|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year
|
|
|
3 Years
|
|
|
5 Years
|
|
|
10 Years
|
|
|
Class Z
|
|
$
|
38
|
|
|
$
|
149
|
|
|
$
|
271
|
|
|
$
|
627
|
|
|
Class S
|
|
$
|
57
|
|
|
$
|
210
|
|
|
$
|
376
|
|
|
$
|
857
|
|
|
Class Y
|
|
$
|
62
|
|
|
$
|
226
|
|
|
$
|
403
|
|
|
$
|
917
|
|
|
Class L
|
|
$
|
70
|
|
|
$
|
251
|
|
|
$
|
447
|
|
|
$
|
1,012
|
|
|
Class A
|
|
$
|
443
|
|
|
$
|
668
|
|
|
$
|
912
|
|
|
$
|
1,609
|
|
|
Class N
|
|
$
|
226
|
|
|
$
|
423
|
|
|
$
|
742
|
|
|
$
|
1,645
|
|
Except for Class N shares, the figures shown above would be the same whether you sold your shares at the end of a period
or kept them. For Class N shares, you would pay the following expenses if you did not redeem your shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class N
|
|
$
|
126
|
|
|
$
|
423
|
|
|
$
|
742
|
|
|
$
|
1,645
|
|
Portfolio Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 349% of the
average value of its portfolio.
INVESTMENTS, RISKS, AND PERFORMANCE
Principal Investment Strategies
Under normal
circumstances, the Fund invests at least 80% of its net assets in investment grade fixed income securities (rated Baa or higher by Moody’s or BBB or higher by Standard & Poor’s or, if unrated, determined to be of comparable
quality by the subadviser). These typically include U.S. dollar-denominated corporate obligations, securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities, U.S. and foreign issuer dollar-denominated bonds
including, but not limited to, corporate obligations, government and agency issues, private placement bonds, securities subject to resale pursuant to Rule 144A, mortgage-backed, and other asset-backed securities.
The Fund may also invest in below investment grade debt securities (“junk” or “high yield” bonds), including securities in default, and
including bank loans; normally, 10% or less of the Fund’s total assets will be invested in below investment grade debt securities. In the event that a security is downgraded after its purchase by the Fund, the Fund may continue to hold the
security if the Fund’s subadviser,
Babson Capital Management LLC
(“Babson Capital”),
considers that doing so would be consistent with the Fund’s investment objective.
The Fund may
invest up to 15% of its total assets in securities that are not denominated in U.S. dollars including, but not limited to, corporate obligations, government and agency issues, private placement bonds, securities subject to resale pursuant to Rule
144A, mortgage-backed, and other asset-backed securities. The Fund may also invest in non-dollar denominated high yield bonds, including bank loans.
In
pursuing its investment objective, the Fund may (but is not obligated to) use a wide variety of exchange-traded and over-the-counter derivatives, including futures contracts (for hedging purposes, to adjust various portfolio characteristics,
including the duration (interest rate volatility) of the Fund’s portfolio, or as a substitute for direct investments); interest rate swaps (for hedging purposes or to gain exposure to securities or markets in which it might not be able to
invest directly); total return swaps (for hedging purposes or as a substitute for direct investments); and credit default swaps (for hedging purposes, to adjust various portfolio characteristics, including the duration (interest rate volatility) of
the Fund’s portfolio, or as a substitute for direct investments). Use of derivatives by the Fund may create investment leverage.
The Fund may also
invest in money market securities, including commercial paper. The Fund may enter into repurchase agreement transactions. The Fund may hold a portion of its assets in cash or cash equivalents. The Fund may enter into dollar roll and reverse
repurchase agreement transactions.
The Fund seeks to maintain a dollar-weighted average duration of less than three years; Babson Capital may increase or
decrease its duration in response to changes in interest rates and other factors. Duration measures the price sensitivity of a bond to changes in interest rates. Duration is the dollar weighted average time to maturity of a
bond utilizing the present value of all future cash flows.
Babson Capital generally selects the Fund’s investments based on its analysis
of opportunities and risks of various securities and market sectors. Babson Capital may choose to sell securities with deteriorating credit or limited upside potential compared to other available securities.
The Fund expects that it will engage in active and frequent trading and so will typically have a relatively high portfolio turnover rate.
Principal Risks
The following are the Principal Risks of the Fund. You have the potential to make money by investing in the Fund, but you can also lose money.
Bank Loans Risk
Bank loans in which the Fund may invest have similar risks to lower-rated fixed income securities. Changes in the financial
condition of the borrower or economic conditions or other circumstances may reduce the capacity of the borrower to make principal and interest payments on such instruments and may lead to defaults. Senior secured bank loans are supported by
collateral; however the value of the collateral may be insufficient to cover the amount owed to the Fund. If the Fund relies on a third party to administer a loan, the Fund is subject to the risk that the third party will fail to perform its
obligations. In addition, if the Fund holds only a participation interest in a loan made by a third party, the Fund’s receipt of payments on the loan will be dependent on the third party’s willingness and ability to make those payments to
the Fund.
Cash Position Risk
The ability of the Fund to meet its objective may be limited to the extent that it holds assets in cash or
otherwise uninvested.
Credit Risk
The Fund is subject to the risk that the issuer of an investment held by the Fund or the counterparty to
a transaction entered into by the Fund will be unable or unwilling to honor its obligations.
Derivatives Risk
Derivatives involve risks
different from, and potentially greater than, direct investments, including risks of imperfect correlation between the value of derivatives and underlying assets, counterparty default, potential losses that partially or completely offset gains, and
illiquidity. Derivatives can create investment leverage and be highly volatile. Derivatives may result in losses greater than the amount invested. If the value of a derivative does not correlate well with the particular market or asset class the
derivative is designed to provide exposure to, the derivative may not have the effect anticipated. Many derivatives are traded in the over-the-counter market and not on exchanges.
Dollar Roll and Reverse Repurchase Agreement Transaction Risk
These transactions may create leverage and subject the Fund to the credit risk of
the counterparty.
Fixed Income Securities Risk
The values of fixed income securities typically will decline during
periods of rising interest rates, and can also decline in response to changes in the financial condition of the issuer, borrower, counterparty, or underlying collateral assets, or changes in
market, economic, industry, political, and regulatory conditions affecting a particular type of security or issuer or fixed income securities generally. Fixed income securities are subject to interest rate risk (the risk that the value of a fixed
income security will fall when interest rates rise), extension risk (the risk that the average life of a security will be extended through a slowing of principal payments), prepayment risk (the risk that a security will be prepaid and the Fund will
be required to reinvest at a less favorable rate), and credit risk.
Foreign Investment Risk; Emerging Markets Risk; Currency Risk
Foreign
securities are subject to additional risks compared to securities of U.S. issuers, including international trade, currency, political, regulatory, and diplomatic risks. In addition, fluctuations in currency exchange rates may adversely affect the
values of foreign securities and the price of the Fund’s shares. Emerging markets securities are subject to greater risks than securities issued in developed foreign markets, including less liquidity, greater price volatility, higher relative
rates of inflation, greater political, economic, and social instability, greater custody and operational risks, and greater volatility in currency exchange rates.
Frequent Trading/Portfolio Turnover Risk
Portfolio turnover generally involves some expense to the Fund and may result in the realization of
taxable capital gains (including short-term gains). The trading costs and tax effects associated with portfolio turnover may adversely affect the Fund’s performance.
Inflation Risk
The value of assets or income from the Fund’s investments will be less in the future as inflation decreases the value of
money. As inflation increases, the value of the Fund’s assets can decline as can the value of the Fund’s distributions.
Leveraging
Risk
Instruments and transactions, including derivatives and dollar roll and reverse repurchase agreement transactions, that create leverage may cause the value of an investment in the Fund to be more volatile and all other risks will
tend to be compounded.
Liquidity Risk
Certain securities may be difficult (or impossible) to sell or positions difficult to close out at a
desirable time and price, and the Fund may be
S-3
required to hold an investment that is declining in value or be prevented from realizing capital gains.
Lower-Rated Fixed Income Securities Risk
Lower-rated securities, commonly known as “junk” or “high yield” bonds, have
speculative characteristics and involve greater volatility of price and yield, greater risk of loss of principal and interest, and generally reflect a greater possibility of an adverse change in financial condition that could affect an issuer’s
ability to honor its obligations.
Management Risk
The Fund relies on the manager’s ability to achieve its investment objective. There
can be no assurance that the Fund will achieve the desired results and the Fund may incur significant losses.
Market Risk
The value of the
Fund’s portfolio securities may decline, at times sharply and unpredictably, as a result of unfavorable market-induced changes affecting particular industries, sectors, or issuers. Stock market prices in general may decline over short or
extended periods, subjecting the Fund to unpredictable declines in the value of its shares and poor performance. The Fund is subject to risks affecting issuers, such as management performance, financial leverage, industry problems, and reduced
demand for goods or services.
Mortgage- and Asset-Backed Securities Risk
Investments in mortgage- and asset-backed securities subject the
Fund to credit risk, interest rate risk, extension risk, and prepayment risk, among other risks. Mortgage-backed and asset-backed securities not issued by a government agency generally involve greater credit risk than securities issued by government
agencies. The types of mortgages (for example, residential or commercial mortgages) underlying securities held by the Fund may differ and be affected differently by market factors. Investments that receive only the interest portion or the principal
portion of payments on the underlying assets may be more volatile than other investments. The market for mortgage- and asset-backed securities has recently experienced high volatility and a lack of liquidity. As a result, the value of many of these
securities has significantly declined.
Repurchase Agreement Risk
These transactions must be fully collateralized at all times, but involve
some risk to a Fund if the other party should default on its obligation and the Fund is delayed or prevented from recovering the collateral.
U.S. Government Securities Risk
Obligations of certain U.S. government agencies and
instrumentalities are not backed by the full faith and credit of the U.S. government, and there can be no assurance that the U.S. government would provide financial support to such agencies and instrumentalities.
Valuation Risk
The Fund is subject to the risk of mispricing or improper valuation of its investments, in particular to the extent that its
securities are fair valued.
When-Issued, Delayed Delivery, and Forward Commitment Transaction Risk
These transactions may create leverage
and involve a risk of loss if the value of the securities declines prior to settlement.
Performance Information
The following bar chart and table provide some indication of the risks of investing in the Fund. The bar chart shows changes in the Fund’s performance
from year to year for Class S shares. The table shows how the Fund’s average annual returns for 1, 5, and 10 years (or 1 year and since inception for Class Z shares) compare with those of a broad measure of market performance. Performance
for Class A and Class N shares of the Fund reflects any applicable sales charge. Past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. More up-to-date performance information is
available at
http://www.massmutual.com/funds or by calling 1-888-309-3539
.
Annual Performance
Class S Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highest
Quarter:
|
|
|
2Q ’09,
|
|
|
|
5.19%
|
|
|
Lowest
Quarter:
|
|
|
2Q ’04,
|
|
|
|
-1.80%
|
|
After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect
the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold Fund shares through tax-deferred arrangements, such as
401(k) plans or individual retirement accounts. After-
S-4
tax returns are shown for Class S only. After-tax returns for other classes will vary.
Average Annual Total Returns
(For the periods ended December 31, 2012)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year
|
|
|
Since
Inception
(12/03/10)
|
|
|
Class Z
|
|
Return Before Taxes
|
|
|
3.35%
|
|
|
|
3.28%
|
|
|
Barclays U.S. 1-3 Year Government Bond Index (reflects no deduction for fees, expenses, or taxes)
|
|
|
0.51%
|
|
|
|
0.99%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year
|
|
|
Five
Years
|
|
|
Ten
Years
|
|
|
Class S
|
|
Return Before Taxes
|
|
|
3.15%
|
|
|
|
4.68%
|
|
|
|
4.25%
|
|
|
|
|
|
|
|
|
|
Return After Taxes on Distributions
|
|
|
2.20%
|
|
|
|
3.46%
|
|
|
|
2.84%
|
|
|
|
|
|
|
|
|
|
Return After Taxes on Distributions and Sale of Fund Shares
|
|
|
2.23%
|
|
|
|
3.33%
|
|
|
|
2.82%
|
|
|
|
|
|
Class Y
|
|
Return Before Taxes
|
|
|
3.06%
|
|
|
|
4.63%
|
|
|
|
4.19%
|
|
|
Class L
|
|
Return Before Taxes
|
|
|
3.01%
|
|
|
|
4.54%
|
|
|
|
4.11%
|
|
|
Class A
|
|
Return Before Taxes
|
|
|
-0.77%
|
|
|
|
3.55%
|
|
|
|
3.48%
|
|
|
Class N
|
|
Return Before Taxes
|
|
|
1.41%
|
|
|
|
3.96%
|
|
|
|
3.54%
|
|
|
Barclays U.S. 1-3 Year Government Bond Index (reflects no deduction for fees, expenses, or taxes)
|
|
|
0.51%
|
|
|
|
2.49%
|
|
|
|
2.83%
|
|
MANAGEMENT
Investment
Adviser:
Massachusetts Mutual Life Insurance Company
Subadviser:
Babson Capital Management LLC
Portfolio Managers:
Ronald E.
Desautels
is a Managing Director and member of Babson Capital’s Fixed Income Team. He has managed the Fund since its inception.
Mary Wilson Kibbe
is a Managing Director and Head of the Fixed Income Team at Babson Capital. She has managed the Fund since its
inception.
David L. Nagle
is a Managing Director and member of Babson Capital’s Fixed
Income Team. He has managed the Fund since its inception.
Charles S. Sanford
is a Managing Director and member of Babson
Capital’s Fixed Income Team. He has managed the Fund since June 2006.
Douglas M. Trevallion
, II
is a Managing
Director and member of Babson Capital’s Fixed Income Team. He has managed the Fund since October 2008.
PURCHASE AND SALE OF FUND SHARES
Shares of the Fund are generally available to retirement plans, other institutional investors, and individual retirement accounts. Fund shares are redeemable
on any business day by written request, telephone or internet (available to certain customers).
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income or capital gains, unless you are an investor eligible for preferential tax
treatment.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase the Fund through a broker-dealer or other financial intermediary, the intermediary may receive a one-time or continuing payments from the Fund,
MassMutual or its affiliates, or others for the sale of Fund shares or continuing shareholder services provided by the intermediary. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary to recommend
the Fund over another investment. You should contact your intermediary to obtain more information about the compensation it may receive in connection with your investment.
S-5
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