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Notes
to Financial Statements (Unaudited) (Continued) |
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an
official closing price is unavailable or not reported on the NASDAQ System, the last reported bid price. Portfolio securities traded on
more than one national securities exchange are valued at the last price at the close of the exchange representing the principal market
for such securities. Debt securities (with the exception of debt securities held by the U.S. Government Money Market Fund) are valued
on the basis of valuations furnished by a pricing service, which generally determines valuations taking into account factors such as institutional-size
trading in similar securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. Shares
of other open-end mutual funds are valued at their closing net asset values as reported on each business day. The U.S. Government Money
Market Fund’s debt securities are typically valued at amortized cost, but may be valued using a vendor quote if MML Advisers determines
it more closely approximates current market value, in accordance with Rule 2a-7 under the 1940 Act pursuant to which the U.S. Government
Money Market Fund must adhere to certain conditions. It is the intention of the U.S. Government Money Market Fund to maintain a stable
net asset value per share of $1.00, although this cannot be assured.
Investments
for which market quotations are readily available are marked to market daily based on those quotations. Market quotations may be provided
by third-party vendors or market makers, and may be determined on the basis of a variety of factors, such as broker quotations, financial
modeling, and other market data, such as market indexes and yield curves, counterparty information, and foreign exchange rates. U.S. Government
and agency securities may be valued on the basis of market quotations or using a model that may incorporate market observable data such
as reported sales of similar securities, broker quotes, yields, bids, offers, quoted market prices, and reference data. The fair values
of OTC derivative contracts, including forward, swap, and option contracts related to interest rates, foreign currencies, credit standing
of reference entities, equity prices, or commodity prices, may be based on market quotations or may be modeled using a series of techniques,
including simulation models, depending on the contract and the terms of the transaction. The fair values of asset-backed securities and
mortgage-backed securities are estimated based on models that consider the estimated cash flows of each debt tranche of the issuer, established
benchmark yield, and estimated tranche-specific spread to the benchmark yield based on the unique attributes of the tranche, including,
but not limited to, prepayment speed assumptions and attributes of the collateral.
The
Board of Trustees (“Trustees”) have designated MML Advisers as the Funds’ “valuation designee,” responsible
for determining the fair value, in good faith, of securities and other instruments held by the Funds for which market quotations are not
readily available or for which such market quotations or values are considered by MML Advisers or a subadviser to be unreliable (including,
for example, certain foreign securities, thinly-traded securities, certain restricted securities, certain initial public offerings, or
securities whose values may have been affected by a significant event). It is possible that a significant amount of a Fund’s assets
will be subject to fair valuation in accordance with MML Advisers’ fair valuation policy and procedures. The fair value determined
for an investment by MML Advisers may differ from recent market prices for the investment and may be significantly different from the
value realized upon the sale of such investment.
The
Funds may invest in securities that are traded principally in foreign markets and that trade on weekends and other days when the Funds
do not price their shares. As a result, the values of the Funds’ portfolio securities may change on days when the prices of the
Funds’ shares are not calculated. The prices of the Funds’ shares will reflect any such changes when the prices of the Funds’
shares are next calculated, which is the next business day. The Funds may use fair value pricing more frequently for securities
primarily traded in foreign markets because, among other things, most foreign markets close well before the Funds value their securities.
The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have
occurred in the interim. The Funds’ investments may be priced based on fair values provided by a third-party vendor, based on certain
factors and methodologies applied by such vendor, in the event that there is movement in the U.S. market, between the close of the foreign
market and the time the Funds calculate their net asset values. All assets and liabilities expressed in foreign currencies are converted
into U.S. dollars at the mean between the buying and selling rates of such currencies against the U.S. dollar at the end of each business
day.
Investments
in equity or debt issued by privately held companies or funds (“Private Company” or collectively, the “Private Companies”)
and any other investments fair valued using significant unobservable inputs may be fair valued using alternate valuation approaches including
the following:
Market
approach: considers factors including the price of recent investments in the same or similar security or financial metrics of comparable
securities.
Income
approach: considers factors including expected future cash flows, security specific risks, and corresponding discount rates.
Cost
approach: considers factors including the value of the security’s underlying assets and liabilities.
