<PAGE>
As filed with the Securities and Exchange Commission on October 1, 1997
Securities Act File No. 33-73824
Investment Company Act File No. 811-8274
================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]
PRE-EFFECTIVE-AMENDMENT NO. [_]
POST-EFFECTIVE-AMENDMENT NO.4
[X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
AMENDMENT NO. 6
[X]
MASSMUTUAL INSTITUTIONAL FUNDS
------------------------------
(Exact Name of Registrant as Specified in Charter)
1295 State Street
Springfield, Massachusetts 01111
--------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (413) 788-8411
--------------
Stephen L. Kuhn
MassMutual Institutional Funds
1295 State Street
Springfield, MA 01111
(Name and Address of Agent for Service)
Copies to:
J. B. Kittredge Esq.
Ropes & Gray
One International Place
Boston, MA 02110
Approximate date of commencement of proposed sale to the public: As soon as
practical after the effective date of the Registration Statement.
It is proposed that this filing will become effective (check appropriate box)
[_] immediately upon filing pursuant to paragraph (b)
[_] on (date) pursuant to paragraph (b)
[x] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[_] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
DECLARATION PURSUANT TO RULE 24F-2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant hereby declares that an indefinite number or amount of its shares
have been registered under the Securities Act of 1933. Registrant's Rule 24f-2
Notice on Form 24F-2 for the fiscal year ending December 31, 1996 was filed on
February 25, 1997.
<PAGE>
MASSMUTUAL INSTITUTIONAL FUNDS
FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Part A
Item No. Prospectus Heading
- -------- ------------------
<S> <C> <C>
1 Cover Page Cover Page
2 Synopsis Expense Information
3 Condensed Financial Information Financial Highlights; Line
of Credit
4 General Description of Registrant The Trust; Investment Practices of the Funds and Related Risks; Investment
Objectives and Policies of the Funds; Investment Practices of the Funds and
Related Risks; Description of Shares
5 Management of the Fund The Trust; Control Person and Pricipal Holder of Securities Investment Manager
And Sub-Advisers; Distributor, Transfer Agent, Shareholder Servicing Agent,
Custodian; Expense Information
6 Capital Stock and Other Securities The Trust; Distributions And Taxation; Description Of Shares
7 Purchase of Securities Being Offered How To Purchase, Exchange, and Redeem Shares; Distributor, Transfer
Agent, Shareholder Servicing Agent, Custodian; How Fund Shares Are
Priced
8 Redemption or Repurchase How to Purchase, Exchange, And Redeem Shares
9 Pending Legal Proceedings Inapplicable
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Part B Heading in Statement
Item No. of Additional Information
- -------- -------------------------
<S> <C> <C>
10 Cover Page Cover Page
11 Table of Contents Table of Contents
12 General Information and History General Information
13 Investment Objectives and Policies Additional Investment Policies; Fundamental Investment
Restrictions; Non-Fundamental Investment Restrictions
14 Management of the Fund Management of the Trust; Compensation; Compensation Table
15 Control Persons and Principal Holders of Control Persons and Principal Holders of Securities
Securities
16 Investment Advisory and Other Services Investment Manager And Sub-Advisers; The Distributor; Custodian,
Dividend Agent And Transfer Agent
17 Brokerage Allocation and Other Practices Portfolio Transactions And Brokerage
18 Capital Stock and Other Securities Management Of The Trust; Description Of Shares
19 Purchase, Redemption and Pricing of Securities Shareholder Investment Account; Redemption Of Shares; Valuation
Being Offered Of Portfolio Securities
20 Tax Status Taxation
21 Underwriters The Distributor
22 Calculation of Performance Data Investment Performance
23 Financial Statements Financial Statements
</TABLE>
iv
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED OCTOBER 1, 1997
MASSMUTUAL INSTITUTIONAL FUNDS
1295 STATE STREET
SPRINGFIELD, MASSACHUSETTS 01111
(413) 788-8411
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Information contained herein pertaining to the Class A and Class Y Shares (the
"Pending Securities") is subject to completion or amendment. A registration
statement relating to, amongst other things, the Pending Securities has been
filed with the Securities and Exchange Commission. These Pending Securities may
not be sold nor may any offers to buy be accepted prior to the time the
registration statement becomes effective. This Prospecuts shall not constitute
an offer to sell or the solicitation of an offer to buy the Pending Securities
nor shall there be any sale of the Pending Securities in any State in which such
offer, solicitation, or sale would be unlawful prior to registration or
qualification under the securitie laws of any such State.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
MassMutual Institutional Funds (the "Trust") is a professionally managed
investment company designed to offer investors both the opportunity to pursue
long-term investment goals and the flexibility to respond to changes in their
investment objectives and economic and market conditions. This Prospectus
describes seven separate, diversified series of shares of the Trust (the
"Funds"). Each Fund has a distinct investment objective.
(1) MassMutual Prime Fund-Seeks to maximize current income to the extent
consistent with liquidity and the preservation of capital by investing
in a diversified portfolio of money market instruments. The Prime Fund
is not a money market fund.
(2) MassMutual Short-Term Bond Fund-Seeks to achieve a high total rate of
return primarily from current income while minimizing fluctuations in
capital values by investing primarily in a diversified portfolio of
short-term investment grade fixed income securities.
(3) MassMutual Core Bond Fund-Seeks to achieve a high total rate of return
consistent with prudent investment risk and the preservation of capital
by investing primarily in a diversified portfolio of investment grade
fixed income securities.
(4) MassMutual Balanced Fund-Seeks to achieve a high total rate of return
over an extended period of time consistent with the preservation of
capital values by investing in a diversified portfolio of equity
securities, fixed income securities and money market instruments.
(5) MassMutual Value Equity Fund-Seeks to achieve long-term growth of
capital and income by investing primarily in a diversified portfolio of
equity securities of larger well-established companies.
(6) MassMutual Small Cap Value Equity Fund-Seeks to achieve long-term
growth of capital and income by investing primarily in a diversified
portfolio of equity securities of smaller companies.
(7) MassMutual International Equity Fund-Seeks to achieve a high total rate
of return over the long term by investing in a diversified portfolio of
foreign and domestic equity securities.
This Prospectus sets forth concisely the information about the Funds and the
Trust that a prospective investor should know before investing. Please read it
carefully and retain it for future reference. Certain additional information
about the Funds and the Trust is contained in a Statement of Additional
Information dated November [ ], 1997, which has been filed with the Securities
and Exchange Commission and is incorporated herein by reference. This additional
information is available without charge by writing to the Secretary, MassMutual
Institutional Funds, 1295 State Street, Springfield, MA 01111.
Massachusetts Mutual Life Insurance Company ("MassMutual" or the "Adviser") is
the investment manager to each of the Funds. David L. Babson and Company, Inc.
("Babson") is the investment sub-adviser to the Value Equity Fund, the Small Cap
Value Equity Fund and the Value Equity Sector of the Balanced Fund. HarbourView
Asset Management Corporation ("HarbourView") is the investment sub-adviser to
the International Equity Fund. Babson and HarbourView are both indirect
subsidiaries of the Adviser and are hereinafter collectively referred to as the
"Sub-Adviser."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
DISTRIBUTOR
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
Two World Trade Center
New York, New York 10048
PROSPECTUS November [ ], 1997.
<PAGE>
<TABLE>
<CAPTION>
Table Of Contents
Page
<S> <C>
Expense Information........................................................ 3
Financial Highlights....................................................... 7
Line of Credit............................................................. 13
The Trust.................................................................. 14
Investment Objectives And Policies Of The Funds............................ 14
Investment Practices Of The Funds And Related Risks........................ 17
How To Purchase, Exchange, And Redeem Shares............................... 19
Investment Manager And Sub-Advisers........................................ 22
Distributor, Transfer Agent, Shareholder Servicing Agent, Custodian........ 23
Control Person And Principal Holder Of Securities.......................... 24
Description Of Shares...................................................... 24
How Fund Shares Are Priced................................................. 24
Distributions And Taxation................................................. 24
Investment Performance..................................................... 25
Glossary................................................................... 27
</TABLE>
2
<PAGE>
Expense Information
The Expense Information in these tables provides estimates of how much it will
cost to operate the Funds for a year.
- --------------------------------------------------------------------------------
CLASS A
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP
SHORT-TERM CORE VALUE VALUE INTERNATIONAL
PRIME BOND BOND BALANCED EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND FUND FUND
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed
on Purchases....................... None None None None None None None
Maximum Sales Charge Imposed
on Reinvested Dividends............ None None None None None None None
Maximum Deferred Sales Charge /(1)/. 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Exchange Fee........................ None None None None None None None
Redemption Fee...................... None None None None None None None
ANNUAL OPERATING EXPENSES
(As a percentage of average.net assets)
Management Fees..................... .45% .45% .45% .45% .45% .55% .85%
Rule 12b-1 Fees..................... .25% .25% .25% .25% .25% .25% .25%
Other Expenses...................... .50% .50% .50% .50% .50% .50% .60%
=================================================================================================================================
TOTAL OPERATING EXPENSES 1.20% 1.20% 1.20% 1.20% 1.20% 1.30% 1.70%
=================================================================================================================================
</TABLE>
(1) You may have to pay a contingent deferred sales charge of up to 1% if you
sell any Class A shares within 12 months of the date on which you first
purchased Class A shares. See "How to Purchase, Exchange, and Redeem
Shares," below, for more information on the contingent deferred sales
charge.
EXAMPLES: An investor would pay the following expenses on an investment of
$1,000 in the Fund assuming: (a) a 5% annual return and (b)
redemption at the end of each time period.
<TABLE>
<CAPTION>
SMALL CAP
SHORT-TERM CORE VALUE VALUE INTERNATIONAL
PRIME BOND BOND BALANCED EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year $22.61 $22.61 $22.61 $22.61 $22.61 $23.62 $27.62
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
3 Years $38.11 $38.11 $38.11 $38.11 $38.11 $41.23 $53.60
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
5 Years $65.96 $65.96 $65.96 $65.96 $65.96 $71.28 $92.28
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
10 Years $145.25 $145.25 $145.25 $145.25 $145.25 $156.53 $200.48
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
An investor would pay the following expenses on the same investment, assuming no
redemption:
<TABLE>
<CAPTION>
SMALL CAP
SHORT-TERM CORE VALUE VALUE INTERNATIONAL
PRIME BOND BOND BALANCED EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year $12.24 $12.24 $12.24 $12.24 $12.24 $13.25 $17.30
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
3 Years $38.11 $38.11 $38.11 $38.11 $38.11 $41.23 $53.60
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
5 Years $65.96 $65.96 $65.96 $65.96 $65.96 $71.28 $92.28
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
10 Years $145.25 $145.25 $145.25 $145.25 $145.25 $156.53 $200.48
- -------------------------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE RETURNS OR
EXPENSES. ACTUAL RETURNS AND EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
4
<PAGE>
CLASS Y
<TABLE>
<CAPTION>
SMALL CAP
SHORT-TERM CORE VALUE VALUE INTERNATIONAL
PRIME BOND BOND BALANCED EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
(As a percentage of offering price)
Maximum Sales Charge
Imposed on Purchases................. None None None None None None None
Maximum Sales Charges Imposed
on Reinvested Dividends.............. None None None None None None None
Maximum Deferred Sales Charge......... None None None None None None None
Exchange Fee.......................... None None None None None None None
Redemption Fee........................ None None None None None None None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fees....................... .45% .45% .45% .45% .45% .55% .85%
Rule 12b-1 Fees....................... None None None None None None None
Other Expenses........................ .30% .30% .30% .30% .30% .30% .40%
=================================================================================================================================
TOTAL OPERATING EXPENSES/(1)/ .75% .75% .75% .75% .75% .85% 1.25%
=================================================================================================================================
</TABLE>
(1) Class Y Investors may also be subject to charges imposed in their
administrative services or other agreement with the Adviser. See "How to
Purchase, Exchange and Redeem Shares-Features and Eligibility Requirements
of each Class."
EXAMPLE: An investor would pay the following expenses on an investment of
$1,000 in the Fund assuming: (a) a 5% annual return and (b) redemption
at the end of each time period.
<TABLE>
<CAPTION>
SMALL CAP
SHORT-TERM CORE VALUE VALUE INTERNATIONAL
PRIME BOND BOND BALANCED EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year $ 7.66 $ 7.66 $7.66 $7.66 $7.66 $ 8.68 $ 12.74
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
3 Years $23.97 $23.97 $23.97 $23.97 $23.97 $ 27.12 $ 39.66
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
5 Years $41.68 $41.68 $41.68 $41.68 $41.68 $ 47.12 $ 68.60
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
10 Years $92.92 $92.92 $92.92 $92.92 $92.92 $104.75 $150.86
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE RETURNS OR
EXPENSES. ACTUAL RETURNS AND EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
5
<PAGE>
CLASS S/(1)/
<TABLE>
<CAPTION>
SMALL CAP
SHORT-TERM CORE VALUE VALUE INTERNATIONAL
PRIME BOND BOND BALANCED EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
(As a percentage of offering price)
Maximum Sales Charge
Imposed on Purchases............. None None None None None None None
and Reinvested Dividends......... None None None None None None None
Maximum Sales Charges Imposed
on Reinvested Dividends.......... None None None None None None None
Maximum Deferred Sales Charge..... None None None None None None None
Exchange Fee...................... None None None None None None None
Redemption Fee.................... None None None None None None None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fees................... .45% .45% .45% .45% .45% .55% .85%
Rule 12b1 Fees.................... None None None None None None None
Other Expenses.................... .0954%% .1010% .0945% .0925% .0902% .0932% .2022%
==================================================================================================================================
TOTAL OPERATING EXPENSES/(2)(3)/ .5454%% .5510% .5445% .5425% .5402% .6432% 1.0522%
==================================================================================================================================
</TABLE>
(1) Class S shares were previously designated as Class 4 shares.
(2) There are no current client expenses for separate investment accounts, but
employee benefit plans that invest in the separate investment accounts are
subject to charges imposed in their group annuity contracts, as set forth in
their respective Plan Documents. See the Glossary for a definition of Plan
Documents.
(3) The expenses in the above table are based on expenses for the fiscal year
ended December 31, 1996 but without giving effect to MassMutual's voluntary
undertaking to waive a portion of its management fee which terminated May 1,
1997, and adjusted for new fund custody and fund administrative fees.
EXAMPLE: An investor would pay the following expenses on an investment of
$1,000 in the Fund assuming: (a) a 5% annual return and (b) redemption
at the end of each time period.
<TABLE>
<CAPTION>
SMALL CAP
SHORT-TERM CORE VALUE VALUE INTERNATIONAL
PRIME BOND BOND BALANCED EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year $ 5.58 $ 5.63 $ 5.57 $ 5.55 $ 5.52 $ 6.57 $ 10.74
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
3 Years $17.48 $17.66 $17.45 $17.39 $17.32 $20.59 $ 33.48
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
5 Years $30.46 $30.77 $30.41 $30.30 $30.18 $35.84 $ 58.03
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
10 Years $68.30 $68.98 $68.19 $67.95 $67.67 $80.13 $128.31
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE RETURNS OR
EXPENSES. ACTUAL RETURNS AND EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
6
<PAGE>
FINANCIAL HIGHLIGHTS
The information in the following tables applies only to the Class S shares of
the Funds (which were previously designated Class 4 shares.) Similar
information does not exist for the Class A and Class Y shares, which were not
outstanding during the periods covered by the financial statements.
The financial highlights for each of the periods through December 31, 1996, have
been derived from the Funds' financial statements, which have been audited by
Coopers & Lybrand L.L.P., independent accountants. The information for the
six-month period ended June 30, 1997 is unaudited. The financial highlights
should be read in conjunction with the financial statements, the notes thereto,
and the unqualified report of independent accountants, which are contained in
the Statement of Additional Information.
Further information about the performance of the Class S shares of the Funds is
contained in the Trust's most recent Annual Report and Semiannual Report. The
Statement of Additional Information, the Annual Report and Semiannual Report may
be obtained without charge by writing to the Trust's Secretary.
MassMutual Prime Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
CLASS S
----------------------------------------------------------
SIX MONTHS ENDED
6/30/97 YEAR ENDED YEAR ENDED PERIOD ENDED
(UNAUDITED) 12/31/96 12/31/95 12/31/94+**
---------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 151.00 $ 151.06 $ 150.36 $ 150.00
--------- --------- --------- ------------
Income (loss) from investment operations:
Net investment income 3.93*** 7.85*** 8.70*** 1.55
Net realized and unrealized gain (loss) on investments 0.01 0.06 (0.02) 0.34
--------- --------- --------- ------------
Total income from investment operations 3.94 7.91 8.68 1.89
--------- --------- --------- ------------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -- (7.97) (7.98) (1.53)
--------- --------- --------- ------------
NET ASSET VALUE, END OF PERIOD $ 154.94 $ 151.00 $ 151.06 $ 150.36
========= ========= ========= ============
Total Return@ 2.61% 5.24% 5.78% 1.26%
RATIOS / SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 244,615 $ 258,729 $ 253,936 $ 170,548
Net expenses to average daily net assets# 0.5274%* 0.5160% 0.5160% 0.5160%*
Net investment income to average daily net assets 5.18%* 5.10% 5.61% 5.01%*
#Computed after giving effect to the voluntary partial
waiver of management fee by MassMutual, which
terminated May 1, 1997. Without this partial waiver
of fees by MassMutual, the ratio of expenses to
average daily net assets would have been: 0.5506%* 0.5509% 0.5468% 0.5605%*
</TABLE>
+All per share amounts for the period have been restated to reflect a 1 for15
reverse stock split effective December 16, 1994.
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
***Per share amount calculated on the average shares method, which more
appropriately presents the per share data for the period since the use of the
undistributed income method does not accord with the results of operations.
@Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
7
<PAGE>
MassMutual ShortTerm Bond Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
CLASS S
---------------------------------------------------------
SIX MONTHS ENDED
6/30/97 YEAR ENDED YEAR ENDED PERIOD ENDED
(UNAUDITED) 12/31/96 12/31/95 12/31/94**
---------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.11 $ 10.15 $ 9.85 $ 10.00
--------- --------- --------- -----------
Income (loss) from investment operations:
Net investment income 0.32*** 0.60 0.66 0.16
Net realized and unrealized gain (loss) on investments (0.06) (0.03) 0.50 (0.15)
--------- --------- --------- -----------
Total income from investment operations 0.26 0.57 1.16 0.01
--------- --------- --------- -----------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -- (0.60) (0.66) (0.16)
From net realized gains -- (0.01) (0.20) --
--------- --------- --------- -----------
Total distributions -- (0.61) (0.86) (0.16)
--------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 10.37 $ 10.11 $ 10.15 $ 9.85
========= ========= ========= ===========
Total Return@ 2.57% 5.57% 11.77% 0.13%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 172,064 $ 145,182 $ 122,904 $ 106,846
Net expenses to average daily net assets# 0.5309%* 0.5190% 0.5190% 0.5190%*
Net investment income to average daily net assets 6.39%* 6.00% 6.32% 6.37%*
Portfolio turnover rate 9% 61% 114% 15%
#Computed after giving effect to the voluntary partial
waiver of management fee by MassMutual, which
terminated May 1, 1997. Without this partial waiver
of fees by MassMutual, the ratio of expenses to
average daily net assets would have been: 0.5546%* 0.5545% 0.5524% 0.5654%*
</TABLE>
* Annualized
** For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
***Per share amount calculated on the average shares method, which more
appropriately presents the per share data for the period since the use of the
undistributed income method does not accord with the results of
operations.
@ Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
8
<PAGE>
MassMutual Core Bond Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
CLASS S
---------------------------------------------------------
SIX MONTHS ENDED
6/30/97 YEAR ENDED YEAR ENDED PERIOD ENDED
(UNAUDITED) 12/31/96 12/31/95 12/31/94**
---------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.45 $ 10.75 $ 9.84 $ 10.00
--------- --------- --------- -----------
Income (loss) from investment operations:
Net investment income 0.34*** 0.67*** 0.72 *** 0.18
Net realized and unrealized gain (loss) on investments (0.04) (0.37) 1.17 (0.16)
--------- --------- --------- -----------
Total income from investment operations 0.30 0.30 1.89 0.02
--------- --------- --------- -----------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -- (0.54) (0.65) (0.18)
From net realized gains -- (0.06) (0.33) --
--------- --------- --------- -----------
Total distributions -- (0.60) (0.98) (0.18)
--------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 10.75 $ 10.45 $ 10.75 $ 9.84
========= ========= ========= ===========
Total Return@ 2.87% 2.80% 19.15% 0.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 416,687 $ 356,699 $ 253,540 $ 194,150
Net expenses to average daily net assets# 0.5270%* 0.5130% 0.5130% 0.5130%*
Net investment income to average daily net assets 6.59%* 6.26% 6.56% 6.86%*
Portfolio turnover rate 22% 54% 104% 7%
#Computed after giving effect to the voluntary partial
waiver of management fee by MassMutual, which
terminated May 1, 1997. Without this partial waiver
of fees by MassMutual, the ratio of expenses to
average daily net assets would have been: 0.5532%* 0.5550% 0.5553% 0.5672%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
***Per share amount calculated on the average shares method, which more
appropriately presents the per share data for the period since the use of the
undistributed income method does not accord with the results of operations.
@ Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
9
<PAGE>
MassMutual Balanced Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
CLASS S
---------------------------------------------------------
SIX MONTHS ENDED
6/30/97 YEAR ENDED YEAR ENDED PERIOD ENDED
(UNAUDITED) 12/31/96 12/31/95 12/31/94**
---------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.34 $ 11.51 $ 9.92 $ 10.00
--------- --------- --------- -----------
Income (loss) from investment operations:
Net investment income 0.23 0.46 0.44 0.11
Net realized and unrealized gain (loss) on investments 1.03 1.02 1.68 (0.08)
--------- --------- --------- -----------
Total income from investment operations 1.26 1.48 2.12 0.03
--------- --------- --------- -----------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -- (0.46) (0.44) (0.11)
From net realized gains -- (0.19) (0.09) --
--------- --------- --------- -----------
Total distributions -- (0.65) (0.53) (0.11)
--------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 13.60 $ 12.34 $ 11.51 $ 9.92
========= ========= ========= ===========
Total Return@ 10.21% 12.83% 21.31% 0.29%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 628,246 $ 563,280 $ 456,773 $ 349,688
Net expenses to average daily net assets# 0.5256%* 0.5120% 0.5120% 0.5120%*
Net investment income to average daily net assets 3.67%* 3.83% 4.18% 4.29%*
Portfolio turnover rate 13% 26% 23% 2%
Average broker commission rate (a) $ 0.0593 $ 0.0594 N/A N/A
#Computed after giving effect to the voluntary partial
waiver of management fee by MassMutual, which
terminated May 1, 1997. Without this partial waiver
of fees by MassMutual, the ratio of expenses to
average daily net assets would have been: 0.5514%* 0.5522% 0.5514% 0.5650%*
</TABLE>
* Annualized
** For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
@ Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
(a)Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were charged.
For fiscal years beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged.
10
<PAGE>
MassMutual Value Equity Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
CLASS S
----------------------------------------------------------
SIX MONTHS ENDED
6/30/97 YEAR ENDED YEAR ENDED PERIOD ENDED
(UNAUDITED) 12/31/96 12/31/95 12/31/94**
---------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.49 $ 12.63 $ 9.91 $ 10.00
---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.15 0.34 0.31 0.08
Net realized and unrealized gain (loss) on investments 2.26 2.22 2.82 (0.09)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 2.41 2.56 3.13 (0.01)
---------- ---------- ---------- ----------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -- (0.34) (0.31) (0.08)
From net realized gains -- (0.39) (0.10) --
---------- ---------- ---------- ----------
Total distributions -- (0.73) (0.41) (0.08)
---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 16.87 $ 14.46 $ 12.63 $ 9.91
========== ========== ========== ==========
Total Return@ 16.67% 20.24% 31.54% (0.10)%
RATIOS / SUPPLEMENTAL DATA:
Net assets, end of period (000's) $2,939,063 $2,485,743 $2,125,248 $1,563,563
Net expenses to average daily net assets# 0.5226%* 0.5067% 0.5067% 0.5067%*
Net investment income to average daily net assets 1.99%* 2.42% 2.72% 3.20%*
Portfolio turnover rate 9% 13% 16% 3%
Average broker commission rate (a) $ 0.0593 $ 0.0585 N/A N/A
# Computed after giving effect to the voluntary partial
waiver of management fee by MassMutual, which
terminated May 1, 1997. Without this partial waiver
of fees by MassMutual, the ratio of expenses to
average daily net assets would have been: 0.5521%* 0.5534% 0.5528% 0.5681%*
</TABLE>
* Annualized
** For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
@ Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
(a) Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were
charged. For fiscal years beginning on or after September 1, 1995, a Fund is
required to disclose its average commission rate per share for security
trades on which commissions are charged.
11
<PAGE>
MassMutual Small Cap Value Equity Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
CLASS S
-------------------------------------------------------
SIX MONTHS ENDED
6/30/97 YEAR ENDED YEAR ENDED PERIOD ENDED
(UNAUDITED) 12/31/96 12/31/95 12/31/94**
------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.43 $ 11.44 $ 9.69 $ 10.00
---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.07 0.31 0.19 0.04
Net realized and unrealized gain (loss) on investments 2.10 2.29 1.75 (0.31)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 2.17 2.60 1.94 (0.27)
---------- ---------- ---------- ----------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -- (0.30) (0.19) (0.04)
From net realized gains -- (0.31) -- --
---------- ---------- ---------- ----------
Total distributions -- (0.61) (0.19) (0.04)
---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 15.60 $ 13.43 $ 11.44 $ 9.69
========== ========== ========== ==========
Total Return@ 16.16% 22.82% 20.01% (2.66)%
RATIOS / SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 565,662 $ 456,935 $ 380,398 $ 310,789
Net expenses to average daily net assets# 0.6257%* 0.6110% 0.6110% 0.6110%*
Net investment income to average daily net assets 1.01%* 2.40% 1.78% 1.78%*
Portfolio turnover rate 17% 28% 28% 4%
Average broker commission rate (a) $ 0.0543 $ 0.0585 N/A N/A
# Computed after giving effect to the voluntary partial
waiver of management fee by MassMutual, which
terminated May 1, 1997. Without this partial waiver
of fees by MassMutual, the ratio of expenses to
average daily net assets would have been: 0.6530%* 0.6546% 0.6553% 0.6681%*
</TABLE>
* Annualized
** For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
@ Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth
in their respective Plan Documents. Total return figures would be lower for
the periods presented if they reflected these charges.
(a) Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were
charged. For fiscal years beginning on or after September 1, 1995, a Fund
is required to disclose its average commission rate per share for security
trades on which commissions are charged.
12
<PAGE>
MassMutual International Equity Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
CLASS S
----------------------------------------------------------
SIX MONTHS ENDED
6/30/97 YEAR ENDED YEAR ENDED PERIOD ENDED
(UNAUDITED) 12/31/96 12/31/95 12/31/94**
---------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.11 $ 9.58 $ 9.28 $ 10.00
--------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 0.07 0.06 0.07 0.00
Net realized and unrealized gain (loss) on investments
and foreign currency 1.77 1.71 0.41 (0.72)
--------- --------- --------- ---------
Total income (loss) from investment operations 1.84 1.77 0.48 (0.72)
--------- --------- --------- ---------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -- (0.24) (0.07) --
In excess of net investment income -- -- (0.11) --
--------- --------- --------- ---------
Total distributions -- (0.24) (0.18) --
--------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 12.95 $ 11.11 $ 9.58 $ 9.28
========= ========= ========= =========
Total Return@ 16.56% 18.51% 5.13% (7.20)%
RATIOS / SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 515,778 $ 356,311 $ 220,718 $ 150,199
Net expenses to average daily net assets# 1.0229%* 1.0020% 1.0020% 1.0020%*
Net investment income to average daily net assets 1.26%* 0.59% 0.76% 0.04%*
Portfolio turnover rate 36% 58% 121% 18%
Average broker commission rate (a) $ 0.0058 $ 0.0254 N/A N/A
# Computed after giving effect to the voluntary partial
waiver of management fee by MassMutual, which
terminated May 1, 1997. Without this partial waiver
of fees by MassMutual, the ratio of expenses to
average daily net assets would have been: 1.0468%* 1.0718% 1.0920% 1.0877%*
</TABLE>
* Annualized
** For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
@ Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
(a) Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were
charged. For fiscal years beginning on or after September 1, 1995, a Fund is
required to disclose its average commission rate per share for security
trades on which commissions are charged.
LINE OF CREDIT
On January 11, 1996, the Trust, on behalf of each Fund, entered into a
discretionary line of credit agreement with PNC Bank, N.A. Each Fund may borrow
under the line of credit, provided that the Trust's borrowings do not exceed
$50,000,000 in the aggregate at any one time. Interest is charged based on
outstanding borrowings at the Federal Funds Rate plus 0.45%. Only the
International Equity Fund utilized the line of credit during the year ended
December 31, 1996 and the six months ended June 30, 1997. The table below sets
forth information regarding the International Equity Fund's utilization of the
line of credit during these periods.
<TABLE>
<CAPTION>
AVERAGE NUMBER OF AVERAGE AMOUNT OF DEBT
AMOUNT OF DEBT AVERAGE AMOUNT OF INTERNATIONAL EQUITY FUND'S PER SHARE OF
OUTSTANDING AT DEBT OUTSTANDING SHARES OUTSTANDING INTERNATIONAL EQUITY FUND
PERIOD END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
-------- -------------- ----------------- --------------------------- -------------------------
<S> <C> <C> <C> <C>
Year ended
December 31,
1996 $1,600,000 $3,517,944 27,151,338 $0.13
Six months
ended June 30,
1997 $ 0 $6,904,444 35,867,968 $0.19
</TABLE>
13
<PAGE>
THE TRUST
The Trust is an openend, management investment company designed to offer
investors both the opportunity to pursue long-term investment goals and the
flexibility to respond to changes in their investment objectives and economic
and market conditions. This Prospectus describes seven separate, diversified
series of shares of the Trust (the "Funds"), each of which has three classes of
shares. For information regarding the classes of shares of the Funds, see "How
to Purchase, Exchange, and Redeem Shares" below.
The Trust is organized under the laws of The Commonwealth of Massachusetts as a
Massachusetts business trust pursuant to an Agreement and Declaration of Trust
dated May 28, 1993, as amended from time to time (the "Declaration of Trust").
Each share of a Fund represents an investment in that Fund's portfolio of
securities. The value of an investment in a Fund will vary as the value of the
underlying portfolio increases or decreases. Dividends paid for a class of a
Fund will vary in relation to the expenses each class incurs.
The Board of Trustees of the Trust is generally responsible for management of
the business and affairs of the Trust. Trustees formulate the general policies
of the Trust and the Funds, approve contracts and authorize Trust officers to
carry out the decisions of the Board. As Adviser and Sub-Advisers to the Funds,
MassMutual, Babson and HarbourView may be considered part of the management of
the Trust. For more information concerning the management of the Trust,
reference should be made to the Statement of Additional Information.
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
Each Fund has a separate investment objective, which may not be changed without
the vote of a majority of that Fund's outstanding voting shares./1/ There can
be no assurance that a Fund will achieve its investment objective; the success
of a Fund depends to a great extent upon changes in market conditions.
(1) MASSMUTUAL PRIME FUND
THE INVESTMENT OBJECTIVE OF THE PRIME FUND IS TO MAXIMIZE CURRENT INCOME TO THE
EXTENT CONSISTENT WITH LIQUIDITY AND THE PRESERVATION OF CAPITAL BY INVESTING IN
A DIVERSIFIED PORTFOLIO OF MONEY MARKET INSTRUMENTS.
The Fund invests in high quality debt instruments having a remaining maturity
not exceeding 397 days. It is the Fund's policy to invest in the following
types of short-term instruments:
(a) Commercial paper and obligations of corporate issuers that at the date of
acquisition are rated in one of the two highest ratings of at least one
nationally recognized statistical rating organization ("NRSRO") or, if
unrated, are judged by MassMutual to be of equivalent quality./2/
(b) U.S. Government Securities./3/
(c) Bank participation certificates that represent interests in all or part
of specific bank loans, provided that at the date of acquisition (1) they
have a remaining maturity of 397 days or less; and (2) each of the
underlying loans is made to an issuer of securities rated in one of the
two highest ratings of at least one NRSRO or, if unrated, are judged by
MassMutual to be of equivalent quality.
(d) Certificates of deposit and bankers' acceptances of banks and savings and
loan associations having deposits of at least $1 billion as of their most
recently published financial statements.
(e) Obligations of foreign issuers, payable in U.S. dollars, provided that no
such investment will be made if as a result more than 25% of the Fund's
total assets would be invested in such securities.
The Fund will make portfolio investments primarily in response to changing
economic and money market conditions and trends. Trading activity is expected to
be low. It is anticipated, however, that from time to time the Fund will take
advantage of temporary disparities in the yield relationships among the
different segments of the money market or among particular instruments within
the same segment of the market to make purchases and sales when management deems
that such transactions will improve the yield or the quality of the portfolio.
The Fund is not a money market fund as defined in Rule 2a-7 under the Investment
Company Act of 1940 (the "1940 Act"). The portfolio of the Fund is managed by
Mary E. Wilson, Senior Managing Director of MassMutual, with which she has been
associated since 1982.
(2) MASSMUTUAL SHORT-TERM BOND FUND
THE INVESTMENT OBJECTIVE OF THE SHORT-TERM BOND FUND IS TO ACHIEVE A HIGH TOTAL
RATE OF RETURN PRIMARILY FROM CURRENT INCOME WHILE MINIMIZING FLUCTUATIONS IN
CAPITAL VALUES BY INVESTING PRIMARILY IN A DIVERSIFIED PORTFOLIO OF SHORT-TERM
INVESTMENT GRADE FIXED INCOME SECURITIES.
- ----------------------
/1/ As used in this Prospectus, a majority of the outstanding voting shares of
any Fund means the lesser of (a) 67% of that Fund's outstanding shares present
at a meeting of shareholders if more than 50% of the outstanding shares are
present in person or by proxy, or (b) more than 50% of that Fund's outstanding
shares.
/2/ For a description of the ratings of two NRSROs. Standard & Poor's Ratings
Group ("S&P") and Moody's Investors Service, Inc. ("Moody's"), see the Appendix
to the Statement of Additional Information. For example, the two highest ratings
of Moody's for commercial paper are P-1 and P-2.
/3/ See the Glossary for a definition of U.S. Government Securities.
14
<PAGE>
The Fund invests in investment grade fixed income securities. Investment grade
fixed income securities are securities that at the date of acquisition are rated
in one of the four highest ratings of at least one NRSRO or, if unrated, are
judged by MassMutual to be of equivalent quality./4/ For example, the Fund may
invest in the following types of debt instruments:
(a) Corporate securities.
(b) U.S. Government Securities.
(c) Obligations issued or guaranteed as to principal and interest by the
Government of Canada, a Province of Canada, or any instrumentality or
political subdivision thereof, provided that no such investment will be
made if as a result more than 25% of the Fund's total assets would be
invested in such securities.
(d) Obligations (including certificates of deposit, time deposits or bankers'
acceptances) of U.S. or Canadian chartered banks having total deposits in
excess of $1 billion, U.S. branches of foreign banks having total
deposits in excess of $1 billion, U.S. savings and loan associations
having total deposits in excess of $1 billion, and Eurodollar
certificates of deposit issued by foreign branches of U.S. banks having
total deposits in excess of $1 billion.
(e) Publicly traded debt securities issued or guaranteed by a national or
state bank or bank holding company (as defined in the Federal Bank
Holding Company Act, as amended) that at the date of acquisition are
rated in one of the three highest ratings of at least one NRSRO or, if
unrated, are judged by MassMutual to be of equivalent quality, and
certificates of deposit of such banks.
(f) Commercial paper that at the date of investment is rated in the two
highest ratings of at least one NRSRO or, if unrated, is judged by
MassMutual to be of equivalent quality.
(g) Bank participation certificates that represent interests in all or part
of specific bank loans, provided that at the date of investment each of
the underlying loans is made to an issuer of securities rated in one of
the two highest short-term debt ratings of at least one NRSRO or, if
unrated, are judged by MassMutual to be of equivalent quality.
(h) Certificates of deposit and bankers' acceptances of banks and savings and
loan associations having deposits of at least $1 billion as of their most
recently published financial statements.
(i) Securities of foreign issuers (other than those listed in (c) or (d)
above) that meet credit quality requirements similar to those above,
provided that no such investment will be made if as a result more than
25% of the Fund's total assets would be invested in such securities.
Under normal market conditions, the Fund generally will have an average
effective portfolio Duration of no more than three years./5/ Portfolio Duration
changes may be accomplished primarily through the reinvestment of cash flows and
selective trading. Neither market timing nor interest rate anticipation methods
are employed in managing the Fund. The portfolio of the Fund is managed by
Ronald E. Desautels, Managing Director of MassMutual, with which he has been
associated since 1989.
(3) MASSMUTUAL CORE BOND FUND
THE INVESTMENT OBJECTIVE OF THE CORE BOND FUND IS TO ACHIEVE A HIGH TOTAL RATE
OF RETURN CONSISTENT WITH PRUDENT INVESTMENT RISK AND THE PRESERVATION OF
CAPITAL BY INVESTING PRIMARILY IN A DIVERSIFIED PORTFOLIO OF INVESTMENT GRADE
FIXED INCOME SECURITIES.
The Fund invests in investment grade, publicly traded, readily marketable, fixed
income securities of such maturities as MassMutual deems appropriate from time
to time in light of market conditions and prospects. Investment grade fixed
income securities are securities that at the date of acquisition are rated in
one of the four highest ratings of at least one NRSRO or, if unrated, are judged
by MassMutual to be of equivalent quality. For example, the Fund may invest in
the following types of debt instruments:
(a) Corporate securities.
(b) U.S. Government Securities.
(c) Obligations issued or guaranteed as to principal and interest by the
Government of Canada, a Province of Canada, or any instrumentality or
political subdivision thereof, provided that no such investment will be
made if as a result more than 25% of the Fund's total assets would be
invested in such securities.
- ------------------
/4/ For example, the four highest ratings of Moody's for debt obligations are
Aaa, Aa, A, and Baa (including Baa3).
/5/ See the Glossary for a definition of Duration.
15
<PAGE>
(d) Obligations (including certificates of deposit, time deposits or bankers'
acceptances) of U.S. or Canadian chartered banks having total deposits in
excess of $1 billion, U.S. branches of foreign banks having total
deposits in excess of $1 billion, U.S. savings and loan associations
having total deposits in excess of $1 billion, and Eurodollar
certificates of deposit issued by foreign branches of U.S. banks having
total deposits in excess of $1 billion.
(e) Publicly traded debt securities issued or guaranteed by a national or
state bank or bank holding company (as defined in the Federal Bank
Holding Company Act, as amended) having a rating within the three highest
ratings as determined by at least one NRSRO or, if unrated, are judged by
MassMutual to be of equivalent quality, and certificates of deposit of
such banks.
(f) Securities of foreign issuers (other than those listed in (c) or (d)
above) that at the date of acquisition are rated in one of the four
highest ratings of at least one NRSRO or, if unrated, are judged by
MassMutual to be of equivalent quality, provided that no such investment
will be made if as a result more than 25% of the Fund's total assets
would be invested in such securities.
Normally, the Fund's portfolio Duration will range from four to seven years.
Portfolio Duration changes will be accomplished primarily through the
reinvestment of cash flows and selective trading. The portfolio of the Fund is
managed by Mary E. Wilson, Senior Managing Director of MassMutual, with which
she has been associated since 1982.
(4) MASSMUTUAL BALANCED FUND
THE INVESTMENT OBJECTIVE OF THE BALANCED FUND IS TO ACHIEVE A HIGH TOTAL RATE OF
RETURN OVER AN EXTENDED PERIOD OF TIME CONSISTENT WITH THE PRESERVATION OF
CAPITAL VALUES BY INVESTING IN A DIVERSIFIED PORTFOLIO OF EQUITY SECURITIES,
FIXED INCOME SECURITIES AND MONEY MARKET INSTRUMENTS.
The Fund invests in three market sectors:
THE PRIME SECTOR - The Prime Sector invests in accordance with the
investment objective and policies of the Prime Fund.
THE CORE BOND SECTOR - The Core Bond Sector invests in accordance with the
investment objective and policies of the Core Bond Fund.
THE VALUE EQUITY SECTOR - The Value Equity Sector invests in accordance
with the investment objective and policies of the Value Equity Fund.
The Fund adjusts the mix of investments among its three market sectors to
capitalize on perceived variations in return potential produced by the
interaction of changing financial market and economic conditions. The Fund
expects that such adjustments normally will be made in a gradual manner over a
period of time. Under normal circumstances at least 25% of the Fund's total
assets will be invested in senior fixed income securities (including short-term
money market instruments). In addition, under normal circumstances, no
investment will be made that would result in more than 35% of the Fund's net
assets being invested in the Prime Sector, more than 35% in the Core Bond Sector
or more than 65% in the Value Equity Sector. In unusual circumstances, the Fund
may invest up to 70% of its total assets in the Equity Sector or up to 50% of
its total assets in the Bond Sector. MassMutual is the Fund's adviser and
Babson is the Sub-Adviser to the Value Equity Sector. The portfolio of the Fund
is managed by a committee of MassMutual and Babson investment professionals.
(5) MASSMUTUAL VALUE EQUITY FUND
THE INVESTMENT OBJECTIVE OF THE VALUE EQUITY FUND IS TO ACHIEVE LONG-TERM GROWTH
OF CAPITAL AND INCOME BY INVESTING PRIMARILY IN A DIVERSIFIED PORTFOLIO OF
EQUITY SECURITIES OF LARGER WELL-ESTABLISHED COMPANIES.
The Fund invests primarily in common stocks, securities convertible into common
stocks, and other equity securities (such as warrants and stock rights) which
are normally cash dividend-paying and listed on a national securities exchange
or traded in the over-the-counter market. The issuers of securities in which the
Fund will invest generally are companies with market capitalizations in excess
of $2 billion and a history of operations of five years or more. MassMutual is
the Fund's adviser and its Sub-Adviser is Babson.
The Fund utilizes a value-oriented strategy in making investment decisions. As
such, investments are made in securities of companies which, in the opinion of
Babson, are of high quality, offer above-average dividend growth potential and
are attractively valued in the marketplace. Investment quality and dividend
growth potential are evaluated using fundamental analysis emphasizing each
issuer's historical financial performance, balance sheet strength, management
capability and competitive position. Various valuation parameters are examined
to determine the attractiveness of individual securities. On average, the
Fund's portfolio securities will have price/earnings ratios and price/book value
ratios below those of the Standard & Poor's 500 Composite Stock Price Index (the
"S&P 500 Stock Index"). Consideration also is given to securities of companies
whose current prices do not adequately reflect, in the opinion of Babson, the
ongoing business value of the enterprise. The Fund's portfolio is managed by
James W. MacAllen, Executive Vice President and Chief Investment Officer of
Babson. Mr. MacAllen has been associated with Babson since January 1, 1996.
During 1996, Mr. MacAllen was also Senior Vice President of Concert Capital
Management, Inc., which was then an indirect subsidiary of MassMutual ("Concert
Capital"), and, as such, managed the portfolio of the Fund. Formerly, Mr.
MacAllen was associated with Hagler, Mastrovita and Hewitt and prior to that was
President and Chief Investment Officer of Wilmington Capital Management.
16
<PAGE>
(6) MASSMUTUAL SMALL CAP VALUE EQUITY FUND
THE INVESTMENT OBJECTIVE OF THE SMALL CAP VALUE EQUITY FUND IS TO ACHIEVE
LONG-TERM GROWTH OF CAPITAL AND INCOME BY INVESTING PRIMARILY IN A DIVERSIFIED
PORTFOLIO OF EQUITY SECURITIES OF SMALLER COMPANIES.
The Fund invests primarily in common stocks, securities convertible into common
stocks and other equity securities (such as warrants and stock rights) which are
issued by companies with a market capitalization of less than $750 million and
which are listed on a national securities exchange or traded in the
over-the-counter market. MassMutual is the Fund's adviser and its Sub-Adviser
is Babson.
The Fund utilizes a value-oriented strategy in making investment decisions. As
such, investments are made in securities of companies that, in the opinion of
Babson, are of high quality or possess a unique product, market position or
operating characteristics which result in above-average levels of profitability
or superior growth potential and are attractively valued in the marketplace.
Traditional fundamental research techniques are employed to determine investment
quality and growth potential, emphasizing each issuer's historic financial
performance, balance sheet strength, management capability and competitive
position. Valuation parameters are examined to determine the attractiveness of
individual securities. On average, the Fund's holdings will have price/earnings
ratios and price/book value ratios below those of the S&P 500 Stock Index.
Consideration also is given to securities of companies whose current prices do
not adequately reflect, in the opinion of Babson, the ongoing business value of
the enterprise.
The Fund may purchase securities with above-average volatility relative to
indices like the S&P 500 Stock Index. While such volatility frequently may
involve the opportunity for greater gain, it also generally involves greater
risk of loss and, as a result, the Fund's shares are suitable only for those
investors who are in a financial position to assume such risk. The Fund's
portfolio is managed by George M. Ulrich, Senior Vice President of Babson. Mr.
Ulrich has been associated with Babson since 1996, Concert Capital (as Senior
Vice President) from 1993 through 1996 and with MassMutual from 1983 to
1993.
(7) MASSMUTUAL INTERNATIONAL EQUITY FUND
THE INVESTMENT OBJECTIVE OF THE INTERNATIONAL EQUITY FUND IS TO ACHIEVE A HIGH
TOTAL RATE OF RETURN OVER THE LONG TERM BY INVESTING IN A DIVERSIFIED PORTFOLIO
OF FOREIGN AND DOMESTIC EQUITY SECURITIES.
The Fund invests primarily in common stocks, securities convertible into common
stocks, and other equity securities, (such as warrants and stock rights). The
Fund generally will have at least 75% of its total assets invested in foreign
securities, including securities of foreign issuers represented by American
Depository Receipts or traded in the U.S. over-the-counter market or listed on a
U.S. securities exchange. Under normal market conditions, the Fund's assets
will be invested in securities traded in markets in at least three different
countries, excluding the United States. In an uncertain market or economic
environment when it would be appropriate to maintain a defensive position, the
Fund may invest up to 100% of its assets in debt securities, such as rated or
unrated bonds and debentures, cash equivalents and preferred stocks. It is
expected that short-term debt securities (i.e., those maturing in one year or
less from the date of purchase) will be emphasized for defensive or liquidity
purposes, since such securities usually may be disposed of quickly at prices not
involving significant losses. When circumstances warrant, securities may be
sold without regard to the length of time held, although short-term trading may
increase brokerage costs borne by the Fund.
The share price of the International Equity Fund will reflect the movements of
both the prices of the portfolio securities and the currencies in which the
securities are denominated. Depending upon the extent of the Fund's investments
abroad, changes in the relative value of the U.S. dollar to the securities'
denominated currencies may have a positive or negative impact on the Fund's
share price.
The Fund's investment policies involve special risks. Risks of investing in
foreign securities include foreign taxation, changes in currency rates or
currency blockage, currency exchange costs, and differences between domestic and
foreign legal, accounting, auditing, brokerage and economic standards. See
"Investment Practices Of The Funds And Related Risks" below and "Foreign
Securities" in the Statement of Additional Information for further discussion of
the possible risks and rewards of investing in foreign securities. MassMutual
is the Fund's adviser and its Sub-Adviser is HarbourView. The portfolio of the
Fund is managed by a committee composed of HarbourView investment
professionals.
INVESTMENT PRACTICES OF THE FUNDS AND RELATED RISKS
The Funds may invest in a wide range of investments and engage in various
investment-related transactions and practices. These practices are pursuant to
non-fundamental policies and therefore may be changed by the Board of Trustees
without the consent of shareholders. Some of the more significant practices are
discussed below.
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS
Each Fund may engage in repurchase agreements and reverse repurchase agreements.
A repurchase agreement is a contract pursuant to which a Fund agrees to purchase
a security and simultaneously agrees to resell it at an agreed-upon price at a
stated time, thereby determining the yield during the Fund's holding period. A
reverse repurchase agreement is a contract pursuant to which a Fund agrees to
sell a security and simulta-
17
<PAGE>
neously agrees to repurchase it at an agreed-upon price at a stated time. For a
more detailed description of repurchase agreements and reverse repurchase
agreements and related risks, see the Statement of Additional Information.
SECURITIES LENDING
Each Fund may seek additional income by making loans of portfolio securities of
not more than 33% of its total assets taken at current value. Although lending
portfolio securities may involve the risk of delay in recovery of the securities
loaned or possible loss of rights in the collateral should the borrower fail
financially, loans will be made only to borrowers deemed by the Adviser or
Sub-Advisor to be in good standing.
HEDGING INSTRUMENTS AND DERIVATIVES
Each Fund may buy or sell forward contracts and other similar instruments and
may engage in foreign currency transactions (collectively referred to as
"hedging instruments" or "derivatives"), as more fully discussed in the
Statement of Additional Information. Derivatives normally are used by a
portfolio manager to (a) protect against possible declines in the market value
of a Fund's portfolio resulting from downward trends in the relevant markets
(for example, in the debt securities markets generally due to increasing
interest rates); (b) protect a Fund's unrealized gains or limit its unrealized
losses; and (c) manage a Fund's exposure to changing security prices.
Derivatives also may be used to establish a position in the debt or equity
securities markets as a temporary substitute for purchasing or selling
particular debt or equity securities and to manage the effective maturity or
Duration of fixed income securities in a Fund's portfolio.
(1) Forward Contracts - Each Fund may purchase or sell securities on a "when
issued" or delayed delivery basis or may purchase or sell securities on a
forward commitment basis ("forward contracts"). When such transactions are
negotiated, the price is fixed at the time of commitment, but delivery and
payment for the securities can take place a month or more after the
commitment date. The securities so purchased or sold are subject to market
fluctuations and no interest accrues to the purchaser during this period.
While a Fund also may enter into forward contracts with the initial
intention of acquiring securities for its portfolio, it may dispose of a
commitment prior to settlement if the Adviser or Sub-Adviser deems it
appropriate to do so.
(2) Currency Transactions/6/ - The International Equity Fund may, but will not
necessarily, engage in foreign currency transactions with counter-parties in
order to hedge the value of portfolio holdings denominated in particular
currencies against fluctuations in relative value. The Short-Term Bond
Fund, the Core Bond Fund and the Core Bond Sector of the Balanced Fund may
invest in foreign securities that are not denominated in U.S. dollars only
if the Fund contemporaneously enters into a foreign currency transaction to
hedge the currency risk associated with the particular foreign
security.
Certain limitations apply to the use of forward contracts by the Funds. For
example, a Fund will not enter into a forward contract if as a result more than
25% of its total assets would be held in a segregated account covering such
contracts. For more information about forward contracts and currency
transactions and the extent to which tax considerations may limit a Fund's use
of such instruments, see the Statement of Additional Information.
There can be no assurance that the use of hedging instruments and derivatives by
a Fund will assist it in achieving its investment objective. Risks inherent in
the use of these instruments include: (a) the risk that interest rates and
securities prices will not move in the direction anticipated; (b) the imperfect
correlation between the prices of a forward contract and the price of the
securities being hedged; and (c) the fact that skills needed to use these
strategies are different from those needed to select portfolio securities. As
to forward contracts, the risk exists that the counterparty to the transaction
will be incapable of meeting its commitment, in which case the desired hedging
protection may not be obtained and the Fund may be exposed to risk of loss. As
to currency transactions, risks exist that purchases and sales of currency and
related instruments can be negatively affected by government exchange controls,
blockages, and manipulations or exchange restrictions imposed by governments
which could result in losses to the Fund if it is unable to deliver or receive
currency or funds in settlement of obligations. It also could cause hedges it
has entered into to be rendered useless, resulting in full currency exposure as
well as incurring transaction costs.
- ----------------------
/6/ See the Glossary for a definition of Currency Transactions.
18
<PAGE>
RESTRICTED AND ILLIQUID SECURITIES
None of the Funds currently expect to invest in restricted or illiquid
securities. However, each Fund may invest not more than 15% of its net assets
in illiquid securities. These policies do not limit the purchase of securities
eligible for resale to qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended, provided that such securities are
determined to be liquid by the Board of Trustees, or by the Adviser or
Sub-Adviser pursuant to Board-approved guidelines. If there is a lack of trading
interest in particular Rule 144A securities, a Fund's holdings of those
securities may be illiquid, resulting in the possibility of undesirable delays
in selling these securities at prices representing fair value.
FOREIGN SECURITIES
Investments in foreign securities offer potential benefits not available from
investing solely in securities of domestic issuers, such as the opportunity to
invest in foreign issuers that appear to offer growth potential, or to invest in
foreign countries with economic policies or business cycles different from those
of the United States or foreign stock markets that do not move in a manner
parallel to U.S. markets, thereby diversifying risks of fluctuations in
portfolio value.
Investments in foreign securities entail certain risks, such as the possibility
of one or more of the following: imposition of dividend or interest withholding
or confiscatory taxes; currency blockages or transfer restrictions;
expropriation, nationalization, military coups or other adverse political or
economic developments; less government supervision and regulation of securities
exchanges, brokers and listed companies, and the difficulty of enforcing
obligations in other countries. Certain markets may require payment for
securities before delivery. A Fund's ability and decisions to purchase and sell
portfolio securities may be affected by laws or regulations relating to the
convertibility of currencies and repatriation of assets. Further, it may be
more difficult for a Fund's agents to keep currently informed about corporate
actions which may affect the prices of portfolio securities. Communications
between the United States and foreign countries may be less reliable than within
the United States, thus increasing the risk of delayed settlements of portfolio
transactions or loss of certificates for portfolio securities.
PORTFOLIO MANAGEMENT
MassMutual, Babson and HarbourView may use trading as a means of managing the
portfolios of the Funds in seeking to achieve their investment objectives.
Transactions will occur when the Adviser or Sub-Adviser believe that the trade,
net of transaction costs, will improve interest income or capital appreciation
potential, or will lessen capital loss potential. Whether the goals discussed
above will be achieved through trading depends on the Adviser's or Sub-Advisor's
ability to evaluate particular securities and anticipate relevant market
factors, including interest rate trends and variations from such trends. If
such evaluations and expectations prove to be incorrect, a Fund's income or
capital appreciation may be reduced and its capital losses may be increased. In
addition, high turnover in any Fund could result in additional brokerage
commissions to be paid by the Fund. See also "Distribution And Taxation"
below.
The Funds may pay brokerage commissions to Advest, Inc. and Jefferies & Co.,
Inc. A trustee of the Trust is a director of the respective parent companies of
Advest, Inc. and Jefferies & Co., Inc.
CASH POSITIONS
Each Fund may hold cash or cash equivalents to provide for expenses and
anticipated redemption payments and so that an orderly investment program may be
carried out in accordance with the Fund's investment policies. To provide
liquidity or for temporary defensive purposes, each Fund may invest in
investment grade debt securities, government obligations, or money market
instruments.
INDUSTRY DIVERSIFICATION
As a general rule, a Fund will not acquire securities of issuers in any one
industry (as determined by the Board of Trustees) if as a result more than 25%
of the value of the total assets of the Fund would be invested in such industry,
with the following exceptions:
(1) There is no limitation for U.S. Government Securities.
(2) In the case of the Prime Fund and the Short-Term Bond Fund, there is no
industry concentration limitation for certificates of deposit and bankers'
acceptances.
CERTAIN DEBT SECURITIES
While the Funds, except for the Prime Fund, may invest in investment grade debt
securities that are rated in the fourth highest rating category by at least one
NRSRO (e.g., Baa3 by Moody's) or, if unrated, are judged by MassMutual to be of
equivalent quality, such securities have speculative characteristics, are
subject to greater credit risk, and may be subject to greater market risk than
higher rated investment grade securities.
FUNDAMENTAL INVESTMENT RESTRICTIONS
For a description of fundamental investment restrictions of the Funds which may
not be changed without the affirmative vote of a majority of the outstanding
voting shares of the Fund, reference should be made to the Statement of
Additional Information.
19
<PAGE>
HOW TO PURCHASE, EXCHANGE, AND REDEEM SHARES
FEATURES AND ELIGIBILITY REQUIREMENTS OF EACH CLASS
Each of the Funds offers three different classes of shares to investors: Class
A, Class Y and Class S. The different classes of a Fund's shares represent
investments in the same portfolio of securities but are subject to different
expenses and will likely have different share prices. The Class A, Class Y and
Class S shares are offered as follows.
CLASS A SHARES - Class A shares of each Fund may be purchased by: defined
contribution plans and defined benefit plans that qualify under section 401(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), with Plan
Assets/7/ in excess of $2.5 million; tax sheltered annuity plans under Code
section 403(b) with Plan Assets in excess of $2.5 million; and individual
retirement accounts described in Code section 408, the assets of which are
rolled over from qualified plans in connection with a program sponsored by the
Adviser ("Rollover IRAs"). Class A shares may also be purchased by other
institutional investors, such as deferred compensation plans described in Code
section 457, voluntary employees' beneficiary associations described in Code
section 509(c)(9), other nonqualified deferred compensation plans and other
institutional or sophisticated investors, in each case with assets in excess of
$2.5 million or which enter into an agreement with the Adviser or an affiliate
of the Adviser for those purchases. In addition, Class A shares may be offered
to present or former officers, directors, trustees and employees (and their
spouses, parents, children and siblings) of the Trust, the Adviser and its
affiliates, and retirement plans established by them for their employees.
CLASS Y SHARES - Class Y shares of each Fund may be purchased by nonqualified
deferred compensation plans where the employer sponsor enters into an
administrative services agreement with the Adviser, or an affiliate of the
Adviser, with respect to the administration of the Plan. Class Y shares may
also be purchased by defined contribution plans and defined benefit plans under
Code section 401(a), and tax sheltered annuity plans under Code section 403(b),
in each case with Plan Assets in excess of $10 million and which enter into an
administrative services or other agreement with the Adviser or an affiliate of
the Adviser. Class Y shares may also be purchased by: certain other
institutional investors with assets in excess of $10 million which enter into
an agreement with the Adviser or an affiliate of the Adviser; and other
registered investment companies managed by the Adviser or an affiliate of the
Adviser, including other series of the Trust.
CLASS S SHARES - Class S shares of each Fund are available only to separate
investment accounts of MassMutual ("SIAs") in which corporate qualified plans,
including defined contribution plans and defined benefit plans, certain
governmental plans and church or other plans, are or may be permitted to invest
pursuant to the issuance of group annuity contracts.
CLASS A SHARES - SALES CHARGES AND 12B-1 FEES
Class A shares are sold at net asset value per share without an initial sales
charge. However, if an Investor redeems any Class A shares within 12 months of
the date on which the Investor first purchased Class A shares, a contingent
deferred sales charge (called the "Class A Contingent Deferred Sales Charge")
may be deducted from the redemption proceeds. If imposed, the Class A Contingent
Deferred Sales Charge will be equal to 1.0% of the lesser of: (1) the aggregate
net asset value of the redeemed shares (not including shares purchased by
reinvestment of dividends or capital gain distributions); and (2) the original
offering price (which is the original net asset value of the redeemed shares).
The Class A Contingent Deferred Sales Charge will not exceed the aggregate
commissions paid on account of all Class A shares of all Funds such Investor
purchased subject to the Class A Contingent Deferred Sales Charge.
In determining whether a Class A Contingent Deferred Sales Charge is payable,
the Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains, and
then will redeem other shares in the order purchased.
No Class A Contingent Deferred Sales Charge is charged on exchanges of shares
under "Exchange Privileges and Procedures" (described below). However, if the
shares acquired by exchange are redeemed within 12 months of the initial
purchase of the exchanged shares, the Class A Contingent Deferred Sales Charge
will apply.
The Class A Contingent Deferred Sales Charge is waived in certain cases
described below.
WAIVERS OF THE CLASS A CONTINGENT DEFERRED SALES CHARGES FOR CERTAIN PURCHASERS.
Class A shares purchased by the following Investors are not subject to any Class
A Contingent Deferred Sales Charge:
(1) the Adviser or its affiliates;
(2) present or former officers, directors, trustees and employees (and their
spouses, parents, children and siblings) of the Trust, the Adviser and its
affiliates, and retirement plans established by them for their
employees;
- ------------
/7/ See Glossary for a definition of Plan Assets.
20
<PAGE>
(3) registered management investment companies, unit investment trusts, or
separate investment accounts of insurance companies having an agreement
with the Adviser or the Distributor for those purchases;
(4) dealers or brokers that have a sales agreement with the Distributor, if
they purchase shares for their own accounts or for retirement plans for
their employees;
(5) dealers, brokers, banks or registered investment advisers that have
entered into an agreement with the Distributor providing specifically for
the use of shares of the Fund in particular investment products made
available to their clients (those clients may be charged a transaction fee
by their dealer, broker or adviser for the purchase or sale of Fund
shares); and
(6) deferred compensation plans or other Investors, in each case if those
purchases are made through a broker or agent or other financial
intermediary that has made special arrangements with the Distributor for
those purchases.
WAIVERS OF THE CLASS A CONTINGENT DEFERRED SALES CHARGE IN CERTAIN TRANSACTIONS.
Class A shares issued or purchased in the following transactions are not subject
to the Class A Contingent Deferred Sales Charge:
(1) shares issued in plans of reorganization, such as mergers;
(2) asset acquisitions and exchange offers to which any Fund is a party;
(3) shares purchased by the reinvestment of loan repayments by a participant
in a retirement plan for which the Adviser or its affiliates acts as
sponsor; and
(4) shares purchased by the reinvestment of dividends or other distributions
reinvested from the Funds or unit investment trusts for which reinvestment
arrangements have been made with the Distributor.
WAIVERS OF THE CLASS A CONTINGENT DEFERRED SALES CHARGE FOR CERTAIN REDEMPTIONS.
The Class A Contingent Deferred Sales Charge is also waived if shares that would
otherwise be subject to the Class A Contingent Deferred Sales Charge are
redeemed in the following cases:
(1) involuntary redemptions of shares by operation of law;
(2) if, at the time of purchase of shares the dealer agrees in writing to
accept the dealer's portion of the sales commission in installments of
1/12th of the commission per month (and no further commission will be
payable if the shares are redeemed within 12 months of purchase); and
(3) for distributions from Plans/8/ for any of the following purposes: (a)
following the death or disability (as defined in the Code) of the
participant or beneficiary (the death or disability must occur after the
participant's account was established); (b) to return excess
contributions; (c) to return contributions made due to a mistake of fact;
(d) hardship withdrawals, as defined in the Plan; (e) under a Qualified
Domestic Relations Order, as defined in the Code; (f) to meet the minimum
distribution requirements of the Code; (g) to establish "substantially
equal periodic payments" as described in Section 72(t) of the Code; (h)
for retirement distributions or loans to participants or beneficiaries;
(i) separation from service; (j) participant directed redemptions to
purchase shares of a mutual fund (other than a fund managed by the Adviser
or its subsidiaries) offered as an investment option in a Plan in which
the Funds are also offered as investment options under a special
arrangement with the Adviser or the Distributor; or (k) Plan termination
or "in service distributions", if the redemption proceeds are rolled over
directly to a Rollover IRA, the assets of which are invested in the
Trust.
CLASS A SERVICE PLAN. Pursuant to a Rule 12b-1 Plan adopted by the Trust. Class
A shares of each Fund pay a service fee at the annual rate of .25% of the Fund's
aggregate average net assets attributable to the Class A shares. The Trust's
Adviser receives the service fees and may pay all or a portion of them to
brokers and other financial intermediaries, including the Distributor or
Sub-Distributor, for providing services to Investors in Class A shares.
CLASS Y SHARES - NO SALES CHARGES
Class Y shares of each Fund are not subject to front-end sales charges.
Therefore, 100% of an Investor's money is invested in the Fund or Funds of its
choice. In addition, Class Y shares of each Fund are not subject to deferred
sales charges or to any distribution or service fees.
CLASS S SHARES - NO SALES CHARGES
SIAs purchase Class S shares directly from the Fund without a front-end sales
charge. Therefore, 100% of an SIA Investor's money is invested in the Fund or
Funds of its choice. In addition, Class S shares of each Fund are not subject
to any deferred sales charges or any distribution or service fees.
- ----------------
/8/ See Glossary for a definition of Plans.
21
<PAGE>
PURCHASE OF SHARES
Shares of the Trust are offered on each day the New York Stock Exchange ("NYSE")
is open for trading (a "Business Day"). Purchase orders received by the
Transfer Agent from MassMutual (as servicing agent of the Distributor) on a
Business Day prior to the close of the NYSE (normally, 4:00 p.m. Eastern Time)
will be processed based on that day's closing net asset value.
Plan Investors purchasing group annuity contracts from MassMutual which have one
or more of the Funds as investment options under their Plans ("Group Annuity
Investors") and Rollover IRAs must place their purchase orders with MassMutual
(as servicing agent of the Distributor) at its home office and must be
accompanied by sufficient funds. Acceptable methods of payment include checks,
federal funds wires, and automated clearing house transactions ("ACH").
MassMutual, on behalf of the Distributor, will not transmit a purchase order to
the Trust's Transfer Agent until MassMutual has determined that the purchase
order is in good form. Generally, a purchase order will be determined by
MassMutual to be in good form if such order: (1) includes all information and
documentation necessary to make appropriate Investor, Plan, trustee and/or Plan
Participant (if applicable) allocations to the various Funds and/or other
investment options under the Plan and (2) is received by MassMutual at its home
office prior to the close of the NYSE. Purchase orders by wire will be in good
form only upon receipt by MassMutual of: (1) immediately available funds,
deposited to the appropriate MassMutual account; and (2) a confirmation of the
wire receipt. Any order to purchase Fund shares which is received by MassMutual
after the close of the NYSE on a Business Day will be transmitted to the Trust's
Transfer Agent on the next Business Day. For more specific information regarding
what information and documentation are necessary for MassMutual to determine
that a purchase order is in good form with respect to a particular plan, Plan
Investors should refer to Plan Documents./9/
For non-qualified deferred compensation plans eligible to purchase Class Y
shares that have entered into an administrative services agreement with the
Adviser, Class Y shares will be purchased directly by the Plan's trustee
pursuant to the terms of the administrative services agreement. Investors Bank &
Trust Company may serve as a Plan's trustee under the terms of the
administrative services agreement. Other Investors eligible to Purchase Class A
and Class Y shares that have entered into an administrative services or other
agreement with the Adviser must place purchase orders in accordance with the
terms of such administrative services or other agreement. All other Investors
must place purchase orders with the Distributor unless the Investor has entered
into an agreement permitting direct purchases from the Trust.
The sale of Trust shares will be suspended during any period when the
determination of net asset value is suspended. The sale of Trust shares also
may be suspended by the Board of Trustees whenever the Board determines that it
is in the Trust's best interest to do so. The Trust, in its complete
discretion, may reject any order for purchase of its shares.
EXCHANGE PRIVILEGES AND PROCEDURES
Investors have the privilege of exchanging shares of one Fund for the same class
of shares of another Fund, subject to the provisions of Plan Documents and
applicable state insurance laws. However, exchanges may be restricted or
refused by a Fund if, in the opinion of the Adviser: (1) an Investor has engaged
in excessive trading; (2) the Fund receives or anticipates simultaneous orders
affecting significant portions of the Fund's assets; or (3) a pattern of
exchanges coincides with a "market timing" strategy that might be disruptive to
the Fund. Each Fund also reserves the right to refuse exchange purchases by any
person or group of persons, if, in the Adviser's judgment, the Fund would be
unable to invest the funds effectively in accordance with its investment
objectives and policies, or otherwise potentially would be adversely affected.
The Trust reserves the right on 60 days' written notice to modify or terminate
the exchange privilege. Furthermore, any exchange limits imposed by a Fund may
be modified, in the sole discretion of the Fund, for Plan Investors so that the
Fund's exchange privileges are consistent with Plan or group annuity contract
exchange limits as set forth in Plan Documents and Department of Labor
regulations. Plan Investors and Plan Participants should refer to Plan
Documents and related materials to determine what, if any, exchange limitations
apply to them.
For Group Annuity Investors and Rollover IRAs, exchange requests must be
delivered to MassMutual at its home office. An Investor that has entered into an
administrative services or other agreement with the Adviser must deliver
exchange requests in good form pursuant to the terms of its administrative
services or other agreement. All other Investors must deliver exchange requests
in good form to the Distributor,or the Trust if the Investor has entered into an
agreement permitting direct purchases form the Trust.
Any exchange will involve the redemption of shares and the purchase of shares in
another Fund on the basis of the next calculated net asset value per share of
each Fund after the exchange request is received by the Transfer Agent. Exchange
requests will not be transmitted to the Transfer Agent until determined to be in
good form./10/
REDEEMING SHARES
For Group Annuity Investors and Rollover IRAs, Redemption requests must be
sent to MassMutual at its home office. An Investor that has entered into an
administrative services or other agreement with the Adviser must deliver
redemption requests in good form pursuant to the terms of its administrative
services or other agreement. All other Investors must deliver redemption
requests in good form to the Distributor, or the Trust if the Investor has
entered into an agreement permitting direct purchases from the Trust.
Each Fund redeems its shares at their net asset value as next computed after
receipt by the Transfer Agent of a request for redemption.
- ---------------
/9/ See the Glossary for a definition of Plan Documents.
/10/ See "Purchase of Shares" above for a discussion of the term "in good
form."
22
<PAGE>
Redemption requests will not be transmitted to the Trust's Transfer Agent until
determined to be in good form. Redemption payments will be made within seven
days after receipt of the written request therefor by the Trust, except that the
right of redemption may be suspended or payments postponed when permitted by
applicable law and regulations. When redemption is requested of shares recently
purchased by check, payment may be delayed until the check has been collected,
which may take up to 15 days from receipt of the check.
The Class A Contingent Deferred Sales Charge may be imposed on certain
redemptions of Class A shares. For information regarding the Class A Contingent
Deferred Sales Charge, see "Class A Shares - Sales Charges and 12b-1 Fees"
above.
INVESTMENT MANAGER AND SUB-ADVISERS
INVESTMENT MANAGER
MassMutual is the investment manager to the Funds and is responsible for
providing all necessary investment management and administrative services.
MassMutual is a mutual life insurance company organized in 1851 under the laws
of The Commonwealth of Massachusetts. MassMutual is licensed to transact a life
insurance and annuity business in all states of the United States, the District
of Columbia, Puerto Rico and certain Provinces of Canada. As of June 30, 1997,
MassMutual had consolidated assets in excess of $58.3 billion and consolidated
assets under management in excess of $139 billion, in each case based on
financial statements prepared in accordance with statutory accounting.
The persons responsible for management of the bond and money market portfolios
of MassMutual are also responsible for managing such investments of the Funds.
Gary E. Wendlandt, Chairman, CEO and Trustee of the Trust, and John V. Murphy,
Trustee of the Trust, are officers of MassMutual, as are Stuart H. Reese,
President of the Trust, Hamline C. Wilson, Vice President and Chief Accounting
and Financial Officer of the Trust, Stephen L. Kuhn, Vice President and
Secretary of the Trust, and Raymond B. Woolson, Treasurer of the Trust.
MassMutual serves as investment manager of each Fund pursuant to a separate
investment management agreement pursuant to which MassMutual is responsible for
providing investment management of the Fund and is authorized to engage in
portfolio transactions on behalf of the Fund, subject to such general or
specific instructions as may be given by the Board of Trustees of the Trust.
MassMutual may, at its expense, employ sub-advisers to manage the investments of
the Funds.
The Trust, on behalf of each Fund, pays MassMutual an investment advisory fee
monthly for the investment advisory services performed and the facilities
furnished at an annual rate of the average daily net assets of that Fund as
follows:
(1) .45% for the Prime Fund, the Short-Term Bond Fund, the Core Bond Fund, the
Balanced Fund and the Value Equity Fund.
(2) .55% for the Small Cap Value Equity Fund.
(3) .85% for the International Equity Fund.
For the fiscal year ended December 31, 1996, MassMutual received fees (after
giving effect to a fee waiver) based upon each Fund's average daily net assets,
as follows: Prime Fund .41%; Short-Term Bond Fund .41%; Core Bond Fund .41%;
Balanced Fund .41%; Value Equity Fund .40%; Small Cap Value Equity Fund .51%;
International Equity Fund .78%. The fee waiver terminated on May 1, 1997.
In addition, MassMutual has entered into a separate administrative services
agreement with each Fund pursuant to which MassMutual is obligated to provide
all necessary administrative and shareholder services and to bear some Class
expenses, such as federal and state registration fees, printing and postage.
The Funds are responsible for certain other expenses including brokerage, taxes,
interest, fees and expenses of non-interested trustees, legal fees, custody and
audit fees. MassMutual may, at its expense, employ others to supply all or any
part of the services to be provided to the Funds pursuant to the administrative
services agreements. The Trust, on behalf of each Fund, pays MassMutual an
administrative services fee monthly for the administrative services performed at
annual rates of the average daily net assets of the applicable class of shares
of the Fund which range from .4752% to .4875% for Class A shares, .2752% to
.2875% for Class Y shares and .0774% to .0777% for Class S shares. Refer to
"Expense Information" for more detailed information.
INVESTMENT SUB-ADVISERS
MassMutual has entered into investment sub-advisory agreements with Babson and
HarbourView. These agreements provide that (1) Babson will manage the
investment and reinvestment of the assets of the Value Equity Fund, the Small
Cap Value Equity Fund and the Value Equity Sector of the Balanced Fund, and (2)
HarbourView will manage the investment and reinvestment of the assets of the
International Equity Fund.
MassMutual pays Babson a fee equal to an annual rate of .13% of the average
daily net asset value of the Value Equity Fund, .13% of the average daily net
asset value of the Value Equity Sector of the Balanced Fund and .25% of the
average daily net asset value of the Small Cap Value Equity Fund. MassMutual
pays HarbourView a fee equal to an annual rate of
23
<PAGE>
.50% of the average daily net asset value of the International Equity Fund.
Babson is a wholly-owned subsidiary of DLB Acquisition Corporation,
a controlled subsidiary of MassMutual. Babson is a registered
investment adviser that has been providing investment counseling to institutions
and individuals for over 50 years. As of December 31, 1996, Babson had over $7.6
billion of assets under management. Babson serves as investment sub-adviser to
the MML Equity Fund and the Equity Sector of MML Blend Fund of MML Series
Investment Fund, a registered investment company managed by MassMutual.
HarbourView is a wholly-owned subsidiary of OppenheimerFunds, Inc. ("OFI"),
which is a wholly-owned subsidiary of Oppenheimer Acquisition Corporation, a
holding company owned in part by senior management of OFI and ultimately
controlled by MassMutual. HarbourView has operated as an investment adviser
since 1986. As of April 10, 1997, HarbourView managed assets of approximately
$700 million, including assets of the International Equity Fund and certain
separate investment accounts of MassMutual.
DISTRIBUTOR, TRANSFER AGENT, SHAREHOLDER SERVICING AGENT, CUSTODIAN
OppenheimerFunds Distributor, Inc. ("Oppenheimer") acts as Distributor to each
Fund. MML Investors Services, Inc. ("MMLISI") serves as Sub-Distributor for each
Fund. Investors Bank & Trust Company serves as each Fund's Sub-Administrator,
Transfer Agent, and Custodian. MassMutual ultimately has a controlling interest
in Oppenheimer. MMLISI is a wholly-owned subsidiary of MassMutual. Both
Oppenheimer and MMLISI may serve as distributors of securities issued by other
investment companies. As Custodian, Investors Bank & Trust Company has custody
of the Funds' securities, maintains certain financial and accounting books and
records, and generally assists in all aspects of the administration of the
Funds. Neither Oppenheimer, MMLISI nor Investors Bank & Trust Company assists in
or is responsible for the investment decisions and policies of the Funds.
CONTROL PERSON AND PRINCIPAL HOLDER OF SECURITIES
MassMutual may be deemed a control person of the Trust in that certain separate
investment accounts of MassMutual and the Trust's seed money provided by
MassMutual together constitute 100% of the shares of each class of each Fund of
the Trust as of September 30, 1997.
DESCRIPTION OF SHARES
The Trust is a series company which is authorized to issue shares in separate
series of multiple classes. The Trust may issue an unlimited number of shares
of multiple classes, in one or more series as the Trustees may authorize, with
or without par value as the Trustees may prescribe. Each share of a particular
class of a Fund represents an equal proportionate interest in that Fund with
each other share of the same class, none having priority or preference over
another. Each Fund is preferred over all other Funds in respect of the assets
allocated to that Fund. Each share of a particular class of a Fund is entitled
to a pro rata share of any distributions declared in respect of that class and,
in the event of liquidation, a pro rata share of the net assets of that class
remaining after satisfaction of outstanding liabilities. When issued, shares
are fully paid and nonassessable and have no preemptive or subscription rights.
Under the Trust's Declaration of Trust, the Board of Trustees is authorized to
create new series and classes without shareholder approval. Shares of each Fund
entitle their holder to one vote for each dollar (or proportionate fractional
vote for each fraction of a dollar) of net asset value per share of each Fund or
class for each share held as to any matter on which such shares are entitled to
vote.
The Trust is not required to hold annual meetings of shareholders. Special
meetings may be called for such purposes as electing Trustees, voting on
management agreements, and with respect to such additional matters relating to
the Trust as may be required by the Trust's Declaration of Trust and the 1940
Act. Shareholder inquiries should be directed to MassMutual Institutional
Funds, 1295 State Street, Springfield, Massachusetts 01111-0001.
HOW FUND SHARES ARE PRICED
The net asset value (closing price) of each Fund is determined once daily as of
the close of trading on the NYSE (currently 4:00 p.m. Eastern Time) on each day
on which the Exchange is open for trading. Net asset value for shares of a
class is determined by dividing the total market value of a Fund's portfolio
investments and other assets attributable to that class, less any liabilities,
by the total outstanding shares of the class.
Securities which are traded on a national securities exchange or on the NASDAQ
national market system generally are valued at the last sale price. Debt
securities normally are valued at the last reported bid price on the primary
market for those securities. To the extent authorized by the Board of Trustees,
portfolio securities may be valued by a pricing service that determines values
based on market transactions for normal institutional-size trading units. Money
market obligations having a maturity of 60 days or less are generally valued at
amortized cost when the Board of Trustees of the Trust believes that amortized
cost approximates market value. In all other cases, assets and other securities
for which no quotations are readily available (including some restricted
securities) are valued at fair value as determined in good faith by the Board of
Trustees, although the actual calculations may be made by persons acting
pursuant to the direction of the Board.
A dealer or other organization selling shares of the Funds may receive different
levels of compensation for selling one class
24
<PAGE>
of shares over another. Class A shares of the Funds, which may be purchased at
the net asset value per share next determined after receipt of a purchase
request in good order, are subject to the service fees under Rule 12b-1, as set
forth and expressed on an annual basis under "Expense Information".
MassMutual may directly, or through the Distributor, pay cash compensation to
registered representatives who are not employees of MassMutual who sell Class A
and Y shares of the Funds. A registered representative selling Class A shares
may receive: (1) compensation in the first year in an amount equal to 1% of all
first year contributions; and (2) in each subsequent year, annual compensation
in an amount equal to 0.25% of the amount invested. A registered representative
selling Class Y shares to Investors, other than in connection with certain
non-qualified deferred compensation plans, may receive annual compensation in an
amount equal to: (1) 0.10% of the amount invested if the investment is equal to
or less than $10 million; or (2) if the investment exceeds $10 million, the sum
of 0.10% of the first $10 million invested and 0.05% on amounts in excess of $10
million. In connection with the sale of Class y shares to non-qualified deferred
compensation plans that enter into an administrative services agreement with the
Adviser, additional compensation may be paid. In such cases, the aggregate
annual compensation will be in an amount equal to 0.25% of the amount invested.
Annual compensation paid on account of sales of Class A and Class Y shares will
be paid quarterly, in arrears.
DISTRIBUTIONS AND TAXATION
Each Fund intends to continue to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986 (the "Code"). As a regulated
investment company, a Fund will not be subject to Federal income taxes on its
ordinary income and net realized capital gain distributed to its shareholders.
In general, a Fund that fails to distribute at least 98% of such income and gain
in the calendar year in which earned will be subject to a 4% excise tax on the
undistributed amount.
Many Investors, including most tax qualified Plan Investors, may be eligible for
preferential federal income tax treatment on distributions received from a Fund
and dispositions of Fund shares. This Prospectus does not attempt to describe in
any respect such preferential tax treatment. Any prospective Investor that is a
trust or other entity eligible for special tax treatment under the Code that is
considering purchasing shares of a Fund, either directly or indirectly through a
life insurance company separate investment account, should consult its tax
advisers about the federal, state and local tax consequences particular to it,
as should persons considering whether to have amounts held for their benefit by
such trusts or other entities invested in shares of a Fund. Investors that do
not receive preferential tax treatment are subject to federal income taxes on
distributions received in respect of their shares. Distributions of the Fund's
ordinary income and shortterm capital gains are taxable to the shareholder as
ordinary income whether received in cash or additional shares. Designated long-
term capital gains distributions are taxable as long-term capital gain whether
distributed in cash or additional shares and regardless of how long the Investor
has owned shares of the Fund; however, a loss recognized from the sale of Fund
shares held for six months or less will be treated as a long-term capital loss
to the extent of long-term capital gains distributions. Under the Taxpayer
Relief Act of 1997, long-term capital gains generally will be subject to a 28%
or 20% tax rate, depending on the holding period in the portfolio investments.
Certain designated dividends may be eligible for the dividends-received
deduction for corporate shareholders. Investors should consult with their tax
advisers for additional information concerning the federal, state and local tax
consequences of purchasing shares of a Fund.
Dividends from net investment income and distributions of any net realized
capital gains of each Fund are declared and paid annually or at other times as
necessary to meet regulatory requirements. Distributions shall be paid in full
and fractional shares of the applicable Class of the applicable Fund at net
asset value on the first Business Day after the record date for the
distribution, unless, subject to such terms and conditions of any underlying
Plan Documents or any administrative services or other agreement with the
Adviser, the Investor has elected to receive dividend payments in cash.
INVESTMENT PERFORMANCE
The Trust commenced operations on October 3, 1994 subsequent to the transfer of
assets by each of seven SIAs to the Fund having corresponding investment
objectives, policies and limitations in exchange for shares of such Fund. While
the SIAs continue to exist, their assets consist solely of shares of the
corresponding Fund. Except for the seed capital provided by MassMutual, each
Fund's portfolio of investments on October 3, 1994 was the same as the portfolio
of the corresponding SIA immediately prior to the transfer.
The SIAs are not registered investment companies as they each are exempt from
registration under the 1940 Act. Since, in a practical sense, the SIAs
constitute "predecessors" of the Funds, the Trust calculates the performance
for each Class of each Fund for periods commencing prior to the transfer of the
SIA assets to the Funds by including the corresponding SIA's total return
adjusted to reflect the deduction of fees and expenses applicable to each Class
as set forth (1) in the case of Class A and Class Y shares, under "Expense
Information," and (2) in the case of Class S shares, in the Fee Table of the
Trust's initial prospectus which was effective October 3, 1994. The anticipated
expenses of the Class S shares of each Fund as set forth in the Trust's initial
prospectus were as follows: 0.516% for the Prime Fund; 0.519% for the Short-Term
Bond Fund; 0.513% for the Core Bond Fund; 0.512% for the Balanced Fund; 0.5067%
for the Value Equity Fund; 0.611% for the Small Cap Value Equity Fund; and
1.002% for the International Equity Fund. These fees and expenses include, in
the case of Class A shares, Rule 12b-1 fees and contingent deferred sales
charges, and in the case of Class S shares, any charges at the SIA level.
Performance data for Class A and Class Y shares for the period from October 3,
1994 until the date on which such class is initially offered for sale will be
based on the performance of Class S shares adjusted downward to take into
account the deduction of the higher operating expenses to which Class A and
Class Y shares are subject. All performance data reflects the management fee
waiver in effect for Class S shares through May 1, 1997.
The quoted performance data includes the performance of the SIAs for periods
before the Trust's Registration Statement became effective. As noted above, the
SIAs were not registered under the 1940 Act and thus were not subject to certain
investment restrictions that are imposed by the 1940 Act. If the SIAs had been
registered under the 1940 Act, the SIAs performance
25
<PAGE>
might have been adversely affected. Employee benefit plans that invest plan
assets in the SIAs may be subject to certain charges as set forth in their
respective Plan Documents. Investors that enter into an administrative services
or other agreement with the Adviser may also be subject to certain charges as
set forth in their respective agreements. Total return figures would be lower if
they reflected these charges.
Each of the Funds from time to time may advertise certain investment performance
figures. These figures are based on historical earnings but past performance
data is not necessarily indicative of future performance of the Funds. All
performance information with respect to Class S shares will be provided net of
the Fund and any SIA expenses. Each of the Funds may quote yield in conformance
with current Securities and Exchange Commission guidelines. Currently, the
yield for each Fund refers to the net investment income earned by the Fund over
a 30-day period, as defined in the advertisement. This income is then assumed to
be earned for a full year and to be reinvested each month for six months. The
resulting semi-annual yield is doubled.
Each of the Funds may advertise its total return and its holding period return
for various periods of time. Total return is calculated by determining, over a
period of time as stated in the advertisement, the average annual compounded
rate of return that an investment in the Fund earned over that period, assuming
reinvestment of all distributions. Holding period return refers to the
percentage change in the value of an investment in a Fund over a period of time
(as stated in the advertisement), assuming reinvestment of all distributions.
Total return and holding period return differ from yield in that the return
figures include capital changes in an investment while yield measures the rate
of net income generated by a Fund. Total return differs from holding period
return principally in that total return is an average annual figure while
holding period return is an aggregate figure for the entire period.
26
<PAGE>
Average Annual Total Return for the periods ended December 31, 1996. All returns
- ---------------------------
take into account the Adviser's voluntary fee waiver, which is described in the
"Financial Highlights" and which terminated on May 1, 1997.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
1 YEAR
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Class A Class Y Class S
<S> <C> <C> <C>
Prime Fund and its predecessor SIA G 3.59% 5.04% 5.24%
Short-Term Bond Fund and its predecessor SIA F 3.92% 5.37% 5.57%
Core Bond Fund and its predecessor SIA E 1.14% 2.59% 2.80%
Balanced Fund and its predecessor SIA M 11.17% 12.62% 12.83%
Value Equity Fund and its predecessor SIA A 18.58% 20.03% 20.24%
Small Cap Value Equity Fund and its predecessor SIA S 21.16% 22.61% 22.82%
International Equity Fund and its predecessor SIA I 16.86% 18.31% 18.51%
- ------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------
3 YEARS
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
CLASS A CLASS Y CLASS S
<S> <C> <C> <C>
Prime Fund and its predecessor SIA G 4.36% 4.81% 5.01%
Short-Term Bond Fund and its predecessor SIA F 4.67% 5.12% 5.32%
Core Bond Fund and its predecessor SIA E 4.85% 5.30% 5.51%
Balanced Fund and its predecessor SIA M 11.26% 11.71% 11.92%
Value Equity Fund and its predecessor SIA A 17.42% 17.87% 18.08%
Small Cap Value Equity Fund and its predecessor SIA S 11.44% 11.89% 12.10%
International Equity Fund and its predecessor SIA I 5.15% 5.60% 5.80%
- ------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------
5 YEARS
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
CLASS A CLASS Y CLASS S
<S> <C> <C> <C>
Prime Fund and its predecessor SIA G 3.69% 4.14% 4.34%
Short-Term Bond Fund and its predecessor SIA F 5.45% 5.90% 6.10%
Core Bond Fund and its predecessor SIA E 6.30% 6.75% 6.96%
Balanced Fund and its predecessor SIA M 10.08% 10.53% 10.74%
Value Equity Fund and its predecessor SIA A 14.14% 14.59% 14.80%
Small Cap Value Equity Fund and its predecessor SIA S 12.82% 13.27% 13.48%
International Equity Fund and its predecessor SIA I 12.42% 12.87% 13.07%
- ------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------
10 YEARS (or since inception)
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
CLASS A CLASS Y CLASS S
<S> <C> <C> <C>
Prime Fund and its predecessor SIA G 5.25% 5.70% 5.90%
Short-term Bond Fund and its predecessor SIA F (April 30, 1989) 6.88% 7.33% 7.53%
Core Bond Fund and its predecessor SIA E 7.57% 8.02% 8.23%
Balanced Fund and its predecessor SIA M (October 10, 1987) 10.88% 11.33% 11.54%
Value Equity Fund and its predecessor SIA A 13.10% 13.55% 13.76%
Small Cap Value Equity Fund and its predecessor SIA S 13.55% 14.00% 14.21%
International Equity Fund and its predecessor SIA I (July 31,
1991) 12.40% 12.85% 13.05%
- ------------------------------------------------------------------------------------------------
</TABLE>
The quoted performance data includes the performance of the Separate Investment
Accounts (SIAs) for the period before the Trust's Registration Statement became
effective. The SIAs were not registered under the 1940 Act and therefore were
not subject to certain investment restrictions imposed by the Act. If the SIAs
had been registered under the 1940 Act, their performance may have been
adversely affected.
27
<PAGE>
GLOSSARY
CURRENCY TRANSACTIONS: include forward currency contracts, exchange listed
currency futures, exchange listed and OTC options on currencies, and currency
swaps. A forward currency contract involves a privately negotiated obligation
to purchase or sell (with delivery generally required) a specific currency at a
future date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of the contract. A
currency swap is an agreement to exchange cash flows based on the notional
difference among two or more currencies and operates similarly to an interest
rate swap.
DURATION: indicates how interest rate changes will affect a debt instrument's
price. As a measure of a fixed-income security's cash flow, duration is an
alternative to the concept of "term to maturity" in assessing the price
volatility associated with changes in interest rates. Generally, the longer the
duration, the more volatility an investor should expect. For example, the
market price of a bond with a duration of two years would be expected to decline
2% if interest rates rose 1%. Conversely, the market price of the same bond
would be expected to increase 2% if interest rates fell 1%. The market price of
a bond with a duration of four years would be expected to increase or decline
twice as much as the market price of a bond with a two-year duration. Duration
measures a security's maturity in terms of the average time required to receive
the present value of all interest and principal payments as opposed to its term
to maturity. The maturity of a security measures only the time until final
payment is due; it does not take account of the pattern of a security's cash
flow over time, which would include how cash flow is affected by prepayments and
by changes in interest rates. Incorporating a security's yield, coupon interest
payments, final maturity and option features into one measure, duration is
computed by determining the weighted average maturity of a bond's cash flows,
where the present values of the cash flows serve as weights. Determining
duration may involve the Adviser's estimates of future economic parameters,
which may vary from actual future values.
FOREIGN SECURITIES: include debt, equity, and hybrid instruments, obligations
and securities of foreign issuers, including governments of countries other than
the United States and companies organized under the laws of countries other than
the United States that are traded on foreign securities exchanges or foreign
over-the-counter markets. Foreign securities also include securities of foreign
issuers (i) represented by American Depository Receipts, (ii) traded in the
United States over-the-counter markets, or (iii) listed on a U.S. securities
exchange.
INVESTOR: includes a plan sponsor, plan fiduciary, trustee, institutional
investor, insurance company separate investment account and/or any other person
or entity described in the Prospectus as an eligible purchaser of shares, that
purchases shares of the Trust and is hereinafter referred to as Investor or
collectively referred to as Investors. An Investor that is a separate
investment account of MassMutual is referred to as an SIA Investor to the extent
it invests in the Trust. Investors that are purchasing shares of a Fund on
behalf of a Plan are sometimes referred to as Plan Investors. The term Investor
does not include a Plan Participant.
NRSRO: means a nationally recognized statistical rating organization. For a
description of the ratings of two NRSROs, Standard & Poor's Ratings Group
("S&P") and Moody's Investors Service, Inc. ("Moody's"), see Appendix A to the
Statement of Additional Information. For example, the four investment grade
ratings in descending order for debt securities as rated by Moody's are Aaa, Aa,
A and Baa -- including Baa3. The four investment grade ratings for debt
securities as rated by S&P are AAA, AA, A and BBB -- including BBB-. For
commercial paper, Moody's two highest ratings are P-1 and P-2 and S&P's two
highest ratings are A-1 and A-2.
PLAN: refers to all defined contribution and defined benefit retirement plans
and any other employee retirement arrangement that invests in the Funds,
including non-qualified deferred compensation plans and tax sheltered annuity
plans.
PLAN ASSETS: assets held by the Plan trustee of a particular Plan.
PLAN PARTICIPANT: includes active, deferred and suspended Plan Participants on
whose behalf Plan Assets are invested, as well as any other individual included
in the computation of active participants under the appropriate Form 5500 filed
with the Internal Revenue Service, if applicable.
PLAN DOCUMENTS: refer to the documents that created and are related to a
particular employee retirement benefit plan. These documents might include
trust documents, insurance contracts (including group annuity contracts),
administrative service agreements and other agreements providing for the
provision of services or benefits for the plan and its participants.
U.S. GOVERNMENT SECURITIES: include obligations issued, sponsored, assumed or
guaranteed as to principal and interest by the Government of the United States,
its agencies and instrumentalities, and securities backed by such obligations,
including FHA/VA guaranteed mortgages.
THE NAME MASSMUTUAL INSTITUTIONAL FUNDS IS THE DESIGNATION OF THE TRUST UNDER A
DECLARATION OF TRUST DATED MAY 28, 1993, AS AMENDED. THE OBLIGATIONS OF SUCH
TRUST ARE NOT PERSONALLY BINDING UPON, NOR SHALL RESORT BE HAD TO THE PROPERTY
OF, ANY OF THE TRUSTEES, SHAREHOLDERS, OFFICERS, EMPLOYEES OR AGENTS OF SUCH
TRUST, BUT ONLY THE PROPERTY OF THE RELEVANT FUND SHALL BE BOUND.
28
<PAGE>
MASSMUTUAL INSTITUTIONAL FUNDS
1295 State Street
Springfield, Massachusetts 01111
INVESTMENT MANAGER
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
1295 State Street
Springfield, Massachusetts 01111
INVESTMENT SUB-ADVISERS
HARBOURVIEW ASSET MANAGEMENT CORPORATION
Two World Trade Center
New York, New York 10048
DAVID L. BABSON AND COMPANY, INC.
One Memorial Drive
Cambridge, Massachusetts 02142
DISTRIBUTOR
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
Two World Trade Center
New York, New York 10048
SUB-DISTRIBUTOR
MML INVESTORS SERVICES, INC.
1414 Main Street
Springfield, Massachusetts 01144
SUB-ADMINISTRATOR, TRANSFER AGENT
and CUSTODIAN
INVESTORS BANK & TRUST COMPANY
200 Clarendon Street
Boston, Massachusetts 02116
INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.
2300 Bay Bank Tower,
1500 Main Street
Springfield, Massachusetts 01101
LEGAL COUNSEL
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
29
<PAGE>
MASSMUTUAL INSTITUTIONAL FUNDS
1295 State Street
Springfield, Massachusetts 01111
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION
DATED OCTOBER 1, 1997
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. IT SHOULD BE READ
IN CONJUNCTION WITH THE PROSPECTUS OF MASSMUTUAL INSTITUTIONAL FUNDS (THE
"TRUST") DATED NOVEMBER [ ], 1997 (THE "PROSPECTUS"). TO OBTAIN A PROSPECTUS,
CALL YOUR REGISTERED REPRESENTATIVE, AT (413) 788-8411, OR WRITE THE TRUST.
No dealer, salesman or any other person has been authorized to give any
information or to make any representations, other than those contained in this
Statement of Additional Information or in the related Prospectus, in connection
with the offer contained herein, and, if given or made, such other information
or representation must not be relied upon as having been authorized by the Trust
or the Distributor. This Statement of Additional Information and the related
Prospectus do not constitute an offer by the Trust or by the Distributor to sell
or a solicitation of any offer to buy any of the securities offered hereby in
any jurisdiction to any person to whom it is unlawful to make such offer in such
jurisdiction.
This Statement of Additional Information relates to the following Funds:
. MassMutual Prime Fund
. MassMutual Short-Term Bond Fund
. MassMutual Core Bond Fund
. MassMutual Balanced Fund
. MassMutual Value Equity Fund
. MassMutual Small Cap Value Equity Fund
. MassMutual International Equity Fund
INFORMATION CONTAINED HEREIN PERTAINING TO THE CLASS A AND CLASS Y SHARES (THE
"PENDING SECURITIES") IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION
STATEMENT RELATING TO, AMONG OTHER THINGS, THE PENDING SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THE PENDING SECURITIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THE PENDING SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
DATED NOVEMBER [ ], 1997
B-1
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
GENERAL INFORMATION........................................................ B-3
ADDITIONAL INVESTMENT POLICIES............................................. B-3
FUNDAMENTAL INVESTMENT RESTRICTIONS........................................ B-8
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS..................................... B-9
MANAGEMENT OF THE TRUST.................................................... B-10
COMPENSATION............................................................... B-14
COMPENSATION TABLE......................................................... B-14
CONTROL PERSON AND PRINCIPAL HOLDERS OF SECURITIES......................... B-15
INVESTMENT MANAGER AND SUB-ADVISERS........................................ B-15
THE DISTRIBUTOR............................................................ B-18
CUSTODIAN, DIVIDEND DISTRIBUTING AGENT AND TRANSFER AGENT.................. B-18
INDEPENDENT PUBLIC ACCOUNTANT.............................................. B-19
PORTFOLIO TRANSACTIONS AND BROKERAGE....................................... B-19
SHAREHOLDER INVESTMENT ACCOUNT............................................. B-20
REDEMPTION OF SHARES....................................................... B-20
VALUATION OF PORTFOLIO SECURITIES.......................................... B-20
DESCRIPTION OF SHARES...................................................... B-21
INVESTMENT PERFORMANCE..................................................... B-21
TAXATION................................................................... B-22
EXPERTS.................................................................... B-24
APPENDIX - DESCRIPTION OF SECURITIES RATINGS............................... B-25
REPORT OF INDEPENDENT ACCOUNTANTS.......................................... B-27
AUDITED FINANCIAL STATEMENTS - DECEMBER 31, 1996........................... B-28
UNAUDITED FINANCIAL STATEMENTS - JUNE 30, 1997............................. B-87
</TABLE>
B-2
<PAGE>
GENERAL INFORMATION
-------------------
MassMutual Institutional Funds (the "Trust") is a professionally managed, open-
end investment company. This Statement of Additional Information describes the
following seven separate diversified series of the Trust: (1) MassMutual Prime
Fund, (2) MassMutual ShortTerm Bond Fund, (3) MassMutual Core Bond Fund, (4)
MassMutual Balanced Fund, (5) MassMutual Value Equity Fund, (6) MassMutual Small
Cap Value Equity Fund, and (7) MassMutual International Equity Fund (each
individually referred to as a "Fund" or collectively as the "Funds").
The Trust is organized under the laws of The Commonwealth of Massachusetts as a
Massachusetts business trust pursuant to an Agreement and Declaration of Trust
dated May 28, 1993, as amended from time to time (the "Declaration of Trust").
Additional series may be created by the Trustees from time to time. The
investment manager for each Fund is Massachusetts Mutual Life Insurance Company
("MassMutual"). The investment sub-adviser for the Value Equity Fund, the Small
Cap Value Equity Fund and the Equity Sector of the Balanced Fund is David L.
Babson and Company, Inc. ("Babson"). The investment sub-adviser for the
International Equity Fund is HarbourView Asset Management Corporation
("HarbourView"). Babson and HarbourView are each indirect subsidiaries of
MassMutual. MassMutual, Babson and HarbourView are sometimes referred to herein
as the "advisers."
ADDITIONAL INVESTMENT POLICIES
------------------------------
Each Fund has a distinct investment objective which it pursues through separate
investment policies, as described in the Prospectus and below. The investment
objective, fundamental investment policies and fundamental investment
restrictions of a Fund may not be changed without the vote of a majority of that
Fund's outstanding shares (which, under the Investment Company Act of 1940 (the
"1940 Act") and the rules thereunder and as used in this Statement of Additional
Information and in the Prospectus, means the lesser of (1) 67% of the shares of
that Fund present at a meeting if the holders of more than 50% of the
outstanding shares of that Fund are present in person or by proxy, or (2) more
than 50% of the outstanding shares of that Fund). The Board of Trustees of the
Trust may adopt new or amend or delete existing non-fundamental investment
policies and restrictions without shareholder approval.
The following discussion, when applicable, elaborates on the presentation of
each Fund's investment policies contained in the Prospectus. For a description
of the ratings of corporate debt securities and money market instruments in
which the various Funds may invest, reference should be made to the Appendix.
PRIME FUND
An instrument in which the Prime Fund may invest will be considered to be
short-term if its remaining maturity on the date of its purchase is 397 days or
less. In the case of a variable or floating rate obligation, the remaining
maturity will be deemed to be the period remaining until the next readjustment
of the interest rate or until maturity, whichever is less. In the case of an
obligation with a demand feature, the remaining maturity will be deemed to be
the period remaining until the principal amount may be recovered through the
demand provision or until the next readjustment of the interest rate or until
maturity, whichever is the shortest.
Certain money market instruments are available only in relatively large
denominations, and others may carry higher yields if purchased in relatively
large denominations. Also, it is believed by MassMutual that an institutional
purchaser of money market instruments who has the ability to invest relatively
large sums on a regular basis may have investment opportunities that are not
available to those who invest smaller sums less frequently. Certain of the Prime
Fund's investment restrictions limit the percentage of the Fund's assets which
may be invested in certain industries or in securities of any issuer.
Accordingly, if the Fund has relatively small net assets and net cash flow from
sales and redemptions of shares, the Fund may be unable to invest in money
market instruments paying the highest yield available at a particular time.
SHORT-TERM BOND FUND
The Fund's duration management strategy currently utilizes a quantitative,
risk-averse discipline that balances generating a high total rate of return
primarily from current income with minimizing fluctuations in capital values.
The duration of the portfolio will be lengthened by extending average maturities
when sufficient additional yield can
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be obtained. Conversely, the duration will be shortened when adequate
compensation for the additional risk associated with longer maturities cannot be
realized.
CORE BOND FUND
The Core Bond Fund's duration management strategy is to match (within 10%) the
duration of the Lehman Brothers Government/Corporate Bond Index. MassMutual
seeks to add value compared to this index through the use of sector rotation,
yield curve management and asset selection. Neither market timing nor interest
rate anticipation methods are employed in managing the Fund.
INTERNATIONAL EQUITY FUND
The Trustees are authorized to determine what constitutes a "foreign security"
and to modify any such definition as they deem appropriate. Opportunities for
longterm capital appreciation will be stressed.
Currency Transactions - The Fund may, but will not necessarily, engage in
currency transactions with counterparties in order to hedge the value of
portfolio holdings denominated in particular currencies against fluctuations in
relative value.
FIXED INCOME SECURITIES
While the Prime Fund invests in high quality securities and the Short-Term Bond
Fund, the Core Bond Fund and the Core Bond Sector of the Balanced Fund invest in
investment grade securities, an investment in these Funds is not without risk.
The debt securities in which the Funds invest may not offer as high a yield as
may be achieved from lower quality instruments having less safety. If the Prime
Fund, the ShortTerm Bond Fund or the Core Bond Fund dispose of an obligation
prior to maturity, it may realize a loss or a gain. An increase in interest
rates will generally reduce the value of portfolio investments, and a decline in
interest rates will generally increase the value of portfolio investments. In
addition, investments are subject to the ability of the issuer to make payment
at maturity. If an investment of the ShortTerm Bond Fund or the Core Bond Fund
is downgraded below investment-grade level, the adviser will normally dispose of
such security in a reasonable period of time. In special circumstances the
adviser may determine that it is in the Fund's best interest to continue to hold
the security.
WARRANTS AND RIGHTS
A warrant typically gives the holder the right to purchase underlying stock at a
specified price for a designated period of time. Warrants may be a relatively
volatile investment. The holder of a warrant takes the risk that the market
price of the underlying stock may never equal or exceed the exercise price of
the warrant. A warrant will expire without value if it is not exercised or sold
during its exercise period. Rights are similar to warrants, but normally have a
short duration and are distributed directly by the issuer to its shareholders.
Warrants and rights have no voting rights, receive no dividends, and have no
rights to the assets of the issuer.
The Equity Sector of the Balanced Fund, the Value Equity Fund, the Small Cap
Value Equity Fund and the International Equity Fund may each invest up to 5% of
the value of their respective assets in warrants in an effort to build a
position in the underlying common stocks and, of such 5%, no more than 2% may be
invested in warrants that are not listed on the New York Stock Exchange or the
American Stock Exchange.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
In a repurchase agreement transaction, a Fund acquires a security from, and
simultaneously resells it to, an approved vendor (a U.S. commercial bank or the
U.S. branch of a foreign bank, or a broker-dealer which has been designated a
primary dealer in government securities and which must meet the credit
requirements set by the Trust's Board of Trustees from time to time) for
delivery on an agreed-upon future date. The resale price exceeds the purchase
price by an amount that reflects an agreed-upon interest rate effective for the
period during which the repurchase agreement is in effect. The majority of these
agreements run from day to day, and delivery pursuant to the resale agreement
typically will occur within one to five days of the purchase. Repurchase
agreements are considered "loans" under the 1940 Act, collateralized by the
underlying security. A Fund's repurchase agreements require that at all times
while the repurchase agreement is in effect, the value of the collateral must
equal or exceed the repurchase price to fully collateralize the loan.
Additionally, a Fund's adviser will impose creditworthiness requirements to
confirm that the vendor is financially sound
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and will continuously monitor the collateral's value. However, if the seller
defaults, the Fund could realize a loss on the sale of the underlying security.
In addition, if the seller should be involved in bankruptcy or insolvency
proceedings, the Fund may incur delay and costs in selling the underlying
security or may suffer a loss of principal and interest if the Fund is treated
as an unsecured creditor and required to return the underlying securities to the
seller's estate.
A reverse repurchase agreement is a contract pursuant to which a Fund agrees to
sell a security and simultaneously agrees to repurchase it at an agreed-upon
price at a stated time. A Fund engaging in reverse repurchase agreements will
maintain a segregated account with its custodian containing cash or liquid
securities, having a current market value at all times in an amount sufficient
to repurchase securities pursuant to outstanding reverse repurchase agreements.
Reverse repurchase agreements are borrowings subject to Restriction (2) under
"Fundamental Investment Restrictions."
CERTAIN DEBT SECURITIES
Some U.S. Government Securities are backed by the full faith and credit of the
U.S. Government; others are secured by the right of the issuer to borrow from
the U.S. Treasury; while others are supported only by the credit of the issuing
agency or instrumentality. There can be no assurance that the U.S. Government
will pay interest and principal on securities on which it is not legally
obligated to do so.
The Funds will limit their investments in certificates of deposit and bankers'
acceptances to U.S. dollar denominated obligations of U.S. banks and savings and
loan associations, London branches of U.S. banks ("Eurodollar obligations") and
U.S. branches of foreign banks ("Yankeedollar obligations"). In the case of
foreign banks, the $1 billion deposit requirement will be computed using
exchange rates in effect at the time of the banks' most recently published
financial statements. Eurodollar obligations and Yankeedollar obligations will
not be acquired if as a result more than 25% of a Fund's net assets would be
invested in such obligations. Obligations of foreign banks and of foreign
branches of U.S. banks may be affected by foreign governmental action, including
imposition of currency controls, interest limitations, withholding taxes,
seizure of assets or the declaration of a moratorium or restriction on payments
of principal or interest. Foreign banks and foreign branches of U.S. banks may
provide less public information than, and may not be subject to the same
accounting, auditing and financial recordkeeping standards as, domestic banks.
SECURITIES LENDING
A Fund may seek additional income by making loans of portfolio securities of not
more than 33% of its net assets taken at current market value. Under applicable
regulatory requirements and securities lending agreements (which are subject to
change), the loan collateral must, on each business day, be at least equal to
the value of the loaned securities and must consist of cash, bank letters of
credit or securities of the U.S. Government (or its agencies or
instrumentalities), or other cash equivalents in which the Fund is permitted to
invest. The terms of a Fund's loans must also meet certain tests under the
Internal Revenue Code and permit the Fund to reacquire loaned securities on five
business days' notice or in time to vote on any important matter.
HEDGING INSTRUMENTS AND DERIVATIVES
The Funds currently may use the hedging instruments and derivatives discussed
below. In the future, a Fund may employ hedging instruments and strategies that
are not currently contemplated but which may be developed, to the extent such
investment methods are consistent with the Fund's investment objective, legally
permissible and adequately disclosed.
(1) FORWARD CONTRACTS -- Each Fund may purchase or sell securities on a forward
commitment basis ("forward contracts"). When such transactions are negotiated,
the price is fixed at the time of commitment, but delivery and payment for the
securities can take place a month or more after the commitment date. The
securities so purchased or sold are subject to market fluctuations and no
interest accrues to the purchaser during this period. At the time of delivery
the securities may be worth more or less than the purchase or sale price. While
a Fund also may enter into forward contracts with the initial intention of
acquiring securities for its portfolio, it may dispose of a commitment prior to
settlement if MassMutual deems it appropriate to do so. The Funds may realize
short-term gains or losses upon the sale of forward contracts. If a Fund enters
into a forward contract, it will establish a segregated account with its
custodian consisting of cash or liquid securities, having a current market value
equal to or greater than the aggregate amount of that Fund's commitment under
forward contracts (that is, the purchase price of the underlying
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security on the delivery date). As an alternative to maintaining all or part of
the segregated account, a Fund could buy call or put options to "cover" the
forward contracts. A Fund will not enter into a forward contract if as a result
more than 25% of its total assets would be held in a segregated account covering
such contracts.
(2) CURRENCY TRANSACTIONS -- Each Fund may engage in currency transactions with
counterparties in order to convert foreign denominated securities or obligations
to U.S. dollar denominated investments. Further, the International Equity Fund
may engage in currency transactions to hedge the value of portfolio holdings
denominated in particular currencies against fluctuations in relative value.
Currency transactions include forward currency contracts, exchange listed
currency futures, exchange listed and OTC options on currencies, and currency
swaps. A forward currency contract involves a privately negotiated obligation to
purchase or sell (with delivery generally required) a specific currency at a
future date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of the contract. A
currency swap is an agreement to exchange cash flows based on the notional
difference among two or more currencies and operates similarly to an interest
rate swap. A Fund may enter into currency transactions with counterparties which
have received (or the guarantors of the obligations of which have received) a
credit rating of A-1 or P-1 by Standard & Poor's Ratings Group ("S&P") or
Moody's Investors Service ("Moody's"), respectively, or that have an equivalent
rating from a nationally recognized statistical rating organization ("NRSRO") or
(except for OTC currency options) are determined to be of equivalent credit
quality by the adviser.
The International Equity Fund's dealings in forward currency contracts and other
currency transactions such as futures, options, options on futures, and swaps
will be limited to hedging involving either specific transactions or portfolio
positions. Transaction hedging is entering into a currency transaction with
respect to specific assets or liabilities of a Fund, which will generally arise
in connection with the purchase or sale of its portfolio securities or the
receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or
generally quoted in that currency. For example, if the Fund believes that a
foreign currency may suffer a substantial decline against the U.S. dollar, it
may enter into a forward sale contract to sell an amount of that foreign
currency approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency. The Funds may also cross-hedge
currencies by entering into transactions to purchase or sell one or more
currencies that are expected to decline in value relative to other currencies to
which the Fund has or in which the Fund expects to have portfolio exposure.
A Fund will not enter into a transaction to hedge currency exposure to an extent
greater, after netting all transactions intended wholly or partially to offset
other transactions, than the aggregate market value (at the time of entering
into the transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently convertible into such currency,
other than with respect to proxy hedging as described below.
To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, the Funds may also engage in proxy
hedging. Proxy hedging is often used when the currency to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a forward contract to sell a currency whose
changes in value are generally considered to be linked to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, and to buy U.S. dollars. The amount of the contract
would not exceed the value of the Fund's securities denominated in linked
currencies. For example, if the adviser considers that the Austrian schilling is
linked to the German deutsche mark (the "D-mark"), the Fund holds securities
denominated in schillings and the adviser believes that the value of schillings
will decline against the U.S. dollar, the adviser may enter into a contract to
sell D-marks and buy dollars. Currency hedging involves some of the same risks
and considerations as other transactions with similar instruments. Currency
transactions can result in losses to the Fund if the currency being hedged
fluctuates in value to a degree or in a direction that is not anticipated.
Further, there is the risk that the perceived linkage between various currencies
may not be present during the particular time that the Fund is engaging in proxy
hedging.
(3) RISKS REGARDING HEDGING INSTRUMENTS AND DERIVATIVES
Some of the general risks associated with hedging and the use of derivatives
include: (a) the possible absence of a liquid secondary market for any
particular hedging instrument at any time; (b) these instruments can be highly
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volatile; and (c) the possible need to defer closing out certain positions to
avoid adverse tax consequences. More specific risks are set forth below.
(A) FORWARD CONTRACTS: Forward contracts involve a risk of loss if the
value of the security to be purchased declines prior to the settlement
date, which risk is in addition to the risk of decline in value of the
Funds' other assets.
(B) CURRENCY TRANSACTIONS: Currency transactions are subject to risks
different from those of other portfolio transactions. Because currency
control is of great importance to the issuing governments and influences
economic planning and policy, purchases and sales of currency and related
instruments can be negatively affected by government exchange controls,
blockages, and manipulations or exchange restrictions imposed by
governments. These can result in losses to a Fund if it is unable to
deliver or receive currency or funds in settlement of obligations and could
also cause hedges it has entered into to be rendered useless, resulting in
full currency exposure as well as incurring transaction costs. Buyers and
sellers of currency futures are subject to the same risks that apply to the
use of futures generally. Further, settlement of a currency futures
contract for the purchase of most currencies must occur at a bank based in
the issuing nation. Trading options on currency futures is relatively new,
and the ability to establish and close out positions on such options is
subject to the maintenance of a liquid market which may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic
to that country's economy.
RESTRICTED AND ILLIQUID SECURITIES
None of the Funds currently expect to invest in restricted or illiquid
securities, although, as a non-fundental policy, each Fund may invest no more
than 15% of its net assets in illiquid securities. However, this policy does not
limit the purchases of securities eligible for resale to qualified institutional
buyers pursuant to Rule 144A under the Securities Act of 1933, provided that
such securities are determined to be liquid by the Board of Trustees, or the
adviser if such determination is pursuant to Board-approved guidelines. Such
guidelines shall take into account trading activity for such securities and the
availability of reliable pricing information, among other factors. If there is a
lack of trading interest in particular Rule 144A securities, a Fund's holdings
of those securities may be illiquid, resulting in undesirable delays in selling
these securities at prices representing fair value.
FOREIGN SECURITIES
The International Equity Fund and to a lesser extent each of the other Funds are
permitted to invest in foreign securities. With the exception of the
International Equity Fund, each Fund intends to invest in foreign securities
only if: (i) such securities are U.S. denominated; or (ii) if such securities
are not U.S. denominated, the Fund contemporaneously enters into a foreign
currency transaction to hedge the currency risk associated with the particular
foreign security. If a Fund's securities are held abroad, the countries in which
such securities may be held and the sub-custodian holding them must be approved
by the Board of Trustees or its delegate under applicable rules adopted by the
Securities and Exchange Commission (the "SEC"). In buying foreign securities, a
Fund may convert U.S. dollars into foreign currency, but only to effect
securities transactions on foreign securities exchanges and not to hold such
currency as an investment.
Investments in foreign securities involve special risks and considerations. As
foreign companies are not generally subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies, there may be less publicly available
information about a foreign company than about a domestic company. For example,
foreign markets have different clearance and settlement procedures. Delays in
settlement could result in temporary periods when assets of a Fund are
uninvested. The inability of a Fund to make intended security purchases due to
settlement problems could cause it to miss certain investment opportunities.
They may also entail certain other risks, such as the possibility of one or more
of the following: imposition of dividend or interest withholding or confiscatory
taxes, higher brokerage costs, thinner trading markets, currency blockages or
transfer restrictions, expropriation, nationalization, military coups or other
adverse political or economic developments; less government supervision and
regulation of securities exchanges, brokers and listed companies; and the
difficulty of enforcing obligations in other countries. Purchases of foreign
securities are usually made in foreign currencies and, as a result, a Fund may
incur currency conversion costs and may be affected favorably or unfavorably by
changes in the value of foreign currencies against the U.S. dollar. Further, it
may be more difficult for a Fund's agents to keep currently informed about
corporate actions which may affect the prices of
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portfolio securities. Communications between the United States and foreign
countries may be less reliable than within the United States, thus increasing
the risk of delayed settlements of portfolio transactions or loss of
certificates for portfolio securities. Certain markets may require payment for
securities before delivery. A Fund's ability and decisions to purchase and sell
portfolio securities may be affected by laws or regulations relating to the
convertibility of currencies and repatriation of assets.
A number of current significant political, demographic and economic developments
may affect investments in foreign securities and in securities of companies with
operations overseas. Such developments include dramatic political changes in
government and economic policies in several Eastern European countries and the
republics composing the former Soviet Union, as well as the unification of the
European Economic Community. The course of any one or more of these events and
the effect on trade barriers, competition and markets for consumer goods and
services are uncertain. Similar considerations are of concern with respect to
developing countries. For example, the possibility of revolution and the
dependence on foreign economic assistance may be greater in these countries than
in developed countries. Management seeks to mitigate the risks associated with
these considerations through diversification and active professional management.
SHORT SALES AGAINST-THE-BOX
Selling short "against-the-box" refers to the sale of securities actually owned
by the seller but held in safekeeping. In such short sales, while the short
position is open, a Fund must own an equal amount of such securities, or by
virtue of ownership of securities have the right, without payment of further
consideration, to obtain an equal amount of securities sold short. Short sales
against-the-box generally produce current recognition of gain for federal income
tax purposes on the constructive sale of securities "in the box" prior to the
time the short position is closed out. None of the Funds currently intend to
engage in short sales against-the-box.
INVESTMENT BASKET
Notwithstanding any Fund's fundamental investment restrictions (except those
imposed as a matter of law), the Board of Trustees may authorize one or more of
the Funds to invest in any security or investment-related instrument, or to
engage in investment-related transactions or practices, such as newly developed
debt securities or hedging programs, provided that the Board of Trustees has
determined that to do so is consistent with the Fund's investment objectives and
policies and has adopted reasonable guidelines for use by the Fund's advisers,
and provided further that at the time of making such investment or entering into
such transaction, such investments or instruments account for not more than 10%
of the Fund's total assets. The Trust has no current intention of using this
investment basket authority.
FUNDAMENTAL INVESTMENT RESTRICTIONS
-----------------------------------
Each Fund is subject to certain fundamental restrictions on its investments,
which may not be changed without the affirmative vote of a majority of the
outstanding shares of that Fund. Investment restrictions that appear below or
elsewhere in this Statement of Additional Information and in the Prospectus
which involve a maximum percentage of securities or assets shall not be
considered to be violated unless an excess over the percentage occurs
immediately after, and is caused by, an acquisition or encumbrance of securities
or assets of, or borrowings by or on behalf of, a Fund. The Trust may not, on
behalf of any Fund:
(1) Purchase any security (other than U.S. Treasury securities or U.S.
Government Securities) if as a result, with respect to 75% of the Fund's
assets, more than 5% of the value of the total assets (determined at the
time of investment) of a Fund would be invested in the securities of a
single issuer.
(2) Borrow money, except from banks for temporary or emergency purposes not
in excess of one-third of the value of a Fund's assets, except that a Fund
may enter into reverse repurchase agreements or roll transactions. For
purposes of calculating this limitation, entering into portfolio lending
agreements shall not be deemed to constitute borrowing money. A Fund would
not make any additional investments while its borrowings exceeded 5% of its
assets.
(3) Issue senior securities (as defined in the 1940 Act) except for
securities representing indebtedness not prevented by paragraph (2) above.
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(4) Make short sales, except for sales "against the box."
(5) Act as an underwriter, except to the extent that, in connection with
the disposition of portfolio securities, a Fund may be deemed an
underwriter under applicable laws.
(6) Invest in oil, gas or other mineral leases, rights, royalty contracts
or exploration or development programs, real estate or real estate mortgage
loans. This restriction does not prevent a Fund from purchasing readily
marketable securities secured or issued by companies investing or dealing
in real estate and by companies that are not principally engaged in the
business of buying and selling such leases, rights, contracts or programs.
(7) Purchase physical commodities or commodity contracts (except futures
contracts, including but not limited to contracts for the future delivery
of securities and futures contracts based on securities indices).
(8) Make loans other than by investing in obligations in which a Fund may
invest consistent with its investment objective and policies and other than
repurchase agreements and loans of portfolio securities.
(9) Pledge, mortgage or hypothecate assets taken at market to an extent
greater than 15% of the total assets of the Fund except in connection with
permitted transactions in options, futures contracts and options on futures
contracts, reverse repurchase agreements and securities lending.
(10) Purchase any security (other than securities issued, guaranteed or
sponsored by the U.S. Government or its agencies or instrumentalities) if,
as a result, a Fund would hold more than 10% of the outstanding voting
securities of an issuer.
(11) Purchase or retain securities of any issuer if, to the knowledge of
the Trust, more than 5% of such issuer's securities are beneficially owned
by officers and trustees of the Trust or officers and directors of its
adviser who individually beneficially own more than 1/2 of 1% of the
securities of such issuer.
Notwithstanding any fundamental investment restriction set forth above or in the
Prospectus, each Fund may: (1) engage in hedging transactions, techniques, and
practices using forward contracts and similar instruments, to the extent and in
a manner permitted by law; and (2) invest in any security or investment-related
instrument, or engage in any investment-related transaction or practice,
provided that the Board of Trustees has determined that to do so is consistent
with the investment objective and policies of the Fund and has adopted
reasonable guidelines for use by the Fund's adviser, and provided further that
at the time of entering into such investment or transaction, such investments or
instruments account for no more than 10% of the Fund's total assets. For the
foreseeable future, the Funds do not expect to engage in futures and options
transactions or interest rate swap agreements.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
--------------------------------------
In addition to the investment restrictions described above and those contained
in the Prospectus, the Trustees of the Trust have voluntarily adopted certain
policies and restrictions which are observed in the conduct of the affairs of
the Funds. These represent intentions of the Trustees based upon current
circumstances. They differ from fundamental investment policies in that the
following additional investment restrictions may be changed or amended by action
of the Trustees without requiring prior notice to or approval of shareholders.
In accordance with such policies and guidelines, each Fund may not:
(1) Invest for the purpose of exercising control over, or management of,
any company.
(2) Invest in securities of other investment companies, except by purchase
in the open market where no commission or profit to a sponsor or dealer
results from such purchase other than the customary broker's commission,
except when such purchase is part of a plan of merger, consolidation,
reorganization or acquisition or except shares of money market funds
advised by MassMutual or an affiliate thereof. It is expected that a Fund
would purchase shares of such money market funds only if arrangements are
made to eliminate duplicate advisory and distribution fees.
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(3) To the extent that shares of a Fund are purchased or otherwise acquired
by an acquiring company that is part of the same group of investment
companies as the Trust in reliance on Section 12(d)(1)(G) of the 1940 Act,
acquire any securities of registered open-end investment companies or
registered unit investment trusts in reliance or Section 12(d)(1)(F) or
Section 12 (d)(1)(G) of the 1940 Act.
MANAGEMENT OF THE TRUST
-----------------------
The Trust has a Board of Trustees, a majority of which must not be "Interested
Persons" as defined in the 1940 Act. The Trustees and principal officers of the
Trust are listed below together with information on their positions with the
Trust, address, age, principal occupations during the past five years and other
principal business affiliations.
GARY E. WENDLANDT* Chairman, Chief Executive Officer
1295 State Street and Trustee of the Trust
Springfield, MA 01111
Age: 47
Chief Investment Officer (since 1993), Executive Vice President (since
1992), Senior Vice President (1983-1992), MassMutual; Chairman (since
1995), Vice Chairman (1993-1995) and President (1988-1993), MML Series
Investment Fund (openend investment company); Chairman (since 1995),
President (1983-1995) and Trustee: MassMutual Corporate Investors and
Chairman (since 1995), President (1988-1995) and Trustee, MassMutual
Participation Investors (closed-end investment companies); Chairman (since
1996), Antares Leveraged Capital Corp. (finance company); Chairman, HYP
Management, Inc. (managing member of MassMutual High Yield Partners LLC)
and MMHC Investment, Inc. (investor in MassMutual High Yield Partners LLC);
Advisory Board Member (since 1996), MassMutual High Yield Partners LLC
(high yield bond fund); President and Director (since 1995), DLB
Acquisition Corporation (holding company for investment advisers); Director
(since 1990), Oppenheimer Acquisition Corporation (investment advisory
holding company); Supervisory Director (since 1991) MassMutual/Carlson CBO
N.V. (collateralized bond fund); Director (since 1994), MassMutual
Corporate Value Partners Limited (investor in debt and equity securities)
and MassMutual Corporate Value Limited (parent of MassMutual Corporate
Value Partners Limited); Chairman (since 1994) and Director (since 1993),
MML Realty Management Corporation; Chairman (since 1994) and Chief
Executive Officer (1994-1996), Cornerstone Real Estate Advisers, Inc.
(wholly-owned real estate investment adviser subsidiary of MassMutual
Holding Company); Director (since 1992), Merrill Lynch Derivative Products,
Inc.; Chairman (1994-1995) and Director (19931995), MML Real Estate
Corporation.
RONALD J. ABDOW Trustee of the Trust
1400 Elm Street
West Springfield, MA 01089
Age: 66
President, Abdow Corporation (operator of restaurants); General Partner,
Grove Investment Group (apartment building syndicator); Trustee, Abdow G&R
Trust and Abdow G&R Co. (owners and operators of restaurant properties);
Partner, Abdow Partnership, Abdow Auburn Associates, and Abdow Hazard
Associates (owners and operators of restaurant properties); Trustee (since
1993) MML Series Investment Fund (open-end investment company).
RICHARD H. AYERS Trustee of the Trust
1000 Stanley Drive
New Britain, CT 06053
Age: 55
Adviser to Chairman (since 1997), Chairman and Chief Executive Officer
(1989-1996) and Director (since 1985), The Stanley Works (manufacturer of
tools, hardware, specialty hardware and specialty hardware products);
Director (since 1986), Southern New England Telecommunications Corp.;
Director, (since 1988) Perkin Elmer Corp.; Advisory Board Member (since
1996), MML Series Investment Fund (openend investment company).
- ---------------
* Trustee who is an "interested person" of the Trust within the definition set
forth in Section 2(a)(19) of the 1940 Act.
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MARY E. BOLAND Trustee of the Trust
67 Market Street
Springfield, MA 01118
Age: 58
Attorney at Law, Egan, Flanagan and Cohen, P.C. (law firm), Springfield,
MA; Director (since 1995), Trustee (until 1995), SIS Bank (formerly,
Springfield Institution for Savings); Trustee, MML Series Investment Fund
(open-end investment company).
DAVID E.A. CARSON Trustee of the Trust
850 Main Street
Bridgeport, CT 06604
Age: 63
President and Chief Executive Officer (since 1985), People's Bank;
Director, United Illuminating Co.; Trustee, American Skandia Trust (open-
end investment company). Advisory Board Member (since 1996), MML Series
Investment Fund (open-end investment company).
RICHARD G. DOOLEY* Trustee of the Trust
1295 State Street
Springfield, Massachusetts 01111
Age: 68
Consultant (since 1993), Executive Vice President and Chief Investment
Officer (1978-1993), MassMutual; Director (since 1996), Investment
Technology Group Inc.; Director, The Advest Group, Inc. (financial services
holding company), Hartford Steam Boiler Inspection and Insurance Co., New
England Education Loan Marketing Corporation; Director (since 1992), Kimco
Realty Corp. (shopping center ownership and management); Director (since
1993), Jefferies Group, Inc. (financial services holding company); Director
and Vice President, Oppenheimer Acquisition Corporation (investment
advisory holding company); Vice Chairman (since 1995), Chairman (1982-
1995), MassMutual Corporate Investors, and Vice Chairman (since 1995),
Chairman (1988-1995), MassMutual Participation Investors (closed-end
investment companies); Director (1993-1995), Luxonen S.A. (Swedish
investment fund); Supervisory Director (1991-1995), MassMutual/Carlson CBO
N.V. (collateralized bond fund); Director (1984-1993), MML Real Estate
Corporation (real estate management subsidiary of MassMutual Holding
Company) and MML Realty Management Corporation (subsidiary of MassMutual
Holding Company to manage real estate projects); Vice Chairman (since
1995), Chairman (1988-1995), MML Series Investment Fund (openend investment
company).
RICHARD W. GREENE Trustee of the Trust
University Of Rochester
Rochester, NY 14627
Age: 62
Executive Vice President and Treasurer (since 1986), University of
Rochester (private university). Advisory Board Member (since 1996), MML
Series Investment Fund (open-end investment company).
BEVERLY C.L. HAMILTON Trustee of the Trust
515 South Flower Street
Los Angeles, CA 90017
Age: 51
President (since 1991), ARCO Investment Management Co.; Vice President
(since 1991), Atlantic Richfield Company; Director (since 1992),
Connecticut Natural Gas; Director (since 1991), Emerging Markets Growth
Fund (closed-end investment company). Advisory Board Member (since 1996),
MML Series Investment Fund (open-end investment company).
- ---------------
* Trustee who is an "interested person" of the Trust within the definition set
forth in Section 2(a)(19) of the 1940 Act.
B-11
<PAGE>
F. WILLIAM MARSHALL, JR. Trustee of the Trust
1441 Main Street
Springfield, MA 01102-3034
Age: 55
President, Chief Executive Officer and Director (since 1993), SIS Bank
(formerly, Springfield Institution for Savings); Chairman and Chief
Executive Officer (1990-1993), Bank of Ireland First Holdings, Inc. and
First New Hampshire Banks; Trustee (since 1996), MML Series Investment Fund
(open-end investment company).
CHARLES J. MCCARTHY Trustee of the Trust
181 Eton Road
Longmeadow, MA 01106
Age: 74
Proprietor, Synectics Financial Company (venture capital activities,
business consulting and investments); Trustee, MML Series Investment Fund
(open-end investment company).
JOHN V. MURPHY* Trustee of the Trust
1295 State Street
Springfield, Massachusetts 01111
Age: 48
Executive Vice President (since 1997) of MassMutual; Executive Vice
President, Director and Chief Operating Officer (1995-1997), David L.
Babson and Company Incorporated; Chief Operating Officer (1993-1996),
Concert Capital Management, Inc.; Senior Vice President and Director
(since 1995), Potomac Babson Incorporated; Chief Financial Officer (1985-
1993), Liberty Financial Companies (financial services).
JOHN H. SOUTHWORTH Trustee of the Trust
195 Eton Road
Longmeadow, MA 01106
Age: 70
Chairman (since 1993) and President (1984-1992), Southworth Company
(manufacturer of paper and calendars); Director (since 1995), Trustee
(until 1995), SIS Bank (formerly, Springfield Institution for Savings);
Trustee, MML Series Investment Fund (open-end investment company).
STUART H. REESE President of the Trust
1295 State Street
Springfield, MA 01111
Age: 42
Chief Executive Director (since 1997), Senior Vice President (1993-1997),
MassMutual; President (since 1993), MML Series Investment Fund; President
(since 1995), Executive Vice President (1993-1995), MassMutual Corporate
Investors and MassMutual Participation Investors (close-end investment
companies); Director (since 1996), Antares Leveraged Capital Corp. (finance
company) and Charter Oak Capital Management, Inc. (investment adviser);
President and Director (since 1996) HYP Management, Inc. (managing member
of MassMutual High Yield Partners LLC), and MMHC Investment, Inc. (investor
in MassMutual High Yield Partners LLC); Director (since 1994), MassMutual
Corporate Value Partners Limited (investor in debt and equity securities)
and MassMutual Corporate Value Limited (parent of MassMutual Corporate
Value Partners Limited); Supervisory Director (since 1994),
MassMutual/Carlson CBO (collateralized bond fund); Director and Member of
Investment Committee (since 1994), MML Bay State Life Insurance Company
(wholly-owned insurance subsidiary of MassMutual); Director and Member
of Investment and Auditing Committees, MML Pension Insurance Company
(wholly-owned insurance subsidiary of MassMutual Holding Company Two MSC,
Inc.); Director (since 1994), Pace Industries (aluminum die caster); Vice
President and Managing Director (1990-1992), Capital Markets Group of Aetna
Life & Casualty Company; Chairman and President (1990-1993), Aetna
Financial Services, Inc.
- ---------------
* Trustee who is an "interested person" of the Trust within the definition set
forth in Section 2(a)(19) of the 1940 Act.
B-12
<PAGE>
HAMLINE C. WILSON Vice President and Chief Financial
1295 State Street Officer of the Trust
Springfield, MA 01111
Age: 60
Senior Managing Director (since 1996), Vice President and Managing Director
(1989-1996), MassMutual; Vice President and Chief Financial Officer, MML
Series Investment Fund, MassMutual Corporate Investors and MassMutual
Participation Investors.
STEPHEN L. KUHN Vice President and Secretary
1295 State Street of the Trust
Springfield, MA 01111
Age: 50
Vice President and Associate General Counsel (since 1992), Second Vice
President and Associate General Counsel (1988-1992), MassMutual; Vice
President and Secretary, MML Series Investment Fund, MassMutual
Participation Investors and MassMutual Corporate Investors; President,
MassMutual/Carlson CBO Incorporated; Chief Legal Officer and Assistant
Secretary (since 1995), DLB Acquisition Corporation (holding company for
investment advisers); Assistant Secretary (since 1997), Oppenheimer
Acquisition Corporation (investment advisor holding company).
CHARLES C. MCCOBB, JR. Vice President of the Trust
1295 State Street
Springfield, MA 01111
Age: 53
Managing Director (since 1997), MassMutual; Managing Director/Vice
President (1994-1997) Citicorp; Managing Director/Vice President (1973-
1994) Aetna Life & Casualty Company.
EDMOND F. RYAN Vice President of the Trust
1295 State Street
Springfield, MA 01111
Age: 49
Senior Vice President (since 1995), Vice President (1985-1995) MassMutual.
RAYMOND B. WOOLSON Treasurer of the Trust
1295 State Street
Springfield, MA 01111
Age: 38
Senior Managing Director (since 1996), Second Vice President (1992-1996),
Director/Fund Account Administration (1989-1992), MassMutual; Treasurer,
MassMutual Corporate Investors and MassMutual Participation Investors;
Treasurer (since 1996), MML Series Investment Fund (openend investment
company).
MARK B. ACKERMAN Comptroller of the Trust
1295 State Street
Springfield, MA 01111
Age: 32
Investment Director (since 1996), Associate Director (1993-1996),
MassMutual; Controller (since 1997) Associate Treasurer (1995-1997),
MassMutual Participation Investors and MassMutual Corporate Investors;
Comptroller (since 1997), Associate Treasurer (1995-1996), MML Series
Investment Fund (openend investment company).
The Audit Committee makes recommendations to the Trustees as to the engagement
or discharge of the Trust's independent auditors, supervises investigations into
matters relating to audit functions, reviews with the Trust's independent
auditors the results of the audit engagement, and considers the audit fees. The
Nominating Committee consists of Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Trust or any adviser and considers making all
nominations for non-interested members of the Board of Trustees. The selection
and nomination of management nominees for such vacancies is committed to the
discretion of the Nominating Committee. The Investment Pricing Committee
determines the fair value of securities for which market quotations are not
readily available.
B-13
<PAGE>
COMPENSATION
------------
The Trust, on behalf of each Fund, pays each of its Trustees who is not an
officer or employee of MassMutual a fee of $2,000 per quarter plus $2,000 per
meeting attended. Such Trustees who serve on the Audit Committee of the Trust
are paid an additional fee of $1,000 per year. Such Trustees who serve on the
Nominating Committee or the Investment Pricing Committee are paid an additional
fee of $500 per meeting attended. In addition, the Trust reimburses out-of-
pocket business travel expenses to such Trustees. Trustees who are officers or
employees of MassMutual receive no fees from the Trust.
COMPENSATION TABLE
------------------
The following table discloses the compensation paid to the Registrant's
non-interested trustees for the 1996 fiscal year. The Registrant has no pension,
retirement, or deferred compensation plans. All of the non-interested Trustees
also serve as Trustees or Advisory Board Members of one other investment company
managed by MassMutual. Total Compensation from Registrant and Fund Complex
reflects compensation paid in the 1996 fiscal year.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
TOTAL COMPENSATION
AGGREGATE FROM REGISTRANT AND
NAME/POSITION COMPENSATION FROM REGISTRANT FUND COMPLEX
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Ronald J. Abdow
Trustee $16,000 $32,000
- ------------------------------------------------------------------------------------------------------------
Richard H. Ayers
Trustee $ 2,000 6,000
- ------------------------------------------------------------------------------------------------------------
Mary E. Boland
Trustee 16,000 32,000
- ------------------------------------------------------------------------------------------------------------
David E.A. Carson
Trustee 2,000 6,000
- ------------------------------------------------------------------------------------------------------------
Richard W. Greene
Trustee 2,000 6,000
- ------------------------------------------------------------------------------------------------------------
Beverly C.L. Hamilton
Trustee 2,000 6,000
- ------------------------------------------------------------------------------------------------------------
F. William Marshall, Jr.
Trustee 12,000 23,333
- ------------------------------------------------------------------------------------------------------------
Charles J. McCarthy
Trustee 17,000 34,000
- ------------------------------------------------------------------------------------------------------------
John H. Southworth
Trustee 17,000 73,246
- ------------------------------------------------------------------------------------------------------------
</TABLE>
The officers and Trustees of the Trust as a group own less than 1% of any series
of outstanding shares of the Trust.
The Trust's shareholders have the right, upon the declaration in writing or vote
of at least two-thirds of the votes represented by its outstanding shares, to
remove a Trustee. The Trustees shall call a meeting of shareholders to vote on
the removal of a Trustee upon the written request of the record holders of
shares representing at least 10% of all of the votes represented by all
outstanding shares of the Trust. In addition, whenever ten or more shareholders
of record who have been such for at least six months preceding the date of
application, and who hold in the aggregate either shares having a net asset
value of at least $25,000 or at least 1% of the Trust's outstanding shares,
whichever is less, shall apply to the Trustees in writing, stating that they
wish to communicate with other shareholders with a view to obtaining signatures
for a request for a meeting for the purpose of voting upon the question of
removal of any Trustee or Trustees and accompanied by the form of communication
and request which they wish to transmit, the Trustees shall within five business
days after receipt of such application either: (1) afford to such applicants
access to a list of the names and addresses of all shareholders as recorded on
the books of the Trust; or (2) inform such applicants as to the approximate
number of shareholders of record, and the
B-14
<PAGE>
approximate cost of mailing to them the proposed communication and form of
request. If the Trustees elect to follow the latter course, the Trustees, upon
the written request of such applicants, accompanied by a tender of the material
to be mailed and of the reasonable expenses of mailing, shall, with reasonable
promptness, mail such material to all shareholders of record at their addresses
as recorded on the books of the Trust, unless within five business days after
such tender the Trustees shall mail to such applicants and file with the SEC,
together with a copy of the material to be mailed, a written statement signed by
at least a majority of the Trustees to the effect that in their opinion either
such material contains untrue statements of fact or omits to state facts
necessary to make the statements contained therein not misleading, or would be
in violation of applicable law, and specifying the basis of such opinion.
After opportunity for hearing regarding the objections specified in the written
statement so filed, the SEC may, and if demanded by the Trustees or by such
applicants shall, enter an order either sustaining one or more of such
objections, or refusing to sustain any of them. If the SEC shall enter an order
refusing to sustain any such objections or if, after the entry of an order
sustaining one or more of such objections, the SEC shall find, after notice and
opportunity for hearing, that all objections so sustained have been met, and
shall enter an order so declaring, the Trustees shall mail copies of such
material to all shareholders with reasonable promptness after the entry of such
order and the renewal of such tender.
On any matters submitted to a vote of shareholders, all shares of the Trust then
entitled to vote shall be voted in the aggregate as a single class without
regard to Fund or class, except that: (i) when required by the 1940 Act or when
the Trustees shall have determined that the matter affects one or more of the
Funds or classes materially differently, shares will be voted by individual Fund
or class; and (ii) when the Trustees have determined that any matter affects
only the interests of one or more Funds or classes, then only shareholders of
such Fund or class shall be entitled to vote thereon. Shareholder inquiries
should be directed to MassMutual Institutional Funds, 1295 State Street,
Springfield, MA 01111.
CONTROL PERSON AND PRINCIPAL HOLDER OF SECURITIES
-------------------------------------------------
MassMutual may be deemed a control person of the Trust in that certain of its
separate investment accounts and its provision of seed money for the Trust
together constitute 100% of the shares of each class of each Fund of the Trust
as of September 30, 1997.
INVESTMENT MANAGER AND SUBADVISERS
----------------------------------
INVESTMENT MANAGER
MassMutual serves as investment manager to each Fund pursuant to an Investment
Management Agreement with the Trust on behalf of each Fund dated September 30,
1994 (each an "Advisory Agreement"). Under each Advisory Agreement, MassMutual
is obligated to provide for the management of each Fund's portfolio of
securities and makes investment decisions with respect to the purchase and sale
of investments for the Prime Fund, the Short-Term Bond Fund, the Core Bond Fund
and the Prime and Core Bond Sectors of the Balanced Fund, subject to policies
established by the Trustees of the Trust and in accordance with each Fund's
investment objective, policies and restrictions as set forth herein and in the
Prospectus.
Each Advisory Agreement may be terminated at any time without the payment of any
penalty by the Trustees, or by vote of a majority of the outstanding shares of
the Fund, or by MassMutual, on sixty days' written notice. In addition, each
Advisory Agreement automatically terminates if it is assigned or if its
continuance is not specifically approved at least annually (1) by the
affirmative vote of a majority of the Trustees or by the affirmative vote of a
majority of the Fund's shares, and (2) by an affirmative vote of a majority of
the Trustees who are not "interested persons" (as defined in the1940 Act) of the
Trust. Under the terms of each Advisory Agreement, a Fund recognizes
MassMutual's control of the name "MassMutual" and the Trust agrees that its
right to use such name is non-exclusive and can be terminated by MassMutual at
any time. MassMutual's liability regarding its investment management
obligations and duties is limited to situations involving its willful
misfeasance, bad faith, gross negligence or reckless disregard of such
obligations and duties.
MassMutual also serves as investment adviser to: MassMutual Corporate Investors
and MassMutual Participation Investors, closed-end management investment
companies; MML Money Market Fund, MML Equity Fund, MML Managed Bond Fund, MML
Blend Fund, and MML Equity Index Fund, which are series of MML Series Investment
Fund, an open-end management investment company; certain wholly owned
subsidiaries of MassMutual; MassMutual/Carlson CBO N.Y., a corporation that
issued Collateralized Bond Obligations on or about May 1, 1991;
B-15
<PAGE>
MassMutual Corporate Value Partners, a partnership formed in 1994 to provide
investment opportunities on a leverage basis in the public or private high yield
markets; MassMutual High Yield Partners LLC, a limited liability company formed
in 1996 to invest in publicly traded high yield bonds, high yield syndicated
bank debt and public convertible securities; and various employee benefit plans.
The Trust, on behalf of each Fund, pays MassMutual an investment advisory fee
monthly, at an annual rate based upon the average daily net assets of that Fund
as follows: .45% for the Prime Fund, the Short-Term Bond Fund, the Core Bond
Fund, the Balanced Fund and the Value Equity Fund; .55% for the Small Cap Value
Equity Fund; and .85% for the International Equity Fund.
For the last three fiscal periods, the Funds have paid the following amounts as
investment advisory fees to MassMutual pursuant to each Advisory Agreement:
<TABLE>
<CAPTION>
Gross Waiver** Net
PRIME FUND
<S> <C> <C> <C>
Period ended 12/31/94* $ 161,361 $ (15,967) $ 145,394
Year ended 12/31/95 1,027,586 (70,814) 956,772
Year ended 12/31/96 1,150,292 (89,223) 1,061,069
SHORT-TERM BOND FUND
Period ended 12/31/94* 123,543 (12,731) 110,812
Year ended 12/31/95 528,655 (39,446) 489,209
Year ended 12/31/96 606,206 (47,791) 558,415
CORE BOND FUND
Period ended 12/31/94* 231,644 (27,892) 203,752
Year ended 12/31/95 964,830 (91,069) 873,761
Year ended 12/31/96 1,375,667 (128,270) 1,247,397
BALANCED FUND
Period ended 12/31/94* 395,156 (46,523) 348,633
Year ended 12/31/95 1,801,770 (165,250) 1,636,520
Year ended 12/31/96 2,271,174 (203,071) 2,068,103
VALUE EQUITY FUND
Period ended 12/31/94* 1,792,257 (244,445) 1,547,812
Year ended 12/31/95 8,289,231 (852,771) 7,436,460
Year ended 12/31/96 10,377,627 (1,077,667) 9,299,960
SMALL CAP VALUE EQUITY FUND
Period ended 12/31/94* 433,941 (45,051) 388,890
Year ended 12/31/95 1,928,743 (155,450) 1,773,293
Year ended 12/31/96 2,298,488 (182,305) 2,116,183
INTERNATIONAL EQUITY FUND
Period ended 12/31/94* 331,042 (33,401) 297,641
Year ended 12/31/95 1,580,088 (170,788) 1,409,300
Year ended 12/31/96 2,398,114 (196,769) 2,201,345
</TABLE>
*The Funds commenced operations on October 3, 1994.
**MassMutual's voluntary agreement to waive a portion of its management fee
terminated May 1, 1997. See "Financial Highlights" in the Prospectus.
In addition, MassMutual has entered into a separate administrative services
agreement ("Administrative Services Agreement") with each Fund pursuant to which
MassMutual is obligated to provide all necessary administrative and shareholder
services and to bear some Class expenses, such as federal and state registration
fees, printing and
B-16
<PAGE>
postage. MassMutual may, at its expense, employ others to supply all or any part
of the services to be provided to the Funds pursuant to the Administrative
Services Agreements. The Trust, on behalf of each Fund, pays MassMutual an
administrative services fee monthly at an annual rate based upon the average
daily net assets of the applicable class of shares of the Fund which range from
.4752% to .4875% for Class A shares; .2752% to .2875% for Class Y shares; and
.0774% to .0777% for Class S shares.
For the last three fiscal periods, the Funds have paid the following amounts as
administrative services fees to MassMutual pursuant to each Administrative
Services Agreement:
<TABLE>
<CAPTION>
PRIME FUND
<S> <C>
Period ended 12/31/94* $ 29,307
Year ended 12/31/95 186,608
Year ended 12/31/96 208,805
SHORT-TERM BOND FUND
Period ended 12/31/94* 21,656
Year ended 12/31/95 93,087
Year ended 12/31/96 106,637
CORE BOND FUND
Period ended 12/31/94* 43,535
Year ended 12/31/95 181,925
Year ended 12/31/96 258,828
BALANCED FUND
Period ended 12/31/94* 75,006
Year ended 12/31/95 342,532
Year ended 12/31/96 431,541
VALUE EQUITY FUND
Period ended 12/31/94* 360,634
Year ended 12/31/95 1,668,405
Year ended 12/31/96 2,088,712
SMALL CAP VALUE EQUITY FUND
Period ended 12/31/94* 68,195
Year ended 12/31/95 303,658
Year ended 12/31/96 361,815
INTERNATIONAL EQUITY FUND
Period ended 12/31/94* 38,056
Year ended 12/31/95 181,945
Year ended 12/31/96 275,670
</TABLE>
*The Funds commenced operations on October 3, 1994.
INVESTMENT SUBADVISERS
Securities held by the Funds are also frequently held by MassMutual investment
accounts and by other investment companies and accounts for which MassMutual,
Babson or HarbourView act as investment adviser or sub-adviser. If the same
security is purchased or sold for any Fund and such accounts or companies at or
about the same time, such purchases or sales normally will be combined, to the
extent practicable, and will be allocated as nearly as practicable on a pro rata
basis in proportion to the amounts to be purchased or sold for each. In
determining the amounts to be purchased and sold, the main factors to be
considered will be the investment objectives of the respective portfolios, the
relative size of portfolio holdings of the same or comparable security,
availability of cash for investment by the various portfolios and the size of
their respective investment commitments. It is believed that the ability of the
Funds to participate in larger volume transactions will, in most cases, produce
better execution for
B-17
<PAGE>
the Funds. In some cases, however, this procedure could have a detrimental
effect on the price and amount of a security available to a Fund or the price at
which a security may be sold. It is the opinion of the Trust's management that
such execution advantage and the desirability of retaining MassMutual, Babson,
and HarborView as advisers of the Funds outweigh the disadvantages, if any,
which might result from this procedure.
Babson is a wholly-owned subsidiary of DLB Acquisition Corporation, an indirect,
controlled subsidiary of MassMutual. HarbourView is a wholly owned subsidiary
of OppenheimerFunds, Inc. ("OFI"), which is a wholly owned subsidiary of
Oppenheimer Acquisition Corporation, a holding company owned in part by senior
management of OFI and ultimately controlled by MassMutual. MassMutual, Babson
and HarbourView are each registered with the SEC as investment advisers.
THE DISTRIBUTOR
---------------
The Trust's shares are continuously distributed by OppenheimerFunds Distributor,
Inc. (the "Distributor") pursuant to a Distribution Agreement with the Trust
dated [October 24, 1997]. The Distributor pays commissions to its selling
dealers as well as the cost of printing and mailing Prospectuses to potential
investors and of any advertising incurred by it in connection with distribution
of shares of the Funds. MML Investor Services, Inc. serves as the
sub-distributor to the Trust pursuant to an agreement with the Distributor dated
September 8, 1997.
The Distribution Agreement will continue in effect for successive one-year
periods, provided that each such continuance is specifically approved (i) by the
vote of a majority of the Trustees or by a vote of a majority of the shares of
the Trust; and (ii) by a majority of the Trustees who are not parties to the
Distribution Agreement or interested persons of the Trust (as defined in the
1940 Act), cast in person at a meeting called for the purpose of voting on such
approval.
Administrative Services Plans for Class A Shares
The Trust has adopted, with respect to the Class A shares of each Fund, an
Administrative Services Plan (each such plan, a "Plan") pursuant to Rule 12b-1
under the 1940 Act. the Trustees of the Trust, including a majority of the
Trustees who are not interested persons of the Trust and who have no direct or
indirect financial interest in the operation of the Plans, by vote cast in
person at a meeting called for the purpose of voting on such Plans, approved the
Plan on [Date]. Under the terms of each Plan, the Trust is permitted to
reimburse, out of the assets attributable to the Class A shares of each
applicable Fund, in an amount up to 0.25% on an annual basis of the average
aggregate net assets of that class. MassMutual for the provision of services to
Class A shareholders by it, the Distributor and investment dealers [and to
reimburse certain other distribution related expenses]. These services may
include, but are not limited to, the following: providing facilities to answer
questions from prospective investors about a Fund; receiving and answering
correspondence, including requests for prospectuses and statements of additional
information; preparing, printing and delivering prospectuses and shareholder
reports to prospective shareholders; complying with federal and state
securities laws pertaining to the sale of Class A shares; assisting investors in
completing application forms and selecting dividend and other account options;
receiving, aggregating and processing shareholder orders; furnishing shareholder
sub-accounting; providing and maintaining elective shareholder services such as
check writing and wire transfer services; providing and maintaining
pre-authorized investment plans; communicating periodically with shareholders;
acting as the sole shareholder of record and nominee for shareholders;
maintaining accounting records for shareholders; and answering questions and
handling correspondence from shareholders about their accounts.
Each Plan provides that it may not be amended to materially increase the
costs which Class A shareholders may bear under the Plan without the approval of
a majority of the outstanding Class A shares of the Fund.
Each Plan provides that it may not take effect until approved by vote of a
majority of both (i) the Trustees of the Trust and (ii) the Trustees of the
Trust who are not interested persons of the Trust and have no direct or indirect
financial interest in the operation of the Plan or any agreements related to it.
Each Plan provides that it shall continue in effect so long as such continuance
is specifically approved at least annually by (i) Trustees of the Trust and (ii)
Trustees of the Trust who are not interested persons of the Trust and have no
direct or indirect financial interest in the operation of the Plan or any
agreements related to it. Each Plan provides that the Distributor and MassMutual
shall provide to the Trustees, and the Board shall review at least quarterly, a
written report of the amounts so expended and the purposes for which such
expenditures were made.
Rules of the NASD limit the amount of distribution fees that may be paid by
mutual funds. "Service fees," defined to mean fees paid for providing
shareholder services or the maintenance of accounts (but not transfer agency
services) are not subject to the limits. The Trust believes that most, if not
all, of the fees paid pursuant to the Plan will qualify as "service fees" and
therefore will not be limited by NASD rules.
The Plans were not in effect prior to the date of this Statement of
Additional Information and no payments were made thereunder in prior fiscal
periods.
Under 12b-1 plans for classes of shares that no longer exist, the Trust paid
distribution and service fees in 1996 of approximately $856 for the Prime Fund,
$896 for the Short-Term Bond Fund, $1,098 for the Core Bond Fund, $1,154 for the
Balanced Fund, $1,074 for the Value Equity Fund, $1,195 for the Small Cap Value
Equity Fund, and $915 for the International Equity Fund, of which approximately
$4,897 was paid to the Distributor for distribution services and approximately
$2,292 was paid to MassMutual for sales related expenses plans.
B-18
<PAGE>
CUSTODIAN, DIVIDEND DISBURSING AGENT AND TRANSFER AGENT
-------------------------------------------------------
Investors Bank & Trust Company, located at 200 Clarendon Street, Boston,
Massachusetts 02116, is the custodian of the Funds' investments (the
"Custodian") and is the Funds' transfer agent and dividend disbursing agent (the
"Transfer Agent"). The Custodian and the Transfer Agent do not assist in, and
are not responsible for, the investment decisions and policies of the
Funds.
INDEPENDENT PUBLIC ACCOUNTANT
-----------------------------
Coopers & Lybrand L.L.P., located at 2300 Bay Bank Tower, 1500 Main Street,
Springfield, Massachusetts 01101, is the Trust's independent public accountants.
PORTFOLIO TRANSACTIONS AND BROKERAGE
------------------------------------
Purchases and sales of securities on a securities exchange are effected by
brokers, and each Fund which purchases or sells securities on a securities
exchange pays a brokerage commission for this service. In transactions on stock
exchanges in the United States, these commissions are negotiated, whereas on
many foreign stock exchanges these commissions are fixed. In the overthecounter
markets, securities are generally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are purchased at a fixed price which includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount. On occasion, certain money market instruments may be
purchased directly from an issuer, in which case no commissions or discounts are
paid.
The primary consideration in placing portfolio security transactions with
broker-dealers for execution is to obtain and maintain the availability of
execution at the most favorable prices and in the most effective manner
possible. Each adviser attempts to achieve this result by selecting
brokerdealers to execute portfolio transactions on the basis of their
professional capability, the value and quality of their brokerage services and
the level of their brokerage commissions.
Under each Advisory Agreement and as permitted by Section 28(e) of the
Securities Exchange Act of 1934, an adviser may cause a Fund to pay a broker-
dealer which provides brokerage and research services to the adviser an amount
of commission for effecting a securities transaction for a Fund in excess of the
amount other broker-dealers would have charged for the transaction if the
adviser determines in good faith that the greater commission is reasonable in
relation to the value of the brokerage and research services provided by the
executing broker-dealer viewed in terms of either a particular transaction or
the adviser's overall responsibilities to the Trust and to its other clients.
The term "brokerage and research services" includes; advice as to the value of
securities, the advisability of investing in, purchasing, or selling securities,
and the availability of securities or of purchasers or sellers of securities;
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and the performance of accounts;
and effecting securities transactions and performing functions incidental
thereto such as clearance and settlement.
Although commissions paid on every transaction will, in the judgment of the
adviser, be reasonable in relation to the value of the brokerage services
provided, commissions exceeding those which another broker might charge may be
paid to broker-dealers (except the Distributor) who were selected to execute
transactions on behalf of the Trust and the adviser's other clients in part for
providing advice as to the availability of securities or of purchasers or
sellers of securities and services in effecting securities transactions and
performing functions incidental thereto such as clearance and settlement.
Broker-dealers may be willing to furnish statistical, research and other factual
information or services ("Research") to an adviser for no consideration other
than brokerage or underwriting commissions. Securities may be bought or sold
through such brokerdealers, but at present, unless otherwise directed by the
Trust, a commission higher than one charged elsewhere will not be paid to such a
firm solely because it provided Research to the adviser. Research provided by
brokers is used for the benefit of all of the adviser's clients and not solely
or necessarily for the benefit of the Trust. The adviser attempts to evaluate
the quality of Research provided by brokers. Results of this effort are
sometimes used by the adviser as a consideration in the selection of brokers to
execute portfolio transactions.
B-19
<PAGE>
The investment advisory fee that the Trust pays on behalf of each Fund to
MassMutual will not be reduced as a consequence of an adviser's receipt of
brokerage and research services. To the extent the Trust's portfolio
transactions are used to obtain such services, the brokerage commissions paid by
the Trust will exceed those that might otherwise be paid, by an amount which
cannot now be determined. Such services would be useful and of value to an
adviser in serving both the Trust and other clients and, conversely, such
services obtained by the placement of brokerage business of other clients would
be useful to an adviser in carrying out its obligations to the Trust.
Brokerage commissions paid by the Funds for the fiscal years ended December 31,
1996 and December 31, 1995 and for the period ended December 31, 1994,
respectively, were as follows: Balanced Fund $115,756, $87,156 and $20,315;
Value Equity Fund $933,716, $643,882 and $128,536; Small Cap Value Equity Fund
$430,964, $291,912 and $50,261; and International Equity Fund $1,103,103,
$1,218,802 and $55,656. Approximately $24,000 of the brokerage commissions paid
by the Funds for the fiscal year ended December 31, 1996 were paid to Jefferies
& Co., Inc. A Trustee of the Trust is a director of the parent company of
Jefferies & Co., Inc.
The Prime Fund, ShortTerm Bond Fund and the Core Bond Fund did not incur
brokerage commissions during these periods.
SHAREHOLDER INVESTMENT ACCOUNT
------------------------------
A Shareholder Investment Account is established for each Investor in the
Funds./1/ Each account contains a record of the shares of each Fund maintained
by the Transfer Agent. No share certificate will be issued. Whenever a
transaction takes place in the Shareholder Investment Account, the Investor will
be mailed a statement showing the transaction and the status of the account.
REDEMPTION OF SHARES
--------------------
With respect to each Fund, the Trustees may suspend the right of redemption,
postpone the date of payment or suspend the determination of net asset value (a)
for any period during which the New York Stock Exchange ("NYSE") is closed
(other than for customary weekend and holiday closing), (b) for any period
during which trading in the markets the Fund normally uses is restricted, (c)
when an emergency exists as determined by the SEC so that disposal of the Fund's
investments or a determination of its net asset value is not reasonably
practicable, or (d) for such other periods as the SEC by order may permit for
the protection of the Trust's shareholders. While the Trust's Declaration of
Trust would permit it to redeem shares in cash or other assets of the Fund or
both, the Trust has filed an irrevocable election with the SEC to pay in cash
all requests for redemption received from any shareholder if the aggregate
amount of such requests in any 90day period does not exceed the lesser of
$250,000 or 1% of a Fund's net assets.
VALUATION OF PORTFOLIO SECURITIES
---------------------------------
The net asset value per share of each Fund is determined by the Transfer Agent
as of the close of the NYSE, currently 4:00 p.m., Eastern Time, on each day the
NYSE is open for trading and the Custodian is open for business. The NYSE is
not open for trading on New Year's Day, Martin Luther King, Jr. Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day and on occasion is closed early or entirely due to weather or
other conditions.
Equity securities are valued on the basis of valuations furnished by a pricing
service, authorized by the Board of Trustees, which provides the last reported
sale price for securities listed on a national securities exchange or on the
NASDAQ national market system, or in the case of overthecounter securities not
so listed, the last reported bid price. Debt securities (other than shortterm
obligations with a remaining maturity of sixty days or less) are valued on the
basis of valuations furnished by a pricing service, authorized by the Board of
Trustees, which determines valuations taking into account appropriate factors
such as institutionalsize trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other
market data. Money market obligations with a remaining maturity of sixty days
or less are valued at amortized cost unless such value does not
- -------------------------------
/1/ "Investor" includes a plan sponsor, plan fiduciary, trustee, institutional
investor, insurance company separate investment account and/or any other person
or entity described in the Prospectus as an eligible purchaser of shares, that
purchases shares of the Trust. An Investor that is a separate investment account
of MassMutual is referred to as a "SIA Investor." Investors that are purchasing
shares of a fund on behalf of a Plan are sometimes referred to as "Plan
Investors." The term Investor does not include a Plan Participant.
B-20
<PAGE>
represent fair value. All other securities and other assets, including debt
securities the prices for which supplied by a pricing agent are deemed by
MassMutual not to be representative of market values, but excluding money market
instruments with a remaining maturity of sixty days or less and including some
restricted securities and securities for which no market quotation is available,
are valued at fair value in accordance with procedures approved by and
determined in good faith by the Trustees, although the actual calculation may be
done by others.
Portfolio securities traded on more than one U.S. national securities exchange
or foreign securities exchange are valued at the last price on the business day
as of which such value is being determined at the close of the exchange
representing the principal market for such securities. All assets and
liabilities expressed in foreign currencies will be converted into U.S. dollars
at the mean between the buying and selling rates of such currencies against U.S.
dollars last quoted by any major bank. If such quotations are not available,
the rate of exchange will be determined in accordance with policies established
by the Trustees.
The proceeds received by each Fund for each issue or sale of its shares, and all
net investment income, realized and unrealized gain will be specifically
allocated to such Fund and constitute the underlying assets of that Fund. The
underlying assets of each Fund will be segregated on the books of account, and
will be charged with the liabilities in respect of such Fund and with a share of
the general liabilities of the Trust. Expenses with respect to any two or more
Funds are to be allocated in proportion to the net asset values of the
respective Funds except where allocations of direct expenses can otherwise be
fairly made. Each class of shares of a Fund will be charged with liabilities
directly attributable to such class, and other Fund expenses are to be allocated
in proportion to the net asset values of the respective classes.
DESCRIPTION OF SHARES
---------------------
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Trust. However, the Trust's
Declaration of Trust disclaims liability of the shareholders, Trustees, or
officers of the Trust for acts or obligations of the Trust, which are binding
only on the assets and property of the Trust, and requires that notice of such
disclaimer be given in each agreement, obligation, or instrument entered into or
executed by the Trust or the Trustees. The Trust's Declaration of Trust
provides for indemnification out of the Trust property for all loss and expense
of any shareholder held personally liable for the obligations of the Trust.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is considered remote since it is limited to circumstances
in which the disclaimer is inoperative and the Trust itself would be unable to
meet its obligations.
INVESTMENT PERFORMANCE
----------------------
The yield of the Prime Fund, the Short-Term Bond Fund and the Core Bond Fund, as
well as total return figures for all of the Funds, may be provided in reports,
sales literature and advertisements. Any performance information with respect
to Class S shares will be provided net of any SIA and Fund expenses.
Yield for each class of shares of such Funds will be based upon a stated 30-day
period and will be computed by dividing the net investment income per share
earned during the period by the maximum offering price per share on the last day
of the period, according to the following formula:
YIELD = 2 [(a-b + 1)/6/ - 1]
-------
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements, if
any).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the maximum offering price (which is the net asset value) per
share on the last day of the period.
B-21
<PAGE>
Each of the Funds may also advertise its total return for each class of shares.
Total return quotations will be based upon a stated period and will be computed
by determining the average annual compounded rate of return over the stated
period that would equate an initial amount invested to the ending redeemable
value of the investment (assuming reinvestment of all distributions), according
to the following formula:
P(1 + T)/n/ = ERV
Where: P = a hypothetical initial payment of $1000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value at the end of the stated period of a
hypothetical $1000 payment made at the beginning of the
stated period .
The Funds may show total return calculated without giving effect to the
voluntary partial waiver of management fee by MassMutual, which terminated May
1, 1997 ("Standardized Total Return Without Reduction in Management Fee"). See
"Financial Highlights" in the Prospectus. Each investment performance figure
will be carried to the nearest hundredth of one percent.
A Fund's yield or total return is not fixed or guaranteed and the Fund's
principal is not insured. Investment performance quotations should not be
considered to be representations of the performance for any period in the
future. The yield is a function of available interest rates on securities in
which the Fund invests, which can be expected to fluctuate, as well as of the
quality, maturity and types of portfolio instruments held by the Fund and of the
Fund's operating expenses. The yield may be affected if, through net sales of
its shares, there is a net investment of new money in the Fund which the Fund
invests at returns different from those being earned on current portfolio
instruments. Yield may also vary if the Fund experiences net redemptions, which
may require the disposition of some of the Fund's current portfolio instruments.
Total return is a function of the value of the Fund's portfolio securities over
time, which may be expected to fluctuate, as well as of income earned by the
Fund on such securities and of the Fund's operating expenses.
Set forth below is the yield for Class S shares of the Prime Fund, Short-Term
Bond Fund and Core Bond Fund for the 30day period ended June 30, 1997.
YIELD FOR THE 30-DAY PERIOD ENDED JUNE 30, 1997
Class S Shares* (Unaudited)
<TABLE>
<CAPTION>
Fund Yield
<S> <C>
Prime Fund 5.44%
Short-Term Bond Fund 5.72%
Core Bond Fund 6.20%
</TABLE>
*Yield for Class A and Y shares may differ due to different expense structures.
TAXATION
--------
Each Fund intends to qualify each year and elect to be taxed as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). In order to qualify as a "regulated investment company,"
a Fund must, among other things: (a) derive at least 90% of its gross income
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities, or foreign currencies, and
other income (including gains from forward contracts) derived with respect to
its business of investing in such stock, securities, or currencies; and (b)
diversify its holdings so that, at the close of each quarter of its taxable
year, (i) at least 50% of the value of its total assets consists of cash, cash
items, U.S. Government securities, and other securities limited generally with
respect to any one issuer to not more than 5% of the total assets of the Fund
and not more than 10% of the outstanding voting securities of such issuer, and
(ii) not more than 25% of the value of its total assets is invested in the
securities of any issuer (other than U.S. Government securities). If a Fund
fails to qualify as a regulated investment company, it will be treated as an
ordinary corporation for federal income tax purposes.
B-22
<PAGE>
As a regulated investment company electing to have its tax liability determined
under Subchapter M, in general a Fund will not be subject to federal income tax
on its ordinary income or capital gains that are distributed. As a
Massachusetts business trust, a Fund under present law will not be subject to
any excise or income taxes imposed by Massachusetts.
An excise tax at the rate of 4% will be imposed on the excess, if any, of each
Fund's "required distribution" over its actual distributions in any calendar
year. Generally, the "required distribution" is 98% of the Fund's ordinary
income for the calendar year plus 98% of its capital gain net income recognized
during the one-year period ending on October 31 (or December 31, if the Fund so
elects) plus undistributed amounts from prior years. Each Fund intends to make
distributions sufficient to avoid imposition of the excise tax. Distributions
declared by a Fund during October, November or December to shareholders of
record on a date in any such month and paid by the Fund during the following
January will be treated for federal tax purposes as paid by the Fund and
received by shareholders on December 31 of the year in which declared.
Except in the case of certain shareholders eligible for preferential tax
treatment, e.g., qualified retirement or pension trusts, shareholders of each
Fund will be subject to federal income taxes on distributions made by the Fund
whether received in cash or additional shares of the Fund. Distributions by
each Fund of net income and short-term capital gains, if any, will be taxable to
shareholders as ordinary income. Designated distributions of long-term capital
gains, if any, will be taxable to shareholders as long-term capital gains,
without regard to how long a shareholder has held shares of the Fund. Under the
Taxpayer Relief Act of 1997, long-term capital gains generally will be subject
to a 28% or 20% tax rate, depending on the holding period in the portfolio
investment.
Dividends and distributions on Fund shares received shortly after their
purchase, although in effect a return of capital, are subject to federal income
taxes. Investment income and gains received by a Fund from sources outside the
United States might be subject to foreign taxes which are withheld at the
source. The effective rate of these foreign taxes cannot be determined in
advance because it depends on the specific countries in which its assets will be
invested, the amount of the assets invested in each such country and the
possible applicability of treaty relief.
The International Equity Fund may be eligible to make an election under Section
853 of the Code so that any of its shareholders subject to federal income taxes
will be able to claim a credit or deduction on their income tax returns for, and
will be required to treat as part of the amounts distributed to them, their pro
rata portion of qualified taxes paid by the Fund to foreign countries. The
ability of shareholders of the Fund to claim a foreign tax credit is subject to
certain limitations imposed by Section 904 of the Code, which in general limits
the amount of foreign tax that may be used to reduce a shareholder's U.S. tax
liability to that amount of U.S. tax which would be imposed on the amount and
type of income in respect of which the foreign tax was paid. In addition, the
ability of shareholders to claim a foreign tax credit is subject to a holding
period requirement. A shareholder who for U.S. income tax purposes claims a
foreign tax credit in respect of Fund distributions may not claim a deduction
for foreign taxes paid by the Fund, regardless of whether the shareholder
itemizes deductions. Also, under Section 63 of the Code, no deduction for
foreign taxes may be claimed by shareholders who do not itemize deductions on
their federal income tax returns. It should also be noted that a tax-exempt
shareholder, like other shareholders, will be required to treat as part of the
amounts distributed to it a pro rata portion of the income taxes paid by the
Fund to foreign countries. However, that income will generally be exempt from
U.S. taxation by virtue of such shareholder's tax-exempt status and such a
shareholder will not be entitled to either a tax credit or a deduction with
respect to such income. The International Equity Fund will notify shareholders
each year of the amount of dividends and distributions and the shareholder's pro
rata share of qualified taxes paid by the Fund to foreign countries. Investment
by a Fund in "passive foreign investment companies" could subject the Fund to
a U.S. federal income tax or other charge on the proceeds from the sale of its
investment in such a company; however, this tax can be avoided by making an
election to mark such investments to market annually or to treat the passive
foreign investment company as a "qualified electing fund."
Redemptions and exchanges of each Fund's shares are taxable events and,
accordingly, shareholders subject to federal income taxes may realize gains and
losses on these transactions. If shares have been held for more than one
year, gain or loss realized will be long-term capital gain or loss, provided the
shareholder holds the shares as a capital asset. Under the Taxpayer Relief Act
of 1997, long-term capital gains generally will be subject to a 28% or 20% tax
rate depending on the Investor's holding period in Fund shares. However, a loss
on the sale of shares held for six months or less will be treated as a long-term
capital loss to the extent of any long-term capital gain dividend
B-23
<PAGE>
paid to the shareholder with respect to such shares. Furthermore, no loss will
be allowed on the sale of Fund shares to the extent the shareholder acquired
other shares of the same Fund within 30 days prior to the sale of the loss
shares or 30 days after such sale. The state and local tax effects of
distributions received from a Fund, and any special tax considerations
associated with foreign investments of the Fund, should be examined by investors
with regard to their own tax situation.
A Fund's transactions in foreign currency-denominated debt instruments and its
hedging activities will likely produce a difference between its book income and
its taxable income. This difference may cause a portion of the Fund's
distributions of book income to constitute returns of capital for tax purposes
or require the Fund to make distributions exceeding book income in order to
permit the Fund to continue to qualify, and be taxed under Subchapter M of the
Code, as a regulated investment company.
Under federal income tax law, a portion of the difference between the purchase
price of zero-coupon securities in which a Fund has invested and their face
value ("original issue discount") is considered to be income to the Fund each
year even though the Fund will not receive cash interest payments from these
securities. This original issue discount (imputed income) will make up a part of
the net investment income of the Fund which must be distributed to shareholders
in order to maintain the qualification of the Fund as a regulated investment
company and to avoid federal income tax at the level of the Fund.
The foregoing is a general and abbreviated summary of the applicable provisions
of the Code and regulations currently in effect. For the complete provisions,
reference should be made to the pertinent Code sections and regulations. The
Code and regulations are subject to change by legislative or administrative
action. This discussion of the federal income tax treatment of the Fund and its
shareholders does not describe in any respect the tax treatment of any
particular arrangement, e.g., tax-exempt trusts or insurance products, pursuant
to which or by which investments in the Fund may be made.
EXPERTS
-------
The financial statements of the MassMutual Prime Fund, MassMutual Short-Term
Bond Fund, MassMutual Core Bond Fund, MassMutual Balanced Fund, MassMutual Value
Equity Fund, MassMutual Small Cap Value Equity Fund, and MassMutual
International Equity Fund included in this Statement of Additional Information
for each period through December 31, 1996 have been included herein in reliance
on the report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
THE NAME MASSMUTUAL INSTITUTIONAL FUNDS IS THE DESIGNATION OF THE TRUSTEES UNDER
A DECLARATION OF TRUST DATED MAY 28, 1993, AS AMENDED FROM TIME TO TIME. THE
OBLIGATIONS OF SUCH TRUST ARE NOT PERSONALLY BINDING UPON, NOR SHALL RESORT BE
HAD TO THE PROPERTY OF ANY OF THE TRUSTEES, SHAREHOLDERS, OFFICERS, EMPLOYEES OR
AGENTS OF SUCH TRUST, BUT ONLY THE PROPERTY OF THE RELEVANT FUND SHALL BE BOUND.
B-24
<PAGE>
APPENDIX - DESCRIPTION OF SECURITIES RATINGS
Although the ratings of fixed-income securities by Standard & Poor's Ratings
Group ("S&P") and Moody's Investors Service, Inc. ("Moody's") are a
generally accepted measurement of credit risk, they are subject to certain
limitations. For example, ratings are based primarily upon historical events
and do not necessarily reflect the future. Furthermore, there is a period of
time between the issuance of a rating and the update of the rating, during which
time a published rating may be inaccurate.
The descriptions of the S&P and Moody's commercial paper, bond and municipal
securities ratings are set forth below.
COMMERCIAL PAPER RATINGS:
S&P commercial paper ratings are graded into four categories, ranging from A for
the highest quality obligations to D for the lowest. The A, A-1 and A-w
categories are described as follows:
A Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined with
the designations 1, 2, and 3 to indicate the relative degree of safety.
A-1 This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be noted with a plus (+) sign
designation.
A-2 Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.
Moody's employs three designations, all judged to be investment grade, to
indicate the relative repayment ability of rated issuers. The two highest
designations are as follows:
Issuers (or supporting institutions) rated Prime-1 (or P-1) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 (or P-1)
repayment ability will normally be evidenced by many of the following
characteristics:
. Leading market positions in well-established industries.
. High rates of return on funds employed.
. Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
. Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
. Well-established access to a range of financial markets and assured sources
of alternate liquidity.
Issuers (or supporting institutions) rated Prime-2 (or P-2) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
BOND RATINGS:
S&P describes its four highest ratings for corporate debt as follows:
AAA Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in a small degree.
A Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas such debt normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
B-25
<PAGE>
The ratings from AA to CCC may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.
Moody's describes its four highest corporate bond ratings as follows:
Aaa Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they compose what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment attributes and may
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment in the future.
Baa Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
B-26
<PAGE>
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of the MassMutual Institutional Funds:
We have audited the accompanying statements of assets and liabilities of the
MassMutual Institutional Funds, comprising, respectively, the Prime, Short-Term
Bond, Core Bond, Balanced, Value Equity, Small Cap Value Equity and
International Equity Funds, (the "Funds"), including the portfolios of
investments, as of December 31, 1996, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended and the financial highlights for each of the
two years in the period then ended and for the period from October 3, 1994
(commencement of operations) through December 31, 1994. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights 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, 1996, by correspondence with the custodian and brokers. 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 and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds constituting the MassMutual Institutional Funds as of
December 31, 1996 and the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period then
ended, and their financial highlights for each of the two years in the period
then ended and for the period from October 3, 1994 (commencement of operations)
through December 31, 1994, in conformity with generally accepted accounting
principles.
/s/ Coopers & Lybrand L.L.P.
Springfield, Massachusetts
February 14, 1997
75
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Prime Fund - Portfolio of Investments
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS - 100.4%
Commercial Paper -- 99.8%
American Brands, Inc.
5.320% 2/10/1997 $ 4,925,000 $ 4,895,888
Aristar, Inc.
5.380% 1/28/1997 4,445,000 4,427,064
Baxter International
Inc.
5.500% 3/21/1997 4,425,000 4,370,622
Burlington Northern
Santa Fe Corp.
5.850% 1/30/1997 8,800,000 8,758,530
Carter Holt Harvey
Limited
5.560% 3/11/1997 5,270,000 5,213,435
Carter Holt Harvey
Limited
5.700% 1/10/1997 3,855,000 3,849,507
Central and South
West Corporation
5.520% 1/14/1997 9,435,000 9,416,193
Comdisco, Inc.
5.520% 2/13/1997 4,015,000 3,988,528
Comdisco, Inc.
5.580% 3/14/1997 5,000,000 4,944,000
ConAgra, Inc.
5.500% 2/18/1997 7,750,000 7,693,167
Cox Enterprises, Inc.
5.480% 2/24/1997 4,185,000 4,150,599
Cox Enterprises, Inc.
5.530% 3/07/1997 1,250,000 1,237,361
Crown Cork & Seal
Company Inc.
5.650% 3/06/1997 2,865,000 2,836,477
CSX Corporation
5.470% 1/31/1997 4,980,000 4,957,299
CSX Corporation
5.470% 2/14/1997 4,450,000 4,420,249
Dana Credit
Corporation
5.470% 1/21/1997 4,165,000 4,152,343
Dana Credit
Corporation
5.550% 1/10/1997 890,000 888,765
Dean Witter, Discover
& Company
5.380% 1/31/1997 4,955,000 4,932,785
Dominion Resources,
Inc.
5.500% 1/29/1997 7,000,000 6,970,055
Dominion Resources,
Inc.
5.500% 2/20/1997 2,300,000 2,282,431
Federal Signal Corp.
5.450% 1/07/1997 4,670,000 4,665,758
Frontier Corporation
5.600% 2/14/1997 5,385,000 5,348,143
General Motors
Acceptance
Corporation
5.822% 2/04/1997 7,690,000 7,881,516
Illinois Power
Company
5.590% 2/12/1997 1,140,000 1,132,565
Illinois Power
Company
5.680% 2/19/1997 7,800,000 7,739,697
ITT Corporation
5.720% 2/06/1997 4,870,000 4,842,144
ITT Corporation
5.730% 1/13/1997 4,900,000 4,890,641
Kerr-McGee Credit
Corporation
5.700% 2/11/1997 6,475,000 6,432,966
Lockheed Martin
Corporation
5.480% 3/07/1997 4,700,000 4,652,478
Lockheed Martin
Corporation
5.720% 1/24/1997 2,290,000 2,281,632
Lockheed Martin
Corporation
5.750% 2/07/1997 2,495,000 2,480,256
NYNEX Corporation
5.420% 3/26/1997 5,690,000 5,615,651
ORIX Credit Alliance,
Inc.
5.530% 2/28/1997 4,700,000 4,658,125
ORIX Credit Alliance,
Inc.
5.550% 1/16/1997 4,780,000 4,768,947
Praxair, Inc.
5.450% 2/25/1997 3,835,000 3,803,069
Praxair, Inc.
5.450% 2/27/1997 2,660,000 2,637,046
Praxair, Inc.
5.450% 3/27/1997 2,985,000 2,945,532
Public Service
Company of Colorado
5.600% 2/07/1997 4,870,000 4,841,971
Public Service
Electric and Gas
Company
5.520% 1/24/1997 410,000 408,554
Ralston Purina
Company
5.500% 1/06/1997 1,475,000 1,473,873
Rite Aid Corporation
5.600% 3/04/1997 5,510,000 5,456,859
Service Corporation
International
5.480% 2/03/1997 7,170,000 7,133,983
Texas Utilities
Electric Co.
5.590% 2/12/1997 8,800,000 8,742,609
Textron Financial
Corporation
5.550% 3/03/1997 1,325,000 1,312,427
Textron Financial
Corporation
5.670% 3/24/1997 8,700,000 8,589,027
Timken Company
5.510% 3/04/1997 5,000,000 4,951,778
Tyson Foods, Inc.
5.720% 1/22/1997 2,300,000 2,292,326
Union Camp Corp.
5.475% 2/26/1997 3,390,000 3,361,128
</TABLE>
(Continued)
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Prime Fund - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
Union Pacific
Corporation
5.620% 3/18/1997 $ 7,635,000 $ 7,544,737
UOP
5.620% 2/26/1997 1,645,000 1,630,619
UOP
5.650% 3/05/1997 7,425,000 7,352,235
UOP
6.000% 2/10/1997 3,150,000 3,129,000
Western Resources
Inc.
5.470% 2/27/1997 490,000 485,756
Western Resources
Inc.
5.600% 1/15/1997 8,625,000 8,606,217
Whirlpool Financial
Corporation
5.600% 1/17/1997 10,070,000 10,044,936
-------------
258,519,499
-------------
Discount Note -- 0.6%
Federal Farm Credit
Bank
5.230% 8/19/1997 1,530,000 1,475,260
-------------
TOTAL SHORT-TERM
INVESTMENTS 259,994,759
=============
(Cost $260,002,847)+
TOTAL INVESTMENTS-- 100.4% 259,994,759
Other Assets/
(Liabilities) - (0.4%) (933,278)
-------------
NET ASSETS-- 100.0% $259,061,481
=============
</TABLE>
Notes to Portfolio of Investments
+Aggregate cost for Federal tax purposes (Note 7)
[The remainder of this page intentionally left blank.]
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Prime Fund - Financial Statements
- --------------------------------------------------------------------------------
December 31, 1996
-----------------
Statement of Assets and Liabilities
<TABLE>
<S> <C>
Assets:
Short-term investments, at value (cost $260,002,847) (Note 2)............ $ 259,994,759
Cash..................................................................... 1,293
Receivables from:
Fund shares sold....................................................... 967,627
Investment manager (Note 3)............................................ 9,209
-------------------
Total assets......................................................... 260,972,888
-------------------
Liabilities:
Payables for:
Fund shares redeemed................................................... 1,784,741
Directors' fees and expenses (Note 3).................................. 5,177
Affiliates (Note 3):
Investment management fees........................................... 95,194
Administration fees.................................................. 17,288
Service and distribution fees........................................ 220
Accrued expenses and other liabilities................................... 8,787
-------------------
Total liabilities.................................................... 1,911,407
-------------------
Net assets............................................................... $ 259,061,481
===================
Net assets consist of:
Paid-in capital.......................................................... $ 258,996,044
Undistributed net investment income...................................... 80,676
Accumulated net realized loss on investments............................. (7,151)
Net unrealized depreciation on investments............................... (8,088)
-------------------
$ 259,061,481
===================
Net assets:
Class 1.................................................................. $ 109,724
===================
Class 2.................................................................. $ 111,039
===================
Class 3.................................................................. $ 111,694
===================
Class 4.................................................................. $ 258,729,024
===================
Shares outstanding:
Class 1.................................................................. 726.501
===================
Class 2.................................................................. 734.255
===================
Class 3.................................................................. 738.294
===================
Class 4.................................................................. 1,713,473.880
===================
Net asset value, offering price and
redemption price per share:
Class 1.................................................................. $ 151.03
===================
Class 2.................................................................. $ 151.23
===================
Class 3.................................................................. $ 151.29
===================
Class 4.................................................................. $ 151.00
===================
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Prime Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended
December 31, 1996
-----------------
Statement of Operations
<S> <C>
Investment income:
Interest...................................................... $ 14,350,850
-------------------
Expenses (Note 1):
Investment management fees (Note 3)........................... 1,150,292
Custody fees.................................................. 26,962
Audit and legal fees.......................................... 8,160
Directors' fees (Note 3)...................................... 15,247
Fees waived by the investment manager (Note 3)................ (89,223)
-------------------
1,111,438
Administration fees (Note 3):
Class 1..................................................... 605
Class 2..................................................... 557
Class 3..................................................... 344
Class 4..................................................... 207,299
Distribution and service fees (Note 3):
Class 1..................................................... 699
Class 2..................................................... 163
-------------------
Net expenses.............................................. 1,321,105
-------------------
Net investment income..................................... 13,029,745
-------------------
Realized and unrealized gain (loss):
Net realized loss on investment transactions.................. (5,068)
Net change in unrealized appreciation (depreciation)
on investments.............................................. 11,447
-------------------
Net realized and unrealized gain.......................... 6,379
-------------------
Net increase in net assets resulting from operations.......... $ 13,036,124
===================
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets:
Operations:
Net investment income.............................................. $ 13,029,745 $ 12,817,140
Net realized loss on investment transactions....................... (5,068) (1,781)
Net change in unrealized appreciation (depreciation)
on investments.................................................... 11,447 (15,459)
------------------- -------------------
Net increase in net assets resulting from operations........... 13,036,124 12,799,900
------------------- -------------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1............................................................ (4,288) (4,178)
Class 2............................................................ (4,922) (4,746)
Class 3............................................................ (5,335) (5,095)
Class 4............................................................ (13,067,477) (12,693,331)
------------------- -------------------
Total distributions from net investment income................. (13,082,022) (12,707,350)
------------------- -------------------
Net fund share transactions (Note 5):
Class 1............................................................ 4,288 4,178
Class 2............................................................ 4,922 4,746
Class 3............................................................ 5,335 5,095
Class 4............................................................ 4,838,727 83,297,102
------------------- -------------------
Increase in net assets from net fund share transactions........ 4,853,272 83,311,121
------------------- -------------------
Total increase in net assets....................................... 4,807,374 83,403,671
Net assets:
Beginning of period................................................ 254,254,107 170,850,436
------------------- -------------------
End of period (including undistributed net investment income
of $80,676 and $132,953, respectively)............................ $ 259,061,481 $ 254,254,107
=================== ===================
</TABLE>
The accompanying notes are an integral part of the financial statements. 7
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Prime Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 1
------------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94+**
----------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 151.05 $ 150.39 $ 150.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 6.09*** 6.90 *** 1.02
Net realized and unrealized gain (loss) on investments 0.03 (0.01) 0.42
----------- ------------ ------------
Total income (loss) from investment operations 6.12 6.89 1.44
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (6.14) (6.23) (1.05)
----------- ------------ ------------
Net asset value, end of period $ 151.03 $ 151.05 $ 150.39
=========== ============ ============
Total Return 4.05% 4.58% 0.96%
Ratios / Supplemental Data:
Net assets, end of period (000's) $110 $105 $101
Net expenses to average daily net assets# 1.65% 1.65% 1.65%*
Net investment income to average daily net assets 3.97% 4.48% 4.07%*
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 1.68% 1.68% 1.69%*
<CAPTION>
Class 2
------------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94+**
----------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 151.24 $ 150.56 $ 150.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 6.96*** 7.78 *** 1.16
Net realized and unrealized gain (loss) on investments 0.04 (0.02) 0.57
----------- ------------ ------------
Total income (loss) from investment operations 7.00 7.76 1.73
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (7.01) (7.08) (1.17)
----------- ------------ ------------
Net asset value, end of period $ 151.23 $ 151.24 $ 150.56
=========== ============ ============
Total Return 4.63% 5.16% 1.15%
Ratios / Supplemental Data:
Net assets, end of period (000's) $111 $106 $101
Net expenses to average daily net assets# 1.10% 1.10% 1.10%*
Net investment income to average daily net assets 4.52% 5.03% 4.62%*
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 1.13% 1.13% 1.14%*
</TABLE>
+All per share amounts for the period have been restated to reflect a 1-for-15
reverse stock split effective December 16, 1994.
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
***Per share amount calculated on the average shares method, which more
appropriately presents the per share data for the period since the use of
the undistributed income method does not accord with the results of
operations.
8 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Prime Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 3
------------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94+**
----------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 151.32 $ 150.61 $ 150.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 7.51*** 8.33 *** 1.21
Net realized and unrealized gain (loss) on investments 0.05 (0.01) 0.61
----------- ------------ ------------
Total income (loss) from investment operations 7.56 8.32 1.82
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (7.59) (7.61) (1.21)
----------- ------------ ------------
Net asset value, end of period $ 151.29 $ 151.32 $ 150.61
=========== ============ ============
Total Return 5.00% 5.53% 1.21%
Ratios / Supplemental Data:
Net assets, end of period (000's) $112 $106 $101
Net expenses to average daily net assets# 0.75% 0.75% 0.75%*
Net investment income to average daily net assets 4.86% 5.38% 4.99%*
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 0.78% 0.78% 0.79%*
<CAPTION>
Class 4
------------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94+**
----------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 151.06 $ 150.36 $ 150.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 7.85*** 8.70 *** 1.55
Net realized and unrealized gain (loss) on investments 0.06 (0.02) 0.34
----------- ------------ ------------
Total income (loss) from investment operations 7.91 8.68 1.89
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (7.97) (7.98) (1.53)
----------- ------------ ------------
Net asset value, end of period $ 151.00 $ 151.06 $ 150.36
=========== ============ ============
Total Return@ 5.24% 5.78% 1.26%
Ratios / Supplemental Data:
Net assets, end of period (000's) $258,729 $253,936 $170,548
Net expenses to average daily net assets# 0.5160% 0.5160% 0.5160%*
Net investment income to average daily net assets 5.10% 5.61% 5.01%*
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 0.5509% 0.5468% 0.5605%*
</TABLE>
+All per share amounts for the period have been restated to reflect a 1-for-15
reverse stock split effective December 16, 1994.
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
***Per share amount calculated on the average shares method, which more
appropriately presents the per share data for the period since the use of the
undistributed income method does not accord with the results of operations.
@Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
The accompanying notes are an integral part of the financial statements. 9
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Short-Term Bond Fund - Portfolio of Investments
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
BONDS & NOTES - 83.9%
ASSET BACKED SECURITIES -- 7.6%
Capita Equipment
Receivables Trust
1996-1, Class A4
6.280% 6/15/2000 $1,000,000 $ 1,001,560
Chase Manhattan Auto
Grantor Trust 1996-B,
Class A
6.610% 9/15/2002 1,829,055 1,841,621
Ford Credit 1994-B
Grantor Trust
7.300% 10/15/1999 357,498 361,520
Ford Credit Auto
Loan Master Trust,
Series 1992-1
6.875% 1/15/1999 1,500,000 1,500,465
Ford Credit Auto
Owner Trust 1996-B,
Class A-4
6.300% 1/15/2001 2,000,000 2,007,980
Nissan Auto
Receivables 1994-A
Grantor Trust,
Class A
6.450% 9/15/1999 626,917 628,484
Railcar Trust No.
1992-1
7.750% 6/01/2004 1,196,415 1,250,254
World Omni 1996-A
Automobile Lease
Securitization Trust,
Class A1
6.300% 6/25/2002 2,500,000 2,508,575
------------
TOTAL ASSET BACKED
SECURITIES 11,100,459
------------
(Cost $11,074,953)
CORPORATE DEBT -- 16.1%
AirTouch
Communications, Inc.
7.500% 7/15/2006 1,000,000 1,026,480
America West Airlines
1996-1, Class A
6.850% 7/02/2009 2,000,000 1,960,000
Analog Devices, Inc.
6.625% 3/01/2000 1,000,000 987,300
Associates Corporation
of North America
6.750% 8/01/2001 1,500,000 1,505,505
Bell Atlantic Financial
Services, Inc.
6.610% 2/07/2000 2,000,000 2,012,380
CSC Enterprises 144A
6.500% 11/15/2001 2,000,000 1,992,380
Ford Motor Credit
Company
9.350% 6/10/1997 1,000,000 1,015,200
General American
Transportation
Corporation
6.750% 3/01/2006 1,000,000 971,900
Lockheed Martin
Corporation
7.700% 6/15/2008 1,000,000 1,046,230
McDonnell Douglas
Corporation
6.875% 11/01/2006 1,000,000 981,260
Norfolk Southern
Corporation
7.400% 9/15/2006 1,000,000 1,015,570
NYNEX Capital
Funding Company
7.450% 5/01/1997 1,000,000 1,005,680
ORIX Credit Alliance,
Inc. 144A
6.480% 4/20/1999 2,000,000 1,997,600
Polaroid Corporation
7.250% 1/15/1997 1,500,000 1,500,330
Rite Aid Corporation
6.700% 12/15/2001 1,000,000 998,090
W.R. Grace & Co.
8.000% 8/15/2004 3,240,000 3,430,253
------------
TOTAL CORPORATE DEBT 23,446,158
------------
(Cost $23,230,308)
U.S. GOVERNMENT
AGENCY OBLIGATIONS -- 16.9%
Federal Home Loan Mortgage Corporation
(FHLMC) -- 3.0%
Collateralized Mortgage Obligations -- 2.7%
FHLMC Series 1693
Class G
6.000% 7/15/2007 2,000,000 1,946,240
FHLMC Series 1704
Class PE
6.000% 7/15/2007 2,000,000 1,972,500
------------
3,918,740
------------
Pass-Through Securities -- 0.3%
FHLMC
4.750% 2/01/1997 -
9/01/2006 531,541 508,060
------------
4,426,800
------------
Federal National Mortgage Association
(FNMA) -- 3.9%
Collateralized Mortgage Obligations -- 2.7%
FNMA Series 1992-86
Class C
7.000% 6/25/2003 57,873 57,709
FNMA Series 1993-175
Class PL
5.000% 10/25/2002 1,390,909 1,381,770
FNMA Series 1993-71
Class PG
6.250% 7/25/2007 2,500,000 2,471,875
------------
3,911,354
------------
Pass-Through Securities -- 1.2%
FNMA
8.000% 5/01/2013 832,639 856,772
FNMA
9.000% 10/01/2009 864,176 918,023
------------
1,774,795
------------
5,686,149
------------
</TABLE>
(Continued)
12 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Short-Term Bond Fund - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
Government National Mortgage Association
(GNMA) -- 1.3%
Pass-Through Securities -- 1.3%
GNMA
8.000% 5/15/2001 -
11/15/2007 $1,808,533 $ 1,868,991
-------------
U.S. Government Guaranteed Notes -- 8.7%
1991-A Jacksonville,
FL
8.400% 8/01/1997 1,150,000 1,167,250
1991-A St. Louis, MO
8.400% 8/01/1997 3,350,000 3,400,250
1994-A Baxter
Springs, KS
6.310% 8/01/2001 500,000 497,390
1994-A Detroit, MI
6.310% 8/01/2001 450,000 447,651
1994-A Jacksonville,
FL
6.310% 8/01/2001 1,485,000 1,477,248
1994-A Los Angeles
County, CA
6.310% 8/01/2001 225,000 223,826
1994-A Tacoma, WA
6.310% 8/01/2001 195,000 193,982
1994-A Trenton, NJ
6.310% 8/01/2001 145,000 144,243
U.S. Dept. of Housing
and Urban
Development, Series
1995-A
8.080% 8/01/1998 3,000,000 3,090,000
U.S. Dept. of Housing
and Urban
Development, Series
1996-A
6.440% 8/01/1999 2,000,000 2,012,500
-------------
12,654,340
-------------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS 24,636,280
-------------
(Cost $24,077,001)
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 43.3%
U.S. Treasury Notes
U.S. Treasury Note
5.750% 8/15/2003 $ 6,000,000 $ 5,820,000
U.S. Treasury Note
7.125% 2/29/2000 22,000,000 22,649,660
U.S. Treasury Note
7.250% 5/15/2004 15,200,000 15,993,288
U.S. Treasury Note
8.875% 2/15/1999 17,500,000 18,514,475
-------------
TOTAL U.S. TREASURY
OBLIGATIONS 62,977,423
-------------
(Cost $62,760,329)
TOTAL BONDS & NOTES 122,160,320
-------------
(Cost $121,142,591)
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS -- 14.7%
Commercial Paper
Bausch & Lomb Inc.
5.600% 1/24/1997 $ 4,435,000 $ 4,419,133
Countrywide Home
Loans, Inc.
5.970% 1/14/1997 780,000 778,318
Crown Cork & Seal
Company Inc.
5.720% 1/09/1997 490,000 489,377
Crown Cork & Seal
Company Inc.
5.830% 2/13/1997 1,480,000 1,469,694
Crown Cork & Seal
Company Inc.
5.950% 2/13/1997 520,000 516,304
Dana Credit
Corporation
5.650% 1/30/1997 510,000 507,679
Illinois Power
Company
5.540% 1/16/1997 5,360,000 5,347,628
NYNEX Corporation
6.250% 1/03/1997 4,360,000 4,358,486
ORIX Credit Alliance,
Inc.
6.080% 2/03/1997 1,210,000 1,203,256
Public Service
Company of Colorado
5.550% 1/03/1997 472,000 471,855
Public Service
Electric and Gas
Company
5.600% 1/09/1997 1,840,000 1,837,710
-------------
TOTAL SHORT-TERM
INVESTMENTS 21,399,440
-------------
(At Amortized Cost)
TOTAL INVESTMENTS -- 98.6% 143,559,760
(Cost $142,542,031)[
Other Assets/
(Liabilities) - 1.4% 1,973,649
-------------
NET ASSETS-- 100.0% $145,533,409
-------------
</TABLE>
Notes to Portfolio of Investments
+Aggregate cost for Federal tax purposes (Note 7)
144A: Securities exempt from registration under rule 144A of the Securities Act
of 1933. The Securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
The accompanying notes are an integral part of the financial statements. 13
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Short-Term Bond Fund - Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1996
-----------------
<S> <C>
Statement of Assets and Liabilities
Assets:
Investments, at value (cost $121,142,591) (Note 2)......................... $ 122,160,320
Short-term investments, at amortized cost (Note 2)......................... 21,399,440
-------------------
Total Investments........................................................ 143,559,760
Cash....................................................................... 1,576
Receivables from:
Fund shares sold......................................................... 25,221
Interest................................................................. 2,325,244
Investment manager (Note 3).............................................. 7,243
-------------------
Total assets........................................................... 145,919,044
-------------------
Liabilities:
Payables for:
Fund shares redeemed..................................................... 305,355
Directors' fees and expenses (Note 3).................................... 5,177
Affiliates (Note 3):
Investment management fees............................................. 57,775
Administration fees.................................................... 10,156
Service and distribution fees.......................................... 232
Accrued expenses and other liabilities..................................... 6,940
-------------------
Total liabilities...................................................... 385,635
-------------------
Net assets................................................................. $ 145,533,409
-------------------
Net assets consist of:
Paid-in capital............................................................ $ 144,792,097
Undistributed net investment income........................................ 18,783
Accumulated net realized loss on investments............................... (295,200)
Net unrealized appreciation on investments................................. 1,017,729
-------------------
$ 145,533,409
===================
Net assets:
Class 1.................................................................... $ 115,863
===================
Class 2.................................................................... $ 117,250
===================
Class 3.................................................................... $ 118,001
===================
Class 4.................................................................... $ 145,182,295
===================
Shares outstanding:
Class 1.................................................................... 11,415
===================
Class 2.................................................................... 11,544
===================
Class 3.................................................................... 11,599
===================
Class 4.................................................................... 14,365,202
===================
Net asset value, offering price and
redemption price per share:
Class 1.................................................................... $ 10.15
===================
Class 2.................................................................... $ 10.16
===================
Class 3.................................................................... $ 10.17
===================
Class 4.................................................................... $ 10.11
===================
</TABLE>
14 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Short-Term Bond Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended
December 31, 1996
-----------------
<S> <C>
Statement of Operations
Investment income:
Interest....................................................................... $ 8,783,175
-------------------
Expenses (Note 1):
Investment management fees (Note 3)............................................ 606,206
Custody fees................................................................... 15,494
Audit and legal fees........................................................... 4,657
Directors' fees (Note 3)....................................................... 15,247
Fees waived by the investment manager (Note 3)................................. (47,791)
-------------------
593,813
Administration fees (Note 3):
Class 1...................................................................... 628
Class 2...................................................................... 577
Class 3...................................................................... 353
Class 4...................................................................... 105,079
Distribution and service fees (Note 3):
Class 1...................................................................... 733
Class 2...................................................................... 171
-------------------
Net expenses............................................................... 701,354
-------------------
Net investment income...................................................... 8,081,821
-------------------
Realized and unrealized gain (loss):
Net realized loss on investment transactions................................... (274,845)
Net change in unrealized appreciation (depreciation)
on investments............................................................... (384,702)
-------------------
Net realized and unrealized loss........................................... (659,547)
-------------------
Net increase in net assets resulting from operations........................... $ 7,422,274
===================
</TABLE>
The accompanying notes are an integral part of the financial statements. 15
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Short-Term Bond Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
----------------- -----------------
Statements of Changes in Net Assets
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income $ 8,081,821 $ 7,424,141
Net realized gain (loss) on investment transactions (274,845) 2,489,218
Net change in unrealized appreciation (depreciation)
on investments (384,702) 2,855,699
----------------- -----------------
Net increase in net assets resulting from operations 7,422,274 12,769,058
----------------- -----------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1 (5,225) (5,481)
Class 2 (5,891) (6,066)
Class 3 (6,321) (6,421)
Class 4 (8,133,246) (7,354,246)
----------------- -----------------
Total distributions from net investment income (8,150,683) (7,372,214)
----------------- -----------------
In excess of net investment income:
Class 1 (1) --
Class 2 (1) --
Class 3 (1) --
Class 4 (1,569) --
----------------- -----------------
Total distributions in excess of net investment income (1,572) --
----------------- -----------------
From net realized gains:
Class 1 (59) (2,049)
Class 2 (59) (2,050)
Class 3 (59) (2,046)
Class 4 (71,288) (2,256,969)
----------------- -----------------
Total distributions from net realized gains (71,465) (2,263,114)
----------------- -----------------
Net fund share transactions (Note 5):
Class 1 5,285 7,530
Class 2 5,951 8,116
Class 3 6,381 8,467
Class 4 23,078,364 12,933,618
----------------- -----------------
Increase in net assets from net fund share transactions 23,095,981 12,957,731
----------------- -----------------
Total increase in net assets 22,294,535 16,091,461
Net assets:
Beginning of period 123,238,874 107,147,413
----------------- -----------------
End of period (including undistributed net investment
income of $18,783 and $68,862, respectively) $ 145,533,409 $ 123,238,874
================= =================
</TABLE>
16 The accompanying notes are an integral part of the financial statements.
<PAGE>
- -------------------------------------------------------------------------------
MassMutual Short-Term Bond Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 1
------------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
----------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.19 $ 9.89 $ 10.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 0.50 0.55 0.09
Net realized and unrealized gain (loss) on investments (0.05) 0.49 (0.11)
----------- ------------ ------------
Total income (loss) from investment operations 0.45 1.04 (0.02)
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (0.48) (0.54) (0.09)
From net realized gains (0.01) (0.20) --
----------- ------------ ------------
Total distributions (0.49) (0.74) (0.09)
----------- ------------ ------------
Net asset value, end of period $ 10.15 $ 10.19 $ 9.89
=========== ============ ============
Total Return 4.35% 10.54% (0.17)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $116 $111 $100
Net expenses to average daily net assets# 1.65% 1.65% 1.65%*
Net investment income to average daily net assets 4.86% 5.20% 5.45%*
Portfolio turnover rate 61% 114% 15%
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 1.68% 1.68% 1.70%*
</TABLE>
<TABLE>
<CAPTION>
Class 2
------------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
----------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.19 $ 9.89 $ 10.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 0.56 0.61 0.10
Net realized and unrealized gain (loss) on investments (0.04) 0.49 (0.11)
----------- ------------ ------------
Total income (loss) from investment operations 0.52 1.10 (0.01)
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (0.54) (0.60) (0.10)
From net realized gains (0.01) (0.20) --
----------- ------------ ------------
Total distributions (0.55) (0.80) (0.10)
----------- ------------ ------------
Net asset value, end of period $ 10.16 $ 10.19 $ 9.89
=========== ============ ============
Total Return 5.02% 11.11% (0.09)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $117 $112 $101
Net expenses to average daily net assets# 1.10% 1.10% 1.10%*
Net investment income to average daily net assets 5.41% 5.75% 5.99%*
Portfolio turnover rate 61% 114% 15%
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 1.13% 1.13% 1.15%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
The accompanying notes are an integral part of the financial statements. 17
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Short-Term Bond Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 3
------------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
----------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.21 $ 9.91 $ 10.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 0.60 0.64 0.10
Net realized and unrealized gain (loss) on investments (0.05) 0.49 (0.09)
----------- ------------ ------------
Total income (loss) from investment operations 0.55 1.13 0.01
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (0.58) (0.63) (0.10)
From net realized gains (0.01) (0.20) --
----------- ------------ ------------
Total distributions (0.59) (0.83) (0.10)
----------- ------------ ------------
Net asset value, end of period $ 10.17 $ 10.21 $ 9.91
=========== ============ ============
Total Return 5.28% 11.46% 0.13%
Ratios / Supplemental Data:
Net assets, end of period (000's) $118 $112 $100
Net expenses to average daily net assets# 0.75% 0.75% 0.75%*
Net investment income to average daily net assets 5.76% 6.10% 6.36%*
Portfolio turnover rate 61% 114% 15%
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 0.79% 0.78% 0.80%*
<CAPTION>
Class 4
------------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
----------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.15 $ 9.85 $ 10.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 0.60 0.66 0.16
Net realized and unrealized gain (loss) on investments (0.03) 0.50 (0.15)
----------- ------------ ------------
Total income (loss) from investment operations 0.57 1.16 0.01
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (0.60) (0.66) (0.16)
From net realized gains (0.01) (0.20) --
----------- ------------ ------------
Total distributions (0.61) (0.86) (0.16)
----------- ------------ ------------
Net asset value, end of period $ 10.11 $ 10.15 $ 9.85
========== ============ ============
Total Return@ 5.57% 11.77% 0.13%
Ratios / Supplemental Data:
Net assets, end of period (000's) $145,182 $122,904 $106,846
Net expenses to average daily net assets# 0.5190% 0.5190% 0.5190%*
Net investment income to average daily net assets 6.00% 6.32% 6.37%*
Portfolio turnover rate 61% 114% 15%
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 0.5545% 0.5524% 0.5654%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
@Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
18 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Core Bond Fund - Portfolio of Investments
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
BONDS & NOTES - 97.0%
ASSET BACKED SECURITIES -- 8.1%
Capita Equipment
Receivables Trust
1996-1, Class A4
6.280% 6/15/2000 $3,000,000 $ 3,004,680
Chase Manhattan Auto
Grantor Trust 1996-B,
Class A
6.610% 9/15/2002 4,572,639 4,604,053
Daimler-Benz Auto
Grantor Trust 1995-A,
Class A
5.850% 5/15/2002 2,505,290 2,503,712
Daimler-Benz Vehicle
Trust 1994-A
5.950% 12/15/2000 220,873 221,079
Ford Credit 1994-B
Grantor Trust
7.300% 10/15/1999 536,247 542,280
Ford Credit Auto
Loan Master Trust,
Series 1992-1
6.875% 1/15/1999 2,000,000 2,000,620
Ford Credit Auto
Owner Trust 1996-B,
Class A-4
6.300% 1/15/2001 5,000,000 5,019,950
Keystone Auto
Grantor Trust 1996-B,
Class A 144A
6.150% 4/15/2003 2,801,590 2,799,349
Nissan Auto
Receivables 1994-A
Grantor Trust,
Class A
6.450% 9/15/1999 1,253,833 1,256,967
Railcar Trust No.
1992-1
7.750% 6/01/2004 1,395,818 1,458,629
World Omni 1995-A
Automobile Lease
Securitization Trust,
Class A
6.050% 11/25/2001 2,835,307 2,838,852
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
World Omni 1996-A
Automobile Lease
Securitization Trust,
Class A1
6.300% 6/25/2002 2,650,000 2,659,090
------------
TOTAL ASSET BACKED
SECURITIES 28,909,261
------------
(Cost $28,855,243)
CORPORATE DEBT -- 33.0%
AirTouch
Communications, Inc.
7.500% 7/15/2006 3,000,000 3,079,440
America West Airlines
1996-1, Class A
6.850% 7/02/2009 4,000,000 3,920,000
American Airlines, Inc.
9.780% 11/26/2011 2,000,000 2,277,500
AMR Corporation (D)
9.000% 8/01/2012 2,000,000 2,263,880
Analog Devices, Inc. (D)
6.625% 3/01/2000 1,500,000 1,480,950
Associates Corporation
of North America
6.750% 8/01/2001 2,000,000 2,007,340
Associates Corporation
of North America (D)
7.875% 9/30/2001 1,500,000 1,573,275
Bell Atlantic Financial
Services, Inc.
6.610% 2/04/2000 1,750,000 1,760,868
BHP Finance (USA)
Limited
6.420% 3/01/2026 3,500,000 3,464,685
Capital Cities/ABC,
Inc.
8.875% 12/15/2000 875,000 944,151
Champion International
Corporation
6.400% 2/15/2026 2,500,000 2,386,725
The Charles Schwab
Corporation
6.250% 1/23/2003 2,500,000 2,409,375
Chrysler Corporation
10.400% 8/01/1999 1,500,000 1,537,440
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
CITGO Petroleum
Corporation
7.875% 5/15/2006 1,000,000 1,019,600
Columbia Gas System,
Inc.
6.610% 11/28/2002 3,000,000 2,976,750
Commercial Credit
Company (D)
7.750% 3/01/2005 3,000,000 3,133,380
Continental Airlines,
Inc., Series 1996-2B
8.560% 7/02/2014 1,749,640 1,904,921
Continental Airlines,
Inc., Series 1996-B
7.820% 10/15/2013 2,000,000 2,067,400
Corning Glass Works (D)
8.875% 3/15/2016 1,000,000 1,128,240
English China Clays
Delaware Inc. (D)
7.375% 10/01/2002 1,000,000 1,027,760
Equifax Inc.
6.500% 6/15/2003 1,000,000 973,260
ERAC USA Finance
Company 144A
6.950% 1/15/2006 1,500,000 1,475,625
FBG Finance Ltd.
144A
7.875% 6/01/2016 3,000,000 3,049,830
Fletcher Challenge Ltd
7.750% 6/20/2006 2,000,000 2,074,100
Foster Wheeler
Corporation
6.750% 11/15/2005 2,000,000 1,932,440
General American
Transportation
Corporation
6.750% 3/01/2006 3,000,000 2,915,700
General Electric
Capital Corporation
8.750% 5/21/2007 1,500,000 1,700,370
General Telephone
Company of Florida
7.500% 8/01/2002 1,000,000 1,011,310
The Goldman Sachs
Group, L.P. 144A
6.200% 2/15/2001 2,500,000 2,450,000
</TABLE>
(Continued)
The accompanying notes are an integral part of the financial statements. 21
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Core Bond Fund - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
Harrahs Operating Inc.
8.750% 3/15/2000 $1,100,000 $ 1,113,750
Hercules Incorporated (D)
6.625% 6/01/2003 2,000,000 1,979,860
IMCERA Group Inc. (D)
6.000% 10/15/2003 1,000,000 957,700
Leucadia National
Corporation
7.750% 8/15/2013 2,500,000 2,471,425
Lockheed Martin
Corporation
7.700% 6/15/2008 3,000,000 3,138,690
McDonnell Douglas
Corporation
6.875% 11/01/2006 3,000,000 2,943,780
McDonnell Douglas
Corporation (D)
9.250% 4/01/2002 1,500,000 1,675,350
Newmont Mining
Corporation
8.625% 4/01/2002 2,000,000 2,111,380
News America
Holdings Incorporated
9.250% 2/01/2013 3,000,000 3,360,870
Norfolk Southern
Corporation
7.220% 9/15/2006 3,000,000 3,056,580
Norfolk Southern
Corporation
7.400% 9/15/2006 2,000,000 2,031,140
North Finance
(Bermuda) Limited
144A
7.000% 9/15/2005 2,000,000 1,970,000
Pearson Inc. 144A
7.375% 9/15/2006 3,000,000 3,012,900
Penske Truck Leasing
Co., L.P.
7.750% 5/15/1999 1,500,000 1,548,210
Ralston Purina
Company
7.750% 10/01/2015 2,000,000 2,050,920
Rite Aid Corporation
6.700% 12/15/2001 2,000,000 1,996,180
Rolls-Royce Capital
Inc.
7.125% 7/29/2003 2,000,000 2,002,980
Scholastic Corporation
7.000% 12/15/2003 4,000,000 3,992,280
Thomas & Betts
Corporation (D)
8.250% 1/15/2004 2,500,000 2,597,825
Time Warner Inc.
7.750% 6/15/2005 3,000,000 3,017,790
United Air Lines, Inc.
10.110% 2/19/2006 939,710 1,040,390
US Air, Inc.
7.500% 10/15/2009 1,461,057 1,475,667
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
Valassis
Communications, Inc.
9.550% 12/01/2003 $ 2,000,000 $ 2,081,280
Westinghouse Electric
Corporation
8.375% 6/15/2002 1,000,000 1,019,670
W.R. Grace & Co.
8.000% 8/15/2004 5,000,000 5,293,600
------------
TOTAL CORPORATE DEBT 117,886,532
------------
(Cost $114,776,584)
NON - U.S. GOVERNMENT
AGENCY OBLIGATIONS -- 1.1%
Collateralized Mortgage Obligation
Prudential Home
Mortgage Securities
1993-26 Class A6
6.750% 7/25/2008 4,000,000 4,008,720
------------
(Cost $3,955,000)
U.S. GOVERNMENT
AGENCY OBLIGATIONS -- 20.2%
Federal Home Loan Mortgage Corporation
(FHLMC) -- 4.6%
Collateralized Mortgage Obligations -- 4.5%
FHLMC Series 1080
Class D
7.000% 7/15/2020 2,900,319 2,933,847
FHLMC Series 1322
Class G
7.500% 2/15/2007 2,000,000 2,048,120
FHLMC Series 1460
Class H
7.000% 5/15/2007 2,000,000 2,020,000
FHLMC Series 1490
Class PJ
6.000% 5/15/2007 600,000 589,122
FHLMC Series 1612
Class PD
5.750% 5/15/2006 5,000,000 4,915,600
FHLMC Series 1625
Class EA
5.750% 3/15/2007 3,500,000 3,436,545
------------
15,943,234
------------
Pass-Through Securities -- 0.1%
FHLMC
9.000% 3/01/2017 368,612 392,225
------------
16,335,459
------------
Federal National Mortgage
Association (FNMA) -- 5.6%
Collateralized Mortgage Obligations -- 5.4%
FNMA Series 1989-20
Class A
6.750% 4/25/2018 4,267,616 4,107,580
FNMA Series 1992-86
Class C
7.000% 6/25/2003 115,745 115,419
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
FNMA Series 1993-134
Class GA
6.500% 2/25/2007 $ 5,000,000 $ 4,964,050
FNMA Series 1993-175
Class PL
5.000% 10/25/2002 1,390,909 1,381,770
FNMA Series 1993-191
Class PD
5.400% 3/25/2004 1,500,000 1,487,340
FNMA Series 1993-221
Class D
6.000% 12/25/2008 2,500,000 2,390,625
FNMA Series 1996-54
Class C
6.000% 9/25/2008 5,000,000 4,800,000
------------
19,246,784
------------
Pass-Through Securities -- 0.2%
FNMA
8.000% 5/01/2013 555,094 571,180
------------
19,817,964
------------
Government National Mortgage
Association (GNMA) -- 8.3%
Collateralized Mortgage Obligation -- 0.5%
JHM Acceptance
Corporation Series E
Class 5
8.960% 4/01/2019 1,633,748 1,718,491
-----------
Pass-Through Securities -- 7.8%
GNMA
6.000% 12/20/2025 5,579,916 5,706,355
GNMA
7.000% 7/20/2025 -
9/20/2025 5,474,412 5,591,443
GNMA
7.500% 1/15/2017 -
6/15/2017 7,142,857 7,188,784
GNMA
8.000% 4/15/2001 -
3/15/2008 8,808,388 9,102,855
GNMA
9.000% 12/15/2004 -
10/15/2009 500,156 532,822
------------
28,122,259
------------
29,840,750
------------
U.S. Government Guaranteed Notes -- 1.7%
1994-A Baxter
Springs, KS
5.930% 8/01/1999 700,000 696,500
1994-A Erie, PA
5.930% 8/01/1999 1,590,000 1,582,050
1994-A Los Angeles
County, CA
5.930% 8/01/1999 190,000 189,050
</TABLE>
(Continued)
22 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Core Bond Fund - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
1994-A Montgomery
County, PA
5.930% 8/01/1999 $ 150,000 $ 149,250
1994-A Pohatcong
Township, NJ
5.930% 8/01/1999 255,000 253,725
1994-A Rochester, NY
5.930% 8/01/1999 135,000 134,325
1994-A Sacramento,
CA
5.930% 8/01/1999 60,000 59,700
1994-A Santa Ana,
CA
5.930% 8/01/1999 920,000 915,400
U.S. Dept. of Housing
and Urban
Development, Series
1996-A
6.670% 8/01/2001 2,000,000 2,020,000
------------
6,000,000
------------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS 71,994,173
------------
(Cost $70,455,483)
U.S. TREASURY OBLIGATIONS -- 34.6%
U.S. Treasury Bonds -- 15.4%
U.S. Treasury Bond
7.250% 5/15/2016 20,700,000 21,857,958
U.S. Treasury Bond
8.875% 8/15/2017 26,750,000 33,040,530
------------
54,898,488
------------
U.S. Treasury Notes -- 13.6%
U.S. Treasury Note
5.875% 4/30/1998 7,000,000 7,010,920
U.S. Treasury Note
6.375% 5/15/1999 23,500,000 23,701,865
U.S. Treasury Note
8.875% 11/15/1998 17,000,000 17,887,230
------------
48,600,015
------------
U.S. Treasury Strips -- 5.6%
U.S. Treasury Strip -- Principal Only
0.000% 2/15/1999 19,500,000 17,237,220
U.S. Treasury Strip -- Principal Only
0.000% 2/15/2015 9,250,000 2,708,308
------------
19,945,528
------------
TOTAL U.S. TREASURY
OBLIGATIONS 123,444,031
------------
(Cost $123,480,345)
TOTAL BONDS & NOTES 346,242,717
------------
(Cost $341,522,655)
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS -- 1.8%
Commercial Paper
Bausch & Lomb Inc.
6.850% 1/08/1997 1,140,000 1,138,482
Indiana Michigan
Power Company
6.700% 1/03/1997 3,000,000 2,998,883
Lockheed Martin
Corporation
7.000% 1/02/1997 2,355,000 2,354,542
------------
TOTAL SHORT-TERM
INVESTMENTS 6,491,907
------------
(At Amortized Cost)
TOTAL INVESTMENTS -- 98.8% 352,734,624
(Cost $348,014,562)[
Other Assets/
(Liabilities) - 1.2% 4,330,553
------------
NET ASSETS-- 100.0% $357,065,177
------------
</TABLE>
Notes to Portfolio of Investments
+Aggregate cost for Federal tax purposes
(Note 7)
144A: Securities exempt from registration under rule 144A of the Securities Act
of 1933. The Securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
(D) All or a portion of this security is segregated to cover forward purchase
commitments (Note 2).
The accompanying notes are an integral part of the financial statements. 23
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Core Bond Fund - Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1996
----------------
Statement of Assets and Liabilities
<S> <C>
Assets:
Investments, at value (cost $341,522,655) (Note 2)..... $ 346,242,717
Short-term investments, at amortized cost (Note 2)..... 6,491,907
----------------
Total Investments.................................... 352,734,624
Cash................................................... 4,936
Receivables from:
Fund shares sold..................................... 380,193
Interest............................................. 4,574,725
Investment manager (Note 3).......................... 17,663
----------------
Total assets....................................... 357,712,141
----------------
Liabilities:
Payables for:
Investments purchased................................ 142,615
Settlement of investments purchased on a
forward commitment basis (Note 2).................. 11,739
Fund shares redeemed................................. 306,112
Directors' fees and expenses (Note 3)................ 5,176
Affiliates (Note 3):
Investment management fees......................... 139,334
Administration fees................................ 26,194
Service and distribution fees...................... 243
Accrued expenses and other liabilities................. 15,551
----------------
Total liabilities.................................. 646,964
----------------
Net assets............................................. $ 357,065,177
================
Net assets consist of:
Paid-in capital........................................ 352,396,989
Undistributed net investment income.................... 1,845,746
Accumulated net realized loss on investments........... (1,885,881)
Net unrealized appreciation on investments
and forward commitments............................ 4,708,323
----------------
$ 357,065,177
================
Net assets:
Class 1................................................ $ 120,838
================
Class 2................................................ $ 122,293
================
Class 3................................................ $ 123,107
================
Class 4................................................ $ 356,698,939
================
Shares outstanding:
Class 1................................................ 11,512
================
Class 2................................................ 11,631
================
Class 3................................................ 11,699
================
Class 4................................................ 34,141,922
================
Net asset value, offering price and
redemption price per share:
Class 1................................................ $ 10.50
================
Class 2................................................ $ 10.51
================
Class 3................................................ $ 10.52
================
Class 4................................................ $ 10.45
================
</TABLE>
24 The accompanying notes are an integral part of the finanial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Core Bond Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended
December 31, 1996
-----------------
Statement of Operations
<S> <C>
Investment income:
Interest........................................... $ 20,691,459
-----------------
Expenses (Note 1):
Investment management fees (Note 3)................ 1,375,667
Custody fees....................................... 38,056
Audit and legal fees............................... 10,158
Directors' fees (Note 3)........................... 15,247
Fees waived by the investment manager (Note 3)..... (128,270)
-----------------
1,310,858
Administration fees (Note 3):
Class 1.......................................... 737
Class 2.......................................... 614
Class 3.......................................... 382
Class 4.......................................... 257,095
Distribution and service fees (Note 3):
Class 1.......................................... 842
Class 2.......................................... 178
-----------------
Net expenses................................... 1,570,706
-----------------
Net investment income.......................... 19,120,753
-----------------
Realized and unrealized gain (loss):
Net realized loss on investment transactions
and forward commitments............................ (1,886,093)
Net change in unrealized appreciation
(depreciation) on
investments and forward commitments.............. (6,456,882)
-----------------
Net realized and unrealized loss............... (8,342,975)
-----------------
Net increase in net assets resulting from
operations......................................... $ 10,777,778
=================
</TABLE>
The accompanying notes are an integral part of the financial statements. 25
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Core Bond Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
----------------- -----------------
Statements of Changes in Net Assets
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income................................................ $ 19,120,753 $ 14,053,804
Net realized gain (loss) on investment transactions
and forward commitments............................................. (1,886,093) 9,143,745
Net change in unrealized appreciation (depreciation) on
investments and forward commitments................................. (6,456,882) 14,064,619
----------------- -----------------
Net increase in net assets resulting from operations................ 10,777,778 37,262,168
----------------- -----------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1.............................................................. (4,416) (7,975)
Class 2.............................................................. (5,227) (5,956)
Class 3.............................................................. (5,674) (6,329)
Class 4.............................................................. (17,374,307) (13,924,661)
----------------- -----------------
Total distributions from net investment income...................... (17,389,624) (13,944,921)
----------------- -----------------
From net realized gains:
Class 1.............................................................. (740) (4,784)
Class 2.............................................................. (714) (3,332)
Class 3.............................................................. (715) (3,329)
Class 4.............................................................. (1,942,817) (7,028,844)
----------------- -----------------
Total distributions from net realized gains......................... (1,944,986) (7,040,289)
----------------- -----------------
Net fund share transactions (Note 5):
Class 1.............................................................. (45,858) 61,915
Class 2.............................................................. 5,941 9,288
Class 3.............................................................. 6,389 9,658
Class 4.............................................................. 111,704,711 43,139,641
----------------- -----------------
Increase in net assets from net fund share transactions............. 111,671,183 43,220,502
----------------- -----------------
Total increase in net assets......................................... 103,114,351 59,497,460
Net assets:
Beginning of period.................................................. 253,950,826 194,453,366
----------------- -----------------
End of period (including undistributed net investment income
of $1,845,746 and $114,829, respectively)........................... $ 357,065,177 $ 253,950,826
================= =================
</TABLE>
26 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Core Bond Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 1
------------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
----------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.79 $ 9.90 $ 10.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 0.53*** 0.50 0.10
Net realized and unrealized gain (loss) on investments (0.36) 1.26 (0.10)
----------- ------------ ------------
Total income (loss) from investment operations 0.17 1.76 --
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (0.40) (0.54) (0.10)
From net realized gains (0.06) (0.33) --
----------- ------------ ------------
Total distributions (0.46) (0.87) (0.10)
----------- ------------ ------------
Net asset value, end of period $ 10.50 $ 10.79 $ 9.90
=========== ============ ============
Total Return 1.60% 17.81% 0.00%
Ratios / Supplemental Data:
Net assets, end of period (000's) $121 $171 $101
Net expenses to average daily net assets# 1.65% 1.65% 1.65%*
Net investment income to average daily net assets 5.10% 5.39% 5.91%*
Portfolio turnover rate 54% 104% 7%
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 1.69% 1.69% 1.71%*
<CAPTION>
Class 2
------------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
----------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.82 $ 9.90 $ 10.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 0.60*** 0.64 0.11
Net realized and unrealized gain (loss) on investments (0.38) 1.19 (0.10)
----------- ------------ ------------
Total income (loss) from investment operations 0.22 1.83 0.01
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (0.47) (0.58) (0.11)
From net realized gains (0.06) (0.33) --
----------- ------------ ------------
Total distributions (0.53) (0.91) (0.11)
----------- ------------ ------------
Net asset value, end of period $ 10.51 $ 10.82 $ 9.90
=========== ============ ============
Total Return 2.07% 18.51% 0.08%
Ratios / Supplemental Data:
Net assets, end of period (000's) $122 $120 $101
Net expenses to average daily net assets# 1.10% 1.10% 1.10%*
Net investment income to average daily net assets 5.67% 5.97% 6.46%*
Portfolio turnover rate 54% 104% 7%
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 1.14% 1.14% 1.16%*
</TABLE>
* Annualized
** For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
*** Per share amount calculated on the average shares method, which more
appropriately presents the per share data for the period since the use of
the undistributed income method does not accord with the results of
operations.
The accompanying notes are an integral part of the financial statesments. 27
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Core Bond Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 3
------------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
----------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.82 $ 9.90 $ 10.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 0.64*** 0.68 0.11
Net realized and unrealized gain (loss) on investments (0.37) 1.19 (0.10)
----------- ------------ ------------
Total income (loss) from investment operations 0.27 1.87 0.01
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (0.51) (0.62) (0.11)
From net realized gains (0.06) (0.33) --
----------- ------------ ------------
Total distributions (0.57) (0.95) (0.11)
----------- ------------ ------------
Net asset value, end of period $ 10.52 $ 10.82 $ 9.90
=========== ============ ============
Total Return 2.52% 18.87% 0.09%
Ratios / Supplemental Data:
Net assets, end of period (000's) $123 $120 $101
Net expenses to average daily net assets# 0.75% 0.75% 0.75%*
Net investment income to average daily net assets 6.01% 6.32% 6.83%*
Portfolio turnover rate 54% 104% 7%
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 0.79% 0.79% 0.81%*
<CAPTION>
Class 4
------------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
----------- ------------ ------------
Net asset value, beginning of period $ 10.75 $ 9.84 $ 10.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 0.67*** 0.72*** 0.18
Net realized and unrealized gain (loss) on investments (0.37) 1.17 (0.16)
----------- ------------ ------------
Total income (loss) from investment operations 0.30 1.89 0.02
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (0.54) (0.65) (0.18)
From net realized gains (0.06) (0.33) --
----------- ------------ ------------
Total distributions (0.60) (0.98) (0.18)
----------- ------------ ------------
Net asset value, end of period $ 10.45 $ 10.75 $ 9.84
=========== ============ ============
Total Return/@/ 2.80% 19.15% 0.20%
Ratios / Supplemental Data:
Net assets, end of period (000's) $356,699 $253,540 $194,150
Net expenses to average daily net assets# 0.5130% 0.5130% 0.5130%*
Net investment income to average daily net assets 6.26% 6.56% 6.86%*
Portfolio turnover rate 54% 104% 7%
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 0.5550% 0.5553% 0.5672%*
</TABLE>
/*/Annualized
/**/For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
/***/Per share amount calculated on the average shares method, which more
appropriately presents the per share data for the period since the use of
the undistributed income method does not accord with the results of
operations.
/@/Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
28 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Balanced Fund - Portfolio of Investments
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
Number of
Shares Market Value
------ ------------
<S> <C> <C>
EQUITIES -- 50.2%
Aerospace & Defense -- 0.9%
Boeing Company 27,000 $ 2,872,125
Raytheon Company 1,200 57,750
TRW, Inc. 48,200 2,385,900
------------
5,315,775
------------
Agribusiness -- 0.6%
Pioneer Hi-Bred
International, Inc. 45,500 3,185,000
------------
Apparel, Textiles & Shoes -- 0.5%
VF Corporation 44,500 3,003,750
------------
Automotive & Parts -- 2.4%
Ford Motor Company 97,300 3,101,438
Genuine Parts
Company 103,000 4,583,500
Goodyear Tire &
Rubber Company 113,700 5,841,338
------------
13,526,276
------------
Banking, Savings & Loans -- 3.2%
The Bank of New
York Company,
Incorporated 170,000 5,737,500
Comerica, Incorporated 41,500 2,173,563
CoreStates Financial
Corp. 81,500 4,227,813
Norwest Corporation 57,000 2,479,500
Wachovia Corp. 60,100 3,395,650
------------
18,014,026
------------
Beverages -- 1.0%
Brown-Forman
Corporation (Class B) 66,600 3,046,950
Pepsico, Inc. 84,000 2,457,000
------------
5,503,950
------------
Chemicals -- 2.0%
E. I. du Pont de
Nemours and Company 33,000 3,114,375
The Lubrizol
Corporation 63,300 1,962,300
Nalco Chemical
Company 81,500 2,944,188
Rohm & Haas
Company 39,000 3,183,375
------------
11,204,238
------------
Communications -- 0.6%
AT & T Corporation 84,000 3,654,000
------------
Computers & Office Equipment -- 3.7%
Hewlett-Packard
Company 122,000 6,130,500
International Business
Machines Corporation 35,000 5,285,000
Pitney Bowes, Inc. 84,000 4,578,000
Xerox Corporation 90,000 4,736,250
------------
20,729,750
------------
Containers -- 0.6%
Temple-Inland, Inc. 63,000 3,409,875
------------
Cosmetics & Personal Care -- 0.8%
Kimberly-Clark
Corporation 48,400 4,610,100
------------
Drugs -- 0.6%
Pharmacia & Upjohn,
Inc. 85,000 3,368,125
------------
Electric Utilities -- 0.6%
NIPSCO Industries,
Inc. 40,000 1,585,000
SCANA Corporation 75,000 2,006,250
------------
3,591,250
------------
Electrical Equipment & Electronics -- 3.8%
AMP, Incorporated 156,700 6,013,363
General Electric
Company 82,000 8,107,750
Honeywell Inc. 44,000 2,893,000
Hubbell, Incorporated
(Class B) 96,023 4,152,986
------------
21,167,099
------------
Energy -- 4.3%
Amoco Corporation 74,000 5,957,000
Atlantic Richfield
Company 20,300 2,689,750
Chevron Corporation 70,500 4,582,500
Kerr-McGee
Corporation 43,500 3,132,000
Mobil Corporation 35,000 4,278,750
Teco Energy, Inc. 57,000 1,375,125
Unocal Corporation 68,900 2,799,063
------------
24,814,188
------------
Financial Services -- 0.8%
American Express
Company 76,500 4,322,250
Foods -- 1.4%
ConAgra, Inc. 62,200 3,094,450
CPC International, Inc. 61,000 4,727,500
------------
7,821,950
------------
Forest Products & Paper -- 1.3%
Westvaco Corporation 101,500 2,918,125
Weyerhaeuser Company 90,400 4,282,700
------------
7,200,825
------------
Hardware & Tools -- 0.6%
The Stanley Works 123,000 3,321,000
------------
Healthcare -- 4.4%
Becton, Dickinson and
Company 102,000 4,424,250
Bristol-Myers Squibb
Company 89,000 9,678,750
Pfizer, Incorporated 74,000 6,132,750
Schering-Plough Corp. 69,800 4,519,550
------------
24,755,300
------------
Industrial Distribution -- 0.7%
W.W. Grainger, Inc. 48,000 3,852,000
------------
Industrial Transportation -- 0.7%
Norfolk Southern
Corporation 48,000 4,200,000
------------
</TABLE>
(Continued)
The accompanying notes are an integral part of the financial statements. 31
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Balanced Fund - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Market Value
------ ------------
<S> <C> <C>
Insurance -- 4.0%
Allstate Corporation 36,544 $ 2,114,984
Jefferson-Pilot
Corporation 39,750 2,250,844
Marsh & McLennan
Companies, Inc. 55,000 5,720,000
MBIA, Inc. 51,500 5,214,375
SAFECO Corporation 149,000 5,876,188
Unitrin, Inc. 28,500 1,588,875
------------
22,765,266
------------
Machinery & Components -- 0.9%
Dover Corporation 62,000 3,115,500
Parker-Hannifin
Corporation 48,000 1,860,000
------------
4,975,500
------------
Miscellaneous -- 1.4%
Harsco Corporation 34,500 2,363,250
Minnesota Mining &
Manufacturing
Company 68,000 5,635,500
------------
7,998,750
------------
Oil & Gas -- 1.0%
Occidental Petroleum
Corporation 128,500 3,003,688
Union Pacific
Resources Group Inc. 89,500 2,617,875
------------
5,621,563
------------
Photography -- 0.7%
Eastman Kodak
Company 49,300 3,956,325
------------
Publishing & Printing -- 1.1%
The McGraw-Hill
Companies, Inc. 89,000 4,105,125
R.R. Donnelley & Sons
Company 75,500 2,368,813
------------
6,473,938
------------
Retail -- 1.0%
The May Department
Stores Company 70,500 3,295,875
Sears Roebuck and Co. 48,000 2,214,000
------------
5,509,875
------------
Retail-Grocery -- 1.0%
Albertson's, Inc. 119,000 4,239,375
American Stores
Company 31,900 1,303,913
------------
5,543,288
------------
Telecommunications -- 0.5%
GTE Corporation 57,000 2,593,500
------------
Telephone Utilities -- 1.5%
Ameritech Corporation 44,500 2,697,813
Frontier Corporation 134,500 3,043,063
Southern New England
Telecommunications
Corporation 66,000 2,565,750
------------
8,306,626
------------
Tobacco -- 1.6%
American Brands, Inc. 88,500 4,391,813
UST Inc. 135,000 4,370,625
------------
8,762,438
------------
TOTAL EQUITIES 283,077,796
------------
(Cost $198,917,229)
Principal
Amount Market Value
------ ------------
<S> <C> <C>
BONDS & NOTES -- 15.9%
ASSET BACKED SECURITIES -- 1.5%
Capita Equipment
Receivables Trust
1996-1, Class A4
6.280% 6/15/2000 $1,000,000 $ 1,001,560
Chase Manhattan Auto
Grantor Trust 1996-B,
Class A
6.610% 9/15/2002 2,286,319 2,302,026
Daimler-Benz Auto
Grantor Trust 1995-A,
Class A
5.850% 5/15/2002 1,113,462 1,112,761
Daimler-Benz Vehicle
Trust 1994-A
5.950% 12/15/2000 147,249 147,386
Ford Credit 1994-B
Grantor Trust
7.300% 10/15/1999 357,498 361,520
Ford Credit Auto
Owner Trust 1996-B,
Class A-4
6.300% 1/15/2001 1,000,000 1,003,990
Nissan Auto
Receivables 1994-A
Grantor Trust, Class A
6.450% 9/15/1999 438,841 439,939
Railcar Trust No.
1992-1
7.750% 6/01/2004 398,805 416,751
World Omni 1996-A
Automobile Lease
Securitization Trust,
Class A1
6.300% 6/25/2002 1,500,000 1,505,145
------------
TOTAL ASSET BACKED
SECURITIES 8,291,078
------------
(Cost $8,269,339)
CORPORATE DEBT -- 5.6%
AirTouch
Communications, Inc.
7.500% 7/15/2006 1,000,000 1,026,480
America West Airlines
1996-1, Class A
6.850% 7/02/2009 1,000,000 980,000
American Airlines,
Inc. (D)
9.780% 11/26/2011 1,000,000 1,138,750
AMR Corporation (D)
9.000% 8/01/2012 500,000 565,970
Analog Devices, Inc.
6.625% 3/01/2000 500,000 493,650
Associates Corporation
of North America
6.750% 8/01/2001 1,000,000 1,003,670
Bell Atlantic Financial
Services, Inc. (D)
6.610% 2/04/2000 1,000,000 1,006,210
BHP Finance (USA)
Limited
6.420% 3/01/2026 1,000,000 989,910
Cardinal Distribution,
Inc.
8.000% 3/01/1997 500,000 501,565
Champion International
Corporation
6.400% 2/15/2026 1,000,000 954,690
The Charles Schwab
Corporation
6.250% 1/23/2003 1,000,000 963,750
CITGO Petroleum
Corporation
7.875% 5/15/2006 250,000 254,900
Continental Airlines,
Inc., Series 1996-2B
8.560% 7/02/2014 499,897 544,263
Continental Airlines,
Inc., Series 1996-B
7.820% 10/15/2013 500,000 516,850
Delta Air Lines, Inc.
8.540% 1/02/2007 437,643 465,066
English China Clays
Delaware Inc. (D)
7.375% 10/01/2002 500,000 513,880
ERAC USA Finance
Company 144A
6.950% 1/15/2006 500,000 491,875
FBG Finance Ltd.
144A
7.875% 6/01/2016 1,000,000 1,016,610
Fletcher Challenge Ltd.
7.750% 6/20/2006 500,000 518,525
General American
Transportation
Corporation
6.750% 3/01/2006 1,000,000 971,900
</TABLE>
(Continued)
32 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Balanced Fund - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
The Goldman Sachs
Group, L.P. 144A
6.200% 2/15/2001 $1,000,000 $ 980,000
GTE Corporation
9.100% 6/01/2003 500,000 557,745
Leucadia National
Corporation
7.750% 8/15/2013 1,000,000 988,570
Lockheed Martin
Corporation
7.700% 6/15/2008 1,000,000 1,046,230
McDonnell Douglas
Corporation
6.875% 11/01/2006 500,000 490,630
McDonnell Douglas
Corporation (D)
9.250% 4/01/2002 500,000 558,450
Newmont Mining
Corporation (D)
8.625% 4/01/2002 1,000,000 1,055,690
News America
Holdings Incorporated
9.250% 2/01/2013 1,000,000 1,120,290
Norfolk Southern
Corporation
7.220% 9/15/2006 850,000 866,031
Norfolk Southern
Corporation
7.400% 9/15/2006 1,000,000 1,015,570
North Finance
(Bermuda) Limited
144A
7.000% 9/15/2005 1,000,000 985,000
Pearson Inc. 144A
7.375% 9/15/2006 500,000 502,150
Polaroid Corporation
7.250% 1/15/1997 1,000,000 1,000,220
Rite Aid Corporation
6.700% 12/15/2001 500,000 499,045
Rolls-Royce Capital
Inc.
7.125% 7/29/2003 1,000,000 1,001,490
Scholastic Corporation
7.000% 12/15/2003 1,000,000 998,070
Thomas & Betts
Corporation
8.250% 1/15/2004 500,000 519,565
Time Warner Inc.
7.750% 6/15/2005 1,000,000 1,005,930
US Air, Inc.
7.500% 10/15/2009 487,019 491,889
W.R. Grace & Co.
8.000% 8/15/2004 1,000,000 1,058,720
------------
TOTAL CORPORATE DEBT 31,659,799
------------
(Cost $30,638,759)
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 4.4%
Federal Home Loan Mortgage Corporation (FHLMC) -- 0.9%
Collateralized Mortgage Obligations -- 0.8%
FHLMC Series 1322
Class G
7.500% 2/15/2007 $1,000,000 $ 1,024,060
FHLMC Series 1625
Class D
5.250% 7/15/2004 3,100,000 3,067,047
FHLMC Series 1625
Class EA
5.750% 3/15/2007 1,000,000 981,870
------------
5,072,977
------------
Pass-Through Securities -- 0.1%
FHLMC
9.000% 3/01/2017 184,306 196,112
------------
5,269,089
------------
Federal National Mortgage Association
(FNMA) -- 1.0%
Collateralized Mortgage Obligations -- 0.9%
FNMA Series 1993-134
Class GA
6.500% 2/25/2007 1,000,000 992,810
FNMA Series 1993-191
Class PD
5.400% 3/25/2004 1,000,000 991,560
FNMA Series 1993-221
Class D
6.000% 12/25/2008 1,000,000 956,250
FNMA Series 1996-54
Class C
6.000% 9/25/2008 2,000,000 1,920,000
------------
4,860,620
------------
Pass-Through Securities -- 0.1%
FNMA
8.000% 5/01/2013 555,094 571,180
------------
5,431,800
------------
Government National Mortgage Association (GNMA) -- 1.4%
Pass-Through Securities
GNMA
6.000% 12/20/2025 464,993 475,530
GNMA
7.000% 7/20/2025 1,837,048 1,876,085
GNMA
7.500% 10/15/2006 -
6/15/2017 3,020,543 3,054,435
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
GNMA
8.000% 11/15/2004 -
7/15/2008 $1,863,588 $ 1,925,887
GNMA
9.000% 12/15/2008 -
5/15/2009 607,143 646,796
------------
7,978,733
------------
U.S. Government Guaranteed Notes -- 1.1%
1991-A Fairfax
County, VA
8.740% 8/01/2001 200,000 216,374
1991-A Jefferson
Park, CA
8.740% 8/01/2001 1,740,000 1,882,454
1991-A Monroe
County, NY
8.740% 8/01/2001 500,000 540,935
1991-A Rochester, NY
8.740% 8/01/2001 60,000 64,912
U.S. Dept. of Housing
and Urban
Development, Series
1995-A (D)
8.240% 8/01/2002 3,000,000 3,255,060
------------
5,959,735
------------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS 24,639,357
------------
(Cost $23,963,711)
U.S. TREASURY OBLIGATIONS -- 4.4%
U.S. Treasury Bonds -- 2.7%
U.S. Treasury Bond
7.250% 5/15/2016 5,250,000 5,543,685
U.S. Treasury Bond
8.750% 5/15/2017 8,250,000 10,066,320
------------
15,610,005
------------
U.S. Treasury Notes -- 1.3%
U.S. Treasury Note
6.125% 3/31/1998 3,700,000 3,717,908
U.S. Treasury Note
7.125% 2/29/2000 3,300,000 3,397,449
------------
7,115,357
------------
U.S. Treasury Strip -- 0.4%
U.S. Treasury Strip -- Principal Only
0.000% 2/15/1999 2,250,000 1,988,910
TOTAL U.S. TREASURY
OBLIGATIONS 24,714,272
------------
(Cost $24,499,494)
TOTAL BONDS & NOTES 89,304,506
------------
(Cost $87,371,303)
</TABLE>
(Continued)
The accompanying notes are an integral part of the financial statements. 33
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Balanced Fund - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS -- 30.2%
Commercial Paper
Burlington Northern
Santa Fe Corp.
5.500% 1/21/1997 $ 7,090,000 $ 7,068,336
Burlington Northern
Santa Fe Corp.
5.970% 1/03/1997 4,290,000 4,288,577
Carter Holt Harvey
Limited
5.500% 1/23/1997 3,750,000 3,737,396
Central and South
West Corporation
5.520% 1/14/1997 3,140,000 3,133,741
Central and South
West Corporation
5.620% 2/07/1997 3,470,000 3,449,957
Central and South
West Corporation
5.630% 1/17/1997 5,550,000 5,536,113
Comdisco, Inc.
5.520% 1/15/1997 2,790,000 2,784,011
Comdisco, Inc.
5.820% 1/29/1997 5,530,000 5,504,968
ConAgra, Inc.
5.490% 2/04/1997 4,135,000 4,113,560
Cox Enterprises, Inc.
5.470% 2/28/1997 3,000,000 2,973,562
Cox Enterprises, Inc.
5.480% 2/05/1997 2,680,000 2,665,722
Cox Enterprises, Inc.
5.500% 2/13/1997 6,170,000 6,129,467
Crown Cork & Seal
Company Inc.
5.800% 2/11/1997 4,000,000 3,973,578
CSX Corporation
5.800% 2/20/1997 5,990,000 5,941,747
Dana Credit
Corporation
5.460% 1/02/1997 4,320,000 4,319,345
Dana Credit
Corporation
5.530% 1/31/1997 2,635,000 2,622,857
Dominion Resources,
Inc.
5.470% 1/22/1997 4,300,000 4,286,279
Dominion Resources,
Inc.
5.520% 1/27/1997 5,915,000 5,891,419
Dominion Resources,
Inc.
5.520% 1/28/1997 3,335,000 3,321,193
ORIX Credit Alliance,
Inc.
5.490% 2/03/1997 3,685,000 3,666,455
ORIX Credit Alliance,
Inc.
5.520% 1/08/1997 2,230,000 2,227,606
ORIX Credit Alliance,
Inc.
5.620% 1/14/1997 170,000 169,655
ORIX Credit Alliance,
Inc.
5.800% 1/06/1997 5,335,000 5,330,702
ORIX Credit Alliance,
Inc.
5.850% 3/03/1997 3,750,000 3,714,417
ORIX Credit Alliance,
Inc.
6.020% 2/27/1997 2,285,000 2,263,220
Praxair, Inc.
5.650% 2/21/1997 3,435,000 3,407,506
Public Service
Company of Colorado
5.470% 1/17/1997 2,355,000 2,349,275
Public Service
Company of Colorado
5.800% 2/25/1997 4,200,000 4,162,783
Public Service
Electric and Gas
Company
5.470% 1/10/1997 3,955,000 3,949,592
Public Service
Electric and Gas
Company
5.470% 1/24/1997 2,360,000 2,351,753
Public Service
Electric and Gas
Company
5.490% 1/13/1997 3,655,000 3,648,311
Public Service
Electric and Gas
Company
5.570% 2/06/1997 5,655,000 5,623,502
Rayonier Inc.
5.540% 1/07/1997 3,000,000 2,997,230
Rite Aid Corporation
5.600% 3/04/1997 4,900,000 4,852,742
Sonat Inc.
5.650% 1/09/1997 5,030,000 5,023,685
Texas Utilities
Electric Co.
5.590% 2/14/1997 4,500,000 4,469,255
Texas Utilities
Electric Co.
5.600% 2/10/1997 3,800,000 3,776,356
Textron Financial
Corporation
5.500% 1/16/1997 1,642,000 1,638,237
Textron Financial
Corporation
5.500% 2/18/1997 3,000,000 2,978,000
Textron Financial
Corporation
5.560% 2/12/1997 2,800,000 2,781,837
Union Pacific
Corporation
5.650% 1/30/1997 2,920,000 2,906,710
Union Pacific
Corporation
5.800% 2/24/1997 2,550,000 2,527,815
UOP
5.600% 1/31/1997 3,255,000 3,239,810
UOP
5.620% 2/26/1997 4,635,000 4,594,478
UOP
5.750% 2/19/1997 4,125,000 4,092,716
=============
TOTAL SHORT-TERM
INVESTMENTS 170,485,476
=============
(Cost $170,483,887)
TOTAL INVESTMENTS -- 96.3% 542,867,778
(Cost $456,772,419)+
Other Assets/
(Liabilities) - 3.7% 20,818,070
============
NET ASSETS-- 100.0% $563,685,848
============
</TABLE>
Notes to Portfolio of Investments
+Aggregate cost for Federal tax purposes (Note 7)
144A: Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
. All or a portion of this security is segregated to cover forward purchase
commitments. (Note 2).
34 The accompanying notes are an integral part of the financial statements.
<PAGE>
- -------------------------------------------------------------------------------
MassMutual Balanced Fund - Financial Statements
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1996
-------------------
<S> <C>
Statement of
Assets and Assets:
Liabilities Investments, at value (cost $286,288,532) (Note 2)....................... $ 372,382,302
Short-term investments, at value (cost $170,483,887) (Note 2)............ 170,485,476
-------------------
Total Investments...................................................... 542,867,778
Cash..................................................................... 1,546
Receivables from:
Investments sold....................................................... 246,752
Fund shares sold....................................................... 19,719,860
Interest and dividends................................................. 1,898,035
Investment manager (Note 3)............................................ 22,488
-------------------
Total assets......................................................... 564,756,459
-------------------
Liabilities:
Payables for:
Investments purchased.................................................. 87,044
Settlement of investments purchased on a
forward commitment basis (Note 2).................................... 2,411
Fund shares redeemed................................................... 702,735
Directors' fees and expenses (Note 3).................................. 5,176
Affiliates (Note 3):
Investment management fees........................................... 213,324
Administration fees.................................................. 40,525
Service and distribution fees........................................ 266
Accrued expenses and other liabilities................................... 19,130
-------------------
Total liabilities.................................................... 1,070,611
-------------------
Net assets............................................................... $ 563,685,848
===================
Net assets consist of:
Paid-in capital.......................................................... $ 475,645,805
Undistributed net investment income...................................... 26,102
Accumulated net realized gain on investments............................. 1,920,993
Net unrealized appreciation on investments
and forward commitments.............................................. 86,092,948
-------------------
$ 563,685,848
===================
Net assets:
Class 1.................................................................. $ 133,821
===================
Class 2.................................................................. $ 135,418
===================
Class 3.................................................................. $ 136,218
===================
Class 4.................................................................. $ 563,280,391
===================
Shares outstanding:
Class 1.................................................................. 10,838
===================
Class 2.................................................................. 10,948
===================
Class 3.................................................................. 10,994
===================
Class 4.................................................................. 45,632,444
===================
Net asset value, offering price and
redemption price per share:
Class 1.................................................................. $ 12.35
===================
Class 2.................................................................. $ 12.37
===================
Class 3.................................................................. $ 12.39
===================
Class 4.................................................................. $ 12.34
===================
</TABLE>
The accompanying notes are an integral part of the financial statements.
35
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Balanced Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended
December 31, 1996
-------------------
<S> <C>
Statement of
Operations Investment income:
Interest................................................................. $ 15,133,862
Dividends................................................................ 6,800,485
-------------------
Total investment income................................................ 21,934,347
-------------------
Expenses (Note 1):
Investment management fees (Note 3)...................................... 2,271,174
Custody fees............................................................. 53,996
Audit and legal fees..................................................... 16,737
Directors' fees (Note 3)................................................. 15,247
Fees waived by the investment manager (Note 3)........................... (203,071)
-------------------
2,154,083
Administration fees (Note 3):
Class 1................................................................ 794
Class 2................................................................ 661
Class 3................................................................ 412
Class 4................................................................ 429,674
Distribution and service fees (Note 3):
Class 1................................................................ 903
Class 2................................................................ 191
-------------------
Net expenses......................................................... 2,586,718
-------------------
Net investment income................................................ 19,347,629
-------------------
Realized and unrealized gain (loss):
Net realized gain on investment transactions and forward commitments..... 8,885,806
Net change in unrealized appreciation (depreciation) on
investments and forward commitments.................................... 33,108,845
-------------------
Net realized and unrealized gain..................................... 41,994,651
-------------------
Net increase in net assets resulting from operations.................... $ 61,342,280
===================
</TABLE>
The accompanying notes are an integral part of the financial statements.
36
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Balanced Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
------------------- ------------------
<S> <C> <C>
Statements of
Changes in Net Increase(Decrease) in Net Assets:
Assets Operations:
Net investment income............................................ $ 19,347,629 $ 16,724,229
Net realized gain on investment transactions
and forward commitments......................................... 8,885,806 4,359,989
Net change in unrealized appreciation (depreciation) on
investments and forward commitments............................. 33,108,845 55,498,858
------------------- ------------------
Net increase in net assets resulting from operations............ 61,342,280 76,583,076
------------------- ------------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1.......................................................... (3,204) (4,846)
Class 2.......................................................... (4,068) (3,751)
Class 3.......................................................... (4,538) (4,120)
Class 4.......................................................... (19,441,756) (16,528,781)
------------------- ------------------
Total distributions from net investment income.................. (19,453,566) (16,541,498)
------------------- ------------------
From net realized gains:
Class 1.......................................................... (1,969) (1,239)
Class 2.......................................................... (1,970) (859)
Class 3.......................................................... (1,972) (857)
Class 4.......................................................... (7,883,759) (3,230,318)
------------------- ------------------
Total distributions from net realized gains..................... (7,889,670) (3,233,273)
------------------- ------------------
Net fund share transactions (Note 5):
Class 1.......................................................... (49,367) 55,401
Class 2.......................................................... 6,038 4,610
Class 3.......................................................... 6,510 4,977
Class 4.......................................................... 72,536,092 50,326,522
------------------- ------------------
Increase in net assets from net fund share transactions......... 72,499,273 50,391,510
------------------- ------------------
Total increase in net assets..................................... 106,498,317 107,199,815
Net assets:
Beginning of period.............................................. 457,187,531 349,987,716
------------------- ------------------
End of period (including undistributed net investment income
of $26,102 and $179,574, respectively)......................... $ 563,685,848 $ 457,187,531
=================== ==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
37
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Balanced Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 1
------------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
----------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.50 $ 9.94 $ 10.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 0.34 0.28 0.06
Net realized and unrealized gain (loss) on investments 1.01 1.70 (0.06)
----------- ------------ ------------
Total income (loss) from investment operations 1.35 1.98 --
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (0.31) (0.33) (0.06)
From net realized gains (0.19) (0.09) --
----------- ------------ ------------
Total distributions (0.50) (0.42) (0.06)
----------- ------------ ------------
Net asset value, end of period $ 12.35 $ 11.50 $ 9.94
=========== ============ ============
Total Return 11.67% 19.92% 0.00%
Ratios / Supplemental Data:
Net assets, end of period (000's) $134 $173 $100
Net expenses to average daily net assets# 1.65% 1.65% 1.65%*
Net investment income to average daily net assets 2.71% 3.03% 3.39%*
Portfolio turnover rate 26% 23% 2%
Average broker commission rate (a) $ .0594 N/A N/A
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 1.69% 1.69% 1.71%*
<CAPTION>
Class 2
__________
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
----------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.53 $ 9.95 $ 10.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 0.39 0.39 0.06
Net realized and unrealized gain (loss) on investments 1.03 1.65 (0.04)
----------- ------------ ------------
Total income (loss) from investment operations 1.42 2.04 0.02
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (0.39) (0.37) (0.07)
From net realized gains (0.19) (0.09) --
----------- ------------ ------------
Total distributions (0.58) (0.46) (0.07)
----------- ------------ ------------
Net asset value, end of period $ 12.37 $ 11.53 $ 9.95
=========== ============ ============
Total Return 12.25% 20.50% 0.17%
Ratios / Supplemental Data:
Net assets, end of period (000's) $135 $121 $100
Net expenses to average daily net assets# 1.10% 1.10% 1.10%*
Net investment income to average daily net assets 3.23% 3.60% 3.94%*
Portfolio turnover rate 26% 23% 2%
Average broker commission rate (a) $ .0594 N/A N/A
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 1.14% 1.14% 1.16%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
(a)Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were charged.
For fiscal years beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged.
The accompanying notes are an integral part of the financial statements.
38
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Balanced Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 3
------------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
----------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.55 $ 9.96 $ 10.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 0.44 0.43 0.07
Net realized and unrealized gain (loss) on investments 1.02 1.66 (0.04)
----------- ------------ ------------
Total income (loss) from investment operations 1.46 2.09 0.03
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (0.43) (0.41) (0.07)
From net realized gains (0.19) (0.09) --
----------- ------------ ------------
Total distributions (0.62) (0.50) (0.07)
----------- ------------ ------------
Net asset value, end of period $ 12.39 $ 11.55 $ 9.96
=========== ============ ============
Total Return 12.61% 20.96% 0.28%
Ratios / Supplemental Data:
Net assets, end of period (000's) $136 $121 $100
Net expenses to average daily net assets# 0.75% 0.75% 0.75%*
Net investment income to average daily net assets 3.60% 3.94% 4.32%*
Portfolio turnover rate 26% 23% 2%
Average broker commission rate (a) $ .0594 N/A N/A
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 0.79% 0.79% 0.81%*
<CAPTION>
Class 4
------------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
----------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.51 $ 9.92 $ 10.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 0.46 0.44 0.11
Net realized and unrealized gain (loss) on investments 1.02 1.68 (0.08)
----------- ------------ ------------
Total income (loss) from investment operations 1.48 2.12 0.03
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (0.46) (0.44) (0.11)
From net realized gains (0.19) (0.09) --
----------- ------------ ------------
Total distributions (0.65) (0.53) (0.11)
----------- ------------ ------------
Net asset value, end of period $ 12.34 $ 11.51 $ 9.92
=========== ============ ============
Total Return@ 12.83% 21.31% 0.29%
Ratios / Supplemental Data:
Net assets, end of period (000's) $563,280 $456,773 $349,688
Net expenses to average daily net assets# 0.5120% 0.5120% 0.5120%*
Net investment income to average daily net assets 3.83% 4.18% 4.29%*
Portfolio turnover rate 26% 23% 2%
Average broker commission rate (a) $ .0594 N/A N/A
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 0.5522% 0.5514% 0.5650%*
</TABLE>
*Annualized
** For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
@ Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
(a) Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were
charged. For fiscal years beginning on or after September 1, 1995, a Fund is
required to disclose its average commission rate per share for security
trades on which commissions are charged.
The accompanying notes are an integral part of the financial statements.
39
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Value Equity Fund - Portfolio of Investments
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
Number of
Shares Market Value
------ ------------
<S> <C> <C>
EQUITIES - 95.2%
Aerospace & Defense -- 1.8%
Boeing Company 230,000 $ 24,466,250
Raytheon Company 10,000 481,250
TRW, Inc. 396,600 19,631,700
------------
44,579,200
============
Agribusiness -- 1.1%
Pioneer Hi-Bred
International, Inc. 385,000 26,950,000
------------
Apparel, Textiles & Shoes -- 1.0%
VF Corporation 365,000 24,637,500
============
Automotive & Parts -- 4.7%
Ford Motor Company 945,300 30,131,438
Genuine Parts
Company 860,000 38,270,000
Goodyear Tire &
Rubber Company 955,000 49,063,125
------------
117,464,563
============
Banking, Savings & Loans -- 6.1%
The Bank of New
York Company,
Incorporated 1,440,000 48,600,000
Comerica, Incorporated 338,000 17,702,750
CoreStates Financial
Corp. 700,000 36,312,500
Norwest Corporation 485,000 21,097,500
Wachovia Corp. 494,000 27,911,000
------------
151,623,750
------------
Beverages -- 1.9%
Brown-Forman
Corporation (Class B) 575,000 26,306,250
Pepsico, Inc. 700,000 20,475,000
------------
46,781,250
============
Chemicals -- 3.7%
E. I. du Pont de
Nemours and Company 275,000 25,953,125
The Lubrizol
Corporation 529,500 16,414,500
Nalco Chemical
Company 680,000 24,565,000
Rohm & Haas
Company 315,000 25,711,875
------------
92,644,500
------------
Communications -- 1.2%
AT & T Corporation 700,000 30,450,000
============
Computers & Office Equipment -- 6.9%
Hewlett-Packard
Company 1,020,000 51,255,000
International Business
Machines Corporation 291,000 43,941,000
Pitney Bowes, Inc. 700,000 38,150,000
Xerox Corporation 723,000 38,047,875
------------
171,393,875
============
Containers -- 1.1%
Temple-Inland, Inc. 525,000 28,415,625
------------
Cosmetics & Personal Care -- 1.5%
Kimberly-Clark
Corporation 403,000 38,385,750
============
Drugs -- 1.2%
Pharmacia & Upjohn,
Inc. 725,000 28,728,125
============
Electric Utilities -- 1.2%
NIPSCO Industries,
Inc. 330,000 13,076,250
SCANA Corporation 625,000 16,718,750
============
29,795,000
------------
Electrical Equipment & Electronics -- 7.0%
AMP, Incorporated 1,313,000 50,386,375
General Electric
Company 680,000 67,235,000
Honeywell Inc. 365,000 23,998,750
Hubbell, Incorporated
(Class B) 800,071 34,603,088
============
176,223,213
============
Energy -- 8.3%
Amoco Corporation 615,000 49,507,500
Atlantic Richfield
Company 168,000 22,260,000
Chevron Corporation 600,000 39,000,000
Kerr-McGee
Corporation 360,000 25,920,000
Mobil Corporation 290,000 35,452,500
Teco Energy, Inc. 487,700 11,765,763
Unocal Corporation 574,900 23,355,313
------------
207,261,076
============
Financial Services -- 1.5%
American Express
Company 665,000 37,572,500
------------
Foods -- 2.5%
ConAgra, Inc. 518,000 25,770,500
CPC International, Inc. 462,500 35,843,748
============
61,614,248
============
Forest Products & Paper -- 2.5%
Westvaco Corporation 855,000 24,581,250
Weyerhaeuser Company 775,000 36,715,625
------------
61,296,875
============
Hardware & Tools -- 1.1%
The Stanley Works 1,030,000 27,810,000
============
</TABLE>
(Continued)
The accompanying notes are an integral part of the financial statements.
42
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Value Equity Fund - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Market Value
------ ------------
<S> <C> <C>
Healthcare -- 8.3%
Becton, Dickinson and
Company 850,000 $ 36,868,750
Bristol-Myers Squibb
Company 750,000 81,562,500
Pfizer, Incorporated 610,000 50,553,750
Schering-Plough Corp. 565,600 36,622,600
--------------
205,607,600
--------------
Industrial Distribution -- 1.3%
W.W. Grainger, Inc. 400,000 32,100,000
--------------
Industrial Transportation -- 1.4%
Norfolk Southern
Corporation 400,000 35,000,000
--------------
Insurance -- 7.7%
Allstate Corporation 305,921 17,705,178
Jefferson-Pilot
Corporation 345,000 19,535,625
Marsh & McLennan
Companies, Inc. 454,900 47,309,600
MBIA, Inc. 435,000 44,043,750
SAFECO Corporation 1,240,000 48,902,500
Unitrin, Inc. 234,950 13,098,463
--------------
190,595,116
--------------
Machinery & Components -- 1.7%
Dover Corporation 540,000 27,135,000
Parker-Hannifin
Corporation 400,000 15,500,000
--------------
42,635,000
--------------
Miscellaneous -- 2.7%
Harsco Corporation 300,000 20,550,000
Minnesota Mining &
Manufacturing
Company 565,000 46,824,375
--------------
67,374,375
--------------
Oil & Gas -- 1.9%
Occidental Petroleum
Corporation 1,067,000 24,941,125
Union Pacific
Resources Group Inc. 729,700 21,343,725
--------------
46,284,850
--------------
Photography -- 1.3%
Eastman Kodak
Company 413,600 33,191,400
--------------
Publishing & Printing -- 2.2%
The McGraw-Hill
Companies, Inc. 740,000 34,132,500
R.R. Donnelley & Sons
Company 630,000 19,766,250
--------------
53,898,750
--------------
Retail -- 1.9%
The May Department
Stores Company 600,000 28,050,000
Sears Roebuck and Co. 400,000 18,450,000
--------------
46,500,000
--------------
Retail-Grocery -- 1.9%
Albertson's, Inc. 1,000,001 35,625,010
American Stores
Company 262,300 10,721,513
--------------
46,346,523
--------------
Telecommunications -- 0.9%
GTE Corporation 475,300 21,626,150
--------------
Telephone Utilities -- 2.8%
Ameritech Corporation 372,000 22,552,500
Frontier Corporation 1,112,200 25,163,525
Southern New England
Telecommunications
Corporation 555,000 21,575,625
--------------
69,291,650
--------------
Tobacco -- 2.9%
American Brands, Inc. 735,000 36,474,375
UST Inc. 1,111,000 35,968,625
--------------
72,443,000
--------------
TOTAL EQUITIES 2,366,521,464
(Cost $1,654,626,282) --------------
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS -- 4.6%
Commercial Paper
AIG Funding Inc.
5.280% 2/28/1997 5,668,000 5,619,784
CoreStates Capital
Corporation
5.270% 4/28/1997 2,000,000 1,963,600
E. I. du Pont de
Nemours and Company
5.250% 5/09/1997 5,000,000 4,900,444
E. I. du Pont de
Nemours and Company
5.250% 5/19/1997 9,000,000 8,806,800
First Union
Corporation
5.270% 4/23/1997 3,000,000 2,947,733
First Union
Corporation
5.280% 3/28/1997 5,000,000 4,933,111
Ford Motor Credit
Company
5.290% 3/10/1997 14,000,000 13,851,912
Heinz (H.J.) Company
5.330% 1/21/1997 3,000,000 2,991,117
Heinz (H.J.) Company
5.400% 1/21/1997 8,000,000 7,976,000
J. P. Morgan &
Company Incorporated
5.280% 2/03/1997 14,000,000 13,932,240
Shell Oil Company
6.500% 1/02/1997 6,861,000 6,859,761
Sunoco Credit
Corporation
5.320% 2/04/1997 8,000,000 7,959,804
Sunoco Credit
Corporation
5.370% 1/21/1997 6,000,000 5,982,100
Transamerica
Financial Corporation
5.270% 3/14/1997 2,595,000 2,565,936
The Walt Disney
Company
5.320% 1/24/1997 10,000,000 9,966,011
Weyerhaeuser Company
5.300% 2/10/1997 9,000,000 8,947,000
Weyerhaeuser Company
5.300% 2/12/1997 4,000,000 3,975,267
--------------
TOTAL SHORT-TERM
INVESTMENTS 114,178,620
(Cost $114,215,876) --------------
TOTAL INVESTMENTS -- 99.8% 2,480,700,084
(Cost $1,768,842,158)+
Other Assets/
(Liabilities) - 0.2% 5,508,151
--------------
NET ASSETS-- 100.0% $2,486,208,235
--------------
</TABLE>
Notes to Portfolio of Investments
+Aggregate cost for Federal tax purposes (Note 7)
The accompanying notes are an integral part of the financial statements.
43
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Value Equity Fund - Financial Statements
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
December 31, 1996
-----------------
<S> <C>
Assets:
Investments, at value (cost $1,654,626,282) (Note 2)..... $ 2,366,521,464
Short-term investments, at value (cost $114,215,876) (Note 2) 114,178,620
-----------------
Total Investments...................................... 2,480,700,084
Cash..................................................... 190
Receivables from:
Investments sold....................................... 2,044,107
Fund shares sold....................................... 1,696,480
Interest and dividends................................. 5,329,158
Investment manager (Note 3)............................ 106,983
-----------------
Total assets......................................... 2,489,877,002
-----------------
Liabilities:
Payables for:
Investments purchased.................................. 481,850
Fund shares redeemed................................... 1,916,768
Directors' fees and expenses (Note 3).................. 5,176
Affiliates (Note 3):
Investment management fees........................... 987,506
Administration fees.................................. 198,758
Service and distribution fees........................ 303
Accrued expenses and other liabilities................... 78,406
-----------------
Total liabilities.................................... 3,668,767
-----------------
Net assets............................................... $ 2,486,208,235
=================
Net assets consist of:
Paid-in capital.......................................... $ 1,759,761,092
Undistributed net investment income...................... 410,862
Accumulated net realized gain on investments............. 14,178,355
Net unrealized appreciation on investments............... 711,857,926
-----------------
$ 2,486,208,235
=================
Net assets:
Class 1.................................................. $ 153,607
=================
Class 2.................................................. $ 155,446
=================
Class 3.................................................. $ 156,351
=================
Class 4.................................................. $ 2,485,742,831
=================
Shares outstanding:
Class 1.................................................. 10,640
=================
Class 2.................................................. 10,740
=================
Class 3.................................................. 10,793
=================
Class 4.................................................. 171,928,663
=================
Net asset value, offering price and
redemption price per share:
Class 1.................................................. $ 14.44
=================
Class 2.................................................. $ 14.47
=================
Class 3.................................................. $ 14.49
=================
Class 4.................................................. $ 14.46
=================
</TABLE>
The accompanying notes are an integral part of the financial statements.
44
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Value Equity Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Statement of Operations
<TABLE>
<CAPTION>
Year ended
December 31, 1996
-----------------
<S> <C>
Investment income:
Dividends................................................ $ 56,941,194
Interest................................................. 10,459,062
----------------
Total investment income................................ 67,400,256
----------------
Expenses (Note 1):
Investment management fees (Note 3)...................... 10,377,627
Custody fees............................................. 205,814
Audit and legal fees..................................... 77,183
Directors' fees (Note 3)................................. 15,195
Fees waived by the investment manager (Note 3)........... (1,077,667)
----------------
9,598,152
Administration fees (Note 3):
Class 1................................................ 814
Class 2................................................ 751
Class 3................................................ 474
Class 4................................................ 2,086,673
Distribution and service fees (Note 3):
Class 1................................................ 911
Class 2................................................ 212
----------------
Net expenses......................................... 11,687,987
----------------
Net investment income................................ 55,712,269
----------------
Realized and unrealized gain (loss):
Net realized gain on investment transactions............. 74,040,546
Net change in unrealized appreciation (depreciation)
on investments......................................... 296,454,766
----------------
Net realized and unrealized gain..................... 370,495,312
----------------
Net increase in net assets resulting from operations..... $ 426,207,581
================
</TABLE>
The accompanying notes are an integral part of the financial statements. 45
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Value Equity Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income........................................... $ 55,712,269 $ 50,082,342
Net realized gain on investment transactions.................... 74,040,546 21,371,652
Net change in unrealized appreciation (depreciation)
on investments................................................. 296,454,766 429,724,511
----------------- ----------------
Net increase in net assets resulting from operations........... 426,207,581 501,178,505
----------------- ----------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1......................................................... (1,849) (1,761)
Class 2......................................................... (2,628) (2,382)
Class 3......................................................... (3,152) (2,774)
Class 4......................................................... (55,920,646) (49,597,273)
----------------- ----------------
Total distributions from net investment income................. (55,928,275) (49,604,190)
----------------- ----------------
From net realized gains:
Class 1......................................................... (4,035) (990)
Class 2......................................................... (4,054) (990)
Class 3......................................................... (4,061) (988)
Class 4......................................................... (64,653,761) (16,056,271)
----------------- ----------------
Total distributions from net realized gains.................... (64,665,911) (16,059,239)
----------------- ----------------
Net fund share transactions (Note 5):
Class 1......................................................... 5,884 2,751
Class 2......................................................... 6,682 3,372
Class 3......................................................... 7,213 3,763
Class 4......................................................... 54,936,919 126,252,551
----------------- ----------------
Increase in net assets from net fund share transactions........ 54,956,698 126,262,437
----------------- ----------------
Total increase in net assets.................................... 360,570,093 561,777,513
Net assets:
Beginning of period............................................. 2,125,638,142 1,563,860,629
----------------- ----------------
End of period (including undistributed net investment income
of $410,862 and $626,868, respectively)........................ $ 2,486,208,235 $ 2,125,638,142
================= ================
</TABLE>
46 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Value Equity Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 1
----------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
---------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period $ 12.63 $ 9.92 $ 10.00
---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.17 0.18 0.04
Net realized and unrealized gain (loss) on investments 2.21 2.81 (0.08)
---------- ---------- ----------
Total income (loss) from investment operations 2.38 2.99 (0.04)
---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.18) (0.18) (0.04)
From net realized gains (0.39) (0.10) --
---------- ---------- ----------
Total distributions (0.57) (0.28) (0.04)
---------- ---------- ----------
Net asset value, end of period $ 14.44 $ 12.63 $ 9.92
========== ========== ==========
Total Return 18.83% 30.10% (0.39)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $154 $129 $99
Net expenses to average daily net assets# 1.65% 1.65% 1.65%*
Net investment income to average daily net assets 1.28% 1.58% 2.31%*
Portfolio turnover rate 13% 16% 3%
Average broker commission rate (a) $ .0585 N/A N/A
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 1.69% 1.70% 1.71%*
<CAPTION>
Class 2
----------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
---------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period $ 12.65 $ 9.93 $ 10.00
---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.25 0.24 0.05
Net realized and unrealized gain (loss) on investments 2.22 2.82 (0.07)
---------- ---------- ----------
Total income (loss) from investment operations 2.47 3.06 (0.02)
---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.26) (0.24) (0.05)
From net realized gains (0.39) (0.10) --
---------- ---------- ----------
Total distributions (0.65) (0.34) (0.05)
---------- ---------- ----------
Net asset value, end of period $ 14.47 $ 12.65 $ 9.93
========== ========== ==========
Total Return 19.46% 30.80% (0.22)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $155 $130 $99
Net expenses to average daily net assets# 1.10% 1.10% 1.10%*
Net investment income to average daily net assets 1.82% 2.13% 2.86%*
Portfolio turnover rate 13% 16% 3%
Average broker commission rate (a) $ .0585 N/A N/A
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 1.14% 1.15% 1.16%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
(a)Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were charged.
For fiscal years beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged.
The accompanying notes are an integral part of the financial statements. 47
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Value Equity Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 3
----------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
---------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period $ 12.66 $ 9.93 $ 10.00
---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.30 0.28 0.05
Net realized and unrealized gain (loss) on investments 2.23 2.83 (0.07)
---------- ---------- ----------
Total income (loss) from investment operations 2.53 3.11 (0.02)
---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.31) (0.28) (0.05)
From net realized gains (0.39) (0.10) --
---------- ---------- ----------
Total distributions (0.70) (0.38) (0.05)
---------- ---------- ----------
Net asset value, end of period $ 14.49 $ 12.66 $ 9.93
========== ========== ==========
Total Return 19.92% 31.30% (0.18)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $156 $130 $99
Net expenses to average daily net assets# 0.75% 0.75% 0.75%*
Net investment income to average daily net assets 2.17% 2.48% 3.23%*
Portfolio turnover rate 13% 16% 3%
Average broker commission rate (a) $ .0585 N/A N/A
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 0.80% 0.80% 0.81%*
<CAPTION>
Class 4
----------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
---------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period $ 12.63 $ 9.91 $ 10.00
---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.34 0.31 0.08
Net realized and unrealized gain (loss) on investments 2.22 2.82 (0.09)
---------- ---------- ----------
Total income (loss) from investment operations 2.56 3.13 (0.01)
---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.34) (0.31) (0.08)
From net realized gains (0.39) (0.10) --
---------- ---------- ----------
Total distributions (0.73) (0.41) (0.08)
---------- ---------- ----------
Net asset value, end of period $ 14.46 $ 12.63 $ 9.91
========== ========== ==========
Total Return@ 20.24% 31.54% (0.10)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $2,485,743 $2,125,248 $1,563,563
Net expenses to average daily net assets# 0.5067% 0.5067% 0.5067%*
Net investment income to average daily net assets 2.42% 2.72% 3.20%*
Portfolio turnover rate 13% 16% 3%
Average broker commission rate (a) $ .0585 N/A N/A
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 0.5534% 0.5528% 0.5681%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
@Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
(a)Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were charged.
For fiscal years beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged.
48 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Small Cap Value Equity - Portfolio of Investments
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
Number of
Shares Market Value
------ ------------
<S> <C> <C>
EQUITIES - 98.4%
Air Transportation -- 1.4%
Atlantic Southeast
Airlines, Inc. 297,800 $ 6,514,375
------------
Apparel, Textiles & Shoes -- 1.2%
Unitog Company 206,500 5,627,125
------------
Automotive & Parts -- 5.7%
Amcast Industrial
Corporation 228,100 5,645,475
Excel Industries, Inc. 355,100 5,903,538
Myers Industries, Inc. 321,154 5,419,469
Titan Wheel
International, Inc. 698,500 8,905,875
------------
25,874,357
------------
Banking, Savings & Loans -- 10.9%
Astoria Financial
Corporation 293,000 10,804,375
Bank United Corp.
Class A 173,200 4,633,100
CCB Financial
Corporation 139,900 9,548,175
First Colorado
Bancorp, Inc. 284,200 4,831,400
Keystone Financial,
Inc. 221,150 5,528,750
One Valley Bancorp of
West Virginia, Inc. 183,750 6,821,719
Security Capital
Corporation 102,800 7,581,500
------------
49,749,019
------------
Building Materials & Construction -- 0.7%
Apogee Enterprises,
Inc. 76,800 3,052,800
------------
Chemicals -- 1.1%
OM Group, Inc. 188,100 5,078,700
------------
Communications -- 2.3%
True North
Communications, Inc. 483,500 10,576,563
------------
Computers & Office Equipment -- 1.0%
Cognex Corporation. (D) 238,500 4,412,250
------------
Containers -- 1.7%
Rock-Tenn Company
(Class A) 391,490 7,731,928
------------
Electrical Equipment & Electronics -- 8.2%
Belden, Inc. 293,700 10,866,900
Dallas Semiconductor
Corporation 468,600 10,777,800
Teleflex, Incorporated 128,100 6,677,213
Wyle Laboratories 227,200 8,974,390
------------
37,296,303
------------
Energy -- 3.2%
NGC Corporation 165,595 3,850,084
Production Operators
Corp. 156,100 7,258,650
TNP Enterprises, Inc. 137,100 3,753,113
------------
14,861,847
------------
Foods -- 3.2%
Midwest Grain
Products, Inc. (D) 167,100 2,840,700
Morrison Health Care,
Inc. 377,200 5,563,700
Riser Foods, Inc.
Class A 197,700 6,276,975
------------
14,681,375
------------
Forest Products & Paper -- 2.4%
Mosinee Paper
Corporation 125,833 4,467,072
Wausau Paper Mills
Company 357,775 6,618,838
------------
11,085,910
------------
Gas Distribution -- 1.9%
WICOR, Inc. 237,300 8,513,138
------------
Healthcare -- 1.0%
Beckman Instruments,
Inc. 113,800 4,367,075
------------
Industrial Transportation -- 3.1%
ABC Rail Products
Corporation . (D) 115,000 $ 2,285,625
Arnold Industries, Inc. 511,500 8,120,063
The Greenbrier
Companies, Inc. 385,300 3,997,488
------------
14,403,176
------------
Insurance -- 11.7%
ALLIED Group,
Incorporated 346,350 11,299,669
Capital RE Corp. 334,500 15,596,063
Executive Risk, Inc. 172,900 6,397,300
Frontier Insurance
Group, Inc. 290,080 11,095,560
Orion Capital
Corporation 147,137 8,993,749
------------
53,382,341
------------
Leasing Companies -- 2.0%
Rollins Truck Leasing
Company 715,750 9,036,344
------------
Machinery & Components -- 13.3%
Columbus McKinnon
Corporation 266,500 4,164,063
DT Industries, Inc. 269,200 9,422,000
The Gorman-Rupp
Company 257,825 3,512,866
Graco, Incorporated 427,000 10,461,500
Greenfield Industries,
Inc. 327,600 10,032,750
Hardinge, Inc. 224,300 5,971,988
Helix Technology
Corporation 247,300 7,171,700
Regal-Beloit
Corporation 297,750 5,843,344
Roper Industries, Inc. 109,200 4,272,450
------------
60,852,661
------------
Metals & Mining -- 1.8%
Reliance Steel &
Aluminum Company 229,600 8,036,000
------------
</TABLE>
The accompanying notes are an integral part of the financial statement.
51
<PAGE>
- -------------------------------------------------------------------------------
MassMutual Small Cap Value Equity - Portfolio of Investments (Continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Market Value
--------- ------------
<S> <C> <C>
Miscellaneous -- 2.1%
Trimas Corporation 407,100 $ 9,719,513
Miscellaneous Distributor Wholesale -- 1.2%
Hughes Supply, Inc. 130,200 5,614,875
Office Products -- 1.1%
American Business
Products, Inc. 197,700 4,967,213
Oil & Gas -- 2.9%
The Houston
Exploration Company. 261,800 4,581,500
Stone Energy
Corporation. 211,000 6,303,625
Titan Exploration, Inc. 200,000 2,400,000
------------
13,285,125
------------
Other Services -- 3.0%
Analysts International
Corporation 340,200 9,610,650
Landauer, Inc. 173,900 4,260,550
------------
13,871,200
------------
Publishing & Printing -- 8.4%
Banta Corporation 284,250 6,502,219
Harte Hanks
Communications, Inc. 398,300 11,052,825
Houghton Mifflin
Company 173,200 9,807,450
McClatchy
Newspapers, Inc. 327,400 11,459,000
------------
38,821,494
------------
Retail -- 1.9%
Arbor Drugs, Inc. 502,250 8,726,594
------------
TOTAL EQUITIES 450,139,301
------------
(Cost $338,729,733)
<CAPTION>
Principal
Amount Market Value
--------- ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS -- 1.4%
Commercial Paper
Ford Motor Credit
Company
5.330% 1/29/1997 1,000,000 995,854
Shell Oil Company
6.500% 1/02/1997 4,350,000 4,349,215
Sunoco Credit
Corporation
5.370% 1/21/1997 1,000,000 997,017
-----------
TOTAL SHORT-TERM
INVESTMENTS 6,342,086
-----------
(At Amortized Cost)
TOTAL INVESTMENTS -- 99.8% 456,481,387
(Cost $345,071,819)+
Other Assets/
(Liabilities) - .2% 886,996
-----------
NET ASSETS--100.0% $ 457,368,383
------------
</TABLE>
Notes to Portfolio of Investments
+Aggregate cost for Federal tax purposes (Note 7)
(D) Non-income producing security.
The accompanying notes are an integral part of the financial statements.
52
<PAGE>
- -------------------------------------------------------------------------------
MassMutual Small Cap Value Equity - Financial Statements
- -------------------------------------------------------------------------------
Statement of
Assets and
Liabilities
<TABLE>
<CAPTION>
December 31, 1996
-----------------
<S> <C>
Assets:
Investments, at value (cost $338,729,733) (Note 2)..... $ 450,139,301
Short-term investments, at amortized cost (Note 2)..... 6,342,086
----------------
Total Investments.................................... 456,481,387
Cash................................................... 16,575
Receivables from:
Investments sold..................................... 590,252
Fund shares sold..................................... 391,223
Interest and dividends............................... 614,637
Investment manager (Note 3).......................... 20,289
----------------
Total assets....................................... 458,114,363
----------------
Liabilities:
Payables for:
Investments purchased................................ 124,059
Fund shares redeemed................................. 349,247
Directors' fees and expenses (Note 3)................ 5,176
Affiliates (Note 3):
Investment management fees......................... 216,574
Administration fees................................ 34,087
Service and distribution fees...................... 274
Accrued expenses and other liabilities................. 16,563
----------------
Total liabilities.................................. 745,980
----------------
Net assets............................................. $ 457,368,383
================
Net assets consist of:
Paid-in capital........................................ $ 340,794,078
Undistributed net investment income.................... 192,363
Accumulated net realized gain on investments........... 4,972,374
Net unrealized appreciation on investments............. 111,409,568
----------------
$ 457,368,383
================
Net assets:
Class 1................................................ $ 142,813
================
Class 2................................................ $ 144,545
================
Class 3................................................ $ 145,609
================
Class 4................................................ $ 456,935,416
================
Shares outstanding:
Class 1................................................ 10,666
================
Class 2................................................ 10,767
================
Class 3................................................ 10,837
================
Class 4................................................ 34,013,589
================
Net asset value, offering price and
redemption price per share:
Class 1................................................ $ 13.39
================
Class 2................................................ $ 13.42
================
Class 3................................................ $ 13.44
================
Class 4................................................ $ 13.43
================
</TABLE>
The accompanying notes are an integral part of the financial statement.
53
<PAGE>
- -------------------------------------------------------------------------------
MassMutual Small Cap Value Equity - Financial Statements (Continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended
December 31, 1996
-----------------
<S> <C>
Statement of Operations
Investment income:
Dividends.............................................. $ 10,401,752
Interest............................................... 2,168,316
-----------------
Total investment income.............................. 12,570,068
-----------------
Expenses (Note 1):
Investment management fees (Note 3).................... 2,298,488
Custody fees........................................... 47,464
Audit and legal fees................................... 14,282
Directors' fees (Note 3)............................... 15,246
Fees waived by the investment manager (Note 3)......... (182,305)
-----------------
2,193,175
-----------------
Administration fees (Note 3):
Class 1.............................................. 844
Class 2.............................................. 667
Class 3.............................................. 417
Class 4.............................................. 359,887
Distribution and service fees (Note 3):
Class 1.............................................. 958
Class 2.............................................. 191
-----------------
Net expenses....................................... 2,556,139
-----------------
Net investment income............................... 10,013,929
-----------------
Realized and unrealized gain (loss):
Net realized gain on investment transactions........... 15,188,213
Net change in unrealized appreciation (depreciation) on
investments.......................................... 63,151,095
-----------------
Net realized and unrealized gain.................... 78,339,308
-----------------
Net increase in net assets resulting from operations... $ 88,353,237
=================
</TABLE>
The accompanying notes are an integral part of the financial statements.
54
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Small Cap Value Equity - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Statements of
Changes in Net
Assets
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income................................................. $ 10,013,929 $ 6,234,130
Net realized gain on investment transactions.......................... 15,188,213 776,790
Net change in unrealized appreciation (depreciation)
on investments....................................................... 63,151,095 57,391,484
----------------- ----------------
Net increase in net assets resulting from operations................. 88,353,237 64,402,404
----------------- ----------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1............................................................... (1,430) (1,356)
Class 2............................................................... (2,382) (1,300)
Class 3............................................................... (2,845) (1,672)
Class 4............................................................... (9,914,239) (6,159,231)
----------------- ----------------
Total distributions from net investment income....................... (9,920,896) (6,163,559)
----------------- ----------------
From net realized gains:
Class 1............................................................... (3,230) --
Class 2............................................................... (3,240) --
Class 3............................................................... (3,251) --
Class 4............................................................... (10,172,978) --
----------------- ----------------
(10,182,699) --
----------------- ----------------
Total distributions from net realized gains
Net fund share
transactions (Note 5):
Class 1............................................................... (49,286) 51,075
Class 2............................................................... 5,622 1,300
Class 3............................................................... 6,096 1,672
Class 4............................................................... 8,348,780 11,428,353
Increase in net assets from net fund share transactions.............. 8,311,212 11,482,400
----------------- ----------------
Total increase in net assets.......................................... 76,560,854 69,721,245
----------------- ----------------
Net assets:
Beginning of period................................................... 380,807,529 311,086,284
End of period (including undistributed net investment income
of $192,363 and $99,330, respectively)............................... $ 457,368,383 $ 380,807,529
================= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
55
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Small Cap Value Equity - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 1
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
---------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.40 $ 9.69 $ 10.00
---------- ----------- -----------
Income (loss) from investment operations:
Net investment income 0.21 0.06 0.02
Net realized and unrealized gain (loss) on investments 2.23 1.74 (0.31)
---------- ----------- -----------
Total income (loss) from investment operations 2.44 1.80 (0.29)
---------- ----------- -----------
Less distributions to shareholders:
From net investment income (0.14) (0.09) (0.02)
From net realized gains (0.31) -- --
---------- ----------- -----------
Total distributions (0.45) (0.09) (0.02)
---------- ----------- -----------
Net asset value, end of period $ 13.39 $ 11.40 $ 9.69
========== =========== ===========
Total Return 21.43% 18.58% (2.89)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $143 $172 $99
Net expenses to average daily net assets# 1.75% 1.75% 1.75%*
Net investment income to average daily net assets 1.56% 0.63% 1.14%*
Portfolio turnover rate 28% 28% 4%
Average broker commission rate (a) $ .0585 N/A N/A
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 1.79% 1.79% 1.81%*
Class 2
-----------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
---------- ----------- -----------
Net asset value, beginning of period $ 11.44 $ 9.70 $ 10.00
---------- ----------- -----------
Income (loss) from investment operations:
Net investment income 0.22 0.13 0.03
Net realized and unrealized gain (loss) on investments 2.30 1.74 (0.30)
---------- ----------- -----------
Total income (loss) from investment operations 2.52 1.87 (0.27)
Less distributions to shareholders:
From net investment income (0.23) (0.13) (0.03)
From net realized gains (0.31) -- --
---------- ----------- -----------
Total distributions (0.54) (0.13) (0.03)
---------- ----------- -----------
Net asset value, end of period $ 13.42 $ 11.44 $ 9.70
========== =========== ===========
Total Return 22.07% 19.25% (2.72)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $145 $118 $99
Net expenses to average daily net assets# 1.20% 1.20% 1.20%*
Net investment income to average daily net assets 1.81% 1.19% 1.69%*
Portfolio turnover rate 28% 28% 4%
Average broker commission rate (a) $ .0585 N/A N/A
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 1.24% 1.24% 1.26%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
(a)Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were charged.
For fiscal years beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged.
The accompanying notes are an integral part of the financial statements.
56
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Small Cap Value Equity - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 3
---------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
----------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.44 $ 9.70 $ 10.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 0.27 0.16 0.03
Net realized and unrealized gain (loss) on investments 2.31 1.74 (0.30)
----------- ------------ ------------
Total income (loss) from investment operations 2.58 1.90 (0.27)
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (0.27) (0.16) (0.03)
From net realized gains (0.31) -- --
----------- ------------ ------------
Total distributions (0.58) (0.16) (0.03)
----------- ------------ ------------
Net asset value, end of period $ 13.44 $ 11.44 $ 9.70
=========== ============ ============
Total Return 22.64% 19.62% (2.68)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $146 $119 $99
Net expenses to average daily net assets# 0.85% 0.85% 0.85%*
Net investment income to average daily net assets 2.16% 1.54% 2.09%*
Portfolio turnover rate 28% 28% 4%
Average broker commission rate (a) $ .0585 N/A N/A
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 0.89% 0.89% 0.91%*
<CAPTION>
Class 4
---------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
----------- ------------ ------------
Net asset value, beginning of period $ 11.44 $ 9.69 $ 10.00
----------- ------------ ------------
Income (loss) from investment operations:
Net investment income 0.31 0.19 0.04
Net realized and unrealized gain (loss) on investments 2.29 1.75 (0.31)
----------- ------------ ------------
Total income (loss) from investment operations 2.60 1.94 (0.27)
----------- ------------ ------------
Less distributions to shareholders:
From net investment income (0.30) (0.19) (0.04)
From net realized gains (0.31) -- --
----------- ------------ ------------
Total distributions (0.61) (0.19) (0.04)
----------- ------------ ------------
Net asset value, end of period $ 13.43 $ 11.44 $ 9.69
=========== ============ ============
Total Return@ 22.82% 20.01% (2.66)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $456,935 $380,398 $310,789
Net expenses to average daily net assets# 0.6110% 0.6110% 0.6110%*
Net investment income to average daily net assets 2.40% 1.78% 1.78%*
Portfolio turnover rate 28% 28% 4%
Average broker commission rate (a) $ .0585 N/A N/A
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 0.6546% 0.6553% 0.6681%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
@Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
(a)Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were charged.
For fiscal years beginning on or after September 1, 1995, a Fund
is required to disclose its average commission rate per share for security
trades on which commissions are charged.
The accompanying notes are an integral part of the financial statements. 57
<PAGE>
- --------------------------------------------------------------------------------
MassMutual International Equity Fund - Portfolio of Investments
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
<TABLE>
<CAPTION>
Number of
Shares Market Value
------ ------------
<S> <C> <C>
EQUITIES - 99.9%
Automobiles -- 2.8%
Ciadea SA (D) 280,885 $ 1,334,428
Mahindra & Mahindra
Ltd., GDR 140,683 1,653,025
Orbital Engine
Corporation Ltd. (D) 2,000,000 1,509,000
Porsche AG,
Preference 6,000 5,353,287
-------------
9,849,740
-------------
Banking -- 8.3%
Banco Bradesco SA,
Preference 230,260,951 1,657,879
Banco de Galicia y
Buenos Aires SA de
CV, Sponsored ADR 127,000 3,079,750
Banco Frances del Rio
de la Plata SA, ADR 57,500 1,581,250
Bank of Scotland 1,250,000 6,588,500
Bil GT Gruppe AG 2,500 1,277,256
Development Bank of
Singapore Limited 200,000 2,702,260
HSBC Holdings PLC 261,214 5,588,987
Skandinaviska Enskilda
Banken Group 150,000 1,537,770
Standard Chartered
Bank PLC 350,000 4,294,500
Turkiye Garanti
Bankasi, ADR 252,000 1,131,808
-------------
29,439,960
-------------
Commercial Services -- 0.3%
Adecco SA 4,000 1,000,952
-------------
Computer Hardware -- 0.8%
Canon, Inc. 100,000 2,205,560
PT Multipolar
Corporation 933,000 533,116
-------------
2,738,676
-------------
Computer Services -- 1.1%
Sligos SA 30,000 3,924,027
-------------
Computer Software -- 7.4%
Ines Corp. 42,000 611,524
Misys PLC 450,872 8,572,204
Nintendo Co. Ltd. 185,000 13,213,144
SAP AG, Preference 30,000 4,123,002
-------------
26,519,874
-------------
Conglomerates -- 2.1%
Chargeurs
International SA (D) 120,000 $ 5,932,200
First Philippine
Holdings Corp., B
Shares 700,000 1,596,910
-------------
7,529,110
-------------
Diversified Financial -- 5.8%
ABN Amro Holding
NV 101,630 6,604,009
ING Groep NV 137,500 4,944,390
IRSA Inversiones y
Representaciones, SA 1,014,404 3,256,744
Nomura Securities
Company Ltd. 250,000 3,747,725
Societe Generale de
Paris 20,000 2,158,216
-------------
20,711,084
-------------
Drugs -- 9.3%
Altana AG 6,000 4,668,067
Ares-Serono Group B 10,500 9,986,057
Biocompatibles
International PLC (D) 411,665 5,762,651
Glaxo Wellcome PLC,
Sponsored ADR 250,000 4,064,325
Sanofi SA 35,000 3,473,918
Takeda Chemical
Industries Ltd. 250,000 5,233,900
-------------
33,188,918
-------------
Electric Utilities -- 0.4%
Capex SA, GDR 76,000 1,262,360
-------------
Electrical Equipment & Electronics -- 6.5%
Austria Mikro
Systeme International
AG 54,800 4,226,450
Keyence Corporation 20,000 2,464,030
LEM Holdings SA 11,192 2,258,868
Matsushita Electric
Industrial Company
Ltd. 175,000 2,849,560
Rohm Company 40,000 2,619,108
SGS-Thomson
Microelectronics NV (D) 58,800 4,116,000
Yamatake-Honeywell
Co., Ltd. 70,000 1,127,763
Yokogawa Electric
Corp. 400,000 3,446,160
-------------
23,107,939
-------------
Energy Services & Producers -- 1.0%
Compagnie Generale de
Geophysique SA (D) 50,000 $ 3,462,375
-------------
Engineering -- 1.7%
Fugro NV 200,000 3,549,660
Internatio-Muller NV 100,000 2,509,050
-------------
6,058,710
-------------
Financial Services -- 3.8%
Compagnie Bancaire
SA 35,000 4,133,693
CS Holding AG 40,000 4,096,156
Merita Ltd.
A Shares (D) 1,399,600 4,342,399
Van der Hoop
Effektenbank NV 145,000 1,106,524
-------------
13,678,772
-------------
Food & Beverage -- 2.5%
Hellenic Bottling Co.,
SA 70,000 2,242,912
Remy Cointreau 120,000 3,393,120
Sermsuk Public
Company Limited 50,000 725,425
South African
Breweries Limited 100,000 2,533,400
-------------
8,894,857
-------------
Healthcare -- 1.4%
Novartis AG 4,264 4,868,254
-------------
Hotel/Gaming -- 0.8%
Lusomundo, SGPS,
SA (D) 257,500 2,962,280
-------------
Household Products -- 0.2%
Srithai Superware Co.
Ltd. 175,000 846,318
-------------
Industrial Services -- 3.2%
Boskalis Westminster 347,290 7,027,135
PT Citra Marga
Nusaphala Persada 2,120,000 1,660,106
VBH - Vereinigter
Baubeschlag Handel
AG 125,000 2,778,025
-------------
11,465,266
-------------
</TABLE>
(Continued)
60 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual International Equity Fund - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Market Value
------ ------------
<S> <C> <C>
Insurance -- 7.1%
AXA SA 75,000 $ 4,760,768
Marschollek,
Lautenschlaeger und
Partner AG 44,000 6,109,884
National Mutual Asia
Ltd. 1,816,000 1,725,563
Ockham Holdings PLC 1,000,000 1,283,400
Reinsurance Australia
Corp. Ltd. 2,910,000 11,325,138
-------------
25,204,753
-------------
Manufacturing -- 3.8%
Bucher Holding AG, B
Shares 1,750 1,199,057
Powerscreen
International PLC 494,100 4,777,354
Rolls-Royce PLC 750,000 3,298,500
SMH AG (Registered) 30,000 4,267,449
-------------
13,542,360
-------------
Medical Products -- 0.4%
Elekta Instrument AB
Free, Series B 40,000 1,420,612
Metals & Mining -- 2.1%
Boehler-Uddeholm AG 12,000 857,970
Boehler-Uddeholm AG
144A . 24,000 1,715,946
Compania de Minas
Buenaventura SA,
Sponsored ADR 200,000 3,375,000
Hoganas AB Cl. B 40,000 1,400,108
-------------
7,349,024
-------------
Non-Durable Household Goods -- 1.8%
Wella AG 2,000 1,057,680
Wella AG Preference 10,000 5,320,843
-------------
6,378,523
-------------
Oil & Gas -- 5.2%
Belle Corporation . 5,000,000 1,387,500
Coflexip SA,
Sponsored ADR 90,000 2,362,500
Expro International
Group PLC 775,000 6,266,495
Hong Kong and China
Gas Company Ltd. 720,000 1,391,544
PTT Exploration and
Production 50,000 721,525
Smedvig ASA A
Shares 165,000 3,617,625
Smedvig ASA B
Shares . 160,000 3,282,496
-------------
19,029,685
-------------
Publishing & Printing-- 0.9%
News Corp. Ltd., ADR 150,000 3,131,250
-------------
Real Estate -- 1.3%
Brazil Realty SA,
GDR 144A 59,000 1,121,000
MRC Allied Industries,
Inc. . 4,000,000 532,000
Sun Hung Kai
Properties Ltd. 250,000 3,062,375
-------------
4,715,375
-------------
Retail -- 2.4%
Autobacs Seven Co.
Limited 50,000 3,528,040
PT Matahari Putra
Prima 700,000 818,518
Vendex International
NV 100,000 4,272,320
-------------
8,618,878
-------------
Shipping -- 0.2%
Lisnave-Estaleiros
Navais de Lisbona SA . 306,300 806,917
-------------
Specialty Retail -- 3.7%
Adidas AG 42,200 3,641,919
FamilyMart Co. 60,000 2,393,382
Giordano International
Ltd. 1,500,000 1,279,800
Jusco Co. 100,000 3,385,880
Moebel Walther AG,
Preference 40,000 2,621,488
-------------
13,322,469
-------------
Telecommunications -- 4.0%
CPT Telefonica del
Peru SA, Cl. B 1,600,000 2,994,080
Korea Mobile
Telecommunications
Corporation 4,300 4,368,962
Millicom International
Cellular SA . 37,500 1,204,688
Portugal Telecom SA 86,000 2,448,437
Telecom Italia Mobile
SpA 1,299,900 3,278,478
-------------
14,294,645
-------------
Telephone Utilities -- 1.4%
Telecomunicacoes
Brasileiras S/A-
Telebras 18,500 1,415,250
Telefonica de Espana
ADS 150,000 3,476,835
-------------
4,892,085
-------------
Television -- 0.7%
Groupe AB SA . 165,000 2,371,875
-------------
Textiles -- 1.9%
Bulgari SpA 225,000 4,557,690
Gucci Group NV 35,000 2,235,625
-------------
6,793,315
-------------
Tobacco -- 0.4%
Compagnie Financiere
Richemont AG 1,000 1,400,141
-------------
Transportation -- 3.2%
Argonaut AB-B Shares . 1,100,000 2,207,040
East Japan Railway Co. 750 3,366,503
Frontline AB . 650,000 2,246,595
MIF Ltd. 250,000 3,719,425
-------------
11,539,563
-------------
TOTAL EQUITIES 356,320,942
-------------
(Cost $309,944,622)
WARRANTS -- 0.3%
Drugs -- 0.3%
Biocompatibles
International PLC . 71,593 912,676
-------------
Oil & Gas -- 0.0%
Hong Kong and China
Gas Company Ltd. . 72,000 3,723
-------------
TOTAL WARRANTS 916,399
-------------
(Cost $0)
TOTAL INVESTMENTS -- 100.2% 357,237,341
-------------
(Cost $309,944,622)+
Other Assets/
(Liabilities) - (0.2%) (585,529)
-------------
NET ASSETS-- 100.0% $356,651,812
-------------
</TABLE>
Notes to Portfolio of Investments
. Non-income producing security
+ Aggregate cost for Federal tax purposes (Note 7)
ADR: American Depository Receipt
GDR: Global Depository Receipt
ADS: American Depository Shares
144A: Securities exempt from registration under rule 144A of the Securities Act
of 1933. The Securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
The accompanying notes are an integral part of the financial statements. 61
<PAGE>
- --------------------------------------------------------------------------------
MassMutual International Equity Fund - Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1996
-----------------
<S> <C>
Statement of Assets and Liabilities
Assets:
Investments, at value (cost $309,944,622) (Note 2)....................... $ 357,237,341
Cash..................................................................... 83,359
Foreign currency, at value (cost $4,918,907)............................. 4,903,738
Receivables from:
Investments sold....................................................... 1,783,534
Open forward foreign currency contracts (Note 2)....................... 612,258
Fund shares sold....................................................... 216,824
Interest and dividends................................................. 267,791
Foreign taxes withheld................................................. 274,223
Investment manager (Note 3)............................................ 54,877
-------------------
Total assets......................................................... 365,433,945
-------------------
Liabilities:
Payables for:
Investments purchased.................................................. 6,371,010
Borrowings under line of credit (Note 8)............................... 1,600,000
Fund shares redeemed................................................... 456,891
Directors' fees and expenses (Note 3).................................. 5,177
Affiliates (Note 3):
Investment management fees........................................... 254,834
Administration fees.................................................. 29,289
Service and distribution fees........................................ 219
Accrued expenses and other liabilities................................... 64,713
-------------------
Total liabilities.................................................... 8,782,133
-------------------
Net assets............................................................... $ 356,651,812
===================
Net assets consist of:
Paid-in capital.......................................................... $ 320,990,580
Undistributed net investment income...................................... 113,978
Accumulated net realized loss on investments and
foreign currency translations.......................................... (12,355,482)
Net unrealized appreciation on investments, forward foreign currency
contracts, foreign currency and other assets and liabilities........... 47,902,736
-------------------
$ 356,651,812
===================
Net assets:
Class 1.................................................................. $ 112,681
===================
Class 2.................................................................. $ 114,019
===================
Class 3.................................................................. $ 114,468
===================
Class 4.................................................................. $ 356,310,644
===================
Shares outstanding:
Class 1.................................................................. 10,176
===================
Class 2.................................................................. 10,281
===================
Class 3.................................................................. 10,315
===================
Class 4.................................................................. 32,070,618
===================
Net asset value, offering price and
redemption price per share:
Class 1.................................................................. $ 11.07
===================
Class 2.................................................................. $ 11.09
===================
Class 3.................................................................. $ 11.10
===================
Class 4.................................................................. $ 11.11
===================
</TABLE>
62 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual International Equity Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended
December 31, 1996
----------------
<S> <C>
Statement of Operations
Investment income:
Dividends (net of withholding tax of $468,717)............................ $ 4,155,451
Interest.................................................................. 350,237
-------------------
Total investment income................................................. 4,505,688
-------------------
Expenses (Note 1):
Investment management fees (Note 3)....................................... 2,398,114
Custody fees.............................................................. 319,874
Audit and legal fees...................................................... 9,403
Excise taxes.............................................................. 6,854
Directors' fees (Note 3).................................................. 15,246
Fees waived by the investment manager (Note 3)............................ (196,769)
-------------------
2,552,722
Administration fees (Note 3):
Class 1................................................................. 698
Class 2................................................................. 569
Class 3................................................................. 465
Class 4................................................................. 273,938
Distribution and service fees (Note 3):
Class 1................................................................. 763
Class 2................................................................. 157
-------------------
Net operating expenses................................................ 2,829,312
Interest expense (Note 8)................................................. 25,373
-------------------
Net investment income................................................. 1,651,003
-------------------
Realized and unrealized gain (loss) from investments
and foreign currency:
Net realized gain on:
Investment transactions................................................. 5,099,336
Foreign currency transactions........................................... 5,633,016
-------------------
Net realized gain..................................................... 10,732,352
-------------------
Net change in unrealized appreciation
(depreciation) on:
Investments............................................................. 36,945,058
Translation of assets and liabilities in foreign currencies............. (414,384)
-------------------
Net unrealized gain................................................... 36,530,674
-------------------
Net realized and unrealized gain from investments
and foreign currency................................................. 47,263,026
-------------------
Net increase in net assets resulting from operations...................... $ 48,914,029
===================
</TABLE>
The accompanying notes are an integral part of the financial statements. 63
<PAGE>
- --------------------------------------------------------------------------------
MassMutual International Equity Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets:
Operations:
Net investment income.............................................. $ 1,651,003 $ 1,410,289
Net realized gain (loss) on investment and foreign
currency transactions............................................. 10,732,352 (11,680,240)
Net change in unrealized appreciation (depreciation) on
investments and translation of assets and liabilities in
foreign currencies................................................ 36,530,674 19,939,116
------------------- -------------------
Net increase in net assets resulting from operations........... 48,914,029 9,669,165
------------------- -------------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1............................................................ (263) --
Class 2............................................................ (433) (195)
Class 3............................................................ (501) (467)
Class 4............................................................ (1,825,896) (1,565,611)
------------------- -------------------
Total distributions from net investment income................. (1,827,093) (1,566,273)
------------------- -------------------
In excess of net investment income:
Class 1............................................................ (794) (830)
Class 2............................................................ (1,308) (952)
Class 3............................................................ (1,513) (947)
Class 4............................................................ (5,515,423) (2,389,653)
------------------- -------------------
Total distributions in excess of net investment income......... (5,519,038) (2,392,382)
------------------- -------------------
Net fund share transactions (Note 5):
Class 1............................................................ (13,956) 16,103
Class 2............................................................ 1,742 1,191
Class 3............................................................ 2,018 1,430
Class 4............................................................ 94,070,522 64,817,475
------------------- -------------------
Increase in net assets from net fund share transactions........... 94,060,326 64,836,199
------------------- -------------------
Total increase in net assets....................................... 135,628,224 70,546,709
Net assets:
Beginning of period................................................ 221,023,588 150,476,879
------------------- -------------------
End of period (including undistributed net investment income
of $113,978 and distributions in excess of net investment
income of $215,389)................................................ $ 356,651,812 $ 221,023,588
=================== ===================
</TABLE>
64 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual International Equity Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 1
----------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
---------- ---------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.54 $ 9.25 $ 10.00
---------- ---------- -----------
Income (loss) from investment operations:
Net investment income (0.07) (0.03) (0.02)
Net realized and unrealized gain (loss) on investments
and foreign currency 1.70 0.40 (0.73)
---------- ---------- -----------
Total income (loss) from investment operations 1.63 0.37 (0.75)
---------- ---------- -----------
Less distributions to shareholders:
From net investment income (0.10) -- --
In excess of net investment income -- (0.08) --
---------- ---------- -----------
Total distributions (0.10) (0.08) --
---------- ---------- -----------
Net asset value, end of period $ 11.07 $ 9.54 $ 9.25
========== ========== ===========
Total Return 17.09% 3.96% (7.50)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $113 $112 $93
Net expenses to average daily net assets# 2.15% 2.15% 2.15%*
Net investment income to average daily net assets (0.51)% (0.40)% (1.10)%*
Portfolio turnover rate 58% 121% 18%
Average broker commission rate (a) $ .0254 N/A N/A
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 2.22% 2.24% 2.24%*
<CAPTION>
Class 2
----------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
---------- ---------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.56 $ 9.26 $ 10.00
---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.00 0.02 (0.01)
Net realized and unrealized gain (loss) on investments
and foreign currency 1.70 0.40 (0.73)
---------- ---------- ----------
Total income (loss) from investment operations 1.70 0.42 (0.74)
---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.17) (0.02) --
In excess of net investment income -- (0.10) --
---------- ---------- ----------
Total distributions (0.17) (0.12) --
---------- ---------- -----------
Net asset value, end of period $ 11.09 $ 9.56 $ 9.26
========== ========== ==========
Total Return 17.85% 4.52% (7.40)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $114 $97 $93
Net expenses to average daily net assets# 1.60% 1.60% 1.60%*
Net investment income to average daily net assets 0.02% 0.19% (0.55)%*
Portfolio turnover rate 58% 121% 18%
Average broker commission rate (a) $ .0254 N/A N/A
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 1.67% 1.69% 1.69%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
(a)Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were charged.
For fiscal years beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged.
The accompanying notes are an integral part of the financial statements. 65
<PAGE>
- --------------------------------------------------------------------------------
MassMutual International Equity Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 3
----------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
---------- ---------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.57 $ 9.27 $ 10.00
---------- ---------- -----------
Income (loss) from investment operations:
Net investment income 0.03 0.04 (0.00)
Net realized and unrealized gain (loss) on investments
and foreign currency 1.70 0.40 (0.73)
---------- ---------- -----------
Total income (loss) from investment operations 1.73 0.44 (0.73)
---------- ---------- -----------
Less distributions to shareholders:
From net investment income (0.20) (0.05) --
In excess of net investment income -- (0.09) --
---------- ---------- -----------
Total distributions (0.20) (0.14) --
---------- ---------- -----------
Net asset value, end of period $ 11.10 $ 9.57 $ 9.27
========== ========== ===========
Total Return 18.11% 4.78% (7.30)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $114 $97 $93
Net expenses to average daily net assets# 1.35% 1.35% 1.35%*
Net investment income to average daily net assets 0.27% 0.45% (0.30)%*
Portfolio turnover rate 58% 121% 18%
Average broker commission rate (a) $ .0254 N/A N/A
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 1.42% 1.44% 1.44%*
<CAPTION>
Class 4
-------
Year ended Year ended Period Ended
12/31/96 12/31/95 12/31/94**
---------- ---------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.58 $ 9.28 $ 10.00
---------- ---------- -----------
Income (loss) from investment operations:
Net investment income 0.06 0.07 0.00
Net realized and unrealized gain (loss) on investments
and foreign currency 1.71 0.41 (0.72)
---------- ---------- -----------
Total income (loss) from investment operations 1.77 0.48 (0.72)
---------- ---------- -----------
Less distributions to shareholders:
From net investment income (0.24) (0.07) --
In excess of net investment income -- (0.11) --
---------- ---------- -----------
Total distributions (0.24) (0.18) --
---------- ---------- -----------
Net asset value, end of period $ 11.11 $ 9.58 $ 9.28
========== ========== ===========
Total Return@ 18.51% 5.13% (7.20)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $356,311 $220,718 $150,199
Net expenses to average daily net assets# 1.0020% 1.0020% 1.0020%*
Net investment income to average daily net assets 0.59% 0.76% 0.04%*
Portfolio turnover rate 58% 121% 18%
Average broker commission rate (a) $ .0254 N/A N/A
#Computed after giving effect to the reduction in
management fee by MassMutual. Without this reduction of
fees by the investment manager, the ratio of expenses
to average daily net assets would have been: 1.0718% 1.0920% 1.0877%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
@ Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
(a)Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were charged.
For fiscal years beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged.
66 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. The Trust
MassMutual Institutional Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end, diversified
management investment company. The Trust is organized under the laws of the
Commonwealth of Massachusetts as a Massachusetts business trust pursuant to an
Agreement and Declaration of Trust dated May 28, 1993, as amended. The Trust
consists of seven separate series of shares (each individually referred to as a
"Fund" or collectively as the "Funds"), each having four classes of shares:
Class 1, Class 2, Class 3 and Class 4. Class 1, Class 2 and Class 3 shares of
each Fund are offered primarily to employer-sponsored defined contribution plans
that satisfy the qualification requirements of Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). Class 4 shares of each Fund are
available only to separate investment accounts ("SIAs") of Massachusetts Mutual
Life Insurance Company ("MassMutual") in which corporate qualified plans
including defined contribution plans and defined benefit plans are permitted to
invest pursuant to the issuance of group annuity contracts. The Funds are
MassMutual Prime Fund ("Prime Fund"), MassMutual Short-Term Bond Fund
("Short-Term Bond Fund"), MassMutual Core Bond Fund ("Core Bond Fund"),
MassMutual Balanced Fund ("Balanced Fund"), MassMutual Value Equity Fund ("Value
Equity Fund"), MassMutual Small Cap Value Equity Fund ("Small Cap Value Equity
Fund"), and MassMutual International Equity Fund ("International Equity Fund"),
all of which commenced operations on October 3, 1994.
2. Significant Accounting Policies
The following is a summary of significant accounting policies followed
consistently by each Fund in the preparation of the financial statements in
conformity with generally accepted accounting principles. The preparation of the
financial statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates.
Investment Valuation
Equity securities are valued on the basis of valuations furnished by a pricing
service, authorized by the Board of Trustees ("Trustees"), which provides the
last reported sale price for securities listed on a national securities exchange
or on the NASDAQ national market system, or in the case of over-the-counter
securities not so listed, the last reported bid price. Debt securities (other
than short-term obligations with a remaining maturity of sixty days or less) are
valued on the basis of valuations furnished by a pricing service, authorized by
the Trustees, which determines valuations taking into account appropriate
factors such as institutional-size trading in similar groups of securities,
yield, quality, coupon rate, maturity, type of issue, trading characteristics
and other market data. Money market obligations with a remaining maturity of
sixty days or less are valued at either amortized cost or at original cost plus
accrued interest, whichever approximates current market value. All other
securities and other assets, including debt securities for which the prices
supplied by a pricing agent are deemed by MassMutual not to be representative of
market values, and including restricted securities and securities for which no
market quotation is available, are valued at fair value in accordance with
procedures approved by and determined in good faith by the Trustees, although
the actual calculation may be done by others.
Portfolio securities traded on more than one national securities exchange are
valued at the last price on the business day as of which such value is being
determined at the close of the exchange representing the principal market for
such securities. All assets and liabilities expressed in foreign currencies will
be converted into U.S. dollars at the mean between the buying and selling rates
of such currencies against U.S. dollars last quoted by any major bank. If such
quotations are not available, the rate of exchange will be determined in
accordance with policies established by the Trustees.
67
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
Accounting for Investments
Investment transactions are accounted for on the trade date. Realized gains and
losses on sales of investments and unrealized appreciation and depreciation of
investments are computed on the specific identification cost method. Interest
income, adjusted for amortization of discounts and premiums on investments, is
earned from the settlement date and is recorded on the accrual basis. Dividend
income is recorded on the ex-dividend date.
Federal Income Tax
It is each Fund's intent to continue to comply with the provisions of subchapter
M of the Code applicable to a regulated investment company. Under such
provisions, the Funds will not be subject to federal income taxes on their
ordinary income and net realized capital gain to the extent they are distributed
or deemed to have been distributed to their shareholders. Therefore, no Federal
income tax provision is required.
Dividends and Distributions to Shareholders
Dividends from net investment income and distributions of any net realized
capital gains of each Fund are declared and paid annually and at other times as
may be required to satisfy tax or regulatory requirements. Distributions to
shareholders are recorded on the ex-dividend date. Income and capital gain
distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences are
primarily due to investments in forward contracts, passive foreign investment
companies, the deferral of wash sale losses, and paydowns on certain
mortgage-backed securities. As a result, net investment income (loss) and net
realized gain (loss) on investment transactions for a reporting period may
differ significantly from distributions during such period. Accordingly, the
Funds may periodically make reclassifications among certain of their capital
accounts without impacting the net asset value of the Funds.
Foreign Currency Translation
The books and records of the Funds are maintained in U.S. dollars. The market
values of foreign currencies, foreign securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollars
at the mean of the buying and selling rates of such currencies against the U.S.
dollar at the end of each business day. Purchases and sales of foreign
securities and income and expense items are translated at the rates of exchange
prevailing on the respective dates of such transactions. The Funds do not
isolate that portion of the results of operations arising from changes in the
exchange rates from that portion arising from changes in the market prices of
securities.
Net realized foreign currency gains and losses resulting from changes in
exchange rates include foreign currency gains and losses between trade date and
settlement date on investment securities transactions, foreign currency
transactions and the difference between the amounts of dividends recorded on the
books of the Funds and the amount actually received.
Forward Foreign Currency Contracts
Each Fund may enter into forward foreign currency contracts in order to convert
foreign denominated securities or obligations to U.S. dollar denominated
investments. The International Equity Fund may engage in such transactions to
manage the value of portfolio holdings against future movements in certain
foreign currency exchange rates. A forward foreign currency contract is an
agreement between two parties to buy and sell a currency at a set price on a
future date. The market value of a forward currency contract fluctuates with
changes in forward foreign currency exchange rates. Forward foreign currency
contracts are marked to market daily and the change in their value is recorded
by the Funds as an unrealized gain or loss. When a forward foreign currency
contract is extinguished, through delivery or offset by entering into another
forward foreign currency contract, the Funds record a realized gain or loss
equal to the difference between the value of the contract at the time it was
opened and the value of the contract at the time it was extinguished or offset.
Forward foreign currency contracts involve a risk of loss from the potential
inability of counterparties to meet the terms of their contracts and from
unanticipated movements in foreign currency values and interest rates.
68
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
The notional or contractual amounts of these instruments represent the
investments the Funds have in particular classes of financial instruments and do
not necessarily represent the amounts potentially subject to risk. The
measurement of the risk associated with these instruments is meaningful only
when all related and offsetting transactions are considered. A summary of
obligations for the International Equity Fund under these financial instruments
at December 31, 1996 is as follows:
<TABLE>
<CAPTION>
In
Contracts Exchange Unrealized
Settlement to Units of for U.S. Contracts at Appreciation
Date Deliver/Receive Currency Dollars Value (Depreciation)
- ---------- --------------- -------- -------- ------------ --------------
<S> <C> <C> <C> <C> <C>
BUYS
01/13/97 Austrian Schilling 2,124,732 $ 196,807 $ 196,017 $ (790)
SELLS
01/02/97 British Pound 114,041 190,471 195,147 (4,676)
01/03/97 British Pound 334,350 562,433 572,139 (9,706)
01/07/97 British Pound 110,538 188,114 189,153 (1,039)
01/27/97 Japanese Yen 4,007,200,000 35,305,727 34,677,258 628,469
---------------
613,048
---------------
$ 612,258
===============
</TABLE>
Forward Commitments
Each Fund may purchase or sell securities on a "when issued" or delayed delivery
or on a forward commitment basis. The Funds use forward commitments to manage
interest rate exposure or as a temporary substitute for purchasing or selling
particular debt securities. Forward commitments are not used for purposes of
trading. Delivery and payment for securities purchased on a forward commitment
basis can take place a month or more after the date of the transaction. The
Funds instruct the custodian to segregate assets in a separate account with a
current market value at least equal to the amount of its forward purchase
commitments. The price of the underlying security and the date when the
securities will be delivered and paid for are fixed at the time the transaction
is negotiated. The value of the forward commitment is determined by management
using a commonly accepted pricing model and fluctuates based upon changes in the
value of the underlying security and market repurchase rates. Such rates equate
the counterparty's cost to purchase and finance the underlying security to the
earnings received on the security and forward delivery proceeds. The Funds
record on a daily basis the unrealized appreciation/depreciation based upon
changes in the value of the forward commitment. When a forward commitment
contract is closed, the Funds record a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value of the contract at the time it was extinguished. Forward commitments
involve a risk of loss if the value of the security to be purchased declines
prior to the settlement date. The Funds could also be exposed to loss if they
cannot close out their forward commitments because of an illiquid secondary
market, or the inability of counterparties to perform. The Funds monitor
exposure to ensure counterparties are creditworthy and concentration of exposure
is minimized. A summary of open obligations under these forward commitments at
December 31, 1996, is as follows:
<TABLE>
<CAPTION>
Forward Expiration Aggregate
Commitment of Face Value Market Unrealized
Contracts to Buy Contracts of Contracts Cost Value (Depreciation)
---------------- ---------- ------------ ---- ------ --------------
<S> <C> <C> <C> <C> <C>
Core Bond Fund
U.S. Treasury Note
5.875% 11/15/1999 February 1997 $ 9,250,000 $ 9,215,674 $ 9,203,935 ($11,739)
Balanced Fund
U.S. Treasury Note
5.875% 11/15/1999 February 1997 $1,900,000 $1,892,949 $1,890,538 ($ 2,411)
</TABLE>
69
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
Allocation of Operating Activity
In maintaining the records for the Funds, the income and expense accounts are
allocated to each class of shares. Investment income, unrealized and realized
gains or losses are prorated among the classes of shares based on the relative
net assets of each. Expenses are allocated to each class of shares depending on
the nature of the expenditures. Administration and distribution and service
fees, which are directly attributable to a class of shares, are charged to that
class' operations. Expenses of the Fund not directly attributable to the
operations of any class of shares or Fund are prorated among the Funds and
classes to which the expense relates based on the relative net assets of each.
Total expenses per class are currently limited to a percentage of average daily
net assets, as discussed in Note 3.
3. Management Fees and Other Transactions With Affiliates
Investment Management Fees
Under an agreement between the Trust and MassMutual, MassMutual is responsible
for providing investment management of each Fund. In return for this service,
MassMutual receives advisory fees monthly based upon each Fund's average daily
net assets at the following annual rates:
<TABLE>
<S> <C>
Prime Fund .45%
Short-Term Bond Fund .45%
Core Bond Fund .45%
Balanced Fund .45%
Value Equity Fund .45%
Small Cap Value Equity Fund .55%
International Equity Fund .85%
</TABLE>
MassMutual has entered into investment sub-advisory agreements with two
subsidiaries: David L. Babson & Company, Inc. ("Babson") and HarbourView Asset
Management Corporation ("HarbourView"). These agreements provide that (1)
effective January 1, 1997, Babson will manage the investment and reinvestment of
the assets of the Value Equity Fund, the Small Cap Value Equity Fund and the
Value Equity sector of the Balanced Fund, and (2) HarbourView will manage the
investment and reinvestment of the assets of the International Equity Fund.
Prior to January 1, 1997, Concert Capital Management ("Concert Capital") served
as the investment sub-advisor to the Value Equity Fund, the Small Cap Value
Equity Fund and the Value Equity sector of the Balanced Fund. On January 1,
1996, the employees of Concert Capital became co-employees of Babson. At the
time, both Concert Capital and Babson were wholly-owned subsidiaries of DLB
Acquisition Corporation, a controlled subsidiary of MassMutual. Concert Capital
merged with and into Babson effective December 31, 1996.
MassMutual pays Babson a fee equal to an annual rate of .13% of the average
daily net asset value of the Value Equity Fund and the Value Equity sector of
the Balanced Fund and .25% of the average daily net asset value of the Small Cap
Value Equity Fund. MassMutual pays HarbourView a fee equal to an annual rate of
.50% of the average daily net asset value of the International Equity Fund.
Administration Fees
Under separate administrative and shareholder services agreements between each
Fund and MassMutual, MassMutual provides certain administrative and shareholder
services and bears some class specific administrative expenses. In return for
these services, MassMutual receives an administrative services fee monthly based
upon the average daily net assets of the applicable class of shares of the Fund
at the following annual rates:
<TABLE>
<CAPTION>
Class 1 Class 2 Class 3 Class 4
-------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Prime Fund .5628% .5128% .3152% .0812%
Short-Term Bond Fund .5568% .5068% .3092% .0782%
Core Bond Fund .5688% .5188% .3212% .0842%
Balanced Fund .5708% .5208% .3232% .0852%
Value Equity Fund .5814% .5314% .3338% .0905%
Small Cap Value Equity Fund .5728% .5228% .3252% .0862%
International Equity Fund .5948% .5448% .4448% .0972%
</TABLE>
70
<PAGE>
Notes to Financial Statements (Continued)
Distribution and Service Fees
OppenheimerFunds Distributor, Inc. ("Oppenheimer") acts as distributor to each
Fund. MML Investor Services, Inc. ("MMLISI") serves as sub-distributor to each
Fund. MassMutual has a controlling interest in OppenheimerFunds and MMLISI is a
wholly owned subsidiary of MassMutual. Oppenheimer is paid a distribution fee
with respect to Class 1 and Class 2 at the annual rate of .40% and .15%,
respectively, of the value of average daily net assets attributable to those
classes of shares of which a portion is subsequently allocated to MMLISI. The
Funds do not pay any fees directly to MMLISI. MassMutual is also paid a fee for
shareholder services with respect to Class 1 shares of the Funds at the annual
rate of .25% of the value of the average daily net assets of the respective
class of each Fund. These fees are authorized pursuant to separate service and
distribution plans for each of the classes of shares adopted by the Funds
pursuant to Rule 12b-1 under the Investment Company Act and are used by
Oppenheimer to cover expenses primarily intended to result in the sale of those
shares of the Funds.
Expense Limitations
MassMutual has voluntarily agreed to waive a portion of its management fee to
the extent that the aggregate annual operating expenses incurred during the year
exceed the following percentages of the average daily net assets:
<TABLE>
<CAPTION>
Class 1 Class 2 Class 3 Class 4
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Prime Fund 1.65% 1.10% .75% .5160%
Short-Term Bond Fund 1.65% 1.10% .75% .5190%
Core Bond Fund 1.65% 1.10% .75% .5130%
Balanced Fund 1.65% 1.10% .75% .5120%
Value Equity Fund 1.65% 1.10% .75% .5067%
Small Cap Value Equity Fund 1.75% 1.20% .85% .6110%
International Equity Fund 2.15% 1.60% 1.35% 1.002%
</TABLE>
MassMutual's management fee for the year ended December 31, 1996 was
$20,477,568, of which $1,925,096 was reimbursed to the Funds.
Other
Certain officers and directors of the Funds are also officers of
MassMutual. The compensation of unaffiliated directors of the Funds is borne by
the Funds.
At December 31, 1996, MassMutual or separate investment accounts thereof owned
all of the outstanding shares of the Trust.
4. Purchases And Sales Of Investments
Cost of purchases and proceeds from sales of investment securities (excluding
short-term investments) for the year ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
Long-term U.S.
Government Other Long-term
Securities Securities
--------------------- ----------------------
Purchases
<S> <C> <C>
Short-Term Bond Fund $ 102,126,595 $ 32,662,257
Core Bond Fund 168,040,130 117,409,164
Balanced Fund 48,825,564 81,833,743
Value Equity Fund -- 366,428,008
Small Cap Value Equity Fund -- 126,866,361
International Equity Fund -- 255,790,219
Sales
Short-Term Bond Fund $ 39,099,687 $ 14,835,789
Core Bond Fund 111,228,535 37,231,689
Balanced Fund 39,076,581 45,001,025
Value Equity Fund -- 281,828,695
Small Cap Value Equity Fund -- 107,156,414
International Equity Fund -- 161,400,001
</TABLE>
71
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
5. Capital Share Transactions
The Funds are authorized to issue an unlimited number of shares, with no par
value, in one or more of four classes of shares: Class 1, Class 2, Class 3 and
Class 4. Class 1 and Class 2 shares of each Fund are subject to distribution and
service fees. Class 3 shares are not subject to any distribution or service
fees. SIA Investors purchase Class 4 shares directly from the Funds and pay no
distribution or service fees. Changes in shares outstanding for each Fund are as
follows:
<TABLE>
<CAPTION>
Class 1
Year ended Year ended
December 31, 1996 December 31, 1995
Shares Amount Shares Amount
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Prime Fund
Sold -- -- -- --
Issued as reinvestment
of dividends 28 4,288 28 4,178
Redeemed -- -- -- --
-------- -------- -------- --------
Net increase 28 $ 4,288 28 $ 4,178
======== ======== ======== ========
Short-Term Bond Fund
Sold -- -- -- --
Issued as reinvestment
of dividends 519 5,285 740 7,530
Redeemed -- -- -- --
-------- -------- -------- --------
Net increase 519 $ 5,285 740 $ 7,530
======== ======== ======== ========
Core Bond Fund
Sold 429 4,520 4,457 49,156
Issued as reinvestment
of dividends 489 5,156 1,186 12,759
Redeemed (5,250) (55,534) -- --
-------- -------- -------- --------
Net increase (decrease) (4,332) $(45,858) 5,643 $ 61,915
======== ======== ======== ========
Balanced Fund
Sold 931 10,969 4,480 49,577
Issued as reinvestment
of dividends 416 5,173 530 6,084
Redeemed (5,552) (65,509) (23) (260)
-------- -------- -------- --------
Net increase (decrease) (4,205) $(49,367) 4,987 $ 55,401
======== ======== ======== ========
Value Equity Fund
Sold -- -- -- --
Issued as reinvestment
of dividends 403 5,884 219 2,751
Redeemed -- -- -- --
-------- -------- -------- --------
Net increase 403 $ 5,884 219 $ 2,751
======== ======== ======== ========
Small Cap Value Equity Fund
Sold 4,373 54,090 4,740 49,719
Issued as reinvestment
of dividends 349 4,660 119 1,356
Redeemed (9,150) (108,036) -- --
-------- -------- -------- --------
Net increase (decrease) (4,428) $(49,286) 4,859 $ 51,075
======== ======== ======== ========
International Equity Fund
Sold 5,377 55,098 1,610 15,218
Issued as reinvestment
of dividends 100 1,065 93 885
Redeemed (7,009) (70,119) -- --
-------- -------- -------- --------
Net increase (decrease) (1,532) $(13,956) 1,703 $ 16,103
======== ======== ======== ========
<CAPTION>
Class 2
Year ended Year ended
December 31, 1996 December 31, 1995
Shares Amount Shares Amount
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Prime Fund
Sold -- -- -- --
Issued as reinvestment
of dividends 33 4,922 32 4,746
Redeemed -- -- -- --
-------- -------- -------- -------
Net increase 33 $ 4,922 32 $ 4,746
======== ======== ======== =======
Short-Term Bond Fund
Sold -- -- -- --
Issued as reinvestment
of dividends 584 5,951 796 8,116
Redeemed -- -- -- --
-------- -------- -------- -------
Net increase 584 $ 5,951 796 $ 8,116
======== ======== ======== =======
Core Bond Fund
Sold -- -- -- --
Issued as reinvestment
of dividends 562 5,941 861 9,288
Redeemed -- -- -- --
-------- -------- -------- -------
Net increase (decrease) 562 $ 5,941 861 $ 9,288
======== ======== ======== =======
Balanced Fund
Sold -- -- -- --
Issued as reinvestment
of dividends 484 6,038 401 4,610
Redeemed -- -- -- --
-------- -------- -------- -------
Net increase (decrease) 484 $ 6,038 401 $ 4,610
======== ======== ======== =======
Value Equity Fund
Sold -- -- -- --
Issued as reinvestment
of dividends 456 6,682 267 3,372
Redeemed -- -- -- --
-------- -------- -------- -------
Net increase 456 $ 6,682 267 $ 3,372
======== ======== ======== =======
Small Cap Value Equity Fund
Sold -- -- -- --
Issued as reinvestment
of dividends 420 5,622 114 1,300
Redeemed -- -- -- --
-------- -------- -------- -------
Net increase (decrease) 420 $ 5,622 114 $ 1,300
======== ======== ======== =======
International Equity Fund
Sold -- -- -- --
Issued as reinvestment
of dividends 161 1,742 124 1,191
Redeemed -- -- -- --
-------- -------- -------- -------
Net increase (decrease) 161 $ 1,742 124 $ 1,191
======== ======== ======== =======
</TABLE>
72
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class 3
Year ended Year ended
December 31, 1996 December 31, 1995
Shares Amount Shares Amount
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Prime Fund
Sold -- -- -- --
Issued as reinvestment
of dividends 35 5,335 34 5,095
Redeemed -- -- -- --
-------- -------- -------- --------
Net increase 35 $ 5,335 34 $ 5,095
======== ======== ======== ========
Short-Term Bond Fund
Sold -- -- -- --
Issued as reinvestment
of dividends 625 6,381 830 8,467
Redeemed -- -- -- --
-------- -------- -------- --------
Net increase 625 $ 6,381 830 $ 8,467
======== ======== ======== ========
Core Bond Fund
Sold -- -- -- --
Issued as reinvestment
of dividends 604 6,389 894 9,658
Redeemed -- -- -- --
-------- -------- -------- --------
Net increase 604 $ 6,389 894 $ 9,658
======== ======== ======== ========
Balanced Fund
Sold -- -- -- --
Issued as reinvestment
of dividends 521 6,510 433 4,977
Redeemed -- -- -- --
-------- -------- -------- --------
Net increase 521 $ 6,510 433 $ 4,977
======== ======== ======== ========
Value Equity Fund
Sold -- -- -- --
Issued as reinvestment
of dividends 492 7,213 299 3,763
Redeemed -- -- -- --
-------- -------- -------- --------
Net increase 492 $ 7,213 299 $ 3,763
======== ======== ======== ========
Small Cap Value Equity Fund
Sold -- -- -- --
Issued as reinvestment
of dividends 455 6,096 146 1,672
Redeemed -- -- -- --
-------- -------- -------- --------
Net increase 455 $ 6,096 146 $ 1,672
======== ======== ======== ========
International Equity Fund
Sold -- -- -- --
Issued as reinvestment
of dividends 186 2,018 149 1,430
Redeemed -- -- -- --
-------- -------- -------- --------
Net increase 186 $ 2,018 149 $ 1,430
======== ======== ======== ========
<CAPTION>
Class 4
Year ended Year ended
December 31, 1996 December 31, 1995
Shares Amount Shares Amount
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Prime Fund
Sold 2,391,584 370,653,176 1,826,450 281,187,060
Issued as reinvestment
of dividends 86,522 13,067,477 84,068 12,693,332
Redeemed (2,445,697) (378,881,926) (1,363,706) (210,583,290)
---------- ------------- ---------- -------------
Net increase 32,409 $ 4,838,727 546,812 $ 83,297,102
========== ============= ========== =============
Short-Term Bond Fund
Sold 6,074,656 62,871,971 5,136,925 53,696,509
Issued as reinvestment
of dividends 808,935 8,206,104 947,825 9,611,215
Redeemed (4,631,745) (47,999,711) (4,819,336) (50,374,106)
---------- ------------- ---------- -------------
Net increase 2,251,846 $ 23,078,364 1,265,414 $ 12,933,618
========== ============= ========== =============
Core Bond Fund
Sold 15,244,478 161,638,362 8,241,236 89,191,723
Issued as reinvestment
of dividends 1,838,613 19,317,124 1,952,750 20,953,505
Redeemed (6,519,179) (69,250,775) (6,340,632) (67,005,587)
---------- ------------- ---------- -------------
Net increase 10,563,912 $ 111,704,711 3,853,354 $ 43,139,641
========== ============= ========== =============
Balanced Fund
Sold 16,529,257 200,170,935 17,612,664 191,493,187
Issued as reinvestment
of dividends 2,193,746 27,325,515 1,722,693 19,759,099
Redeemed (12,780,860) (154,960,358) (14,889,389) (160,925,764)
---------- ------------- ---------- -------------
Net increase 5,942,143 $ 72,536,092 4,445,968 $ 50,326,522
========== ============= ========== =============
Value Equity Fund
Sold 42,761,147 585,609,490 39,224,457 451,052,424
Issued as reinvestment
of dividends 8,235,214 120,574,407 5,223,526 65,653,544
Redeemed (47,300,940) (651,246,978) (34,020,780) (390,453,417)
---------- ------------- ---------- -------------
Net increase 3,695,421 $ 54,936,919 10,427,203 $ 126,252,551
========== ============= ========== =============
Small Cap Value Equity Fund
Sold 10,428,037 129,033,258 9,765,741 102,623,894
Issued as reinvestment
of dividends 1,500,824 20,087,217 539,817 $6,159,231
Redeemed (11,168,365) (140,771,695) (9,110,662) (97,354,772)
---------- ------------- ---------- -------------
Net increase 760,496 $ 8,348,780 1,194,896 $ 11,428,353
========== ============= ========== =============
International Equity Fund
Sold 14,964,804 154,912,942 11,931,440 112,672,627
Issued as reinvestment
of dividends 672,906 7,341,306 412,266 3,955,148
Redeemed (6,611,341) (68,183,726) (5,487,562) (51,810,300)
---------- ------------- ---------- -------------
Net increase 9,026,369 $ 94,070,522 6,856,144 $ 64,817,475
========== ============= ========== =============
</TABLE>
73
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
6. Foreign Securities
The International Equity Fund invests substantially all of its assets in foreign
securities. The other Funds may also invest in foreign securities, subject to
certain percentage restrictions. Investing in securities of foreign companies
and foreign governments involves special risks and considerations not typically
associated with investing in securities of U.S. companies and the U.S.
Government. These risks include revaluation of currencies and future adverse
political and economic developments. Moreover, securities of many foreign
companies and foreign governments and their markets may be less liquid and their
prices more volatile than those of securities of comparable U.S. companies and
the U.S. Government.
7. Federal Income Tax Information
At December 31, 1996, the cost of securities and the unrealized appreciation
(depreciation) in the value of investments owned by the Funds, as computed on a
Federal income tax basis, are as follows:
<TABLE>
<CAPTION>
Federal Tax Basis Tax Basis Net Unrealized
Income Tax Unrealized Unrealized Appreciation
Cost Appreciation Depreciation (Depreciation)
--------------- --------------- ------------- -----------------
<S> <C> <C> <C> <C>
Prime Fund $ 260,002,847 $ 2,614 $ (10,702) $ (8,088)
Short-Term Bond Fund 142,542,031 1,257,932 (240,203) 1,017,729
Core Bond Fund 348,014,562 6,739,419 (2,019,357) 4,720,062
Balanced Fund 456,772,419 86,711,748 (616,389) 86,095,359
Value Equity Fund 1,768,842,158 713,420,243 (1,562,317) 711,857,926
Small Cap Value Equity Fund 345,263,421 119,498,338 (8,280,372) 111,217,966
International Equity Fund 309,948,749 59,397,218 (12,108,626) 47,288,592
</TABLE>
At December 31, 1996, the following Funds have available, for Federal income tax
purposes, unused capital losses:
<TABLE>
<CAPTION>
Amount Expiration Date
--------------------------------- -------------------------------------
<S> <C> <C>
Prime Fund $ 2,082 December 31, 2003
Prime Fund 2,368 December 31, 2004
Short-Term Bond Fund 295,197 December 31, 2004
Core Bond Fund 1,885,881 December 31, 2004
International Equity Fund 11,789,843 December 31, 2003
</TABLE>
8. Line of Credit
On January 11, 1996, the Trust, on behalf of each Fund, entered into a
discretionary line of credit agreement with PNC Bank, N.A. Each Fund may borrow
under the line of credit, provided that the Trust's borrowings do not exceed
$50,000,000 in the aggregate at any one time. Interest is charged based on
outstanding borrowings at the Federal Funds Rate plus .45%. Only the
International Equity Fund utilized the line of credit during the year ended
December 31, 1996. Average daily borrowings for the year ended December 31, 1996
were $3,517,944 and the average interest rate was 5.77%. The maximum borrowing
outstanding during the year ended December 31, 1996 was $9,870,500.
74
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Prime Fund - Portfolio Manager Report (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments (Unaudited)
June 30, 1997
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS - 99.9%
Commercial Paper -- 99.3%
Aristar, Inc.
5.660% 8/28/1997 $ 4,450,000 $ 4,409,421
Boston Scientific
Corporation
5.800% 7/01/1997 315,000 315,000
Boston Scientific
Corporation
5.820% 9/03/1997 1,045,000 1,034,318
Boston Scientific
Corporation
5.850% 9/03/1997 3,100,000 3,068,311
Boston Scientific
Corporation
5.870% 7/10/1997 1,725,000 1,722,468
Burlington Northern
Santa Fe Corporation
5.800% 8/07/1997 9,830,000 9,771,402
Carter Holt Harvey
Limited
5.810% 9/15/1997 5,500,000 5,433,236
Carter Holt Harvey
Limited
5.810% 9/16/1997 5,200,000 5,136,047
Central and South
West Corporation
5.800% 8/26/1997 7,435,000 7,367,920
Cincinnati Bell Inc.
5.560% 8/18/1997 6,000,000 5,955,520
Comdisco, Inc.
5.820% 7/17/1997 5,330,000 5,316,213
Comdisco, Inc.
5.830% 9/15/1997 1,900,000 1,876,936
Comdisco, Inc.
5.850% 9/19/1997 1,200,000 1,184,667
ConAgra, Inc.
5.750% 8/29/1997 4,535,000 4,492,264
Cox Enterprises, Inc.
5.780% 7/16/1997 5,245,000 5,232,368
Cox Enterprises, Inc.
5.790% 7/11/1997 3,385,000 3,379,556
Crown Cork & Seal
Company Inc.
5.820% 8/08/1997 4,400,000 4,372,969
Crown Cork & Seal
Company Inc.
5.830% 9/29/1997 2,640,000 2,602,050
CSX Corporation
5.750% 7/14/1997 3,695,000 3,687,328
CSX Corporation
5.800% 12/01/1997 6,000,000 5,853,375
Dominion Resources,
Inc.
5.800% 8/27/1997 4,375,000 4,334,823
Dominion Resources,
Inc.
5.840% 7/22/1997 6,300,000 6,278,538
Echlin, Inc.
5.640% 8/01/1997 4,130,000 4,109,942
Finova Capital
Corporation
5.640% 1/29/1998 4,630,000 4,473,224
General Motors
Acceptance
Corporation
5.420% 7/30/1997 3,640,000 3,624,107
General Motors
Acceptance
Corporation
5.700% 12/03/1997 6,800,000 6,631,653
Harris Corporation
5.800% 7/09/1997 5,700,000 5,692,653
Harris Corporation
5.800% 7/21/1997 2,140,000 2,133,105
Illinois Power
Company
5.750% 7/08/1997 815,000 814,089
Illinois Power
Company
5.800% 7/23/1997 5,080,000 5,061,994
Illinois Power
Company
5.820% 8/05/1997 4,715,000 4,688,321
Lockheed Martin
Corporation
5.500% 7/28/1997 4,000,000 3,983,500
Lockheed Martin
Corporation
5.740% 7/31/1997 1,500,000 1,492,825
Lockheed Martin
Corporation
5.780% 7/08/1997 4,965,000 4,959,420
Mead Corporation
5.880% 9/22/1997 8,580,000 8,466,255
ORIX Credit Alliance, Inc.
5.530% 7/24/1997 3,550,000 3,537,458
ORIX Credit Alliance,
Inc.
5.830% 9/19/1997 3,875,000 3,825,486
ORIX Credit Alliance,
Inc.
5.920% 10/31/1997 2,200,000 2,157,131
Praxair, Inc.
5.450% 7/18/1997 3,555,000 3,545,851
Praxair, Inc.
5.790% 7/02/1997 315,000 314,949
Praxair, Inc.
5.790% 11/17/1997 1,150,000 1,124,468
Public Service
Company of Colorado
5.840% 9/24/1997 6,170,000 6,086,234
Public Service
Company of Colorado
5.850% 7/22/1997 1,415,000 1,410,171
Public Service
Electric and Gas
Company
5.820% 7/07/1997 2,750,000 2,747,332
Public Service
Electric and Gas
Company
5.820% 8/04/1997 8,000,000 7,956,027
Rite Aid Corporation
5.750% 7/10/1997 2,900,000 2,895,831
Rite Aid Corporation
5.770% 7/01/1997 2,950,000 2,950,000
</TABLE>
(Continued)
The accompanying notes are an integral part of the financial statements. 5
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Prime Fund - Portfolio of Investments
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
Rite Aid Corporation
5.800% 7/14/1997 $ 1,100,000 $ 1,097,696
Rite Aid Corporation
5.800% 7/25/1997 3,000,000 2,988,400
Textron Financial
Corporation
5.820% 7/03/1997 5,465,000 5,463,233
Textron Financial
Corporation
5.830% 7/07/1997 800,000 799,223
Textron Financial
Corporation
5.850% 7/07/1997 1,035,000 1,033,991
Timken Company
5.800% 7/15/1997 4,000,000 3,990,977
Timken Company
5.850% 9/16/1997 4,550,000 4,494,041
Union Camp Corp.
5.650% 10/17/1997 2,500,000 2,456,875
Union Camp Corp.
5.720% 7/23/1997 3,165,000 3,153,936
Union Pacific
Corporation
5.830% 9/11/1997 4,735,000 4,680,547
Union Pacific
Corporation
5.850% 7/28/1997 3,275,000 3,260,631
Union Pacific
Corporation
5.850% 9/17/1997 2,735,000 2,700,926
UOP
5.830% 8/01/1997 6,000,000 5,969,879
UOP
5.830% 8/06/1997 2,885,000 2,868,180
Whirlpool Financial
Corporation
5.800% 8/12/1997 1,915,000 1,902,042
Whirlpool Financial
Corporation
5.800% 9/04/1997 3,030,000 2,998,543
Whirlpool Financial
Corporation
5.820% 8/22/1997 5,760,000 5,711,578
------------
243,077,454
------------
Discount Note -- 0.6%
Federal Farm Credit
Bank
5.230% 8/19/1997 1,530,000 1,519,109
------------
TOTAL SHORT-TERM
INVESTMENTS 244,596,563
------------
(Cost $244,588,726)+
TOTAL INVESTMENTS -- 99.9% 244,596,563
Other Assets/
(Liabilities) - 0.1% 358,000
------------
NET ASSETS -- 100.0% $244,954,563
============
</TABLE>
Notes to Portfolio of Investments
+Aggregate cost for Federal tax purposes (Note 7)
6 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Prime Fund - Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, 1997
(Unaudited)
--------------
<S> <C>
Statement of Assets and Liabilities
Assets:
Short-term investments, at value (cost $244,588,726) (Note 2)............... $ 244,596,563
Cash........................................................................ 2,640
Receivables from:
Fund shares sold.......................................................... 1,938,518
--------------
Total assets............................................................ 246,537,721
--------------
Liabilities:
Payables for:
Fund shares redeemed...................................................... 1,454,783
Directors' fees and expenses (Note 3)..................................... 5,202
Affiliates (Note 3):
Investment management fees............................................. 98,510
Administration fees.................................................... 17,885
Service and distribution fees.......................................... 223
Accrued expenses and other liabilities...................................... 6,555
--------------
Total liabilities...................................................... 1,583,158
--------------
Net assets.................................................................. $ 244,954,563
==============
Net assets consist of:
Paid-in capital............................................................. $ 238,247,351
Undistributed net investment income......................................... 6,710,299
Accumulated net realized loss on investments................................ (10,924)
Net unrealized appreciation on investments.................................. 7,837
--------------
$ 244,954,563
==============
Net assets:
Class 1.................................................................. $ 111,959
==============
Class 2.................................................................. $ 113,610
==============
Class 3.................................................................. $ 114,477
==============
Class 4.................................................................. $ 244,614,517
==============
Shares outstanding:
Class 1.................................................................. 726.501
==============
Class 2.................................................................. 734.255
==============
Class 3.................................................................. 738.294
==============
Class 4.................................................................. 1,578,770.623
==============
Net asset value, offering price and
redemption price per share:
Class 1.................................................................. $ 154.11
==============
Class 2.................................................................. $ 154.73
==============
Class 3.................................................................. $ 155.06
==============
Class 4.................................................................. $ 154.94
==============
</TABLE>
The accompanying notes are an integral part of the financial statements. 7
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Prime Fund - Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months ended
June 30, 1997
(Unaudited)
------------
<S> <C>
Statement of Operations
Investment income:
Interest................................................................... $ 7,305,942
------------
Expenses (Note 1):
Investment management fees (Note 3)........................................ 576,162
Custody fees............................................................... 11,181
Audit and legal fees....................................................... 3,281
Directors' fees (Note 3)................................................... 10,410
Fees waived by the investment manager (Note 3)............................. (29,758)
------------
571,276
Administration fees (Note 3):
Class 1.................................................................. 309
Class 2.................................................................. 286
Class 3.................................................................. 177
Class 4.................................................................. 103,830
Distribution and service fees (Note 3):
Class 1.................................................................. 357
Class 2.................................................................. 84
------------
Net expenses........................................................... 676,319
------------
Net investment income.................................................. 6,629,623
------------
Realized and unrealized gain (loss):
Net realized loss on investment transactions............................... (3,773)
Net change in unrealized appreciation (depreciation)
on investments............................................................. 15,925
------------
Net realized and unrealized gain....................................... 12,152
------------
Net increase in net assets resulting from operations..................... $ 6,641,775
============
<CAPTION>
Six months ended
June 30, 1997 Year ended
(Unaudited) December 31, 1996
--------------- -------------
<S> <C> <C>
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets:
Operations:
Net investment income................................... $ 6,629,623 $ 13,029,745
Net realized loss on investment transactions............ (3,773) (5,068)
Net change in unrealized appreciation (depreciation)
on investments......................................... 15,925 11,447
--------------- -------------
Net increase in net assets resulting from operations... 6,641,775 13,036,124
--------------- -------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1................................................. -- (4,288)
Class 2................................................. -- (4,922)
Class 3................................................. -- (5,335)
Class 4................................................. -- (13,067,477)
--------------- -------------
Total distributions from net investment income......... -- (13,082,022)
--------------- -------------
Net fund share transactions (Note 5):
Class 1................................................. -- 4,288
Class 2................................................. -- 4,922
Class 3................................................. -- 5,335
Class 4................................................. (20,748,693) 4,838,727
--------------- -------------
Increase (Decrease) in net assets from net fund
share transactions.................................. (20,748,693) 4,853,272
--------------- -------------
Total increase (decrease) in net assets................. (14,106,918) 4,807,374
Net assets:
Beginning of period..................................... 259,061,481 254,254,107
--------------- -------------
End of period (including undistributed net investment
income of $6,710,299 and $80,676, respectively)........ $ 244,954,563 $ 259,061,481
=============== =============
</TABLE>
8 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Prime Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 1
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94+**
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 151.03 $ 151.05 $ 150.39 $ 150.00
------------- ------------- ------------- -------------
Income (loss) from investment operations:
Net investment income 3.06*** 6.09*** 6.90 *** 1.02
Net realized and unrealized gain (loss) on investments 0.02 0.03 (0.01) 0.42
------------- ------------- ------------- -------------
Total income (loss) from investment operations 3.08 6.12 6.89 1.44
------------- ------------- ------------- -------------
Less distributions to shareholders:
From net investment income -- (6.14) (6.23) (1.05)
------------- ------------- ------------- -------------
Net asset value, end of period $ 154.11 $ 151.03 $ 151.05 $ 150.39
============= ============= ============= =============
Total Return 2.04% 4.05% 4.58% 0.96%
Ratios / Supplemental Data:
Net assets, end of period (000's) $112 $110 $105 $101
Net expenses to average daily net assets# 1.66%* 1.65% 1.65% 1.65%*
Net investment income to average daily net assets 4.05%* 3.97% 4.48% 4.07%*
#Computed after giving effect to the voluntary
partial waiver of management fee by MassMutual,
which terminated May 1, 1997. Without this
partial waiver of fees by MassMutual, the
ratio of expenses to average daily net assets
would have been: 1.68%* 1.68% 1.68% 1.69%*
<CAPTION>
Class 2
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94+**
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 151.23 $ 151.24 $ 150.56 $ 150.00
------------- ------------- ------------- -------------
Income (loss) from investment operations:
Net investment income 3.49*** 6.96*** 7.78 *** 1.16
Net realized and unrealized gain (loss) on investments 0.01 0.04 (0.02) 0.57
------------- ------------- ------------- -------------
Total income (loss) from investment operations 3.50 7.00 7.76 1.73
------------- ------------- ------------- -------------
Less distributions to shareholders:
From net investment income -- (7.01) (7.08) (1.17)
------------- ------------- ------------- -------------
Net asset value, end of period $ 154.73 $ 151.23 $ 151.24 $ 150.56
============= ============= ============= =============
Total Return 2.31% 4.63% 5.16% 1.15%
Ratios / Supplemental Data:
Net assets, end of period (000's) $114 $111 $106 $101
Net expenses to average daily net assets# 1.11%* 1.10% 1.10% 1.10%*
Net investment income to average daily net assets 4.60%* 4.52% 5.03% 4.62%*
#Computed after giving effect to the voluntary
partial waiver of management fee by MassMutual,
which terminated May 1, 1997. Without this
partial waiver of fees by MassMutual, the ratio
of expenses to average daily net assets would
have been: 1.13%* 1.13% 1.13% 1.14%*
</TABLE>
+ All per share amounts for the period have been restated to reflect a 1-for-15
reverse stock split effective December 16, 1994.
* Annualized
** For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
***Per share amount calculated on the average shares method, which more
appropriately presents the per share data for the period since the use of the
undistributed income method does not accord with the results of operations.
The accompanying notes are an integral part of the financial statements. 9
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Prime Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 3
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94+**
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 151.29 $ 151.32 $ 150.61 $ 150.00
------------- ------------- ------------- -------------
Income (loss) from investment operations:
Net investment income 3.76*** 7.51*** 8.33 *** 1.21
Net realized and unrealized gain (loss) on investments 0.01 0.05 (0.01) 0.61
------------- ------------- ------------- -------------
Total income (loss) from investment operations 3.77 7.56 8.32 1.82
------------- ------------- ------------- -------------
Less distributions to shareholders:
From net investment income -- (7.59) (7.61) (1.21)
------------- ------------- ------------- -------------
Net asset value, end of period $ 155.06 $ 151.29 $ 151.32 $ 150.61
============= ============= ============= =============
Total Return 2.49% 5.00% 5.53% 1.21%
Ratios / Supplemental Data:
Net assets, end of period (000's) $114 $112 $106 $101
Net expenses to average daily net assets# 0.76%* 0.75% 0.75% 0.75%*
Net investment income to average daily net assets 4.95%* 4.86% 5.38% 4.99%*
#Computed after giving effect to the voluntary
partial waiver of management fee by
MassMutual, which terminated May 1, 1997. Without
this partial waiver of fees by MassMutual,
the ratio of expenses to average daily net
assets would have been: 0.78%* 0.78% 0.78% 0.79%*
<CAPTION>
Class 4
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94+**
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 151.00 $ 151.06 $ 150.36 $ 150.00
------------- ------------- ------------- -------------
Income (loss) from investment operations:
Net investment income 3.93*** 7.85*** 8.70 *** 1.55
Net realized and unrealized gain (loss) on investments 0.01 0.06 (0.02) 0.34
------------- ------------- ------------- -------------
Total income (loss) from investment operations 3.94 7.91 8.68 1.89
------------- ------------- ------------- -------------
Less distributions to shareholders:
From net investment income -- (7.97) (7.98) (1.53)
------------- ------------- ------------- -------------
Net asset value, end of period $ 154.94 $ 151.00 $ 151.06 $ 150.36
============= ============= ============= =============
Total Return@ 2.61% 5.24% 5.78% 1.26%
Ratios / Supplemental Data:
Net assets, end of period (000's) $244,615 $258,729 $253,936 $170,548
Net expenses to average daily net assets# 0.5274%* 0.5160% 0.5160% 0.5160%*
Net investment income to average daily net assets 5.18%* 5.10% 5.61% 5.01%*
#Computed after giving effect to the voluntary
partial waiver of management fee by MassMutual,
which terminated May 1, 1997. Without this partial
waiver of fees by MassMutual, the ratio of expenses
to average daily net assets would have been: 0.5506%* 0.5509% 0.5468% 0.5605%*
</TABLE>
+All per share amounts for the period have been restated to reflect a 1-for-15
reverse stock split effective December 16, 1994.
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
***Per share amount calculated on the average shares method, which more
appropriately presents the per share data for the period since the use of the
undistributed income method does not accord with the results of operations.
@Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
10 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Short-Term Bond Fund - Portfolio of Investments
- --------------------------------------------------------------------------------
Portfolio of Investments (Unaudited)
June 30, 1997
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
BONDS & NOTES - 83.9%
ASSET BACKED SECURITIES - 6.5%
Capital Equipment
Receivables Trust
1996-1, Class A4
6.280% 6/15/2000 $1,000,000 $ 999,060
Chase Manhattan Auto
Grantor Trust 1996-B,
Class A
6.610% 9/15/2002 1,505,214 1,510,859
Chase Manhattan Auto
Owner Trust 1997-A,
Class A4
6.400% 7/16/2001 1,500,000 1,499,835
Ford Credit 1994-B
Grantor Trust
7.300% 10/15/1999 249,094 251,194
Ford Credit Auto
Owner Trust 1996-B,
Class A-4
6.300% 1/15/2001 2,000,000 1,996,240
Metlife Capital
Equipment Loan Trust
Series 1997-A, Class A
6.850% 5/20/2008 1,000,000 995,070
Nissan Auto
Receivables 1994-A
Grantor Trust, Class A
6.450% 9/15/1999 400,290 400,790
Railcar Trust No.
1992-1
7.750% 6/01/2004 1,142,115 1,184,225
World Omni 1996-A
Automobile Lease
Securitization Trust,
Class A1
6.300% 6/25/2002 2,426,059 2,432,124
-------------
TOTAL ASSET BACKED
SECURITIES 11,269,397
-------------
(Cost $11,284,986)
CORPORATE DEBT -- 18.5%
AirTouch
Communications, Inc.
7.500% 7/15/2006 $1,000,000 $ 1,021,200
America West Airlines
1996-1, Class A
6.850% 7/02/2009 2,000,000 1,947,500
Analog Devices, Inc.
6.625% 3/01/2000 1,000,000 994,310
Associates Corporation
of North America
6.750% 8/01/2001 1,500,000 1,501,860
Bell Atlantic Financial
Services, Inc.
6.610% 2/07/2000 2,000,000 2,004,640
Carlisle Companies
Incorporated
7.250% 1/15/2007 1,000,000 998,110
The CIT Group
Holdings, Inc.
6.250% 3/22/1999 2,200,000 2,204,906
CSC Enterprises 144A
6.500% 11/15/2001 2,000,000 1,982,660
First Brands
Corporation
7.250% 3/01/2007 1,500,000 1,497,720
General American
Transportation
Corporation
6.750% 3/01/2006 1,000,000 967,720
Lockheed Martin
Corporation
7.700% 6/15/2008 1,000,000 1,043,040
Lucent Technologies
Inc.
6.900% 7/15/2001 2,000,000 2,017,640
MAPCO Inc.
7.250% 3/01/2009 1,250,000 1,251,150
Norfolk Southern
Corporation
7.350% 5/15/2007 1,000,000 1,014,840
Orchard Supply
Hardware Stores
Corporation
9.375% 2/15/2002 2,000,000 2,096,380
ORIX Credit Alliance,
Inc. 144A
6.480% 4/20/1999 2,000,000 1,990,400
Rite Aid Corporation
6.700% 12/15/2001 1,000,000 992,410
The US West Capital
Funding, Inc.
6.850% 1/15/2002 1,500,000 1,498,395
Walt Disney Company,
The
6.375% 3/30/2001 1,500,000 1,488,810
W.R. Grace & Co.
8.000% 8/15/2004 3,240,000 3,391,567
-------------
TOTAL CORPORATE DEBT 31,905,258
-------------
(Cost $31,717,048)
U.S. GOVERNMENT
AGENCY OBLIGATIONS -- 13.4%
Federal Home Loan Mortgage Corporation
(FHLMC) -- 2.5%
Collateralized Mortgage Obligations -- 2.2%
FHLMC Series 1693
Class G
6.000% 7/15/2007 2,000,000 1,946,860
FHLMC Series 1704
Class PE
6.000% 7/15/2007 2,000,000 1,974,360
-------------
3,921,220
-------------
Pass-Through Securities -- 0.3%
FHLMC
4.750% 9/01/2006 466,658 446,093
-------------
4,367,313
-------------
</TABLE>
(Continued)
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Short-Term Bond Fund - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
Federal National Mortgage Association
(FNMA) -- 2.6%
Collateralized Mortgage Obligations -- 1.7%
FNMA Series 1993-
175 Class PL
5.000% 10/25/2002 $ 468,248 $ 466,052
FNMA Series 1993-71
Class PG
6.250% 7/25/2007 2,500,000 2,459,375
-------------
2,925,427
-------------
Pass-Through Securities -- 0.9%
FNMA
8.000% 5/01/2013 693,195 705,520
FNMA
9.000% 10/01/2009 805,661 849,956
-------------
1,555,476
-------------
4,480,903
-------------
Government National Mortgage Association
(GNMA) -- 1.0%
Pass-Through Securities -- 1.0%
GNMA 8.000% 5/15/2001 -
11/15/2007 1,611,297 1,666,886
-------------
U.S. Government Guaranteed Notes -- 7.3%
1991-A Jacksonville,
FL
8.400% 8/01/1997 1,150,000 1,152,507
1991-A St. Louis, MO
8.400% 8/01/1997 3,350,000 3,357,303
1994-A Baxter
Springs, KS
6.310% 8/01/2001 500,000 492,595
1994-A Detroit, MI
6.310% 8/01/2001 450,000 443,336
1994-A Jacksonville,
FL
6.310% 8/01/2001 1,485,000 1,463,007
1994-A Los Angeles
County, CA
6.310% 8/01/2001 225,000 221,668
1994-A Tacoma, WA
6.310% 8/01/2001 195,000 192,112
1994-A Trenton, NJ
6.310% 8/01/2001 145,000 142,853
U.S. Dept. of Housing
and Urban
Development, Series
1995-A
8.080% 8/01/1998 3,000,000 3,063,750
U.S. Dept. of Housing
and Urban
Development, Series
1996-A
6.440% 8/01/1999 2,000,000 2,007,500
-------------
12,536,631
-------------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS 23,051,733
-------------
(Cost $22,661,354)
U.S. TREASURY OBLIGATIONS -- 45.5%
U.S. Treasury Notes
U.S. Treasury Note
5.750% 8/15/2003 11,800,000 11,394,316
U.S. Treasury Note
7.125% 2/29/2000 27,000,000 27,590,490
U.S. Treasury Note
7.250% 5/15/2004 20,400,000 21,263,736
U.S. Treasury Note
8.875% 2/15/1999 17,500,000 18,260,200
-------------
TOTAL U.S. TREASURY
OBLIGATIONS 78,508,742
-------------
(Cost $78,829,547)
TOTAL BONDS & NOTES 144,735,130
-------------
(Cost $144,492,935)
SHORT-TERM INVESTMENTS -- 11.9%
Commercial Paper
Boston Scientific
Corporation
5.870% 9/03/1997 1,185,000 1,172,634
Carter Holt Harvey
Limited
5.760% 7/03/1997 665,000 664,787
Carter Holt Harvey
Limited
5.770% 7/03/1997 500,000 499,840
Carter Holt Harvey
Limited
5.900% 8/19/1997 2,355,000 2,336,088
Comdisco, Inc.
5.850% 7/30/1997 2,015,000 2,005,504
Crown Cork & Seal
Company Inc.
5.700% 7/01/1997 161,000 161,000
Crown Cork & Seal
Company Inc.
5.780% 7/01/1997 117,000 117,000
Federal Signal Corp.
5.820% 7/21/1997 1,045,000 1,041,621
ORIX Credit Alliance, Inc.
5.830% 7/01/1997 1,050,000 1,050,000
ORIX Credit Alliance, Inc.
5.870% 7/09/1997 2,840,000 2,836,295
ORIX Credit Alliance,
Inc.
5.900% 7/09/1997 114,000 113,851
Pennsylvania Power &
Light Co.
5.750% 7/01/1997 995,000 995,000
Sonat Inc.
5.780% 7/07/1997 1,750,000 1,748,314
Union Pacific
Corporation
5.840% 9/11/1997 1,150,000 1,136,568
Union Pacific
Corporation
5.850% 7/28/1997 3,210,000 3,195,917
Union Pacific
Corporation
5.850% 9/11/1997 1,390,000 1,373,737
-------------
TOTAL SHORT-TERM
INVESTMENTS 20,448,156
-------------
(At Amortized Cost)
TOTAL INVESTMENTS -- 95.8% 165,183,286
(Cost $164,941,091)+
Other Assets/
(Liabilities) - 4.2% 7,239,656
-------------
NET ASSETS-- 100.0% $172,422,942
-------------
</TABLE>
Notes to Portfolio of Investments
+Aggregate cost for Federal tax purposes (Note 7)
144A: Securities exempt from registration under rule 144A of the Securities Act
of 1933. The Securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
14 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Short-Term Bond Fund - Financial Statements
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
June 30, 1997
(Unaudited)
---------------
<S> <C>
Assets:
Investments, at value (cost $144,492,935) (Note 2)............... $ 144,735,130
Short-term investments, at amortized cost (Note 2)............... 20,448,156
---------------
Total Investments.............................................. 165,183,286
Cash............................................................. 426
Receivables from:
Fund shares sold............................................... 4,621,175
Interest....................................................... 2,860,601
---------------
Total assets................................................ 172,665,488
---------------
Liabilities:
Payables for:
Fund shares redeemed........................................... 159,130
Directors' fees and expenses (Note 3).......................... 5,318
Affiliates (Note 3):
Investment management fees................................... 60,940
Administration fees.......................................... 10,705
Service and distribution fees................................ 233
Accrued expenses and other liabilities........................... 6,220
---------------
Total liabilities............................................ 242,546
---------------
Net assets....................................................... $ 172,422,942
===============
Net assets consist of:
Paid-in capital.................................................. $ 167,618,985
Undistributed net investment income.............................. 4,939,839
Accumulated net realized loss on investments..................... (378,077)
Net unrealized appreciation on investments....................... 242,195
---------------
$ 172,422,942
===============
Net assets:
Class 1.......................................................... $ 118,259
===============
Class 2.......................................................... $ 120,003
===============
Class 3.......................................................... $ 120,979
===============
Class 4.......................................................... $ 172,063,701
===============
Shares outstanding:
Class 1.......................................................... 11,415
===============
Class 2.......................................................... 11,544
===============
Class 3.......................................................... 11,599
===============
Class 4.......................................................... 16,587,139
===============
Net asset value, offering price and
redemption price per share:
Class 1.......................................................... $ 10.36
===============
Class 2.......................................................... $ 10.40
===============
Class 3.......................................................... $ 10.43
===============
Class 4.......................................................... $ 10.37
===============
</TABLE>
The accompanying notes are an integral part of the financial statements. 15
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Short-Term Bond Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Statement of Operations
<TABLE>
<CAPTION>
Six months ended
June 30, 1997
(Unaudited)
------------------
<S> <C>
Investment income:
Interest......................................................... $ 5,330,859
------------------
Expenses (Note 1):
Investment management fees (Note 3).............................. 346,373
Custody fees..................................................... 7,799
Audit and legal fees............................................. 2,032
Directors' fees (Note 3)......................................... 10,526
Fees waived by the investment manager (Note 3)................... (18,246)
------------------
348,484
Administration fees (Note 3):
Class 1........................................................ 322
Class 2........................................................ 297
Class 3........................................................ 182
Class 4........................................................ 60,055
Distribution and service fees (Note 3):
Class 1........................................................ 375
Class 2........................................................ 88
------------------
Net expenses................................................. 409,803
------------------
Net investment income........................................ 4,921,056
Realized and unrealized gain (loss):
Net realized loss on investment transactions..................... (82,877)
Net change in unrealized appreciation (depreciation)
on investments................................................. (775,534)
------------------
Net realized and unrealized loss............................. (858,411)
------------------
Net increase in net assets resulting from operations............. $ 4,062,645
==================
</TABLE>
16 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Short-Term Bond Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six months ended
June 30, 1997 Year ended
(Unaudited) December 31, 1996
------------------ -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income.......................................... $ 4,921,056 $ 8,081,821
Net realized loss on investment transactions................... (82,877) (274,845)
Net change in unrealized appreciation (depreciation)
on investments................................................ (775,534) (384,702)
------------------ -----------------
Net increase in net assets resulting from operations.......... 4,062,645 7,422,274
------------------ -----------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1........................................................ -- (5,225)
Class 2........................................................ -- (5,891)
Class 3........................................................ -- (6,321)
Class 4........................................................ -- (8,133,246)
------------------ -----------------
Total distributions from net investment income................ -- (8,150,683)
------------------ -----------------
In excess of net investment income:
Class 1........................................................ -- (1)
Class 2........................................................ -- (1)
Class 3........................................................ -- (1)
Class 4........................................................ -- (1,569)
------------------ -----------------
Total distributions in excess of net investment income........ -- (1,572)
------------------ -----------------
From net realized gains:
Class 1........................................................ -- (59)
Class 2........................................................ -- (59)
Class 3........................................................ -- (59)
Class 4........................................................ -- (71,288)
------------------ -----------------
Total distributions from net realized gains................... -- (71,465)
------------------ -----------------
Net fund share transactions (Note 5):
Class 1........................................................ -- 5,285
Class 2........................................................ -- 5,951
Class 3........................................................ -- 6,381
Class 4........................................................ 22,826,888 23,078,364
------------------ -----------------
Increase in net assets from net fund share transactions....... 22,826,888 23,095,981
------------------ -----------------
Total increase in net assets................................... 26,889,533 22,294,535
Net assets:
Beginning of period............................................ 145,533,409 123,238,874
------------------ -----------------
End of period (including undistributed net investment
income of $4,939,839 and $18,783, respectively................ $ 172,422,942 $ 145,533,409
------------------ -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 17
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Short-Term Bond Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 1
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.15 $ 10.19 $ 9.89 $ 10.00
----------- ----------- ----------- -----------
Income (loss) from investment operations:
Net investment income 0.27*** 0.50 0.55 0.09
Net realized and unrealized gain (loss) on investments (0.06) (0.05) 0.49 (0.11)
----------- ----------- ----------- -----------
Total income (loss) from investment operations 0.21 0.45 1.04 (0.02)
----------- ----------- ----------- -----------
Less distributions to shareholders:
From net investment income -- (0.48) (0.54) (0.09)
From net realized gains -- (0.01) (0.20) --
----------- ----------- ----------- -----------
Total distributions -- (0.49) (0.74) (0.09)
----------- ----------- ----------- -----------
Net asset value, end of period $ 10.36 $ 10.15 $ 10.19 $ 9.89
=========== =========== =========== ===========
Total Return 2.07% 4.35% 10.54% (0.17)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $118 $116 $111 $100
Net expenses to average daily net assets# 1.66%* 1.65% 1.65% 1.65%*
Net investment income to average daily net assets 5.26%* 4.86% 5.20% 5.45%*
Portfolio turnover rate 9% 61% 114% 15%
#Computed after giving effect to the voluntary partial
waiver of management fee by MassMutual, which terminated
May 1, 1997. Without this partial waiver of
fees by MassMutual, the ratio of expenses
to average daily net assets would have been: 1.68%* 1.68% 1.68% 1.70%*
</TABLE>
<TABLE>
<CAPTION>
Class 2
--------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.16 $ 10.19 $ 9.89 $ 10.00
----------- ----------- ----------- -----------
Income (loss) from investment operations:
Net investment income 0.29*** 0.56 0.61 0.10
Net realized and unrealized gain (loss) on investments (0.05) (0.04) 0.49 (0.11)
----------- ----------- ----------- -----------
Total income (loss) from investment operations 0.24 0.52 1.10 (0.01)
----------- ----------- ----------- -----------
Less distributions to shareholders:
From net investment income -- (0.54) (0.60) (0.10)
From net realized gains -- (0.01) (0.20) --
----------- ----------- ----------- -----------
Total distributions -- (0.55) (0.80) (0.10)
----------- ----------- ----------- -----------
Net asset value, end of period $ 10.40 $ 10.16 $ 10.19 $ 9.89
=========== =========== =========== ===========
Total Return 2.36% 5.02% 11.11% (0.09)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $120 $117 $112 $101
Net expenses to average daily net assets# 1.11%* 1.10% 1.10% 1.10%*
Net investment income to average daily net assets 5.81%* 5.41% 5.75% 5.99%*
Portfolio turnover rate 9% 61% 114% 15%
#Computed after giving effect to the voluntary partial
waiver of management fee by MassMutual, which terminated
May 1, 1997. Without this partial waiver of
fees by MassMutual, the ratio of expenses
to average daily net assets would have been: 1.13%* 1.13% 1.13% 1.15%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
***Per share amount calculated on the average shares method, which more
appropriately presents the per share data for the period since the use of the
undistributed income method does not accord with the results of operations.
18 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Short-Term Bond Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 3
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.17 $ 10.21 $ 9.91 $ 10.00
---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.31*** 0.60 0.64 0.10
Net realized and unrealized gain (loss) on investments (0.05) (0.05) 0.49 (0.09)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 0.26 0.55 1.13 0.01
---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income -- (0.58) (0.63) (0.10)
From net realized gains -- (0.01) (0.20) --
---------- ---------- ---------- ----------
Total distributions -- (0.59) (0.83) (0.10)
---------- ---------- ---------- ----------
Net asset value, end of period $ 10.43 $ 10.17 $ 10.21 $ 9.91
========== ========== ========== ==========
Total Return 2.56% 5.28% 11.46% 0.13%
Ratios / Supplemental Data:
Net assets, end of period (000's) $121 $118 $112 $100
Net expenses to average daily net assets# 0.76%* 0.75% 0.75% 0.75%*
Net investment income to average daily net assets 6.16%* 5.76% 6.10% 6.36%*
Portfolio turnover rate 9% 61% 114% 15%
#Computed after giving effect to the voluntary partial waiver
of management fee by MassMutual, which terminated May 1, 1997.
Without this partial waiver of fees by MassMutual, the ratio
of expenses to average daily net assets would have been: 0.79%* 0.79% 0.78% 0.80%*
</TABLE>
<TABLE>
<CAPTION>
Class 4
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.11 $ 10.15 $ 9.85 $ 10.00
---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.32*** 0.60 0.66 0.16
Net realized and unrealized gain (loss) on investments (0.06) (0.03) 0.50 (0.15)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 0.26 0.57 1.16 0.01
---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income -- (0.60) (0.66) (0.16)
From net realized gains -- (0.01) (0.20) --
---------- ---------- ---------- ----------
Total distributions -- (0.61) (0.86) (0.16)
---------- ---------- ---------- ----------
Net asset value, end of period $ 10.37 $ 10.11 $ 10.15 $ 9.85
========== ========== ========== ==========
Total Return@ 2.57% 5.57% 11.77% 0.13%
Ratios / Supplemental Data:
Net assets, end of period (000's) $ 172,064 $ 145,182 $ 122,904 $ 106,846
Net expenses to average daily net assets# 0.5309%* 0.5190% 0.5190% 0.5190%*
Net investment income to average daily net assets 6.39%* 6.00% 6.32% 6.37%*
Portfolio turnover rate 9% 61% 114% 15%
#Computed after giving effect to the voluntary partial waiver
of management fee by MassMutual, which terminated May 1, 1997.
Without this partial waiver of fees by MassMutual, the ratio
of expenses to average daily net assets would have been: 0.5546%* 0.5545% 0.5524% 0.5654%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
***Per share amount calculated on the average shares method, which more
appropriately presents the per share data for the period since the use of the
undistributed income method does not accord with the results of operations.
@Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
The accompanying notes are an integral part of the financial statements. 19
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Core Bond Fund - Portfolio of Investments
- --------------------------------------------------------------------------------
Portfolio of Investments (Unaudited)
June 30, 1997
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C>
BONDS & NOTES - 95.2%
ASSET BACKED SECURITIES -- 5.9%
Capita Equipment
Receivables Trust
1996-1, Class A4
6.280% 6/15/2000 $3,000,000 $ 2,997,180
Chase Manhattan Auto
Grantor Trust 1996-B,
Class A
6.610% 9/15/2002 3,763,036 3,777,147
Daimler-Benz Auto
Grantor Trust 1995-A,
Class A
5.850% 5/15/2002 1,802,634 1,800,381
Ford Credit 1994-B
Grantor Trust
7.300% 10/15/1999 373,641 376,791
Ford Credit Auto
Owner Trust 1996-B
Class A-4
6.300% 1/15/2001 5,000,000 4,990,600
Keystone Auto
Grantor Trust 1996-B,
Class A 144A
6.150% 4/15/2003 2,220,084 2,216,776
Metlife Capital
Equipment Loan Trust
Series 1997-A, Class A
6.850% 5/20/2008 1,500,000 1,492,605
Nissan Auto
Receivables 1994-A
Grantor Trust, Class A
6.450% 9/15/1999 800,586 801,587
Railcar Trust No.
1992-1
7.750% 6/01/2004 1,332,468 1,381,596
World Omni 1995-A
Automobile Lease
Securitization Trust,
Class A
6.050% 11/25/2001 2,258,513 2,259,913
World Omni 1996-A
Automobile Lease
Securitization Trust,
Class A1
6.300% 6/25/2002 $2,571,622 $ 2,578,051
--------------
TOTAL ASSET BACKED
SECURITIES 24,672,627
--------------
(Cost $24,704,112)
CORPORATE DEBT -- 42.1%
Airgas, Inc.
7.140% 3/08/2004 4,000,000 4,012,744
AirTouch
Communications, Inc.
7.500% 7/15/2006 3,000,000 3,063,600
America West Airlines
1996-1, Class A
6.850% 7/02/2009 4,000,000 3,895,000
American Airlines
1994-A Pass-Through
Trusts, Class A4 ++
9.780% 11/26/2011 2,000,000 2,275,000
AMR Corporation ++
9.000% 8/01/2012 2,000,000 2,240,280
Analog Devices, Inc. ++
6.625% 3/01/2000 1,500,000 1,491,465
Associates Corporation
of North America
6.750% 8/01/2001 2,000,000 2,002,480
Associates Corporation
of North America ++
7.875% 9/30/2001 1,500,000 1,563,300
Barrick Gold
Corporation
7.500% 5/01/2007 4,000,000 4,092,280
Bell Atlantic Financial
Services, Inc.
6.610% 2/04/2000 1,750,000 1,754,130
BHP Finance (USA)
Limited
6.420% 3/01/2026 3,500,000 3,429,580
Capital Cities/ABC,
Inc.
8.875% 12/15/2000 875,000 931,184
Carlisle Companies
Incorporated
7.250% 1/15/2007 $2,500,000 $2,495,275
Champion International
Corporation
6.400% 2/15/2026 2,500,000 2,379,350
The Charles Schwab
Corporation
6.250% 1/23/2003 2,500,000 2,406,250
Chrysler Corporation
10.400% 8/01/1999 1,500,000 1,504,935
CITGO Petroleum
Corporation
7.875% 5/15/2006 1,000,000 1,033,200
The Columbia Gas
System, Inc.
6.610% 11/28/2002 3,000,000 2,966,100
Comcast Cable
Communications, Inc.
144A
8.375% 5/01/2007 2,500,000 2,644,675
Commercial Credit
Company ++
7.750% 3/01/2005 3,000,000 3,117,120
Continental Airlines,
Inc., Series 1996-2B
8.560% 1/02/2016 1,701,186 1,835,155
Continental Airlines,
Inc., Series 1996-B
7.820% 4/15/2015 1,960,784 2,022,000
Corning Glass Works ++
8.875% 3/15/2016 1,000,000 1,113,940
Crown Cork & Seal
Company Inc.
6.750% 12/15/2003 3,550,000 3,498,419
CSX Corporation 144A
7.250% 5/01/2027 4,000,000 4,081,040
English China Clays
Delaware Inc. ++
7.375% 10/01/2002 1,000,000 1,017,100
Equifax Inc.
6.500% 6/15/2003 1,000,000 976,130
</TABLE>
(Continued)
22 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Core Bond Fund - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
ERAC USA Finance
Company 144A
6.950% 1/15/2006 $1,500,000 $ 1,467,345
FBG Finance Limited
144A
7.875% 6/01/2016 3,000,000 3,012,090
First Brands
Corporation
7.250% 3/01/2007 2,000,000 1,996,960
Fletcher Challenge Ltd.
7.750% 6/20/2006 2,000,000 2,058,840
Foodbrands America,
Inc.
10.750% 5/15/2006 3,000,000 3,516,960
Foster Wheeler
Corporation
6.750% 11/15/2005 2,000,000 1,937,060
General American
Transportation
Corporation
6.750% 3/01/2006 3,000,000 2,903,160
General Electric
Capital Corporation
8.750% 5/21/2007 1,500,000 1,689,060
General Mills, Inc.
8.900% 6/15/2006 2,250,000 2,506,613
General Motors
Acceptance
Corporation
8.625% 6/15/1999 4,175,000 4,343,127
General Telephone
Company of Florida
7.500% 8/01/2002 1,000,000 1,014,420
The Goldman Sachs
Group, L.P. 144A
6.200% 2/15/2001 2,500,000 2,460,100
Harrahs Operating Inc.
8.750% 3/15/2000 1,100,000 1,122,000
Hercules Incorporated ++
6.625% 6/01/2003 1,000,000 985,850
Hilton Hotels
Corporation
7.375% 6/01/2002 1,750,000 1,762,548
IMCERA Group Inc. ++
6.000% 10/15/2003 1,000,000 953,810
Leucadia National
Corporation
7.750% 8/15/2013 2,500,000 2,436,950
Lockheed Martin
Corporation
7.700% 6/15/2008 3,000,000 3,129,120
MAPCO Inc.
7.250% 3/01/2009 3,250,000 3,252,990
McDonnell Douglas
Corporation ++
9.250% 4/01/2002 1,500,000 1,649,310
MFS Communications
Company, Inc.
(Step Up)
0.000% 1/15/2004 1,750,000 1,628,900
Millipore Corporation
7.500% 4/01/2007 3,750,000 3,799,350
Mobil Corporation
8.625% 8/15/2021 4,000,000 4,605,360
Newmont Mining
Corporation ++
8.625% 4/01/2002 2,000,000 2,130,760
News America
Holdings Incorporated
9.250% 2/01/2013 3,000,000 3,344,910
Norfolk Southern
Corporation
7.050% 5/01/2037 5,000,000 5,074,700
North Finance
(Bermuda) Limited
144A
7.000% 9/15/2005 2,000,000 1,970,000
Orchard Supply
Hardware Stores
Corporation
9.375% 2/15/2002 3,871,000 4,057,543
Penske Truck Leasing
Co., L.P.
7.750% 5/15/1999 1,500,000 1,537,080
Petroleum Geo-
Services ASA
7.500% 3/31/2007 750,000 755,693
Ralston Purina
Company
7.750% 10/01/2015 2,000,000 2,027,600
Rite Aid Corporation
6.700% 12/15/2001 2,000,000 1,984,820
Rolls-Royce Capital
Inc.
7.125% 7/29/2003 2,000,000 2,008,060
Scholastic Corporation
7.000% 12/15/2003 4,000,000 3,968,840
Texaco Inc.
8.500% 2/15/2003 2,500,000 2,696,700
Thomas & Betts
Corporation ++
8.250% 1/15/2004 2,500,000 2,640,825
Time Warner Inc.
7.750% 6/15/2005 3,000,000 3,048,750
Time Warner Inc.
Pass-Thru Asset
Trust 1997-1 144A
6.100% 12/30/2001 4,000,000 3,831,520
United Air Lines, Inc.
10.110% 2/19/2006 924,283 1,026,056
US Air, Inc., Class B
7.500% 10/15/2009 1,443,239 1,452,259
The US West Capital
Funding, Inc.
6.850% 1/15/2002 3,750,000 3,745,988
Valassis
Communications, Inc.
9.550% 12/01/2003 2,000,000 2,130,340
Westinghouse Electric
Corporation
8.375% 6/15/2002 1,000,000 1,032,480
WorldCom, Inc.
7.750% 4/01/2007 2,000,000 2,045,360
W.R. Grace & Co.
8.000% 8/15/2004 5,000,000 5,233,900
--------------
TOTAL CORPORATE DEBT 175,817,839
--------------
(Cost $172,717,962)
NON - U.S. GOVERNMENT
AGENCY OBLIGATIONS -- 1.0%
Collateralized Mortgage Obligations
Prudential Home
Mortgage Securities
1993-26 Class A6
6.750% 7/25/2008 4,000,000 3,975,000
--------------
(Cost $3,955,000)
U.S. GOVERNMENT
AGENCY OBLIGATIONS -- 19.2%
Federal Home Loan Mortgage Corporation
(FHLMC) -- 3.8%
Collateralized Mortgage Obligations -- 3.7%
FHLMC Series 1080
Class D
7.000% 7/15/2020 2,352,997 2,376,527
FHLMC Series 1322
Class G
7.500% 2/15/2007 2,000,000 2,040,620
FHLMC Series 1460
Class H
7.000% 5/15/2007 2,000,000 2,007,500
FHLMC Series 1490
Class PJ
6.000% 5/15/2007 600,000 585,936
FHLMC Series 1612
Class PD
5.750% 5/15/2006 4,976,042 4,901,401
FHLMC Series 1625
Class EA
5.750% 3/15/2007 3,500,000 3,444,210
--------------
15,356,194
--------------
Pass-Through Securities -- 0.1%
FHLMC
9.000% 3/01/2017 339,937 361,727
--------------
15,717,921
--------------
</TABLE>
(Continued)
The accompanying notes are an integral part of the financial statements. 23
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Core Bond Fund - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
Federal National Mortgage Association
(FNMA) -- 4.5%
Collateralized Mortgage Obligations -- 4.4%
FNMA Series 1989-20
Class A
6.750% 4/25/2018 $4,203,676 $ 4,019,765
FNMA Series 1993-
134 Class GA
6.500% 2/25/2007 5,000,000 4,954,650
FNMA Series 1993-
175 Class PL
5.000% 10/25/2002 468,248 466,052
FNMA Series 1993-
191 Class PD
5.400% 3/25/2004 1,500,000 1,488,750
FNMA Series 1993-
221 Class D
6.000% 12/25/2008 2,487,500 2,378,672
FNMA Series 1996-54
Class C
6.000% 9/25/2008 5,000,000 4,793,750
--------------
18,101,639
--------------
Pass-Through Securities -- 0.1%
FNMA
8.000% 5/01/2013 462,130 470,346
--------------
18,571,985
--------------
Government National Mortgage Association
(GNMA) -- 9.5%
Collateralized Mortgage Obligations -- 0.4%
JHM Acceptance
Corporation Series E
Class 5
8.960% 4/01/2019 1,603,881 1,676,553
--------------
Pass-Through Securities -- 9.1%
GNMA
6.000% 1/20/2027 -
5/20/2027 11,973,792 12,046,389
GNMA
6.875% 12/20/2025 5,112,361 5,237,000
GNMA
7.000% 7/20/2025 -
9/20/2025 4,942,952 5,077,456
GNMA
7.500% 1/15/2017 -
6/15/2017 6,828,298 6,922,118
GNMA
8.000% 4/15/2001 -
3/15/2008 7,917,527 8,190,677
GNMA
9.000% 12/15/2004 -
10/15/2009 465,099 496,400
--------------
37,970,040
--------------
39,646,593
--------------
U.S. Government Guaranteed Notes -- 1.4%
1994-A Baxter
Springs, KS
5.930% 8/01/1999 700,000 695,625
1994-A Erie, PA
5.930% 8/01/1999 1,590,000 1,580,063
1994-A Los Angeles
County, CA
5.930% 8/01/1999 190,000 188,813
1994-A Montgomery
County, PA
5.930% 8/01/1999 150,000 149,063
1994-A Pohatcong
Township, NJ
5.930% 8/01/1999 255,000 253,406
1994-A Rochester, NY
5.930% 8/01/1999 135,000 134,156
1994-A Sacramento, CA
5.930% 8/01/1999 60,000 59,625
1994-A Santa Ana, CA
5.930% 8/01/1999 920,000 914,250
U.S. Dept. of Housing
and Urban
Development, Series
1996-A
6.670% 8/01/2001 2,000,000 2,010,000
--------------
TOTAL U.S. Government
Guaranteed Notes 5,985,001
--------------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS 79,921,500
--------------
(Cost $78,353,097)
U.S. TREASURY OBLIGATIONS -- 27.0%
U.S. Treasury Bonds -- 14.7%
U.S. Treasury Bond
7.250% 5/15/2016 27,550,000 28,729,416
U.S. Treasury Bond
8.875% 8/15/2017 26,750,000 32,580,698
--------------
61,310,114
--------------
U.S. Treasury Notes -- 7.9%
U.S. Treasury Note
6.375% 5/15/1999 14,500,000 14,572,500
U.S. Treasury Note
7.250% 8/15/2004 17,500,000 18,243,750
--------------
32,816,250
--------------
U.S. Treasury Strips -- 4.4%
U.S. Treasury Strip -- Principal Only
0.000% 2/15/1999 19,500,000 17,710,485
U.S. Treasury Strip -- Principal Only
0.000% 2/15/2015 2,750,000 816,530
--------------
18,527,015
--------------
TOTAL U.S. TREASURY
OBLIGATIONS 112,653,379
--------------
(Cost $113,665,970)
TOTAL BONDS & NOTES 397,040,345
--------------
(Cost $393,396,141)
SHORT-TERM INVESTMENTS -- 1.7%
Commercial Paper
ConAgra, Inc.
5.800% 7/02/1997 337,000 336,946
Maytag Corporation
6.450% 7/01/1997 2,690,000 2,690,000
Service Corporation
International
5.900% 7/03/1997 4,000,000 3,998,689
--------------
TOTAL SHORT-TERM
INVESTMENTS 7,025,635
--------------
(At Amortized Cost)
TOTAL INVESTMENTS -- 96.9% 404,065,980
(Cost $400,421,776)+
Other Assets/
(Liabilities) - 3.1% 12,996,873
--------------
NET ASSETS -- 100.0% $417,062,853
==============
</TABLE>
Notes to Portfolio of Investments
+Aggregate cost for Federal tax purposes (Note 7)
144A: Securities exempt from registration under rule 144A of the Securities Act
of 1933. The Securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
++All or a portion of this security is segregated to cover forward purchase
commitments (Note 2).
24 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Core Bond Fund - Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, 1997
(Unaudited)
-----------------
<S> <C>
Statement of Assets and Liabilities
Assets:
Investments, at value (cost $393,396,141) (Note 2).......... $ 397,040,345
Short-term investments, at amortized cost (Note 2).......... 7,025,635
-----------------
Total Investments......................................... 404,065,980
Cash........................................................ 1,302
Receivables from:
Investments sold.......................................... 1,009,917
Fund shares sold.......................................... 6,398,717
Interest.................................................. 6,039,483
-----------------
Total assets........................................... 417,515,399
-----------------
Liabilities:
Payables for:
Investments purchased..................................... 135,859
Settlement of investments purchased on a
forward commitment basis (Note 2)...................... 23,599
Fund shares redeemed...................................... 92,829
Directors' fees and expenses (Note 3)..................... 5,317
Affiliates (Note 3):
Investment management fees............................. 151,927
Administration fees.................................... 28,550
Service and distribution fees.......................... 243
Accrued expenses and other liabilities...................... 14,222
-----------------
Total liabilities...................................... 452,546
-----------------
Net assets.................................................. $ 417,062,853
=================
Net assets consist of:
Paid-in capital............................................. $ 401,263,451
Undistributed net investment income......................... 14,267,081
Accumulated net realized loss on investments................ (2,088,284)
Net unrealized appreciation on investments
and forward commitments................................ 3,620,605
-----------------
$ 417,062,853
=================
Net assets:
Class 1..................................................... $ 123,665
=================
Class 2..................................................... $ 125,495
=================
Class 3..................................................... $ 126,549
=================
Class 4..................................................... $ 416,687,144
=================
Shares outstanding:
Class 1..................................................... 11,512
=================
Class 2..................................................... 11,631
=================
Class 3..................................................... 11,699
=================
Class 4..................................................... 38,753,822
=================
Net asset value, offering price and
redemption price per share:
Class 1..................................................... $ 10.74
=================
Class 2..................................................... $ 10.79
=================
Class 3..................................................... $ 10.82
=================
Class 4..................................................... $ 10.75
=================
</TABLE>
The accompanying notes are an integral part of the financial statements. 25
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Core Bond Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months ended
June 30, 1997
(Unaudited)
-----------------
<S> <C>
Statement of Operations
Investment income:
Interest..................................................... $ 13,415,692
-----------------
Expenses (Note 1):
Investment management fees (Note 3).......................... 848,056
Custody fees................................................. 20,260
Audit and legal fees......................................... 5,012
Directors' fees (Note 3)..................................... 10,526
Fees waived by the investment manager (Note 3)............... (49,361)
-----------------
834,493
Administration fees (Note 3):
Class 1.................................................... 342
Class 2.................................................... 316
Class 3.................................................... 197
Class 4.................................................... 158,527
Distribution and service fees (Note 3):
Class 1.................................................... 391
Class 2.................................................... 91
-----------------
Net expenses............................................. 994,357
-----------------
Net investment income.................................... 12,421,335
-----------------
Realized and unrealized gain (loss):
Net realized loss on investment transactions and forward
commitments................................................ (202,403)
Net change in unrealized appreciation (depreciation) on
investments and forward commitments........................ (1,087,718)
-----------------
Net realized and unrealized loss......................... (1,290,121)
-----------------
Net increase in net assets resulting from operations......... $ 11,131,214
=================
</TABLE>
26 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Core Bond Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months ended
June 30, 1997 Year ended
(Unaudited) December 31, 1996
--------------- -----------------
<S> <C> <C>
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets:
Operations:
Net investment income........................................... $ 12,421,335 $ 19,120,753
Net realized loss on investment transactions
and forward commitments........................................ (202,403) (1,886,093)
Net change in unrealized appreciation (depreciation) on
investments and forward commitments............................ (1,087,718) (6,456,882)
--------------- ----------------
Net increase in net assets resulting from operations........... 11,131,214 10,777,778
--------------- ----------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1......................................................... -- (4,416)
Class 2......................................................... -- (5,227)
Class 3......................................................... -- (5,674)
Class 4......................................................... -- (17,374,307)
--------------- ----------------
Total distributions from net investment income................. -- (17,389,624)
--------------- ----------------
From net realized gains:
Class 1......................................................... -- (740)
Class 2......................................................... -- (714)
Class 3......................................................... -- (715)
Class 4......................................................... -- (1,942,817)
--------------- ----------------
Total distributions from net realized gains.................... -- (1,944,986)
--------------- ----------------
Net fund share transactions (Note 5):
Class 1......................................................... -- (45,858)
Class 2......................................................... -- 5,941
Class 3......................................................... -- 6,389
Class 4......................................................... 48,866,462 111,704,711
--------------- ----------------
Increase in net assets from net fund share transactions........ 48,866,462 111,671,183
--------------- ----------------
Total increase in net assets.................................... 59,997,676 103,114,351
Net assets:
Beginning of period............................................. 357,065,177 253,950,826
--------------- ----------------
End of period (including undistributed net investment income
of $14,267,081 and $1,845,746 respectively).................... $ 417,062,853 $ 357,065,177
=============== ================
</TABLE>
The accompanying notes are an integral part of the financial statements. 27
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Core Bond Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 1
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.50 $ 10.79 $ 9.90 $ 10.00
------------- ------------- ------------- -------------
Income (loss) from investment operations:
Net investment income 0.28*** 0.53*** 0.50 0.10
Net realized and unrealized gain (loss) on investments (0.04) (0.36) 1.26 (0.10)
------------- ------------- ------------- -------------
Total income (loss) from investment operations 0.24 0.17 1.76 --
------------- ------------- ------------- -------------
Less distributions to shareholders:
From net investment income -- (0.40) (0.54) (0.10)
From net realized gains -- (0.06) (0.33) --
------------- ------------- ------------- -------------
Total distributions -- (0.46) (0.87) (0.10)
------------- ------------- ------------- -------------
Net asset value, end of period $ 10.74 $ 10.50 $ 10.79 $ 9.90
============= ============= ============= =============
Total Return 2.29% 1.60% 17.81% 0.00%
Ratios / Supplemental Data:
Net assets, end of period (000's) $124 $121 $171 $101
Net expenses to average daily net assets# 1.66%* 1.65% 1.65% 1.65%*
Net investment income to average daily net assets 5.45%* 5.10% 5.39% 5.91%*
Portfolio turnover rate 22% 54% 104% 7%
#Computed after giving effect to the voluntary partial waiver
of management fee by MassMutual, which terminated May 1, 1997.
Without this partial waiver of fees by MassMutual, the ratio
of expenses to average daily net assets would have been: 1.69%* 1.69% 1.69% 1.71%*
<CAPTION>
Class 2
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
------------- ------------- ------------- -------------
Net asset value, beginning of period $ 10.51 $ 10.82 $ 9.90 $ 10.00
------------- ------------- ------------- -------------
Income (loss) from investment operations:
Net investment income 0.31*** 0.60*** 0.64 0.11
Net realized and unrealized gain (loss) on investments (0.03) (0.38) 1.19 (0.10)
------------- ------------- ------------- -------------
Total income (loss) from investment operations 0.28 0.22 1.83 0.01
------------- ------------- ------------- -------------
Less distributions to shareholders:
From net investment income -- (0.47) (0.58) (0.11)
From net realized gains -- (0.06) (0.33) --
------------- ------------- ------------- -------------
Total distributions -- (0.53) (0.91) (0.11)
------------- ------------- ------------- -------------
Net asset value, end of period $ 10.79 $ 10.51 $ 10.82 $ 9.90
============= ============= ============= =============
Total Return 2.66% 2.07% 18.51% 0.08%
Ratios / Supplemental Data:
Net assets, end of period (000's) $125 $122 $120 $101
Net expenses to average daily net assets# $1.11%* 1.10% 1.10% 1.10%*
Net investment income to average daily net assets 6.00%* 5.67% 5.97% 6.46%*
Portfolio turnover rate 22% 54% 104% 7%
#Computed after giving effect to the voluntary partial waiver
of management fee by MassMutual, which terminated May 1, 1997.
Without this partial waiver of fees by MassMutual, the ratio of
expenses to average daily net assets would have been: 1.14%* 1.14% 1.14% 1.16%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
***Per share amount calculated on the average shares method, which more
appropriately presents the per share data for the period since the use of the
undistributed income method does not accord with the results of operations.
28 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Core Bond Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 3
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.52 $ 10.82 $ 9.90 $ 10.00
------------ ------------ ------------ ------------
Income (loss) from investment operations:
Net investment income 0.33*** 0.64*** 0.68 0.11
Net realized and unrealized gain (loss) on investments (0.03) (0.37) 1.19 (0.10)
------------ ------------ ------------ ------------
Total income (loss) from investment operations 0.30 0.27 1.87 0.01
------------ ------------ ------------ ------------
Less distributions to shareholders:
From net investment income -- (0.51) (0.62) (0.11)
From net realized gains -- (0.06) (0.33) --
------------ ------------ ------------ ------------
Total distributions -- (0.57) (0.95) (0.11)
------------ ------------ ------------ ------------
Net asset value, end of period $ 10.82 $ 10.52 $ 10.82 $ 9.90
============ ============ ============ ============
Total Return 2.85% 2.52% 18.87% 0.09%
Ratios / Supplemental Data:
Net assets, end of period (000's) $127 $123 $120 $101
Net expenses to average daily net assets# 0.76%* 0.75% 0.75% 0.75%*
Net investment income to average daily net assets 6.35%* 6.01% 6.32% 6.83%*
Portfolio turnover rate 22% 54% 104% 7%
#Computed after giving effect to the voluntary
partial waiver of management fee by MassMutual,
which terminated May 1, 1997. Without this
partial waiver of fees by MassMutual, the ratio
of expenses to average daily net assets would
have been: 0.79%* 0.79% 0.79% 0.81%*
</TABLE>
<TABLE>
<CAPTION>
Class 4
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.45 $ 10.75 $ 9.84 $ 10.00
------------ ------------ ------------ ------------
Income (loss) from investment operations:
Net investment income 0.34*** 0.67*** 0.72*** 0.18
Net realized and unrealized gain (loss) on investments (0.04) (0.37) 1.17 (0.16)
------------ ------------ ------------ ------------
Total income (loss) from investment operations 0.30 0.30 1.89 0.02
------------ ------------ ------------ ------------
Less distributions to shareholders:
From net investment income -- (0.54) (0.65) (0.18)
From net realized gains -- (0.06) (0.33) --
------------ ------------ ------------ ------------
Total distributions -- (0.60) (0.98) (0.18)
------------ ------------ ------------ ------------
Net asset value, end of period $ 10.75 $ 10.45 $ 10.75 $ 9.84
============ ============ ============ ============
Total Return@ 2.87% 2.80% 19.15% 0.20%
Ratios / Supplemental Data:
Net assets, end of period (000's) $416,687 $356,699 $253,540 $194,150
Net expenses to average daily net assets# 0.5270%* 0.5130% 0.5130% 0.5130%*
Net investment income to average daily net assets 6.59%* 6.26% 6.56% 6.86%*
Portfolio turnover rate 22% 54% 104% 7%
#Computed after giving effect to the voluntary
partial waiver of management fee by MassMutual,
which terminated May 1, 1997. Without this
partial waiver of fees by MassMutual, the ratio
of expenses to average daily net assets would
have been: 0.5532%* 0.5550% 0.5553% 0.5672%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
***Per share amount calculated on the average shares method, which more
appropriately presents the per share data for the period since the use of the
undistributed income method does not accord with the results of operations.
@Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
The accompanying notes are an integral part of the financial statements. 29
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Balanced Fund - Portfolio of Investments
- --------------------------------------------------------------------------------
Portfolio of Investments (Unaudited)
June 30, 1997
<TABLE>
<CAPTION>
Number of
Shares Market Value
------ ------------
<S> <C> <C>
EQUITIES -- 53.4%
Aerospace & Defense -- 1.6%
Boeing Company 54,000 $ 2,865,375
Raytheon Company 92,000 4,692,000
TRW Inc. 48,200 2,738,363
------------
10,295,738
------------
Agribusiness -- 0.6%
Pioneer Hi-Bred
International, Inc. 45,500 3,640,000
------------
Apparel, Textiles & Shoes -- 0.6%
VF Corporation 44,500 3,771,375
------------
Automotive & Parts -- 2.6%
Ford Motor Company 97,300 3,673,075
Genuine Parts
Company 154,500 5,233,688
Goodyear Tire &
Rubber Company 113,700 7,198,631
------------
16,105,394
------------
Banking, Savings & Loans -- 3.6%
The Bank of New
York Company,
Incorporated 150,000 6,525,000
Comerica, Incorporated 53,000 3,604,000
CoreStates Financial
Corp. 81,500 4,380,625
Norwest Corporation 57,000 3,206,250
Pacific Century
Financial Corporation 25,600 1,184,000
Wachovia Corp. 60,100 3,504,581
------------
22,404,456
------------
Beverages -- 1.0%
Brown-Forman
Corporation (Class B) 66,600 3,250,913
PepsiCo, Inc 84,000 3,155,250
------------
6,406,163
------------
Chemicals -- 2.5%
E. I. du Pont de
Nemours and Company 66,000 4,149,750
The Lubrizol
Corporation 68,300 2,864,331
Nalco Chemical
Company 81,500 3,147,938
Rohm & Haas
Company 60,000 5,403,750
------------
15,565,769
------------
Commercial Services -- 0.3%
Pinnacle West Capital
Corporation 70,500 $ 2,119,406
------------
Communications -- 0.2%
AT & T Corporation 27,000 946,688
------------
Computers & Office Equipment -- 4.0%
Hewlett-Packard
Company 122,000 6,832,000
International Business
Machines Corporation 70,000 6,313,125
Pitney Bowes, Inc. 84,000 5,838,000
Xerox Corporation 90,000 7,098,750
------------
26,081,875
------------
Containers -- 0.5%
Temple-Inland, Inc. 63,000 3,402,000
------------
Cosmetics & Personal Care -- 0.8%
Kimberly-Clark
Corporation 96,800 4,815,800
------------
Drugs -- 0.5%
Pharmacia & Upjohn,
Inc. 94,000 3,266,500
------------
Electric Utilities -- 0.8%
New England Electric
System 6,000 222,000
NIPSCO Industries,
Inc. 40,000 1,652,500
SCANA Corporation 130,500 3,238,031
------------
5,112,531
------------
Electrical Equipment & Electronics-- 3.9%
AMP, Incorporated 156,700 6,542,225
General Electric
Company 164,000 10,721,500
Honeywell Inc. 44,000 3,338,500
Hubbell, Incorporated
(Class B) 96,023 4,224,994
------------
24,827,219
------------
Energy -- 3.1%
Amoco Corporation 74,000 6,433,375
Kerr-McGee
Corporation 43,500 2,756,813
Mobil Corporation 70,000 4,891,250
Teco Energy, Inc. 95,700 2,446,331
Unocal Corporation 68,900 2,674,181
------------
19,201,950
------------
Financial Services -- 0.9%
American Express
Company 76,500 $ 5,699,250
------------
Foods -- 1.7%
Archer-Daniels-Midland
Company 12,400 291,400
ConAgra, Inc. 74,200 4,758,075
CPC International, Inc. 61,000 5,631,063
------------
10,680,538
------------
Forest Products & Paper -- 1.2%
Westvaco Corporation 101,500 3,190,906
Weyerhaeuser Company 84,600 4,399,200
------------
7,590,106
------------
Hardware & Tools -- 0.5%
The Stanley Works 77,000 3,080,000
------------
Healthcare -- 4.4%
Becton, Dickinson and
Company 102,000 5,163,750
Bristol-Myers Squibb
Company 178,000 14,418,000
Pfizer, Incorporated 22,500 2,688,750
Schering-Plough Corp. 119,600 5,725,850
------------
27,996,350
------------
Industrial Distribution -- 0.6%
W.W. Grainger, Inc. 48,000 3,753,000
------------
Industrial Transportation -- 1.5%
Burlington Northern
Santa Fe Corporation 51,900 4,664,513
Norfolk Southern
Corporation 48,000 4,836,000
------------
9,500,513
------------
Insurance -- 3.9%
Jefferson-Pilot
Corporation 52,250 3,650,969
Marsh & McLennan
Companies, Inc. 110,000 7,851,250
MBIA, Inc. 51,500 5,809,844
SAFECO Corporation 149,000 6,956,438
------------
24,268,501
------------
Machinery & Components -- 1.1%
Dover Corporation 62,000 3,813,000
Parker-Hannifin
Corporation 48,000 2,913,000
------------
6,726,000
------------
(Continued)
</TABLE>
32 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Balanced Fund - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Market Value
------ ------------
<S> <C> <C>
Manufacturing -- 0.4%
Pall Corporation 99,600 $ 2,315,700
------------
Miscellaneous -- 1.0%
Harsco Corporation 69,000 2,794,500
Minnesota Mining &
Manufacturing
Company 34,200 3,488,400
------------
6,282,900
------------
Oil & Gas -- 1.2%
ENI SPA, Sponsored
ADR 31,900 1,814,313
Occidental Petroleum
Corporation 128,500 3,220,531
Union Pacific
Resources Group Inc. 108,300 2,693,963
------------
7,728,807
------------
Photography -- 0.6%
Eastman Kodak
Company 49,300 3,783,775
------------
Publishing & Printing -- 1.3%
The McGraw-Hill
Companies, Inc. 89,000 5,234,313
R.R. Donnelley & Sons
Company 75,500 2,765,188
------------
7,999,501
------------
Retail -- 1.4%
The May Department
Stores Company 98,500 4,654,125
Sears Roebuck and Co. 78,000 4,192,500
------------
8,846,625
------------
Retail-Grocery -- 1.5%
Albertson's, Inc. 169,100 6,172,150
American Stores
Company 61,900 3,056,313
------------
9,228,463
------------
Telecommunications -- 0.8%
GTE Corporation 116,000 5,089,500
------------
Telephone Utilities -- 1.4%
Ameritech Corporation 44,500 3,023,219
Frontier Corporation 159,500 3,180,031
Southern New England
Telecommunications
Corporation 63,200 2,456,900
------------
8,660,150
------------
Tobacco -- 1.4%
Fortune Brands, Inc. 88,500 3,302,156
Gallaher Group PLC,
ADR* 88,500 1,631,719
UST Inc. 136,800 3,796,200
------------
8,730,075
------------
TOTAL EQUITIES $335,922,618
------------
(Cost $214,936,985)
Principal
Amount Market Value
--------- ------------
BONDS & NOTES -- 16.5%
ASSET BACKED SECURITIES -- 1.2%
Capita Equipment
Receivables Trust
1996-1, Class A4
6.280% 6/15/2000 $1,000,000 $ 999,060
Chase Manhattan Auto
Grantor Trust 1996-B,
Class A
6.610% 9/15/2002 1,881,518 1,888,573
Daimler-Benz Auto
Grantor Trust 1995-A,
Class A
5.850% 5/15/2002 801,171 800,169
Ford Credit 1994-B
Grantor Trust
7.300% 10/15/1999 249,094 251,194
Ford Credit Auto
Owner Trust 1996-B,
Class A-4
6.300% 1/15/2001 1,000,000 998,120
Metlife Capital
Equipment Loan Trust
Series 1997-A, Class A
6.850% 5/20/2008 500,000 497,535
Nissan Auto
Receivables 1994-A
Grantor Trust, Class A
6.450% 9/15/1999 280,204 280,555
Railcar Trust No.
1992-1
7.750% 6/01/2004 380,705 394,742
World Omni 1996-A
Automobile Lease
Securitization Trust,
Class A1
6.300% 6/25/2002 1,455,635 1,459,274
------------
TOTAL ASSET BACKED
SECURITIES 7,569,222
------------
(Cost $7,572,210)
CORPORATE DEBT -- 6.6%
AirTouch
Communications, Inc.
7.500% 7/15/2006 1,000,000 1,021,200
America West Airlines
1996-1, Class A
6.850% 7/02/2009 1,000,000 973,750
American Airlines
1994-A Pass-Through
Trusts, Class A4 ++
9.780% 11/26/2011 1,000,000 1,137,500
AMR Corporation ++
9.000% 8/01/2012 500,000 560,070
Analog Devices, Inc.
6.625% 3/01/2000 500,000 497,155
Associates Corporation
of North America
6.750% 8/01/2001 1,000,000 1,001,240
Barrick Gold
Corporation
7.500% 5/01/2007 1,000,000 1,023,070
Bell Atlantic Financial
Services, Inc. ++
6.610% 2/04/2000 1,000,000 1,002,352
BHP Finance (USA)
Limited
6.420% 3/01/2026 1,000,000 979,880
Carlisle Companies
Incorporated
7.250% 1/15/2007 500,000 499,055
Champion International
Corporation
6.400% 2/15/2026 1,000,000 951,740
The Charles Schwab
Corporation
6.250% 1/23/2003 1,000,000 962,500
CITGO Petroleum
Corporation
7.875% 5/15/2006 250,000 258,300
Comcast Cable
Communications, Inc.
144A
8.375% 5/01/2007 750,000 793,403
Continental Airlines,
Inc., Series 1996-2B
8.560% 1/02/2016 486,053 524,330
Continental Airlines,
Inc., Series 1996-B
7.820% 4/15/2015 490,196 505,500
Crown Cork & Seal
Company Inc.
6.750% 12/15/2003 1,000,000 985,470
CSX Corporation 144A
7.250% 5/01/2027 1,200,000 1,224,312
Delta Air Lines, Inc.,
1992, Series C
8.540% 1/02/2007 419,455 446,170
(Continued)
</TABLE>
The accompanying notes are an integral part of the financial statements. 33
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Balanced Fund - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
English China Clays
Delaware Inc. ++
7.375% 10/01/2002 $ 500,000 $ 508,550
ERAC USA Finance
Company 144A
6.950% 1/15/2006 500,000 489,115
FBG Finance Limited
144A
7.875% 6/01/2016 1,000,000 1,004,030
Fletcher Challenge Ltd.
7.750% 6/20/2006 500,000 514,710
Foodbrands America, Inc.
10.750% 5/15/2006 1,000,000 1,172,320
General American
Transportation
Corporation
6.750% 3/01/2006 1,000,000 967,720
General Mills, Inc.
8.900% 6/15/2006 500,000 557,025
The Goldman Sachs
Group, L.P. 144A
6.200% 2/15/2001 1,000,000 984,040
GTE Corporation
9.100% 6/01/2003 500,000 553,055
Hilton Hotels
Corporation
7.375% 6/01/2002 500,000 503,585
Leucadia National
Corporation
7.750% 8/15/2013 1,000,000 974,780
Lockheed Martin
Corporation
7.700% 6/15/2008 1,000,000 1,043,040
MAPCO Inc.
7.250% 3/01/2009 1,000,000 1,000,920
McDonnell Douglas
Corporation ++
9.250% 4/01/2002 500,000 549,770
MFS Communications
Company, Inc. (Step Up)
0.000% 1/15/2004 500,000 465,400
Millipore Corporation
7.500% 4/01/2007 1,000,000 1,013,160
Mobil Corporation
8.625% 8/15/2021 1,000,000 1,151,340
Newmont Mining
Corporation ++
8.625% 4/01/2002 1,000,000 1,065,380
News America
Holdings Incorporated
9.250% 2/01/2013 1,000,000 1,114,970
Norfolk Southern
Corporation
7.050% 5/01/2037 1,350,000 1,370,169
North Finance
(Bermuda) Limited
144A
7.000% 9/15/2005 1,000,000 985,000
Petroleum Geo-
Services ASA
7.500% 3/31/2007 250,000 251,898
Rite Aid Corporation
6.700% 12/15/2001 500,000 496,205
Rolls-Royce Capital
Inc.
7.125% 7/29/2003 1,000,000 1,004,030
Scholastic Corporation
7.000% 12/15/2003 1,000,000 992,210
Thomas & Betts
Corporation
8.250% 1/15/2004 500,000 528,165
Time Warner Inc.
7.750% 6/15/2005 1,000,000 1,016,250
Time Warner Inc.
Pass-Thru Asset
Trust 1997-1 144A
6.100% 12/30/2001 750,000 718,410
US Air, Inc., Class B
7.500% 10/15/2009 481,080 484,086
The US West Capital
Funding, Inc.
6.850% 1/15/2002 1,000,000 998,930
WorldCom, Inc.
7.750% 4/01/2007 500,000 511,340
W.R. Grace & Co.
8.000% 8/15/2004 1,000,000 1,046,780
------------
TOTAL CORPORATE DEBT 41,383,380
------------
(Cost $40,328,848)
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 4.2%
Federal Home Loan Mortgage Corporation (FHLMC) -- 0.8%
Collateralized Mortgage Obligations -- 0.7%
FHLMC Series 1322
Class G
7.500% 2/15/2007 1,000,000 1,020,310
FHLMC Series 1625
Class D
5.250% 7/15/2004 3,100,000 3,074,797
FHLMC Series 1625
Class EA
5.750% 3/15/2007 1,000,000 984,060
------------
5,079,167
------------
Pass-Through Securities -- 0.1%
FHLMC
9.000% 3/01/2017 169,969 180,864
------------
5,260,031
------------
Federal National Mortgage Association
(FNMA) -- 0.9%
Collateralized Mortgage Obligations -- 0.8%
FNMA Series 1993-134
Class GA
6.500% 2/25/2007 1,000,000 990,930
FNMA Series 1993-191
Class PD
5.400% 3/25/2004 1,000,000 992,500
FNMA Series 1993-221
Class D
6.000% 12/25/2008 995,000 951,469
FNMA Series 1996-54
Class C
6.000% 9/25/2008 2,000,000 1,917,500
------------
4,852,399
------------
Pass-Through Securities -- 0.1%
FNMA
8.000% 5/01/2013 462,130 470,346
------------
5,322,745
------------
Government National Mortgage Association
(GNMA) -- 1.6%
Pass-Through Securities
GNMA
6.000% 5/20/2027 2,472,203 2,479,941
GNMA
6.875% 12/20/2025 426,030 436,417
GNMA
7.000% 7/20/2025 1,651,054 1,696,194
GNMA
7.500% 10/15/2006 -
6/15/2017 2,798,797 2,844,158
GNMA
8.000% 11/15/2004 -
7/15/2008 1,653,057 1,710,087
GNMA
9.000% 12/15/2008 -
5/15/2009 561,048 598,805
------------
9,765,602
------------
U.S. Government Guaranteed Notes -- 0.9%
1991-A Fairfax
County, VA
8.740% 8/01/2001 200,000 213,750
1991-A Jefferson
Park, CA
8.740% 8/01/2001 1,740,000 1,859,625
1991-A Monroe
County, NY
8.740% 8/01/2001 500,000 534,375
1991-A Rochester, NY
8.740% 8/01/2001 60,000 64,125
U.S. Dept. of Housing
and Urban
Development, Series
1995-A ++
8.240% 8/01/2002 3,000,000 3,215,760
------------
5,887,635
------------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS 26,236,013
------------
(Cost $25,577,145)
(Continued)
</TABLE>
34 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Balanced Fund - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Market Value
--------- ------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 4.5%
U.S. Treasury Bonds -- 2.4%
U.S. Treasury Bond
7.250% 5/15/2016 $ 7,750,000 $ 8,081,778
U.S. Treasury Bond
8.750% 5/15/2017 6,000,000 7,218,720
------------
15,300,498
------------
U.S. Treasury Notes -- 1.8%
U.S. Treasury Note
5.875% 1/31/1999 4,000,000 3,991,880
U.S. Treasury Note
7.250% 8/15/2004 7,125,000 7,427,813
------------
11,419,693
------------
U.S. Treasury Strip -- 0.3%
U.S. Treasury Strip -- Principal Only
0.000% 2/15/1999 2,250,000 2,043,518
------------
TOTAL U.S. TREASURY
OBLIGATIONS 28,763,709
------------
(Cost $28,715,544)
TOTAL BONDS & NOTES 103,952,324
------------
(Cost $102,193,747)
SHORT-TERM INVESTMENTS -- 30.0%
Commercial Paper
Boston Scientific
Corporation
5.800% 7/01/1997 4,745,000 4,745,000
Boston Scientific
Corporation
5.820% 8/06/1997 3,155,000 3,136,638
Boston Scientific
Corporation
5.870% 7/10/1997 1,895,000 1,892,219
Burlington Northern
Santa Fe Corporation
5.750% 8/04/1997 6,725,000 6,688,479
Carter Holt Harvey
Limited
5.800% 7/18/1997 2,730,000 2,722,523
Carter Holt Harvey
Limited
5.820% 7/08/1997 4,540,000 4,534,862
Comdisco, Inc.
5.770% 7/29/1997 2,400,000 2,389,229
Comdisco, Inc.
5.800% 8/18/1997 5,060,000 5,020,869
Comdisco, Inc.
5.810% 8/15/1997 3,555,000 3,529,182
Cox Enterprises, Inc.
5.800% 7/17/1997 5,560,000 5,545,668
Crown Cork & Seal
Company Inc.
5.840% 8/26/1997 4,070,000 4,033,026
CSX Corporation
5.760% 8/11/1997 6,185,000 6,144,426
CSX Corporation
5.810% 7/03/1997 5,465,000 5,463,236
Dana Credit
Corporation
5.790% 7/28/1997 2,270,000 2,259,777
Dominion Resources,
Inc.
5.780% 7/30/1997 4,670,000 4,648,256
Dominion Resources,
Inc.
5.820% 7/21/1997 3,585,000 3,572,829
Enron Corp.
5.780% 8/01/1997 6,275,000 6,243,768
Federal Signal Corp.
5.760% 7/02/1997 6,715,000 6,713,926
Harris Corporation
5.790% 8/13/1997 4,155,000 4,126,265
Illinois Power
Company
5.780% 7/24/1997 2,200,000 2,191,876
Illinois Power
Company
5.780% 7/31/1997 2,935,000 2,920,863
Illinois Power
Company
5.820% 8/05/1997 5,285,000 5,255,096
Lockheed Martin
Corporation
5.810% 8/25/1997 4,100,000 4,063,607
Lockheed Martin
Corporation
5.900% 7/10/1997 5,800,000 5,792,390
Mattel, Inc.
5.780% 7/25/1997 3,280,000 3,267,361
Mattel, Inc.
5.780% 8/22/1997 1,605,000 1,591,600
ORIX Credit Alliance, Inc.
5.820% 7/09/1997 2,155,000 2,152,213
ORIX Credit Alliance, Inc.
5.850% 7/15/1997 4,660,000 4,649,399
ORIX Credit Alliance, Inc.
5.880% 7/16/1997 6,000,000 5,985,300
Praxair, Inc.
5.760% 8/14/1997 4,945,000 4,910,187
Public Service
Company of Colorado
5.800% 8/19/1997 6,055,000 6,007,199
Public Service
Company of Colorado
5.840% 9/19/1997 3,980,000 3,929,144
Public Service
Electric and Gas
Company
5.780% 7/23/1997 2,750,000 2,740,286
Public Service
Electric and Gas
Company
5.820% 7/07/1997 3,460,000 3,456,644
Rite Aid Corporation
5.780% 7/22/1997 2,100,000 2,092,920
Rite Aid Corporation
5.800% 7/14/1997 3,295,000 3,288,099
Textron Financial
Corporation
5.800% 7/11/1997 6,700,000 6,689,205
Textron Financial
Corporation
5.820% 7/02/1997 2,465,000 2,464,602
Union Pacific
Corporation
5.850% 8/07/1997 4,675,000 4,646,892
Union Pacific
Corporation
5.850% 9/11/1997 5,400,000 5,337,900
Union Pacific
Corporation
5.850% 9/15/1997 4,535,000 4,479,950
UOP
5.830% 8/08/1997 5,090,000 5,058,677
Whirlpool Financial
Corporation
5.800% 8/12/1997 6,620,000 6,575,205
Whirlpool Financial
Corporation
5.800% 8/20/1997 5,375,000 5,331,701
------------
TOTAL SHORT-TERM
INVESTMENTS 188,288,494
------------
(Cost $188,285,661)
TOTAL INVESTMENTS -- 99.9% 628,163,436
(Cost $505,416,393)+
Other Assets/
(Liabilities) 0.1% 527,625
------------
NET ASSETS -- 100.0% $628,691,061
------------
</TABLE>
Notes to Portfolio of Investments
+Aggregate cost for Federal tax purposes (Note 7)
144A: Securities exempt from registration under Rule 144A of the Securities Act
of 1933. 144A: These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
*Non-income producing security
++ All or a portion of this security is segregated to cover forward purchase
commitments. (Note 2).
The accompanying notes are an integral part of the financial statements. 35
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Balanced Fund - Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
June 30, 1997
(Unaudited)
----------------
<S> <C>
Assets:
Investments, at value (cost $317,130,732) (Note 2)..................... $ 439,874,942
Short-term investments, at value (cost $188,285,661) (Note 2).......... 188,288,494
----------------
Total Investments.................................................... 628,163,436
Cash................................................................... 8,223
Receivables from:
Investments sold..................................................... 1,158,998
Fund shares sold..................................................... 830,703
Interest and dividends............................................... 2,214,668
----------------
Total assets...................................................... 632,376,028
----------------
Liabilities:
Payables for:
Investments purchased................................................ 3,102,397
Settlement of investments purchased on a
forward commitment basis (Note 2)................................. 4,847
Fund shares redeemed................................................. 272,626
Directors' fees and expenses (Note 3)................................ 5,316
Affiliates (Note 3):
Investment management fees........................................ 238,126
Administration fees............................................... 45,229
Service and distribution fees..................................... 281
Accrued expenses and other liabilities................................. 16,145
----------------
Total liabilities................................................. 3,684,967
----------------
Net assets............................................................. $ 628,691,061
================
Net assets consist of:
Paid-in capital........................................................ $ 483,414,936
Undistributed net investment income.................................... 10,713,433
Accumulated net realized gain on investments........................... 11,820,496
Net unrealized appreciation on investments
and forward commitments........................................... 122,742,196
----------------
$ 628,691,061
================
Net assets:
Class 1................................................................ $ 146,563
================
Class 2................................................................ $ 148,717
================
Class 3................................................................ $ 149,854
================
Class 4................................................................ $ 628,245,927
================
Shares outstanding:
Class 1................................................................ 10,838
================
Class 2................................................................ 10,948
================
Class 3................................................................ 10,994
================
Class 4................................................................ 46,209,722
================
Net asset value, offering price and
redemption price per share:
Class 1................................................................ $ 13.52
================
Class 2................................................................ $ 13.58
================
Class 3................................................................ $ 13.63
================
Class 4................................................................ $ 13.60
================
</TABLE>
36 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Balanced Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Statement of Operations
<TABLE>
<CAPTION>
Six months ended
June 30, 1997
(Unaudited)
---------------
<S> <C>
Investment income:
Interest................................................................ $ 8,622,309
Dividends............................................................... 3,596,262
---------------
Total investment income............................................... 12,218,571
---------------
Expenses (Note 1):
Investment management fees (Note 3)..................................... 1,309,860
Custody fees............................................................ 29,090
Audit and legal fees.................................................... 7,400
Directors' fees (Note 3)................................................ 10,526
Fees waived by the investment manager (Note 3).......................... (74,994)
---------------
1,281,882
Administration fees (Note 3):
Class 1............................................................... 393
Class 2............................................................... 363
Class 3............................................................... 227
Class 4............................................................... 247,822
Distribution and service fees (Note 3):
Class 1............................................................... 448
Class 2............................................................... 105
---------------
Net expenses........................................................ 1,531,240
---------------
Net investment income............................................... 10,687,331
---------------
Realized and unrealized gain (loss):
Net realized gain on investment transactions and forward commitments.... 9,899,503
Net change in unrealized appreciation (depreciation) on
investments and forward commitments................................... 36,649,248
---------------
Net realized and unrealized gain.................................... 46,548,751
---------------
Net increase in net assets resulting from operations.................... $ 57,236,082
================
</TABLE>
The accompanying notes are an integral part of the financial statements. 37
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Balanced Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months ended
Statements of June 30, 1997 Year ended
Changes in Net (Unaudited) December 31, 1996
Assets ----------------- ------------------
<S> <C> <C>
Increase(Decrease) in Net Assets:
Operations:
Net investment income ...................................... $ 10,687,331 $ 19,347,629
Net realized gain on investment transactions
and forward commitments ................................... 9,899,503 8,885,806
Net change in unrealized appreciation (depreciation) on
investments and forward commitments ....................... 36,649,248 33,108,845
----------------- ------------------
Net increase in net assets resulting from operations ...... 57,236,082 61,342,280
----------------- ------------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1 .................................................... -- (3,204)
Class 2 .................................................... -- (4,068)
Class 3 .................................................... -- (4,538)
Class 4 .................................................... -- (19,441,756)
----------------- ------------------
Total distributions from net investment income............. -- (19,453,566)
----------------- ------------------
From net realized gains:
Class 1 .................................................... -- (1,969)
Class 2 .................................................... -- (1,970)
Class 3 .................................................... -- (1,972)
Class 4 .................................................... -- (7,883,759)
----------------- ------------------
Total distributions from net realized gains................ -- (7,889,670)
----------------- ------------------
Net fund share transactions (Note 5):
Class 1 .................................................... -- (49,367)
Class 2 .................................................... -- 6,038
Class 3 .................................................... -- 6,510
Class 4 .................................................... 7,769,131 72,536,092
----------------- ------------------
Increase in net assets from net fund share transactions ... 7,769,131 72,499,273
----------------- ------------------
Total increase in net assets ............................... 65,005,213 106,498,317
Net assets:
Beginning of period ........................................ 563,685,848 457,187,531
----------------- ------------------
End of period (including undistributed net investment income
of $10,713,433 and $26,102, respectively) ................. $ 628,691,061 $ 563,685,848
================= ==================
</TABLE>
38 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Balanced Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Financial Highlights
(For a share outstanding throughout each period)
Class 1
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.35 $ 11.50 $ 9.94 $ 10.00
------------ ------------ ------------ ------------
Income (loss) from investment operations:
Net investment income 0.16 0.34 0.28 0.06
Net realized and unrealized gain (loss) on investments 1.01 1.01 1.70 (0.06)
------------ ------------ ------------ ------------
Total income (loss) from investment operations 1.17 1.35 1.98 --
------------ ------------ ------------ ------------
Less distributions to shareholders:
From net investment income -- (0.31) (0.33) (0.06)
From net realized gains -- (0.19) (0.09) --
------------ ------------ ------------ ------------
Total distributions -- (0.50) (0.42) (0.06)
------------ ------------ ------------ ------------
Net asset value, end of period $ 13.52 $ 12.35 $ 11.50 $ 9.94
============ ============ ============ ============
Total Return 9.47% 11.67% 19.92% 0.00%
Ratios / Supplemental Data:
Net assets, end of period (000's) $147 $134 $173 $100
Net expenses to average daily net assets# 1.66%* 1.65% 1.65% 1.65%*
Net investment income to average daily net assets 2.54%* 2.71% 3.03% 3.39%*
Portfolio turnover rate 13% 26% 23% 2%
Average broker commission rate (a) $ 0.0593 $ 0.0594 N/A N/A
#Computed after giving effect to the voluntary partial waiver
of management fee by MassMutual, which terminated May 1, 1997.
Without this partial waiver of fees by MassMutual, the ratio
of expenses to average daily net assets would have been: 1.69%* 1.69% 1.69% 1.71%*
<CAPTION>
Class 2
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.37 $ 11.53 $ 9.95 $ 10.00
------------ ------------ ------------ ------------
Income (loss) from investment operations:
Net investment income 0.20 0.39 0.39 0.06
Net realized and unrealized gain (loss) on investments 1.01 1.03 1.65 (0.04)
------------ ------------ ------------ ------------
Total income (loss) from investment operations 1.21 1.42 2.04 0.02
------------ ------------ ------------ ------------
Less distributions to shareholders:
From net investment income -- (0.39) (0.37) (0.07)
From net realized gains -- (0.19) (0.09) --
------------ ------------ ------------ ------------
Total distributions -- (0.58) (0.46) (0.07)
------------ ------------ ------------ ------------
Net asset value, end of period $ 13.58 $ 12.37 $ 11.53 $ 9.95
============ ============ ============ ============
Total Return 9.78% 12.25% 20.50% 0.17%
Ratios / Supplemental Data:
Net assets, end of period (000's) $149 $135 $121 $100
Net expenses to average daily net assets# 1.11%* 1.10% 1.10% 1.10%*
Net investment income to average daily net assets 3.09%* 3.23% 3.60% 3.94%*
Portfolio turnover rate 13% 26% 23% 2%
Average broker commission rate (a) $ 0.0593 $ 0.0594 N/A N/A
#Computed after giving effect to the voluntary partial waiver
of management fee by MassMutual, which terminated May 1, 1997.
Without this partial waiver of fees by MassMutual, the ratio
of expenses to average daily net assets would have been: 1.14%* 1.14% 1.14% 1.16%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
(a)Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were charged.
For fiscal years beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged.
The accompanying notes are an integral part of the financial statements. 39
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Balanced Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Financial Highlights
(For a share outstanding throughout each period)
Class 3
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.39 $ 11.55 $ 9.96 $ 10.00
------------ ------------ ------------ ------------
Income (loss) from investment operations:
Net investment income 0.22 0.44 0.43 0.07
Net realized and unrealized gain (loss) on investments 1.02 1.02 1.66 (0.04)
------------ ------------ ------------ ------------
Total income (loss) from investment operations 1.24 1.46 2.09 0.03
------------ ------------ ------------ ------------
Less distributions to shareholders:
From net investment income -- (0.43) (0.41) (0.07)
From net realized gains -- (0.19) (0.09) --
------------ ------------ ------------ ------------
Total distributions -- (0.62) (0.50) (0.07)
------------ ------------ ------------ ------------
Net asset value, end of period $ 13.63 $ 12.39 $ 11.55 $ 9.96
============ ============ ============ ============
Total Return 10.01% 12.61% 20.96% 0.28%
Ratios / Supplemental Data:
Net assets, end of period (000's) $150 $136 $121 $100
Net expenses to average daily net assets# 0.76%* 0.75% 0.75% 0.75%*
Net investment income to average daily net assets 3.43%* 3.60% 3.94% 4.32%*
Portfolio turnover rate 13% 26% 23% 2%
Average broker commission rate (a) $ 0.0593 $ 0.0594 N/A N/A
#Computed after giving effect to the voluntary
partial waiver of management fee by
MassMutual, which terminated May 1, 1997.
Without this partial waiver of fees
by MassMutual, the ratio of expenses to average
daily net assets would have been: 0.79%* 0.79% 0.79% 0.81%*
<CAPTION>
Class 4
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.34 $ 11.51 $ 9.92 $ 10.00
------------ ------------ ------------ ------------
Income (loss) from investment operations:
Net investment income 0.23 0.46 0.44 0.11
Net realized and unrealized gain (loss) on investments 1.03 1.02 1.68 (0.08)
------------ ------------ ------------ ------------
Total income (loss) from investment operations 1.26 1.48 2.12 0.03
------------ ------------ ------------ ------------
Less distributions to shareholders:
From net investment income -- (0.46) (0.44) (0.11)
From net realized gains -- (0.19) (0.09) --
------------ ------------ ------------ ------------
Total distributions -- (0.65) (0.53) (0.11)
------------ ------------ ------------ ------------
Net asset value, end of period $ 13.60 $ 12.34 $ 11.51 $ 9.92
============ ============ ============ ============
Total Return@ 10.21% 12.83% 21.31% 0.29%
Ratios / Supplemental Data:
Net assets, end of period (000's) $628,246 $563,280 $456,773 $349,688
Net expenses to average daily net assets# 0.5256%* 0.5120% 0.5120% 0.5120%*
Net investment income to average daily net assets 3.67%* 3.83% 4.18% 4.29%*
Portfolio turnover rate 13% 26% 23% 2%
Average broker commission rate (a) $ 0.0593 $ 0.0594 N/A N/A
#Computed after giving effect to the voluntary
partial waiver of management fee by
MassMutual, which terminated May 1, 1997.
Without this partial waiver of fees
by MassMutual, the ratio of expenses to average
daily net assets would have been: 0.5514%* 0.5522% 0.5514% 0.5650%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
(a)Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were charged.
For fiscal years beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged.
@ Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
40 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Value Equity Fund - Portfolio of Investments
- --------------------------------------------------------------------------------
Portfolio of Investments (Unaudited)
June 30, 1997
<TABLE>
<CAPTION>
Number of
Shares Market Value
------ ------------
<S> <C> <C>
EQUITIES -- 95.3%
Aerospace & Defense -- 2.9%
Boeing Company 460,000 $ 24,408,750
Raytheon Company 772,000 39,372,000
TRW Inc. 396,600 22,531,838
------------
86,312,588
------------
Agribusiness -- 1.0%
Pioneer Hi-Bred
International, Inc. 385,000 30,800,000
------------
Apparel, Textiles & Shoes -- 1.1%
VF Corporation 365,000 30,933,750
------------
Automotive & Parts -- 4.8%
Ford Motor Company 945,300 35,685,075
Genuine Parts
Company 1,290,000 43,698,750
Goodyear Tire &
Rubber Company 955,000 60,463,438
------------
139,847,263
------------
Banking, Savings & Loans -- 6.4%
The Bank of New
York Company,
Incorporated 1,265,000 55,027,500
Comerica, Incorporated 450,000 30,600,000
CoreStates Financial
Corp. 700,000 37,625,000
Norwest Corporation 485,000 27,281,250
Pacific Century
Financial Corporation 214,600 9,925,250
Wachovia Corp. 494,000 28,806,375
------------
189,265,375
------------
Beverages -- 1.8%
Brown-Forman
Corporation (Class B) 575,000 28,067,188
PepsiCo, Inc 700,000 26,293,750
------------
54,360,938
------------
Chemicals -- 4.4%
E. I. du Pont de
Nemours and Company 550,000 34,581,250
The Lubrizol
Corporation 571,200 23,954,700
Nalco Chemical
Company 680,000 26,265,000
Rohm & Haas
Company 503,000 45,301,438
------------
130,102,388
------------
Commercial Services -- 0.6%
Pinnacle West Capital
Corporation 588,792 17,700,560
------------
Communications -- 0.3%
AT & T Corporation 224,800 7,882,050
------------
Computers & Office Equipment -- 7.3%
Hewlett-Packard
Company 1,020,000 57,120,000
International Business
Machines Corporation 582,000 52,489,125
Pitney Bowes, Inc. 700,000 48,650,000
Xerox Corporation 723,000 57,026,625
------------
215,285,750
------------
Containers -- 1.0%
Temple-Inland, Inc. 525,000 28,350,000
------------
Cosmetics & Personal Care -- 1.4%
Kimberly-Clark
Corporation 806,000 40,098,500
------------
Drugs -- 0.9%
Pharmacia & Upjohn,
Inc. 792,000 27,522,000
------------
Electric Utilities -- 1.4%
New England Electric
System 52,000 1,924,000
NIPSCO Industries,
Inc. 330,000 13,633,125
SCANA Corporation 1,090,600 27,060,513
------------
42,617,638
------------
Electrical Equipment & Electronics -- 6.9%
AMP, Incorporated 1,213,000 50,642,750
General Electric
Company 1,360,000 88,910,000
Honeywell Inc. 365,000 27,694,375
Hubbell, Incorporated
(Class B) 800,071 35,203,142
------------
202,450,267
------------
Energy -- 5.4%
Amoco Corporation 615,000 53,466,563
Kerr-McGee
Corporation 360,000 22,815,000
Mobil Corporation 580,000 40,527,500
Teco Energy, Inc. 818,700 20,928,019
Unocal Corporation 574,900 22,313,306
------------
160,050,388
------------
Financial Services -- 1.7%
American Express
Company 665,000 49,542,500
------------
Foods -- 2.9%
Archer-Daniels-Midland
Company 102,600 2,411,100
ConAgra, Inc. 613,000 39,308,625
CPC International, Inc. 462,500 42,694,531
------------
84,414,256
------------
Forest Products & Paper -- 2.2%
Westvaco Corporation 855,000 26,879,063
Weyerhaeuser Company 721,900 37,538,800
------------
64,417,863
------------
Hardware & Tools -- 0.9%
The Stanley Works 639,000 25,560,000
------------
Healthcare -- 7.7%
Becton, Dickinson and
Company 850,000 43,031,250
Bristol-Myers Squibb
Company 1,500,000 121,500,000
Pfizer, Incorporated 184,130 22,003,535
Schering-Plough Corp. 907,200 43,432,200
------------
229,966,985
------------
Industrial Distribution -- 1.1%
W.W. Grainger, Inc. 400,000 31,275,000
------------
Industrial Transportation -- 2.7%
Burlington Northern
Santa Fe Corporation 432,200 38,843,975
Norfolk Southern
Corporation 400,000 40,300,000
------------
79,143,975
------------
</TABLE>
(Continued)
The accompanying notes are an integral part of the financial statements. 43
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Value Equity Fund - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Market Value
------ ------------
<S> <C> <C>
Insurance -- 6.9%
Jefferson-Pilot
Corporation 437,000 $ 30,535,375
Marsh & McLennan
Companies, Inc. 909,800 64,936,975
MBIA, Inc. 435,000 49,073,438
SAFECO Corporation 1,240,000 57,892,500
------------
202,438,288
------------
Machinery & Components -- 2.0%
Dover Corporation 540,000 33,210,000
Parker-Hannifin
Corporation 400,000 24,275,000
------------
57,485,000
------------
Manufacturing -- 0.7%
Pall Corporation 830,500 19,309,117
------------
Miscellaneous -- 1.8%
Harsco Corporation 600,000 24,300,000
Minnesota Mining &
Manufacturing
Company 279,700 28,529,400
------------
52,829,400
------------
Oil & Gas -- 2.2%
ENI SPA, Sponsored
ADR 266,700 15,168,563
Occidental Petroleum
Corporation 1,067,000 26,741,688
Union Pacific
Resources Group Inc. 897,700 22,330,288
------------
64,240,539
------------
Photography -- 1.1%
Eastman Kodak
Company 413,600 31,743,800
------------
Publishing & Printing -- 2.3%
The McGraw-Hill
Companies, Inc. 740,000 43,521,250
R.R. Donnelley & Sons
Company 630,000 23,073,750
------------
66,595,000
------------
Retail -- 2.5%
The May Department
Stores Company 825,000 38,981,250
Sears Roebuck and Co. 648,100 34,835,375
------------
73,816,625
------------
Retail-Grocery -- 2.6%
Albertson's, Inc. 1,414,000 51,611,000
American Stores
Company 518,300 25,591,063
------------
77,202,063
------------
Telecommunications -- 1.4%
GTE Corporation 965,800 $ 42,374,475
------------
Telephone Utilities -- 2.5%
Ameritech Corporation 372,000 25,272,750
Frontier Corporation 1,319,000 26,297,563
Southern New England
Telecommunications
Corporation 531,000 20,642,625
------------
72,212,938
------------
Tobacco -- 2.5%
Fortune Brands, Inc. 735,000 27,424,688
Gallaher Group PLC,
ADR ++ 735,000 13,551,563
UST Inc. 1,126,800 31,268,700
------------
72,244,951
------------
TOTAL EQUITIES $2,800,392,230
--------------
(Cost $1,787,766,969)
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS -- 4.9%
Commercial Paper
Abbott Laboratories
5.460% 7/10/1997 $ 5,000,000 $ 4,993,175
Abbott Laboratories
5.470% 7/09/1997 2,015,000 2,012,551
American International
Group, Inc.
5.520% 7/23/1997 10,000,000 9,966,267
Anheuser-Busch
Companies, Inc.
5.540% 7/07/1997 7,000,000 6,993,537
Anheuser-Busch
Companies, Inc.
6.000% 7/01/1997 7,766,000 7,766,000
AT & T Corporation
5.240% 7/18/1997 3,000,000 2,992,577
AT & T Corporation
5.240% 8/21/1997 8,000,000 7,940,613
Coca-Cola Company,
The
5.490% 8/22/1997 13,000,000 12,896,910
Eastman Kodak
Company
5.525% 7/21/1997 9,338,000 9,309,338
E. I. du Pont de
Nemours and Company
5.490% 8/11/1997 $7,000,000 $ 6,956,233
E. I. du Pont de
Nemours and Company
5.610% 11/17/1997 1,419,000 1,387,496
E. I. du Pont de
Nemours and Company
5.630% 11/12/1997 4,000,000 3,914,389
Ford Motor Credit
Company
5.580% 12/09/1997 5,000,000 4,871,424
Ford Motor Credit
Company
5.630% 12/05/1997 5,000,000 4,874,618
General Electric
Capital Corporation
5.580% 12/08/1997 4,000,000 3,897,778
IBM Credit
Corporation
5.520% 8/25/1997 3,000,000 2,974,700
IBM Credit
Corporation
5.520% 7/22/1997 8,000,000 7,974,238
J.P. Morgan & Co.,
Inc.
5.510% 7/28/1997 7,000,000 6,971,073
J.P. Morgan & Co.,
Inc.
5.530% 7/25/1997 5,872,000 5,850,352
PepsiCo, Inc
5.500% 7/14/1997 10,000,000 9,980,139
Procter & Gamble
Company, The
5.520% 9/17/1997 5,000,000 4,937,708
Toys "R" Us, Inc.
5.480% 7/09/1997 7,015,000 7,006,457
Weyerhaeuser Company
5.530% 8/06/1997 8,354,000 8,307,802
------------
TOTAL SHORT-TERM
INVESTMENTS 144,775,375
------------
(Cost $144,789,861)
TOTAL INVESTMENTS -- 100.2% 2,945,167,605
(Cost $1,932,556,830)+
Other Assets/
(Liabilities) - (0.2%) (5,563,503)
------------
NET ASSETS -- 100.0% $2,939,604,102
--------------
</TABLE>
Notes to Portfolio of Investments
+Aggregate cost for Federal tax purposes (Note 7)
++Non-Income producing security
44 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Value Equity Fund - Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Statement of June 30, 1997
Assets and (Unaudited)
Liabilities -----------------
<S> <C>
Assets:
Investments, at value (cost $1,787,766,969) (Note 2) ...................... $ 2,800,392,230
Short-term investments, at value (cost $144,789,861) (Note 2) ............. 144,775,375
-----------------
Total Investments ....................................................... 2,945,167,605
Cash....................................................................... 925
Receivables from:
Investments sold ........................................................ 9,540,659
Fund shares sold ........................................................ 7,984,118
Interest and dividends .................................................. 5,038,019
-----------------
Total assets ......................................................... 2,967,731,326
-----------------
Liabilities:
Payables for:
Investments purchased ................................................... 25,412,280
Fund shares redeemed .................................................... 1,309,733
Directors' fees and expenses (Note 3) ................................... 5,317
Affiliates (Note 3):
Investment management fees ........................................... 1,109,735
Administration fees .................................................. 223,358
Service and distribution fees ........................................ 333
Accrued expenses and other liabilities .................................... 66,468
-----------------
Total liabilities .................................................... 28,127,224
-----------------
Net assets ................................................................ $ 2,939,604,102
=================
Net assets consist of:
Paid-in capital ........................................................... $ 1,796,583,622
Undistributed net investment income ....................................... 26,785,147
Accumulated net realized gain on investments .............................. 103,624,558
Net unrealized appreciation on investments ................................ 1,012,610,775
-----------------
$ 2,939,604,102
=================
Net assets:
Class 1 ................................................................... $ 178,268
=================
Class 2 ................................................................... $ 180,894
=================
Class 3 ................................................................... $ 182,261
=================
Class 4 ................................................................... $ 2,939,062,679
=================
Shares outstanding:
Class 1 ................................................................... 10,640
=================
Class 2 ................................................................... 10,740
=================
Class 3 ................................................................... 10,793
=================
Class 4 ................................................................... 174,174,339
=================
Net asset value, offering price and
redemption price per share:
Class 1 ................................................................... $ 16.75
=================
Class 2 ................................................................... $ 16.84
=================
Class 3 ................................................................... $ 16.89
=================
Class 4 ................................................................... $ 16.87
=================
</TABLE>
The accompanying notes are an integral part of the financial statements. 45
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Value Equity Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Statement of Operations
<TABLE>
<CAPTION>
Six months ended
June 30, 1997
(Unaudited)
----------------
<S> <C>
Investment income:
Dividends........................................................ $ 30,007,475
Interest......................................................... 3,288,686
----------------
Total investment income........................................ 33,296,161
----------------
Expenses (Note 1):
Investment management fees (Note 3).............................. 5,958,697
Custody fees..................................................... 109,941
Audit and legal fees............................................. 33,755
Directors' fees (Note 3)......................................... 10,526
Fees waived by the investment manager (Note 3)................... (391,015)
----------------
5,721,904
Administration fees (Note 3):
Class 1........................................................ 471
Class 2........................................................ 437
Class 3........................................................ 276
Class 4........................................................ 1,198,138
Distribution and service fees (Note 3):
Class 1........................................................ 527
Class 2........................................................ 123
----------------
Net expenses................................................. 6,921,876
----------------
Net investment income........................................ 26,374,285
----------------
Realized and unrealized gain (loss):
Net realized gain on investment transactions..................... 89,446,203
Net change in unrealized appreciation (depreciation)
on investments................................................. 300,752,849
----------------
Net realized and unrealized gain............................. 390,199,052
----------------
Net increase in net assets resulting from operations............. $ 416,573,337
================
</TABLE>
46 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Value Equity Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Statements of
Changes in Net
Assets
<TABLE>
<CAPTION>
Six months ended
June 30, 1997 Year ended
(Unaudited) December 31, 1996
---------------- ----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income......................................... $ 26,374,285 $ 55,712,269
Net realized gain on investment transactions.................. 89,446,203 74,040,546
Net change in unrealized appreciation (depreciation)
on investments............................................... 300,752,849 296,454,766
---------------- ----------------
Net increase in net assets resulting from operations......... 416,573,337 426,207,581
---------------- ----------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1....................................................... -- (1,849)
Class 2....................................................... -- (2,628)
Class 3....................................................... -- (3,152)
Class 4....................................................... -- (55,920,646)
---------------- ----------------
Total distributions from net investment income............... -- (55,928,275)
---------------- ----------------
From net realized gains:
Class 1....................................................... -- (4,035)
Class 2....................................................... -- (4,054)
Class 3....................................................... -- (4,061)
Class 4....................................................... -- (64,653,761)
---------------- ----------------
Total distributions from net realized gains.................. -- (64,665,911)
---------------- ----------------
Net fund share transactions (Note 5):
Class 1....................................................... -- 5,884
Class 2....................................................... -- 6,682
Class 3....................................................... -- 7,213
Class 4....................................................... 36,822,530 54,936,919
---------------- ----------------
Increase in net assets from net fund share transactions...... 36,822,530 54,956,698
---------------- ----------------
Total increase in net assets.................................. 453,395,867 360,570,093
Net assets:
Beginning of period........................................... 2,486,208,235 2,125,638,142
---------------- ----------------
End of period (including undistributed net investment income
of $26,785,147 and $410,862, respectively)................... $ 2,939,604,102 $ 2,486,208,235
================ ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
47
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Value Equity Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 1
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.44 $ 12.63 $ 9.92 $ 10.00
---------- ---------- ---------- -----------
Income (loss) from investment operations:
Net investment income 0.06 0.17 0.18 0.04
Net realized and unrealized gain (loss) on investments 2.25 2.21 2.81 (0.08)
---------- ---------- ---------- -----------
Total income (loss) from investment operations 2.31 2.38 2.99 (0.04)
---------- ---------- ---------- -----------
Less distributions to shareholders:
From net investment income -- (0.18) (0.18) (0.04)
From net realized gains -- (0.39) (0.10) --
---------- ---------- ---------- -----------
Total distributions -- (0.57) (0.28) (0.04)
---------- ---------- ---------- -----------
Net asset value, end of period $ 16.75 $ 14.44 $ 12.63 $ 9.92
========== ========== ========== ===========
Total Return 16.00% 18.83% 30.10% (0.39)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $178 $154 $129 $99
Net expenses to average daily net assets# 1.66%* 1.65% 1.65% 1.65%*
Net investment income to average daily net assets 0.85%* 1.28% 1.58% 2.31%*
Portfolio turnover rate 9% 13% 16% 3%
Average broker commission rate (a) $ 0.0593 $ .0585 N/A N/A
#Computed after giving effect to the voluntary
partial waiver of management fee by MassMutual,
which terminated May 1, 1997. Without this
partial waiver of fees by MassMutual, the ratio
of expenses to average daily net assets would
have been: 1.69%* 1.69% 1.70% 1.71%*
<CAPTION>
Class 2
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.47 $ 12.65 $ 9.93 $ 10.00
---------- ---------- ---------- -----------
Income (loss) from investment operations:
Net investment income 0.11 0.25 0.24 0.05
Net realized and unrealized gain (loss) on investments 2.26 2.22 2.82 (0.07)
---------- ---------- ---------- -----------
Total income (loss) from investment operations 2.37 2.47 3.06 (0.02)
---------- ---------- ---------- -----------
Less distributions to shareholders:
From net investment income -- (0.26) (0.24) (0.05)
From net realized gains -- (0.39) (0.10) --
---------- ---------- ---------- -----------
Total distributions -- (0.65) (0.34) (0.05)
---------- ---------- ---------- -----------
Net asset value, end of period $ 16.84 $ 14.47 $ 12.65 $ 9.93
========== ========== ========== ===========
Total Return 16.38% 19.46% 30.80% (0.22)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $181 $155 $130 $99
Net expenses to average daily net assets# 1.11%* 1.10% 1.10% 1.10%*
Net investment income to average daily net assets 1.40%* 1.82% 2.13% 2.86%*
Portfolio turnover rate 9% 13% 16% 3%
Average broker commission rate (a) $ 0.0593 $ 0.0585 N/A N/A
#Computed after giving effect to the voluntary
partial waiver of management fee by MassMutual,
which terminated May 1, 1997. Without this
partial waiver of fees by MassMutual, the ratio
of expenses to average daily net assets would
have been: 1.14%* 1.14% 1.15% 1.16%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations)
through December 31, 1994.
(a)Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were charged.
For fiscal years beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged.
The accompanying notes are an integral part of the financial statements.
48
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Value Equity Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 3
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.49 $ 12.66 $ 9.93 $ 10.00
---------- ---------- ---------- -----------
Income (loss) from investment operations:
Net investment income 0.13 0.30 0.28 0.05
Net realized and unrealized gain (loss) on investments 2.27 2.23 2.83 (0.07)
---------- ---------- ---------- -----------
Total income (loss) from investment operations 2.40 2.53 3.11 (0.02)
---------- ---------- ---------- -----------
Less distributions to shareholders:
From net investment income -- (0.31) (0.28) (0.05)
From net realized gains -- (0.39) (0.10) --
---------- ---------- ---------- -----------
Total distributions -- (0.70) (0.38) (0.05)
---------- ---------- ---------- -----------
Net asset value, end of period $ 16.89 $ 14.49 $ 12.66 $ 9.93
========== ========== ========== ===========
Total Return 16.56% 19.92% 31.30% (0.18)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $182 $156 $130 $99
Net expenses to average daily net assets# 0.77%* 0.75% 0.75% 0.75%*
Net investment income to average daily net assets 1.75%* 2.17% 2.48% 3.23%*
Portfolio turnover rate 9% 13% 16% 3%
Average broker commission rate (a) $ 0.0593 $ 0.0585 N/A N/A
#Computed after giving effect to the voluntary
partial waiver of management fee by MassMutual,
which terminated May 1, 1997. Without this
partial waiver of fees by MassMutual, the
ratio of expenses to average daily net assets
would have been: 0.79%* 0.80% 0.80% 0.81%*
<CAPTION>
Class 4
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.46 $ 12.63 $ 9.91 $ 10.00
---------- ---------- ---------- -----------
Income (loss) from investment operations:
Net investment income 0.15 0.34 0.31 0.08
Net realized and unrealized gain (loss) on investments 2.26 2.22 2.82 (0.09)
---------- ---------- ---------- -----------
Total income (loss) from investment operations 2.41 2.56 3.13 (0.01)
---------- ---------- ---------- -----------
Less distributions to shareholders:
From net investment income -- (0.34) (0.31) (0.08)
From net realized gains -- (0.39) (0.10) --
---------- ---------- ---------- -----------
Total distributions -- (0.73) (0.41) (0.08)
---------- ---------- ---------- -----------
Net asset value, end of period $ 16.87 $ 14.46 $ 12.63 $ 9.91
========== ========== ========== ===========
Total Return@ 16.67% 20.24% 31.54% (0.10)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $2,939,063 $2,485,743 $2,125,248 $1,563,563
Net expenses to average daily net assets# 0.5226%* 0.5067% 0.5067% 0.5067%*
Net investment income to average daily net assets 1.99%* 2.42% 2.72% 3.20%*
Portfolio turnover rate 9% 13% 16% 3%
Average broker commission rate (a) $ 0.0593 $ 0.0585 N/A N/A
#Computed after giving effect to the voluntary
partial waiver of management fee by MassMutual,
which terminated May 1, 1997. Without this
partial waiver of fees by MassMutual, the
ratio of expenses to average daily net assets
would have been: 0.5521%* 0.5534% 0.5528% 0.5681%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
(a)Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were charged.
For fiscal years beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged.
@ Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
The accompanying notes are an integral part of the financial statements.
49
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Small Cap Value Equity - Portfolio of Investments
- --------------------------------------------------------------------------------
Portfolio of Investments (Unaudited)
June 30, 1997
<TABLE>
<CAPTION>
Number of
Shares Market Value
------ ------------
<S> <C> <C>
EQUITIES -- 92.7%
Air Transportation -- 1.3%
Atlantic Southeast
Airlines, Inc. 247,800 $ 7,093,275
------------
Apparel, Textiles & Shoes -- 1.1%
Culp, Inc. 55,000 996,875
Unitog Company 203,500 5,494,500
------------
6,491,375
------------
Automotive & Parts -- 6.1%
Amcast Industrial
Corporation 228,100 5,702,500
Excel Industries, Inc. 355,100 6,924,450
Keystone Automotive
Industries, Inc. ++ 250,000 4,250,000
Myers Industries, Inc. 321,154 5,419,469
Titan Wheel
International, Inc. 698,500 12,311,063
------------
34,607,482
------------
Banking, Savings & Loans -- 12.1%
Astoria Financial
Corporation 245,900 11,680,250
Bank United Corp.
Class A 173,200 6,581,600
CCB Financial
Corporation 139,900 10,230,188
First Colorado
Bancorp, Inc. 284,200 5,435,325
Keystone Financial,
Inc. 221,150 6,910,938
One Valley Bancorp of
West Virginia, Inc. 183,750 7,717,500
Security Capital
Corporation 102,800 9,714,600
Sovereign Bancorp,
Inc. 431,080 6,573,966
St. Paul Bancorp, Inc. 11,000 364,375
Webster Financial
Corporation 75,500 3,435,250
------------
68,643,992
------------
Beverages -- 1.3%
The Robert Mondavi
Corporation ++ 158,400 $ 7,484,400
------------
Building Materials & Construction -- 0.6%
Apogee Enterprises,
Inc. 153,600 3,302,400
------------
Chemicals -- 1.9%
OM Group, Inc. 319,800 10,593,375
------------
Communications -- 2.1%
True North
Communications, Inc. 483,500 11,966,625
------------
Computer Services -- 0.9%
Pomeroy Computer
Resources, Inc. ++ 200,000 4,950,000
------------
Computers & Office Equipment -- 1.3%
Cognex Corporation ++ 285,900 7,576,350
------------
Diversified Operations -- 0.3%
SPS Technologies, Inc. ++ 25,000 1,768,750
------------
Electrical Equipment & Electronics -- 7.9%
AFC Cable Systems,
Inc. ++ 147,500 3,982,500
Belden, Inc. 293,700 10,004,156
Dallas Semiconductor
Corporation 345,800 13,572,650
Teleflex, Incorporated 256,200 8,006,250
Wyle Laboratories 227,200 8,974,400
------------
44,539,956
------------
Energy -- 1.0%
NGC Corporation 176,041 2,717,633
TNP Enterprises, Inc. 137,100 3,179,006
------------
5,896,639
------------
Financial Services -- 0.1%
Eaton Vance Corp. 25,900 720,344
------------
Foods -- 1.4%
JP Foodservice, Inc. ++ 42,800 $ 1,227,825
Midwest Grain
Products, Inc. ++ 49,850 660,513
Morrison Health Care,
Inc. 367,200 5,852,250
------------
7,740,588
------------
Forest Products & Paper -- 2.1%
Mosinee Paper
Corporation 218,749 5,359,351
Wausau Paper Mills
Company 357,775 6,753,003
------------
12,112,354
------------
Gas Distribution -- 1.6%
WICOR, Inc. 237,300 9,239,869
------------
Industrial Transportation -- 3.2%
ABC Rail Products
Corporation ++ 445,000 7,620,625
Arnold Industries, Inc. 371,300 6,312,100
The Greenbrier
Companies, Inc. 385,300 4,358,706
------------
18,291,431
------------
Insurance -- 8.2%
ALLIED Group,
Incorporated 271,950 10,334,100
Capital RE Corp. 205,300 10,983,550
Executive Risk, Inc. 172,900 8,990,800
Frontier Insurance
Group, Inc. 190,680 12,346,530
Nationwide Financial
Services, Inc. Class A 152,000 4,037,500
------------
46,692,480
------------
Leasing Companies -- 1.9%
Rollins Truck Leasing
Company 715,750 10,646,781
------------
</TABLE>
(Continued)
52 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Small Cap Value Equity - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Market Value
------ ------------
<S> <C> <C>
Machinery & Components -- 14.0%
Columbus McKinnon
Corporation 266,500 $ 5,063,500
DT Industries, Inc. 269,200 9,623,900
Graco, Incorporated 427,000 12,863,375
Greenfield Industries,
Inc. 413,200 11,156,400
Hardinge, Inc. 224,300 6,560,775
Helix Technology
Corporation 247,300 10,015,650
OmniQuip
International, Inc. ++ 292,600 6,766,375
Regal-Beloit
Corporation 297,750 7,797,328
Roper Industries, Inc. 171,100 8,875,813
-------------
78,723,116
-------------
Medical Supplies -- 0.9%
Invacare Corporation 223,800 5,231,325
-------------
Metals & Mining -- 2.2%
Reliance Steel &
Aluminum Company 489,300 12,721,800
-------------
Miscellaneous -- 2.0%
Trimas Corporation 407,100 11,449,688
-------------
Miscellaneous Distributor Wholesale -- 1.9%
Hughes Supply, Inc. 266,600 10,664,000
-------------
Office Products -- 0.8%
American Business
Products, Inc. 197,700 4,497,675
-------------
Oil & Gas -- 2.2%
The Houston
Exploration Company ++ 261,800 4,074,263
Parker Drilling
Company ++ 400,000 4,450,000
Stone Energy
Corporation ++ 138,800 3,799,650
-------------
12,323,913
-------------
Other Services -- 2.9%
Analysts International
Corporation 340,200 11,396,700
Landauer, Inc. 206,200 4,781,263
-------------
16,177,963
-------------
Publishing & Printing -- 7.6%
Banta Corporation 284,250 7,710,281
Harte Hanks
Communications, Inc. 398,300 11,749,850
Houghton Mifflin
Company 173,200 11,561,100
McClatchy
Newspapers, Inc. 409,250 12,021,719
-------------
43,042,950
-------------
Retail -- 1.8%
Arbor Drugs, Inc. 502,250 10,107,781
-------------
TOTAL EQUITIES $525,298,677
-------------
(Cost $360,676,948)
Principal
Amount Market Value
------ ------------
SHORT-TERM INVESTMENTS -- 7.7%
Commercial Paper
Abbott Laboratories
5.470% 7/09/1997 $2,315,000 $ 2,312,186
American International
Group, Inc.
6.100% 7/01/1997 4,000,000 4,000,000
AT & T Corporation
5.430% 7/10/1997 4,000,000 3,994,570
Eastman Kodak
Company
5.500% 7/10/1997 2,644,000 2,640,364
E. I. du Pont de
Nemours and Company
6.000% 7/01/1997 4,000,000 4,000,000
Ford Motor Credit
Company
5.520% 7/31/1997 4,000,000 3,981,600
IBM Credit
Corporation
5.510% 7/11/1997 4,000,000 3,993,878
J.P. Morgan & Co.,
Inc.
5.510% 7/28/1997 4,000,000 3,983,470
PepsiCo, Inc
5.500% 7/14/1997 2,000,000 1,996,028
PepsiCo, Inc
6.050% 7/01/1997 2,016,000 2,016,000
Transamerica
Corporation
6.200% 7/01/1997 4,000,000 4,000,000
Walt Disney Company,
The
6.100% 7/01/1997 4,000,000 4,000,000
Weyerhaeuser Company
5.540% 7/23/1997 2,500,000 2,491,536
-------------
TOTAL SHORT-TERM
INVESTMENTS 43,409,632
-------------
(At Amortized Cost)
TOTAL INVESTMENTS -- 100.4% 568,708,309
(Cost $404,086,580) +
Other Assets/
(Liabilities) - (0.4%) (2,545,251)
-------------
NET ASSETS -- 100.0% $566,163,058
-------------
</TABLE>
Notes to Portfolio of Investments
+ Aggregate cost for Federal tax purposes (Note 7)
++ Non-income producing security.
The accompanying notes are an integral part of the financial statements. 53
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Small Cap Value Equity - Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Statement of June 30, 1997
Assets and (Unaudited)
Liabilities ----------------
<S> <C>
Assets:
Investments, at value (cost $360,676,948) (Note 2) ..... $ 525,298,677
Short-term investments, at amortized cost (Note 2) ..... 43,409,632
----------------
Total Investments .................................... 568,708,309
Cash ................................................... 839
Receivables from:
Investments sold ..................................... 446,235
Fund shares sold ..................................... 1,952,959
Interest and dividends ............................... 553,997
----------------
Total assets ...................................... 571,662,339
----------------
Liabilities:
Payables for:
Investments purchased ................................ 4,764,297
Fund shares redeemed ................................. 421,324
Directors' fees and expenses (Note 3) ................ 5,317
Affiliates (Note 3):
Investment management fees ........................ 254,735
Administration fees ............................... 40,085
Service and distribution fees ..................... 302
Accrued expenses and other liabilities ................. 13,221
----------------
Total liabilities ................................. 5,499,281
----------------
Net assets ............................................. $ 566,163,058
================
Net assets consist of:
Paid-in capital ........................................ $ 372,384,505
Undistributed net investment income .................... 2,631,716
Accumulated net realized gain on investments ........... 26,525,108
Net unrealized appreciation on investments ............. 164,621,729
----------------
$ 566,163,058
================
Net assets:
Class 1 ................................................ $ 164,885
================
Class 2 ................................................ $ 167,340
================
Class 3 ................................................ $ 168,863
================
Class 4 ................................................ $ 565,661,970
================
Shares outstanding:
Class 1 ................................................ 10,666
================
Class 2 ................................................ 10,767
================
Class 3 ................................................ 10,837
================
Class 4 ................................................ 36,265,588
================
Net asset value, offering price and
redemption price per share:
Class 1 ................................................ $ 15.46
================
Class 2 ................................................ $ 15.54
================
Class 3 ................................................ $ 15.58
================
Class 4 ................................................ $ 15.60
================
</TABLE>
54 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Small Cap Value Equity - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months ended
June 30, 1997
Statement of (Unaudited)
Operations -------------
Investment income:
<S> <C>
Dividends .............................................................. $ 3,447,513
Interest ............................................................... 500,472
-------------
Total investment income $ 3,947,985
-------------
Expenses (Note 1):
Investment management fees (Note 3) .................................... 1,324,751
Custody fees ........................................................... 23,791
Audit and legal fees ................................................... 6,172
Directors' fees (Note 3) ............................................... 10,526
Fees waived by the investment manager (Note 3) ......................... (65,671)
-------------
1,299,569
Administration fees (Note 3):
Class 1 .............................................................. 417
Class 2 .............................................................. 386
Class 3 .............................................................. 242
Class 4 .............................................................. 207,434
Distribution and service fees (Note 3):
Class 1 .............................................................. 473
Class 2 .............................................................. 111
-------------
Net expenses ........................................................ 1,508,632
-------------
Net investment income ............................................... 2,439,353
-------------
Realized and unrealized gain (loss):
Net realized gain on investment transactions ........................ 21,552,734
Net change in unrealized appreciation (depreciation) on
investments ....................................................... 53,212,161
-------------
Net realized and unrealized gain .................................... 74,764,895
-------------
Net increase in net assets resulting from operations ................... $ 77,204,248
=============
</TABLE>
The accompanying notes are an integral part of the financial statements. 55
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Small Cap Value Equity - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months ended
Statements of June 30, 1997 Year ended
Changes in Net (Unaudited) December 31, 1996
Assets ---------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income ...................................... $ 2,439,353 $ 10,013,929
Net realized gain on investment transactions ............... 21,552,734 15,188,213
Net change in unrealized appreciation (depreciation)
on investments ............................................ 53,212,161 63,151,095
---------------- -----------------
Net increase in net assets resulting from operations ...... 77,204,248 88,353,237
---------------- -----------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1 .................................................... -- (1,430)
Class 2 .................................................... -- (2,382)
Class 3 .................................................... -- (2,845)
Class 4 .................................................... -- (9,914,239)
---------------- -----------------
Total distributions from net investment income ............ -- (9,920,896)
---------------- -----------------
From net realized gains:
Class 1 .................................................... -- (3,230)
Class 2 .................................................... -- (3,240)
Class 3 .................................................... -- (3,251)
Class 4 .................................................... -- (10,172,978)
---------------- -----------------
Total distributions from net realized gains ............... -- (10,182,699)
---------------- -----------------
Net fund share transactions (Note 5):
Class 1 .................................................... -- (49,286)
Class 2 .................................................... -- 5,622
Class 3 .................................................... -- 6,096
Class 4 .................................................... 31,590,427 8,348,780
---------------- -----------------
Increase in net assets from net fund share transactions ... 31,590,427 8,311,212
---------------- -----------------
Total increase in net assets ............................... 108,794,675 76,560,854
Net assets:
Beginning of period ........................................ 457,368,383 380,807,529
---------------- -----------------
End of period (including undistributed net investment income
of $2,631,716 and $192,363, respectively) ................. $ 566,163,058 $ 457,368,383
================ =================
</TABLE>
56 The accompanying notes are an intrgral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Small Cap Value Equity - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Financial Highlights
(For a share outstanding throughout each period)
Class 1
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.39 $ 11.40 $ 9.69 $ 10.00
------------ ------------ ------------ ------------
Income (loss) from investment operations:
Net investment income (0.01) 0.21 0.06 0.02
Net realized and unrealized gain (loss) on investments 2.08 2.23 1.74 (0.31)
------------ ------------ ------------ ------------
Total income (loss) from investment operations 2.07 2.44 1.80 (0.29)
------------ ------------ ------------ ------------
Less distributions to shareholders:
From net investment income -- (0.14) (0.09) (0.02)
From net realized gains -- (0.31) -- --
------------ ------------ ------------ ------------
Total distributions -- (0.45) (0.09) (0.02)
------------ ------------ ------------ ------------
Net asset value, end of period $ 15.46 $ 13.39 $ 11.40 $ 9.69
============ ============ ============ ============
Total Return 15.46% 21.43% 18.58% (2.89)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $165 $143 $172 $99
Net expenses to average daily net assets# 1.76%* 1.75% 1.75% 1.75%*
Net investment income to average daily net assets (0.13)%* 1.56% 0.63% 1.14%*
Portfolio turnover rate 17% 28% 28% 4%
Average broker commission rate (a) $ 0.0543 $ 0.0585 N/A N/A
#Computed after giving effect to the voluntary partial
waiver of management fee by MassMutual, which terminated
May 1, 1997. Without this partial waiver of fees by
MassMutual, the ratio of expenses to average daily net
assets would have been: 1.79%* 1.79% 1.79% 1.81%*
<CAPTION>
Class 2
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.42 $ 11.44 $ 9.70 $ 10.00
------------ ------------ ------------ ------------
Income (loss) from investment operations:
Net investment income 0.03 0.22 0.13 0.03
Net realized and unrealized gain (loss) on investments 2.09 2.30 1.74 (0.30)
------------ ------------ ------------ ------------
Total income (loss) from investment operations 2.12 2.52 1.87 (0.27)
------------ ------------ ------------ ------------
Less distributions to shareholders:
From net investment income -- (0.23) (0.13) (0.03)
From net realized gains -- (0.31) -- --
------------ ------------ ------------ ------------
Total distributions -- (0.54) (0.13) (0.03)
------------ ------------ ------------ ------------
Net asset value, end of period $ 15.54 $ 13.42 $ 11.44 $ 9.70
============ ============ ============ ============
Total Return 15.80% 22.07% 19.25% (2.72)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $167 $145 $118 $99
Net expenses to average daily net assets# 1.21%* 1.20% 1.20% 1.20%*
Net investment income to average daily net assets 0.42%* 1.81% 1.19% 1.69%*
Portfolio turnover rate 17% 28% 28% 4%
Average broker commission rate (a) $ 0.0543 $ 0.0585 N/A N/A
#Computed after giving effect to the voluntary partial
waiver of management fee by MassMutual, which terminated
May 1, 1997. Without this partial waiver of fees by
MassMutual, the ratio of expenses to average daily net
assets would have been: 1.24%* 1.24% 1.24% 1.26%
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
(a)Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares purchased
and sold during the fiscal year for which commissions were charged. For fiscal
years beginning on or after September 1, 1995, a Fund is required to disclose
its average commission rate per share for security trades on which commissions
are charged.
The accompanying notes are an integral part of the financial statements. 57
<PAGE>
- --------------------------------------------------------------------------------
MassMutual Small Cap Value Equity - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Financial Highlights
(For a share outstanding throughout each period)
Class 3
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.44 $ 11.44 $ 9.70 $ 10.00
------------ ------------ ------------ ------------
Income (loss) from investment operations:
Net investment income 0.05 0.27 0.16 0.03
Net realized and unrealized gain (loss) on investments 2.09 2.31 1.74 (0.30)
------------ ------------ ------------ ------------
Total income (loss) from investment operations 2.14 2.58 1.90 (0.27)
------------ ------------ ------------ ------------
Less distributions to shareholders:
From net investment income -- (0.27) (0.16) (0.03)
From net realized gains -- (0.31) -- --
------------ ------------ ------------ ------------
Total distributions -- (0.58) (0.16) (0.03)
------------ ------------ ------------ ------------
Net asset value, end of period $ 15.58 $ 13.44 $ 11.44 $ 9.70
============ ============ ============ ============
Total Return 15.92% 22.64% 19.62% (2.68)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $169 $146 $119 $99
Net expenses to average daily net assets# 0.86%* 0.85% 0.85% 0.85%*
Net investment income to average daily net assets 0.77%* 2.16% 1.54% 2.09%*
Portfolio turnover rate 17% 28% 28% 4%
Average broker commission rate (a) $ 0.0543 $ 0.0585 N/A N/A
#Computed after giving effect to the voluntary
partial waiver of management fee by MassMutual,
which terminated May 1, 1997. Without this
partial waiver of fees by MassMutual,
the ratio of expenses to average daily net
assets would have been: 0.89%* 0.89% 0.89% 0.91%*
<CAPTION>
Class 4
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.43 $ 11.44 $ 9.69 $ 10.00
------------ ------------ ------------ ------------
Income (loss) from investment operations:
Net investment income 0.07 0.31 0.19 0.04
Net realized and unrealized gain (loss) on investments 2.10 2.29 1.75 (0.31)
------------ ------------ ------------ ------------
Total income (loss) from investment operations 2.17 2.60 1.94 (0.27)
------------ ------------ ------------ ------------
Less distributions to shareholders:
From net investment income -- (0.30) (0.19) (0.04)
From net realized gains -- (0.31) -- --
------------ ------------ ------------ ------------
Total distributions -- (0.61) (0.19) (0.04)
------------ ------------ ------------ ------------
Net asset value, end of period $ 15.60 $ 13.43 $ 11.44 $ 9.69
============ ============ ============ ============
Total Return@ 16.16% 22.82% 20.01% (2.66)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $565,662 $456,935 $380,398 $310,789
Net expenses to average daily net assets# 0.6257%* 0.6110% 0.6110% 0.6110%*
Net investment income to average daily net assets 1.01%* 2.40% 1.78% 1.78%*
Portfolio turnover rate 17% 28% 28% 4%
Average broker commission rate (a) $ 0.0543 $ 0.0585 N/A N/A
#Computed after giving effect to the voluntary
partial waiver of management fee by MassMutual,
which terminated as of May 1, 1997. Without this
partial waiver of management fees by MassMutual,
the ratio of expenses to average daily net assets
would have been: 0.6530%* 0.6546% 0.6553% 0.6681%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
(a)Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were charged.
For fiscal years beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged.
@ Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
58 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual International Equity Fund - Portfolio of Investments
- --------------------------------------------------------------------------------
Portfolio of Investments (Unaudited)
June 30, 1997
<TABLE>
<CAPTION>
Number of
Shares Market Value
------ ------------
<S> <C> <C>
EQUITIES -- 98.9%
Aerospace & Defense -- 0.6%
Rolls-Royce PLC 750,000 $ 2,858,400
--------------
Automobiles -- 1.8%
Orbital Engine Corp.
Ltd. ++ 2,000,000 1,318,400
Porsche AG,
Preference 6,000 7,816,201
--------------
9,134,601
--------------
Banking -- 9.2%
ABN Amro Holding
NV 163,184 3,048,261
Banco Bradesco SA,
Preference 292,260,951 2,922,610
Banco de Galicia y
Buenos Aires SA de
CV, Sponsored ADR 127,000 3,349,625
Bank of Scotland 4,647 29,853
Credit Suisse Group 80,000 10,289,120
HSBC Holdings PLC 161,214 4,848,511
Merita Ltd., Cl A 1,399,600 4,661,508
Societe Generale 100,000 11,173,680
Turkiye Garanti
Bankasi (New), ADR 560,000 2,112,375
Unibanco-Uniao de
Banco Brasileiros SA,
Sponsored GDR ++ 140,000 5,197,500
--------------
47,633,043
--------------
Computer Hardware -- 3.5%
Canon, Inc. 177,000 4,825,994
Eidos PLC ++ 225,000 2,752,335
Imagineer Co. Ltd. 205,000 6,897,225
PT Multipolar
Corporation 4,866,000 3,401,821
--------------
17,877,375
--------------
Computer Software -- 4.8%
JBA Holdings PLC 525,000 7,689,045
Misys PLC 450,872 10,137,677
SAP AG, Preference 33,600 6,931,969
--------------
24,758,691
--------------
Diversified Financial -- 2.9%
Cie Financiere de
Paribas, Series A 150,000 10,373,130
ING Groep NV 100,000 4,618,940
--------------
14,992,070
--------------
Electric Utilities -- 0.8%
Capex SA, GDR 76,000 $ 1,450,840
Electricidade de
Portugal SA 65,000 1,194,317
First Philippine
Holdings Corp., B
Shares 1,250,000 1,729,750
--------------
4,374,907
--------------
Electrical Equipment & Electronics -- 5.1%
Austria Mikro
Systeme International
AG 59,150 5,017,204
Getronics NV 40,166 1,299,695
Keyence Corp. 22,000 3,268,373
LEM Holdings SA 11,192 2,456,657
Rohm Co. 40,000 4,124,788
SGS-Thomson
Microelectronics NV ++ 58,800 4,704,000
Sony Corporation 60,000 5,238,132
--------------
26,108,849
--------------
Energy Services & Producers -- 5.3%
Cie Generale de
Geophysique SA ++ 54,000 5,261,166
Cie Generale de
Geophysique SA,
Sponsored ADR ++ 350,000 6,737,500
Coflexip SA,
Sponsored ADR 200,000 6,025,000
PTT Exploration & Production Public Co.
Ltd. 93,000 1,349,849
Smedvig AS 165,000 4,124,538
Smedvig AS, Series B 160,000 3,933,984
--------------
27,432,037
--------------
Food & Beverage -- 1.2%
Hellenic Bottling Co.,
SA 70,000 2,589,895
Remy Cointreau 120,000 2,884,032
Serm Suk Public Co.
Ltd. 50,000 617,640
--------------
6,091,567
--------------
Healthcare/Drugs -- 12.9%
Altana AG 15,000 $ 16,097,243
Ares-Serono Group, Cl
B 7,550 10,953,286
Biocompatibles
International PLC ++ 483,258 10,520,043
Glaxo Wellcome PLC 305,000 6,307,065
Novartis AG 4,264 6,826,611
Oxigene, Inc. ++ 26,400 863,795
Takeda Chemical
Industries Ltd. 350,000 9,848,790
Torii Pharmaceutical
Co. Ltd. 228,800 5,378,585
--------------
66,795,418
--------------
Healthcare/Supplies & Services -- 2.4%
Medical Invest
Svenska AB Class A ++ 114,300 4,582,413
Medical Invest
Svenska AB Class B ++ 39,755 1,624,672
Nichii Gakkan
Company 110,000 6,152,223
--------------
12,359,308
--------------
Household Products -- 0.1%
Srithai Superware Co.
Ltd. 169,000 391,421
Industrial Services -- 8.7%
Axime ++ 51,000 6,037,365
Bau Holdings AF,
Preference 170,611 9,267,334
Bau Holdings AG 21,501 1,551,942
Boskalis Westminster 351,631 6,909,408
Fugro NV 220,000 5,670,324
Internatio-Muller NV 102,500 3,238,231
Ordina Beheer NV ++ 208,000 3,768,648
PT Citra Marga
Nusaphala Persada 3,270,000 2,958,059
VBH Holding AG 125,000 2,711,563
Vedior NV-CVA ++ 100,000 2,648,870
--------------
44,761,744
--------------
</TABLE>
(Continued)
The accompanying notes are an integral part of the financial statements. 61
<PAGE>
- --------------------------------------------------------------------------------
MassMutual International Equity Fund - Portfolio of Investments (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Market Value
------ ------------
<S> <C> <C>
Insurance -- 7.0%
Marschollek,
Lautenschlaeger und
Partner-VO, Non-vtg.
Preferred Stock 44,000 $ 10,605,241
Norwich Union PLC ++ 550,000 2,910,820
Ockham Holdings PLC 1,000,000 1,331,400
Reinsurance Australia
Corp. Ltd. 2,910,000 8,741,640
Skandia Forsakrings
AB 338,400 12,472,713
--------------
36,061,814
--------------
Leisure & Entertainment -- 5.1%
Lusomundo SGPS SA ++ 528,500 4,780,177
Nintendo Co. Ltd. 255,000 21,392,970
--------------
26,173,147
--------------
Manufacturing -- 3.6%
Chargeurs
International SA 168,000 9,689,215
Powerscreen
International PLC 349,900 3,811,391
Stork NV 123,157 5,028,550
--------------
18,529,156
--------------
Metals & Mining -- 1.6%
Cia de Minas
Buenaventura SA,
Sponsored ADR 200,000 3,937,500
M. I. M. Holdings Ltd. 3,000,000 4,404,900
--------------
8,342,400
--------------
Non-Durable Household Goods -- 1.6%
Wella AG 2,000 1,342,872
Wella AG Preference 10,000 6,760,268
--------------
8,103,140
--------------
Oil & Gas -- 4.1%
Belle Corp. ++ 7,500,000 2,189,250
Expro International
Group PLC 875,000 6,662,338
Novus Petroleum
Limited 2,500,000 8,521,500
Petroleo Brasileiro
SA, Preference 14,733,000 4,036,842
--------------
21,409,930
--------------
Real Estate -- 1.2%
Brazil Realty SA,
GDR 144A 62,000 $ 1,537,687
IRSA Inversiones y
Representaciones, SA 1,014,404 4,443,597
--------------
5,981,284
--------------
Retail -- 0.6%
Fila Holding SPA,
Sponsored ADR 58,000 1,939,375
PT Matahari Putra
Prima 700,000 1,403,454
--------------
3,342,829
--------------
Specialty Retail -- 2.0%
Adidas AG 42,200 4,722,429
FamilyMart Co. 66,000 3,241,451
Giordano International
Ltd. 3,500,000 2,394,350
--------------
10,358,230
--------------
Telecommunications -- 2.8%
Korea Mobile
Telecommunications
Corp. 4,429 3,248,056
Millicom International
Cellular SA ++ 100,000 4,775,000
Tandberg Television
ASA ++ 300,000 2,233,350
Telecom Italia Mobile
SpA 1,299,900 4,201,797
--------------
14,458,203
--------------
Telephone Utilities -- 7.8%
CPT Telefonica del
Peru SA, Cl. B 1,600,000 4,204,160
Telecomunicacoes
Brasileiras SA,
Sponsored ADR 120,000 18,209,992
Telecomunicacoes de
Sao Paulo SA ++ 299,993 88,048
Telecomunicacoes de
Sao Paulo SA,
Preference 12,522,000 4,070,902
Telecomunicacoes do
Rio de Janeiro SA,
Preference 40,357,620 6,033,464
Telefonica de Espana,
ADS 150,000 4,344,855
Videsh Sanchar Nigam
Ltd., GDR ++ 160,000 3,172,000
--------------
40,123,421
--------------
Transportation -- 2.2%
Argonaut AB-B Shares ++ 1,100,000 $ 1,991,550
Frontline AB ++ 1,075,000 3,684,133
MIF Ltd. ++ 391,000 5,714,773
--------------
11,390,456
--------------
TOTAL EQUITIES 509,843,441
--------------
(Cost $410,706,769)
RIGHTS -- 0.5%
Computer Hardware -- 0.4%
PT Multipolar
Corporation ++ 10,778,060 2,216,795
--------------
Industrial Services -- 0.1%
PT Citra Marga
Nusaphala Persada ++ 3,270,000 672,839
--------------
TOTAL RIGHTS 2,889,634
--------------
(Cost $2,889,179)
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS -- 2.0%
Commercial Paper
Associates Corporation
of North America
6.250% 7/01/1997 $10,500,000 $ 10,500,000
--------------
TOTAL SHORT-TERM
INVESTMENTS 10,500,000
--------------
(At Amortized Cost)
TOTAL INVESTMENTS -- 101.4% 523,233,075
(Cost $424,095,948)+
Other Assets/
(Liabilities) - (1.4%) (7,059,212)
--------------
NET ASSETS -- 100.0% $516,173,863
--------------
</TABLE>
Notes to Portfolio of Investments
++Non-income producing security
+Aggregate cost for Federal tax purposes (Note 7)
ADR: American Depository Receipt
GDR: Global Depository Receipt
ADS: American Depository Shares
144A: Securities exempt from registration under rule 144A of the Securities Act
of 1933. The Securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
62 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual International Equity Fund - Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, 1997
(Unaudited)
---------------
Statement of Assets and Liabilities
<S> <C>
Assets:
Investments, at value (cost $413,595,948) (Note 2)...... $ 512,733,075
Short-term investments, at amortized cost (Note 2)...... 10,500,000
Total Investments..................................... 523,233,075
---------------
Cash.................................................... 297,491
Foreign currency, at value (cost $3,368,844)............ 3,524,157
Receivables from:
Investments sold...................................... 11,567,046
Fund shares sold...................................... 4,045,977
Interest and dividends................................ 1,009,538
Foreign taxes withheld................................ 475,673
---------------
Total assets....................................... 544,152,957
---------------
Liabilities:
Payables for:
Investments purchased................................. 24,152,987
Open forward foreign currency contracts (Note 2)...... 2,866,843
Fund shares redeemed.................................. 500,320
Directors' fees and expenses (Note 3)................. 5,318
Affiliates (Note 3):
Investment management fees......................... 361,138
Administration fees................................ 41,464
Service and distribution fees...................... 248
Accrued expenses and other liabilities.................. 50,776
---------------
Total liabilities.................................. 27,979,094
---------------
Net assets.............................................. $ 516,173,863
===============
Net assets consist of:
Paid-in capital......................................... $ 413,449,144
Undistributed net investment income..................... 2,786,109
Accumulated net realized gain on investments and
foreign currency translations......................... 3,725,014
Net unrealized appreciation on investments, forward
foreign currency contracts, foreign currency and
other assets and liabilities.......................... 96,213,596
---------------
$ 516,173,863
===============
Net assets:
Class 1................................................. $ 130,571
===============
Class 2................................................. $ 132,483
===============
Class 3................................................. $ 133,169
===============
Class 4................................................. $ 515,777,640
===============
Shares outstanding:
Class 1................................................. 10,176
===============
Class 2................................................. 10,281
===============
Class 3................................................. 10,315
===============
Class 4................................................. 39,835,590
===============
Net asset value, offering price and
redemption price per share:
Class 1................................................. $ 12.83
===============
Class 2................................................. $ 12.89
===============
Class 3................................................. $ 12.91
===============
Class 4................................................. $ 12.95
===============
</TABLE>
The accompanying notes are an integral part of these financial statements. 63
<PAGE>
- --------------------------------------------------------------------------------
MassMutual International Equity Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months ended
June 30, 1997
(Unaudited)
----------------
Statement of Operations
<S> <C>
Investment income:
Dividends (net of withholding tax of $538,484)...... $ 4,722,527
Interest............................................ 173,527
----------------
Total investment income........................... 4,896,054
----------------
Expenses (Note 1):
Investment management fees (Note 3)................. 1,804,870
Custody fees........................................ 195,684
Audit and legal fees................................ 5,235
Directors' fees (Note 3)............................ 10,526
Fees waived by the investment manager (Note 3)...... (50,753)
----------------
1,965,562
Administration fees (Note 3):
Class 1........................................... 355
Class 2........................................... 330
Class 3........................................... 270
Class 4........................................... 206,216
Distribution and service fees (Note 3):
Class 1........................................... 388
Class 2........................................... 91
----------------
Net operating expenses......................... 2,173,212
----------------
Interest Expense (Note 8)........................... 50,711
----------------
Net investment income.......................... 2,672,131
----------------
Realized and unrealized gain (loss) from investments
and foreign currency:
Net realized gain on:
Investment transactions........................... 12,990,196
Foreign currency transactions..................... 3,090,300
Net realized gain............................... 16,080,496
----------------
Net change in unrealized appreciation
(depreciation) on:
Investments....................................... 51,844,408
Translation of assets and liabilities in foreign
currencies....................................... (3,533,548)
Net unrealized gain............................... 48,310,860
----------------
Net realized and unrealized gain from investments
and foreign currency............................. 64,391,356
----------------
Net increase in net assets resulting from operations $ 67,063,487
================
</TABLE>
64 The accompanying notes are an integral part of the financial statements.
<PAGE>
- --------------------------------------------------------------------------------
MassMutual International Equity Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months ended
June 30, 1997 Year ended
(Unaudited) December 31, 1996
---------------- -----------------
<S> <C> <C>
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets:
Operations:
Net investment income............................................. $ 2,672,131 $ 1,651,003
Net realized gain on investments and foreign
currency transactions............................................ 16,080,496 10,732,352
Net change in unrealized appreciation (depreciation) on
investments and translation of assets and liabilities in
foreign currencies............................................... 48,310,860 36,530,674
---------------- -----------------
Net increase in net assets resulting from operations............ 67,063,487 48,914,029
---------------- -----------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1........................................................... -- (263)
Class 2........................................................... -- (433)
Class 3........................................................... -- (501)
Class 4........................................................... -- (1,825,896)
---------------- -----------------
Total distributions from net investment income................... -- (1,827,093)
---------------- -----------------
In excess of net investment income:
Class 1........................................................... -- (794)
Class 2........................................................... -- (1,308)
Class 3........................................................... -- (1,513)
Class 4........................................................... -- (5,515,423)
---------------- -----------------
Total distributions in excess of net investment income........... -- (5,519,038)
---------------- -----------------
Net fund share transactions (Note 5):
Class 1........................................................... -- (13,956)
Class 2........................................................... -- 1,742
Class 3........................................................... -- 2,018
Class 4........................................................... 92,458,564 94,070,522
---------------- -----------------
Increase in net assets from net fund share transactions.......... 92,458,564 94,060,326
---------------- -----------------
Total increase in net assets...................................... 159,522,051 135,628,224
Net assets:
Beginning of period............................................... 356,651,812 221,023,588
---------------- -----------------
End of period (including undistributed net investment income
of $2,786,109 and $113,978, respectively)........................ $ 516,173,863 $ 356,651,812
================ =================
</TABLE>
The accompanying notes are an integral part of the financial statements. 65
<PAGE>
- --------------------------------------------------------------------------------
MassMutual International Equity Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 1
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.07 $ 9.54 $ 9.25 $ 10.00
----------- ----------- ----------- -----------
Income (loss) from investment operations:
Net investment income 0.00 (0.07) (0.03) (0.02)
Net realized and unrealized gain (loss) on investments
and foreign currency 1.76 1.70 0.40 (0.73)
----------- ----------- ----------- -----------
Total income (loss) from investment operations 1.76 1.63 0.37 (0.75)
----------- ----------- ----------- -----------
Less distributions to shareholders:
From net investment income -- (0.10) -- --
In excess of net investment income -- -- (0.08) --
----------- ----------- ----------- -----------
Total distributions -- (0.10) (0.08) --
----------- ----------- ----------- -----------
Net asset value, end of period $ 12.83 $ 11.07 $ 9.54 $ 9.25
=========== =========== =========== ===========
Total Return 15.90% 17.09% 3.96% (7.50)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $131 $113 $112 $93
Net expenses to average daily net assets# 2.17%* 2.15% 2.15% 2.15%*
Net investment income to average daily net assets 0.03%* (0.51)% (0.40)% (1.10)%*
Portfolio turnover rate 36% 58% 121% 18%
Average broker commission rate (a) $ 0.0058 $ 0.0254 N/A N/A
#Computed after giving effect to the voluntary partial
waiver of management fee by MassMutual, which terminated
May 1, 1997. Without this partial waiver of fees by
MassMutual, the ratio of expenses to average daily
net assets would have been: 2.19%* 2.22% 2.24% 2.24%*
</TABLE>
<TABLE>
<CAPTION>
Class 2
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.09 $ 9.56 $ 9.26 $ 10.00
----------- ----------- ----------- -----------
Income (loss) from investment operations:
Net investment income 0.03 0.00 0.02 (0.01)
Net realized and unrealized gain (loss) on investments
and foreign currency 1.77 1.70 0.40 (0.73)
----------- ----------- ----------- -----------
Total income (loss) from investment operations 1.80 1.70 0.42 (0.74)
----------- ----------- ----------- -----------
Less distributions to shareholders:
From net investment income -- (0.17) (0.02) --
In excess of net investment income -- -- (0.10) --
----------- ----------- ----------- -----------
Total distributions -- (0.17) (0.12) --
----------- ----------- ----------- -----------
Net asset value, end of period $ 12.89 $ 11.09 $ 9.56 $ 9.26
=========== =========== =========== ===========
Total Return 16.23% 17.85% 4.52% (7.40)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $132 $114 $97 $93
Net expenses to average daily net assets# 1.62%* 1.60% 1.60% 1.60%*
Net investment income to average daily net assets 0.58%* 0.02% 0.19% (0.55)%*
Portfolio turnover rate 36% 58% 121% 18%
Average broker commission rate (a) $ 0.0058 $ 0.0254 N/A N/A
#Computed after giving effect to the voluntary partial
waiver of management fee by MassMutual, which terminated
May 1, 1997. Without this partial waiver of fees by
MassMutual, the ratio of expenses to average daily
net assets would have been: 1.64%* 1.67% 1.69% 1.69%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
(a)Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares purchased
and sold during the fiscal year for which commissions were charged. For fiscal
years beginning on or after September 1, 1995, a Fund is required to disclose
its average commission rate per share for security trades on which commissions
are charged. The average broker commission rate will vary depending on the
markets in which trades are executed.
The accompanying notes are an integral part of the financial statements.
66
<PAGE>
- --------------------------------------------------------------------------------
MassMutual International Equity Fund - Financial Statements (Continued)
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 3
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.10 $ 9.57 $ 9.27 $ 10.00
------------- ------------- ------------- -------------
Income (loss) from investment operations:
Net investment income 0.05 0.03 0.04 (0.00)
Net realized and unrealized gain (loss) on investments
and foreign currency 1.76 1.70 0.40 (0.73)
------------- ------------- ------------- -------------
Total income (loss) from investment operations 1.81 1.73 0.44 (0.73)
------------- ------------- ------------- -------------
Less distributions to shareholders:
From net investment income -- (0.20) (0.05) --
In excess of net investment income -- -- (0.09) --
------------- ------------- ------------- -------------
Total distributions -- (0.20) (0.14) --
------------- ------------- ------------- -------------
Net asset value, end of period $ 12.91 $ 11.10 $ 9.57 $ 9.27
============= ============= ============= =============
Total Return 16.31% 18.11% 4.78% (7.30)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $133 $114 $97 $93
Net expenses to average daily net assets# 1.37%* 1.35% 1.35% 1.35%*
Net investment income to average daily net assets 0.83%* 0.27% 0.45% (0.30)%*
Portfolio turnover rate 36% 58% 121% 18%
Average broker commission rate (a) $ 0.0058 $ 0.0254 N/A N/A
#Computed after giving effect to the voluntary partial
waiver of management fee by MassMutual, which terminated
May 1, 1997. Without this partial waiver of fees by
MassMutual, the ratio of expenses to average daily
net assets would have been: 1.39%* 1.42% 1.44% 1.44%*
<CAPTION>
Class 4
-------
Six months ended
6/30/97 Year ended Year ended Period ended
(Unaudited) 12/31/96 12/31/95 12/31/94**
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.11 $ 9.58 $ 9.28 $ 10.00
------------- ------------- ------------- -------------
Income (loss) from investment operations:
Net investment income 0.07 0.06 0.07 0.00
Net realized and unrealized gain (loss) on investments
and foreign currency 1.77 1.71 0.41 (0.72)
------------- ------------- ------------- -------------
Total income (loss) from investment operations 1.84 1.77 0.48 (0.72)
------------- ------------- ------------- -------------
Less distributions to shareholders:
From net investment income -- (0.24) (0.07) --
In excess of net investment income -- -- (0.11) --
------------- ------------- ------------- -------------
Total distributions -- (0.24) (0.18) --
------------- ------------- ------------- -------------
Net asset value, end of period $ 12.95 $ 11.11 $ 9.58 $ 9.28
============= ============= ============= =============
Total Return@ 16.56% 18.51% 5.13% (7.20)%
Ratios / Supplemental Data:
Net assets, end of period (000's) $515,778 $356,311 $220,718 $150,199
Net expenses to average daily net assets# 1.0229%* 1.0020% 1.0020% 1.0020%*
Net investment income to average daily net assets 1.26%* 0.59% 0.76% 0.04%*
Portfolio turnover rate 36% 58% 121% 18%
Average broker commission rate (a) $ 0.0058 $ 0.0254 N/A N/A
#Computed after giving effect to the voluntary partial
waiver of management fee by MassMutual, which terminated
May 1, 1997. Without this partial waiver of fees by
MassMutual, the ratio of expenses to average daily
net assets would have been: 1.0468%* 1.0718% 1.0920% 1.0877%*
</TABLE>
*Annualized
**For the period from October 3, 1994 (commencement of operations) through
December 31, 1994.
(a)Average commission rate paid is computed by dividing the total amount of
commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were charged.
For fiscal years beginning on or after September 1, 1995, a Fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged. The average broker commission rate will vary
depending on the markets in which trades are executed.
@ Employee retirement benefit plans that invest plan assets in the Separate
Investment Accounts (SIAs) may be subject to certain charges as set forth in
their respective Plan Documents. Total return figures would be lower for the
periods presented if they reflected these charges.
The accompanying notes are an integral part of the financial statements. 67
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
1. The Trust
MassMutual Institutional Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end, diversified
management investment company. The Trust is organized under the laws of the
Commonwealth of Massachusetts as a Massachusetts business trust pursuant to an
Agreement and Declaration of Trust dated May 28, 1993, as amended. The Trust
consists of seven separate series of shares (each individually referred to as a
"Fund" or collectively as the "Funds"), each having four classes of shares:
Class 1, Class 2, Class 3 and Class 4. Class 1, Class 2 and Class 3 shares of
each Fund are offered primarily to employer-sponsored defined contribution plans
that satisfy the qualification requirements of Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). Class 4 shares of each Fund are
available only to separate investment accounts ("SIAs") of Massachusetts Mutual
Life Insurance Company ("MassMutual") in which corporate qualified plans,
including defined contribution plans and defined benefit plans, are permitted to
invest pursuant to the issuance of group annuity contracts. The Funds are
MassMutual Prime Fund ("Prime Fund"), MassMutual Short-Term Bond Fund
("Short-Term Bond Fund"), MassMutual Core Bond Fund ("Core Bond Fund"),
MassMutual Balanced Fund ("Balanced Fund"), MassMutual Value Equity Fund ("Value
Equity Fund"), MassMutual Small Cap Value Equity Fund ("Small Cap Value Equity
Fund"), and MassMutual International Equity Fund ("International Equity Fund"),
all of which commenced operations on October 3, 1994.
2. Significant Accounting Policies
The following is a summary of significant accounting policies followed
consistently by each Fund in the preparation of the financial statements in
conformity with generally accepted accounting principles. The preparation of the
financial statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates.
Investment Valuation
Equity securities are valued on the basis of valuations furnished by a pricing
service, authorized by the Board of Trustees ("Trustees"), which provides the
last reported sale price for securities listed on a national securities exchange
or on the NASDAQ national market system, or in the case of over-the-counter
securities not so listed, the last reported bid price. Debt securities (other
than short-term obligations with a remaining maturity of sixty days or less) are
valued on the basis of valuations furnished by a pricing service, authorized by
the Trustees, which determines valuations taking into account appropriate
factors such as institutional-size trading in similar groups of securities,
yield, quality, coupon rate, maturity, type of issue, trading characteristics
and other market data. Money market obligations with a remaining maturity of
sixty days or less are valued at either amortized cost or at original cost plus
accrued interest, whichever approximates current market value. All other
securities and other assets, including debt securities for which the prices
supplied by a pricing agent are deemed by MassMutual not to be representative of
market values, and including restricted securities and securities for which no
market quotation is available, are valued at fair value in accordance with
procedures approved by and determined in good faith by the Trustees, although
the actual calculation may be done by others.
Portfolio securities traded on more than one national securities exchange are
valued at the last price on the business day as of which such value is being
determined at the close of the exchange representing the principal market for
such securities. All assets and liabilities expressed in foreign currencies will
be converted into U.S. dollars at the mean between the buying and selling rates
of such currencies against U.S. dollars last quoted by any major bank. If such
quotations are not available, the rate of exchange will be determined in
accordance with policies established by the Trustees.
68
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
Accounting for Investments
Investment transactions are accounted for on the trade date. Realized gains and
losses on sales of investments and unrealized appreciation and depreciation of
investments are computed on the specific identification cost method. Interest
income, adjusted for amortization of discounts and premiums on investments, is
earned from the settlement date and is recorded on the accrual basis. Dividend
income is recorded on the ex-dividend date.
Federal Income Tax
It is each Fund's intent to continue to comply with the provisions of subchapter
M of the Code applicable to a regulated investment company. Under such
provisions, the Funds will not be subject to federal income taxes on their
ordinary income and net realized capital gain to the extent they are distributed
or deemed to have been distributed to their shareholders. Therefore, no Federal
income tax provision is required.
Dividends and Distributions to Shareholders
Dividends from net investment income and distributions of any net realized
capital gains of each Fund are declared and paid annually and at other times as
may be required to satisfy tax or regulatory requirements. Distributions to
shareholders are recorded on the ex-dividend date. Income and capital gain
distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences are
primarily due to investments in forward contracts, passive foreign investment
companies, the deferral of wash sale losses, and paydowns on certain
mortgage-backed securities. As a result, net investment income (loss) and net
realized gain (loss) on investment transactions for a reporting period may
differ significantly from distributions during such period. Accordingly, the
Funds may periodically make reclassifications among certain of their capital
accounts without impacting the net asset value of the Funds.
Foreign Currency Translation
The books and records of the Funds are maintained in U.S. dollars. The market
values of foreign currencies, foreign securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollars
at the mean of the buying and selling rates of such currencies against the U.S.
dollar at the end of each business day. Purchases and sales of foreign
securities and income and expense items are translated at the rates of exchange
prevailing on the respective dates of such transactions. The Funds do not
isolate that portion of the results of operations arising from changes in the
exchange rates from that portion arising from changes in the market prices of
securities.
Net realized foreign currency gains and losses resulting from changes in
exchange rates include foreign currency gains and losses between trade date and
settlement date on investment securities transactions, foreign currency
transactions and the difference between the amounts of dividends recorded on the
books of the Funds and the amount actually received.
Forward Foreign Currency Contracts
Each Fund may enter into forward foreign currency contracts in order to convert
foreign denominated securities or obligations to U.S. dollar denominated
investments. The International Equity Fund may engage in such transactions to
manage the value of portfolio holdings against future movements in certain
foreign currency exchange rates. A forward foreign currency contract is an
agreement between two parties to buy and sell a currency at a set price on a
future date. The market value of a forward currency contract fluctuates with
changes in forward foreign currency exchange rates. Forward foreign currency
contracts are marked to market daily and the change in their value is recorded
by the Funds as an unrealized gain or loss. When a forward foreign currency
contract is extinguished, through delivery or offset by entering into another
forward foreign currency contract, the Funds record a realized gain or loss
equal to the difference between the value of the contract at the time it was
opened and the value of the contract at the time it was extinguished or offset.
Forward foreign currency contracts involve a risk of loss from the potential
inability of counterparties to meet the terms of their contracts and from
unanticipated movements in foreign currency values and interest rates.
69
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
The notional or contractual amounts of these instruments represent the
investments the Funds have in particular classes of financial instruments and do
not necessarily represent the amounts potentially subject to risk. The
measurement of the risk associated with these instruments is meaningful only
when all related and offsetting transactions are considered. A summary of
obligations for the International Equity Fund under these financial instruments
at June 30, 1997 is as follows:
<TABLE>
<CAPTION>
In
Contracts Exchange Unrealized
Settlement to Units of for U.S. Contracts at Appreciation
Date Deliver/Receive Currency Dollars Value (Depreciation)
- --------- ----------------- ---------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C>
BUYS
07/02/97 French Franc 13,258,256 $ 2,276,994 $ 2,258,300 $ (18,694)
07/01/97 Japanese Yen 7,449,428 64,964 65,108 144
07/01/97 Netherlands Guilder 4,986,916 2,566,871 2,545,254 (21,617)
07/01/97 Swedish Krona 4,120,261 535,273 532,857 (2,416)
--------------
(42,583)
--------------
SELLS
07/31/97 Japanese Yen 4,007,200,000 32,316,129 35,141,013 (2,824,884)
07/01/97 Netherlands Guilder 143,992 74,116 73,492 624
--------------
(2,824,260)
--------------
$ (2,866,843)
==============
</TABLE>
Forward Commitments
Each Fund may purchase or sell securities on a "when issued" or delayed delivery
or on a forward commitment basis. The Funds use forward commitments to manage
interest rate exposure or as a temporary substitute for purchasing or selling
particular debt securities. Forward commitments are not used for purposes of
trading. Delivery and payment for securities purchased on a forward commitment
basis can take place a month or more after the date of the transaction. The
Funds instruct the custodian to segregate assets in a separate account with a
current market value at least equal to the amount of its forward purchase
commitments. The price of the underlying security and the date when the
securities will be delivered and paid for are fixed at the time the transaction
is negotiated. The value of the forward commitment is determined by management
using a commonly accepted pricing model and fluctuates based upon changes in the
value of the underlying security and market repurchase rates. Such rates equate
the counterparty's cost to purchase and finance the underlying security to the
earnings received on the security and forward delivery proceeds. The Funds
record on a daily basis the unrealized appreciation/depreciation based upon
changes in the value of the forward commitment. When a forward commitment
contract is closed, the Funds record a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value of the contract at the time it was extinguished. Forward commitments
involve a risk of loss if the value of the security to be purchased declines
prior to the settlement date. The Funds could also be exposed to loss if they
cannot close out their forward commitments because of an illiquid secondary
market, or the inability of counterparties to perform. The Funds monitor
exposure to ensure counterparties are creditworthy and concentration of exposure
is minimized. A summary of open obligations under these forward commitments at
June 30, 1997, is as follows:
<TABLE>
<CAPTION>
Forward Expiration Aggregate
Commitment of Face Value Market Unrealized
Contracts to Buy Contracts of Contracts Cost Value (Depreciation)
---------------- --------- ------------ ---- ----- --------------
<S> <C> <C> <C> <C> <C>
Core Bond Fund
U.S. Treasury Note
5.875% 11/15/1999 August 1997 $ 9,250,000 $ 9,210,977 $ 9,187,378 ($23,599)
Balanced Fund
U.S. Treasury Note
5.875% 11/15/1999 August 1997 $1,900,000 $1,891,984 $1,887,137 ($ 4,847)
</TABLE>
70
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
Allocation of Operating Activity
In maintaining the records for the Funds, the income and expense accounts are
allocated to each class of shares. Investment income, unrealized and realized
gains or losses are prorated among the classes of shares based on the relative
net assets of each. Expenses are allocated to each class of shares depending on
the nature of the expenditures. Administration and distribution and service
fees, which are directly attributable to a class of shares, are charged to that
class' operations. Expenses of the Fund not directly attributable to the
operations of any class of shares or Fund are prorated among the Funds and
classes to which the expense relates based on the relative net assets of each.
Total expenses per class are currently limited to a percentage of average daily
net assets, as discussed in Note 3.
3. Management Fees and Other Transactions With Affiliates
Investment Management Fees
Under an agreement between the Trust and MassMutual, MassMutual is responsible
for providing investment management of each Fund. In return for this service,
MassMutual receives advisory fees monthly based upon each Fund's average daily
net assets at the following annual rates:
<TABLE>
<CAPTION>
<S> <C>
Prime Fund .45%
Short-Term Bond Fund .45%
Core Bond Fund .45%
Balanced Fund .45%
Value Equity Fund .45%
Small Cap Value Equity Fund .55%
International Equity Fund .85%
</TABLE>
MassMutual has entered into investment sub-advisory agreements with two
subsidiaries: David L. Babson & Company, Inc. ("Babson") and HarbourView Asset
Management Corporation ("HarbourView"). These agreements provide that (1)
effective January 1, 1997, Babson will manage the investment and reinvestment of
the assets of the Value Equity Fund, the Small Cap Value Equity Fund and the
Value Equity sector of the Balanced Fund, and (2) HarbourView will manage the
investment and reinvestment of the assets of the International Equity Fund.
Prior to January 1, 1997, Concert Capital Management ("Concert Capital") served
as the investment sub-advisor to the Value Equity Fund, the Small Cap Value
Equity Fund and the Value Equity sector of the Balanced Fund. On January 1,
1996, the employees of Concert Capital became co-employees of Babson. At the
time, both Concert Capital and Babson were wholly-owned subsidiaries of DLB
Acquisition Corporation, a controlled subsidiary of MassMutual. Concert Capital
merged with and into Babson effective December 31, 1996.
MassMutual pays Babson a fee equal to an annual rate of .13% of the average
daily net asset value of the Value Equity Fund and the Value Equity sector of
the Balanced Fund and .25% of the average daily net asset value of the Small Cap
Value Equity Fund. MassMutual pays HarbourView a fee equal to an annual rate of
.50% of the average daily net asset value of the International Equity Fund.
Administration Fees
Under separate administrative and shareholder services agreements between each
Fund and MassMutual, MassMutual provides certain administrative and shareholder
services and bears some class specific administrative expenses. In return for
these services, MassMutual receives an administrative services fee monthly based
upon the average daily net assets of the applicable class of shares of the Fund
at the following annual rates:
<TABLE>
<CAPTION>
Class 1 Class 2 Class 3 Class 4
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Prime Fund .5628% .5128% .3152% .0812%
Short-Term Bond Fund .5568% .5068% .3092% .0782%
Core Bond Fund .5688% .5188% .3212% .0842%
Balanced Fund .5708% .5208% .3232% .0852%
Value Equity Fund .5814% .5314% .3338% .0905%
Small Cap Value Equity Fund .5728% .5228% .3252% .0862%
International Equity Fund .5948% .5448% .4448% .0972%
</TABLE>
71
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
Distribution and Service Fees
OppenheimerFunds Distributor, Inc. ("Oppenheimer") acts as distributor to each
Fund. MML Investor Services, Inc. ("MMLISI") serves as sub-distributor to each
Fund. MassMutual has a controlling interest in OppenheimerFunds, and MMLISI is a
wholly owned subsidiary of MassMutual. Oppenheimer is paid a distribution fee
with respect to Class 1 and Class 2 at the annual rate of .40% and .15%,
respectively, of the value of average daily net assets attributable to those
classes of shares of which a portion is subsequently allocated to MMLISI. The
Funds do not pay any fees directly to MMLISI. MassMutual is also paid a fee for
shareholder services with respect to Class 1 shares of the Funds at the annual
rate of .25% of the value of the average daily net assets of the respective
class of each Fund. These fees are authorized pursuant to separate service and
distribution plans for each of the classes of shares adopted by the Funds
pursuant to Rule 12b-1 under the Investment Company Act and are used by
Oppenheimer to cover expenses primarily intended to result in the sale of those
shares of the Funds.
Expense Limitations
For the period January 1, 1997 to April 30, 1997, MassMutual voluntarily agreed
to waive a portion of its management fee to the extent that the aggregate annual
operating expenses incurred during the year exceed the following percentages of
the average daily net assets:
<TABLE>
<CAPTION>
Class 1 Class 2 Class 3 Class 4
------- ------- ------- -------
<S> <C> <C> <C> <C>
Prime Fund 1.65% 1.10% .75% .5160%
Short-Term Bond Fund 1.65% 1.10% .75% .5190%
Core Bond Fund 1.65% 1.10% .75% .5130%
Balanced Fund 1.65% 1.10% .75% .5120%
Value Equity Fund 1.65% 1.10% .75% .5067%
Small Cap Value Equity Fund 1.75% 1.20% .85% .6110%
International Equity Fund 2.15% 1.60% 1.35% 1.002%
</TABLE>
MassMutual's voluntary agreement to waive a portion of its management fee
terminated May 1, 1997. MassMutual's management fee for the six months ended
June 30, 1997 was $12,168,769, of which $679,798 was reimbursed to the Funds.
Other
Certain officers and directors of the Funds are also officers of MassMutual. The
compensation of unaffiliated directors of the Funds is borne by the Funds.
At June 30, 1997, MassMutual or separate investment accounts thereof owned all
of the outstanding shares of the Trust.
4. Purchases And Sales Of Investments
Cost of purchases and proceeds from sales of investment securities (excluding
short-term investments) for the six months ended June 30, 1997 were as follows:
<TABLE>
<CAPTION>
Long-term U.S.
Government Other Long-term
Securities Securities
-------------- ------------------
<S> <C> <C> <C>
Purchases Short-Term Bond Fund $ 18,507,923 $ 16,509,283
Core Bond Fund 47,633,441 78,499,107
Balanced Fund 20,660,889 47,510,855
Value Equity Fund - 275,356,822
Small Cap Value Equity Fund - 79,346,567
International Equity Fund - 243,114,678
Sales Short-Term Bond Fund $ 2,362,891 $ 9,230,657
Core Bond Fund 57,991,171 21,845,637
Balanced Fund 16,398,490 33,414,775
Value Equity Fund - 231,667,406
Small Cap Value Equity Fund - 78,679,629
International Equity Fund - 151,990,672
</TABLE>
72
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
5. Capital Share Transactions
The Funds are authorized to issue an unlimited number of shares, with no par
value, in one or more of four classes of shares: Class 1, Class 2, Class 3 and
Class 4. Class 1 and Class 2 shares of each Fund are subject to distribution and
service fees. Class 3 shares are not subject to any distribution or service
fees. SIA Investors purchase Class 4 shares directly from the Funds and pay no
distribution or service fees. Changes in shares outstanding for each Fund are as
follows:
<TABLE>
<CAPTION>
Class 1
Six months ended Year ended
June 30, 1997 December 31, 1996
Shares Amount Shares Amount
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Prime Fund
Sold - - - -
Issued as reinvestment
of dividends - - 28 4,288
Redeemed - - - -
--------- --------- --------- ----------
Net increase - $ - 28 $ 4,288
========= ========= ========= ==========
Short-Term Bond Fund
Sold - - - -
Issued as reinvestment
of dividends - - 519 5,285
Redeemed - - - -
--------- --------- --------- ----------
Net increase - $ - 519 $ 5,285
========= ========= ========= ==========
Core Bond Fund
Sold - - 429 4,520
Issued as reinvestment
of dividends - - 489 5,156
Redeemed - - (5,250) (55,534)
--------- --------- --------- ----------
Net increase (decrease) - $ - (4,332) $ (45,858)
========= ========= ========= ==========
Balanced Fund
Sold - - 931 10,969
Issued as reinvestment
of dividends - - 416 5,173
Redeemed - - (5,552) (65,509)
--------- --------- --------- ----------
Net increase (decrease) - $ - (4,205) $ (49,367)
========= ========= ========= ==========
Value Equity Fund
Sold - - - -
Issued as reinvestment
of dividends - - 403 5,884
Redeemed - - - -
--------- --------- --------- ----------
Net increase - $ - 403 $ 5,884
========= ========= ========= ==========
Small Cap Value Equity Fund
Sold - - 4,373 54,090
Issued as reinvestment
of dividends - - 349 4,660
Redeemed - - (9,150) (108,036)
--------- --------- --------- ----------
Net increase (decrease) - $ - (4,428) $ (49,286)
========= ========= ========= ==========
International Equity Fund
Sold - - 5,377 55,098
Issued as reinvestment
of dividends - - 100 1,065
Redeemed - - (7,009) (70,119)
--------- --------- --------- ----------
Net increase - $ - (1,532) $ (13,956)
========= ========= ========= ==========
</TABLE>
<TABLE>
<CAPTION>
Class 2
Six months ended Year ended
June 30, 1997 December 31, 1996
Shares Amount Shares Amount
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Prime Fund
Sold - - - -
Issued as reinvestment
of dividends - - 33 4,922
Redeemed - - - -
---------- ---------- ---------- ----------
Net increase - $ - 33 $ 4,922
========== ========== ========== ==========
Short-Term Bond Fund
Sold - - - -
Issued as reinvestment
of dividends - - 584 5,951
Redeemed - - - -
---------- ---------- ---------- ----------
Net increase - $ - 584 $ 5,951
========== ========== ========== ==========
Core Bond Fund
Sold - - - -
Issued as reinvestment
of dividends - - 562 5,941
Redeemed - - - -
---------- ---------- ---------- ----------
Net increase (decrease) - $ - 562 $ 5,941
========== ========== ========== ==========
Balanced Fund
Sold - - - -
Issued as reinvestment
of dividends - - 484 6,038
Redeemed - - - -
---------- ---------- ---------- ----------
Net increase (decrease) - $ - 484 $ 6,038
========== ========== ========== ==========
Value Equity Fund
Sold - - - -
Issued as reinvestment
of dividends - - 456 6,682
Redeemed - - - -
---------- ---------- ---------- ----------
Net increase - $ - 456 $ 6,682
========== ========== ========== ==========
Small Cap Value Equity Fund
Sold - - - -
Issued as reinvestment
of dividends - - 420 5,622
Redeemed - - - -
---------- ---------- ---------- ----------
Net increase (decrease) - $ - 420 $ 5,622
========== ========== ========== ==========
International Equity Fund
Sold - - - -
Issued as reinvestment
of dividends - - 161 1,742
Redeemed - - - -
---------- ---------- ---------- ----------
Net increase - $ - 161 $ 1,742
========== ========== ========== ==========
</TABLE>
73
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class 3
Six months ended Year ended
June 30, 1997 December 31, 1996
Shares Amount Shares Amount
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Prime Fund
Sold - - - -
Issued as reinvestment
of dividends - - 35 5,335
Redeemed - - - -
---------- ---------- ---------- ----------
Net increase - $ - 35 $ 5,335
========== ========== ========== ==========
Short-Term Bond Fund
Sold - - - -
Issued as reinvestment
of dividends - - 625 6,381
Redeemed - - - -
---------- ---------- ---------- ----------
Net increase - $ - 625 $ 6,381
========== ========== ========== ==========
Core Bond Fund
Sold - - - -
Issued as reinvestment
of dividends - - 604 6,389
Redeemed - - - -
---------- ---------- ---------- ----------
Net increase - $ - 604 $ 6,389
========== ========== ========== ==========
Balanced Fund
Sold - - - -
Issued as reinvestment
of dividends - - 521 6,510
Redeemed - - - -
---------- ---------- ---------- ----------
Net increase - $ - 521 $ 6,510
========== ========== ========== ==========
Value Equity Fund
Sold - - - -
Issued as reinvestment
of dividends - - 492 7,213
Redeemed - - - -
---------- ---------- ---------- ----------
Net increase (decrease) - $ - 492 $ 7,213
========== ========== ========== ==========
Small Cap Value Equity Fund
Sold - - - -
Issued as reinvestment
of dividends - - 455 6,096
Redeemed - - - -
---------- ---------- ---------- ----------
Net increase - $ - 455 $ 6,096
========== ========== ========== ==========
International Equity Fund
Sold - - - -
Issued as reinvestment
of dividends - - 186 2,018
Redeemed - - - -
---------- ---------- ---------- ----------
Net increase - $ - 186 $ $2,018
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Class 4
Six months ended Year ended
June 30, 1997 December 31, 1996
Shares Amount Shares Amount
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Prime Fund
Sold 1,255,263 191,777,654 2,391,584 370,653,176
Issued as reinvestment
of dividends - - 86,522 13,067,477
Redeemed (1,389,966) (212,526,347) (2,445,697) (378,881,926)
------------ ------------ ------------ ------------
Net increase (134,703) $(20,748,693) 32,409 $ 4,838,727
============ ============ ============ ============
Short-Term Bond Fund
Sold 4,745,250 48,620,824 6,074,656 62,871,971
Issued as reinvestment
of dividends - - 808,935 8,206,104
Redeemed (2,523,313) (25,793,936) (4,631,745) (47,999,711)
------------ ------------ ------------ ------------
Net increase 2,221,937 $ 22,826,888 2,251,846 $ 23,078,364
============ ============ ============ ============
Core Bond Fund
Sold 9,449,800 99,663,183 15,244,478 161,638,362
Issued as reinvestment
of dividends - - 1,838,613 19,317,124
Redeemed (4,837,900) (50,796,721) (6,519,179) (69,250,775)
------------ ------------ ------------ ------------
Net increase 4,611,900 $ 48,866,462 10,563,912 $111,704,711
============ ============ ============ ============
Balanced Fund
Sold 8,196,028 105,127,519 16,529,257 200,170,935
Issued as reinvestment
of dividends - - 2,193,746 27,325,515
Redeemed (7,618,750) (97,358,388) (12,780,860) (154,960,358)
------------ ------------ ------------ ------------
Net increase 577,278 $ 7,769,131 5,942,143 $ 72,536,092
============ ============ ============ ============
Value Equity Fund
Sold 22,591,959 348,496,543 42,761,147 585,609,490
Issued as reinvestment
of dividends - - 8,235,214 120,574,407
Redeemed (20,346,283) (311,674,013) (47,300,940) (651,246,978)
------------ ------------ ------------ ------------
Net increase (decrease) 2,245,676 $ 36,822,530 3,695,421 $ 54,936,919
============ ============ ============ ============
Small Cap Value Equity Fund
Sold 6,601,406 91,460,706 10,428,037 129,033,258
Issued as reinvestment
of dividends - - 1,500,824 20,087,217
Redeemed (4,349,407) (59,870,279) (11,168,365) (140,771,695)
------------ ------------ ------------ ------------
Net increase 2,251,999 $ 31,590,427 760,496 $ 8,348,780
============ ============ ============ ============
International Equity Fund
Sold 12,137,572 144,485,007 14,964,804 154,912,942
Issued as reinvestment
of dividends - - 672,906 7,341,306
Redeemed (4,372,600) (52,026,443) (6,611,341) (68,183,726)
------------ ------------ ------------ ------------
Net increase 7,764,972 $ 92,458,564 9,026,369 $ 94,070,522
============ ============ ============ ============
</TABLE>
74
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
6. Foreign Securities
The International Equity Fund invests substantially all of its assets in foreign
securities. The other Funds may also invest in foreign securities, subject to
certain percentage restrictions. Investing in securities of foreign companies
and foreign governments involves special risks and considerations not typically
associated with investing in securities of U.S. companies and the U.S.
Government. These risks include revaluation of currencies and future adverse
political and economic developments. Moreover, securities of many foreign
companies and foreign governments and their markets may be less liquid and their
prices more volatile than those of securities of comparable U.S. companies and
the U.S. Government.
7. Federal Income Tax Information
At June 30, 1997, the cost of securities and the unrealized appreciation
(depreciation) in the value of investments owned by the Funds, as computed on a
Federal income tax basis, are as follows:
<TABLE>
<CAPTION>
Federal Tax Basis Tax Basis Net Unrealized
Income Tax Unrealized Unrealized Appreciation
Cost Appreciation Depreciation (Depreciation)
------------------ ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
Prime Fund $ 244,588,726 $ 13,049 $ (5,212) $ 7,837
Short-Term Bond Fund 164,941,091 890,098 (647,903) 242,195
Core Bond Fund 400,421,776 6,269,978 (2,625,774) 3,644,204
Balanced Fund 505,416,393 124,999,570 (2,252,527) 122,747,043
Value Equity Fund 1,932,556,830 1,026,193,157 (13,582,382) 1,012,610,775
Small Cap Value Equity Fund 404,086,580 168,930,386 (4,308,657) 164,621,729
International Equity Fund 424,095,948 109,456,956 (10,319,829) 99,137,127
</TABLE>
At December 31, 1996, the following Funds had available, for Federal income tax
purposes, unused capital losses:
<TABLE>
<CAPTION>
Amount Expiration Date
--------------------------------------
<S> <C> <C>
Prime Fund $ 2,082 December 31, 2003
Prime Fund 2,368 December 31, 2004
Short-Term Bond Fund 295,197 December 31, 2004
Core Bond Fund 1,885,881 December 31, 2004
International Equity Fund 11,789,843 December 31, 2003
</TABLE>
8. Line of Credit
The Trust, on behalf of each Fund, maintains a discretionary line of credit
agreement with PNC Bank, N.A. Each Fund may borrow under the line of credit,
provided that the Trust's borrowings do not exceed $50,000,000 in the aggregate
at any one time. Interest is charged based on outstanding borrowings at the
Federal Funds Rate plus .45%. Only the International Equity Fund utilized the
line of credit during the six months ended June 30, 1997. Average daily
borrowings for the six months ended June 30, 1997 were $6,904,444 and the
average interest rate was 5.85%. The maximum borrowing outstanding during the
six months ended June 30, 1997 was $31,600,000.
75
<PAGE>
Part C
- ------
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
v
<PAGE>
PART C: OTHER INFORMATION
- -------------------------
Item 24: Financial Statements and Exhibits
- ------------------------------------------
(a) Financial Statements:
(1) Financial Statements included in the Prospectus
-----------------------------------------------
constituting Part A of this Registration Statement
--------------------------------------------------
Financial Highlights for the six-month period ended
June 30, 1997 (unaudited), and for the years ended
December 31, 1996, December 31, 1995 and for the
period ended December 31, 1994
(2) Financial Statements included in the Statement of
-------------------------------------------------
Additional Information constituting Part B of this
--------------------------------------------------
Registration Statement
----------------------
Portfolio of Investments at June 30, 1997
(unaudited)
Statement of Assets and Liabilities at June
30, 1997 (unaudited)
Statement of Operations at June 30, 1997
(unaudited)
Statements of Changes in Net Assets for the
six months ended June 30, 1997
(unaudited) and for the years ended
December 31, 1996 and December 31, 1995
Financial Highlights for the six months
ended June 30, 1997 (unaudited) and for
the years ended December 31, 1996,
December 31, 1995 and for the period
ended December 31, 1994
Notes to Financial Statements (unaudited)
Portfolio of Investments at December 31,
1996
Statement of Assets and Liabilities at
December 31, 1996
Statement of Operations at December 31, 1996
Statements of Changes in Net Assets for the
years ended December 31, 1996 and
December 31, 1995
Financial Highlights for the years ended
December 31, 1996, December 31, 1995
and for the period ended December 31,
1994
Notes to Financial Statements
Report of Independent Accountants
(b) Exhibits:
Exhibit 1: Copy of Registrant's Agreement and
Declaration of Trust, as amended
November 29, 1993./1/
C-1
<PAGE>
Exhibit 2: Copy of Registrant's By-Laws, as now in
effect./1/
Exhibit 3: None.
Exhibit 4: None.
Exhibit 5(a): Copy of Investment Management Agreement
between each of Registrant's seven series
and MassMutual Life Insurance Company
("MassMutual")./1/
(b): Copy of specimen Investment Sub-Advisory
Agreements between MassMutual and David L.
Babson and Company, Inc. ("Babson")./2/
(c): Copy of Investment Sub-Advisory Agreement
between MassMutual and HarbourView Asset
Management Corporation ("HarbourView")./1/
Exhibit 6(a): Copy of distribution agreement between the
Trust and OppenheimerFunds Distributor, Inc.
("Oppenheimer")./3/
(b): Copy of sub-distribution agreement between
Oppenheimer and MML Investors Services,
Inc./1/
Exhibit 7: None.
Exhibit 8(a): Copy of Custodian Agreement between the
Trust and Investors Bank & Trust Company
("IBT")./1/
(b): Copy of Administrative and Shareholder
Services Agreement between each of
Registrant's seven series and MassMutual for
the provision of administrative and
shareholder services./1/
(c): Copy of Transfer Agency Agreement among the
Trust, MassMutual and IBT./1/
Exhibit 9: None.
Exhibit 10: Opinion of Counsel as to the legality of
shares being registered is incorporated
herein by reference to the Rule 24f-2
Notice on Form 24f-2 with Opinion of
Counsel filed electronically on
February 25, 1997.
Exhibit 11(a): Consent of Ropes & Gray./2/
C-2
<PAGE>
(b): Consent of Coopers & Lybrand L.L.P./1/
(c)-(g): Powers of Attorney for Gary E. Wendlandt,
Ronald J. Abdow, Charles J. McCarthy,
John H. Southworth, Mary E. Boland./1/
(i)-(o): Powers of Attorney for Richard H. Ayers,
David E.A. Carson, Richard G. Dooley,
Richard W. Greene, Beverly C.L. Hamilton,
F. William Marshall, Jr., and John V.
Murphy./2/
Exhibit 12: None.
Exhibit 13: None.
Exhibit 14: None.
Exhibit 15: Copy of Rule 12b-1 Plans./3/
Exhibit 16: None.
Exhibit 27: Financial Data Schedules
Exhibit 18: Rule 18f-3 Plan./3/
- -------------
/1/Filed herewith.
/2/Incorporated by reference to Registrant's Post-Effective Amendment No. 3 to
the Registration Statement filed via EDGAR April 28, 1997.
/3/To be filed by amendment.
Item 25: Person Controlled by or Under Common Control with Registrant
- ---------------------------------------------------------------------
At the date of this Post-Effective Amendment to the Registration Statement,
Registrant did not, directly or indirectly, control any person.
Registrant was organized by MassMutual primarily to offer investors both the
opportunity to pursue long-term investment goals and the flexibility to respond
to changes in their investment objectives and economic and market conditions.
Initially, the Registrant will provide a vehicle for the investment of assets of
various separate investment accounts established by MassMutual and life
insurance company subsidiaries of MassMutual. The assets in such separate
accounts are, under state law, assets of the life insurance companies which have
established such accounts. Thus, at any time MassMutual and its life insurance
company subsidiaries will own such outstanding shares of Registrant's series as
are purchased with separate account assets. As a
C-3
<PAGE>
result, MassMutual will own substantially all of the shares of Registrant,
probably for a number of years.
The following entities are, or may be deemed to be, controlled by MassMutual
through the direct or indirect ownership of such entities' stock.
1. CM Assurance Company, a Connecticut life, accident, disability and health
insurer, all the stock of which is owned by MassMutual.
2. CM Benefit Insurance Company, a Connecticut life, accident, disability and
health insurer, all the stock of which is owned by MassMutual.
3. C.M. Life Insurance Company, a Connecticut life, accident, disability and
health insurer, all the stock of which is owned by MassMutual.
4. MML Bay State Life Insurance Company, a Connecticut life and health
insurer, all the stock of which is owned by MassMutual.
5. MML Distributors, LLC, formerly known as Connecticut Mutual Financial
Services, LLC, a registered broker-dealer incorporated as a limited
liability company in Connecticut. MassMutual has a 99% ownership interest
and G.R. Phelps & Co. has a 1% ownership interest.
6. MassMutual Holding Company, a Delaware holding company, all the stock of
which is owned by MassMutual.
7. MassMutual of Ireland, Limited, incorporated in the Republic of Ireland, to
operate a group life and health claim office for MassMutual, all of the
stock of which is owned by MassMutual.
8. MML Series Investment Fund, a registered open-end investment company
organized as a Massachusetts business trust, all of the shares of which are
owned by separate accounts of MassMutual and companies controlled by
MassMutual.
9. MassMutual Institutional Funds, a registered open-end investment company
organized as a Massachusetts business trust, all of the shares of which are
owned by MassMutual.
10. G.R. Phelps & Co., Inc., a Connecticut corporation which formerly operated
as a securities broker-dealer, all the stock of which is owned by
MassMutual Holding Company.
11. MML Investors Services, Inc., registered broker-dealer incorporated in
Massachusetts, all the stock of which is owned by MassMutual Holding
Company.
C-4
<PAGE>
12. MassMutual Holding MSC, Inc., a Massachusetts corporation, which acts as a
holding company for MassMutual positions in investment entities organized
outside the United States. MassMutual Holding Company owns all the
outstanding shares of MassMutual Holding MSC, Inc.
13. MassMutual Holding Trust I, a Massachusetts business trust, which acts as a
holding company for certain MassMutual investment subsidiaries. MassMutual
Holding Company owns all the outstanding shares of MassMutual Holding
Trust I.
14. MassMutual Holding Trust II, a Massachusetts business trust, which acts as
a holding company for certain MassMutual investment subsidiaries.
MassMutual Holding Company owns all the outstanding shares of MassMutual
Holding Trust II.
15. MassMutual International, Inc., a Delaware corporation that acts as a
holding company of and provides services to international insurance
companies, all of the stock of which is owned by MassMutual Holding
Company.
16. MML Insurance Agency, Inc., a licensed insurance broker incorporated in
Massachusetts, all of the stock of which is owned by MML Investors
Services, Inc.
17. MML Securities Corporation, a "Massachusetts Securities Corporation", all
of the stock of which is owned by MML Investors Services, Inc.
18. Diversified Insurance Services Agency of America, Inc., a licensed
insurance broker incorporated in Alabama. MML Insurance Agency, Inc. owns
all the shares of outstanding stock.
19. Diversified Insurance Services Agency of America, Inc., a licensed
insurance broker incorporated in Hawaii. MML Insurance Agency, Inc. owns
all the shares of outstanding stock.
20. MML Insurance Agency of Mississippi, P.C., a Mississippi professional
corporation that operates as an insurance broker, all of the stock of which
is owned by MML Insurance Agency, Inc.
21. MML Insurance Agency of Nevada, Inc., a Nevada corporation that operates as
an insurance broker, all of the stock of which is owned by MML Insurance
Agency, Inc.
22. MML Insurance Agency of Ohio, Inc., a subsidiary of MML Insurance Agency,
Inc., is incorporated in the state of Ohio that operates as an insurance
broker. The outstanding capital stock is controlled by MML Insurance
Agency, Inc. through a voting trust agreement.
23. MML Insurance Agency of Texas, Inc., a subsidiary of MML Insurance Agency,
Inc., is incorporated in the state of Texas that operates as an insurance
broker. The
C-5
<PAGE>
outstanding capital stock is controlled by MML Insurance Agency, Inc.
through an irrevocable proxy arrangement.
24. MassMutual/Carlson CBO N.V., a Netherlands Antilles corporation which
operates a collateralized bond obligation fund. MassMutual Holding MSC,
Inc. and Carlson Investment Management Co. each own 50% of the outstanding
shares.
25. MassMutual Corporate Value Limited, a Cayman Islands corporation that owns
approximately 93% of MassMutual Corporate Value Partners Limited.
MassMutual Holding MSC, Inc. owns 46.19% of the outstanding capital stock
of MassMutual Corporate Value Limited.
26 MassMutual Corporate Value Partners Limited, a Cayman Islands corporation
that operates as a high yield bond fund. MassMutual Corporate Value Limited
holds an approximately 93% ownership interest in this company.
27. 9048-5434 Quebec, Inc., a Quebec corporation, which operates as the owner
of hotel property in Montreal, Quebec, Canada. MassMutual Holding MSC, Inc.
owns all the shares of 9048-5434 Quebec, Inc.
28. Antares Leveraged Capital Corp., a Delaware corporation that operates as a
finance company. MassMutual Holding Trust I owns approximately 98.7% of the
capital stock of Antares.
29. Charter Oak Capital Management, Inc., a Delaware corporation that operates
as an investment manager. MassMutual Holding Trust I owns 80% of the
capital stock of Charter Oak.
30. Cornerstone Real Estate Advisers, Inc., a Massachusetts equity real estate
advisory corporation, all the stock of which is owned by MassMutual Holding
Trust I.
31. DLB Acquisition Corporation ("DLB") is a Delaware corporation, which serves
as a holding company for David L. Babson and Company, Incorporated.
MassMutual Holding Trust I owns 83.7% of the outstanding capital stock of
DLB.
32. Oppenheimer Acquisition Corporation ("OAC") is a Delaware corporation,
which serves as a holding company for OppenheimerFunds, Inc. MassMutual
Holding Trust I owns 86% of the capital stock of OAC
33. David L. Babson and Company, Incorporated, a registered investment adviser
incorporated in Massachusetts, all of the stock of which is owned by DLB.
34. Babson Securities Corporation, a registered broker-dealer incorporated in
Massachusetts, all of the stock of which is owned by David L. Babson and
Company, Incorporated.
C-6
<PAGE>
35. Babson-Stewart-Ivory International, a Massachusetts general partnership,
which operates as a registered investment adviser. David L. Babson and
Company Incorporated holds a 50% ownership interest in the partnership.
36. Potomac Babson Incorporated, a Massachusetts corporation, is a registered
investment adviser. David L. Babson and Company Incorporated owns 60% of
the outstanding shares of Potomac Babson Incorporated.
37. OppenheimerFunds, Inc., a registered investment adviser incorporated in
Colorado, all of the stock of which is owned by Oppenheimer Acquisition
Corporation.
38. Centennial Asset Management Corporation, a Delaware corporation that serves
as the investment adviser and general distributor of the Centennial Funds.
OppenheimerFunds, Inc. owns all the stock of Centennial Asset Management
Corporation.
39. HarbourView Asset Management Corporation, a registered investment adviser
incorporated in New York, all the stock of which is owned by
OppenheimerFunds, Inc.
40. MultiSource Service, Inc., a Colorado corporation that operates as a
clearing broker, all of the stock of which is owned by OppenheimerFunds,
Inc.
41. OppenheimerFunds Distributor, Inc., a registered broker-dealer incorporated
in New York, all the stock of which is owned by OppenheimerFunds, Inc.
42. Oppenheimer Partnership Holdings, Inc., a Delaware holding company, all the
stock of which is owned by OppenheimerFunds, Inc.
43. Oppenheimer Real Asset Management, Inc., a commodity pool operator
incorporated in Delaware, all the stock of which is owned by
OppenheimerFunds, Inc.
44. Shareholder Financial Services, Inc., a transfer agent incorporated in
Colorado, all the stock of which is owned by OppenheimerFunds, Inc.
45. Shareholder Services, Inc., a transfer agent incorporated in Colorado, all
the stock of which is owned by OppenheimerFunds, Inc.
46. Centennial Capital Corporation, a Delaware corporation that formerly
sponsored a unit investment trust. Centennial Asset Management Corporation
owns all the outstanding shares of Centennial Capital Corporation.
47 Cornerstone Office Management, LLC, a Delaware limited liability company
that is 50% owned by Cornerstone Real Estate Advisers, Inc. and 50% owned
by MML Realty Management Corporation.
C-7
<PAGE>
48. Cornerstone Suburban Office Investors, LP, a Delaware limited partnership,
which operates as a real estate operating company. Cornerstone Office
Management, LLC holds a 1% general partnership interest in this fund and
MassMutual holds a 99% limited partnership interest.
49. CM Advantage, Inc., a Connecticut corporation that acts as a general
partner in real estate limited partnerships. MassMutual Holding Trust II
owns all of the outstanding stock.
50. CM International, Inc., a Delaware corporation that holds a mortgage pool
and issues collateralized mortgage obligations. MassMutual Holding Trust II
owns all the outstanding stock of CM International, Inc.
51. CM Property Management, Inc., a Connecticut real estate holding company,
all the stock of which is owned by MassMutual Holding Trust II.
52. HYP Management, Inc., a Delaware corporation which is the LLC Manager for
MassMutual High Yield Partners LLC and owns 1.28% of the LLC units of such
entity. MassMutual Holding Trust II owns all the outstanding stock of HYP
Management, Inc.
53. MMHC Investment, Inc., a Delaware corporation which is a passive investor
in MassMutual High Yield Partners LLC. MassMutual Holding Trust II owns all
the outstanding stock of MMHC Investment, Inc.
54. MassMutual High Yield Partners LLC, a Delaware limited liability company,
that operates as a high yield bond fund. MassMutual holds 5.28%, MMHC
Investment Inc. holds 35.99%, and HYP Management, Inc. hold 1.28% for a
total of 42.55% of the ownership interest in this company.
55. MML Realty Management Corporation, a former property manager incorporated
in Massachusetts, all the stock of which is owned by MassMutual Holding
Trust II.
56. 505 Waterford Park Limited Partnership, a Delaware limited partnership,
which holds title to an office building in Minneapolis, Minnesota. MML
Realty Management Corporation holds a 1% general partnership interest in
this partnership and MassMutual holds a 99% limited partnership interest.
57. Urban Properties, Inc., a Delaware real estate holding and development
company, all the stock of which is owned by MassMutual Holding Trust II.
58. Westheimer 335 Suites, Inc., was incorporated in Delaware to serve as a
general partner of the Westheimer 335 Suites Limited Partnership.
MassMutual Holding Trust II owns all the stock of Westheimer 335 Suites,
Inc.
C-8
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59. Westheimer 335 Suites Limited Partnership, a Texas limited partnership of
which Westheimer 335 Suites, Inc. is the general partner.
60. MassMutual Internacional (Argentina) S.A., an Argentine corporation, which
operates as a holding company. MassMutual International Inc. owns 99.9% of
the outstanding shares and MassMutual Holding Company owns the remaining
0.1% of the shares.
61. MassMutual Internacional (Chile) S.A., a Chilean corporation, which
operates as a holding company. MassMutual International Inc. owns 99.9% of
the outstanding shares and MassMutual Holding Company owns the remaining
0.1% of the shares.
62. MassMutual International (Bermuda) Ltd., a Bermuda life insurance company,
all of the stock of which is owned by MassMutual International Inc.
63. MassMutual International (Luxembourg) S.A., a Luxembourg corporation, which
operates as an insurance company. MassMutual International Inc. owns 99% of
the outstanding shares and MassMutual Holding Company owns the remaining 1%
of the shares.
64. Mass Seguros de Vida S.A., a life insurance company incorporated in Chile.
MassMutual Holding Company owns 33.5% of the outstanding capital stock of
Mass Seguros de Vida S.A.
65. MassLife Seguros de Vida S.A., a life insurance company incorporated in
Argentina. MassMutual International Inc. owns 45% of the outstanding
capital stock of MassLife Seguros de Vida S.A.
66 MassMutual Services, S.A., an Argentine corporation, which operates as a
service company. MassMutual Internacional (Argentina) S.A. owns 99% of the
outstanding shares and MassMutual International, Inc. owns 1% of the
shares.
67. Origen Inversiones S.A., a Chilean corporation which operates as a holding
company. MassMutual Internacional (Chile) S.A. holds a 33.5% ownership
interest in this corporation.
68. Compensa Compania Seguros De Vida, a Chilean insurance company. Origen
Inversiones S.A. owns 99% of the outstanding shares of this company.
69. Oppenheimer Series Fund Inc., a Maryland corporation and a registered
open-end investment company of which MassMutual and its affiliates own a
majority of the outstanding shares issued by the fund.
70. Oppenheimer Value Stock Fund ("OVSF) is a series of Oppenheimer Integrity
Funds, a Massachusetts business trust. OVSF is a registered open-end
investment company of
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which MassMutual owns approximately 29% of the outstanding shares of
beneficial interest.
71. Panorama Series Fund, Inc., a registered open-end investment company
organized as a Maryland corporation. Shares of the fund are sold only to
MassMutual and its affiliates.
72. The DLB Fund Group, an open-end management investment company advised by
David L. Babson and Company Incorporated. MassMutual owns at least 25% of
each series.
MassMutual acts as the investment adviser of the following investment companies,
and as such may be deemed to control them.
1. MML Series Investment Fund, a registered open-end Massachusetts business
trust, all of the shares are owned by separate accounts of MassMutual and
companies controlled by MassMutual.
2. MassMutual Corporate Investors, a registered closed-end Massachusetts
business trust.
3. MassMutual Corporate Value Partners Limited, a Cayman Islands corporation
that operates as a high-yield bond fund. MassMutual Corporate Value Limited
holds an approximately 93% ownership interest in this company.
4. MassMutual High Yield Partners LLC, a Delaware limited liability company,
that operates as a high yield bond fund. MassMutual holds 5.28%, MMHC
Investment Inc. holds 35.99%, and HYP Management, Inc. hold 1.28% for a
total of 42.55% of the ownership interest in this company.
5. MassMutual Institutional Funds, a registered open-end Massachusetts
business trust, all of the shares of which are owned by MassMutual.
6. MassMutual Participation Investors, a registered closed-end Massachusetts
business trust.
7. MassMutual/Carlson CBO N.V., a Netherlands Antilles corporation which
operates a collateralized bond obligation fund. MassMutual Holding MSC,
Inc. and Carlson Investment Management Co. each own 50% of the outstanding
shares.
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Item 26: Number of Holders of Securities
- ----------------------------------------
As of September 15, 1997, the number of holders of record of each class of
securities of Registrant was as follows:
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Shares of
Beneficial 1
Interest
</TABLE>
Item 27: Indemnification
- ------------------------
Article VIII of Registrant's Agreement and Declaration of Trust provides for the
indemnification of Registrant's Trustees and officers. Registrant undertakes to
apply the indemnification provisions of its Agreement and Declaration of Trust
in a manner consistent with Securities and Exchange Commission Release No.
IC-11330 so long as the interpretation of Section 17(h) and 17(i) of the
Investment Company Act of 1940 (the "1940 Act") set forth in such Release shall
remain in effect and be consistently applied.
Trustees and officers of Registrant are also indemnified by MassMutual pursuant
to its by-laws which apply to subsidiaries, including Registrant. No
indemnification is provided with respect to any liability to any entity which is
registered as an investment company under the 1940 Act or to the security
holders thereof, where the basis for such liability is willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of office.
MassMutual's directors' and officers' liability insurance program, which covers
Registrant's Trustees and officers, consists of two distinct coverages. The
first coverage reimburses MassMutual, subject to specified limitations, for
amounts which MassMutual is legally obligated to pay out under its
indemnification by-law, discussed above. The second coverage directly protects a
Trustee or officer of Registrant against liability from shareholder derivative
and similar lawsuits which are indemnifiable under the law. There are, however,
specific acts giving rise to liability which are excluded from this coverage.
For example, no Trustee or officer is insured against personal liability for
libel or slander, acts of deliberate dishonesty, fines or penalties, illegal
personal profit or advantage at the expense of Registrant or its shareholders,
violation of employee benefit plans, regulatory statutes, and similar acts which
would traditionally run contrary to public policy and hence reimbursement by
insurance.
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MassMutual's present insurance coverage has an overall limit of $60 million
annually ($15 million of which is underwritten by National Union Fire Insurance
Company, $15 million of which is underwritten by Executive Risk Indemnity, Inc.,
$10 million of which is underwritten by Continental, Casualty Co., $5 million of
which is underwritten by Federal Insurance Co. and $15 million of which is
underwritten by Sargasso Mutual Insurance Company). There is a deductible of
$200,000 per claim under the corporate coverage. There is no deductible for
individual trustees or officers.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "1933 Act") may be permitted to trustees, officers and controlling
persons of Registrant pursuant to the foregoing provisions, or otherwise,
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
1933 Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Registrant
of expenses incurred or paid by a Trustee, officer or controlling person of
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with the
securities being registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
Item 28: Business and Other Connections of the Investment Adviser
- -----------------------------------------------------------------
a. The Investment Adviser
MassMutual is the investment adviser for the Registrant. MassMutual is a mutual
life insurance company organized as a Massachusetts corporation which was
originally chartered in 1851. As a mutual life insurance company, MassMutual has
no shareholders. MassMutual's primary business is ordinary life insurance. It
also provides, directly or through its subsidiaries, a wide range of annuity and
disability products, and pension and pension-related products and services, as
well as investment services to individuals, and corporations and other
institutions, in all 50 states of the United States and the District of
Columbia. MassMutual is also licensed to transact business in Puerto Rico, and
six provinces of Canada, but has no export sales. Effective February 29, 1996,
Connecticut Mutual Life Insurance Company merged into MassMutual.
MassMutual's principal lines of business are (i) the Individual Line, which
provides life insurance including variable and universal life insurance,
annuities and disability income insurance to individuals and small businesses;
(ii) Pension Management, which provides group pension investment products and
administrative services, primarily to sponsors of tax qualified retirement
plans; (iii) Life and Health Benefits Management, which previously provided
group life and health insurance products and related services to corporations
and other institutions; this line was transferred to a subsidiary in December
1994, and the subsidiary was subsequently sold in March of 1996; and (iv)
MassMutual Investment Management Group, which provides advisory services for
MassMutual's general investment account and separate investment
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<PAGE>
accounts, as well as for various closed-end and open-end investment companies
and external institutional clients, through its own staff and those of
Oppenheimer Funds Inc. and David L. Babson and Company, Inc., in which
MassMutual indirectly owns a controlling interest.
The directors and executive vice presidents of MassMutual, their positions and
their other business affiliations and business experience for the past two years
are listed below.
Directors
ROGER G. ACKERMAN, Director and Member, Auditing and Human Resources Committees
Chairman and Chief Executive Officer (since 1996), President and Chief
Operating Officer (1990-1996), Corning Incorporated (manufacturer of
specialty materials, communication equipment and consumer products), One
Riverfront Plaza, Corning, New York; Director (since 1993), Dow Corning
Corporation (producer of silicone products), 2200 West Salzburg Road,
Midland, Michigan; Director, The Pittson Company (mining and marketing of
coal for electric utility and steel industries), One Pickwick Plaza,
Greenwich, Connecticut.
JAMES R. BIRLE, Director, Chairman, Dividend Policy Committee and Member,
Investment Committee
Chairman (since 1997), President (1994-1997) and Founder (since 1994),
Resolute Partners, LLC (private merchant bank), 2 Greenwich Plaza, Suite
100, Greenwich, Connecticut; Director (since 1996), IKON Office Solutions
(diversified office products and technology solutions), 825 Duportail Road,
Valley Forge, Pennsylvania; Director: Drexel Industries, Inc., Connecticut
Health and Education Facilities Authority, and Transparency International;
Trustee, Villanova University and The Sea Research Foundation; Director
(1991-1996), Connecticut Mutual Life Insurance Company, 140 Garden Street,
Hartford, Connecticut.
FRANK C. CARLUCCI, III, Director and Member, Board Affairs and Dividend Policy
Committees
Chairman (since 1993), Vice Chairman (1989-1993), The Carlyle Group
(merchant banking corporation), 1001 Pennsylvania Avenue, N.W., Washington,
D.C.; Director: Ashland Oil Inc. (producer of petroleum products), 1000
Ashland Drive, Russell, Kentucky; BDM International, Inc. (professional and
technical services to public and private sector), 7915 Jones Branch Drive,
McLean, Virginia; General Dynamics Corporation (manufacturer of military
equipment), 3190 Fairview Park Drive, Falls Church, Virginia; Kaman
Corporation (diversified manufacturer), 1332 Blue Hills Avenue, Bloomfield,
Connecticut; Northern Telecom Ltd. (digital telecommunications systems),
2920 Matheson Boulevard East, Mississauga, Ontario, Canada; The Quaker Oats
Company (manufacturer of food products), 321 North Clark Street, Chicago,
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Illinois; Sun Resorts Ltd., N.V.; Westinghouse Electric Corporation
(electronic systems, electric power generating equipment and broadcasting),
11 Stanwix Street, Pittsburgh, Pennsylvania; Chairman, Neurogen Corporation
and Texas Biotechnology Corporation; Trustee, The Rand Corporation;
Director (until 1997), CB Commercial Real Estate Group, Inc. (real estate
broker subsidiary of Carlyle Holding Corporation), 533 Fremont Avenue, Los
Angeles, California; Bell Atlantic Corporation (telecommunications), 1717
Arch Street, Philadelphia, Pennsylvania; Chairman; Director (1989-1996),
Connecticut Mutual Life Insurance Company, 140 Garden Street, Hartford,
Connecticut.
GENE CHAO, Director and Member, Auditing and Dividend Policy Committees
Chairman, President and Chief Executive Officer, Computer Projections, Inc.
(computer graphics), 733 S.W. Vista Avenue, Portland, Oregon; Director
(1990-1996), Connecticut Mutual Life Insurance Company, 140 Garden Street,
Hartford, Connecticut.
PATRICIA DIAZ DENNIS, Director and Member, Auditing and Human Resources
Committees
Senior Vice President and Assistant General Counsel (since 1995), SBC
Communications Inc. (telecommunications), 175 East Houston, San Antonio,
Texas; Special Counsel-Communication Law Matters (1993-1995), Sullivan &
Cromwell (law firm), 1701 Pennsylvania Avenue, N.W., Washington, D.C.;
Trustee (since 1995), Federal Communications Bar Association Foundation;
Trustee, Tomas Rivera Policy Institute, and Radio and Television News
Directors Foundation; Director: National Public Radio, Reading Is
Fundamental, and Foundation for Women's Resources; Director (1995-1996),
Connecticut Mutual Life Insurance Company, 140 Garden Street, Hartford,
Connecticut.
ANTHONY DOWNS, Director and Member, Auditing and Investment Committees
Senior Fellow, The Brookings Institution (non-profit policy research
center), 1775 Massachusetts Avenue, N.W., Washington, D.C.; Director: The
Pittway Corporation (publications and security equipment), 200 South Wacker
Drive, Suite 700, Chicago, Illinois; National Housing Partnerships
Foundation (non-profit organization to own and manage rental housing), 1225
Eye Street, N.W., Washington, D.C.; Bedford Property Investors, Inc. (real
estate investment trust), 3658 Mt. Diablo Boulevard, Lafayette, California;
General Growth Properties, Inc. (real estate investment trust), 215 Keo
Way, Des Moines, Iowa; NAACP Legal and Educational Defense Fund, Inc.
(civil rights organization), 99 Hudson Street, New York, New York; Trustee:
Urban Institute (public policy research organization), 2100 M Street, N.W.,
Washington, D.C. and Urban Land Institute (educational and research
organization), 625 Indiana Avenue, N.W., Washington, D.C.
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JAMES L. DUNLAP, Director and Member, Human Resources and Board Affairs
Committees
President and Chief Operating Officer (since 1996), United Meridian
Corporation (oil exploration), 1201 Louisiana, Houston, Texas; Senior Vice
President (1987-1996), Texaco, Inc. (producer of petroleum products), 2000
Westchester Avenue, White Plains, New York.
WILLIAM B. ELLIS, Director and Member, Auditing and Investment Committees
Senior Fellow (since 1995), Yale University School of Forestry and
Environmental Studies, New Haven, Connecticut; Chairman (1983-1995) and
Chief Executive Officer (1983-1993), Northeast Utilities (electric
utility), 107 Selden Street, Berlin, Connecticut; Director, The Hartford
Steam Boiler Inspection and Insurance Company (property and casualty
insurer), One State Street, Hartford, Connecticut; Director (since 1996),
Advest Group, Inc. (financial services holding company), 280 Trumbull
Street, Hartford, Connecticut; Director (since 1995), Catalytica Combustion
Systems, Inc.; Director, The National Museum of National History of the
Smithsonian Institution, Washington, D.C.; Director (1985-1996),
Connecticut Mutual Life Insurance Company, 140 Garden Street, Hartford,
Connecticut.
ROBERT M. FUREK, Director and Member, Dividend Policy and Investment Committees
President (1994-1996), International Distillers and Vintners, Inc.;
President and Chief Executive Officer (1987-1996), Heublein, Inc. (beverage
distributor), 450 Columbus Boulevard, Hartford, Connecticut; Director, The
Dexter Corporation (producer of specialty chemicals and papers), One Elm
Street, Windsor Locks, Connecticut; Corporator, The Bushnel Memorial,
Hartford, Connecticut; Trustee, Colby College, Mayflower Hill Drive,
Waterville, Maine; Director (1990-1996), Connecticut Mutual Life Insurance
Company, 140 Garden Street, Hartford, Connecticut.
CHARLES K. GIFFORD, Director and Member, Investment and Auditing Committees
Chairman and Chief Executive Officer (since 1995), and President
(1989-1996), The First National Bank of Boston, and Chief Executive Officer
(since 1995), President (1989-1996) and Chairman (1995-1996) of Bank of
Boston Corporation (bank holding company), 100 Federal Street, Boston,
Massachusetts; Director, Member of Audit and Compensation Committees,
Boston Edison Co. (public utility electric company), 800 Boylston Street,
Boston, Massachusetts.
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WILLIAM N. GRIGGS, Director, Chairman, Auditing Committee and Member, Investment
Committee
Managing Director, Griggs & Santow Inc. (financial consultants), 75 Wall
Street, New York, New York; Director, T/SF Communications, Inc.
(diversified publishing and communications company), Tulsa, Oklahoma.
GEORGE B. HARVEY, Director, Chairman, Human Resources Committee and Member,
Board Affairs Committee
Retired; Chairman, President and Chief Executive Officer (1983-1996),
Pitney Bowes, Inc. (office machines manufacturer), One Elmcroft Road,
Stamford, Connecticut; Director: Merrill Lynch & Co., Inc. (financial
services holding company), 250 Vesey Street, World Financial Center, North
Tower, New York, New York; The McGraw-Hill Companies, Inc. (multimedia
publishing and information services), 1221 Avenue of the Americas, New
York, New York; Stamford Hospital, Stamford, Connecticut; Pfizer, Inc.
(pharmaceutical and health-care products), 235 East 42nd Street, New York,
New York; The Catalyst (until 1997); Member, Board of Overseers, Wharton
School of Finance, University of Pennsylvania; Director (1989-1996),
Connecticut Mutual Life Insurance Company, 140 Garden Street, Hartford,
Connecticut.
BARBARA B. HAUPTFUHRER, Director and Member, Board Affairs and Investment
Committees
Director and Member, Compensation, Nominating and Audit Committees, The
Vanguard Group of Investment Companies including among others the following
funds: Vanguard/Windsor Fund, Vanguard/Wellington Fund, Vanguard/Morgan
Growth Fund, Vanguard/Wellesley Income Fund, Vanguard/Gemini Fund,
Vanguard/Explorer Fund, Vanguard Municipal Bond Fund, Vanguard Fixed Income
Securities Fund, Vanguard Index Trust, Vanguard World Fund, Vanguard/Star
Fund, Vanguard Ginnie Mae Fund, Vanguard/Primecap Fund, Vanguard
Convertible Securities Fund, Vanguard Quantitative Fund, Vanguard/Trustees
Commingled Equity Fund, Vanguard/Trustees Commingled Fund-International,
Vanguard Money Market Trust, Vanguard/Windsor II, Vanguard Asset Allocation
Fund and Vanguard Equity Income Fund (principal offices, Drummers Lane,
Valley Forge, Pennsylvania); Director, Chairman of Retirement Benefits
Committee and Pension Fund Investment Review - USA and Canada and Member,
Audit, Finance and Executive Committees, The Great Atlantic & Pacific Tea
Company, Inc. (operator of retail food stores), 2 Paragon Drive, Montvale,
New Jersey; Director, Chairman of Nominating Committee and Member,
Compensation Committee, Knight-Ridder, Inc. (publisher of daily newspapers
and operator of cable television and business information systems), One
Herald Plaza, Miami, Florida; Director and Member, Compensation Committee,
Raytheon Company (electronics manufacturer), 141 Spring Street, Lexington,
Massachusetts; Director and Member, Executive Committee and Chairman, Human
Resources and Independent Directors Committees, IKON Office
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Solutions (diversified office products and technology solutions), 825
Duportail Road, Valley Forge, Pennsylvania.
SHELDON B. LUBAR, Director, Chairman, Board Affairs Committee and Member,
Investment Committee
Chairman, Lubar & Co. Incorporated (investment management and advisory
company), 777 East Wisconsin Avenue, Milwaukee, Wisconsin; Chairman and
Director, The Christiana Companies, Inc. (real estate development);
Director: Firstar Bank, Firstar Corporation (bank holding company), SLX
Energy, Inc. (oil and gas exploration); Member, Advisory Committee, Venture
Capital Fund, L.P. (principal offices, 777 East Wisconsin Avenue,
Milwaukee, Wisconsin); Director: Grey Wolf Drilling Co. (contract oil and
gas drilling), 2000 Post Oak Boulevard, Houston, Texas; Marshall Erdman and
Associates, Inc. (design, engineering, and construction firm), 5117
University Avenue, Madison, Wisconsin; MGIC Investment Corporation
(investment company), MGIC Plaza, 111 E. Kilbourn Avenue, Milwaukee,
Wisconsin; Ameritech, Inc. (regional holding company for telephone
companies), 30 South Wacker Drive, Chicago, Illinois, Director (since
1995), Energy Ventures, Inc., 5 Post Oak Park, Houston, Texas; Director
(1989-1995), Prideco, Inc. (drill collar manufacturer), 6039 Thomas Road,
Houston, Texas.
WILLIAM B. MARX, JR., Director and Member, Dividend Policy and Board Affairs
Committees
Consultant (1996-1997); Senior Executive Vice President (1996), Lucent
Technologies, Inc. (public telecommunications systems and software), 600
Mountain Road, Murray Hill, New Jersey; Executive Vice President and Chief
Executive Officer, Multimedia Products Group (1994-1995), AT&T (global
communications and network computing company), 295 North Maple Avenue,
Basking Ridge, New Jersey; Director (since 1996), California Microwave,
Inc., Redwood City, California; Member, National Board of Directors, Junior
Achievement, Colorado Springs, Colorado; Member (since 1996), Advisory
Council, Graduate School of Business, Stanford University, Stanford,
California; Chairman, Executive Committee (since 1996), National Minority
Supplier Development Council, Inc., 15 West 39th Street, New York, New
York.
JOHN F. MAYPOLE, Director and Member, Board Affairs and Human Resources
Committees
Managing Partner, Peach State Real Estate Holding Company (real estate
investment company), P.O. Box 1223, Toccoa, Georgia; Consultant to
institutional investors; Co-owner of family businesses (including Maypole
Chevrolet-Geo, Inc. and South Georgia Car Rentals, Inc.); Director (since
1996), Coating Technologies International; Director, Chairman, Finance
Committee and Member, Executive Committee and Human Resources Committee on
Directors, Bell Atlantic Corporation (telecommunications), 1717 Arch
Street, Philadelphia, Pennsylvania; Director and Chairman, Compensation
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Committee, Briggs Industries, Inc. (plumbing fixtures), 4350 W. Cypress
Street, Tampa, Florida; Director, Chairman, Audit Committee and Member,
Compensation Committee, Blodgett Corporation; Director, Chairman, Products
Committee and Member, Compensation and Audit Committee (until 1996), Igloo
Corporation (portable coolers), 1001 W. Sam Houston Parkway North, Houston,
Texas; Director and Member, Senior Management Committee, Dan River, Inc.
(textile manufacturer), 2291 Memorial Drive, Danville, Virginia; Director,
Davies, Turner & Company; Director (1989-1996), Connecticut Mutual Life
Insurance Company, 140 Garden Street, Hartford, Connecticut.
DONALD F. MCCULLOUGH, Director and Member, Dividend Policy and Auditing
Committees
Retired (since 1988); former Chairman and Chief Executive Officer, Collins
& Aikman Corp. (manufacturer of textile products), 210 Madison Avenue, New
York, New York; Director (1971-1996); Bankers Trust New York Corp. (bank
holding company) and Bankers Trust Company (principal offices, 280 Park
Avenue, New York, New York); Director (1975-1996), Melville Corporation
(specialty retailer), One Theall Road, Rye, New York.
JOHN J. PAJAK, President and Chief Operating Officer, Director and Member,
Dividend Policy and Investment Committees
President, Director and Chief Operating Officer (since 1996), Vice Chairman
and Chief Administrative Officer (1996), Executive Vice President
(1987-1996) of MassMutual; Director (since 1994), MassMutual Holding
Company (wholly-owned holding company subsidiary of MassMutual); Trustee
(since 1996), MassMutual Holding Trust I (wholly-owned holding company
subsidiary of MassMutual Holding Company); Director (since 1996),
MassMutual International Inc. (wholly-owned subsidiary of MassMutual
Holding Company to act as service provider for international insurance
companies); Director (1994-1996), MassMutual Holding Company Two, Inc.
(former wholly-owned holding company subsidiary of MassMutual); MassMutual
Holding Company Two MSC, Inc. (former wholly-owned holding company
subsidiary of MassMutual Holding Company Two, Inc.); and Mirus Insurance
Company (formerly MML Pension Insurance Company, a wholly-owned insurance
subsidiary of MassMutual Holding Company Two MSC, Inc.) (principal offices,
1295 State Street, Springfield, Massachusetts); Director (1995-1996),
National Capital Health Plan, Inc. (health maintenance organization),
Washington, D.C.
THOMAS B. WHEELER, Chairman and Chief Executive Officer, Chairman, Investment
Committee and Member, Dividend Policy and Board Affairs Committees
Chairman (since 1996), Chief Executive Officer (since 1988), and President
(1987-1996) of MassMutual; Chairman (since 1996), MassMutual Holding Trust
I (wholly-owned holding company subsidiary of MassMutual Holding Company);
Director (since 1996), MassMutual International Inc. (wholly-owned
subsidiary of MassMutual Holding Company to act as service provider for
international insurance companies); Chairman and
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Chief Executive Officer (since 1995), DLB Acquisition Corporation (holding
company for investment advisers); Chairman of the Board of Directors (1994-
1996), Mirus Insurance Company (formerly MML Pension Insurance Company, a
wholly-owned insurance subsidiary of MassMutual Holding Company Two MSC,
Inc.) (principal offices, 1295 State Street, Springfield, Massachusetts);
Director, The First National Bank of Boston and Bank of Boston Corporation
(bank holding company), 100 Federal Street, Boston, Massachusetts and
Massachusetts Capital Resources Company, 545 Boylston Street, Boston,
Massachusetts; Chairman and Director, Oppenheimer Acquisition Corp. (parent
of OppenheimerFunds, Inc., an investment management company), Two World
Trade Center, New York, New York; Director (since 1993), Textron, Inc.
(diversified manufacturing company), 40 Westminster Street, Providence,
Rhode Island; Chairman of the Board of Directors (1992-1995), Concert
Capital Management, Inc. (former wholly-owned investment advisory
subsidiary of DLB Acquisition Corporation), One Memorial Drive, Cambridge,
Massachusetts.
ALFRED M. ZEIEN, Director and Member, Board Affairs and Human Resources
Committees
Chairman and Chief Executive Officer, The Gillette Company (manufacturer of
personal care products), Prudential Tower Building, Boston, Massachusetts;
Director: Polaroid Corporation (manufacturer of photographic products), 549
Technology Square, Cambridge, Massachusetts; Repligen Corporation
(biotechnology), One Kendall Square, Cambridge, Massachusetts; Bank of
Boston Corporation (bank holding company), 100 Federal Street, Boston,
Massachusetts; and Raytheon Corporation (electronics manufacturer), 141
Spring Street, Lexington, Massachusetts; Trustee, University Hospital of
Boston, Massachusetts; Trustee, Marine Biology Laboratory and Woods Hole
Oceanographic Institute, Woods Hole, Massachusetts.
Executive Vice Presidents
LAWRENCE V. BURKETT, JR., Executive Vice President and General Counsel
Executive Vice President and General Counsel (since 1993) of MassMutual;
President, Chief Executive Officer and Director (since 1996), CM Assurance
Company, CM Benefit Insurance Company, C.M. Life Insurance Company and MML
Bay State Life Insurance Company (wholly-owned insurance company
subsidiaries of MassMutual); Director (since 1996), MassMutual Holding MSC,
Inc. and Trustee (since 1996), MassMutual Holding Trust I and MassMutual
Holding Trust II (wholly-owned holding company subsidiaries of MassMutual
Holding Company); Director (since 1997), MML Securities Corporation (a
wholly-owned subsidiary of MML Investors Services, Inc. that is a
"Massachusetts Securities Corporation"); Director (since 1996): MassMutual
International Inc. (wholly-owned subsidiary of MassMutual Holding Company
to act as service provider for international insurance companies); G.R.
Phelps, Inc. (wholly-owned broker-dealer subsidiary of MassMutual Holding
Company); CM Advantage Inc.(wholly-owned subsidiary of MassMutual Holding
Trust II to act as general partner in real estate
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limited partnerships); Director, MassMutual Holding Company (wholly-owned
holding company subsidiary of MassMutual); Director (1994-1996), MassMutual
Holding Company Two, Inc. (former wholly-owned holding company subsidiary
of MassMutual), MassMutual Holding Company Two MSC, Inc. (former wholly-
owned holding company subsidiary of MassMutual Holding Company Two, Inc.)
and Mirus Insurance Company (formerly MML Pension Insurance Company, a
wholly-owned insurance subsidiary of MassMutual Holding Company Two MSC,
Inc.) (principal offices, 1295 State Street, Springfield, Massachusetts);
Chairman and Director (since 1996), MML Investors Services, Inc. (wholly-
owned broker-dealer subsidiary of MassMutual Holding Company), 1414 Main
Street, Springfield, Massachusetts; Director, Cornerstone Real Estate
Advisers, Inc. (wholly-owned real estate investment adviser subsidiary of
MassMutual Holding Company), One Financial Plaza, Suite 1700, Hartford,
Connecticut; Vice President (since 1996) and Director, Sargasso Mutual
Insurance Co., Ltd., Victoria Hall, Victoria Street, Hamilton, Bermuda;
Director, MassMutual of Ireland, Ltd. (wholly-owned subsidiary of
MassMutual that formerly provided group insurance claim services), One
Earlsfort Centre, Hatch Street, Dublin, Ireland; Chairman (1994-1996),
Director (1993-1996), MML Reinsurance (Bermuda) Ltd. (wholly-owned property
and casualty reinsurance subsidiary of MassMutual Holding Company) and
Director (since 1995), MassMutual International (Bermuda) Ltd. (wholly-
owned subsidiary of MassMutual Holding Company that distributes variable
insurance products in overseas markets) (principal offices, 41 Cedar
Avenue, Hamilton, Bermuda).
JOHN B. DAVIES, Executive Vice President
Executive Vice President (since 1994) of MassMutual; Director (since 1996),
CM Assurance Company, CM Benefit Insurance Company, C.M. Life Insurance
Company and MML Bay State Life Insurance Company (wholly-owned insurance
company subsidiaries of MassMutual); Director (since 1996), MassMutual
Holding MSC, Inc. and Trustee (since 1996), MassMutual Holding Trust II
(wholly-owned holding company subsidiaries of MassMutual Holding Company)
(principal offices, 1295 State Street, Springfield, Massachusetts);
Director, MML Investors Services, Inc. (wholly-owned broker-dealer
subsidiary of MassMutual Holding Company), MML Insurance Agency, Inc.
(wholly-owned subsidiary of MML Investors Services, Inc.), MML Insurance
Agency of Ohio, Inc. (subsidiary of MML Insurance Agency, Inc.); Director
(since 1995), MML Insurance Agency of Nevada, Inc. (subsidiary of MML
Insurance Agency, Inc.); Director (since 1996), MML Insurance Agency of
Mississippi, P.C., DISA Insurance Services of America, Inc. (Alabama), and
Diversified Insurance Services of America, Inc. (Hawaii) (subsidiaries of
MML Insurance Agency, Inc.) (principal offices, 1414 Main Street,
Springfield, Massachusetts); Director: Cornerstone Real Estate Advisers,
Inc. (wholly-owned real estate investment adviser subsidiary of MassMutual
Holding Company), One Financial Plaza, Suite 1700, Hartford, Connecticut;
and Life Underwriter Training Council, 7625 Wisconsin Avenue, Bethesda,
Maryland.
C-20
<PAGE>
DANIEL J. FITZGERALD, Executive Vice President
Executive Vice President (since 1994), Corporate Financial Operations
(1994-1997)of MassMutual; Director (since 1996), President and Chief
Executive Officer (since 1997) MassMutual International Inc. (wholly-owned
subsidiary of MassMutual Holding Company to act as service provider for
international insurance companies); Director (since 1996), CM Assurance
Company, CM Benefit Insurance Company, and C.M. Life Insurance Company
(wholly-owned insurance company subsidiaries of MassMutual); Antares
Leveraged Capital Corp. (finance company); CM Advantage Inc. and Westheimer
335 Suites, Inc. (wholly-owned subsidiaries of MassMutual Holding Trust II
to act as general partners in real estate limited partnerships); HYP
Management, Inc. (wholly-owned subsidiary of MassMutual Holding Trust II to
act as managing member of MassMutual High Yield Partners LLC); MMHC
Investment, Inc. (wholly-owned subsidiary of MassMutual Holding Trust II);
MassMutual Holding MSC, Inc. (wholly-owned holding company subsidiary of
MassMutual Holding Company); Trustee (since 1996), MassMutual Holding Trust
I and MassMutual Holding Trust II (wholly-owned holding company
subsidiaries of MassMutual Holding Company); Director (since 1995), DLB
Acquisition Corporation (holding company for investment advisers); Vice
President and Director (1993-1997), MassMutual Holding Company
(wholly-owned holding company subsidiary of MassMutual); Director, MML Bay
State Life Insurance Company (wholly-owned insurance subsidiary of
MassMutual); and MML Realty Management Corporation (wholly-owned real
estate management subsidiary of MassMutual Holding Company); Vice President
and Director (1994-1996), MassMutual Holding Company Two, Inc. and
MassMutual Holding Company Two MSC, Inc. (former direct and indirect
wholly-owned holding company subsidiaries of MassMutual); Director
(1994-1996), Mirus Insurance Company (formerly MML Pension Insurance
Company, a wholly-owned insurance subsidiary of MassMutual Holding Company
Two MSC, Inc.); Director (1994-1995), MML Real Estate Corporation
(wholly-owned real estate management subsidiary of MassMutual Holding
Company) (principal offices, 1295 State Street, Springfield,
Massachusetts); Director (1994-1996), Concert Capital Management, Inc.
(former investment advisory subsidiary of DLB Acquisition Corporation), One
Memorial Drive, Cambridge, Massachusetts; Director and Member, Compensation
Committee, Cornerstone Real Estate Advisers, Inc., One Financial Plaza,
Suite 1700, Hartford, Connecticut; Director, and Member, Audit and
Compensation Committees, MML Investors Services, Inc. (wholly-owned broker
dealer subsidiary of MassMutual Holding Company); Director, MML Insurance
Agency, Inc. (wholly-owned subsidiary of MML Investors Services, Inc.);
Director (since 1996), MML Insurance Agency of Ohio, Inc., MML Insurance
Agency of Nevada, Inc., MML Insurance Agency of Mississippi, P.C., DISA
Insurance Services of America, Inc. (Alabama), and Diversified Insurance
Services of America, Inc. (Hawaii) (subsidiaries of MML Insurance Agency,
Inc.) (principal offices, 1414 Main Street, Springfield, Massachusetts);
Director, MassMutual of Ireland, Ltd. (wholly-owned subsidiary of
MassMutual that formerly provided group insurance claim services), One
Earlsfort Centre, Hatch Street, Dublin, Ireland.
C-21
<PAGE>
JOHN V. MURPHY, Executive Vice President
Executive Vice President (since 1997) of MassMutual; Executive Vice
President, Director and Chief Operating Officer (1995-1997), David L.
Babson and Company Incorporated (wholly-owned investment advisory
subsidiary of DLB Acquisition Corporation), Chief Operating Officer
(1993-1996), Concert Capital Management, Inc. (wholly-owned investment
advisory subsidiary of DLB Acquisition Corporation), (principal offices,
One Memorial Drive, Cambridge, Massachusetts); Senior Vice President and
Director (since 1995), Potomac Babson Incorporated (investment advisory
subsidiary of David L. Babson and Company Incorporated), New York, New
York; Director and Senior Vice President (since 1995), DLB Acquisition
Corporation (holding company for investment advisers) and Trustee (since
1997), MassMutual Institutional Funds (open-end investment company)
(principal offices, 1295 State Street, Springfield, Massachusetts).
GARY E. WENDLANDT, Executive Vice President and Chief Investment Officer
Chief Investment Officer and Executive Vice President of MassMutual;
Chairman (since 1995), Trustee (since 1986) and President (1983-1995),
MassMutual Corporate Investors and Chairman (since 1995), Trustee (since
1988) and President (1988-1995), MassMutual Participation Investors
(closed-end investment companies); Chairman (since 1995), Vice Chairman
(1993-1995) and Trustee, MML Series Investment Fund (open-end investment
company); Chairman, Chief Executive Officer and Member, Investment Pricing
Committee, MassMutual Institutional Funds (open-end investment company);
Advisory Board Member (since 1996), MassMutual High Yield Partners LLC
(high yield bond fund); Chairman and President (since 1996), MassMutual
Holding MSC, Inc. and MassMutual Holding Trust II (wholly-owned holding
company subsidiaries of MassMutual Holding Company); Chairman (since 1996):
Antares Leveraged Capital Corp. (finance company); HYP Management, Inc.
(wholly-owned subsidiary of MassMutual Holding Trust II to act as managing
member of MassMutual High Yield Partners LLC); and MMHC Investment, Inc.
(wholly-owned subsidiary of MassMutual Holding Trust II); President and
Trustee (since 1996), MassMutual Holding Trust I (wholly-owned holding
company subsidiary of MassMutual Holding Company); Vice Chairman and
Director (since 1996), MassMutual International Inc. (wholly-owned
subsidiary of MassMutual Holding Company to act as service provider for
international insurance companies); Director (since 1996), CM Advantage
Inc. (wholly-owned subsidiary of MassMutual Holding Trust II to act as
general partner in real estate limited partnerships); President and
Director (since 1995), DLB Acquisition Corporation (holding company for
investment advisers); Chairman, Chief Executive Officer, President and
Director, MassMutual Holding Company (wholly-owned holding company
subsidiary of MassMutual); Chairman and Director, MML Realty Management
Corporation (wholly-owned real estate management subsidiary of MassMutual
Holding Company); Chairman (1994-1995) and Director (1993-1995), MML Real
Estate Corporation (wholly-owned real estate management subsidiary of
MassMutual Holding Company) Chairman, President and Chief Executive Officer
(1994-1996), MassMutual
C-22
<PAGE>
Holding Company Two, Inc. (former wholly-owned holding company subsidiary
of MassMutual); Chairman and President (1994-1996), Chief Executive Officer
(1995-1996), MassMutual Holding Company Two MSC, Inc. (former wholly-owned
holding company subsidiary of MassMutual Holding Company Two, Inc.);
(principal offices, 1295 State Street, Springfield, Massachusetts);
Chairman and Member, Executive and Compensation Committees (since 1994),
Member, Audit Committee (since 1995), and Chief Executive Officer (1994-
1996), Cornerstone Real Estate Advisers, Inc. (wholly-owned real estate
investment advisory subsidiary of MassMutual Holding Trust I), One
Financial Plaza, Suite 1700, Hartford, Connecticut; President and Chief
Executive Officer (1994-1996) and Director (1992-1996), Concert Capital
Management, Inc.(former investment advisory subsidiary of DLB Acquisition
Corporation) One Memorial Drive, Cambridge, Massachusetts; Director,
Oppenheimer Acquisition Corporation (parent of OppenheimerFunds, Inc., an
investment management company), Two World Trade Center, New York, New York;
Supervisory Director, MassMutual/Carlson CBO N.V. (collateralized bond
fund), 14 John Gorsiraweg, Willemstad, Curacao, Netherlands Antilles;
Director, Merrill Lynch Derivative Products, Inc., World Financial Center,
North Tower, New York, New York; MassMutual Corporate Value Partners
Limited (investor in debt and equity securities) and MassMutual Corporate
Value Limited (parent of MassMutual Corporate Value Partners Limited)
(principal offices, c/o BankAmerica Trust and Banking Corporation, Box
1092, George Town, Grand Cayman, Cayman Islands, British West Indies);
Director (since 1995), Mass Seguros de Vida, S.A., Huerfanos No. 770,
Santiago, Chile; President and Director (since 1995), MassMutual
International (Bermuda) Ltd. (wholly-owned subsidiary of MassMutual Holding
Company that distributes variable insurance products in overseas markets),
41 Cedar Avenue, Hamilton, Bermuda.
JOSEPH M. ZUBRETSKY, Executive Vice President And Chief Financial Officer
Executive Vice President and Chief Financial Officer (since 1997) of
MassMutual; Chief Financial Officer (1996-1997) Healthsource, Hooksett, New
Hampshire; Partner (1990-1996), Coopers & Lybrand LLC (certified public
accountants), Hartford, Connecticut; Director (since 1997): Antares
Leverage Capital Corp. (finance company), Chicago, Illinois; DLB
Acquisition Corporation (holding company for investment adviser);
MassMutual Holding Company (wholly-owned holding company subsidiary of
MassMutual); MassMutual International, Inc. (wholly-owned subsidiary of
MassMutual Holding Company to act as service provider for international
insurance companies) (principal offices, 1295 State Street, Springfield,
Massachusetts); Oppenheimer Acquisition Corporation (parent of
OppenheimerFunds, Inc., an investment management company), Two World Trade
Center, New York, New York.
b. The Investment Sub-Advisers
The directors and executive officers of Babson, their positions and their other
business affiliations and business experience for the past two years are as
follows:
C-23
<PAGE>
Directors and Executive Officers
HANI K. FINDAKLY, Director
Director (since 1996), David L. Babson and Company, Inc., One Memorial Drive,
Cambridge, Massachusetts; President (since 1996), Potomac Babson Inc.
(registered investment adviser), 1290 Avenue of the Americas, New York, New
York; President (1989-1995), Potomac Capital, Inc. (registered investment
adviser), 1290 Avenue of the Americas, New York, New York.
RONALD E. GWOZDZ, Director and Executive Vice President
Director (since 1996), Executive Vice President (since 1996) and Senior Vice
President (1991-1996), David L. Babson and Company, Inc., One Memorial Drive,
Cambridge, Massachusetts.
JAMES W. MACALLEN, Director and Executive Vice President
Director and Executive Vice President (since 1996), David L. Babson and Company,
Inc., One Memorial Drive, Cambridge, Massachusetts; Senior Vice President
(1996), Concert Capital Management, Inc. (former investment advisory subsidiary
of DLB Acquisition Corporation), One Memorial Drive, Cambridge, Massachusetts;
Principal (1994-1995), Hagler, Mastrovita & Hewitt (investment counsel), 225
Franklin Street, Boston, Massachusetts.
EDWARD L. MARTIN, Director and Executive Vice President
Director (since 1990), Executive Vice President (since 1995) and Senior Vice
President (1988-1995), David L. Babson and Company, Inc., One Memorial Drive,
Cambridge, Massachusetts; Director and Senior Vice President (since 1996),
Potomac Babson Inc. (registered investment adviser), 1290 Avenue of the
Americas, New York, New York.
PETER C. SCHLIEMANN, Director and Executive Vice President
Executive Vice President (since 1992), Senior Vice President (1984-1992) and
Director (since 1982), David L. Babson and Company, Inc., One Memorial Drive,
Cambridge, Massachusetts; Director (1996), Concert Capital Management, Inc.
(former investment advisory subsidiary of DLB Acquisition Corporation), One
Memorial Drive, Cambridge, Massachusetts.
FRANK L. TARANTINO, Senior Vice President, Clerk and Chief Operating Officer
Senior Vice President, Clerk and Chief Operating Officer (since 1997), David L.
Babson and Company, Inc., One Memorial Drive, Cambridge, Massachusetts;
President (1993-1997), Liberty Securities Corporation (broker-dealer), 600
Atlantic Avenue, Boston, Massachusetts.
PETER C. THOMPSON, Director and President
C-24
<PAGE>
President and Director (since 1983), David L. Babson and Company, Inc., One
Memorial Drive, Cambridge, Massachusetts.; Director (1996), Concert Capital
Management, Inc. (former investment advisory subsidiary of DLB Acquisition
Corporation), One Memorial Drive, Cambridge, Massachusetts; Director (since
1996), Potomac Babson Inc. (registered investment adviser) 1290 Avenue of the
Americas, New York, New York.
JONATHAN B. TREAT, Director and Senior Vice President
Director and Senior Vice President (since 1992), David L. Babson and Company,
Inc., One Memorial Drive, Cambridge, Massachusetts.
ROLAND W. WHITRIDGE, Director and Senior Vice President
Director (since 1990) and Senior Vice President (since 1992), David L. Babson
and Company, Inc., One Memorial Drive, Cambridge, Massachusetts.
HarbourView is the investment sub-adviser for the International Equity Fund of
the Registrant. HarbourView is a wholly owned subsidiary of OppenheimerFunds,
Inc. and was incorporated in the State of New York on April 17, 1986.
The directors and executive vice presidents of HarbourView, their positions and
their other business affiliations and business experience for the past two years
are as follows:
BRIDGET A. MACASKILL, President, Chief Executive Officer and Director
President, Chief Executive Officer and a Director of OppenheimerFunds, Inc.
("OFI") and HarbourView Asset Management Corporation; Chairman and Director of
Shareholder Services Inc. ("SSI") and Shareholder Financial Services, Inc.
("SFSI"); President and a Director of Oppenheimer Acquisition Corp. ("OAC") and
Oppenheimer Partnership Holdings, Inc., a holding company subsidiary of OFI; a
Director of Oppenheimer Real Asset Management, Inc.; a director of the NASDAQ
Stock Market, Inc. and of Hillsdown Holding plc (a U.K. food company); formerly
an Executive Vice President of OFI.
ANDREW J. DONOHUE, Executive Vice President, General Counsel and Director
Executive Vice President, General Counsel and a Director of OFI, the
OppenheimerFunds Distributor, Inc., SSI, SFSI, Oppenheimer Partnership Holdings,
Inc. and MultiSource Services, Inc. (a broker-dealer); President and a Director
of Centennial Asset Management Corporation; President and a Director of
Oppenheimer Real Asset Management, Inc.; General Counsel of OAC; and officer of
other Oppenheimer Funds.
ROBERT C. DOLL, JR. Executive Vice President
Executive Vice President and a Director of OFI; Executive Vice President of
HarbourView; Vice President and a Director of OAC; an officer of other
Oppenheimer Funds.
C-25
<PAGE>
Item 29: Principal Underwriters
- -------------------------------
(a) OppenheimerFunds Distributor, Inc. is the General Distributor of
the Trust's shares and is also general distributor of the following open-end
management investment companies:
1. The "Denver-Based" Oppenheimer funds. The address for these
-------------------------------------
funds is 6803 South Tucson Way, Englewood, CO 80112.
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Integrity Funds (consisting of the following
series:)
Oppenheimer Bond Fund
Oppenheimer International Bond Fund
Oppenheimer High Yield Fund
Oppenheimer Main Street Funds, Inc.(R)
(consisting of the following 2 series:)
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income Fund
Oppenheimer Municipal Fund
(consisting of the following 2 series:)
Oppenheimer Insured Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Total Return Fund, Inc. Capital Accumulation Plan
Oppenheimer Variable Account Funds
(consisting of the following 9 series:)
Oppenheimer Money Fund
Oppenheimer High Income Fund
Oppenheimer Bond Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
C-26
<PAGE>
Oppenheimer Multiple Strategies Fund
Oppenheimer Growth & Income Fund
Oppenheimer Global Securities Fund
Oppenheimer Strategic Bond Fund
Panorama Series Fund, Inc.
(consisting of the following 7 series:)
Total Return Portfolio
Growth Portfolio
International Equity Portfolio
LifeSpan Capital Appreciation Portfolio
LifeSpan Balanced Portfolio
LifeSpan Diversified Income Portfolio
Government Securities Portfolio
The New York Tax-Exempt Income Fund, Inc.
2. The "New York-Based" Oppenheimer funds. The address for these
---------------------------------------
funds is 2 World Trade Center, New York, NY 10048-0203.
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multiple Strategies Fund
Oppenheimer World Bond Fund
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
(consisting of the following 3 series:)
Oppenheimer Florida Municipal Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer New York Municipal Fund
Oppenheimer Series Fund, Inc.
(consisting of the following 5 series:)
Oppenheimer Disciplined Allocation Fund
Oppenheimer Disciplined Value Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
C-27
<PAGE>
Oppenheimer Municipal Bond Fund
Oppenheimer U.S. Government Trust
3. The "Quest" Oppenheimer Funds. OpCap Advisors (previously named
-----------------------------
Quest for Value Advisors) is sub-adviser. The address for these
funds is 2 World Trade Center, New York, NY 10048-0203.
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
(consisting of the following 4 series:)
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Global Value Fund, Inc.
4. The "Rochester" Oppenheimer Funds. The address for these funds
----------------------------------
is 350 Linden Oaks, Rochester, NY 14625.
Bond Fund Series - Oppenheimer Bond Fund for Growth
Rochester Fund Municipals
Rochester Portfolio Series - Limited Term New York Municipal
Fund
(b) The information contained in the registration on Form BD of
OppenheimerFunds Distributor, Inc., filed under the Securities Exchange Act of
1934, is incorporated herein by reference.
Item 30: Location of Accounts and Records
- -----------------------------------------
Each account, book or other document required to be maintained by
Registrant pursuant to Section 31 (a) of the Investment Company Act of 1940 and
Rules 31a-1 to 31a-3 thereunder are maintained as follows:
(Articles of Incorporation and Bylaws)
MassMutual Institutional Funds
1295 State Street
Springfield, Massachusetts 01111
(With respect to its services as Advisor)
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
C-28
<PAGE>
(With respect to its services as Sub-Advisor)
David L. Babson and Company, Inc.
One Memorial Drive
Cambridge, Massachusetts
(With respect to its services as Sub-Advisor)
HarbourView Asset Management Corporation
Two World Trade Center
New York, New York
(With respect to its services as Distributor)
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York
(With respect to its services as Sub-Administrator, Transfer Agent and
Custodian)
Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts
(With respect to their services as counsel)
Ropes & Gray
One International Place
Boston, Massachusetts
Item 31: Management Services
- ----------------------------
Not Applicable.
Item 32: Undertakings
- ---------------------
(a) The Registrant hereby undertakes to call a meeting of shareholders
for the purposes of voting upon the question of removal of a trustee or
trustees, and to assist in communications with other shareholders as required by
Section 16(c) of the Securities Act of 1933, as amended, but only where it is
requested to do so by the holders of at least 10% of the Registrant's
outstanding voting securities.
(b) The Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
C-29
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant has duly
caused this post-effective amendment to the Registration Statement to be signed
on its behalf by the undersigned, thereto duly authorized, in the City of
Springfield and the Commonwealth of Massachusetts on the 30th day of September,
1997. The Registrant certifies that this Post-Effective Amendment meets all the
requirements for effectiveness pursuant to Rule 485(a) under the Securities Act
of 1933.
MASSMUTUAL INSTITUTIONAL FUNDS
By: /s/ Hamline C. Wilson
---------------------
Hamline C. Wilson
Vice President & Chief Accounting
and Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on the 30th day of September, 1997.
Signature Title
--------- -----
/s/ Gary E. Wendlandt Chairman, Trustee &
--------------------- Chief Executive Officer
Gary E. Wendlandt
/s/ Stephen L. Kuhn * Trustee
-------------------
Ronald J. Abdow
/s/ Stephen L. Kuhn * Trustee
-------------------
Richard H. Ayers
/s/ Stephen L. Kuhn * Trustee
-------------------
Mary E. Boland
/s/ Stephen L. Kuhn * Trustee
-------------------
David E. A. Carson
<PAGE>
/s/ Stephen L. Kuhn * Trustee
-------------------
Richard G. Dooley
/s/ Stephen L. Kuhn * Trustee
-------------------
Richard W. Greene
/s/ Stephen L. Kuhn * Trustee
-------------------
Bevely C. L. Hamilton
/s/ Stephen L. Kuhn * Trustee
-------------------
F. William Marhsall, Jr.
/s/ Stephen L. Kuhn * Trustee
-------------------
Charles J. McCarthy
/s/ John V. Murphy Trustee
------------------
John V. Murphy
/s/ Stephen L. Kuhn * Trustee
-------------------
John H. Southworth
/s/ Hamline C. Wilson Vice President &
--------------------- Chief Accounting and
Hamline C. Wilson Financial Officer
/s/ Stephen L. Kuhn
-------------------
* Stephen L. Kuhn, as Attorney-in-fact pursuant to Powers of Attorney
granted on or about August 5, 1994, April 18, 1996 and April 21, 1997.
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit No. Title of Exhibit
- ----------- ----------------
1 Copy of Registrant's Agreement and Declaration of Trust, as
amended November 29, 1993.
2 Copy of Registrant's By-Laws, as now in effect.
5(a) Copy of Investment Management Agreement between each of
Registrant's seven series and MassMutual Life Insurance
Company ("MassMutual").
5(c) Copy of Investment Sub-Advisory Agreement between
MassMutual and HarbourView Asset Management Corporation
("HarbourView").
6(b) Copy of sub-distribution agreement between Oppenheimer
and MML Investors Services, Inc.
8(a) Copy of Custodian Agreement between the Trust and Investors
Bank & Trust Company ("IBT").
8(b) Copy of Administrative and Shareholder Services
Agreement between the Trust and MassMutual for the
provision of administrative and shareholder services.
8(c) Copy of Transfer Agency Agreement among the Trust,
MassMutual and IBT.
11(b) Consent of Coopers & Lybrand L.L.P.
11(c)-(g) Powers of Attorney for Gary E. Wendlandt, Ronald J. Abdow,
Charles J. McCarthy, John H. Southworth, Mary E. Boland.
27 Financial Data Schedules
<PAGE>
Exhibit 1
MASSMUTUAL INSTITUTIONAL FUNDS
AGREEMENT AND DECLARATION OF TRUST
May 28, 1993, as amended
<PAGE>
RECEIVED
JUN 02, 1993
SECRETARY OF STATE
CORPORATION DIVISION
MASSMUTUAL PENSION MANAGEMENT FUNDS
AGREEMENT AND DECLARATION OF TRUST
May 28, 1993
<PAGE>
MASS MUTUAL PENSION MANAGEMENT FUNDS
Written Instrument of Trustees
June 14, 1993
The undersigned, being all of the Trustees of MassMutual Pension Management
Funds (the "Trust"), a Massachusetts Voluntary Association established by
execution of an Agreement and Declaration of Trust, dated as of May 28, 1993, as
amended from time to time (the "Declaration of Trust"):
Pursuant to Section 7 of Article IX of the Declaration of Trust, does
hereby (1) change the name of the Trust from "MassMutual Pension Management
Funds" to "MassMutual Institutional Funds", and (2) amend Section 1 of
Article I of the Declaration of Trust by substituting the words "MassMutual
Institutional Funds" for the words "MassMutual Pension Management Funds"
therein.
WITNESS the signature of the undersigned this 14th day of June, 1993.
/s/ Stephen L. Kuhn
------------------------------
Stephen L. Kuhn, as Trustee
and not individually
THE COMMONWEALTH OF MASSACHUSETTS
Springfield ss. June 14, 1993
Then personally appeared the above-named Trustee and acknowledged the
foregoing instrument to be his free act and deed, before me,
/s/ Anne V. Moszynski
------------------------------
Notary Public
(Notary's Seal)
Anne V. Moszynski
NOTARY PUBLIC
My Commission Expires April 15, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Recitals ........................................................ 1
ARTICLE I: NAME AND DEFINITIONS
Section 1 Name................................................... 1
Section 2 Definitions............................................ 1
ARTICLE II: PURPOSE 2
ARTICLE III: SHARES
Section 1 Division of Beneficial Interest........................ 3
Section 2 Ownership of Shares.................................... 3
Section 3 Investments in the Trust; Assets of the
Series................................................. 3
Section 4 No Preemptive or Appraisal Rights; Derivative
Actions................................................ 4
Section 5 Status of Shares and Limitation of Personal
Liability.............................................. 4
ARTICLE IV: THE TRUSTEES
Section 1 Election; Removal...................................... 5
Section 2 Effect of Death, Resignation, etc. of a
Trustee................................................ 5
Section 3 Powers................................................. 5
Section 4 Payment of Expenses by the Trust....................... 8
Section 5 Ownership of Assets of the Trust....................... 9
Section 6 Advisory, Management and Distribution.................. 9
ARTICLE V: SHAREHOLDERS' VOTING POWERS
AND MEETINGS
Section 1 Voting Powers.......................................... 10
Section 2 Meetings............................................... 11
Section 3 Quorum and Required Vote............................... 11
Section 4 Action by Written Consent.............................. 12
Section 5 Additional Provisions.................................. 12
ARTICLE VI: DISTRIBUTIONS, REDEMPTIONS AND
REPURCHASES, AND DETERMINATION
OF NET ASSET VALUE
Section 1 Distributions.......................................... 12
Section 2 Redemptions and Repurchases............................ 13
Section 3 Payment in Kind........................................ 14
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 4 Redemptions at the Option of the Trust................. 15
Section 5 Dividends, Distributions, Redemptions
and Repurchases........................................ 15
Section 6 Additional Provisions Relating to
Redemptions and Repurchases............................ 15
Section 7 Determination of Net Asset Value....................... 15
ARTICLE VII: COMPENSATION AND LIMITATION
OF LIABILITY OF TRUSTEES
Section 1 Compensation........................................... 17
Section 2 Limitation of Liability................................ 17
ARTICLE VIII: INDEMNIFICATION
Section 1 Trustees, Officers, etc................................ 18
Section 2 Compromise Payment..................................... 19
Section 3 Indemnification Not Exclusive; Definitions............. 20
Section 4 Shareholders........................................... 20
ARTICLE IX: MISCELLANEOUS
Section 1 Trustees, Shareholders, etc. Not
Personally Liable; Notice.............................. 20
Section 2 Trustee's Good Faith Action, Expert Advice,
No Bond or Surety...................................... 21
Section 3 Liability of Third Persons Dealing with
Trustees............................................... 21
Section 4 Duration and Termination of Trust...................... 21
Section 5 Filing of Copies, References, Headings................. 22
Section 6 Applicable Law......................................... 22
Section 7 Amendments............................................. 22
</TABLE>
iii
<PAGE>
MASSMUTUAL PENSION MANAGEMENT FUNDS
------------------------
AGREEMENT AND DECLARATION OF TRUST
--------------------------
AGREEMENT AND DECLARATION OF TRUST made at Springfield, Massachusetts, this
28th day of May, 1993 by the Trustee hereunder and by the holders of shares of
beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH that
WHEREAS, this Trust has been formed to carry on the business of an
investment company; and
WHEREAS, the Trustees have agreed to manage all property coming into their
hands as trustees of a Massachusetts business trust with transferable shares in
accordance with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets, which they may from time to time acquire in any
manner as Trustees hereunder, IN TRUST to manage and dispose of the same upon
the following terms and conditions for the pro rata benefit of the holders from
time to time of Shares in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Name
- ----
Section 1. This Trust shall be known as "MassMutual Pension Management
---------
Funds" and the Trustees shall conduct the business of the Trust under that name
or any other name as they may from time to time determine.
Definitions
- -----------
Section 2. Whenever used herein, unless otherwise required by the context
---------
or specifically provided:
<PAGE>
(a) The "Trust" refers to the Massachusetts business trust established
by this Agreement and Declaration of Trust, as amended from time to time;
(b) "Trustees" refers to the Trustee or Trustees of the Trust named
herein or elected in accordance with Article IV;
(c) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be divided
from time to time or, if more than one series of Shares is authorized by
the Trustees, the equal proportionate units into which each series of
Shares shall be divided from time to time or, if more than one class of
Shares of any series is authorized by the Trustees, the equal proportionate
units into which each class of such series of Shares shall be divided from
time to time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time to time;
(f) The terms "Affiliated Person," "Assignment," "Commission,"
"Interested Person," "Principal Underwriter" and "Majority Shareholder
Vote" (the 67% or 50% requirement of the third sentence of Section 2(a)(42)
of the 1940 Act, whichever may be applicable) shall have the meanings given
them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust as amended or restated from time to time; and
(h) "Bylaws" shall mean the Bylaws of the Trust as amended from time
to time.
ARTICLE II
PURPOSE
The purpose of the Trust is to engage in the business of a management
investment company and to provide investors a managed investment primarily in
securities, commodities and debt and other financial instruments.
-2-
<PAGE>
ARTICLE III
SHARES
Division of Beneficial Interest
- -------------------------------
Section 1. The Shares of the Trust shall be issued in one or more series
---------
as the Trustees may, without Shareholder approval, authorize. The Trustees may,
without Shareholder approval, divide the Shares of any series into two or more
classes, Shares of each such class having such preferences or special or
relative rights or privileges (including conversion rights, if any) as the
Trustees may determine and as are not inconsistent with any provision of this
Declaration of Trust. Each series shall be preferred over all other series in
respect of the assets allocated to that series. The beneficial interest in each
series shall at all times be divided into Shares, without par value unless the
Trustees specify otherwise, each of which shall, except as the Trustees may
otherwise authorize in the case of any series that is divided into two or more
classes, represent an equal proportionate interest in the series with each other
Share of the same series, none having priority or preference over another. The
number of Shares authorized shall be unlimited, and the Shares so authorized may
be represented in part by fractional shares. The Trustees may from time to time
divide or combine the Shares of any series or class into a greater or lesser
number without thereby changing the proportionate beneficial interests in the
series or class.
Ownership of Shares
- -------------------
Section 2. The ownership of Shares shall be recorded on the books of the
---------
Trust or its transfer or similar agent. No certificates certifying the
ownership of Shares shall be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent of the Trust, as the case may be, shall be conclusive
as to who are the Shareholders of each series and class and as to the number of
Shares of each series and class held from time to time by each Shareholder.
Investments in the Trust; Assets of the Series
- ----------------------------------------------
Section 3. The Trustees may accept investments in the Trust from such
---------
persons and on such terms and, subject to any requirements of law, for such
consideration, which may consist of cash or tangible or intangible property or a
combination thereof, as they from time to time authorize. When Shares have been
issued for such consideration, such Shares shall be fully paid and
nonassessable.
-3-
<PAGE>
All consideration received by the Trust for the issue or sale of Shares of
each series, together with all income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation thereof,
and any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to the series of Shares
with respect to which the same were received by the Trust for all purposes,
subject only to the rights of creditors, and shall be so handled upon the books
of account of the Trust and are herein referred to as "assets of" such series.
No Preemptive or Appraisal Rights; Derivative Actions
- -----------------------------------------------------
Section 4. Shareholders shall have no preemptive or other right to
---------
receive, purchase or subscribe for any additional Shares or other securities
issued by the Trust and shall have no appraisal rights with respect to Shares
owned by them. No action may be brought by a Shareholder on behalf of the Trust
or a particular series of the Trust unless a prior demand regarding such matter
has been made on the Trustees and the Shareholders of the Trust or such series.
Status of Shares and Limitation of Personal Liability
- -----------------------------------------------------
Section 5. Shares shall be deemed to be personal property giving only the
---------
rights provided in this instrument. Every Shareholder by virtue of having
become a Shareholder shall be held to have expressly assented and agreed to the
terms hereof and to have become a party hereto. The death of a Shareholder
during the continuance of the Trust shall not operate to terminate the same nor
entitle the representative of any deceased Shareholder to an accounting or to
take any action in court or elsewhere against the Trust or the Trustees, but
only to the rights of said decedent under this Trust. Ownership of Shares shall
not entitle the Shareholder to any title in or to the whole or any part of the
Trust property or right to call for a partition or division of the same or for
an accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or
agent of the Trust, shall have any power to bind personally any Shareholder, nor
except as specifically provided herein to call upon any Shareholder for the
payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay.
-4-
<PAGE>
ARTICLE IV
THE TRUSTEES
Election; Removal
- -----------------
Section 1. The number of Trustees shall be fixed by the Trustees, except
---------
that, subsequent to any sale of Shares pursuant to a public offering, there
shall be not less than three Trustees. Any vacancies occurring in the Board of
Trustees may be filled by the Trustees if, immediately after filling any such
vacancy, at least two-thirds of the Trustees then holding office shall have been
elected to such office by the Shareholders. In the event that at any time less
than a majority of the Trustees then holding office were elected to such office
by the Shareholders, the Trustees shall call a meeting of Shareholders for the
purpose of electing Trustees. Each Trustee elected by the Trustees shall serve
until the next meeting of Shareholders called for the purpose of electing
Trustees and until the election and qualification of his or her successor, or
until he or she sooner dies, resigns or is removed. Each Trustee elected by the
Shareholders shall serve until he or she dies, resigns or is removed. The
initial Trustees, each of whom shall serve until he or she dies, resigns or is
removed, shall be Stephen L. Kuhn and such other persons as the Trustee or
Trustees then in office shall, prior to any sale of Shares pursuant to a public
offering, appoint. By vote of a majority of the Trustees then in office, the
Trustees may remove a Trustee with or without cause. At any Shareholders'
meeting called for the purpose, a Trustee may be removed, with or without cause,
by vote of the holders of two-thirds of the votes represented by outstanding
Shares.
Effect of Death, Resignation, etc. of a Trustee
- -----------------------------------------------
Section 2. The death, declination, resignation, retirement, removal or
---------
incapacity of the Trustees, or any one of them, shall not operate to annul the
Trust or to revoke any existing agency created pursuant to the terms of this
Declaration of Trust.
Powers
- ------
Section 3. Subject to the provisions of this Declaration of Trust, the
----------
business of the Trust shall be managed by the Trustees, and they shall have all
powers necessary or convenient to carry out that responsibility. Without
limiting the foregoing, the Trustees may adopt Bylaws not inconsistent with this
Declaration of Trust providing for the conduct of the business of the Trust and
may amend and repeal them to the extent that such Bylaws do not reserve that
right to the Shareholders; they may fill vacancies in their number, including
vacancies resulting from increases in their number, and may elect and remove
such officers and appoint and terminate such agents as
-5-
<PAGE>
they consider appropriate; they may appoint from their own number, and
terminate, any one or more committees consisting of two or more Trustees,
including an executive committee which may, when the Trustees are not in
session, exercise some or all of the power and authority of the Trustees as the
Trustees may determine; they may appoint an advisory board, the members of which
shall not be Trustees and need not be Shareholders; they may employ one or more
custodians of the assets of the Trust and may authorize such custodians to
employ subcustodians and to deposit all or any part of such assets in a system
or systems for the central handling of securities; retain a transfer agent or a
Shareholder services agent, or both; provide for the distribution of Shares by
the Trust, through one or more principal underwriters or otherwise; set record
dates for the determination of Shareholders with respect to various matters; and
in general delegate such authority as they consider desirable to any officer of
the Trust, to any committee of the Trustees and to any agent or employee of the
Trust or to any such custodian or underwriter.
Without limiting the foregoing, the Trustees shall have power and
authority:
(a) To invest and reinvest in securities, options, futures contracts,
options on futures contracts and other property, and to hold cash
uninvested;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, write
options on and lease any or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such power
and discretion with relation to securities or property as the Trustees
shall deem proper;
(d) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities or other assets;
(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in the
name of the Trustees or of the Trust or in the name of a custodian,
subcustodian or other depository or a nominee or nominees or otherwise;
(f) Subject to the provisions of Article III, Section 3 of this
Declaration of Trust, to allocate assets, liabilities and expenses of the
Trust to a particular series of Shares or to apportion the same among two
or more series,
-6-
<PAGE>
provided that any liabilities or expenses incurred by a particular series
of Shares shall be payable solely out of the assets of that series; and to
the extent necessary or appropriate to give effect to the preferences and
special or relative rights and privileges of any classes of Shares, to
allocate assets, liabilities, income and expenses of a series to a
particular class of Shares of that series or to apportion the same among
two or more classes of Shares of that series;
(g) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security of which
is or was held in the Trust; to consent to any contract, lease, mortgage,
purchase or sale of property by such corporation or issuer, and to pay
calls or subscriptions with respect to any security held in the Trust;
(h) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit
any security with, or transfer any security to, any such committee,
depositary or trustee, and to delegate to them such power and authority
with relation to any security (whether or not so deposited or transferred)
as the Trustees shall deem proper, and to agree to pay, and to pay, such
portion of the expenses and compensation of such committee, depositary or
trustee as the Trustees shall deem proper;
(i) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust on any matter in controversy, including but not limited
to claims for taxes;
(j) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(k) To borrow funds, securities or other assets;
(l) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge
the Trust property or any part thereof to secure any of or all of such
obligations or obligations incurred pursuant to subparagraph (k) hereof;
(m) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the
assets of the Trust and payment of distributions and principal on its
portfolio investments, and insurance policies insuring
-7-
<PAGE>
the Shareholders, Trustees, officers, employees, agents, investment
advisers or managers, principal underwriters or independent contractors of
the Trust individually against all claims and liabilities of every nature
arising by reason of holding, being or having held any such office or
position, or by reason of any action alleged to have been taken or omitted
by any such person as Shareholder, Trustee, officer, employee, agent,
investment adviser or manager, principal underwriter or independent
contractor, including any action taken or omitted that may be determined to
constitute negligence, whether or not the Trust would have the power to
indemnify such person against such liability; and
(n) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profit-sharing,
share bonus, share purchase, savings, thrift and other retirement,
incentive and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a means of providing
such retirement and other benefits, for any or all of the Trustees,
officers, employees and agents of the Trust.
The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments by Trustees.
Except as otherwise provided herein or from time to time in the Bylaws, any
action to be taken by the Trustees may be taken by a majority of the Trustees
present at a meeting of the Trustees (a quorum being present), within or without
Massachusetts, including any meeting held by means of a conference telephone or
other communications equipment by means of which all persons participating in
the meeting can hear each other at the same time, and participation by such
means shall constitute presence in person at a meeting, or by written consents
of a majority of the Trustees then in office.
Payment of Expenses by the Trust
- --------------------------------
Section 4. The Trustees are authorized to pay or to cause to be paid out
---------
of the principal or income of the Trust, or partly out of principal and partly
out of income, as they deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in connection
with the management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the Trust's
officers, employees, investment adviser or manager, administrator, principal
underwriter, auditor, counsel, custodian, transfer agent, Shareholder services
agent and such other agents or independent contractors, and such other expenses
-8-
<PAGE>
and charges, as the Trustees may deem necessary or proper to incur, provided,
--------
however, that all expenses, fees, charges, taxes and liabilities incurred or
- -------
arising in connection with a particular series of Shares, as determined by the
Trustees, shall be payable solely out of the assets of that series.
Ownership of Assets of the Trust
- --------------------------------
Section 5. Title to all of the assets of each series of Shares and of the
---------
Trust shall at all times be considered as vested in the Trustees.
Advisory, Management and Distribution
- -------------------------------------
Section 6. Subject to a favorable Majority Shareholder Vote, the Trustees
---------
may, at any time and from time to time, contract for exclusive or nonexclusive
advisory and/or management services with Massachusetts Mutual Life Insurance
Company and/or any other partnership, corporation, trust, association or other
organization (an "Adviser"), every such contract to comply with such
requirements and restrictions as may be set forth in the Bylaws; and any such
contract may contain such other terms interpretive of or in addition to said
requirements and restrictions as the Trustees may determine, including, without
limitation, authority to determine from time to time what investments shall be
purchased, held, sold or exchanged and what portion, if any, of the assets of
the Trust or any series of Shares shall be held uninvested, and to make changes
in the investments of the Trust or any series of Shares. The Trustees may also,
at any time and from time to time, contract with Oppenheimer Management
Corporation and/or any other corporation, trust, association or other
organization, appointing it exclusive or nonexclusive distributor or principal
underwriter for the Shares, every such contract to comply with such requirements
and restrictions as may be set forth in the Bylaws; and any such contract may
contain such other terms interpretive of or in addition to said requirements and
restrictions as the Trustees may determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or agent of or for any
corporation, trust, association or other organization, or of or for any
parent or affiliate of any organization, with which an advisory or
management contract, or principal underwriter's or distributor's contract,
or administrator, transfer, shareholder services or other agency contract
may have been or may hereafter be made, or that any organization, or any
-9-
<PAGE>
parent or affiliate thereof, is a Shareholder or has an interest in the
Trust, or that
(ii) any corporation, trust, association or other organization with
which an advisory or management contract or principal underwriter's or
distributor's contract, or administrator, transfer, Shareholder services or
other agency contract may have been or may hereafter be made also has an
advisory or management contract, or principal underwriter's or
distributor's contract, or administrator, transfer, shareholder services or
other agency contract with one or more other corporations, trusts,
associations or other organizations, or has other business or interests
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Voting Powers
- -------------
Section 1. The Shareholders shall have power to vote only (i) for the
---------
election or removal of Trustees as provided in Article IV, Section 1, (ii) with
respect to any Adviser as provided in Article IV, Section 6, (iii) with respect
to any termination of this Trust to the extent and as provided in Article IX,
Section 4, (iv) with respect to any amendment of this Declaration of Trust to
the extent and as provided in Article IX, Section 7 and (v) with respect to such
additional matters relating to the Trust as may be required by law, this
Declaration of Trust, the Bylaws or any registration of the Trust with the
Securities and Exchange Commission (or any successor agency) or any state, or as
the Trustees may consider necessary or desirable.
Holders of Shares of each series or class shall be entitled to one vote for
each dollar (or a proportionate fractional vote for each fraction of a dollar)
of net asset value per Share of each series or class for each Share held as to
any matter on which such Shares are entitled to vote. Notwithstanding any other
provision of this Declaration of Trust, on any matter submitted to a vote of
Shareholders, all Shares of the Trust then entitled to vote shall be voted in
the aggregate as a single class without regard to series or class except: (1)
when required by the 1940 Act or when the Trustees shall have determined that
the matter affects one or more series or classes materially differently, Shares
shall be voted by individual series or class; and (2) when the Trustees have
determined that the matter affects
-10-
<PAGE>
only the interests of one or more series or classes, then only Shareholders of
such series or classes shall be entitled to vote thereon. There shall be no
cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy. A proxy with respect to Shares
held in the name of two or more persons shall be valid if executed by any one of
them unless at or prior to exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of them. A proxy purporting to be
executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. At all meetings of Shareholders, unless
inspectors of election have been appointed, all questions relating to the
qualification of voters and the validity of proxies and the acceptance or
rejection of votes shall be decided by the chairman of the meeting. Unless
otherwise specified in the proxy, the proxy shall apply to all Shares of each
series of the Trust owned by the Shareholder.
Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this Declaration of Trust
or the Bylaws to be taken by Shareholders.
Meetings
- --------
Section 2. No annual or regular meeting of Shareholders is required.
---------
Meetings of Shareholders of the Trust or of any series or class may be called by
the Trustees or such other person or persons as may be specified in the Bylaws
and held from time to time for the purpose of taking action upon any matter
requiring the vote or the authority of the Shareholders of the Trust or any
series or class as herein provided or upon any other matter deemed by the
Trustees to be necessary or desirable. Meetings of Shareholders of the Trust or
of any series or class shall be called by the Trustees or such other person or
persons upon written application as may be specified in the Bylaws. The
Shareholders shall be entitled to at least seven days' written notice of any
meeting of the Shareholders.
Quorum and Required Vote
- ------------------------
Section 3. Shares representing thirty percent (30%) of the votes entitled
---------
to vote shall be a quorum for the transaction of business at a Shareholders'
meeting, except that where any provision of law or of this Declaration of Trust
permits or requires that holders of any series or class shall vote as a series
or class, then Shares representing thirty percent (30%) of the votes of that
series or class entitled to vote shall be necessary to constitute a quorum for
the transaction of business
-11-
<PAGE>
by that series or class. Any lesser number, however, shall be sufficient for
adjournments. Any adjourned session or sessions may be held within a reasonable
time after the date set for the original meeting without the necessity of
further notice. Except when a larger vote is required by any provision of this
Declaration of Trust or the Bylaws, Shares representing a majority of the votes
voted shall decide any questions and a plurality shall elect a Trustee, provided
that where any provision of law or of this Declaration of Trust permits or
requires that the holders of any series or class shall vote as a series or
class, then Shares representing a majority of the votes of that series or class
voted on the matter (or a plurality with respect to the election of a Trustee)
shall decide that matter insofar as that series or class is concerned.
Action by Written Consent
- -------------------------
Section 4. Any action taken by Shareholders may be taken without a meeting
---------
if Shares representing a majority of the votes entitled to vote on the matter
(or such larger proportion thereof as shall be required by any express provision
of this Declaration of Trust or the Bylaws or by law) consent to the action in
writing and such written consents are filed with the records of the meetings of
Shareholders. Such consent shall be treated for all purposes as a vote taken at
a meeting of Shareholders.
Additional Provisions
- ---------------------
Section 5. The Bylaws may include further provisions for Shareholders'
---------
votes and meetings and related matters.
ARTICLE VI
DISTRIBUTIONS, REDEMPTIONS AND REPURCHASES,
AND DETERMINATION OF NET ASSET VALUE
Distributions
- -------------
Section 1. The Trustees may, but need not, each year distribute to the
---------
Shareholders of each series or class such income and gains, accrued or realized,
as the Trustees may determine, after providing for actual and accrued expenses
and liabilities (including such reserves as the Trustees may establish)
determined in accordance with good accounting practices. The Trustees shall
have full discretion to determine which items shall be treated as income and
which items as capital and their determination shall be binding upon the
Shareholders. Distributions of each year's income of each series, if any be
made, may be made in one or more payments, which shall be in Shares, in cash or
otherwise and on a date or dates and as of a record date or dates determined by
the Trustees. At any time and from time to time in their discretion, the
Trustees may
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<PAGE>
distribute to the Shareholders of any one or more series or classes as of a
record date or dates determined by the Trustees, in Shares, in cash or
otherwise, all or part of any gains realized on the sale or disposition of
property of the series or otherwise, or all or part of any other principal of
the Trust attributable to the series. In the case of any series not divided into
two or more classes of Shares, each distribution pursuant to this Section 1
shall be made ratably according to the number of Shares of the series held by
the several Shareholders on the applicable record date thereof, provided that no
distribution need be made on Shares purchased pursuant to orders received, or
for which payment is made, after such time or times as the Trustees may
determine. In the case of any series divided into two or more classes, each
distribution pursuant to this Section 1 may be made in whole or in such parts as
the Trustees may determine to the Shareholders of any one or more classes, and
the distribution to the Shareholders of any class shall be made ratably
according to the number of Shares of the class (but need not be made ratably
according to the number of Shares of the series, considered without regard to
class) held by the several Shareholders on the record date thereof, provided
that no distribution need be made on Shares purchased pursuant to orders
received, or for which payment is made, after such time or times as the Trustees
may determine. Any such distribution paid in Shares will be paid at the net
asset value thereof as determined in accordance with Section 7 of this Article
VI.
Redemptions and Repurchases
- ---------------------------
Section 2. Any holder of Shares of the Trust may by presentation of a
---------
written request, together with his or her certificates, if any, for such Shares,
in proper form for transfer, at the office of the Trust or at a principal office
of a transfer agent appointed by the Trust, redeem his or her Shares for the net
asset value thereof determined and computed in accordance with the provisions of
this Section 2 and the provisions of Section 7 of this Article VI.
Upon receipt by the Trust or its transfer agent of such written request for
redemption of Shares, such Shares shall be redeemed at the net asset value per
share of the appropriate series or class next determined after such Shares are
tendered in proper order for transfer to the Trust or determined as of such
other time fixed by the Trustees as may be permitted or required by the 1940
Act, provided that no such tender shall be required in the case of Shares for
which a certificate or certificates have not been issued, and in such case such
Shares shall be redeemed at the net asset value per share of the appropriate
series or class next determined after such request has been received in proper
form or determined at such other time fixed by the Trustees as may be permitted
or required by the 1940 Act.
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<PAGE>
The obligation of the Trust to redeem its Shares of each series or class as
set forth above in this Section 2 shall be subject to the conditions that during
any time of emergency, as hereinafter defined, such obligation may be suspended
by the Trust by or under authority of the Trustees for such period or periods
during such time of emergency as shall be determined by or under authority of
the Trustees. If there is such a suspension, any Shareholder may withdraw any
demand for redemption and any tender of Shares which has been received by the
Trust during any such period and any tender of Shares, the applicable net asset
value of which would but for such suspension be calculated as of a time during
such period. Upon such withdrawal, the Trust shall return to the Shareholder
the certificates therefor, if any. For the purposes of any such suspension,
"time of emergency" shall mean, either with respect to all Shares or any series
or class of Shares, any period during which:
a. the New York Stock Exchange is closed other than for customary
weekend and holiday closings; or
b. the Trustees or authorized officers of the Trust shall have
determined, in compliance with any applicable rules and regulations of the
Securities and Exchange Commission, either that trading on the New York
Stock Exchange is restricted, or that an emergency exists as a result of
which (i) disposal by the Trust of securities owned by it is not reasonably
practicable or (ii) it is not reasonably practicable for the Trust fairly
to determine the current value of its net assets; or
c. the suspension or postponement of such obligations is permitted by
order of the Securities and Exchange Commission.
The Trust may also purchase, repurchase or redeem Shares in accordance with
such other methods, upon such other terms and subject to such other conditions
as the Trustees may from time to time authorize at a price not exceeding the net
asset value of such Shares in effect when the purchase or repurchase or any
contract to purchase or repurchase is made.
Payment in Kind
- ---------------
Section 3. Subject to any generally applicable limitation imposed by the
---------
Trustees, any payment on redemption of Shares may, if authorized by the
Trustees, be made wholly or partly in kind, instead of in cash. Such payment in
kind shall be made by distributing securities or other property constituting, in
the opinion of the Trustees, a fair representation of the various types of
securities and other property then held by the series of Shares being redeemed
(but not necessarily involving a portion of
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<PAGE>
each of the series' holdings) and taken at their value used in determining the
net asset value of the Shares in respect of which payment is made.
Redemptions at the Option of the Trust
- --------------------------------------
Section 4. The Trust shall have the right at its option and at any time to
---------
redeem Shares of any Shareholder at the net asset value thereof as determined in
accordance with Section 7 of this Article VI: (i) if at such time such
Shareholder owns fewer Shares than, or Shares having an aggregate net asset
value of less than, an amount determined from time to time by the Trustees; or
(ii) to the extent that such Shareholder owns Shares of a particular series of
Shares equal to or in excess of a percentage of the outstanding Shares of that
series (determined without regard to class) determined from time to time by the
Trustees; or (iii) to the extent that such Shareholder owns Shares of the Trust
representing a percentage equal to or in excess of such percentage of the
aggregate number of outstanding Shares of the Trust or the aggregate net asset
value of the Trust determined from time to time by the Trustees.
Dividends, Distributions, Redemptions and Repurchases
- -----------------------------------------------------
Section 5. No dividend or distribution (including, without limitation, any
---------
distribution paid upon termination of the Trust or of any series) with respect
to, nor any redemption or repurchase of, the Shares of any series (or of any
class) shall be effected by the Trust other than from the assets of such series
(or of the series of which such class is a part).
Additional Provisions Relating to Redemptions and Repurchases
- -------------------------------------------------------------
Section 6. The completion of redemption of Shares shall constitute a full
---------
discharge of the Trust and the Trustees with respect to such Shares, and the
Trustees may require that any certificate or certificates issued by the Trust to
evidence the ownership of such Shares shall be surrendered to the Trustees for
cancellation or notation.
Determination of Net Asset Value
- --------------------------------
Section 7. The term "net asset value" of the Shares of each series or
---------
class shall mean: (i) the value of all the assets of such series or class; (ii)
less the total liabilities of such series or class; (iii) divided by the number
of Shares of such series or class outstanding, in each case at the time of each
determination. The "number of Shares of such series or class outstanding" for
the purposes of such computation shall be exclusive of any Shares of such series
or class to be redeemed and not then redeemed as to which the redemption price
has been
-15-
<PAGE>
determined, but shall include Shares of such series or class presented for
repurchase and not then repurchased and Shares of such series or class to be
redeemed and not then redeemed as to which the redemption price has not been
determined and Shares of such series or class the sale of which has been
confirmed. Any fractions involved in the computation of net asset value per
share shall be adjusted to the nearer cent unless the Trustees shall determine
to adjust such fractions to a fraction of a cent.
The Trustees, or any officer or officers or agent of this Trust designated
for the purpose by the Trustees, shall determine the net asset value of the
Shares of each series or class, and the Trustees shall fix the times as of which
the net asset value of the Shares of each series or class shall be determined
and shall fix the periods during which any such net asset value shall be
effective as to sales, redemptions and repurchases of, and other transactions
in, the Shares of such series or class, except as such times and periods for any
such transaction may be fixed by other provisions of this Declaration of Trust
or by the Bylaws.
In valuing the portfolio investments of any series or class for
determination of net asset value per share of such series or class:
(a) Each investment for which market quotations are readily available
shall be valued at current market value determined by methods
specified by the Board of Trustees;
(b) Each other investment, including any investment within (a) for which
the specified price does not appear to represent a dependable
quotation for such investment as of the time of valuation, shall be
valued at a fair value as determined in good faith by the Trustees;
(c) Any cash on hand shall be valued at the face amount thereof;
(d) Any cash on deposit, accounts receivable, and cash dividends and
interest declared or accrued and not yet received, any prepaid
expenses, and any other current asset shall be valued at the face
amount thereof, unless the Trustees shall determine that any such item
is not worth its face amount, in which case such asset shall be valued
at a fair value determined in good faith by the Trustees; and
(e) Any other asset shall be valued at a fair value determined in good
faith by the Trustees.
-16-
<PAGE>
Notwithstanding the foregoing, short-term debt obligations, commercial paper and
repurchase agreements may be, but need not be, valued on the basis of quoted
yields for securities of comparable maturity, quality and type, or on the basis
of amortized cost.
Liabilities of any series or class for accounts payable for investments
purchased and for Shares tendered for redemption and not then redeemed as to
which the redemption price has been determined shall be stated at the amounts
payable therefor. In determining the net asset value of any series or class,
the person or persons making such determination on behalf of the Trust may
include in liabilities such reserves, estimated accrued expenses and
contingencies as such person or persons may in its, his or their best judgment
deem fair and reasonable under the circumstances. Any income dividends and
gains distributions payable by the Trust shall be deducted as of such time or
times on the record date therefor as the Trustees shall determine.
The manner of determining the net assets of any series or class or of
determining the net asset value of the Shares of any series or class may from
time to time be altered as necessary or desirable in the judgment of the
Trustees to conform to any other method prescribed or permitted by any
applicable law or regulation.
Determinations under this Section 7 made in good faith and in accordance
with the provisions of the 1940 Act shall be binding on all parties concerned.
ARTICLE VII
COMPENSATION AND LIMITATION
OF LIABILITY OF TRUSTEES
Compensation
- ------------
Section 1. The Trustees as such shall be entitled to reasonable
---------
compensation from the Trust; they may fix the amount of their compensation.
Nothing herein shall in any way prevent the employment of any Trustee for
advisory, management, legal, accounting, investment banking or other services
and payment for the same by the Trust.
Limitation of Liability
- -----------------------
Section 2. The Trustees shall not be responsible or liable in any event
---------
for any neglect or wrongdoing of any officer, agent, employee, adviser or
principal underwriter of the Trust, nor shall any Trustee be responsible for the
act or omission of any other Trustee, but nothing herein contained shall protect
any Trustee against any liability to which he or she would otherwise
-17-
<PAGE>
be subject by reason of wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate, writing, Share or
undertaking and every other act or thing whatsoever executed or done by or on
behalf of the Trust or the Trustees or any of them in connection with the Trust
shall be conclusively deemed to have been executed or done only in or with
respect to their or his or her capacity as Trustees or Trustee, and such
Trustees or Trustee shall not be personally liable thereon.
ARTICLE VIII
INDEMNIFICATION
Trustees, Officers, etc.
- ------------------------
Section 1. The Trust shall indemnify each person who is or has been a
---------
Trustee or officer (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise) (hereinafter referred to
as a "Covered Person") against all liabilities and expenses, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and counsel fees and expenses reasonably incurred by any Covered
Person in connection with the defense or disposition of any action, suit or
other proceeding, whether civil, criminal, administrative or investigative, and
any appeal therefrom, before any court or administrative or legislative body, in
which such Covered Person may be or may have been involved as a party or
otherwise or with which such person may be or may have been threatened, while in
office or thereafter, by reason of being or having been such a Covered Person,
except that no Covered Person shall be indemnified against any liability to the
Trust or its Shareholders to which such Covered Person would otherwise be
subject by reason of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office.
Expenses, including counsel fees and expenses so incurred by any such
Covered Person (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), may be paid from time to time by the Trust
in advance of the final disposition of any such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such Covered Person to repay
amounts so paid to the Trust if it is ultimately determined that indemnification
of such expenses is not authorized under this Article, provided that (a) such
-------- ----
Covered Person shall provide security for his undertaking, (b) the Trust
-18-
<PAGE>
shall be insured against losses arising by reason of such Covered Person's
failure to fulfill his undertaking or (c) a majority of the Trustees who are
disinterested persons and who are not Interested Persons (provided that a
majority of such Trustees then in office act on the matter), or independent
legal counsel in a written opinion, shall determine, based on a review of
readily available facts (but not a full trial-type inquiry), that there is
reason to believe such Covered Person ultimately will be entitled to
indemnification.
Compromise Payment
- ------------------
Section 2. As to any matter disposed of (whether by a compromise payment,
---------
pursuant to a consent decree or otherwise) without an adjudication in a decision
on the merits by a court, or by any other body before which the proceeding was
brought, that such Covered Person is liable to the Trust or its Shareholders by
reason of wilful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's office,
indemnification shall be provided if (a) approved as in the best interest of the
Trust, after notice that it involves such indemnification, by at least a
majority of the Trustees who are disinterested persons and are not Interested
Persons (provided that a majority of such Trustees then in office act on the
matter), upon a determination, based upon a review of readily available facts
(but not a full trial-type inquiry) that such Covered Person is not liable to
the Trust or its Shareholders by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
Covered Person's office, or (b) there has been obtained an opinion in writing of
independent legal counsel, based upon a review of readily available facts (but
not a full-trial type inquiry) to the effect that such indemnification would not
protect such Covered Person against any liability to the Trust to which such
Covered Person would otherwise be subject by reason of wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office.
Any approval pursuant to this Section shall not prevent the recovery from
any Covered Person of any amount paid to such Covered Person in accordance with
this Section as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction to have been liable to the
Trust or its Shareholders by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
Covered Person's office.
-19-
<PAGE>
Indemnification Not Exclusive; Definitions
- ------------------------------------------
Section 3. The right of indemnification hereby provided shall not be
---------
exclusive of or affect any other rights to which any such Covered Person may be
entitled. As used in this Article VIII, the term "Covered Person" shall include
such person's heirs, executors and administrators, and a "disinterested person"
is a person against whom none of the actions, suits or other proceedings in
question or another action, suit or other proceeding on the same or similar
grounds is then or has been pending. Nothing contained in this article shall
affect any rights to indemnification to which personnel of the Trust, other than
Trustees and officers, and other persons may be entitled by contract or
otherwise under law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of such persons.
Shareholders
- ------------
Section 4. In case any Shareholder or former Shareholder shall be held to
---------
be personally liable solely by reason of his or her being or having been a
Shareholder and not because of his or her acts or omissions or for some other
reason, the Shareholder or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or, in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled to
be held harmless from and indemnified against all loss and expense arising from
such liability, but only out of the assets of the particular series of Shares of
which he or she is or was a Shareholder.
ARTICLE IX
MISCELLANEOUS
Trustees, Shareholders, etc. Not Personally Liable; Notice
- ----------------------------------------------------------
Section 1. All persons extending credit to, contracting with or having any
---------
claim against the Trust or a particular series of Shares shall look only to the
assets of the Trust or the assets of that particular series of Shares for
payment under such credit, contract or claim; and neither the Shareholders nor
the Trustees, nor any of the Trust's officers, employees or agents, whether
past, present or future, shall be personally liable therefor. Nothing in this
Declaration of Trust shall protect any Trustee against any liability to which
such Trustee would otherwise be subject by reason of wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee.
Every note, bond, contract, instrument, writing, certificate or undertaking
made or issued by the Trustees or by any officers
-20-
<PAGE>
or officer shall give notice that this Declaration of Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts and shall recite that
the same was executed or made by or on behalf of the Trust or by them as
Trustees or Trustee or as officers or officer and not individually and that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and property of
the Trust, and may contain such further recital as he or she or they may deem
appropriate, but the omission thereof shall not operate to bind any Trustees or
Trustee or officers or officer or Shareholders or Shareholder individually.
Trustee's Good Faith Action, Expert Advice, No Bond or Surety
- -------------------------------------------------------------
Section 2. The exercise by the Trustees of their powers and discretions
---------
hereunder shall be binding upon everyone interested. A Trustee shall be liable
for his or her own wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee, and
for nothing else, and shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust, and shall be
under no liability for any act or omission in accordance with such advice or for
failing to follow such advice. The Trustees shall not be required to give any
bond as such, nor any surety if a bond is required.
Liability of Third Persons Dealing with Trustees
- ------------------------------------------------
Section 3. No person dealing with the Trustees shall be bound to make any
---------
inquiry concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
Duration and Termination of Trust
- ---------------------------------
Section 4. Unless terminated as provided herein, the Trust shall continue
---------
without limitation of time. The Trust may be terminated at any time by vote of
the holders of a majority of the votes represented by outstanding Shares of each
series entitled to vote or by the Trustees by written notice to the
Shareholders. Any series of Shares may be terminated at any time by vote of the
holders of a majority of the votes represented by outstanding Shares of such
series entitled to vote or by the Trustees by written notice to the Shareholders
of such series.
Upon termination of the Trust or of any one or more series of Shares, after
paying or otherwise providing for all charges, taxes, expenses and liabilities,
whether due or accrued or anticipated as may be determined by the Trustees, the
Trust shall
-21-
<PAGE>
in accordance with such procedures as the Trustees consider appropriate reduce
the remaining assets to distributable form in cash or shares or other
securities, or any combination thereof, and distribute the proceeds to the
Shareholders of the series involved, ratably according to the number of Shares
of such series held by the several Shareholders of such series on the date of
termination, except to the extent otherwise required or permitted by the
preferences and special or relative rights and privileges of any classes of
Shares of that series, provided that any distribution to the Shareholders of a
particular class of Shares shall be made to such Shareholders pro rata in
proportion to the number of Shares of such class held by each of them.
Filing of Copies, References, Headings
- --------------------------------------
Section 5. The original or a copy of this instrument and of each amendment
---------
hereto shall be kept at the office of the Trust where it may be inspected by any
Shareholder. A copy of this instrument and of each amendment hereto shall be
filed by the Trust with the Secretary of State of The Commonwealth of
Massachusetts and with the Clerk of the City of Springfield, as well as any
other governmental office where such filing may from time to time be required.
Anyone dealing with the Trust may rely on a certificate by an officer of the
Trust as to whether or not any such amendments have been made and as to any
matters in connection with the Trust hereunder; and, with the same effect as if
it were the original, may rely on a copy certified by an officer of the Trust to
be a copy of this instrument or of any such amendments. In this instrument and
in any such amendment, references to this instrument, and all expressions such
as "herein," "hereof" and "hereunder," shall be deemed to refer to this
instrument as amended or affected by any such amendments. Headings are placed
herein for convenience of reference only and shall not be taken as a part hereof
or control or affect the meaning, construction or effect of this instrument.
This instrument may be executed in any number of counterparts, each of which
shall be deemed an original.
Applicable Law
- --------------
Section 6. This Declaration of Trust is made in The Commonwealth of
---------
Massachusetts, and it is created under and is to be governed by and construed
and administered according to the laws of said Commonwealth. The Trust shall be
of the type commonly called a Massachusetts business trust, and without limiting
the provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
Amendments
- ----------
Section 7. This Declaration of Trust may be amended at any time by an
---------
instrument in writing signed by a majority of the then
-22-
<PAGE>
Trustees when authorized so to do by a vote of the holders of a majority of the
votes represented by outstanding Shares entitled to vote, except that an
amendment which shall affect the holders of one or more series or classes of
Shares but not the holders of all outstanding series and classes shall be
authorized by vote of the holders of a majority of the votes represented by
outstanding Shares entitled to vote of each series and class affected and no
vote of Shareholders of a series or class not affected shall be required.
Amendments having the purpose of changing the name of the Trust or of supplying
any omission, curing any ambiguity or curing, correcting or supplementing any
defective or inconsistent provision contained herein shall not require
authorization by Shareholder vote.
IN WITNESS WHEREOF the undersigned has hereunto set his hand in the City of
Springfield, Massachusetts for himself and his assigns, as of this 28th day of
May, 1993.
/s/ Stephen L. Kuhn
-----------------------------
Stephen L. Kuhn, as Trustee
and not individually
THE COMMONWEALTH OF MASSACHUSETTS
Springfield ss. May 28, 1993
Then personally appeared the above-named Trustee and acknowledged the
foregoing instrument to be his free act and deed, before me,
/s/ [SIGNATURE APPEARS HERE]
-----------------------------
Notary Public
My commission expires: April 15, 1999
[NOTARY'S SEAL [STAMP APPEARS HERE]
APPEARS HERE]
The address of the trustee is:
Stephen L. Kuhn
Massachusetts Mutual Life
Insurance Company
1295 State Street
Springfield, Massachusetts 01111
The principal office of the Trust is:
Stephen L. Kuhn
Massachusetts Mutual Life
Insurance Company
1295 State Street
Springfield, Massachusetts 01111
-23-
<PAGE>
Exhibit 2
BYLAWS
------
OF
--
MASSMUTUAL INSTITUTIONAL FUNDS
------------------------------
Section 1. Agreement and Declaration of
Trust and Principal Office
-----------------------------------------
1.1 Agreement and Declaration of Trust. These Bylaws shall be subject to the
-----------------------------------
Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of MassMutual Institutional Funds, a Massachusetts
business trust established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust shall be
------------------------------
located in Springfield, Massachusetts.
Section 2. Shareholders
------------------------
2.1 Shareholder Meetings. A meeting of the shareholders of the Trust or of any
---------------------
one or more series or classes of shares may be called at any time by the
Trustees, by the chairman, the president or, if the Trustees, the chairman and
the president shall fail to call any meeting of shareholders for a period of 30
days after written application of one or more shareholders who hold shares
representing at least ten percent of all of the votes represented by all
outstanding shares of the Trust, if shareholders of all series are required
under the Declaration of Trust to vote in the aggregate and not by individual
series at such meeting, or shares representing at least ten percent of all the
votes represented by any series or class, if shareholders of such series or
class are entitled under the Declaration of Trust to vote by individual series
or class at such meeting, then such shareholders may call such meeting. Each
call of a meeting shall state the place, date, hour and purposes of the meeting.
2.2 Place of Meetings. All meetings of the shareholders shall be held at the
------------------
principal office of the Trust, or, to the extent permitted by the Declaration of
Trust, at such other place within the United States as shall be designated by
the Trustees or the president of the Trust.
2.3 Notice of Meetings. A written notice of each meeting of shareholders,
-------------------
stating the place, date and hour and the purposes of the meeting, shall be given
at least seven days before the meeting to each shareholder entitled to vote
thereat by leaving such notice with him or her or at his or her residence or
usual place of business or by mailing it, postage prepaid, and addressed to such
shareholder at his or her address as it appears
<PAGE>
-2-
in the records of the Trust. Such notice shall be given by the secretary or an
assistant secretary or by an officer designated by the Trustees. If the meeting
is a meeting of the shareholders of one or more series or classes of shares, but
not a meeting of all shareholders of the Trust, then only the shareholders of
such one or more series or classes shall be entitled to notice of and to vote at
the meeting. No notice of any meeting of shareholders need be given to a
shareholder if a written waiver of notice, executed before or after the meeting
by such shareholder or his or her attorney thereunto duly authorized, is filed
with the records of the meeting.
2.4 Ballots. No ballot shall be required for any election unless requested by
--------
a shareholder present or represented at the meeting and entitled to vote in the
election.
2.5 Proxies. Shareholders entitled to vote may vote either in person or by
--------
proxy in writing dated not more than six months before the meeting named
therein, which proxies shall be filed with the secretary, or other person
responsible to record the proceedings of the meeting, before being voted.
Unless otherwise specifically limited by their terms, such proxies shall entitle
the holders thereof to vote at any adjournment of such meeting but shall not be
valid after the final adjournment of such meeting. The placing of a
shareholder's name on a proxy pursuant to telephonic or electronically
transmitted instructions obtained pursuant to procedures reasonably designed to
verify that such instructions have been authorized by such shareholder shall
constitute execution of such proxy by or on behalf of such shareholder.
Section 3. Trustees
---------------------
3.1 Committees and Advisory Board. The Trustees may appoint from their number
------------------------------
an executive committee and other committees. Except as the Trustees may
otherwise determine, any such committee may make rules for conduct of its
business. The Trustees may appoint an advisory board to consist of not less
than two nor more than five members. The members of the advisory board shall be
compensated in such manner as the Trustees may determine and shall confer with
and advise the Trustees regarding the investments and other affairs of the
Trust. Each member of the advisory board shall hold office until the first
meeting of the Trustees following the next meeting of the shareholders and until
his or her successor is elected and qualified, or until he or she sooner dies,
resigns, is removed or becomes disqualified, or until the advisory board is
sooner abolished by the Trustees.
<PAGE>
-3-
3.2 Regular Meetings. Regular meetings of the Trustees may be held without
-----------------
call or notice at such places and at such times as the trustees may from time to
time determine, provided that notice of the first regular meeting following any
such determination shall be given to absent Trustees.
3.3 Special Meetings. Special meetings of the Trustees may be held at any time
-----------------
and at any place designated in the call of the meeting, when called by the
chairman, the president or the treasurer or by two or more Trustees, sufficient
notice thereof being given to each Trustee by the secretary or an assistant
secretary or by the officer or one of the Trustees calling the meeting.
3.4 Notice. It shall be sufficient notice to a Trustee to send notice by mail
-------
at least forty-eight hours or by telegram at least twenty-four hours before the
meeting addressed to the Trustee at his or her usual or last known business or
residence address or to give notice to him or her in person or by telephone or
by facsimile transmission at least twenty-four hours before the meeting. Notice
of a meeting need not be given to any Trustee if a written waiver of notice,
executed by him or her before or after the meeting, is filed with the records of
the meeting, or to any Trustee who attends the meeting without protesting prior
thereto or at its commencement the lack of notice to him or her. Neither notice
of a meeting nor a waiver of a notice need specify the purposes of the meeting.
3.5 Quorum. At any meeting of the Trustees one-third of the Trustees then in
-------
office shall constitute a quorum; provided, however, a quorum shall not be less
than two. Any meeting may be adjourned from time to time by a majority of the
votes cast upon the question, whether or not a quorum is present, and the
meeting may be held as adjourned without further notice.
Section 4. Officers and Agents
--------------------------------
4.1 Enumeration; Qualification. The officers of the Trust shall be a chairman,
---------------------------
a president, a treasurer, a secretary and such other officers, if any, as the
Trustees from time to time may in their discretion elect or appoint. The Trust
may also have such agents, if any, as the Trustees from time to time may in
their discretion appoint. Any officer may be but none need be a Trustee or
shareholder. Any two or more offices may be held by the same person.
4.2 Powers. Subject to the other provisions of these By-Laws,
-------
<PAGE>
-4-
each officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly incident
to his or her office as if the Trust were organized as a Massachusetts business
corporation and such other duties and powers as the Trustees may from time to
time designate, including without limitation the power to make purchases and
sales of portfolio securities of the Trust pursuant to recommendations of the
Trust's investment adviser in accordance with the policies and objectives of the
Trust set forth in its prospectus or statement of additional information and
with such general or specific instructions as the Trustees may from time to time
have issued.
4.3 Election. The chairman, the president, the treasurer and the secretary
---------
shall be elected annually by the Trustees. Other officers, if any, may be
elected or appointed by the Trustees at any time.
4.4 Tenure. The chairman, the president, the treasurer and the secretary shall
-------
hold office until their respective successors are chosen and qualified, or in
each case until he or she sooner dies, resigns, is removed or becomes
disqualified. Each other officer shall hold office at the pleasure of the
Trustees. Each agent shall retain his or her authority at the pleasure of the
Trustees.
4.5 Chairman. The chairman shall preside at all meetings of the Trustees and
---------
shareholders.
4.6 President. The president shall be the chief executive officer of the
----------
Trust. In the absence of the chairman, or in the event of the chairman's
inability or refusal to act, the president shall perform the duties of the
chairman and when so acting shall have all the powers of the chairman.
4.7 Vice Presidents. In the absence of the president, or in the event of the
----------------
president's inability or refusal to act, the vice president (or in the event
there be more than one vice president, the vice presidents in the order
designated, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting shall
have all the powers of the president. Any vice president shall have such other
duties and powers as shall be designated from time to time by the Trustees, the
chairman or the president.
4.8 Treasurer. The treasurer shall be the chief financial and accounting
----------
officer of the Trust and subject to any arrangement made by the Trustees with a
bank or trust company or other organization as custodian or transfer or
shareholder services
<PAGE>
-5-
agent, shall be in charge of its valuable papers and its books of account and
accounting records, and shall have such duties and powers as shall be designated
from time to time by the Trustees, the chairman or the president. Any assistant
treasurer shall have such duties and powers as shall be designated from time to
time by the Trustees or the Treasurer.
4.9 Secretary. The secretary shall record all proceedings of the shareholders
----------
and the Trustees in books to be kept therefor, which books shall be kept at the
principal office of the Trust. In the absence of the secretary from any meeting
of shareholders or Trustees, an assistant secretary, or if there be none or he
or she is absent, a temporary clerk chosen at the meeting, shall record the
proceedings thereof in the aforesaid books. Any assistant secretary shall have
such duties and powers as shall be designated from time to time by the Trustees
or the Secretary.
Section 5. Resignations and Removals
--------------------------------------
Any Trustee, officer or advisory board member may resign at any time by
delivering his or her resignation in writing to the president, the treasurer or
the secretary or to a meeting of the Trustees. The Trustees may remove any
officer elected by them with or without cause by the vote of a majority of the
Trustees then in office. Except to the extent expressly provided in a written
agreement with the Trust, no Trustee, officer, or advisory board member
resigning, and no officer or advisory board member removed, shall have any right
to any compensation for any period following his or her resignation or removal,
or any right to damages on account of such removal.
Section 6. Vacancies
----------------------
A vacancy in any office may be filled at any time. Each successor shall hold
office for the unexpired term, and in the case of the chairman, the president,
the treasurer and the secretary, until his or her successor is chosen and
qualified, or in each case until he or she sooner dies, resigns, is removed or
becomes disqualified.
Section 7. Shares of Beneficial Interest
------------------------------------------
7.1 Share Certificates. No certificates certifying the ownership of shares
-------------------
shall be issued except as the Trustees may otherwise authorize. In the event
that the Trustees authorize the issuance of share certificates, subject to the
provisions of
<PAGE>
-6-
Section 7.3, each shareholder shall be entitled to a certificate stating
the number of shares owned by him or her, in such form as shall be prescribed
from time to time by the Trustees. Such certificate shall be signed by the
chairman, the president or a vice president and by the treasurer or an assistant
treasurer. Such signatures may be facsimiles if the certificate is signed by a
transfer agent or by a registrar, other than a Trustee, officer or employee of
the Trust. In case any officer who has signed or whose facsimile signature has
been placed on such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Trust with the same effect as if
he or she were such officer at the time of its issue.
In lieu of issuing certificates for shares, the Trustees or the
transfer agent may either issue receipts therefor or keep accounts upon the
books of the Trust for the record holders of such shares, who shall in either
case be deemed, for all purposes hereunder, to be the holders of certificates
for such shares as if they had accepted such certificates and shall be held to
have expressly assented and agreed to the terms hereof.
7.2 Loss of Certificates. In the case of the alleged loss or destruction or
---------------------
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees may prescribe.
7.3 Discontinuance of Issuance of Certificates. The Trustees may at any time
-------------------------------------------
discontinue the issuance of share certificates and may, by written notice to
each shareholder, require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect the ownership of
shares in the Trust.
Section 8. Record Date and
Closing Transfer Books
----------------------------
The Trustees may fix in advance a time, which shall not be more than 90 days
before the date of any meeting of shareholders or the date for the payment of
any dividend or making of any other distribution to shareholders, as the record
date for determining the shareholders having the right to notice and to vote and
the number of votes entitled to be cast at such meeting and any adjournment
thereof or the right to receive such dividend or distribution, and in such case
only shareholders of record on such record date shall have such right,
notwithstanding any transfer of shares on the books of the Trust after the
record date; or without fixing such record date the Trustees may for any of such
purposes close the transfer books for all or any part of
<PAGE>
-7-
such period.
Section 9. Seal
-----------------
The seal of the Trust shall, subject to alteration by the Trustees, consist of a
flat-faced circular die with the word "Massachusetts," together with the name of
the Trust and the year of its organization, cut or engraved thereon; but, unless
otherwise required by the Trustees, the seal shall not be necessary to be placed
on, and its absence shall not impair the validity of, any document, instrument
or other paper executed and delivered by or on behalf of the Trust.
Section 10. Execution of Papers
---------------------------------
Except as the Trustees may generally or in particular cases authorize the
execution thereof in some other manner, all deeds, leases, transfers, contracts,
bonds, notes, checks, drafts and other obligations made, accepted or endorsed by
the Trust shall be signed, and all transfers of securities standing in the name
of the Trust shall be executed, by the chairman, the president or by one of the
vice presidents or by the treasurer or by the secretary or by whomsoever else
shall be designated for that purpose by the vote of the Trustees and need not
bear the seal of the Trust.
Section 11. Fiscal Year
-------------------------
Except as from time to time otherwise provided by the Trustees, the fiscal year
of the Trust shall end on December 31.
Section 12. Amendments
------------------------
These By-Laws may be amended or repealed, in whole or in part, by a majority of
the Trustees then in office at any meeting of the Trustees, or by one or more
writings signed by such a majority.
<PAGE>
Exhibit 5(a)
INVESTMENT MANAGEMENT AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
And
MASSMUTUAL INSTITUTIONAL FUNDS
(As To MassMutual Prime Fund)
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
-------------------------------
This INVESTMENT MANAGEMENT AGREEMENT (the "Management Agreement"), is
between Massachusetts Mutual Life Insurance Company, a Massachusetts corporation
(the "Manager"), and MassMutual Institutional Funds, a Massachusetts business
trust (the "Trust"), effective this 30th day of September, 1994.
WHEREAS, the Trust is an open-end diversified management investment
company registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, MassMutual Prime Fund (the "Fund") is a series of the Trust;
WHEREAS, the Manager is an investment adviser registered with the
Commission as such under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and
WHEREAS, the Trust desires to appoint the Manager as its investment
manager for the Fund and the Manager is willing to act in such capacity upon the
terms herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the Trust and the Manager hereby agree as follows:
1. General Provision.
------------------
The Trust hereby employs the Manager and the Manager hereby undertakes to
act as the investment manager of the Fund, to provide investment advice and
to perform for the Fund such other duties and functions as are hereinafter
set forth. The Manager shall, in all matters, give to the Fund and the
Trust's Board of Trustees the benefit of the Manager's best judgment,
effort, advice and recommendations and shall, at all times conform to, and
use its best efforts to enable the Fund to conform to:
(a) the provisions of the Act, the Advisers Act and any rules or
regulations thereunder;
(b) any other applicable provisions of state or federal law;
(c) the provisions of the Agreement and Declaration of Trust and By-
Laws of the Trust as amended from time to time (collectively
referred to as the "Trust Documents");
(d) policies and determinations of the Board of Trustees of the
Trust;
(e) the fundamental and non-fundamental policies and investment
restrictions of the Fund as reflected in the Trust's registration
statement or as such policies may, from time to time, be amended
by the Board of Trustees, or where necessary, by the Fund's
shareholders; and/or
(f) the Prospectus and Statement of Additional Information of the
Fund in effect from time to time.
<PAGE>
The appropriate officers and employees of the Manager shall be available
upon reasonable notice for consultation with any of the Trustees and
officers of the Trust and the Trust with respect to any matter dealing with
the business and affairs of the Fund, such as the valuation of portfolio
securities of the Fund, including but not limited to securities that are
either not registered for public sale or securities not traded on any
securities market.
2. Duties of the Manager.
----------------------
(a) The Manager shall, subject to the direction and control by the Trust's
Board of Trustees (i) regularly provide investment advice and
recommendations to the Fund, with respect to the Fund's investments,
investment policies and the purchase and sale of securities; (ii)
supervise and monitor continuously the investment program of the Fund
and the composition of its portfolio and determine what securities
shall be purchased or sold by the Fund; (iii) arrange, subject to the
provisions of Section 5 hereof, for the purchase of securities and
other investments for the Fund and the sale of securities and other
investments held in the portfolio of the Fund; and (iv) provide
reports on the foregoing to the Board of Trustees at each Board
meeting.
(b) Provided that neither the Trust nor the Fund shall be required to pay
any compensation other than as provided by the terms of this
Management Agreement and subject to the provisions of Section 5
hereof, the Manager may obtain investment information, research or
assistance from any other person, firm or corporation to supplement,
update or otherwise improve its investment management services.
(c) Provided that nothing herein shall be deemed to protect the Manager
from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or reckless disregard to its obligations
and duties under this Management Agreement, the Manager shall not be
liable for any loss sustained by reason of good faith errors or
omissions in connection with any matters to which this Management
Agreement relates.
(d) Nothing in this Management Agreement shall prevent the Manager or any
officer thereof from acting as investment adviser or sub-adviser for
any other person, firm or corporation and shall not in any way limit
or restrict the Manager or any of their respective directors,
officers, members, stockholders or employees from buying, selling, or
trading any securities for its own account or for the account of
others for whom it or they may be acting, provided that such
activities will not adversely affect or otherwise impair the
performance by any party of its duties and obligations under this
Management Agreement.
(e) The Manager shall cooperate with the Trust by providing the Trust with
any information in the Manager's possession necessary for supervising
the activities of all administrative and clerical personnel as shall
be required to provide corporate administration for the Fund,
including the compilation and maintenance of such records with respect
to its operations as may reasonably be required. The Manager shall,
at its own expense, provide such officers for the Trust as its Board
may request.
2
<PAGE>
3. Duties of the Trust.
--------------------
The Trust shall provide the Manager with the following information about
the Fund:
(a) cash flow estimates on request;
(b) notice of the Fund's "investable funds" by 9:00 a.m. each business
day;
(c) as they are modified, from time to time, current versions of the
documents and policies referred to in Subsections (c), (d), (e) and
(f) of Section 1 hereof, above.
4. Compensation of the Manager.
----------------------------
The Trust agrees to pay the Manager and the Sub-Adviser agrees to accept as
full compensation for the performance of all functions and duties on its
part to be performed pursuant to the provisions hereof, a fee at the annual
rate .45% of the average daily net asset value of the Fund, determined at
the close of the New York Stock Exchange on each day that the Exchange is
open for trading and paid on the last day of each month.
5. Portfolio Transactions and Brokerage.
-------------------------------------
(a) The Manager is authorized, in arranging the purchase and sale of the
Fund's publicly-traded portfolio securities, to employ or deal with
such members of securities exchanges, brokers or dealers (hereinafter
"broker- dealers"), including "affiliated" broker-dealers, as that
term is defined in the Act, as may, in its best judgment, implement
the policy of the Fund to obtain, at reasonable expense, the best
execution (prompt and reliable execution at the most favorable
security price obtainable) of the Fund's portfolio transactions.
(b) The Manager may effect the purchase and sale of securities (which are
otherwise publicly traded) in private transactions on such terms and
conditions as are customary in such transactions, may use a broker in
such to effect said transactions, and may enter into a contract in
which the broker acts either as principal or as agent.
(c) The Manager shall select broker-dealers to effect the Fund's portfolio
transactions on the basis of its estimate of their ability to obtain
best execution of particular and related portfolio transactions. The
abilities of a broker-dealer to obtain best execution of particular
portfolio transaction(s) will be judged by the Manager on the basis of
all relevant factors and considerations including, insofar as
feasible, the execution capabilities required by the transaction or
transactions; the ability and willingness of the broker-dealer to
facilitate the Fund's portfolio transactions by participating therein
for its own account; the importance to the Fund of speed, efficiency
or confidentiality; the broker-dealer's apparent familiarity with
sources from or to whom particular securities might be purchased or
sold; as well as any other matters relevant to the selection of a
broker-dealer for particular and related transactions of the Fund.
6. Duration.
---------
Unless terminated earlier pursuant to Section 7 hereof, this Management
Agreement shall
3
<PAGE>
remain in effect until June 30, 1995. Thereafter it shall continue in
effect from year to year, so long as such continuance shall be approved at
least annually by the Trust's Board of Trustees, including the vote of the
majority of the Trustees of the Trust who are not parties to this
Management Agreement or "interested persons" (as defined in the Act) of any
such party cast in person at a meeting called for the purpose of voting on
such approval, or by the holders of a "majority" (as defined in the Act) of
the outstanding voting securities of the Fund.
7. Termination.
------------
This Management Agreement shall terminate automatically upon its assignment
or in the event upon the termination of the Advisory Management Agreement;
it may also be terminated: (i) for cause or with the consent of the parties
and the Trust by the Trust or the Manager at any time without penalty upon
sixty days' written notice to the other party and the Trust; or (ii) by the
Trust at any time without penalty upon sixty days' written notice to the
Trust and the Manager provided that such termination by the Trust shall be
directed or approved by a vote of a majority of all of the Trustees of the
Trust then in office or by the vote of the holders of a "majority" of the
outstanding voting securities of the Fund (as defined in the Act).
8. Investment Sub-Advisory Contracts.
----------------------------------
(a) Subject to the provisions of the Agreement and Declaration of Trust
and the 1940 Act, the Manager, at its expense, may, in its discretion
(subject only to approval by the Trust's Board of Trustees and, if
necessary, the Trust's shareholders) select and contract with an investment
sub-adviser (the "Sub-Adviser") for the Fund. So long as any Sub-Adviser
serves as Sub-Adviser to the Fund, it must be a party to a Sub-Investment
Advisory Agreement in substantially the form attached hereto as Schedule A
----------
(the "Sub-Adviser Agreement") and will be obligated to:
(1) Furnish continuously an investment program as to those assets of
the Trust and the Fund as allocated by the Manager;
(2) In connection therewith, adhere to such guidelines as may be
established by the Manager from time to time to insure compliance with
applicable investment objectives, policies and restrictions of the
Trust and the Fund; and
(3) Place all orders for the purchase and sale of investments of the
Fund.
(b) The Manager will be responsible for payment of all compensation to any
Sub-Adviser and other persons and entities to which Manager delegates any
duties hereunder.
9. Disclaimer of Shareholder Liability.
------------------------------------
The Trust and the Manager understand that the obligations of the Trust
under this Management Agreement are not binding upon any Trustee or
shareholder of the Trust personally, but bind only the Trust and the
Trust's property. The Manager represents that it has notice of the
provisions of the Trust Documents disclaiming shareholder and Trustee
liability for acts or obligations of the Trust.
4
<PAGE>
10. Notice.
-------
Any notice under this Management Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party, with a copy
to the Trust, at the addresses below or such other address as such other
party may designate for the receipt of such notice.
If to the Manager:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Edwin P. McCausland, Jr
Vice President and Managing Director
If to the Trust:
MassMutual Institutional Funds
1295 State Street
Springfield, MA 01111
Attention: Stephen L. Kuhn,
Vice President and Secretary
IN WITNESS WHEREOF, the Trust and the Manager have caused this Management
Agreement to be executed on the day and year first above written.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Edwin P. McCausland, Jr.
---------------------------------------
Edwin P. McCausland, Jr.
Vice President and Managing Director
MASSMUTUAL INSTITUTIONAL FUNDS on behalf of
MASSMUTUAL PRIME FUND
By: /s/ Stuart H. Reese
---------------------------------------
Stuart H. Reese
President
5
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
And
MASSMUTUAL INSTITUTIONAL FUNDS
(As To MassMutual Short-Term Bond Fund)
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
-------------------------------
This INVESTMENT MANAGEMENT AGREEMENT (the "Management Agreement"), is
between Massachusetts Mutual Life Insurance Company, a Massachusetts corporation
(the "Manager"), and MassMutual Institutional Funds, a Massachusetts business
trust (the "Trust"), effective this 30th day of September, 1994.
WHEREAS, the Trust is an open-end diversified management investment
company registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, MassMutual Short-Term Bond Fund (the "Fund") is a series of
the Trust;
WHEREAS, the Manager is an investment adviser registered with the
Commission as such under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and
WHEREAS, the Trust desires to appoint the Manager as its investment
manager for the Fund and the Manager is willing to act in such capacity upon the
terms herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the Trust and the Manager hereby agree as follows:
1. General Provision.
------------------
The Trust hereby employs the Manager and the Manager hereby undertakes to
act as the investment manager of the Fund, to provide investment advice and
to perform for the Fund such other duties and functions as are hereinafter
set forth. The Manager shall, in all matters, give to the Fund and the
Trust's Board of Trustees the benefit of the Manager's best judgment,
effort, advice and recommendations and shall, at all times conform to, and
use its best efforts to enable the Fund to conform to:
(a) the provisions of the Act, the Advisers Act and any rules or
regulations thereunder;
(b) any other applicable provisions of state or federal law;
(c) the provisions of the Agreement and Declaration of Trust and By-
Laws of the Trust as amended from time to time (collectively
referred to as the "Trust Documents");
(d) policies and determinations of the Board of Trustees of the
Trust;
(e) the fundamental and non-fundamental policies and investment
restrictions of the Fund as reflected in the Trust's registration
statement or as such policies may, from time to time, be amended
by the Board of Trustees, or where necessary, by the Fund's
shareholders; and/or
(f) the Prospectus and Statement of Additional Information of the
Fund in effect from time to time.
The appropriate officers and employees of the Manager shall be available
upon reasonable notice for consultation with any of the Trustees and
officers of the Trust and the Trust with respect to any matter dealing with
the business and affairs of the Fund, such as the
<PAGE>
valuation of portfolio securities of the Fund, including but not limited to
securities that are either not registered for public sale or securities not
traded on any securities market.
2. Duties of the Manager.
----------------------
(a) The Manager shall, subject to the direction and control by the Trust's
Board of Trustees (i) regularly provide investment advice and
recommendations to the Fund, with respect to the Fund's investments,
investment policies and the purchase and sale of securities; (ii)
supervise and monitor continuously the investment program of the Fund
and the composition of its portfolio and determine what securities
shall be purchased or sold by the Fund; (iii) arrange, subject to the
provisions of Section 5 hereof, for the purchase of securities and
other investments for the Fund and the sale of securities and other
investments held in the portfolio of the Fund; and (iv) provide
reports on the foregoing to the Board of Trustees at each Board
meeting.
(b) Provided that neither the Trust nor the Fund shall be required to pay
any compensation other than as provided by the terms of this
Management Agreement and subject to the provisions of Section 5
hereof, the Manager may obtain investment information, research or
assistance from any other person, firm or corporation to supplement,
update or otherwise improve its investment management services.
(c) Provided that nothing herein shall be deemed to protect the Manager
from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or reckless disregard to its obligations
and duties under this Management Agreement, the Manager shall not be
liable for any loss sustained by reason of good faith errors or
omissions in connection with any matters to which this Management
Agreement relates.
(d) Nothing in this Management Agreement shall prevent the Manager or any
officer thereof from acting as investment adviser or sub-adviser for
any other person, firm or corporation and shall not in any way limit
or restrict the Manager or any of their respective directors,
officers, members, stockholders or employees from buying, selling, or
trading any securities for its own account or for the account of
others for whom it or they may be acting, provided that such
activities will not adversely affect or otherwise impair the
performance by any party of its duties and obligations under this
Management Agreement.
(e) The Manager shall cooperate with the Trust by providing the Trust with
any information in the Manager's possession necessary for supervising
the activities of all administrative and clerical personnel as shall
be required to provide corporate administration for the Fund,
including the compilation and maintenance of such records with respect
to its operations as may reasonably be required. The Manager shall,
at its own expense, provide such officers for the Trust as its Board
may request.
3. Duties of the Trust.
--------------------
The Trust shall provide the Manager with the following information about
the Fund:
(a) cash flow estimates on request;
2
<PAGE>
(b) notice of the Fund's "investable funds" by 9:00 a.m. each business
day;
(c) as they are modified, from time to time, current versions of the
documents and policies referred to in Subsections (c), (d), (e) and
(f) of Section 1 hereof, above.
4. Compensation of the Manager.
----------------------------
The Trust agrees to pay the Manager and the Sub-Adviser agrees to accept as
full compensation for the performance of all functions and duties on its
part to be performed pursuant to the provisions hereof, a fee at the annual
rate .45% of the average daily net asset value of the Fund, determined at
the close of the New York Stock Exchange on each day that the Exchange is
open for trading and paid on the last day of each month.
5. Portfolio Transactions and Brokerage.
-------------------------------------
(a) The Manager is authorized, in arranging the purchase and sale of the
Fund's publicly-traded portfolio securities, to employ or deal with
such members of securities exchanges, brokers or dealers (hereinafter
"broker- dealers"), including "affiliated" broker-dealers, as that
term is defined in the Act, as may, in its best judgment, implement
the policy of the Fund to obtain, at reasonable expense, the best
execution (prompt and reliable execution at the most favorable
security price obtainable) of the Fund's portfolio transactions.
(b) The Manager may effect the purchase and sale of securities (which are
otherwise publicly traded) in private transactions on such terms and
conditions as are customary in such transactions, may use a broker in
such to effect said transactions, and may enter into a contract in
which the broker acts either as principal or as agent.
(c) The Manager shall select broker-dealers to effect the Fund's portfolio
transactions on the basis of its estimate of their ability to obtain
best execution of particular and related portfolio transactions. The
abilities of a broker-dealer to obtain best execution of particular
portfolio transaction(s) will be judged by the Manager on the basis of
all relevant factors and considerations including, insofar as
feasible, the execution capabilities required by the transaction or
transactions; the ability and willingness of the broker-dealer to
facilitate the Fund's portfolio transactions by participating therein
for its own account; the importance to the Fund of speed, efficiency
or confidentiality; the broker-dealer's apparent familiarity with
sources from or to whom particular securities might be purchased or
sold; as well as any other matters relevant to the selection of a
broker-dealer for particular and related transactions of the Fund.
6. Duration.
---------
Unless terminated earlier pursuant to Section 7 hereof, this Management
Agreement shall remain in effect until June 30, 1995. Thereafter it shall
continue in effect from year to year, so long as such continuance shall be
approved at least annually by the Trust's Board of Trustees, including the
vote of the majority of the Trustees of the Trust who are not parties to
this Management Agreement or "interested persons" (as defined in the Act)
of any such party cast in person at a meeting called for the purpose of
voting on such
3
<PAGE>
approval, or by the holders of a "majority" (as defined in the Act) of the
outstanding voting securities of the Fund.
7. Termination.
------------
This Management Agreement shall terminate automatically upon its assignment
or in the event upon the termination of the Advisory Management Agreement;
it may also be terminated: (i) for cause or with the consent of the parties
and the Trust by the Trust or the Manager at any time without penalty upon
sixty days' written notice to the other party and the Trust; or (ii) by the
Trust at any time without penalty upon sixty days' written notice to the
Trust and the Manager provided that such termination by the Trust shall be
directed or approved by a vote of a majority of all of the Trustees of the
Trust then in office or by the vote of the holders of a "majority" of the
outstanding voting securities of the Fund (as defined in the Act).
8. Investment Sub-Advisory Contracts.
----------------------------------
(a) Subject to the provisions of the Agreement and Declaration of Trust and
the 1940 Act, the Manager, at its expense, may, in its discretion (subject
only to approval by the Trust's Board of Trustees and, if necessary, the
Trust's shareholders) select and contract with an investment sub-adviser
(the "Sub-Adviser") for the Fund. So long as any Sub-Adviser serves as Sub-
Adviser to the Fund, it must be a party to a Sub-Investment Advisory
Agreement in substantially the form attached hereto as Schedule A (the
----------
"Sub-Adviser Agreement") and will be obligated to:
(1) Furnish continuously an investment program as to those assets of
the Trust and the Fund as allocated by the Manager;
(2) In connection therewith, adhere to such guidelines as may be
established by the Manager from time to time to insure compliance with
applicable investment objectives, policies and restrictions of the
Trust and the Fund; and
(3) Place all orders for the purchase and sale of investments of the
Fund.
(b) The Manager will be responsible for payment of all compensation to any
Sub-Adviser and other persons and entities to which Manager delegates any
duties hereunder.
9. Disclaimer of Shareholder Liability.
------------------------------------
The Trust and the Manager understand that the obligations of the Trust
under this Management Agreement are not binding upon any Trustee or
shareholder of the Trust personally, but bind only the Trust and the
Trust's property. The Manager represents that it has notice of the
provisions of the Trust Documents disclaiming shareholder and Trustee
liability for acts or obligations of the Trust.
10. Notice.
-------
Any notice under this Management Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party, with a copy
to the Trust, at the addresses
4
<PAGE>
below or such other address as such other party may designate for the
receipt of such notice.
If to the Manager:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Edwin P. McCausland, Jr
Vice President and Managing Director
If to the Trust:
MassMutual Institutional Funds
1295 State Street
Springfield, MA 01111
Attention: Stephen L. Kuhn,
Vice President and Secretary
IN WITNESS WHEREOF, the Trust and the Manager have caused this Management
Agreement to be executed on the day and year first above written.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Edwin P. McCausland, Jr.
----------------------------------------
Edwin P. McCausland, Jr.
Vice President and Managing Director
MASSMUTUAL INSTITUTIONAL FUNDS on behalf of
MASSMUTUAL SHORT-TERM BOND FUND
By: /s/ Stuart H. Reese
---------------------------------------
Stuart H. Reese
President
5
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
And
MASSMUTUAL INSTITUTIONAL FUNDS
(As To MassMutual Core Bond Fund)
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
-------------------------------
This INVESTMENT MANAGEMENT AGREEMENT (the "Management Agreement"), is
between Massachusetts Mutual Life Insurance Company, a Massachusetts corporation
(the "Manager"), and MassMutual Institutional Funds, a Massachusetts business
trust (the "Trust"), effective this 30th day of September, 1994.
WHEREAS, the Trust is an open-end diversified management investment
company registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, MassMutual Core Bond Fund (the "Fund") is a series of the
Trust;
WHEREAS, the Manager is an investment adviser registered with the
Commission as such under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and
WHEREAS, the Trust desires to appoint the Manager as its investment
manager for the Fund and the Manager is willing to act in such capacity upon the
terms herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the Trust and the Manager hereby agree as follows:
1. General Provision.
------------------
The Trust hereby employs the Manager and the Manager hereby undertakes
to act as the investment manager of the Fund, to provide investment
advice and to perform for the Fund such other duties and functions as
are hereinafter set forth. The Manager shall, in all matters, give to
the Fund and the Trust's Board of Trustees the benefit of the Manager's
best judgment, effort, advice and recommendations and shall, at all
times conform to, and use its best efforts to enable the Fund to conform
to:
(a) the provisions of the Act, the Advisers Act and any rules or
regulations thereunder;
(b) any other applicable provisions of state or federal law;
(c) the provisions of the Agreement and Declaration of Trust and
By-Laws of the Trust as amended from time to time
(collectively referred to as the "Trust Documents");
(d) policies and determinations of the Board of Trustees of the
Trust;
(e) the fundamental and non-fundamental policies and investment
restrictions of the Fund as reflected in the Trust's
registration statement or as such policies may, from time to
time, be amended by the Board of Trustees, or where
necessary, by the Fund's shareholders; and/or
(f) the Prospectus and Statement of Additional Information of the
Fund in effect from time to time.
The appropriate officers and employees of the Manager shall be available
upon reasonable
<PAGE>
notice for consultation with any of the Trustees and officers of the
Trust and the Trust with respect to any matter dealing with the business
and affairs of the Fund, such as the valuation of portfolio securities
of the Fund, including but not limited to securities that are either not
registered for public sale or securities not traded on any securities
market.
2. Duties of the Manager.
----------------------
(a) The Manager shall, subject to the direction and control by the
Trust's Board of Trustees (i) regularly provide investment advice
and recommendations to the Fund, with respect to the Fund's
investments, investment policies and the purchase and sale of
securities; (ii) supervise and monitor continuously the investment
program of the Fund and the composition of its portfolio and
determine what securities shall be purchased or sold by the Fund;
(iii) arrange, subject to the provisions of Section 5 hereof, for
the purchase of securities and other investments for the Fund and
the sale of securities and other investments held in the portfolio
of the Fund; and (iv) provide reports on the foregoing to the Board
of Trustees at each Board meeting.
(b) Provided that neither the Trust nor the Fund shall be required to
pay any compensation other than as provided by the terms of this
Management Agreement and subject to the provisions of Section 5
hereof, the Manager may obtain investment information, research or
assistance from any other person, firm or corporation to
supplement, update or otherwise improve its investment management
services.
(c) Provided that nothing herein shall be deemed to protect the Manager
from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or reckless disregard to its obligations
and duties under this Management Agreement, the Manager shall not
be liable for any loss sustained by reason of good faith errors or
omissions in connection with any matters to which this Management
Agreement relates.
(d) Nothing in this Management Agreement shall prevent the Manager or
any officer thereof from acting as investment adviser or sub-
adviser for any other person, firm or corporation and shall not in
any way limit or restrict the Manager or any of their respective
directors, officers, members, stockholders or employees from
buying, selling, or trading any securities for its own account or
for the account of others for whom it or they may be acting,
provided that such activities will not adversely affect or
otherwise impair the performance by any party of its duties and
obligations under this Management Agreement.
(e) The Manager shall cooperate with the Trust by providing the Trust
with any information in the Manager's possession necessary for
supervising the activities of all administrative and clerical
personnel as shall be required to provide corporate administration
for the Fund, including the compilation and maintenance of such
records with respect to its operations as may reasonably be
required. The Manager shall, at its own expense, provide such
officers for the Trust as its Board may request.
3. Duties of the Trust.
--------------------
The Trust shall provide the Manager with the following information about
the Fund:
2
<PAGE>
(a) cash flow estimates on request;
(b) notice of the Fund's "investable funds" by 9:00 a.m. each business
day;
(c) as they are modified, from time to time, current versions of the
documents and policies referred to in Subsections (c), (d), (e) and
(f) of Section 1 hereof, above.
4. Compensation of the Manager.
----------------------------
The Trust agrees to pay the Manager and the Sub-Adviser agrees to accept
as full compensation for the performance of all functions and duties on
its part to be performed pursuant to the provisions hereof, a fee at the
annual rate .45% of the average daily net asset value of the Fund,
determined at the close of the New York Stock Exchange on each day that
the Exchange is open for trading and paid on the last day of each month.
5. Portfolio Transactions and Brokerage.
-------------------------------------
(a) The Manager is authorized, in arranging the purchase and sale of
the Fund's publicly-traded portfolio securities, to employ or deal
with such members of securities exchanges, brokers or dealers
(hereinafter "broker- dealers"), including "affiliated" broker-
dealers, as that term is defined in the Act, as may, in its best
judgment, implement the policy of the Fund to obtain, at reasonable
expense, the best execution (prompt and reliable execution at the
most favorable security price obtainable) of the Fund's portfolio
transactions.
(b) The Manager may effect the purchase and sale of securities (which
are otherwise publicly traded) in private transactions on such
terms and conditions as are customary in such transactions, may use
a broker in such to effect said transactions, and may enter into a
contract in which the broker acts either as principal or as agent.
(c) The Manager shall select broker-dealers to effect the Fund's
portfolio transactions on the basis of its estimate of their
ability to obtain best execution of particular and related
portfolio transactions. The abilities of a broker-dealer to obtain
best execution of particular portfolio transaction(s) will be
judged by the Manager on the basis of all relevant factors and
considerations including, insofar as feasible, the execution
capabilities required by the transaction or transactions; the
ability and willingness of the broker-dealer to facilitate the
Fund's portfolio transactions by participating therein for its own
account; the importance to the Fund of speed, efficiency or
confidentiality; the broker-dealer's apparent familiarity with
sources from or to whom particular securities might be purchased or
sold; as well as any other matters relevant to the selection of a
broker-dealer for particular and related transactions of the Fund.
6. Duration.
---------
Unless terminated earlier pursuant to Section 7 hereof, this Management
Agreement shall remain in effect until June 30, 1995. Thereafter it
shall continue in effect from year to
3
<PAGE>
year, so long as such continuance shall be approved at least annually by
the Trust's Board of Trustees, including the vote of the majority of the
Trustees of the Trust who are not parties to this Management Agreement
or "interested persons" (as defined in the Act) of any such party cast
in person at a meeting called for the purpose of voting on such
approval, or by the holders of a "majority" (as defined in the Act) of
the outstanding voting securities of the Fund.
7. Termination.
------------
This Management Agreement shall terminate automatically upon its
assignment or in the event upon the termination of the Advisory
Management Agreement; it may also be terminated: (i) for cause or with
the consent of the parties and the Trust by the Trust or the Manager at
any time without penalty upon sixty days' written notice to the other
party and the Trust; or (ii) by the Trust at any time without penalty
upon sixty days' written notice to the Trust and the Manager provided
that such termination by the Trust shall be directed or approved by a
vote of a majority of all of the Trustees of the Trust then in office or
by the vote of the holders of a "majority" of the outstanding voting
securities of the Fund (as defined in the Act).
8. Investment Sub-Advisory Contracts.
----------------------------------
(a) Subject to the provisions of the Agreement and Declaration of Trust
and the 1940 Act, the Manager, at its expense, may, in its discretion
(subject only to approval by the Trust's Board of Trustees and, if
necessary, the Trust's shareholders) select and contract with an
investment sub-adviser (the "Sub-Adviser") for the Fund. So long as any
Sub-Adviser serves as Sub-Adviser to the Fund, it must be a party to a
Sub-Investment Advisory Agreement in substantially the form attached
hereto as Schedule A (the "Sub-Adviser Agreement") and will be
----------
obligated to:
(1) Furnish continuously an investment program as to those assets
of the Trust and the Fund as allocated by the Manager;
(2) In connection therewith, adhere to such guidelines as may be
established by the Manager from time to time to insure compliance
with applicable investment objectives, policies and restrictions
of the Trust and the Fund; and
(3) Place all orders for the purchase and sale of investments of
the Fund.
(b) The Manager will be responsible for payment of all compensation to
any Sub-Adviser and other persons and entities to which Manager
delegates any duties hereunder.
9. Disclaimer of Shareholder Liability.
------------------------------------
The Trust and the Manager understand that the obligations of the Trust
under this Management Agreement are not binding upon any Trustee or
shareholder of the Trust personally, but bind only the Trust and the
Trust's property. The Manager represents that it has notice of the
provisions of the Trust Documents disclaiming shareholder and Trustee
liability for acts or obligations of the Trust.
4
<PAGE>
10. Notice.
-------
Any notice under this Management Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party,
with a copy to the Trust, at the addresses below or such other address
as such other party may designate for the receipt of such notice.
If to the Manager:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Edwin P. McCausland, Jr
Vice President and Managing Director
If to the Trust:
MassMutual Institutional Funds
1295 State Street
Springfield, MA 01111
Attention: Stephen L. Kuhn,
Vice President and Secretary
IN WITNESS WHEREOF, the Trust and the Manager have caused this
Management Agreement to be executed on the day and year first above written.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Edwin P. McCausland, Jr.
--------------------------------------
Edwin P. McCausland, Jr.
Vice President and Managing Director
MASSMUTUAL INSTITUTIONAL FUNDS on behalf of
MASSMUTUAL CORE BOND FUND
By: /s/ Stuart H. Reese
--------------------------------------
Stuart H. Reese
President
5
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
And
MASSMUTUAL INSTITUTIONAL FUNDS
(As To MassMutual Balanced Fund)
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
-------------------------------
This INVESTMENT MANAGEMENT AGREEMENT (the "Management Agreement"), is
between Massachusetts Mutual Life Insurance Company, a Massachusetts corporation
(the "Manager"), and MassMutual Institutional Funds, a Massachusetts business
trust (the "Trust"), effective this 30th day of September, 1994.
WHEREAS, the Trust is an open-end diversified management investment
company registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, MassMutual Balanced Fund (the "Fund") is a series of the Trust;
WHEREAS, the Manager is an investment adviser registered with the
Commission as such under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and
WHEREAS, the Trust desires to appoint the Manager as its investment
manager for the Fund and the Manager is willing to act in such capacity upon the
terms herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the Trust and the Manager hereby agree as follows:
1. General Provision.
------------------
The Trust hereby employs the Manager and the Manager hereby undertakes
to act as the investment manager of the Fund, to provide investment
advice and to perform for the Fund such other duties and functions as
are hereinafter set forth. The Manager shall, in all matters, give to
the Fund and the Trust's Board of Trustees the benefit of the Manager's
best judgment, effort, advice and recommendations and shall, at all
times conform to, and use its best efforts to enable the Fund to conform
to:
(a) the provisions of the Act, the Advisers Act and any rules or
regulations thereunder;
(b) any other applicable provisions of state or federal law;
(c) the provisions of the Agreement and Declaration of Trust and
By-Laws of the Trust as amended from time to time
(collectively referred to as the "Trust Documents");
(d) policies and determinations of the Board of Trustees of the
Trust;
(e) the fundamental and non-fundamental policies and investment
restrictions of the Fund as reflected in the Trust's
registration statement or as such policies may, from time to
time, be amended by the Board of Trustees, or where
necessary, by the Fund's shareholders; and/or
(f) the Prospectus and Statement of Additional Information of the
Fund in effect from time to time.
The appropriate officers and employees of the Manager shall be available
upon reasonable
<PAGE>
notice for consultation with any of the Trustees and officers of the
Trust and the Trust with respect to any matter dealing with the business
and affairs of the Fund, such as the valuation of portfolio securities
of the Fund, including but not limited to securities that are either not
registered for public sale or securities not traded on any securities
market.
2. Duties of the Manager.
----------------------
(a) The Manager shall, subject to the direction and control by the
Trust's Board of Trustees (i) regularly provide investment advice
and recommendations to the Fund, with respect to the Fund's
investments, investment policies and the purchase and sale of
securities; (ii) supervise and monitor continuously the investment
program of the Fund and the composition of its portfolio and
determine what securities shall be purchased or sold by the Fund;
(iii) arrange, subject to the provisions of Section 5 hereof, for
the purchase of securities and other investments for the Fund and
the sale of securities and other investments held in the portfolio
of the Fund; and (iv) provide reports on the foregoing to the
Board of Trustees at each Board meeting.
(b) Provided that neither the Trust nor the Fund shall be required to
pay any compensation other than as provided by the terms of this
Management Agreement and subject to the provisions of Section 5
hereof, the Manager may obtain investment information, research or
assistance from any other person, firm or corporation to
supplement, update or otherwise improve its investment management
services.
(c) Provided that nothing herein shall be deemed to protect the
Manager from willful misfeasance, bad faith or gross negligence in
the performance of its duties, or reckless disregard to its
obligations and duties under this Management Agreement, the
Manager shall not be liable for any loss sustained by reason of
good faith errors or omissions in connection with any matters to
which this Management Agreement relates.
(d) Nothing in this Management Agreement shall prevent the Manager or
any officer thereof from acting as investment adviser or sub-
adviser for any other person, firm or corporation and shall not in
any way limit or restrict the Manager or any of their respective
directors, officers, members, stockholders or employees from
buying, selling, or trading any securities for its own account or
for the account of others for whom it or they may be acting,
provided that such activities will not adversely affect or
otherwise impair the performance by any party of its duties and
obligations under this Management Agreement.
(e) The Manager shall cooperate with the Trust by providing the Trust
with any information in the Manager's possession necessary for
supervising the activities of all administrative and clerical
personnel as shall be required to provide corporate administration
for the Fund, including the compilation and maintenance of such
records with respect to its operations as may reasonably be
required. The Manager shall, at its own expense, provide such
officers for the Trust as its Board may request.
3. Duties of the Trust.
--------------------
The Trust shall provide the Manager with the following information about
the Fund:
2
<PAGE>
(a) cash flow estimates on request;
(b) notice of the Fund's "investable funds" by 9:00 a.m. each business
day;
(c) as they are modified, from time to time, current versions of the
documents and policies referred to in Subsections (c), (d), (e)
and (f) of Section 1 hereof, above.
4. Compensation of the Manager.
----------------------------
The Trust agrees to pay the Manager and the Sub-Adviser agrees to accept
as full compensation for the performance of all functions and duties on
its part to be performed pursuant to the provisions hereof, a fee at the
annual rate .45% of the average daily net asset value of the Fund,
determined at the close of the New York Stock Exchange on each day that
the Exchange is open for trading and paid on the last day of each month.
5. Portfolio Transactions and Brokerage.
-------------------------------------
(a) The Manager is authorized, in arranging the purchase and sale of
the Fund's publicly-traded portfolio securities, to employ or deal
with such members of securities exchanges, brokers or dealers
(hereinafter "broker- dealers"), including "affiliated" broker-
dealers, as that term is defined in the Act, as may, in its best
judgment, implement the policy of the Fund to obtain, at
reasonable expense, the best execution (prompt and reliable
execution at the most favorable security price obtainable) of the
Fund's portfolio transactions.
(b) The Manager may effect the purchase and sale of securities (which
are otherwise publicly traded) in private transactions on such
terms and conditions as are customary in such transactions, may
use a broker in such to effect said transactions, and may enter
into a contract in which the broker acts either as principal or as
agent.
(c) The Manager shall select broker-dealers to effect the Fund's
portfolio transactions on the basis of its estimate of their
ability to obtain best execution of particular and related
portfolio transactions. The abilities of a broker-dealer to obtain
best execution of particular portfolio transaction(s) will be
judged by the Manager on the basis of all relevant factors and
considerations including, insofar as feasible, the execution
capabilities required by the transaction or transactions; the
ability and willingness of the broker-dealer to facilitate the
Fund's portfolio transactions by participating therein for its own
account; the importance to the Fund of speed, efficiency or
confidentiality; the broker-dealer's apparent familiarity with
sources from or to whom particular securities might be purchased
or sold; as well as any other matters relevant to the selection of
a broker-dealer for particular and related transactions of the
Fund.
6. Duration.
---------
Unless terminated earlier pursuant to Section 7 hereof, this Management
Agreement shall remain in effect until June 30, 1995. Thereafter it
shall continue in effect from year to
3
<PAGE>
year, so long as such continuance shall be approved at least annually by
the Trust's Board of Trustees, including the vote of the majority of the
Trustees of the Trust who are not parties to this Management Agreement
or "interested persons" (as defined in the Act) of any such party cast
in person at a meeting called for the purpose of voting on such
approval, or by the holders of a "majority" (as defined in the Act) of
the outstanding voting securities of the Fund.
7. Termination.
------------
This Management Agreement shall terminate automatically upon its
assignment or in the event upon the termination of the Advisory
Management Agreement; it may also be terminated: (i) for cause or with
the consent of the parties and the Trust by the Trust or the Manager at
any time without penalty upon sixty days' written notice to the other
party and the Trust; or (ii) by the Trust at any time without penalty
upon sixty days' written notice to the Trust and the Manager provided
that such termination by the Trust shall be directed or approved by a
vote of a majority of all of the Trustees of the Trust then in office or
by the vote of the holders of a "majority" of the outstanding voting
securities of the Fund (as defined in the Act).
8. Investment Sub-Advisory Contracts.
----------------------------------
(a) Subject to the provisions of the Agreement and Declaration of
Trust and the 1940 Act, the Manager, at its expense, may, in its
discretion (subject only to approval by the Trust's Board of
Trustees and, if necessary, the Trust's shareholders) select and
contract with an investment sub-adviser (the "Sub-Adviser") for
the Fund. So long as any Sub-Adviser serves as Sub-Adviser to the
Fund, it must be a party to a Sub-Investment Advisory Agreement in
substantially the form attached hereto as Schedule A (the
----------
"Sub-Adviser Agreement") and will be obligated to:
(1) Furnish continuously an investment program as to those
assets of the Trust and the Fund as allocated by the
Manager;
(2) In connection therewith, adhere to such guidelines as
may be established by the Manager from time to time to
insure compliance with applicable investment objectives,
policies and restrictions of the Trust and the Fund; and
(3) Place all orders for the purchase and sale of
investments of the Fund.
(b) The Manager will be responsible for payment of all compensation to
any Sub-Adviser and other persons and entities to which Manager
delegates any duties hereunder.
9. Disclaimer of Shareholder Liability.
------------------------------------
The Trust and the Manager understand that the obligations of the Trust
under this Management Agreement are not binding upon any Trustee or
shareholder of the Trust personally, but bind only the Trust and the
Trust's property. The Manager represents that it has notice of the
provisions of the Trust Documents disclaiming shareholder and Trustee
liability for acts or obligations of the Trust.
4
<PAGE>
10. Notice.
-------
Any notice under this Management Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party,
with a copy to the Trust, at the addresses below or such other address
as such other party may designate for the receipt of such notice.
If to the Manager:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Edwin P. McCausland, Jr
Vice President and Managing Director
If to the Trust:
MassMutual Institutional Funds
1295 State Street
Springfield, MA 01111
Attention: Stephen L. Kuhn,
Vice President and Secretary
IN WITNESS WHEREOF, the Trust and the Manager have caused this
Management Agreement to be executed on the day and year first above written.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Edwin P. McCausland, Jr.
--------------------------------------
Edwin P. McCausland, Jr.
Vice President and Managing Director
MASSMUTUAL INSTITUTIONAL FUNDS on behalf of
MASSMUTUAL BALANCED FUND
By: /s/ Stuart H. Reese
--------------------------------------
Stuart H. Reese
President
5
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
And
MASSMUTUAL INSTITUTIONAL FUNDS
(As To MassMutual Value Equity Fund)
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
-------------------------------
This INVESTMENT MANAGEMENT AGREEMENT (the "Management Agreement"), is
between Massachusetts Mutual Life Insurance Company, a Massachusetts corporation
(the "Manager"), and MassMutual Institutional Funds, a Massachusetts business
trust (the "Trust"), effective this 30th day of September, 1994.
WHEREAS, the Trust is an open-end diversified management investment company
registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, MassMutual Value Equity Fund (the "Fund") is a series of the
Trust;
WHEREAS, the Manager is an investment adviser registered with the
Commission as such under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and
WHEREAS, the Trust desires to appoint the Manager as its investment manager
for the Fund and the Manager is willing to act in such capacity upon the terms
herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the Trust and the Manager hereby agree as follows:
1. General Provision.
------------------
The Trust hereby employs the Manager and the Manager hereby undertakes to
act as the investment manager of the Fund, to provide investment advice and
to perform for the Fund such other duties and functions as are hereinafter
set forth. The Manager shall, in all matters, give to the Fund and the
Trust's Board of Trustees the benefit of the Manager's best judgment,
effort, advice and recommendations and shall, at all times conform to, and
use its best efforts to enable the Fund to conform to:
(a) the provisions of the Act, the Advisers Act and any rules or
regulations thereunder;
(b) any other applicable provisions of state or federal law
(c) the provisions of the Agreement and Declaration of Trust and By-
Laws of the Trust as amended from time to time (collectively
referred to as the "Trust Documents");
(d) policies and determinations of the Board of Trustees of the
Trust;
(e) the fundamental and non-fundamental policies and investment
restrictions of the Fund as reflected in the Trust's registration
statement or as such policies may, from time to time, be amended
by the Board of Trustees, or where necessary, by the Fund's
shareholders; and/or
(f) the Prospectus and Statement of Additional Information of the
Fund in effect from time to time.
The appropriate officers and employees of the Manager shall be available
upon reasonable
<PAGE>
notice for consultation with any of the Trustees and officers of the Trust
and the Trust with respect to any matter dealing with the business and
affairs of the Fund, such as the valuation of portfolio securities of the
Fund, including but not limited to securities that are either not
registered for public sale or securities not traded on any securities
market.
2. Duties of the Manager.
----------------------
(a) The Manager shall, subject to the direction and control by the Trust's
Board of Trustees (i) regularly provide investment advice and
recommendations to the Fund, with respect to the Fund's investments,
investment policies and the purchase and sale of securities; (ii)
supervise and monitor continuously the investment program of the Fund
and the composition of its portfolio and determine what securities
shall be purchased or sold by the Fund; (iii) arrange, subject to the
provisions of Section 5 hereof, for the purchase of securities and
other investments for the Fund and the sale of securities and other
investments held in the portfolio of the Fund; and (iv) provide
reports on the foregoing to the Board of Trustees at each Board
meeting.
(b) Provided that neither the Trust nor the Fund shall be required to pay
any compensation other than as provided by the terms of this
Management Agreement and subject to the provisions of Section 5
hereof, the Manager may obtain investment information, research or
assistance from any other person, firm or corporation to supplement,
update or otherwise improve its investment management services.
(c) Provided that nothing herein shall be deemed to protect the Manager
from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or reckless disregard to its obligations
and duties under this Management Agreement, the Manager shall not be
liable for any loss sustained by reason of good faith errors or
omissions in connection with any matters to which this Management
Agreement relates.
(d) Nothing in this Management Agreement shall prevent the Manager or any
officer thereof from acting as investment adviser or sub-adviser for
any other person, firm or corporation and shall not in any way limit
or restrict the Manager or any of their respective directors,
officers, members, stockholders or employees from buying, selling, or
trading any securities for its own account or for the account of
others for whom it or they may be acting, provided that such
activities will not adversely affect or otherwise impair the
performance by any party of its duties and obligations under this
Management Agreement.
(e) The Manager shall cooperate with the Trust by providing the Trust with
any information in the Manager's possession necessary for supervising
the activities of all administrative and clerical personnel as shall
be required to provide corporate administration for the Fund,
including the compilation and maintenance of such records with respect
to its operations as may reasonably be required. The Manager shall,
at its own expense, provide such officers for the Trust as its Board
may request.
3. Duties of the Trust.
--------------------
The Trust shall provide the Manager with the following information about
the Fund:
2
<PAGE>
(a) cash flow estimates on request;
(b) notice of the Fund's "investable funds" by 9:00 a.m. each business
day;
(c) as they are modified, from time to time, current versions of the
documents and policies referred to in Subsections (c), (d), (e) and
(f) of Section 1 hereof, above.
4. Compensation of the Manager.
----------------------------
The Trust agrees to pay the Manager and the Sub-Adviser agrees to accept as
full compensation for the performance of all functions and duties on its
part to be performed pursuant to the provisions hereof, a fee at the annual
rate .45% of the average daily net asset value of the Fund, determined at
the close of the New York Stock Exchange on each day that the Exchange is
open for trading and paid on the last day of each month.
5. Portfolio Transactions and Brokerage.
-------------------------------------
(a) The Manager is authorized, in arranging the purchase and sale of the
Fund's publicly-traded portfolio securities, to employ or deal with
such members of securities exchanges, brokers or dealers (hereinafter
"broker- dealers"), including "affiliated" broker-dealers, as that
term is defined in the Act, as may, in its best judgment, implement
the policy of the Fund to obtain, at reasonable expense, the best
execution (prompt and reliable execution at the most favorable
security price obtainable) of the Fund's portfolio transactions.
(b) The Manager may effect the purchase and sale of securities (which are
otherwise publicly traded) in private transactions on such terms and
conditions as are customary in such transactions, may use a broker in
such to effect said transactions, and may enter into a contract in
which the broker acts either as principal or as agent.
(c) The Manager shall select broker-dealers to effect the Fund's portfolio
transactions on the basis of its estimate of their ability to obtain
best execution of particular and related portfolio transactions. The
abilities of a broker-dealer to obtain best execution of particular
portfolio transaction(s) will be judged by the Manager on the basis of
all relevant factors and considerations including, insofar as
feasible, the execution capabilities required by the transaction or
transactions; the ability and willingness of the broker-dealer to
facilitate the Fund's portfolio transactions by participating therein
for its own account; the importance to the Fund of speed, efficiency
or confidentiality; the broker-dealer's apparent familiarity with
sources from or to whom particular securities might be purchased or
sold; as well as any other matters relevant to the selection of a
broker-dealer for particular and related transactions of the Fund.
6. Duration.
---------
Unless terminated earlier pursuant to Section 7 hereof, this Management
Agreement shall remain in effect until June 30, 1995. Thereafter it shall
continue in effect from year to
3
<PAGE>
year, so long as such continuance shall be approved at least annually by
the Trust's Board of Trustees, including the vote of the majority of the
Trustees of the Trust who are not parties to this Management Agreement or
"interested persons" (as defined in the Act) of any such party cast in
person at a meeting called for the purpose of voting on such approval, or
by the holders of a "majority" (as defined in the Act) of the outstanding
voting securities of the Fund.
7. Termination.
------------
This Management Agreement shall terminate automatically upon its assignment
or in the event upon the termination of the Advisory Management Agreement;
it may also be terminated: (i) for cause or with the consent of the parties
and the Trust by the Trust or the Manager at any time without penalty upon
sixty days' written notice to the other party and the Trust; or (ii) by the
Trust at any time without penalty upon sixty days' written notice to the
Trust and the Manager provided that such termination by the Trust shall be
directed or approved by a vote of a majority of all of the Trustees of the
Trust then in office or by the vote of the holders of a "majority" of the
outstanding voting securities of the Fund (as defined in the Act).
8. Investment Sub-Advisory Contracts.
----------------------------------
(a) Subject to the provisions of the Agreement and Declaration of Trust
and the 1940 Act, the Manager, at its expense, may, in its discretion
(subject only to approval by the Trust's Board of Trustees and, if
necessary, the Trust's shareholders) select and contract with an investment
sub-adviser (the "Sub-Adviser") for the Fund. So long as any Sub-Adviser
serves as Sub-Adviser to the Fund, it must be a party to a Sub-Investment
Advisory Agreement in substantially the form attached hereto as Schedule A
----------
(the "Sub-Adviser Agreement") and will be obligated to:
(1) Furnish continuously an investment program as to those assets of
the Trust and the Fund as allocated by the Manager;
(2) In connection therewith, adhere to such guidelines as may be
established by the Manager from time to time to insure compliance with
applicable investment objectives, policies and restrictions of the
Trust and the Fund; and
(3) Place all orders for the purchase and sale of investments of the
Fund.
(b) The Manager will be responsible for payment of all compensation to any
Sub-Adviser and other persons and entities to which Manager delegates any
duties hereunder.
9. Disclaimer of Shareholder Liability.
------------------------------------
The Trust and the Manager understand that the obligations of the Trust
under this Management Agreement are not binding upon any Trustee or
shareholder of the Trust personally, but bind only the Trust and the
Trust's property. The Manager represents that it has notice of the
provisions of the Trust Documents disclaiming shareholder and Trustee
liability for acts or obligations of the Trust.
4
<PAGE>
10. Notice.
-------
Any notice under this Management Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party, with a copy
to the Trust, at the addresses below or such other address as such other
party may designate for the receipt of such notice.
If to the Manager:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Edwin P. McCausland, Jr
Vice President and Managing Director
If to the Trust:
MassMutual Institutional Funds
1295 State Street
Springfield, MA 01111
Attention: Stephen L. Kuhn,
Vice President and Secretary
IN WITNESS WHEREOF, the Trust and the Manager have caused this Management
Agreement to be executed on the day and year first above written.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Edwin P. McCausland, Jr.
-----------------------------------
Edwin P. McCausland, Jr.
Vice President and Managing Director
MASSMUTUAL INSTITUTIONAL FUNDS on behalf of
MASSMUTUAL VALUE EQUITY FUND
By: /s/ Stuart H. Reese
-----------------------------------
Stuart H. Reese
President
5
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
And
MASSMUTUAL INSTITUTIONAL FUNDS
(As To MassMutual Small Cap Value Equity Fund)
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
-------------------------------
This INVESTMENT MANAGEMENT AGREEMENT (the "Management Agreement"), is
between Massachusetts Mutual Life Insurance Company, a Massachusetts corporation
(the "Manager"), and MassMutual Institutional Funds, a Massachusetts business
trust (the "Trust"), effective this 30th day of September, 1994.
WHEREAS, the Trust is an open-end diversified management investment company
registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, MassMutual Small Cap Value Equity Fund (the "Fund") is a series
of the Trust;
WHEREAS, the Manager is an investment adviser registered with the
Commission as such under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and
WHEREAS, the Trust desires to appoint the Manager as its investment manager
for the Fund and the Manager is willing to act in such capacity upon the terms
herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the Trust and the Manager hereby agree as follows:
1. General Provision.
------------------
The Trust hereby employs the Manager and the Manager hereby undertakes to
act as the investment manager of the Fund, to provide investment advice and
to perform for the Fund such other duties and functions as are hereinafter
set forth. The Manager shall, in all matters, give to the Fund and the
Trust's Board of Trustees the benefit of the Manager's best judgment,
effort, advice and recommendations and shall, at all times conform to, and
use its best efforts to enable the Fund to conform to:
(a) the provisions of the Act, the Advisers Act and any rules or
regulations thereunder;
(b) any other applicable provisions of state or federal law;
(c) the provisions of the Agreement and Declaration of Trust and By-
Laws of the Trust as amended from time to time (collectively
referred to as the "Trust Documents");
(d) policies and determinations of the Board of Trustees of the
Trust;
(e) the fundamental and non-fundamental policies and investment
restrictions of the Fund as reflected in the Trust's registration
statement or as such policies may, from time to time, be amended
by the Board of Trustees, or where necessary, by the Fund's
shareholders; and/or
(f) the Prospectus and Statement of Additional Information of the
Fund in effect from time to time.
The appropriate officers and employees of the Manager shall be available
upon reasonable
<PAGE>
notice for consultation with any of the Trustees and officers of the Trust
and the Trust with respect to any matter dealing with the business and
affairs of the Fund, such as the valuation of portfolio securities of the
Fund, including but not limited to securities that are either not
registered for public sale or securities not traded on any securities
market.
2. Duties of the Manager.
----------------------
(a) The Manager shall, subject to the direction and control by the Trust's
Board of Trustees (i) regularly provide investment advice and
recommendations to the Fund, with respect to the Fund's investments,
investment policies and the purchase and sale of securities; (ii)
supervise and monitor continuously the investment program of the Fund
and the composition of its portfolio and determine what securities
shall be purchased or sold by the Fund; (iii) arrange, subject to the
provisions of Section 5 hereof, for the purchase of securities and
other investments for the Fund and the sale of securities and other
investments held in the portfolio of the Fund; and (iv) provide
reports on the foregoing to the Board of Trustees at each Board
meeting.
(b) Provided that neither the Trust nor the Fund shall be required to pay
any compensation other than as provided by the terms of this
Management Agreement and subject to the provisions of Section 5
hereof, the Manager may obtain investment information, research or
assistance from any other person, firm or corporation to supplement,
update or otherwise improve its investment management services.
(c) Provided that nothing herein shall be deemed to protect the Manager
from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or reckless disregard to its obligations
and duties under this Management Agreement, the Manager shall not be
liable for any loss sustained by reason of good faith errors or
omissions in connection with any matters to which this Management
Agreement relates.
(d) Nothing in this Management Agreement shall prevent the Manager or any
officer thereof from acting as investment adviser or sub-adviser for
any other person, firm or corporation and shall not in any way limit
or restrict the Manager or any of their respective directors,
officers, members, stockholders or employees from buying, selling, or
trading any securities for its own account or for the account of
others for whom it or they may be acting, provided that such
activities will not adversely affect or otherwise impair the
performance by any party of its duties and obligations under this
Management Agreement.
(e) The Manager shall cooperate with the Trust by providing the Trust with
any information in the Manager's possession necessary for supervising
the activities of all administrative and clerical personnel as shall
be required to provide corporate administration for the Fund,
including the compilation and maintenance of such records with respect
to its operations as may reasonably be required. The Manager shall,
at its own expense, provide such officers for the Trust as its Board
may request.
3. Duties of the Trust.
--------------------
The Trust shall provide the Manager with the following information about
the Fund:
2
<PAGE>
(a) cash flow estimates on request;
(b) notice of the Fund's "investable funds" by 9:00 a.m. each business
day;
(c) as they are modified, from time to time, current versions of the
documents and policies referred to in Subsections (c), (d), (e) and
(f) of Section 1 hereof, above.
4. Compensation of the Manager.
----------------------------
The Trust agrees to pay the Manager and the Sub-Adviser agrees to accept as
full compensation for the performance of all functions and duties on its
part to be performed pursuant to the provisions hereof, a fee at the annual
rate .55% of the average daily net asset value of the Fund, determined at
the close of the New York Stock Exchange on each day that the Exchange is
open for trading and paid on the last day of each month.
5. Portfolio Transactions and Brokerage.
-------------------------------------
(a) The Manager is authorized, in arranging the purchase and sale of the
Fund's publicly-traded portfolio securities, to employ or deal with
such members of securities exchanges, brokers or dealers (hereinafter
"broker- dealers"), including "affiliated" broker-dealers, as that
term is defined in the Act, as may, in its best judgment, implement
the policy of the Fund to obtain, at reasonable expense, the best
execution (prompt and reliable execution at the most favorable
security price obtainable) of the Fund's portfolio transactions.
(b) The Manager may effect the purchase and sale of securities (which are
otherwise publicly traded) in private transactions on such terms and
conditions as are customary in such transactions, may use a broker in
such to effect said transactions, and may enter into a contract in
which the broker acts either as principal or as agent.
(c) The Manager shall select broker-dealers to effect the Fund's portfolio
transactions on the basis of its estimate of their ability to obtain
best execution of particular and related portfolio transactions. The
abilities of a broker-dealer to obtain best execution of particular
portfolio transaction(s) will be judged by the Manager on the basis of
all relevant factors and considerations including, insofar as
feasible, the execution capabilities required by the transaction or
transactions; the ability and willingness of the broker-dealer to
facilitate the Fund's portfolio transactions by participating therein
for its own account; the importance to the Fund of speed, efficiency
or confidentiality; the broker-dealer's apparent familiarity with
sources from or to whom particular securities might be purchased or
sold; as well as any other matters relevant to the selection of a
broker-dealer for particular and related transactions of the Fund.
6. Duration.
---------
Unless terminated earlier pursuant to Section 7 hereof, this Management
Agreement shall remain in effect until June 30, 1995. Thereafter it shall
continue in effect from year to
3
<PAGE>
year, so long as such continuance shall be approved at least annually by
the Trust's Board of Trustees, including the vote of the majority of the
Trustees of the Trust who are not parties to this Management Agreement or
"interested persons" (as defined in the Act) of any such party cast in
person at a meeting called for the purpose of voting on such approval, or
by the holders of a "majority" (as defined in the Act) of the outstanding
voting securities of the Fund.
7. Termination.
------------
This Management Agreement shall terminate automatically upon its assignment
or in the event upon the termination of the Advisory Management Agreement;
it may also be terminated: (i) for cause or with the consent of the parties
and the Trust by the Trust or the Manager at any time without penalty upon
sixty days' written notice to the other party and the Trust; or (ii) by the
Trust at any time without penalty upon sixty days' written notice to the
Trust and the Manager provided that such termination by the Trust shall be
directed or approved by a vote of a majority of all of the Trustees of the
Trust then in office or by the vote of the holders of a "majority" of the
outstanding voting securities of the Fund (as defined in the Act).
8. Investment Sub-Advisory Contracts.
----------------------------------
(a) Subject to the provisions of the Agreement and Declaration of Trust
and the 1940 Act, the Manager, at its expense, may, in its discretion
(subject only to approval by the Trust's Board of Trustees and, if
necessary, the Trust's shareholders) select and contract with an investment
sub-adviser (the "Sub-Adviser") for the Fund. So long as any Sub-Adviser
serves as Sub-Adviser to the Fund, it must be a party to a Sub-Investment
Advisory Agreement in substantially the form attached hereto as Schedule A
----------
(the "Sub-Adviser Agreement") and will be obligated to:
(1) Furnish continuously an investment program as to those assets of
the Trust and the Fund as allocated by the Manager;
(2) In connection therewith, adhere to such guidelines as may be
established by the Manager from time to time to insure compliance with
applicable investment objectives, policies and restrictions of the
Trust and the Fund; and
(3) Place all orders for the purchase and sale of investments of the
Fund.
(b) The Manager will be responsible for payment of all compensation to any
Sub-Adviser and other persons and entities to which Manager delegates any
duties hereunder.
9. Disclaimer of Shareholder Liability.
------------------------------------
The Trust and the Manager understand that the obligations of the Trust
under this Management Agreement are not binding upon any Trustee or
shareholder of the Trust personally, but bind only the Trust and the
Trust's property. The Manager represents that it has notice of the
provisions of the Trust Documents disclaiming shareholder and Trustee
liability for acts or obligations of the Trust.
4
<PAGE>
10. Notice.
-------
Any notice under this Management Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party, with a copy
to the Trust, at the addresses below or such other address as such other
party may designate for the receipt of such notice.
If to the Manager:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Edwin P. McCausland, Jr
Vice President and Managing Director
If to the Trust:
MassMutual Institutional Funds
1295 State Street
Springfield, MA 01111
Attention: Stephen L. Kuhn,
Vice President and Secretary
IN WITNESS WHEREOF, the Trust and the Manager have caused this Management
Agreement to be executed on the day and year first above written.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Edwin P. McCausland, Jr.
-----------------------------------
Edwin P. McCausland, Jr.
Vice President and Managing Director
MASSMUTUAL INSTITUTIONAL FUNDS on behalf of
MASSMUTUAL SMALL CAP VALUE EQUITY FUND
By: /s/ Stuart H. Reese
-----------------------------------
Stuart H. Reese
President
5
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
And
MASSMUTUAL INSTITUTIONAL FUNDS
(As To MassMutual International Equity Fund)
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
-------------------------------
This INVESTMENT MANAGEMENT AGREEMENT (the "Management Agreement"), is
between Massachusetts Mutual Life Insurance Company, a Massachusetts corporation
(the "Manager"), and MassMutual Institutional Funds, a Massachusetts business
trust (the "Trust"), effective this 30th day of September, 1994.
WHEREAS, the Trust is an open-end diversified management investment
company registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, MassMutual International Equity Fund (the "Fund") is a series
of the Trust;
WHEREAS, the Manager is an investment adviser registered with the
Commission as such under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and
WHEREAS, the Trust desires to appoint the Manager as its investment
manager for the Fund and the Manager is willing to act in such capacity upon the
terms herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the Trust and the Manager hereby agree as follows:
1. General Provision.
------------------
The Trust hereby employs the Manager and the Manager hereby undertakes to
act as the investment manager of the Fund, to provide investment advice and
to perform for the Fund such other duties and functions as are hereinafter
set forth. The Manager shall, in all matters, give to the Fund and the
Trust's Board of Trustees the benefit of the Manager's best judgment,
effort, advice and recommendations and shall, at all times conform to, and
use its best efforts to enable the Fund to conform to:
(a) the provisions of the Act, the Advisers Act and any rules or
regulations thereunder;
(b) any other applicable provisions of state or federal law;
(c) the provisions of the Agreement and Declaration of Trust and By-
Laws of the Trust as amended from time to time (collectively
referred to as the "Trust Documents");
(d) policies and determinations of the Board of Trustees of the
Trust;
(e) the fundamental and non-fundamental policies and investment
restrictions of the Fund as reflected in the Trust's registration
statement or as such policies may, from time to time, be amended
by the Board of Trustees, or where necessary, by the Fund's
shareholders; and/or
(f) the Prospectus and Statement of Additional Information of the
Fund in effect from time to time.
The appropriate officers and employees of the Manager shall be available
upon reasonable notice for consultation with any of the Trustees and
officers of the Trust and the Trust with
<PAGE>
respect to any matter dealing with the business and affairs of the Fund,
such as the valuation of portfolio securities of the Fund, including but
not limited to securities that are either not registered for public sale or
securities not traded on any securities market.
2. Duties of the Manager.
----------------------
(a) The Manager shall, subject to the direction and control by the Trust's
Board of Trustees (i) regularly provide investment advice and
recommendations to the Fund, with respect to the Fund's investments,
investment policies and the purchase and sale of securities; (ii)
supervise and monitor continuously the investment program of the Fund
and the composition of its portfolio and determine what securities
shall be purchased or sold by the Fund; (iii) arrange, subject to the
provisions of Section 5 hereof, for the purchase of securities and
other investments for the Fund and the sale of securities and other
investments held in the portfolio of the Fund; and (iv) provide
reports on the foregoing to the Board of Trustees at each Board
meeting.
(b) Provided that neither the Trust nor the Fund shall be required to pay
any compensation other than as provided by the terms of this
Management Agreement and subject to the provisions of Section 5
hereof, the Manager may obtain investment information, research or
assistance from any other person, firm or corporation to supplement,
update or otherwise improve its investment management services.
(c) Provided that nothing herein shall be deemed to protect the Manager
from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or reckless disregard to its obligations
and duties under this Management Agreement, the Manager shall not be
liable for any loss sustained by reason of good faith errors or
omissions in connection with any matters to which this Management
Agreement relates.
(d) Nothing in this Management Agreement shall prevent the Manager or any
officer thereof from acting as investment adviser or sub-adviser for
any other person, firm or corporation and shall not in any way limit
or restrict the Manager or any of their respective directors,
officers, members, stockholders or employees from buying, selling, or
trading any securities for its own account or for the account of
others for whom it or they may be acting, provided that such
activities will not adversely affect or otherwise impair the
performance by any party of its duties and obligations under this
Management Agreement.
(e) The Manager shall cooperate with the Trust by providing the Trust with
any information in the Manager's possession necessary for supervising
the activities of all administrative and clerical personnel as shall
be required to provide corporate administration for the Fund,
including the compilation and maintenance of such records with respect
to its operations as may reasonably be required. The Manager shall,
at its own expense, provide such officers for the Trust as its Board
may request.
3. Duties of the Trust.
--------------------
The Trust shall provide the Manager with the following information about
the Fund:
2
<PAGE>
(a) cash flow estimates on request;
(b) notice of the Fund's "investable funds" by 9:00 a.m. each business
day;
(c) as they are modified, from time to time, current versions of the
documents and policies referred to in Subsections (c), (d), (e) and
(f) of Section 1 hereof, above.
4. Compensation of the Manager.
----------------------------
The Trust agrees to pay the Manager and the Sub-Adviser agrees to accept as
full compensation for the performance of all functions and duties on its
part to be performed pursuant to the provisions hereof, a fee at the annual
rate .85% of the average daily net asset value of the Fund, determined at
the close of the New York Stock Exchange on each day that the Exchange is
open for trading and paid on the last day of each month.
5. Portfolio Transactions and Brokerage.
-------------------------------------
(a) The Manager is authorized, in arranging the purchase and sale of the
Fund's publicly-traded portfolio securities, to employ or deal with
such members of securities exchanges, brokers or dealers (hereinafter
"broker- dealers"), including "affiliated" broker-dealers, as that
term is defined in the Act, as may, in its best judgment, implement
the policy of the Fund to obtain, at reasonable expense, the best
execution (prompt and reliable execution at the most favorable
security price obtainable) of the Fund's portfolio transactions.
(b) The Manager may effect the purchase and sale of securities (which are
otherwise publicly traded) in private transactions on such terms and
conditions as are customary in such transactions, may use a broker in
such to effect said transactions, and may enter into a contract in
which the broker acts either as principal or as agent.
(c) The Manager shall select broker-dealers to effect the Fund's portfolio
transactions on the basis of its estimate of their ability to obtain
best execution of particular and related portfolio transactions. The
abilities of a broker-dealer to obtain best execution of particular
portfolio transaction(s) will be judged by the Manager on the basis of
all relevant factors and considerations including, insofar as
feasible, the execution capabilities required by the transaction or
transactions; the ability and willingness of the broker-dealer to
facilitate the Fund's portfolio transactions by participating therein
for its own account; the importance to the Fund of speed, efficiency
or confidentiality; the broker-dealer's apparent familiarity with
sources from or to whom particular securities might be purchased or
sold; as well as any other matters relevant to the selection of a
broker-dealer for particular and related transactions of the Fund.
6. Duration.
---------
Unless terminated earlier pursuant to Section 7 hereof, this Management
Agreement shall remain in effect until June 30, 1995. Thereafter it shall
continue in effect from year to year, so long as such continuance shall be
approved at least annually by the Trust's Board
3
<PAGE>
of Trustees, including the vote of the majority of the Trustees of the
Trust who are not parties to this Management Agreement or "interested
persons" (as defined in the Act) of any such party cast in person at a
meeting called for the purpose of voting on such approval, or by the
holders of a "majority" (as defined in the Act) of the outstanding voting
securities of the Fund.
7. Termination.
------------
This Management Agreement shall terminate automatically upon its assignment
or in the event upon the termination of the Advisory Management Agreement;
it may also be terminated: (i) for cause or with the consent of the parties
and the Trust by the Trust or the Manager at any time without penalty upon
sixty days' written notice to the other party and the Trust; or (ii) by the
Trust at any time without penalty upon sixty days' written notice to the
Trust and the Manager provided that such termination by the Trust shall be
directed or approved by a vote of a majority of all of the Trustees of the
Trust then in office or by the vote of the holders of a "majority" of the
outstanding voting securities of the Fund (as defined in the Act).
8. Investment Sub-Advisory Contracts.
----------------------------------
(a) Subject to the provisions of the Agreement and Declaration of Trust
and the 1940 Act, the Manager, at its expense, may, in its discretion
(subject only to approval by the Trust's Board of Trustees and, if
necessary, the Trust's shareholders) select and contract with an investment
sub-adviser (the "Sub-Adviser") for the Fund. So long as any Sub-Adviser
serves as Sub-Adviser to the Fund, it must be a party to a Sub-Investment
Advisory Agreement in substantially the form attached hereto as Schedule A
----------
(the "Sub-Adviser Agreement") and will be obligated to:
(1) Furnish continuously an investment program as to those assets of
the Trust and the Fund as allocated by the Manager;
(2) In connection therewith, adhere to such guidelines as may be
established by the Manager from time to time to insure compliance with
applicable investment objectives, policies and restrictions of the
Trust and the Fund; and
(3) Place all orders for the purchase and sale of investments of the
Fund.
(b) The Manager will be responsible for payment of all compensation to any
Sub-Adviser and other persons and entities to which Manager delegates any
duties hereunder.
9. Disclaimer of Shareholder Liability.
------------------------------------
The Trust and the Manager understand that the obligations of the Trust
under this Management Agreement are not binding upon any Trustee or
shareholder of the Trust personally, but bind only the Trust and the
Trust's property. The Manager represents that it has notice of the
provisions of the Trust Documents disclaiming shareholder and Trustee
liability for acts or obligations of the Trust.
10. Notice.
-------
4
<PAGE>
Any notice under this Management Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party, with a copy
to the Trust, at the addresses below or such other address as such other
party may designate for the receipt of such notice.
If to the Manager:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Edwin P. McCausland, Jr
Vice President and Managing Director
If to the Trust:
MassMutual Institutional Funds
1295 State Street
Springfield, MA 01111
Attention: Stephen L. Kuhn,
Vice President and Secretary
IN WITNESS WHEREOF, the Trust and the Manager have caused this Management
Agreement to be executed on the day and year first above written.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Edwin P. McCausland, Jr.
----------------------------
Edwin P. McCausland, Jr.
Vice President and Managing Director
MASSMUTUAL INSTITUTIONAL FUNDS on behalf of
MASSMUTUAL INTERNATIONAL EQUITY FUND
By: /s/ Stuart H. Reese
-------------------
Stuart H. Reese
President
<PAGE>
Exhibit 5 (c)
INVESTMENT SUB-ADVISORY AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
And
HARBOURVIEW ASSET MANAGEMENT CORPORATION
(With respect to MassMutual International Equity Fund)
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
---------------------------------
This INVESTMENT SUB-ADVISORY AGREEMENT (the "Sub-Advisory Agreement"),
is by and between HarbourView Asset Management Corporation ("HarborView" the
"Sub-Adviser"), and Massachusetts Mutual Life Insurance Company ("MassMutual")
effective this 30th day of September, 1994.
WHEREAS, MassMutual International Equity Fund (the "Fund") is a series
of MassMutual Institutional Funds (the "Trust"), a Massachusetts business trust
which is an open-end diversified management investment company registered as
such with the Securities and Exchange Commission (the "Commission") pursuant to
the Investment Company Act of 1940, as amended (the "Act"), and the Trust has
appointed MassMutual as the investment adviser for the Fund, pursuant to the
terms of an Investment Management Agreement (the "Advisory Agreement");
WHEREAS, the Advisory Agreement provides that MassMutual may, at its
option, subject to approval by the Trustees of the Trust and, to the extent
necessary, shareholders of the Fund, appoint a sub-adviser to assume certain
responsibilities and obligations of MassMutual under the Advisory Agreement;
WHEREAS, MassMutual and the Sub-Adviser are investment advisers
registered with the Commission as such under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), and
WHEREAS, MassMutual desires to appoint the Sub-Adviser as its
sub-adviser for the Fund and the Sub-Adviser is willing to act in such capacity
upon the terms herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, MassMutual and the Sub-Adviser, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. General Provision.
-----------------
MassMutual hereby employs the Sub-Adviser and the Sub-Adviser hereby
undertakes to act as the investment sub-adviser of the Fund to provide
investment advice and to perform for the Fund such other duties and
functions as are hereinafter set forth. The Sub-Adviser shall, in all
matters, give to the Fund and the Trust's Board of Trustees, directly
or through MassMutual, the benefit of the Sub-Adviser's best judgment,
effort, advice and recommendations and shall, at all times conform to,
and use its best efforts to enable the Fund to conform to:
(a) the provisions of the Act and any rules or regulations
thereunder;
(b) any other applicable provisions of state or federal law;
(c) the provisions of the Agreement and Declaration of Trust
and By-Laws of the Trust as amended from time to time
(collectively referred to as the "Trust Documents");
(d) policies and determinations of the Board of Trustees of
the Trust and MassMutual;
<PAGE>
(e) the fundamental and non-fundamental policies and
investment restrictions of the Fund as reflected in the
Trust's registration statement under the Investment
Company Act or as such policies may, from time to time,
be amended by the Fund's shareholders; and
(f) the Prospectus and Statement of Additional Information of
the Fund in effect from time to time.
The appropriate officers and employees of the Sub-Adviser shall be
available upon reasonable notice for consultation with any of the
Trustees and officers of the Trust and MassMutual with respect to any
matter dealing with the business and affairs of the Fund, such as the
valuation of portfolio securities of the Fund, including but not
limited to securities that are either not registered for public sale or
securities not traded on any securities market.
2. Duties of the Sub-Adviser.
--------------------------
(a) The Sub-Adviser shall, subject to the direction and control by
the Trust's Board of Trustees or MassMutual, to the extent
MassMutual's direction is not inconsistent with that of the
Board of Trustees, (i) regularly provide investment advice and
recommendations to the Fund, directly or through MassMutual,
with respect to the Fund's investments, investment policies
and the purchase and sale of securities; (ii) supervise and
monitor continuously the investment program of the Fund and
the composition of its portfolio and determine what securities
shall be purchased or sold by the Fund; (iii) arrange, subject
to the provisions of Section 5 hereof, for the purchase of
securities and other investments for the Fund and the sale of
securities and other investments held in the portfolio of the
Fund; and (iv) provide reports on the foregoing to the Board
of Trustees at each Board meeting.
(b) Provided that none of MassMutual, the Fund or the Trust shall
be required to pay any compensation other than as provided by
the terms of this Sub-Advisory Agreement and subject to the
provisions of Section 5 hereof, the Sub-Adviser may obtain
investment information, research or assistance from any other
person, firm or corporation to supplement, update or otherwise
improve its investment management services.
(c) Provided that nothing herein shall be deemed to protect the
Sub-Adviser from willful misfeasance, bad faith or gross
negligence in the performance of its duties, or reckless
disregard to its obligations and duties under this
Sub-Advisory Agreement, the Sub-Adviser shall not be liable
for any loss sustained by reason of good faith errors or
omissions in connection with any matters to which this
Sub-Advisory Agreement relates.
(d) Nothing in this Sub-Advisory Agreement shall prevent
MassMutual, Sub-Adviser, their affiliates, or any officer
thereof from acting as investment adviser or sub-adviser for
any other person, firm or corporation and shall not in any way
limit or restrict MassMutual or the Sub-Adviser or any of
their respective directors, officers, members, stockholders or
employees from buying, selling, or trading any securities for
its own account or for the account of others for whom it or
they may be acting, provided that such activities will not
adversely affect or otherwise impair
2
<PAGE>
the performance by any party of its duties and obligations
under this Sub-Advisory Agreement.
(e) The Sub-Adviser shall cooperate with MassMutual by providing
MassMutual with any information in the Sub-Adviser's
possession reasonably necessary for supervising the activities
of all administrative and clerical personnel as shall be
reasonably required to provide corporate administration for
the Fund, including the compilation and maintenance of such
records with respect to its operations as may reasonably be
required. The Sub-Adviser shall, at its own expense, provide
such officers for the Trust as its Board may request.
3. Duties of MassMutual
--------------------
MassMutual shall provide the Sub-Adviser with the following information
about the Fund:
(a) cash flow estimates on request;
(b) notice of the Fund's "investable funds" by 9:00 a.m. each
business day;
(c) as they are modified, from time to time, current versions of
the documents and policies referred to in Subsections (c),
(d), (e) and (f) of Section 1 hereof, above.
4. Compensation of the Sub-Adviser.
--------------------------------
MassMutual agrees to pay the Sub-Adviser and the Sub-Adviser agrees to
accept as full compensation for the performance of all functions and
duties on its part to be performed pursuant to the provisions hereof, a
fee at the annual rate .50% of the average daily net asset value of the
Fund, determined at the close of the New York Stock Exchange on each
day that the Exchange is open for trading and paid on the last day of
each week.
5. Portfolio Transactions and Brokerage.
-------------------------------------
(a) The Sub-Adviser is authorized, in arranging the Fund's
portfolio transactions, to employ or deal with such members of
securities or commodities exchanges, brokers or dealers
including "affiliated" broker-dealers (as that term is defined
in the Act)(hereinafter "broker'dealers"), as may, in its best
judgment, implement the policy of the Fund to obtain, at
reasonable expense, the "best execution" (prompt and reliable
execution at the most favorable security price obtainable) of
the Fund's portfolio transactions as well as to obtain,
consistent with the provisions of subparagraph (c) of this
paragraph 5, the benefit of such investment information or
research as may be of significant assistance to the
performance by Sub-Adviser of its investment management
functions.
(b) The Sub-Adviser shall select broker dealers to effect the
Fund's portfolio transactions on the basis of its estimate of
their ability to obtain best execution of particular and
related portfolio transactions. The abilities of a broker-
dealer to obtain best execution of particular portfolio
transactions will be judged by Sub-Adviser on the basis of all
relevant factors and considerations, including, insofar as
3
<PAGE>
feasible, the execution capabilities required by the
transaction(s); the ability and willingness of the broker-
dealer to facilitate the Fund's portfolio transactions by
participating therein for its own account; the importance to
the Fund of speed, efficiency and confidentiality; the broker-
dealer's apparent familiarity with sources from or to whom
particular securities might be purchased or sold; as well as
any other matters relevant to the selection of a broker-dealer
for particular and related transactions of the Fund.
(c) The Sub-Adviser shall have discretion, in the interests of the
Fund, to allocate brokerage on the Fund's portfolio
transactions to broker-dealers other than affiliated broker-
dealers, qualified to obtain best execution of such
transactions who provide brokerage and/or research services
(as such services are defined in (S)28(e)(3) of the Securities
and Exchange Act of 1934) for the Fund and/or any other
accounts for which Sub-Adviser and its affiliates exercise
"investment discretion" (as that term is defined in
(S)3(a)(35) of the Securities and Exchange Act of 1934) and to
cause the Fund to pay such broker-dealers a commission for the
effecting a portfolio transaction for the Fund that is in
excess of the amount of commission another broker-dealer
adequately qualified to effect such transaction would have
charged for effecting that transaction, if the Sub-Adviser
determines in good faith that such commission is reasonable in
relation to the value of the brokerage and/or research
services provided by such broker-dealer, viewed in terms of
either the particular transaction or the overall
responsibilities of Sub-Adviser and its investment advisory
affiliates with respect to the accounts as to which they
exercise investment discretion. In reaching such
determination, Sub-Adviser will not be required to place or
attempt to place a specific dollar value on the brokerage
and/or research services provided or being provided by such
broker-dealer. In demonstrating that such determinations were
made in good faith, Sub-Adviser shall be prepared to show all
commissions were allocated for the purposes contemplated by
this Agreement and that the total commissions paid by the Fund
over a representative period selected by the Fund's Trustees
were reasonable in relation to the benefits to the Fund.
(d) Sub-Adviser shall have no duty or obligation to seek advance
competitive bidding for the most favorable commission rate
applicable to any particular portfolio transaction or to
select any broker-dealer on the basis of its purported or
"posted" commission rate but will to the best of its ability,
endeavor to be aware of the current level of the charges of
eligible broker-dealers and to minimize the expenses incurred
by the Fund for effecting its portfolio transactions to the
extent consistent with the interests and policies of the Fund
as established by the determinations of its Board of Trustees
and the provisions of this Paragraph 5.
(e) The Fund recognizes that an affiliated broker-dealer (i) may
act as its regular broker as long as it is lawful for it to so
act; (ii) may be a major recipient of brokerage commissions
paid by the Fund; and (iii) may effect portfolio transactions
for the Fund only if the commissions, fees or other
renumerations received or to be received by it are determined
in accordance with the procedures contemplated by a ny rule,
regulation or order adopted under the Act for determining the
permissible level of such commissions.
(f) Subject to the foregoing provisions of this Paragraph 5,
Sub-Adviser may also
4
<PAGE>
consider sales of Fund shares and shares of other investment
companies managed by Sub-Adviser or its affiliates as a factor
in the selection of broker-dealers for the Fund's portfolio
transactions.
6. Duration.
---------
Unless terminated earlier pursuant to Section 7 hereof, this
Sub-Advisory Agreement shall remain in effect until June 30, 1995.
Thereafter it shall continue in effect from year to year, so long as
such continuance shall be approved at least annually by the Trust's
Board of Trustees, including the vote of the majority of the Trustees
of the Trust who are not parties to this Sub-Advisory Agreement or
"interested persons" (as defined in the Act) of any such party cast in
person at a meeting called for the purpose of voting on such approval,
or by the holders of a "majority" (as defined in the Act) of the
outstanding voting securities of the Fund.
7. Termination.
------------
This Sub-Advisory Agreement shall terminate automatically upon its
assignment or in the event upon the termination of the Advisory
Agreement; it may also be terminated: (i) for cause or with the consent
of the parties and the Trust by MassMutual or the Sub-Adviser at any
time without penalty upon sixty days' written notice to the other party
and the Trust; or (ii) by the Trust at any time without penalty upon
sixty days' written notice to MassMutual and the Sub-Adviser provided
that such termination by the Trust shall be directed or approved by a
vote of a majority of all of the Trustees of the Trust then in office
or by the vote of the holders of a "majority" of the outstanding voting
securities of the Fund (as defined in the Act).
8. Disclaimer of Shareholder Liability.
------------------------------------
MassMutual and the Sub-Adviser understand that the obligations of the
Trust under this Sub-Advisory Agreement are not binding upon any
Trustee or shareholder of the Trust personally, but bind only the Trust
and the Trust's property. MassMutual and the Sub-Adviser represent that
each has notice of the provisions of the Trust Documents disclaiming
shareholder and Trustee liability for acts or obligations of the Trust.
9. Notice.
-------
Any notice under this Sub-Advisory Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party,
with a copy to the Trust, at the addresses below or such other address
as such other party may designate for the receipt of such notice.
if to MassMutual:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Edwin P. McCausland, Jr
Vice President and Managing Director
If to the Sub-Adviser:
5
<PAGE>
HarbourView Asset Management Corporation
Two World Trade Center
New York, New York 10048-0203
Attention: Andrew Donohue
Executive Vice President and General Counsel
If to either party, copies to:
MassMutual Institutional Funds
1295 State Street
Springfield, MA 01111
Attention: Peter A. Feige
Investors Bank & Trust
89 South Street
Boston, MA 02205-1537
Attention: Debra Brown
IN WITNESS WHEREOF, MassMutual and the Sub-Adviser have caused this
Sub-Advisory Agreement to be executed on the day and year first above written.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Edwin P. McCausland, Jr.
--------------------------------------
Edwin P. McCausland, Jr.
Vice President and Managing Director
HARBOURVIEW ASSET MANAGEMENT
CORPORATION
By: /s/ Andrew J. Donohue
--------------------------------------
Andrew J. Donohue
Executive Vice President
Accepted and Acknowledged:
--------------------------
MASSMUTUAL INSTITUTIONAL FUNDS on behalf of
MASSMUTUAL INTERNATIONAL EQUITY FUND
6
<PAGE>
By: /s/ Stuart H. Reese
----------------------------------
Stuart H. Reese
President
7
<PAGE>
Exhibit 6(b)
SUB-DISTRIBUTOR'S AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
MML INVESTORS SERVICES, INC.
Date: September 8, 1994
MML INVESTORS SERVICES, INC.
One Financial Plaza
1350 Main Street
Springfield, MA 01103-1686
OPPENHEIMER FUNDS DISTRIBUTOR, INC., a New York corporation ("OFDI")
acts as the distributor (the "Distributor") for the various series of
MassMutual Institutional Funds, a Massachusetts business trust, which is an
investment company registered under the Investment Company Act of 1940 (the
"Fund"), the various classes of shares of which have been registered under the
Securities Act of 1933 to be offered for sale to the public in a continuous
public offering in accordance with the terms and conditions set forth in the
Prospectus and Statement of Additional Information of such fund included in
such fund's Registration Statement, as it may be amended from time to time
(the "Fund Shares").
OFDI desires to have MML Investors Services, Inc. ("MMLISI") act as
OFDI's Sub-Distributor for the distribution and sale of Fund Shares. MMLISI
has advised OFDI that it is willing to act as its Sub-Distributor and Agent,
and it is accordingly agreed between us as follows:
1. MMLISI will act as Sub-Distributor for OFDI for the sale of Fund
Shares according to the terms set forth in the Registration Statement of the
Fund as such Registration Statement may be amended from time to time.
2. MMLISI's responsibilities as Sub-Distributor shall include, but
not be limited to, providing a nationwide system of sales personnel to promote
and otherwise wholesale sales of Fund Shares, providing a nationwide system of
service representatives to assist purchasers of Fund Shares, making qualified
personnel available, either in person, by phone or through the mail, to
respond to questions regarding Fund Shares asked by purchasers or prospective
purchasers of Fund Shares, and generally using its best efforts to sell Fund
Shares.
In addition MMLISI shall:
(a) process completed applications for the purchase of Fund Shares
submitted to it
<PAGE>
by investors,
(b) process orders submitted to it by Fund shareholders for the
purchase of additional Fund Shares,
(c) promptly deliver to the Fund's transfer agent any and all
payments received by it and made in connection with orders for
Fund Shares (net of any applicable sales charge with respect to
such order as set forth in the Registration Statement)
accompanied, in the case of purchases by new investors, by
proper applications for the purchase of Fund Shares. Purchase
orders shall be deemed effective at the time and in the manner
set forth in the Registration Statement,
(d) keep available for prospective investors reasonable quantities
of the Fund's Prospectus relating to Fund Shares, Statement of
Additional Information, annual and semi-annual reports of the
Fund, applications for the purchase of Fund Shares and other
similar materials (including materials relating to the use of
Fund Shares as a funding medium for qualified plans), and shall
provide prospective investors with copies of such documents and
materials upon request, and
(e) prepare and distribute sales literature and advertising material
pertaining to the Fund, as approved by OFDI, in such quantities
and of such a nature as may reasonably support its best efforts
to sell Fund Shares. It shall use its best efforts to assure
that such sales literature and advertising materials comply with
applicable laws and regulations, and shall promptly furnish to
OFDI, for OFDI's approval and filing with the National
Association of Securities Dealers, Inc., any proposed sales
literature or advertising materials relating to or referring to
the Fund or Fund Shares.
3. MMLISI will receive no compensation from OFDI for the sale of Fund
Shares except as may otherwise be agreed to by OFDI and MMLISI as set forth on
Exhibit A attached hereto as from time to time amended. OFDI shall not be
responsible for paying any of the costs associated with MMLISI's performance
of its duties hereunder or with the sale of the Fund Shares to the public by
MMLISI.
4. This Agreement may not be amended or changed except in writing and
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors. This Agreement shall not be assigned by either party
and shall terminate automatically upon assignment. This Agreement may be
terminated by either party at any time, without penalty, by giving not less
than 60 days' written notice (which notice may be waived). In addition, OFDI
may terminate this agreement with respect to the Fund immediately upon notice
if OFDI should cease to act as Distributor of the Fund. Unless earlier
terminated, this Agreement shall remain in effect until September 8, 1996, and
shall continue from year to year thereafter unless terminated by either party
as described above.
5. In connection with the distribution of Fund Shares, MMLISI agrees
to be bound by Sections 8, 9(b), 9(c) & 9(d) of the General Distributor's
Agreement by and between OFDI and the Fund, as amended from time to time.
6. MMLISI has notice of the provision of the Fund's Agreement and
Declaration of Trust dated May 28, 1993, pursuant to which there are
limitations on the liability of the Fund's Trustees and
<PAGE>
shareholders and understands and agrees that the liabilities of the Fund are
not binding upon any Trustee or shareholder of the Fund personally but bind
only the Fund and the Funds' Property.
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
------------------------------------------
Andrew J. Donohue, Executive Vice President
Accepted:
MML INVESTORS SERVICES, INC.
By: /s/ Kenneth M. Rickson
-------------------------------
Kenneth M. Rickson
President and Chief Operating Officer
<PAGE>
EXHIBIT A
MMLISI shall be entitled to receive any and all compensation pertaining to
Fund Shares including 12b-1 fees, which MMLISI is entitled to under its Dealer
Agreement for the Oppenheimer Funds or otherwise.
<PAGE>
EXHIBIT 8(a)
CUSTODIAN AGREEMENT
Between
MASSMUTUAL INSTITUTIONAL FUNDS
And
INVESTORS BANK & TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
1. Bank Appointed Custodian........................................ 1
2. Definitions..................................................... 1
2.1 Authorized Person.................................. 1
2.2 Security........................................... 1
2.3 Portfolio Security................................. 2
2.4 Officers' Certificate.............................. 2
2.5 Book-Entry System.................................. 2
2.6 Depository......................................... 2
2.7 Proper Instructions................................ 2
3. Separate Accounts............................................... 3
4. Certification as to Authorized Persons.......................... 3
5. Custody of Cash................................................. 3
5.1 Purchase of Securities............................. 3
5.2 Redemptions........................................ 4
5.3 Distributions and Expenses of Fund................. 4
5.4 Payment in Respect of Securities................... 4
5.5 Repayment of Loans................................. 4
5.6 Repayment of Cash.................................. 4
5.7 Foreign Exchange Transactions...................... 4
5.8 Other Authorized Payments.......................... 4
5.9 Termination........................................ 5
6. Securities...................................................... 5
6.1 Segregation and Registration....................... 5
6.2 Voting and Proxies................................. 5
6.3 Book-Entry System.................................. 5
6.4 Use of a Depository................................ 6
6.5 Use of Book-Entry System for Commercial Paper...... 8
6.6 Use of Immobilization Programs..................... 8
6.7 Eurodollar CDs..................................... 9
6.8 Options and Futures Transactions................... 9
(a) Puts and Calls Traded on Securities
Exchanges, NASDAQ or Over-the-Counter...... 9
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
(b) Puts, Calls, and Futures Traded
on Commodities Exchanges................... 9
6.9 Segregated Account................................. 10
6.10 Interest Bearing Call or Time Deposits............. 11
6.11 Transfer of Securities............................. 11
7. Redemptions..................................................... 13
8. Merger, Dissolution, etc. of Fund............................... 13
9. Actions of Bank Without Prior Authorization.................... 13
10. Collection; Defaults............................................ 14
11. Maintenance of Records; Accounting Services..................... 14
12. Concerning the Bank............................................. 15
12.1 Performance of Duties;
Standard of Care.................................. 15
12.2 Agents and Subcustodians........................... 16
12.3 Insurance.......................................... 16
12.4 Fees and Expenses of Bank.......................... 17
12.5 Advances by Bank.................................. 17
13. Termination..................................................... 17
14. Confidentiality................................................. 18
15. Notices......................................................... 19
16. Amendments...................................................... 19
17. Parties......................................................... 19
18. Governing Law................................................... 20
19. Counterparts.................................................... 20
20. Disclaimer and Limitation of Liability.......................... 20
21. Necessary Action................................................ 20
</TABLE>
<PAGE>
CUSTODIAN AGREEMENT
-------------------
This Custodian Agreement (the "Agreement") made this 29th day of August,
1994, between MassMutual Institutional Funds, a Massachusetts business trust
(the "Trust") and Investors Bank & Trust Company, a Massachusetts corporation
(the "Bank").
WHEREAS, the Trust is registered as an open end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and currently consists of seven separate portfolios (the "Funds"); and
WHEREAS, the Bank has the qualifications required by Section 17(f)(1) of
the 1940 Act to act as custodian of the portfolio securities and cash of the
Trust, and has indicated its willingness to so act, subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Bank Appointed Custodian. The Trust hereby appoints the Bank as
------------------------
custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth.
2. Definitions. Whenever used herein, the terms listed below will have the
-----------
following meaning:
2.1 Authorized Person. Authorized Person will mean any of the persons
-----------------
duly authorized to give Proper Instructions or otherwise act on behalf of the
Trust by appropriate resolution of its Board of Trustees (the "Board"), and set
forth in a certificate as required by Section 4 hereof.
2.2 Security. The term security as used herein will have the same meaning
--------
as when such term is used in the Securities Act of 1933, as amended, including,
without limitation, any note, stock, treasury stock, bond, debenture, evidence
of indebtedness, certificate of interest or participation in any profit sharing
agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on
any security, certificate of deposit, or group or index of securities (including
any interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to
a foreign currency, or, in general, any interest or instrument commonly known as
a "security", or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or option contract to purchase or sell any of the foregoing, and
futures, forward contracts and options thereon.
<PAGE>
2
2.3 Portfolio Security. Portfolio Security will mean any security owned
------------------
by the Trust.
2.4 Officers' Certificate. Officers' Certificate will mean, unless
---------------------
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons.
2.5 Book-Entry System. Book-Entry System shall mean the Federal Reserve
-----------------
Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor or successors and its nominee or nominees.
2.6 Depository. Depository shall mean The Depository Trust Company
----------
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934, as amended
("Exchange Act"), its successor or successors and its nominee or nominees. The
term "Depository" shall further mean and include any other person authorized to
act as a depository under the 1940 Act, its successor or successors and its
nominee or nominees, specifically identified in a certified copy of a resolution
of the Board.
2.7 Proper Instructions.
-------------------
(a) Proper Instructions shall mean:
(i) instructions regarding the purchase or sale of
Portfolio Securities, and payments and deliveries in connection therewith, given
by an Authorized Person as shall have been designated in an Officers'
Certificate, such instructions to be given in such form and manner as the Bank
and the trust shall agree upon from time to time, and
(ii) instructions (which may be continuing instructions)
regarding other matters signed or initialed by such one or more persons from
time to time designated in an Officers' Certificate as having been authorized by
the Board.
(b) Oral instructions will be considered Proper Instructions if
the Bank reasonably believes them to have been given by a person authorized to
give such instructions with respect to the transaction involved. The Trust shall
cause all oral instructions to be promptly confirmed in writing.
(c) Upon receipt of an Officers' Certificate as to the
authorization by the Board accompanied by a detailed description of procedures
approved by the Trust, Proper Instructions may include communication effected
directly between electro-mechanical or electronic devices provided that the
Board and the Bank are satisfied that such procedures afford adequate safeguards
for the Trust's assets.
(d) The Bank shall act upon and comply with any subsequent Proper
Instruction which modifies a prior instruction and the sole obligation of the
Bank with respect to any follow-up or confirmatory instruction shall be to make
reasonable efforts to
<PAGE>
3
detect any discrepancy between the original instruction and such confirmation
and to report such discrepancy to the Trust.
(e) The Trust shall be responsible, at the Trust's expense, for
taking any action, including any reprocessing, necessary to correct any such
discrepancy or error, and to the extent such action requires the Bank to act,
the Trust shall give the Bank specific Proper Instructions as to the action
required.
3. Separate Accounts. The Bank will at all times segregate the assets of
-----------------
each series or portfolio to which this Agreement relates into a separate account
for each such series or portfolio containing the assets of such series or
portfolio (and all investment earnings thereon).
4. Certification as to Authorized Persons. The Secretary or an Associate
--------------------------------------
Secretary of the Trust will at all times maintain on file with the Bank his or
her certification to the Bank, in such form as may be acceptable to the Bank, of
the names and signatures of the Authorized Persons, it being understood that
upon the occurrence of any change in the information set forth in the most
recent certification on file (including without limitation any person named in
the most recent certification who is no longer an Authorized Person as
designated therein), the Secretary or an Associate Secretary of the Trust, will
sign a new or amended certification setting forth the change and the new,
additional or omitted names or signatures. The Bank will be entitled to rely and
act upon any Officers' Certificate given to it by the Trust which has been
signed by Authorized Persons named in the most recent certification.
5. Custody of Cash. As Custodian for the Trust, the Bank will open and
----------------
maintain a separate account or accounts for each series or portfolio, in the
name of the Trust or in the name of the Bank, as Custodian of the Trust, and
will deposit to such account or accounts of the Trust all of the cash of the
Trust, except for cash held by a subcustodian appointed pursuant to Section 13.2
hereof, including borrowed funds, delivered to the Bank. Upon receipt by the
Bank of Proper Instructions (which may be continuing instructions) or in the
case of payments for redemptions and repurchases of outstanding shares of the
Trust, notification from the Trust's transfer agent as provided in Section 7
hereof, requesting such payment, designating the payee or the account or
accounts to which the Bank will release funds for deposit, and stating that it
is for a purpose permitted under the terms of this Section 5, specifying the
applicable subsection, the Bank will make payments of cash held for the accounts
of the Trust, insofar as funds are available for that purpose, only as permitted
in subsections 5.1-5.9 below. Nothing contained herein will act to preclude the
Trust from establishing one or more joint trading accounts to invest monies that
are uninvested at the close of business, provided that appropriate regulatory
approvals are obtained.
5.1 Purchase of Securities. Upon the purchase of securities for the
----------------------
Trust, against contemporaneous receipt of such securities by the Bank registered
in the name of the Trust or in the name of, or properly endorsed and in form for
transfer to, the Bank, or a nominee of the Bank, as Custodian of the Trust, or
receipt for the account of the Bank
<PAGE>
4
pursuant to the provisions of Section 6 hereof, each such payment to be made at
the purchase price shown on a broker's confirmation (or transaction report in
the case of Book Entry Paper) of purchase of the securities received by the Bank
before such payment is made, as confirmed in the Proper Instructions received by
the Bank before such payment is made.
5.2 Redemptions. In such amount as may be necessary for the repurchase
------------
or redemption of common shares of the Trust offered for repurchase or redemption
in accordance with Section 7 hereof.
5.3 Distributions and Expenses of Trust. For the payment on the
------------------------------------
account of the Trust of dividends or other distributions to shareholders as may
from time to time be declared by the Board, interest, taxes, management,
administrative or supervisory fees, distribution fees, fees of the Bank for its
services hereunder and reimbursement of the expenses and liabilities of the Bank
as provided hereunder, fees of any transfer agent, fees for legal, accounting,
and auditing services, or other operating expenses of the Trust.
5.4 Payment in Respect of Securities. For payments in connection with
---------------------------------
the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Trust held by or to be delivered to the Bank.
5.5 Repayment of Loans. To repay loans of money made to the Trust,
-------------------
but, in the case of final payment, only upon redelivery to the Bank of any
Portfolio Securities pledged or hypothecated therefor and upon surrender of
documents evidencing the loan;
5.6 Repayment of Cash. To repay the cash delivered to the Trust for the
------------------
purpose of collateralizing the obligation to return to the Trust certificates
borrowed from the Trust representing Portfolio Securities, but only upon
redelivery to the Bank of such borrowed certificates.
5.7 Foreign Exchange Transactions. For payments in connection with
------------------------------
foreign exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery which may be entered into by the Bank on behalf of
the Trust upon the receipt of Proper Instructions, such Proper Instructions to
specify the currency broker or banking institution (which may be the Bank, or
any other subcustodian or agent hereunder, acting as principal) with which the
contract or option is made, and the Bank shall have no duty with respect to the
selection of such currency brokers or banking institutions with which the Trust
deals or for their failure to comply with the terms of any contract or option.
5.8 Other Authorized Payments. For other authorized transactions of the
--------------------------
Trust, or other obligations of the Trust incurred for proper Trust purposes;
provided that before making any such payment the Bank will also receive a
certified copy of a resolution of the Board signed by an Authorized Person
(other than the Person certifying such resolution) and certified by its
Secretary or Associate Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Trust, or
specifying the amount of the obligation for which payment is to be made, setting
forth the
<PAGE>
5
purpose for which such obligation was incurred and declaring such purpose to be
a proper purpose.
5.9 Termination. Upon the termination of this Agreement pursuant to
------------
Section 14 hereof.
6. Securities.
----------
6.1 Segregation and Registration.
-----------------------------
(a) Except as otherwise provided herein, and except for securities
to be delivered to any subcustodian appointed pursuant to Section 13.2 hereof,
the Bank as custodian, on behalf of each series or portfolio will receive and
hold pursuant to the provisions hereof, in a separate account or accounts and
physically segregated at all times from those of other persons, any and all
Portfolio Securities which may now or hereafter be delivered to it by or for the
account of the Trust. All such Portfolio Securities will be held or disposed of
by the Bank for, and subject at all times to, the instructions of the Trust
pursuant to the terms of this Agreement. Subject to the specific provisions
herein relating to Portfolio Securities that are not physically held by the
Bank, the Bank will register all Portfolio Securities (unless otherwise directed
by Proper Instructions or an Officers' Certificate), in the name of a registered
nominee of the Bank as defined in the Internal Revenue Code and any Regulations
of the Treasury Department issued thereunder, and will execute and deliver all
such certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state. The Bank will use its best efforts
to the end that the specific Portfolio Securities held by it hereunder will be
at all times identifiable.
(b) The Trust will from time to time furnish to the Bank
appropriate instruments to enable it to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee, any Portfolio
Securities which may from time to time be registered in the name of the Trust.
6.2 Voting and Proxies. Neither the Bank nor any nominee of the Bank
------------------
will vote any of the Portfolio Securities held hereunder, except in accordance
with Proper Instructions or an Officers' Certificate. The Bank will execute and
deliver, or cause to be executed and delivered, to the Trust all notices,
proxies and proxy soliciting materials with respect to such Securities, such
proxies to be executed by the registered holder of such Securities (if
registered otherwise than in the name of the Trust), but without indicating the
manner in which such proxies are to be voted.
6.3 Book-Entry System. Provided the Bank has received a certified copy
-----------------
of a resolution of the Board specifically approving deposits of Trust assets in
the Book-Entry System, and such approval has not been withdrawn:
(a) The Bank may keep Portfolio Securities in the Book-Entry
System provided that such Portfolio Securities are represented in an account
("Account") of the Bank (or its agent) in such System which shall not include
any assets of the Bank (or such agent) other than assets held as a fiduciary,
custodian, or otherwise for customers;
<PAGE>
6
(b) The records of the Bank (and any such agent) with respect to
the Trust's participation in the Book-Entry System through the Bank (or any such
agent) will identify by book entry Portfolio Securities which are included with
other securities deposited in the Account and shall at all times during the
regular business hours of the Bank (or such agent) be open for inspection by
duly authorized officers, employees or agents of the Trust. Where securities are
transferred to the Trust's account, the Bank shall also, by book entry or
otherwise, identify as belonging to the trust a quantity of securities in
fungible bulk of securities (i) registered in the name of the Bank or its
nominee, or (ii) shown on the Bank's account on the books of the Federal Reserve
Bank;
(c) The Bank (or its agent) shall pay for securities purchased for
the account of the Trust or shall pay cash collateral against the return of
Portfolio Securities loaned by the Trust upon (i) receipt of advice from the
Book-Entry System that such Securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Bank (or its agent) to reflect
such payment and transfer for the account of the Trust. The Bank (or its agent)
shall transfer securities sold or loaned for the account of the Trust upon:
(i) Receipt of advice from the Book-Entry System that
payment for securities sold or payment of the initial cash collateral against
the delivery of securities loaned by the Trust has been transferred to the
Account; and
(ii) The making of an entry on the records of the Bank (or
its agent) to reflect such transfer and payment for the account of the Trust.
Copies of all advice from the Book-Entry System of transfers of securities for
the account of the Trust shall identify the Trust, be maintained for the Trust
by the Bank and shall be provided to the Trust at its request. The Bank shall
send the Trust a confirmation, as defined by Rule 17f-4 of the 1940 Act, of any
transfers to or from the account of the Trust;
(d) The Bank will promptly provide the Trust with any report
obtained by the Bank or its agent on the Book-Entry System's accounting system,
internal accounting control and procedures for safeguarding securities deposited
in the Book-Entry System;
(e) The Bank shall be liable to the Trust for any loss or damage
to the Trust resulting from use of the Book-Entry System by reason of any
negligence, willful misfeasance or bad faith of the Bank or any of its agents or
of any of its or their employees or from any reckless disregard by the Bank or
any such agent of its duty to use its best efforts to enforce such rights as it
may have against the Book-Entry System; at the election of the Trust, it shall
be entitled to be subrogated for the Bank in any claim against the Book-Entry
System or any other person which the Bank or its agent may have as a consequence
of any such loss or damage if and to the extent that the Trust has not been made
whole for any loss or damage;
6.4 Use of a Depository. Provided the Bank has received a certified
---------------------
copy of a resolution of the Board specifically approving deposits in DTC or
other such Depository, approval not having been withdrawn:
<PAGE>
7
(a) The Bank may use a Depository to hold, receive, exchange,
release, lend, deliver and otherwise deal with Portfolio Securities including
stock dividends, rights and other items of like nature, and to receive and remit
to the Bank on behalf of the Trust all income and other payments thereon and to
take all steps necessary and proper in connection with the collection thereof;
(b) Registration of Portfolio Securities may be made in the name
of any nominee or nominees used by such Depository;
(c) Payment for securities purchased and sold may be made through
the clearing medium employed by such Depository for transactions of participants
acting through it. Upon any purchase of Portfolio Securities, payment will be
made only upon delivery of the securities to or for the account of the Trust and
the Trust shall pay cash collateral against the return of Portfolio Securities
loaned by the Trust only upon delivery of the Securities to or for the account
of the Trust; and upon any sale of Portfolio Securities, delivery of the
Securities will be made only against payment thereof or, in the event Portfolio
Securities are loaned, delivery of Securities will be made only against receipt
of the initial cash collateral to or for the account of the Trust; and
(d) The Bank shall be liable to the Trust for any loss or damage
to the Trust resulting from use of a Depository by reason of any gross
negligence, willful misfeasance or bad faith of the Bank or its employees, or
from any reckless disregard by the Bank of its duty to use its best efforts to
enforce such rights as it may have against a Depository. In this connection, the
Bank shall use its best efforts to ensure that:
(i) The Depository obtains replacement of any certificated
Portfolio Security deposited with it in the event such Security is lost,
destroyed, wrongfully taken or otherwise not available to be returned to the
Bank upon its request;
(ii) Any proxy materials received by a Depository with
respect to Portfolio Securities deposited with such Depository are forwarded
immediately to the Bank for prompt transmittal to the Trust;
(iii) Such Depository immediately forwards to the Bank
confirmation of any purchase or sale of Portfolio Securities and of the
appropriate book entry made by such Depository to the Trust's account;
(iv) Such Depository prepares and delivers to the Bank such
records with respect to the performance of the Bank's obligations and duties
hereunder as may be necessary for the Trust to comply with the recordkeeping
requirements of Section 31(a) of the 1940 Act and Rule 31(a) thereunder; and
(v) Such Depository delivers to the Bank and the trust all
internal accounting control reports, whether or not audited by an independent
public accountant, as well as such other reports as the Trust may reasonably
request in order to verify the Portfolio Securities held by such Depository.
<PAGE>
8
6.5 Use of Book-Entry System for Commercial Paper. Provided (i) the Bank
----------------------------------------------
has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper"), and (ii) for each year
following such approval the Board has received and approved the arrangements,
upon receipt of Proper Instructions and upon receipt of confirmation from an
Issuer (as defined below) that the Trust has purchased such Issuer's Book-entry
Paper, the Bank shall issue and hold in book-entry form, on behalf of the Trust,
commercial paper issued by issuers with whom the Bank has entered into a book-
entry agreement (the "Issuers"). In maintaining its Book-entry Paper System, the
Bank agrees that:
(a) The Bank will maintain all Book-entry Paper held by the Trust
in an account of the Bank that includes only assets held by it for customers;
(b) The records of the Bank with respect to the Trust's purchase
of Book-entry Paper through the Bank will identify, by book-entry, Commercial
Paper belonging to the trust which is included in the Book-Entry Paper System
and shall at all times during the regular business hours of the Bank be open for
inspection by duly authorized officers, employees or agents of the Trust;
(c) The Bank shall pay for Book-Entry Paper purchased for the
account of the Trust upon contemporaneous (i) receipt of advice from the Issuer
that such sale of Book-Entry Paper has been effected, and (ii) the making of an
entry on the records of the Bank to reflect such payment and transfer for the
account of the Trust;
(d) The Bank shall cancel such Book-Entry Paper obligation upon
the maturity thereof upon contemporaneous (i) receipt of advice that payment for
such Book-Entry Paper has been transferred to the Trust, and (ii) the making of
an entry on the records of the Bank to reflect such payment for the account of
the Trust;
(e) The Bank shall transmit to the Trust a transaction journal
confirming each transaction in Book-Entry Paper for the account of the Trust on
the next business day following the transaction; and
(f) The Bank will send to the Trust such reports on its system of
internal accounting control with respect to the Book-Entry Paper System as the
Trust may reasonably request from time to time.
6.6 Use of Immobilization Programs. Provided (i) the Bank has received
-------------------------------
a certified copy of a resolution of the Board specifically approving the
maintenance of Portfolio Securities in an immobilization program operated by a
bank which meets the requirements of Section 26(a)(1) of the 1940 Act, and (ii)
for each year following such approval the Board has reviewed and approved the
arrangements, and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval, the Bank shall enter into
such immobilization program with such bank acting as a subcustodian hereunder.
<PAGE>
9
6.7 Eurodollar CDs. Any Portfolio Securities which are Eurodollar CDs
---------------
may be physically held by the European branch of the U.S. banking institution
that is the issuer of such Eurodollar CD (a "European Branch"), provided that
such Securities are identified on the books of the Bank as belonging to the
Trust and that the books of the Bank identify the European Branch holding such
Securities. Notwithstanding any other provision of this Agreement to the
contrary, except as stated in the first sentence of this subsection 6.7, the
Bank shall be under no other duty with respect to such Eurodollar CDs belonging
to the Trust, and shall have no liability to the Trust or its shareholders with
respect to the actions, inactions, whether negligent or otherwise of such
European Branch in connection with such Eurodollar CDs, except for any loss or
damage to the Trust resulting from the Bank's own gross negligence, willful
misfeasance or bad faith in the performance, of its duties hereunder.
6.8 Options and Futures Transactions.
--------------------------------
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or Over-
the-Counter.
(i) The Bank shall take action as to put options ("puts")
and call options ("calls") purchased or sold (written) by the Trust regarding
escrow or other arrangements (i) in accordance with the provisions of any
agreement entered into upon receipt of Proper Instructions between the Bank, any
broker-dealer registered under the Exchange Act and a member of the National
Association of Securities Dealers, Inc. (the "NASD"), and, if necessary, the
Trust relating to the compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange, or of any
similar organization or organizations.
(ii) Unless another agreement requires it to do so, the Bank
shall be under no duty or obligation to see that the Trust has deposited or is
maintaining adequate margin, if required, with any broker in connection with any
option, nor shall the Bank be under duty or obligation to present such option to
the broker for exercise unless it receives Proper Instructions from the Trust.
The Bank shall have no responsibility for the legality of any put or call
purchased or sold on behalf of the Trust, the propriety of any such purchase or
sale, or the adequacy of any collateral delivered to a broker in connection with
an option or deposited to or withdrawn from a Segregated Account (as defined in
subsection 6.9 below). The Bank specifically, but not by way of limitation,
shall not be under any duty or obligation to: (x) periodically check or notify
the Trust that the amount of such collateral held by a broker or held in a
Segregated Account is sufficient to protect such broker of the trust against any
loss; (y) effect the return of any collateral delivered to a broker; or (z)
advise the Trust that any option it holds, has or is about to expire. Such
duties or obligations shall be the sole responsibility of the Trust.
(b) Puts, Calls and Futures Traded on Commodities Exchanges.
(i) The Bank shall take action as to puts, calls and futures
contracts ("Futures") purchased or sold by the Trust in accordance with the
provisions of any agreement among the Trust, the Bank and a Futures Commission
Merchant registered
<PAGE>
10
under the Commodity Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in connection with
transactions by the Trust.
(ii) The responsibilities and liabilities of the Bank as to
futures, puts and calls traded on commodities exchanges, any Futures Commission
Merchant account and the Segregated Account shall be limited as set forth in
subparagraph (a)(2) of this Section 6.8 as if such subparagraph referred to
Futures Commission Merchants rather than brokers, and Futures and puts and calls
thereon instead of options.
6.9 Segregated Account. The Bank, upon receipt of Proper Instructions,
---------- -------
shall establish and maintain a Segregated Account or Accounts as described by
the Securities and Exchange Commission ("SEC") in Investment Company Act Release
No. 10666, or any subsequent release or releases of the SEC relating to the
maintenance of Segregated Accounts by registered investment companies (the
"Release"). Upon receipt of Proper Instructions, the Bank shall transfer into
such Account or Accounts cash and/or Portfolio Securities:
(a) In accordance with the provisions of any agreement among the
Trust, the Bank and a broker-dealer registered under the Exchange Act and a
member of the NASD or any Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange or the
Commodity Futures Trading Commission or any registered Contract Market, or of
any similar organizations regarding escrow or other arrangements in connection
with transactions by the Trust;
(b) For the purpose of segregating cash or securities in
connection with options purchased or written by the trust or commodity futures
purchased or written by the Trust;
(c) For the deposit of any Portfolio Securities which the Trust
has agreed to sell on a forward commitment basis or other purpose to which the
Release applies;
(d) For other proper corporate purposes, but only, in the case of
the clause (e), upon receipt of, in addition to Proper Instructions, a certified
copy of a resolution of the Board, or of the Executive Committee signed by an
officer of the Trust and certified by the Secretary or an Assistant Secretary,
setting forth the purpose or purposes of such Segregated Account and declaring
such purposes to be proper corporate purposes; and
(e) Assets may be withdrawn from the Segregated Account pursuant
to Proper Instructions only:
(i) In accordance with the provisions of any agreements
referenced in (a) or (b) above;
(ii) For sale or delivery to meet the Trust's obligations
under outstanding firm commitment or when-issued agreements for
the purchase of Portfolio Securities and under reverse repurchase
agreements;
<PAGE>
11
(iii) For exchange for other liquid assets of equal or greater value
deposited in the Segregated Account;
(iv) To the extent that the Trust's outstanding forward commitment
or when-issued agreements for the purchase of portfolio securities or
reverse repurchase agreements are sold to other parties or the Trust's
obligations thereunder are met from assets of the Trust other than those
in the Segregated Account; or
(v) For delivery upon settlement of a forward commitment agreement
for the sale of Portfolio Securities.
6.10 Interest Bearing Call or Time Deposits. The Bank shall, upon receipt
--------------------------------------
of Proper Instructions relating to the purchase by the Trust of interest-bearing
fixed-term and call deposits, transfer cash, by wire or otherwise, in such
amounts and to such bank or banks as shall be indicated in such Proper
Instructions. The Bank shall include in its records with respect to the assets
of the Trust appropriate notation as to the amount of each such deposit, the
banking institution with which such deposit is made (the "Deposit Bank"), and
shall retain such forms of advice or receipt evidencing the deposit, if any, as
may be forwarded to the Bank by the Deposit Bank. Such deposits shall be deemed
Portfolio Securities of the Trust and the responsibility of the Bank therefore
shall be the same as and no greater than the Bank's responsibility in respect of
other Portfolio Securities of the Trust.
6.11 Transfer of Securities. The Bank will transfer, exchange, deliver or
-----------------------
release Portfolio Securities held by it hereunder, insofar as such Portfolio
Securities are available for such purpose, provided that before making any
transfer, exchange, delivery or release under this Section the Bank will receive
Proper Instructions requesting such transfer, exchange or delivery stating that
it is for a purpose permitted under the terms of this Section 6.11, specifying
the applicable subsection, or describing the purpose of the transaction with
sufficient particularity to permit the Bank to ascertain the applicable
subsection, only:
(a) Upon sales of Portfolio Securities for the account of the Trust,
against contemporaneous receipt by the Bank of payment therefor in full, each
such payment to be in the amount of the sale price shown in a broker's
confirmation of sale of the Portfolio Securities received by the Bank before
such payment is made, as confirmed in the Proper Instructions received by the
Bank before such payment is made;
(b) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan of merger, consolidation,
reorganization, share split-up, change in par value, recapitalization or
readjustment or otherwise, upon exercise of subscription, purchase or sale or
other similar rights represented by such Portfolio Securities, or for the
purpose of tendering shares in the event of a tender offer therefor, provided
however that in the event of an offer of exchange, tender offer, or other
exercise of rights requiring the physical tender or delivery of Portfolio
Securities, the Bank shall have no liability for failure to so tender in a
timely manner unless such Proper Instructions
<PAGE>
12
are received by the Bank at least two business days prior to the date required
for tender, and unless the Bank (or its agent or subcustodian hereunder) has
actual possession of such Security at least two business days prior to the date
of tender;
(c) Upon conversion of Portfolio Securities pursuant to their terms into
other securities;
(d) For the purpose of redeeming in kind shares of the Trust upon
authorization from the Trust;
(e) In the case of option contracts owned by the Trust, for presentation
to the endorsing broker;
(f) When such Portfolio Securities are called, redeemed or retired or
otherwise become payable;
(g) For the purpose of effectuating the pledge of Portfolio Securities
held by the Bank in order to collateralize loans made to the Trust by any bank,
including the Bank; provided, however, that such Portfolio Securities will be
released only upon payment to the Bank for the account of the Trust of the
moneys borrowed, except that in cases where additional collateral is required to
secure a borrowing already made, and such fact is made to appear in the Proper
Instructions, further Portfolio Securities may be released for that purpose
without any such payment. In the event that any such pledged Portfolio
Securities are held by the Bank, they will be so held for the account of the
lender, and after notice to the Trust from the lender in accordance with the
normal procedures of the lender, that an event of deficiency or default on the
loan has occurred, the Bank may deliver such pledged Portfolio Securities to or
for the account of the lender;
(h) For the purpose of releasing certificates representing Portfolio
Securities, against contemporaneous receipt by the Bank of the fair market value
of such security, as set forth in the Proper Instructions received by the Bank
before such payment is made;
(i) For the purpose of delivering securities lent by the Trust to a bank
or broker dealer, but only against receipt in accordance with street delivery
custom except as otherwise provided herein, of adequate collateral as agreed
upon from time to time by the Trust and the Bank, and upon receipt of payment in
connection with any repurchase agreement relating to such securities entered
into by the Trust;
(j) For other authorized transactions of the Trust or for other proper
corporate purposes; provided that before making such transfer, the Bank will
also receive a certified copy of resolutions of the Board, signed by an
authorized officer of the Trust (other than the officer certifying such
resolution) and certified by its Secretary or Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to be
an authorized transaction of the Trust or such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made; and
<PAGE>
13
(k) Upon termination of this Agreement as hereinafter set forth pursuant
to Section 8 and Section 14 of this Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b),
(c), (e), (f), (g), (h) and (i), securities or cash receivable in exchange
therefor shall be delivered to the Bank.
7. Redemptions. In the case of payment of assets of the Trust held by the
-----------
Bank in connection with redemptions and repurchases by the Trust of outstanding
common shares, the Bank will rely on notification by the Trust's transfer agent
of receipt of a request for redemption and certificates, if issued, in proper
form for redemption before such payment is made. Payment shall be made in
accordance with the Agreement and Declaration of Trust and By-laws of the
Trust, from assets available for said purpose.
8. Merger, Dissolution, etc. of Trust. In the case of the following
-----------------------------------
transactions, not in the ordinary course of business, namely, the merger of the
Trust into or the consolidation of the Trust with another investment company,
the sale by the Trust of all, or substantially all, of its assets to another
investment company, or the liquidation or dissolution of the Trust and
distribution of its assets, the Bank will deliver the Portfolio Securities held
by it under this Agreement and disburse cash only upon the order of the trust
set forth in an Officers' Certificate, accompanied by a certified copy of a
resolution of the Board authorizing any of the foregoing transactions.
9. Actions of Bank Without Prior Authorization. Notwithstanding anything
-------------------------------------------
herein to the contrary, unless and until the Bank receives an Officers'
Certificate to the contrary, it will without prior authorization or instruction
of the Trust or the transfer agent:
9.1 Endorse for collection and collect on behalf of and in the name of
the Trust all checks, drafts, or other negotiable or transferable instruments or
other orders for the payment of money received by it for the account of the
Trust and hold for the account of the Trust all income, dividends, interest and
other payments or distribution of cash with respect to the Portfolio Securities
held thereunder;
9.2 Present for payment all coupons and other income items held by it for
the account of the Trust which call for payment upon presentation and hold the
cash received by it upon such payment for the account of the Trust;
9.3 Receive and hold for the account of the Trust all securities received
as a distribution on Portfolio Securities as a result of a stock dividend, share
split-up, reorganization, recapitalization, merger, consolidation, readjustment,
distribution of rights and similar securities issued with respect to any
Portfolio Securities held by it hereunder.
9.4 Execute as agent on behalf of the Trust all necessary ownership and
other certificates and affidavits required by the Internal Revenue Code or the
regulations of the Treasury Department issued thereunder, or by the laws of any
state, now or hereafter in effect, inserting the trust's name on such
certificates as the owner of the securities covered thereby, to the extent it
may lawfully do so and as may be required to obtain payment in respect thereof.
The Bank will execute and deliver such certificates in connection with
<PAGE>
14
Portfolio Securities delivered to it or by it under this Agreement as may be
required under the provisions of the Internal Revenue Code and any Regulations
of the Treasury Department issued thereunder, or under the laws of any State;
9.5 Present for payment all Portfolio Securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it upon
payment for the account of the Trust; and
9.6 Exchange interim receipts or temporary securities for definitive
securities.
10. Collections and Defaults. The Bank will use all reasonable effort to
------------------------
collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Trust notice actually received by it of any call for redemption,
offer of exchange, right of subscription, reorganization or other proceedings
affecting such Securities. If Portfolio Securities upon which such income is
payable are in default or payment is refused after due demand or presentation,
the Bank will notify the Trust in writing of any default or refusal to pay
within two business days from the day on which it receives knowledge of such
default or refusal. In addition, the Bank will send the Trust a written report
once each month showing any income on any Portfolio Security held by it which is
more than ten days overdue on the date of such report and which has not
previously been reported.
11. Maintenance of Records.
-------------------------
11.1 The Bank will maintain records with respect to transactions for which
the Bank is responsible pursuant to the terms and conditions of this Agreement,
and in compliance with the applicable rules and regulations of the 1940 Act and
will furnish the Trust daily with a statement of condition of the Trust.
11.2 The Bank will furnish to the Trust at the end of every month, and at
the close of each quarter of the Trust's fiscal year, a list of the Portfolio
Securities and the aggregate amount of cash held by it for the Trust.
11.3 The books and records of the Bank pertaining to its actions under
this Agreement and reports by the Bank or its independent accountants concerning
its accounting system, procedures for safeguarding securities and internal
accounting controls will be open to inspection and audit at reasonable times by
officers or auditors, or legal counsel employed by the Trust and will be
preserved by the Bank in the manner and in accordance with the applicable rules
and regulations under the 1940 Act.
11.4 The Bank shall keep the books of account and render statements or
copies from time to time as reasonably requested by the Treasurer or any
executive officer of the Trust.
11.5 The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.
<PAGE>
15
12. Concerning the Bank.
-------------------
12.1 Performance of Duties and Standard of Care.
-------------------------------------------
(a) The Bank shall use reasonable care in performing its duties
hereunder. In the performance of such duties, the Bank will be protected and not
be liable, and will be indemnified and held harmless for any loss to the Trust
except in the case of the negligence, willful misconduct, bad faith, reckless
disregard of duties or obligations hereunder, including knowing violations of
law, or fraud of the Bank, or of its officers, employees, or agents, except as
set forth in paragraph 12.1 (d) hereof.
(i) On issues that are legal in nature, the Bank will be
entitled to receive and act upon the advice of independent legal counsel of its
own selection, provided such counsel is chosen with reasonable care and which
can be counsel for the Trust, and will be without liability for any action taken
or thing done or omitted to be done in accordance with this Agreement in good
faith conformity with such advice. Except as otherwise agreed to by the Trust,
the Bank shall pay the fees and expenses of such counsel, unless such counsel is
the Trust's counsel;
(ii) Will be protected and not be liable, and will be
indemnified and held harmless for any action taken or omitted to be taken by it
in reliance upon any Officers' Certificate, Proper Instructions, or resolutions
of the Board, reasonably believed by the Bank to be genuine, and
(b) The Bank will be under no duty or obligation to inquire into:
(i) The validity of the issue of any Portfolio Securities purchased
by or for the Trust, the legality of the purchases thereof or the propriety of
the price incurred therefor;
(ii) The legality of any sale of any Portfolio Securities by or for
the Trust or the propriety of the amount for which the same are sold;
(iii) The legality of an issue or sale of any common shares of the
Trust or the sufficiency of the amount to be received therefor;
(iv) The legality of the repurchase of any common shares of the Trust
or the propriety of the amount to be paid therefor;
(v) The legality of the declaration of any dividend by the Trust or
the legality of the distribution of any Portfolio Securities as payment in kind
of such dividend; and
(vi) Any property or moneys of the Trust unless and until received by
it, and any such property or moneys delivered or paid by it pursuant to the
terms hereof.
(c) The Bank will not be under any duty or obligation to ascertain
whether any Portfolio Securities at any time delivered to or held by it for the
account of the Trust are such as may properly be held by the Trust under the
provisions of its Agreement and
<PAGE>
16
Declaration of Trust, By-laws, any federal or state statutes or any rule or
regulation of any governmental agency.
(d) Notwithstanding anything in this Agreement to the contrary, in no
event shall the Bank or the Trust be liable to the other, or to any third party,
for special, punitive or consequential damages arising, directly or indirectly
from this Agreement, even if said party has been advised by the other party of
the possibility of such damages.
(e) Notwithstanding anything in this Agreement to the contrary, in no
event shall the Bank be liable hereunder or to any third party for any losses or
damages of any kind resulting from acts of God, earthquakes, fires, floods,
storms or other disturbances of nature, epidemics, strikes, riots,
nationalization, expropriation, currency restrictions, acts of war, civil war or
terrorism, insurrection, nuclear fusion, fission or radiation, the interruption,
loss or malfunction of utilities, transportation, or computers (hardware or
software) and computer facilities, the unavailability of energy sources and
other similar happenings or events except as results from the Bank's own
negligence.
(f) Notwithstanding anything in this Agreement to the contrary, the
Bank shall have in place reasonable business continuity and disaster recovery
procedures and systems and shall provide the Trust, at least annually, test
results of such procedures and systems.
12.2 Agents and Subcustodians.
-------------------------
(a) The Bank may employ agents in the performance of its duties
hereunder and shall be responsible for the acts and omissions of such agents as
if performed by the Bank hereunder.
(b) Subcustodians.
(i) Upon receipt of Proper Instructions, the Bank may employ
subcustodians, provided that any such subcustodian meets at least the minimum
qualifications required by Section 17(f)(1) of the 1940 Act to act as a
custodian of the Trust's assets with respect to property of the Trust held in
the United States.
(ii) Assets held by subcustodians in countries other than the
United States shall be held pursuant to Rule 17f-5 of the 1940 Act, and pursuant
to such terms and conditions as more fully set forth in Exhibit B.
(iii) The Bank shall have no liability to the Trust or any
other person by reason of any act or omission of any domestic subcustodian and
the Trust shall indemnify the Bank and hold it harmless from and against all
actions, suits and claims, arising directly or indirectly out of the performance
of any subcustodian. Upon request of the Bank, the Trust shall assume the entire
defense of any action, suit, or claim subject to the foregoing indemnity. The
Trust shall pay all fees and expenses of any subcustodian.
12.3 Insurance. The Bank shall at all times maintain insurance
----------
coverages adequate for the nature of its operations, including directors and
officers, errors and omissions, and fidelity bond insurance coverages. The Bank
shall have the Trust named as
<PAGE>
17
a Certificate Holder on each of these coverages, and provide MassMutual with
Certificates of Insurance at each policy renewal. The Certificates shall provide
that MassMutual receive a minimum of twenty (20) days' notice of cancellation,
non-renewal, or material change of policy coverages. The Bank shall provide
MassMutual with copies of its insurance policies, upon request. If at any time,
due to a material adverse change in policy coverages, MassMutual reasonably
believes that such coverages are insufficient in any material respect, or if any
policy is placed with an insurer with an A.M. Best rating of less than A 12, the
Bank shall take reasonable steps to satisfy MassMutual's concerns.
12.4. Fees and Expenses of Bank. The Trust will pay or reimburse the Bank
-------------------------
from time to time for any transfer taxes payable upon transfer of Portfolio
Securities made hereunder, and for all necessary proper disbursements, expenses
and charges made or incurred by the Bank in the performance of this Agreement
(including any duties listed on any Schedule hereto, if any) including any
indemnities for any loss, liabilities or expense to the Bank as provided above.
For the services rendered by the Bank hereunder, the Trust will pay to the Bank
such compensation or fees at such rate and at such times as shall be agreed upon
in writing by the parties from time to time. The Bank will also be entitled to
reimbursement by the Trust for all reasonable expenses incurred in conjunction
with termination of this Agreement by the Trust.
12.5 Advances by Bank. The Bank may, in its sole discretion, advance
-----------------
funds on behalf of the Trust to make any payment permitted by this Agreement
upon receipt of any proper authorization required by this Agreement for such
payments by the Trust. Should such a payment or payments, with advanced funds,
result in an overdraft (due to insufficiencies of the Trust's account with the
Bank, or for any other reason other than as a result of a mistake by the Bank),
such overdraft or related indebtedness, shall be deemed to be a loan made by the
Bank to the Trust payable on demand and bearing interest at the current rate
charged by the Bank for such loans unless the Trust shall provide the Bank with
agreed upon compensating balances. The Trust agrees that the Bank shall have a
continuing lien and security interest to the extent of any overdraft or
indebtedness, in and to any property at any time held by it for the Trust's
benefit or in which the Trust has an interest and which is then in the Bank's
possession or control (or in the possession or control of any third party acting
on the Bank's behalf). The Trust authorizes the Bank, in its sole discretion, at
any time to charge any overdraft or indebtedness, together with interest due
thereon against any balance of account standing to the credit of the Trust on
the Bank's books.
13. Termination.
-----------
13.1 This Agreement may be terminated at any time without penalty upon
ninety (90) days' written notice delivered by either party to the other by means
of registered mail, and upon the expiration of such ninety (90) days this
Agreement will terminate; provided, however, that the effective date of such
termination may be postponed to a date not more than thirty (30) additional days
from the date of delivery of such notice:
(a) by the Bank in order to prepare for the transfer by the Bank of all
of the assets of the Trust held hereunder, provided that the Bank has not acted
in a manner that would constitute negligence, gross negligence, willful
misconduct, bad faith or fraud, and
<PAGE>
18
(b) by the Trust in order to give the Trust an opportunity to make
suitable arrangements for a successor custodian, provided however, that the
Trust is not in breach of a material term or condition of this Agreement.
At any time after the termination of this Agreement, the Trust will, at its
request, have access to the records of the Bank relating to the performance of
its duties as custodian. This Agreement shall also terminate upon the delivery
of the Trust's Portfolio Securities, the disbursement of cash, and the payment
of fees and expenses of the Bank in the case of certain transactions described
in Section 8 hereof.
13.2 In the event of the termination of this Agreement, the Bank will
immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer of all
cash and the delivery of all Portfolio Securities duly endorsed and all records
maintained under Section 11 hereof to the successor custodian when appointed by
the Trust. The obligation of the Bank to deliver and transfer over the assets of
the Trust held by it directly to such successor custodian will commence as soon
as such successor is appointed and will continue until completed as aforesaid.
13.3 If the Trust does not select a successor custodian within ninety
(90) days from the date of delivery of notice of termination the Bank may,
subject to the provisions of subsection 14.3, deliver the Portfolio Securities
and cash of the Trust held by the Bank to a bank or trust company of its own
selection which meets the requirements of Section 17(f)(1) of the 1940 Act and
has a reported capital, surplus and undivided profits aggregating not less than
$2,000,000, to be held as the property of the Trust under terms similar to those
on which they were held by the Bank, whereupon such bank or trust company so
selected by the Bank will become the successor custodian of such assets of the
Trust with the same effect as though selected by the Board.
13.4 Prior to the expiration of ninety (90) days after notice of
termination has been given, the Trust may furnish the Bank with an order of the
Trust advising that a successor custodian cannot be found willing and able to
act upon reasonable and customary terms and that there has been submitted to the
shareholders of the Trust the question of whether the Trust will be liquidated
or will function without a custodian for the assets of the Trust held by the
Bank. In that event the Bank will deliver the Portfolio Securities and cash of
the Trust held by it, subject as aforesaid, in accordance with one of such
alternatives which may be approved by the requisite vote of shareholders, upon
receipt by the Bank of a copy of the minutes of the meeting of shareholders at
which action was taken, certified by the Trust's Secretary and an opinion of
counsel to the Trust in form and content satisfactory to the Bank.
13.5 Notwithstanding the above, the Trust may terminate this Agreement
without penalty at anytime after the Bank receives a rating of four and one-half
(4.5), on a scale of 1-5 with one (1) being the best rating and five (5) the
worst, by Cates Consulting Analysts, a Division of the Ferguson Company.
14. Confidentiality. Both parties hereto agree than any non-public
---------------
information, including trade secrets, obtained hereunder concerning the other
party is confidential and
<PAGE>
19
may not be disclosed to any other person, firm, corporation, association, or
other entity, without the prior written consent of the other party, except as
may be required by applicable law or at the request of a governmental agency.
The parties further agree, that without waiving any other legal or equitable
rights or remedies, that a breach of this provision would irreparably damage the
other party and accordingly agree that each of them is entitled, without bond or
other security, to an injunction or injunctions to prevent breaches of this
provision.
15. Notices. Any notice or other instrument in writing authorized or
-------
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below; namely:
(a) In the case of notices sent to the Trust to:
MassMutual Institutional Trusts
1295 State Street
Springfield, Massachusetts 01111
Attention: Edmond F. Ryan
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
P.O. Box 1537
Boston, Massachusetts 02205-1537
Attention: Richard Boorman
or if notices to either, a copy to:
MassMutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Attention: Allan B. Bixby
Second Vice President and Treasurer
or at such other place as such party may from time to time designate in
writing.
16. Amendments. This Agreement constitutes the entire agreement may not be
----------
altered or amended, except by an instrument in writing, executed by both
parties, and in the case of the trust, such alteration or amendment will be
authorized and approved by its Board.
17. Parties. This Agreement will be binding upon and shall inure to the
-------
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the trust
without the written consent of the Bank or by the Bank without the written
consent of the trust, authorized and approved by its Board; and provided further
that termination proceedings pursuant to Section 14 hereof will not be deemed to
be an assignment within the meaning of this provision.
<PAGE>
20
18. Governing Law. This Agreement and all performance hereunder will be
-------------
governed by the laws of the Commonwealth of Massachusetts.
19. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
20. Disclaimer of Liability. A copy of the Agreement and Declaration of
-----------------------
Trust of the Trust is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed on
behalf of the Borad of Trustees of the Trust as Trustees and not individually
and that the obligations of this instrument are not binding upon any of the
Trustees or shareholders individually but are binding upon the assets and
property of the Trust; provided, however, that the Agreement and Declaration of
Trust of the Trust provides that the assets of a particular series of the Trust
shall under no circumstances be charges with liabilities attributable to any
other series of the Trust and that all persons extending credit to, or
contracting with or having any claim against a particular series of the Trust
shall look only to the assets of that particular series for payment of such
credit, contract or claim.
21. Necessary Action. The Bank shall take all reasonable action in
----------------
connection with the transfer of assets from the Bank of New York to the Bank in
a timely and orderly manner, provided however, that the Bank shall have no
liability for the action or inaction of the Bank of New York.
<PAGE>
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
MASSMUTUAL INSTITUTIONAL FUNDS
By:
-------------------------
Peter A. Feige
Vice President
INVESTORS BANK & TRUST COMPANY
By:
-------------------------
Name:
Title:
<PAGE>
Exhibit 8(b)
ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
And
MASSMUTUAL INSTITUTIONAL FUNDS
(As to the MassMutual Prime Fund)
<PAGE>
ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT
-------------------------------------------------
This ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT (the
"Agreement"), dated as of this 30th day of September, 1994 (the "Effective
Date") is by and between MassMutual Institutional Funds (the "Trust") on behalf
of MassMutual Prime Fund (the "Fund") and Massachusetts Mutual Life Insurance
Company (the "Manager").
WHEREAS, The Fund is a series of the Trust, a Massachusetts business
trust which is an open-end diversified management investment company registered
as such with the Securities and Exchange Commission (the "Commission") pursuant
to the Investment Company Act of 1940, as amended (the "1940 Act"), and
WHEREAS, the Trust, on behalf of the Fund, and the Manager wish to
enter into this Agreement whereby the Manager will provide, or cause to be
provided, administrative and shareholder services for the Fund and assume
certain expenses of the Fund.
NOW, THEREFORE, in consideration of the covenants and mutual promises
of the parties made to each other, it is hereby covenanted and agreed as
follows:
ARTICLE I: ADMINISTRATIVE AND SHAREHOLDER SERVICES
--------------------------------------------------
A. General Responsibilities. Subject to the exceptions set forth in Sub-
Section C hereof and subject to the direction and control of the Board of
Trustees of the Trust, the Manager will provide, or cause to be provided, all
services required for the administration of the Trust and the Fund, including
fund accounting, shareholder servicing, and transfer agency services.
B. Specific Responsibilities. Without limiting the responsibilities of the
Manager, the Manager will:
1. Maintain office facilities (which may be in the offices of the Manager
or a corporate affiliate but shall be in such location as the Trust
reasonably determines).
2. Furnish statistical and research data, clerical services and stationery
and office supplies.
3. Compile data for, prepare for execution by the Fund and file all the
Fund's federal and state tax returns and required tax filings other than
those required by this Agreement to be made by the Fund's custodian and
transfer agent.
4. Prepare compliance filings pursuant to state securities laws with the
advice of the Trust's counsel.
5. Prepare the Trust's Annual and Semi-Annual Reports to Shareholders and
amendments to its Registration Statements (on Form N-1A or any replacement
therefor).
<PAGE>
6. Compile data for, prepare and file timely Notices to the SEC required
pursuant to Rule 24f-2 under the 1940 Act.
7. Determine the daily pricing of the portfolio securities and computation
of the net asset value and the net income of Fund in accordance with the
Prospectus, resolutions of the Trust's Board of Trustees, and the
procedures set forth in EXHIBIT A: NET ASSET VALUE CALCULATIONS.
8. Keep and maintain the financial accounts and records of the Fund and
provide the Trust with certain reports, as needed or requested by the Fund.
9. Provide officers for the Trust as requested by the Trust's Board of
Trustees.
10. Perform fund accounting services for the Fund as set forth in EXHIBIT
B: FUND ACCOUNTING FUNCTIONS.
11. Generally assist in all aspects of the operations of the Fund.
C. Excepted Responsibilities. The Manager shall not perform the following
services pursuant to this Agreement:
1. Those performed by the custodian for the Trust under the Custodian
Agreement between the Trust and Investors Bank & Trust Company or any
successor custodian (the "Bank");
2. Those performed by the distributor(s) of the Trust's shares;
3. Those provided by the Trust's independent legal counsel;
4. Those performed by the independent public accountants for the Trust;
5. Those performed by the Fund's investment manager;
6. Those provided by the Trust's independent trustees, and
7. Those provided by Investors Bank & Trust Company pursuant to a Transfer
Agency Agreement.
D. Sub-contract Rights. The Manager may in its discretion (subject only to
approval by the Trust's Board of Trustees) delegate or subcontract some or all
of the Manager's duties, but shall remain ultimately responsible for the
provision of such services. The Manager shall be responsible for payment of all
compensation to any person or entity that Manager delegates any duties
hereunder.
2
<PAGE>
ARTICLE II: EXPENSES
---------------------
A. Expenses. The Manager shall assume all expenses of the Trust and the Fund,
including the Manager's reasonable out-of-pocket disbursements; provided,
however, that the Fund or the Trust shall pay:
1. Taxes and corporate fees payable to governmental agencies;
2. Brokerage commissions (which may be higher than other brokers would
charge if paid to a broker which provides brokerage and research services
to the Manager for use in providing investment advice and management to the
Fund and other accounts over which the Manager exercises investment
discretion) and other capital items payable in connection with the purchase
or sale of the Fund's investments (The words "brokerage and research
services" shall have the meaning given in the Securities Exchange Act of
1934 and the Rules and Regulations thereunder.);
3. Interest on account of any borrowing by the Fund;
4. Fees and expenses of the Trust's Trustees who are not interested persons
(as defined in the 1940 Act) of the Manager or of the Trust;
5. Fees payable to the Trust's certified independent public accountants;
6. Fees paid to the Trust's independent legal counsel;
7. Fees paid to the Fund's custodian;
8. Fees paid to the Fund's Investment Manager, and
9. Payments due pursuant to any 12b-1 Plan adopted by the Trust and
applicable to the Fund.
ARTICLE III: COMPENSATION
--------------------------
The Manager's Compensation. For the services to be rendered and the facilities
to be furnished by the Manager as provided for in this Agreement, the Trust will
compensate the Manager as the Trust and the Manager may from time to time agree.
ARTICLE IV: STANDARD OF CARE
-----------------------------
A. Standard of Care. The Manager shall use reasonable care in performing its
duties hereunder. In the performance of such duties, the Manager its directors,
officers, employees, and
3
<PAGE>
agents, successors and assigns will be protected and will not be liable, and
will be indemnified and held harmless by the Trust for any error of judgement,
mistake of law, or any other loss, claim, damages, liabilities, or expenses
arising by reason of it acting hereunder, by the Trust except in the case of the
negligence, willful misconduct, bad faith, reckless disregard of duties or
obligations hereunder, including knowing violations of law, or fraud of the
Manager, or of its officers, employees, or agents, except as otherwise set forth
in this Article IV. Notwithstanding anything herein to the contrary, the Manager
shall have no discretion over the Trust's assets or choice of investments and
shall not be held liable hereunder for any losses suffered by the Fund.
B. Legal Advice. On issues that are legal in nature, the Manager will be
entitled to receive and act upon the advice of independent legal counsel of its
own selection, provided such counsel is chosen with reasonable care and which
can be counsel for the Trust, and will be without liability for any action taken
or thing done or omitted to be done in accordance with this Agreement in good
faith conformity with such advice. Except as otherwise agreed to by the Trust,
the Manager shall pay the fees and expenses of such counsel, unless such counsel
is the Trust's counsel. On issues that are related to financial accounting
matters, the Manager will be entitled to receive and act upon the advice of the
Trust's independent public accountants, provided that the Manager promptly
notifies the Trust that it has sought such advice and discloses the nature of
the matter. Except as otherwise agreed to by the parties, the Trust shall bear
the expenses and costs of obtaining advice from its independent public
accountants, if such advice is sought pursuant to this subsection B of Article
IV.
C. Good Faith Reliance. The Manager will be protected and not be liable, and
will be indemnified and held harmless for any action taken or omitted to be
taken by it in reliance upon any document, certificate or instrument which it
reasonably believes to be genuine and to be signed or presented by the proper
person or persons.
D. Damages. Notwithstanding anything in this Agreement to the contrary, in no
event shall the Manager or the Trust be liable to the other, or to any third
party, for special, punitive or consequential damages arising, directly or
indirectly from this Agreement, even if said party has been advised by the other
party of the possibility of such damages.
E. Acts of God. In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, interruption of
electrical power or other utilities, equipment or transmission failure or damage
reasonably beyond its control, or other causes reasonably beyond its control,
such party shall not be liable to the other for any damages resulting from such
failure to perform or otherwise from such causes. The Manager, the Trust and
MassMutual shall notify each other as soon as reasonably possible following the
occurrence of an event described in this subsection.
ARTICLE V: EFFECTIVE DATE, TERMINATION AND AMENDMENT
-----------------------------------------------------
A. Effective Date. This Agreement will become effective on the Effective Date
and, unless
4
<PAGE>
sooner terminated as provided herein, will continue for an initial term of one-
year from the Effective Date and thereafter shall continue for successive one
year periods; provided however, that such continuance shall be specifically
approved at least annually by (i) the Board of Trustees of the Trust, or (ii) by
vote of a majority of the outstanding shares of the Fund (as defined in the 1940
Act), provided however, that in either event the continuance is also approved at
least annually by a majority of the Trust's Trustees who are not parties to this
Agreement or interested persons (as defined in the 1940 Act)(other than a
Trustees of the Trust) of the Manager or of the Trust by vote cast in person at
a meeting called for the purpose of voting on such approval.
B. Termination. Anything to the contrary herein notwithstanding, (1) this
Agreement may at any time be terminated by the Trust on 90 days' written notice
to the Manager without the payment of any penalty either by the Board of
Trustees of the Trust or by vote of majority of the outstanding shares of the
Fund (as defined in the 1940 Act); (2) this Agreement shall immediately
terminate in the event of its assignment (within the meaning of the 1940 Act);
and (3) this Agreement may be terminated by the Manager on 90 days' written
notice to the Trust without the payment of any penalty. Any notice under this
Agreement shall be given in writing, addressed and delivered, or mailed
postpaid, to the other party at the principal office of such party.
C. Amendment. This Agreement may be amended at any time by mutual written
consent of the parties, provided that such consent on the part of the Trust
shall have been approved at a meeting by the vote of a majority of the
outstanding shares of the Fund and by written majority of the Trustees of the
Trust who are not parties to this Agreement or interested persons (within the
meaning of the 1940 Act) of the Trust or of the Manager by vote cast in person
at a meeting called for the purpose of acting on such amendment.
ARTICLE VI: MISCELLANEOUS
--------------------------
A. Services Not Exclusive. The services of the Manager to the Trust and the
Fund under this Agreement are not exclusive and the Manager shall be free to
render similar services to others.
B. Use of Name by the Trust. The Trust recognizes the Manager's control of the
name "MassMutual" and agrees that its right to use this name is non-exclusive
and can be terminated by the Manager at any time. The use of such name will
automatically be terminated if at any time the Manager, a subsidiary or an
affiliate of the Manager ceases to be investment manager for the Fund.
C. Interested and Affiliated Persons. It is understood that members of the
Board of Trustees, officers, employees or agents of the Trust or the Fund may
also be directors, officers, employees or agents of the Manager, and Sub-
Advisers, and that the Manager and Sub-Advisers, and their directors, officers,
employees or agents may be interested in the Fund as shareholders or otherwise.
5
<PAGE>
D. Records and Confidentiality. All records pertaining to the operation and
administration of the Trust and the Fund (whether prepared by the Manager or
supplied to the Manager by the Trust or the Fund) are the property and subject
to the control of the Trust. In the event of the termination of this Agreement,
all such records in the possession of the Manager shall be promptly turned over
to the Trust free from any claim or retention of rights. All such records shall
be deemed to be confidential in nature and the Manager shall not disclose or use
any records or information obtained pursuant to this Agreement in any manner
whatsoever except as expressly authorized by the Trust or as required by federal
or state regulatory authorities. The Manager shall submit to all regulatory and
administrative bodies having jurisdiction over the operations of the Manager or
the Trust, present or future, any information, reports or other material
obtained pursuant to this Agreement which any such body may request or require
pursuant to applicable laws or regulations.
E. Disclaimer of Liability. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on behalf of the
Board of Trustees of the Trust as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding upon the assets and property of the
Trust; provided, however, that the Agreement and Declaration of Trust of the
Trust provides that the assets of a particular series of the Trust shall under
no circumstances be charged with liabilities attributable to any other series of
the Trust and that all persons extending credit to, or contracting with or
having any claim against a particular series of the Trust, shall look only to
the assets of that particular series for payment of such credit, contract or
claim.
F. Notices. Any notice or other instrument in writing authorized or required
by this Agreement to be given to either party hereto will be sufficiently given
if addressed to such party and mailed or delivered to it at its office at the
address set forth below; namely:
(a) In the case of notices sent to the Trust to:
MassMutual Institutional Trusts
1295 State Street
Springfield, Massachusetts 01111
Attention: Stephen L. Kuhn
Vice President & Secretary
(b) In the case of notices sent to the Manager to:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Attention: Edmond F. Ryan
Vice President
6
<PAGE>
In the case of notices sent to either party, a copy to the Bank to:
Investors Bank & Trust Company
P.O. Box 1537
Boston, Massachusetts 02205-1537
Attention: Richard Boorman
or at such other place as such party may from time to time designate in writing.
G. Insurance Coverage. The Bank shall at all times maintain insurance
coverages adequate for the nature of its operations, including directors and
officers, errors and omissions, and fidelity bond insurance coverages. The Bank
shall have the Trust named as a Certificate Holder on each of these coverages,
and provide MassMutual with Certificates of Insurance at each policy renewal.
The Certificates shall provide that MassMutual receive a minimum of twenty (20)
days' written notice of cancellation, non-renewal, or material change of policy
coverages. The Bank shall provide MassMutual with copies of its insurance
policies, upon request. If at any time, due to a material adverse change in
policy coverages, MassMutual reasonably believes that such coverages are
insufficient in any material respect, or if any policy is placed with an insurer
with an A.M. Best rating of less than A 12, the Bank shall take reasonable steps
to satisfy MassMutual's concerns.
H. Business Continuity. Notwithstanding anything in this Agreement to the
contrary, the Bank shall have in place comprehensive business continuity and
disaster recovery procedures and systems and shall provide MassMutual, at least
annually, test results of such procedures and systems.
I. Parties. This Agreement will be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns; provided,
however, that this Agreement will not be assignable by the Trust without the
written consent of the Manager or by the Manager without the written consent of
the Trust, authorized and approved by its Board; and provided further that
termination proceedings pursuant to Article V, Section B hereof will not be
deemed to be an assignment within the meaning of this provision.
J. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
K. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Administrative and
Shareholder Services Agreement to be executed on the day and year first above
written.
MASSMUTUAL INSTITUTIONAL FUNDS
on behalf of MassMutual Prime Fund
By: /s/ Stuart H. Reese
-----------------------------
Stuart H. Reese
President
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Edwin P. McCausland, Jr.
-----------------------------
Edwin P. McCausland, Jr.
Vice President and
Managing Director
8
<PAGE>
EXHIBIT A: NET ASSET VALUE CALCULATIONS
----------------------------------------
MassMutual shall compute and, unless otherwise directed by the Board, determine
as of the close of business on the New York Stock Exchange on each day on which
said Exchange is open for unrestricted trading and as of such other hours, if
any, as may be authorized by the Board the net asset value and the public
offering price of a share of capital stock of the Trust, such determination to
be made in accordance with the provisions of the Articles and By-laws of the
Trust and Prospectus and Statement of Additional Information relating to the
Trust, as they may from time to time be amended, and any applicable resolutions
of the Board at the time in force and applicable and promptly to notify the
Trust, the proper exchange and the NASD or such other persons as the Trust may
request of the results of such computation and determination.
In computing the net asset value hereunder, MassMutual may rely in good faith
upon information furnished to it by any Authorized Person in respect of (i) the
manner of accrual of the liabilities of the Trust and in respect of liabilities
of the Trust not appearing on its books of account kept by the Bank, (ii)
reserves, if any, authorized by the Board or that no such reserves have been
authorized, (iii) the source of the quotations to be used in computing the net
asset value, (iv) the value to be assigned to any security for which no price
quotations are available, and (v) the method of computation of the public
offering price on the basis of the net asset value of the shares, and the Bank
shall not be responsible for any loss occasioned by such reliance or for any
good faith reliance on any quotations received from a source pursuant to (iii)
above.
9
<PAGE>
EXHIBIT B: FUND ACCOUNTING FUNCTIONS
-------------------------------------
MassMutual shall have the following responsibilities pursuant to (S)10 of
Article I(B):
1. Maintain the books and records of the funds pursuant to applicable rules
of the Investment Company Act of 1940, including the following:
(a) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of cash
and all other debits and credits, as required;
(b) General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts as required;
(c) A monthly trial balance of all ledger accounts as required.
2. Daily pricing of all portfolio securities using securities valuations or
other methods as may be approved by the fund's Trustees from time to time.
3. Daily posting of all income and expense accruals and reconciliation of
general ledger balances and total shares outstanding.
4. Computation of the daily net asset value as of the close of business of
the New York Stock Exchange on each day on which the Exchange is open for
business (See Exhibit C: Net Asset Value Calculations).
5. Reporting of the daily net asset value and dividend distributions to
transfer agent, fund, management, NASDAQ, and others as requested by 5:30
p.m. each day.
6. Calculation of dividends and capital gain distributions.
7. Routine monitoring of the fund's investments and providing prompt notice
of any violations of the diversification requirements, investment
restrictions or investment policies.
8. Calculation of yields and returns pursuant to S.E.C. formulas, and any
other performance calculations as required.
9. Providing fund prices and performance numbers to industry reporting
services.
10. Preparing reports on expense limitations and net asset value analysis, as
requested.
11. Maintain historical records of all fund net asset values and dividend
distributions.
10
<PAGE>
12. Preparing Blue Sky filings.
13. Preparing audited annual and unaudited semi-annual reports including
statement of investments, financial statements and footnotes.
14. Producing documents and responding to inquiries during S.E.C. audit, IRS
audit and others as required.
15. Providing the portfolio managers with cash availability based on security
settlements, shareholder activity, maturities, and income collections for
each fund by 8:30 a.m. each valuation day.
16. Taking whatever action is needed to accomplish the transfer of assets
from the Bank of New York to Investors Bank and Trust Company in a timely and
orderly manner.
11
<PAGE>
COMPENSATION
------------
Pursuant to the terms and conditions of the ADMINISTRATIVE AND SHAREHOLDER
SERVICES AGREEMENT (the "Agreement") between MassMutual Institutional Funds (the
"Trust"), on behalf of the MassMutual Prime Fund (the "Fund") and Massachusetts
Mutual Life Insurance Company (the Manager"), the Trust agrees to pay monthly to
the Manager, an administrative services fee calculated by Class at the annual
rate of the daily average net assets of the applicable class of shares of the
Fund, expressed in basis points, as follows:
<TABLE>
====================================================
Class 1 Class 2 Class 3 Class 4
====================================================
<S> <C> <C> <C>
56.28 51.28 31.52 8.12
====================================================
</TABLE>
Article II of the Agreement provides that the Manager will assume all expenses
of each Fund, including the Manager's reasonable out-of-pocket disbursements;
provided, however, that the Trust will pay:
1. Taxes and corporate fees payable to governmental agencies;
2. Brokerage commissions (which may be higher than other brokers would
charge if paid to a broker which provides brokerage and research services to
the Manager for use in providing investment advice and management to the Fund
and other accounts over which the Manager exercises investment discretion)
and other capital items payable in connection with the purchase or sale of
the Fund's investments (The words "brokerage and research services" shall
have the meaning given in the Securities Exchange Act of 1934 and the Rules
and Regulations thereunder.);
3. Interest on account of any borrowing by the Fund;
4. Fees and expenses of the Trust's Trustees who are not interested persons
(as defined in the 1940 Act) of the Manager or of the Trust;
5. Fees payable to the Trust's certified independent public accountants;
6. Fees paid to the Trust's independent legal counsel;
7. Fees paid to the Fund's custodian;
8. Fees paid to the Fund's Investment Manager, and
9. Payments due pursuant to any 12b-1 Plan adopted by the Trust and
applicable to the Fund.
12
<PAGE>
ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
And
MASSMUTUAL INSTITUTIONAL FUNDS
(As to the MassMutual Short-Term Bond Fund)
<PAGE>
ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT
-------------------------------------------------
This ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT (the
"Agreement"), dated as of this 30th day of September, 1994 (the "Effective
Date") is by and between MassMutual Institutional Funds (the "Trust") on behalf
of MassMutual Short-Term Bond Fund (the "Fund") and Massachusetts Mutual Life
Insurance Company (the "Manager").
WHEREAS, The Fund is a series of the Trust, a Massachusetts business
trust which is an open-end diversified management investment company registered
as such with the Securities and Exchange Commission (the "Commission") pursuant
to the Investment Company Act of 1940, as amended (the "1940 Act"), and
WHEREAS, the Trust, on behalf of the Fund, and the Manager wish to
enter into this Agreement whereby the Manager will provide, or cause to be
provided, administrative and shareholder services for the Fund and assume
certain expenses of the Fund.
NOW, THEREFORE, in consideration of the covenants and mutual promises
of the parties made to each other, it is hereby covenanted and agreed as
follows:
ARTICLE I: ADMINISTRATIVE AND SHAREHOLDER SERVICES
---------------------------------------------------
A. General Responsibilities. Subject to the exceptions set forth in Sub-
Section C hereof and subject to the direction and control of the Board of
Trustees of the Trust, the Manager will provide, or cause to be provided, all
services required for the administration of the Trust and the Fund, including
fund accounting, shareholder servicing, and transfer agency services.
B. Specific Responsibilities. Without limiting the responsibilities of the
Manager, the Manager will:
1. Maintain office facilities (which may be in the offices of the Manager
or a corporate affiliate but shall be in such location as the Trust
reasonably determines).
2. Furnish statistical and research data, clerical services and stationery
and office supplies.
3. Compile data for, prepare for execution by the Fund and file all the
Fund's federal and state tax returns and required tax filings other than
those required by this Agreement to be made by the Fund's custodian and
transfer agent.
4. Prepare compliance filings pursuant to state securities laws with the
advice of the Trust's counsel.
<PAGE>
5. Prepare the Trust's Annual and Semi-Annual Reports to Shareholders and
amendments to its Registration Statements (on Form N-1A or any replacement
therefor).
6. Compile data for, prepare and file timely Notices to the SEC required
pursuant to Rule 24f-2 under the 1940 Act.
7. Determine the daily pricing of the portfolio securities and computation
of the net asset value and the net income of Fund in accordance with the
Prospectus, resolutions of the Trust's Board of Trustees, and the
procedures set forth in EXHIBIT A: NET ASSET VALUE CALCULATIONS.
8. Keep and maintain the financial accounts and records of the Fund and
provide the Trust with certain reports, as needed or requested by the Fund.
9. Provide officers for the Trust as requested by the Trust's Board of
Trustees.
10. Perform fund accounting services for the Fund as set forth in EXHIBIT
B: FUND ACCOUNTING FUNCTIONS.
11. Generally assist in all aspects of the operations of the Fund.
C. Excepted Responsibilities. The Manager shall not perform the following
services pursuant to this Agreement:
1. Those performed by the custodian for the Trust under the Custodian
Agreement between the Trust and Investors Bank & Trust Company or any
successor custodian (the "Bank");
2. Those performed by the distributor(s) of the Trust's shares;
3. Those provided by the Trust's independent legal counsel;
4. Those performed by the independent public accountants for the Trust;
5. Those performed by the Fund's investment manager;
6. Those provided by the Trust's independent trustees, and
7. Those provided by Investors Bank & Trust Company pursuant to a Transfer
Agency Agreement.
2
<PAGE>
D. Sub-contract Rights. The Manager may in its discretion (subject only to
approval by the Trust's Board of Trustees) delegate or subcontract some or all
of the Manager's duties, but shall remain ultimately responsible for the
provision of such services. The Manager shall be responsible for payment of all
compensation to any person or entity that Manager delegates any duties
hereunder.
ARTICLE II: EXPENSES
---------------------
A. Expenses. The Manager shall assume all expenses of the Trust and the Fund,
including the Manager's reasonable out-of-pocket disbursements; provided,
however, that the Fund or the Trust shall pay:
1. Taxes and corporate fees payable to governmental agencies;
2. Brokerage commissions (which may be higher than other brokers would
charge if paid to a broker which provides brokerage and research services
to the Manager for use in providing investment advice and management to the
Fund and other accounts over which the Manager exercises investment
discretion) and other capital items payable in connection with the purchase
or sale of the Fund's investments (The words "brokerage and research
services" shall have the meaning given in the Securities Exchange Act of
1934 and the Rules and Regulations thereunder.);
3. Interest on account of any borrowing by the Fund;
4. Fees and expenses of the Trust's Trustees who are not interested persons
(as defined in the 1940 Act) of the Manager or of the Trust;
5. Fees payable to the Trust's certified independent public accountants;
6. Fees paid to the Trust's independent legal counsel;
7. Fees paid to the Fund's custodian;
8. Fees paid to the Fund's Investment Manager, and
9. Payments due pursuant to any 12b-1 Plan adopted by the Trust and
applicable to the Fund.
ARTICLE III: COMPENSATION
--------------------------
The Manager's Compensation. For the services to be rendered and the facilities
to be furnished by the Manager as provided for in this Agreement, the Trust will
compensate the Manager as the Trust and the Manager may from time to time
agree.
3
<PAGE>
ARTICLE IV: STANDARD OF CARE
-----------------------------
A. Standard of Care. The Manager shall use reasonable care in performing its
duties hereunder. In the performance of such duties, the Manager its directors,
officers, employees, and agents, successors and assigns will be protected and
will not be liable, and will be indemnified and held harmless by the Trust for
any error of judgement, mistake of law, or any other loss, claim, damages,
liabilities, or expenses arising by reason of it acting hereunder, by the Trust
except in the case of the negligence, willful misconduct, bad faith, reckless
disregard of duties or obligations hereunder, including knowing violations of
law, or fraud of the Manager, or of its officers, employees, or agents, except
as otherwise set forth in this Article IV. Notwithstanding anything herein to
the contrary, the Manager shall have no discretion over the Trust's assets or
choice of investments and shall not be held liable hereunder for any losses
suffered by the Fund.
B. Legal Advice. On issues that are legal in nature, the Manager will be
entitled to receive and act upon the advice of independent legal counsel of its
own selection, provided such counsel is chosen with reasonable care and which
can be counsel for the Trust, and will be without liability for any action taken
or thing done or omitted to be done in accordance with this Agreement in good
faith conformity with such advice. Except as otherwise agreed to by the Trust,
the Manager shall pay the fees and expenses of such counsel, unless such counsel
is the Trust's counsel. On issues that are related to financial accounting
matters, the Manager will be entitled to receive and act upon the advice of the
Trust's independent public accountants, provided that the Manager promptly
notifies the Trust that it has sought such advice and discloses the nature of
the matter. Except as otherwise agreed to by the parties, the Trust shall bear
the expenses and costs of obtaining advice from its independent public
accountants, if such advice is sought pursuant to this subsection B of Article
IV.
C. Good Faith Reliance. The Manager will be protected and not be liable, and
will be indemnified and held harmless for any action taken or omitted to be
taken by it in reliance upon any document, certificate or instrument which it
reasonably believes to be genuine and to be signed or presented by the proper
person or persons.
D. Damages. Notwithstanding anything in this Agreement to the contrary, in no
event shall the Manager or the Trust be liable to the other, or to any third
party, for special, punitive or consequential damages arising, directly or
indirectly from this Agreement, even if said party has been advised by the other
party of the possibility of such damages.
E. Acts of God. In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, interruption of
electrical power or other utilities, equipment or transmission failure or damage
reasonably beyond its control, or other causes reasonably beyond its control,
such party shall not be liable to the other for any damages resulting from such
failure to perform or otherwise from such causes. The Manager, the Trust and
MassMutual shall notify each other as soon as reasonably possible following the
occurrence of an event described in this subsection.
4
<PAGE>
ARTICLE V: EFFECTIVE DATE, TERMINATION AND AMENDMENT
-----------------------------------------------------
A. Effective Date. This Agreement will become effective on the Effective Date
and, unless sooner terminated as provided herein, will continue for an initial
term of one-year from the Effective Date and thereafter shall continue for
successive one year periods; provided however, that such continuance shall be
specifically approved at least annually by (i) the Board of Trustees of the
Trust, or (ii) by vote of a majority of the outstanding shares of the Fund (as
defined in the 1940 Act), provided however, that in either event the continuance
is also approved at least annually by a majority of the Trust's Trustees who are
not parties to this Agreement or interested persons (as defined in the 1940
Act)(other than a Trustees of the Trust) of the Manager or of the Trust by vote
cast in person at a meeting called for the purpose of voting on such approval.
B. Termination. Anything to the contrary herein notwithstanding, (1) this
Agreement may at any time be terminated by the Trust on 90 days' written notice
to the Manager without the payment of any penalty either by the Board of
Trustees of the Trust or by vote of majority of the outstanding shares of the
Fund (as defined in the 1940 Act); (2) this Agreement shall immediately
terminate in the event of its assignment (within the meaning of the 1940 Act);
and (3) this Agreement may be terminated by the Manager on 90 days' written
notice to the Trust without the payment of any penalty. Any notice under this
Agreement shall be given in writing, addressed and delivered, or mailed
postpaid, to the other party at the principal office of such party.
C. Amendment. This Agreement may be amended at any time by mutual written
consent of the parties, provided that such consent on the part of the Trust
shall have been approved at a meeting by the vote of a majority of the
outstanding shares of the Fund and by written majority of the Trustees of the
Trust who are not parties to this Agreement or interested persons (within the
meaning of the 1940 Act) of the Trust or of the Manager by vote cast in person
at a meeting called for the purpose of acting on such amendment.
ARTICLE VI: MISCELLANEOUS
--------------------------
A. Services Not Exclusive. The services of the Manager to the Trust and the
Fund under this Agreement are not exclusive and the Manager shall be free to
render similar services to others.
B. Use of Name by the Trust. The Trust recognizes the Manager's control of the
name "MassMutual" and agrees that its right to use this name is non-exclusive
and can be terminated by the Manager at any time. The use of such name will
automatically be terminated if at any time the Manager, a subsidiary or an
affiliate of the Manager ceases to be investment manager for the Fund.
5
<PAGE>
C. Interested and Affiliated Persons. It is understood that members of the
Board of Trustees, officers, employees or agents of the Trust or the Fund may
also be directors, officers, employees or agents of the Manager, and Sub-
Advisers, and that the Manager and Sub-Advisers, and their directors, officers,
employees or agents may be interested in the Fund as shareholders or otherwise.
D. Records and Confidentiality. All records pertaining to the operation and
administration of the Trust and the Fund (whether prepared by the Manager or
supplied to the Manager by the Trust or the Fund) are the property and subject
to the control of the Trust. In the event of the termination of this Agreement,
all such records in the possession of the Manager shall be promptly turned over
to the Trust free from any claim or retention of rights. All such records shall
be deemed to be confidential in nature and the Manager shall not disclose or use
any records or information obtained pursuant to this Agreement in any manner
whatsoever except as expressly authorized by the Trust or as required by federal
or state regulatory authorities. The Manager shall submit to all regulatory and
administrative bodies having jurisdiction over the operations of the Manager or
the Trust, present or future, any information, reports or other material
obtained pursuant to this Agreement which any such body may request or require
pursuant to applicable laws or regulations.
E. Disclaimer of Liability. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on behalf of the
Board of Trustees of the Trust as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding upon the assets and property of the
Trust; provided, however, that the Agreement and Declaration of Trust of the
Trust provides that the assets of a particular series of the Trust shall under
no circumstances be charged with liabilities attributable to any other series of
the Trust and that all persons extending credit to, or contracting with or
having any claim against a particular series of the Trust, shall look only to
the assets of that particular series for payment of such credit, contract or
claim.
F. Notices. Any notice or other instrument in writing authorized or required
by this Agreement to be given to either party hereto will be sufficiently given
if addressed to such party and mailed or delivered to it at its office at the
address set forth below; namely:
(a) In the case of notices sent to the Trust to:
MassMutual Institutional Trusts
1295 State Street
Springfield, Massachusetts 01111
Attention: Stephen L. Kuhn
Vice President & Secretary
6
<PAGE>
(b) In the case of notices sent to the Manager to:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Attention: Edmond F. Ryan
Vice President
In the case of notices sent to either party, a copy to the Bank to:
Investors Bank & Trust Company
P.O. Box 1537
Boston, Massachusetts 02205-1537
Attention: Richard Boorman
or at such other place as such party may from time to time designate in writing.
G. Insurance Coverage. The Bank shall at all times maintain insurance
coverages adequate for the nature of its operations, including directors and
officers, errors and omissions, and fidelity bond insurance coverages. The Bank
shall have the Trust named as a Certificate Holder on each of these coverages,
and provide MassMutual with Certificates of Insurance at each policy renewal.
The Certificates shall provide that MassMutual receive a minimum of twenty (20)
days' written notice of cancellation, non-renewal, or material change of policy
coverages. The Bank shall provide MassMutual with copies of its insurance
policies, upon request. If at any time, due to a material adverse change in
policy coverages, MassMutual reasonably believes that such coverages are
insufficient in any material respect, or if any policy is placed with an insurer
with an A.M. Best rating of less than A 12, the Bank shall take reasonable steps
to satisfy MassMutual's concerns.
H. Business Continuity. Notwithstanding anything in this Agreement to the
contrary, the Bank shall have in place comprehensive business continuity and
disaster recovery procedures and systems and shall provide MassMutual, at least
annually, test results of such procedures and systems.
I. Parties. This Agreement will be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns; provided,
however, that this Agreement will not be assignable by the Trust without the
written consent of the Manager or by the Manager without the written consent of
the Trust, authorized and approved by its Board; and provided further that
termination proceedings pursuant to Article V, Section B hereof will not be
deemed to be an assignment within the meaning of this provision.
J. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
7
<PAGE>
K. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Administrative and
Shareholder Services Agreement to be executed on the day and year first above
written.
MASSMUTUAL INSTITUTIONAL FUNDS
on behalf of MassMutual Short-Term Bond Fund
By: /s/ Stuart H. Reese
-----------------------------------
Stuart H. Reese
President
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Edwin P. McCausland, Jr.
-----------------------------------
Edwin P. McCausland, Jr.
Vice President and
Managing Director
8
<PAGE>
EXHIBIT A: NET ASSET VALUE CALCULATIONS
----------------------------------------
MassMutual shall compute and, unless otherwise directed by the Board, determine
as of the close of business on the New York Stock Exchange on each day on which
said Exchange is open for unrestricted trading and as of such other hours, if
any, as may be authorized by the Board the net asset value and the public
offering price of a share of capital stock of the Trust, such determination to
be made in accordance with the provisions of the Articles and By-laws of the
Trust and Prospectus and Statement of Additional Information relating to the
Trust, as they may from time to time be amended, and any applicable resolutions
of the Board at the time in force and applicable and promptly to notify the
Trust, the proper exchange and the NASD or such other persons as the Trust may
request of the results of such computation and determination.
In computing the net asset value hereunder, MassMutual may rely in good faith
upon information furnished to it by any Authorized Person in respect of (i) the
manner of accrual of the liabilities of the Trust and in respect of liabilities
of the Trust not appearing on its books of account kept by the Bank, (ii)
reserves, if any, authorized by the Board or that no such reserves have been
authorized, (iii) the source of the quotations to be used in computing the net
asset value, (iv) the value to be assigned to any security for which no price
quotations are available, and (v) the method of computation of the public
offering price on the basis of the net asset value of the shares, and the Bank
shall not be responsible for any loss occasioned by such reliance or for any
good faith reliance on any quotations received from a source pursuant to (iii)
above.
9
<PAGE>
EXHIBIT B: FUND ACCOUNTING FUNCTIONS
-------------------------------------
MassMutual shall have the following responsibilities pursuant to (S)10 of
Article I(B):
1. Maintain the books and records of the funds pursuant to applicable rules
of the Investment Company Act of 1940, including the following:
(a) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of cash
and all other debits and credits, as required;
(b) General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts as required;
(c) A monthly trial balance of all ledger accounts as required.
2. Daily pricing of all portfolio securities using securities valuations or
other methods as may be approved by the fund's Trustees from time to time.
3. Daily posting of all income and expense accruals and reconciliation of
general ledger balances and total shares outstanding.
4. Computation of the daily net asset value as of the close of business of
the New York Stock Exchange on each day on which the Exchange is open for
business (See Exhibit C: Net Asset Value Calculations).
5. Reporting of the daily net asset value and dividend distributions to
transfer agent, fund, management, NASDAQ, and others as requested by 5:30
p.m. each day.
6. Calculation of dividends and capital gain distributions.
7. Routine monitoring of the fund's investments and providing prompt notice
of any violations of the diversification requirements, investment
restrictions or investment policies.
8. Calculation of yields and returns pursuant to S.E.C. formulas, and any
other performance calculations as required.
9. Providing fund prices and performance numbers to industry reporting
services.
10. Preparing reports on expense limitations and net asset value analysis, as
requested.
11. Maintain historical records of all fund net asset values and dividend
distributions.
10
<PAGE>
12. Preparing Blue Sky filings.
13. Preparing audited annual and unaudited semi-annual reports including
statement of investments, financial statements and footnotes.
14. Producing documents and responding to inquiries during S.E.C. audit, IRS
audit and others as required.
15. Providing the portfolio managers with cash availability based on security
settlements, shareholder activity, maturities, and income collections for
each fund by 8:30 a.m. each valuation day.
16. Taking whatever action is needed to accomplish the transfer of assets
from the Bank of New York to Investors Bank and Trust Company in a timely and
orderly manner.
11
<PAGE>
COMPENSATION
------------
Pursuant to the terms and conditions of the ADMINISTRATIVE AND SHAREHOLDER
SERVICES AGREEMENT (the "Agreement") between MassMutual Institutional Funds (the
"Trust"), on behalf of the MassMutual Short-Term Bond Fund (the "Fund") and
Massachusetts Mutual Life Insurance Company (the "Manager"), the Trust agrees to
pay monthly to the Manager, an administrative services fee calculated by Class
at the annual rate of the daily average net assets of the applicable class of
shares of the Fund, expressed in basis points, as follows:
<TABLE>
<CAPTION>
===================================================
Class 1 Class 2 Class 3 Class 4
===================================================
<S> <C> <C> <C>
55.68 50.68 30.92 7.82
===================================================
</TABLE>
Article II of the Agreement provides that the Manager will assume all expenses
of each Fund, including the Manager's reasonable out-of-pocket disbursements;
provided, however, that the Trust will pay:
1. Taxes and corporate fees payable to governmental agencies;
2. Brokerage commissions (which may be higher than other brokers would
charge if paid to a broker which provides brokerage and research services to
the Manager for use in providing investment advice and management to the Fund
and other accounts over which the Manager exercises investment discretion)
and other capital items payable in connection with the purchase or sale of
the Fund's investments (The words "brokerage and research services" shall
have the meaning given in the Securities Exchange Act of 1934 and the Rules
and Regulations thereunder.);
3. Interest on account of any borrowing by the Fund;
4. Fees and expenses of the Trust's Trustees who are not interested persons
(as defined in the 1940 Act) of the Manager or of the Trust;
5. Fees payable to the Trust's certified independent public accountants;
6. Fees paid to the Trust's independent legal counsel;
7. Fees paid to the Fund's custodian;
8. Fees paid to the Fund's Investment Manager, and
9. Payments due pursuant to any 12b-1 Plan adopted by the Trust and
applicable to the Fund.
12
<PAGE>
ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
And
MASSMUTUAL INSTITUTIONAL FUNDS
(As to the MassMutual Core Bond Fund)
<PAGE>
ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT
-------------------------------------------------
This ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT (the
"Agreement"), dated as of this 30th day of September, 1994 (the "Effective
Date") is by and between MassMutual Institutional Funds (the "Trust") on behalf
of MassMutual Core Bond Fund (the "Fund") and Massachusetts Mutual Life
Insurance Company (the "Manager").
WHEREAS, The Fund is a series of the Trust, a Massachusetts business
trust which is an open-end diversified management investment company registered
as such with the Securities and Exchange Commission (the "Commission") pursuant
to the Investment Company Act of 1940, as amended (the "1940 Act"), and
WHEREAS, the Trust, on behalf of the Fund, and the Manager wish to
enter into this Agreement whereby the Manager will provide, or cause to be
provided, administrative and shareholder services for the Fund and assume
certain expenses of the Fund.
NOW, THEREFORE, in consideration of the covenants and mutual promises
of the parties made to each other, it is hereby covenanted and agreed as
follows:
ARTICLE I: ADMINISTRATIVE AND SHAREHOLDER SERVICES
--------------------------------------------------
A. General Responsibilities. Subject to the exceptions set forth in Sub-
Section C hereof and subject to the direction and control of the Board of
Trustees of the Trust, the Manager will provide, or cause to be provided, all
services required for the administration of the Trust and the Fund, including
fund accounting, shareholder servicing, and transfer agency services.
B. Specific Responsibilities. Without limiting the responsibilities of the
Manager, the Manager will:
1. Maintain office facilities (which may be in the offices of the Manager
or a corporate affiliate but shall be in such location as the Trust
reasonably determines).
2. Furnish statistical and research data, clerical services and stationery
and office supplies.
3. Compile data for, prepare for execution by the Fund and file all the
Fund's federal and state tax returns and required tax filings other than
those required by this Agreement to be made by the Fund's custodian and
transfer agent.
4. Prepare compliance filings pursuant to state securities laws with the
advice of the Trust's counsel.
5. Prepare the Trust's Annual and Semi-Annual Reports to Shareholders and
amendments to its Registration Statements (on Form N-1A or any replacement
therefor).
<PAGE>
6. Compile data for, prepare and file timely Notices to the SEC required
pursuant to Rule 24f-2 under the 1940 Act.
7. Determine the daily pricing of the portfolio securities and computation
of the net asset value and the net income of Fund in accordance with the
Prospectus, resolutions of the Trust's Board of Trustees, and the
procedures set forth in EXHIBIT A: NET ASSET VALUE CALCULATIONS.
8. Keep and maintain the financial accounts and records of the Fund and
provide the Trust with certain reports, as needed or requested by the Fund.
9. Provide officers for the Trust as requested by the Trust's Board of
Trustees.
10. Perform fund accounting services for the Fund as set forth in EXHIBIT
B: FUND ACCOUNTING FUNCTIONS.
11. Generally assist in all aspects of the operations of the Fund.
C. Excepted Responsibilities. The Manager shall not perform the following
services pursuant to this Agreement:
1. Those performed by the custodian for the Trust under the Custodian
Agreement between the Trust and Investors Bank & Trust Company or any
successor custodian (the "Bank");
2. Those performed by the distributor(s) of the Trust's shares;
3. Those provided by the Trust's independent legal counsel;
4. Those performed by the independent public accountants for the Trust;
5. Those performed by the Fund's investment manager;
6. Those provided by the Trust's independent trustees, and
7. Those provided by Investors Bank & Trust Company pursuant to a Transfer
Agency Agreement.
D. Sub-contract Rights. The Manager may in its discretion (subject only to
approval by the Trust's Board of Trustees) delegate or subcontract some or all
of the Manager's duties, but shall remain ultimately responsible for the
provision of such services. The Manager shall be responsible for payment of all
compensation to any person or entity that Manager delegates any duties
hereunder.
2
<PAGE>
ARTICLE II: EXPENSES
---------------------
A. Expenses. The Manager shall assume all expenses of the Trust and the Fund,
including the Manager's reasonable out-of-pocket disbursements; provided,
however, that the Fund or the Trust shall pay:
1. Taxes and corporate fees payable to governmental agencies;
2. Brokerage commissions (which may be higher than other brokers would
charge if paid to a broker which provides brokerage and research services
to the Manager for use in providing investment advice and management to the
Fund and other accounts over which the Manager exercises investment
discretion) and other capital items payable in connection with the purchase
or sale of the Fund's investments (The words "brokerage and research
services" shall have the meaning given in the Securities Exchange Act of
1934 and the Rules and Regulations thereunder.);
3. Interest on account of any borrowing by the Fund;
4. Fees and expenses of the Trust's Trustees who are not interested persons
(as defined in the 1940 Act) of the Manager or of the Trust;
5. Fees payable to the Trust's certified independent public accountants;
6. Fees paid to the Trust's independent legal counsel;
7. Fees paid to the Fund's custodian;
8. Fees paid to the Fund's Investment Manager, and
9. Payments due pursuant to any 12b-1 Plan adopted by the Trust and
applicable to the Fund.
ARTICLE III: COMPENSATION
--------------------------
The Manager's Compensation. For the services to be rendered and the facilities
to be furnished by the Manager as provided for in this Agreement, the Trust will
compensate the Manager as the Trust and the Manager may from time to time
agree.
ARTICLE IV: STANDARD OF CARE
-----------------------------
A. Standard of Care. The Manager shall use reasonable care in performing its
duties hereunder. In the performance of such duties, the Manager its directors,
officers, employees, and
3
<PAGE>
agents, successors and assigns will be protected and will not be liable, and
will be indemnified and held harmless by the Trust for any error of judgement,
mistake of law, or any other loss, claim, damages, liabilities, or expenses
arising by reason of it acting hereunder, by the Trust except in the case of the
negligence, willful misconduct, bad faith, reckless disregard of duties or
obligations hereunder, including knowing violations of law, or fraud of the
Manager, or of its officers, employees, or agents, except as otherwise set forth
in this Article IV. Notwithstanding anything herein to the contrary, the Manager
shall have no discretion over the Trust's assets or choice of investments and
shall not be held liable hereunder for any losses suffered by the Fund.
B. Legal Advice. On issues that are legal in nature, the Manager will be
entitled to receive and act upon the advice of independent legal counsel of its
own selection, provided such counsel is chosen with reasonable care and which
can be counsel for the Trust, and will be without liability for any action taken
or thing done or omitted to be done in accordance with this Agreement in good
faith conformity with such advice. Except as otherwise agreed to by the Trust,
the Manager shall pay the fees and expenses of such counsel, unless such counsel
is the Trust's counsel. On issues that are related to financial accounting
matters, the Manager will be entitled to receive and act upon the advice of the
Trust's independent public accountants, provided that the Manager promptly
notifies the Trust that it has sought such advice and discloses the nature of
the matter. Except as otherwise agreed to by the parties, the Trust shall bear
the expenses and costs of obtaining advice from its independent public
accountants, if such advice is sought pursuant to this subsection B of Article
IV.
C. Good Faith Reliance. The Manager will be protected and not be liable, and
will be indemnified and held harmless for any action taken or omitted to be
taken by it in reliance upon any document, certificate or instrument which it
reasonably believes to be genuine and to be signed or presented by the proper
person or persons.
D. Damages. Notwithstanding anything in this Agreement to the contrary, in no
event shall the Manager or the Trust be liable to the other, or to any third
party, for special, punitive or consequential damages arising, directly or
indirectly from this Agreement, even if said party has been advised by the other
party of the possibility of such damages.
E. Acts of God. In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, interruption of
electrical power or other utilities, equipment or transmission failure or damage
reasonably beyond its control, or other causes reasonably beyond its control,
such party shall not be liable to the other for any damages resulting from such
failure to perform or otherwise from such causes. The Manager, the Trust and
MassMutual shall notify each other as soon as reasonably possible following the
occurrence of an event described in this subsection.
ARTICLE V: EFFECTIVE DATE, TERMINATION AND AMENDMENT
-----------------------------------------------------
A. Effective Date. This Agreement will become effective on the Effective Date
and, unless
4
<PAGE>
sooner terminated as provided herein, will continue for an initial term of one-
year from the Effective Date and thereafter shall continue for successive one
year periods; provided however, that such continuance shall be specifically
approved at least annually by (i) the Board of Trustees of the Trust, or (ii) by
vote of a majority of the outstanding shares of the Fund (as defined in the 1940
Act), provided however, that in either event the continuance is also approved at
least annually by a majority of the Trust's Trustees who are not parties to this
Agreement or interested persons (as defined in the 1940 Act)(other than a
Trustees of the Trust) of the Manager or of the Trust by vote cast in person at
a meeting called for the purpose of voting on such approval.
B. Termination. Anything to the contrary herein notwithstanding, (1) this
Agreement may at any time be terminated by the Trust on 90 days' written notice
to the Manager without the payment of any penalty either by the Board of
Trustees of the Trust or by vote of majority of the outstanding shares of the
Fund (as defined in the 1940 Act); (2) this Agreement shall immediately
terminate in the event of its assignment (within the meaning of the 1940 Act);
and (3) this Agreement may be terminated by the Manager on 90 days' written
notice to the Trust without the payment of any penalty. Any notice under this
Agreement shall be given in writing, addressed and delivered, or mailed
postpaid, to the other party at the principal office of such party.
C. Amendment. This Agreement may be amended at any time by mutual written
consent of the parties, provided that such consent on the part of the Trust
shall have been approved at a meeting by the vote of a majority of the
outstanding shares of the Fund and by written majority of the Trustees of the
Trust who are not parties to this Agreement or interested persons (within the
meaning of the 1940 Act) of the Trust or of the Manager by vote cast in person
at a meeting called for the purpose of acting on such amendment.
ARTICLE VI: MISCELLANEOUS
--------------------------
A. Services Not Exclusive. The services of the Manager to the Trust and the
Fund under this Agreement are not exclusive and the Manager shall be free to
render similar services to others.
B. Use of Name by the Trust. The Trust recognizes the Manager's control of the
name "MassMutual" and agrees that its right to use this name is non-exclusive
and can be terminated by the Manager at any time. The use of such name will
automatically be terminated if at any time the Manager, a subsidiary or an
affiliate of the Manager ceases to be investment manager for the Fund.
C. Interested and Affiliated Persons. It is understood that members of the
Board of Trustees, officers, employees or agents of the Trust or the Fund may
also be directors, officers, employees or agents of the Manager, and Sub-
Advisers, and that the Manager and Sub-Advisers, and their directors, officers,
employees or agents may be interested in the Fund as shareholders or otherwise.
5
<PAGE>
D. Records and Confidentiality. All records pertaining to the operation and
administration of the Trust and the Fund (whether prepared by the Manager or
supplied to the Manager by the Trust or the Fund) are the property and subject
to the control of the Trust. In the event of the termination of this Agreement,
all such records in the possession of the Manager shall be promptly turned over
to the Trust free from any claim or retention of rights. All such records shall
be deemed to be confidential in nature and the Manager shall not disclose or use
any records or information obtained pursuant to this Agreement in any manner
whatsoever except as expressly authorized by the Trust or as required by federal
or state regulatory authorities. The Manager shall submit to all regulatory and
administrative bodies having jurisdiction over the operations of the Manager or
the Trust, present or future, any information, reports or other material
obtained pursuant to this Agreement which any such body may request or require
pursuant to applicable laws or regulations.
E. Disclaimer of Liability. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on behalf of the
Board of Trustees of the Trust as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding upon the assets and property of the
Trust; provided, however, that the Agreement and Declaration of Trust of the
Trust provides that the assets of a particular series of the Trust shall under
no circumstances be charged with liabilities attributable to any other series of
the Trust and that all persons extending credit to, or contracting with or
having any claim against a particular series of the Trust, shall look only to
the assets of that particular series for payment of such credit, contract or
claim.
F. Notices. Any notice or other instrument in writing authorized or required
by this Agreement to be given to either party hereto will be sufficiently given
if addressed to such party and mailed or delivered to it at its office at the
address set forth below; namely:
(a) In the case of notices sent to the Trust to:
MassMutual Institutional Trusts
1295 State Street
Springfield, Massachusetts 01111
Attention: Stephen L. Kuhn
Vice President & Secretary
(b) In the case of notices sent to the Manager to:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Attention: Edmond F. Ryan
Vice President
6
<PAGE>
In the case of notices sent to either party, a copy to the Bank to:
Investors Bank & Trust Company
P.O. Box 1537
Boston, Massachusetts 02205-1537
Attention: Richard Boorman
or at such other place as such party may from time to time designate in writing.
G. Insurance Coverage. The Bank shall at all times maintain insurance
coverages adequate for the nature of its operations, including directors and
officers, errors and omissions, and fidelity bond insurance coverages. The Bank
shall have the Trust named as a Certificate Holder on each of these coverages,
and provide MassMutual with Certificates of Insurance at each policy renewal.
The Certificates shall provide that MassMutual receive a minimum of twenty (20)
days' written notice of cancellation, non-renewal, or material change of policy
coverages. The Bank shall provide MassMutual with copies of its insurance
policies, upon request. If at any time, due to a material adverse change in
policy coverages, MassMutual reasonably believes that such coverages are
insufficient in any material respect, or if any policy is placed with an insurer
with an A.M. Best rating of less than A 12, the Bank shall take reasonable steps
to satisfy MassMutual's concerns.
H. Business Continuity. Notwithstanding anything in this Agreement to the
contrary, the Bank shall have in place comprehensive business continuity and
disaster recovery procedures and systems and shall provide MassMutual, at least
annually, test results of such procedures and systems.
I. Parties. This Agreement will be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns; provided,
however, that this Agreement will not be assignable by the Trust without the
written consent of the Manager or by the Manager without the written consent of
the Trust, authorized and approved by its Board; and provided further that
termination proceedings pursuant to Article V, Section B hereof will not be
deemed to be an assignment within the meaning of this provision.
J. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
K. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Administrative and
Shareholder Services Agreement to be executed on the day and year first above
written.
MASSMUTUAL INSTITUTIONAL FUNDS
on behalf of MassMutual Core Bond Fund
By: /s/ Stuart H. Reese
------------------------------
Stuart H. Reese
President
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Edwin P. McCausland, Jr.
------------------------------
Edwin P. McCausland, Jr.
Vice President and
Managing Director
8
<PAGE>
EXHIBIT A: NET ASSET VALUE CALCULATIONS
----------------------------------------
MassMutual shall compute and, unless otherwise directed by the Board, determine
as of the close of business on the New York Stock Exchange on each day on which
said Exchange is open for unrestricted trading and as of such other hours, if
any, as may be authorized by the Board the net asset value and the public
offering price of a share of capital stock of the Trust, such determination to
be made in accordance with the provisions of the Articles and By-laws of the
Trust and Prospectus and Statement of Additional Information relating to the
Trust, as they may from time to time be amended, and any applicable resolutions
of the Board at the time in force and applicable and promptly to notify the
Trust, the proper exchange and the NASD or such other persons as the Trust may
request of the results of such computation and determination.
In computing the net asset value hereunder, MassMutual may rely in good faith
upon information furnished to it by any Authorized Person in respect of (i) the
manner of accrual of the liabilities of the Trust and in respect of liabilities
of the Trust not appearing on its books of account kept by the Bank, (ii)
reserves, if any, authorized by the Board or that no such reserves have been
authorized, (iii) the source of the quotations to be used in computing the net
asset value, (iv) the value to be assigned to any security for which no price
quotations are available, and (v) the method of computation of the public
offering price on the basis of the net asset value of the shares, and the Bank
shall not be responsible for any loss occasioned by such reliance or for any
good faith reliance on any quotations received from a source pursuant to (iii)
above.
9
<PAGE>
EXHIBIT B: FUND ACCOUNTING FUNCTIONS
-------------------------------------
MassMutual shall have the following responsibilities pursuant to (S)10 of
Article I(B):
1. Maintain the books and records of the funds pursuant to applicable rules
of the Investment Company Act of 1940, including the following:
(a) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of cash
and all other debits and credits, as required;
(b) General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts as required;
(c) A monthly trial balance of all ledger accounts as required.
2. Daily pricing of all portfolio securities using securities valuations or
other methods as may be approved by the fund's Trustees from time to time.
3. Daily posting of all income and expense accruals and reconciliation of
general ledger balances and total shares outstanding.
4. Computation of the daily net asset value as of the close of business of
the New York Stock Exchange on each day on which the Exchange is open for
business (See Exhibit C: Net Asset Value Calculations).
5. Reporting of the daily net asset value and dividend distributions to
transfer agent, fund, management, NASDAQ, and others as requested by 5:30
p.m. each day.
6. Calculation of dividends and capital gain distributions.
7. Routine monitoring of the fund's investments and providing prompt notice
of any violations of the diversification requirements, investment
restrictions or investment policies.
8. Calculation of yields and returns pursuant to S.E.C. formulas, and any
other performance calculations as required.
9. Providing fund prices and performance numbers to industry reporting
services.
10. Preparing reports on expense limitations and net asset value analysis, as
requested.
11. Maintain historical records of all fund net asset values and dividend
distributions.
10
<PAGE>
12. Preparing Blue Sky filings.
13. Preparing audited annual and unaudited semi-annual reports including
statement of investments, financial statements and footnotes.
14. Producing documents and responding to inquiries during S.E.C. audit, IRS
audit and others as required.
15. Providing the portfolio managers with cash availability based on security
settlements, shareholder activity, maturities, and income collections for
each fund by 8:30 a.m. each valuation day.
16. Taking whatever action is needed to accomplish the transfer of assets
from the Bank of New York to Investors Bank and Trust Company in a timely and
orderly manner.
11
<PAGE>
COMPENSATION
------------
Pursuant to the terms and conditions of the ADMINISTRATIVE AND SHAREHOLDER
SERVICES AGREEMENT (the "Agreement") between MassMutual Institutional Funds (the
"Trust"), on behalf of the MassMutual Core Bond Fund (the "Fund") and
Massachusetts Mutual Life Insurance Company (the Manager"), the Trust agrees to
pay monthly to the Manager, an administrative services fee calculated by Class
at the annual rate of the daily average net assets of the applicable class of
shares of the Fund, expressed in basis points, as follows:
<TABLE>
==========================================================
Class 1 Class 2 Class 3 Class 4
==========================================================
<S> <C> <C> <C>
56.88 51.88 32.12 8.42
==========================================================
</TABLE>
Article II of the Agreement provides that the Manager will assume all expenses
of each Fund, including the Manager's reasonable out-of-pocket disbursements;
provided, however, that the Trust will pay:
1. Taxes and corporate fees payable to governmental agencies;
2. Brokerage commissions (which may be higher than other brokers would
charge if paid to a broker which provides brokerage and research services to
the Manager for use in providing investment advice and management to the Fund
and other accounts over which the Manager exercises investment discretion)
and other capital items payable in connection with the purchase or sale of
the Fund's investments (The words "brokerage and research services" shall
have the meaning given in the Securities Exchange Act of 1934 and the Rules
and Regulations thereunder.);
3. Interest on account of any borrowing by the Fund;
4. Fees and expenses of the Trust's Trustees who are not interested persons
(as defined in the 1940 Act) of the Manager or of the Trust;
5. Fees payable to the Trust's certified independent public accountants;
6. Fees paid to the Trust's independent legal counsel;
7. Fees paid to the Fund's custodian;
8. Fees paid to the Fund's Investment Manager, and
9. Payments due pursuant to any 12b-1 Plan adopted by the Trust and
applicable to the Fund.
<PAGE>
ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
And
MASSMUTUAL INSTITUTIONAL FUNDS
(As to the MassMutual Balanced Fund)
<PAGE>
ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT
-------------------------------------------------
This ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT (the
"Agreement"), dated as of this 30th day of September, 1994 (the "Effective
Date") is by and between MassMutual Institutional Funds (the "Trust") on behalf
of MassMutual Balanced Fund (the "Fund") and Massachusetts Mutual Life Insurance
Company (the "Manager").
WHEREAS, The Fund is a series of the Trust, a Massachusetts business
trust which is an open-end diversified management investment company registered
as such with the Securities and Exchange Commission (the "Commission") pursuant
to the Investment Company Act of 1940, as amended (the "1940 Act"), and
WHEREAS, the Trust, on behalf of the Fund, and the Manager wish to
enter into this Agreement whereby the Manager will provide, or cause to be
provided, administrative and shareholder services for the Fund and assume
certain expenses of the Fund.
NOW, THEREFORE, in consideration of the covenants and mutual promises
of the parties made to each other, it is hereby covenanted and agreed as
follows:
ARTICLE I: ADMINISTRATIVE AND SHAREHOLDER SERVICES
---------------------------------------------------
A. General Responsibilities. Subject to the exceptions set forth in Sub-
Section C hereof and subject to the direction and control of the Board of
Trustees of the Trust, the Manager will provide, or cause to be provided, all
services required for the administration of the Trust and the Fund, including
fund accounting, shareholder servicing, and transfer agency services.
B. Specific Responsibilities. Without limiting the responsibilities of the
Manager, the Manager will:
1. Maintain office facilities (which may be in the offices of the Manager
or a corporate affiliate but shall be in such location as the Trust
reasonably determines).
2. Furnish statistical and research data, clerical services and stationery
and office supplies.
3. Compile data for, prepare for execution by the Fund and file all the
Fund's federal and state tax returns and required tax filings other than
those required by this Agreement to be made by the Fund's custodian and
transfer agent.
4. Prepare compliance filings pursuant to state securities laws with the
advice of the Trust's counsel.
5. Prepare the Trust's Annual and Semi-Annual Reports to Shareholders and
amendments to its Registration Statements (on Form N-1A or any replacement
therefor).
<PAGE>
6. Compile data for, prepare and file timely Notices to the SEC required
pursuant to Rule 24f-2 under the 1940 Act.
7. Determine the daily pricing of the portfolio securities and computation
of the net asset value and the net income of Fund in accordance with the
Prospectus, resolutions of the Trust's Board of Trustees, and the
procedures set forth in EXHIBIT A: NET ASSET VALUE CALCULATIONS.
8. Keep and maintain the financial accounts and records of the Fund and
provide the Trust with certain reports, as needed or requested by the Fund.
9. Provide officers for the Trust as requested by the Trust's Board of
Trustees.
10. Perform fund accounting services for the Fund as set forth in EXHIBIT
B: FUND ACCOUNTING FUNCTIONS.
11. Generally assist in all aspects of the operations of the Fund.
C. Excepted Responsibilities. The Manager shall not perform the following
services pursuant to this Agreement:
1. Those performed by the custodian for the Trust under the Custodian
Agreement between the Trust and Investors Bank & Trust Company or any
successor custodian (the "Bank");
2. Those performed by the distributor(s) of the Trust's shares;
3. Those provided by the Trust's independent legal counsel;
4. Those performed by the independent public accountants for the Trust;
5. Those performed by the Fund's investment manager;
6. Those provided by the Trust's independent trustees, and
7. Those provided by Investors Bank & Trust Company pursuant to a Transfer
Agency Agreement.
D. Sub-contract Rights. The Manager may in its discretion (subject only to
approval by the Trust's Board of Trustees) delegate or subcontract some or all
of the Manager's duties, but shall remain ultimately responsible for the
provision of such services. The Manager shall be responsible for payment of all
compensation to any person or entity that Manager delegates any duties
hereunder.
2
<PAGE>
ARTICLE II: EXPENSES
--------------------
A. Expenses. The Manager shall assume all expenses of the Trust and the Fund,
including the Manager's reasonable out-of-pocket disbursements; provided,
however, that the Fund or the Trust shall pay:
1. Taxes and corporate fees payable to governmental agencies;
2. Brokerage commissions (which may be higher than other brokers would
charge if paid to a broker which provides brokerage and research services
to the Manager for use in providing investment advice and management to the
Fund and other accounts over which the Manager exercises investment
discretion) and other capital items payable in connection with the purchase
or sale of the Fund's investments (The words "brokerage and research
services" shall have the meaning given in the Securities Exchange Act of
1934 and the Rules and Regulations thereunder.);
3. Interest on account of any borrowing by the Fund;
4. Fees and expenses of the Trust's Trustees who are not interested persons
(as defined in the 1940 Act) of the Manager or of the Trust;
5. Fees payable to the Trust's certified independent public accountants;
6. Fees paid to the Trust's independent legal counsel;
7. Fees paid to the Fund's custodian;
8. Fees paid to the Fund's Investment Manager, and
9. Payments due pursuant to any 12b-1 Plan adopted by the Trust and
applicable to the Fund.
ARTICLE III: COMPENSATION
--------------------------
The Manager's Compensation. For the services to be rendered and the facilities
to be furnished by the Manager as provided for in this Agreement, the Trust will
compensate the Manager as the Trust and the Manager may from time to time agree.
ARTICLE IV: STANDARD OF CARE
-----------------------------
A. Standard of Care. The Manager shall use reasonable care in performing its
duties hereunder. In the performance of such duties, the Manager its directors,
officers, employees, and
3
<PAGE>
agents, successors and assigns will be protected and will not be liable, and
will be indemnified and held harmless by the Trust for any error of judgement,
mistake of law, or any other loss, claim, damages, liabilities, or expenses
arising by reason of it acting hereunder, by the Trust except in the case of the
negligence, willful misconduct, bad faith, reckless disregard of duties or
obligations hereunder, including knowing violations of law, or fraud of the
Manager, or of its officers, employees, or agents, except as otherwise set forth
in this Article IV. Notwithstanding anything herein to the contrary, the Manager
shall have no discretion over the Trust's assets or choice of investments and
shall not be held liable hereunder for any losses suffered by the Fund.
B. Legal Advice. On issues that are legal in nature, the Manager will be
entitled to receive and act upon the advice of independent legal counsel of its
own selection, provided such counsel is chosen with reasonable care and which
can be counsel for the Trust, and will be without liability for any action taken
or thing done or omitted to be done in accordance with this Agreement in good
faith conformity with such advice. Except as otherwise agreed to by the Trust,
the Manager shall pay the fees and expenses of such counsel, unless such counsel
is the Trust's counsel. On issues that are related to financial accounting
matters, the Manager will be entitled to receive and act upon the advice of the
Trust's independent public accountants, provided that the Manager promptly
notifies the Trust that it has sought such advice and discloses the nature of
the matter. Except as otherwise agreed to by the parties, the Trust shall bear
the expenses and costs of obtaining advice from its independent public
accountants, if such advice is sought pursuant to this subsection B of Article
IV.
C. Good Faith Reliance. The Manager will be protected and not be liable, and
will be indemnified and held harmless for any action taken or omitted to be
taken by it in reliance upon any document, certificate or instrument which it
reasonably believes to be genuine and to be signed or presented by the proper
person or persons.
D. Damages. Notwithstanding anything in this Agreement to the contrary, in no
event shall the Manager or the Trust be liable to the other, or to any third
party, for special, punitive or consequential damages arising, directly or
indirectly from this Agreement, even if said party has been advised by the other
party of the possibility of such damages.
E. Acts of God. In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, interruption of
electrical power or other utilities, equipment or transmission failure or damage
reasonably beyond its control, or other causes reasonably beyond its control,
such party shall not be liable to the other for any damages resulting from such
failure to perform or otherwise from such causes. The Manager, the Trust and
MassMutual shall notify each other as soon as reasonably possible following the
occurrence of an event described in this subsection.
ARTICLE V: EFFECTIVE DATE, TERMINATION AND AMENDMENT
-----------------------------------------------------
A. Effective Date. This Agreement will become effective on the Effective Date
and, unless
4
<PAGE>
sooner terminated as provided herein, will continue for an initial term of one-
year from the Effective Date and thereafter shall continue for successive one
year periods; provided however, that such continuance shall be specifically
approved at least annually by (i) the Board of Trustees of the Trust, or (ii) by
vote of a majority of the outstanding shares of the Fund (as defined in the 1940
Act), provided however, that in either event the continuance is also approved at
least annually by a majority of the Trust's Trustees who are not parties to this
Agreement or interested persons (as defined in the 1940 Act)(other than a
Trustees of the Trust) of the Manager or of the Trust by vote cast in person at
a meeting called for the purpose of voting on such approval.
B. Termination. Anything to the contrary herein notwithstanding, (1) this
Agreement may at any time be terminated by the Trust on 90 days' written notice
to the Manager without the payment of any penalty either by the Board of
Trustees of the Trust or by vote of majority of the outstanding shares of the
Fund (as defined in the 1940 Act); (2) this Agreement shall immediately
terminate in the event of its assignment (within the meaning of the 1940 Act);
and (3) this Agreement may be terminated by the Manager on 90 days' written
notice to the Trust without the payment of any penalty. Any notice under this
Agreement shall be given in writing, addressed and delivered, or mailed
postpaid, to the other party at the principal office of such party.
C. Amendment. This Agreement may be amended at any time by mutual written
consent of the parties, provided that such consent on the part of the Trust
shall have been approved at a meeting by the vote of a majority of the
outstanding shares of the Fund and by written majority of the Trustees of the
Trust who are not parties to this Agreement or interested persons (within the
meaning of the 1940 Act) of the Trust or of the Manager by vote cast in person
at a meeting called for the purpose of acting on such amendment.
ARTICLE VI: MISCELLANEOUS
--------------------------
A. Services Not Exclusive. The services of the Manager to the Trust and the
Fund under this Agreement are not exclusive and the Manager shall be free to
render similar services to others.
B. Use of Name by the Trust. The Trust recognizes the Manager's control of the
name "MassMutual" and agrees that its right to use this name is non-exclusive
and can be terminated by the Manager at any time. The use of such name will
automatically be terminated if at any time the Manager, a subsidiary or an
affiliate of the Manager ceases to be investment manager for the Fund.
C. Interested and Affiliated Persons. It is understood that members of the
Board of Trustees, officers, employees or agents of the Trust or the Fund may
also be directors, officers, employees or agents of the Manager, and Sub-
Advisers, and that the Manager and Sub-Advisers, and their directors, officers,
employees or agents may be interested in the Fund as shareholders or otherwise.
5
<PAGE>
D. Records and Confidentiality. All records pertaining to the operation and
administration of the Trust and the Fund (whether prepared by the Manager or
supplied to the Manager by the Trust or the Fund) are the property and subject
to the control of the Trust. In the event of the termination of this Agreement,
all such records in the possession of the Manager shall be promptly turned over
to the Trust free from any claim or retention of rights. All such records shall
be deemed to be confidential in nature and the Manager shall not disclose or use
any records or information obtained pursuant to this Agreement in any manner
whatsoever except as expressly authorized by the Trust or as required by federal
or state regulatory authorities. The Manager shall submit to all regulatory and
administrative bodies having jurisdiction over the operations of the Manager or
the Trust, present or future, any information, reports or other material
obtained pursuant to this Agreement which any such body may request or require
pursuant to applicable laws or regulations.
E. Disclaimer of Liability. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on behalf of the
Board of Trustees of the Trust as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding upon the assets and property of the
Trust; provided, however, that the Agreement and Declaration of Trust of the
Trust provides that the assets of a particular series of the Trust shall under
no circumstances be charged with liabilities attributable to any other series of
the Trust and that all persons extending credit to, or contracting with or
having any claim against a particular series of the Trust, shall look only to
the assets of that particular series for payment of such credit, contract or
claim.
F. Notices. Any notice or other instrument in writing authorized or required
by this Agreement to be given to either party hereto will be sufficiently given
if addressed to such party and mailed or delivered to it at its office at the
address set forth below; namely:
(a) In the case of notices sent to the Trust to:
MassMutual Institutional Trusts
1295 State Street
Springfield, Massachusetts 01111
Attention: Stephen L. Kuhn
Vice President & Secretary
(b) In the case of notices sent to the Manager to:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Attention: Edmond F. Ryan
Vice President
6
<PAGE>
In the case of notices sent to either party, a copy to the Bank to:
Investors Bank & Trust Company
P.O. Box 1537
Boston, Massachusetts 02205-1537
Attention: Richard Boorman
or at such other place as such party may from time to time designate in writing.
G. Insurance Coverage. The Bank shall at all times maintain insurance
coverages adequate for the nature of its operations, including directors and
officers, errors and omissions, and fidelity bond insurance coverages. The Bank
shall have the Trust named as a Certificate Holder on each of these coverages,
and provide MassMutual with Certificates of Insurance at each policy renewal.
The Certificates shall provide that MassMutual receive a minimum of twenty (20)
days' written notice of cancellation, non-renewal, or material change of policy
coverages. The Bank shall provide MassMutual with copies of its insurance
policies, upon request. If at any time, due to a material adverse change in
policy coverages, MassMutual reasonably believes that such coverages are
insufficient in any material respect, or if any policy is placed with an insurer
with an A.M. Best rating of less than A 12, the Bank shall take reasonable steps
to satisfy MassMutual's concerns.
H. Business Continuity. Notwithstanding anything in this Agreement to the
contrary, the Bank shall have in place comprehensive business continuity and
disaster recovery procedures and systems and shall provide MassMutual, at least
annually, test results of such procedures and systems.
I. Parties. This Agreement will be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns; provided,
however, that this Agreement will not be assignable by the Trust without the
written consent of the Manager or by the Manager without the written consent of
the Trust, authorized and approved by its Board; and provided further that
termination proceedings pursuant to Article V, Section B hereof will not be
deemed to be an assignment within the meaning of this provision.
J. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
K. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Administrative and
Shareholder Services Agreement to be executed on the day and year first above
written.
MASSMUTUAL INSTITUTIONAL FUNDS
on behalf of MassMutual Balanced Fund
By: /s/ Stuart H. Reese
---------------------------------
Stuart H. Reese
President
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Edwin P. McCausland, Jr.
---------------------------------
Edwin P. McCausland, Jr.
Vice President and
Managing Director
8
<PAGE>
EXHIBIT A: NET ASSET VALUE CALCULATIONS
----------------------------------------
MassMutual shall compute and, unless otherwise directed by the Board, determine
as of the close of business on the New York Stock Exchange on each day on which
said Exchange is open for unrestricted trading and as of such other hours, if
any, as may be authorized by the Board the net asset value and the public
offering price of a share of capital stock of the Trust, such determination to
be made in accordance with the provisions of the Articles and By-laws of the
Trust and Prospectus and Statement of Additional Information relating to the
Trust, as they may from time to time be amended, and any applicable resolutions
of the Board at the time in force and applicable and promptly to notify the
Trust, the proper exchange and the NASD or such other persons as the Trust may
request of the results of such computation and determination.
In computing the net asset value hereunder, MassMutual may rely in good faith
upon information furnished to it by any Authorized Person in respect of (i) the
manner of accrual of the liabilities of the Trust and in respect of liabilities
of the Trust not appearing on its books of account kept by the Bank, (ii)
reserves, if any, authorized by the Board or that no such reserves have been
authorized, (iii) the source of the quotations to be used in computing the net
asset value, (iv) the value to be assigned to any security for which no price
quotations are available, and (v) the method of computation of the public
offering price on the basis of the net asset value of the shares, and the Bank
shall not be responsible for any loss occasioned by such reliance or for any
good faith reliance on any quotations received from a source pursuant to (iii)
above.
9
<PAGE>
EXHIBIT B: FUND ACCOUNTING FUNCTIONS
-------------------------------------
MassMutual shall have the following responsibilities pursuant to (S)10 of
Article I(B):
1. Maintain the books and records of the funds pursuant to applicable rules
of the Investment Company Act of 1940, including the following:
(a) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of cash
and all other debits and credits, as required;
(b) General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts as required;
(c) A monthly trial balance of all ledger accounts as required.
2. Daily pricing of all portfolio securities using securities valuations or
other methods as may be approved by the fund's Trustees from time to time.
3. Daily posting of all income and expense accruals and reconciliation of
general ledger balances and total shares outstanding.
4. Computation of the daily net asset value as of the close of business of
the New York Stock Exchange on each day on which the Exchange is open for
business (See Exhibit C: Net Asset Value Calculations).
5. Reporting of the daily net asset value and dividend distributions to
transfer agent, fund, management, NASDAQ, and others as requested by 5:30
p.m. each day.
6. Calculation of dividends and capital gain distributions.
7. Routine monitoring of the fund's investments and providing prompt notice
of any violations of the diversification requirements, investment
restrictions or investment policies.
8. Calculation of yields and returns pursuant to S.E.C. formulas, and any
other performance calculations as required.
9. Providing fund prices and performance numbers to industry reporting
services.
10. Preparing reports on expense limitations and net asset value analysis, as
requested.
11. Maintain historical records of all fund net asset values and dividend
distributions.
10
<PAGE>
12. Preparing Blue Sky filings.
13. Preparing audited annual and unaudited semi-annual reports including
statement of investments, financial statements and footnotes.
14. Producing documents and responding to inquiries during S.E.C. audit, IRS
audit and others as required.
15. Providing the portfolio managers with cash availability based on security
settlements, shareholder activity, maturities, and income collections for
each fund by 8:30 a.m. each valuation day.
16. Taking whatever action is needed to accomplish the transfer of assets
from the Bank of New York to Investors Bank and Trust Company in a timely and
orderly manner.
11
<PAGE>
COMPENSATION
------------
Pursuant to the terms and conditions of the ADMINISTRATIVE AND SHAREHOLDER
SERVICES AGREEMENT (the "Agreement") between MassMutual Institutional Funds (the
"Trust"), on behalf of the MassMutual Balanced Fund (the "Fund") and
Massachusetts Mutual Life Insurance Company (the Manager"), the Trust agrees to
pay monthly to the Manager, an administrative services fee calculated by Class
at the annual rate of the daily average net assets of the applicable class of
shares of the Fund, expressed in basis points, as follows:
<TABLE>
<CAPTION>
=======================================================
Class 1 Class 2 Class 3 Class 4
=======================================================
<S> <C> <C> <C>
57.08 52.08 32.32 8.52
=======================================================
</TABLE>
Article II of the Agreement provides that the Manager will assume all expenses
of each Fund, including the Manager's reasonable out-of-pocket disbursements;
provided, however, that the Trust will pay:
1. Taxes and corporate fees payable to governmental agencies;
2. Brokerage commissions (which may be higher than other brokers would
charge if paid to a broker which provides brokerage and research services to
the Manager for use in providing investment advice and management to the Fund
and other accounts over which the Manager exercises investment discretion)
and other capital items payable in connection with the purchase or sale of
the Fund's investments (The words "brokerage and research services" shall
have the meaning given in the Securities Exchange Act of 1934 and the Rules
and Regulations thereunder.);
3. Interest on account of any borrowing by the Fund;
4. Fees and expenses of the Trust's Trustees who are not interested persons
(as defined in the 1940 Act) of the Manager or of the Trust;
5. Fees payable to the Trust's certified independent public accountants;
6. Fees paid to the Trust's independent legal counsel;
7. Fees paid to the Fund's custodian;
8. Fees paid to the Fund's Investment Manager, and
9. Payments due pursuant to any 12b-1 Plan adopted by the Trust and
applicable to the Fund.
12
<PAGE>
ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
And
MASSMUTUAL INSTITUTIONAL FUNDS
(As to the MassMutual Value Equity Fund)
<PAGE>
ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT
-------------------------------------------------
This ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT (the "Agreement"),
dated as of this 30th day of September, 1994 (the "Effective Date") is by and
between MassMutual Institutional Funds (the "Trust") on behalf of MassMutual
Value Equity Fund (the "Fund") and Massachusetts Mutual Life Insurance Company
(the "Manager").
WHEREAS, The Fund is a series of the Trust, a Massachusetts business trust
which is an open-end diversified management investment company registered as
such with the Securities and Exchange Commission (the "Commission") pursuant to
the Investment Company Act of 1940, as amended (the "1940 Act"), and
WHEREAS, the Trust, on behalf of the Fund, and the Manager wish to enter
into this Agreement whereby the Manager will provide, or cause to be provided,
administrative and shareholder services for the Fund and assume certain expenses
of the Fund.
NOW, THEREFORE, in consideration of the covenants and mutual promises of
the parties made to each other, it is hereby covenanted and agreed as follows:
ARTICLE I: ADMINISTRATIVE AND SHAREHOLDER SERVICES
---------------------------------------------------
A. General Responsibilities. Subject to the exceptions set forth in Sub-
Section C hereof and subject to the direction and control of the Board of
Trustees of the Trust, the Manager will provide, or cause to be provided, all
services required for the administration of the Trust and the Fund, including
fund accounting, shareholder servicing, and transfer agency services.
B. Specific Responsibilities. Without limiting the responsibilities of the
Manager, the Manager will:
1. Maintain office facilities (which may be in the offices of the Manager
or a corporate affiliate but shall be in such location as the Trust
reasonably determines).
2. Furnish statistical and research data, clerical services and stationery
and office supplies.
3. Compile data for, prepare for execution by the Fund and file all the
Fund's federal and state tax returns and required tax filings other than
those required by this Agreement to be made by the Fund's custodian and
transfer agent.
4. Prepare compliance filings pursuant to state securities laws with the
advice of the Trust's counsel.
5. Prepare the Trust's Annual and Semi-Annual Reports to Shareholders and
amendments to its Registration Statements (on Form N-1A or any replacement
therefor).
<PAGE>
6. Compile data for, prepare and file timely Notices to the SEC required
pursuant to Rule 24f-2 under the 1940 Act.
7. Determine the daily pricing of the portfolio securities and computation
of the net asset value and the net income of Fund in accordance with the
Prospectus, resolutions of the Trust's Board of Trustees, and the
procedures set forth in EXHIBIT A: NET ASSET VALUE CALCULATIONS.
8. Keep and maintain the financial accounts and records of the Fund and
provide the Trust with certain reports, as needed or requested by the Fund.
9. Provide officers for the Trust as requested by the Trust's Board of
Trustees.
10. Perform fund accounting services for the Fund as set forth in EXHIBIT
B: FUND ACCOUNTING FUNCTIONS.
11. Generally assist in all aspects of the operations of the Fund.
C. Excepted Responsibilities. The Manager shall not perform the following
services pursuant to this Agreement:
1. Those performed by the custodian for the Trust under the Custodian
Agreement between the Trust and Investors Bank & Trust Company or any
successor custodian (the "Bank");
2. Those performed by the distributor(s) of the Trust's shares;
3. Those provided by the Trust's independent legal counsel;
4. Those performed by the independent public accountants for the Trust;
5. Those performed by the Fund's investment manager;
6. Those provided by the Trust's independent trustees, and
7. Those provided by Investors Bank & Trust Company pursuant to a Transfer
Agency Agreement.
D. Sub-contract Rights. The Manager may in its discretion (subject only to
approval by the Trust's Board of Trustees) delegate or subcontract some or all
of the Manager's duties, but shall remain ultimately responsible for the
provision of such services. The Manager shall be responsible for payment of all
compensation to any person or entity that Manager delegates any duties
hereunder.
2
<PAGE>
ARTICLE II: EXPENSES
---------------------
A. Expenses. The Manager shall assume all expenses of the Trust and the Fund,
including the Manager's reasonable out-of-pocket disbursements; provided,
however, that the Fund or the Trust shall pay:
1. Taxes and corporate fees payable to governmental agencies;
2. Brokerage commissions (which may be higher than other brokers would
charge if paid to a broker which provides brokerage and research services
to the Manager for use in providing investment advice and management to the
Fund and other accounts over which the Manager exercises investment
discretion) and other capital items payable in connection with the purchase
or sale of the Fund's investments (The words "brokerage and research
services" shall have the meaning given in the Securities Exchange Act of
1934 and the Rules and Regulations thereunder.);
3. Interest on account of any borrowing by the Fund;
4. Fees and expenses of the Trust's Trustees who are not interested persons
(as defined in the 1940 Act) of the Manager or of the Trust;
5. Fees payable to the Trust's certified independent public accountants;
6. Fees paid to the Trust's independent legal counsel;
7. Fees paid to the Fund's custodian;
8. Fees paid to the Fund's Investment Manager, and
9. Payments due pursuant to any 12b-1 Plan adopted by the Trust and
applicable to the Fund.
ARTICLE III: COMPENSATION
--------------------------
The Manager's Compensation. For the services to be rendered and the facilities
to be furnished by the Manager as provided for in this Agreement, the Trust will
compensate the the Manager as the Trust and the Manager may from time to time
agree.
ARTICLE IV: STANDARD OF CARE
-----------------------------
A. Standard of Care. The Manager shall use reasonable care in performing its
duties hereunder. In the performance of such duties, the Manager its directors,
officers, employees, and agents,
3
<PAGE>
successors and assigns will be protected and will not be liable, and will be
indemnified and held harmless by the Trust for any error of judgement, mistake
of law, or any other loss, claim, damages, liabilities, or expenses arising by
reason of it acting hereunder, by the Trust except in the case of the
negligence, willful misconduct, bad faith, reckless disregard of duties or
obligations hereunder, including knowing violations of law, or fraud of the
Manager, or of its officers, employees, or agents, except as otherwise set forth
in this Article IV. Notwithstanding anything herein to the contrary, the Manager
shall have no discretion over the Trust's assets or choice of investments and
shall not be held liable hereunder for any losses suffered by the Fund.
B. Legal Advice. On issues that are legal in nature, the Manager will be
entitled to receive and act upon the advice of independent legal counsel of its
own selection, provided such counsel is chosen with reasonable care and which
can be counsel for the Trust, and will be without liability for any action taken
or thing done or omitted to be done in accordance with this Agreement in good
faith conformity with such advice. Except as otherwise agreed to by the Trust,
the Manager shall pay the fees and expenses of such counsel, unless such counsel
is the Trust's counsel. On issues that are related to financial accounting
matters, the Manager will be entitled to receive and act upon the advice of the
Trust's independent public accountants, provided that the Manager promptly
notifies the Trust that it has sought such advice and discloses the nature of
the matter. Except as otherwise agreed to by the parties, the Trust shall bear
the expenses and costs of obtaining advice from its independendent public
accountants, if such advice is sought pursuant to this subsection B of Article
IV.
C. Good Faith Reliance. The Manager will be protected and not be liable, and
will be indemnified and held harmless for any action taken or omitted to be
taken by it in reliance upon any document, certificate or instrument which it
reasonably believes to be genuine and to be signed or presented by the proper
person or persons.
D. Damages. Notwithstanding anything in this Agreement to the contrary, in no
event shall the Manager or the Trust be liable to the other, or to any third
party, for special, punitive or consequential damages arising, directly or
indirectly from this Agreement, even if said party has been advised by the other
party of the possibility of such damages.
E. Acts of God. In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, interruption of
electrical power or other utilities, equipment or transmission failure or damage
reasonably beyond its control, or other causes reasonably beyond its control,
such party shall not be liable to the other for any damages resulting from such
failure to perform or otherwise from such causes. The Manager, the Trust and
MassMutual shall notify each other as soon as reasonably possible following the
occurrence of an event described in this subsection.
ARTICLE V: EFFECTIVE DATE, TERMINATION AND AMENDMENT
-----------------------------------------------------
A. Effective Date. This Agreement will become effective on the Effective Date
and, unless
4
<PAGE>
sooner terminated as provided herein, will continue for an initial term of one-
year from the Effective Date and thereafter shall continue for successive one
year periods; provided however, that such continuance shall be specifically
approved at least annually by (i) the Board of Trustees of the Trust, or (ii) by
vote of a majority of the outstanding shares of the Fund (as defined in the 1940
Act), provided however, that in either event the continuance is also approved at
least annually by a majority of the Trust's Trustees who are not parties to this
Agreement or interested persons (as defined in the 1940 Act)(other than a
Trustees of the Trust) of the Manager or of the Trust by vote cast in person at
a meeting called for the purpose of voting on such approval.
B. Termination. Anything to the contrary herein notwithstanding, (1) this
Agreement may at any time be terminated by the Trust on 90 days' written notice
to the Manager without the payment of any penalty either by the Board of
Trustees of the Trust or by vote of majority of the outstanding shares of the
Fund (as defined in the 1940 Act); (2) this Agreement shall immediately
terminate in the event of its assignment (within the meaning of the 1940 Act);
and (3) this Agreement may be terminated by the Manager on 90 days' written
notice to the Trust without the payment of any penalty. Any notice under this
Agreement shall be given in writing, addressed and delivered, or mailed
postpaid, to the other party at the principal office of such party.
C. Amendment. This Agreement may be amended at any time by mutual written
consent of the parties, provided that such consent on the part of the Trust
shall have been approved at a meeting by the vote of a majority of the
outstanding shares of the Fund and by written majority of the Trustees of the
Trust who are not parties to this Agreement or interested persons (within the
meaning of the 1940 Act) of the Trust or of the Manager by vote cast in person
at a meeting called for the purpose of acting on such amendment.
ARTICLE VI: MISCELLANEOUS
--------------------------
A. Services Not Exclusive. The services of the Manager to the Trust and the
Fund under this Agreement are not exclusive and the Manager shall be free to
render similar services to others.
B. Use of Name by the Trust. The Trust recognizes the Manager's control of the
name "MassMutual" and agrees that its right to use this name is non-exclusive
and can be terminated by the Manager at any time. The use of such name will
automatically be terminated if at any time the Manager, a subsidiary or an
affiliate of the Manager ceases to be investment manager for the Fund.
C. Interested and Affiliated Persons. It is understood that members of the
Board of Trustees, officers, employees or agents of the Trust or the Fund may
also be directors, officers, employees or agents of the Manager, and Sub-
Advisers, and that the Manager and Sub-Advisers, and their directors, officers,
employees or agents may be interested in the Fund as shareholders or otherwise.
5
<PAGE>
D. Records and Confidentiality. All records pertaining to the operation and
administration of the Trust and the Fund (whether prepared by the Manager or
supplied to the Manager by the Trust or the Fund) are the property and subject
to the control of the Trust. In the event of the termination of this Agreement,
all such records in the possession of the Manager shall be promptly turned over
to the Trust free from any claim or retention of rights. All such records shall
be deemed to be confidential in nature and the Manager shall not disclose or use
any records or information obtained pursuant to this Agreement in any manner
whatsoever except as expressly authorized by the Trust or as required by federal
or state regulatory authorities. The Manager shall submit to all regulatory and
administrative bodies having jurisdiction over the operations of the Manager or
the Trust, present or future, any information, reports or other material
obtained pursuant to this Agreement which any such body may request or require
pursuant to applicable laws or regulations.
E. Disclaimer of Liability. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on behalf of the
Board of Trustees of the Trust as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding upon the assets and property of the
Trust; provided, however, that the Agreement and Declaration of Trust of the
Trust provides that the assets of a particular series of the Trust shall under
no circumstances be charged with liabilities attributable to any other series of
the Trust and that all persons extending credit to, or contracting with or
having any claim against a particular series of the Trust, shall look only to
the assets of that particular series for payment of such credit, contract or
claim.
F. Notices. Any notice or other instrument in writing authorized or required
by this Agreement to be given to either party hereto will be sufficiently given
if addressed to such party and mailed or delivered to it at its office at the
address set forth below; namely:
(a) In the case of notices sent to the Trust to:
MassMutual Institutional Trusts
1295 State Street
Springfield, Massachusetts 01111
Attention: Stephen L. Kuhn
Vice Presient & Secretary
(b) In the case of notices sent to the Manager to:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Attention: Edmond F. Ryan
Vice President
6
<PAGE>
In the case of notices sent to either party, a copy to the Bank to:
Investors Bank & Trust Company
P.O. Box 1537
Boston, Massachusetts 02205-1537
Attention: Richard Boorman
or at such other place as such party may from time to time designate in writing.
G. Insurance Coverage. The Bank shall at all times maintain insurance
coverages adequate for the nature of its operations, including directors and
officers, errors and omissions, and fidelity bond insurance coverages. The Bank
shall have the Trust named as a Certificate Holder on each of these coverages,
and provide MassMutual with Certificates of Insurance at each policy renewal.
The Certificates shall provide that MassMutual receive a minimum of twenty (20)
days' written notice of cancellation, non-renewal, or material change of policy
coverages. The Bank shall provide MassMutual with copies of its insurance
policies, upon request. If at any time, due to a material adverse change in
policy coverages, MassMutual reasonably believes that such coverages are
insufficient in any material respect, or if any policy is placed with an insurer
with an A.M. Best rating of less than A 12, the Bank shall take reasonable steps
to satisfy MassMutual's concerns.
H. Business Continuity. Notwithstanding anything in this Agreement to the
contrary, the Bank shall have in place comprehensive business continuity and
disaster recovery procedures and systems and shall provide MassMutual, at least
annually, test results of such procedures and systems.
I. Parties. This Agreement will be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns; provided,
however, that this Agreement will not be assignable by the Trust without the
written consent of the Manager or by the Manager without the written consent of
the Trust, authorized and approved by its Board; and provided further that
termination proceedings pursuant to Article V, Section B hereof will not be
deemed to be an assignment within the meaning of this provision.
J. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
K. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Administrative and
Shareholder Services Agreement to be executed on the day and year first above
written.
MASSMUTUAL INSTITUTIONAL FUNDS
on behalf of MassMutual Value Equity Fund
By: /s/ Stuart H. Reese
--------------------------------
Stuart H. Reese
President
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Edwin P. McCausland, Jr.
--------------------------------
Edwin P. McCausland, Jr.
Vice President and
Managing Director
8
<PAGE>
EXHIBIT A: NET ASSET VALUE CALCULATIONS
---------------------------------------
MassMutual shall compute and, unless otherwise directed by the Board, determine
as of the close of business on the New York Stock Exchange on each day on which
said Exchange is open for unrestricted trading and as of such other hours, if
any, as may be authorized by the Board the net asset value and the public
offering price of a share of capital stock of the Trust, such determination to
be made in accordance with the provisions of the Articles and By-laws of the
Trust and Prospectus and Statement of Additional Information relating to the
Trust, as they may from time to time be amended, and any applicable resolutions
of the Board at the time in force and applicable and promptly to notify the
Trust, the proper exchange and the NASD or such other persons as the Trust may
request of the results of such computation and determination.
In computing the net asset value hereunder, MassMutual may rely in good faith
upon information furnished to it by any Authorized Person in respect of (i) the
manner of accrual of the liabilities of the Trust and in respect of liabilities
of the Trust not appearing on its books of account kept by the Bank, (ii)
reserves, if any, authorized by the Board or that no such reserves have been
authorized, (iii) the source of the quotations to be used in computing the net
asset value, (iv) the value to be assigned to any security for which no price
quotations are available, and (v) the method of computation of the public
offering price on the basis of the net asset value of the shares, and the Bank
shall not be responsible for any loss occasioned by such reliance or for any
good faith reliance on any quotations received from a source pursuant to (iii)
above.
9
<PAGE>
EXHIBIT B: FUND ACCOUNTING FUNCTIONS
-------------------------------------
MassMutual shall have the following responsibilities pursuant to (S)10 of
Article I(B):
1. Maintain the books and records of the funds pursuant to applicable rules
of the Investment Company Act of 1940, including the following:
(a) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of cash
and all other debits and credits, as required;
(b) General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts as required;
(c) A monthly trial balance of all ledger accounts as required.
2. Daily pricing of all portfolio securities using securities valuations or
other methods as may be approved by the fund's Trustees from time to time.
3. Daily posting of all income and expense accruals and reconciliation of
general ledger balances and total shares outstanding.
4. Computation of the daily net asset value as of the close of business of
the New York Stock Exchange on each day on which the Exchange is open for
business (See Exhibit C: Net Asset Value Calculations).
5. Reporting of the daily net asset value and dividend distributions to
transfer agent, fund, management, NASDAQ, and others as requested by 5:30
p.m. each day.
6. Calculation of dividends and capital gain distributions.
7. Routine monitoring of the fund's investments and providing prompt notice
of any violations of the diversification requirements, investment
restrictions or investment policies.
8. Calculation of yields and returns pursuant to S.E.C. formulas, and any
other performance calculations as required.
9. Providing fund prices and performance numbers to industry reporting
services.
10. Preparing reports on expense limitations and net asset value analysis, as
requested.
11. Maintain historical records of all fund net asset values and dividend
distributions.
10
<PAGE>
12. Preparing Blue Sky filings.
13. Preparing audited annual and unaudited semi-annual reports including
statement of investments, financial statements and footnotes.
14. Producing documents and responding to inquiries during S.E.C. audit, IRS
audit and others as required.
15. Providing the portfolio managers with cash availability based on security
settlements, shareholder activity, maturities, and income collections for
each fund by 8:30 a.m. each valuation day.
16. Taking whatever action is needed to accomplish the transfer of assets
from the Bank of New York to Investors Bank and Trust Company in a timely and
orderly manner.
11
<PAGE>
COMPENSATION
------------
Pursuant to the terms and conditions of the ADMINISTRATIVE AND SHAREHOLDER
SERVICES AGREEMENT (the "Agreement") between MassMutual Insitutional Funds (the
"Trust"), on behalf of the MassMutual Value Equity Fund (the "Fund") and
Massachusetts Mutual Life Insurance Company (the Manager"), the Trust agrees to
pay monthly to the Manager, an administrative services fee calculated by Class
at the annual rate of the daily average net assets of the applicable class of
shares of the Fund, expressed in basis points, as follows:
==============================================================================
Class 1 Class 2 Class 3 Class 4
==============================================================================
58.14 53.14 33.38 9.05
==============================================================================
Article II of the Agreement provides that the Manager will assume all expenses
of each Fund, including the Manager's reasonable out-of-pocket disbursements;
provided, however, that the Trust will pay:
1. Taxes and corporate fees payable to governmental agencies;
2. Brokerage commissions (which may be higher than other brokers would
charge if paid to a broker which provides brokerage and research services to
the Manager for use in providing investment advice and management to the Fund
and other accounts over which the Manager exercises investment discretion)
and other capital items payable in connection with the purchase or sale of
the Fund's investments (The words "brokerage and research services" shall
have the meaning given in the Securities Exchange Act of 1934 and the Rules
and Regulations thereunder.);
3. Interest on account of any borrowing by the Fund;
4. Fees and expenses of the Trust's Trustees who are not interested persons
(as defined in the 1940 Act) of the Manager or of the Trust;
5. Fees payable to the Trust's certified independent public accountants;
6. Fees paid to the Trust's independent legal counsel;
7. Fees paid to the Fund's custodian;
8. Fees paid to the Fund's Investment Manager, and
9. Payments due pursuant to any 12b-1 Plan adopted by the Trust and
applicable to the Fund.
12
<PAGE>
ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
And
MASSMUTUAL INSTITUTIONAL FUNDS
(As to the MassMutual Small Cap Value Equity Fund)
13
<PAGE>
ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT
-------------------------------------------------
This ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT (the
"Agreement"), dated as of this 30th day of September, 1994 (the "Effective
Date") is by and between MassMutual Institutional Funds (the "Trust") on behalf
of MassMutual Small Cap Value Equity Fund (the "Fund") and Massachusetts Mutual
Life Insurance Company (the "Manager").
WHEREAS, The Fund is a series of the Trust, a Massachusetts business
trust which is an open-end diversified management investment company registered
as such with the Securities and Exchange Commission (the "Commission") pursuant
to the Investment Company Act of 1940, as amended (the "1940 Act"), and
WHEREAS, the Trust, on behalf of the Fund, and the Manager wish to
enter into this Agreement whereby the Manager will provide, or cause to be
provided, administrative and shareholder services for the Fund and assume
certain expenses of the Fund.
NOW, THEREFORE, in consideration of the covenants and mutual promises
of the parties made to each other, it is hereby covenanted and agreed as
follows:
ARTICLE I: ADMINISTRATIVE AND SHAREHOLDER SERVICES
---------------------------------------------------
A. General Responsibilities. Subject to the exceptions set forth in Sub-
Section C hereof and subject to the direction and control of the Board of
Trustees of the Trust, the Manager will provide, or cause to be provided, all
services required for the administration of the Trust and the Fund, including
fund accounting, shareholder servicing, and transfer agency services.
B. Specific Responsibilities. Without limiting the responsibilities of the
Manager, the Manager will:
1. Maintain office facilities (which may be in the offices of the Manager
or a corporate affiliate but shall be in such location as the Trust
reasonably determines).
2. Furnish statistical and research data, clerical services and
stationery and office supplies.
3. Compile data for, prepare for execution by the Fund and file all the
Fund's federal and state tax returns and required tax filings other than
those required by this Agreement to be made by the Fund's custodian and
transfer agent.
4. Prepare compliance filings pursuant to state securities laws with the
advice of the Trust's counsel.
5. Prepare the Trust's Annual and Semi-Annual Reports to Shareholders and
amendments to its Registration Statements (on Form N-1A or any
replacement therefor).
<PAGE>
6. Compile data for, prepare and file timely Notices to the SEC required
pursuant to Rule 24f-2 under the 1940 Act.
7. Determine the daily pricing of the portfolio securities and
computation of the net asset value and the net income of Fund in
accordance with the Prospectus, resolutions of the Trust's Board of
Trustees, and the procedures set forth in EXHIBIT A: NET ASSET VALUE
CALCULATIONS.
8. Keep and maintain the financial accounts and records of the Fund and
provide the Trust with certain reports, as needed or requested by the
Fund.
9. Provide officers for the Trust as requested by the Trust's Board of
Trustees.
10. Perform fund accounting services for the Fund as set forth in EXHIBIT
B: FUND ACCOUNTING FUNCTIONS.
11. Generally assist in all aspects of the operations of the Fund.
C. Excepted Responsibilities. The Manager shall not perform the following
services pursuant to this Agreement:
1. Those performed by the custodian for the Trust under the Custodian
Agreement between the Trust and Investors Bank & Trust Company or any
successor custodian (the "Bank");
2. Those performed by the distributor(s) of the Trust's shares;
3. Those provided by the Trust's independent legal counsel;
4. Those performed by the independent public accountants for the Trust;
5. Those performed by the Fund's investment manager;
6. Those provided by the Trust's independent trustees, and
7. Those provided by Investors Bank & Trust Company pursuant to a
Transfer Agency Agreement.
D. Sub-contract Rights. The Manager may in its discretion (subject only to
approval by the Trust's Board of Trustees) delegate or subcontract some or all
of the Manager's duties, but shall remain ultimately responsible for the
provision of such services. The Manager shall be responsible for payment of all
compensation to any person or entity that Manager delegates any duties
hereunder.
2
<PAGE>
ARTICLE II: EXPENSES
---------------------
A. Expenses. The Manager shall assume all expenses of the Trust and the Fund,
including the Manager's reasonable out-of-pocket disbursements; provided,
however, that the Fund or the Trust shall pay:
1. Taxes and corporate fees payable to governmental agencies;
2. Brokerage commissions (which may be higher than other brokers would
charge if paid to a broker which provides brokerage and research services
to the Manager for use in providing investment advice and management to
the Fund and other accounts over which the Manager exercises investment
discretion) and other capital items payable in connection with the
purchase or sale of the Fund's investments (The words "brokerage and
research services" shall have the meaning given in the Securities
Exchange Act of 1934 and the Rules and Regulations thereunder.);
3. Interest on account of any borrowing by the Fund;
4. Fees and expenses of the Trust's Trustees who are not interested
persons (as defined in the 1940 Act) of the Manager or of the Trust;
5. Fees payable to the Trust's certified independent public accountants;
6. Fees paid to the Trust's independent legal counsel;
7. Fees paid to the Fund's custodian;
8. Fees paid to the Fund's Investment Manager, and
9. Payments due pursuant to any 12b-1 Plan adopted by the Trust and
applicable to the Fund.
ARTICLE III: COMPENSATION
--------------------------
The Manager's Compensation. For the services to be rendered and the facilities
to be furnished by the Manager as provided for in this Agreement, the Trust will
compensate the Manager as the Trust and the Manager may from time to time
agree.
ARTICLE IV: STANDARD OF CARE
-----------------------------
A. Standard of Care. The Manager shall use reasonable care in performing its
duties hereunder. In the performance of such duties, the Manager its directors,
officers, employees, and agents,
3
<PAGE>
successors and assigns will be protected and will not be liable, and will be
indemnified and held harmless by the Trust for any error of judgement, mistake
of law, or any other loss, claim, damages, liabilities, or expenses arising by
reason of it acting hereunder, by the Trust except in the case of the
negligence, willful misconduct, bad faith, reckless disregard of duties or
obligations hereunder, including knowing violations of law, or fraud of the
Manager, or of its officers, employees, or agents, except as otherwise set forth
in this Article IV. Notwithstanding anything herein to the contrary, the Manager
shall have no discretion over the Trust's assets or choice of investments and
shall not be held liable hereunder for any losses suffered by the Fund.
B. Legal Advice. On issues that are legal in nature, the Manager will be
entitled to receive and act upon the advice of independent legal counsel of its
own selection, provided such counsel is chosen with reasonable care and which
can be counsel for the Trust, and will be without liability for any action taken
or thing done or omitted to be done in accordance with this Agreement in good
faith conformity with such advice. Except as otherwise agreed to by the Trust,
the Manager shall pay the fees and expenses of such counsel, unless such counsel
is the Trust's counsel. On issues that are related to financial accounting
matters, the Manager will be entitled to receive and act upon the advice of the
Trust's independent public accountants, provided that the Manager promptly
notifies the Trust that it has sought such advice and discloses the nature of
the matter. Except as otherwise agreed to by the parties, the Trust shall bear
the expenses and costs of obtaining advice from its independendent public
accountants, if such advice is sought pursuant to this subsection B of Article
IV.
C. Good Faith Reliance. The Manager will be protected and not be liable, and
will be indemnified and held harmless for any action taken or omitted to be
taken by it in reliance upon any document, certificate or instrument which it
reasonably believes to be genuine and to be signed or presented by the proper
person or persons.
D. Damages. Notwithstanding anything in this Agreement to the contrary, in no
event shall the Manager or the Trust be liable to the other, or to any third
party, for special, punitive or consequential damages arising, directly or
indirectly from this Agreement, even if said party has been advised by the other
party of the possibility of such damages.
E. Acts of God. In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, interruption of
electrical power or other utilities, equipment or transmission failure or damage
reasonably beyond its control, or other causes reasonably beyond its control,
such party shall not be liable to the other for any damages resulting from such
failure to perform or otherwise from such causes. The Manager, the Trust and
MassMutual shall notify each other as soon as reasonably possible following the
occurrence of an event described in this subsection.
ARTICLE V: EFFECTIVE DATE, TERMINATION AND AMENDMENT
-----------------------------------------------------
A. Effective Date. This Agreement will become effective on the Effective Date
and, unless
4
<PAGE>
sooner terminated as provided herein, will continue for an initial term of one-
year from the Effective Date and thereafter shall continue for successive one
year periods; provided however, that such continuance shall be specifically
approved at least annually by (i) the Board of Trustees of the Trust, or (ii) by
vote of a majority of the outstanding shares of the Fund (as defined in the 1940
Act), provided however, that in either event the continuance is also approved at
least annually by a majority of the Trust's Trustees who are not parties to this
Agreement or interested persons (as defined in the 1940 Act)(other than a
Trustees of the Trust) of the Manager or of the Trust by vote cast in person at
a meeting called for the purpose of voting on such approval.
B. Termination. Anything to the contrary herein notwithstanding, (1) this
Agreement may at any time be terminated by the Trust on 90 days' written notice
to the Manager without the payment of any penalty either by the Board of
Trustees of the Trust or by vote of majority of the outstanding shares of the
Fund (as defined in the 1940 Act); (2) this Agreement shall immediately
terminate in the event of its assignment (within the meaning of the 1940 Act);
and (3) this Agreement may be terminated by the Manager on 90 days' written
notice to the Trust without the payment of any penalty. Any notice under this
Agreement shall be given in writing, addressed and delivered, or mailed
postpaid, to the other party at the principal office of such party.
C. Amendment. This Agreement may be amended at any time by mutual written
consent of the parties, provided that such consent on the part of the Trust
shall have been approved at a meeting by the vote of a majority of the
outstanding shares of the Fund and by written majority of the Trustees of the
Trust who are not parties to this Agreement or interested persons (within the
meaning of the 1940 Act) of the Trust or of the Manager by vote cast in person
at a meeting called for the purpose of acting on such amendment.
ARTICLE VI: MISCELLANEOUS
--------------------------
A. Services Not Exclusive. The services of the Manager to the Trust and the
Fund under this Agreement are not exclusive and the Manager shall be free to
render similar services to others.
B. Use of Name by the Trust. The Trust recognizes the Manager's control of the
name "MassMutual" and agrees that its right to use this name is non-exclusive
and can be terminated by the Manager at any time. The use of such name will
automatically be terminated if at any time the Manager, a subsidiary or an
affiliate of the Manager ceases to be investment manager for the Fund.
C. Interested and Affiliated Persons. It is understood that members of the
Board of Trustees, officers, employees or agents of the Trust or the Fund may
also be directors, officers, employees or agents of the Manager, and Sub-
Advisers, and that the Manager and Sub-Advisers, and their directors, officers,
employees or agents may be interested in the Fund as shareholders or otherwise.
5
<PAGE>
D. Records and Confidentiality. All records pertaining to the operation and
administration of the Trust and the Fund (whether prepared by the Manager or
supplied to the Manager by the Trust or the Fund) are the property and subject
to the control of the Trust. In the event of the termination of this Agreement,
all such records in the possession of the Manager shall be promptly turned over
to the Trust free from any claim or retention of rights. All such records shall
be deemed to be confidential in nature and the Manager shall not disclose or use
any records or information obtained pursuant to this Agreement in any manner
whatsoever except as expressly authorized by the Trust or as required by federal
or state regulatory authorities. The Manager shall submit to all regulatory and
administrative bodies having jurisdiction over the operations of the Manager or
the Trust, present or future, any information, reports or other material
obtained pursuant to this Agreement which any such body may request or require
pursuant to applicable laws or regulations.
E. Disclaimer of Liability. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on behalf of the
Board of Trustees of the Trust as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding upon the assets and property of the
Trust; provided, however, that the Agreement and Declaration of Trust of the
Trust provides that the assets of a particular series of the Trust shall under
no circumstances be charged with liabilities attributable to any other series of
the Trust and that all persons extending credit to, or contracting with or
having any claim against a particular series of the Trust, shall look only to
the assets of that particular series for payment of such credit, contract or
claim.
F. Notices. Any notice or other instrument in writing authorized or required
by this Agreement to be given to either party hereto will be sufficiently given
if addressed to such party and mailed or delivered to it at its office at the
address set forth below; namely:
(a) In the case of notices sent to the Trust to:
MassMutual Institutional Trusts
1295 State Street
Springfield, Massachusetts 01111
Attention: Stephen L. Kuhn
Vice President & Secretary
(b) In the case of notices sent to the Manager to:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Attention: Edmond F. Ryan
Vice President
6
<PAGE>
In the case of notices sent to either party, a copy to the Bank to:
Investors Bank & Trust Company
P.O. Box 1537
Boston, Massachusetts 02205-1537
Attention: Richard Boorman
or at such other place as such party may from time to time designate in writing.
G. Insurance Coverage. The Bank shall at all times maintain insurance
coverages adequate for the nature of its operations, including directors and
officers, errors and omissions, and fidelity bond insurance coverages. The Bank
shall have the Trust named as a Certificate Holder on each of these coverages,
and provide MassMutual with Certificates of Insurance at each policy renewal.
The Certificates shall provide that MassMutual receive a minimum of twenty (20)
days' written notice of cancellation, non-renewal, or material change of policy
coverages. The Bank shall provide MassMutual with copies of its insurance
policies, upon request. If at any time, due to a material adverse change in
policy coverages, MassMutual reasonably believes that such coverages are
insufficient in any material respect, or if any policy is placed with an insurer
with an A.M. Best rating of less than A 12, the Bank shall take reasonable steps
to satisfy MassMutual's concerns.
H. Business Continuity. Notwithstanding anything in this Agreement to the
contrary, the Bank shall have in place comprehensive business continuity and
disaster recovery procedures and systems and shall provide MassMutual, at least
annually, test results of such procedures and systems.
I. Parties. This Agreement will be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns; provided,
however, that this Agreement will not be assignable by the Trust without the
written consent of the Manager or by the Manager without the written consent of
the Trust, authorized and approved by its Board; and provided further that
termination proceedings pursuant to Article V, Section B hereof will not be
deemed to be an assignment within the meaning of this provision.
J. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
K. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Administrative
and Shareholder Services Agreement to be executed on the day and year first
above written.
MASSMUTUAL INSTITUTIONAL FUNDS
on behalf of MassMutual Small Cap Value Equity Fund
By: /s/ Stuart H. Reese
------------------------------
Stuart H. Reese
President
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Edwin P. McCausland, Jr.
-------------------------------
Edwin P. McCausland, Jr.
Vice President and
Managing Director
8
<PAGE>
EXHIBIT A: NET ASSET VALUE CALCULATIONS
----------------------------------------
MassMutual shall compute and, unless otherwise directed by the Board, determine
as of the close of business on the New York Stock Exchange on each day on which
said Exchange is open for unrestricted trading and as of such other hours, if
any, as may be authorized by the Board the net asset value and the public
offering price of a share of capital stock of the Trust, such determination to
be made in accordance with the provisions of the Articles and By-laws of the
Trust and Prospectus and Statement of Additional Information relating to the
Trust, as they may from time to time be amended, and any applicable resolutions
of the Board at the time in force and applicable and promptly to notify the
Trust, the proper exchange and the NASD or such other persons as the Trust may
request of the results of such computation and determination.
In computing the net asset value hereunder, MassMutual may rely in good faith
upon information furnished to it by any Authorized Person in respect of (i) the
manner of accrual of the liabilities of the Trust and in respect of liabilities
of the Trust not appearing on its books of account kept by the Bank, (ii)
reserves, if any, authorized by the Board or that no such reserves have been
authorized, (iii) the source of the quotations to be used in computing the net
asset value, (iv) the value to be assigned to any security for which no price
quotations are available, and (v) the method of computation of the public
offering price on the basis of the net asset value of the shares, and the Bank
shall not be responsible for any loss occasioned by such reliance or for any
good faith reliance on any quotations received from a source pursuant to (iii)
above.
9
<PAGE>
EXHIBIT B:FUND ACCOUNTING FUNCTIONS
-----------------------------------
MassMutual shall have the following responsibilities pursuant to (S)10 of
Article I(B):
1. Maintain the books and records of the funds pursuant to applicable rules
of the Investment Company Act of 1940, including the following:
(a) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of cash
and all other debits and credits, as required;
(b) General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts as required;
(c) A monthly trial balance of all ledger accounts as required.
2. Daily pricing of all portfolio securities using securities valuations or
other methods as may be approved by the fund's Trustees from time to time.
3. Daily posting of all income and expense accruals and reconciliation of
general ledger balances and total shares outstanding.
4. Computation of the daily net asset value as of the close of business of
the New York Stock Exchange on each day on which the Exchange is open for
business (See Exhibit C: Net Asset Value Calculations).
5. Reporting of the daily net asset value and dividend distributions to
transfer agent, fund, management, NASDAQ, and others as requested by 5:30
p.m. each day.
6. Calculation of dividends and capital gain distributions.
7. Routine monitoring of the fund's investments and providing prompt notice
of any violations of the diversification requirements, investment
restrictions or investment policies.
8. Calculation of yields and returns pursuant to S.E.C. formulas, and any
other performance calculations as required.
9. Providing fund prices and performance numbers to industry reporting
services.
10. Preparing reports on expense limitations and net asset value analysis, as
requested.
11. Maintain historical records of all fund net asset values and dividend
distributions.
10
<PAGE>
12.Preparing Blue Sky filings.
13.Preparing audited annual and unaudited semi-annual reports including
statement of investments, financial statements and footnotes.
14.Producing documents and responding to inquiries during S.E.C. audit, IRS
audit and others as required.
15.Providing the portfolio managers with cash availability based on security
settlements, shareholder activity, maturities, and income collections for
each fund by 8:30 a.m. each valuation day.
16.Taking whatever action is needed to accomplish the transfer of assets
from the Bank of New York to Investors Bank and Trust Company in a timely and
orderly manner.
11
<PAGE>
COMPENSATION
------------
Pursuant to the terms and conditions of the ADMINISTRATIVE AND SHAREHOLDER
SERVICES AGREEMENT (the "Agreement") between MassMutual Institutional Funds (the
"Trust"), on behalf of the MassMutual Small Cap Value Equity Fund (the "Fund")
and Massachusetts Mutual Life Insurance Company (the "Manager"), the Trust
agrees to pay monthly to the Manager, an administrative services fee calculated
by Class at the annual rate of the daily average net assets of the applicable
class of shares of the Fund, expressed in basis points, as follows:
<TABLE>
<CAPTION>
=======================================================================
Class 1 Class 2 Class 3 Class 4
=======================================================================
<S> <C> <C> <C>
57.28 52.28 32.52 8.62
=======================================================================
</TABLE>
Article II of the Agreement provides that the Manager will assume all expenses
of each Fund, including the Manager's reasonable out-of-pocket disbursements;
provided, however, that the Trust will pay:
1. Taxes and corporate fees payable to governmental agencies;
2. Brokerage commissions (which may be higher than other brokers would
charge if paid to a broker which provides brokerage and research services
to the Manager for use in providing investment advice and management to the
Fund and other accounts over which the Manager exercises investment
discretion) and other capital items payable in connection with the purchase
or sale of the Fund's investments (The words "brokerage and research
services" shall have the meaning given in the Securities Exchange Act of
1934 and the Rules and Regulations thereunder.);
3. Interest on account of any borrowing by the Fund;
4. Fees and expenses of the Trust's Trustees who are not interested
persons (as defined in the 1940 Act) of the Manager or of the Trust;
5. Fees payable to the Trust's certified independent public accountants;
6. Fees paid to the Trust's independent legal counsel;
7. Fees paid to the Fund's custodian;
8. Fees paid to the Fund's Investment Manager, and
9. Payments due pursuant to any 12b-1 Plan adopted by the Trust and
applicable to the Fund.
12
<PAGE>
ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
And
MASSMUTUAL INSTITUTIONAL FUNDS
(As to the MassMutual International Equity Fund)
<PAGE>
ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT
-------------------------------------------------
This ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT (the
"Agreement"), dated as of this 30th day of September, 1994 (the "Effective
Date") is by and between MassMutual Institutional Funds (the "Trust") on behalf
of MassMutual International Equity Fund (the "Fund") and Massachusetts Mutual
Life Insurance Company (the "Manager").
WHEREAS, The Fund is a series of the Trust, a Massachusetts business
trust which is an open-end diversified management investment company registered
as such with the Securities and Exchange Commission (the "Commission") pursuant
to the Investment Company Act of 1940, as amended (the "1940 Act"), and
WHEREAS, the Trust, on behalf of the Fund, and the Manager wish to
enter into this Agreement whereby the Manager will provide, or cause to be
provided, administrative and shareholder services for the Fund and assume
certain expenses of the Fund.
NOW, THEREFORE, in consideration of the covenants and mutual promises
of the parties made to each other, it is hereby covenanted and agreed as
follows:
ARTICLE I: ADMINISTRATIVE AND SHAREHOLDER SERVICES
---------------------------------------------------
A. General Responsibilities. Subject to the exceptions set forth in Sub-
Section C hereof and subject to the direction and control of the Board of
Trustees of the Trust, the Manager will provide, or cause to be provided, all
services required for the administration of the Trust and the Fund, including
fund accounting, shareholder servicing, and transfer agency services.
B. Specific Responsibilities. Without limiting the responsibilities of the
Manager, the Manager will:
1. Maintain office facilities (which may be in the offices of the Manager
or a corporate affiliate but shall be in such location as the Trust
reasonably determines).
2. Furnish statistical and research data, clerical services and stationery
and office supplies.
3. Compile data for, prepare for execution by the Fund and file all the
Fund's federal and state tax returns and required tax filings other than
those required by this Agreement to be made by the Fund's custodian and
transfer agent.
4. Prepare compliance filings pursuant to state securities laws with the
advice of the Trust's counsel.
5. Prepare the Trust's Annual and Semi-Annual Reports to Shareholders and
amendments to its Registration Statements (on Form N-1A or any replacement
therefor).
6. Compile data for, prepare and file timely Notices to the SEC required
pursuant to Rule
<PAGE>
24f-2 under the 1940 Act.
7. Determine the daily pricing of the portfolio securities and computation
of the net asset value and the net income of Fund in accordance with the
Prospectus, resolutions of the Trust's Board of Trustees, and the
procedures set forth in EXHIBIT A: NET ASSET VALUE CALCULATIONS.
8. Keep and maintain the financial accounts and records of the Fund and
provide the Trust with certain reports, as needed or requested by the Fund.
9. Provide officers for the Trust as requested by the Trust's Board of
Trustees.
10. Perform fund accounting services for the Fund as set forth in EXHIBIT
B: FUND ACCOUNTING FUNCTIONS.
11. Generally assist in all aspects of the operations of the Fund.
C. Excepted Responsibilities. The Manager shall not perform the following
services pursuant to this Agreement:
1. Those performed by the custodian for the Trust under the Custodian
Agreement between the Trust and Investors Bank & Trust Company or any
successor custodian (the "Bank");
2. Those performed by the distributor(s) of the Trust's shares;
3. Those provided by the Trust's independent legal counsel;
4. Those performed by the independent public accountants for the Trust;
5. Those performed by the Fund's investment manager;
6. Those provided by the Trust's independent trustees, and
7. Those provided by Investors Bank & Trust Company pursuant to a Transfer
Agency Agreement.
D. Sub-contract Rights. The Manager may in its discretion (subject only to
approval by the Trust's Board of Trustees) delegate or subcontract some or all
of the Manager's duties, but shall remain ultimately responsible for the
provision of such services. The Manager shall be responsible for payment of all
compensation to any person or entity that Manager delegates any duties
hereunder.
2
<PAGE>
ARTICLE II: EXPENSES
---------------------
A. Expenses. The Manager shall assume all expenses of the Trust and the Fund,
including the Manager's reasonable out-of-pocket disbursements; provided,
however, that the Fund or the Trust shall pay:
1. Taxes and corporate fees payable to governmental agencies;
2. Brokerage commissions (which may be higher than other brokers would
charge if paid to a broker which provides brokerage and research services
to the Manager for use in providing investment advice and management to the
Fund and other accounts over which the Manager exercises investment
discretion) and other capital items payable in connection with the purchase
or sale of the Fund's investments (The words "brokerage and research
services" shall have the meaning given in the Securities Exchange Act of
1934 and the Rules and Regulations thereunder.);
3. Interest on account of any borrowing by the Fund;
4. Fees and expenses of the Trust's Trustees who are not interested persons
(as defined in the 1940 Act) of the Manager or of the Trust;
5. Fees payable to the Trust's certified independent public accountants;
6. Fees paid to the Trust's independent legal counsel;
7. Fees paid to the Fund's custodian;
8. Fees paid to the Fund's Investment Manager, and
9. Payments due pursuant to any 12b-1 Plan adopted by the Trust and
applicable to the Fund.
ARTICLE III: COMPENSATION
--------------------------
The Manager's Compensation. For the services to be rendered and the facilities
to be furnished by the Manager as provided for in this Agreement, the Trust will
compensate the Manager as the Trust and the Manager may from time to time
agree.
ARTICLE IV: STANDARD OF CARE
-----------------------------
A. Standard of Care. The Manager shall use reasonable care in performing its
duties hereunder. In the performance of such duties, the Manager its directors,
officers, employees, and agents, successors and assigns will be protected and
will not be liable, and will be indemnified
3
<PAGE>
and held harmless by the Trust for any error of judgement, mistake of law, or
any other loss, claim, damages, liabilities, or expenses arising by reason of it
acting hereunder, by the Trust except in the case of the negligence, willful
misconduct, bad faith, reckless disregard of duties or obligations hereunder,
including knowing violations of law, or fraud of the Manager, or of its
officers, employees, or agents, except as otherwise set forth in this Article
IV. Notwithstanding anything herein to the contrary, the Manager shall have no
discretion over the Trust's assets or choice of investments and shall not be
held liable hereunder for any losses suffered by the Fund.
B. Legal Advice. On issues that are legal in nature, the Manager will be
entitled to receive and act upon the advice of independent legal counsel of its
own selection, provided such counsel is chosen with reasonable care and which
can be counsel for the Trust, and will be without liability for any action taken
or thing done or omitted to be done in accordance with this Agreement in good
faith conformity with such advice. Except as otherwise agreed to by the Trust,
the Manager shall pay the fees and expenses of such counsel, unless such counsel
is the Trust's counsel. On issues that are related to financial accounting
matters, the Manager will be entitled to receive and act upon the advice of the
Trust's independent public accountants, provided that the Manager promptly
notifies the Trust that it has sought such advice and discloses the nature of
the matter. Except as otherwise agreed to by the parties, the Trust shall bear
the expenses and costs of obtaining advice from its independent public
accountants, if such advice is sought pursuant to this subsection B of Article
IV.
C. Good Faith Reliance. The Manager will be protected and not be liable, and
will be indemnified and held harmless for any action taken or omitted to be
taken by it in reliance upon any document, certificate or instrument which it
reasonably believes to be genuine and to be signed or presented by the proper
person or persons.
D. Damages. Notwithstanding anything in this Agreement to the contrary, in no
event shall the Manager or the Trust be liable to the other, or to any third
party, for special, punitive or consequential damages arising, directly or
indirectly from this Agreement, even if said party has been advised by the other
party of the possibility of such damages.
E. Acts of God. In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, interruption of
electrical power or other utilities, equipment or transmission failure or damage
reasonably beyond its control, or other causes reasonably beyond its control,
such party shall not be liable to the other for any damages resulting from such
failure to perform or otherwise from such causes. The Manager, the Trust and
MassMutual shall notify each other as soon as reasonably possible following the
occurrence of an event described in this subsection.
ARTICLE V: EFFECTIVE DATE, TERMINATION AND AMENDMENT
-----------------------------------------------------
A. Effective Date. This Agreement will become effective on the Effective Date
and, unless sooner terminated as provided herein, will continue for an initial
term of one-year from the
4
<PAGE>
Effective Date and thereafter shall continue for successive one year periods;
provided however, that such continuance shall be specifically approved at least
annually by (i) the Board of Trustees of the Trust, or (ii) by vote of a
majority of the outstanding shares of the Fund (as defined in the 1940 Act),
provided however, that in either event the continuance is also approved at least
annually by a majority of the Trust's Trustees who are not parties to this
Agreement or interested persons (as defined in the 1940 Act)(other than a
Trustees of the Trust) of the Manager or of the Trust by vote cast in person at
a meeting called for the purpose of voting on such approval.
B. Termination. Anything to the contrary herein notwithstanding, (1) this
Agreement may at any time be terminated by the Trust on 90 days' written notice
to the Manager without the payment of any penalty either by the Board of
Trustees of the Trust or by vote of majority of the outstanding shares of the
Fund (as defined in the 1940 Act); (2) this Agreement shall immediately
terminate in the event of its assignment (within the meaning of the 1940 Act);
and (3) this Agreement may be terminated by the Manager on 90 days' written
notice to the Trust without the payment of any penalty. Any notice under this
Agreement shall be given in writing, addressed and delivered, or mailed
postpaid, to the other party at the principal office of such party.
C. Amendment. This Agreement may be amended at any time by mutual written
consent of the parties, provided that such consent on the part of the Trust
shall have been approved at a meeting by the vote of a majority of the
outstanding shares of the Fund and by written majority of the Trustees of the
Trust who are not parties to this Agreement or interested persons (within the
meaning of the 1940 Act) of the Trust or of the Manager by vote cast in person
at a meeting called for the purpose of acting on such amendment.
ARTICLE VI: MISCELLANEOUS
--------------------------
A. Services Not Exclusive. The services of the Manager to the Trust and the
Fund under this Agreement are not exclusive and the Manager shall be free to
render similar services to others.
B. Use of Name by the Trust. The Trust recognizes the Manager's control of the
name "MassMutual" and agrees that its right to use this name is non-exclusive
and can be terminated by the Manager at any time. The use of such name will
automatically be terminated if at any time the Manager, a subsidiary or an
affiliate of the Manager ceases to be investment manager for the Fund.
C. Interested and Affiliated Persons. It is understood that members of the
Board of Trustees, officers, employees or agents of the Trust or the Fund may
also be directors, officers, employees or agents of the Manager, and Sub-
Advisers, and that the Manager and Sub-Advisers, and their directors, officers,
employees or agents may be interested in the Fund as shareholders or otherwise.
5
<PAGE>
D. Records and Confidentiality. All records pertaining to the operation and
administration of the Trust and the Fund (whether prepared by the Manager or
supplied to the Manager by the Trust or the Fund) are the property and subject
to the control of the Trust. In the event of the termination of this Agreement,
all such records in the possession of the Manager shall be promptly turned over
to the Trust free from any claim or retention of rights. All such records shall
be deemed to be confidential in nature and the Manager shall not disclose or use
any records or information obtained pursuant to this Agreement in any manner
whatsoever except as expressly authorized by the Trust or as required by federal
or state regulatory authorities. The Manager shall submit to all regulatory and
administrative bodies having jurisdiction over the operations of the Manager or
the Trust, present or future, any information, reports or other material
obtained pursuant to this Agreement which any such body may request or require
pursuant to applicable laws or regulations.
E. Disclaimer of Liability. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on behalf of the
Board of Trustees of the Trust as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding upon the assets and property of the
Trust; provided, however, that the Agreement and Declaration of Trust of the
Trust provides that the assets of a particular series of the Trust shall under
no circumstances be charged with liabilities attributable to any other series of
the Trust and that all persons extending credit to, or contracting with or
having any claim against a particular series of the Trust, shall look only to
the assets of that particular series for payment of such credit, contract or
claim.
F. Notices. Any notice or other instrument in writing authorized or required
by this Agreement to be given to either party hereto will be sufficiently given
if addressed to such party and mailed or delivered to it at its office at the
address set forth below; namely:
(a) In the case of notices sent to the Trust to:
MassMutual Institutional Trusts
1295 State Street
Springfield, Massachusetts 01111
Attention: Stephen L. Kuhn
Vice President & Secretary
(b) In the case of notices sent to the Manager to:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Attention: Edmond F. Ryan
Vice President
6
<PAGE>
In the case of notices sent to either party, a copy to the Bank to:
Investors Bank & Trust Company
P.O. Box 1537
Boston, Massachusetts 02205-1537
Attention: Richard Boorman
or at such other place as such party may from time to time designate in writing.
G. Insurance Coverage. The Bank shall at all times maintain insurance
coverages adequate for the nature of its operations, including directors and
officers, errors and omissions, and fidelity bond insurance coverages. The Bank
shall have the Trust named as a Certificate Holder on each of these coverages,
and provide MassMutual with Certificates of Insurance at each policy renewal.
The Certificates shall provide that MassMutual receive a minimum of twenty (20)
days' written notice of cancellation, non-renewal, or material change of policy
coverages. The Bank shall provide MassMutual with copies of its insurance
policies, upon request. If at any time, due to a material adverse change in
policy coverages, MassMutual reasonably believes that such coverages are
insufficient in any material respect, or if any policy is placed with an insurer
with an A.M. Best rating of less than A 12, the Bank shall take reasonable steps
to satisfy MassMutual's concerns.
H. Business Continuity. Notwithstanding anything in this Agreement to the
contrary, the Bank shall have in place comprehensive business continuity and
disaster recovery procedures and systems and shall provide MassMutual, at least
annually, test results of such procedures and systems.
I. Parties. This Agreement will be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns; provided,
however, that this Agreement will not be assignable by the Trust without the
written consent of the Manager or by the Manager without the written consent of
the Trust, authorized and approved by its Board; and provided further that
termination proceedings pursuant to Article V, Section B hereof will not be
deemed to be an assignment within the meaning of this provision.
J. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
K. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Administrative and
Shareholder Services Agreement to be executed on the day and year first above
written.
MASSMUTUAL INSTITUTIONAL FUNDS
on behalf of MassMutual International Equity Fund
By: /s/ Stuart H. Reese
---------------------------------------
Stuart H. Reese
President
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Edwin P. McCausland, Jr.
---------------------------------------
Edwin P. McCausland, Jr.
Vice President and
Managing Director
8
<PAGE>
EXHIBIT A: NET ASSET VALUE CALCULATIONS
----------------------------------------
MassMutual shall compute and, unless otherwise directed by the Board, determine
as of the close of business on the New York Stock Exchange on each day on which
said Exchange is open for unrestricted trading and as of such other hours, if
any, as may be authorized by the Board the net asset value and the public
offering price of a share of capital stock of the Trust, such determination to
be made in accordance with the provisions of the Articles and By-laws of the
Trust and Prospectus and Statement of Additional Information relating to the
Trust, as they may from time to time be amended, and any applicable resolutions
of the Board at the time in force and applicable and promptly to notify the
Trust, the proper exchange and the NASD or such other persons as the Trust may
request of the results of such computation and determination.
In computing the net asset value hereunder, MassMutual may rely in good faith
upon information furnished to it by any Authorized Person in respect of (i) the
manner of accrual of the liabilities of the Trust and in respect of liabilities
of the Trust not appearing on its books of account kept by the Bank, (ii)
reserves, if any, authorized by the Board or that no such reserves have been
authorized, (iii) the source of the quotations to be used in computing the net
asset value, (iv) the value to be assigned to any security for which no price
quotations are available, and (v) the method of computation of the public
offering price on the basis of the net asset value of the shares, and the Bank
shall not be responsible for any loss occasioned by such reliance or for any
good faith reliance on any quotations received from a source pursuant to (iii)
above.
9
<PAGE>
EXHIBIT B: FUND ACCOUNTING FUNCTIONS
-------------------------------------
MassMutual shall have the following responsibilities pursuant to (S)10 of
Article I(B):
1. Maintain the books and records of the funds pursuant to applicable rules
of the Investment Company Act of 1940, including the following:
(a) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of cash
and all other debits and credits, as required;
(b) General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts as required;
(c) A monthly trial balance of all ledger accounts as required.
2. Daily pricing of all portfolio securities using securities valuations or
other methods as may be approved by the fund's Trustees from time to time.
3. Daily posting of all income and expense accruals and reconciliation of
general ledger balances and total shares outstanding.
4. Computation of the daily net asset value as of the close of business of
the New York Stock Exchange on each day on which the Exchange is open for
business (See Exhibit C: Net Asset Value Calculations).
5. Reporting of the daily net asset value and dividend distributions to
transfer agent, fund, management, NASDAQ, and others as requested by 5:30
p.m. each day.
6. Calculation of dividends and capital gain distributions.
7. Routine monitoring of the fund's investments and providing prompt notice
of any violations of the diversification requirements, investment
restrictions or investment policies.
8. Calculation of yields and returns pursuant to S.E.C. formulas, and any
other performance calculations as required.
9. Providing fund prices and performance numbers to industry reporting
services.
10. Preparing reports on expense limitations and net asset value analysis, as
requested.
11. Maintain historical records of all fund net asset values and dividend
distributions.
10
<PAGE>
12. Preparing Blue Sky filings.
13. Preparing audited annual and unaudited semi-annual reports including
statement of investments, financial statements and footnotes.
14. Producing documents and responding to inquiries during S.E.C. audit, IRS
audit and others as required.
15. Providing the portfolio managers with cash availability based on security
settlements, shareholder activity, maturities, and income collections for
each fund by 8:30 a.m. each valuation day.
16. Taking whatever action is needed to accomplish the transfer of assets
from the Bank of New York to Investors Bank and Trust Company in a timely and
orderly manner.
11
<PAGE>
COMPENSATION
------------
Pursuant to the terms and conditions of the ADMINISTRATIVE AND SHAREHOLDER
SERVICES AGREEMENT (the "Agreement") between MassMutual Institutional Funds (the
"Trust"), on behalf of the MassMutual International Equity Fund (the "Fund") and
Massachusetts Mutual Life Insurance Company (the "Manager"), the Trust agrees to
pay monthly to the Manager, an administrative services fee calculated by Class
at the annual rate of the daily average net assets of the applicable class of
shares of the Fund, expressed in basis points, as follows:
<TABLE>
<CAPTION>
=====================================================
Class 1 Class 2 Class 3 Class 4
=====================================================
<S> <C> <C> <C>
59.48 54.48 44.48 9.72
=====================================================
</TABLE>
Article II of the Agreement provides that the Manager will assume all expenses
of each Fund, including the Manager's reasonable out-of-pocket disbursements;
provided, however, that the Trust will pay:
1. Taxes and corporate fees payable to governmental agencies;
2. Brokerage commissions (which may be higher than other brokers would
charge if paid to a broker which provides brokerage and research services to
the Manager for use in providing investment advice and management to the Fund
and other accounts over which the Manager exercises investment discretion)
and other capital items payable in connection with the purchase or sale of
the Fund's investments (The words "brokerage and research services" shall
have the meaning given in the Securities Exchange Act of 1934 and the Rules
and Regulations thereunder.);
3. Interest on account of any borrowing by the Fund;
4. Fees and expenses of the Trust's Trustees who are not interested persons
(as defined in the 1940 Act) of the Manager or of the Trust;
5. Fees payable to the Trust's certified independent public accountants;
6. Fees paid to the Trust's independent legal counsel;
7. Fees paid to the Fund's custodian;
8. Fees paid to the Fund's Investment Manager, and
9. Payments due pursuant to any 12b-1 Plan adopted by the Trust and
applicable to the Fund.
12
<PAGE>
COMPENSATION/1/
------------
Pursuant to the terms and conditions of the ADMINISTRATIVE AND SHAREHOLDER
SERVICES AGREEMENTS (the "Agreements") between MassMutual Insitutional Funds
(the "Trust"), on behalf of each of the Funds (the "Funds") and Massachusetts
Mutual Life Insurance Company (the "Manager"), the Trust agrees to pay monthly
to the Manager, an administrative services fee calculated by Class at the annual
rate of the daily average net assets of the applicable class of shares of the
Fund, expressed in basis points, as follows:
<TABLE>
<CAPTION>
=========================================================================
Fund Name Class 1 Class 2 Class 3 Class 4
=========================================================================
<S> <C> <C> <C> <C>
Prime 56.28 51.28 31.52 8.12
- -------------------------------------------------------------------------
Short-Term 55.68 50.68 30.92 7.82
- -------------------------------------------------------------------------
Core Bond 56.88 51.88 32.12 8.42
- -------------------------------------------------------------------------
Balanced 57.08 52.08 32.32 8.52
- -------------------------------------------------------------------------
Value Equity 58.14 53.14 33.38 9.05
- -------------------------------------------------------------------------
Small Cap 57.28 52.28 32.52 8.62
- -------------------------------------------------------------------------
International 59.48 54.48 44.48 9.72
=========================================================================
</TABLE>
- --------------------------
/1/ Article II of the Agreement provides that the Manager will assume all
expenses of each Fund, including the Manager's reasonable out-of-pocket
disbursements; provided, however, that the Trust will pay:
1. Taxes and corporate fees payable to governmental agencies;
2. Brokerage commissions (which may be higher than other brokers would
charge if paid to a broker which provides brokerage and research services to
the Manager for use in providing investment advice and management to the Fund
and other accounts over which the Manager exercises investment discretion) and
other capital items payable in connection with the purchase or sale of the
Fund's investments (The words "brokerage and research services" shall have the
meaning given in the Securities Exchange Act of 1934 and the Rules and
Regulations thereunder.);
3. Interest on account of any borrowing by the Fund;
4. Fees and expenses of the Trust's Trustees who are not interested persons
(as defined in the 1940 Act) of the Manager or of the Trust;
5. Fees payable to the Trust's certified independent public accountants;
6. Fees paid to the Trust's independent legal counsel;
7. Fees paid to the Fund's custodian;
8. Fees paid to the Fund's Investment Manager, and
9. Payments due pursuant to any 12b-1 Plan adopted by the Trust and
applicable to the Fund.
13
<PAGE>
Exhibit 8(c)
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
Among
-----
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY,
--------------------------------------------
MASSMUTUAL INSTITUTIONAL FUNDS,
-------------------------------
And
---
INVESTORS BANK & TRUST COMPANY
------------------------------
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
This TRANSFER AGENCY AND SERVICE AGREEMENT (the "Transfer Agency Agreement")
effective as of the 29th day of August, 1994, by and among Massachusetts Mutual
Life Insurance Company, a Massachusetts corporation ("MassMutual"), MassMutual
Institutional Funds, a Massachusetts business trust (the "Trust"), and Investors
Bank & Trust Company, a Massachusetts trust company (the "Bank").
WHEREAS, the Trust was organized on or about May 28, 1993 and is registered
as an open end management investment company under the Investment Company Act of
1940, as amended (the "1940 Act");
WHEREAS, the Trust is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets ("Fund(s)") and the Trust is authorized to issue multiple
classes in such series ("Class(s)");
WHEREAS, the Trust intends to initially offer shares in at least seven
separate series, (such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Article 17, being herein referred to as the "Fund(s)") and each Fund intends to
issue multiple classes of shares;
WHEREAS, MassMutual has entered into administrative, shareholder services,
and investment management agreements with each of the Funds, which agreements
impose upon MassMutual the obligation to provide, or cause to be provided,
certain services, including transfer agency services;
WHEREAS, the Bank is duly registered as a transfer agent as provided in
Section 17A(c) of the Securities Exchange Act of 1934, as amended, (the "1934
Act"); and
WHEREAS, MassMutual and the Trust desire to appoint the Bank as the Transfer
Agent for the Trust and as its dividend disbursing agent and agent in connection
with certain other activities, and the Bank desires to accept such appointment.
NOW, THEREFORE, in consideration of the mutual covenants herein set forth,
MassMutual and the Bank agree as follows:
ARTICLE 1: Terms of Appointment and Duties of the Bank
------------------------------------------------------
1.01 Subject to the terms and conditions set forth in this Agreement, the
Trust hereby employs and appoints the Bank to act as, and the Bank agrees to act
as, (i) transfer agent for each of the Fund(s)' authorized and issued shares of
beneficial interest ("Shares"), (ii) dividend disbursing agent and (iii) agent
in connection with any accumulation, open-account or similar plans, including
without limitation any periodic investment plan or periodic withdrawal program,
provided to the shareholders of the Trust appearing on the record books of the
Bank ("Shareholders") as set out in the currently effective Prospectus and
Statement of Additional Information of the Trust, as each may be amended from
time to time (the "Prospectus").
<PAGE>
1.02 Without limiting the generality of the foregoing, the Bank agrees that
it will perform the following specific services for each Fund in accordance with
Trust policies set forth in the Prospectus or established by the Trust's Board
of Trustees:
(a) In connection with procedures established from time to time by
agreement between MassMutual and the Bank, the Bank shall:
(i) Receive orders and payment for the purchase of Shares from
MassMutual, and promptly deliver payment and appropriate documentation
therefor to the custodian of the Trust appointed by the Board of
Trustees of the Trust (the "Custodian").
(ii) Hold issued Shares in the appropriate Shareholder account.
(iii) Receive redemption requests and redemption directions from
MassMutual and deliver the appropriate documentation therefor to the
Custodian.
(iv) At the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption of shares, pay over
or cause to be paid over to MassMutual in the appropriate manner such
monies as instructed by MassMutual for the redeeming Shareholders.
(v) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions from MassMutual's Trade
Summary File, within time frames mutually agreed upon.
(vi) Prepare and transmit payments for dividends and distributions
declared by the Trust on behalf of a Fund to MassMutual.
(vii) Create and maintain all necessary records including those
specified in Article 10 hereof, in accordance with all applicable
laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act, and those records
pertaining to the various functions performed by it hereunder. All
records shall be available for inspection and use by the Trust and its
designate. Where applicable, such records shall be maintained by the
Bank for the periods and in the places required by Rule 31a-2 under
the 1940 Act.
(viii) Make available during regular business hours all records and
other data created and maintained pursuant to this Agreement for
reasonable audits and inspections by the Trust, or any person retained
by the Trust. Upon reasonable notice by the Trust, the Bank shall make
available during regular business hours its facilities and premises
employed in connection with its performance of this Agreement for
reasonable visitation by the Trust, or any person retained by the
Trust.
(ix) Record the issuance of Shares and maintain, pursuant to Rule
17Ad-10(e) under the 1934 Act, a record of the total number of Shares
by Fund and by Class which are authorized, based upon data provided to
it by the Trust, and issued and outstanding. The Bank shall also
provide the Trust on a regular basis with the total number of Shares
which are authorized and issued and outstanding and shall have no
obligation, when recording the issuance of Shares, to monitor the
issuance of such Shares or to
<PAGE>
take cognizance of any laws relating to the issue or sale of such
Shares, which functions shall be the sole responsibility of the
Trust.
(b) In addition to and not in lieu of the services set forth in the above
paragraph (a), the Bank shall:
(i) Except as provided in paragraph 1.03 herein or in writing by the
Bank, the Trust and MassMutual, perform all of the customary services of a
transfer agent, dividend disbursing agent and, as relevant, agent in connection
with accumulation, open-account or similar plans (including without limitation
any periodic investment plan or periodic withdrawal program), including
maintaining all Shareholder accounts.
(ii) Provide a system which will enable the Trust to monitor the total
number of shares sold in each State or jurisdiction in which Shares are sold and
monitor the daily activity for each State or jurisdiction in which shares of the
Trust are registered.
(c) The Bank shall utilize a system to identify all share transactions
which involve purchase and redemption orders that are processed at a time other
than the time of the computation of net asset value per share next computed
after receipt of such orders, and shall compute the net effect upon the Fund(s)
of such transactions so identified on a daily and cumulative basis.
1.03 The Bank shall not be responsible for providing Shareholder services,
including, but not limited to: preparing shareholder meeting lists, mailing
proxies, receiving and tabulating proxies, preparing and mailing Shareholder
reports and prospectuses to current Shareholders, withholding federal taxes and
prepare and file U.S. Treasury Department Forms 1099 and other appropriate forms
required with respect to dividends and distributions by federal authorities for
all Shareholders.
ARTICLE 2: Sale of Trust Shares
-------------------------------
2.01 Whenever the Trust shall sell or cause to be sold any Shares of a
Fund, MassMutual shall deliver or cause to be delivered to the Bank a document
or electronic file specifying: (i) the name of the Fund and Class thereof whose
Shares were sold; (ii) the number of Shares sold, trade date, and price;
(iii) the amount of money to be delivered to the Custodian for the sale of such
Shares and specifically allocated to such Fund; and (iv) in the case of a new
account, a new account application or sufficient information to establish an
account, and (v) the name of the holder.
2.02 The Bank will, upon receipt by it of a check or other payment
identified by it as an investment in Shares of one of the Funds and drawn or
endorsed to the Bank as agent for, or identified as being for the account of,
one of the Funds, promptly deposit such check or other payment to the
appropriate account postings necessary to reflect the investment. The Bank will
notify the Trust, or its designate, and the Custodian of all purchases and
related account adjustments.
2.03 Under procedures established by mutual agreement between MassMutual
and the Bank, the Bank shall credit to the purchaser or his authorized agent's
account, as identified by MassMutual, such Shares, computed to the nearest three
decimal points, as he is entitled to receive, based on the appropriate net asset
value of the Funds' Shares, determined in accordance
<PAGE>
with the prospectus and applicable Federal law or regulation. In issuing Shares
to a purchaser or his authorized agent, the Bank shall be entitled to rely upon
the latest directions, if any, previously received by the Bank from MassMutual
on behalf of the purchaser or his authorized agent concerning the delivery of
such Shares. Unless otherwise agreed upon, the Bank shall have no obligation to
provide confirmations of share transactions.
2.04 The Bank shall not be required to issue any Shares of the Trust when
it has received a written instruction from MassMutual or the Trust or written
notification from any appropriate Federal or State authority that the sale of
the Shares of the Fund(s) in question has been suspended or discontinued, and
the Bank shall be entitled to rely upon such written instructions or written
notification.
2.05 Upon the issuance of any Shares of any Fund(s) in accordance with
foregoing provisions of this Section, the Bank shall not be responsible for the
payment of any original issue or other taxes, if any, required to be paid by the
Trust in connection with such issuance.
2.06 The Bank may establish such additional rules and regulations governing
the transfer or registration of Shares as it may deem advisable and consistent
with such rules and regulations generally adopted by transfer agents (not
inconsistent with this Agreement). Moreover, with the written consent of the
Trust, the Bank may adopt any other rules and regulations.
ARTICLE 3: Returned Checks
--------------------------
3.01 In the event that any check or other order for the transfer of money
is returned unpaid for any reason, the Bank will take such steps as the Bank
may, in its discretion, deem appropriate to protect the Trust from financial
loss or as the Trust or its designate may instruct. Provided that the standard
procedures, as agreed upon from time to time, between the Trust and the Bank,
regarding purchases and redemptions of Shares, are adhered to by the Bank, the
Bank shall not be liable for any loss suffered by a Fund as a result of returned
or unpaid purchase or redemption transactions. Legal or other expenses incurred
to collect amounts owed to a Fund as a consequence of returned or unpaid
purchase or redemption transactions shall be an expense of that Fund.
ARTICLE 4: Redemptions
----------------------
4.01 Shares of any Fund may be redeemed in accordance with the procedures
set forth in the Prospectus and the Bank will duly process all redemption
requests transmitted to it by MassMutual in accordance with Trust policies set
forth in the Prospectus.
ARTICLE 5: Transfers and Exchanges
----------------------------------
5.01 The Bank is authorized to review and process transfers of Shares of
each Fund, exchanges between Funds on the records of the Funds maintained by the
Bank, and exchanges between the Trust and any other entity as may be permitted
by the Prospectus of the Trust and in accordance with instructions from
MassMutual. The Bank will, upon an order to transfer Shares by or on behalf of
the registered holder thereof in proper form, credit the same to the transferee
on its books. If Shares are to be exchanged for Shares of another Fund, the Bank
will process such exchange in the same manner as a redemption and sale of
Shares, except that it may in its reasonable discretion waive requirements for
information and documentation.
<PAGE>
ARTICLE 6: Right to Seek Assurances
-----------------------------------
6.01 The Bank reserves the right to refuse to transfer or redeem Shares
until it is satisfied that the requested transfer or redemption is legally
authorized, and it shall incur no liability for the refusal, in good faith, to
make transfers or redemptions which the Bank, in its reasonable judgment, deems
improper or unauthorized, or until it is satisfied that there is no basis for
any claims adverse to such transfer or redemption. The Bank may, in effecting
transfers, rely upon the provisions of the Uniform Act for the Simplification of
Fiduciary Security Transfers or the Uniform Commercial Code, as the same may be
amended from time to time, which in the opinion of legal counsel for the Trust
protect it in not requiring certain documents in connection with the transfer or
redemption of Shares of any Fund, and the Trust shall indemnify the Bank for any
act done or omitted by it in reliance upon such laws or opinions of counsel of
the Trust.
ARTICLE 7: Distributions
------------------------
7.01 The Trust will promptly notify the Bank of the declaration of any
dividend or distribution. The Trust shall furnish to the Bank a resolution of
the Board of Trustees of the Trust certified by the Secretary (a "Certificate"):
(a) authorizing the declaration of dividends on a specified periodic basis
and authorizing the Bank to rely on oral instructions or a Certificate
specifying the date of the declaration of such dividend or distribution, the
date of payment thereof, the record date as of which Shareholders entitled to
payment shall be determined and the amount payable per share to Shareholders of
record as of the date and the total amount payable to the Bank on the payment
date; or
(b) setting forth the date of the declaration of any dividend or
distribution by a Fund, the date of payment thereof, the record date as of which
Shareholders entitled to payment shall be determined, and the amount payable per
share to the Shareholders of record as of the record date and the total amount
payable to the Bank as the Trust's disbursing agent on the payment date.
7.02 To the extent that dividends are not automatically reinvested, the
Bank, on behalf of the Trust, shall instruct the Custodian to place in a
dividend disbursing account funds equal to the cash amount of any dividend or
distribution to be paid out. The Bank will calculate, prepare and mail checks to
(at the address as it appears on the records of the Bank), or (where
appropriate) credit any dividend or distribution to the account of Fund
Shareholders and maintain and safeguard all underlying records.
7.03 The Bank will promptly replace lost checks at its discretion and in
conformity with regular business practices.
7.04 The Bank will maintain all records necessary to reflect the crediting
of dividends or distributions which are reinvested in Shares of the Trust,
including without limitation daily dividends or distributions.
7.05 The Bank shall not be liable for any improper payments made in
accordance with a resolution of the Trust of the Board of Trustees of the Trust.
<PAGE>
7.06 If the Bank shall not receive from the Custodian sufficient cash to
make payment to all Shareholders of the Trust as of the record date, the Bank
shall, upon notifying the Trust, withhold payment to all Shareholders of record
as of the record date until such sufficient cash is provided to the Bank.
ARTICLE 8: Other Duties
-----------------------
8.01 In addition to the duties expressly provided for herein, the Bank
shall perform such other duties and functions and shall be paid such amounts
therefor as may from time to time be agreed to in writing.
ARTICLE 9: Taxes
----------------
9.01 MassMutual will file all tax information returns concerning
distributions such as the payment of dividends and capital gain distributions
and tax withholding with the proper Federal, State and local authorities as are
required by law to be filed by the Trust and shall withhold such sums as are
required to be withheld by applicable law.
ARTICLE 10: Books and Records
-----------------------------
10.01 The Bank shall maintain confidential records showing for each
Shareholder's account the following:
(a) names, addresses and tax identification numbers;
(b) numbers of Shares of each Fund and Class held;
(c) historical information regarding the account of each Shareholder,
including dividends and distributions paid and the date and price of all
transactions on a Shareholder's account;
(d) any stop or restraining order placed against a Shareholder's account;
(e) information with respect to withholdings by Fund;
(f) any capital gain or dividend reinvestment order, plan application,
dividend address and correspondence relating to the current maintenance of a
Shareholder's account by Fund;
(g) [withhold]
(h) any information required in order for the Bank to perform the
calculations contemplated or required by this Agreement; and
(i) such other information and data as may be required by applicable law or
as mutually agreed upon by both parties.
10.02 Any records required to be maintained by Rule 31a-1 under the 1940
Act will be preserved for the periods prescribed in Rule 31a-2 under the 1940
Act. Such records may be inspected by MassMutual or the Trust at reasonable
times. The Bank may, at its option at any time, and shall forthwith upon
MassMutual's or the Trust's demand, turn over to MassMutual or
<PAGE>
the Trust and cease to retain in the Bank's files, records and documents created
and maintained by the Bank in performance of its service or for its protection.
At the end of the six-year retention period, such periods and documents will
either be turned over to MassMutual or the Trust, or destroyed in accordance
with the Trust's authorization.
10.03 Procedures applicable to the services to be performed hereunder may
be established from time to time by agreement between the Fund(s) and the Bank.
The Bank shall have the right to utilize any shareholder accounting and
recordkeeping systems which, in its opinion, qualifies to perform any services
to be performed hereunder. The Bank shall keep records relating to the services
performed hereunder, in the form and manner as it may deem advisable.
ARTICLE 11: Fees and Expenses.
------------------------------
11.01 For performance by the Bank pursuant to this Agreement, MassMutual
agrees to pay the Bank an annual maintenance fee for each Shareholder account as
set out in a schedule agreed to by all parties from time to time. Such fees and
out-of-pocket expenses and advances identified under Section 11.02 below may be
changed from time to time subject to mutual written agreement between the
MassMutual and the Bank.
11.02 In addition to the fee paid under Section 11.01 hereof, MassMutual
agrees to reimburse the Bank for its out-of-pocket expenses for the items set
forth in a schedule agreed to by all parties from time to time. In addition,
any other expenses incurred by the Bank at the specific written request of
MassMutual, including, without limitation, any special equipment or supplies
specifically ordered by MassMutual or required to be purchased by MassMutual,
will be reimbursed by MassMutual.
11.03 MassMutual agrees to pay all fees and reimbursable expenses within
thirty days following its receipt of a billing notice in accordance with
procedures agreed upon by the parties to this Transfer Agency Agreement. Postage
for mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to the Bank by MassMutual at least seven
(7) days prior to the mailing date of such material.
ARTICLE 12: Representations and Warranties of the Bank
------------------------------------------------------
12.01 The Bank represents and warrants to MassMutual and the Trust that:
(a) It is a trust company duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
(b) It is empowered under applicable laws and by its charter and by-laws to
enter into and perform this Transfer Agency Agreement.
(c) All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
(d) It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Transfer Agency Agreement.
<PAGE>
ARTICLE 13: Representations and Warranties of the Trust and MassMutual
----------------------------------------------------------------------
13.01 The Trust represents and warrants to the Bank that:
(a) It is a business trust duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
(b) It is empowered under applicable laws and by its trust documents and by-
laws to enter into and perform this Transfer Agency Agreement.
(c) All proceedings required by said trust documents and by-laws have been
taken to authorize it to enter into and perform this Agreement.
(d) The Trust is an open-end investment company registered under the 1940
Act.
(e) A registration statement on Form N-1A (including a prospectus and
statement of additional information) under the Securities Act of 1933 and the
1940 Act has been filed with the Commission and is currently effective or will
become effective prior to the Trust commencing the offer of its shares for sale
to the public, and will remain effective, and appropriate state securities law
filings have been made and will continue to be made, with respect to all Shares
of the Trust being offered for sale.
(f) When Shares are hereafter issued in accordance with the terms of the
Prospectus, such Shares shall be validly issued, fully paid and nonassessable by
the Fund(s).
13.02 MassMutual represents and warrants to the Bank that:
(a) It is a life insurance company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
(c) It is empowered under applicable laws and by its charter and by-laws to
enter into and perform this Transfer Agency Agreement.
(d) All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Transfer Agency Agreement.
ARTICLE 14: Indemnification
---------------------------
14.01 Except as set forth in paragraphs 14.02 and 14.05 hereof, the Bank
shall not be responsible for, and MassMutual shall indemnify and hold the Bank
harmless from and against, any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liability arising out of or attributable to:
(a) All actions taken or omitted to be taken by the Bank or its agent or
subcontractors in good faith in reliance on, or use by the Bank or its agents or
subcontractors of, information, records and documents which
(i) are received by the Bank or its agents or subcontractors and furnished
to it by or on behalf of the Fund(s),
<PAGE>
(ii) have been prepared and/or maintained by the Fund(s) or any other
person or firm on behalf of the Fund(s), and
(iii) were received by the Bank or its agents or subcontractors from a
prior transfer agent.
(b) Any action taken or omitted to be taken by the Bank in connection with
its appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed.
(c) MassMutual's or the Trust's refusal or failure to comply with the
terms of this Agreement, or which arise out of MassMutual's, the Trust's or
their directors', officers', employees', agents' or subcontractors', negligence,
willful misconduct, bad faith, reckless disregard of duties hereunder, including
knowing violations of law, or fraud or which arise out of the breach of any
representation or warranty hereunder.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of, any instructions or requests, whether written or oral, of an
officer or employee of MassMutual or the Trust.
(e) The offer or sale of Shares by the Trust in violation of any
requirement under the federal securities laws or regulations or the securities
laws or regulations of any State that such Shares be registered in such State or
in violation of any stop order or other determination or ruling by any federal
agency or any State with respect to the offer or sale of such Shares in such
state.
(f) The failure of MassMutual or the Trust to convey information regarding
share purchases and redemptions in a timely manner.
(g) On issues that are legal in nature, the Bank will be entitled to
receive and act upon the advice of independent legal counsel of its own
selection, provided such counsel is chosen with reasonable care and which can be
counsel for the Trust, and will be without liability for any action taken or
thing done or omitted to be done in accordance with this Agreement in good faith
conformity with such advice. Except as otherwise agreed to by the Trust, the
Bank shall pay the fees and expenses of such counsel, unless such counsel is the
Trust's counsel;
14.02 Indemnification by MassMutual or the Trust under this Transfer Agency
Agreement shall not apply to actions or omissions of the Bank or its directors,
officers, employees, agents or subcontractors in cases of its or their own
negligence, willful misconduct, bad faith, reckless disregard of duties
hereunder, including knowing violation of law, or fraud.
14.03 At any time the Bank may apply to any officer of MassMutual or the
Trust for instructions, with respect to any matter arising in connection with
the services to be performed by the Bank under this Transfer Agency Agreement.
The Bank and its agents or subcontractors shall not be liable and shall be
indemnified by MassMutual and the Trust for any action taken or omitted by it in
reliance upon such instructions except for a knowing violation of law. The Bank,
its agents and subcontractors shall be protected and indemnified in acting upon
any paper or document furnished by or on behalf of the Fund(s), reasonably
believed to be genuine and to have been signed by the proper person or persons,
or upon any instruction, information, data, records
<PAGE>
or documents provided the Bank or its agents or subcontractors by machine
readable input, telex, CRT data entry or other similar means authorized by the
Fund(s), and shall not be held to have notice of any change of authority of any
person, until written notice thereof has been sent by MassMutual or the Fund(s)
to the Bank.
14.04 In the event either party is unable to perform its obligations under
the terms of this Transfer Agency Agreement because of acts of God, interruption
of electrical power or other utilities, equipment or transmission failure or
damage reasonably beyond its control, or other causes reasonably beyond its
control, such party shall not be liable to the other for any damages resulting
from such failure to perform or otherwise from such causes. The Bank, the Trust
and MassMutual shall notify each other as soon as reasonably possible following
the occurrence of an event described in this subsection.
14.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder as contemplated by this Agreement.
14.06 In order that the indemnification provisions contained in this
Article 14 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking the indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent, which consent shall not be unreasonably
withheld.
ARTICLE 15: Covenants of MassMutual and the Trust and the Bank
--------------------------------------------------------------
15.01 MassMutual shall promptly furnish to the Bank the following:
(a) Officers' Certificates stating that the Trust Officer and the
MassMutual Officer signing this Transfer Agency Agreement have the authority to
bind MassMutual and the Trust, respectively, to the terms and conditions of this
Agreement, to appoint the Bank as Transfer Agent as provided herein, and to
execute and deliver this Transfer Agency Agreement.
(b) A copy of the trust documents and by-laws of the Trust and all
amendments thereto.
(c) Copies of each vote of the Trustees designating authorized persons to
give instructions to the Bank, and a Certificate providing specimen signatures
for such authorized persons.
(d) Certificates as to any change in any officer or Trustee of the Trust.
(e) All account application forms and other documents relating to
shareholder accounts or relating to any plan, program or service offered by the
Trust.
(f) A list of all Shareholders of the Fund(s) with the name, address and
tax identification number of each Shareholder, and the number of Shares of the
Fund(s) held by each, certificate
<PAGE>
numbers and denominations (if any certificates have been issued), lists of any
account against which stops have been placed, together with the reasons for said
stops, and the number of Shares redeemed by the Fund(s).
(g) An opinion of counsel for the Trust with respect to the validity of
the Shares and the status of such Shares under the Securities Act of 1933.
(h) Copies of the Fund(s) registration statement on Form N-1A as amended
and declared effective by the Securities and Exchange Commission and all post-
effective amendments thereto.
(i) Such other certificates, documents or opinions as may mutually be
deemed necessary or appropriate for the Bank in the proper performance of its
duties.
15.02 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Trust for safekeeping of check forms and
facsimile signature imprinting devices, if any; and for the preparation or use,
and for keeping account of, such certificates, forms and devices.
15.03 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the 1940 Act and the Rules thereunder, the Bank agrees
that all such records prepared or maintained by the Bank relating to the
services to be performed by the Bank hereunder are the confidential property of
the Trust and will be preserved, maintained and made available in accordance
with such Section and Rules, and will be surrendered to the Trust on and in
accordance with its request.
15.04 The Bank, MassMutual and the Trust agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Transfer Agency Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be required by law.
15.05 In case of any requests or demands for the inspection of the
Shareholder records of the Trust, the Bank will endeavor to notify MassMutual or
the Trust and to secure instructions from an authorized officer of the Trust as
to such instruction. The Bank reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel that it
may be held liable for the failure to exhibit the Shareholder records to such
person.
ARTICLE 16: Term of Agreement
-----------------------------
16.01 This Agreement shall become effective with respect to each Fund on
the date hereof (the "Effective Date") and shall continue in effect for twelve
months from the Effective Date (the "Initial Term") and from year to year
thereafter with respect to each Fund, provided that subsequent to the Initial
Term, this Transfer Agency Agreement may be terminated by either MassMutual or
the Bank at any time without payment of any penalty upon ninety (90) days
written notice to the other. In the event such notice is given by MassMutual,
such notice shall also designate a successor transfer agent.
<PAGE>
ARTICLE 17: Additional Funds
----------------------------
17.01 In the event that the Trust establishes one or more series of Shares
in addition to the initial series with respect to which it desires to have the
Bank render services as transfer agent under the terms hereof, it shall so
notify the Bank in writing, and if the Bank agrees in writing to provide such
services, such series of Shares shall become a Fund hereunder.
ARTICLE 18: Assignment
----------------------
18.01 Except as provided in Section 18.03 hereof, neither this Transfer
Agency Agreement nor any rights or obligations hereunder may be assigned by
either party without the written consent of the other party.
18.02 This Transfer Agency Agreement shall inure to the benefit of and be
binding upon the parties and their respective permitted successors and assigns.
18.03 The Bank, may without further consent on the part of MassMutual,
subcontract for the performance of any of the services to be provided hereunder
to third parties, including any affiliate of the Bank, provided that the Bank
shall give MassMutual 60 days' prior notice or such shorter period as is
practicable under the circumstances, and provided further that the Bank shall
remain liable hereunder for any acts or omissions of any subcontractor as if
performed by the Bank.
ARTICLE 19: Amendment
---------------------
19.01 This Transfer Agency Agreement may be amended or modified by a
written agreement executed by both parties.
ARTICLE 20: Massachusetts Law to Apply
--------------------------------------
20.01 This Transfer Agency Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
ARTICLE 21: Merger of Agreement and Severability
------------------------------------------------
21.01 This Transfer Agency Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect to
the subject hereof whether oral or written.
21.02 In the event any provision of this Transfer Agency Agreement shall be
held unenforceable or invalid for any reason, the remainder of the Agreement
shall remain in full force and effect.
21.03 This Transfer Agency Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original; but such
counterparts shall together, constitute only one instrument.
<PAGE>
ARTICLE 22: Notices
-------------------
22. 01 Any notice or other instrument in writing authorized or required by
this Transfer Agency Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below:
To the Bank: Investors Bank & Trust Company
P.O. Box 1537
Boston, Massachusetts 02205-1537
Attention: Richard Boorman
To MassMutual: Massachusetts Mutual Life
Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Edmond F. Ryan
Vice President
If to either, a copy to:
To the Trust: MassMutual Institutional Funds
1295 State Street
Springfield, Massachusetts 01111
Attention: Peter A. Feige
ARTICLE 23: Disclaimer and Limitation of Liability
--------------------------------------------------
23.01 A copy of the Trust's Agreement and Declaration of Trust is on file
with the Secretary of The Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Board of Trustees of the
Trust as Trustees and not individually and that obligations of this instrument
are not binding upon any of the Trustees or shareholders individually but are
binding upon the assets and property of the Trust; provided, however, that the
Agreement and Declaration of Trust of the Trust provides that the assets of a
particular series of the Trust shall under no circumstances be charged with
liabilities attributable to any other series of the Trust and that all persons
extending credit to, or contracting with or having any claim against a
particular series of the Trust shall look only to the assets of that particular
series for payment of such credit, contract or claim.
ARTICLE 24: Insurance
---------------------
24.01 The Bank shall at all times maintain insurance coverages adequate for
the nature of its operations, including directors and officers, errors and
omissions, and fidelity bond insurance coverages. The Bank shall have the Trust
named a Certificate Holder on each of these coverages, and provide MassMutual
with Certificates of Insurance at each policy renewal. The Certificates shall
provide that MassMutual receive a minimum of twenty (20) days' notice of
cancellation, non-renewal, or material change of policy coverages. The Bank
shall provide MassMutual with copies of its insurance policies, upon request.
If at any time, due to a material adverse change in policy coverages, MassMutual
reasonably believes that such coverages are insufficient in any
<PAGE>
material respect, or if any policy is placed with an insurer with an A.M. Best
rating of less than A 12, the Bank shall take reasonable steps to satisfy
MassMutual's concerns.
24.02 Notwithstanding anything in this Agreement to the contrary, the Bank
shall have in place reasonable business continuity and disaster recovery
procedures and systems and shall provide MassMutual, at least annually, test
results of such procedures and systems.
ARTICLE 25: Miscellaneous
-------------------------
25.01 If the Bank acts upon instructions from MassMutual or the Trust, even
if conflicting instructions are subsequently received, it shall be indemnified
and held harmless by the Trust and MassMutual for any losses or claims that
might arise from its actions.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Transfer Agency
Agreement to be executed in their names and on their behalf under their seals by
and through their duly authorized officers.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By:
---------------------------------------
Edmond F. Ryan
Vice President
INVESTORS BANK & TRUST COMPANY
By:
---------------------------------------
Name:
Title:
AGREED TO AND ACCEPTED BY
MASSMUTUAL INSTITUTIONAL FUNDS
By:
----------------------------------------
Peter A. Feige
Vice President
<PAGE>
Exhibit 11(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
MassMutual Institutional Funds:
We consent to the inclusion in Post-Effective Amendment No. 4 to the
Registration Statement under the Securities Act of 1933 of MassMutual
Institutional Funds on Form N-1A (File No. 33-73824) of our report dated
February 14, 1997, on our audit of the financial statements and financial
highlights of MassMutual Institutional Funds (comprising the MassMutual Prime
Fund, MassMutual Short-Term Bond Fund, MassMutual Core Bond Fund, MassMutual
Balanced Fund, MassMutual Value Equity Fund, MassMutual Small Cap Value Equity
Fund, and MassMutual International Equity Fund), which report is included in the
Annual Report for the year ended December 31, 1996, which is included in this
Registration Statement. We also consent to the reference to our Firm under the
caption "Experts" in the Statement of Additional Information.
/s/ Coopers & Lybrand L.L.P.
Springfield, Massachusetts
September 30, 1997
<PAGE>
Exhibit 11 c
POWER OF ATTORNEY
-----------------
The Undersigned, Gary E. Wendlandt, Trustee, Chairman and Chief
Executive Officer of MassMutual Institutional Funds (the "Fund"), does hereby
constitute and appoint Stephen L. Kuhn, Richard M. Howe, Margaret Sheehan and
Peter MacDougall, and each of them individually, as his true and lawful
attorneys and agents.
Such attorneys and agents shall have full power of substitution and to
take any and all action and execute any and all instruments on the Undersigned's
behalf as Chairman and Chief Executive Officer of the Fund that said attorneys
and agents may deem necessary or advisable to enable the Fund to comply with the
Securities Act of 1933, as amended (the "1933 Act"), the Investment Company Act
of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of the Fund to be offered
by the Fund. It specifically authorizes such attorneys and agents to sign the
Undersigned's name on his behalf as Trustee, Chairman and Chief Executive
Officer of the Fund to the Registration Statements and to any instruments or
documents filed or to be filed with the Commission under the 1933 Act and the
1940 Act in connection with such Registration Statements, including any and all
amendments to such statements, documents, or instruments.
The Undersigned hereby ratifies and confirms all that said attorneys
and agents shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the undersigned has set his hand this 5th day of
August, 1994.
/s/ Gary E. Wendlandt
-------------------------------
Gary E. Wendlandt
Trustee, Chairman and Chief
Executive Officer of MassMutual
Institutional Funds
Witness:
/s/ Anne V. Moszynski
- ----------------------
<PAGE>
Exhibit 11 d
POWER OF ATTORNEY
-----------------
The Undersigned, Ronald J. Abdow, Trustee of MassMutual Institutional
Funds (the "Fund"), does hereby constitute and appoint Stephen L. Kuhn, Richard
M. Howe, Margaret Sheehan and Peter MacDougall, and each of them individually,
as his true and lawful attorneys and agents.
Such attorneys and agents shall have full power of substitution and to
take any and all action and execute any and all instruments on the Undersigned's
behalf as Trustee of the Fund that said attorneys and agents may deem necessary
or advisable to enable the Fund to comply with the Securities Act of 1933, as
amended (the "1933 Act"), the Investment Company Act of 1940, as amended (the
"1940 Act"), and any rules, regulations, orders or other requirements of the
Securities and Exchange Commission (the "Commission") thereunder. This power of
attorney applies to the registration, under the 1933 Act and the 1940 Act, of
shares of beneficial interest of the Fund to be offered by the Fund. It
specifically authorizes such attorneys and agents to sign the Undersigned's name
on his behalf as Trustee of the Fund to the Registration Statements and to any
instruments or documents filed or to be filed with the Commission under the 1933
Act and the 1940 Act in connection with such Registration Statements, including
any and all amendments to such statements, documents, or instruments.
The Undersigned hereby ratifies and confirms all that said attorneys
and agents shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the undersigned has set his hand this 5th day of
August, 1994.
/s/ Ronald J. Abdow
-------------------------
Ronald J. Abdow
Trustee of MassMutual
Institutional Funds
Witness:
/s/ Anne V. Moszynski
- ----------------------
<PAGE>
Exhibit 11 e
POWER OF ATTORNEY
-----------------
The Undersigned, Charles J. McCarthy, Trustee of MassMutual
Institutional Funds (the "Fund"), does hereby constitute and appoint Stephen L.
Kuhn, Richard M. Howe, Margaret Sheehan and Peter MacDougall, and each of them
individually, as his true and lawful attorneys and agents.
Such attorneys and agents shall have full power of substitution and to
take any and all action and execute any and all instruments on the Undersigned's
behalf as Trustee of the Fund that said attorneys and agents may deem necessary
or advisable to enable the Fund to comply with the Securities Act of 1933, as
amended (the "1933 Act"), the Investment Company Act of 1940, as amended (the
"1940 Act"), and any rules, regulations, orders or other requirements of the
Securities and Exchange Commission (the "Commission") thereunder. This power of
attorney applies to the registration, under the 1933 Act and the 1940 Act, of
shares of beneficial interest of the Fund to be offered by the Fund. It
specifically authorizes such attorneys and agents to sign the Undersigned's name
on his behalf as Trustee of the Fund to the Registration Statements and to any
instruments or documents filed or to be filed with the Commission under the 1933
Act and the 1940 Act in connection with such Registration Statements, including
any and all amendments to such statements, documents, or instruments.
The Undersigned hereby ratifies and confirms all that said attorneys
and agents shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the undersigned has set his hand this 5th day of
August, 1994.
/s/ Charles J. McCarthy
-----------------------------
Charles J. McCarthy
Trustee of MassMutual
Institutional Funds
Witness:
/s/ Anne V. Moszynski
- ----------------------
<PAGE>
Exhibit 11 f
POWER OF ATTORNEY
-----------------
The Undersigned, John H. Southworth, Trustee of MassMutual
Institutional Funds (the "Fund"), does hereby constitute and appoint Stephen L.
Kuhn, Richard M. Howe, Margaret Sheehan and Peter MacDougall, and each of them
individually, as his true and lawful attorneys and agents.
Such attorneys and agents shall have full power of substitution and to
take any and all action and execute any and all instruments on the Undersigned's
behalf as Trustee of the Fund that said attorneys and agents may deem necessary
or advisable to enable the Fund to comply with the Securities Act of 1933, as
amended (the "1933 Act"), the Investment Company Act of 1940, as amended (the
"1940 Act"), and any rules, regulations, orders or other requirements of the
Securities and Exchange Commission (the "Commission") thereunder. This power of
attorney applies to the registration, under the 1933 Act and the 1940 Act, of
shares of beneficial interest of the Fund to be offered by the Fund. It
specifically authorizes such attorneys and agents to sign the Undersigned's name
on his behalf as Trustee of the Fund to the Registration Statements and to any
instruments or documents filed or to be filed with the Commission under the 1933
Act and the 1940 Act in connection with such Registration Statements, including
any and all amendments to such statements, documents, or instruments.
The Undersigned hereby ratifies and confirms all that said attorneys
and agents shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the undersigned has set his hand this 5th day of
August, 1994.
/s/ John H. Southworth
----------------------------
John H. Southworth
Trustee of MassMutual
Institutional Funds
Witness:
/s/ Anne V. Moszynski
- ----------------------
<PAGE>
Exhibit 11 (g)
POWER OF ATTORNEY
-----------------
The Undersigned, Mary E. Boland, Trustee of MassMutual Institutional
Funds (the "Fund"), does hereby constitute and appoint Stephen L. Kuhn, Richard
M. Howe, Margaret Sheehan and Peter MacDougall, and each of them individually,
as his true and lawful attorneys and agents.
Such attorneys and agents shall have full power of substitution and to
take any and all action and execute any and all instruments on the Undersigned's
behalf as Trustee of the Fund that said attorneys and agents may deem necessary
or advisable to enable the Fund to comply with the Securities Act of 1933, as
amended (the "1933 Act"), the Investment Company Act of 1940, as amended (the
"1940 Act"), and any rules, regulations, orders or other requirements of the
Securities and Exchange Commission (the "Commission") thereunder. This power of
attorney applies to the registration, under the 1933 Act and the 1940 Act, of
shares of beneficial interest of the Fund to be offered by the Fund. It
specifically authorizes such attorneys and agents to sign the Undersigned's name
on his behalf as Trustee of the Fund to the Registration Statements and to any
instruments or documents filed or to be filed with the Commission under the 1933
Act and the 1940 Act in connection with such Registration Statements, including
any and all amendments to such statements, documents, or instruments.
The Undersigned hereby ratifies and confirms all that said attorneys
and agents shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the undersigned has set his hand this 5th day of
August, 1994.
/s/ Mary E. Boland
-------------------------
Mary E. Boland
Trustee of MassMutual
Institutional Funds
Witness:
/s/ Anne V. Moszynski
- ----------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 31
<NAME> CORE BOND FUND, CLASS 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 400,421,776
<INVESTMENTS-AT-VALUE> 404,065,980
<RECEIVABLES> 13,448,117
<ASSETS-OTHER> 1,302
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 417,515,399
<PAYABLE-FOR-SECURITIES> 135,859
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 316,687
<TOTAL-LIABILITIES> 452,546
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 401,263,451
<SHARES-COMMON-STOCK> 11,512
<SHARES-COMMON-PRIOR> 11,512
<ACCUMULATED-NII-CURRENT> 14,267,081
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,088,284)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,620,605
<NET-ASSETS> 123,665
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,275
<OTHER-INCOME> 0
<EXPENSES-NET> 999
<NET-INVESTMENT-INCOME> 3,276
<REALIZED-GAINS-CURRENT> (65)
<APPREC-INCREASE-CURRENT> (384)
<NET-CHANGE-FROM-OPS> 2,827
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,827
<ACCUMULATED-NII-PRIOR> 1,845,746
<ACCUMULATED-GAINS-PRIOR> (1,885,881)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 848,056
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,043,718
<AVERAGE-NET-ASSETS> 121,252
<PER-SHARE-NAV-BEGIN> 10.50
<PER-SHARE-NII> 0.28
<PER-SHARE-GAIN-APPREC> (0.04)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.74
<EXPENSE-RATIO> 1.66
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED
JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 32
<NAME> CORE BOND FUND, CLASS 2
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 400,421,776
<INVESTMENTS-AT-VALUE> 404,065,980
<RECEIVABLES> 13,448,117
<ASSETS-OTHER> 1,302
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 417,515,399
<PAYABLE-FOR-SECURITIES> 135,859
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 316,687
<TOTAL-LIABILITIES> 452,546
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 401,263,451
<SHARES-COMMON-STOCK> 11,631
<SHARES-COMMON-PRIOR> 11,631
<ACCUMULATED-NII-CURRENT> 14,267,081
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,088,284)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,620,605
<NET-ASSETS> 125,495
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,333
<OTHER-INCOME> 0
<EXPENSES-NET> 677
<NET-INVESTMENT-INCOME> 3,656
<REALIZED-GAINS-CURRENT> (66)
<APPREC-INCREASE-CURRENT> (388)
<NET-CHANGE-FROM-OPS> 3,202
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,202
<ACCUMULATED-NII-PRIOR> 1,845,746
<ACCUMULATED-GAINS-PRIOR> (1,885,881)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 848,056
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,043,718
<AVERAGE-NET-ASSETS> 122,878
<PER-SHARE-NAV-BEGIN> 10.51
<PER-SHARE-NII> 0.31
<PER-SHARE-GAIN-APPREC> (0.03)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.79
<EXPENSE-RATIO> 1.11
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 33
<NAME> CORE BOND FUND, CLASS 3
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 400,421,776
<INVESTMENTS-AT-VALUE> 404,065,980
<RECEIVABLES> 13,448,117
<ASSETS-OTHER> 1,302
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 417,515,399
<PAYABLE-FOR-SECURITIES> 135,859
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 316,687
<TOTAL-LIABILITIES> 452,546
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 401,263,451
<SHARES-COMMON-STOCK> 11,699
<SHARES-COMMON-PRIOR> 11,699
<ACCUMULATED-NII-CURRENT> 14,267,081
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,088,284)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,620,605
<NET-ASSETS> 126,549
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,365
<OTHER-INCOME> 0
<EXPENSES-NET> 468
<NET-INVESTMENT-INCOME> 3,897
<REALIZED-GAINS-CURRENT> (67)
<APPREC-INCREASE-CURRENT> (388)
<NET-CHANGE-FROM-OPS> 3,442
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,442
<ACCUMULATED-NII-PRIOR> 1,845,746
<ACCUMULATED-GAINS-PRIOR> (1,885,881)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 848,056
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,043,718
<AVERAGE-NET-ASSETS> 123,801
<PER-SHARE-NAV-BEGIN> 10.52
<PER-SHARE-NII> 0.33
<PER-SHARE-GAIN-APPREC> (0.03)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.82
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 34
<NAME> CORE BOND FUND, CLASS 4
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 400,421,776
<INVESTMENTS-AT-VALUE> 404,065,980
<RECEIVABLES> 13,448,117
<ASSETS-OTHER> 1,302
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 417,515,399
<PAYABLE-FOR-SECURITIES> 135,859
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 316,687
<TOTAL-LIABILITIES> 452,546
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 401,263,451
<SHARES-COMMON-STOCK> 38,753,822
<SHARES-COMMON-PRIOR> 34,141,922
<ACCUMULATED-NII-CURRENT> 14,267,081
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,088,284)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,620,605
<NET-ASSETS> 416,687,144
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13,402,719
<OTHER-INCOME> 0
<EXPENSES-NET> 992,213
<NET-INVESTMENT-INCOME> 12,410,506
<REALIZED-GAINS-CURRENT> (202,205)
<APPREC-INCREASE-CURRENT> (1,086,558)
<NET-CHANGE-FROM-OPS> 11,121,743
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,449,800
<NUMBER-OF-SHARES-REDEEMED> 4,837,900
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 59,988,205
<ACCUMULATED-NII-PRIOR> 1,845,746
<ACCUMULATED-GAINS-PRIOR> (1,885,881)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 848,056
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,043,718
<AVERAGE-NET-ASSETS> 379,669,294
<PER-SHARE-NAV-BEGIN> 10.45
<PER-SHARE-NII> 0.34
<PER-SHARE-GAIN-APPREC> (0.04)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.75
<EXPENSE-RATIO> 0.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED
JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 51
<NAME> VALUE EQUITY FUND, CLASS 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 1,932,556,830
<INVESTMENTS-AT-VALUE> 2,945,167,605
<RECEIVABLES> 22,562,796
<ASSETS-OTHER> 925
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,967,731,326
<PAYABLE-FOR-SECURITIES> 25,412,280
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,714,944
<TOTAL-LIABILITIES> 28,127,224
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,797,583,622
<SHARES-COMMON-STOCK> 10,640
<SHARES-COMMON-PRIOR> 10,640
<ACCUMULATED-NII-CURRENT> 26,785,147
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 103,624,558
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,012,610,775
<NET-ASSETS> 178,268
<DIVIDEND-INCOME> 2,038
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,349
<NET-INVESTMENT-INCOME> 689
<REALIZED-GAINS-CURRENT> 5,471
<APPREC-INCREASE-CURRENT> 18,502
<NET-CHANGE-FROM-OPS> 24,661
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 24,661
<ACCUMULATED-NII-PRIOR> 410,862
<ACCUMULATED-GAINS-PRIOR> 14,178,355
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,958,697
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,312,891
<AVERAGE-NET-ASSETS> 163,489
<PER-SHARE-NAV-BEGIN> 14.44
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 2.25
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.75
<EXPENSE-RATIO> 1.66
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED
JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 52
<NAME> VALUE EQUITY FUND, CLASS 2
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 1,932,556,830
<INVESTMENTS-AT-VALUE> 2,945,167,605
<RECEIVABLES> 22,562,796
<ASSETS-OTHER> 925
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,967,731,326
<PAYABLE-FOR-SECURITIES> 25,412,280
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,714,944
<TOTAL-LIABILITIES> 28,127,224
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,797,583,622
<SHARES-COMMON-STOCK> 10,740
<SHARES-COMMON-PRIOR> 10,740
<ACCUMULATED-NII-CURRENT> 26,785,147
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 103,624,558
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,012,610,775
<NET-ASSETS> 180,894
<DIVIDEND-INCOME> 2,066
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 914
<NET-INVESTMENT-INCOME> 1,152
<REALIZED-GAINS-CURRENT> 5,543
<APPREC-INCREASE-CURRENT> 18,752
<NET-CHANGE-FROM-OPS> 25,448
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 25,448
<ACCUMULATED-NII-PRIOR> 410,862
<ACCUMULATED-GAINS-PRIOR> 14,178,355
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,958,697
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,312,891
<AVERAGE-NET-ASSETS> 165,673
<PER-SHARE-NAV-BEGIN> 14.47
<PER-SHARE-NII> 0.11
<PER-SHARE-GAIN-APPREC> 2.26
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.84
<EXPENSE-RATIO> 1.11
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 53
<NAME> VALUE EQUITY FUND, CLASS 3
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 1,932,556,830
<INVESTMENTS-AT-VALUE> 2,945,167,605
<RECEIVABLES> 22,562,796
<ASSETS-OTHER> 925
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,967,731,326
<PAYABLE-FOR-SECURITIES> 25,412,280
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,714,944
<TOTAL-LIABILITIES> 28,127,224
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,797,583,622
<SHARES-COMMON-STOCK> 10,793
<SHARES-COMMON-PRIOR> 10,793
<ACCUMULATED-NII-CURRENT> 26,785,147
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 103,624,558
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,012,610,775
<NET-ASSETS> 182,261
<DIVIDEND-INCOME> 2,079
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 633
<NET-INVESTMENT-INCOME> 1,446
<REALIZED-GAINS-CURRENT> 5,582
<APPREC-INCREASE-CURRENT> 18,882
<NET-CHANGE-FROM-OPS> 25,910
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 25,910
<ACCUMULATED-NII-PRIOR> 410,862
<ACCUMULATED-GAINS-PRIOR> 14,178,355
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,958,697
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,312,891
<AVERAGE-NET-ASSETS> 166,782
<PER-SHARE-NAV-BEGIN> 14.49
<PER-SHARE-NII> 0.13
<PER-SHARE-GAIN-APPREC> 2.27
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.89
<EXPENSE-RATIO> 0.77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 54
<NAME> VALUE EQUITY FUND, CLASS 4
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 1,932,556,830
<INVESTMENTS-AT-VALUE> 2,945,167,605
<RECEIVABLES> 22,562,796
<ASSETS-OTHER> 925
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,967,731,326
<PAYABLE-FOR-SECURITIES> 25,412,280
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,714,944
<TOTAL-LIABILITIES> 28,127,224
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,797,583,622
<SHARES-COMMON-STOCK> 174,174,339
<SHARES-COMMON-PRIOR> 171,928,663
<ACCUMULATED-NII-CURRENT> 26,785,147
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 103,624,558
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,012,610,775
<NET-ASSETS> 2,939,062,679
<DIVIDEND-INCOME> 33,289,978
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 6,918,980
<NET-INVESTMENT-INCOME> 26,370,998
<REALIZED-GAINS-CURRENT> 89,429,607
<APPREC-INCREASE-CURRENT> 300,696,713
<NET-CHANGE-FROM-OPS> 416,497,318
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 22,591,959
<NUMBER-OF-SHARES-REDEEMED> 20,346,283
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 453,319,848
<ACCUMULATED-NII-PRIOR> 410,862
<ACCUMULATED-GAINS-PRIOR> 14,178,355
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,958,697
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,312,891
<AVERAGE-NET-ASSETS> 2,669,761,273
<PER-SHARE-NAV-BEGIN> 14.46
<PER-SHARE-NII> 0.15
<PER-SHARE-GAIN-APPREC> 2.26
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.87
<EXPENSE-RATIO> 0.52
<AVG-DEBT-OUTSTANDING> 0.00
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED
JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 11
<NAME> PRIME FUND, CLASS 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 244,588,726
<INVESTMENTS-AT-VALUE> 244,596,563
<RECEIVABLES> 1,938,518
<ASSETS-OTHER> 2,640
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 246,537,721
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,583,158
<TOTAL-LIABILITIES> 1,583,158
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 238,247,351
<SHARES-COMMON-STOCK> 727
<SHARES-COMMON-PRIOR> 727
<ACCUMULATED-NII-CURRENT> 6,710,299
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10,924)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,837
<NET-ASSETS> 111,959
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,139
<OTHER-INCOME> 0
<EXPENSES-NET> 912
<NET-INVESTMENT-INCOME> 2,227
<REALIZED-GAINS-CURRENT> (2)
<APPREC-INCREASE-CURRENT> 10
<NET-CHANGE-FROM-OPS> 2,235
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,235
<ACCUMULATED-NII-PRIOR> 80,676
<ACCUMULATED-GAINS-PRIOR> (7,151)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 576,162
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 706,077
<AVERAGE-NET-ASSETS> 110,811
<PER-SHARE-NAV-BEGIN> 151.03
<PER-SHARE-NII> 3.06
<PER-SHARE-GAIN-APPREC> 0.02
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 154.11
<EXPENSE-RATIO> 1.66
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED
JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 12
<NAME> PRIME FUND, CLASS 2
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 244,588,726
<INVESTMENTS-AT-VALUE> 244,596,563
<RECEIVABLES> 1,938,518
<ASSETS-OTHER> 2,640
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 246,537,721
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,583,158
<TOTAL-LIABILITIES> 1,583,158
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 238,247,351
<SHARES-COMMON-STOCK> 734
<SHARES-COMMON-PRIOR> 734
<ACCUMULATED-NII-CURRENT> 6,710,299
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10,924)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,837
<NET-ASSETS> 113,610
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,181
<OTHER-INCOME> 0
<EXPENSES-NET> 618
<NET-INVESTMENT-INCOME> 2,563
<REALIZED-GAINS-CURRENT> (2)
<APPREC-INCREASE-CURRENT> 9
<NET-CHANGE-FROM-OPS> 2,571
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,571
<ACCUMULATED-NII-PRIOR> 80,676
<ACCUMULATED-GAINS-PRIOR> (7,151)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 576,162
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 706,077
<AVERAGE-NET-ASSETS> 112,291
<PER-SHARE-NAV-BEGIN> 151.23
<PER-SHARE-NII> 3.49
<PER-SHARE-GAIN-APPREC> 0.01
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 154.73
<EXPENSE-RATIO> 1.11
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 13
<NAME> PRIME FUND, CLASS 3
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 244,588,726
<INVESTMENTS-AT-VALUE> 244,596,563
<RECEIVABLES> 1,938,518
<ASSETS-OTHER> 2,640
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 246,537,721
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,583,158
<TOTAL-LIABILITIES> 1,583,158
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 238,247,351
<SHARES-COMMON-STOCK> 738
<SHARES-COMMON-PRIOR> 738
<ACCUMULATED-NII-CURRENT> 6,710,299
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10,924)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,837
<NET-ASSETS> 114,477
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,203
<OTHER-INCOME> 0
<EXPENSES-NET> 427
<NET-INVESTMENT-INCOME> 2,776
<REALIZED-GAINS-CURRENT> (2)
<APPREC-INCREASE-CURRENT> 9
<NET-CHANGE-FROM-OPS> 2,783
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,783
<ACCUMULATED-NII-PRIOR> 80,676
<ACCUMULATED-GAINS-PRIOR> (7,151)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 576,162
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 706,077
<AVERAGE-NET-ASSETS> 113,050
<PER-SHARE-NAV-BEGIN> 151.29
<PER-SHARE-NII> 3.76
<PER-SHARE-GAIN-APPREC> 0.01
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 155.06
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 14
<NAME> PRIME FUND, CLASS 4
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 244,588,726
<INVESTMENTS-AT-VALUE> 244,596,563
<RECEIVABLES> 1,938,518
<ASSETS-OTHER> 2,640
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 246,537,721
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,583,158
<TOTAL-LIABILITIES> 1,583,158
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 238,247,351
<SHARES-COMMON-STOCK> 1,578,771
<SHARES-COMMON-PRIOR> 1,713,474
<ACCUMULATED-NII-CURRENT> 6,710,299
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10,924)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,837
<NET-ASSETS> 244,614,517
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,296,419
<OTHER-INCOME> 0
<EXPENSES-NET> 674,361
<NET-INVESTMENT-INCOME> 6,622,057
<REALIZED-GAINS-CURRENT> (3,768)
<APPREC-INCREASE-CURRENT> 15,897
<NET-CHANGE-FROM-OPS> 6,634,186
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,255,263
<NUMBER-OF-SHARES-REDEEMED> 1,389,966
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (14,114,507)
<ACCUMULATED-NII-PRIOR> 80,676
<ACCUMULATED-GAINS-PRIOR> (7,151)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 576,162
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 706,077
<AVERAGE-NET-ASSETS> 257,857,991
<PER-SHARE-NAV-BEGIN> 151.00
<PER-SHARE-NII> 3.93
<PER-SHARE-GAIN-APPREC> 0.01
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 154.94
<EXPENSE-RATIO> 0.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 61
<NAME> SMALL CAP VALUE EQUITY FUND, CLASS 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 404,086,580
<INVESTMENTS-AT-VALUE> 568,708,309
<RECEIVABLES> 2,953,191
<ASSETS-OTHER> 839
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 571,662,339
<PAYABLE-FOR-SECURITIES> 4,764,297
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 734,984
<TOTAL-LIABILITIES> 5,499,281
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 372,384,505
<SHARES-COMMON-STOCK> 10,666
<SHARES-COMMON-PRIOR> 10,666
<ACCUMULATED-NII-CURRENT> 2,631,716
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 26,525,108
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 164,621,729
<NET-ASSETS> 164,885
<DIVIDEND-INCOME> 1,190
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,282
<NET-INVESTMENT-INCOME> (93)
<REALIZED-GAINS-CURRENT> 6,512
<APPREC-INCREASE-CURRENT> 15,653
<NET-CHANGE-FROM-OPS> 22,072
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 22,072
<ACCUMULATED-NII-PRIOR> 192,363
<ACCUMULATED-GAINS-PRIOR> 4,972,374
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,324,751
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,574,303
<AVERAGE-NET-ASSETS> 146,776
<PER-SHARE-NAV-BEGIN> 13.39
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 2.08
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.46
<EXPENSE-RATIO> 1.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 62
<NAME> SMALL CAP VALUE EQUITY FUND, CLASS 2
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 404,086,580
<INVESTMENTS-AT-VALUE> 568,708,309
<RECEIVABLES> 2,953,191
<ASSETS-OTHER> 839
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 571,662,339
<PAYABLE-FOR-SECURITIES> 4,764,297
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 734,984
<TOTAL-LIABILITIES> 5,499,281
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 372,384,505
<SHARES-COMMON-STOCK> 10,767
<SHARES-COMMON-PRIOR> 10,767
<ACCUMULATED-NII-CURRENT> 2,631,716
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 26,525,108
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 164,621,729
<NET-ASSETS> 167,340
<DIVIDEND-INCOME> 1,206
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 894
<NET-INVESTMENT-INCOME> 312
<REALIZED-GAINS-CURRENT> 6,600
<APPREC-INCREASE-CURRENT> 15,883
<NET-CHANGE-FROM-OPS> 22,795
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 22,795
<ACCUMULATED-NII-PRIOR> 192,363
<ACCUMULATED-GAINS-PRIOR> 4,972,374
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,324,751
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,574,303
<AVERAGE-NET-ASSETS> 148,761
<PER-SHARE-NAV-BEGIN> 13.42
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 2.09
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.54
<EXPENSE-RATIO> 1.21
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<SERIES>
<NUMBER> 63
<NAME> SMALL CAP VALUE EQUITY FUND, CLASS 3
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 404,086,580
<INVESTMENTS-AT-VALUE> 568,708,309
<RECEIVABLES> 2,953,191
<ASSETS-OTHER> 839
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 571,662,339
<PAYABLE-FOR-SECURITIES> 4,764,297
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 734,984
<TOTAL-LIABILITIES> 5,499,281
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 372,384,505
<SHARES-COMMON-STOCK> 10,837
<SHARES-COMMON-PRIOR> 10,837
<ACCUMULATED-NII-CURRENT> 2,631,716
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 26,525,108
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 164,621,729
<NET-ASSETS> 168,863
<DIVIDEND-INCOME> 1,216
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 643
<NET-INVESTMENT-INCOME> 573
<REALIZED-GAINS-CURRENT> 6,654
<APPREC-INCREASE-CURRENT> 16,027
<NET-CHANGE-FROM-OPS> 23,254
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 23,254
<ACCUMULATED-NII-PRIOR> 192,363
<ACCUMULATED-GAINS-PRIOR> 4,972,374
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,324,751
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,574,303
<AVERAGE-NET-ASSETS> 149,987
<PER-SHARE-NAV-BEGIN> 13.44
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 2.09
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.58
<EXPENSE-RATIO> 0.86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 64
<NAME> SMALL CAP VALUE EQUITY FUND, CLASS 4
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 404,086,580
<INVESTMENTS-AT-VALUE> 568,708,309
<RECEIVABLES> 2,953,191
<ASSETS-OTHER> 839
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 571,662,339
<PAYABLE-FOR-SECURITIES> 4,764,297
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 734,984
<TOTAL-LIABILITIES> 5,499,281
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 372,384,505
<SHARES-COMMON-STOCK> 36,265,588
<SHARES-COMMON-PRIOR> 34,013,589
<ACCUMULATED-NII-CURRENT> 2,631,716
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 26,525,108
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 164,621,729
<NET-ASSETS> 565,661,970
<DIVIDEND-INCOME> 3,944,374
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,505,813
<NET-INVESTMENT-INCOME> 2,438,560
<REALIZED-GAINS-CURRENT> 21,532,969
<APPREC-INCREASE-CURRENT> 53,164,597
<NET-CHANGE-FROM-OPS> 77,136,127
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,601,406
<NUMBER-OF-SHARES-REDEEMED> 4,349,407
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 108,726,554
<ACCUMULATED-NII-PRIOR> 192,363
<ACCUMULATED-GAINS-PRIOR> 4,972,374
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,324,751
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,574,303
<AVERAGE-NET-ASSETS> 485,274,476
<PER-SHARE-NAV-BEGIN> 13.43
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 2.10
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.60
<EXPENSE-RATIO> 0.63
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED
JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 41
<NAME> BALANCED FUND, CLASS 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 505,416,393
<INVESTMENTS-AT-VALUE> 628,163,436
<RECEIVABLES> 4,204,369
<ASSETS-OTHER> 8,223
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 632,376,028
<PAYABLE-FOR-SECURITIES> 3,102,397
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 582,570
<TOTAL-LIABILITIES> 3,684,967
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 483,414,936
<SHARES-COMMON-STOCK> 10,838
<SHARES-COMMON-PRIOR> 10,838
<ACCUMULATED-NII-CURRENT> 10,713,433
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11,820,496
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 122,742,196
<NET-ASSETS> 146,563
<DIVIDEND-INCOME> 2,890
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,144
<NET-INVESTMENT-INCOME> 1,746
<REALIZED-GAINS-CURRENT> 2,333
<APPREC-INCREASE-CURRENT> 8,663
<NET-CHANGE-FROM-OPS> 12,742
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 12,742
<ACCUMULATED-NII-PRIOR> 26,102
<ACCUMULATED-GAINS-PRIOR> 1,920,993
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,309,860
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,606,234
<AVERAGE-NET-ASSETS> 138,873
<PER-SHARE-NAV-BEGIN> 12.35
<PER-SHARE-NII> 0.16
<PER-SHARE-GAIN-APPREC> 1.01
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.52
<EXPENSE-RATIO> 1.66
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 42
<NAME> BALANCED FUND, CLASS 2
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 505,416,393
<INVESTMENTS-AT-VALUE> 628,163,436
<RECEIVABLES> 4,204,369
<ASSETS-OTHER> 8,223
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 623,376,028
<PAYABLE-FOR-SECURITIES> 3,102,397
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 582,570
<TOTAL-LIABILITIES> 3,684,967
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 483,414,936
<SHARES-COMMON-STOCK> 10,948
<SHARES-COMMON-PRIOR> 10,948
<ACCUMULATED-NII-CURRENT> 10,713,433
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11,820,496
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 122,742,196
<NET-ASSETS> 148,717
<DIVIDEND-INCOME> 2,928
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 775
<NET-INVESTMENT-INCOME> 2,153
<REALIZED-GAINS-CURRENT> 2,364
<APPREC-INCREASE-CURRENT> 8,782
<NET-CHANGE-FROM-OPS> 13,299
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 13,299
<ACCUMULATED-NII-PRIOR> 26,102
<ACCUMULATED-GAINS-PRIOR> 1,920,993
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,309,860
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,606,234
<AVERAGE-NET-ASSETS> 140,722
<PER-SHARE-NAV-BEGIN> 12.37
<PER-SHARE-NII> 0.20
<PER-SHARE-GAIN-APPREC> 1.01
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.58
<EXPENSE-RATIO> 1.11
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED
JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 43
<NAME> BALANCED FUND, CLASS 3
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 505,416,393
<INVESTMENTS-AT-VALUE> 628,163,436
<RECEIVABLES> 4,204,369
<ASSETS-OTHER> 8,223
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 632,376,028
<PAYABLE-FOR-SECURITIES> 3,102,397
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 582,570
<TOTAL-LIABILITIES> 3,684,967
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 483,414,936
<SHARES-COMMON-STOCK> 10,994
<SHARES-COMMON-PRIOR> 10,994
<ACCUMULATED-NII-CURRENT> 10,713,433
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11,820,496
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 122,742,196
<NET-ASSETS> 149,854
<DIVIDEND-INCOME> 2,948
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 536
<NET-INVESTMENT-INCOME> 2,412
<REALIZED-GAINS-CURRENT> 2,381
<APPREC-INCREASE-CURRENT> 8,844
<NET-CHANGE-FROM-OPS> 13,636
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 13,636
<ACCUMULATED-NII-PRIOR> 26,102
<ACCUMULATED-GAINS-PRIOR> 1,920,993
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,309,860
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,606,234
<AVERAGE-NET-ASSETS> 141,676
<PER-SHARE-NAV-BEGIN> 12.39
<PER-SHARE-NII> 0.22
<PER-SHARE-GAIN-APPREC> 1.02
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.63
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED
JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 44
<NAME> BALANCED FUND, CLASS 4
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 505,416,393
<INVESTMENTS-AT-VALUE> 628,163,436
<RECEIVABLES> 4,204,369
<ASSETS-OTHER> 8,223
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 632,376,028
<PAYABLE-FOR-SECURITIES> 3,102,397
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 582,570
<TOTAL-LIABILITIES> 3,684,967
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 483,414,936
<SHARES-COMMON-STOCK> 46,209,722
<SHARES-COMMON-PRIOR> 45,632,444
<ACCUMULATED-NII-CURRENT> 10,713,433
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11,820,496
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 122,742,196
<NET-ASSETS> 628,245,927
<DIVIDEND-INCOME> 12,209,805
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,528,784
<NET-INVESTMENT-INCOME> 10,681,021
<REALIZED-GAINS-CURRENT> 9,892,425
<APPREC-INCREASE-CURRENT> 36,622,959
<NET-CHANGE-FROM-OPS> 57,196,405
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,196,028
<NUMBER-OF-SHARES-REDEEMED> 7,618,750
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 64,965,536
<ACCUMULATED-NII-PRIOR> 26,102
<ACCUMULATED-GAINS-PRIOR> 1,920,993
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,309,860
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,606,234
<AVERAGE-NET-ASSETS> 586,563,229
<PER-SHARE-NAV-BEGIN> 12.34
<PER-SHARE-NII> 0.23
<PER-SHARE-GAIN-APPREC> 1.03
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.60
<EXPENSE-RATIO> 0.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 71
<NAME> INTENATIONAL EQUITY FUND, CLASS 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 424,095,948
<INVESTMENTS-AT-VALUE> 523,233,075
<RECEIVABLES> 17,098,234
<ASSETS-OTHER> 3,821,648
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 544,152,957
<PAYABLE-FOR-SECURITIES> 24,152,987
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,826,107
<TOTAL-LIABILITIES> 27,979,094
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 413,449,144
<SHARES-COMMON-STOCK> 10,176
<SHARES-COMMON-PRIOR> 10,176
<ACCUMULATED-NII-CURRENT> 2,786,109
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,725,014
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 96,213,596
<NET-ASSETS> 130,571
<DIVIDEND-INCOME> 1,323
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,324
<NET-INVESTMENT-INCOME> (1)
<REALIZED-GAINS-CURRENT> 4,273
<APPREC-INCREASE-CURRENT> 13,602
<NET-CHANGE-FROM-OPS> 17,874
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 17,890
<ACCUMULATED-NII-PRIOR> 113,978
<ACCUMULATED-GAINS-PRIOR> (12,355,482)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,804,870
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,274,676
<AVERAGE-NET-ASSETS> 120,385
<PER-SHARE-NAV-BEGIN> 11.07
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 1.76
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.83
<EXPENSE-RATIO> 2.17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED
JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 72
<NAME> INTERNATIONAL EQUITY FUND, CLASS 2
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 424,095,948
<INVESTMENTS-AT-VALUE> 523,233,075
<RECEIVABLES> 17,098,234
<ASSETS-OTHER> 3,821,648
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 544,152,957
<PAYABLE-FOR-SECURITIES> 24,152,987
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,826,107
<TOTAL-LIABILITIES> 27,979,094
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 413,449,144
<SHARES-COMMON-STOCK> 10,281
<SHARES-COMMON-PRIOR> 10,281
<ACCUMULATED-NII-CURRENT> 2,786,109
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,725,014
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 96,213,596
<NET-ASSETS> 132,483
<DIVIDEND-INCOME> 1,341
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,001
<NET-INVESTMENT-INCOME> 340
<REALIZED-GAINS-CURRENT> 4,332
<APPREC-INCREASE-CURRENT> 13,782
<NET-CHANGE-FROM-OPS> 18,455
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 18,464
<ACCUMULATED-NII-PRIOR> 113,978
<ACCUMULATED-GAINS-PRIOR> (12,355,482)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,804,870
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,274,676
<AVERAGE-NET-ASSETS> 121,983
<PER-SHARE-NAV-BEGIN> 11.09
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 1.77
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.89
<EXPENSE-RATIO> 1.62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED
JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 73
<NAME> INTERNATIONAL EQUITY FUND, CLASS 3
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 424,095,948
<INVESTMENTS-AT-VALUE> 523,233,075
<RECEIVABLES> 17,098,234
<ASSETS-OTHER> 3,821,648
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 544,152,957
<PAYABLE-FOR-SECURITIES> 24,152,987
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,826,107
<TOTAL-LIABILITIES> 27,979,094
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 413,449,144
<SHARES-COMMON-STOCK> 10,315
<SHARES-COMMON-PRIOR> 10,315
<ACCUMULATED-NII-CURRENT> 2,786,109
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,725,014
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 96,213,596
<NET-ASSETS> 133,169
<DIVIDEND-INCOME> 1,348
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 850
<NET-INVESTMENT-INCOME> 497
<REALIZED-GAINS-CURRENT> 4,353
<APPREC-INCREASE-CURRENT> 13,845
<NET-CHANGE-FROM-OPS> 18,696
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 18,701
<ACCUMULATED-NII-PRIOR> 113,978
<ACCUMULATED-GAINS-PRIOR> (12,355,482)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,804,870
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,274,676
<AVERAGE-NET-ASSETS> 122,540
<PER-SHARE-NAV-BEGIN> 11.10
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 1.76
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.91
<EXPENSE-RATIO> 1.37
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 74
<NAME> INTERNATIONAL EQUITY FUND, CLASS 4
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 424,095,948
<INVESTMENTS-AT-VALUE> 523,233,075
<RECEIVABLES> 17,098,234
<ASSETS-OTHER> 3,821,648
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 544,152,957
<PAYABLE-FOR-SECURITIES> 24,152,987
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,826,107
<TOTAL-LIABILITIES> 27,979,094
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 413,449,144
<SHARES-COMMON-STOCK> 39,835,590
<SHARES-COMMON-PRIOR> 32,070,618
<ACCUMULATED-NII-CURRENT> 2,786,109
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,725,014
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 96,213,596
<NET-ASSETS> 515,777,640
<DIVIDEND-INCOME> 4,892,042
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2,220,747
<NET-INVESTMENT-INCOME> 2,671,295
<REALIZED-GAINS-CURRENT> 16,067,537
<APPREC-INCREASE-CURRENT> 48,269,631
<NET-CHANGE-FROM-OPS> 67,008,463
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,137,572
<NUMBER-OF-SHARES-REDEEMED> 4,372,600
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 159,466,996
<ACCUMULATED-NII-PRIOR> 113,978
<ACCUMULATED-GAINS-PRIOR> (12,355,482)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,804,870
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,274,676
<AVERAGE-NET-ASSETS> 427,829,745
<PER-SHARE-NAV-BEGIN> 11.11
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 1.77
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.95
<EXPENSE-RATIO> 1.02
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED
JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 21
<NAME> SHORT TERM BOND FUND, CLASS 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 164,941,091
<INVESTMENTS-AT-VALUE> 165,183,286
<RECEIVABLES> 7,481,776
<ASSETS-OTHER> 426
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 172,665,488
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 242,546
<TOTAL-LIABILITIES> 242,546
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 167,618,985
<SHARES-COMMON-STOCK> 11,415
<SHARES-COMMON-PRIOR> 11,415
<ACCUMULATED-NII-CURRENT> 4,939,839
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (378,077)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 242,195
<NET-ASSETS> 118,259
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,998
<OTHER-INCOME> 0
<EXPENSES-NET> 958
<NET-INVESTMENT-INCOME> 3,039
<REALIZED-GAINS-CURRENT> (62)
<APPREC-INCREASE-CURRENT> (582)
<NET-CHANGE-FROM-OPS> 2,396
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,396
<ACCUMULATED-NII-PRIOR> 18,783
<ACCUMULATED-GAINS-PRIOR> (295,200)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 346,373
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 428,049
<AVERAGE-NET-ASSETS> 116,502
<PER-SHARE-NAV-BEGIN> 10.15
<PER-SHARE-NII> 0.27
<PER-SHARE-GAIN-APPREC> (0.06)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.36
<EXPENSE-RATIO> 1.66
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 22
<NAME> SHORT TERM BOND FUND, CLASS 2
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 164,941,091
<INVESTMENTS-AT-VALUE> 165,183,286
<RECEIVABLES> 7,481,776
<ASSETS-OTHER> 426
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 172,665,488
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 242,546
<TOTAL-LIABILITIES> 242,546
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 167,618,985
<SHARES-COMMON-STOCK> 11,544
<SHARES-COMMON-PRIOR> 11,544
<ACCUMULATED-NII-CURRENT> 4,939,839
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (378,077)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 242,195
<NET-ASSETS> 120,003
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,051
<OTHER-INCOME> 0
<EXPENSES-NET> 649
<NET-INVESTMENT-INCOME> 3,402
<REALIZED-GAINS-CURRENT> (63)
<APPREC-INCREASE-CURRENT> (586)
<NET-CHANGE-FROM-OPS> 2,753
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,753
<ACCUMULATED-NII-PRIOR> 18,783
<ACCUMULATED-GAINS-PRIOR> (295,200)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 346,373
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 428,049
<AVERAGE-NET-ASSETS> 118,057
<PER-SHARE-NAV-BEGIN> 10.16
<PER-SHARE-NII> 0.29
<PER-SHARE-GAIN-APPREC> (0.05)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.40
<EXPENSE-RATIO> 1.11
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 23
<NAME> SHORT TERM BOND FUND, CLASS 3
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 164,941,091
<INVESTMENTS-AT-VALUE> 165,183,286
<RECEIVABLES> 7,481,776
<ASSETS-OTHER> 426
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 172,665,488
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 242,546
<TOTAL-LIABILITIES> 242,546
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 167,618,985
<SHARES-COMMON-STOCK> 11,599
<SHARES-COMMON-PRIOR> 11,599
<ACCUMULATED-NII-CURRENT> 4,939,839
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (378,077)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 242,195
<NET-ASSETS> 120,979
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,081
<OTHER-INCOME> 0
<EXPENSES-NET> 449
<NET-INVESTMENT-INCOME> 3,632
<REALIZED-GAINS-CURRENT> (63)
<APPREC-INCREASE-CURRENT> (590)
<NET-CHANGE-FROM-OPS> 2,978
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,978
<ACCUMULATED-NII-PRIOR> 18,783
<ACCUMULATED-GAINS-PRIOR> (295,200)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 346,373
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 428,049
<AVERAGE-NET-ASSETS> 118,914
<PER-SHARE-NAV-BEGIN> 10.17
<PER-SHARE-NII> 0.31
<PER-SHARE-GAIN-APPREC> (0.05)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.43
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE PERIOD ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 24
<NAME> SHORT TERM BOND FUND, CLASS 4
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 164,941,091
<INVESTMENTS-AT-VALUE> 165,183,286
<RECEIVABLES> 7,481,776
<ASSETS-OTHER> 426
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 172,665,488
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 242,546
<TOTAL-LIABILITIES> 242,546
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 167,618,985
<SHARES-COMMON-STOCK> 16,587,139
<SHARES-COMMON-PRIOR> 14,365,202
<ACCUMULATED-NII-CURRENT> 4,939,839
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (378,077)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 242,195
<NET-ASSETS> 172,063,701
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,318,729
<OTHER-INCOME> 0
<EXPENSES-NET> 407,746
<NET-INVESTMENT-INCOME> 4,910,983
<REALIZED-GAINS-CURRENT> (82,690)
<APPREC-INCREASE-CURRENT> (773,776)
<NET-CHANGE-FROM-OPS> 4,054,518
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,745,250
<NUMBER-OF-SHARES-REDEEMED> 2,523,313
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 26,881,406
<ACCUMULATED-NII-PRIOR> 18,783
<ACCUMULATED-GAINS-PRIOR> (295,200)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 346,373
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 428,049
<AVERAGE-NET-ASSETS> 154,865,935
<PER-SHARE-NAV-BEGIN> 10.11
<PER-SHARE-NII> 0.32
<PER-SHARE-GAIN-APPREC> (0.06)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.37
<EXPENSE-RATIO> 0.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
