2004, based on the Portfolio's May 1, 2004 start date. (d) Other Expenses reflect the repayment by the Portfolio of fees previously waived by Met Investors Advisory LLC under the terms of the Expense Limitation Agreement in the following amounts: .03% for the Lord Abbett Bond Debenture Portfolio and .02% for the PIMCO Total Return Portfolio. (e) The American Funds Insurance Series has adopted a Distribution Plan under Rule 12b-1 of the Investment Company Act of 1940. Under the Distribution Plan the Portfolios pay an annual fee to compensate certain other parties for promoting, selling and servicing the shares of the Portfolio. The Distribution Plan is described in more detail in the American Funds Insurance Series prospectus. The American Funds Insurance Series pays MetLife for its distribution-related services and expenses, an amount equal to an annual rate of 0.25% of the assets attributable to the Policies. 6 An Investment Adviser or subadviser of a Portfolio or its affiliates may make payments to MetLife and/or certain affiliates that are based on a percentage of assets of the Portfolios attributable to the Policies and certain other variable insurance products that we and our affiliates issue. These percentages differ and some Advisers (or other affiliates) may pay us more than others. These percentages currently range up to 0.50% of assets. MetLife pays American Funds Distributors, Inc., the principal underwriter for the American Funds Insurance Series, a percentage of all premiums allocated to the American Funds Growth Portfolio, the American Funds Growth-Income Portfolio and the American Funds Global Small Capitalization Portfolio for the services it provides in marketing the Portfolios' shares in connection with the Policies. Transferring Cash Value Among Your Policy's Investment Options Market Timing We have policies and procedures that attempt to detect transfer activity that may adversely affect other Policy owners or Portfolio shareholders in situations where there is potential for pricing inefficiencies or that involve relatively large single or grouped transactions by one or more Policy owners (i.e., market timing). We employ various means to try to detect such transfer activity, such as periodically examining the number of transfers and/or the number of "round trip" transfers into and out of particular investment divisions made by Policy owners within given periods of time and/or investigating transfer activity identified by us or the Funds on a case-by-case basis. We may revise these policies and procedures in our sole discretion at any time without prior notice. The detection and deterrence of harmful transfer activity involves judgments that are inherently subjective. Our ability to detect such transfer activity may be limited by operational and technological systems, as well as our ability to predict strategies employed by Policy owners to avoid such detection. Our ability to restrict such transfer activity may be limited by provisions of the Policy. We apply our policies and procedures without exception, waiver, or special arrangement, although we may vary our policies and procedures among our variable policies and investment divisions and may be more restrictive with regard to certain policies or investment divisions than others. Accordingly, there is no assurance that we will prevent all transfer activity that may adversely affect Policy owners or Portfolio shareholders. In addition, we cannot guarantee that the Portfolios will not be harmed by transfer activity related to other insurance companies and/or retirement plans that may invest in the Portfolios. Our policies and procedures may result in restrictions being applied to Policy owner(s). These restrictions may include: .. requiring you to send us by U.S. mail a signed, written request to make transfers; .. establishing an earlier submission time for telephone, facsimile, and Internet requests than for written requests or removing the availability of these means for making transfers; .. limiting the number of transfers you may make each Policy Year; .. charging a transfer or collecting a fund redemption fee; .. denying a transfer request from an authorized third party acting on behalf of multiple Policy owners; and .. imposing other limitations and modifications where we determine that exercise of the transfer privilege may create a disadvantage to other Policy owners. If restrictions are imposed on a Policy owner, we will reverse upon discovery any transaction inadvertently processed in contravention of such restrictions. In accordance with applicable law, we reserve the right to modify or terminate the transfer privilege at any time. We also reserve the right to defer or restrict the transfer privilege at any time that we 7 are unable to purchase or redeem shares of any of the Portfolios, including any refusal or restriction on purchases or redemptions of their shares as a result of their own policies and procedures on market timing activities. You should read the Fund prospectuses for more details. Automated Investment Strategies We may, at any time, modify or terminate any of the automated investment strategies currently available. Internet Transfers We now offer Internet transfer capability for your Policy. You may make transfers on www.metlife.com. Federal Tax Matters The following is a brief summary of some tax rules that may apply to your Policy. It does not purport to be complete or cover every situation. Because individual circumstances vary, you should consult with your own tax advisor to find out how taxes can affect your benefits and rights under your Policy, especially before you make unscheduled premium payments, change your specified face amount, change your death benefit option, change coverage provided by riders, take a loan or withdrawal, or assign or surrender the Policy. [SIDEBAR: You should consult with your own tax advisor to find out how taxes can affect your benefits and rights under your Policy.] Insurance proceeds .. Generally excludable from your beneficiary's gross income. .. The proceeds may be subject to federal estate tax: (i) if paid to the insured's estate; or (ii) if paid to a different beneficiary if the insured possessed incidents of ownership at or within three years before death. .. If you die before the insured, the value of your Policy (determined under IRS rules) is included in your estate and may be subject to federal estate tax. . Whether or not any federal estate tax is due is based on a number of factors, including the estate size. . The insurance proceeds payable upon death of the insured will never be less than the minimum amount required for the Policy to be treated as life insurance under section 7702 of the Internal Revenue Code, as in effect on the date the Policy was issued. Cash value (if your Policy is not a modified endowment contract) You are generally not taxed on your cash value until you withdraw it, surrender your Policy or receive a distribution such as on the Final Date. In these cases, you are generally permitted to take withdrawals and receive other distributions up to the amount of premiums paid without any tax consequences. However, withdrawals and other distributions will be subject to income tax after you have received amounts equal to the total premiums you paid. Somewhat different rules apply in the first 15 Policy years, when a distribution may be subject to tax if there is a gain in your Policy (which is generally when your cash value exceeds the cumulative premiums you paid). There may be an indirect tax upon the income in the Policy or the proceeds of a Policy under the Federal corporate alternative minimum tax, if you are subject to that tax. Split-Dollar Insurance Plans The IRS has recently issued guidance on split dollar insurance plans. A tax advisor should be consulted with respect to this new guidance if you have purchased or are considering the purchase of a Policy for a split dollar insurance plan. 8 The Sarbanes-Oxley Act of 2002 (the "Act"), which was signed into law on July 30, 2002, prohibits, with limited exceptions, publicly-traded companies, including non-U.S. companies that have securities listed on U.S. exchanges, from extending, directly or indirectly or through a subsidiary, many types of personal loans to their directors or executive officers. It is possible that this prohibition may be interpreted to apply to certain split-dollar life insurance arrangements for directors and executive officers of such companies, since at least some such arrangements can arguably be viewed as involving a loan from the employer for at least some purposes. Although the prohibition on loans generally took effect as of July 30, 2002, there is an exception for loans outstanding as of the date of enactment, so long as there is no material modification to the loan terms and the loan is not renewed after July 30, 2002. Any affected business contemplating the payment of a premium on an existing Policy or the purchase of a new Policy in connection with a split-dollar life insurance arrangement should consult legal counsel. Loans .. Loan amounts you receive will generally not be subject to income tax, unless your Policy is or becomes a modified endowment contract, is exchanged or terminates. .. Interest on loans is generally not deductible. For businesses that own a Policy, at least part of the interest deduction unrelated to the Policy may be disallowed unless the insured is a 20% owner, officer, director or employee of the business. .. If your Policy terminates (upon surrender, cancellation lapse, the Final Date or, in most cases, exchange) while any Policy loan is outstanding, the amount of the loan plus accrued interest thereon will be deemed to be a "distribution" to you. Any such distribution will have the same tax consequences as any other Policy distribution. Since amounts borrowed reduce the cash value that will be distributed to you if the Policy is surrendered, cancelled or lapses, any cash value distributed to you in these circumstances may be insufficient to pay the income tax on any gain. Modified Endowment Contracts These contracts are life insurance policies where the premiums paid during the first 7 years after the Policy is issued, or after a material change in the Policy exceeds tax law limits referred to as the "7-pay test." Material changes in the Policy, include changes in the level of benefits and certain other changes to your Policy after the issue date. Reductions in benefits during a 7-pay period may cause your Policy to become a modified endowment contract. Generally, a life insurance policy that is received in exchange for a modified endowment contract will also be considered a modified endowment contract. The IRS has promulgated a procedure for the correction of inadvertent modified endowment contracts. If your Policy is considered a modified endowment contract: .. The death benefit will still generally be income tax free to your beneficiary, as discussed above. .. Amounts withdrawn or distributed before the insured's death, including (without limitation) loans, assignments and pledges, are (to the extent of any gains on your policy) treated as income first and subject to income tax. All modified endowment contracts you purchase from us and our affiliates during the same calendar year are treated as a single contract for purposes of determining the amount of any such income. .. You will generally owe an additional 10% tax penalty on the taxable portion of the amounts you received before age 59 1/2, except generally if you are disabled or the distribution is part of a series of substantially equal periodic payments. Diversification In order for your Policy to qualify as life insurance, we must comply with certain diversification standards with respect to the investments underlying the Policy. We believe that we satisfy and will continue to satisfy these diversification standards. Inadvertent failure to meet these standards may be 9 able to be corrected. Failure to meet these standards would result in immediate taxation to Policy owners of gains under their Policies. Changes to tax rules and interpretations Changes in applicable tax laws, rules and interpretations can adversely affect the tax treatment of your Policy. These changes may take effect retroactively. We reserve the right to amend the Policy in any way necessary to avoid any adverse tax treatment. Examples of changes that could create adverse tax consequences include: . Possible taxation of cash value transfers. . Possible taxation as if you were the owner of your allocable portion of the Separate Account's assets. . Possible limits on the number of investment funds available or the frequency of transfers among them. . Possible changes in the tax treatment of Policy benefits and rights. Foreign tax credits To the extent permitted under the federal tax law, we may claim the benefit of certain foreign tax credits attributable to taxes paid by certain Portfolios to foreign jurisdictions. Experts The financial statements included in this Supplement to the prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports appearing herein and are included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. Deloitte & Touche LLP's principal business address is 201 E. Kennedy Boulevard, Tampa, Florida 33602. Financial Statements The financial statements of the Separate Account are attached to this Supplement. You can find the financial statements of MetLife in the Statement of Additional Information referred to on the next page. Our financial statements should be considered only as bearing upon our ability to meet our obligations under the Policy. 10 INDEPENDENT AUDITORS' REPORT To the Policyholders of Metropolitan Life Separate Account UL and the Board of Directors Metropolitan Life Insurance Company: We have audited the accompanying statement of assets and liabilities of each of the investment divisions (as disclosed in Note 1 to the financial statements) comprising Metropolitan Life Separate Account UL (the "Separate Account") of Metropolitan Life Insurance Company ("Metropolitan Life") as of December 31, 2003, and the related statements of operations and statements of changes in net assets for each of the periods in the three years then ended. These financial statements are the responsibility of the Separate Account's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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 custodians and the depositors of the Separate Account. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each of the investment divisions comprising the Separate Account of Metropolitan Life as of December 31, 2003, the results of their operations and the changes in their net assets for each of the periods in the three years then ended, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Tampa, Florida April 16, 2004 F-1 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 2003
State Street State Street State Street Research Research Research Investment Trust Diversified Aggressive Growth Investment Division Investment Division Investment Division ------------------- ------------------- ------------------- ASSETS: Investments at Value: Metropolitan Series Fund, Inc. ("Metropolitan Fund") State Street Research Investment Trust Portfolio (14,863,974 Shares; cost $441,842,964)................ $ 366,694,241 $ -- $ -- State Street Research Diversified Portfolio (19,105,895 Shares; cost $308,822,843)................ -- 289,072,197 -- State Street Research Aggressive Growth Portfolio (10,426,099 Shares; cost $247,124,703)................ -- -- 187,148,479 MetLife Stock Index Portfolio (15,492,994 Shares; cost $471,480,310)................ -- -- -- FI International Stock Portfolio (4,453,384 Shares; cost $49,092,645).................. -- -- -- Janus Mid Cap Portfolio (13,049,904 Shares; cost $245,811,880)................ -- -- -- T. Rowe Price Small Cap Growth Portfolio (5,028,788 Shares; cost $60,709,864).................. -- -- -- Scudder Global Equity Portfolio (2,503,741 Shares; cost $28,862,268).................. -- -- -- Harris Oakmark Large Cap Value Portfolio (3,104,521 Shares; cost $33,265,016).................. -- -- -- Neuberger Berman Partners Mid Cap Value Portfolio (1,781,579 Shares; cost $24,876,339).................. -- -- -- T. Rowe Price Large Cap Growth Portfolio (2,868,134 Shares; cost $31,282,336).................. -- -- -- Lehman Brothers Aggregate Bond Index Portfolio (5,026,722 Shares; cost $53,380,037).................. -- -- -- Morgan Stanley EAFE Index Portfolio (2,459,540 Shares; cost $19,855,278).................. -- -- -- Russell 2000 Index Portfolio (2,317,218 Shares; cost $22,079,290).................. -- -- -- Met/Putnam Voyager Portfolio (1,900,061 Shares; cost $8,302,977)................... -- -- -- State Street Research Aurora Portfolio (3,401,875 Shares; cost $44,584,567).................. -- -- -- MetLife Mid Cap Stock Index Portfolio (2,344,249 Shares; cost $23,095,881).................. -- -- -- Franklin Templeton Small Cap Growth Portfolio (327,356 Shares; cost $2,499,796)..................... -- -- -- State Street Research Large Cap Value Portfolio (104,079 Shares; cost $957,558)....................... -- -- -- Davis Venture Value Portfolio (965,333 Shares; cost $21,277,385).................... -- -- -- Loomis Sayles Small Cap Portfolio (23,295 Shares; cost $3,717,206)...................... -- -- -- Alger Equity Growth Portfolio (263,538 Shares; cost $4,582,005)..................... -- -- -- MFS Investors Trust Portfolio (186,025 Shares; cost $1,391,215)..................... -- -- -- MFS Research Managers Portfolio (79,153 Shares; cost $613,213)........................ -- -- -- State Street Research Bond Income Portfolio (837,355 Shares; cost $89,830,207).................... -- -- -- FI Structured Equity Portfolio (3,215 Shares; cost $454,116)......................... -- -- -- Harris Oakmark Focused Value Portfolio (115,466 Shares; cost $21,015,539).................... -- -- -- Salomon Brothers Strategic Bond Opportunities Portfolio (409,695 Shares; cost $4,866,132)..................... -- -- -- Salomon Brothers U.S. Government Portfolio (592,211 Shares; cost $7,267,172)..................... -- -- -- State Street Research Money Market Portfolio (273,528 Shares; cost $27,352,817).................... -- -- -- FI Mid Cap Opportunities Portfolio (96,616 Shares; cost $916,740)........................ -- -- -- ----------------- ----------------- ----------------- Total Investments...................................... 366,694,241 289,072,197 187,148,479 Cash and Accounts Receivable........................... 393,060 -- 119,894 ----------------- ----------------- ----------------- Total Assets........................................... 367,087,301 289,072,197 187,268,373 LIABILITIES............................................ Due to/From Metropolitan Life Insurance Company........ -- 38,810 -- ----------------- ----------------- ----------------- NET ASSETS............................................. $367,087,301 $289,033,387 $187,268,373 ================= ================= ================= Outstanding Units (In Thousands)....................... 16,151 12,881 11,833 Unit Values............................................ $10.57 to $33.12 $11.79 to $30.64 $11.71 to $16.87
MetLife Stock Index Investment Division ------------------- ASSETS: Investments at Value: Metropolitan Series Fund, Inc. ("Metropolitan Fund") State Street Research Investment Trust Portfolio (14,863,974 Shares; cost $441,842,964)................ $ -- State Street Research Diversified Portfolio (19,105,895 Shares; cost $308,822,843)................ -- State Street Research Aggressive Growth Portfolio (10,426,099 Shares; cost $247,124,703)................ -- MetLife Stock Index Portfolio (15,492,994 Shares; cost $471,480,310)................ 456,268,669 FI International Stock Portfolio (4,453,384 Shares; cost $49,092,645).................. -- Janus Mid Cap Portfolio (13,049,904 Shares; cost $245,811,880)................ -- T. Rowe Price Small Cap Growth Portfolio (5,028,788 Shares; cost $60,709,864).................. -- Scudder Global Equity Portfolio (2,503,741 Shares; cost $28,862,268).................. -- Harris Oakmark Large Cap Value Portfolio (3,104,521 Shares; cost $33,265,016).................. -- Neuberger Berman Partners Mid Cap Value Portfolio (1,781,579 Shares; cost $24,876,339).................. -- T. Rowe Price Large Cap Growth Portfolio (2,868,134 Shares; cost $31,282,336).................. -- Lehman Brothers Aggregate Bond Index Portfolio (5,026,722 Shares; cost $53,380,037).................. -- Morgan Stanley EAFE Index Portfolio (2,459,540 Shares; cost $19,855,278).................. -- Russell 2000 Index Portfolio (2,317,218 Shares; cost $22,079,290).................. -- Met/Putnam Voyager Portfolio (1,900,061 Shares; cost $8,302,977)................... -- State Street Research Aurora Portfolio (3,401,875 Shares; cost $44,584,567).................. -- MetLife Mid Cap Stock Index Portfolio (2,344,249 Shares; cost $23,095,881).................. -- Franklin Templeton Small Cap Growth Portfolio (327,356 Shares; cost $2,499,796)..................... -- State Street Research Large Cap Value Portfolio (104,079 Shares; cost $957,558)....................... -- Davis Venture Value Portfolio (965,333 Shares; cost $21,277,385).................... -- Loomis Sayles Small Cap Portfolio (23,295 Shares; cost $3,717,206)...................... -- Alger Equity Growth Portfolio (263,538 Shares; cost $4,582,005)..................... -- MFS Investors Trust Portfolio (186,025 Shares; cost $1,391,215)..................... -- MFS Research Managers Portfolio (79,153 Shares; cost $613,213)........................ -- State Street Research Bond Income Portfolio (837,355 Shares; cost $89,830,207).................... -- FI Structured Equity Portfolio (3,215 Shares; cost $454,116)......................... -- Harris Oakmark Focused Value Portfolio (115,466 Shares; cost $21,015,539).................... -- Salomon Brothers Strategic Bond Opportunities Portfolio (409,695 Shares; cost $4,866,132)..................... -- Salomon Brothers U.S. Government Portfolio (592,211 Shares; cost $7,267,172)..................... -- State Street Research Money Market Portfolio (273,528 Shares; cost $27,352,817).................... -- FI Mid Cap Opportunities Portfolio (96,616 Shares; cost $916,740)........................ -- ---------------- Total Investments...................................... 456,268,669 Cash and Accounts Receivable........................... 845,678 ---------------- Total Assets........................................... 457,114,347 LIABILITIES............................................ Due to/From Metropolitan Life Insurance Company........ -- ---------------- NET ASSETS............................................. $457,114,347 ================ Outstanding Units (In Thousands)....................... 25,747 Unit Values............................................ $9.58 to $29.26
See Notes to Financial Statements. F-2
FI International Janus T. Rowe Price Scudder Harris Oakmark Neuberger Berman T. Rowe Price Stock Mid Cap Small Cap Growth Global Equity Large Cap Value Partners Mid Cap Large Cap Growth Investment Investment Investment Investment Investment Value Investment Investment Division Division Division Division Division Division Division - ---------------- ---------------- ----------------- ----------------- ----------------- ----------------- ---------------- $ -- $ -- $ -- $ -- $ -- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 43,910,364 -- -- -- -- -- -- -- 182,829,152 -- -- -- -- -- -- -- 61,703,229 -- -- -- -- -- -- -- 28,617,758 -- -- -- -- -- -- -- 37,440,522 -- -- -- -- -- -- -- 30,910,402 -- -- -- -- -- -- -- 33,385,077 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - ---------------- ---------------- ----------------- ----------------- ----------------- ----------------- ---------------- 43,910,364 182,829,152 61,703,229 28,617,758 37,440,522 30,910,402 33,385,077 73,925 1,248,936 139,936 77,960 63,107 35,149 135,257 - ---------------- ---------------- ----------------- ----------------- ----------------- ----------------- ---------------- 43,984,289 184,078,088 61,843,165 28,695,718 37,503,629 30,945,551 33,520,334 -- -- -- -- -- -- -- - ---------------- ---------------- ----------------- ----------------- ----------------- ----------------- ---------------- $ 43,984,289 $ 184,078,088 $ 61,843,165 $ 28,695,718 $ 37,503,629 $ 30,945,551 $ 33,520,334 ================ ================ ================= ================= ================= ================= ================ 3,484 13,348 4,703 2,140 3,060 1,946 3,290 $9.92 to $13.85 $5.69 to $16.17 $12.64 to $14.08 $12.92 to $14.39 $11.53 to $14.56 $13.86 to $19.29 $8.23 to $12.13 Lehman Brothers Aggregate Bond Index Investment Division - ----------------- $ -- -- -- -- -- -- -- -- -- -- -- 54,942,071 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - ----------------- 54,942,071 52,236 - ----------------- 54,994,307 -- - ----------------- $ 54,994,307 ================= 4,064 $12.77 to $13.67
See Notes to Financial Statements. F-3 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 2003
Morgan Stanley Russell 2000 Met/Putnam State Street EAFE Index Index Voyager Research Aurora Investment Investment Investment Investment Division Division Division Division ---------------- ----------------- --------------- ----------------- ASSETS: Investments at Value: Metropolitan Series Fund, Inc. ("Metropolitan Fund") State Street Research Investment Trust Portfolio (14,863,974 Shares; cost $441,842,964)................ $ -- $ -- $ -- $ -- State Street Research Diversified Portfolio (19,105,895 Shares; cost $308,822,843)................ -- -- -- -- State Street Research Aggressive Growth Portfolio (10,426,099 Shares; cost $247,124,703)................ -- -- -- -- MetLife Stock Index Portfolio (15,492,994 Shares; cost $471,480,310)................ -- -- -- -- FI International Stock Portfolio (4,453,384 Shares; cost $49,092,645).................. -- -- -- -- Janus Mid Cap Portfolio (13,049,904 Shares; cost $245,811,880)................ -- -- -- -- T. Rowe Price Small Cap Growth Portfolio (5,028,788 Shares; cost $60,709,864).................. -- -- -- -- Scudder Global Equity Portfolio (2,503,741 Shares; cost $28,862,268).................. -- -- -- -- Harris Oakmark Large Cap Value Portfolio (3,104,521 Shares; cost $33,265,016).................. -- -- -- -- Neuberger Berman Partners Mid Cap Value Portfolio (1,781,579 Shares; cost $24,876,339).................. -- -- -- -- T. Rowe Price Large Cap Growth Portfolio (2,868,134 Shares; cost $31,282,336).................. -- -- -- -- Lehman Brothers Aggregate Bond Index Portfolio (5,026,722 Shares; cost $53,380,037).................. -- -- -- -- Morgan Stanley EAFE Index Portfolio (2,459,540 Shares; cost $19,855,278).................. 24,103,487 -- -- -- Russell 2000 Index Portfolio (2,317,218 Shares; cost $22,079,290).................. -- 27,690,757 -- -- Met/Putnam Voyager Portfolio (1,900,061 Shares; cost $8,302,977)................... -- -- 8,588,274 -- State Street Research Aurora Portfolio (3,401,875 Shares; cost $44,584,567).................. -- -- -- 56,539,160 MetLife Mid Cap Stock Index Portfolio (2,344,249 Shares; cost $23,095,881).................. -- -- -- -- Franklin Templeton Small Cap Growth Portfolio (327,356 Shares; cost $2,499,796)..................... -- -- -- -- State Street Research Large Cap Value Portfolio (104,079 Shares; cost $957,558)....................... -- -- -- -- Davis Venture Value Portfolio (965,333 Shares; cost $21,277,385).................... -- -- -- -- Loomis Sayles Small Cap Portfolio (23,295 Shares; cost $3,717,206)...................... -- -- -- -- Alger Equity Growth Portfolio (263,538 Shares; cost $4,582,005)..................... -- -- -- -- MFS Investors Trust Portfolio (186,025 Shares; cost $1,391,215)..................... -- -- -- -- MFS Research Managers Portfolio (79,153 Shares; cost $613,213)........................ -- -- -- -- State Street Research Bond Income Portfolio (837,355 Shares; cost $89,830,207).................... -- -- -- -- FI Structured Equity Portfolio (3,215 Shares; cost $454,116)......................... -- -- -- -- Harris Oakmark Focused Value Portfolio (115,466 Shares; cost $21,015,539).................... -- -- -- -- Salomon Brothers Strategic Bond Opportunities Portfolio (409,695 Shares; cost $4,866,132)..................... -- -- -- -- Salomon Brothers U.S. Government Portfolio (592,211 Shares; cost $7,267,172)..................... -- -- -- -- State Street Research Money Market Portfolio (273,528 Shares; cost $27,352,817).................... -- -- -- -- FI Mid Cap Opportunities Portfolio (96,616 Shares; cost $916,740)........................ -- -- -- -- ---------------- ----------------- --------------- ----------------- Total Investments...................................... 24,103,487 27,690,757 8,588,274 56,539,160 Cash and Accounts Receivable........................... 186,690 35,522 62,483 502 ---------------- ----------------- --------------- ----------------- Total Assets........................................... 24,290,177 27,726,279 8,650,757 56,539,662 LIABILITIES Due to/From Metropolitan Life Insurance Company........ -- -- -- -- ---------------- ----------------- --------------- ----------------- NET ASSETS $ 24,290,177 $ 27,726,279 $ 8,650,757 $ 56,539,662 ================ ================= =============== ================= Outstanding Units (In Thousands)....................... 2,676 2,085 1,913 3,372 Unit Values............................................ $7.85 to $10.37 $10.75 to $14.59 $4.38 to $4.78 $15.46 to $16.89
See Notes to Financial Statements. F-4
MetLife Franklin State Street MFS Mid Cap Stock Templeton Small Research Large Davis Venture Loomis Sayles Alger Equity Investors Index Cap Growth Cap Value Value Small Cap Growth Trust Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division - ----------------- --------------- ----------------- ---------------- ----------------- ------------ --------------- $ -- $ -- $ -- $ -- $ -- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 27,896,567 -- -- -- -- -- -- -- 3,041,132 -- -- -- -- -- -- -- 1,110,523 -- -- -- -- -- -- -- 24,393,963 -- -- -- -- -- -- -- 4,415,478 -- -- -- -- -- -- -- 4,933,432 -- -- -- -- -- -- -- 1,538,430 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - ----------------- --------------- ----------------- ---------------- ----------------- ---------- --------------- 27,896,567 3,041,132 1,110,523 24,393,963 4,415,478 4,933,432 1,538,430 28,320 -- -- 35,532 7,461 -- 5,616 - ----------------- --------------- ----------------- ---------------- ----------------- ---------- --------------- 27,924,887 3,041,132 1,110,523 24,429,495 4,422,939 4,933,432 1,544,046 -- 2,885 395 -- -- -- -- - ----------------- --------------- ----------------- ---------------- ----------------- ---------- --------------- $ 27,924,887 $ 3,038,247 $ 1,110,128 $ 24,429,495 $ 4,422,939 $4,933,432 $ 1,544,046 ================= =============== ================= ================ ================= ========== =============== 2,338 329 103 1,322 30 721 186 $11.04 to $12.13 $9.07 to $9.29 $10.70 to $10.86 $9.79 to $28.40 $9.27 to $205.39 $6.84 $7.96 to $8.33 MFS Research Mangers Investment Division - --------------- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 666,466 -- -- -- -- -- -- -- - --------------- 666,466 2,075 - --------------- 668,541 -- - --------------- $ 668,541 =============== 81 $6.57 to $8.51
See Notes to Financial Statements. F-5 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 2003
State Street Salomon Brothers Research Bond FI Structured Harris Oakmark Strategic Bond Income Equity Focused Value Opportunities Investment Investment Investment Investment Division Division Division Division ---------------- --------------- ------------------ ---------------- ASSETS: Investments at Value: Metropolitan Series Fund, Inc. ("Metropolitan Fund") State Street Research Investment Trust Portfolio (14,863,974 Shares; cost $441,842,964)................ $ -- $ -- $ -- $ -- State Street Research Diversified Portfolio (19,105,895 Shares; cost $308,822,843)................ -- -- -- -- State Street Research Aggressive Growth Portfolio (10,426,099 Shares; cost $247,124,703)................ -- -- -- -- MetLife Stock Index Portfolio (15,492,994 Shares; cost $471,480,310)................ -- -- -- -- FI International Stock Portfolio (4,453,384 Shares; cost $49,092,645).................. -- -- -- -- Janus Mid Cap Portfolio (13,049,904 Shares; cost $245,811,880)................ -- -- -- -- T. Rowe Price Small Cap Growth Portfolio (5,028,788 Shares; cost $60,709,864).................. -- -- -- -- Scudder Global Equity Portfolio (2,503,741 Shares; cost $28,862,268).................. -- -- -- -- Harris Oakmark Large Cap Value Portfolio (3,104,521 Shares; cost $33,265,016).................. -- -- -- -- Neuberger Berman Partners Mid Cap Value Portfolio (1,781,579 Shares; cost $24,876,339).................. -- -- -- -- T. Rowe Price Large Cap Growth Portfolio (2,868,134 Shares; cost $31,282,336).................. -- -- -- -- Lehman Brothers Aggregate Bond Index Portfolio (5,026,722 Shares; cost $53,380,037).................. -- -- -- -- Morgan Stanley EAFE Index Portfolio (2,459,540 Shares; cost $19,855,278).................. -- -- -- -- Russell 2000 Index Portfolio (2,317,218 Shares; cost $22,079,290).................. -- -- -- -- Met/Putnam Voyager Portfolio (1,900,061 Shares; cost $8,302,977)................... -- -- -- -- State Street Research Aurora Portfolio (3,401,875 Shares; cost $44,584,567).................. -- -- -- -- MetLife Mid Cap Stock Index Portfolio (2,344,249 Shares; cost $23,095,881).................. -- -- -- -- Franklin Templeton Small Cap Growth Portfolio (327,356 Shares; cost $2,499,796)..................... -- -- -- -- State Street Research Large Cap Value Portfolio (104,079 Shares; cost $957,558)....................... -- -- -- -- Davis Venture Value Portfolio (965,333 Shares; cost $21,277,385).................... -- -- -- -- Loomis Sayles Small Cap Portfolio (23,295 Shares; cost $3,717,206)...................... -- -- -- -- Alger Equity Growth Portfolio (263,538 Shares; cost $4,582,005)..................... -- -- -- -- MFS Investors Trust Portfolio (186,025 Shares; cost $1,391,215)..................... -- -- -- -- MFS Research Managers Portfolio (79,153 Shares; cost $613,213)........................ -- -- -- -- State Street Research Bond Income Portfolio (837,355 Shares; cost $89,830,207).................... 96,806,570 -- -- -- FI Structured Equity Portfolio (3,215 Shares; cost $454,116)......................... -- 505,504 -- -- Harris Oakmark Focused Value Portfolio (115,466 Shares; cost $21,015,539).................... -- -- 25,894,491 -- Salomon Brothers Strategic Bond Opportunities Portfolio (409,695 Shares; cost $4,866,132)..................... -- -- -- 5,166,251 Salomon Brothers U.S. Government Portfolio (592,211 Shares; cost $7,267,172)..................... -- -- -- -- State Street Research Money Market Portfolio (273,528 Shares; cost $27,352,817).................... -- -- -- -- FI Mid Cap Opportunities Portfolio (96,616 Shares; cost $916,740)........................ -- -- -- -- ---------------- --------------- ------------------ ---------------- Total Investments...................................... 96,806,570 505,504 25,894,491 5,166,251 Cash and Accounts Receivable........................... -- -- -- -- ---------------- --------------- ------------------ ---------------- Total Assets........................................... 96,806,570 505,504 25,894,491 5,166,251 LIABILITIES Due to/From Metropolitan Life Insurance Company........ 86,980 221 28,853 3,182 ---------------- --------------- ------------------ ---------------- NET ASSETS............................................. $96,719,590 $505,283 $25,865,638 $5,163,069 ================ =============== ================== ================ Outstanding Units (In Thousands)....................... 5,517 49 115 375 Unit Values............................................ $12.89 to $27.12 $8.37 to $10.56 $219.73 to $225.05 $13.52 to $13.85
See Notes to Financial Statements. F-6
State Street Salomon Brothers Research FI Mid Cap U.S. Government Money Market Opportunities Investment Investment Investment Division Division Division ----------------- ----------------- ----------------- $ -- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 7,307,884 -- -- -- 27,352,819 -- -- -- 1,112,044 ----------------- ----------------- ----------------- 7,307,884 27,352,819 1,112,044 -- 15,270 -- ----------------- ----------------- ----------------- 7,307,884 27,368,089 1,112,044 2,982 21,662 273 ----------------- ----------------- ----------------- $ 7,304,902 $ 27,346,427 $ 1,111,771 ================= ================= ================= 559 1,760 96 $12.82 to $13.13 $15.21 to $15.92 $11.50 to $11.67
See Notes to Financial Statements. F-7 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 2003
Invesco VIF Invesco VIF Janus Aspen Invesco VIF Equity Real Estate Growth High Yield Income Opportunity Investment Investment Investment Investment Division Division Division Division ----------- ----------- ----------- ----------- ASSETS: Investments at Value: Janus Aspen Series Fund ("Janus Fund") Janus Aspen Growth Portfolio (182,002 Shares; cost $3,317,989).......................................... $3,499,893 $ -- $ -- $ -- Invesco Variable Investment Funds, Inc ("Invesco Funds") Invesco VIF High Yield Portfolio (101,401 Shares; cost $755,920)............................................ -- 804,108 -- -- Invesco VIF Equity Income Portfolio (10,296 Shares; cost $180,622)............................................. -- -- 184,406 -- Invesco VIF Real Estate Opportunity Portfolio (12,455 Shares; cost $132,719)............................................. -- -- -- 178,608 Franklin Templeton Variable Insurance Product Series Funds ("Franklin Fund") Franklin Templeton International Stock Portfolio (327,691 Shares; cost $3,587,146).......................................... -- -- -- -- Franklin Templeton Valuemark Small Cap Portfolio (77,203 Shares; cost $1,159,415)........................................... -- -- -- -- Alliance Variable Product Series Funds ("Alliance Fund") Alliance Growth & Income Portfolio (95,425 Shares; cost $1,731,867)........................................... -- -- -- -- Alliance Premier Growth Portfolio (3,941 Shares; cost $83,621)............................................... -- -- -- -- Alliance Technology Portfolio (3,177 Shares; cost $43,696)............................................... -- -- -- -- Fidelity Variable Insurance Products Funds ("Fidelity Funds") Fidelity VIP Contrafund Portfolio (38,974 Shares; cost $783,501)............................................. -- -- -- -- Fidelity VIP Asset Manager Growth Portfolio (35,491 Shares; cost $395,048)............................................. -- -- -- -- Fidelity VIP Growth Portfolio (9,647 Shares; cost $277,258).............................................. -- -- -- -- American Series Funds ("American Fund") American Funds Growth Portfolio (555,600 Shares; cost $21,669,606)......................................... -- -- -- -- American Funds Growth-Income Portfolio (602,836 Shares; cost $17,398,081)......................................... -- -- -- -- American Funds Global Small Cap Portfolio (410,836 Shares; cost $4,620,777).......................................... -- -- -- -- Met Investors Series Trust ("Met Investors Fund") T. Rowe Price Mid Cap Growth Portfolio (527,122 Shares; cost $2,959,767).......................................... -- -- -- -- MFS Research International Portfolio (152,598 Shares; cost $1,307,159).......................................... -- -- -- -- PIMCO Total Return Portfolio (1,093,890 Shares; cost $12,468,910)....................................... -- -- -- -- PIMCO Innovation Portfolio (924,904 Shares; cost $3,855,266).......................................... -- -- -- -- Lord Abbett Bond Debenture Portfolio (991,531 Shares; cost $10,678,786)......................................... -- -- -- -- Met/AIM Mid Cap Core Equity Portfolio (80,233 Shares; cost $854,896)............................................. -- -- -- -- Met/AIM Small Cap Growth Portfolio (53,490 Shares; cost $596,561)............................................. -- -- -- -- Harris Oakmark International Portfolio (68,416 Shares; cost $766,989)............................................. -- -- -- -- Janus Aggressive Growth Portfolio (567,168 Shares; cost $3,302,437).......................................... -- -- -- -- Lord Abbett Growth and Income Portfolio (845 Shares; cost $16,883)................................................. -- -- -- -- ---------- -------- -------- -------- Total Investments........................................................... 3,499,893 804,108 184,406 178,608 Cash and Accounts Receivable................................................ -- -- -- -- ---------- -------- -------- -------- Total Assets................................................................ 3,499,893 804,108 184,406 178,608 LIABILITIES Due to/From Metropolitan Life Insurance Company............................. -- -- -- -- ---------- -------- -------- -------- NET ASSETS.................................................................. $3,499,893 $804,108 $184,406 $178,608 ========== ======== ======== ======== Outstanding Units (In Thousands)............................................ 435 87 19 10 Unit Values................................................................. $8.03 $9.21 $9.73 $17.79
See Notes to Financial Statements. F-8
Alliance Alliance Fidelity Franklin Templeton Franklin Templeton Growth & Premier Alliance Fidelity Asset Manager Fidelity International Stock Valuemark Small Income Growth Technology Contrafund Growth Growth Investment Cap Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ------------------- ------------------ ---------- ---------- ---------- ---------- ------------- ---------- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 4,053,532 -- -- -- -- -- -- -- -- 1,345,642 -- -- -- -- -- -- -- -- 2,063,085 -- -- -- -- -- -- -- -- 84,057 -- -- -- -- -- -- -- -- 45,595 -- -- -- -- -- -- -- -- 893,677 -- -- -- -- -- -- -- -- 432,629 -- -- -- -- -- -- -- -- 296,358 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- ----------- ---------- ---------- ------- ------- -------- -------- -------- 4,053,532 1,345,642 2,063,085 84,057 45,595 893,677 432,629 296,358 -- -- -- -- -- -- -- -- ----------- ---------- ---------- ------- ------- -------- -------- -------- 4,053,532 1,345,642 2,063,085 84,057 45,595 893,677 432,629 296,358 -- -- -- -- -- -- -- -- ----------- ---------- ---------- ------- ------- -------- -------- -------- $4,053,532 $1,345,642 $2,063,085 $84,057 $45,595 $893,677 $432,629 $296,358 =========== ========== ========== ======= ======= ======== ======== ======== 403 199 197 14 10 97 54 47 $10.03 $6.76 $10.47 $6.10 $4.54 $9.18 $8.00 $6.27
See Notes to Financial Statements. F-9 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 2003
American Funds American Funds American Funds Global Growth Growth-Income Small Cap Investment Investment Investment Division Division Division ---------------- ---------------- ---------------- ASSETS: Investments at Value: Janus Aspen Series Fund ("Janus Fund") Janus Aspen Growth Portfolio (182,002 Shares; cost $3,317,989).......................................... $ -- $ -- $ -- Invesco Variable Investment Funds, Inc ("Invesco Funds") Invesco VIF High Yield Portfolio (101,401 Shares; cost $755,920)............................................ -- -- -- Invesco VIF Equity Income Portfolio (10,296 Shares; cost $180,622)............................................. -- -- -- Invesco VIF Real Estate Opportunity Portfolio (12,455 Shares; cost $132,719)............................................. -- -- -- Franklin Templeton Variable Insurance Product Series Funds ("Franklin Fund") Franklin Templeton International Stock Portfolio (327,691 Shares; cost $3,587,146).......................................... -- -- -- Franklin Templeton Valuemark Small Cap Portfolio (77,203 Shares; cost $1,159,415)........................................... -- -- -- Alliance Variable Product Series Funds ("Alliance Fund") Alliance Growth & Income Portfolio (95,425 Shares; cost $1,731,867)........................................... -- -- -- Alliance Premier Growth Portfolio (3,941 Shares; cost $83,621)............................................... -- -- -- Alliance Technology Portfolio (3,177 Shares; cost $43,696)............................................... -- -- -- Fidelity Variable Insurance Products Funds ("Fidelity Funds") Fidelity VIP Contrafund Portfolio (38,974 Shares; cost $783,501)............................................. -- -- -- Fidelity VIP Asset Manager Growth Portfolio (35,491 Shares; cost $395,048)............................................. -- -- -- Fidelity VIP Growth Portfolio (9,647 Shares; cost $277,258).............................................. -- -- -- American Series Funds ("American Fund") American Funds Growth Portfolio (555,600 Shares; cost $21,669,606)......................................... 25,279,776 -- -- American Funds Growth-Income Portfolio (602,836 Shares; cost $17,398,081)......................................... -- 20,182,964 -- American Funds Global Small Cap Portfolio (410,836 Shares; cost $4,620,777).......................................... -- -- 5,784,566 Met Investors Series Trust ("Met Investors Fund") T. Rowe Price Mid Cap Growth Portfolio (527,122 Shares; cost $2,959,767).......................................... -- -- -- MFS Research International Portfolio (152,598 Shares; cost $1,307,159).......................................... -- -- -- PIMCO Total Return Portfolio (1,093,890 Shares; cost $12,468,910)....................................... -- -- -- PIMCO Innovation Portfolio (924,904 Shares; cost $3,855,266).......................................... -- -- -- Lord Abbett Bond Debenture Portfolio (991,531 Shares; cost $10,678,786)......................................... -- -- -- Met/AIM Mid Cap Core Equity Portfolio (80,233 Shares; cost $854,896)............................................. -- -- -- Met/AIM Small Cap Growth Portfolio (53,490 Shares; cost $596,561)............................................. -- -- -- Harris Oakmark International Portfolio (68,416 Shares; cost $766,989)............................................. -- -- -- Janus Aggressive Growth Portfolio (567,168 Shares; cost $3,302,437).......................................... -- -- -- Lord Abbett Growth and Income Portfolio (845 Shares; cost $16,883)................................................. -- -- -- ---------------- ---------------- ---------------- Total Investments........................................................... 25,279,776 20,182,964 5,784,566 Cash and Accounts Receivable................................................ 480,164 185,947 16,294 ---------------- ---------------- ---------------- Total Assets................................................................ 25,759,940 20,368,911 5,800,860 LIABILITIES Due to/From Metropolitan Life Insurance Company............................. -- -- -- ---------------- ---------------- ---------------- NET ASSETS.................................................................. $25,759,940 $20,368,911 $5,800,860 ================ ================ ================ Outstanding Units (In Thousands)............................................ 417 525 378 Unit Values................................................................. $60.53 to $62.00 $38.04 to $38.96 $15.06 to $15.42
T. Rowe Price Mid Cap Growth Investment Division -------------- ASSETS: Investments at Value: Janus Aspen Series Fund ("Janus Fund") Janus Aspen Growth Portfolio (182,002 Shares; cost $3,317,989).......................................... $ -- Invesco Variable Investment Funds, Inc ("Invesco Funds") Invesco VIF High Yield Portfolio (101,401 Shares; cost $755,920)............................................ -- Invesco VIF Equity Income Portfolio (10,296 Shares; cost $180,622)............................................. -- Invesco VIF Real Estate Opportunity Portfolio (12,455 Shares; cost $132,719)............................................. -- Franklin Templeton Variable Insurance Product Series Funds ("Franklin Fund") Franklin Templeton International Stock Portfolio (327,691 Shares; cost $3,587,146).......................................... -- Franklin Templeton Valuemark Small Cap Portfolio (77,203 Shares; cost $1,159,415)........................................... -- Alliance Variable Product Series Funds ("Alliance Fund") Alliance Growth & Income Portfolio (95,425 Shares; cost $1,731,867)........................................... -- Alliance Premier Growth Portfolio (3,941 Shares; cost $83,621)............................................... -- Alliance Technology Portfolio (3,177 Shares; cost $43,696)............................................... -- Fidelity Variable Insurance Products Funds ("Fidelity Funds") Fidelity VIP Contrafund Portfolio (38,974 Shares; cost $783,501)............................................. -- Fidelity VIP Asset Manager Growth Portfolio (35,491 Shares; cost $395,048)............................................. -- Fidelity VIP Growth Portfolio (9,647 Shares; cost $277,258).............................................. -- American Series Funds ("American Fund") American Funds Growth Portfolio (555,600 Shares; cost $21,669,606)......................................... -- American Funds Growth-Income Portfolio (602,836 Shares; cost $17,398,081)......................................... -- American Funds Global Small Cap Portfolio (410,836 Shares; cost $4,620,777).......................................... -- Met Investors Series Trust ("Met Investors Fund") T. Rowe Price Mid Cap Growth Portfolio (527,122 Shares; cost $2,959,767).......................................... 3,368,307 MFS Research International Portfolio (152,598 Shares; cost $1,307,159).......................................... -- PIMCO Total Return Portfolio (1,093,890 Shares; cost $12,468,910)....................................... -- PIMCO Innovation Portfolio (924,904 Shares; cost $3,855,266).......................................... -- Lord Abbett Bond Debenture Portfolio (991,531 Shares; cost $10,678,786)......................................... -- Met/AIM Mid Cap Core Equity Portfolio (80,233 Shares; cost $854,896)............................................. -- Met/AIM Small Cap Growth Portfolio (53,490 Shares; cost $596,561)............................................. -- Harris Oakmark International Portfolio (68,416 Shares; cost $766,989)............................................. -- Janus Aggressive Growth Portfolio (567,168 Shares; cost $3,302,437).......................................... -- Lord Abbett Growth and Income Portfolio (845 Shares; cost $16,883)................................................. -- -------------- Total Investments........................................................... 3,368,307 Cash and Accounts Receivable................................................ 6,963 -------------- Total Assets................................................................ 3,375,270 LIABILITIES Due to/From Metropolitan Life Insurance Company............................. -- -------------- NET ASSETS.................................................................. $3,375,270 ============== Outstanding Units (In Thousands)............................................ 527 Unit Values................................................................. $6.28 to $6.43
See Notes to Financial Statements. F-10
MFS Lord Abbett Met/AIM Mid Research PIMCO PIMCO Bond Cap Met/AIM Small Harris Oakmark International Total Return Innovation Debenture Core Equity Cap Growth International Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division - -------------- ---------------- -------------- ---------------- ---------------- ---------------- ----------------- $ -- $ -- $ -- $ -- $ -- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 1,496,988 -- -- -- -- -- -- -- 12,700,057 -- -- -- -- -- -- -- 4,467,285 -- -- -- -- -- -- -- 11,938,027 -- -- -- -- -- -- -- 989,278 -- -- -- -- -- -- -- 643,481 -- -- -- -- -- -- -- 813,470 -- -- -- -- -- -- -- -- -- -- -- -- -- -- - -------------- ---------------- -------------- ---------------- ---------------- ---------------- ----------------- 1,496,988 12,700,057 4,467,285 11,938,027 989,278 643,481 813,470 232 -- 13,528 104,275 -- -- -- - -------------- ---------------- -------------- ---------------- ---------------- ---------------- ----------------- 1,497,220 12,700,057 4,480,813 12,042,302 989,278 643,481 813,470 -- 2,991 -- -- 346 30 454 - -------------- ---------------- -------------- ---------------- ---------------- ---------------- ----------------- $1,497,220 $12,697,066 $4,480,813 $12,042,302 $988,932 $643,451 $ 813,016 ============== ================ ============== ================ ================ ================ ================= 151 1,042 932 876 92 60 72 $9.70 to $9.94 $11.96 to $12.25 $4.72 to $4.83 $12.87 to $14.95 $10.69 to $10.85 $10.46 to $10.62 $11.23 to $11.40
Janus Lord Abbett Aggressive Growth & Growth Income Investment Investment Division Division - --------------- ----------- $ -- $ -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 3,987,193 -- -- 20,634 - --------------- ------- 3,987,193 20,634 15,526 -- - --------------- ------- 4,002,719 20,634 -- 105 - --------------- ------- $ 4,002,719 $20,529 =============== ======= 569 3 $6.89 to $7.06 $8.10
See Notes to Financial Statements. F-11 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
State Street Research Investment Trust Investment Division ---------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------- INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 2,669,960 $ 1,708,899 $ 51,437,166 Expenses: Mortality and expense charges................................ 2,738,164 2,678,347 3,136,115 ----------- ------------ ------------- Net investment (loss) income................................... (68,204) (969,448) 48,301,051 ----------- ------------ ------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (6,958,914) (6,132,437) 731,187 Change in unrealized appreciation (depreciation) of investments 88,855,777 (90,883,953) (122,469,738) ----------- ------------ ------------- Net realized and unrealized gains (losses) on investments...... 81,896,863 (97,016,390) (121,738,551) ----------- ------------ ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $81,828,659 $(97,985,838) $ (73,437,500) =========== ============ =============
See Notes to Financial Statements. F-12
State Street Research Diversified State Street Research Aggressive Growth MetLife Stock Index Investment Division Investment Division Investment Division - --------------------------------------- --------------------------------------- ---------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 9,831,564 $ 5,726,999 $ 25,415,648 $ -- $ -- $ 46,776,659 $ 6,468,236 $ 5,409,402 $ 3,858,667 2,320,042 2,168,000 2,231,404 1,367,678 1,263,240 1,493,070 3,080,678 2,704,257 2,645,594 - ----------- ------------ ------------ ----------- ------------ ------------ ------------ ------------ ------------ 7,511,522 3,558,999 23,184,244 (1,367,678) (1,263,240) 45,283,589 3,387,558 2,705,145 1,213,073 - ----------- ------------ ------------ ----------- ------------ ------------ ------------ ------------ ------------ (2,593,687) (1,810,936) (111,095) (8,202,841) (5,953,657) (1,536,972) (10,060,006) (5,045,284) 4,130,927 42,182,763 (41,694,719) (42,080,714) 62,199,697 (44,703,891) (94,895,107) 101,361,307 (82,559,071) (48,985,481) - ----------- ------------ ------------ ----------- ------------ ------------ ------------ ------------ ------------ 39,589,076 (43,505,655) (42,191,809) 53,996,856 (50,657,548) (96,432,079) 91,301,301 (87,604,355) (44,854,554) - ----------- ------------ ------------ ----------- ------------ ------------ ------------ ------------ ------------ $47,100,598 $(39,946,656) $(19,007,565) $52,629,178 $(51,920,788) $(51,148,490) $ 94,688,859 $(84,899,210) $(43,641,481) =========== ============ ============ =========== ============ ============ ============ ============ ============
F-13 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
FI International Stock Investment Division -------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 249,748 $ 317,077 $ 1,500,375 Expenses: Mortality and expense charges................................ 304,442 298,333 327,499 ----------- ----------- ------------ Net investment (loss) income................................... (54,694) 18,744 1,172,876 ----------- ----------- ------------ NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (1,630,864) (2,655,399) (1,661,736) Change in unrealized appreciation (depreciation) of investments 10,924,390 (4,418,288) (9,202,287) ----------- ----------- ------------ Net realized and unrealized gains (losses) on investments...... 9,293,526 (7,073,687) (10,864,023) ----------- ----------- ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 9,238,832 $(7,054,943) $ (9,691,147) =========== =========== ============
See Notes to Financial Statements. F-14
Janus Mid Cap T. Rowe Price Small Cap Growth Scudder Global Equity Investment Division Investment Division Investment Division - --------------------------------------- -------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ -- $ -- $ -- $ -- $ -- $ 3,542,193 $ 501,419 $ 350,009 $ 2,319,964 1,297,757 1,013,088 1,037,631 402,320 332,098 332,644 189,917 168,321 164,713 - ----------- ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- (1,297,757) (1,013,088) (1,037,631) (402,320) (332,098) 3,209,549 311,502 181,688 2,155,251 - ----------- ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- (1,145,184) (5,163,698) (2,451,549) (309,653) (297,872) (796,014) (1,005,776) (466,029) (71,082) 46,019,342 (34,449,605) (53,291,667) 17,635,578 (12,423,975) (6,595,361) 7,242,152 (3,445,540) (5,825,339) - ----------- ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- 44,874,158 (39,613,303) (55,743,216) 17,325,925 (12,721,847) (7,391,375) 6,236,376 (3,911,569) (5,896,421) - ----------- ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- $43,576,401 $(40,626,391) $(56,780,847) $16,923,605 $(13,053,945) $(4,181,826) $ 6,547,878 $(3,729,881) $(3,741,170) =========== ============ ============ =========== ============ =========== =========== =========== ===========
F-15 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Harris Oakmark Large Cap Value Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ -- $ 618,214 $ 12,105 Expenses: Mortality and expense charges................................ 252,368 179,930 68,617 ---------- ----------- -------- Net investment (loss) income................................... (252,368) 438,284 (56,512) ---------- ----------- -------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... 38,696 173,172 94,596 Change in unrealized appreciation (depreciation) of investments 6,986,213 (3,824,797) 810,284 ---------- ----------- -------- Net realized and unrealized gains (losses) on investments...... 7,024,909 (3,651,625) 904,880 ---------- ----------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $6,772,541 $(3,213,341) $848,368 ========== =========== ========
See Notes to Financial Statements. F-16
Neuberger Berman Partners Mid Cap Value T. Rowe Price Large Cap Growth Lehman Brothers Aggregate Bond Index Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- -------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 78,805 $ 49,885 $ 196,293 $ 30,610 $ 57,106 $ 8,447 $ 2,863,939 $1,283,105 $ 366,468 197,793 139,354 89,772 210,672 163,196 103,226 357,739 300,244 154,225 ---------- ----------- --------- ---------- ----------- --------- ----------- ---------- ---------- (118,988) (89,469) 106,521 (180,062) (106,090) (94,779) 2,506,200 982,861 212,243 ---------- ----------- --------- ---------- ----------- --------- ----------- ---------- ---------- 28,084 105,666 (68,863) (489,389) (317,124) (100,488) 1,152,171 515,268 210,509 7,656,793 (1,888,036) (195,526) 7,871,800 (5,333,848) (92,461) (2,185,014) 2,760,523 1,053,501 ---------- ----------- --------- ---------- ----------- --------- ----------- ---------- ---------- 7,684,877 (1,782,370) (264,389) 7,382,411 (5,650,972) (192,949) (1,032,843) 3,275,791 1,264,010 ---------- ----------- --------- ---------- ----------- --------- ----------- ---------- ---------- $7,565,889 $(1,871,839) $(157,868) $7,202,349 $(5,757,062) $(287,728) $ 1,473,357 $4,258,652 $1,476,253 ========== =========== ========= ========== =========== ========= =========== ========== ==========
F-17 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Morgan Stanley EAFE Index Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 280,223 $ 59,278 $ 25,460 Expenses: Mortality and expense charges................................ 158,241 123,406 63,300 ---------- ----------- ----------- Net investment (loss) income................................... 121,982 (64,128) (37,840) ---------- ----------- ----------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (497,564) (800,822) (961,834) Change in unrealized appreciation (depreciation) of investments 6,516,826 (1,274,363) (729,479) ---------- ----------- ----------- Net realized and unrealized gains (losses) on investments...... 6,019,262 (2,075,185) (1,691,313) ---------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $6,141,244 $(2,139,313) $(1,729,153) ========== =========== ===========
See Notes to Financial Statements. F-18
Russell 2000 Index Met/Putnam Voyager State Street Research Aurora Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 134,309 $ 74,869 $ 21,244 $ -- $ -- $ -- $ -- $ 127,494 $ 44,265 163,522 104,600 68,898 58,697 39,278 22,732 336,756 225,368 95,291 ---------- ----------- ----------- ---------- ----------- --------- ----------- ----------- ---------- (29,213) (29,731) (47,654) (58,697) (39,278) (22,732) (336,756) (97,874) (51,026) ---------- ----------- ----------- ---------- ----------- --------- ----------- ----------- ---------- (125,595) (343,069) (1,016,179) (624,452) (304,226) (113,353) 196,537 81,843 155,882 7,938,110 (2,545,881) 1,215,383 2,271,140 (1,227,374) (585,114) 17,391,943 (6,958,922) 1,218,805 ---------- ----------- ----------- ---------- ----------- --------- ----------- ----------- ---------- 7,812,515 (2,888,950) 199,204 1,646,688 (1,531,600) (698,467) 17,588,480 (6,877,079) 1,374,687 ---------- ----------- ----------- ---------- ----------- --------- ----------- ----------- ---------- $7,783,302 $(2,918,681) $ 151,550 $1,587,991 $(1,570,878) $(721,199) $17,251,724 $(6,974,953) $1,323,661 ========== =========== =========== ========== =========== ========= =========== =========== ==========
F-19 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
MetLife Mid Cap Stock Index Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 100,611 $ 42,658 $ 24,102 Expenses: Mortality and expense charges................................ 164,774 98,019 42,826 ---------- ----------- -------- Net investment (loss) income................................... (64,163) (55,361) (18,724) ---------- ----------- -------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... 12,063 (23,095) (19,531) Change in unrealized appreciation (depreciation) of investments 6,538,587 (2,089,536) 294,328 ---------- ----------- -------- Net realized and unrealized gains (losses) on investments...... 6,550,650 (2,112,631) 274,797 ---------- ----------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $6,486,487 $(2,167,992) $256,073 ========== =========== ========
See Notes to Financial Statements. F-20
State Street Research Franklin Templeton Small Cap Growth Large Cap Value Davis Venture Value Investment Division Investment Division Investment Division - --------------------------------------- -------------------------- ------------------------------------- For the Year For the Year For the Period For the Year For the Period For the Year For the Year For the Year Ended Ended May 1, 2001 to Ended May 1, 2002 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2003 2002 2001 - ------------ ------------ -------------- ------------ -------------- ------------ ------------ ------------ $ -- $ -- $ -- $ 8,880 $ 869 $ 69,175 $ 91,596 $ 192,850 16,641 8,397 1,124 4,290 436 144,858 90,846 39,662 -------- --------- ------- -------- ------- ---------- ----------- --------- (16,641) (8,397) (1,124) 4,590 433 (75,683) 750 153,188 -------- --------- ------- -------- ------- ---------- ----------- --------- (19,016) (42,766) (3,651) 41,938 (3,284) (213,900) (188,804) (46,987) 796,643 (271,373) 16,066 156,144 (3,178) 5,610,390 (2,083,879) (437,523) -------- --------- ------- -------- ------- ---------- ----------- --------- 777,627 (314,139) 12,415 198,082 (6,462) 5,396,490 (2,272,683) (484,510) -------- --------- ------- -------- ------- ---------- ----------- --------- $760,986 $(322,536) $11,291 $202,672 $(6,029) $5,320,807 $(2,271,933) $(331,322) ======== ========= ======= ======== ======= ========== =========== =========
F-21 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Loomis Sayles Small Cap Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ -- $ 2,322 $ 86,281 Expenses: Mortality and expense charges................................ 28,298 18,464 11,207 ---------- --------- -------- Net investment (loss) income................................... (28,298) (16,142) 75,074 ---------- --------- -------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (88,636) (106,829) (35,645) Change in unrealized appreciation (depreciation) of investments 1,169,772 (414,868) (62,611) ---------- --------- -------- Net realized and unrealized gains (losses) on investments...... 1,081,136 (521,697) (98,256) ---------- --------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $1,052,838 $(537,839) $(23,182) ========== ========= ========
See Notes to Financial Statements. F-22
Alger Equity Growth MFS Investors Trust MFS Research Managers Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 2,523 $ -- $ -- $ 2,817 $ 3,660 $ -- $ 3,840 $ 705 $ 386 26,251 13,698 121 10,528 6,375 1,179 4,713 3,132 749 ---------- ----------- ------- -------- --------- ------- -------- -------- ------ (23,728) (13,698) (121) (7,711) (2,715) (1,179) (873) (2,427) (363) ---------- ----------- ------- -------- --------- ------- -------- -------- ------ (63,998) (57,097) (175) 13,432 (71,866) (5,896) (4,462) (30,794) 1,304 1,339,908 (983,355) (5,126) 221,187 (78,498) 4,527 112,414 (58,814) (346) ---------- ----------- ------- -------- --------- ------- -------- -------- ------ 1,275,910 (1,040,452) (5,301) 234,619 (150,364) (1,369) 107,952 (89,608) 958 ---------- ----------- ------- -------- --------- ------- -------- -------- ------ $1,252,182 $(1,054,150) $(5,422) $226,908 $(153,079) $(2,548) $107,079 $(92,035) $ 595 ========== =========== ======= ======== ========= ======= ======== ======== ======
F-23 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
State Street Research Bond Income Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $2,907,624 $4,937,322 $5,667,650 Expenses: Mortality and expense charges................................ 724,135 658,727 572,051 ---------- ---------- ---------- Net investment (loss) income................................... 2,183,489 4,278,595 5,095,599 ---------- ---------- ---------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... 880,712 (378,655) 400,025 Change in unrealized appreciation (depreciation) of investments 1,572,001 2,444,438 (137,736) ---------- ---------- ---------- Net realized and unrealized gains (losses) on investments...... 2,452,713 2,065,783 262,289 ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $4,636,202 $6,344,378 $5,357,888 ========== ========== ==========
See Notes to Financial Statements. F-24
FI Structured Equity Harris Oakmark Focused Value Salomon Brothers Strategic Bond Investment Division Investment Division Opportunities Investment Division - ------------------------------------- --------------------------------------- --------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Period For the Year For the Year For the Period Ended Ended Ended Ended Ended May 1, 2001 to Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ -------------- ------------ ------------ -------------- $ 1,560 $ 527 $ -- $ 24,204 $ 15,621 $ -- $ 62,248 $ 83,495 $ -- 2,368 457 69 151,516 79,292 9,775 29,146 10,768 894 ------- -------- ------- ---------- ----------- -------- -------- -------- ------ (808) 70 (69) (127,312) (63,671) (9,775) 33,102 72,727 (894) ------- -------- ------- ---------- ----------- -------- -------- -------- ------ 24,426 (9,596) (77) 31,214 (9,588) (43) 97,650 241 117 58,141 (4,285) (2,467) 5,537,632 (938,481) 279,801 233,146 62,351 4,621 ------- -------- ------- ---------- ----------- -------- -------- -------- ------ 82,567 (13,881) (2,544) 5,568,846 (948,069) 279,758 330,796 62,592 4,738 ------- -------- ------- ---------- ----------- -------- -------- -------- ------ $81,759 $(13,811) $(2,613) $5,441,534 $(1,011,740) $269,983 $363,898 $135,319 $3,844 ======= ======== ======= ========== =========== ======== ======== ======== ======
F-25 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Salomon Brothers U.S. Government Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 91,740 $ 90,377 $ -- Expenses: Mortality and expense charges................................ 49,123 18,808 1,841 -------- -------- ------- Net investment (loss) income................................... 42,617 71,569 (1,841) -------- -------- ------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... 48,098 10,225 5,065 Change in unrealized appreciation (depreciation) of investments (40,677) 83,661 (2,273) -------- -------- ------- Net realized and unrealized gains (losses) on investments...... 7,421 93,886 2,792 -------- -------- ------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 50,038 $165,455 $ 951 ======== ======== =======
See Notes to Financial Statements. F-26
State Street Research Money Market FI Mid Cap Opportunities Janus Aspen Growth Investment Division Investment Division Investment Division - ------------------------------------- -------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Period For the Year For the Year For the Year Ended Ended Ended Ended May 1, 2002 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2003 2002 2001 - ------------ ------------ ------------ ------------ -------------- ------------ ------------ ------------ $226,302 $ 527,338 $1,134,017 $ 14,470 $ -- $ 2,873 $ 708 $ 210,720 179,158 268,010 215,488 4,632 333 13,156 10,078 25,354 -------- --------- ---------- -------- ------- ---------- --------- ----------- 47,144 259,328 918,529 9,838 (333) (10,283) (9,370) 185,366 -------- --------- ---------- -------- ------- ---------- --------- ----------- (1) (628,588) (499,341) 19,777 (1,950) (263,013) (179,152) (1,848,663) 1 611,711 796,577 191,546 3,758 1,041,007 (329,490) 498,521 -------- --------- ---------- -------- ------- ---------- --------- ----------- -- (16,877) 297,236 211,323 1,808 777,994 (508,642) (1,350,142) -------- --------- ---------- -------- ------- ---------- --------- ----------- $ 47,144 $ 242,451 $1,215,765 $221,161 $ 1,475 $ 767,711 $(518,012) $(1,164,776) ======== ========= ========== ======== ======= ========== ========= ===========
F-27 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Invesco VIF High Yield Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 46,066 $ 49,754 $ 29,774 Expenses: Mortality and expense charges................................ 2,831 1,346 602 -------- -------- -------- Net investment (loss) income................................... 43,235 48,408 29,172 -------- -------- -------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (5,183) (31,480) (3,798) Change in unrealized appreciation (depreciation) of investments 90,384 (7,350) (33,395) -------- -------- -------- Net realized and unrealized gains (losses) on investments...... 85,201 (38,830) (37,193) -------- -------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $128,436 $ 9,578 $ (8,021) ======== ======== ========
See Notes to Financial Statements. F-28
Invesco VIF Equity Income Invesco VIF Real Estate Opportunity Franklin Templeton International Stock Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 1,951 $ 2,157 $ 1,779 $ 2,672 $ 1,881 $ 1,183 $ 50,493 $ 44,446 $ 203,320 662 638 304 946 2,129 531 16,047 13,035 5,484 ------- -------- ------- ------- ------- ------- -------- --------- --------- 1,289 1,519 1,475 1,726 (248) 652 34,446 31,411 197,836 ------- -------- ------- ------- ------- ------- -------- --------- --------- (4,599) (7,425) (1,414) 7,645 12,032 1,271 (71,786) (325,690) (18,952) 30,971 (21,641) (4,995) 41,591 3,016 (3,692) 947,139 (187,267) (287,060) ------- -------- ------- ------- ------- ------- -------- --------- --------- 26,372 (29,066) (6,409) 49,236 15,048 (2,421) 875,353 (512,957) (306,012) ------- -------- ------- ------- ------- ------- -------- --------- --------- $27,661 $(27,547) $(4,934) $50,962 $14,800 $(1,769) $909,799 $(481,546) $(108,176) ======= ======== ======= ======= ======= ======= ======== ========= =========
F-29 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Franklin Templeton Valuemark Small Cap Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ -- $ 2,327 $ 56 Expenses: Mortality and expense charges................................ 6,613 3,601 177 -------- --------- ------ Net investment (loss) income................................... (6,613) (1,274) (121) -------- --------- ------ NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized (losses) gains from security transactions......... (16,606) (49,638) (480) Change in unrealized appreciation (depreciation) of investments 366,174 (184,311) 4,364 -------- --------- ------ Net realized and unrealized gains (losses) on investments...... 349,568 (233,949) 3,884 -------- --------- ------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $342,955 $(235,223) $3,763 ======== ========= ======
See Notes to Financial Statements. F-30
Alliance Growth & Income Alliance Premier Growth Alliance Technology Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 11,419 $ 27,692 $ 3,229 $ -- $ -- $ -- $ -- $ -- $ 782 7,030 4,105 1,034 257 274 104 181 96 121 -------- --------- ------- ------- -------- ------ ------- ------- -------- 4,389 23,587 2,195 (257) (274) (104) (181) (96) 661 -------- --------- ------- ------- -------- ------ ------- ------- -------- (27,592) (18,278) (318) (661) (9,853) (138) (931) (519) (19,763) 441,306 (137,057) 24,267 11,616 (12,480) 1,299 13,613 (9,033) (2,681) -------- --------- ------- ------- -------- ------ ------- ------- -------- 413,714 (155,335) 23,949 10,955 (22,333) 1,161 12,682 (9,552) (22,444) -------- --------- ------- ------- -------- ------ ------- ------- -------- $418,103 $(131,748) $26,144 $10,698 $(22,607) $1,057 $12,501 $(9,648) $(21,783) ======== ========= ======= ======= ======== ====== ======= ======= ========
F-31 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Fidelity Contrafund Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 830 $ 187 $ -- Expenses: Mortality and expense charges................................ 3,285 1,113 57 -------- -------- ----- Net investment (loss) income................................... (2,455) (926) (57) -------- -------- ----- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized gains (losses) from security transactions......... 6,303 (348) (27) Change in unrealized appreciation (depreciation) of investments 139,867 (29,437) (253) -------- -------- ----- Net realized and unrealized gains (losses) on investments...... 146,170 (29,785) (280) -------- -------- ----- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $143,715 $(30,711) $(337) ======== ======== =====
See Notes to Financial Statements. F-32
Fidelity Asset Manager Growth Fidelity Growth American Funds Growth Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- --------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Period Ended Ended Ended Ended Ended Ended Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------- $ 8,346 $ 3,640 $ -- $ 174 $ 132 $ -- $ 22,917 $ 3,067 $ 134,864 1,598 623 233 1,005 649 243 141,220 59,610 6,807 ------- -------- ------- ------- -------- ------- ---------- ----------- --------- 6,748 3,017 (233) (831) (517) (243) (118,303) (56,543) 128,057 ------- -------- ------- ------- -------- ------- ---------- ----------- --------- (4,335) (5,591) 113 (2,588) (8,400) (3,407) (100,817) (49,022) (95,342) 59,143 (19,964) (1,597) 63,146 (40,968) (3,078) 5,264,250 (1,636,890) (17,189) ------- -------- ------- ------- -------- ------- ---------- ----------- --------- 54,808 (25,555) (1,484) 60,558 (49,368) (6,485) 5,163,433 (1,685,912) (112,531) ------- -------- ------- ------- -------- ------- ---------- ----------- --------- $61,556 $(22,538) $(1,717) $59,727 $(49,885) $(6,728) $5,045,130 $(1,742,455) $ 15,526 ======= ======== ======= ======= ======== ======= ========== =========== =========
F-33 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
American Funds Growth-Income Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 170,202 $ 83,225 $ 20,236 Expenses: Mortality and expense charges................................ 112,608 48,157 5,104 ---------- ----------- -------- Net investment (loss) income................................... 57,594 35,068 15,132 ---------- ----------- -------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized gains (losses) from security transactions......... (26,406) (51,319) (13,398) Change in unrealized appreciation (depreciation) of investments 3,852,340 (1,122,854) 55,397 ---------- ----------- -------- Net realized and unrealized gains (losses) on investments...... 3,825,934 (1,174,173) 41,999 ---------- ----------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $3,883,528 $(1,139,105) $ 57,131 ========== =========== ========
See Notes to Financial Statements. F-34
American Funds Global Small Cap JPM Enhanced Index T. Rowe Price Mid Cap Growth Investment Division Investment Division Investment Division - --------------------------------------- ------------------------------------- --------------------------------------- For the Year For the Year For the Period For the Year For the Year For the Year For the Year For the Year For the Period Ended Ended May 1, 2001 to Ended Ended Ended Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ -------------- ------------ ------------ ------------ ------------ ------------ -------------- $ 19,214 $ 10,794 $ 7,147 $ 163 $ 117 $ -- $ -- $ 7,906 $ -- 27,847 12,245 1,216 16 39 13 17,818 6,944 940 ---------- --------- -------- ------- ------- ----- -------- --------- ------- (8,633) (1,451) 5,931 147 78 (13) (17,818) 962 (940) ---------- --------- -------- ------- ------- ----- -------- --------- ------- (33,362) 35,746 (18,714) (1,554) (1,186) (25) (46,026) (55,314) (1,372) 1,513,502 (396,292) 46,579 1,806 (1,483) (320) 776,010 (378,709) 11,239 ---------- --------- -------- ------- ------- ----- -------- --------- ------- 1,480,140 (360,546) 27,865 252 (2,669) (345) 729,984 (434,023) 9,867 ---------- --------- -------- ------- ------- ----- -------- --------- ------- $1,471,507 $(361,997) $ 33,796 $ 399 $(2,591) $(358) $712,166 $(433,061) $ 8,927 ========== ========= ======== ======= ======= ===== ======== ========= =======
F-35 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
MFS Research International Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 10,739 $ 1,203 $ 174 Expenses: Mortality and expense charges................................ 7,953 3,324 525 -------- -------- ------- Net investment (loss) income................................... 2,786 (2,121) (351) -------- -------- ------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized gains (losses) from security transactions......... 148,987 (66,559) (4,107) Change in unrealized appreciation (depreciation) of investments 191,049 (2,664) 1,444 -------- -------- ------- Net realized and unrealized gains (losses) on investments...... 340,036 (69,223) (2,663) -------- -------- ------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $342,822 $(71,344) $(3,014) ======== ======== =======
See Notes to Financial Statements. F-36
PIMCO Total Return PIMCO Innovation Lord Abbett Bond Debenture Investment Division Investment Division Investment Division - --------------------------------------- --------------------------------------- ------------------------------------- For the Year For the Year For the Period For the Year For the Year For the Period For the Year For the Year For the Year Ended Ended May 1, 2001 to Ended Ended May 1, 2001 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ -------------- ------------ ------------ -------------- ------------ ------------ ------------ $255,223 $ -- $ 26,164 $ -- $ -- $ -- $ 190,964 $ 996,547 $ 923,897 79,517 28,120 2,322 21,608 9,521 1,528 81,381 71,674 64,809 -------- -------- -------- ---------- --------- ------- ---------- ----------- ----------- 175,706 (28,120) 23,842 (21,608) (9,521) (1,528) 109,583 924,873 859,088 -------- -------- -------- ---------- --------- ------- ---------- ----------- ----------- 175,963 60,373 1,564 (195,867) (111,879) (9,873) 198,834 (1,886,218) (134,223) (25,434) 270,736 (14,155) 1,260,206 (652,366) 4,179 1,391,673 949,375 (902,997) -------- -------- -------- ---------- --------- ------- ---------- ----------- ----------- 150,529 331,109 (12,591) 1,064,339 (764,245) (5,694) 1,590,507 (936,843) (1,037,220) -------- -------- -------- ---------- --------- ------- ---------- ----------- ----------- $326,235 $302,989 $ 11,251 $1,042,731 $(773,766) $(7,222) $1,700,090 $ (11,970) $ (178,132) ======== ======== ======== ========== ========= ======= ========== =========== ===========
F-37 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF OPERATIONS
Met/AIM Mid Cap Core Equity Met/AIM Small Cap Growth Investment Division Investment Division -------------------------- -------------------------- For the Year For the Period For the Year For the Period Ended May 1, 2002 to Ended May 1, 2002 to December 31, December 31, December 31, December 31, 2003 2002 2003 2002 ------------ -------------- ------------ -------------- INVESTMENT (LOSS) INCOME: Income: Dividends.................................................... $ 8,411 $ 291 $ -- $ -- Expenses: Mortality and expense charges................................ 4,773 638 2,947 281 -------- ------- -------- ------- Net investment (loss) income................................... 3,638 (347) (2,947) (281) -------- ------- -------- ------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Net realized gains (losses) from security transactions......... 6,414 (1,242) 66,977 (593) Change in unrealized appreciation (depreciation) of investments 140,733 (6,351) 51,242 (4,322) -------- ------- -------- ------- Net realized and unrealized gains (losses) on investments...... 147,147 (7,593) 118,219 (4,915) -------- ------- -------- ------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.................................................... $150,785 $(7,940) $115,272 $(5,196) ======== ======= ======== =======
See Notes to Financial Statements. F-38
Harris Oakmark International Janus Aggressive Growth Lord Abbett Growth & Income Investment Division Investment Division Investment Division - -------------------------- --------------------------------------- -------------------------------- For the Year For the Period For the Year For the Year For the Period For the Year For the Period Ended May 1, 2002 to Ended Ended May 1, 2001 to Ended October 31, 2002 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2003 2002 2001 2003 2002 - ------------ -------------- ------------ ------------ -------------- ------------ ------------------- $ 8,848 $ 210 $ -- $ -- $ -- $ -- $-- 2,473 298 25,657 13,374 2,780 47 -- -------- ------- ---------- --------- -------- ------ --- 6,375 (88) (25,657) (13,374) (2,780) (47) -- -------- ------- ---------- --------- -------- ------ --- 72,432 (843) (313,967) (78,401) (43,356) 20 -- 49,401 (2,920) 1,123,504 (426,893) (11,854) 3,750 -- -------- ------- ---------- --------- -------- ------ --- 121,833 (3,763) 809,537 (505,294) (55,210) 3,770 -- -------- ------- ---------- --------- -------- ------ --- $128,208 $(3,851) $ 783,880 $(518,668) $(57,990) $3,723 $-- ======== ======= ========== ========= ======== ====== ===
F-39 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
State Street Research Investment Trust Investment Division ----------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------- (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (68,204) $ (969,448) $ 48,301,051 Net realized (losses) gains from security transactions..................... (6,958,914) (6,132,437) 731,187 Change in unrealized appreciation (depreciation) of investments............ 88,855,777 (90,883,953) (122,469,738) ------------ ------------ ------------- Net increase (decrease) in net assets resulting from operations............ 81,828,659 (97,985,838) (73,437,500) ------------ ------------ ------------- From capital transactions: Net premiums............................................................... 67,707,999 78,160,135 80,046,712 Redemptions................................................................ (15,137,546) (10,399,853) (15,513,042) Net Investment Division transfers.......................................... (7,863,696) (11,186,400) 2,751,095 Other net transfers........................................................ (36,428,084) (38,309,389) (40,534,492) ------------ ------------ ------------- Net increase (decrease) in net assets resulting from capital transactions.. 8,278,673 18,264,493 26,750,273 ------------ ------------ ------------- NET CHANGE IN NET ASSETS...................................................... 90,107,332 (79,721,345) (46,687,227) NET ASSETS--BEGINNING OF PERIOD............................................... 276,979,969 356,701,314 403,388,541 ------------ ------------ ------------- NET ASSETS--END OF PERIOD..................................................... $367,087,301 $276,979,969 $ 356,701,314 ============ ============ =============
See Notes to Financial Statements. F-40
State Street Research Diversified State Street Research Aggressive Growth MetLife Stock Index Investment Division Investment Division Investment Division - ---------------------------------------- ---------------------------------------- ---------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 7,511,522 $ 3,558,999 $ 23,184,244 $ (1,367,678) $ (1,263,240) $ 45,283,589 $ 3,387,558 $ 2,705,145 $ 1,213,073 (2,593,687) (1,810,936) (111,095) (8,202,841) (5,953,657) (1,536,972) (10,060,006) (5,045,284) 4,130,927 42,182,763 (41,694,719) (42,080,714) 62,199,697 (44,703,891) (94,895,107) 101,361,307 (82,559,071) (48,985,481) - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 47,100,598 (39,946,656) (19,007,565) 52,629,178 (51,920,788) (51,148,490) 94,688,859 (84,899,210) (43,641,481) - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 52,190,961 54,194,120 55,767,097 34,182,901 40,003,786 42,942,155 108,236,751 114,022,950 113,949,042 (14,264,879) (9,523,000) (8,333,720) (7,318,523) (4,831,140) (6,486,474) (14,265,812) (13,779,170) (11,030,629) (2,178,352) (383,162) 8,413,016 (5,104,646) (6,485,783) 1,097,789 (11,228,029) 11,797,286 19,393,554 (31,835,294) (32,044,615) (31,250,185) (17,936,155) (17,642,321) (19,697,556) (46,545,385) (47,844,806) (45,631,351) - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 3,912,436 12,243,343 24,596,208 3,823,577 11,044,542 17,855,914 36,197,525 64,196,260 76,680,616 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 51,013,034 (27,703,313) 5,588,643 56,452,755 (40,876,246) (33,292,576) 130,886,384 (20,702,950) 33,039,135 238,020,353 265,723,666 260,135,023 130,815,618 171,691,864 204,984,440 326,227,963 346,930,913 313,891,778 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $289,033,387 $238,020,353 $265,723,666 $187,268,373 $130,815,618 $171,691,864 $457,114,347 $326,227,963 $346,930,913 ============ ============ ============ ============ ============ ============ ============ ============ ============
F-41 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
FI International Stock Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (54,694) $ 18,744 $ 1,172,876 Net realized (losses) gains from security transactions..................... (1,630,864) (2,655,399) (1,661,736) Change in unrealized appreciation (depreciation) of investments............ 10,924,390 (4,418,288) (9,202,287) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations............ 9,238,832 (7,054,943) (9,691,147) ----------- ----------- ----------- From capital transactions: Net premiums............................................................... 7,903,805 9,783,594 9,615,907 Redemptions................................................................ (1,780,012) (1,287,021) (1,289,983) Net Investment Division transfers.......................................... (552,252) (2,781,604) 323,092 Other net transfers........................................................ (3,792,182) (3,974,969) (4,148,436) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from capital transactions.. 1,779,359 1,740,000 4,500,580 ----------- ----------- ----------- NET CHANGE IN NET ASSETS...................................................... 11,018,191 (5,314,943) (5,190,567) NET ASSETS--BEGINNING OF PERIOD............................................... 32,966,098 38,281,041 43,471,608 ----------- ----------- ----------- NET ASSETS--END OF PERIOD..................................................... $43,984,289 $32,966,098 $38,281,041 =========== =========== ===========
See Notes to Financial Statements. F-42
Janus Mid Cap T. Rowe Price Small Cap Growth Scudder Global Equity Investment Division Investment Division Investment Division - ---------------------------------------- -------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ (1,297,757) $ (1,013,088) $ (1,037,631) $ (402,320) $ (332,098) $ 3,209,549 $ 311,502 $ 181,688 $ 2,155,251 (1,145,184) (5,163,698) (2,451,549) (309,653) (297,872) (796,014) (1,005,776) (466,029) (71,082) 46,019,342 (34,449,605) (53,291,667) 17,635,578 (12,423,975) (6,595,361) 7,242,152 (3,445,540) (5,825,339) - ------------ ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- 43,576,401 (40,626,391) (56,780,847) 16,923,605 (13,053,945) (4,181,826) 6,547,878 (3,729,881) (3,741,170) - ------------ ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- 53,673,455 64,528,237 74,363,749 12,384,395 14,332,234 15,023,523 6,014,790 7,029,500 7,562,752 (5,340,392) (2,804,544) (3,144,623) (1,578,439) (1,348,311) (2,577,320) (1,735,572) (936,418) (630,613) (5,185,372) (5,298,371) 3,860,189 (197,295) 753,895 (372,409) (125,590) (322,915) 603,395 (21,665,579) (21,964,497) (23,970,747) (5,569,189) (5,463,573) (5,350,422) (2,481,721) (2,670,700) (2,572,779) - ------------ ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- 21,482,112 34,460,825 51,108,568 5,039,472 8,274,245 6,723,372 1,671,907 3,099,467 4,962,755 - ------------ ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- 65,058,513 (6,165,566) (5,672,279) 21,963,077 (4,779,700) 2,541,546 8,219,785 (630,414) 1,221,585 119,019,575 125,185,141 130,857,420 39,880,088 44,659,788 42,118,242 20,475,933 21,106,347 19,884,762 - ------------ ------------ ------------ ----------- ------------ ----------- ----------- ----------- ----------- $184,078,088 $119,019,575 $125,185,141 $61,843,165 $ 39,880,088 $44,659,788 $28,695,718 $20,475,933 $21,106,347 ============ ============ ============ =========== ============ =========== =========== =========== ===========
F-43 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Harris Oakmark Large Cap Value Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (252,368) $ 438,284 $ (56,512) Net realized (losses) gains from security transactions..................... 38,696 173,172 94,596 Change in unrealized appreciation (depreciation) of investments............ 6,986,213 (3,824,797) 810,284 ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations............ 6,772,541 (3,213,341) 848,368 ----------- ----------- ----------- From capital transactions: Net premiums............................................................... 11,430,624 10,115,432 4,073,390 Redemptions................................................................ (991,704) (287,586) (268,807) Net Investment Division transfers.......................................... 1,835,698 6,291,525 9,043,603 Other net transfers........................................................ (4,616,084) (4,169,815) (1,466,228) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from capital transactions.. 7,658,534 11,949,556 11,381,958 ----------- ----------- ----------- NET CHANGE IN NET ASSETS...................................................... 14,431,075 8,736,215 12,230,326 NET ASSETS--BEGINNING OF PERIOD............................................... 23,072,554 14,336,339 2,106,013 ----------- ----------- ----------- NET ASSETS--END OF PERIOD..................................................... $37,503,629 $23,072,554 $14,336,339 =========== =========== ===========
See Notes to Financial Statements. F-44
Neuberger Berman Partners Mid Cap Value T. Rowe Price Large Cap Growth Lehman Brothers Aggregate Bond Index Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ (118,988) $ (89,469) $ 106,521 $ (180,062) $ (106,090) $ (94,779) $ 2,506,200 $ 982,861 $ 212,243 28,084 105,666 (68,863) (489,389) (317,124) (100,488) 1,152,171 515,268 210,509 7,656,793 (1,888,036) (195,526) 7,871,800 (5,333,848) (92,461) (2,185,014) 2,760,523 1,053,501 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 7,565,889 (1,871,839) (157,868) 7,202,349 (5,757,062) (287,728) 1,473,357 4,258,652 1,476,253 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 8,682,614 8,172,686 5,746,048 8,620,553 9,447,412 8,996,035 13,565,785 10,479,062 8,533,067 (629,059) (1,215,338) (57,006) (982,056) (125,856) (60,227) (1,812,183) (1,839,866) (1,024,276) 650,401 2,321,678 4,766,372 (78,277) 873,833 8,736,398 (6,698,353) 8,318,943 11,244,179 (3,610,116) (3,236,171) (2,321,908) (3,337,120) (3,453,967) (3,536,498) (5,580,587) (4,492,832) (2,262,688) - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 5,093,840 6,042,855 8,133,506 4,223,100 6,741,422 14,135,708 (525,338) 12,465,307 16,490,282 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 12,659,729 4,171,016 7,975,638 11,425,449 984,360 13,847,980 948,019 16,723,959 17,966,535 18,285,822 14,114,806 6,139,168 22,094,885 21,110,525 7,262,545 54,046,288 37,322,329 19,355,794 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $30,945,551 $18,285,822 $14,114,806 $33,520,334 $22,094,885 $21,110,525 $54,994,307 $54,046,288 $37,322,329 =========== =========== =========== =========== =========== =========== =========== =========== ===========
F-45 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Morgan Stanley EAFE Index Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 121,982 $ (64,128) $ (37,840) Net realized (losses) gains from security transactions..................... (497,564) (800,822) (961,834) Change in unrealized appreciation (depreciation) of investments............ 6,516,826 (1,274,363) (729,479) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations............ 6,141,244 (2,139,313) (1,729,153) ----------- ----------- ----------- From capital transactions: Net premiums............................................................... 7,425,875 6,625,665 4,890,376 Redemptions................................................................ (362,211) (1,101,621) (722,285) Net Investment Division transfers.......................................... 438,708 1,672,217 4,395,203 Other net transfers........................................................ (2,849,511) (2,360,586) (1,819,787) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from capital transactions.. 4,652,861 4,835,675 6,743,507 ----------- ----------- ----------- NET CHANGE IN NET ASSETS...................................................... 10,794,105 2,696,362 5,014,354 NET ASSETS--BEGINNING OF PERIOD............................................... 13,496,072 10,799,710 5,785,356 ----------- ----------- ----------- NET ASSETS--END OF PERIOD..................................................... $24,290,177 $13,496,072 $10,799,710 =========== =========== ===========
See Notes to Financial Statements. F-46
Russell 2000 Index Met/Putnam Voyager State Street Research Aurora Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ (29,213) $ (29,731) $ (47,654) $ (58,697) $ (39,278) $ (22,732) $ (336,756) $ (97,874) $ (51,026) (125,595) (343,069) (1,016,179) (624,452) (304,226) (113,353) 196,537 81,843 155,882 7,938,110 (2,545,881) 1,215,383 2,271,140 (1,227,374) (585,114) 17,391,943 (6,958,922) 1,218,805 - ----------- ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- 7,783,302 (2,918,681) 151,550 1,587,991 (1,570,878) (721,199) 17,251,724 (6,974,953) 1,323,661 - ----------- ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- 7,659,016 7,082,371 5,343,692 3,213,111 3,461,165 2,425,615 16,618,731 15,376,489 7,040,736 (486,878) (266,570) (375,673) (93,468) (27,865) (23,841) (920,139) (302,359) (81,569) 991,151 2,834,125 1,811,235 (151,453) 548,678 2,239,800 1,566,557 6,843,668 11,247,758 (3,048,846) (2,527,437) (2,007,235) (1,158,137) (1,159,060) (878,209) (7,037,769) (5,887,521) (2,656,308) - ----------- ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- 5,114,443 7,122,489 4,772,019 1,810,053 2,822,918 3,763,365 10,227,380 16,030,277 15,550,617 - ----------- ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- 12,897,745 4,203,808 4,923,569 3,398,044 1,252,040 3,042,166 27,479,104 9,055,324 16,874,278 14,828,534 10,624,726 5,701,157 5,252,713 4,000,673 958,507 29,060,558 20,005,234 3,130,956 - ----------- ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- $27,726,279 $14,828,534 $10,624,726 $ 8,650,757 $ 5,252,713 $4,000,673 $56,539,662 $29,060,558 $20,005,234 =========== =========== =========== =========== =========== ========== =========== =========== ===========
F-47 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
MetLife Mid Cap Stock Index Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (64,163) $ (55,361) $ (18,724) Net realized (losses) gains from security transactions..................... 12,063 (23,095) (19,531) Change in unrealized appreciation (depreciation) of investments............ 6,538,587 (2,089,536) 294,328 ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations............ 6,486,487 (2,167,992) 256,073 ----------- ----------- ----------- From capital transactions: Net premiums............................................................... 8,658,518 7,438,484 4,147,919 Redemptions................................................................ (315,294) (109,971) (16,900) Net Investment Division transfers.......................................... 960,729 4,006,261 4,052,437 Other net transfers........................................................ (3,433,510) (2,617,681) (1,566,864) ----------- ----------- ----------- Net increase (decrease) in net assets resulting from capital transactions.. 5,870,443 8,717,093 6,616,592 ----------- ----------- ----------- NET CHANGE IN NET ASSETS...................................................... 12,356,930 6,549,101 6,872,665 NET ASSETS--BEGINNING OF PERIOD............................................... 15,567,957 9,018,856 2,146,191 ----------- ----------- ----------- NET ASSETS--END OF PERIOD..................................................... $27,924,887 $15,567,957 $ 9,018,856 =========== =========== ===========
See Notes to Financial Statements. F-48
State Street Research Franklin Templeton Small Cap Growth Large Cap Value Davis Venture Value Investment Division Investment Division Investment Division - --------------------------------------- -------------------------- ------------------------------------- For the Year For the Year For the Period For the Year For the Period For the Year For the Year For the Year Ended Ended May 1, 2001 to Ended May 1, 2002 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2003 2002 2001 - ------------ ------------ -------------- ------------ -------------- ------------ ------------ ------------ $ (16,641) $ (8,397) $ (1,124) $ 4,590 $ 433 $ (75,683) $ 750 $ 153,188 (19,016) (42,766) (3,651) 41,938 (3,284) (213,900) (188,804) (46,987) 796,643 (271,373) 16,066 156,144 (3,178) 5,610,390 (2,083,879) (437,523) ---------- ---------- -------- ---------- -------- ----------- ----------- ----------- 760,986 (322,536) 11,291 202,672 (6,029) 5,320,807 (2,271,933) (331,322) ---------- ---------- -------- ---------- -------- ----------- ----------- ----------- 844,482 626,488 107,629 405,361 64,977 6,492,659 5,157,409 3,338,434 (27,310) (5,592) (802) (5,862) (313) (286,620) (86,825) (44,938) 610,392 745,849 369,945 469,287 153,138 2,147,532 5,300,022 4,710,785 (416,036) (235,608) (30,931) (149,915) (23,188) (2,675,075) (2,166,021) (1,312,198) ---------- ---------- -------- ---------- -------- ----------- ----------- ----------- 1,011,528 1,131,137 445,841 718,871 194,614 5,678,496 8,204,585 6,692,083 ---------- ---------- -------- ---------- -------- ----------- ----------- ----------- 1,772,514 808,601 457,132 921,543 188,585 10,999,303 5,932,652 6,360,761 1,265,733 457,132 -- 188,585 -- 13,430,192 7,497,540 1,136,779 ---------- ---------- -------- ---------- -------- ----------- ----------- ----------- $3,038,247 $1,265,733 $457,132 $1,110,128 $188,585 $24,429,495 $13,430,192 $ 7,497,540 ========== ========== ======== ========== ======== =========== =========== ===========
F-49 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Loomis Sayles Small Cap Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (28,298) $ (16,142) $ 75,074 Net realized (losses) gains from security transactions..................... (88,636) (106,829) (35,645) Change in unrealized appreciation (depreciation) of investments............ 1,169,772 (414,868) (62,611) ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations............ 1,052,838 (537,839) (23,182) ---------- ---------- ---------- From capital transactions: Net premiums............................................................... 1,387,309 1,200,038 909,510 Redemptions................................................................ (49,105) (11,815) (7,864) Net Investment Division transfers.......................................... 159,941 268,407 960,425 Other net transfers........................................................ (536,437) (436,811) (356,458) ---------- ---------- ---------- Net increase (decrease) in net assets resulting from capital transactions.. 961,708 1,019,819 1,505,613 ---------- ---------- ---------- NET CHANGE IN NET ASSETS...................................................... 2,014,546 481,980 1,482,431 NET ASSETS--BEGINNING OF PERIOD............................................... 2,408,393 1,926,413 443,982 ---------- ---------- ---------- NET ASSETS--END OF PERIOD..................................................... $4,422,939 $2,408,393 $1,926,413 ========== ========== ==========
See Notes to Financial Statements. F-50
Alger Equity Growth MFS Investors Trust MFS Research Managers Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ (23,728) $ (13,698) $ (121) $ (7,711) $ (2,715) $ (1,179) $ (873) $ (2,427) $ (363) (63,998) (57,097) (175) 13,432 (71,866) (5,896) (4,462) (30,794) 1,304 1,339,908 (983,355) (5,126) 221,187 (78,498) 4,527 112,414 (58,814) (346) ---------- ----------- ------- ---------- --------- --------- -------- --------- --------- 1,252,182 (1,054,150) (5,422) 226,908 (153,079) (2,548) 107,079 (92,035) 595 ---------- ----------- ------- ---------- --------- --------- -------- --------- --------- 1,035,783 40,283 -- 701,861 657,381 122,835 278,607 256,687 72,571 -- -- -- (14,052) (4,428) (1,444) (4,854) (250) (3,984) 359 4,290,312 52,468 164,766 480,329 486,210 57,895 151,712 231,621 (337,622) (338,952) (1,809) (229,330) (608,417) (282,946) (84,526) (153,237) (149,340) ---------- ----------- ------- ---------- --------- --------- -------- --------- --------- 698,520 3,991,643 50,659 623,245 524,865 324,655 247,122 254,912 150,868 ---------- ----------- ------- ---------- --------- --------- -------- --------- --------- 1,950,702 2,937,493 45,237 850,153 371,786 322,107 354,201 162,877 151,463 2,982,730 45,237 -- 693,893 322,107 -- 314,340 151,463 -- ---------- ----------- ------- ---------- --------- --------- -------- --------- --------- $4,933,432 $ 2,982,730 $45,237 $1,544,046 $ 693,893 $ 322,107 $668,541 $ 314,340 $ 151,463 ========== =========== ======= ========== ========= ========= ======== ========= =========
F-51 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
State Street Research Bond Income Investment Division -------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 2,183,489 $ 4,278,595 $ 5,095,599 Net realized (losses) gains from security transactions..................... 880,712 (378,655) 400,025 Change in unrealized appreciation (depreciation) of investments............ 1,572,001 2,444,438 (137,736) ----------- ----------- ------------ Net increase (decrease) in net assets resulting from operations............ 4,636,202 6,344,378 5,357,888 ----------- ----------- ------------ From capital transactions: Net premiums............................................................... 16,159,717 18,007,464 14,237,318 Redemptions................................................................ (4,549,369) (3,078,401) (3,623,665) Net Investment Division transfers.......................................... (3,340,166) 1,121,089 3,289,281 Other net transfers........................................................ (9,344,726) (8,719,726) (15,760,945) ----------- ----------- ------------ Net increase (decrease) in net assets resulting from capital transactions.. (1,074,544) 7,330,426 (1,858,011) ----------- ----------- ------------ NET CHANGE IN NET ASSETS...................................................... 3,561,658 13,674,804 3,499,877 NET ASSETS--BEGINNING OF PERIOD............................................... 93,157,932 79,483,128 75,983,251 ----------- ----------- ------------ NET ASSETS--END OF PERIOD..................................................... $96,719,590 $93,157,932 $ 79,483,128 =========== =========== ============
See Notes to Financial Statements. F-52
Salomon Brothers FI Structured Equity Harris Oakmark Focused Value Strategic Bond Opportunities Investment Division Investment Division Investment Division - ------------------------------------- --------------------------------------- --------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Period For the Year For the Year For the Period Ended Ended Ended Ended Ended May 1, 2001 to Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ -------------- ------------ ------------ -------------- $ (808) $ 70 $ (69) $ (127,312) $ (63,671) $ (9,775) $ 33,102 $ 72,727 $ (894) 24,426 (9,596) (77) 31,214 (9,588) (43) 97,650 241 117 58,141 (4,285) (2,467) 5,537,632 (938,481) 279,801 233,146 62,351 4,621 -------- -------- ------- ----------- ----------- ---------- ---------- ---------- -------- 81,759 (13,811) (2,613) 5,441,534 (1,011,740) 269,983 363,898 135,319 3,844 -------- -------- ------- ----------- ----------- ---------- ---------- ---------- -------- 167,405 51,077 -- 8,198,287 6,333,512 999,657 1,996,763 890,271 97,914 (10,046) -- -- (450,269) (161,171) (7,188) (108,331) (17,732) (566) 229,644 41,277 28,886 3,144,705 5,880,885 3,223,723 1,486,748 1,049,918 396,753 (56,377) (10,863) (1,055) (3,347,152) (2,377,498) (271,630) (749,672) (348,947) (33,111) -------- -------- ------- ----------- ----------- ---------- ---------- ---------- -------- 330,626 81,491 27,831 7,545,571 9,675,728 3,944,562 2,625,508 1,573,510 460,990 -------- -------- ------- ----------- ----------- ---------- ---------- ---------- -------- 412,385 67,680 25,218 12,987,105 8,663,988 4,214,545 2,989,406 1,708,829 464,834 92,898 25,218 -- 12,878,533 4,214,545 -- 2,173,663 464,834 -- -------- -------- ------- ----------- ----------- ---------- ---------- ---------- -------- $505,283 $ 92,898 $25,218 $25,865,638 $12,878,533 $4,214,545 $5,163,069 $2,173,663 $464,834 ======== ======== ======= =========== =========== ========== ========== ========== ========
F-53 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Salomon Brothers U.S. Government Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 42,617 $ 71,569 $ (1,841) Net realized (losses) gains from security transactions..................... 48,098 10,225 5,065 Change in unrealized appreciation (depreciation) of investments............ (40,677) 83,661 (2,273) ----------- ---------- -------- Net increase (decrease) in net assets resulting from operations............ 50,038 165,455 951 ----------- ---------- -------- From capital transactions: Net premiums............................................................... 3,454,837 1,641,232 162,934 Redemptions................................................................ (137,457) (35,283) (10,909) Net Investment Division transfers.......................................... 916,767 2,382,469 755,686 Other net transfers........................................................ (1,344,693) (637,762) (59,363) ----------- ---------- -------- Net increase (decrease) in net assets resulting from capital transactions.. 2,889,454 3,350,656 848,348 ----------- ---------- -------- NET CHANGE IN NET ASSETS...................................................... 2,939,492 3,516,111 849,299 NET ASSETS--BEGINNING OF PERIOD............................................... 4,365,410 849,299 -- ----------- ---------- -------- NET ASSETS--END OF PERIOD..................................................... $ 7,304,902 $4,365,410 $849,299 =========== ========== ========
See Notes to Financial Statements. F-54
State Street Research Money Market FI Mid Cap Opportunities Janus Aspen Growth Investment Division Investment Division Investment Division - -------------------------------------- -------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Period For the Year For the Year For the Year Ended Ended Ended Ended May 1, 2002 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2003 2002 2001 - ------------ ------------ ------------ ------------ -------------- ------------ ------------ ------------ $ 47,144 $ 259,328 $ 918,529 $ 9,838 $ (333) $ (10,283) $ (9,370) $ 185,366 (1) (628,588) (499,341) 19,777 (1,950) (263,013) (179,152) (1,848,663) 1 611,711 796,577 191,546 3,758 1,041,007 (329,490) 498,521 - ----------- ------------ ----------- ---------- -------- ---------- ---------- ----------- 47,144 242,451 1,215,765 221,161 1,475 767,711 (518,012) (1,164,776) - ----------- ------------ ----------- ---------- -------- ---------- ---------- ----------- 4,560,820 25,769,284 17,936,134 324,317 49,033 839,829 913,602 779,753 (1,186,158) (4,958,930) (1,689,474) (43,946) (19) (88,894) (13,590) (2,741,484) (4,975,125) (33,048,287) (4,603,225) 537,734 149,230 (5,665) 34,319 254,486 (1,910,867) 10,079,748 (1,666,768) (95,364) (31,850) (176,510) (211,649) (189,372) - ----------- ------------ ----------- ---------- -------- ---------- ---------- ----------- (3,511,330) (2,158,185) 9,976,667 722,741 166,394 568,760 722,682 (1,896,617) - ----------- ------------ ----------- ---------- -------- ---------- ---------- ----------- (3,464,186) (1,915,734) 11,192,432 943,902 167,869 1,336,471 204,670 (3,061,393) 30,810,613 32,726,347 21,533,915 167,869 -- 2,163,422 1,958,752 5,020,145 - ----------- ------------ ----------- ---------- -------- ---------- ---------- ----------- $27,346,427 $ 30,810,613 $32,726,347 $1,111,771 $167,869 $3,499,893 $2,163,422 $ 1,958,752 =========== ============ =========== ========== ======== ========== ========== ===========
F-55 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Invesco VIF High Yield Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 43,235 $ 48,408 $ 29,172 Net realized (losses) gains from security transactions..................... (5,183) (31,480) (3,798) Change in unrealized appreciation (depreciation) of investments............ 90,384 (7,350) (33,395) -------- -------- -------- Net increase (decrease) in net assets resulting from operations............ 128,436 9,578 (8,021) -------- -------- -------- From capital transactions: Net premiums............................................................... 232,669 216,788 213,527 Redemptions................................................................ (6,154) -- -- Net Investment Division transfers.......................................... 11,139 2,473 71,476 Other net transfers........................................................ (37,616) (27,503) (13,506) -------- -------- -------- Net increase (decrease) in net assets resulting from capital transactions.. 200,038 191,758 271,497 -------- -------- -------- NET CHANGE IN NET ASSETS...................................................... 328,474 201,336 263,476 NET ASSETS--BEGINNING OF PERIOD............................................... 475,634 274,298 10,822 -------- -------- -------- NET ASSETS--END OF PERIOD..................................................... $804,108 $475,634 $274,298 ======== ======== ========
See Notes to Financial Statements. F-56
Invesco VIF Equity Income Invesco VIF Real Estate Opportunity Franklin Templeton International Stock Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 1,289 $ 1,519 $ 1,475 $ 1,726 $ (248) $ 652 $ 34,446 $ 31,411 $ 197,836 (4,599) (7,425) (1,414) 7,645 12,032 1,271 (71,786) (325,690) (18,952) 30,971 (21,641) (4,995) 41,591 3,016 (3,692) 947,139 (187,267) (287,060) -------- -------- -------- -------- -------- -------- ---------- ---------- ---------- 27,661 (27,547) (4,934) 50,962 14,800 (1,769) 909,799 (481,546) (108,176) -------- -------- -------- -------- -------- -------- ---------- ---------- ---------- 44,937 30,604 5,886 20,763 9,629 3,478 571,285 937,164 461,547 (13,395) -- (780) (74,780) -- -- (219,304) (90,063) (236,261) 6,492 7,548 112,018 8,373 64,182 (24,700) 342,850 643,475 589,847 (6,352) (8,020) (3,589) (5,943) 1,520 (2,641) (163,132) (163,651) (39,531) -------- -------- -------- -------- -------- -------- ---------- ---------- ---------- 31,682 30,132 113,535 (51,587) 75,331 (23,863) 531,699 1,326,925 775,602 -------- -------- -------- -------- -------- -------- ---------- ---------- ---------- 59,343 2,585 108,601 (625) 90,131 (25,632) 1,441,498 845,379 667,426 125,063 122,478 13,877 179,233 89,102 114,734 2,612,034 1,766,655 1,099,229 -------- -------- -------- -------- -------- -------- ---------- ---------- ---------- $184,406 $125,063 $122,478 $178,608 $179,233 $ 89,102 $4,053,532 $2,612,034 $1,766,655 ======== ======== ======== ======== ======== ======== ========== ========== ==========
F-57 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Franklin Templeton Valuemark Small Cap Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (6,613) $ (1,274) $ (121) Net realized (losses) gains from security transactions..................... (16,606) (49,638) (480) Change in unrealized appreciation (depreciation) of investments............ 366,174 (184,311) 4,364 ---------- --------- -------- Net increase (decrease) in net assets resulting from operations............ 342,955 (235,223) 3,763 ---------- --------- -------- From capital transactions: Net premiums............................................................... 258,012 40,174 32,699 Redemptions................................................................ -- -- -- Net Investment Division transfers.......................................... 30,689 995,374 69,587 Other net transfers........................................................ (86,982) (102,364) (3,042) ---------- --------- -------- Net increase (decrease) in net assets resulting from capital transactions.. 201,719 933,184 99,244 ---------- --------- -------- NET CHANGE IN NET ASSETS...................................................... 544,674 697,961 103,007 NET ASSETS--BEGINNING OF PERIOD............................................... 800,968 103,007 -- ---------- --------- -------- NET ASSETS--END OF PERIOD..................................................... $1,345,642 $ 800,968 $103,007 ========== ========= ========
See Notes to Financial Statements. F-58
Alliance Growth & Income Alliance Premier Growth Alliance Technology Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- ------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year Ended Ended Ended Ended Ended Ended Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 4,389 $ 23,587 $ 2,195 $ (257) $ (274) $ (104) $ (181) $ (96) $ 661 (27,592) (18,278) (318) (661) (9,853) (138) (931) (519) (19,763) 441,306 (137,057) 24,267 11,616 (12,480) 1,299 13,613 (9,033) (2,681) ---------- ---------- -------- ------- -------- ------- ------- ------- -------- 418,103 (131,748) 26,144 10,698 (22,607) 1,057 12,501 (9,648) (21,783) ---------- ---------- -------- ------- -------- ------- ------- ------- -------- 581,532 560,351 422,139 29,785 29,958 -- 15,245 17,162 463 (87,076) (14,526) -- -- -- -- (316) -- -- 41,687 192,482 160,474 3,688 (60,622) 97,128 727 -- 36,082 (82,296) (71,035) (11,019) (2,341) (2,820) 133 (792) (1,833) (2,213) ---------- ---------- -------- ------- -------- ------- ------- ------- -------- 453,847 667,272 571,594 31,132 (33,484) 97,261 14,864 15,329 34,332 ---------- ---------- -------- ------- -------- ------- ------- ------- -------- 871,950 535,524 597,738 41,830 (56,091) 98,318 27,365 5,681 12,549 1,191,135 655,611 57,873 42,227 98,318 -- 18,230 12,549 -- ---------- ---------- -------- ------- -------- ------- ------- ------- -------- $2,063,085 $1,191,135 $655,611 $84,057 $ 42,227 $98,318 $45,595 $18,230 $ 12,549 ========== ========== ======== ======= ======== ======= ======= ======= ========
F-59 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Fidelity Contrafund Investment Division ------------------------------------- For the Year For the Year For the Year Ended Ended Ended December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ ------------ (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ (2,455) $ (926) $ (57) Net realized (losses) gains from security transactions..................... 6,303 (348) (27) Change in unrealized appreciation (depreciation) of investments............ 139,867 (29,437) (253) --------- -------- ------- Net increase (decrease) in net assets resulting from operations............ 143,715 (30,711) (337) --------- -------- ------- From capital transactions: Net premiums............................................................... 53,210 22,932 3,356 Redemptions................................................................ (213,750) -- -- Net Investment Division transfers.......................................... 657,697 237,002 21,462 Other net transfers........................................................ 3,584 (3,862) (621) --------- -------- ------- Net increase (decrease) in net assets resulting from capital transactions.. 500,741 256,072 24,197 --------- -------- ------- NET CHANGE IN NET ASSETS...................................................... 644,456 225,361 23,860 NET ASSETS--BEGINNING OF PERIOD............................................... 249,221 23,860 -- --------- -------- ------- NET ASSETS--END OF PERIOD..................................................... $ 893,677 $249,221 $23,860 ========= ======== =======
See Notes to Financial Statements. F-60
Fidelity Asset Manager Growth Fidelity Growth American Funds Growth Investment Division Investment Division Investment Division - ------------------------------------- ------------------------------------- --------------------------------------- For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Year For the Period Ended Ended Ended Ended Ended Ended Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------- $ 6,748 $ 3,017 $ (233) $ (831) $ (517) $ (243) $ (118,303) $ (56,543) $ 128,057 (4,335) (5,591) 113 (2,588) (8,400) (3,407) (100,817) (49,022) (95,342) 59,143 (19,964) (1,597) 63,146 (40,968) (3,078) 5,264,250 (1,636,890) (17,189) -------- -------- ------- -------- -------- ------- ----------- ----------- ---------- 61,556 (22,538) (1,717) 59,727 (49,885) (6,728) 5,045,130 (1,742,455) 15,526 -------- -------- ------- -------- -------- ------- ----------- ----------- ---------- 194,197 105,094 16,990 101,957 102,972 22,338 8,746,040 5,515,691 700,197 (1,698) (2,162) -- (738) -- -- (274,455) (51,220) (1,570) 74,992 (31,085) 84,590 6,224 (1,143) 74,755 5,353,241 5,147,713 2,173,706 (27,293) (12,942) (5,355) (4,423) (5,581) (3,117) (3,102,038) (2,053,980) 288,414 -------- -------- ------- -------- -------- ------- ----------- ----------- ---------- 240,198 58,905 96,225 103,020 96,248 93,976 10,722,788 8,558,204 3,160,747 -------- -------- ------- -------- -------- ------- ----------- ----------- ---------- 301,754 36,367 94,508 162,747 46,363 87,248 15,767,918 6,815,749 3,176,273 130,875 94,508 -- 133,611 87,248 -- 9,992,022 3,176,273 -- -------- -------- ------- -------- -------- ------- ----------- ----------- ---------- $432,629 $130,875 $94,508 $296,358 $133,611 $87,248 $25,759,940 $ 9,992,022 $3,176,273 ======== ======== ======= ======== ======== ======= =========== =========== ==========
F-61 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
American Funds Growth-Income Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 57,594 $ 35,068 $ 15,132 Net realized (losses) gains from security transactions..................... (26,406) (51,319) (13,398) Change in unrealized appreciation (depreciation) of investments............ 3,852,340 (1,122,854) 55,397 ----------- ----------- ---------- Net increase (decrease) in net assets resulting from operations............ 3,883,528 (1,139,105) 57,131 ----------- ----------- ---------- From capital transactions: Net premiums............................................................... 7,049,440 4,324,156 553,810 Redemptions................................................................ (184,181) (62,519) (6,270) Net investment division transfers.......................................... 3,708,586 4,404,613 1,876,550 Other net transfers........................................................ (2,495,963) (1,573,001) (27,864) ----------- ----------- ---------- Net increase (decrease) in net assets resulting from capital transactions.. 8,077,882 7,093,249 2,396,226 ----------- ----------- ---------- NET CHANGE IN NET ASSETS...................................................... 11,961,410 5,954,144 2,453,357 NET ASSETS--BEGINNING OF PERIOD............................................... 8,407,501 2,453,357 -- ----------- ----------- ---------- NET ASSETS--END OF PERIOD..................................................... $20,368,911 $ 8,407,501 $2,453,357 =========== =========== ==========
See Notes to Financial Statements. F-62
American Funds Global Small Cap JPM Enhanced Index T. Rowe Price Mid Cap Growth Investment Division Investment Division Investment Division - --------------------------------------- ------------------------------------- --------------------------------------- For the Year For the Year For the Period For the Year For the Year For the Year For the Year For the Year For the Period Ended Ended May 1, 2001 to Ended Ended Ended Ended Ended May 1, 2001 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ -------------- ------------ ------------ ------------ ------------ ------------ -------------- $ (8,633) $ (1,451) $ 5,931 $ 147 $ 78 $ (13) $ (17,818) $ 962 $ (940) (33,362) 35,746 (18,714) (1,554) (1,186) (25) (46,026) (55,314) (1,372) 1,513,502 (396,292) 46,579 1,806 (1,483) (320) 776,010 (378,709) 11,239 ---------- ---------- -------- -------- ------- ------ ---------- ---------- -------- 1,471,507 (361,997) 33,796 399 (2,591) (358) 712,166 (433,061) 8,927 ---------- ---------- -------- -------- ------- ------ ---------- ---------- -------- 1,663,445 1,071,636 138,839 3,043 6,165 -- 1,283,521 820,210 82,192 (60,720) (8,869) -- -- -- -- (26,453) (1,344) (543) 1,303,948 1,067,611 476,691 (11,034) 1,869 5,908 481,182 375,032 264,649 (610,233) (354,525) (30,269) (173) (3,041) (187) (448,143) 47,743 209,192 ---------- ---------- -------- -------- ------- ------ ---------- ---------- -------- 2,296,440 1,775,853 585,261 (8,164) 4,993 5,721 1,290,107 1,241,641 555,490 ---------- ---------- -------- -------- ------- ------ ---------- ---------- -------- 3,767,947 1,413,856 619,057 (7,765) 2,402 5,363 2,002,273 808,580 564,417 2,032,913 619,057 -- 7,765 5,363 -- 1,372,997 564,417 -- ---------- ---------- -------- -------- ------- ------ ---------- ---------- -------- $5,800,860 $2,032,913 $619,057 $ -- $ 7,765 $5,363 $3,375,270 $1,372,997 $564,417 ========== ========== ======== ======== ======= ====== ========== ========== ========
F-63 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
MFS Research International Investment Division --------------------------------------- For the Year For the Year For the Period Ended Ended May 1, 2001 to December 31, December 31, December 31, 2003 2002 2001 ------------ ------------ -------------- (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income............................................... $ 2,786 $ (2,121) $ (351) Net realized (losses) gains from security transactions..................... 148,987 (66,559) (4,107) Change in unrealized appreciation (depreciation) of investments............ 191,049 (2,664) 1,444 ---------- -------- -------- Net increase (decrease) in net assets resulting from operations............ 342,822 (71,344) (3,014) ---------- -------- -------- From capital transactions: Net premiums............................................................... 514,658 323,700 38,580 Redemptions................................................................ (15,626) (1,956) -- Net investment division transfers.......................................... 140,125 254,704 77,076 Other net transfers........................................................ (198,441) (28,935) 124,871 ---------- -------- -------- Net increase (decrease) in net assets resulting from capital transactions.. 440,716 547,513 240,527 ---------- -------- -------- NET CHANGE IN NET ASSETS...................................................... 783,538 476,169 237,513 NET ASSETS--BEGINNING OF PERIOD............................................... 713,682 237,513 -- ---------- -------- -------- NET ASSETS--END OF PERIOD..................................................... $1,497,220 $713,682 $237,513 ========== ======== ========
See Notes to Financial Statements. F-64
PIMCO Total Return PIMCO Innovation Lord Abbett Bond Debenture Investment Division Investment Division Investment Division - --------------------------------------- --------------------------------------- -------------------------------------- For the Year For the Year For the Period For the Year For the Year For the Period For the Year For the Year For the Year Ended Ended May 1, 2001 to Ended Ended May 1, 2001 to Ended Ended Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2001 2003 2002 2001 2003 2002 2001 - ------------ ------------ -------------- ------------ ------------ -------------- ------------ ------------ ------------ $ 175,706 $ (28,120) $ 23,842 $ (21,608) $ (9,521) $ (1,528) $ 109,583 $ 924,873 $ 859,088 175,963 60,373 1,564 (195,867) (111,879) (9,873) 198,834 (1,886,218) (134,223) (25,434) 270,736 (14,155) 1,260,206 (652,366) 4,179 1,391,673 949,375 (902,997) - ----------- ---------- ---------- ---------- ---------- -------- ----------- ------------ ---------- 326,235 302,989 11,251 1,042,731 (773,766) (7,222) 1,700,090 (11,970) (178,132) - ----------- ---------- ---------- ---------- ---------- -------- ----------- ------------ ---------- 5,176,301 1,998,260 266,987 1,268,741 931,879 138,136 2,358,538 2,500,797 2,653,126 (300,049) (31,798) (9,397) (47,295) (7,020) -- (558,076) (441,582) (478,731) 3,254,351 3,693,012 902,199 1,385,317 627,449 661,537 1,087,733 11,019,013 807,014 (1,973,454) (851,347) (68,474) (437,762) (258,151) (43,761) (1,142,589) (13,314,199) (872,472) - ----------- ---------- ---------- ---------- ---------- -------- ----------- ------------ ---------- 6,157,149 4,808,127 1,091,315 2,169,001 1,294,157 755,912 1,745,606 (235,971) 2,108,937 - ----------- ---------- ---------- ---------- ---------- -------- ----------- ------------ ---------- 6,483,384 5,111,116 1,102,566 3,211,732 520,391 748,690 3,445,696 (247,941) 1,930,805 6,213,682 1,102,566 -- 1,269,081 748,690 -- 8,596,606 8,844,547 6,913,742 - ----------- ---------- ---------- ---------- ---------- -------- ----------- ------------ ---------- $12,697,066 $6,213,682 $1,102,566 $4,480,813 $1,269,081 $748,690 $12,042,302 $ 8,596,606 $8,844,547 =========== ========== ========== ========== ========== ======== =========== ============ ==========
F-65 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company STATEMENTS OF CHANGES IN NET ASSETS
Met/AIM Met/AIM Mid Cap Core Equity Small Cap Growth Investment Division Investment Division -------------------------- -------------------------- For the Year For the Period For the Year For the Period Ended May 1, 2002 to Ended May 1, 2002 to December 31, December 31, December 31, December 31, 2003 2002 2003 2002 ------------ -------------- ------------ -------------- (DECREASE) INCREASE IN NET ASSETS From operations: Net investment (loss) income..................................... $ 3,638 $ (347) $ (2,947) $ (281) Net realized (losses) gains from security transactions........... 6,414 (1,242) 66,977 (593) Change in unrealized appreciation (depreciation) of investments.. 140,733 (6,351) 51,242 (4,322) --------- -------- -------- -------- Net increase (decrease) in net assets resulting from operations.. 150,785 (7,940) 115,272 (5,196) --------- -------- -------- -------- From capital transactions: Net premiums..................................................... 376,221 70,763 201,753 30,362 Redemptions...................................................... (9,516) (929) (5,605) (129) Net investment division transfers................................ 345,361 212,616 286,464 84,320 Other net transfers.............................................. (126,899) (21,530) (70,229) 6,439 --------- -------- -------- -------- Net increase (decrease) in net assets resulting from capital transactions............................................ 585,167 260,920 412,383 120,992 --------- -------- -------- -------- NET CHANGE IN NET ASSETS............................................ 735,952 252,980 527,655 115,796 NET ASSETS--BEGINNING OF PERIOD..................................... 252,980 -- 115,796 -- --------- -------- -------- -------- NET ASSETS--END OF PERIOD........................................... $ 988,932 $252,980 $643,451 $115,796 ========= ======== ======== ========
See Notes to Financial Statements. F-66
Harris Oakmark International Janus Aggressive Growth Lord Abbett Growth & Income Investment Division Investment Division Investment Division - -------------------------- --------------------------------------- -------------------------------- For the Year For the Period For the Year For the Year For the Period For the Year For the Period Ended May 1, 2002 to Ended Ended May 1, 2001 to Ended October 31, 2002 to December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2003 2002 2003 2002 2001 2003 2002 - ------------ -------------- ------------ ------------ -------------- ------------ ------------------- $ 6,375 $ (88) $ (25,657) $ (13,374) $ (2,780) $ (47) $-- 72,432 (843) (313,967) (78,401) (43,356) 20 -- 49,401 (2,920) 1,123,504 (426,893) (11,854) 3,750 -- -------- -------- ---------- ---------- ---------- ------- --- 128,208 (3,851) 783,880 (518,668) (57,990) 3,723 -- -------- -------- ---------- ---------- ---------- ------- --- 111,653 59,332 1,705,553 1,567,918 311,526 4,885 -- (357) (178) (28,560) (23,600) -- -- -- 446,278 122,434 109,161 607,036 817,361 12,124 -- (22,736) (27,767) (612,599) (540,084) (118,215) (203) -- -------- -------- ---------- ---------- ---------- ------- --- 534,838 153,821 1,173,555 1,611,270 1,010,672 16,806 -- -------- -------- ---------- ---------- ---------- ------- --- 663,046 149,970 1,957,435 1,092,602 952,682 20,529 -- 149,970 -- 2,045,284 952,682 -- -- -- -------- -------- ---------- ---------- ---------- ------- --- $813,016 $149,970 $4,002,719 $2,045,284 $ 952,682 $20,529 $-- ======== ======== ========== ========== ========== ======= ===
F-67 Metropolitan Life Separate Account UL Of Metropolitan Life Insurance Company NOTES TO FINANCIAL STATEMENTS December 31, 2003 1. BUSINESS Metropolitan Life Separate Account UL (the "Separate Account"), a separate account of Metropolitan Life Insurance Company ("Metropolitan Life"), was established on December 13, 1988 to support Metropolitan Life's operations with respect to certain variable universal life policies ("Policies"). Metropolitan Life is a wholly owned subsidiary of MetLife Inc. ("MetLife"). The Separate Account was registered as a unit investment trust on January 5, 1990 under the Investment Company Act of 1940, as amended, and exists in accordance with the regulations of the New York Insurance Department. The Separate Account presently consists of fifty-seven investment divisions that support six variable universal life insurance policies: Flexible Premium Multifunded Life ("UL II"), MetLife Flexible Premium Variable Life ("MetFlex"), Group Variable Universal Life ("GVUL"), Flexible Premium Multifunded Life ("UL 2001"), Variable Additional Insurance ("VAI") and Variable Additional Benefits Rider ("VABR"). The Separate Account is divided into investment divisions. Each investment division invests its assets exclusively in shares of corresponding portfolios, series or funds (with the same name) within the Metropolitan Fund, Janus Fund, Invesco Funds, Franklin Fund, Alliance Fund, Fidelity Funds, American Fund or Met Investors Fund, collectively, (the "Funds"). For convenience, the portfolios, series, and funds are referred to as "portfolios." The assets of the Separate Account are registered in the name of Metropolitan Life. Under applicable insurance law, the assets and liabilities of the Separate Account are clearly identified and distinguished from Metropolitan Life's other assets and liabilities. The portion of the Separate Account's assets applicable to the variable life policies is not chargeable with liabilities arising out of any other business Metropolitan Life may conduct. The table below represents the investment divisions within the Separate Account: State Street Research Investment Trust Investment Division State Street Research Diversified Investment Division State Street Research Aggressive Growth Investment Division MetLife Stock Index Investment Division FI International Stock Investment Division Janus Mid Cap Investment Division T. Rowe Price Small Cap Growth Investment Division Scudder Global Equity Investment Division Harris Oakmark Large Cap Value Investment Division Neuberger Berman Partners Mid Cap Value Investment Division T. Rowe Price Large Cap Growth Investment Division Lehman Brothers Aggregate Bond Index Investment Division Morgan Stanley EAFE Index Investment Division Russell 2000 Index Investment Division Met/Putnam Voyager Investment Division State Street Research Aurora Investment Division MetLife Mid Cap Stock Index Investment Division Franklin Templeton Small Cap Growth Investment Division (b) State Street Research Large Cap Value Investment Division (c) Davis Venture Value Investment Division Loomis Sayles Small Cap Investment Division Alger Equity Growth Investment Division (a) MFS Investors Trust Investment Division (a) MFS Research Managers Investment Division (a) State Street Research Bond Income Investment Division (a) FI Structured Equity Investment Division (a) Harris Oakmark Focused Value Investment Division (b) Salomon Brothers Stategic Bond Opportunities Investment Division (b) Salomon Brothers U.S. Government Investment Division (b) State Street Research Money Market Investment Division FI Mid Cap Opportunities Investment Division (c) Janus Aspen Growth Investment Division Invesco VIF High Yield Investment Division Invesco VIF Equity Income Investment Division Invesco VIF Real Estate Opportunity Investment Division Franklin Templeton International Stock Investment Division Franklin Templeton Valuemark Small Cap Investment Division (a) Alliance Growth & Income Investment Division Alliance Premier Growth Investment Division (a) Alliance Technology Investment Division (a) Fidelity Contrafund Investment Division (a) Fidelity Asset Manager Growth Investment Division (a) Fidelity Growth Investment Division (a) American Funds Growth Investment Division (b) American Funds Growth-Income Investment Division (b) American Funds Global Small Cap Investment Division (b) JPM Enhanced Index Investment Division (a) T. Rowe Price Mid Cap Growth Investment Division (b) MFS Research International Investment Division (b) PIMCO Total Return Investment Division (b) PIMCO Innovation Investment Division (b) Lord Abbett Bond Debenture Investment Division Met/AIM Mid Cap Core Equity Investment Division (c) Met/AIM Small Cap Growth Investment Division (c) Harris Oakmark International Investment Division (c) Janus Aggressive Growth Investment Division Lord Abbett Growth & Income Investment Division (d) F-68 NOTES TO FINANCIAL STATEMENTS -- (Continued) 1. BUSINESS -- (Continued) (a) On January 1, 2001, operations commenced for eleven new investment divisions added to the Separate Account on that date: Franklin Templeton Valuemark Small Cap Investment Division, Alger Equity Growth Investment Division, MFS Investors Trust Investment Division, MFS Research Managers Investment Division, FI Structured Equity Investment Division, Alliance Premier Growth Investment Division, Alliance Technology Investment Division, Fidelity Contrafund Investment Division, Fidelity Asset Manager Growth Investment Division, Fidelity Growth Investment Division, and JPM Enhanced Index Investment Division. (b) On May 1, 2001, operations commenced for twelve new investment divisions added to the Separate Account on that date: Janus Aggressive Growth Investment Division, Franklin Templeton Small Cap Growth Investment Division, Harris Oakmark Focused Value Investment Division, Salomon Brothers Strategic Bond Opportunities Investment Division, Salomon Brothers U.S. Government Investment Division, American Funds Growth Investment Division, American Funds Growth-Income Investment Division, American Funds Global Small Cap Investment Division, T. Rowe Price Mid Cap Growth Investment Division, MFS Research International Investment Division, PIMCO Total Return Investment Division, and PIMCO Innovation Investment Division. (c) On May 1, 2002, operations commenced for five new investment divisions added to the Separate Account on that date: State Street Research Large Cap Value Investment Division, FI Mid Cap Opportunities Investment Division, Met/AIM Mid Cap Core Equity Investment Division, Met/AIM Small Cap Growth Investment Division, and Harris Oakmark International Investment Division. (d) On October 31, 2002 operations commenced for one new investment division added to the Separate Account on that date: Lord Abbett Growth & Income Investment Division. 2. SIGNIFICANT ACCOUNTING POLICIES The financial statements included herein have been provided in accordance with accounting principles generally accepted in the United States of America for variable universal life separate accounts registered as unit investment trusts. A. Valuation of Investments Investments are made in the portfolios of the Funds and are valued at the reported net asset values of these portfolios. The investments of the Funds are valued at fair value. Money market fund investments are valued utilizing the amortized cost method of valuation. B. Security Transactions Purchases and sales are recorded on the trade date basis. Realized gains and losses on the sales of investments are computed on the basis of the identified cost of the investment sold. Income from dividends, and gains from realized gain distributions, are recorded on the ex-distribution date. C. Federal Income Taxes The operations of the Separate Account are included in the Federal income tax return of Metropolitan Life, which is taxed as a life insurance company under the provisions of the Internal Revenue Code ("IRC"). Under the current provisions of the IRC, Metropolitan Life does not expect to incur Federal income taxes on the earnings of the Separate Account to the extent the earnings are credited under the policies. Accordingly, no charge is being made currently to the Separate Account for Federal income taxes. Metropolitan Life will review periodically the status of this policy in the event of changes in the tax law. A charge may be made in future years for any Federal income taxes that would be attributed to the policies. D. Net Premiums Metropolitan Life deducts a sales load and a state premium tax charge from premiums before amounts are allocated to the Separate Account. In the case of certain policies, Metropolitan Life also deducts a Federal income tax charge before amounts are allocated to the Separate Account. The Federal income tax charge is imposed in connection with certain policies to recover a portion of the Federal income tax adjustment attributable to policy acquisition expenses. F-69 NOTES TO FINANCIAL STATEMENTS -- (Continued) 2. SIGNIFICANT ACCOUNTING POLICIES -- (Continued) E. Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported herein. Actual results could differ from these estimates. F. Purchase Payments Purchase payments received by Metropolitan Life are credited as Accumulation Units as of the end of the valuation period in which received, as provided in the prospectus. 3. EXPENSES With respect to assets in the Separate Account that support certain policies, Metropolitan Life deducts a charge from the assets of the Separate Account for the assumption of general administrative expenses and mortality and expense risks. This charge is equivalent to an effective annual rate of 0.45% of the average daily values of the assets in the Separate Account for GVUL policies, 0.90% for UL II & UL 2001 policies, 0.75% for VAI and VABR policies less than $250,000, and 0.50% for VAI and VABR policies $250,000 and greater. For Met Flex policies, a charge of 0.48% is assessed against the cash value of the assets in the separate account. F-70 NOTES TO FINANCIAL STATEMENTS -- (Continued) 4. PURCHASES AND SALES OF INVESTMENTS The cost of purchases and proceeds from sales of investments for the year ended December 31, 2003 were as follows:
Purchases Sales --------- -------- (In Thousands) State Street Research Investment Trust Investment Division....... $ 23,613 $ 15,572 State Street Research Diversified Investment Division............ 25,688 14,354 State Street Research Aggressive Growth Investment Division...... 11,163 8,764 MetLife Stock Index Investment Division.......................... 63,324 24,023 FI International Stock Investment Division....................... 5,514 3,811 Janus Mid Cap Investment Division................................ 22,923 3,117 T. Rowe Price Small Cap Growth Investment Division............... 6,430 1,862 Scudder Global Equity Investment Division........................ 4,833 2,872 Harris Oakmark Large Cap Value Investment Division............... 9,213 1,835 Neuberger Berman Partners Mid Cap Value Investment Division...... 5,510 557 T. Rowe Price Large Cap Growth Investment Division............... 6,544 2,531 Lehman Brothers Aggregate Bond Index Investment Division......... 20,915 19,015 Morgan Stanley EAFE Index Investment Division.................... 9,570 4,867 Russell 2000 Index Investment Division........................... 6,960 1,888 Met/Putnam Voyager Investment Division........................... 2,701 964 State Street Research Aurora Investment Division................. 11,291 1,416 MetLife Mid Cap Stock Index Investment Division.................. 7,181 1,384 Franklin Templeton Small Cap Growth Investment Division.......... 1,497 116 State Street Research Large Cap Value Investment Division........ 1,062 338 Davis Venture Value Investment Division.......................... 6,627 1,045 Loomis Sayles Small Cap Investment Division...................... 1,611 682 Alger Equity Growth Investment Division.......................... 1,071 396 MFS Investors Trust Investment Division.......................... 1,675 1,062 MFS Research Managers Investment Division........................ 279 34 State Street Research Bond Income Investment Division............ 13,891 12,765 FI Structured Equity Investment Division......................... 587 257 Harris Oakmark Focused Value Investment Division................. 7,908 488 Salomon Brothers Stategic Bond Opportunities Investment Division. 4,033 1,375 Salomon Brothers U.S. Government Investment Division............. 5,404 2,472 State Street Research Money Market Investment Division........... 6,223 9,648 FI Mid Cap Opportunities Investment Division..................... 823 90 Janus Aspen Growth Investment Division........................... 833 274 Invesco VIF High Yield Investment Division....................... 298 55 Invesco VIF Equity Income Investment Division.................... 57 24 Invesco VIF Real Estate Opportunity Investment Division.......... 32 82 Franklin Templeton International Stock Investment Division....... 1,048 482 Franklin Templeton Valuemark Small Cap Investment Division....... 311 502 Alliance Growth & Income Investment Division..................... 635 176 Alliance Premier Growth Investment Division...................... 33 3 Alliance Technology Investment Division.......................... 16 1 Fidelity Contrafund Investment Division.......................... 728 230 Fidelity Asset Manager Growth Investment Division................ 279 32 Fidelity Growth Investment Division.............................. 109 6 American Funds Growth Investment Division........................ 10,843 369 American Funds Growth-Income Investment Division................. 8,552 463 American Funds Global Small Cap Investment Division.............. 3,456 1,175 JPM Enhanced Index Investment Division........................... 3 11 T. Rowe Price Mid Cap Growth Investment Division................. 1,455 183 MFS Research International Investment Division................... 2,812 2,368 PIMCO Total Return Investment Division........................... 8,452 2,120 PIMCO Innovation Investment Division............................. 2,694 553 Lord Abbett Bond Debenture Investment Division................... 4,152 2,314 Met/AIM Mid Cap Core Equity Investment Division.................. 704 115 Met/AIM Small Cap Growth Investment Division..................... 786 377 Harris Oakmark International Investment Division................. 1,577 1,035 Janus Aggressive Growth Investment Division...................... 4,304 3,158 Lord Abbett Growth & Income Investment Division.................. 17 0 -------- -------- Total............................................................ $350,250 $155,708 ======== ========
F-71 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. CHANGES IN OUTSTANDING UNITS The changes in units outstanding for the years ended December 31, 2003, 2002 and 2001 were as follows:
State Street State Street State Street Research MetLife Research Research Aggressive Stock Investment Trust Diversified Growth Index Investment Investment Investment Investment Division Division Division Division ---------------- ------------ ------------ ---------- (In Thousands) Outstanding at December 31, 2002 15,060 12,268 11,447 22,140 Activity during 2003: Issued........................ 5,136 3,873 3,343 10,343 Redeemed...................... (4,045) (3,260) (2,957) (6,736) ------ ------ ------ ------ Outstanding at December 31, 2003 16,151 12,881 11,833 25,747 ====== ====== ====== ====== Outstanding at December 31, 2001 13,264 11,138 10,503 17,015 Activity during 2002: Issued........................ 5,072 3,678 3,343 9,909 Redeemed...................... (3,276) (2,548) (2,399) (4,784) ------ ------ ------ ------ Outstanding at December 31, 2002 15,060 12,268 11,447 22,140 ====== ====== ====== ====== Outstanding at December 31, 2000 11,054 9,234 9,254 11,689 Activity during 2001: Issued........................ 2,828 2,200 1,392 6,525 Redeemed...................... (618) (296) (143) (1,199) ------ ------ ------ ------ Outstanding at December 31, 2001 13,264 11,138 10,503 17,015 ====== ====== ====== ======
F-72 NOTES TO FINANCIAL STATEMENTS -- (Continued)
FI T. Rowe Price Harris Neuberger T. Rowe Price Lehman Brothers International Janus Small Cap Scudder Oakmark Berman Partners Large Cap Aggregate Stock Mid Cap Growth Global Equity Large Cap Value Mid Cap Value Growth Bond Index Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ------------- ---------- ------------- ------------- --------------- --------------- ------------- --------------- 3,296 11,521 4,261 1,978 2,346 1,567 2,853 4,147 1,224 5,469 1,463 768 1,639 892 1,408 2,097 (1,036) (3,642) (1,021) (606) (925) (513) (971) (2,180) ------ ------ ------ ----- ----- ----- ----- ------ 3,484 13,348 4,703 2,140 3,060 1,946 3,290 4,064 ====== ====== ====== ===== ===== ===== ===== ====== 3,106 8,481 3,509 2,000 1,242 1,076 2,124 3,153 1,176 5,867 1,561 687 1,697 906 1,289 1,774 (986) (2,827) (809) (709) (593) (415) (560) (780) ------ ------ ------ ----- ----- ----- ----- ------ 3,296 11,521 4,261 1,978 2,346 1,567 2,853 4,147 ====== ====== ====== ===== ===== ===== ===== ====== 2,709 5,367 2,995 1,848 220 456 632 1,730 1,578 3,701 864 209 1,076 790 2,004 2,267 (1,181) (587) (350) (57) (54) (170) (512) (844) ------ ------ ------ ----- ----- ----- ----- ------ 3,106 8,481 3,509 2,000 1,242 1,076 2,124 3,153 ====== ====== ====== ===== ===== ===== ===== ======
F-73 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. CHANGES IN OUTSTANDING UNITS -- (Continued)
Morgan Stanley State Street EAFE Russell Met/Putnam Research Index 2000 Index Voyager Aurora Investment Investment Investment Investment Division Division Division Division -------------- ---------- ---------- ------------ (In Thousands) Outstanding at December 31, 2002 2,044 1,614 1,463 2,599 Activity during 2003: Issued........................ 2,174 1,138 1,235 1,832 Redeemed...................... (1,542) (667) (785) (1,059) ------ ----- ----- ------ Outstanding at December 31, 2003 2,676 2,085 1,913 3,372 ====== ===== ===== ====== Outstanding at December 31, 2001 1,352 920 792 1,317 Activity during 2002: Issued........................ 1,485 1,015 1,075 1,944 Redeemed...................... (793) (321) (404) (662) ------ ----- ----- ------ Outstanding at December 31, 2002 2,044 1,614 1,463 2,599 ====== ===== ===== ====== Outstanding at December 31, 2000 544 512 131 164 Activity during 2001: Issued........................ 1,865 1,181 704 1,201 Redeemed...................... (1,057) (773) (43) (48) ------ ----- ----- ------ Outstanding at December 31, 2001 1,352 920 792 1,317 ====== ===== ===== ======
F-74 NOTES TO FINANCIAL STATEMENTS -- (Continued)
MetLife Mid Franklin State Street MFS Cap Stock Templeton Research Davis Loomis Sayles Alger MFS Research Index Small Cap Growth Large Cap Value Venture Value Small Cap Equity Growth Investors Trust Managers Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ----------- ---------------- --------------- ------------- ------------- ------------- --------------- ---------- 1,762 198 23 901 18 589 104 47 1,301 266 147 650 21 200 272 54 (725) (135) (67) (229) (9) (68) (190) (20) ----- ---- --- ----- -- --- ---- --- 2,338 329 103 1,322 30 721 186 81 ===== ==== === ===== == === ==== === 867 52 -- 297 11 6 43 13 1,231 215 27 754 12 624 110 73 (336) (69) (4) (150) (5) (41) (49) (39) ----- ---- --- ----- -- --- ---- --- 1,762 198 23 901 18 589 104 47 ===== ==== === ===== == === ==== === 210 -- -- 39 2 -- -- -- 693 54 -- 267 10 6 47 83 (36) (2) -- (9) (1) -- (4) (70) ----- ---- --- ----- -- --- ---- --- 867 52 -- 297 11 6 43 13 ===== ==== === ===== == === ==== ===
F-75 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. CHANGES IN OUTSTANDING UNITS -- (Continued)
State Street Saloman Brothers Research FI Harris Oakmark Strategic Bond Bond Income Structured Equity Focused Value Opportunities Investment Investment Investment Investment Division Division Division Division ------------ ----------------- -------------- ---------------- (In Thousands) Outstanding at December 31, 2002 5,564 12 76 177 Activity during 2003: Issued........................ 1,494 75 72 430 Redeemed...................... (1,541) (38) (33) (232) ------ --- --- ---- Outstanding at December 31, 2003 5,517 49 115 375 ====== === === ==== Outstanding at December 31, 2001 4,202 3 23 41 Activity during 2002: Issued........................ 2,094 15 72 195 Redeemed...................... (732) (6) (19) (59) ------ --- --- ---- Outstanding at December 31, 2002 5,564 12 76 177 ====== === === ==== Outstanding at December 31, 2000 3,980 -- -- -- Activity during 2001: Issued........................ 1,197 3 24 42 Redeemed...................... (975) -- (1) (1) ------ --- --- ---- Outstanding at December 31, 2001 4,202 3 23 41 ====== === === ====
F-76 NOTES TO FINANCIAL STATEMENTS -- (Continued)
State Street FI Janus Invesco VIF Invesco Franklin Templeton Saloman Brothers Research Mid Cap Aspen Invesco VIF Equity VIF Real Estate International U.S. Government Money Market Opportunities Growth High Yield Income Opportunity Stock Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ---------------- ------------ ------------- ---------- ----------- ----------- --------------- ------------------ 340 1,981 21 354 65 15 14 344 626 526 107 123 29 6 2 118 (407) (747) (32) (42) (7) (2) (6) (59) ---- ------ --- ---- --- -- --- --- 559 1,760 96 435 87 19 10 403 ==== ====== === ==== === == === === 71 2,156 -- 236 37 12 7 189 393 1,770 22 149 38 5 61 183 (124) (1,945) (1) (31) (10) (2) (54) (28) ---- ------ --- ---- --- -- --- --- 340 1,981 21 354 65 15 14 344 ==== ====== === ==== === == === === -- 1,479 -- 473 1 2 10 99 99 2,983 -- 84 45 12 1 118 (28) (2,306) -- (321) (9) (2) (4) (28) ---- ------ --- ---- --- -- --- --- 71 2,156 -- 236 37 12 7 189 ==== ====== === ==== === == === ===
F-77 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. CHANGES IN OUTSTANDING UNITS -- (Continued)
Franklin Templeton Alliance Valuemark Growth & Alliance Alliance Small Cap Income Premier Growth Technology Investment Investment Investment Investment Division Division Division Division ------------------ ---------- -------------- ---------- (In Thousands) Outstanding at December 31, 2002 163 150 9 6 Activity during 2003: Issued........................ 57 67 6 5 Redeemed...................... (21) (20) (1) (1) --- --- --- --- Outstanding at December 31, 2003 199 197 14 10 === === === === Outstanding at December 31, 2001 16 65 14 2 Activity during 2002: Issued........................ 183 95 5 4 Redeemed...................... (36) (10) (10) -- --- --- --- --- Outstanding at December 31, 2002 163 150 9 6 === === === === Outstanding at December 31, 2000 -- 6 -- -- Activity during 2001: Issued........................ 17 60 14 26 Redeemed...................... (1) (1) -- (24) --- --- --- --- Outstanding at December 31, 2001 16 65 14 2 === === === ===
F-78 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Fidelity American JPM T. Rowe Price Fidelity Asset Manager Fidelity American American Funds Funds Global Enhanced Mid Cap Contrafund Growth Growth Funds Growth Growth-Income Small Cap Index Growth Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ---------- ------------- ---------- ------------ -------------- ------------ ---------- ------------- 35 20 28 221 287 203 1 294 90 39 20 313 387 375 1 387 (28) (5) (1) (117) (149) (200) (2) (154) --- -- -- ---- ---- ---- -- ---- 97 54 47 417 525 378 -- 527 === == == ==== ==== ==== == ==== 3 13 13 53 68 49 1 68 33 15 18 217 287 226 1 328 (1) (8) (3) (49) (68) (72) (1) (102) --- -- -- ---- ---- ---- -- ---- 35 20 28 221 287 203 1 294 === == == ==== ==== ==== == ==== -- -- -- -- -- -- -- -- 3 14 17 67 76 55 1 71 -- (1) (4) (14) (8) (6) -- (3) --- -- -- ---- ---- ---- -- ---- 3 13 13 53 68 49 1 68 === == == ==== ==== ==== == ====
F-79 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. CHANGES IN OUTSTANDING UNITS -- (Continued)
MFS Lord Abbett Research PIMCO PIMCO Bond International Total Return Innovation Debenture Investment Investment Investment Investment Division Division Division Division ------------- ------------ ---------- ----------- (In Thousands) Outstanding at December 31, 2002 95 534 416 748 Activity during 2003: Issued........................ 397 1,055 896 449 Redeemed...................... (341) (547) (380) (321) ---- ----- ---- ---- Outstanding at December 31, 2003 151 1,042 932 876 ==== ===== ==== ==== Outstanding at December 31, 2001 28 103 121 774 Activity during 2002: Issued........................ 239 623 437 178 Redeemed...................... (172) (192) (142) (204) ---- ----- ---- ---- Outstanding at December 31, 2002 95 534 416 748 ==== ===== ==== ==== Outstanding at December 31, 2000 -- -- -- 601 Activity during 2001: Issued........................ 113 123 128 246 Redeemed...................... (85) (20) (7) (73) ---- ----- ---- ---- Outstanding at December 31, 2001 28 103 121 774 ==== ===== ==== ====
F-80 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Met/Aim Met/Aim Harris Janus Lord Abbett Mid Cap Small Cap Oakmark Aggressive Growth & Core Equity Growth International Growth Income Investment Investment Investment Investment Investment Division Division Division Division Division ----------- ---------- ------------- ---------- ----------- 30 15 18 381 -- 96 99 180 1,088 3 (34) (54) (126) (900) -- --- --- ---- ----- -- 92 60 72 569 3 === === ==== ===== == -- -- -- 122 -- 33 17 22 409 -- (3) (2) (4) (150) -- --- --- ---- ----- -- 30 15 18 381 -- === === ==== ===== == -- -- -- -- -- -- -- -- 148 -- -- -- -- (26) -- --- --- ---- ----- -- -- -- -- 122 -- === === ==== ===== ==
F-81 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. UNIT VALUES A summary of unit values and units outstanding for the Contracts and the expense as a percentage of average net assets, excluding expenses for the underlying funds, for each of the periods ended December 31, 2003, 2002 and 2001, respectively, or lesser time period if applicable.
State Street State Street State Street Research Research Research Aggressive MetLife Investment Trust Diversified Growth Stock Index Investment Investment Investment Investment Division Division Division Division ---------------- ---------------- ---------------- ---------------- 2003 Units (In Thousands).................................. 16,151 12,881 11,833 25,747 Unit Fair Value, Lowest to Highest (1)................ $10.57 to $33.12 $11.79 to $30.64 $11.71 to $16.87 $9.58 to $29.26 Net Assets (In Thousands)............................. $367,087 $289,033 $187,268 $457,114 Investment Income Ratio to Net Assets (2)............. 0.83% 3.73% 0.00% 1.65% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% Total Return, Lowest to Highest (1)(4)................ 29.08% to 30.24% 19.48% to 20.56% 39.53% to 40.79% 27.06% to 28.20% 2002 Units (In Thousands).................................. 15,060 12,268 11,447 22,140 Unit Fair Value, Lowest to Highest (1)................ $8.11 to $25.66 $9.78 to $25.64 $8.32 to $12.09 $7.48 to $23.03 Net Assets (In Thousands)............................. $276,980 $238,020 $130,816 $326,228 Investment Income Ratio to Net Assets (2)............. 0.54% 2.27% 0.00% 1.61% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% Total Return, Lowest to Highest (1)(4)................ -27% to -26% -15% to -14% -29% -23% to -22% 2001 Units (In Thousands).................................. 13,264 11,138 10,503 17,015 Unit Fair Value, Lowest to Highest (1)................ $10.98 to $35.04 $11.35 to $30.04 $11.67 to $17.12 $9.62 to $29.91 Net Assets (In Thousands)............................. $356,701 $265,724 $171,692 $346,931 Investment Income Ratio to Net Assets (2)............. 13.53% 9.67% 24.84% 1.17% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% Total Return, Lowest to Highest (1)(4)................ -18% to -17% -7% to -6% -24% -13% to -12%
- -------- (1) Metropolitan Life sells a number of variable life products which have unique combinations of features and fees that are charged against the contract owners' account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. (2) These amounts represent the dividends, excluding distributions of capital gains, received by the investment division from the underlying portfolio, net of management fees assessed by the fund manager, divided by the average net assets. These ratios excluded those expenses, such as mortality and expense charges, that are assessed against contract owners' accounts either through reductions in unit values or the redemption of units. The recognition of investment income by the investment division is affected by the timing of the declaration of dividends by the underlying portfolio in which the investment divisions invest. (3) These amounts represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense risk charges for each period indicated. The ratios include only those expenses that result in a direct reduction to unit value. Charges made directly to contract owner accounts through the redemption of units, and expenses of the underlying portfolio, are excluded. (4) These amounts represent the total return for the period indicated including changes in the value of the underlying portfolio, and expenses assessed through the reduction of units values. The total return does not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the Separate Account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. F-82 NOTES TO FINANCIAL STATEMENTS -- (Continued)
FI T. Rowe Price Harris Neuberger T. Rowe Price International Janus Small Cap Scudder Oakmark Large Berman Partners Large Cap Stock Mid Cap Growth Global Equity Cap Value Mid Cap Value Growth Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,484 13,348 4,703 2,140 3,060 1,946 3,290 $9.92 to $13.85 $5.69 to $16.17 $12.64 to $14.08 $12.92 to $14.39 $11.53 to $14.56 $13.86 to $19.29 $8.23 to $12.13 $43,984 $184,078 $61,843 $28,696 $37,504 $30,946 $33,520 0.65% 0.00% 0.00% 2.04% 0.00% 0.32% 0.11% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.60% to 0.90% 0.60% to 0.90% 26.90% to 28.04% 33.38% to 35.10% 39.62% to 40.87% 29.29% to 30.45% 24.38% to 25.49% 35.30% to 36.52% 29.64% to 30.81% 3,296 11,521 4,261 1,978 2,346 1,567 2,853 $7.78 to $10.91 $4.22 to $12.07 $9.05 to $10.04 $9.90 to $11.03 $9.23 to $11.71 $10.24 to $14.13 $6.35 to $9.27 $32,966 $119,020 $39,880 $20,476 $23,073 $18,286 $22,095 0.89% 0.00% 0.00% 1.68% 3.31% 0.31% 0.26% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% -18% to -17% -30% to -29% -27% -17% to -16% -15% to -14% -10% -24% to 23% 3,106 8,481 3,509 2,000 1,242 1,076 2,124 $9.47 to $13.35 $5.95 to $17.08 $12.46 to $13.76 $11.79 to $12.88 $10.80 to $13.76 $11.44 to $15.63 $8.35 to $12.08 $38,281 $125,185 $44,660 $21,106 $14,336 $14,115 $21,111 3.67% 0.00% 8.16% 11.32% 0.15% 1.94% 0.06% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.60% to 0.90% 0.60% to 0.90% -21% to -20% -37% to -33% -10% to 2% -16% to -15% 17% to 20% -3% to 0% -11% to -6%
F-83 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. UNIT VALUES -- (Continued)
Lehman Brothers Aggregate Bond Morgan Stanley Russell 2000 Met/Putnam Index EAFE Index Index Voyager Investment Investment Investment Investment Division Division Division Division ---------------- ---------------- ---------------- ---------------- 2003 Units (In Thousands).................................. 4,064 2,676 2,085 1,913 Unit Fair Value, Lowest to Highest (1)................ $12.77 to $13.67 $7.85 to $10.37 $10.75 to $14.59 $4.38 to $4.78 Net Assets (In Thousands)............................. $54,994 $24,290 $27,726 $8,651 Investment Income Ratio to Net Assets (2)............. 5.25% 1.48% 0.63% 0.00% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.60% to 0.90% Total Return, Lowest to Highest (1)(4)................ 2.71% to 3.63% 36.41% to 37.70% 44.77% to 46.07% 24.78% to 25.91% 2002 Units (In Thousands).................................. 4,147 2,044 1,614 1,463 Unit Fair Value, Lowest to Highest (1)................ $12.43 to $13.19 $5.76 to $7.53 $7.43 to $9.99 $3.51 to $3.79 Net Assets (In Thousands)............................. $54,046 $13,496 $14,829 $5,253 Investment Income Ratio to Net Assets (2)............. 2.81% 0.49% 0.59% 0.00% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.50% to 0.90% Total Return, Lowest to Highest (1)(4)................ 9% to 10% -17% -21% to -20% -30% to -29% 2001 Units (In Thousands).................................. 3,153 1,352 920 792 Unit Fair Value, Lowest to Highest (1)................ $11.38 to $11.97 $6.97 to $9.04 $9.42 to $12.56 $4.98 to $5.04 Net Assets (In Thousands)............................. $37,322 $10,800 $10,625 $4,001 Investment Income Ratio to Net Assets (2)............. 1.29% 0.31% 0.26% 0.00% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3)....................................... 0.45% to 0.90% 0.45% to 0.90% 0.45% to 0.90% 0.60% to 0.90% Total Return, Lowest to Highest (1)(4)................ 7% -22% to -21% 0% to 6% -46% to -31%
- -------- (1) Metropolitan Life sells a number of variable life products which have unique combinations of features and fees that are charged against the contract owners' account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. (2) These amounts represent the dividends, excluding distributions of capital gains, received by the investment division from the underlying portfolio, net of management fees assessed by the fund manager, divided by the average net assets. These ratios excluded those expenses, such as mortality and expense charges, that are assessed against contract owners' accounts either through reductions in unit values or the redemption of units. The recognition of investment income by the investment division is affected by the timing of the declaration of dividends by the underlying portfolio in which the investment divisions invest. (3) These amounts represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense risk charges for each period indicated. The ratios include only those expenses that result in a direct reduction to unit value. Charges made directly to contract owner accounts through the redemption of units, and expenses of the underlying portfolio, are excluded. (4) These amounts represent the total return for the period indicated including changes in the value of the underlying portfolio, and expenses assessed through the reduction of unit values. The total return does not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the Separate Account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. F-84 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Franklin State Street MetLife Mid Templeton State Street Loomis Research Cap Stock Small Cap Research Davis Sayles Alger Aurora Index Growth Large Cap Value Venture Value Small Cap Equity Growth Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ------------- 3,372 2,338 329 103 1,322 30 721 $15.46 to $16.89 $11.04 to $12.13 $9.07 to $9.29 $10.70 to $10.86 $9.79 to $28.40 $9.27 to $205.39 $6.84 $56,540 $27,925 $3,038 $1,110 $24,429 $4,423 $4,933 0.00% 0.46% 0.00% 1.37% 0.37% 0.00% 0.06% 0.60% to 0.90% 0.60% to 0.90% 0.90% 0.90% 0.60% to 0.90% 0.60% to 0.90% 0.60% 48.80% to 50.14% 33.76% to 34.96% 43.64% to 44.93% 34.47% to 35.68% 29.70% to 30.87% 35.25% to 36.47% 35.15% 2,599 1,762 198 23 901 18 589 $10.30 to $11.25 $8.18 to $8.98 $6.31 to $6.41 $7.96 to $8.00 $7.48 to $21.70 $6.80 to $150.51 $5.06 $29,061 $15,568 $1,266 $189 $13,430 $2,408 $2,983 0.52% 0.35% 0.00% 0.92% 0.88% 0.11% 0.00% 0.50% to 0.90% 0.50% to 0.90% 0.90% 0.90% 0.50% to 0.90% 0.50% to 0.90% 0.60% -22% to -21% -16% to -15% -28% -20% -17% to -16% -22% -33% 1,317 867 52 -- 297 11 6 $13.09 to $14.29 $9.62 to $10.56 $8.83 to $8.88 $-- $8.94 to $25.95 $8.66 to $191.87 $7.57 $20,005 $9,019 $457 $-- $7,498 $1,926 $45 0.38% 0.43% 0.00% -- 4.47% 7.28% 0.00% 0.60% to 0.90% 0.60% to 0.90% 0.60% -- 0.60% to 0.90% 0.60% to 0.90% 0.60% 16% to 19% -1% to 3% -12% to -11% -- -11% to -9% -9% to -4% -16%
F-85 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. UNIT VALUES -- (Continued)
MFS State Street MFS Research Research Investors Trust Managers Bond Income Investment Investment Investment Division Division Division ---------------- ---------------- ---------------- 2003 Units (In Thousands)................................................. 186 81 5,517 Unit Fair Value, Lowest to Highest (1)............................... $7.96 to $8.33 $6.57 to $8.51 $12.89 to $27.12 Net Assets (In Thousands)............................................ $1,544 $669 $96,720 Investment Income Ratio to Net Assets (2)............................ 0.25% 0.78% 3.06% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% to 0.90% 0.60% to 0.90% 0.60% to 0.90% Total Return, Lowest to Highest (1)(4)............................... 20.76% to 21.85% 23.00% to 24.10% 4.91% to 5.85% 2002 Units (In Thousands)................................................. 104 47 5,564 Unit Fair Value, Lowest to Highest (1)............................... $6.54 to $6.84 $5.29 to $6.86 $12.18 to $25.85 Net Assets (In Thousands)............................................ $694 $314 $93,158 Investment Income Ratio to Net Assets (2)............................ 0.72% 0.30% 5.72% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% to 0.90% 0.60% to 0.90% 0.60% to 0.90% Total Return, Lowest to Highest (1)(4)............................... -21% to -20% -25% to -24% 7% to 8% 2001 Units (In Thousands)................................................. 43 13 4,202 Unit Fair Value, Lowest to Highest (1)............................... $8.19 to $8.57 $6.97 to $9.04 $11.23 to $24.08 Net Assets (In Thousands)............................................ $322 $151 $79,483 Investment Income Ratio to Net Assets (2)............................ 0.00% 0.25% 5.64% to 7.28% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% to 0.90% 0.60% to 0.90% .45% to 0.90% Total Return, Lowest to Highest (1)(4)............................... -14% to -3% -17% to -14% 7% to 8%
FI Structured Equity Investment Division ---------------- 2003 Units (In Thousands)................................................. 49 Unit Fair Value, Lowest to Highest (1)............................... $8.37 to $10.56 Net Assets (In Thousands)............................................ $505 Investment Income Ratio to Net Assets (2)............................ 0.52% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% to .90% Total Return, Lowest to Highest (1)(4)............................... 25.79% to 26.92% 2002 Units (In Thousands)................................................. 12 Unit Fair Value, Lowest to Highest (1)............................... $6.59 to $8.32 Net Assets (In Thousands)............................................ $93 Investment Income Ratio to Net Assets (2)............................ 0.89% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% to .90% Total Return, Lowest to Highest (1)(4)............................... -19% to -17% 2001 Units (In Thousands)................................................. 3 Unit Fair Value, Lowest to Highest (1)............................... $8.19 Net Assets (In Thousands)............................................ $25 Investment Income Ratio to Net Assets (2)............................ 0.00% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% Total Return, Lowest to Highest (1)(4)............................... -11%
- -------- (1) Metropolitan Life sells a number of variable life products which have unique combinations of features and fees that are charged against the contract owners' account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. (2) These amounts represent the dividends, excluding distributions of capital gains, received by the investment division from the underlying portfolio, net of management fees assessed by the fund manager, divided by the average net assets. These ratios excluded those expenses, such as mortality and expense charges, that are assessed against contract owners' accounts either through reductions in unit values or the redemption of units. The recognition of investment income by the investment division is affected by the timing of the declaration of dividends by the underlying portfolio in which the investment divisions invest. (3) These amounts represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense risk charges for each period indicated. The ratios include only those expenses that result in a direct reduction to unit value. Charges made directly to contract owner accounts through the redemption of units, and expenses of the underlying portfolio, are excluded. (4) These amounts represent the total return for the period indicated including changes in the value of the underlying portfolio, and expenses assessed through the reduction of unit values. The total return does not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the Separate Account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. F-86 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Saloman Brothers Saloman State Street FI Janus Invesco Invesco Harris Oakmark Strategic Bond Brothers Research Mid Cap Aspen VIF High VIF Equity Focused Value Opporunities U.S. Government Money Market Opportunities Growth Yield Income Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - ------------------ ---------------- ---------------- ---------------- ---------------- ---------- ---------- ---------- 115 375 559 1,760 96 435 87 19 $219.73 to $225.05 $13.52 to $13.85 $12.82 to $13.13 $15.21 to $15.92 $11.50 to $11.67 $8.03 $9.21 $9.73 $25,866 $5,163 $7,305 $27,346 $1,112 $3,500 $804 $184 0.12% 1.70% 1.57% 0.78% 2.26% 0.10% 7.20% 1.26% 0.90% 0.90% 0.90% 0.60% to 0.90% 0.90% 0.60% 0.60% 0.60% 31.47% to 32.66% 11.62% to 12.62% 0.77% to 1.68% -0.09% to 0.81% 41.26% to 42.53% 31.73% 25.04% 22.60% 76 177 340 1,981 21 354 65 15 $167.13 to $169.65 $12.12 to $12.30 $12.72 to $12.91 $13.09 to $15.93 $8.14 to $8.19 $6.10 $7.37 $7.94 $12,879 $2,174 $4,365 $30,811 $168 $2,163 $476 $125 0.18% 6.33% 3.47% 1.57% 0.00% 0.03% 13.27% 1.74% 0.90% 0.90% 0.90% 0.45% to 0.90% 0.90% 0.60% 0.60% 0.60% -10% to -9% 9% to 10% 7% to 8% 0% to 1% -19% to -18% -27% -1% -19% 23 41 71 2,156 -- 236 37 12 $184.98 to $186.09 $11.15 to $11.22 $11.89 to $11.96 $14.88 to $15.85 $-- $8.30 $7.46 $9.81 $4,215 $465 $849 $32,726 $-- $1,959 $274 $122 0.00% 0.00% 0.00% 4.18% -- 6.04% 20.89% 2.61% 0.90% 0.90% 0.90% 0.60% to 0.90% -- 0.60% 0.60% 0.60% 12% to 13% 3% to 4% 4% 3% to 4% -- -19% -15% -7%
F-87 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. UNIT VALUES -- (Continued)
Franklin Franklin Invesco VIF Templeton Templeton Alliance Real Estate International Valuemark Growth & Opportunity Stock Small Cap Income Investment Investment Investment Investment Division Division Division Division ----------- ------------- ---------- ---------- 2003 Units (In Thousands)................................................. 10 403 199 197 Unit Fair Value, Lowest to Highest (1)............................... $17.79 $10.03 $6.76 $10.47 Net Assets (In Thousands)............................................ $179 $4,054 $1,346 $2,063 Investment Income Ratio to Net Assets (2)............................ 1.49% 1.52% 0.00% 0.70% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% 0.60% 0.60% 0.60% Total Return, Lowest to Highest (1)(4)............................... 38.82% 32.55% 37.24% 32.18% 2002 Units (In Thousands)................................................. 14 344 163 150 Unit Fair Value, Lowest to Highest (1)............................... $12.82 $7.57 $4.93 $7.92 Net Assets (In Thousands)............................................ $179 $2,612 $801 $1,191 Investment Income Ratio to Net Assets (2)............................ 1.40% 2.03% 0.51% 3.31% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% 0.60% 0.60% 0.60% Total Return, Lowest to Highest (1)(4)............................... -6% -18% -29% -22% 2001 Units (In Thousands)................................................. 7 189 16 65 Unit Fair Value, Lowest to Highest (1)............................... $12.05 $9.27 $6.91 $10.19 Net Assets (In Thousands)............................................ $89 $1,767 $103 $656 Investment Income Ratio to Net Assets (2)............................ 1.16% 14.19% 0.05% 0.91% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% 0.60% 0.60% 0.60% Total Return, Lowest to Highest (1)(4)............................... 1% -16% -9% 2%
- -------- (1) Metropolitan Life sells a number of variable life products which have unique combinations of features and fees that are charged against the contract owners' account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. (2) These amounts represent the dividends, excluding distributions of capital gains, received by the investment division from the underlying portfolio, net of management fees assessed by the fund manager, divided by the average net assets. These ratios excluded those expenses, such as mortality and expense charges, that are assessed against contract owners' accounts either through reductions in unit values or the redemption of units. The recognition of investment income by the investment division is affected by the timing of the declaration of dividends by the underlying portfolio in which the investment divisions invest. (3) These amounts represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense risk charges for each period indicated. The ratios include only those expenses that result in a direct reduction to unit value. Charges made directly to contract owner accounts through the redemption of units, and expenses of the underlying portfolio, are excluded. (4) These amounts represent the total return for the period indicated including changes in the value of the underlying portfolio, and expenses assessed through the reduction of unit values. The total return does not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the Separate Account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. F-88 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Fidelity American Asset American American Funds Alliance Alliance Fidelity Manager Fidelity Funds Funds Global Premier Growth Technology Contrafund Growth Growth Growth Growth-Income Small Cap Investment Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division Division - -------------- ---------- ---------- ---------- ---------- ---------------- ---------------- ---------------- 14 10 97 54 47 417 525 378 $6.10 $4.54 $9.18 $8.00 $6.27 $60.53 to $62.00 $38.04 to $38.96 $15.06 to $15.42 $84 $46 $894 $433 $296 $25,760 $20,369 $5,801 0.00% 0.00% 0.15% 2.96% 0.08% 0.13% 1.18% 0.49% 0.60% 0.60% 0.60% 0.60% 0.60% 0.90% 0.90% 0.90% 23.37% 43.79% 28.35% 23.15% 32.78% 35.59% to 36.81% 31.25% to 32.43% 52.16% to 53.53% 9 6 35 20 28 221 287 203 $4.94 $3.16 $7.16 $6.50 $4.72 $44.64 to $45.32 $28.98 to $29.42 $9.90 to $10.05 $42 $18 $249 $131 $134 $9,992 $8,408 $2,033 0.00% 5.08% 0.14% 3.23% 0.12% 0.05% 1.74% 0.81% 0.60% 0.60% 0.60% 0.60% 0.60% 0.90% 0.90% 0.90% -31% -42% -10% -18% -30% -25% to -24% -19% to -18% -20% to -19% 14 2 3 13 13 53 68 49 $7.15 $5.43 $7.96 $7.89 $6.77 $59.63 to $59.99 $35.81 to $36.03 $12.34 to $12.41 $98 $13 $24 $95 $87 $3,176 $2,453 $619 0.00% 6.23% 0.00% 0.00% 0.00% 4.25% 0.82% 1.15% 0.60% 0.60% 0.60% 0.60% 0.60% 0.90% 0.90% 0.90% -14% -35% -12% -10% -20% -15% to -14% -3% -9% to -8%
F-89 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. UNIT VALUES -- (Continued)
JPM MFS Enhanced T. Rowe Price Research Index Mid Cap Growth International Investment Investment Investment Division Division Division ---------- ---------------- ---------------- 2003 Units (In Thousands)................................................. -- 527 151 Unit Fair Value, Lowest to Highest (1)............................... $-- $6.28 to $6.43 $9.70 to $9.94 Net Assets (In Thousands)............................................ $-- $3,375 $1,497 Investment Income Ratio to Net Assets (2)............................ -- 0.00% 0.97% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) -- 0.90% 0.90% Total Return, Lowest to Highest (1)(4)............................... -- 35.90% to 37.12% 31.01% to 32.19% 2002 Units (In Thousands)................................................. 1 294 95 Unit Fair Value, Lowest to Highest (1)............................... $6.09 $4.62 to $4.69 $7.41 to $7.52 Net Assets (In Thousands)............................................ $8 $1,373 $714 Investment Income Ratio to Net Assets (2)............................ 1.78% 0.82% 0.25% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% 0.90% 0.90% Total Return, Lowest to Highest (1)(4)............................... -25% -44% -12% 2001 Units (In Thousands)................................................. 1 68 28 Unit Fair Value, Lowest to Highest (1)............................... $8.12 $8.32 to $8.37 $8.44 to $8.50 Net Assets (In Thousands)............................................ $5 $564 $238 Investment Income Ratio to Net Assets (2)............................ 0.00% 0.00% 0.07% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.60% 0.90% 0.90% Total Return, Lowest to Highest (1)(4)............................... -9% -16% to -15% -13% to -12%
PIMCO Total Return Investment Division ---------------- 2003 Units (In Thousands)................................................. 1,042 Unit Fair Value, Lowest to Highest (1)............................... $11.96 to $12.25 Net Assets (In Thousands)............................................ $12,697 Investment Income Ratio to Net Assets (2)............................ 2.70% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.90% Total Return, Lowest to Highest (1)(4)............................... 3.59% to 4.52% 2002 Units (In Thousands)................................................. 534 Unit Fair Value, Lowest to Highest (1)............................... $11.55 to $11.72 Net Assets (In Thousands)............................................ $6,214 Investment Income Ratio to Net Assets (2)............................ 0.00% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.90% Total Return, Lowest to Highest (1)(4)............................... 9% to 10% 2001 Units (In Thousands)................................................. 103 Unit Fair Value, Lowest to Highest (1)............................... $10.64 to $10.70 Net Assets (In Thousands)............................................ $1,103 Investment Income Ratio to Net Assets (2)............................ 2.37% Expenses as a percent of Average Net Assets, Lowest to Highest (1)(3) 0.90% Total Return, Lowest to Highest (1)(4)............................... 6%
- -------- (1) Metropolitan Life sells a number of variable life products which have unique combinations of features and fees that are charged against the contract owners' account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns. (2) These amounts represent the dividends, excluding distributions of capital gains, received by the investment division from the underlying portfolio, net of management fees assessed by the fund manager, divided by the average net assets. These ratios excluded those expenses, such as mortality and expense charges, that are assessed against contract owners' accounts either through reductions in unit values or the redemption of units. The recognition of investment income by the investment division is affected by the timing of the declaration of dividends by the underlying portfolio in which the investment divisions invest. (3) These amounts represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense risk charges for each period indicated. The ratios include only those expenses that result in a direct reduction to unit value. Charges made directly to contract owner accounts through the redemption of units, and expenses of the underlying portfolio, are excluded. (4) These amounts represent the total return for the period indicated including changes in the value of the underlying portfolio, and expenses assessed through the reduction of unit values. The total return does not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the Separate Account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. F-90 NOTES TO FINANCIAL STATEMENTS -- (Continued)
Lord Abbett Met/Aim Met/Aim Janus Lord Abbett PIMCO Bond Mid Cap Small Cap Harris Oakmark Aggressive Growth & Innovation Debenture Core Equity Growth International Growth Income Investment Investment Investment Investment Investment Investment Investment Division Division Division Division Division Division Division - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------- 932 876 92 60 72 569 3 $4.72 to $4.83 $12.87 to $14.95 $10.69 to $10.85 $10.46 to $10.62 $11.23 to $11.40 $6.89 to $7.06 $8.10 $4,481 $12,042 $989 $643 $814 $4,003 $20,529 0.00% 1.85% 1.35% 0.00% 1.84% 0.00% 0.00% 0.90% 0.45% to 0.90% 0.90% 0.90% 0.90% 0.90% 0.60% 56.44% to 57.84% 17.17% to 19.52% 25.29% to 26.42% 37.84% to 39.08% 34.16% to 35.37% 28.77% to 29.93% 29.15% 416 748 30 15 18 381 -- $3.01 to $3.06 $10.87 to $12.51 $8.53 to $8.58 $7.59 to $7.63 $8.37 to $8.42 $5.35 to $5.43 $-- $1,269 $8,597 $253 $116 $150 $2,045 $-- 0.00% 11.43% 0.00% 0.00% 0.00% 0.00% -- 0.90% 0.45% to 0.90% 0.90% 0.90% 0.90% 0.90% -- -51% 0% to 1% -15% to -14% -24% -16% -31% -- 121 774 -- -- -- 122 -- $6.15 to $6.19 $10.83 to $12.35 $-- $-- $-- $7.73 to $7.82 $-- $749 $8,845 $-- $-- $-- $953 $-- 0.00% 11.73% -- -- -- 0.00% -- 0.90% 0.45% to 0.90% -- -- -- 0.90% -- -25% -2% to -1% -- -- -- -23% to -22% --
F-91 NOTES TO FINANCIAL STATEMENTS -- (Concluded) 7. CHANGE OF PORTFOLIO NAME AND PORTFOLIO MERGERS Effective January 1, 2003, MFS Mid Cap Growth Portfolio changed sub-advisers from Massachusetts Financial Services to T. Rowe Price Associates Inc. and changed its name to T. Rowe Price Mid Cap Growth Portfolio; and State Street Research Concentrated International Portfolio changed sub-advisers from State Street Research & Management Company to Harris Associates L.P. and changed its name to Harris Oakmark International Portfolio. Effective April 28, 2003, Janus Growth Portfolio of the Metropolitan Fund merged into the Janus Aggressive Growth Portfolio of the Met Investors Fund. Effective May 1, 2003, Putnam Large Cap Growth Portfolio changed its name to Met/Putnam Voyager Portfolio. Effective May, 1, 2003, all series of the New England Zenith Fund became newly organized portfolios of the Metropolitan Fund. The reorganization had no effect on the investment objectives, policies or advisory fees of any series, nor was there any change in investment adviser or sub-adviser. Effective December 16, 2003, Putnam International Stock Portfolio of the Metropolitan Fund changed its name to FI International Stock Portfolio. Effective April 29, 2002, Loomis Sayles High Yield Bond Portfolio of the Metropolitan Fund was merged into the Lord Abbett Bond Debenture Portfolio of the Met Investors Fund. Effective April 29, 2002, State Street Research Income Portfolio and State Street Research Money Market Portfolio of the Metropolitan Fund were merged respectively into the State Street Research Bond Income Portfolio and the State Street Research Money Market Portfolio of the Zenith Fund. Effective May 1, 2002, State Street Research Aurora Small Cap Value Portfolio and the Harris Oakmark Mid Cap Value Portfolio changed their names to State Street Research Aurora Portfolio and Harris Oakmark Focused Value Portfolio, respectively. Effective July 1, 2001, State Street Research became the sub-investment manager of the State Street Research Bond Income Portfolio (formerly Back Bay Advisers Bond Income Portfolio) of the New England Zenith Series Fund. Effective May 1, 2001, State Street Research Growth Portfolio changed its name to State Street Research Investment Trust Portfolio. F-92 EQUITY ADVANTAGE VUL AND ULII FLEXIBLE PREMIUM MULTIFUNDED LIFE INSURANCE POLICIES METROPOLITAN LIFE SEPARATE ACCOUNT UL ISSUED BY METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ADDITIONAL INFORMATION (PART B) MAY 1, 2004 This Statement of Additional Information is not a prospectus. This Statement of Additional Information relates to (a) for Equity Advantage VUL Policies, the prospectus dated May 1, 2004 (for new sales) and the supplement dated May 1, 2004 (for existing policies) and (b) for ULII Policies the supplement dated May 1, 2004, and should be read in conjunction therewith. A copy of the prospectus for Equity Advantage VUL and the prospectus for ULII may be obtained by writing to MetLife, P.O. Box 336, Warwick, RI 02887-0336. SAI-1 TABLE OF CONTENTS The Company and the Separate Account............. SAI-3 Distribution of the Policies..................... SAI-3 Commissions on Equity Advantage VUL Policies.. SAI-3 Commissions on ULII Policies.................. SAI-4 Income Plans..................................... SAI-4 Limits to MetLife's Right to Challenge the Policy SAI-4 Misstatement of Age or Sex....................... SAI-4 Reports.......................................... SAI-4 Personalized Illustrations....................... SAI-5 Legal Notices.................................... SAI-6 Experts.......................................... SAI-6 Financial Statements............................. SAI-
SAI-2 THE COMPANY AND THE SEPARATE ACCOUNT MetLife is a wholly-owned subsidiary of MetLife, Inc. a publicly traded company. Our main office is located at One Madison Avenue, New York, New York 10010. MetLife was formed under the laws of New York State in 1868. MetLife, Inc., through its subsidiaries and affiliates, provides insurance and other financial services to individual and group customers. We established the Separate Account under New York law on December 13, 1988. The Separate Account receives premium payments from the Policies described in the Prospectus and other variable life insurance policies that we issue. We have registered the Separate Account as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act"). DISTRIBUTION OF THE POLICIES We serve as the "principal underwriter," as defined in the 1940 Act, for the Policy. We are registered under the Securities Exchange Act of 1934 as a broker-dealer and are a member of the National Association of Securities Dealers, Inc. We perform the sales and administrative services for the Policies. We sell the Policies through licensed life insurance sales representatives who are either registered through us, or registered through other broker-dealers, including a wholly owned subsidiary. We offer the Policies to the public on a continuous basis. We anticipate continuing to offer the Policies, but reserve the right to discontinue the offering. COMMISSIONS ON EQUITY ADVANTAGE VUL POLICIES Commissions paid in 2001, 2002 and 2003 totaled $62,825,350, $48,578,350 and $29,643,124 respectively. The calculation of maximum commissions payable for the Equity Advantage VUL Policies is described in the prospectus. COMMISSIONS ON ULII POLICIES Commissions paid in 2001, 2002 and 2003 totaled $5,499,592, $3,435,442 and $2,534,464 respectively. The calculation of maximum commissions payable for the ULII Policies is described in the prospectus for ULII. INCOME PLANS Generally, you can receive the Policy's insurance proceeds, amounts payable at the Final Date or amounts paid upon surrender under an income plan instead of in a lump sum. Before you choose an income plan you should consider: .. The tax consequences associated with the Policy proceeds, which can vary considerably, depending on whether a plan is chosen. You or your beneficiary should consult with a qualified tax adviser about tax consequences. .. That your Policy will terminate at the time you commence an income plan and you will receive a new contract, which describes the terms of the income plan. You should carefully review the terms of the new contract, because it contains important information about the terms and conditions of the income plan. .. The rates of return that we credit under these plans are not based on the performance of any of the Portfolios. Generally, we currently make the following income plans available: . Interest income . Installment Income for a Stated Period . Installment Income for . Single Life a Stated Amount Income-Guaranteed Payment Period . Joint and Survivor . Single Life Life Income Income-Guaranteed Return SAI-3 LIMITS TO METLIFE'S RIGHT TO CHALLENGE THE POLICY We will not contest your Policy after two Policy years from issue or reinstatement (excluding riders added later). We will not contest an increase in a death benefit after it has been in effect for two years. MISSTATEMENT OF AGE OR SEX We will adjust benefits to reflect the correct age and sex of the insured, if this information is not correct in the Policy application. REPORTS Generally, you will promptly receive statements confirming your significant transactions such as: .. Change in specified face amount. .. Change in death benefit options. .. Changes in guarantees. .. Transfers among investment divisions (including those through Automated Investment Strategies, which are confirmed quarterly). .. Partial withdrawals. .. Loan amounts you request. .. Loan repayments and premium payments. If your premium payments are made through preauthorized checking arrangement or another systematic payment method, we will not send you any confirmation in addition to the one you receive from your bank or employer. We will also send you an annual statement within 30 days after a Policy year. The statement will summarize the year's transactions and include information on: .. Deductions and charges. .. Status of the death benefit. .. Cash and cash surrender values. .. Amounts in the investment divisions and Fixed Account. .. Status of Policy loans. .. Automatic loans to pay interest. .. Information on your modified endowment contract status (if applicable). We will also send you a Fund's annual and semi-annual reports to shareholders. PERSONALIZED ILLUSTRATIONS We may provide personalized illustrations showing how the Policies work based on assumptions about investment returns and the Policy Owner's and/or insured's characteristics. The illustrations are intended to show how the death benefit, cash surrender value, and cash value could vary over an extended period of time assuming hypothetical gross rates of return (i.e., investment income and capital gains and losses, realized or unrealized) for the Separate Account equal to specified constant after-tax rates of return. One of the gross rates of return will be 0%. Gross rates of return do not SAI-4 reflect the deduction of any charges and expenses. The illustrations will be based on specified assumptions, such as face amount, premium payments, insured, underwriting class, and death benefit option. Illustrations will disclose the specific assumptions upon which they are based. Values will be given based on guaranteed mortality and expense risk and other charges and may also be based on current mortality and expense risk and other charges. The illustrated death benefit, cash surrender value, and cash value for a hypothetical Policy would be different, either higher or lower, from the amounts shown in the illustration if the actual gross rates of return averaged the gross rates of return upon which the illustration is based, but varied above and below the average during the period, or if premiums were paid in other amounts or at other than annual intervals. For example, as a result of variations in actual returns, additional premium payments beyond those illustrated may be necessary to maintain the Policy in force for the periods shown or to realize the Policy values shown in particular illustrations even if the average rate of return is realized. Illustrations may also show the internal rate of return on the cash surrender value and the death benefit. The internal rate of return on the cash surrender value is equivalent to an interest rate (after taxes) at which an amount equal to the illustrated premiums could have been invested outside the Policy to arrive at the cash surrender value of the Policy. The internal rate of return on the death benefit is equivalent to an interest rate (after taxes) at which an amount equal to the illustrated premiums could have been invested outside the Policy to arrive at the death benefit of the Policy. Illustrations may also show values based on the historical performance of the investment divisions of the Separate Account. LEGAL MATTERS Marie C. Swift, Associate General Counsel at MetLife, has passed upon the legality of the Policies. The law firm of Foley & Lardner LLP, Washington, D.C., has advised us on certain matters relating to the federal securities laws. EXPERTS The financial statements included in this Statement of Additional Information have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing herein (which report expresses an unqualified opinion and includes an explanatory paragraph referring to the change in the method of accounting for embedded derivatives in certain insurance products as required by new accounting guidance which became effective on October 1, 2003, and recorded the impact as a cumulative effect of a change in accounting principle), and are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. Deloitte & Touche LLP's principal business address is 201 E. Kennedy Boulevard, Tampa, Florida 33602. FINANCIAL STATEMENTS The financial statements of MetLife are attached to this Statement of Additional Information. Our financial statements should be considered only as bearing upon our ability to meet our obligations under the Policy. SAI-5 Independent Auditors' Report To the Board of Directors and Stockholder of Metropolitan Life Insurance Company: We have audited the accompanying consolidated balance sheets of Metropolitan Life Insurance Company and subsidiaries (the "Company") as of December 31, 2003 and 2002, and the related consolidated statements of income, stockholder's equity, and cash flows for each of the three years in the period ended December 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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. 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 consolidated financial statements present fairly, in all material respects, the consolidated financial position of Metropolitan Life Insurance Company and subsidiaries as of December 31, 2003 and 2002, and the consolidated results of their operations and their consolidated cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1, the Company changed its method of accounting for embedded derivatives in certain insurance products as required by new accounting guidance which became effective on October 1, 2003, and recorded the impact as a cumulative effect of a change in accounting principle. DELOITTE & TOUCHE LLP New York, New York April 9, 2004 F-1 Metropolitan Life Insurance Company and Subsidiaries Consolidated Balance Sheets December 31, 2003 and 2002 (Dollars in millions, except share and per share data)
2003 2002 -------- -------- Assets Investments: Fixed maturities available-for-sale, at fair value (amortized cost: $134,844 and $117,528, respectively)................................................................ $143,148 $124,260 Equity securities, at fair value (cost: $893 and $1,495, respectively)...................... 1,246 1,551 Mortgage loans on real estate............................................................... 26,637 25,353 Policy loans................................................................................ 8,180 8,047 Real estate and real estate joint ventures held-for-investment.............................. 3,163 3,050 Real estate held-for-sale................................................................... 89 799 Other limited partnership interests......................................................... 2,461 2,380 Short-term investments...................................................................... 1,320 1,199 Other invested assets....................................................................... 4,803 3,419 -------- -------- Total investments........................................................................ 191,047 170,058 Cash and cash equivalents....................................................................... 2,393 1,106 Accrued investment income....................................................................... 1,922 1,889 Premiums and other receivables.................................................................. 6,193 6,721 Deferred policy acquisition costs............................................................... 10,232 9,666 Other assets.................................................................................... 5,817 6,084 Separate account assets......................................................................... 63,661 53,912 -------- -------- Total assets............................................................................. $281,265 $249,436 ======== ======== Liabilities and Stockholder's Equity Liabilities: Future policy benefits...................................................................... $ 86,802 $ 86,039 Policyholder account balances............................................................... 61,725 54,464 Other policyholder funds.................................................................... 6,948 6,206 Policyholder dividends payable.............................................................. 1,046 1,025 Policyholder dividend obligation............................................................ 2,130 1,882 Short-term debt............................................................................. 3,536 912 Long-term debt.............................................................................. 2,055 2,624 Shares subject to mandatory redemption...................................................... 277 -- Current income taxes payable................................................................ 792 873 Deferred income taxes payable............................................................... 2,698 1,947 Payables under securities loaned transactions............................................... 24,065 16,321 Other liabilities........................................................................... 8,057 6,889 Separate account liabilities................................................................ 63,661 53,912 -------- -------- Total liabilities........................................................................ 263,792 233,094 -------- -------- Company-obligated mandatorily redeemable securities of subsidiary trusts........................ -- 277 -------- -------- Stockholder's Equity: Preferred stock, par value $1,000 per share; 110,000 shares authorized; 93,402 shares issued and outstanding at December 31, 2003............................................................... 93 -- Common stock, par value $0.01 per share; 1,000,000,000 shares authorized; 494,466,664 shares issued and outstanding at December 31, 2003 and 2002........................................... 5 5 Additional paid-in capital...................................................................... 13,730 13,474 Retained earnings............................................................................... 1,261 708 Accumulated other comprehensive income.......................................................... 2,384 1,878 -------- -------- Total stockholder's equity............................................................... 17,473 16,065 -------- -------- Total liabilities and stockholder's equity............................................... $281,265 $249,436 ======== ========
See accompanying notes to consolidated financial statements. F-2 Metropolitan Life Insurance Company and Subsidiaries Consolidated Statements of Income For the years ended December 31, 2003, 2002 and 2001 (Dollars in millions)
2003 2002 2001 ------- ------- ------- Revenues Premiums...................................................................... $18,151 $18,461 $17,023 Universal life and investment-type product policy fees........................ 1,921 1,927 1,874 Net investment income......................................................... 10,357 10,631 11,054 Other revenues................................................................ 1,062 1,354 1,532 Net investment gains (losses) (net of amounts allocable from other accounts of ($259), ($139) and ($33), respectively)..................................... (287) (697) 951 ------- ------- ------- Total revenues............................................................. 31,204 31,676 32,434 ------- ------- ------- Expenses Policyholder benefits and claims (excludes amounts directly related to net investment gains (losses) of ($233), ($150) and ($54), respectively)........ 18,677 18,860 18,265 Interest credited to policyholder account balances............................ 2,379 2,711 3,035 Policyholder dividends........................................................ 1,897 1,911 2,060 Other expenses (excludes amounts directly related to net investment gains (losses) of ($26), $11 and $21, respectively)............................... 5,836 6,543 6,920 ------- ------- ------- Total expenses............................................................. 28,789 30,025 30,280 ------- ------- ------- Income from continuing operations before provision for income taxes........... 2,415 1,651 2,154 Provision for income taxes.................................................... 688 510 774 ------- ------- ------- Income from continuing operations............................................. 1,727 1,141 1,380 Income from discontinued operations, net of income taxes...................... 300 471 107 ------- ------- ------- Income before cumulative effect of change in accounting....................... 2,027 1,612 1,487 Cumulative effect of change in accounting, net of income taxes................ (26) -- -- ------- ------- ------- Net income.................................................................... $ 2,001 $ 1,612 $ 1,487 ======= ======= =======
See accompanying notes to consolidated financial statements. F-3 Metropolitan Life Insurance Company and Subsidiaries Consolidated Statements of Stockholder's Equity For the years ended December 31, 2003, 2002 and 2001 (Dollars in millions)
Additional Preferred Common Paid-in Retained Stock Stock Capital Earnings --------- ------ ---------- -------- Balance at December 31, 2000........................... $-- $ 5 $14,549 $ 407 Sale of subsidiary to the Holding Company.............. 96 Issuance of warrants--by subsidiary.................... 40 Dividends on common stock.............................. (1,860) (1,894) Comprehensive income: Net income.......................................... 1,487 Other comprehensive income: Cumulative effect of change in accounting for derivatives, net of income taxes and reclassification adjustment..................... Unrealized gains on derivative instruments, net of income taxes............................. Unrealized investment gains, net of related offsets, reclassification adjustments and income taxes.................................... Foreign currency translation adjustment.......... Minimum pension liability adjustment............. Other comprehensive income....................... Comprehensive income................................ --- --- ------- ------- Balance at December 31, 2001........................... -- 5 12,825 -- Sale of subsidiary to the Holding Company.............. 149 Capital contribution from the Holding Company.......... 500 Dividends on common stock.............................. (904) Comprehensive income: Net income.......................................... 1,612 Other comprehensive income: Unrealized losses on derivative instruments, net of income taxes............................. Unrealized investment gains, net of related offsets, reclassification adjustments and income taxes.................................... Foreign currency translation adjustment.......... Other comprehensive income....................... Comprehensive income................................ --- --- ------- ------- Balance at December 31, 2002........................... -- 5 13,474 708 Issuance of preferred stock--by subsidiary............. 93 Issuance of shares--by subsidiary...................... 24 Issuance of stock options.............................. 2 Sale of subsidiaries to the Holding Company or affiliate............................................. 261 Capital contribution from the Holding Company.......... 2 Return of capital to the Holding Company............... (33) Dividends on common stock.............................. (1,448) Comprehensive income: Net income.......................................... 2,001 Other comprehensive income: Unrealized losses on derivative instruments, net of income taxes............................. Unrealized investment gains, net of related offsets, reclassification adjustments and income taxes.................................... Foreign currency translation adjustment.......... Minimum pension liability adjustment............. Other comprehensive income....................... Comprehensive income................................ --- --- ------- ------- Balance at December 31, 2003........................... $93 $ 5 $13,730 $ 1,261 === === ======= =======
Accumulated Other Comprehensive Income (Loss) -------------------------------------------- Net Foreign Minimum Unrealized Currency Pension Investment Translation Liability (Losses) Gains Adjustment Adjustment Total -------------- ----------- ---------- ------- Balance at December 31, 2000........................... $1,183 $(100) $ (28) $16,016 Sale of subsidiary to the Holding Company.............. 96 Issuance of warrants--by subsidiary.................... 40 Dividends on common stock.............................. (3,754) Comprehensive income: Net income.......................................... 1,487 Other comprehensive income: Cumulative effect of change in accounting for derivatives, net of income taxes and reclassification adjustment..................... 22 22 Unrealized gains on derivative instruments, net of income taxes............................. 24 24 Unrealized investment gains, net of related offsets, reclassification adjustments and income taxes.................................... 570 570 Foreign currency translation adjustment.......... (39) (39) Minimum pension liability adjustment............. (18) (18) ------- Other comprehensive income....................... 559 ------- Comprehensive income................................ 2,046 ------ ----- ----- ------- Balance at December 31, 2001........................... 1,799 (139) (46) 14,444 Sale of subsidiary to the Holding Company.............. 149 Capital contribution from the Holding Company.......... 500 Dividends on common stock.............................. (904) Comprehensive income: Net income.......................................... 1,612 Other comprehensive income: Unrealized losses on derivative instruments, net of income taxes............................. (58) (58) Unrealized investment gains, net of related offsets, reclassification adjustments and income taxes.................................... 250 250 Foreign currency translation adjustment.......... 72 72 ------- Other comprehensive income....................... 264 ------- Comprehensive income................................ 1,876 ------ ----- ----- ------- Balance at December 31, 2002........................... 1,991 (67) (46) 16,065 Issuance of preferred stock--by subsidiary............. 93 Issuance of shares--by subsidiary...................... 24 Issuance of stock options.............................. 2 Sale of subsidiaries to the Holding Company or affiliate............................................. 261 Capital contribution from the Holding Company.......... 2 Return of capital to the Holding Company............... (33) Dividends on common stock.............................. (1,448) Comprehensive income: Net income.......................................... 2,001 Other comprehensive income: Unrealized losses on derivative instruments, net of income taxes............................. (228) (228) Unrealized investment gains, net of related offsets, reclassification adjustments and income taxes.................................... 642 642 Foreign currency translation adjustment.......... 174 174 Minimum pension liability adjustment............. (82) (82) ------- Other comprehensive income....................... 506 ------- Comprehensive income................................ 2,507 ------ ----- ----- ------- Balance at December 31, 2003........................... $2,405 $ 107 $(128) $17,473 ====== ===== ===== =======
See accompanying notes to consolidated financial statements. F-4 Metropolitan Life Insurance Company and Subsidiaries Consolidated Statements of Cash Flows For the years ended December 31, 2003, 2002 and 2001 (Dollars in millions)
2003 2002 2001 -------- -------- -------- Cash flows from operating activities Net income............................................................. $ 2,001 $ 1,612 $ 1,487 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expenses.............................. 386 432 521 Amortization of premiums and accretion of discounts associated with investments, net.................................................. (162) (456) (560) (Gains) losses from sales of investments and businesses, net........ 125 256 (918) Interest credited to other policyholder account balances............ 2,379 2,711 3,035 Universal life and investment-type product policy fees.............. (1,921) (1,927) (1,874) Change in premiums and other receivables............................ (81) (1,878) (612) Change in deferred policy acquisition costs, net.................... (902) (766) (553) Change in insurance-related liabilities............................. 4,210 4,550 3,463 Change in income taxes payable...................................... 250 684 871 Change in other liabilities......................................... 725 106 (226) Other, net.......................................................... (485) (937) (946) -------- -------- -------- Net cash provided by operating activities.............................. 6,525 4,387 3,688 -------- -------- -------- Cash flows from investing activities Sales, maturities and repayments of: Fixed maturities.................................................... 69,292 61,473 51,479 Equity securities................................................... 576 2,676 2,116 Mortgage loans on real estate....................................... 3,221 2,555 1,834 Real estate and real estate joint ventures.......................... 888 714 1,131 Other limited partnership interests................................. 307 209 396 Purchases of: Fixed maturities.................................................... (90,122) (79,509) (51,122) Equity securities................................................... (104) (1,235) (3,323) Mortgage loans on real estate....................................... (4,354) (3,111) (3,310) Real estate and real estate joint ventures.......................... (310) (28) (665) Other limited partnership interests................................. (588) (447) (424) Net change in short-term investments................................... (183) (308) (303) Proceeds from sales of businesses...................................... 1,995 749 831 Net change in payable under securities loaned transactions............. 7,744 3,659 361 Other, net............................................................. (1,141) (815) (510) -------- -------- -------- Net cash used in investing activities.................................. $(12,779) $(13,418) $ (1,509) ======== ======== ========
See accompanying notes to consolidated financial statements. F-5 Metropolitan Life Insurance Company and Subsidiaries Consolidated Statements of Cash Flows--(Continued) For the years ended December 31, 2003, 2002 and 2001 (Dollars in millions)
2003 2002 2001 -------- -------- -------- Cash flows from financing activities Policyholder account balances: Deposits........................................................... $ 29,054 $ 30,457 $ 31,407 Withdrawals........................................................ (22,268) (24,880) (27,846) Net change in short-term debt......................................... 2,624 567 (740) Long-term debt issued................................................. 145 537 353 Long-term debt repaid................................................. (714) (221) (1,379) Capital contribution from the Holding Company......................... 148 649 96 Net proceeds from issuance of company-obligated mandatorily redeemable securities of subsidiary trust...................................... -- -- 197 Dividends on common stock............................................. (1,448) (904) (3,754) -------- -------- -------- Net cash provided by (used in) financing activities................... 7,541 6,205 (1,666) -------- -------- -------- Change in cash and cash equivalents................................... 1,287 (2,826) 513 Cash and cash equivalents, beginning of year.......................... 1,106 3,932 3,419 -------- -------- -------- Cash and cash equivalents, end of year................................ $ 2,393 $ 1,106 $ 3,932 ======== ======== ======== Supplemental disclosures of cash flow information: Cash paid (refunded) during the year: Interest....................................................... $ 344 $ 267 $ 346 ======== ======== ======== Income taxes................................................... $ 789 $ 96 $ (335) ======== ======== ======== Non-cash transactions during the year: Business dispositions--assets.................................. $ 5,506 $ 17,276 $ 6,162 ======== ======== ======== Business dispositions--liabilities............................. $ 3,511 $ 16,547 $ 5,263 ======== ======== ======== Mortgage note on sale of real estate........................... $ -- $ -- $ 1,530 ======== ======== ======== Purchase money mortgage on real estate sale.................... $ 196 $ 954 $ -- ======== ======== ======== Real estate acquired in satisfaction of debt................... $ 14 $ 30 $ 30 ======== ======== ========
See accompanying notes to consolidated financial statements. F-6 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements 1. Summary of Accounting Policies Business Metropolitan Life Insurance Company ("Metropolitan Life") and its subsidiaries (the "Company") is a leading provider of insurance and other financial services to a broad spectrum of individual and institutional customers. The Company offers life insurance, annuities, and mutual funds to individuals, as well as group insurance, reinsurance and retirement and savings products and services to corporations and other institutions. Metropolitan Life is a wholly-owned subsidiary of MetLife, Inc. ("MetLife" or the "Holding Company"). The Company offered automobile and homeowners insurance through Metropolitan Property and Casualty Insurance Company, which was sold to the Holding Company in 2003. Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The New York Insurance Department (the "Department") recognizes only statutory accounting practices for determining and reporting the financial condition and results of operations of an insurance company for determining solvency under the New York Insurance Law. No consideration is given by the Department to financial statements prepared in conformity with GAAP in making such determination. The accompanying consolidated financial statements include the accounts of (i) Metropolitan Life and its subsidiaries; (ii) partnerships and joint ventures in which the Company has a majority voting interest; and (iii) variable interest entities ("VIEs") created or acquired on or after February 1, 2003 of which the Company is deemed to be the primary beneficiary. Closed block assets, liabilities, revenues and expenses are combined on a line by line basis with the assets, liabilities, revenues and expenses outside the closed block based on the nature of the particular item. See Note 6. Intercompany accounts and transactions have been eliminated. Metropolitan Insurance and Annuity Company ("MIAC" ), which was sold to MetLife in 2001; Cova Corporation, MetLife Investors Group, Inc., MetLife International Holdings, Inc., Walnut Street Securities, Inc., Seguros Genesis S.A., MetLife Pensiones S.A. and Metropolitan Life Seguros de Vida S.A., which were sold to MetLife in 2002; and Metropolitan Property and Casualty Insurance Company and its subsidiaries, Metropolitan Tower Life Insurance Company, MetLife General Insurance Agency, Inc. and its subsidiaries, MetLife Securities, Inc. and N.L. Holding Corporation and its subsidiaries, which were sold to MetLife in 2003, are included in the accompanying financial statements until the date of sale. See Note 17. The Company uses the equity method of accounting for investments in real estate joint ventures and other limited partnership interests in which it has more than a minor equity interest or more than minor influence over the partnership's operations, but does not have a controlling interest. The Company uses the cost method of accounting for interests in which it has a minor equity investment and virtually no influence over the partnership's operations. Minority interest related to consolidated entities included in other liabilities was $1,233 million and $481 million at December 31, 2003 and 2002, respectively. This increase was the direct result of the change in Metropolitan Life's ownership of Reinsurance Group of America Incorporated ("RGA") to approximately 52% in 2003 as compared to 58% in 2002. Certain amounts in the prior years' consolidated financial statements have been reclassified to conform with the 2003 presentation. F-7 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Summary of Critical Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in the consolidated financial statements. The critical accounting policies, estimates and related judgments underlying the Company's consolidated financial statements are summarized below. In applying these policies, management makes subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company's businesses and operations. Investments The Company's principal investments are in fixed maturities, mortgage loans and real estate, all of which are exposed to three primary sources of investment risk: credit, interest rate and market valuation. The financial statement risks are those associated with the recognition of impairments and income, as well as the determination of fair values. The assessment of whether impairments have occurred is based on management's case-by-case evaluation of the underlying reasons for the decline in fair value. Management considers a wide range of factors about the security issuer and uses its best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. Inherent in management's evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used by the Company in the impairment evaluation process include, but are not limited to: (i) the length of time and the extent to which the market value has been below cost; (ii) the potential for impairments of securities when the issuer is experiencing significant financial difficulties; (iii) the potential for impairments in an entire industry sector or sub-sector; (iv) the potential for impairments in certain economically depressed geographic locations; (v) the potential for impairments of securities where the issuer, series of issuers or industry has suffered a catastrophic type of loss or has exhausted natural resources; (vi) unfavorable changes in forecasted cash flows on asset-backed securities; and (vii) other subjective factors, including concentrations and information obtained from regulators and rating agencies. In addition, the earnings on certain investments are dependent upon market conditions, which could result in prepayments and changes in amounts to be earned due to changing interest rates or equity markets. The determination of fair values in the absence of quoted market values is based on: (i) valuation methodologies; (ii) securities the Company deems to be comparable; and (iii) assumptions deemed appropriate given the circumstances. The use of different methodologies and assumptions may have a material effect on the estimated fair value amounts. In addition, the Company enters into certain structured investment transactions, real estate joint ventures and limited partnerships for which the Company may be deemed to be the primary beneficiary and, therefore, may be required to consolidate such investments. The accounting rules for the determination of the primary beneficiary are complex and require evaluation of the contractual rights and obligations associated with each party involved in the entity, an estimate of the entity's expected losses and expected residual returns and the allocation of such estimates to each party. Derivatives The Company enters into freestanding derivative transactions primarily to manage the risk associated with variability in cash flows or changes in fair values related to the Company's financial assets and liabilities or to changing fair values. The Company also uses derivative instruments to hedge its currency exposure associated with net investments in certain foreign operations. The Company also purchases investment securities, issues certain insurance policies and engages in certain reinsurance contracts that embed derivatives. The associated financial statement risk is the volatility in net income which can result from (i) changes in fair value of derivatives not qualifying as accounting hedges; (ii) ineffectiveness of designated hedges; and (iii) counterparty default. In addition, there is a risk that embedded derivatives requiring bifurcation are not identified and reported F-8 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) at fair value in the consolidated financial statements. Accounting for derivatives is complex, as evidenced by significant authoritative interpretations of the primary accounting standards which continue to evolve, as well as the significant judgments and estimates involved in determining fair value in the absence of quoted market values. These estimates are based on valuation methodologies and assumptions deemed appropriate in the circumstances. Such assumptions include estimated volatility and interest rates used in the determination of fair value where quoted market values are not available. The use of different assumptions may have a material effect on the estimated fair value amounts. Deferred Policy Acquisition Costs The Company incurs significant costs in connection with acquiring new and renewal insurance business. These costs, which vary with and are primarily related to the production of that business, are deferred. The recovery of such costs is dependent upon the future profitability of the related business. The amount of future profit is dependent principally on investment returns in excess of the amounts credited to policyholders, mortality, morbidity, persistency, interest crediting rates, expenses to administer the business, creditworthiness of reinsurance counterparties and certain economic variables, such as inflation. Of these factors, the Company anticipates that investment returns are most likely to impact the rate of amortization of such costs. The aforementioned factors enter into management's estimates of gross margins and profits, which generally are used to amortize such costs. Revisions to estimates result in changes to the amounts expensed in the reporting period in which the revisions are made and could result in the impairment of the asset and a charge to income if estimated future gross margins and profits are less than amounts deferred. In addition, the Company utilizes the reversion to the mean assumption, a standard industry practice, in its determination of the amortization of deferred policy acquisition cost ("DAC"), including value of business acquired ("VOBA"). This practice assumes that the expectation for long-term appreciation in equity markets is not changed by minor short-term market fluctuations, but that it does change when large interim deviations have occurred. Future Policy Benefits The Company establishes liabilities for amounts payable under insurance policies, including traditional life insurance, annuities and disability insurance. Generally, amounts are payable over an extended period of time and liabilities are established based on methods and underlying assumptions in accordance with GAAP and applicable actuarial standards. Principal assumptions used in the establishment of liabilities for future policy benefits are mortality, morbidity, expenses, persistency, investment returns and inflation. The Company also establishes liabilities for unpaid claims and claims expenses for property and casualty insurance. Liabilities for property and casualty insurance are dependent on estimates of amounts payable for claims reported but not settled and claims incurred but not reported. These estimates are influenced by historical experience and actuarial assumptions with respect to current developments, anticipated trends and risk management strategies. Differences between the actual experience and assumptions used in pricing these policies and in the establishment of liabilities result in variances in profit and could result in losses. Reinsurance The Company enters into reinsurance transactions as both a provider and a purchaser of reinsurance. Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risks. The Company periodically reviews actual and anticipated experience compared to the aforementioned assumptions used to F-9 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) establish assets and liabilities relating to ceded and assumed reinsurance and evaluates the financial strength of counterparties to its reinsurance agreements using criteria similar to that evaluated in the security impairment process discussed previously. Additionally, for each of its reinsurance contracts, the Company must determine if the contract provides indemnification against loss or liability relating to insurance risk, in accordance with applicable accounting standards. The Company must review all contractual features, particularly those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims. If the Company determines that a reinsurance contract does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the contract using the deposit method of accounting. Litigation The Company is a party to a number of legal actions. Given the inherent unpredictability of litigation, it is difficult to estimate the impact of litigation on the Company's consolidated financial position. Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Liabilities related to certain lawsuits, including the Company's asbestos-related liability, are especially difficult to estimate due to the limitation of available data and uncertainty regarding numerous variables used to determine amounts recorded. The data and variables that impact the assumption used to estimate the Company's asbestos-related liability include the number of future claims, the cost to resolve claims, the disease mix and severity of disease, the jurisdiction of claims filed, tort reform efforts and the impact of any possible future adverse verdicts and their amounts. It is possible that an adverse outcome in certain of the Company's litigation, including asbestos-related cases, or the use of different assumptions in the determination of amounts recorded could have a material effect upon the Company's consolidated net income or cash flows in particular quarterly or annual periods. Employee Benefit Plans The Company sponsors pension and other retirement plans in various forms covering employees who meet specified eligibility requirements. The reported expense and liability associated with these plans requires an extensive use of assumptions which include the discount rate, expected return on plan assets and rate of future compensation increases as determined by the Company. Management determines these assumptions based upon currently available market and industry data, historical performance of the plan and its assets, and consultation with an independent consulting actuarial firm to aid it in selecting appropriate assumptions and valuing its related liabilities. The actuarial assumptions used in the calculation of the Company's aggregate projected benefit obligation may vary and include an expectation of long-term market appreciation in equity markets which is not changed by minor short-term market fluctuations, but does change when large interim deviations occur. These assumptions used by the Company may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates or longer or shorter life spans of the participants. These differences may have a significant effect on the Company's consolidated financial statements and liquidity. Significant Accounting Policies Investments The Company's fixed maturity and equity securities are classified as available-for-sale and are reported at their estimated fair value. Unrealized investment gains and losses on securities are recorded as a separate component of other comprehensive income or loss, net of policyholder related amounts and deferred income taxes. The cost of fixed maturity and equity securities is adjusted for impairments in value deemed to be other- than-temporary. These adjustments are recorded as investment losses. Investment gains and losses on sales of F-10 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) securities are determined on a specific identification basis. All security transactions are recorded on a trade date basis. Mortgage loans on real estate are stated at amortized cost, net of valuation allowances. Valuation allowances are established for the excess carrying value of the mortgage loan over its estimated fair value when it is probable that, based upon current information and events, the Company will be unable to collect all amounts due under the contractual terms of the loan agreement. Such valuation allowances are based upon the present value of expected future cash flows discounted at the loan's original effective interest rate or the collateral value if the loan is collateral dependent. The Company also establishes allowances for loan loss when a loss contingency exists for pools of loans with similar characteristics based on property types and loan to value risk factors. A loss contingency exists when the likelihood that a future event will occur is probable based on past events. Changes in valuation allowances are included in net investment gains and losses. Interest income earned on impaired loans is accrued on the principal amount of the loan based on the loan's contractual interest rate. However, interest ceases to be accrued for loans on which interest is generally more than 60 days past due and/or where the collection of interest is not considered probable. Cash receipts on impaired loans are recorded as a reduction of the recorded investment. Real estate held-for-investment, including related improvements, is stated at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated useful life of the asset (typically 20 to 40 years). Once the Company identifies a property that is expected to be sold within one year and commences a firm plan for marketing the property, in accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS 144"), the Company, if applicable, classifies the property as held-for-sale and reports the related net investment income and any resulting investment gains and losses as discontinued operations. Real estate held-for-sale is stated at the lower of depreciated cost or fair value less expected disposition costs. Real estate is not depreciated while it is classified as held-for-sale. Cost of real estate held-for-investment is adjusted for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Impaired real estate is written down to estimated fair value with the impairment loss being included in net investment gains and losses. Impairment losses are based upon the estimated fair value of real estate, which is generally computed using the present value of expected future cash flows from the real estate discounted at a rate commensurate with the underlying risks. Real estate acquired upon foreclosure of commercial and agricultural mortgage loans is recorded at the lower of estimated fair value or the carrying value of the mortgage loan at the date of foreclosure. Policy loans are stated at unpaid principal balances. Short-term investments are stated at amortized cost, which approximates fair value. Other invested assets consist principally of leveraged leases and funds withheld at interest. The leveraged leases are recorded net of non-recourse debt. The Company participates in lease transactions which are diversified by industry, asset type and geographic area. The Company regularly reviews residual values and impairs residuals to expected values as needed. Funds withheld represent amounts contractually withheld by ceding companies in accordance with reinsurance agreements. For agreements written on a modified coinsurance basis and certain agreements written on a coinsurance basis, assets supporting the reinsured policies and equal to the net statutory reserves are withheld and continue to be legally owned by the ceding companies. Other invested assets also includes the fair value of embedded derivatives related to funds withheld and modified coinsurance contracts. The Company recognizes interest on funds withheld in accordance with the treaty terms as investment income is earned on the assets supporting the reinsured policies. F-11 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Structured Investment Transactions The Company participates in structured investment transactions, primarily asset securitizations and structured notes. These transactions enhance the Company's total return of the investment portfolio principally by generating management fee income on asset securitizations and by providing equity-based returns on debt securities through structured notes and similar instruments. The Company sponsors financial asset securitizations of high yield debt securities, investment grade bonds and structured finance securities and also is the collateral manager and a beneficial interest holder in such transactions. As the collateral manager, the Company earns management fees on the outstanding securitized asset balance, which are recorded in income as earned. When the Company transfers assets to a bankruptcy-remote special purpose entity ("SPE") and surrenders control over the transferred assets, the transaction is accounted for as a sale. Gains or losses on securitizations are determined with reference to the carrying amount of the financial assets transferred, which is allocated to the assets sold and the beneficial interests retained based on relative fair values at the date of transfer. Beneficial interests in securitizations are carried at fair value in fixed maturities. Income on these beneficial interests is recognized using the prospective method in accordance with Emerging Issues Task Force ("EITF") Issue No. 99-20, Recognition of Interest Income and Impairment on Certain Investments ("EITF 99-20"). The SPEs used to securitize assets are not consolidated by the Company because the Company has determined that it is not the primary beneficiary of these entities based on the framework provided in Financial Accounting Standards Board ("FASB") Interpretation No. 46 (revised December 31, 2003), Consolidation of Variable Interest Entities, An Interpretation of ARB No. 51 ("FIN 46(r)"). Prior to the adoption of FIN 46(r), such SPEs were not consolidated because they did not meet the criteria for consolidation under previous accounting guidance. The Company purchases or receives beneficial interests in SPEs, which generally acquire financial assets, including corporate equities, debt securities and purchased options. The Company has not guaranteed the performance, liquidity or obligations of the SPEs and the Company's exposure to loss is limited to its carrying value of the beneficial interests in the SPEs. The Company uses the beneficial interests as part of its risk management strategy, including asset-liability management. These SPEs are not consolidated by the Company because the Company has determined that it is not the primary beneficiary of these entities based on the framework provided in FIN 46(r). Prior to the adoption of FIN 46(r), such SPEs were not consolidated because they did not meet the criteria for consolidation under previous accounting guidance. These beneficial interests are generally structured notes, as defined by EITF Issue No. 96-12, Recognition of Interest Income and Balance Sheet Classification of Structured Notes, which are included in fixed maturities, and their income is recognized using the retrospective interest method or the level yield method, as appropriate. Impairments of these beneficial interests are included in net investment gains and losses. Derivative Financial Instruments The Company uses derivative instruments to manage risk through one of five principal risk management strategies, the hedging of: (i) liabilities; (ii) invested assets; (iii) portfolios of assets or liabilities; (iv) net investments in certain foreign operations; and (v) firm commitments and forecasted transactions. Additionally, the Company enters into income generation and replication derivative transactions as permitted by its insurance subsidiaries' Derivatives Use Plans approved by the applicable state insurance departments. The Company's derivative hedging strategy employs a variety of instruments, including financial futures, financial forwards, interest rate, credit default and foreign currency swaps, foreign currency forwards, and options, including caps and floors. On the date the Company enters into a derivative contract, management designates the derivative as a hedge of the identified exposure (fair value, cash flow or foreign currency). If a derivative does not qualify for hedge F-12 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) accounting, according to SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended ("SFAS 133"), the changes in its fair value and all scheduled periodic settlement receipts and payments are reported in net investment gains or losses. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. In this documentation, the Company specifically identifies the asset, liability, firm commitment, foreign operation, or forecasted transaction that has been designated as a hedged item, states how the hedging instrument is expected to hedge the risks related to the hedged item, and sets forth the method that will be used to retrospectively and prospectively assess the hedging instruments effectiveness and the method that will be used to measure hedge ineffectiveness. The Company generally determines hedge effectiveness based on total changes in fair value of a derivative instrument. The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer effective in offsetting changes in the fair value or cash flows of a hedged item; (ii) the derivative expires or is sold, terminated, or exercised; (iii) the derivative is de-designated as a hedge instrument; (iv) it is probable that the forecasted transaction will not occur; (v) a hedged firm commitment no longer meets the definition of a firm commitment; or (vi) management determines that designation of the derivative as a hedge instrument is no longer appropriate. The Company designates and accounts for the following as cash flow hedges, when they have met the effectiveness requirements of SFAS 133: (i) various types of interest rate swaps to convert floating rate investments to fixed rate investments; (ii) various types of interest rate swaps to convert floating rate liabilities into fixed rate liabilities; (iii) receive U.S. dollar fixed on foreign currency swaps to hedge the foreign currency cash flow exposure of foreign currency denominated investments; (iv) foreign currency forwards to hedge the exposure of future payments or receipts in foreign currencies; and (v) other instruments to hedge the cash flows of various other forecasted transactions. For all qualifying and highly effective cash flow hedges, the effective portion of changes in fair value of the derivative instrument is reported in other comprehensive income or loss. The ineffective portion of changes in fair value of the derivative instrument is reported in net investment gains or losses. Hedged forecasted transactions, other than the receipt or payment of variable interest payments, are not expected to occur more than 12 months after hedge inception. The Company designates and accounts for the following as fair value hedges when they have met the effectiveness requirements of SFAS 133: (i) various types of interest rate swaps to convert fixed rate investments to floating rate investments; (ii) receive U.S. dollar floating on foreign currency swaps to hedge the foreign currency fair value exposure of foreign currency denominated investments; (iii) pay U.S. dollar floating on foreign currency swaps to hedge the foreign currency fair value exposure of foreign currency denominated liabilities, and (iv) other instruments to hedge various other fair value exposures of investments. For all qualifying and highly effective fair value hedges, the changes in fair value of the derivative instrument are reported as net investment gains or losses. When hedge accounting is discontinued because it is determined that the derivative no longer qualifies as an effective fair value hedge, the derivative continues to be carried on the consolidated balance sheet at its fair value, but the hedged asset or liability will no longer be adjusted for changes in fair value. When hedge accounting is discontinued because the hedged item no longer meets the definition of a firm commitment, the derivative continues to be carried on the consolidated balance sheet at its fair value, and any asset or liability that was recorded pursuant to recognition of the firm commitment is removed from the consolidated balance sheet and recognized as a net investment gain or loss in the current period. When hedge accounting is discontinued because it is probable that a forecasted transaction will not occur, the derivative continues to be carried on the consolidated balance sheet at its fair value, and gains and losses that were accumulated in other comprehensive F-13 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) income or loss are recognized immediately in net investment gains or losses. When the hedged forecasted transaction is no longer probable, but is reasonably possible, the accumulated gain or loss remains in other comprehensive income or loss and is recognized when the transaction affects net income or loss; however, prospective hedge accounting for the transaction is terminated. In all other situations in which hedge accounting is discontinued, the derivative is carried at its fair value on the consolidated balance sheet, with changes in its fair value recognized in the current period as net investment gains or losses. The Company uses forward exchange contracts that provide an economic hedge on portions of its net investments in foreign operations against adverse movements in foreign currency exchange rates. Unrealized losses on instruments so designated are recorded as components of accumulated other comprehensive income. The Company may enter into contracts that are not themselves derivative instruments but contain embedded derivatives. For each contract, the Company assesses whether the economic characteristics of the embedded derivative are clearly and closely related to those of the host contract and determines whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. If it is determined that the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, and that a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is separated from the host contract and accounted for as a stand-alone derivative. Such embedded derivatives are recorded on the consolidated balance sheet at fair value and changes in their fair value are recognized in the current period in net investment gains or losses. If the Company is unable to properly identify and measure an embedded derivative for separation from its host contract, the entire contract is carried on the consolidated balance sheet at fair value, with changes in fair value recognized in the current period as net investment gains or losses. The Company also uses derivatives to synthetically create investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These securities, called replication synthetic asset transactions ("RSATs"), are a combination of a credit default swap and a U.S. Treasury or Agency security, to synthetically create a third replicated security. These derivatives are not designated as hedges. As of December 31, 2003 and 2002, 23 and 18, respectively, of such RSATs, with notional amounts totaling $479 million and $275 million, respectively, were outstanding. The Company records both the premiums received on the credit default swaps over the life of the contracts and changes in their fair value in net investment gains and losses. The Company enters into written covered calls to generate additional investment income on the underlying assets it holds. These derivatives are not designated as hedges. The Company records the premiums received over the life of the contract and changes in fair value of such options as net investment gains and losses. Cash and Cash Equivalents The Company considers all investments purchased with an original maturity of three months or less to be cash equivalents. Property, Equipment, Leasehold Improvements and Computer Software Property, equipment and leasehold improvements, which are included in other assets, are stated at cost, less accumulated depreciation and amortization. Depreciation is determined using either the straight-line or sum-of-the-years-digits method over the estimated useful lives of the assets. The estimated life for company occupied real estate property is generally 40 years. Estimated lives range from five to ten years for leasehold improvements and three to five years for all other property and equipment. Accumulated depreciation and F-14 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) amortization of property, equipment and leasehold improvements was $394 million and $368 million at December 31, 2003 and 2002, respectively. Related depreciation and amortization expense was $101 million, $81 million and $96 million for the years ended December 31, 2003, 2002 and 2001, respectively. Computer software, which is included in other assets, is stated at cost, less accumulated amortization. Purchased software costs, as well as internal and external costs incurred to develop internal-use computer software during the application development stage, are capitalized. Such costs are amortized generally over a three-year period using the straight-line method. Accumulated amortization of capitalized software was $376 million and $297 million at December 31, 2003 and 2002, respectively. Related amortization expense was $139 million, $153 million and $106 million for the years ended December 31, 2003, 2002 and 2001, respectively. Deferred Policy Acquisition Costs The costs of acquiring new and renewal insurance business that vary with, and are primarily related to, the production of that business are deferred. Such costs, which consist principally of commissions, agency and policy issue expenses, are amortized with interest over the expected life of the contract for participating traditional life, universal life and investment-type products. Generally, DAC is amortized in proportion to the present value of estimated gross margins or profits from investment, mortality, expense margins and surrender charges. Interest rates are based on rates in effect at the inception or acquisition of the contracts. Actual gross margins or profits can vary from management's estimates resulting in increases or decreases in the rate of amortization. Management utilizes the reversion to the mean assumption, a standard industry practice, in its determination of the amortization of DAC. This practice assumes that the expectation for long-term equity investment appreciation is not changed by minor short-term market fluctuations, but that it does change when large interim deviations have occurred. Management periodically updates these estimates and evaluates the recoverability of DAC. When appropriate, management revises its assumptions of the estimated gross margins or profits of these contracts, and the cumulative amortization is reestimated and adjusted by a cumulative charge or credit to current operations. DAC for non-participating traditional life, non-medical health and annuity policies with life contingencies is amortized in proportion to anticipated premiums. Assumptions as to anticipated premiums are made at the date of policy issuance or acquisition and are consistently applied during the lives of the contracts. Deviations from estimated experience are included in operations when they occur. For these contracts, the amortization period is typically the estimated life of the policy. Policy acquisition costs related to internally replaced contracts are expensed at the date of replacement. DAC for property and casualty insurance contracts, which is primarily comprised of commissions and certain underwriting expenses, are deferred and amortized on a pro rata basis over the applicable contract term or reinsurance treaty. VOBA, included as part of DAC, represents the present value of future profits generated from existing insurance contracts in-force at the date of acquisition and is amortized over the expected policy or contract duration in relation to the estimated gross profits or premiums from such policies and contracts. Goodwill The excess of cost over the fair value of net assets acquired ("goodwill") is included in other assets. On January 1, 2002, the Company adopted the provisions of SFAS No. 142, Goodwill and Other Intangible Assets, F-15 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) ("SFAS 142"). In accordance with SFAS 142, goodwill is not amortized but is tested for impairment at least annually to determine whether a write down of the cost of the asset is required. Impairments are recognized in operating results when the carrying amount of goodwill exceeds its implied fair value. Prior to the adoption of SFAS 142, goodwill was amortized on a straight-line basis over a period ranging from ten to 30 years and impairments were recognized in operating results when permanent diminution in value was deemed to have occurred. Changes in goodwill were as follows:
Years Ended December 31, ----------------------- 2003 2002 2001 ----- ----- ---- (Dollars in millions) Net balance at January 1.. $ 405 $ 575 $703 Acquisitions.............. 3 7 20 Amortization.............. -- -- (47) Impairment losses......... -- (2) (61) Disposition and other..... (190) (175) (40) ----- ----- ---- Net balance at December 31 $ 218 $ 405 $575 ===== ===== ====
Accumulated amortization from goodwill was as follows at:
December 31, ------------------ 2003 2002 ---- ---- (Dollars in millions) Accumulated amortization $32 $71 === ===
Recognition of Insurance Revenue and Related Benefits Premiums related to traditional life and annuity policies with life contingencies are recognized as revenues when due. Benefits and expenses are provided against such revenues to recognize profits over the estimated lives of the policies. When premiums are due over a significantly shorter period than the period over which benefits are provided, any excess profit is deferred and recognized into operations in a constant relationship to insurance in-force or, for annuities, the amount of expected future policy benefit payments. Premiums related to non-medical health contracts are recognized on a pro rata basis over the applicable contract term. Deposits related to universal life and investment-type products are credited to policyholder account balances. Revenues from such contracts consist of amounts assessed against policyholder account balances for mortality, policy administration and surrender charges and are recognized in the period in which services are provided. Amounts that are charged to operations include interest credited and benefit claims incurred in excess of related policyholder account balances. Premiums related to property and casualty contracts are recognized as revenue on a pro rata basis over the applicable contract term. Unearned premiums are included in other liabilities. Other Revenues Other revenues include asset management and advisory fees, broker/dealer commissions and fees, and administrative service fees. Such fees and commissions are recognized in the period in which services are F-16 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) performed. Other revenues also include changes in account value relating to corporate-owned life insurance ("COLI"). Under certain COLI contracts, if the Company reports certain unlikely adverse results in its consolidated financial statements, withdrawals would not be immediately available and would be subject to market value adjustment, which could result in a reduction of the account value. Policyholder Dividends Policyholder dividends are approved annually by the insurance subsidiaries' boards of directors. The aggregate amount of policyholder dividends is related to actual interest, mortality, morbidity and expense experience for the year, as well as management's judgment as to the appropriate level of statutory surplus to be retained by the insurance subsidiaries. Participating Business Participating business represented approximately 13% and 16% of the Company's life insurance in-force, and 88% and 89% of the number of life insurance policies in-force, at December 31, 2003 and 2002, respectively. Participating policies represented approximately 40% and 41%, 40% and 41%, and 44% and 46% of gross and net life insurance premiums for the years ended December 31, 2003, 2002 and 2001, respectively. The percentages indicated are calculated excluding the business of the Reinsurance segment. Income Taxes The Holding Company and its includable life insurance and non-life insurance subsidiaries file a consolidated U.S. federal income tax return in accordance with the provisions of the Internal Revenue Code of 1986, as amended (the "Code"). Non-includable subsidiaries file either separate tax returns or separate consolidated tax returns. The future tax consequences of temporary differences between financial reporting and tax bases of assets and liabilities are measured at the balance sheet dates and are recorded as deferred income tax assets and liabilities. Reinsurance The Company has reinsured certain of its life insurance and property and casualty insurance contracts with other insurance companies under various agreements. Amounts due from reinsurers are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Policy and contract liabilities are reported gross of reinsurance credits. DAC is reduced by amounts recovered under reinsurance contracts. Amounts received from reinsurers for policy administration are reported in other revenues. The Company assumes and retrocedes financial reinsurance contracts, which represent low mortality risk reinsurance treaties. These contracts are reported as deposits and are included in other assets. The amount of revenue reported on these contracts represents fees and the cost of insurance under the terms of the reinsurance agreement and is reported in other revenue. Separate Accounts Separate accounts are established in conformity with insurance laws and are generally not chargeable with liabilities that arise from any other business of the Company. Separate account assets are subject to general account claims only to the extent the value of such assets exceeds the separate account liabilities. Investments (stated at estimated fair value) and liabilities of the separate accounts are reported separately as assets and F-17 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) liabilities. Deposits to separate accounts, investment income and recognized and unrealized gains and losses on the investments of the separate accounts accrue directly to contractholders and, accordingly, are not reflected in the revenues of the Company. Fees charged to contractholders, principally mortality, policy administration and surrender charges are included in universal life and investment-type product fees. See "--Application of Recent Accounting Pronouncements." Stock-Based Compensation Effective January 1, 2003, MetLife and the Company account for stock-based compensation plans using the prospective fair value method prescribed by SFAS No. 123, Accounting for Stock-Based Compensation ("SFAS 123"), as amended by SFAS 148, Accounting for Stock-Based Compensation--Transition and Disclosure ("SFAS 148"). MetLife allocates 100% of stock option expense to the Company. Stock-based compensation grants prior to January 1, 2003 are accounted for using the accounting method prescribed by Accounting Principles Board Opinion ("APB") No. 25, Accounting for Stock Issued to Employees ("APB 25") and Note 14 includes the pro forma disclosures required by SFAS No. 123, as amended. Foreign Currency Balance sheet accounts of foreign operations are translated at the exchange rates in effect at each year-end and income and expense accounts are translated at the average rates of exchange prevailing during the year. The local currencies of foreign operations are the functional currencies unless the local economy is highly inflationary. Translation adjustments are charged or credited directly to other comprehensive income or loss. Gains and losses from foreign currency transactions are reported in earnings. Discontinued Operations The results of operations of a component of the Company that either has been disposed of or is classified as held-for-sale on or after January 1, 2002 are reported in discontinued operations if the operations and cash flows of the component have been or will be eliminated from the ongoing operations of the Company as a result of the disposal transaction and the Company will not have any significant continuing involvement in the operations of the component after the disposal transaction. Application of Recent Accounting Pronouncements Effective December 31, 2003, the Company adopted EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments ("EITF 03-1"). EITF 03-1 provides guidance on the disclosure requirements for other-than-temporary impairments of debt and marketable equity investments that are accounted for under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities ("SFAS 115"). The adoption of EITF 03-1 requires the Company to include certain quantitative and qualitative disclosures for debt and marketable equity securities classified as available-for-sale or held-to-maturity under SFAS 115 that are impaired at the balance sheet date but for which an other-than-temporary impairment has not been recognized. (See Note 2). The initial adoption of EITF 03-1, which only required additional disclosures, did not have a material impact on the Company's consolidated financial statements. In December, 2003, the FASB revised SFAS No. 132, Employers' Disclosures about Pensions and Other Postretirement Benefits--an Amendment of FASB Statements No. 87, 88 and 106 ("SFAS 132(r)"). SFAS 132(r) retains most of the disclosure requirements of SFAS 132 and requires additional disclosure about assets, obligations, cash flows and net periodic benefit cost of defined benefit pension plans and other defined F-18 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) postretirement plans. SFAS 132(r) is primarily effective for fiscal years ending after December 15, 2003; however, certain disclosures about foreign plans and estimated future benefit payments are effective for fiscal years ending after June 15, 2004. The Company's adoption of SFAS 132(r) on December 31, 2003 did not have a significant impact on its consolidated financial statements since it only revises disclosure requirements. In January 2004, the FASB issued FASB Staff Position ("FSP") No. 106-1, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 ("FSP 106-1") which permits a sponsor of a postretirement health care plan that provides a prescription drug benefit to make a one-time election to defer accounting for the effects of the new legislation. The Company has elected to defer the accounting until further guidance is issued by the FASB. The measurements of the Company's postretirement accumulated benefit plan obligation and net periodic benefit cost disclosed in Note 13 do not reflect the effects of the new legislation. The guidance, when issued, could require the Company to change previously reported information. In July 2003, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts ("SOP 03-1"). SOP 03-1 provides guidance on (i) the classification and valuation of long-duration contract liabilities, (ii) the accounting for sales inducements and (iii) separate account presentation and valuation. SOP 03-1 is effective for fiscal years beginning after December 15, 2003. As of January 1, 2004, the Company increased future policyholder benefits for various guaranteed minimum death and income benefits net of DAC and unearned revenue liability offsets under certain variable annuity and universal life contracts of approximately $61 million, net of income tax, which will be reported as a cumulative effect of a change in accounting. Industry standards and practices continue to evolve relating to the valuation of liabilities relating to these types of benefits, which may result in further adjustments to the Company's measurement of liabilities associated with such benefits in subsequent accounting periods. Effective with the adoption of SOP 03-1, costs associated with enhanced or bonus crediting rates to contractholders must be deferred and amortized over the life of the related contract using assumptions consistent with the amortization of DAC, which has been the Company's accounting treatment. Effective January 1, 2004, the Company reclassified $116 million of ownership in its own separate accounts from other assets to fixed maturities available-for-sale and equity securities. This reclassification will have no effect on net income or other comprehensive income. In accordance with SOP 03-1's revised definition of a separate account, effective January 1, 2004, the Company also reclassified $1,678 million of separate account assets to general account investments and $1,678 million of separate account liabilities to future policy benefits and policyholder account balances. The net cumulative effect of this reclassification was insignificant. In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity ("SFAS 150"). SFAS 150 clarifies the accounting for certain financial instruments with characteristics of both liabilities and equity and requires that those instruments be classified as a liability or, in certain circumstances, an asset. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS 150, as of July 1, 2003, required the Company to reclassify $277 million of company-obligated mandatorily redeemable securities of subsidiary trusts from mezzanine equity to liabilities. In April 2003, the FASB cleared Statement 133 Implementation Issue No. B36, Embedded Derivatives: Modified Coinsurance Arrangements and Debt Instruments That Incorporate Credit Risk Exposures That Are Unrelated or Only Partially Related to the Creditworthiness of the Obligor under Those Instruments ("Issue B36"). Issue B36 concluded that (i) a company's funds withheld payable and/or receivable under certain F-19 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) reinsurance arrangements, and (ii) a debt instrument that incorporates credit risk exposures that are unrelated or only partially related to the creditworthiness of the obligor include an embedded derivative feature that is not clearly and closely related to the host contract. Therefore, the embedded derivative feature must be measured at fair value on the balance sheet and changes in fair value reported in income. Issue B36 became effective on October 1, 2003 and required the Company to increase policyholder account balances by $40 million, to decrease other invested assets by $1 million and increase DAC by $2 million. These amounts, net of income taxes of $13 million, were recorded as a cumulative effect of a change in accounting. As a result of the adoption of Issue B36, the Company recognized investment gains of $9 million, net of income tax, for the three month period ended December 31, 2003. In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities ("SFAS 149"). SFAS 149 amends and clarifies the accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. Except for certain implementation guidance that is incorporated in SFAS 149 and already effective, SFAS 149 is effective for contracts entered into or modified after June 30, 2003. The Company's adoption of SFAS 149 on July 1, 2003 did not have a significant impact on the consolidated financial statements. During 2003, the Company adopted FASB Interpretation No. 46 Consolidation of Variable Interest Entities--An Interpretation of ARB No. 51 ("FIN 46") and its December 2003 revision ("FIN 46(r)"). Certain of the Company's asset-backed securitizations, collateralized debt obligations, structured investment transactions, and investments in real estate joint ventures and other limited partnership interests meet the definition of a variable interest entity ("VIE") and must be consolidated, in accordance with the transition rules and effective dates, if the Company is deemed to be the primary beneficiary. A VIE is defined as (i) any entity in which the equity investments at risk in such entity do not have the characteristics of a controlling financial interest or (ii) any entity that does not have sufficient equity at risk to finance its activities without additional subordinated support from other parties. Effective February 1, 2003, the Company adopted FIN 46 for VIEs created or acquired on or after February 1, 2003 and, effective December 31, 2003, the Company adopted FIN 46(r) with respect to interests in entities formerly considered special purpose entities ("SPEs") including interests in asset-backed securities and collateralized debt obligations. In accordance with the provisions in FIN 46(r), the Company has elected to defer until March 31, 2004 the consolidation of interests in VIEs for non SPEs acquired prior to February 1, 2003 for which it is the primary beneficiary. The adoption of FIN 46 as of February 1, 2003 did not have a significant impact on the Company's consolidated financial statements. The adoption of the provisions of FIN 46(r) at December 31, 2003 did not require the Company to consolidate any additional VIEs that were not previously consolidated. Effective January 1, 2003, the Company adopted FIN No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others ("FIN 45"). FIN 45 requires entities to establish liabilities for certain types of guarantees and expands financial statement disclosures for others. The initial recognition and initial measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The adoption of FIN 45 did not have a significant impact on the Company's consolidated financial statements. See Note 12. Effective January 1, 2003, MetLife and the Company adopted SFAS No. 148, Accounting for Stock-Based Compensation--Transition and Disclosure ("SFAS 148"), which provides guidance on how to apply the fair value method of accounting and use the prospective transition method for stock options granted by the Holding Company and the Company subsequent to December 31, 2002. As permitted under SFAS 148, options granted prior to January 1, 2003 will continue to be accounted for under Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25"), and the pro forma impact of accounting for these options at fair value will continue to be disclosed in the consolidated financial statements until the last of those options vest in 2005. See Note 14. F-20 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Effective January 1, 2003, the Company adopted SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities ("SFAS 146"). SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recorded and measured initially at fair value only when the liability is incurred rather than at the date of an entity's commitment to an exit plan as required by EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity Including Certain Costs Incurred in a Restructuring ("EITF 94-3"). The Company's activities subject to this guidance in 2003 were not significant. Effective January 1, 2003, the Company adopted SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections ("SFAS 145"). In addition to amending or rescinding other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions, SFAS 145 generally precludes companies from recording gains and losses from the extinguishment of debt as an extraordinary item. SFAS 145 also requires sale-leaseback treatment for certain modifications of a capital lease that result in the lease being classified as an operating lease. The adoption of SFAS 145 did not have a significant impact on the Company's consolidated financial statements. Effective January 1, 2002, the Company adopted SFAS 144. SFAS 144 provides a single model for accounting for long-lived assets to be disposed of by superseding SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of ("SFAS 121"), and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations--Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions ("APB 30"). Under SFAS 144, discontinued operations are measured at the lower of carrying value or fair value less costs to sell, rather than on a net realizable value basis. Future operating losses relating to discontinued operations also are no longer recognized before they occur. SFAS 144 (i) broadens the definition of a discontinued operation to include a component of an entity (rather than a segment of a business); (ii) requires long-lived assets to be disposed of other than by sale to be considered held and used until disposed; and (iii) retains the basic provisions of (a) APB 30 regarding the presentation of discontinued operations in the statements of income, (b) SFAS 121 relating to recognition and measurement of impaired long-lived assets (other than goodwill), and (c) SFAS 121 relating to the measurement of long-lived assets classified as held-for-sale. Adoption of SFAS 144 did not have a material impact on the Company's consolidated financial statements other than the presentation as discontinued operations of net investment income and net investment gains related to operations of real estate on which the Company initiated disposition activities subsequent to January 1, 2002 and the classification of such real estate as held-for-sale on the consolidated balance sheets. See Note 18. Effective January 1, 2002, the Company adopted SFAS No. 142. SFAS 142 eliminates the systematic amortization and establishes criteria for measuring the impairment of goodwill and certain other intangible assets by reporting unit. Amortization of goodwill, prior to the adoption of SFAS 142 was $47 million for the year ended December 31, 2001. Amortization of other intangible assets was not material for the years ended December 31, 2003, 2002 and 2001. The Company completed the required impairment tests of goodwill and indefinite-lived intangible assets in the third quarter of 2002 and recorded a $5 million charge to earnings relating to the impairment of certain goodwill assets as a cumulative effect of a change in accounting. There was no impairment of identified intangible assets or significant reclassifications between goodwill and other intangible assets at January 1, 2002. Effective July 1, 2001, the Company adopted SFAS No. 141, Business Combinations ("SFAS 141"). SFAS 141 requires the purchase method of accounting for all business combinations and separate recognition of intangible assets apart from goodwill if such intangible assets meet certain criteria. In accordance with SFAS 141, the elimination of $5 million of negative goodwill was reported in net income in the first quarter of 2002 as a cumulative effect of a change in accounting. F-21 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) In July 2001, the U.S. Securities and Exchange Commission ("SEC") released Staff Accounting Bulletin ("SAB") No. 102, Selected Loan Loss Allowance and Documentation Issues ("SAB 102"). SAB 102 summarizes certain of the SEC's views on the development, documentation and application of a systematic methodology for determining allowances for loan and lease losses. The application of SAB 102 by the Company did not have a material impact on the Company's consolidated financial statements. Effective April 1, 2001, the Company adopted certain additional accounting and reporting requirements of SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities-- a Replacement of FASB Statement No. 125, relating to the derecognition of transferred assets and extinguished liabilities and the reporting of servicing assets and liabilities. The initial adoption of these requirements did not have a material impact on the Company's consolidated financial statements. Effective April 1, 2001, the Company adopted EITF 99-20, Recognition of Interest Income and Impairment on Certain Investments. This pronouncement requires investors in certain asset-backed securities to record changes in their estimated yield on a prospective basis and to apply specific evaluation methods to these securities for an other-than-temporary decline in value. The initial adoption of EITF 99-20 did not have a material impact on the Company's consolidated financial statements. Effective January 1, 2001, the Company adopted SFAS 133 which established new accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. The cumulative effect of the adoption of SFAS 133, as of January 1, 2001, resulted in a $33 million increase in other comprehensive income, net of income taxes of $18 million, and had no material impact on net income. The increase to other comprehensive income is attributable to net gains on cash flow-type hedges at transition. Also at transition, the amortized cost of fixed maturities decreased and other invested assets increased by $22 million, representing the fair value of certain interest rate swaps that were accounted for prior to SFAS 133 using fair value-type settlement accounting. During the year ended December 31, 2001, $18 million of the pre-tax gain reported in accumulated other comprehensive income at transition was reclassified into net investment income. The FASB continues to issue additional guidance relating to the accounting for derivatives under SFAS 133, which may result in further adjustments to the Company's treatment of derivatives in subsequent accounting periods. F-22 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) 2. Investments Fixed Maturities and Equity Securities Fixed maturities and equity securities at December 31, 2003 were as follows:
Gross Cost or Unrealized Amortized ----------- Estimated Cost Gain Loss Fair Value --------- ------ ---- ---------- (Dollars in millions) Fixed Maturities: Bonds: U.S. corporate securities................. $ 49,466 $3,486 $228 $ 52,724 Mortgage-backed securities................ 28,049 687 81 28,655 Foreign corporate securities.............. 18,680 2,005 70 20,615 U.S. treasuries/agencies.................. 13,249 1,208 23 14,434 Asset-backed securities................... 10,414 169 54 10,529 Commercial mortgage-backed securities..... 9,080 480 15 9,545 Foreign government securities............. 4,847 752 20 5,579 States and political subdivisions......... 282 11 8 285 Other fixed income assets................. 232 138 62 308 -------- ------ ---- -------- Total bonds............................ 134,299 8,936 561 142,674 Redeemable preferred stocks................... 545 2 73 474 -------- ------ ---- -------- Total fixed maturities................. $134,844 $8,938 $634 $143,148 ======== ====== ==== ======== Equity Securities: Common stocks................................. $ 514 $ 329 $ 1 $ 842 Nonredeemable preferred stocks................ 379 25 -- 404 -------- ------ ---- -------- Total equity securities................ $ 893 $ 354 $ 1 $ 1,246 ======== ====== ==== ========
F-23 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Fixed maturities and equity securities at December 31, 2002 were as follows:
Cost or Gross Unrealized Amortized ---------------- Estimated Cost Gain Loss Fair Value --------- ------ ------ ---------- (Dollars in millions) Fixed Maturities: Bonds: U.S. corporate securities................. $ 42,265 $2,914 $ 896 $ 44,283 Mortgage-backed securities................ 24,999 1,018 15 26,002 Foreign corporate securities.............. 15,405 1,295 185 16,515 U.S. treasuries/agencies.................. 13,256 1,514 3 14,767 Asset-backed securities................... 8,070 204 181 8,093 Commercial mortgage-backed securities..... 5,445 516 5 5,956 Foreign government securities............. 4,649 516 50 5,115 States and political subdivisions......... 2,575 181 20 2,736 Other fixed income assets................. 312 126 82 356 -------- ------ ------ -------- Total bonds............................ 116,976 8,284 1,437 123,823 Redeemable preferred stocks................... 552 1 116 437 -------- ------ ------ -------- Total fixed maturities................. $117,528 $8,285 $1,553 $124,260 ======== ====== ====== ======== Equity Securities: Common stocks............................. $ 827 $ 114 $ 80 $ 861 Nonredeemable preferred stocks............ 668 25 3 690 -------- ------ ------ -------- Total equity securities................ $ 1,495 $ 139 $ 83 $ 1,551 ======== ====== ====== ========
The Company held foreign currency derivatives with notional amounts of $4,242 million and $2,371 million to hedge the exchange rate risk associated with foreign bonds and loans at December 31, 2003 and 2002, respectively. The Company held fixed maturities at estimated fair values that were below investment grade or not rated by an independent rating agency that totaled $11,814 million and $11,041 million at December 31, 2003 and 2002, respectively. These securities had a net unrealized gain of $839 million at December 31, 2003 and a net unrealized loss of $378 million at December 31, 2002. Non-income producing fixed maturities were $357 million and $456 million at December 31, 2003 and 2002, respectively. F-24 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) The cost or amortized cost and estimated fair value of bonds at December 31, 2003, by contractual maturity date (excluding scheduled sinking funds), are shown below:
Cost or Amortized Estimated Cost Fair Value --------- ---------- (Dollars in millions) Due in one year or less.................... $ 4,084 $ 4,233 Due after one year through five years...... 25,388 26,737 Due after five years through ten years..... 24,539 26,662 Due after ten years........................ 32,745 36,313 -------- -------- Subtotal................................ 86,756 93,945 Mortgage-backed and asset-backed securities 47,543 48,729 -------- -------- Subtotal................................ 134,299 142,674 Redeemable preferred stock................. 545 474 -------- -------- Total fixed maturities.................. $134,844 $143,148 ======== ========
Bonds not due at a single maturity date have been included in the above table in the year of final maturity. Actual maturities may differ from contractual maturities due to the exercise of prepayment options. Sales of fixed maturities and equity securities classified as available-for-sale were as follows:
Years Ended December 31, ------------------------- 2003 2002 2001 ------- ------- ------- (Dollars in millions) Proceeds............... $48,390 $34,918 $27,576 Gross investment gains. $ 446 $ 1,683 $ 634 Gross investment losses $ (452) $ (973) $ (934)
Gross investment losses above exclude writedowns recorded during 2003, 2002 and 2001 for other-than-temporarily impaired available-for-sale fixed maturities and equity securities of $328 million, $1,342 million and $278 million, respectively. Excluding investments in U.S. Treasury securities and obligations of U.S. government corporations and agencies, the Company is not exposed to any significant concentration of credit risk in its fixed maturities portfolio. F-25 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) The following table shows the estimated fair values and gross unrealized losses of the Company's fixed maturities, aggregated by sector and length of time that the securities have been in a continuous unrealized loss position at December 31, 2003:
Equal to or Greater Less than 12 months than 12 months Total -------------------- -------------------- -------------------- Estimated Gross Estimated Gross Estimated Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss --------- ---------- --------- ---------- --------- ---------- (Dollars in millions) U.S. corporate securities............ $ 6,338 $136 $ 962 $ 92 $ 7,300 $228 Mortgage-backed securities........... 7,133 78 18 3 7,151 81 Foreign corporate securities......... 2,446 57 331 13 2,777 70 U.S. treasuries/agencies............. 3,526 23 -- -- 3,526 23 Asset-backed securities.............. 2,295 29 780 25 3,075 54 Commercial mortgage-backed securities 1,998 13 227 2 2,225 15 Foreign government securities........ 225 20 2 -- 227 20 States and political subdivisions.... 131 8 -- -- 131 8 Other fixed income assets............ 12 52 40 10 52 62 ------- ---- ------ ---- ------- ---- Total bonds....................... 24,104 416 2,360 145 26,464 561 Redeemable preferred stocks.......... 192 60 279 13 471 73 ------- ---- ------ ---- ------- ---- Total fixed maturities............ $24,296 $476 $2,639 $158 $26,935 $634 ======= ==== ====== ==== ======= ====
At December 31, 2003, the Company had gross unrealized losses of $1 million from equity securities that had been in an unrealized loss position for less than twelve months. The amount of unrealized losses from equity securities that had been in an unrealized loss position for twelve months or greater is less than $1 million at December 31, 2003. The fair value of those equity securities that had been in an unrealized loss position for less than twelve months and for twelve months or greater at December 31, 2003, is $18 million and $21 million, respectively. Securities Lending Program The Company participates in securities lending programs whereby blocks of securities, which are included in investments, are loaned to third parties, primarily major brokerage firms. The Company requires a minimum of 102% of the fair value of the loaned securities to be separately maintained as collateral for the loans. Securities with a cost or amortized cost of $22,290 million and $13,477 million and an estimated fair value of $23,461 million and $16,120 million were on loan under the program at December 31, 2003 and 2002, respectively. The Company was liable for cash collateral under its control of $24,065 million and $16,321 million at December 31, 2003 and 2002, respectively. Security collateral on deposit from customers may not be sold or repledged and is not reflected in the consolidated financial statements. Assets on Deposit and Held in Trust The Company had investment assets on deposit with regulatory agencies with a fair market value of $1,286 million and $939 million at December 31, 2003 and 2002, respectively. Company securities held in trust to satisfy collateral requirements had an amortized cost of $1,711 million and $1,430 million at December 31, 2003 and 2002, respectively. F-26 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Mortgage Loans on Real Estate Mortgage loans on real estate were categorized as follows:
December 31, ------------------------------ 2003 2002 -------------- -------------- Amount Percent Amount Percent ------- ------- ------- ------- (Dollars in millions) Commercial mortgage loans.. $21,597 81% $20,433 80% Agricultural mortgage loans 5,166 19% 5,042 20% ------- --- ------- --- Total................... 26,763 100% 25,475 100% === === Less: Valuation allowances. 126 122 ------- ------- Mortgage loans.......... $26,637 $25,353 ======= =======
Mortgage loans on real estate are collateralized by properties primarily located throughout the United States. At December 31, 2003, approximately 20%, 12% and 7% of the properties were located in California, New York and Florida, respectively. Generally, the Company (as the lender) requires that a minimum of one-fourth of the purchase price of the underlying real estate be paid by the borrower. Mortgage loans at December 31, 2003 and 2002 include $1,998 million and $1,515 million, respectively to MIAC, a related party, in connection with MIAC's purchase of real estate from the Company in 2001 and 2003. In addition, certain of the Company's real estate joint ventures have mortgage loans with the Company. The carrying values of such mortgages were $639 million and $620 million at December 31, 2003 and 2002, respectively. Changes in mortgage loan valuation allowances were as follows:
Years Ended December 31, ----------------------- 2003 2002 2001 ---- ---- ---- (Dollars in millions) Balance at January 1...... $122 $144 $ 83 Additions................. 50 39 106 Deductions................ (46) (56) (45) Dispositions of affiliates -- (5) -- ---- ---- ---- Balance at December 31.... $126 $122 $144 ==== ==== ====
A portion of the Company's mortgage loans on real estate was impaired and consisted of the following:
December 31, ------------------ 2003 2002 ---- ---- (Dollars in millions) Impaired mortgage loans with valuation allowances... $286 $604 Impaired mortgage loans without valuation allowances 146 257 ---- ---- Total............................................ 432 861 Less: Valuation allowances on impaired mortgages.... 61 121 ---- ---- Impaired mortgage loans.......................... $371 $740 ==== ====
F-27 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) The average investment in impaired mortgage loans on real estate was $615 million, $1,068 million and $938 million for the years ended December 31, 2003, 2002 and 2001, respectively. Interest income on impaired mortgage loans was $55 million, $88 million and $103 million for the years ended December 31, 2003, 2002 and 2001, respectively. The investment in restructured mortgage loans on real estate was $188 million and $410 million at December 31, 2003 and 2002, respectively. Interest income of $19 million, $44 million and $76 million was recognized on restructured loans for the years ended December 31, 2003, 2002 and 2001, respectively. Gross interest income that would have been recorded in accordance with the original terms of such loans amounted to $24 million, $41 million and $60 million for the years ended December 31, 2003, 2002 and 2001, respectively. Mortgage loans on real estate with scheduled payments of 60 days (90 days for agriculture mortgages) or more past due or in foreclosure had an amortized cost of $35 million and $28 million at December 31, 2003 and 2002, respectively. Real Estate and Real Estate Joint Ventures Real estate and real estate joint ventures consisted of the following:
December 31, -------------------- 2003 2002 ------ ------ (Dollars in millions) Real estate and real estate joint ventures held-for-investment $3,446 $3,321 Impairments................................................... (283) (271) ------ ------ Total...................................................... 3,163 3,050 ------ ------ Real estate held-for-sale..................................... 101 815 Impairments................................................... -- (5) Valuation allowance........................................... (12) (11) ------ ------ Total...................................................... 89 799 ------ ------ Real estate and real estate joint ventures............. $3,252 $3,849 ====== ======
Accumulated depreciation on real estate was $1,226 million and $1,319 million at December 31, 2003 and 2002, respectively. The related depreciation expense was $124 million, $180 million and $217 million for the years ended December 31, 2003, 2002 and 2001, respectively. These amounts include $15 million, $66 million and $93 million of depreciation expense related to discontinued operations for the years ended December 31, 2003, 2002 and 2001, respectively. F-28 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Real estate and real estate joint ventures were categorized as follows:
December 31, ---------------------------- 2003 2002 ------------- ------------- Amount Percent Amount Percent ------ ------- ------ ------- (Dollars in millions) Office..... $1,597 49 % $2,244 58 % Retail..... 660 20 697 18 Apartments. 499 15 454 12 Land....... 77 2 87 2 Agriculture 1 -- 7 -- Other...... 418 14 360 10 ------ --- ------ ---- Total... $3,252 100% $3,849 100 % ====== === ====== ====
The Company's real estate holdings are primarily located throughout the United States. At December 31, 2003, approximately 25%, 21% and 17% of the Company's real estate holdings were located in California, Texas and New York, respectively. Changes in real estate and real estate joint ventures held-for-sale valuation allowance were as follows:
Years Ended December 31, ----------------------- 2003 2002 2001 ---- ---- ---- (Dollars in millions) Balance at January 1...................... $ 11 $ 35 $ 39 Additions charged to investment income.... 17 21 16 Deductions for writedowns and dispositions (16) (45) (20) ---- ---- ---- Balance at December 31.................... $ 12 $ 11 $ 35 ==== ==== ====
Investment income related to impaired real estate and real estate joint ventures held-for-investment was $35 million, $48 million and $34 million for the years ended December 31, 2003, 2002 and 2001, respectively. There was no investment income related to impaired real estate and real estate joint ventures held-for-sale for the year ended December 31, 2003. Investment income related to impaired real estate and real estate joint ventures held-for-sale was $3 million and $19 million for the years ended December 31, 2002 and 2001, respectively. The carrying value of non-income producing real estate and real estate joint ventures was $67 million and $62 million at December 31, 2003 and 2002, respectively. The Company owned real estate acquired in satisfaction of debt of $1 million and $8 million at December 31, 2003 and 2002, respectively. F-29 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Leveraged Leases Leveraged leases, included in other invested assets, consisted of the following:
December 31, -------------------- 2003 2002 ------ ------ (Dollars in millions) Investment............... $ 974 $ 985 Estimated residual values 386 428 ------ ------ Total................. 1,360 1,413 Unearned income.......... (380) (368) ------ ------ Leveraged leases...... $ 980 $1,045 ====== ======
The investment amounts set forth above are generally due in monthly installments. The payment periods generally range from one to 15 years, but in certain circumstances are as long as 30 years. These receivables are generally collateralized by the related property. The Company's deferred tax liability related to leveraged leases was $870 million and $981 million at December 31, 2003 and 2002, respectively. Net Investment Income The components of net investment income were as follows:
Years Ended December 31, ----------------------- 2003 2002 2001 ------- ------- ------- (Dollars in millions) Fixed maturities................................. $ 7,757 $ 7,844 $ 8,449 Equity securities................................ 26 42 61 Mortgage loans on real estate.................... 1,811 1,840 1,838 Real estate and real estate joint ventures (1)... 612 673 824 Policy loans..................................... 510 512 527 Other limited partnership interests.............. 75 57 48 Cash, cash equivalents and short-term investments 83 228 264 Other............................................ 315 286 244 ------- ------- ------- Total......................................... 11,189 11,482 12,255 Less: Investment expenses (1).................... 832 851 1,201 ------- ------- ------- Net investment income......................... $10,357 $10,631 $11,054 ======= ======= =======
- -------- (1)Excludes amounts related to real estate held-for-sale presented as discontinued operations in accordance with SFAS 144. F-30 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Net Investment Gains (Losses) Net investment gains (losses), including changes in valuation allowances, and related policyholder amounts were as follows:
Years Ended December 31, ----------------------- 2003 2002 2001 ----- ----- ------ (Dollars in millions) Fixed maturities............................... $(373) $(862) $ (644) Equity securities.............................. 39 230 66 Mortgage loans on real estate.................. (51) (21) (91) Real estate and real estate joint ventures (1). 19 (6) 1,626 Other limited partnership interests............ (84) (2) (161) Sales of businesses............................ 5 (7) 25 Derivatives (2)................................ (122) (140) 124 Other.......................................... 21 (28) (27) ----- ----- ------ Total................................... (546) (836) 918 Amounts allocated from: Deferred policy acquisition costs........... 26 (11) (21) Participating contracts..................... 89 (7) (105) Policyholder dividend obligation............ 144 157 159 ----- ----- ------ Total net investment gains (losses)..... $(287) $(697) $ 951 ===== ===== ======
- -------- (1)The amounts presented exclude amounts related to sales of real estate held-for-sale presented as discontinued operations in accordance with SFAS 144. (2)The amounts presented include scheduled periodic settlement payments on derivative instruments that do not qualify for hedge accounting under SFAS 133. Investment gains and losses are net of related policyholder amounts. The amounts netted against investment gains and losses are (i) amortization of DAC to the extent that such amortization results from investment gains and losses; (ii) adjustments to participating contractholder accounts when amounts equal to such investment gains and losses are applied to the contractholder's accounts; and (iii) adjustments to the policyholder dividend obligation resulting from investment gains and losses. This presentation may not be comparable to presentations made by other insurers. Real estate and real estate joint ventures net investment gains for 2001 include $1,630 million related to the sale of real estate to MIAC. F-31 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Net Unrealized Investment Gains The components of net unrealized investment gains, included in accumulated other comprehensive income, were as follows:
Years Ended December 31, ------------------------- 2003 2002 2001 ------- ------- ------- (Dollars in millions) Fixed maturities........................... $ 8,094 $ 6,701 $ 2,958 Equity securities.......................... 353 56 619 Derivatives................................ (395) (24) 71 Other invested assets...................... (55) 1 59 ------- ------- ------- Total................................... 7,997 6,734 3,707 ------- ------- ------- Amounts allocated from: Future policy benefit loss recognition.. (1,453) (1,242) (30) Deferred policy acquisition costs....... (495) (366) (6) Participating contracts................. (117) (129) (127) Policyholder dividend obligation........ (2,130) (1,882) (708) Deferred income taxes...................... (1,397) (1,124) (1,037) ------- ------- ------- Total................................... (5,592) (4,743) (1,908) ------- ------- ------- Net unrealized investment gains..... $ 2,405 $ 1,991 $ 1,799 ======= ======= =======
The changes in net unrealized investment gains were as follows:
Years Ended December 31, ----------------------- 2003 2002 2001 ------ ------- ------ (Dollars in millions) Balance at January 1................................................. $1,991 $ 1,799 $1,183 Unrealized investment gains during the year.......................... 994 2,803 1,391 Unrealized investment gains (losses) relating to: Future policy benefit (loss) gain recognition..................... (211) (1,212) 254 Deferred policy acquisition costs................................. (129) (204) (128) Participating contracts........................................... 12 (2) 6 Policyholder dividend obligation.................................. (248) (1,174) (323) Deferred income taxes................................................ (179) (72) (475) Unrealized investment gains (losses) of subsidiaries at date of sale, net of deferred income taxes....................................... 175 53 (109) ------ ------- ------ Balance at December 31............................................... $2,405 $ 1,991 $1,799 ====== ======= ====== Net change in unrealized investment gains............................ $ 414 $ 192 $ 616 ====== ======= ======
Structured Investment Transactions The Company securitizes high yield debt securities, investment grade bonds and structured finance securities. The Company has sponsored four securitizations with a total of approximately $1,431 million in financial assets as of December 31, 2003. The Company's beneficial interests in these SPEs as of December 31, 2003 and 2002 and the related investment income for the years ended December 31, 2003, 2002 and 2001 were insignificant. F-32 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) The Company also invests in structured notes and similar type instruments, which generally provide equity-based returns on debt securities. The carrying value of such investments was approximately $880 million and $870 million at December 31, 2003 and 2002, respectively. The related income recognized was $78 million, $1 million and $44 million for the years ended December 31, 2003, 2002 and 2001, respectively. Variable Interest Entities As discussed in Note 1, the Company has adopted the provisions of FIN 46 and FIN46(r). At December 31, 2003, FIN 46(r) did not require the Company to consolidate any additional VIEs that were not previously consolidated. The following table presents the total assets of and maximum exposure to loss relating to VIEs for which the Company has concluded that (i) it is the primary beneficiary and which will be consolidated in the Company's financial statements beginning March 31, 2004 and (ii) it holds significant valuable interests but it is not the primary beneficiary and which will not be consolidated:
December 31, 2003 ------------------------------------------------------- Primary Beneficiary (1) Not Primary Beneficiary --------------------------- --------------------------- Total Maximum Exposure Total Maximum Exposure Assets (2) to Loss (3) Assets (2) to Loss (3) ---------- ---------------- ---------- ---------------- (Dollars in millions) SPEs: Asset-backed securitizations and collateralized debt obligations $ -- $ -- $2,400 $20 Non-SPEs: Real estate joint ventures (4)... 617 238 42 59 Other limited partnerships (5)... 29 27 445 10 ---- ---- ------ --- Total......................... $646 $265 $2,887 $89 ==== ==== ====== ===
- -------- (1)Had the Company consolidated these VIEs at December 31, 2003, the transition adjustments would have been $10 million, net of income tax. (2)The assets of the asset-backed securitizations and collateralized debt obligations are reflected at fair value as of December 31, 2003. The assets of the real estate joint ventures and other limited partnerships are reflected at the carrying amounts at which such assets would have been reflected on the Company's balance sheet had the Company consolidated the VIE from the date of its initial investment in the entity. (3)The maximum exposure to loss of the asset-backed securitizations and collateralized debt obligations is equal to the carrying amounts of retained interests. In addition, the Company provides collateral management services for certain of these structures for which it collects a management fee. The maximum exposure to loss relating to real estate joint ventures and other limited partnerships is equal to the carrying amounts plus any unfunded commitments, reduced by amounts guaranteed by other partners. (4)Real estate joint ventures include partnerships and other ventures, which engage in the acquisition, development, management and disposal of real estate investments. (5)Other limited partnerships include partnerships established for the purpose of investing in public and private debt and equity securities, as well as limited partnerships established for the purpose of investing in low-income housing that qualifies for federal tax credits. F-33 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) 3. Derivative Financial Instruments The table below provides a summary of notional amount and fair value of derivative financial instruments held at December 31, 2003 and 2002:
2003 2002 --------------------------- --------------------------- Current Market Current Market or Fair Value or Fair Value Notional ------------------ Notional ------------------ Amount Assets Liabilities Amount Assets Liabilities -------- ------ ----------- -------- ------ ----------- (Dollars in millions) Financial futures................ $ 1,015 $ 8 $ 24 $ 4 $ -- $ -- Interest rate swaps.............. 9,921 189 36 3,866 196 126 Floors........................... 325 5 -- 325 9 -- Caps............................. 9,483 29 -- 7,770 -- -- Financial forwards............... 1,310 2 3 1,870 -- 12 Foreign currency swaps........... 4,679 9 791 2,371 92 181 Options.......................... 6,065 7 -- 6,472 9 -- Foreign currency forwards........ 528 -- 10 1 -- -- Credit default swaps............. 605 2 1 376 2 -- ------- ---- ---- ------- ---- ---- Total contractual commitments. $33,931 $251 $865 $23,055 $308 $319 ======= ==== ==== ======= ==== ====
The following is a reconciliation of the notional amounts by derivative type and strategy at December 31, 2003 and 2002:
December 31, 2002 Terminations/ December 31, 2003 Notional Amount Additions Maturities Notional Amount ----------------- --------- ------------- ----------------- (Dollars in millions) BY DERIVATIVE TYPE Financial futures............................ $ 4 $ 1,543 $ 532 $ 1,015 Interest rate swaps.......................... 3,866 8,040 1,985 9,921 Floors....................................... 325 -- -- 325 Caps......................................... 7,770 3,000 1,287 9,483 Financial forwards........................... 1,870 1,310 1,870 1,310 Foreign currency swaps....................... 2,371 2,516 208 4,679 Options...................................... 6,472 -- 407 6,065 Foreign currency forwards.................... 1 527 -- 528 Written covered calls........................ -- 1,178 1,178 -- Credit default swaps......................... 376 284 55 605 ------- ------- ------ ------- Total contractual commitments............. $23,055 $18,398 $7,522 $33,931 ======= ======= ====== ======= BY DERIVATIVE STRATEGY Liability hedging............................ $ 8,683 $ 5,030 $1,187 $12,526 Invested asset hedging....................... 5,284 6,671 1,459 10,496 Portfolio hedging............................ 9,028 2,323 4,429 6,922 Firm commitments and forecasted transactions. 60 3,847 447 3,460 Hedging net investments in foreign operations -- 527 -- 527 ------- ------- ------ ------- Total contractual commitments............. $23,055 $18,398 $7,522 $33,931 ======= ======= ====== =======
F-34 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) The following table presents the notional amounts of derivative financial instruments by maturity at December 31, 2003:
Remaining Life --------------------------------------------------------------------- One Year After One Year After Five Years or Less Through Five Years Through Ten Years After Ten Years Total -------- ------------------ ----------------- --------------- ------- (Dollars in millions) Financial futures................ $ 1,015 $ -- $ -- $ -- $ 1,015 Interest rate swaps.............. 242 6,297 1,716 1,666 9,921 Floors........................... -- -- 325 -- 325 Caps............................. 3,000 6,483 -- -- 9,483 Financial forwards............... 1,310 -- -- -- 1,310 Foreign currency swaps........... 326 1,663 2,255 435 4,679 Options.......................... 4,163 1,901 -- 1 6,065 Foreign currency forwards........ 528 -- -- -- 528 Credit default swaps............. 209 396 -- -- 605 ------- ------- ------ ------ ------- Total contractual commitments. $10,793 $16,740 $4,296 $2,102 $33,931 ======= ======= ====== ====== =======
The following table presents the notional amounts and fair values of derivatives by type of hedge designation at December 31, 2003 and 2002:
2003 2002 -------------------------- --------------------------- Fair Value Fair Value ----------------- ------------------ Notional Notional Amount Asset Liabilities Amount Assets Liabilities -------- ----- ----------- -------- ------ ----------- (Dollars in millions) BY TYPE OF HEDGE Fair value........ $ 3,678 $ 27 $291 $ 418 $ -- $ 64 Cash flow......... 12,968 54 422 3,445 69 72 Foreign Operations 527 -- 10 -- -- -- Non qualifying.... 16,758 170 142 19,192 239 183 ------- ---- ---- ------- ---- ---- Total.......... $33,931 $251 $865 $23,055 $308 $319 ======= ==== ==== ======= ==== ====
The company recognizes net investment expense of $61 million and $4 million and net investment income of $8 million, from the periodic settlement of interest rate caps and interest rate, foreign currency and credit default swaps that qualify as accounting hedges under SFAS No. 133, as amended, for the years ended December 31, 2003, 2002 and 2001, respectively. During the years ended December 31, 2003 and 2002, the Company recognized $184 million and $30 million, respectively, in net investment losses related to qualifying fair value hedges. Accordingly, $158 million and $34 million of net unrealized gains on fair value hedged investments were recognized in net investment losses during the years ended December 31, 2003 and 2002, respectively. There were no discontinued fair value hedges during the years ended December 31, 2003 or 2002. There were no derivatives designated as fair value hedges during the year ended December 31, 2001. For the years ended December 31, 2003 and 2002, the net amounts accumulated in other comprehensive income relating to cash flow hedges were losses of $379 million and $24 million, respectively. For the years ended December 31, 2003 and 2002, the market value of cash flow hedges decreased by $418 million and $145 million, respectively. During the years ended December 31, 2003 and 2002, the Company recognized other F-35 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) comprehensive net losses of $349 million and $142 million, respectively, relating to the effective portion of cash flow hedges. During the year ended December 31, 2003, other comprehensive expense of $2 million was reclassified to net investment income. During the year ended December 31, 2002, other comprehensive losses of $57 million were reclassified to net investment losses. During the year ended December 31, 2003, insignificant amounts were recognized in net investment losses related to discontinued cash flow hedges. During the year ended December 31, 2002 and 2001 no cash flow hedges were discontinued. For the years ended December 31, 2003, 2002 and 2001, $8 million, $10 million and $19 million of other comprehensive income was reclassified to net investment income, respectively, related to the SFAS 133 transition adjustment. Approximately $2 million of net investment expense and $17 million of net losses reported in accumulated other comprehensive income at December 31, 2003 are expected to be reclassified during the year ending December 31, 2004 into net investment income and net investment loss, respectively, as the derivatives and underlying investments mature or expire according to their original terms. For the years ended December 31, 2003, 2002 and 2001, the Company recognized as net investment gains, the settlement payments on derivative instruments of $84 million, $32 million and $24 million, respectively, and net investment losses from changes in fair value of $206 million and $172 million and net investment gains of $100 million, respectively, related to derivatives not qualifying as accounting hedges. The Company uses forward exchange contracts that provide an economic hedge on portions of its net investments in foreign operations against adverse movements in foreign currency exchange rates. For the year ended December 31, 2003, the Company experienced net unrealized foreign currency losses of $10 million related to hedges of its net investments in foreign operations. These unrealized losses were recorded as components of accumulated other comprehensive income. F-36 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) 4. Insurance Deferred Policy Acquisition Costs Information regarding VOBA and DAC for the years ended December 31, 2003, 2002 and 2001 is as follows:
Deferred Value of Policy Business Acquisition Acquired Costs Total -------- ----------- ------- (Dollars in millions) Balance at December 31, 2000............ $1,674 $ 8,823 $10,497 Capitalizations......................... -- 2,018 2,018 ------ ------- ------- Total............................ 1,674 10,841 12,515 Amortization allocated to: Net investment gains (losses)........ (15) 36 21 Unrealized investment gains (losses). 16 112 128 Other expenses....................... 178 1,256 1,434 ------ ------- ------- Total amortization............... 179 1,404 1,583 Dispositions and other.................. 7 (468) (461) ------ ------- ------- Balance at December 31, 2001............ 1,502 8,969 10,471 Capitalizations......................... -- 2,227 2,227 ------ ------- ------- Total............................ 1,502 11,196 12,698 Amortization allocated to: Net investment gains (losses)........ 16 (5) 11 Unrealized investment gains (losses). 31 173 204 Other expenses....................... 121 1,380 1,501 ------ ------- ------- Total amortization............... 168 1,548 1,716 Dispositions and other.................. (463) (853) (1,316) ------ ------- ------- Balance at December 31, 2002............ 871 8,795 9,666 Capitalizations......................... -- 1,982 1,982 Acquisitions............................ -- 218 218 ------ ------- ------- Total............................ 871 10,995 11,866 Amortization allocated to: -- Net investment gains (losses)........ (5) (21) (26) Unrealized investment gains (losses). (9) 138 129 Other expenses....................... 49 1,332 1,381 ------ ------- ------- Total amortization............... 35 1,449 1,484 Dispositions and other.................. -- (150) (150) ------ ------- ------- Balance at December 31, 2003............ $ 836 $ 9,396 $10,232 ====== ======= =======
The estimated future amortization expense allocated to other expenses for VOBA is $71 million in 2004, $69 million in 2005, $63 million in 2006, $59 million in 2007 and $56 million in 2008. Amortization of VOBA and DAC is allocated to (i) investment gains and losses to provide consolidated statement of income information regarding the impact of such gains and losses on the amount of the amortization, (ii) unrealized investment gains and losses to provide information regarding the amount that would F-37 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) have been amortized if such gains and losses had been recognized, and (iii) other expenses to provide amounts related to the gross margins or profits originating from transactions other than investment gains and losses. Investment gains and losses related to certain products have a direct impact on the amortization of VOBA and DAC. Presenting investment gains and losses net of related amortization of VOBA and DAC provides information useful in evaluating the operating performance of the Company. This presentation may not be comparable to presentations made by other insurers. Future Policy Benefits and Policyholder Account Balances Future policy benefit liabilities for participating traditional life insurance policies are equal to the aggregate of (i) net level premium reserves for death and endowment policy benefits (calculated based upon the nonforfeiture interest rate, ranging from 3% to 9%, and mortality rates guaranteed in calculating the cash surrender values described in such contracts), (ii) the liability for terminal dividends, and (iii) premium deficiency reserves, which are established when the liabilities for future policy benefits plus the present value of expected future gross premiums are insufficient to provide for expected future policy benefits and expenses after DAC is written off. Future policy benefit liabilities for traditional annuities are equal to accumulated contractholder fund balances during the accumulation period and the present value of expected future payments after annuitization. Interest rates used in establishing such liabilities range from 3% to 9%. Future policy benefit liabilities for non-medical health insurance are calculated using the net level premium method and assumptions as to future morbidity, withdrawals and interest, which provide a margin for adverse deviation. Interest rates used in establishing such liabilities range from 3% to 7%. Future policy benefit liabilities for disabled lives are estimated using the present value of benefits method and experience assumptions as to claim terminations, expenses and interest. Interest rates used in establishing such liabilities range from 3% to 8%. Policyholder account balances for universal life and investment-type contracts are equal to the policy account values, which consist of an accumulation of gross premium payments plus credited interest, ranging from 1% to 13%, less expenses, mortality charges, and withdrawals. The liability for unpaid claims and claim expenses for property and casualty insurance represents the amount estimated for claims that have been reported but not settled and claims incurred but not reported. Liabilities for unpaid claims are estimated based upon the Company's historical experience and other actuarial assumptions that consider the effects of current developments, anticipated trends and risk management programs, reduced for anticipated salvage and subrogation. Revisions of these estimates are included in operations in the year such refinements are made. Separate Accounts Separate accounts include two categories of account types: non-guaranteed separate accounts totaling $47,198 million and $38,702 million at December 31, 2003 and 2002, respectively, for which the policyholder assumes the investment risk, and guaranteed separate accounts totaling $16,463 million and $15,210 million at December 31, 2003 and 2002, respectively, for which the Company contractually guarantees either a minimum return or account value to the policyholder. Fees charged to the separate accounts by the Company (including mortality charges, policy administration fees and surrender charges) are reflected in the Company's revenues as universal life and investment-type product policy fees and totaled $451 million, $461 million and $559 million for the years ended December 31, F-38 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) 2003, 2002 and 2001, respectively. Guaranteed separate accounts consisted primarily of Met Managed Guaranteed Interest Contracts and participating close-out contracts. The average interest rates credited on these contracts were 4.5% and 4.8% at December 31, 2003 and 2002, respectively. The assets that support these liabilities were comprised of $13,504 million and $12,979 million in fixed maturities at December 31, 2003 and 2002, respectively. 5. Reinsurance The Company's life insurance operations participate in reinsurance activities in order to limit losses, minimize exposure to large risks, and to provide additional capacity for future growth. The Company currently reinsures up to 90% of the mortality risk for all new individual life insurance policies that it writes through its various franchises. This practice was initiated by different franchises for different products starting at various points in time between 1992 and 2000. Risks in excess of $25 million on single life policies and $30 million on survivorship policies are 100% coinsured. In addition, in 1998, the Company reinsured substantially all of the mortality risk on its universal life policies issued since 1983. RGA retains a maximum of $6 million of coverage per individual life with respect to its assumed reinsurance business. The Company reinsures its business through a diversified group of reinsurers. Placement of reinsurance is done primarily on an automatic basis and also on a facultative basis for risks of specific characteristics. The Company is contingently liable with respect to ceded reinsurance should any reinsurer be unable to meet its obligations under these agreements. In addition to reinsuring mortality risk, the Company reinsures other risks and specific coverages. The Company routinely reinsures certain classes of risks in order to limit its exposure to particular travel, avocation and lifestyle hazards. The Company has exposure to catastrophes, which are an inherent risk of the property and casualty business and could contribute to significant fluctuations in the Company's results of operations. The Company uses excess of loss and quota share reinsurance arrangements to limit its maximum loss, provide greater diversification of risk and minimize exposure to larger risks. The Company has also protected itself through the purchase of combination risk coverage. This reinsurance coverage pools risks from several lines of business and includes individual and group life claims in excess of $2 million per policy, as well as excess property and casualty losses, among others. See Note 12 for information regarding certain excess of loss reinsurance agreements providing coverage for risks associated primarily with sales practices claims. The amounts in the consolidated statements of income are presented net of reinsurance ceded. The effects of reinsurance were as follows:
Years Ended December 31, ------------------------- 2003 2002 2001 ------- ------- ------- (Dollars in millions) Direct premiums............................................ $16,843 $17,859 $16,257 Reinsurance assumed........................................ 3,568 2,948 2,786 Reinsurance ceded.......................................... (2,260) (2,346) (2,020) ------- ------- ------- Net premiums............................................... $18,151 $18,461 $17,023 ======= ======= ======= Reinsurance recoveries netted against policyholder benefits $ 2,175 $ 2,478 $ 2,069 ======= ======= =======
Reinsurance recoverables, included in premiums and other receivables, were $3,692 million and $3,833 million at December 31, 2003 and 2002, respectively, including $1,341 million and $1,348 million, respectively, F-39 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) relating to reinsurance of long-term guaranteed interest contracts and structured settlement lump sum contracts accounted for as a financing transaction. Reinsurance and ceded commissions payables, included in other liabilities, were $102 million and $74 million at December 31, 2003 and 2002, respectively. Included in premiums and other receivables are reinsurance recoverables due from Exeter Reassurance Company, Limited, a related party, of $507 million and $502 million at December 31, 2003 and 2002, respectively. Included in future policy benefits, other policyholder funds, and policyholder account balances are reinsurance liabilities assumed from MIAC, Cova Corporation, MetLife Investor's Group, Inc. and MetLife International Holdings, Inc., related parties, of $790 million, $1,807 million, and $190 million and $772 million, $1,694 million, and $136 million, respectively, at December 31, 2003 and 2002. The following table provides an analysis of the activity in the liability for benefits relating to property and casualty group accident and non-medical health policies and contracts (See Note 17):
Years Ended December 31, ------------------------- 2003 2002 2001 ------- ------- ------- (Dollars in millions) Balance at January 1............. $ 4,821 $ 4,597 $ 4,226 Reinsurance recoverables...... (496) (457) (410) ------- ------- ------- Net balance at January 1......... 4,325 4,140 3,816 ------- ------- ------- Incurred related to: Current year.................. 3,816 4,219 4,182 Prior years................... 28 (81) (84) ------- ------- ------- 3,844 4,138 4,098 ------- ------- ------- Paid related to: Current year.................. (2,153) (2,559) (2,538) Prior years................... (1,290) (1,332) (1,236) ------- ------- ------- (3,443) (3,891) (3,774) ------- ------- ------- Dispositions..................... (1,450) (62) -- Net Balance at December 31....... 3,276 4,325 4,140 Add: Reinsurance recoverables. 284 496 457 ------- ------- ------- Balance at December 31........... $ 3,560 $ 4,821 $ 4,597 ======= ======= =======
6. Closed Block On April 7, 2000 ("the date of demutualization"), Metropolitan Life established a closed block for the benefit of holders of certain individual life insurance policies of Metropolitan Life. Assets have been allocated to the closed block in an amount that has been determined to produce cash flows which, together with anticipated revenues from the policies included in the closed block, are reasonably expected to be sufficient to support obligations and liabilities relating to these policies, including, but not limited to, provisions for the payment of claims and certain expenses and taxes, and to provide for the continuation of policyholder dividend scales in effect for 1999, if the experience underlying such dividend scales continues, and for appropriate adjustments in such scales if the experience changes. At least annually, the Company compares actual and projected experience against the experience assumed in the then-current dividend scales. Dividend scales are adjusted periodically to give effect to changes in experience. F-40 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) The closed block assets, the cash flows generated by the closed block assets and the anticipated revenues from the policies in the closed block will benefit only the holders of the policies in the closed block. To the extent that, over time, cash flows from the assets allocated to the closed block and claims and other experience related to the closed block are, in the aggregate, more or less favorable than what was assumed when the closed block was established, total dividends paid to closed block policyholders in the future may be greater than or less than the total dividends that would have been paid to these policyholders if the policyholder dividend scales in effect for 1999 had been continued. Any cash flows in excess of amounts assumed will be available for distribution over time to closed block policyholders and will not be available to stockholders. If the closed block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from assets outside of the closed block. The closed block will continue in effect as long as any policy in the closed block remains in-force. The expected life of the closed block is over 100 years. The Company uses the same accounting principles to account for the participating policies included in the closed block as it used prior to the date of demutualization. However, the Company establishes a policyholder dividend obligation for earnings that will be paid to policyholders as additional dividends as described below. The excess of closed block liabilities over closed block assets at the effective date of the demutualization (adjusted to eliminate the impact of related amounts in accumulated other comprehensive income) represents the estimated maximum future earnings from the closed block expected to result from operations attributed to the closed block after income taxes. Earnings of the closed block are recognized in income over the period the policies and contracts in the closed block remain in-force. Management believes that over time the actual cumulative earnings of the closed block will approximately equal the expected cumulative earnings due to the effect of dividend changes. If, over the period the closed block remains in existence, the actual cumulative earnings of the closed block is greater than the expected cumulative earnings of the closed block, the Company will pay the excess of the actual cumulative earnings of the closed block over the expected cumulative earnings to closed block policyholders as additional policyholder dividends unless offset by future unfavorable experience of the closed block and, accordingly, will recognize only the expected cumulative earnings in income with the excess recorded as a policyholder dividend obligation. If over such period, the actual cumulative earnings of the closed block is less than the expected cumulative earnings of the closed block, the Company will recognize only the actual earnings in income. However, the Company may change policyholder dividend scales in the future, which would be intended to increase future actual earnings until the actual cumulative earnings equal the expected cumulative earnings. F-41 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Closed block liabilities and assets designated to the closed block are as follows:
December 31, -------------------- 2003 2002 ------- ------- (Dollars in millions) CLOSED BLOCK LIABILITIES Future policy benefits.................................................... $41,928 $41,207 Other policyholder funds.................................................. 260 279 Policyholder dividends payable............................................ 682 719 Policyholder dividend obligation.......................................... 2,130 1,882 Payables under securities loaned transactions............................. 6,418 4,851 Other liabilities......................................................... 180 433 ------- ------- Total closed block liabilities..................................... 51,598 49,371 ------- ------- ASSETS DESIGNATED TO THE CLOSED BLOCK Investments: Fixed maturities available-for-sale, at fair value (amortized cost: $30,381 and $28,339, respectively).................. 32,348 29,981 Equity securities, at fair value (cost: $217 and $236, respectively)... 250 218 Mortgage loans on real estate.......................................... 7,431 7,032 Policy loans........................................................... 4,036 3,988 Short-term investments................................................. 123 24 Other invested assets.................................................. 108 604 ------- ------- Total investments.................................................. 44,296 41,847 Cash and cash equivalents................................................. 531 435 Accrued investment income................................................. 527 540 Deferred income taxes..................................................... 1,043 1,151 Premiums and other receivables............................................ 164 130 ------- ------- Total assets designated to the closed block........................ 46,561 44,103 ------- ------- Excess of closed block liabilities over assets designated to to the closed block................................................................... 5,037 5,268 ------- ------- Amounts included in accumulated other comprehensive loss: Net unrealized investment gains, net of deferred income tax of $730 and $577, respectively............................ 1,270 1,047 Unrealized derivative gains (losses), net of deferred income tax (benefit) expense of $(28) and $7, respectively.................. (48) 13 Allocated to policyholder dividend obligation, net of deferred income tax benefit of ($778) and ($668), respectively....... (1,352) (1,214) ------- ------- (130) (154) ------- ------- Maximum future earnings to be recognized from closed block assets and liabilities............................................ $ 4,907 $ 5,114 ======= =======
F-42 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Information regarding the policyholder dividend obligation is as follows:
Years Ended December 31, --------------------- 2003 2002 2001 ------ ------ ----- (Dollars in millions) Balance at beginning of year................................... $1,882 $ 708 $ 385 Impact on net income before amounts allocated from policyholder dividend obligation.......................................... 144 157 159 Net investment gains (losses).................................. (144) (157) (159) Change in unrealized investment and derivative gains........... 248 1,174 323 ------ ------ ----- Balance at end of year......................................... $2,130 $1,882 $ 708 ====== ====== =====
Closed block revenues and expenses were as follows:
Years Ended December 31, ----------------------- 2003 2002 2001 ------ ------ ------ (Dollars in millions) REVENUES Premiums................................................................ $3,365 $3,551 $3,658 Net investment income and other revenues................................ 2,554 2,568 2,547 Net investment gains (losses) (net of amounts allocated from the policyholder dividend obligation of ($144), ($157) and ($159), respectively)......................................................... 16 168 (12) ------ ------ ------ Total revenues....................................................... 5,935 6,287 6,193 ------ ------ ------ EXPENSES Policyholder benefits and claims........................................ 3,660 3,770 3,862 Policyholder dividends.................................................. 1,509 1,573 1,544 Change in policyholder dividend obligation (excludes amounts directly related to net investment gains (losses) of ($144), ($157) and ($159), respectively)......................................................... 144 157 159 Other expenses.......................................................... 297 310 352 ------ ------ ------ Total expenses....................................................... 5,610 5,810 5,917 ------ ------ ------ Revenues net of expenses before income taxes............................ 325 477 276 Income taxes............................................................ 118 173 97 ------ ------ ------ Revenues net of expenses and income taxes............................... $ 207 $ 304 $ 179 ====== ====== ======
The change in maximum future earnings of the closed block is as follows:
Years Ended December 31, ---------------------- 2003 2002 2001 ------ ------ ------ (Dollars in millions) Balance at end of year.......... $4,907 $5,114 $5,333 Less: Reallocation of assets....... -- 85 -- Balance at beginning of year. 5,114 5,333 5,512 ------ ------ ------ Change during year.............. $ (207) $ (304) $ (179) ====== ====== ======
F-43 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) During the year ended December 31, 2002, the allocation of assets to the closed block was revised to appropriately classify assets in accordance with the plan of demutualization. The reallocation of assets had no impact on consolidated assets or liabilities. Metropolitan Life charges the closed block with federal income taxes, state and local premium taxes, and other additive state or local taxes, as well as investment management expenses relating to the closed block as provided in the plan of demutualization. Metropolitan Life also charges the closed block for expenses of maintaining the policies included in the closed block. Many of the derivative instrument strategies used by the Company are also used for the closed block. The table below provides a summary of the notional amount and fair value of derivatives by hedge accounting classification at:
December 31, 2003 December 31, 2002 --------------------------- --------------------------- Fair Value Fair Value Notional ------------------ Notional ------------------ Amount Assets Liabilities Amount Assets Liabilities -------- ------ ----------- -------- ------ ----------- (Dollars in millions) By Type of Hedge Fair value...... $ 6 $-- $ 1 $ -- $-- $-- Cash flow....... 473 -- 80 128 2 11 Non qualifying.. 90 -- 12 258 32 2 ---- --- --- ---- --- --- Total........ $569 $-- $93 $386 $34 $13 ==== === === ==== === ===
During the years ended December 31, 2003, 2002 and 2001, the closed block recognized net investment expenses of $2 million and net investment income of $1 million and $1 million, respectively, from the periodic settlement of interest rate caps and interest rate, foreign currency and credit default swaps that qualify as accounting hedges under SFAS 133, as amended. During the year ended December 31, 2003, the closed block recognized $1 million in net investment losses related to qualifying fair value hedges. Accordingly, $1 million of unrealized gains on fair value hedged investments was recognized in net investment losses during the year ended December 31, 2003. There were no fair value hedges during the years ended December 31, 2002 and 2001. There were no discontinued fair value hedges during the years ended December 31, 2003, 2002 and 2001. For the years ended December 31, 2003 and 2002, the net amounts accumulated in other comprehensive income relating to cash flow hedges were losses of $76 million and gains of $20 million, respectively. For the years ended December 31, 2003 and 2002, the market value of cash flow hedges decreased by $106 million and increased $4 million, respectively. During the years ended December 31, 2003 and 2002, the closed block recognized other comprehensive net losses of $93 million and other comprehensive net gains of $4 million, respectively, relating to the effective portion of cash flow hedges. During the years ended December 31, 2003, 2002 and 2001, no cash flow hedges were discontinued. For the years ended December 31, 2003 and 2002, $3 million and $4 million of other comprehensive income was reclassified to net investment income, respectively, related to the SFAS 133 transition adjustment. Amounts reclassified for transition adjustment for the year ended December 31, 2001 were insignificant. Approximately $5 million of net losses reported in accumulated other comprehensive income at December 31, 2003 are expected to be reclassified during the year ending December 31, 2004 into net investment losses as the derivatives and underlying investments mature or expire according to their original terms. F-44 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) For the years ended December 31, 2003, 2002 and 2001, scheduled periodic settlement payments on derivative instruments recognized as net investment gains and losses were immaterial. Net investment losses from changes in fair value of $18 million and $11 million and gains of $5 million related to derivatives not qualifying as accounting hedges were recognized for the years ended December 31, 2003, 2002 and 2001, respectively. 7. Debt Debt consisted of the following:
December 31, --------------------- 2003 2002 ------ ------ (Dollars in millions) Surplus notes, interest rates ranging from 7.00% to 7.88%, maturity dates ranging from 2005 to 2025.............................................................. $ 940 $1,632 Capital notes payable to the Holding Company, interest rate of 7.13%, maturity dates ranging from 2032 to 2033................................................ 500 500 Senior notes, interest rates ranging from 6.75% to 7.25%, maturity dates ranging from 2006 to 2011.............................................................. 299 298 Fixed rate notes, interest rates ranging from 1.69% to 12.00%, maturity dates ranging from 2005 to 2009...................................................... 103 33 Capital lease obligations........................................................ 74 21 Other notes with varying interest rates.......................................... 139 140 ------ ------ Total long-term debt............................................................. 2,055 2,624 Total short-term debt............................................................ 3,536 912 ------ ------ Total......................................................................... $5,591 $3,536 ====== ======
The Company maintains committed and unsecured credit facilities aggregating $2,478 million ($1,000 million expiring in 2004, $1,303 million expiring in 2005 and $175 million expiring in 2006). If these facilities were drawn upon, they would bear interest at rates stated in the agreements. The facilities are primarily used for general corporate purposes and as back-up lines of credit for the borrowers' commercial paper program. At December 31, 2003, the Company had drawn approximately $49 million under the facilities expiring in 2005 at interest rates ranging from 4.08% to 5.48% and approximately another $50 million under the facility expiring in 2006 at an interest rate of 1.69%. In April 2003, the Company replaced an expiring $1 billion five-year credit facility with a $1 billion 364-day credit facility and the Holding Company was added as a borrower. In May 2003, the Company replaced an expiring $140 million three-year credit facility, with a $175 million three-year credit facility which expires in 2006. At December 31, 2003, the Company had approximately $616 million in letters of credit from various banks. Payments of interest and principal on the surplus notes, subordinated to all other indebtedness, may be made only with the prior approval of the insurance department of the state of domicile. On November 1, 2003, the Company redeemed the $300 million of 7.45% surplus notes outstanding scheduled to mature on November 1, 2023 at a redemption price of $311 million. The aggregate maturities of long-term debt for the Company are $131 million in 2004, $309 million in 2005, $160 million in 2006, $14 million in 2007, $24 million in 2008 and $1,417 million thereafter. F-45 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Short-term debt of the Company consisted of commercial paper with a weighted average interest rate of 1.1% and a weighted average maturity of 33 days at December 31, 2003. Short-term debt of the Company consisted of commercial paper with a weighted average interest rate of 1.4% and a weighted average maturity of 63 days at December 31, 2002. The Company also has other collateralized borrowings with a weighted average coupon rate of 5.07% and a weighted average maturity of 30 days at December 31, 2003. Such securities had a weighted average coupon rate of 5.83% and a weighted average maturity of 34 days at December 31, 2002. Interest expense related to the Company's indebtedness included in other expenses was $265 million, $208 million and $313 million for the years ended December 31, 2003, 2002 and 2001, respectively. 8. Shares Subject to Mandatory Redemption and Company-Obligated Mandatorily Redeemable Securities of Subsidiary Trusts GenAmerica Capital I. In June 1997, GenAmerica Corporation ("GenAmerica") issued $125 million of 8.525% capital securities through a wholly-owned subsidiary trust, GenAmerica Capital I. GenAmerica has fully and unconditionally guaranteed, on a subordinated basis, the obligation of the trust under the capital securities and is obligated to mandatorily redeem the securities on June 30, 2027. GenAmerica may prepay the securities any time after June 30, 2007. Capital securities outstanding were $119 million, net of unamortized discounts of $6 million, at both December 31, 2003 and 2002. Interest expense on these instruments is included in other expenses and was $11 million for each of the years ended December 31, 2003, 2002 and 2001. RGA Capital Trust I. In December 2001, a majority-owned subsidiary of the Company, RGA, through its wholly-owned trust, RGA Capital Trust I (the "Trust"), issued 4,500,000 Preferred Income Equity Redeemable Securities ("PIERS") Units. Each PIERS unit consists of (i) a preferred security issued by the trust, having a stated liquidation amount of $50 per unit, representing an undivided beneficial ownership interest in the assets of the Trust, which consist solely of junior subordinated debentures issued by RGA which have a principal amount at maturity of $50 and a stated maturity of March 18, 2051, and (ii) a warrant to purchase, at any time prior to December 15, 2050, 1.2508 shares of RGA stock at an exercise price of $50. The fair market value of the warrant on the issuance date was $14.87 and is detachable from the preferred security. RGA fully and unconditionally guarantees, on a subordinated basis, the obligations of the Trust under the preferred securities. The preferred securities and subordinated debentures were issued at a discount (original issue discount) to the face or liquidation value of $14.87 per security. The securities will accrete to their $50 face/liquidation value over the life of the security on a level yield basis. The weighted average effective interest rate on the preferred securities and the subordinated debentures is 8.25% per annum. Capital securities outstanding were $158 million, net of unamortized discount of $67 million, at both December 31, 2003 and 2002. 9. September 11, 2001 Tragedies On September 11, 2001, terrorist attacks occurred in New York, Washington, D.C. and Pennsylvania (the "tragedies") triggering a significant loss of life and property, which had an adverse impact on certain of the Company's businesses. The Company's original estimate of the total insurance losses related to the tragedies, which was recorded in the third quarter of 2001, was $208 million, net of income taxes of $117 million. As of December 31, 2003 and 2002, the Company's remaining liability for unpaid and future claims associated with the tragedies was $9 million and $47 million, respectively, principally related to disability coverages. This estimate has been and will continue to be subject to revision in subsequent periods, as claims are received from insureds and processed. Any revision to the estimate of losses in subsequent periods will affect net income in such periods. F-46 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) 10. Business Realignment Initiatives During the fourth quarter of 2001, the Company implemented several business realignment initiatives, which resulted from a strategic review of operations and an ongoing commitment to reduce expenses. The impact of these actions on a segment basis were charges of $399 million in Institutional, $97 million in Individual and $3 million in Auto & Home. The liability at December 31, 2003 and 2002 was $27 million and $40 million, in the Institutional segment and $9 million and $14 million, in the Individual segment, respectively. The remaining liability is due to certain contractual obligations. The remaining liability in the Individual segment as of December 31, 2002 does not include $4 million, related to MetLife Investors Group, Inc., a subsidiary sold to the Holding Company in December 2002. There was no liability remaining for Metlife Investors Group, Inc., as of December 31, 2003. 11. Income Taxes The provision for income taxes for continuing operations was as follows:
Years Ended December 31, -------------------- 2003 2002 2001 ---- ----- ---- (Dollars in millions) Current: Federal................ $357 $ 826 $(83) State and local........ 19 (18) (4) Foreign................ 2 (5) 15 ---- ----- ---- 378 803 (72) ---- ----- ---- Deferred: Federal................ 283 (322) 813 State and local........ 27 17 32 Foreign................ -- 12 1 ---- ----- ---- 310 (293) 846 ---- ----- ---- Provision for income taxes $688 $ 510 $774 ==== ===== ====
Reconciliations of the income tax provision at the U.S. statutory rate to the provision for income taxes as reported for continuing operations were as follows:
Years Ended December 31, -------------------- 2003 2002 2001 ----- ---- ---- (Dollars in millions) Tax provision at U.S. statutory rate.............. $ 845 $578 $754 Tax effect of: Tax exempt investment income................... (101) (86) (82) State and local income taxes................... 42 18 29 Foreign operations net of foreign income taxes. (17) 4 4 Prior year taxes............................... (25) (8) 36 Sales of businesses............................ -- -- 5 Other, net..................................... (56) 4 28 ----- ---- ---- Provision for income taxes........................ $ 688 $510 $774 ===== ==== ====
F-47 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Deferred income taxes represent the tax effect of the differences between the book and tax bases of assets and liabilities. Net deferred income tax assets and liabilities consisted of the following:
December 31, -------------------- 2003 2002 ------- ------- (Dollars in millions) Deferred income tax assets: Policyholder liabilities and receivables. $ 2,597 $ 3,020 Net operating losses..................... 245 187 Litigation related....................... 72 95 Other.................................... 179 286 ------- ------- 3,093 3,588 Less: Valuation allowance................ 16 14 ------- ------- 3,077 3,574 ------- ------- Deferred income tax liabilities: Investments.............................. 1,352 1,597 Deferred policy acquisition costs........ 2,815 2,699 Employee benefits........................ 151 65 Net unrealized investment gains.......... 1,397 1,124 Other.................................... 60 36 ------- ------- 5,775 5,521 ------- ------- Net deferred income tax liability........... $(2,698) $(1,947) ======= =======
Domestic net operating loss carryforwards amount to $650 million at December 31, 2003 and will expire beginning in 2013. Foreign net operating loss carryforwards amount to $55 million at December 31, 2003 and were generated in various foreign countries with expiration periods of five years to infinity. The Company has recorded a valuation allowance related to tax benefits of certain foreign net operating loss carryforwards. The valuation allowance reflects management's assessment, based on available information, that it is more likely than not that the deferred income tax asset for certain foreign net operating loss carryforwards will not be realized. The tax benefit will be recognized when management believes that it is more likely than not that these deferred income tax assets are realizable. The 2003 tax provision also includes an adjustment revising the estimate of income taxes for 2002. The Internal Revenue Service has audited the Company for the years through and including 1996. The Company is being audited for the years 1997, 1998 and 1999. The Company believes that any adjustments that might be required for open years will not have a material effect on its consolidated financial statements. 12. Commitments, Contingencies and Guarantees Litigation Sales Practices Claims Over the past several years, Metropolitan Life, New England Mutual Life Insurance Company ("New England Mutual") and General American Life Insurance Company ("General American") have faced numerous claims, including class action lawsuits, alleging improper marketing and sales of individual life insurance policies or annuities. These lawsuits are generally referred to as "sales practices claims." F-48 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) In December 1999, a federal court approved a settlement resolving sales practices claims on behalf of a class of owners of permanent life insurance policies and annuity contracts or certificates issued pursuant to individual sales in the United States by Metropolitan Life, MIAC or Metropolitan Tower Life Insurance Company between January 1, 1982 and December 31, 1997. The class includes owners of approximately six million in-force or terminated insurance policies and approximately one million in-force or terminated annuity contracts or certificates. Similar sales practices class actions against New England Mutual, with which Metropolitan Life merged in 1996, and General American, which was acquired in 2000, have been settled. In October 2000, a federal court approved a settlement resolving sales practices claims on behalf of a class of owners of permanent life insurance policies issued by New England Mutual between January 1, 1983 through August 31, 1996. The class includes owners of approximately 600,000 in-force or terminated policies. A federal court has approved a settlement resolving sales practices claims on behalf of a class of owners of permanent life insurance policies issued by General American between January 1, 1982 through December 31, 1996. An appellate court has affirmed the order approving the settlement. The class includes owners of approximately 250,000 in-force or terminated policies. Certain class members have opted out of the class action settlements noted above and have brought or continued non-class action sales practices lawsuits. In addition, other sales practices lawsuits have been brought. As of December 31, 2003, there are approximately 366 sales practices lawsuits pending against Metropolitan Life, approximately 40 sales practices lawsuits pending against New England Mutual and approximately 25 sales practices lawsuits pending against General American. Metropolitan Life, New England Mutual and General American continue to defend themselves vigorously against these lawsuits. Some individual sales practices claims have been resolved through settlement, won by dispositive motions, or, in a few instances, have gone to trial. Most of the current cases seek substantial damages, including in some cases punitive and treble damages and attorneys' fees. Additional litigation relating to the Company's marketing and sales of individual life insurance may be commenced in the future. The Metropolitan Life class action settlement did not resolve two putative class actions involving sales practices claims filed against Metropolitan Life in Canada, and these actions remain pending. The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for sales practices claims against Metropolitan Life, New England Mutual and General American. Regulatory authorities in a small number of states have had investigations or inquiries relating to Metropolitan Life's, New England Mutual's or General American's sales of individual life insurance policies or annuities. Over the past several years, these and a number of investigations by other regulatory authorities were resolved for monetary payments and certain other relief. The Company may continue to resolve investigations in a similar manner. Asbestos-Related Claims Metropolitan Life is also a defendant in thousands of lawsuits seeking compensatory and punitive damages for personal injuries allegedly caused by exposure to asbestos or asbestos-containing products. Metropolitan Life has never engaged in the business of manufacturing, producing, distributing or selling asbestos or asbestos-containing products nor has Metropolitan Life issued liability or workers' compensation insurance to companies in the business of manufacturing, producing, distributing or selling asbestos or asbestos-containing products. Rather, these lawsuits have principally been based upon allegations relating to certain research, publication and F-49 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) other activities of one or more of Metropolitan Life's employees during the period from the 1920's through approximately the 1950's and have alleged that Metropolitan Life learned or should have learned of certain health risks posed by asbestos and, among other things, improperly publicized or failed to disclose those health risks. Metropolitan Life believes that it should not have legal liability in such cases. Legal theories asserted against Metropolitan Life have included negligence, intentional tort claims and conspiracy claims concerning the health risks associated with asbestos. Although Metropolitan Life believes it has meritorious defenses to these claims, and has not suffered any adverse monetary judgments in respect of these claims, due to the risks and expenses of litigation, almost all past cases have been resolved by settlements. Metropolitan Life's defenses (beyond denial of certain factual allegations) to plaintiffs' claims include that: (i) Metropolitan Life owed no duty to the plaintiffs--it had no special relationship with the plaintiffs and did not manufacture, produce, distribute or sell the asbestos products that allegedly injured plaintiffs; (ii) plaintiffs cannot demonstrate justifiable detrimental reliance; and (iii) plaintiffs cannot demonstrate proximate causation. In defending asbestos cases, Metropolitan Life selects various strategies depending upon the jurisdictions in which such cases are brought and other factors which, in Metropolitan Life's judgment, best protect Metropolitan Life's interests. Strategies include seeking to settle or compromise claims, motions challenging the legal or factual basis for such claims or defending on the merits at trial. In 2002 and 2003, trial courts in California, Utah and Georgia granted motions dismissing claims against Metropolitan Life on some or all of the above grounds. Other courts have denied motions brought by Metropolitan Life to dismiss cases without the necessity of trial. There can be no assurance that Metropolitan Life will receive favorable decisions on motions in the future. Metropolitan Life intends to continue to exercise its best judgment regarding settlement or defense of such cases, including when trials of these cases are appropriate. The following table sets forth the total number of asbestos personal injury claims pending against Metropolitan Life as of the dates indicated, the number of new claims during the years ended on those dates and the total settlement payments made to resolve asbestos personal injury claims during those years:
At or for the Years Ended December 31, ------------------------- 2003 2002 2001 -------- -------- ------- (Dollars in millions) Asbestos personal injury claims at year end (approximate) 111,700 106,500 89,000 Number of new claims during the year (approximate)....... 60,300 66,000 59,500 Settlement payments during the year (1).................. $ 84.2 $ 95.1 $ 90.7
- -------- (1)Settlement payments represent payments made by Metropolitan Life during the year in connection with settlements made in that year and in prior years. Amounts do not include Metropolitan Life's attorneys' fees and expenses and do not reflect amounts received from insurance carriers. The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for asbestos-related claims. The ability of Metropolitan Life to estimate its ultimate asbestos exposure is subject to considerable uncertainty due to numerous factors. The availability of data is limited and it is difficult to predict with any certainty numerous variables that can affect liability estimates, including the number of future claims, the cost to resolve claims, the disease mix and severity of disease, the jurisdiction of claims filed, tort reform efforts and the impact of any possible future adverse verdicts and their amounts. Recent bankruptcies of other companies involved in asbestos litigation, as well as advertising by plaintiffs' asbestos lawyers, may result in an increase in the number of claims and the cost of resolving claims, as well as the number of trials and possible adverse verdicts Metropolitan Life may experience. Plaintiffs are seeking F-50 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) additional funds from defendants, including Metropolitan Life, in light of such recent bankruptcies by certain other defendants. In addition, publicity regarding legislative reform efforts may result in an increase in the number of claims. Metropolitan Life will continue to study its claims experience, review external literature regarding asbestos claims experience in the United States and consider numerous variables that can affect its asbestos liability exposure, including bankruptcies of other companies involved in asbestos litigation and legislative and judicial developments, to identify trends and to assess their impact on the recorded asbestos liability. The number of asbestos cases that may be brought or the aggregate amount of any liability that Metropolitan Life may ultimately incur is uncertain. Accordingly, it is reasonably possible that the Company's total exposure to asbestos claims may be greater than the liability recorded by the Company in its consolidated financial statements and that future charges to income may be necessary. While the potential future charges could be material in particular quarterly or annual periods in which they are recorded, based on information currently known by management, it does not believe any such charges are likely to have a material adverse effect on the Company's consolidated financial position. During the fourth quarter of 2002, Metropolitan Life analyzed its claims experience and reviewed external publications and numerous variables to identify trends and assessed their impact on its recorded asbestos liability. Certain publications suggested a trend towards more asbestos-related claims and a greater awareness of asbestos litigation generally by potential plaintiffs and plaintiffs' lawyers. Plaintiffs' lawyers continue to advertise heavily with respect to asbestos litigation. Bankruptcies and reorganizations of other defendants in asbestos litigation may increase the pressures on remaining defendants, including Metropolitan Life. Through the first nine months of 2002, the number of new claims received by Metropolitan Life was lower than those received during the comparable 2001 period. However, the number of new claims received by Metropolitan Life during the fourth quarter of 2002 was significantly higher than those received in the prior year quarter, resulting in more new claims being received by Metropolitan Life in 2002 than in 2001. Factors considered also included expected trends in filing cases, the dates of initial exposure of plaintiffs to asbestos, the likely percentage of total asbestos claims which included Metropolitan Life as a defendant and experience in claims settlement negotiations. Metropolitan Life also considered views derived from actuarial calculations it made in the fourth quarter of 2002. These calculations were made using, among other things, then current information regarding Metropolitan Life's claims and settlement experience, information available in public reports, as well as a study regarding the possible future incidence of mesothelioma. Based on all of the above information, including greater than expected claims experience in 2000, 2001 and 2002, Metropolitan Life expected to receive more claims in the future than it had previously expected. Previously, Metropolitan Life's liability reflected that the increase in asbestos-related claims was a result of an acceleration in the reporting of such claims; the liability now reflects that such an increase is also the result of an increase in the total number of asbestos-related claims expected to be received by Metropolitan Life. Accordingly, Metropolitan Life increased its recorded liability for asbestos-related claims by $402 million from approximately $820 million to $1,225 million at December 31, 2002. This total recorded asbestos-related liability (after the self-insured retention) is within the coverage of the excess insurance policies discussed below. The aforementioned analysis was updated through December 31, 2003. During 1998, Metropolitan Life paid $878 million in premiums for excess insurance policies for asbestos-related claims. The excess insurance policies for asbestos-related claims provide for recovery of losses up to $1,500 million, which is in excess of a $400 million self-insured retention. The asbestos-related policies are also subject to annual and per-claim sublimits. Amounts are recoverable under the policies annually with respect to claims paid during the prior calendar year. Although amounts paid by Metropolitan Life in any given year that may be recoverable in the next calendar year under the policies will be reflected as a reduction in the Company's F-51 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) operating cash flows for the year in which they are paid, management believes that the payments will not have a material adverse effect on the Company's liquidity. Each asbestos-related policy contains an experience fund and a reference fund that provides for payments to Metropolitan Life at the commutation date if the reference fund is greater than zero at commutation or pro rata reductions from time to time in the loss reimbursements to Metropolitan Life if the cumulative return on the reference fund is less than the return specified in the experience fund. The return in the reference fund is tied to performance of the Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond Index. A claim was made under the excess insurance policies in 2003 for the amounts paid with respect to asbestos litigation in excess of the retention. Based on performance of the reference fund, at December 31, 2002, the loss reimbursements to Metropolitan Life in 2003 and the recoverable with respect to later periods was $42 million less than the amount of the recorded losses. Such foregone loss reimbursements may be recovered upon commutation depending upon future performance of the reference fund. The foregone loss reimbursements were estimated to be $9 million with respect to 2002 claims and estimated to be $42 million in the aggregate. The $402 million increase in the recorded liability for asbestos claims less the foregone loss reimbursement adjustment of $42 million ($27 million, net of income tax) resulted in an increase in the recoverable of $360 million. At December 31, 2002, a portion ($136 million) of the $360 million recoverable was recognized in income while the remainder ($224 million) was recorded as a deferred gain which is expected to be recognized in income in the future over the estimated settlement period of the excess insurance policies. The $402 million increase in the recorded liability, less the portion of the recoverable recognized in income, resulted in a net expense of $266 million ($169 million, net of income tax). The $360 million recoverable may change depending on the future performance of the Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond Index. As a result of the excess insurance policies, $1,237 million is recorded as a recoverable at December 31, 2002 ($224 million of which is recorded as a deferred gain as mentioned above); the amount includes recoveries for amounts paid in 2002. If at some point in the future, the Company believes the liability for probable and estimable losses for asbestos-related claims should be increased, an expense would be recorded and the insurance recoverable would be adjusted subject to the terms, conditions and limits of the excess insurance policies. Portions of the change in the insurance recoverable would be recorded as a deferred gain and amortized into income over the estimated remaining settlement period of the insurance policies. In 2003, Metropolitan Life also has been named as a defendant in a small number of silicosis, welding and mixed dust cases. The cases are pending in Mississippi, Texas, Ohio, Pennsylvania, West Virginia, Louisiana, Kentucky, Georgia, Alabama, Illinois and Arkansas. The Company intends to defend itself vigorously against these cases. Demutualization Actions Several lawsuits were brought in 2000 challenging the fairness of Metropolitan Life's plan of reorganization, as amended (the "plan") and the adequacy and accuracy of Metropolitan Life's disclosure to policyholders regarding the plan. These actions name as defendants some or all of Metropolitan Life, the Holding Company, the individual directors, the New York Superintendent of Insurance (the "Superintendent") and the underwriters for MetLife, Inc.'s initial public offering, Goldman Sachs & Company and Credit Suisse First Boston. Five purported class actions pending in the New York state court in New York County were consolidated within the commercial part. In addition, there remained a separate purported class action in New York state court in New York County. On February 21, 2003, the defendants' motions to dismiss both the consolidated action and separate action were granted; leave to replead as a proceeding under Article 78 of New York's Civil Practice Law and Rules has been granted in the separate action. Plaintiffs in the consolidated action and separate action F-52 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) have filed notices of appeal. Another purported class action in New York state court in Kings County has been voluntarily held in abeyance by plaintiffs. The plaintiffs in the state court class actions seek injunctive, declaratory and compensatory relief, as well as an accounting and, in some instances, punitive damages. Some of the plaintiffs in the above described actions also have brought a proceeding under Article 78 of New York's Civil Practice Law and Rules challenging the Opinion and Decision of the Superintendent who approved the plan. In this proceeding, petitioners seek to vacate the Superintendent's Opinion and Decision and enjoin him from granting final approval of the plan. This case also is being held in abeyance by plaintiffs. Three purported class actions were filed in the United States District Court for the Eastern District of New York claiming violation of the Securities Act of 1933. The plaintiffs in these actions, which have been consolidated, claim that the Policyholder Information Booklets relating to the plan failed to disclose certain material facts and seek rescission and compensatory damages. Metropolitan Life's motion to dismiss these three cases was denied in 2001. On February 4, 2003, plaintiffs filed a consolidated amended complaint adding a fraud claim under the Securities Exchange Act of 1934. Metropolitan Life has served a motion to dismiss the consolidated amended complaint and a motion for summary judgment in this action. Metropolitan Life, the Holding Company and the individual defendants believe they have meritorious defenses to the plaintiffs' claims and are contesting vigorously all of the plaintiffs' claims in these actions. In 2001, a lawsuit was filed in the Superior Court of Justice, Ontario, Canada on behalf of a proposed class of certain former Canadian policyholders against the Holding Company, Metropolitan Life, and Metropolitan Life Insurance Company of Canada. Plaintiffs' allegations concern the way that their policies were treated in connection with the demutualization of Metropolitan Life; they seek damages, declarations, and other non-pecuniary relief. The defendants believe they have meritorious defenses to the plaintiffs' claims and will contest vigorously all of plaintiffs' claims in this matter. In July 2002, a lawsuit was filed in the United States District Court for the Eastern District of Texas on behalf of a proposed class comprised of the settlement class in the Metropolitan Life sales practices class action settlement approved in December 1999 by the United States District Court for the Western District of Pennsylvania. After the defendants' motion to transfer the lawsuit to the Western District of Pennsylvania was granted, plaintiffs filed an amended complaint alleging that the treatment of the cost of the sales practices settlement in connection with the demutualization of Metropolitan Life breached the terms of the settlement. Plaintiffs sought compensatory and punitive damages, as well as attorneys' fees and costs. In October 2003, the court granted defendants' motion to dismiss the action. Plaintiffs filed a notice of appeal to the United States Court of Appeals for the Third Circuit. In January 2004, the appeal was dismissed. Race-Conscious Underwriting Claims Insurance departments in a number of states initiated inquiries in 2000 about possible race-conscious underwriting of life insurance. These inquiries generally have been directed to all life insurers licensed in their respective states, including Metropolitan Life and certain of its affiliates. The New York Insurance Department has concluded its examination of Metropolitan Life concerning possible past race-conscious underwriting practices. Four purported class action lawsuits filed against Metropolitan Life in 2000 and 2001 alleging racial discrimination in the marketing, sale, and administration of life insurance policies have been consolidated in the United States District Court for the Southern District of New York. On April 28, 2003, the United States District Court approved a class-action settlement of the consolidated actions. Several persons filed notices of appeal from the order approving the settlement, but subsequently the appeals were dismissed. Metropolitan Life also has entered into settlement agreements to resolve the regulatory examination. Metropolitan Life recorded a charge in the fourth quarter of 2001 in connection with the anticipated resolution of these matters. The Company believes the remaining portion of the previously recorded charge is adequate to cover the costs associated with the resolution of these matters. F-53 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Sixteen lawsuits involving approximately 130 plaintiffs have been filed in federal and state court in Alabama, Mississippi and Tennessee alleging federal and/or state law claims of racial discrimination in connection with the sale, formation, administration or servicing of life insurance policies. Metropolitan Life is contesting vigorously plaintiffs' claims in these actions. Other In 2001, a putative class action was filed against Metropolitan Life in the United States District Court for the Southern District of New York alleging gender discrimination and retaliation in the MetLife Financial Services unit of the Individual segment. The plaintiffs were seeking unspecified compensatory damages, punitive damages, a declaration that the alleged practices were discriminatory and illegal, injunctive relief requiring Metropolitan Life to discontinue the alleged discriminatory practices, an order restoring class members to their rightful positions (or appropriate compensation in lieu thereof), and other relief. Plaintiffs filed a motion for class certification. Opposition papers were filed by Metropolitan Life. In August 2003, the court granted preliminary approval to a settlement of the lawsuit. At the fairness hearing held on November 6, 2003, the court approved the settlement of the lawsuit. Implementation of the settlement has commenced in 2004. A putative class action lawsuit is pending in the United States District Court for the District of Columbia, in which plaintiffs allege that they were denied certain ad hoc pension increases awarded to retirees under the Metropolitan Life retirement plan. The ad hoc pension increases were awarded only to retirees (i.e., individuals who were entitled to an immediate retirement benefit upon their termination of employment) and not available to individuals like these plaintiffs whose employment, or whose spouses' employment, had terminated before they became eligible for an immediate retirement benefit. The plaintiffs seek to represent a class consisting of former Metropolitan Life employees, or their surviving spouses, who are receiving deferred vested annuity payments under the retirement plan and who were allegedly eligible to receive the ad hoc pension increases awarded in 1977, 1980, 1989, 1992, 1996 and 2001, as well as increases awarded in earlier years. Metropolitan Life is vigorously defending itself against these allegations. A lawsuit was filed against Metropolitan Life in Ontario, Canada by Clarica Life Insurance Company ("Clarica") regarding the sale of the majority of Metropolitan Life's Canadian operation to Clarica in 1998. Clarica alleged that Metropolitan Life breached certain representations and warranties contained in the sale agreement, that Metropolitan Life made misrepresentations upon which Clarica relied during the negotiations and that Metropolitan Life was negligent in the performance of certain of its obligations and duties under the sale agreement. The parties settled the matter in January 2004. The settlement will have no material impact on the Company's consolidated financial results in 2004. A reinsurer of universal life policy liabilities of Metropolitan Life and certain of its affiliates commenced an arbitration proceeding and sought rescission, claiming that, during underwriting, material misrepresentations or omissions were made to the reinsurer. The reinsurer also sent a notice purporting to increase reinsurance premium rates. In December 2003, the arbitration panel denied the reinsurer's attempt to rescind the contract and granted the reinsurer's request to raise rates. As a result of the panel's rulings, liabilities ceded to the reinsurer were recaptured effective May 5, 2003. The recapture had no material impact on the Company's consolidated financial results in 2003. As previously reported, the SEC is conducting a formal investigation of New England Securities Corporation ("NES"), an indirect subsidiary of New England Life Insurance Company, in response to NES informing the SEC that certain systems and controls relating to one NES advisory program were not operating effectively. NES is cooperating fully with the SEC. F-54 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Prior to filing MetLife's June 30, 2003 Form 10-Q, MetLife announced a $31 million after-tax charge resulting from certain improperly deferred expenses at an affiliate, New England Financial. MetLife notified the SEC about the nature of this charge prior to its announcement. The SEC is pursuing a formal investigation of the matter and MetLife is fully cooperating with the investigation. The American Dental Association and two individual providers have sued MetLife, Mutual of Omaha and Cigna in a purported class action lawsuit brought in a Florida federal district court. The plaintiffs purport to represent a nationwide class of in-network providers who allege that their claims are being wrongfully reduced by downcoding, bundling, and the improper use and programming of software. The complaint alleges federal racketeering and various state law theories of liability. MetLife is vigorously defending the case and a motion to dismiss has been filed. A purported class action in which a policyholder seeks to represent a class of owners of participating life insurance policies is pending in state court in New York. Plaintiff asserts that Metropolitan Life breached her policy in the manner in which it allocated investment income across lines of business during a period ending with the 2000 demutualization. In August 2003, an appellate court affirmed the dismissal of fraud claims in this action. MetLife is vigorously defending the case. Regulatory bodies have contacted the Company and have requested information relating to market timing and late trading of mutual funds and variable insurance products. The Company believes that these inquiries are similar to those made to many financial services companies as part of an industry-wide investigation by various regulatory agencies into the practices, policies and procedures relating to trading in mutual fund shares. State Street Research Investment Services, one of the Company's indirect broker/dealer subsidiaries, has entered into a settlement with the National Association of Securities Dealers ("NASD") resolving all outstanding issues relating to its investigation. The SEC has commenced an investigation with respect to market timing and late trading in a limited number of privately-placed variable insurance contracts that were sold through General American. The Company is in the process of responding and is fully cooperating with regard to these information requests and investigations. The Company at the present time is not aware of any systemic problems with respect to such matters that may have a material adverse effect on the Company's consolidated financial position. Various litigation, claims and assessments against the Company, in addition to those discussed above and those otherwise provided for in the Company's consolidated financial statements, have arisen in the course of the Company's business, including, but not limited to, in connection with its activities as an insurer, employer, investor, investment advisor and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning the Company's compliance with applicable insurance and other laws and regulations. Summary It is not feasible to predict or determine the ultimate outcome of all pending investigations and legal proceedings or provide reasonable ranges of potential losses, except as noted above in connection with specific matters. In some of the matters referred to above, very large and/or indeterminate amounts, including punitive and treble damages, are sought. Although in light of these considerations it is possible that an adverse outcome in certain cases could have a material adverse effect upon the Company's consolidated financial position, based on information currently known by the Company's management, in its opinion, the outcomes of such pending investigations and legal proceedings are not likely to have such an effect. However, given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company's consolidated net income or cash flows in particular quarterly or annual periods. F-55 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Leases In accordance with industry practice, certain of the Company's income from lease agreements with retail tenants is contingent upon the level of the tenants' sales revenues. Additionally, the Company, as lessee, has entered into various lease and sublease agreements for office space, data processing and other equipment. Future minimum rental and sublease income, and minimum gross rental payments relating to these lease agreements were as follows:
Gross Rental Sublease Rental Income Income Payments ------ -------- -------- (Dollars in millions) 2004.............................................. $ 399 $16 $194 2005.............................................. $ 366 $15 $178 2006.............................................. $ 336 $14 $158 2007.............................................. $ 293 $12 $137 2008.............................................. $ 232 $10 $108 Thereafter........................................ $1,402 $13 $698
Commitments to Fund Partnership Investments The Company makes commitments to fund partnership investments in the normal course of business. The amounts of these unfunded commitments were $1,378 million and $1,667 million at December 31, 2003 and 2002, respectively. The Company anticipates that these amounts will be invested in the partnerships over the next three to five years. Guarantees In the course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties pursuant to which it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific liabilities, and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counterparties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third party lawsuits. These obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation ranging from $1 million to $800 million, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does not believe that it is possible to determine the maximum potential amount due under these guarantees in the future. In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Also, the Company indemnifies other of its agents for liabilities incurred as a result of their representation of the Company's interests. Since these indemnities are generally not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount due under these indemnities in the future. The fair value of such indemnities, guarantees and commitments entered into was insignificant. The Company's recorded liability at December 31, 2003 and 2002 for indemnities, guarantees and commitments provided to third parties prior to January 1, 2003 was insignificant. F-56 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) The Company writes credit default swap obligations requiring payment of principal due in exchange for the reference credit obligation, depending on the nature or occurrence of specified credit events for the referenced entities. In the event of a specified credit event, the Company's maximum amount at risk, assuming the value of the referenced credits become worthless, is $479 million at December 31, 2003. The credit default swaps expire at various times during the next four years. 13. Employee Benefit Plans Pension Benefit and Other Benefit Plans The Company is both the sponsor and administrator of defined benefit pension plans covering eligible employees and sales representatives of the Company. Retirement benefits are based upon years of credited service and final average or career average earnings history. The Company also provides certain postemployment benefits and certain postretirement health care and life insurance benefits for retired employees through insurance contracts. Substantially all of the Company's employees may, in accordance with the plans applicable to the postretirement benefits, become eligible for these benefits if they attain retirement age, with sufficient service, while working for the Company. F-57 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) The Company uses a December 31 measurement date for all of its pension and postretirement benefit plans. Obligations, Funded Status and Net Periodic Benefit Costs
December 31, ------------------------------- Pension Benefits Other Benefits -------------- --------------- 2003 2002 2003 2002 ------ ------ ------- ------ (Dollars in millions) Change in projected benefit obligation: Projected benefit obligation at beginning of year...... $4,747 $4,426 $ 1,878 $1,669 Service cost........................................ 122 104 38 36 Interest cost....................................... 311 307 122 123 Acquisitions and divestitures....................... (1) (110) -- -- Actuarial losses.................................... 352 307 167 342 Curtailments and terminations....................... (7) (3) (4) (2) Change in benefits.................................. (1) -- (1) (168) Transfers in (out) of controlled group.............. (181) -- (77) -- Benefits paid....................................... (287) (284) (122) (122) ------ ------ ------- ------ Projected benefit obligation at end of year............ 5,055 4,747 2,001 1,878 ------ ------ ------- ------ Change in plan assets: Contract value of plan assets at beginning of year..... 4,008 4,161 965 1,169 Actual return on plan assets........................ 632 (185) 112 (92) Acquisitions and divestitures....................... (1) (110) -- -- Employer and participant contributions.............. 340 426 46 10 Transfers in (out) of controlled group.............. (186) -- (2) -- Benefits paid....................................... (287) (284) (122) (122) ------ ------ ------- ------ Contract value of plan assets at end of year........... 4,506 4,008 999 965 ------ ------ ------- ------ Under funded........................................... (549) (739) (1,002) (913) Unrecognized net asset at transition................... 1 -- -- -- Unrecognized net actuarial losses...................... 1,438 1,507 352 262 Unrecognized prior service cost........................ 82 101 (175) (208) ------ ------ ------- ------ Prepaid (accrued) benefit cost......................... $ 972 $ 869 $ (825) $ (859) ====== ====== ======= ====== Qualified plan prepaid pension cost.................... $1,296 $1,164 Non-qualified plan accrued pension cost................ (468) (351) Unamortized prior service cost......................... 14 -- Accumulated other comprehensive loss................... 130 56 ------ ------ Prepaid benefit cost................................... $ 972 $ 869 ====== ======
The aggregate projected benefit obligation and aggregate contract value of plan assets for the pension plans were as follows:
Qualified Plan Non-Qualified Plan Total ---------------- ----------------- ---------------- 2003 2002 2003 2002 2003 2002 ------- ------- ----- ----- ------- ------- (Dollars in millions) Aggregate projected benefit obligation....................... $(4,526) $(4,273) $(529) $(474) $(5,055) $(4,747) Aggregate contract value of plan assets (principally Company contracts)....................... 4,506 4,008 -- -- 4,506 4,008 ------- ------- ----- ----- ------- ------- Under funded....................... $ (20) $ (265) $(529) $(474) $ (549) $ (739) ======= ======= ===== ===== ======= =======
F-58 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) The accumulated benefit obligation for all defined benefit pension plans was $4,869 million and $4,224 million at December 31, 2003 and 2002, respectively. Information for pension plans with an accumulated benefit obligation in excess of plan assets:
December 31, ------------------ 2003 2002 ---- ---- (Dollars in millions) Projected benefit obligation.. $546 $489 Accumulated benefit obligation $468 $357 Fair value of plan assets..... $ 12 $ 9
Information for pension and postretirement plans with a projected benefit obligation in excess of plan assets:
December 31, ------------------------------------ Pension Benefits Other Benefits ------------------- ---------------- 2003 2002 2003 2002 ------ ------ ------ ------ (Dollars in millions) Projected benefit obligation $5,046 $4,739 $2,001 $1,878 Fair value of plan assets... $4,486 $3,991 $1,003 $ 965
The components of net periodic benefit cost were as follows:
Pension Benefits Other Benefits ------------------- ----------------- 2003 2002 2001 2003 2002 2001 ----- ----- ----- ---- ---- ----- (Dollars in millions) Service cost.................................. $ 122 $ 104 $ 104 $ 38 $ 36 $ 34 Interest cost................................. 311 307 308 122 123 115 Expected return on plan assets................ (331) (354) (402) (71) (93) (108) Amortization of prior actuarial losses (gains) 102 33 (2) (12) (9) (27) Curtailment cost.............................. 10 11 21 3 4 6 ----- ----- ----- ---- ---- ----- Net periodic benefit cost..................... $ 214 $ 101 $ 29 $ 80 $ 61 $ 20 ===== ===== ===== ==== ==== =====
Assumptions Assumptions used in determining benefit obligations were as follows:
December 31, ------------------------------------ Pension Benefits Other Benefits --------------- -------------------- 2003 2002 2003 2002 --------- ----- --------- ---------- Discount rate................ 6.1%-6.5% 6.75% 6.1%-6.5% 6.5%-6.75% Rate of compensation increase 4%-8% 4%-8% N/A N/A
Assumptions used in determining net periodic benefit cost were as follows:
December 31, ---------------------------------------- Pension Benefits Other Benefits ------------------ --------------------- 2003 2002 2003 2002 ---------- ------- ---------- ---------- Discount rate.................. 6.5%-6.75% 6%-7.4% 6.5%-6.75% 6.5%-7.40% Expected rate of return on plan assets....................... 8%-8.75% 8%-9% 3.79%-8.5% 5.2%-9 % Rate of compensation increase.. 4%-8 % 4%-8% N/A N/A
F-59 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) The discount rate is based on the yield of a hypothetical portfolio of high-quality debt instruments available on the valuation date, which would provide the necessary future cash flows to pay the aggregate projected benefit obligation when due. The expected rate of return on plan assets is based on anticipated performance of the various asset sectors in which the plan invests, weighted by target allocation percentages. Anticipated future performance is based on long-term historical returns of the plan assets by sector, adjusted for the Company's long-term expectations on the performance of the markets. While the precise expected return derived using this approach will fluctuate from year to year, the Company's policy is to hold this long-term assumption constant as long as it remains within a reasonable tolerance from the derived rate. The assumed health care cost trend rates used in measuring the accumulated nonpension postretirement benefit obligation were as follows:
December 31, ----------------------------------------------- 2003 2002 ------------------------ ---------------------- Pre-Medicare eligible claims 8.5% down to 5% in 2010 9% down to 5% in 2010 Medicare eligible claims.... 10.5% down to 5% in 2014 11% down to 5% in 2014
Assumed health care cost trend rates may have a significant effect on the amounts reported for health care plans. A one-percentage point change in assumed health care cost trend rates would have the following effects:
One Percent One Percent Increase Decrease ----------- ----------- (Dollars in millions) Effect on total of service and interest cost components $ 10 $ (9) Effect of accumulated postretirement benefit obligation $108 $(105)
Plan Assets The weighted average allocation of pension plan and other benefit plan assets is as follows:
December 31, ------------------------------ Pension Benefits Other Benefits --------------- ------------- 2003 2002 2003 2002 Asset Category ---- ---- ---- ---- Equity securities 52% 39% 38% 36% Fixed maturities. 39% 51% 61% 63% Real estate...... 9% 10% -- -- Other............ -- -- 1% 1% --- --- --- --- Total......... 100% 100% 100% 100% === === === ===
The weighted average target allocation of pension plan and other benefit plan assets for 2004 is as follows:
Pension Benefits Other Benefits ---------------- -------------- Asset Category Equity securities 35%-60% 25%-40% Fixed maturities. 35%-70% 50%-80% Real estate...... 0%-15% N/A Other............ 0%-20% 0%-10%
Target allocations of assets are determined with the objective of maximizing returns and minimizing volatility of net assets through adequate asset diversification and partial liability immunization. Adjustments are made to target allocations based on the Company's assessment of the impact of economic factors and market conditions. F-60 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Cash Flows The Company expects to contribute $488 million to its pension plans and $87 million to its other benefit plans during 2004. The following benefit payments, which reflect expected future service as appropriate, are expected to be paid:
Pension Benefits Other Benefits ---------------- -------------- (Dollars in millions) 2004..... $ 326 $115 2005..... $ 297 $119 2006..... $ 309 $123 2007..... $ 313 $128 2008..... $ 321 $131 2009-2013 $1,771 $711
Savings and Investment Plans The Company sponsors savings and investment plans for substantially all employees under which the Company matches a portion of employee contributions. The Company contributed $59 million, $58 million and $60 million for the years ended December 31, 2003, 2002 and 2001, respectively. 14. Equity Preferred Stock On December 16, 2003, the Holding Company contributed 2,532,600 shares of common stock to the Company in exchange for 93,402 shares of Series A Cumulative Preferred Stock ("the Preferred Shares"). Holders of the Preferred Shares are entitled to receive cumulative cash dividends at the annual applicable rate of 7% times the Liquidation Preference of $1,000 per share payable quarterly, when and if declared by the Board of Directors. Holders of the Preferred Shares have no voting rights, except as required by applicable law. The Preferred Shares rank senior to the common stock. The Preferred Shares are redeemable at the option of the Company at any time, to the extent that any such redemption shall not violate applicable provisions of the laws of the State of Missouri. The Preferred Shares are redeemable at a price equal to the par value per share plus any amount equal to accumulated and unpaid dividends. Dividend Restrictions Under the New York Insurance Law, Metropolitan Life is permitted without prior insurance regulatory clearance to pay a stockholder dividend to the Holding Company as long as the aggregate amount of all such dividends in any calendar year does not exceed the lesser of (i) 10% of its surplus to policyholders as of the immediately preceding calendar year, and (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding realized capital gains). Metropolitan Life will be permitted to pay a cash dividend to the Holding Company in excess of the lesser of such two amounts only if it files notice of its intention to declare such a dividend and the amount thereof with the Superintendent and the Superintendent does not disapprove the distribution. Under the New York Insurance Law, the Superintendent has broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such dividends to its stockholders. The Department has established informal guidelines for such determinations. F-61 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) The guidelines, among other things, focus on the insurer's overall financial condition and profitability under statutory accounting practices. For the year ended December 31, 2003, Metropolitan Life paid to MetLife, Inc. $698 million in dividends for which prior insurance regulatory clearance was not required and $750 million in special dividends, as approved by the Superintendent. For the year ended December 31, 2002, Metropolitan Life paid to MetLife, Inc. $535 million in dividends for which prior insurance regulatory clearance was not required and $369 million in special dividends, as approved by the Superintendent. For the year ended December 31, 2001, Metropolitan Life paid to MetLife, Inc. $721 million in dividends for which prior insurance regulatory clearance was not required and $3,033 million in special dividends, as approved by the Superintendent. At December 31, 2003, the maximum amount of the dividend, which may be paid to the Holding Company from Metropolitan Life in 2004, without prior regulatory approval, is $798 million. Stock Compensation Plans Under the MetLife, Inc. 2000 Stock Incentive Plan (the "Stock Incentive Plan"), awards granted may be in the form of non-qualified or incentive stock options qualifying under Section 422A of the Internal Revenue Code. Under the MetLife, Inc. 2000 Directors Stock Plan, as amended, (the "Directors Stock Plan") awards granted may be in the form of stock awards or non-qualified stock options or a combination of the foregoing to outside Directors of MetLife. The aggregate number of shares of stock that may be awarded under the Stock Incentive Plan is subject to a maximum limit of 37,823,333 shares for the duration of the plan. The Directors Stock Plan has a maximum limit of 500,000 share awards. All options granted have an exercise price equal to the fair market value price of MetLife common stock on the date of grant, and an option's maximum term is ten years. Certain options under the Stock Incentive Plan become exercisable over a three-year period commencing with date of grant, while other options become exercisable three years after the date of grant. Options issued under the Directors Stock Plan are exercisable immediately. Effective January 1, 2003, MetLife and the Company elected to apply the fair value method of accounting and use the prospective transition method for stock options granted by MetLife subsequent to December 31, 2002. As permitted under SFAS 148, options granted prior to January 1, 2003 will continue to be accounted for under APB 25. MetLife allocated 100% of stock option expense to the Company in each of the years ended December 31, 2003, 2002 and 2001. Had compensation cost for MetLife Stock Incentive Plan and Directors Stock Plan been determined based on fair value at the grant date for awards under those plans consistent with the method of SFAS 123, the Company's net income would have been reduced to the following pro-forma amounts:
Years Ended December 31, ---------------------- 2003 2002 2001 ------ ------ ------ (Dollars in millions) Net Income.......................................................... $2,001 $1,612 $1,487 Add: Stock-based employee compensation expense included in reported net income, net of related tax effects................... 13 1 1 Deduct: Total Stock-based employee compensation determined under fair value based method for all awards, net of related tax effects (42) (33) (20) ------ ------ ------ Pro forma net income (1) (2)........................................ $1,972 $1,580 $1,468 ====== ====== ======
- -------- (1)The pro forma earnings disclosures are not necessarily representative of the effects on net income. (2)Includes MetLife's ownership share of stock compensation costs related to the RGA incentive stock plan and the stock compensation costs related to the incentive stock plans at SSRM Holdings, Inc. determined in accordance with SFAS 123. F-62 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) The fair value of each option grant is estimated on the date of the grant using the Black-Scholes options-pricing model with the following weighted average assumptions used for grants for the:
Years Ended December 31, --------------------------------- 2003 2002 2001 ----------- ----------- --------- Dividend yield.......... 0.68%-0.79% 0.68% 0.68% Risk-free rate of return 2.71%-4.03% 4.74%-5.52% 5.72% Volatility.............. 37.0%-38.7% 25.3%-30.3% 31.60% Expected duration....... 6 years 6 years 4-6 years
Statutory Equity and Income Applicable insurance department regulations require that the insurance subsidiaries prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the insurance department of the state of domicile. Statutory accounting practices primarily differ from GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions, reporting surplus notes as surplus instead of debt and valuing securities on a different basis. As of December 31, 2001, New York Statutory Accounting Practices did not provide for deferred income taxes. The Department has adopted a modification to its regulations, effective December 31, 2002, with respect to the admissibility of deferred taxes by New York insurers, subject to certain limitations. Statutory net income of Metropolitan Life, as filed with the Department, was $2,169 million, $1,455 million and $2,782 million for the years ended December 31, 2003, 2002 and 2001, respectively; statutory capital and surplus, as filed, was $7,978 million and $6,986 million at December 31, 2003 and 2002, respectively. The National Association of Insurance Commissioners ("NAIC") adopted the Codification of Statutory Accounting Principles (the "Codification"), which is intended to standardize regulatory accounting and reporting to state insurance departments, and became effective January 1, 2001. However, statutory accounting principles continue to be established by individual state laws and permitted practices. The Department required adoption of the Codification, with certain modifications, for the preparation of statutory financial statements effective January 1, 2001. Further modifications by state insurance departments may impact the effect of the Codification on the statutory capital and surplus of Metropolitan Life and the Holding Company's other insurance subsidiaries. F-63 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Other Comprehensive Income The following table sets forth the reclassification adjustments required for the years ended December 31, 2003, 2002 and 2001 in other comprehensive income (loss) that are included as part of net income for the current year that have been reported as a part of other comprehensive income (loss) in the current or prior year:
Years Ended December 31, ---------------------- 2003 2002 2001 ----- ------- ------ (Dollars in millions) Holding gains on investments arising during the year............................... $ 835 $ 2,936 $1,311 Income tax effect of holding gains................................................. (344) (971) (518) Reclassification adjustments: Recognized holding losses included in current year income....................... 311 307 555 Amortization of premiums and accretion of discounts associated with investments................................................................... (152) (440) (475) Recognized holding gains allocated to other policyholder amounts................ (259) (139) (33) Income tax effect............................................................... 40 85 (18) Allocation of holding losses on investments relating to other policyholder amounts. (317) (2,453) (158) Income tax effect of allocation of holding losses to other policyholder amounts.... 125 814 61 Unrealized investment gains (losses) of subsidiary at date of sale................. 269 68 (173) Deferred income taxes on unrealized investment gains (losses) of subsidiary at date of sale.......................................................................... (94) (15) 64 ----- ------- ------ Net unrealized investment gains.................................................... 414 192 616 ----- ------- ------ Foreign currency translation adjustments arising during the year................... 174 137 (58) Foreign currency translation adjustments of subsidiary at date of sale............. -- (65) 19 ----- ------- ------ Foreign currency translation adjustment............................................ 174 72 (39) ----- ------- ------ Minimum pension liability adjustments arising during the year...................... (81) -- (18) Minimum pension liability adjustments of subsidiary at date of sale................ (1) -- -- ----- ------- ------ Minimum pension liability adjustment............................................... (82) -- (18) ----- ------- ------ Other comprehensive income......................................................... $ 506 $ 264 $ 559 ===== ======= ======
15. Other Expenses Other expenses were comprised of the following:
Years Ended December 31, ------------------------- 2003 2002 2001 ------- ------- ------- (Dollars in millions) Compensation....................................................... $ 2,038 $ 2,423 $ 2,447 Commissions........................................................ 1,710 1,938 1,649 Interest and debt issue costs...................................... 313 242 312 Amortization of policy acquisition costs (excludes amounts directly related to net investment gains (losses) of $(26), $11 and $21, respectively).................................................... 1,381 1,501 1,434 Capitalization of policy acquisition costs......................... (1,982) (2,227) (2,018) Rent, net of sublease income....................................... 226 289 280 Minority interest.................................................. 116 74 57 Other.............................................................. 2,034 2,303 2,759 ------- ------- ------- Total other expenses............................................ $ 5,836 $ 6,543 $ 6,920 ======= ======= =======
F-64 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) 16. Business Segment Information The Company provides insurance and financial services to customers in the United States, Canada, Central America, South America, Europe, South Africa, Asia and Australia. The Company's business is divided into six major segments: Institutional, Individual, Auto & Home, International, Reinsurance and Asset Management. These segments are managed separately because they either provide different products and services, require different strategies or have different technology requirements. Institutional offers a broad range of group insurance and retirement and savings products and services, including group life insurance, non-medical health insurance, such as short and long-term disability, long-term care, and dental insurance, and other insurance products and services. Individual offers a wide variety of individual insurance and investment products, including life insurance, annuities and mutual funds. Auto & Home provides insurance coverages, including private passenger automobile, homeowners and personal excess liability insurance. International provides life insurance, accident and health insurance, annuities and retirement and savings products to both individuals and groups, and auto and homeowners coverage to individuals. Reinsurance provides primarily reinsurance of life and annuity policies in North America and various international markets. Additionally, reinsurance of critical illness policies is provided in select international markets. Asset Management provides a broad variety of asset management products and services to individuals and institutions. F-65 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) Set forth in the tables below is certain financial information with respect to the Company's operating segments as of and for the years ended December 31, 2003, 2002 and 2001. The accounting policies of the segments are the same as those of the Company, except for the method of capital allocation and the accounting for gains and losses from intercompany sales, which are eliminated in consolidation. The Company allocates capital to each segment based upon an internal capital allocation system that allows the Company to more effectively manage its capital. The Company evaluates the performance of each operating segment based upon net income excluding certain net investment gains and losses, net of income taxes, and the impact from the cumulative effect of changes in accounting, net of income taxes. Scheduled periodic settlement payments on derivative instruments not qualifying for hedge accounting are included in net investment gains (losses). The Company allocates certain non-recurring items (e.g., expenses associated with the resolution of proceedings alleging race-conscious underwriting practices, sales practices claims and claims for personal injuries caused by exposure to asbestos or asbestos-containing products) to Corporate & Other.
At or for the Year Ended Auto & Asset Corporate December 31, 2003 Institutional Individual Home International Reinsurance Management & Other Total - ------------------------ ------------- ---------- ------ ------------- ----------- ---------- --------- -------- (Dollars in millions) Premiums.......................... $ 9,093 $ 4,242 $2,168 $ 6 $ 2,648 $ -- $ (6) $ 18,151 Universal life and investment-type product policy fees.............. 633 1,287 -- 1 -- -- -- 1,921 Net investment income............. 4,037 5,592 119 50 431 66 62 10,357 Other revenues.................... 592 204 23 14 48 143 38 1,062 Net investment gains (losses)..... (204) (127) (4) (7) 31 9 15 (287) Policyholder benefits and claims.. 9,931 5,020 1,604 16 2,102 -- 4 18,677 Interest credited to policyholder account balances................. 914 1,280 -- 1 184 -- -- 2,379 Policyholder dividends............ 198 1,697 -- 3 -- -- (1) 1,897 Other expenses.................... 1,782 2,464 572 24 741 182 71 5,836 Income from continuing operations before provision for income taxes............................ 1,326 737 130 20 131 36 35 2,415 Income from discontinued operations, net of income taxes............................ 30 30 -- -- -- -- 240 300 Cumulative effect of change in accounting, net of income taxes............................ (26) -- -- -- -- -- -- (26) Net income........................ 849 519 111 13 86 22 401 2,001 Total assets...................... 109,492 133,335 -- 1,069 12,879 175 24,315 281,265 Deferred policy acquisition costs............................ 739 7,363 -- 6 2,122 -- 2 10,232 Goodwill, net..................... 59 42 -- -- 99 18 -- 218 Separate account assets........... 35,632 28,028 -- -- 13 -- (12) 63,661 Policyholder liabilities.......... 61,565 88,096 -- 297 9,272 -- (579) 158,651 Separate account liabilities...... 35,632 28,028 -- -- 13 -- (12) 63,661
F-66 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued)
At or for the Year Ended Auto & Asset Corporate December 31, 2002 Institutional Individual Home International Reinsurance Management & Other Total - ------------------------ ------------- ---------- ------ ------------- ----------- ---------- --------- -------- (Dollars in millions) Premiums.......................... $ 8,245 $ 4,419 $2,828 $992 $1,984 $ -- $ (7) $ 18,461 Universal life and investment-type product policy fees.............. 623 1,267 -- 37 -- -- -- 1,927 Net investment income............. 3,915 6,019 177 241 378 59 (158) 10,631 Other revenues.................... 607 454 26 10 42 166 49 1,354 Net investment gains (losses)..... (497) (110) (46) (9) 7 (4) (38) (697) Policyholder benefits and claims.. 9,337 5,162 2,020 821 1,517 -- 3 18,860 Interest credited to policyholder account balances................. 930 1,608 -- 28 146 -- (1) 2,711 Policyholder dividends............ 115 1,769 (1) 28 -- -- -- 1,911 Other expenses.................... 1,529 2,543 794 373 616 211 477 6,543 Income (loss) from continuing operations before provision (benefit) for income taxes....... 982 967 172 21 132 10 (633) 1,651 Income from discontinued operations, net of income taxes............................ 121 199 -- -- -- -- 151 471 Net income (loss)................. 759 811 131 21 86 6 (202) 1,612 Total assets...................... 94,911 120,284 4,957 795 9,458 191 18,840 249,436 Deferred policy acquisition costs............................ 608 7,448 175 5 1,429 -- 1 9,666 Goodwill, net..................... 62 73 156 -- 96 18 -- 405 Separate account assets........... 31,935 21,982 -- -- 11 -- (16) 53,912 Policyholder liabilities.......... 55,460 84,844 2,673 248 6,734 -- (343) 149,616 Separate account liabilities...... 31,935 21,982 -- -- 11 -- (16) 53,912 At or for the Year Ended Auto & Asset Corporate December 31, 2001 Institutional Individual Home International Reinsurance Management & Other Total - ------------------------ ------------- ---------- ------ ------------- ----------- ---------- --------- -------- (Dollars in millions) Premiums.......................... $ 7,288 $ 4,531 $2,755 $788 $1,664 $ -- $ (3) $ 17,023 Universal life and investment-type product policy fees.............. 592 1,245 -- 38 -- -- (1) 1,874 Net investment income............. 3,966 6,107 200 256 349 71 105 11,054 Other revenues.................... 649 527 22 16 35 198 85 1,532 Net investment gains (losses)..... (16) 864 (17) (16) (10) 25 121 951 Policyholder benefits and claims.. 8,924 5,213 2,121 632 1,373 -- 2 18,265 Interest credited to policyholder account balances................. 1,012 1,850 -- 51 122 -- -- 3,035 Policyholder dividends............ 259 1,767 -- 34 -- -- -- 2,060 Other expenses.................... 1,746 2,763 800 315 478 252 566 6,920 Income (loss) from continuing operations before provision (benefit) for income taxes....... 538 1,681 39 50 65 42 (261) 2,154 Income from discontinued operations, net of income taxes............................ 21 36 -- -- -- -- 50 107 Net income (loss)................. 383 1,092 41 16 39 27 (111) 1,487
F-67 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) The following table indicates amounts in the current and prior years that have been classified as discontinued operations in accordance with SFAS 144:
Year ended December 31, ----------------------- 2003 2002 2001 ---- ---- ---- (Dollars in millions) Net investment income Institutional............................... $ 2 $ 33 $ 34 Individual.................................. 5 50 56 Corporate & Other........................... 45 77 79 ---- ---- ---- Total net investment income............. $ 52 $160 $169 ==== ==== ==== Net investment gains (losses) Institutional............................... $ 45 $156 $ -- Individual.................................. 43 262 -- Corporate & Other........................... 333 164 -- ---- ---- ---- Total net investment gains (losses)..... $421 $582 $ -- ==== ==== ==== Interest Expense Individual.................................. $ 1 $ 1 $ -- ---- ---- ---- Total interest expense.................. $ 1 $ 1 $ -- ==== ==== ====
Economic Capital. Beginning in 2003, the Company changed its methodology of allocating capital to its business segments from Risk-Based Capital ("RBC") to Economic Capital. Prior to 2003, the Company's business segments' allocated equity was primarily based on RBC, an internally developed formula based on applying a multiple to the National Association of Insurance Commissioners Statutory Risk-Based Capital and included certain adjustments in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Economic Capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The Economic Capital model accounts for the unique and specific nature of the risks inherent in the Company's businesses. This is in contrast to the standardized regulatory RBC formula, which is not as refined in its risk calculations with respect to the nuances of the Company's businesses. The change in methodology is being applied prospectively. This change has and will continue to impact the level of net investment income and net income of each of the Company's business segments. A portion of net investment income is credited to the segments based on the level of allocated equity. This change in methodology of allocating equity does not impact the Company's consolidated net investment income or net income. F-68 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) The following table presents actual and pro forma net investment income with respect to the Company's segments for the years ended December 31, 2002 and 2001. The amounts shown as pro forma reflect net investment income that would have been reported in these years had the Company allocated capital based on Economic Capital rather than on the basis of RBC. Net Investment Income
For the Years Ended December 31, ------------------------------------ 2002 2001 ----------------- ----------------- Actual Pro forma Actual Pro forma ------- --------- ------- --------- (Dollars in millions) Institutional.... $ 3,915 $ 3,977 $ 3,966 $ 4,040 Individual....... 6,019 5,929 6,107 6,020 Auto & Home...... 177 160 200 184 International.... 241 204 256 240 Reinsurance...... 378 341 349 313 Asset Management. 59 71 71 89 Corporate & Other (158) (51) 105 168 ------- ------- ------- ------- Total......... $10,631 $10,631 $11,054 $11,054 ======= ======= ======= =======
The Auto & Home segment's results of operations for the year ended December 31, 2003 consists of Metropolitan Property and Casualty Insurance Company and its subsidiaries until October 2003 when it was sold to MetLife. See Note 17. The Reinsurance segment's results of operations for the year ended December 31, 2003 include RGA's coinsurance agreement under which it assumed the traditional U.S. life reinsurance business of Allianz Life Insurance Company of North America. The transaction added approximately $246 million of premiums and $11 million of pre-tax income, excluding minority interest expense. The Individual segment's results of operations for the year ended December 31, 2003 includes a second quarter after-tax charge of $31 million resulting from certain improperly deferred expenses at an affiliate, New England Financial. The Institutional, Individual, Reinsurance and Auto & Home segments for the year ended December 31, 2001 include $287 million, $24 million, $9 million and $5 million, respectively, of pre-tax losses associated with the September 11, 2001 tragedies. See Note 9. The Institutional, Individual and Auto & Home segments include $399 million, $97 million and $3 million, respectively, in pre-tax charges associated with business realignment initiatives for the year ended December 31, 2001. See Note 10. The Individual segment for the year ended December 31, 2001, includes $118 million of pre-tax expenses associated with the establishment of a policyholder liability for certain group annuity policies. For the year ended December 31, 2001, pre-tax gross investment gains (losses) of $1,027 million, $142 million and $357 million resulting from the sale of certain real estate properties to MIAC are included in the Individual segment, Institutional segment and Corporate & Other, respectively. F-69 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) As part of the GenAmerica acquisition in 2000, the Company acquired Conning Corporation ("Conning"), the results of which are included in the Asset Management segment due to the types of products and strategies employed by the entity from its acquisition date to July 2001, the date of its disposition. The Company sold Conning, receiving $108 million in the transaction and reported a gain of approximately $25 million, in the third quarter of 2001. Corporate & Other includes various start-up and run-off entities, as well as the elimination of all intersegment amounts. The elimination of intersegment amounts relates to intersegment loans, which bear interest rates commensurate with related borrowings, as well as intersegment reinsurance transactions. Net investment income and net investment gains (losses) are based upon the actual results of each segment's specifically identifiable asset portfolio adjusted for allocated capital. Other costs and operating costs were allocated to each of the segments based upon: (i) a review of the nature of such costs; (ii) time studies analyzing the amount of employee compensation costs incurred by each segment; and (iii) cost estimates included in the Company's product pricing. Revenues derived from any customer did not exceed 10% of consolidated revenues for the years ended December 31, 2003, 2002 and 2001. Revenues from U.S. operations were $30,199 million, $29,723 million and $30,812 million for the years ended December 31, 2003, 2002 and 2001, respectively, which represented 97%, 94% and 95%, respectively, of consolidated revenues. 17. Acquisitions and Dispositions In September 2003, a subsidiary of the Company, RGA, announced a coinsurance agreement under which it assumed the traditional U.S. life reinsurance business of Allianz Life Insurance Company of North America. This transaction closed during the fourth quarter of 2003 with an effective date retroactive to July 1, 2003. The transaction added approximately $278 billion of life reinsurance in-force, $246 million of premiums and $11 million of income before income tax expense, excluding minority interest expense, to the fourth quarter of 2003. In October 2003, the Company completed its sales of Met Tower Life Insurance Company, MetLife General Insurance Agency, Inc., MetLife Securities, Inc., and N.L. Holding Corporation to the Holding Company. The amount received in excess of book value of $28 million was recorded as a capital contribution from the Holding Company. Total assets and total liabilities of the entities sold at the date of sale were $293 million and $195 million, respectively. Total revenues of the entities sold included in the consolidated statements of income were $156 million, $218 million and $219 million for the years ended December 31, 2003, 2002 and 2001, respectively. In October 2003, the Company sold Metropolitan Property and Casualty Insurance Company's common stock to the Holding Company for $1,990 million. The amount received in excess of book value of $120 million was recorded as a capital contribution from the Holding Company. Total assets and total liabilities of the entities sold at the date of sale were $5,806 million and $3,400 million, respectively. Total revenues of the entities sold included in the consolidated statements of income were $2,343 million, $3,013 million and $2,973 million for the years ended December 31, 2003, 2002 and 2001, respectively. In December 2002, the Company completed its sales of Cova Corporation, MetLife Investors Group, Inc., MetLife International Holdings, Inc., Walnut Street Securities, Inc., Seguros Genesis S.A., MetLife Pensiones S.A. and Metropolitan Life Seguros de Vida S.A. to the Holding Company. The amount received in excess of book value of $149 million was recorded as a capital contribution from the Holding Company. Total assets and F-70 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) total liabilities of the entities sold at the date of sale were $17,853 million and $16,545 million, respectively. Total revenues of the entities sold included in the consolidated statements of income were $1,648 million and $1,463 million for the years ended December 31, 2002 and 2001, respectively. In December 2001, the Company completed its sale of MIAC to the Holding Company. The amount received in excess of book value of $96 million was recorded as a capital contribution from the Holding Company. Total assets and total liabilities of MIAC at the date of sale were $6,240 million and $5,219 million, respectively. Total revenues of MIAC included in the consolidated statements of income were $391 million for the year ended December 31, 2001. In July 2001, the Company completed its sale of Conning, an affiliate acquired in the acquisition of GenAmerica Financial Corporation in 2000. Conning specialized in asset management for insurance company investment portfolios and investment research. 18. Discontinued Operations The Company actively manages its real estate portfolio with the objective to maximize earnings through selective acquisitions and dispositions. In accordance with SFAS 144, income related to real estate classified as held-for-sale on or after January 1, 2002 is presented as discontinued operations. These assets are carried at lower of cost or market. The following table presents the components of income from discontinued operations:
Years Ended December 31, ----------------------- 2003 2002 2001 ---- ----- ----- (Dollars in millions) Investment income...................... $120 $ 458 $ 508 Investment expense..................... (68) (298) (339) Net investment gains (losses).......... 421 582 -- ---- ----- ----- Total revenues...................... 473 742 169 Interest Expense....................... 1 1 -- Provision for income taxes............. 172 270 62 ---- ----- ----- Income from discontinued operations. $300 $ 471 $ 107 ==== ===== =====
The carrying value of real estate related to discontinued operations was $89 million and $799 million at December 31, 2003 and 2002, respectively. See Note 16 for discontinued operations by business segment. F-71 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) 19. Fair Value Information The estimated fair values of financial instruments have been determined by using available market information and the valuation methodologies described below. Considerable judgment is often required in interpreting market data to develop estimates of fair value. Accordingly, the estimates presented herein may not necessarily be indicative of amounts that could be realized in a current market exchange. The use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts. Amounts related to the Company's financial instruments were as follows:
Notional Carrying Estimated Amount Value Fair Value December 31, 2003 -------- -------- ---------- (Dollars in millions) Assets: Fixed maturities............................. $143,148 $143,148 Equity securities............................ $ 1,246 $ 1,246 Mortgage loans on real estate................ $ 26,637 $ 28,572 Policy loans................................. $ 8,180 $ 8,180 Short-term investments....................... $ 1,320 $ 1,320 Cash and cash equivalents.................... $ 2,393 $ 2,393 Mortgage loan commitments.................... $ 555 $ -- $ (4) Commitments to fund partnership investments.. $1,378 $ -- $ -- Liabilities: Policyholder account balances................ $ 53,503 $ 55,218 Short-term debt.............................. $ 3,536 $ 3,536 Long-term debt............................... $ 2,055 $ 2,236 Shares subject to mandatory redemption....... $ 277 $ 336 Payable under securities loaned transactions. $ 24,065 $ 24,065
Notional Carrying Estimated Amount Value Fair Value December 31, 2002 -------- -------- ---------- (Dollars in millions) Assets: Fixed maturities.................................................. $124,260 $124,260 Equity securities................................................. $ 1,551 $ 1,551 Mortgage loans on real estate..................................... $ 25,353 $ 27,935 Policy loans...................................................... $ 8,047 $ 8,047 Short-term investments............................................ $ 1,199 $ 1,199 Cash and cash equivalents......................................... $ 1,106 $ 1,106 Mortgage loan commitments......................................... $ 859 $ -- $ 12 Commitments to fund partnership investments....................... $1,667 $ -- $ -- Liabilities: Policyholder account balances..................................... $ 34,706 $ 35,063 Short-term debt................................................... $ 912 $ 912 Long-term debt.................................................... $ 2,624 $ 2,794 Payable under securities loaned transactions...................... $ 16,321 $ 16,321 Other: Company-obligated mandatorily redeemable securities of subsidiary trusts.......................................................... $ 277 $ 310
F-72 Metropolitan Life Insurance Company and Subsidiaries Notes to Consolidated Financial Statements--(Continued) The methods and assumptions used to estimate the fair values of financial instruments are summarized as follows: Fixed Maturities and Equity Securities The fair value of fixed maturities and equity securities are based upon quotations published by applicable stock exchanges or received from other reliable sources. For securities for which the market values were not readily available, fair values were estimated using quoted market prices of comparable investments. Mortgage Loans on Real Estate, Mortgage Loan Commitments and Commitments to Fund Partnership Investments Fair values for mortgage loans on real estate are estimated by discounting expected future cash flows, using current interest rates for similar loans with similar credit risk. For mortgage loan commitments, the estimated fair value is the net premium or discount of the commitments. Commitments to fund partnership investments have no stated interest rate and are assumed to have a fair value of zero. Policy Loans The carrying values for policy loans approximate fair value. Cash and Cash Equivalents and Short-term Investments The carrying values for cash and cash equivalents and short-term investments approximated fair values due to the short-term maturities of these instruments. Policyholder Account Balances The fair value of policyholder account balances is estimated by discounting expected future cash flows based upon interest rates currently being offered for similar contracts with maturities consistent with those remaining for the agreements being valued. Short-term and Long-term Debt, Payables Under Securities Loaned Transactions, Shares Subject to Mandatory Redemption and Company-Obligated Mandatorily Redeemable Securities of Subsidiary Trusts The fair values of short-term and long-term debt, payables under securities loaned transactions, shares subject to mandatory redemption and Company-obligated mandatorily redeemable securities of subsidiary trusts are determined by discounting expected future cash flows using risk rates currently available for debt with similar terms and remaining maturities. Derivative Financial Instruments The fair value of derivative instruments, including financial futures, financial forwards, interest rate, credit default and foreign currency swaps, foreign currency forwards, caps, floors, options and written covered calls are based upon quotations obtained from dealers or other reliable sources. See Note 3 for derivative fair value disclosures. 20. Related Parties Effective January 1, 2003, MetLife Group, Incorporated, a New York corporation and wholly owned subsidiary of the Holding Company, was formed as a personnel services company to provide personnel, as needed, to support the activities of the Company. Charges for these services were approximately $1,680 million in 2003. F-73 Metropolitan Life Separate Account UL PART C. OTHER INFORMATION Item 26. Exhibits (a) Resolution of the Board of Directors of Metropolitan Life effecting the establishment of Metropolitan Life Separate Account UL 2 (b) None (c) (i) Form of Broker Agreement 2 (ii) Schedule of Sales Commissions 1 (iii) Forms of Selling Agreement (d) (i) Specimen Old Product Flexible Premium Multifunded Life Insurance Policy (including application and any alternative pages as required by state law) with form of riders, if any 2 (ii) Specimen of New Product Flexible Premium Multifunded Life Insurance Policy (including application and any alternative pages required by state law) with forms of riders 5 (iii) Riders for Disability Waiver Rider, and Accidental Death Benefit 2 (iv) Riders for Accelerated Death Benefit, Children's Term Insurance Benefit and Spouse Term Insurance Benefit 2 (v) New York Endorsement of Old Product to Flexible Premium Multifunded Life Insurance Policy 2 (vi) Additional alternate pages for Old Product required by state law 2 (vii) Endorsement adding death benefit Option C for Old Product 2 (viii) Endorsement- Long Term Care Guarantee Purchase 9 (ix) Endorsement- Death Benefit Adjustment (e) (i) Applications (see (d)(i) and (d)(ii) above) (ii) Updated Application for Policy (f) (i) Restated Charter and By-Laws of Metropolitan Life 7 (ii) Amended Restated Charter and By-laws of Metropolitan Life 11 (g) Reinsurance Contracts (h) (i) Participation Agreement with New England Zenith Fund 8 (ii) Participation Agreement with Met Investors Series Trust 11 (iii) Participation Agreement with American Funds 10 (i) None (j) None (k) (i) Opinion and Consent of Christopher P. Nicholas as to the legality of the securities being registered 4 (ii) Opinion and Consent of Marie C. Swift as to the legality of the securities being registered (l) Actuarial Consent (m) Calculation (n) (i) Consent of Independent Auditors (ii) Consent of Foley and Lardner LLP (o) None (p) None (q) (i) Memoranda describing certain procedures filed pursuant to Rule 6e-3(T)(b)(12)(iii) 2 (ii) Addendum to Memoranda describing certain procedures filed pursuant to Rule 6e-3(T)(b)(12)(iii) 9 (r) Powers of attorney 3 1 Incorporated by reference from Sales and Administration of the Policies" in the Prospectuses included herein and "Distribution of the Policies" in the Statement of Additional Information. 2 Incorporated herein by reference to Post-Effective Amendment No. 5 to this Registration Statement (File No. 033-47927) filed April 30, 1997. 3 Incorporated herein by reference to the Security Equity Separate Account Thirteen Registration Statement (File No. 333-110185) filed November 3, 2003 except for John M. Keane, William J. Wheeler and Joseph J. Prochaska, Jr.'s powers of attorney, which are incorporated by reference to Post-Effective Amendment No. 4 to the Registration Statement for Metropolitan Life Separate Account E (File No. 333-69320) filed on February 6, 2004 and Sylvia M. Mathews incorporated by reference to Post-Effective Amendment No. 32 to the Registration Statement of Metropolitan Life Separate Account E (File No. 2-90380) filed on April 20, 2004. 4 Incorporated herein by reference to Post-Effective Amendment No. 6 to the Registration Statement (File No. 033-47927) filed on December 23, 1997. 5 Incorporated herein by reference to Post-Effective Amendment No. 7 to the Registration Statement (File No. 033-47927) filed on February 27, 1998. 6 Incorporated herein by reference to Post-Effective Amendment No. 10 to the Registration Statement (File No. 033-47927) filed on April 2, 1999. 7 Incorporated herein by reference to Post-Effective Amendment No. 11 to the Registration Statement (File No. 033-47927) filed on April 6, 2000. 8 Incorporated herein by reference to Post-Effective Amendment No. 10 to the Registration Statement (File No. 033-57320) filed on September 18, 2000. 9 Incorporated herein by reference to Post-Effective Amendment No. 12 to the Registration Statement (File No. 033-47927) filed on April 10, 2001. 10 Incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registration Statement for MetLife Separate Account E (File No. 333-52366) filed on August 3, 2001. 11 Incorporated herein by reference to the Registration Statement for MetLife Separate Account E (File No. 333-83716) filed on March 5, 2002. 12 Incorporated herein by reference to Post-Effective Amendment No. 14 to the Registration Statement (File No. 033-47927) filed on April 25, 2002. Item 27. Directors and Officers of Depositor
Name and Principal Business Address Positions and Offices with Depositor - ----------------------------------- ------------------------------------ Robert H. Benmosche Chairman of the Board, President and Chief Metropolitan Life Insurance Company Executive Officer One Madison Avenue, New York, NY 10010 Curtis H. Barnette Director Chairman Emeritus Bethlehem Steel Corporation 1170 Eighth Avenue, Martin Tower 2118 Bethlehem, PA 18016-7699 John C. Danforth Director Partner Bryan Cave LLP One Metropolitan Square 211 North Broadway, Suite 3600 St. Louis, MO 63102
Burton A. Dole, Jr. Director Retired Chairman of the Board, President and Chief Executive Officer Nellcor Puritan Bennett, Inc. P.O. Box 208 Carlsbad, CA 92018 Cheryl W. Grise Director President Utility Group of Northeast Utilities Service Company P.O. Box 270 Hartford, CT 06141 James R. Houghton Director Chairman and Chief Executive Officer Corning Incorporated One Riverfront Plaza, MP HQ E2-6 Corning, NY 14831 Harry P. Kamen Director Retired Chairman and Chief Executive Officer Metropolitan Life Insurance Company 200 Park Avenue, Suite 5700 New York, NY 10166 Helene L. Kaplan Director Of Counsel, Skadden, Arps, Slate, Meagher and Flom Four Times Square New York, NY 10036 John M. Keane Director 2200 Wilson Blvd., Suite 102-542 Arlington, VA 22201-3324 Charles H. Leighton Director Retired Chairman and Chief Executive Officer CML Group, Inc. 51 Vaughn Hill Road Bolton, MA 01720
Sylvia M. Mathews Director Chief Operating Officer and Executive Director The Bill & Melinda Gates Foundation 1551 Eastlake Avenue East Seattle, WA 98102 Stewart G. Nagler Vice Chairman of the Board and Chief Metropolitan Life Insurance Company Financial Officer One Madison Avenue New York, NY 10010 Hugh B. Price Director President and Chief Executive Officer National Urban League, Inc. 120 Wall Street, 7th & 8th Floors New York, NY 10005 Kenton J. Sicchitano Director Retired Global Managing Partner PricewaterhouseCoopers 101 Jericho Road Weston, MA 02493 William C. Steere, Jr. Director Retired Chairman of the Board Pfizer, Inc. 235 East 42nd Street New York, NY 10016
Set forth below is a list of certain principal officers of Metropolitan Life. The principal business address of each officer of Metropolitan Life is One Madison Avenue, New York, New York 10010.
Name Position with Metropolitan Life Robert H. Benmosche Chairman of the Board, President and Chief Executive Officer Stewart C. Nagler Vice Chairman of the Board Gwenn L. Carr Vice President and Secretary Daniel J. Cavanagh Executive Vice President C. Robert Henrikson President- US Insurance & Financial Services Jeffrey J. Hodgman Executive Vice President Leland C. Launer Executive Vice President and Chief Investment Officer James L. Lipscomb Executive Vice President and General Counsel Joseph J. Prochaska, Jr. Senior Vice President and Chief Accounting Officer Catherine A. Rein Senior Executive Vice President; President and Chief Executive Officer of Metropolitan Property and Casualty Insurance Company
Stanley J. Talbi Senior Vice President and Chief Actuary William J. Toppeta President, International Lisa Weber Senior Executive Vice President and Chief Administration Officer Judy E. Weiss Executive Vice President and Chief Actuary William J. Wheeler Executive Vice President and Chief Financial Officer Anthony J. Williamson Senior Vice President and Treasurer
The business address of each officer is One Madison Avenue, New York, New York 10010. Item 28. Persons Controlled by or Under Common Control with the Depositor or the Registrant The registrant is a separate account of Metropolitan Life Insurance Company under the New York Insurance law. Under said law the assets allocated to the separate account are the property of Metropolitan Life Insurance Company. Metropolitan Life Insurance Company is a wholly-owned subsidiary of MetLife, Inc. a publicly traded company. The following outline indicates those persons who are controlled by or under common control with Metropolitan Life Insurance Company: ORGANIZATIONAL STRUCTURE OF METLIFE, INC. AND SUBSIDIARIES AS OF DECEMBER 31, 2003 The following is a list of subsidiaries of MetLife, Inc. updated as of December 31, 2003. Those entities which are listed at the left margin (labeled with capital letters) are direct subsidiaries of MetLife, Inc. Unless otherwise indicated, each entity which is indented under another entity is a subsidiary of that other entity and, therefore, an indirect subsidiary of MetLife, Inc. Certain inactive subsidiaries have been omitted from the MetLife, Inc. organizational listing. The voting securities (excluding directors' qualifying shares, if any) of the subsidiaries listed are 100% owned by their respective parent corporations, unless otherwise indicated. The jurisdiction of domicile of each subsidiary listed is set forth in the parenthetical following such subsidiary. A. MetLife Group, Inc. (NY) B. MetLife Bank National Association (USA) C. Exeter Reassurance Company, Ltd. (Bermuda) D. MetLife Taiwan Insurance Company Limited (Taiwan) E. Metropolitan Insurance and Annuity Company (DE) 1. TH Tower NGP, LLC (DE) 2. Partners Tower, L.P. - a 99% limited partnership interest of Partners Tower, L.P. is held by Metropolitan Insurance and Annuity Company and 1% general partnership interest is held by TH Tower NGP, LLC (DE) 3. TH Tower Leasing, LLC (DE) F. MetLife Pensiones S.A. (Mexico)- 97.4738% is owned by Metlife, Inc. and 2.5262% is owned by Metropolitan Asset Management Corporation. G. MetLife Chile Inversiones Limitada (Chile)- 99.9999999% is owned by MetLife, Inc. and 0.0000001% is owned by Natiloportem Holdings, Inc. 1. MetLife Chile Seguros de Vida S.A. (Chile)- 99.99% is owned by MetLife Chile Inversiones Limitada, and 0.01% is owned by MetLife International Holdings, Inc. a) MetLife Chile Administradora de Mutuos Hipotecarios S.A. (Chile)- 99.99% is owned by MetLife Chile Seguros de Vida S.A., and 0.01% is owned by MetLife Chile Inversiones Limitada. H. MetLife Mexico S.A. (Mexico)- 98.70541% is owned by Metlife, Inc., 1.27483% is owned by Metropolitan Asset Management Corporation and 0.01976% is owned by Metlife International Holdings, Inc. 1 I. Metropolitan Life Seguros de Vida S.A. (Uruguay) 1. Jefferson Pilot Omega Seguros de Vida S.A. (Uruguay) J. MetLife Securities, Inc. (DE) K. MetLife General Insurance Agency, Inc. (DE) 1. MetLife General Insurance Agency of North Carolina, Inc. (DE) 2. MetLife General Insurance Agency of Texas, Inc. (DE) 3. MetLife General Insurance Agency of Massachusetts, Inc. (MA) L. Metropolitan Property and Casualty Insurance Company 1. Metropolitan General Insurance Company (RI) 2. Metropolitan Casualty Insurance Company (RI) 3. Metropolitan Direct Property and Casualty Insurance Company (RI) 4. Met P&C Managing General Agency, Inc. (TX) 5. MetLife Auto & Home Insurance Agency, Inc. (RI) 6. Metropolitan Group Property and Casualty Insurance Company (RI) a) Metropolitan Reinsurance Company (U.K.) Limited (United Kingdom) 7. Metropolitan Lloyds, Inc. (TX) a) Metropolitan Lloyds Insurance Company of Texas (TX)- Metropolitan Lloyds Insurance Company of Texas, an affiliated association, provides homeowner and related insurance for the Texas market. It is an association of individuals designated as underwriters. Metropolitan Lloyds, Inc., a subsidiary of Metropolitan Property and Casualty Insurance Company, serves as the attorney-in-fact and manages the association. 8. Economy Fire & Casualty Company (IL) a) Economy Preferred Insurance Company (IL) b) Economy Premier Assurance Company (IL) M. Cova Corporation (MO) 1. Texas Life Insurance Company (TX) 2 a) Texas Life Agency Services, Inc. (TX) b) Texas Life Agency Services of Kansas, Inc. (KS) 2. Cova Life Management Company (DE) 3. MetLife Investors Insurance Company (MO) a) MetLife Investors Insurance Company of California (CA) b) First MetLife Investors Insurance Company (NY) N. Metropolitan Tower Life Insurance Company (DE) O. N.L. Holding Corp. (DEL) (NY) 1. Nathan & Lewis Associates-Arizona, Inc. (AZ) 2. Nathan & Lewis Associates, Inc. (NY) a) Nathan and Lewis Insurance Agency of Massachusetts, Inc. (MA) b) Nathan and Lewis Associates of Texas, Inc. (TX) P. Walnut Street Securities, Inc. (MO) 1. WSS Insurance Agency of Massachusetts, Inc. (MA) 2. Walnut Street Advisers, Inc. (MO) 3. WSS Insurance Agency of Nevada, Inc. (NV) Q. MetLife Investors Group, Inc. (DE) 1. MetLife Investors USA Insurance Company (DE) 2. MetLife Investors Distribution Company (DE) 3. Met Investors Advisory, LLC (DE) 4. MetLife Investors Financial Agency, Inc. (TX) R. MetLife International Holdings, Inc. (DE) 3 1. MetLife Iberia, S.A. (Spain) a) Seguros Genesis S.A. (Spain) b) Genesis Seguros Generales, Sociedad Anonima de Seguros y Reaseguros (Spain) 99.99969% is owned by Metlife Iberia, S.A. and 0.00031% is owned by Metlife International Holdings, Inc. 2. Natiloportem Holdings, Inc. (DE) a) Metropolitan Life Insurance Services Limited (United Kingdom)- 50% of the shares of Metropolitan Life Insurance Services Limited are held by Natiloportem Holdings, Inc. b) Servicios Administrativos Gen, S.A. de C.V. (Mexico) c) European Marketing Services S.r.l. (Italy)- 95% of the shares of European Marketing Services S.r.l are held by Natiloportem Holdings, Inc. and 5% are held by MetLife International Holdings, Inc. 3. MetLife India Insurance Company Private Limited (India)-26% of the shares of MetLife India Insurance Company Private Limited is owned by MetLife International Holdings, Inc. and 74% is owned by third parties. 4. Metropolitan Life Insurance Company of Hong Kong Limited (Hong Kong)- 99.99841% is owned by Metlife International Holdings, Inc. and 0.00159% is owned by Natiloporterm Holdings, Inc. 5. Metropolitan Life Seguros de Retiro S.A. (Argentina) - 99.9999% is owned by MetLife International Holdings, Inc. and 0.0001% is owned by Natiloportem Holdings, Inc. 6. Metropolitan Life Seguros de Vida S.A. (Argentina) - 99.999% is owned by MetLife International Holdings, Inc. and 0.001% is owned by Natiloportem Holdings, Inc. a) Met AFJP S.A. (Argentina)- 95% of the shares of Met AFJP S.A. are owned by Metropolitan Life Seguros de Vida S.A. and 5% of the shares are held by Metropolitan Seguros de Retiro S.A. 7. MetLife Services Company Czechia, s.r.o. (Czech Republic)- 10% of the shares of MetLife Services Company Czechia, s.r.o. is owned by Natiloportem Holdings, Inc. and 90% of the shares are held by MetLife International Holdings, Inc. 8. MetLife Insurance Company of Korea Limited (South Korea) 9. Metropolitan Life Seguros e Previdencia Privada S.A. (Brazil) - 99.999999% is owned by MetLife International Holdings, Inc. and 0.000001% is owned by Natiloportem Holdings, Inc. S. Metropolitan Life Insurance Company (NY) 1. 334 Madison Avenue BTP-D Holdings, LLC (DE) 4 2. 334 Madison Avenue BTP-E Holdings, LLC (DE) 3. 334 Madison Avenue Euro Investments, Inc. (DE) a) Park Twenty Three Investments Company (United Kingdom)- 99% of the voting control of Park Twenty Three Investments Company is held by 334 Madison Euro Investments, Inc. and 1% voting control is held by St. James Fleet Investments Two Limited. (1) Convent Station Euro Investments Four Company (United Kingdom)- 99% of the voting control of Convent Station Euro Investments Four Company is held by Park Twenty Three Investments Company and 1% voting control is held by 334 Madison Euro Investments, Inc. as nominee for Park Twenty Three Investments Company. 4. St. James Fleet Investments Two Limited (Cayman Islands)- 34% of the shares of St. James Fleet Investments Two Limited is held by Metropolitan Life Insurance Company. 5. One Madison Investments (Cayco) Limited (Cayman Islands)- 89.9% of the voting control of One Madison Investments (Cayco) Limited is held by Metropolitan Life Insurance Company and 10.1% voting control is held by Convent Station Euro Investments Four Company. 6. CRB Co, Inc. (MA)- AEW Real Estate Advisors, Inc. holds 49,000 preferred non-voting shares of CRB Co., Inc. and AEW Advisors, Inc. holds 1,000 preferred non-voting shares of CRB, Co., Inc. 7. GA Holding Corp. (MA) 8. CRH Co., Inc. (MA) 9. L/C Development Corporation (CA) 10. Benefit Services Corporation (GA) 11. Thorngate, LLC (DE) 5 12. Alternative Fuel I, LLC 13. One Madison Merchandising L.L.C. (CT) 14. Transmountain Land & Livestock Company (MT) 15. MetPark Funding, Inc. (DE) 16. HPZ Assets LLC (DE) 17. MetDent, Inc. (DE) 18. Missouri Reinsurance (Barbados), Inc. (Barbados) 19. Metropolitan Tower Realty Company, Inc. (DE) 20. P.T. MetLife Sejahtera (Indonesia)-94.3% of P.T. MetLife Sejahtera is held by Metropolitan Life Insurance Company 21. Metropolitan Life Holdings Netherlands BV (Netherlands) 22. MetLife (India) Private Ltd. (India) 23. Metropolitan Marine Way Investments Limited (Canada) 24. MetLife Central European Services Spolka z organiczona odpowiedzialmoscia (Poland) 25. MetLife Investments Ireland Limited (Ireland) 26. MetLife Private Equity Holdings, LLC (DE) 27. 23rd Street Investments, Inc. (DE) a) Mezzanine Investment Limited Partnership-BDR (DE). Metropolitan Life Insurance Company holds a 99% limited partnership interest in Mezzanine Investment Limited Partnership-BDR and 23rd Street Investments, Inc. is a 1% general partner. b) Mezzanine Investment Limited Partnership-LG (DE). 23rd Street Investments, Inc. is a 1% general partner of Mezzanine Investment Limited Partnership-LG. Metropolitan Life Insurance Company holds a 99% limited partnership interest in Mezzanine Investment Limited Partnership-LG. (1) Coating Technologies International, Inc. (DE) 28. Metropolitan Realty Management, Inc. (DE) a) Cross & Brown Company (NY) 6 (1) CBNJ, Inc. (NJ) 29. Hyatt Legal Plans, Inc. (DE) a) Hyatt Legal Plans of Florida, Inc. (FL) 30. MetLife Holdings, Inc. a) MetLife Credit Corp. b) MetLife Funding, Inc. 31. SSRM Holdings, Inc. (DE) - Employees of State Street Research & Mangement Company owned a total of 59,616 restricted shares and options for an additional 197,897 restricted shares of common stock of SSRM Holdings, Inc. a) State Street Research & Management Company (DE) (1) State Street Research Investment Services, Inc. (MA) b) SSR Realty Advisors, Inc. (DE) (1) Metric Management, Inc. (DE) (2) Metric Assignor, Inc. (CA) (3) SSR AV, Inc. (DE) (4) Metric Capital Corporation (CA) (5) SSR Development Partners LLC (DE) (6) Metric Property Management, Inc. (DE) (7) SSR AVF III LLC 32. Bond Trust Account A 33. Metropolitan Asset Management Corporation (DE) a) MetLife Capital Credit L.P. (DE) - 90% of MetLife Capital Credit L.P. is held directly by Metropolitan Life Insurance Company and 10% General Partnership interest of MetLife Capital Credit L.P. is held by Metropolitan Asset Management Corporation. (1) MetLife Capital CFLI Holdings, LLC (DE) 7 (a) MetLife Capital CFLI Leasing, LLC (DE) b) MetLife Capital Limited Partnership (DE)- 73.78% Limited Partnership interest is held directly by Metropolitan Life Insurance Company and 9.58% Limited Partnership and 16.64% General Partnership interests are held by Metropolitan Asset Management Corporation. c) MetLife Investments Asia Limited (Hong Kong)- One share of MetLife Investments Asia Limited is held by W&C Services, Inc., a nominee of Metropolitan Asset Management Corporation. d) MetLife Investments Limited (United Kingdom)- 23rd Street Investments, Inc. holds one share of MetLife Investments Limited and MetLife Investments, S.A. and 1% of MetLife Latin America Asesorias e Inversiones Limitada. e) MetLife Investments, S.A. (Argentina)- 23rd Street Investments, Inc. holds one share of MetLife Investments Limited and MetLife Investments, S.A. and 1% of MetLife Latin America Asesorias e Inversiones Limitada. f) MetLife Latin America Asesorias e Inversiones Limitada (Chile)- 23rd Street Investments, Inc. holds one share of MetLife Investments Limited and MetLife Investments, S.A. and 1% of MetLife Latin America Asesorias e Inversiones Limitada. 34. New England Life Insurance Company (MA) a) MetLife Advisers, LLC (MA) b) New England Securities Corporation (MA) (1) Hereford Insurance Agency, Inc. (MA) c) New England Financial Distributors LLC (DE) - 79.29% is held by New England Life Insurance Company d) Newbury Insurance Company, Limited (Bermuda) e) New England Pension and Annuity Company (DE) f) Omega Reinsurance Corporation (AZ) 35. GenAmerica Financial Corporation (MO) a) GenAmerica Capital I (DE) b) General American Distributors, Inc. (MO) c) General American Life Insurance Company (MO) 8 (1) Paragon Life Insurance Company (MO) (2) GenAmerica Management Corporation (MO)- 90% of the voting shares of GenAmerica Management Corporation is owned by General American Life Insurance Company. (3) Krisman, Inc. (MO) (4) White Oak Royalty Company (OK) (5) Equity Intermediary Company (MO) (a) Reinsurance Group of America, Incorporated (MO)- 51.9% of Reinsurance Group of America, Incorporated is held by Equity Intermediary Company. (i) Reinsurance Company of Missouri, Incorporated (MO) (A) RGA Reinsurance Company (MO) (aa) Fairfield Management Group, Inc. (MO) (a.1) Reinsurance Partners, Inc. (MO) (a.2) Great Rivers Reinsurance Management, Inc. (MO) (a.3) RGA (U.K.) Underwriting Agency Limited (United Kingdom) (ii) Triad Re, Ltd. (Barbados)-67% of Triad Re, Ltd. is held by Reinsurance Group of America, Incorporated and 100% of the preferred stock of Triad Re, Ltd. is also held by Reinsurance Group of America Incorporated. (iii) RGA Sigma Reinsurance SPC (Cayman Islands) (iv) RGA Capital Trust I (DE) (v) RGA Americas Reinsurance Company, Ltd. (Barbados) (vi) RGA Reinsurance Company (Barbados) Ltd. (Barbados) (A) RGA Financial Group, L.L.C. (DE)- 80% of RGA Financial Group, L.L.C. is held by RGA Reinsurance Company (Barbados) Ltd. and 20% of RGA Financial Group, LLC is held by RGA Reinsurance Company (vii) RGA Life Reinsurance Company of Canada (Canada) (viii) RGA International Corporation (Nova Scotia) (A) RGA Financial Products Limited (Canada) 9 (ix) RGA Holdings Limited (U.K) (United Kingdom) (A) RGA UK Services Limited (United Kingdom) (B) RGA Capital Limited U.K. (United Kingdom) (C) RGA Reinsurance (UK) Limited (United Kingdom) (x) RGA South African Holdings (Pty) Ltd. (South Africa) (A) RGA Reinsurance Company of South Africa Limited (South Africa) (xi) RGA Australian Holdings PTY Limited (Australia) (A) RGA Reinsurance Company of Australia Limited (Australia) (B) RGA Asia Pacific PTY, Limited (Australia) (xii) General American Argentina Seguros de Vida, S.A. (Argentina) (xiii) RGA Argentina S.A. (Argentina) (xiv) Regal Atlantic Company (Bermuda) Ltd. (Bermuda) (xv) Malaysia Life Reinsurance Group Berhad (Malaysia)- 30% interest of Malaysia Life Reinsurance Group Berhad is held by Reinsurance Group of America, Incorporated. (xvi) RGA Technology Partners, Inc. (MO) (xvii) RGA International Reinsurance Company (Ireland) The voting securities (excluding directors' qualifying shares, if any) of each subsidiary shown on the organizational chart are 100% owned by their respective parent entity, unless otherwise indicated. In addition to the entities shown on the organizational chart, MetLife, Inc. (or where indicated, a subsidiary) also owns interests in the following entities: 1) Metropolitan Structures is a general partnership in which Metropolitan Life Insurance Company owns a 50% interest. 2) Metropolitan Life Insurance Company owns varying interests in certain mutual funds distributed by its affiliates. These ownership interests are generally expected to decrease as shares of the funds are purchased by unaffiliated investors. 3) Metropolitan Life Insurance Company indirectly owns 100% of the non-voting preferred stock of Nathan and Lewis Associates Ohio, Incorporated, an insurance agency. 100% of the voting common stock of this company 10 is held by an individual who has agreed to vote such shares at the direction of N.L. HOLDING CORP. (DEL), a direct wholly owned subsidiary of MetLife, Inc. 4) Mezzanine Investment Limited Partnerships ("MILPs"), Delaware limited partnerships, are investment vehicles through which investments in certain entities are held. A wholly owned subsidiary of Metropolitan Life Insurance Company serves as the general partner of the limited partnerships and Metropolitan Life Insurance Company directly owns a 99% limited partnership interest in each MILP. The MILPs have various ownership and/or debt interests in certain companies. The various MILPs own, directly or indirectly, 100% of the voting stock of the following: Coating Technologies International, Inc. 5) New England Life Insurance Company ("NELICO"), owns 100% of the voting stock of Omega Reinsurance Corporation. NELICO does not have a financial interest in this subsidiary. 6) 100% of the capital stock of Fairfield Insurance Agency of Texas, Inc. is owned by an officer. New England Life Insurance Company controls the issuance of additional stock and has certain rights to purchase such officer's shares. NOTE: THE METLIFE, INC. ORGANIZATIONAL CHART DOES NOT INCLUDE REAL ESTATE JOINT VENTURES AND PARTNERSHIPS OF WHICH METLIFE, INC. AND/OR ITS SUBSIDIARIES IS AN INVESTMENT PARTNER. IN ADDITION, CERTAIN INACTIVE SUBSIDIARIES HAVE ALSO BEEN OMITTED. 11 Item 29. Indemnification MetLife, Inc. has secured a Financial Institutions Bond in the amount of $50,000,000 subject to a $5,000,000 deductible. MetLife, Inc. also maintains a Directors' and Officers' liability policy with a maximum coverage of $300 million. The Directors and Officers of Metropolitan Life Insurance Company ("Metropolitan") and the principal underwriter, as well as certain other subsidiaries of MetLife, Inc. are covered under the Financial Institutions Bond as well as under the Directors' and Officers' Liability Policy. A provision in Metropolitan's by-laws provides for the indemnification (under certain circumstances) of individuals serving as directors or officers of Metropolitan. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Metropolitan pursuant to the foregoing provisions, or otherwise, Metropolitan Life Insurance Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Metropolitan of expenses incurred or paid by a director, officer or controlling person or Metropolitan Life Insurance Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Metropolitan will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 30. Principal Underwriters (a) Other Activity. The principal underwriter for the registrant is Metropolitan Life Insurance Company. Metropolitan Life Insurance Company acts in the following capacities with respect to the following investment companies: Metropolitan Tower Life Separate Account One (principal underwriter) Metropolitan Tower Life Separate Account Two (principal underwriter) Metropolitan Life Separate Account E (principal underwriter and depositor) Metropolitan Series Fund, Inc. (principal underwriter and sub-investment manager) New England Variable Annuity Fund I (depositor) New England Life Retirement Investment Account (depositor) The New England Variable Account (depositor) Security Equity Separate Account Thirteen (depositor) Security Equity Separate Account Twenty-Six (depositor) Security Equity Separate Account Twenty-Seven (depositor) (b) Management. See response to Item 27 above.
(c) Compensation from the Registrant.
(1) (2) (3) (4) (5) Compensation on Net Underwriting Events Occasioning Name of Principal Discounts and the Deduction of a Brokerage Other Underwriter Commissions Deferred Sales Load Commissions Compensation ----------------- ---------------- ------------------- ----------- ------------ Metropolitan Life Insurance Company $29,643,124 0 0 0
Commissions are paid by the Company directly to agents who are registered representatives of the Principal Underwriter or to broker-dealers that have entered into a selling agreement with the principal underwriter with respect to sales of the Contracts. Item 31. Location of Accounts and Records The following companies will maintain possession of the documents required by Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder: (a) Registrant (b) Metropolitan Life Insurance Company One Madison Avenue New York, NY 10010 Item 32. Management Services Not applicable Item 33. Fee Representation Metropolitan Life represents that the fees and charges deducted under the Policies offered and sold pursuant to this amended Registration Statement, in the aggregate, are reasonable in relation to the services rendered, the expenses to be incurred, and the risks assumed by Metropolitan Life under the Policies. Metropolitan Life bases its representation on its assessment of numerous facts and circumstances that it deems relevant. There may include including such factors as: the nature and extent of such services, expenses and risks, the need for Metropolitan Life to earn an adequate profit, the degree to which the Policies include innovative features, and regulatory standards for exemptive relief under the Investment Company Act of 1940 used prior to October 1996, including the range of industry practice. This representation applies to all policies issued pursuant to this Registration Statement, including those sold on the terms specifically described in the prospectuses contained herein, or any variations therein based on supplements, amendments, endorsements or other riders to such policies or prospectuses, or otherwise. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, Metropolitan Life Separate Account UL, certifies that it meets all of the requirements for effectiveness of this amended Registration Statement under Rule 485(b) under the Securities Act and has caused this Amendment to the Registration Statement to be signed on its behalf, in the City of New York, and the State of New York on the 26th day of April, 2004. Metropolitan Life Separate Account UL By: Metropolitan Life Insurance Company By: /s/ James L. Lipscomb -------------------------------------------- James L. Lipscomb Executive Vice President and General Counsel SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, Metropolitan Life Insurance Company certifies that it meets all of the requirements for effectiveness of this amended Registration Statement under Rule 485(b) under the Securities Act and has caused this Amendment to the Registration Statement to be signed on its behalf, in the City of New York, and the State of New York on the 26th day of April, 2004. Metropolitan Life Insurance Company BY: /s/ James L. Lipscomb --------------------------- James L. Lipscomb Executive Vice President and General Counsel Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons, in the capacities indicated, on April 26, 2004.
SIGNATURE Title * Chairman of the Board, President and - --------------------------------------- Chief Executive Officer Robert H. Benmosche * Vice-Chairman of the Board - --------------------------------- Stewart G. Nagler * - --------------------------------- Senior Vice President and Joseph J. Prochaska, Jr. Chief Accounting Officer * - --------------------------------- Curtis H. Barnette Director * - --------------------------------- John C. Danforth Director * - --------------------------------- Burton A. Dole, Jr. Director * - --------------------------------- Cheryl W. Grise Director * - --------------------------------- James R. Houghton Director * - --------------------------------- Harry P. Kamen Director * - --------------------------------- Helene L. Kaplan Director * - --------------------------------- John M. Keane Director
* - --------------------------------- Charles M. Leighton Director * - --------------------------------- Sylvia M. Mathews Director * - --------------------------------- Hugh B. Price Director * - --------------------------------- Kenton J. Sicchitano Director * - --------------------------------- William C. Steere, Jr. Director * Executive Vice President and - --------------------------------- Chief Financial Officer William J. Wheeler /s/ Marie C. Swift - --------------------------------- Marie C. Swift, Esq. Attorney-in-fact
* Executed by Marie C. Swift, Esq. on behalf of those indicated pursuant to Powers of Attorney filed with the Registration Statement (File No. 333-110185) filed November 3, 2003 except for John M. Keane, William J. Wheeler and Joseph Prochaska, Jr.'s powers of attorney, which are incorporated by reference to Post-Effective Amendment No. 4 to the Registration Statement of Metropolitan Life Separate Account E (File No. 333-69320) filed on February 6, 2004 and Sylvia M. Mathews incorporated by reference to Post-Effective Amendment No. 32 to the Registration Statement of Metropolitan Life Separate Account E (File No. 2-90380) filed on April 20, 2004. Exhibit Index (c)(iii) Forms of Selling Agreement (d)(ix) Endorsement (e)(ii) Updated Application for Policy (g) Reinsurance Agreements (k)(ii) Opinion and Consent of Marie C. Swift, Esquire (l) Actuarial Consent (m) Calculation Exhibit (n)(i) Consent of Independent Auditor (n)(ii) Consent of Foley & Lardner LLP EX-99.(C)(III) 2 dex99ciii.txt SELLING AGREEMENTS Exhibit (c)(iii) GENERAL AMERICAN DISTRIBUTORS SALES AGREEMENT TABLE OF CONTENTS I. DEFINITIONS IX. INDEMNIFICATION II. AGREEMENTS, REPRESENTATIONS, X. GENERAL PROVISIONS AND COVENANTS A. TERM AND TERMINATION A. AGREEMENTS AND COVENANTS OF GAD B. ASSIGNABILITY B. REPRESENTATIONS AND C. AMENDMENTS COVENANTS OF BROKER D. NOTICES III. COMPLIANCE WITH APPLICABLE LAWS E. ARBITRATION IV. PRINCIPLES OF ETHICAL MARKET F. GOVERNING LAW CONDUCT G. ENTIRE UNDERSTANDING V. COMPENSATION H. NO THIRD PARTY BENEFICIARIES VI. COMPLAINTS AND INVESTIGATIONS I. NON-EXCLUSIVITY VII. RECORDS AND ADMINISTRATION J. WAIVER VIII. PRIVACY INFORMATION K. COUNTERPARTS A. PROPRIETARY INFORMATION L. SEVERABILITY B. RECEIPT OF CUSTOMER NONPUBLIC PERSONAL INFORMATION FROM BROKER BY GAD C. TREATMENT OF NONPUBLIC PERSONAL INFORMATION DISCLOSED TO BROKER BY GAD D. CONFIDENTIAL INFORMATION E. PROTECTED HEALTH INFORMATION Enterprise Selling Agreement GAD Version - September 2003 Page 1 of 59 GENERAL AMERICAN FINANCIAL SALES AGREEMENT This Agreement, including the Exhibits attached hereto (collectively, the "Agreement") dated ______________________________, 2003, ("Effective Date") by and among General American Distributors, a Missouri corporation, ("GAD") and Equitas America, LLC, a ________________ corporation that, for the distribution of traditional fixed rate insurance products only, is or is affiliated with one or more validly licensed insurance agency, or for the distribution of registered products, is registered as a broker dealer with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as amended, (the "1934 Act") and a member of the National Association of Securities Dealers ("NASD") and is also either licensed as or is affiliated with one or more validly licensed insurance agencies (collectively with its affiliated insurance agency(s) "Broker"). WITNESSETH: WHEREAS, GAD and its Affiliates issue or provide access to certain insurance and financial products, including but not limited to, fixed rate annuities, variable annuities, variable life insurance policies, fixed rate life insurance policies, variable riders on such fixed rate products, and other insurance products as identified on Exhibits A and B hereto (together, the "Contracts"); and WHEREAS, GAD, on behalf of itself and each Affiliate that issues or provides access to the Contracts identified on Exhibits A and B hereto, is authorized to enter into selling agreements with unaffiliated broker-dealers or selling groups, as the case may be, to distribute the Contracts; and WHEREAS, GAD proposes to compensate Broker for the sale and servicing of Contracts in accordance with the Compensation Schedules set forth in Exhibits A and B. NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties hereto agree as follows: I. Definitions 1) Affiliate - Any entity that directly or indirectly controls, is controlled by or is under common control with GAD, including, without limitation, any entity that owns 25% or more of the voting securities of any of the foregoing and any entity that is a subsidiary of any of the foregoing. Enterprise Selling Agreement GAD Version - September 2003 Page 2 of 59 2) Agency- One or more associated insurance agencies of Broker, identified on Exhibit D hereto, which are properly licensed to participate in the business of insurance. 3) Applicable Laws - Shall have the meaning given to such term as in accordance with Section II of this Agreement. 4) Confidential Information - Shall have the meaning given to such term as described in Section VIII(D) of this Agreement. 5) Fixed Contracts - Contracts that are not variable and include, without limitation, fixed rate annuities, fixed rate life insurance and other fixed insurance contracts, issued by GAD, or its Affiliates, as more fully described in Exhibit B, which may be amended by GAD in its sole discretion from time to time. 6) General Agent - Shall have the meaning given to such term as described in Section III(B)(20) of this Agreement. 7) Nonpublic Personal Information- Nonpublic personal information means financial or health related information by which a financial institution's consumers and customers are individually identifiable, including but not limited to nonpublic personal information as defined by Title V of the Gramm-Leach-Bliley Act and regulations adopted pursuant to the Act. 8) Prospectus - The prospectuses and Statements of Additional Information included within the Registration Statements referred to herein or filed pursuant to the Securities Act of 1933 and the Investment Company Act of 1940, as amended. 9) Registration Statements - Registration statements and amendments thereto filed with the SEC relating to the Variable Contracts, including those for any underlying investment vehicle or variable insurance rider. 10) Variable Contracts - Variable life insurance policies, variable annuity contracts, variable insurance riders and other variable insurance contracts, issued by GAD, or its Affiliates, as more fully described in Exhibit A , which may be amended by GAD in its sole discretion from time to time. Enterprise Selling Agreement GAD Version - September 2003 Page 3 of 59 11) Representatives - those individuals, accepted by GAD or its Affiliates to solicit and sell Contracts under the terms of this Agreement, who are duly licensed and appointed as a life insurance agent of GAD or its Affiliates, and with respect to registered products, are also duly registered, individually, with the NASD in compliance with 1934 Act. 12) Protected Health Information or PHI -- Individually identifiable information that is transmitted or maintained in any medium and relates to the past, present or future physical or mental health or condition of an individual; the provision of health care to an individual; or future payment for the provision of health care to the individual. PHI includes demographic information about individuals, including names; addresses; dates directly related to an individual, including but not limited to birth date; telephone numbers; fax numbers; E-mail addresses; Social Security numbers; policy numbers; medical record numbers; account numbers; and any other unique identifying number, characteristic, or code. PHI includes, but is not limited to, information provided by an individual on an application for a long term care insurance policy or other health care plan issued by GAD or an affiliate of GAD; information related to the declination or issuance of, or claim under, a long term care insurance policy issued by GAD or an affiliate; or information derived therefrom. II. Authorizations, Representations, and Covenants A. Authorizations, Representations, and Covenants of GAD 1) GAD represents that it is duly authorized, on behalf of itself and each Affiliate that issues or provides access to the Contracts identified on Exhibits A and B hereto, to enter into this Agreement with Broker to distribute such Contracts. 2) GAD, subject to the terms and conditions of the Agreement, hereby appoints Broker, on behalf of itself and each Affiliate, to solicit, sell and provide service to the Contracts which are set forth on the applicable Exhibits A and B on a non-exclusive basis. 3) GAD authorizes Broker through its Representatives to solicit applications for the Fixed Contracts listed in Exhibit B, provided that (a) Broker shall not solicit applications for Fixed Contracts except in those states where it and its Representatives are appropriately licensed and, in which, the Fixed Contracts are qualified for sale under Applicable Laws; and (b) Broker complies in all other Enterprise Selling Agreement GAD Version - September 2003 Page 4 of 59 respects with the published policies and procedures of GAD or its Affiliates, and with the terms of this Agreement. 4) GAD authorizes Broker through its Representatives to offer and sell the Variable Contracts listed in Exhibit A, provided that (a) Broker shall not solicit applications for Variable Contracts except in those states where it and its Representatives are appropriately licensed; (b) there is an effective Registration Statement relating to such Variable Contracts; (c) such Variable Contracts are qualified for sale under Applicable Laws in such state in which the sale or solicitation is to take place; and (d) Broker complies in all other respects with the published policies and procedures of GAD and its Affiliates, and with the terms of the Agreement. GAD shall notify Broker or its designee of the issuance by the SEC of any stop order with respect to a Registration Statement or the initiation of any proceeding by the SEC relating to the registration and/or offering of Variable Contracts and of any other action or circumstances that makes it no longer lawful for GAD or its Affiliates to offer or issue Variable Contracts listed in Exhibit A. GAD shall advise Broker of any revision of or supplement to any prospectus related to the Variable Contracts or underlying investments of such Variable Contracts. 5) The performance or receipt of services pursuant to this Agreement shall in no way impair the absolute control of the business and operations of each of the parties by its own Board of Directors. Pursuant to the foregoing, GAD and its Affiliates shall specifically retain ultimate authority, including but not limited to: a) to refuse for any reason to appoint a Representative and cancel any existing appointment at any time; b) to direct the marketing of its insurance products and services; c) to review and approve all advertising concerning, its insurance products and services; d) to underwrite all insurance policies issued by it; e) to cancel risks; f) to handle all matters involving claims adjusting and payment; g) to prepare all policy forms and amendments; h) to maintain custody of, responsibility for and control of all investments; and i) to withdraw a Contract from sale or to change or amend a Contract for any reason. Enterprise Selling Agreement GAD Version - September 2003 Page 5 of 59 6) Exhibits A and B may be amended by GAD in its sole discretion from time to time to include additional Contracts, including fixed rate annuities, variable annuities, variable life insurance policies, fixed rate life insurance policies, variable riders on such fixed rate products, and other insurance products issued by GAD or its Affiliates. The provisions of this Agreement shall apply with equal force to such additional Contracts unless the context otherwise requires. Exhibits A and B may be amended by GAD in its sole discretion from time to time to delete one or more of the Contracts. 7) During the term of this Agreement, GAD will provide Broker, without charge, with as many copies of the Contract prospectus(es), current underlying mutual fund prospectus(es), statements of additional information and applications for the Contracts, as Broker may reasonably request. Upon receipt from GAD of updated copies of the Contract prospectus(es), current underlying mutual fund prospectus(es), statements of additional information and applications for the Contracts, Broker will promptly discard or destroy all copies of such documents previously provided to them, except such copies as are needed for purposes of maintaining proper records. Upon termination of this Agreement, Broker will promptly return to GAD all Contract prospectus(es), current underlying mutual fund prospectus(es), statements of additional information and applications for the Contracts and other materials and supplies furnished by GAD to Broker or to its Representatives, except for copies required for maintenance of records. 8) During the term of this Agreement, GAD or its Affiliates will be responsible for providing and approving all promotional, sales and advertising material to be used by Broker. GAD will file such materials or will cause such materials to be filed with the SEC, NASD, and any state securities regulatory authorities, as appropriate. B. Representations and Covenants of Broker 1) Broker represents and warrants that it will only offer Contracts in those states where it or its Agency is appropriately licensed and that it has obtained any other appointments, approvals, licenses, authorizations, orders or consents which are necessary to enter into this Agreement and to perform its duties hereunder. Broker further represents that its Representatives who will be soliciting applications for Contracts will at all times be appropriately licensed under Applicable Laws and such solicitation is in accordance with Applicable Law, including without limitation the Enterprise Selling Agreement GAD Version - September 2003 Page 6 of 59 NASD Rules of Fair Practice, and all insurance replacement regulations and regulations prohibiting the rebating of commission. 2) Broker represents and warrants that it is a registered broker-dealer under the 1934 Act, has all necessary broker-dealer licenses, is a member in good standing with the NASD, and is licensed as an insurance broker and has obtained any other approvals, licenses, authorizations, orders or consents which are necessary to enter into this Agreement and to perform its duties hereunder. Broker further represents that its Representatives who will be soliciting applications for Variable Contracts, whether alone or jointly with representatives of GAD or its designee, will at all times as required by Applicable Laws be appropriately registered and/or licensed under such laws and shall comply with all requirements of the NASD, the 1934 Act and all other federal and/or state laws applicable to the solicitation and service of the Variable Contracts including without limitation the NASD Rules of Fair Practice. 3) Broker represents that neither it nor any of its Representatives are currently under investigation by any insurance regulator, the NASD or SEC, any other self-regulatory organization or other governmental authority (except for any investigations of which it has notified GAD in writing). Broker further agrees that, if a formal or informal investigation of Broker or any of its agents is commenced by any insurance regulator, the NASD or SEC, any other self regulatory organization or other governmental authority, in connection with the sale of the Contracts, Broker will notify GAD of the existence and subject matter of such investigation. The Agency further agrees that no subagent shall be appointed to solicit and procure Contracts of GAD if the subagent has been convicted of any felony prohibited by the Federal Violent Crime Control and Law Enforcement Act of 1994. 4) Commencing at such time as GAD and Broker shall agree upon, Broker shall find suitable purchasers for the Contracts for which Representatives are licensed and authorized under Applicable Laws. In meeting its obligation to solicit applications for the Contracts, Broker agrees as follows: a) Broker shall use only those training, sales, advertising, and promotional materials with respect to the Contracts that have been pre-approved in writing by GAD for use at that time; Enterprise Selling Agreement GAD Version - September 2003 Page 7 of 59 b) Broker shall establish and implement reasonable procedures for periodic inspection and supervision of sales practices of its Representatives, and will, upon a reasonable written request from GAD, provide a report to GAD on the results of such inspections and the compliance with such procedures; provided, however, that Broker shall retain sole responsibility for the supervision, inspection and control of its Representatives; c) Broker shall take reasonable steps to ensure that its Representatives shall not make recommendations to an applicant to purchase a Contract in the absence of reasonable grounds to believe that the purchase of a Contract is suitable for such applicant to the extent required by Applicable Laws. Broker shall be solely responsible for determining the suitability of recommendations to purchase a Contract made by its agents or other representatives; and notwithstanding the foregoing, Broker may offer the Contracts in addition to offering other life insurance and annuity products to customers of Broker. Furthermore, Broker understands that no territory is exclusively assigned to Broker hereunder. Broker acknowledges and agrees that GAD may distribute the Contracts through its own employee's agent and Representatives, including those of its Affiliates, or through any other distribution method or system including (but not limited to) agreements with other insurance agencies regarding the sale of such Contracts in the territories, markets or distribution channels covered by this Agreement. d) Broker shall review diligently all Contract applications for accuracy and completeness and for compliance with the conditions herein, including the suitability and prospectus delivery requirements, and shall take all reasonable and appropriate measures to assure that applications submitted to GAD are accurate, complete, compliant with the conditions herein, and for Variable Contracts, approved by a qualified registered principal. With respect to variable Contracts distributed jointly by Broker and representatives of GAD or its designee, Broker shall ensure that all applications relating thereto have been provided to Broker for its review and approval by a qualified registered principal of Broker. 5) To the extent permitted by Applicable Laws, only the initial purchase payments for the Contracts shall be collected by Representatives of Broker. All such purchase payments shall be remitted promptly in full, (and in no event later than the time permitted under Applicable Law or the rules of the NASD), together with any related application, forms and any other required documentation to GAD or the appropriate Affiliate. The Broker shall make such remittances in accordance with any Enterprise Selling Agreement GAD Version - September 2003 Page 8 of 59 and all policies and procedures described in the Contract, insurance policy, prospectus, if appropriate, or as otherwise adopted by GAD and its Affiliates. 6) Broker acknowledges that GAD, on behalf of itself and its Affiliates, shall have the unconditional right to reject, in whole or in part, any application for a Contract. If GAD rejects an application, GAD or its Affiliate will immediately return any purchase payments received directly to the Broker, and Broker will be responsible for promptly returning such payments to the purchaser. If any purchaser of a Contract elects to return such Contract pursuant to any law or contractual provision, any purchase payment made or such other amount, as the Contract or Applicable Laws shall specify, will be returned by GAD or its Affiliates to the Broker, and the Broker will be responsible for promptly returning such payments to the purchaser. Except as otherwise may be provided in Exhibit A, B or the Compensation Schedules, if a purchase payment is either refunded or returned to the purchaser, no commission will be payable to Broker hereunder, and any commission received by Broker will be returned promptly to GAD. GAD may, at its option, offset any such amounts against any amounts payable to Broker. 7) Except as otherwise required by Applicable Laws, Broker is not a principal, underwriter or agent of GAD, or its Affiliates, or any separate account of GAD or its Affiliates. Broker shall act as an independent contractor, and nothing herein contained shall constitute Broker, nor its agents or other representatives, including Representatives as employees of GAD or its Affiliates in connection with the solicitation of applications for Contracts or other dealings with the public. Broker, its agents and its other representatives, shall not hold themselves out to be employees of GAD or its Affiliates in this connection or in any dealings with the public. 8) Broker agrees that any material it develops, approves or uses for sales, training, explanatory or other purposes in connection with the solicitation of applications for the Contracts hereunder, other than generic advertising material which does not make specific reference to GAD, its Affiliates or the Contracts, will not be used without the prior written consent of GAD. 9) Broker shall ensure that solicitation and other activities undertaken by Broker or its Representatives shall be undertaken only in accordance with Applicable Laws. Broker represents no commissions, or portions thereof, or other compensation for the sale of the Contracts will be paid to any person or entity that is not duly licensed and appointed by GAD or its Affiliates in the appropriate states as required by Applicable Laws. Broker shall ensure that Representatives fulfill any training Enterprise Selling Agreement GAD Version - September 2003 Page 9 of 59 requirements necessary to be licensed or otherwise qualified to sell the Contracts. Broker understands and acknowledges that neither it, nor any of its Representatives, is authorized by GAD to give any information or make any representation in connection with this Agreement or the offering of the Contracts other than those contained in the contract, policy, prospectus, or solicitation material authorized for use in writing by GAD or its Affiliates. Broker shall not make any representations or give information that is not contained in the contract, policy, prospectus or solicitation material of the Contracts. 10) Neither Broker nor its agents, designees or other representatives shall have authority on behalf of GAD or its Affiliates to alter or amend any Contract or any form related to a Contract to adjust or settle any claim or commit GAD or its Affiliates with respect thereto, or bind GAD or its Affiliates in any way; or enter into legal proceedings in connection with any matter pertaining to GAD's business without its prior written consent. Broker shall not expend, nor contract for the expenditure of, funds of GAD or its Affiliates nor shall Broker possess or exercise any authority on behalf of GAD other than that expressly conferred on Broker by this Agreement. 11) Broker and Agency shall be solely responsible for the accuracy and propriety of any instruction given or action taken by a Representative on behalf of an owner or prospective owner of a Contract. GAD shall have no responsibility or liability for any action taken or omitted by it in good faith in reliance on or by acceptance of such an instruction or action. 12) Broker shall prepare any forms necessary to comply with Applicable Laws or otherwise required in connection with the sale of the Contracts, either as an initial transaction or as a replacement for other insurance or annuity products, and Broker shall send such forms to GAD or the appropriate Affiliate. In the alternative, if such forms are not required, but information with respect to a transaction or replacement is required, Broker will transmit such information in writing to GAD or the appropriate Affiliate. Broker further shall notify GAD or the appropriate Affiliate when sales of the Contracts are replacement contracts. Such notification shall not be later than the time that Broker submits applications for such Contracts to GAD or the appropriate Affiliate. 13) Broker shall furnish GAD and any appropriate regulatory authority with any information, documentation, or reports prepared in connection with or related to this Agreement which may be requested by GAD or an appropriate regulatory authority in order to ascertain whether the Enterprise Selling Agreement GAD Version - September 2003 Page 10 of 59 operations of GAD or Broker related to the Contracts are being conducted in a manner consistent with Applicable Laws. 14) Broker will adhere to state insurance replacement regulations, before it receives or solicits any applications for Contracts. 15) Broker represents that it has full authority to enter into this Agreement and that by entering into this Agreement it will not impair any other of its contractual obligations with respect to sales of any Contract. 16) Insurance Coverage. a) Fidelity Bond. Broker shall secure and maintain a fidelity bond (including coverage for larceny and embezzlement), issued by a reputable bonding company, covering all of its directors, officers, agents, Representatives, associated persons and employees who have access to funds of GAD or its Affiliates. This bond shall be maintained at Broker's expense in at least the amount prescribed under Rule 3020 of the NASD Conduct Rules or future amendments thereto. Broker shall provide GAD with satisfactory evidence of said bond upon GAD's reasonable request. Broker hereby assigns any proceeds received from a fidelity bonding company, or other liability coverage, to GAD, for itself or on behalf of its Affiliates as their interest may appear, to the extent of its loss due to activities covered by the bond, policy or other liability coverage. b) Plan of Insurance. Broker shall maintain in full force and effect during the term of this Agreement a plan of insurance, which may be a plan of self-insurance, which shall provide coverage for errors and omissions of the Broker, its Agency, representatives and agents, including Representatives in an amount reasonably acceptable to GAD. If such insurance plan terminates for any reason during the term of the Agreement, Broker shall immediately notify GAD of such termination. If requested by GAD, Broker shall provide satisfactory evidence of coverage under such insurance policy satisfactory to GAD showing the amount and scope of coverage provided. c) Loss of coverage. The authority of any Representative to solicit and procure Contracts hereunder shall terminate automatically upon the termination of such Representative's coverage under the Broker's fidelity bond or plan of insurance as referenced herein. Enterprise Selling Agreement GAD Version - September 2003 Page 11 of 59 d) Broker represents that all of its directors, officers and representatives are and shall be covered by blanket fidelity bonds, including coverage for larceny and embezzlement, issued by a reputable bonding company in an amount reasonably acceptable to GAD. These bonds shall be maintained at Broker's expense and shall be at least, of the form type and amount required under the NASD Rules of Fair Practice. Upon request, Broker shall give evidence satisfactory to GAD that such coverage is in force. Furthermore, Broker shall give prompt written notice to GAD of any notice of cancellation or change of such coverage. Broker hereby assigns any proceeds received from a fidelity bonding company, or other liability coverage, to GAD, for itself or its Affiliates, as their interest may appear, to the extent of their loss due to activities covered by the bond, policy or other liability coverage. 16) In such cases where Broker intends to distribute the Variable Contracts through an Agency, Broker further represents that: a) Broker will operate and be responsible for all securities-related services provided by Agency arising from the offer, sale and/or servicing by its registered Representatives of the Variable Contracts; b) Agency will engage in the offer or sale of Variable Contracts only through persons who are registered Representatives of the Broker. Unregistered employees will not engage in any securities activities, nor receive any compensation based on transactions in securities or the provision of securities advice; c) Broker will be responsible for the education, training, supervision, and control of its registered Representatives as required under the 1934 Act and other applicable laws, including, but not limited to, principal review and approval of all sales literature and advertisements, periodic compliance audits, and maintaining ability to appoint and terminate registered persons. d) Registered Representatives will be licensed under the insurance laws of the states in which they do business and will be appointed agents by Agency for which the representatives may solicit applications in connection with the offer and sale of insurance securities; e) Broker and Agency, as applicable, will maintain the books and records relating to the sale of Variable Contracts and the receipt and disbursement of insurance commissions and fees Enterprise Selling Agreement GAD Version - September 2003 Page 12 of 59 thereon. Such books and records will be maintained and preserved in conformity with the requirements of Section 17(a) of the 1934 Act and the Rules thereunder, to the extent applicable, and will at all times be compiled and maintained in a manner that permits inspection by supervisory personnel of the Broker, the SEC, the NASD, and other appropriate regulatory authorities; and f) All premiums derived from the sale of the Variable Contracts will be made payable to and sent directly to GAD or the appropriate Affiliate or will be sent by customers to the Broker for forwarding to GAD or the appropriate Affiliate. Agency will not receive, accumulate, or maintain custody of customer funds. 17) In such cases where Broker intends to distribute Fixed Contracts through an Agency, Broker agrees that before a subagent is permitted to solicit Contracts, Broker or its Agency shall have entered into a written agreement with the subagent pursuant to which the subagent: (a) is authorized to deliver policies only upon the payment to it of the premiums due thereon and upon compliance with the terms, conditions and provisions of such policies; (b) shall promptly remit to the Broker or Agency all funds collected on GAD's or its Affiliates' behalf; (c) shall otherwise act only pursuant to the limited authority granted to the Agency hereunder and shall comply with all of the duties and obligations of the Broker hereunder and the rules of GAD or its Affiliates; and (d) agrees to GAD's right to offset from any compensation due the subagent any indebtedness due from the subagent to GAD or its Affiliates and to chargeback compensation under GAD's or its Affiliates' rules. The Broker further agrees that it shall promptly remit to GAD all funds collected on the behalf of GAD or its Affiliates. 18) Broker agrees to comply with the policies and procedures of GAD and its Affiliates with respect to the solicitation, sales and administration of Contracts and services Broker and Representatives are authorized to sell and service under the Agreement, including, but not limited to, privacy policies and procedures, as those policies and procedures may be provided to Broker by GAD from time to time. 19) For a period of 12 months after termination of the Agreement, the Broker and Agency shall not, directly or indirectly, on a systematic basis, contact the policyholders of GAD or its Affiliates or condone such contact for the purpose of inducing any such policyholders to lapse, cancel, and fail to renew or replace any Contract. If the Agency, in the judgment of GAD is determined to have engaged in such prohibited activity, then GAD shall have the right to declare the Agency's claims Enterprise Selling Agreement GAD Version - September 2003 Page 13 of 59 for compensation or any other benefit under the Agreement shall be forfeited and void. GAD, on behalf of itself and its Affiliates, may also pursue all remedies, including injunction, to assure compliance with the covenants in this section and shall, if successful, be entitled to recover from the Agency all costs and expenses incurred in pursuing such remedies, including reasonable attorneys' fees. 20) In such cases where Broker shall distribute Contracts with the assistance of the general agency distribution system of GAD ("General Agent"), the following additional terms shall apply: a) Broker hereby acknowledges and consents to in advance the participation of every General Agent, designated by GAD, as a participating general agency under this Agreement. b) Broker agrees that both it and its Representatives shall work cooperatively with the General Agent(s) located in the particular territory where a Contract is sold and through which the sale is processed on behalf of GAD or its Affiliates. Broker further agrees that with respect to each such Contract, it will rely solely upon the General Agent(s) for Contract issuance, servicing, the forwarding of commissions, and other related matters. Notwithstanding the foregoing, the Broker agrees that it shall look solely to GAD and not to General Agent(s) for payment of any commissions or other compensation payable pursuant to the terms of this Agreement. III. Compliance With Applicable Laws 1) GAD and Broker agree to comply with all applicable state and federal statutes, laws, rules, and regulations including without limitation, state insurance laws, rules and regulations, and federal and state securities laws, rules and regulations. Applicable state and federal statutes, laws, rules and regulations may also include, applicable rulings of federal and state regulatory organizations, agencies and self regulatory agencies, including without limitation state insurance departments, the SEC and the NASD, consumer privacy laws, HIPAA and any other state or federal laws, rules or regulations and decisions, orders and rulings of state and federal regulatory agencies that are now or may hereafter become applicable to the parties hereto and the transactions that are the subject of this Agreement ("Applicable Laws"). 2) Broker agrees to comply with all applicable anti-money laundering laws, regulations, rules and government guidance, including the reporting, recordkeeping and compliance requirements of the Bank Secrecy Act ("BSA"), as amended by The International Money Laundering Abatement and Enterprise Selling Agreement GAD Version - September 2003 Page 14 of 59 Financial Anti-Terrorism Act of 2002, Title III of the USA PATRIOT Act ("the Act"), its implementing regulations, and related SEC and SRO rules. These requirements include requirements to identify and report currency transactions and suspicious activity, to implement a customer identification program to verify the identity of customers, and to implement an anti-money laundering compliance program. As required by the Act, Broker certifies that it has a comprehensive anti-money laundering compliance program that includes, policies, procedures and internal controls for complying with the BSA; policies, procedures and internal controls for identifying, evaluating and reporting suspicious activity; a designated compliance officer or officers; training for appropriate employees; and an independent audit function. Further Broker certifies, and will certify to GAD annually hereafter, that it has established and implemented a Customer Identification Program, in compliance with applicable regulations, as part of its anti-money laundering compliance program that, at a minimum, requires (i) the verification of the identity of any customer seeking to open an account; (ii) the retention of a record of the information used to verify each customer's identity; and (iii) the determination, within a reasonable time before or after the account is opened, as to whether the customer appears on any lists of known or suspected terrorists or terrorist organizations as provided to it by any government agency. Broker hereby agrees that it will verify the identity of each customer that it introduces GAD, whether through documentary or non-documentary means, and that GAD will rely upon such verification, as prescribed by the regulations promulgated under Section 326 of the Act in accordance with the safe-harbor provided in Section 103.122(b)(6) of the regulations under the Act. IV. Principles of Ethical Market Conduct As a member of the American Council of Life Insurance's Insurance Marketplace Standards Association (IMSA), GAD expects that the Agency and its subagents will abide by the six principles of ethical market conduct set forth by IMSA in connection with all Contracts sold pursuant to this Agreement. The six principles are as follows: (a) to conduct business according to high standards of honesty and fairness and to render that service to its customers which in the same circumstances, it would apply to or demand for itself; (b) to provide competent and customer focused sales and service; (c) to engage in active and fair competition; (d) to provide advertising and sales material that are clear as to purpose and honest and fair as to content; (e) to provide fair and expeditious handling of customer complaints and disputes; and (f) to maintain a system of supervision and review that is reasonably designed to achieve compliance with these principles of ethical market conduct. Broker shall furnish information, documentation and reports to GAD as it Enterprise Selling Agreement GAD Version - September 2003 Page 15 of 59 may reasonably request in order to permit GAD to ascertain whether Broker is conducting its operations in accordance with the Principles of Ethical Market Conduct. V. Compensation 1) GAD shall pay Broker compensation for the sale of each Contract sold by Representative of Broker as set forth in Exhibits A, B and the Compensation Schedule(s) attached between GAD and either Broker or Agency, as the case may be. GAD shall identify to Broker with each such payment the name or names of the Representative(s) of Broker who solicited each Contract covered by the payment. Broker will be responsible for issuing checks, statements or forms for tax purposes and other administrative duties connected with compensation of such Representatives. Unless otherwise agreed upon by the parties, GAD shall have no obligation to any of the employees, agents or Representatives of Broker or Agency for the payment of any compensation. Unless otherwise provided in Exhibits A, B or the Compensation Schedules, Exhibits A, B and the Compensation Schedules, including the commissions and fees therein, may be amended by GAD at any time, in any manner, and without prior notice. Any amendment to Exhibits A, B or in the Compensation Schedules will be applicable to any Contract for which any application or premium is received by GAD on or after the effective date of such amendment. However, GAD reserves the right to amend such Exhibits and Schedules with respect to subsequent premiums and renewal commissions and the right to amend such Exhibits and Schedules pursuant to this subsection even after termination of this Agreement. 2) GAD may at any time offset against any compensation payable to (a) the Agency or its successors or assigns, any indebtedness due from the Agency to GAD or its Affiliates, and (b) the subagents or their successors or assigns any indebtedness due from the subagent to GAD or its Affiliates. Nothing contained herein shall be construed as giving Agency or representative the right to incur any indebtedness on behalf of GAD or its Affiliates. Any remaining indebtedness of Broker to GAD or its Affiliates arising under this Agreement shall be a first lien against any monies payable hereunder. The right of Broker, or any person claiming through Broker to receive any compensation provided by this Agreement shall be subordinate to the right of GAD to offset such compensation against any such indebtedness of the Broker to GAD or its Affiliates. 3) Neither Broker nor any of its Representatives shall have any right to withhold or deduct any part of any premium or other purchase payment it shall receive with respect to the Contracts covered by this Agreement for purposes of payment of commission or otherwise. Enterprise Selling Agreement GAD Version - September 2003 Page 16 of 59 4) No compensation shall be payable, and any compensation already paid shall be returned to GAD on request, under each of the following conditions: a) if GAD or its Affiliates, in their sole discretion, determine not to issue the Contract applied for, b) if GAD or its Affiliates refund the premium paid by the applicant, upon the exercise of applicant's right of withdrawal pursuant to any "free-look" privilege, c) if GAD or its Affiliates refund the premium paid by applicant as a result of the resolution of a consumer complaint, recognizing that GAD and its Affiliates have sole discretion to refund premiums paid by applicants, or d) if GAD or its Affiliates determine that any person signing an application who is required to be registered and/or licensed or any other person or entity receiving compensation for soliciting purchases of the Contracts is not duly registered and/or licensed to sell the Contracts in the jurisdiction of such attempted sale. 5) GAD shall pay the compensation to Agency for Contracts credited prior to the termination date of this Agreement, to the Agency under the Agreement, as set forth in Exhibit A, B or any Compensation Schedule(s), attached, while it is in effect. Such Compensation shall be payable when the premium is due and paid to GAD subject to the provisions of this Agreement and of the Schedule(s). 6) Agency and Broker hereby agree and acknowledge that compensation attributable to the sale of any Contract issued by an Affiliate may be payable directly by GAD, in its discretion, to Agency or Broker where permitted, and not by the Affiliate. Agency and Broker further agree and acknowledge that such payment of compensation by GAD attributable to the sale of such Contracts shall constitute a complete discharge of the obligation to pay compensation by the Affiliate issuer under this Agreement. The foregoing manner of payment shall not affect the right of offset or chargeback as referred to in Sections V (2) and V (4) of this Agreement, or other compensation rules as may be set forth in this Agreement, Compensation Schedules(s), or rules of GAD or its Affiliates. Enterprise Selling Agreement GAD Version - September 2003 Page 17 of 59 7) GAD shall not be obligated to pay any compensation, which would violate the applicable laws of any jurisdictions, anything in this Agreement notwithstanding. 8) Unless otherwise agreed to by GAD, Broker, either directly or by reimbursing GAD on request, shall pay for expenses incurred by such Broker in connection with the solicitation, offer and sale of the Contracts. 9) In addition to the conditions and limitations elsewhere contained in the Agreement and the Compensation Schedule(s), no first year commission shall be payable on replacements or switches of any Contract with another Contract, which are undisclosed, and which otherwise requires disclosure by either state regulation or GAD's or its Affiliates' rules on replacement transactions; the replacement or switching rules of each applicable Affiliate are described on Exhibit C attached hereto. 10) With respect to compensation under this Agreement, in the event that anything contained in this Section V conflicts with the terms of the compensation described in the attached Exhibits A, B or Compensation Schedule(s), the terms contained in such schedules attached will prevail. VI. Complaints and Investigations 1) Broker and GAD jointly agree to cooperate fully in any regulatory investigation or proceeding or judicial proceeding arising in connection with the offer, sale, and/or servicing of the Contracts. 2) Both the Broker and GAD jointly agree to investigate any customer complaint in connection with the Contracts. The term customer complaint shall mean an oral or written communication either directly from the purchaser of or applicant for Contract covered by this Agreement or his/her legal representative, or indirectly from a regulatory agency to which he/she or his/her legal representative has expressed a grievance. 3) Such cooperation referred to in Sections VI (1) and VI (2) of this Agreement shall include, but is not limited to, each party promptly notifying the other of the receipt of notice of any such investigation or proceeding, forwarding to the other party a copy of any written materials in connection with the matter and such additional information as may be necessary to furnish a complete understanding of same. In the case of a customer complaint, promptly refer such Enterprise Selling Agreement GAD Version - September 2003 Page 18 of 59 complaint to the other party for handling where appropriate and provide the other party with customer complaint information and documentation upon request. A complaint is defined as a written or documented verbal communication received by a company or its distributors, which primarily expresses a grievance. 4) GAD reserves the right to settle on behalf of itself, and on behalf of itself and Broker collectively if Broker agrees, any claims, complaints or grievances made by applicants, policyholders or others in connection with the Contracts, and concerning any conduct, act or omission by the Broker or its agents or representatives with respect to the Contracts or any transactions arising out of this Agreement. If Broker does not agree to a collective settlement with GAD and GAD, on behalf of itself, settles the matter, Broker shall indemnify and hold harmless GAD from any and all claims, complaints or grievances made by Broker or any applicant, policyholder or other made in connection with such matter. VII. Records and Administration 1) To the extent requested by Broker and agreed to by GAD, once a Contract has been issued, it will be delivered after review by Broker to the applicant, accompanied by any applicable Notice of Withdrawal Right and any additional appropriate documents. GAD will confirm or cause to be confirmed to customers all Contract transactions, as to the extent legally required, and will administer the Contracts after they have been delivered, but may from time to time require assistance from Broker. Consistent with its administrative procedures, GAD will assume that a Contract issued by it or its Affiliate will be promptly delivered by Broker to the purchaser of such Contract. As a result, if a purchaser exercises the free look rights under a Contract, Broker shall indemnify GAD for any loss incurred by GAD that results from Broker's failure to promptly deliver such Contract to its purchaser. 2) Broker will maintain all books and records as required by Rules 17a-3 and 17a-4 under the 1934 Act, except to the extent that GAD may agree to maintain any such records on Broker's behalf. Records subject to any such agreement shall be maintained by GAD as agent for Broker in compliance with said rules, and such records shall be and remain the property of Broker and be at all times subject to inspection by the SEC in accordance with Section 17(a) of that Act. Nothing contained herein shall be construed to affect GAD's or its Affiliates' right to ownership and control of all pertinent records and documents pertaining to its business operations including, without limitation, its operations relating to the Contracts, which right is hereby recognized and affirmed. Enterprise Selling Agreement GAD Version - September 2003 Page 19 of 59 GAD and Broker agree that each shall retain all records related to this Agreement as required by the 1934 Act, and the rules and regulations thereunder and by any other applicable law or regulation, as Confidential Information as described in Section VIII(D) of this Agreement, and neither party shall reveal or disclose such Confidential Information to any third party unless such disclosure is authorized by the party affected thereby or unless such disclosure is expressly required by applicable federal or state regulatory authorities. However, nothing contained herein shall be deemed to interfere with any document, record or other information, which by law, is a matter of public record. VIII. Privacy Information A. Proprietary Information Any and all account records developed by GAD or its Affiliates, or provided to GAD or its Affiliates by Broker or Broker's affiliates, including but not limited to customer files, sales aides, computer software, customer names, addresses, telephone numbers and related paperwork, literature, authorizations, manuals and supplies of every kind and nature relating to the Contracts and the servicing of the Contracts are and shall remain the property of GAD or its Affiliates. Such proprietary information and materials shall be treated as nonpublic personal information and/or confidential information, as appropriate pursuant to Sections VIII(A), (B), (C), and (D) of this Agreement. Any and all proprietary information and material developed and provided by GAD and its Affiliates shall be returned to GAD (including all copies made by the Broker or its affiliates) upon termination of this Agreement. Any materials developed by the Broker or its affiliates in support of the marketing, sales, advertising or training related to GAD or its Contracts shall be destroyed upon the termination of the Agreement. B. Receipt of Customer Nonpublic Personal Information From Broker by GAD 1) GAD and its Affiliates will treat Nonpublic Personal Information regarding Broker's customers provided to it by Broker under this Agreement as Confidential Information under Section VIII(D) of this Agreement, except that such provisions shall not apply to such information regarding customers of Broker who were, are or become policyholders or customers of GAD or its Affiliates other than by reason of the services provided by Broker under this Agreement. Enterprise Selling Agreement GAD Version - September 2003 Page 20 of 59 2) Notwithstanding the foregoing, GAD and its Affiliates shall have the right to use or disclose such nonpublic personal information: (a) to the full extent required to comply with Applicable Laws or requests of regulators; (b) as necessary in connection with any of GAD and its Affiliates' audit, legal, compliance or accounting procedures; (c) as necessary or permitted by Applicable Laws in the ordinary course of business, for example to administer Contracts and provide customer service to purchasers of Contracts under this Agreement; (d) as authorized by such customer; and (e) to protect against or prevent fraud. 3) GAD and its Affiliates may market, offer, sell or distribute insurance products, including, but not limited to, the Contracts, or any of their other products and related services, outside of this Agreement to customers of Broker provided they do not use Nonpublic Personal Information regarding Broker's customers provided by Broker to specifically target customers, and such marketing, offering, selling or distributing by GAD and its Affiliates of insurance (including but not limited to the Contracts) or any of their other products or services shall not be subject to the terms of this Agreement. C. Treatment of Nonpublic Personal Information Disclosed to Broker by GAD Broker will treat Nonpublic Personal Information regarding Broker's customers provided to it by GAD or its Affiliates under this Agreement as Confidential Information and shall use such information only to solicit sales of and to provide service with respect to Contracts sold pursuant to this Agreement. Notwithstanding the foregoing, Broker shall have the right to use or disclose Nonpublic Personal Information provided to it by GAD or its Affiliates to the extent permitted by Applicable Laws and GAD or its Affiliate's privacy policy, for example, to comply with Applicable Laws or requests of regulators, in connection with Broker's audit procedures, as authorized by such customers, and to protect against or prevent fraud. D. Confidential Information 1) GAD and its Affiliates and Broker will maintain the confidentiality of Confidential Information disclosed by either party to the other party under the terms of this Agreement. Except as otherwise provided in Sections VIII(A) and VIII(B), neither GAD and its Affiliates nor Broker shall disclose any Confidential Information that is covered by this Agreement, and shall only disclose such information if authorized in writing by the affected party or if expressly required under the terms of a valid subpoena or order issued by a court of competent jurisdiction or regulatory body or Enterprise Selling Agreement GAD Version - September 2003 Page 21 of 59 applicable laws and regulations. "Confidential Information" means: (a) any information that this Agreement specifies will be treated as "Confidential Information" under this Section VIII(D); (b) any information of Broker and its affiliates disclosed by Broker to GAD or its Affiliates through the course of business during the term of this Agreement, or any information of GAD and its Affiliates that is disclosed by GAD or its Affiliates to Broker through the course of business during the term of this Agreement, in each such case if such information is clearly identified as and marked "confidential" by the disclosing party, such information includes, but is not limited to, new products, marketing strategies and materials, development plans, customer information, client lists, pricing information, rates and values, financial information and computer systems; (c) Nonpublic Personal Information; and (d) information required to be treated as confidential under Applicable Laws. 2) "Confidential Information" does not include (i) information which is now generally available in the public domain or which in the future enters the public domain through no fault of the receiving party; (ii) information that is disclosed to the receiving party by a third party without violation by such third party of an independent obligation of confidentiality of which the receiving party is aware; or (iii) information that the disclosing party consents in writing that the receiving party may disclose. 3) The disclosing party warrants that it has the right to provide access to, disclose and use, the Confidential Information to be provided hereunder. The receiving party shall not be liable to the other for: a) inadvertent use, publication, or dissemination of the Confidential Information received hereunder provided that: (i) it uses the same degree of care in safeguarding such information as it used for its own information of like importance; (ii) it has complied with Applicable Laws; and (iii) upon discovery of such, it shall take steps to prevent any further inadvertent use, publication, or dissemination; and/or b) unauthorized use, publication or dissemination of the Confidential Information received hereunder by persons who are or have been in its employ unless it fails to safeguard such information with the same degree of care as it uses for its own proprietary information of like importance and provided that the receiving party uses such Confidential Information in accordance with Applicable Laws. Enterprise Selling Agreement GAD Version - September 2003 Page 22 of 59 4) Any similarity between the Confidential Information and any other information, regardless of medium, whether verbal or written, as well as contracts and/or services acquired from third parties or developed by the receiving party, or Affiliates independently through its or their own efforts, thought, labor and ingenuity shall not constitute any violation of this Agreement and shall not subject the receiving party to any liability whatsoever. 5) The receiving party shall use the Confidential Information solely for purposes contemplated by this Agreement and shall not disclose the Confidential Information except as expressly provided herein. 6) The receiving party understands that neither the disclosing party nor any of its representatives or designees have made or make any representation or warranty as to the accuracy or completeness of the Confidential Information. E. Protected Health Information To the extent that Broker and its Representatives receive, create, has access to or uses PHI, as that term is defined in Section I of the Agreement, regarding individuals who are applicants for, owners of or eligible for benefits under certain health insurance products and optional riders offered by or through GAD or any of its Affiliates, in accordance with the requirements of the federal Health Insurance Portability and Accountability Act of 1996 and related regulations ("HIPAA"), as may be amended from time to time, Broker agrees: 1) Not to use or disclose PHI except (i.) to perform functions, activities, or services for, or on behalf of, GAD or its Affiliates as specified in the Agreement and consistent with applicable laws, or (ii.) to the extent that such use or disclosure is required by law. Any such use or disclosure shall be limited to that required to perform such services or to that required by relevant law. 2) To use appropriate safeguards to prevent use or disclosure of PHI other than as permitted by this Agreement. 3) To promptly report to GAD any use or disclosure of PHI not permitted by this Agreement of which Broker becomes aware and to mitigate any harmful effect of any use or disclosure that is made by Broker or its Representatives in violation of the requirements of this Agreement. Enterprise Selling Agreement GAD Version - September 2003 Page 23 of 59 4) To ensure that any third party with whom Broker contracts or is hired under that arrangement, receives or has access to PHI agrees to the same restrictions and conditions that apply to Broker with respect to PHI under this Agreement. 5) To, within 15 days of GAD's request, provide GAD with any PHI or information relating to PHI as deemed necessary by GAD to provide individuals with access to, amendment of, and an accounting of disclosures of their PHI. 6) To make Broker's records relating to use or disclosure of PHI available to the Secretary of the United States Department of Health and Human Services at his/her request to determine GAD's, or one of its Affiliate's, compliance with HIPAA. 7) To, upon termination of this Agreement, in accordance with GAD's wishes either return or destroy all PHI Broker maintains in any form and retain no copies. If GAD agrees that such return or destruction is not feasible, Broker shall extend these protections to the PHI beyond the termination of the Agreement, in which case any further use or disclosure of the PHI will be solely for the purposes that make return or destruction infeasible. Destruction without retention of copies is deemed "infeasible" if prohibited by the terms of the Agreement or by applicable law, including record retention requirements of various state insurance laws. IX. Indemnification 1) Except with respect to matters relating to the joint distribution of Contracts, the following indemnification provisions shall apply: a) GAD will indemnify and hold harmless Broker and Agency from any and all losses, claims, damages or liabilities (or actions in respect thereof), to which Broker may become subject, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Prospectus, Registration Statements or any other sales or offering materials furnished or approved in writing by GAD for any of the Contracts or any relevant funding vehicle or any amendments or supplements thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; and will reimburse Broker for any legal or other expenses reasonably incurred by it in connection with investigating or defending against such loss, claim, damage, liability or action in respect thereof; provided, however, that Enterprise Selling Agreement GAD Version - September 2003 Page 24 of 59 GAD shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made by Broker when referring to or explaining such Prospectus, amendment, Registration Statement or any other sales or offering materials. GAD shall not indemnify Broker for any action where an applicant for any of the Contracts was not furnished or sent or given, at or prior to written confirmation of the sale of a Contract, a copy of the appropriate Prospectus (es), any Statement of Additional Information, if required or requested, and any supplements or amendments to either furnished to Broker by GAD. The forgoing indemnities shall, upon the same terms and conditions, extend to and inure to the benefit of each director, trustee and officer of Broker and any person controlling it. b) Broker will indemnify and hold harmless GAD and its Affiliates against any losses, claims, damages or liabilities (or actions in respect thereof), to which GAD or its Affiliates may become subject, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any negligent, improper, fraudulent or unauthorized acts or omissions by Broker, its employees, agents, representatives, officers or directors, including but not limited to improper or unlawful sales practices, any statement or alleged untrue statement of any material fact, any omission or alleged omission, any unauthorized use of sales materials or advertisements, and any oral or written misrepresentations; and will reimburse GAD or its Affiliates for any legal or other expenses reasonably incurred by them in connection with investigating or defending against any such loss, claim, damage, liability or action. The foregoing indemnities shall, upon the same terms and conditions, extend to and inure to the benefit of each director, trustee and officer of GAD and its Affiliates, and any person controlling either GAD or its Affiliates. c) Broker shall indemnify and hold harmless GAD and its Affiliates from any and all losses, claims, damages or liabilities (or actions in respect thereof) to which GAD or its Affiliates may be subject, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or result from any breach of any representation or warranty, covenant, agreement, obligation or undertaking in this Agreement by Broker or its directors, officers, employees or other representatives or by any other person or entity acting on behalf of or under control of Broker; and will reimburse GAD or its Affiliates for any legal or other expenses reasonably incurred by them in connection with investigating or defending against any such loss, claim, damage, liability or action. The foregoing indemnities shall, upon the same terms and Enterprise Selling Agreement GAD Version - September 2003 Page 25 of 59 conditions, extend to and inure to the benefit of each director, trustee and officer of GAD and its Affiliates, and any person controlling either GAD or its Affiliates. d) Broker shall indemnify and hold GAD and its Affiliates harmless for any penalties, losses or liabilities resulting from GAD improperly paying any compensation under this Agreement, unless such improper payment was caused by GAD's or its Affiliates' negligence or willful misconduct; and will reimburse GAD or its Affiliates for any legal or other expenses reasonably incurred by them in connection with investigating or defending against any such loss, claim, damage, liability or action. The foregoing indemnities shall, upon the same terms and conditions, extend to and inure to the benefit of each director, trustee and officer of GAD, its Affiliates, and any person controlling either GAD or its Affiliates. 2) With respect to matters relating to the joint distribution of Contracts, the following indemnification provision shall apply: a) GAD, and General Agent, where applicable, jointly and severally, agree to indemnify Broker and Agency against and hold them harmless from any and all claims, damages, lawsuits, administrative proceedings, liabilities and expenses (including reasonable attorneys' fees) against Broker or Agency arising or resulting directly or indirectly from acts or omissions of GAD or General Agent(s), including, but not limited to, breach of any representation, warranty, covenant or obligation of GAD or General Agent(s) under the Agreement, or of any of their officers or employees in connection with performance under the Agreement. For purposes of this Section only, Broker shall be deemed to include its "controlling persons" as defined in Section 15 of the 1933 Act and Section 20(a) of the 1934 Act. b) Broker and Agency, where applicable, jointly and severally, agree to indemnify GAD, its Affiliates and General Agent(s) against and hold them harmless from any and all claims, damages, lawsuits, administrative proceedings, liabilities and expenses (including reasonable attorneys' fees) against GAD, its Affiliates or General Agent(s) arising or resulting directly or indirectly from acts or omissions of Broker or Agency, including, but not limited to, breach of any representation, warranty, covenant or obligation of Broker or Agency under the Agreement, or of any of their officers or employees in connection with performance under the Agreement. For purposes of this Section only, GAD shall be deemed to include its "controlling persons" as defined in Section 15 of the 1933 Act and Section 20(a) of the 1934 Act. Enterprise Selling Agreement GAD Version - September 2003 Page 26 of 59 3) Promptly after receipt by an indemnified party of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party, notify the indemnifying party in writing of the commencement thereof; but the omission to notify the indemnifying party shall not relieve it from any liability which it may otherwise have to any indemnified party. In case any such action shall be brought against any indemnified party, it shall notify the indemnifying party of the commencement thereof. The indemnifying party shall be entitled to participate in, and, to the extent that it shall wish, jointly with any other indemnifying party, similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. X. General Provisions A. Term and Termination 1) This Agreement shall continue in force for a term of one year from the Effective Date and thereafter shall automatically be renewed each year for a further one-year period, provided that any party may unilaterally terminate this Agreement with or without cause upon thirty (30) days prior written notice of termination to the other parties. 2) Change in Status. a) Broker-Dealer Status. The Agreement shall terminate immediately upon GAD or Broker ceasing to be a registered broker-dealer or a member of the NASD. b) Legal Status. The Agreement shall terminate immediately upon the termination of the legal existence of Broker or the Agency, or the merger, consolidation, reorganization, dissolution, receivership or bankruptcy of either, or whenever the Broker or Agency is no longer licensed under law to solicit and procure applications for Contracts, unless the Agency notifies the other parties in writing at least thirty (30) days' prior to the occurrence of any of the above events and obtains written permission to continue on a basis approved by the other parties. Enterprise Selling Agreement GAD Version - September 2003 Page 27 of 59 3) Upon termination of this Agreement, all authorizations, rights and obligations shall cease except (a) the agreements contained in Sections, VI, VIII, IX, X(E), X(F), and X(J) hereof; and (b) the obligation to settle accounts hereunder. Except with respect to records required to be maintained by Broker pursuant to Rules 17a-3 and 17a-4 under the 1934 Act, Broker shall return to GAD, within 30 days after the Effective Date of termination, any and all records in its possession which have been specifically maintained in connection with GAD's operations related to the Contracts. B. Assignability This Agreement shall not be assigned by either party without the written consent of the other; provided, however, that GAD may assign this Agreement to its Affiliates at any time. Any purported assignment in violation of this Section shall be void. C. Amendments No oral promises or representations shall be binding nor shall this Agreement be modified except by agreement in writing, executed on behalf of the Parties by a duly authorized officer of each of them. D. Notices Notices to be given hereunder shall be addressed to: General American Distributors, Inc. Equitas America, LLC Attn: Law Department __________________________ 13045 Tesson Ferry Road __________________________ St. Louis, MO 63128 __________________________ E. Arbitration 1) All disputes and differences between the parties, other than those arising with respect to the use of nonpublic personal information under Section VIII must be decided by arbitration, regardless of the insolvency of either party, unless the conservator, receiver, liquidator or statutory successor is specifically exempted from an arbitration proceeding by applicable state law. 2) Either party may initiate arbitration by providing written notification to the other party. Such written notice shall set forth (i) a brief statement of the issue(s); (ii) the failure of the parties to reach agreement; and (iii) the date of the demand for arbitration. Enterprise Selling Agreement GAD Version - September 2003 Page 28 of 59 3) The arbitration panel shall consist of three arbitrators. The arbitrators must be impartial and must be or must have been officers of life insurance and or securities companies other than the parties or their affiliates. 4) Each party shall select an arbitrator within thirty (30) days from the date of the demand. If either party shall refuse or fail to appoint an arbitrator within the time allowed, the party that has appointed an arbitrator may notify the other party that, if it has not appointed its arbitrator within the following ten (10) days, an arbitrator will be appointed on its behalf. The two (2) arbitrators shall select the third arbitrator within thirty (30) days of the appointment of the second arbitrator. If the two arbitrators fail to agree on the selection of the third arbitrator within the time allowed, each arbitrator shall submit to the other a list of three (3) candidates. Each arbitrator shall select one name from the list submitted by the other and the third arbitrator shall be selected from the two names chosen by drawing lots. 5) The arbitrators shall interpret this Agreement as an honorable engagement rather than merely as a legal obligation and shall consider practical business and equitable principles as well as industry custom and practice regarding the applicable insurance and securities business. The arbitrators are released from judicial formalities and shall not be bound by strict rules of procedure and evidence. 6) The arbitrators shall determine all arbitration schedules and procedural rules. Organizational and other meetings will be held in Missouri, unless the arbitrators select another location. The arbitrators shall decide all matters by majority vote. 7) The decisions of the arbitrators shall be final and binding on both parties. The arbitrators may, at their discretion, award costs and expenses, as they deem appropriate, including but not limited to legal fees and interest. The arbitrators may not award exemplary or punitive damages. Judgment may be entered upon the final decision of the arbitrators in any court of competent jurisdiction. 8) Unless the arbitrators shall provide otherwise, each party will be responsible for (a) all fees and expenses of its respective counsel, accountants, actuaries and any other representatives in connection with the arbitration and (b) one-half (1/2) of the expenses of the arbitration, including the fees and expenses of the arbitrators Enterprise Selling Agreement GAD Version - September 2003 Page 29 of 59 F. Governing Law This Agreement shall be governed by and construed in accordance with the laws of the State of Missouri without regard to Missouri choice of law provisions. G. Entire Understanding This Agreement and any reference incorporated herein constitute the complete understanding of the parties and supersedes in its entirety any and all prior and contemporaneous agreements among the parties with respect to the subject matter discussed herein. No oral agreements or representations shall be binding. H. No Third Party Beneficiaries GAD's Affiliates shall be third party beneficiaries of this Agreement, entitled to enforce the provision hereof as if they were a party to this Agreement. Except as otherwise provided in the preceding sentence, nothing in the Agreement shall convey any rights upon any person or entity, which is not a party to the Agreement. I. Non-exclusivity Broker and Agency agree that no territory or product is assigned exclusively hereunder and that GAD reserves the right in its discretion to enter into selling agreements with other broker-dealers, and to contract with or establish one or more insurance agencies in any jurisdiction in which Broker transacts business hereunder. J. Waiver The failure of either party to strictly enforce any provision of this Agreement shall not operate as a waiver of such provision or release either party from its obligation to perform strictly in accordance with such provision. K. Counterparts This Agreement may be executed in counterparts, with the same force and effect as if executed in one complete document. L. Severablity If any provision of this Agreement is declared null, void or unenforceable in whole or in part by any court, arbitrator or governmental agency, said provision shall survive to the extent it is not so Enterprise Selling Agreement GAD Version - September 2003 Page 30 of 59 declared and all the other provisions of the Agreement shall remain in full force and effect unless, in each case, such declaration shall serve to deprive any of the parties hereto of the fundamental benefits of this Agreement. In reliance on the representations set forth and in consideration of the undertakings described, the parties represented below do hereby contract and agree. GENERAL AMERICAN DISTRIBUTORS (BROKER-DEALER) By ------------------------------------- - ---------------------------------------- Print Name & Title Date ------------------------------------ EQUITAS AMERICA, LLC (SELLING BROKER-DEALER) By -------------------------------------- - ---------------------------------------- Print Name & Title Date ------------------------------------ Enterprise Selling Agreement GAD Version - September 2003 Page 31 of 59 EXHIBIT A Schedule of Variable Product and Compensation The following General American Variable Contracts are governed by this Agreement: VUL (00) VUL 2002 ** *Offers may be made without restriction by the Broker when the non-chargeback compensation schedule is utilized. If the chargeback compensation is desired, pre-approval is required by General American's Executive Benefits Advisors department ** This product is available as it is approved in individual states. COMMISSION SCHEDULE 1. Broker shall be paid a commission for products listed in Schedule A accepted by General American under an issued Contract for which Broker solicited the business, in accordance with the schedule listed below. 2. In the event a Contract for which a commission has been paid lapses or is surrendered by the Contract owner during the first policy year, or is returned to General American or GAD for refund of premium within the later of ten (10) days after the purchaser receives it or forty-five (45) days after the application for the policy is completed, or a premium for which commission has been paid is refunded by General American, GAD will require reimbursement from Broker, as follows: a. 100% if the triggering event occurs within six months of the policy issue date; b. 50% if the triggering event occurs during the seventh through twelfth month of the policy issue date. If the amount to be deducted exceeds compensation due, BD shall promptly pay back the amount of excess following a written demand by General American or GAD. AGENT LEVEL VUL (00) and VUL 2002 % of 1st Year Premium % of Renewal Premium Years 2-10 Years 11+ - -------------------------------------------------------------------------------- Target 90% 2% 1% - -------------------------------------------------------------------------------- Excess 3% 2% 1% - -------------------------------------------------------------------------------- % of Assets all years .10% Enterprise Selling Agreement GAD Version - September 2003 Page 32 of 59 The following New England Life Insurance Company Variable Contracts are governed by this Agreement: Variable Universal Life (VUL) Variable Ordinary Life (VOL) New England Life Insurance Company Commissions For policies credited to the Agency under the Agreement while this Part is in effect, commissions payable to Agency shall be payable when the premium is due and paid to the Company subject to the provisions of the Agreement.
Single Life First Year Renewal Years 2-10 - Variable Universal Life (VUL) - Band 0 50 (3% over Target) 2.50 (1.5% over Target) - Band 1 50 (3% over Target) 2.50 (1.5% over Target) - Band 2 50 (3% over Target) 2.25 (1.5% over Target) - Variable Ordinary Life (VOL) - Band 1 50 (3% over Target) 2.50 (1.5% over Target) - Band 2 50 (3% over Target) 2.50 (1.5% over Target) Joint Life - Variable Universal Survivorship Life (VUSL) - Band 1 50 (3% over Target) 2.00 (1.5% over Target) - Band 2 50 (3% over Target) 2.00 (1.5% over Target)
(a) Reductions in FYC for High Issue Ages: FYC decreases by the following percentage points for each year the issue age is over 70 (joint equal age for survivorship policies): VOL: 2% (b) Commission Chargebacks: All commissions paid on premiums which are refunded shall be charged back to the Agency. For variable life-type plans (VUSL, VUL, VOL), 50% of any FYC paid, net of chargebacks premiums refunded, shall be charged back to the Broker Dealer for any coverage which is terminated in or prior to the 13th month. (c) Policy Bands: VUL: Band 0 - less than $250,000 face amounts Band 1 - less than $500,000 and at least $250,000 face amounts Band 2 - face amounts of $500,000 and above VOL: Band 1 - less than $250,000 face amounts Band 2 - face amounts of $250,000 and above VUSL: Band 1 - Less than $1,000,000 face amounts Band 2 - Face amounts of $1,000,000 and above (d) Target Premiums: Are as published by the Company Enterprise Selling Agreement GAD Version - September 2003 Page 33 of 59 Expense Reimbursement Allowances and Service Fees to the Agency Expense Reimbursement Allowance For policies credited to the Agency while this part is in effect, an ERA amount shall be paid to the Broker Dealer in a given month equal to a percentage of FYC earned in the preceding month as follows: 50% up to target on the following policies VUL Band 0, 1 & 2; VOL Band 1 & 2 VSUL Bands 1 & 2 25% on "over the Target Premium" for all flexible premium products (except VUL Band 2) 18% on "over the Target Premium" for VUL Band 2 Service Fees No service fees are payable on target premium or excess premium. Enterprise Selling Agreement GAD Version - September 2003 Page 34 of 59 The following Metropolitan Life Insurance Company Variable Contracts are governed by this Agreement: Universal Life 2001 ( UL (01) ) Universal Life Base Policy (UL1) Life Paid up at 98 (L98) Variable Rider and Premium Option METROPOLITAN LIFE INSURANCE COMPANY
UL (01) and UL 1 % of 1st Year Premium % of Renewal Premium Years 2-10 - ------------------------------------------------------------------------------- Target 50% 3% - ------------------------------------------------------------------------------- Excess 3% 3% - -------------------------------------------------------------------------------
Expense Reimbursement Allowances For policies credited to the Agency while this part is in effect, an ERA amount shall be paid to the Agency in a given month equal to a percentage of Premium: 25% on UL 01 and UL1 Enterprise Selling Agreement GAD Version - September 2003 Page 35 of 59 The following Enterprise COLI Variable Contract is governed by this Agreement: Enterprise Executive Advantage Variable Universal Survivorship Life (VUSL) ENTERPRISE COMMISSIONS Enterprise Executive Advantage Target Premium = 7Pay - -------------------------------------------------------------------------- ChargeBack Version - -------------------------------------------------------------------------- Street Level GDC - -------------------------------------------------------------------------- % of Premium - -------------------------------------------------------------------------- Year 1 target 20.00% - -------------------------------------------------------------------------- Year 1 excess 1.25% - -------------------------------------------------------------------------- Year 2-6 target 8.00% - -------------------------------------------------------------------------- Year 2-6 excess 1.00% - -------------------------------------------------------------------------- Year 7-10 target 6.00% - -------------------------------------------------------------------------- Year 7-10 excess 1.00% - -------------------------------------------------------------------------- Year 11+ - - ------------------------------------------------------------------------- Trail Commission as a % of Assets (service fees) - -------------------------------------------------------------------------- Years 6-15 0.20% - -------------------------------------------------------------------------- Years 16-20 0.10% - -------------------------------------------------------------------------- Years 21+ 0.05% - -------------------------------------------------------------------------- - -------------------------------------------------------------------------- Non-ChargeBack Version - -------------------------------------------------------------------------- Street Level GDC - -------------------------------------------------------------------------- % of Premium - -------------------------------------------------------------------------- Year 1 target 9.00% - -------------------------------------------------------------------------- Year 1 excess 1.25% - -------------------------------------------------------------------------- Year 2-5 target 12.00% - -------------------------------------------------------------------------- Year 2-5 excess 1.00% - -------------------------------------------------------------------------- Year 6-10 target 5.00% - -------------------------------------------------------------------------- Year 6-10 excess 1.00% - -------------------------------------------------------------------------- Year 11+ - - -------------------------------------------------------------------------- - ------------------------------------------------------------------------- Trail Commission as a % of Assets (service fees) - -------------------------------------------------------------------------- Years 6-15 0.20% - -------------------------------------------------------------------------- Years 16-20 0.10% - -------------------------------------------------------------------------- Years 21+ 0.05% - -------------------------------------------------------------------------- Enterprise Selling Agreement GAD Version - September 2003 Page 36 of 59 - -------------------------------------------------------------------------- ESV Rider Version - -------------------------------------------------------------------------- Street Level Broker - -------------------------------------------------------------------------- % of Premium - -------------------------------------------------------------------------- Year 1 target 11.80% - -------------------------------------------------------------------------- Year 1 excess 1.25% - -------------------------------------------------------------------------- Year 2-6 target 9.83% - -------------------------------------------------------------------------- Year 2-6 excess 1.00% - -------------------------------------------------------------------------- Year 7+ - - -------------------------------------------------------------------------- - ------------------------------------------------------------------------- Trail Commission as a % of Assets (service fees) - -------------------------------------------------------------------------- Years 7-20 0.27% - -------------------------------------------------------------------------- Years 21+ - - -------------------------------------------------------------------------- Enterprise Selling Agreement GAD Version - September 2003 Page 37 of 59 Variable Universal Survivorship Life (VUSL) Commission Chargeback If for any reason the policy lapses anytime prior to the 13th month, all unearned commissions (up to the Target Premium) already received by the agent are charged back as well as one-half of the earned commissions. Commissions received on dump-in amounts above the Target Premium are not charged back. Partial surrenders prior to the 13th month will result in partial chargebacks. - ----------------------------------------------------------------------------------------------- % of Target Premium by Policy Year Year 1 Years 2-5 Years 6-10 Years 11+ - ----------------------------------------------------------------------------------------------- Commission 50% 9% 4% 1% - ------------------------------------------------------------------------------------------------ ERA 20% 0% 0% 0% - ------------------------------------------------------------------------------------------------ Total to BD 70% 9% 4% 1% - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ % of Excess Premium by Policy Year Year 1 Years 2-5 Years 6-10 Years 11+ - ------------------------------------------------------------------------------------------------ Commission 2% 2% 2% 1% - ------------------------------------------------------------------------------------------------ ERA 2% 2% 2% 0% - ------------------------------------------------------------------------------------------------ Total to BD 4% 4% 4% 1% - ------------------------------------------------------------------------------------------------
Enterprise Selling Agreement GAD Version - September 2003 Page 38 of 59 EXHIBIT B Schedule of Fixed Product and Compensation N/A Enterprise Selling Agreement GAD Version - September 2003 Page 39 of 59 EXHIBIT C Rewritten Business (RWB) Commission Rules (formerly, Replacement Commission Rules) Effective June 1, 2002 Revised May 9, 2003 GUIDING PRINCIPLES FOR REWRITTEN BUSINESS The objective of this document is to provide information on MetLife's enterprise-wide Rewritten Business (RWB) Rules. These rules were designed based the following guiding principles: 1. Support suitable change that is driven by the best interest and needs of the customer. 2. Enterprise Consistency - Apply the same rules for all business done by all producers in the MetLife family of distribution franchises. 3. Generally pay full compensation for increase in premium and reduced compensation for replaced premium, regardless of source. 4. Fairness - Provide fair compensation for internal, Enterprise-wide replacement transactions that are done with the best interest and needs of the client in mind and in accordance with industry practices and regulatory requirements. These rules were designed to provide for all known situations that an agent might encounter with suitability and fairness for the client in mind. At the time of the writing of this document, they are believed to cover all situations, BUT it is recognized that our business is not static and a situation may arise where these Rewritten Business Rules will not clearly address the issue. These new rules apply to payment of First Year Compensation. In general, Asset Trail, TLP and renewal commissions will not be affected. SUITABILITY, FIRST & FOREMOST The rules for Rewritten Business are in place to support suitable transactions that are in the best interest of the customer. Simply stated, all Rewritten Business must be suitable for the customer. A product replacement or switch can only be recommended if it is in the customer's best interest. In general, when you and your customer are considering rewriting a product to better serve the customer's financial goals, the following guidelines should be followed. For a detailed review of MetLife's suitability guidelines, please refer to the Suitability Tutorial and Replacement Tutorial in the Ethics & Compliance section of the LearnNow website, or the Suitability document posted in the Reference Works section of the Ask Me/Tell Me/Read Me database. . The recommendation should be supported by a thorough fact-find and needs analysis. . The new product should clearly meet the customer's financial and personal goals, and this should be readily evident to the customer. . The benefits of the new product should clearly outweigh the costs and consequences of replacing or switching the existing product. Enterprise Selling Agreement GAD Version - September 2003 Page 40 of 59 . The pros and cons of the proposed transaction should be discussed completely with the customer. . Proper disclosure of the replacement or switch must be made to the customer and ALL Company and state requirements must be strictly adhered to with regard to Rewritten Business. WHEN DO THE REWRITTEN BUSINESS RULES APPLY? When a client gives up all or part of the benefit provided by an Existing Product (either by ceasing to pay required premiums or deposits on the product or by appropriating the product's cash value) to fund the purchase of a New Product or the rollover into an Existing Product, these Rewritten Business rules will apply. These rules govern the commissions paid on the sale of the second product. These rules apply in the following circumstances as defined by key terms and definitions presented in the following section of this document: . When an Existing Product is rewritten by New Product; or . When funds from an Existing Product are used to fund a deposit into another Existing Product; or . When an Existing Product is rewritten by a non-enterprise New Product sponsored by, or sold through the enterprise (e.g., products available through the MetLife General Agency.) For Protection Products, and Investment Products, any transaction identified as occurring within the respective Rewritten Business Window (see definition in next section of this document), may trigger the application of these Rewritten Business Rules. Enterprise Selling Agreement GAD Version - September 2003 Page 41 of 59 KEY TERMS & DEFINITIONS AS APPLIED TO REWRITTEN BUSINESS RULES Existing Product or Product Being Rewritten is any "existing" enterprise protection or investment product used to fund the purchase of a new enterprise protection or investment product or to fund a deposit into an Existing Enterprise protection or investment Product. New Product is any protection or investment product, policy or contract, which rewrites, in whole or part, an Existing Product. New Premium or New Deposit is the amount of first-year premium or the initial deposit paid on a New Product. With respect to flexible premium life products, any amount paid in excess of the (base commissionable) premium amount - sometimes referred to as "excess premium" - is excluded. Old Premium Level is an amount equal to the first-year premium on an Existing Product. With respect to flexible premium life products, "Old Premium Level" does not include any amount previously paid in excess of the (base commissionable) premium amount - sometimes referred to as "excess premium." Old Money is the net cash value released (excluding dividend accumulations) from an Existing Product, either as cash build up, accumulation, or policy values, and subsequently appropriated or used to pay any part of a New Premium or Deposit. Appropriation or use of Old Money to pay any part of a New Premium or Deposit may be implied if the use or appropriation occurs within the Rewritten Business Window and the criteria for deeming the money to have been used for that purpose have been met. This will apply whether that cash value is explicitly rolled into the new policy or not. In addition, a full or partial surrender of PUAR/VABR values (or of a paid-up or non-forfeiture policy) on the same life is considered rollover money if it falls within the RWB window, even if the old policy is not otherwise changed or "rewritten." New Money is any amount used to pay premium or deposits on a New or Existing Product that is not Old Money. In essence, New Money is any money paid by the client that has not come from an existing enterprise product within the Rewritten Business Window as defined in this document. Rewritten Business Window is the time frame in which transactions on an Existing Product will trigger the application of these Rewritten Business rules with regard to the issue of a New Product or deposit into an Existing Product. If within this time frame, an Existing Product lapses, is fully or partially surrendered for the cash value, or the annualized premium is reduced by a policy change, these Rewritten Business rules will apply to the commissions on the New Product. 1) For Protection Products, the Rewritten Business Window is 6 months prior to and 12 months after the Date of Part A of a New Product. 2) For Investment Products, the Rewritten Business Window is 3 months prior to and 3 months after the issue date of a New Product or a deposit into an Existing contract. Enterprise Selling Agreement GAD Version - September 2003 Page 42 of 59 RULES FOR MONEY COMING INTO A NEW LIFE POLICY Permanent to Permanent / Term to Term / Permanent to Term Life Full First-Year Commissions will be paid on the part of the New premium in the New Product that exceeds the premium level of the Old Product. .. Partial First-Year Commissions will be paid on premium dollars in the New Product up to the premium level of the Old Product. The partial commission payable will be determined based on the age of the old policy being rewritten. This applies to "roll-overs" directly into the Cash Value and Paid-Up Riders. Please refer to the table below. - -------------------------------------------------------------------------- Percent of Normal FYC - -------------------------------------------------------------------------- Years Up to Old Premium Above Old Premium Old Policy Has Level/1/ Level Been In-force - -------------------------------------------------------------------------- Less Than 5 0% 100% - -------------------------------------------------------------------------- 5 but less than 6 25% 100% - -------------------------------------------------------------------------- 6 but less than 7 30% 100% - -------------------------------------------------------------------------- 7 but less than 8 35% 100% - -------------------------------------------------------------------------- 8 but less than 9 40% 100% - -------------------------------------------------------------------------- 9 but less than 10 45% 100% - -------------------------------------------------------------------------- 10 or more 50% 100% - -------------------------------------------------------------------------- (1) Also applies to old money rolled over into an accumulation fund (e.g, Excess Premium), or whole life riders (e.g, VABR). .. For Existing Term insurance sold after 01/01/2001. When existing term insurance that was sold after 01/01/2001 is replaced by a new term policy, the "Up to Old Premium Level" percentages in the table above would be doubled. .. Premium Doubling Rule. Should the New Policy base premium at least double that of the Old Policy base premium AND the Old Policy is at least 5 years old, full commission will be paid on all premium dollars related to the base premium of the New Policy. Any Old Money rolled over into an accumulation fund (e.g, Excess Premium), or whole life riders (e.g, VABR) will be commissioned based on the above table. .. Normal Renewals will be paid based on published schedules of renewals for the New Policy being written. .. A Persistency Adjustment will apply to offset the "lapse" of the Old Product that is being rewritten under the Traditional Life Persistency (TLP) arrangement. This adjustment will apply if the Old Product being rewritten is a traditional life policy, has been in force for 5 years or more, and the commissions on the New Product are adjusted under the Rewritten Business Rules. .. No Commissions are paid for "Saving" cases. Enterprise Selling Agreement GAD Version - September 2003 Page 43 of 59 .. Term Insurance receives the "Percent of Normal FYC" scale if rewritten, unless it is in the last 2 years of the level premium guarantee period, in which case 100% of normal FYC is payable. Term to Permanent .. Term-to-permanent commission payments are determined by the conversion rules of the Old Product. For a replacement of a term policy by a permanent policy, where no term conversion is available, full commissions will be paid on the permanent policy. Annuities/Mutual Fund/WRAP Account to Life Full first-year commissions will be paid when money is coming from an Old Investment Product and going towards a New Protection Product, except for Annuities with surrender/withdrawal charges. Enterprise Selling Agreement GAD Version - September 2003 Page 44 of 59 RULES FOR MONEY COMING INTO AN NEW ANNUITY Fixed to Fixed Annuity / Fixed to Variable Annuity / Variable to Fixed Annuity .. Full commissions will be paid on New Money included within the New Deposit. .. One-half of the normal first-year commission will be paid on the Old Money included within the New Deposit. The commission is only payable if the old annuity contract is beyond the surrender/withdrawal charge period. .. No Commissions will be paid on the Old Money included within the New Deposit if a surrender/withdrawal charge was assessed on the old contract. Variable Annuity to Variable Annuity .. Full commissions will be paid on New Money included within the New Deposit. .. No Commissions will be paid on any Old Money included within the New Deposit. Mutual Fund or WRAP Account to Fixed or Variable Annuity .. Full commissions will be paid on all money being deposited. Permanent Life Insurance to Fixed or Variable Annuity .. Full commissions will be paid on New Money included within the New Deposit. .. Full first-year commission will be paid on Old Money included within the New Deposit if the life insurance policy has been in force at least 10 years. .. No first year commission paid on Old Money included in the New Deposit if the life insurance policy has been in force for less than 10 years. Special Rules Applicable to Annuities .. No commissions will be payable on company-sponsored exchanges or similar exchanges sponsored by MetLife affiliates. .. Stretch/ Decedent IRA. If the annuity is an IRA contract and the beneficiary elects a stretch/decedent IRA, no commissions will be paid or credited. .. Annuitization. One-half (50%) of the normal commissions/GDC will be credited on an annuitization from a deferred annuity which has been in place for at least two contract years AND on an annuitization using life insurance accumulation amounts or death benefit proceeds under the terms of the policy. .. Spousal Transfers. If the spouse is the primary beneficiary of the annuity death claim, and he/she elects to retain the proceeds in his/her name and become the annuitant/owner of the existing contract, no commission will be paid or credited. If the annuity death proceeds are moved to a new annuity, instead of using the spousal assumption/continuation provisions, the same RWB Rules for Old Money coming into a new Annuity will apply. Full first-year commission will be paid on New Money. Enterprise Selling Agreement GAD Version - September 2003 Page 45 of 59 RULES FOR MONEY COMING INTO A NEW MUTUAL FUND/WRAP -------------------------------------------------- One Mutual Fund Family/WRAP to Another Mutual Fund Family/WRAP - -------------------------------------------------------------- .. Full first-year commissions will be paid, provided a properly executed "Mutual Fund Switch Letter," signed by the client, the Financial Services Representative and his or her manager, is submitted as part of the transaction. Exchanges Within the Same Mutual Fund Family - -------------------------------------------- .. Full first-year commission will be paid on any amount of New Money. .. No first-year commission will be paid when Old Money from a mutual fund family is used to fund a mutual fund from the same family of funds. There is generally no sales charge to the client for this exchange, and as such, there is no commission payable. Annuity To Mutual Fund/Wrap Account - ----------------------------------- .. Full commission will be paid on New Money. .. Full first-year commission will be paid when a mutual fund or WRAP account rewrites an annuity that is out of the surrender charge period. .. No commission will be paid on the Old Money if the annuity is subject to a surrender/withdrawal charge. Permanent Life Insurance to Mutual Funds/WRAP Accounts - ------------------------------------------------------ .. Full commissions will be paid on New Money included within the New Deposit. .. Full first-year commission will be paid on Old Money included within the New Deposit if the life insurance policy has been in force at least 10 years. .. No first year commission paid on Old Money included in the New Deposit if the life insurance policy has been in force for less than 10 years. Enterprise Selling Agreement GAD Version - September 2003 Page 46 of 59 ADDITIONAL RULES THAT APPLY --------------------------- The Company reserves the right to apply the rewritten business rules in special situations. Listed here is information regarding several special situations, and the names of individuals you should contact if you encounter a situation where it is unclear how these rules apply. Policy Loans. It is against company rules to recommend policy loans to help fund a New or Existing Products. The date of a policy loan check may be used as the "date of lapse" in determining whether a new policy will be considered a "rewritten policy," if, within the Rewritten Business Window: 1) a loan is taken out on an Existing Policy resulting in the total outstanding loan on that policy to be equal to 80% or more of the total loan value on that policy, and 2) the existing policy lapses, is surrendered for the cash value, or the annualized premium is reduced by policy change, with three or less months additional premiums having been paid 31 days after the date of the policy loan check. Remember that it is against Company policy to recommend policy loans to help fund the purchase of an equity product. Ownership Changes. When a change in ownership occurs involving a corporation, a qualified retirement plan or an irrevocable trust, the New Policy will not be considered Rewritten Business for RWB commission rule purposes, even though the insured is the same. Neither will an individually-owned policy sold after a corporate-owned policy is terminated because of business failure or bankruptcy. Matured Endowments. If the funds of an endowment policy, which has matured or is within 3 years of maturity, are deposited into a new or existing life insurance policy, annuity, or mutual fund, all the funds will be considered New Money for commission purposes, and full FYCs will be paid. Juvenile Policies. Full commissions will be credited when a juvenile policy owned by parents, guardians or a trust is rewritten by a New Policy on the same life that also owns the New Policy and the owner of the New Policy is an adult (age 18 or older). Qualified Domestic Relations Order. When a life policy is cancelled because of a court ordered settlement and is rewritten by another life policy on the same life, full commissions will be credited. Enterprise Selling Agreement GAD Version - September 2003 Page 47 of 59 When the assets of an annuity are required to be split because of a Domestic Relations Order or Qualified Domestic Relations Order, no commissions will be paid or credited. Product Exchanges. The company sometimes sponsors special exchange programs (known as a "company-sponsored exchange") designed to encourage clients to replace an older product with a newer one, typically because the newer product has features the older one lacks that are considered advantageous to the client. The company often provides some incentive to the client to make the sponsored exchange. Special commission provision may also apply. If they do, these special commission provisions will supersede the rules published here. Term Conversions. On a term conversion in the first policy year, the term writer's first-year commissions are protected. The writer of the permanent policy will receive first-year commissions on the new policy less the FYC paid on the term policy, and will receive full renewal commissions. A term policy in its second or later policy year may be converted, and full commissions will be credited to the writer effecting the term conversion. Enterprise Selling Agreement GAD Version - September 2003 Page 48 of 59 EXAMPLES -------- It's important to note at this point that the examples below show the net FYC you would receive given the assumptions shown. Remember, AS CURRENTLY IS THE BUSINESS PROCESS, Full FYC may well be paid out in one pay cycle AND the relative Rewritten Business Rule adjustments, may come 1 or more pay cycles later. Example of How The Table Works: - ------------------------------- - ----------------------------------------------------------------- Percent of Normal FYC - ----------------------------------------------------------------- Years Old Policy Has Up to Old Premium Above Old Premium Been In-force Level (1) Level - ---------------------------------------------------------------- Less Than 5 0% 100% - ---------------------------------------------------------------- 5 but less than 6 25% 100% - ---------------------------------------------------------------- 6 but less than 7 30% 100% - ---------------------------------------------------------------- 7 but less than 8 35% 100% - ---------------------------------------------------------------- 8 but less than 9 40% 100% - ---------------------------------------------------------------- 9 but less than 10 45% 100% - ---------------------------------------------------------------- 10 or more 50% 100% - ---------------------------------------------------------------- (1) Also applies to old money rolled over into an accumulation fund (e.g, Excess Premium), or whole life riders (e.g, VABR). Assumptions: .. New Policy FYC Rate is 50% .. Old Policy in-force for 71/2years (cross table at "7 but less than 8" years in-force row) Results: .. FYC Rate on New Premium up to the Old Premium level = 17.5% (which is normal FYC Rate 50% x 35% - the % from the chart above) .. FYC Rate for New Premium above Old Premium level = 50% (New Money, gets full FYC) Enterprise Selling Agreement GAD Version - September 2003 Page 49 of 59 Examples of a Life to Life Rewritten Policy Example 1: Old policy and New Policy have same premium. Old Policy New Policy - ---------- ---------- .. In-force for 9 years . New Premium of $1,000 .. Premium of $1,000 . Normal FYC rate of 50% .. $0 net cash value Results: .. FYC on New Premium up to Old Premium level = 50% x 45% x $1000 = $225.00 .. FYC on New Premium above Old Premium level = 50% x ($1,000 - $1,000) = $ 0.00 -------- TOTAL FYC = $225.00
How did we get there? .. Look Up applicable FYC adjustment rate from table (9 years inforce) = 45% .. Multiply as shown above for New Premium up to Old Premium level ($1,000) .. No FYC on New Premium above Old Premium level because New Premium minus Old Premium is $0. - -------------------------------------------------------------------------------- Example 2: New Policy has $500 more premium than old policy. Old Policy New Policy - ---------- ---------- .. In-force for 9 years . New Premium of $1,500 .. Premium of $1,000 . Normal FYC rate of 50% .. $0 net cash value Results: .. FYC on New Premium up to Old Premium level = 50% x 45% x $1000 = $225.00 .. FYC on New Premium above Old Premium level = 50% x ($1,500 - $1,000) = $250.00 ------- TOTAL FYC = $475.00
How did we get there? .. Look Up applicable FYC adjustment rate from table (9 years inforce) = 45% .. Multiply as shown above for New Premium up to Old Premium level ($1,000) .. FYC on New Premium above Old Premium calculated as above because New Premium minus Old Premium is $500. Enterprise Selling Agreement GAD Version - September 2003 Page 50 of 59 Example 3: New Policy has $500 more premium than old policy, and additional $10,000 of Old Policy Cash Value also being rolled over into new policy. Old Policy New Policy - ---------- ---------- .. In-force for 9 years . New Premium of $1,500 .. Premium of $1,000 . Normal FYC rate of 50% .. $10,000 net cash value (Rolled Over to New Policy)
Results: .. FYC on New Premium up to Old Premium level = 50% x 45% x $1000 = $225.00 .. FYC on New Premium above Old Premium level = 50% x ($1,500 - $1,000) = $250.00 .. FYC on net Cash Value from Old Policy = 2% x 45% x $10,000 = $ 90.00 ------- TOTAL FYC = $565.00
How did we get there? .. Look Up applicable FYC adjustment rate from table (9 years inforce) = 45% .. Multiply as shown above for New Premium up to Old Premium level ($1,000) .. FYC on New Premium above Old Premium calculated as above because New Premium minus Old Premium is $500. .. Multiply as shown above for Old Money ($10,000) rolled over to new policy. - -------------------------------------------------------------------------------- Example 4: Same as example 3, BUT assume $10,000 of Old Policy Cash Value is surrendered by owner (i.e., not rolled over into the new policy.) Old Policy New Policy - ---------- ---------- .. In-force for 9 years . New Premium of $1,500 .. Premium of $1,000 . Normal FYC rate of 50% .. $10,000 net cash value (NOT rolled over) Results: .. FYC on New Premium up to Old Premium level = 50% x 45% x $1,000 = $ 225.00 .. FYC on New Premium above Old Premium level = 50% x ($1,500 - $1,000) = $ 250.00 .. FYC on net Cash Value from Old Policy ("Old Money") = $ 0.00 -------- TOTAL FYC = $ 475.00
How did we get there? .. Look Up applicable FYC adjustment rate from table ( 9 years inforce) = 45% .. Multiply as shown above for New Premium up to Old Premium level ($1,000) .. FYC on New Premium above Old Premium calculated as above because New Premium minus Old Premium is $500. .. Since the owner of the contract surrendered the policy, no premium dollars came into the new Policy from "Old Money." Hence, No FYC would be paid on Old Money. Enterprise Selling Agreement GAD Version - September 2003 Page 51 of 59 Example 5: Same as example 3, BUT $2,500 New Policy Premium. This would cause the Premium Doubling Rule to take effect. Old Policy New Policy - ---------- ---------- .. In-force for 9 years . New Premium of $2,500 .. Premium of $1,000 . Normal FYC rate of 50% .. $10,000 net cash value (Rolled over into New Policy) Results: .. FYC on All New Premium = 50% x $2,500 = $1,250.00 .. FYC on net Cash Value from Old Policy ("Old Money") = 2% x 45% x $10,000 = $ 90.00 ----------- TOTAL FYC = $1,340.00
How did we get there? .. The New base premium is at least double that of the Old base premium, therefore the Premium Doubling Rule applies and Full FYC will be paid on the New Policy base premium. .. The Old Money rolled into the New Policy will receive FYC based on the Table. - -------------------------------------------------------------------------------- Example 6 - Annuity/Mutual Fund/WRAP to Life: $20,000 from an annuity is rolled over into the PUAR of a new life policy, which has a premium of $500. Old Contract New Policy - ------------ ---------- .. $20,000 in Old Contract (Rolled into PUAR) . $500 New Premium .. No Surrender Charges . FYC is 50% Results: .. FYC Rate of new premium is 50% (50% x 500 = $250) = $250.00 .. FYC on PUAR is 3% ($20,000 x 3% = $600) = $600.00 ------- TOTAL FYC = $850.00 How did we get there? .. Full FYC is paid when money is coming from an "old" Investment & Income product into a "new" Protection product. .. Old contract was out of the surrender charge period. Enterprise Selling Agreement GAD Version - September 2003 Page 52 of 59 Examples of an Annuity to Rewritten Annuity Contract Example 7: Old annuity is out of the surrender charge period. Old Contract New Contract - ------------ ------------ .. $100,000 Old Contract Surrender . $100,000 New Contract Deposit .. No Surrender Charges . GDC Rate of 6% . FYC is 35% of GDC Results: .. GDC is 6% of New Deposit ($100,000 x 6% = $6,000) .. FYC Rate of GDC is 35% of $6,000 = $2,100 .. 1/2 FYC on entire deposit = 50% x $2,100 = $1,050.00 ----------- TOTAL FYC = $1,050.00 How did we get there? .. Since there were no surrender charges and no New Money deposited, half the FYC is paid on the deposit. - -------------------------------------------------------------------------------- Example 8: Same as Example 7, but assume additional $10,000 new deposit. Old Contract New Contact - ------------ ----------- .. $100,000 Old Contract Surrender . $110,000 New Contract Deposit .. No Surrender Charges . GDC Rate of 6% . FYC is 35% of GDC Results: .. GDC is 6% of New Deposit .. FYC Rate of GDC is 35% .. Full FYC on "New Money" ($10,000 x 6% x 35% = $210) = $ 210.00 .. 1/2 FYC on rollover deposit ($100,000 x 6% x 35% x 50% = $1,050) = $1,050.00 ----------- TOTAL FYC = $1,260.00 How did we get there? .. Since there were no surrender charges and there was New Money deposited along with the deposit rolled over from the old annuity, full FYC (35% of the GDC) is paid on the "New Money" and half the FYC (50% of the 35% of the GDC) is paid on the deposit rolled over. The amount will be paid in the current year and Enterprise Selling Agreement GAD Version - September 2003 Page 53 of 59 Example 9: Same as Example 7, but old contract is still in the surrender charge period. Old Contract New Contact - ------------ ----------- .. $100,000 Old Contract Surrender . $100,000 New Contract Deposit .. Surrender Charges . GDC Rate of 6% . FYC is 35% of GDC Results: .. GDC is 6% of New Deposit .. FYC Rate of GDC is 35% .. FYC on rollover deposit ($100,000 x 6% x 35% x 0% = $0) = $ 0.00 -------- TOTAL FYC = $ 0.00 How did we get there? .. Since the old contract was still in the surrender charges no FYC will be paid. - -------------------------------------------------------------------------------- Example 10: Same as Example 8, but old contract is still in the surrender charge period. Old Contract New Contact - ------------ ----------- .. $100,000 Old Contract Surrender . $110,000 New Contract Deposit .. Surrender Charges . GDC Rate of 6% . FYC is 35% of GDC Results: .. GDC is 6% of New Deposit .. FYC Rate of GDC is 35% .. Full FYC on "New Money" ($10,000 x 6% x 35% = $210) = $ 210.00 .. FYC on rollover deposit ($100,000 x 6% x 35% x 0% = $0) = $ 0.00 ---------- TOTAL FYC = $ 210.00 How did we get there? .. Since the old contract was still in the surrender charge period, no FYC will be paid on the "Old Money" included in the deposit to the new contract. Full FYC (35% of the GDC) is paid on the "New Money." Enterprise Selling Agreement GAD Version - September 2003 Page 54 of 59 Examples of a Mutual Fund/WRAP to a Rewritten Mutual Fund/Wrap Example 11: Old fund is from ABC Family. New fund is from XYZ Family, and a properly executed "Mutual Fund Switch Letter" signed by the client, the FSR and his/her manager, has been submitted as part of the transaction. Old Fund New Fund - -------- -------- .. $3,000 in Old Fund . $3,000 New Fund Deposit . GDC Rate of 6% . FYC is 35% of GDC Results: .. GDC is 6% of New Deposit ($3,000 x 6% = $180) .. FYC Rate of GDC is 35% .. Full FYC on fund family change $3,000 x6% x35% = $63.00 How did we get there? .. Since the old and new funds were from different fund families, full FYC is paid. U. IMPORTANT NOTE -------------- .. If, in this example, the new fund family was the same as the old family, NO FYC would be payable. - -------------------------------------------------------------------------------- Example 12: Same as Example 11, but additional $1,000 "New Money," where new fund is from the same fund family as old fund. Old Fund New Fund - -------- -------- .. $3,000 in Old Fund . $4,000 New Contract Deposit . GDC Rate of 6% . FYC is 35% of GDC Results: .. GDC is 6% of New Deposit .. FYC Rate of GDC is 35% .. No FYC on "Old Money" .. Full FYC on "New Money" ($4,000 - $3,000) x 6% x 35% = $21.00 How did we get there? .. Full FYC is paid on "New Money" only. Enterprise Selling Agreement GAD Version - September 2003 Page 55 of 59 Examples of a Life to Annuity, Mutual Fund, or WRAP Example 13: Life policy in-force 10 or more years, no New Money. Full FYC is paid on "Old Money." Old Policy New Contract/Fund - ---------- ----------------- .. $2,000 cash surrender value in . $2,000 New Contract/Fund Deposit Old Policy . GDC Rate of 6% .. Policy in-force 12 years . FYC is 35% of GDC Results: .. GDC is 6% of New Deposit .. FYC Rate of GDC is 35% .. Full FYC on deposit into new fund/contract ($2,000 x 6% x 35% = $42) - -------------------------------------------------------------------------------- Example 14: Life policy in-force less than 10 years, no New Money. No FYC is paid on Old Money. Old Policy New Contract/Fund - ---------- ----------------- .. $2,000 cash surrender value in Old Policy . $2,000 New Contract Deposit .. Policy In-force 8 years . GDC Rate of 6% . FYC is 35% of GDC Results: .. GDC is 6% of New Deposit .. FYC Rate of GDC is 35% .. No FYC on "Old Money" ($2,000 - $2,000) x 6% x 35% x 0% = $0.00 Enterprise Selling Agreement GAD Version - September 2003 Page 56 of 59 Example 15: Life policy in-force less than 10 years, $1,000 New Money deposited into contract/fund. Full FYC is paid on "New Money" only. Old Policy New Contract/Fund - ---------- ----------------- .. $2,000 cash surrender value in Old Policy . $3,000 New Contract Deposit .. Policy In-force 8 years . GDC Rate of 6% . FYC is 35% of GDC Results: .. GDC is 6% of New Deposit .. FYC Rate of GDC is 35% .. Full FYC on "New Money" ($3,000 - $2,000) x 6% x 35% = $21.00 .. $0 GDC on old policy cash surrender value. - -------------------------------------------------------------------------------- Example 16: Life policy in-force 10 or more years, $1,000 of New Money deposited into contract/fund. Full FYC is paid on the "Old Money" AND "New Money." Old Policy New Contract/Fund - ---------- ----------------- .. $2,000 cash surrender value in Old Policy . $3,000 New Contract Deposit .. Policy In-force 12 years . GDC Rate of 6% . FYC is 35% of GDC Results: .. GDC is 6% of New Deposit .. FYC Rate of GDC is 35% .. Full FYC on deposit into new contract/fund $3,000 x 6% x 35% = $63.00 Enterprise Selling Agreement GAD Version - September 2003 Page 57 of 59 EXHIBIT D ASSOCIATED INSURANCE AGENCY The Broker/Dealer named below ("Broker"), having executed a Sales Agreement (the "Agreement") by and among Broker and General American Distributors ("GAD") dated _____________ that, among other things, provides for sales of Variable Contracts and Fixed Contracts through a designated associated insurance agency or agencies, hereby designates the associated insurance agency (the "Associated Insurance Agency") named below as its Agency (as that term is defined in the Agreement) pursuant to Section III(B) thereof. By signing this Exhibit D, each of Broker and the Associated Insurance Agency hereby represent and warrant that the Associated Insurance Agency is and will remain qualified to serve as an Agency in accordance with the terms of the Agreement, and the Associated Insurance Agency hereby agrees to be bound by and subject to the terms of the Agreement. --------------------------------------- Broker/Dealer By: ------------------------------------ --------------------------------------- Print Name & Title --------------------------------------- (Tax Identification Number) --------------------------------------- Associated Insurance Agency Name By: ------------------------------------- --------------------------------------- Print Name & Title --------------------------------------- (Tax Identification Number) Enterprise Selling Agreement GAD Version - September 2003 Page 58 of 59 GENERAL AMERICAN FINANCIAL WHOLESALE SALES AGREEMENT TABLE OF CONTENTS I. DEFINITIONS IX. INDEMNIFICATION II. COMPLIANCE WITH APPLICABLE X. GENERAL PROVISIONS LAWS A. TERM AND TERMINATION III. AGREEMENTS, REPRESENTATIONS, AND COVENANTS B. ASSIGNABILITY A. AGREEMENTS AND COVENANTS C. AMENDMENTS OF GAD D. NOTICES B. REPRESENTATIONS AND COVENANTS OF WHOLESALER E. ARBITRATION IV. PRINCIPLES OF ETHICAL MARKET F. GOVERNING LAW CONDUCT G. ENTIRE UNDERSTANDING V. COMPENSATION H. NO THIRD PARTY BENEFICIARIES VI. COMPLAINTS AND INVESTIGATIONS I. NON-EXCLUSIVITY VII. RECORDS AND ADMINISTRATION J. WAIVER VIII. PRIVACY INFORMATION K. COUNTERPARTS A. PROPRIETARY INFORMATION L. SEVERABILITY B. RECEIPT OF CUSTOMER NONPUBLIC PERSONAL INFORMATION FROM WHOLESALER BY GAD C. TREATMENT OF NONPUBLIC PERSONAL INFORMATION DISCLOSED TO WHOLESALER BY GAD D. CONFIDENTIAL INFORMATION E. PROTECTED HEALTH INFORMATION Enterprise Selling Agreement Page 1 of 34 GENERAL AMERICAN FINANCIAL SALES AGREEMENT This Broker-Dealer Wholesale Agreement (the "Agreement") dated __________________, 2003, ("Effective Date") by and between General American Distributors, a Missouri corporation, ("GAD") and _________________, a _______________corporation that, for the distribution of traditional fixed rate insurance products only, is a validly licensed insurance agency, or for the distribution of registered products, is registered as a broker dealer with the Securities and Exchange Commission ("SEC") under the 1934 Act and a member of the National Association of Securities Dealers ("NASD") and is also either licensed as or is affiliated with a validly licensed insurance agency (collectively "Wholesaler"). WITNESSETH: WHEREAS, GAD issues or provides access to certain insurance and financial products, including but not limited to, fixed rate annuities, variable annuities, variable life insurance policies, fixed rate life insurance policies, variable riders on such fixed rate products, and other insurance products as identified on Exhibits A and B attached hereto, which is incorporated herein by reference (together, the "Contracts"); and WHEREAS, GAD, on behalf of itself and each Affiliate that issues or provides access to the Contracts identified in Exhibit A hereto, is authorized to enter into selling agreements with unaffiliated broker-dealers or selling groups, as the case may be, to distribute the Contracts; and WHEREAS, GAD is the distributor and principal underwriter of the Contracts, and is authorized to enter into agreements, with registered broker-dealers and insurance agencies for the distribution of the Contracts; and WHEREAS, Wholesaler is a registered broker-dealer desiring to participate in the promotion of sales and distribution of the Contracts, which are deemed to be securities under the Securities Act of 1933; and WHEREAS, Wholesaler has relationships with certain third party retailing selling groups ("Retailers"), which have qualified and licensed agents/registered representatives who will solicit and sell the Contracts. WHEREAS, GAD, subject to the terms and conditions of the Agreement, hereby appoints Wholesaler to support the sales of and provide service with respect to the Contracts which are set forth on the applicable Exhibits A and B on a non-exclusive basis; and Enterprise Selling Agreement Page 2 of 34 WHEREAS, Wholesaler accepts such appointment and agrees to use its best efforts to find purchasers for the Contracts; and WHEREAS, GAD proposes to compensate Wholesaler for the sale and servicing of Contracts in accordance with Exhibits A and B. NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties hereto agree as follows: I. Definitions 1) Affiliate - Any entity that controls, is controlled by or is under common control with including, without limitation, any entity that owns 25% or more of the voting stock of any GAD company and any entity that is a subsidiary of that company. 2) Agency- an associated insurance agency of Wholesaler, which is properly licensed to participate in the business of insurance. 3) Applicable Laws - Shall have meaning given to such term as in accordance with Section II of this Agreement. 4) Confidential Information - Shall have meaning given to such term as described in Section VIII(D) of this Agreement. 5) Fixed Contracts - Contracts that are not variable and include, without limitation, fixed rate annuities, fixed rate life insurance and other fixed insurance contracts, issued by GAD, as more fully described in Exhibit B, which may be amended by GAD in its sole discretion from time to time. 6) General Agent - Shall have the meaning given to such term as described in Section III(A)(20) of this Agreement. 7) Nonpublic Personal Information- Nonpublic personal information means financial or health related information by which a financial institution's consumers and customers are individually Enterprise Selling Agreement Page 3 of 34 identifiable, including but not limited to nonpublic personal information as defined by Title V of the Gramm-Leach-Bliley Act and regulations adopted pursuant to the Act. 8) Prospectus - The prospectuses and Statements of Additional Information included within the Registration Statements referred to herein or filed pursuant to the Securities Act of 1933 and the Investment Company Act of 1940, as amended. 9) Registration Statements - Registration statements and amendments thereto filed with the SEC relating to the Variable Contracts, including those for any underlying investment vehicle or variable insurance rider. 10) Variable Contracts - Variable life insurance policies, variable annuity contracts, variable insurance riders and other variable insurance contracts, issued by GAD, as more fully described in Exhibit A at the time of this Agreement or as may be amended by GAD in its sole discretion from time to time. 11) Protected Health Information or PHI -- Individually identifiable information that is transmitted or maintained in any medium and relates to the past, present or future physical or mental health or condition of an individual; the provision of health care to an individual; or future payment for the provision of health care to the individual. PHI includes demographic information about individuals, including names; addresses; dates directly related to an individual, including but not limited to birth date; telephone numbers; fax numbers; E-mail addresses; Social Security numbers; policy numbers; medical record numbers; account numbers; and any other unique identifying number, characteristic, or code. PHI includes, but is not limited to, information provided by an individual on an application for a long term care insurance policy or other health care plan issued by GAD or an affiliate of GAD; information related to the declination or issuance of, or claim under, a long term care insurance policy issued by GAD or an affiliate; or information derived therefrom. II. Compliance With Applicable Laws 1) GAD and Wholesaler agree to comply with all applicable state and federal statutes, laws, rules, and regulations including with out limitation, state insurance laws, rules and regulations, and federal and state securities laws, rules and regulations. Applicable state and federal statutes, laws, rules and regulations may also include, applicable guidelines, policies, and rulings of federal and state Enterprise Selling Agreement Page 4 of 34 regulatory organizations and agencies, including without limitation state insurance departments, the SEC and the National Association of Securities Dealers, Inc. ("NASD"), consumer privacy laws, HIPAA and any other state or federal laws, rules or regulations and decisions, orders and rulings of state and federal regulatory agencies that are now or may hereafter become applicable to the parties hereto and the transactions that are the subject of this Agreement ("Applicable Laws"). 2) Notwithstanding the foregoing, GAD and Wholesaler agree to comply with all applicable anti-money laundering laws, regulations, rules and government guidance, including the reporting, recordkeeping and compliance requirements of the Bank Secrecy Act ("BSA"), as amended by The International Money Laundering Abatement and Financial Anti-Terrorism Act of 2002, Title III of the USA PATRIOT Act ("the Act"), its implementing regulations, and related SEC and SRO rules. These requirements include requirements to identify and report currency transactions and suspicious activity, to verify customer identity, to conduct customer due diligence, and to implement anti-money laundering compliance programs. As required by the Act, Wholesaler certifies that it has a comprehensive anti-money laundering compliance program that includes policies, procedures and internal controls for complying with the BSA; policies, procedures and internal controls for identifying, evaluating and reporting suspicious activity; a designated compliance officer or officers; training for appropriate employees; and an independent audit function. 3) Further, Wholesaler agrees to comply with the economic sanctions programs administered by the U.S. Treasury Department's Office of Foreign Assets Control ("OFAC"). Wholesaler certifies that it has an OFAC compliance program in place which includes procedures for checking customer names [and persons with signature authority over accounts] against the OFAC lists of sanctioned governments and specially-designated nationals, terrorists and traffickers; the screening of wire transfers [and other payments] against the OFAC lists; a designated compliance officer; an internal communication network; training of appropriate personnel; and an independent audit function. 4) GAD and Wholesaler agree to promptly notify the other whenever questionable activity or potential indications of suspicious activity or OFAC matches are detected. GAD and Wholesaler agree to investigate any potentially suspicious activity and to take appropriate action, including the blocking of accounts, the filing of Suspicious Activity Reports and the reporting of matches to OFAC, in connection with the Contracts. Enterprise Selling Agreement Page 5 of 34 III. Agreements, Representations, and Covenants A. Agreements and Covenants of GAD 1) GAD represents that it is duly authorized, on behalf of itself and each Affiliate that issues or provides access to the Contracts identified in Exhibit A hereto, to enter into this Agreement with Wholesaler to wholesale such Contracts. 2) GAD shall advise Wholesaler of any revision of or supplement to any Prospectus related to the Variable Contracts or underlying investments of such Variable Contracts. 3) The performance or receipt of services pursuant to this Agreement shall in no way impair the absolute control of the business and operations of each of the parties by its own Board of Directors. Pursuant to the foregoing, GAD shall specifically retain ultimate authority, including but not limited to: a) to refuse for any reason to appoint a Representative and cancel any existing appointment at any time; b) to direct the marketing of its insurance products and services; c) to review and approve all advertising concerning, its insurance products and services; d) to underwrite all insurance policies issued by it; e) to cancel risks; f) to handle all matters involving claims adjusting and payment; g) to prepare all policy forms and amendments; and h) to maintain custody of, responsibility for and control of all investments. B. Representations and Covenants of Wholesaler 1) Wholesaler represents and warrants that it will only support Contracts in those states where it or its Agency is appropriately licensed and that it has obtained any other appointments, approvals, licenses, authorizations, orders or consents which are necessary to enter into this Agreement and to perform its duties hereunder. 2) Wholesaler represents and warrants that it is a registered broker-dealer under the Securities Exchange act of 1934 ("1934 Act"), has all necessary broker-dealer licenses, is a member in good standing with the NASD, and is licensed as an insurance Wholesaler and has obtained any other Enterprise Selling Agreement Page 6 of 34 approvals, licenses, authorizations, orders or consents which are necessary to enter into this Agreement and to perform its duties hereunder. 3) Wholesaler represents that neither it is not currently under investigation by any insurance regulator, the NASD or SEC, any other self-regulatory organization or other governmental authority (except for any investigations of which it has notified GAD in writing). Wholesaler further agrees that, if a formal or informal investigation of Wholesaler or any of its agents is commenced by any insurance regulator, the NASD or SEC, any other self regulatory organization or other governmental authority, whether or not in connection with the sale of the Contracts, Wholesaler will notify GAD of the existence and subject matter of such investigation. The Agency further agrees that no subagent shall be appointed to solicit and procure Contracts of GAD if the subagent has been convicted of any felony prohibited by the Federal Violent Crime Control and Law Enforcement Act of 1994. 4) Wholesaler acknowledges that GAD shall have the unconditional right to reject, in whole or in part, any application for a Contract. If GAD rejects an application, GAD will immediately return any purchase payments received directly to the Wholesaler and Wholesaler will be responsible for promptly returning such payments to the purchaser. If any purchaser of a Contract elects to return such Contract pursuant to any law or contractual provision, any purchase payment made or such other amount, as the Contract or Applicable Laws shall specify, will be returned by GAD to the Wholesaler and the Wholesaler will be responsible for promptly returning such payments to the purchaser. If a purchase payment is either refunded or returned to the purchaser, no commission will be payable to Wholesaler hereunder, and any commission received by Wholesaler will be returned promptly to GAD. GAD may, at its option, offset any such amounts against any amounts payable to Wholesaler. 5) Wholesaler is not a principal, underwriter or agent of GAD, any Affiliate of GAD, or any GAD separate account. Wholesaler shall act as an independent contractor, and nothing herein contained shall constitute Wholesaler, nor its agents or other representatives as employees of GAD in connection with the solicitation or support of applications for Contracts or other dealings with the public. Wholesaler, its agents and its other representatives, shall not hold themselves out to be employees of GAD in this connection or in any dealings with the public. Enterprise Selling Agreement Page 7 of 34 6) Wholesaler agrees that any material it develops, approves or uses for sales, training, explanatory or other purposes in connection with the solicitation of applications for the Contracts hereunder, other than generic advertising material which does not make specific reference to GAD or the Contracts, will not be used without the prior written consent of GAD. 7) Authorized activities by Wholesaler shall be undertaken only in accordance with Applicable Laws. Wholesaler represents no commissions, or portions thereof, or other compensation for the sale of the Contracts will be paid to any person or entity which is not duly licensed and appointed by GAD in the appropriate states as required by Applicable Laws. 8) Neither Wholesaler nor its agents, designees or other representatives shall have authority on behalf of GAD to alter or amend any Contract or any form related to a Contract to adjust or settle any claim or commit GAD with respect thereto, or bind GAD or any of its Affiliates in any way; or enter into legal proceedings in connection with any matter pertaining to GAD's business without its prior written consent. Wholesaler shall not expend, nor contract for the expenditure of, funds of GAD nor shall Wholesaler possess or exercise any authority on behalf of GAD other than that expressly conferred on Wholesaler by this Agreement. 9) Wholesaler shall prepare any forms necessary to comply with Applicable Laws; and received from GAD in connection with the sale of the Contracts as replacement for other insurance or annuity products and to send such forms to GAD. In the alternative, if such forms are not required but information with respect to replacement is required, Wholesaler will transmit such information in writing to GAD. Wholesaler further shall notify GAD when sales of the Contracts are replacement contracts. Such notification shall not be later than the time that Wholesaler submits applications for such Contracts to GAD. 10) Wholesaler shall furnish GAD or any appropriate regulatory authority with any information, documentation, or reports prepared in connection with or related to this Agreement which may be requested by GAD or an appropriate regulatory authority in order to ascertain whether the operations of GAD or Wholesaler related to the Contracts are being conducted in a manner consistent with Applicable Laws. 11) Wholesaler will adhere to all Applicable laws, including but not limited to, state insurance replacement regulations, before it receives or supports any applications for Contracts. Enterprise Selling Agreement Page 8 of 34 12) Wholesaler represents that it has full authority to enter into this Agreement and that by entering into this Agreement it will not impair any other of its contractual obligations with respect to sales of any Contract. 13) Wholesaler shall promote the Contracts only to registered representatives licensed through broker-dealers which have or will enter into active selling agreements with GAD and who are or will be variable licensed and appointed with GAD for the sale of the Contracts. 14) Any solicitation by Wholesaler of broker-dealers who do not have an active selling agreement with GAD shall only be done in such manner and using materials as are prescribed by GAD. 15) Wholesaler agrees that it shall, at all times, when performing its functions under this Agreement, be registered as a securities broker-dealer with the SEC and will maintain its membership with the NASD, and shall be licensed or registered as a securities broker- dealer in the states that require such licensing or registration in connection with the services to be provided under this Agreement. 16) Marketing and Administrative Duties of Wholesaler. a) Wholesaler will use its relationships with Retailers and Retailers' broker dealers and registered representatives to promote the Contracts. GAD, in their discretion, may accept or reject the services of any broker dealer or registered representatives, and are under no duty to contract with or appoint any particular broker dealer or registered representative. Wholesaler is not authorized to provide marketing services related to the Contracts to registered representatives of broker-dealers which do not have selling agreements with GAD, or to registered representatives who are not properly licensed and appointed with GAD. b) Wholesaler will provide certain marketing and administrative services to promote the sale of the Contracts. Such services shall include, but are not limited to, assistance in the appointment and contracting of agents; distribution of training and recruiting materials, and sales materials, newsletters, and field service bulletins (provided that all such materials shall be approved by GAD prior to use); assistance with sales promotional activities; training of sales staff and registered representatives with respect to the features of the Contracts, and providing technical Enterprise Selling Agreement Page 9 of 34 assistance to registered representatives and sales staff in the ongoing servicing of owners of the Contracts. c) Wholesaler shall have no direct contact with any member of the public, including any client of the designated broker-dealers or registered representatives, or owner of a Contract or their representatives except in circumstances where a duly licensed and appointed registered representative of the broker dealer is present. d) The responsibilities of Wholesaler also shall include: (i.) the establishment and implementation of appropriate procedures to ensure the prompt distribution of prospectuses, training, and marketing materials, and any amendments or supplements thereto, to authorized retail broker-dealer representatives, and the prompt collection from such representatives and disposal of such materials when recalled or replaced by GAD by more current materials; (ii.) an initial review of applications, forms, and other required documentation for Contracts to the extent requested by GAD. The purpose of such review is to assist retail broker-dealers in ensuring that applications, forms, and other documentation comply with the standards and procedures provided from time to time by GAD. Wholesaler shall perform such initial review, if requested, in an expeditious manner, and shall forward the materials so reviewed to GAD promptly after completing the initial review. Wholesaler has no authority to, and shall not, accept or endorse any checks or money orders intended to be applied as premium or purchase payments to the Contracts. e) Wholesaler shall perform its activities under this Agreement in full compliance with the requirements of the 1934 Act and all other applicable federal or state laws, and with the rules of the NASD. Wholesaler agrees that it is responsible for maintaining its own appropriate books, records, and other items that may be required by the SEC, NASD, or other regulatory agencies having jurisdiction over such activities. f) In conjunction with marketing and sales promotion efforts, GAD will be responsible for the costs of producing and printing all policy forms, related prospectuses, and the basic sales literature that they deem appropriate. Enterprise Selling Agreement Page 10 of 34 g) GAD is responsible for maintaining in effect the registration statement for the Contracts. GAD shall immediately notify Wholesaler of the issuance of any stop order, any federal or state proceeding, or any other action that would prevent the sale of the Contracts in any state or jurisdiction. h) Wholesaler shall immediately notify GAD with respect to: (i.) the initiation and disposition of any form of disciplinary action against Wholesaler or any of its employees by the NASD, or any other regulatory agency or instrumentality having jurisdiction with respect to the subject matter hereof; (ii.) the issuance of any form of deficiency notice made part of the public record by the NASD or any such agency regarding Wholesaler's practices; (iii.) the execution of any consensual order with respect thereto; and/or (iv.) any change, termination, or suspension of its status as a broker-dealer or NASD member. i) Wholesaler will have responsibility for its marketing and sales promotional costs including, but not limited to: (i.) all travel of Wholesaler and its agents; (ii.) any meetings with broker-dealers or their affiliates. (iii.) hiring any staff, maintaining office space, and meeting its expenses. 17) Insurance Coverage. a) Fidelity Bond. Wholesaler shall secure and maintain a fidelity bond (including coverage for larceny and embezzlement), issued by a reputable bonding company, covering all of its directors, officers, agents, representatives, associated persons and employees who have access to funds of GAD. This bond shall be maintained at Wholesaler's expense in at least the amount prescribed under Rule 3020 of the NASD Conduct Rules or future amendments thereto. Wholesaler shall provide GAD with satisfactory evidence of said bond upon GAD's reasonable request. Wholesaler hereby assigns any proceeds received from a fidelity bonding company, or other liability coverage, to GAD as their interest may appear, to the extent of its loss due to activities covered by the bond, policy or other liability coverage. b) Plan of Insurance Agents. Wholesaler shall maintain in full force and effect during the term of this Agreement a plan of insurance, which may be a plan of self-insurance, which shall provide coverage for errors and omissions of the Wholesaler, its Agency, representatives and agents. If such insurance plan terminates for any reason during the term of the Agreement, Wholesaler Enterprise Selling Agreement Page 11 of 34 shall immediately notify GAD of such termination. If requested by GAD, Wholesaler shall provide satisfactory evidence of coverage under such insurance policy satisfactory to GAD showing the amount and scope of coverage provided. c) Wholesaler represents that all of its directors, officers and representatives are and shall be covered by blanket fidelity bonds, including coverage for larceny and embezzlement, issued by a reputable bonding company. These bonds shall be maintained at Wholesaler's expense and shall be at least, of the form type and amount required under the NASD Rules of Fair Practice. Upon request, Wholesaler shall give evidence satisfactory to GAD that such coverage is in force. Furthermore, Wholesaler shall give prompt written notice to GAD of any notice of cancellation or change of such coverage. Wholesaler hereby assigns any proceeds received from a fidelity banding company, or other liability coverage, to GAD as their interest may appear, to the extent of their loss due to activities covered by the bond, policy or other liability coverage. 18) Wholesaler and Agency, as applicable, will maintain the books and records relating to the sale of Variable Contracts and the receipt and disbursement of insurance commissions and fees thereon. Such books and records will be maintained and preserved in conformity with the requirements of Section 17(a) of the 1934 Act and the Rules thereunder, to the extent applicable, and will at all times be compiled and maintained in a manner that permits inspection by supervisory personnel of the Wholesaler, the SEC, the NASD, and other appropriate regulatory authorities. 19) Broker agrees to comply with the policies and procedures of GAD and its Affiliates with respect to the solicitation, sales and administration of Contracts and services Broker and Representatives are authorized to sell and service under the Agreement, including, but not limited to, privacy policies and procedures, as those policies and procedures may be provided to Broker by GAD from time to time. 20) For a period of 12 months after termination of the Agreement, the Agency shall not, directly or indirectly, on a systematic basis, contact the policyholders of the Company or condone such contact for the purpose of inducing any such policyholders to lapse, cancel, and fail to renew or replace any Contract. If the Agency, in the judgment of GAD is determined to have engaged in such prohibited activity, then GAD shall have the right to declare the Agency's claims for compensation or any other benefit under the Agreement shall be forfeited and void. GAD may also pursue all remedies, including injunction, to assure compliance with the covenants in this section Enterprise Selling Agreement Page 12 of 34 and shall, if successful, be entitled to recover from the Agency all costs and expenses incurred in pursuing such remedies, including reasonable attorneys' fees. IV. Principles of Ethical Market Conduct As a member of the American Council of Life Insurance's Insurance Marketplace Standards Association (IMSA), GAD expects that the Agency and its subagents will abide by the six principles of ethical market conduct set forth by IMSA in connection with all Contracts sold pursuant to this Agreement. The six principles are as follows: (a) to conduct business according to high standards of honesty and fairness and to render that service to its customers which in the same circumstances, it would apply to or demand for itself; (b) to provide competent and customer focused sales and service; (c) to engage in active and fair competition; (d) to provide advertising and sales material that are clear as to purpose and honest and fair as to content; (e) to provide fair and expeditious handling of customer complaints and disputes; and (f) to maintain a system of supervision and review that is reasonably designed to achieve compliance with these principles of ethical market conduct. V. Compensation 1) GAD shall pay compensation to Wholesaler as set forth in the attached Compensation Schedule (Exhibit A), while it is in effect. 2) GAD may at any time offset against any compensation payable to (a) Agency or its successors or assigns, any indebtedness due from the Agency to GAD, and (b) the subagents or their successors or assigns any indebtedness due from the subagent to GAD. Nothing contained herein shall be construed as giving Agency the right to incur any indebtedness on behalf of GAD. Any remaining indebtedness of Wholesaler to GAD arising under this Agreement shall be a first lien against any monies payable hereunder. The right of Wholesaler, or any person claiming through Wholesaler to receive any compensation provided by this Agreement shall be subordinate to the right of GAD to offset such compensation against any such indebtedness of the Wholesaler to GAD. 3) No compensation shall be payable, and any compensation already paid shall be returned to GAD on request, under each of the following conditions: a) if GAD, in its sole discretion, determines not to issue the Contract applied for, Enterprise Selling Agreement Page 13 of 34 b) if GAD refunds the premium paid by the applicant, upon the exercise of applicant's right of withdrawal pursuant to any "free-look" privilege, c) if GAD refunds the premium paid by applicant as a result of the resolution of a consumer complaint, recognizing that GAD has sole discretion to refund premiums paid by applicants, or d) if GAD determines that any person signing an application who is required to be registered and/or licensed or any other person or entity receiving compensation for soliciting purchases of the Contracts is not duly registered and/or licensed to sell the Contracts in the jurisdiction of such attempted sale. 4) GAD shall pay the compensation to Agency for Contracts credited to the Agency under the Agreement, as set forth in Compensation Schedule, attached, while it is in effect. Such Compensation shall be payable when the premium is due and paid to GAD subject to the provisions of this Agreement and of the Compensation Schedule. 5) GAD shall not be obligated to pay any compensation, which would violate the applicable laws of any jurisdictions, anything in this Agreement notwithstanding. 6) In addition to the conditions and limitations elsewhere contained in the Agreement and the Compensation Schedule(s), no first year commission shall be payable on replacements or switches of an Affiliate Contract with another Affiliate Contract, which are undisclosed, and which otherwise require disclosure by either state regulation or GAD rules on replacement transactions; specific GAD rules for such Affiliate replacements are hereby incorporated by reference in Exhibit C. 7) With respect to compensation under this Agreement, in the event that anything contained in this Section V conflicts with the terms of the compensation described in the attached product schedules, the terms contained in such schedules attached will prevail. VI. Complaints and Investigations 1) Wholesaler and GAD jointly agree to cooperate fully in any regulatory investigation or proceeding or judicial proceeding arising in connection with the offer, sale, and/or servicing of the Contracts. Enterprise Selling Agreement Page 14 of 34 2) Both the Wholesaler and GAD jointly agree to investigate any customer complaint in connection with the Contracts. The term customer complaint shall mean an oral or written communication either directly from the purchaser of or applicant for Contract covered by this Agreement or his/her legal representative, or indirectly from a regulatory agency to which he/she or his/her legal representative has expressed a grievance. 3) Such cooperation referred to in Sections VI (1) and VI (2) of this Agreement shall include, but is not limited to, each party promptly notifying the other of the receipt of notice of any such investigation or proceeding, forwarding to the other party a copy of any written materials in connection with the matter and such additional information as may be necessary to furnish a complete understanding of same. In the case of a customer complaint, promptly refer such complaint to the other party for handling where appropriate and provide the other party with customer complaint information and documentation upon request. A complaint is defined as a written or documented verbal communication received by a company or its distributors, which primarily expresses a grievance. 4) GAD reserves the right to settle on behalf of itself, and on behalf of itself and Broker collectively if Broker agrees, any claims, complaints or grievances made by applicants, policyholders or others in connection with the Contracts, and concerning any conduct, act or omission by the Broker or its agents or representatives with respect to the Contracts or any transactions arising out of this Agreement. If Broker does not agree to a collective settlement with GAD and GAD, on behalf of itself, settles the matter, Broker shall indemnify and hold harmless GAD from any and all claims, complaints or grievances made by Broker or any applicant, policyholder or other made in connection with such matter. VII. Records and Administration 1) Once a Contract has been issued, it will be delivered after review by Wholesaler to the applicant, accompanied by any applicable Notice of Withdrawal Right and any additional appropriate documents. GAD will confirm or cause to be confirmed to customers all Contract transactions, as to the extent legally required, and will administer the Contracts after they have been delivered, but may from time to time require assistance from Wholesaler. Wholesaler hereby undertakes to render such assistance to GAD. Enterprise Selling Agreement Page 15 of 34 2) Wholesaler will maintain all books and records as required by Rules 17a-3 and 17a-4 under the 1934 Act, except to the extent that GAD may agree to maintain any such records on Wholesaler's behalf. Records subject to any such agreement shall be maintained by GAD as agent for Wholesaler in compliance with said rules, and such records shall be and remain the property of Wholesaler and be at all times subject to inspection by the SEC in accordance with Section 17(a) of that Act. Nothing contained herein shall be construed to affect GAD's right to ownership and control of all pertinent records and documents pertaining to its business operations including, without limitation, its operations relating to the Contracts, which right is hereby recognized and affirmed. GAD and Wholesaler agree that each shall retain all records related to this Agreement as required by the 1934 Act, and the rules and regulations thereunder and by any other applicable law or regulation, as Confidential Information as described in Section VIII(B) of this Agreement, and neither party shall reveal or disclose such Confidential Information to any third party unless such disclosure is authorized by the party affected thereby or unless such disclosure is expressly required by applicable federal or state regulatory authorities. However, nothing contained herein shall be deemed to interfere with any document, record or other information, which by law, is a matter of public record. VIII. Privacy Information A. Proprietary Information Any and all account records developed by GAD or provided to GAD by Wholesaler or its Affiliates, including but not limited to customer files, sales aides, computer software, customer names, addresses, telephone numbers and related paperwork, literature, authorizations, manuals and supplies of every kind and nature relating to the Contracts and the servicing of the Contracts are and shall remain the property of GAD. Such proprietary information and materials shall be treated as nonpublic personal information and/or confidential information, as appropriate pursuant to Sections VIII(A), (B), (C), and (D) of this Agreement. Any and all proprietary information and material developed and provided by GAD shall be returned to GAD (including all copies made by the Wholesaler or its Affiliates) upon termination of this Agreement. Any materials developed by the Wholesaler or its Affiliates in support of the marketing, sales, advertising or training related to GAD or its Contracts shall be destroyed upon the termination of the Agreement. Enterprise Selling Agreement Page 16 of 34 B. Receipt of Customer Nonpublic Personal Information From Wholesaler by GAD 1) GAD will treat nonpublic personal information regarding Wholesaler's customers provided to it by Wholesaler under this Agreement as Confidential Information under Section VIII(B) of this Agreement, except that such provisions shall not apply to such information regarding customers of Wholesaler who were, are or become policyholders or customers of GAD or any of its Affiliates other than by reason of the services provided by Wholesaler under this Agreement. 2) Notwithstanding the foregoing, GAD and its Affiliates shall have the right to use or disclose such nonpublic personal information: (a) to the full extent required to comply with Applicable Laws or requests of regulators; (b) as necessary in connection with any of GAD's audit, legal, compliance or accounting procedures; (c) as necessary or permitted by Applicable Laws in the ordinary course of business, for example to administer Contracts and provide customer service to purchasers of Contracts under this Agreement; (d) as authorized by such customer; and (e) to protect against or prevent fraud. 3) GAD and its Affiliates may market, offer, sell or distribute insurance products, including, but not limited to, the Contracts, or any of their other products and related services, outside of this Agreement to customers of Wholesaler provided they do not use nonpublic personal information regarding Wholesaler's customers provided by Wholesaler to specifically target customers, and such marketing, offering, selling or distributing by GAD and its Affiliates of insurance (including but not limited to the Contracts) or any of their other products or services shall not be subject to the terms of this Agreement. C. Treatment of Nonpublic Personal Information Disclosed to Wholesaler by GAD Wholesaler will treat nonpublic personal information regarding Wholesaler's customers provided to it by GAD under this Agreement as Confidential Information and shall use such information only to solicit sales of and to provide service with respect to Contracts sold pursuant to this Agreement. Notwithstanding the foregoing, Wholesaler shall have the right to use or disclose nonpublic personal information provided to it by GAD to the extent permitted by Applicable Laws and GAD's privacy policy, for example, to comply with Applicable Laws or requests of regulators, in connection with Wholesaler's audit procedures, as authorized by such customers, and to protect against or prevent fraud. Enterprise Selling Agreement Page 17 of 34 D. Confidential Information 1) GAD and Wholesaler will maintain the confidentiality of Confidential Information disclosed by either party to the other party under the terms of this Agreement. Except as otherwise provided in Sections VIII(A) and VIII(B), neither GAD nor Wholesaler shall disclose any Confidential Information that is covered by this Agreement, and shall only disclose such information if authorized in writing by the affected party or if expressly required under the terms of a valid subpoena or order issued by a court of competent jurisdiction or regulatory body or applicable laws and regulations. "Confidential Information" means: (a) any information that this Agreement specifies will be treated as "Confidential Information" under this Section VIII(B); (b) any information of Wholesaler and their Affiliates disclosed by Wholesaler to GAD through the course of business during the term of this Agreement, or any information of GAD and its Affiliates that is disclosed by GAD to Wholesaler through the course of business during the term of this Agreement, in each such case if such information is clearly identified as and marked "confidential" by the disclosing party, such information includes, but is not limited to, new products, marketing strategies and materials, development plans, customer information, client lists, pricing information, rates and values, financial information and computer systems; (c) nonpublic personal information; and (d) information required to be treated as confidential under Applicable Laws. 2) "Confidential Information" does not include (i) information which is now generally available in the public domain or which in the future enters the public domain through no fault of the receiving party; (ii) information that is disclosed to the receiving party by a third party without violation by such third party of an independent obligation of confidentiality of which the receiving party is aware; or (iii) information that the disclosing party consents in writing that the receiving party may disclose. 3) The disclosing party warrants that it has the right to provide access to, disclose and use, the Confidential Information to be provided hereunder. The receiving party shall not be liable to the other for: a) inadvertent use, publication, or dissemination of the Confidential Information received hereunder provided that: (i) it uses the same degree of care in safeguarding such information as it used for its own information of like importance; (ii) it has complied with Applicable Laws; and (iii) upon discovery of such, it shall take steps to prevent any further inadvertent use, publication, or dissemination; and/or Enterprise Selling Agreement Page 18 of 34 b) unauthorized use, publication or dissemination of the Confidential Information received hereunder by persons who are or have been in its employ unless it fails to safeguard such information with the same degree of care as it uses for its own proprietary information of like importance and provided that the receiving party uses such Confidential Information in accordance with Applicable Laws. 4) Any similarity between the Confidential Information and any other information, regardless of medium, whether verbal or written, as well as contracts and/or services acquired from third parties or developed by the receiving party, or Affiliates independently through its or their own efforts, thought, labor and ingenuity shall not constitute any violation of this Agreement and shall not subject the receiving party to any liability whatsoever. 5) The receiving party shall use the Confidential Information solely for purposes contemplated by this Agreement and shall not disclose the Confidential Information except as expressly provided herein. 6) The receiving party understands that neither the disclosing party nor any of its representatives or designees have made or make any representation or warranty as to the accuracy or completeness of the Confidential Information. E. Protected Health Information To the extent that Broker and its Representatives receive, create, has access to or uses PHI, as that term is defined in Section I of the Agreement, regarding individuals who are applicants for, owners of or eligible for benefits under certain health insurance products and optional riders offered by or through GAD or any of its Affiliates, in accordance with the requirements of the federal Health Insurance Portability and Accountability Act of 1996 and related regulations ("HIPAA"), as may be amended from time to time, Broker agrees: 1) Not to use or disclose PHI except (i.) to perform functions, activities, or services for, or on behalf of, GAD or its Affiliates as specified in the Agreement and consistent with applicable laws, or (ii.) to the extent that such use or disclosure is required by law. Any such use or disclosure shall be limited to that required to perform such services or to that required by relevant law. 2) To use appropriate safeguards to prevent use or disclosure of PHI other than as permitted by this Agreement. Enterprise Selling Agreement Page 19 of 34 3) To promptly report to GAD any use or disclosure of PHI not permitted by this Agreement of which Broker becomes aware and to mitigate any harmful effect of any use or disclosure that is made by Broker or its Representatives in violation of the requirements of this Agreement. 4) To ensure that any third party with whom Broker contracts or is hired under that arrangement, receives or has access to PHI agrees to the same restrictions and conditions that apply to Broker with respect to PHI under this Agreement. 5) To, within 15 days of GAD's request, provide GAD with any PHI or information relating to PHI as deemed necessary by GAD to provide individuals with access to, amendment of, and an accounting of disclosures of their PHI. 6) To make Broker's records relating to use or disclosure of PHI available to the Secretary of the United States Department of Health and Human Services at his/her request to determine GAD's, or one of its Affiliate's, compliance with HIPAA. 7) To, upon termination of this Agreement, in accordance with GAD's wishes either return or destroy all PHI Broker maintains in any form and retain no copies. If GAD agrees that such return or destruction is not feasible, Broker shall extend these protections to the PHI beyond the termination of the Agreement, in which case any further use or disclosure of the PHI will be solely for the purposes that make return or destruction infeasible. Destruction without retention of copies is deemed "infeasible" if prohibited by the terms of the Agreement or by applicable law, including record retention requirements of various state insurance laws. IX. Indemnification 1) Except with respect to matters relating to the joint distribution of Contracts, the following indemnification provisions shall apply: a) GAD will indemnify and hold harmless Wholesaler from any and all losses, claims, damages or liabilities (or actions in respect thereof), to which Wholesaler may become subject, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Prospectus, Registration Statements or any other sales or offering materials furnished or approved in writing by GAD for any of the Contracts or any relevant funding vehicle or any amendments or supplements thereto, or arise out of or are based upon the omission or alleged Enterprise Selling Agreement Page 20 of 34 omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; and will reimburse Wholesaler for any legal or other expenses reasonably incurred by it in connection with investigating or defending against such loss, claim, damage, liability or action in respect thereof; provided, however, that GAD shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made by Wholesaler when referring to or explaining such Prospectus, amendment, Registration Statement or any other sales or offering materials. GAD shall not indemnify Wholesaler for any action where an applicant for any of the Contracts was not furnished or sent or given, at or prior to written confirmation of the sale of a Contract, a copy of the appropriate Prospectus (es), any Statement of Additional Information, if required or requested, and any supplements or amendments to either furnished to Wholesaler by GAD. The forgoing indemnities shall, upon the same terms and conditions, extend to and inure to the benefit of each director, trustee and officer of Wholesaler and any person controlling it. b) Wholesaler will indemnify and hold harmless GAD against any losses, claims, damages or liabilities (or actions in respect thereof), to which GAD may become subject, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any negligent, improper, fraudulent or unauthorized acts or omissions by Wholesaler, its employees, agents, representatives, officers or directors, including but not limited to improper or unlawful sales practices, any statement or alleged untrue statement of any material fact, any omission or alleged omission, any unauthorized use of sales materials or advertisements, and any oral or written misrepresentations; and will reimburse GAD for any legal or other expenses reasonably incurred by it in connection with investigating or defending against any such loss, claim, damage, liability or action. The foregoing indemnities shall, upon the same terms and conditions, extend to and inure to the benefit of each director, trustee and officer of GAD and any person controlling it. c) Wholesaler shall indemnify and hold harmless GAD from any and all losses, claims, damages or liabilities (or actions in respect thereof) to which GAD may be subject, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or result from any breach of any representation or warranty, covenant, agreement, obligation or undertaking in this Agreement by Wholesaler or its directors, officers, employees or other representatives or by any other person or entity acting on behalf of or under control of Wholesaler; and will Enterprise Selling Agreement Page 21 of 34 reimburse GAD for any legal or other expenses reasonably incurred by it in connection with investigating or defending against any such loss, claim, damage, liability or action. The foregoing indemnities shall, upon the same terms and conditions, extend to and inure to the benefit of each director, trustee and officer of GAD and any person controlling it. d) Wholesaler shall indemnify and hold GAD harmless for any penalties, losses or liabilities resulting from GAD improperly paying any compensation under this Agreement, unless such improper payment was caused by GAD's negligence or willful misconduct; and will reimburse GAD for any legal or other expenses reasonably incurred by it in connection with investigating or defending against any such loss, claim, damage, liability or action. The foregoing indemnities shall, upon the same terms and conditions, extend to and inure to the benefit of each director, trustee and officer of GAD and any person controlling it. 2) Promptly after receipt by an indemnified party of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party, notify the indemnifying party in writing of the commencement thereof; but the omission to notify the indemnifying party shall not relieve it from any liability which it may otherwise have to any indemnified party. In case any such action shall be brought against any indemnified party, it shall notify the indemnifying party of the commencement thereof. The indemnifying party shall be entitled to participate in, and, to the extent that it shall wish, jointly with any other indemnifying party, similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. X. General Provisions A. Term and Termination 1) This Agreement shall continue in force for one year from its Effective Date and thereafter shall automatically be renewed every year for a further one year period; provided that either party may unilaterally terminate this Agreement with or without cause upon sixty (60) days' written notice to the other party of its intention to do so. Enterprise Selling Agreement Page 22 of 34 2) Change in Status. a) Broker-Dealer Status. The Agreement shall terminate immediately upon GAD or Wholesaler ceasing to be a registered Broker-dealer or a member of the NASD. b) Legal Status. The Agreement shall terminate immediately upon the termination of the legal existence of Selling Broker-Dealer or the Agency, or the merger, consolidation, reorganization, dissolution, receivership or bankruptcy of either, or whenever the Agency is no longer licensed under law to solicit and procure applications for Contracts, unless the Agency notifies the other parties in writing at least thirty (30) days' prior to the occurrence of any of the above events and obtains written permission to continue on a basis approved by the other parties. 3) Upon termination of this Agreement, all authorizations, rights and obligations shall cease except (a) the agreements contained in Sections, VI, VIII, IX, X(E), X(F), and X(J) hereof; and (b) the obligation to settle accounts hereunder. Except with respect to records maintained by or on behalf of Wholesaler pursuant to Rules 17a-3 and 17a-4 under the 1934 Act, Wholesaler shall return to GAD, within 30 days after the Effective Date of termination, any and all records in its possession which have been specifically maintained in connection with GAD's operations related to the Contracts. B. Assignability This Agreement shall not be assigned by either party without the written consent of the other. C. Amendments No oral promises or representations shall be binding nor shall this Agreement be modified except by agreement in writing, executed on behalf of the Parties by a duly authorized officer of each of them. D. Notices Notices to be given hereunder shall be addressed to: General American Distributors, Inc. _____________ Attn: Law Department _____________ 13045 Tesson Ferry Road _____________ St. Louis, MO 63101 _____________ Enterprise Selling Agreement Page 23 of 34 E. Arbitration 1) All disputes and differences between the parties, other than those arising with respect to the use of nonpublic personal information under Section VIII must be decided by arbitration, regardless of the insolvency of either party, unless the conservator, receiver, liquidator or statutory successor is specifically exempted from an arbitration proceeding by applicable state law. 2) Either party may initiate arbitration by providing written notification to the other party. Such written notice shall set forth (i) a brief statement of the issue(s); (ii) the failure of the parties to reach agreement; and (iii) the date of the demand for arbitration. 3) The arbitration panel shall consist of three arbitrators. The arbitrators must be impartial and must be or must have been officers of life insurance and or securities companies other than the parties or their affiliates. 4) Each party shall select an arbitrator within thirty-days (30) from the date of the demand. If either party shall refuse or fail to appoint an arbitrator within the time allowed, the party that has appointed an arbitrator may notify the other party that, if it has not appointed its arbitrator within the following ten (10) days, an arbitrator will be appointed on its behalf. The two (2) arbitrators shall select the third arbitrator within thirty (30) days of the appointment of the second arbitrator. If the two arbitrators fail to agree on the selection of the third arbitrator within the time allowed, each arbitrator shall submit to the other a list of three (3) candidates. Each arbitrator shall select one name from the list submitted by the other and the third arbitrator shall be selected from the two names chosen by drawing lots. 5) The arbitrators shall interpret this Agreement as an honorable engagement rather than merely as a legal obligation and shall consider practical business and equitable principles as well as industry custom and practice regarding the applicable insurance and securities business. The arbitrators are released from judicial formalities and shall not be bound by strict rules of procedure and evidence. 6) The arbitrators shall determine all arbitration schedules and procedural rules. Organizational and other meetings will be held in Missouri, unless the arbitrators select another location. The arbitrators shall decide all matters by majority vote. Enterprise Selling Agreement Page 24 of 34 7) The decisions of the arbitrators shall be final and binding on both parties. The arbitrators may, at their discretion, award costs and expenses, as they deem appropriate, including but not limited to legal fees and interest. The arbitrators may not award exemplary or punitive damages. Judgment may be entered upon the final decision of the arbitrators in any court of competent jurisdiction. 8) Unless the arbitrators shall provide otherwise, each party will be responsible for (a) all fees and expenses of its respective counsel, accountants, actuaries and any other representatives in connection with the arbitration and (b) one-half (1/2) of the expenses of the arbitration, including the fees and expenses of the arbitrators F. Governing Law This Agreement shall be governed by and construed in accordance with the laws of the State of Missouri without regard to Missouri choice of law provisions. G. Entire Understanding This Agreement and any reference incorporated herein constitute the complete understanding of the parties and supersedes in its entirety any and all prior and contemporaneous agreements among the parties with respect to the subject matter discussed herein. No oral agreements or representatives shall be binding. H. No Third Party Beneficiaries Nothing in the Agreement shall convey any rights upon any person or entity, which is not a party to the Agreement. I. Non-exclusivity Wholesaler and Agency agree that no territory or product is assigned exclusively hereunder and that GAD reserves the right in its discretion to enter into selling agreements with other Broker-Dealers, and to contract with or establish one or more insurance agencies in any jurisdiction in which Wholesaler transacts business hereunder. J. Waiver The failure of either party to strictly enforce any provision of this Agreement shall not operate as a waiver of such provision or release either party from its obligation to perform strictly in accordance with such provision. Enterprise Selling Agreement Page 25 of 34 K. Counterparts This Agreement may be executed in counterparts, with the same force and effect as if executed in one complete document. L. Severability If any provision of this Agreement is declared null, void or unenforceable in whole or in part by any court, arbitrator or governmental agency, said provision shall survive to the extent it is not so declared and all the other provisions of the Agreement shall remain in full force and effect unless, in each case, such declaration shall serve to deprive any of the parties hereto of the fundamental benefits of this Agreement In reliance on the representations set forth and in consideration of the undertakings described, the parties represented below do hereby contract and agree. GENERAL AMERICAN DISTRIBUTORS (BROKER-DEALER) By -------------------------------------- - ---------------------------------------- Print Name & Title Date ------------------------------------ (WHOLESALER) By -------------------------------------- - ---------------------------------------- Print Name & Title Date ------------------------------------ Enterprise Selling Agreement Page 26 of 34 Exhibit A WHOLESALING ALLOWANCE GEN AMERICA LIFE INSURANCE COMPANY In addition to the compensation to the retail BD, General American Distributors (GAD) agrees to pay to the Wholesaler an additional allowance equal to 24% of target premium and 1% of excess premium in the first year on VUL (00), and VUL (2002). In addition, 1% of renewal premiums will be payable on VUL(00) and VUL 2002. ================================================================================ NEW ENGLAND LIFE INSURANCE COMPANY For policies credited to the Agency under the Agreement while this part is in effect, marketing allowance payable to the Agency shall be the following percentages of recurring premiums (up to Target Premiums) and shall be payable when the premium is due and paid to the Company, subject to the provisions of the Agreement. First Year Wholesaling Allowance 24% of target premium for VUSL Bands 1 & 2, VUL Bands 0, 1 & 2 , VOL Bands 1 & 2 Renewal Year Wholesaling Allowance - Years 2-10 2.50% for; VUL Bands 0 & 1 2.25% for VUL Band 2; 2.00% for VUSL Band 1 & 2 Excess Premiums (Years 1-10) 0.5% premiums over the Target Premium on VUL , VUSL, VOL Service Fees: No service fees are payable on target premium or excess premium. ================================================================================ Enterprise Executive Advantage - (EEA - COLI) ----------------------------------------- Year 1 Target 3.00% ----------------------------------------- Year 1 Excess 0% ----------------------------------------- Year 2+ Target 0% ----------------------------------------- Year 2+ Excess 0% ----------------------------------------- ================================================================================ Variable Universal Survivorship Life (VUSL) Commission Chargeback If for any reason the policy lapses anytime prior to the 13th month, all unearned Wholesale allowances (up to the Target Premium) already received by the agent are charged back as well as one-half of the earned Wholesale allowances. Wholesale allowances received on dump-in amounts above the Target Premium are not charged back. Partial surrenders prior to the 13th month will result in partial chargebacks Enterprise Selling Agreement Page 27 of 34 - ------------------------------------- ------------ ------------- --------------- ------------- % of Target Premium by Policy Year Year 1 Years 2-5 Years 6-10 Years 11+ - ------------------------------------- ------------ ------------- --------------- ------------- Wholesale allowance 20% 1% 1% 1% - ------------------------------------- ------------ ------------- --------------- ------------- Total on Target to Wholesale BD 20% 1% 1% 1% - ------------------------------------- ------------ ------------- --------------- ------------- - ------------------------------------- ------------ ------------- --------------- ------------- % of Excess Premium by Policy Year Year 1 Years 2-5 Years 6-10 Years 11+ - ------------------------------------- ------------ ------------- --------------- ------------- Wholesale allowance 1% 1% 1% 1% - ------------------------------------- ------------ ------------- --------------- ------------- Total on Excess to Wholesale BD 1% 1% 1% 1% - ------------------------------------- ------------ ------------- --------------- -------------
================================================================================ METLIFE In addition to the compensation to the retail BD, MetLife agrees to pay to the Wholesaler an additional allowance equal to 22.5% of target premium in the FIRST Year Renewal Allowance UL (01) and UL1 % of Renewal Premium Years 2-4 Years 5-10 - -------------------------------- -------------- --------------- Target $0 - $499,999 3% 2.25% - -------------------------------- -------------- --------------- Target $500,000 - $2.0 Mil 3.75% 2.25% - -------------------------------- -------------- --------------- Target $ >2.0 Mil 4.5% 2.25% - -------------------------------- -------------- --------------- Enterprise Selling Agreement Page 28 of 34 EXHIBIT B Schedule of Fixed Product and Compensation Enterprise Selling Agreement Page 29 of 34 EXHIBIT C Rewritten Business (RWB) Commission Rules (formerly, Replacement Commission Rules) Effective June 1, 2002 Note: Notwithstanding the rules below, no FYC will be payable on internal replacements or switches that are undisclosed, which includes all internal replacements or switches for which disclosure is required by either state regulation or GAD rules. A. Definitions For most states and for the GAD enterprise, a replacement can be broadly defined as purchasing a new policy in connection with discontinuing or changing another policy. Such a definition applies for disclosure purposes and when replacement forms must be completed. However, for purposes of Rewritten Business (RWB) commission rules, the definition is more limited. Application of RWB Commission Rules: A new individual life insurance policy issued within the Enterprise will be subject to RWB commission rules if a premium-paying life insurance policy (the "old policy") previously issued within the Enterprise on the same life meets one of the following criteria within six months before or 12 months after the Home Office Receipt Date (HORD) of a new life policy (the "RWB window"; for a new annuity, the RWB window is three months before and after the issue date): .. Is fully or partially lapsed, including lapse to extended term or reduced paid-up; .. Is fully or partially surrendered; .. Has a reduction in annualized premium through a policy change; .. Has a loan taken out that results in the total outstanding loan exceeding 80% of the total loan value of the policy, and the policy subsequently lapses, is surrendered or has a reduction in annualized premium, with less than four months of additional premiums being paid after the policy loan. However, the new policy will not be considered rewritten business for RWB commission rule purposes, even though the insured is the same, if (a) a change in ownership occurs involving a corporation, a qualified retirement plan or an irrevocable trust; (b) a corporate-owned policy is terminated because of business failure or bankruptcy; (c) a life policy is cancelled because of a court-ordered settlement; or (d) a juvenile policy owned by parents, guardians or a trust is rewritten by a new policy on the same life that also owns the new policy and is an adult (age 18 or older). For survivorship policies, a survivorship policy "rewrites" a single life policy (or vice versa) if one of the insureds on the survivorship policy is the insured on the single life policy. However, one survivorship policy rewrites another only if both insureds are the same. The RWB commission rules will be applied, assuming the above definitions are satisfied, even though .. No funds are moved from the old policy to the new policy; or .. The agent is not told and does not know of the rewritten business; or .. The policy ownership or policy payor changes, except for changes in ownership involving a corporation, a qualified retirement plan or an irrevocable trust. Old Money: The net cash value released (excluding dividend accumulations) from the old policy during the RWB Window, whether that cash value is explicitly rolled into the new policy or not. In addition, a full or partial Enterprise Selling Agreement Page 30 of 34 surrender of paid-up additions (or of a paid-up policy) on the same life is considered rollover money if it falls within the RWB window, even if the old policy is not otherwise changed or "rewritten". New Money: The excess, if any, of the amount applied to the new policy over the Old Money, on or within 12 months after the issue date of the new policy. Old Premium: The amount of first year premium paid (up to the target premium for flexible premium policies) on the old policy. New Premium: The amount of first year premium paid (up to the target premium for flexible premium policies) on the new policy. This amount may be paid by either Old Money or New Money. B. Life-to-Life (Permanent or Term) FYC on Old Money: No FYC will be payable. FYC on New Money FYC will then be payable as follows. a. For the amount of New Money up to the Old Premium level, If the New Premium is at least double the Old Premium and the old policy is at least five years old, then full first commissions are payable. If the New Premium is less than double the Old Premium or the old policy is less than five years old, then first commission are payable as follows:
-------------------------------------------------------------------------------------------------------------------- Years Existing % of Normal FYC if % of Normal FYC if Existing Policy Policy In Force Existing Policy Replaced Replaced by New Agent (not a by Original Writing Agent "Business Successor") (or "Business Successor") -------------------------------------------------------------------------------------------------------------------- Less than 5 Years 0% 0% -------------------------------------------------------------------------------------------------------------------- 5 Years less than 6 Years 25% 25% -------------------------------------------------------------------------------------------------------------------- 6 Years less than 7 Years 30% 25% -------------------------------------------------------------------------------------------------------------------- 7 Years less than 8 Years 35% 25% -------------------------------------------------------------------------------------------------------------------- 8 Years less than 9 Years 40% 25% -------------------------------------------------------------------------------------------------------------------- 9 Years less than 10 Years 45% 25% -------------------------------------------------------------------------------------------------------------------- 10+ Years 50% 25% --------------------------------------------------------------------------------------------------------------------
Exceptions: Term insurance sold after 1/1/01 will receive double the above rates if later rewritten. If a level term policy is rewritten to another term policy in the last two years of its level premium period, full normal first year commissions will be paid Enterprise Selling Agreement Page 31 of 34 If a term policy is converted as of attained age to a permanent policy, the commission rules applicable to attained-age term conversions will be applied, whether or not a term conversion was available and whether or not a term conversion was actually performed. b. For the amount of New Money in excess of the Old Premium level, up to the New Premium level. Full normal first commissions are payable. c. For the balance of any New Money, applied as excess, lump-sum, or dump-in. Full normal excess, single premium or paid up additions commissions will be paid. Other Considerations 1. In applying these rules, the Company may estimate the amount of premium to be paid in the first year after the replacement and determine a single percentage of normal commission to be paid on future first year premium payments, combining the reduced rate in (a) above with the full rate in (b) above. A review may be made at or before the first anniversary and an adjustment made if the actual premiums paid differ from those that had been expected. 2. Full renewal commissions will be payable on the new policy. 3. Rewritten premium will not count as a chargeable termination in any bonus calculation if the old policy is at least five years old when it is rewritten. However, any other rewritten premium, including any excess of the Old Premium over the New Premium (i.e., premium that is not rewritten) will count as a chargeable termination. 4. All commissions on the new policy will be payable to the writing agent of the new policy. 5. There are no longer separate rules for pension policies. C. Life-to-Annuity, Mutual Fund, or Wrap Account Rewrites of a life policy to an annuity, mutual fund or wrap account will now be subject to RWB commission rules. The RWB window will be three months before to three months after the issue date of the new contract. The net cash released from the life policy will be considered Old Money. .. If the life policy if less than 10 years old, no first-year commission will be paid on Old Money; .. If the life policy is more than 10 years old, full normal commission will be paid on Old Money; .. Full normal commission will be paid on New Money. D. Annuity-to-Life Annuity-to-life rewrites are not subject to RWB commission rules; full normal commissions are payable. Enterprise Selling Agreement Page 32 of 34 E. Annuity-to-Annuity Annuity-to-annuity rewrites are subject to RWB commission rules. The RWB window will be three months before to three months after the issue date of the new annuity. The net cash released by the old annuity will be considered Old Money. If a variable annuity is rewritten by another variable annuity, no commissions will be payable unless the initial deposit on the new annuity exceeds the terminated value in the old annuity. In that case, a normal commission will be paid on the increase. For a fixed-to-fixed, fixed-to-variable or variable-to-fixed rewritten annuity, no first year commissions will be payable unless (1) the initial deposit on the new annuity exceeds the terminated value in the old annuity; or (2) the old annuity is beyond its surrender charge period; or (3) the old fixed annuity is within 30 days of the end of a rate guarantee window. In these cases, a full normal FYC will be paid on any increased deposit and 50% of a normal FYC will be paid on the balance. If, under a Spousal Transfer Provision, the spousal beneficiary of an annuity death claim elects to retain the proceeds in and to become the annuitant of the existing contract, no commission will be paid on the amount transferred. If, instead, the death proceeds are moved to a new annuity but not through a Spousal Transfer Provision, no FYC will be paid. In either case, full normal commissions will be paid on any New Money F. Annuity-to-Mutual Fund or Wrap Account No commission will be paid on Old Money if a mutual fund or wrap account replaces an annuity that is subject to a surrender charge. The Old Money will be considered the cash released by the annuity, and the RWB window will be three months before and three months after the effective date of the fund or wrap account. G. Disability-to-Disability For disability-to-disability rewrites, there is no change from previous replacement commission rules. If there is an increase in annual premium on the new policy, a full first-year commission will be paid on the increased premium. No first-year commission will be paid on the balance of premium. A full new scale of renewal commissions will be paid only on the increased premium. The old renewal scale, measured from the original issue date, will be continued on the balance of the premium. If there is no increase in annual premium on the new policy, no first-year commission will be paid and the old renewal scale will be continued, measured from the original issue date. H. Exchange Programs A policy that qualifies for a special exchange offer will be subject to special exchange commission rules that may differ from normal RWB commission rules. A policy that would qualify for an exchange offer will be treated according to exchange commission rules even if a rewriting occurs instead. Enterprise Selling Agreement Page 33 of 34 EXHIBIT D AFFILIATED INSURANCE AGENCY The Wholesaler/Dealer named below ("Wholesaler"), having executed a Sales Agreement ("Agreement") with General American Distributors ("GAD") dated _____________ which, provides for sales of GAD's Variable Contracts through a designated affiliated insurance agency or agencies ("Agency"), hereby designates the Agency named below pursuant to Section III(B) of the Agreement. Wholesaler and Agency hereby represent and warrant that the Agency named below is and will be maintained in compliance with this Agreement. ---------------------------------- Affiliated Insurance Agency Name By: ------------------------------------- ---------------------------------------- Print Name & Title ---------------------------------------- (Tax Identification Number) ---------------------------------------- Affiliated Insurance Agency Name By: ------------------------------------- ---------------------------------------- Print Name & Title ---------------------------------------- (Tax Identification Number) EX-99.(D)(IX) 3 dex99dix.txt ENDORSEMENT Exhibit 99(d)(ix) Metropolitan Life Insurance Company Endorsement This policy is amended by adding the following as the first sentence of the Death Benefit Adjustment provision: After the first policy year, you may decrease the Specified Face Amount of Insurance. /s/ Gwenn L. Carr Gwenn L. Carr Vice-President and Secretary R.S. 1272 October 2003 EX-99.(E)(II) 4 dex99eii.txt APPLICATION Exhibit 99(e)(ii) Application for Individual and Multi-Life Life Insurance Metropolitan Life Insurance Company One Madison Avenue New York, NY 10010-3690 New England Life Insurance Company General American Life Insurance Company 501 Boylston Street 700 Market Street Boston, MA 02116-3700 St. Louis, MO 63101 MetLife Investors USA Insurance Company MetLife Investors Insurance Company 222 Delaware Ave, Suite 900 700 Market Street P.O. Box 25130 St. Louis, MO 63101 Wilmington, DE 19899
BELOW ARE INSURANCE FRAUD WARNING STATEMENTS THAT APPLY TO RESIDENTS OF SPECIFIC STATES. PLEASE READ IF THE STATE IN WHICH THE OWNER RESIDES IS LISTED. Arkansas, Kentucky, Louisiana, New Mexico, Ohio, Oklahoma, Pennsylvania Any person who knowingly and with intent to defraud any insurance company or any other person files an application for insurance or statement of claim containing any materially false information, or conceals for the purpose of misleading information concerning any fact material thereto, commits a fraudulent insurance act which is a crime and subjects such person to criminal and civil penalties. Colorado It is unlawful to knowingly provide false, incomplete, or misleading facts or information to an insurance company for the purpose of defrauding or attempting to defraud the company. Penalties may include imprisonment, fines, denial of life insurance and civil damages. It is also unlawful for any insurance company or agent of an insurance company to knowingly provide false, incomplete or misleading facts or information to a policyholder or claimant for the purpose of defrauding or attempting to defraud the policyholder or claimant with respect to a settlement or award from insurance proceeds. Such acts shall be reported to the Colorado Division of Insurance within the Department of Regulatory Agencies to the extent required by applicable law. Washington D.C., Maine, Tennessee, Virginia It is a crime to knowingly provide false, incomplete, or misleading information to an insurance company for the purpose of defrauding the company. Penalties may include imprisonment, fines, or denial of insurance benefits. Florida Any person who knowingly and with the intent to injure, defraud, or deceive any insurer files a statement of claim or an application containing any false, incomplete, or misleading information is guilty of a felony of the third degree. New Jersey Any person who includes any false or misleading information on an application for an insurance policy is subject to criminal and civil penalties. ENB-7-04 -4 Part I Company Use Only (Policy Numbers/Billing/MSA Number) - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ [ ] Metropolitan Life Insurance Company [ ] New England Life Insurance Company [ ] General American Life Insurance Company [ ] MetLife Investors USA Insurance Company [ ] MetLife Investors Insurance Company The Company indicated above is referred to as "the Company". - ------------------------------------------------------------------------------------------------------------------------ 1. Proposed Insured #1: Life 1 -------------------------------------------------------------------------------------------------------------------- Name: First, Middle, Last DOB State/Country of Sex Mo./Day/Yr. Birth Social Security Number ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ a) Current Residence Address and Phone Number: ---------------------------------------------------------------------------------------------------------------- (Street) (City) (State) (Zip) [ ] a.m. [ ] Home ( ____ ) ______________ ( ____ ) ______________ Best time and place to call: ____________ [ ] p.m. [ ] Work (Home Phone) (Work Phone) E-Mail Address: ------------------------------------------------------------------------------------------------- b) Driver's License Number and State of Issue: --------------------------------------------------------------------- c) Employer's Name: ------------------------------------------------------------------------------------------------ d) Occupation & Duties: -------------------------------------------------------------------------------------------- e) Earned Annual Income: $ __________________________ Net Worth: $_________________________________________________ f) Are you actively at work? [ ] Yes [ ] No (If No, provide details) ----------------------------------------------- ---------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ 2. Proposed Insured #2: Life 2 or Spouse/Covered Insured/Applicant's Waiver of Premium Benefit (For multiple persons under a Covered Insured rider, complete Other Insureds Supplement for additional persons.) -------------------------------------------------------------------------------------------------------------------- Name: First, Middle, Last Social Relationship DOB State/Country Security to Proposed Sex Mo./Day/Yr. of Birth Number Insured #1 ----------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- a) Current Residence Address and Phone Number (if different than Proposed Insured #1): -------------------------------------------------------------------------------------------------------------------- (Street) (City) (State) (Zip) [ ] a.m. [ ] Home ( ____ ) ______________ ( ____ ) ______________ Best time and place to call: ____________ [ ] p.m. [ ] Work (Home Phone) (Work Phone) E-Mail Address: b) Driver's License Number and State of Issue: --------------------------------------------------------------------- c) Employer's Name: ------------------------------------------------------------------------------------------------ d) Occupation & Duties: -------------------------------------------------------------------------------------------- e) Earned Annual Income: $ _________________________ Net Worth: $__________________________________________________ f) Are you actively at work? [ ] Yes [ ] No (If No, provide details) ------------------------------------------ ---------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------
ENB-7-04 -5 - ------------------------------------------------------------------------------------------------------------------------------- 3. Existing or applied for insurance, including any term riders or annuities: (If additional space is needed, provide details in the Supplemental Information section. If any existing insurance, complete state replacement forms as necessary.) If no existing or applied for insurance or annuity, check here.[ ] [Type: Life (L), Disability (D), Health (H), Annuity (A)] Year Proposed Type of Accidental Death Insured Company (L,D,H,A) Amount Issue Amount 1035 - ------------------------------------------------------------------------------------------------------------------------------- [ ] Yes - ------------------------------------------------------------------------------------------------------------------------------- [ ] Yes - ------------------------------------------------------------------------------------------------------------------------------- [ ] Yes - ------------------------------------------------------------------------------------------------------------------------------- [ ] Yes - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- 4. In connection with this application, has there been, or will there be, with this or any other company any: surrender transaction; loan; withdrawal; lapse; reduction or redirection of premium/consideration; or change transaction (except conversions) involving an annuity or other life insurance? (If Yes, complete the Replacement Questionnaire and Disclosure and any applicable replacement forms.) [ ] Yes [ ] No - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- 5. Indicate Plan and Face Amount: [ ] list below or [ ] complete Product Supplement. a) Type of Insurance: [ ] Individual Life [ ] Survivorship/Joint Life [ ] Group Conversion (For MetLife only.) (Complete Product Supplement.) [ ] Qualified Plan Employee Group Number ________) b) Plan:_____________________________________________________ c) Face Amount: $_________________________________________ Complete for Universal Life/Variable Life Products. (For Variable Life, also complete Variable Life Supplement.) d) Planned Premium (modal): Year 1: $___________________________ Excess/Lump Sum: $_____________________ Renewal (If applicable): $________________________ Planned Annual Unscheduled Payment (If applicable): $_________________ e) Definition of Life Insurance Test (If choice is available under policy applied for.): [ ] Guideline Premium Test [ ] Cash Value Accumulation Test f) Death Benefit Option/Contract Type: _____________________ g) Guarantee to Age: ____________ or [ ] 5 Years (for MetLife Variable only.) h) Optional Benefits/Riders/Dividend Option: [ ] list below or [ ] complete Product Supplement ---------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- i) Special Requests/Other: list below ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- j) Do you request an alternate/additional policy (If available)? [ ] Yes [ ] No (If Yes, provide full details in Supplemental Information section and include signed and dated illustration for each policy requested.) - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- 6. MODE OF PAYMENT a) Mode of Payment: [ ] Annual [ ] Semiannual [ ] Quarterly [ ] Monthly [ ] Bank Draft [ ] Special Accounts [ ] Other_______________________________________________ (Additional details/existing/new account numbers, etc.): _________________________________________________________ b) Amount collected with application $____________________ must equal at least one monthly premium. - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- 7. SOURCE OF PAYMENT (Check all that apply:) [ ] Earned Income [ ] Money Market Fund [ ] Certificate of Deposit [ ] Rollover/Transfer of Assets [ ] Savings [ ] Loan [ ] Other__________________________ [ ] Mutual Fund/Brokerage Account [ ] Use of values in another Life Insurance/Annuity Contract - -------------------------------------------------------------------------------------------------------------------------------
ENB-7-04 -6 - -------------------------------------------------------------------------------- 8. What is the purpose of this insurance? (Check all that apply:) [ ] Income Protection [ ] Business Planning [ ] Estate Planning [ ] Mortgage Protection [ ] Retirement Supplement [ ] Education Funding [ ] Final Expenses [ ] Charitable Giving [ ] Other ________________ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Provide the following information for all Primary/Contingent Owners and Beneficiaries: name; relationship to Proposed Insured(s); date of birth; social security/tax ID number; and address. Include E-Mail address. If Trust, provide Trustee Name and Date of Trust. Indicate additional: Owners; Contingent Owners; Primary Beneficiaries; and Contingent Beneficiaries in Supplemental Information section. - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------------ 9. Owner/Contingent Owner Information a) Identity of Owner: Proposed Insured #1 [ ] #2 [ ] b) Identity of Contingent Owner (if applicable): - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ 10. Beneficiary Information Note: Multiple beneficiaries will receive equal proceeds unless otherwise requested by Owner. a) Identity of Primary Beneficiary: [ ] Owner b) Identity of Contingent Beneficiary: - ------------------------------------------------------------------------------------------------------------------------------------ [ ] Check here if all present and future natural or adopted children of Proposed Insured #1 are to be included as Contingent Beneficiaries. - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ 11. Billing/Mailing Address:* [ ] Proposed Insured #1 Residence Address:* [ ] Proposed Insured #2 Residence Address [ ] Owner's Address (If not Owner listed in question 9a, [ ] Primary Beneficiary's Address (If not Beneficiary listed in indicate name and address below.) question 10a, indicate name and address below.) [ ] Other Premium Payer (Indicate name and address below.) (If Other, indicate relationship to Proposed Insured(s).) _____________________________________ Relationship ------------------------------------------------------------------------------------------------------------------------------ (Name: Address: Street City/State/ Zip) *If any other special mailing arrangements are needed, indicate in Supplemental Information section. - ------------------------------------------------------------------------------------------------------------------------------------
ENB-7-04 -7 - ------------------------------------------------------------------------------------------------------------------------------------ 12. Is any person to be insured a dependent spouse or dependent minor? (If Yes, provide details below.) [ ] Yes [ ] No a) Amount of insurance on spouse: Existing: $____________________ Applied For: $_______________ b) If dependent minor, are there any other siblings insured for less than this child? (If Yes, provide [ ] Yes [ ] No details in Supplemental Information section.) c) Amount of existing and applied for insurance on parents of dependent minor: Amount Amount - ----------------------------------------------------------- --------------------------------------------------------------------- Father's Name Existing Applied For Mother's Name Existing Applied For - ----------------------------------------------------------- --------------------------------------------------------------------- - ----------------------------------------------------------- --------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------------ Part II - ------------------------------------------------------------------------------------------------------------------------------------ 13. Within the past three years has any person to be insured flown in a plane other than as a passenger on a [ ] Yes [ ] No scheduled airline or have plans for such activity within the next year? (If Yes, complete Aviation Supplement.) 14. Within the past three years has any person to be insured participated in or intend to participate in any: [ ] Yes [ ] No underwater sports (SCUBA diving, hardhat, skin diving, snorkeling); sky sports (skydiving, hang gliding, parachuting, ballooning); racing sports (motorcycle, auto, motor boat); rock or mountain climbing; bungee jumping or other similar activities? (If Yes, complete Avocation Supplement.) 15. Are all persons to be insured U.S. citizens? (If No, provide details below including: country of citizenship; [ ] Yes [ ] No Visa/ID Card type; number; and expiration date.) 16. Has any person to be insured traveled or resided outside the U.S. or Canada in the past two years OR does any [ ] Yes [ ] No person to be insured intend to travel or reside outside the U.S. or Canada in the next 12 months? (If Yes, provide details below including: country; city; duration; and purpose.) 17. Has any person to be insured ever used tobacco products: (e.g. cigarettes; cigars; pipes; smokeless tobacco; [ ] Yes [ ] No chew) or nicotine substitutes: (e.g. patch or gum)? (If Yes, provide type, amount, date last used, and frequency below.) 18. Has any person to be insured: ever had a driver's license suspended or revoked; ever been convicted of DUI [ ] Yes [ ] No or DWI; or had any moving violations in the last five years? (If Yes, provide details below.) - ------------------------------------------------------------------------------------------------------------------------------------ Give details for question 15 through 18. Attach additional sheet(s), if necessary. - ------------------------------------------------------------------------------------------------------------------------------------ Question Proposed Insured Number(s) Date Details - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ 19. Attending Physician(s) of the Proposed Insured(s): (Provide: name; address; phone number; date; and reason for last consultation. Attach additional sheet(s), if necessary.) - ------------------------------------------------------------------------------------------------------------------------------------ Proposed Insured #1 - ------------------------------------------------------------------------------------------------------------------------------------ Physician's name, address and phone number Date/Reason/Diagnosis/Treatment - ------------------------------------------------------------------------------------------------------------------------------------ Proposed Insured #2 - ------------------------------------------------------------------------------------------------------------------------------------ Physician's name, address and phone number Date/Reason/Diagnosis/Treatment - ------------------------------------------------------------------------------------------------------------------------------------
ENB-7-04 -8 20. Proposed Insured #1 Height: ________ Weight: ________ Proposed Insured #2 Height: ________ Weight: ________ - ------------------------------------------------------------------------------- 21. Has any person proposed for insurance EVER received treatment, attention, or advice from any physician, practitioner or health facility for, or been told by any physician, practitioner or health facility that he/she had: (Provide details for each Yes answer below.) a) High blood pressure; chest pain; heart attack; or any other disease or disorder of the heart or [ ] Yes [ ] No circulatory system? b) Asthma; bronchitis; emphysema; sleep apnea; shortness of breath; or any other disease or disorder of the [ ] Yes [ ] No respiratory system? c) Seizures; stroke; paralysis; Alzheimer's disease; multiple sclerosis; Parkinson's; or any other disease or [ ] Yes [ ] No disorder of the brain or nervous system? d) Ulcers; colitis; hepatitis; cirrhosis; or any other disease or disorder of the liver, gallbladder, [ ] Yes [ ] No stomach, or intestines? e) Any disease or disorder of: the kidney; bladder; or prostate; or protein or blood in the urine? [ ] Yes [ ] No f) Diabetes; thyroid disorder; or any other endocrine disorders? [ ] Yes [ ] No g) Arthritis; gout; or disorder of the muscles, bones, or joints? [ ] Yes [ ] No h) Cancer; tumor; polyp; cyst; anemia; leukemia; or any other disorder of the blood or lymph glands? [ ] Yes [ ] No i) Depression; stress; anxiety; or any other psychological or emotional disorder or symptoms? [ ] Yes [ ] No - ------------------------------------------------------------------------------------------------------------------------------------ 22. Has any person proposed for insurance: (Provide details for each Yes answer below.) a) In the past six months, taken any medication or been under observation or treatment? [ ] Yes [ ] No b) Scheduled any: doctor's visits; medical care; or surgery for the next six months? [ ] Yes [ ] No c) During the past five years had any: checkup; health condition; or hospitalization not revealed above? [ ] Yes [ ] No d) Ever been diagnosed with, treated by a medical professional for, or tested positive for any of the [ ] Yes [ ] No following: Acquired Immune Deficiency Syndrome (AIDS); AIDS Related Complex (ARC); AIDS (Human Immunodeficiency Virus (HIV)) virus; or antibodies to the AIDS (HIV) virus? e) Ever used heroin, cocaine, barbiturates, or other drugs, except as prescribed by a physician or other [ ] Yes [ ] No licensed practitioner? f) Have you ever received treatment from a physician or counselor regarding the use of alcohol, or [ ] Yes [ ] No the use of drugs except for medicinal purposes; or received treatment or advice from an organization that assists those who have an alcohol or drug problem? - ------------------------------------------------------------------------------------------------------------------------------------ 23. Answer Question 23 only when requesting the Long-Term Care Guaranteed Purchase Option. (Provide details for each Yes answer below.) a) Do you currently use any mechanical equipment i.e.: a walker; wheelchair; leg braces; or crutches? [ ] Yes [ ] No b) Do you need any assistance; or supervision with the following activities bathing; dressing; walking; moving in/out of a chair or bed; toileting; continence; or taking medication? [ ] Yes [ ] No - ------------------------------------------------------------------------------------------------------------------------------------
Give details of each Yes answer from Questions 21, 22, and 23. Attach additional sheet(s), if necessary.
Proposed Question Date/Duration Insured Number Name/Address of Physician Illness Diagnosis/Severity/Treatment - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------
-9 - ------------------------------------------------------------------------------------------------------------------------------------ 24. Has a parent or sibling of any person to be insured ever had heart disease, coronary artery disease, high blood [ ] Yes [ ] No pressure, cancer, diabetes or mental illness? (If Yes, complete rest of question 24.) - ------------------------------------------------------------------------------------------------------------------------------------ Relationship to Proposed State of Health (Specific Conditions) or Cause of Death Insured #1: Age(s) if Living Age(s) at Death (Attach additional sheet(s), if necessary.) - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Relationship to Proposed State of Health (Specific Conditions) or Cause of Death Insured #2: Age(s) if Living Age(s) at Death (Attach additional sheet(s), if necessary.) - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Supplemental Information Section or Special Requests from Agent/Producer. Attach additional sheet(s) if necessary. - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Home Office Endorsements: (Not applicable to: FL, KY, MD, MA, MN, MO, OR, PA, PR, WV, WI.) - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------
ENB-7-04 -10 AGREEMENT/DISCLOSURE I have read this application for life insurance including any amendments and supplements and to the best of my knowledge and belief, all statements are true and complete. I also agree that: .. My statements in this application and any amendment(s), paramedical/medical exam and supplement(s) are the basis of any policy issued. .. My acceptance of any insurance policy means I agree to any changes shown in the Home Office Endorsements section, where state law permits Home Office endorsements. .. This application and any: amendment(s); paramedical/medical exam; and supplement(s) that become part of the application, will be attached to and become part of the new policy. .. Only the Company's President, Secretary or Vice-President may: (a) make or change any contract of insurance; (b) make a binding promise about insurance; or (c) change or waive any term of an application, receipt, or policy. .. No information will be deemed to have been given to the Company unless it is stated in this application and its supplement(s), paramedical/medical exam, and amendment(s). .. Except as stated in the Temporary Insurance Agreement and Receipt, no insurance will take effect until a policy is delivered to the Owner and the full first premium due is paid. It will only take effect at the time it is delivered if: (a) the condition of health of each person to be insured is the same as stated in the application; and (b) no person to be insured has received any medical advice or treatment from a medical practitioner since the date of the application. .. I understand that paying my insurance premiums more frequently than annually may result in a higher yearly out-of-pocket cost or different cash values. .. If I intend to replace existing insurance or annuities, I have so indicated in question 4 of this application. .. I have received the Company's Consumer Privacy Notice and, as required, the Life Insurance Buyer's Guide. .. If I was required to sign an HIV Informed Consent Authorization, I have received a copy of that Authorization. - -------------------------------------------------------------------------------- Substitute Form W-9 - Request for Taxpayer Identification Number - -------------------------------------------------------------------------------- Under penalties of perjury, I, _______________________________________ ( ______________________________ ) certify: (Owner's Name) (Owner's Taxpayer ID #) 1) That the number shown above is my correct taxpayer identification number; and 2) That I am not subject to backup withholding because: (a) I have not been notified by the IRS that I am subject to backup withholding as a result of failure to report all interest or dividends; or (b) the IRS has notified me that I am no longer subject to backup withholding; and 3) I am a U.S. citizen or a U.S. resident for tax purposes.* Please note: Cross out and initial item 2 if subject to backup withholding as a result of a failure to report all interest and dividend income. The Internal Revenue Service does not require your consent to any provision of this document other than the certifications to avoid backup withholding. *If you are not a U.S. citizen or a U.S. resident for tax purposes, please complete form W-8BEN. - --------------------------------------------------------------------------------------------------------------------------------- Signatures: Signed at City, State Mo./Day/Yr. Signature Owner* ______________________ ___________________ X_________________________________ (age 15 or over) (If other than a Proposed Insured) Proposed Insured #1 ______________________ ___________________ X_________________________________ (age 15 or over) Proposed Insured #2 ______________________ ___________________ X_________________________________ (age 15 or over) Parent or Guardian or person liable for child's support ______________________ ___________________ X_________________________________ (Signature required if Owner or Proposed Insured(s) is/are under the age of 18 and the Parent, Guardian or person liable for the child's support has not signed above.) Witness to Signatures ____________________ ___________________ X_________________________________ (Licensed Agent/Producer) *If the Owner is a Firm or Corporation, include Officer's Title with signature. (Officer signing must be other than a Proposed Insured.)
ENB-7-04 Application for Life Insurance Case/Policy No./Proposed Insured______________ Metropolitan Life Insurance Company Variable Life Supplement This supplement will be attached to and become part of the application with which it is used. A) Client's General RISK TOLERANCE for Investing: (Choose one.) [ ] Conservative [ ] Conservative to Moderate [ ] Moderate [ ] Moderate to Aggressive [ ] Aggressive B) Client's INVESTMENT OBJECTIVE for the Policy's fund options: (Choose one.) [ ] Capital Preservation [ ] Income [ ] Growth & Income [ ] Growth [ ] Aggressive Growth C) Have you Completed the Asset Allocation Questionnaire? (If Yes, submit with application.) [ ] Yes [ ] No Investment Division/Account Allocation (Indicate in whole percentages.) Please select investment divisions/account allocations that are appropriate for the RISK TOLERANCE and INVESTMENT OBJECTIVE indicated above. Some fund options may be appropriate for more than one investment objective. For more complete information about a specific fund, including charges and expenses, please read the prospectus carefully. The total division/account allocation must equal 100%.
Capital Preservation: Growth (continued): ______ % MetLife Fixed Interest Account ______ % Met/Putnam Voyager ______ % MetLife Mid Cap Stock Index Income: ______ % MetLife Stock Index ______ % Index Selector Conservative ______ % Neuberger Berman Partners Mid Cap Value ______ % Lehman Brothers(R) Aggregate Bond Index ______ % State Street Research Investment Trust ______ % Lord Abbett Bond Debenture ______ % State Street Research Large Cap Growth ______ % PIMCO Total Return ______ % State Street Research Large Cap Value ______ % Salomon Brothers Strategic Bond Opportunities ______ % T. Rowe Price Large Cap Growth ______ % Salomon Brothers U.S. Government ______ % T. Rowe Price Mid-Cap Growth ______ % State Street Research Bond Income Growth & Income: Aggressive Growth: ______ % Index Selector Conservative to Moderate ______ % American Funds Global Small Capitalization ______ % Index Selector Moderate ______ % FI International Stock ______ % MFS Investors Trust ______ % Franklin Templeton Small Cap Growth ______ % MFS Total Return ______ % Harris Oakmark International ______ % Neuberger Berman Real Estate ______ % Index Selector Aggressive ______ % State Street Research Diversified ______ % Loomis Sayles Small Cap ______ % Met/AIM Small Cap Growth Growth: ______ % MFS Research International ______ % American Funds Growth ______ % Morgan Stanley EAFE(R)Index ______ % American Funds Growth-Income ______ % PIMCO PEA Innovation ______ % Davis Venture Value ______ % Russell 2000(R)Index ______ % FI Mid Cap Opportunities ______ % Scudder Global Equity ______ % FI Value Leaders ______ % State Street Research Aurora ______ % Harris Oakmark Focused Value ______ % State Street Research Aggressive Growth ______ % Harris Oakmark Large Cap Value ______ % T. Rowe Price Small Cap Growth ______ % Index Selector Moderate to Aggressive ______ % Janus Aggressive Growth Other: ------ % -------------------------------------------- ______ % Met/AIM Mid Cap Core Equity ------ % --------------------------------------------
(Continued on next page) MFND-4-02 (03/04) FF 1 of 3 .. Largest Percentage Rule: You must allocate the largest total allocation of the contribution to the fund options offered under the Primary Objective selected. When the largest percentage is equally allocated among two or more Investment Objectives, the allocations are appropriate if the Primary Investment Objective is the most aggressive category. .. Equity Generator: If you select the Fixed Account with no other fund options and elect the Equity Generator, the Primary Investment Objective is "Preservation of Capital". .. Equalizer: If the Equalizer is elected using any combination of allocations to only the Fixed Account and the MetLife Stock Index fund option, the Primary Objective is "Growth". Similarly, if the Equalizer is elected using any combination of allocations to only the Fixed Account and the SSR Aggressive Growth fund option, the Primary Investment Objective is "Aggressive Growth". .. Index Selector: If an Index Selector model is chosen, no other allocations are permitted. 100% of the contribution must go to the selected model. Optional Automated Investment Strategies. (If you are not electing an Automated Investment Strategy, please proceed to the section entitled "Carefully Read the Following" below.) a) You may select only one of the following: [ ] Equity Generator with MetLife Stock Index [ ] Equity Generator with SSR Aggressive Growth [ ] Equalizer with MetLife Stock Index [ ] Equalizer with SSR Aggressive Growth [ ] Rebalancer [ ] Allocator (See section b below.) [ ] Index Selector
b) Complete this section only if you selected Allocator. Transfer from the Fixed Account to one or more of the following investment divisions (enter monthly amount): $_____ American Funds G-I $_____ Lord Abbett Bond Debenture $_____ Russell 2000(R) Index $_____ American Funds Global Small Cap $_____ Met/AIM Mid Cap Core Equity $_____ Salomon Bros. Strategic Bond Opportunities $_____ American Funds Growth $_____ Met/AIM Small Cap Growth $_____ Salomon Bros. U.S. Govt. $_____ Davis Venture Value $_____ Met/Putnam Voyager $_____ Scudder Global Equity $_____ FI International Stock $_____ MetLife Mid Cap Stock Index $_____ SSR Aggressive Growth $_____ FI Mid Cap Opportunities $_____ MetLife Stock Index $_____ SSR Aurora $_____ FI Value Leaders $_____ MFS Investors Trust $_____ SSR Bond Income $_____ Franklin Templeton Small Cap $_____ MFS Research International $_____ SSR Diversified Growth $_____ MFS Total Return $_____ SSR Investment Trust $_____ Harris Oakmark Focused Value $_____ Morgan Stanley EAFE(R) Index $_____ SSR Large Cap Growth $_____ Harris Oakmark International $_____ Neuberger Berman Mid Cap Value $_____ SSR Large Cap Value $_____ Harris Oakmark Large Cap Value $_____ Neuberger Berman Real Estate $_____ T. Rowe Price Large Cap Growth $_____ Janus Aggressive Growth $_____ PIMCO PEA Innovation $_____ T. Rowe Price Mid-Cap Growth $_____ Lehman Bros.(R) Aggregate Bond Index $_____ PIMCO Total Return $_____ T. Rowe Price Small Cap Growth $_____ Loomis Sayles Small Cap $_____ Other: __________________ $_____ Other: ____________________ $_____ Other: ____________________
Please select one of the following: (There must be sufficient value for the Allocator to remain in effect for 3 months.) [ ] 1. Transfer the dollar amount per month for as long as there is money in the Fixed Account. [ ] 2. Transfer the dollar amount per month for ______________ months. [ ] 3. Transfer a total of $__________________________ over _______ months in equal installments to the division(s) indicated above. (Continued on next page) MFND-4-02 (03/04) FF 2 of 3 Carefully Read the Following: Variable Life Insurance is generally not appropriate for time horizons of less than 10 years. These products are long-term investments that may have significant short-term surrender charges. Variable Life Insurance is designed to provide death benefit protection while offering the potential for long-term cash value accumulation and may not be appropriate in situations where significant liquidation of assets in the near future is expected. 1.I elect to have the monthly deduction from the cash value taken as follows: (Check one.) [ ] From the Fixed Account only. [ ] Proportionately at the time of the deduction from the investment divisions and the Fixed Account based on the cash value in each. 2.I understand that the initial premium payment will be allocated to the Fixed Account for 20 calendar days from the investment start date as described in the prospectus. I understand that the elections I have made will become effective 20 calendar days after the investment start date for the initial premium payment of the applied for policy. 3.For those who have chosen an Index Selector Allocation Model: ------------------------------- I understand that MetLife will allocate my initial payment and future net premiums based on the current allocation of the Index Selector category I select for as long as I remain in this category. I accept this current allocation and understand it may change at any time (after MetLife notifies me about the change). MetLife will rebalance the amount in the Index Divisions and the Fixed Account each calendar quarter to match the applicable allocation percentages for that category. Suitability: a) Have you received a prospectus for the policy applied for? [ ] Yes [ ] No If Yes: Date of prospectus_____________ Date of any supplement______________ b) Did your agent/producer review your financial situation, risk tolerance and investment objectives prior to completing this application? [ ] Yes [ ] No If "No", on what basis was this product recommended? _______________________ ____________________________________________________________________________ c) Do you understand that: 1) The amount and duration of the death benefit may increase or decrease depending on the policy's investment return, subject to any guarantees provided by the policy? [ ] Yes [ ] No 2) There is no guaranteed minimum cash value and the cash value may increase or decrease depending on the policy's investment return? [ ] Yes [ ] No d) Do you believe that this policy and the fund options you have selected will meet your insurance needs and financial objectives? [ ] Yes [ ] No Owner's Financial Information e) Annual Income $ ------------------------ f) Net Worth $ (exclude personal residence, ------------------------ automobiles & home furnishings) Important Information: - ---------------------- .. THE DEATH BENEFIT MAY BE VARIABLE OR FIXED UNDER SPECIFIED CONDITIONS. .. THE CASH VALUE MAY INCREASE OR DECREASE, EVEN TO THE EXTENT OF BEING REDUCED TO ZERO, IN ACCORDANCE WITH SEPARATE INVESTMENT ACCOUNT EXPERIENCE. .. THE COST OF INSURANCE RATES FOR THIS POLICY MAY CHANGE. THE RATES CURRENTLY BEING CHARGED ARE NOT GUARANTEED, AND THE COMPANY MAY CHARGE THE FULL MAXIMUM GUARANTEED RATES. .. ILLUSTRATIONS OF BENEFITS, INCLUDING DEATH BENEFITS AND CASH VALUES, ARE AVAILABLE UPON REQUEST. MFND-4-02 (03/04) FF 3 of 3 EX-99.(G) 5 dex99g.txt REINSURANCE AGREEMENT Note: Using this form of agreement, Metropolitan Life Insurance Company has entered into separate agreements with each of the following reinsurers: Allianz Life Insurance Company of North America, ERC Life Reinsurance Corporation, Munich American Reassurance Company, RGA Reinsurance Company, SCOR Life U.S. Re Insurance Company, Security Life of Denver Insurance Company and Swiss Re Life and Health America Inc. Automatic and Facultative YRT Agreement between Metropolitan Life Insurance Company (the Ceding Company) and ABC REINSURANCE COMPANY City, State (the Reinsurer) Effective Month, Day, Year 1 INDEX Article Name Article Number Page Number - ------------ -------------- ----------- Preamble 3 Automatic Cessions I 4 Facultative Cessions II 5 Reinsurance Premiums III 6 Reinsurer's Liability IV 7 Claims V 8 Administration and Accounting VI 9 DAC Tax VII 11 Conversions and Exchanges VIII 12 Terminations, Reductions/Increases and Changes IX 13 Recapture and Retention Changes X 14 Reinstatements and Reduced Paid-Up Insurance XI 15 Insolvency XII 16 Arbitration XIII 17 Duration of Agreement XIV 18 Miscellaneous XV 19 A. Choice of Law B. Severability C. Reserve Credit D. Assignment E. Confidentiality F. Inspection of Records G. Damages H. Errors and Omissions I. Indemnification and Limitation of Liability J. Entire Agreement K. Modifications to Agreement L. Survival M. Currency N. Independent Contractor O. Agents, Intermediaries, and Representatives P. Construction Rules Q. Written Notices R. Representation of Authority and Acknowledgement of Understanding S. Representation of Valid Signature T. Counterparts Execution XVI 23 Exhibit Name Exhibit Number - ------------ -------------- Limits I 24 2 The Ceding Company Retention Limits II 25 Policy Plans Reinsured III 26 Premium Rates IV 31 Monthly Statements V 32 PREAMBLE -------- This Reinsurance Agreement (the "Agreement") is effective Month Day, Year, between Metropolitan Life Insurance Company a New York domiciled life insurance corporation (the "Ceding Company") and ABC Reinsurance Company a "name state" domiciled life insurance corporation (the "Reinsurer"). The background of this Agreement is that the Ceding Company cedes and the Reinsurer accepts, on a yearly renewable term ("YRT") basis, the quota share of the mortality risk associated with permanent single life policies ("the Policies") and associated Riders that the Ceding Company may issue during the term of this Agreement. In consideration of the mutual promises set forth herein, the parties agree as follows: 3 ARTICLE I AUTOMATIC CESSIONS ------------------ The Ceding Company shall cede and the Reinsurer shall accept as indemnity reinsurance, on a YRT basis, in accordance with the terms and conditions hereof, the portions of the Ceding Company's risk on all Policies that are not in excess of the Automatic Binding Limit, as provided in Exhibit I, with respect to each Policy and the Ceding Company shall retain for its own account the portions of the risk on each Policy as provided in Exhibit II not to exceed its per life retention, provided that: A. the Ceding Company shall have retained the specified portion of the risk on each ceded Policy as described above; B. the amount ceded to the Reinsurer does not exceed the Automatic Binding Limit as shown in Exhibit I; C. the sum of the amount of insurance already in force and applied for on that life according to information available to the Ceding Company, does not exceed the Jumbo Limit as shown in Exhibit I; D. the Ceding Company has not applied for facultative coverage on the current application; E. the Policy is issued in accordance with the Ceding Company's normal individual ordinary life underwriting rules and practices; F. the Policy is listed in Exhibit III. 4 ARTICLE II FACULTATIVE CESSIONS -------------------- The Ceding Company has the option to, in accordance with the provisions of this Article, facultatively submit to the Reinsurer any Policy that is not obligatorily ceded under the provisions of Article I; provided that the provisions of Sections A through E below are met. In addition, there is no limitation on the Ceding Company's right to submit a case facultatively to other reinsurers. A. the Ceding Company shall have provided to the Reinsurer copies of the original Policy application, medical reports, inspection reports, attending physician statements and any additional information that is pertinent to the insurability of the risk; B. the Ceding Company shall have notified the Reinsurer of any outstanding underwriting requirements at the time of the facultative submission; C. the Reinsurer shall, within 30 days after receipt of all required information, advise the Ceding Company of the portion that it would facultatively accept and the terms and conditions of such acceptance; D. the Ceding Company shall have notified the Reinsurer of its acceptance of the Reinsurer's proposed terms and conditions for the facultative cession within 120 days of receipt or the termination date specified in the Reinsurer's offer unless the Reinsurer in writing expressly extends the period for the Ceding Company's acceptance or rejection; and E. the facultative cessions shall not be limited to those Policies that are listed in Exhibit III. 5 ARTICLE III REINSURANCE PREMIUMS -------------------- A. Life reinsurance shall be on the yearly renewable term basis for the net amount at risk (death benefit less reserve or fund value) on that portion of the policy which is reinsured by the Reinsurer. Premiums and allowances shall be based on the rates specified in Exhibit IV. B. The Reinsurer shall not indemnify the Ceding Company for premium taxes or guaranty fund assessments. In the event that the reinsurer is an alien company, the reinsurer shall reimburse the Ceding Company for any federal excise tax payable on business ceded under this Agreement. C. The Ceding Company shall report and pay reinsurance premiums on an annual basis in advance without regard to the Policy mode of premium payment. D. For technical reasons relating to statutory reserve requirements, the YRT rates described in Exhibit IV cannot be guaranteed for more than one year. The Reinsurer anticipates continuing to accept premiums on the basis of the YRT rates described in Exhibit IV. The guaranteed reinsurance premium for each age and duration shall be the higher of the premium based on the reinsurance rates shown in Exhibit IV and the premium based on the statutory minimum valuation mortality table and the statutory maximum valuation interest rate permitted for the underlying Policy under the National Association of Insurance Commissioners' Standard Valuation Law. E. In no event shall the Reinsurer increase the reinsurance rates on inforce business ceded under this Agreement unless it also concurrently increases the reinsurance rates for all of its YRT reinsurance assumed individual life insurance business. F. Reinsurance premiums on Policies that terminate, reduce or change, the Reinsurer shall refund any unearned reinsurance premium. G. For Policies that are reinstated after coverage has ceased, the Ceding Company shall pay to the Reinsurer reinsurance premiums for the period for which the Ceding Company received Policy premiums in arrears. 6 ARTICLE IV REINSURER'S LIABILITY --------------------- A. The Reinsurer's liability for cessions under Article I of this Agreement shall commence simultaneously with that of the Ceding Company. B. The Reinsurer shall have no liability for Policy proceeds paid under the Ceding Company's temporary term insurance agreement ("TIA") unless conditions for automatic cessions under Article I of this Agreement are met. C. The Reinsurer's liability for facultatively accepted cessions shall commence when all of the conditions specified in Article II for facultative acceptances shall have been met. 7 ARTICLE V CLAIMS ------ A. The Ceding Company shall give prompt notice of Policy claims to the Reinsurer in such form and detail as the parties may, from time to time, agree. The Ceding Company shall, at the Reinsurer's request, provide copies of Policy claim documentation to the Reinsurer. The Reinsurer shall, in all cases, accept copies of Policy claim documentation provided by the Ceding Company as sufficient. The Ceding Company's decision, in good faith, to pay a Policy claim without contest, compromise or litigation shall be unconditionally binding on the Reinsurer. B. Ceding Company shall notify the Reinsurer that the Ceding Company intends to contest, compromise or litigate a Policy claim. The Reinsurer shall pay its share of any settlement up to the maximum that would have been payable under the Policy had there been no controversy together with the Reinsurer's share of specific expenses involved unless it declines to endorse the contest, compromise or litigation, in which case it shall pay the full amount of its share of the claim to the Ceding Company. Compensation of salaried officers and employees of the Ceding Company shall not be included in the Reinsurer's share of the specific expenses and/or final settlement. C. In the event that the amount of insurance provided by a Policy or Policies reinsured hereunder shall be increased or reduced because of a misstatement of age or sex established after the death of the insured, the Reinsurer shall share in the increase or reduction in the proportion that the net liability that the Reinsurer bore to the total net liability under the Policy immediately prior to such increase or reduction. The Policy or Policies shall be restated in accordance with the terms and rules of the Ceding Company. Any adjustment for the difference in reinsurance premiums shall be made without interest. D. The Reinsurer shall pay interest on its share of any Policy claim settlement calculated at the same rate and for the same period of time as that used by the Ceding Company. E. The parties may, from time to time, establish informal claims guidelines for ease of administration and processing. F. The Reinsurer shall share in the same proportion of any claim under an accelerated death benefit rider (and any continued coverage under the policy) that the Reinsurer would share in the absence of the rider. 8 ARTICLE VI ADMINISTRATION AND ACCOUNTING ----------------------------- A. The Ceding Company shall administer the Policies, establish and maintain necessary and appropriate Policy records in accordance with its general standards and practices and shall furnish monthly statements for the month just past to the Reinsurer in a form substantially similar to that shown in Exhibit V within thirty (30) days following the close of each month showing the net amount of reinsurance premium or return of reinsurance premium due to or from the Reinsurer. The net amount shall be based on reinsurance premiums less claims. B. The Ceding Company shall include with each monthly statement payment of the net amount of reinsurance premium, if any, due to the Reinsurer as shown on the monthly statement. Amounts that have not been paid within thirty (30) days following the close of each month shall be in default. The Reinsurer shall pay to the Ceding Company any amounts due to the Ceding Company as shown on the monthly statement within thirty days after the Reinsurer receives the monthly statement from the Ceding Company. Any amounts due to the Ceding Company that have not been paid within thirty (30) days after the due date shall be in default. C. Subject to the provisions of Article XV.H, the Reinsurer may terminate the reinsurance on risks for which reinsurance premiums are in default by giving thirty (30) days written notice of termination to the Ceding Company; provided, however, that the Ceding Company may cure the default as provided herein. Except to the extent the default shall have been cured, as of the close of the last day of this thirty (30) day period, the Reinsurer's liability for the following reinsurance shall terminate with respect to risks that are the subject of the termination notice and risks for which the reinsurance premiums went into default during the thirty (30) day notice period. D. Notwithstanding termination of reinsurance as provided in this Section, the Ceding Company shall continue to be liable to the Reinsurer for all unpaid reinsurance premiums earned by the Reinsurer under this Agreement. E. Reinsurance terminated under Section C of this Article may be reinstated by the Ceding Company if, within sixty (60) days after the effective date of its termination, the Ceding Company pays in full all of the unpaid reinsurance premiums for the reinsurance that was in force prior to its termination. The effective date of reinstatement shall be the day on which the Reinsurer receives all of the required reinsurance premiums. The Reinsurer shall have no liability in connection with any claims incurred between the date of termination of reinsurance applicable to a Policy and the date of reinstatement of reinsurance of that Policy. F. The first day of the thirty (30) day notice of termination under Section C of this Article shall be the day on which the Ceding Company receives the termination notice. If all premiums in default are received by the Reinsurer within the thirty (30) day notice period, the reinsurance shall remain in effect. 9 G. The Ceding Company shall bear the expense of all medical examinations, inspection fees and other charges incurred in connection with Policy issuance. 10 ARTICLE VII DAC TAX ------- A. The Parties are making a joint election under Treas. Reg. Section1.848-2(g)(8) under which: 1. The Party with the net positive consideration under this Agreement is required to capitalize specified policy acquisition expenses with respect to such Agreement without regard to the general deductions limitation of Section 848(c)(1) of the Internal Revenue Code. 2. This election shall be effective with the effective date of this Agreement. 3. Each party shall attach a schedule to its federal income tax return for its first taxable year ending after the election becomes effective which identifies the Agreement for which this joint election under Treas. Reg. Section1.848-2(g)(8) has been made. B. The Parties agree to exchange information pertaining to the amount of net consideration as determined under Treas. Reg. Section1.848-2(f) for this Agreement to insure consistency as to amount and timing or as is otherwise required by the Internal Revenue Service. C. The exchange of information described in section B above shall follow the procedures set forth below: 1. the Ceding Company shall submit its calculation of the "net consideration" as defined under the above referenced regulation to the Reinsurer not later than April 1 for each and every tax year for which this Agreement is in effect; 2. the Reinsurer may challenge such calculation within thirty (30) calendar days of receipt of the Ceding Company's calculation; and 3. if the Reinsurer contests the Ceding Company's calculation of the net consideration, the parties shall act in good faith to reach an agreement as to the correct amount within thirty (30) days of the date the Reinsurer submits its alternative calculation. If the Ceding Company and the Reinsurer reach an agreement on an amount of net consideration, each party shall report the agreed upon amount in their respective tax returns for the preceding taxable year. D. The Parties represent and warrant that they are subject to U.S. taxation under Subchapter L of Chapter 1 of the Internal Revenue Code or Subpart F of Part III of Subchapter N of chapter 1 of the Internal Revenue Code. 11 ARTICLE VIII CONVERSIONS AND EXCHANGES ------------------------- A. If any policy ceded automatically under this Agreement is exchanged for another policy that is listed in Exhibit III, the new policy shall be reinsured on the basis described in Article I based upon the policy date, age and underwriting classification of the new policy. B. If any policy ceded automatically under this Agreement is exchanged for, or converted to, another policy that is not listed in Exhibit III or does not meet the criteria of Article I, the Ceding Company shall recapture reinsurance under this Agreement. At the Ceding Company's option, the ceding company may recapture only up to its retention limit as shown in Exhibit II and the Reinsurer shall reinsure its proportionate share of the excess above the Ceding Company's retention up to its automatic binding limit shown in Exhibit I. Reinsurance premiums shall be those shown in Exhibit IV, based upon policy date, age and underwriting classification of the original policy. C. If any policy ceded facultatively under this Agreement is exchanged for, or converted to, another policy, at the Ceding Company's option reinsurance shall continue based upon the policy date, age and underwriting classification of the original policy. D. If existing business that was not ceded under this Agreement is exchanged for, or converted to a policy that is listed in Exhibit III, it shall not be considered reinsured under this Agreement, unless otherwise agreed upon. 12 ARTICLE IX TERMINATIONS, REDUCTIONS/INCREASES AND CHANGES ---------------------------------------------- A. If a policy that was ceded pursuant to Article I, is reduced or terminated, the reinsurance ceded to the Reinsurer shall be reduced by the Reinsurer's share of the reduction shown in Exhibit I. B. If a policy that was ceded on the excess retention basis, or if another policy of the Ceding Company on the same life, is reduced or terminated, reinsurance of the policy on that life shall be reduced, to restore, as far as possible, the Ceding Company's retention on the risk such that the amount retained shall not be greater than the retention limit at the time of issue of the policy or the retention limit as adjusted in accordance with recapture as provided in Article X. If there is more than one insurance policy on the life, the reduction shall apply first to any reinsurance on the policy being reduced, and then, to any reinsurance on other policies on the life on a chronological basis with the last policies reinsured being reduced first. If the reinsurance on any policy has been ceded to more than one reinsurer, the reduction in reinsurance with the Reinsurer on such policy shall be the same fraction of the total reinsurance on that policy immediately before the reduction. C. If a policy reinsured on the quota share basis pursuant to Article I, is increased, subject to the normal rules and practices of the Ceding Company, the Ceding Company shall cede automatically the Reinsurer's share of the increase to the Reinsurer if the policy continues to meet the conditions of Article I. D. If a policy that was ceded on the excess retention basis is increased, subject to the normal rules and practices to the Ceding Company, the Ceding Company shall cede automatically a proportional share of the increase to the Reinsurer if the policy continues to meet the conditions of Article I. E. For policies ceded pursuant to Article I, reduction or removal of table ratings and flat extras and changes in smoking classification shall be underwritten according to the Ceding Company's normal rules and practices and the Reinsurer shall be bound automatically. Risk classification changes on facultative policies shall be subject to the Reinsurer's approval. F. For plans of insurance with a variable death benefit that are reinsured under this Agreement, the Reinsurer shall share proportionately in any contractual increase or decrease in the amount at risk. 13 ARTICLE X RECAPTURE AND RETENTION CHANGES ------------------------------- A. The Ceding Company shall promptly notify the Reinsurer of changes in its retention limits. B. For Policies ceded pursuant to this Agreement subject to excess retention limits, 1. The Ceding Company may recapture business to reflect changes in its retention limits, provided that ten (10) years have elapsed since the issue date of the original policy. For policies issued as a result of exchange or conversion, the duration for recapture eligibility shall be based on the date used for premium calculations. 2. Recapture shall become effective on the policy anniversary date following notification to the Reinsurer of the Ceding Company's intent to recapture. 3. If any reinsurance is recaptured under the provisions of this Section, all reinsurance eligible for recapture under the provisions of this Article must be recaptured. 4. If the reinsurance on the policy has been ceded to more than one reinsurer, the reduction in reinsurance with the Reinsurer on such policy shall be the same fraction of the total recapture on that policy as the Reinsurer held of the total reinsurance on that policy immediately before the recapture. C. Policies ceded on a quota share basis shall not be eligible for recapture except as otherwise provided for by this Agreement. D. If the Reinsurer increases reinsurance premiums on inforce business as described in Article III, the Ceding Company may recapture all inforce cessions or amounts thereof up to its retention limit. E. The Reinsurer agrees it shall maintain a claims-paying ability rating of BBB from Standard & Poor's Corporation. In the event that the Reinsurer's Standard & Poor's Corporation rating falls below that level, or is discontinued at the request of the Reinsurer, the Ceding Company shall have the right to recapture upon ninety (90) days prior written notice to the Reinsurer. If the Standard and Poor's Corporation materially changes its scale for rating life/health insurers, or if it ceases to rate life/health insurers, then the parties agree to select a successor rating agency and substitute the appropriate designation from that agency's rating system for the Standard and Poor's Corporation rating. 14 ARTICLE XI REINSTATEMENTS AND PAID-UP INSURANCE ------------------------------------ A. Reinsurance of any lapsed Policy that was ceded in accordance with the terms and conditions of this Agreement may be automatically reinstated so long as the policy is reinstated in accordance with terms and rules of the Ceding Company. The Ceding Company shall pay the Reinsurer reinsurance premiums for the period for which the Ceding Company received premiums in arrears from the policyholders. B. Policy changes that are the result of extended term insurance or reduced paid-up insurance (nonforfeiture options) shall continue to be reinsured proportionately and shall be handled in accordance with Article III. 15 ARTICLE XII INSOLVENCY ---------- A. In the event of the insolvency of the Ceding Company, all reinsurance benefits shall be payable directly to the Ceding Company or to the liquidator, receiver, or statutory successor of the Ceding Company without diminution because of the insolvency of the Ceding Company. B. In the event of the insolvency of the Ceding Company, the liquidator, receiver, or statutory successor shall give the Reinsurer written notice of the pendency of a claim on a reinsured Policy within a reasonable time after such claim is filed in the insolvency proceeding. During the pendency of any such claim, the Reinsurer may investigate such claim and interpose in the name of the Ceding Company (or its liquidator, receiver, or statutory successor), but at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that the Reinsurer may deem available to the Ceding Company or its liquidator, receiver, or statutory successor. C. The expense thus incurred by the Reinsurer shall be chargeable, subject to court approval, against the Ceding Company as part of the expense of liquidation to the extent of a proportionate share of the benefit which may accrue to the Ceding Company solely as a result of the defense undertaken by the Reinsurer. Where two or more reinsurers are participating in the same claim and a majority in interest elect to interpose a defense or defenses to any such claim, the expense shall be apportioned in accordance with the terms of the reinsurance agreements as though such expense had been incurred by the Ceding Company. D. In the event of the insolvency of the Reinsurer, the Ceding Company may recapture all of the business reinsured by the Reinsurer under this Agreement. Such recapture shall be effective as of the date of the insolvency. E. In the event of the insolvency of either party, the insolvent party must notify the other party of its insolvency within thirty (30) days. F. In the event of the insolvency of the Reinsurer, the Ceding Company must notify the Reinsurer (or its liquidator, receiver, or statutory successor) whether or not it is going to recapture the business within sixty (60) days after being notified of the Reinsurer's insolvency. 16 ARTICLE XIII ARBITRATION ----------- A. All disputes and differences between the Ceding Company and the Reinsurer shall be decided by arbitration, regardless of the insolvency of either party, unless the liquidator, receiver or statutory successor is specifically exempted from an arbitration proceeding by applicable law. B. Either party may initiate arbitration by providing written notification to the other party that sets forth (a) a brief statement of the issue(s); (b) the failure of the parties to reach agreement; and (c) the date of the demand for arbitration. C. The arbitration panel shall consist of three arbitrators who must be impartial and each of whom must, at that time, either be accredited as an arbitrator by ARIAS-US or be an active or former officer of a life insurance or reinsurance company other than the parties or their affiliates. D. Each party shall select an arbitrator within thirty (30) days from the date of the demand. If either party refuses or fails to appoint an arbitrator within the time allowed, the party that has appointed an arbitrator may notify the other party that, if it has not appointed its arbitrator within the following ten (10) days, the arbitrator shall appoint an arbitrator on its behalf. Within thirty (30) days of the appointment of the second arbitrator the two (2) arbitrators shall select the third arbitrator, who must also be, at that time, accredited by ARIAS-US as an umpire. If the two arbitrators fail to agree on the selection of the third arbitrator within the time allowed, the Umpire Selection Procedures of ARIAS-US, as in force at that time, shall be used to select the third arbitrator. E. The arbitrators shall interpret this Agreement as an honorable engagement rather than merely as a legal obligation and shall consider equitable principles as well as industry custom and practice regarding the applicable insurance and reinsurance business. The arbitrators are released from judicial formalities and shall not be bound by strict rules of procedure and evidence. F. The arbitrators shall determine all arbitration schedules and procedural rules and may, in their discretion, use applicable ARIAS-US forms and procedures. Organizational and other meetings shall be held in New York, New York, unless the arbitrators otherwise provide. The arbitrators shall decide all matters by majority vote. G. The decisions of the arbitrators shall be final and binding on both parties. The arbitrators may, in their discretion, award costs and expenses, as they deem appropriate, including but not limited to legal fees and interest. Judgment may be entered upon the final decisions of the arbitrators in any court of competent jurisdiction. The arbitrators may not award any exemplary or punitive damages. H. Unless the arbitrators provide otherwise, each party shall be responsible for (a) all fees and expenses charged by its respective counsel, accountants, actuaries and other representatives in connection with the arbitration and (b) one-half of the expenses of the arbitration, including the fees of the arbitrators. 17 ARTICLE XIV DURATION OF AGREEMENT --------------------- A. Except as otherwise provided herein or as the parties may otherwise agree, the Agreement shall be unlimited in duration. Either party may terminate this Agreement with respect to new business at any time upon ninety (90) days prior written notice to the other party. The first day of the notice period shall be deemed to be the date on which notice is received by the other party. B. During the ninety (90) day period following delivery of a notice of termination, this Agreement shall continue in force in accordance with its terms. C. Except as the parties may otherwise agree, this Agreement shall continue to apply, after the date of termination, to cessions that became effective prior to the termination of this Agreement. D. The parties shall cooperate in seeking to obtain any required regulatory approvals for this Agreement and, in the event that any required regulatory approval cannot be obtained after reasonable effort, the Agreement and any cessions previously effected hereunder shall be deemed void as of the inception and the parties shall be restored to the position they would have been in had this Agreement never become effective. 18 ARTICLE XV MISCELLANEOUS ------------- A. Choice of Law: This Agreement is subject to and is to be interpreted in accordance with the laws of the Commonwealth of Massachusetts without regard to the Massachusetts choice of law rules. B. Severability: In the event that any provision or term of this Agreement is held invalid, illegal or unenforceable, all of the other provisions and terms shall remain in full force and effect to the extent that their continuance is practicable and consistent with the original intent of the parties. In addition, if provisions or terms are held invalid, illegal or unenforceable, the parties shall attempt in good faith to renegotiate the Agreement to carry out its original intent. C. Reserve Credit: The Reinsurer shall establish and maintain reserves with respect to ceded Policy liabilities that equal or exceed the Reinsurer's proportionate share of the reserve credit taken by the Ceding Company. The Ceding Company shall on an annual basis provide the Reinsurer with a reserve summary for ceded Policy liabilities hereunder. This annual reserve summary shall include the opinion of the Ceding Company's actuary applicable to such Policy liabilities. D. Assignment: This Agreement shall be binding on the parties and their respective successors and permitted assignees. This Agreement may not be assigned by either party without the written consent of the other, which consent shall not be unreasonably withheld. In no instance shall anyone other than the Ceding Company and the Reinsurer have any rights hereunder and, except as otherwise herein provided, the Ceding Company shall be and remain solely liable to any insured, owner or beneficiary under any Policy. E. Confidentiality: Each party shall maintain the confidentiality of all information, including legally protected consumer privacy information, that is provided to it by the other party in connection with this Agreement; provided, however, that this obligation of confidentiality shall not apply (a) if and to the extent that disclosure is required by applicable law or any court, governmental agency or regulatory authority or by subpoena or discovery request in pending litigation; (b) if the information is or becomes available from public information (other than as a result of prior unauthorized disclosure by the disclosing party); (c) if the information is or was received from a third party not known by the disclosing party to be under a confidentiality obligation with regard to such information; or (d) if the information was in the possession of the disclosing party (having received such information on a non-confidential basis) other than by reason of the services performed pursuant to this Agreement. In the event that either party becomes legally compelled to disclose any secret or confidential information, such party shall give prompt written notice of that fact to the other party so that such other party may seek an appropriate remedy to prevent such disclosure; provided, however, that this provision shall not apply to information that is or otherwise becomes available to the public or that was previously available on a non-confidential basis. This provision does not prohibit the sharing of information with Retrocessionaires or other parties engaged to provide services in connection with this Agreement, to the extent necessary to provide such 19 services, provided that such Retrocessionaires and parties shall have agreed to maintain the confidentiality of such information. F. Inspection of Records: Each party and its employees and authorized representatives, respectively, may audit, during regular business hours, at the home office of the other party, provided that reasonable advance notice has been given, any and all books, records, statements, correspondence, reports, and other documents that relate to a Policy. The audited party agrees to provide a reasonable work space for such audit, to cooperate fully and to disclose the existence of and to produce any and all necessary and reasonable materials requested by such auditors. Each party shall bear its own audit expenses. All such information, including audit reports and analyses, shall be kept confidential. G. Damages: The Reinsurer assumes no liability under this Agreement 1. for any damages, fines, penalties, costs or expenses, or portion thereof, levied on or assessed against the Ceding Company by any court or regulatory body on the basis of negligence, oppression, malice, fraud, fault, wrong doing or bad faith by the Ceding Company in connection with any Policy or for any act or omission that is not consistent with the generally accepted practices and standards of the life insurance industry applicable at the time of such act or omission, unless the Reinsurer shall have received notice of and concurred in writing with the actions taken or not taken by the Ceding Company that led to the levy or assessment, in which case the Reinsurer shall pay a proportional share of such levy or assessment; or 2. for any payment by the Ceding Company in excess of the Policy amount because of negligence, oppression, malice, fault, wrongdoing or bad faith of the Ceding Company in connection with any Policy or for any act or omission not consistent with the generally accepted practices and standards of the life insurance industry applicable at the time of such act or omission, unless the Reinsurer shall have received notice of and concurred in writing with the actions taken or not taken by the Ceding Company that led to the excess payment, in which case the Reinsurer shall pay a proportional share of such excess payment. H. Errors and Omissions: If either the Ceding Company or the Reinsurer commits an unintentional error, oversight or misunderstanding (collectively referred to as "errors") in administering this Agreement, the error shall be corrected by restoring both parties to the positions they would have occupied had the error not occurred. If it is not possible to restore each party to the position it would have occupied had the error not occurred, the parties shall endeavor in good faith to fashion a resolution to the situation created by the error that is fair and reasonable and most closely approximates the intent of the parties as evidenced by this Agreement. I. Indemnification and Limitation of Liability: Each party shall indemnify and hold the other, its affiliates, directors, officers, employees and all other persons and entities acting on behalf of or under the control of any of them harmless from and against any and all claims, including reasonable legal expenses, that result from any negligent, dishonest, malicious, fraudulent or criminal act or omission or arising out of or related to any incorrect representation, warranty or obligation of 20 this Agreement or any failure or breach of this Agreement by the indemnifying party, its directors, officers, employees, other representatives or any other person or entity acting on behalf of or under the control of any of them. In no event shall any party to this Agreement be liable to the other party for punitive, indirect or consequential damages arising under this Agreement for any clause whatsoever, whether or not such party has been advised or could have foreseen the possibility of such damages. J. Entire Agreement: This Agreement supersedes all prior discussions and agreements between the parties and constitutes their sole and entire agreement with respect to its subject matter and there are no understandings between the parties with respect thereto other than as expressed in the Agreement. K. Modifications to Agreement: Any change or modification of this Agreement shall be null and void unless made by amendment to the Agreement and signed by both parties. No waiver by either party of any default by the other party in the performance of any promise, term or condition of this Agreement shall be construed to be a waiver by such party of any other or subsequent default in performance of the same or any other promise, term or condition of this Agreement. No prior transactions or dealings between the parties shall be deemed to establish any custom or usage waiving or modifying any provision hereof. The failure of either party to enforce any part of this Agreement shall not constitute a waiver by such party of its right to do so, nor shall it be deemed to be an act of ratification or consent. L. Survival: All of the provisions of this Agreement, to the extent necessary to carry out the purposes of this Agreement or to ascertain and enforce the parties' rights hereunder, shall survive the termination of this Agreement. M. Currency: All monies due either the Reinsured or the Reinsurer under this Agreement shall be offset against each other, dollar for dollar, regardless of any insolvency of either party. All payments shall be effected through offsetting balances, electronic funds transfers or as the parties may otherwise agree in order to carry out the purposes of this Agreement. All financial transactions under this Agreement shall be paid in the lawful currency of the United States. N. Independent Contractor: The parties shall be deemed to be independent contractors, each with full control over its respective business affairs and operations. This Agreement shall not be construed as a partnership or joint venture and neither party hereto shall be liable for any obligations incurred by the other party except as expressly provided herein. O. Agents, Intermediaries, and Representatives: Each party represents that all negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by the parties directly and without the intervention of any person in such manner as to give rise to any valid claim by any other person for a finder's fee, brokerage commission or similar payment. P. Construction Rules: Each party represents that it has had sufficient opportunity to review and negotiate the terms of this Agreement and is fully aware of all the obligations and responsibilities created hereunder. Therefore, the parties agree 21 that the rule of construction that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any Exhibit attached hereto. Exhibits attached hereto are incorporated into this Agreement. Captions are provided for reference only. Q. Written Notices: Written notices under this Agreement shall be effective when delivered to any party at the address provided herein: 1. If to the Ceding Company: Vice President & Actuary Metropolitan Life Insurance Company One Madison Avenue New York, New York 10010 2. If to the Reinsurer: ABC Reinsurance Company 3. Either party may change its address by giving the other party written notice of its new address; provided, however, that any notice of change of address shall be effective only upon receipt. R. Representation of Authority and Acknowledgement of Understanding: Each party represents that it has full power and authority to enter into and to perform this Agreement and that the person signing this Agreement on its behalf has been properly authorized and empowered to do so. Each party further acknowledges that it has read this Agreement, understands it and agrees to be bound by it. S. Representation of Valid Signature: Each party represents and warrants that this Agreement has been duly and validly signed on its behalf; that it has the full corporate power and authority necessary to perform its obligations hereunder; and that it shall maintain in force all necessary legal and regulatory authorizations. T. Counterparts: This Agreement may be signed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. 22 ARTICLE XVI EXECUTION OF AGREEMENT ---------------------- In witness of the above, Metropolitan Life Insurance Company of New York, New York and ABC Reinsurance Company of City, State have by their respective officers executed and delivered this Agreement, effective Month, Day, Year. Metropolitan Life Insurance Company By: By: ----------------------------------- ----------------------------------- Name: Name: --------------------------------- --------------------------------- Title: Title: -------------------------------- -------------------------------- ABC Reinsurance Company By: By: ----------------------------------- ----------------------------------- Name: Name: --------------------------------- --------------------------------- Title: Title: -------------------------------- -------------------------------- 23 EXHIBIT I LIMITS ------ REINSURER'S SHARE: X% AUTOMATIC BINDING LIMIT - ----------------------- The Ceding Company may not cede Policy amounts pursuant to Article I when the face amount of the Policy exceeds the following: JUMBO LIMIT - ----------- The Ceding Company may cede Policy amounts pursuant to Article I only if, according to the information available to the Ceding Company, the total amount of life insurance in force and applied for on the life with all insurance companies, including any amount to be replaced, does not exceed $ 24 EXHIBIT II CEDING COMPANY RETENTION LIMITS ------------------------------- CEDING COMPANY SHARE: X% of the Policy face amount, not to exceed the following retention limits per life. SINGLE LIFE - ----------- SURVIVORSHIP - ------------ SPECIAL LIMITS - -------------- 25 EXHIBIT III POLICIES AND RIDERS ------------------- The Policies and Riders described below may be ceded hereunder: 26 EXHIBIT IV REINSURANCE RATES ----------------- There shall be no policy fees. Premium rates shall be the same for automatic and facultative reinsurance. Life premiums shall be the following percentages of the attached single life mortality tables, for all underwriting classes. Premiums for Temporary Term for all underwriting classes shall be the same as the duration one rates for Life reinsurance premiums described above. Substandard table ratings are 25% multiples based on NS, SM and JUV for each table. The premiums shall be increased by any flat extra premium charged the insured less allowances. Insurance coverage resulting from exercise of ABTR and GIR shall be reinsured at point in scale. 27 EXHIBIT V MONTHLY REPORTS --------------- The Ceding Company shall provide the Reinsurer reports each month in substantial accord with those shown in this Exhibit. 28 EX-99.(K)(II) 6 dex99kii.txt COUNSEL CONSENT [METLIFE LOGO APPEARS HERE] Exhibit (k)(ii) April 26, 2004 Metropolitan Life Separate Account UL Metropolitan Life Insurance Company One Madison Avenue New York, NY 10010 Ladies and Gentlemen: In my capacity as Assocaite General Counsel of Metropolitan Life Insurance Company (the "Company"), I am rendering the following opinion in connection with the filing with the Securities and Exchange Commission of an amendment to the registration statement on Form N-6 (File No. 33-47927) under the Securities Act of 1933. This Amendment to the Registration Statement is being filed with respect to individual Variable Universal Life Insurance Policies (the "Policies") issued by Metropolitan Life Separate Account UL (the "Account"). It is my professional opinion that: 1. The Account is a separate investment account of the Company and is validly existing pursuant to the laws of the State of New York. 2. The Variable Universal Life Insurance Policies, when issued in accordance with the prospectuses contained in the amendment to the Registration Statement and in compliance with applicable local law, are and will be legal and binding obligations of the Company in accordance with their terms; and 3. Assets attributable to reserves and other contract liabilities and held in the Account will not be chargeable with liabilities arising out of any other business the Company may conduct. In forming this opinion, I have made such examination of law and examined such records and other documents as in my judgment are necessary and appropriate. I hereby consent to the filing of this opinion letter as an exhibit to the Registration Statement and to the use of my name under the caption "Legal Matters" in the Statement of Additional Information contained in the amendment to the Registration Statement. Very truly yours, /s/ Marie C. Swift Marie C. Swift, Esq. Associate General Counsel EX-99.(L) 7 dex99l.txt ACTUARY CONSENT Exhibit (l) April 26, 2004 Metropolitan Life Insurance Company One Madison Avenue New York, NY 10010-3690 Metropolitan Life Insurance Company This opinion is furnished in connection with the filing of Post-Effective Amendment No. 18 to Registration Statement No. 33-47927 on Form N-6 ("Registration Statement"), which covers, among others, premiums received under the Equity Advantage VUL life insurance policies that are currently being offered by Metropolitan Life Insurance Company ("MLIC") in each State where they have been approved by appropriate State insurance authorities (the "Current Equity Advantage Policies"). As a Vice-President and Actuary of MLIC, I have reviewed the Equity Advantage variable form (the "Policy Form") and I am familiar with the Registration Statement and Exhibits thereto. In my opinion, the illustrations of death benefits, cash values and cash surrender values in Appendix A to the Prospectus for the Current Equity Advantage Policies included in the Registration Statement, based on the assumptions stated therein, are consistent with the provisions of the Policy Form and with MLIC's administrative procedures. Also, in my opinion, the amounts assumed in the illustrations for current policy charges (including the Current Equity Advantage Policy's decrease in mortality and expense risk charge after 10 years) remain reasonable, based on MLIC's current expectations. The rate structure of the Current Equity Advantage Policies has not been designed so as to make the relationship between premiums and benefits, as shown in these illustrations, appear to be materially more favorable to a prospective purchaser for non-smoker preferred risk males age 40 than for a male at other ages or in other underwriting classes or for a female. Nor have the assumptions in the particular illustrations shown been selected for the purpose of making that relationship appear materially more favorable. The illustrations are based on a commonly used rating classification and a premium amount and age that are appropriate to the market in which the Current Equity Advantage Policies are sold. I hereby consent to the use of this opinion as an exhibit to the Registration Statement and to the reference to my name under the heading "Experts" in the prospectus and supplement contained in the Registration Statement. Very truly yours, /s/ Marian J. Zeldin Marian J. Zeldin Vice President and Actuary EX-99.(M) 8 dex99m.txt CALCULATION EXHIBIT CALCULATION EXHIBIT FOR EQUITY ADVANTAGE VUL ASSUMPTIONS: MALE, ISSUE AGE 40, PREFERRED NONSMOKER FACE AMOUNT OF 100,000.00 LEVEL DB OPTION PLANNED ANNUAL PREMIUM OF 816.00 USING CURRENT CHARGES, 6.00% GROSS INTEREST RATE THE FOLLOWING IS A DETAILED REPRESENTATION OF THE MONTHLY PROCESSING DURING POLICY YEAR 5:
BEGIN- NING MORTALITY COST NET END OF OUTSTAND- END END POL- POL- OF MONTH GROSS & EXPENSE OF INVEST- MONTH ING OF MONTH OF MONTH ICY ICY CASH PREMIUM PREMIUM RISK ADMIN RIDER INSURANCE MENT CASH SURRENDER LOAN CASH SURR DEATH YEAR MONTH VALUE PAID LOAD CHARGE CHARGE CHARGE CHARGE EARNINGS VALUE CHARGE BALANCE VALUE BENEFIT 5 1 1,704.81 816.00 44.88 1.86 6.00 0.00 15.76 10.28 2,462.59 1,142.40 0.00 1,320.19 100,000.00 5 2 2,462.59 0.00 0.00 1.85 6.00 0.00 15.76 10.23 2,449.21 1,142.40 0.00 1,306.81 100,000.00 5 3 2,449.21 0.00 0.00 1.84 6.00 0.00 15.76 10.17 2,435.78 1,142.40 0.00 1,293.38 100,000.00 5 4 2,435.78 0.00 0.00 1.83 6.00 0.00 15.77 10.11 2,422.29 1,142.40 0.00 1,279.89 100,000.00 5 5 2,422.29 0.00 0.00 1.82 6.00 0.00 15.77 10.06 2,408.76 1,142.40 0.00 1,266.36 100,000.00 5 6 2,408.76 0.00 0.00 1.81 6.00 0.00 15.77 10.00 2,395.18 1,142.40 0.00 1,252.78 100,000.00 5 7 2,395.18 0.00 0.00 1.80 6.00 0.00 15.77 9.94 2,381.55 1,142.40 0.00 1,239.15 100,000.00 5 8 2,381.55 0.00 0.00 1.79 6.00 0.00 15.78 9.89 2,367.87 1,142.40 0.00 1,225.47 100,000.00 5 9 2,367.87 0.00 0.00 1.78 6.00 0.00 15.78 9.83 2,354.14 1,142.40 0.00 1,211.74 100,000.00 5 10 2,354.14 0.00 0.00 1.77 6.00 0.00 15.78 9.77 2,340.36 1,142.40 0.00 1,197.96 100,000.00 5 11 2,340.36 0.00 0.00 1.76 6.00 0.00 15.78 9.71 2,326.53 1,142.40 0.00 1,184.13 100,000.00 5 12 2,326.53 0.00 0.00 1.74 6.00 0.00 15.78 9.66 2,312.67 1,142.40 0.00 1,170.27 100,000.00
THE FOLLOWING IS A DESCRIPTION OF EACH COLUMN OF THE DETAILED REPRESENTATION: POLICY YEAR The policy year is assumed to be 5, as described above. POLICY MONTH The policy month ranges from 1 through 12, to describe the monthly processing that occurs throughout the policy year. BEGINNING OF MONTH CASH VALUE The beginning of month cash value (BOM CV) in each current month is equal to the end of month cash value from each previous month. This demonstration assumes that the cash value is comprised of separate account cash value only; no general account cash value or loan account cash value are present. GROSS PREMIUM PAID The gross premium paid is the planned ANNUAL premium of 816.00 as described above. PREMIUM LOAD The premium load is the sum of the sales charge, state tax, and federal tax as described in the Transaction Fees table. For year 5, this sum is 5.50% of gross premium paid. In year 5 month 1, the premium load is therefore 5.50% x 816.00 = 44.88. MORTALITY & EXPENSE RISK CHARGE The mortality & expense (M&E) risk charge is a percentage of the separate account cash value at the time that the charge is deducted. This demonstration assumes that all cash value is comprised of separate account cash value only. The annual percentages are described in the Periodic Fees table. The monthly percentages are 1/12th of the annual percentages. For example, in year 5 month 1, the percentage is 0.90% and the cash value at the time that the charge is deducted is: Cash Value = Beginning Of Month Cash Value + Gross Premium Paid - Premium Load Cash Value = 1,704.81 + 816.00 - 44.88 (values are from the Detailed Representation above) Cash Value = 2,475.93
The mortality & expense risk charge is therefore 0.90%/12 x 2,475.93 = 1.86. ADMIN CHARGE The administration (admin) charge varies depending upon the policy year, issue age, and whether or not the required administrative premium has been paid, as described in the Periodic Fees table. In year 5, this charge is 6.00. RIDER CHARGE The rider charge is the sum of the charges for all riders present, except for the Disability Waiver of Monthly Deduction Rider (DWD). The DWD is calculated after the Cost of Insurance Charge because it uses that charge in its calculation. This illustration assumes no riders (including DWD) are present; the rider charge (as well as DWD charge) is therefore 0.00. A list of available riders can be found in the Rider Fees Table. COST OF INSURANCE CHARGE The cost of insurance (COI) charge is the product of the monthly COI rate and the net amount at risk (NAR). The NAR is the difference between the death benefit (DB) and the cash value (floored at 0), both at the time that the NAR is calculated. There are 3 different DB options: level DB option: DB = Max (face amount , cash value x IRS Corridor Factor) increasing DB option: DB = Max (face amount + cash value (floored at 0), cash value x IRS Corridor Factor) mixed DB option: DB = increasing DB option until attained age 65, level DB option thereafter
At the time that the NAR is calculated, the face amount is comprised of those attributable to the base policy. It is divided by a monthly discount factor which is calculated based upon the guaranteed interest rate. The guaranteed interest rate is 3.00%, so the monthly discount factor is calculated as follows: monthly discount factor = ROUND {(1 + guaranteed interest rate) /\ (1/12), 7} monthly discount factor = ROUND {(1 + 3.00%) /\ (1/12), 7} monthly discount factor = 1.0024663 The NAR is: NAR = death benefit - Max (0, cash value) and finally the COI charge is: COI charge = monthly COI rate x NAR For example, in year 5 month 1, we have the following: level DB option, guideline premium test face amount = 100,000.00 cash value = BOM CV + Gross Premium Paid - Premium Load - M&E Risk Charge - Admin Charge - Rider Charge cash value = 1,704.81 + 816.00 - 44.88 - 1.86 - 6.00 - 0.00 cash value = 2,468.07 IRS Corridor Factor = 2.22 monthly discount factor = 1.0024663 monthly COI rate = 0.0001620 DB = Max (face amount/monthly discount factor, cash value x IRS Corridor Factor) DB = Max (100,000.00/1.0024663, 2,468.07 x 2.22) DB = Max (99,753.97676710, 5,479.12) DB = 99,753.97676710 NAR = ROUND {DB - Max (0, cash value), 2} NAR = ROUND {99,753.97676710 - Max (0, 2,468.07), 2} NAR = ROUND {99,753.97676710 - 2,468.07, 2} NAR = ROUND {97,285.90676710, 2} NAR = 97,285.91 COI charge = monthly COI rate x NAR COI charge = 0.0001620 x 97,285.91 COI charge = 15.76
NET INVESTMENT EARNINGS The net investment earnings represent the policy performance of the cash value. The cash value is actually tracked separately for each separate account fund that has invested cash value, as well as for a loan fund if any loan balance is present. This demonstration assumes fund performance across all funds to average a gross annual interest rate of 6.00% and an investment management fee of 0.81%. To calculate the monthly net interest rate (used to calculate the net investment earnings), given the annual gross interest rate and the investment management fee, we use the following: DDF = ROUND{ [(1+IMF)/\(1/365)] - 1, 8} monthly net interest rate = ROUND{[ [(1+I)/\(1/365) - DDF ] /\ (365/12)] - 1, 7} where: DDF = daily deduction factor
I = annual gross interest rate IMF = investment management fee For I = 6.00% and IMF = 0.81%, we have: DDF = ROUND{ [(1+IMF)/\(1/365)] - 1, 8} DDF = ROUND{ [(1+0.81%)/\(1/365)] - 1, 8} DDF = ROUND{ [1.0081/\(1/365)] - 1, 8} DDF = ROUND{ 1.000022102631 - 1, 8} DDF = ROUND{ 0.000022102631, 8} DDF = 0.00002210 monthly net interest rate = ROUND{[ [ (1+I)/\(1/365) - DDF ] /\ (365/12)] - 1, 7} monthly net interest rate = ROUND{[ [ (1+6.00%)/\(1/365) - 0.00002210 ] /\ (365/12)] - 1, 7} monthly net interest rate = ROUND{[ [ 1.06/\(1/365) - 0.00002210 ] /\ (365/12)] - 1, 7} monthly net interest rate = ROUND{[ [ 1.00015965 - 0.00002210 ] /\ (365/12)] - 1, 7} monthly net interest rate = ROUND{[ 1.00013755 /\ (365/12)] - 1, 7} monthly net interest rate = ROUND{[ 1.00419240] - 1, 7} monthly net interest rate = ROUND{ 0.00419240, 7} monthly net interest rate = 0.0041924
To calculate the net investment earnings for the month, we calculate the product of the cash value at the time the net investment earnings is calculated and the monthly net interest rate. The cash value at the time the net investment earnings is calculated is: cash value = BOM CV + Gross Premium Paid - Premium Load - M&E Risk Charge - Admin Charge - Rider Charge - COI Charge For example, in year 5 month 1, we have the following: cash value = BOM CV + Gross Premium Paid - Premium Load - M&E Risk Charge - Admin Charge - Rider Charge - COI Charge cash value = 1,704.81 + 816.00 - 44.88 - 1.86 - 6.00 - 0.00 - 15.76 cash value = 2,452.31 net investment earnings = cash value x monthly net interest rate net investment earnings = 2,452.31 x 0.0041924 net investment earnings = 10.28
END OF MONTH CASH VALUE The end of month cash value (EOM CV) is simply: EOM CV = BOM CV + Gross Premium Paid - Premium Load - M&E Risk Charge - Admin Charge - Rider Charge - COI Charge + Net Investment Earnings In year 5 month 1, we have: EOM CV = BOM CV + Gross Premium Paid - Premium Load - M&E Risk Charge - Admin Charge - Rider Charge - COI Charge + Net Investment Earnings EOM CV = 1,704.81 + 816.00 - 44.88 - 1.86 - 6.00 - 0.00 - 15.76 + 10.28 EOM CV = 2,462.59 SURRENDER CHARGE The surrender charge (SC) in year 1 is defined as a percentage of the lesser of premiums paid in year 1 and the sum of the tabular base SC premium and tabular rider SC premiums. The surrender charge in years 2 and beyond are defined as a percentage of the lesser of premiums paid in years 1-2 and the sum of the tabular base SC premium and tabular rider SC premiums. The percentages are as follows: YEAR PERCENTAGE 1 75 2 100 3 90 4 80 5 70 6 60 7 54 8 48 9 42 10 36 11 30 12 24 13 18 14 12 15 6 16 0 The surrender charge is level throughout each year. A separate surrender charge is calculated in a similar fashion for each face increase. For example, in year 5 month 1, we have the following: premiums paid in years 1-2 = 1,632.00 face amount = 100,000.00 tabular base SC premium rate = 17.51 tabular rider SC premiums = 0.00 year 5 percentage = 70 tabular base SC premium = tabular base SC premium rate x face amount / 1000 tabular base SC premium = 17.51 x 100,000.00 / 1000 tabular base SC premium = 1,751.00 surrender charge = year 5 percentage x Min (premiums paid in years 1-2, tabular base SC premium + tabular rider SC premiums) surrender charge = 70% x Min (1,632.00, 1,751.00 + 0.00) surrender charge = 70% x Min (1,632.00, 1,751.00) surrender charge = 70% x 1,632.00 surrender charge = 1,142.40
OUTSTANDING LOAN BALANCE The outstanding loan balance represents the amount of cash value loaned, including loan charged interest as described in the Periodic Fees table. This illustration assumes no loans have been taken; the outstanding loan balance is therefore 0.00. END OF MONTH CASH SURRENDER VALUE The end of month cash surrender value (EOM CSV) is the end of month cash value net of surrender charge and outstanding loan balance. That is: EOM CSV = EOM CV - surrender charge - outstanding loan balance In year 5 month 1, we have: EOM CSV = EOM CV - surrender charge - outstanding loan balance EOM CSV = 2,462.59 - 1,142.40 - 0.00 EOM CSV = 1,320.19 END OF MONTH DEATH BENEFIT The end of month death benefit (EOM DB) is calculated based upon the DB option. The DB options are as follows: level DB option: DB = Max (face amount , cash value x IRS Corridor Factor) increasing DB option: DB = Max (face amount + cash value (floored at 0), cash value x IRS Corridor Factor) mixed DB option: DB = increasing DB option until attained age 65, level DB option thereafter
The face amount is the same as that used to calculate the NAR in the COI charge. The DB is actually the gross DB, before the reduction of any outstanding loan balance. The EOM DB is therefore: EOM DB = DB - outstanding loan balance In year 5 month 1, we have: level DB option face amount = 100,000.00 cash value = EOM CV = 2,462.59 IRS Corridor Factor = 2.22 DB = Max (face amount, cash value x IRS Corridor Factor) DB = Max (100,000.00, 2,462.59 x 2.22) DB = Max (100,000.00, 5,466.95) DB = 100,000.00 EOM DB = DB - outstanding loan balance EOM DB = 100,000.00 - 0.00 EOM DB = 100,000.00 EX-99.N(I) 9 dex99ni.txt AUDITOR CONSENT Exhibit (n)(i) Independent Auditors' Consent We consent to the use in this Post-Effective Amendment No. 18/Amendment No. 11 to Registration Statement No. 033-47927/ 811-06025 of Metropolitan Life Separate Account UL on Form N-6 of our report dated April 16, 2004, relating to Metropolitan Life Separate Account UL appearing in the Prospectuses, which are a part of such Registration Statement, and our report dated April 9, 2004 relating to Metropolitan Life Insurance Company (which report expresses an unqualified opinion and includes an explanatory paragraph referring to the change in the method of accounting for embedded derivatives in certain insurance products as required by new accounting guidance which became effective on October 1, 2003, and recorded the impact as a cumulative effect of a change in accounting principle) appearing in the Statement of Additional Information, which is also part of such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Prospectus and Statement of Additional Information which are part of such Registration Statement. Deloitte & Touche LLP Tampa, Florida April 26, 2004 EX-99.NII 10 dex99nii.txt FOLEY CONSENT Exhibit (n) (ii) CONSENT OF FOLEY & LARDNER LLP We hereby consent to the reference to this firm under "Legal Matters" in the statement of additional information contained in Post-Effective Amendment No. 18 to this registration statement (File No. 033-47927). April 26, 2004 By: /s/ Thomas C. Lauerman, Partner ------------------------------- FOLEY & LARDNER LLP -----END PRIVACY-ENHANCED MESSAGE-----