SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
Check the appropriate box:
/ / Preliminary Information Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
/X/ Definitive Information Statement
The DLB Fund Group
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(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
The DLB Fund Group
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One Memorial Drive
Cambridge, MA 02142-1300
Telephone: (617) 225-3800
Fax: (617) 225-3801
INFORMATION STATEMENT
OCTOBER 8, 2004
GENERAL INFORMATION
This Information Statement, which is first being mailed on or about
October 8, 2004, is distributed in connection with actions to be taken by
written consent of the Majority Shareholder (as defined below) of each of the
Funds ("Funds") of The DLB Fund Group (the "Trust") on the date that is 20 days
following the date of this Information Statement, or as soon thereafter as
practicable, as more fully described below. This document is required under the
federal securities laws and is provided solely for your information.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
SHARE OWNERSHIP INFORMATION
The Trustees have set October 4, 2004 (the "Record Date") as the record
date for determining the number of shares and the shareholders entitled to give
consent and to receive this information statement. On the Record Date,
69,509,898.963 shares of the Trust were outstanding, attributable to each Fund
as follows:
DLB Fixed Income Fund...........................1,863,132.860
DLB High Yield Fund.............................7,325,070.103
DLB Value Fund..................................4,238,334.102
DLB Core Growth Fund............................9,176,291.379
DLB Enhanced Index Core Equity Fund ............2,992,227.977
DLB Enhanced Index Growth Fund..................2,790,910.838
DLB Enhanced Index Value Fund...................3,351,666.502
DLB Small Company Opportunities Fund...........29,652,620.357
DLB Small Capitalization Value Fund.............8,119,644.845
Information concerning shareholders who were known to be the record
owners of more than 5% of each Fund's shares as of the Record Date is set forth
below. As of the Record Date, Massachusetts Mutual Life Insurance Company
("MassMutual" or "Majority Shareholder") owned 58,464,762.659 shares of the
Trust, or 84.11% of the outstanding shares of the Trust.
Fund Name Number of Shares Percent of the Fund
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DLB Fixed Income Fund
MassMutual 1,255,023.808 67.4%
1295 State Street
Springfield, MA 01111
MassMutual Trust Company 377,672.651 20.3%
Attn: Carol Callahan
140 Garden Street
Hartford, CT 06154
DLB High Yield Fund
MassMutual 6,279,641.305 85.6%
1295 State Street
Springfield, MA 01111
Roman Catholic Bishop of Springfield 528,448.499 7.2%
Attn: Ms. Jeanne M. DesRoisers, Treasurer
P.O. Box 1730 Springfield, MA 01102
DLB Core Growth Fund
MassMutual 8,198,062.195 89.4%
1295 State Street
Springfield, MA 01111
DLB Value Fund
MassMutual 3,837,892.909 90.6%
1295 State Street
Springfield, MA 01111
Roman Catholic Bishop of Springfield 304,311.392 7.18%
Attn: Ms. Jeanne M. DesRoisers, Treasurer
P.O. Box 1730 Springfield, MA 01102
DLB Enhanced Index Core Equity Fund
MassMutual 2,833,653.304 94.7%
1295 State Street
Springfield, MA 01111
DLB Enhanced Index Growth Fund
MassMutual 2,786,350.047 99.8%
1295 State Street
Springfield, MA 01111
DLB Enhanced Index Value Fund
MassMutual 3,350,448.675 99.9%
1295 State Street
Springfield, MA 01111
DLB Small Company Opportunities Fund
MassMutual 23,871,272.831 80.5%
1295 State Street
Springfield, MA 01111
DLB Small Cap Value Fund
MassMutual 6,052,512.330 74.5%
1295 State Street
Springfield, MA 01111
Newton Retirement System 1,453,326.202 17.9%
Attn: Ms. Kelly Byrne, Director
1000 Commonwealth Avenue
Newton Centre, MA 02459
SHARE OWNERSHIP OF TRUSTEES, NOMINEES AND PRESIDENT
Set forth below is information concerning beneficial ownership, as of
the Record Date, of the Trust's shares by (i) each Trustee, nominee for Trustee
(each a "Nominee" and together, the "Nominees") and President, and (ii) the
Trust's Trustees, Nominees and President as a group.
As of the Record Date, the Trustees, the President of the Trust and the
Nominees owned the following shares of the Funds:
NAME AND ADDRESS* AMOUNT AND NATURE OF
NAME OF FUND OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF FUND***
------------ ------------------- -------------------- ------------------
Kevin McClintock** 0
Steven A. Kandarian 0
DLB Small Company Nabil N. El-Hage 709.667 Sole Voting and
Opportunities Fund Investment Power
Richard A. Nenneman 0
DLB Small Company Maria D. Furman 6,451.613 Sole Voting and
Opportunities Fund Investment Power
Ronald J. Abdow 0
Corine T. Norgaard 0
Susan A. Alfano** 0
* The address for each Trustee, Nominee and the President is c/o The DLB Fund
Group, One Memorial Drive, Cambridge, MA 02142
** Mr. McClintock and Ms. Alfano participate in a deferred compensation plan
and/or retirement plan that invest in or are tied to the performance of shares
of the DLB Small Company Opportunities Fund and the DLB High Yield Fund, and
thereby maintain an economic interest in these Funds by virtue of such
participation.
***On the Record Date, each of the Trustees, Nominees and the President of the
Trust beneficially owned less than 1% of each Fund's outstanding shares, and the
Trustees, Nominees and President of the Trust as a whole beneficially owned less
than 1% of each Fund's outstanding shares.
The table below sets forth information regarding the Trustees' and
Nominees' beneficial ownership of Fund shares, based on the value of such shares
as of the Record Date.
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AGGREGATE DOLLAR RANGE
OF EQUITY SECURITIES IN ALL
REGISTERED INVESTMENT
COMPANIES OVERSEEN OR
TO BE OVERSEEN BY
TRUSTEE OR NOMINEE IN
NAME OF TRUSTEE OR THE DOLLAR RANGE OF EQUITY SECURITIES FAMILY OF INVESTMENT
NOMINEE BENEFICIALLY OWNED IN THE TRUST COMPANIES
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INDEPENDENT TRUSTEES
OR NOMINEES
Ronald J. Abdow None None
Corine T. Norgaard None None
Nabil N. El-Hage $10,001 - 50,000 DLB Small Company $10,001-50,000
Opportunities Fund
Steven A. Kandarian None None
Richard A. Nenneman None None
Maria D. Furman Over $100,000 DLB Small Company Over $100,000
Opportunities Fund
INTERESTED TRUSTEES
OR NOMINEES
Kevin M. McClintock* None None
Susan A. Alfano* None None
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* Mr. McClintock and Ms. Alfano participate in a deferred compensation plan
and/or retirement plan that invest in or are tied to the performance of shares
of the DLB Small Company Opportunities Fund and the DLB High Yield Fund, and
thereby maintain an economic interest in these Funds by virtue of such
participation.
REPORTS TO SHAREHOLDERS
FURTHER INFORMATION CONCERNING THE TRUST IS CONTAINED IN ITS MOST RECENT ANNUAL
AND SEMI-ANNUAL REPORT TO SHAREHOLDERS, WHICH HAVE BEEN MAILED TO SHAREHOLDERS
AND WHICH MAY BE OBTAINED, FREE OF CHARGE BY WRITING TO THE DLB FUND GROUP,
ATTN: THE DLB FUND GROUP COORDINATOR, C/O BABSON CAPITAL MANAGEMENT LLC, ONE
MEMORIAL DRIVE, CAMBRIDGE, MA 02142, OR BY TELEPHONING 1-877-766-0014.
ABOUT THE PROPOSALS
The Board of Trustees has proposed a reorganization of the Trust,
which will involve the following, among other actions: (i) electing new Trustees
for the Trust; (ii) approving new advisory arrangements for the Trust; (iii)
changing certain of the fundamental investment restrictions of the DLB Fixed
Income Fund; (iv) creating new series of the Trust; (v) merging certain series
of MassMutual Institutional Funds into certain currently existing and newly
established series of the Trust; and (vi) creating five new share classes for
the Funds (together, the "Reorganization"). If the Reorganization is
consummated, the currently outstanding shares of the DLB Fixed Income Fund, DLB
Core Growth Fund and DLB Small Capitalization Value Fund will be re-designated
Class S shares of such Funds; the currently outstanding shares of the DLB Value
Fund will be re-designated Class L shares of such Fund; the currently
outstanding shares of the DLB Enhanced Index Core Equity Fund, DLB Enhanced
Index Core Growth Fund, DLB High Yield Fund, and DLB Enhanced Index Value Fund
will be re-designated Class Y shares of such Funds; and the currently
outstanding shares of the DLB Small Company Opportunities Fund will be
re-designated Class A shares of such Fund. Shareholders of the DLB Fixed Income
Fund should also note that upon consummation of the Reorganization, it is
expected that the MassMutual Core Bond Fund will merge into the DLB Fixed Income
Fund and thereafter it is expected that the DLB Fixed Income Fund's investment
objective and principal investment strategies will be revised to be
substantially similar to those of the MassMutual Core Bond Fund. The MassMutual
Core Bond Fund's principal investment objective and strategies are set forth in
Appendix III to this Information Statement.
This Information Statement describes actions that will be taken by the
Majority Shareholder to approve actions (i), (ii) and (iii) above. If the
Reorganization is not consummated, you will be notified in the next annual
report of the Trust.
PROPOSAL 1:
ELECTION OF TRUSTEES -- The Board of Trustees is responsible for overseeing the
activities of the Funds and their service providers. Currently, the Board
consists of five trustees, one of whom is an interested person (as defined in
Section 2(a)(19) of the Investment Company Act of 1940 (the "1940 Act")) of the
Trust (an "Interested Trustee") and four of whom are not interested persons of
the Trust (each an "Independent Trustee"). It is proposed that shareholders
elect two new Independent Trustees and one new Interested Trustee to the Board.
PROPOSALS 2 AND 3:
APPROVAL OF MANAGEMENT AGREEMENTS AND SUBADVISER AGREEMENTS -- Babson Capital
Management LLC ("Babson") currently serves as investment adviser to each Fund.
As investment adviser, Babson directs the investments of the Funds and is
responsible for overseeing regulatory compliance, overseeing the Trust's other
service providers and generally monitoring the affairs of and providing an
investment program for the Funds, subject to the supervision of the Trustees. If
the Reorganization is consummated, Babson, subject to the supervision of
MassMutual, would continue to provide day-to-day portfolio management services
to the Funds as investment subadviser. However, MassMutual would be the
investment adviser to the Funds. As investment adviser, MassMutual would take
over Babson's non-portfolio management related functions, such as monitoring
Fund regulatory compliance and supervising services provided to the Funds and
shareholders. The Trustees believe that engaging MassMutual to serve as
investment adviser will allow Babson to focus exclusively on the area of its
greatest expertise -- making investment decisions for the Funds. It will also
allow the Funds to benefit from MassMutual's experience providing mutual fund
management. MassMutual currently oversees the investment programs for 46 mutual
funds with approximately $18 billion in assets as of September 30, 2004.
MassMutual also manages other funds for which investment subadvisers provide
day-to-day portfolio management. Moreover, it is expected that, over time, this
proposal may result in operational efficiencies. Over time, this may result in
expenses being spread over a larger pool of assets and could potentially lead to
lower operating expenses and/or transaction costs to the Funds (as a percentage
of assets). In order for MassMutual to serve as investment adviser and for
Babson to serve as a subadviser for a Fund, the 1940 Act requires that the
relevant advisory agreements be approved by shareholders of that Fund.
PROPOSAL 4
CHANGING FUNDAMENTAL INVESTMENT RESTRICTIONS - The Board of Trustees has
proposed to change certain of the DLB Fixed Income Fund's fundamental investment
restrictions. Under the 1940 Act, such changes can only take effect after they
have been approved by the vote of a "majority of the outstanding voting
securities" of the DLB Fixed Income Fund. As defined by the 1940 Act, a
"majority of the outstanding voting securities" means the vote of (i) 67% or
more of the Fund's outstanding shares present at a meeting, if the holders of
more than 50% of the outstanding shares of the Fund are present for or
represented by proxy, or (ii) more than 50% of the Fund's outstanding shares,
whichever is less.
PROPOSAL 1
TO ELECT NOMINEES AS TRUSTEES OF THE TRUST
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Two Independent Trustees and one Interested Trustee are proposed to be
elected by the shareholders as Trustees of the Trust, each to hold office until
his or her death, resignation or removal, or, if sooner, until the next meeting
of shareholders called for the purpose of electing Trustees and until the
election and qualification of such successor. The Nominees for election as
Independent Trustees are Ronald J. Abdow and Corine T. Norgaard. The Nominee for
election as an Interested Trustee is Susan A. Alfano. The remaining Trustees,
Ms. Furman and Messrs. El-Hage, McClintock, Nenneman and Kandarian, have
previously been elected by the shareholders of the Trust and will continue to
serve as Trustees.
Set forth below after the name of each Nominee and each Trustee whose
term will continue after this meeting is his or her position(s) with the Trust;
age; term of office and length of time served; principal occupation during the
past five years; certain other directorships; and certain other information
required to be disclosed in this Information Statement.
INFORMATION ABOUT NOMINEES
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NAME, ADDRESS(1) POSITION(S) TERM OF PRINCIPAL OCCUPATION(S) NUMBER OF OTHER DIRECTORSHIPS
AND AGE HELD OFFICE(2) AND DURING PAST FIVE YEARS PORTFOLIOS HELD BY NOMINEE(3)
WITH THE LENGTH OF IN FUND
TRUST TIME SERVED COMPLEX
TO BE
OVERSEEN BY
NOMINEE
INDEPENDENT NOMINEES
Ronald J. Abdow Nominee N/A Chairman, Abdow Corporation 16 Trustee (since 2002)
Age: 72 (operator of restaurants); Oppenheimer Tremont Market
Trustee, Abdow G&R Trust and Abdow Neutral Fund LLC,
G&R Co. (owners and operators of Oppenheimer Tremont
restaurant properties); Partner, Opportunity Fund LLC,
Abdow Partnership, Abdow Auburn Oppenheimer Real Estate
Associates, and Abdow Hazard Fund; Trustee (since 1994),
Associates (owners and operators MassMutual Institutional
of restaurant properties); Funds (open-end
Chairman, Western Mass Development investment company);
Corp.; Chairman, American Trustee (since 1993), MML
International College. Series Investment Fund
(open-end investment
company).
Corine T. Norgaard Nominee N/A Director (since 1997), The Advest 18 Trustee (since 1993), Aetna
Age: 67 Bank; Dean (1996-2004), Barney Series Fund (investment
School of Business, University of company); Director (since
Hartford. 1992), Aetna Variable
Series Fund; Trustee
(since 1998), MassMutual
Participation Investors
and MassMutual Corporate
Investors (closed-end
investment companies).
INTERESTED NOMINEE
Susan A. Alfano(4) Nominee N/A Executive Vice President, 16 None.
Age: 50 Corporate Administration,
MassMutual Life Insurance
Company (2001-present); Senior
Vice President, Corporate
Human Resources (1990-2001);
Vice President, Corporate
Human Resources, Second VP
Information Systems; Director
of Compensation, Corporate
Human Resources, Associate
Director of Compensation,
Assistant Director of
Compensation, Compensation
Analyst (1971-1990).
1 The address for each Nominee is c/o Babson Capital Management LLC, One
Memorial Drive, Cambridge, MA 02142.
2 Each Trustee holds office until his or her death, resignation or removal, or,
if sooner, until the next meeting of shareholders called for the purpose of
electing Trustees and until the election and qualification of such successor.
3 Directorships of companies not reported in the "principal occupation" column
that have a class of securities registered or subject to registration under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or are
registered as investment companies under the 1940 Act. MassMutual Participation
Investors and MassMutual Corporate Investors are deemed to be part of the Fund
Complex because they are managed by Babson.
4 Ms. Alfano is an "Interested Person" as that term is defined in the 1940 Act,
through her employment with MassMutual.
INFORMATION ABOUT CURRENT TRUSTEES WHO ARE NOT NOMINEES
Each of the following Trustees of the Trust will continue to serve in
such capacity until his or her death, resignation or removal, or, if sooner,
until the next meeting of shareholders called for the purpose of electing
Trustees and until the election and qualification of such successor.
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NAME, ADDRESS(1) POSITION(S) TERM OF PRINCIPAL OCCUPATION(S) NUMBER OF OTHER DIRECTORSHIPS
AND AGE HELD OFFICE(2) AND DURING PAST FIVE YEARS PORTFOLIOS HELD BY TRUSTEE(3)
WITH THE LENGTH OF IN FUND
TRUST TIME SERVED COMPLEX
TO BE
OVERSEEN BY
TRUSTEE
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INTERESTED
TRUSTEE
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KEVIN M. President Since 2003 Managing Director and Member of 16 None.
MCCLINTOCK(4) the Board of Managers, Babson
Age: 42 Capital Management LLC, 1999-
present; Managing Director, S.I.
Trustee Since 1999 International Assets (formerly
known as Babson-Stewart Ivory
International), 1999-2004;
Director of Equities and Fixed
Income, Dreyfus Corporation,
1995-1999.
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INDEPENDENT
TRUSTEES
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NABIL N. EL- Trustee Since 2003 Senior Lecturer, Finance, 16 None.
HAGE Harvard Business School,
Age: 45 (January 2003-present);
Chairman (1995-present)
and CEO (1995-2003),
Jeepers! Inc. (indoor
amusement centers);
Manager, Global Entertainment
Ventures, LLC (single purpose
investment vehicle)(2001-
present).
MARIA D. Trustee Since Managing Director, Director, 16 None.
FURMAN June 2004 and Portfolio Manager,
Age: 50 Standish, Ayer and Wood
(investment management)
(1976-2002).
STEVEN A. Trustee Since Consultant, financial services, 18 Trustee, MassMutual
KANDARIAN 2002 (February 2004-present); Participation Investors
Age: 51 Former Executive Director, and MassMutual Corporate
Pension Benefit Guaranty Corp., Investors (closed-end
(a federal pension agency), mutual funds) since
December 2001-February 2004; February 2002.
Managing Director, Orion
Partners, L.P. (a private equity
fund), 1993-November 2001.
RICHARD Trustee Since 1994 Retired. Currently sits on boards 16 None.
NENNEMAN of various civic associations.
Age: 74
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1 The address for each Trustee is c/o Babson Capital Management LLC, One
Memorial Drive, Cambridge, MA 02142.
2 Each Trustee holds office until his or her death, resignation or removal, or,
if sooner, until the next meeting of shareholders called for the purpose of
electing Trustees and until the election and qualification of such successor.
3 Directorships of companies not reported in the "principal occupation" column
that have a class of securities registered or subject to registration under the
Exchange Act or are registered as investment companies under the 1940 Act.
MassMutual Participation Investors and MassMutual Corporate Investors are deemed
to be a part of the Fund Complex because they are also managed by Babson.
4 Mr. McClintock is an "Interested Person" as that term is defined in the 1940
Act, through his employment with Babson.
EXECUTIVE OFFICERS WHO ARE NOT TRUSTEES
Set forth on the following page is a list of the Trust's Executive
Officers who are not also Trustees, their age, position with the Trust,
principal occupation or employment for the past five years and term of office
and length of time served. The Trust's Executive Officers are employees of
Babson or its affiliates.
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TERM OF OFFICE(2)
POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S)
NAME, ADDRESS(1), AND AGE WITH TRUST TIME SERVED DURING PAST FIVE YEARS
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DEANNE B. DUPONT Treasurer Since 1996 Managing Director and Treasurer of Babson
Age: 50 Capital Management LLC.
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MARY ELLEN WESNESKI Vice President Since 1999 Managing Director of Babson Capital
Age: 54 Management LLC (1999-present); Chief
Compliance Officer, MassMutual Participation
Investors and MassMutual Corporate Investors
(since September 2004); Senior Manager,
Deloitte & Touche LLP (1996-1999).
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JOHN E. DEITELBAUM Clerk Since 1999 Second Vice President and Associate General
Age: 36 Counsel, MassMutual (2000-present); Associate
Secretary (2003-present) MassMutual
Participation Investors and MassMutual
Corporate Investors (closed end mutual funds)
and Assistant Secretary (2003-present) of
their Sub-trusts; Assistant Clerk, Babson
Securities Corp. (1999-present); Counsel
(2000-present), Assistant Clerk
(1999-present), Vice President and General
Counsel (1998-1999), Babson Capital Management
LLC; Counsel, MassMutual (1996-1998).
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MICHAEL CHONG Chief Compliance Officer Since Chief Compliance Officer of the MassMutual
Age: 46 September 2004 Institutional Funds (open-end investment
company) and MML Series Investment Fund (open
end investment company) (since September
2004); Vice President and Associate General
Counsel (May 1999 to present), Second Vice
President (June 1996 to May 1999),
Massachusetts Mutual Life Insurance Company;
Assistant General Counsel (February 1994-June
1996),Connecticut Mutual Life Insurance
Company.
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1 The address for each of the Trust's Executive Officers is c/o Babson Capital
Management LLC, One Memorial Drive, Cambridge, MA 02142.
2 The President, the Treasurer and the Clerk of the Trust shall hold office
until their respective successors are chosen and qualified, or in each case
until he or she sooner dies, resigns, is removed or becomes disqualified. Each
other officer shall hold office and shall retain authority at the pleasure of
the Trustees.
COMMITTEES OF THE BOARD OF TRUSTEES
The Board of Trustees of the Trust has an Audit Committee and a
Nominating and Governance Committee, each of which is currently comprised solely
of Trustees who are Independent Trustees. Currently, Messrs. Nenneman, Kandarian
and El-Hage comprise the Audit Committee and Messrs. Nenneman, Kandarian and
El-Hage and Ms. Furman comprise the Nominating and Governance Committee.
NOMINATING AND GOVERNANCE COMMITTEE
The Nominating and Governance Committee, pursuant to a Nominating and
Governance Committee Charter adopted by the Board (attached as Appendix 1 to the
Trust's Information Statement dated June 2, 2004), (a) identifies individuals
qualified to become Independent Trustees of the Trust's Board of Trustees in the
event that a position currently filled by an Independent Trustee is vacated or
created; (b) evaluates the qualifications of Independent Trustee candidates; (c)
nominates Independent Trustee nominees for election or appointment to the Board;
(d) sets any standards necessary or qualifications for service on the Board; and
(e) performs the following governance responsibilities: (i) makes nominations
for membership on all committees of the Board (other than the Audit Committee)
and reviews such committee assignments annually; (ii) reviews as necessary the
responsibilities of any committees of the Board (other than the Audit
Committee), whether there is a continuing need for such committee, whether there
is a need for additional committees of the Board, and whether the committees
should be combined or reorganized, and makes such recommendations to the full
Board; and (iii) monitors the independence of legal counsel for the Independent
Trustees. The Trust's Nominating and Governance Committee Charter is not
currently available to shareholders via the Trust's website. The Nominating and
Governance Committee held two meetings during the fiscal year ended October 31,
2003. Additionally, the Nominating and Governance Committee held a meeting on
June 24, 2004, at which it recommended the nomination of Mr. Abdow and Ms.
Norgaard for election as Trustee, and a meeting on September 23, 2004 at which
it recommended the nomination of Susan A. Alfano for election as Trustee.
NOMINATING AND GOVERNANCE COMMITTEE PROCEDURES FOR SHAREHOLDER NOMINATION OF
INDEPENDENT TRUSTEE CANDIDATES
The Nominating and Governance Committee will consider nominee
candidates for Trustee that are recommended by Trust shareholders in the same
manner as it considers and evaluates candidates recommended by other sources. A
Trust shareholder's recommendation must be submitted as described below to be
considered properly submitted for purposes of the Nominating and Governance
Committee's consideration. The Trust's shareholders must submit any such
recommendation (a "Shareholder Recommendation") in writing to the Trust's
Nominating and Governance Committee, to the attention of the Clerk, at the
address of the principal executive offices of the Trust. The Shareholder
Recommendation must be delivered to or mailed and received at the principal
executive offices of the Trust 60-90 calendar days before the meeting at which
the Nominating and Governance Committee is to select a nominee for Independent
Trustee. The Shareholder Recommendation must include: (i) a statement in writing
setting forth: (A) the name, age, date of birth, phone number, business address,
residence address and nationality of the person recommended by the shareholder
(the "Candidate"); (B) the class or series and number of all shares of the Trust
owned of record or beneficially by the Candidate, as reported to such
shareholder by the Candidate; (C) any other information regarding the Candidate
called for with respect to director nominees by paragraphs (a), (d), (e) and (f)
of Item 401 of Regulation S-K or paragraph (b) of Item 22 of Rule 14a-101
(Schedule 14A) under the Exchange Act, adopted by the Securities and Exchange
Commission ("SEC") (or the corresponding provisions of any regulation or rule
subsequently adopted by the SEC or any successor agency applicable to the
Trust); (D) any other information regarding the Candidate that would be required
to be disclosed if the Candidate were a nominee in a proxy statement or other
filing required to be made in connection with solicitation of proxies for
election of Trustees or directors pursuant to Section 14 of the Exchange Act and
the rules and regulations promulgated thereunder; and (E) whether the
recommending shareholder believes that the Candidate is or will be an
"interested person" of the Trust (as defined in the 1940 Act) and, if not an
"interested person," information regarding the Candidate that will be sufficient
for the Trust to make such determination; (ii) the written and signed consent of
the Candidate to be named as a nominee, for such Candidate's information
submitted in accordance with (i), above, to be disclosed as may be necessary or
appropriate and to serve as a Trustee if elected; (iii) the recommending
shareholder's name as it appears on the Trust's books, the number of all shares
of the Trust owned beneficially and of record by the recommending shareholder;
(iv) a description of all arrangements or understandings between the
recommending shareholder and the Candidate and any other person or persons
(including their names) pursuant to which the recommendation is being made by
the recommending shareholder; and (v) such other information as the Nominating
and Governance Committee may require the Candidate to furnish as it may
reasonably require or deem necessary to determine the eligibility of such
Candidate to serve as a Trustee.
NOMINATING AND GOVERNANCE COMMITTEE CONSIDERATION OF NOMINEES FOR TRUSTEE
The Nominating and Governance Committee is responsible for identifying
and nominating individuals to serve as Independent Trustees. The Nominating and
Governance Committee Charter contemplates that each nominee for Independent
Trustee must have a college degree or, in the judgment of the Nominating and
Governance Committee, equivalent business experience. In addition, the Committee
may take into account a wide variety of factors in considering a Trustee
candidate, giving such weight to any individual factor(s) as it deems
appropriate, including but not limited to: availability and commitment of a
candidate to attend meetings and perform his or her responsibilities on the
Board; relevant industry and related experience; educational background; depth
and breadth of financial expertise; and an assessment of the candidate's
ability, judgment, expertise, reputation and integrity. In the case of a
candidate properly recommended by a shareholder, the Committee may also consider
any other facts and circumstances attendant to such shareholder submission as
may be deemed appropriate by the Nominating and Governance Committee. Different
factors may assume greater or lesser significance at particular times, in light
of the Board's present composition and the Nominating and Governance Committee's
(or the Board's) perceptions about future issues and needs.
In identifying potential nominees for an Independent Trustee, the
Nominating and Governance Committee may consider candidates recommended by the
Trust's current Trustees; the Trust's officers; the Trust's investment adviser;
the Trust's shareholders; and any other source the Committee deems to be
appropriate.
Ms. Norgaard, Ms. Alfano, and Mr. Abdow were recommended as candidates
to the Nominating and Governance Committee by officers of MassMutual and/or
Babson.
AUDIT COMMITTEE
The Audit Committee, pursuant to an Audit Committee Charter adopted by
the Board, oversees the Trust's accounting and financial reporting policies and
practices, its internal controls and internal controls of certain service
providers; oversees the quality and objectivity of the Trust's financial
statements and the independent audit thereof; ascertains the independence of the
Trust's independent registered public accounting firm; acts as liaison between
the Trust's independent registered public accounting firm and the full Board of
Trustees and provides immediate access for the Trust's independent registered
public accounting firm to report any special matters they believe should be
brought to the attention of the full Board of Trustees.
REGULAR AND COMMITTEE MEETINGS FOR FISCAL YEAR 2003
The full Board met four times during the fiscal year ended October 31,
2003. The Audit Committee held three meetings during the fiscal year ended
October 31, 2003. Each Trustee named herein attended all of the Board and
Committee meetings of which he was a member for the fiscal year ended October
31, 2003.
SHAREHOLDER COMMUNICATIONS TO TRUSTEES
Trust shareholders may send communications to the Trustees of the Trust
by addressing such correspondence directly to John Deitelbaum, Clerk, c/o Babson
Capital Management LLC, One Memorial Drive, Cambridge, MA 02142. Except as
provided below, the Clerk shall either (i) provide a copy of each shareholder
communication to the Board at its next regularly scheduled Board meeting or (ii)
if the Clerk determines that the communication requires more immediate
attention, forward the communication to the Board promptly after receipt. The
Clerk will also provide a copy of each shareholder communication to the Trust's
Chief Compliance Officer.
The Clerk may, in good faith, determine that a shareholder
communication should not be provided to the Board because it does not reasonably
relate to the Trust or its operations, management, activities, policies, service
providers, Board, officers, shareholders or other matters relating to an
investment in the Fund or is otherwise ministerial in nature (such as a request
for Fund literature, share data or financial information). The Clerk will
provide to the Board on a quarterly basis a summary of the shareholder
communications not provided to the Board by virtue of this paragraph.
COMPENSATION OF THE TRUSTEES
The following table lists the compensation paid to each of the Trustees
by the Trust and Fund Complex during the Trust's fiscal year ended October 31,
2003.
COMPENSATION TABLE
Except as noted below, the Trust pays each Independent Trustee a fee for his or
her services. The Trustees periodically review their fees to assure that such
fees continue to be appropriate in light of their responsibilities as well as in
relation to fees paid to Trustees of other mutual fund complexes. The fees paid
to each Trustee by the Trust for the fiscal year ended October 31, 2003 are
shown below.
- ------------------------------------------------------------------------------------------------------------------------
NAME OF TRUSTEE AGGREGATE PENSION OR TOTAL COMPENSATION FROM FUND
COMPENSATION RETIREMENT AND FUND COMPLEX PAID TO
FROM TRUST(1) BENEFITS ACCRUED AS TRUSTEES
PART OF FUND
EXPENSES(4)
- ------------------------------------------------------------------------------------------------------------------------
Nabil N. El-Hage $19,000 N/A $19,000
Richard A. Nenneman $20,000 N/A $20,000
Richard J. Phelps $19,000 N/A $19,000
Steven A. Kandarian (2) 0 N/A 0
Kevin M. McClintock (3) 0 N/A 0
- ------------------------------------------------------------------------------------------------------------------------
(1) Includes an annual retainer payable by the Trust to each of the
Independent Trustees of $16,000 and a per meeting attendance fee of $1,000.
Ms. Maria D. Furman was not a Trustee during the fiscal year ended October 31,
2003. Mr. Richard J. Phelps, who retired from the Board of Trustees effective
December 31, 2003, received $19,000 in aggregate compensation from the Trust
because he attended three of four regular Board meetings in the fiscal year
ended October 31, 2003.
(2) Mr. Kandarian, although an Independent Trustee of the Trust and MassMutual
Corporate Investors and MassMutual Participation Investors (two closed-end funds
deemed to be a part of the Fund Complex because they are managed by Babson), was
not paid an annual retainer or a per meeting attendance fee from these funds in
2003 due to his employment with the Pension Benefit Guaranty Corporation
("PBGC"). He resigned from the PBGC effective February 2004. As a result of Mr.
Kandarian's resignation from the PBGC, the PBGC's ethics rules no longer
prohibit him from receiving compensation for his services as an Independent
Trustee of the Trust, and the Trust will compensate Mr. Kandarian in accordance
with its policies governing Independent Trustees beginning in 2004.
(3) Mr. McClintock, as an Interested Trustee, received no compensation for his
role as Trustee to the Trust.
(4) The Trust has no retirement or pension plan for the Trustees.
PROPOSAL 2
TO APPROVE MASSMUTUAL AS INVESTMENT ADVISER TO THE FUNDS BY APPROVING MANAGEMENT
- --------------------------------------------------------------------------------
AGREEMENTS BETWEEN MASSMUTUAL AND THE TRUST ON BEHALF OF THE FUNDS
------------------------------------------------------------------
BACKGROUND
Babson currently serves as investment adviser to each Fund pursuant to
a separate advisory agreement with each Fund. At a meeting of the Board of
Trustees held on June 24, 2004, the Board, and the Independent Trustees voting
separately, unanimously approved the appointment of MassMutual as investment
adviser to each Fund and approved a Management Agreement (each a "Proposed
Management Agreement") between each Fund and MassMutual, to be effective on or
about October 31, 2004. The Board also recommended that each Proposed Management
Agreement be submitted to the shareholders of each respective Fund for approval.
As described more fully under "Proposal 3" below, the Board is also proposing
that Babson, subject to MassMutual's supervision, continue to provide day-to-day
portfolio management of each Fund.
SUMMARY OF THE PROPOSED MANAGEMENT AGREEMENT
A summary of the Proposed Management Agreements and information about
MassMutual are provided below. A form of the Proposed Management Agreements is
attached as Appendix I to this information statement, and the following
description of the Proposed Management Agreements is qualified in its entirety
by reference to such Appendix.
DUTIES UNDER THE PROPOSED MANAGEMENT AGREEMENTS - The provisions regarding the
duties of the adviser under each Proposed Management Agreement are similar to
those of the current advisory agreements between the Funds and Babson (the
"Current Advisory Agreements"). Under each Proposed Management Agreement,
MassMutual will, subject to the direction and control of the Trust's Board of
Trustees, (i) regularly provide investment advice and recommendations to the
Fund, with respect to the Fund's investments, investment policies and the
purchase and sale of securities; (ii) supervise and monitor continuously the
investment program of the Fund and the composition of its portfolio and
determine what securities shall be purchased or sold by the Fund; (iii) arrange
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.
Under each Proposed Management Agreement, MassMutual may, subject to the
provisions of the Trust's Agreement and Declaration of Trust and the 1940 Act,
select and contract with an investment subadviser for the Fund. MassMutual will
be responsible for payment of all compensation to any such subadviser.
Under each Current Advisory Agreement, Babson will, subject to the
control of the Trustees of the Trust and to such policies as the Trustees may
determine, (i) furnish continuously an investment program for the Fund and will
make investment decisions on behalf of the Fund and place all orders for the
purchase and sale of its portfolio securities and (ii) furnish office space and
equipment, provide bookkeeping and clerical services (excluding determination of
net asset value, shareholder accounting services and fund accounting services)
and pay all salaries, fees and expenses of officers and Trustees of the Trust
who are affiliated with Babson. Under each Current Advisory Agreement, Babson
may, subject to the provisions of the Trust's Agreement and Declaration of Trust
and the 1940 Act, select and contract with an investment subadviser for the
Fund. Babson will be responsible for payment of all compensation to any such
subadviser.
STANDARD OF CARE - The limitation of liability provisions of each Proposed
Management Agreement are substantially similar to those of each Current Advisory
Agreement. Each Proposed Management Agreement provides that MassMutual will not
be liable for any loss sustained by reason of good faith errors or omissions in
connection with the performance of its duties. However, nothing in a Proposed
Management Agreement will protect MassMutual from willful misfeasance, bad faith
or gross negligence in the performance of its duties, or reckless disregard to
its obligations and duties under the Proposed Management Agreement. Each Current
Advisory Agreement provides that in the absence of willful misfeasance, bad
faith or gross negligence on the part of Babson, or reckless disregard of its
obligations and duties thereunder, Babson shall not be subject to any liability
to the Trust, or to any shareholder of the Trust, for any act or omission in the
course of, or connected with, rendering services thereunder.
PORTFOLIO TRANSACTIONS - The portfolio transactions provisions of each Proposed
Management Agreement are similar to each Current Advisory Agreement. Each
Proposed Management Agreement provides that MassMutual is authorized, in
arranging the purchase and sale of the Fund's publicly-traded portfolio
securities, to employ or deal with broker-dealers, including "affiliated"
broker-dealers (as defined in the 1940 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. MassMutual 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 transactions will be judged by MassMutual on the basis
of all of the 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.
Each Current Advisory Agreement provides that in placing orders for the
portfolio transactions of the Fund, Babson will seek the best price and
execution available, except to the extent it may be permitted to pay higher
brokerage commissions for brokerage and research services as described below. In
using its best efforts to obtain for the Fund the most favorable price and
execution available, Babson shall consider all factors it deems relevant,
including, without limitation, the overall net economic result to the Fund
(involving price paid or received and any commissions and other costs paid), the
efficiency with which the transaction is effected, the ability to effect the
transaction at all where a large block is involved, availability of the broker
to stand ready to execute possibly difficult transactions in the future and the
financial strength and stability of the broker. Subject to such policies as the
Trustees may determine, Babson shall not be deemed to have acted unlawfully or
to have breached any duty created by a Current Advisory Agreement or otherwise
solely by reason of its having caused the Fund to pay a broker or dealer that
provides brokerage and research services to Babson an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if Babson determines in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or Babson 's overall responsibilities with respect to the Fund and
to other clients of Babson as to which Babson exercises investment discretion.
DURATION AND TERMINATION - The duration and termination provisions of each
Proposed Management Agreement are similar to those of each Current Advisory
Agreement. Each Proposed Management Agreement shall continue in effect until two
years from its execution date and thereafter 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
who are not parties to the Proposed Management Agreement or "interested persons"
(as defined in the 1940 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" of the outstanding voting securities (as defined in the 1940 Act) of
the Fund. Each Proposed Management Agreement will terminate automatically in the
event of its assignment and may also be terminated (i) for cause or with the
consent of the parties and the Trust by the Trust or MassMutual 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 MassMutual provided that such termination by the Trust
is directed or approved by a vote of a majority of the Trustees of the Trust
then in office or by the vote of the holders of a "majority" of the Fund's
outstanding voting securities (as defined in the 1940 Act).
Each Current Advisory Agreement provides that it shall become effective
upon its execution, and shall remain in full force and effect continuously
thereafter (unless terminated automatically) until terminated as follows: (a)
either the Trust or Babson may at any time terminate a Current Advisory
Agreement by not more than sixty days' written notice delivered or mailed by
registered mail, postage prepaid, to the other party, or (b) if (i) the Trustees
of the Trust or the shareholders by the affirmative vote of a majority of the
outstanding shares of the Fund, and (ii) a majority of the Trustees of the Trust
who are not interested persons of the Trust or of Babson, by vote cast in person
at a meeting called for the purpose of voting on such approval, do not
specifically approve at least annually the continuance of the Current Advisory
Agreement, then it shall automatically terminate at the close of business on the
second anniversary of its execution, or upon the expiration of one year from the
effective date of the last such continuance, whichever is later; provided,
however, that if the continuance the Current Advisory Agreement is submitted to
the shareholders of the Fund for their approval and such shareholders fail to
approve such continuance of the Current Advisory Agreement, Babson may continue
to serve thereunder in a manner consistent with the 1940 Act and the rules and
regulations thereunder. Action by the Trust under (a) above may be taken either
(i) by vote of a majority of its Trustees, or (ii) by the affirmative vote of a
majority of the outstanding shares of the Fund.
COMPENSATION - It is expected that the fees payable by each Fund under the
Proposed Management Agreements will be less than or equal to the fees paid by
the Funds under the Current Advisory Agreements, except for the DLB Fixed Income
Fund.
The following table compares the fees payable to Babson under the Current
Advisory Agreements with the fees payable to MassMutual under the Proposed
Management Agreements. It also shows how much Babson earned under each Current
Advisory Agreement, and how much would have been payable to MassMutual under the
corresponding Proposed Management Agreement if it had been in effect, for the
fiscal year ended October 31, 2003.
- ---------------------------------------------------------------------------------------------------------------------
PROPOSED
CURRENT RATE DIFFERENCE
AGREEMENT AGGREGATE AGREEMENT AGGREGATE (% HIGHER/
FUND RATE (%) AMOUNT ($) (%) AMOUNT ($) LOWER)
- ---------------------------------------------------------------------------------------------------------------------
DLB Fixed Income Fund 0.40% $85,878 0.48% $102,054 20%
DLB High Yield Fund 0.50% $157,747 0.50% $157,747 0%
DLB Value Fund 0.55% $349,594 0.50% $317,813 (9%)
DLB Core Growth Fund 0.55% $573,119 0.55% $573,119 0%
DLB Enhanced Index 0.50% $123,287 0.50% $123,287 0%
Core Equity Fund
DLB Enhanced Index 0.50% $86,947 0.50% $86,947 0%
Growth Fund
DLB Enhanced Index 0.50% $122,567 0.50% $122,567 0%
Value Fund
DLB Small Company 1.00% $3,537,189 0.58% $2,051,567 (42%)
Opportunities Fund
DLB Small 0.70% $451,697 0.70% $451,697 0%
Capitalization Value
Fund
- ---------------------------------------------------------------------------------------------------------------------
FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the DLB Fixed Income Fund, DLB Value Fund and the DLB Small
Company Opportunities Fund. The tables show Fund expenses under the Current
Advisory Agreements and the Proposed Management Agreements for the DLB Fixed
Income Fund, DLB Value Fund and the DLB Small Company Opportunities Fund.
DLB FIXED INCOME FUND
EXPENSE INFORMATION
- --------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES PRO FORMA FEES UNDER PROPOSED
(EXPENSES THAT ARE DEDUCTED MANAGEMENT AGREEMENT FOR
FROM FUND ASSETS) CURRENT FEES CLASS S SHARES (1)
- --------------------------------------------------------------------------------------------------------------
Management Fees 0.40% 0.48%
Distribution and Service (12b-1) Fees None (2) None
Other Expenses 0.71% 0.11%
- --------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.11% 0.59%
Fee Waiver (0.56%)(3) None
Net Expenses 0.55% 0.59%(4)
- --------------------------------------------------------------------------------------------------------------
(1) As part of the Reorganization, each Fund has created five new share
classes. Following the Reorganization, the currently outstanding shares of
the DLB Fixed Income Fund will be re-designated Class S shares.
(2) The Fund has adopted (but not implemented) a distribution and service plan
pursuant to Rule 12b-1 under the 1940 Act that permits payments by the
Fund at an annual rate of up to 0.50% of the Fund's average daily net
assets.
(3) Babson has contractually agreed with the Fund to bear certain expenses to
the extent that the Fund's Total Annual Fund Operating Expenses--other
than brokerage commissions, hedging transaction fees and other investment
related costs, extraordinary, non-recurring and certain other unusual
expenses, such as litigation and other extraordinary legal expenses,
securities lending fees and expenses, and transfer taxes--would otherwise
exceed the percentage noted in the Net Expenses column of the table.
(4) MassMutual has contractually agreed to bear expenses (other than
extraordinary litigation and legal expenses, or other non-recurring or
unusual expenses) through March 1, 2006, to the extent that Net Expenses
would otherwise exceed the percentage noted in the Net Expenses column of
the table. The agreement cannot be terminated unilaterally by MassMutual.
EXAMPLE
This Example is intended to help you compare the cost of investing in the DLB
Fixed Income Fund before and after proposed changes and with the cost of
investing in other mutual funds. The table shows Fund expenses under the Current
Advisory Agreement and under the Proposed Management Agreement. The Example
assumes that you invest $10,000 in the Fund for the time periods indicated and
then redeem all your shares at the end of those periods. It also assumes that
your investment has a 5% return each year, that the Fund's operating expenses
remain the same and that all dividends and distributions are reinvested. Since
the DLB Fixed Income Fund does not currently impose any redemption fees or fees
upon redemption and Class S shares of the Fund will not impose such fees, the
figures shown would be the same whether or not you redeemed you shares at the
end of each period. The assumptions upon which the Example are based are likely
to vary from any investor's personal circumstances; your actual costs may be
higher or lower than those shown.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
CURRENT FEES $56 $297 $557 $1,301
PRO FORMA FEES
FOR CLASS S SHARES $60 $189 $329 $ 737
DLB VALUE FUND
Although the advisory fees for the DLB Value Fund under its Proposed Management
Agreement are expected to be less than the advisory fees payable under its
Current Advisory Agreement and the Fund's total operating expenses will not
increase, the following table is provided because it is expected that the Fund's
Other Expenses will increase in connection with the approval of the Proposed
Management Agreement and the Reorganization generally.
EXPENSE INFORMATION
- --------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES PRO FORMA FEES UNDER PROPOSED
(EXPENSES THAT ARE DEDUCTED MANAGEMENT AGREEMENT FOR
FROM FUND ASSETS) CURRENT FEES CLASS L SHARES (1)
- --------------------------------------------------------------------------------------------------------------
Management Fees 0.55% 0.50%
Distribution and Service (12b-1) Fees None (2) None
Other Expenses 0.27% 0.31%
Total Annual Fund Operating Expenses 0.82% 0.81%
Fee Waiver (0.02%)(3) (0.01%)(4)
Net Expenses 0.80% 0.80% (4)
- --------------------------------------------------------------------------------------------------------------
(1) As part of the Reorganization, each Fund has created five new share
classes. Following the Reorganization, the currently outstanding shares of
the DLB Value Fund will be re-designated Class L shares.
(2) The Fund has adopted (but not implemented) a distribution and service plan
pursuant to Rule 12b-1 under the 1940 Act that permits payments by the
Fund at an annual rate of up to 0.50% of the Fund's average daily net
assets.
(3) Babson has contractually agreed with the Fund to bear certain expenses to
the extent that the Fund's Total Annual Fund Operating Expenses--other
than brokerage commissions, hedging transaction fees and other investment
related costs, extraordinary, non-recurring and certain other unusual
expenses, such as litigation and other extraordinary legal expenses,
securities lending fees and expenses, and transfer taxes--would otherwise
exceed the percentage noted in the Net Expenses column of the table.
(4) MassMutual has contractually agreed to bear expenses (other than
extraordinary litigation and legal expenses, or other non-recurring or
unusual expenses) through March 1, 2006, to the extent that Net Expenses
would otherwise exceed the percentage noted in the Net Expenses column of
the table. The agreement cannot be terminated unilaterally by MassMutual.
EXAMPLE
This Example is intended to help you compare the cost of investing in the DLB
Value Fund before and after proposed changes and with the cost of investing in
other mutual funds. The table shows Fund expenses under the Current Advisory
Agreement and under the Proposed Management Agreement. The Example assumes that
you invest $10,000 in the Fund for the time periods indicated and then redeem
all your shares at the end of those periods. It also assumes that your
investment has a 5% return each year, that the Fund's operating expenses remain
the same and that all dividends and distributions are reinvested. Since the DLB
Value Fund does not currently impose any redemption fees or fees upon redemption
and Class L shares of the Fund will not impose such fees, the figures shown
would be the same whether or not you redeemed you shares at the end of each
period. The assumptions upon which the Example are based are likely to vary from
any investor's personal circumstances; your actual costs may be higher or lower
than those shown.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
CURRENT FEES $82 $260 $453 $1,012
PRO FORMA FEES
FOR CLASS L SHARES $82 $255 $444 $989
DLB SMALL COMPANY OPPORTUNITIES FUND
Although the advisory fees for the DLB Small Company Opportunities Fund under
its Proposed Management Agreement are expected to be less than the advisory fees
payable under its Current Advisory Agreement and the Fund's total operating
expenses will not increase, the following table is provided because the Fund's
Distribution and Service Fees and Other Expenses will increase in connection
with the approval of the Proposed Management Agreement and the Reorganization
generally.
EXPENSE INFORMATION
- ------------------------------------------------------------------------------------------------------------------
SHAREHOLDER FESS (FEES PAID DIRECTLY FROM CURRENT FEES PRO FORMA FEES UNDER PROPOSED
YOUR INVESTMENT) MANAGEMENT AGREEMENT FOR CLASS A SHARES*
- ------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) on Purchases None 5.75%***
(as a % of offering price)
- ------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) as a None None***
% of the original offering price or redemption
proceeds.**
- ------------------------------------------------------------------------------------------------------------------
* Following the Reorganization, the currently outstanding shares of the DLB
Small Company Opportunities Fund will be re-designated Class A shares.
** A contingent deferred sales charge may apply to shares redeemed within 18
months of purchase from initial investments of $1 million or more.
*** The Class A sales charges will be waived for Class A shares of the DLB Small
Company Opportunities Fund sold to shareholders of the DLB Small Company
Opportunities Fund who held shares of that Fund prior to October 31, 2004. The
Class A contingent deferred sales charges will be waived for redemptions of
Class A shares of the DLB Small Company Opportunities Fund by shareholders of
the DLB Small Company Opportunities Fund who held shares of that Fund prior to
October 31, 2004.
- ------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES CURRENT FEES PRO FORMA FEES UNDER PROPOSED
(EXPENSES THAT ARE DEDUCTED MANAGEMENT AGREEMENT FOR
FROM FUND ASSETS) CLASS A SHARES (1)
- ------------------------------------------------------------------------------------------------------------------------------
Management Fees 1.00% 0.58%
Distribution and Service (12b-1) Fees (2) None 0.25%
Other Expenses 0.14% 0.32%
Total Annual Fund Operating Expenses 1.14% 1.15%
Fee Waiver None (0.01%)(3)
Net Expenses 1.14% 1.14% (3)
- ------------------------------------------------------------------------------------------------------------------------------
(1) Following the Reorganization, the currently outstanding shares of the DLB
Small Company Opportunities Fund will be re-designated Class A shares.
(2) The Fund has adopted (but not implemented) a distribution and service plan
pursuant to Rule 12b-1 ("12b-1 Plan") that permits payments by the Fund at
an annual rate of up to 0.50% of the Fund's average daily net assets. Upon
consummation of the Reorganization, the Fund will amend the 12b-1 Plan.
Under the terms of the amended 12b-1 Plan, the Fund is permitted to pay
distribution and service fees at the annual rate of 0.25%, in the
aggregate, of its average daily net assets attributable to Class A shares.
Distribution fees may be paid to brokers or other financial intermediaries
for providing services in connection with the distribution and marketing
of Class A shares and for related expenses. Services fees may be paid to
brokers or other financial intermediaries for providing personal services
to Class A shareholders and/or maintaining Class A shareholder accounts
and for related expenses. Compensation under the 12b-1 Plan for service
fees will be paid to MassMutual, through MML Distributors, LLC (the
"Distributor"), and compensation under the 12b-1 Plan for distribution
fees will be paid to the Distributor. MassMutual and the Distributor will
be entitled to retain a portion of the fees generated by an account, or
may reallow the full amount to the brokers or other intermediaries.
MassMutual may pay any Class A 12b-1 service fees to brokers or other
financial intermediaries in advance for the first year after the shares
are sold. After the shares have been held for a year, MassMutual will pay
the service fees on a quarterly basis. Because these fees are paid out of
the 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.
(3) MassMutual has contractually agreed to bear expenses (other than
extraordinary litigation and legal expenses, or other non-recurring or
unusual expenses) through March 1, 2006, to the extent that Net Expenses
would otherwise exceed the percentage noted in the Net Expenses column of
the table. The agreement cannot be terminated unilaterally by MassMutual.
EXAMPLE
This Example is intended to help you compare the cost of investing in the DLB
Small Company Opportunities Fund before and after proposed changes and with the
cost of investing in other mutual funds. The table shows Fund expenses under the
Current Advisory Agreement and under the Proposed Management Agreement. The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. For Class
A shares, this example includes the initial sales charge. Please note that the
Class A sales charges will be waived for Class A shares of the DLB Small Company
Opportunities Fund sold to shareholders of the DLB Small Company Opportunities
Fund who held shares of that Fund prior to October 31, 2004. If the sales charge
was not included, the fees in the example would remain the same. It also assumes
that your investment has a 5% return each year, that the Fund's operating
expenses remain the same and that all dividends and distributions are
reinvested. Since the DLB Small Company Opportunities Fund does not currently
impose any redemption fees or fees upon redemption and Class A shares of the
Fund will not impose such fees (for investments of less than $1 million), the
figures shown would be the same whether or not you redeemed you shares at the
end of each period. The assumptions upon which the Example are based are likely
to vary from any investor's personal circumstances; your actual costs may be
higher or lower than those shown.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
CURRENT FEES $116 $362 $ 628 $1,386
PRO FORMA FEES
FOR CLASS A SHARES $685 $917 $1167 $1,880
EXPENSE LIMITATIONS
Babson has contractually agreed with certain of the Funds to bear certain
expenses to the extent that a Fund's Total Annual Fund Operating Expenses--other
than brokerage commissions, hedging transaction fees and other investment
related costs, extraordinary, non-recurring and certain other unusual expenses,
such as litigation and other extraordinary legal expenses, securities lending
fees and expenses, and transfer taxes--would otherwise exceed the percentage of
the Fund's average daily net assets noted in the table below. These expense
limitation agreements will terminate upon consummation of the Reorganization.
MassMutual has contractually agreed, upon consummation of the Reorganization,
to bear expenses (other than extraordinary litigation and legal expenses, or
other non-recurring or unusual expenses) through March 1, 2006, to the extent
a Fund's Net Expenses would exceed the percentage noted in the Pro Forma
MassMutual Expense Limit column of the table below.
- --------------------------------------------------------------------------------
CURRENT BABSON PRO FORMA MASSMUTUAL
FUND EXPENSE LIMIT EXPENSE LIMIT
- --------------------------------------------------------------------------------
DLB Fixed Income Fund 0.55% 0.59% for Class S shares
DLB High Yield Fund 0.75% 0.75% for Class Y shares
DLB Value Fund 0.80% 0.80% for Class L shares
DLB Enhanced Index Core
Equity Fund 0.70% 0.69% for Class Y shares
DLB Enhanced Index
Growth Fund 0.70% 0.69% for Class Y shares
DLB Enhanced Index
Value Fund 0.70% 0.69% for Class Y shares
DLB Small Company
Opportunities Fund 1.30% 1.14% for Class A shares
DLB Small Capitalization
Value Fund 0.85% 0.85% for Class S shares
DLB Core Growth Fund 0.80% 0.75% for Class S shares
- --------------------------------------------------------------------------------
DATES OF APPROVAL OF CURRENT ADVISORY AGREEMENTS
The following table shows the dates that the Current Advisory Agreements for the
Funds were executed and last submitted to shareholders for approval.
- ----------------------------------------------------------------------------------------------------------------
DATE
FUND DATE OF SUBMITTED TO REASON FOR
EXECUTION SHAREHOLDERS SUBMISSION
- ----------------------------------------------------------------------------------------------------------------
DLB Fixed Income Fund July 19, 1995 July 25, 1995 Initial Approval
DLB High Yield Fund June 28, 2000 June 28, 2000 Initial Approval
DLB Value Fund July 19, 1995 July 25, 1995 Initial Approval
DLB Core Growth Fund January 20, 1998 January 20, 1998 Initial Approval
DLB Enhanced Index Core Equity Fund December 18, 2000 December 18, 2000 Approval of Amendment
DLB Enhanced Index Growth Fund December 18, 2000 December 18, 2000 Initial Approval
DLB Enhanced Index Value Fund December 18, 2000 December 18, 2000 Initial Approval
DLB Small Company Opportunities Fund July 14, 1998 July 10, 1998 Initial Approval
DLB Small Capitalization Value Fund December 18, 2000 December 18, 2000 Initial Approval
- ----------------------------------------------------------------------------------------------------------------
TRUSTEES' CONSIDERATIONS
In approving the Proposed Management Agreements, the Trustees first
took note of the fact that MassMutual would delegate all responsibility for
furnishing a continuous investment program for the Funds, and making investment
decisions with respect to a Fund's assets, to Babson. The Trustees then examined
MassMutual's ability to provide investment oversight, administrative and
shareholder services to the Funds. As part of this examination, the Trustees
considered that MassMutual has represented to them that the scope and quality of
administrative and shareholder services to be provided to the Funds under the
Proposed Management Agreements will be at least equivalent to the scope and
quality of administrative and shareholder services provided by Babson under the
Current Advisory Agreements. The Trustees also considered the experience and
qualifications of the personnel of MassMutual that would be performing, or
overseeing the performance of, the services to be provided to the Funds and the
needs of the Funds for administrative and shareholder services. Based on the
above, the Trustees concluded that the human resources to be devoted by
MassMutual were appropriate to fulfill effectively its duties under the Proposed
Management Agreements.
The Trustees considered a number of factors they believed to be
relevant to the interests of shareholders of the Funds. Such factors included
(i) the ability of MassMutual to monitor the operations and performance of each
Fund's sub-adviser, (ii) the financial condition, stability and business
strategy of MassMutual, (iii) the ability of MassMutual with respect to
regulatory compliance and the ability to monitor compliance with the investment
policies of the Funds, (iv) possible economies of scale, and (v) any conditions
affecting MassMutual's future provision of high quality services to the Funds.
The Trustees concluded that the anticipated scope and quality of the services to
be provided by MassMutual were sufficient, in light of market conditions, the
resources to be dedicated by MassMutual and its integrity, personnel, and
financial resources, to merit approval of the Proposed Management Agreements.
In reaching that conclusion, the Trustees also reviewed the advisory
fees and other expenses of the Funds against such fees for a peer group of funds
with similar investment objectives. For these purposes, the Trustees took into
account not only the actual dollar amount of fees to be paid by the Funds to
MassMutual, but also took into account the estimated profitability of the Funds
to MassMutual and the so-called "fallout benefits" to MassMutual, such as any
reputational value derived from serving as investment adviser to the Funds.
Additionally, the Trustees were informed that MassMutual may receive research
services from brokers in connection with portfolio securities transactions for
the Funds and that research services furnished by brokers through which the
Funds effect securities transactions may be used by MassMutual in advising other
accounts that it advises. Conversely, research services furnished to MassMutual
in connection with other accounts MassMutual advises may be used by MassMutual
in advising the Funds. The Trustees also considered that the net expense ratios
to be applicable to the classes of shares that existing shareholders of the
Funds other than the DLB Fixed Income Fund will be converted into will be same
as the net expense ratios that are currently applicable to such shareholders,
and that in the case of the DLB Fixed Income Fund, the net expense ratio to be
applicable to the class of shares that existing holders of the DLB Fixed Income
Fund will be converted into will be increased from 0.55% to 0.59% (with the
increased net expense ratio being less than the expense ratio that would be
applicable to such existing holders of the DLB Fixed Income Fund if the
applicable fee waiver were to be discontinued). Based on the foregoing, the
Trustees concluded that the fees to be paid to MassMutual under the Proposed
Management Agreements were fair and reasonable, given the anticipated scope and
quality of the services to be rendered by MassMutual.
Following their review, the Trustees determined that the terms of the
Proposed Management Agreements were fair and reasonable with respect to each
Fund and were in the best interests of each Fund's shareholders. After carefully
considering the information summarized above, the Trustees, including the
Independent Trustees, unanimously voted to approve the Proposed Management
Agreements.
In their deliberations with respect to these matters, the Independent
Trustees were advised by their counsel, who was determined by the Independent
Trustees to be "independent legal counsel" within the meaning and intent of the
SEC rules regarding the independence of counsel. The Trustees weighed the
foregoing matters in light of the advice given to them by their independent
legal counsel as to the law applicable to the review of investment advisory
contracts. In arriving at a decision, the Trustees, including the Independent
Trustees, did not identify any single matter as all-important or controlling.
The foregoing summary does not detail all of the matters considered.
ABOUT MASSMUTUAL
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY ("MASSMUTUAL") is located at 1295
State Street, Springfield, Massachusetts 01111. 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. As of December 31, 2003, MassMutual, together with
its subsidiaries, had assets in excess of $96 billion and assets under
management in excess of $285 billion.
PRINCIPAL EXECUTIVE OFFICER AND DIRECTORS - listed below are the directors and
the principal executive officer of MassMutual. The principal business address of
each director and the principal executive officer of MassMutual, as it relates
to their duties at MassMutual, is the same as MassMutual's address listed above.
PRINCIPAL EXECUTIVE OFFICER: POSITION HELD WITH MASSMUTUAL
Robert J. O'Connell Chairman, President and Chief Executive
Officer
DIRECTORS:
Robert J. O'Connell
Roger G. Ackerman
James R. Birle
Gene Chao
James H. DeGraffenreidt
Patricia Diaz Dennis
James L. Dunlap
William B. Ellis
Robert Essner
Robert M. Furek
Carol A. Leary
William B. Marx
John F. Maypole
Marc Racicot
SIMILAR FUNDS MANAGED BY MASSMUTUAL
MassMutual is the investment adviser for the following funds that have
investment objectives and policies similar to those of the Funds.
- --------------------------------------------------------------------------------
NET ASSETS AS OF RATE OF
FUND SEPTEMBER 30, 2004 COMPENSATION
MassMutual Core Bond $1,574,427,690 0.48%
Fund (similar to DLB
Fixed Income Fund)
MML Enhanced Index $ 16,323,411 0.55%
Core Equity Fund (similar
to DLB Enhanced Index
Core Equity Fund)
MassMutual Small Cap $ 443,694,494 0.58%
Equity Fund (similar to
DLB Small Company
Opportunities Fund)
MML Small Cap Equity $ 88,938,446 0.65% on first $100
Fund (similar to DLB million,
Small Company 0.60% on next $100
Opportunities Fund) million,
0.55% on next $300
million,
0.50% on assets over
$500 million
- --------------------------------------------------------------------------------
PROPOSAL 3
TO APPROVE BABSON AS INVESTMENT SUBADVISER TO THE FUNDS BY APPROVING SUBADVISER
-------------------------------------------------------------------------------
AGREEMENTS AMONG MASSMUTUAL, BABSON AND THE TRUST, ON BEHALF OF THE FUNDS.
--------------------------------------------------------------------------
BACKGROUND
At a meeting of the Board of Trustees held on June 24, 2004, the Board,
including the Independent Trustees voting separately, unanimously approved a
Subadviser Agreement among MassMutual, Babson and the Trust on behalf of each
Fund (each a "Proposed Subadviser Agreement"), to be effective on or about
October 31, 2004. The Board also recommended that each Proposed Subadviser
Agreement be submitted to the shareholders of each Fund for approval.
SUMMARY OF THE PROPOSED SUBADVISER AGREEMENTS
A summary of the Proposed Subadviser Agreements and information about Babson are
provided below. A form of the Proposed Subadviser Agreements is attached as
Appendix II to this information statement, and the following description of the
Proposed Subadviser Agreements is qualified in its entirety by reference to such
Appendix.
DUTIES UNDER THE PROPOSED SUBADVISER AGREEMENTS - Under each Proposed Subadviser
Agreement, Babson will, subject to the direction and control of the Trust's
Board of Trustees or MassMutual, (i) regularly provide investment advice and
recommendations to a Fund, 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
investments shall be purchased or sold by the Fund; (iii) arrange 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.
STANDARD OF CARE - Each Proposed Subadviser Agreement provides that Babson will
not be liable for any loss sustained by reason of good faith errors or omissions
in connection with the performance of its duties. However, nothing in a Proposed
Subadviser Agreement will protect Babson from willful misfeasance, bad faith or
gross negligence in the performance of its duties, or reckless disregard to its
obligations and duties under the Proposed Subadviser Agreement.
PORTFOLIO TRANSACTIONS - Each Proposed Subadviser Agreement provides that Babson
is authorized, in arranging the purchase and sale of the Fund's publicly-traded
portfolio securities, to employ or deal with 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 Babson portfolio transactions. Babson 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 transactions will be judged by Babson on the basis of
all of the 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 Exchange Act; as well
as any other matters relevant to the selection of a broker-dealer for particular
and related transactions of the Fund.
DURATION AND TERMINATION - Each Proposed Subadviser Agreement shall continue in
effect until two years from its execution date and thereafter 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 who are not parties to the Proposed Subadviser Agreement or
"interested persons" (as defined in the 1940 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" of the outstanding voting securities (as defined in the
1940 Act) of the Fund. Each Proposed Subadviser Agreement will terminate
automatically in the event of its assignment, the termination of the Fund's
advisory agreement or the dissolution of the Fund. Each Proposed Subadviser
Agreement may be terminated by MassMutual or the Board of Trustees of the Trust:
(i) by written notice to Babson with immediate effect, if Babson's registration
under the Investment Advisers Act of 1940 is suspended, terminated, lapsed or
renewed; (ii) by written notice to Babson with immediate effect, if Babson is
bankrupt or insolvent, seeks an arrangement with creditors, is dissolved or
terminated or ceases to exist; (iii) by written notice to Babson with immediate
effect, if MassMutual or the Board of Trustees of the Trust determines for any
reason that such termination is appropriate for the protection of the Fund,
including without limitation a determination by MassMutual or the Board that
Babson has breached an obligation or duty under the Proposed Subadviser
Agreement; or (iv) in MassMutual's or the Trustees' sole discretion, without
penalty, upon sixty days' written notice to Babson. Each Proposed Subadviser
Agreement may also be terminated by Babson upon sixty days' written notice to
MassMutual and the Trust. Each Proposed Subadviser Agreement may also be
terminated without penalty, at any time, by the vote of the holders of a
"majority" of the Fund's outstanding voting securities (as defined in the 1940
Act).
COMPENSATION - The Funds do not pay Babson's compensation under the Proposed
Subadviser Agreements; MassMutual pays it. The table below sets forth the
compensation that would be payable by MassMutual to Babson for providing
subadvisory services to each Fund.
- --------------------------------------------------------------------------------
FUND ANNUAL RATE OF AVERAGE DAILY NET ASSETS
- ---- ---------------------------------------
DLB Fixed Income Fund 0.10%
DLB High Yield Fund 0.20%
DLB Value Fund 0.25% on the first $600 million of
average daily net assets
0.15% on the average daily net assets
over $600 million
DLB Core Growth Fund 0.25%
DLB Enhanced Index Core Equity Fund 0.25%
DLB Enhanced Index Growth Fund 0.25%
DLB Enhanced Index Value Fund 0.25%
DLB Small Company Opportunities Fund 0.40% on the first $1 billion of
average daily net assets
0.30% on the average daily net assets
over $1 billion
DLB Small Capitalization Value Fund 0.40%
- --------------------------------------------------------------------------------
TRUSTEES' CONSIDERATIONS
In approving the Proposed Subadviser Agreements, the Trustees
considered that Babson's ability to provide advisory and management services
with respect to the Funds would be unchanged from April 29, 2004 (the date the
Trustees last considered the renewal of the Current Advisory Agreements). The
Trustees also considered that Babson has represented to them that the scope and
quality of services to be provided to the Funds under the Proposed Subadviser
Agreements will be at least equivalent to the scope and quality of services
provided under the Current Advisory Agreements. Based on the foregoing, the
Trustees concluded that the investment processes, research capabilities and
philosophies of Babson would continue to be well suited to the Funds, given
their investment objectives and policies.
Following their review, the Trustees determined that the terms of the
Proposed Subadviser Agreements were fair and reasonable with respect to each
Fund and were in the best interests of each Fund's shareholders. After carefully
considering the information summarized above, the Trustees, including the
Independent Trustees, unanimously voted to approve the Proposed Subadviser
Agreements.
In their deliberations with respect to these matters, the Independent
Trustees were advised by their counsel, who was determined by the Independent
Trustees to be "independent legal counsel" within the meaning and intent of the
SEC rules regarding the independence of counsel. The Trustees weighed the
foregoing matters in light of the advice given to them by their independent
legal counsel as to the law applicable to the review of investment advisory
contracts. In arriving at a decision, the Trustees, including the Independent
Trustees, did not identify any single matter as all-important or controlling.
The foregoing summary does not detail all of the matters considered.
ABOUT BABSON
BABSON CAPITAL MANAGEMENT LLC ("BABSON"), an indirect, wholly-owned subsidiary
of MassMutual, with principal offices located at 1500 Main Street, Springfield,
Massachusetts 01115 and at One Memorial Drive, Cambridge, Massachusetts 02142,
manages the investments of the Funds. Babson has provided investment advice to
individual and institutional investors for more than 60 years and had assets
under management as of January 31, 2004 of more than $82 billion.
PRINCIPAL EXECUTIVE OFFICER AND MEMBERS OF THE BOARD OF MANAGERS - listed below
are the Members of the Board of Managers and the principal executive officer of
Babson. The principal business address of each Member of the Board of Managers
and the principal executive officer of Babson, as it relates to their duties at
Babson, is the same as the address listed for Babson above.
STUART H. REESE, Member of the Board of Managers, President and Chief Executive
Officer
KEVIN M. MCCLINTOCK, Member of the Board of Managers, Managing Director
WILLIAM F. GLAVIN, JR., Member of the Board of Managers, Managing Director,
Chief Operating Officer and Chief Compliance Officer
ROBERT LIGUORI, Member of the Board of Managers
ROGER W. CRANDALL, Member of the Board of Managers and Managing Director
SIMILAR FUNDS MANAGED BY BABSON
Babson acts as investment subadviser for the following mutual funds that have
investment objectives similar to those of the Funds.
- ---------------------------------------------------------------------------------------------------
FUND ASSETS RATE OF COMPENSATION
- ---------------------------------------------------------------------------------------------------
MassMutual Core Bond Fund (similar $1,574,427,690* 0.10%
to the DLB Fixed Income Fund)
- ---------------------------------------------------------------------------------------------------
MML Enhanced Index Core Equity $ 16,323,411* 0.25%
Fund (similar to the DLB Enhanced
Index Core Equity Fund)
- ---------------------------------------------------------------------------------------------------
MassMutual Small Cap Equity Fund $ 443,694,494* 0.25%
(similar to the DLB Small Company
Opportunities Fund)
- ---------------------------------------------------------------------------------------------------
MML Small Cap Equity Fund $ 88,938,446* 0.25%
(similar to the DLB Small Company
Opportunities Fund)
- ---------------------------------------------------------------------------------------------------
Ameritas Small Company Equity $ 22,395,843** 0.85% of the first $50 million,
Fund of Calvert Variable Series, Inc. 0.65% of the next $50 million
(similar to the DLB Small Company and 0.55% for amounts in
Opportunities Fund) excess of $100 million
- ---------------------------------------------------------------------------------------------------
Large Cap Value Portfolio of $ 3,982,480** 0.45% of the first $40 million
Investors Mark Series Fund, Inc. and 0.40% for amounts in
(similar to the DLB Value Fund) excess of $40 million
- ---------------------------------------------------------------------------------------------------
Tamarack Value Fund (similar to the $ 376,720,766** 0.35%
DLB Value Fund)
- ---------------------------------------------------------------------------------------------------
* Net Assets as of September 30, 2004.
** Assets under management as of August 31, 2004.
PROPOSAL 4
TO CHANGE CERTAIN OF THE DLB FIXED INCOME FUND'S FUNDAMENTAL
------------------------------------------------------------
INVESTMENT RESTRICTIONS
-----------------------
BACKGROUND
At a meeting of the Board of Trustees held on June 24, 2004, the Board
unanimously voted to approve changes to certain of the DLB Fixed Income Fund's
fundamental investment restrictions. The Board also recommended that each such
change be submitted to the Majority Shareholder of the Fund for approval.
RESTRICTIONS WITH RESPECT TO BORROWING MONEY
Currently, the DLB Fixed Income Fund's fundamental investment restrictions state
that the Trust may not, on behalf of the Fund:
"Borrow money in excess of 10% of the value (taken at the lower of cost
or current value) of the Fund's total assets (not including the amount borrowed)
at the time the borrowing is made, and then only from banks for temporary,
extraordinary or emergency purposes, except that the Fund may borrow through
reverse repurchase agreements or dollar rolls up to 33% of the value of the
Fund's total assets. Such borrowings (other than borrowings relating to reverse
repurchase agreements and dollar rolls) will be repaid before any investments
are purchased."
As revised, this fundamental investment restriction would state that the Trust
may not, on behalf of the DLB Fixed Income Fund:
"Borrow money in excess of 33% of the value (taken at the lower of cost
or current value) of the Fund's total assets (not including the amount borrowed)
at the time the borrowing is made, and then only from banks for temporary,
extraordinary or emergency purposes, except that the Fund may borrow through
reverse repurchase agreements or dollar rolls up to 33% of the value of the
Fund's total assets. Such borrowings (other than borrowings relating to reverse
repurchase agreements and dollar rolls) will be repaid before any investments
are purchased."
RESTRICTIONS WITH RESPECT TO PURCHASING COMMODITIES OR COMMODITY CONTRACTS
Currently, the DLB Fixed Income Fund's fundamental investment restrictions state
that the Trust may not, on behalf of the Fund:
"Purchase or sell commodities or commodity contracts, including futures
contracts."
As revised, this fundamental investment restriction would state that the Trust
may not, on behalf of the DLB Fixed Income Fund:
"Purchase or sell commodities or commodity contracts, including futures
contracts, except that the DLB Fixed Income Fund may purchase and sell futures
contracts, options (including options on commodities and commodity contracts)
and other financial instruments and may enter into foreign exchange
transactions."
ADDITIONAL INFORMATION
PRINCIPAL UNDERWRITER AND ADMINISTRATOR
PRINCIPAL UNDERWRITER: Babson Securities Corp. ("BSC"), a wholly-owned
subsidiary of Babson, serves as the principal underwriter of the Funds. BSC has
its principal office at One Memorial Drive, Cambridge, Massachusetts 02142. If
the Reorganization is consummated, MML Distributors, LLC, would serve as
principal underwriter of the Funds.
ADMINISTRATOR: Investors Bank and Trust Company ("IBT") serves as Administrator
of the Funds. IBT's principal business address is 200 Clarendon Street, Boston
MA 02116. If the Reorganization is consummated, MassMutual would serve as
administrator of the Funds and IBT would serve as Sub-Administrator.
FUND TRANSACTIONS
During the fiscal year ended October 31, 2003, the Funds did not pay any
brokerage commissions to any affiliate of the Funds.
SHAREHOLDER CONSENT
VOTE REQUIRED: To be elected as a Trustee, each nominee must receive the
affirmative vote of the holders of a plurality of the outstanding shares of all
of the Funds voting together as a single class. As required by the 1940 Act,
approval of Proposals 2, 3 and 4 requires the affirmative vote of a "majority of
the outstanding voting securities" of the Fund entitled to vote on such
Proposal. As defined by the 1940 Act, a "majority of the outstanding voting
securities" means the vote of (i) 67% or more of the Fund's outstanding shares
present at a meeting, if the holders of more than 50% of the outstanding shares
of the Fund are present for or represented by proxy, or (ii) more than 50% of
the Fund's outstanding shares, whichever is less. As stated above, the Majority
Shareholder has indicated that, as permitted by the Trust's Bylaws, it intends
to execute a consent to be effective on the date that is 20 days following the
date of this Information Statement, or as soon thereafter as practicable, which
would by itself constitute the necessary shareholder approval for all proposals.
No action is required to be taken by you as a shareholder of the Trust; this
Information Statement is furnished to you for your information only in light of
relevant federal securities laws.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
APPENDIX I
- ----------
FORM OF
INVESTMENT MANAGEMENT AGREEMENT
for The DLB Fund Group
This INVESTMENT MANAGEMENT AGREEMENT (the "Management Agreement"), is between
Massachusetts Mutual Life Insurance Company, a Massachusetts corporation (the
"Manager"), and The DLB Fund Group, a Massachusetts business trust (the
"Trust"), effective this ______ day of ________ , 2004.
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, DLB ____________ 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, 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 [VARIES BY
FUND] of the average daily net asset value of the Fund, determined at the close
of the New York Stock Exchange on each day that the Exchange is open for trading
and paid on the last day of each month.
5. Portfolio Transactions and Brokerage.
(a) The Manager is authorized, in arranging the purchase and sale of
the Fund's publicly-traded portfolio securities, to employ or deal with such
members of securities exchanges, brokers or dealers (hereinafter "broker-
dealers"), including "affiliated" broker-dealers, as that term is defined in the
Act, as may, in its best judgment, implement the policy of the Fund to obtain,
at reasonable expense, the best execution (prompt and reliable execution at the
most favorable security price obtainable) of the Fund's portfolio transactions.
(b) The Manager may effect the purchase and sale of securities
(which are otherwise publicly traded) in private transactions on such terms and
conditions as are customary in such transactions, may use a broker in such to
effect said transactions, and may enter into a contract in which the broker acts
either as principal or as agent.
(c) The Manager shall select broker-dealers to effect the Fund's
portfolio transactions on the basis of its estimate of their ability to obtain
best execution of particular and related portfolio transactions. The abilities
of a broker-dealer to obtain best execution of particular portfolio
transaction(s) will be judged by the Manager on the basis of all relevant
factors and considerations including, insofar as feasible, the execution
capabilities required by the transaction or transactions; the ability and
willingness of the broker-dealer to facilitate the Fund's portfolio transactions
by participating therein for its own account; the importance to the Fund of
speed, efficiency or confidentiality; the broker-dealer's apparent familiarity
with sources from or to whom particular securities might be purchased or sold;
as well as any other matters relevant to the selection of a broker-dealer for
particular and related transactions of the Fund.
6. Duration.
Unless terminated earlier pursuant to Section 7 hereof, this Management
Agreement shall remain in effect until 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.
(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
Attention:
If to the Trust: The DLB Fund Group
One Memorial Drive
Cambridge, MA 02142
Attention:
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: _____________________________
THE DLB FUND GROUP
on behalf of DLB __________ FUND
By: _____________________________
APPENDIX II
- -----------
FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT
for the DLB [ ] Fund
This Investment Sub-Advisory Agreement (this "Sub-Advisory Agreement"), is by
and between [ ] (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 DLB [ ] Fund (the "Fund"),
a series of The DLB Fund Group (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
[ ] day of [ ], 2004.
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; and
WHEREAS, MassMutual and the Sub-Adviser are investment advisers registered with
the Commission as such under the Investment Advisers Act of 1940, as amended
(the "Advisers Act");
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 applicable to the operation of registered investment companies;
(iii) the provisions of the Agreement and Declaration of
Trust and Bylaws of the Trust, as amended from time to time and
provided to the Sub-Adviser by MassMutual (collectively referred to
as the "Trust Documents");
(iv) policies and determinations of the Board of
Trustees of the Trust and MassMutual, which have been delivered 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 amended by the Fund's Board of Trustees or
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. The Sub-Adviser will provide reasonable assistance
to the Fund's pricing agent in valuing securities held by the Fund for which
market quotations are not readily available (i.e., internally priced
securities).
(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 Sub-Advisory Agreement so long as it performs such services in
accordance with this Sub-Advisory 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 the Disclosure Documents, (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 7 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 monthly, quarterly or annual time frames, as MassMutual shall
reasonably request or as required by applicable law or regulation, including,
but not limited to, those listed in Appendix A.
(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 7 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 of the Sub-Adviser or any change in its key personnel that could
materially affect the services provided by the Sub-Adviser 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, 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, 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. The
Sub-Adviser agrees that all records which it maintains for the Fund are property
of the Fund and the Sub-Adviser will promptly surrender to the Fund any of such
records or copies thereof upon the Fund's request.
(g) The Sub-Adviser makes no representations or warranty, express or
implied (except as subject to Section 3(b) herein), that any level of
performance or investment results will be achieved by the Fund or that the Fund
will perform comparably with any standard, including any other clients of the
Sub-Adviser or index.
(h) The Sub-Adviser agrees to reimburse MassMutual for any costs
associated with the production, printing and filing with the Commission (not
including mailing costs) of supplements to the Disclosure Documents due to
changes caused by the Sub-Adviser, except for any such costs which may properly
be charged to 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
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. Obligations of MassMutual and the Fund.
(a) MassMutual will provide, or has provided, to the Sub-Adviser,
such information or documents as the Sub-Adviser shall reasonably request or as
required by applicable law or regulation. Throughout the term of this
Sub-Advisory Agreement, MassMutual shall continue to provide such information
and documents to the Sub-Adviser, including any amendments, updates or
supplements to such information or documents before or at the time the
amendments, updates or supplements become effective. MassMutual shall timely
furnish the Sub-Adviser with such additional information as may be reasonably
necessary for or requested by the Sub-Adviser to perform its responsibilities
pursuant to this Sub-Advisory Agreement.
(b) MassMutual shall provide such assistance to the Sub-Adviser in
setting up and maintaining brokerage accounts and other accounts as the
Sub-Adviser shall reasonably request to allow for the purchase or sale of
various forms of securities pursuant to this Sub-Advisory Agreement.
5. Custodian and Fund Accountant. The Fund assets shall be maintained in the
custody of Investors Bank & Trust Company, 200 Clarendon Street, Boston,
Massachusetts 02116, or such other custodian identified to the Sub-Adviser. Any
assets added to the Fund shall be delivered directly to such custodian. The
Sub-Adviser shall have no liability for the acts or omissions of any custodian
of the Fund's assets. The Sub-Adviser shall have no responsibility for the
segregation requirement of the Act or other applicable law. In addition, at the
date of this Sub-Advisory Agreement, MassMutual has contracted with Investors
Bank & Trust Company to provide fund accounting services on behalf of the Fund.
The Sub-Adviser shall have no liability for the acts or omissions of Investors
Bank & Trust Company or such other fund accountant in connection with fund
accounting services provided on behalf of the Fund.
6. Compensation of the Sub-Adviser.
(a) [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 [ ]% on the
first $[ ] million of Aggregate Assets; [ ]% on the next $[ ] million of
Aggregate Assets; and [ ]% on Aggregate Assets in excess of $[ ] 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-Adviser provides investment advisory services, and which have
substantially the same investment objectives, policies and investment
strategies, determined at the close of the Exchange on each day that the
Exchange is open for trading. MassMutual shall pay the Sub-Adviser such fee not
later than the tenth (10th) business day immediately following the end of each
calendar quarter. Aggregate Assets for which the Sub-Adviser provides investment
advisory services shall mean all assets except for cash or cash equivalents.]
[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 annual rate of [ ]% on the
average daily net assets of the Fund under management by the Sub-Adviser
determined at the close of the New York Stock Exchange on each day that the
Exchange is open for trading. MassMutual shall pay the Sub-Advisor such fee not
later than the tenth (10th) business day immediately following the end of each
calendar quarter. Average daily net assets for which the Sub-Adviser provides
investment advisory services shall mean all assets except for cash or cash
equivalents.]
(b) Expenses. MassMutual, the Trust and the Fund shall assume and
pay their respective organizational, operational and business expenses not
specifically assumed or agreed to be paid by the Sub-Adviser pursuant to this
Sub-Advisory Agreement. The Sub-Adviser shall pay its own organizational,
operational and business expenses but shall not be obligated to pay any expenses
of MassMutual, the Trust or the Fund, including, without limitation: (a)
interest and taxes; (b) brokerage commissions and other costs in connection with
the purchase or sale of securities or other investment instruments of the Fund;
and (c) custodian fees and expenses. Any reimbursement of management or other
fees required by an expense limitation provision and any liability arising out
of a violation by MassMutual of Section 36(b) of the Act shall be the sole
responsibility of MassMutual, provided that nothing herein shall relieve
Sub-Adviser from its own liability under Section 36(b) of the Act with respect
to its duties under this Sub-Advisory Agreement.
7. 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 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. Subject to these
requirements and the provisions of the Act, the Securities Exchange Act of 1934,
as amended, and other applicable provisions of law, the Sub-Adviser may select
brokers or dealers with which it or the Trust are affiliated.
8. 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 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 provided
to MassMutual by the Sub-Adviser or approved by the Sub-Adviser for use in the
Disclosure Documents, as well as all performance information provided to
MassMutual by the Sub-Adviser or approved by the Sub-Adviser for use by
MassMutual, 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.
9. Representations and Warranties of MassMutual.
(a) MassMutual represents and warrants to the Sub-Adviser the
following:
(i) MassMutual has all requisite corporate power and
authority under the laws of the Commonwealth of
Massachusetts and federal securities laws and under the
Advisory Agreement with the Fund to execute, deliver
and perform this Sub-Advisory Agreement.
(ii) MassMutual is a registered investment adviser under the
Advisers Act and is in material compliance with all
other required registrations under applicable federal
and state law.
(iii) MassMutual has complied, in all material respects,
with all registrations required by, and will comply, in
all material respects, with all applicable rules and
regulations of the Commission.
(iv) MassMutual has received a copy of Part II of
Sub-Adviser's Form ADV.
(v) 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
MassMutual is subject, which might reasonably be
expected to (i) result in any material adverse change
in MassMutual's condition (financial or otherwise) or
(ii) materially impair MassMutual's ability to
discharge its obligations under this Sub-Advisory
Agreement.
The foregoing representations and warranties shall be continuing during the term
of this Sub-Advisory Agreement.
10. 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 8 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 MassMutual 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.
11. 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 laws, rules and regulations,
subpoenas or court orders. Without limiting the foregoing, MassMutual
acknowledges that the securities holdings of the Fund constitute information of
value to the Sub-Adviser, and agrees: (1) not to use for any purpose, other than
for MassMutual or the Fund, or their agents, to supervise or monitor the
Sub-Adviser, the holdings or other trading-related information of the Fund; and
(2) not to disclose the Fund's holdings, except: (a) as required by applicable
law or regulation; (b) as required by state or federal regulatory authorities;
(c) to the Board of Trustees of the Trust, counsel to the Board, counsel to the
Trust, the administrator or any sub-administrator, the independent accountants
and any other agent of the Trust; or (d) as otherwise agreed to by the parties
hereto in writing. Further, MassMutual agrees that information supplied by the
Sub-Adviser, including approved lists, internal procedures, compliance
procedures and any board materials, is valuable to the Sub-Adviser, and
MassMutual agrees not to disclose any of the information contained in such
materials, except: (i) as required by applicable law or regulation; (ii) as
required by state or federal regulatory authorities; (iii) to the Board of
Trustees of the Trust, counsel to the Board, counsel to the Trust, the
administrator or any sub-administrator, the independent accountants and any
other agent of the Trust; or (iv) as otherwise agreed to by the parties hereto
in writing.
Without limiting the foregoing, the Sub-Adviser agrees that any and all
information that it obtains pursuant to this Sub-Advisory Agreement regarding
MassMutual or its customers including, but not limited to, approved lists,
internal procedures, compliance procedures and any board materials, is valuable
to MassMutual and will be used exclusively to fulfill the Sub-Adviser's
obligations hereunder, and will not be disclosed to any other party, including
any affiliate of the Sub-Adviser or agent of the Fund, except (i) as necessary
for the Sub-Adviser to fulfill its obligations pursuant to this Sub-Advisory
Agreement, (ii) as required by applicable law or regulation; (iii) as required
by state or federal regulatory authorities; or (iv) as otherwise agreed to by
the parties hereto in writing. Notwithstanding the foregoing, MassMutual agrees
that the Sub-Adviser may identify it or the Fund as a client in promotional
materials.
12. Review of Fund Documents.
During the term of this Sub-Advisory Agreement, MassMutual shall furnish to the
Sub-Adviser at its principal office all prospectuses, proxy statements, reports
to shareholders, sales literature, or other material prepared for distribution
to shareholders of the Fund or the public, which refer to the Sub-Adviser or its
clients in any way, prior to the use thereof, and MassMutual shall not use any
such materials if the Sub-Adviser reasonably objects in writing five (5) days
(or such other time as may be mutually agreed, which would include longer time
periods for review of the Fund's prospectus and other parts of its registration
statement) after receipt thereof. MassMutual shall ensure that materials
prepared by employees or agents of MassMutual or its affiliates that refer to
the Sub-Adviser or its clients in any way are consistent with those materials
previously approved by the Sub-Adviser as referenced in the preceding sentence.
13. Use of Sub-Adviser's Name
The parties agree that the name of the Sub-Adviser, the names of any affiliates
of the Sub-Adviser and any derivative or logo or trademark or service mark or
trade name are the valuable property of the Sub-
Adviser and its affiliates. MassMutual and the Fund shall have the right to use
such name(s), derivatives, logos, trademarks or service marks or trade names
only with the prior written approval of the Sub-Adviser, which approval shall
not be unreasonably withheld or delayed so long as this Sub-Advisory Agreement
is in effect. It is understood that certain materials used in the ordinary
course of business, such as prospectuses, financial reports, fund fact sheets
and materials provided to the Trustees, do not require such prior approval.
Upon termination of this Sub-Advisory Agreement, MassMutual and the Fund shall
forthwith cease to use such name(s), derivatives, logos, trademarks or service
marks or trade names. MassMutual and the Fund agree that they will review with
the Sub-Adviser any advertisement, sales literature, or notice prior to its use
that makes reference to the Sub-Adviser or its affiliates or any such name(s),
derivatives, logos, trademarks, service marks or trade names to that the
Sub-Adviser may review the context in which it is referred to, it being agreed
that the Sub-Adviser shall have no responsibility to ensure the adequacy of the
form or content of such materials for purposes of the Act or other applicable
laws and regulations. If MassMutual or the Fund makes any unauthorized use of
the Sub-Adviser's names, derivatives, logos, trademarks or service marks or
trade names, the parties acknowledge that the Sub-Adviser shall suffer
irreparable harm for which monetary damages are inadequate and thus, the
Sub-Adviser shall be entitled to injunctive relief.
14. Duration.
Unless terminated earlier pursuant to Section 15 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 15 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.
15. 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 or the Board of Trustees of the Trust determines for any reason, that
such termination is appropriate for the protection of the Fund, including
without limitation a 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
sixty 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 sixty days' prior written notice, to
MassMutual and the Trust.
16. 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 not based
upon, or did not arise out of an act or omission of MassMutual or the Fund or
any of its or their officers, directors, employees, affiliates or controlling
persons constituting reckless disregard, willful misfeasance, bad faith, gross
negligence, fraud or willful misconduct.
(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,
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, the contents of the Disclosure Documents, or the wrongful
conduct of persons with respect to the sale of interests in the Fund, 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 reckless disregard,
willful misfeasance, bad faith, gross negligence, fraud or willful misconduct.
(c) Promptly after receipt by an indemnified party under this
Section 16 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 16, 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 16 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 16 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 16. Notwithstanding any
other provisions of this Section 16, 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.
17. 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.
18. 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:
If to the Sub-Adviser: Babson Capital Management LLC
One Memorial Drive
Cambridge, MA 02142
Attention: [ ]
With a copy to:
If to either MassMutual or the Sub-Adviser, copies to:
The DLB Fund Group
[ ]
[ ]
Attention: [ ]
19. 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.
20. 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.
21. 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.
22. 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.
23. Successors.
This Sub-Advisory Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns.
24. 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.
25. 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.
26. 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.
27. 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: __________________________________
Name:
Title:
[NAME OF SUB-ADVISER]
By: __________________________________
Name:
Title:
Accepted and Agreed to by:
THE DLB FUND GROUP
on behalf of the DLB [ ] Fund
By: __________________________________
Name:
Title:
Appendix A
The Sub-Adviser shall provide to MassMutual the following:
1. Quarterly Portfolio Data Sheets (due on the 10th business day after the end
of every quarter): The data sheets should include the following
information:
a. Portfolio Characteristics for the Fund, standard and best fit market
index
b. Portfolio Sector Weights for the Fund, standard and best fit market
index.
c. Top 10 Equity Holdings (% of equities) for the Fund
d. Top 5 contributors and detractors by performance based on contribution
to the portfolio
e. Purchases (New) and Sales (Eliminated) during the quarter.
f. Performance of the Fund vs. standard and best fit market index and
peer group
2. Portfolio Manager Commentary (due on the 10th business day after the end of
every quarter): The commentary should include information on the following
topics (there is no limit to the number of words used):
a. Qualitative assessment by manager: list three factors that were the
major influences on performance - both positive and negative
b. Performance attribution:
- The industry weightings that had the largest contribution to
performance during the most recent quarter.
- The industry weightings that had the largest detraction from
performance during the most recent quarter.
- The five holdings that contributed the most to performance during
the most recent quarter.
- The five holdings that detracted the most from performance during
the most recent quarter.
c. The manager's market outlook.
d. How he/she has positioned the Fund for the near term.
3. Third party portfolio attribution analysis of the Fund: Performance
attribution should demonstrate the impact of portfolio management decisions
including Asset Allocation Effects and Security Selection Effects.
4. Quarterly Conference Calls: The purpose of this contact will be to obtain a
greater understanding of the performance of the Fund, the reasons for that
performance, and to gain valuable insights into the Fund provided by the
manager
5. Annual On-Site Meeting - As part of MassMutual's due diligence process,
members of the Concert Investment Advisory Group arrange an "on site"
meeting with each of the managers in the Concert Investment Program.
Typically, these meetings include a general overview of the firm as well as
separate meetings with each of the portfolio managers to discuss their
long-term and short-term strategies, modifications to their investment
strategy or style and any other relevant information
APPENDIX III
- ------------
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
The Fund normally invests at least 80% of its assets in investment grade fixed
income debt securities, including:
o U.S. dollar-denominated corporate obligations;
o securities issued or guaranteed by the U.S. Government or its agencies;
o U.S. dollar-denominated bonds of foreign issuers; and
o mortgage-backed and other asset-backed securities.
Securities issued by U.S. Government agencies may not be guaranteed by the U.S.
Treasury.
The Fund may invest up to 10% of its total assets in below investment grade debt
securities. The Fund may also invest in money market securities, including
commercial paper. Selection of investments for the Fund will be made by the
Fund's Sub-Adviser, Babson Capital Management LLC (formerly known as David L.
Babson & Company Inc.), by analyzing overall investment opportunities and risks
of various fixed income debt securities and market sectors. Currently, analysis
of various factors (which may change over time and in particular cases) include:
the potential of high income offered by different types of corporate and
government obligations; diversification among industries and issuers, credit
ratings, and sectors to reduce the volatility of the Fund's share price; and the
relative value offered by different securities. 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 net assets may be restricted or illiquid at the time of purchase.
The Fund's Sub-Adviser intends for the Fund's DURATION to match (within 10%) the
duration of the Lehman Brothers Aggregate Bond Index. Portfolio duration changes
are accomplished through reinvesting cash flow and selective trading.