<PAGE>
As filed with the Securities and Exchange Commission on April 30, 1998
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. 8 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
AMENDMENT NO. 10 [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)
[x] on May 1, 1998 pursuant to paragraph (b)
[_] 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.
To: The Securities and Exchange Commission
The Registrant submits this Post-Effective Amendment No. 8 to its
Registration Statement under the Securities Act of 1933 (Registration No. 33-
73824) and this Amendment No. 10 to its Registration Statement under the
Investment Company Act of 1940 (Registration No. 811-8274). This Post-Effective
Amendment relates solely to 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 and does not affect the Registrant's currently effective Prospectus
or Statement of Additional Information with respect to the MassMutual Indexed
Equity Fund.
<PAGE>
MASSMUTUAL INSTITUTIONAL FUNDS
FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Part A
Item No. Prospectus Heading
- -------- ------------------
<S> <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 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 Principal Holder Of Securities;
Investment Manager And Sub-Advisers; Distributor, Sub-Distributor,
Transfer Agent, Dividend Disbursing Agent, Custodian And
Sub-Administrator; 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, Sub-Distributor,
Transfer Agent, Dividend Disbursing Agent, Custodian and Sub-Administrator; How
Fund Shares Are Priced
8 Redemption or Repurchase How to Purchase, Exchange, And Redeem Shares
9 Pending Legal Proceedings Inapplicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part B Heading in Statement
Item No. of Additional Information
- -------- -------------------------
<S> <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
15 Control Persons and Principal Holders of Control Person and Principal Holder of Securities
Securities
16 Investment Advisory and Other Services Investment Manager And Sub-Advisers; The Distributor;
Custodian, Dividend Disbursing 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>
<PAGE>
MASSMUTUAL INSTITUTIONAL FUNDS
1295 State Street
Springfield, Massachusetts 01111
(413) 788-8411
MassMutual Institutional Funds (the "Trust") is a professionally managed,
open-end 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 the following seven separate, diversified series of shares of the
Trust (the "Funds"), each of which 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.
Each of the Funds offers three classes of shares: Class A, Class Y and Class S.
Each class of shares is offered to different types of investors and has
different expenses. See "Expense Information" and "How to Purchase, Exchange and
Redeem Shares."
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 May 1, 1998, as amended from time-to-time (the "SAI"), which
has been filed with the Securities and Exchange Commission (the "SEC") 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, Massachusetts 01111.
Massachusetts Mutual Life Insurance Company ("MassMutual" or the "Adviser") is
the investment manager to each of the Funds. David L. Babson and Company
Incorporated ("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 each referred to as a
"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 May 1, 1998
<PAGE>
Table Of Contents
Page
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............................... 20
Investment Manager And Sub-Advisers....................................... 23
Distributor, Sub-Distributor, Transfer Agent, Dividend Disbursing Agent,
Custodian And Sub-Administrator......................................... 24
Control Person And Principal Holder Of Securities......................... 24
Description Of Shares..................................................... 24
How Fund Shares Are Priced................................................ 25
Distributions And Taxation................................................ 25
Investment Performance.................................................... 26
Glossary.................................................................. 28
2
<PAGE>
Expense Information
The following information is provided in order to assist you in understanding
the various costs and expenses that, you as an investor in the Funds, will bear
directly or indirectly.
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
(As a percentage of offering price)
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 /(2)/.............. .50% .50% .50% .50% .50% .50% .60%
===================================================================================================================================
TOTAL OPERATING EXPENSES /(2)/ 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 of any series of the Trust. See "How To
Purchase, Exchange And Redeem Shares," for more information on the
contingent deferred sales charge.
(2) Other Expenses and Total Operating Expenses are based on estimated
amounts for the 1998 fiscal year.
EXAMPLES: An investor would pay the following expenses on an investment of
$1,000 in the Class A shares of the Fund assuming: (a) a 5% annual
retum 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 Examples are based on each Fund's "Total Operating Expenses," as described
above. The Examples 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 /(1)/.............. .30% .30% .30% .30% .30% .30% .40%
====================================================================================================================================
TOTAL OPERATING EXPENSES /(1)//(2)/ .75% .75% .75% .75% .75% .85% 1.25%
====================================================================================================================================
</TABLE>
(1) Other Expenses and Total Operating Expenses are based on estimated amounts
for the 1998 fiscal year.
(2) 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 Class Y shares of the Fund assuming: (a) a 5% annual
retum 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 is based on each Fund's "Total Operating Expenses," as described
above. 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
<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.................... .0983% .1026% .0953% .0942% .0896% .0938% .2005%
===============================================================================================================================
TOTAL OPERATING EXPENSES /(1)//(2)/ .5483% .5526% .5453% .5442% .5396% .6438% 1.0505%
===============================================================================================================================
</TABLE>
/(1)/ 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.
/(2)/ The expenses in the above table are based on expenses for the fiscal year
ended December 31, 1997, but restated to give effect to the elimination
of MassMutual's voluntary undertaking to waive a portion of its
management fee (which terminated May 1, 1997) and a revision in the
expense structure (which was effective on December 1, 1997).
EXAMPLE: An investor would pay the following expenses on an investment of
$1,000 in the Class S shares of 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 $ 5.61 $ 5.65 $ 5.57 $ 5.56 $ 5.52 $ 6.58 $10.74
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
3 Years $17.58 $17.71 $17.47 $17.44 $17.30 $20.63 $33.68
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
5 Years $30.64 $30.88 $30.46 $30.40 $30.16 $35.96 $58.70
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
10 Years $68.73 $69.27 $68.34 $68.20 $67.64 $80.68 $131.68
- --------------------------------------------------------------------------------------------------
</TABLE>
The Example is based on each Fund's "Total Operating Expenses," as described
above. 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. 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 information in the following tables has been derived from the financial
statements audited by Coopers & Lybrand L.L.P., independent accountants, whose
report on the 1997 financial statements of the Funds is included in the Trust's
Annual Report for the year ended December 31, 1997 (the "Annual Report") and in
the SAI. Further information about the performance of the Funds is contained in
the Annual Report. The SAI and the Annual 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(1)
----------
Year ended Year ended Year ended Period ended
12/31/97 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 8.14*** 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 8.13 7.91 8.68 1.89
---------- ---------- ---------- -----------
Less distributions to shareholders:
From net investment income (8.29) (7.97) (7.98) (1.53)
---------- ---------- ---------- -----------
Net asset value, end of period $ 150.84 $ 151.00 $ 151.06 $ 150.36
========== ========== ========== ===========
Total Return@ 5.39% 5.24% 5.78% 1.26%
Ratios / Supplemental Data:
Net assets, end of period (000s) $ 241,370 $ 258,729 $ 253,936 $ 170,548
Net expenses to average daily net assets# 0.5399% 0.5160% 0.5160% 0.5160%*
Net investment income to average daily net assets 5.25% 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: 0.5515% 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.
(1) Class S shares were previously designated as Class 4 shares.
@ 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 Short-Term Bond Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class S (1)
-----------
Year ended Year ended Year ended Period ended
12/31/97 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 0.65*** 0.60 0.66 0.16
Net realized and unrealized gain (loss) on investments 0.04 (0.03) 0.50 (0.15)
---------- ---------- ---------- -----------
Total income (loss) from investment operations 0.69 0.57 1.16 0.01
---------- ---------- ---------- -----------
Less distributions to shareholders:
From net investment income (0.57) (0.60) (0.66) (0.16)
From net realized gains 0.00 (0.01) (0.20) --
---------- ---------- ---------- -----------
Total distributions (0.57) (0.61) (0.86) (0.16)
---------- ---------- ---------- -----------
Net asset value, end of period $ 10.23 $ 10.11 $ 10.15 $ 9.85
========== ========== ========== ===========
Total Return@ 6.84% 5.57% 11.77% 0.13%
Ratios / Supplemental Data:
Net assets, end of period (000s) $200,268 $145,182 $122,904 $106,846
Net expenses to average daily net assets# 0.5423% 0.5190% 0.5190% 0.5190%*
Net investment income to average daily net assets 6.22% 6.00% 6.32% 6.37%*
Portfolio turnover rate 48% 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: 0.5530% 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.
(1) Class S shares were previously designated as Class 4 shares.
@ 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 (1)
-----------
Year ended Year ended Year ended Period ended
12/31/97 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 0.69*** 0.67*** 0.72*** 0.18
Net realized and unrealized gain (loss) on investments 0.33 (0.37) 1.17 (0.16)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 1.02 0.30 1.89 0.02
---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.64) (0.54) (0.65) (0.18)
From net realized gains (0.02) (0.06) (0.33) --
---------- ---------- ---------- ----------
Total distributions (0.66) (0.60) (0.98) (0.18)
---------- ---------- ---------- ----------
Net asset value, end of period $ 10.81 $ 10.45 $ 10.75 $ 9.84
========== ========== ========== ==========
Total Return@ 9.78% 2.80% 19.15% 0.20%
Ratios / Supplemental Data:
Net assets, end of period (000s) $455,931 $356,699 $253,540 $194,150
Net expenses to average daily net assets# 0.5393% 0.5130% 0.5130% 0.5130%*
Net investment income to average daily net assets 6.34% 6.26% 6.56% 6.86%*
Portfolio turnover rate 54% 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: 0.5512% 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.
(1) Class S shares were previously designated as Class 4 shares.
@ 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 (1)
-----------
Year ended Year ended Year ended Period ended
12/31/97 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 0.48 0.46 0.44 0.11
Net realized and unrealized gain (loss) on investments 1.82 1.02 1.68 (0.08)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 2.30 1.48 2.12 0.03
---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.48) (0.46) (0.44) (0.11)
From net realized gains (0.57) (0.19) (0.09) --
---------- ---------- ---------- ----------
Total distributions (1.05) (0.65) (0.53) (0.11)
---------- ---------- ---------- ----------
Net asset value, end of period $ 13.59 $ 12.34 $ 11.51 $ 9.92
========== ========== ========== ==========
Total Return@ 18.72% 12.83% 21.31% 0.29%
Ratios / Supplemental Data:
Net assets, end of period (000s) $655,135 $ 563,280 $ 456,773 $ 349,688
Net expenses to average daily net assets# 0.5389% 0.5120% 0.5120% 0.5120%*
Net investment income to average daily net assets 3.57% 3.83% 4.18% 4.29%*
Portfolio turnover rate 28% 26% 23% 2%
Average broker commission rate (a) $ 0.0579 $ 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: 0.5510% 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.
(1) Class S shares were previously designated as Class 4 shares.
@ 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
<PAGE>
MassMutual Value Equity Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class S (1)
------------
Year ended Year ended Year ended Period ended
12/31/97 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 0.32 0.34 0.31 0.08
Net realized and unrealized gain (loss) on investments 3.83 2.22 2.82 (0.09)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 4.15 2.56 3.13 (0.01)
---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.31) (0.34) (0.31) (0.08)
From net realized gains (1.30) (0.39) (0.10) --
---------- ---------- ---------- ----------
Total distributions (1.61) (0.73) (0.41) (0.08)
---------- ---------- ---------- ----------
Net asset value, end of period $ 17.00 $ 14.46 $ 12.63 $ 9.91
========== ========== ========== ==========
Total Return@ 29.01% 20.24% 31.54% (0.10)%
Ratios / Supplemental Data:
Net assets, end of period (000s) $3,197,848 $2,485,743 $2,125,248 $1,563,563
Net expenses to average daily net assets# 0.5378% 0.5067% 0.5067% 0.5067%*
Net investment income to average daily net assets 1.91% 2.42% 2.72% 3.20%*
Portfolio turnover rate 20% 13% 16% 3%
Average broker commission rate (a) $ 0.0579 $ 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: 0.5512% 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.
(1) Class S shares were previously designated as Class 4 shares.
@ 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.
11
<PAGE>
MassMutual Small Cap Value Equity Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class S (1)
-----------
Year ended Year ended Year ended Period ended
12/31/97 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 0.13 0.31 0.19 0.04
Net realized and unrealized gain (loss) on investments 4.73 2.29 1.75 (0.31)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 4.86 2.60 1.94 (0.27)
---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.14) (0.30) (0.19) (0.04)
From net realized gains (1.54) (0.31) -- --
---------- ---------- ---------- ----------
Total distributions (1.68) (0.61) (0.19) (0.04)
---------- ---------- ---------- ----------
Net asset value, end of period $ 16.61 $ 13.43 $ 11.44 $ 9.69
========== ========== ========== ==========
Total Return@ 36.36% 22.82% 20.01% (2.66)%
Ratios / Supplemental Data:
Net assets, end of period (000s) $690,378 $ 456,935 $380,398 $310,789
Net expenses to average daily net assets# 0.6400% 0.6110% 0.6110% 0.6110%*
Net investment income to average daily net assets 0.89% 2.40% 1.78% 1.78%*
Portfolio turnover rate 31% 28% 28% 4%
Average broker commission rate (a) $ 0.0517 $ 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: 0.6515% 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.
(1) Class S shares were previously designated as Class 4 shares.
@ 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.
12
<PAGE>
MassMutual International Equity Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class S (1)
-----------
Year ended Year ended Year ended Period ended
12/31/97 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 0.06 0.06 0.07 0.00
Net realized and unrealized gain (loss) on investments
and foreign currency 1.69 1.71 0.41 (0.72)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 1.75 1.77 0.48 (0.72)
---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.07) (0.24) (0.07) --
In excess of net investment income -- -- (0.11) --
From net realized gains (0.41) -- -- --
---------- ---------- ---------- ----------
Total distributions (0.48) (0.24) (0.18) --
---------- ---------- ---------- ----------
Net asset value, end of period $ 12.38 $ 11.11 $ 9.58 $ 9.28
========== ========== ========== ==========
Total Return@ 15.79% 18.51% 5.13% (7.20)%
Ratios / Supplemental Data:
Net assets, end of period (000s) $546,790 $356,311 $220,718 $150,199
Net expenses to average daily net assets# 1.0580% 1.0020% 1.0020% 1.0020%*
Net investment income to average daily net assets 0.53% 0.59% 0.76% 0.04%*
Portfolio turnover rate 83% 58% 121% 18%
Average broker commission rate (a) $0.0083 $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: 1.0684% 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.
(1) Class S shares were previously designated as Class 4 shares.
@ 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.
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, so long as 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 years ended
December 31, 1996 and 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
Year ended
December 31, 1997 $ 0 $6,100,000 38,966,646 $0.16
</TABLE>
13
<PAGE>
The Trust
The Trust is an open-end, 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. 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"). The Board of Trustees of the Trust is generally
responsible for management of the business and affairs of the Trust. The
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 SAI.
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 Wilson Kibbe, Executive 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.
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:
- -----------------------
/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.
/4/ For example, the four highest ratings of Moody's for debt obligations are
Aaa, Aa, A, and Baa (including Baa3).
14
<PAGE>
(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.
(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.
- ----------------------
/5/ See the Glossary for a definition of Duration.
15
<PAGE>
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 Wilson Kibbe, Executive 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, President, Chief Executive Officer 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.
(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, at the time of purchase, of
$750 million or less 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
16
<PAGE>
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 is not required to sell portfolio securities as a result of an issuer's
market capitalization increasing above $750 million. Consequently, during
periods of equity market strength a substantial portion of the Fund's portfolio
may consist of securities issued by companies with a market capitalization in
excess of $750 million. 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 a 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 SAI 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 primarily by
George Evans, who is assisted by William Wilby, both of whom are 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 simultaneously 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 SAI.
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-Adviser 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 SAI.
Derivatives nor-
17
<PAGE>
mally 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 counterparties 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 SAI.
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.
Restricted and Illiquid Securities
None of the Funds currently expects 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.
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/6/ See the Glossary for a definition of Currency Transactions.
18
<PAGE>
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-Adviser'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. ("Advest") and Jefferies
& Co., Inc. ("Jefferies"). Jefferies and Advest are each wholly-owned
subsidiaries of companies for which one Trustee serves as director.
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.
Mortgage-Backed U.S. Government Securities and
CMOs
The Funds may invest in mortgage-backed U.S. Securities and collateralized
mortgage obligations ("CMOs"). These securities represent participation
interests in pools of residential mortgage loans made by lenders such as banks
and savings and loan associations. The pools are assembled for sale to investors
(such as the Funds) by government agencies and also, in the case of CMOs, by
private issuers, which issue or guarantee the securities relating to the pool.
Such securities differ from conventional debt securities which generally provide
for periodic payment of interest in fixed or determinable amounts (usually semi-
annually) with principal payments at maturity or specified call dates. Some
mortgage-backed U.S. Government Securities in which a Fund may invest may be
backed by the full faith and credit of the U.S. Treasury (e.g., direct pass-
through certificates of Government National Mortgage Association); some are
supported by the right of the issuer to borrow from the U.S. Government (e.g.,
obligations of Federal Home Loan Mortgage Corporation); and some are backed by
only the credit of the issuer itself (e.g., Federal National Mortgage
Association). Those guarantees do not extend to the value or yield of the
mortgage-backed securities themselves or to the net asset value of a funds'
shares. These government agencies may also issue derivative mortgage backed
securities such as CMOs.
The expected yield on mortgage-backed securities is based on the average
expected life of the underlying pool of mortgage loans. The actual life of any
particular pool will be shortened by any unscheduled or early payments of
principal. Principal prepayments generally result from the sale of the
underlying property or the refinancing or foreclosure of underlying mortgages.
The occurrence of prepayments is affected by a wide range of economic,
demographic and social factors and, accordingly, it is not possible to predict
accurately the average life of a particular pool. Yield on such pools is usually
computed by using the historical record of prepayments for that pool, or, in the
case of newly-issued mortgages, the prepayment history of similar pools. The
actual prepayment experience of a pool of mortgage loans may cause the yield
realized by a Fund to differ from the yield calculated on the basis of the
expected average life of the pool.
Prepayments tend to increase during periods of falling interest rates, while
during periods of rising interest rates prepayments will most likely decline.
When prevailing interest rates rise, the value of a pass-through security may
decrease as do the values of other debt securities, but, when prevailing
interest rates decline, the value of a pass-through security is not likely to
rise to the extent that the values of other debt securities rise, because of the
prepayment feature of pass-through securities. A Fund's reinvestment of
scheduled principal payments and unscheduled prepayments it receives may occur
at times when available investments offer higher or lower rates than the
original investment, thus affecting the yield of the Fund. Monthly interest
payments received by the Fund have a compounding effect which may increase the
yield to the Fund more than debt obligations that pay interest semi-annually.
Because of those factors, mortgage-backed securities may be less effective than
Treasury bonds of similar maturity at maintaining yields during periods of
declining interest rates. A Fund may purchase mortgage-backed securities at a
premium or at a discount. Accelerated prepayments adversely affect yields for
pass-through securities purchased at a premium (i.e., at a price in excess of
their principal amount) and may involve additional risk of loss of principal
because the premium may not have been fully amortized at the time the obligation
is repaid. The opposite is true for pass-through securities purchased at a
discount.
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<PAGE>
Asset-Backed Securities
These securities, issued by trusts and special purpose entities, are backed by
pools of assets, such as automobile and creditcard receivables and home equity
loans, which pass through the payments on the underlying obligations to the
security holders (less servicing fees paid to the originator or fees for any
credit enhancement). The value of an asset-backed security is affected by
changes in the market's perception of the asset backing the security, the
creditworthiness of the servicing agent for the loan pool, the originator of the
loans, or the financial institution providing any credit enhancement, and is
also affected if any credit enhancement has been exhausted. Payments of
principal and interest passed through to holders of asset-backed securities are
typically supported by some form of credit enhancement, such as a letter of
credit, surety bond, limited guarantee by another entity or having a priority to
certain of the borrower's other securities. The degree of credit enhancement
varies, and generally applies to only a fraction of the asset-backed security's
par value until exhausted. If the credit enhancement of an asset-backed security
held by a Fund has been exhausted, and if any required payments of principal and
interest are not made with respect to the underlying loans, the Fund may
experience losses or delays in receiving payment.
The risks of investing in asset-backed securities are ultimately dependent upon
payment of consumer loans by the individual borrowers. As a purchaser of an
asset-backed security, the Funds would generally have no recourse to the entity
that originated the loans in the event of default by a borrower. The underlying
loans are subject to prepayments, which shorten the weighted average life of
asset-backed securities and may lower their return, in the same manner as
described above for prepayments of a pool of mortgage loans underlying
mortgage-backed securities. However, asset-backed securities do not have the
benefit of the same security interest in the underlying collateral as do
mortgage-backed securities.
Roll Transactions
To take advantage of attractive financing opportunities in the mortgage market
and to enhance current income, each of the Funds may engage in dollar roll
transactions. A dollar roll transaction involves a sale by a Fund of a GNMA
certificate or other mortgage backed securities to a financial institution, such
as a bank or broker-dealer, currently with an agreement by the Fund to
repurchase a similar security from the institution at a later date at an agreed
upon price. The securities that are repurchased will bear the same interest rate
as those sold, but generally will be collateralized by different pools of
mortgages with different prepayment histories than those sold. Dollar roll
transactions involve potential risks of loss which are different from those
related to the securities underlying the transaction. For a more detailed
description of dollar roll transactions and related risks, see the SAI.
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 SAI.
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 501(c)(9), other non-qualified
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.
- ---------------------
/7/ See the Glossary for a definition of Plan Assets.
20
<PAGE>
Class Y Shares - Class Y shares of each Fund may be purchased by
non-qualified 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 that 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").
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/8/ redeems any Class A shares within 12 months
of the date on which the Investor first purchased Class A shares of any series
of the Trust, 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 1.00% 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 series of the Trust an Investor purchased subject to the Class A
Contingent Deferred Sales Charge.
In determining whether the Class A Contingent Deferred Sales Charge is payable,
a 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,
as described under "Exchange Privileges and Procedures." 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 will be used directly or indirectly
to reimburse the Adviser or its affiliates for compensation paid to registered
representatives as described under "How Fund Shares Are Priced." 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; and
(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.
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; and
(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.
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/9 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
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/8/ See the Glossary for a definition of Investor.
/9/ See the Glossary for a definition of Plans.
21
<PAGE>
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 (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 Fees. Pursuant to separate Rule 12b-1 Plans adopted by the
Funds, Class A shares of each Fund pay a service fee (the "Service Fee") at the
annual rate of .25% of the Fund's average daily net assets attributable to the
Class A shares. The Adviser receives the Service Fee and may pay all or a
portion of them to brokers and other financial intermediaries, including the
Distributor or Sub-Distributor, for personal services rendered to Investors in
Class A shares and/or maintenance of Class A shareholder accounts.
The Class A service plans are of a type known as a compensation plan. This means
that although the Trustees are expected to take into account the expenses of the
Adviser, the fees are payable to compensate the Adviser for services rendered
even if the amount paid by a Fund exceeds the Adviser's expenses. See the SAI
for a description of the types of permissible Service Fee expenditures by the
Adviser.
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 a 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.
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 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, as servicing agent 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/10/ (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.
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 ("IBT") 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 enter 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 series of the Trust,
- -------------------
/10/ See the Glossary for a definition of Plan Participant.
22
<PAGE>
subject to the provisions of Plan Documents, any administrative services or
other agreement with MassMutual, and applicable laws, including 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 that have entered into an
agreement permitting direct purchases from the Trust must deliver exchange
requests in good form to the Transfer Agent.
Any exchange will involve the redemption of shares and the purchase of shares in
another series of the Trust on the basis of the next calculated net asset value
per share of each series 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.(11)
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 Transfer Agent.
Each Fund redeems its shares at their net asset value as next computed after
receipt by the Transfer Agent of a request for redemption. Redemption requests
will not be transmitted to the 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 provides, directly or through
its subsidiaries, a wide range of life insurance, annuity and disability
products, pension, retirement and deferred compensation products and services,
as well as investment services to individuals, corporations, investment
companies and other institutions. As of December 31, 1997, MassMutual, together
with its subsidiaries, had consolidated assets in excess of $61 billion and
consolidated assets under management in excess of $152 billion.
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, 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 ser-
- --------------------
/11/ See "Purchase of Shares" above for a discussion of the term "in good form."
23
<PAGE>
vices 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, 1997, MassMutual received investment
advisory fees (after giving effect to a voluntary fee waiver) based upon each
Fund's average daily net assets, as follows: Prime Fund .44%; Short-Term Bond
Fund .44%; Core Bond Fund .44%; Balanced Fund .44%; Value Equity Fund .44%;
Small Cap Value Equity Fund .54%; International Equity Fund .84%. 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 .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, 1997, Babson had over $18 billion of
assets under management. Babson serves as investment subadviser 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 March 31, 1998, HarbourView managed assets of approximately
$1.5 billion, including assets of the International Equity Fund and certain
separate investment accounts of MassMutual.
Distributor, Sub-Distributor, Transfer Agent, Dividend Disbursing Agent,
Custodian And Sub-Administrator
OppenheimerFunds Distributor, Inc. ("OFDI") acts as Distributor to each Fund.
MML Investors Services, Inc. ("MMLISI") serves as Sub-Distributor for each Fund.
MassMutual ultimately has a controlling interest in OFDI. MMLISI is a wholly-
owned subsidiary of MassMutual. OFDI serves and MMLISI may serve as distributor
of securities issued by other investment companies.
IBT serves as each Fund's Transfer Agent, Dividend Disbursing Agent and
Custodian. As Custodian, IBT has custody of the Funds' securities, and maintains
certain financial and accounting books and records. In addition, MassMutual has
entered into a sub-administration agreement with IBT. As sub-administrator, IBT
generally assists in all aspects of fund administration and is compensated by
MassMutual for providing administrative services to the Funds.
Control Person And Principal Holder Of Securities
MassMutual may be deemed a control person (as that term is defined in the 1940
Act) of the Trust in that certain separate investment accounts of MassMutual and
the Trust's seed money provided by MassMutual together constituted 100% of the
shares of each class of each Fund of the Trust as of April 1, 1998.
Description Of Shares
The Trust is a series company. 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
24
<PAGE>
the Trustees may prescribe. Each share of a particular class of a series
represents an equal proportionate interest in that series with each other share
of the same class, none having priority or preference over another. Each series
is preferred over all other series in respect of the assets allocated to that
series. Each share of a particular class of a series 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. To date shares of twelve separate
series have been authorized, seven of which constitute the interests in the
Funds described in this Prospectus. 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 at
4:00 p.m., Eastern Time on each day on which the NYSE 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.
Generally, the Fund values portfolio securities as follows. 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. For additional information, see the SAI.
A dealer or other organization selling shares of the Funds may receive different
levels of compensation for selling one class 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 or Sub-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 up
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 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
25
<PAGE>
Fund's ordinary income and short-term 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 described in this Prospectus having
corresponding investment objectives, policies and limitations in exchange for
Class S shares of such Fund. While the SIAs continue to exist, their assets
consist solely of Class S 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, without giving effect to the voluntary fee waiver described in such
prospectus, were as follows: 0.557% for the Prime Fund, the Short-Term Bond
Fund, the Core Bond Fund, the Balanced Fund, and the Value Equity Fund; 0.657%
for the Small Cap Value Equity Fund; and 1.059% for the International Equity
Fund. The fees and expenses used to adjust each SIA's total return (as described
above) 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 January 1, 1998 (commencement of operations of Class A and Class Y
shares) is 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.
The quoted performance data includes the performance of the SIAs for periods
before the Trust's Registration Statement became effective. 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 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 after
deduction of the Fund and any SIA expenses. Each of the Funds may quote yield in
conformance with current SEC 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, 1997. All returns
- ---------------------------
take into account the Adviser's voluntary fee waiver, which was in effect from
October 3, 1994 until May 1, 1997, and is described in the "Financial
Highlights." All returns shown below would have been lower had such voluntary
fee waiver not been in effect.
<TABLE>
<CAPTION>
1 YEAR
- --------------------------------------------------------------------------------------------------------------------------
Class A Class Y Class S
<S> <C> <C> <C>
Prime Fund and its predecessor SIA G 4.71% 5.17% 5.39%
Short-Term Bond Fund and its predecessor SIA F 6.15% 6.61% 6.84%
Core Bond Fund and its predecessor SIA E 9.07% 9.55% 9.78%
Balanced Fund and its predecessor SIA M 17.96% 18.47% 18.72%
Value Equity Fund and its predecessor SIA A 28.19% 28.74% 29.01%
Small Cap Value Equity Fund and its predecessor SIA S 35.49% 36.08% 36.36%
International Equity Fund and its predecessor SIA I 15.05% 15.55% 15.79%
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
3 YEARS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Class Y Class S
Prime Fund and its predecessor SIA G 4.79% 5.25% 5.47%
Short-Term Bond Fund and its predecessor SIA F 7.33% 7.80% 8.03%
Core Bond Fund and its predecessor SIA E 9.67% 10.15% 10.38%
Balanced Fund and its predecessor SIA M 16.81% 17.32% 17.57%
Value Equity Fund and its predecessor SIA A 26.03% 26.57% 26.84%
Small Cap Value Equity Fund and its predecessor SIA S 25.39% 25.94% 26.20%
International Equity Fund and its predecessor SIA I 12.27% 12.76% 12.99%
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
5 YEARS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Class Y Class S
Prime Fund and its predecessor SIA G 3.99% 4.44% 4.66%
Short-Term Bond Fund and its predecessor SIA F 5.44% 5.90% 6.12%
Core Bond Fund and its predecessor SIA E 6.81% 7.28% 7.50%
Balanced Fund and its predecessor SIA M 11.95% 12.44% 12.67%
Value Equity Fund and its predecessor SIA A 17.64% 18.15% 18.40%
Small Cap Value Equity Fund and its predecessor SIA S 16.24% 16.75% 16.99%
International Equity Fund and its predecessor SIA I 16.24% 16.75% 16.99%
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
10 YEARS (or since inception)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Class Y Class S
Prime Fund and its predecessor SIA G 5.10% 5.56% 5.78%
Short-Term Bond Fund and its predecessor SIA F (April 30, 1989) 6.85% 7.32% 7.55%
Core Bond Fund and its predecessor SIA E 8.29% 8.77% 8.99%
Balanced Fund and its predecessor SIA M (October 10, 1987) 12.03% 12.52% 12.75%
Value Equity Fund and its predecessor SIA A 15.72% 16.22% 16.46%
Small Cap Value Equity Fund and its predecessor SIA S 16.40% 16.91% 17.15%
International Equity Fund and its predecessor SIA I (July 31, 1991) 12.74% 13.23% 13.47%
- --------------------------------------------------------------------------------------------------------------------------
</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 the Appendix to the
SAI. 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
David L. Babson and Company Incorporated
One Memorial Drive
Cambridge, Massachusetts 02142
HarbourView Asset Management Corporation
Two World Trade Center
New York, New York 10048
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.
1500 Main Street, Suite 2300
Springfield, Massachusetts 01101
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, Massachusetts 02110
29
<PAGE>
B2098 598
<PAGE>
MASSMUTUAL INSTITUTIONAL FUNDS
1295 State Street
Springfield, Massachusetts 01111
STATEMENT OF ADDITIONAL INFORMATION
THIS STATEMENT OF ADDITIONAL INFORMATION ("SAI") IS NOT A PROSPECTUS. IT SHOULD
BE READ IN CONJUNCTION WITH THE PROSPECTUS OF MASSMUTUAL INSTITUTIONAL FUNDS
(THE "TRUST") DATED MAY 1, 1998, AS AMENDED FROM TIME TO TIME (THE
"PROSPECTUS"). TO OBTAIN A PROSPECTUS, CALL YOUR REGISTERED REPRESENTATIVE, AT
(413) 788-8411, OR WRITE THE TRUST AT THE ABOVE ADDRESS.
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
SAI 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 SAI
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 SAI 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
DATED MAY 1, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
GENERAL INFORMATION ..................................................... 3
ADDITIONAL INVESTMENT POLICIES .......................................... 3
FUNDAMENTAL INVESTMENT RESTRICTIONS ..................................... 8
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS ................................. 9
MANAGEMENT OF THE TRUST ................................................. 10
COMPENSATION ............................................................ 14
CONTROL PERSON AND PRINCIPAL HOLDER OF SECURITIES ....................... 15
INVESTMENT MANAGER AND SUB-ADVISERS ..................................... 15
ADMINISTRATOR AND SUB-ADMINISTRATOR ..................................... 17
THE DISTRIBUTOR ......................................................... 18
CLASS A SERVICE PLANS ................................................... 18
CUSTODIAN, DIVIDEND DISBURSING AGENT AND TRANSFER AGENT ................. 19
INDEPENDENT PUBLIC ACCOUNTANT ........................................... 19
PORTFOLIO TRANSACTIONS AND BROKERAGE .................................... 19
SHAREHOLDER INVESTMENT ACCOUNT .......................................... 20
REDEMPTION OF SHARES .................................................... 21
VALUATION OF PORTFOLIO SECURITIES ....................................... 21
DESCRIPTION OF SHARES ................................................... 22
INVESTMENT PERFORMANCE .................................................. 22
TAXATION ................................................................ 24
EXPERTS ................................................................. 26
APPENDIX - DESCRIPTION OF SECURITIES RATINGS ............................ 27
REPORT OF INDEPENDENT ACCOUNTANTS ....................................... 29
AUDITED FINANCIAL STATEMENTS ............................................ 30
2
<PAGE>
GENERAL INFORMATION
-------------------
MassMutual Institutional Funds (the "Trust") is a professionally managed,
open-end, investment company. This SAI describes the following seven separate,
diversified series of the Trust: (1) MassMutual Prime Fund ("Prime Fund"), (2)
MassMutual Short-Term Bond Fund ("Short-Term Bond Fund"), (3) MassMutual Core
Bond Fund ("Core Bond Fund"), (4) MassMutual Balanced Fund ("Balanced Fund"),
(5) MassMutual Value Equity Fund ("Value Equity Fund"), (6) MassMutual Small Cap
Value Equity Fund ("Small Cap Value Equity Fund"), and (7) MassMutual
International Equity Fund ("International Equity Fund") (each individually
referred to as a "Fund" or collectively as the "Funds"). Currently, the Trustees
have authorized a total of twelve separate series. Additional series may be
created by the Trustees from time-to-time.
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").
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 Incorporated ("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 SAI 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
long-term 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 Short-Term Bond Fund, the Core Bond Fund or the Core Bond Sector of
the Balanced 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
Short-Term Bond Fund, the Core Bond Fund or the Core Bond Sector of the Balanced
Fund is downgraded below investment-grade level, the adviser may continue to
hold such security if the adviser determines that to do so is in the Fund's best
interest.
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 ("NYSE")
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 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
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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."
ROLL TRANSACTIONS
To take advantage of attractive financing opportunities in the mortgage market
and to enhance current income, each of the Funds may engage in dollar roll
transactions. A dollar roll transaction involves a sale by a Fund of a GNMA
certificate or other mortgage backed securities to a financial institution, such
as a bank or broker-dealer, concurrently with an agreement by the Fund to
repurchase a similar security from the institution at a later date at an agreed
upon price. The securities that are repurchased will bear the same interest rate
as those sold, but generally will be collateralized by different pools of
mortgages with different prepayment histories than those sold. During the period
between the sale and repurchase, the Fund will not be entitled to receive the
interest and principal payments on the securities sold. Proceeds of the sale
will be invested in additional instruments for the Fund. A Fund is compensated
for agreeing to repurchase the security by the difference between the current
sales price and the price for the future purchase (often referred to as the
"drop") as well as by the interest earned on the cash proceeds of the initial
sale. Dollar rolls may be renewed over a period of several months with a
different repurchase and repurchase price and a cash settlement made at each
renewal without physical delivery of securities. Moreover, a Fund may enter into
a dollar roll transaction involving a security not then in the Fund's portfolio
so long as the transaction is preceded by a firm commitment agreement pursuant
to which the Fund has agreed to buy the securities on a future date.
The Funds will not use such transactions for leveraging purposes and,
accordingly, will segregate cash or other liquid securities in an amount
sufficient to meet its obligations under the roll transactions. Dollar roll
transactions involve potential risks of loss which are different from those
related to the securities underlying the transaction. For example, if the
counterparty were to become insolvent, the Fund's right to purchase from the
counterparty may be restricted. Additionally, the market value of the securities
sold by the Fund may decline below the repurchase price of those securities to
be purchased. Dollar roll transactions 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 total 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 (which may
be invested by the Fund in any investment not otherwise prohibited
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by the Prospectus or this SAI), 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 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, Inc. ("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
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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 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 expects to invest in restricted or illiquid
securities, although, as a non-fundamental 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
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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 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 intends 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 SAI 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
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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.
(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 fundamental investment restrictions described above, 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 restrictions 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 the Fund are purchased or otherwise
acquired by other series of the Trust, acquire any securities of
registered open-end investment companies or registered unit investment
trusts in reliance on 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) of the Trust. 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) and Executive Vice President,
MassMutual; 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, Oppenheimer Acquisition Corporation
(holding company for investment advisers); 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 (since 1995), Vice Chairman (1993-1995)
and President (1988-1993), MML Series Investment Fund (open-end investment
company).
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
Retired; former adviser to Chairman (since 1997), Chairman and Chief
Executive Officer (1989-1996) and Director (1985-1996), The Stanley Works
(manufacturer of tools, hardware and specialty hardware products);
Director, Southern New England Telecommunications Corp. and Perkin Elmer
Corp.; 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.
10
<PAGE>
Mary E. Boland Trustee of the Trust
67 Market Street
Springfield, MA 01102
Age: 59
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
Chairman and Chief Executive Officer (since 1997), President and Chief
Executive Officer (1985-1997), People's Bank; Director, United Illuminating
Co. (electric utility); 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, MA 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), HSB Group Inc. (formerly known as Hartford Steam Boiler
Inspection and Insurance Co.), New England Education Loan Marketing
Corporation; Director, Kimco Realty Corp. (shopping center ownership and
management); Director (since 1993), Jefferies Group, Inc. (financial
services 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); Vice Chairman (since 1995), Chairman (1988-1995),
MML Series Investment Fund (open-end 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.; Director,
Connecticut Natural Gas; Director, Emerging Markets Growth Fund (closed-end
investment company); Director (since 1997), United Asset Management Corp.
(investment management); 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.
11
<PAGE>
F. William Marshall, Jr. Trustee of the Trust
1441 Main Street
Springfield, MA 01102
Age: 56
President, Chief Executive Officer and Director (since 1993), SIS Bancorp,
Inc. and 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, MA 01111
Age: 48
Executive Vice President (since 1997), MassMutual; Executive Vice
President, Director and Chief Operating Officer (1995-1997), David L.
Babson and Company Incorporated (investment adviser); Chief Operating
Officer (1993-1996), Concert Capital Management, Inc.; Senior Vice
President and Director (1995-1997), Potomac Babson Incorporated; Chief
Financial Officer (1985-1993), Liberty Financial Companies (financial
services); Director, Emerald Isle Bancorp and Hibernia Savings Bank
(wholly-owned subsidiary of Emerald Isle Bancorp).
John H. Southworth Trustee of the Trust
195 Eton Road
Longmeadow, MA 01106
Age: 70
Chairman (since 1993), 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: 43
Chief Executive Director (since 1997), Executive Director (1996-1997),
Senior Vice President (1993-1996), MassMutual; President (since 1995),
Executive Vice President (1993-1995), MassMutual Corporate Investors and
MassMutual Participation Investors (closed-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
funds sponsored by MassMutual); 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 (1994-1996), Pace Industries
(aluminum die caster); Advisory Board Member (since 1995), Kirtland Capital
Partners; Chairman and President (1990-1993), Aetna Financial Services,
Inc.; President (since 1993), 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.
12
<PAGE>
Stephen L. Kuhn Vice President and Secretary of the Trust
1295 State Street
Springfield, MA 01111
Age: 51
Vice President and Associate General Counsel, MassMutual; Vice President
and Secretary, MassMutual Participation Investors and MassMutual Corporate
Investors (closed-end investment companies); President, MassMutual/Carlson
CBO Incorporated; Assistant Secretary (since 1996), Antares Leveraged
Capital Corp. (finance company); Chief Legal Officer and Assistant
Secretary (since 1995), DLB Acquisition Corporation (holding company for
investment advisers); Assistant Secretary (since 1997), Oppenheimer
Acquisition Corporation (holding company for investment advisers); Vice
President and Secretary, MML Series Investment Company (open-end investment
company).
Charles C. McCobb, Jr. Vice President of the Trust
1295 State Street
Springfield, MA 01111
Age: 54
Managing Director (since 1997), MassMutual; Managing Director and Vice
President (1994-1997), Citicorp, Inc. (banking); Managing Director
(1985-1994), Aetna Life & Casualty Company (insurance company); Vice
President (since 1996), MassMutual Corporate Investors and MassMutual
Participation Investors (closed-end investment companies).
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: 39
Senior Managing Director (since 1996), Second Vice President (1992-1996),
MassMutual; Treasurer, MassMutual Corporate Investors and MassMutual
Participation Investors (closed-end investment companies); Vice President
and Chief Financial Officer (since 1996), HYP Management, Inc. (managing
member of MassMutual High Yield Partners LLC) and MMHC Investment Inc.
(investor in funds sponsored by MassMutual); Vice President and Treasurer,
MassMutual/Darby CBO IM Inc. (manager of MassMutual/Darby CBO LLC, a high
yield bond fund); Treasurer (since 1996), MML Series Investment Fund
(open-end 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
(closed-end investment companies); Comptroller (since 1997), Associate
Treasurer (1995-1996), MML Series Investment Fund (open-end 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
13
<PAGE>
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.
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.
The following table discloses the compensation paid to the Registrant's
non-interested trustees for the 1997 fiscal year. The Registrant has no pension,
retirement, or deferred compensation plans. Each of the non-interested Trustees
also serve as a Trustee or an Advisory Board Member of one other registered,
open-end investment company managed by MassMutual. Total Compensation from
Registrant and Fund Complex reflects compensation paid in the 1997 fiscal year.
Total Compensation
Aggregate From Registrant and
Name/Position Compensation from Registrant Fund Complex
Ronald J. Abdow
Trustee $16,000 $32,000
- --------------------------------------------------------------------------------
Richard H. Ayers
Trustee 15,674 31,674
- --------------------------------------------------------------------------------
Mary E. Boland
Trustee 16,000 32,000
- --------------------------------------------------------------------------------
David E.A. Carson
Trustee 15,674 31,674
- --------------------------------------------------------------------------------
Richard W. Greene
Trustee 15,674 31,674
- --------------------------------------------------------------------------------
Beverly C.L. Hamilton
Trustee 15,674 31,674
- --------------------------------------------------------------------------------
F. William Marshall, Jr.
Trustee 16,000 32,000
- --------------------------------------------------------------------------------
Charles J. McCarthy
Trustee 17,000 34,000
- --------------------------------------------------------------------------------
John H. Southworth
Trustee 17,000 34,000
- --------------------------------------------------------------------------------
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,
14
<PAGE>
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 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 series 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 series or classes materially differently, shares will be voted by individual
series or class; and (ii) when the Trustees have determined that any matter
affects only the interests of one or more series or classes, then only
shareholders of such series or class shall be entitled to vote thereon.
Shareholder inquiries should be directed to MassMutual Institutional Funds, 1295
State Street, Springfield, Massachusetts 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 constituted 100% of the shares of each class of each Fund of the Trust
as of April 1, 1998.
INVESTMENT MANAGER AND SUB-ADVISERS
-----------------------------------
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 the 1940 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.
15
<PAGE>
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; various private domestic and offshore investment
funds and partnerships; and various employee benefit plans and separate
investment accounts in which employee benefit plans invest.
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 years, the Funds have paid the following amounts as
investment advisory fees to MassMutual pursuant to each Advisory Agreement:
Gross Waiver* Net
Prime Fund
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
Year ended 12/31/97 1,155,353 (29,758) 1,125,595
Short-Term Bond Fund
Year ended 12/31/95 528,655 (39,446) 489,209
Year ended 12/31/96 606,206 (47,791) 558,415
Year ended 12/31/97 769,014 (18,246) 750,768
Core Bond Fund
Year ended 12/31/95 964,830 (91,069) 873,761
Year ended 12/31/96 1,375,667 (128,270) 1,247,397
Year ended 12/31/97 1,869,877 (49,361) 1,820,516
Balanced Fund
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
Year ended 12/31/97 2,799,328 (74,994) 2,724,334
Value Equity Fund
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
Year ended 12/31/97 13,063,454 (391,015) 12,672,439
Small Cap Value Equity Fund
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
Year ended 12/31/97 3,149,017 (65,671) 3,083,346
International Equity Fund
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
Year ended 12/31/97 4,149,537 (50,753) 4,098,784
* MassMutual's voluntary agreement to waive a portion of its management fee
terminated May 1, 1997. See "Financial Highlights" in the Prospectus.
16
<PAGE>
INVESTMENT SUB-ADVISERS
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.
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 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.
YEAR 2000 ISSUE
Like other businesses and governments around the world, the Trust could be
adversely affected if the computer systems used by MassMutual (and those with
which it does business on behalf of the Trust) and the Trust's other service
providers do not properly recognize the Year 2000. This is commonly known as
"Year 2000 issue." In 1996, MassMutual began an enterprise-wide process of
identifying, evaluating and implementing changes to computer systems and
applications software to address the Year 2000 issue. MassMutual has informed
the Trust that this is one of MassMutual's highest business operational
priorities. MassMutual is addressing the Year 2000 issue internally with
modifications to existing programs and conversions to new programs. MassMutual
is also seeking assurances from vendors, service providers, including a Fund's
investment sub-adviser, and others with which MassMutual and the Trust conduct
business in order to identify and resolve Year 2000 issues.
ADMINISTRATOR AND SUB-ADMINISTRATOR
-----------------------------------
MassMutual has entered into a separate administrative services agreement (each
an "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. 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. MassMutual has entered into a
sub-administration agreement with Investors Bank & Trust Company ("IBT"). As
sub-administrator, IBT generally assists in all aspects of fund administration
and is compensated by MassMutual for providing administrative services to the
Funds.
For the last three fiscal years, the Funds have paid the following amounts as
administrative services fees to MassMutual pursuant to each Administrative
Services Agreement:
Prime Fund
Year ended 12/31/95 $186,608
Year ended 12/31/96 208,805
Year ended 12/31/97 209,004
Short-Term Bond Fund
Year ended 12/31/95 93,087
Year ended 12/31/96 106,637
Year ended 12/31/97 134,919
17
<PAGE>
Core Bond Fund
Year ended 12/31/95 181,925
Year ended 12/31/96 258,828
Year ended 12/31/97 348,743
Balanced Fund
Year ended 12/31/95 342,532
Year ended 12/31/96 431,541
Year ended 12/31/97 527,470
Value Equity Fund
Year ended 12/31/95 1,668,405
Year ended 12/31/96 2,088,712
Year ended 12/31/97 2,594,600
Small Cap Value Equity Fund
Year ended 12/31/95 303,658
Year ended 12/31/96 361,815
Year ended 12/31/97 490,532
International Equity Fund
Year ended 12/31/95 181,945
Year ended 12/31/96 275,670
Year ended 12/31/97 467,044
THE DISTRIBUTOR
---------------
The Trust's shares are continuously distributed by OppenheimerFunds Distributor,
Inc. (the "Distributor") pursuant to an Amended and Restated Distribution
Agreement with the Trust dated December 1, 1997 (the "Distribution Agreement").
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
Investors Services, Inc. serves as the sub-distributor (the "Sub-Distributor")
to the Trust pursuant to an agreement with the Distributor dated September 8,
1994.
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 (as defined in the 1940 Act) of any
such person, cast in person at a meeting called for the purpose of voting on
such approval.
CLASS A SERVICE PLANS
---------------------
The Trust has adopted, with respect to the Class A shares of each Fund, a
Service Plan and Agreement (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
Plans on August 4, 1997. Under the terms of each Plan, the Trust is permitted to
compensate, out of the assets attributable to the Class A shares of the
applicable Fund, in an amount up to 0.25% on an annual basis of the average
daily net assets attributable to that class, MassMutual for services provided
and expenses incurred by it for purposes of maintaining or providing personal
services (the "Servicing Fee") to Class A shareholders. The Servicing Fee may be
spent by MassMutual on personal services rendered to Class A shareholders of a
Fund and/or maintenance of Class A shareholder accounts. MassMutual's Servicing
Fee expenditures may include, but shall not be limited to, compensation to, and
expenses (including telephone and overhead expenses) of agents or employees of
MassMutual, the Distributor or Sub-Distributor, pension consultants or
participating or introducing brokers and other financial intermediaries who
assist investors in completing account forms and selecting dividend and other
account options; who aid in the processing of redemption requests for Class A
shares or the processing of dividend payments with respect to Class A shares;
who prepare, print and deliver prospectuses and shareholder reports to Class A
shareholders; who
18
<PAGE>
oversee compliance with federal and state laws pertaining to the sale of Class A
shares; who provide information periodically to Class A shareholders showing
their position in Class A shares; who issue account statements to Class A
shareholders; who furnish shareholder sub-accounting; who forward communications
from a Fund to Class A shareholders; who render advice regarding particular
shareholder account options offered by a Fund in light of shareholder needs; who
provide and maintain elective shareholder services; who provide and maintain
pre-authorized investment plans for Class A shareholders; who respond to
inquiries from Class A shareholders relating to such services; and/or who
provide such similar services as permitted under applicable statutes, rules or
regulations.
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)
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 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.
The Conduct 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 all of the fees
paid pursuant to the Plans will qualify as "service fees" and therefore will not
be limited by NASD rules.
The Plans were not in effect during the fiscal year ended December 31, 1997, and
no payments were made thereunder in prior fiscal periods.
Under 12b-1 plans for classes of shares of the Funds that no longer exist, the
Trust paid distribution and service fees in 1997 of approximately $898 for the
Prime Fund, $951 for the Short-Term Bond Fund, $999 for the Core Bond Fund,
$1169 for the Balanced Fund, $1414 for the Value Equity Fund, $1329 for the
Small Cap Value Equity Fund, and $1008 for the International Equity Fund, of
which approximately $5,348 was paid to the Distributor for distribution services
and approximately $2,420 was paid to MassMutual for sales related expenses.
CUSTODIAN, DIVIDEND DISBURSING AGENT AND TRANSFER AGENT
-------------------------------------------------------
IBT, 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 1500 Main Street, Suite 2300, Springfield,
Massachusetts 01101, is the Trust's independent public accountant.
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
over-the-counter 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
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adviser attempts to achieve this result by selecting broker-dealers 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 broker-dealers, 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.
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,
1997, December 31, 1996 and December 31, 1995, respectively, were as follows:
Balanced Fund $174,902, $115,756, and $87,156; Value Equity Fund $1,494,262,
$933,716, and $643,882; Small Cap Value Equity Fund $423,705, $430,964, and
$291,912; and International Equity Fund $2,025,648, $1,103,103, and $1,218,802.
Approximately $35,000 and $24,000 of the brokerage commissions paid by the Fund
for the fiscal years ended December 31, 1997 and 1996, respectively, were paid
to Jefferies & Co., Inc. ("Jefferies"). Jefferies is a wholly-owned subsidiary
of a company for which one Trustee serves as a director.
The Prime Fund, Short-Term 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.
- -------------------
/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.
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<PAGE>
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 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 90-day 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 Custodian at
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 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 Board of
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 amortized cost unless such value does not 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.
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<PAGE>
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 is 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.
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
22
<PAGE>
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 30-day period ended December 31, 1997.
Yield for the 30-Day Period Ended December 31, 1997
Class S Shares* (Unaudited)
Fund Yield
Prime Fund 5.53%
Short-Term Bond Fund 5.69%
Core Bond Fund 6.15%
*Yield for Class A and Y shares may differ due to different expense structures.
PERFORMANCE COMPARISONS
From time-to-time and only to the extent the comparison is appropriate for the
Funds, the Trust may quote the performance of the Funds in advertising and other
types of literature and may compare the performance of the Funds to the
performance of various indices and investments for which reliable performance
data is available. The performance of the Funds may be compared in advertising
and other literature to averages, performance rankings and other information
prepared by recognized mutual fund statistical services.
Performance information for the Funds may be compared, in reports and
promotional literature, to the S&P 500 Index, the Russell 2000 Index, the Lehman
Brothers 20+ Treasury Index, Donoghue's Money Fund Averages, the Lehman Brothers
5-7 Year Treasury Index, Lehman Brothers Government Bond Index, Lehman Brothers
Treasury Bond Index, Lipper Balanced Fund Average, Lipper Growth Fund Average,
Lipper Flexible Portfolio Fund Average, Lehman Brothers Intermediate Treasury
Index, 91-Day Treasury Bill Average, Morgan Stanley Capital International Index
for Europe, Australia and the Far East ("MSCI EAFE Index"), or other appropriate
managed or unmanaged indices of the performance of various types of investments,
so that investors may compare a Fund's results with those of indices widely
regarded by investors as representative of the security markets in general.
Unmanaged indices may assume the reinvestment of dividends, but generally do not
reflect deductions for administrative and management costs and expenses. Managed
indices generally do reflect such deductions.
The Trust also may use the following information in advertisements and other
types of literature, but only to the extent the information is appropriate for
the Funds: (1) the Consumer Price Index may be used to assess the real rate of
return from an investment in a Fund; (2) other government statistics, including,
but not limited to, The Survey of Current Business, may be used to illustrate
investment attributes of a Fund or the general economic, business, investment,
or financial environment in which the Fund operates; (3) the effect of
tax-deferred compounding on the investment returns of a Fund, or on returns in
general, may be illustrated by graphs, charts, etc., where such graphs or charts
would compare, at various points in time, the return from an investment in the
Fund (or returns in general) on a tax-deferred basis (assuming reinvestment of
capital gains and dividends and assuming one or more tax rates) with the return
on a taxable basis; and (4) the sectors or industries in which a Fund invests
may be compared to relevant indices of stocks or surveys (e.g., S&P Industry
Surveys) to evaluate the Fund's historical performance or current or potential
value with respect to the particular industry or sector.
Each of the Fund's performance also may be compared to those of other mutual
funds having similar objectives. This comparative performance could be expressed
as a ranking prepared by Lipper Analytical Services, Inc., (including the Lipper
General Bond Fund Average, the Lipper Intermediate Investment Grade Debt Fund
Average, the Lipper Bond Fund Average, the Lipper Growth Fund Average, the
Lipper Flexible Fund Average), Donoghue's Money Fund Report, including
Donoghue's Taxable Money Market Fund Average or Morningstar, Inc., independent
services which monitor the performance of mutual funds. Any such comparisons may
be useful to investors who wish to compare a Fund's past performance with that
of its competitors. Of course, past performance cannot be a guarantee of future
results.
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<PAGE>
OTHER ADVERTISING ITEMS
The Trust may discuss in advertising and other types of literature that a Fund
has been assigned a rating by a NRSRO, such as S&P. Such rating would assess the
creditworthiness of the investments held by such Fund. The assigned rating would
not be a recommendation to purchase, sell or hold the Fund's shares since the
rating would not comment on the market price of the Fund's shares or the
suitability of the Fund for a particular investor. In addition, the assigned
rating would be subject to change, suspension or withdrawal as a result of
changes in, or unavailability of, information relating to the Fund or its
investments. The Trust may compare a Fund's performance with other investments
which are assigned ratings by NRSROs. Any such comparisons may be useful to
investors who wish to compare a Fund's past performance with other rated
investments. Of course past performance cannot be a guarantee of future results.
General mutual fund statistics provided by the Investment Company Institute may
also be used.
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.
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,
24
<PAGE>
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 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.
25
<PAGE>
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 SAI for each period through December
31, 1997, 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.
26
<PAGE>
APPENDIX - DESCRIPTION OF SECURITIES RATINGS
Although the ratings of fixed-income securities by S&P and 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. Issues assigned the highest
rating of A 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. The A-1 and A-2 categories are described
as follows:
A-1 This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics will be noted with a plus (+) sign designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. 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.
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<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 Caa 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.
28
<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, 1997, 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
three 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 based 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, 1997, 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, 1997 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 three 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 6, 1998
29
<PAGE>
MassMutual Prime Fund - Portfolio of Investments
Portfolio of Investments
December 31, 1997
Principal
Amount Market Value
------ ------------
SHORT-TERM INVESTMENTS--94.4%
Commercial Paper--92.2%
Aristar, Inc.
5.890% 2/19/1998 $3,245,000 $ 3,218,985
Aristar, Inc.
5.950% 2/06/1998 7,200,000 7,157,160
Baxter International
Inc.
5.800% 4/15/1998 2,650,000 2,604,449
Baxter International
Inc.
5.850% 4/15/1998 7,645,000 7,513,591
Boston Scientific
Corporation
5.970% 1/29/1998 5,600,000 5,573,997
Burlington Northern
Santa Fe Corp.
5.890% 2/17/1998 10,000,000 9,923,103
Carter Holt Harvey
Limited
5.750% 1/30/1998 5,100,000 5,076,377
Carter Holt Harvey
Limited
5.800% 2/03/1998 4,415,000 4,391,527
Carter Holt Harvey
Limited
6.000% 1/30/1998 880,000 875,747
Comdisco, Inc.
5.900% 2/25/1998 3,465,000 3,433,767
ConAgra, Inc.
5.720% 2/26/1998 6,400,000 6,343,054
Cox Enterprises, Inc.
5.780% 1/22/1998 2,875,000 2,865,307
Crown Cork & Seal
Company Inc.
5.950% 2/18/1998 1,215,000 1,205,361
Crown Cork & Seal
Company Inc.
5.970% 1/28/1998 3,620,000 3,603,792
Crown Cork & Seal
Company Inc.
5.970% 2/24/1998 5,425,000 5,376,419
CSX Corporation
5.710% 1/14/1998 3,700,000 3,692,371
CSX Corporation
5.730% 1/16/1998 4,450,000 4,439,375
CSX Corporation
5.740% 2/06/1998 1,950,000 1,938,807
Dana Credit
Corporation
6.060% 2/05/1998 1,455,000 1,446,428
Dominion Resources,
Inc.
5.950% 1/27/1998 5,900,000 5,874,646
Echlin, Inc.
5.740% 2/11/1998 2,810,000 2,791,630
Echlin, Inc.
5.900% 2/23/1998 4,975,000 4,931,787
Enron Corp.
5.740% 1/23/1998 1,855,000 1,848,493
Federal Signal Corp.
5.720% 1/15/1998 3,815,000 3,806,514
Federal Signal Corp.
5.730% 1/15/1998 4,065,000 4,055,942
Fina Oil and Chemical
Company
5.780% 3/26/1998 1,200,000 1,183,340
Finova Capital
Corporation
5.640% 1/29/1998 4,630,000 4,609,690
Humana, Inc.
5.750% 1/09/1998 1,975,000 1,972,476
Humana, Inc.
5.999% 1/08/1998 1,565,000 1,563,174
Illinois Power
Company
5.760% 1/13/1998 4,510,000 4,501,341
Illinois Power
Company
5.780% 1/20/1998 5,845,000 5,827,170
Lockheed Martin
Corporation
5.770% 2/10/1998 5,970,000 5,931,726
Lockheed Martin
Corporation
5.830% 4/13/1998 2,340,000 2,300,552
Lockheed Martin
Corporation
5.850% 3/13/1998 2,100,000 2,075,357
Mallinckrodt Group
Inc.
6.050% 2/13/1998 5,220,000 5,182,278
Mallinckrodt Group
Inc.
6.300% 1/05/1998 1,320,000 1,319,076
ORIX Credit Alliance,
Inc.
5.710% 2/20/1998 2,775,000 2,752,993
ORIX Credit Alliance,
Inc.
5.840% 2/27/1998 1,250,000 1,238,442
ORIX Credit Alliance,
Inc.
5.980% 3/13/1998 1,690,000 1,670,168
ORIX Credit Alliance,
Inc.
6.150% 3/12/1998 3,945,000 3,899,359
Public Service
Electric and Gas
Company
5.750% 2/05/1998 3,180,000 3,162,223
Public Service
Electric and Gas
Company
5.800% 2/04/1998 7,200,000 7,160,560
Ryder System, Inc.
6.080% 2/24/1998 3,710,000 3,676,165
Ryder System, Inc.
6.220% 3/03/1998 2,925,000 2,895,510
Textron Financial
Corporation
5.870% 3/25/1998 1,215,000 1,198,333
Textron Financial
Corporation
5.900% 2/12/1998 260,000 258,210
(Continued)
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
MassMutual Prime Fund - Portfolio of Investments (Continued)
Principal
Amount Market Value
------ ------------
Textron Financial
Corporation
5.980% 3/20/1998 $3,600,000 $3,553,590
Textron Financial
Corporation
6.020% 2/13/1998 3,700,000 3,673,395
Textron Financial
Corporation
6.100% 1/29/1998 1,060,000 1,054,971
Union Camp Corp.
5.600% 1/26/1998 1,600,000 1,593,778
Union Camp Corp.
5.640% 5/01/1998 4,350,000 4,263,725
Union Pacific
Corporation
5.800% 2/02/1998 2,470,000 2,457,265
Union Pacific
Corporation
5.930% 2/11/1998 4,775,000 4,742,752
Union Pacific
Corporation
6.050% 3/09/1998 3,275,000 3,238,734
UOP
5.770% 2/27/1998 4,900,000 4,855,234
UOP
5.850% 1/21/1998 4,990,000 4,973,783
Vastar Resources, Inc.
5.820% 2/12/1998 4,510,000 4,479,377
Vastar Resources, Inc.
5.850% 3/18/1998 5,655,000 5,583,967
Volvo AB
5.800% 2/09/1998 10,000,000 9,937,167
------------
222,774,510
------------
Discount Notes -- 2.2%
Farm Credit
5.420% 11/20/1998 1,390,000 1,315,695
Federal National
Mortgage Association
5.410% 4/27/1998 4,200,000 4,119,476
------------
5,435,171
------------
TOTAL SHORT-TERM
INVESTMENTS 228,209,681
(Cost $228,230,839)+ ------------
TOTAL INVESTMENTS -- 94.4% 228,209,681
Other Assets/
(Liabilities) - 5.6% 13,508,786
------------
NET ASSETS -- 100.0% $241,718,467
============
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.
31
<PAGE>
MassMutual Prime Fund - Financial Statements
Statement of Assets and Liabilities
December 31, 1997
-----------------
Assets:
Short-term investments, at value (cost $228,230,839)
(Note 2)............................................... $ 228,209,681
Cash .................................................... 881
Receivables from:
Fund shares sold ...................................... 15,760,118
----------------
Total assets .......................................... 243,970,680
----------------
Liabilities:
Payables for:
Fund shares redeemed .................................. 2,101,153
Directors' fees and expenses (Note 3) ................. 5,869
Affiliates (Note 3):
Investment management fees .......................... 105,518
Administration fees ................................. 18,390
Service and distribution fees ....................... 230
Accrued expenses and other liabilities .................. 21,053
----------------
Total liabilities ................................... 2,252,213
----------------
Net assets .............................................. $ 241,718,467
================
Net assets consist of:
Paid-in capital ......................................... $ 241,757,785
Accumulated net realized loss on investments ............ (18,160)
Net unrealized depreciation on investments .............. (21,158)
----------------
$ 241,718,467
================
Net assets:
Class 1 ................................................. $ 114,315
================
Class 2 ................................................. $ 116,323
================
Class 3 ................................................. $ 117,416
================
Class S ................................................. $ 241,370,413
================
Shares outstanding:
Class 1 ................................................. 757.816
================
Class 2 ................................................. 769.958
================
Class 3 ................................................. 776.927
================
Class S ................................................. 1,600,181.474
================
Net asset value, offering price and
redemption price per share:
Class 1 ................................................. $ 150.85
================
Class 2 ................................................. $ 151.08
================
Class 3 ................................................. $ 151.13
================
Class S ................................................. $ 150.84
================
The accompanying notes are an integral part of the financial statements.
32
<PAGE>
MassMutual Prime Fund - Financial Statements (Continued)
<TABLE>
<CAPTION>
Statement of
Operations
Year ended
December 31, 1997
-----------------
<S> <C>
Investment income:
Interest .................................................. $ 14,872,581
------------
Expenses (Note 1):
Investment management fees (Note 3) ......................... 1,155,353
Custody fees .............................................. 23,463
Audit and legal fees ...................................... 8,135
Directors' fees (Note 3) .................................. 21,363
Fees waived by the investment manager (Note 3) ............ (29,758)
------------
1,178,556
Administration fees (Note 3):
Class 1 ................................................. 630
Class 2 ................................................. 583
Class 3 ................................................. 361
Class S ................................................. 207,430
Distribution and service fees (Note 3):
Class 1 ................................................. 728
Class 2 ................................................. 170
------------
Net expenses .......................................... 1,388,458
------------
Net investment income ................................. 13,484,123
------------
Realized and unrealized gain (loss):
Net realized loss on investment transactions .............. (11,009)
Net change in unrealized appreciation (depreciation)
on investments .......................................... (13,070)
------------
Net realized and unrealized loss ...................... (24,079)
------------
Net increase in net assets resulting from operations ...... $ 13,460,044
============
<CAPTION>
Statements of
Changes in Net
Assets
Year ended Year ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income .................................... $ 13,484,123 $ 13,029,745
Net realized loss on investment transactions ............. (11,009) (5,068)
Net change in unrealized appreciation (depreciation)
on investments ......................................... (13,070) 11,447
------------- -------------
Net increase in net assets resulting from operations ... 13,460,044 13,036,124
------------- -------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1 .................................................. (4,723) (4,288)
Class 2 .................................................. (5,393) (4,922)
Class 3 .................................................. (5,838) (5,335)
Class S .................................................. (13,552,104) (13,067,477)
------------- -------------
Total distributions from net investment income ......... (13,568,058) (13,082,022)
------------- -------------
Net fund share transactions (Note 5):
Class 1 .................................................. 4,723 4,288
Class 2 .................................................. 5,393 4,922
Class 3 .................................................. 5,838 5,335
Class S .................................................. (17,250,954) 4,838,727
------------- -------------
Increase (Decrease) in net assets from net fund
share transactions ................................... (17,235,000) 4,853,272
------------- -------------
Total increase (decrease) in net assets .................. (17,343,014) 4,807,374
Net assets:
Beginning of period ...................................... 259,061,481 254,254,107
------------- -------------
End of period (including undistributed net investment
income of $0 and $80,676, respectively) ................ $ 241,718,467 $ 259,061,481
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
33
<PAGE>
MassMutual Prime Fund - Financial Statements (Continued)
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 1
-------
Year ended Year ended Year ended Period ended
12/31/97 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 6.33*** 6.09*** 6.90*** 1.02
Net realized and unrealized gain (loss) on investments (0.01) 0.03 (0.01) 0.42
---------- ---------- ---------- ------------
Total income (loss) from investment operations 6.32 6.12 6.89 1.44
---------- ---------- ---------- ------------
Less distributions to shareholders:
From net investment income (6.50) (6.14) (6.23) (1.05)
---------- ---------- ---------- ------------
Net asset value, end of period $ 150.85 $ 151.03 $ 151.05 $ 150.39
========== ========== ========== ============
Total Return 4.19% 4.05% 4.58% 0.96%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 114 $ 110 $ 105 $ 101
Net expenses to average daily net assets# 1.67% 1.65% 1.65% 1.65%*
Net investment income to average daily net assets 4.11% 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 1
-------
Year ended Year ended Year ended Period ended
12/31/97 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 7.22*** 6.96*** 7.78*** 1.16
Net realized and unrealized gain (loss) on investments (0.03) 0.04 (0.02) 0.57
---------- ---------- ---------- ------------
Total income (loss) from investment operations 7.19 7.00 7.76 1.73
---------- ---------- ---------- ------------
Less distributions to shareholders:
From net investment income (7.34) (7.01) (7.08) (1.17)
---------- ---------- ---------- ------------
Net asset value, end of period $ 151.08 $ 151.23 $ 151.24 $ 150.56
========== ========== ========== ============
Total Return 4.76% 4.63% 5.16% 1.15%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 116 $ 111 $ 106 $ 101
Net expenses to average daily net assets# 1.12% 1.10% 1.10% 1.10%*
Net investment income to average daily net assets 4.66% 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.
34
<PAGE>
MassMutual Prime Fund - Financial Statements (Continued)
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 3
-------
Year ended Year ended Year ended Period ended
12/31/97 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 7.77*** 7.51*** 8.33*** 1.21
Net realized and unrealized gain (loss) on investments (0.02) 0.05 (0.01) 0.61
---------- ---------- ---------- ------------
Total income (loss) from investment operations 7.75 7.56 8.32 1.82
---------- ---------- ---------- ------------
Less distributions to shareholders:
From net investment income (7.91) (7.59) (7.61) (1.21)
---------- ---------- ---------- ------------
Net asset value, end of period $ 151.13 $ 151.29 $ 151.32 $ 150.61
========== ========== ========== ============
Total Return 5.12% 5.00% 5.53% 1.21%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 117 $ 112 $ 106 $ 101
Net expenses to average daily net assets# 0.77% 0.75% 0.75% 0.75%*
Net investment income to average daily net assets 5.01% 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: 0.79% 0.78% 0.78% 0.79%*
<CAPTION>
Class S (1)
-----------
Year ended Year ended Year ended Period ended
12/31/97 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 8.14*** 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 8.13 7.91 8.68 1.89
---------- ---------- ---------- ------------
Less distributions to shareholders:
From net investment income (8.29) (7.97) (7.98) (1.53)
---------- ---------- ---------- ------------
Net asset value, end of period $ 150.84 $ 151.00 $ 151.06 $ 150.36
========== ========== ========== ============
Total Return@ 5.39% 5.24% 5.78% 1.26%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 241,370 $ 258,729 $ 253,936 $ 170,548
Net expenses to average daily net assets# 0.5399% 0.5160% 0.5160% 0.5160%*
Net investment income to average daily net assets 5.25% 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: 0.5515% 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.
(1)Class S shares were previously designated as Class 4 shares.
@ 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.
35
<PAGE>
MassMutual Short-Term Bond Fund - Portfolio of Investments
Portfolio of Investments
December 31, 1997
Principal
Amount Market Value
------ ------------
BONDS & NOTES -- 64.9%
ASSET BACKED SECURITIES -- 6.9%
California
Infrastructure PG&E
1,1997-1, Class A4
6.160% 6/25/2003 $ 550,000 $ 552,101
California
Infrastructure PG&E
1,1997-1, Class A6
6.320% 9/25/2005 250,000 252,178
California
Infrastructure
SCE-1,1997-1,
Class A3
6.170% 3/25/2003 350,000 351,306
California
Infrastructure
SCE-1,1997-1,
Class AS
6.280% 9/25/2005 300,000 301,413
California
Infrastructure
SDG&E-l,1997-1,
Class AS
6.190% 9/25/2005 200,000 200,616
Capita Equipment
Receivables Trust
1996-1, Class A4
6.280% 6/15/2000 1,000,000 1,004,120
Capita Equipment
Receivables Trust
1997-1, Class A3
6.120% 9/15/2000 1,500,000 1,502,340
Chase Manhattan Auto
Owner Trust 1997-A,
Class A4
6.400% 7/16/2001 1,500,000 1,509,375
Chase Manhattan RV
Owner Trust 1997-A,
Class A7
6.140% 10/16/2006 1,000,000 1,001,180
First Bank Corporate
Card Master Trust
1997-1, Class A
6.400% 2/15/2003 $1,000,000 $ 1,008,120
Ford Credit 1994-B
Grantor Trust
7.300% 10/15/1999 159,393 160,588
Ford Credit Auto
Owner Trust 1996-B,
Class A-4
6.300% 1/15/2001 2,000,000 2,007,500
Metlife Capital
Equipment Loan Trust
Series 1997-A,
Class A
6.850% 5/20/2008 1,000,000 1,030,350
Railcar Trust No.
1992-1
7.750% 6/01/2004 1,103,295 1,158,912
World Omni 1996-A
Automobile Lease
Securitization Trust,
Class Al
6.300% 6/25/2002 1,883,748 1,885,500
-----------
TOTAL ASSET BACKED
SECURITIES 13,925,599
-----------
(Cost $13,851,094)
CORPORATE DEBT -- 20.2%
AirTouch
Communications, Inc.
7.500% 7/15/2006 1,000,000 1,061,710
America West Airlines
1996-1, Class A
6.850% 7/02/2009 1,980,748 2,011,173
Analog Devices, Inc.
6.625% 3/01/2000 1,000,000 1,005,920
Associates Corporation
of North America
6.750% 8/01/2001 1,500,000 1,524,555
Bell Atlantic Financial
Services, Inc.
6.610% 2/07/2000 $2,000,000 $2,025,240
BHP Finance (USA)
Limited
7.875% 12/01/2002 1,000,000 1,061,040
Carlisle Companies
Incorporated
7.250% 1/15/2007 1,000,000 1,036,440
The CIT Group
Holdings, Inc.
6.250% 3/22/1999 2,200,000 2,208,492
CSC Enterprises 144A
6.500% 11/15/2001 2,000,000 2,027,780
First Brands
Corporation
7.250% 3/01/2007 1,500,000 1,545,900
General American
Transportation
Corporation
6.750% 3/01/2006 1,000,000 1,010,880
Heller Financial, Inc.
6.330% 7/28/2000 2,000,000 1,998,280
Korea Development Bank
7.375% 9/17/2004 600,000 480,126
Lockheed Martin
Corporation
7.700% 6/15/2008 1,000,000 1,081,720
MAPCO Inc.
7.250% 3/01/2009 1,250,000 1,303,888
Norfolk Southern
Corporation
7.350% 5/15/2007 1,000,000 1,062,850
Orchard Supply
Hardware Stores
Corporation
9.375% 2/15/2002 2,000,000 2,068,880
ORIX Credit Alliance,
Inc. 144A
6.480% 4/20/1999 2,000,000 2,013,260
J.C. Penny Company, Inc.
7.250% 4/01/2002 2,500,000 2,588,200
Rite Aid Corporation
6.700% 12/15/2001 1,000,000 1,010,680
(Continued)
The accompanying notes are an integral part of the financial statements.
36
<PAGE>
MassMutual Short-Term Bond Fund - Portfolio of Investments (Continued)
Principal
Amount Market Value
------ ------------
Union Oil Company of
California
9.875% 8/15/2002 $2,500,000 $ 2,867,975
The US West Capital Funding, Inc.
6.850% 1/15/2002 1,500,000 1,516,890
Valero Pass-Through
Asset Trust 1997-1 144A
6.750% 12/15/2002 1,000,000 1,004,910
Walt Disney Company, The
6.375% 3/30/2001 1,500,000 1,515,555
WR. Grace & Co.
8.000% 8/15/2004 3,240,000 3,505,810
-----------
TOTAL CORPORATE DEBT 40,538,154
-----------
(Cost $39,785,561)
U.S. GOVERNMENT
AGENCY OBLIGATIONS -- 12.8%
Federal Home Loan Mortgage Corporation
(FHLMC) -- 2.2%
Collateralized Mortgage Obligations -- 2.0%
FHLMC Series 1693 Class G
6.000% 7/15/2007 2,000,000 1,988,740
FHLMC Series 1704
Class PE
6.000% 7/15/2007 2,000,000 1,995,000
-----------
3,983,740
-----------
Pass-Through Securities -- 0.2%
FHLMC
4.750% 9/01/2006 341,974 330,645
-----------
4,314,385
-----------
Federal National Mortgage Association
(FNMA) -- 1.8%
Collateralized Mortgage Obligations -- 1.2%
FNMA Series 1993-71
Class PG
6.250% 7/25/2007 2,500,000 2,503,900
-----------
Pass-Through Securities -- 0.6%
FNMA
8.000% 5/01/2013 577,967 589,601
FNMA
9.000% 10/01/2009 616,037 654,810
-----------
1,244,411
-----------
3,748,311
-----------
Government National Mortgage Association
(GNMA) -- 0.8%
Pass-Through Securities
GNMA
8.000% 5/15/2001 -
11/15/2007 1,433,730 1,505,558
-----------
U.S. Government Guaranteed Notes -- 8.0%
1994-A Baxter
Springs, KS
6.310% 8/01/2001 $ 500,000 $ 503,880
1994-A Detroit, MI
6.310% 8/01/2001 450,000 453,492
1994-A Jacksonville,
FL
6.310% 8/01/2001 1,485,000 1,496,524
1994-A Los Angeles
County, CA
6.310% 8/01/2001 225,000 226,746
1994-A Tacoma, WA
6.310% 8/01/2001 195,000 196,513
1994-A Trenton, NJ
6.310% 8/01/2001 145,000 146,125
U.S. Dept. of Housing
and Urban
Development, Series
1995-A
8.080% 8/01/1998 3,000,000 3,041,250
U.S. Dept. of Housing
and Urban
Development, Series
1996-A
6.440% 8/01/1999 2,000,000 2,017,500
U.S. Dept. of Housing
and Urban
Development, Series
1997-A
6.110% 8/01/2000 4,000,000 4,020,000
U.S. Dept. of Housing
and Urban
Development, Series
1997-A
6.230% 8/01/2002 4,000,000 4,035,000
-----------
16,137,030
-----------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS 25,705,284
-----------
(Cost $24,949,590)
U.S. TREASURY OBLIGATIONS -- 25.0%
U.S. Treasury Notes
U.S. Treasury Note
7.125% 2/29/2000 31,000,000 31,896,210
U.S. Treasury Note
8.875% 2/15/1999 17,500,000 18,104,275
-----------
TOTAL U.S. TREASURY
OBLIGATIONS 50,000,485
-----------
(Cost $50,289,938)
TOTAL BONDS & NOTES 130,169,522
-----------
(Cost $128,876,183)
SHORT-TERM INVESTMENTS -- 38.1%
Commercial Paper
Baxter International Inc.
6.050% 2/27/1998 $6,620,000 $ 6,556,586
Burlington Northern
Santa Fe Corp.
5.890% 2/17/1998 4,590,000 4,554,704
Carter Holt Harvey
Limited
6.300% 1/13/1998 5,040,000 5,029,416
Carter Holt Harvey
Limited
6.600% 1/13/1998 265,000 264,417
Comdisco, Inc.
5.770% 1/21/1998 3,440,000 3,428,973
Comdisco, Inc.
6.050% 3/09/1998 1,240,000 1,226,038
Crown Cork & Seal
Company Inc.
5.970% 1/13/1998 245,000 244,512
Crown Cork & Seal
Company Inc.
6.000% 3/09/1998 2,630,000 2,600,632
CSX Corporation
5.820% 1/13/1998 2,620,000 2,614,917
Dominion Resources,
Inc.
5.780% 1/26/1998 1,705,000 1,698,156
Federal Signal Corp.
7.300% 1/02/1998 2,185,000 2,184,557
Humana, Inc.
6.130% 1/09/1998 4,495,000 4,488,877
Illinois Power
Company
5.830% 1/28/1998 4,315,000 4,296,133
ORIX Credit Alliance,
Inc.
5.960% 1/20/1998 575,000 573,191
ORIX Credit Alliance,
Inc.
5.970% 1/20/1998 658,000 655,927
ORIX Credit Alliance,
Inc.
6.020% 1/13/1998 113,000 112,773
ORIX Credit Alliance,
Inc.
6.200% 2/20/1998 5,000,000 4,956,944
ORIX Credit Alliance,
Inc.
7.000% 1/16/1998 340,000 339,008
Public Service
Electric and Gas
Company
5.980% 2/26/1998 1,400,000 1,386,977
(Continued)
The accompanying notes are an integral part of the financial statements.
37
<PAGE>
MassMutual Short-Term Bond Fund - Portfolio of Investments (Continued)
Principal
Amount Market Value
------ ------------
Ryder System, Inc.
6.050% 1/27/1998 $2,965,000 $2,952,044
Ryder System, Inc.
6.450% 3/12/1998 5,700,000 5,628,513
Textron Financial
Corporation
6.050% 2/13/1998 4,185,000 4,154,758
Tyson Foods, Inc.
5.810% 1/23/1998 5,740,000 5,719,620
Union Pacific
Corporation
5.720% 1/16/1998 3,350,000 3,342,016
Union Pacific
Corporation
6.000% 3/06/1998 1,600,000 1,582,934
UOP
5.900% 1/30/1998 5,990,000 5,961,531
-------------
TOTAL SHORT-TERM
INVESTMENTS 76,554,154
-------------
(At Amortized Cost)
TOTAL INVESTMENTS -- 103.0% 206,723,676
(Cost $205,430,337)+
Other Assets/
(Liabilities)-(3.0%) (6,082,389)
--------------
NET ASSETS -- 100.0% $ 200,641,287
==============
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 remainder of this page intentionally left blank.
The accompanying notes are an integral part of the financial statements.
38
<PAGE>
MassMutual Short-Term Bond Fund - Financial Statements
Statement of
Assets and
Liabilities
December 31, 1997
-----------------
Assets:
Investments, at value (cost $128,876,183) (Note 2) .......... $ 130,169,522
Short-term investments, at amortized cost (Note 2) .......... 76,554,154
-----------------
Total Investments .......................................... 206,723,676
Cash ........................................................ 26,124
Receivables from:
Fund shares sold ........................................... 1,941,166
Interest ................................................... 2,636,882
-----------------
Total assets .............................................. 211,327,848
-----------------
Liabilities:
Payables for:
Investments purchased ...................................... 9,055,799
Fund shares redeemed ....................................... 1,526,514
Directors' fees and expenses (Note 3) ...................... 5,869
Affiliates (Note 3):
Investment management fees ................................ 79,099
Administration fees ....................................... 13,790
Service and distribution fees ............................. 245
Accrued expenses and other liabilities ...................... 5,245
-----------------
Total liabilities ......................................... 10,686,561
-----------------
Net assets .................................................. $ 200,641,287
=================
Net assets consist of:
Paid-in capital ............................................. $ 198,964,924
Undistributed net investment income ......................... 61,151
Accumulated net realized gain on investments ................ 321,873
Net unrealized appreciation on investments .................. 1,293,339
-----------------
$ 200,641,287
=================
Net assets:
Class 1 ..................................................... $ 122,436
=================
Class 2 ..................................................... $ 124,585
=================
Class 3 ..................................................... $ 125,819
=================
Class S ..................................................... $ 200,268,447
=================
Shares outstanding:
Class 1 ..................................................... 11,916
=================
Class 2 ..................................................... 12,115
=================
Class 3 ..................................................... 12,213
=================
Class S ..................................................... 19,577,260
=================
Net asset value, offering price and redemption price per share:
Class 1 ..................................................... $ 10.27
=================
Class 2 ..................................................... $ 10.28
=================
Class 3 ..................................................... $ 10.30
=================
Class S ..................................................... $ 10.23
=================
The accompanying notes are an integral part of the financial statements.
39
<PAGE>
MassMutual Short-Term Bond Fund - Financial Statements (Continued)
Statement of
Operations
Year ended
December 31, 1997
-----------------
Investment income:
Interest ........................................... $ 11,550,126
-----------------
Expenses (Note 1):
Investment management fees (Note 3) ............... 769,014
Custody fees ....................................... 16,687
Audit and legal fees ............................... 4,364
Directors' fees (Note 3) ........................... 21,363
Fees waived by the investment manager (Note 3) ..... (18,246)
-----------------
793,182
Administration fees (Note 3):
Class 1 .......................................... 660
Class 2 .......................................... 610
Class 3 .......................................... 375
Class S ........................................... 133,274
Distribution and service fees (Note 3):
Class 1 .......................................... 771
Class 2 .......................................... 180
-----------------
Net expenses ..................................... 929,052
-----------------
Net investment income ............................ 10,621,074
Realized and unrealized gain (loss):
Net realized gain on investment transactions ....... 667,141
Net change in unrealized appreciation (depreciation)
on investments .................................... 275,610
-----------------
Net realized and unrealized gain ................. 942,751
-----------------
Net increase in net assets resulting from operations $ 11,563,825
=================
The accompanying notes are an integral part of the financial statements.
40
<PAGE>
MassMutual Short-Term Bond Fund - Financial Statements (Continued)
Statements of
Changes in Net
Assets
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income ................................. $ 10,621,074 $ 8,081,821
Net realized gain (loss) on investment transactions ... 667,141 (274,845)
Net change in unrealized appreciation (depreciation)
on investments ....................................... 275,610 (384,702)
----------------- -----------------
Net increase in net assets resulting from operations . 11,563,825 7,422,274
----------------- -----------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1 ............................................... (5,130) (5,225)
Class 2 ............................................... (5,845) (5,891)
Class 3 ............................................... (6,291) (6,321)
Class S ............................................... (10,576,607) (8,133,246)
----------------- -----------------
Total distributions from net investment income ....... (10,593,873) (8,150,683)
----------------- -----------------
In excess of net investment income:
Class 1 ............................................... -- (1)
Class 2 ............................................... -- (1)
Class 3 ............................................... -- (1)
Class S ............................................... -- (1,569)
----------------- -----------------
Total distributions in excess of net investment
income ............................................. -- (1,572)
----------------- -----------------
From net realized gains:
Class 1 ............................................... (21) (59)
Class 2 ............................................... (22) (59)
Class 3 ............................................... (22) (59)
Class S ............................................... (34,836) (71,288)
----------------- -----------------
Total distributions from net realized gains .......... (34,901) (71,465)
----------------- -----------------
Net fund share transactions (Note 5):
Class 1 ............................................... 5,151 5,285
Class 2 ............................................... 5,867 5,951
Class 3 ............................................... 6,313 6,381
Class S ............................................... 54,155,496 23,078,364
----------------- -----------------
Increase in net assets from net fund share
transactions ........................................ 54,172,827 23,095,981
----------------- -----------------
Total increase in net assets .......................... 55,107,878 22,294,535
Net assets:
Beginning of period ................................... 145,533,409 123,238,874
----------------- -----------------
End of period (including undistributed net investment
income of $61,151 and $18,783, respectively) ......... $ 200,641,287 $ 145,533,409
================= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
41
<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 Year ended Period ended
12/31/97 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 0.53*** 0.50 0.55 0.09
Net realized and unrealized gain (loss) on investments 0.04 (0.05) 0.49 (0.11)
---------- ---------- ---------- ------------
Total income (loss) from investment operations 0.57 0.45 1.04 (0.02)
---------- ---------- ---------- ------------
Less distributions to shareholders:
From net investment income (0.45) (0.48) (0.54) (0.09)
From net realized gains 0.00 (0.01) (0.20) --
---------- ---------- ---------- ------------
Total distributions (0.45) (0.49) (0.74) (0.09)
---------- ---------- ---------- ------------
Net asset value, end of period $ 10.27 $ 10.15 $ 10.19 $ 9.89
========== ========== ========== ============
Total Return 5.63% 4.35% 10.54% (0.17)%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 122 $ 116 $ 111 $ 100
Net expenses to average daily net assets# 1.67% 1.65% 1.65% 1.65%*
Net investment income to average daily net assets 5.10% 4.86% 5.20% 5.45%*
Portfolio turnover rate 48% 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%*
<CAPTION>
Class 2
-------
Year ended Year ended Year ended Period ended
12/31/97 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 0.59*** 0.56 0.61 0.10
Net realized and unrealized gain (loss) on investments 0.04 (0.04) 0.49 (0.11)
---------- ---------- ---------- ------------
Total income (loss) from investment operations 0.63 0.52 1.10 (0.01)
---------- ---------- ---------- ------------
Less distributions to shareholders:
From net investment income (0.51) (0.54) (0.60) (0.10)
From net realized gains 0.00 (0.01) (0.20) --
---------- ---------- ---------- ------------
Total distributions (0.51) (0.55) (0.80) (0.10)
---------- ---------- ---------- ------------
Net asset value, end of period $ 10.28 $ 10.16 $ 10.19 $ 9.89
========== ========== ========== ============
Total Return 6.18% 5.02% 11.11% (0.09)%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 125 $ 117 $ 112 $ 101
Net expenses to average daily net assets# 1.12% 1.10% 1.10% 1.10%*
Net investment income to average daily net assets 5.65% 5.41% 5.75% 5.99%*
Portfolio turnover rate 48% 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.
The accompanying notes are an integral part of the financial statements.
42
<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 Year ended Period ended
12/31/97 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 0.63*** 0.60 0.64 0.10
Net realized and unrealized gain (loss) on investments 0.04 (0.05) 0.49 (0.09)
---------- ---------- ---------- ------------
Total income (loss) from investment operations 0.67 0.55 1.13 0.01
---------- ---------- ---------- ------------
Less distributions to shareholders:
From net investment income (0.54) (0.58) (0.63) (0.10)
From net realized gains 0.00 (0.01) (0.20) --
---------- ---------- ---------- ------------
Total distributions (0.54) (0.59) (0.83) (0.10)
---------- ---------- ---------- ------------
Net asset value, end of period $ 10.30 $ 10.17 $ 10.21 $ 9.91
========== ========== ========== ============
Total Return 6.63% 5.28% 11.46% 0.13%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 126 $ 118 $ 112 $ 100
Net expenses to average daily net assets# 0.77% 0.75% 0.75% 0.75%*
Net investment income to average daily net assets 5.99% 5.76% 6.10% 6.36%*
Portfolio turnover rate 48% 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: 0.78% 0.79% 0.78% 0.80%*
<CAPTION>
Class S (1)
-----------
Year ended Year ended Year ended Period ended
12/31/97 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 0.65*** 0.60 0.66 0.16
Net realized and unrealized gain (loss) on investments 0.04 (0.03) 0.50 (0.15)
---------- ---------- ---------- ------------
Total income (loss) from investment operations 0.69 0.57 1.16 0.01
---------- ---------- ---------- ------------
Less distributions to shareholders:
From net investment income (0.57) (0.60) (0.66) (0.16)
From net realized gains 0.00 (0.01) (0.20) --
---------- ---------- ---------- ------------
Total distributions (0.57) (0.61) (0.86) (0.16)
---------- ---------- ---------- ------------
Net asset value, end of period $ 10.23 $ 10.11 $ 10.15 $ 9.85
========== ========== ========== ============
Total Return@ 6.84% 5.57% 11.77% 0.13%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 200,268 $ 145,182 $ 122,904 $ 106,846
Net expenses to average daily net assets# 0.5423% 0.5190% 0.5190% 0.5190%*
Net investment income to average daily net assets 6.22% 6.00% 6.32% 6.37%*
Portfolio turnover rate 48% 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: 0.5530% 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.
(1)Class S shares were previously designated as Class 4 shares.
@ 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.
43
<PAGE>
MassMutual Core Bond Fund - Portfolio of Investments
Portfolio of Investments
December 31, 1997
Principal
Amount Market Value
------ ------------
BONDS & NOTES -- 88.0%
ASSET BACKED SECURITIES -- 5.9%
California
Infrastructure PG&E-
1,1997-1, Class A4
6.160% 6/25/2003 $1,250,000 $1,254,775
California
Infrastructure PG&E-
1,1997-1, Class A6
6.320% 9/25/2005 550,000 554,791
California
Infrastructure SCE-
1,1997-1, Class A3
6.170% 3/25/2003 1,000,000 1,003,730
California
Infrastructure SCE-
1,1997-1, Class A5
6.280% 9/25/2005 700,000 703,297
California
Infrastructure
SDG&E-1,1997-1,
Class A5
6.190% 9/25/2005 500,000 501,540
Capita Equipment
Receivables Trust
1996-1, Class A4
6.280% 6/15/2000 3,000,000 3,012,360
Caterpillar Financial
Asset Trust, 1997-B,
Class A3
6.160% 9/25/2003 3,500,000 3,493,000
Chase Manhattan RV
Owner Trust 1997-A,
Class A7
6.140% 10/16/2006 4,500,000 4,505,310
Ford Credit 1994-B
Grantor Trust
7.300% 10/15/1999 239,089 240,882
Ford Credit Auto
Owner Trust 1996-B,
Class A-4
6.300% 1/15/2001 5,000,000 5,018,750
Metlife Capital
Equipment Loan Trust
Series 1997-A, Class A
6.850% 5/20/2008 1,500,000 1,545,525
Railcar Trust No.
1992-1
7.750% 6/01/2004 1,287,178 1,352,064
World Omni 1995-A
Automobile Lease
Securitization Trust,
Class A
6.050% 11/25/2001 1,597,656 1,597,145
World Omni 1996-A
Automobile Lease
Securitization Trust,
Class Al
6.300% 6/25/2002 1,996,773 1,998,630
-----------
TOTAL ASSET BACKED
SECURITIES 26,781,799
===========
(Cost $26,678,499)
CORPORATE DEBT -- 44.3%
Airgas, Inc.
7.140% 3/08/2004 4,000,000 4,147,552
AirTouch
Communications, Inc.
7.500% 7/15/2006 3,000,000 3,185,130
America West Airlines
1996-1, Class A
6.850% 7/02/2009 3,961,496 4,022,345
American Airlines
1994-A Pass-Through
Trusts, Class A4 (D)
9.780% 11/26/2011 1,959,704 2,347,235
AMR Corporation (D)
9.000% 8/01/2012 2,000,000 2,373,020
Analog Devices, Inc. (D)
6.625% 3/01/2000 1,500,000 1,508,880
Archer-Daniels-Midland
Company
6.750% 12/15/2027 2,000,000 2,003,460
Associates Corporation
of North America
6.750% 8/01/2001 2,000,000 2,032,740
Associates Corporation
of North America (D)
7.875% 9/30/2001 1,500,000 1,581,225
Barrick Gold Corporation
7.500% 5/01/2007 4,000,000 4,206,280
Bell Atlantic Financial
Services, Inc.
6.610% 2/04/2000 1,750,000 1,772,033
BHP Finance (USA)
Limited
6.420% 3/01/2026 3,500,000 3,509,485
Capital Cities/ABC,
Inc.
8.875% 12/15/2000 875,000 940,030
Carlisle Companies
Incorporated
7.250% 1/15/2007 2,500,000 2,591,100
Celulosa Arauco
Constitucion
6.950% 9/15/2005 2,000,000 1,998,220
Champion International
Corporation
6.400% 2/15/2026 2,500,000 2,485,225
The Charles Schwab
Corporation
6.250% 1/23/2003 2,500,000 2,493,425
CITGO Petroleum
Corporation
7.875% 5/15/2006 1,000,000 1,048,500
The Columbia Gas
System, Inc.
6.610% 11/28/2002 3,000,000 3,025,560
Comcast Cable
Communications, Inc.
8.375% 5/01/2007 2,500,000 2,784,250
Commercial Credit
Company (D)
7.750% 3/01/2005 3,000,000 3,217,890
Continental Airlines,
Inc., Series 1996-2B
8.560% 1/02/2016 1,701,186 1,935,066
(Continued)
The accompanying notes are an integral part of the financial statements.
44
<PAGE>
MassMutual Core Bond Fund - Portfolio of Investments (Continued)
Principal
Amount Market Value
------ ------------
Continental Airlines,
Inc., Series 1996-B
7.820% 4/15/2015 $1,960,784 $2,113,118
Corning Glass Works (D)
8.875% 3/15/2016 1,000,000 1,205,550
Crown Cork & Seal
Company Inc.
6.750% 12/15/2003 3,550,000 3,594,375
CSX Corporation
7.250% 5/01/2027 4,000,000 4,395,360
English China Clays
Delaware Inc. (D)
7.375% 10/01/2002 1,000,000 1,037,450
Equifax Inc.
6.500% 6/15/2003 1,000,000 1,000,320
ERAC USA Finance
Company 144A
6.950% 1/15/2006 1,500,000 1,536,300
FBG Finance Limited
144A
7.875% 6/01/2016 3,000,000 3,302,490
First Brands
Corporation
7.250% 3/01/2007 2,000,000 2,061,200
Fletcher Challenge Ltd.
7.750% 6/20/2006 2,000,000 2,114,840
Foodbrands America,
Inc.
10.750% 5/15/2006 3,000,000 3,492,450
Foster Wheeler
Corporation
6.750% 11/15/2005 2,000,000 2,012,640
General American
Transportation
Corporation
6.750% 3/01/2006 3,000,000 3,032,640
General Electric
Capital Corporation
6.500% 11/01/2006 1,250,000 1,269,675
General Electric
Capital Corporation
8.750% 5/21/2007 1,500,000 1,763,595
General Mills, Inc.
8.900% 6/15/2006 2,250,000 2,611,620
General Motors
Acceptance
Corporation
8.625% 6/15/1999 4,175,000 4,316,700
General Telephone
Company of Florida
7.500% 8/01/2002 1,000,000 1,044,440
The Goldman Sachs
Group, L.P. 144A
6.200% 2/15/2001 2,500,000 2,508,325
Harrahs Operating Inc.
8.750% 3/15/2000 1,100,000 1,124,750
Hercules Incorporated (D)
6.625% 6/01/2003 1,000,000 1,006,060
Hershey Foods
Corporation
7.200% 8/15/2027 3,750,000 3,986,625
Hilton Hotels
Corporation
7.000% 7/15/2004 3,500,000 3,552,255
IMCERA Group Inc. (D)
6.000% 10/15/2003 1,000,000 964,870
Interpool, Inc.
7.350% 8/01/2007 2,000,000 2,000,520
Korea Development
Bank
7.375% 9/17/2004 1,500,000 1,200,315
Leucadia National
Corporation
7.750% 8/15/2013 2,500,000 2,585,525
Lockheed Martin
Corporation
7.700% 6/15/2008 3,000,000 3,245,160
MAPCO Inc.
7.250% 3/01/2009 3,250,000 3,390,108
Millipore Corporation
7.500% 4/01/2007 3,750,000 3,955,275
Mobil Corporation
8.625% 8/15/2021 4,000,000 5,003,560
Morgan Stanley Group,
Inc.
6.875% 3/01/2007 5,500,000 5,619,625
Newmont Mining
Corporation (D)
8.625% 4/01/2002 2,000,000 2,148,260
News America
Holdings Incorporated
9.250% 2/01/2013 3,000,000 3,573,270
Norfolk Southern
Corporation
7.050% 5/01/2037 5,000,000 5,284,700
North Finance
(Bermuda) Limited
144A
7.000% 9/15/2005 2,000,000 2,042,120
Orchard Supply
Hardware Stores
Corporation
9.375% 2/15/2002 3,871,000 4,004,317
Penske Truck Leasing
Co., L.P.
7.750% 5/15/1999 1,500,000 1,534,185
Petroleum Geo-
Services ASA
7.500% 3/31/2007 750,000 793,688
Ralston Purina
Company
7.750% 10/01/2015 2,000,000 2,175,080
Raytheon Company
6.750% 8/15/2007 2,500,000 2,550,425
Rite Aid Corporation
6.700% 12/15/2001 2,000,000 2,021,360
Rolls-Royce Capital
Inc.
7.125% 7/29/2003 2,000,000 2,061,000
Scholastic Corporation
7.000% 12/15/2003 4,000,000 4,104,720
Sears Roebuck
Acceptance Corp.
6.750% 9/15/2005 3,500,000 3,568,040
Texaco Inc.
8.500% 2/15/2003 2,500,000 2,743,850
Thomas & Betts
Corporation (D)
8.250% 1/15/2004 2,500,000 2,720,200
Time Warner Inc.
Pass-Thru Asset
Trust 1997-1 144A
6.100% 12/30/2001 4,000,000 3,919,280
United Air Lines, Inc.
10.110% 2/19/2006 924,283 1,046,335
US Air, Inc., Class B
7.500% 10/15/2009 1,425,421 1,491,347
The US West Capital
Funding, Inc.
6.850% 1/15/2002 3,750,000 3,792,225
Valassis
Communications, Inc.
9.550% 12/01/2003 2,000,000 2,247,200
Valero Pass-Through
Asset
Trust 1997-1 144A
6.750% 12/15/2002 2,000,000 2,009,820
WorldCom, Inc.
7.750% 4/01/2007 2,000,000 2,147,780
WorldCom, Inc.
9.375% 1/15/2004 1,525,000 1,614,624
W.R. Grace & Co.
8.000% 8/15/2004 5,000,000 5,410,200
------------
TOTAL CORPORATE DEBT 202,260,413
(Cost $193,280,633) ------------
NON-U.S. GOVERNMENT AGENCY
OBLIGATIONS--0.9%
Prudential Home Mortgage Securities
Collateralized Mortgage Obligations
Prudential Home
Mortgage Securities
1993-26 Class A6
6.750% 7/25/2008 4,000,000 4,032,480
(Cost $3,955,000)
(Continued)
The accompanying notes are an integral part of the financial statements.
45
<PAGE>
MassMutual Core Bond Fund - Portfolio of Investments (Continued)
<TABLE>
<CAPTION>
Principal
Amount Market Value
------ ------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 20.0%
Federal Home Loan Mortgage Corporation
(FHLMC) -- 1.1%
Collateralized Mortgage Obligations -- 1.0%
FHLMC Series 1322
Class G
7.500% 2/15/2007 $2,000,000 $2,053,120
FHLMC Series 1460
Class H
7.000% 5/15/2007 2,000,000 2,051,240
FHLMC Series 1490
Class PJ
6.000% 5/15/2007 600,000 597,558
------------
4,701,918
------------
Pass-Through Securities -- 0.1%
FHLMC
9.000% 3/01/2017 300,225 321,520
------------
5,023,438
------------
Federal National Mortgage Association
(FNMA) -- 4.0%
Collateralized Mortgage Obligations -- 3.9%
FNMA Series 1989-20
Class A
6.750% 4/25/2018 4,137,448 4,002,981
FNMA Series 1993-
134 Class GA
6.500% 2/25/2007 5,000,000 5,037,500
FNMA Series 1993-
191 Class PD
5.400% 3/25/2004 1,240,567 1,234,365
FNMA Series 1993-
221 Class D
6.000% 12/25/2008 2,500,000 2,464,825
FNMA Series 1996-54
Class C
6.000% 9/25/2008 5,000,000 4,885,350
------------
17,625,021
------------
Pass-Through Securities -- 0.1%
FNMA
8.000% 5/01/2013 385,311 393,067
------------
18,018,088
------------
Government National Mortgage Association
(GNMA) -- 13.6%
Collateralized Mortgage Obligations -- 0.4%
JHM Acceptance
Corporation Series E
Class 5
8.960% 4/01/2019 1,548,083 1,619,682
------------
Pass-Through Securities -- 13.2%
GNMA
5.500% 10/20/2027 -
12/20/2027 6,831,097 6,843,543
GNMA
6.000% 1/20/2027 -
12/20/2027 28,456,886 28,937,195
GNMA
7.000% 8/15/2023 -
11/15/2023 4,950,004 5,007,225
GNMA
7.500% 1/15/2017 -
6/15/2017 6,460,948 6,683,011
GNMA
8.000% 4/15/2001 -
1/15/2009 11,966,862 12,566,394
GNMA
9.000% 12/15/2004 -
10/15/2009 422,766 459,083
------------
60,496,451
------------
62,116,133
------------
U.S. Government Guaranteed Notes -- 1.3%
1994-A Baxter
Springs, KS
5.930% 8/01/1999 700,000 700,875
1994-A Erie, PA
5.930% 8/01/1999 1,590,000 1,591,988
1994-A Los Angeles
County, CA
5.930% 8/01/1999 190,000 190,238
1994-A Montgomery
County, PA
5.930% 8/01/1999 150,000 150,188
1994-A Pohatcong
Township, NJ
5.930% 8/01/1999 255,000 255,319
1994-A Rochester, NY
5.930% 8/01/1999 135,000 135,169
1994-A Sacramento, CA
5.930% 8/01/1999 60,000 60,075
1994-A Santa Ana, CA
5.930% 8/01/1999 920,000 921,150
U.S. Dept. of Housing
and Urban Development,
Series 1996-A
6.670% 8/01/2001 2,000,000 2,045,000
------------
6,050,002
------------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS 91,207,661
------------
(Cost $89,014,515)
U.S. TREASURY OBLIGATIONS -- 16.9%
U.S. Treasury Bonds -- 14.1%
U.S. Treasury Bond
7.250% 5/15/2016 28,650,000 32,634,070
U.S. Treasury Bond
8.875% 8/15/2017 23,750,000 31,524,325
------------
64,158,395
------------
U.S. Treasury Note -- 0.5%
U.S. Treasury Note
5.875% 9/30/2002 2,400,000 2,413,128
------------
U.S. Treasury Strips -- 2.3%
U.S. Treasury Strip -- Principal Only
0.000% 8/15/2015 12,100,000 4,215,398
U.S. Treasury Strip -- Principal Only
0.000% 5/15/2016 19,300,000 6,429,409
------------
10,644,807
------------
TOTAL U.S. TREASURY
OBLIGATIONS 77,216,330
------------
(Cost $72,179,992)
TOTAL BONDS & NOTES 401,498,683
------------
(Cost $385,108,639)
SHORT-TERM INVESTMENTS -- 10.4%
Commercial Paper
Boston Scientific
Corporation
6.200% 1/20/1998 1,690,000 1,684,470
Boston Scientific
Corporation
6.750% 1/16/1998 4,710,000 4,696,753
Carter Holt Harvey
Limited
6.200% 1/06/1998 1,815,000 1,813,437
Carter Holt Harvey
Limited
6.250% 1/05/1998 2,015,000 2,013,601
Carter Holt Harvey
Limited
6.350% 1/13/1998 5,310,000 5,298,761
Comdisco, Inc.
6.150% 2/10/1998 5,650,000 5,611,392
Comdisco, Inc.
6.850% 1/22/1998 505,000 502,982
ConAgra, Inc.
6.330% 1/07/1998 4,250,000 4,245,516
ConAgra, Inc.
6.850% 1/02/1998 5,175,000 5,174,015
Indiana Michigan
Power Company
6.400% 1/08/1998 3,620,000 3,615,495
</TABLE>
(Continued)
The accompanying notes are an integral part of the financial statements.
46
<PAGE>
MassMutual Core Bond Fund - Portfolio of Investments (Continued)
Principal
Amount Market Value
------ ------------
Mallinckrodt Group
Inc.
6.150% 1/12/1998 $3,700,000 $3,693,047
ORIX Credit Alliance,
Inc.
6.170% 1/09/1998 5,055,000 5,048,069
Public Service
Company of Colorado
6.300% 1/22/1998 2,560,000 2,550,592
Union Oil Company of
California
6.270% 1/09/1998 1,635,000 1,632,722
------------
TOTAL SHORT-TERM
INVESTMENTS 47,580,852
============
(At Amortized Cost)
TOTAL INVESTMENTS -- 98.4% 449,079,535
Other Assets/
(Liabilities) - 1.6% 7,250,624
------------
NET ASSETS -- 100.0% $456,330,159
============
(Cost $432,689,491)+
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.
(D) All or a portion of this security is segregated to cover forward purchase
commitments. (Note 2).
The remainder of this page intentionally left blank.
The accompanying notes are an integral part of the financial statements.
47
<PAGE>
MassMutual Core Bond Fund - Financial Statements
Statement of
Assets and
Liabilities
<TABLE>
<CAPTION>
December 31, 1997
-----------------
<S> <C>
Assets:
Investments, at value (cost $385,108,639) (Note 2) ........ $401,498,683
Short-term investments, at amortized cost (Note 2) ........ 47,580,852
------------
Total Investments ....................................... 449,079,535
Cash ...................................................... 46,527
Receivables from:
Settlement of investments purchased on a
forward commitment basis (Note 2) ..................... 69,262
Fund shares sold ........................................ 4,180,459
Interest ................................................ 5,841,824
------------
Total assets .......................................... 459,217,607
------------
Liabilities:
Payables for:
Investments purchased ................................... 9,945
Fund shares redeemed .................................... 2,639,343
Directors' fees and expenses (Note 3) ................... 5,869
Affiliates (Note 3):
Investment management fees ............................ 190,543
Administration fees ................................... 33,205
Service and distribution fees ......................... 262
Accrued expenses and other liabilities .................... 8,281
------------
Total liabilities ..................................... 2,887,448
------------
Net assets ................................................ $456,330,159
============
Net assets consist of:
Paid-in capital ........................................... $438,706,742
Undistributed net investment income ....................... 1,094,301
Accumulated net realized gain on investments .............. 69,810
Net unrealized appreciation on investments
and forward commitments ................................. 16,459,306
------------
$456,330,159
============
Net assets:
Class 1 ................................................... $ 131,171
============
Class 2 ................................................... $ 133,481
============
Class 3 ................................................... $ 134,838
============
Class S ................................................... $455,930,669
============
Shares outstanding:
Class 1 ................................................... 12,073
============
Class 2 ................................................... 12,265
============
Class 3 ................................................... 12,379
============
Class S ................................................... 42,182,957
============
Net asset value, offering price and redemption price per share:
Class 1 ................................................... $ 10.86
============
Class 2 ................................................... $ 10.88
============
Class 3 ................................................... $ 10.89
============
Class S ................................................... $ 10.81
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
48
<PAGE>
MassMutual Core Bond Fund - Financial Statements (Continued)
Statement of
Operations
<TABLE>
<CAPTION>
Year ended
December 31, 1997
-----------------
<S> <C>
Investment income:
Interest ................................................... $ 28,599,868
------------
Expenses (Note 1):
Investment management fees (Note 3) ........................ 1,869,877
Custody fees ............................................... 43,020
Audit and legal fees ....................................... 8,768
Directors' fees (Note 3) ................................... 21,363
Fees waived by the investment manager (Note 3) ............. (49,361)
------------
1,893,667
Administration fees (Note 3):
Class 1 ................................................. 708
Class 2 ................................................. 655
Class 3 ................................................. 409
Class S .................................................. 346,971
Distribution and service fees (Note 3):
Class 1 ................................................. 809
Class 2 ................................................. 190
------------
Net expenses ............................................ 2,243,409
------------
Net investment income .................................. 26,356,459
------------
Realized and unrealized gain (loss):
Net realized gain on investment transactions and forward
commitments .............................................. 2,197,948
Net change in unrealized appreciation (depreciation) on
investments and forward commitments ...................... 11,750,983
------------
Net realized and unrealized gain ....................... 13,948,931
------------
Net increase in net assets resulting from operations ....... $ 40,305,390
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
49
<PAGE>
MassMutual Core Bond Fund - Financial Statements (Continued)
Statements of
Changes in Net
Assets
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income ................................... $ 26,356,459 $ 19,120,753
Net realized gain (loss) on investment transactions
and forward commitments ............................... 2,197,948 (1,886,093)
Net change in unrealized appreciation (depreciation) on
investments and forward commitments ................... 11,750,983 (6,456,882)
------------- -------------
Net increase in net assets resulting from operations .. 40,305,390 10,777,778
------------- -------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1 ................................................. (5,999) (4,416)
Class 2 ................................................. (6,818) (5,227)
Class 3 ................................................. (7,342) (5,674)
Class S ................................................. (27,133,147) (17,374,307)
------------- -------------
Total distributions from net investment income ........ (27,153,306) (17,389,624)
------------- -------------
From net realized gains:
Class 1 ................................................. (55) (740)
Class 2 ................................................. (55) (714)
Class 3 ................................................. (56) (715)
Class S ................................................. (196,689) (1,942,817)
------------- -------------
Total distributions from net realized gains ........... (196,855) (1,944,986)
------------- -------------
Net fund share transactions (Note 5):
Class 1 ................................................. 6,094 (45,858)
Class 2 ................................................. 6,894 5,941
Class 3 ................................................. 7,406 6,389
Class S ................................................. 86,289,359 111,704,711
------------- -------------
Increase in net assets from net fund share transactions 86,309,753 111,671,183
------------- -------------
Total increase in net assets ............................ 99,264,982 103,114,351
Net assets:
Beginning of period ..................................... 357,065,177 253,950,826
------------- -------------
End of period (including undistributed net investment
income of $1,094,301 and $1,845,746, respectively) .... $ 456,330,159 $ 357,065,177
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
50
<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 Year ended Period ended
12/31/97 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 0.56*** 0.53*** 0.50 0.10
Net realized and unrealized gain (loss) on investments 0.33 (0.36) 1.26 (0.10)
-------- -------- -------- --------
Total income (loss) from investment operations 0.89 0.17 1.76 --
-------- -------- -------- --------
Less distributions to shareholders:
From net investment income (0.51) (0.40) (0.54) (0.10)
From net realized gains (0.02) (0.06) (0.33) --
-------- -------- -------- --------
Total distributions (0.53) (0.46) (0.87) (0.10)
-------- -------- -------- --------
Net asset value, end of period $ 10.86 $ 10.50 $ 10.79 $ 9.90
======== ======== ======== ========
Total Return 8.09% 1.60% 17.81% 0.00%
Ratios / Supplemental Data:
Net assets, end of period (000s) $ 131 $ 121 $ 171 $ 101
Net expenses to average daily net assets# 1.67% 1.65% 1.65% 1.65%*
Net investment income to average daily net assets 5.22% 5.10% 5.39% 5.91%*
Portfolio turnover rate 54% 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
-------
Year ended Year ended Year ended Period ended
12/31/97 12/31/96 12/31/95 12/31/94**
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.51 $ 10.82 $ 9.90 $ 10.00
---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.63*** 0.60*** 0.64 0.11
Net realized and unrealized gain (loss) on investments 0.33 (0.38) 1.19 (0.10)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 0.96 0.22 1.83 0.01
---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.57) (0.47) (0.58) (0.11)
From net realized gains (0.02) (0.06) (0.33) --
---------- ---------- ---------- ----------
Total distributions (0.59) (0.53) (0.91) (0.11)
---------- ---------- ---------- ----------
Net asset value, end of period $ 10.88 $ 10.51 $ 10.82 $ 9.90
========== ========== ========== ==========
Total Return 9.16% 2.07% 18.51% 0.08%
Ratios / Supplemental Data:
Net assets, end of period (000s) $ 133 $ 122 $ 120 $ 101
Net expenses to average daily net assets# $ 1.12% 1.10% 1.10% 1.10%*
Net investment income to average daily net assets 5.77% 5.67% 5.97% 6.46%*
Portfolio turnover rate 54% 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.
The accompanying notes are an integral part of the financial statements.
51
<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 Year ended Period ended
12/31/97 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 0.67*** 0.64*** 0.68 0.11
Net realized and unrealized gain (loss) on investments 0.33 (0.37) 1.19 (0.10)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 1.00 0.27 1.87 0.01
---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.61) (0.51) (0.62) (0.11)
From net realized gains (0.02) (0.06) (0.33) --
---------- ---------- ---------- ----------
Total distributions (0.63) (0.57) (0.95) (0.11)
---------- ---------- ---------- ----------
Net asset value, end of period $ 10.89 $ 10.52 $ 10.82 $ 9.90
========== ========== ========== ==========
Total Return 9.53% 2.52% 18.87% 0.09%
Ratios / Supplemental Data:
Net assets, end of period (000s) $ 135 $ 123 $ 120 $ 101
Net expenses to average daily net assets# 0.78% 0.75% 0.75% 0.75%*
Net investment income to average daily net assets 6.12% 6.01% 6.32% 6.83%*
Portfolio turnover rate 54% 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%(*)
<CAPTION>
Class S (1)
-----------
Year ended Year ended Year ended Period ended
12/31/97 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 0.69*** 0.67*** 0.72*** 0.18
Net realized and unrealized gain (loss) on investments 0.33 (0.37) 1.17 (0.16)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 1.02 0.30 1.89 0.02
---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.64) (0.54) (0.65) (0.18)
From net realized gains (0.02) (0.06) (0.33) --
---------- ---------- ---------- ----------
Total distributions (0.66) (0.60) (0.98) (0.18)
---------- ---------- ---------- ----------
Net asset value, end of period $ 10.81 $ 10.45 $ 10.75 $ 9.84
========== ========== ========== ==========
Total Return@ 9.78% 2.80% 19.15% 0.20%
Ratios / Supplemental Data:
Net assets, end of period (000s) $ 455,931 $ 356,699 $ 253,540 $ 194,150
Net expenses to average daily net assets# 0.5393% 0.5130% 0.5130% 0.5130%*
Net investment income to average daily net assets 6.34% 6.26% 6.56% 6.86%*
Portfolio turnover rate 54% 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: 0.5512% 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.
(1)Class S shares were previously designated as Class 4 shares.
@Employee retirement benefit plans that invest plan assets in the Separate
Investment Account is (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.
52
<PAGE>
MassMutual Balanced Fund - Portfolio of Investments
Portfolio of Investments
December 31, 1997
Number of
Shares Market Value
------ ------------
EQUITIES - 56.6%
Aerospace & Defense - 1.8%
Raytheon Company
Class A 34,000 $1,676,625
Raytheon Company
Class B 92,000 4,646,000
TRW Inc. 98,500 5,257,438
-----------
11,580,063
-----------
Apparel, Textiles & Shoes - 0.6%
VF Corporation 89,000 4,088,438
-----------
Automotive & Parts -- 2.6%
Ford Motor Company 97,300 4,737,294
Genuine Parts
Company 154,500 5,243,344
Goodyear Tire &
Rubber Company 113,700 7,234,163
-----------
17,214,801
-----------
Banking, Savings & Loans -- 4.3%
The Bank of New
York Company,
Incorporated 135,000 7,804,688
Comerica, Incorporated 53,000 4,783,250
CoreStates Financial
Corp. 47,200 3,778,950
Norwest Corporation 114,000 4,403,250
Pacific Century
Financial Corporation 116,800 2,890,800
Wachovia Corp. 60,100 4,875,613
-----------
28,536,551
-----------
Beverages -- 0.7%
Brown-Forman
Corporation (Class B) 80,700 4,458,675
-----------
Chemicals -- 3.3%
Air Products and
Chemicals, Inc. 36,500 3,002,125
Engelhard Corporation 140,200 2,435,975
E. I. du Pont de
Nemours and Company 66,000 3,964,125
The Lubrizol
Corporation 68,300 2,518,563
Nalco Chemical
Company 96,000 3,798,000
Rohm & Haas
Company 60,000 5,745,000
-----------
21,463,788
Commercial Services -- 0.5%
Pinnacle West Capital
Corporation 76,200 3,228,975
-----------
Computers & Office Equipment -- 4.9%
Electronic Data
Systems Corporation 111,500 4,899,031
Hewlett-Packard
Company 122,000 7,625,000
International Business
Machines Corporation 70,000 7,319,365
Pitney Bowes, Inc. 65,000 5,845,938
Xerox Corporation 90,000 6,643,125
-----------
32,332,459
-----------
Containers -- 0.5%
Temple-Inland, Inc. 63,000 3,295,688
-----------
Cosmetics & Personal Care -- 1.1%
Kimberly-Clark
Corporation 145,800 7,189,763
-----------
Drugs--0.5%
Pharmacia & Upjohn,
Inc. 94,000 3,442,750
-----------
Electric Utilities -- 0.6%
SCANA Corporation 130,500 3,906,844
-----------
Electrical Equipment & Electronics -- 3.9%
AMP, Incorporated 156,700 6,581,400
General Electric
Company 125,000 9,171,875
Honeywell Inc. 76,000 5,206,000
Hubbell, Incorporated
(Class B) 96,023 4,735,114
-----------
25,694,389
-----------
Energy -- 3.4%
Amoco Corporation 74,000 6,299,250
Kerr-McGee
Corporation 43,500 2,754,094
Mobil Corporation 70,000 5,053,125
Teco Energy, Inc. 117,000 3,290,625
Unocal Corporation 130,000 5,045,625
-----------
22,442,719
-----------
Financial Services -- 0.8%
American Express
Company 56,500 5,042,625
-----------
Foods -- 2.3%
Archer-Daniels-Midland
Company 180,600 3,916,763
ConAgra, Inc. 148,400 4,869,375
CPC International, Inc. 61,000 6,572,750
-----------
15,358,888
-----------
Forest Products & Paper -- 1.1%
Westvaco Corporation 101,500 3,190,906
Weyerhaeuser Company 84,600 4,150,688
-----------
7,341,594
-----------
Hardware & Tools -- 0.6%
The Stanley Works 77,000 3,633,438
-----------
(Continued)
The accompanying notes are an integral part of the financial statements.
53
<PAGE>
MassMutual Balanced Fund - Portfolio of Investments (Continued)
Number of
Shares Market Value
------ ------------
Healthcare -- 3.7%
Becton, Dickinson and
Company 102,000 $ 5,100,000
Bristol-Myers Squibb
Company 123,000 11,638,875
Schering-Plough Corp. 119,600 7,430,150
------------
24,169,025
------------
Industrial Distribution -- 0.7%
WW Grainger, Inc. 48,000 4,665,000
------------
Industrial Transportation -- 1.5%
Burlington Northern
Santa Fe Corp. 51,900 4,823,456
Norfolk Southern
Corporation 167,200 5,151,850
------------
9,975,306
------------
Insurance -- 4.3%
American General
Corporation 70,000 3,784,375
Jefferson-Pilot
Corporation 39,250 3,056,594
Marsh & McLennan
Companies, Inc. 100,000 7,456,250
MBIA, Inc. 103,000 6,881,688
SAFECO Corporation 139,000 6,776,250
------------
27,955,157
------------
Machinery & Components -- 0.9%
Dover Corporation 124,000 4,479,500
Parker-Hannifin
Corporation 38,000 1,743,250
------------
6,222,750
------------
Manufacturing -- 0.9%
Armstrong World
Industries, Inc. 61,000 4,559,750
Pall Corporation 49,800 1,030,238
------------
5,589,988
------------
Miscellaneous -- 0.9%
Harsco Corporation 69,000 2,975,625
Minnesota Mining &
Manufacturing
Company 34,200 2,806,538
------------
5,782,163
------------
Oil & Gas--1.1%
ENI SPA, Sponsored
ADR 55,400 3,161,263
Occidental Petroleum
Corporation 128,500 3,766,656
------------
6,927,919
------------
Photography -- 0.5%
Eastman Kodak
Company 59,200 3,600,100
------------
Publishing & Printing -- 1.4%
The McGraw-Hill
Companies, Inc. 89,000 6,586,000
R.R. Donnelley & Sons
Company 75,500 2,812,375
------------
9,398,375
------------
Retail-- 1.5%
The May Department
Stores Company 98,500 5,189,719
Sears Roebuck and Co. 98,000 4,434,500
------------
9,624,219
------------
Retail-Grocery -- 1.8%
Albertson's, Inc. 169,100 8,011,113
American Stores
Company 185,000 3,804,063
------------
11,815,176
------------
Telecommunications -- 0.9%
GTE Corporation 116,000 6,061,000
------------
Telephone Utilities -- 1.6%
Ameritech Corporation 44,500 3,582,250
Frontier Corporation 159,500 3,837,969
Southern New England
Telecommunications
Corporation 57,100 2,872,844
------------
10,293,063
------------
Tobacco -- 1.4%
Fortune Brands, Inc. 105,400 3,906,388
UST Inc. 136,800 5,053,050
------------
8,959,438
------------
TOTAL EQUITIES $371,291,127
(Cost $236,958,405) ------------
Principal
Amount Market Value
------ ------------
BONDS & NOTES -- 15.2%
ASSET BACKED SECURITIES -- 1.1%
California
Infrastructure PG&E
1,1997-1, Class A4
6.160% 6/25/2003 300,000 301,146
California
Infrastructure PG&E
1,1997-1, Class A6
6.320% 9/25/2005 150,000 151,307
California
Infrastructure SCE-
1,1997-1, Class A3
6.170% 3/25/2003 200,000 200,746
California
Infrastructure
SCE-1,1997-1,
Class AS
6.280% 9/25/2005 150,000 150,707
California
Infrastructure
SDG&E-1,1997-1,
Class AS
6.190% 9/25/2005 100,000 100,308
Capita Equipment
Receivables Trust
1996-1, Class A4
6.280% 6/15/2000 1,000,000 1,004,120
Caterpillar Financial
Asset Trust, 1997-B,
Class A3
6.160% 9/25/2003 1,000,000 998,000
Chase Manhattan RV
Owner Trust 1997-A,
Class A7
6.140% 10/16/2006 1,000,000 1,001,180
Ford Credit 1994-B
Grantor Trust
7.300% 10/15/1999 159,393 160,588
Ford Credit Auto
Owner Trust 1996-B,
Class A-4
6.300% 1/15/2001 1,000,000 1,003,750
Metlife Capital
Equipment Loan Trust
Series 1997-A,
Class A
6.850% 5/20/2008 500,000 515,175
Railcar Trust No.
1992-1
7.750% 6/01/2004 367,765 386,304
World Omni 1996-A
Automobile Lease
Securitization Trust,
Class Al
6.300% 6/25/2002 1,130,249 1,131,300
------------
TOTAL ASSET BACKED
SECURITIES 7,104,631
(Cost $7,073,371) ------------
CORPORATE DEBT -- 7.4%
AirTouch
Communications, Inc.
7.500% 7/15/2006 1,000,000 1,061,710
America West Airlines
1996-1, Class A
6.850% 7/02/2009 990,374 1,005,586
(Continued)
The accompanying notes are an integral part of the financial statements.
54
<PAGE>
MassMutual Balanced Fund - Portfolio of Investments (Continued)
Principal
Amount Market Value
------ ------------
American Airlines
1994-A Pass-Through
Trusts, Class A4
9.780% 11/26/2011 $979,852 $1,173,618
AMR Corporation
9.000% 8/01/2012 500,000 593,255
Analog Devices, Inc.
6.625% 3/01/2000 500,000 502,960
Archer-Daniels-Midland
Company
6.750% 12/15/2027 350,000 350,606
Associates Corporation
of North America
6.500% 8/15/2002 500,000 504,850
Associates Corporation
of North America
6.750% 8/01/2001 1,000,000 1,016,370
Barrick Gold
Corporation
7.500% 5/01/2007 1,000,000 1,051,570
Bell Atlantic Financial
Services, Inc.
6.610% 2/04/2000 1,000,000 1,012,590
BHP Finance (USA)
Limited
6.420% 3/01/2026 1,000,000 1,002,710
Carlisle Companies
Incorporated
7.250% 1/15/2007 500,000 518,220
Celulosa Arauco
Constitucion
6.950% 9/15/2005 500,000 499,555
Champion International
Corporation
6.400% 2/15/2026 1,000,000 994,090
The Charles Schwab
Corporation
6.250% 1/23/2003 1,000,000 997,370
The CIT Group
Holdings, Inc.
6.375% 10/01/2002 1,000,000 1,002,410
CITGO Petroleum
Corporation
7.875% 5/15/2006 250,000 262,125
Comcast Cable
Communications, Inc.
8.375% 5/01/2007 750,000 835,275
Continental Airlines,
Inc., Series 1996-2B
8.560% 1/02/2016 486,053 552,876
Continental Airlines,
Inc., Series 1996-B
7.820% 4/15/2015 490,196 528,279
Crown Cork & Seal
Company Inc.
6.750% 12/15/2003 $1,000,000 $1,012,500
CSX Corporation
7.250% 5/01/2027 1,200,000 1,318,608
Delta Air Lines, Inc.,
1992, Series C
8.540% 1/02/2007 419,455 445,944
English China Clays
Delaware Inc.
7.375% 10/01/2002 500,000 518,725
ERAC USA Finance
Company 144A
6.950% 1/15/2006 500,000 512,100
FBG Finance Limited
144A
7.875% 6/01/2016 1,000,000 1,100,830
Fletcher Challenge Ltd.
7.750% 6/20/2006 500,000 528,710
Foodbrands America,
Inc.
10.750% 5/15/2006 1,000,000 1,164,150
General American
Transportation
Corporation
6.750% 3/01/2006 1,000,000 1,010,880
General Electric
Capital Corporation
6.500% 11/01/2006 250,000 253,935
General Mills, Inc.
8.900% 6/15/2006 500,000 580,360
The Goldman Sachs
Group, L.P 144A
6.200% 2/15/2001 1,000,000 1,003,330
GTE Corporation
9.100% 6/01/2003 375,000 419,903
Hershey Foods
Corporation
7.200% 8/15/2027 1,000,000 1,063,100
Hilton Hotels
Corporation
7.000% 7/15/2004 1,000,000 1,014,930
Interpool, Inc.
7.350% 8/01/2007 500,000 500,130
Korea Development
Bank
7.375% 9/17/2004 350,000 280,074
Leucadia National
Corporation
7.750% 8/15/2013 1,000,000 1,034,210
Lockheed Martin
Corporation
7.700% 6/15/2008 1,000,000 1,081,720
MAPCO Inc.
7.250% 3/01/2009 $1,000,000 $1,043,110
Millipore Corporation
7.500% 4/01/2007 1,000,000 1,054,740
Mobil Corporation
8.625% 8/15/2021 1,000,000 1,250,890
Morgan Stanley Group,
Inc.
6.875% 3/01/2007 500,000 510,875
Newmont Mining
Corporation
8.625% 4/01/2002 1,000,000 1,074,130
News America
Holdings Incorporated
9.250% 2/01/2013 1,000,000 1,191,090
Norfolk Southern
Corporation
7.050% 5/01/2037 1,350,000 1,426,869
North Finance
(Bermuda) Limited
144A
7.000% 9/15/2005 1,000,000 1,021,060
Petroleum Geo-
Services ASA
7.500% 3/31/2007 250,000 264,563
Raytheon Company
6.750% 8/15/2007 500,000 510,085
Rite Aid Corporation
6.700% 12/15/2001 500,000 505,340
Rolls-Royce Capital
Inc.
7.125% 7/29/2003 1,000,000 1,030,500
Scholastic Corporation
7.000% 12/15/2003 1,000,000 1,026,180
Thomas & Betts
Corporation
8.250% 1/15/2004 500,000 544,040
Time Warner Inc.
7.750% 6/15/2005 1,000,000 1,054,740
Time Warner Inc.
Pass-Thru Asset
Trust 1997-1 144A
6.100% 12/30/2001 750,000 734,865
US Air, Inc., Class B
7.500% 10/15/2009 475,140 497,116
The US West Capital
Funding, Inc.
6.850% 1/15/2002 1,000,000 1,011,260
Valero Pass-Through
Asset Trust
1997-1 144A
6.750% 12/15/2002 500,000 502,455
WorldCom, Inc.
7.750% 4/01/2007 500,000 536,945
(Continued)
The accompanying notes are an integral part of the financial statements.
55
<PAGE>
MassMutual Balanced Fund - Portfolio of Investments (Continued)
Principal
Amount Market Value
------ ------------
WorldCom, Inc.
9.375% 1/15/2004 $ 435,000 $ 460,565
W.R. Grace & Co.
8.000% 8/15/2004 1,000,000 1,082,040
-----------
TOTAL CORPORATE DEBT 48,643,622
-----------
(Cost $46,114,710)
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 3.6%
Federal Home Loan Mortgage Corporation
(FHLMC) -- 0.2%
Collateralized Mortgage Obligations -- 0.1%
FHLMC Series 1322
Class G
7.500% 2/15/2007 1,000,000 1,026,560
-----------
Pass-Through Securities -- 0.1%
FHLMC
9.000% 3/01/2017 150,112 160,760
-----------
1,187,320
-----------
Federal National Mortgage Association
(FNMA) -- 0.8%
Collateralized Mortgage Obligations -- 0.7%
FNMA Series 1993-
134 Class GA
6.500% 2/25/2007 1,000,000 1,007,500
FNMA Series 1993-
191 Class PD
5.400% 3/25/2004 827,045 822,910
FNMA Series 1993-
221 Class D
6.000% 12/25/2008 1,000,000 985,930
FNMA Series 1996-54
Class C
6.000% 9/25/2008 2,000,000 1,954,140
-----------
4,770,480
-----------
Pass-Through Securities -- 0.1%
FNMA
8.000% 5/01/2013 385,311 393,067
-----------
5,163,547
-----------
Government National Mortgage Association
(GNMA) -- 1.8%
Pass-Through Securities
GNMA
5.500% 10/20/2027 -
11/20/2027 1,863,751 1,867,255
GNMA
6.000% 5/20/2027 2,431,322 2,477,663
GNMA
7.000% 8/15/2023 -
10/15/2023 990,000 1,001,445
GNMA
7.500% 10/15/2006 -
6/15/2017 2,575,523 2,667,548
GNMA
8.000% 11/15/2004-
1/15/2009 2,811,429 2,952,279
GNMA
9.000% 12/15/2008 -
5/15/2009 479,372 520,549
-----------
11,486,739
-----------
U.S. Government Guaranteed Notes -- 0.8%
1991-A Fairfax
County, VA
8.740% 8/01/2001 200,000 215,500
1991-A Jefferson
Park, CA
8.740% 8/01/2001 1,740,000 1,874,850
1991-A Monroe
County, NY
8.740% 8/01/2001 500,000 538,750
1991-A Rochester, NY
8.740% 8/01/2001 60,000 64,650
U.S. Dept. of Housing
and Urban
Development, Series
1995-A
8.240% 8/01/2002 3,000,000 3,259,770
-----------
5,953,520
-----------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS 23,791,126
-----------
(Cost $22,913,562)
U.S. TREASURY OBLIGATIONS -- 3.1%
U.S. Treasury Bonds -- 2.2%
U.S. Treasury Bond
7.250% 5/15/2016 6,000,000 6,834,360
U.S. Treasury Bond
8.750% 5/15/2017 6,000,000 7,866,540
-----------
14,700,900
-----------
U.S. Treasury Note -- 0.5%
U.S. Treasury Note
7.125% 2/29/2000 3,000,000 3,086,730
-----------
U.S. Treasury Strips -- 0.4%
U.S. Treasury Strip -- Principal Only
0.000% 2/15/1999 2,250,000 2,114,055
U.S. Treasury Strip -- Principal Only
0.000% 8/15/2015 700,000 243,866
-----------
2,357,921
-----------
TOTAL U.S. TREASURY
OBLIGATIONS 20,145,551
----------
(Cost $18,769,405)
TOTAL BONDS & NOTES 99,684,930
----------
(Cost $94,871,048)
SHORT-TERM INVESTMENTS -- 28.9%
Commercial Paper
Aristar, Inc.
5.970% 2/13/1998 6,315,000 6,269,970
Boston Scientific
Corporation
5.940% 1/12/1998 5,300,000 5,290,381
Carter Holt Harvey
Limited
5.750% 1/16/1998 5,253,000 5,240,415
Carter Holt Harvey
Limited
6.000% 2/05/1998 3,600,000 3,579,000
Comdisco, Inc.
5.750% 1/07/1998 5,285,000 5,279,935
Comdisco, Inc.
5.750% 1/23/1998 4,515,000 4,499,135
Comdisco, Inc.
5.770% 1/21/1998 3,430,000 3,419,005
Comdisco, Inc.
5.830% 1/29/1998 4,030,000 4,011,726
Comdisco, Inc.
6.000% 1/08/1998 4,735,000 4,729,476
Cox Enterprises, Inc.
5.770% 1/28/1998 4,600,000 4,580,094
Cox Enterprises, Inc.
5.900% 2/06/1998 1,935,000 1,923,584
Crown Cork & Seal
Company Inc.
6.070% 3/31/1998 6,140,000 6,049,682
CSX Corporation
5.820% 1/13/1998 3,035,000 3,029,112
CSX Corporation
5.980% 2/03/1998 4,000,000 3,978,073
Dana Credit
Corporation
6.100% 3/05/1998 3,815,000 3,774,275
Dominion Resources,
Inc.
5.720% 1/14/1998 5,000,000 4,989,672
Dominion Resources,
Inc.
5.780% 1/26/1998 5,250,000 5,228,927
Echlin, Inc.
5.900% 2/23/1998 2,410,000 2,389,066
Echlin, Inc.
6.000% 2/02/1998 4,275,000 4,252,200
Federal Signal Corp.
5.720% 1/15/1998 3,760,000 3,751,636
Federal Signal Corp.
7.300% 1/02/1998 4,315,000 4,314,125
Humana, Inc.
5.980% 1/09/1998 5,270,000 5,262,997
(Continued)
The accompanying notes are an integral part of the financial statements.
56
<PAGE>
MassMutual Balanced Fund --Portfolio of Investments (Continued)
Principal
Amount Market Value
------ ------------
Humana, Inc.
6.020% 1/06/1998 $3,965,000 $3,961,685
Illinois Power
Company
5.960% 2/17/1998 2,990,000 2,966,734
International Paper
Company
5.920% 2/10/1998 3,070,000 3,049,806
Lockheed Martin
Corporation
5.850% 3/13/1998 6,450,000 6,374,311
Mallinckrodt Group
Inc.
6.030% 2/11/1998 5,000,000 4,965,663
ORIX Credit Alliance,
Inc.
6.100% 2/20/1998 4,000,000 3,966,111
ORIX Credit Alliance,
Inc.
6.130% 3/02/1998 2,845,000 2,816,787
ORIX Credit Alliance,
Inc.
6.150% 3/16/1998 3,370,000 3,328,783
ORIX Credit Alliance,
Inc.
7.000% 1/13/1998 450,000 448,950
Public Service
Electric and Gas
Company
5.800% 1/20/1998 5,000,000 4,984,695
Public Service
Electric and Gas
Company
5.800% 1/30/1998 5,235,000 5,210,541
Ryder System, Inc.
6.050% 2/27/1998 7,025,000 6,957,706
Ryder System, Inc.
6.080% 2/24/1998 2,585,000 2,561,425
Ryder System, Inc.
6.150% 2/18/1998 3,935,000 3,902,733
Textron Financial
Corporation
5.980% 3/20/1998 575,000 578,792
Textron Financial
Corporation
6.000% 1/05/1998 5,740,000 5,736,173
Textron Financial
Corporation
6.100% 1/02/1998 5,100,000 5,099,136
Tyson Foods, Inc.
5.810% 1/27/1998 4,845,000 4,824,670
Tyson Foods, Inc.
5.980% 2/12/1998 4,865,000 4,831,059
Union Pacific
Corporation
6.000% 2/09/1998 5,455,000 5,419,543
Union Pacific
Corporation
6.070% 4/30/1998 2,275,000 2,230,255
UOP
5.850% 1/22/1998 6,525,000 6,502,733
UOP
6.200% 2/04/1998 2,890,000 2,873,077
-------------
TOTAL SHORT-TERM
INVESTMENTS 189,433,854
=============
(Cost $189,418,921)
TOTAL INVESTMENTS -- 100.7% 660,409,911
(Cost $521,248,374)+
Other Assets/
(Liabilities) - (0.7%) (4,796,780)
-------------
NET ASSETS -- 100.0% $655,613,131
=============
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.
The accompanying notes are an integral part of the financial statements.
57
<PAGE>
MassMutual Balanced Fund - Financial Statements
Statement of
Assets and
Liabilities
<TABLE>
<CAPTION>
December 31, 1997
----------------
<S> <C>
Assets:
Investments, at value (cost $331,829,453) (Note 2) ........... $470,976,057
Short-term investments, at value (cost $189,418,921) (Note 2). 189,433,854
----------------
Total Investments .......................................... 660,409,911
Cash ......................................................... 1,001
Receivables from:
Investments sold ........................................... 1,709,145
Fund shares sold ........................................... 1,081,911
Interest and dividends ..................................... 2,153,880
----------------
Total assets ............................................. 665,355,848
----------------
Liabilities:
Payables for:
Investments purchased ...................................... 1,385,886
Fund shares redeemed ....................................... 8,018,295
Directors' fees and expenses (Note 3) ...................... 5,867
Affiliates (Note 3):
Investment management fees ............................... 271,183
Administration fees ...................................... 47,263
Service and distribution fees ............................ 312
Accrued expenses and other liabilities ....................... 13,911
----------------
Total liabilities ........................................ 9,742,717
----------------
Net assets ................................................... $655,613,131
================
Net assets consist of:
Paid-in capital .............................................. $510,255,546
Accumulated net realized gain on investments ................. 6,196,048
Net unrealized appreciation on investments
and forward commitments .................................. 139,161,537
----------------
$655,613,131
================
Net assets:
Class 1 ...................................................... $ 156,975
================
Class 2 ...................................................... $ 159,724
================
Class 3 ...................................................... $ 161,227
================
Class S ...................................................... $655,135,205
================
Shares outstanding:
Class 1 ...................................................... 11,560
================
Class 2 ...................................................... 11,735
================
Class 3 ...................................................... 11,820
================
Class S ...................................................... 48,223,502
================
Net asset value, offering price and
redemption price per share:
Class 1 ...................................................... $ 13.58
================
Class 2 ...................................................... $ 13.61
================
Class 3 ...................................................... $ 13.64
================
Class S ...................................................... $ 13.59
================
</TABLE>
The accompanying notes are an integral part of the financial statements.
58
<PAGE>
MassMutual Balanced Fund - Financial Statements (Continued)
Statement of
Operations
Year ended
December 31, 1997
-----------------
Investment income:
Interest .................................................. $ 18,009,660
Dividends ................................................. 7,554,347
-----------------
Total investment income ................................. 25,564,007
-----------------
Expenses (Note 1):
Investment management fees (Note 3) ....................... 2,799,328
Custody fees .............................................. 66,289
Audit and legal fees ...................................... 14,611
Directors' fees (Note 3) .................................. 21,362
Fees waived by the investment manager (Note 3) ............ (74,994)
-----------------
2,826,596
Administration fees (Note 3):
Class 1 ................................................. 832
Class 2 ................................................. 770
Class 3 ................................................. 482
Class S ................................................. 525,386
Distribution and service fees (Note 3):
Class 1 ................................................. 947
Class 2 ................................................. 222
-----------------
Net expenses .......................................... 3,355,235
-----------------
Net investment income ................................. 22,208,772
-----------------
Realized and unrealized gain (loss):
Net realized gain on investment transactions and forward
commitments ............................................. 30,475,696
Net change in unrealized appreciation (depreciation) on
investments and forward commitments ..................... 53,068,589
-----------------
Net realized and unrealized gain ...................... 83,544,285
-----------------
Net increase in net assets resulting from operations ...... $ 105,753,057
=================
The accompanying notes are an integral part of the financial statements.
59
<PAGE>
MassMutual Balanced Fund - Financial Statements (Continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
Increase(Decrease) in Net Assets:
Operations:
Net investment income .......................................... $ 22,208,772 $ 19,347,629
Net realized gain on investment transactions
and forward commitments ...................................... 30,475,696 8,885,806
Net change in unrealized appreciation (depreciation) on
investments and forward commitments .......................... 53,068,589 33,108,845
----------------- -----------------
Net increase in net assets resulting from operations ......... 105,753,057 61,342,280
----------------- -----------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1 ........................................................ (3,540) (3,204)
Class 2 ........................................................ (4,381) (4,068)
Class 3 ........................................................ (4,913) (4,538)
Class S ........................................................ (22,163,635) (19,441,756)
----------------- -----------------
Total distributions from net investment income ............... (22,176,469) (19,453,566)
----------------- -----------------
From net realized gains:
Class 1 ........................................................ (6,158) (1,969)
Class 2 ........................................................ (6,204) (1,970)
Class 3 ........................................................ (6,230) (1,972)
Class S ........................................................ (26,240,454) (7,883,759)
----------------- -----------------
Total distributions from net realized gains .................. (26,259,046) (7,889,670)
----------------- -----------------
Net fund share transactions (Note 5):
Class 1 ........................................................ 9,696 (49,367)
Class 2 ........................................................ 10,600 6,038
Class 3 ........................................................ 11,159 6,510
Class S ........................................................ 34,578,286 72,536,092
----------------- -----------------
Increase in net assets from net fund share transactions ...... 34,609,741 72,499,273
----------------- -----------------
Total increase in net assets ................................... 91,927,283 106,498,317
Net assets:
Beginning of period ............................................ 563,685,848 457,187,531
----------------- -----------------
End of period (including undistributed net investment income
of $0 and $26,102, respectively) ............................. $ 655,613,131 $ 563,685,848
================= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
60
<PAGE>
MassMutual Balanced Fund - Financial Statements (Continued)
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 1
-------
Year ended Year ended Year ended Period ended
12/31/97 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 0.33 0.34 0.28 0.06
Net realized and unrealized gain (loss) on investments 1.80 1.01 1.70 (0.06)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 2.13 1.35 1.98 --
---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.33) (0.31) (0.33) (0.06)
From net realized gains (0.57) (0.19) (0.09) --
---------- ---------- ---------- ----------
Total distributions (0.90) (0.50) (0.42) (0.06)
---------- ---------- ---------- ----------
Net asset value, end of period $ 13.58 $ 12.35 $ 11.50 $ 9.94
========== ========== ========== ==========
Total Return 17.28% 11.67% 19.92% 0.00%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 157 $ 134 $ 173 $ 100
Net expenses to average daily net assets# 1.68% 1.65% 1.65% 1.65%*
Net investment income to average daily net assets 2.43% 2.71% 3.03% 3.39%*
Portfolio turnover rate 28% 26% 23% 2%
Average broker commission rate (a) $ 0.0579 $ 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
-------
Year ended Year ended Year ended Period ended
12/31/97 12/31/96 12/31/95 12/31/94**
---------- ---------- ---------- ----------
Net asset value, beginning of period $ 12.37 $ 11.53 $ 9.95 $ 10.00
---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.40 0.39 0.39 0.06
Net realized and unrealized gain (loss) on investments 1.81 1.03 1.65 (0.04)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 2.21 1.42 2.04 0.02
---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.40) (0.39) (0.37) (0.07)
From net realized gains (0.57) (0.19) (0.09) --
---------- ---------- ---------- ----------
Total distributions (0.97) (0.58) (0.46) (0.07)
---------- ---------- ---------- ----------
Net asset value, end of period $ 13.61 $ 12.37 $ 11.53 $ 9.95
========== ========== ========== ==========
Total Return 17.93% 12.25% 20.50% 0.17%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 160 $ 135 $ 121 $ 100
Net expenses to average daily net assets# 1.12% 1.10% 1.10% 1.10%*
Net investment income to average daily net assets 2.99% 3.23% 3.60% 3.94%*
Portfolio turnover rate 28% 26% 23% 2%
Average broker commission rate (a) $ 0.0579 $ 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.
61
<PAGE>
MassMutual Balanced Fund - Financial Statements (Continued)
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Class 3
-------
Year ended Year ended Year ended Period ended
12/31/97 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 0.45 0.44 0.43 0.07
Net realized and unrealized gain (loss) on investments 1.82 1.02 1.66 (0.04)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 2.27 1.46 2.09 0.03
---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.45) (0.43) (0.41) (0.07)
From net realized gains (0.57) (0.19) (0.09) --
---------- ---------- ---------- ----------
Total distributions (1.02) (0.62) (0.50) (0.07)
---------- ---------- ---------- ----------
Net asset value, end of period $ 13.64 $ 12.39 $ 11.55 $ 9.96
========== ========== ========== ==========
Total Return 18.37% 12.61% 20.96% 0.28%
Ratios / Supplemental Data:
Net assets, end of period (000s) $ 161 $ 136 $ 121 $ 100
Net expenses to average daily net assets# 0.78% 0.75% 0.75% 0.75%(*)
Net investment income to average daily net assets 3.33% 3.60% 3.94% 4.32%(*)
Portfolio turnover rate 28% 26% 23% 2%
Average broker commission rate (a) $ 0.0579 $ 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 S (1)
-----------
Year ended Year ended Year ended Period ended
12/31/97 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 0.48 0.46 0.44 0.11
Net realized and unrealized gain (loss) on investments 1.82 1.02 1.68 (0.08)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 2.30 1.48 2.12 0.03
---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.48) (0.46) (0.44) (0.11)
From net realized gains (0.57) (0.19) (0.09) --
---------- ---------- ---------- ----------
Total distributions (1.05) (0.65) (0.53) (0.11)
---------- ---------- ---------- ----------
Net asset value, end of period $ 13.59 $ 12.34 $ 11.51 $ 9.92
========== ========== ========== ==========
Total Return@ 18.72% 12.83% 21.31% 0.29%
Ratios / Supplemental Data:
Net assets, end of period (000s) $ 655,135 $ 563,280 $ 456,773 $ 349,688
Net expenses to average daily net assets# 0.5389% 0.5120% 0.5120% 0.5120%(*)
Net investment income to average daily net assets 3.57% 3.83% 4.18% 4.29%(*)
Portfolio turnover rate 28% 26% 23% 2%
Average broker commission rate (a) $ 0.0579 $ 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: 0.5510% 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 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.
(1) Class S shares were previously designated as Class 4 shares.
@ 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.
62
<PAGE>
MassMutual Value Equity Fund - Portfolio of Investments
Portfolio of Investments
December 31, 1997
Number of
Shares Market Value
------ ------------
EQUITIES -- 97.1%
Aerospace & Defense -- 3.0%
Raytheon Company
Class A 283,000 $ 13,955,438
Raytheon Company
Class B 772,000 38,986,000
TRW Inc. 829,800 44,290,575
------------
97,232,013
------------
Apparel, Textiles & Shoes -- 1.0%
VF Corporation 730,000 33,534,375
------------
Automotive & Parts -- 4.7%
Ford Motor Company 945,300 46,024,294
Genuine Parts
Company 1,290,000 43,779,375
Goodyear Tire &
Rubber Company 955,000 60,761,875
------------
150,565,544
------------
Banking, Savings & Loans -- 7.5%
The Bank of New
York Company,
Incorporated 1,140,000 65,906,250
Comerica, Incorporated 450,000 40,612,500
CoreStates Financial
Corp. 392,000 31,384,500
Norwest Corporation 970,000 37,466,250
Pacific Century
Financial Corporation 979,400 24,240,150
Wachovia Corp. 494,000 40,075,750
------------
239,685,400
------------
Beverages -- 1.2%
Brown-Forman
Corporation (Class B) 682,600 37,713,650
------------
Chemicals -- 5.6%
Air Products and
Chemicals, Inc. 303,600 24,971,100
Engelhard Corporation 1,179,500 20,493,813
E. I. du Pont de
Nemours and Company 550,000 33,034,375
The Lubrizol
Corporation 571,200 21,063,000
Nalco Chemical
Company 797,400 31,547,138
Rohm & Haas
Company 503,000 48,162,240
------------
179,271,666
------------
Commercial Services -- 0.8%
Pinnacle West Capital
Corporation 636,868 26,987,282
------------
Computers & Office Equipment -- 8.5%
Electronic Data
Systems Corporation 930,000 40,861,875
Hewlett-Packard
Company 1,020,000 63,750,000
International Business
Machines Corporation 582,000 60,855,375
Pitney Bowes, Inc. 542,000 48,746,125
Xerox Corporation 723,000 53,366,438
------------
267,579,813
------------
Containers -- 0.9%
Temple-Inland, Inc. 525,000 27,464,063
------------
Cosmetics & Personal Care -- 1.9%
Kimberly-Clark
Corporation 1,231,000 60,703,688
------------
Drugs -- 0.9%
Pharmacia & Upjohn,
Inc. 792,000 29,007,000
------------
Electric Utilities -- 1.0%
SCANA Corporation 1,090,600 32,649,838
------------
Electrical Equipment & Electronics -- 6.6%
AMP, Incorporated 1,213,000 50,946,000
General Electric
Company 1,035,000 75,943,125
Honeywell Inc. 630,000 43,155,000
Hubbell, Incorporated
(Class B) 846,471 41,741,621
------------
211,785,746
------------
Energy -- 5.9%
Amoco Corporation 615,000 52,351,875
Kerr-McGee
Corporation 360,000 22,792,500
Mobil Corporation 580,000 41,868,750
Teco Energy, Inc. 1,000,000 28,125,000
Unocal Corporation 1,090,000 42,305,625
------------
187,443,750
------------
Financial Services -- 1.3%
American Express
Company 470,000 41,947,500
------------
Foods---3.8%
Archer-Daniels-Midland
Company 1,489,005 32,292,796
ConAgra, Inc. 1,226,000 40,228,125
CPC International, Inc. 462,500 49,834,375
------------
122,355,296
------------
Forest Products & Paper -- 1.9%
Westvaco Corporation 855,000 26,879,063
Weyerhaeuser Company 721,900 35,418,219
------------
62,297,282
------------
Hardware & Tools -- 0.9%
The Stanley Works 639,000 30,152,813
------------
Healthcare -- 6.2%
Becton, Dickinson and
Company 922,800 46,140,000
Bristol-Myers Squibb
Company 1,025,000 96,990,625
Schering-Plough Corp. 907,200 56,359,800
------------
199,490,425
------------
(Continued)
The accompanying notes are an integral part of the financial statements.
63
<PAGE>
MassMutual Value Equity Fund -- Portfolio of Investments (Continued)
<TABLE>
<CAPTION>
Number of
Shares Market Value
------ ------------
<S> <C> <C>
Industrial Distribution -- 1.2%
WW Grainger, Inc. 400,000 $ 38,875,000
--------------
Industrial Transportation -- 2.6%
Burlington Northern
Santa Fe Corp. 432,200 40,167,588
Norfolk Southern
Corporation 1,390,200 42,835,538
--------------
83,003,126
--------------
Insurance -- 7.4%
American General
Corporation 585,000 31,626,563
Jefferson-Pilot
Corporation 337,000 26,243,875
Marsh & McLennan
Companies, Inc. 809,800 60,380,713
MBIA, Inc. 870,000 58,126,875
SAFECO Corporation 1,140,000 55,575,000
--------------
231,953,026
--------------
Machinery & Components -- 1.7%
Dover Corporation 1,080,000 39,015,000
Parker-Hannifin
Corporation 317,000 14,542,375
--------------
53,557,375
--------------
Manufacturing -- 1.5%
Armstrong World
Industries, Inc. 515,000 38,496,250
Pall Corporation 426,200 8,817,013
--------------
47,313,263
--------------
Miscellaneous -- 1.5%
Harsco Corporation 600,000 25,875,000
Minnesota Mining &
Manufacturing
Company 279,700 22,952,881
--------------
48,827,881
--------------
Oil & Gas -- 1.8%
ENI SPA, Sponsored
ADR 464,200 26,488,413
Occidental Petroleum
Corporation 1,067,000 31,276,438
--------------
57,764,851
--------------
Photography -- 0.9%
Eastman Kodak
Company 496,300 30,181,244
--------------
Publishing & Printing -- 2.4%
The McGraw-Hill
Companies, Inc. 740,000 54,760,000
R.R. Donnelley & Sons
Company 630,000 23,467,500
--------------
78,227,500
--------------
Retail -- 2.7%
The May Department
Stores Company 825,000 43,467,188
Sears Roebuck and Co. 973,100 44,032,775
--------------
87,499,963
--------------
Retail-Grocery -- 3.1%
Albertson's, Inc. 1,414,000 66,988,250
American Stores
Company 1,531,600 31,493,525
--------------
98,481,775
--------------
Telecommunications -- 1.6%
GTE Corporation 965,800 50,463,050
--------------
Telephone Utilities -- 2.7%
Ameritech Corporation 372,000 29,946,000
Frontier Corporation 1,319,000 31,738,438
Southern New England
Telecommunications
Corporation 480,400 24,170,125
--------------
85,854,563
--------------
Tobacco -- 2.4%
Fortune Brands, Inc. 961,300 35,628,181
UST Inc. 1,126,800 41,621,175
--------------
77,249,356
--------------
TOTAL EQUITIES 3,107,119,117
(Cost $1,987,657,293) --------------
<CAPTION>
Principal
Amount Market Value
---------- ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS -- 2.8%
Commercial Paper
Abbott Laboratories
5.950% 1/13/1998 $4,000,000 $3,992,067
Abbott Laboratories
6.000% 1/09/1998 7,000,000 6,990,665
AlliedSignal Inc.
5.550% 6/12/1998 5,000,000 4,866,125
AT&T Corp.
5.690% 2/02/1998 7,690,000 7,651,106
Caterpillar Financial
Services Corp.
5.520% 4/22/1998 3,000,000 2,944,963
Caterpillar Financial
Services Corp.
5.550% 4/24/1998 5,000,000 4,906,618
Coca-Cola Company,
The
5.660% 2/02/1998 10,000,000 9,949,689
Eastman Kodak
Company
5.950% 1/15/1998 2,983,000 2,976,098
Ford Motor Credit
Company
5.520% 4/20/1998 5,000,000 4,909,924
IBM Credit
Corporation
5.720% 2/11/1998 3,389,000 3,366,922
Motorola, Inc.
5.700% 2/06/1998 8,694,000 8,644,444
Procter & Gamble
Company, The
5.550% 4/14/1998 7,000,000 6,880,835
Procter & Gamble
Company, The
5.600% 4/14/1998 5,000,000 4,914,882
Sara Lee Corporation
6.000% 1/07/1998 11,000,000 10,989,000
Walt Disney Company,
The
5.550% 4/08/1998 5,000,000 4,919,840
--------------
TOTAL SHORT-TERM
INVESTMENTS 88,903,178
(Cost $88,947,350) --------------
TOTAL INVESTMENTS -- 99.9% 3,196,022,295
(Cost $2,076,604,643)+
Other Assets/
(Liabilities) - 0.1% 2,422,343
--------------
NET ASSETS -- 100.0% $3,198,444,638
==============
</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.
64
<PAGE>
MassMutual Value Equity Fund - Financial Statements
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
December 31, 1997
-----------------
<S> <C>
Assets:
Investments, at value (cost $1,987,657,293)(Note 2) ....................... $ 3,107,119,117
Short-term investments, at value (cost $88,947,350) (Note 2) .............. 88,903,178
---------------
Total Investments ....................................................... 3,196,022,295
Cash ...................................................................... 5,510
Receivables from:
Investments sold ........................................................ 14,276,512
Fund shares sold ........................................................ 5,721,246
Interest and dividends .................................................. 5,967,211
---------------
Total assets ............................................................ 3,221,992,774
---------------
Liabilities:
Payables for:
Investments purchased ................................................... 11,451,815
Fund shares redeemed .................................................... 10,503,639
Directors' fees and expenses (Note 3) ................................... 5,866
Affiliates (Note 3):
Investment management fees ............................................ 1,298,717
Administration fees ................................................... 226,696
Service and distribution fees ......................................... 387
Accrued expenses and other liabilities .................................... 61,016
---------------
Total liabilities ..................................................... 23,548,136
---------------
Net assets ................................................................ $ 3,198,444,638
===============
Net assets consist of:
Paid-in capital ........................................................... $ 2,027,869,764
Undistributed net investment income ....................................... 1,297,337
Accumulated net realized gain on investments .............................. 49,859,885
Net unrealized appreciation on investments ................................ 1,119,417,652
---------------
$ 3,198,444,638
===============
Net assets:
Class 1 ................................................................... $ 196,012
===============
Class 2 ................................................................... $ 199,451
===============
Class 3 ................................................................... $ 201,310
===============
Class S ................................................................... $ 3,197,847,865
===============
Shares outstanding:
Class 1 ................................................................... 11,555
===============
Class 2 ................................................................... 11,719
===============
Class 3 ................................................................... 11,813
===============
Class S ................................................................... 188,089,578
===============
Net asset value, offering price and redemption price per share:
Class 1 ................................................................... $ 16.96
===============
Class 2 ................................................................... $ 17.02
===============
Class 3 ................................................................... $ 17.04
===============
Class S ................................................................... $ 17.00
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
65
<PAGE>
MassMutual Value Equity Fund - Financial Statements (Continued)
Statement of Operations
<TABLE>
<CAPTION>
Year ended
December 31, 1997
-----------------
<S> <C>
Investment income:
Dividends ................................................................. $ 63,147,354
Interest .................................................................. 7,971,314
---------------
Total investment income ................................................. 71,118,668
---------------
Expenses (Note 1):
Investment management fees (Note 3) ....................................... 13,063,454
Custody fees .............................................................. 257,635
Audit and legal fees ...................................................... 67,121
Directors' fees (Note 3) .................................................. 21,361
Fees waived by the investment manager (Note 3) ............................ (391,015)
---------------
13,018,556
Administration fees (Note 3):
Class 1 ................................................................ 1,025
Class 2 ................................................................ 951
Class 3 ................................................................ 602
Class S ................................................................. 2,592,022
Distribution and service fees (Note 3):
Class 1 ................................................................ 1,146
Class 2 ................................................................ 268
---------------
Net expenses ............................................................ 15,614,570
---------------
Net investment income ................................................... 55,504,098
---------------
Realized and unrealized gain (loss):
Net realized gain on investment transactions .............................. 263,910,119
Net change in unrealized appreciation (depreciation)
on investments .......................................................... 407,559,726
---------------
Net realized and unrealized gain ........................................ 671,469,845
---------------
Net increase in net assets resulting from operations....................... $ 726,973,943
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
66
<PAGE>
MassMutual Value Equity Fund - Financial Statements (Continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income ..................................................... $ 55,504,098 $ 55,712,269
Net realized gain on investment transactions .............................. 263,910,119 74,040,546
Net change in unrealized appreciation (depreciation)
on investments .......................................................... 407,559,726 296,454,766
--------------- ---------------
Net increase in net assets resulting from operations ...................... 726,973,943 426,207,581
--------------- ---------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1 ................................................................... (1,299) (1,849)
Class 2 ................................................................... (2,285) (2,628)
Class 3 ................................................................... (2,920) (3,152)
Class S ................................................................... (54,611,119) (55,920,646)
--------------- ---------------
Total distributions from net investment income .......................... (54,617,623) (55,928,275)
--------------- ---------------
From net realized gains:
Class 1 ................................................................... (13,946) (4,035)
Class 2 ................................................................... (14,077) (4,054)
Class 3 ................................................................... (14,146) (4,061)
Class S ................................................................... (228,186,420) (64,653,761)
--------------- ---------------
Total distributions from net realized gains ............................. (228,228,589) (64,665,911)
--------------- ---------------
Net fund share transactions (Note 5):
Class 1 ................................................................... 15,245 5,884
Class 2 ................................................................... 16,362 6,682
Class 3 ................................................................... 17,066 7,213
Class S ................................................................... 268,059,999 54,936,919
--------------- ---------------
Increase in net assets from net fund share transactions ................. 268,108,672 54,956,698
--------------- ---------------
Total increase in net assets ............................................ 712,236,403 360,570,093
Net assets:
Beginning of period ....................................................... 2,486,208,235 2,125,638,142
--------------- ---------------
End of period (including undistributed net investment income
of $1,297,337 and $410,862, respectively) ............................... $ 3,198,444,638 $ 2,486,208,235
=============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
67
<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 Year ended Period ended
12/31/97 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 0.13 0.17 0.18 0.04
Net realized and unrealized gain (loss) on investments 3.81 2.21 2.81 (0.08)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 3.94 2.38 2.99 (0.04)
---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.12) (0.18) (0.18) (0.04)
From net realized gains (1.30) (0.39) (0.10) --
---------- ---------- ---------- ----------
Total distributions (1.42) (0.57) (0.28) (0.04)
---------- ---------- ---------- ----------
Net asset value, end of period $ 16.96 $ 14.44 $ 12.63 $ 9.92
========== ========== ========== ==========
Total Return 27.56% 18.83% 30.10% (0.39)%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 196 $ 154 $ 129 $ 99
Net expenses to average daily net assets# 1.68% 1.65% 1.65% 1.65%(*)
Net investment income to average daily net assets 0.77% 1.28% 1.58% 2.31%(*)
Portfolio turnover rate 20% 13% 16% 3%
Average broker commission rate (a) $ 0.0579 $ 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: 1.69% 1.69% 1.70% 1.71%(*)
<CAPTION>
Class 2
-------
Year ended Year ended Year ended Period ended
12/31/97 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 0.22 0.25 0.24 0.05
Net realized and unrealized gain (loss) on investments 3.84 2.22 2.82 (0.07)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 4.06 2.47 3.06 (0.02)
---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.21) (0.26) (0.24) (0.05)
From net realized gains (1.30) (0.39) (0.10) --
---------- ---------- ---------- ----------
Total distributions (1.51) (0.65) (0.34) (0.05)
---------- ---------- ---------- ----------
Net asset value, end of period $ 17.02 $ 14.47 $ 12.65 $ 9.93
========== ========== ========== ==========
Total Return 28.34% 19.46% 30.80% (0.22)%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 199 $ 155 $ 130 $ 99
Net expenses to average daily net assets# 1.13% 1.10% 1.10% 1.10%(*)
Net investment income to average daily net assets 1.32% 1.82% 2.13% 2.86%(*)
Portfolio turnover rate 20% 13% 16% 3%
Average broker commission rate (a) $ 0.0579 $ 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
commission 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.
68
<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 Year ended Period ended
12/31/97 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 0.28 0.30 0.28 0.05
Net realized and unrealized gain (loss) on investments 3.84 2.23 2.83 (0.07)
--------- --------- --------- ---------
Total income (loss) from investment operations 4.12 2.53 3.11 (0.02)
--------- --------- --------- ---------
Less distributions to shareholders:
From net investment income (0.27) (0.31) (0.28) (0.05)
From net realized gains (1.30) (0.39) (0.10) --
--------- --------- --------- ---------
Total distributions (1.57) (0.70) (0.38) (0.05)
--------- --------- --------- ---------
Net asset value, end of period $ 17.04 $ 14.49 $ 12.66 $ 9.93
========= ========= ========= =========
Total Return 28.71% 19.92% 31.30% (0.18)%
Ratios / Supplemental Data:
Net assets, end of period (000s) $ 201 $ 156 $ 130 $ 99
Net expenses to average daily net assets# 0.78% 0.75% 0.75% 0.75%*
Net investment income to average daily net assets 1.67% 2.17% 2.48% 3.23%*
Portfolio turnover rate 20% 13% 16% 3%
Average broker commission rate (a) $ 0.0579 $ 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: 0.80% 0.80% 0.80% 0.81%*
Class S (1)
-----------
Year ended Year ended Year ended Period ended
12/31/97 12/31/96 12/31/95 12/31/94**
---------- ---------- ---------- ----------
Net asset value, beginning of period $ 14.46 $ 12.63 $ 9.91 $ 10.00
---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.32 0.34 0.31 0.08
Net realized and unrealized gain (loss) on investments 3.83 2.22 2.82 (0.09)
---------- ---------- ---------- ----------
Total income (loss) from investment operations 4.15 2.56 3.13 (0.01)
---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.31) (0.34) (0.31) (0.08)
From net realized gains (1.30) (0.39) (0.10) --
---------- ---------- ---------- ----------
Total distributions (1.61) (0.73) (0.41) (0.08)
---------- ---------- ---------- ----------
Net asset value, end of period $ 17.00 $ 14.46 $ 12.63 $ 9.91
========== ========== ========== ==========
Total Return@ 29.01% 20.24% 31.54% (0.10)%
Ratios / Supplemental Data:
Net assets, end of period (000s) $3,197,848 $2,485,743 $2,125,248 $1,563,563
Net expenses to average daily net assets# 0.5378% 0.5067% 0.5067% 0.5067%*
Net investment income to average daily net assets 1.91% 2.42% 2.72% 3.20%*
Portfolio turnover rate 20% 13% 16% 3%
Average broker commission rate (a) $ 0.0579 $ 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: 0.5512% 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.
(1) Class S shares were previously designed as Class 4 shares.
@ 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 offered these charges.
The accompanying notes are an integral part of the financial statements.
69
<PAGE>
MassMutual Small Cap Value Equity - Portfolio of Investments
Portfolio of Investments
December 31, 1997
Number of
Shares Market Value
------ ------------
EQUITIES -- 98.4%
Air Transportation -- 1.5%
Atlantic Southeast
Airlines, Inc. 365,600 $ 10,396,750
------------
Automotive & Parts -- 4.2%
Excel Industries, Inc. 192,500 3,477,031
Keystone Automotive
Industries, Inc o . 241,900 5,745,125
Myers Industries, Inc. 353,268 6,027,635
Titan Wheel
International, Inc. 689,500 13,833,094
------------
29,082,885
------------
Banking, Savings & Loans -- 13.2%
Astoria Financial
Corporation 245,900 13,708,925
Bank United Corp.
Class A 173,200 8,475,975
CCB Financial
Corporation 139,900 15,039,250
First Colorado
Bancorp, Inc. 254,500 6,044,375
First Republic Bank o 250,100 7,987,569
Keystone Financial,
Inc. 221,150 8,901,288
One Valley Bancorp of
West Virginia, Inc. 229,687 8,900,371
Sovereign Bancorp,
Inc. 431,080 8,944,910
Webster Financial
Corporation 198,000 13,167,000
------------
91,169,663
------------
Beverages -- 0.9%
The Robert Mondavi
Corporation o 122,900 5,991,375
------------
Building Materials & Construction -- 2.8%
Crossmann
Communities, Inc. o 181,800 5,022,225
Group Maintenance
America Corp. o 508,400 8,547,475
Service Experts, Inc. o 192,600 5,513,175
------------
19,082,875
------------
Chemicals -- 2.3%
OM Group, Inc. 319,800 $ 11,712,675
Spartech Corporation 288,700 4,366,588
------------
16,079,263
------------
Communications -- 1.7%
True North
Communications, Inc. 478,900 11,852,775
------------
Computer Services -- 0.8%
Pomeroy Computer
Resources, Inc. o 325,900 5,784,725
------------
Computers & Office Equipment -- 1.1%
Cognex Corporation o 285,900 7,790,775
------------
Diversified Operations -- 0.3%
SPS Technologies, Inc. o 50,000 2,181,250
------------
Electrical Equipment & Electronics -- 7.0%
AFC Cable Systems,
Inc. o 177,575 5,282,856
Altron Incorporated o 699,500 9,268,375
Belden, Inc. 293,700 10,352,925
Dallas Semiconductor
Corporation 345,800 14,091,350
Teleflex, Incorporated 256,200 9,671,550
------------
48,667,056
------------
Energy -- 1.1%
NGC Corporation 176,041 3,080,718
TNP Enterprises, Inc. 130,100 4,325,825
------------
7,406,543
------------
Financial Services -- 0.5%
Eaton Vance Corp. 82,800 3,125,700
------------
Foods -- 1.5%
International Home
Foods, Inc. o 120,100 3,362,800
Morrison Health Care,
Inc. 356,800 7,136,000
------------
10,498,800
------------
Forest Products & Paper -- 1.9%
Wausau-Mosinee Paper
Corporation 654,363 $ 13,169,055
------------
Gas Distribution -- 1.6%
WICOR, Inc. 233,000 10,819,938
-----------
Household Products -- 1.0%
Libbey Inc. 185,800 7,037,175
-----------
Industrial Transportation -- 3.3%
ABC Rail Products
Corporation o 445,000 8,900,000
Arnold Industries, Inc. 363,800 6,275,550
The Greenbrier
Companies, Inc. 429,400 7,433,988
------------
22,609,538
------------
Insurance -- 8.6%
ALLIED Group,
Incorporated 404,425 11,576,666
Capital RE Corp. 202,000 12,536,625
Executive Risk, Inc. 171,400 11,965,855
Highlands Insurance
Group, Inc. o 468,200 13,285,175
Nationwide Financial
Services, Inc. Class A 146,400 5,288,700
State Auto Financial
Corporation 138,100 4,453,725
------------
59,106,746
------------
Investment Management Services -- 0.6%
Conning Corporation o 257,900 4,319,825
------------
Leasing Companies -- 1.8%
Rollins Truck Leasing
Company 704,450 12,592,044
------------
Machinery & Components -- 13.0%
Columbus McKinnon
Corporation 263,400 6,387,450
DT Industries, Inc. 380,300 12,930,200
Gleason Corporation 267,800 7,213,863
Graco, Incorporated 421,800 15,738,413
(Continued)
The accompanying notes are an integral part of the financial statements.
70
<PAGE>
MassMutual Small Cap Value Equity - Portfolio of Investments (Continued)
Number of
Shares Market Value
------ ------------
Hardinge, Inc. 219,100 $ 8,161,475
Helix Technology
Corporation 494,600 9,644,700
OmniQuip
International, Inc. 241,800 4,820,888
Regal-Beloit
Corporation 290,750 8,595,297
Roper Industries, Inc. 335,300 9,472,225
Watsco, Inc. 249,300 6,154,594
------------
89,119,105
------------
Marine Services -- 0.9%
Trico Marine Services,
Inc. o 208,100 6,112,938
------------
Medical Supplies -- 0.7%
Invacare Corporation 223,800 4,867,650
------------
Metals & Mining -- 2.1%
Reliance Steel &
Aluminum Company 489,300 14,556,675
------------
Miscellaneous -- 2.0%
Trimas Corporation 407,100 13,994,063
------------
Miscellaneous Distributor Wholesale -- 2.4%
Hughes Supply, Inc. 478,600 16,721,088
------------
Office Products -- 0.8%
American Business
Products, Inc. 252,900 5,468,963
------------
Oil & Gas -- 3.7%
Bayard Drilling
Technologies, Inc. o 305,800 4,969,250
The Houston
Exploration Company o 295,300 5,426,138
Parker Drilling
Company o 386,700 4,712,906
Stone Energy
Corporation o 215,700 7,225,950
TransCoastal Marine
Services, Inc. o 235,000 3,348,750
------------
25,682,994
------------
Other Services -- 3.6%
Analysts International
Corporation 510,300 $ 17,605,350
Landauer, Inc. 256,800 7,190,400
------------
24,795,750
------------
Publishing & Printing -- 6.1%
Banta Corporation 284,250 7,674,750
Harte Hanks
Communications, Inc. 280,600 10,417,275
Houghton Mifflin
Company 346,400 13,293,100
McClatchy
Newspapers, Inc. 402,650 10,947,047
------------
42,332,172
------------
Real Estate -- 2.1%
Captec Net Lease
Realty, Inc. 379,000 6,514,063
Mid-Atlantic Realty
Trust 546,400 8,025,250
------------
14,539,313
------------
Retail -- 2.0%
Arbor Drugs, Inc. 742,875 13,743,188
------------
Transportation -- 1.3%
C.H. Robinson
Worldwide, Inc. 90,100 2,015,988
Hub Group, Inc.
Class A o 237,000 7,050,750
------------
9,066,738
------------
TOTAL EQUITIES $679,765,393
------------
(Cost $451,951,657)
Principal
Amount Market Value
SHORT-TERM INVESTMENTS -- 1.0%
Commercial Paper -- 0.1%
Sara Lee Corporation
6.000% 1/07/1998 $1,000,000 $ $999,000
------------
Discount Note -- 0.9%
Federal Home Loan
Bank
5.800% 1/07/1998 6,000,000 5,994,200
------------
TOTAL SHORT-TERM
INVESTMENTS 6,993,200
------------
(At Amortized Cost)
TOTAL INVESTMENTS -- 99.4% 686,758,593
(Cost $458,944,857)+
Other Assets!
(Liabilities) - 0.6% 4,206,064
------------
NET ASSETS -- 100.0% $690,964,657
============
Notes to Portfolio of Investments
+Aggregate cost for Federal tax purposes (Note 7)
o Non-income producing security.
The accompanying notes are an integral part of the financial statements.
71
<PAGE>
MassMutual Small Cap Value Equity - Financial Statements
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
December 31, 1997
-----------------
<S> <C>
Assets:
Investments, at value (cost $451,951,657) (Note 2) ........................ $ 679,765,393
Short-term investments, at amortized cost (Note 2) ........................ 6,993,200
---------------
Total Investments ....................................................... 686,758,593
Cash ...................................................................... 22,236
Receivables from:
Investments sold ........................................................ 1,745,256
Fund shares sold ........................................................ 2,591,194
Interest and dividends .................................................. 663,346
---------------
Total assets .......................................................... 691,780,625
---------------
Liabilities:
Payables for:
Fund shares redeemed .................................................... 408,230
Directors' fees and expenses (Note 3) ................................... 5,867
Affiliates (Note 3):
Investment management fees ............................................ 341,243
Administration fees ..................................................... 48,734
Service and distribution fees ........................................... 386
Accrued expenses and other liabilities .................................. 11,508
---------------
Total liabilities ..................................................... 815,968
---------------
Net assets .............................................................. $ 690,964,657
===============
Net assets consist of:
Paid-in capital ......................................................... $ 460,933,162
Accumulated net realized gain on investments ............................ 2,217,759
Net unrealized appreciation on investments .............................. 227,813,736
---------------
$ 690,964,657
===============
Net assets:
Class 1 ................................................................. $ 192,471
===============
Class 2 ................................................................. $ 195,879
===============
Class 3 ................................................................. $ 198,007
===============
Class S ................................................................. $ 690,378,300
===============
Shares outstanding:
Class 1 ................................................................. 11,677
===============
Class 2 ................................................................. 11,809
===============
Class 3 ................................................................. 11,922
===============
Class S ................................................................. 41,565,529
===============
Net asset value, offering price and redemption price per share:
Class 1 ................................................................. $ 16.48
===============
Class 2 ................................................................. $ 16.59
===============
Class 3 ................................................................. $ 16.61
===============
Class S ................................................................. $ 16.61
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
72
<PAGE>
MassMutual Small Cap Value Equity - Financial Statements (Continued)
Statement of Operations
<TABLE>
<CAPTION>
Year ended
December 31, 1997
-----------------
<S> <C>
Investment income:
Dividends ............................................................... $ 7,072,894
Interest ................................................................ 1,671,001
---------------
Total investment income ............................................... 8,743,895
---------------
Expenses (Note 1):
Investment management fees (Note 3) ..................................... 3,149,017
Custody fees ............................................................ 57,133
Audit and legal fees .................................................... 13,833
Directors' fees (Note 3) ................................................ 21,362
Fees waived by the investment manager (Note 3) .......................... (65,671)
---------------
3,175,674
Administration fees (Note 3):
Class 1 ............................................................... 949
Class 2 ............................................................... 879
Class 3 ............................................................... 552
Class S ................................................................ 488,152
Distribution and service fees (Note 3):
Class 1 ............................................................... 1,077
Class 2 ............................................................... 252
---------------
Net expenses ......................................................... 3,667,535
---------------
Net investment income ................................................ 5,076,360
---------------
Realized and unrealized gain (loss):
Net realized gain on investment transactions ............................ 56,071,743
Net change in unrealized appreciation (depreciation) on
investments ............................................................ 116,404,168
---------------
Net realized and unrealized gain ..................................... 172,475,911
---------------
Net increase in net assets resulting from operations .................... $ 177,552,271
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
73
<PAGE>
MassMutual Small Cap Value Equity - Financial Statements (Continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income .................................... $ 5,076,360 $ 10,013,929
Net realized gain on investment transactions ............. 56,071,743 15,188,213
Net change in unrealized appreciation (depreciation)
on investments .......................................... 116,404,168 63,151,095
------------- -------------
Net increase in net assets resulting from operations .... 177,552,271 88,353,237
------------- -------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1 .................................................. -- (1,430)
Class 2 .................................................. (449) (2,382)
Class 3 .................................................. (1,067) (2,845)
Class S .................................................. (5,267,208) (9,914,239)
------------- -------------
Total distributions from net investment income .......... 5,268,724) (9,920,896)
------------- -------------
From net realized gains:
Class 1 ................................................. (16,515) (3,230)
Class 2 ................................................. (16,672) (3,240)
Class 3 ................................................. (16,782) (3,251)
Class S ................................................. (58,776,388) (10,172,978)
------------- -------------
Total distributions from net realized gains ............ (58,826,357) (10,182,699)
------------- -------------
Net fund share transactions (Note 5):
Class 1 ................................................ 16,505 (49,286)
Class 2 ................................................ 17,114 5,622
Class 3 ................................................ 17,846 6,096
Class S ................................................ 120,087,619 8,348,780
------------- -------------
Increase in net assets from net fund share transactions 120,139,084 8,311,212
------------- -------------
Total increase in net assets ........................... 233,596,274 76,560,854
Net assets:
Beginning of period .................................... 457,368,383 380,807,529
------------ -------------
End of period (including undistributed net
investment income of $0 and $192,363, respectively) ... $ 690,964,657 $ 457,368,383
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
74
<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 Year ended Period ended
12/31/97 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 (0.04) 0.21 0.06 0.02
Net realized and unrealized gain (loss) on investments 4.67 2.23 1.74 (0.31)
---------- ---------- ---------- ------------
Total income (loss) from investment operations 4.63 2.44 1.80 (0.29)
---------- ---------- ---------- ------------
Less distributions to shareholders:
From net investment income -- (0.14) (0.09) (0.02)
From net realized gains (1.54) (0.31) -- --
---------- ---------- ---------- ------------
Total distributions (1.54) (0.45) (0.09) (0.02)
---------- ---------- ---------- ------------
Net asset value, end of period $ 16.48 $ 13.39 $ 11.40 $ 9.69
========== ========== ========== ============
Total Return 34.74% 21.43% 18.58% (2.89)%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 192 $ 143 $ 172 $ 99
Net expenses to average daily net assets# 1.78% 1.75% 1.75% 1.75%*
Net investment income to average daily net assets (0.25)% 1.56% 0.63% 1.14%*
Portfolio turnover rate 31% 28% 28% 4%
Average broker commission rate (a) $ 0.0517 $ 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
-------
Year ended Year ended Year ended Period ended
12/31/97 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 0.05 0.22 0.13 0.03
Net realized and unrealized gain (loss) on investments 4.70 2.30 1.74 (0.30)
---------- ---------- ---------- ------------
Total income (loss) from investment operations 4.75 2.52 1.87 (0.27)
---------- ---------- ---------- ------------
Less distributions to shareholders:
From net investment income (0.04) (0.23) (0.13) (0.03)
From net realized gains (1.54) (0.31) -- --
---------- ---------- ---------- ------------
Total distributions (1.58) (0.54) (0.13) (0.03)
---------- ---------- ---------- ------------
Net asset value, end of period $ 16.59 $ 13.42 $ 11.44 $ 9.70
========== ========== ========== ============
Total Return 35.58% 22.07% 19.25% (2.72)%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 196 $ 145 $ 118 $ 99
Net expenses to average daily net assets# 1.23% 1.20% 1.20% 1.20%*
Net investment income to average daily net assets 0.30% 1.81% 1.19% 1.69%*
Portfolio turnover rate 31% 28% 28% 4%
Average broker commission rate (a) $ 0.0517 $ 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.
75
<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 Year ended Period ended
12/31/97 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 0.10 0.27 0.16 0.03
Net realized and unrealized gain (loss) on investments 4.71 2.31 1.74 (0.30)
---------- ---------- ---------- ------------
Total income (loss) from investment operations 4.81 2.58 1.90 (0.27)
---------- ---------- ---------- ------------
Less distributions to shareholders:
From net investment income (0.10) (0.27) (0.16) (0.03)
From net realized gains (1.54) (0.31) -- --
---------- ---------- ---------- ------------
Total distributions (1.64) (0.58) (0.16) (0.03)
---------- ---------- ---------- ------------
Net asset value, end of period $ 16.61 $ 13.44 $ 11.44 $ 9.70
========== ========== ========== ============
Total Return 35.95% 22.64% 19.62% (2.68)%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 198 $ 146 $ 119 $ 99
Net expenses to average daily net assets# 0.88% 0.85% 0.85% 0.85%*
Net investment income to average daily net assets 0.65% 2.16% 1.54% 2.09%*
Portfolio turnover rate 31% 28% 28% 4%
Average broker commission rate (a) $ 0.0517 $ 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 S (1)
-----------
Year ended Year ended Year ended Period ended
12/31/97 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 0.13 0.31 0.19 0.04
Net realized and unrealized gain (loss) on investments 4.73 2.29 1.75 (0.31)
--------- ---------- ---------- ------------
Total income (loss) from investment operations 4.86 2.60 1.94 (0.27)
--------- ---------- ---------- ------------
Less distributions to shareholders:
From net investment income (0.14) (0.30) (0.19) (0.04)
From net realized gains (1.54) (0.31) -- --
--------- ---------- ---------- ------------
Total distributions (1.68) (0.61) (0.19) (0.04)
--------- ---------- ---------- ------------
Net asset value, end of period $ 16.61 $ 13.43 $ 11.44 $ 9.69
========= ========== ========== ============
Total Return 36.36% 22.82% 20.01% (2.66)%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 690,378 $ 456,935 $ 380,398 $ 310,789
Net expenses to average daily net assets# 0.6400% 0.6110% 0.6110% 0.6110%*
Net investment income to average daily net assets 0.89% 2.40% 1.78% 1.78%*
Portfolio turnover rate 31% 28% 28% 4%
Average broker commission rate (a) $ 0.0517 $ 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: 0.6515% 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.
(1) Class S shares were previously designated as Class 4 shares.
@ 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.
76
<PAGE>
MassMutual International Equity Fund - Portfolio of Investments
Portfolio of Investments
December 31, 1997
Number of
Shares Market Value
------ ------------
EQUITIES -- 83.5%
Automobiles -- 1.8%
Porsche AG,
Preference 6,000 $10,077,623
-----------
Banking -- 12.1%
Banco Bradesco SA,
Preference 292,260,951 2,864,157
Banco de Galicia y
Buenos Aires SA de
CV, Sponsored ADR 127,000 3,270,250
Commerzbank AG 75,000 2,919,840
Credit Suisse Group 120,000 18,593,784
Credito Italiano 3,470,000 10,706,338
Liechtenstein Global
Trust AG 10,000 6,204,787
Skandinaviska Enskilda
Banken Group 200,000 2,533,280
Societe Generale 100,000 13,630,630
Unibanco-Uniao de
Banco Brasileiros SA,
Sponsored GDR o 190,000 6,115,625
-----------
66,838,691
-----------
Computer Hardware--1.7%
Canon, Inc. 225,000 5,260,680
Eidos PLC o 225,000 2,498,940
Imagineer Co. Ltd. 205,000 1,608,184
-----------
9,367,804
-----------
Computer Services -- 1.0%
Cap Gemini SA 70,000 5,742,317
-----------
Computer Software -- 4.9%
JBA Holdings PLC 525,000 8,940,645
Misys PLC 581,892 17,616,955
-----------
26,557,600
-----------
Diversified Financial -- 2.4%
Cie Financiere de
Paribas, Series A 150,000 13,040,520
-----------
Electric Utilities -- 0.4%
Cia Paranaense
Energia, Sponsored
ADR, Preference B
Shares 170,000 $2,326,875
-----------
Electrical Equipment & Electronics -- 2.5%
LEM Holdings SA 11,192 2,271,317
Murata Mfg. Co. Ltd. 100,000 2,522,660
Sony Corporation 100,000 8,921,620
-----------
13,715,597
-----------
Energy Services & Producers -- 6.8%
Cie Generale de
GeophysiqueSA o 54,000 6,911,725
Cie Generale de
Geophysique SA, o
Sponsored ADR 350,000 8,968,750
Coflexip SA,
Sponsored ADR 200,000 11,100,000
PTT Exploration &
Production Public Co.
Ltd. 93,000 1,070,058
Smedvig AS, Series B 160,000 3,363,984
Transocean Offshore Inc. 125,400 125,400 6,042,713
-----------
37,457,230
-----------
Food & Beverage -- 2.3%
Cadbury Schweppes PLC 1,000,000 10,094,500
Remy Cointreau 120,000 2,240,076
-----------
12,334,576
-----------
Healthcare/Drugs -- 6.5%
Biocompatibles
International PLC o 823,823 6,845,310
Glaxo Wellcome PLC 312,979 7,415,631
Novartis AG 4,264 6,928,574
Takeda Chemical
Industries Ltd. 350,000 10,013,745
Torii Pharmaceutical
Co. Ltd. 249,000 4,213,155
-----------
35,416,415
-----------
Healthcare/Supplies & Services -- 2.3%
Medical Invest
Svenska AB Class A o 114,300 $3,889,526
Medical Invest
Svenska AB Class B o 99,755 3,331,717
Nichii Gakkan
Company 150,000 5,191,455
-----------
12,412,698
-----------
Industrial Services -- 3.8%
Bau Holdings AF,
Preference 170,611 7,727,552
Boskalis Westminster 479,798 8,520,349
Ordina NV o 208,000 2,862,621
VBH Holding AG 125,000 1,668,475
-----------
20,778,997
-----------
Insurance -- 9.3%
Instituto Nazionale
delle Assicurazioni 7,000,000 14,193,900
Marschollek,
Lautenschlaeger und
Partner-VO, Non-vtg.
Preferred Stock 4,000 1,034,458
Reinsurance Australia
Corp. Ltd. 2,951,101 7,691,159
Schweizerische
Lebensversicherungs
und Rentenanstalt 15,000 11,795,952
Skandia Forsakrings AB 338,400 15,972,378
-----------
50,687,847
-----------
Leisure & Entertainment -- 6.2%
EMI Group PLC 600,000 5,015,160
Lusomundo SGPS SA 400,000 3,698,760
Nintendo Co. Ltd. 255,000 25,103,603
-----------
33,817,523
-----------
(Continued)
The accompanying notes are an integral part of the financial statements.
77
<PAGE>
MassMutual International Equity Fund - Portfolio of Investments (Continued)
Number of
Shares Market Value
------ ------------
Manufacturing -- 1.7%
Powerscreen
International PLC 488,831 $4,886,257
Stork NV 123,157 4,252,599
-------------
9,138,856
=============
Media -- 1.1%
Grupo Televisa SA,
Sponsored GDR (D) 44,700 1,729,331
Havas SA 60,000 4,318,578
-------------
6,047,909
=============
Non-Durable Household Goods -- 1.6%
Wella AG 2,000 1,412,647
WellaAG Preference 10,000 7,341,314
-------------
8,753,961
=============
Oil & Gas -- 3.9%
Expro International
Group PLC 875,000 7,760,113
Novus Petroleum
Limited 2,513,333 6,550,248
Petroleo Brasileiro
SA, Preference 29,233,000 6,834,675
-------------
21,145,036
=============
Real Estate -- 1.4%
Brazil Realty SA,
GDR144A 62,000 1,277,752
IRSA Inversiones y
Representaciones, SA 1,690,673 6,290,318
-------------
7,568,070
=============
Telecommunications -- 0.6%
Tandberg Television
ASA (D) 300,000 $3,458,940
-------------
Telephone Utilities -- 2.6%
Telecomunicacoes
Brasileiras SA,
Sponsored ADR 120,000 13,972,500
-------------
Transportation -- 5.9%
Argonaut
AB-B Shares (D) 1,100,000 1,885,400
Frontline Ltd (D) 1,500,000 6,063,300
Internatio-Muller NV 159,300 5,013,410
MIF Ltd. (D) 391,000 6,947,835
Smit Internationale
NV 450,000 12,208,770
-------------
32,118,715
-------------
Water Companies -- 0.7%
Cia de Saneamento
Basico do Estado de
Sao Paulo 17,250,000 4,095,150
-------------
TOTAL EQUITIES 456,871,450
=============
(Cost $398,154,381)
RIGHTS -- 0.0%
Banking -- 0.0%
Banco Bradesco SA
Rts., Preference,
Exp. 2/98 12,495,669 --
-------------
TOTAL RIGHTS --
-------------
Principal
Amount Market Value
------ ------------
SHORT-TERM INVESTMENTS -- 16.8%
Commercial Paper
American Express
Company
5.830% 1/15/1998 $20,000,000 $19,954,656
Cooperative
Association of
Tractor Dealers
5.920% 1/14/1998 4,500,000 4,490,380
Ford Motor Credit
Company
5.950% 1/09/1998 10,000,000 9,986,778
Ford Motor Credit
Company
6.120% 1/02/1998 10,000,000 9,998,300
The Goldman Sachs
Group, L.P.
5.850% 1/05/1998 10,000,000 9,993,500
Merrill Lynch & Co.
Inc.
5.870% 1/12/1998 10,000,000 9,982,064
Merrill Lynch & Co.
Inc.
5.900% 1/07/1998 10,000,000 9,990,167
New Center Asset
6.750% 1/02/1998 7,700,000 7,698,556
Prudential Funding
Corporation
5.840% 1/13/1998 10,000,000 9,980,533
-------------
TOTAL SHORT-TERM
INVESTMENTS 92,074,934
-------------
(At Amortized Cost)
TOTAL INVESTMENTS -- 100.3% 548,946,384
(Cost $490,229,315)+
Other Assets/
(Liabilities) - (0.3%) (1,764,450)
-------------
NET ASSETS -- 100.0% $547,181,934
=============
Notes to Portfolio of Investments
(D) Non-income producing security
+ Aggregate cost for Federal tax purposes (Note 7)
ADR: American Depository Receipt
GDR: Global Depository Receipt
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.
78
<PAGE>
MassMutual Small Cap Value Equity - Financial Statements (Continued)
Statement of
Assets and
Liabilities
<TABLE>
<CAPTION>
December 31, 1997
-----------------
<S> <C>
Assets:
Investments, at value (cost $398,154,381) (Note 2) ................ $ 456,871,450
Short-term investments, at amortized cost (Note 2) ................ 92,074,934
-----------------
Total Investments ............................................... 548,946,384
Cash .............................................................. 200,916
Receivables from:
Investments sold ................................................ 21,181,972
Open forward foreign currency contracts (Note 2) ................ 2,302,439
Fund shares sold ................................................ 3,179,598
Interest and dividends .......................................... 156,479
Foreign taxes withheld .......................................... 511,024
-----------------
Total assets ................................................... 576,478,812
-----------------
Liabilities:
Payables for:
Payable to Custodian ............................................ 21,181,199
Investments purchased ........................................... 4,293,610
Fund shares redeemed ............................................ 3,274,192
Directors' fees and expenses (Note 3) ........................... 5,869
Affiliates (Note 3):
Investment management fees ..................................... 416,327
Administration fees ............................................ 38,673
Service and distribution fees .................................. 263
Accrued expenses and other liabilities ............................ 86,745
-----------------
Total liabilities .............................................. 29,296,878
-----------------
Net assets ........................................................ $ 547,181,934
=================
Net assets consist of:
Paid-in capital ................................................... $ 469,631,790
Undistributed net investment income ............................... 293,037
Accumulated net realized gain on investments and
foreign currency translations ................................... 16,328,165
Net unrealized appreciation on investments, forward foreign currency
contracts, foreign currency and other assets and liabilities .... 60,928,942
-----------------
$ 547,181,934
=================
Net assets:
Class 1 ........................................................... $ 128,942
=================
Class 2 ........................................................... $ 131,194
=================
Class 3 ........................................................... $ 132,039
=================
Class S ........................................................... $ 546,789,759
=================
Shares outstanding:
Class 1 ........................................................... 10,526
=================
Class 2 ........................................................... 10,635
=================
Class 3 ........................................................... 10,680
=================
Class S ........................................................... 44,180,338
=================
Net asset value, offering price and redemption price per share:
Class 1 ........................................................... $ 12.25
=================
Class 2 ........................................................... $ 12.34
=================
Class 3 ........................................................... $ 12.36
=================
Class S ........................................................... $ 12.38
=================
</TABLE>
The accompanying notes are an integral part of the financial statements.
79
<PAGE>
MassMutual International Equity Fund - Financial Statements (Continued)
Statement of
Operations
<TABLE>
<CAPTION>
Year ended
December 31, 1997
-----------------
<S> <C>
Investment income:
Dividends (net of withholding tax of $697,895) ............ $ 6,628,667
Interest .................................................. 1,167,260
-----------------
Total investment income ................................. 7,795,927
-----------------
Expenses (Note 1):
Investment management fees (Note 3) ...................... 4,149,537
Custody fees .............................................. 569,180
Audit and legal fees ...................................... 10,274
Directors' fees (Note 3) .................................. 21,363
Fees waived by the investment manager (Note 3) ............ (50,753)
-----------------
4,699,601
Administration fees (Note 3):
Class 1 ................................................. 748
Class 2 ................................................. 695
Class 3 ................................................. 570
Class S ................................................. 465,031
Distribution and service fees (Note 3):
Class 1 ................................................. 817
Class 2 ................................................. 191
-----------------
Net operating expenses .................................. 5,167,653
-----------------
Interest Expense (Note 8) ................................ 52,801
-----------------
Net investment income ................................... 2,575,473
-----------------
Realized and unrealized gain (loss) from investments
and foreign currency:
Net realized gain on:
Investment transactions ................................. 46,198,883
Foreign currency transactions ........................... 643,684
-----------------
Net realized gain ....................................... 46,842,567
-----------------
Net change in unrealized appreciation (depreciation) on:
Investments ............................................. 11,424,350
Translation of assets and liabilities in foreign
currencies.............................................. 1,601,856
-----------------
Net unrealized gain ..................................... 13,026,206
-----------------
Net realized and unrealized gain from investments
and foreign currency translation ...................... 59,868,773
-----------------
Net increase in net assets resulting from operations ...... $ 62,444,246
=================
</TABLE>
The accompanying notes are an integral part of the financial statements.
80
<PAGE>
MassMutual International Equity Fund - Financial Statements (Continued)
Statements of
Changes in Net
Assets
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income ..................................... $ 2,575,473 $ 1,651,003
Net realized gain on investments and foreign
currency transactions .................................... 46,842,567 10,732,352
Net change in unrealized appreciation (depreciation) on
investments and translation of assets and liabilities in
foreign currencies ....................................... 13,026,206 36,530,674
----------------- -----------------
Net increase in net assets resulting from operations..... 62,444,246 48,914,029
----------------- -----------------
Distributions to shareholders (Note 2):
From net investment income:
Class 1 ................................................... (91) (263)
Class 2 ................................................... (133) (433)
Class 3 ................................................... (256) (501)
Class S ................................................... (3,046,471) (1,825,896)
----------------- -----------------
Total distributions from net investment income ........... (3,046,951) (1,827,093)
----------------- -----------------
In excess of net investment income:
Class 1 ................................................... -- (794)
Class 2 ................................................... -- (1,308)
Class 3 ................................................... -- (1,513)
Class S ................................................... -- (5,515,423)
----------------- -----------------
Total distributions in excess of net investment income.... -- (5,519,038)
----------------- -----------------
From net realized gains:
Class 1 ................................................... (4,184) --
Class 2 ................................................... (4,229) --
Class 3 ................................................... (4,243) --
Class S ................................................... (17,495,727) --
----------------- -----------------
Total distributions from net realized gains .............. (17,508,383) --
----------------- -----------------
Net fund share transactions (Note 5):
Class 1 ................................................... 4,275 (13,956)
Class 2 ................................................... 4,362 1,742
Class 3 ................................................... 4,499 2,018
Class S ................................................... 148,628,074 94,070,522
----------------- -----------------
Increase in net assets from net fund share transactions... 148,641,210 94,060,326
----------------- -----------------
Total increase in net assets .............................. 190,530,122 135,628,224
Net assets:
Beginning of period ....................................... 356,651,812 221,023,588
----------------- -----------------
End of period (including undistributed net investment
income of $293,037 and $113,978, respectively) ........... $ 547,181,934 $ 356,651,812
================= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
81
<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 Year ended Period ended
12/31/97 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 (0.07) (0.07) (0.03) (0.02)
Net realized and unrealized gain (loss) on investments
and foreign currency 1.67 1.70 0.40 (0.73)
---------- ---------- ---------- ------------
Total income (loss) from investment operations 1.60 1.63 0.37 (0.75)
---------- ---------- ---------- ------------
Less distributions to shareholders:
From net investment income (0.01) (0.10) -- --
In excess of net investment income -- -- (0.08) --
From net realized gains (0.41) -- -- --
---------- ---------- ---------- ------------
Total distributions (0.42) (0.10) (0.08) --
---------- ---------- ---------- ------------
Net asset value, end of period $ 12.25 $ 11.07 $ 9.54 $ 9.25
========== ========== ========== ============
Total Return 14.46% 17.09% 3.96% (7.50)%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 129 $ 113 $ 112 $ 93
Net expenses to average daily net assets# 2.20% 2.15% 2.15% 2.15%*
Net investment income to average daily net assets (0.61)% (0.51)% (0.40)% (1.10)%*
Portfolio turnover rate 83% 58% 121% 18%
Average broker commission rate (a) $ 0.0083 $ 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: 2.21% 2.22% 2.24% 2.24%*
<CAPTION>
Class 2
-------
Year ended Year ended Year ended Period ended
12/31/97 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 (0.01) 0.00 0.02 (0.01)
Net realized and unrealized gain (loss) on investments
and foreign currency 1.68 1.70 0.40 (0.73)
---------- ---------- ---------- ------------
Total income (loss) from investment operations 1.67 1.70 0.42 (0.74)
---------- ---------- ---------- ------------
Less distributions to shareholders:
From net investment income (0.01) (0.17) (0.02) --
In excess of net investment income -- -- (0.10) --
From net realized gains (0.41) -- -- --
---------- ---------- ---------- ------------
Total distributions (0.42) (0.17) (0.12) --
---------- ---------- ---------- ------------
Net asset value, end of period $ 12.34 $ 11.09 $ 9.56 $ 9.26
========== ========== ========== ============
Total Return 15.11% 17.85% 4.52% (7.40)%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 131 $ 114 $ 97 $ 93
Net expenses to average daily net assets# 1.65% 1.60% 1.60% 1.60%*
Net investment income to average daily net assets (0.06)% 0.02% 0.19% (0.55)%*
Portfolio turnover rate 83% 58% 121% 18%
Average broker commission rate (a) $ 0.0083 $ 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: 1.66% 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.
82
<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 Year ended Period ended
12/31/97 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 0.02 0.03 0.04 (0.00)
Net realized and unrealized gain (loss) on investments
and foreign currency 1.67 1.70 0.40 (0.73)
---------- ---------- ---------- ------------
Total income (loss) from investment operations 1.69 1.73 0.44 (0.73)
---------- ---------- ---------- ------------
Less distributions to shareholders:
From net investment income (0.02) (0.20) (0.05) --
In excess of net investment income -- -- (0.09) --
From net realized gains (0.41) -- -- --
---------- ---------- ---------- ------------
Total distributions (0.43) (0.20) (0.14) --
---------- ---------- ---------- ------------
Net asset value, end of period $ 12.36 $ 11.10 $ 9.57 $ 9.27
========== ========== ========== ============
Total Return 15.29% 18.11% 4.78% (7.30)%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 132 $ 114 $ 97 $ 93
Net expenses to average daily net assets# 1.40% 1.35% 1.35% 1.35%*
Net investment income to average daily net assets 0.19% 0.27% 0.45% (0.30)%*
Portfolio turnover rate 83% 58% 121% 18%
Average broker commission rate (a) $ 0.0083 $ 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: 1.41% 1.42% 1.44% 1.44%*
<CAPTION>
Class S (1)
-----------
Year ended Year ended Year ended Period ended
12/31/97 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 0.06 0.06 0.07 0.00
Net realized and unrealized gain (loss) on investments
and foreign currency 1.69 1.71 0.41 (0.72)
---------- ---------- ---------- ------------
Total income (loss) from investment operations 1.75 1.77 0.48 (0.72)
---------- ---------- ---------- ------------
Less distributions to shareholders:
From net investment income (0.07) (0.24) (0.07) --
In excess of net investment income -- -- (0.11) --
From net realized gains (0.41) -- -- --
---------- ---------- ---------- ------------
Total distributions (0.48) (0.24) (0.18) --
---------- ---------- ---------- ------------
Net asset value, end of period $ 12.38 $ 11.11 $ 9.58 $ 9.28
========== ========== ========== ============
Total Return 15.79% 18.51% 5.13% (7.20)%
Ratios/Supplemental Data:
Net assets, end of period (000s) $ 546,790 $ 356,311 $ 220,718 $ 150,199
Net expenses to average daily net assets# 1.0580% 1.0020% 1.0020% 1.0020%*
Net investment income to average daily net assets 0.53% 0.59% 0.76% 0.04%*
Portfolio turnover rate 83% 58% 121% 18%
Average broker commission rate (a) $ 0.0083 $ 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: 1.0684% 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.
(1) Class S shares were previously designated as Class 4 shares.
@ 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.
83
<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, 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. As of
December 31, 1997 the Trust consisted of seven separate
diversified series of shares (each individually referred to as a
"Fund" or collectively as the "Funds"), each of which had four
classes of shares: Class 1, Class 2, Class 3 and Class S. Class
1, Class 2 and Class 3 shares of each Fund were 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 S
shares of each Fund, which were originally designated as Class 4
shares, 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. See Note 9 for a summary of the revisions to the
class structure of the Funds.
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. A new series of the Trust, the MassMutual
Indexed Equity Fund, is expected to commence operations March 1,
1998. The MassMutual Indexed Equity Fund will have three
classes, Class A, Class Y and Class S. See Note 9.
2. Significant The following is a summary of significant accounting policies
Accounting followed consistently by each Fund in the preparation of the
Policies 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 Equity securities are valued on the basis of valuations
Valuation 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.
84
<PAGE>
Notes to Financial Statements (Continued)
Accounting for Investment transactions are accounted for on the trade date.
Investments 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 It is each Fund's intent to continue to comply with the
Tax 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 Dividends from net investment income and distributions of any
Distributions net realized capital gains of each Fund are declared and paid
to annually and at other times as may be required to satisfy tax or
Shareholders regulatory requirements. Distributions to shareholders are
recorded on the ex-dividend date. Income and capital gain
distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting
principles. These differences are primarily due to investments
in forward contracts, passive foreign investment companies, the
deferral of wash sale losses, and paydowns on certain mortgage-
backed securities. As a result, net investment income and net
realized gain on investment transactions for a reporting period
may differ significantly from distributions during such period.
Accordingly, the Funds may periodically make reclassifications
among certain of their capital accounts without impacting the
net asset value of the Funds.
Foreign The books and records of the Funds are maintained in U.S.
Currency dollars. The market values of foreign currencies, foreign
Translation 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 Each Fund may enter into forward foreign currency contracts in
Foreign order to convert foreign denominated securities or obligations
Currency to U.S. dollar denominated investments. The International Equity
Contracts 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.
85
<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, 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
01/02/98 Netherlands Guilder 44,232 $ 22,125 $21,819 $ (306)
SELLS
02/17/98 Japanese Yen 6,824,400,000 55,000,000 52,697,255 2,302,745
--------------
$ 2,302,439
==============
</TABLE>
Forward Each Fund may purchase or sell securities on a "when issued" or
Commitments 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, 1997, is as follows:
<TABLE>
<CAPTION>
Forward Expiration Aggregate
Commitment of Face Value Market Unrealized
Contracts to Buy Contracts of Contracts Cost Value Appreciation
- ---------------- --------- ------------ ---- ------ ------------
<S> <C> <C> <C> <C> <C>
Core Bond Fund
U.S. Treasury Note
6.00% 08/15/2000 February 1998 $30,000,000 $30,135,938 $30,205,200 $69,262
</TABLE>
86
<PAGE>
Notes to Financial Statements (Continued)
Allocation of In maintaining the records for the Funds, the income and
Operating expense accounts are allocated to each class of shares.
Activity 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 were limited to a percentage of average
daily net assets for a portion of the year, as discussed in
Note 3.
3. Management
Fees and Other
Transactions
With Affiliates
Investment Under an agreement between the Trust and MassMutual,
Management Fees 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:
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%
MassMutual has entered into investment sub-advisory
agreements with two subsidiaries: David L. Babson and
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 Under separate administrative and shareholder services
Fees 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 S
------- ------- ------- -------
<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>
87
<PAGE>
Notes to Financial Statements (Continued)
In conjunction with the redesignation of Class 4 shares to
Class S shares on December 1, 1997, (see Note 9), the Class S
administrative service fee was adjusted to .0777% of the
average daily net assets of all the Funds with the exception
of International Equity Fund, which was adjusted to .0774% of
average daily net assets.
Distribution and OppenheimerFunds Distributor, Inc. ("Oppenheimer") acts
Service Fees as distributor to each Fund. MML Investor Services, Inc.
("MMLISI") serves as sub-distributor to each Fund. MassMutual
has a controlling interest in Oppenheimer 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 For the period January 1, 1997 to April 30, 1997, MassMutual
Limitations 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 S
------- ------- ------- -------
<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 year ended December 31, 1997 was
$26,955,580, of which $679,798 was reimbursed to the Funds.
Other Certain officers and Trustees of the Funds are also officers
of MassMutual. The compensation of unaffiliated Trustees of
the Funds is borne by the Funds.
At December 31, 1997, MassMutual or separate investment
accounts thereof owned all of the outstanding shares of the
Trust.
4. Purchases And Cost of purchases and proceeds from sales of investment
Sales Of securities (excluding short-term investments)
Investments for the year ended December 31, 1997 were as follows:
Long-term U.S.
Government Other Long-term
Securities Securities
------------ ------------
Purchases Short-Term Bond Fund $ 31,425,204 $ 39,742,452
Core Bond Fund 88,174,696 132,252,986
Balanced Fund 29,279,250 100,443,143
Value Equity Fund -- 642,451,976
Small Cap Value Equity Fund -- 250,070,186
International Equity Fund -- 408,627,335
Sales Short-Term Bond Fund $ 44,702,047 $ 19,456,604
Core Bond Fund 142,167,673 66,371,875
Balanced Fund 35,319,378 84,175,961
Value Equity Fund -- 556,704,082
Small Cap Value Equity Fund -- 169,292,492
International Equity Fund -- 380,917,329
88
<PAGE>
Notes to Financial Statements (Continued)
5. Capital Share The Funds are authorized to issue an unlimited number of
Transactions shares, with no par value in each class of shares. Changes
in shares outstanding for each Fund are as follows:
<TABLE>
<CAPTION>
Class 1 Class 2
Year ended Year ended Year ended Year ended
December 31, 1997 December 31, 1996 December 31, 1997 December 31, 1996
Shares Amount Shares Amount Shares Amount Shares Amount
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Prime Fund
Sold -- -- -- -- -- -- -- --
Issued as reinvestment
of dividends 31 $ 4,723 28 $ 4,288 36 $ 5,393 33 $ 4,922
Redeemed -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Net increase 31 $ 4,723 28 $ 4,288 36 $ 5,393 33 $ 4,922
========= ========= ========= ========= ========= ========= ========= =========
Short-Term Bond Fund
Sold -- -- -- -- -- -- -- --
Issued as reinvestment
of dividends 501 5,151 519 5,285 571 5,867 584 5,951
Redeemed -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Net increase 501 $ 5,151 519 $ 5,285 571 $ 5,867 584 $ 5,951
========= ========= ========= ========= ========= ========= ========= =========
Core Bond Fund
Sold -- -- 429 4,520 -- -- -- --
Issued as reinvestment
of dividends 561 6,094 489 5,156 634 6,894 562 5,941
Redeemed -- -- (5,250) (55,534) -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Net increase (decrease) 561 $ 6,094 (4,332) $ (45,858) 634 $ 6,894 562 $ 5,941
========= ========= ========= ========= ========= ========= ========= =========
Balanced Fund
Sold -- -- 931 10,969 -- -- -- --
Issued as reinvestment
of dividends 722 9,696 416 5,173 787 10,600 484 6,038
Redeemed -- -- (5,552) (65,509) -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Net increase (decrease) 722 $ 9,696 (4,205) $ (49,367) 787 $ 10,600 484 $ 6,038
========= ========= ========= ========= ========= ========= ========= =========
Value Equity Fund
Sold -- -- -- -- -- -- -- --
Issued as reinvestment
of dividends 915 15,245 403 5,884 979 16,362 456 6,682
Redeemed -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Net increase 915 $ 15,245 403 $ 5,884 979 $ 16,362 456 $ 6,682
========= ========= ========= ========= ========= ========= ========= =========
Small Cap Value Equity Fund
Sold -- -- 4,373 54,090 -- -- -- --
Issued as reinvestment
of dividends 1,011 16,505 349 4,660 1,042 17,114 420 5,622
Redeemed -- -- (9,150) (108,036) -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Net increase (decrease) 1,011 $ 16,505 (4,428) $ (49,286) 1,042 $ 17,114 420 $ 5,622
========= ========= ========= ========= ========= ========= ========= =========
International Equity Fund
Sold -- -- 5,377 55,098 -- -- -- --
Issued as reinvestment
of dividends 350 4,275 100 1,065 354 4,362 161 1,742
Redeemed -- -- (7,009) (70,119) -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Net increase (decrease) 350 $ 4,275 (1,532) $ (13,956) 354 $ 4,362 161 $ 1,742
========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
89
<PAGE>
Notes to Financial Statements (Continued)
<TABLE>
<CAPTION>
Class 3 Class S
Year ended Year ended Year ended Year ended
December 31, 1997 December 31, 1996 December 31, 1997 December 31, 1996
Shares Amount Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Prime Fund
Sold -- -- -- -- 2,313,757 $356,901,047 2,391,584 $370,653,176
Issued as reinvestment
of dividends 39 $ 5,838 35 $ 5,335 89,849 13,552,104 86,522 13,067,477
Redeemed -- -- -- -- (2,516,899) (387,704,105) (2,445,697) (378,881,926)
--------- --------- --------- --------- ---------- ------------ ---------- ------------
Net increase (decrease) 39 $ 5,838 35 $ 5,335 (113,293) $(17,250,954) 32,409 $ 4,838,727
========= ========= ========= ========= ========== ============ ========== ============
Short-Term Bond Fund
Sold -- -- -- -- 9,428,262 98,207,327 6,074,656 62,871,971
Issued as reinvestment
of dividends 614 6,313 625 6,381 1,038,249 10,611,443 808,935 8,206,104
Redeemed -- -- -- -- (5,254,453) (54,663,274) (4,631,745) (47,999,711)
--------- --------- --------- --------- ---------- ------------ ---------- ------------
Net increase 614 $ 6,313 625 $ 6,381 5,212,058 $ 54,155,496 2,251,846 $ 23,078,364
========= ========= ========= ========= ========== ============ ========== ============
Core Bond Fund
Sold -- -- -- -- 18,573,681 200,529,976 15,244,478 161,638,362
Issued as reinvestment
of dividends 680 7,406 604 6,389 2,529,434 27,329,767 1,838,613 19,317,124
Redeemed -- -- -- -- (13,062,080) (141,570,384) (6,519,179) (69,250,775)
--------- --------- --------- --------- ---------- ------------ --------- ------------
Net increase 680 $ 7,406 604 $ 6,389 8,041,035 $ 86,289,359 10,563,912 $111,704,711
========= ========= ========= ========= ========== ============ ========== ============
Balanced Fund
Sold -- -- -- -- 15,490,780 208,070,969 16,529,257 200,170,935
Issued as reinvestment
of dividends 826 11,159 521 6,510 3,601,954 48,404,059 2,193,746 27,325,515
Redeemed -- -- -- -- (16,501,676) (221,896,742) (12,780,860) (154,960,358)
--------- --------- --------- --------- ---------- ------------ --------- ------------
Net increase 826 $ 11,159 521 $ 6,510 2,591,058 $ 34,578,286 5,942,143 $ 72,536,092
========= ========= ========= ========= ========== ============ ========== ============
Value Equity Fund
Sold -- -- -- -- 42,809,442 708,198,212 42,761,147 585,609,490
Issued as reinvestment
of dividends 1,020 17,066 492 7,213 16,938,371 282,797,539 8,235,214 120,574,407
Redeemed -- -- -- -- (43,586,898) (722,935,752) (47,300,940) (651,246,978)
--------- --------- --------- --------- ---------- ------------ ---------- ------------
Net increase 1,020 $ 17,066 492 $ 7,213 16,160,915 $268,059,999 3,695,421 $ 54,936,919
========= ========= ========= ========= ========== ============ ========== ============
Small Cap Value Equity Fund
Sold -- -- -- -- 14,575,709 230,041,190 10,428,037 129,033,258
Issued as reinvestment
of dividends 1,085 17,846 455 6,096 3,890,912 64,043,615 1,500,824 20,087,217
Redeemed -- -- -- -- (10,914,681) (173,997,186) (11,168,365) (140,771,695)
--------- --------- --------- --------- ---------- ------------ ---------- ------------
Net increase 1,085 $ 17,846 455 $ 6,096 7,551,940 $120,087,619 760,496 $ 8,348,780
========= ========= ========= ========= ========== ============ ========== ============
International Equity Fund
Sold -- -- -- -- 22,135,252 274,603,312 14,964,804 154,912,942
Issued as reinvestment
of dividends 365 4,499 186 2,018 1,662,863 20,542,197 672,906 7,341,306
Redeemed -- -- -- -- (11,688,395) (146,517,435) (6,611,341) (68,183,726)
--------- --------- --------- --------- ---------- ------------ ---------- ------------
Net increase 365 $ 4,499 186 $ 2,018 12,109,720 $148,628,074 9,026,369 $ 94,070,522
========= ========= ========= ========= ========== ============ ========== ============
</TABLE>
90
<PAGE>
Notes to Financial Statements (Continued)
6. Foreign The International Equity Fund invests substantially all of
Securities 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 At December 31, 1997, the cost of securities and the
Tax Information unrealized appreciation (depreciation) in the value of
investments owned by the Funds, as computed on a Federal
income tax basis, 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 $ 228,230,839 $ 3,815 $ (24,973) $ (21,158)
Short-Term Bond Fund 205,430,337 1,854,403 (561,064) 1,293,339
Core Bond Fund 432,689,491 16,919,821 (529,777) 16,390,044
Balanced Fund 521,260,171 139,690,566 (540,826) 139,149,740
Value Equity Fund 2,076,604,643 1,123,293,702 (3,876,050) 1,119,417,652
Small Cap Value Equity Fund 459,144,230 234,617,794 (7,003,431) 227,614,363
International Equity Fund 490,229,315 86,328,444 (27,611,375) 58,717,069
</TABLE>
At December 31, 1997, the following Funds had available, for Federal income tax
purposes, unused capital losses:
Amount Expiration Date
--------------- ------------------------
Prime Fund $ 2,082 December 31, 2003
Prime Fund 2,368 December 31, 2004
Prime Fund 7,761 December 31, 2005
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 year ended December 31, 1997. Average daily borrowings
for the year ended December 31, 1997 were $6,100,000 and the
average interest rate was 5.86%. The maximum borrowing
outstanding during the year ended December 31, 1997 was
$31,600,000. There was no balance outstanding at December
31, 1997.
9. Class 4 Effective December 1, 1997, all Class 4 shares of all
Redesignation Funds were redesignated as Class S shares, and the expense
and Subsequent structure was revised accordingly (see Note 3).
Event Additionally, two new classes of shares, Class A and Class
Regarding New Y, were created for all Funds. Effective January 1, 1998,
Classes of Class A and Y shares began operations, and Class 1 shares of
Shares all Funds were exchanged for Class A shares and Class 2 and
Class 3 shares of all Funds were exchanged for Class Y
shares. The Class 1, Class 2, and Class 3 shares were
subsequently terminated by the Trustees. The new classes of
shares are offered to different types of investors and have
different expense and sales charge structures, as outlined
in the Trust's Prospectus.
91
<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.
<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 years ended December
31, 1997, 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 December 31, 1997
Statement of Assets and Liabilities at December
31, 1997
Statement of Operations at December 31, 1997
Statements of Changes in Net Assets for the years
ended December 31, 1997 and December 31,
1996
Financial Highlights for the years ended December
31, 1997, 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 June 14, 1993./1/
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 series (excluding MassMutual
Indexed Equity Fund (the "Fund")) and MassMutual
Life Insurance Company ("MassMutual")./1/
C-1
<PAGE>
(b): Copy of specimen Investment Sub-Advisory
Agreements between MassMutual and David L. Babson
and Company, Inc ("Babson")./3/
(c): Copy of Investment Sub-Advisory Agreement between
MassMutual and HarbourView Asset Management
Corporation ("HarbourView")./1/
Exhibit 6(a): Copy of Amended and Restated General Distributors
Agreement between the Trust and OppenheimerFunds
Distributor, Inc. ("Oppenheimer")./4/
(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 series
(excluding the Fund) and MassMutual for the
provision of administrative and shareholder
services./2/
(c): Copy of Amended and Restated Transfer Agency
Agreement among the Trust, MassMutual and IBT./4/
Exhibit 9: None.
Exhibit 10: Opinion of Counsel./5/
Exhibit 11(a): Consent of Ropes & Gray previously filed as
Exhibit 10 to Registrant's Pre-Effective Amendment
No. 2 to the Registration Statement filed August
30, 1994.
(b): Consent of Coopers & Lybrand L.L.P./6/
(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./3/
Exhibit 12: None.
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<PAGE>
Exhibit 13: None.
Exhibit 14: None.
Exhibit 15(a): Form of Class A Rule 12b-1 Plans./2/
(b): Form of Class Y Rule 12b-1 Plans./2/
Exhibit 16: None.
Exhibit 17: Financial Data Schedules./6/
Exhibit 18: Rule 18f-3 Plan./4/
- -------------
/1/Incorporated by reference to Registrant's Post-Effective Amendment ("PEA")
No. 4 to the Registration Statement filed via EDGAR on October 2, 1997.
/2/Incorporated by reference to Registrant's PEA No. 6 to the Registration
Statement filed via EDGAR on November 26, 1997.
/3/Incorporated by reference to Registrant's PEA No. 3 to the Registration
Statement filed via EDGAR on April 28, 1997.
/4/Incorporated by reference to Registrant's PEA No. 7 to the Registration
Statement filed via EDGAR on February 6, 1998.
/5/Incorporated by reference to Registrant's Pre-Effective Amendment No. 2 to
the Registration Statement filed August 30, 1994.
/6/Filed herewith.
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.
Currently, the Registrant provides a vehicle for the investment of assets of
various separate investment accounts established by MassMutual. The assets in
such separate accounts are, under state law, assets of the life insurance
companies which have established such accounts.
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<PAGE>
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 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,
which formerly operated as 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.
C-4
<PAGE>
11. MML Investors Services, Inc., is a registered broker-dealer incorporated in
Massachusetts. MassMutual Holding Company owns 86% of the capital stock and
G.R. Phelps & Co., Inc. owns 14% of the capital stock of MML Investors
Services, Inc.
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. DISA Insurance Services Agency of America, Inc. (Alabama), 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. (Hawaii), 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 and is controlled 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 and operates as an insurance
broker. The
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<PAGE>
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 and operates as an insurance
broker. The 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 as a collateralized bond obligation fund. MassMutual Holding MSC,
Inc. owns 99% 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. 1279342 Ontario Limited, an Ontario corporation, which operates as the
owner of a hotel property in Ontario, Canada. MassMutual Holding MSC, Inc.
owns all of the shares of 1279342 Ontario Limited.
29. Antares Leveraged Capital Corp., a Delaware corporation that operates as a
finance company. MassMutual Holding Trust I owns approximately 99% of the
capital stock of Antares.
30. 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.
31. Cornerstone Real Estate Advisers, Inc., a Massachusetts equity real estate
advisory corporation, all the stock of which is owned by MassMutual Holding
Trust I.
32. 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 85% of the outstanding capital stock of
DLB.
C-6
<PAGE>
33. Oppenheimer Acquisition Corporation ("OAC") is a Delaware corporation,
which serves as a holding company for OppenheimerFunds, Inc. MassMutual
Holding Trust I owns 89% of the capital stock of OAC.
34. David L. Babson and Company Incorporated, a registered investment adviser
incorporated in Massachusetts, all of the stock of which is owned by DLB.
35. 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.
36. 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.
37. 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.
38. OppenheimerFunds, Inc., a registered investment adviser incorporated in
Colorado, all of the stock of which is owned by OAC.
39. 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.
40. HarbourView Asset Management Corporation, a registered investment adviser
incorporated in New York, all the stock of which is owned by
OppenheimerFunds, Inc.
41. MultiSource Service, Inc., a registered broker-dealer incorporated in
Colorado that operates as a clearing broker, 80% of the stock of which is
owned by OppenheimerFunds, Inc.
42. OppenheimerFunds Distributor, Inc., a registered broker-dealer incorporated
in New York, all the stock of which is owned by OppenheimerFunds, Inc.
43. Oppenheimer Partnership Holdings, Inc., a Delaware holding company, all the
stock of which is owned by OppenheimerFunds, Inc.
44. Oppenheimer Real Asset Management, Inc., a commodity trading adviser
incorporated in Delaware, all the stock of which is owned by
OppenheimerFunds, Inc.
45. Shareholder Financial Services, Inc., a transfer agent incorporated in
Colorado, all the stock of which is owned by OppenheimerFunds, Inc.
C-7
<PAGE>
46. Shareholder Services, Inc., a transfer agent incorporated in Colorado, all
the stock of which is owned by OppenheimerFunds, Inc.
47. 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.
48. 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.
49. 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.
50. 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.
51. 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.
52. CM Property Management, Inc., a Connecticut real estate holding company,
all the stock of which is owned by MassMutual Holding Trust II.
53. 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.
54. MMHC Investment, Inc., a Delaware corporation which is a passive investor
in MassMutual/Darby CBO, LLC, MassMutual High Yield Partners LLC and other
MassMutual investments. MassMutual Holding Trust II owns all the
outstanding stock of MMHC Investment, Inc.
55. 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.
56. MML Realty Management Corporation, a former property manager incorporated
in Massachusetts, all the stock of which is owned by MassMutual Holding
Trust II.
C-8
<PAGE>
57. 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.
58. MassMutual/Darby CBO IM Inc., a Delaware corporation which operates as the
LLC Manager of MassMutual/Darby CBO LLC. MMHC Investment, Inc. owns 50% of
the capital stock of this company.
59. MassMutual/Darby CBO LLC, a Delaware limited liability company that
operates as a fund investing in high yield debt securities of U.S. and
emerging markets issuers. MassMutual holds 1.79%, MMHC Investment Inc.
holds 44.91% and MassMutual High Yield Partners LLC holds 2.39% of the
ownership interest in this company.
60. Urban Properties, Inc., a Delaware real estate holding and development
company, all the stock of which is owned by MassMutual Holding Trust II.
61. 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.
62. Westheimer 335 Suites Limited Partnership, a Texas limited partnership of
which Westheimer 335 Suites, Inc. is the general partner.
63. 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.
64. 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.
65. MassMutual International (Bermuda) Ltd., a Bermuda life insurance company,
all of the stock of which is owned by MassMutual International Inc.
66. 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.
67. MassLife Seguros de Vida S.A., a life insurance company incorporated in
Argentina. MassMutual International Inc. owns 99.9% of the outstanding
capital stock of MassLife Seguros de Vida S.A.
C-9
<PAGE>
68. MassMutual Services, S.A., an Argentine corporation, which operates as a
service company. MassMutual Internacional (Argentina) S.A. owns 99.9% of
the outstanding shares and MassMutual International, Inc. owns 0.1% of the
shares.
69. Mass Seguros de Vida S.A., a life insurance company incorporated in Chile.
MassMutual International (Chile) S.A. owns 33.5% of the outstanding capital
stock of Mass Seguros de Vida S.A.
70. 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.
71. Compania Seguros de VidaCorp, S.A., a Chilean insurance company. Origen
Inversiones S.A. owns 99% of the outstanding shares of this company.
72. 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.
73. 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.
74. The DLB Fund Group, an open-end management investment company advised by
David L. Babson and Company Incorporated. MassMutual owns at least 25% of
several of the series of the DLB Fund Group.
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 of which 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.
C-10
<PAGE>
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. owns 99% of the outstanding shares.
8. MassMutual/Darby CBO, LLC, a Delaware limited liability Company that
operates as a fund investing in high yield debt securities of U.S. and
emerging market issuers. MassMutual owns 1.79%, MMHC Investment, Inc. owns
44.91% and MassMutual High Yield Partners LLC owns 2.39% of the ownership
interest in this Company.
Item 26: Number of Holders of Securities
- ----------------------------------------
As of April 1, 1998, the number of holders of record of each class of
securities of Registrant was as follows:
Title of Class Number of Record Holders
-------------- ------------------------
Shares of 1
Beneficial
Interest
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
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<PAGE>
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.
MassMutual's present insurance coverage has an overall limit of $60 million
annually ($15 million of which is underwritten by Continental Casualty Company,
$15 million of which is underwritten by Executive Risk Indemnity, Inc., $15
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
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<PAGE>
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 Protection
business and Individual Accumulation business, which provides life insurance
including variable and universal life insurance, annuities and disability income
insurance to individuals and small businesses; (ii) Retirement Services, which
provides group pension investment products and administrative services,
primarily to sponsors of tax qualified retirement plans; and (iii) MassMutual
Investment Management Group, which provides advisory services for MassMutual's
general investment account and separate investment 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 Incorporated, 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, Chairman, Human Resources Committee and Member,
Board Affairs Committee
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, Dow Corning Corporation
(producer of silicone products), 2200 West Salzburg Road, Midland,
Michigan; The Pittson Company (mining and marketing of coal for electric
utility and steel industries), One Pickwick Plaza, Greenwich, Connecticut.
JAMES R. BIRLE, Director and Member, Auditing and Investment Committees
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; Trustee (1995-1997), The Sea Research
Foundation; Director (1991-1996), Connecticut Mutual Life Insurance
Company, 140 Garden Street, Hartford, Connecticut.
GENE CHAO, Director, Chairman, Auditing Committee and Member, Dividend Policy
Committee
Chairman, President and Chief Executive Officer, Computer Projections, Inc.
(computer graphics), 733 S.W. Vista Avenue, Portland, Oregon; Director
(since 1996), Monowave
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Corporation, 2171 Boyer Avenue East, Seattle, Washington; Director (since
1997), National Captioning Institute, 1900 Gallows Road, Vienna, Virginia;
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, SBC Communications
Inc. (telecommunications), 175 East Houston, San Antonio, Texas; Director,
(since 1997) Citadel Communications Corp.; 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; Trustee (1995-1997), Federal Communications Bar Association
Foundation; 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 (since
1998), Counselors of Real Estate, 430 N. Michigan Avenue, Chicago,
Illinois; 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.
JAMES L. DUNLAP, Director, Chairman, Dividend Policy Committee and Member, Board
Affairs Committee
Vice Chairman (since 1998), President and Chief Operating Officer (since
1996-1998), Ocean Energy, Inc. (formerly 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, Dividend Policy 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;
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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 Auditing 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; Partner (since
1997), Resolute Partners LLC (private merchant bank), 2 Soundview Drive,
Greenwich, 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 Board Affairs Committees
Chairman and Chief Executive Officer (since 1995), and President
(1989-1996), BankBoston N.A., and Chairman (since 1998 and 1995-1996),
Chief Executive Officer (since 1995), President (1989-1996), BankBoston
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.
WILLIAM N. GRIGGS, Director and Member, Human Resources and Investment
Committees
Managing Director, Griggs & Santow Inc. (financial consultants), 75 Wall
Street, New York, New York; Director (1990-1997), T/SF Communications, Inc.
(diversified publishing and communications company), Tulsa, Oklahoma.
GEORGE B. HARVEY, Director and Member, Board Affairs and Dividend Policy
Committees
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.
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(pharmaceutical and health-care products), 235 East 42nd Street, New York,
New York; Director (1994-1997), The Catalyst; 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/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 Solutions
(diversified office products and technology solutions), 825 Duportail Road,
Valley Forge, Pennsylvania.
SHELDON B. LUBAR, Director and Member, Human Resources and Investment Committee
Chairman, Lubar & Co. Incorporated (investment management and advisory
company); Chairman and Director, The Christiana Companies, Inc. (real
estate development); Director: SLX Energy, Inc. (oil and gas exploration);
Member, Advisory Committee, Venture Capital Fund, L.P. (principal offices,
700 North Water Street, Milwaukee, Wisconsin) Director, Firstar Corporation
(bank holding company), 777 East Wisconsin Avenue, Milwaukee, Wisconsin;
Director (1982-1997): Grey Wolf Drilling Co. (contract oil and gas
drilling), 2000 Post Oak Boulevard, Houston, Texas; Director: 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,
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Chicago, Illinois; EVI, Inc., 5 Post Oak Park, Houston, Texas; Director
(since 1997), Jefferies & Co., (financial services), 11100 Santa Monica
Boulevard, Los Angeles, California; Director (1984-1998), Firstar Bank, 777
East Wisconsin Avenue, Milwaukee, Wisconsin.
WILLIAM B. MARX, JR., Director and Member, Dividend Policy and Board Affairs
Committees
Retired: 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, Audit
Committee and Member, Finance Committee and Executive Committee, Bell
Atlantic Corporation (telecommunications), 1717 Arch Street, Philadelphia,
Pennsylvania; Director (since 1996), TCX International, Inc.; Chairman
(1997), Director (1992-1997), Briggs Industries, Inc. (plumbing fixtures),
4350 W. Cypress Street, Tampa, Florida; Director (1989-1997), Blodgett
Corporation; Director, Chairman, Compensation Committee and Member, Audit
Committee, Dan River, Inc. (textile manufacturer), 2291 Memorial Drive,
Danville, Virginia; Director, Davies, Turner & Company; Director
(1987-1996), Igloo Corporation (portable coolers), 1001 W. Sam Houston
Parkway North, Houston, Texas; Director (1989-1996), Connecticut Mutual
Life Insurance Company, 140 Garden Street, Hartford, Connecticut.
JOHN J. PAJAK, President, 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, 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),
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MassMutual International Inc. (wholly-owned subsidiary of MassMutual
Holding Company to act as service provider for international insurance
companies); DLB Acquisition Corporation (holding company for investment
advisers) and Oppenheimer Acquisition Corporation (holding company for
investment advisers) (principal offices, 1295 State Street, Springfield,
Massachusetts); Trustee, Sisters of Providence Health System (operator of
hospitals), 146 Chestnut Street, Springfield, Massachusetts.
THOMAS B. WHEELER, Chairman, 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);
MassMutual International Inc. (wholly-owned subsidiary of MassMutual
Holding Company to act as service provider for international insurance
companies); Chairman and Chief Executive Officer, DLB Acquisition
Corporation (holding company for investment advisers); Chairman and
Director, Oppenheimer Acquisition Corp. (holding company for investment
advisers), (principal offices, 1295 State Street, Springfield,
Massachusetts); Director, BankBoston, N.A. and BankBoston Corporation (bank
holding company), 100 Federal Street, Boston, Massachusetts; Member,
Executive Committee, Massachusetts Capital Resources Company, 545 Boylston
Street, Boston, Massachusetts; Director, Textron, Inc. (diversified
manufacturing company), 40 Westminster Street, Providence, Rhode Island.
ALFRED M. ZEIEN, Director, Chairman, Board Affairs Committee and Member Human
Resources Committee
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; BankBoston Corporation (bank
holding company), 100 Federal Street, Boston, Massachusetts; and Raytheon
Corporation (electronics manufacturer), 141 Spring Street, Lexington,
Massachusetts; Trustee (1984-1997), University Hospital of Boston,
Massachusetts; Trustee, Marine Biology Laboratory and Woods Hole
Oceanographic Institute, Woods Hole, Massachusetts; Director (1981-1996),
Repligen Corporation (biotechnology), One Kendall Square, Cambridge,
Massachusetts.
Executive Vice Presidents
LAWRENCE V. BURKETT, JR., Executive Vice President and General Counsel
Executive Vice President and General Counsel 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
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subsidiaries 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); 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
limited partnerships); Director, MassMutual Holding Company (wholly-owned
holding company subsidiary of MassMutual) (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); Director (since 1997), MML Securities
Corporation (a wholly-owned subsidiary of MML Investors Services, Inc. that
is a "Massachusetts Securities Corporation") (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; Chairman (since 1997), 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; Director,
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).
PETER J. DABOUL, Executive Vice President
Executive Vice President (since 1997), Senior Vice President (1990-1997) of
MassMutual, 1295 State Street, Springfield, Massachusetts.
JOHN B. DAVIES, Executive Vice President
Executive Vice President 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:
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.
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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) (principal offices, 1295 State 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.
JAMES E. MILLER, Executive Vice President
Executive Vice President (since 1997 and 1987-1996) of MassMutual, 1295
State Street, Springfield, Massachusetts; Senior Vice President
(1996-1997), UniCare Life & Health Insurance Company, Springfield,
Massachusetts.
JOHN V. MURPHY, Executive Vice President
Executive Vice President (since 1997) of MassMutual, 1295 State Street,
Springfield, Massachusetts; 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 (1995-1997),
Potomac Babson Incorporated (investment advisory subsidiary of David L.
Babson and Company Incorporated), New York, New York; Director and Senior
Vice President (1995-1997), DLB Acquisition Corporation (holding company
for investment advisers); Director (since 1997), Oppenheimer Acquisition
Corporation (parent of OppenheimerFunds, Inc., an investment management
company); Trustee (since 1997), MassMutual Institutional Funds (open-end
investment company) (principal offices, 1295 State Street, Springfield,
Massachusetts); Director (1989-1998), Emerald Isle Bancorp and Hibernia
Savings Bank (wholly-owned subsidiary of Emerald Isle Bancorp), 730 Hancock
Street, Quincy, Massachusetts.
GARY E. WENDLANDT, Executive Vice President and Chief Investment Officer
Chief Investment Officer and Executive Vice President of MassMutual;
Chairman and Trustee, MassMutual Corporate Investors and MassMutual
Participation Investors (closed-end investment companies); MML Series
Investment Fund (open-end investment company); Chairman and Chief Executive
Officer
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MassMutual Institutional Funds (open-end investment company); Advisory
Board Member (since 1996), MassMutual High Yield Partners LLC (high yield
bond fund); Chairman (since 1996) and President (since 1997), MassMutual
Holding MSC, Inc. and MassMutual Holding Trust II (wholly-owned holding
company subsidiaries of MassMutual Holding Company); Chairman (since 1996)
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),
MassMutual International (Chile) S.A. and CM Advantage Inc. (wholly-owned
subsidiary of MassMutual Holding Trust II to act as general partner in real
estate limited partnerships); President and Director, DLB Acquisition
Corporation (holding company for investment advisers) and Director,
Oppenheimer Acquisition Corporation (parent of OppenheimerFunds, Inc., an
investment management company); 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) (principal offices, 1295 State Street,
Springfield, Massachusetts); Chairman and Member, Executive, Auditing and
Compensation Committees, 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; 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, Mass Seguros de Vida, S.A., Huerfanos No.
770, Santiago, Chile; President and Director, MassMutual International
(Bermuda) Ltd. (wholly-owned subsidiary of MassMutual Holding Company that
distributes variable insurance products in overseas markets), 41 Cedar
Avenue, Hamilton, Bermuda; Chairman (since 1996), Antares Leveraged Capital
Corp. (finance company), Chicago, Illinois.
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JOSEPH M. ZUBRETSKY, Executive Vice President and Chief Financial Officer
Executive Vice President and Chief Financial Officer (since 1997) of
MassMutual, 1295 State Street, Springfield, Massachusetts; Chief Financial
Officer (1996-1997), Healthsource, Hooksett, New Hampshire; Partner
(1990-1996), Coopers & Lybrand LLP (certified public accountants),
Hartford, Connecticut; Director (since 1997): Antares Leverage Capital
Corp. (finance company), Chicago, Illinois; DLB Acquisition Corporation
(holding company for investment adviser); Oppenheimer Acquisition
Corporation (parent of OppenheimerFunds, Inc., an investment management
company); MassMutual Holding Company (wholly-owned holding company
subsidiary of MassMutual); MassMutual Holding MSC, Inc. (wholly-owned
holding company subsidiary of MassMutual Holding Company); MassMutual
International, Inc. (wholly-owned subsidiary of MassMutual Holding Company
to act as service provider for international insurance companies); Trustee
(since 1997), MassMutual Holding Trust I and MassMutual Holding Trust II
(wholly-owned holding company subsidiaries of MassMutual Holding Company)
(principal offices, 1295 State Street, Springfield, Massachusetts).
b. The Investment Sub-Advisers
The directors and executive officers of David L. Babson and Company
Incorporated, their positions and their other business affiliations and business
experience for the past two years are as follows:
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 1995), 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, President and Chief Executive Officer
Director, President and Chief Executive Officer (since 1998), Executive Vice
President (1996-1998) 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.
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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 Chairman
Director and Chairman (since 1998), 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 officers of HarbourView, their positions and their
other business affiliations and business experience for the past two years are
as follows:
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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"), the
parent of OFI, and Oppenheimer Partnership Holdings, Inc., a holding company
subsidiary of OFI; a Director of Oppenheimer Real Asset Management, Inc.; a
director of NASA, Inc. and of Hillsdown Holding plc (a U.K. food company).
ANDREW J. DONOHUE, Executive Vice President, General Counsel and Director
Executive Vice President, General Counsel and a Director of OFI,
OppenheimerFunds Distributor, Inc. (a broker-dealer subsidiary of OFI), SSI,
SFSI, Oppenheimer Partnership Holdings, Inc. and MultiSource Services, Inc. (a
broker-dealer subsidiary of OFI); President and a Director of Centennial Asset
Management Corporation; President and a Director of Oppenheimer Real Asset
Management, Inc.; General Counsel of OAC; and an officer of the Oppenheimer
Funds.
ROBERT C. DOLL, JR. Executive Vice President
Executive Vice President, Director of Equity Investments and a Director of OFI;
Executive Vice President of HarbourView; Vice President and a Director of OAC;
and an officer of various Oppenheimer Funds.
Item 29: Principal Underwriters
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(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
C-24
<PAGE>
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
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
C-25
<PAGE>
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
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.
C-26
<PAGE>
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:
(Declaration of Trust 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
(With respect to its services as Sub-Advisor)
David L. Babson and Company Inc.
One Memorial Drive
Cambridge, Massachusetts 02142
(With respect to its services as Sub-Advisor)
HarbourView Asset Management Corporation
Two World Trade Center
New York, New York 10048
(With respect to its services as Distributor)
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048
C-27
<PAGE>
(With respect to its services as Sub-Administrator, Transfer Agent and
Custodian)
Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
(With respect to their services as counsel)
Ropes & Gray
One International Place
Boston, Massachusetts 02110
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-28
<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 April,
1998. The Registrant certifies that this Post-Effective Amendment meets all the
requirements for effectiveness pursuant to Rule 485(b) under the Securities Act
of 1933.
MASSMUTUAL INSTITUTIONAL FUNDS
By: /s/ Stuart H. Reese
-------------------
Stuart H. Reese
President
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 April, 1998.
Signature Title
--------- -----
/s/ Stephen L. Kuhn* 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/ Raymond B. Woolson Treasurer
---------------------- (Principal Financial Officer)
Raymond B. Woolson
/s/ Mark B. Ackerman Comptroller
--------------------
Mark B. Ackerman
/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.
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.
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit No. Title of Exhibit
- ----------- ----------------
11(b) Consent of Coopers & Lybrand L.L.P.
17 Financial Data Schedules
<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. 8 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 6, 1998, 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, 1997, 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
April 29, 1998
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 228,230,839
<INVESTMENTS-AT-VALUE> 228,209,681
<RECEIVABLES> 15,760,118
<ASSETS-OTHER> 881
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 243,970,680
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,252,213
<TOTAL-LIABILITIES> 2,252,213
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 241,757,785
<SHARES-COMMON-STOCK> 758
<SHARES-COMMON-PRIOR> 727
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (18,160)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (21,158)
<NET-ASSETS> 114,315
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6,476
<OTHER-INCOME> 0
<EXPENSES-NET> 1,871
<NET-INVESTMENT-INCOME> 4,605
<REALIZED-GAINS-CURRENT> (5)
<APPREC-INCREASE-CURRENT> (8)
<NET-CHANGE-FROM-OPS> 4,592
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,723
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 31
<NET-CHANGE-IN-ASSETS> 4,591
<ACCUMULATED-NII-PRIOR> 80,676
<ACCUMULATED-GAINS-PRIOR> (7,151)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,155,353
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,418,216
<AVERAGE-NET-ASSETS> 111,962
<PER-SHARE-NAV-BEGIN> 151.03
<PER-SHARE-NII> 6.33
<PER-SHARE-GAIN-APPREC> (0.01)
<PER-SHARE-DIVIDEND> (6.50)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 150.85
<EXPENSE-RATIO> 1.67
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 228,230,839
<INVESTMENTS-AT-VALUE> 228,209,681
<RECEIVABLES> 15,760,118
<ASSETS-OTHER> 881
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 243,970,680
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,252,213
<TOTAL-LIABILITIES> 2,252,213
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 241,757,785
<SHARES-COMMON-STOCK> 770
<SHARES-COMMON-PRIOR> 734
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (18,160)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (21,158)
<NET-ASSETS> 116,323
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6,572
<OTHER-INCOME> 0
<EXPENSES-NET> 1,274
<NET-INVESTMENT-INCOME> 5,298
<REALIZED-GAINS-CURRENT> (5)
<APPREC-INCREASE-CURRENT> (9)
<NET-CHANGE-FROM-OPS> 5,284
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,393
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 36
<NET-CHANGE-IN-ASSETS> 5,284
<ACCUMULATED-NII-PRIOR> 80,676
<ACCUMULATED-GAINS-PRIOR> (7,151)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,155,353
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,418,216
<AVERAGE-NET-ASSETS> 113,614
<PER-SHARE-NAV-BEGIN> 151.23
<PER-SHARE-NII> 7.22
<PER-SHARE-GAIN-APPREC> (0.03)
<PER-SHARE-DIVIDEND> (7.34)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 151.08
<EXPENSE-RATIO> 1.12
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 228,230,839
<INVESTMENTS-AT-VALUE> 228,209,681
<RECEIVABLES> 15,760,118
<ASSETS-OTHER> 881
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 243,970,680
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,252,213
<TOTAL-LIABILITIES> 2,252,213
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 241,757,785
<SHARES-COMMON-STOCK> 777
<SHARES-COMMON-PRIOR> 738
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (18,160)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (21,158)
<NET-ASSETS> 117,416
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6,622
<OTHER-INCOME> 0
<EXPENSES-NET> 886
<NET-INVESTMENT-INCOME> 5,736
<REALIZED-GAINS-CURRENT> (5)
<APPREC-INCREASE-CURRENT> (9)
<NET-CHANGE-FROM-OPS> 5,722
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,838
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 39
<NET-CHANGE-IN-ASSETS> 5,722
<ACCUMULATED-NII-PRIOR> 80,676
<ACCUMULATED-GAINS-PRIOR> (7,151)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,155,353
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,418,216
<AVERAGE-NET-ASSETS> 114,482
<PER-SHARE-NAV-BEGIN> 151.29
<PER-SHARE-NII> 7.77
<PER-SHARE-GAIN-APPREC> (0.02)
<PER-SHARE-DIVIDEND> (7.91)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 151.13
<EXPENSE-RATIO> 0.77
<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 year ended December 31,
1997 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 14
<NAME> PRIME FUND, CLASS S
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 228,230,839
<INVESTMENTS-AT-VALUE> 228,209,681
<RECEIVABLES> 15,760,118
<ASSETS-OTHER> 881
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 243,970,680
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,252,213
<TOTAL-LIABILITIES> 2,252,213
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 241,757,785
<SHARES-COMMON-STOCK> 1,600,181
<SHARES-COMMON-PRIOR> 1,713,474
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (18,160)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (21,158)
<NET-ASSETS> 241,370,413
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 14,852,911
<OTHER-INCOME> 0
<EXPENSES-NET> 1,384,427
<NET-INVESTMENT-INCOME> 13,468,484
<REALIZED-GAINS-CURRENT> (10,994)
<APPREC-INCREASE-CURRENT> (13,044)
<NET-CHANGE-FROM-OPS> 13,444,446
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 13,552,104
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,313,757
<NUMBER-OF-SHARES-REDEEMED> 2,516,899
<SHARES-REINVESTED> 89,849
<NET-CHANGE-IN-ASSETS> (17,358,611)
<ACCUMULATED-NII-PRIOR> 80,676
<ACCUMULATED-GAINS-PRIOR> (7,151)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,155,353
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,418,216
<AVERAGE-NET-ASSETS> 256,404,274
<PER-SHARE-NAV-BEGIN> 151.00
<PER-SHARE-NII> 8.14
<PER-SHARE-GAIN-APPREC> (0.01)
<PER-SHARE-DIVIDEND> (8.29)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 150.84
<EXPENSE-RATIO> 0.54
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 205,430,337
<INVESTMENTS-AT-VALUE> 206,723,676
<RECEIVABLES> 4,578,048
<ASSETS-OTHER> 26,124
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 211,327,848
<PAYABLE-FOR-SECURITIES> 9,055,799
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,630,762
<TOTAL-LIABILITIES> 10,686,561
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 198,964,924
<SHARES-COMMON-STOCK> 11,916
<SHARES-COMMON-PRIOR> 11,415
<ACCUMULATED-NII-CURRENT> 61,151
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 321,873
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,293,339
<NET-ASSETS> 122,436
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,022
<OTHER-INCOME> 0
<EXPENSES-NET> 1,980
<NET-INVESTMENT-INCOME> 6,042
<REALIZED-GAINS-CURRENT> 424
<APPREC-INCREASE-CURRENT> 108
<NET-CHANGE-FROM-OPS> 6,574
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,130
<DISTRIBUTIONS-OF-GAINS> 21
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 501
<NET-CHANGE-IN-ASSETS> 6,573
<ACCUMULATED-NII-PRIOR> 18,783
<ACCUMULATED-GAINS-PRIOR> (295,200)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 769,014
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 947,298
<AVERAGE-NET-ASSETS> 118,583
<PER-SHARE-NAV-BEGIN> 10.15
<PER-SHARE-NII> 0.53
<PER-SHARE-GAIN-APPREC> 0.04
<PER-SHARE-DIVIDEND> (0.45)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.27
<EXPENSE-RATIO> 1.67
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 205,430,337
<INVESTMENTS-AT-VALUE> 206,723,676
<RECEIVABLES> 4,578,048
<ASSETS-OTHER> 26,124
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 211,327,848
<PAYABLE-FOR-SECURITIES> 9,055,799
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,630,762
<TOTAL-LIABILITIES> 10,686,561
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 198,964,924
<SHARES-COMMON-STOCK> 12,115
<SHARES-COMMON-PRIOR> 11,544
<ACCUMULATED-NII-CURRENT> 61,151
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 321,873
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,293,339
<NET-ASSETS> 124,585
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,140
<OTHER-INCOME> 0
<EXPENSES-NET> 1,347
<NET-INVESTMENT-INCOME> 6,793
<REALIZED-GAINS-CURRENT> 431
<APPREC-INCREASE-CURRENT> 112
<NET-CHANGE-FROM-OPS> 7,336
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,845
<DISTRIBUTIONS-OF-GAINS> 22
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 571
<NET-CHANGE-IN-ASSETS> 7,335
<ACCUMULATED-NII-PRIOR> 18,783
<ACCUMULATED-GAINS-PRIOR> (295,200)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 769,014
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 947,298
<AVERAGE-NET-ASSETS> 120,334
<PER-SHARE-NAV-BEGIN> 10.16
<PER-SHARE-NII> 0.59
<PER-SHARE-GAIN-APPREC> 0.04
<PER-SHARE-DIVIDEND> (0.51)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.28
<EXPENSE-RATIO> 1.12
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 205,430,337
<INVESTMENTS-AT-VALUE> 206,723,676
<RECEIVABLES> 4,578,048
<ASSETS-OTHER> 26,124
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 211,327,848
<PAYABLE-FOR-SECURITIES> 9,055,799
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,630,762
<TOTAL-LIABILITIES> 10,686,561
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 198,964,924
<SHARES-COMMON-STOCK> 12,213
<SHARES-COMMON-PRIOR> 11,599
<ACCUMULATED-NII-CURRENT> 61,151
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 321,873
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,293,339
<NET-ASSETS> 125,819
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,206
<OTHER-INCOME> 0
<EXPENSES-NET> 937
<NET-INVESTMENT-INCOME> 7,269
<REALIZED-GAINS-CURRENT> 435
<APPREC-INCREASE-CURRENT> 113
<NET-CHANGE-FROM-OPS> 7,817
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,291
<DISTRIBUTIONS-OF-GAINS> 22
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 614
<NET-CHANGE-IN-ASSETS> 7,818
<ACCUMULATED-NII-PRIOR> 18,783
<ACCUMULATED-GAINS-PRIOR> (295,200)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 769,014
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 947,298
<AVERAGE-NET-ASSETS> 121,315
<PER-SHARE-NAV-BEGIN> 10.17
<PER-SHARE-NII> 0.63
<PER-SHARE-GAIN-APPREC> 0.04
<PER-SHARE-DIVIDEND> (0.54)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.30
<EXPENSE-RATIO> 0.77
<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 year ended December 31,
1997 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 24
<NAME> Short Term Bond Fund, Class S
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 205,430,337
<INVESTMENTS-AT-VALUE> 206,723,676
<RECEIVABLES> 4,578,048
<ASSETS-OTHER> 26,124
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 211,327,848
<PAYABLE-FOR-SECURITIES> 9,055,799
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,630,762
<TOTAL-LIABILITIES> 10,686,561
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 198,964,924
<SHARES-COMMON-STOCK> 19,577,260
<SHARES-COMMON-PRIOR> 14,365,202
<ACCUMULATED-NII-CURRENT> 61,151
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 321,873
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,293,339
<NET-ASSETS> 200,268,447
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,525,758
<OTHER-INCOME> 0
<EXPENSES-NET> 924,788
<NET-INVESTMENT-INCOME> 10,600,970
<REALIZED-GAINS-CURRENT> 665,851
<APPREC-INCREASE-CURRENT> 275,277
<NET-CHANGE-FROM-OPS> 11,542,098
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 10,576,607
<DISTRIBUTIONS-OF-GAINS> 34,836
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,428,262
<NUMBER-OF-SHARES-REDEEMED> 5,254,453
<SHARES-REINVESTED> 1,038,249
<NET-CHANGE-IN-ASSETS> 55,086,152
<ACCUMULATED-NII-PRIOR> 18,783
<ACCUMULATED-GAINS-PRIOR> (295,200)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 769,014
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 947,298
<AVERAGE-NET-ASSETS> 170,531,833
<PER-SHARE-NAV-BEGIN> 10.11
<PER-SHARE-NII> 0.65
<PER-SHARE-GAIN-APPREC> 0.04
<PER-SHARE-DIVIDEND> (0.57)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.23
<EXPENSE-RATIO> 0.54
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 432,689,491
<INVESTMENTS-AT-VALUE> 449,079,535
<RECEIVABLES> 10,091,545
<ASSETS-OTHER> 46,527
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 459,217,607
<PAYABLE-FOR-SECURITIES> 9,945
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,877,503
<TOTAL-LIABILITIES> 2,887,448
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 438,706,742
<SHARES-COMMON-STOCK> 12,073
<SHARES-COMMON-PRIOR> 11,512
<ACCUMULATED-NII-CURRENT> 1,094,301
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 69,810
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 16,459,306
<NET-ASSETS> 131,171
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,580
<OTHER-INCOME> 0
<EXPENSES-NET> 2,083
<NET-INVESTMENT-INCOME> 6,497
<REALIZED-GAINS-CURRENT> 604
<APPREC-INCREASE-CURRENT> 3,231
<NET-CHANGE-FROM-OPS> 10,332
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,999
<DISTRIBUTIONS-OF-GAINS> 55
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 561
<NET-CHANGE-IN-ASSETS> 10,333
<ACCUMULATED-NII-PRIOR> 1,845,746
<ACCUMULATED-GAINS-PRIOR> (1,885,881)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,869,877
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,292,770
<AVERAGE-NET-ASSETS> 124,493
<PER-SHARE-NAV-BEGIN> 10.50
<PER-SHARE-NII> 0.56
<PER-SHARE-GAIN-APPREC> 0.33
<PER-SHARE-DIVIDEND> (0.51)
<PER-SHARE-DISTRIBUTIONS> (0.02)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.86
<EXPENSE-RATIO> 1.67
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 432,689,491
<INVESTMENTS-AT-VALUE> 449,079,535
<RECEIVABLES> 10,091,545
<ASSETS-OTHER> 46,527
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 459,217,607
<PAYABLE-FOR-SECURITIES> 9,945
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,877,503
<TOTAL-LIABILITIES> 2,887,448
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 438,706,742
<SHARES-COMMON-STOCK> 12,265
<SHARES-COMMON-PRIOR> 11,631
<ACCUMULATED-NII-CURRENT> 1,094,301
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 69,810
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 16,459,306
<NET-ASSETS> 133,481
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,707
<OTHER-INCOME> 0
<EXPENSES-NET> 1,420
<NET-INVESTMENT-INCOME> 7,287
<REALIZED-GAINS-CURRENT> 615
<APPREC-INCREASE-CURRENT> 3,286
<NET-CHANGE-FROM-OPS> 11,188
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,818
<DISTRIBUTIONS-OF-GAINS> 55
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 634
<NET-CHANGE-IN-ASSETS> 11,188
<ACCUMULATED-NII-PRIOR> 1,845,746
<ACCUMULATED-GAINS-PRIOR> (1,885,881)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,869,877
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,292,770
<AVERAGE-NET-ASSETS> 126,340
<PER-SHARE-NAV-BEGIN> 10.51
<PER-SHARE-NII> 0.63
<PER-SHARE-GAIN-APPREC> 0.33
<PER-SHARE-DIVIDEND> (0.57)
<PER-SHARE-DISTRIBUTIONS> (0.02)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.88
<EXPENSE-RATIO> 1.12
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 432,689,491
<INVESTMENTS-AT-VALUE> 449,079,535
<RECEIVABLES> 10,091,545
<ASSETS-OTHER> 46,527
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 459,217,607
<PAYABLE-FOR-SECURITIES> 9,945
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,877,503
<TOTAL-LIABILITIES> 2,887,448
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 438,706,742
<SHARES-COMMON-STOCK> 12,379
<SHARES-COMMON-PRIOR> 11,699
<ACCUMULATED-NII-CURRENT> 1,094,301
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 69,810
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 16,459,306
<NET-ASSETS> 134,838
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,781
<OTHER-INCOME> 0
<EXPENSES-NET> 989
<NET-INVESTMENT-INCOME> 7,792
<REALIZED-GAINS-CURRENT> 621
<APPREC-INCREASE-CURRENT> 3,318
<NET-CHANGE-FROM-OPS> 11,731
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,342
<DISTRIBUTIONS-OF-GAINS> 56
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 680
<NET-CHANGE-IN-ASSETS> 11,731
<ACCUMULATED-NII-PRIOR> 1,845,746
<ACCUMULATED-GAINS-PRIOR> (1,885,881)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,869,877
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,292,770
<AVERAGE-NET-ASSETS> 127,404
<PER-SHARE-NAV-BEGIN> 10.52
<PER-SHARE-NII> 0.67
<PER-SHARE-GAIN-APPREC> 0.33
<PER-SHARE-DIVIDEND> (0.61)
<PER-SHARE-DISTRIBUTIONS> (0.02)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.89
<EXPENSE-RATIO> 0.78
<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 year ended December 31,
1997 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 34
<NAME> CORE BOND FUND, CLASS S
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 432,689,491
<INVESTMENTS-AT-VALUE> 449,079,535
<RECEIVABLES> 10,091,545
<ASSETS-OTHER> 46,527
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 459,217,607
<PAYABLE-FOR-SECURITIES> 9,945
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,877,503
<TOTAL-LIABILITIES> 2,887,448
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 438,706,742
<SHARES-COMMON-STOCK> 42,182,957
<SHARES-COMMON-PRIOR> 34,141,922
<ACCUMULATED-NII-CURRENT> 1,094,301
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 69,810
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 16,459,306
<NET-ASSETS> 455,930,669
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 28,573,800
<OTHER-INCOME> 0
<EXPENSES-NET> 2,238,917
<NET-INVESTMENT-INCOME> 26,334,883
<REALIZED-GAINS-CURRENT> 2,196,108
<APPREC-INCREASE-CURRENT> 11,741,148
<NET-CHANGE-FROM-OPS> 40,272,139
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 27,133,147
<DISTRIBUTIONS-OF-GAINS> 196,689
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 18,573,681
<NUMBER-OF-SHARES-REDEEMED> 13,062,080
<SHARES-REINVESTED> 2,529,434
<NET-CHANGE-IN-ASSETS> 99,231,730
<ACCUMULATED-NII-PRIOR> 1,845,746
<ACCUMULATED-GAINS-PRIOR> (1,885,881)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,869,877
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,292,770
<AVERAGE-NET-ASSETS> 415,149,919
<PER-SHARE-NAV-BEGIN> 10.45
<PER-SHARE-NII> 0.69
<PER-SHARE-GAIN-APPREC> 0.33
<PER-SHARE-DIVIDEND> (0.64)
<PER-SHARE-DISTRIBUTIONS> (0.02)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.81
<EXPENSE-RATIO> 0.54
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 521,248,374
<INVESTMENTS-AT-VALUE> 660,409,911
<RECEIVABLES> 4,944,936
<ASSETS-OTHER> 1,001
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 665,355,848
<PAYABLE-FOR-SECURITIES> 1,385,886
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,356,831
<TOTAL-LIABILITIES> 9,742,717
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 510,255,546
<SHARES-COMMON-STOCK> 11,560
<SHARES-COMMON-PRIOR> 10,838
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,196,048
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 139,161,537
<NET-ASSETS> 156,975
<DIVIDEND-INCOME> 5,992
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2,442
<NET-INVESTMENT-INCOME> 3,550
<REALIZED-GAINS-CURRENT> 7,116
<APPREC-INCREASE-CURRENT> 12,488
<NET-CHANGE-FROM-OPS> 23,154
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,540
<DISTRIBUTIONS-OF-GAINS> 6,158
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 722
<NET-CHANGE-IN-ASSETS> 23,154
<ACCUMULATED-NII-PRIOR> 26,102
<ACCUMULATED-GAINS-PRIOR> 1,920,993
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,799,328
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,430,229
<AVERAGE-NET-ASSETS> 145,791
<PER-SHARE-NAV-BEGIN> 12.35
<PER-SHARE-NII> 0.33
<PER-SHARE-GAIN-APPREC> 1.80
<PER-SHARE-DIVIDEND> (0.33)
<PER-SHARE-DISTRIBUTIONS> (0.57)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.58
<EXPENSE-RATIO> 1.68
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 521,248,374
<INVESTMENTS-AT-VALUE> 660,409,911
<RECEIVABLES> 4,944,936
<ASSETS-OTHER> 1,001
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 665,355,848
<PAYABLE-FOR-SECURITIES> 1,385,886
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,356,831
<TOTAL-LIABILITIES> 9,742,717
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 510,255,546
<SHARES-COMMON-STOCK> 11,735
<SHARES-COMMON-PRIOR> 10,948
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,196,048
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 139,161,537
<NET-ASSETS> 159,724
<DIVIDEND-INCOME> 6,081
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,664
<NET-INVESTMENT-INCOME> 4,417
<REALIZED-GAINS-CURRENT> 7,225
<APPREC-INCREASE-CURRENT> 12,665
<NET-CHANGE-FROM-OPS> 24,307
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,381
<DISTRIBUTIONS-OF-GAINS> 6,204
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 787
<NET-CHANGE-IN-ASSETS> 24,306
<ACCUMULATED-NII-PRIOR> 26,102
<ACCUMULATED-GAINS-PRIOR> 1,920,993
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,799,328
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,430,229
<AVERAGE-NET-ASSETS> 147,944
<PER-SHARE-NAV-BEGIN> 12.37
<PER-SHARE-NII> 0.40
<PER-SHARE-GAIN-APPREC> 1.81
<PER-SHARE-DIVIDEND> (0.40)
<PER-SHARE-DISTRIBUTIONS> (0.57)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.61
<EXPENSE-RATIO> 1.12
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 521,248,374
<INVESTMENTS-AT-VALUE> 660,409,911
<RECEIVABLES> 4,944,936
<ASSETS-OTHER> 1,001
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 665,355,848
<PAYABLE-FOR-SECURITIES> 1,385,886
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,356,831
<TOTAL-LIABILITIES> 9,742,717
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 510,255,546
<SHARES-COMMON-STOCK> 11,820
<SHARES-COMMON-PRIOR> 10,994
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,196,048
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 139,161,537
<NET-ASSETS> 161,227
<DIVIDEND-INCOME> 6,127
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,159
<NET-INVESTMENT-INCOME> 4,968
<REALIZED-GAINS-CURRENT> 7,283
<APPREC-INCREASE-CURRENT> 12,757
<NET-CHANGE-FROM-OPS> 25,008
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,913
<DISTRIBUTIONS-OF-GAINS> 6,230
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 826
<NET-CHANGE-IN-ASSETS> 25,009
<ACCUMULATED-NII-PRIOR> 26,102
<ACCUMULATED-GAINS-PRIOR> 1,920,993
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,799,328
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,430,229
<AVERAGE-NET-ASSETS> 149,082
<PER-SHARE-NAV-BEGIN> 12.39
<PER-SHARE-NII> 0.45
<PER-SHARE-GAIN-APPREC> 1.82
<PER-SHARE-DIVIDEND> (0.45)
<PER-SHARE-DISTRIBUTIONS> (0.57)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.64
<EXPENSE-RATIO> 0.78
<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 year ended December 31,
1997 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 44
<NAME> BALANCED FUND, CLASS S
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 521,248,374
<INVESTMENTS-AT-VALUE> 660,409,911
<RECEIVABLES> 4,944,936
<ASSETS-OTHER> 1,001
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 665,355,848
<PAYABLE-FOR-SECURITIES> 1,385,886
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,356,831
<TOTAL-LIABILITIES> 9,742,717
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 510,255,546
<SHARES-COMMON-STOCK> 48,223,502
<SHARES-COMMON-PRIOR> 45,632,444
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,196,048
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 139,161,537
<NET-ASSETS> 655,135,205
<DIVIDEND-INCOME> 25,545,807
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 3,349,970
<NET-INVESTMENT-INCOME> 22,195,837
<REALIZED-GAINS-CURRENT> 30,454,072
<APPREC-INCREASE-CURRENT> 53,030,679
<NET-CHANGE-FROM-OPS> 105,680,588
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 22,163,635
<DISTRIBUTIONS-OF-GAINS> 26,240,454
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15,490,780
<NUMBER-OF-SHARES-REDEEMED> 16,501,676
<SHARES-REINVESTED> 3,601,954
<NET-CHANGE-IN-ASSETS> 91,854,814
<ACCUMULATED-NII-PRIOR> 26,102
<ACCUMULATED-GAINS-PRIOR> 1,920,993
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,799,328
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,430,229
<AVERAGE-NET-ASSETS> 621,630,134
<PER-SHARE-NAV-BEGIN> 12.34
<PER-SHARE-NII> 0.48
<PER-SHARE-GAIN-APPREC> 1.82
<PER-SHARE-DIVIDEND> (0.48)
<PER-SHARE-DISTRIBUTIONS> (0.57)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.59
<EXPENSE-RATIO> 0.54
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 2,076,604,643
<INVESTMENTS-AT-VALUE> 3,196,022,295
<RECEIVABLES> 25,964,969
<ASSETS-OTHER> 5,510
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,221,992,774
<PAYABLE-FOR-SECURITIES> 11,451,815
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12,096,321
<TOTAL-LIABILITIES> 23,548,136
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,027,869,764
<SHARES-COMMON-STOCK> 11,555
<SHARES-COMMON-PRIOR> 10,640
<ACCUMULATED-NII-CURRENT> 1,297,337
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 49,859,885
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,119,417,652
<NET-ASSETS> 196,012
<DIVIDEND-INCOME> 4,320
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2,961
<NET-INVESTMENT-INCOME> 1,359
<REALIZED-GAINS-CURRENT> 16,004
<APPREC-INCREASE-CURRENT> 25,043
<NET-CHANGE-FROM-OPS> 42,406
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,299
<DISTRIBUTIONS-OF-GAINS> 13,946
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 915
<NET-CHANGE-IN-ASSETS> 42,405
<ACCUMULATED-NII-PRIOR> 410,862
<ACCUMULATED-GAINS-PRIOR> 14,178,355
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13,063,454
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 16,005,585
<AVERAGE-NET-ASSETS> 176,265
<PER-SHARE-NAV-BEGIN> 14.44
<PER-SHARE-NII> 0.13
<PER-SHARE-GAIN-APPREC> 3.81
<PER-SHARE-DIVIDEND> (0.12)
<PER-SHARE-DISTRIBUTIONS> (1.30)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.96
<EXPENSE-RATIO> 1.68
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 2,076,604,643
<INVESTMENTS-AT-VALUE> 3,196,022,295
<RECEIVABLES> 25,964,969
<ASSETS-OTHER> 5,510
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,221,992,774
<PAYABLE-FOR-SECURITIES> 11,451,815
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12,096,321
<TOTAL-LIABILITIES> 23,548,136
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,027,869,764
<SHARES-COMMON-STOCK> 11,719
<SHARES-COMMON-PRIOR> 10,740
<ACCUMULATED-NII-CURRENT> 1,297,337
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 49,859,885
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,119,417,652
<NET-ASSETS> 199,451
<DIVIDEND-INCOME> 4,383
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2,021
<NET-INVESTMENT-INCOME> 2,362
<REALIZED-GAINS-CURRENT> 16,248
<APPREC-INCREASE-CURRENT> 25,395
<NET-CHANGE-FROM-OPS> 44,005
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,285
<DISTRIBUTIONS-OF-GAINS> 14,077
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 979
<NET-CHANGE-IN-ASSETS> 44,005
<ACCUMULATED-NII-PRIOR> 410,862
<ACCUMULATED-GAINS-PRIOR> 14,178,355
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13,063,454
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 16,005,585
<AVERAGE-NET-ASSETS> 178,882
<PER-SHARE-NAV-BEGIN> 14.47
<PER-SHARE-NII> 0.22
<PER-SHARE-GAIN-APPREC> 3.84
<PER-SHARE-DIVIDEND> (0.21)
<PER-SHARE-DISTRIBUTIONS> (1.30)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.02
<EXPENSE-RATIO> 1.13
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 2,076,604,643
<INVESTMENTS-AT-VALUE> 3,196,022,295
<RECEIVABLES> 25,964,969
<ASSETS-OTHER> 5,510
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,221,992,774
<PAYABLE-FOR-SECURITIES> 11,451,815
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12,096,321
<TOTAL-LIABILITIES> 23,548,136
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,027,869,764
<SHARES-COMMON-STOCK> 11,813
<SHARES-COMMON-PRIOR> 10,793
<ACCUMULATED-NII-CURRENT> 1,297,337
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 49,859,885
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,119,417,652
<NET-ASSETS> 201,310
<DIVIDEND-INCOME> 4,417
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,410
<NET-INVESTMENT-INCOME> 3,007
<REALIZED-GAINS-CURRENT> 16,375
<APPREC-INCREASE-CURRENT> 25,577
<NET-CHANGE-FROM-OPS> 44,959
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,920
<DISTRIBUTIONS-OF-GAINS> 14,146
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1,020
<NET-CHANGE-IN-ASSETS> 44,959
<ACCUMULATED-NII-PRIOR> 410,862
<ACCUMULATED-GAINS-PRIOR> 14,178,355
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13,063,454
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 16,005,585
<AVERAGE-NET-ASSETS> 180,246
<PER-SHARE-NAV-BEGIN> 14.49
<PER-SHARE-NII> 0.28
<PER-SHARE-GAIN-APPREC> 3.84
<PER-SHARE-DIVIDEND> (0.27)
<PER-SHARE-DISTRIBUTIONS> (1.30)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.04
<EXPENSE-RATIO> 0.78
<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 year ended December 31,
1997 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 54
<NAME> VALUE EQUITY FUND, CLASS S
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 2,076,604,643
<INVESTMENTS-AT-VALUE> 3,196,022,295
<RECEIVABLES> 25,964,969
<ASSETS-OTHER> 5,510
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,221,992,774
<PAYABLE-FOR-SECURITIES> 11,451,815
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12,096,321
<TOTAL-LIABILITIES> 23,548,136
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,027,869,764
<SHARES-COMMON-STOCK> 188,089,578
<SHARES-COMMON-PRIOR> 171,928,663
<ACCUMULATED-NII-CURRENT> 1,297,337
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 49,859,885
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,119,417,652
<NET-ASSETS> 3,197,847,865
<DIVIDEND-INCOME> 71,105,548
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 15,608,178
<NET-INVESTMENT-INCOME> 55,497,370
<REALIZED-GAINS-CURRENT> 263,861,492
<APPREC-INCREASE-CURRENT> 407,483,711
<NET-CHANGE-FROM-OPS> 726,842,573
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 54,611,119
<DISTRIBUTIONS-OF-GAINS> 218,186,420
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 42,809,442
<NUMBER-OF-SHARES-REDEEMED> 43,586,898
<SHARES-REINVESTED> 16,938,371
<NET-CHANGE-IN-ASSETS> 712,105,034
<ACCUMULATED-NII-PRIOR> 410,862
<ACCUMULATED-GAINS-PRIOR> 14,178,355
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13,063,454
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 16,005,585
<AVERAGE-NET-ASSETS> 2,902,454,365
<PER-SHARE-NAV-BEGIN> 14.46
<PER-SHARE-NII> 0.32
<PER-SHARE-GAIN-APPREC> 3.83
<PER-SHARE-DIVIDEND> (0.31)
<PER-SHARE-DISTRIBUTIONS> (1.30)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.00
<EXPENSE-RATIO> 0.54
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 458,944,857
<INVESTMENTS-AT-VALUE> 686,758,593
<RECEIVABLES> 4,999,796
<ASSETS-OTHER> 22,236
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 691,780,625
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 815,968
<TOTAL-LIABILITIES> 815,968
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 460,933,162
<SHARES-COMMON-STOCK> 11,677
<SHARES-COMMON-PRIOR> 10,666
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,217,759
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 227,813,736
<NET-ASSETS> 192,471
<DIVIDEND-INCOME> 2,530
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2,942
<NET-INVESTMENT-INCOME> (412)
<REALIZED-GAINS-CURRENT> 16,150
<APPREC-INCREASE-CURRENT> 33,921
<NET-CHANGE-FROM-OPS> 49,659
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 16,515
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1,011
<NET-CHANGE-IN-ASSETS> 49,658
<ACCUMULATED-NII-PRIOR> 192,363
<ACCUMULATED-GAINS-PRIOR> 4,972,374
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,149,017
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,733,206
<AVERAGE-NET-ASSETS> 165,613
<PER-SHARE-NAV-BEGIN> 13.39
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> 4.67
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (1.54)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.48
<EXPENSE-RATIO> 1.78
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 458,944,857
<INVESTMENTS-AT-VALUE> 686,758,593
<RECEIVABLES> 4,999,796
<ASSETS-OTHER> 22,236
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 691,780,625
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 815,968
<TOTAL-LIABILITIES> 815,968
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 460,933,162
<SHARES-COMMON-STOCK> 11,809
<SHARES-COMMON-PRIOR> 10,767
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,217,759
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 227,813,736
<NET-ASSETS> 195,879
<DIVIDEND-INCOME> 2,568
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2,062
<NET-INVESTMENT-INCOME> 506
<REALIZED-GAINS-CURRENT> 16,393
<APPREC-INCREASE-CURRENT> 34,434
<NET-CHANGE-FROM-OPS> 51,333
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 449
<DISTRIBUTIONS-OF-GAINS> 16,672
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1,042
<NET-CHANGE-IN-ASSETS> 51,334
<ACCUMULATED-NII-PRIOR> 192,363
<ACCUMULATED-GAINS-PRIOR> 4,972,374
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,149,017
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,733,206
<AVERAGE-NET-ASSETS> 168,111
<PER-SHARE-NAV-BEGIN> 13.42
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 4.70
<PER-SHARE-DIVIDEND> (0.04)
<PER-SHARE-DISTRIBUTIONS> (1.54)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.59
<EXPENSE-RATIO> 1.23
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 458,944,857
<INVESTMENTS-AT-VALUE> 686,758,593
<RECEIVABLES> 4,999,796
<ASSETS-OTHER> 22,236
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 691,780,625
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 815,968
<TOTAL-LIABILITIES> 815,968
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 460,933,162
<SHARES-COMMON-STOCK> 11,922
<SHARES-COMMON-PRIOR> 10,837
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,217,759
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 227,813,736
<NET-ASSETS> 198,007
<DIVIDEND-INCOME> 2,592
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,491
<NET-INVESTMENT-INCOME> 1,101
<REALIZED-GAINS-CURRENT> 16,544
<APPREC-INCREASE-CURRENT> 34,753
<NET-CHANGE-FROM-OPS> 52,398
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,067
<DISTRIBUTIONS-OF-GAINS> 16,782
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1,085
<NET-CHANGE-IN-ASSETS> 52,396
<ACCUMULATED-NII-PRIOR> 192,363
<ACCUMULATED-GAINS-PRIOR> 4,972,374
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,149,017
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,733,206
<AVERAGE-NET-ASSETS> 169,660
<PER-SHARE-NAV-BEGIN> 13.44
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> 4.71
<PER-SHARE-DIVIDEND> (0.10)
<PER-SHARE-DISTRIBUTIONS> (1.54)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.61
<EXPENSE-RATIO> 0.88
<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 year ended December 31,
1997 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 64
<NAME> SMALL CAP VALUE EQUITY FUND, CLASS S
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 458,944,857
<INVESTMENTS-AT-VALUE> 686,758,593
<RECEIVABLES> 4,999,796
<ASSETS-OTHER> 22,236
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 691,780,625
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 815,968
<TOTAL-LIABILITIES> 815,968
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 460,933,162
<SHARES-COMMON-STOCK> 41,565,529
<SHARES-COMMON-PRIOR> 34,013,589
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,217,759
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 227,813,736
<NET-ASSETS> 690,378,300
<DIVIDEND-INCOME> 8,736,205
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 3,661,040
<NET-INVESTMENT-INCOME> 5,075,165
<REALIZED-GAINS-CURRENT> 56,022,656
<APPREC-INCREASE-CURRENT> 116,301,060
<NET-CHANGE-FROM-OPS> 177,398,881
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,267,208
<DISTRIBUTIONS-OF-GAINS> 58,776,388
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14,575,709
<NUMBER-OF-SHARES-REDEEMED> 10,914,681
<SHARES-REINVESTED> 3,890,912
<NET-CHANGE-IN-ASSETS> 233,442,884
<ACCUMULATED-NII-PRIOR> 192,363
<ACCUMULATED-GAINS-PRIOR> 4,972,374
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,149,017
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,733,206
<AVERAGE-NET-ASSETS> 572,045,167
<PER-SHARE-NAV-BEGIN> 13.43
<PER-SHARE-NII> 0.13
<PER-SHARE-GAIN-APPREC> 4.73
<PER-SHARE-DIVIDEND> (0.14)
<PER-SHARE-DISTRIBUTIONS> (1.54)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.61
<EXPENSE-RATIO> 0.64
<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 year ended December 31,
1997 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 71
<NAME> INTERNATIONAL EQUITY FUND, CLASS 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 490,229,315
<INVESTMENTS-AT-VALUE> 548,946,384
<RECEIVABLES> 27,331,512
<ASSETS-OTHER> 200,916
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 576,478,812
<PAYABLE-FOR-SECURITIES> 4,293,610
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25,003,268
<TOTAL-LIABILITIES> 29,296,878
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 469,631,790
<SHARES-COMMON-STOCK> 10,526
<SHARES-COMMON-PRIOR> 10,176
<ACCUMULATED-NII-CURRENT> 293,037
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 16,328,165
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 60,928,942
<NET-ASSETS> 128,942
<DIVIDEND-INCOME> 2,000
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2,769
<NET-INVESTMENT-INCOME> (769)
<REALIZED-GAINS-CURRENT> 11,612
<APPREC-INCREASE-CURRENT> 5,419
<NET-CHANGE-FROM-OPS> 16,262
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 91
<DISTRIBUTIONS-OF-GAINS> 4,184
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 350
<NET-CHANGE-IN-ASSETS> 16,261
<ACCUMULATED-NII-PRIOR> 113,978
<ACCUMULATED-GAINS-PRIOR> (12,355,482)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,149,537
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,271,207
<AVERAGE-NET-ASSETS> 125,710
<PER-SHARE-NAV-BEGIN> 11.07
<PER-SHARE-NII> (0.07)
<PER-SHARE-GAIN-APPREC> 1.67
<PER-SHARE-DIVIDEND> (0.01)
<PER-SHARE-DISTRIBUTIONS> (0.41)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.25
<EXPENSE-RATIO> 2.20
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 490,229,315
<INVESTMENTS-AT-VALUE> 548,946,384
<RECEIVABLES> 27,331,512
<ASSETS-OTHER> 200,916
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 576,478,812
<PAYABLE-FOR-SECURITIES> 4,293,610
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25,003,268
<TOTAL-LIABILITIES> 29,296,878
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 469,631,790
<SHARES-COMMON-STOCK> 10,635
<SHARES-COMMON-PRIOR> 10,281
<ACCUMULATED-NII-CURRENT> 293,037
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 16,328,165
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 60,928,942
<NET-ASSETS> 131,194
<DIVIDEND-INCOME> 2,029
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2,109
<NET-INVESTMENT-INCOME> (80)
<REALIZED-GAINS-CURRENT> 11,791
<APPREC-INCREASE-CURRENT> 5,463
<NET-CHANGE-FROM-OPS> 17,174
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 133
<DISTRIBUTIONS-OF-GAINS> 4,229
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 354
<NET-CHANGE-IN-ASSETS> 17,175
<ACCUMULATED-NII-PRIOR> 113,978
<ACCUMULATED-GAINS-PRIOR> (12,355,482)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,149,537
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,271,207
<AVERAGE-NET-ASSETS> 127,561
<PER-SHARE-NAV-BEGIN> 11.09
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 1.68
<PER-SHARE-DIVIDEND> (0.01)
<PER-SHARE-DISTRIBUTIONS> (0.41)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.34
<EXPENSE-RATIO> 1.65
<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 year ended December 31,
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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 490,229,315
<INVESTMENTS-AT-VALUE> 548,946,384
<RECEIVABLES> 27,331,512
<ASSETS-OTHER> 200,916
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 576,478,812
<PAYABLE-FOR-SECURITIES> 4,293,610
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25,003,268
<TOTAL-LIABILITIES> 29,296,878
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 469,631,790
<SHARES-COMMON-STOCK> 10,680
<SHARES-COMMON-PRIOR> 10,315
<ACCUMULATED-NII-CURRENT> 293,037
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 16,328,165
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 60,928,942
<NET-ASSETS> 132,039
<DIVIDEND-INCOME> 2,039
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,799
<NET-INVESTMENT-INCOME> 240
<REALIZED-GAINS-CURRENT> 11,856
<APPREC-INCREASE-CURRENT> 5,475
<NET-CHANGE-FROM-OPS> 17,571
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 256
<DISTRIBUTIONS-OF-GAINS> 4,243
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 365
<NET-CHANGE-IN-ASSETS> 17,571
<ACCUMULATED-NII-PRIOR> 113,978
<ACCUMULATED-GAINS-PRIOR> (12,355,482)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,149,537
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,271,207
<AVERAGE-NET-ASSETS> 128,225
<PER-SHARE-NAV-BEGIN> 11.10
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 1.67
<PER-SHARE-DIVIDEND> (0.02)
<PER-SHARE-DISTRIBUTIONS> (0.41)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.36
<EXPENSE-RATIO> 1.40
<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 year ended December 31,
1997 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 74
<NAME> INTERNATIONAL EQUITY FUND, CLASS S
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 490,229,315
<INVESTMENTS-AT-VALUE> 548,946,384
<RECEIVABLES> 27,331,512
<ASSETS-OTHER> 200,916
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 576,478,812
<PAYABLE-FOR-SECURITIES> 4,293,610
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25,003,268
<TOTAL-LIABILITIES> 29,296,878
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 469,631,790
<SHARES-COMMON-STOCK> 44,180,338
<SHARES-COMMON-PRIOR> 32,070,618
<ACCUMULATED-NII-CURRENT> 293,037
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 16,328,165
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 60,928,942
<NET-ASSETS> 546,789,759
<DIVIDEND-INCOME> 7,789,859
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 5,213,777
<NET-INVESTMENT-INCOME> 2,576,082
<REALIZED-GAINS-CURRENT> 46,807,308
<APPREC-INCREASE-CURRENT> 13,009,849
<NET-CHANGE-FROM-OPS> 62,393,239
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,046,471
<DISTRIBUTIONS-OF-GAINS> 17,495,727
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 22,135,252
<NUMBER-OF-SHARES-REDEEMED> 11,688,395
<SHARES-REINVESTED> 1,662,863
<NET-CHANGE-IN-ASSETS> 190,479,115
<ACCUMULATED-NII-PRIOR> 113,978
<ACCUMULATED-GAINS-PRIOR> (12,355,482)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,149,537
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,271,207
<AVERAGE-NET-ASSETS> 487,799,327
<PER-SHARE-NAV-BEGIN> 11.11
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 1.69
<PER-SHARE-DIVIDEND> (0.07)
<PER-SHARE-DISTRIBUTIONS> (0.41)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.38
<EXPENSE-RATIO> 1.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
