Rule 497(e)
Registration No. 33-73824
File No. 811-8274
MASSMUTUAL INSTITUTIONAL FUNDS
SUPPLEMENT DATED DECEMBER 1, 1998 TO THE
PROSPECTUS DATED MAY 1, 1998
THE PROSPECTUS IS CHANGED AS FOLLOWS:
The supplement dated July 29, 1998 is replaced by this Supplement.
2. MassMutual Value Equity Fund was renamed "MassMutual Core Equity Fund."
All references in the Prospectus to MASSMUTUAL VALUE EQUITY FUND OR VALUE
EQUITY FUND are replaced with the phrases MASSMUTUAL CORE EQUITY FUND OR CORE
EQUITY FUND.
3. All references in the Prospectus to the VALUE EQUITY SECTOR of the
MassMutual Balanced Fund, beginning with the first such reference in the fourth
paragraph on the cover page, are replaced with the phrase CORE EQUITY SECTOR.
4. The Table relating to CLASS Y under the heading EXPENSES on page 5 of the
Prospectus is replaced with the following table:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------------------------
SHORT SMALL CAP
-TERM CORE CORE VALUE INTERNATIONAL
PRIME BOND BOND BALANCED EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND FUND FUND
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) .10% .20% .20% .30% .30% .30% .30%
TOTAL
OPERATING
EXPENSES
(1)(2) .55% .65% .65% .75% .75% .85% 1.15%
</TABLE>
<PAGE>
(1) Other Expenses and Total Operating Expenses are based on estimated amounts
for the 1998 fiscal year, but restated to give effect to a reduction in
administrative service fee charged to the Prime Fund, the Core Bond Fund,
the Short-Term Bond Fund and the International Equity Fund (which was
effective on December 1, 1998).
(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
return and (b) redemption at the end of each time period.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
SHORT CORE BALANCED CORE SMALL CAP INTERNATIONAL
PRIME -TERM BOND FUND EQUITY VALUE EQUITY FUND
FUND BOND FUND FUND EQUITY
FUND FUND
- -------------------------------------------------------------------------------
1 Year $5.62 $6.64 $6.64 $7.66 $7.66 $8.68 $11.73
3 Years $17.63 $20.80 $20.80 $23.97 $23.97 $27.12 $36.54
5 Years $30.72 $36.22 $36.22 $41.68 $41.68 $47.12 $63.29
10 Years $68.93 $81.04 $81.04 $92.92 $92.92 $104.75 $139.75
- ------------------------------------------------------------------------------
</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. The last four sentences of the third paragraph under the caption "(5)
MASSMUTUAL CORE EQUITY FUND' on page 16 of the Prospectus are replaced with the
following:
On July 29, 1998, Walter T. McCormick became the Fund's portfolio manager.
As portfolio manager, Mr. McCormick is the person principally responsible
for the day-to-day management of the Fund's portfolio. Mr. McCormick
joined Babson on June 22, 1998, as a Senior Vice President, from Keystone
Investments, Inc., where he managed equity portfolios for the past 14
years and, since 1997, also served as the chief investment officer of
Keystone's Growth and Income unit.
6. The following is added as a new second paragraph under the caption
"SECURITIES LENDING" on page 17 of the Prospectus:
Under applicable regulatory requirements and securities lending agreements
(which are subject
<PAGE>
to change), the loan collateral received by a Fund when it lends portfolio
securities must, on each business day, be at least equal to the value of
the loaned securities. Cash collateral received by a Fund will be
reinvested by the Fund's securities lending agent in high quality, short
term instruments, including bank obligations, U.S. Government Securities,
repurchase agreements, money market funds and U.S. dollar denominated
corporate instruments with an effective maturity of one-year or less,
including variable rate and floating rate securities, insurance company
funding agreements and asset-backed securities. All investments of cash
collateral by a Fund are for the account and risk of such Fund.
7. The following paragraphs should be added as the third and fourth paragraphs
on page 18 of the Prospectus within the section captioned "INVESTMENT PRACTICES
OF THE FUNDS AND RELATED RISKS" UNDER "FOREIGN SECURITIES":
The International Equity Fund and, to a lesser extent, the other Funds,
may be subject to an additional risk regarding their foreign securities
holdings. On January 1, 1999, eleven countries in the European Monetary
Union will adopt the euro as their official currency. However, their
current currencies (for example, the franc, the mark and the lire) will
also continue in use until January 1, 2002. After that date, it is
expected that only the euro will be used in those countries. A common
currency is expected to confer some benefits in those markets, by
consolidating the government debt market for those countries and reducing
some currency risks and costs. But the conversion to the new currency
will affect the Funds operationally and also has potential risks, some of
which are listed below. Among other things, the conversion will affect:
* Issuers in which the Funds invest, because of changes in the
competitive environment from a consolidated currency market and
greater operational costs from converting to the new currency. This
might depress stock values.
* Vendors the Funds depend on to carry out its business, such as
custodians (which hold the foreign securities the Funds buy), the
Adviser and Sub-Advisers (which must price the Funds' investments to
deal with the conversion to the euro) and brokers, foreign markets
and securities depositories. If they are not prepared, there could
be delays in settlements and additional costs to the Funds.
* Exchange contracts and derivatives that are outstanding during the
transition to the euro. The lack of currency rate calculations
between the affected currencies and the need to update the Funds'
contracts could pose extra costs to the Funds.
The Sub-Adviser to the International Equity Fund is upgrading (at its
expense) its computer and bookkeeping systems to deal with the conversion.
The Funds' custodian has advised the Adviser of its plans to deal with the
conversion including how it will update its record keeping systems and
handle the redenomination of outstanding foreign debt. The possible
effect of these factors on the Funds' investments cannot be determined at
this time, but they may reduce the value of some of the Funds' holdings
and increase their operational costs.
8. The following is added immediately before the caption "HOW TO PURCHASE,
EXCHANGE AND REDEEM SHARES" on page 20 of the Prospectus:
YEAR 2000 ISSUE
Like other businesses and governments around the world, the Funds could b
adversely affected if the computer systems used by the Funds' service
providers and those with which they do
<PAGE>
business do not properly recognize the Year 2000. This is commonly known
as the "Year 2000 issue." In 1996, MassMutual began an enterprise-wide
process of identifying, evaluating and implementing changes to its
computer systems to address the Year 2000 issue. MassMutual is addressing
the Year 2000 issue internally with modifications to existing programs and
conversions to new programs. MassMutual has advised the Funds that the
Year 2000 issue is one of MassMutual's highest business operational
priorities. MassMutual is also seeking assurances from the Funds' other
service providers, including the Sub-Advisers, and others with which
MassMutual and the Funds conduct business in order to identify and resolve
Year 2000 issues. In addition, because the Year 2000 issue affects
virtually all organizations, the companies in which the Funds invest could
be adversely impacted by the Year 2000 issue. The extent of such impact
cannot be predicted.
9. The third sentence in the first paragraph on page 21 of the Prospectus,
under the HEADING "FEATURES AND ELIGIBILITY REQUIREMENTS OF EACH CLASS" under
the caption "CLASS Y SHARES", is hereby replaced with the following:
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, including
insurance company separate investment accounts; MassMutual separate
investment accounts; and other registered investment companies managed by
the Adviser or an affiliate of the Adviser, including other series of the
Trust.
10. The following sentence is added after the second sentence in the third
paragraph under the caption "PURCHASE OF SHARES" on page 22 of the Prospectus:
"MassMutual separate investment accounts may purchase Class Y shares directly
from the Trust."
11. The fourth sentence in the second paragraph of page 24 of the Prospectus,
within the section "INVESTMENT MANAGER AND SUB-ADVISERS" under the caption
"INVESTMENT MANAGER", is replaced with the following:
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, .0823% to
.2875% for Class Y Shares and .0774% to .0777% for Class S Shares.
12. The second and third to last sentences of the fourth paragraph under the
caption "HOW FUND SHARES ARE PRICED" on page 25 of the Prospectus are replaced
with the following:
In connection with the sale of Class Y shares to non-qualified deferred
compensation plans that enter into an administrative services agreement
with MassMutual, additional compensation may be paid as determined by
MassMutual from time-to-time. As of the date of this Supplement,
aggregate annual compensation in such cases is in an amount equal to 0.25%
of the amount invested.
December 1, 1998
MASSMUTUAL INSTITUTIONAL FUNDS
SUPPLEMENT DATED DECEMBER 1, 1998 TO THE
STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1998
THE STATEMENT OF ADDITIONAL INFORMATION IS CHANGED AS FOLLOWS:
1. MassMutual Value Equity Fund has been renamed "MassMutual Core Equity
Fund." All references in the Statement of Additional Information to the
MASSMUTUAL VALUE EQUITY FUND OR VALUE EQUITY FUND are replaced with the phrases
MASSMUTUAL CORE EQUITY FUND OR CORE EQUITY FUND.
3. All references in the Statement of Additional Information to VALUE EQUITY
SECTOR or EQUITY SECTOR of the MassMutual Balanced Fund, starting with the
first such reference on page 3, are replaced with the phrase CORE EQUITY
SECTOR.
10. The third sentence in the first paragraph under the caption "ADMINISTRATOR
-------------
AND SUB-ADMINISTRATOR" on page 17 of the Statement of Additional Information is
- ---------------------
replaced with the following:
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; .0823% to .2875% for Class Y Shares;
and .0774% to .0777% for Class S Shares.
December 1, 1998
