<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (NO. 33-73824) UNDER THE
SECURITIES ACT OF 1933
Investment Company Act File No. 811-8274
Pre-Effective Amendment No.
Post-Effective Amendment No. 11
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 13
MASSMUTUAL INSTITUTIONAL FUNDS
(Exact Name of Registrant as Specified in Declaration of Trust)
1295 State Street, Springfield, Massachusetts 01111
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including area code (413) 788-8411
Name and Address of Agent for Service
Stephen L. Kuhn, Esq.
Vice President and Secretary
MassMutual Institutional Funds
1295 State Street
Springfield, Massachusetts 01111
Copy to:
J.B. Kittredge, Esq.
Ropes & Gray
One International Place
Boston, MA 02110
Approximate Date of Proposed Public Offering: As soon as practical after the
effective date of this Registration Statement.
It is proposed that this filing become effective (check appropriate line)
[_] immediately upon filing pursuant to paragraph (b)
[X] on May 3, 1999 pursuant to paragraph (b)
[_] 60 days after filing to pursuant to paragraph (a) of Rule 485
[_] on [date] pursuant to paragraph (a)(1) of rule 485
[_] 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
Registrant submits this Post-Effective Amendment No. 11 to its Registration
Statement No. 33-73824 under the Securities Act of 1933 and this Amendment No.
13 to its Registration Statement No. 811-2224 under the Investment Company Act
of 1940. This Post-Effective Amendment relates to MassMutual Prime Fund,
MassMutual Short-Term Bond Fund, MassMutual Core Bond Fund, MassMutual
Diversified Bond Fund, MassMutual Balanced Fund, MassMutual Core Equity Fund,
MassMutual Small Cap Value Equity Fund, MassMutual Growth Equity Fund,
MassMutual Small Cap Growth Equity Fund, MassMutual Mid Cap Growth Equity Fund,
MassMutual Small Cap Growth Equity Fund, MassMutual International Equity Fund.
No other information relating to any other series of Registrant is amended or
superceded hereby.
We have elected to register an indefinite number of shares pursuant to
Regulation 24f-2 under the Investment Company Act of 1940. We filed our Rule
24f-2 notice for the period ended December 31, 1998, on March 30, 1999.
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MASSMUTUAL INSTITUTIONAL FUNDS
This Prospectus describes the following Funds:
o MassMutual Prime Fund
seeks to maximize current income, consistent with liquidity and capital
preservation, by investing in money market instruments.
o MassMutual Short-Term Bond Fund
seeks a high total rate of return primarily from current income while
minimizing fluctuations in capital values by investing primarily in
short-term investment grade fixed income securities.
o MassMutual Core Bond Fund
seeks a high total rate of return, consistent with prudent investment risk
and capital preservation, by investing primarily in investment grade debt
securities.
o MassMutual Diversified Bond Fund
seeks a superior total rate of return by investing in fixed income
instruments.
o MassMutual Balanced Fund
seeks a high total rate of return over time, consistent with capital
preservation, by investing in stock, fixed income and money market
securities.
o MassMutual Core Equity Fund
seeks long-term growth of capital and income by investing primarily in
large company stocks.
o MassMutual Growth Equity Fund
seeks long-term growth of capital and future income.
o MassMutual Small Cap Value Equity Fund
seeks long-term growth of capital and income by investing primarily in
small company stocks.
o MassMutual Mid Cap Growth Equity Fund
seeks long-term capital growth.
o MassMutual Small Cap Growth Equity Fund
seeks long-term capital appreciation.
o MassMutual International Equity Fund
seeks a high total rate of return over time by investing primarily in
foreign stocks.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any statement to the
contrary is a crime.
PROSPECTUS
May 3, 1999
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Table Of Contents Page
Summary Information ....................................................... 3
About the Funds
MassMutual Prime Fund ................................................ 4
MassMutual Short-Term Bond Fund ...................................... 6
MassMutual Core Bond Fund ............................................ 8
MassMutual Diversified Bond Fund ..................................... 10
MassMutual Balanced Fund ............................................. 12
MassMutual Core Equity Fund .......................................... 14
MassMutual Growth Equity Fund ........................................ 16
MassMutual Small Cap Value Equity Fund ............................... 18
MassMutual Mid Cap Growth Equity Fund ................................ 20
MassMutual Small Cap Growth Equity Fund .............................. 22
MassMutual International Equity Fund ................................. 24
Summary of Principal Risks ................................................ 26
About the Investment Advisers and Sub-Advisers
Massachusetts Mutual Life Insurance Company .......................... 30
David L. Babson and Company Incorporated ............................. 30
HarbourView Asset Management Corporation ............................. 31
Massachusetts Financial Services Company ............................. 31
Miller Anderson & Sherrerd, LLP ...................................... 31
J.P. Morgan Investment Management Inc. ............................... 32
Waddell & Reed Investment Management Company ......................... 32
About the Classes of Shares - Multiple Class Information
Class S Shares ....................................................... 33
Class Y Shares ....................................................... 33
Class L Shares ....................................................... 34
Class A Shares ....................................................... 34
Compensation to Intermediaries ....................................... 35
Investing in the Funds
Buying, Redeeming and Exchanging Shares .............................. 36
Determining Net Asset Value .......................................... 36
How to Invest ........................................................ 37
Taxation and Distribution ............................................ 37
Investment Performance .................................................... 38
Financial Highlights ...................................................... 40
Appendix - Additional Investment Policies and Risk Considerations ......... 47
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Summary Information
MassMutual Institutional Funds provide a broad range of investment choices
across the risk/return spectrum. The summary pages that follow describe each
Fund:
o Investment objectives.
o Principal Investment Strategies and Risks. A "Summary of Principal Risks"
of investing in the Funds begins on page 26.
o Investment return over the past ten years, or since inception if less than
ten years old.
o Average annual total returns for the last one, five and ten year periods
(or, shorter periods for newer Funds) and how the Fund did against a
comparable broad-based index.
o Fees and Expenses.
Past Performance is not an indication of future performance. There is no
assurance that a Fund's investment objective will be achieved, and you can lose
money by investing in the Funds.
Important Notes about performance information for the Funds.
Where indicated, performance information for a Fund includes the performance of
a predecessor separate investment account of MassMutual before those Funds were
created. In addition, where indicated average annual total returns for Class A,
Class L and Class Y shares of those Funds is based on the performance of Class S
Shares, adjusted for class specific expenses.
The Growth Equity Fund, Mid Cap Growth Equity Fund and Small Cap Growth Equity
Fund are new funds effective May 3, 1999. They do not have actual performance.
Instead, the performance of the Sub-Adviser is provided based on a composite of
portfolios managed by the Sub-Adviser with similar investment objectives as the
Fund. The Performance Charts for those Sub-Advisers reflect the Sub-Adviser's
composite performance, adjusted for class specific expenses of the particular
fund.
In all cases, investment returns assume the reinvestment of dividends and
capital gains distributions.
Important Note about Fees and Expenses.
As an investor, you pay certain fees and expenses in connection with your
investment. These fees and expenses will vary depending on the Fund in which you
invest and the class of shares that you purchase. The fee tables shown on the
following pages under "Expense Information" are meant to assist you in
understanding these fees and expenses. Each fee table shows two categories of
expenses, Shareholder Fees and Annual Fund Operating Expenses. Shareholder Fees
refer to fees paid directly from your investment, such as up front or contingent
sales charges. None of the Funds charges any Shareholder Fees for any class of
share. Annual Fund Operating Expenses refer to the costs of operating the Funds.
These costs are deducted from a Fund's assets, which means you pay them
indirectly.
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MassMutual Prime Fund
Investment Objective
This 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.
Principal Investment Strategies and Risks
The Fund invests in debt instruments that have a remaining maturity not
exceeding 397 days and that have one of the two highest ratings from at least
one nationally recognized statistical rating organization or, if unrated, that
the Adviser judges to be of equivalent quality. Generally, the majority of the
Fund's holdings do not have the highest rating. The Fund's principal investments
include:
o commercial paper and other corporate obligations;
o securities issued or guaranteed by the U.S. Government or its agencies;
o certificates evidencing participation in bank loans; and
o certificates of deposit and bankers' acceptances.
Some of these investments are subject to legal restrictions on resale.
The Principal Risks of investing in the Fund are Market Risk, Credit Risk and
Management Risk.
These Risks are described beginning on page 26.
Annual Performance*
The bar chart shows the risks of investing in the Fund because the returns vary
from year to year.
[GRAPHIC]
Class S Shares
1989 ..................................................................... 9.17%
1990 ..................................................................... 8.15%
1991 ..................................................................... 6.15%
1992 ..................................................................... 3.75%
1993 ..................................................................... 2.92%
1994 ..................................................................... 4.01%
1995 ..................................................................... 5.78%
1996 ..................................................................... 5.24%
1997 ..................................................................... 5.39%
1998 ..................................................................... 5.39%
During the periods shown above, the highest quarterly return was 2.36% for the
quarter ended June 30, 1989 and the lowest was .71% for the quarter ended June
30, 1993.
Average Annual Total Returns
(for the periods ended December 31, 1998)
The table shows the risks of investing in the Fund because the Fund's returns
may deviate from the broad market over different time periods.
One Five Ten
Year Years Years
Class S* 5.39% 5.16% 5.58%
Class Y+ 5.14% 4.93% 5.36%
Class L+ 5.24% 5.01% 5.43%
Class A+ 4.60% 4.46% 4.89%
91-day Treasury Bills** 5.05% 5.11% 5.44%
* Performance for Class S shares of the Fund includes performance of a
predecessor separate investment account of MassMutual for periods prior to
October 3, 1994. For a more detailed discussion, please refer to "Investment
Performance" in this Prospectus.
+ Performance for Class Y and Class A shares of the Fund is based on Class S
shares for the 5- and 10-year periods, adjusted to reflect Class Y and Class A
expenses. Performance for Class L shares of the Fund is based on Class S shares
for all periods shown, adjusted to reflect Class L expenses.
** 91-day Treasury Bills are unmanaged and do not incur expenses. Treasury Bills
are backed by the full faith and credit of the United States government and
offer a fixed rate of interest, while the Fund's shares are not guaranteed.
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Expense Information
Class S Class Y Class L Class A
Shareholder Fees
(fees paid
directly
from your
investment) None None None None
Annual Fund
Operating
Expenses
(expenses that
are
deducted from
Fund assets) (%
of
average net
assets)
Management Fees .35% .35% .35% .35%
Service (Rule
12b-1) Fees None None None .25%
Other Expenses .10% .20% .35% .35%
Total Annual
Fund Operating
Expenses(1)(2) .45% .55% .70% .95%
(1) The expenses in the above table are based on expenses for the fiscal year
ended December 31, 1998, but restated to give effect to a change in the
management fees and administrative fees effective on May 3, 1999.
(2) Employee benefit plans which invest in the Fund through MassMutual
separate investment accounts may pay additional charges under their group
annuity contract or services agreement. Investors who purchase shares
directly from the Fund may also be subject to charges imposed in their
administrative services or other agreement with MassMutual or MassMutual
affiliate. None of these charges are deducted from Fund assets.
Examples
These examples are intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in each share class of the Fund for the time periods
indicated, that your investment earns a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
Class S $46 $144 $252 $567
Class Y $56 $176 $307 $689
Class L $72 $224 $390 $871
Class A $97 $303 $525 $1166
Since the Fund does not impose any Shareholder Fees, the figures shown would be
the same whether you sold your shares at the end of a period or kept them.
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MassMutual Short-Term Bond Fund
Investment Objective
This 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.
Principal Investment Strategies and Risks
The Fund invests primarily in investment grade debt securities, including:
o commercial paper and other corporate obligations;
o securities issued or guaranteed by the U.S. Government or its agencies;
and
o mortgage-backed and other asset-backed securities.
The Fund's portfolio "duration" is the average of the periods remaining for
payments of principal and interest on the Fund's debt securities, weighted by
the dollar amount of each payment. The Fund's portfolio duration is estimated to
be generally less than three years. The Adviser may increase the portfolio's
duration when longer-term investments offer higher yields. When short-term
investments offer more attractive yields than longer-term investments, but with
less risk, the portfolio's duration may be decreased.
The Principal Risks of investing in the Fund are Market Risk, Credit Risk,
Management Risk and Prepayment Risk.
These Risks are described beginning on page 26.
Annual Performance*
The bar chart shows the risks of investing in the Fund because the returns vary
from year to year.
[GRAPHIC]
Class S Shares
1989 ..................................................................... N/A
1990 ..................................................................... 8.89%
1991 .....................................................................13.60%
1992 ..................................................................... 6.72%
1993 ..................................................................... 7.83%
1994 .....................................................................-0.99%
1995 .....................................................................11.77%
1996 ..................................................................... 5.57%
1997 ..................................................................... 6.84%
1998 ..................................................................... 6.29%
During the periods shown above, the highest quarterly return was 4.66% for the
quarter ended December 31, 1991 and the lowest was -1.56% for the quarter ended
March 31, 1994.
Average Annual Total Returns
(for the periods ended December 31, 1998)
The table shows the risks of investing in the Fund because the Fund's returns
may deviate from the broad market over different time periods.
One Five Ten
Year Years Years
Class S* 6.29% 5.82% N/A
Class Y+ 6.12% 5.60% N/A
Class L+ 6.10% 5.63% N/A
Class A+ 5.75% 5.16% N/A
Lehman Brothers 1-3
Year Government Bond
Index** 6.97% 5.96% 7.36%
* Performance for Class S shares of the Fund includes performance of a
predecessor separate investment account of MassMutual for periods prior to
October 3, 1994. For a more detailed discussion, please refer to "Investment
Performance" in this Prospectus.
+ Performance for Class Y and Class A shares of the Fund is based on Class S
shares for the 5- and 10-year periods, adjusted to reflect Class Y and Class A
expenses. Performance for Class L shares of the Fund is based on Class S shares
for all periods shown, adjusted to reflect Class L expenses.
** The Lehman Brothers 1-3 Year Government Bond Index is an unmanaged index of
U.S. government bonds with 1-3 years remaining to the scheduled payment of
principal. The Index does not incur expenses and cannot be purchased directly by
Investors.
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Expense Information
Class S Class Y Class L Class A
Shareholder Fees
(fees paid
directly
from your
investment) None None None None
Annual Fund
Operating
Expenses
(expenses that
are
deducted from
Fund assets) (%
of
average net
assets)
Management Fees .40% .40% .40% .40%
Service (Rule
12b-1) Fees None None None .25%
Other Expenses .14% .19% .34% .34%
Total Annual
Fund Operating
Expenses(1)(2) .54% .59% .74% .99%
(1) The expenses in the above table are based on expenses for the fiscal year
ended December 31, 1998, but restated to give effect to a change in the
management fees and administrative fees effective on May 3, 1999.
(2) Employee benefit plans which invest in the Fund through MassMutual
separate investment accounts may pay additional charges under their group
annuity contract or services agreement. Investors who purchase shares
directly from the Fund may also be subject to charges imposed in their
administrative services or other agreement with MassMutual or MassMutual
affiliate. None of these charges are deducted from Fund assets.
These examples are intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in each share class of the Fund for the time periods
indicated, that your investment earns a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
Class S $55 $172 $299 $664
Class Y $60 $188 $327 $726
Class L $76 $236 $410 $910
Class A $101 $316 $548 $1218
Since the Fund does not impose any Shareholder Fees, the figures shown would be
the same whether you sold your shares at the end of a period or kept them.
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MassMutual Core Bond Fund
Investment Objective
This 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.
Principal Investment Strategies and Risks
The Fund invests primarily in investment grade debt securities, including:
o domestic and foreign corporate bonds;
o bonds issued or guaranteed by the U.S. Government or its agencies;
o mortgage-backed and other asset-backed securities; and
o money market securities, including commercial paper.
Some of these investments may be in securities that are not denominated in U.S.
dollars and others may be purchased subject to legal restrictions on resale,
although no more than 15% of the Fund's investments may be illiquid at the time
of purchase.
The Principal Risks of investing in the Fund are Market Risk, Credit Risk,
Management Risk, Prepayment Risk, Liquidity Risk, Foreign Investment Risk,
Currency Risk and Leveraging Risk.
These Risks are described beginning on page 26.
Annual Performance*
The bar chart shows the risks of investing in the Fund because the returns vary
from year to year.
[GRAPHIC]
Class S Shares
1989 .....................................................................12.86%
1990 ..................................................................... 8.30%
1991 .....................................................................17.58%
1992 ..................................................................... 7.04%
1993 .....................................................................11.34%
1994 .....................................................................-4.11%
1995 .....................................................................19.15%
1996 ..................................................................... 2.80%
1997 ..................................................................... 9.78%
1998 ..................................................................... 8.44%
During the periods shown above, the highest quarterly return was 6.91% for the
quarter ended June 30, 1989 and the lowest was -3.49% for the quarter ended
March 31, 1994.
Average Annual Total Returns
(for the periods ended December 31, 1998)
The table shows the risks of investing in the Fund because the Fund's returns
may deviate from the broad market over different time periods.
One Five Ten
Year Years Years
Class S* 8.44% 6.93% 9.12%
Class Y+ 8.25% 6.72% 8.90%
Class L+ 8.20% 6.69% 8.88%
Class A+ 7.75% 6.24% 8.42%
Lehman Brothers
Government/
Corporate Bond Index** 9.47% 7.30% 9.34%
* Performance for Class S shares of the Fund includes performance of a
predecessor separate investment account of MassMutual for periods prior to
October 3, 1994. For a more detailed discussion, please refer to "Investment
Performance" in this Prospectus.
+Performance for Class Y and Class A shares of the Fund is based on Class S
shares for the 5- and 10-year periods, adjusted to reflect Class Y and Class A
expenses. Performance for Class L shares of the Fund is based on Class S shares
for all periods shown, adjusted to reflect Class L expenses.
**The Lehman Brothers Government/Corporate Bond Index is an unmanaged index of
major U.S. government and investment grade bonds with more than one year
remaining to the scheduled payment of principal. The Index does not incur
expenses and cannot be purchased directly by Investors.
-8-
<PAGE>
Expense Information
Class S Class Y Class L Class A
Shareholder Fees
(fees paid
directly
from your
investment) None None None None
Annual Fund
Operating
Expenses
(expenses that
are
deducted from
Fund assets) (%
of
average net
assets)
Management Fees .48% .48% .48% .48%
Service (Rule
12b-1) Fees None None None .25%
Other Expenses .11% .16% .31% .31%
Total Annual
Fund Operating
Expenses(1)(2) .59% .64% .79% 1.04%
(1) The expenses in the above table are based on expenses for the fiscal year
ended December 31, 1998, but restated to give effect to a change in the
management fees and administrative fees effective on May 3, 1999.
(2) Employee benefit plans which invest in the Fund through MassMutual
separate investment accounts may pay additional charges under their group
annuity contract or services agreement. Investors who purchase shares
directly from the Fund may also be subject to charges imposed in their
administrative services or other agreement with MassMutual or MassMutual
affiliate. None of these charges are deducted from Fund assets.
Expenses
These examples are intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in each share class of the Fund for the time periods
indicated, that your investment earns a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
Class S $60 $188 $326 $724
Class Y $65 $204 $354 $786
Class L $81 $252 $437 $970
Class A $106 $331 $575 $1277
Since the Fund does not impose any Shareholder Fees, the figures shown would be
the same whether you sold your shares at the end of a period or kept them.
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<PAGE>
MassMutual Diversified Bond Fund
Investment Objective
This Fund seeks a superior total rate of return by investing in fixed income
instruments.
Principal Investment Strategies and Risks
This Fund seeks to achieve its investment objective by investing primarily in
the following types of fixed income instruments:
o Public bonds;
o Private placement bonds, including securities issued pursuant to Rule
144A;
o Mortgage-backed securities, including commercial mortgage-backed
securities;
o Asset-backed securities;
o Residential whole loan mortgage pools;
o Commercial mortgage loans;
o U.S. Treasury futures and forward contracts;
o Fully hedged foreign securities;
o Interest rate and currency swaps;
o Commercial paper; and
o Options on fixed income investments, including swaptions and interest rate
caps and floors.
The average credit quality of the Fund will not be less than BBB-/Baa3. In
determining the credit quality of assets that are not rated by an independent
credit rating firm, the Adviser will utilize its own proprietary credit rating
system. The Fund will also have specified liquidity and diversification
requirements for particular types of investments.
The duration of the Fund is intended to be within 5% of the duration of the
Lehman Brothers Intermediate Aggregate Bond Index.
The Principal Risks of investing in the Fund are Market Risk, Credit Risk,
Management Risk, Prepayment Risk, Liquidity Risk, Derivative Risk, Foreign
Investment Risk, Currency Risk and Leveraging Risk.
These Risks are described beginning on page 26.
Annual Performance
The Fund began operations May 3, 1999, and therefore has no performance history.
However, there will be risks of investing in the Fund because the returns would
be expected to vary from year to year.
Average Annual Total Returns
(for the periods ended December 31, 1998)
Because this Fund is new, there is no table which shows how the Fund's returns
have deviated from the broad market.
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<PAGE>
Expense Information
Class S Class Y Class L Class A
Shareholder Fees
(fees paid
directly
from your
investment) None None None None
Annual Fund
Operating
Expenses
(expenses that
are
deducted from
Fund assets) (%
of
average net
assets)
Management Fees .50% .50% .50% .50%
Service (Rule
12b-1) Fees None None None .25%
Other Expenses .14% .19% .34% .34%
Total Annual
Fund Operating
Expenses(1)(2) .64% .69% .84% 1.09%
(1) Other Expenses and Total Annual Fund Operating Expenses are based on
estimated amounts for the first fiscal year of the Fund.
(2) Employee benefit plans which invest in the Fund through MassMutual
separate investment accounts may pay additional charges under their group
annuity contract or services agreement. Investors who purchase shares
directly from the Fund may also be subject to charges imposed in their
administrative services or other agreement with MassMutual or MassMutual
affiliate. None of these charges are deducted from Fund assets.
Examples
These examples are intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in each share class of the Fund for the time periods
indicated, that your investment earns a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years
Class S $65 $204
Class Y $70 $220
Class L $86 $268
Class A $111 $347
Since the Fund does not impose any Shareholder Fees, the figures shown would be
the same whether you sold your shares at the end of a period or kept them.
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<PAGE>
MassMutual Balanced Fund
Investment Objective
This 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.
Principal Investment Strategies and Risks
The Fund's portfolio consists of three segments:
o The Prime Segment, which seeks to meet liquidity needs by investing in
diverse money market instruments.
o The Core Bond Segment, which invests primarily in investment grade debt
securities.
o The Core Equity Segment, which invests primarily in stocks and convertible
securities of large capitalized companies which have below average price
to earnings ratios and higher dividend yields relative to their industry
group.
The Fund adjusts the mix of investments among these three market segments based
on MassMutual's judgment about each segment's potential for returns in relation
to the corresponding risk. These 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 debt securities. 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 Segment, more than 35%
in the Core Bond Segment or more than 65% in the Core Equity Segment. In unusual
circumstances, the Fund may invest up to 70% of its total assets in the Equity
Segment or up to 50% of its total assets in the Core Bond Segment.
The Principal Risks of investing in the Fund are
Market Risk, Credit Risk, Management Risk,
Prepayment Risk, Liquidity Risk, Derivative Risk,
Foreign Investment Risk, Currency Risk and
Leveraging Risk.
These Risks are described beginning on page 26.
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<PAGE>
Annual Performance*
The bar chart shows the risks of investing in the Fund because the returns vary
from year to year.
[GRAPHIC]
Class S Shares
1989 .....................................................................18.83%
1990 ..................................................................... 3.12%
1991 .....................................................................22.47%
1992 ..................................................................... 8.90%
1993 ..................................................................... 9.09%
1994 ..................................................................... 2.44%
1995 .....................................................................21.31%
1996 .....................................................................12.83%
1997 .....................................................................18.72%
1998 .....................................................................13.50%
During the periods shown above, the highest quarterly return was 9.37% for the
quarter ended December 31, 1998 and the lowest was -6.91% for the quarter ended
September 30, 1990.
Average Annual Total Returns
(for the periods ended December 31, 1998)
The table shows the risks of investing in the Fund because the Fund's returns
may deviate from the broad market over different time periods.
One Five Ten
Year Years Years
Class S* 13.50% 13.57% 12.91%
Class Y+ 13.23% 13.33% 12.67%
Class L+ 13.15% 13.22% 12.56%
Class A+ 12.78% 12.84% 12.19%
S&P 500(R)Index** 28.58% 24.07% 19.20%
Lipper Balanced Fund
Index** 15.37% 13.71% 13.19%
Lehman Brothers
Government/
Corporate Bond Index** 9.47% 7.30% 9.34%
*Performance for Class S shares of the Fund includes performance of a
predecessor separate investment account of MassMutual for periods prior to
October 3, 1994. For a more detailed discussion, please refer to "Investment
Performance" in this Prospectus.
+Performance for Class Y and Class A shares of
the Fund is based on Class S shares of the 5- and 10-year periods, adjusted to
reflect Class Y and Class A expenses. Performance for Class L shares of the Fund
is based on Class S shares for all periods shown, adjusted to reflect Class L
expenses.
**The S&P 500(R) Index is a widely recognized, unmanaged index of
common stock of the 500 largest capitalized U.S. companies. The Lipper Balanced
Fund Index is an unmanaged, equally weighted index of the 30 largest mutual
Funds within each of the investment objective categories for the Balanced Fund.
The Lehman Brothers Government/Corporate Index is an unmanaged index of major
U.S. government and investment grade corporate bonds with more than one year
remaining until the scheduled payment of principal. These Indices do not incur
expenses and cannot be purchased directly by Investors.
Expense Information
Class S Class Y Class L Class A
Shareholder Fees
(fees paid
directly
from your
investment) None None None None
Annual Fund
Operating
Expenses
(expenses that
are
deducted from
Fund assets) (%
of
average net
assets)
Management Fees .48% .48% .48% .48%
Service (Rule
12b-1) Fees None None None .25%
Other Expenses .10% .26% .41% .41%
Total Annual
Fund Operating
Expenses(1)(2) .58% .74% .89% 1.14%
(1) The expenses in the above table are based on expenses for the fiscal year
ended December 31, 1998, but restated to give effect to a change in the
management fees and administrative fees effective on May 3, 1999.
(2) Employee benefit plans which invest in the Fund through MassMutual
separate investment accounts may pay additional charges under their group
annuity contract or services agreement. Investors who purchase shares
directly from the
-13-
<PAGE>
Fund may also be subject to charges imposed in their administrative
services or other agreement with MassMutual or MassMutual affiliate. None
of these charges are deducted from Fund assets.
Examples
These examples are intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in each share class of the Fund for the time periods
indicated, that your investment earns a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
Class S $59 $185 $321 $712
Class Y $76 $236 $409 $909
Class L $91 $284 $492 $1093
Class A $116 $363 $631 $1400
Since the Fund does not impose any Shareholder Fees, the figures shown would be
the same whether you sold your shares at the end of a period or kept them.
-14-
<PAGE>
MassMutual Core Equity Fund
Investment Objective
This 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.
Principal Investment Strategies and Risks
The Fund invests primarily in dividend paying stocks, securities convertible
into stocks, and other securities, such as warrants and stock rights whose value
is based on stock prices. The Fund's portfolio manager follows a "value"
approach that favors the stocks of companies having below average share price to
company earnings ("P/E") ratios and higher dividend yields relative to their
industry groups. The Fund generally invests in the publicly traded stock of
companies with market capitalizations greater than $2 billion and a history of
operations of five years or more.
The Principal Risks of investing in the Fund are Market Risk, Management Risk
and Leveraging Risk.
These Risks are described beginning on page 26.
Annual Performance*
The bar chart shows the risks of investing in the Fund because the returns vary
from year to year.
[GRAPHIC]
Class S Shares
1989 .....................................................................23.02%
1990 .....................................................................-0.99%
1991 .....................................................................25.50%
1992 .....................................................................10.55%
1993 ..................................................................... 9.55%
1994 ..................................................................... 4.07%
1995 .....................................................................31.54%
1996 .....................................................................20.24%
1997 .....................................................................29.01%
1998 .....................................................................16.74%
During the periods shown above, the highest quarterly return was 16.49% for the
quarter ended December 31, 1998 and the lowest was -11.97% for the quarter ended
September 30, 1990.
Average Annual Total Returns
(for the periods ended December 31, 1998)
The table shows the risks of investing in the Fund because the Fund's returns
may deviate from the broad market over different time periods.
One Five Ten
Year Years Years
Class S* 16.75% 19.91% 16.46%
Class Y+ 16.49% 19.65% 16.21%
Class L+ 16.45% 19.62% 16.17%
Class A+ 15.96% 19.14% 15.71%
S&P 500(R) Index** 28.62% 24.07% 19.20%
* Performance for Class S shares of the Fund includes performance of a
predecessor separate investment account of MassMutual for periods prior to
October 3, 1994. For a more detailed discussion, please refer to "Investment
Performance" in this Prospectus.
+Performance for Class Y and Class A shares of the Fund is based on Class S
shares of the 5- and 10-year periods, adjusted to reflect Class Y and Class A
expenses. Performance for Class L shares of the Fund is based on Class S shares
for all periods shown, adjusted to reflect Class L expenses.
**The S&P 500(R) Index is a widely recognized, unmanaged index of common stocks
of the 500 largest capitalized U.S. companies. The Index does not incur expenses
and cannot be purchased directly by Investors.
-15-
<PAGE>
Expense Information
Class S Class Y Class L Class A
Shareholder Fees
(fees paid
directly
from your
investment) None None None None
Annual Fund
Operating
Expenses
(expenses that
are
deducted from
Fund assets) (%
of
average net
assets)
Management Fees .50% .50% .50% .50%
Service (Rule
12b-1) Fees None None None .25%
Other Expenses .08% .18% .33% .33%
Total Annual
Fund Operating
Expenses(1)(2) .58% .68% .83% 1.08%
(1) The expenses in the above table are based on expenses for the fiscal year
ended December 31, 1998, but restated to give effect to a change in the
management fees and administrative fees effective on May 3, 1999.
(2) Employee benefit plans which invest in the Fund through MassMutual
separate investment accounts may pay additional charges under their group
annuity contract or services agreement. Investors who purchase shares
directly from the Fund may also be subject to charges imposed in their
administrative services or other agreement with MassMutual or MassMutual
affiliate. None of these charges are deducted from Fund assets.
Examples
These examples are intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in each share class of the Fund for the time periods
indicated, that your investment earns a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
Class S $59 $185 $321 $712
Class Y $69 $217 $376 $835
Class L $85 $264 $459 $1019
Class A $110 $344 $597 $1326
Since the Fund does not impose any Shareholder Fees, the figures shown would be
the same whether you sold your shares at the end of a period or kept them.
-16-
<PAGE>
MassMutual Growth Equity Fund
Investment Objective
This Fund seeks long-term growth of capital and future income.
Principal Investment Strategies and Risks
The Fund seeks to achieve its objective by investing its assets, except for
working cash balances, primarily in the common stocks and securities convertible
into common stocks of companies which the investment Sub-Adviser, Massachusetts
Financial Services Company ("MFS"), believes offer better than average prospects
for long-term growth.
The Sub-Adviser uses a bottom-up, as opposed to a top-down, investment style,
which means that securities are selected based upon fundamental analysis
performed by the portfolio manager and the Sub-Adviser's large group of equity
research analysts.
In managing the Fund, MFS seeks to purchase securities of companies which it
considers well-run and poised for growth, particularly companies which
demonstrate:
o a strong franchise, strong cash flows and a recurring revenue stream;
o a strong industry position, where there is potential for high profit
margins and/or substantial barriers to new entry in the industry;
o a strong management with a clearly defined strategy; and
o new products or services.
The Fund may invest up to 30% of its assets in foreign securities, including
companies in emerging markets, and may have exposure to foreign currencies
through its investment in these securities, its direct holdings of foreign
currencies, or through its use of foreign currency exchange contracts for the
purchase or sale of a fixed quantity of foreign currency at a future date.
The Principal Risks of investing in the Fund are Market Risk, Management Risk,
Liquidity Risk, Derivative Risk, Foreign Investment Risk, Currency Risk, Growth
Company Risk and Emerging Markets Risk.
These Risks are described beginning on page 26.
Annual Performance
The Fund began operations May 3, 1999, and therefore has no performance history.
However, there will be risks of investing in the Fund because the returns would
be expected to vary from year to year.
Average Annual Total Returns
Because this Fund is new, there is no table which shows how the Fund's returns
have deviated from the broad market.
-17-
<PAGE>
Expense Information
Class S Class Y Class L Class A
Shareholder Fees
(fees paid
directly
from your
investment) None None None None
Annual Fund
Operating
Expenses
(expenses that
are
deducted from
Fund assets) (% of
average net
assets)
Management Fees .68% .68% .68% .68%
Service (Rule
12b-1) Fees None None None .25%
Other Expenses .10% .16% .31% .31%
Total Annual
Fund Operating
Expenses(1)(2) .78% .84% .99% 1.24%
(1) Other Expenses and Total Annual Fund Operating Expenses are based on
estimated amounts for the first fiscal year of the Fund.
(2) Employee benefit plans which invest in the Fund through MassMutual
separate investment accounts may pay additional charges under their group
annuity contract or services agreement. Investors who purchase shares
directly from the Fund may also be subject to charges imposed in their
administrative services or other agreement with MassMutual or MassMutual
affiliate. None of these charges are deducted from Fund assets.
Examples
These examples are intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in each share class of the Fund for the time periods
indicated, that your investment earns a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years
Class S $80 $249
Class Y $86 $268
Class L $101 $315
Class A $127 $395
Since the Fund does not impose any Shareholder Fees, the figures shown would be
the same whether you sold your shares at the end of a period or kept them.
MFS Prior Performance -- Similar Accounts*
The bar chart illustrates the variability of returns achieved by MFS for its
similar accounts.
[GRAPHIC]
1989 .....................................................................35.66%
1990 .....................................................................-5.04%
1991 .....................................................................47.83%
1992 ..................................................................... 6.44%
1993 .....................................................................14.50%
1994 .....................................................................-6.83%
1995 .....................................................................28.47%
1996 .....................................................................22.98%
1997 .....................................................................48.44%
1998 .....................................................................40.84%
During the periods shown above, the highest quarterly return was 25.97% for the
quarter ended December 31, 1998 and the lowest was -25.19% for the quarter ended
September 30, 1990.
MFS Average Annual Total Returns for Similar Accounts*
(for the periods ended December 31, 1998)
The table compares MFS' investment results for similar accounts to that of an
index measuring the broad market over different time periods.
One Five Ten
Year Years Years
Class S* 40.84% 25.21% 21.72%
Class Y* 40.78% 25.15% 21.66%
Class L* 40.63% 25.00% 21.51%
Class A* 40.38% 24.74% 21.26%
S&P 500 Index** 28.58% 24.07% 19.20%
* Performance shown is a composite of all portfolios managed by MFS with similar
investment objectives and policies and without significant client-imposed
restrictions, adjusted to reflect the fees and expenses of each of the Fund's
share classes. The bar chart is adjusted for Class S Expenses. MFS' composite
includes performance of the Massachusetts Investors Growth Stock Fund, which is
registered under the 1940 Act. The quoted performance does not represent the
historical performance of the MassMutual Growth Equity Fund and should not be
interpreted as being indicative of the future performance of the Fund. For a
more detailed discussion, please refer to "Investment Performance" in this
Prospectus.
**The S&P 500(R) Index is a widely recognized, unmanaged index representative of
the largest capitalized U.S. companies. The Index does not incur expenses and
cannot be purchased directly by Investors.
-18-
<PAGE>
MassMutual Small Cap Value Equity Fund
Investment Objective
This Fund seeks to achieve long-term growth of capital and income by investing
primarily in a diversified portfolio of equity securities of smaller companies.
Principal Investment Strategies and Risks
The Fund invests primarily in stocks, securities convertible into stocks and
other securities, such as warrants and stock rights, whose value is based on
stock prices. The Fund generally invests in publicly traded stocks of companies
with a market capitalization, at the time of purchase, of $750 million or less.
The Principal Risks of investing in the Fund are Market Risk, Management Risk,
Liquidity Risk, Derivative Risk, Leveraging Risk and Smaller Company Risk.
These Risks are described beginning on page 26.
Annual Performance*
The bar chart shows the risks of investing in the Fund because the returns vary
from year to year.
[GRAPHIC]
Class S Shares
1989 .....................................................................18.33%
1990 .....................................................................-5.42%
1991 .....................................................................29.34%
1992 .....................................................................17.10%
1993 .....................................................................14.08%
1994 .....................................................................-4.43%
1995 .....................................................................20.01%
1996 .....................................................................22.82%
1997 .....................................................................36.36%
1998 .....................................................................-9.03%
During the periods shown above, the highest quarterly return was 18.72% for the
quarter ended June 30, 1997 and the lowest was -18.98% for the quarter ended
September 30, 1998.
Average Annual Total Returns
(for the periods ended December 31, 1998)
The table shows the risks of investing in the Fund because the Fund's returns
may deviate from the broad market over different time periods.
One Five Ten
Year Years Years
Class S* -9.02% 11.81% 12.95%
Class Y+ -9.25% 11.57% 12.71%
Class L+ -9.32% 11.51% 12.65%
Class A+ -9.58% 11.10% 12.23%
Russell 2000 Index** -2.55% 11.88% 12.93%
*Performance for Class S shares of the Fund includes performance of a
predecessor separate investment account of MassMutual for periods prior to
October 3, 1994. For a more detailed discussion, please refer to "Investment
Performance" in this Prospectus.
+Performance for Class Y and Class A shares of the Fund is based on Class S
shares of the 5- and 10-year periods, adjusted to reflect Class Y and Class A
expenses. Performance for Class L shares of the Fund is based on Class S shares
for all periods shown, adjusted to reflect Class L expenses.
**The Russell 2000 Index is a widely recognized, unmanaged index representative
of small-capitalized U.S. companies. The Index does not incur expenses and
cannot be purchased directly by Investors.
-19-
<PAGE>
Expense Information
Class S Class Y Class L Class A
Shareholder Fees
(fees paid
directly
from your
investment) None None None None
Annual Fund
Operating
Expenses
(expenses that
are
deducted from
Fund assets) (%
of
average net
assets)
Management Fees .58% .58% .58% .58%
Service (Rule
12b-1) Fees None None None .25%
Other Expenses .10% .20% .35% .35%
Total Annual
Fund Operating
Expenses(1)(2) .68% .78% .93% 1.18%
(1) The expenses in the above table are based on expenses for the fiscal year
ended December 31, 1998, but restated to give effect to a change in the
management fees and administrative fees effective on May 3, 1999.
(2) Employee benefit plans which invest in the Fund through MassMutual
separate investment accounts may pay additional charges under their group
annuity contract or services agreement. Investors who purchase shares
directly from the Fund may also be subject to charges imposed in their
administrative services or other agreement with MassMutual or MassMutual
affiliate. None of these charges are deducted from Fund assets.
Examples
These examples are intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in each share class of the Fund for the time periods
indicated, that your investment earns a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
Class S $69 $217 $376 $835
Class Y $80 $249 $431 $958
Class L $95 $296 $514 $1142
Class A $120 $376 $653 $1449
Since the Fund does not impose any Shareholder Fees, the figures shown would be
the same whether you sold your shares at the end of a period or kept them.
-20-
<PAGE>
MassMutual Mid Cap Growth Equity Fund
Investment Objective
This Fund seeks long-term capital growth.
Principal Investment Strategies and Risks
This Fund seeks to achieve its investment objective by investing primarily in
common stocks and other equity securities having capitalizations in the range of
companies included in the S&P Mid Cap 400 Index. The Sub-Adviser for the Fund,
Miller Anderson & Sherrerd, LLP ("MAS"), focuses particularly on the
expectations of stock analysts and invests the portfolio in stocks of companies
that it believes will report earnings growth exceeding analysts' expectations.
The Fund may invest to a limited extent in foreign equity securities. MAS may
use derivatives in managing the portfolio.
MAS uses a quantitative screen to sort stocks based on revisions to analysts'
earnings predictions. MAS then conducts extensive fundamental research into
those companies with the most attractive earnings revisions. Finally, MAS
evaluates the valuation of the stocks to eliminate from consideration the most
overvalued stocks. MAS also follows a strict sell discipline. The Fund will sell
stocks when their earnings revision scores fall to unacceptable levels,
fundamental research reveals unfavorable trends, or their valuations exceed
levels that are reasonable in relation to the stock's growth prospects.
The Principal Risks of investing in the Fund are Market Risk, Management Risk,
Liquidity Risk, Derivative Risk, Foreign Investment Risk, Smaller Company Risk,
Growth Company Risk, Currency Risk and Emerging Markets Risk.
These Risks are described beginning on page 26.
Annual Performance
The Fund began operations May 3, 1999, and therefore has no performance history.
However, there will be risks of investing in the Fund because the returns would
be expected to vary from year to year.
Average Annual Total Returns
Because this Fund is new, there is no table which shows how the Fund's returns
have deviated from the broad market.
-21-
<PAGE>
Expense Information
Class S Class Y Class L Class A
Shareholder Fees
(fees paid
directly
from your
investment) None None None None
Annual Fund
Operating
Expenses
(expenses that
are
deducted from
Fund assets) (%
of
average net
assets)
Management Fees .70% .70% .70% .70%
Service (Rule
12b-1) Fees None None None .25%
Other Expenses .10% .17% .32% .32%
Total Annual
Fund Operating
Expenses(1)(2) .80% .87% 1.02% 1.27%
(1) Other Expenses and Total Annual Fund Operating Expenses are based on
estimated amounts for the first fiscal year of the Fund.
(2) Employee benefit plans which invest in the Fund through MassMutual
separate investment accounts may pay additional charges under their group
annuity contract or services agreement. Investors who purchase shares
directly from the Fund may also be subject to charges imposed in their
administrative services or other agreement with MassMutual or MassMutual
affiliate. None of these charges are deducted from Fund assets.
Examples
These examples are intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in each share class of the Fund for the time periods
indicated, that your investment earns a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years
Class S $82 $255
Class Y $89 $277
Class L $104 $325
Class A $130 $405
Since the Fund does not impose any Shareholder Fees, the figures shown would be
the same whether you sold your shares at the end of a period or kept them.
MAS Prior Performance -- Similar Accounts*
The bar chart illustrates the variability of returns achieved by MAS for its
similar accounts.
[GRAPHIC]
1989 ..................................................................... N/A
1990 ..................................................................... N/A
1991 .....................................................................59.50%
1992 ..................................................................... 2.71%
1993 .....................................................................18.12%
1994 .....................................................................-5.61%
1995 .....................................................................36.24%
1996 .....................................................................18.69%
1997 .....................................................................33.11%
1998 .....................................................................37.38%
During the periods shown above, the highest quarterly return was 36.02% for the
quarter ended December 31, 1998 and the lowest was -19.80% for the quarter ended
September 30, 1990.
MAS Average Annual Total Returns for Similar Accounts*
(for the periods ended December 31, 1998)
The table compares MAS' investment results for its similar accounts to that of
an index measuring the broad market over different time periods.
One Five Ten
Year Years Years
Class S* 37.38% 22.79% N/A
Class Y* 37.31% 22.72% N/A
Class L* 37.16% 22.57% N/A
Class A* 36.91% 22.31% N/A
Russell 2500 Index** .38% 14.13% 14.61%
* Performance shown is a composite of all portfolios managed by MAS with similar
investment objectives and policies and without significant client imposed
restrictions, adjusted to reflect the fees and expenses of each of the Fund's
share classes. The bar chart is adjusted for Calss S Expenses. MAS' composite
includes performance of the MAS Funds Mid Cap Growth Portfolio, which is
registered under the 1940 Act. The quoted performance does not represent the
historical performance of the MassMutual Mid Cap Growth Fund and should not be
interpreted as being indicative of the future performance of the Fund. For a
more detailed discussion, please refer to "Investment Performance" in this
Prospectus.
**The Russell 2500 Index is an unmanaged index representative of mid-capitalized
U.S. companies. The Index does not incur expenses and cannot be purchased
directly by Investors.
-22-
<PAGE>
MassMutual Small Cap Growth Equity Fund
Investment Objective
This Fund seeks long-term capital appreciation.
Principal Investment Strategies and Risks
The Fund seeks to achieve its objective by investing primarily in common stocks
and equity securities of smaller companies which the managers believe offer
potential for long-term growth. The Fund may maintain cash reserves for
liquidity purposes. The Fund will generally buy companies whose market
capitalization is greater than $100 million, but less than $1.5 billion at the
time of purchase. The Fund is not required to invest in dividend paying stocks,
since current income is not an objective of the Fund. Two Sub-Advisers manage
the Fund, each being responsible for a portion of the portfolio.
The investment process of J.P. Morgan Investment Management Inc. ("J.P. Morgan")
emphasizes: in-depth proprietary research and stock valuation and selection;
insight into companies' real growth potential by forecasting prospects over
periods often up to 5 years; quantifying research results with rankings
according to relative value, and buying undervalued or fairly valued companies
poised for long-term growth; focusing on each company's business strategy and
competitive environment; and high growth sectors such as technology, health care
and consumer services.
Waddell & Reed Investment Management Company ("Waddell & Reed") uses a bottom-up
process, generally emphasizing long-term growth potential and superior financial
characteristics, such as: annual revenue and earnings growth rate of 25%+,
pre-tax margins of 20%+, and debt-free capital structure. Generally, companies
also are considered which are strong niche players with a defensible market
position, have active involvement of the founder-entrepreneur, and demonstrate
commitment to their employees, customers, suppliers and shareholders.
Waddell & Reed buys companies with an anticipated three year holding period, and
therefore expects this portion of the Fund's portfolio to typically have lower
than 50% annual turnover.
The Principal Risks of investing in the Fund are Market Risk, Management Risk,
Liquidity Risk, Derivative Risk, Foreign Investment Risk, Smaller Company Risk,
Growth Company Risk, Currency Risk and Emerging Markets Risk.
These Risks are described beginning on page 26.
Annual Performance
The Fund began operations May 3, 1999, and therefore has no performance history.
However, there will be risks of investing in the Fund because the returns would
be expected to vary from year to year.
Average Annual Total Returns
Because this Fund is new, there is no table which shows how the Fund's returns
have deviated from the broad market.
-23-
<PAGE>
Expense Information
Class S Class Y Class L Class A
Shareholder Fees
(fees paid
directly
from your
investment) None None None None
Annual Fund
Operating
Expenses
(expenses that
are
deducted from
Fund assets) (% of
average net
assets)
Management Fees .82% .82% .82% .82%
Service (Rule
12b-1) Fees None None None .25%
Other Expenses .13% .27% .42% .42%
Total Annual
Fund Operating
Expenses(1)(2) .95% 1.09% 1.24% 1.49%
(1) Other Expenses and Total Annual Fund Operating Expenses are based on
estimated amounts for the first fiscal year of the Fund.
(2) Employee benefit plans which invest in the Fund through MassMutual
separate investment accounts may pay additional charges under their group
annuity contract or services agreement. Investors who purchase shares
directly from the Fund may also be subject to charges imposed in their
administrative services or other agreement with MassMutual or MassMutual
affiliate. None of these charges are deducted from Fund assets.
Examples
These examples are intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in each share class of the Fund for the time periods
indicated, that your investment earns a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years
Class S $97 $303
Class Y $111 $347
Class L $127 $395
Class A $152 $475
Since the Fund does not impose any Shareholder Fees, the figures shown would be
the same whether you sold your shares at the end of a period or kept them.
J.P. Morgan and Waddell & Reed Prior Performance -- Similar Accounts*
The bar chart illustrates the variability of returns achieved by each
Sub-Adviser and how they have differed.
[GRAPHIC]
1989 ..................................................................... N/A
1989 ..................................................................... N/A
1990 ..................................................................... 2.39%
1990 ..................................................................... N/A
1991 .....................................................................89.51%
1991 ..................................................................... N/A
1992 ..................................................................... 4.80%
1992 ..................................................................... N/A
1993 .....................................................................11.40%
1993 ..................................................................... N/A
1994 .....................................................................12.25%
1994 ..................................................................... N/A
1995 .....................................................................34.38%
1995 .....................................................................42.29%
1996 ..................................................................... 6.87%
1996 .....................................................................24.39%
1997 .....................................................................37.11%
1997 .....................................................................29.24%
1998 .....................................................................55.13%
1998 ..................................................................... 1.19%
Highest Quarter Lowest Quarter
J.P. Morgan 24.02%, 4Q 1998 -21.94%, 3Q 1998
Waddell & Reed 36.98%, 4Q 1998 -18.05%, 3Q 1990
J.P. Morgan and Waddell & Reed Average
Annual Total Returns for Similar Accounts*
(for the periods ended December 31, 1998)
The table compares each Sub-Adviser's investment results for its similar
accounts to an index measuring the broad market over different time periods.
One Five Ten
Year Years Years
J. P. Morgan
Class S* 1.19% N/A N/A
Class Y* 1.05% N/A N/A
Class L* .90% N/A N/A
Class A* .65% N/A N/A
Waddell & Reed
Class S* 55.13% 27.95% N/A
Class Y* 54.99% 27.80% N/A
Class L* 54.84% 27.65% N/A
Class A* 54.59% 27.40% N/A
Russell 2000 Growth
Index** -2.55% 11.88% 12.93%
*Performance shown is the composite of all portfolios managed by each of the
Fund's Sub-Advisers with similar investment objectives and policies and without
significant client-imposed restrictions, adjusted to reflect the fees and
expenses of each of the Fund's share classes. The bar charts are adjusted for
Class S expenses. The quoted performance does not represent the historical
performance of the MassMutual Small Cap Growth Equity
Fund
-24-
<PAGE>
and should not be interpreted as being indicative of the future performance
of the Fund. For a more detailed discussion, please refer to "Investment
Performance" in this Prospectus.
**The Russell 2000 Index is a widely recognized, unmanaged index representative
of small-capitalized, U.S. companies. The Index does not incur expenses and
cannot be purchased directly by Investors.
-25-
<PAGE>
MassMutual International Equity Fund
Investment Objective
This 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.
The Fund seeks to achieve its objective by having at least 75% of its total
assets invested in stocks traded primarily in foreign markets, including markets
in Europe, Latin America and Asia. The Fund's Sub-Adviser, HarbourView Asset
Management Corporation ("HarbourView") focuses on well-positioned, well-managed
businesses that have strong revenue growth, sustainable profit margins, capital
efficiency and/or business integrity. HarbourView also considers the
macroeconomic outlook for various regional economies. The Fund tends to favor
companies involved in the following businesses:
o Capital Market Development;
o Telecommunications/Media;
o Efficiency Enhancing Technologies and Services;
o Healthcare and Biotechnology;
o Infrastructure Spending;
o Emerging Consumer Markets;
o Corporate Restructuring; and
o Natural Resources.
The Principal Risks of investing in the Fund are Market Risk, Management Risk,
Liquidity Risk, Derivative Risk, Foreign Investment Risk, Currency Risk,
Leveraging Risk and Emerging Markets Risk.
These Risks are described beginning on page 26.
Annual Performance*
The bar chart shows the risks of investing in the Fund because the returns vary
from year to year.
[GRAPHIC]
Class S Shares
1989 ..................................................................... N/A
1990 ..................................................................... N/A
1991 ..................................................................... N/A
1992 .....................................................................-2.37%
1993 .....................................................................59.84%
1994 .....................................................................-4.96%
1995 ..................................................................... 5.13%
1996 .....................................................................18.51%
1997 .....................................................................15.79%
1998 ..................................................................... 5.05%
During the periods shown above, the highest quarterly return was 21.33% for the
quarter ended December 31, 1993 and the lowest was -21.54% for the quarter ended
September 30, 1998.
Average Annual Total Returns
(for the periods ended December 31, 1998)
The table shows the risks of investing in the Fund because the Fund's returns
may deviate from the broad market over different time periods.
One Five Ten
Year Years Years
Class S* 5.05% 7.57% N/A
Class Y+ 4.84% 7.35% N/A
Class L+ 4.83% 7.35% N/A
Class A+ 4.40% 6.88% N/A
MSCI EAFE** 19.85% 9.16% 5.53%
* Performance for Class S shares of the Fund includes performance of a
predecessor separate investment account of MassMutual for periods prior to
October 3, 1994. For a more detailed discussion, please refer to "Investment
Performance" in this Prospectus.
+Performance for Class Y and Class A shares of the Fund is based on Class S
shares for the 5- and 10-year periods, adjusted to reflect Class Y and Class A
expenses. Performance for Class L shares of the Fund is based on Class S shares
for all periods shown, adjusted to reflect Class L expenses.
**MSCI EAFE is a widely recognized, unmanaged index representative of foreign
securities in the major non-U.S. markets of Europe, Australia and the Far East.
The Index does not incur expenses and cannot be purchased
directly by Investors.
-26-
<PAGE>
Expense Information
Class S Class Y Class L Class A
Shareholder Fees
(fees paid
directly
from your
investment) None None None None
Annual Fund
Operating
Expenses
(expenses that
are
deducted from
Fund assets) (%
of
average net
assets)
Management Fees .85% .85% .85% .85%
Service (Rule
12b-1) Fees None None None .25%
Other Expenses .23% .26% .41% .41%
Total Annual
Fund Operating
Expenses(1)(2) 1.08% 1.11% 1.26% 1.51%
(1) The expenses in the above table are based on expenses for the fiscal year
ended December 31, 1998, but restated to give effect to a change in
administrative fees effective on May 3, 1999.
(2) Employee benefit plans which invest in the Fund through MassMutual
separate investment accounts may pay additional charges under their group
annuity contract or services agreement. Investors who purchase shares
directly from the Fund may also be subject to charges imposed in their
administrative services or other agreement with MassMutual or MassMutual
affiliate. None of these charges are deducted from Fund assets.
Examples
These examples are intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in each share class of the Fund for the time periods
indicated, that your investment earns a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
Class S $110 $344 $597 $1326
Class Y $113 $354 $614 $1363
Class L $129 $401 $697 $1547
Class A $154 $481 $835 $1854
Since the Fund does not impose any Shareholder Fees, the figures shown would be
the same whether you sold your shares at the end of a period or kept them.
-27-
<PAGE>
Summary of Principal Risks
The value of your investment in a Fund changes with the values of the
investments in a Fund's portfolio. Many factors can affect those values. Factors
that may affect a particular Fund's portfolio as a whole are called "principal
risks". They are summarized in this section. The chart at the end of this
section displays similar information. All Funds could be subject to additional
principal risks because the types of investments made by each Fund can change
over time. Although the Funds strive to reach their stated goals, they cannot
offer guaranteed results. You have the potential to make money in these Funds,
but you can also lose money.
o Market Risk - Prime/Bond Funds
All the Funds are subject to market risk, which is the general risk of
unfavorable market-induced changes in the value of a security. The Prime
Fund, the Short-Term Bond Fund, the Core Bond Fund, the Balanced Fund's
Core Bond Segment and the Diversified Bond Fund are subject to market risk
because they invest some or all of their assets in debt securities. Debt
securities are obligations of an issuer to pay principal and/or interest
at a specified interest rate over a predetermined period. If interest
rates rise close to or higher than the specified rate, those securities
are likely to be worth less and the value of the Funds will likely fall.
If interest rates fall, most securities held by Funds paying higher rates
of interest will likely be worth more, and the Fund's value will likely
increase.
This kind of market risk, also called interest rate risk, is generally
greater for debt securities with longer maturities and portfolios with
longer Durations. Even the highest quality debt securities are subject to
interest rate risk and market risk is generally greater for lower-rated
securities or comparable unrated securities.
o Market Risk - Equity Funds
The Core Equity Fund, the Small Cap Value Equity Fund, the International
Equity Fund, the Core Equity Segment of the Balanced Fund, the Growth
Equity Fund, the Mid Cap Growth Equity Fund and the Small Cap Growth
Equity Fund are subject to market risk. Market risk arises since stock
prices can fall for any number of factors, including general economic and
market conditions, prospects of the securities issuer, changing interest
rates, and real or perceived economic and competitive industry conditions.
These Funds maintain substantial exposure to equities and do not attempt
to time the market. Because of this exposure, the possibility that stock
market prices in general will decline over short or even extended periods
subjects these Funds to unpredictable declines in the value of their
shares, as well as periods of poor performance. Market risk also includes
specific risks affecting the companies whose shares are purchased by the
Fund, such as management performance, financial leverage, industry
problems and reduced demand for the issuer's goods or services.
o Credit Risk. All the Funds are subject to credit risk. This is the risk
that the issuer or the guarantor of a debt security, or the counterparty
to a derivatives contract or securities loan, will be unable or unwilling
to make timely principal and/or interest payments, or to otherwise honor
its obligations. There are varying degrees of credit risk, which are often
reflected in credit ratings. Credit risk is particularly significant for
the Prime Fund, the Core Bond Fund, the Diversified Bond Fund and the
Prime Segment and the Core Bond Segment of the Balanced Fund to the extent
they invest in below investment grade
Terms appearing in bold type are discussed in greater detail under "Appendix-
Additional Investment Policies and Risk Considerations". Those sections also
include more information about the Funds, their investments and the related
risks.
-28-
<PAGE>
securities. These debt securities and similar unrated securities, which
are commonly known as "junk bonds," either have speculative elements or
are predominantly speculative investments. The Core Bond Fund, the Core
Bond Segment of the Balanced Fund and the Diversified Bond Fund invest in
foreign debt securities and, accordingly, are also subject to increased
credit risk because of the difficulties of requiring foreign entities,
including issuers of sovereign debt, to honor their contractual
commitments, and because a number of foreign governments and other issuers
are already in default.
o Management Risk. Each Fund is subject to management risk because it is an
actively managed investment portfolio. Management risk is the chance that
poor security selection will cause the Fund to underperform other Funds
with similar investment objectives. The Funds' investment advisers and
Sub-Advisers manage the Funds according to the traditional methods of
active investment management, which involves the buying and selling of
securities based upon economic, financial and market analysis and
investment judgment. The Funds' investment advisers and Sub-Advisers apply
their investment techniques and risk analyses in making investment
decisions for the Funds, but there can be no guarantee that they will
produce the desired result.
o Prepayment Risk. Prepayment risk is the risk that principal will be repaid
at a different rate than anticipated, causing the return on
mortgage-backed securities to be less than expected when purchased. The
interest rate risk described above may be compounded for the Short-Term
Bond Fund, the Core Bond Fund, the Core Bond Segment of the Balanced Fund
and the Diversified Bond Fund to the extent that these Funds invest to a
material extent in mortgage-related or other asset-backed securities that
may be prepaid. These securities have variable maturities that tend to
lengthen when interest rates are rising, which is the least desirable
time. These Funds are also subject to reinvestment risk, which is the
chance that cash flows from securities will be reinvested at lower rates
if interest rates fall.
o Liquidity Risk. Liquidity risk exists when particular investments are
difficult to sell. A Fund may not be able to sell these illiquid
securities at the best prices. Investments in derivatives, foreign
investments and securities having small market capitalization, substantial
market and/or credit risk tend to involve greater liquidity risk.
Accordingly, the Core Bond Fund, the Mid Cap Growth Equity Fund, the
Diversified Bond Fund, the Growth Equity Fund, the Small Cap Value Equity
Fund, the Small Cap Growth Equity Fund, the International Equity Fund and
the Core Bond Segment of the Balanced Fund may be subject to liquidity
risk.
o Derivatives Risk. All Funds may use derivatives, which are financial
contracts whose value depends on, or is derived from, the value of an
underlying asset, interest rate or index. The Funds will sometimes use
derivatives as part of a strategy designed to reduce other risks and
sometimes will use derivatives for leverage, which increases opportunities
for gain but also involves greater risk. In addition to other risks such
as the credit risk of the counterparty, derivatives involve the risk of
mispricing or improper valuation and the risk that changes in the value of
the derivative may not correlate perfectly with relevant assets, rates and
indices. In addition, a Fund's use of derivatives may affect the timing
and amount of taxes payable by shareholders.
o Foreign Investment Risk. Funds investing in foreign securities may
experience more rapid and extreme changes in value than Funds which invest
solely in U.S. companies. This is because the securities markets of many
foreign countries are relatively small, with a limited number of companies
representing a small number of industries. In addition, foreign companies
are usually not subject to the same degree of regulation as U.S.
companies. Reporting, accounting and auditing standards
-29-
<PAGE>
of foreign countries differ, in some cases significantly, from U.S.
standards. Also, nationalization, expropriation or confiscatory taxation,
currency blockage, political changes or diplomatic developments could
adversely affect a Fund's non-U.S. investments. In the event of
nationalization, expropriation or other confiscation, a Fund could lose
its entire investment. Economic downturns in certain regions, such as
Southeast Asia, can also adversely affect other countries whose economies
appear to be unrelated. The Core Bond Fund, the International Equity Fund,
the Diversified Bond Fund, the Core Bond Segment of the Balanced Fund, the
Growth Equity Fund, the Mid Cap Growth Equity Fund and the Small Cap
Growth Equity Fund are subject to foreign investment risk.
These Funds may also invest in foreign securities known as American
Depositary Receipts ("ADRs"), Global Depositary Receipts ("GDRs") and
European Depositary Receipts ("EDRs"). ADRs, GDRs and EDRs represent
securities or a pool of securities of an underlying foreign or, in the
case of GDRs and EDRs, U.S. or non-U.S. issuer. They are subject to many
of the same risks as foreign securities. ADRs, GDRs and EDRs are more
completely described in the Statement of Additional Information.
o Emerging Markets Risk. The Growth Equity Fund, the Mid Cap Growth Equity
Fund, the Small Cap Growth Equity Fund and the International Equity Fund
may invest in emerging markets, subject to the applicable restrictions on
foreign investments, when the Sub-Adviser deems those investments are
consistent with the Fund's investment objectives and policies. Emerging
markets are generally considered to be the countries having "emerging
market economies" based on factors such as the country's foreign currency
debt rating, its political and economic stability, the development of its
financial and capital markets and the level of its economy. Investing in
foreign securities in emerging markets involves special risks, including
less liquidity and more price volatility than securities of comparable
domestic issuers or in established foreign markets. Emerging markets also
may be concentrated towards particular industries. There may also be
different clearing and settlement procedures, or an inability to handle
large volumes of transactions. These could result in settlement delays and
temporary periods when a portion of a Fund's assets are not invested, or a
loss in value due to illiquidity.
o Currency Risk. The Core Bond Fund, the International Equity Fund, the
Diversified Bond Fund, the Core Bond Segment of the Balanced Fund, the
Growth Equity Fund, the Mid Cap Growth Equity Fund and the Small Cap
Growth Equity Fund are subject to currency risk to the extent that they
invest in securities of foreign companies that are traded in, and receive
revenues in, foreign currencies. Currency risk is caused by uncertainty in
foreign currency exchange rates. Fluctuations in the value of the U.S.
dollar relative to foreign currencies may enhance or diminish returns that
a U.S. investor would receive on foreign investments. The Funds may, but
will not necessarily, engage in foreign currency transactions in order to
protect against fluctuations in the value of holdings denominated in other
currencies. Those currencies can decline in value relative to the U.S.
Dollar, or, in the case of hedging positions, the U.S. Dollar can decline
in value relative to the currency hedged. A Fund's investment in foreign
currencies may increase the amount of ordinary income recognized by the
Fund.
o Smaller Company Risk. Market risk and liquidity risk are particularly
pronounced for stocks of smaller companies. These companies may have
limited product lines, markets or financial resources or they may depend
on a few key employees. The Small Cap Value Equity Fund, Mid Cap Growth
Equity Fund and Small Cap Growth Equity Fund generally have the greatest
exposure to this risk.
o Growth Company Risk. Market risk is also particularly pronounced for
"growth" companies. The prices of growth company
-30-
<PAGE>
securities may fall to a greater extent than the overall equity markets
(represented by the S&P 500 Index) due to changing economic, political or
market factors. Growth company securities tend to be more volatile in
terms of price swings and trading volume.
o Leveraging Risk. When a Fund borrows money or otherwise leverages its
portfolio, the value of an investment in that Fund will be more volatile
and all other risks will tend to be compounded. All of the Funds may take
on leveraging risk by investing collateral from securities loans, by using
derivatives and by borrowing money to repurchase shares or to meet
redemption requests.
-31-
<PAGE>
Principal Risks by Fund
The following chart summarizes the Principal Risks of each Fund. A particular
Fund may, however, still have risks even if not marked.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Manage- Pre- Liq- Der-
Credit ment Payment uidity ivative
Fund Market Risk Risk Risk Risk Risk
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Prime Fund X X X X
Short-Term Bond Fund X X X X X
Core Bond Fund X X X X X X
Diversified Bond Fund X X X X X X
Balanced Fund X X X X X X
Core Equity Fund X X X X
Growth Equity Fund X X X X X
Small Cap Value Equity
Fund X X X X X
Mid Cap Growth Equity Fund X X X X X
Small Cap Growth Equity
Fund X X X X X
International Equity Fund X X X X X
</TABLE>
-32-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Foreign
Invest- Lever- Smaller Growth Emerging
ment Currency aging Company Company Markets
Fund Risk Risk Risk Risk Risk Risk
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Prime Fund X
Short-Term Bond Fund X
Core Bond Fund X X X
Diversified Bond Fund X X X
Balanced Fund X X X
Core Equity Fund X
Growth Equity Fund X X X X X
Small Cap Value Equity
Fund X X
Mid Cap Growth Equity Fund X X X X X X
Small Cap Growth Equity
Fund X X X X X X
International Equity Fund X X X X
</TABLE>
-33-
<PAGE>
About the Investment Advisers and Sub-Advisers
MassMutual is the Funds' investment adviser and is responsible for providing all
necessary investment management and administrative services. Founded in 1851,
MassMutual is a mutual life insurance company that provides a broad range of
insurance, money management, retirement and asset accumulation products and
services for individuals and businesses. MassMutual, together with its
subsidiaries, has assets of $67 billion and assets under management in excess of
$176 billion. MassMutual contracts with its subsidiaries, David L. Babson and
Company, Incorporated and HarbourView Asset Management Corporation to help
manage certain Funds. In 1998, MassMutual was paid an investment management fee
based on a percentage of its average daily net assets as follows: .45% for the
Prime Fund, the Short-Term Bond Fund, the Core Bond Fund, the Balanced Fund and
the Core Equity Fund; .55% for the Small Cap Value Equity Fund; and .85% for the
International Equity Fund. The current investment management fee paid by each
Fund to MassMutual is identified under "Expense Information" for each Fund. The
Funds also pay MassMutual an administrative and shareholder services fee at an
annual rate based on a percentage of their average daily net assets for the
applicable class of shares. In 1998, the fee ranges for each share class of
those funds were .0774% to .0777% for Class S shares; .0823% to .2875% for Class
Y shares; and .4752% to .4875% for Class A shares. At the date of this
Prospectus, the fee ranges for each share class of all Funds is .0675% to .1232%
for Class S shares; .1432% to .2575% for Class Y shares; .2932% to .4075% for
Class L shares; and .2932% to .4075% for Class A shares. There were no Class L
shares offered for sale in 1998. The Diversified Bond Fund, the Growth Equity
Fund, the Mid Cap Growth Equity Fund and the Small Cap Growth Equity Fund were
not in operation in 1998.
Mary Wilson Kibbe_________________________________________________________
Principally responsible for the day-to-day management of the Prime Fund,
the Core Bond Fund, the Prime and Core Bond Segments of the Balanced Fund
and the Diversified Bond Fund. She has managed these Funds since their
inception. She has been associated with MassMutual since 1982 and is
responsible for overseeing all public fixed income trading for MassMutual
and its insurance company subsidiaries.
Ronald Desautels__________________________________________________________
Principally responsible for the day-to-day management of the Short-Term
Bond Fund. He has managed the Fund since its inception. He has 22 years of
investment experience and has been associated with MassMutual since 1989.
David L. Babson and Company Incorporated manages the investments of the Core
Equity Fund, the Small Cap Value Equity Fund and the Core Equity Segment of the
Balanced Fund. David L. Babson has provided investment advice to individual and
institutional investors for more than 50 years and manages more than $21
billion.
Walter T. McCormick_______________________________________________________
Principally responsible for the day-to-day management of the Core Equity
Fund and the Core Equity Segment of the Balanced Fund. Mr. McCormick, who
has 14 years of investment experience, joined David L. Babson in June,
1998. He began managing these Funds in July 1998. Prior to that, he
managed equity portfolios for Keystone Investments, Inc.
George M. Ulrich__________________________________________________________
Principally responsible for the day-to-day management of the Small Cap
Value Equity Fund. He has managed the Fund since its inception and has 32
years of investment experience. He joined David L. Babson in 1996 and has
been associated with the MassMutual organization as a portfolio manager
since 1983.
-34-
<PAGE>
HarbourView Asset Management Corporation manages the investments of the
International Equity Fund. HarbourView Asset Management is a subsidiary of
OppenheimerFunds, Inc., which together with its subsidiaries, manages mutual
Funds with assets of more than $99 billion.
George Evans______________________________________________________________
Primarily responsible for the day-to-day management of the International
Equity Fund. Mr. Evans, has managed the Fund since its inception. He has
been an officer and portfolio manager for OppenheimerFunds for the past
five years, and prior to that was an international equities portfolio
manager/analyst for Brown Brothers, Harriman & Co.
William Wilby_____________________________________________________________
A HarbourView investment professional, Mr. Wilby assists George Evans in
managing the International Equity Fund. He is a senior vice president of
Oppenheimer Funds, Inc. and has been a portfolio manager for
OppenheimerFunds for more than five years.
Massachusetts Financial Services Company manages the investments of the Growth
Equity Fund. MFS has approximately $100 billion in assets under management. MFS
is an indirect, wholly-owned subsidiary of Sun Life Assurance Company of Canada.
Stephen Pesek ____________________________________________________________
Primarily responsible for the day-to-day management of the portfolio of
the Growth Equity Fund. Mr. Pesek has been a portfolio manager with MFS
since 1994. Mr. Pesek is a vice president of MFS and manages other
portfolios with similar investment objectives to the Fund.
Miller Anderson & Sherrerd, LLP manages the investments of the Mid Cap Growth
Equity Fund. Miller Anderson & Sherrerd, LLP ("MAS"), a Pennsylvania limited
liability partnership founded in 1969, is a wholly-owned indirect subsidiary of
Morgan Stanley Dean Witter & Co., and a division of Morgan Stanley Dean Witter
Investment Management. As of December 31, 1998, Morgan Stanley Dean Witter
Investment Management had in excess of $163 billion in assets under management.
Arden Armstrong___________________________________________________________
Primarily responsible for the day-to-day management of the portfolio of
the Mid Cap Growth Equity Fund. Ms. Armstrong, a managing director of
Morgan Stanley & Co., Incorporated, joined Miller Anderson & Sherrerd, LLP
in 1986. She joined the Mid Cap Growth management team in 1990.
David P. Chu______________________________________________________________
A vice president of Morgan Stanley Dean Witter & Co., Mr. Chu assists Ms.
Armstrong in the day-to-day management of the Mid Cap Growth Equity Fund.
Mr. Chu joined Miller Anderson & Sherrerd, LLP and the Mid Cap Growth
management team in 1998. He served as senior equity analyst from 1992 to
1997 and as co-portfolio manager in 1997 for NationsBank and its
subsidiary TradeStreet Investment Associates.
-35-
<PAGE>
J.P. Morgan Investment Management Inc. manages a portion of the portfolio of the
Small Cap Growth Equity Fund. J.P. Morgan manages over $300 billion in assets,
and $65 billion in U.S. equity assets.
Candice Eggerss __________________________________________________________
Primarily responsible for the day-to-day management of the portfolio of
the Small Cap Growth Equity Fund. Ms. Eggerss has been with J.P. Morgan
since May of 1996 as a member of the U.S. small company portfolio
management team, and from June of 1993 to May of 1996 held a similar
position with Weiss, Peck and Greer. Ms. Eggerss is a vice president of
J.P. Morgan and manages other portfolios for J.P. Morgan with similar
investment objectives to the Fund.
Saira Malik ______________________________________________________________
A J.P. Morgan professional, Ms. Malik assists Ms. Eggerss with the
day-to-day management of the portfolio of the Small Cap Growth Equity
Fund. Ms. Malik has been with J.P. Morgan since July of 1995 as a small
company equity analyst and portfolio manager after graduating from the
University of Wisconsin with an M.S. in finance. Ms. Malik is a vice
president of J.P. Morgan and manages or assists with managing other
portfolios for J.P. Morgan with similar investment objectives to the Fund.
Waddell & Reed Investment Management Company manages a portion of the portfolio
of the Small Cap Growth Equity Fund. Waddell & Reed has approximately $27
billion in assets under management, including approximately $3.4 billion in
institutional assets.
Mark Seferovich, CFA______________________________________________________
Primarily responsible for the day-to-day management of the portfolio of
the Small Cap Growth Equity Fund. Mr. Seferovich is a senior vice
president of Waddell & Reed and the lead portfolio manager of its small
cap style. He joined Waddell & Reed in February 1989 as manager of small
capitalization growth equity funds. From 1982 to 1988 he was a portfolio
manager for Security Management Company and prior to that was security
analyst/portfolio manager with Reimer & Koger Associates.
Grant Sarris______________________________________________________________
A vice president and portfolio manager for Waddell & Reed, Mr. Sarris
assists Mr. Seferovich in the day-to-day management of the portfolio of
the Small Cap Growth Equity Fund. He joined Waddell & Reed in 1991 as an
investment analyst. In 1996 he was named assistant portfolio manager of
the small capitalization growth equity style. Prior to joining Waddell &
Reed, he was an intern with Shin-Nihon Kohan, Ltd. in Tokyo.
-36-
<PAGE>
About the Classes of Shares - Multiple Class Information
The Funds offers four Classes of shares: Class S, Class Y, Class L and Class A.
The shares offered by this Prospectus are Class S, Class Y, Class L and Class A
shares. None of the Classes of shares has up-front or deferred sales charges.
Only Class A shares charge a service (Rule 12b-1) fee.
Class S, Class Y and Class L shares are primarily offered to institutional
investors through institutional distribution channels, such as
employer-sponsored retirements plans or through broker-dealers, financial
institutions or insurance companies. Class A shares are primarily offered
through retail distribution channels, such as broker-dealers or financial
institutions. The different Classes have different fees, expenses and/or minimum
investor size requirements. The difference in the fee structures among the
Classes is the result of their separate arrangements for shareholder and
distribution services and not the result of any difference in amounts charged by
the Adviser for investment advisory services. Accordingly, investment
advisory expenses do not vary by Class. Different fees and expenses of a Class
will affect performance of that Class. For additional information, call us at
1-888-743-5274 or contact a sales representative or financial intermediary who
offer the Classes.
Except as described below, all Classes of shares of a Fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences among the various Classes are: (a) each Class
may be subject to different expenses specific to that Class; (b) each Class has
a different Class designation; (c) each Class has exclusive voting rights with
respect to matters solely affecting such Class; (d) each Class offered in
connection with a 12b-1 Plan will bear the expense of the payments that would be
made pursuant to that 12b-1 Plan, and only that Class will be entitled to vote
on matters pertaining to that 12b-1 Plan, and only that Class will be entitled
to vote on matters pertaining to that 12b-1 Plan; and (e) each Class will have
different exchange privileges.
Each Class of a Fund's shares invests in the same portfolio of securities.
Because each Class will have different expenses, they will likely have different
share prices. All Classes of shares are available for purchase by insurance
company separate investment accounts. Each Class of shares of the Funds may also
be purchased by the following Eligible Purchasers:
Class S Shares
Eligible Purchasers. Class S shares may be purchased by:
o Qualified plans under Section 401(a) of the Internal Revenue Code of 1986
(the "Code"), Code Section 403(b) plans, Code Section 457 plans and other
retirement plans, where plan assets of the employer generally or are
expected to exceed $100 million;
o Registered mutual funds; and
o Other institutional investors with assets generally in excess of $100
million.
These Eligible Purchasers must have an agreement with MassMutual or a MassMutual
affiliate to purchase Class S Shares.
Shareholder and Distribution Fees. Class S shares of each Fund are purchased
directly from the Trust without a front-end sales charge. Therefore, 100% of an
Investor's money is invested in the Fund or Funds of its choice. Class S shares
do not have deferred sales charges or any Rule 12b-1 distribution or services
fees.
Class Y Shares
Eligible Purchasers. Class Y shares may be purchased by:
o Non-qualified deferred compensation plans;
o Registered mutual funds;
o Qualified plans under Code Section 401(a), Code Section 403(b) plans, Code
Section 457 plans and other retirement plans, where plan assets of the
employer generally or are
-37-
<PAGE>
expected to exceed $5 million; and
o Other institutional investors with assets generally in excess of $5
million.
These Eligible Purchasers must have an agreement with MassMutual or a MassMutual
affiliate to purchase Class Y Shares.
Shareholder and Distribution Fees. The Class Y shares are 100% no load, so you
pay no fees (sales loads) when you buy or sell Class Y shares. Therefore, all of
your money is invested in the Fund or Funds of your choice. Class Y shares do
not have any Rule 12b-1 distribution or service fees.
Class L Shares
Eligible Purchasers. Class L shares may be purchased by:
o Non-qualified deferred compensation plans;
o Qualified plans under Code Section 401(a), Code Section 403(b) plans, Code
Section 457 plans, and other retirement plans, where plan assets of the
employer generally or are expected to exceed $1 million; and
o Other institutional investors with assets generally in excess of $1
million.
These Eligible Purchasers must have an agreement with MassMutual or a MassMutual
affiliate to purchase Class L Shares. Class L shares are generally sold in
connection with the use of an intermediary performing third party administration
and/or other shareholder services.
Shareholder and Distribution Fees. Class L shares of each Fund are purchased
directly from the Trust without a front-end sales charge. Therefore, 100% of an
Investor's money is invested in the Fund or Funds of its choice. Class L shares
do not have deferred sales charges or any Rule 12b-1 distribution or service
fees.
Class A Shares
Eligible Purchasers. Class A shares may be purchased by:
o Qualified plans under Code Section 401(a), Code Section 403(b) plans, Code
Section 457 plans and other retirement plans;
o Individual retirement accounts described in Code Section 408; and
o Other institutional investors, nonqualified deferred compensation plans,
and voluntary employees' beneficiary associations described in Code
Section 501(c)(9).
These Eligible Purchasers must have an agreement with MassMutual or a MassMutual
affiliate to purchase Class A Shares. There is no minimum plan or institutional
investor size to purchase Class A shares.
Class A shares may be offered to present or former officers, directors,
trustees, and employees (and their spouses, parents, children and siblings) of
the Funds, MassMutual and its affiliates and retirement plans established by
them for their employees.
Service (Rule 12b-1) Fees. Class A shares are sold at net asset value per share
without an initial sales charge. Therefore, 100% of an Investor's money is
invested in the Fund or Funds of its choice. The Funds have adopted Rule 12b-1
Plans that allow the Class A shares of each Fund to pay a service fee at the
annual rate of .25% of the Fund's average daily net assets attributable to the
Class A shares. The Funds pay this service fee to MassMutual, and MassMutual may
pay all or a portion of the fee to brokers and other financial intermediaries,
including the Funds' Distributor, for personal services rendered to Class A
shareholders and/or maintenance of Class A shareholder accounts.
Because these fees are paid out of a Fund's assets on an on-going basis, over
time these fees will increase the costs of your investment in the Class A shares
and may cost you more than other types of sales charges.
-38-
<PAGE>
Compensation to Intermediaries
MassMutual may directly, or through the Distributor, pay cash compensation to
persons who provide services on behalf of Class L or Class Y shares. This
compensation is paid by MassMutual, not from Fund assets. MassMutual may pay
intermediaries up to .15% of the amount invested for Class L shares, as
compensation for performing third party administration and/or other shareholder
services. MassMutual may also pay intermediaries up to .15% of the amount
invested for the servicing of Class Y shares. The payments on account of Class L
or Class Y shares will be based on criteria established by MassMutual.
Compensation paid to brokers or other intermediaries for providing services on
account of Class A shares is described above under "Service (Rule 12b-1) Fees".
Where Class L or Class Y shares are sold in connection with nonqualified
deferred compensation plans where the employer sponsor has an administrative
services agreement with MassMutual or its affiliate, additional compensation may
be paid as determined by MassMutual from time to time according to established
criteria. As of the date of this Prospectus, aggregate annual compensation in
such cases does not exceed .50%. Annual compensation paid on account of Class A,
Class L or Class Y shares will be paid quarterly, in arrears. Each Fund may also
pay brokerage commissions to affiliates of its Sub-Adviser.
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.
-39-
<PAGE>
Investing In The Funds
Buying, Redeeming and Exchanging Shares
The Funds sell their shares at a price equal to their net asset value (NAV). The
Funds' generally determine their NAV at 4:00 p.m. Eastern standard time every
day the New York Stock Exchange is open. Your purchase order will be priced at
the next net asset value calculated after the transfer agent accepts your
purchase order. The Funds will suspend selling their shares during any period
when the determination of NAV is suspended. The Funds can reject any purchase
order and can suspend purchases if it is in their best interest.
The Funds redeem their shares at their next NAV computed after the Funds'
transfer agent receives your redemption request. You will usually receive
payment for your shares within 7 days after the transfer agent receives your
written redemption request. If, however, you request redemption of shares
recently purchased by check, you may not receive payment until the check has
been collected, which may take up to 15 days from receipt of the check. The
Funds can also suspend or postpone payment, when permitted by applicable law and
regulations.
You can exchange shares of one Fund for the same class of shares of another
Fund. An exchange is treated as a sale of shares in one Fund, and a purchase of
shares in another Fund at the NAV next determined after the transfer agent
received the exchange request. Your right to exchange shares is subject to
applicable regulatory requirements or contractual obligations. The Funds may
limit or refuse exchanges, if, in the opinion of MassMutual:
o you have engaged in excessive trading;
o a Fund receives or expects simultaneous orders affecting significant
portions of the Fund's assets;
o a pattern of exchanges occurs which coincides with a market timing
strategy which may be disruptive to the Fund; or
o the Fund would be unable to invest the Funds effectively based on its
investment objectives and policies, or if the Fund would be adversely
affected.
The Funds reserve the right to modify or terminate the exchange privilege on 60
days written notice.
The Funds do not accept purchase, redemption or exchange orders or compute their
NAVs on days when the NYSE is closed. This includes: weekends, Good Friday and
all federal holidays other than Columbus Day and Veterans Day. Certain foreign
markets may be open on days when the Funds do not accept orders or price their
shares. As a result, the NAV of a Fund's shares may change on days when you will
not be able to buy or sell shares.
Determining Net Asset Value
We calculate the net asset value of each class of shares of each Fund
separately. The net asset value (closing price) for shares of a class of a Fund
is determined by adding the current value of all of the Fund's assets
attributable to that Class, subtracting the liabilities attributable to that
class and then dividing the resulting number by the total outstanding shares of
the class.
Each Fund's assets are valued based on market value of the Fund's total
portfolio. The Fund's valuation methods are defined in the Statement of
Additional Information.
-40-
<PAGE>
How to Invest
When you buy shares of the Fund through an agreement with MassMutual, your
agreement will describe how you need to submit buy, sell and exchange orders.
Purchase orders must be accompanied by sufficient Funds. You can pay by check or
Federal Funds wire transfer. You must submit any buy, sell or exchange orders in
"good form" as described in your agreement.
Taxation and Distributions
Each Fund intends to continue to qualify as a regulated investment company under
Subchapter M of the Internal Revenue 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, including either directly or indirectly
through a life insurance company separate investment account, should consult its
tax advisers about the federal, state, local and foreign tax consequences
particular to it, as should persons considering whether to have amounts held for
their benefit by such trusts or other entities investing in shares of a Fund.
Investors that do not receive preferential tax treatment are subject to federal
income taxes on distributions received in respect of their shares. Distributions
of the Fund's ordinary income and short-term capital gains (i.e. gains from
capital assets held for one year or less) are taxable to the shareholder as
ordinary income whether received in cash or additional shares. Certain
designated dividends may be eligible for the dividends-received deduction for
corporate shareholders. Designated capital gain dividends (relating to gains
from capital assets held for more than one year) are taxable as long-term
capital gains in the hands of the investor whether distributed in cash or
additional shares and regardless of how long the investor has owned shares of
the Fund. The nature of each Fund's distributions will be affected by its
investment strategies. A Fund whose investment return consists largely of
interest, dividends and capital gains from short-term holdings will distribute
largely ordinary income. A Fund whose return comes largely from the sale of
long-term holdings will distribute largely capital gain dividends. Distributions
are taxable to a shareholder even though they are paid from income or gains
earned by a Fund prior to the shareholder's investment and thus were included in
the NAV paid by the shareholder.
Any gain resulting from the exchange or redemption of an investor's shares in a
Fund will generally be subject to tax. A loss incurred with respect to shares of
a Fund held for six months or less will be treated as a long-term capital loss
to the extent of capital gains dividend with respect to such shares.
The Fund's investments in foreign securities may be subject to foreign
withholding taxes. In that case, the Fund's yield on those securities would be
decreased. Shareholders of the Funds other than the International Equity Fund
generally will not be entitled to claim a credit or deduction with respect to
foreign taxes. Shareholders of the International Equity Fund however, may be
entitled to claim a credit or deduction with respect to foreign taxes. In
addition, the Fund's investments in foreign securities or foreign currencies may
increase or accelerate the Fund's recognition of ordinary income and may affect
the timing or amount of the Fund's distributions.
Shareholders should consult their tax adviser for more information on their own
tax situation, including possible state, local and foreign taxes.
-41-
<PAGE>
Investment Performance
The registration statement for the Prime Fund, Short-Term Bond Fund, Core Bond
Fund, Balanced Fund, Core Equity Fund, Small Cap Value Equity Fund and
International Equity Fund became effective, and those Funds commenced
operations, on October 3, 1994. Those Funds were the successors to seven
separate investment accounts of MassMutual having corresponding investment
objectives, policies and limitations. Class S shares of the Funds were exchanged
for the assets of the separate investment accounts, and while the separate
investment accounts continue to exist, their assets consist solely of Class S
shares of the corresponding Funds. 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 separate investment account immediately
prior to the transfer.
The quoted performance data in this Prospectus for those funds includes the
performance of the separate investment accounts for periods before the
Registration Statement became effective on October 3, 1994. The separate
investment accounts were not registered under the Investment Company Act of 1940
and thus were not subject to certain investment restrictions that are imposed by
this Act. If the separate investment accounts had been registered under the
Investment Company Act, their performance might have been adversely affected.
The historical performance of the separate investment accounts have been
restated to reflect the Funds' expenses, as described in the Fees and Expenses
section of the prospectus.
Sub-Adviser Performance
MFS. Performance data shown for the Growth Equity Fund is based on a composite
of all other similar portfolios managed by MFS, the Fund's Sub-Adviser,
adjusted to reflect the fees and expenses of each of the Fund's share classes.
Some of these portfolios are mutual funds registered with the SEC, including
Massachusetts Investors Growth Stock Fund, and some are private accounts. All
the portfolios have substantially the same investment objectives and policies
and are managed in accordance with essentially the same investment strategies
and techniques as those of the Fund. However, the private account portfolios are
not registered with the SEC and therefore are not subject to the limitations,
diversification requirements and other restrictions which the Fund, as a
registered mutual fund, will be subject to. The performance of the private
accounts may have been adversely affected if they had been registered with the
SEC.
MAS. Performance data shown for the Mid Cap Growth Equity Fund is based on a
composite of all other portfolios managed by Miller Anderson & Sherrerd, LLP,
the Fund's Sub-Adviser, adjusted to reflect the fees and expenses of each of the
Fund's share classes. One of these portfolios is the MAS Funds Mid Cap Growth
Portfolio, a mutual fund registered with the SEC. All the portfolios have
substantially the same investment objective and policies and are managed in
accordance with essentially the same investment strategies and techniques as
those of the Fund. However, the private account portfolios are not registered
with the SEC and therefore are not subject to the limitations, diversification
requirements and other restrictions which the Fund, as a registered mutual fund,
will be subject to. The performance of the private accounts may have been
adversely affected if they had been registered with the SEC.
J.P. Morgan and Waddell & Reed. J.P. Morgan and Waddell & Reed each manage a
portion of the Small Cap Growth Equity Fund. The J.P. Morgan performance
information is shown based on the historical performance of all discretionary
investment management accounts under the management of J.P. Morgan with similar
investment objectives and policies as the
-42-
<PAGE>
Fund, adjusted to reflect the fees and expenses of each of the Fund's share
classes. Some of these portfolios are mutual funds registered with the SEC,
including the J.P. Morgan U.S. Small Company Opportunities Fund, and some are
private accounts. The private account portfolios are not registered with the SEC
and therefore are not subject to the limitations, diversification requirements
and other restrictions which the MassMutual Small Cap Growth Equity Fund, as a
registered mutual fund, will be subject to. The performance of the private
accounts may have been adversely affected if they had been registered with the
SEC.
From January 1, 1996, the Waddell & Reed performance information shown is based
on a composite of accounts it manages with substantially similar investment
objectives and policies as the Fund, adjusted to reflect the fees and expenses
of each of the Fund's share classes. From inception of Waddell & Reed's Small
Cap Composite on 4/1/89 through 12/31/95, performance is based on data of Small
Cap style mutual fund portfolios managed by the Waddell & Reed. The private
account portfolios are not registered with the SEC and therefore are not subject
to the limitations, diversification requirements and other restrictions which
the Fund, as a registered mutual fund, will be subject to. The performance of
the private accounts may have been adversely affected if they had been
registered with the SEC.
Composite performance for each of the Sub-Adviser's portfolios is provided
solely to illustrate that Sub-Adviser's performance in managing portfolios with
investment objectives similar to the applicable Fund. Such performance is not
indicative of future rates of return. Prior performance of the Sub-Advisers is
no indication of future performance of any of the Funds.
-43-
<PAGE>
Financial Highlights
The financial highlights table is intended to help you understand the Funds'
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned on an investment in the
Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by Deloitte & Touche LLP, whose report, along with
the Funds' financial statements, are included in the Annual Report, which is
available on request.
PRIME FUND
<TABLE>
<CAPTION>
Class A Class Y
------- -------
Year ended Year ended
12/31/98 + 12/31/98 +
--------- ---------
<S> <C> <C>
Net asset value, beginning of period $ 691.21 $ 690.78
--------- ---------
Income (loss) from investment operations:
Net investment income 32.03 *** 36.67 ***
Net realized and unrealized gain (loss) on
investments (0.09) (1.30)
--------- ---------
Total income (loss) from investment
operations 31.94 35.37
--------- ---------
Less distributions to shareholders:
From net investment income (572.32) (575.42)
--------- ---------
Net asset value, end of period $ 150.83 $ 150.73
========= =========
Total Return 4.60% 5.14%
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 120 $ 556
Net expenses to average daily net assets # 1.20% 0.74%
Net investment income to average daily net assets 4.59% 5.21%
<CAPTION>
Class S(1)
----------
Year ended Year ended Year ended Year ended Year ended
12/31/98 12/31/97 12/31/96 12/31/95 12/31/94**
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 150.84 $ 151.00 $ 151.06 $ 150.36 $ 150.00
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 8.10 *** 8.14 *** 7.85 *** 8.70 *** 1.55
Net realized and unrealized gain (loss) on
investments 0.03 (0.01) 0.06 (0.02) 0.34
--------- --------- --------- --------- ---------
Total income (loss) from investment
operations 8.13 8.13 7.91 8.68 1.89
--------- --------- --------- --------- ---------
Less distributions to shareholders:
From net investment income (8.23) (8.29) (7.97) (7.98) (1.53)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 150.74 $ 150.84 $ 151.00 $ 151.06 $ 150.36
========= ========= ========= ========= =========
Total Return @ 5.39% 5.39% 5.24% 5.78% 1.26%
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 251,757 $ 241,370 $ 258,729 $ 253,936 $ 170,548
Net expenses to average daily net assets # 0.5482% 0.5399% 0.5160% 0.5160% 0.5160%*
Net investment income to average daily net assets 5.23% 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: N/A 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.
+ Amounts have been restated to reflect reverse stock splits (See Note 9).
(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.
-44-
<PAGE>
SHORT-TERM BOND FUND
<TABLE>
<CAPTION>
Class A Class Y
------- -------
Year ended Year ended
12/31/98 + 12/31/98 +
--------- ---------
<S> <C> <C>
Net asset value, beginning of period $ 10.25 $ 10.24
--------- ---------
Income (loss) from investment operations:
Net investment income 0.52 *** 0.57 ***
Net realized and unrealized gain (loss) on
investments 0.05 0.06
--------- ---------
Total income (loss) from investment
operations 0.57 0.63
--------- ---------
Less distributions to shareholders:
From net investment income (0.50) (0.55)
From net realized gains (0.01) (0.01)
--------- ---------
Total distributions (0.51) (0.56)
--------- ---------
Net asset value, end of period $ 10.31 $ 10.31
========= =========
Total Return 5.75% 6.12%
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 129 $ 269
Net expenses to average daily net assets # 1.20% 0.74%
Net investment income to average daily net assets 4.95% 5.40%
Portfolio turnover rate 44% 44%
<CAPTION>
Class S(1)
----------
Year ended Year ended Year ended Year ended Year ended
12/31/98 12/31/97 12/31/96 12/31/95 12/31/94**
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.23 $ 10.11 $ 10.15 $ 9.85 $ 10.00
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 0.56 0.65 *** 0.60 0.66 0.16
Net realized and unrealized gain (loss) on
investments 0.08 0.04 (0.03) 0.50 (0.15)
--------- --------- --------- --------- ---------
Total income (loss) from investment
operations 0.64 0.69 0.57 1.16 0.01
--------- --------- --------- --------- ---------
Less distributions to shareholders:
From net investment income (0.56) (0.57) (0.60) (0.66) (0.16)
From net realized gains (0.01) 0.00 (0.01) (0.20) --
--------- --------- --------- --------- ---------
Total distributions (0.57) (0.57) (0.61) (0.86) (0.16)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 10.30 $ 10.23 $ 10.11 $ 10.15 $ 9.85
========= ========= ========= ========= =========
Total Return @ 6.29% 6.84% 5.57% 11.77% 0.13%
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 283,673 $ 200,268 $ 145,182 $ 122,904 $ 106,846
Net expenses to average daily net assets # 0.5482% 0.5423% 0.5190% 0.5190% 0.5190%*
Net investment income to average daily net assets 5.58% 6.22% 6.00% 6.32% 6.37%*
Portfolio turnover rate 44% 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: N/A 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.
+ Amounts have been restated to reflect reverse stock splits (See Note 9).
(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.
-45-
<PAGE>
CORE BOND FUND
<TABLE>
<CAPTION>
Class A Class Y
------- -------
Year ended Year ended
12/31/98 + 12/31/98 +
--------- ---------
<S> <C> <C>
Net asset value, beginning of period $ 10.85 $ 10.86
--------- ---------
Income (loss) from investment operations:
Net investment income 0.59 *** 0.65 ***
Net realized and unrealized gain (loss) on
investments 0.25 0.25
--------- ---------
Total income (loss) from investment
operations 0.84 0.90
--------- ---------
Less distributions to shareholders:
From net investment income (0.52) (0.59)
From net realized gains (0.11) (0.11)
--------- ---------
Total distributions (0.63) (0.70)
--------- ---------
Net asset value, end of period $ 11.06 $ 11.06
========= =========
Total Return 7.75% 8.25%
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 141 $ 400
Net expenses to average daily net assets # 1.20% 0.74%
Net investment income to average daily net assets 5.26% 5.73%
Portfolio turnover rate 51% 51%
<CAPTION>
Class S(1)
----------
Year ended Year ended Year ended Year ended Year ended
12/31/98 12/31/97 12/31/96 12/31/95 12/31/94**
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.81 $ 10.45 $ 10.75 $ 9.84 $ 10.00
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 0.67 *** 0.69 *** 0.67 *** 0.72 *** 0.18
Net realized and unrealized gain (loss) on
investments 0.24 0.33 (0.37) 1.17 (0.16)
--------- --------- --------- --------- ---------
Total income (loss) from investment
operations 0.91 1.02 0.30 1.89 0.02
--------- --------- --------- --------- ---------
Less distributions to shareholders:
From net investment income (0.56) (0.64) (0.54) (0.65) (0.18)
From net realized gains (0.10) (0.02) (0.06) (0.33) --
--------- --------- --------- --------- ---------
Total distributions (0.66) (0.66) (0.60) (0.98) (0.18)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 11.06 $ 10.81 $ 10.45 $ 10.75 $ 9.84
========= ========= ========= ========= =========
Total Return @ 8.44% 9.78% 2.80% 19.15% 0.20%
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 709.459 $ 455,931 $ 356,699 $ 253,540 $ 194,150
Net expenses to average daily net assets # 0.5454% 0.5393% 0.5130% 0.5130% 0.5130%*
Net investment income to average daily net assets 5.92% 6.34% 6.26% 6.56% 6.86%*
Portfolio turnover rate 51% 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: N/A 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.
+ Amounts have been restated to reflect reverse stock splits (See Note 9).
(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.
-46-
<PAGE>
BALANCED FUND
<TABLE>
<CAPTION>
Class A Class Y
------- -------
Year ended Year ended
12/31/98 + 12/31/98 +
--------- ---------
<S> <C> <C>
Net asset value, beginning of period $ 14.03 $ 14.06
--------- ---------
Income (loss) from investment operations:
Net investment income 0.41 *** 0.48 ***
Net realized and unrealized gain (loss) on
investments 1.36 1.36
--------- ---------
Total income (loss) from investment
operations 1.77 1.84
--------- ---------
Less distributions to shareholders:
From net investment income (0.58) (0.67)
From net realized gains (1.02) (1.03)
--------- ---------
Total distributions (1.60) (1.70)
--------- ---------
Net asset value, end of period $ 14.20 $ 14.20
========= =========
Total Return 12.78% 13.23%
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 177 $ 1,051
Net expenses to average daily net assets # 1.20% 0.76%
Net investment income to average daily net assets 2.76% 3.21%
Portfolio turnover rate 30% 30%
<CAPTION>
Class S(1)
----------
Year ended Year ended Year ended Year ended Year ended
12/31/98 12/31/97 12/31/96 12/31/95 12/31/94**
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.59 $ 12.34 $ 11.51 $ 9.92 $ 10.00
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 0.49 *** 0.48 0.46 0.44 0.11
Net realized and unrealized gain (loss) on
investments 1.33 1.82 1.02 1.68 (0.08)
--------- --------- --------- --------- ---------
Total income (loss) from investment
operations 1.82 2.30 1.48 2.12 0.03
--------- --------- --------- --------- ---------
Less distributions to shareholders:
From net investment income (0.48) (0.48) (0.46) (0.44) (0.11)
From net realized gains (0.73) (0.57) (0.19) (0.09) --
--------- --------- --------- --------- ---------
Total distributions (1.21) (1.05) (0.65) (0.53) (0.11)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 14.20 $ 13.59 $ 12.34 $ 11.51 $ 9.92
========= ========= ========= ========= =========
Total Return @ 13.50% 18.72% 12.83% 21.31% 0.29%
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 771,763 $ 655,135 $ 563,280 $ 456,773 $ 349,688
Net expenses to average daily net assets # 0.5433% 0.5389% 0.5120% 0.5120% 0.5120%*
Net investment income to average daily net assets 3.42% 3.57% 3.83% 4.18% 4.29%*
Portfolio turnover rate 30% 28% 26% 23% 2%
# 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: N/A 0.5510% 0.5522% 0.5514% 0.5650%*
</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.
+ Amounts have been restated to reflect reverse stock splits (See Note 9).
(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.
-47-
<PAGE>
CORE EQUITY FUND
<TABLE>
<CAPTION>
Class A Class Y
------- -------
Year ended Year ended
12/31/98 + 12/31/98 +
---------- ----------
<S> <C> <C>
Net asset value, beginning of period $ 18.02 $ 18.03
---------- ----------
Income (loss) from investment operations:
Net investment income 0.19 *** 0.27 ***
Net realized and unrealized gain (loss) on
investments 2.60 2.63
---------- ----------
Total income (loss) from investment
operations 2.79 2.90
---------- ----------
Less distributions to shareholders:
From net investment income (0.43) (0.56)
From net realized gains (1.98) (1.98)
---------- ----------
Total distributions (2.41) (2.54)
---------- ----------
Net asset value, end of period $ 18.40 $ 18.39
========== ==========
Total Return 15.96% 16.49%
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 227 $ 754
Net expenses to average daily net assets # 1.20% 0.75%
Net investment income to average daily net assets 1.01% 1.43%
Portfolio turnover rate 12% 12%
<CAPTION>
Class S(1)
----------
Year ended Year ended Year ended Year ended Year ended
12/31/98 12/31/97 12/31/96 12/31/95 12/31/94***
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.00 $ 14.46 $ 12.63 $ 9.91 $ 10.00
---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.31 0.32 0.34 0.31 0.08
Net realized and unrealized gain (loss) on
investments 2.49 3.83 2.22 2.82 (0.09)
---------- ---------- ---------- ---------- ----------
Total income (loss) from investment
operations 2.80 4.15 2.56 3.13 (0.01)
---------- ---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.31) (0.31) (0.34) (0.31) (0.08)
From net realized gains (1.10) (1.30) (0.39) (0.10) --
---------- ---------- ---------- ---------- ----------
Total distributions (1.41) (1.61) (0.73) (0.41) (0.08)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 18.39 $ 17.00 $ 14.46 $ 12.63 $ 9.91
========== ========== ========== ========== ==========
Total Return @ 16.75% 29.01% 20.24% 31.54% (0.10)%
Ratios/Supplemental Data:
Net assets, end of period (000's) $3,586,177 $3,197,848 $2,485,743 $2,125,248 $1,563,563
Net expenses to average daily net assets # 0.5391% 0.5378% 0.5067% 0.5067% 0.5067% *
Net investment income to average daily net assets 1.67% 1.91% 2.42% 2.72% 3.20% *
Portfolio turnover rate 12% 20% 13% 16% 3%
# 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: N/A 0.5512% 0.5534% 0.5528% 0.5681% *
</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.
+ Amounts have been restated to reflect reverse stock splits (See Note 9).
(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.
-48-
<PAGE>
SMALL CAP VALUE EQUITY FUND
<TABLE>
<CAPTION>
Class A Class Y
------- -------
Year ended Year ended
12/31/98 + 12/31/98 +
--------- ---------
<S> <C> <C>
Net asset value, beginning of period $ 17.48 $ 17.51
--------- ---------
Income (loss) from investment operations:
Net investment income 0.03 *** 0.11 ***
Net realized and unrealized gain (loss) on
investments (1.78) (1.81)
--------- ---------
Total income (loss) from investment
operations (1.75) (1.70)
--------- ---------
Less distributions to shareholders:
From net investment income (0.12) (0.21)
From net realized gains (1.54) (1.54)
--------- ---------
Total distributions (1.66) (1.75)
--------- ---------
Net asset value, end of period $ 14.07 $ 14.06
========= =========
Total Return (9.58)% (9.25)%
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 174 $ 568
Net expenses to average daily net assets # 1.30% 0.85%
Net investment income to average daily net assets 0.19% 0.67%
Portfolio turnover rate 31% 31%
<CAPTION>
Class S(1)
----------
Year ended Year ended Year ended Year ended Year ended
12/31/98 12/31/97 12/31/96 12/31/95 12/31/94***
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.61 $ 13.43 $ 11.44 $ 9.69 $ 10.00
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 0.13 0.13 0.31 0.19 0.04
Net realized and unrealized gain (loss) on
investments (1.67) 4.73 2.29 1.75 (0.31)
--------- --------- --------- --------- ---------
Total income (loss) from investment
operations (1.54) 4.86 2.60 1.94 (0.27)
--------- --------- --------- --------- ---------
Less distributions to shareholders:
From net investment income (0.13) (0.14) (0.30) (0.19) (0.04)
From net realized gains (0.88) (1.54) (0.31) -- --
--------- --------- --------- --------- ---------
Total distributions (1.01) (1.68) (0.61) (0.19) (0.04)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 14.06 $ 16.61 $ 13.43 $ 11.44 $ 9.69
========= ========= ========= ========= =========
Total Return @ (9.02)% 36.36% 22.82% 20.01% (2.66)%
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 682,578 $ 690,378 $ 456,935 $ 380,398 $ 310,789
Net expenses to average daily net assets # 0.6434% 0.6400% 0.6110% 0.6110% 0.6110% *
Net investment income to average daily net assets 0.86% 0.89% 2.40% 1.78% 1.78% *
Portfolio turnover rate 31% 31% 28% 28% 4%
# 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: N/A 0.6515% 0.6546% 0.6553% 0.6681% *
</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.
+ Amounts have been restated to reflect reverse stock splits (See Note 9).
(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.
-49-
<PAGE>
INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Class A Class Y
------- -------
Year ended Year ended
12/31/98 + 12/31/98 +
--------- ---------
<S> <C> <C>
Net asset value, beginning of period $ 12.81 $ 12.83
--------- ---------
Income (loss) from investment operations:
Net investment income 0.01 *** 0.06 ***
Net realized and unrealized gain (loss) on
investments and foreign currency 0.53 0.55
--------- ---------
Total income (loss) from investment
operations 0.54 0.61
--------- ---------
Less distributions to shareholders:
From net investment income (0.12) (0.21)
From net realized gains (1.86) (1.86)
--------- ---------
Total distributions (1.98) (2.07)
--------- ---------
Net asset value, end of period $ 11.37 $ 11.37
========= =========
Total Return 4.40% 4.84%
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 135 $ 503
Net expenses to average daily net assets # 1.69% 1.23%
Net investment income to average daily net assets 0.10% 0.43%
Portfolio turnover rate 80% 80%
<CAPTION>
Class S(1)
----------
Year ended Year ended Year ended Year ended Year ended
12/31/98 12/31/97 12/31/96 12/31/95 12/31/94***
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.38 $ 11.11 $ 9.58 $ 9.28 $ 10.00
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 0.10 0.06 0.06 0.07 0.00
Net realized and unrealized gain (loss) on
investments and foreign currency 0.51 1.69 1.71 0.41 (0.72)
--------- --------- --------- --------- ---------
Total income (loss) from investment
operations 0.61 1.75 1.77 0.48 (0.72)
--------- --------- --------- --------- ---------
Less distributions to shareholders:
From net investment income (0.17) (0.07) (0.24) (0.07) --
In excess of net investment income -- -- -- (0.11) --
From net realized gains (1.45) (0.41) -- -- --
--------- --------- --------- --------- ---------
Total distributions (1.62) (0.48) (0.24) (0.18) --
--------- --------- --------- --------- ---------
Net asset value, end of period $ 11.37 $ 12.38 $ 11.11 $ 9.58 $ 9.28
========= ========= ========= ========= =========
Total Return @ 5.05% 15.79% 18.51% 5.13% (7.20)%
Ratios/Supplemental Data:
Net assets, end of period (000's) $ 640,498 $ 546,790 $ 356,311 $ 220,718 $ 150,199
Net expenses to average daily net assets # 1.0389% 1.0580% 1.0020% 1.0020% 1.0020% *
Net investment income to average daily net assets 0.73% 0.53% 0.59% 0.76% 0.04% *
Portfolio turnover rate 80% 83% 58% 121% 18%
# 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: N/A 1.0684% 1.0718% 1.0920% 1.0877% *
</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.
+ Amounts have been restated to reflect reverse stock splits (See Note 9).
(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.
-50-
<PAGE>
APPENDIX
ADDITIONAL INVESTMENT POLICIES
AND RISK CONSIDERATIONS
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 and
some associated risks are discussed below.
Euro Risk
The International Equity Fund and, to a lesser extent, the other Funds,
including the Growth Equity Fund, may be subject to an additional risk regarding
their foreign securities holdings. On January 1, 1999, eleven countries in the
European Monetary Union adopted 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:
o 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.
o Vendors the Funds depend on to carry out their business, such as
custodians (which hold the foreign securities the Funds buy), the Fund's
managers 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.
o 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 MassMutual of its plans to deal with the conversion
including how it will update its recordkeeping 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.
Year 2000 Issue
Like other businesses and governments around the world, the Funds could be
adversely affected if the computer systems used by the Funds' service providers
and those with which they do 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
-51-
<PAGE>
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.
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. The Statement of Additional Information provides a
detailed description of repurchase agreements, reverse repurchase agreements and
related risks.
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 MassMutual and the
Fund's Sub-Adviser to be in good standing.
Under applicable regulatory requirements and securities lending agreements
(which are subject 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 that Fund.
Hedging Instruments and Derivatives
Each Fund may buy or sell forward contracts and other similar instruments and
may engage in foreign currency transactions (collectively referred to as
"hedging instruments" or "derivatives"), as more fully discussed in the
Statement of Additional Information.
The portfolio managers may normally use derivatives:
o to protect against possible declines in the market value of a Fund's
portfolio resulting from downward trends in the markets (for example, in
the debt securities markets generally due to increasing interest rates);
o to protect a Fund's unrealized gains or limit its unrealized losses; and
o to manage a Fund's exposure to changing securities prices.
Our portfolio managers may also use derivatives to establish a position in the
debt or equity securities markets as a temporary substitute for purchasing or
selling particular 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
-52-
<PAGE>
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 or the Fund's Sub-Adviser deems it
appropriate to do so.
(2) Currency Transactions - The International Equity Fund, the Growth Equity
Fund, the Mid CapGrowth Equity Fund and the Small Cap Growth 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, the Core Bond Segment
of the Balanced Fund and the Diversified Bond 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 the following:
o the risk that interest rates and securities prices will not move in the
direction anticipated;
o the imperfect correlation between the prices of a forward contract and the
price of the securities being hedged; and
o the Fund's portfolio manager may not have the skills needed to manage
these strategies.
Therefore, there is no assurance that hedging instruments and derivatives will
assist the Fund in achieving its investment objective. 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 Fund or its 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,
-53-
<PAGE>
thereby diversifying risks of fluctuations in
portfolio value.
Investments in foreign securities, however, entail certain risks, such as: the
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 decision to purchase and sell portfolio securities may be affected
by laws or regulations relating to the convertibility of currencies and
repatriation of assets. Further, it may be more difficult for a Fund's agents to
keep currently informed about corporate actions which may affect the prices of
portfolio securities. Communications between the United States and foreign
countries may be less reliable than within the United States, thus increasing
the risk of delayed settlements of portfolio transactions or loss of
certificates for portfolio securities.
Portfolio Management
The Fund's Adviser and Sub-Advisers may use trading as a means of managing the
portfolios of the Funds in seeking to achieve their investment objectives.
Transactions will occur when MassMutual or Sub-Advisers believes 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 manager'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 could fall and its capital losses could increase. In addition, high
portfolio turnover in any Fund can result in additional brokerage commissions to
be paid by the Fund.
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. Government 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
-54-
<PAGE>
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 Fund's 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 may 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
risk of prepayment. 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 these 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.
Asset-Backed Securities
These securities, issued by trusts and special purpose entities, are backed by
pools of assets, such as automobile and credit-card 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 by having a priority
to certain of the borrower's other assets. 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.
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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. The Statement of
Additional Information gives a more detailed description of dollar roll
transactions and related risks.
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
nationally recognized statistical rating organization (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.
When Issued Securities
The Growth Equity Fund, the Mid Cap Growth Equity Fund and the Small Cap Growth
Equity Fund may purchase securities on a "when-issued" or on a "forward
delivery" basis, which means securities will be delivered to the Fund at a
future date beyond the settlement date. A Fund will not have to pay for
securities until they are delivered. While waiting for delivery of the
securities, the Fund will segregate sufficient liquid assets to cover its
commitments. Although the Funds do not intend to make such purchases for
speculative purposes, there are risks related to liquidity and market
fluctuations prior to the Fund taking delivery.
Options and Futures Contracts
The Growth Equity Fund, the Mid Cap Growth Equity Fund and the Small Cap Growth
Equity Fund may engage in options transactions, such as writing covered put and
call options on securities and purchasing put and call options on securities.
These strategies are designed to increase a Fund's portfolio return, or to
protect the value of the portfolio, by offsetting a decline in portfolio value
through the options purchased. Writing options, however, can only constitute a
partial hedge, up to the amount of the premium, and due to transaction costs.
These Funds may also write covered call and put options and purchase call and
put options on stock indexes in order to increase portfolio income or to protect
the Fund against declines in the value of portfolio securities. In addition,
these Funds and the International Equity Fund may also purchase and write
options on foreign currencies to protect against declines in the dollar value of
portfolio securities and against increases in the dollar cost of securities to
be acquired.
The Growth Equity Fund, the Mid Cap Growth Equity Fund and the Small Cap Growth
Equity Fund may also enter into stock index futures contracts. These Funds and
the International
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Equity Fund may enter into foreign currency futures contracts. These
transactions are hedging strategies. They are designed to protect a Fund's
current or intended investments from the effects of changes in exchange rates or
market declines. A Fund will incur brokerage fees when it purchases and sells
futures contracts. Futures contracts entail risk of loss in portfolio value, if
the Sub-Adviser is incorrect in anticipating the direction of exchange rates or
the securities markets.
These Funds may also purchase and write options on these futures contracts. This
strategy also is intended to protect against declines in the values of portfolio
securities or against increases in the costs of securities to be acquired. Like
other options, options on futures contracts constitute only a partial hedge up
to the amount of the premium, and due to transaction costs.
While these strategies will generally be used by a Fund for hedging purposes,
there are risks. For example, the Sub-Adviser may incorrectly forecast the
direction of exchange rates or of the underlying securities index or markets.
When these hedging transactions are unsuccessful, the Fund may experience
losses. When a Fund enters into these transactions to increase portfolio value
(i.e., other than for hedging purposes), there is a liquidity risk that no
market will arise for resale and the Fund could also experience losses. Options
and Futures Contracts strategies and risks are described more fully in the
Statement of Additional Information.
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MASSMUTUAL INSTITUTIONAL FUNDS
1295 State Street Springfield,
Massachusetts 01111
Learning More About the Funds
You can learn more about the Funds by reading the Funds' Annual and Semiannual
Reports and the Statement of Additional Information (SAI). This information is
available free upon request. In the Annual and Semiannual Reports, you will find
a discussion of market conditions and investment strategies that significantly
affected each Fund's performance during the period covered by the Report and a
listing of portfolio securities. The SAI will provide you more detail regarding
the organization and operation of the Funds, including their investment
strategies. The SAI is incorporated by reference into this Prospectus and is
therefore legally considered a part of this Prospectus.
How to Obtain Information
From MassMutual Institutional Funds: You may request information about the Funds
(including the Annual/Semiannual Reports and the SAI) or make shareholder
inquiries by calling 1-888-743-5274 or by writing MassMutual Institutional Funds
c/o Massachusetts Mutual Life Insurance Company, 1295 State Street, Springfield,
Massachusetts 01111-0111, Attention: MassMutual Institutional Funds Coordinator,
MIP C218.
From the SEC: You may review information about the Funds (including the SAI) at
the SEC's Public Reference Room in Washington, D.C. (call 1-800-SEC-0330 for
information regarding the operation of the SEC's public reference room). You can
get copies of this information, upon payment of a copying fee, by writing to the
SEC's Public Reference Section, Washington, D.C. 20549-6009. Alternatively, if
you have access to the Internet, you may obtain information about the Funds from
the SEC's Internet site at http://www.sec.gov. When obtaining information about
the Funds from the SEC, you may find it useful to reference the Funds' SEC file
number: 881-8274.
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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 3, 1999, AS AMENDED FROM TIME TO TIME (THE
"PROSPECTUS"). THIS STATEMENT OF ADDITIONAL INFORMATION INCORPORATES HEREIN THE
FINANCIAL STATEMENTS OF THE FUNDS BY REFERENCE TO THE FUNDS' ANNUAL REPORT AS OF
DECEMBER 31, 1998 (THE "ANNUAL REPORT"). TO OBTAIN A PROSPECTUS, CALL TOLL-FREE
1-888-743-5274, 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:
o MassMutual Prime Fund
o MassMutual Short-Term Bond Fund
o MassMutual Core Bond Fund
o MassMutual Diversified Bond Fund
o MassMutual Balanced Fund
o MassMutual Core Equity Fund
o MassMutual Growth Equity Fund
o MassMutual Small Cap Value Equity Fund
o MassMutual Mid Cap Growth Equity Fund
o MassMutual Small Cap Growth Equity Fund
o MassMutual International Equity Fund
DATED MAY 3, 1999
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TABLE OF CONTENTS
Page
GENERAL INFORMATION ......................................................B-3
ADDITIONAL INVESTMENT POLICIES ...........................................B-3
FUNDAMENTAL INVESTMENT RESTRICTIONS ......................................B-15
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS ..................................B-16
MANAGEMENT OF THE TRUST ..................................................B-17
COMPENSATION .............................................................B-21
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES ......................B-23
INVESTMENT MANAGER AND SUB-ADVISERS ......................................B-23
ADMINISTRATOR AND SUB-ADMINISTRATOR ......................................B-26
THE DISTRIBUTOR ..........................................................B-27
CLASS A SERVICE PLANS ....................................................B-27
CUSTODIAN, DIVIDEND DISBURSING AGENT AND TRANSFER AGENT ..................B-28
INDEPENDENT PUBLIC ACCOUNTANT ............................................B-28
PORTFOLIO TRANSACTIONS AND BROKERAGE .....................................B-28
SHAREHOLDER INVESTMENT ACCOUNT ...........................................B-29
DESCRIPTION OF SHARES ....................................................B-29
REDEMPTION OF SHARES .....................................................B-29
VALUATION OF PORTFOLIO SECURITIES ........................................B-30
INVESTMENT PERFORMANCE ...................................................B-30
OTHER ADVERTISING ITEMS...................................................B-34
TAXATION .................................................................B-34
EXPERTS ..................................................................B-36
GLOSSARY..................................................................B-36
APPENDIX - DESCRIPTION OF SECURITIES RATINGS .............................B-38
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GENERAL INFORMATION
MassMutual Institutional Funds (the "Trust") is a professionally managed,
open-end investment company. This SAI describes the following eleven separate
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 Diversified Bond Fund ("Diversified Bond
Fund"), (5) MassMutual Balanced Fund ("Balanced Fund"), (6) MassMutual Core
Equity Fund ("Core Equity Fund"), (7) MassMutual Growth Equity Fund ("Growth
Equity Fund"), (8) MassMutual Small Cap Value Equity Fund ("Small Cap Value
Equity Fund"), (9) MassMutual Mid Cap Growth Equity Fund ("Mid Cap Growth Equity
Fund"), (10) MassMutual Small Cap Growth Equity Fund ("Small Cap Growth Equity
Fund") and (11) 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 sixteen 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 Core Equity Fund, the
Small Cap Value Equity Fund and the Core Equity Segment of the Balanced Fund is
David L. Babson and Company Incorporated ("Babson"), located at One Memorial
Drive, Cambridge, Massachusetts 02142. The investment sub-adviser for the Growth
Equity Fund is Massachusetts Financial Services Company ("MFS"), located at 500
Boylston Street, Boston, Massachusetts 19428. The investment sub-adviser for the
Mid Cap Growth Equity Fund is Miller Anderson & Sherrerd, LLP ("MAS"), located
at One Tower Bridge, West Conshohocken, Pennsylvania 19428. The sub-advisers for
the Small Cap Growth Equity Fund are J.P. Morgan Investment Management Inc.
("J.P. Morgan") located at 522 Fifth Avenue, New York, New York 10036 and
Waddell & Reed Investment Management Company ("Waddell & Reed"), located at 6300
Lamar, Overland Park, Kansas 66202. The investment sub-adviser for the
International Equity Fund is HarbourView Asset Management Corporation
("HarbourView"), located at Two World Trade Center, New York, New York 10048.
Babson and HarbourView are each indirect subsidiaries of MassMutual. MassMutual,
Babson, HarbourView, MFS, MAS, J.P. Morgan and Waddell & Reed 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, MassMutual believes that an institutional purchaser
of money market instruments who can 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 that may be invested in
certain industries or in securities of any
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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 Short-Term Bond Fund's duration management strategy currently uses 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 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.
DIVERSIFIED BOND FUND
The Diversified Bond Fund's duration management strategy is to match (within 5%)
the duration of the Lehman Brothers Intermediate Aggregate 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.
The Fund will also have specified liquidity and diversification requirements for
particular types of investments, including:
(a) Bond purchases for the Fund will be limited to 15% of any major industry
group;
(b) Below investment grade bonds cannot exceed 25% of the Fund's assets;
(c) Residential whole loan mortgage pools cannot exceed 15% of the Fund's
assets; these investments will also be limited geographically based on
population size of the area where the residences are located.
(d) Commercial mortgage loans cannot exceed 25% of the Fund's assets; these
investments will also be limited to 7% for each type of mortgaged
property, and geographically based on the population size of the area
where the properties are located.
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.
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, the Core Bond Segment 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 Segment 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 Segment 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.
Although the Diversified Bond Fund may invest in investment grade securities, it
may also invest in securities below investment grade. Lower-grade debt
securities may be subject to greater market fluctuations and greater risks of
loss of income and principal than investment-grade securities. Securities that
are (or have fallen) below investment grade
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<PAGE>
are exposed to a greater risk that the issuers of those securities might not
meet their debt obligations. These risks can reduce the Fund's share prices and
the income it earns.
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 Core Equity Segment of the Balanced Fund, the Core Equity Fund, the Small
Cap Value Equity Fund, the Growth Equity Fund, the Mid Cap Growth Equity Fund,
the Small Cap Growth 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 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 bankruptcy 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 repurchaser or 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.
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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 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.
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(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 Growth Equity Fund, the Mid Cap Growth Equity Fund, the Small Cap Growth
Equity Fund and the International Equity Fund may deal in forward currency
contracts and other currency transactions such as futures, options, options on
futures, and swaps, but will be limited to hedging involving either specific
transactions or portfolio positions. Transaction hedging is entering into a
currency transaction with respect to specific assets or liabilities of a Fund,
which will generally arise in connection with the purchase or sale of its
portfolio securities or the receipt of income therefrom. Position hedging is
entering into a currency transaction with respect to portfolio security
positions denominated or generally quoted in that currency. For example, if the
Fund believes that a foreign currency may suffer a substantial decline against
the U.S. dollar, it may enter into a forward sale contract to sell an amount of
that foreign currency approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency. The Funds may also
cross-hedge currencies by entering into transactions to purchase or sell one or
more currencies that are expected to decline in value relative to other
currencies to which the Fund has or in which the Fund expects to have portfolio
exposure.
A Fund will not enter into a transaction to hedge currency exposure to an extent
greater, after netting all transactions intended wholly or partially to offset
other transactions, than the aggregate market value (at the time of entering
into the transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently convertible into such currency,
other than with respect to proxy hedging as described below.
To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, the Funds may also engage in proxy
hedging. Proxy hedging is often used when the currency to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a forward contract to sell a currency whose
changes in value are generally considered to be linked to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, and to buy U.S. dollars. The amount of the contract
would not exceed the value of the Fund's securities denominated in linked
currencies. For example, if the adviser considers that the Austrian schilling is
linked to the German deutsche mark (the "D-mark"), the Fund holds securities
denominated in schillings and the adviser believes that the value of schillings
will decline against the U.S. dollar, the adviser may enter into a contract to
sell D-marks and buy dollars. Currency hedging involves some of the same risks
and considerations as other transactions with similar instruments. Currency
transactions can result in losses to the Fund if the currency being hedged
fluctuates in value to a degree or in a direction that is not anticipated.
Further, there is the risk that the perceived linkage between various currencies
may not be present during the particular time that the Fund is engaging in proxy
hedging.
(3) Risks Regarding Hedging Instruments and Derivatives - Some of the general
risks associated with hedging and the use of derivatives include: (a) the
possible absence of a liquid secondary market for any particular hedging
instrument at any time; (b) these instruments can be highly volatile; and (c)
the possible need to defer closing out certain positions to avoid adverse tax
consequences. More specific risks are set forth below.
(i) 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.
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(ii) 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.
THE GROWTH FUNDS' USE OF DERIVATIVES
(1) Options and Futures Transactions. The Growth Equity Fund, the Mid Cap Growth
Equity Fund and the Small Cap Growth Equity Fund (the "Growth Funds") may (a)
purchase and sell exchange traded and over-the-counter (OTC) put and call
options on equity securities or indexes of equity securities, (b) purchase and
sell futures contracts on indexes of equity securities and (c) purchase and sell
put and call options on futures contracts on indexes of equity securities. Each
of these instruments is a derivative instrument as its value derives from the
underlying asset or index.
The Growth Funds may utilize options and futures contracts to manage its
exposure to changing interest rates and/or security prices. Some options and
futures strategies, including selling futures contracts and buying puts, tend to
hedge a Fund's investments against price fluctuations. Other strategies,
including buying futures contracts, writing puts and calls, and buying calls,
tend to increase market exposure. Options and futures contracts may be combined
with each other or with forward contracts in order to adjust the risk and return
characteristics of a Fund's overall strategy in a manner deemed appropriate to
the Advisor and consistent with a Fund's objective and policies. Because
combined options positions involve multiple trades, they result in higher
transaction costs and may be more difficult to open and close out.
The use of options and futures is a highly specialized activity which involves
investment strategies and risks different from those associated with ordinary
portfolio securities transactions, and there can be no guarantee that their use
will increase a Fund's return. While the use of these instruments by the Growth
Funds may reduce certain risks associated with owning its portfolio securities,
these techniques themselves entail certain other risks. If the Advisor applies a
strategy at an inappropriate time or judges market conditions or trends
incorrectly, options and futures strategies may lower a Fund's return. Certain
strategies limit a Fund's possibilities to realize gains as well as limiting its
exposure to losses. A Fund could also experience losses if the prices of its
options and futures positions were poorly correlated with its other investments,
or if it could not close out its positions because of an illiquid secondary
market. In addition, a Fund will incur transaction costs, including trading
commissions and option premiums, in connection with its futures and options
transactions and these transactions could significantly increase a Fund's
turnover rate.
The Growth Funds may purchase put and call options on securities, indexes of
securities and futures contracts, or purchase and sell futures contracts, only
if such options are written by other persons and if (i) the aggregate premiums
paid on all such options which are held at any time do not exceed 20% of a
Fund's net assets, and (ii) the aggregate margin deposits required on all such
futures or options thereon held at any time do not exceed 5% of a Fund's total
assets.
(2) Purchasing Put and Call Options. The Growth Funds may purchase put and call
options. By purchasing a put option, a Fund obtains the right (but not the
obligation) to sell the instrument underlying the option at a fixed strike
price. In return for this right, a Fund pays the current market price for the
option (known as the option premium). Options have various types of underlying
instruments, including specific securities, indexes of securities, indexes of
securities prices, and futures contracts. A Fund may terminate its position in a
put option it has purchased by allowing it to expire or by exercising the
option. A Fund may also close out a put option position by entering into an
offsetting transaction, if a liquid market exists. If the option is allowed to
expire, a Fund will lose the entire
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premium it paid. If a Fund exercises a put option on a security, it will sell
the instrument underlying the option at the strike price. If a Fund exercises an
option on an index, settlement is in cash and does not involve the actual sale
of securities. If an option is American style, it may be exercised on any day up
to its expiration date. A European style option may be exercised only on its
expiration date.
The buyer of a typical put option can expect to realize a gain if the price of
the underlying instrument falls substantially. However, if the price of the
instrument underlying the option does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss (limited to the
amount of the premium paid, plus related transaction costs).
The features of call options are essentially the same as those of put options,
except that the purchaser of a call option obtains the right to purchase, rather
than sell, the instrument underlying the option at the option's strike price. A
call buyer typically attempts to participate in potential price increases of the
instrument underlying the option with risk limited to the cost of the option if
security prices fall. At the same time, the buyer can expect to suffer a loss if
security prices do not rise sufficiently to offset the cost of the option.
(3) Selling (Writing) Put and Call Options. The Growth Funds may also "write"
put and call options. When a Fund writes a put option, it takes the opposite
side of the transaction from the option's purchaser. In return for receipt of
the premium, a Fund assumes the obligation to pay the strike price for the
instrument underlying the option if the other party to the option chooses to
exercise it. A Fund may seek to terminate its position in a put option it writes
before exercise by purchasing an offsetting option in the market at its current
price. If the market is not liquid for a put option a Fund has written, however,
a Fund must continue to be prepared to pay the strike price while the option is
outstanding, regardless of price changes, and must continue to post margin as
discussed below.
If the price of the underlying instrument rises, a put writer would generally
expect to profit, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it is likely
that the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would expect to
suffer a loss. This loss should be less than the loss from purchasing and
holding the underlying instrument directly, however, because the premium
received for writing the option should offset a portion of the decline.
Writing a call option obligates a Fund to sell or deliver the option's
underlying instrument in return for the strike price upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium a call writer offsets part of the effect of a price decline. At the same
time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is greater,
a call writer gives up some ability to participate in security price increases.
The writer of an exchange traded put or call option on a security, an index of
securities or a futures contract is required to deposit cash or securities or a
letter of credit as margin and to make mark to market payments of variation
margin as the position becomes unprofitable.
(4) Options on Indexes. The Growth Funds may also purchase options on indexes.
Options on securities indexes are similar to options on securities, except that
the exercise of securities index options is settled by cash payment and does not
involve the actual purchase or sale of securities. In addition, these options
are designed to reflect price fluctuations in a group of securities or segment
of the securities market rather than price fluctuations in a single security. A
Fund, in purchasing or selling index options, is subject to the risk that the
value of its portfolio securities may not change as much as an index because a
Fund's investments generally will not match the composition of an index.
For a number of reasons, a liquid market may not exist and thus a Fund may not
be able to close out an option position that it has previously entered into.
When a Fund purchases an OTC option, it will be relying on its counterparty to
perform its obligations, and a Fund may incur additional losses if the
counterparty is unable to perform.
(5) Exchange Traded and OTC Options. All options purchased or sold by the Growth
Funds will be traded on a securities exchange or will be purchased or sold by
securities dealers (OTC options) that meet creditworthiness standards approved
by a Funds' Board of Trustees. While exchange-traded options are obligations of
the Options Clearing Corporation, in the case of OTC options, a Fund relies on
the dealer from which it purchased the option to perform if the option is
exercised. Thus, when a Fund purchases an OTC option, it relies on the dealer
from which it purchased the option to make or take delivery of the underlying
securities. Failure by the dealer to do so would
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result in the loss of the premium paid by a Fund as well as loss of the expected
benefit of the transaction.
Provided that a Fund has arrangements with certain qualified dealers who agree
that the Fund may repurchase any option it writes for a maximum price to be
calculated by a predetermined formula, a Fund may treat the underlying
securities used to cover written OTC options as liquid. In these cases, the OTC
option itself would only be considered illiquid to the extent that the maximum
repurchase price under the formula exceeds the intrinsic value of the option.
(6) Futures Contracts and Options on Futures Contracts. The Growth Funds may
purchase or sell (write) futures contracts and purchase or sell put and call
options, including put and call options on futures contracts. Futures contracts
obligate the buyer to take and the seller to make delivery at a future date of a
specified quantity of a financial instrument or an amount of cash based on the
value of a securities index. Currently, futures contracts are available on
various types of fixed income securities, including but not limited to U.S.
Treasury bonds, notes and bills, Eurodollar certificates of deposit and on
indexes of fixed income securities and indexes of equity securities.
Unlike a futures contract, which requires the parties to buy and sell a security
or make a cash settlement payment based on changes in a financial instrument or
securities index on an agreed date, an option on a futures contract entitles its
holder to decide on or before a future date whether to enter into such a
contract. If the holder decides not to exercise its option, the holder may close
out the option position by entering into an offsetting transaction or may decide
to let the option expire and forfeit the premium thereon. The purchaser of an
option on a futures contract pays a premium for the option but makes no initial
margin payments or daily payments of cash in the nature of "variation" margin
payments to reflect the change in the value of the underlying contract as does a
purchaser or seller of a futures contract.
The seller of an option on a futures contract receives the premium paid by the
purchaser and may be required to pay initial margin. Amounts equal to the
initial margin and any additional collateral required on any options on futures
contracts sold by a Fund are paid by a Fund into a segregated account, in the
name of the Futures Commission Merchant, as required by the 1940 Act and the
SEC's interpretations thereunder.
(7) Combined Positions. The Growth Funds are permitted to purchase and write
options in combination with each other, or in combination with futures or
forward contracts, to adjust the risk and return characteristics of the overall
position. For example, a Fund may purchase a put option and write a call option
on the same underlying instrument, in order to construct a combined position
whose risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at one
strike price and buying a call option at a lower price, in order to reduce the
risk of the written call option in the event of a substantial price increase.
Because combined options positions involve multiple trades, they result in
higher transaction costs and may be more difficult to open and close out.
(8) Risks Regarding Options and Futures Transactions. Some of the general risks
associated with the use of options and futures include:
(a) Correlation of Price Changes. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely that
the standardized options and futures contracts available will not match a
Fund's current or anticipated investments exactly. The Growth Funds may
invest in options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in which
it typically invests, which involves a risk that the options or futures
position will not track the performance of a Fund's other investments.
Options and futures contracts prices can also diverge from the prices of
their underlying instruments, even if the underlying instruments match a
Fund's investments well. Options and futures contracts prices are affected
by such factors as current and anticipated short term interest rates,
changes in volatility of the underlying instrument, and the time remaining
until expiration of the contract, which may not affect security prices the
same way. Imperfect correlation may also result from differing levels of
demand in the options and futures markets and the securities markets, from
structural differences in how options and futures and securities are
traded, or from imposition of daily price fluctuation limits or trading
halts. A Fund may purchase or sell options and futures contracts with a
greater or lesser value than the securities it wishes to hedge or intends
to purchase in order to attempt to compensate for differences in
volatility between the contract and the securities, although this may not
be successful in all cases. If price changes in a Fund's options or
futures positions are poorly correlated with its other investments, the
positions may fail to produce anticipated gains or result in losses that
are not offset by gains in other investments.
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(b) Liquidity of Options and Futures Contracts. There is no assurance a
liquid market will exist for any particular option or futures contract at
any particular time even if the contract is traded on an exchange. In
addition, exchanges may establish daily price fluctuation limits for
options and futures contracts and may halt trading if a contract's price
moves up or down more than the limit in a given day. On volatile trading
days when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible for a Fund to enter into new positions or
close out existing positions. If the market for a contract is not liquid
because of price fluctuation limits or otherwise, it could prevent prompt
liquidation of unfavorable positions, and could potentially require a Fund
to continue to hold a position until delivery or expiration regardless of
changes in its value. As a result, a Fund's access to other assets held to
cover its options or futures positions could also be impaired. (See
"Exchange Traded and OTC Options" above for a discussion of the liquidity
of options not traded on an exchange.)
(c) Position Limits. Futures exchanges can limit the number of futures and
options on futures contracts that can be held or controlled by an entity.
If an adequate exemption cannot be obtained, a Fund or the Advisor may be
required to reduce the size of its futures and options positions or may
not be able to trade a certain futures or options contract in order to
avoid exceeding such limits.
(d) Asset Coverage for Futures Contracts and Options Positions. The Funds
intend to comply with Section 4.5 of the regulations under the Commodity
Exchange Act, which limits the extent to which a Fund can commit assets to
initial margin deposits and option premiums. In addition, the Funds will
comply with guidelines established by the SEC with respect to coverage of
options and futures contracts by mutual funds, and if the guidelines so
require, will set aside appropriate liquid assets in a segregated
custodial account in the amount prescribed. Securities held in a
segregated account cannot be sold while the futures contract or option is
outstanding, unless they are replaced with other suitable assets. As a
result, there is a possibility that segregation of a large percentage of a
Fund's assets could impede portfolio management or a Fund's ability to
meet redemption requests or other current obligations.
(9) Swaps and Related Swap Products: The Growth Funds may engage in swap
transactions, including, but not limited to, interest rate, currency, securities
index, basket, specific security and commodity swaps, interest rate caps, floors
and collars and options on interest rate swaps (collectively defined as "swap
transactions").
The Growth Funds may enter into swap transactions for any legal purpose
consistent with its investment objective and policies, such as for the purpose
of attempting to obtain or preserve a particular return or spread at a lower
cost than obtaining that return or spread through purchases and/or sales of
instruments in cash markets, to protect against currency fluctuations, as a
duration management technique, to protect against any increase in the price of
securities a Fund anticipates purchasing at a later date, or to gain exposure to
certain markets in the most economical way possible. A Fund will not sell
interest rate caps, floors or collars if it does not own securities with coupons
which provide the interest that a Fund may be required to pay.
Swap agreements are two-party contracts entered into primarily by institutional
counterparties for periods ranging from a few weeks to several years. In a
standard swap transaction, two parties agree to exchange the returns (or
differentials in rates of return) that would be earned or realized on specified
notional investments or instruments. The gross returns to be exchanged or
"swapped" between the parties are calculated by reference to a "notional
amount," i.e., the return on or increase in value of a particular dollar amount
invested at a particular interest rate, in a particular foreign currency or
commodity, or in a "basket" of securities representing a particular index. The
purchaser of an interest rate cap or floor, upon payment of a fee, has the right
to receive payments (and the seller of the cap is obligated to make payments) to
the extent a specified interest rate exceeds (in the case of a cap) or is less
than (in the case of a floor) a specified level over a specified period of time
or at specified dates. The purchaser of an interest rate collar, upon payment of
a fee, has the right to receive payments (and the seller of the collar is
obligated to make payments) to the extent that a specified interest rate falls
outside an agreed upon range over a specified period of time or at specified
dates. The purchaser of an option on an interest rate swap, upon payment of a
fee (either at the time of purchase or in the form of higher payments or lower
receipts within an interest rate swap transaction) has the right, but not the
obligation, to initiate a new swap transaction of a pre-specified notional
amount with pre-specified terms with the seller of the option as the
counterparty.
The "notional amount" of a swap transaction is the agreed upon basis for
calculating the payments that the parties have agreed to exchange. For example,
one swap counterparty may agree to pay a floating rate of interest (e.g., 3
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month LIBOR) calculated based on a $10 million notional amount on a quarterly
basis in exchange for receipt of payments calculated based on the same notional
amount and a fixed rate of interest on a semi-annual basis. In the event a Fund
is obligated to make payments more frequently than it receives payments from the
other party, it will incur incremental credit exposure to that swap
counterparty. This risk may be mitigated somewhat by the use of swap agreements
which call for a net payment to be made by the party with the larger payment
obligation when the obligations of the parties fall due on the same date. Under
most swap agreements entered into by a Fund, payments by the parties will be
exchanged on a "net basis", and a Fund will receive or pay, as the case may be,
only the net amount of the two payments.
The amount of a Fund's potential gain or loss on any swap transaction is not
subject to any fixed limit. Nor is there any fixed limit on a Fund's potential
loss if it sells a cap or collar. If the Fund buys a cap, floor or collar,
however, the Fund's potential loss is limited to the amount of the fee that it
has paid. When measured against the initial amount of cash required to initiate
the transaction, which is typically zero in the case of most conventional swap
transactions, swaps, caps, floors and collars tend to be more volatile than many
other types of instruments.
The use of swap transactions, caps, floors and collars involves investment
techniques and risks which are different from those associated with portfolio
security transactions. If the Advisor is incorrect in its forecasts of market
values, interest rates, and other applicable factors, the investment performance
of a Fund will be less favorable than if these techniques had not been used.
These instruments are typically not traded on exchanges. Accordingly, there is a
risk that the other party to certain of these instruments will not perform its
obligations to a Fund or that a Fund may be unable to enter into offsetting
positions to terminate its exposure or liquidate its position under certain of
these instruments when it wishes to do so. Such occurrences could result in
losses to a Fund.
The Advisers to the Growth Funds will, however, consider such risks and will
enter into swap and other derivatives transactions only when it believes that
the risks are not unreasonable.
The Growth Funds will maintain cash or liquid assets in a segregated account
with its custodian in an amount sufficient at all times to cover its current
obligations under its swap transactions, caps, floors and collars. If a Fund
enters into a swap agreement on a net basis, it will segregate assets with a
daily value at least equal to the excess, if any, of a Fund's accrued
obligations under the swap agreement over the accrued amount a Fund is entitled
to receive under the agreement. If a Fund enters into a swap agreement on other
than a net basis, or sells a cap, floor or collar, it will segregate assets with
a daily value at least equal to the full amount of a Fund's accrued obligations
under the agreement.
The Growth Funds will not enter into any swap transaction, cap, floor, or
collar, unless the counterparty to the transaction is deemed creditworthy by the
Adviser. If a counterparty defaults, a Fund may have contractual remedies
pursuant to the agreements related to the transaction. The swap markets in which
many types of swap transactions are traded have grown substantially in recent
years, with a large number of banks and investment banking firms acting both as
principals and as agents utilizing standardized swap documentation. As a result,
the markets for certain types of swaps (e.g., interest rate swaps) have become
relatively liquid. The markets for some types of caps, floors and collars are
less liquid.
During the term of a swap, cap, floor or collar, changes in the value of the
instrument are recognized as unrealized gains or losses by marking to market to
reflect the market value of the instrument. When the instrument is terminated, a
Fund will record a realized gain or loss equal to the difference, if any,
between the proceeds from (or cost of) the closing transaction and a Fund's
basis in the contract.
The federal income tax treatment with respect to swap transactions, caps,
floors, and collars may impose limitations on the extent to which the Growth
Funds may engage in such transactions.
RESTRICTED AND ILLIQUID SECURITIES
With the exception of the Diversified Bond Fund, 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 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
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may be illiquid, resulting in undesirable delays in selling these securities at
prices representing fair value. Additionally, this policy is not intended to
apply to securities which become illiquid, i.e., difficult to sell at a
favorable price, as a result of market conditions.
Investments may be illiquid because there is no active trading market for them,
making it difficult to value them or dispose of them promptly at an acceptable
price. A restricted security is one that has a contractual restriction on its
resale or which cannot be sold publicly until it is registered under the
Securities Act of 1933. The Funds will not invest more than 15% of their
respective net assets in illiquid or restricted securities. Certain restricted
securities that are eligible for resale to qualified institutional purchasers
may not be subject to that limit. The Advisers monitor holdings of illiquid
securities on an ongoing basis to determine whether to sell any holding to
maintain adequate liquidity.
FOREIGN SECURITIES
The International Equity Fund, the Growth Equity Fund, the Mid Cap Growth Equity
Fund and the Small Cap Growth 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, the Growth Equity Fund, the Mid Cap Growth Equity
Fund and the Small Cap Growth 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.
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 Depositary Receipts ("ADR's"), (ii) traded
in the United States over-the-counter markets, or (iii) listed on a U.S.
securities exchange.
ADR's are issued by a U.S. depository institution, but they represent a
specified quantity of shares of a non-U.S. stock company. ADR's trade on U.S.
securities exchanges, and therefore are not treated as "foreign securities" for
purposes of the limitations on a Fund's investments in foreign securities,
although they are subject to many of the same risks as foreign securities as
described below.
The Growth Equity Fund, the Mid Cap Growth Equity Fund, the Small Cap Growth
Equity Fund and the International Equity Fund also may invest in sponsored or
unsponsored Global Depositary Receipts ("GDRs") and European Depositary Receipts
("EDRs") to the extent they come available. GDRs and EDRs are typically issued
by foreign depositaries and evidence ownership interests in a security or pool
of securities issued by either a foreign or a U.S. corporation. Holders of
unsponsored GDRs and EDRs generally bear all the costs associated with
establishing them. The depositary of an unsponsored GDR or EDR is under no
obligation to distribute shareholder communications received from the underlying
issuer or to pass through to the GDR or EDR holders any voting rights with
respect to the securities or pools of securities represented by the GDR or EDR.
GDRs and EDRs also may not be denominated in the same currency as the underlying
securities. Registered GDRs and EDRs are generally designed for use in U.S.
securities markets, while bearer form GDRs and EDRs are generally designed for
non-U.S. securities markets. The Funds will treat the underlying securities of a
GDR or EDR as the investment for purposes of its investment policies and
restrictions.
Investments in foreign securities involve special risks and considerations. As
foreign companies are not generally subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies, there may be less publicly available
information about a foreign company than about a domestic company. For example,
foreign markets have different clearance and settlement procedures. Delays in
settlement could result in temporary periods when assets of a Fund are
uninvested. The inability of a Fund to make intended security purchases due to
settlement problems could cause it to miss certain investment opportunities.
They may also entail certain other risks, such as the possibility of one or more
of the following: imposition of dividend or interest withholding or confiscatory
taxes, higher brokerage costs, thinner trading markets, currency blockages or
transfer restrictions, expropriation, nationalization, military coups or other
adverse political or economic developments; less government supervision and
regulation of securities exchanges, brokers and listed companies; and the
difficulty of enforcing obligations in other countries. Purchases of foreign
securities are usually
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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.
In addition to the general risks of investing in foreign securities, investments
in emerging markets involve special risks. Securities of many issuers in
emerging markets may be less liquid and more volatile than securities of
comparable domestic issuers. Emerging markets may have different clearance and
settlement procedures, and in certain markets there have been times when
settlements have been unable to keep pace with the volume of securities
transactions, making it difficult to conduct such transactions. Delays in
settlement could result in temporary periods when a portion of the assets of a
Fund is uninvested and no return is earned thereon. The inability of a Fund to
make intended security purchases due to settlement problems could cause a Fund
to miss attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result in losses to a Fund due to
subsequent declines in values of the portfolio securities, decrease in the level
of liquidity in a Fund's portfolio, or, if a Fund has entered into a contract to
sell the security, possible liability to the purchaser. Certain markets may
require payment for securities before delivery, and in such markets a Fund bears
the risk that the securities will not be delivered and that the Fund's payments
will not be returned. Securities prices in emerging markets can be significantly
more volatile than in the more developed nations of the world, reflecting the
greater uncertainties of investing in less established markets and economics. In
particular, countries with emerging markets may have relatively unstable
governments, present the risk of nationalization of businesses, restrictions on
foreign ownership, or prohibitions of repatriation of assets, and may have less
protection of property rights than more developed countries. The economics of
countries with emerging markets may be predominantly based on only a few
industries, may be highly vulnerable to changes in local or global trade
conditions, and may suffer from extreme and volatile debt burdens or inflation
rates. Local securities markets may trade a small number of securities and may
be unable to respond effectively to increases in trading volume, potentially
making prompt liquidation of substantial holdings difficult or impossible at
times. Securities of issuers located in countries with emerging markets may have
limited marketability and may be subject to more abrupt or erratic price
movements.
Certain emerging markets may require governmental approval for the repatriation
of investment income, capital or the proceeds of sales of securities by foreign
investors. In addition, if a deterioration occurs in an emerging market's
balance of payments or for other reasons, a country could impose temporary
restrictions on foreign capital remittances. A Fund could be adversely affected
by delays in, or a refusal to grant, any required governmental approval for
repatriation of capital, as well as by the application to that Fund of any
restrictions on investments.
Investment in certain foreign emerging market debt obligations may be restricted
or controlled to varying degrees. These restrictions or controls may at times
preclude investment in certain foreign emerging market debt obligations and
increase the expenses of a Fund.
WHEN-ISSUED SECURITIES
The Short-Term Bond Fund, the Core Bond Fund, the Balanced Fund, the Growth
Equity Fund, the Mid Cap Growth Equity Fund and the Small Cap Growth Equity Fund
may purchase securities on a "when-issued" or on a "forward delivery" basis.
Generally, under normal circumstances, a Fund is expected to take delivery of
securities purchased. When a Fund commits to purchase a security on a
"when-issued" or on a "forward delivery" basis, it will set up procedures
consistent with SEC policies, which currently recommend that an amount of the
Fund's assets equal to
B-14
<PAGE>
the amount of the purchase be held aside or segregated to be used to pay for the
commitment. Therefore, the Fund will always have liquid assets sufficient to
cover any commitments or to limit any potential risk. However, although the
Funds do not intend to make such purchases for speculative purposes, there are
risks. For example, a Fund may have to sell assets which have been set aside in
order to meet redemptions. Also, if a Fund determines it necessary to sell the
"when-issued" or "forward delivery" securities before delivery, the Fund may
incur a loss because of market fluctuations since the time the commitment to
purchase the securities was made.
PORTFOLIO MANAGEMENT
MassMutual, Babson, HarbourView, MFS, MAS, J.P. Morgan and Waddell & Reed 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 believes 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 "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.
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 (but not loss) 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.
B-15
<PAGE>
(2) Borrow money, except from banks for temporary or emergency purposes
not in excess of one-third of the value of a Fund's assets, except that a
Fund may enter into reverse repurchase agreements or roll transactions.
For purposes of calculating this limitation, entering into portfolio
lending agreements shall not be deemed to constitute borrowing money. A
Fund would not make any additional investments while its borrowings
exceeded 5% of its assets.
(3) Issue senior securities (as defined in the 1940 Act) except for
securities representing indebtedness not prevented by paragraph (2) above.
(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) With the exception of the Growth Equity Fund, the Mid Cap Growth
Equity Fund, and the Small Cap Growth Equity Fund, 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. This restriction is applicable to 75% of the assets of the Growth
Equity Funds.
(11) With the exception of the Growth Equity Fund, the Mid Cap Growth
Equity Fund, and the Small Cap Growth Equity Fund, 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.
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.
B-16
<PAGE>
(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.
(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 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,
HarbourView, MFS, MAS, J.P. Morgan and Waddell & Reed may be considered part of
the management 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.
Stuart H. Reese/*/ Chairman, Trustee and President of the Trust
1295 State Street
Springfield, MA 01111
Age: 44
Chief Investment Officer (since 1999), Chief Executive Director
(1997-1999), Executive Director (1996-1997), Senior Vice President
(1993-1997), MassMutual; President (since 1995), Executive Vice President
(1993-1995), MassMutual Corporate Investors and MassMutual Participation
Investors (closed-end investment companies); Director (since 1996),
Antares Capital Corporation (finance company) and Charter Oak Capital
Management, Inc. (investment adviser); 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); Director
(1994-1996), Pace Industries (aluminum die caster); Advisory Board Member
(since 1995), Kirtland Capital Partners; President (since 1994), MML
Series Investment Fund (open-end investment company).
Ronald J. Abdow Trustee of the Trust
1400 Elm Street
West Springfield, MA 01089
Age: 68
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).
- ----------
/*/Trustee who is an "interested person" of the Trust with the definition set
forth in Section 2(a)(19) of the 1940 Act.
B-17
<PAGE>
Richard H. Ayers Trustee of the Trust
176 Sewall Road
Wolfreboro, NH 03894
Age: 57
Retired; former adviser to Chairman (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.; Trustee (since 1999), Advisory Board Member (1996-1999), MML Series
Investment Fund (open-end investment company).
Mary E. Boland Trustee of the Trust
67 Market Street
Springfield, MA 01102
Age: 60
Attorney at Law, Egan, Flanagan and Cohen, P.C. (law firm), Springfield,
MA; Director (1995-1999), Trustee (until 1995), SIS Bank (formerly,
Springfield Institution for Savings); Director (since 1999), SIS and
Family Bank, F.S.B. (formerly SIS Bank); Trustee (since 1973), MML Series
Investment Fund (open-end investment company).
David E.A. Carson Trustee of the Trust
850 Main Street
Bridgeport, CT 06604
Age: 65
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); Trustee (since 1999), Advisory Board Member
(1996-1999), MML Series Investment Fund (open-end investment company).
Robert J. O'Connell/*/ Trustee of the Trust
1295 State Street
Springfield, MA 01111
Age: 55
President, Chief Executive Officer, Director, Member, Board Affairs
Committee and Dividend Policy Committee, Chairman Investment Committee of
MassMutual Life Insurance Company; Director, C.M. Life Insurance Company
and MML Bay State Life Insurance Company (wholly-owned insurance company
subsidiaries of MassMutual), Cornerstone Real Estate Advisers, Inc.
(wholly-owned real estate investment advisory subsidiary of MassMutual
Holding Trust I), One Financial Plaza, Suite 1700, Hartford, Connecticut;
DLB Acquisition Corporation (holding company for investment advisers),
MassMutual Holding MSC, Inc., Trustee, MassMutual Holding Trust II
(wholly-owned holding company subsidiaries of MassMutual Holding Co.),
MassMutual Holding Trust I (wholly-owned holding company subsidiary of
MassMutual Holding Co.), Director, MassMutual International, Inc.,
(wholly-owned subsidiary of MassMutual Holding Company to act as service
provider for international insurance companies, MassMutual Holding Company
(wholly-owned holding company subsidiary of MassMutual), MassMutual
Benefits Management, Inc., Life Office Management Association; Director,
President and Chief Executive Officer (1991-1998), AIG Life Insurance
Company, American International Life Assurance of New York, Delaware
American Life Insurance Co., Pacific Union Assurance Company; Director
(1991-1998) AIG Life Insurance Company of Puerto Rico; Senior Vice
President (1991-1998), Life Insurance of American International Group,
Inc., American Life Insurance Company, DE; Senior Vice President, Group
Management Division (1991-1998) of American International Group, Inc.;
Trustee (since 1999), MassMutual Institutional Funds (open-end investment
company).
- ----------
/*/Trustee who is an "interested person" of the Trust with the definition set
forth in Section 2(a)(19) of the 1940 Act.
B-18
<PAGE>
Richard W. Greene Trustee of the Trust
University Of Rochester
Rochester, NY 14627
Age: 63
Vice President for Investments and Treasurer (since 1998); Executive Vice
President and Treasurer (1986-1998), University of Rochester (private
university); Trustee (since 1999), Advisory Board Member (1996-1999), MML
Series Investment Fund (open-end investment company).
Beverly L. Hamilton Trustee of the Trust
515 South Flower Street
Los Angeles, CA 90017
Age: 53
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); Trustee (since 1999), Advisory
Board Member (1996-1999), MML Series Investment Fund (open-end investment
company).
F. William Marshall, Jr. Trustee of the Trust
1441 Main Street
Springfield, MA 01102
Age: 57
Chairman, SIS and Family Bank, F.S.B. (formerly SIS Bank); President,
Chief Executive Officer and Director (1993-1999), SIS Bancorp, Inc. and
SIS Bank (formerly, Springfield Institution for Savings); Director (since
1999), Peoples Heritage Financial Group, Inc.; 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: 76
Proprietor, Synectics Financial Company (venture capital activities,
business consulting and investments); Trustee, MML Series Investment Fund
(open-end investment company).
Richard G. Dooley/*/ Trustee of the Trust
1295 State Street
Springfield, MA 01111
Age: 70
Consultant (since 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.), Nellie Mae; 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), Director (since 1974),
MassMutual Corporate Investors, and Vice Chairman (since 1995), Director
(since 1988), Chairman (1988-1995), MassMutual Participation Investors
(closed-end investment companies); Vice Chairman (since 1995), Chairman
(1988-1995), Trustee (since 1995) MML Series Investment Fund (open-end
investment company); Director (since 1996), Charter Oak Capital
Management, Inc.
- ----------
/*/Trustee who is an "interested person" of the Trust with the definition set
forth in Section 2(a)(19) of the 1940 Act.
B-19
<PAGE>
John H. Southworth Trustee of the Trust
195 Eton Road
Longmeadow, MA 01106
Age: 71
Chairman (since 1994), 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).
Michael D. Hays Chief Financial Officer of the Trust
1295 State Street
Springfield, MA 01111
Age: 56
Senior Vice President (since 1998), Senior Vice President and Actuary
(1986-1998), MassMutual.
Mary Wilson Kibbe Senior Vice President of the Trust
1295 State Street
Springfield, MA 01111
Age: 45
Executive Director (since 1982), Senior Managing Director (1996-1997),
Vice President and Managing Director (1991-1996), MassMutual; Senior Vice
President (since 1996), HYP Management, Inc. (managing member of
MassMutual High Yield Partners LLC) and MMHC Investment, Inc. (investor in
funds sponsored by MassMutual); Senior Vice President (since 1994), MML
Series Investment Fund (open-end investment company); Vice President,
MassMutual Participation Investors and MassMutual Corporate Investors
(closed-end investment companies); Vice President (1991-1995), Oppenheimer
Investment Grade Bond Fund (open-end investment company).
Stephen L. Kuhn Vice President and Secretary of the Trust
1295 State Street
Springfield, MA 01111
Age: 52
Vice President and Deputy General Counsel (since 1998), MassMutual; Vice
President and Associate General Counsel (1992-1998), MassMutual; Vice
President and Secretary, MassMutual Participation Investors and MassMutual
Corporate Investors (closed-end investment companies); Assistant Secretary
(since 1996), Antares Capital Corporation (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 (since 1989), MML Series
Investment Company (open-end investment company).
Charles C. McCobb, Jr. Vice President of the Trust
1295 State Street
Springfield, MA 01111
Age: 55
Managing Director (since 1997), MassMutual; Managing Director and Vice
President (1994-1997), Citicorp, Inc. (banking); Managing Director
(1973-1994), Aetna Life & Casualty Company (insurance company); Vice
President (since 1996), and Chief Financial Officer (since 1998),
MassMutual Corporate Investors and MassMutual Participation Investors
(closed-end investment companies); Chief Financial Officer (since 1998)
MMHC Investment, Inc., HYP Management, Inc., MMCI Subsidiary Trust and
MMPI Subsidiary Trust (wholly-owned subsidiaries of MassMutual Corporate
Investors and MassMutual Participation Investors, respectively).
B-20
<PAGE>
Edmond F. Ryan Vice President of the Trust
1295 State Street
Springfield, MA 01111
Age: 40
Senior Vice President (since 1995), Vice President (1985-1995),
MassMutual.
Vernon J. Meyer Vice President of the Trust
1295 State Street
Springfield, MA 01111
Age: 34
Vice President (since 1998); Second Vice President (1994-1998), Assistant
Vice President and Director (1993-1994), MassMutual.
Mark B. Ackerman Treasurer of the Trust
1295 State Street
Springfield, MA 01111
Age: 34
Investment Director (since 1996), Associate Investment Director
(1994-1996), MassMutual; Controller (1998), Treasurer (since 1998),
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); Vice President (since
1998), HYP Management, Inc.; Comptroller (1998) and Treasurer (since
1998), MMCI Subsidiary Trust, MMPI Subsidiary Trust (wholly-owned
subsidiaries of MassMutual Corporate Investors and MassMutual
Participation Investors, respectively).
The Audit Committee makes recommendations to the Trustees as to the engagement
or discharge of the Trust's independent auditors, supervises investigations into
matters relating to audit functions, reviews with the Trust's independent
auditors the results of the audit engagement, and considers the audit fees. The
Nominating Committee consists of Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Trust or any adviser and considers making all
nominations for non-interested members of the Board of Trustees. The selection
and nomination of management nominees for such vacancies is committed to the
discretion of the Nominating Committee. The Investment Pricing Committee
determines the fair value of securities for which market quotations are not
readily available.
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.
B-21
<PAGE>
The following table discloses the compensation paid to the Registrant's
non-interested trustees for the 1998 fiscal year. The Registrant has no pension,
retirement, or deferred compensation plans. Each of the non-interested Trustees
also serve as a Trustee of one other registered, open-end investment company
managed by MassMutual. Total Compensation from Registrant and Fund Complex
reflects compensation paid in the 1998 fiscal year.
- --------------------------------------------------------------------------------
Aggregate Total Compensation
Compensation from From Registrant and
Name/Position Registrant Fund Complex
- --------------------------------------------------------------------------------
Ronald J. Abdow
Trustee $16,000 $32,000
- --------------------------------------------------------------------------------
Richard H. Ayers
Trustee 17,000 34,000
- --------------------------------------------------------------------------------
Mary E. Boland
Trustee 16,000 32,000
- --------------------------------------------------------------------------------
David E.A. Carson
Trustee 16,000 32,000
- --------------------------------------------------------------------------------
Richard W. Greene
Trustee 16,000 32,000
- --------------------------------------------------------------------------------
Beverly L. Hamilton
Trustee 16,000 32,000
- --------------------------------------------------------------------------------
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, 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
B-22
<PAGE>
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 PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
MassMutual may be deemed a control person (as that term is defined in the 1940
Act) 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
the Class A and Class S shares of each Fund of the Trust as of March 31, 1999.
The following shareholders may be deemed control persons (as defined in the Act)
of the Trust in that they beneficially own more than 25% of the Class Y shares
of the Funds indicated as of March 31, 1999: CGB Enterprises, Inc., P.O. Box
249, Mandeville, LA 70470-0249 owned 48.35% of the Class Y shares of the Prime
Fund; Novus International, Inc., 530 Maryville Center Drive, St. Louis, MO 63141
owned 29.99% of the Class Y shares of the Core Bond Fund; Alamo Cement Co., LTD,
6055 West Green Mountain Road, San Antonio, TX 78266 owned 28.54% of the Class Y
shares of the Core Bond Fund; Zen-Noh Grain Corporation, P.O. Box 39,
Mandeville, LA 70470-0249 owned 26.21% of the Class Y shares of the Core Equity
Fund; Novus International, Inc., 530 Maryville Center Drive, St. Louis, MO 63141
owned 31.50% of the Class Y shares of the Small Cap Value Equity Fund;
Massachusetts Mutual Life Insurance Company, 1295 State Street, Springfield, MA
01111 owned 97.78% of the Class Y shares of the Balanced Fund; and Novus
International, Inc., 530 Maryville Center Drive, St. Louis, MO 63141 owned
42.67% of the Class Y shares of the International Equity Fund.
The following shareholders may be deemed principal holders of the Trust because
of their beneficial ownership of more than 5% of the Class Y shares of certain
Funds as of March 31, 1999: Arthur J. Gallagher & Co., Two Pierce Place, Itasca,
IL 60143 owned 6.60% of the Class Y shares of the Core Bond Fund; Arthur J.
Gallagher & Co., Two Pierce Place, Itasca, IL 60143 owned 13.12% of the Class Y
shares of the Core Equity Fund; CGB Enterprises, Inc., P.O. Box 249, Mandeville,
LA 70470-0249 owned 10.70% of the Class Y shares of the Small Cap Value Equity
Fund; Arthur J. Gallagher & Co., Two Pierce Place, Itasca, IL 60143 owned 10.69%
of the Class Y shares of the Small Cap Value Equity Fund; CGB Enterprises, Inc.,
P.O. Box 249, Mandeville, LA 70470-0249 owned 8.20% of the Class Y shares of the
International Equity Fund; Arthur J. Gallagher & Co., Two Pierce Place, Itasca,
IL 60143 owned 5.66% of the Class Y shares of the International Equity Fund; and
Novus International, Inc., 530 Maryville Center Drive, St. Louis, MO 63141 owned
8.23% of the Class Y shares of the Short Term Bond Fund.
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 May 3, 1999
(each an "Advisory Agreement"), with the exception of the International Equity
Fund, which agreement is dated September 30, 1994. 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, the Prime and Core Bond Segments of the Balanced Fund, the
Diversified Bond Fund, the Growth Fund, the Mid Cap Growth Fund, the Small Cap
Value Equity Fund, and the International Equity 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
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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.
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, MML Equity Index Fund, MML Small Cap Value Equity Fund, MML Growth
Equity Fund and MML Small Cap Growth Equity 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: .35% for the Prime Fund, .40% for the Short-Term Bond Fund, .48% for
the Core Bond Fund, .50% for the Diversified Bond Fund, .48% for the Balanced
Fund, .50% for the Core Equity Fund, .58% for the Small Cap Value Equity Fund;
.68% for the Growth Equity Fund, .70% for the Mid Cap Growth Equity Fund, .82%
for the Small Cap Growth 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 12/31/96 $ 1,150,292 ($ 89,223) $ 1,061,069
Year ended 12/31/97 $ 1,155,353 ($ 29,758) $ 1,125,595
Year ended 12/31/98 $ 1,143,154 -- $ 1,143,154
Short-Term Bond Fund
Year ended 12/31/96 $ 606,206 ($ 47,791) $ 558,415
Year ended 12/31/97 $ 769,014 ($ 18,246) $ 750,768
Year ended 12/31/98 $ 1,163,327 -- $ 1,163,327
Core Bond Fund
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
Year ended 12/31/98 $ 2,419,080 -- $ 2,419,080
Balanced Fund
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
Year ended 12/31/98 $ 3,182,481 -- $ 3,182,481
Core Equity Fund
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
Year ended 12/31/98 $15,182,885 -- $15,182,885
Small Cap Value Equity Fund
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
Year ended 12/31/98 $ 3,775,176 -- $ 3,775,176
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International Equity Fund
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
Year ended 12/31/98 $ 5,327,317 -- $ 5,327,317
*MassMutual's voluntary agreement to waive a portion of its management fee
terminated May 1, 1997. See "Financial Highlights" in the Prospectus.
The Diversified Bond Fund, the Growth Equity Fund, the Mid Cap Growth Equity
Fund and the Small Cap Growth Equity Fund commenced operations on May 3, 1999.
AFFILIATED 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 pays to Babson a sub-advisory fee equal to an annual rate of .13% of
the average daily net asset value of the Core Equity Fund, .13% of the average
daily net asset value of the Core Equity Segment of the Balanced Fund and .25%
of the average daily net asset value of the Small Cap Value Equity Fund.
MassMutual pays to HarbourView a sub-advisory fee equal to an annual rate of
.50% of the average daily net asset value of the International Equity Fund.
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 HarbourView as advisers of the Funds outweigh
the disadvantages, if any, which might result from this procedure.
UNAFFILIATED INVESTMENT ADVISERS
MFS is an indirect, wholly-owned subsidiary of Sun Life Assurance Company of
Canada, and is registered with the SEC as an investment adviser. MFS is
sub-adviser for the Growth Equity Fund. MassMutual pays to MFS a sub-advisory
fee equal to an annual rate of .40% on the first $300 million of aggregate net
assets under management, .37% on the next $300 million of aggregate net assets
under management, .32% on the next $500 million of aggregate net assets under
management, and .25% on aggregate net assets in excess of $1.5 billion of
aggregate net assets under management. As used in this section, aggregate net
assets under management means the aggregate of (i) average daily net assets of
the specified Fund, plus (ii) the average daily net assets of all other funds or
accounts of MassMutual or its affiliates, including other funds registered under
the 1940 Act, for which the sub-adviser provides investment sub-advisory
services. MFS also provides investment sub-advisory services for MML Growth
Equity Fund, a series of MML Series Investment Fund, an open-end investment
company for which MassMutual acts as investment manager.
MAS is a subsidiary of Morgan Stanley Dean Witter Investment Management Inc. and
is registered with the SEC as an investment adviser. MAS is sub-adviser for Mid
Cap Growth Equity Fund. MassMutual pays to MAS a sub-advisory fee equal to an
annual rate of .55% on the first $150 million of aggregate net assets under
management, and .50% on aggregate net assets in excess of $140 million. MAS does
not provide any such services for other funds managed by MassMutual.
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J.P. Morgan and Waddell & Reed both act as sub-advisers for Small Cap Growth
Equity Fund, and both are registered with the SEC as investment advisers. Each
sub-adviser will manage 50% of the net assets of the Fund's portfolio.
Initially, each sub-adviser will be allocated their portion of the Fund's net
assets based on cash flow received by the Fund. Annually, the Fund's portfolio
will be rebalanced so that each sub-adviser's allocation is 50% of the net
assets. MassMutual pays J.P. Morgan an investment sub-advisory fee at an annual
rate of .60% on the first $100 million of aggregate net assets under management
and .50% on aggregate net assets in excess of $200 million. MassMutual pays
Waddell & Reed an investment sub-advisory fee at an annual rate of .75% on the
first $100 million of aggregate net assets under management and, thereafter,
.70% on aggregate net assets in excess of $100 million. J.P. Morgan and Waddell
& Reed both provide sub-advisory services for MML Small Cap Growth Equity Fund,
a series of MML Series Investment Fund, an open-end investment company for which
MassMutual acts as investment manager.
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 .2932% to .4075% for Class A shares; .1432% to .2575% for Class Y
shares; .0675% to .1232% for Class S shares and .2932% to .4075% for Class L
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 12/31/96 $ 208,805
Year ended 12/31/97 $ 209,004
Year ended 12/31/98 $ 198,633
Short-Term Bond Fund
Year ended 12/31/96 $ 106,637
Year ended 12/31/97 $ 134,919
Year ended 12/31/98 $ 201,862
Core Bond Fund
Year ended 12/31/96 $ 258,828
Year ended 12/31/97 $ 348,743
Year ended 12/31/98 $ 418,822
Balanced Fund
Year ended 12/31/96 $ 431,541
Year ended 12/31/97 $ 527,470
Year ended 12/31/98 $ 550,978
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Core Equity Fund
Year ended 12/31/96 $2,088,712
Year ended 12/31/97 $2,594,600
Year ended 12/31/98 $2,623,373
Small Cap Value Equity Fund
Year ended 12/31/96 $ 361,815
Year ended 12/31/97 $ 490,532
Year ended 12/31/98 $ 534,899
International Equity Fund
Year ended 12/31/96 $ 275,670
Year ended 12/31/97 $ 467,044
Year ended 12/31/98 $ 486,162
THE DISTRIBUTOR
The Trust's shares are continuously distributed by MML Distributors, LLC (the
"Distributor"), located at 1414 State Street, Springfield, Massachusetts
01144-1013, pursuant to a Distribution Agreement with the Trust dated as of May
3, 1999 (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. The Distributor is a majority-owned
subsidiary of MassMutual.
The Distribution Agreement will continue in effect for an initial two-year
period, and thereafter 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 for the Prime Fund, Short-Term Bond Fund, Core Bond
Fund, Balanced Fund, Core Equity Fund, Small Cap Value Equity Fund and
International Equity Fund, and on February 1, 1999 for the Diversified Bond
Fund, Growth Equity Fund, Mid Cap Growth Equity Fund and Small Cap Growth Equity
Fund. 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 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 amounts paid by a
Fund exceeds the Adviser's expenses. 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 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.
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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.
Under the 12b-1 plans for Class A shares of the Funds, the Trust paid service
fees in 1998 of approximately $292 for the Prime Fund, $315 for the Short-Term
Bond Fund, $341 for the Core Bond Fund, $414 for the Balanced Fund, $522 for the
Core Equity Fund, $458 for the Small Cap Value Equity Fund, and $345 for the
International Equity Fund, all of which was paid to MassMutual.
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"). As custodian, IBT
has custody of the Funds' securities and maintains certain financial and
accounting books and records. 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
Deloitte & Touche LLP, New York, New York, is the Trust's independent public
accountant.
PricewaterhouseCoopers LLP ("PwC") resigned as the Trust's independent public
accountant, effective February 23, 1999, after consultation with the staff of
the Securities and Exchange Commission (SEC) on the issue of its independence to
the Trust. Deloitte & Touche LLP was approved as the Trust's independent public
accountant by the Board of Trustees for fiscal years 1998 and 1999. PwC did not
resign as a result of a disagreement on any matters relating to accounting
principles or practices, financial statement disclosures or auditing scope or
procedure.
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 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
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<PAGE>
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,
1998, December 31, 1997, and December 31, 1996, respectively, were as follows:
Balanced Fund $212,554.36, $174,902, and $115,756; Core Equity Fund
$1,030,560.95, $1,494,262, and $933,716; Small Cap Value Equity Fund
$638,429.88, $423,705, and $430,964; and International Equity Fund
$2,377,044.12, $2,025,648, and $1,103,103. Approximately $8,193 and $35,000 of
the brokerage commissions paid by the Fund for the fiscal years ended December
31, 1998 and 1997, respectively, were paid to Jefferies & Co., Inc.
("Jefferies") and Advest, Inc. Jefferies and Advest, Inc. are wholly-owned
subsidiaries of a company for which one Trustee serves as a director.
SHAREHOLDER INVESTMENT ACCOUNT
A Shareholder Investment Account is established for each Investor in the Funds.
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.
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 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 sixteen separate series have been authorized, eleven of which
constitute the interests in the Funds described in the 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.
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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.
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 currently 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>
INVESTMENT PERFORMANCE
The yield of the Prime Fund, the Short-Term Bond Fund, the Core Bond Fund and
the Diversified 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 any class of Fund shares will be provided net of any
Fund expenses for that class.
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.
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, 1998. The
Diversified Bond Fund commenced operations as of May 3, 1999.
Yield for the 30-Day Period Ended December 31, 1998
Class S Shares* (Unaudited)
Fund Yield
Prime Fund 5.41%
Short-Term Bond Fund 4.89%
Core Bond Fund 5.69%
*Yield for Class A, Y and S shares may differ due to different expense
structures. Class L shares had not been established as of December 31, 1998.
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
ERV = 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
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<PAGE>
some of the Fund's current portfolio instruments. Total return is a function of
the value of the Fund's portfolio securities over time, which may be expected to
fluctuate, as well as of income earned by the Fund on such securities and of the
Fund's operating expenses.
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<PAGE>
Average Annual Total Return for the periods ended December 31, 1998.
- --------------------------------------------------------------------------------
1 YEAR
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A Class Y Class S
- --------------------------------------------------------------------------------
Prime Fund and its predecessor SIA G 4.60% 5.14% 5.39%
- --------------------------------------------------------------------------------
Short-Term Bond Fund and its predecessor
SIA F 5.75% 6.12% 6.29%
- --------------------------------------------------------------------------------
Core Bond Fund and its predecessor SIA E 7.75% 8.25% 8.44%
- --------------------------------------------------------------------------------
Balanced Fund and its predecessor SIA M 12.78% 13.23% 13.50%
- --------------------------------------------------------------------------------
Core Equity Fund and its predecessor SIA A 15.96% 16.49% 16.75%
- --------------------------------------------------------------------------------
Small Cap Value Equity Fund and its
predecessor SIA S -9.58% -9.25% -9.02%
- --------------------------------------------------------------------------------
International Equity Fund and its
predecessor SIA I 4.40% 4.84% 5.05%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3 YEARS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A Class Y Class S
- --------------------------------------------------------------------------------
Prime Fund and its predecessor SIA G 4.63% 5.11% 5.34%
- --------------------------------------------------------------------------------
Short-Term Bond Fund and its predecessor
SIA F 5/60% 6.03% 6.23%
- --------------------------------------------------------------------------------
Core Bond Fund and its predecessor SIA E 6.27% 6.75% 6.96%
- --------------------------------------------------------------------------------
Balanced Fund and its predecessor SIA M 14.25% 14.74% 14.99%
- --------------------------------------------------------------------------------
Core Equity Fund and its predecessor SIA A 21.10% 21.63% 21.89%
- --------------------------------------------------------------------------------
Small Cap Value Equity Fund and its
predecessor SIA S 14.35% 14.81% 15.06%
- --------------------------------------------------------------------------------
International Equity Fund and its
predecessor SIA I 12.25% 12.73% 12.96%
- --------------------------------------------------------------------------------
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<PAGE>
- --------------------------------------------------------------------------------
5 YEARS
- -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A Class Y Class S
- --------------------------------------------------------------------------------
Prime Fund and its predecessor SIA G 4.46% 4.93% 5.16%
- --------------------------------------------------------------------------------
Short-Term Bond Fund and its predecessor
SIA F 5.16% 5.60% 5.82%
- --------------------------------------------------------------------------------
Core Bond Fund and its predecessor SIA E 6.24% 6.72% 6.93%
- --------------------------------------------------------------------------------
Balanced Fund and its predecessor SIA M 12.84% 13.33% 13.57%
- --------------------------------------------------------------------------------
Core Equity Fund and its predecessor SIA A 19.14% 19.65% 19.91%
- --------------------------------------------------------------------------------
Small Cap Value Equity Fund and its
predecessor SIA S 11.10% 11.57% 11.81%
- --------------------------------------------------------------------------------
International Equity Fund and its
predecessor SIA I 6.88% 7.35% 7.57%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
10 YEARS (or since inception)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A Class Y Class S
- --------------------------------------------------------------------------------
Prime Fund and its predecessor SIA G 4.89% 5.36% 5.58%
- --------------------------------------------------------------------------------
Short-Term Bond Fund and its predecessor
SIA F N/A N/A N/A
- --------------------------------------------------------------------------------
Core Bond Fund and its predecessor SIA E 8.42% 8.90% 9.12%
- --------------------------------------------------------------------------------
Balanced Fund and its predecessor SIA M 12.19% 12.67% 12.91%
- --------------------------------------------------------------------------------
Core Equity Fund and its predecessor SIA A 15.71% 16.21% 16.46%
- --------------------------------------------------------------------------------
Small Cap Value Equity Fund and its
predecessor SIA S 12.23% 12.71% 12.95%
- --------------------------------------------------------------------------------
International Equity Fund and its
predecessor SIA I N/A N/A N/A
- --------------------------------------------------------------------------------
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, Russell
2500 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 Intermediate Aggregate 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
B-34
<PAGE>
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.
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
B-35
<PAGE>
intends to make distributions sufficient to avoid imposition of the excise tax.
Distributions declared by a Fund during October, November or December to
shareholders of record on a date in any such month and paid by the Fund during
the following January will be treated for federal tax purposes as paid by the
Fund and received by shareholders on December 31 of the year in which declared.
Except in the case of certain shareholders eligible for preferential tax
treatment, e.g., qualified retirement or pension trusts, shareholders of each
Fund will be subject to federal income taxes on distributions made by the Fund
whether received in cash or additional shares of the Fund. Distributions by each
Fund of net income and short-term capital gains, if any, will be taxable to
shareholders as ordinary income. Designated distributions of long-term capital
gains, if any, will be taxable to shareholders as long-term capital gains,
without regard to how long a shareholder has held shares of the Fund. Under the
Taxpayer Relief Act of 1997, long-term capital gains generally will be subject
to a 28% or 20% tax rate, depending on the holding period in the portfolio
investment.
Dividends and distributions on Fund shares received shortly after their
purchase, although in effect a return of capital, are subject to federal income
taxes. Investment income and gains received by a Fund from sources outside the
United States might be subject to foreign taxes which are withheld at the
source. The effective rate of these foreign taxes cannot be determined in
advance because it depends on the specific countries in which its assets will be
invested, the amount of the assets invested in each such country and the
possible applicability of treaty relief.
The International Equity Fund may be eligible to make an election under Section
853 of the Code so that any of its shareholders subject to federal income taxes
will be able to claim a credit or deduction on their income tax returns for, and
will be required to treat as part of the amounts distributed to them, their pro
rata portion of qualified taxes paid by the Fund to foreign countries. The
ability of shareholders of the Fund to claim a foreign tax credit is subject to
certain limitations imposed by Section 904 of the Code, which in general limits
the amount of foreign tax that may be used to reduce a shareholder's U.S. tax
liability to that amount of U.S. tax which would be imposed on the amount and
type of income in respect of which the foreign tax was paid. In addition, the
ability of shareholders to claim a foreign tax credit is subject to a holding
period requirement. A shareholder who for U.S. income tax purposes claims a
foreign tax credit in respect of Fund distributions may not claim a deduction
for foreign taxes paid by the Fund, regardless of whether the shareholder
itemizes deductions. Also, under Section 63 of the Code, no deduction for
foreign taxes may be claimed by shareholders who do not itemize deductions on
their federal income tax returns. It should also be noted that a tax-exempt
shareholder, like other shareholders, will be required to treat as part of the
amounts distributed to it a pro rata portion of the income taxes paid by the
Fund to foreign countries. However, that income will generally be exempt from
U.S. taxation by virtue of such shareholder's tax-exempt status and such a
shareholder will not be entitled to either a tax credit or a deduction with
respect to such income. The International Equity Fund will notify shareholders
each year of the amount of dividends and distributions and the shareholder's pro
rata share of qualified taxes paid by the Fund to foreign countries. Investment
by a Fund in "passive foreign investment companies" could subject the Fund to a
U.S. federal income tax or other charge on the proceeds from the sale of its
investment in such a company; however, this tax can be avoided by making an
election to mark such investments to market annually or to treat the passive
foreign investment company as a "qualified electing fund."
Redemptions and exchanges of each Fund's shares are taxable events and,
accordingly, shareholders subject to federal income taxes may realize gains and
losses on these transactions. If shares have been held for more than one year,
gain or loss realized will be long-term capital gain or loss, provided the
shareholder holds the shares as a capital asset. Under the Taxpayer Relief Act
of 1997, long-term capital gains generally will be subject to a 28% or 20% tax
rate depending on the Investor's holding period in Fund shares. However, a loss
on the sale of shares held for six months or less will be treated as a long-term
capital loss to the extent of any long-term capital gain dividend 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.
B-36
<PAGE>
Under federal income tax law, a portion of the difference between the purchase
price of zero-coupon securities in which a Fund has invested and their face
value ("original issue discount") is considered to be income to the Fund each
year even though the Fund will not receive cash interest payments from these
securities. This original issue discount (imputed income) will make up a part of
the net investment income of the Fund which must be distributed to shareholders
in order to maintain the qualification of the Fund as a regulated investment
company and to avoid federal income tax at the level of the Fund.
The foregoing is a general and abbreviated summary of the applicable provisions
of the Code and regulations currently in effect. For the complete provisions,
reference should be made to the pertinent Code sections and regulations. The
Code and regulations are subject to change by legislative or administrative
action. This discussion of the federal income tax treatment of the Fund and its
shareholders does not describe in any respect the tax treatment of any
particular arrangement, e.g., tax-exempt trusts or insurance products, pursuant
to which or by which investments in the Fund may be made.
EXPERTS
The financial statements of each of the Funds are set forth in the Funds' Annual
Reports as of December 31, 1998, and are incorporated herein by reference in
reliance on the report of Deloitte & Touche LLP, independent accountants, given
on the authority of that firm as experts in accounting and auditing. A copy of
the Funds' Annual Report as of December 31, 1998 is available, without charge,
upon request.
GLOSSARY
Currency Transactions: include forward currency contracts, exchange listed
currency futures, exchange listed and OTC options on currencies, and currency
swamps. 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.
Investor: include 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 purchase of shares, that
purchases shares of the Trust and is hereinafter referred to as Investor or
collectively referred to as Investors.
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.
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<PAGE>
U.S. Government Securities: include obligations issued, sponsored, assumed and
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 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.
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<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:
S Leading market positions in well-established industries.
S High rates of return on funds employed.
S Conservative capitalization structure with moderate reliance
on debt and ample asset protection.
S Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
S 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.
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.
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<PAGE>
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.
B-40
<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.
PART C: OTHER INFORMATION
Item 23: Exhibits
Exhibit A: Copy of Registrant's Agreement and Declaration of Trust, as amended
June 14, 1993. /1/
Exhibit B: Copy of Registrant's By-Laws, as now in effect. /1/
Exhibit C: None.
Exhibit D:
(1) Copy of specimen Investment Management Agreement between certain of
Registrant's series (MassMutual Core Bond, MassMutual Core Equity, MassMutual
Small Cap Value, MassMutual Balanced, MassMutual Diversified Bond, MassMutual
Growth Equity Fund, MassMutual Mid Cap Growth Equity Fund and MassMutual Small
Cap Growth Equity Fund) and Massachusetts Mutual Life Insurance Company
("MassMutual"). /5/
(2) Copy of Investment Management Agreements between certain of Registrant's
series (Prime Fund, Short Term Bond Fund, and International Equity Fund). /1/
(3) Copy of Investment Sub-Advisory Agreement between MassMutual and David L.
Babson and Company, Inc ("Babson"). /3/
(4) Copy of Investment Sub-Advisory Agreement between MassMutual and HarbourView
Asset Management Corporation("HarbourView"). /1/
(5) Copy of Investment Sub-Advisory Agreement between MassMutual and
Massachusetts Financial Services Company ("MFS") with respect to the Growth
Equity Fund. /5/
(6) Copy of Investment Sub-Advisory Agreement between MassMutual and Miller
Anderson & Sherrerd, LLP ("MAS") with respect to the Mid Cap Growth Equity Fund.
/5/
(7) Copy of Investment Sub-Advisory Agreement between MassMutual and J.P. Morgan
Investment Management Inc. ("J.P. Morgan") with respect to the Small Cap Growth
Equity Fund. /5/
(8) Copy of Investment Sub-Advisory Agreement between MassMutual and Waddell &
Reed Investment Management Company ("Waddell & Reed") with respect to the Small
Cap Growth Equity Fund. /5/
Exhibit E
(1) Copy of General Distributors Agreement between the Trust and MML
Distributors, LLC. /5/
Exhibit F: None.
Exhibit G:
(1) Copy of Custodian Agreement between the Trust and Investors Bank & Trust
Company ("IBT")./1/
(2) Schedule 1 to the Custodian Agreement dated May 3, 1999 between the Trust
and Investors Bank & Trust Company ("IBT"). /5/
<PAGE>
(3) Specimen Administrative and Shareholder Services Agreement between each of
Registrant's series and MassMutual for the provision of administrative and
shareholder services. /5/
(4)Appendix A to the Amended and Restated Transfer Agency and Service Agreement
among the Trust, MassMutual and IBT./5/
Exhibit H:
Copy of Class L Shareholder Services Agreement between each of Registrant's
series and MassMutual for the provision of shareholder services for the owners
of the Class L Shares./5/
Exhibit I:
(1) Opinion of Counsel. /4/
(2) Opinion and Consent of Counsel with respect to Growth Equity, Mid Cap Growth
Equity, Small Cap Growth Equity and Diversified Bond Fund. /5/
Exhibit J:
(1) 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.
(2) Consent of Independent Accountants, PricewaterhouseCoopers L.L.P. /5/
(3) Consent of Independent Auditors, Deloitte & Touche, LLP. /5/
(4) Powers of Attorney for Ronald J. Abdow, Charles J. McCarthy, John H.
Southworth, Mary E. Boland. /1/
(5) Powers of Attorney for Richard H. Ayers, David E.A. Carson, Richard G.
Dooley, Richard W. Greene, Beverly L. Hamilton, and F. William Marshall, Jr. /3/
(6) Power of Attorney for Michael D. Hays, Chief Financial Officer. /5/
Exhibit K: None.
Exhibit L: None.
Exhibit M
(1) Form of Class A Rule 12b-1 Plans for the following Funds: MassMutual Prime
Fund, MassMutual Equity Fund, MassMutual Short-Term Bond Fund, MassMutual Core
Bond Fund, MassMutual Balanced Fund, MassMutual Core Equity Fund, MassMutual
Small Cap Value Equity Fund, MassMutual International Equity Fund./2/
(2) Copy of Class A Rule 12b-1 Plans for the following Funds: Growth Equity, Mid
Cap Growth Equity, Small Cap Growth Equity and Diversified Bond Fund. /5/
(3) Form of Class Y Rule 12b-1 Plans for the following Funds: MassMutual Prime
Fund, MassMutual Equity Fund, MassMutual Short-Term Bond Fund, MassMutual Core
Bond Fund, MassMutual Balanced Fund, MassMutual Core Equity Fund, MassMutual
Small Cap Value Equity Fund, MassMutual International Equity Fund./2/
(4) Copy of Class Y Rule 12b-1 Plans for the following Funds: Growth Equity, Mid
Cap Growth Equity, Small Cap Growth Equity and Diversified Bond Fund. /5/
(5) Copy of Class L 12b-1 Plans for all the Funds./5/
Exhibit N:
Financial Data Schedules./5/
Exhibit O:
Amended and Restated Rule 18f-3 Plan./5/
- -------------
<PAGE>
/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 Pre-Effective Amendment No. 2 to
the Registration Statement filed August 30, 1994.
/5/ Filed herewith.
Item 24: Person Controlled by or Under Common Control with the Fund
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. 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 corporation which operates as a life and
health insurance company, all the stock of which is owned by MassMutual. This
subsidiary is inactive.
2. CM Benefit Insurance Company, a Connecticut corporation which operates as a
life and health insurance company, all the stock of which is owned by
MassMutual. This subsidiary is inactive.
3. C.M. Life Insurance Company, a Connecticut corporation which operates as a
life and health insurance company, all the stock of which is owned by
MassMutual.
4. MML Bay State Life Insurance Company, a Connecticut corporation which
operates as a life and health insurance company, all the stock of which is owned
by MassMutual.
5. MML Distributors, LLC, a Connecticut limited liability company which operates
as a securities broker-dealer. MassMutual has a 99% ownership interest and G.R.
Phelps & Co. has a 1% ownership interest.
6. MassMutual Holding Company, a Delaware corporation which operates as a
holding company for certain MassMutual entities, all the stock of which is owned
by MassMutual.
7. MassMutual of Ireland, Limited, a corporation organized in the Republic of
Ireland which formerly operated to provide claims service to holders of
MassMutual group life and health insurance contracts. This subsidiary is
inactive and will be dissolved in the near future. All of the stock of which is
owned by MassMutual.
8. MML Series Investment Fund, a Massachusetts business trust which operates as
an open-end investment company. All the shares issued by the Trust are owned by
MassMutual and certain of its affiliates.
9. MassMutual Institutional Funds, a Massachusetts business trust which operates
as an open-end investment company, all of the shares of which are owned by
MassMutual.
<PAGE>
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. This subsidiary is inactive and expected to be dissolved.
11. MassMutual Mortgage Finance, LLC, a Delaware limited liability company which
makes, acquires, holds and sells mortgage loans.
12. MML Investors Services, Inc., a Massachusetts corporation which operates as
a securities broker-dealer. MassMutual Holding Company owns 86% of the capital
stock and G.R. Phelps & Co. Inc., owns 14% of the capital stock of MML Investor
Services, Inc.
13. 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. This subsidiary qualifies as a
"Massachusetts Security Corporation" under Chapter 63 of Massachusetts General
Laws.
14. MassMutual Holding Trust I, a Massachusetts business trust, which operates
as a holding company for separately staffed MassMutual investment subsidiaries.
MassMutual Holding Company owns all the outstanding shares of MassMutual Holding
Trust I.
15. MassMutual Holding Trust II, a Massachusetts business trust, which operates
as a holding company for non-staffed MassMutual investment subsidiaries.
MassMutual Holding Company owns all the outstanding shares of MassMutual Holding
Trust II.
16. MassMutual International, Inc., a Delaware corporation which operates as a
holding company for those entities constituting MassMutual's international
insurance operations, all of the stock of which is owned by MassMutual Holding
Company.
17. MML Insurance Agency, Inc., a Massachusetts corporation which operates as an
insurance broker, all of the stock of which is owned by MML Investors Services,
Inc.
18. MML Securities Corporation, a Massachusetts corporation which operates as a
"Massachusetts Securities Corporation", under Section 63 of the Massachusetts
General Laws, all of the stock of which is owned by MML Investors Services, Inc.
19. DISA Insurance Services of America, Inc., an Alabama corporation which
operates as an insurance broker. MML Insurance Agency, Inc. owns all the shares
of outstanding stock.
20. Diversified Insurance Services of America, Inc., a Hawaii corporation which
operates as an insurance broker. MML Insurance Agency, Inc. owns all the shares
of outstanding stock.
21. MML Insurance Agency of Mississippi, P.C., a Mississippi corporation that
operates as an insurance broker and is controlled by MML Insurance Agency, Inc.
22. 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.
23. MML Insurance Agency of Ohio, Inc., an Ohio corporation which operates as an
insurance broker and is controlled by MML Insurance Agency, Inc. through a
voting trust agreement.
24. MML Insurance Agency of Texas, Inc., a Texas corporation which operates as
an insurance broker and is controlled by MML Insurance Agency, Inc. through an
irrevocable proxy arrangement.
25. MassMutual Corporate Value Limited, a Cayman Islands corporation which holds
88.33% ownership interest in MassMutual Corporate Value Partners Limited,
another Cayman Islands Corporation operating as a high yield bond fund
(MassMutual Holding MSC, Inc. 46.41%).
<PAGE>
26. MassMutual Corporate Value Partners Limited, a Cayman Islands corporation
that operates as a high yield bond fund. MassMutual Corporate Value Limited
holds approximately 88% ownership interest in this company and MassMutual holds
approximately 5% ownership interest in this company.
27. 9048-5434 Quebec, Inc., a Canadian corporation, which operates as the owner
of Hotel du Parc in Montreal, Quebec, Canada. MassMutual Holding MSC, Inc. owns
all the shares of 9048-5434 Quebec, Inc.
28. 1279342 Ontario Limited, a Canadian corporation, which operates as the owner
of Deerhurst Resort in Huntsville Ontario, Canada. MassMutual Holding MSC, Inc.
owns all of the shares of 1279342 Ontario Limited.
29. Antares Capital Corporation, 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 a manager of institutional investment portfolios. MassMutual Holding Trust I
owns 80% of the capital stock of Charter Oak.
31. Cornerstone Real Estate Advisers, Inc., a Massachusetts corporation which
operates as an investment adviser, all the stock of which is owned by MassMutual
Holding Trust I.
32. DLB Acquisition Corporation ("DLB") is a Delaware corporation, which
operates as a holding company for David L. Babson and Company Inc. MassMutual
Holding Trust I owns 85% of the outstanding capital stock of DLB.
33. Oppenheimer Acquisition Corporation ("OAC") is a Delaware corporation, which
operates as a holding company for the Oppenheimer companies. MassMutual Holding
Trust I owns 89% of the capital stock of OAC.
34. David L. Babson and Company Incorporated, a Massachusetts corporation which
operates as an investment adviser, all of the stock of which is owned by DLB.
35. Babson Securities Corporation, a Massachusetts corporation which operates as
a securities broker-dealer, 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 an investment adviser. David L. Babson and Company
Incorporated holds a 50% ownership interest in the partnership.
37. Potomac Babson Incorporated, a Massachusetts corporation which operates as
an investment adviser. David L. Babson and Company Incorporated owns 60% of the
outstanding shares of Potomac Babson Incorporated.
38. OppenheimerFunds, Inc., a Colorado corporation which operates as an
investment adviser to the OppenheimerFunds, all of the stock of which is owned
by OAC.
39. Centennial Asset Management Corporation, a Delaware corporation that
operates 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 New York corporation, which
operates as an investment adviser, all the stock of which is owned by
OppenheimerFunds, Inc.
41. OppenheimerFunds Distributor, Inc., a New York corporation, which operates
as a securities broker dealer, all the stock of which is owned by
OppenheimerFunds, Inc.
42. Oppenheimer Partnership Holdings, Inc., a Delaware corporation which
operates as a holding company, all the stock of which is owned by
OppenheimerFunds, Inc.
<PAGE>
43. Oppenheimer Real Asset Management, Inc., a Delaware corporation which is the
sub-adviser to a mutual fund investing in the commodities markets, all the stock
of which is owned by OppenheimerFunds, Inc.
44. Shareholder Financial Services, Inc., a Colorado corporation which operates
as a transfer agent for mutual funds, all the stock of which is owned by
OppenheimerFunds, Inc.
45. Shareholder Services, Inc., a Colorado corporation which operates as a
transfer agent for various Oppenheimer and MassMutual funds, all the stock of
which is owned by OppenheimerFunds, Inc.
46. Centennial Capital Corporation, a Delaware corporation that formerly
sponsored a unit investment trust. Centennial Asset Management Corporation owns
all the outstanding shares of Centennial Capital Corporation.
47. Cornerstone Office Management, LLC, a Delaware limited liability company
which serves as the general partner of Cornerstone Suburban Office, LP that is
50% owned by Cornerstone Real Estate Advisers, Inc. and 50% owned by MML Realty
Management Corporation.
48. Cornerstone Suburban Office Investors, LP, a Delaware limited partnership,
which operates as a real estate operating company. Cornerstone Office
Management, LLC holds a 1% general partnership interest in this fund and
MassMutual holds a 99% limited partnership interest.
49. CM Advantage, Inc., a Connecticut corporation that serves as a general
partner in real estate limited partnerships. This subsidiary is largely inactive
and will be dissolved in the near future. MassMutual Holding Trust II owns all
of the outstanding stock.
50. CM International,Inc., a Delaware corporation which is the issuer of
collateralized mortgage obligation securities. MassMutual Holding Trust II owns
all the outstanding stock of CM International, Inc.
51. CM Property Management, Inc., a Connecticut corporation which serves as the
General Partner of Westheimer 335 Suites Limited Partnership. The Partnership
holds a ground lease with respect to hotel property in Houston, Texas, all the
stock of which is owned by MassMutual Holding Trust II.
52. HYP Management, Inc., a Delaware corporation which operates as the "LLC
Manager" of MassMutual High Yield Partners II LLC, a high yield bond fund.
MassMutual Holding Trust II owns all the outstanding stock of HYP Management,
Inc.
53. MMHC Investment, Inc., a Delaware corporation which is a passive investor in
MassMutual/Darby CBO IM, Inc., MassMutual/Darby CBO, LLC, Somers CDO, Limited,
MassMutual High Yield Partners II, LLC and other MassMutual investments.
MassMutual Holding Trust II owns all the outstanding stock of MMHC Investment,
Inc.
54. MassMutual High Yield Partners II LLC, a Delaware limited liability company,
that operates as a high yield bond fund. MassMutual holds approximately 2.52%,
MMHC Investment Inc. holds approximately 34.87% , and HYP Management, Inc. holds
approximately 3.82%, for an approximate total of 41.21% of the ownership
interest in this company.
55. MML Realty Management Corporation, a Massachusetts Corporation which
formerly operated as a manager of properties owned by MassMutual, all the stock
of which is owned by MassMutual Holding Trust II.
56. MassMutual Benefits Management, Inc., (formerly Westheimer 335 Suites, Inc.)
a Delaware Corporation which supports MassMutual with benefit plan
administration and planning services. MassMutual Holding Trust II owns all of
the outstanding stock.
57. Somers CDO, Limited, a Cayman Islands corporation that operates as a fund
investing in high yield debt securities of primarily U.S. issues. MMHC
Investment Inc., holds 38.10% of the subordinated notes of this issue which are
treated as equity for tax purposes. Registrant is the collateral manager of
Somers CDO, Limited.
<PAGE>
58. 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 and MassMutual
holds a 99% limited partnership interest.
59. MassMutual/Darby CBO IM Inc., a Delaware corporation which operates as the
LLC Manager of MassMutual/Darby CBO LLC, a collateralized bond obligation fund.
MMHC Investment, Inc. owns 50% of the capital stock of this company.
60. 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 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.
61. Urban Properties, Inc., a Delaware corporation which serves as a General
Partner of real estate limited partnerships and as a real estate holding
company, all the stock of which is owned by MassMutual Holding Trust II.
62. Westheimer 335 Suites Limited Partnership, a Texas limited partnership of
which MassMutual Benefits Management is the general partner.
63. MassMutual Internacional (Argentina) S.A., a corporation organized in the
Argentine Republic, which operates as a holding company. MassMutual
International Inc. owns 99% of the outstanding shares and MassMutual Holding
Company owns the remaining 1% of the shares.
64. MassMutual Internacional (Chile) S.A., a corporation organized in the
Republic of Chile, which operates as a holding company. MassMutual International
Inc. owns 99% of the outstanding shares and MassMutual Holding Company owns the
remaining 1% of the shares.
65. MassMutual International (Bermuda) Ltd., a corporation organized in Bermuda,
which operates as a life insurance company, all of the stock of which is owned
by MassMutual International Inc.
66. MassMutual International (Luxembourg) S.A., a corporation organized in the
Grand Duchy of Luxembourg, which operates as a life 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 corporation organized in the Argentine
Republic, which operates as a life insurance company. MassMutual International
Inc. owns 99.9% of the outstanding capital stock of MassLife Seguros de Vida
S.A.
68. MassMutual Services, S.A., a corporation organized in the Argentine Republic
which operates as a service company. MassMutual Internacional (Argentina) S.A.
owns 99% of the outstanding shares and MassMutual International, Inc. owns 1% of
the shares.
69. Mass Seguros de Vida S.A., a corporation organized in the Republic of Chile,
which operates as a life insurance company. 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 corporation organized in the Republic of Chile
which operates as a holding company. MassMutual Internacional (Chile) S.A. holds
a 33.5% ownership interest in this corporation.
71. Compania de Seguros VidaCorp, S.A., a corporation organized in the Republic
of Chile, which operates as an insurance company. Origen Inversiones S.A. owns
99% of the outstanding shares of this company.
72. Oppenheimer Series Fund Inc., a Maryland corporation which operates as an
investment company of which MassMutual and its affiliates own a majority of
certain series of shares issued by the fund.
73. Panorama Series Fund, Inc., a Maryland corporation which operates as an
open-end investment company. All shares issued by the fund are owned by
MassMutual and certain affiliates.
<PAGE>
74. The DLB Fund Group, a Massachusetts business trust which operates as an
open-end investment company advised by David L. Babson and Company Incorporated.
MassMutual owns at least 25% of each series of shares issued by the fund.
75. Saar Holdings CDO, Limited, a Cayman Islands corporation that operates as a
collateralized debt obligation fund investing in high yield debt securities of
primarily U.S. issuers including, to a limited extent, convertible high yield
bonds. MMHC Investment Inc. holds 40% of the mandatorily redeemable preferred
shares of this issuer. Such preferred shares are treated as equity for tax
purposes. Registrant is the collateral mananger of Saar Holdings CDO, Limited.
76. Enhanced Mortgage-Backed Securities Fund Limited, a special purpose company
incorporated with limited liability in the Cayman Islands investing primarily in
residential and commercial mortgage backed securities and through the
application of various portfolio optimization techniques. Massachusetts Mutual
Life Insurance Company is the Investment Manager and Valuation Agent and holds
all of the Class B notes and 48% of the Class C Certificates and at least 25% of
the aggregate principal amount of Class C Certificates directly or through a
wholly owned affiliate.
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 Massachusetts business trust which operates as
an open-end investment company. All shares issued by the trust are owned by
MassMutual and certain of its affiliates.
2. MassMutual Corporate Investors, A Massachusetts business trust which operates
as a closed-end investment company. MassMutual serves as Investment Adviser to
the 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 approximately 2.52%,
MMHC Investment Inc. holds approximately 34.87%, and HYP Management, Inc. holds
approximately 3.82% for an approximate total of 41.21% of the ownership interest
in this company.
5. MassMutual Institutional Funds, a Massachusetts business trust which operates
as an open-end investment company, all of the shares of which are owned by
MassMutual.
6. MassMutual Participation Investors, a Massachusetts business trust which
operates as a closed-end investment company. MassMutual serves as investment
adviser to the Trust.
7. 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.
8. Somers CDO, Limited, a Cayman Islands corporation that operates as a fund
investing in high yield debt securities of primarily U.S. issues. MMHC
Investment Inc., holds 38.10% of the subordinated notes of this issue which are
treated as equity for tax purposes. Registrant is the collateral manager of
Somers CDO, Limited.
Item 25: 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)
<PAGE>
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, consist of two distinct coverages. The first
coverage reimburses MassMutual, subject to specified limitations, for amounts
which MassMutual is legally obligated to pay out under its indemnification
by-law, discussed above. The second coverage directly protects a Trustee or
officer of Registrant against liability from shareholder derivative and similar
lawsuits which are indemnifiable under the law. There are, however, specific
acts giving rise to liability which are excluded from this coverage. For
example, no Trustee or officer is insured against personal liability for libel
or slander, acts of deliberate dishonesty, fines or penalties, illegal personal
profit or advantage at the expense of Registrant or its shareholders, violation
of employee benefit plans, regulatory statutes, and similar acts which would
traditionally run contrary to public policy and hence reimbursement by
insurance.
MassMutual's present insurance coverage has an overall limit of $75 million
annually ($15 million of which is underwritten by Continental Casualty Company,
$20 million of which is underwritten by Executive Risk Indemnity, Inc., $25
million of which is underwritten by Federal Insurance Co.("Chubb"), 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 26: Business and Other Connections of the Investment Adviser
a. The Investment Adviser
MassMutual is the investment adviser for the Registrant. MassMutual is a mutual
life insurance company organized as a Massachusetts corporation, which was
originally chartered in 1851. As a mutual life insurance company, MassMutual has
no shareholders. MassMutual's primary business is ordinary life insurance. It
also provides, directly or through its subsidiaries, a wide range of annuity and
disability products, and pension and pension-related products and services, as
well as investment services to individuals, and corporations and other
institutions, in all 50 states of the United States and the District of
Columbia. MassMutual is also licensed to transact business in Puerto Rico, and
six provinces of Canada, but has no export sales. Effective February 29, 1996,
Connecticut Mutual Life Insurance Company merged into MassMutual. MassMutual's
principal lines of business are (i) the Individual 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
<PAGE>
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
OppenheimerFunds 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), 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 Soundview Drive, 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.
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 Corporation, 2171 Boyer Avenue East, Seattle, Washington;
Vice Chairman (since 1997), National Captioning Institute, 1900 Gallows Road,
Vienna, Virginia.
PATRICIA DIAZ DENNIS, Director and Member, Auditing and Human Resources
Committees
Senior Vice President-Regulatory & Public Affairs, 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, Universidad
Autonoma de Mexico (UNAM) Foundation, Bexar County Woman's Bar Association;
Trustee (1995-1997), Federal Communications Bar Association Foundation;.
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.
<PAGE>
JAMES L. DUNLAP, Director, Chairman, Dividend Policy Committee and Member,
Auditing 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.
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;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.
ROBERT M. FUREK, Director and Member, Dividend Policy and Auditing Committees
Partner (since 1997),Resolute Partners LLC (private merchant bank), 1
State Street, Suite 2310, Hartford, CT.; 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.
CHARLES K. GIFFORD, Director and Member, Investment and Board Affairs Committees
Chairman and Chief Executive Officer (since 1995) of Bank Boston, N.A.,
and Chairman (since 1998), Chief Executive Officer (since 1995) BankBoston
Corporation, 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; Director; Merrill Lynch & Co., Inc. (financial services holding
company), 250 Vesey Street, World Financial Center, North Tower, New York, New
York; The McGraw-Hill Companies, Inc. (multimedia publishing and information
services), 1221 Avenue of the Americas, New York, New York; Stamford Hospital,
Stamford, Connecticut; Pfizer, Inc. (pharmaceutical and health-care products),
235 East 42nd Street, New York, New York; Director (1994-1997), The Catalyst;
Member, Board of Overseers, Wharton School of Finance, University of
Pennsylvania.
BARBARA B. HAUPTFUHRER, Director and Member, Board Affairs and Investment
Committees
Retired; 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
Independent Directors Committees, IKON Office Solutions (diversified office
products and technology solutions), 825 Duportail Road, Valley Forge,
Pennsylvania.
<PAGE>
SHELDON B. LUBAR, Director and Member, Human Resources and Investment Committee
Chairman, Lubar & Co. Incorporated (investment management and advisory
company); Chairman and Director (1986-1999), The Christiana Companies, Inc.
(real estate development), C2 Inc., (1999), 700 N. Water Street, Suite 1200,
Milwaukee, Wisconsin; 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, 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; 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.
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 (1996-1998), Coating Technologies
International; Director, Chairman, Audit 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.
ROBERT J. O'CONNELL, Director, Member, Board Affairs Committee and Dividend
Policy Committee, Chairman Investment Committee
President and Chief Executive Officer of MassMutual Life Insurance
Company; Director, C.M. Life Insurance Company and MML Bay State Life Insurance
Company (wholly-owned insurance company subsidiaries of MassMutual), Cornerstone
Real Estate Advisers, Inc. (wholly-owned real estate investment advisory
subsidiary of MassMutual Holding Trust I), One Financial Plaza, Suite 1700,
Hartford, Connecticut; DLB Acquisition Corporation (holding company for
investment advisers), MassMutual Holding MSC, Inc., Trustee, MassMutual Holding
Trust II (wholly-owned holding company subsidiaries of MassMutual Holding Co.),
MassMutual Holding Trust I (wholly-owned holding company subsidiary of
MassMutual Holding Co.), Director, MassMutual International, Inc., (wholly-owned
subsidiary of MassMutual Holding Company to act as service provider for
international insurance companies, MassMutual Holding Company (wholly-owned
holding company subsidiary of MassMutual), MassMutual Benefits Management, Inc.,
Life Office Management Association, MassMutual Institutional Funds and MML
Series Investment Fund (open end investment companies); Director, President and
Chief Executive Officer (1991-1998), AIG Life
<PAGE>
Insurance Company, American International Life Assurance of New York, Delaware
American Life Insurance Co., Pacific Union Assurance Company; Director
(1991-1998) AIG Life Insurance Company of Puerto Rico; Senior Vice President
(1991-1998), Life Insurance of American International Group, Inc., American Life
Insurance Company, DE; Senior Vice President, Group Management Division
(1991-1998) of American International Group, Inc.
THOMAS B. WHEELER, Chairman, Investment Committee and Member and Board Affairs
Committees
Chairman (1999), Chief Executive Officer (1988-1998), and President
(1987-1996) of MassMutual; Director (1996-1999), 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.
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 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).
<PAGE>
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.
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) 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; President and Chief Executive Officer (1999), MML
Bay State Life Insurance Company; 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);
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
(1997-1999), Oppenheimer Acquisition Corporation (parent of OppenheimerFunds,
Inc., an investment management company); Trustee (1997-1999), 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.
STUART H. REESE, Chief Investment Officer and Executive Vice President
Chief Investment Officer and Executive Vice President (since 1999) of
MassMutual; President (since 1994) and Director (since 1999), MML Series
Investment Fund and MassMutual Institutional Fund (open end investment
companies); President (since 1995) of MassMutual Corporate Investors and
MassMutual Participation Investors (closed end investment companies); Director
(since 1993), MML Pension Insurance Company, MML Bay State, MML Bay State Life
Insurance Company (wholly owned insurance company subsidiary of MassMutual),
MassMutual Corporate Value Partners (since 1994),(high yield bond fund);
Advisory Board Member, Kirtland Capital Partners (since 1995); Director (since
1996), MassMutual High Yield Partners (high yield bond fund), CM Assurance
Company, CM Benefit Insurance Company, CM Life Insurance Company (wholly owned
insurance company subsidiaries of MassMutual), CM International, Inc. (issuer of
collateralized mortgage obligation securities), Antares Capital Corporation
(finance company), Charter Oak Capital Management, Inc. (manager of
institutional investment portfolio), and State House I Corporation.
<PAGE>
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; Director (since
1997): Antares Capital Corporation 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
JAMES W. MACALLEN, President, Chief Executive Officer, Chief Investment Officer
and Director
Chairman and Chief Executive Officer (since 1998), Director and Chief
Investment Officer (since 1996) David L. Babson and Company Inc. (investment
advisory), One Memorial Drive, Cambridge, Massachusetts; Senior Vice President
(1996-1997), Concert Capital Management, Inc. (investment advisory); Senior
Vice-President(since 1996) Potomac Babson Incorporated (investment advisory)
1290 Avenue of the Americas, New York, New York.
EDWARD L. MARTIN, Director and Executive Vice President
Director (since 1990), Executive Vice President (since 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), and Director (since 1982), David L.
Babson and Company Inc., One Memorial Drive, Cambridge, Massachusetts; Director
(1996-1997), 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.
JONATHAN B. TREAT, Director and Senior Vice President
Director and Senior Vice President (since 1992), Portfolio Manager (since
1988), 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), Portfolio
Manager (since 1974) David L. Babson and Company Inc., One Memorial Drive,
Cambridge, Massachusetts.
DEANNE B. DUPONT, Treasurer and Vice-President
<PAGE>
Treasurer (since 1996), Vice-President (since 1995) David L. Babson and
Company, Inc. (investment advisory), One Memorial Drive, Cambridge,
Massachusetts.
JOHN E. DEITELBAUM, Vice President and General Counsel
Vice President and General Counsel (since 1998), David L. Babson and
Company, Inc. (investment advisory), One Memorial Drive, Cambridge,
Massachusetts; Counsel, 1996-1998), Massachusetts Mutual Life Insurance Company,
1295 State Street, Springfield, Massachusetts (life insurance company)
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:
BRIDGET A. MACASKILL, President, Chief Executive Officer and Director
President, Chief Executive Officer and a Director of OppenheimerFunds,
Inc. ("OFI"), President and a Director of HarbourView Asset Management
Corporation ("HarbourView"); 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.; and a Director 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., HarbourView 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 and Secretary of OAC; and an
officer of the Oppenheimer Funds.
ROBERT C. DOLL, JR. Executive Vice President, Chief Investment Officer and
Director
Executive Vice President, Chief Investment Officer and a Director of OFI;
Executive Vice President of HarbourView; Vice President and a Director of OAC;
and an officer of various Oppenheimer Funds.
O. LEONARD DARLING, Chief Executive Officer and Senior Managing Director
Chief Executive Office and Senior Managing Director of HarbourView Asset
Management Corporation; Executive Vice-President of Oppenheimer Funds, Inc.
MASSACHUSETTS FINANCIAL SERVICES COMPANY ("MFS")
MFS serves as investment adviser to the following open-end Funds
comprising the MFS Family of Funds (except the Vertex Funds mentioned below):
Massachusetts Investors Trust, Massachusetts Investors Growth Stock Fund, MFS
Growth Opportunities Fund, MFS Government Securities Fund, MFS Government
Limited Maturity Fund, MFS Series Trust I (which has thirteen series: MFS
Managed Sectors Fund, MFS Cash Reserve Fund, MFS Global Asset Allocation Fund,
MFS Strategic Growth Fund, MFS Research Growth and Income Fund, MFS Core Growth
Fund, MFS Equity Income Fund, MFS Special Opportunities Fund, MFS Convertible
Securities Fund, MFS Blue Chip Fund, MFS New Discovery Fund, MFS Science and
Technology Fund and MFS Research International Fund), MFS Series Trust II (which
has four series: MFS Emerging Growth Fund, MFS Large Cap Growth Fund, MFS
Intermediate Income Fund and MFS Charter Income Fund), MFS Series Trust III
(which has three series: MFS High Income Fund, MFS Municipal High Income Fund
and MFS High Yield Opportunities Fund), MFS Series Trust IV (which has four
series: MFS Money Market Fund, MFS Government Money Market Fund, MFS Municipal
Bond Fund and MFS Mid Cap Growth Fund), MFS Series Trust V (which has five
series: MFS Total Return Fund, MFS Research Fund, MFS
<PAGE>
International Opportunities Fund, MFS International Strategic Growth Fund and
MFS International Value Fund), MFS Series Trust VI (which has three series: MFS
Global Total Return Fund, MFS Utilities Fund and MFS Global Equity Fund), MFS
Series Trust VII (which has two series: MFS Global Governments Fund and MFS
Capital Opportunities Fund), MFS Series Trust VIII (which has two series: MFS
Strategic Income Fund and MFS Global Growth Fund), MFS Series Trust IX (which
has five series: MFS Bond Fund, MFS Limited Maturity Fund, MFS Municipal Limited
Maturity Fund, MFS Research Bond Fund and MFS Intermediate Investment Grade Bond
Fund), MFS Series Trust X (which has seven series: MFS Government Mortgage Fund,
MFS/Foreign & Colonial Emerging Markets Equity Fund, MFS International Growth
Fund, MFS International Growth and Income Fund, MFS Strategic Value Fund, MFS
Small Cap Value Fund and MFS Emerging Markets Debt Fund), MFS Series Trust XI
(which has four series: MFS Union Standard Equity Fund, Vertex All Cap Fund,
Vertex U.S. All Cap Fund and Vertex Contrarian Fund), and MFS Municipal Series
Trust (which has 16 series: MFS Alabama Municipal Bond Fund, MFS Arkansas
Municipal Bond Fund, MFS California Municipal Bond Fund, MFS Florida Municipal
Bond Fund, MFS Georgia Municipal Bond Fund, MFS Maryland Municipal Bond Fund,
MFS Massachusetts Municipal Bond Fund, MFS Mississippi Municipal Bond Fund, MFS
New York Municipal Bond Fund, MFS North Carolina Municipal Bond Fund, MFS
Pennsylvania Municipal Bond Fund, MFS South Carolina Municipal Bond Fund, MFS
Tennessee Municipal Bond Fund, MFS Virginia Municipal Bond Fund, MFS West
Virginia Municipal Bond Fund and MFS Municipal Income Fund) (the "MFS Funds").
The principal business address of each of the MFS Funds is 500 Boylston Street,
Boston, Massachusetts 02116.
MFS also serves as investment adviser of the following open-end Funds: MFS
Institutional Trust ("MFSIT") (which has ten series) and MFS Variable Insurance
Trust ("MVI") (which has thirteen series). The principal business address of
each of the aforementioned funds is 500 Boylston Street, Boston, Massachusetts
02116.
In addition, MFS serves as investment adviser to the following closed-end
funds: MFS Municipal Income Trust, MFS Multimarket Income Trust, MFS Government
Markets Income Trust, MFS Intermediate Income Trust, MFS Charter Income Trust
and MFS Special Value Trust (the "MFS Closed-End Funds"). The principal business
address of each of the MFS Closed-End Funds is 500 Boylston Street, Boston,
Massachusetts 02116.
Lastly, MFS serves as investment adviser to MFS/Sun Life Series Trust
("MFS/SL") (which has 26 series), Money Market Variable Account, High Yield
Variable Account, Capital Appreciation Variable Account, Government Securities
Variable Account, World Governments Variable Account, Total Return Variable
Account and Managed Sectors Variable Account (collectively, the "Accounts"). The
principal business address of MFS/SL is 500 Boylston Street, Boston,
Massachusetts 02116. The principal business address of each of the
aforementioned Accounts is One Sun Life Executive Park, Wellesley Hills,
Massachusetts 02181.
Vertex Investment Management, Inc., a Delaware corporation and a
wholly-owned subsidiary of MFS, whose principal business address is 500 Boylston
Street, Boston, Massachusetts 02116 ("Vertex"), serves as investment adviser to
Vertex All Cap Fund, Vertex U.S. All Cap Fund and Vertex Contrarian Fund, each a
series of MFS Series Trust XI. The principal business address of
theaforementioned Funds is 500 Boylston Street, Boston, Massachusetts 02116.
MFS International Ltd. ("MIL"), a limited liability company organized
under the laws of Bermuda and a subsidiary of MFS, whose principal business
address is Cedar House, 41 Cedar Avenue, Hamilton HM12 Bermuda, serves as
investment adviser to and distributor for MFS American Funds known as the MFS
Funds after January 1999 (which will have 11 portfolios as of January 1999):
U.S. Equity Fund, U.S. Emerging Growth Fund, U.S. High Yield Bond Fund, U.S.
Dollar Reserve Fund, Charter Income Fund, U.S. Research Fund, U.S. Strategic
Growth Fund, Global Equity Fund, European Equity Fund and European Corporate
Bond Fund) (the "MIL Funds"). The MIL Funds are organized in Luxembourg and
qualify as an undertaking for collective investments in transferable securities
(UCITS). The principal business address of the MIL Funds is 47, Boulevard Royal,
L-2449 Luxembourg.
MIL also serves as investment adviser to and distributor for MFS Meridian
U.S. Government Bond Fund, MFS Meridian Charter Income Fund, MFS
<PAGE>
Meridian Global Governments Fund, MFS Meridian U.S. Emerging Growth Fund, MFS
Meridian Global Equity Fund, MFS Meridian Limited Maturity Fund, MFS Meridian
Global Growth Fund, MFS Meridian Money Market Fund, MFS Meridian Global Balanced
Fund, MFS Meridian U.S. Equity Fund, MFS Meridian Research Fund, MFS Meridian
U.S. High Yield Fund, MFS Meridian Emerging Markets Debt Fund, MFS Meridian
Strategic Growth Fund and MFS Meridian Global Asset Allocation Fund and the MFS
Meridian Research International Fund (collectively the "MFS Meridian Funds").
Each of the MFS Meridian Funds is organized as an exempt company under the laws
of the Cayman Islands. The principal business address of each of the MFS
Meridian Funds is P.O. Box 309, Grand Cayman, Cayman Islands, British West
Indies.
MFS International (U.K.) Ltd. ("MIL-UK"), a private limited company
registered with the Registrar of Companies for England and Wales whose current
address is Eversheds, Senator House, 85 Queen Victoria Street, London, England
EC4V 4JL, is involved primarily in marketing and investment research activities
with respect to private clients and the MIL Funds and the MFS Meridian Funds.
MFS Institutional Advisors (Australia) Ltd. ("MFSI-Australia"), a private
limited company organized under the Corporations Law of New South Wales,
Australia whose current address is Level 27, Australia Square, 264 George
Street, Sydney, NSW2000, Australia, is involved primarily in investment
management and distribution of Australian superannuation unit trusts and acts as
an investment adviser to institutional accounts.
MFS Holdings Australia Pty Ltd. ("MFS Holdings Australia"), a private
limited company organized pursuant to the Corporations Law of New South Wales,
Australia whose current address is Level 27, Australia Square, 264 George
Street, Sydney, NSW2000 Australia, and whose function is to serve primarily as a
holding company.
MFS Fund Distributors, Inc. ("MFD"), a wholly owned subsidiary of MFS,
serves as distributor for the MFS Funds, MVI and MFSIT.
MFS Service Center, Inc. ("MFSC"), a wholly owned subsidiary of MFS,
serves as shareholder servicing agent to the MFS Funds, the MFS Closed-End
Funds, MFSIT and MVI.
MFS Institutional Advisors, Inc. ("MFSI"), a wholly owned subsidiary of
MFS, provides investment advice to substantial private clients.
MFS Retirement Services, Inc. ("RSI"), a wholly owned subsidiary of MFS,
markets MFS products to retirement plans and provides administrative and record
keeping services for retirement plans.
Massachusetts Investment Management Co., Ltd. (MIMCO), a wholly-owned
subsidiary of MFS, is a corporation incorporated in Japan. MIMCO, whose address
is Kamiyacho-Mori Building, 3-20, Tranomon 4-chome, Minato-ku, Tokyo, Japan, is
involved in investment management activities.
MIMCO
Jeffrey L. Shames, Arnold D. Scott and Mamoru Ogata are Directors, Shaun
Moran is the Representative Director, Joseph W. Dello Russo is the Statutory
Auditor, Robert DiBella is the President and Thomas B. Hastings is the Assistant
Statutory Auditor.
MFS
The Directors of MFS are Jeffrey L. Shames, Arnold D. Scott, John W.
Ballen, Kevin R. Parke, Thomas J. Cashman, Jr., Joseph W. Dello Russo, William
W. Scott, Donald A. Stewart and John D. McNeil. Mr. Shames is the Chairman and
Chief Executive Officer, Mr. Ballen is President and Chief Investment Officer,
Mr. Arnold Scott is a Senior Executive Vice President and Secretary, Mr. William
Scott, Mr. Cashman, Mr. Dello Russo and Mr. Parke are Executive Vice Presidents
(Mr. Parke is also Chief Equity Officer), Stephen E. Cavan is a Senior Vice
President, General Counsel and an Assistant Secretary, Robert T. Burns is a
Senior Vice President, Associate General Counsel and an Assistant Secretary of
MFS, and Thomas B. Hastings is a Vice President and Treasurer of MFS.
<PAGE>
Massachusetts Investors Trust
Massachusetts Investors Growth Stock Fund
MFS Growth Opportunities Fund
MFS Government Securities Fund
MFS Series Trust I
MFS Series Trust V
MFS Series Trust VI
MFS Series Trust X
MFS Government Limited Maturity Fund
Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer,
James O. Yost, Ellen M. Moynihan and Mark E. Bradley, Vice Presidents of MFS,
are the Assistant Treasurers, James R. Bordewick, Jr., Senior Vice President and
Associate General Counsel of MFS, is the Assistant Secretary.
MFS Series Trust II
Leslie J. Nanberg, Senior Vice President of MFS, is a Vice President,
Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O.
Yost, Ellen M. Moynihan and Mark E. Bradley are the Assistant Treasurers, and
James R. Bordewick, Jr. is the Assistant Secretary.
MFS Government Markets Income Trust
MFS Intermediate Income Trust
Leslie J. Nanberg, Senior Vice President of MFS, is a Vice President,
Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O.
Yost, Ellen M. Moynihan and Mark E. Bradley are the Assistant Treasurers, and
James R. Bordewick, Jr. is the Assistant Secretary.
MFS Series Trust III
James T. Swanson, Robert J. Manning and Joan S. Batchelder, Senior Vice
Presidents of MFS, and Bernard Scozzafava, Vice President of MFS, are Vice
Presidents, Stephen E. Cavan is the Secretary, W. Thomas London is the
Treasurer, James O. Yost, Ellen M. Moynihan and Mark E. Bradley are the
Assistant Treasurers, and James R. Bordewick, Jr. is the Assistant Secretary.
MFS Series Trust IV
MFS Series Trust IX
Robert A. Dennis and Geoffrey L. Kurinsky, Senior Vice Presidents of MFS,
are Vice Presidents, Stephen E. Cavan is the Secretary, W. Thomas London is the
Treasurer, James O. Yost, Ellen M. Moynihan and Mark E. Bradley are the
Assistant Treasurers and James R. Bordewick, Jr. is the Assistant Secretary.
MFS Series Trust VII
Leslie J. Nanberg and Stephen C. Bryant, Senior Vice Presidents of MFS,
are Vice Presidents, Stephen E. Cavan is the Secretary, W. Thomas London is the
Treasurer, James O. Yost, Ellen M. Moynihan and Mark E. Bradley are the
Assistant Treasurers and James R. Bordewick, Jr. is the Assistant Secretary.
MFS Series Trust VIII
Jeffrey L. Shames, Leslie J. Nanberg and James T. Swanson and John D.
Laupheimer, Jr., a Senior Vice President of MFS, are Vice Presidents, Stephen E.
Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost, Ellen
M. Moynihan and Mark E. Bradley are the Assistant Treasurers and James R.
Bordewick, Jr. is the Assistant Secretary.
MFS Municipal Series Trust
Robert A. Dennis is Vice President, Geoffrey L. Schechter, Vice President
of MFS, is Vice President, Stephen E. Cavan is the Secretary, W. Thomas London
is the Treasurer, James O. Yost, Ellen M. Moynihan and Mark E. Bradley are the
Assistant Treasurers and James R. Bordewick, Jr. is the Assistant Secretary.
MFS Variable Insurance Trust
<PAGE>
MFS Series Trust XI
MFS Institutional Trust
Jeffrey L. Shames is the President and Chairman, Stephen E. Cavan is the
Secretary, W. Thomas London is the Treasurer, James O. Yost, Ellen M. Moynihan
and Mark E. Bradley are the Assistant Treasurers and James R. Bordewick, Jr. is
the Assistant Secretary.
MFS Municipal Income Trust
Robert J. Manning is Vice President, Stephen E. Cavan is the Secretary, W.
Thomas London is the Treasurer, James O. Yost, Ellen M. Moynihan and Mark E.
Bradley are the Assistant Treasurers and James R. Bordewick, Jr. is the
Assistant Secretary.
MFS Multimarket Income Trust
MFS Charter Income Trust
Leslie J. Nanberg and James T. Swanson are Vice Presidents, Stephen E.
Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost, Ellen
M. Moynihan and Mark E. Bradley are the Assistant Treasurers and James R.
Bordewick, Jr. is the Assistant Secretary.
MFS Special Value Trust
Robert J. Manning is Vice President, Stephen E. Cavan is the Secretary, W.
Thomas London is the Treasurer, James O. Yost, Ellen M. Moynihan and Mark E.
Bradley are the Assistant Treasurers and James R. Bordewick, Jr. is the
Assistant Secretary.
MFS/Sun Life Series Trust
John D. McNeil, Chairman and Director of Sun Life Assurance Company of
Canada, is the Chairman, Stephen E. Cavan is the Secretary, W. Thomas London is
the Treasurer, James O. Yost, Ellen M. Moynihan and Mark E. Bradley are the
Assistant Treasurers and James R. Bordewick, Jr. is the Assistant Secretary.
Money Market Variable Account
High Yield Variable Account
Capital Appreciation Variable Account
Government Securities Variable Account
Total Return Variable Account
World Governments Variable Account
Managed Sectors Variable Account
John D. McNeil is the Chairman, Stephen E. Cavan is the Secretary, and
James R. Bordewick, Jr. is the Assistant Secretary.
MIL Funds
Richard B. Bailey, John A. Brindle, Richard W. S. Baker, Arnold D. Scott,
Jeffrey L. Shames and William F. Waters are Directors, Stephen E. Cavan is the
Secretary, W. Thomas London is the Treasurer, James O. Yost, Ellen M. Moynihan
and Mark E. Bradley are the Assistant Treasurers and James R. Bordewick, Jr. is
the Assistant Secretary.
MFS Meridian Funds
Richard B. Bailey, John A. Brindle, Richard W. S. Baker, Arnold D. Scott,
Jeffrey L. Shames and William F. Waters are Directors, Stephen E. Cavan is the
Secretary, W. Thomas London is the Treasurer, James R. Bordewick, Jr. is the
Assistant Secretary and James O. Yost, Ellen M. Moynihan and Mark E. Bradley are
the Assistant Treasurers.
Vertex
Jeffrey L. Shames and Arnold D. Scott are the Directors, Jeffrey L. Shames
is the President, Kevin R. Parke and John W. Ballen are Executive Vice
Presidents, John F. Brennan, Jr., and John D. Laupheimer are Senior Vice
Presidents, Brian E. Stack is a Vice President, Joseph W. Dello Russo is the
<PAGE>
Treasurer, Thomas B. Hastings is the Assistant Treasurer, Stephen E. Cavan is
the Secretary and Robert T. Burns is the Assistant Secretary.
MIL
Peter D. Laird is President and a Director, Arnold D. Scott, Jeffrey L.
Shames and Thomas J. Cashman, Jr. are Directors, Stephen E. Cavan is a Director,
Senior Vice President and the Clerk, Robert T. Burns is an Assistant Clerk,
Joseph W. Dello Russo, Executive Vice President and Chief Financial Officer of
MFS, is the Treasurer and Thomas B. Hastings is the Assistant Treasurer.
MIL-UK
Peter D. Laird is President and a Director, Thomas J. Cashman, Arnold D.
Scott and Jeffrey L. Shames are Directors, Stephen E. Cavan is a Director and
the Secretary, Joseph W. Dello Russo is the Treasurer, Thomas B. Hastings is the
Assistant Treasurer and Robert T. Burns is the Assistant Secretary.
MFSI - Australia
Thomas J. Cashman, Jr. is President and a Director, Graham E. Lenzer, John
A. Gee and David Adiseshan are Directors, Stephen E. Cavan is the Secretary,
Joseph W. Dello Russo is the Treasurer, Thomas B. Hastings is the Assistant
Treasurer, and Robert T. Burns is the Assistant Secretary.
MFS Holdings - Australia
Jeffrey L. Shames is the President and a Director, Arnold D. Scott, Thomas
J. Cashman, Jr., and Graham E. Lenzer are Directors, Stephen E. Cavan is the
Secretary, Joseph W. Dello Russo is the Treasurer, Thomas B. Hastings is the
Assistant Treasurer, and Robert T. Burns is the Assistant Secretary.
MFD
Arnold D. Scott and Jeffrey L. Shames are Directors, William W. Scott,
Jr., an Executive Vice President of MFS, is the President, Stephen E. Cavan is
the Secretary, Robert T. Burns is the Assistant Secretary, Joseph W. Dello Russo
is the Treasurer, and Thomas B. Hastings is the Assistant Treasurer.
MFSC
Arnold D. Scott and Jeffrey L. Shames are Directors, Joseph A. Recomendes,
a Senior Vice President and Chief Information Officer of MFS, is Vice Chairman
and a Director, Janet A. Clifford is the President, Joseph W. Dello Russo is the
Treasurer, Thomas B. Hastings is the Assistant Treasurer, Stephen E. Cavan is
the Secretary, and Robert T. Burns is the Assistant Secretary.
MFSI
Thomas J. Cashman, Jr., Jeffrey L. Shames, and Arnold D. Scott are
Directors, Joseph J. Trainor is the President and a Director, Leslie J. Nanberg
is a Senior Vice President, a Managing Director and a Director, Kevin R. Parke
is the Executive Vice President and a Managing Director, George F. Bennett, Jr.,
John A. Gee, Brianne Grady, Joseph A. Kosciuszek and Joseph J. Trainor are
Senior Vice Presidents and Managing Directors, Joseph W. Dello Russo is the
Treasurer, Thomas B. Hastings is the Assistant Treasurer and Robert T. Burns is
the Secretary.
RSI
Arnold D. Scott is the Chairman and a Director, Martin E. Beaulieu is the
President, William W. Scott, Jr. is a Director, Joseph W. Dello Russo is the
Treasurer, Thomas B. Hastings is the Assistant Treasurer, Stephen E. Cavan is
the Secretary and Robert T. Burns is the Assistant Secretary.
In addition, the following persons, Directors or officers of MFS, have the
affiliations indicated:
Donald A. Stewart: President and a Director, Sun Life Assurance Company of
Canada, Sun Life Centre, 150 King Street West, Toronto, Ontario, Canada (Mr.
<PAGE>
Stewart is also an officer and/or Director of various subsidiaries and
affiliates of Sun Life)
John D. McNeil: Chairman, Sun Life Assurance Company of Canada, Sun Life Centre,
150 King Street West, Toronto, Ontario, Canada (Mr. McNeil is also an officer
and/or Director of various subsidiaries and affiliates of Sun Life)
Joseph W. Dello Russo: Director of Mutual Fund Operations, The Boston Company,
Exchange Place, Boston, Massachusetts (until August, 1994)
MILLER ANDERSON & SHERRED ("MAS")
MAS is a Pennsylvania limited liability partnership founded in 1969. MAS
provides investment services to employee benefit plans, endowment funds,
foundations and other institutional investors.
The directors and executive officers of MAS, their positions and their other
business affiliations and business experience are as follows:
Richard Brown Worley
Portfolio Manager, Executive Committee Member, MAS: Managing Director, Morgan
Stanley & Co. Incorporated; Portfolio Manager, Morgan Stanley Dean Witter
Investment Management, Inc., Registered Representative, MAS Fund Distribution,
Inc.,
Thomas Leonard Bennett
Portfolio Manager, Executive Committee Member Director, MAS; Director, Morgan
Stanley Universal Funds; Managing Director, Morgan Stanley & Co. Incorporated ;
Portfolio Manger, Morgan Stanley Dean Witter Investment Management, Inc.;
Chairman, MAS Funds; Director, MAS Fund Distribution, Inc.
Gilbert Schlarbaum
Portfolio Manager, Executive Committee Member, MAS: Managing Director, Morgan
Stanley & Co. Incorporated; Portfolio Manger, Morgan Stanley Dean Witter
Investment Management, Inc.; Director, MAS Fund Distribution, Inc.
Robert J. Marcin
Portfolio Manager, Executive Committee Member, MAS: Portfolio Manager, Morgan
Stanley Asset Management, Inc.; Managing Director, Morgan Stanley & Co.
Incorporated; Registered Representative, MAS Fund Distribution, Inc.
Marna C. Whittington
Executive Committee Member, MAS; Managing Director, Morgan Stanley & Co.
Incorporated; CEO, MAS Fund Distribution, Inc.; Director, Rohn Has.
J.P. MORGAN INVESTMENT MANAGEMENT INC. ("JPMIM")
JPMIM is a registered investment adviser under the Investment Advisers Act of
1940, as amended, and is a wholly owned subsidiary of J.P. Morgan & Co.
Incorporated. JPMIM manages employee benefit funds of corporations, labor unions
and state and local governments and the accounts of other institutional
investors, including investment companies.
To the knowledge of the Registrant, none of the directors, or executive officers
of JPMIM, is or has been during the past two fiscal years engaged in any other
business, profession, vocation or employment of a substantial nature, except
that certain officers and directors of JPMIM also hold various positions with,
and engage in business for, J.P. Morgan & Co. Incorporated, which owns all the
outstanding stock of JPMIM.
WADDELL & REED INVESTMENT MANAGEMENT COMPANY (WRIMCO)
Waddell & Reed Investment Management Company is a sub-adviser of the Registrant
under the terms of a sub-advisory agreement whereby it provides investment
management services to the Registrant. Waddell & Reed Investment
<PAGE>
Management Company is not engaged in any business other than the provision of
investment management services.
Each director and executive officer of Waddell & Reed Investment Management
Company has had as his sole business, profession, vocation or employment during
the past two years only his duties as an executive officer and/or employee of
Waddell & Reed Investment Management Company or its affiliates, except as to
persons who are directors and/or officers of certain registered investment
companies for which Waddell & Reed Investment Management Company acts as
investment adviser, except for Mr. Ronald K. Richey, and except as otherwise
noted. Mr. Richey is Chairman of the Executive Committee of Torchmark
Corporation, the parent company of Waddell & Reed, Inc. Mr. Richey's address is
2001 Third Avenue South, Birmingham, Alabama 35233. The address of the others is
6300 Lamar Avenue, Shawnee Mission, Kansas 66202-4200.
For purposes of this section, the term "Fund Complex" includes each of the
registered investment companies in the United Group of Mutual Funds, Waddell &
Reed Funds, Inc. and Target/United Funds, Inc.
Michael L. Avery
Vice President of four funds in the Fund Complex; Senior Vice President of
WRIMCO; formerly, Vice President of Waddell & Reed Asset Management Company.
Daniel P. Becker
Vice President of one fund in the Fund Complex; Vice President of WRIMCO;
formerly Vice President of Waddell & Reed Asset Management Company.
James C. Cusser
Vice President of three funds in the Fund Complex; Vice President of
WRIMCO.
Diane C. Dercher
Vice President of WRIMCO.
Cynthia P. Prince-Fox
Vice President of two funds in the Fund Complex; Vice President of WRIMCO;
formerly Vice President of Waddell & Reed Asset Management Company.
Abel Garcia
Vice President of three funds in the Fund Complex; Senior Vice President
of WRIMCO; formerly, Vice President of Waddell & Reed Asset Management Company.
Robert L. Hechler
President and Principal Financial Officer of each of the funds in the Fund
Complex; Vice President, Chief Operations Officer, Director and Treasurer of
Waddell & Reed Financial Services, Inc.; Executive Vice President, Principal
Financial Officer, Director and Treasurer of WRIMCO; President, Chief Executive
Officer, Principal Financial Officer, Director and Treasurer of Waddell & Reed,
Inc.; President, Director and Treasurer of Waddell & Reed Services Company;
President, Treasurer and Director of Waddell & Reed Distributors, Inc.;
Executive Vice President, Chief Operations Officer and Director of Waddell &
Reed Financial, Inc. Formerly, Director and Treasurer of Waddell & Reed Asset
Management Company.
Henry J. Herrmann
Vice President of funds in the Fund Complex; Vice President, Chief
Investment Officer and Director of Waddell & Reed Financial Services, Inc.;
Director of Waddell & Reed, Inc.; President, Chief Executive Officer, Chief
Investment Officer and Director of WRIMCO; President, Chief Investment Officer,
Treasurer and Director of Waddell & Reed Financial, Inc. Formerly,
<PAGE>
President, Chief Executive Officer, Chief Investment Officer and Director of
Waddell & Reed Asset Management Company.
John M. Holliday
Vice President of nine funds in the Fund Complex; Senior Vice President of
WRIMCO; formerly, Senior Vice President of Waddell & Reed Asset Management
Company.
Charles W. Hooper, Jr.
Vice President of one fund in the Fund Complex; Vice President of WRIMCO;
formerly Vice President of Waddell & Reed Asset Management Company.
Theodore W. Howard
Vice President, Treasurer and Principal Accounting Officer of the funds in
the Fund Complex; Vice President of Waddell & Reed Services Company.
Antonio Intagliata
Vice President of one fund in the Fund Complex; Senior Vice President of
WRIMCO.
Helge K. Lee
Vice President, Secretary and General Counsel of each of the funds in the
Fund Complex; Vice President, Secretary, General Counsel and Director of Waddell
& Reed Financial Services, Inc.; Senior Vice President, Secretary and General
Counsel of WRIMCO and Waddell & Reed, Inc.; Senior Vice President, Secretary,
General Counsel and Director of Waddell & Reed Services Company; Vice President,
Secretary and General Counsel of Waddell & Reed Distributors, Inc.; Secretary
and General Counsel of Waddell & Reed Financial, Inc.
Thomas A. Mengel
Vice President of three funds in the Fund Complex; Vice President of
WRIMCO.
William M. Nelson
Vice President of one fund in the Fund Complex; Vice President of WRIMCO.
Louise D. Rieke
Vice President of three funds in the Fund Complex; Senior Vice President
of WRIMCO; formerly, Vice President of Waddell & Reed Asset Management Company.
Philip J. Sanders
Vice President of one fund in the Fund Complex; Vice President of WRIMCO.
Grant P. Sarris
Vice President of two funds in the Fund Complex and Vice President of
WRIMCO.
Mark G. Seferovich
Vice President of two funds in the Fund Complex; Senior Vice President of
WRIMCO; formerly Vice President of Waddell & Reed Asset Management Company.
Zachary H. Shafran
Vice President of two funds in the Fund Complex; Vice President of WRIMCO.
W. Patrick Sterner
<PAGE>
Vice President of two funds in the Fund Complex; Vice President of WRIMCO;
formerly, Vice President of Waddell & Reed Asset Management Company.
Mira Stevovich
Vice President of two funds in the Fund Complex; Vice President of WRIMCO.
John E. Sundeen, Jr.
Senior Vice President of WRIMCO; formerly Vice President of Waddell & Reed
Asset Management Company.
Russell E. Thompson
Vice President of three funds in the Fund Complex; Senior Vice President
of WRIMCO; formerly, Senior Vice President of Waddell & Reed Asset Management
Company.
Keith A. Tucker
Chairman of the Board of the funds in the Fund Complex; President,
Chairman of the Board, Chief Executive Officer and Director of Waddell & reed
Financial Services, Inc.; Chairman of the Board and Director of Waddell & Reed,
Inc.; Chairman of the Board and Director of WRIMCO; Chairman of the Board and
Director of Waddell & Reed Services Company; Chief Executive Officer, Principal
Financial Officer, Chairman of the Board and Director of Waddell & Reed
Financial, Inc.
Daniel J. Vrabac
Vice President of three funds in the Fund Complex; Vice President of
WRIMCO; formerly, Vice President of Waddell & Reed Asset Management Company.
James D. Wineland
Vice President of three funds in the Fund Complex; Senior Vice President
of WRIMCO; formerly, Vice President of Waddell & Reed Asset Management Company.
The address of each person is 6300 Lamar Avenue, P.O. Box 29217, Shawnee
Mission, Kansas 66201-9217 unless a different address is given.
Item 27: Principal Underwriters
(a) Not Applicable
(b) The following are names and positions of Officers and Member
Representatives of MML Distributors, LLC:
KENNETH M. RICKSON
Member Representative, G.R. Phelps & Co., Inc., President (5/1/96), CEO
(12/22/97), Main OSJ Supervisor (12/22/97), One Monarch Place 1414 Main Street
Springfield, MA 01144-1013.
MARGARET SPERRY
Member Representative, Massachusetts Mutual Life Insurance Co.(5/1/96),
1295 State Street, Springfield, MA 01111.
RONALD E. THOMSON
Vice President (5/1/96), One Monarch Place 1414 Main Street Springfield,
MA 01144-1013.
JOHN E. FORREST
<PAGE>
Vice President (12/22/97), One Monarch Place 1414 Main Street Springfield,
MA 01144-1013.
MICHAEL L. KERLEY
Vice President, Assistant Secretary, One Monarch Place 1414 Main Street,
Springfield MA 01144-1013
JAMES T. BAGLEY
Treasurer (12/22/97), One Monarch Place 1414 Main Street, Springfield MA
01144-1013.
BRUCE C. FRISBIE
Assistant Treasurer, 1295 State Street, Springfield MA 01111-0001.
RAYMOND W. ANDERSON
Assistant Treasurer, 140 Garden Street, Hartford CT 06154.
ANN F. LOMELI
Secretary, 1295 State Street, Springfield MA 01111-0001.
MARILYN A. SPONZO
Chief Legal Officer (12/22/97), Assistant Secretary (4/9/98), One Monarch
Place 1414 Main Street, Springfield MA 01144-1013.
ROBERT ROSENTHAL
Compliance Officer (12/22/97), One Monarch Place 1414 Main Street,
Springfield MA 01144.
KATHLEEN M. DANSEREAU
Registration Manager, 1414 Main Street, Springfield MA 01144.
RUTH HOWE
Director of Continuing Education (4/9/98), 1414 Main Street, Springfield
MA 01144.
PETER CUOZZO
Variable Life Supervisor and Hartford OSJ Supervisor (4/9/98), 140 Garden
Street Hartford, CT 06154.
MAUREEN R. FORD
Variable Annuity Supervisor (4/9/98), 140 Garden Street, Hartford CT
06154.
ANNE MELISSA DOWLING
Large Corporate Marketing Supervisor, 140 Garden Street, Hartford CT
06154.
c) Not Applicable
Item 28: 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
<PAGE>
(With respect to its services as Adviser)
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
(With respect to its services as Sub-Adviser)
David L. Babson and Company Inc.
One Memorial Drive
Cambridge, Massachusetts 02142
(With respect to its services as Sub-Adviser)
HarbourView Asset Management Corporation
Two World Trade Center
New York, New York 10048
(With respect to its services as Sub-Adviser)
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
(With respect to its services as Sub-Adviser)
Miller Anderson, Sherrerd
100 Front Street #100
West Conshohocken, Pennsylvania 19428
(With respect to its services as Sub-Adviser)
J. P. Morgan Investment Management Inc.
522 Fifth Avenue
New York, New York 10036
(With respect to its services as Sub-Adviser)
Waddell & Reed Investment Management Company
6300 Lamar Avenue
Overland Park, Kansas 66202-4200
(With respect to its services as Distributor)
MML Investor Services, Inc.
1414 Main Street
Springfield, Massachusetts 01144
(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 29: Management Services
Not Applicable.
Item 30: 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.
<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 to the Registration Statement to be signed on it
behalf by the undersigned, thereto duly authorized, in the City of Springfield
and the Commonwealth of Massachusetts on the 28TH day of April, 1999. 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 28th day of April, 1999.
Signature Title
/s/ Richard G. Dooley* Chairman &
- ---------------------------------- Trustee
Richard G. Dooley
/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
/s/ Stephen L. Kuhn* Trustee
- ----------------------------------
Richard W. Greene
/s/ Stephen L. Kuhn* Trustee
- ----------------------------------
Beverly C. L. Hamilton
/s/ Stephen L. Kuhn* Trustee
- ----------------------------------
F. William Marshall, Jr.
/s/ Stephen L. Kuhn* Trustee
- ----------------------------------
Charles J. McCarthy
/s/ Stephen L. Kuhn* Trustee
- ----------------------------------
John H. Southworth
/s/ Michael D. Hays Chief Financial Officer
- ----------------------------------
Michael D. Hays
/s/ Mark B. Ackerman Treasurer
- ----------------------------------
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.
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. TITLE of EXHIBIT
- ----------- ----------------
D(1) Copy of specimen Investment Management Agreement
for certain of the Funds.
D(5) Copy of Investment Sub-Advisory Agreement between
MassMutual and Massachusetts Financial Services
Company ("MFS").
D(6) Copy of Investment Sub-Advisory Agreement between
MassMutual and Miller Anderson & Sherrerd, LLP
("MAS").
D(7) Copy of Investment Sub-Advisory Agreement between
MassMutual and J.P. Morgan Investment Management
Inc. ("J.P. Morgan").
D(8) Copy of Investment Sub-Advisory Agreement between
MassMutual and Waddell & Reed Investment
Management Company ("Waddell & Reed").
E(1) Copy of General Distributors Agreement between the
Trust and MML Distributors, LLC.
G(2) Schedule 1 to the to Custodian Agreement dated May
3, 1999 between the Trust and IBT.
G(3) Specimen Administrative and Shareholder Services
Agreement between each of Registrant's series and
MassMutual.
G(4) Appendix A to the Amended and Restated Transfer
Agency Agreement among the Trust, MassMutual and
IBT.
H Copy of specimen Class L Shareholder Services
Agreement between each of Registrant's series and
MassMutual.
I(2) Opinion and Consent of Counsel, Ropes & Gray, with
respect to the Growth Equity Fund, Mid Cap Growth
Equity Fund, Small Cap Growth Equity Fund and
Diversified Bond Fund.
J(2) Consent of PricewaterhouseCoopers LLP, Independent
Accounts
J(3) Consent of Deloitte & Touche, LLP, Independent
Auditors
J(6) Power of Attorney for Michael D. Hays, Chief
Financial Officer.
M(2) Copy of Class A Rule 12b-1 Plans for the following
Funds: Growth Equity, Mid Cap Growth Equity, Small
Cap Growth Equity and Diversified Bond Fund.
M(4) Copy of Class Y Rule 12b-1 Plans for the
following Funds: Growth Equity, Mid Cap Growth
Equity, Small Cap Growth Equity and Diversified
Bond Fund.
M(5) Copy of Class L 12b-1 Plans for all Funds.
O Amended and Restated Rule 18f-3 Plan.
27 Financial Data Schedules.
<PAGE>
Exhibit D(1)
FORM OF
INVESTMENT MANAGEMENT AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
and
MASSMUTUAL INSTITUTIONAL FUNDS
[as to the MassMutual Core Bond Fund, MassMutual Small Cap Value Equity,
MassMutual Diversified Bond, MassMutual Core Equity, MassMutual Growth Equity,
MassMutual Mid Cap Growth Equity, MassMutual Small Cap Growth Equity and
MassMutual Balanced Fund]
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
This INVESTMENT MANAGEMENT AGREEMENT (the "Management Agreement"), is
between Massachusetts Mutual Life Insurance Company, a Massachusetts corporation
(the "Manager"), and MassMutual Institutional Funds, a Massachusetts business
trust (the "Trust"), effective this 3rd day of May, 1999.
WHEREAS, the Trust is an open-end diversified management investment
company registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, [MassMutual Core Bond Fund, MassMutual Small Cap Value Equity,
MassMutual Diversified Bond, MassMutual Core Equity, MassMutual Growth Equity,
MassMutual Mid Cap Growth Equity, MassMutual Small Cap Growth Equity and
MassMutual Balanced Fund] (the "Fund") is a series of the Trust;
WHEREAS, the Manager is an investment adviser registered with the
Commission as such under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"); and
WHEREAS, the Trust desires to appoint the Manager as its investment
manager for the Fund and the Manager is willing to act in such capacity upon the
terms herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the Trust and the Manager hereby agree as follows:
1. General Provision.
The Trust hereby employs the Manager and the Manager hereby undertakes to act as
the investment manager of the Fund, to provide investment advice and to perform
for the Fund such other duties and functions as are hereinafter set forth. The
Manager shall, in all matters, give to the Fund and the Trust's Board of
Trustees the benefit of the Manager's best judgment, effort, advice and
recommendations and shall, at all times conform to, and use its best efforts to
enable the Fund to conform to:
(a) the provisions of the Act, the Advisers Act and any rules or
regulations thereunder;
(b) any other applicable provisions of state or federal law;
(c) the provisions of the Agreement and Declaration of Trust and By-Laws
of the Trust as amended from time to time (collectively referred to as the
"Trust Documents");
(d) policies and determinations of the Board of Trustees of the Trust;
(e) the fundamental and non-fundamental policies and investment
restrictions of the Fund as reflected in the Trust's registration statement or
as such policies may, from time to time, be amended by the Board of Trustees, or
where necessary, by the Fund's shareholders; and/or
(f) the Prospectus and Statement of Additional Information of the Fund in
effect from time to time.
The appropriate officers and employees of the Manager shall be available
upon reasonable notice for consultation with any of the Trustees and officers of
the Trust and the Trust with respect to any matter dealing with the business and
affairs of the Fund, such as the valuation of portfolio securities of the Fund,
including but not limited to securities that are either not registered for
public sale or securities not traded on any securities market.
2. Duties of the Manager.
(a) The Manager shall, subject to the direction and
control by the Trust's Board of Trustees (i) regularly provide
investment advice and recommendations to the Fund,
<PAGE>
with respect to the Fund's investments, investment policies
and the purchase and sale of securities; (ii) supervise and
monitor continuously the investment program of the Fund and
the composition of its portfolio and determine what securities
shall be purchased or sold by the Fund; (iii) arrange, subject
to the provisions of Section 5 hereof, for the purchase of
securities and other investments for the Fund and the sale of
securities and other investments held in the portfolio of the
Fund; and (iv) provide reports on the foregoing to the Board
of Trustees at each Board meeting.
(b) Provided that neither the Trust nor the Fund shall be required to pay
any compensation other than as provided by the terms of this Management
Agreement and subject to the provisions of Section 5 hereof, the Manager may
obtain investment information, research or assistance from any other person,
firm or corporation to supplement, update or otherwise improve its investment
management services.
(c) Provided that nothing herein shall be deemed to protect the Manager
from willful misfeasance, bad faith or gross negligence in the performance of
its duties, or reckless disregard to its obligations and duties under this
Management Agreement, the Manager shall not be liable for any loss sustained by
reason of good faith errors or omissions in connection with any matters to which
this Management Agreement relates.
(d) Nothing in this Management Agreement shall prevent the Manager or any
officer thereof from acting as investment adviser or sub-adviser for any other
person, firm or corporation and shall not in any way limit or restrict the
Manager or any of their respective directors, officers, members, stockholders or
employees from buying, selling, or trading any securities for its own account or
for the account of others for whom it or they may be acting, provided that such
activities will not adversely affect or otherwise impair the performance by any
party of its duties and obligations under this Management Agreement.
(e) The Manager shall cooperate with the Trust by providing the Trust with
any information in the Manager's possession necessary for supervising the
activities of all administrative and clerical personnel as shall be required to
provide corporate administration for the Fund, including the compilation and
maintenance of such records with respect to its operations as may reasonably be
required. The Manager shall, at its own expense, provide such officers for the
Trust as its Board may request.
3. Duties of the Trust.
The Trust shall provide the Manager with the following information about the
Fund:
(a) cash flow estimates on request;
(b) notice of the Fund's "investable funds" by 9:00 a.m. each business
day;
(c) as they are modified, from time to time, current versions of the
documents and policies referred to in Subsections (c), (d), (e) and (f) of
Section 1 hereof, above.
4. Compensation of the Manager.
The Trust agrees to pay the Manager and the Manager agrees to accept as full
compensation for the performance of all functions and duties on its part to be
performed pursuant to the provisions hereof, a fee at the annual rate .48% of
the average daily net asset value of the Fund, determined at the close of the
New York Stock Exchange on each day that the Exchange is open for trading and
paid on the last day of each month.
5. Portfolio Transactions and Brokerage.
(a) The Manager is authorized, in arranging the purchase and sale of the
Fund's publicly-traded portfolio securities, to employ or deal with such members
of securities exchanges, brokers or dealers (hereinafter "broker-dealers"),
including "affiliated" broker-
<PAGE>
dealers, as that term is defined in the Act, as may, in its best judgment,
implement the policy of the Fund to obtain, at reasonable expense, the best
execution (prompt and reliable execution at the most favorable security price
obtainable) of the Fund's portfolio transactions.
(b) The Manager may effect the purchase and sale of securities (which are
otherwise publicly traded) in private transactions on such terms and conditions
as are customary in such transactions, may use a broker in such to effect said
transactions, and may enter into a contract in which the broker acts either as
principal or as agent.
(c) The Manager shall select broker-dealers to effect the Fund's portfolio
transactions on the basis of its estimate of their ability to obtain best
execution of particular and related portfolio transactions. The abilities of a
broker-dealer to obtain best execution of particular portfolio transaction(s)
will be judged by the Manager on the basis of all relevant factors and
considerations including, insofar as feasible, the execution capabilities
required by the transaction or transactions; the ability and willingness of the
broker-dealer to facilitate the Fund's portfolio transactions by participating
therein for its own account; the importance to the Fund of speed, efficiency or
confidentiality; the broker-dealer's apparent familiarity with sources from or
to whom particular securities might be purchased or sold; as well as any other
matters relevant to the selection of a broker-dealer for particular and related
transactions of the Fund.
6. Duration.
Unless terminated earlier pursuant to Section 7 hereof, this Management
Agreement shall remain in effect until two years from the date first above
written. Thereafter it shall continue in effect from year to year, so long as
such continuance shall be approved at least annually by the Trust's Board of
Trustees, including the vote of the majority of the Trustees of the Trust who
are not parties to this Management Agreement or "interested persons" (as defined
in the Act) of any such party cast in person at a meeting called for the purpose
of voting on such approval, or by the holders of a "majority" (as defined in the
Act) of the outstanding voting securities of the Fund.
7. Termination.
This Management Agreement shall terminate automatically upon its assignment or
in the event upon the termination of the Advisory Management Agreement; it may
also be terminated: (i) for cause or with the consent of the parties and the
Trust by the Trust or the Manager at any time without penalty, upon sixty days'
written notice to the other party and the Trust; or (ii) by the Trust at any
time without penalty upon sixty days' written notice to the Trust and the
Manager provided that such termination by the Trust shall be directed or
approved by a vote of a majority of all of the Trustees of the Trust then in
office or by the vote of the holders of a "majority" of the outstanding voting
securities of the Fund (as defined in the Act).
8. Investment Sub-Advisory Contracts.
(a) Subject to the provisions of the Agreement and Declaration of Trust
and the 1940 Act, the Manager, at its expense, may, in its discretion (subject
only to approval by the Trust's Board of Trustees and, if necessary, the Trust's
shareholders) select and contract with an investment sub-adviser (the
"Sub-Adviser") for the Fund. So long as any Sub-Adviser serves as Sub-Adviser to
the Fund, it must be a party to a Sub-Investment Advisory Agreement in
substantially the form attached hereto as Schedule A (the "Sub-Adviser
Agreement") and will be obligated to:
(1) Furnish continuously an investment program as to those assets of
the Trust and the Fund as allocated by the Manager;
(2) In connection therewith, adhere to such guidelines as may be
established by the Manager from time to time to insure compliance with
applicable investment objectives, policies and restrictions of the Trust
and the Fund; and
(3) Place all orders for the purchase and sale of investments of the
Fund.
<PAGE>
(b) The Manager will be responsible for payment of all compensation to any
Sub-Adviser and other persons and entities to which Manager delegates any duties
hereunder.
9. Disclaimer of Shareholder Liability.
The Trust and the Manager understand that the obligations of the Trust under
this Management Agreement are not binding upon any Trustee or shareholder of the
Trust personally, but bind only the Trust and the Trust's property. The Manager
represents that it has notice of the provisions of the Trust Documents
disclaiming shareholder and Trustee liability for acts or obligations of the
Trust.
10. Notice.
Any notice under this Management Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party, with a copy to the
Trust, at the addresses below or such other address as such other party may
designate for the receipt of such notice.
If to the Manager: Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
If to the Trust: MassMutual Institutional Funds
1295 State Street
Springfield, MA 01111
Attention: Stephen L. Kuhn,
Vice President and Secretary
IN WITNESS WHEREOF, the Trust and the Manager have caused this Management
Agreement to be executed on the day and year first above written.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ John V. Murphy
----------------------------------
John V. Murphy
Executive Vice President
MASSMUTUAL INSTITUTIONAL FUNDS
on behalf of MASSMUTUAL CORE BOND FUND
By: /s/ Stuart H. Reese
----------------------------------
Stuart H. Reese
President
<PAGE>
Exhibit D(5)
INVESTMENT SUB-ADVISORY AGREEMENTS
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
and
MASSACHUSETTS FINANCIAL SERVICES COMPANY
(as to the Growth Equity Fund)
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
This Investment Sub-Advisory Agreement (this "Sub-Advisory Agreement"), is by
and between Massachusetts Financial Services Company, organized under the laws
of the State of Delaware (the "Sub-Adviser") and Massachusetts Mutual Life
Insurance Company, a mutual life insurance company organized under the laws of
the Commonwealth of Massachusetts ("MassMutual"), for the MassMutual Growth
Equity Fund (the "Fund"), a series of MassMutual Institutional Funds (the
"Trust"), a Massachusetts business trust which is an open-end diversified
management investment company registered as such with the Securities and
Exchange Commission (the "Commission") pursuant to the Investment Company Act of
1940, as amended (the "Act"), effective as of the 1st day of May, 1999.
WHEREAS, the Trust has appointed MassMutual as the investment adviser for the
Fund pursuant to the terms of an Investment Advisory Agreement (the "Advisory
Agreement");
WHEREAS, the Advisory Agreement provides that MassMutual may, at its option,
subject to approval by the Trustees of the Trust and, to the extent necessary,
the shareholders of the Fund, appoint a sub-adviser to assume certain
responsibilities and obligations of MassMutual under the Advisory Agreement;
WHEREAS, MassMutual and the Sub-Adviser are investments advisers registered with
the Commission as such under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"); and
WHEREAS, MassMutual desires to appoint the Sub-Adviser as its sub-adviser for
the Fund and the Sub-Adviser is willing to act in such capacity upon the terms
herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, MassMutual, the Fund and the Sub-Adviser, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. General Provision.
(a) MassMutual hereby employs the Sub-Adviser and the Sub-Adviser hereby
undertakes to act as the investment sub-adviser of the Fund to provide
investment advice and to perform for the Fund such other duties and functions as
are hereinafter set forth. Subject to Section 1(c) hereof, the Sub-Adviser shall
be responsible for managing the Fund in conformity with:
(i) the provisions of the Act and any rules or regulations
thereunder;
(ii) any other applicable provisions of state or federal securities
law;
(iii) the provisions of the Agreement and Declaration of Trust and
Bylaws of the Trust, as amended from time to time (collectively referred
to as the "Trust Documents");
(iv) policies and determinations of the Board of Trustees of the
Trust and MassMutual;
(v) the fundamental and non-fundamental policies and investment
restrictions of the Fund as reflected in the Trust's registration
statement under the Act or as such policies may, from time to time, be
amended by the Fund's shareholders; and
(vi) the Prospectus and Statement of Additional Information of the
Fund in effect from time to time (collectively referred to as the
"Disclosure Documents").
(b) The appropriate officers and employees of the Sub-Adviser shall be
available upon reasonable notice for consultation with any of the Trustees and
officers of the Trust and MassMutual with respect to the services provided by
the Sub-Adviser hereunder. MassMutual acknowledges that the Sub-Adviser is not
the Fund's pricing agent. Sub-Adviser will provide reasonable assistance to the
Fund's pricing agent in valuing securities held by the fund which are not
readily marketable (i.e., internally priced securities).
<PAGE>
(c) MassMutual acknowledges that the Sub-Adviser is not the compliance
agent for the Fund or for MassMutual, and does not have access to all of the
Fund's books and records necessary to perform certain compliance testing. To the
extent that the Sub-Adviser has agreed to perform the services specified in this
Section and in Section 2 hereof in accordance with applicable law (including
sub-chapters M and L of the Internal Revenue Code of 1986, as amended (the
"Code"), the Act and the Advisers Act ("Applicable Law")) and in accordance with
the Trust Documents, policies and determinations of the Board of Trustees of the
Trust and MassMutual and the Fund's Disclosure Documents (collectively, the
"Charter Requirements"), the Sub-Adviser shall perform such services based upon
its books and records with respect to the Fund, which comprise a portion of the
Fund's books and records, and upon written instructions received from the Fund,
MassMutual or the Fund's administrator, and shall not be held responsible under
this Agreement so long as it performs such services in accordance with this
Agreement, the Charter Requirements and Applicable Law based upon such books and
records and such instructions provided by the Fund, MassMutual or the Fund's
administrator. The Sub-Adviser shall be afforded a reasonable amount of time to
implement any such instructions (for example, if instructed not to trade on
behalf of securities of certain specified MassMutual or Fund affiliates, the
Sub-Adviser shall be afforded five business days after receipt of such
instruction to implement this trading restriction).
2. Duties of the Sub-Adviser.
(a) The Sub-Adviser shall, subject to the direction and control by the
Trust's Board of Trustees or MassMutual, to the extent MassMutual's direction is
not inconsistent with that of the Board of Trustees, (i) regularly provide
investment advice and recommendations to the Fund, directly or through
MassMutual, with respect to the Fund's investments, investment policies and the
purchase, sale or other disposition of securities and other investments; (ii)
supervise and monitor continuously the investment program of the Fund and the
composition of its portfolio and determine what securities or other investments
shall be purchased or sold by the Fund; (iii) arrange, subject to the provisions
of Section 6 hereof, for the purchase of securities and other investments for
the Fund and the sale of securities and other investments held in the portfolio
of the Fund; (iv) provide reports on the foregoing to the Board of Trustees at
each Board meeting; and (v) vote or exercise any consent rights with respect to
such securities or investments.
(b) The Sub-Adviser shall provide to MassMutual such reports for the Fund,
and in such time frames, as MassMutual and the Sub-Adviser shall mutually agree
or as required by applicable law or regulation.
(c) Provided that none of MassMutual, the Fund or the Trust shall be
required to pay any compensation other than as provided by the terms of this
Sub-Advisory Agreement and subject to the provisions of Section 5 hereof, the
Sub-Adviser may obtain investment information, research or assistance from any
other person, firm or corporation to supplement, update or otherwise improve its
investment management services.
(d) The Sub-Adviser shall disclose to MassMutual and to the Fund
information regarding any change in control in the Sub-Adviser or to the Fund's
portfolio manager or any change in its key personnel, information regarding any
material adverse change in the condition (financial or otherwise) of the
Sub-Adviser or any person who controls the Sub-Adviser that would materially
affect the services provided by the Sub-Adviser hereunder, information regarding
the investment performance and general investment methods of the Sub-Adviser
with respect to the Fund, information necessary to enable MassMutual to monitor
the performance of the Sub-Adviser and information that is required to be
disclosed in any filings required by any governmental agency or by any
applicable law, regulation, rule or order.
(e) The Sub-Adviser shall provide MassMutual, upon reasonable prior
written request by MassMutual to the Sub-Adviser, with access to inspect at the
Sub-Adviser's office the books and records of the Sub-Adviser relating to the
Fund and the Sub-Adviser's performance hereunder.
3. Other Activities.
<PAGE>
(a) Nothing in this Sub-Advisory Agreement shall prevent MassMutual or the
Sub-Adviser or any officer thereof from acting as investment adviser or
sub-adviser for any other person, firm or corporation and shall not in any way
limit or restrict MassMutual or the Sub-Adviser or any of their respective
directors, officers, members, stockholders, partners or employees from buying,
selling, or trading any securities for its own account or for the account of
others for whom it or they may be acting, provided that such activities are in
compliance with U.S. federal and state securities laws, regulations and rules
and will not adversely affect or otherwise impair the performance by any party
of its duties and obligations under this Sub-Advisory Agreement.
(b) The Sub-Adviser agrees that it will not knowingly or deliberately
favor any other account managed or controlled by it or any of its principals or
affiliates over the Fund. The Sub-Adviser, upon reasonable request and receipt
of adequate assurances of confidentiality, shall provide MassMutual with an
explanation of the differences, if any, in performance between the Fund and any
other account with investment objectives and policies similar to the Fund for
which the Sub-Adviser, or any one of its principals or affiliates, acts as
investment adviser. On occasions when the Sub-Adviser deems the purchase or sale
of a security to be in the best interest of the Fund as well as other clients of
the Sub-Adviser, the Sub-Adviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate orders for
securities to be purchased or sold to attempt to obtain a more favorable price
or lower brokerage commissions and efficient execution. In such event,
allocation of these securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Sub-Adviser in the manner the
Sub-Adviser considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and its clients.
4 Compensation of the Sub-Adviser.
MassMutual agrees to pay the Sub-Adviser and the Sub-Adviser agrees to accept as
full compensation for the performance of all functions and duties on its part to
be performed pursuant to the provisions hereof, a fee paid quarterly, in
arrears, at the following rate: an annual rate of .40% on the first $300 million
of Aggregate Assets; an annual rate of .37% on the next $300 million of
Aggregate Assets; an annual rate of .35% on the next $300 million of Aggregate
Assets; an annual rate of .32% on the next $600 million of Aggregate Assets; and
an annual rate of .25% of Aggregate Assets in excess of $1.5 billion. For the
purposes of this Sub-Advisory Agreement, "Aggregate Assets" shall mean the
aggregate of (i) the average daily net assets of the Fund determined at the
close of the New York Stock Exchange on each day that the Exchange is open for
trading, and (ii) the average daily net assets of all other funds or accounts of
MassMutual or its affiliates, including other funds registered under the Act,
for which the Sub-Advisor provides investment advisory services determined at
the close of the Exchange on each day that the Exchange is open for trading.
MassMutual shall pay the Sub-Advisor such fee on the first business day
immediately following the end of each calendar quarter. Compensation for any
partial period shall be pro-rated based on the length of the period.
5. Portfolio Transactions and Brokerage.
(a) The Sub-Adviser is authorized, in arranging the purchase and sale of
the Fund's publicly-traded portfolio securities, to employ or deal with such
members of securities exchanges, brokers or dealers (hereinafter
"broker-dealers"), as may, in its best judgment, implement the policy of the
Fund to obtain, at reasonable expense, the best execution of the Fund's
portfolio transactions.
(b) The Sub-Adviser may effect the purchase and sale of securities (which
are otherwise publicly traded) in private transactions on such terms and
conditions as are customary in such transactions, may use a broker to effect
such transactions, and may enter into a contract in which the broker acts either
as principal or as agent.
(c) The Sub-Adviser shall select broker-dealers to effect the Fund's
portfolio transactions on the basis of its estimate of their ability to obtain
best execution of particular and related portfolio transactions. The abilities
of a broker-dealer to obtain best execution of particular portfolio
transaction(s) will be judged by the Sub-Adviser on the basis of all relevant
<PAGE>
factors and considerations including, insofar as feasible, the execution
capabilities required by the transaction or transactions; the ability and
willingness of the broker-dealer to facilitate the Fund's portfolio transactions
by participating therein for its own account; the importance to the Fund of
speed, efficiency or confidentiality; the broker-dealer's apparent familiarity
with sources from or to whom particular securities might be purchased or sold;
other matters involved in the receipt of brokerage and research services in
accordance with Section 28(e) of the Securities Exchange Act of 1934, as
amended; as well as any other matters relevant to the selection of a
broker-dealer for particular and related transactions of the Fund; and such
other considerations as the Board of Trustees of the Trust or MassMutual
determine and provide to the Sub-Adviser from time to time.
6. Representations And Warranties of The Sub-Adviser.
The Sub-Adviser hereby represents and warrants to the Fund and MassMutual that:
(a) The Sub-Adviser has obtained all required governmental and regulatory
licenses, registrations and approvals required by law as may be necessary to
perform its obligations under this Sub-Advisory Agreement and to act as
contemplated by the Trust Documents and the Disclosure Documents, including
without limitation registration as an investment adviser under the Advisers Act,
and will maintain and renew any required licenses, registrations, approvals and
memberships during the term of this Sub-Advisory Agreement.
(b) There is no pending, or to the best of its knowledge, threatened or
contemplated action, suit or proceeding before or by any court, governmental,
administrative or self-regulatory body or arbitration panel to which the
Sub-Adviser or any of its principals or affiliates is a party, or to which any
of the assets of the Sub-Adviser is subject, which reasonably might be expected
to materially impair the Sub-Adviser's ability to discharge its obligations
under this Sub-Advisory Agreement.
(c) All references in the Disclosure Documents describing the Sub-Adviser
and its affiliates and the controlling persons, affiliates, stockholders,
directors, officers and employees of any of the foregoing are accurate in all
material respects and do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make such information not
misleading.
The foregoing representations and warranties shall be continuing during the term
of this Sub-Advisory Agreement.
7. Covenants of the Sub-Adviser.
(a) If at any time during the term of this Sub-Advisory Agreement, the
Sub-Adviser discovers any fact or omission, or any event or change of
circumstances occurs, which would make the Sub-Adviser's representations and
warranties in Section 6 inaccurate or incomplete in any material respect, or
which might render the Disclosure Documents untrue or misleading in any material
respect, the Sub-Adviser will provide prompt written notification to the Fund
and MassMutual of any such fact, omission, event or change of circumstances, and
the facts related thereto.
(b) The Sub-Adviser agrees that, during the term of this Sub-Advisory
Agreement, and for so long as investment in the Fund is being offered for sale,
it will provide the Fund and the Sub-Adviser with updated information relating
to the Fund's performance results as reasonably required from time to time by
the Fund and MassMutual. The Sub-Adviser shall use its best efforts to provide
such information within a reasonable period of time after the end of the month
to which such updated information relates and the information is available to
it.
8. Confidentiality.
All information and advice furnished by one party to the other party (including
their respective agents, employees and representatives) hereunder shall be
treated as confidential and shall not be disclosed to third parties, except as
may be necessary to comply with applicable governmental laws, rules and
regulations, subpoenas or court orders.
<PAGE>
9. Duration.
Unless terminated earlier pursuant to Section 10 hereof, this Sub-Advisory
Agreement shall remain in effect for a period of two years from the date hereof.
Thereafter it shall continue in effect from year to year, unless terminated
pursuant to Section 10 hereof, so long as such continuance shall be approved at
least annually by the Trust's Board of Trustees, including the vote of the
majority of the Trustees of the Trust who are not parties to this Sub-Advisory
Agreement or "interested persons" (as defined in the Act) of any such party cast
in person at a meeting called for the purpose of voting on such approval, or by
the holders of a "majority" (as defined in the Act) of the outstanding voting
securities of the Fund.
10. Termination.
(a) This Sub-Advisory Agreement shall terminate automatically upon its
unauthorized assignment (within the meaning of the Act), the termination of the
Advisory Agreement or the dissolution of the Fund.
(b) The Sub-Advisory Agreement may be terminated by MassMutual or the
Board of Trustees of the Trust: (i) by written notice to the Sub-Adviser with
immediate effect, if the Sub-Adviser's registration under the Adviser's Act is
suspended, terminated, lapsed or not renewed; (ii) by written notice to the
Sub-Adviser with immediate effect, if the Sub-Adviser is bankrupt or insolvent,
seeks an arrangement with creditors, is dissolved or terminated or ceases to
exist; (iii) by written notice to the Sub-Adviser with immediate effect, if
MassMutual determines in good faith, for any reason, that such termination is
appropriate for the protection of the Fund, including without limitation a good
faith determination by MassMutual or the Board of Trustees of the Trust that the
Sub-Adviser has breached a material obligation or duty under this Sub-Advisory
Agreement; or (iv) in their sole discretion, without penalty, upon ninety days
prior written notice to Sub-Adviser. This Sub-Advisory Agreement also may be
terminated at any time, without penalty, by the vote of the holders of a
"majority" of the outstanding voting securities of the Fund (as defined in the
Act).
(c) The Sub-Advisory Agreement may be terminated by the Sub-Adviser,
without penalty at any time, upon ninety days' prior written notice, to
MassMutual and the Trust.
11. Indemnification.
(a) Provided that nothing herein shall be deemed to protect the
Sub-Adviser from acts or omissions in breach of this Sub-Advisory Agreement or
from willful misfeasance, bad faith or gross negligence in the performance of
its duties, or reckless disregard to its obligations and duties under this
Sub-Advisory Agreement, the Sub-Adviser shall not be liable for any loss
sustained by reason of good faith errors or omissions in connection with any
matters to which this Sub-Advisory Agreement relates.
(b) The Sub-Adviser agrees to indemnify and hold harmless MassMutual, the
Fund and any of its or their controlling persons or any shareholders, partners,
directors, officers and/or employees of any of them against any loss, claim,
damage, charge, liability or expense (including, without limitation, reasonable
attorneys' and accountants' fees) to which such persons may become subject,
insofar as such loss, claim, damage, charge, liability or expense arises out of
or is based upon any demands, claims, liabilities, expenses, lawsuits, actions
or proceedings relating to this Sub-Advisory Agreement or to the advisory
services for the account of the Fund provided by the Sub-Adviser, provided that
the loss, claim, damage, liability, cost or expense arose out of an act or
omission of the Sub-Adviser or its officers, directors, employees, agents or
controlling persons constituting willful misfeasance, bad faith, gross
negligence, fraud, willful misconduct or a breach of this Sub-Advisory
Agreement.
(c) MassMutual agrees to indemnify and hold harmless the Sub-Adviser and
any of its controlling persons, shareholders, partners, directors, officers
and/or employees of any of them against any loss, claim, settlement, damage,
charge, liability or
<PAGE>
expense (including, without limitation, reasonable attorneys' and accountants'
fees) to which such persons may become subject, insofar as such loss, claim,
settlement, damage, charge, liability or expense arises out of or is based upon
any demands, claims, liabilities, expenses, lawsuits, actions or proceedings
relating to this Sub-Advisory Agreement, the advisory services for the account
of the Fund provided by the Sub-Adviser, the operation of the Fund or the
contents of the Disclosure Documents, provided that the loss, claim, damage,
liability, cost or expense arose out of act or omission of MassMutual or the
Fund or any of its partners, officers, directors, employees, agents or
controlling persons constituting willful misfeasance, bad faith, gross
negligence, fraud, willful misconduct or a breach of this Sub-Advisory
Agreement.
(d) Promptly after receipt by an indemnified party under this Section 11
of notice of any claim or dispute or commencement of any action or litigation,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party under this Section 11, notify the indemnifying party of
the commencement thereof; but the omission to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 11 except to the extent, if any, that such
failure or delay prejudiced the other party in defending against the claim. In
case any such claim, dispute, action or litigation is brought or asserted
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, to assume the defense thereof, with
counsel of its choice, following notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof; in which
event, the indemnifying party will not be liable to such indemnified party under
this Section 11 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof, but shall continue to
be liable to the indemnified party in all other respects as heretofore set forth
in this Section 11. Notwithstanding any other provisions of this Section 11, if,
in any claim, dispute, action or litigation as to which indemnity is or may be
available, any indemnified party reasonably determines that its interests are or
may be, in whole or in part, adverse to the interests of the indemnifying party,
the indemnified party may retain its own counsel of its choice in connection
with such claim, dispute, action or litigation and shall continue to be
indemnified by the indemnifying party for any legal or any other expenses
reasonably incurred in connection with investigating or defending such claim,
dispute, action or litigation.
12. Disclaimer of Shareholder Liability.
MassMutual and the Sub-Adviser understand that the obligations of the Trust
under this Sub-Advisory Agreement are not binding upon any Trustee or
shareholder of the Trust personally, but bind only the Trust and the Trust's
property. MassMutual and the Sub-Adviser represent that each has notice of the
provisions of the Trust Documents disclaiming shareholder and Trustee liability
for acts or obligations of the Trust.
13. Use of Names.
MassMutual and the Fund shall not use the name of the Sub-Adviser or any of its
affiliates or any abbreviation, logo or derivative therefrom in any prospectus,
sales literature or other material relating to the Fund in any manner not
approved prior thereto by the Sub-Adviser. The Sub-Adviser shall not use the
name of MassMutual or the Fund or any abbreviation, logo or derivative therefrom
in any material relating to the Sub-Adviser in any manner not approved prior
thereto by MassMutual or the Fund.
14. Notice.
Any notice under this Sub-Advisory Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party, with a copy to the
Trust, at the addresses below or such other address as such other party may
designate for the receipt of such notice.
If to MassMutual: Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Vernon J. Meyer
Vice President
If to the Sub-Adviser: Massachusetts Financial Services Company
<PAGE>
500 Boylston Street
Boston, MA 02116-3741
Attention: Stephen E. Cavan, Esq.
General Counsel
If to either MassMutual or the Sub-Adviser, copies to:
MassMutual Institutional Funds
1295 State Street
Springfield, MA 01111
Attention: Stephen L. Kuhn
Vice President
15. No Assignment.
No assignment (within the meaning of the Act) of this Sub-Advisory Agreement may
be made without the express written consent of all parties hereto.
16. Amendments to this Sub-Advisory Agreement.
This Sub-Advisory Agreement may be amended only by a written instrument approved
in writing by all parties hereto.
17. Governing Law.
This Sub-Advisory Agreement shall be governed by and construed in accordance
with the internal laws of the Commonwealth of Massachusetts, without giving
effect to principles of conflict of laws.
18. Survival.
The provisions of this Sub-Advisory Agreement shall survive the termination or
other expiration of this Sub-Advisory Agreement with respect to any matter
arising while this Sub-Advisory Agreement was in effect.
19. Successors.
This Sub-Advisory Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns.
20. Entire Agreement.
This Sub-Advisory Agreement constitutes the entire agreement among the parties
hereto with respect to the matters referred to herein, and no other agreement,
oral or otherwise, shall be binding on the parties hereto.
21. No Waiver.
No failure or delay on the part of any party hereto in exercising any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
Any waiver granted hereunder must be in writing and shall be valid only in the
specific instance in which given.
22. Severability.
If any one or more provisions in this Sub-Advisory Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not effect any other provision
of this Sub-Advisory Agreement, but this Sub-Advisory Agreement shall be
construed so as to effectuate the intent of the parties hereto as nearly as
possible without giving effect to such invalid, illegal or unenforceable
provision had never been contained herein.
23. Counterparts.
This Sub-Advisory Agreement may be executed in any number of counterparts, each
of which shall constitute an original, but all of which when taken together
shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Fund, MassMutual and the Sub-Adviser have caused this
Sub-Advisory Agreement to be executed as of the day and year first above
written.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Michael D. Hays
--------------------------------
Name: Michael D. Hays
------------------------------
Title: Senior Vice President
-----------------------------
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: /s/ Jeffrey L. Shames
---------------------------------------
Name: Jeffrey L. Shames
------------------------------------
Title: Chairman and Chief Executive Officer
------------------------------------
ACKNOWLEDGED:
MASSSMUTUAL INSTITUTIONAL FUNDS
on behalf of MassMutual Growth Equity Fund
By: /s/ Stuart H. Reese
------------------------------
Name: Stuart H. Reese
----------------------------
Title: President
---------------------------
<PAGE>
Exhibit D(6)
INVESTMENT SUB-ADVISORY AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
and
MILLER ANDERSON & SHERRERD, LLP
(as to the Mid Cap Growth Equity Fund)
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
This Investment Sub-Advisory Agreement (this "Sub-Advisory Agreement"), is by
and between Miller Anderson & Sherrerd, LLP, organized under the laws of the
Commonwealth of Pennsylvania (the "Sub-Adviser") and Massachusetts Mutual Life
Insurance Company, a mutual life insurance company organized under the laws of
the Commonwealth of Massachusetts ("MassMutual"), for the MassMutual Mid Cap
Growth Equity Fund (the "Fund"), a series of MassMutual Institutional Funds (the
"Trust"), a Massachusetts business trust which is an open-end diversified
management investment company registered as such with the Securities and
Exchange Commission (the "Commission") pursuant to the Investment Company Act of
1940, as amended (the "Act"), effective as of the 3rd day of May, 1999.
WHEREAS, the Trust has appointed MassMutual as the investment adviser for the
Fund pursuant to the terms of an Investment Advisory Agreement (the "Advisory
Agreement");
WHEREAS, the Advisory Agreement provides that MassMutual may, at its option,
subject to approval by the Trustees of the Trust and, to the extent necessary,
the shareholders of the Fund, appoint a sub-adviser to assume certain
responsibilities and obligations of MassMutual under the Advisory Agreement;
WHEREAS, MassMutual and the Sub-Adviser are investments advisers registered with
the Commission as such under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"); and
WHEREAS, MassMutual desires to appoint the Sub-Adviser as its sub-adviser for
the Fund and the Sub-Adviser is willing to act in such capacity upon the terms
herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, MassMutual, the Fund and the Sub-Adviser, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. General Provision.
(a) MassMutual hereby employs the Sub-Adviser and the Sub-Adviser hereby
undertakes to act as the investment sub-adviser of the Fund to provide
investment advice and to perform for the Fund such other duties and functions as
are hereinafter set forth. The Sub-Adviser shall, in all matters, give to the
Fund and the Trust's Board of Trustees, directly or through MassMutual, the
benefit of the Sub-Adviser's best judgment, effort, advice and recommendations
and shall, at all times conform to, and use its best efforts to ensure the Fund
conforms to:
(i) the provisions of the Act and any rules or regulations
thereunder;
(ii) any other applicable provisions of state or federal law;
(iii) the provisions of the Agreement and Declaration of Trust and
Bylaws of the Trust, as amended from time to time (collectively referred
to as the "Trust Documents");
(iv) policies and determinations of the Board of Trustees of the
Trust and MassMutual;
(v) the fundamental and non-fundamental policies and investment
restrictions of the Fund as reflected in the Trust's registration
statement under the Act or as such policies may, from time to time, be
amended by the Fund's shareholders; and
(vi) the Prospectus and Statement of Additional Information of the
Fund in effect from time to time (collectively referred to as the
"Disclosure Documents").
(b) The appropriate officers and employees of the Sub-Adviser shall be
available upon reasonable notice for consultation with any of the Trustees and
officers of the Trust and MassMutual with respect to any matter dealing with the
business and affairs of the Fund, such as the valuation of portfolio
<PAGE>
securities of the Fund, including but not limited to securities that are either
not registered for public sale or securities not traded on any securities
market.
2. Duties of the Sub-Adviser.
(a) The Sub-Adviser shall, subject to the direction and control by the
Trust's Board of Trustees or MassMutual, to the extent MassMutual's direction is
not inconsistent with that of the Board of Trustees, (i) regularly provide
investment advice and recommendations to the Fund, directly or through
MassMutual, with respect to the Fund's investments, investment policies and the
purchase, sale or other disposition of securities and other investments; (ii)
supervise and monitor continuously the investment program of the Fund and the
composition of its portfolio and determine what securities or other investments
shall be purchased or sold by the Fund; (iii) arrange, subject to the provisions
of Section 6 hereof, for the purchase of securities and other investments for
the Fund and the sale of securities and other investments held in the portfolio
of the Fund; (iv) provide reports on the foregoing to the Board of Trustees at
each Board meeting; and (v) undertake to do anything incidental to the foregoing
to facilitate the performance of the Sub-Adviser's obligations hereunder,
including voting or exercising any consent rights with respect to such
securities or investments.
(b) The Sub-Adviser shall provide to MassMutual such reports for the Fund,
and in such time frames, as MassMutual shall reasonably request or as required
by applicable law or regulation.
(c) Provided that none of MassMutual, the Fund or the Trust shall be
required to pay any compensation other than as provided by the terms of this
Sub-Advisory Agreement and subject to the provisions of Section 5 hereof, the
Sub-Adviser may obtain investment information, research or assistance from any
other person, firm or corporation to supplement, update or otherwise improve its
investment management services.
(d) Provided that nothing herein shall be deemed to protect the
Sub-Adviser from acts or omissions in breach of this Sub-Advisory Agreement or
from willful misfeasance, bad faith or gross negligence in the performance of
its duties, or reckless disregard to its obligations and duties under this
Sub-Advisory Agreement, the Sub-Adviser shall not be liable for any loss
sustained by reason of good faith errors or omissions in connection with any
matters to which this Sub-Advisory Agreement relates.
(e) The Sub-Adviser shall make all material disclosures to MassMutual and
the Fund regarding itself and its partners, officers, directors, shareholders,
employees, affiliates or any person who controls any of the foregoing,
including, but not limited to, information regarding any change in control in
the Sub-Adviser or any change in its key personnel, information regarding any
material adverse change in the condition (financial or otherwise) of the
Sub-Adviser or any person who controls the Sub-Adviser, information regarding
the investment performance and general investment methods of the Sub-Adviser,
its principals and affiliates, information that MassMutual reasonably deems
material to the Fund or necessary to enable MassMutual to monitor the
performance of the Sub-Adviser and information that is required, in the
reasonable judgment of MassMutual, to be disclosed in any filings required by
any governmental agency or by any applicable law, regulation, rule or order.
(f) The Sub-Adviser shall provide MassMutual with any information in the
Sub-Adviser's possession necessary for supervising the activities of its
personnel, including professional, administrative and clerical personnel,
including the compilation and maintenance of such records with respect to the
Fund's operations as may reasonably be required.
(g) The Sub-Adviser shall provide MassMutual, upon reasonable prior
written request by MassMutual to the Sub-Adviser, with access to inspect at the
Sub-Adviser's office the books and records of the Sub-Adviser relating to the
Fund and the Sub-Adviser's performance hereunder and such other books and
records of the Sub-Adviser as are necessary to confirm that the Sub-Adviser has
complied with its obligations and duties under this Sub-Advisory Agreement.
3. Other Activities.
<PAGE>
(a) Nothing in this Sub-Advisory Agreement shall prevent MassMutual or the
Sub-Adviser or any officer thereof from acting as investment adviser or
sub-adviser for any other person, firm, corporation or other entity and shall
not in any way limit or restrict MassMutual or the Sub-Adviser or any of their
respective directors, officers, members, stockholders, partners or employees
from buying, selling, or trading any securities for its own account or for the
account of others for whom it or they may be acting, provided that such
activities are in compliance with U.S. federal and state securities laws,
regulations and rules and will not adversely affect or otherwise impair the
performance by any party of its duties and obligations under this Sub-Advisory
Agreement.
(b) The Sub-Adviser agrees that it will not knowingly or deliberately
favor any other account managed or controlled by it or any of its principals or
affiliates over the Fund. The Sub-Adviser, upon reasonable request and receipt
of adequate assurances of confidentiality, shall provide MassMutual with an
explanation of the differences, if any, in performance between the Fund and any
other account with investment objectives and policies similar to the Fund for
which the Sub-Adviser, or any one of its principals or affiliates, acts as
investment adviser. To the extent that a particular investment is suitable for
both the Fund and the Sub-Adviser's other clients, such investment will be
allocated among the Fund and such other clients in a manner that is fair and
equitable in the circumstances.
4 Compensation of the Sub-Adviser.
MassMutual agrees to pay the Sub-Adviser and the Sub-Adviser agrees to accept as
full compensation for the performance of all functions and duties on its part to
be performed pursuant to the provisions hereof, a fee paid quarterly, in
arrears, at the following rate: an annual rate of .55% on the first $150 million
of Aggregate Assets; and an annual rate of .50% of Aggregate Assets in excess of
$150 million. For the purposes of this Sub-Advisory Agreement, "Aggregate
Assets" shall mean the aggregate of (i) the average daily net assets of the Fund
determined at the close of the New York Stock Exchange on each day that the
Exchange is open for trading, and (ii) the average daily net assets of all other
funds or accounts of MassMutual or its affiliates, including other funds
registered under the Act, for which the Sub-Advisor provides investment advisory
services determined at the close of the Exchange on each day that the Exchange
is open for trading. MassMutual shall pay the Sub-Advisor such fee on the first
business day immediately following the end of each calendar quarter.
5. Portfolio Transactions and Brokerage.
(a) The Sub-Adviser is authorized, in arranging the purchase and sale of
the Fund's publicly-traded portfolio securities, to employ or deal with such
members of securities exchanges, brokers or dealers (hereinafter
"broker-dealers"), as may, in its best judgment, implement the policy of the
Fund to obtain, at reasonable expense, the best execution (prompt and reliable
execution at the most favorable security price obtainable) of the Fund's
portfolio transactions.
(b) The Sub-Adviser may effect the purchase and sale of securities (which
are otherwise publicly traded) in private transactions on such terms and
conditions as are customary in such transactions, may use a broker to effect
such transactions, and may enter into a contract in which the broker acts either
as principal or as agent.
(c) The Sub-Adviser shall select broker-dealers to effect the Fund's
portfolio transactions on the basis of its estimate of their ability to obtain
best execution of particular and related portfolio transactions. The abilities
of a broker-dealer to obtain best execution of particular portfolio
transaction(s) will be judged by the Sub-Adviser on the basis of all relevant
factors and considerations including, insofar as feasible, the execution
capabilities required by the transaction or transactions; the ability and
willingness of the broker-dealer to facilitate the Fund's portfolio transactions
by participating therein for its own account; the importance to the Fund of
speed, efficiency or confidentiality; the broker-dealer's apparent familiarity
with sources from or to whom particular securities might be purchased or sold;
other matters involved in the receipt of brokerage and research services in
accordance with Section 28(e) of the Securities Exchange
<PAGE>
Act of 1934, as amended; as well as any other matters relevant to the selection
of a broker-dealer for particular and related transactions of the Fund; and such
other considerations as the Board of Trustees of the Trust or MassMutual
determine and provide to the Sub-Adviser from time to time.
6. Representations And Warranties of The Sub-Adviser.
The Sub-Adviser hereby represents and warrants to the Fund and MassMutual that:
(a) The Sub-Adviser has obtained all required governmental and regulatory
licenses, registrations and approvals required by law as may be necessary to
perform its obligations under this Sub-Advisory Agreement and to act as
contemplated by the Trust Documents and the Disclosure Documents, including
without limitation registration as an investment adviser under the Advisers Act,
and will maintain and renew any required licenses, registrations, approvals and
memberships during the term of this Sub-Advisory Agreement.
(b) There is no pending, or to the best of its knowledge, threatened or
contemplated action, suit or proceeding before or by any court, governmental,
administrative or self-regulatory body or arbitration panel to which the
Sub-Adviser or any of its principals or affiliates is a party, or to which any
of the assets of the Sub-Adviser is subject, which reasonably might be expected
to (i) result in any material adverse change in the Sub-Adviser's condition
(financial or otherwise), business or prospects, (ii) affect adversely in any
material respect any of the Sub-Adviser's assets, (iii) materially impair the
Sub-Adviser's ability to discharge its obligations under this Sub-Advisory
Agreement, or (iv) result in a matter which would require an amendment to the
Sub-Adviser's Form ADV, Part II; and the Sub-Adviser has not received any notice
of an investigation by the Securities and Exchange Commission or any state
regarding U.S. federal or state securities laws, regulations or rules.
(c) All references in the Disclosure Documents concerning the Sub-Adviser
and its affiliates and the controlling persons, affiliates, stockholders,
directors, officers and employees of any of the foregoing are accurate in all
material respects and do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make such information not
misleading.
(d) Subject to adequate assurances of confidentiality, the Sub-Adviser has
supplied to, or made available for review by, MassMutual (and if requested by
MassMutual to its designated auditor) all documents, statements, agreements and
workpapers reasonably requested by it relating to accounts covered by the
Sub-Adviser's performance results and which are in the Sub-Adviser's possession
or to which it has access.
The foregoing representations and warranties shall be continuing during the term
of this Sub-Advisory Agreement.
7. Covenants of the Sub-Adviser.
(a) If at any time during the term of this Sub-Advisory Agreement, the
Sub-Adviser discovers any fact or omission, or any event or change of
circumstances occurs, which would make the Sub-Adviser's representations and
warranties in Section 6 inaccurate or incomplete in any material respect, or
which might render the Disclosure Documents untrue or misleading in any material
respect, the Sub-Adviser will provide prompt written notification to the Fund
and MassMutual of any such fact, omission, event or change of circumstances, and
the facts related thereto.
(b) The Sub-Adviser agrees that, during the term of this Sub-Advisory
Agreement, and for so long as investment in the Fund is being offered for sale,
it will provide the Fund and the Sub-Adviser with updated information relating
to the Sub-Adviser's performance results as reasonably required from time to
time by the Fund and MassMutual. The Sub-Adviser shall use its best efforts to
provide such information within a reasonable period of time after the end of the
month to which such updated information relates and the information is available
to it.
8. Confidentiality.
<PAGE>
All information and advice furnished by one party to the other party (including
their respective agents, employees and representatives) hereunder shall be
treated as confidential and shall not be disclosed to third parties, except as
may be necessary to comply with applicable laws, rules and regulations,
subpoenas or court orders.
9. Duration.
Unless terminated earlier pursuant to Section 10 hereof, this Sub-Advisory
Agreement shall remain in effect for a period of two years from the date hereof.
Thereafter it shall continue in effect from year to year, unless terminated
pursuant to Section 10 hereof, so long as such continuance shall be approved at
least annually by the Trust's Board of Trustees, including the vote of the
majority of the Trustees of the Trust who are not parties to this Sub-Advisory
Agreement or "interested persons" (as defined in the Act) of any such party cast
in person at a meeting called for the purpose of voting on such approval, or by
the holders of a "majority" (as defined in the Act) of the outstanding voting
securities of the Fund.
10. Termination.
(a) This Sub-Advisory Agreement shall terminate automatically upon its
unauthorized assignment (within the meaning of the Act), the termination of the
Advisory Agreement or the dissolution of the Fund.
(b) The Sub-Advisory Agreement may be terminated by MassMutual or the
Board of Trustees of the Trust: (i) by written notice to the Sub-Adviser with
immediate effect, if the Sub-Adviser's registration under the Adviser's Act is
suspended, terminated, lapsed or not renewed; (ii) by written notice to the
Sub-Adviser with immediate effect, if the Sub-Adviser is bankrupt or insolvent,
seeks an arrangement with creditors, is dissolved or terminated or ceases to
exist; (iii) by written notice to the Sub-Adviser with immediate effect, if
MassMutual determines in good faith, for any reason, that such termination is
appropriate for the protection of the Fund, including without limitation a good
faith determination by MassMutual or the Board of Trustees of the Trust that the
Sub-Adviser has breached an obligation or duty under this Sub-Advisory
Agreement; or (iv) in their sole discretion, without penalty, upon ninety days
prior written notice to Sub-Adviser. This Sub-Advisory Agreement also may be
terminated at any time, without penalty, by the vote of the holders of a
"majority" of the outstanding voting securities of the Fund (as defined in the
Act).
(c) The Sub-Advisory Agreement may be terminated by the Sub-Adviser,
without penalty at any time, upon ninety days' prior written notice, to
MassMutual and the Trust.
11. Indemnification.
(a) In any action in which MassMutual or the Fund or any of its or their
controlling persons, or any shareholders, partners, directors, officers and/or
employees of any of the foregoing, are parties, the Sub-Adviser agrees to
indemnify and hold harmless the foregoing persons against any loss, claim,
damage, charge, liability or expense (including, without limitation, reasonable
attorneys' and accountants' fees) to which such persons may become subject,
insofar as such loss, claim, damage, charge, liability or expense arises out of
or is based upon any demands, claims, liabilities, expenses, lawsuits, actions
or proceedings relating to this Sub-Advisory Agreement or to the advisory
services for the account of the Fund provided by the Sub-Adviser, provided that
the loss, claim, damage, liability, cost or expense related to, was based upon,
or arose out of an act or omission of the Sub-Adviser or its officers,
directors, employees, affiliates or controlling persons constituting willful
misfeasance, bad faith, gross negligence, fraud, willful misconduct, a breach of
this Sub-Advisory Agreement, or a violation of applicable federal or state
securities laws, rules and regulations.
(b) In any action in which the Sub-Adviser or any of its controlling
persons, or any shareholders, partners, directors, officers and/or employees of
any of the foregoing, are parties, MassMutual agrees to indemnify and hold
harmless the foregoing persons against any loss, claim, settlement, damage,
charge, liability or expense (including, without limitation, reasonable
attorneys' and accountants' fees) to which such persons may become subject,
<PAGE>
insofar as such loss, claim, settlement, damage, charge, liability or expense
arises out of or is based upon any demands, claims, liabilities, expenses,
lawsuits, actions or proceedings relating to this Sub-Advisory Agreement, the
advisory services for the account of the Fund provided by the Sub-Adviser, the
operation of the Fund or the contents of the Disclosure Documents, provided that
the loss, claim, damage, liability, cost or expense did not relate to, or was
not based upon, or did not arise out of an act or omission of the Sub-Adviser,
its shareholders, or any of its partners, officers, directors, employees, agents
or controlling persons constituting willful misfeasance, bad faith, gross
negligence, fraud, willful misconduct, a breach of this Sub-Advisory Agreement,
or a violation of applicable federal or state securities laws, rules and
regulations.
(c) Promptly after receipt by an indemnified party under this Section 11
of notice of any claim or dispute or commencement of any action or litigation,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party under this Section 11, notify the indemnifying party of
the commencement thereof; but the omission to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 11 except to the extent, if any, that such
failure or delay prejudiced the other party in defending against the claim. In
case any such claim, dispute, action or litigation is brought or asserted
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, to assume the defense thereof, with
counsel specially approved in writing by such indemnified party, such approval
not to be unreasonably withheld, following notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof; in
which event, the indemnifying party will not be liable to such indemnified party
under this Section 11 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof, but shall
continue to be liable to the indemnified party in all other respects as
heretofore set forth in this Section 11. Notwithstanding any other provisions of
this Section 11, if, in any claim, dispute, action or litigation as to which
indemnity is or may be available, any indemnified party reasonably determines
that its interests are or may be, in whole or in part, adverse to the interests
of the indemnifying party, the indemnified party may retain its own counsel,
with the choice of counsel subject to the consent of the indemnifying party
(which consent shall not be withheld unreasonably), in connection with such
claim, dispute, action or litigation and shall continue to be indemnified by the
indemnifying party for any legal or any other expenses reasonably incurred in
connection with investigating or defending such claim, dispute, action or
litigation.
12. Disclaimer of Shareholder Liability.
MassMutual and the Sub-Adviser understand that the obligations of the Trust
under this Sub-Advisory Agreement are not binding upon any Trustee or
shareholder of the Trust personally, but bind only the Trust and the Trust's
property. MassMutual and the Sub-Adviser represent that each has notice of the
provisions of the Trust Documents disclaiming shareholder and Trustee liability
for acts or obligations of the Trust.
13. Notice.
Any notice under this Sub-Advisory Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party, with a copy to the
Trust, at the addresses below or such other address as such other party may
designate for the receipt of such notice.
If to MassMutual: Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Vernon J. Meyer
Vice President
If to the Sub-Adviser: Miller Anderson & Sherrerd, LLP
One Tower Bridge
West Conshohocken, PA 19428-2899
Attention: Ms. Arden Armstrong
Managing Director
<PAGE>
With a copy to: Harold J. Schaaff, Esq.
Morgan Stanley Dean Witter Investment Management Inc.
1221 Avenue of the Americas
New York, NY 10020
If to either MassMutual or the Sub-Adviser, copies to:
MassMutual Institutional Funds
1295 State Street
Springfield, MA 01111
Attention: Stephen L. Kuhn
Vice President
14. No Assignment.
No assignment (within the meaning of the Act) of this Sub-Advisory Agreement may
be made without the express written consent of all parties hereto.
15. Amendments to this Sub-Advisory Agreement.
This Sub-Advisory Agreement may be amended only by a written instrument approved
in writing by all parties hereto.
16. Governing Law.
This Sub-Advisory Agreement shall be governed by and construed in accordance
with the internal laws of the Commonwealth of Massachusetts, without giving
effect to principles of conflict of laws.
17. Survival.
The provisions of this Sub-Advisory Agreement shall survive the termination or
other expiration of this Sub-Advisory Agreement with respect to any matter
arising while this Sub-Advisory Agreement was in effect.
18. Successors.
This Sub-Advisory Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns.
19. Entire Agreement.
This Sub-Advisory Agreement constitutes the entire agreement among the parties
hereto with respect to the matters referred to herein, and no other agreement,
oral or otherwise, shall be binding on the parties hereto.
20. No Waiver.
No failure or delay on the part of any party hereto in exercising any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
Any waiver granted hereunder must be in writing and shall be valid only in the
specific instance in which given.
21. Severability.
If any one or more provisions in this Sub-Advisory Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not effect any other provision
of this Sub-Advisory Agreement, but this Sub-Advisory Agreement shall be
construed so as to effectuate the intent of the parties hereto as nearly as
possible without giving effect to such invalid, illegal or unenforceable
provision had never been contained herein.
22. Counterparts.
This Sub-Advisory Agreement may be executed in any number of counterparts, each
of which shall constitute an original, but all of which when taken together
shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Fund, MassMutual and the Sub-Adviser have caused this
Sub-Advisory Agreement to be executed as of the day and year first above
written.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ John V. Murphy
---------------------------
Name: John V. Murphy
-------------------------
Title: Executive Vice President
------------------------
MILLER ANDERSON & SHERRERD, LLP
By: /s/ Arden C. Armstrong
---------------------------
Name: Arden C. Armstrong
------------------------
Title: Managing Director
------------------------
ACKNOWLEDGED:
MASSSMUTUAL INSTITUTIONAL FUNDS
on behalf of MassMutual Mid Cap Growth Equity Fund
By: /s/ Stuart H. Reese
-----------------------------
Name: Stuart H. Reese
---------------------------
Title: President
--------------------------
<PAGE>
Exhibit D(7)
INVESTMENT SUB-ADVISORY AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
and
J. P. MORGAN INVESTMENT MANAGEMENT INC.
(as to the Small Cap Growth Equity)
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
This Investment Sub-Advisory Agreement (this "Sub-Advisory Agreement"), is by
and between J.P. Morgan Investment Management Inc., organized under the laws of
the State of Delaware (the "Sub-Adviser") and Massachusetts Mutual Life
Insurance Company, a mutual life insurance company organized under the laws of
the Commonwealth of Massachusetts ("MassMutual"), for the MassMutual Small Cap
Growth Equity Fund (the "Fund"), a series of MassMutual Institutional Funds (the
"Trust"), a Massachusetts business trust which is an open-end diversified
management investment company registered as such with the Securities and
Exchange Commission (the "Commission") pursuant to the Investment Company Act of
1940, as amended (the "Act"), effective as of the 3rd day of May, 1999.
WHEREAS, the Trust has appointed MassMutual as the investment adviser for the
Fund pursuant to the terms of an Investment Advisory Agreement (the "Advisory
Agreement");
WHEREAS, the Advisory Agreement provides that MassMutual may, at its option,
subject to approval by the Trustees of the Trust and, to the extent necessary,
the shareholders of the Fund, appoint a sub-adviser to assume certain
responsibilities and obligations of MassMutual under the Advisory Agreement;
WHEREAS, MassMutual and the Sub-Adviser are investments advisers registered with
the Commission as such under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"); and
WHEREAS, MassMutual desires to appoint the Sub-Adviser as one of the
sub-advisers for the Fund with responsibility for such portion of the Fund's
assets as MassMutual shall direct from time to time (the "Portfolio") and the
Sub-Adviser is willing to act in such capacity upon the terms herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, MassMutual, the Fund and the Sub-Adviser, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. General Provision.
(a) MassMutual hereby employs the Sub-Adviser and the Sub-Adviser hereby
undertakes to act as the investment sub-adviser of the Fund with respect to the
Portfolio to provide investment advice and to perform for the Portfolio of the
Fund such other duties and functions as are hereinafter set forth. The
Sub-Adviser shall, in all matters, give to the Portfolio of the Fund and the
Trust's Board of Trustees, directly or through MassMutual, the benefit of the
Sub-Adviser's best judgment, effort, advice and recommendations and shall, at
all times conform to, and use its best efforts to ensure the Portfolio of the
Fund conforms to:
(i) the provisions of the Act and any rules or regulations
thereunder;
(ii) any other applicable provisions of state or federal law;
(iii) the provisions of the Agreement and Declaration of Trust and
Bylaws of the Trust, as amended from time to time (collectively referred
to as the "Trust Documents");
(iv) policies and determinations of the Board of Trustees of the
Trust and MassMutual;
(v) the fundamental and non-fundamental policies and investment
restrictions of the Fund as reflected in the Trust's registration
statement under the Act or as such policies may, from time to time, be
amended by the Fund's shareholders; and
(vi) the Prospectus and Statement of Additional Information of the
Fund in effect from time to time (collectively referred to as the
"Disclosure Documents").
(b) The appropriate officers and employees of the Sub-Adviser shall be
available upon reasonable notice for consultation with any of the Trustees and
<PAGE>
officers of the Trust and MassMutual with respect to any matter dealing with the
business and affairs of the Fund with respect to the Portfolio, such as the
valuation of portfolio securities of the Portfolio of the Fund, including but
not limited to securities that are either not registered for public sale or
securities not traded on any securities market.
2. Duties of the Sub-Adviser.
(a) The Sub-Adviser shall, subject to the direction and control of the
Trust's Board of Trustees or MassMutual, to the extent MassMutual's direction is
not inconsistent with that of the Board of Trustees, (i) regularly provide
investment advisory services to the Portfolio of the Fund with respect to its
investments and investment policies; (ii) with respect to the Portfolio,
supervise and monitor continuously the investment program of the Fund and the
composition of its portfolio and determine what securities or other investments
shall be purchased or sold by the Fund; (iii) with respect to the Portfolio,
arrange, subject to the provisions of Section 5 hereof, for the purchase of
securities and other investments for the Fund and the sale of securities and
other investments held in the portfolio of the Fund; (iv) provide reports on the
foregoing to the Board of Trustees at each Board meeting with respect to the
Portfolio; and (v) undertake to do anything incidental to the foregoing to
facilitate the performance of the Sub-Adviser's obligations hereunder, including
voting or exercising any consent rights with respect to such securities or
investments.
(b) The Sub-Adviser shall provide to MassMutual such reports for the Fund,
and in such time frames, as MassMutual and the Sub-Adviser shall mutually agree
or as required by applicable law or regulation.
(c) None of MassMutual, the Fund or the Trust shall be required to pay any
compensation other than as provided by the terms of this Sub-Advisory Agreement.
This provision shall not apply to prevent the Sub-Adviser from obtaining
investment information, research or assistance from any other person, firm or
corporation to supplement, update or otherwise improve its investment management
services, subject, however, to the provisions of Section 5 hereof.
(d) Provided that nothing herein shall be deemed to protect the
Sub-Adviser from acts or omissions in breach of this Sub-Advisory Agreement or
from willful misfeasance, bad faith or gross negligence in the performance of
its duties, or reckless disregard to its obligations and duties under this
Sub-Advisory Agreement, the Sub-Adviser shall not be liable for any loss
sustained by reason of good faith errors or omissions in connection with any
matters to which this Sub-Advisory Agreement relates.
(e) The Sub-Adviser shall make all material disclosures to MassMutual and
the Fund of public information regarding itself and its partners, officers,
directors, shareholders, employees, affiliates or any person who controls any of
the foregoing, including, but not limited to, information regarding any change
in control of the Sub-Adviser or any change in its key personnel material to the
services provided hereunder, information regarding any material adverse change
in the condition (financial or otherwise) of the Sub-Adviser or any person who
controls the Sub-Adviser, information regarding the investment performance and
general investment methods of the Sub-Adviser with respect to the Portfolio of
the Fund, information that MassMutual reasonably deems material to the Fund or
necessary to enable MassMutual to monitor the performance of the Sub-Adviser and
information that is required, in the reasonable judgment of MassMutual, to be
disclosed in any filings required by any governmental agency or by any
applicable law, regulation, rule or order.
(f) The Sub-Adviser shall provide MassMutual, upon reasonable prior
written request by MassMutual to the Sub-Adviser, with access to inspect at the
Sub-Adviser's office the books and records of the Sub-Adviser relating to the
Portfolio of the Fund and the Sub-Adviser's performance hereunder and to meet
personnel of the Sub-Adviser who have responsibilities with respect to the
Portfolio of the Fund.
3. Other Activities.
(a) Nothing in this Sub-Advisory Agreement shall prevent MassMutual or the
Sub-Adviser or any officer thereof from acting as investment adviser or
<PAGE>
sub-adviser for any other person, firm or corporation and shall not in any way
limit or restrict MassMutual or the Sub-Adviser or any of their respective
directors, officers, members, stockholders, partners or employees or affiliates
from buying, selling, or trading any securities for its own account or for the
account of others for whom it or they may be acting, provided that such
activities are in compliance with U.S. federal and state securities laws,
regulations and rules.
(b) The Sub-Adviser agrees that it will not knowingly or deliberately
favor any other account, mutual fund or commingled fund managed or controlled by
it over the Fund. The Sub-Adviser, upon reasonable request and receipt of
adequate assurances of confidentiality, shall provide MassMutual with an
explanation of the differences, if any, in performance between the Portfolio of
the Fund and any other mutual fund or commingled fund with investment objectives
and policies similar to the Portfolio of the Fund for which the Sub-Adviser, or
any one of its principals or affiliates, acts as investment adviser. To the
extent that a particular investment is suitable for both the Fund and the
Sub-Adviser's other clients, such investment will be allocated among the Fund
and such other clients in a manner that is fair and equitable in the
circumstances.
4 Compensation of the Sub-Adviser.
MassMutual agrees to pay the Sub-Adviser and the Sub-Adviser agrees to accept as
full compensation for the performance of all functions and duties on its part to
be performed pursuant to the provisions hereof, a fee paid quarterly, in
arrears, at the following rate: an annual rate of .60% on the first $200 million
of Aggregate Assets; an annual rate of .55% on the next $300 million of
Aggregate Assets; and an annual rate of .50% of Aggregate Assets in excess of
$500 million. For the purposes of this Sub-Advisory Agreement, "Aggregate
Assets" shall mean the aggregate of (i) the average daily net assets of the
Portfolio of the Fund for which the Sub-Advisor provides investment advisory
services, determined at the close of the New York Stock Exchange on each day
that the Exchange is open for trading, and (ii) the average daily net assets of
all other portfolios of funds or accounts of MassMutual or its affiliates
utilizing the same small cap growth investment strategy as the Portfolio of the
Fund, including portfolios of other funds registered under the Act (namely MML
Small Cap Growth Equity Fund), for which the Sub-Advisor provides investment
advisory services determined at the close of the Exchange on each day that the
Exchange is open for trading. MassMutual shall pay the Sub-Advisor such fee on
the first business day immediately following the end of each calendar quarter.
5. Portfolio Transactions and Brokerage.
(a) The Sub-Adviser is authorized, with respect to the Portfolio in
arranging the purchase and sale of the Fund's publicly-traded portfolio
securities, to employ or deal with such members of securities exchanges, brokers
or dealers (hereinafter "broker-dealers"), as may, in its best judgment,
implement the policy of the Fund to obtain, at reasonable expense, the best
execution of the Fund's portfolio transactions.
(b) The Sub-Adviser may effect the purchase and sale of securities (which
are otherwise publicly traded) in private transactions on such terms and
conditions as are customary in such transactions, may use a broker to effect
such transactions, and may enter into a contract in which the broker acts either
as principal or as agent.
(c) The Sub-Adviser shall select broker-dealers to effect the Fund's
portfolio transactions on the basis of its estimate of their ability to obtain
best execution of particular and related portfolio transactions. The abilities
of a broker-dealer to obtain best execution of particular portfolio
transaction(s) will be judged by the Sub-Adviser on the basis of all relevant
factors and considerations including, insofar as feasible, the execution
capabilities required by the transaction or transactions; the ability and
willingness of the broker-dealer to facilitate the Fund's portfolio transactions
by participating therein for its own account; the importance to the Fund of
speed, efficiency or confidentiality; the broker-dealer's apparent familiarity
with sources from or to whom particular securities might be purchased or sold;
other matters involved in the receipt of brokerage and research services in
accordance with Section 28(e) of the Securities Exchange Act of 1934, as
amended; as well as any other matters relevant to the
<PAGE>
selection of a broker-dealer for particular and related transactions of the
Fund; and such other considerations as the Board of Trustees of the Trust or
MassMutual determine and provide to the Sub-Adviser from time to time.
6. Representations And Warranties of The Sub-Adviser.
The Sub-Adviser hereby represents and warrants to the Fund and MassMutual that:
(a) The Sub-Adviser has obtained all required governmental and regulatory
licenses, registrations and approvals required by law as may be necessary to
perform its obligations under this Sub-Advisory Agreement and to act as
contemplated by the Trust Documents and the Disclosure Documents, including
without limitation registration as an investment adviser under the Advisers Act,
and will maintain and renew any required licenses, registrations, approvals and
memberships during the term of this Sub-Advisory Agreement.
(b) There is, to the best of its knowledge, no pending, threatened or
contemplated action, suit or proceeding before or by any court, governmental,
administrative or self-regulatory body or arbitration panel to which the
Sub-Adviser or any of its principals or affiliates is a party, or to which any
of the assets of the Sub-Adviser is subject, which reasonably might be expected
to (i) result in any material adverse change in the Sub-Adviser's condition
(financial or otherwise), business or prospects, (ii) affect adversely in any
material respect any of the Sub-Adviser's assets, (iii) materially impair the
Sub-Adviser's ability to discharge its obligations under this Sub-Advisory
Agreement, or (iv) result in a matter which would require an amendment to the
Sub-Adviser's Form ADV, Part II; and the Sub-Adviser has not received any notice
of an investigation by the Securities and Exchange Commission or any state
regarding U.S. federal or state securities laws, regulations or rules.
(c) All references in the Disclosure Documents concerning the Sub-Adviser
and its affiliates and the controlling persons, affiliates, stockholders,
directors, officers and employees of any of the foregoing are accurate in all
material respects and do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make such information not
misleading.
(d) The Sub-Adviser has supplied to MassMutual the performance of the
relevant composite of the Sub-Adviser's accounts and the composite represents in
all material respects the aggregate investment performance of all accounts which
had or have, for all periods covered, investment policies, objectives and
strategies which are substantially similar to the investment policies,
objectives and strategies of the Portfolio of the Fund as set forth in the
Disclosure Documents. . The exclusion of any account from the composite does not
cause the composite to be misleading in any material respect. No account so
included was created or maintained to establish a performance record.
The foregoing representations and warranties shall be continuing during the term
of this Sub-Advisory Agreement.
7. Covenants of the Sub-Adviser.
(a) If at any time during the term of this Sub-Advisory Agreement, the
Sub-Adviser discovers any fact or omission, or any event or change of
circumstances occurs, which would make the Sub-Adviser's representations and
warranties in Section 6 inaccurate or incomplete in any material respect, or
which might render the Disclosure Documents untrue or misleading in any material
respect, the Sub-Adviser will provide prompt written notification to the Fund
and MassMutual of any such fact, omission, event or change of circumstances, and
the facts related thereto.
(b) The Sub-Adviser agrees that, during the term of this Sub-Advisory
Agreement, and for so long as investment in the Fund is being offered for sale,
it will provide the Fund and the Sub-Adviser with updated information relating
to the Sub-Adviser's performance results as reasonably required from time to
time by the Fund and MassMutual. The Sub-Adviser shall use its best efforts to
provide such information within a reasonable period of time after the end of the
month to which such updated information relates and the information is available
to it.
<PAGE>
8. Confidentiality.
All information and advice furnished by one party to the other party (including
their respective agents, employees and representatives) hereunder shall be
treated as confidential and shall not be disclosed to third parties, except as
may be necessary to comply with applicable governmental laws, rules and
regulations, subpoenas or court orders.
9. Duration.
Unless terminated earlier pursuant to Section 10 hereof, this Sub-Advisory
Agreement shall remain in effect for a period of two years from the date hereof.
Thereafter it shall continue in effect from year to year, unless terminated
pursuant to Section 10 hereof, so long as such continuance shall be approved at
least annually by the Trust's Board of Trustees, including the vote of the
majority of the Trustees of the Trust who are not parties to this Sub-Advisory
Agreement or "interested persons" (as defined in the Act) of any such party cast
in person at a meeting called for the purpose of voting on such approval, or by
the holders of a "majority" (as defined in the Act) of the outstanding voting
securities of the Fund.
10. Termination.
(a) This Sub-Advisory Agreement shall terminate automatically upon its
unauthorized assignment (within the meaning of the Act), the termination of the
Advisory Agreement or the dissolution of the Fund.
(b) The Sub-Advisory Agreement may be terminated by MassMutual or the
Board of Trustees of the Trust: (i) by written notice to the Sub-Adviser with
immediate effect, if the Sub-Adviser's registration under the Adviser's Act is
suspended, terminated, lapsed or not renewed; (ii) by written notice to the
Sub-Adviser with immediate effect, if the Sub-Adviser is bankrupt or insolvent,
seeks an arrangement with creditors, is dissolved or terminated or ceases to
exist; (iii) by written notice to the Sub-Adviser with immediate effect, if
MassMutual determines in good faith, for any reason, that such termination is
appropriate for the protection of the Fund, including without limitation a good
faith determination by MassMutual or the Board of Trustees of the Trust that the
Sub-Adviser has breached an obligation or duty under this Sub-Advisory
Agreement; or (iv) in their sole discretion, without penalty, upon ninety days
prior written notice to Sub-Adviser. This Sub-Advisory Agreement also may be
terminated at any time, without penalty, by the vote of the holders of a
"majority" of the outstanding voting securities of the Fund (as defined in the
Act).
(c) The Sub-Advisory Agreement may be terminated by the Sub-Adviser,
without penalty at any time, upon ninety days' prior written notice, to
MassMutual and the Trust.
11. Indemnification.
(a) The Sub-Adviser agrees to indemnify and hold harmless MassMutual, the
Fund and any of its or their controlling persons or shareholders, partners,
directors, officers and/or employees of any of them against any loss, claim,
damage, charge, liability or expense (including, without limitation, reasonable
attorneys' and accountants' fees) to which such persons may become subject,
insofar as such loss, claim, damage, charge, liability or expense arises out of
or is based upon any demands, claims, liabilities, expenses, lawsuits, actions
or proceedings relating to this Sub-Advisory Agreement or to the advisory
services for the account of the Fund provided by the Sub-Adviser, provided that
the loss, claim, damage, liability, cost or expense related to, was based upon,
or arose out of an act or omission of the Sub-Adviser or its officers,
directors, employees, agents or controlling persons constituting willful
misfeasance, bad faith, gross negligence, fraud, willful misconduct, a breach of
this Sub-Advisory Agreement, or a violation of applicable federal or state
securities laws, rules and regulations.
(b) MassMutual agrees to indemnify and hold harmless the Sub-Adviser and
any of its controlling persons, affiliates, or any shareholders, partners,
directors, officers and/or employees of any of them against any loss, claim,
settlement, damage, charge, liability or expense (including, without limitation,
reasonable attorneys' and accountants' fees) to which such persons may become
subject, insofar as such loss, claim, settlement, damage, charge,
<PAGE>
liability or expense arises out of or is based upon any demands, claims,
liabilities, expenses, lawsuits, actions or proceedings relating to this
Sub-Advisory Agreement, the advisory services for the account of the Fund
provided by the Sub-Adviser, the operation of the Fund or the contents of the
Disclosure Documents, provided that the loss, claim, damage, liability, cost or
expense did not relate to, or was not based upon, or did not arise out of act or
omission of the Sub-Adviser, any of its controlling persons, affiliates or any
of its or their shareholders, partners, officers, directors or employees
constituting willful misfeasance, bad faith, gross negligence, fraud, willful
misconduct, a breach of this Sub-Advisory Agreement, or a violation of
applicable federal or state securities laws, rules and regulations.
(c) Promptly after receipt by an indemnified party under this Section 11
of notice of any claim or dispute or commencement of any action or litigation,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party under this Section 11, notify the indemnifying party of
the commencement thereof; but the omission to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 11 except to the extent, if any, that such
failure or delay prejudiced the other party in defending against the claim. In
case any such claim, dispute, action or litigation is brought or asserted
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, to assume the defense thereof, with
counsel specially approved in writing by such indemnified party, such approval
not to be unreasonably withheld, following notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof; in
which event, the indemnifying party will not be liable to such indemnified party
under this Section 11 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof, but shall
continue to be liable to the indemnified party in all other respects as
heretofore set forth in this Section 11. Notwithstanding any other provisions of
this Section 11, if, in any claim, dispute, action or litigation as to which
indemnity is or may be available, any indemnified party reasonably determines
that its interests are or may be, in whole or in part, adverse to the interests
of the indemnifying party, the indemnified party may retain its own counsel,
with the choice of counsel subject to the consent of the indemnifying party
(which consent shall not be withheld unreasonably), in connection with such
claim, dispute, action or litigation and shall continue to be indemnified by the
indemnifying party for any legal or any other expenses reasonably incurred in
connection with investigating or defending such claim, dispute, action or
litigation.
12. Disclaimer of Shareholder Liability.
MassMutual and the Sub-Adviser understand that the obligations of the Trust
under this Sub-Advisory Agreement are not binding upon any Trustee or
shareholder of the Trust personally, but bind only the Trust and the Trust's
property. MassMutual and the Sub-Adviser represent that each has notice of the
provisions of the Trust Documents disclaiming shareholder and Trustee liability
for acts or obligations of the Trust.
13. Notice.
Any notice under this Sub-Advisory Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party, with a copy to the
Trust, at the addresses below or such other address as such other party may
designate for the receipt of such notice.
If to MassMutual: Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Vernon J. Meyer
Vice President
If to the Sub-Adviser: J.P. Morgan Investment Management, Inc.
522 Fifth Avenue
New York, NY 10036
Attention: Diane Minardi
Vice President
<PAGE>
If to either MassMutual or the Sub-Adviser, copies to:
MassMutual Institutional Funds
1295 State Street
Springfield, MA 01111
Attention: Stephen L. Kuhn
Vice President
14. No Assignment.
No assignment (within the meaning of the Act) of this Sub-Advisory Agreement may
be made without the express written consent of all parties hereto.
15. Amendments to this Sub-Advisory Agreement.
This Sub-Advisory Agreement may be amended only by a written instrument approved
in writing by all parties hereto.
16. Governing Law.
This Sub-Advisory Agreement shall be governed by and construed in accordance
with the internal laws of the Commonwealth of Massachusetts, without giving
effect to principles of conflict of laws.
17. Survival.
The provisions of this Sub-Advisory Agreement shall survive the termination or
other expiration of this Sub-Advisory Agreement with respect to any matter
arising while this Sub-Advisory Agreement was in effect.
18. Successors.
This Sub-Advisory Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns.
19. Entire Agreement.
This Sub-Advisory Agreement constitutes the entire agreement among the parties
hereto with respect to the matters referred to herein, and no other agreement,
oral or otherwise, shall be binding on the parties hereto.
20. No Waiver.
No failure or delay on the part of any party hereto in exercising any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
Any waiver granted hereunder must be in writing and shall be valid only in the
specific instance in which given.
21. Severability.
If any one or more provisions in this Sub-Advisory Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not effect any other provision
of this Sub-Advisory Agreement, but this Sub-Advisory Agreement shall be
construed so as to effectuate the intent of the parties hereto as nearly as
possible without giving effect to such invalid, illegal or unenforceable
provision had never been contained herein.
22. Counterparts.
This Sub-Advisory Agreement may be executed in any number of counterparts, each
of which shall constitute an original, but all of which when taken together
shall constitute one and the same instrument.
23. Disclosure.
Neither MassMutual, the Trust or the Fund shall, without the prior written
consent of the Sub-Adviser, make representations regarding, or reference to,
<PAGE>
the Sub-Adviser or any affiliates in any disclosure document, advertisement,
sales literature or other promotional materials.
IN WITNESS WHEREOF, the Fund, MassMutual and the Sub-Adviser have caused this
Sub-Advisory Agreement to be executed as of the day and year first above
written.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ John V. Murphy
-----------------------------------
Name: John V. Murphy
---------------------------------
Title: Executive Vice President
--------------------------------
J.P. MORGAN INVESTMENT MANAGEMENT, INC.
By: /s/ Diane J. Minardi
-----------------------------------
Name: Diane J. Minardi
---------------------------------
Title: Vice President
--------------------------------
ACKNOWLEDGED:
MASSSMUTUAL INSTITUTIONAL FUNDS
on behalf of MassMutual Small Cap Growth Equity Fund
By: /s/ Stuart H. Reese
------------------------------
Name: Stuart H. Reese
----------------------------
Title: President
---------------------------
<PAGE>
Exhibit D(8)
INVESTMENT SUB-ADVISORY AGREEMENTS
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
and
WADDELL & REED INVESTMENT MANAGEMENT COMPANY
(as to the Small Cap Growth Equity Fund)
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
This Investment Sub-Advisory Agreement (this "Sub-Advisory Agreement"), is by
and between Waddell & Reed Investment Management Company, organized under the
laws of the State of Kansas (the "Sub-Adviser") and Massachusetts Mutual Life
Insurance Company, a mutual life insurance company organized under the laws of
the Commonwealth of Massachusetts ("MassMutual"), for the MassMutual Small Cap
Growth Equity Fund (the "Fund"), a series of MassMutual Institutional Funds (the
"Trust"), a Massachusetts business trust which is an open-end diversified
management investment company registered as such with the Securities and
Exchange Commission (the "Commission") pursuant to the Investment Company Act of
1940, as amended (the "Act"), effective as of the 3rd day of May, 1999.
WHEREAS, the Trust has appointed MassMutual as the investment adviser for the
Fund pursuant to the terms of an Investment Advisory Agreement (the "Advisory
Agreement");
WHEREAS, the Advisory Agreement provides that MassMutual may, at its option,
subject to approval by the Trustees of the Trust and, to the extent necessary,
the shareholders of the Fund, appoint a sub-adviser to assume certain
responsibilities and obligations of MassMutual under the Advisory Agreement;
WHEREAS, MassMutual and the Sub-Adviser are investments advisers registered with
the Commission as such under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"); and
WHEREAS, MassMutual desires to appoint the Sub-Adviser as one of the
sub-advisers for the Fund with responsibility for such portion of the Fund's
assets as MassMutual shall direct from time to time (the "Portfolio") and the
Sub-Adviser is willing to act in such capacity upon the terms herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, MassMutual, the Fund and the Sub-Adviser, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. General Provision.
(a) Unless specifically stated otherwise or unless the context clearly
requires otherwise, all references to the "Portfolio" or to the "Fund" shall be
deemed to be references only to the assets of the Fund to be managed by
Sub-Adviser hereunder, and Sub-Adviser's obligations shall be strictly limited
thereto.
(b) MassMutual hereby employs the Sub-Adviser and the Sub-Adviser hereby
undertakes to act as the investment sub-adviser of the Fund with respect to the
Portfolio to provide investment advice and to perform for the Portfolio of the
Fund such other duties and functions as are hereinafter set forth. The
Sub-Adviser shall, in all matters, give to the Portfolio of the Fund and the
Trust's Board of Trustees, directly or through MassMutual, the benefit of the
Sub-Adviser's best judgment, effort, advice and recommendations and shall, at
all times conform to, and use its best efforts to ensure the Portfolio of the
Fund conforms to:
(i) the provisions of the Act and any rules or regulations
thereunder;
(ii) any other applicable provisions of state or federal law;
(iii) the provisions of the Agreement and Declaration of Trust and
Bylaws of the Trust, as amended from time to time and communicated in
writing to the Sub-Adviser (collectively referred to as the "Trust
Documents");
(iv) policies and determinations of the Board of Trustees of the
Trust and MassMutual, as communicated in writing to the Sub-Adviser;
(v) the fundamental and non-fundamental policies and investment
restrictions of the Fund as reflected in the Trust's registration
statement under the Act or as such policies may, from time to time, be
<PAGE>
amended by the Fund's shareholders, as communicated in writing to the
Sub-Adviser; and
(vi) the Prospectus and Statement of Additional Information of the
Fund in effect from time to time as communicated in writing to the
Sub-Adviser (collectively referred to as the "Disclosure Documents").
(c) The appropriate officers and employees of the Sub-Adviser shall be
available upon reasonable notice for consultation with any of the Trustees and
officers of the Trust and MassMutual with respect to any matter dealing with the
business and affairs of the Fund with respect to the Portfolio, such as the
valuation of portfolio securities of the Portfolio of the Fund, including but
not limited to securities that are either not registered for public sale or
securities not traded on any securities market.
2. Duties of the Sub-Adviser.
(a) The Sub-Adviser shall, subject to the ultimate direction and control
by the Trust's Board of Trustees or MassMutual, to the extent MassMutual's
direction is not inconsistent with that of the Board of Trustees, (i) with
respect to the Portfolio, regularly provide investment advice and
recommendations to the Fund, directly or through MassMutual, with respect to the
Fund's investments, investment policies and the purchase, sale or other
disposition of securities and other investments; (ii) with respect to the
Portfolio, supervise and monitor continuously the investment program of the Fund
and the composition of its portfolio and determine what securities or other
investments shall be purchased or sold by the Fund; (iii) with respect to the
Portfolio, arrange, subject to the provisions of Section 6 hereof, for the
purchase of securities and other investments for the Fund and the sale of
securities and other investments held in the portfolio of the Fund; (iv) provide
reports on the foregoing to the Board of Trustees at each Board meeting with
respect to the Portfolio; and (v) undertake to do anything incidental to the
foregoing to facilitate the performance of the Sub-Adviser's obligations
hereunder, including voting or exercising any consent rights with respect to
such securities or investments in accordance with the Sub-Adviser's procedures
as amended from time to time.
(b) The Sub-Adviser shall provide to MassMutual such reports for the Fund,
and in such time frames, as MassMutual shall request or as required by
applicable law or regulation.
(c) Provided that none of MassMutual, the Fund or the Trust shall be
required to pay any compensation other than as provided by the terms of this
Sub-Advisory Agreement and subject to the provisions of Section 5 hereof, the
Sub-Adviser may obtain investment information, research or assistance from any
other person, firm or corporation to supplement, update or otherwise improve its
investment management services.
(d) Provided that nothing herein shall be deemed to protect the
Sub-Adviser from acts or omissions in breach of this Sub-Advisory Agreement or
from willful misfeasance, bad faith or gross negligence in the performance of
its duties, or reckless disregard to its obligations and duties under this
Sub-Advisory Agreement, the Sub-Adviser shall not be liable for any loss
sustained by reason of good faith errors or omissions in connection with any
matters to which this Sub-Advisory Agreement relates.
(e) The Sub-Adviser shall make all material disclosures to MassMutual and
the Fund regarding itself and its partners, officers, directors, shareholders,
employees, affiliates or any person who controls any of the foregoing,
including, but not limited to, information regarding any change in control in
the Sub-Adviser or any change in its key personnel material to the services
provided hereunder, information regarding any material adverse change in the
condition (financial or otherwise) of the Sub-Adviser or any person who controls
the Sub-Adviser, information regarding the investment performance and general
investment methods of the Sub-Adviser material to the services provided
hereunder, its principals and affiliates, information that MassMutual reasonably
deems material to the Fund or necessary to enable MassMutual to monitor the
performance of the Sub-Adviser and information that is required, in the
reasonable judgment of MassMutual, to be disclosed in any filings required by
any governmental agency or by any applicable law, regulation, rule or order.
MassMutual hereby acknowledges that it has received and has had an
<PAGE>
opportunity to review a copy of Form ADV, Part II, of the Sub-Adviser, in
accordance with Rule 204-3 of the Advisers Act.
(f) The Sub-Adviser shall provide MassMutual with any information in the
Sub-Adviser's possession necessary for supervising the activities of its
personnel, including professional, administrative and clerical personnel,
including the compilation and maintenance of such records with respect to the
Fund's operations as may reasonably be required.
(g) The Sub-Adviser shall provide MassMutual, upon reasonable prior
written request by MassMutual to the Sub-Adviser, with access to inspect at the
Sub-Adviser's office the books and records of the Sub-Adviser relating to the
Fund and the Sub-Adviser's performance hereunder and such other books and
records of the Sub-Adviser as are necessary to confirm that the Sub-Adviser has
complied with its obligations and duties under this Sub-Advisory Agreement.
3. Other Activities.
(a) Nothing in this Sub-Advisory Agreement shall prevent MassMutual or the
Sub-Adviser or any officer thereof from acting as investment adviser or
sub-adviser for any other person, firm or corporation and shall not in any way
limit or restrict MassMutual or the Sub-Adviser or any of their respective
directors, officers, members, stockholders, partners or employees from buying,
selling, or trading any securities for its own account or for the account of
others for whom it or they may be acting, provided that such activities are in
compliance with U.S. federal and state securities laws, regulations and rules
and will not adversely affect or otherwise impair the performance by any party
of its duties and obligations under this Sub-Advisory Agreement.
(b) The Sub-Adviser agrees that it will not knowingly or deliberately
favor any other account managed or controlled by it or any of its principals or
affiliates over the Fund. The Sub-Adviser, upon reasonable request and receipt
of adequate assurances of confidentiality, shall provide MassMutual with an
explanation of the differences, if any, in performance between the Portfolio of
the Fund and any other account with investment objectives and policies similar
to the Portfolio of the Fund for which the Sub-Adviser, or any one of its
principals or affiliates, acts as investment adviser. To the extent that a
particular investment is suitable for both the Fund and the Sub-Adviser's other
clients, such investment will be allocated among the Fund and such other clients
in a manner that is fair and equitable in the circumstances. Any allocation made
in accordance with the Sub-Adviser's allocation procedures, as from time to time
amended, shall be presumed fair and equitable, provided such allocation
procedures, or amendments thereto, have been delivered to MassMutual.
4 Compensation of the Sub-Adviser.
MassMutual agrees to pay the Sub-Adviser and the Sub-Adviser agrees to accept as
full compensation for the performance of all functions and duties on its part to
be performed pursuant to the provisions hereof, a fee paid quarterly, in
arrears, at the following rate: an annual rate of .75% on the first $100 million
of Aggregate Assets; and an annual rate of .70% of Aggregate Assets in excess of
$100 million. For the purposes of this Sub-Advisory Agreement, "Aggregate
Assets" shall mean the aggregate of (i) the average daily net assets of the
Portfolio of the Fund for which the Sub-Advisor provides investment advisory
services, determined at the close of the New York Stock Exchange on each day
that the Exchange is open for trading, and (ii) the average daily net assets of
all other portfolios or funds or accounts of MassMutual or its affiliates,
including portfolios of other funds registered under the Act, for which the
Sub-Advisor provides investment advisory services determined at the close of the
Exchange on each day that the Exchange is open for trading. MassMutual shall pay
the Sub-Advisor such fee on the first business day immediately following the end
of each calendar quarter.
5. Portfolio Transactions and Brokerage.
(a) The Sub-Adviser is authorized, with respect to the Portfolio in
arranging the purchase and sale of the Fund's publicly-traded portfolio
securities, to employ or deal with such members of securities exchanges, brokers
or dealers (hereinafter "broker-dealers"), as may, in its best judgment,
implement the policy of the Fund to obtain, at reasonable expense,
<PAGE>
the best execution (prompt and reliable execution at the most favorable security
price obtainable) of the Fund's portfolio transactions.
(b) The Sub-Adviser may effect the purchase and sale of securities (which
are otherwise publicly traded) in private transactions on such terms and
conditions as are customary in such transactions, may use a broker to effect
such transactions, and may enter into a contract in which the broker acts either
as principal or as agent.
(c) The Sub-Adviser shall select broker-dealers to effect the Fund's
portfolio transactions on the basis of its estimate of their ability to obtain
best execution of particular and related portfolio transactions. The abilities
of a broker-dealer to obtain best execution of particular portfolio
transaction(s) will be judged by the Sub-Adviser on the basis of all relevant
factors and considerations including, without limitation, insofar as feasible,
the execution capabilities required by the transaction or transactions; the
ability and willingness of the broker-dealer to facilitate the Fund's portfolio
transactions by participating therein for its own account; the importance to the
Fund of speed, efficiency or confidentiality; the broker-dealer's apparent
familiarity with sources from or to whom particular securities might be
purchased or sold; the willingness of the broker-dealer to provide useful or
desirable investment research and/or special execution services; other matters
involved in the receipt of brokerage and research services in accordance with
Section 28(e) of the Securities Exchange Act of 1934, as amended; as well as any
other matters relevant to the selection of a broker-dealer for particular and
related transactions of the Fund; and such other considerations as the Board of
Trustees of the Trust or MassMutual determine and provide to the Sub-Adviser
from time to time. The Sub-Adviser may cause the Fund to pay a commission in
excess of the amount another adequately qualified broker-dealer would have
charged if the Sub-Adviser determines, in good faith, that such commission is
reasonable in relation to the value of the brokerage and/or other services
provided by the broker-dealer, viewed in terms of either that particular
transaction or the overall responsibilities of the Sub-Adviser with respect to
the accounts for which it exercises investment discretion.
(d) The Sub-Adviser may aggregate purchase and sale orders for the Fund
with those of other accounts from which it has investment discretion. Securities
purchased in transactions effected pursuant to such aggregated orders shall be
allocated among the Fund and such other client accounts of the Sub-Adviser in
accordance with the Sub-Adviser's written allocation procedures, as amended from
time to time, or in a manner that is fair and equitable under the circumstances.
6. Representations And Warranties.
The Sub-Adviser hereby represents and warrants to the Fund and MassMutual that:
(a) The Sub-Adviser has obtained all required governmental and regulatory
licenses, registrations and approvals required by law as may be necessary to
perform its obligations under this Sub-Advisory Agreement and to act as
contemplated by the Trust Documents and the Disclosure Documents, including
without limitation registration as an investment adviser under the Advisers Act,
and will maintain and renew any required licenses, registrations, approvals and
memberships during the term of this Sub-Advisory Agreement.
(b) There is no pending, or to the best of its knowledge, threatened or
contemplated action, suit or proceeding before or by any court, governmental,
administrative or self-regulatory body or arbitration panel to which the
Sub-Adviser or any of its principals or affiliates is a party, or to which any
of the assets of the Sub-Adviser is subject, which reasonably might be expected
to (i) result in any material adverse change in the Sub-Adviser's condition
(financial or otherwise), business or prospects, (ii) affect adversely in any
material respect any of the Sub-Adviser's assets, (iii) materially impair the
Sub-Adviser's ability to discharge its obligations under this Sub-Advisory
Agreement, or (iv) result in a matter which would require an amendment to the
Sub-Adviser's Form ADV, Part II; and the Sub-Adviser has not received any notice
of an investigation by the Securities and Exchange Commission or any state
regarding U.S. federal or state securities laws, regulations or rules.
<PAGE>
(c) All references in the Disclosure Documents concerning the Sub-Adviser
and its affiliates and the controlling persons, affiliates, stockholders,
directors, officers and employees of any of the foregoing are accurate in all
material respects and do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make such information not
misleading.
(d) Subject to adequate assurances of confidentiality, and appropriate
redacting by the Sub-Adviser to protect client confidentiality, the Sub-Adviser
has supplied to, or made available for review by, MassMutual (and if requested
by MassMutual to its designated auditor) all documents, statements, agreements
and workpapers reasonably requested by it relating to accounts covered by the
Sub-Adviser's performance results and which are in the Sub-Adviser's possession
or to which it has access.
MassMutual represents and warrants to the Sub-Adviser that this Agreement
and the appointment of the Sub-Adviser as a sub-adviser to the Fund have
received all necessary approvals, and are authorized by applicable law, by the
Advisory Agreement, the Trust Documents and the Disclosure Documents.
The foregoing representations and warranties shall be continuing during the term
of this Sub-Advisory Agreement.
7. Covenants.
(a) If at any time during the term of this Sub-Advisory Agreement, the
Sub-Adviser discovers any fact or omission, or any event or change of
circumstances occurs, which would make the Sub-Adviser's representations and
warranties in Section 6 inaccurate or incomplete in any material respect, or
which might render the Disclosure Documents untrue or misleading in any material
respect, the Sub-Adviser will provide prompt written notification to the Fund
and MassMutual of any such fact, omission, event or change of circumstances, and
the facts related thereto.
(b) The Sub-Adviser agrees that, during the term of this Sub-Advisory
Agreement, and for so long as investment in the Fund is being offered for sale,
it will provide the Fund and the Sub-Adviser with updated information relating
to the Sub-Adviser's performance results as reasonably required from time to
time by the Fund and MassMutual. The Sub-Adviser shall use its best efforts to
provide such information within a reasonable period of time after the end of the
month to which such updated information relates and the information is available
to it.
(c) If at any time during the term of this Sub-Advisory Agreement,
MassMutual discovers any fact or omission, or any event or change of
circumstances occurs, which would make the representations and warranties made
by MassMutual in Section 6 inaccurate or incomplete in any material respect,
MassMutual will provide prompt written notification to the Sub-Adviser of any
such fact, omission, event or change of circumstances, and the facts related
thereto.
(d) The Sub-Adviser's duties and obligations with respect to the Fund
shall be limited solely to those set forth in this Sub-Advisory Agreement and
MassMutual shall be fully responsible for the performance of those functions
normally carried out by an investment adviser that are not specifically
delegated to the Sub-Adviser hereunder. Without limiting the generality of the
foregoing, MassMutual, either directly or through affiliated parties or other
persons to whom MassMutual so delegates, shall be responsible for (i) monitoring
overall Fund compliance with the restrictions set forth in Section 1(b) hereof,
(ii) calculating the net asset value and the performance of the Fund, (iii)
contracting with a third-party custodian to, among other things, maintain
custody of Fund assets, communicate information to MassMutual regarding Fund
holdings thereof, communicate to the Sub-Adviser regarding Portfolio holdings
and the value thereof, collect dividends and interest payments for Fund
holdings, resolve trade fails and administer other corporate actions.
8. Confidentiality.
All information and advice furnished by one party to the other party (including
their respective agents, employees and representatives) hereunder
<PAGE>
shall be treated as confidential and shall not be disclosed to third parties,
except as may be in the public domain through no breach by any party of this
Agreement or as may be necessary to comply with applicable governmental laws,
rules and regulations, subpoenas or court orders.
9. Duration.
Unless terminated earlier pursuant to Section 10 hereof, this Sub-Advisory
Agreement shall remain in effect for a period of two years from the date hereof.
Thereafter it shall continue in effect from year to year, unless terminated
pursuant to Section 10 hereof, so long as such continuance shall be approved at
least annually by the Trust's Board of Trustees, including the vote of the
majority of the Trustees of the Trust who are not parties to this Sub-Advisory
Agreement or "interested persons" (as defined in the Act) of any such party cast
in person at a meeting called for the purpose of voting on such approval, or by
the holders of a "majority" (as defined in the Act) of the outstanding voting
securities of the Fund.
10. Termination.
(a) This Sub-Advisory Agreement shall terminate automatically upon its
unauthorized assignment (within the meaning of the Act), the termination of the
Advisory Agreement or the dissolution of the Fund.
(b) The Sub-Advisory Agreement may be terminated by MassMutual or the
Board of Trustees of the Trust: (i) by written notice to the Sub-Adviser with
immediate effect, if the Sub-Adviser's registration under the Adviser's Act is
suspended, terminated, lapsed or not renewed; (ii) by written notice to the
Sub-Adviser with immediate effect, if the Sub-Adviser is bankrupt or insolvent,
seeks an arrangement with creditors, is dissolved or terminated or ceases to
exist; (iii) by written notice to the Sub-Adviser with immediate effect, if
MassMutual determines in good faith, for any reason, that such termination is
appropriate for the protection of the Fund, including without limitation a good
faith determination by MassMutual or the Board of Trustees of the Trust that the
Sub-Adviser has breached an obligation or duty under this Sub-Advisory
Agreement; or (iv) in their sole discretion, without penalty, upon ninety days
prior written notice to Sub-Adviser. This Sub-Advisory Agreement also may be
terminated at any time, without penalty, by the vote of the holders of a
"majority" of the outstanding voting securities of the Fund (as defined in the
Act).
(c) The Sub-Advisory Agreement may be terminated by the Sub-Adviser,
without penalty at any time, upon ninety days' prior written notice, to
MassMutual and the Trust.
11. Indemnification.
(a) The Sub-Adviser agrees to indemnify and hold harmless MassMutual, the
Fund and any of its or their controlling persons or any shareholders, partners,
directors, officers and/or employees of any of them against any loss, claim,
damage, charge, liability or expense (including, without limitation, reasonable
attorneys' and accountants' fees) to which such persons may become subject,
insofar as such loss, claim, damage, charge, liability or expense arises out of
or is based upon any demands, claims, liabilities, expenses, lawsuits, actions
or proceedings relating to this Sub-Advisory Agreement or to the advisory
services for the account of the Fund provided by the Sub-Adviser, provided that
the loss, claim, damage, liability, cost or expense related to, was based upon,
or arose out of an act or omission of the Sub-Adviser or its officers,
directors, employees, agents or controlling persons constituting willful
misfeasance, bad faith, gross negligence, fraud, willful misconduct, a breach of
this Sub-Advisory Agreement, or a violation of applicable federal or state
securities laws, rules and regulations.
(b) MassMutual agrees to indemnify and hold harmless the Sub-Adviser and
any of its controlling persons, shareholders, partners, directors, officers
and/or employees of any of them against any loss, claim, settlement, damage,
charge, liability or expense (including, without limitation, reasonable
attorneys' and accountants' fees) to which such persons may become subject,
insofar as such loss, claim, settlement, damage, charge, liability or expense
arises out of or is based upon any demands, claims, liabilities, expenses,
lawsuits, actions or proceedings relating to this Sub-Advisory Agreement, the
advisory services for the account of the Fund provided by the
<PAGE>
Sub-Adviser, the operation of the Fund or the contents of the Disclosure
Documents, provided that the loss, claim, damage, liability, cost or expense
related to, or was based upon, or arose out of act or omission of MassMutual or
the Fund or any of its partners, officers, directors, employees, agents or
controlling persons constituting willful misfeasance, bad faith, gross
negligence, fraud, willful misconduct, a breach of this Sub-Advisory Agreement,
or a violation of applicable federal or state securities laws, rules and
regulations.
(c) Promptly after receipt by an indemnified party under this Section 11
of notice of any claim or dispute or commencement of any action or litigation,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party under this Section 11, notify the indemnifying party of
the commencement thereof; but the omission to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 11 except to the extent, if any, that such
failure or delay prejudiced the other party in defending against the claim. In
case any such claim, dispute, action or litigation is brought or asserted
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, to assume the defense thereof, with
counsel specially approved in writing by such indemnified party, such approval
not to be unreasonably withheld, following notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof; in
which event, the indemnifying party will not be liable to such indemnified party
under this Section 11 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof, but shall
continue to be liable to the indemnified party in all other respects as
heretofore set forth in this Section 11. Notwithstanding any other provisions of
this Section 11, if, in any claim, dispute, action or litigation as to which
indemnity is or may be available, any indemnified party reasonably determines
that its interests are or may be, in whole or in part, adverse to the interests
of the indemnifying party, the indemnified party may retain its own counsel,
with the choice of counsel subject to the consent of the indemnifying party
(which consent shall not be withheld unreasonably), in connection with such
claim, dispute, action or litigation and shall continue to be indemnified by the
indemnifying party for any legal or any other expenses reasonably incurred in
connection with investigating or defending such claim, dispute, action or
litigation.
12. Disclaimer of Shareholder Liability.
MassMutual and the Sub-Adviser understand that the obligations of the Trust
under this Sub-Advisory Agreement are not binding upon any Trustee or
shareholder of the Trust personally, but bind only the Trust and the Trust's
property. MassMutual and the Sub-Adviser represent that each has notice of the
provisions of the Trust Documents disclaiming shareholder and Trustee liability
for acts or obligations of the Trust.
13. Notice.
Any notice under this Sub-Advisory Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party, with a copy to the
Trust, at the addresses below or such other address as such other party may
designate for the receipt of such notice.
If to MassMutual: Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Vernon J. Meyer
Vice President
If to the Sub-Adviser: Waddell & Reed Investment Management Company
6300 Lamar
Overland Park, KS 66202-4247
Attention: Mark P. Buyle, Esq.
If to either MassMutual or the Sub-Adviser, copies to:
MassMutual Institutional Funds
1295 State Street
<PAGE>
Springfield, MA 01111
Attention: Stephen L. Kuhn
Vice President
14. No Assignment.
No assignment (within the meaning of the Act) of this Sub-Advisory Agreement may
be made without the express written consent of all parties hereto.
15. Amendments to this Sub-Advisory Agreement.
This Sub-Advisory Agreement may be amended only by a written instrument approved
in writing by all parties hereto.
16. Governing Law.
This Sub-Advisory Agreement shall be governed by and construed in accordance
with the internal laws of the Commonwealth of Massachusetts, without giving
effect to principles of conflict of laws.
17. Survival.
The provisions of this Sub-Advisory Agreement shall survive the termination or
other expiration of this Sub-Advisory Agreement with respect to any matter
arising while this Sub-Advisory Agreement was in effect.
18. Successors.
This Sub-Advisory Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns.
19. Entire Agreement.
This Sub-Advisory Agreement constitutes the entire agreement among the parties
hereto with respect to the matters referred to herein, and no other agreement,
oral or otherwise, shall be binding on the parties hereto.
20. No Waiver.
No failure or delay on the part of any party hereto in exercising any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
Any waiver granted hereunder must be in writing and shall be valid only in the
specific instance in which given.
21. Severability.
If any one or more provisions in this Sub-Advisory Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not effect any other provision
of this Sub-Advisory Agreement, but this Sub-Advisory Agreement shall be
construed so as to effectuate the intent of the parties hereto as nearly as
possible without giving effect to such invalid, illegal or unenforceable
provision had never been contained herein.
22. Counterparts.
This Sub-Advisory Agreement may be executed in any number of counterparts, each
of which shall constitute an original, but all of which when taken together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Fund, MassMutual and the Sub-Adviser have caused this
Sub-Advisory Agreement to be executed as of the day and year first above
written.
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Michael D. Hays
------------------------
<PAGE>
Name: Michael D. Hays
Title: Senior Vice President
WADDELL & REED INVESTMENT MANAGEMENT COMPANY
By: /s/ Henry J. Herrmann
----------------------------------------
Name: Henry J. Herrmann
-----------------
Title: President, Chief Executive Officer
----------------------------------
and Chief Investment Officer
----------------------------
ACKNOWLEDGED:
MASSSMUTUAL INSTITUTIONAL FUNDS
on behalf of MassMutual Small Cap Growth Equity Fund
By: /s/ Stuart H. Reese
-------------------
Name: Stuart H. Reese
----------------
Title: President
----------------
<PAGE>
Exhibit E(1)
GENERAL DISTRIBUTORS AGREEMENT
Between
MASSMUTUAL INSTITUTIONAL FUNDS
and
MML DISTRIBUTORS, LLC
<PAGE>
GENERAL DISTRIBUTOR'S AGREEMENT
BETWEEN
MASSMUTUAL INSTITUTIONAL FUNDS
AND
MML DISTRIBUTORS, LLC
Date: May 3, 1999
MML Distributors, LLC
1414 Main Street
Springfield, MA 01144
Dear Sirs:
MASSMUTUAL INSTITUTIONAL FUNDS, a Massachusetts business trust (the "Trust"), is
registered as an investment company under the Investment Company Act of 1940
(the "1940 Act"), and an indefinite number of one or more classes of shares of
beneficial interest of the following series of the Trust: (1) MassMutual Prime
Fund; (2) MassMutual Short-Term Bond Fund; (3) MassMutual Core Bond Fund; (4)
MassMutual Balanced Fund; (5) MassMutual Value Equity Fund; (6) MassMutual Small
Cap Value Equity Fund; (7) MassMutual International Equity Fund; (8) MassMutual
Indexed Equity Fund; (9) MassMutual Diversified Bond Fund; (10) MassMutual
Growth Equity Fund; (11) MassMutual Mid Cap Growth Equity Fund; and (12)
MassMutual Small Cap Growth Equity Fund, have been registered under the
Securities Act of 1933, as amended (the "1933 Act") to be offered for sale to
the public in a continuous public offering in accordance with the terms and
conditions set forth in each series' Prospectus and Statement of Additional
Information ("SAI") included in the Trust's Registration Statement as it may be
amended from time to time (the "current Prospectus and/or SAI"). As used herein,
the term "Fund" refers to each of the series of the Trust described above and
any additional series of the Trust that have Shares which become registered
under the 1933 Act to be offered for sale to the public in a continuous public
offering in accordance with the terms and conditions set forth in such series'
current Prospectus and/or SAI.
In this connection, the Trust desires that your firm (the "General Distributor")
act in a principal capacity as General Distributor for the sale and distribution
of Class A, Class L, Class Y and Class S Shares which have been registered as
described above and of any additional Shares of any Fund which may become
registered during the term of this Agreement and as to which you agree to act as
the General Distributor ("Shares"). You have advised the Trust that you are
willing to act as General Distributor on such terms, and it is accordingly
agreed by and between us as follows:
1. Appointment of the Distributor. The Trust hereby appoints you as the sole
General Distributor, pursuant to the aforesaid continuous public offering of its
Shares, and the Trust further agrees from and after the date of this Agreement,
that it will not, without your consent, sell or agree to sell any Shares
otherwise than through you, except (a) the Trust may itself sell Shares without
sales charge as an investment to the officers, trustees or directors and bona
fide present and former full-time employees of the Trust, the Trust's Investment
Adviser and affiliates thereof, the Separate Investment Accounts of the Adviser,
and to investors who are identified in the current Prospectus and/or SAI as
having the privilege to buy Shares at net asset value; (b) the Trust may issue
Shares in connection with a merger, consolidation or acquisition of assets on
such basis as may be authorized or permitted under the 1940 Act; (c) the Trust
may issue Shares for the reinvestment of dividends and other distributions of
the Trust or of any Fund if permitted by the current Prospectus and/or SAI; and
(d) the Trust may issue Shares as underlying securities of a unit investment
trust or other registered open-end investment company (or series thereof) if
such unit investment trust or registered open-end investment company (or series
thereof) has elected to use Shares as an underlying investment.
2. Sale of Shares. You hereby accept such appointment and agree to sell Shares,
provided, however, that when requested by the Trust at any time
<PAGE>
because of market or other economic considerations or abnormal circumstances of
any kind, or when agreed to by mutual consent of the Trust and the General
Distributor, you will suspend such efforts. The Trust may also withdraw the
offering of Shares at any time when required by the provisions of any statute,
order, rule or regulation of any governmental body having jurisdiction. It is
understood that you do not undertake to sell all or any specific number of
Shares.
3. Sales Charge. Shares shall be sold by you at net asset value plus, if
applicable, a front-end sales charge not in excess of 8.5% of the offering
price, but which front-end sales charge, if any, shall be proportionately
reduced or eliminated for larger sales and under other circumstances, in each
case on the basis set forth in the current Prospectus and/or SAI. The redemption
proceeds of Shares offered and sold at net asset value with or without a
front-end sales charge may be subject to a contingent deferred sales charge
("CDSC") under the circumstances described in the current Prospectus and/or SAI.
You may reallow such portion of the front-end sales charge to dealers or cause
payment (which may exceed the front-end sales charge, if any) of commissions to
brokers through which sales are made, as you may determine, and you may pay such
amounts to dealers and brokers on sales of Shares from your own resources (such
dealers and brokers shall collectively include all domestic or foreign
institutions eligible to offer and sell the Shares), and in the event a Fund has
more than one class of Shares outstanding, then you may impose a front-end sales
charge and/or a CDSC on Shares of one class that is different from the charges
imposed on Shares of a Fund's other class(es), in each case as set forth in the
current Prospectus and/or SAI, provided the front-end sales charge and CDSC to
the ultimate purchaser do not exceed the respective levels set forth for such
category of purchaser in the current Prospectus and/or SAI.
4. Purchase of Shares.
(a) As General Distributor, you shall have the right to accept or reject
orders for the purchase of Shares at your discretion. Any consideration
which you may receive in connection with a rejected purchase order will be
returned promptly.
(b) You agree promptly to issue or to cause an agent appointed by you or
the duly appointed transfer or shareholder servicing agent of the Trust to
issue as your agent confirmations of all accepted purchase orders and to
transmit a copy of such confirmations to the Trust. The net asset value of
all Shares which are the subject of such confirmations, computed in
accordance with the applicable rules under the 1940 Act, shall be a
liability of the General Distributor to the Trust to be paid promptly
after receipt of payment from the originating dealer or broker (or
investor, in the case of direct purchases) and not later than eleven
business days after such confirmation even if you have not actually
received payment from the originating dealer or broker, or investor. In no
event shall the General Distributor make payment to the Trust later than
permitted by applicable rules of the National Association of Securities
Dealers, Inc.
(c) If the originating dealer or broker shall fail to make timely
settlement of its purchase order in accordance with applicable rules of
the National Association of Securities Dealers, Inc., or if a direct
purchaser shall fail to make good payment for Shares in a timely manner,
you shall have the right to cancel such purchase order and, at your
account and risk, to hold responsible the originating dealer or broker, or
investor. You agree promptly to reimburse a Fund for losses suffered by it
that are attributable to any such cancellation, or to errors on your part
in relation to the effective date of accepted purchase orders, limited to
the amount that such losses exceed contemporaneous gains realized by a
Fund for either of such reasons with respect to other purchase orders.
(d) In the case of a canceled purchase for the account of a directly
purchasing shareholder, the Trust agrees that if such investor fails to
make you whole for any loss you pay to a Fund on such canceled purchase
order, a Fund will reimburse you for such loss to the extent of the
aggregate redemption proceeds of any
<PAGE>
other Shares of a Fund owned by such investor, on your demand that a Fund
exercise its right to claim such redemption proceeds.
The Trust shall register or cause to be registered all Shares sold to you
pursuant to the provisions hereof in such names and amounts as you may
request from time to time. All Shares, when so issued and paid for, shall
be fully paid and non-assessable by the Trust (which shall not prevent the
imposition of any CDSC that may apply) to the extent set forth in the
current Prospectus and/or SAI.
5. 1933 Act Registration. The Trust has delivered to you a copy of the current
Prospectus and SAI. The Trust agrees that it will use its best efforts to
continue the effectiveness of the Registration Statement under the 1933 Act. The
Trust further agrees, at its expense, to prepare and file any amendments to its
Registration Statement as may be necessary and any supplemental data in order to
comply with the 1933 Act. The Trust will promptly furnish you at your expense
with a reasonable number of copies of the Prospectus and SAI and any amendments
thereto for use in connection with the sale of Shares.
6. 1940 Act Registration. The Trust has registered under the 1940 Act as an
investment company, and it will use its best efforts to maintain such
registration and to comply with the requirements of the 1940 Act.
7. State Blue Sky Notification. At your request, the Trust will, at its expense,
take such steps as may be necessary and feasible to determine what action is
necessary to file notices necessary for the sale of Shares and where required,
to file notices for the sale of Shares in states, territories or dependencies of
the United States, the District of Columbia, the Commonwealth of Puerto Rico and
to qualify Shares in foreign countries, in accordance with the laws thereof, and
to renew or extend any such notification or qualification; provided, however,
that the Trust shall not be required to qualify Shares or to maintain the
qualification of Shares in any jurisdiction where it shall deem such
qualification disadvantageous to the Trust. The Trust shall keep you informed of
the State Blue Sky Notifications of the Shares.
8. Duties of Distributor. You agree that:
(a) Neither you nor any of your officers will take any long or short
position in the Shares;
(b) You shall, upon reasonable request of the Trust, furnish to the Trust
any pertinent information required to be inserted with respect to you as
General Distributor within the purview of the 1933 Act in any reports or
registrations required to be filed with any governmental authority;
(c) You will not make any representations inconsistent with the
information contained in the current Prospectus and/or SAI;
(d) You or your agent shall maintain such records relating to your acting
as General Distributor of the Trust as may be reasonably required for the
Trust or its transfer or shareholder servicing agent to respond to
shareholder requests or complaints, and to permit the Trust to maintain
proper accounting records, and you shall make such records reasonably
available to the Trust and its transfer agent or shareholder servicing
agent upon request; and
(e) In performing your obligations under this Agreement, you shall comply
with all requirements of a Fund's current Prospectus and/or SAI and all
applicable laws, rules and regulations with respect to the purchase, sale
and distribution of Shares.
9. Duties of the Trust. The Trust agrees that:
(a) It shall promptly furnish to you, at least 10 days prior to use, any
description of you or the services you perform hereunder which the Trust
intends to use in the Prospectus, SAI, in sales literature reports,
advertisements or otherwise. Such description may not be utilized if you
object thereto in writing;
<PAGE>
(b) It shall promptly furnish to you for your approval and filing with the
National Association of Securities Dealers, Inc. any proposed sales
literature or advertisement relating to, or referring to the Trust or the
Shares;
(c) It shall promptly advise you of any information concerning the Trust
or the Shares, which may affect your ability to properly discharge your
obligations hereunder; and
(d) It shall not use the word "MML Distributors, LLC" other than merely
identifying the General Distributor as such unless such use is
specifically approved by you.
10. Allocation of Costs. The Trust shall pay, or cause others to pay, the cost
of composition and printing of sufficient copies of a Fund's Prospectus and SAI
as shall be required for periodic distribution to a Fund's shareholders and the
expense of registering Shares for sale under federal securities laws and filing
notices in states to sell Shares in such states. You shall pay the expenses
normally attributable to the sale of Shares, other than as paid under a Fund's
Plan under Rule 12b-1 of the 1940 Act, including the cost of printing and
mailing of the Prospectus (other than those furnished to existing shareholders)
and any sales literature or advertisements used by you in the public sale of the
Shares.
11. Duration. This Agreement shall take effect on the date first written above,
and shall supersede any and all prior General Distributor's Agreements by and
among the Trust and you. Unless earlier terminated pursuant to Section 12
hereof, this Agreement shall remain in effect until May 3, 2001. This Agreement
shall continue in effect from year to year thereafter, provided that such
continuance shall be specifically approved at least annually: (a) by the Trust's
Board of Trustees or by vote of a majority of the voting securities of the
Trust; and (b) by the vote of a majority of the Trustees, who are not parties to
this 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.
12. Termination. This Agreement may be terminated (a) by the General Distributor
at any time without penalty by giving no less than sixty days' written notice
(which notice may be waived by the Trust); (b) by the Trust at any time without
penalty upon sixty days' written notice to the General Distributor (which notice
may be waived by the General Distributor); or (c) by mutual consent of the Trust
and the General Distributor, provided that such termination by the Trust shall
be directed or approved by the Board of Trustees of the Trust or by the vote of
the holders of a majority of the outstanding voting securities of the Trust. In
the event this Agreement is terminated, the General Distributor shall be
entitled to be paid the CDSC, if any, under paragraph 3 hereof on the redemption
proceeds of Shares sold prior to the effective date of such termination.
13. Assignment. This Agreement may not be amended or changed except in writing
and shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successors; however, this Agreement shall not be assigned
by either party and shall automatically terminate upon assignment.
14. Disclaimer of Shareholder Liability. The General Distributor understands and
agrees that the obligations of the Trust under this Agreement are not binding
upon any Trustee or shareholder of the Trust personally, but bind only the Trust
and the Trust's property; the General Distributor represents that it has notice
of the provisions of the Agreement and Declaration of Trust dated May 29, 1993,
as amended, disclaiming shareholder liability for acts or obligations of the
Trust.
15. Section Headings. The headings of each section is for descriptive purposes
only, and such headings are not to be construed or interpreted as part of this
Agreement.
If the foregoing is in accordance with your understanding, so indicate by
signing in the space provided below.
<PAGE>
MASSMUTUAL INSTITUTIONAL FUNDS
By: /s/ Stuart H. Reese
--------------------------
Name: Stuart H. Reese
Title: President
Accepted:
MML DISTRIBUTORS, LLC
By: /s/ Kenneth Rickson
----------------------
Name: Kenneth Rickson
Title: President
<PAGE>
Exhibit G(2)
SCHEDULE 1 TO THE CUSTODIAN AGREEMENT
BETWEEN
MASSMUTUAL INSTITUTIONAL FUNDS
AND
INVESTORS BANK & TRUST COMPANY
<PAGE>
Schedule 1
To the
CUSTODIAN AGREEMENT
Between
MassMutual Institutional Funds and Investors Bank & Trust
Series of MassMutual Institutional Funds
MassMutual Prime Fund
MassMutual Short-Term Bond Fund
MassMutual Core Equity Fund
MassMutual Small Cap Value Equity Fund
MassMutual Core Bond Fund
MassMutual Balanced Fund
MassMutual International Equity Fund
MassMutual Indexed Equity Fund
MassMutual Diversified Bond Fund
MassMutual Growth Equity Fund
MassMutual Mid Cap Growth Equity Fund
MassMutual Small Cap Growth Equity Fund
MASSMUTUAL INSTITUTIONAL FUNDS
By: /s/ Stuart H. Reese
--------------------------
Title: President
-----------------------
INVESTORS BANK & TRUST COMPANY
By: /s/
--------------------------
Title:
-----------------------
<PAGE>
Exhibit G(3)
FORM OF
ADMINISTRATIVE AND SHAREHOLDERS SERVICES AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
and
MASSMUTUAL INSTITUTIONAL FUNDS
<PAGE>
FORM OF
ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT
This ADMINISTRATIVE AND SHAREHOLDER SERVICES AGREEMENT (the "Agreement"),
dated as of the _____ of ___________, 1999 (the "Effective Date") is by and
between MassMutual Institutional Funds (the "Trust") on behalf of MassMutual
_______ Fund (the "Fund") and Massachusetts Mutual Life Insurance Company (the
"Manager").
WHEREAS, the Fund is a series of the Trust, a Massachusetts business trust
which is an open-end diversified management investment company registered as
such with the Securities and Exchange Commission (the "Commission") pursuant to
the Investment Company Act of 1940, as amended (the "1940 Act"), and
WHEREAS, the Trust, on behalf of the Fund, and the Manager wish to enter
into this Agreement whereby the Manager will provide, or cause to be provided,
administrative and shareholder services for the Fund and assume certain expenses
of the Fund.
NOW, THEREFORE, in consideration of the covenants and mutual promises of
the parties made to each other, it is hereby covenanted and agreed as follows:
ARTICLE I: ADMINISTRATIVE AND SHAREHOLDER SERVICES
A. General Responsibilities. Subject to the exceptions set forth in Sub-Section
C hereof and subject to the direction and control of the Board of Trustees of
the Trust, the Manager will provide, or cause to be provided, all services
required for the administration of the Trust and the Fund, including fund
accounting, shareholder servicing, and transfer agency services.
B. Specific Responsibilities. Without limiting the responsibilities of the
Manager, the Manager will:
1. Maintain office facilities (which may be in the offices of the Manager
or a corporate affiliate but shall be in such location as the Trust
reasonably determines).
2. Furnish statistical and research data, clerical services and stationery
and office supplies.
3. Compile data for, prepare for execution by the Fund and file all the
Fund's federal and state tax returns and required tax filings other than
those required by this Agreement to be made by the Fund's custodian and
transfer agent.
4. Prepare compliance filings pursuant to state securities laws with the
advice of the Trust's counsel.
5. Prepare the Trust's Annual and Semi-Annual Reports to Shareholders and
amendments to its Registration Statements (on Form N-1A or any replacement
therefor).
6. Compile data for, prepare and file timely Notices to the SEC required
pursuant to Rule 24f-2 under the 1940 Act.
7. Determine the daily pricing of the portfolio securities and computation
of the net asset value and the net income of Fund in accordance with the
Prospectus, resolutions of the Trust's Board of Trustees, and the
procedures set forth in EXHIBIT A: NET ASSET VALUE CALCULATIONS.
8. Keep and maintain the financial accounts and records of the Fund and
provide the Trust with certain reports, as needed or requested by the
Fund.
9. Provide officers for the Trust as requested by the Trust's Board of
Trustees.
10. Perform fund accounting services for the Fund as set forth in EXHIBIT
B: FUND ACCOUNTING FUNCTIONS.
<PAGE>
11. Generally assist in all aspects of the operations of the Fund.
C. Excepted Responsibilities. The Manager shall not perform the following
services pursuant to this Agreement:
1. Those performed by the custodian for the Trust under the Custodian
Agreement between the Trust and Investors Bank & Trust Company or any
successor custodian (the "Bank");
2. Those performed by the distributor(s) of the Trust's shares;
3. Those provided by the Trust's independent legal counsel;
4. Those performed by the independent public accountants for the Trust;
5. Those performed by the Fund's investment manager;
6. Those provided by the Trust's independent trustees; and
7. Those provided by Investors Bank & Trust Company pursuant to a Transfer
Agency Agreement.
D. Sub-contract Rights. The Manager may in its discretion (subject only to
approval by the Trust's Board of Trustees) delegate or subcontract some or all
of the Manager's duties, but shall remain ultimately responsible for the
provision of such services. The Manager shall be responsible for payment of all
compensation to any person or entity that Manager delegates any duties
hereunder.
ARTICLE II: EXPENSES
A. Expenses. The Manager shall assume all expenses of the Trust and the Fund,
including the Manager's reasonable out-of-pocket disbursements; provided,
however, that the Fund or the Trust shall pay:
1. Taxes and corporate fees payable to governmental agencies;
2. Brokerage commissions (which may be higher than other brokers would
charge if paid to a broker which provides brokerage and research services
to the Manager for use in providing investment advice and management to
the Fund and other accounts over which the Manager exercises investment
discretion) and other capital items payable in connection with the
purchase or sale of the Fund's investments (The words "brokerage and
research services" shall have the meaning given in the Securities Exchange
Act of 1934 and the Rules and Regulations thereunder.);
3. Interest on account of any borrowing by the Fund;
4. Fees and expenses of the Trust's Trustees who are not interested
persons (as defined in the 1940 Act) of the Manager or of the Trust;
5. Fees payable to the Trust's certified independent public accountants;
6. Fees paid to the Trust's independent legal counsel;
7. Fees paid to the Fund's custodian;
8. Fees paid to the Fund's Investment Manager; and
9. Payments due pursuant to any 12b-1 Plan adopted by the Trust and
applicable to the Fund.
ARTICLE III: COMPENSATION
The Manager's Compensation. For the services to be rendered and the facilities
to be furnished by the Manager as provided for in this Agreement, the Trust will
compensate the Manager as the Trust and the Manager may from time to time agree.
<PAGE>
ARTICLE IV: STANDARD OF CARE
A. Standard of Care. The Manager shall use reasonable care in performing its
duties hereunder. In the performance of such duties, the Manager its directors,
officers, employees, and agents, successors and assigns will be protected and
will not be liable, and will be indemnified and held harmless by the Trust, for
any error of judgment, mistake of law, or any other loss, claim, damages,
liabilities, or expenses arising by reason of it acting hereunder, except in the
case of the negligence, willful misconduct, bad faith, reckless disregard of
duties or obligations hereunder, including knowing violations of law, or fraud
of the Manager, or of its officers, employees, or agents, except as otherwise
set forth in this Article IV. Notwithstanding anything herein to the contrary,
the Manager shall have no discretion over the Trust's assets or choice of
investments and shall not be held liable hereunder for any losses suffered by
the Fund.
B. Legal Advice. On issues that are legal in nature, the Manager will be
entitled to receive and act upon the advice of independent legal counsel of its
own selection, provided such counsel is chosen with reasonable care and which
can be counsel for the Trust, and will be without liability for any action taken
or thing done or omitted to be done in accordance with this Agreement in good
faith conformity with such advice. Except as otherwise agreed to by the Trust,
the Manager shall pay the fees and expenses of such counsel, unless such counsel
is the Trust's counsel. On issues that are related to financial accounting
matters, the Manager will be entitled to receive and act upon the advice of the
Trust's independent public accountants, provided that the Manager promptly
notifies the Trust that it has sought such advice and discloses the nature of
the matter. Except as otherwise agreed to by the parties, the Trust shall bear
the expenses and costs of obtaining advice from its independent public
accountants, if such advice is sought pursuant to this subsection B of Article
IV.
C. Good Faith Reliance. The Manager will be protected and not be liable, and
will be indemnified and held harmless, for any action taken or omitted to be
taken by it in reliance upon any document, certificate or instrument which it
reasonably believes to be genuine and to be signed or presented by the proper
person or persons.
D. Damages. Notwithstanding anything in this Agreement to the contrary, in no
event shall the Manager or the Trust be liable to the other, or to any third
party, for special, punitive or consequential damages arising, directly or
indirectly from this Agreement, even if said party has been advised by the other
party of the possibility of such damages.
E. Acts of God. In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, interruption of
electrical power or other utilities, equipment or transmission failure or damage
reasonably beyond its control, or other causes reasonably beyond its control,
such party shall not be liable to the other for any damages resulting from such
failure to perform or otherwise from such causes. The Manager, the Trust and
MassMutual shall notify each other as soon as reasonably possible following the
occurrence of an event described in this subsection.
ARTICLE V: EFFECTIVE DATE, TERMINATION AND AMENDMENT
A. Effective Date. This Agreement will become effective on the Effective Date
and, unless sooner terminated as provided herein, will continue for an initial
term of one-year from the Effective Date and thereafter shall continue for
successive one year periods; provided, however, that such continuance shall be
specifically approved at least annually by (i) the Board of Trustees of the
Trust, or (ii) by a vote of a majority of the outstanding shares of the Fund (as
defined in the 1940 Act), provided, however, that in either event the
continuance is also approved at least annually by a majority of the Trust's
Trustees who are not parties to this Agreement or interested persons (as defined
in the 1940 Act)(other than a Trustee of the Trust) of the Manager or of the
Trust by vote case in person at a meeting called for the purpose of voting on
such approval .
B. Termination. Anything to the contrary herein notwithstanding, this Agreement
may at any time be terminated (i) by the Trust on 90 days' written notice to the
Manager without the payment of any penalty either by the Board
<PAGE>
of Trustees of the Trust, (ii) by vote of majority of the outstanding shares of
the Fund (as defined in the 1940 Act), or (iii) by the Manager on 90 days'
written notice to the Trust without the payment of any penalty by the Manager.
Any notice under this Agreement shall be given in writing, addressed and
delivered, or mailed postpaid, to the other party at the principal office of
such party.
C. Amendment. This Agreement may be amended at any time by mutual written
consent of the parties.
ARTICLE VI: MISCELLANEOUS
A. Services Not Exclusive. The services of the Manager to the Trust and the Fund
under this Agreement are not exclusive and the Manager shall be free to render
similar services to others.
B. Use of Name by the Trust. The Trust recognizes the Manager's control of the
name "MassMutual" and agrees that its right to use this name is non-exclusive
and can be terminated by the Manager at any time. The use of such name will
automatically be terminated if at any time the Manager, a subsidiary or an
affiliate of the Manager ceases to be investment manager for the Fund.
C. Interested and Affiliated Persons. It is understood that members of the Board
of Trustees, officers, employees or agents of the Trust or the Fund may also be
directors, officers, employees or agents of the Manager or of one or more
Sub-Advisers of one or more series of the Trust, and that the Manager and such
Sub-Advisers, and their directors, officers, employees or agents may be
interested in the Fund as shareholders or otherwise.
D. Records and Confidentiality. All records pertaining to the operation and
administration of the Trust and the Fund (whether prepared by the Manager or
supplied to the Manager by the Trust or the Fund) are the property and subject
to the control of the Trust. In the event of the termination of this Agreement,
all such records in the possession of the Manager shall be promptly turned over
to the Trust free from any claim or retention of rights. All such records shall
be deemed to be confidential in nature and the Manager shall not disclose or use
any records or information obtained pursuant to this Agreement in any manner
whatsoever except as expressly authorized by the Trust or as required by federal
or state regulatory authorities. The Manager shall submit to all regulatory and
administrative bodies having jurisdiction over the operations of the Manager or
the Trust, present or future, any information, reports or other material
obtained pursuant to this Agreement which any such body may request or require
pursuant to applicable laws or regulations.
E. Disclaimer of Liability. A copy of the Agreement and Declaration of Trust of
the Trust is on file with the Secretary of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on behalf of the
Board of Trustees of the Trust as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding upon the assets and property of the
Trust; provided, however, that the Agreement and Declaration of Trust of the
Trust provides that the assets of a particular series of the Trust shall under
no circumstances be charged with liabilities attributable to any other series of
the Trust and that all persons extending credit to, or contracting with or
having any claim against a particular series of the Trust, shall look only to
the assets of that particular series for payment of such credit, contract or
claim.
F. Notices. Any notice or other instrument in writing authorized or required by
this Agreement to be given to either party hereto will be sufficiently given if
addressed to such party and mailed or delivered to it at its office at the
address set forth below; namely:
(a) In the case of notices sent to the Trust to:
MassMutual Institutional Trusts
1295 State Street
Springfield, Massachusetts 01111
Attention: Stephen L. Kuhn
Vice President & Secretary
(b) In the case of notices sent to the Manager to:
<PAGE>
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
In the case of notices sent to either party, a copy to the Bank to:
Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02110
or at such other place as such party may from time to time designate in writing.
G. Insurance Coverage. The Fund and the Trust and the Manager shall each at all
times maintain such insurance coverages adequate for the nature of its
operations, including directors and officers, errors and omissions, and fidelity
bond insurance coverages.
H. Intentionally Omitted.
I. Parties. This Agreement will be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns; provided,
however, that this Agreement will not be assignable by the Trust without the
written consent of the Manager or by the Manager without the written consent of
the Trust, authorized and approved by its Board; and provided further that
termination proceedings pursuant to Article V, Section B hereof will not be
deemed to be an assignment within the meaning of this provision.
J. Governing Law. This Agreement and all performance hereunder will be governed
by the laws of the Commonwealth of Massachusetts.
K. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Administrative and
Shareholder Services Agreement to be executed as of the day and year first above
written.
MASSMUTUAL INSTITUTIONAL FUNDS
on behalf of MassMutual _________Fund
By: _________________________________
Stuart H. Reese
President
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: __________________________________
<PAGE>
EXHIBIT A
NET ASSET VALUE CALCULATIONS
MassMutual shall compute and, unless otherwise directed by the Board, determine
as of the close of business on the New York Stock Exchange on each day on which
said Exchange is open for unrestricted trading and as of such other hours, if
any, as may be authorized by the Board the net asset value and the public
offering price of a share of capital stock of the Trust, such determination to
be made in accordance with the provisions of the Articles and By-laws of the
Trust and Prospectus and Statement of Additional Information relating to the
Trust, as they may from time to time be amended, and any applicable resolutions
of the Board at the time in force and applicable and promptly to notify the
Trust, the proper exchange and the NASD or such other persons as the Trust may
request of the results of such computation and determination.
In computing the net asset value hereunder, MassMutual may rely in good faith
upon information furnished to it in respect of (i) the manner of accrual of the
liabilities of the Trust and in respect of liabilities of the Trust not
appearing on its books of account kept by the Bank, (ii) reserves, if any,
authorized by the Board or that no such reserves have been authorized, (iii) the
source of the quotations to be used in computing the net asset value, (iv) the
value to be assigned to any security for which no price quotations are
available, and (v) the method of computation of the public offering price on the
basis of the net asset value of the shares, and MassMutual shall not be
responsible for any loss occasioned by such reliance or for any good faith
reliance on any quotations received from a source pursuant to (iii) above.
<PAGE>
EXHIBIT B
FUND ACCOUNTING FUNCTIONS
MassMutual shall have the following responsibilities pursuant to ss.10 of
Article I(B):
1. Maintain the books and records of the Fund pursuant to applicable rules
of the Investment Company Act of 1940, including the following:
(a) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of
cash and all other debits and credits, as required;
(b) General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts as required;
(c) A monthly trial balance of all ledger accounts as required.
2. Daily pricing of all portfolio securities using securities valuations
or other methods as may be approved by the Fund's Trustees from time to
time.
3. Daily posting of all income and expense accruals and reconciliation of
general ledger balances and total shares outstanding.
4. Computation of the daily net asset value as of the close of business of
the New York Stock Exchange on each day on which the Exchange is open for
business (See Exhibit A: Net Asset Value Calculations).
5. Reporting of the daily net asset value and dividend distributions to
the Transfer Agent, the Fund, the Manager, NASDAQ, and others as
requested, by 5:30 p.m. each day.
6. Calculation of dividends and capital gain distributions.
7. Routine monitoring of the Fund's investments and providing prompt
notice of any violations of the diversification requirements, investment
restrictions or investment policies.
8. Calculation of yields and returns pursuant to SEC formulas, and any
other performance calculations as required.
9. Providing Fund prices and performance numbers to industry reporting
services.
10. Preparing reports on expense limitations and net asset value analysis,
as requested.
11. Maintain historical records of all Fund net asset values and dividend
distributions.
12. Preparing Blue Sky filings.
13. Preparing audited annual and unaudited semi-annual reports including
statement of investments, financial statements and footnotes.
14. Producing documents and responding to inquiries during SEC, IRS or
other governmental audits, as required.
15. Providing the portfolio managers with cash availability based on
security settlements, shareholder activity, maturities, and income
collections for the Fund by 8:30 a.m. each valuation day.
<PAGE>
Exhibit G(4)
APPENDIX A TO THE
AMENDED AND RESTATED TRANSFER AGENCY AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY,
MASSMUTUAL INSTITUTIONAL FUNDS
and
INVESTORS BANK & TRUST COMPANY
<PAGE>
APPENDIX A
To the
AMENDED AND RESTATED TRANSFER AGENCY AND SERVICE AGREEMENT
Between
MassMutual Institutional Funds, Massachusetts Mutual Life Insurance Company
and Investors Bank & Trust
Portfolios Classes
- ---------- -------
MassMutual Core Bond Fund A,Y,S,L
MassMutual International Equity Fund A,Y,S,L
MassMutual Short-Term Bond Fund A,Y,S,L
MassMutual Prime Fund A,Y,S,L
MassMutual Core Equity Fund A,Y,S,L
MassMutual Small Cap Value Equity Fund A,Y,S,L
MassMutual Balanced Fund A,Y,S,L
MassMutual Indexed Equity Fund A,Y,S,L
MassMutual Diversified Bond Fund A,Y,S,L
MassMutual Growth Equity Fund A,Y,S,L
MassMutual Mid Cap Growth Equity Fund A,Y,S,L
MassMutual Small Cap Growth Equity Fund A,Y,S,L
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Michael D. Hays
---------------------------
Name: Michael D. Hays
Title: Executive Vice President
INVESTORS BANK & TRUST COMPANY
By:____________________________
Name:__________________________
Title:_________________________
AGREED TO AND ACCEPTED BY
MASSMUTUAL INSTITUTIONAL FUNDS
By: /s/ Stuart H. Reese
---------------------------
Name: Stuart H. Reese
Title: President
<PAGE>
Exhibit H
FORM OF
CLASS L SHAREHOLDER SERVICE AGREEMENT
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
and
MASSMUTUAL INSTITUTIONAL FUNDS
<PAGE>
CLASS L SHAREHOLDER SERVICE AGREEMENT
This CLASS L SHAREHOLDER SERVICE AGREEMENT is being entered into as of the
3rd day of May, 1999 between MassMutual Institutional Funds (the "Trust"), in
respect of the classes of shares of its Funds set forth on Schedule A hereto,
and Massachusetts Mutual Life Insurance Company (the "Service Agent"). In
consideration of the mutual covenants hereinafter contained, it is hereby agreed
by and between the parties hereto as follows:
1. Pursuant to the terms of this Agreement, the Service Agent, itself, or
through other financial institutions or other intermediaries, will provide
shareholder support services (including personal services and the maintenance of
shareholder accounts) to the Trust and the holders of the classes of shares of
its Funds set forth on Schedule A hereto. These services shall include, but are
not limited to, the following functions: providing office space, equipment,
telephone facilities and various personnel, including clerical, supervisory and
computer personnel, as necessary or beneficial to establish and maintain
shareholder accounts and records; assisting in providing investment advice or
recommendations regarding Fund shares; providing information periodically to
shareholders showing their positions in a Fund's shares; delivery of current
Trust prospectuses, reports, notices, proxies, and proxy statements and other
informational materials; processing purchase and redemption transactions;
processing dividend payments; providing support services, including providing
information about the Trust and its Funds and answering routine shareholder
inquiries regarding the Trust and its Funds; assisting shareholders in changing
dividend options, account designations, and addresses; training personnel to
provide such services; and providing such other shareholder services as the
Trust reasonably requests.
2. To compensate the Service Agent for the services it provides and the
expenses it bears hereunder, the Trust will, on behalf of each Fund listed on
Schedule A, pay the Service Agent a service fee (the "Service Fee") accrued
daily and paid promptly (but in any event within three business days) after the
last day of each calendar month, at the applicable annual rate set forth on
Schedule A of the average daily net assets of the class or classes of shares of
such Funds listed on such Schedule A (determined as provided from time to time
in the prospectus of the Trust or as otherwise specified from time to time by
the Board of Trustees). The Service Fee paid under this Agreement is intended to
qualify as a "service fee" as defined in Section 2830 of the Conduct Rules of
the National Association of Securities Dealers, Inc. (or any successor
provision) as in effect from time to time. The Service Agent may retain such
other financial institutions or other intermediaries as it deems necessary to
aid it in the provision of the shareholder support services required to be
provided hereunder, and in connection with any such retention may compensate
such financial institutions or other intermediaries as it deems appropriate. In
no event, however, will the Trust have any liability for payment of the Service
Fee to any person other than the Service Agent.
If this Agreement is terminated as of any date not the last day of a
calendar month, then the fee payable to the Service Agent shall be paid promptly
(but in any event within three business days) after such date of termination.
3. This Agreement shall continue in effect for one year from the date of
its execution, and thereafter for successive periods of one year if this
Agreement is approved at least annually by the Trustees, including a majority of
the Trustees who are not interested persons of the Trust and have no direct or
indirect financial interest in the operation of this Agreement (the
"Disinterested Trustees").
4. Notwithstanding paragraph 3, this Agreement may be terminated at any
time, without the payment of any penalty, by the Service Agent, on the one hand,
or by the vote of a majority of the Disinterested Trustees, on the other, on not
more than thirty (60) days written notice.
5. Any agreement entered into pursuant to this Agreement shall be in
writing and shall be subject to termination as provided in Section 4.
<PAGE>
6. This Agreement may be amended at any time (including for the purpose of
making modifications to Schedule A hereto) by a written instrument executed by
the Service Agent and the Trust.
7. This Agreement shall be construed in accordance with the laws of The
Commonwealth of Massachusetts.
8. A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts and notice
is hereby given that this instrument is executed on behalf of the Trustees of
the Trust as Trustees and not individually, and that the obligations of or
arising out of this instrument are not binding upon any of the Trustees or
holders of beneficial interest in the Trust individually but are binding only
upon the assets and property attributable to the respective classes of shares of
the respective Funds indicated on Schedule A.
Witness the due execution hereof this 3rd day of May, 1999.
MASSMUTUAL INSTITUTIONAL FUNDS
By: /s/ Stuart H. Reese
---------------------------------------
Name: Stuart H. Reese
--------------------------------
Title: President
--------------------------------
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By: /s/ John V. Murphy
---------------------------------------
Name: John V. Murphy
--------------------------------
Title: Executive Vice President
--------------------------------
<PAGE>
SCHEDULE A
Class L Shares of the following Funds: Annual Rate
- -------------------------------------- -----------
MassMutual Prime Fund 0.15%
MassMutual Short-Term Bond Fund 0.15%
MassMutual Core Bond Fund 0.15%
MassMutual Balanced Fund 0.15%
MassMutual Core Equity Fund 0.15%
MassMutual Small Cap Value Equity Fund 0.15%
MassMutual International Equity Fund 0.15%
MassMutual Indexed Equity Fund 0.15%
MassMutual Diversified Bond Fund 0.15%
MassMutual Growth Fund 0.15%
MassMutual Mid Cap Growth Equity Fund 0.15%
MassMutual Small Cap Growth Equity Fund 0.15%
<PAGE>
Exhibit I(2)
OPINION AND
CONSENT OF
ROPES & GRAY
(with respect to Growth Equity, Mid Cap Growth, Small Cap Growth and
Diversified Bond Funds
<PAGE>
April 28, 1999
MassMutual Institutional Fund
1295 State Street
Springfield, MA 01111
Ladies and Gentlemen:
We are furnishing this opinion in connection with the proposed offer and
sale from time to time by MassMutual Institutional Funds (the "Trust") of (i) an
indefinite number of shares of beneficial interest (the "New Shares") in each of
MassMutual Diversified Bond Fund, MassMutual Growth Equity Fund, MassMutual Mid
Cap Growth Equity Fund and MassMutual Small Cap Growth Equity Fund (each a
"Fund") and (ii) an indefinite number of shares of beneficial interest
designated as "Class L" shares (the "Class L Shares" and, together with the New
Shares, the "Shares") in each of the foregoing Funds and in each of the existing
series of the Trust, in each case pursuant to a post-effective amendment to the
Trust's Registration Statement on Form N-1A (File No. 033-73824) under the
Securities Act of 1933, as amended.
We are familiar with the action taken by the Trustees of the Trust to
authorize the issuance of the Shares. We have examined the Trust's records of
Trustee action, its By-Laws and its Agreement and Declaration of Trust, as
amended to date. We have examined such other documents as we deem necessary for
the purposes of this opinion.
We assume that, upon sale of the Shares, the Trust will receive the
authorized consideration therefor, which will at least equal the net asset value
of the Shares.
We assume that appropriate action has been taken to register or qualify
the sale of the Shares under any applicable state laws regulating offerings and
sales of securities.
Based upon the foregoing, we are of the opinion that the Trust is
authorized to issue an unlimited number of Shares, and that, when the Shares are
issued and sold after the post-effective amendment to the Registration Statement
has been declared effective and the authorized consideration therefor is
received by the Trust, they will be validly issued, fully paid and nonassessable
by the Trust.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust". Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust or any
series of the Trust (a "Series"). However, the Agreement and Declaration of
Trust (i) provides that all persons extending credit to, contracting with or
having any claim against the Trust or a Series shall look only to the assets of
the Trust or the assets of the Series and that the shareholders shall not be
liable therefor, and (ii) requires that notice of such disclaimer of shareholder
liability be given in every note, bond, contract, instrument, writing,
certificate or undertaking made or issued by the Trustees or by any officers or
officer of the Trust. The Agreement and Declaration of Trust provides for
indemnification out of the assets of a particular Series for all loss and
expense of any shareholder held personally liable for the obligations of that
Series solely by reason of his or her being or having been a shareholder. Thus,
the risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the relevant Series would be
unable to meet its obligations.
We consent to the filing of this opinion as an exhibit to the aforesaid
post-effective amendment to the Trust's Registration Statement.
Very truly yours,
Ropes & Gray
<PAGE>
Exhibit J(2)
CONSENT OF INDEPENDENT ACCOUNTANTS
PRICEWATERHOUSECOOPERS LLP
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
MassMutual Institutional Funds:
We consent to the incorporation by reference in Post-Effective Amendment No. 11
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
Funds, 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.
Springfield, Massachusetts
April 29, 1999
<PAGE>
Exhibit J(3)
CONSENT OF INDEPENDENT AUDITORS
DELOITTE & TOUCHE, LLP
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
MassMutual Institutional Funds:
We consent to the use of our report dated March 26, 1999 appearing in the Annual
Report to Shareholders which has been incorporated by reference in
Post-Effective Amendment No. 11 to Registration Statement No. 33-73824 in the
Statement of Additional Information, which is a part of such Registration
Statement, and to the reference to us under the caption "Financial Highlights"
appearing in the Prospectus, which also is a part of such Registration
Statement.
DELOITTE & TOUCHE LLP
New York, New York
April 27, 1999
<PAGE>
Exhibit J(6)
POWER OF ATTORNEY
for
MICHAEL D. HAYS, Chief Financial Officer
<PAGE>
POWER OF ATTORNEY
The Undersigned, Chief Financial Officer of MassMutual Institutional Funds
(the "Trust"), does hereby constitute and appoint Stephen L. Kuhn, Jaqueline M.
Hummel and J.B. Kittredge, and each of them individually, as his true and lawful
attorneys and agents.
Such attorneys and agents shall have full power of substitution and to
take any and all action and execute any and all instruments on the Undersigned's
behalf as Chief Financial Officer of the Trust that said attorneys and agents
may deem necessary or advisable to enable the Trust to comply with the
Securities Act of 1933, as amended (the "1933 Act"), the Investment Company Act
of 1940, as amended (the "1940 Act"), and any rules, regulations, orders or
other requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This power of attorney applies to the registration, under the 1933
Act and the 1940 Act, of shares of beneficial interest of the Trust to be
offered by the Trust. It specifically authorizes such attorneys and agents to
sign the Undersigned's name on his behalf as Chief Financial Officer to the
Registration Statements and to any instruments or documents filed or to be filed
with the Commission under the 1933 Act and the 1940 Act in connection with such
Registration Statements, including any and all amendments to such statements,
documents, or instruments.
The Undersigned hereby ratifies and confirms all that said attorneys and
agents shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the undersigned has set his hand this 12th day of April,
1999.
/s/ Michael D. Hays
- -----------------------
Michael D. Hays
Chief Financial Officer
Witness:
/s/ Stephanie A. Odom
<PAGE>
Exhibit M(2)
CLASS A RULE 12b-1 PLAN
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
and
MASSMUTUAL INSTITUTIONAL FUNDS
(as to the Growth Equity, Mid Cap Growth Equity, Small Cap Growth Equity and
Diversified Bond Fund)
<PAGE>
MASSMUTUAL INSTITUTIONAL FUNDS
MASSMUTUAL GROWTH EQUITY, MID CAP GROWTH EQUITY,
SMALL CAP GROWTH EQUITY AND DIVERSIFIED BOND FUND
Service Plan and Agreement
This Plan and Agreement (the "Plan") constitutes the Service Plan of the Class A
shares of the MassMutual [Growth Equity, Mid Cap Growth Equity, Small Cap Growth
Equity and Diversified Bond Fund] (the "Fund"), a series of the MassMutual
Institutional Funds, a Massachusetts business trust (the "Trust"), adopted
pursuant to the provisions of Rule 12b-1 under the Investment Company Act of
1940 (the "Act") and the related agreement between the Trust and MML
Distributors, LLC, the principal underwriter of the Trust's shares (the
"Distributor"). During the effective term of this Plan, the Trust may make
payments to Massachusetts Mutual Life Insurance Company, the Fund's
Administrator ("MassMutual"), upon the terms and conditions hereinafter set
forth:
Section 1. The Trust will pay service fees to MassMutual for services provided
and expenses incurred by it for purposes of maintaining or providing personal
services to Class A shareholders (the "Servicing Fee"). The amount of such
payments and the purposes for which they are made shall be determined by the
Qualified Trustees (as defined below). The Servicing Fee may be spent by
MassMutual on account of personal services rendered to Class A shareholders of
the 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 Fund's 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 provide information periodically to Class A shareholders
showing their position in Class A shares; who prepare, print and deliver
prospectuses and shareholder reports to Class A shareholders; who oversee
compliance with federal and state laws pertaining to the sale of Class A shares;
who issue account statements to Class A shareholders; who forward communications
from the Fund to Class A shareholders; who render advice regarding the
particular shareholder account options offered by the Fund in light of
shareholder needs; who provide and maintain elective shareholder services; who
furnish shareholder sub-accounting; 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.
Payments under this Section 1 of the Plan shall not exceed in any fiscal year
the annual rate of .25% of the Fund's average daily net assets attributable to
Class A shares. A majority of the Qualified Trustees may, at any time and from
time to time, reduce the amount of such payments, or may suspend the operation
of the Plan for such period or periods of time as they may determine.
Section 2. To the extent that any payments made by the Fund to MassMutual,
including payment of management and administrative fees, should be deemed to be
indirect financing of any activity primarily intended to result in the sale of
shares issued by the Fund within the context of Rule 12b-1 under the Act, then
such payments shall be deemed to be authorized by this Plan.
Section 3. This Plan shall not take effect until it has been approved, together
with any related agreements, by votes of the majority (or whatever greater
percentage may, from time to time, be required by Section 12(b) of the Act or
the rules and regulations thereunder) of both (i) the Trustees of the Trust, and
(ii) the Qualified Trustees of the Trust, cast in person at a meeting called for
the purpose of voting on this Plan or such agreement.
Section 4. This Plan shall continue in effect for a period of more than one year
after it takes effect only so long as such continuance is specifically approved
at least annually in the manner provided for approval of this Plan in Section 3.
<PAGE>
Section 5. MassMutual shall provide to the Trustees of the Trust, and the
Trustees shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
Section 6. This Plan may be terminated at any time by vote of a majority of the
Qualified Trustees, or by vote of a majority of the outstanding Class A shares
of the Fund.
Section 7. All agreements with any person relating to implementation of this
Plan shall be in writing, and any agreement related to this Plan shall provide:
(a) that such agreement may be terminated at any time, without payment of
any penalty, by vote of a majority of the Qualified Trustees or by vote of
a majority of the outstanding Class A shares of the Fund, on not more than
60 days' written notice to any other party to the agreement; and
(b) that such agreement shall terminate automatically in the event of its
assignment.
Section 8. This Plan may not be amended to increase materially the amount
permitted pursuant to Section 1 hereof without the approval of a majority of the
outstanding Class A shares of the Fund, and all material amendments to this Plan
shall be approved in the manner provided for approval of this Plan in Section 3.
Section 9. As used in this Plan, (a) the term "Qualified Trustees" shall mean
those Trustees of the Trust who are not interested persons of the Trust, and
have no direct or indirect financial interest in the operation of this Plan or
any agreements related to it, and (b) the terms "interested person" and "vote of
a majority of the outstanding voting securities" shall have the respective
meanings specified in the Act and the rules and regulations thereunder, subject
to such exemptions as may be granted by the Securities and Exchange Commission.
Section 10. A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts and notice
is hereby given that this instrument is executed on behalf of the Trustees of
the Trust as Trustees and not individually, and that the obligations of or
arising out of this instrument are not binding upon any of the Trustees,
officers or shareholders individually but are binding only upon the assets and
property attributable to the Class A shares of the Fund.
Effective as of the 3rd day of May, 1999.
MASSMUTUAL INSTITUTIONAL MASSACHUSETTS MUTUAL LIFE
FUNDS on behalf of the INSURANCE COMPANY
MassMutual Growth Equity,
Mid Cap Growth Equity,
Small Cap Growth Equity and
Diversified Bond Fund
By: /s/ Stuart H. Reese By: /s/ John V. Murphy
----------------------- -------------------------------
Name: Stuart H. Reese Name: John V. Murphy
Title: President Title: Executive Vice President
<PAGE>
Exhibit M(4)
CLASS Y RULE 12b-1 PLAN
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
and
MASSMUTUAL INSTITUTIONAL FUNDS
(as to the Growth Equity, Mid Cap Growth Equity, Small Cap Growth Equity and
Diversified Bond Fund)
<PAGE>
MASSMUTUAL INSTITUTIONAL FUNDS
CLASS Y SHARES
Distribution and Service Plan and Agreement
This Plan and Agreement (the "Plan") constitutes the Distribution and Service
Plan of the Class Y shares of the MassMutual [GROWTH EQUITY, MID CAP GROWTH
EQUITY, SMALL CAP GROWTH EQUITY and DIVERSIFIED BOND FUND] (the "Fund"), a
series of the MassMutual Institutional Funds, a Massachusetts business trust
(the "Trust"), adopted pursuant to the provisions of Rule 12b-1 under the
Investment Company Act of 1940 (the "Act") and the related agreement between the
Trust and MML Distributors, LLC., the principal underwriter of the Trust's
shares. During the effective term of this Plan, the Trust may make payments to
Massachusetts Mutual Life Insurance Company ("MassMutual") upon the terms and
conditions hereinafter set forth:
Section 1. To the extent that any payments made by the Fund to MassMutual,
including payment of management and administrative fees, should be deemed to be
indirect financing of any activity primarily intended to result in the sale of
shares issued by the Fund within the context of Rule 12b-1 under the Act, then
such payments shall be deemed to be authorized by the Plan.
Section 2. This Plan shall not take effect until it has been approved, together
with any related agreements, by votes of the majority (or whatever greater
percentage may, from time to time, be required by Section 12(b) of the Act or
the rules and regulations thereunder) of both (i) the Trustees of the Trust, and
(ii) the Qualified Trustees of the Trust, cast in person at a meeting called for
the purpose of voting on this Plan or such agreement.
Section 3. This Plan shall continue in effect for a period of more than one year
after it takes effect only so long as such continuance is specifically approved
at least annually in the manner provided for approval of this Plan in Section 2.
Section 4. MassMutual shall provide to the Trustees of the Trust, and the
Trustees shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
Section 5. This Plan may be terminated at any time by vote of a majority of the
Qualified Trustees, or by vote of a majority of the outstanding Class Y shares
of the Fund.
Section 6. All agreements with any person relating to implementation of this
Plan shall be in writing, and any agreement related to this Plan shall provide:
(a) that such agreement may be terminated at any time, without payment of
any penalty, by vote of a majority of the Qualified Trustees or by vote of
a majority of the outstanding Class Y shares of the Fund, on not more than
60 days' written notice to any other party to the agreement; and
(b) that such agreement shall terminate automatically in the event of its
assignment.
Section 7. This Plan may not be amended to increase materially the amount of
distribution expenses permitted pursuant to Section 1 hereof without the
approval of a majority of the outstanding Class Y shares of the Fund, and all
material amendments to this Plan shall be approved in the manner provided for
approval of this Plan in Section 2.
Section 8. As used in this Plan, (a) the term "Qualified Trustees" shall mean
those Trustees of the Trust who are not interested persons of the Trust, and
have no direct or indirect financial interest in the operation of this Plan or
any agreements related to it, and (b) the terms "interested person" and "vote of
a majority of the outstanding voting securities" shall have the respective
meanings specified in the Act and the rules and regulations thereunder, subject
to such exemptions as may be granted by the Securities and Exchange Commission.
<PAGE>
Section 9. A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts and notice
is hereby given that this instrument is executed on behalf of the Trustees of
the Trust as Trustees and not individually, and that the obligations of or
arising out of this instrument are not binding upon any of the Trustees,
officers or shareholders individually but are binding only upon the assets and
property attributable to the Class Y shares of the Fund.
Effective as of the 3rd day of May, 1999.
MASSMUTUAL INSTITUTIONAL
FUNDS, on behalf of MASSMUTUAL
GROWTH EQUITY, MID CAP GROWTH EQUITY,
SMALL CAP GROWTH EQUITY and DIVERSIFIED BOND FUND
BY: /s/ Stuart H. Reese
---------------------------------------------
Name: Stuart H. Reese
Title: President
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
BY: /s/ John V. Murphy
---------------------------------------------
Name: John V. Murphy
Title: Executive Vice President
<PAGE>
Exhibit M(5)
CLASS L RULE 12b-1 PLAN
Between
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
and
MASSMUTUAL INSTITUTIONAL FUNDS
(as to the Growth Equity, Mid Cap Growth Equity, Small Cap Growth Equity and
Diversified Bond Fund)
<PAGE>
MASSMUTUAL INSTITUTIONAL FUNDS
CLASS L SHARES
Distribution and Service Plan and Agreement
This Plan and Agreement (the "Plan") constitutes the Distribution and Service
Plan of the Class L shares of the MASSMUTUAL [GROWTH EQUITY, MID CAP GROWTH
EQUITY, SMALL CAP GROWTH EQUITY and DIVERSIFIED BOND FUND] (the "Fund"), a
series of the MassMutual Institutional Funds, a Massachusetts business trust
(the "Trust"), adopted pursuant to the provisions of Rule 12b-1 under the
Investment Company Act of 1940 (the "Act") and the related agreement between the
Trust and MML Distributors, LLC., the principal underwriter of the Trust's
shares. During the effective term of this Plan, the Trust may make payments to
Massachusetts Mutual Life Insurance Company ("MassMutual") upon the terms and
conditions hereinafter set forth:
Section 1. To the extent that any payments made by the Fund to MassMutual,
including payment of management and administrative fees, should be deemed to be
indirect financing of any activity primarily intended to result in the sale of
shares issued by the Fund within the context of Rule 12b-1 under the Act, then
such payments shall be deemed to be authorized by the Plan.
Section 2. This Plan shall not take effect until it has been approved, together
with any related agreements, by votes of the majority (or whatever greater
percentage may, from time to time, be required by Section 12(b) of the Act or
the rules and regulations thereunder) of both (i) the Trustees of the Trust, and
(ii) the Qualified Trustees of the Trust, cast in person at a meeting called for
the purpose of voting on this Plan or such agreement.
Section 3. This Plan shall continue in effect for a period of more than one year
after it takes effect only so long as such continuance is specifically approved
at least annually in the manner provided for approval of this Plan in Section 2.
Section 4. MassMutual shall provide to the Trustees of the Trust, and the
Trustees shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
Section 5. This Plan may be terminated at any time by vote of a majority of the
Qualified Trustees, or by vote of a majority of the outstanding Class L shares
of the Fund.
Section 6. All agreements with any person relating to implementation of this
Plan shall be in writing, and any agreement related to this Plan shall provide:
(a) that such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the Qualified
Trustees or by vote of a majority of the outstanding Class L shares
of the Fund, on not more than 60 days' written notice to any other
party to the agreement; and
(b) that such agreement shall terminate automatically in the event
of its assignment.
Section 7. This Plan may not be amended to increase materially the amount of
distribution expenses permitted pursuant to Section 1 hereof without the
approval of a majority of the outstanding Class L shares of the Fund, and all
material amendments to this Plan shall be approved in the manner provided for
approval of this Plan in Section 2.
Section 8. As used in this Plan, (a) the term "Qualified Trustees" shall mean
those Trustees of the Trust who are not interested persons of the Trust, and
have no direct or indirect financial interest in the operation of this Plan or
any agreements related to it, and (b) the terms "interested person" and "vote of
a majority of the outstanding voting securities" shall have the respective
meanings specified in the Act and the rules and regulations thereunder, subject
to such exemptions as may be granted by the Securities and Exchange Commission.
<PAGE>
Section 9. A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts and notice
is hereby given that this instrument is executed on behalf of the Trustees of
the Trust as Trustees and not individually, and that the obligations of or
arising out of this instrument are not binding upon any of the Trustees,
officers or shareholders individually but are binding only upon the assets and
property attributable to the Class L shares of the Fund.
Effective as of the 3rd day of May, 1999.
MASSMUTUAL INSTITUTIONAL
FUNDS, on behalf of MASSMUTUAL
GROWTH EQUITY, MID CAP GROWTH EQUITY,
SMALL CAP GROWTH EQUITY and DIVERSIFIED BOND FUND
BY: /s/ Stuart H. Reese
--------------------
Name: Stuart H. Reese
Title: President
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
BY: /s/ John V. Murphy
----------------------
Name: John V. Murphy
Title: Executive Vice President
<PAGE>
Exhibit O
AMENDED AND RESTATED RULE 18F-3 PLAN
<PAGE>
FORM OF
AMENDED AND RESTATED
RULE 18F-3 PLAN
Adopted February 1, 1999
Effective May 3, 1999
Introduction
MassMutual Institutional Funds (the "Trust") is a Massachusetts business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end management investment company. Massachusetts Mutual Life
Insurance Company (the "Adviser") is a mutual life insurance company organized
under Massachusetts law. MML Distributors, LLC (the "Distributor") is a
registered broker-dealer which serves as principal underwriter to the Trust. The
Trust consists of sixteen separate, authorized series and may add additional
series from time to time in the future (the "Funds"), each of which has and will
have separate investment objectives. Prior to the adoption of this Second
Amended and Restated Rule 18f-3 Plan, each Fund had three (3) classes of shares
- - Class A, Class Y and Class S. Upon the Effective Date of this Second Amended
and Restated Rule 18f-3 Plan, each Fund will have four (4) classes of shares -
Class S, Class Y, Class L and Class A.
This plan is prepared, and is being adopted by the Board of Trustees, pursuant
to the requirements of Rule 18f-3 under the 1940 Act (the "Rule 18f-3 Plan").
Description of Classes
Class S. Class S shares are available to separate investment accounts of the
Adviser and life insurance company affiliates of the Adviser ("Separate
Accounts"). Interests in the Separate Accounts are generally offered only to
defined contribution plans and defined benefit plans under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code") and certain other plans
in accordance with the Federal securities laws and the rules and regulations
thereunder. In addition, Class S shares may also be purchased directly by
defined contribution and defined benefit plans under Code Section 401(a), and by
other retirement plans, which in either case have plan assets in excess of
$100,000,000, as well as other institutional investors with assets generally in
excess of $100,000,000, as provided for in the Prospectus and/or Statement of
Additional Information contained in the Trust's Registration Statement, as
amended from time to time (the "current Prospectus and/or SAI"). Class S shares
are offered at net asset value without a front-end or contingent deferred sales
charge.
Class Y. Class Y shares are marketed primarily to nonqualified deferred
compensation plans whereby the employer sponsor enters into an administrative
services agreement with the Adviser, or an affiliate of the Adviser, with
respect to administration of the plan. Class Y shares may also be marketed to
defined contribution plans and defined benefit plans under Code Section 401(a),
tax-sheltered annuity plans under Code Section 403(b) and other retirement
plans, in each case with plan assets in excess of a determined amount as
provided for in the current Prospectus and/or SAI, 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 marketed to other institutional
investors, including the Adviser and Separate Accounts, and other registered
investment companies (or any series thereof) advised by the Adviser or an
affiliate of the Adviser, in each case as provided for in the current Prospectus
and/or SAI. Class Y shares are offered at net asset value without a front-end or
contingent deferred sales charge.
Class L. Class L Shares are marketed primarily to defined contribution and
defined benefit plans that qualify under Code Section 401(a), tax sheltered
annuity plans, and other retirement plans, in each case with plan assets in
excess of a determined amount as provided for in the current Prospectus and/or
SAI, and other institutional investors, generally as provided for in the current
Prospectus and/or SAI, and that use the services of an intermediary performing
third party administration and other shareholder services. Class L shares may
also be marketed to Separate Accounts of the Adviser, as provided
<PAGE>
for in the current Prospectus and/or SAI. Class L shares are offered at net
asset value without a front-end or contingent deferred sales charge.
Class A. Class A shares are marketed primarily to defined contribution plans and
defined benefit plans under Code Section 401(a), individual retirement accounts
described in Code Section 408, and tax-sheltered annuity custodial accounts
described in Code Section 403(b)(7), in each case as provided for in the current
Prospectus and/or SAI. Class A shares may also be marketed to 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 or other
institutional or sophisticated investors, in each case, as provided for in the
current Prospectus and/or SAI. Class A shares may also be sold to Separate
Accounts. Class A shares may also be offered to present or former officers,
directors, trustees and employees (and their spouses, parents, children and
siblings) of the Trust, the Adviser and its affiliates and retirement plans
established by them for their employees.
Class A shares may be offered with a front-end sales charge, provided that any
such front-end sales charge is in accordance with the current Prospectus and/or
SAI, and, provided further, that any such front-end sales charge shall not
exceed 5.75%. In cases where a front-end sales charge is not imposed and Class A
shares are offered at net asset value, there may be contingent deferred sales
charges applied for redemptions occurring during a designated period period
following the first purchase of Class A shares.
Distribution and Servicing Arrangements
Class S. Class S shares may be sold to Separate Accounts and to certain large
benefit and retirement plans and other institutional investors as described
above under "Description of Classes". Where Class S shares are sold "direct" by
employees of the Adviser to such benefit plans, retirement plans and
institutional investors, employees of the Adviser shall be registered
representatives of a broker-dealer affiliate of the Adviser.
Class Y. It is anticipated that Class Y shares will be marketed primarily
through sales efforts of employees of the Adviser without an intermediary. In
such cases, employees of the Adviser shall be registered representatives of a
broker-dealer affiliate of the Adviser. Class Y shares may also be marketed
through independent and affiliated broker/dealers or with the assistance of
independent intermediaries. There will not be any direct sales by employees of
the Adviser when Class Y shares are sold to Separate Accounts of the Adviser.
Class L. It is anticipated that Class L shares will be marketed primarily
through independent and/or affiliated intermediaries acting as third party
administrators, investment advisers and/or shareholder servicing agents. In such
cases, these intermediaries shall be registered representatives of a broker. In
addition, there may also be "direct" sales of Class L shares by employees of the
Adviser, in which case such employees of the Adviser shall be registered
representatives of a broker-dealer affiliate of the Adviser. There will not be
any direct sales by employees of the Adviser when Class L shares are sold to
Separate Accounts of the Adviser, and sales of interests in the Separate
Accounts need not be made by registered representatives.
Class A. It is anticipated that Class A shares will primarily be marketed both
through independent and affiliated broker/dealers with the assistance of
independent intermediaries, but Class A shares also may be sold directly by
employees of the Adviser. In addition, there may also be "direct" sales of Class
A shares by employees of the Adviser in the case of Class A shares which are
sold to participants of qualified plans who roll their plan distributions into
individual retirement accounts. In either case, such employees of the Adviser
shall be registered representatives of a broker-dealer affiliate of the Adviser.
There will not be any direct sales by employees of the Adviser when Class A
shares are sold to Separate Accounts of the Adviser, and sales of interests in
the Separate Accounts need not be made by registered representatives.
Servicing Arrangements -- Fees
In General. Each Fund has adopted or will adopt with respect to Class A shares a
Service Plan and Agreement pursuant to Rule 12b-1 under the 1940 Act
<PAGE>
(a "Plan") which will provide for payment of service fees to the Adviser (the
"Class A Service Fee") for rendering personal services to Class A shareholders
and/or maintenance of Class A shareholder accounts. The Adviser will not use the
Rule 12b-1 Plan fees charged to Class A shares within a Fund to support the
distribution, marketing or shareholder services of any other class within the
Fund. A defensive Rule 12b-1 Plan has been adopted for Class L and Class Y
shares of each Fund. Each Fund has also approved or will approve with respect to
Class L shares a Class L Shareholder Service Agreement which will provide for
payment of shareholder service fees to the Adviser (the "Class L Service Fee")
for rendering or causing others to render personal services to Class L
Shareholders and/or for maintaining Class L shareholder accounts.
Class A. The Class A Service Plan provides that the Class A Service Fee will be
paid to the Adviser at an annual rate not to exceed .25% of the average daily
net asset value of the Class A shares.
Class L. . Class L shares are not subject to Rule 12b-1 service fees. The Class
has a defensive 12b-1 plan. Any expenses related to sales and distribution would
be borne by the Adviser and not by the Trust.
Class Y. Class Y shares are not subject to any service fees; although the Class
does have a defensive 12b-1 Plan. Any expenses related to sales and distribution
would be borne by the Adviser and not by the Trust.
Class S. Class S shares are not subject to Rule 12b-1 fees because there are not
expected to be any distribution or service expenses attributable to Class S due
to the nature of the investors eligible to purchase Class S shares.
Administrative Arrangements
The Adviser has entered into a separate Administrative and Shareholder Services
Agreement for each Fund pursuant to which the Adviser is compensated for
administrative and shareholder services rendered and expenses incurred by it in
the rendering of such services and for the cost of bearing some Class expenses,
such as Federal and state registration fees, printing and postage. It is
anticipated that the Adviser will provide or cause to be provided extensive
services to Class A shareholders, specialized and targeted third party
administration and/or other services to Class L shareholders, modest services to
Class Y shareholders and limited services to Class S shareholders. A Class L
Shareholder Service Agreement provides for a Class L Service Fee from time to
time to be paid to the Adviser (currently at an annual rate not to exceed .15%
of the average daily net asset value of the Class L shares). The Trust, on
behalf of each Fund, pays the Adviser a monthly fee for the services performed
at an annual rate of the average daily net assets of the applicable class of
shares of the Fund within the range specified in the current Prospectus and/or
SAI. The administrative services fee is an Identifiable Class Expense.
Also, as described above in the section entitled Servicing Arrangement -- Fees,
Class A shares will bear the Class A service fee.
Administrative Arrangements - Fees
Each class of each Fund shall bear an administrative fee as set forth in each
Fund's Administrative and Shareholder Services Agreement. Such fees will vary
from class to class and from Fund to Fund. Set forth below is the range of
administrative fees paid by each class of the existing twelve Funds on the
effective date of this Rule 18f-3 Plan: MassMutual Prime Fund; MassMutual
Short-Term Bond Fund; MassMutual Core Bond Fund; MassMutual Balanced Fund;
MassMutual Core Equity Fund; MassMutual Small Cap Value Equity Fund; MassMutual
International Equity Fund; MassMutual Indexed Equity Fund; MassMutual
Diversified Bond Fund; MassMutual Growth Equity Fund; MassMutual Mid Cap Growth
Equity Fund; and MassMutual Small Cap Growth Equity Fund.
The MassMutual Balanced Fund is identified separately. That Fund is an asset
allocation Fund comprised of three separate portfolios. That arrangement
necessitates that additional administrative services be provided.
The MassMutual Indexed Equity Fund is identified separately. That Fund is a
spoke of an unaffiliated Master Portfolio. MassMutual is the administrator of
the MassMutual Indexed Equity Fund and incurs higher administrative services in
connection with the hub-spoke arrangement.
<PAGE>
The MassMutual Small Cap Growth Equity Fund is identified separately. The
Manager has appointed two sub-advisers for that Fund, each of which will manage
50% of the Fund's portfolio. This arrangement will necessitate that additional
administrative services be provided.
Class A. Class A shares will bear an annual administrative service fee not to
exceed a range of between .2932% and .3345%. The annual administrative service
fee for the MassMutual Balanced Fund is .3952%. The annual administrative
service fee for the MassMutual Indexed Equity Fund is .5345%. The annual
administrative service fee for the MassMutual Small Cap Growth Equity Fund is
.4075%.
Class L. Class L shares will bear an annual administrative service fee not to
exceed a range of between .2932% and .3345%. The annual administrative service
fee for the MassMutual Balanced Fund is .3952%. The annual administrative
service fee for the MassMutual Indexed Equity Fund is .5345%. The annual
administrative service fee for the MassMutual Small Cap Growth Equity Fund is
.4075%.
Class Y. Class Y shares will bear an annual administrative service fee not to
exceed a range of between .1432% and .1845%. The annual administrative service
fee for the MassMutual Balanced Fund is .2452%. The annual administrative
service fee for the MassMutual Indexed Equity Fund is .3845%. The annual
administrative service fee for the MassMutual Small Cap Growth Equity Fund is
.2575%.
Class S. Class S shares will bear an annual administrative service fee not to
exceed a range of between .0675% and .1232%. The annual administrative service
fee for the MassMutual Balanced Fund is .0852%. The annual administrative
service fee for the MassMutual Indexed Equity Fund is .3545%. The annual
administrative service fee for the MassMutual Small Cap Growth Equity Fund is
.1175%.
Voting and Other Rights and Obligations
Each share of the Trust, regardless of class, will have identical voting,
dividend, liquidation and other rights, preferences, powers, restrictions,
limitations, qualifications, designations and terms and conditions, except that:
(a) each class will have a different class designation;
(b) each class offered in connection with a Rule 12b-1 Plan will bear the
expense of the payments that would be made pursuant to such Rule 12b-1
Plan;
(c) each class will also bear certain other expenses that are directly
attributable only to the class (the "Identifiable Class Expenses," as
described in more detail under "Allocation of Fund Expenses Identifiable
Class Expenses");
(d) only the holders of the shares of the appropriate class involved will
be entitled to vote on matters pertaining to a Rule 12b-1 Plan relating to
such class (e.g., the adoption, amendment or termination of a Rule 12b-1
Plan) in accordance with the requirements and procedures set forth in Rule
12b-1;
(e) each class will have separate voting rights on any matter submitted to
shareholders in which the interest of one class differs from the interest
of any other class; and
(f) each class will have different exchange privileges described below.
Dividends paid by a Fund with respect to each class of shares, to the extent any
dividends are paid, will be calculated in the same manner, at the same time, on
the same day and will be in the same amount, except that fee payments made under
the Rule 12b-1 Plans relating to a particular class of shares will be borne
exclusively by such class and except that any Identifiable Class Expenses may be
borne by the applicable class of shares.
<PAGE>
Allocation of Fund Expenses
Unattributed Expenses. All expenses of the Trust that cannot be attributed
directly to any one Fund will be allocated to each Fund based on the relative
net assets of such Fund. All expenses of a Fund that cannot be allocated to any
one particular class will be allocated to each class based on the relative net
assets of such class. An independent expert previously reviewed the methodology
and procedures for the proper allocation of expenses among the former Class 1,
Class 2, Class 3 and Class 4 shares and the expert rendered a report that
demonstrated that such methodology and procedures were adequate to ensure that
such allocations will be made in an appropriate manner, subject to the
conditions and limitations in the report. The methodology and procedures for the
proper allocation of expenses among Class A, Class L, Class Y and Class S shares
will be the same as those reviewed by the independent expert for the Class 1,
Class 2, Class 3 and Class 4 shares.
Identifiable Class Expenses. Identifiable Class Expenses will be allocated to a
particular class of a Fund and are limited to:
(a) transfer agency fees attributable to a specific class of shares;
(b) printing and postage expenses related to preparing and distributing
materials such as shareholder reports, prospectuses and proxies to current
shareholders of a specific class;
(c) Blue Sky registration fees incurred by a class of shares;
(d) SEC registration fees incurred by a class of shares;
(e) shareholder and administrative service fees payable under each Fund's
respective administrative service agreement or shareholder service
agreement, as applicable; and
(f) any other incremental expenses subsequently identified that should be
properly allocated to one class which shall be approved by the Board and
is consistent with Rule 18f-3 and any SEC interpretations thereof.
Waivers and Reimbursements of Expenses
The Adviser may choose to reimburse or waive the Identifiable Class Expenses of
certain classes on a voluntary, temporary basis. The amount of such expenses
waived or reimbursed by the Adviser may vary from class to class. In addition,
the Adviser may waive or reimburse expenses attributable to the Trust generally
and/or expenses attributable to a Fund (with or without a waiver or
reimbursement of Identifiable Class Expenses) but only if the same proportionate
amount of such expenses are waived or reimbursed for each class. Thus, any
expenses attributable to the Trust generally that are waived or reimbursed would
be credited to each class of a Fund based on the relative net assets of the
classes.
Similarly, any expenses attributable to a Fund that are waived or reimbursed
would be credited to each class of that Fund according to the relative net
assets of the classes. The Adviser's flexibility to waive expenses may be
subject to tax considerations.
<PAGE>
No Conversion Provision
In General. Class A, Class L, Class Y and Class S shares of the Funds do not
have a conversion feature.
Exchange Provision
Class A. Shareholders of Class A shares of each Fund will generally be entitled
to exchange those shares at net asset value for Class A shares of other Funds
that offer Class A shares. Shareholders of Class A shares continue to be subject
to the Rule 12b-1 Plan fee applicable to Class A shares after the exchange.
Class L. Shareholders of Class L shares of each Fund will generally be entitled
to exchange those shares at net asset value for Class L shares of other Funds
that offer Class L shares.
Class Y. Shareholders of Class Y shares of each Fund will generally be entitled
to exchange those shares at net asset value for Class Y shares of other Funds
that offer Class Y shares.
Class S. Shareholders of Class S shares of each Fund will generally be entitled
to exchange those shares at net asset value for Class S shares of other Funds
that offer Class S shares.
Effective Date
This Amended and Restated Rule 18f-3 Plan shall become effective on May 3, 1999.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> Prime Fund Class A
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 247,916,928
<INVESTMENTS-AT-VALUE> 247,957,829
<RECEIVABLES> 8,305,239
<ASSETS-OTHER> 1,496
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 256,264,564
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,832,071
<TOTAL-LIABILITIES> 3,832,071
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 252,393,164
<SHARES-COMMON-STOCK> 794
<SHARES-COMMON-PRIOR> 758
<ACCUMULATED-NII-CURRENT> 19,112
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (20,684)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 40,901
<NET-ASSETS> 119,698
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6,757
<OTHER-INCOME> 0
<EXPENSES-NET> 1,404
<NET-INVESTMENT-INCOME> 5,353
<REALIZED-GAINS-CURRENT> (1)
<APPREC-INCREASE-CURRENT> 31
<NET-CHANGE-FROM-OPS> 5,383
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 94,659
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 165
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 629
<NET-CHANGE-IN-ASSETS> 5,383
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (18,160)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,143,154
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,394,367
<AVERAGE-NET-ASSETS> 116,709
<PER-SHARE-NAV-BEGIN> 691.21
<PER-SHARE-NII> 32.03
<PER-SHARE-GAIN-APPREC> (0.09)
<PER-SHARE-DIVIDEND> (572.32)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 150.83
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> Prime Fund Class Y
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 247,916,928
<INVESTMENTS-AT-VALUE> 247,957,829
<RECEIVABLES> 8,305,239
<ASSETS-OTHER> 1,496
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 256,264,564
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,832,071
<TOTAL-LIABILITIES> 3,832,071
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 252,393,164
<SHARES-COMMON-STOCK> 3,689
<SHARES-COMMON-PRIOR> 1,547
<ACCUMULATED-NII-CURRENT> 19,112
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (20,684)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 40,901
<NET-ASSETS> 556,080
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 26,541
<OTHER-INCOME> 0
<EXPENSES-NET> 3,308
<NET-INVESTMENT-INCOME> 23,233
<REALIZED-GAINS-CURRENT> 13
<APPREC-INCREASE-CURRENT> (359)
<NET-CHANGE-FROM-OPS> 22,887
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 440,359
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,752
<NUMBER-OF-SHARES-REDEEMED> 2,987
<SHARES-REINVESTED> 2,924
<NET-CHANGE-IN-ASSETS> 322,341
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (18,160)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,143,154
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,394,367
<AVERAGE-NET-ASSETS> 445,918
<PER-SHARE-NAV-BEGIN> 690.78
<PER-SHARE-NII> 36.67
<PER-SHARE-GAIN-APPREC> (1.30)
<PER-SHARE-DIVIDEND> (575.42)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 150.73
<EXPENSE-RATIO> 0.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> Prime Fund Class S
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 247,916,928
<INVESTMENTS-AT-VALUE> 247,957,829
<RECEIVABLES> 8,305,239
<ASSETS-OTHER> 1,496
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 256,264,564
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,832,071
<TOTAL-LIABILITIES> 3,832,071
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 252,393,164
<SHARES-COMMON-STOCK> 1,670,110
<SHARES-COMMON-PRIOR> 1,600,181
<ACCUMULATED-NII-CURRENT> 19,112
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (20,684)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 40,901
<NET-ASSETS> 251,756,715
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 14,658,481
<OTHER-INCOME> 0
<EXPENSES-NET> 1,389,655
<NET-INVESTMENT-INCOME> 13,268,826
<REALIZED-GAINS-CURRENT> (2,536)
<APPREC-INCREASE-CURRENT> 62,387
<NET-CHANGE-FROM-OPS> 13,328,677
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12,743,282
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,115,282
<NUMBER-OF-SHARES-REDEEMED> 4,129,942
<SHARES-REINVESTED> 84,589
<NET-CHANGE-IN-ASSETS> 10,386,302
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (18,160)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,143,154
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,394,367
<AVERAGE-NET-ASSETS> 253,471,522
<PER-SHARE-NAV-BEGIN> 150.84
<PER-SHARE-NII> 8.10
<PER-SHARE-GAIN-APPREC> 0.03
<PER-SHARE-DIVIDEND> (8.23)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 150.74
<EXPENSE-RATIO> 0.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 19
<NAME> Short Term Bond Fund Class A
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 280,602,336
<INVESTMENTS-AT-VALUE> 283,447,096
<RECEIVABLES> 1,208,411
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 131,503
<TOTAL-ASSETS> 284,787,010
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 715,678
<TOTAL-LIABILITIES> 715,678
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 281,302,233
<SHARES-COMMON-STOCK> 12,541
<SHARES-COMMON-PRIOR> 11,916
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (75,661)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,844,760
<NET-ASSETS> 129,354
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,739
<OTHER-INCOME> 0
<EXPENSES-NET> 1,507
<NET-INVESTMENT-INCOME> 6,232
<REALIZED-GAINS-CURRENT> 6
<APPREC-INCREASE-CURRENT> 681
<NET-CHANGE-FROM-OPS> 6,919
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,032
<DISTRIBUTIONS-OF-GAINS> 137
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,943
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 598
<NET-CHANGE-IN-ASSETS> 6,918
<ACCUMULATED-NII-PRIOR> 61,151
<ACCUMULATED-GAINS-PRIOR> 321,873
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,163,327
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,418,380
<AVERAGE-NET-ASSETS> 125,989
<PER-SHARE-NAV-BEGIN> 10.25
<PER-SHARE-NII> 0.52
<PER-SHARE-GAIN-APPREC> 0.05
<PER-SHARE-DIVIDEND> (0.50)
<PER-SHARE-DISTRIBUTIONS> (0.01)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.31
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 19
<NAME> Short Term Bond Fund Class Y
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 280,602,336
<INVESTMENTS-AT-VALUE> 283,447,096
<RECEIVABLES> 1,208,411
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 131,503
<TOTAL-ASSETS> 284,787,010
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 715,678
<TOTAL-LIABILITIES> 715,678
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 281,302,233
<SHARES-COMMON-STOCK> 26,073
<SHARES-COMMON-PRIOR> 24,328
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (75,661)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,844,760
<NET-ASSETS> 268,784
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 15,878
<OTHER-INCOME> 0
<EXPENSES-NET> 1,907
<NET-INVESTMENT-INCOME> 13,971
<REALIZED-GAINS-CURRENT> 12
<APPREC-INCREASE-CURRENT> 1,396
<NET-CHANGE-FROM-OPS> 15,379
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 13,681
<DISTRIBUTIONS-OF-GAINS> 279
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24,718
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1,355
<NET-CHANGE-IN-ASSETS> 18,380
<ACCUMULATED-NII-PRIOR> 61,151
<ACCUMULATED-GAINS-PRIOR> 321,873
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,163,327
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,418,380
<AVERAGE-NET-ASSETS> 258,500
<PER-SHARE-NAV-BEGIN> 10.24
<PER-SHARE-NII> 0.57
<PER-SHARE-GAIN-APPREC> 0.06
<PER-SHARE-DIVIDEND> (0.55)
<PER-SHARE-DISTRIBUTIONS> (0.01)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.31
<EXPENSE-RATIO> 0.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 20
<NAME> Short Term Bond Fund Class S
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 280,602,336
<INVESTMENTS-AT-VALUE> 283,447,096
<RECEIVABLES> 1,208,411
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 131,503
<TOTAL-ASSETS> 284,787,010
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 715,678
<TOTAL-LIABILITIES> 715,678
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 281,302,233
<SHARES-COMMON-STOCK> 27,529,935
<SHARES-COMMON-PRIOR> 19,577,260
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (75,661)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,844,760
<NET-ASSETS> 283,673,194
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 15,822,361
<OTHER-INCOME> 0
<EXPENSES-NET> 1,414,966
<NET-INVESTMENT-INCOME> 14,407,395
<REALIZED-GAINS-CURRENT> (104,712)
<APPREC-INCREASE-CURRENT> 1,549,344
<NET-CHANGE-FROM-OPS> 15,852,027
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14,459,636
<DISTRIBUTIONS-OF-GAINS> 321,463
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17,247,226
<NUMBER-OF-SHARES-REDEEMED> 10,729,747
<SHARES-REINVESTED> 1,435,196
<NET-CHANGE-IN-ASSETS> 83,404,747
<ACCUMULATED-NII-PRIOR> 61,151
<ACCUMULATED-GAINS-PRIOR> 321,873
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,163,327
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,418,380
<AVERAGE-NET-ASSETS> 258,132,584
<PER-SHARE-NAV-BEGIN> 10.23
<PER-SHARE-NII> 0.56
<PER-SHARE-GAIN-APPREC> 0.08
<PER-SHARE-DIVIDEND> (0.56)
<PER-SHARE-DISTRIBUTIONS> (0.01)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.31
<EXPENSE-RATIO> 0.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> Core Bond Fund Class A
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 750,003,586
<INVESTMENTS-AT-VALUE> 771,338,621
<RECEIVABLES> 10,620,977
<ASSETS-OTHER> 164,850
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 782,124,448
<PAYABLE-FOR-SECURITIES> 3,023,136
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 69,100,454
<TOTAL-LIABILITIES> 72,123,590
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 688,172,382
<SHARES-COMMON-STOCK> 12,774
<SHARES-COMMON-PRIOR> 12,073
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 493,441
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21,335,035
<NET-ASSETS> 141,315
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,805
<OTHER-INCOME> 0
<EXPENSES-NET> 1,635
<NET-INVESTMENT-INCOME> 7,170
<REALIZED-GAINS-CURRENT> 1,749
<APPREC-INCREASE-CURRENT> 1,225
<NET-CHANGE-FROM-OPS> 10,144
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,554
<DISTRIBUTIONS-OF-GAINS> 1,221
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,081
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 693
<NET-CHANGE-IN-ASSETS> 10,144
<ACCUMULATED-NII-PRIOR> 1,094,301
<ACCUMULATED-GAINS-PRIOR> 69,810
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,419,080
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,933,231
<AVERAGE-NET-ASSETS> 136,236
<PER-SHARE-NAV-BEGIN> 10.85
<PER-SHARE-NII> 0.59
<PER-SHARE-GAIN-APPREC> 0.25
<PER-SHARE-DIVIDEND> (0.52)
<PER-SHARE-DISTRIBUTIONS> (0.11)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.06
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> Core Bond Fund Class Y
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 750,003,586
<INVESTMENTS-AT-VALUE> 771,338,621
<RECEIVABLES> 10,620,977
<ASSETS-OTHER> 164,850
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 782,124,448
<PAYABLE-FOR-SECURITIES> 3,023,136
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 69,100,454
<TOTAL-LIABILITIES> 72,123,590
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 688,172,382
<SHARES-COMMON-STOCK> 36,181
<SHARES-COMMON-PRIOR> 24,644
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 493,441
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21,335,035
<NET-ASSETS> 400,056
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 19,194
<OTHER-INCOME> 0
<EXPENSES-NET> 2,195
<NET-INVESTMENT-INCOME> 16,999
<REALIZED-GAINS-CURRENT> 3,695
<APPREC-INCREASE-CURRENT> 2,299
<NET-CHANGE-FROM-OPS> 22,993
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 18,553
<DISTRIBUTIONS-OF-GAINS> 3,456
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 34,044
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 2,137
<NET-CHANGE-IN-ASSETS> 131,737
<ACCUMULATED-NII-PRIOR> 1,094,301
<ACCUMULATED-GAINS-PRIOR> 69,810
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,419,080
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,933,231
<AVERAGE-NET-ASSETS> 296,474
<PER-SHARE-NAV-BEGIN> 10.86
<PER-SHARE-NII> 0.65
<PER-SHARE-GAIN-APPREC> 0.25
<PER-SHARE-DIVIDEND> (0.59)
<PER-SHARE-DISTRIBUTIONS> (0.11)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.06
<EXPENSE-RATIO> 0.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> Core Bond Fund Calss S
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 750,003,586
<INVESTMENTS-AT-VALUE> 771,338,621
<RECEIVABLES> 10,620,977
<ASSETS-OTHER> 164,850
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 782,124,448
<PAYABLE-FOR-SECURITIES> 3,023,136
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 69,100,454
<TOTAL-LIABILITIES> 72,123,590
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 688,172,382
<SHARES-COMMON-STOCK> 64,158,721
<SHARES-COMMON-PRIOR> 42,182,957
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 493,441
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21,335,035
<NET-ASSETS> 709,459,487
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 34,721,686
<OTHER-INCOME> 0
<EXPENSES-NET> 2,929,401
<NET-INVESTMENT-INCOME> 31,792,285
<REALIZED-GAINS-CURRENT> 6,567,709
<APPREC-INCREASE-CURRENT> 4,872,205
<NET-CHANGE-FROM-OPS> 43,232,199
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 32,902,152
<DISTRIBUTIONS-OF-GAINS> 6,128,341
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 38,073,055
<NUMBER-OF-SHARES-REDEEMED> 19,631,777
<SHARES-REINVESTED> 3,534,486
<NET-CHANGE-IN-ASSETS> 253,528,818
<ACCUMULATED-NII-PRIOR> 1,094,301
<ACCUMULATED-GAINS-PRIOR> 69,810
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,419,080
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,933,231
<AVERAGE-NET-ASSETS> 537,140,709
<PER-SHARE-NAV-BEGIN> 10.81
<PER-SHARE-NII> 0.67
<PER-SHARE-GAIN-APPREC> 0.24
<PER-SHARE-DIVIDEND> (0.56)
<PER-SHARE-DISTRIBUTIONS> (0.10)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.06
<EXPENSE-RATIO> 0.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> Balanced Fund Class A
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 618,057,462
<INVESTMENTS-AT-VALUE> 782,158,484
<RECEIVABLES> 7,979,713
<ASSETS-OTHER> 86,171
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 790,224,368
<PAYABLE-FOR-SECURITIES> 2,342,330
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14,890,419
<TOTAL-LIABILITIES> 17,232,749
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 600,473,146
<SHARES-COMMON-STOCK> 12,465
<SHARES-COMMON-PRIOR> 11,560
<ACCUMULATED-NII-CURRENT> 32,992
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,384,459
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 164,101,022
<NET-ASSETS> 177,010
<DIVIDEND-INCOME> 1,910
<INTEREST-INCOME> 4,651
<OTHER-INCOME> 0
<EXPENSES-NET> 1,989
<NET-INVESTMENT-INCOME> 4,572
<REALIZED-GAINS-CURRENT> 9,267
<APPREC-INCREASE-CURRENT> 6,197
<NET-CHANGE-FROM-OPS> 20,036
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,590
<DISTRIBUTIONS-OF-GAINS> 11,583
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,185
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1,280
<NET-CHANGE-IN-ASSETS> 20,035
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 6,196,048
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,182,481
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,844,543
<AVERAGE-NET-ASSETS> 165,619
<PER-SHARE-NAV-BEGIN> 14.03
<PER-SHARE-NII> 0.41
<PER-SHARE-GAIN-APPREC> 1.36
<PER-SHARE-DIVIDEND> (0.58)
<PER-SHARE-DISTRIBUTIONS> (1.02)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.20
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 14
<NAME> Balanced Fund Class Y
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 618,057,462
<INVESTMENTS-AT-VALUE> 782,158,484
<RECEIVABLES> 7,979,713
<ASSETS-OTHER> 86,171
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 790,224,368
<PAYABLE-FOR-SECURITIES> 2,342,330
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14,890,419
<TOTAL-LIABILITIES> 17,232,749
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 600,473,146
<SHARES-COMMON-STOCK> 74,030
<SHARES-COMMON-PRIOR> 23,555
<ACCUMULATED-NII-CURRENT> 32,992
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,384,459
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 164,101,022
<NET-ASSETS> 1,051,256
<DIVIDEND-INCOME> 4,420
<INTEREST-INCOME> 10,764
<OTHER-INCOME> 0
<EXPENSES-NET> 2,903
<NET-INVESTMENT-INCOME> 12,281
<REALIZED-GAINS-CURRENT> 20,403
<APPREC-INCREASE-CURRENT> 20,520
<NET-CHANGE-FROM-OPS> 53,204
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 45,079
<DISTRIBUTIONS-OF-GAINS> 61,093
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 66,553
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 7,477
<NET-CHANGE-IN-ASSETS> 730,305
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 6,196,048
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,182,481
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,844,543
<AVERAGE-NET-ASSETS> 383,143
<PER-SHARE-NAV-BEGIN> 14.06
<PER-SHARE-NII> 0.48
<PER-SHARE-GAIN-APPREC> 1.36
<PER-SHARE-DIVIDEND> (0.67)
<PER-SHARE-DISTRIBUTIONS> (1.03)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.20
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 15
<NAME> Balanced Fund Class S
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 618,057,462
<INVESTMENTS-AT-VALUE> 782,158,484
<RECEIVABLES> 7,979,713
<ASSETS-OTHER> 86,171
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 790,224,368
<PAYABLE-FOR-SECURITIES> 2,342,330
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14,890,419
<TOTAL-LIABILITIES> 17,232,749
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 600,473,146
<SHARES-COMMON-STOCK> 54,365,582
<SHARES-COMMON-PRIOR> 48,223,502
<ACCUMULATED-NII-CURRENT> 32,992
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,384,459
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 164,101,022
<NET-ASSETS> 771,763,353
<DIVIDEND-INCOME> 8,153,126
<INTEREST-INCOME> 19,853,622
<OTHER-INCOME> 0
<EXPENSES-NET> 3,839,651
<NET-INVESTMENT-INCOME> 24,167,097
<REALIZED-GAINS-CURRENT> 38,965,468
<APPREC-INCREASE-CURRENT> 24,912,768
<NET-CHANGE-FROM-OPS> 88,045,333
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 24,100,466
<DISTRIBUTIONS-OF-GAINS> 36,732,877
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,316,077
<NUMBER-OF-SHARES-REDEEMED> 18,473,081
<SHARES-REINVESTED> 4,299,084
<NET-CHANGE-IN-ASSETS> 116,628,148
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 6,196,048
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,182,481
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,844,543
<AVERAGE-NET-ASSETS> 706,669,312
<PER-SHARE-NAV-BEGIN> 13.59
<PER-SHARE-NII> 0.49
<PER-SHARE-GAIN-APPREC> 1.33
<PER-SHARE-DIVIDEND> (0.48)
<PER-SHARE-DISTRIBUTIONS> (0.73)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.20
<EXPENSE-RATIO> 0.54
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> Core Equity Fund Class A
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 2,264,821,470
<INVESTMENTS-AT-VALUE> 3,675,977,495
<RECEIVABLES> 21,312,151
<ASSETS-OTHER> 3,775
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,697,293,421
<PAYABLE-FOR-SECURITIES> 717,456
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 109,417,083
<TOTAL-LIABILITIES> 110,134,539
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,154,856,647
<SHARES-COMMON-STOCK> 12,354
<SHARES-COMMON-PRIOR> 11,555
<ACCUMULATED-NII-CURRENT> 106,352
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 21,039,858
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,411,156,025
<NET-ASSETS> 227,342
<DIVIDEND-INCOME> 4,331
<INTEREST-INCOME> 289
<OTHER-INCOME> 0
<EXPENSES-NET> 2,503
<NET-INVESTMENT-INCOME> 2,117
<REALIZED-GAINS-CURRENT> 10,733
<APPREC-INCREASE-CURRENT> 18,480
<NET-CHANGE-FROM-OPS> 31,330
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,908
<DISTRIBUTIONS-OF-GAINS> 21,970
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,877
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1,477
<NET-CHANGE-IN-ASSETS> 31,330
<ACCUMULATED-NII-PRIOR> 1,297,337
<ACCUMULATED-GAINS-PRIOR> 49,859,885
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 15,182,885
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18,192,352
<AVERAGE-NET-ASSETS> 208,747
<PER-SHARE-NAV-BEGIN> 18.02
<PER-SHARE-NII> 0.19
<PER-SHARE-GAIN-APPREC> 2.60
<PER-SHARE-DIVIDEND> (0.43)
<PER-SHARE-DISTRIBUTIONS> (1.98)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.40
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> Core Equity Fund Class Y
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 2,264,821,470
<INVESTMENTS-AT-VALUE> 3,675,977,495
<RECEIVABLES> 21,312,151
<ASSETS-OTHER> 3,775
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,697,293,421
<PAYABLE-FOR-SECURITIES> 717,456
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 109,417,083
<TOTAL-LIABILITIES> 110,134,539
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,154,856,647
<SHARES-COMMON-STOCK> 40,993
<SHARES-COMMON-PRIOR> 23,532
<ACCUMULATED-NII-CURRENT> 106,352
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 21,039,858
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,411,156,025
<NET-ASSETS> 754,054
<DIVIDEND-INCOME> 9,173
<INTEREST-INCOME> 613
<OTHER-INCOME> 0
<EXPENSES-NET> 3,365
<NET-INVESTMENT-INCOME> 6,421
<REALIZED-GAINS-CURRENT> 23,715
<APPREC-INCREASE-CURRENT> 45,271
<NET-CHANGE-FROM-OPS> 75,407
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 20,187
<DISTRIBUTIONS-OF-GAINS> 65,959
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 36,358
<NUMBER-OF-SHARES-REDEEMED> 76
<SHARES-REINVESTED> 4,711
<NET-CHANGE-IN-ASSETS> 353,293
<ACCUMULATED-NII-PRIOR> 1,297,337
<ACCUMULATED-GAINS-PRIOR> 49,859,885
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 15,182,885
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18,192,352
<AVERAGE-NET-ASSETS> 448,015
<PER-SHARE-NAV-BEGIN> 18.03
<PER-SHARE-NII> 0.27
<PER-SHARE-GAIN-APPREC> 2.63
<PER-SHARE-DIVIDEND> (0.56)
<PER-SHARE-DISTRIBUTIONS> (1.98)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.39
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> Core Equity Fund Class S
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 2,264,821,470
<INVESTMENTS-AT-VALUE> 3,675,977,495
<RECEIVABLES> 21,312,151
<ASSETS-OTHER> 3,775
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,697,293,421
<PAYABLE-FOR-SECURITIES> 717,456
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 109,417,083
<TOTAL-LIABILITIES> 110,134,539
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,154,856,647
<SHARES-COMMON-STOCK> 194,978,032
<SHARES-COMMON-PRIOR> 188,089,578
<ACCUMULATED-NII-CURRENT> 106,352
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 21,039,858
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,411,156,025
<NET-ASSETS> 3,586,177,486
<DIVIDEND-INCOME> 69,978,916
<INTEREST-INCOME> 4,677,590
<OTHER-INCOME> 0
<EXPENSES-NET> 18,186,484
<NET-INVESTMENT-INCOME> 56,470,022
<REALIZED-GAINS-CURRENT> 173,949,339
<APPREC-INCREASE-CURRENT> 291,674,622
<NET-CHANGE-FROM-OPS> 522,093,983
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 57,644,450
<DISTRIBUTIONS-OF-GAINS> 202,715,885
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 44,529,203
<NUMBER-OF-SHARES-REDEEMED> 52,073,640
<SHARES-REINVESTED> 14,432,891
<NET-CHANGE-IN-ASSETS> 388,329,621
<ACCUMULATED-NII-PRIOR> 1,297,337
<ACCUMULATED-GAINS-PRIOR> 49,859,885
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 15,182,885
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18,192,352
<AVERAGE-NET-ASSETS> 3,373,317,626
<PER-SHARE-NAV-BEGIN> 17.00
<PER-SHARE-NII> 0.31
<PER-SHARE-GAIN-APPREC> 2.49
<PER-SHARE-DIVIDEND> (0.31)
<PER-SHARE-DISTRIBUTIONS> (1.10)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.39
<EXPENSE-RATIO> 0.54
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> Small Cap Value Equity Fund Class A
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 570,088,080
<INVESTMENTS-AT-VALUE> 689,246,997
<RECEIVABLES> 3,294,356
<ASSETS-OTHER> 669
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 692,542,022
<PAYABLE-FOR-SECURITIES> 747,964
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,474,273
<TOTAL-LIABILITIES> 9,222,237
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 563,375,053
<SHARES-COMMON-STOCK> 12,364
<SHARES-COMMON-PRIOR> 11,677
<ACCUMULATED-NII-CURRENT> 126,877
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 658,938
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 119,158,917
<NET-ASSETS> 173,948
<DIVIDEND-INCOME> 2,069
<INTEREST-INCOME> 670
<OTHER-INCOME> 0
<EXPENSES-NET> 2,382
<NET-INVESTMENT-INCOME> 357
<REALIZED-GAINS-CURRENT> 10,604
<APPREC-INCREASE-CURRENT> (29,485)
<NET-CHANGE-FROM-OPS> (18,524)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,413
<DISTRIBUTIONS-OF-GAINS> 17,099
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,008
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1,356
<NET-CHANGE-IN-ASSETS> (18,523)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,217,759
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,775,176
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,418,376
<AVERAGE-NET-ASSETS> 183,180
<PER-SHARE-NAV-BEGIN> 17.48
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> (1.78)
<PER-SHARE-DIVIDEND> (0.12)
<PER-SHARE-DISTRIBUTIONS> (1.54)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.07
<EXPENSE-RATIO> 1.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> Small Cap Value Equity Fund Class Y
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 570,088,080
<INVESTMENTS-AT-VALUE> 689,246,997
<RECEIVABLES> 3,294,356
<ASSETS-OTHER> 669
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 692,542,022
<PAYABLE-FOR-SECURITIES> 747,964
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,474,273
<TOTAL-LIABILITIES> 9,222,237
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 563,375,053
<SHARES-COMMON-STOCK> 40,399
<SHARES-COMMON-PRIOR> 23,731
<ACCUMULATED-NII-CURRENT> 126,877
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 658,938
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 119,158,917
<NET-ASSETS> 568,113
<DIVIDEND-INCOME> 4,574
<INTEREST-INCOME> 1,482
<OTHER-INCOME> 0
<EXPENSES-NET> 3,395
<NET-INVESTMENT-INCOME> 2,661
<REALIZED-GAINS-CURRENT> 21,871
<APPREC-INCREASE-CURRENT> (48,717)
<NET-CHANGE-FROM-OPS> (24,185)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,850
<DISTRIBUTIONS-OF-GAINS> 54,356
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 35,834
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 4,565
<NET-CHANGE-IN-ASSETS> 174,227
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,217,759
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,775,176
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,418,376
<AVERAGE-NET-ASSETS> 398,417
<PER-SHARE-NAV-BEGIN> 17.51
<PER-SHARE-NII> 0.11
<PER-SHARE-GAIN-APPREC> (1.81)
<PER-SHARE-DIVIDEND> (0.21)
<PER-SHARE-DISTRIBUTIONS> (1.54)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.06
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> Small Cap Value Equity Fund Class S
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 570,088,080
<INVESTMENTS-AT-VALUE> 689,246,997
<RECEIVABLES> 3,294,356
<ASSETS-OTHER> 669
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 692,542,022
<PAYABLE-FOR-SECURITIES> 747,964
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,474,273
<TOTAL-LIABILITIES> 9,222,237
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 563,375,053
<SHARES-COMMON-STOCK> 48,544,773
<SHARES-COMMON-PRIOR> 41,565,529
<ACCUMULATED-NII-CURRENT> 126,877
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 658,938
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 119,158,917
<NET-ASSETS> 682,577,724
<DIVIDEND-INCOME> 7,784,318
<INTEREST-INCOME> 2,522,354
<OTHER-INCOME> 0
<EXPENSES-NET> 4,412,599
<NET-INVESTMENT-INCOME> 5,894,073
<REALIZED-GAINS-CURRENT> 38,383,903
<APPREC-INCREASE-CURRENT> (108,576,617)
<NET-CHANGE-FROM-OPS> (64,298,641)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,891,102
<DISTRIBUTIONS-OF-GAINS> 39,773,593
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17,908,247
<NUMBER-OF-SHARES-REDEEMED> 14,284,755
<SHARES-REINVESTED> 3,355,752
<NET-CHANGE-IN-ASSETS> (7,800,576)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,217,759
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,775,176
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,418,376
<AVERAGE-NET-ASSETS> 685,813,997
<PER-SHARE-NAV-BEGIN> 16.61
<PER-SHARE-NII> 0.13
<PER-SHARE-GAIN-APPREC> (1.67)
<PER-SHARE-DIVIDEND> (0.13)
<PER-SHARE-DISTRIBUTIONS> (0.88)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.06
<EXPENSE-RATIO> 0.64
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 16
<NAME> International Equity Fund Class A
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 628,857,306
<INVESTMENTS-AT-VALUE> 641,732,931
<RECEIVABLES> 2,296,752
<ASSETS-OTHER> 290,435
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 644,320,118
<PAYABLE-FOR-SECURITIES> 168,505
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,016,263
<TOTAL-LIABILITIES> 3,184,768
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 623,001,417
<SHARES-COMMON-STOCK> 11,834
<SHARES-COMMON-PRIOR> 10,526
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,183,290
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,950,643
<NET-ASSETS> 134,583
<DIVIDEND-INCOME> 2,229
<INTEREST-INCOME> 252
<OTHER-INCOME> 0
<EXPENSES-NET> 2,343
<NET-INVESTMENT-INCOME> 138
<REALIZED-GAINS-CURRENT> 14,870
<APPREC-INCREASE-CURRENT> (9,367)
<NET-CHANGE-FROM-OPS> 5,641
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,652
<DISTRIBUTIONS-OF-GAINS> 15,476
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,066
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1,768
<NET-CHANGE-IN-ASSETS> 5,641
<ACCUMULATED-NII-PRIOR> 293,037
<ACCUMULATED-GAINS-PRIOR> 16,328,165
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,327,317
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,600,635
<AVERAGE-NET-ASSETS> 137,855
<PER-SHARE-NAV-BEGIN> 12.81
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 0.53
<PER-SHARE-DIVIDEND> (0.12)
<PER-SHARE-DISTRIBUTIONS> (1.86)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.37
<EXPENSE-RATIO> 1.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 17
<NAME> International Equity Fund Class Y
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 628,857,306
<INVESTMENTS-AT-VALUE> 641,732,931
<RECEIVABLES> 2,296,752
<ASSETS-OTHER> 290,435
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 644,320,118
<PAYABLE-FOR-SECURITIES> 168,505
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,016,263
<TOTAL-LIABILITIES> 3,184,768
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 623,001,417
<SHARES-COMMON-STOCK> 44,247
<SHARES-COMMON-PRIOR> 21,315
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,183,290
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,950,643
<NET-ASSETS> 502,918
<DIVIDEND-INCOME> 4,664
<INTEREST-INCOME> 528
<OTHER-INCOME> 0
<EXPENSES-NET> 3,864
<NET-INVESTMENT-INCOME> 1,328
<REALIZED-GAINS-CURRENT> 31,098
<APPREC-INCREASE-CURRENT> (7,585)
<NET-CHANGE-FROM-OPS> 24,841
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,174
<DISTRIBUTIONS-OF-GAINS> 57,831
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 38,055
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 6,192
<NET-CHANGE-IN-ASSETS> 239,685
<ACCUMULATED-NII-PRIOR> 293,037
<ACCUMULATED-GAINS-PRIOR> 16,328,165
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,327,317
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,600,635
<AVERAGE-NET-ASSETS> 311,058
<PER-SHARE-NAV-BEGIN> 12.83
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 0.55
<PER-SHARE-DIVIDEND> (0.21)
<PER-SHARE-DISTRIBUTIONS> (1.86)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.37
<EXPENSE-RATIO> 1.23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 18
<NAME> International Equity Fund Class S
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MASSMUTUAL INSTITUTIONAL FUNDS, INC. FORM N-SAR FOR THE YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 628,857,306
<INVESTMENTS-AT-VALUE> 641,732,931
<RECEIVABLES> 2,296,752
<ASSETS-OTHER> 290,435
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 644,320,118
<PAYABLE-FOR-SECURITIES> 168,505
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,016,263
<TOTAL-LIABILITIES> 3,184,768
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 623,001,417
<SHARES-COMMON-STOCK> 56,352,157
<SHARES-COMMON-PRIOR> 44,180,338
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,183,290
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,950,643
<NET-ASSETS> 640,497,849
<DIVIDEND-INCOME> 10,011,648
<INTEREST-INCOME> 1,134,018
<OTHER-INCOME> 0
<EXPENSES-NET> 6,594,428
<NET-INVESTMENT-INCOME> 4,551,238
<REALIZED-GAINS-CURRENT> 65,552,194
<APPREC-INCREASE-CURRENT> (47,961,347)
<NET-CHANGE-FROM-OPS> 22,142,085
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,863,557
<DISTRIBUTIONS-OF-GAINS> 73,650,942
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24,866,276
<NUMBER-OF-SHARES-REDEEMED> 19,794,239
<SHARES-REINVESTED> 7,099,782
<NET-CHANGE-IN-ASSETS> 93,708,090
<ACCUMULATED-NII-PRIOR> 293,037
<ACCUMULATED-GAINS-PRIOR> 16,328,165
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,327,317
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,600,635
<AVERAGE-NET-ASSETS> 626,214,173
<PER-SHARE-NAV-BEGIN> 12.38
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> 0.51
<PER-SHARE-DIVIDEND> (0.17)
<PER-SHARE-DISTRIBUTIONS> (1.45)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.37
<EXPENSE-RATIO> 1.04
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
